STOCK PURCHASE AGREEMENT Dated June 17, 2007 by and among JOHN J. BOGAN, TRUSTEE OF THE JOHN BOGAN SEPARATE PROPERTY TRUST DATED OCTOBER 5, 1999, WILLIAM A. HUSTON, and with respect to all of the outstanding capital stock of D3 TECHNOLOGIES INC.
Exhibit
2.1
Dated
June 17, 2007
by
and among
XXXX
X. XXXXX, TRUSTEE OF THE XXXX XXXXX
SEPARATE
PROPERTY TRUST DATED OCTOBER 5, 1999,
XXXXXXX
X. XXXXXX,
and
LMI
AEROSPACE, INC.
with
respect to all of the
outstanding
capital stock of
D3
TECHNOLOGIES INC.
TABLE
OF CONTENTS
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Page
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ARTICLE
I SALE AND PURCHASE OF SHARES
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1
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1.1
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Sale
and Purchase of Shares
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1
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1.2
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Purchase
Price; Escrow
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1
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1.3
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Adjustment
to Purchase Price
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2
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ARTICLE
2 CLOSING
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2
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2.1
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Closing
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2
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2.2
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Closing
Deliveries
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2
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2.3
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Further
Assurances; Post-Closing Cooperation
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2
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ARTICLE
3 REPRESENTATIONS AND WARRANTIES OF SELLERS
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3
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3.1
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Organization;
Standing
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3
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3.2
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Authority
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3
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3.3
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Subsidiaries
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3
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3.4
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Capitalization
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3
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3.5
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No
Conflicts
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4
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3.6
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Governmental
Approvals and Filings
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4
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3.7
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Books
and Records
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5
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3.8
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Financial
Statements
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5
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3.9
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Taxes
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6
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3.10
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Material
Contracts
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7
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3.11
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Employees;
Labor and Employment Matters
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10
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3.12
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Benefit
Plans; ERISA
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11
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3.13
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Legal
Proceedings
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12
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3.14
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Compliance
with Laws
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12
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3.15
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Real
Property
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13
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3.16
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Tangible
Personal Property
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13
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3.17
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Proprietary
Rights
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13
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3.18
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Environmental
Matters
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14
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3.19
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Permits
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14
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3.20
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Insurance
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14
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3.21
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Brokers
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15
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3.22
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Accounts
Receivable
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15
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3.23
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No
Undisclosed Liabilities
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15
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3.24
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No
Material Adverse Change
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16
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3.25
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Absence
of Certain Changes and Events
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16
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3.26
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Certain
Payments
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17
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3.27
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Disclosure
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17
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3.28
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Relationships
With Related Persons
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17
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3.29
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Warranties
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18
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3.30
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Bank
Accounts
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18
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ARTICLE
4 REPRESENTATIONS AND WARRANTIES OF THE BUYER
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18
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4.1
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Organization;
Standing
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18
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4.2
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Authority
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18
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4.3
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No
Conflicts
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19
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4.4
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Governmental
Approvals and Filings
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19
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4.5
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Legal
Proceedings
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19
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4.6
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Purchase
for Investment
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19
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4.7
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Exon-Xxxxxx
Amendment
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19
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4.8
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Brokers
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20
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ARTICLE
5 COVENANTS
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20
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5.1
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Investigation
by Buyer
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20
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5.2
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Confidentiality
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20
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5.3
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Conduct
of Business
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20
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5.4
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Exclusivity
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21
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5.5
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Consents
and Approvals
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21
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5.6
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Employee
Matters
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22
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5.7
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Fulfillment
of Conditions
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23
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5.8
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Expenses
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23
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5.9
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Public
Announcements
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23
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5.10
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Payment
of Indebtedness; Release of Guarantees
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24
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5.11
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Indemnification
of Directors and Officers
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24
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5.12
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Issuance
of Restricted Stock by Buyer; Transaction Bonuses
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24
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5.13
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Income
Taxes
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25
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ARTICLE
6 CONDITIONS OF CLOSING
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25
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6.1
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Conditions
Precedent to the Obligations of Buyer
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25
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6.2
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Conditions
Precedent to the Obligations of Sellers
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27
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ARTICLE
7 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
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29
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7.1
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Survival
of Representations, Warranties and Covenants
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29
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7.2
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No
Other Representations
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29
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ARTICLE
8 INDEMNIFICATION
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30
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8.1
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Obligation
to Indemnify
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30
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8.2
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Indemnification
Claims
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31
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8.3
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Third-Party
Claim Procedures
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32
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8.4
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Escrow
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33
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8.5
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Exclusive
Remedy
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34
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ARTICLE
9 TERMINATION
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34
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9.1
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Termination
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34
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9.2
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Effect
of Termination
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35
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ARTICLE
10 DEFINITIONS
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35
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ARTICLE
11 MISCELLANEOUS
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39
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11.1
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Notices
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39
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11.2
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Entire
Agreement
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40
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11.3
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Governing
Law
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41
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11.4
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Counterparts
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41
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11.5
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Binding
Effect: Assignment
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41
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11.6
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Waivers
and Amendments; Preservation of Remedies
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41
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11.7
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Severability
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41
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11.8
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Attorneys’
Fees
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42
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11.9
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Arbitration
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42
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11.10
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Mutual
Drafting
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42
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11.11
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No
Third Party Beneficiaries
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42
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11.12
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Headings
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42
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1113
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Time
of Essence
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43
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EXHIBIT
A Shares
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1
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EXHIBIT
B Form of Escrow Agreement
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2
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EXHIBIT
C Form of Sellers Noncompetition Agreement
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3
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EXHIBIT
D Form of Sellers’ Release
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4
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EXHIBIT
E Indemnification Events
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5
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EXHIBIT
F Form of Opinion of Xxxxxxxx, Xxxx, Xxxxxxxxxx & Xxxxxxx
LLP
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6
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EXHIBIT
G Form of Opinion of Gallop, Xxxxxxx & Xxxxxx, X.X.
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7
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THIS
STOCK PURCHASE AGREEMENT (“Agreement”), dated June 17, 2007 (“Effective Date”),
is entered into by and among XXXX X. XXXXX, TRUSTEE OF THE XXXX XXXXX SEPARATE
PROPERTY TRUST DATED OCTOBER 5, 1999 (“Xxxxx”), XXXXXXX X. XXXXXX, an
individual (“Xxxxxx” and together with Xxxxx the “Sellers”), and LMI AEROSPACE,
INC., a Missouri corporation (“Buyer”). Capitalized terms used and not otherwise
defined in this Agreement shall have the respective meanings given to such
terms
in Article 10.
A. Sellers
collectively own 25,000 shares of common stock, no par value per share, of
D3
Technologies Inc., a California corporation (the “Company”), constituting all of
the issued and outstanding shares of capital stock of the Company (the
“Shares”). The number of shares held by each Seller is set forth opposite such
Seller’s name on Exhibit
X.
X. Xxxxxxx
desire to sell, and Buyer desires to purchase, all of the Shares on the terms
and subject to the conditions set forth in this Agreement.
ARTICLE
1
SALE
AND PURCHASE OF SHARES
1.1 Sale
and Purchase of Shares
Sellers
agree to sell and transfer to Buyer, and Buyer agrees to purchase from Sellers,
at the Closing, all of the Shares on the terms and subject to the conditions
set
forth in this Agreement.
1.2 Purchase
Price;
Escrow
The
aggregate purchase price for the Shares, and for the covenants of Sellers
contained in Seller Noncompetition Agreements required to be executed by the
Sellers under the terms of this Agreement, shall be Sixty-Five Million Dollars
($65,000,000), subject to adjustment in accordance with Section 1.3 (the
“Purchase Price”), payable in immediately available United States funds at the
Closing. At the Closing, Buyer shall (a) pay $58,500,000 of the Purchase Price
(the “Closing Cash Payment”) by wire transfer of immediately available funds to
an account or accounts (and, if more than one account, in such proportions)
designated in writing by Sellers at least one (1) business day prior to the
Closing Date and (b) deliver the remainder of the Purchase Price ($6,500,000)
(“Escrow Cash”) by wire transfer of immediately available funds to an account
specified by Xxxxx Fargo Bank, National Association, as escrow agent (“Escrow
Agent”), to be held and administered in accordance with an Escrow Agreement, in
substantially the form attached hereto as Exhibit
B
(“Escrow
Agreement”), to be entered into on or prior to the Closing Date by Sellers,
Buyer and the Escrow Agent.
1.3 Adjustment
to Purchase Price
(a) At
the
Closing, the Sellers shall cause the Company to deliver evidence, reasonably
satisfactory to the Buyer, of the aggregate cash balances, including cash
equivalents, of the Company in the Company’s bank accounts identified on
Schedule 3.30 (the “Cash Balance”) together with evidence, reasonably
satisfactory to the Buyer, that no cash distributions have been made or bonuses
paid by the Company to the Sellers since the Balance Sheet Date (as defined
in
Section 3.8) (the “2007 Interim Distributions”).
(b) At
the
Closing, the Sellers shall cause the Company to distribute to the Sellers,
pro
rata in accordance with their ownership of the Shares, an amount equal to the
Maximum Distribution Amount. For purposes of this Section 1.1 the “Maximum
Distribution Amount” is One Million Two Hundred Thousand Dollars
($1,200,000).
ARTICLE
2
CLOSING
2.1 Closing
The
closing of the transactions contemplated by this Agreement (the “Closing”) shall
take place by exchange of documents via electronic transmission, Federal
Express, or facsimile, at 10:00 A.M. P.D.T. July 31, 2007, or at such other
time
or date or at such physical location as the parties may mutually agree to in
writing (“Closing Date”).
2.2 Closing
Deliveries
At
the
Closing, Buyer shall deliver the Closing Cash Payment to Sellers and the Escrow
Cash to the Escrow Agent, in accordance with Section 1.2. Simultaneously,
Sellers shall assign and transfer to Buyer all of Sellers’ right, title and
interest in and to the Shares by delivering to Buyer the original certificates
representing the Shares (the “Share Certificates”), in genuine and unaltered
form, duly endorsed in blank or accompanied by duly executed stock powers
endorsed in blank (“Stock Assignments”). At the Closing, there shall also be
delivered to Sellers and Buyer the other agreements, instruments, certificates
and other documents listed in Sections 6.1 and 6.2.
2.3 Further
Assurances; Post-Closing Cooperation
(a) Subject
to the terms and conditions of this Agreement, at any time or from time to
time
after the Closing, each of the parties shall execute and deliver such other
documents and instruments, provide such materials and information and take
such
other actions as may reasonably be necessary, proper or advisable, to the extent
permitted by applicable law, to fulfill its obligations under this Agreement
and
the other Transaction Documents to which it is a party.
(b) Following
the Closing, if, in order properly to prepare its Tax Returns, it is necessary
that Sellers be furnished with additional information, documents or records
relating to the business or condition of the Company prior to the Closing Date,
Buyer agrees to use its best efforts to furnish or make available such
information, documents or records (or copies thereof) at the Sellers’ request,
cost and expense.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES
OF
SELLERS
Except
as
otherwise set forth in the Disclosure Schedules delivered to Buyer
contemporaneously with the execution and delivery of this Agreement, Sellers,
jointly and severally, hereby represent and warrant to Buyer as
follows:
3.1 Organization;
Standing
The
Company is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of California. The Company has all
necessary power and authority to carry on its business as it is now conducted
and to own and use its properties and assets in connection therewith. The
Company is duly qualified as a foreign corporation and is in good standing
in
each jurisdiction where the character of its properties owned or leased or
the
nature of its activities make such qualification necessary, except for those
jurisdictions in which the failure to be so qualified would not reasonably
be
expected to have a material adverse effect on the Company. Schedule
3.1
sets
forth a complete and accurate list of each jurisdiction in which the Company
is
authorized to do business. Sellers have prior to the execution of this Agreement
delivered to Buyer true and complete copies of the Articles of Incorporation
and
Bylaws of the Company as in effect on the Effective Date, and a list of the
current officers and directors of the Company.
3.2 Authority
Each
of
the Sellers has the full legal capacity, absolute and unrestricted right, power
and authority to execute and deliver this Agreement and each of the other
Transaction Documents to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby, including without limitation to own, hold, sell and transfer
(pursuant to this Agreement) the Shares. Each of the Sellers has duly and
validly executed and delivered this Agreement and each of the other Transaction
Documents to which it is a party, and this Agreement and such other Transaction
Documents constitute the legal, valid and binding obligations of such Seller
enforceable against such Seller in accordance with their terms.
3.3 Subsidiaries
The
Company does not have any subsidiaries or any other equity investment in any
entity, nor does it own any securities with respect to any entity.
3.4 Capitalization
The
authorized capital stock of the Company consists solely of 25,000 shares of
stock, no par value per share, all of which are issued and outstanding and
held
by Sellers as set forth on Schedule
3.4.
The
Shares are owned beneficially and of record by Sellers, free and clear of all
Liens, other than restrictions on transfer imposed by applicable federal and
state securities Laws. None of the Shares was issued in violation of the
Securities Act or any other applicable federal or state securities Laws or
other
legal requirements. The Shares are duly authorized, validly issued, fully paid
and nonassessable. There are no existing options, warrants, calls, preemptive
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character (including without limitation any rights of first refusal)
relating to the issued or unissued capital stock of the Company or securities
convertible into or exchangeable for such shares or equity interests or
obligations of the Company to grant or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment, nor
are
there any other understandings relating to the issuance, sale or transfer of
the
Shares or any other securities of the Company. The delivery of the Share
Certificates, duly endorsed or accompanied by duly executed Stock Assignments,
as provided in Section 2.2 will transfer to the Buyer good and marketable title
to the Shares, free and clear all Liens, other than restrictions on transfer
imposed by applicable federal and state securities Laws.
3.5 No
Conflicts
The
execution, delivery and performance by each of Sellers of this Agreement and
each of the other Transaction Documents to which it is a party does not and
will
not: (i) contravene, violate or conflict with the Articles of Incorporation
or
Bylaws of the Company or any resolution adopted by or consent of the board
of
directors or stockholders of the Company; (ii) contravene, conflict with or
violate, result in a breach of, or cause a default under (with or without notice
or lapse of time) (A) any provision of any federal, state or local law, rule
or
regulation or other permit or authorization of any Governmental Authority
applicable to such Seller or the Company, (B) any provision of any order,
arbitration award, judgment, settlement or decree to which such Seller or the
Company is subject, (C) except as set forth on Schedule
3.5,
any
provision of any material agreement or instrument to which such Seller or the
Company is subject, which conflict, violation, breach or default in each of
clauses (A), (B) and (C) above would prohibit or restrict the consummation
of
the transactions contemplated by this Agreement or, individually or in the
aggregate, have a material adverse effect on the business, financial condition
or results of operations of the Company; (iii) except as set forth on
Schedule
3.5,
give
any third party the right to declare a default or exercise any remedy under,
or
to accelerate the maturity or performance of, or to cancel, terminate or modify,
any material agreement or instrument to which the Company is subject; (iv)
result in the imposition or creation of any Lien upon or with respect to any
of
the assets and properties of the Company; (v) cause any of the assets owned
by
the Company to be reassessed or revalued by any taxing authority or other
governmental body; or (vi) cause Buyer to become subject to, or to become liable
for the payment of, any tax. Except as set forth on Schedule
3.5,
neither
of Sellers nor the Company is or will be required to give any notice to or
obtain any approval, consent, ratification, waiver, or other authorization
from
any Person in connection with the execution and delivery of this Agreement
or
the consummation or performance of any of the transactions contemplated by
this
Agreement.
3.6 Governmental
Approvals and Filings
Except
for any requisite approvals from the Federal Trade Commission and the Antitrust
Division of the Department of Justice under the HSR Act, no consent, approval
or
action of, filing with or notice to any Governmental Authority on the part
of
Sellers or the Company is required in connection with the execution, delivery
and performance of this Agreement or any other Transaction Document to which
it
is a party or the consummation of the transactions contemplated hereby or
thereby, except where the failure to obtain any such consent, approval or
action, to make any such filing or to give any such notice could not reasonably
be expected to adversely affect the ability of Sellers to consummate the
transactions contemplated by this Agreement or any other Transaction Document
or
to perform its obligations hereunder or thereunder.
3.7 Books
and Records
The
books
of account, minute books and other corporate records of the Company made
available to Buyer prior to the execution of this Agreement contain a true
and
complete record of all action taken at all meetings and by all written consents
in lieu of meetings of the stockholders, the board of directors and committees
of the board of directors of the Company. The stock transfer ledgers and other
stock records of the Company made available to Buyer prior to the execution
of
this Agreement accurately reflect all transfers of record of the Company’s
capital stock made prior to the execution of this Agreement. The books of
account, minute books, stock transfer books and other stock records and all
other corporate records of the Company have been maintained in accordance with
sound business practices and the requirements of Section 13(b)(2) of the
Securities Exchange Act of 1934, as amended (regardless of whether or not the
Company is subject to that Section), and the rules and regulations thereunder,
including the maintenance of an adequate system of internal
controls.
3.8 Financial
Statements
Prior
to
the execution of this Agreement, Sellers have delivered to Buyer true and
complete copies of (a) the audited balance sheet (the “Balance Sheet”) of the
Company as of December 31, 2006 (the “Balance Sheet Date”) and the related
audited statements of income, changes in stockholders’ equity and cash flow for
the fiscal year then ended (collectively, the “Current Year-End Financial
Statements”), together with the report thereon of the Company’s independent
certified public accountants, including the notes thereto; and (b) the unaudited
balance sheet (the “Interim Balance Sheet”) of the Company as of March 31, 2007
(the “Interim Balance Sheet Date”) and the related unaudited statements of
income for the portion of the fiscal year then ended (collectively, the “Interim
Financial Statements”). Prior to the Closing Date, Sellers shall deliver to
Buyer true and complete copies of the audited balance sheets of the Company
as
at December 31 in each of 2004 and 2005 and the related audited consolidated
statements of income, changes in stockholders’ equity and cash flow for each of
the fiscal years then ended, together with the reports thereon of the Company’s
independent certified public accountants (collectively, the “Prior Year End
Financial Statements,” and, together with the Current Year-End Financial
Statements, the “Financial Statements”), including in each case the notes
thereto. All of the Financial Statements were prepared in accordance with GAAP,
subject, in the case of Interim Financial Statements, to normal recurring
year-end adjustments (the effect of which will not, individually or in the
aggregate, be materially adverse) and the absence of notes (that, if presented,
would not differ materially from those included in the Balance Sheet), and
fairly present the financial condition and results of operations, changes in
stockholders’ equity and cash flow of the Company as of the respective dates and
for the periods referred to in the Financial Statements. The Financial
Statements reflect the consistent application of such accounting principles
throughout the periods involved. No financial statements of any other Person
are
required to be included in the Financial Statements of the Company. The Company
owns all the properties and assets (whether real, personal, or mixed and whether
tangible or intangible) reflected as owned in the books and records of the
Company, including all of the properties and assets reflected in the Current
Year-End Financial Statements and the Interim Financial Statements (except
for
assets held under capitalized leases disclosed on Schedule
3.10
and
personal property sold since the date of the Current Year-End Financial
Statements and the Interim Financial Statements, as the case may be, in the
Ordinary Course of Business), and all of the properties and assets purchased
or
otherwise acquired by the Company since the date of the Current Year-End
Financial Statements (except for personal property acquired and sold since
such
date in the Ordinary Course of Business and consistent with past
practice).
3.9 Taxes
(a) The
Company has filed (on a timely basis since 2004) all Tax Returns that are or
were required to be filed by the Company, pursuant to any law, rule or
regulation of any applicable Governmental Authority. Sellers have delivered
to
Buyer copies of, and Section 3.9 of the Disclosure Schedule contains a
complete and accurate list of, all such Tax Returns filed since January 1,
2003.
The Company has paid, or made provision for the payment of, all Taxes that
have
or may have become due pursuant to those Tax Returns, including any estimated
quarterly payments due under any estimated tax voucher, or otherwise, or
pursuant to any assessment received by Sellers or the Company, except such
Taxes, if any, as are listed in Schedule 3.9
and are
being contested in good faith and as to which adequate reserves (determined
in
accordance with GAAP) have been provided in the Balance Sheet and the Interim
Balance Sheet. All estimated payments have been made timely, pursuant to good
faith estimates and in accordance with the Company’s past practice.
(b) The
United States federal and state income Tax Returns of the Company subject to
such Taxes have been audited by the IRS or relevant state tax authorities or
are
closed by the applicable statute of limitations for all taxable years through
the year ended December 31, 2003. Schedule 3.9
contains
a complete and accurate list of all audits of all such Tax Returns, including
a
reasonably detailed description of the nature and outcome of each audit. All
deficiencies proposed as a result of such audits have been paid, reserved
against, settled, or, as described in Schedule 3.9,
are
being contested in good faith by appropriate proceedings. Schedule 3.9
describes all adjustments to the United States federal income Tax Returns filed
by the Company for all taxable years since the year ended December 31, 2002,
and
the resulting deficiencies proposed by the IRS. Except as described in
Schedule 3.9,
none of
the Sellers or the Company has given or been requested to give waivers or
extensions (or is or would be subject to a waiver or extension given by any
other Person) of any statute of limitations relating to the payment of Taxes
of
the Company or for which the Company may be liable.
(c) The
charges, accruals, and reserves with respect to Taxes on the books of the
Company are adequate (determined in accordance with GAAP) and are at least
equal
to the Company’s liability for Taxes. There exists no proposed tax assessment
against the Company except as disclosed in the Balance Sheet or in Schedule 3.9.
All
Taxes that the Company is or was required by any law, rule or regulation of
any
Governmental Authority to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper Governmental
Authority or other Person.
(d) All
Tax
Returns filed by (or that include on a consolidated basis) the Company are
true,
correct, and complete. There is no tax sharing agreement that will require
any
payment by the Company after the date of this Agreement. The Company is not,
nor
within the five-year period preceding the Closing Date has it been, an “S”
corporation.
3.10 Material
Contracts
(a) Schedule
3.10(a)
sets
forth a complete and accurate list, and Sellers have delivered or made available
to Buyer true and complete copies, of the following obligations and contracts
of
the Company, which are currently effective and outstanding (collectively, the
“Material Contracts”):
(i) all
contracts, commitments and agreements for the purchase of any materials,
supplies, services or other items that involve an expenditure by the Company
of
more than $250,000, for any single contract, commitment or agreement or series
of related contracts, commitments or agreements;
(ii) all
personal property leases under which the Company is either lessor or
lessee;
(iii) all
real
property leases under which the Company is either lessor or lessee;
(iv) all
agreements, mortgages, indentures and other instruments relating to indebtedness
for borrowed money to which the Company is a party or by which the Company
or
its assets and properties are bound;
(v) all
contracts, commitments and agreements (other than customer purchase orders)
that
involve the performance by the Company of services or the delivery by the
Company of goods, materials or other items;
(vi) a
general
description of all arrangements between the Company for the provision of
services or the delivery of goods pursuant to purchase orders where the purchase
orders are not issued pursuant to an agreement described in Section
3.10(v);
(vii) each
licensing agreement or other contract, commitment or agreement with respect
to
Intellectual Property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the non-disclosure
of
any of the Intellectual Property;
(viii) each
collective bargaining agreement and other contract, commitment or agreement
to
or with any labor union or other employee representative of a group of
employees;
(ix) each
joint venture, partnership, and other contract, commitment or agreement (however
named) involving a sharing of profits, losses, cost, or liabilities by the
Company with any other Person;
(x) each
contract, commitment or agreement containing covenants that in any way purport
to restrict the business activity of the Company or any affiliate the Company
or
limit the freedom of the Company or any affiliate of the Company to engage
in
any line of business or to compete with any Person;
(xi) each
contract, commitment or agreement providing for payments to or by any Person
where payment is based on sales, purchases, or profits, other than payment
for
direct payments for goods or services;
(xii) each
power of attorney;
(xiii) each
contract, commitment or agreement entered into other than in the Ordinary Course
of Business that contains or provides for an express undertaking by the Company
to be responsible for indirect, incidental or consequential
damages;
(xiv) each
contract, commitment or agreement entered into since July 31, 2003 that
contains or provides for an express undertaking by the Company to indemnify
any
party in connection with the provision of goods or services by the Company,
which indemnification would result in a material adverse effect on the
Company;
(xv) each
contract, commitment or agreement for capital expenditures in excess of
$50,000;
(xvi) each
written warranty, guaranty or other similar undertaking with respect to
contractual performance extended by the Company other than in the Ordinary
Course of Business;
(xvii) any
contract, commitment or agreement with any current or former officer, director
or employee to which the Company is or was a direct or indirect party or
pursuant to which the Company may receive any direct or indirect benefit;
and
(xviii) each
amendment, supplement and modification (whether oral or written) in respect
of
any of the foregoing.
Schedule
3.10(a)
sets
forth reasonably complete details concerning such Material Contracts such that
a
person using reasonable methods could identify the Material Contracts listed
on
the Disclosure Schedule to the copies of the Material Contracts delivered to
Buyer, including the parties to the Material Contracts, and sets forth the
amount, to the extent reasonably possible, of the remaining commitment of the
Company or Sellers under the Material Contracts and the Company’s office where
details relating to each such Material Contract is located.
(b) Except
as
set forth in Schedule
3.10(b):
(i) no
Seller
(and no Related Person or Affiliate of any Seller) has or may acquire any rights
under, and no Seller has or may become subject to any obligation or liability
under, any contract, commitment or agreement that relates to the business of,
or
any of the assets owned or used by, the Company; and
(ii) to
the
Knowledge of Sellers, no officer, director, agent, employee, consultant, or
contractor of the Company is bound by any contract, commitment or agreement
that
purports to limit the ability of such officer, director, agent, employee,
consultant, or contractor to (A) engage in or continue any conduct,
activity, or practice relating to the business of the Company, or
(B) assign to the Company or to any other Person any rights to any
invention, improvement, or discovery.
(c) Each
Material Contract is in full force and effect and is valid and enforceable
in
accordance with its terms.
(d) Except
as
set forth in Schedule
3.10(d):
(i) the
Company is, and at all times since December 31, 2003 has been, in full
compliance with all applicable terms and requirements of each contract,
commitment or agreement under which the Company has or had any obligation or
liability or by which the Company or any of the assets owned or used by the
Company is or was bound;
(ii) to
the
Knowledge of Sellers, each other Person that has or had any obligation or
liability under any contract, commitment or agreement under which the Company
has or had any rights is, and at all times since December 31, 2003 has been,
in
full compliance with all applicable terms and requirements of such contract,
commitment or agreement;
(iii) to
the
Knowledge of Sellers, no event has occurred or circumstance exists that (with
or
without notice or lapse of time) may contravene, conflict with, or result in
a
violation or breach of, or give the Company or other Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Material Contract;
and
(e) The
Company has not given to nor received from any other Person, at any time since
December 31, 2003, any notice or other communication (whether oral or written)
regarding any actual, alleged, possible, or potential violation or breach of,
or
default under, any Material Contract including the withholding of any payment
of
any material amount required to be made by such party thereunder.
(f) There
are
no renegotiations of, attempts to renegotiate or outstanding rights to
renegotiate any material amounts paid or payable to the Company under current
or
completed Material Contracts with any Person and no such Person has made written
demand for such renegotiation.
(g) The
Material Contracts relating to the sale, design, manufacture, or provision
of
products or services by the Company have been entered into in the Ordinary
Course of Business and have been entered into without the commission of any
act
alone or in concert with any other Person, or any consideration having been
paid
or promised, that is or would be in violation of any law, rule or regulation
of
any Governmental Authority.
(h) Other
than as set forth on Schedule
3.10
no
Material Contract contains any provision that would require any approval,
consent, ratification, waiver, or other authorization from any other Person
for
such Material Contract to remain in full force and effect following the
consummation of the transactions contemplated by this Agreement such that no
Person could declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or to cancel, terminate or modify, any material
agreement or instrument to which the Company is subject as the result of the
consummation of the transactions contemplated by this Agreement.
3.11 Employees;
Labor and Employment Matters
(a) Schedule
3.11(a)
contains
a complete and accurate list of the following information for each employee
or
director of the Company, including each employee on leave of absence or layoff
status: name; job title; current compensation paid or payable and any change
in
compensation since December 31, 2005; vacation accrued; and service credited
for
purposes of vesting and eligibility to participate under the Company’s pension,
retirement, profit-sharing, thrift-savings, deferred compensation, stock bonus,
stock option, cash bonus, employee stock ownership (including investment credit
or payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Benefit Plans or any other Benefits Arrangements.
Other than those employees who are a party to an employment agreement disclosed
on Schedule
3.11(a),
all
employees of the Company are employed by the Company “at will.” Sellers have
provided Buyer with true and complete copies of all policies and handbooks
relating to the employees of the Company.
(b) Except
for matters that, individually or in the aggregate, could not be reasonably
likely to materially adversely affect the Company, the Company is in compliance
with all applicable labor and employment Laws, regulations and administrative
orders of any country, state or municipality or of any subdivision thereof
to
which the Company and since December 31, 2003 there has been no Action
pending against or, to the Knowledge of the Sellers, threatened against the
Company relating to the alleged violation of any Law pertaining to labor
relations or employment matters, including any charge or complaint filed by
an
employee or union with the Equal Employment Opportunity Commission, or any
comparable Governmental Body, organizational activity.
(c) There
is
no strike or other organized labor dispute, slowdown or stoppage actually
pending or threatened, against or directly affecting the Company, and no event
has occurred or circumstance exists that could provide any basis for any work
stoppage or other labor dispute.
(d) No
union
organizational campaign or representation petition is currently pending with
respect to the Company’s employees.
(e) The
Company is not a party to, and has not been since 2002, any collective
bargaining agreement or union contract that covers the Company’s
employees.
(f) There
has
been no “mass layoff” or “plant closing” as defined by the Worker Adjustment and
Retraining Notification Act (“WARN Act”) with respect to the Company within the
sixty (60) day period preceding the date hereof.
3.12 Benefit
Plans; ERISA
(a) For
purposes of this Section 3.12, the following terms shall have the following
respective meanings:
(i) The
term
“Employee Benefit Plans” shall mean each and all “employee benefit plans” as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”), maintained or contributed to by the Company or in which
the Company participates or has participated and which provides benefits to
the
Company’s employees including (A) any such plans that are “employee welfare
benefit plans” as defined in Section 3(1) of ERISA, including retiree medical
and life insurance plans (“Welfare Plans”), and (b) any such plans that are
“employee pension benefit plans” as defined in Section 3(2) of ERISA (“Pension
Plans”).
(ii) The
term
“Benefit Arrangements” shall mean any life and health insurance,
hospitalization, savings, bonus, deferred compensation, incentive compensation,
holiday, vacation, termination, severance pay, sick pay, sick leave, disability,
tuition refund, service award, company car, scholarship, relocation, patent
award, fringe benefit, collective bargaining agreements, individual employment,
consultancy, termination contracts or severance contracts and other policies
or
practices of the Company providing employee or executive compensation or
benefits to the Company’s employees, other than Employee Benefit
Plans.
(b) Schedule
3.12(b)
lists
all Employee Benefit Plans and all Benefit Arrangements. With respect to each
of
the Employee Benefit Plans and Benefit Arrangements, Sellers have delivered
or
made available to Buyer, as applicable, copies of: (i) all plans and related
trust documents and amendments thereto; (ii) the most recent summary plan
descriptions and the annual report for the most recent two years; and (iii)
the
most recent determination letter received from the Internal Revenue
Service.
(c) The
Company does not sponsor or maintain, nor is it a contributing employer or
otherwise a party to, nor has any obligation or liability under or with respect
to, any “defined benefit plan” within the meaning of Section 3(35) of
ERISA.
(d) The
Company does not maintain or participate in, nor is obligated to contribute
to,
nor has ever maintained or participated in, nor been obligated to contribute
to,
any “multiemployer plan” within the meaning of Section 3(37) of
ERISA.
(e) With
respect to each Employee Benefit Plan and Benefit Arrangement: (i) the Company
is in material compliance in all respects with the terms of each Employee
Benefit Plan or Benefit Arrangement and with the requirements prescribed by
all
applicable statutes, orders or governmental rules or regulations including,
without limitation, ERISA and the Code; (ii) all necessary governmental
approvals for each Employee Benefit Plan or Benefit Arrangement have been
obtained, and/or a favorable determination as to the qualification under the
Code of each Pension Plan and each amendment required thereto by the Internal
Revenue Service has been made, and each Pension Plan remains qualified under
the
Code; its related trust has been determined to be exempt from taxation under
Section 501(a) of the Code; and nothing has occurred since the date of such
favorable determination that would adversely affect such qualification or
exemption; and (iii) there are no actions or proceedings (other than routine
claims for benefits) pending or threatened, with respect to any Employee Benefit
Plan or Benefit Arrangement or against the assets of any such Employee Benefit
Plan or Benefit Arrangement.
(f) No
administrator of any Pension Plan or Welfare Plan, “disqualified person” (as
such term is used in Section 4975(c)(1) of the Code), nor the Company has
engaged in any transaction with respect to any Pension Plan or Welfare Plan
in
violation of Section 406 of ERISA or engaged in any “prohibited transaction” (as
defined in Section 4975(c)(1) of the Code) other than any such transaction
which
is exempt under Section 408 of ERISA or Section 4975(d) of the
Code.
3.13 Legal
Proceedings
There
are
no Actions pending or, to the Knowledge of Sellers, threatened against, relating
to or affecting Sellers or the Company or any of their respective assets and
properties or that otherwise relates to or may affect the business of the
Company or that challenges or may have the effect of preventing, delaying,
interfering with, restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or any of the other Transaction Documents, and no event or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such Action. There is no writ, judgment, decree, injunction
or similar order of a Governmental Authority outstanding against the Company
that, individually or in the aggregate with other such orders, materially
adversely affect the Company. The Company has not received, at any time since
January 1, 2003, any notice or other communication (whether oral or written)
from any Governmental Authority or any other Person regarding any actual,
alleged, possible, potential or threatened Actions.
3.14 Compliance
with Laws
(a) The
Company is not, nor has it been at any time since January 1, 2004, in violation
of or in default under any applicable law or any writ, judgment, decree,
injunction or similar order of a Governmental Authority applicable to the
Company, the conduct or operation of its business or the ownership or use of
any
of its assets and properties the effect of which, individually or in the
aggregate with other such violations and defaults, could reasonably be expected
to materially adversely affect the Company.
(b) no
event
has occurred or circumstance exists that (with or without notice or lapse of
time) (A) may constitute or result in a violation by the Company of, or a
failure on the part of the Company to comply with, any law, rule or regulation
of any Governmental Authority, or (B) may give rise to any obligation on the
part of the Company to undertake, or to bear all or any portion of the cost
of,
any remedial action of any nature; and
(c) the
Company has not received, at any time since January 1, 2004, any notice or
other
communication (whether oral or written) from any Governmental Authority or
any
other Person regarding (A) any actual, alleged, possible, or potential violation
of, or failure to comply with, any law, rule or regulation of any Governmental
Authority, or (B) any actual, alleged, possible, or potential obligation on
the
part of the Company to undertake, or to bear all or any portion of the cost
of,
any remedial action of any nature.
3.15 Real
Property
(a) The
Company does not own any land or buildings or any improvements or structures
located thereon or any appurtenances belonging thereto.
(b) Schedule
3.15(b)
sets
forth the address and legal description of each parcel of leased real property
(including buildings and improvements thereon), and a true and complete list
of
all leases for each such parcel of leased real property. The Company has
delivered to the Buyer a true and complete copy of each lease document. Each
lease is in full force and effect and constitutes a legal, valid and binding
obligation of the respective parties thereto and will be a legal, valid and
binding obligation of the respective parties thereto immediately after the
Closing. With respect to each lease, (i) neither the Company nor, to the
Knowledge of Sellers, any other party to any lease is in breach or in default
thereunder, and no event has occurred which, with notice or lapse of time (or
both), would constitute such a breach or default thereunder, (ii) no other
party
to the lease has repudiated, or, to the Knowledge of Sellers, threatened to
repudiate, any provision thereof; and (iii) no consent of the landlords under
any such lease or sublease is required as a result of the consummation of the
transactions contemplated hereby.
The
Company conducts its operations on the leased real property and operates the
improvements thereon in accordance with applicable Law.
3.16 Tangible
Personal Property
All
of
the fixtures, machinery and equipment of the Company (the “Tangible Personal
Property”) are in existence and in good working condition and are adequate for
the uses to which they are being put, and none of such Tangible Personal
Property is in need of maintenance or repairs except for routine maintenance
and
repairs that are not material in nature or cost. The Company has good and
marketable title to, or holds by valid and existing lease, all of the Tangible
Personal Property and all other assets used by it, free and clear of all
Liens.
3.17 Proprietary
Rights
(a) Schedule
3.17(a)
sets
forth a list of all Intellectual Property owned and used or held for use by
the
Company and that is material to the operation of the Company, specifying as
to
each, as applicable: (i) the nature of such Intellectual Property; (ii) the
owner of such Intellectual Property; (iii) the jurisdictions by or in which
such
Intellectual Property has been issued or registered or in which an application
for such issuance or registration has been filed, including the respective
registration or application numbers, if available; and (iv) material licenses,
sublicenses and other agreements to which the Company is a party and pursuant
to
which any person is authorized to use such Intellectual Property.
(b) The
Company owns or has the right to use the Intellectual Property free and clear
of
all Liens.
(c) The
Company is not a defendant in, and, to the Knowledge of Sellers, the Company
is
not likely to become a defendant in, any Action based on a claim of infringement
involving any Intellectual Property. To the Knowledge of Sellers, there is
no
existing infringement of any Intellectual Property by any other party. No
Intellectual Property is subject to any outstanding order, judgment, decree,
stipulation or agreement restricting the use thereof by the Company or
restricting the licensing thereof by the Company to any party. The Company
has
not entered into any special agreement to indemnify any other party against
any
charge of infringement of any patent, trademark, service xxxx or
copyright.
3.18 Environmental
Matters
(a) The
Company has obtained all Permits which are required under applicable
Environmental Laws in connection with the conduct of the business or operations
of the Company, except where the failure to obtain any such Permit could not
reasonably be expected to be, individually or in the aggregate with other such
failures, materially adverse to the Company. Each such Permit is in full force
and effect and the Company is in compliance with the terms and conditions of
all
such Permits and with any applicable Environmental Law, except where the failure
to be in compliance could not reasonably be expected to be, individually or
in
the aggregate with other such failures, materially adverse to the
Company.
(b) Except
as
disclosed in Schedule
3.18(b),
no oral
or written notification of a Release of a Hazardous Material has been filed
by
or on behalf of the Company and no site or facility now or previously owned,
operated or leased by the Company is listed or proposed for listing on (i)
the
National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (together with the rules
and
regulations promulgated thereunder, “CERCLA”), (ii) the Comprehensive
Environmental Response and Liability Information System (as provided by 40
C.F.R. 300.5, “CERCLIS”), or (iii) any similar state or local list of sites
requiring investigation or clean-up.
(c) There
have been no environmental investigations, studies, audits, tests, reviews
or
other analyses conducted by, or that are in the possession of, the Company
in
relation to any site or facility now or previously owned, operated or leased
by
the Company which have not been delivered to Buyer prior to the execution of
this Agreement.
3.19 Permits
The
Company has obtained all Permits necessary for the conduct of the Company’s
business as currently conducted, which Permits are set forth in Schedule
3.19,
except
for those Permits that, if not obtained by the Company, could not reasonably
be
expected to have a material adverse effect on the Company. All such Permits
are
valid and in full force and effect and, to the Knowledge of Sellers, the Company
is not in default (or with the giving of notice or lapse of time or both, would
be in default) under any such Permit in any material respect.
3.20 Insurance
Schedule
3.20
contains
a true and complete list of all insurance policies currently in effect,
including any pending applications for policies of insurance, or that were
in
effect during the five (5) years preceding the date of this Agreement that
insure the business, operations or employees of the Company or affect or relate
to the ownership, use or operation of any of the assets and properties of the
Company and that have been issued to the Company or the Sellers. Sellers have
delivered to Buyer true and complete copies of all such insurance policies.
In
addition, Schedule
3.20
describes (i) any self-insurance arrangement by or affecting the Company,
including any reserves established thereunder, (ii) any contract or arrangement,
other than a policy of insurance, for the transfer or sharing of risk by the
Company, and (iii) any obligations of the Company to any third party with
respect to insurance (including obligations under leases and service agreements)
and identifies the policy under which such coverage is provided.
3.21 Brokers
Except
for Xxxxxxxxx Quarterdeck, a division of Xxxxxxxxx & Company, Inc.
(“Xxxxxxxxx Quarterdeck”), whose fees, commissions and expenses are the sole
responsibility of Sellers, all negotiations relative to this Agreement and
the
transactions contemplated hereby have been carried out by Sellers directly
with
Buyer without the intervention of any other party on behalf of Sellers in such
manner as to give rise to any valid claim by any other party against Buyer
or
the Company for a finder’s fee, brokerage commission or similar
payment.
3.22 Accounts
Receivable
All
Accounts Receivable of the Company that are reflected on the Balance Sheet
or
the Interim Balance Sheet or on the accounting records of the Company as of
the
Closing Date represent or will represent valid obligations arising from bona
fide sales actually made or services actually performed in the Ordinary Course
of Business. Unless paid prior to the Closing Date, the Accounts Receivable
are
or will be as of the Closing Date current and collectible net of the respective
reserves shown on the Balance Sheet or the Interim Balance Sheet or on the
accounting records of the Company as of the Closing Date (which reserves are
adequate and calculated consistent with past practice and in accordance with
GAAP, and, in the case of the reserve as of the Closing Date, will be equal
to
the reserve shown on the Interim Balance Sheet and will not represent a material
adverse change in the composition of such Accounts Receivable in terms of
aging). Subject to such reserves, at least 50% of the Accounts Receivable either
has been or will be collected in full, without any set-off, within 120 days
after the day on which it first becomes due and payable, and the remaining
Accounts Receivable either has been or will be collected in full, without any
set-off, within 360 days after the day on which it first becomes due and
payable. Except as set forth on Schedule
3.22,
there
is no contest, claim, or right of set-off under any contract, commitment or
agreement with any obligor of an Accounts Receivable relating to the amount
or
validity of such Accounts Receivable. Section 3.22 of the Disclosure Schedules
contains a complete and accurate list of all Accounts Receivable as of the
date
of the Interim Balance Sheet, which list sets forth the aging of such Accounts
Receivable and whether such Account Receivable is billed or
unbilled.
3.23 No
Undisclosed Liabilities
The
Company has no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent or otherwise) except for
liabilities or obligations reflected or reserved against in the Balance Sheet
or
the Interim Balance Sheet and current liabilities incurred in the Ordinary
Course of Business since the respective dates thereof.
3.24 No
Material Adverse Change
Since
the
Balance Sheet Date, there has not been any material adverse change in the
business, operations, properties, prospects, assets or condition of the Company,
and no event, other than an event contemplated by this Agreement, has occurred
or circumstance exists that may result in such a material adverse change.
3.25 Absence
of Certain Changes and Events
Except
as
set forth on Schedule
3.25,
since
the date of the Balance Sheet, the Company has conducted its business only
in
the Ordinary Course of Business and there has not been any:
(a) change
in
the Company’s authorized or issued capital stock; grant of any stock option or
right to purchase shares of capital stock of the Company; issuance of any
security convertible into such capital stock; grant of any registration rights;
purchase, redemption, retirement, or other acquisition by the Company of any
shares of any such capital stock; or declaration or payment of any dividend
or
other distribution or payment in kind in respect of shares of capital
stock;
(b) amendment
to the Articles of Incorporation or Bylaws of the Company;
(c) payment
or increase by the Company of any bonuses, salaries, or other compensation
to
any stockholder, director, officer, or (except in the Ordinary Course of
Business) employee or entry into any employment, severance, or similar contract,
commitment or agreement with any director, officer, or employee;
(d) adoption
of, or increase in the payments to or benefits under, any profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement, or other
employee benefit plan for or with any employees of the Company;
(e) damage
to
or destruction or loss of any asset or property of the Company, whether or
not
covered by insurance, materially and adversely affecting the properties, assets,
business, financial condition, or prospects of the Company;
(f) entry
into, termination of, or receipt of notice of termination of (i) any license,
distributorship, dealer, sales representative, joint venture, credit, or similar
agreement, or (ii) any contract, commitment, agreement or transaction involving
a total remaining commitment by or to the Company of at least
$250,000;
(g) sale,
lease or other disposition of any asset or property of the Company or mortgage,
pledge, or imposition of any Lien or other encumbrance on any material asset
or
property of the Company, including the sale, lease, or other disposition of
any
of the Intellectual Property;
(h) cancellation
or waiver of any claims or rights with a value to the Company;
(i) material
change in the accounting methods (for tax or accounting purposes) used by the
Company; or
(j) agreement,
whether oral or written, by the Company to do any of the foregoing.
3.26 Certain
Payments
None
of
the Company or any director, officer, agent, or employee of the Company, or
any
other Person associated with or acting for or on behalf of the Company, has
directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of the Company or any affiliate
of the Company, or (iv) in violation of any law, rule or regulation of any
Governmental Authority; or (b) established or maintained any fund or asset
that
has not been recorded in the books and records of the Company.
3.27 Disclosure
(a) No
representation or warranty of Sellers in this Agreement and no statement in
the
Disclosure Schedules contains any untrue statement or omits to state, and no
amendment or update thereto will contain any untrue statement or omit to state,
a material fact necessary to make the statements herein or therein, in light
of
the circumstances in which they were made, not misleading.
(b) To
the
Knowledge of Sellers, there is no fact that has specific application to either
Seller or the Company (other than general economic or industry conditions)
and
that materially adversely affects or materially threatens the assets, business,
prospects, financial condition, or results of operations of the Company that
has
not been set forth in this Agreement or the Disclosure Schedules.
3.28 Relationships
With Related Persons.
Except
as
disclosed on Schedule
3.28,
no
Seller or any Related Person of Sellers or of the Company has, or since the
first day of the next to last completed fiscal year of the Company has had,
any
interest in any property (whether real, personal, or mixed and whether tangible
or intangible), used in or pertaining to the Company’s business. No Seller or
any Related Person of Sellers or of the Company is, or since the first day
of
the next to last completed fiscal year of the Acquired Companies has owned
(of
record or as a beneficial owner) an equity interest or any other financial
or
profit interest in, a Person that has (i) had business dealings or a material
financial interest in any transaction with the Company, or (ii) engaged in
competition with the Company with respect to any line of the products or
services of the Company (a “Competing Business”) in any market presently served
by the Company, except for less than one percent of the outstanding capital
stock of any Competing Business that is publicly traded on any recognized
exchange or in the over-the-counter market. Except as set forth in Schedule
3.28,
no
Seller or any Related Person of Sellers or of the Company is a party to any
contract, commitment or agreement with, or has any claim or right against,
the
Company.
3.29 Warranties
Except
as
set forth Schedule
3.29:
(a) the Company has no unexpired express warranty with respect to any
product currently being or previously manufactured or sold by the Company or
any
service currently being or previously provided by the Company; (b) Sellers
have received no notice of any claim based on any warranty; and (c) Sellers
have no Knowledge of any claim (actual or threatened) based on any warranty
of
which any Seller has received notice and which, together with all other claims
of which Sellers have Knowledge, in the aggregate exceeds the reserve reflected
on the Interim Financial Statements. The dollar amount of the reserve for
products liability claims reflected on the Closing Financial Statements shall
not be greater than the dollar amount reflected on the Interim Financial
Statements.
3.30 Bank
Accounts
Attached
as Schedule
3.30
is a
list of all accounts maintained by the Company with financial institutions
as
well as a list of all authorized signatories for such accounts.
ARTICLE
4
Buyer
hereby represents and warrants to Sellers as follows:
4.1 Organization;
Standing
Buyer
is
a corporation duly incorporated, validly existing and in good standing under
the
Laws of the State of Missouri and has full corporate power and authority to
execute and deliver this Agreement and each of the other Transaction Documents
to which it is a party, to perform its obligations hereunder and thereunder
and
to consummate the transactions contemplated hereby and thereby.
4.2 Authority
The
execution and delivery by Buyer of this Agreement and each of the other
Transaction Documents to which Buyer is a party, and the performance by Buyer
of
its obligations hereunder and thereunder have been duly and validly authorized
by the Board of Directors of Buyer, no other corporate action on the part of
Buyer or its stockholders being necessary. Each of the Transaction Documents
to
which Buyer is a party, including, without limitation, this Agreement, has
been
duly and validly executed and delivered by Buyer and constitutes the legal,
valid and binding obligation of Buyer enforceable against Buyer in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency or other similar Laws affecting the enforcement of
creditors’ rights in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4.3 No
Conflicts
The
execution, delivery and performance by Buyer of this Agreement and each of
the
other Transaction Documents to which Buyer is a party does not and will not:
(i)
conflict with or result in a violation or breach of any of the terms, conditions
or provisions of the Certificate of Incorporation or Bylaws (or other comparable
corporate charter document) of Buyer; or (ii) directly or indirectly (with
or
without notice or lapse of time), conflict with or violate, result in a breach
of, or cause a default under (A) any provision of any federal, state or local
law, rule or regulation applicable to Buyer or any of its assets and properties,
or (B) any provision of any order, arbitration award, judgment or decree to
which Buyer or any of its assets and properties is subject, which conflict,
violation, breach or default in each of clauses (A) and (B) above would prohibit
or restrict the consummation of the transactions contemplated by this
Agreement.
4.4 Governmental
Approvals and Filings
Except
for any requisite approvals from the Federal Trade Commission and the Antitrust
Division of the Department of Justice under the HSR Act, no consent, approval
or
action of, filing with or notice to any Governmental Authority on the part
of
Buyer is required in connection with the execution, delivery and performance
of
this Agreement or any other Transaction Document to which it is a party or
the
consummation of the transactions contemplated hereby or thereby, except where
the failure to obtain any such consent, approval or action, to make any such
filing or to give any such notice could not reasonably be expected to adversely
affect the ability of Buyer to consummate the transactions contemplated by
this
Agreement or any other Transaction Document or to perform its obligations
hereunder or thereunder.
4.5 Legal
Proceedings
There
are
no Actions pending or, to the Knowledge of Buyer, threatened against, relating
to or affecting Buyer or any of its assets and properties which could reasonably
be expected to result in the issuance of any writ, judgment, decree, injunction
or similar order of a Governmental Authority restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the other Transaction
Documents.
4.6 Purchase
for Investment
The
Shares are be acquired by Buyer for its own account for investment purposes
only
and not with a view towards the sale or distribution thereof within the meaning
of Section 2(11) of the Securities Act.
4.7 Exon-Xxxxxx
Amendment
Buyer
is
not a “foreign person” for purposes of the Exon-Xxxxxx Amendment.
4.8 Brokers
No
broker, investment banker, financial advisor or other Person, other than
Wachovia Securities or Xxxxxxx M&A Partners LLC, whose fees, commissions and
expenses are the sole responsibility of Buyer, is entitled to any broker’s,
finder’s, financial advisor’s or similar fee or commission in connection with
this Agreement and the transactions contemplated hereby based on arrangements
made by or on behalf of the Buyer.
ARTICLE
5
5.1 Investigation
by Buyer
Sellers
shall, and shall cause the Company to, (a) provide Buyer and its officers,
employees, counsel, accountants, financial advisors, consultants and other
representatives (collectively, “Representatives”) with full access, upon
reasonable prior notice and during normal business hours, to all officers,
employees, agents and accountants of the Company and the assets, properties,
books and records of the Company, but only to the extent that such access does
not unreasonably interfere with the business and operations of the Company,
and
(b) furnish Buyer with all such information and data concerning the business
and
operations of the Company as Buyer may reasonably request in connection with
such investigation; provided, however, that Sellers shall not be required to
violate any obligation of confidentiality to which Sellers or the Company is
subject in discharging Sellers’ obligations under this Section 5.1.
Notwithstanding anything herein to the contrary, (i) Buyer and its
Representatives shall not speak to any of the employees or customers of the
Company without the prior written consent of Sellers, and any such
communications permitted by Sellers shall be made in the presence of Sellers
or
one of their representatives, and (ii) in no event shall Buyer or its
Representatives have access at any time prior to the Closing to any information
regarding pending or proposed bids for new contracts or subcontracts or any
related information where Buyer or any of its affiliates has also submitted
or
intends to submit a bid for the same contract or subcontract.
5.2 Confidentiality
The
terms
of the nondisclosure letter agreement dated May 31, 2007, are hereby
incorporated herein by reference and shall continue in full force and effect.
If
this Agreement is terminated for any reason prior to the Closing, the
nondisclosure letter agreement shall continue in full force and effect in
accordance with its terms with respect to all confidential information disclosed
to, or obtained by, Buyer and its representatives in connection with the
transactions contemplated by this Agreement.
5.3 Conduct
of Business
From
the
Effective Date through the earlier of the termination of this Agreement and
the
Closing, Sellers shall cause the Company to conduct business only in the
Ordinary Course of Business. An action will be deemed to be in the “Ordinary
Course of Business” only if such action is consistent with the past practices of
the Company and is taken in the ordinary course of the normal day-to-day
operations of the Company; and such action does not require authorization by
the
board of directors of the Company. Except as expressly set forth in this
Agreement, Sellers shall cause the Company to (i) preserve intact the present
business organization and reputation of the Company in all material respects,
(ii) keep available (subject to dismissals and retirements in the Ordinary
Course of Business) the services of the key officers and employees of the
Company, (iii) maintain the assets and properties of the Company in good working
order and condition, ordinary wear and tear excepted, and (iv) maintain the
good
will of key customers and other parties with whom the Company has significant
business relationships. Sellers shall also cause the Company to confer with
Buyer concerning operational matters of a material nature and otherwise report
periodically to Buyer concerning the status of the business, operations, and
finances of the Company during the period between the Effective Date and the
earlier of the termination of this Agreement and the Closing.
Sellers
will not, and will cause the Company not to, make any change in its accounting
methods (for tax or financial purposes) from an accrual basis to a cash basis
for income tax purposes. Without limiting the generality of the foregoing,
unless specifically consented to by Buyer, in advance in writing, or expressly
set forth in this Agreement, the Sellers shall not, and shall cause the Company
not to take any of the actions described in Section 3.25.
5.4 Exclusivity
From
the
Effective Date until the earlier of the Closing Date or the termination of
this
Agreement pursuant to Section 9.1, Seller shall not, and shall cause the Company
and its officers, directors, employees, representatives and agents not to,
directly or indirectly (a) initiate, solicit or encourage any proposal, offer,
or discussion with, provide any non-public information to, or consider the
merits of any unsolicited inquiries or proposals from, any Person (other than
Buyer) concerning any transaction involving the sale of the business or assets
(other than in the Ordinary Course of Business) of the Company or of any of
the
capital stock of the Company or any merger, business combination, or similar
transaction involving the Company or (b) engage in discussions or negotiations
with any Person (other than Buyer) concerning any such transaction.
5.5 Consents
and Approvals
(a) Sellers
and Buyer shall take, or cause to be taken, all commercially reasonable steps
to
obtain, at the earliest practicable date, all consents, approvals and waivers
of
any Governmental Authority or other third parties necessary to consummate the
transactions contemplated by this Agreement including any approval, consent,
ratification, waiver, or other authorization needed to be obtained and listed
on
Schedules
3.5 and 3.10
and
including but not limited to any waiver of any event of default that would
occur
under any Material Contract due to the change in control of the Company;
provided, however, that Sellers shall not be required to incur (unless
indemnified by Buyer) any financial or other obligation in connection therewith
(other than normal and customary transaction costs and filing fees not otherwise
required by this Agreement to be incurred by Buyer).
(b) In
addition to and without limiting the foregoing, each of Buyer and Sellers
undertakes and agrees to file as soon as practicable, and in any event prior
to
ten (10) business days after the Effective Date, a Notification and Report
Form
and documentary materials in respect of the transactions contemplated by this
Agreement that substantially comply with the provisions of the HSR Act with
the
Federal Trade Commission and the Antitrust Division of the Department of Justice
(and shall file as soon as practicable any form or report required by any other
Governmental Authority relating to antitrust matters). Each of Buyer and Sellers
shall, subject to applicable Law, (i) respond as promptly as practicable to
any
inquiries or requests received from any Governmental Authority for additional
information or documentation, (ii) not extend any waiting period under the
HSR
Act or enter into any agreement with any Governmental Authority not to
consummate the transactions contemplated by this Agreement, except with the
prior written consent of the other party hereto, which consent shall not be
unreasonably withheld or delayed, (iii) use commercially reasonable efforts
to
obtain an early termination of the applicable waiting period under the HSR
Act,
(iv) make any further filings or information submissions pursuant thereto that
may be reasonably necessary or advisable and (v) promptly make any filings
or
submissions required under any applicable foreign antitrust or trade regulation
law. Each of the parties shall use commercially reasonable efforts, subject
to
applicable Law, to obtain any clearance under the HSR Act or to resolve any
objections that may be asserted by the applicable Governmental Authority, in
each case as promptly as practicable, including by executing agreements;
provided, however, that nothing contained herein shall require Buyer (or,
without Buyer’s prior written consent, permit Sellers) to take any such action
if the taking of such action could reasonably be expected to have a material
adverse effect on the business, assets, results of operations or financial
condition of the Company or Buyer and its subsidiaries, taken as a whole, or
deprive Buyer of the economic benefit of the transactions contemplated by this
Agreement in any material respect or require Buyer to dispose of any material
portion of its business. Each party shall, subject to, and to the extent
permitted under, applicable Law, (A) promptly notify the other party of any
written communication to such party from any Governmental Authority and permit
the other party to review in advance any proposed written communication to
any
of the foregoing, (B) not agree to participate in any substantive meeting or
discussion with any Governmental Authority in respect of any filings,
investigation or inquiry concerning the transactions contemplated by this
Agreement unless it consults with the other party in advance and, to the extent
permitted by such Governmental Authority, gives the other party the opportunity
to attend and participate thereat, and (C) furnish the other party with copies
of all correspondence, filings and communications (and memoranda setting forth
the substance thereof) between such party and any Governmental Authority with
respect to this Agreement and the transactions contemplated hereby (unless
the
furnishing of such information would (1) violate the provisions of any
applicable Laws or any confidentiality agreement or (2) cause the loss of the
attorney-client privilege with respect thereto); provided, that each such party
shall use its commercially reasonable efforts to promptly communicate to the
other party the substance of any such communication, whether by redacting parts
of such material communication or otherwise, so that such communication would
not violate applicable Laws or cause the loss of the attorney-client privilege
with respect thereto.
5.6 Employee
Matters
(a) On
the
Closing Date, Buyer or any of its affiliates (including after the Closing,
the
Company) shall continue to employ all persons who, immediately prior to the
Closing, were employed by the Company at the same compensation levels and on
substantially the same terms and conditions of employment in effect as of the
Closing Date.
(b) For
purposes of determining eligibility to participate and vesting where length
of
service is relevant under any employee benefit plan of Buyer or any of its
affiliates, in which employees of the Company who continue to be employed by
Buyer or any of its affiliates (including after the Closing, the Company) from
and after the Closing (the “Continuing Employees”) are eligible to participate,
the Continuing Employees shall receive service credit for service with the
Company under such plans to the same extent such service was credited under
similar employee benefit plans of the Company. If the Buyer chooses to terminate
any employee benefit plan (within the meaning of Section 3(3) of ERISA) during
the period from the Closing Date through December 31, 2007, Buyer shall, or
shall cause one of its affiliates (including after the Closing, the Company)
to
provide the Continuing Employees with eligibility for coverage under such
employee benefit plans (within the meaning of Section 3(3) of ERISA) maintained
by Buyer or any of its affiliates (including after the Closing, the Company)
that are substantially comparable to the terminated employee benefit plans.
5.7 Fulfillment
of Conditions
Subject
to the terms and conditions of this Agreement, each of the parties hereto shall
use commercially reasonable efforts to cause the Closing to occur (including,
without limitation, the execution and delivery of any documents reasonably
requested by the other party and to satisfy the other party’s conditions to
Closing set forth herein). Each of the Seller and Buyer shall promptly notify
the other party promptly after becoming aware of any event or circumstance
that
could reasonably be expected to cause any condition to Closing not to be
satisfied. Commercially reasonable efforts shall not require the party subject
to that obligation to take actions that would result in a materially adverse
change in the benefits to such party of this Agreement and the transactions
contemplated by this Agreement.
5.8 Expenses
Sellers
and Buyer shall each bear all of its respective expenses and third-party fees
incurred on its behalf (which in Sellers case shall include all legal or
brokerage fees incurred by or on behalf of the Company) in connection with
the
preparation, execution and performance of this Agreement and each of the other
Transaction Documents and the transactions contemplated hereby and thereby,
including without limitation all fees and expenses of its attorneys,
accountants, agents and representatives. Sellers will cause the Company not
to
incur any out-of-pocket expenses in connection with this Agreement or the
transactions contemplated hereby in excess of $40,000 (but not any legal or
brokerage fees); provided, however, that such amount shall be exclusive of
expenses incurred in connection with the delivery of the audit of the Prior
Year
End Financial Statements; and provided, further, that such limitations shall
not
apply to payments made prior to January 1, 2007 for expenses or fees incurred
by
the Company. Buyer shall be solely responsible for (i) the costs of any audit
of
the 2004 and/or 2005 financial statements of the Company which Buyer elects
to
perform either before or after the Closing, and (ii) the fee for filing the
Notification and Report Form pursuant to the HSR Act.
5.9 Public
Announcements
Any
public announcement or similar publicity with respect to this Agreement or
the
Contemplated Transactions will be issued, if at all, at such time and in such
manner as Buyer determines. Unless consented to by Buyer in advance or required
by Law, prior to the Closing Sellers shall, and shall cause the Company to,
keep
this Agreement strictly confidential and may not make any disclosure of this
Agreement to any Person. Sellers and Buyer will consult with each other
concerning the means by which the Company’s employees, customers, and suppliers
and others having dealings with the Company will be informed of the transactions
contemplated by this Agreement, and Buyer will have the right to be present
for
any such communication.
5.10 Payment
of Indebtedness; Release of Guarantees
(a) Sellers
will cause all indebtedness owed to the Company by either Seller or any Related
Person of the Sellers, and any indebtedness owed to the Sellers or any Related
Person of the Sellers by the Company, to be paid in full prior to
Closing.
(b) At
or
prior to Closing Sellers shall cause all indebtedness for borrowed money owed
by
the Company to be paid in full and all loan or financing documents to be
terminated, and all security interests or liens against the Company’s assets to
be released.
(c) Buyer
shall cooperate with Sellers in seeking to have Sellers released from all of
the
guarantees that Sellers have given with respect to the liabilities of the
Company described in Schedule
5.10
(which
shall not include liabilities described in Section 5.10(b) or (c) all of
which shall be terminated at or prior to the Closing).
5.11 Indemnification
of Directors and Officers
Until
the
second anniversary of the Closing Date, Buyer shall not permit the Company
to
take any action to amend any provision of the Articles of Incorporation or
Bylaws of the Company that provides for indemnification of directors, officers
and employees (including an amendment effected through a merger, consolidation,
sale of all or substantially all the assets, liquidation or dissolution of
the
Company), if such amendment would adversely affect the right to indemnification
(all related rights) of any Seller who served as a director or officer of the
Company prior to the Closing Date with respect to actions taken in such capacity
on or prior to the Closing Date, unless such Seller would, immediately after
such amendment, be entitled to indemnification by Buyer or another subsidiary
of
Buyer comparable to the indemnification and other rights provided by the
affected provision(s) prior to such amendment.
5.12 Issuance
of Restricted Stock by Buyer; Transaction Bonuses
(a) Subject
to the terms and conditions of this Section 5.12(a), at or as soon as reasonably
practicable following the Closing Buyer shall issue, under the LMI Aerospace,
Inc. 2005 Long-Term Incentive Plan (the “Long Term Incentive Plan”), that number
of shares of the Buyer’s common stock having an aggregate value on the Closing
Date equal to Five Million Dollars ($5,000,000) (the “Restricted Shares”). The
Restricted Shares will be awarded to those employees of the Company, and in
such
number to each such employee, as agreed upon by Buyer and Sellers prior to
Closing; provided, however, that each such employee awarded Restricted Shares
shall have executed and delivered such documents required under the terms of
the
Long Term Incentive Plan in connection with such issuance. The Restricted Shares
will be subject to restrictions pursuant to the terms of the Long Term Incentive
Plan and related agreements. Such restrictions will lapse on each anniversary
of
the award date as follows:
|
Anniversary
|
Percentage
of
Restricted
Shares
for
which
restrictions
will
lapse
|
Aggregate
Percentage of
Restricted
Shares for
which
restrictions shall
have
lapsed
|
|
First
Anniversary
|
6.67%
|
6.67%
|
|
Second
Anniversary
|
13.34%
|
20.01%
|
|
Third
Anniversary
|
20.01%
|
40.02%
|
|
Fourth
Anniversary
|
26.68%
|
66.70%
|
|
Fifth
Anniversary
|
33.30%
|
100.00%
|
(b) Within
75
days of the Closing Date (the “Bonus Date”), Buyer shall pay to each of the
employees that were employed by the Company on the Closing Date and are employed
by the Company on the Bonus Date (the “Bonus Employees”) a bonus (the
“Transaction Bonuses”) attributable to work performed in connection with the
transactions contemplated by this Agreement. The Transaction Bonuses payable
to
the Bonus Employees shall be in such amounts or computed according to such
formula as agreed upon in writing by Buyer and the Sellers on or prior to the
Closing Date; provided, however, that the aggregate amount of the Transaction
Bonuses shall be equal to $3,000,000.
5.13 Income
Taxes
Sellers
shall cause the Company to make the estimated Tax payments due on June 15,
2007
as such estimated payments are set forth on Schedule
5.13.
To the
extent that prior to the Closing Date the Company has applied for any refund
of
Income Tax paid by the Company pertaining to any such prior period, Sellers
shall be entitled to the amount of such Income Tax refund actually received
by
the Company, net of any expenses paid or incurred by the Company in connection
with such Income Tax refund; provided, however, that Sellers shall only be
entitled to such Income Tax refund if such Income Tax refund does not affect
any
other Tax paid or owed by the Company for any other past, present or future
period.
ARTICLE
6
6.1 Conditions
Precedent to the Obligations of Buyer
The
obligation of Buyer hereunder to purchase the Shares is subject to the
fulfillment, at or before the Closing, of each of the following conditions
(all
or any of which may be waived in whole or in part by Buyer in its sole
discretion):
(a) The
representations and warranties made by Sellers in this Agreement, taken as
a
whole, and each of the representations and warranties considered individually,
shall be true and correct, in all material respects on and as of the Closing
Date as though made on and as of the Closing Date, without giving any effect
to
any supplement to the Disclosure Schedules.
(b) Sellers
shall have performed and complied with, in all material respects, the
agreements, covenants and obligations required by this Agreement to be so
performed or complied with by the Seller at or before the Closing.
(c) There
shall not be in effect on the Closing Date any writ, judgment, decree,
injunction or similar order of a Governmental Authority or any applicable law
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or the
other Transaction Documents.
(d) All
consents, approvals and actions of, filings with and notices to any Governmental
Authority or other third party necessary to permit Buyer and Sellers to perform
their obligations under this Agreement and the other Transaction Documents
and
to consummate the transactions contemplated hereby and thereby (including any
approval, consent, ratification, waiver, or other authorization listed on
Schedules
3.5 and 3.10)
shall
have been duly obtained, made or given and shall be in full force and effect,
and all terminations or expirations of waiting periods imposed by any
Governmental Authority necessary for the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents, including
under the HSR Act, shall have occurred.
(e) Sellers
and the Escrow Agent shall have executed and delivered to Buyer the Escrow
Agreement.
(f) Sellers
shall have delivered to Buyer the Share Certificates duly endorsed in blank
or
accompanied by duly executed Stock Assignments.
(g) Each
person who was a directors and/or officer of the Company immediately prior
to
the Closing shall have resigned in writing from his or her position(s) as a
director and/or officer of the Company.
(h) Each
of
the Sellers shall have executed and delivered to Buyer a noncompetition
agreement substantially in the form attached as Exhibit
C
hereto
(the “Seller Noncompetition Agreements”).
(i) Each
of
the Key Employees shall executed and delivered to Buyer an employment agreement
in such form as is reasonably acceptable to Buyer (the “Employment
Agreements”).
(j) Each
of
the Sellers shall have executed and delivered to Buyer the Sellers’ Release in
the form attached as Exhibit
D hereto
(the “Sellers’ Release”).
(k) Sellers
shall have provided satisfactory evidence to Buyer that the Company has not
made
any change in its accounting methods (for tax or financial purposes) such that
the Company changes from accounting on an accrual basis to accounting on a
cash
basis for income tax purposes.
(l) Buyer
shall have received a certification, in form acceptable to the Buyer, of Xxxx
Xxxxx stating, that to his knowledge, all of the representations and warranties
contained in this Agreement (including the Disclosure Schedules) are true and
correct in all material respects.
(m) Buyer
shall have received a complete and accurate list of all Accounts Receivable
as
of the close of business on the date immediately prior to the Closing Date,
which list sets forth the aging of such Accounts Receivable and whether such
Account Receivable is billed or unbilled.
(n) Sellers
shall have delivered to Buyer the Prior Year-End Financial Statements as set
forth in Section 3.8, together with a certificate of the Sellers stating that
the representations and warranties in Section 3.8 were accurate in all respects
as of the date of delivery of such Prior Year-End Financial Statements to Buyer
and are accurate in all respects on and as of the Closing Date as if made on
and
as of the Closing Date, without giving effect to any supplement to the
Disclosure Schedules.
(o) Seller
shall have delivered to Buyer evidence of the Company’s cash account that
includes the amount of the 2006 Boeing Rebate as of the Closing
Date.
(p) Sellers
shall have delivered to Buyer such other documents as Buyer may reasonably
request for the purpose of (i) evidencing the accuracy of any of Sellers’
representations and warranties, (ii) evidencing the performance by either
Seller of, or the compliance by either Seller with, any covenant or obligation
required to be performed or complied with by such Seller, (iii) evidencing
the satisfaction of any condition referred to in this Section 6.1, or
(iv) otherwise facilitating the consummation or performance of any of the
transactions contemplated by this Agreement.
(q) The
waiting period applicable to the consummation of the transactions contemplated
by this Agreement under the HSR Act shall have expired or been
terminated.
(r) Buyer
shall have received the opinion of Xxxxxxxx, Xxxx, Hargreaves & Savitch LLP
dated as of the Closing Date in the form attached as Exhibit
F
hereto.
(s) The
Cash
Balance shall not be less than (1) $5,200,000 less (2) any portion of
the 2006 Boeing rebate actually paid by the Company prior to Closing; provided,
however, that if the Company has, prior to Closing, made any payment of the
2006
Boeing rebate then the Sellers shall certify to Buyer at Closing the amount
paid
and any amount that remains to be paid.
6.2 Conditions
Precedent to the Obligations of Sellers
The
obligation of Sellers hereunder to sell the Shares is subject to the
fulfillment, at or before the Closing, of each of the following conditions
(all
or any of which may be waived in whole or in part by Sellers in their sole
discretion):
(a) The
representations and warranties made by Buyer in this Agreement, taken as a
whole, shall be true and correct in all material respects on and as of the
Closing Date as though made on and as of the Closing Date.
(b) Buyer
shall have performed and complied with, in all material respects, the
agreements, covenants and obligations required by this Agreement to be so
performed or complied with by Buyer at or before the Closing.
(c) There
shall not be in effect on the Closing Date any writ, judgment, decree,
injunction or similar order of a Governmental Authority or any applicable law
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or the
other Transaction Documents.
(d) All
consents, approvals and actions of, filings with and notices to any Governmental
Authority or other third party necessary to permit Buyer and Sellers to perform
their obligations under this Agreement and the other Transaction Documents
and
to consummate the transactions contemplated hereby and thereby shall have been
duly obtained, made or given and shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental
Authority necessary for the consummation of the transactions contemplated by
this Agreement and the other Transaction Documents, including under the HSR
Act,
shall have occurred.
(e) Buyer
and
the Escrow Agent shall have executed and delivered to Sellers the Escrow
Agreement.
(f) Sellers
shall have received verbal confirmation of the receipt of the Closing Cash
Payment by the banks or other financial institutions to which the Closing Cash
Payment was delivered by wire transfer.
(g) Buyer
shall have delivered to Sellers such other documents as Sellers may reasonably
request for the purpose of (i) evidencing the accuracy of any of Buyer’s
representations and warranties, (ii) evidencing the performance by Buyer
of, or the compliance by Buyer with, any covenant or obligation required to
be
performed or complied with by Buyer, (iii) evidencing the satisfaction of
any condition referred to in this Section 6.2, or (iv) otherwise
facilitating the consummation or performance of any of the transactions
contemplated by this Agreement.
(h) The
waiting period applicable to the consummation of the transactions contemplated
by this Agreement under the HSR Act shall have expired or been
terminated.
(i) Sellers
shall have received the opinion of Gallop, Xxxxxxx & Xxxxxx, X.X. in the
form attached as Exhibit
G
hereto.
ARTICLE
7
7.1 Survival
of Representations, Warranties and Covenants
(a) Subject
to the provisions of this Section 7.1, all representations, warranties,
covenants, and obligations in this Agreement (including the Disclosure
Schedules) and any other certificate or document delivered pursuant to this
Agreement will survive the Closing.
(b) The
right
to indemnification and payment of Losses based on such representations,
warranties, covenants, and obligations (i) are subject to the limitations
contained in Section 7.1(c), (ii) will not be affected by any investigation
conducted with respect to, or any Knowledge acquired (or capable of being
acquired) at any time, whether before or after the execution and delivery of
this Agreement or the Closing Date, with respect to the accuracy or inaccuracy
of or compliance with, any such representation, warranty, covenant, or
obligation, and (iii) will be determined as if all references to “to the
Knowledge” of any or all of the party making the representation or warranty, and
all references to “material” and “materially” and words of similar effect, were
deleted from any representation for purposes of determining if the minimum
amounts set forth in Section 8.1(c) have been met.
(c) If
the
Closing occurs, Sellers will have no liability (for indemnification or
otherwise) with respect to any representation or warranty other than those
in
Sections 3.2, 3.4, 3.9, 3.12, and 3.18, or any covenant or obligation to be
performed and complied with prior to the Closing Date, unless, on or before
April 30, 2009, Buyer notifies Sellers of a claim specifying the factual basis
of that claim in reasonable detail to the extent then known by Buyer. A claim
with respect to Sections 3.2, 3.4, 3.9, 3.12, and 3.18 may be made at any
time prior to the expiration of the applicable statute of limitations. If the
Closing occurs, Buyer will have no liability (for indemnification or otherwise)
with respect to any representation or warranty, or covenant or obligation to
be
performed and complied with prior to the Closing Date, unless, on or before
April 30, 2009, Sellers notify Buyer of a claim specifying the factual basis
of
that claim in reasonable detail to the extent then known by Sellers.
7.2 No
Other Representations
Notwithstanding
anything to the contrary contained in this Agreement, it is the explicit intent
of each party hereto that Sellers are not making any representation or warranty
whatsoever, express or implied, except those representations and warranties
contained in Article 3 and the related Disclosure Schedule. In particular,
Sellers make no representation or warranty to Buyer with respect to (a) the
information set forth in that certain Confidential Offering Memorandum prepared
by Xxxxxxxxx Quarterdeck or (ii) any financial projection or forecast relating
to the business or condition of the Company. With respect to any projection
or
forecast delivered by or on behalf of Sellers to Buyer, Buyer acknowledges
that
(i) there are uncertainties inherent in attempting to make such projections
and
forecasts, (ii) Buyer is familiar with such uncertainties, (iii) Buyer is taking
full responsibility for making its own evaluation of the adequacy and accuracy
of all such projections and forecasts furnished to it and (iv) Buyer shall
have
no claim against Sellers with respect thereto.
ARTICLE
8
8.1 Obligation
to Indemnify
(a) Subject
to Section 8.1(c), Sellers, jointly and severally, agree to indemnify, defend
and hold harmless Buyer, the Company, and their respective directors, officers,
stockholders, employees, representatives, agents, Affiliates, successors and
assigns (each a “Buyer Indemnified Party” and collectively, the “Buyer
Indemnified Parties”) from and against, and will pay to the Buyer Indemnified
Parties the amount of, all Losses resulting from or arising out of or in
connection with the following (collectively, the “Buyer Indemnification
Events”):
(i) any
inaccuracy in or any breach of any representation or warranty, made by Sellers
in this Agreement (including the Disclosure Schedules), the Transaction
Documents or any other certificate or document delivered by Sellers pursuant
to
this Agreement;
(ii) any
failure to perform or comply with any covenant or obligation of Sellers
contained in this Agreement or any of the other Transaction
Documents;
(iii) any
matter described on Exhibit
E
attached
hereto;
(iv) any
services provided by, or any product shipped or manufactured by or on behalf
of,
the Company prior to the Closing Date; or
(v) any
claim
by any Person for brokerage or finder’s fees or commissions or similar payments
based upon any agreement or understanding alleged to have been made by any
such
Person with either of Sellers or with the Company (or any Person acting on
their
behalf) in connection with any of the transactions contemplated by this
Agreement.
(b) Buyer
agrees to indemnify, defend and hold harmless each of Sellers and their
respective representatives, heirs, successors and assigns (each a “Seller
Indemnified Party” and, collectively, the “Seller Indemnified Parties”) from and
against, and will pay to the Seller Indemnified Parties the amount of, all
Losses resulting from or arising out of or in connection with the following
(collectively, the “Seller Indemnification Events”):
(i) any
inaccuracy in or any breach of any representation or warranty made by Buyer
in
this Agreement, the Transaction Documents, or in any certificate delivered
by
Buyer pursuant to this Agreement
(ii) any
failure to perform or comply with any covenant or obligation of Buyer contained
in this Agreement or in any of the Transaction Documents;
(iii) any
claim
by any Person for brokerage or finder’s fees or commissions or similar payments
based upon any agreement or understanding alleged to have been made by such
Person with Buyer (or any Person acting on its behalf) in connection with any
of
the transactions contemplated by the Agreement.
(c) Sellers’
aggregate liability (for indemnification or otherwise) with respect to Losses
resulting from, arising out of, or relating to this Agreement shall be limited
to $6,500,000. In addition, and notwithstanding anything to the contrary
contained in this Agreement, Sellers will have no liability (for indemnification
or otherwise) with respect to the matters described in Sections 8.1(a)(i) or
(iv), or, to the extent relating to any failure to perform or comply prior
to
the Closing Date, Section 8.1(a)(ii) unless:
(i) the
Losses with respect to the matter giving rise to a claim are greater than Ten
Thousand Dollars ($10,000) to the extent such Losses arise or result from
different causes of action (“Small
Claims”),
provided that the Buyer Indemnified Parties may make a claim for indemnification
for different Small Claims which arise or result from the same cause of action,
if such related Losses together exceed One Hundred Thousand Dollars ($100,000)
or at such time that the aggregate of all Small Claims, whether or not related,
exceed One Hundred Thousand Dollars ($100,000), subject in all cases, to the
other limitations of this Section 8.1(c); and
(ii) the
total
of all Losses with respect to such matters exceeds an amount equal to Four
Hundred Thousand Dollars ($400,000) (the “Deductible”), and then only for the
amount by which such Losses exceed such Deductible.
In
addition, the amount of any Losses shall be reduced by any amount finally
received by a Buyer Indemnified Party under any insurance coverage. Buyer
Indemnified Party shall use reasonable efforts to collect any amounts available
under insurance coverage. Notwithstanding the foregoing, Losses may include
any
adverse effect to the Buyer Indemnified Party’s insurance policy to the extent
the adverse effect is the result of paying the claim for Losses, including,
without limitation, the cost of higher premiums or the cost of cancellation
of
such insurance policy and the increased cost for any replacement
policy.
The
limitations of this Section 8.1(c) will not apply to any breach or inaccuracy
of
any of Sellers’ representations and warranties of which either Seller had
Knowledge at any time prior to the date on which such representation and
warranty is made or any intentional failure by either Seller to perform any
covenant or obligation required to be performed under this Agreement or the
Transaction Documents, and Sellers will be jointly and severally liable for
all
Losses with respect to such breaches, inaccuracies and failures to
perform.
8.2 Indemnification
Claims
(a) Subject
to the terms of this Agreement including the limitations of Section 7.1, no
party entitled to indemnification under Section 8.1(a) or 8.1(b) (each an
“Indemnified Party”) shall be entitled to recover any Losses pursuant to the
indemnification obligations set forth in Sections 8.1(a) and 8.1(b) unless
and
until the party obligated to indemnify such Indemnified Party (the “Indemnifying
Party”) receives a written notice (“Claim Notice”) of a claim for
indemnification under Section 8.1(a) or 8.1(b) (“Indemnification Claim”) (with a
copy to the Escrow Agent if Buyer is the Indemnified Party) stating (i) that
the
Indemnified Party has actually suffered or incurred Losses for which such
Indemnified Party believes in good faith that it may be entitled to
indemnification under Section 8.1(a) or 8.1(b), as applicable, or believes
in
good faith that such Indemnified Party could suffer or incur Losses for which
such Indemnified Party believes in good faith that it may be entitled to
indemnification under Section 8.1 or 8.1(b), and (ii) to the extent then known
by such Indemnified Party, a brief description, in reasonable detail, of the
facts, circumstances or events giving rise to the Indemnification Claim (and
the
Losses, to the extent known, forming the basis of such Indemnification Claim),
including the identity and address of any third-party claimant and copies of
any
formal demand or complaint, and (iii) the representation, warranty or covenant
of this Agreement that may form the basis of such Indemnification Claim.
(b) Within
15
days following its receipt of a Claim Notice, the Indemnifying Party shall
deliver notice of objection to such claim to the Indemnified Party (with a
copy
to the Escrow Agent if Buyer is the Indemnified Party). If no objection notice
is given within such 15-day period, then the Indemnification Claim set forth
in
the related Claim Notice shall be deemed to be valid and indemnifiable,
whereupon the Indemnifying Party shall deliver (or if Sellers are the
Indemnifying Party and sufficient funds remain with the Escrow Agent to cover
such Indemnification Claim, Sellers shall instruct the Escrow Agent to deliver)
to the Indemnified Party an amount equal to the amount of the Indemnification
Claim set forth in the Claim Notice. If the Indemnifying Party delivers written
objection to any Indemnification Claim set forth in a Claim Notice within the
foregoing 15-day period, then the Indemnified Party shall not be entitled to
any
indemnification payment unless and until such Indemnification Claim is finally
resolved by mutual agreement, court order, arbitration decision, or settlement.
If the Indemnified Party and the Indemnifying Party mutually agree to resolve
a
disputed Indemnification Claim in favor of the Indemnified Party, then the
Indemnifying Party shall deliver (or if Sellers are the Indemnifying Party
and
sufficient funds remain with the Escrow Agent to cover such Indemnification
Claim, Sellers shall instruct the Escrow Agent to deliver) to the Indemnified
Party an amount equal to the amount agreed upon by Indemnified Party and the
Indemnifying Party. If a disputed Indemnification Claim is resolved by court
order or arbitration decision, in favor of the Indemnified Party, then the
Indemnifying Party shall deliver (or if Sellers are the Indemnifying Party
and
sufficient funds remain with the Escrow Agent to cover such Indemnification
Claim, Sellers shall instruct the Escrow Agent to deliver) to the Indemnified
Party an amount equal to the amount awarded to the Indemnified Party pursuant
to
such court order or arbitration decision.
8.3 Third-Party
Claim Procedures
(a) If
an
Indemnified Party becomes aware of any third-party claim against such
Indemnified Party (“Third-Party Claim”), which such Indemnified Party reasonably
believes may result in a claim for indemnification pursuant to this Article
8,
such Indemnified Party shall notify the Indemnifying Party of such claim. An
Indemnified Party’s failure to promptly notify the Indemnifying Party of a
Third-Party Claim shall not affect any rights to indemnification hereunder,
except to the extent that the Indemnifying Party demonstrates that the defense
of such action is prejudiced by the Indemnified Party’s failure to give such
notice..
(b) The
Indemnifying Party will, unless the Third Party Claim involves Taxes, be
entitled to participate in the defense or compromise of such Third Party Claim
and, to the extent that it wishes (unless (i) the Indemnifying Party is
also a party to such Third Party Claim and the Indemnified Party determines
in
good faith that joint representation would be inappropriate, or (ii) the
Indemnifying Party fails to provide reasonable assurance to the Indemnified
Party of its financial capacity to defend such Third Party Claim and provide
indemnification with respect to such Third Party Claim), to assume the defense
of such Third Party Claim with counsel reasonably satisfactory to the
Indemnified Party and, after notice from the Indemnifying Party to the
Indemnified Party of its election to assume the defense of such Third Party
Claim, the Indemnifying Party will not, as long as it diligently conducts such
defense, be liable to the Indemnified Party under this Section 8 for any
fees of other counsel or any other expenses with respect to the defense of
such
Third Party Claim, in each case subsequently incurred by the Indemnified Party
in connection with the defense of such Third Party Claim, other than reasonable
costs of investigation. If the Indemnifying Party assumes the defense of a
Third
Party Claim, (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Third Party Claim are within the scope
of
and subject to indemnification; (ii) no compromise or settlement of such
claims may be effected by the Indemnifying Party without the Indemnified Party’s
consent unless (A) there is no finding or admission of any violation of
Law or
any
violation of the rights of any Person and no effect on any other claims that
may
be made against the Indemnified Party, and (B) the sole relief provided is
monetary damages that are paid in full by the Indemnifying Party; and
(iii) the Indemnified Party will have no liability with respect to any
compromise or settlement of such claims effected without its consent. If notice
is given to an Indemnifying Party of the commencement of any Third Party Claim
and the Indemnifying Party does not, within fifteen days after the Indemnified
Party’s notice is given (or sooner, if the nature of the Third-Party Claim so
requires), give notice to the Indemnified Party of its election to assume the
defense of such Third Party Claim, the Indemnifying Party will be bound by
any
determination made in respect of such Third Party Claim or any compromise or
settlement effected by the Indemnified Party. If the Indemnifying Party chooses
to defend or participate in the defense of any Third-Party Claim, it shall
have
the right to receive from the affected Indemnified Party any books, records
or
other documents reasonably within such Indemnified Party’s control that are
necessary or appropriate for such defense.
(c) Notwithstanding
the foregoing, if an Indemnified Party determines in good faith that there
is a
reasonable probability that a Third Party Claim may adversely affect it or
its
affiliates other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the Indemnified Party may,
by
notice to the Indemnifying Party, assume the exclusive right to defend,
compromise, or settle such Third Party Claim, but the Indemnifying Party will
not be bound by any determination of a Third Party Claim so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
(d) Sellers
hereby consent to the non-exclusive jurisdiction of any court in which a Third
Party Claim is brought against any Indemnified Party for purposes of any claim
that an Indemnified Party may have under this Agreement with respect to such
Third Party Claim or the matters alleged therein, and agree that process may
be
served on Sellers with respect to such a claim anywhere in the
world.
8.4 Escrow
Buyer
shall give the Escrow Agent a copy of any notice of any Claim Notice delivered
to Sellers. The Escrow Cash held by the Escrow Agent pursuant to the Escrow
Agreement shall be available to compensate the Buyer Indemnified Parties for
any
Losses, and payment of all Indemnification Claims made by the Buyer Indemnified
Parties (after final determination of the amount of such claims as provided
above) shall be made out of the Escrow Cash to the extent thereof, on
May 1, 2009, subject to pending Indemnification Claims as more specifically
provided in the Escrow Agreement.
8.5 Exclusive
Remedy
After
the
Closing, to the extent permitted by applicable law, the indemnities set forth
in
this Article 8 shall be the sole and exclusive remedies of the Buyer Indemnified
Parties and the Seller Indemnified Parties with respect to any of the Buyer
Indemnification Events and Seller Indemnification Events, respectively, and
Buyer and Sellers shall not be entitled to a rescission of this Agreement or
to
any further indemnification rights or claims of any nature whatsoever in respect
thereof, all of which the parties hereto hereby waive.
ARTICLE
9
9.1 Termination
This
Agreement may be terminated, and the transactions contemplated hereby may be
abandoned at any time before the Closing only:
(a) by
mutual
written agreement of Sellers and Buyer;
(b) by
Sellers or Buyer, in the event that any writ, judgment, decree, injunction
or
similar order of a Governmental Authority or applicable law becomes effective
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement and
the
other Transaction Documents, upon written notification delivered to the
non-terminating party;
(c) by
either
Buyer or Sellers, upon written notice to the non-terminating party, if a
material breach of any provision of this Agreement has been committed by the
other party and such breach has not been waived;
(d) (i) by
Buyer, upon written notice to the Sellers, if any of the conditions in
Section 6.1 have not been satisfied as of the Closing Date, or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Buyer to comply with its obligations under this Agreement) and
Buyer has not waived such condition on or before the Closing Date; or
(ii) by Sellers, upon written notice to the Buyer, if any of the conditions
in Section 6.2 have not been satisfied as of the Closing Date, or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Sellers to comply with their obligations under this Agreement)
and Sellers have not waived such condition on or before the Closing Date;
or
(e) at
any
time after September 15, 2007 by Sellers or Buyer upon written notice delivered
to the non-terminating party if the Closing shall not have occurred on or before
such date and the failure to consummate the Closing is not caused by the failure
of the terminating party to comply fully with its obligations under this
Agreement.
9.2 Effect
of Termination
If
this
Agreement is validly terminated pursuant to Section 9.1, this Agreement shall
forthwith become null and void, and there shall be no liability or obligation
on
the part of Sellers or Buyer (or any of their respective officers, directors,
employees, agents or other representatives or Affiliates), except that this
Section 9.2, Section 5.2 (Confidentiality) and Section 5.8 (Expenses) shall
continue to apply following any such termination; provided, however, that if
this Agreement is terminated by a party because of the breach of the Agreement
by the other party or because one or more of the conditions to the terminating
party’s obligations under this Agreement is not satisfied as a result of the
other party’s failure to comply with its obligations under this Agreement, the
terminating party’s right to pursue all legal remedies will survive such
termination unimpaired.
ARTICLE
10
As
used
in this Agreement, the following defined terms shall have the meanings indicated
below:
“Accounts
Receivable”
means
all trade accounts receivable and other rights to payment from customers of
the
Company whether billed or unbilled (including all work in process included
in
the books and records of the Company), including all trade accounts receivable
representing amounts receivable in respect of services rendered, goods shipped
or products sold or to customers of the Company and all other accounts or notes
receivable of the Company.
“Action”
means
any litigation, action, suit, claim, proceeding or investigation.
“Adjustment
Amount”
is
defined in Section 1.3.
“Affiliate”
means
any Person controlled by, controlling or under common control with a party
to
this Agreement. For purposes of this definition, “control,” when used with
respect to any specified Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise.
“Business
Days”
means
any day other than a Saturday, Sunday or public holiday or a day on which banks
are required or permitted to close under the laws of the State of
California.
“Cash
Balance”
is
defined in Section 1.3.
“Code”
means
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder from time to time.
“Disclosure
Schedule”
means
the schedules prepared by Sellers and delivered to Buyer as of the date hereof
which sets forth the exceptions to the representations and warranties of Sellers
contained in Article 3 and certain other information called for by this
Agreement.
“Employment
Agreements”
is
defined in Section 6.1(i).
“Environmental
Law”
means
any law, rule, regulation or order relating to the regulation or protection
of
human health, safety or the environment or to emissions, discharges, releases
or
threatened releases of pollutants, contaminants, chemicals or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, ambient air, soil, surface water, ground water, wetlands, land
or
subsurface strata), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes.
“Exon-Xxxxxx
Amendment”
means
Section 721 of the Defense Production Act of 1950, as amended, and any successor
thereto and the regulations issued pursuant thereto or in consequence
thereof.
“GAAP”
means
generally accepted accounting principles and practices as in effect in the
United States of America from time to time, consistently applied throughout
the
specified period and in the immediately prior comparable period.
“Governmental
Authority”
means
any foreign, domestic, federal, territorial, state or local governmental
authority, quasi-governmental authority, instrumentality, court, government
or
self-regulatory organization, commission, tribunal or organization or any
regulatory, administrative or other agency, or any political or other
subdivision, department or branch of any of the foregoing.
“Hazardous
Material”
shall
be construed broadly to include (i) any petroleum or petroleum products,
flammable explosives, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); (ii) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,”
“extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,”
“toxic pollutants” or words of similar import under any Environmental Law; and
(iii) any other chemical or other material or substance, exposure to which
is
now or hereafter prohibited, limited or regulated by any Governmental Authority
under any Environmental Law.
“HSR
Act”
means
Section 7A of the Xxxxxxx Act (Title II of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended) and the rules and regulations promulgated
thereunder.
“Income
Tax”
means
any federal, state, local or foreign Tax imposed on or measured by gross or
net
income or a taxable base in the nature of gross or net income (including
franchise, alternative, minimum, alternative minimum, add-on, and surcharge
and
other similar Taxes), any Tax imposed in whole or in part in lieu of any of
the
foregoing, and in each instance any interest (including interest on deferred
tax
liability under Section 453A(c) of the Code and “look-back” interest under
Section 460 of the Code and similar amounts of interest imposed by the Code),
penalties, additions to tax or similar charges attributable to such
Tax.
“Intellectual
Property”
means,
on a worldwide basis whether registered or unregistered all (a) inventions,
developments and discoveries (whether patentable or unpatentable and whether
or
not reduced to practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
relating thereto, (b) trademarks, service marks, trade dress, logos, trade
names, and corporate names, and all goodwill associated therewith, together
with
all translations, adaptations, derivations, and combinations, applications,
registrations, and renewals relating thereto, (c) copyrightable works, all
copyrights, and all applications, registrations, and renewals relating thereto,
(d) trade secrets and confidential business information (including ideas,
research and development, know how, formulas, compositions, databases,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (e) computer
software (including all data and related documentation), (f) other proprietary
rights, (g) Internet domain names and registration rights and (h) copies and
tangible embodiments of the foregoing (in whatever form or medium).
“Key
Employees”
means
Xxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxx
and
such site managers, vice-presidents, directors as LMI designates to
Sellers.
“Knowledge”
means
the following: an individual shall be deemed to have “Knowledge” of a particular
fact or matter only if such individual is actually aware of such fact or matter,
and does not include constructive knowledge or deemed knowledge nor require
or
assume any investigation of such fact or matter; an entity shall be deemed
to
have “Knowledge” of a particular fact or matter if any individual who is serving
as a director or officer of such entity (or in any similar capacity) has
Knowledge of such fact or matter. Notwithstanding the foregoing, Sellers shall
be deemed to have Knowledge if any of the following persons is actually aware
of
such fact or matter: Xxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxxx,
Xxxxxxx Xxxxxxxxx and Xxxx Xxxxxxx.
“Law”
means
any federal, state, local, municipal, foreign, international, multinational,
or
other administrative(including any political subdivision of any Governmental
Authority) order, constitution, law, code, consent decree, ordinance, judgment,
rule of common law, rule, regulation, statute, or treaty or other pronouncement
having the effect of law.
“Lien”
means
any mortgage, pledge, assessment, security interest, lease, lien, adverse claim,
levy, charge or other encumbrance of any kind, or any conditional sale contract,
title retention contract or other contract or agreement to give any of the
foregoing.
“Losses”
means
all losses, costs, claims, liabilities, damages, lawsuits, deficiencies, demands
and expenses (whether or not arising out of third-party claims), including
without limitation interest, penalties, costs of litigation, lost profits and
other losses resulting from any shut down or curtailment of operations, damages
to the environment, attorneys’ fees, and all amounts paid in the investigation,
defense or settlement of any of the foregoing.
“Ordinary
Course of Business”
is
defined in Section 5.3.
“Permits”
means
all permits, licenses, certificates of authority, authorizations, approvals,
registrations, franchises and similar consents granted or issued by any
Governmental Authority.
“Related
Person”
means,
with respect to a particular individual:
(a) each
other member of such individual’s Family;
(b) any
Person that is directly or indirectly controlled by such individual or one
or
more members of such individual’s Family;
(c) any
Person in which such individual or members of such individual’s Family hold
(individually or in the aggregate) a Material Interest; and
(d) any
Person with respect to which such individual or one or more members of such
individual’s Family serves as a director, officer, partner, executor, or trustee
(or in a similar capacity); and
with
respect to a specified Person other than an individual:
(a) any
Person that directly or indirectly controls, is directly or indirectly
controlled by, or is directly or indirectly under common control with such
specified Person;
(b) any
Person that holds a Material Interest in such specified Person;
(c) each
Person that serves as a director, officer, partner, executor, or trustee of
such
specified Person (or in a similar capacity);
(d) any
Person in which such specified Person holds a Material Interest;
(e) any
Person with respect to which such specified Person serves as a general partner
or a trustee (or in a similar capacity); and
(f) any
Related Person of any individual described in clause (b) or (c).
For
purposes of this definition, (a) the “Family” of an individual includes (i) the
individual, (ii) the individual’s spouse and former spouses, (iii) any other
natural person who is related to the individual or the individual’s spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) “Material Interest” means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least five
percent (5%) of the outstanding voting power of a Person or equity securities
or
other equity interests representing at least five percent (5% )of the
outstanding equity securities or equity interests in a Person.
“Person”
means
any individual, corporation (including any non-profit corporation), general
or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity including any
Governmental Authority.
“Release”
means
any release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the indoor or outdoor
environment, including, without limitation, the movement of Hazardous Materials
through ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata.
“Seller
Noncompetition Agreements”
is
defined in Section 6.1(h).
“Securities
Act”
means
the Securities Act of 1933 and the rules and regulations promulgated thereunder,
or any successor law to that Act or such rules and regulations.
“Tax”
means
(whether or not disputed) taxes of any kind, levies or other like assessments,
customs, duties, imposts, charges or fees, including, without limitation, Income
Taxes, gross receipts, ad valorem, value added, excise, real property, personal
property, occupancy, asset, sales, use, license, payroll, transaction, capital,
capital stock, net worth, estimated, withholding, employment, social security,
unemployment, unemployment compensation, workers’ compensation, disability,
utility, severance, production, environmental, energy, business, occupation,
mercantile, franchise, premium, profits, windfall profits, documentary, stamp,
registration, transfer and gains taxes, toll charges (for example, toll charges
under Sections 367 and 1492 of the Code), or other taxes of any kind whatsoever,
imposed by or payable to the United States, or any state, country, local or
foreign government or subdivision, instrumentality, authority or agency thereof
or under any treaty, convention or compact between or among any of them, and
in
each instance such term shall include any interest (including interest on
deferred tax liability under Section 453A(c) of the Code and “look-back”
interest under Section 460 of the Code and similar amounts of interest imposed
by the Code), penalties, additions to tax or similar charges imposed in lieu
of
a Tax or attributable to any Tax.
“Tax
Return”
means
any return, declaration, report, claim for refund, information return or
statement or estimated tax voucher that relates to Taxes, including any schedule
or attachment thereto and any amendment thereof.
“Transaction
Documents”
means
this Agreement, the Escrow Agreement, the Share Certificates, the Stock
Assignments (if any) and the Seller Noncompetition Agreements.
ARTICLE
11
11.1 Notices
All
notices, requests, demands and other communications hereunder shall be made
in
writing and shall be deemed given (a) if delivered personally or sent by
facsimile transmission with confirmation of receipt, on the date given, (b)
if
delivered by a courier express delivery service, on the date of delivery, or
(c)
if by certified or registered mail, postage prepaid, return receipt requested,
three (3) days after mailing, to the parties (or their successors in interest
or
their assignees) at the addresses listed below, or at such other addresses
as
such party may designate by written notice in the manner aforesaid.
If
to
Sellers, to:
Xxxx
X.
Xxxxx, Trustee of the Xxxx Xxxxx
Separate
Property Trust Dated October 5, 1999
0000
Xxxxxxxx Xxx Xxxxxx
Xxx
Xxxxx, Xxxxxxxxxx 00000
and
Xxxxxxx
X. Xxxxxx
0000
Xxxxx Xxxxx
Xxx
Xxxxx, Xxxxxxxxxx 00000
with
a
copy (which shall not constitute notice) to:
Xxxxxxxx,
Xxxx, Hargreaves & Savitch LLP
000
X
Xxxxxx, Xxxxx 0000
Xxx
Xxxxx, Xxxxxxxxxx 00000
Attention:
Xxxx X. X’Xxxxx, Esq.
Facsimile:
(000) 000-0000
If
to
Buyer, to:
LMI
Aerospace,
Inc.
000
Xxxxxxxx Xxxxx Xxxxxxxxx
Xx.
Xxxxxxx, Xxxxxxxx 00000
Attention:
Xxxxxx X. Xxxx, Chief Executive Officer
Facsimile:
(000) 000-0000
with
a
copy (which shall not constitute notice) to:
Gallop,
Xxxxxxx & Xxxxxx, X.X.
000
X.
Xxxxxx Xxxx
Xxxxx
0000
Xx.
Xxxxx, Xxxxxxxx 00000
Attention:
Xxxx X. Xxxxxxxxx, Esq.
Facsimile:
(000) 000-0000
11.2 Entire
Agreement
This
Agreement (including the exhibits and schedules hereto) and the other
Transaction Documents supersede all prior discussions, agreements and
understandings (whether written or oral) between the parties hereto and thereto
with respect to the subject matter hereof and thereof, including without
limitation that certain expression of interest dated April 24, 2007 and that
certain proposal letter, dated May 29, 2007, by and among Buyer, Sellers and
the
Company, and contain the sole and entire agreement of the parties with respect
to the subject matter hereof and thereof.
11.3 Governing
Law
This
Agreement shall be governed by and construed in accordance with the internal
Laws of the State of Missouri applicable to a contract executed and to be
performed in such state, without giving effect to the conflicts of Laws
principles thereof.
11.4 Counterparts
This
Agreement may be executed in two or more counterparts and by facsimile, each
of
which shall be considered an original instrument, but all of which together
shall be considered one and the same agreement, and shall become binding when
one or more counterparts have been and executed and delivered by each of the
parties hereto.
11.5 Binding
Effect; Assignment
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns and legal representatives.
Neither this Agreement, nor any right hereunder, may be assigned by any party
without the prior written consent of the other party; provided, however, that
Buyer may collaterally assign its rights under this Agreement to institutions
providing financing to facilitate the transactions contemplated by this
Agreement. Any non-permitted assignment or attempted assignment shall be void.
Notwithstanding the foregoing, Buyer may assign its rights, but not its
obligations, under this Agreement to a wholly owned subsidiary of
Buyer.
11.6 Waivers
and Amendments; Preservation of Remedies
This
Agreement may be amended, superseded, canceled, renewed or extended, and the
terms of this Agreement may be waived, only by a written instrument signed
by
each of the parties or, in the case of a waiver, by the party waiving
compliance. The failure of either party to insist, in any one or more instances,
upon performance of the terms or conditions of this Agreement shall not be
construed as a waiver or relinquishment of any right granted under this
Agreement or of the future performance of any such term, covenant or condition.
No waiver on the part of any party of any right, power or privilege, nor any
single or partial exercise of any such right, power or privilege, shall preclude
any further exercise thereof or the exercise of any other such right, power
or
privilege. The rights and remedies provided in this Agreement are cumulative
and
are not exclusive of any rights or remedies that any party may otherwise have
at
law or in equity.
11.7 Severability
In
the
event any one or more of the provisions contained in this Agreement should
be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained in this Agreement
shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not
in
and of itself affect the validity of such provision in any other jurisdiction),
and the balance of this Agreement shall be interpreted as if such provision(s)
were so excluded and shall be enforceable in accordance with its
terms.
11.8 Attorneys’
Fees
If
any
legal action or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party shall be entitled to recover reasonable
attorneys’ fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it may be entitled.
11.9 Arbitration
Any
controversy or claim arising out of or related to this Agreement shall be
submitted to arbitration in the City of San Diego, State of California in
accordance with the Commercial Rules of the American Arbitration Association,
as
in effect from time to time. There shall be a single arbitrator, and if the
parties are unable to agree on a single arbitrator, the single arbitrator shall
be selected in accordance with the rules of the American Arbitration
Association. The parties agree to abide by all awards rendered by the
arbitrator, and such awards shall be final, non-appealable and binding and
on
all parties. Judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. The provisions of this Section 11.9
shall be specifically enforceable.
11.10 Mutual
Drafting
The
parties are sophisticated and have been represented by counsel throughout the
negotiations leading up to the consummation of the transactions contemplated
by
this Agreement. The provisions of this Agreement have been carefully negotiated
by both parties and their counsel, and the parties do not intend that the
presumptions of any law or rule relating to the interpretation of contracts
against the drafter of any particular clause should be applied to this
Agreement, and therefore waive their effects.
11.11 No
Third Party Beneficiaries
Nothing
in this Agreement is intended or shall be construed to give any person any
legal
or equitable right, remedy or claim under or in respect of this Agreement or
any
provision contained in this Agreement. Without limiting the generality of the
foregoing, no provision in this Agreement shall create any third party
beneficiary or other right in any employee or former employee of the Company
(including any beneficiary or dependent thereof) in respect of continued
employment (or resumed employment) with the Company or in respect of any
benefits that may be provided, directly or indirectly, under any Employee
Benefit Plan.
11.12 Headings
The
headings in this Agreement are for reference only, and shall not affect the
interpretation of this Agreement.
11.13 Time
of Essence
Time
is
of the essence for each and every provision of this Agreement.
[Signature
page to follow]
|
“Sellers”
|
||
|
/s/
Xxxx X. Xxxxx
|
||
|
XXXX
X. XXXXX, TRUSTEE OF THE XXXX
XXXXX
SEPARATE PROPERTY TRUST
DATED
OCTOBER 5, 1999
|
||
|
/s/
Xxxxxxx X. Xxxxxx
|
||
|
XXXXXXX
X. XXXXXX, an individual
|
||
|
“Buyer”
|
||
|
LMI
AEROSPACE, INC.
|
||
|
By:
|
/s/
Xxxxxx X. Xxxx
|
|
|
Xxxxxx
X. Xxxx, its President and Chief
Executive
Officer
|
||
