EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT, dated as of March 26, 1998 (together with
the Schedules, Annexes and Exhibits hereto, this "Agreement"), is by and among
Xxxx Industries, Inc., a Delaware corporation ("Buyer"), and the individuals set
forth on Annex I hereto (each such individual, a "Seller" and all such
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individuals collectively, the "Sellers"), the beneficial and record owners of
one hundred percent (100%) of the issued and outstanding shares of common stock,
$0.01 par value per share (the "Common Stock"), of XXXXXXXX FURNITURE, INC., a
Delaware corporation (the "Company").
WHEREAS, Sellers desire to sell all of the shares of Common Stock owned by
each of them, all as set forth on Annex I hereto (collectively, the "Shares")
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and Buyer desires to purchase such Shares for the consideration provided herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, and agreements contained herein, Sellers and Buyer
hereby agree as follows:
SECTION 1. SALE AND PURCHASE
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(a) Sale and Purchase. On the terms and subject to the conditions of
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this Agreement, on the Closing Date (as defined in Section 2(a)), each Seller
will sell, convey, transfer and deliver to Buyer, and Buyer will purchase from
such Seller, the number of Shares set forth opposite such Seller's name on Annex
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I hereto, which Shares represent one hundred percent (100%) of the outstanding
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shares of capital stock of the Company. As to each Seller, the Shares being
sold by such Seller are sometimes referred to herein as such "Seller's Shares."
(b) Purchase Price.
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(i) On the terms and subject to the conditions of this Agreement,
in consideration of the sale of the Shares, Buyer agrees to pay Sellers on
the Closing Date a cash sum equal to Seven Million Dollars ($7,000,000)
(the "Purchase Price"), as follows: (A) Six Million Dollars in cash
($6,000,000) (the "Cash Consideration") payable to Sellers at Closing (as
defined below) as set forth in Section 1(b)(ii) below and (B) One Million
Dollars ($1,000,000) in cash (the "Escrowed Consideration") to be deposited
with the Escrow Agent as set forth in Section 1(b)(iii) below. The
Purchase Price shall be allocated by the Sellers' Representative (as
defined below), among the Sellers as set forth on Annex I hereto.
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(ii) The Cash Consideration shall be payable by wire transfer of
immediately available funds to such bank account or bank accounts as
Gefinor (USA) Inc., a New York corporation or its assignee (the "Sellers'
Representative"), shall theretofore designate in writing to Buyer, or by
such other means as are agreed upon by Sellers' Representative and Buyer.
(iii) The Escrowed Consideration shall be delivered to an escrow
agent (the "Escrow Agent") selected by Sellers' Representative and approved
by Buyer (such approval not to be unreasonably withheld), to be held and
released by the Escrow Agent in accordance with the Escrow Agreement in
substantially the form of Exhibit I hereto (the "Escrow Agreement") to be
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entered into by Buyer, Sellers and the Escrow Agent on the Closing Date.
The Escrow Agreement shall provide that the Escrowed Consideration will be
held in escrow for a period of twelve (12) months, unless otherwise
released earlier to satisfy any indemnification claims hereunder, as more
fully described in the Escrow Agreement.
SECTION 2. THE CLOSING.
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(a) Time and Place of Closing. On the terms and subject to the
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conditions contained in this Agreement, the closing of the purchase and sale of
the Shares (the "Closing") shall take place at the offices of Xxxxx Xxxxxxxxxx
LLP, 1301 Avenue of the Americas, New York, New York, on the third business day
after all of the conditions to each parties' obligations under Sections 7 and 8
have been satisfied or waived, or at such time and place as shall be mutually
agreed to by the parties (the "Closing Date").
(b) Delivery and Payment. At the Closing, the Sellers' Representative
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shall deliver (or cause to be delivered) to Buyer stock certificates
representing the number of each Seller's Shares set forth opposite such Seller's
name on Annex I hereto, duly endorsed or accompanied by duly executed stock
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powers in blank and any necessary power of attorney, and having all necessary
stock transfer tax stamps affixed thereto at the expense of Sellers in form
suitable for transfer of valid title thereto to Buyer free and clear of any
Encumbrances (as defined below), and the certificates to be delivered pursuant
to Section 7 hereof, against payment of the Purchase Price by Buyer to Sellers'
Representative (including deposit of the Escrowed Consideration by Buyer with
the Escrow Agent as provided above) and delivery by Buyer of the certificates to
be delivered pursuant to Section 8 hereof.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS WITH RESPECT TO STOCK
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OWNERSHIP, AUTHORITY, NO VIOLATION, ETC.
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Each Seller hereby severally, and not jointly, represents and
warrants to Buyer, as follows:
(a) Stock Ownership. Except as set forth on Schedule 3(a), such
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Seller is the beneficial and record owner of such Seller's Shares, free and
clear of any lien, pledge, option, security interest, claim, third party right
or any other restriction or encumbrance of any nature whatsoever
("Encumbrances"), and on the Closing Date will transfer to Buyer good title to
such Shares, free and clear of any Encumbrance whatsoever.
(b) No Violation, Etc. Neither such Seller's execution and delivery
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of this Agreement, the consummation of the transactions contemplated herein nor
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compliance by such Seller with any of the provisions hereof will (i) result in
the creation of any Encumbrance upon such Seller's Shares under, or contravene
or violate any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, agreement, contract, or any other
instrument or obligation to which such Seller is a party or by which Seller or
Seller's Shares may be bound or affected or (ii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to such Seller or
such Seller's Shares. Except as set forth on Schedule 3(b), no consent,
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approval, authorization, order, filing, registration or qualification of or with
any court or governmental authority or of any third party is required to be
obtained by such Seller in connection with the execution and delivery by Sellers
of this Agreement or consummation by Sellers of the transactions contemplated
herein in the manner contemplated hereby.
(c) No Other Agreements to Sell Assets or Business. Such Seller has
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no obligation, absolute or contingent, to any other individual, corporation,
partnership, trust, limited liability company, association, joint venture or any
similar entity (each, a "Person") to (i) sell such Seller's Shares (other than
the sales contemplated hereby), or (ii) cause the Company to (A) sell any assets
of the Company (other than sales of inventory in the ordinary course of the
business of the Company), (B) issue, sell or otherwise transfer any capital
stock or any security convertible into or exchangeable for capital stock of the
Company (other than the sales contemplated hereby), (C) effect any merger,
consolidation or other reorganization of the Company or (D) enter into any
agreement with respect to any of the foregoing.
(d) Litigation. There is no action, claim, suit or proceeding pending
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or, to the knowledge of such Seller, threatened by or against or affecting such
Seller or such Seller's Shares and, to the knowledge of such Seller, there is no
investigation pending or threatened against or affecting such Seller or such
Seller's Shares, in each case before any court or governmental or regulatory
authority or body, that would reasonably be expected to have a material and
adverse effect on the Shares, the Company or on the consummation of the
transactions contemplated by this Agreement. There are no writs, decrees,
injunctions or orders of any court or governmental or regulatory agency,
authority or body outstanding against such Seller with respect to or effecting
such Seller's Shares.
(e) Authority; Execution and Delivery. Each Seller has the power,
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capacity and authority to enter into this Agreement and, to sell such Seller's
Shares in accordance with the terms hereof, and to perform fully such Seller's
obligations hereunder. This Agreement has been duly executed and delivered by
each Seller and constitutes the legal, valid and binding obligation of such
Seller enforceable against such Seller in accordance with its terms, except as
the enforcement hereof (or thereof) may be limited by bankruptcy, insolvency, or
other similar laws affecting the enforcement of creditors' rights in general or
by general principles of equity. If any Seller is not a natural person, such
Seller has obtained all requisite corporate or other similar authority to enter
into and deliver this Agreement and to consummate the transactions contemplated
herein.
(f) Organization. Each Seller which is not a natural person is duly
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organized under the laws of its jurisdiction of formation or incorporation.
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SECTION 4. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLERS.
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Sellers, hereby jointly and severally, represent and warrant to
Buyer, as follows:
(a) Consents, No Conflicts, Etc. Except as disclosed on Schedule 4(a)
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hereto and except for filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976 (the "H-S-R Act"), with respect to the transactions contemplated by
this Agreement, neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor compliance by the
Company with any of the provisions hereof will (i) violate or conflict with the
Certificate of Incorporation or By-laws of the Company, as the same may have
been amended, (ii) violate, conflict with, result in a breach of, constitute a
default (or an event which with the giving of notice or lapse of time or both
would constitute a default) under, or result in the acceleration of performance
under, or termination or cancellation of, any note, bond, mortgage, indenture,
lease, deed of trust, license, agreement, or any other instrument or obligation
to which the Company is a party, or by which the Company or any of its assets or
properties may be bound or affected, (iii) result in the creation of any
Encumbrance upon the Shares or any of the capital stock, assets or properties of
the Company, (iv) violate any order, writ, injunction, decree, statute, rule or
regulation known by Sellers to be applicable to the Company, or any of its
assets or properties, or (v) require the Company to obtain the consent,
approval, permission or other authorization of or qualification or filing by or
with any court, arbitrator or governmental, administrative, regulatory or self-
regulatory authority or of any third party, except in each case insofar as any
such violation, conflict, breach, default, acceleration, termination,
cancellation, creation of any Encumbrance, failure to obtain any consent,
approval, permission or other authorization, qualification or filing would not
have a material adverse effect, individually and/or in the aggregate, on the
financial condition or business of the Company and the Subsidiary (as defined
below), taken as a whole (a "Material Adverse Effect").
(b) Organization and Good Standing. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has all requisite corporate power to own, lease and
operate its properties and to carry on its business as it is now being conducted
and is duly qualified and in good standing to do business as a foreign
corporation in each jurisdiction in which the failure to be so qualified would
have a Material Adverse Effect. The subsidiary of the Company, listed on
Schedule 4(b) hereto, (the "Subsidiary") is the Company's sole subsidiary and is
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a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization set forth on Schedule 4(b) hereto,
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with the corporate power to own its properties and conduct its business as now
being conducted. The Subsidiary is duly qualified and in good standing as a
foreign corporation duly authorized to do business in all jurisdictions in which
the failure to be so qualified would have a Material Adverse Effect.
(c) Capitalization.
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(i) The Company's authorized capital consists exclusively of
Twenty Thousand (20,000) shares of Common Stock of which 9,600 shares are
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issued and outstanding. The authorized capital stock of the Subsidiary,
and the number of shares issued and outstanding, and the beneficial owner
of such shares are listed on Schedule 4(b) hereto. Except for the
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Subsidiary, the Company has no direct or indirect subsidiaries, nor, except
as set forth on Schedule 4(b), does it hold any equity interests or any
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convertible securities in any other Person. All shareholder agreements to
which the Company or any Seller is a party, if any, will be terminated at
the Closing.
(ii) All of the outstanding Common Stock has been duly authorized
and is validly issued, fully paid and non-assessable. There are no existing
subscriptions, warrants, rights, options, calls or commitments of any
character whatsoever, or agreements to grant the same, relating to the
issuance, sale, delivery or transfer by the Sellers or the Company of any
capital stock of the Company, and the Company does not have any outstanding
securities convertible into or exchangeable or exercisable for any shares
of capital stock of the Company or any subscriptions, warrants, rights,
options, calls or commitments of any character whatsoever with respect to
the issuance, sale or delivery of such convertible securities.
(d) Certificate of Incorporation and By-laws. Sellers have delivered
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to Buyer copies of the Certificate of Incorporation and By-laws of the Company,
which copies are complete and correct as of the date hereof.
(e) Financial Statements. Sellers have delivered to Buyer true and
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complete copies of the following consolidated financial statements of the
Company (including any related notes to such financial statements), each of
which has been prepared in accordance with GAAP consistently applied throughout
the periods indicated (subject to year-end adjustments), each of which is in
accordance with the books and records of the Company and fairly presents in all
material respects the financial position and results of operations of the
Company as of the dates and for the periods indicated:
(i) audited consolidated balance sheet, statement of income and
retained earnings and statement of cash flows of the Company as at December
28, 1996, in each case certified by the Company's independent certified
public accountants; and
(ii) unaudited consolidated balance sheet of the Company as at
February 28, 1998 and unaudited statement of income and retained earnings
and statement of cash flows of the Company for the two-month period ended
February 28, 1998.
The balance sheet contained in the unaudited consolidated financial
statements of the Company as at February 28, 1998 (the "Balance Sheet Date") is
herein referred to as the "Balance Sheet."The Company's accounts receivables are
bona-fide accounts receivables and since January 3, 1998, have not been
materially diminished in any manner other than by cash collections and write-
offs in the ordinary course of business. The Company's inventory, as set forth
on the Company's balance sheet as of January 3, 1998, represents bona fide
inventory, and since January 3, 1998, has not been materially diminished in any
manner other than the sale in the ordinary course of business. Said
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inventory, as reflected on such balance sheet, which is reported on the face of
the balance sheet net of any related reserve account, does not include any
material amount of inventory that is obsolete.
(f) Absence of Undisclosed Liabilities and Obligations. Except (i) as
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and to the extent reflected in the audited financial statements of the Company
as of December 28, 1996 or the unaudited financial statements as of January 3,
1998, or in the notes thereto, (ii) as and to the extent reflected in the
Balance Sheet or which have arisen in the ordinary course of the Company's
business since the Balance Sheet Date and (iii) as disclosed on a Schedule
hereto, there were no other liabilities or obligations, secured or unsecured
(whether absolute, accrued, known or unknown, contingent or otherwise, and
whether due or to become due) that have had or which can reasonably be expected
to have a Material Adverse Effect.
(g) Absence of Certain Changes or Events. Except as disclosed on
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Schedule 4(g) hereto, since the Balance Sheet Date, there has not been any:
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(i) event or condition of any character which has had or is
reasonably likely to have a Material Adverse Effect;
(ii) change in the number of shares of capital stock issued and
outstanding or any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, securities, property or otherwise) in
respect of the capital stock of the Company, or any redemption or other
acquisition by the Company of any shares of its capital stock;
(iii) (A) material increase in the compensation payable or to
become payable by the Company to any of its officers, directors or
employees (collectively, "Company Personnel") whose total compensation for
services rendered to the Company is currently at an annual rate of more
than $50,000 or any increase of general applicability in the compensation
payable to Company Personnel other than in the ordinary course of business
consistent with past practice, (B) bonus, incentive compensation, service
award or other like benefit, granted, made or accrued, contingently or
otherwise, to or to the credit of Company Personnel except pursuant to the
existing plans and arrangements of the Company and other than in the
ordinary course of business consistent with past practice or (C) employee
welfare, pension, retirement, profit-sharing or similar payment or
arrangement made or agreed to by the Company except pursuant to the
existing plans and arrangements, all as described on Schedule 4(i)(viii)
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hereto;
(iv) labor trouble, or any controversies or unsettled grievances
threatened between the Company and any Company Personnel that would
reasonably be expected to have a Material Adverse Effect;
(v) mortgage, pledge or subjection to any Encumbrance of any of
the material assets of the Company except (A) the lien of current real and
personal property taxes incurred but not yet due and payable, (B)
materialmen's or like liens or obligations arising in
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the ordinary course of business securing obligations not yet due and
payable, or (C) purchase money security interests or similar liens arising
in the ordinary course of business;
(vi) sale, assignment or transfer of any assets of the Company
which are material to the Company;
(vii) material change by the Company in accounting methods,
principles or practices, except as required by GAAP;
(viii) waiver of any rights of substantial value to the Company,
other than in the ordinary course of business of the Company consistent
with past practice;
(ix) cancellation or termination by the Company of any contract,
agreement or other instrument material to the Company other than in the
ordinary course of business of the Company consistent with past practice;
(x) liability incurred by the Company that would reasonably be
expected to have a Material Adverse Effect, except liabilities incurred in
the ordinary course of business of the Company consistent with past
practice;
(xi) capital expenditure or the execution of any lease with
respect to any aspect of the business of the Company, or any incurring of
liability therefor, involving payments in excess of $25,000;
(xii) borrowing of money by the Company or guaranteeing of any
indebtedness of others by the Company other than under existing credit
facilities or in the ordinary course of business consistent with past
practice;
(xiii) lending of any money or otherwise pledging the credit of
the Company to any party other than the Company other than in the ordinary
course of business of the Company consistent with past practice;
(xiv) material failure to operate the business of the Company in
the ordinary course consistent with past practice;
(xv) failure to pay any current obligations of the Company in
accordance with the general practices of the Company, except for those
being contested in good faith;
(xvi) damage, destruction or casualty loss, not covered by
insurance, that would reasonably be expected to have a Material Adverse
Effect; or
(xvii) agreement by the Company to do any of the foregoing.
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(h) Tax Matters. The Company has filed all tax reports and returns
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required to be filed by it, (excluding any such reports and returns for the tax
year ended January 3, 1998), including all federal, state, local and foreign tax
returns and reports. Except as disclosed on Schedule 4(h) hereto, all such
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returns and reports are accurate and complete in all material respects and were
prepared in conformity with the applicable laws and regulations. For the
purposes of this Agreement, any federal, state, local, foreign, income, sales,
use, excise, franchise, transfer, payroll, property (personal or real),
occupancy or other tax, charge, levy, fee or other assessment, unemployment
insurance premiums and any other charge in the nature of a tax, together with
any related additions, interest or penalty, is referred to as a "Tax". The
Company has (i) paid in full all Taxes shown to be due on such returns or any
assessment, reassessment deficiency notice, 30-day letter or similar notice
received by it and (ii) made adequate provision (by the establishment of
reserves or otherwise) for all Taxes relating to or arising in connection with
any period ending on or before the Closing Date. The Company has delivered to
Buyer true and complete copies of all such returns and reports for all taxable
years of the Company as set forth on Schedule 4(h) hereto, together with true
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and complete copies of all reports of taxing authorities relating to examination
of such returns if any. Since February 26, 1996, the Company has not waived any
statute of limitation period with respect to any audit year.
The Company is not a party to any pending action or proceeding by any
governmental authority for the assessment of any Tax, and no claim for
assessment, reassessment or collection of any Tax has been asserted against the
Company that has not been paid.
(i) Lists of Properties, Contracts and Personnel Data. Schedules
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4(i)(i) through 4(i)(xv) hereto contain accurate lists of the following:
(i) Schedule 4(i)(i). Qualification. All jurisdictions in which
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the Company and the Subsidiary are duly qualified to do business as a
foreign corporation;
(ii) Schedule 4(i)(ii). Real Property. All real property owned
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of record or beneficially by the Company and the Subsidiary; all leases of
real property to which the Company and the Subsidiary are a party; and all
contracts to which the Company is a party for the sale or purchase of real
property;
(iii) Schedule 4(i)(iii). Intellectual Properties; Computer
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Software. (A) All patents and pending applications therefor, all
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registrations of trademarks, all registrations of trade names, labels or
other trade rights, all pending applications for any such registrations or
entries of the foregoing, all copyright registrations (including, for
Computer Software (as defined below)) and pending applications therefor
(collectively, "Intellectual Properties"), in the case of each of the
foregoing, all to the extent that the foregoing items are material to the
business of the Company and the Subsidiary and are owned in whole or in
part by the Company or the Subsidiary, and all material licenses relating
thereto other than the Computer Software Licenses (as hereinafter defined);
and (B) all proprietary computer software owned in whole or in part by the
Company or the Subsidiary (the "Computer Software"), and all material
licenses relating thereto (other than licenses for commercially available
software);
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(iv) Schedule 4(i)(iv). Asset Register. A copy of the Company's
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asset register as of a recent date;
(v) Schedule 4(i)(v). Insurance. All policies of insurance in
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force with respect to the Company and the Subsidiary, including, without
restricting the generality of the foregoing, those covering properties,
buildings, machinery, equipment, furniture, fixtures, operations and lives
of, or performance of their duties by, Company Personnel, as of the Balance
Sheet Date;
(vi) Schedule 4(i)(vi). Other Contracts. All agreements,
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contracts and commitments relating to the business of the Company and the
Subsidiary not otherwise listed in any other Schedule hereto with an annual
payment in excess of $25,000 and which cannot be cancelled upon ninety (90)
days' notice (other than purchase orders entered into in the ordinary
course of business at standard prices) and any agreements under which the
Company or the Subsidiary has limited or restricted their respective right
to compete with any Person in any respect;
(vii) Schedule 4(i)(vii). Labor Agreements. All labor
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contracts, employment agreements, compensation agreements, bonus
agreements, consulting or similar agreements and collective bargaining
agreements relating to Company Personnel;
(viii) Schedule 4(i)(viii). ERISA. All employee profit-sharing,
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incentive, deferred compensation, welfare, pension, retirement, group
insurance, bonus, severance, stock option, stock purchase, and other
employee benefit plans, regardless of whether any such plan or arrangement
is an "employee benefit plan" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained or contributed to (or to which there is an obligation to
contribute) by the Company or the Subsidiary for the benefit of present or
former Company Personnel (collectively, the "Plans"); identifying (i) each
such plan which provides any benefits after termination of employment other
than a Retirement Plan, (ii) each such plan which is an "employee pension
benefit plan" ("Retirement Plan") as that term is defined in Section 3(2)
of ERISA;
(ix) Schedule 4(i)(ix). Compensation. The names and current
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annual rates of compensation of all Company Personnel whose current
aggregate annual rates of compensation including bonuses are $50,000 or
more;
(x) Schedule 4(i)(x). Powers of Attorney. The names of all
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Persons holding powers of attorney from the Company or the Subsidiary;
(xi) Schedule 4(ii)(xi). Bank Accounts. The names of each
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institution in which the Company or the Subsidiary has a bank account or
safe-deposit box, the number of
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any such account or box, and the names of all Persons authorized to draw
thereon or to have access thereto;
(xii) Schedule 4(i)(xii). Indebtedness. All notes, debentures,
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bonds, letters of credit, bankers' acceptances and other instruments
evidencing indebtedness (including capital leases, guarantees and lines of
credit) of the Company or the Subsidiary, in any case with an outstanding
principal balance as of the Balance Sheet Date in excess of $25,000;
(xiii) Schedule 4(i)(xiii). Agents. The name of each agent, if
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any, other than a regular employee or a commissioned salesman of the
Company or the Subsidiary who has been paid a commission in excess of
$10,000 in connection with obtaining any contract or order of the Company
or the Subsidiary during the 1997 fiscal year or who is expected to be paid
a commission in excess of $10,000 during the 1998 fiscal year, indicating
the amount of commission paid during the 1997 fiscal year; and
(xiv) Schedule 4(i)(xiv). Permits. All material governmental or
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regulatory licenses, permits, consents, franchises, approvals,
authorizations and certificates (other than Environmental Permits (as
defined below)) and pending applications therefore (collectively,
"Permits") required to conduct the business of the Company or the
Subsidiary.
(j) Copies of Documents. To the extent practical, the Company
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previously delivered or made available to Buyer or to counsel to Buyer, true and
complete copies of:
(i) all leases, agreements, contracts, undertakings, commitments,
arrangements and plans listed on Schedules 4(i)(ii), 4(i)(iv), 4(i)(vi),
4(i)(vii) and 4(i)(viii);
(ii) all deeds or other evidence of title to owned real property
listed on Schedule 4(i)(ii) and copies of any title insurance policies in
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the possession of the Company with respect thereto;
(iii) the most recent Internal Revenue Service Determination
Letters, summary plan descriptions and employee communications, Annual
Reports (Form 5500 Series) and accompanying schedules and actuarial reports
for the plans and arrangements listed on Schedule 4(i)(viii);
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(iv) all Intellectual Properties and Computer Software listed on
Schedule 4(i)(iii);
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(v) all Permits listed on Schedule 4(i)(xiv);
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(vi) all policies of insurance listed on Schedule 4(i)(v);
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(vii) all instruments evidencing a power of attorney listed on
Schedule 4(i)(x);
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(viii) all securities notes, debentures, bonds, bankers'
acceptances, letters of credit and other instruments of indebtedness listed
on Schedule 4(i)(xii);
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(ix) all UCC searches obtained by the Company; and
(x) any written environmental reports or studies prepared by or
at the request of the Company or the Subsidiary.
(k) Properties. Except as disclosed on Schedule 4(k) hereto, the
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Company or the Subsidiary (i) has good title to all of the properties and assets
real, personal, tangible and intangible reflected in the Balance Sheet, except
as since sold or otherwise disposed of in the ordinary course of business, free
and clear of all Encumbrances of any nature whatsoever, except for (A) the lien
of taxes not yet due and payable; (B) manufacturer's and like liens; (C) such
imperfections of title and encumbrances, if any, as do not materially detract
from the marketability or value, or materially interfere with the present use,
of the properties of the Company or the Subsidiary, respectively, or otherwise
materially impair the business operations of the Company or the Subsidiary; and
(D) any Encumbrance disclosed in the Schedules hereto or in the UCC searches
provided to Buyer pursuant to Section 4(j)(ix) hereof; and (ii) has in all
material respects performed all the obligations required to be performed by it
to the date hereof under said leases and such personal tangible and intangible
properties, and as to real property leased, to Seller's knowledge, are not
subject to any Encumbrances, easements, rights of way, building or use
restrictions, exceptions, reservations or limitations that materially interfere
with or impair the present use thereof in the usual and normal conduct of the
business of the Company or the Subsidiary or materially detract from the value
of the leasehold of the Company related thereto. Neither of the Company or the
Subsidiary has received notice of (i) any violation of any applicable zoning
regulation, ordinance or other law, order, regulation or requirement relating to
the operations of owned or leased properties of the Company or the Subsidiary or
(ii) any pending or threatened condemnation proceedings relating to any of their
respective owned or leased properties and, so far as known to Sellers, there are
no such pending or threatened proceedings. Except for the burn cell constructed
by Xxxxx-Xxxxx Blow Pipe Co., the plants, structures, material tangible
properties and equipment currently in use by the Company in its manufacturing
operations, taken as a whole, are in good operating condition and repair,
ordinary wear and tear excepted, subject to normal maintenance in the ordinary
course of business.
(l) Validity of Contracts. Except as set forth in this Agreement or
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disclosed in a Schedule hereto, each material contract, agreement or commitment
of the Company or the Subsidiary listed in any Schedule hereto, is valid and
enforceable in accordance with its terms and neither of the Company or the
Subsidiary is, or will be with notice, the lapse of time, or both, in default in
any material respect under any material provision of any such contract,
agreement or commitment.
-11-
(m) Intellectual Properties.
-----------------------
(i) No Person other than the Company or the Subsidiary has an
ownership interest in, or a right to receive a royalty or similar payment
with respect to, any of the Intellectual Properties or Computer Software
listed on Schedule 4(i)(iii) hereto, except as noted in such Schedule. The
------------------
Company owns, or is licensed or otherwise has the right to use, all of the
Intellectual Properties listed on Schedule 4(i)(iii), free and clear of any
------------------
Encumbrance or royalty or other payment requirements of any nature
whatsoever, except as noted in such Schedule.
(ii) To the best of the Sellers' knowledge, neither of the
Company or the Subsidiary is infringing upon, or otherwise violating, the
intellectual property rights of any third party. Neither of the Company or
the Subsidiary has received notice of any proceedings or claims that are
infringing upon or otherwise violating any such rights, and the Company,
the Subsidiary and the Sellers are unaware of any such infringement or
violation as to which notice has not been received by the Company or the
Subsidiary. Except as set forth on Schedule 4(i)(iii) hereto, no
------------------
proceedings or claims in which the Company or the Subsidiary alleges that
any third party is infringing upon or otherwise violating any of the
Intellectual Properties are pending and none have been served by,
instituted or asserted by the Company or the Subsidiary.
(n) Environmental Matters. Except as set forth in Schedule 4(n) or
--------------------- -------------
would not have a Material Adverse Effect, with respect to the time period
following February 26, 1996:
(i) The Company and the Subsidiary comply, and at all times since
February 26, 1996 have complied, in all material respects, with all
Environmental Laws (as defined below) applicable to the business or to the
Company's or the Subsidiary's ownership or operation of the properties
owned or operated by the Company or the Subsidiary, including, without
limitation, the use, maintenance and operation of properties operated by
the Company, and all activities and conduct of business by the Company or
the Subsidiary related thereto, including, without limitation, the
treatment, remediation, removal, transport, storage and/or disposal of any
Contaminant (as defined below).
(ii) The Company or the Subsidiary, as appropriate, has obtained,
or has taken appropriate steps to obtain, all Environmental Permits
necessary for the Company's or the Subsidiary's ownership and operation of
the Company, the Subsidiary and their respective business, and the Company
and the Subsidiary are in compliance in all material respects with all
terms and conditions of such Environmental Permits.
(iii) Neither of the Company or the Subsidiary are subject to any
judicial or administrative proceeding, notice, order, judgment, decree or
settlement, alleging or addressing (x) any violation of any Environmental
Law, or (y) any claims or liabilities or costs arising from the Release (as
defined below) or threatened Release of any Contaminant at any location.
-12-
(iv) No Environmental Lien (as defined below) has attached to any
of the properties or assets currently owned or operated by the Company or
the Subsidiary.
(v) To Sellers' knowledge, (x) there has been no Release or
threatened Release of any Contaminants at, to or from any of properties
currently owned or operated by the Company and (y) there has been no
disposal (as such term is defined in the Federal Resource Conservation and
Recovery Act) of any Contaminants at such properties.
(vi) Neither of the Company or the Subsidiary have transported or
arranged for the transport of any Contaminants for the purpose of
treatment, storage, reclamation, recycling, remediation or disposal to any
facility or site which was at such time listed on the National Priorities
List ("NPL") pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") or listed on the Comprehensive
Liability Information System ("CERCLIS") or, to the knowledge of Sellers,
is now subject to an enforcement proceeding by any governmental agency
relating to Contaminants at such facility or site.
(vii) To Sellers' or the Subsidiary's knowledge no asbestos or
asbestos containing materials, or polychlorinated biphenyls ("PCBs") are
located in, at or upon any of the properties currently owned or operated by
the Company.
(viii) No underground improvements, including, but not limited
to, treatment or storage tanks, sumps or water, gas or oil xxxxx, or
associated piping, are or ever have been located on any of the properties
currently owned or operated by the Company while such properties were owned
or operated by the Company or the Subsidiary.
(ix) Except for any items disclosed in the Stock Purchase
Agreement, dated as of January 5, 1996, among XXXX Furniture, Inc.,
Xxxxxxxx Furniture, Inc. and Xxxxxxxx Acquisition Co., including any
schedules, annexes and exhibits thereto (the "XXXX Agreement"), the Sellers
have no knowledge of any material violation of any Environmental Laws by
the Company and/or its then subsidiaries on or prior to February 26, 1996.
For purposes hereof, the following terms shall have the following
meanings:
"Contaminant" means any pollutant, hazardous substance, radioactive
substance, toxic substance, hazardous waste, medical waste, radioactive waste,
special waste, petroleum or petroleum-derived substance or waste, asbestos,
PCBs, or any hazardous or toxic constituent thereof.
"Environmental Laws" means all federal, state, local and foreign laws,
statutes, codes, ordinances, rules, regulations, Environmental Permits, orders,
relating to the protection of the environment, health or safety.
"Environmental Lien" means a lien in favor of any governmental
authority for any (x) liability under any Environmental Law, or (b) damages
arising from, or costs incurred by, such
-13-
governmental authority in response to a Release or threatened Release of a
Contaminant into the environment.
"Environmental Permits" means all permits, consents, licenses, and
other approvals or authorizations required under Environmental Laws.
"Release" means the release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migrating into
the indoor or outdoor environment of any Contaminant through or in the air,
soil, surface water, groundwater or the properties owned, occupied, or otherwise
controlled by the Company or the Subsidiary.
(o) Insurance. All policies of insurance (or renewals thereof) set
---------
forth on Schedule 4(i)(v) are valid, outstanding and in force and effect on the
----------------
date hereof and all premiums with respect thereto, covering all periods up to
and including the date hereof, have been paid. Such policies insure the
equipment of the Company or the Subsidiary for their replacement values against
loss, theft and destruction and, to the knowledge of the Company or the
Subsidiary, insure the properties and business of the Company and the Subsidiary
against such losses and risks as are adequate in accordance with customary
industry practice to protect the properties and business of the Company and the
Subsidiary. Except as set forth on such Schedule, the Company has not been
notified by any carrier of any non-renewal or termination of coverage, or of any
material increase in the premium rates for said policies.
(p) Labor Matters. Except as disclosed on Schedule 4(i)(vii) hereto,
------------- ------------------
neither the Company nor the Subsidiary have labor contracts, collective
bargaining agreements or employment agreements with any Company Personnel or any
representative of any Company Personnel. Except as set forth on Schedule
4(i)(vii), and as would not have a Material Adverse Effect, (i) the Company and
the Subsidiary are in compliance, with all applicable laws respecting employment
and employment practices, terms and conditions of employment and wages and
hours, and is not engaged in any unfair labor practice; (ii) to the knowledge of
the Company or the Subsidiary, there is no unfair labor practice complaint
against the Company or the Subsidiary pending before the National Labor
Relations Board; (iii) there is no labor strike, representation campaign or work
stoppage actually pending or, to the knowledge of the Company or the Subsidiary,
threatened, against or affecting the Company or the Subsidiary; (iv) no
grievance or arbitration proceeding arising out of or under collective
bargaining agreements is pending and, to the knowledge of the Company or the
Subsidiary, no claim therefor has been asserted against the Company or the
Subsidiary; and (v) neither of the Company or the Subsidiary have experienced
any work stoppage since February 26, 1996.
(q) Employee Benefits.
-----------------
(i) There are no Company Personnel or former officers, directors
or employees of the Company, in each cash who have terminated subsequent to
February 26, 1996 who are entitled to (x) any pension benefit that is
unfunded or (y) any pension or other benefit to be paid after termination
-14-
of employment other than required by Section 601 of ERISA or pursuant to
Plans intending to be qualified under Section 401(a) of the Code and listed
on Schedule 4(i)(viii);
-------------------
(ii) Each Plan that is an employee welfare benefit plan as
defined in Section 3(1) of ERISA is either (x) funded through an insurance
contract and is not a "welfare benefit fund" within the meaning of Section
419 of the Code or (y) is unfunded. To the extent that any of the welfare
benefits under the Plans are insured, there is no liability in the nature
of a retroactive rate adjustment or loss-sharing or similar arrangement
with respect to such Plan;
(iii) All contributions or payments owed under or which otherwise
relate to any Plan have been made with respect to all periods prior to the
date hereof. Neither of the Company or the Subsidiary is in default under
any Plan and each Plan complies in all material respects with and has been
operated in compliance with applicable law. As to each Plan for which an
annual report is required to be filed under ERISA or the Code, all such
filings have been made on a timely basis, no liabilities with respect to
such Plan existed on the date of such annual report except as disclosed
therein, and no adverse change has occurred with the financial materials
covered by such annual report since the date thereof. The Company has
complied in all material respects with the requirements for the
continuation of benefits under Section 601 of ERISA;
(iv) None of the assets of the Plans is invested in any property
constituting employer real property or an employer security within the
meaning of Section 407(d) of ERISA;
(v) Since February 26, 1996, neither of the Company or the
Subsidiary (or any entity that is or was at any time treated as a single
employer with the Company or the Subsidiary under Section 414(b), (c), (m)
or (o) of the Code) have at any time (x) maintained, contributed to or been
required to contribute to any plan under which more than one employer makes
contributions (within the meaning of Section 4064(a) of ERISA) or any plan
that is a Multiemployer Plan, (y) incurred or expects to incur any
liability to the Pension Benefit Guaranty Corporation or otherwise under
Title IV of ERISA (other than the payment of premiums none of which are
overdue) or (z) incurred or expects to incur liability in connection with
an "accumulated funding deficiency" within the meaning of Section 412 of
the Code whether or not waived. Except for any items disclosed in the XXXX
Agreement, the Sellers have no knowledge of any Company liability with
respect to the foregoing and which arose on or prior to February 26, 1996
and which would have a Material Adverse Effect.
(vi) The Company 401(k) Plan (the "401(k) Plan") is qualified
under Sections 401(a) of the Code. All contributions due with respect to
the periods ending on or before the Closing Date to the 401(k) Plan have
been timely made and a pro rata portion of the contributions (including
--- ----
matching contributions) for the current plan year has been made or
appropriate charges have been reflected on the Balance Sheet.
-15-
(vii) Since February 26, 1996, none of the Company, the
Subsidiary or, to the knowledge of the Sellers, the Subsidiary or the
Company, any other person, including any fiduciary, has engaged in any
"prohibited transaction" (as defined in Section 4975 of the Code or Section
406 of ERISA), which could subject any of the Plans (or their trusts), the
Company, the Subsidiary or any person who the Company has an obligation to
indemnify, to any tax or penalty imposed under Section 4975 of the Code or
Section 502 of ERISA. Except for any items disclosed in the XXXX Agreement,
the Sellers have no knowledge of any prohibited transaction engaged in on
or prior to February 26, 1996, which would have a Material Adverse Effect.
(viii) Except as set forth on Schedule 4(i)(viii), the events
-------------------
contemplated by this Agreement (either alone or together with any other
event) will not (A) entitle any present or former Company Personnel to
severance pay, unemployment compensation, or other similar payments under
any Plan or law, (B) accelerate the time of payment or vesting or increase
the amount of benefits due under any Plan or compensation to any present or
former Company Personnel, (C) result in any payments (including parachute
payments) under any Plan or law becoming due to any present or former
Company Personnel, or (D) terminate or modify or give a third party a right
to terminate or modify the provisions or terms of any Plan.
(r) Litigation. Except as disclosed on Schedule 4(r) hereto, there is
---------- -------------
no claim, litigation, proceeding, labor dispute (other than routine grievance
procedures), arbitral action or government investigation pending or, to the
knowledge of the Company or the Subsidiary, threatened before any court or
governmental or regulatory agency which would, if adversely determined, have a
Material Adverse Effect.
(s) Compliance with Laws. Neither of the Company or the Subsidiary
--------------------
are, and since February 26, 1996, have not been, in violation of any applicable
statutes, regulations, orders, ordinances and other laws of the United States of
America, any state, local and foreign governments or other governmental bodies
or authorities and agencies of any of the foregoing to which they are subject,
the violation of which would have a Material Adverse Effect. Neither of the
Company or the Subsidiary have received any written notice to the effect that,
or otherwise been advised that, it is not in compliance with any of such
statutes, regulations and orders, ordinances, other laws or undertakings, and
Sellers have no reason to anticipate that any presently existing circumstances
are likely to result in violations of any such regulations which would cause a
Material Adverse Effect. Each of the Company and the Subsidiary have obtained
all Permits the failure of which to obtain would have a Material Adverse Effect.
All such Permits are in full force and effect and no proceedings for the
suspension or cancellation of any Permit is pending or, to the Company's or the
Subsidiary's knowledge, threatened. Except for any items disclosed in the XXXX
Agreement, the Sellers have no knowledge of any violation of any applicable law
and/or regulation by the Company and/or its then subsidiaries on or prior to
February 26, 1996, which would have a Material Adverse Effect.
(t) No Brokers. None of Sellers, the Company or the Subsidiary have
----------
entered into and will not enter into any agreement, arrangement or understanding
-16-
with any Person which may result in an obligation of Buyer to pay any finder's
fee, brokerage commission or similar payment in connection with the transactions
contemplated hereby.
(u) Transactions with Certain Persons. Except as disclosed on
---------------------------------
Schedule 4(u) hereto, none of the Sellers, the Subsidiary or any officer,
-------------
director or employee of the Company, the Subsidiary or any Affiliate (as defined
herein) thereof is presently a party to any material transaction with the
Company or the Subsidiary relating to the business of the Company or the
Subsidiary, including, without limitation, any contract, agreement or other
arrangement (i) providing for the furnishing of services by, (ii) providing for
the rental of real or personal property from or (iii) otherwise requiring
payments to (other than services as officers, directors or employees) any such
person or to any Person in which any such person has a substantial interest as a
shareholder, member, officer, director, trustee or partner. An "Affiliate,"for
the purposes of this Agreement, shall include with respect to any Person, a
director or officer of such Person or any other Person which directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person.
(v) XXXX Indemnification. Other than the provisions of Article VII of
--------------------
the XXXX Agreement, which have been independently reviewed by Buyer, to the best
of Sellers' knowledge, the consummation of the transactions contemplated herein
will not prevent the Company from seeking indemnification from XXXX Furniture,
Inc. ("XXXX"), for any breach of any representation, warranty and/or covenant
contained in the XXXX Agreement to the same extent that the Company could have
done so immediately prior to completion of the transactions contemplated herein.
(w) Limitations. Notwithstanding any other provision of this
-----------
Agreement which may by its generality or otherwise be subject to a different
construction, the representations and warranties of Sellers set forth in Section
4(n) (Environmental Matters) and 4(q) (Employee Benefits) hereof are the sole
and exclusive representations and warranties of Sellers with respect to the
subject matter thereof (including, without limitation, (A) the compliance of any
Person with, or liability of any Person under, any Environmental Law or ERISA at
any time or location, (B) any Release at any time or location or (C) the
existence of any Contaminant at any time or location, or any Losses arising out
of the foregoing).
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer hereby represents and warrants to Sellers as follows:
(a) Consents, No Conflicts, Etc. Except for filings under the H-S-R
---------------------------
Act with respect to the transactions contemplated by this Agreement, neither
the execution and delivery of this Agreement, the consummation by Buyer of the
transactions contemplated herein nor compliance by Buyer with any of the
provisions hereof will (i) violate or conflict with any provision of the
Articles of Incorporation or Bylaws of Buyer, (ii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Buyer or any of
-17-
its assets or properties, or (iii) require the consent, approval, permission or
other authorization of or by or filing or qualification with any court,
arbitrator or governmental, administrative, or self-regulatory authority which
has not been obtained.
(b) Organization and Good Standing. Buyer is a company duly
------------------------------
organized, validly existing and in good standing under the laws of Delaware and
has all requisite corporate power to carry on its business as presently
conducted.
(c) Authority; Execution and Delivery. All requisite corporate action
---------------------------------
has been taken to authorize the execution, delivery and performance by Buyer of
this Agreement and the transactions contemplated herein, and no other corporate
proceedings on the part of Buyer are necessary to authorize the execution and
delivery of this Agreement and the transactions contemplated herein. This
Agreement has been duly executed and delivered by Buyer and constitutes the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as enforcement hereof or thereof may be
limited by bankruptcy, insolvency, or other similar laws affecting the
enforcement of creditors' rights in general or by general principles of equity.
(d) No Brokers. Neither Buyer, nor any of its Affiliates has entered
----------
into any agreement, arrangement or understanding with any Person which will
result in the obligation of the Company or Sellers to pay any finder's fee,
brokerage commission or similar payment in connection with the transactions
contemplated hereby.
(e) Securities Law. Buyer: (i) understands that the Sellers' Shares
--------------
have not been, and will not be, registered under any state or federal securities
law and are being offered and sold in reliance upon federal and state exemptions
for transactions not involving any public offering, (ii) is acquiring the
Sellers' Shares solely for its own account for investment purposes, and not with
a view to the distribution thereof in violation of the Securities Act of 1933,
as amended (the "Act"), (iii) is a sophisticated investor with knowledge and
experience in business and financial matters, (iv) has, in addition to the
representations and warranties of Sellers set forth herein, received certain
information concerning the Company and has had the opportunity to obtain
additional information as desired in order to evaluate the merits and risks
inherent in purchasing and holding the Sellers' Shares, (v) is able to bear the
economic risks and lack of liquidity inherent in holding the Sellers' Shares,
and (vi) is an "accredited investor" as that term is defined in Rule 501(a) of
Regulation D under the Act.
SECTION 6. CERTAIN COVENANTS AND AGREEMENTS.
--------------------------------
(a) Corporate Names. From and after the Closing, Buyer shall possess,
---------------
to the exclusion of Sellers, all rights of the Company to the name: Xxxxxxxx
Furniture, Inc. and any variants or derivatives thereof, and Sellers shall have
no rights whatsoever to the use of any such names or any variant or derivative
of any such names in the conduct of any business.
(b) Nondisclosure. Sellers will not at any time after the date of
-------------
this Agreement divulge, furnish to or make accessible to anyone any knowledge or
information with respect to confidential or secret processes, inventions,
-18-
discoveries, improvements, formulae, plans, material, devices or ideas or know-
how, whether patentable or not, with respect to any proprietary aspects of the
business of the Company; provided, however, that nothing herein shall prohibit
-------- -------
Sellers from complying with any order or decree of any court of competent
jurisdiction or governmental authority, but Sellers will give Buyer timely
notice of the receipt of any such order or decree, and the foregoing provision
shall not apply to any information which is or becomes generally available to
the public through no breach of this Agreement.
(c) Litigation Proceeds. Buyer and Sellers agree that fifty percent
-------------------
(50%) of any proceeds received by the Company or any successor thereto with
respect to the resolution of the Xxxxx-Xxxxx Blow Pipe Co. litigation (whether
through settlement, judicial decision or otherwise) (such fifty-percent portion,
the "Sellers' Litigation Proceeds"), shall be payable to Sellers' Representative
on behalf of the Sellers. Upon receipt, the Sellers' Litigation Proceeds shall
be remitted promptly to Sellers' Representative and shall be paid net of (A) the
taxes payable by the Company with respect to the Sellers' Litigation Proceeds
and (B) fifty percent (50%) of the expenses relating to such litigation to the
extent that such expenses were (1) accrued on the books and records of the
Company on the date hereof and unpaid on the Closing Date or (2) reasonable
expenses relating to such litigation incurred by the Company after the Closing
Date; provided, that if the Sellers' Litigation Proceeds are received by the
--------
Company prior to Closing, the parties hereto will endeavor to cause the Sellers'
Litigation Proceeds to be paid or credited to Sellers in the manner most
efficient to all parties. The parties further agree that the Buyer shall have
the right, in its reasonable discretion, to control such litigation after, but
not before, the Closing Date. Any decision relating to the control of such
litigation made by Buyer after the Closing Date shall be presumed reasonable if
made in reliance upon written advice from Buyer's counsel.
(d) Access to Facilities; Due Diligence. Between the date hereof and
-----------------------------------
the Closing Date the Company shall (i) give to the Buyer and its authorized
representatives reasonable access to all properties, books, records, contracts
and other documents of the Company upon reasonable notice during normal business
hours (ii) furnish to Buyer all information with respect to the Company that
Buyer may reasonably request and (iii) with the prior consent of Sellers'
Representative and in the presence of a Seller if Sellers' Representative so
requests, allow Buyer to discuss matters relating to the Company with the
Company's customers, the outside auditors, attorneys and such other
representatives of the Company as are reasonably requested by Buyer.
(e) Conduct of the Business. Sellers shall, from the date hereof up
-----------------------
to and including the Closing Date, cause the Company to conduct its business
only in the ordinary course, consistent with past practice, and will not do, or
cause to be done, anything which is represented and warranted not to have been
done in this Agreement, except as otherwise expressly contemplated hereby. In
addition, Sellers will, from and after the date hereof up to and including the
Closing Date, use all reasonable efforts to cause the Company to: (a) maintain
in full force and effect the insurance policies set forth on Schedule 4(i)(v)
----------------
(or policies providing substantially the same coverage, copies of which will be
made available to Buyer); (b) take such action as may reasonably be necessary to
preserve the assets and properties wherever located, which are material to the
Company; (c) maintain its books and records in accordance with accounting
principles and in the manner consistent with past practices; (d) maintain the
assets of the Company in substantially the same state of repair, order and
-19-
condition as on the date hereof, reasonable wear and tear or loss by insured
casualty excepted; (e) maintain in full force and effect all material Permits
and perform in all material respects all obligations under material contracts;
(f) not permit (to the extent within the control of the Sellers) to occur any
event which would reasonably likely have a Material Adverse Effect; and (g) not
take any action that would prevent Sellers from consummating the transactions
contemplated by this Agreement.
(f) Changes in Representations and Warranties. Between the date of
-----------------------------------------
this Agreement and the Closing Date, Sellers will not knowingly, and Sellers
shall not knowingly permit the Company to, enter into any transaction, take any
action, or by inaction permit an event to occur, which would result in any of
the representations and warranties of Sellers herein contained not being true
and correct in any material respect at and as of (i) the time immediately
following the occurrence of such transaction or event or (ii) the Closing Date.
Each party hereto agrees that, with respect to the representations and
warranties of such party contained in this Agreement, such party shall have the
right, until the Closing Date, to supplement or amend promptly the Schedules
hereto with respect to any matter hereafter arising or discovered which, if
existing or known at the date of this Agreement, would have been required to be
set forth or described on the Schedules and such supplement or amendment shall
be deemed to be part of the Schedules as of the date hereof. Notwithstanding the
foregoing sentence, if any amendment or supplement to a Schedule that
constitutes or reflects an event or occurrence that Buyer determines would have
a Material Adverse Effect, Buyer shall have the right to terminate this
Agreement pursuant to Section 15 hereof.
(g) Mutual Cooperation. The parties hereto will cooperate with each
------------------
other, and will use all reasonable efforts to cause the fulfillment of the
conditions to the parties' obligations hereunder and to obtain as promptly as
possible all material consents, authorizations, orders or approvals from each
and every third party, whether private or governmental, required in connection
with the transactions contemplated by this Agreement.
(h) Assumption/Payment of Liabilities. Buyer shall pay in full at
---------------------------------
Closing the liabilities of the Company listed on Exhibit II hereto, and which
----------
payments shall not be deemed hereunder a condition precedent to Closing but a
condition to be performed simultaneously at Closing.
(i) Tax Matters. Following the Closing the parties shall cooperate
-----------
with each other to the extent reasonably necessary in the preparation and filing
of each parties' income tax returns as they relate to the business. In
connection therewith, each party shall, at the other's expense, make available
to the other such personnel as shall be reasonably requested (so as not to
unreasonably interfere with any party's business) to aid in the preparation of
such tax returns. To the extent applicable, the parties hereto agree to provide
reasonable cooperation to each other to assist the Buyer, at no out-of-pocket
cost or expense to the Sellers, in preserving the net operating loss carry-
forwards of the Company.
(j) No Mergers, Consolidations, Sales of Assets, Etc. Until the
------------------------------------------------
earlier of the termination of this Agreement pursuant to Section 15 hereof or
-20-
the later of (x) April 30 1998, or (y) if the United States Department of
Justice or the Federal Trade Commission shall have made a second request for
additional information with respect to the transactions contemplated hereby,
thirty (30) days after the date of such second additional request, neither the
Sellers nor the Company shall, and shall not permit their representatives to,
directly or indirectly, initiate, solicit, negotiate with, encourage discussions
with, provide information to, or agree to a transaction with, any corporation,
partnership, Person or other entity or group concerning any merger or any sale
of the Company's assets (other than in the ordinary course of the business of
the Company consistent with past practice), sale of shares of capital stock (or
securities convertible or exchangeable into or otherwise evidencing, or any
agreement or instrument evidencing, the right to acquire capital stock) or
similar transaction involving the Company. Sellers and the Company will give
Buyer prompt notice of any such solicitation, inquiry or proposal.
(k) Xxxx-Xxxxx-Xxxxxx Act. On or prior to the date of this Agreement,
---------------------
Buyer and Sellers have made their respective filings under the H-S-R Act with
respect to the transactions contemplated by this Agreement, and shall make any
other required submissions in connection therewith. Each party shall use its
reasonable best efforts to obtain early termination of the waiting period under
the H-S-R Act for the transactions contemplated by this Agreement.
(l) Further Assurances. Sellers will, and will cause the Company and
------------------
all Company Personnel to, cooperate fully with Buyer in connection with the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, from and after the Closing Date, from time to time, at Buyer's
request and without further consideration, Sellers will execute and deliver, or
cause to be executed and delivered, at Buyer's sole cost and expense, such other
instruments and take such other action as Buyer may reasonably request in order
to carry out the purposes of this Agreement; provided that Sellers shall not be
required to make any payment, incur any expense or assume any obligation to any
third party in complying with this covenant.
(m) Dissolution; Qualification and Tax Returns. Sellers will use
------------------------------------------
their reasonable best efforts to cause the Company to complete, prior to the
Closing Date, the following: (A) dissolution of the Company's sole subsidiary,
Xxxxxxxx Furniture of Canada, Ltd. and (B) withdrawal of the Company from its
qualification to do business in Minnesota.
(n) Buyer's Completion of Environmental Due Diligence. Buyer agrees
-------------------------------------------------
to complete its environmental due diligence review by April 15, 1998 and to
promptly inform Sellers' Representative of the results thereof.
(o) Payoff of Cvijanovic Note. At or prior to the Closing, the
-------------------------
promissory note issued by Xxxxx Xxxxxxxxxx to the Company, dated March 20, 1998,
in the principal amount of thirty-one-thousand, five-hundred seventy-nine
dollars ($31,579) shall have been paid in full.
(p) Assistance With Stationary Source Permit. Sellers agree that, for
----------------------------------------
a reasonable period of time after the Closing Date (which period shall be no
less than 60 days, but not more than 180 days), they will use their reasonable
efforts to assist Buyer in obtaining an elimination of certain limits contained
in the Company's Stationary Source Permit, Registration No. 11081, as and to the
-21-
extent permitted by applicable law. Notwithstanding the foregoing, Sellers
shall not be required to make any payment, incur any expense, execute any
certification, commence, participate in or defend any administrative or judicial
proceedings, or assume any obligation to any third party in complying with this
covenant.
(q) Additional Matter. Sellers agree to use their reasonable best
-----------------
efforts to provide to Buyer, prior to the Closing Date: (i) additional
information regarding the resolution of the litigations listed as items (1) and
(2) on Schedule 2.1.10 to the XXXX Agreement and (ii) the insurance policies
issued by Xxxxxx National Insurance Cos. relating to the binders attached as
Exhibit A and Exhibit B to Schedule 4(i)(v).
--------- --------- ----------------
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER.
----------------------------------
The obligations of Buyer to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment, or the waiver by Buyer,
on or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties True at the Closing Date. The
-------------------------------------------------------
representations and warranties of Sellers contained in this Agreement or in any
other document delivered by Sellers pursuant hereto shall be deemed to have been
made at and as of the Closing Date and shall then be true and correct in all
material respects and on the Closing Date, the Sellers' Representative shall
have delivered to Buyer an officer's certificate to such effect.
(b) Sellers' Performance. Each of the obligations of Sellers to be
--------------------
performed on or before the Closing Date, pursuant to the terms of this
Agreement, shall have been duly performed in all material respects, individually
or in the aggregate, by the Closing Date, and on the Closing Date the Sellers'
Representative shall have delivered to Buyer an officer's certificate to such
effect. The Buyer shall have received from the Sellers copies of the Company's
1997 audited financial statements and such audited statements shall not reflect
a material adverse change in the financial position of the Company from the 1997
unaudited financial statements, previously delivered by Sellers to Buyer. In
addition, the Buyer shall have received from the Sellers a copy of the Company's
unaudited financial statements for the month and three months ended April 4,
1998, and said April 4, 1998 unaudited financial statement shall not evidence
any material adverse change in the financial condition of the Company from the
February 28, 1998 unaudited financial statements previously delivered to Buyer.
(c) Stock Certificates. On the Closing Date, Sellers' Representative
------------------
shall have delivered to Buyer a certificate or certificates evidencing the
Shares, free and clear of all Encumbrances of any nature whatsoever, duly
endorsed in blank for transfer or accompanied by stock powers duly executed in
blank and with all requisite documentary or stock transfer tax stamps affixed.
(d) Approvals and Consents. Sellers and the Company shall have
----------------------
obtained and shall have delivered to Buyer all requisite approvals and consents
from governmental or regulatory bodies or agencies required to be obtained by
-22-
the Seller or the Company, whether federal, state, local or foreign, or from any
other Person pursuant to material leases, mortgages, contracts, agreements,
permits or licenses necessary to be obtained for the performance of the
obligations hereunder.
(e) Buyer's Completion of Environmental Due Diligence. Buyer shall
-------------------------------------------------
have completed its environmental due diligence review of the Company and shall
have determined, to Buyer's reasonable satisfaction, no event with respect
thereto, would reasonably be expected to have a Material Adverse Effect;
provided, that, if the Buyer has not notified Sellers' Representative by April
-------- ----
15, 1998, that it does not intend to proceed with the sale based upon its
environmental due diligence findings, such condition shall be deemed waived by
the Buyer.
(f) Material Adverse Change. Since the date hereof, there shall not
-----------------------
have occurred any event or condition which has had a Material Adverse Effect.
(g) Litigation. No claim, action, suit, investigation or other
----------
proceeding shall be pending or threatened by any third party (including any
governmental agency) before any court or administrative agency which would
prevent the transactions provided for herein.
(h) No Change in Law. There shall not have been any action taken or
----------------
any statute enacted by any governmental authority which would (i) render the
parties unable to consummate the transactions contemplated herein, (ii) make the
transactions contemplated herein illegal or (iii) prohibit the consummation of
the transactions contemplated herein.
(i) Xxxx-Xxxxx-Xxxxxx Act. All applicable waiting periods under the
---------------------
H-S-R Act shall have expired or been terminated, and no action shall have been
taken or formal protest made by the United States Department of Justice, the
Federal Trade Commission or any other governmental authority or any other person
or entity to prohibit the transactions contemplated by this Agreement by reason
of a claimed violation of any antitrust laws.
(j) Escrow Agreement. Sellers and the Escrow Agent shall have
----------------
executed and delivered to Buyer the Escrow Agreement.
(k) Resignations. As of the Closing Date, directors and officers who
------------
will not remain with the Company following the Closing Date (if any), or any
directors and officers so requested by the Buyer, shall have resigned as
directors, officers and employees of the Company.
SECTION 8. CONDITIONS TO OBLIGATIONS OF SELLERS.
------------------------------------
The obligations of Seller to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment, or the waiver by Sellers,
on or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties True at the Closing Date. The
-------------------------------------------------------
representations and warranties of Buyer contained in this Agreement or in any
other document delivered by Buyer pursuant hereto shall be deemed to have been
-23-
made at and as of the Closing Date and shall then be true and correct in all
material respects, and on the Closing Date, Buyer shall have delivered to
Sellers' Representative an officer's certificate to such effect.
(b) Buyer's Performance. Each of the obligations of Buyer to be
-------------------
performed on or before the Closing Date, pursuant to the terms of this
Agreement, shall have been duly performed in all material respects and, on the
Closing Date, Buyer shall have delivered to Sellers' Representative an officer's
certificate to such effect.
(c) Approvals and Consents. Buyer shall have obtained and shall have
----------------------
delivered to Seller all requisite approvals and consents required to be obtained
by Buyer from third parties and governmental or regulatory bodies or agencies,
whether federal, state, local or foreign, necessary to be obtained for the
performance of the obligations hereunder.
(d) Litigation. No claim, action, suit, investigation or other
----------
proceeding shall be pending or threatened by any third party (including any
governmental agency) before any court or administrative agency which would
prevent the transactions provided for herein.
(e) No Change in Law. There shall not have been any action taken or
----------------
any statute enacted by any governmental authority which would (i) render the
parties unable to consummate the transactions contemplated herein, (ii) make the
transactions contemplated herein illegal or (iii) prohibit the consummation of
the transactions contemplated herein.
(f) Xxxx-Xxxxx-Xxxxxx Act. All applicable waiting periods under the
---------------------
H-S-R Act shall have expired or been terminated, and no action shall have been
taken or formal protest made by the United States Department of Justice, the
Federal Trade Commission or any other governmental authority or any other person
or entity to prohibit the transactions contemplated by this Agreement by reason
of a claimed violation of any antitrust laws.
(g) Escrow Agreement. Buyer and the Escrow Agent shall have executed
----------------
and delivered to the Sellers' Representative the Escrow Agreement.
(h) Assumption/Payment of Liabilities. Buyer shall pay in full,
---------------------------------
simultaneously with the Closing, the liabilities of the Company listed on
Exhibit II hereto.
----------
SECTION 9. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
------------------------------------------------------
INDEMNIFICATION, ETC.
--------------------
(a) Survival of Representations, Warranties, Etc. All representations
--------------------------------------------
and warranties of the parties made in this Agreement or as provided herein shall
survive for eighteen (18) months following the Closing Date (the applicable
"Survival Period"). All representations and warranties related to any claim
asserted in writing prior to the expiration of the applicable Survival Period
shall survive until such claim shall be resolved and payment in respect thereof,
if any is owing, shall be made.
-24-
(b) Nature of Sellers' Liability. Each Seller shall be liable to
----------------------------
Buyer under Section 3 hereof only for a breach by such Seller of such Seller's
representations or warranties contained therein, and shall be liable only for
the nonfulfillment by such Seller of such Seller's agreements, covenants and
obligations hereunder. With respect to all other representations and warranties
made by Sellers in Section 4 hereof, the liabilities of Sellers shall be,
subject to Section 9(d) below, joint and several.
(c) Sellers' Agreement to Indemnify. Subject to the limitations on
-------------------------------
liability set forth in Section 9(b) above and 9(d) below, each Seller shall, in
accordance with the terms hereof, fully indemnify and hold harmless Buyer, its
subsidiaries (including the Company) and all of their Affiliates, officers,
directors, employees, representatives and agents against and in respect of any
and all liabilities, losses, damages, deficiencies, penalties, fines, costs or
expenses (including, without limitation, the reasonable fees and expenses of
investigation and counsel) (collectively, "Losses") resulting from (A) any
misrepresentation or breach of warranty or the nonfulfillment of any agreement,
covenant or obligation by Sellers made in this Agreement and (B) any and all
actions, suits, proceedings, claims, demands, assessments, judgments incidental
to the foregoing or the enforcement of such indemnification.
(d) Limitation on Liability of Sellers.
----------------------------------
(i) Sellers shall not be subject to liability under 9(c) unless
and until any and all of Buyer's Losses exceed $100,000 in the aggregate
(in which case Sellers shall only be liable with respect to the excess over
$100,000). It is expressly understood that (A) Buyer's recourse against
Sellers is limited and Buyer may only seek recourse against the Sellers for
an amount equal to (1) the Escrowed Consideration plus (2) up to two
million dollars ($2,000,000) in excess of the Escrowed Consideration, (B)
the maximum liability of each Seller for breaches of representations,
warranties, covenants and agreements hereunder shall not exceed (x) such
Seller's allocable portion of the Escrowed Consideration held pursuant to
the Escrow Agreement, plus (y) that portion of the two million dollars
----
($2,000,000) which is pro rata with such Sellers ownership interest in the
Company, all as set forth on Annex I hereto (collectively, such Seller's
"Allocable Portion"), (C) Buyer shall have no recourse against any Seller
under this Agreement other than against such Seller's Allocable Portion,
(D) no Seller shall be liable for any amounts for consequential or punitive
damages, lost profits or business interruption and (E) any claims by Buyer
against Sellers must first be made against the Escrowed Consideration. Any
payments required to be made pursuant to this Section 9 shall be made by
the Escrow Agent in accordance with the Escrow Agreement.
(ii) Buyer shall not be entitled to recover indemnification
amounts under Section 9(c) hereof (A) unless Buyer promptly asserts its
claim by written notice to Sellers' Representative (provided, that failure
--------
of Buyer to give such notice shall not relieve any Seller from any
liability which it may have on account of this indemnification, except to
the extent that such Seller is materially prejudiced thereby) specifying
briefly the details of the alleged misrepresentation or breach, (B) with
respect to a misrepresentation or breach of warranty or covenant or
agreement by or of a Seller which is contained herein if, at or before the
-25-
time of Closing, Buyer had knowledge of the misrepresentation or breach of
warranty or covenant or agreement, or (C) with respect to any other action
taken by Buyer subsequent to the Closing Date. Buyer further agrees that
in no event shall Buyer recover, after taking into consideration insurance
proceeds, if any, more than one hundred percent (100%) for any Loss
incurred and to take all reasonable steps, as may be required by law, to
mitigate the extent of any Loss.
(iii) The amount of any recovery by Buyer pursuant to Section 9(c)
shall be net of any federal, state and/or local income tax benefits inuring
to the Buyer as a result of the state of facts which entitled Buyer to
recover from Seller pursuant to Section 9(c).
(e) Buyer's Agreement to Indemnify. Buyer shall, in accordance with
------------------------------
the terms hereof, fully indemnify and hold harmless Sellers, and if applicable,
their respective subsidiaries and all of their Affiliates, officers, directors
employees, representatives and agents against and in respect of any and all of
Sellers' Losses (i) resulting from any misrepresentation or breach of warranty
or the nonfulfillment of any agreement, covenant or obligation by Buyer made in
this Agreement and (ii) arising out of the ownership, operation or conduct of
the business of the Company or its subsidiaries from and after the Closing Date,
except to the extent Buyer is entitled to be indemnified by Sellers hereunder
with respect to any such Loss; provided, however, that the amount of any said
--------
indemnification by Buyer hereunder shall be limited as follows: Buyer shall not
be subject to liability under this Section 9(e) unless and until any and all of
Sellers' Losses exceed $100,000 in the aggregate (in which case Buyer shall only
be liable with respect to the excess over $100,000). It is expressly understood
that Sellers' recourse against Buyer is limited and Sellers may only seek
recourse against the Buyer for an amount equal to three million dollars
($3,000,000). Sellers shall not be entitled to recover indemnification amounts
under Section 9(e) hereof (A) unless any Seller promptly asserts such claims by
written notice to Buyer (provided, that failure of such Seller to give such
notice shall not relieve the Buyer from any liability which it may have on
account of this indemnification, except to the extent that the Buyer is
materially prejudiced thereby) specifying briefly the details of the alleged
misrepresentation or breach, (B) with respect to a misrepresentation or breach
of warranty or covenant or agreement by or of the Buyer which is contained
herein if, at or before the time of Closing, any Seller had knowledge of the
misrepresentation or breach of warranty or covenant or agreement , (C) to the
extent a Loss for which indemnification is requested results from any oral or
written agreement entered into by the Company prior to the Closing Date, which
(1) relates to the period after the Closing Date, (2) was not disclosed to Buyer
and (3) was known to Sellers on the date hereof to have constituted a breach of
the representations and warranties hereunder without regard to materiality.
Sellers further agree that in no event shall Sellers recover in the aggregate
after taking into consideration insurance proceeds, if any, more than one
hundred percent (100%) for any Loss incurred and to take all reasonable steps,
as may be required by law, to mitigate the extent of any Loss. The amount of
any recovery by Sellers pursuant to Section 9(e) shall be net of an federal,
state, local and/or other income tax benefits inuring to the Sellers as a result
of the state of facts which entitled Sellers to recover from Buyer pursuant to
Section 9(e).
(f) Third Party Claims. Any person entitled to indemnification
------------------
hereunder shall (i) give prompt notice to the indemnifying party of any third
-26-
party claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, that any person entitled to
--------
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person. If such defense is not assumed
by the indemnifying party, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but such consent will not
be unreasonably withheld). An indemnifying party who elects not to assume the
defense of a claim shall be obligated to pay the reasonable fees and expenses of
counsel, however such party shall not be obligated to pay the fees and expenses
of more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim. No indemnifying party shall, except with the
consent for each indemnified party, consent to any settlement of a claim which
does not include as an unconditional term thereof the giving by the claiming
third party to each indemnified party a release of all liability in respect of
such claim.
(g) Exclusive Remedy. The indemnification provided for in this
----------------
Section 9 shall be the exclusive remedy in any action seeking damages or any
other form of monetary relief brought by any party to this Agreement against
another party, provided that nothing herein shall be construed to limit the
right of a party, in a proper case, to seek injunctive relief for a breach of
this Agreement.
SECTION 10. PAYMENT OF CERTAIN EXPENSES.
---------------------------
Except as expressly set forth herein, Buyer will pay all federal,
state, county and local Taxes (including, without limitation, any requisite
transfer taxes) which may be payable by Buyer or the Company by reason of the
consummation of the purchase and sale of the Shares, provided, however, that
Sellers shall be responsible for any income or other Taxes which may be payable
by the Sellers with respect to the sale of the Shares by the Sellers. Sellers
specifically acknowledges that Sellers shall be responsible for any transaction
consulting fee payable to Gefinor (USA) Inc. with respect to the transactions
contemplated herein. Subject to the foregoing, Sellers, on the one hand, and
Buyer, on the other hand, will be liable for their own costs and expenses,
including legal fees, in connection with this Agreement and the transactions
contemplated hereby.
SECTION 11. WAIVER.
------
Any of the terms or conditions of this Agreement may be waived at any
time and from time to time in writing by the party entitled to the benefits
thereof without affecting any other terms or conditions of this Agreement.
SECTION 12. NOTICES, ETC.
------------
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given, if delivered in
person or by courier, telegraphed, telexed or by facsimile transmission or three
days after being mailed by certified or registered mail, postage prepaid:
-27-
if to Sellers:
Gefinor Acquisition Partners
000 Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: 000-000-0000
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: 000-000-0000
if to Buyer:
Xxxx Industries, Inc.
Xxx Xxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx, Senior Vice President
Facsimile: 000-000-0000
with a copy to:
Akerman, Senterfitt & Xxxxxx, P.A.
SunTrust International Center
00xx Xxxxx
Xxx X.X. 0xx Xxxxxx
Xxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile: 305-374-5095
Any party may, by written notice to the other, change the address to
which notices to such party are to be delivered or mailed.
SECTION 13. ENTIRE AGREEMENT; AMENDMENT.
---------------------------
This Agreement and the other agreements referred to herein and entered
into in connection herewith set forth the entire agreement and understanding of
the parties in respect of the transactions contemplated hereby and supersede all
-28-
prior agreements, arrangements and understandings relating to the subject matter
hereof including all such agreements, arrangements and understandings between
the Sellers and the Company. No representation, promise, inducement or
statement of intention has been made by Sellers or Buyer which is not embodied
in this Agreement or the other agreements referred to herein and entered into in
connection herewith, the Schedules, Annexes or Exhibits hereto, or the written
statements, certificates or other documents delivered pursuant hereto, and
neither Sellers nor Buyer shall be bound by or liable for any alleged
representation, promise, inducement or statement of intention not so set forth.
This Agreement may be amended or modified only by a written instrument executed
by Buyer and Sellers or by their successors and assigns.
SECTION 14. PRESS RELEASES .
--------------
Neither Sellers, on the one hand, nor Buyer, on the other hand, shall
issue any press releases or make any public announcements of any of the
transactions contemplated by this Agreement except as may be mutually agreed to
in writing by both Sellers and Buyer; provided, however, that notwithstanding
-------- -------
the foregoing, Sellers and Buyer shall be permitted, upon prior notice to the
other party, to make such disclosures to the public or governmental authorities
or shareholders of Buyer or the Securities and Exchange Commission and/or the
New York Stock Exchange to maintain compliance with, or to prevent violation of,
applicable laws or regulations, including the Act, the Securities Exchange Act
of 1934, as amended, and those of the New York Stock Exchange.
SECTION 15. TERMINATION.
-----------
(a) Events of Termination. This Agreement and the transactions
---------------------
contemplated hereby may be terminated at any time prior to Closing by written
notice delivered by Seller to Buyer or by Buyer to Seller, as the case may be,
in the following instances:
(i) By Buyer if there has been a misrepresentation, a breach of
warranty or a material failure to comply on the part of the Sellers with
respect to any of the representations, warranties, covenants or provisions
set forth herein (or delivered in any other document pursuant hereto), and
such misrepresentation, breach or failure to comply has or may reasonably
be expected to have a Material Adverse Effect and has not been cured, if
capable of cure, in full within twenty (20) days of receipt by Sellers of
notice from Buyer.
(ii) By Sellers if there has been a material misrepresentation, a
material breach of warranty or a material failure to comply with any
covenant on the part of Buyer with respect to the representations,
warranties or covenants set forth herein (or delivered in any other
document pursuant hereto) and such material misrepresentation, material
breach or material failure to comply has not been cured, if capable of
cure, within twenty (20) days of receipt by Buyer of notice from Sellers.
(iii) At any time prior to Closing by the mutual consent in
writing of Sellers and Buyer.
-29-
(iv) By Buyer in accordance with Section 6(f) hereof; provided,
--------
that Buyer shall have given Sellers a reasonable opportunity to cure which
time period shall not be less than 30 days.
(b) Liability in the Event of Termination; Remedies.
-----------------------------------------------
(i) In the event of termination of this Agreement and the
transactions contemplated hereby pursuant to Sections 15(a)(i) or (ii)
hereof, if there has been an intentional material misrepresentation of any
of the items provided therein, the non-breaching party may avail itself of
all rights, power and remedies now or hereafter existing at law or in
equity or by statute or otherwise. It is specifically agreed among the
parties that a termination under 15(a)(iv) above shall not preclude
effecting a termination for the same reason under Section 15(a)(i) or (ii)
above as well.
(ii) In the event of termination of this Agreement and the
transactions contemplated hereby pursuant to Sections 15(a)(i) or (ii), if
there has not been an intentional material misrepresentation, or pursuant
to Sections 15(a)(iii) or (iv) hereof this Agreement shall, with the
exception of Sections 10 and 14 hereof, become void and have no further
effect, without any liability on the part of any party hereto.
SECTION 16. GENERAL.
-------
This Agreement: (i) shall be performable in and construed and
enforced in accordance with the laws of the State of New York, without giving
effect to the choice of law principles thereof; (ii) shall inure to the benefit
of and be binding upon the heirs, legal representatives, successors and assigns
of Sellers and the successors and assigns of Buyer, nothing in this Agreement,
expressed or implied, being intended to confer upon any other Person any right
or remedies hereunder, other than a successor of Sellers or Buyer; and (iii) may
be executed in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
The Section and other headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
SECTION 17. SEVERABILITY.
------------
To the extent that any provision of this Agreement shall be invalid or
unenforceable, it shall be considered deleted herefrom and the remainder of such
provision and of this Agreement shall be unaffected and shall continue in full
force and effect. In furtherance and not in limitation of the foregoing, if any
provision, term, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void, unenforceable or
against its regulatory policy, then such provision, term, covenant or
restriction shall be construed to cover only that duration, extent or activities
which may be validly and enforceably covered and the remainder of the
provisions, terms, covenants and restrictions contained herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
-30-
SECTION 18. KNOWLEDGE.
---------
For purposes of this Agreement, "knowledge" shall mean the actual
knowledge of the senior management of the relevant party (or in the case of an
individual, such individual) of an event or circumstance; it being the intention
of the parties hereto that constructive knowledge by virtue of the mere
possession of documentation delivered, held or obtained by such party or its
agents prior to Closing shall not constitute knowledge on the part of such
party. For the purposes hereof, the "senior management" of Sellers shall mean
those individuals set forth on Schedule 18 hereto.
-----------
-31-
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
the day and year first above written.
BUYER:
XXXX INDUSTRIES, INC.
By: /s/ X.X. Xxxxxxx, Senior Vice President
----------------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
SELLERS:
THE KAIZEN BREAKTHROUGH PARTNERSHIP, L.P.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Principal, Gefinor Acquisition Partners
Managing Partner
GEFINOR (USA) INC. (as a Seller and as Sellers' Agent)
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
TBM CAPITAL, L.L.C. (F/K/A TBM CAPITAL, INC.)
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Member
-00-
XXX XXXXXXXX XXXXXXXXXX XX. XXX
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Attorney-in-Fact
ABDULKADIR AL-MUHAIDIB & SONS
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Attorney-in-Fact
/s/ Xxxxx Xxxxxxxxxx
----------------------------------------------------
Xxxxx Xxxxxxxxxx
-33-
