EXHIBIT 2.2
EXECUTION COPY
STOCK PURCHASE AGREEMENT
among
CRYSTALOID TECHNOLOGIES, INC.
The Management Sellers party hereto
and
XXXX PARTNERS INCORPORATED
CRYSTALOID ELECTRONICS COMPANY
Dated as of March 31, 1998
TABLE OF CONTENTS
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SECTION PAGE
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ARTICLE I
DEFINITIONS
1.1. Definitions...................................................... 1
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1. Basic Transaction................................................ 6
2.2. Payment of Purchase Price........................................ 7
2.3. Holdback......................................................... 7
2.4. The Closing...................................................... 7
2.5. Closing Deliveries by Sellers.................................... 7
2.6. Closing Deliveries by Buyer...................................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
3.1. Authorization of Transaction..................................... 8
3.2. Noncontravention................................................. 8
3.3. Brokers' Fees.................................................... 9
3.4. Shares........................................................... 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS
4.1. Organization, Qualification, and Corporate Power................. 9
4.2. Capitalization................................................... 10
4.3. Noncontravention................................................. 10
4.4. Brokers' Fees.................................................... 11
4.5. Title to Assets.................................................. 11
4.6. Subsidiaries..................................................... 11
4.7. Financial Statements; Projections................................ 11
4.8. Events Subsequent to Latest Balance Sheet........................ 12
4.9. Undisclosed Liabilities.......................................... 14
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4.10. Legal Compliance................................................. 14
4.11. Tax Matters...................................................... 14
4.12. Real Property.................................................... 16
4.13. Intellectual Property............................................ 19
4.14. Tangible Assets.................................................. 22
4.15. Inventory........................................................ 23
4.16. Contracts........................................................ 23
4.17. Notes and Accounts Receivable.................................... 25
4.18. Powers of Attorney............................................... 25
4.19. Insurance........................................................ 25
4.20. Litigation....................................................... 26
4.21. Product Warranty................................................. 26
4.22. Product Liability................................................ 27
4.23. Employees........................................................ 27
4.24. Employee Benefits................................................ 27
4.25. Environmental Matters............................................ 30
4.26. Permits.......................................................... 32
4.27. Backlog.......................................................... 32
4.28. No Conflict of Interest.......................................... 32
4.29. Bank Accounts.................................................... 32
4.30. Customers and Suppliers.......................................... 33
4.31. Claims Against Officers and Directors............................ 33
4.32. Improper and Other Payments...................................... 33
4.33. Accuracy of Statements........................................... 34
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
5.1. Organization of the Buyer........................................ 34
5.2. Authorization of Transaction..................................... 34
5.3. Noncontravention................................................. 34
5.4. Brokers' Fees.................................................... 35
5.5. Legal Compliance................................................. 35
5.6. Litigation....................................................... 35
5.7. Accuracy of Statements........................................... 35
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ARTICLE VI
COVENANTS
6.1. General.......................................................... 36
6.2. Notices and Consents............................................. 36
6.3. Operation of Business............................................ 36
6.4. Full Access...................................................... 38
6.5. Exclusivity...................................................... 39
6.6. Efforts.......................................................... 39
6.7. Maintenance of Insurance......................................... 39
6.8. Notice and Supplemental Information.............................. 39
6.9. Employment Agreement............................................. 40
6.10. Public Announcements............................................. 40
6.11. Consistent Tax Reporting......................................... 40
6.12. Termination of Shareholder Agreements............................ 40
6.13. Resignation of Officers and Directors............................ 40
6.14. Capital Projects................................................. 40
6.15. SERP Agreements.................................................. 40
6.16. Xxxxxxxx Transaction............................................. 40
6.17. Transition....................................................... 40
6.18. Confidentiality.................................................. 41
6.19. Noncompetition................................................... 41
6.20. Xxxxxxx Guaranty................................................. 42
6.21. Post-Closing Covenants........................................... 42
ARTICLE VII
CONDITIONS TO OBLIGATION OF BUYER
7.1. Representations and Warranties True as of Closing Date........... 43
7.2. Compliance with Covenants........................................ 43
7.3. Consents......................................................... 43
7.4. Actions or Proceedings........................................... 44
7.5. Certificate...................................................... 44
7.6. Financial Condition at Closing................................... 44
7.7. Opinion of Counsel............................................... 45
7.8. Resignations..................................................... 45
7.9. Financing........................................................ 45
7.10. Employment Agreements............................................ 45
7.11. Capital Projects................................................. 45
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7.12. SERP Agreements.................................................. 45
7.13. Xxxxxxxx Transaction............................................. 45
7.14. FIRPTA Certificate............................................... 45
7.15. Termination of Certain Agreements................................ 45
7.16. Insurance........................................................ 45
7.17. Contracts........................................................ 46
7.18. Board Approval................................................... 46
7.19. No Material Adverse Effect....................................... 46
7.20. Documents........................................................ 46
ARTICLE VIII
CONDITIONS TO OBLIGATION OF THE SELLERS
8.1. Representations and Warranties True as of Closing................ 46
8.2. Compliance with Covenants........................................ 46
8.3. Actions or Proceedings........................................... 46
8.4. Certificate...................................................... 47
8.5. Opinion of Counsel............................................... 47
8.6. Documents........................................................ 47
ARTICLE IX
SURVIVAL AND REMEDY; INDEMNIFICATION
9.1. Survival of Representations and Warranties....................... 47
9.2. Indemnification by the Management Sellers........................ 48
9.3. Indemnification by the Buyer..................................... 49
9.4. Third-Party Claims............................................... 49
9.5. Other Indemnification Provisions................................. 51
9.6. Holdback......................................................... 51
ARTICLE X
TAX MATTERS
10.1. Tax Matters...................................................... 52
10.2. Tax Periods Ending on or Before the Closing Date................. 52
10.3. Tax Periods Beginning Before and Ending After the Closing Date... 52
10.4. Cooperation on Tax Matters....................................... 53
10.5. Tax Sharing Agreements........................................... 53
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SECTION PAGE
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10.6. Certain Taxes.................................................... 54
ARTICLE XI
TERMINATION
11.1. Termination of Agreement......................................... 54
11.2. Effect of Termination............................................ 55
ARTICLE XII
MISCELLANEOUS
12.1. Expenses......................................................... 55
12.2. Press Releases and Public Announcements.......................... 55
12.3. No Third-Party Beneficiaries..................................... 55
12.4. Entire Agreement................................................. 55
12.5. Succession and Assignment........................................ 55
12.6. Counterparts..................................................... 56
12.7. Headings......................................................... 56
12.8. Notices.......................................................... 56
12.9. Governing Law.................................................... 57
12.10. Amendments and Waivers........................................... 57
12.11. Xxxxxxx.......................................................... 57
12.12. Severability..................................................... 57
12.13. Construction..................................................... 57
12.14. Incorporation of Exhibits, Annexes, and Schedules................ 58
12.15. Specific Performance............................................. 58
12.16. Submission to Jurisdiction....................................... 58
Exhibits
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Exhibit A - Form of Employment Agreement
Exhibit B - Form of Opinion of Counsel to the Seller
Exhibit C - Form of Opinion of Counsel to the Buyer
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Schedules
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Schedule 3.2 Noncontravention
Schedule 3.3 Brokers
Schedule 3.4 Shares
Schedule 4.2 Sellers
Schedule 4.3 Noncontravention
Schedule 4.4 Brokers
Schedule 4.5 Title to Assets
Schedule 4.7(a) Financial Statements
Schedule 4.7(b) Projections
Schedule 4.8(b) Contracts
Schedule 4.8(c) Changes to Contracts
Schedule 4.8(e) Capital Expenditures
Schedule 4.8(g) Indebtedness
Schedule 4.8(l) Changes in Capital Stock
Schedule 4.8(q) Changes in Employment Terms
Schedule 4.8(r) Changes in Benefit Plans
Schedule 4.9 Undisclosed Liabilities
Schedule 4.10 Legal Compliance
Schedule 4.11 Tax Returns
Schedule 4.12(a) Owned Property
Schedule 4.12(b) Leased Property
Schedule 4.13(a) Ownership of Intellectual Property
Schedule 4.13(b) Intellectual Property Infringement
Schedule 4.13(c) Company Intellectual Property
Schedule 4.13(d) Third Party Intellectual Property
Schedule 4.13(e) Rockwell Agreement
Schedule 4.16 Contracts
Schedule 4.19 Insurance
Schedule 4.20 Litigation
Schedule 4.21 Warranties
Schedule 4.23 Employees
Schedule 4.24 Employee Benefits
Schedule 4.25(c) Environmental Liabilities
Schedule 4.25(d) Hazardous Substances
Schedule 4.26 Permits
Schedule 4.27 Backlog
Schedule 4.29 Bank Accounts
Schedule 4.30 Customers and Suppliers
Schedule 4.31 Claims Against Officers and Directors
Schedule 5.5 Legal Compliance
Schedule 5.6 Litigation
Schedule 6.3 Operation of Business
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STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT, dated as of March 31, 1998, by and among
Crystaloid Technologies, Inc., a Delaware corporation (the "Buyer"), the
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Management Sellers, Xxxx Partners Incorporated, an Ohio corporation ("Xxxx"),
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and Crystaloid Electronics Company, an Ohio corporation (the "Company").
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WHEREAS, for good and valuable consideration, including the transactions
contemplated by the Trust Agreements and the Stock Redemption Agreement, Xxxx
has acquired all of the outstanding capital stock of the Company (the "Shares");
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and
WHEREAS, the Buyer wishes to purchase the Shares from Xxxx and Xxxx desires
to sell to the Buyer all of the Shares.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms shall have the following
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meanings for the purposes of this Agreement.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
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investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
"Affiliate" means, with respect to any specified Person, a Person that
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directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, the Person specified.
"Affiliated Group" means any affiliated group within the meaning of Code
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(S)1504(a) or any similar group defined under a similar provision of state,
local or foreign Law.
"Agreement" means this Stock Purchase Agreement, including all exhibits and
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schedules hereto, as it may be amended from time to time.
"Authority" means any governmental regulatory or administrative body,
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governmental agency, governmental subdivision or authority, any court or
judicial authority, any public, private or industry governmental regulatory
authority, whether foreign, national, federal, state or local or
otherwise, or any Person lawfully empowered by any of the foregoing to enforce
or seek compliance with any regulation.
"Backlog" has the meaning set forth in Section 4.27 below.
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"Business" means the design, manufacture and distribution of liquid crystal
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displays and modules.
"Buyer" has the meaning set forth in the preface above.
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"Buyer Indemnified Parties" has the meaning set forth in Section 9.2 below.
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"Capital Projects" means, collectively, the Polarizer Cutting Machine, the
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Aqueous Cleaning System and the Spacer Applicator Machine.
"Cash Amount" means $2,700,000 less the sum of: (i) any adjustment pursuant
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to Section 7.6 plus (ii) the Holdback Amount.
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"Closing" has the meaning set forth in Section 2.4 below.
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"Closing Date" has the meaning set forth in Section 2.4 below.
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"Code" means the Internal Revenue Code of 1986, as amended.
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"Company" has the meaning set forth in the preface above.
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"Company Indemnifying Parties" has the meaning set forth in Section 9.2
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below.
"Confidential Information" means any information concerning the businesses
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and affairs of the Company that is not already generally available to the
public.
"Contract" means any contract, lease, commitment, understanding, sales
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order, purchase order, agreement, indenture, mortgage, note, bond, right,
warrant, instrument, plan, permit or license, whether written or oral, which is
intended or purports to be binding and enforceable.
"Directors" shall mean all of the members of the Board of Directors of the
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Company except for Xxxxxxx X. Xxxxxxxx.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
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retirement plan or arrangement, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare Benefit
Plan or material fringe benefit or other retirement, bonus, or incentive plan
or program.
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"Employee Pension Benefit Plan" has the meaning set forth in ERISA (S)3(2).
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"Employee Welfare Benefit Plan" has the meaning set forth in ERISA (S)3(1).
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"Employment Agreements" means the Employment and Non-Interference
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Agreements between the Company and each of Xxxxxx X. Xxxxxx, Xx., Xxxxxxx X.
Xxxx, Xxxxxx X. Xxxxxx, III and Xxxxxxx X. Xxxxxx, dated the Closing Date, in
the form attached hereto as Exhibit A.
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"Environmental Laws" means all federal, state, local and foreign statutes,
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regulations, ordinances and other provisions having the force or effect of law,
all judicial and administrative orders and determinations, all contractual
obligations and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any Hazardous Substances, materials or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect, including (but not limited to) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Resource Conservation and Recovery
Act of 1976, as amended, the Toxic Substances Control Act of 1976, as amended,
the Federal Water Pollution Control Act Amendments of 1972, the Clean Water Act
of 1977, as amended, any so-called "Superlien" law, and any other similar
federal, state or local statutes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"Financial Statements" means the following:
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(a) the audited financial statements of the Company for the 1994
fiscal year and the reviewed financial statements of the Company for the
1995, 1996 and 1997 fiscal years, respectively (including all notes
thereto), which are included in Schedule 4.7 consisting of the balance
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sheet at such dates and the related statements of earnings and cash flows
for the twelve month periods then ended;
(b) the unaudited financial statements of the Company as of January
31, 1998 (which shall include, for comparative purposes, financial
statements as of January 31, 1997), which are included in Schedule 4.7,
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consisting of the balance sheet at such date and the related statement of
earnings for the one month period then ended.
"GAAP" means United States generally accepted accounting principles as in
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effect from time to time.
"Hazardous Substance" means any material or substance which (i) constitutes
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a hazardous substance, toxic substance or pollutant (as such terms are defined
by or pursuant to any Environmental Laws) or (ii) is regulated or controlled as
a hazardous substance, toxic substance,
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pollutant or other regulated or controlled material, substance or matter
pursuant to any Environmental Laws.
"Holdback Amount" has the meaning set forth in Section 2.3 below.
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"Holdback Release Date" has the meaning set forth in Section 2.3 below.
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"Indemnified Party" has the meaning set forth in Section 9.4 below.
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"Indemnifying Party" has the meaning set forth in Section 9.4 below.
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"Intellectual Property" means (a) all inventions (whether patentable or
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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 thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, 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), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Xxxxxxx" means Xxxxxxx Products, Inc., a Delaware corporation and the sole
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stockholder of the Buyer.
"Knowledge" means actual knowledge after reasonable investigation.
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"Latest Balance Sheet" means the unaudited balance sheet of the Company
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dated as of October 31, 1997.
"Law" means any law, statute, regulation, ordinance, rule, order, decree,
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judgment, consent decree, settlement agreement or governmental requirement
enacted, promulgated, entered into, agreed or imposed by any Authority.
"Liability" means any liability (whether known or unknown, whether asserted
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or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
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"Lien" means any mortgage, lien (except for any lien for Taxes not yet due
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and payable), charge, restriction, pledge, security interest, option, lease or
sublease, claim, right of any third party, easement, encroachment or
encumbrance.
"Xxxxxxxx Transaction" means the redemption by the Company of 4,913 Shares
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pursuant to the Stock Redemption Agreement, dated as of March 31, 1998, by and
among the Company, the Xxxxxxxx Family Limited Partnership and Xxxxxxx X.
Xxxxxxxx (the "Stock Redemption Agreement").
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"Management Sellers" means Xxxxxx X. Xxxxxx, Xx. and Xxxxxx X. Xxxx.
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"Material Adverse Effect" shall mean any circumstances, developments or
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matters whose effect on the Company's Business, properties, assets, results,
operations, condition (financial and other) and prospects, either alone or in
the aggregate, is or would reasonably expected to be materially adverse.
"Multiemployer Plan" has the meaning set forth in ERISA (S)3(37).
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"Ordinary Course of Business" means the ordinary course of business
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consistent with past custom and practice (including with respect to quantity and
frequency).
"Outside Sellers" means Xxxxxxx X. Xxxx, Xxxxxx X. Xxxx and Xxxxx X. Xxxx.
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"PBGC" means the Pension Benefit Guaranty Corporation.
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"Permits" has the meaning set forth in Section 4.26 below.
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"Person" means an individual, a partnership, a corporation, an association,
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a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Projections" means all financial projections and forward-looking
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statements concerning the Company which have been furnished by the Company or
the Sellers to Buyer or its Affiliates or representatives and which have been
attached to Schedule 4.7(b).
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"Purchase Price"means $2,700,000, minus any adjustment pursuant to Section
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7.6.
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"Rockwell Agreement" has the meaning set forth in Section 4.13 below.
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"Schedules" means the disclosure schedules accompanying this Agreement.
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"Securities Act" means the Securities Act of 1933, as amended.
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"Securities Exchange Act" means the Securities Exchange Act of 1934, as
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amended.
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"Sellers" means collectively, Xxxx, the Management Sellers and the Outside
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Sellers.
"Shares" means the 3,525 shares of common stock, no par value per share, of
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the Company held of record by Xxxx.
"Subsidiary" means any corporation, partnership or limited liability
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company with respect to which a specified Person (or a Subsidiary thereof) owns
a majority of the common stock or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"Tax" means any federal, state, local, or foreign income, gross receipts,
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license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code (S)59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
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information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 9.4 below.
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"Trust Agreements" means the trust agreements entered into by the
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Management Sellers and the Outside Sellers.
ARTICLE II
PURCHASE AND SALE OF SHARES
SECTION 2.1. Basic Transaction. On and subject to the terms and
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conditions of this Agreement, the Buyer agrees to purchase from Xxxx, and Xxxx
agrees to sell, or cause to be sold, to the Buyer, all of the Shares for the
consideration specified herein.
SECTION 2.2. Payment of Purchase Price. On the Closing Date, in
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consideration for the Shares, the Buyer shall pay to Xxxx the Cash Amount. The
Cash Amount shall be paid to Xxxx by means of wire transfers of immediately
available funds to an account or accounts designated by Xxxx.
SECTION 2.3. Holdback. The Buyer will withhold $500,000 of the Purchase
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Price (the "Holdback Amount") from Xxxx until eighteen months from the Closing
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Date (the "Holdback Release Date"). The Holdback Amount shall be deposited in
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an interest bearing account and shall serve as a source for any indemnification
claims pursuant to Article IX. On the Holdback Release Date, if there are no
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pending claims for indemnification by the Buyer, the Buyer shall cause the
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Holdback Amount and interest calculated at 5% per annum on the entire Holdback
Amount to be distributed to Xxxx.
SECTION 2.4. The Closing. The closing of the transactions contemplated
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by this Agreement (the "Closing") shall take place at the offices of Xxxxx &
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Xxxxx, 00 Xxxxx Xxxx Xxxxxx, Xxxxx 0000, Xxxxx, Xxxx 00000, commencing at 10:00
a.m. local time on the later of (i) April 15, 1998, or (ii) five business days
following the satisfaction or waiver of all conditions to the obligations of the
parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective parties will take at the
Closing itself) or such other date as the parties may mutually determine, but in
any event no later than April 30, 1998 (the "Closing Date"). It is the intent
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of the parties that Buyer shall assume control of the Company immediately after
the close of business on the Closing Date.
SECTION 2.5. Closing Deliveries by Sellers. To effect the transfer
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referred to in Section 2.1 hereof and the delivery of the consideration
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described in Section 2.2 hereof, the Sellers shall, on the Closing Date, deliver
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the following:
(a) Sellers shall cause to be delivered to Buyer certificates
evidencing the Shares, free and clear of any and all Liens, duly endorsed
in blank for transfer or accompanied by stock powers duly executed in
blank;
(b) Sellers shall have delivered to Buyer all consents, approvals,
releases and waivers from governmental Authorities and other third parties
required or necessary as a result of the transactions contemplated hereby,
reasonably satisfactory in form and substance to Buyer and its counsel;
(c) Sellers shall have delivered all other documents required to be
delivered pursuant to Article VII hereof not specifically mentioned above
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in this Section;
(d) Sellers shall have delivered all documents in connection with the
Xxxxxxxx Transaction; and
(e) All instruments and documents executed and delivered to Buyer
pursuant hereto shall be in form and substance, and shall be executed in a
manner, reasonably satisfactory to Buyer and its counsel.
SECTION 2.6. Closing Deliveries by Buyer. To effect the transfer
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referred to in Section 2.1 hereof and the delivery of the consideration
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described in Section 2.2 hereof, the Buyer shall, on the Closing Date, deliver
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the following:
(a) Buyer shall have tendered to Xxxx the Cash Amount by wire
transfer of immediately available funds to such account or accounts of
which Xxxx shall have given notice to Buyer hereunder not later than five
(5) business days prior to the Closing Date;
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(b) Buyer shall have deposited the Holdback Amount;
(c) Buyer shall have tendered all other documents required to be
delivered pursuant to Article VIII hereof not specifically mentioned above
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in this Section; and
(d) All instruments and documents executed and delivered to Sellers
pursuant hereto shall be in form and substance, and shall be executed in a
manner, reasonably satisfactory to Sellers and their counsel.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant to the Buyer that the statements
contained in this Article III are correct and complete as of the date of this
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Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article III) with respect to himself or itself.
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SECTION 3.1. Authorization of Transaction. Each Seller has full power
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and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform his or its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of each Seller,
enforceable in accordance with its terms and conditions. The Sellers need not
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
SECTION 3.2. Noncontravention. Except as set forth on Schedule 3.2,
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neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will (A) violate any constitution, Law,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which any Seller
is subject or any provision of the Trust Agreements or the Stock Redemption
Agreement or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or consent under
any Contract, lease, license, instrument, or other arrangement to which any
Seller is a party or by which he or it is bound or to which any of his or its
assets is subject.
SECTION 3.3. Brokers' Fees. Except as set forth on Schedule 3.3, the
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Sellers have no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which the Buyer could become liable or obligated.
SECTION 3.4. Shares. Except as set forth on Schedule 3.4, Xxxx holds of
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record and owns beneficially all of the Shares, free and clear of any
restrictions on transfer (other than any restrictions
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under the Securities Act and state securities Laws), Taxes, Liens, options,
warrants, purchase rights, Contracts, commitments, equities, claims, and
demands. No Seller is a party to any option, warrant, purchase right, or other
Contract or commitment that could require such Seller to sell, transfer, or
otherwise dispose of any Shares (other than this Agreement). Except as set forth
on Schedule 3.4, no Seller is a party to any voting trust, proxy, or other
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agreement or understanding with respect to the voting of any Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS
The Company and the Sellers hereby represent and warrant to the Buyer that
the statements contained in this Article IV are correct and complete as of the
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date of this Agreement, and, except as amended pursuant to Section 6.8, will be
-----------
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Article IV), except as set forth in the Schedules hereto. Nothing in the
----------
Schedules shall be deemed adequate to disclose an exception to a representation
or warranty made herein, however, unless the Schedule identifies the exception
with reasonable particularity. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document or other item shall not
be deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the document or other item itself). An item disclosed in any Schedule shall be
deemed disclosed for purposes of all Schedules, provided that reasonably
particular cross references have been included.
SECTION 4.1. Organization, Qualification, and Corporate Power. The
------------------------------------------------
Company is a corporation duly organized, validly existing, and in good standing
under the Laws of the State of Ohio. The Company is duly authorized to conduct
business and is in good standing under the Laws of each jurisdiction except
where the failure to be so qualified would not have a Material Adverse Effect on
the Company. The Company has full corporate power and authority and all
licenses, Permits, and authorizations necessary to carry on the Business in
which it is engaged and to own and use the properties owned and used by it. The
Sellers have delivered to the Buyer correct and complete copies of the articles
of incorporation and code of regulations of the Company (as amended to date).
The minute books (containing the records of meetings of the stockholders, the
board of directors, and any committees of the board of directors), the stock
certificate books, and the stock record books of the Company are correct and
complete. The Company is not in default under or in violation of any provision
of its articles of incorporation or code of regulations.
SECTION 4.2. Capitalization.
--------------
(a) The entire authorized capital stock of the Company consists of
15,000 shares of common stock, no par value, of which 3,525 shares are
issued and outstanding and 4,913 shares are held in treasury. All of the
issued and outstanding Shares have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record by Xxxx.
-9-
Except as set forth on Schedule 4.2, there are no outstanding or authorized
------------
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other Contracts or commitments that could require the
Company to issue, sell, or otherwise cause to become outstanding any of the
Shares. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to the Shares.
There are no voting trusts, proxies, or other agreements or understandings
with respect to the voting of the Shares.
(b) The assignments, endorsements, stock powers and other instruments
of transfer delivered by Xxxx to Buyer at the Closing will be sufficient to
transfer Xxxx'x entire interest, legal and beneficial, in the Shares and,
after such transfer, the Buyer shall acquire all of the Shares. Xxxx has
full power and authority (including full corporate power and authority) to
convey good and marketable title to all of the Shares, and upon transfer to
Buyer of the certificates representing such Shares, Buyer will receive good
and marketable title to such Shares, free and clear of all Liens.
SECTION 4.3. Noncontravention. Neither the execution and the delivery of
----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, Law, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any provision
of the articles of incorporation or code of regulations of the Company or (ii)
except as set forth on Schedule 4.3, conflict with, result in a breach of,
------------
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any Contract, lease, license, instrument, or other arrangement to which
the Company is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Lien upon any of its assets). The
Company does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the parties to consummate the transactions contemplated by this
Agreement.
SECTION 4.4. Brokers' Fees. Except as set forth on Schedule 4.4, the
------------- ------------
Company has no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement.
SECTION 4.5. Title to Assets. Except as set forth on Schedule 4.5, the
--------------- ------------
Company has good and marketable title to, or a valid leasehold interest in, the
properties and assets used by it, located on its premises, or shown on the
Latest Balance Sheet or acquired after the date thereof, free and clear of all
Liens, except for properties and assets disposed of in the Ordinary Course of
Business since the date of the Latest Balance Sheet.
SECTION 4.6. Subsidiaries. The Company has no direct or indirect
------------
Subsidiaries, either wholly or partially owned, and the Company does not hold
any direct or indirect economic, voting or management interest in any Person or
own any securities issued by any Person.
SECTION 4.7. Financial Statements; Projections.
---------------------------------
-10-
(a) The Financial Statements of the Company are set forth on Schedule
--------
4.7(a). The Financial Statements have been and will be prepared in
------
accordance with GAAP consistently applied and present fairly the financial
position, assets and Liabilities of the Company as of the dates thereof and
the revenues, expenses, results of operations of the Company for the
periods covered thereby. The Financial Statements are the books and
records of the Company and do not reflect any transactions which are not
bona fide transactions.
(b) The Projections of the Company are set forth on Schedule 4.7(b).
---------------
All of the Projections are based upon assumptions made in good faith and
considered reasonable by the Company in light of historical financial
information concerning the Company and its industry. The Projections
represent each Seller's and the Company's best estimate of the results of
operations and cash flows for the periods covered thereby and the financial
position as of the dates set forth therein of the Company. The Company's
failure to meet the Projections, other than as the result of assumptions
made negligently or in bad faith, shall not be deemed to be a breach of
this Agreement.
SECTION 4.8. Events Subsequent to Latest Balance Sheet. Since the date
-----------------------------------------
of the Latest Balance Sheet, there has not been any change in the business,
financial condition, operations, results of operations, or future prospects of
the Company, or in any item set forth on any of the Schedules attached hereto,
which would have a Material Adverse Effect on the Company. Without limiting the
generality of the foregoing, since that date:
(a) the Company has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for a fair consideration in
the Ordinary Course of Business;
(b) except as set forth on Schedule 4.8(b), the Company has not
---------------
entered into any Contract, lease, or license (or series of related
Contracts, leases, and licenses) involving more than $25,000 and outside
the Ordinary Course of Business;
(c) except as set forth on Schedule 4.8(c), no party (including the
---------------
Company) has accelerated, terminated, modified, or canceled any agreement,
Contract, lease or license (or series of related Contracts, leases and
licenses) to which the Company is a party or by which it is bound outside
the Ordinary Course of Business;
(d) the Company has not imposed any Lien upon any of its assets,
tangible or intangible;
(e) except as set forth on Schedule 4.8(e), the Company has not made
---------------
any capital expenditure (or series of related capital expenditures) in an
amount in excess of $25,000 either individually or in the aggregate;
(f) the Company has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions);
-11-
(g) except as set forth on Schedule 4.8(g), the Company has not
---------------
issued any note, bond, or other debt security or created, incurred,
assumed, or guaranteed any indebtedness for borrowed money or capitalized
lease obligation involving more than $25,000 either individually or in the
aggregate;
(h) the Company has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business;
(i) the Company has not cancelled, compromised, waived, or released
any right or claim (or series of related rights and claims) either
involving more than $25,000 or outside the Ordinary Course of Business;
(j) the Company has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(k) there has been no change made or authorized in the articles of
incorporation or code of regulations of the Company;
(l) except as set forth on Schedule 4.8(l), the Company has not
---------------
issued, sold, or otherwise disposed any of its capital stock, or granted
any options, warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of its capital stock;
(m) the Company has not declared, set aside, or paid any dividend or
made any distribution with respect to its capital stock (whether in cash or
in kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
(n) the Company has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
(o) the Company has not made any loan to, or entered into any other
transaction with, any of its directors, officers, employees or Affiliates;
(p) the Company has not entered into any employment Contract or
collective bargaining agreement, written or oral, or modified the terms of
any existing such Contract or agreement;
(q) except for hourly employees and except as set forth on Schedule
--------
4.8(q), the Company has not granted any increase in the base compensation
------
of any of its directors, officers, and employees or made any other change
in employment terms for any of its directors, officers, and employees, in
each case, with respect to those directors, officers and employees, whose
annual compensation, including any bonuses, equals or exceeds $50,000;
-12-
(r) except as set forth on Schedule 4.8(r), the Company has not
---------------
adopted, amended, modified, or terminated any bonus, profit-sharing,
incentive, severance, or other plan, Contract, or commitment for the
benefit of any of its directors, officers, and employees (or taken any such
action with respect to any other Employee Benefit Plan);
(s) the Company has not made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of Business;
(t) there has not been any other occurrence, event, incident, action,
failure to act, or transaction outside the Ordinary Course of Business
involving the Company; and
(u) the Company has not committed to any of the foregoing.
SECTION 4.9. Undisclosed Liabilities. Except as set forth on Schedule
----------------------- --------
4.9, the Company has no Liability (and to the Knowledge of the Sellers and the
---
Directors and officers of the Company, there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against it giving rise to any Liability) including, but not
limited to, any Liability related in any manner to the Trust Agreements or the
Xxxxxxxx Transaction, except for (i) Liabilities set forth on the face of the
Latest Balance Sheet (rather than in any notes thereto) and (ii) Liabilities
which have arisen after the date of the Latest Balance Sheet in the Ordinary
Course of Business (none of which results from, arises out of, relates to, is in
the nature of, or was caused by any breach of Contract, breach of warranty,
tort, infringement, or violation of Law or arose out of any charge, complaint,
actions, suit, claim, proceeding or demand).
SECTION 4.10. Legal Compliance. Except as set forth on Schedule 4.10,
---------------- -------------
the Company and its Affiliates have complied with all applicable Laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and, to the Knowledge of the Sellers and
the Directors and officers of the Company, no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply.
SECTION 4.11. Tax Matters.
-----------
(a) The Company has duly and timely filed all Tax Returns that it has
been required to file for all periods through and including the Closing
Date. All such Tax Returns were correct and complete in all respects. All
Taxes owed by the Company (whether or not shown on any Tax Return) have
been timely paid. The Company currently is not the beneficiary of any
extension of time within which to file any Tax Return. The Company has
maintained adequate provision for, and adequate funds to pay, all unpaid
Liabilities for Taxes, whether or not disputed, that have accrued with
respect to or are applicable to the period ended on and including the
Closing Date or to any years and periods prior thereto and for which the
Company may be directly or contingently liable in its own right or as a
transferee of the assets of, or successor to, any Person. The Company has
not incurred any Tax Liabilities
-13-
other than in the Ordinary Course of Business for any taxable year for
which the applicable statute of limitations has not expired. No claim has
ever been made by an Authority in a jurisdiction where the Company does not
pay Taxes or file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no Liens on any of the assets of the Company
that arose in connection with any failure (or alleged failure) to pay any
Tax.
(b) None of the Tax Returns that include the operations of the
Company has ever been audited or investigated by any taxing Authority, and
no facts exist which would constitute grounds for the assessment of any
additional Taxes by any taxing Authority with respect to the taxable years
covered in such Tax Returns. No issues have been raised in any examination
by any taxing Authority with respect to the businesses and operations of
the Company which, by application of similar principals, reasonably could
be expected to result in a proposed adjustment to the Liability for Taxes
for any other period not so examined. Neither the Sellers nor the Directors
and officers (and employees responsible for Tax matters) of the Company
have received, or expect to receive, from any taxing Authority any written
notice of a proposed adjustment, deficiency, underpayment of Taxes or any
other such notice which has not been satisfied by payment or been
withdrawn, and no claims have been asserted relating to such Taxes against
the Company.
(c) Schedule 4.11 lists all federal, state, local, and foreign income
-------------
Tax Returns filed with respect to the Company for taxable periods for which
the applicable statue of limitations has not expired, indicates those Tax
Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. The Sellers have delivered to the
Buyer correct and complete copies of all federal, state, local and foreign
income Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by the Company for taxable periods for which
the applicable statute of limitations has not expired. The Company has not
waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
(d) The Company has withheld and paid all Taxes required to have been
withheld and paid, including without limitation, sales and use taxes, and
all Taxes in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(e) The Company has not filed a consent to the application of Section
341(f) of the Code.
(f) The Company will not be required, as a result of (i) a change in
accounting method for a Tax period beginning on or before the Closing Date,
to include any adjustment under Section 481(c) of the Code (or any
corresponding provision of state, local or foreign Tax Law) in taxable
income for any Tax period beginning on or after the Closing Date, or (ii)
any "closing agreement," as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign Tax Law), to include any
item of income in or exclude any item of deduction from any Tax period
beginning on or after the Closing Date.
-14-
(g) The Company has disclosed on its income Tax Returns all positions
taken therein that could give rise to an accuracy-related penalty under
Section 6662 of the Code (or any corresponding provision of Tax Law).
(h) The Company has not made any payments, is not obligated to make
any payments and is not a party to any agreement that under certain
circumstances could obligate it to make any "excess parachute payment" as
defined in Section 280G of the Code or any payments that will not be
deductible under Section 162(m) of the Code.
(i) The Company is not a party to any Tax allocation or sharing
agreement. The Company is not subject to any joint venture, partnership or
other arrangement or Contract which is treated as a partnership for federal
income Tax purposes.
(j) None of the assets of the Company constitutes tax-exempt bond
financed property or tax-exempt use property within the meaning of Section
168 of the Code, and none of the assets reflected on the Financial
Statements is subject to a lease, safe harbor lease or other arrangement as
a result of which the Company is not treated as the owner for federal
income Tax purposes.
(k) The basis of all depreciable or amortizable assets, and the
methods used in determining allowable depreciation or amortization
(including cost recovery) deductions of the Company, are correct and in
compliance with the Code and the regulations thereunder in all material
respects.
(l) No Seller is a "foreign person" as defined in Section 1445(f)(3)
of the Code.
(m) The Company (A) has not been a member of an Affiliated Group
filing a consolidated federal income Tax Return or (B) has any Liability
for the Taxes of any Person (other than the Company) under Treas. Reg.
(S)1.1502-6 (or any similar provision of state, local, or foreign Law), as
a transferee or successor, by Contract, or otherwise.
(n) The Company is not a party to or otherwise subject to any
arrangement having the effect of or giving rise to the recognition of a
deduction or loss in a taxable period ending on or before the Closing Date,
and a corresponding recognition of taxable income or gain in a taxable
period ending after the Closing Date, or any other arrangement that would
have the effect of or give rise to the recognition of taxable income or
gain in a taxable period ending after the Closing Date without the receipt
of or entitlement to a corresponding amount of cash.
SECTION 4.12. Real Property.
-------------
(a) Schedule 4.12(a) lists and describes briefly all real property
----------------
that the Company owns (the "Owned Property"). With respect to each such
--------------
parcel of Owned Property:
-15-
(i) except as set forth on Schedule 4.12(a), the identified
----------------
owner has good and marketable title to the parcel of Owned Property,
free and clear of all Liens, easements, covenants, or other
restrictions, except for installments of special assessments of real
estate Taxes not yet delinquent and recorded easements, covenants, and
other restrictions which do not impair the current use, occupancy, or
value, or the marketability of title, of the property subject thereto;
(ii) except as set forth on Schedule 4.12(a), there are no
----------------
pending or,to the Knowledge of the Sellers and the Directors and
officers (and employees with responsibility for real estate matters)
of the Company, threatened condemnation proceedings, lawsuits, or
administrative actions relating to the property or other matters
affecting adversely the current use, occupancy, or value thereof;
(iii) the legal description for the parcel contained in the deed
thereof describes such parcel fully and adequately, the buildings and
improvements are located within the boundary lines of the described
parcels of land, are not in violation of applicable setback
requirements, zoning Laws, and ordinances (and none of the properties
or buildings or improvements thereon are subject to "permitted non-
conforming use" or "permitted non-conforming structure"
classifications), and do not encroach on any easement which may burden
the land, and the land does not serve any adjoining property for any
purpose inconsistent with the use of the land, and the property is not
located within any flood plain or subject to any similar type
restriction for which any permits or licenses necessary to the use
thereof have not been obtained;
(iv) all facilities have received all approvals of governmental
Authorities (including licenses and permits) required in connection
with the ownership or operation thereof and have been operated and
maintained in accordance with applicable Laws, rules, and regulations;
(v) there are no leases, subleases, licenses, concessions, or
other Contracts, written or oral, granting to any party or parties the
right of use or occupancy of any portion of the parcel of Owned
Property;
(vi) except as set forth on Schedule 4.12(a), there are no
----------------
outstanding options or rights of first refusal to purchase the parcel
of Owned Property, or any portion thereof or interest therein;
(vii) there are no parties (other than the Company) in
possession of the parcel of real property, other than tenants under
any leases disclosed in Schedule 4.12(a) who are in possession of
----------------
space to which they are entitled;
(viii) all facilities located on the parcel of real property are
supplied with utilities and other services necessary for the operation
of such facilities, including
-16-
gas, electricity, water, telephone, sanitary sewer, and storm sewer,
all of which services are adequate in accordance with all applicable
Laws, ordinances, rules, and regulations and are provided via public
roads or via permanent, irrevocable, appurtenant easements benefitting
the parcel of real property; and
(ix) except as set forth on Schedule 4.12(a), each parcel of
----------------
real property abuts on and has direct vehicular access to a public
road, or has access to a public road via a permanent, irrevocable,
appurtenant easement benefitting the parcel of real property, and
access to the property is provided by paved public right-of-way with
adequate curb cuts available.
(b) Schedule 4.12(b) lists and describes briefly all real property
----------------
leased or subleased to the Company (the "Leased Property"). Schedule
--------------- --------
4.12(b) also identifies the leased or subleased properties for which title
-------
insurance policies are to be procured. The Sellers have delivered to the
Buyer correct and complete copies of the leases and subleases and other
agreements for occupancy, including all amendments, extensions and other
modifications thereto ("Leases") with respect to each Leased Property, as
------
listed in Schedule 4.12(b) (as amended to date). With respect to each Lease
----------------
listed in Schedule 4.12(b):
----------------
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby;
(iii) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) no party to the lease or sublease has repudiated any
provision thereof;
(v) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(vi) with respect to each sublease, the representations and
warranties set forth in subsections (i) through (v) above are true and
correct with respect to the underlying lease;
(vii) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have
received all approvals of governmental Authorities (including licenses
and permits) required in connection
-17-
with the operation thereof and have been operated and maintained in
accordance with applicable Laws, rules, and regulations;
(ix) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of said
facilities; and
(x) the owner of the facility leased or subleased has good and
marketable title to the parcel of real property, free and clear of all
Liens, easements, covenants, or other restrictions, except for
installments of special easements of real estate Taxes not yet
delinquent and recorded easements, covenants, and other restrictions
which do not impair the current use, occupancy, or value, or the
marketability of title, of the property subject thereto.
SECTION 4.13. Intellectual Property.
---------------------
(a) Except as set forth on Schedule 4.13(a), the Company owns or has
----------------
the right to use pursuant to license, sublicense, Contract, or permission
all Intellectual Property necessary for the operation of the Business as
presently conducted and as proposed to be conducted as set forth in the
Projections. Each item of Intellectual Property owned or used by the
Company immediately prior to the Closing hereunder will be owned or
available for use by the Company on identical terms and conditions
immediately subsequent to the Closing hereunder. The Company has taken all
necessary action to maintain and protect each item of Intellectual Property
that it owns or uses.
(b) Except as set forth on Schedule 4.13(b), the Company has not
----------------
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and
neither the Sellers nor the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Company have ever
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any
claim that the Company must license or refrain from using any Intellectual
Property rights of any third party). To the Knowledge of the Sellers and
the Directors and officers (and employees with responsibility for
Intellectual Property matters) of the Company, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Company.
(c) Schedule 4.13(c) identifies each patent or registration which has
----------------
been issued to the Company with respect to any of its Intellectual
Property, identifies each pending patent application or application for
registration which the Company has made with respect to any of its
Intellectual Property, and identifies each license, Contract or other
permission which the Company has granted to any third party with respect to
any of its Intellectual Property (together with any exceptions). The
Sellers have delivered to the Buyer correct and complete copies of all such
patents, registrations, applications, licenses, Contracts and permissions
(as amended to date) and has made available to the Buyer correct and
complete
-18-
copies of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. Schedule 4.13(c) also
----------------
identifies each trade name or unregistered trademark used by the Company in
connection with its Business. With respect to each item of Intellectual
Property required to be identified in Schedule 4.13(c):
----------------
(i) the Company possesses all right, title, and interest in and
to the item, free and clear of any Lien, license, or other
restriction;
(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of
the Sellers and the Directors and officers (and employees with
responsibility for Intellectual Property matters) of the Company, is
threatened which challenges the legality, validity, enforceability,
use, or ownership of the item; and
(iv) the Company has never agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(d) Schedule 4.13(d) identifies each item of Intellectual Property
----------------
that any third party owns and that the Company uses pursuant to license,
sublicense, Contract or permission. The Sellers have delivered to the
Buyer correct and complete copies of all such licenses, sublicenses,
Contracts and permissions (as amended to date). With respect to each item
of Intellectual Property required to be identified in Schedule 4.13(d):
----------------
(i) the license, sublicense, Contract or permission covering
the item is legal, valid, binding, enforceable, and in full force and
effect;
(ii) the license, sublicense, Contract or permission will
continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the consummation of the
transactions contemplated hereby;
(iii) no party to the license, sublicense, Contract or
permission is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(iv) no party to the license, sublicense, Contract or permission
has repudiated any provision thereof;
-19-
(v) with respect to each sublicense, the representations and
warranties set forth in subsections (i) through (iv) above are true
and correct with respect to the underlying license;
(vi) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;
(vii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of
the Sellers and the Directors and officers (and employees with
responsibility for Intellectual Property matters) of the Company, is
threatened which challenges the legality, validity, or enforceability
of the underlying item of Intellectual Property; and
(viii) the Company has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or
permission.
(e) Schedule 4.13(e) sets forth a true, correct and complete copy of
----------------
the Technical Information and Patent License, dated as of March 13, 1987,
between the Company and Rockwell International Corporation (the "Rockwell
--------
Agreement"). With respect to the Rockwell Agreement other than as set forth
---------
on Schedule 4.13(e):
----------------
(i) other than the non-exclusive license granted to the Company
under the patents (the "Licensed Patents") licensed in the Rockwell
----------------
Agreement, to the Knowledge of the Sellers and the Directors and
officers (and employees with responsibility for Intellectual Property
matters) of the Company, no licenses under the Licensed Patents gave
been granted by Rockwell to any third party;
(ii) the Rockwell Agreement is valid, binding, enforceable, and
in full force and effect and will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby;
(iii) to the Knowledge of the Sellers and the Directors and
officers (and employees with responsibility for Intellectual Property
matters) of the Company, the Licensed Patents are valid, subsisting
and legally enforceable against any third party;
(iv) the Company has timely made all scheduled royalty payments
set forth in the Rockwell Agreement;
(v) to the Knowledge of the Sellers and the Directors and
officers (and employees with responsibility for Intellectual Property
matters) of the Company, no third party infringes or is suspected of
infringing any of the Licensed Patents, whether or not such
infringement has been reported to Rockwell;
-20-
(vi) the Company is in possession of detailed books and
records of account of all liquid crystal displays to the extent
required by the Rockwell Agreement;
(vii) the Company and its past and present employees are and
have been in full compliance with all material provisions of the
Rockwell Agreement, including the obligation to maintain in confidence
and protect from disclosure any Technical Information (as defined in
the Rockwell Agreement);
(viii) the Company has not been called upon to, and it is not in
the possession of any facts relating to a claim which shall cause the
Company to, indemnify and hold Rockwell harmless from any claim
brought or threatened to be brought by any third party;
(ix) the Company is not in receipt of and, to the Knowledge of
the Sellers and the Directors and officers (and employees with
responsibility for Intellectual Property matters) of the Company,
there are no facts which would support, a claim by Rockwell that the
Company is in breach of the Rockwell Agreement;
(x) the Company has validly and effectively extended the term
of the Rockwell Agreement by written notice, duly given and, except
for as set forth on Schedule 4.13(e), in accordance with the terms of
----------------
the Rockwell Agreement prior to the end of its first term, which
notice extends the term of the Rockwell Agreement to March 12, 2002;
and
(xi) the Company has neither assigned or transferred, nor
attempted to assign or transfer, any of the Company's rights or
obligations under the Rockwell Agreement, either with or without the
prior written consent of Rockwell.
(f) To the Knowledge of the Sellers and the Directors and officers
(and employees with responsibility for Intellectual Property matters) of
the Company, the Company will not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with, any Intellectual
Property rights of third parties as a result of the continued operation of
its Business as presently conducted and as presently proposed to be
conducted.
(g) Neither the Sellers nor the Directors and officers (and employees
with responsibility for Intellectual Property matters) of the Company have
any Knowledge of any new products, inventions, procedures, or methods of
manufacturing or processing that any competitors or other third parties
have developed which reasonably could be expected to supersede or make
obsolete any product or process of the Company.
SECTION 4.14. Tangible Assets. The Company owns or leases all buildings,
---------------
machinery, equipment, and other tangible assets necessary for the conduct of its
Business as presently conducted and as presently proposed to be conducted. Each
such tangible asset has been maintained in accordance with normal industry
practice, is in good operating condition and
-21-
repair (subject to normal wear and tear), is suitable for the purposes for which
it presently is used and, to the Knowledge of the Sellers and the Directors and
officers of the Company, free from defects (patent and latent). The assets of
the Company at the Closing will be sufficient to permit the Buyer to operate the
Business as currently conducted.
SECTION 4.15. Inventory. The inventory of the Company consists of raw
---------
materials and supplies, manufactured and purchased parts, goods in process, and
finished goods, all of which is merchantable and fit for the purpose for which
it was procured or manufactured, and none of which is slow-moving, obsolete,
damaged, or defective, subject only to the reserve for inventory writedown set
forth on the face of the Latest Balance Sheet (rather than in any notes thereto)
as adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of the Company.
SECTION 4.16. Contracts. Schedule 4.16 lists the following Contracts and
--------- -------------
other agreements to which the Company is a party:
(a) any Contract (or group of related Contracts) for the lease of
personal property to or from any Person providing for lease payments in
excess of $25,000 per annum;
(b) any Contract (or group of related contracts) between the Company
and any Major Customer or Major Supplier;
(c) any capitalized lease, pledge, conditional sale or title
retention agreement involving the payment of more than $25,000 in the
aggregate;
(d) any Contract concerning a partnership or joint venture;
(e) any Contract with a sales representative, manufacturer's
representative, distributor, dealer, broker, sales agency, advertising
agency or other Person engaged in sales, distributing or promotional
activities, or any agreement to act as one of the foregoing on behalf of
any Person;
(f) any Contract (or group of related Contracts) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, or under which it has imposed a
Lien on any of its assets, tangible or intangible;
(g) any Contract pursuant to which the Company has made or will make
loans or advances, or has or will have incurred debts or become a guarantor
or surety or pledged its credit on or otherwise become responsible with
respect to any undertaking of another Person (except for the negotiation or
collection of negotiable instruments in transactions in the ordinary course
of business);
-22-
(h) any mortgage, indenture, note, bond or other agreement relating
to indebtedness incurred or provided by the Company;
(i) any form of Contract concerning confidentiality or noncompetition
or otherwise prohibiting the Company from freely engaging in any business;
(j) any Contract with any Seller or any Affiliate thereof;
(k) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(l) any license, royalty or other Contract relating to Intellectual
Property;
(m) any Contract involving a governmental body;
(n) any collective bargaining agreement;
(o) any Contract for the employment of any individual on a full-time,
part-time, consulting, or other basis providing annual compensation in
excess of $50,000 or providing severance benefits;
(p) any Contract, whether or not fully performed, relating to any
acquisition or disposition of the Company or any predecessor in interest or
any acquisition or disposition of any subsidiary, division, line of
business, or real property;
(q) any Contract under which it has advanced or loaned any amount to
any of its directors, officers, and employees;
(r) any Contract under which the consequences of a default or
termination could have an adverse effect on the business, financial
condition, operations, results of operations, or future prospects of the
Company;
(s) any other Contract (or group of related Contracts) the
performance of which involves consideration in excess of $25,000;
(t) any commitment to do any of the foregoing described in clauses
(a) through (s).
The Sellers have delivered to the Buyer a correct and complete copy (or form of
Contract for certain Contracts so identified on Schedule 4.16) of each written
Contract listed in Schedule 4.16 (as amended to date) and a written summary
-------------
setting forth the terms and conditions of each oral Contract referred to in
Schedule 4.16. With respect to each such Contract: (A) the Contract is legal,
-------------
valid, binding, enforceable, and in full force and effect; (B) the Contract will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the
-23-
consummation of the transactions contemplated hereby; (C) no party is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the Contract; and (D) no party has repudiated any provision
of the Contract.
SECTION 4.17. Notes and Accounts Receivable. All notes and accounts
-----------------------------
receivable of the Company are reflected properly on their books and records, are
valid receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Latest Balance Sheet (rather than in any notes thereto) as adjusted
for operations and transactions through the Closing Date in accordance with the
past custom and practices of the Company.
SECTION 4.18. Powers of Attorney. There are no outstanding powers of
------------------
attorney executed on behalf of the Company.
SECTION 4.19. Insurance. Schedule 4.19 sets forth the following
--------- -------------
information with respect to each insurance policy (including policies providing
property, casualty, Liability, and workers' compensation coverage and bond and
surety arrangements) to which the Company has been a party, a named insured, or
otherwise the beneficiary of coverage:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(e) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) neither the Company nor any other party to the policy is in breach
or default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; and (D) no party to the policy has repudiated
any provision thereof. The Company has been covered by insurance in scope and
amount customary and reasonable for the Business in which it has engaged.
-24-
Schedule 4.19 describes any self-insurance arrangements affecting the Company.
-------------
Schedule 4.19 sets forth known claims, if any, made against the Company that are
-------------
covered by insurance. Such claims have been disclosed to and accepted by the
appropriate insurance companies and are being defended by such appropriate
insurance companies. Except as set forth on Schedule 4.19, no claims have been
-------------
denied coverage during the last five years.
SECTION 4.20. Litigation. Schedule 4.20 sets forth each instance in
---------- -------------
which the Company (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party or to the Knowledge of the Sellers
and the Directors and officers (and employees with responsibility for litigation
matters) of the Company, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or quasi-
judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Schedule 4.20 would reasonably be
-------------
expected to result in any adverse change in the business, financial condition,
operations, results of operations, or future prospects of the Company. Neither
the Sellers nor the Directors and officers (and employees with responsibility
for litigation matters) of the Company have any reason to believe that any such
action, suit, proceeding, hearing, or investigation may be brought or threatened
against the Company. Neither the Sellers nor the Company have any Liability
with respect to any claims or threatened claims by third parties relating to any
sale or proposed sale of the Company (whether structured as a sale of stock, a
sale of assets, a merger or otherwise) or any division of the Company, including
any claims or threatened claims by the Crystal Corridor Group. Neither the
Sellers nor the Company is a party to any litigation relating to such claims
and, to the Knowledge of the Sellers and the Directors and officers (and
employees with responsibility for litigation matters) of the Company, no such
litigation is threatened.
SECTION 4.21. Product Warranty. Each product manufactured, sold, leased,
----------------
or delivered by the Company has been in conformity with all applicable
contractual commitments and all express and implied warranties, and the Company
has no Liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due) for replacement or repair
thereof or other damages in connection therewith, subject only to a $250,000 pro
forma reserve for product warranty claims. Any setoffs against the pro forma
reserve shall be calculated on the basis of the net cost to the Company to
repair or replace the defective product. No product manufactured, sold, leased,
or delivered by the Company is subject to any guaranty, warranty, or other
indemnity beyond the applicable standard terms and conditions of sale or lease.
Schedule 4.21 includes copies of the standard terms and conditions of sale or
-------------
lease for the Company (containing applicable guaranty, warranty, and indemnity
provisions).
SECTION 4.22. Product Liability. The Company has no Liability (whether
-----------------
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due) arising out of
-25-
any injury to individuals or property as a result of the ownership, possession,
or use of any product manufactured, sold, leased, or delivered by the Company.
SECTION 4.23. Employees. Schedule 4.23 contains a true, complete and
--------- -------------
accurate list of the names, titles, annual compensation and all bonuses and
similar payments made for the current and preceding fiscal years for all
directors, officers and employees of the Company whose annual compensation,
including any bonuses, equals or exceeds $50,000. To the Knowledge of the
Sellers and the Directors and officers (and employees with responsibility for
employment matters) of the Company, no executive, key employee, or group of
employees has any plans to terminate employment with the Company. The Company is
not a party to or bound by any collective bargaining agreement, nor has it
experienced any strikes, grievances, claims of unfair labor practices, or other
collective bargaining disputes. The Company has not committed any unfair labor
practice. Neither the Sellers nor the Directors and officers (and employees with
responsibility for employment matters) of the Company have any Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company. The Company has not
engaged in any plant closing or employee layoff activities that would violate or
require notification pursuant to, the Worker Adjustment Retraining and
Notification Act of 1988, as amended, or any similar state, local or foreign
plant closing or mass layoff statute, rule or regulation.
SECTION 4.24. Employee Benefits.
-----------------
(a) General. Except as set forth on Schedule 4.24, the Company is
------- -------------
not a party to, participates in or has any Liability or contingent
Liability with respect to:
(i) any Employee Welfare Benefit Plan or Employee Pension
Benefit Plan, other than a Multiemployer Plan;
(ii) any retirement or deferred compensation plan, incentive
compensation plan, stock plan, unemployment compensation plan,
vacation pay, severance pay, bonus or benefit arrangement, insurance
or hospitalization program or any other fringe benefit arrangements
for any current or former employee, director, consultant or agent,
whether pursuant to Contract, arrangement, custom or informal
understanding, which does not constitute an employee benefit plan (as
defined in section 3(3) of ERISA); or
(iii) any employment agreement.
(b) Plan Documents and Reports. A true and correct copy of each of
--------------------------
the plans, arrangements, and agreements listed on Schedule 4.24 (referred
-------------
to hereinafter as "Employee Benefit Plans"), and all Contracts relating
----------------------
thereto, or to the funding thereof, including, without limitation, all
trust agreements, insurance Contracts, administration Contracts, investment
management agreements, subscription and participation agreements, and
recordkeeping agreements, each as in effect on the date hereof, has been
-26-
supplied to the Buyer. In the case of any Employee Benefit Plan which is
not in written form, the Buyer has been supplied with an accurate
description of such Employee Benefit Plan as in effect on the date hereof.
A true and correct copy of the most recent annual report, actuarial report,
accountant's opinion of the plan's financial statements, summary plan
description and Internal Revenue Service determination letter with respect
to each Employee Benefit Plan, to the extent applicable, and a current
schedule of assets (and the fair market value thereof assuming liquidation
of any asset which is not readily tradable) held with respect to any funded
Employee Benefit Plan has been supplied to the Buyer, and there have been
no material changes in the financial condition in the respective plans
other than market gains or losses to date from that stated in the annual
reports and actuarial reports supplied.
(c) Compliance with Employee Benefit Laws; Liabilities. As to all
--------------------------------------------------
Employee Benefit Plans:
(i) All Employee Benefit Plans comply and have been
administered in form and in operation in all material respects with
all applicable requirements of Law, and no event has occurred which
will or could cause any such Employee Benefit Plan to fail to comply
with such requirements and no notice has been issued by any
governmental Authority questioning or challenging such compliance.
(ii) All Employee Benefit Plans which are employee pension
benefit plans comply in form and in operation with all applicable
requirements of sections 401(a) and 501(a) of the Code; there have
been no amendments to such plans which are not the subject of a
favorable determination letter issued with respect thereto by the
Internal Revenue Service; and no event has occurred which will or
could give rise to disqualification of any such plan under such
sections or to a tax under section 511 of the Code.
(iii) None of the assets of any Employee Benefit Plan is
invested in employer securities or employer real property.
(iv) There have been no "prohibited transactions" (as described
in section 406 of ERISA or section 4975 of the Code) with respect to
any Employee Benefit Plan and the Company has not engaged in any
prohibited transaction.
(v) There have been no acts or omissions which have given rise
to or may give rise to fines, penalties, taxes or related charges
under section 502 of ERISA or Chapters 43, 47, 68 or 100 of the Code
for which the Company may be liable.
(vi) None of the payments contemplated by the Employee Benefit
Plans would, in the aggregate, constitute excess parachute payments
(as defined in section 280G of the Code (without regard to subsection
(b)(4) thereof)).
-27-
(vii) There are no actions, suits or claims (other than routine
claims for benefits) pending or, to the Knowledge of the Sellers and
the Directors and officers (and employees with responsibility for
employee benefit matters) of the Company, threatened involving any
Employee Benefit Plan or the assets thereof and, to the Knowledge of
the Sellers and the Directors and officers (and employees with
responsibility for employee benefit matters) of the Company, no facts
exist which could give rise to any such actions, suits or claims
(other than routine claims for benefits).
(viii) With respect to each Employee Benefit Plan that is
subject to Title IV of ERISA:
(A) there has been no reportable event (as described in
section 4043 of ERISA) which has not been reported and for which
notice is not waived under applicable regulations;
(B) no steps have been taken to terminate any such plan;
(C) there has been no withdrawal (within the meaning of
section 4063 of ERISA) of a "substantial employer" (as defined in
section 4001(a)(2) of ERISA);
(D) no event or condition has occurred which would
constitute grounds under section 4042 of ERISA for the
termination of or the appointment of a trustee to administer any
such plan; and
(E) except as disclosed on actuarial reports supplied to
the Buyer, if each such plan were terminated immediately after
the closing, there would be no unfunded Liabilities with respect
to any such plan, its participants or beneficiaries or the
Pension Benefit Guaranty Corporation (the "PBGC").
----
(ix) Each Employee Benefit Plan which constitutes a "group
health plan" (as defined in section 607(1) of ERISA or section
4980B(g)(2) of the Code), including any plans of current and former
affiliates which must be taken into account under sections 4980B and
414(t) of the Code or section 601 of ERISA, has been operated in
compliance in all material respects with applicable Law, including
coverage requirements of section 4980B of the Code and section 601 of
ERISA to the extent such requirements are applicable.
(x) The Company has no Liability or contingent Liability for
providing, under any Employee Benefit Plan or otherwise, any post-
retirement medical or life insurance benefits, other than statutory
Liability for providing group health
-28-
plan continuation coverage under Part 6 of Title I of ERISA and
section 4980B of the Code.
(xi) Actuarially adequate accruals for all obligations under the
Employee Benefit Plans are reflected in the financial statements of
the Company and such obligations include a pro rata amount of the
contributions and PBGC premiums which would otherwise have been made
in accordance with past practices and applicable Law for the plan
years which include the Closing Date.
(xii) There has been no act or omission by the Company that
would impair the ability of the Company (or any successor thereto) to
unilaterally amend or terminate (in compliance with and subject to
applicable Laws) any Employee Benefit Plan.
(d) Multiemployer Plans. The Company does not contribute to, has not
-------------------
contributed to, and does not have any Liability or contingent Liability
with respect to any Multiemployer Plan.
SECTION 4.25. Environmental Matters.
---------------------
(a) Each of the Company and Affiliates:
(i) has complied and is in compliance with all Environmental
Laws (and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand or notice has been filed or, to the Knowledge
of the Sellers and the Directors and officers (and employees with
responsibility for environmental matters), commenced against any of
them alleging any such failure to comply);
(ii) has obtained and complied with, and is in compliance with,
all Permits, licenses and other authorizations that are required
pursuant to Environmental Laws; and
(iii) has complied in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables which are
contained in the Environmental Laws.
(b) Neither the Company nor its Affiliates has received any written
or oral notice, report or other information regarding any actual or alleged
violation of Environmental Laws, or any Liabilities or potential
Liabilities (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due), including
any investigatory, remedial or corrective obligations, relating to any of
them or its facilities arising under Environmental Laws.
-29-
(c) Except as set forth on Schedule 4.25(c), the Company has no
----------------
Liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued ir unaccrued, whether
liquidated or unliquidated, and whether due or to become due), and the
Company and its Affiliates have not handled or disposed of any substance,
arranged for the disposal of any substance, exposed any employee or other
individual to any substance or condition, or owned or operated any property
or facility in any manner that could give rise to any Liability, for damage
to any site, location or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other individual, or for
any reason under any Environmental Law.
(d) Schedule 4.25(d) sets forth all properties and equipment used in
----------------
the business of the Company and its Affiliates that contain, or have
contained, asbestos, PCB's, methylene chloride, trichloroethylene, 1,2-
transdichloroethylene, dioxins, dibenzofurans and other Hazardous
Substances.
(e) None of the following exists at any property or facility owned or
operated by the Company: (1) underground storage tanks, (2) asbestos-
containing material in any form or condition, (3) materials or equipment
containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(f) Neither the Company nor its Affiliates has treated, stored,
disposed of, arranged for or permitted the disposal of, transported,
handled, or released any substance, including without limitation any
Hazardous Substance, or owned or operated any property or facility (and no
such property or facility is contaminated by any such substance) in a
manner that has given or would give rise to Liabilities, including any
Liability for response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorney fees, or any
investigative, corrective or remedial obligations, pursuant to
Environmental Laws.
(g) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations for
site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called "transaction-
triggered" or "responsible property transfer" Environmental Laws.
(h) Neither the Company nor any of its Affiliates has, either
expressly or by operation of Law, assumed or undertaken any Liability,
including without limitation any obligation for corrective or remedial
action, of any other Person relating to Environmental Laws.
(i) No facts, events or conditions relating to the past or present
facilities, properties or operations of the Company or any of its
Affiliates will prevent, hinder or limit continued compliance with
Environmental Laws, give rise to any investigatory,
-30-
remedial or corrective obligations pursuant to Environmental Laws, or give
rise to any other Liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental Laws, including
without limitation any relating to onsite or offsite releases or threatened
releases of Hazardous Substances or wastes, personal injury, property
damage or natural resources damage.
SECTION 4.26. Permits. Schedule 4.26 is a true and accurate list of all
------- -------------
licenses, certificates, permits, franchises, rights, code approvals and private
product approvals (collectively, "Permits") held by the Company. Except for the
-------
Permits listed on Schedule 4.26, there are no Permits, whether federal, state,
-------------
local or foreign, which are necessary for the lawful operation of the Business
of the Company as presently conducted.
SECTION 4.27. Backlog. Schedule 4.27 sets forth a true, complete and
------- -------------
correct list of all customer orders of the Company which constitute backlog
("Backlog") and the dollar amount represented by each such order as of March 18,
-------
1998. Except as set forth on Schedule 4.27, none of the Backlog orders have
-------------
been canceled and, to the Knowledge of the Sellers and the Directors and
officers (and employees with responsibility for Backlog matters) of the Company,
there are no threats of cancellation with respect to the Backlog orders.
SECTION 4.28. No Conflict of Interest. Neither any Seller nor any
-----------------------
Affiliate thereof has or claims to have any direct or indirect interest in any
tangible or intangible property used in the Business of the Company except as a
holder of Shares. Neither any Seller nor any Affiliate thereof has any direct
or indirect interest in any other Person which conducts a business similar to,
has any Contract or arrangement with, or does business or is involved in any way
with, the Company, except for the ownership of less than 1% of the outstanding
stock of any publicly held corporation.
SECTION 4.29. Bank Accounts. Schedule 4.29 sets forth the names and
------------- -------------
locations of each bank or other financial institution at which the Company has
accounts (giving the account numbers) or safe deposit box and the names of all
Persons authorized to draw thereon or have access thereto, and the names of all
Persons, if any, now holding powers of attorney or comparable delegation of
authority from the Company and a summary statement thereof.
SECTION 4.30. Customers and Suppliers.
-----------------------
(a) Schedule 4.30 sets forth:
-------------
(i) a list of the 10 largest customers of the Company, in terms
of revenue during each of the 1996 and 1997 calendar years
(collectively, the "Major Customers"), showing the total revenue
---------------
received in each such period from each such customer;
(ii) a list of the 10 largest suppliers of the Company in terms
of purchases during the 1996 and 1997 calendar years (collectively,
the "Major Suppliers"),
---------------
-31-
and showing the approximate total purchases in each such period from
each such supplier; and
(iii) a list of the 10 products with the largest sales volume
sold by the Company in terms of revenue during each of the 1996 and
1997 calendar years (collectively, the "Major Products"), showing the
--------------
approximate total revenue received in each such period with respect to
each such product.
(b) Since the date of the Latest Balance Sheet, there has not been
any adverse change in the business relationship, and there has been no
dispute, between the Company and any Major Customer or Major Supplier, and,
to the Knowledge of the Sellers and the Directors and officers of the
Company, there are no indications that any Major Customer or Major Supplier
intends to reduce its purchases from, or sales to, the Company, other than
as set forth in the Projections. Since the date of the Latest Balance
Sheet, there have been no decreases in the profit margins on any Major
Product and, to the Knowledge of the Sellers and the Directors and officers
of the Company, there are no indications that the profit margins on any
Major Product will decrease in the next two fiscal years, other than as set
forth in the Projections.
SECTION 4.31. Claims Against Officers and Directors. Schedule 4.31 sets
------------------------------------- -------------
forth each pending or, to the Knowledge of the Sellers and the Directors and
officers (and employees with responsibility for insurance matters) of the
Company, threatened claims against any director, officer, employee or agent of
the Company or any other Person which could give rise to any claim for
indemnification against the Company, including any claims or threatened claims
by the Crystal Corridor Group.
SECTION 4.32. Improper and Other Payments.
---------------------------
(a) Neither the Company, any director, officer, employee, agent or
representative of the Company, any Seller, their respective Affiliates nor
any Person acting on behalf of any of them, has made, paid or received any
bribes, kickbacks or other similar payments to or from any Person, whether
lawful or unlawful;
(b) no contributions have been made, directly or indirectly, to a
domestic or foreign political party or candidate.
(c) no improper foreign payment (as defined in the Foreign Corrupt
Practices Act) has been made; and
(d) the internal accounting controls of the Company are adequate to
detect any of the foregoing.
SECTION 4.33. Accuracy of Statements. Neither this Agreement nor any
----------------------
Schedule, exhibit, statement, list, document, certificate or other information
furnished or to be furnished by
-32-
or on behalf of the Company or any Seller to Buyer or any representative or
Affiliate of Buyer in connection with this Agreement or any of the transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in which
they are made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers that the statements
contained in this Article V are correct and complete as of the date of this
---------
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article V).
SECTION 5.1. Organization of the Buyer. The Buyer is a corporation duly
-------------------------
organized, validly existing, and in good standing under the laws of the State of
Delaware and legally authorized to do business in Ohio. The Buyer is not in
default under or in violation of any provision of its articles of incorporation
or bylaws.
SECTION 5.2. Authorization of Transaction. The Buyer has full power and
----------------------------
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions. The Buyer need not give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
SECTION 5.3. Noncontravention. Neither the execution and the delivery of
----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, Law, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or consent under
any agreement, Contract, lease, license, instrument, or other arrangement to
which the Buyer is a party or by which it is bound or to which any of its assets
is subject.
SECTION 5.4. Brokers' Fees. The Buyer has no Liability or obligation to
-------------
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Seller could become liable
or obligated.
SECTION 5.5. Legal Compliance. The Company and its Affiliates have
----------------
complied with all applicable Laws (including rules, regulations, codes, plans,
injunctions, judgments, orders,
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decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or to the Knowledge of the Directors and officers of the Buyer commenced
against any of them alleging any failure so to comply with respect to the
transactions contemplated by this Agreement.
SECTION 5.6. Litigation. Schedule 5.6 sets forth each instance in which
---------- ------------
the Company (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party or to the Knowledge of the
Directors and officers (and employees with responsibility for litigation
matters) of the Buyer, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or quasi-
judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator as a result of the transactions
contemplated by this Agreement. None of the actions, suits, proceedings,
hearings, and investigations set forth in Schedule 5.6 would reasonably be
------------
expected to result in any adverse change in the business, financial condition,
operations, results of operations, or future prospects of the Buyer. The
Directors and officers (and employees with responsibility for litigation
matters) of the Buyer have no reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or to the Knowledge of the
Directors and officers (and employees with responsibility for litigation
matters) of the Buyer, threatened against the Buyer.
SECTION 5.7. Accuracy of Statements. Neither this Agreement nor any
----------------------
Schedule, exhibit, statement, list, document, certificate or other information
furnished or to be furnished by or on behalf of the Buyer to Seller or any
representative or Affiliate of Seller in connection with this Agreement or any
of the transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
ARTICLE VI
COVENANTS
SECTION 6.1. General. Each of the parties will use his or its best
-------
efforts to take all action and to do all things necessary in order to consummate
and make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Articles
--------
VII and VIII below).
--- ----
SECTION 6.2. Notices and Consents. The Sellers will cause the Company
--------------------
to give any notices to third parties, and will cause the Company to obtain any
third party consents, that the Buyer may reasonably request. Each of the
parties will (and the Sellers will cause the Company to) give any notices to,
make any filings with, and use its best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in Sections 4.3 and 5.3 above.
------------ ---
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SECTION 6.3. Operation of Business. From the date of this Agreement
---------------------
until the Closing Date, the Company shall be operated in the Ordinary Course of
Business and each of the Sellers and the Company shall use commercially
reasonable efforts to preserve intact the present business organization and
personnel of the Company, preserve the business relationships of the Company
with other Persons material to the operation of the Company, and not permit any
action or omission which would cause any of the representations or warranties of
the Company contained herein to become inaccurate or any of the covenants of the
Company to be breached. Without limiting the generality of the foregoing, except
as set forth in Schedule 6.3, prior to the Closing, the Company will not,
------------
without the prior written consent of the Buyer:
(a) incur any obligation or enter into any Contract, other than in
the Ordinary Course of Business, which (i) requires a payment by any party
in excess of, or a series of payments which in the aggregate exceed,
$25,000 and (ii) has a term of, or requires the performance of any
obligations by the Company over a period in excess of six months;
(b) take any action, or enter into or authorize any Contract or
transaction involving more than $25,000 and outside the Ordinary Course of
Business, other than any transactions contemplated by this Agreement;
(c) sell, transfer, convey, assign or otherwise dispose of any of its
assets or properties other than in the Ordinary Course of Business;
(d) waive, release or cancel any claims against third parties or
debts owing to it, or any rights which have any value involving more than
$25,000 and outside in the Ordinary Course of Business;
(e) make any changes in its accounting systems, policies, principles
or practices;
(f) enter into, authorize, or permit any transaction with any Seller
or any Affiliate thereof, or enter into any Contract relating to
compensation or benefits with any Person, or, other than in the Ordinary
Course of Business, modify any compensation amounts or levels of any
officer or employee;
(g) except as required for the transactions contemplated in this
Agreement, change or amend its articles of incorporation or code of
regulations;
(h) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of
options, warrants, convertible or exchangeable securities, commitments,
subscriptions, rights to purchase or otherwise) any shares of capital stock
or any other securities of the Company, or amend any of the terms of any
such capital stock or other securities, except as required for the
transactions contemplated in this Agreement;
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(i) except as required for the transactions contemplated in this
Agreement, split, combine, or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution in property
other than cash in respect of its capital stock, or redeem or otherwise
acquire any capital stock or other securities of the Company;
(j) make any borrowings, incur any debt, or assume, guarantee,
endorse (except for the negotiation or collection of negotiable instruments
in the Ordinary Course of Business and consistent with past practice) or
otherwise become liable (whether directly, contingently or otherwise) for
the obligations of any other Person, or make any payment or repayment in
respect of any indebtedness in excess of $25,000 (other than trade payables
and accrued expenses in the Ordinary Course of Business and consistent with
past practice);
(k) make any loans, advances or capital contributions to, or
investments in, any other Person;
(l) enter into, adopt, amend or terminate any bonus, profit sharing,
compensation, termination, stock option, stock appreciation right,
restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreements,
trusts, plans, funds or other arrangements for the benefit or welfare of
any director, manager, officer or employee, or increase in any manner the
compensation or fringe benefits of any director, manager, officer or
employee or pay any benefit not required by any existing plan and
arrangement or enter into any Contract, agreement, commitment or
arrangement to do any of the foregoing;
(m) acquire, lease, encumber or otherwise impose a Lien on any
assets, whether tangible or intangible;
(n) authorize or make any capital expenditures which individually or
in the aggregate are in excess of $25,000;
(o) make any Tax election or settle or compromise any federal, state,
local or foreign income Tax Liability, or waive or extend the statute of
limitations in respect of any such Taxes;
(p) pay any amount, perform any obligation or agree to pay any amount
or perform any obligation, in settlement or compromise of any suits or
claims of Liability against the Company or any of its directors, managers,
officers, employees or agents;
(q) terminate, modify, amend or otherwise alter or change any of the
terms or provisions of any agreement, or pay any amount not required by Law
or by any Contract; or
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(r) other than overnight deposits or money market instruments and
investments existing on the date hereof, make any investments with cash or
the proceeds of existing investments.
SECTION 6.4. Full Access. The Sellers will permit and cause the Company
-----------
to permit, representatives of the Buyer to have full access to all premises,
properties, personnel, books, records (including Tax records), Contracts, and
documents of or pertaining to the Company and shall make the officers and
employees of the Company available to the Buyer and its representatives as the
Buyer and their representatives shall from time to time reasonably request, in
each case to the extent that such access and disclosure would not obligate the
Company to take any actions that would disrupt the normal course of its business
or violate the terms of any agreement to which the Company is bound or any
applicable Law or regulation. The Buyer and the Buyer's representatives will
not use any of the Confidential Information that they receive from the Company
except in connection with this Agreement, and, if this Agreement is terminated
for any reason whatsoever, the Buyer and the Buyer's representatives will return
to the Company all tangible embodiments (and all summaries and copies, including
electronically stored information) of the Confidential Information that they
receive from the Company or copied from Confidential Information received from
the Company which are in its possession and will only use such Confidential
Information in the defense of any litigation related to this Agreement;
provided, however, that the Buyer and the Buyer's representatives shall not be
-------- -------
responsible for the confidentiality of any information (i) which, at the time of
disclosure, is available publicly, through no fault of the Buyer (ii) which,
after disclosure, becomes available publicly through no fault of the Buyer, or
(iii) which the Buyer knew or to which the Buyer had access prior to disclosure.
SECTION 6.5. Exclusivity. Except as may be necessary to consummate the
-----------
Xxxxxxxx Transaction, the Sellers will not (and the Sellers will not cause or
permit the Company to) (i) solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets, of
the Company (including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. The Sellers will not vote their Shares in favor of any
such acquisition structured as a merger, consolidation, or share exchange. The
Sellers will notify the Buyer immediately if any Person makes any proposal,
offer, inquiry, or contact with respect to any of the foregoing.
SECTION 6.6. Efforts.
-------
(a) Subject to the terms and conditions hereof, each party hereto
shall use all reasonable efforts to consummate the transactions
contemplated hereby as promptly as practicable. An undertaking of a Person
under this Agreement to use such Person's best efforts shall not require
such Person to incur unreasonable expenses or obligations in order to
satisfy such undertaking.
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(b) The Sellers, the Company and the Buyer will, as promptly as
practicable (i) make the required filings with, and use their respective
best efforts to obtain all required authorizations, approvals, consents and
other actions of, governmental Authorities and (ii) use their respective
best efforts to obtain all other required consents of other Persons with
respect to the transactions contemplated hereby.
(c) The Buyer will use its best efforts to obtain the financing
necessary to consummate the transactions contemplated hereby.
SECTION 6.7. Maintenance of Insurance. The Company will continue to
------------------------
carry its existing insurance through the Closing Date, and shall not allow any
material breach, default or cancellation (other than expiration and replacement
of policies in the ordinary cause of business) of such insurance policies or
agreements to occur or exist.
SECTION 6.8. Notice and Supplemental Information. The Sellers, the
-----------------------------------
Company and the Buyer shall each give prompt notice to the other parties of any
material adverse development causing a breach of any of its own representations
and warranties in Articles III, IV and V respectively. In addition, the Sellers
------------ -- -
and the Company will, from time to time, as necessary, within a reasonable
period of time preceding the Closing, by notice in accordance with the terms of
this Agreement, supplement or amend the Schedules, including one or more
supplements or amendments to correct any matter which would constitute a breach
of any representation, warranty, agreement or covenant contained herein. If the
Sellers or the Company supplement or amend the Schedules with facts or
circumstances that would reasonably be expected to have a Material Adverse
Effect on the Company, the sole remedy of the Buyer under this Section 6.8 shall
-----------
be termination of the Agreement as provided for in Section 11.1(e).
---------------
SECTION 6.9. Employment Agreement. The Company shall enter into the
--------------------
Employment Agreements.
SECTION 6.10. Public Announcements. The Sellers, the Company and the
--------------------
Buyer will consult with each other before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated by
this Agreement and no party shall, without the prior written consent of the
others, issue any such press release or make any such public statement, except
as may be required by applicable Law.
SECTION 6.11. Consistent Tax Reporting. The Sellers, the Company and the
------------------------
Buyer shall treat and report the transactions contemplated by this Agreement in
all respects consistently for purposes of any federal, state, local or foreign
Tax. The parties hereto shall not take any actions or positions inconsistent
with the obligations set forth herein.
SECTION 6.12. Termination of Shareholder Agreements. Prior to or at the
-------------------------------------
Closing the Company shall cause the termination, and render void and of no
effect, (i) any existing shareholder agreements between or among holders of
Shares and the Company effecting the ownership or disposition of the capital
stock of the Company and (ii) any options or warrants to
-38-
purchase or rights to subscribe for, any capital stock of the Company to which
the Company is a party and which has not been previously exercised, canceled or
redeemed.
SECTION 6.13. Resignation of Officers and Directors. The Sellers shall
-------------------------------------
cause each officer and member of the Board of Directors of, and each trustee or
fiduciary of any plan or arrangement involving employee benefits of, the
Company, if so requested by Buyer, to tender his or her resignation from such
position effective as of the Closing.
SECTION 6.14. Capital Projects. The Company shall purchase the Capital
----------------
Projects.
SECTION 6.15. SERP Agreements. The Company shall enter into the SERP
---------------
agreement modifications in form and substance reasonably satisfactory to Buyer,
with Xxxxxx X. Xxxxxx, Xx., Xxxxxxx X. Xxxx, Xxxxxx X. Xxxxxx, III, and Xxxxxxx
X. Xxxxxx.
SECTION 6.16. Xxxxxxxx Transaction. The Company shall consummate or
--------------------
cause the consummation of the Xxxxxxxx Transaction and Xxxx will own all of the
outstanding capital stock of the Company.
SECTION 6.17. Transition. The Sellers will not take any action that is
----------
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Company from maintaining
the same business relationships with the Company after the Closing as it
maintained with the Company prior to the Closing. The Sellers will refer all
customer inquiries relating to the Business of the Company to the Buyer from and
after the Closing.
SECTION 6.18. Confidentiality. The Sellers will, and will cause Xxxxxxxx
---------------
to, treat and hold as such all of the Confidential Information, refrain from
using any of the Confidential Information except in connection with this
Agreement, and, in the event of a Closing, deliver promptly to the Buyer or
destroy, at the request and option of the Buyer, all tangible embodiments (and
all copies) of the Confidential Information which are in their possession. In
the event that any Seller is requested or required (by oral question or request
for information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose any Confidential
Information, such Seller will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 6.18. If, in the absence of a
------------
protective order or the receipt of a waiver hereunder, a party is, on the advice
of counsel, compelled to disclose any Confidential Information to any tribunal
or else stand liable for contempt, such Seller may disclose the Confidential
Information to the tribunal; provided, however, that such Seller shall use his
-------- -------
or its best efforts to obtain, at the request of the Buyer, an order or other
assurance that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as the Buyer shall designate.
The foregoing provisions shall not apply to any Confidential Information which
is generally available to the public immediately prior to the time of
disclosure.
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SECTION 6.19. Noncompetition.
--------------
(a) The Sellers acknowledge that they have a special knowledge of the
Business and the proprietary and confidential information included in the
Business, and that the Buyer is making a considerable investment in the
Business from which the Sellers have benefitted. In consideration of this
Agreement and such investment and benefit, and as an inducement to the
Buyer to enter into this Agreement and consummate the transactions
contemplated herein, each of the Sellers agrees that, for a period of five
years after the Closing Date, no Seller will, directly or indirectly, own,
manage, operate, control or participate in the ownership, management,
operation or control of, or be connected as an officer, employee, partner,
director or otherwise with, or have any financial interest in, or aid or
assist anyone else in the conduct of, any business that directly or
indirectly designs and manufactures liquid crystal displays and modules
("Competitive Business"); provided, however, that any Seller may own less
-------------------- -------- -------
than 1% of any outstanding class of securities registered pursuant to the
Securities Exchange Act of 1934, as amended, of an issuer that is a
Competitive Business.
(b) For a period of five years following the Closing Date, none of
the Sellers will, without the express prior written approval of the Board
of Directors of the Buyer, (A) directly or indirectly recruit, solicit or
otherwise induce or influence any sales agent, joint venturer, lessor,
supplier, agent, representative or any other person that has or had during
the one year period initially preceding the Closing Date a business
relationship with the Company, to discontinue, reduce or adversely modify
such employment, agency or business relationship with the Buyer or the
Company as it relates to the Business as conducted by the Buyer or the
Company after the Closing Date, or (B) employ or seek to employ or cause
any Competitive Business to employ or seek to employ any person or agent
who is employed or retained by the Buyer or the Company. Notwithstanding
the foregoing, nothing herein shall prevent a Seller from providing a
letter of recommendation to an employee with respect to a future employment
opportunity.
(c) For a period of five years following the Closing Date, none of
the Sellers will without the express prior written approval of the Board of
Directors of the Buyer, directly or indirectly, recruit, solicit or
otherwise induce or influence any customer of the Buyer or the Company to
discontinue, reduce or modify such business relationship with the Buyer or
the Company.
(d) Each of the Sellers agrees that the violation or threatened
violation of any of the provisions of this Section 6.19 shall cause
------------
immediate and irreparable harm to the Buyer and that the damage to the
Buyer will be difficult or impossible to calculate with precision.
Therefore, in the event any Seller violates this Section 6.19, an
------------
injunction restraining such Seller from such violation may be entered
against such Seller in addition to any other relief available to the Buyer.
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(e) If, at the time of enforcement of any provision of this Section
-------
6.19, a court shall hold that the duration, scope or other restrictions
----
stated herein are unreasonable under circumstances then existing, the
parties agree that the maximum duration, scope or other restrictions
reasonable under such circumstances shall be substituted for the stated
duration, scope or other restrictions and that the court shall be allowed
to revise the restrictions contained herein to cover the maximum period,
scope and other restrictions permitted by law; provided, however, that the
-------- -------
substituted period shall not exceed the period contemplated by this
Agreement.
SECTION 6.20. Xxxxxxx Guaranty. Xxxxxxx hereby guarantees the payment of
----------------
the Buyer's obligations pursuant to Section 2.3 solely in the event that Buyer
-----------
fails to pay such obligation to Xxxx when due. The foregoing guaranty is a
guaranty of payment only and shall only be enforceable in the event Buyer fails
to make the payments required by Section 2.3.
-----------
SECTION 6.21. Post-Closing Covenants. The Sellers, the Company and the
----------------------
Buyer agree as follows with respect to the period following the Closing:
(a) In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of
the parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other party
hereto reasonably may request, all at the sole cost and expense of the
requesting party (unless the requesting party is entitled to
indemnification therefor under Article IX). From and after the Closing,
----------
the Buyer will be entitled to access all documents, books, records,
agreements, and financial data of any sort relating to the Company.
(b) In the event and for so long as any party hereto actively is
contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with (i)
any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving the Company, each of the other parties
hereto will cooperate with him or it and his or its counsel in the contest
or defense, make available their personnel, and provide such testimony and
access to their books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting
or defending party (unless the contesting or defending party is entitled to
indemnification therefor under Article IX).
----------
ARTICLE VII
CONDITIONS TO OBLIGATION OF BUYER
-41-
The obligation of the Buyer to consummate the transactions to be performed
by it in connection with the Closing is subject to satisfaction of the following
conditions:
SECTION 7.1. Representations and Warranties True as of Closing Date. The
------------------------------------------------------
representations and warranties set forth in Articles III and IV shall have been
------------ --
accurate, true and correct on and as of the date of this Agreement, and shall
also be accurate, true and correct on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
SECTION 7.2. Compliance with Covenants. The Sellers and the Company
-------------------------
shall have performed and complied with all of the covenants hereunder in all
material respects through the Closing.
SECTION 7.3. Consents. The Company shall have procured all of the third
--------
party consents specified in Sections 4.3 and 6.2 above.
--------------------
SECTION 7.4. Actions or Proceedings. No action, suit, or proceeding
----------------------
shall be pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, (C)
affect adversely the right of the Buyer to own the Shares and to control the
Company, or (D) affect adversely the right of the Company to own its assets and
to operate its Business (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect).
SECTION 7.5. Certificate. The Sellers shall have delivered to the Buyer
-----------
a certificate to the effect that each of the conditions specified above in
Sections 7.1-7.4 is satisfied in all respects.
----------------
SECTION 7.6. Financial Condition at Closing. All of the following
------------------------------
financial conditions shall exist as of March 31, 1998:
(a) the Company shall have not more than $3.8 million in outstanding
indebtedness at the Closing Date. For purposes of this Section 7.6, the
-----------
term indebtedness shall include notes payable and the short-term and long-
term portions of any and all indebtedness for borrowed money or other
obligations, including capitalized lease obligations, including accrued
interest, fees and prepayment penalties with respect thereto, but shall not
include accounts payable that are payable other than to the Sellers or
their Affiliates, all as determined in accordance with GAAP in a manner
consistent with prior periods;
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(b) the minimum level of working capital of the Company shall be at
least $1.65 million. The term "working capital" shall be defined as net
accounts receivable plus inventory less current liabilities (to the extent
---- ----
not included in Section 7.6(a)); and
--------------
(c) the mix of assets and liabilities of the Companies and their
Subsidiaries shall be substantially the same as at October 31, 1997;
provided, however, that the failure to satisfy the conditions in this Section
-------- ------- -------
7.6 will serve to reduce the Purchase Price payable to the Seller by the
---
following sum: (i) the amount by which working capital of the Company is less
than $1.65 million plus (ii) the amount of indebtedness assumed or refinanced by
----
Buyer in excess of $3.8 million, and; provided, further, that if the Company
-------- -------
does anything outside of the Ordinary Course of Business to affect the working
capital of the Company between the date hereof and the Closing Date, the Buyer
shall be able to terminate this Agreement as provided in Section 11.1(e).
---------------
SECTION 7.7. Opinion of Counsel. The Buyer shall have received from
------------------
counsel to the Sellers an opinion in form and substance as set forth in Exhibit
-------
B attached hereto, addressed to the Buyer, and dated as of the Closing Date.
-
SECTION 7.8. Resignations. The Buyer shall have received the
------------
resignations, effective as of the Closing, of each director and officer of the
Company other than those whom the Buyer shall have specified in writing at least
five business days prior to the Closing.
SECTION 7.9. Financing. The Buyer shall have obtained on terms and
---------
conditions which are commercially reasonable all of the financing it needs in
order to consummate the transactions contemplated hereby and fund the working
capital requirements of the Company after the Closing.
SECTION 7.10. Employment Agreements. The Company shall have entered into
---------------------
the Employment Agreements.
SECTION 7.11. Capital Projects. The Company shall have purchased the
----------------
Capital Projects.
SECTION 7.12. SERP Agreements. The Company shall have entered into the
---------------
SERP agreement modifications in form and substance reasonably satisfactory to
Buyer.
SECTION 7.13. Xxxxxxxx Transaction. The Xxxxxxxx Transaction shall have
--------------------
been consummated and Xxxx shall be the owner of all of the outstanding capital
stock of the Company.
SECTION 7.14. FIRPTA Certificate. Buyer shall have received from each
------------------
Seller a duly executed certificate in the form specified by Treasury Regulation
(S) 1.1445-2(b)(2).
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SECTION 7.15. Termination of Certain Agreements. The Sellers shall have,
---------------------------------
and the Sellers shall have caused their Affiliates and the Company to, and that
the Company and its Affiliates shall have, effective as of the Closing, without
any cost to the Company, terminated, rescinded, canceled and rendered void and
of no effect any and all Contracts between the Company on the one hand and any
Seller or any Affiliate thereof (other than the Company) on the other hand. The
Sellers agree that effective as of the Closing, all rights of any Seller or any
Affiliate thereof or any Affiliates of the Company to indemnification by the
Company (whether by Contract, code of regulations, Law or otherwise) are
terminated, void, of no effect and unenforceable by them except as may arise
pursuant to this Agreement.
SECTION 7.16. Insurance. Buyer shall be satisfied as to the availability
---------
and cost of adequate and reasonable insurance covering the business and assets
of the Company.
SECTION 7.17. Contracts. None of the Contracts entered into by the
---------
Company shall be breached or subject to termination, modification or change as a
result of the transactions contemplated by this Agreement, and none of the
customers of the Company shall have stated or indicated their determination or
intention to reduce or otherwise adversely change their orders or business.
SECTION 7.18. Board Approval. The Board of Directors of Buyer shall have
--------------
authorized the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby.
SECTION 7.19. No Material Adverse Effect. Since the date of this
--------------------------
Agreement, no event has occurred which could reasonably be expected to have a
Material Adverse Effect on the Company or on any item set forth on any Schedule.
SECTION 7.20. Documents. All actions to be taken by the Sellers in
---------
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Buyer.
ARTICLE VIII
CONDITIONS TO OBLIGATION OF THE SELLERS
The obligation of the Sellers to consummate the transactions to be
performed by them in connection with the Closing is subject to satisfaction of
the following conditions:
SECTION 8.1. Representations and Warranties True as of Closing. The
-------------------------------------------------
representations and warranties set forth in Article V shall have been accurate,
---------
true and correct on and as of the date of this Agreement, and shall also be
accurate, true and correct on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date.
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SECTION 8.2. Compliance with Covenants. The Buyer shall have
-------------------------
performed and complied with all of its covenants hereunder in all material
respects through the Closing.
SECTION 8.3. Actions or Proceedings. No action, suit, or proceeding
----------------------
shall be pending before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement or (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect).
SECTION 8.4. Certificate. The Buyer shall have delivered to the
-----------
Sellers a certificate to the effect that each of the conditions specified above
in Sections 8.1 - 8.3 is satisfied in all respects.
------------------
SECTION 8.5. Opinion of Counsel. The Sellers shall have received
------------------
from counsel to the Buyer an opinion in form and substance as set forth in
Exhibit D attached hereto, addressed to the Sellers, and dated as of the Closing
---------
Date.
SECTION 8.6. Documents. All actions to be taken by the Buyer in
---------
connection with the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Sellers.
ARTICLE IX
SURVIVAL AND REMEDY; INDEMNIFICATION
SECTION 9.1. Survival of Representations and Warranties. All of the
------------------------------------------
terms and conditions of this Agreement, together with the warranties,
representations, agreements and covenants contained herein or in any instrument
or document delivered or to be delivered pursuant to this Agreement, shall
survive the execution of this Agreement and the Closing Date, notwithstanding
any investigation heretofore or hereafter made by or on behalf of any party
hereto; provided, however, that unless otherwise stated, the agreements and
-------- -------
covenants set forth in this Agreement shall survive and continue until all
obligations set forth therein shall have been performed and satisfied.
Notwithstanding the foregoing, (a) the representations and warranties contained
in Article III and Sections 4.1, 4.2, 4.3, 4.4, 5.1, 5.2, 5.3 and 5.4 of this
----------- -------- --- --- --- --- --- --- --- ---
Agreement shall survive the Closing and continue in full force and effect
indefinitely; (b) the representations and warranties of the Sellers and the
Company contained in Sections 4.11, 4.25 and the covenants set forth in Section
------------- ---- -------
10.6 of this Agreement shall survive the Closing and continue in full force and
----
effect until the expiration of the applicable statute of limitations (including
any extensions or waivers thereof); and (c) all other representations and
warranties, and the related agreements of the Sellers, the
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Company and the Buyer to indemnify each other set forth in this Article IX,
----------
shall survive and continue for, and all indemnification claims with respect
thereto shall be made prior to the end of, eighteen (18) months from the Closing
Date, except for representations, warranties and related indemnities for which
an indemnification claim shall be pending as of the end of the applicable period
referred to above, in which event such indemnities shall survive with respect to
such indemnification claim until the final disposition thereof (the
"Indemnification Period").
----------------------
SECTION 9.2. Indemnification by the Management Sellers.
-----------------------------------------
(a) In the event that, during the Indemnification Period there is
(i) a breach (or an alleged breach) of any of the representations or
warranties made by, or any breach of or failure to perform any covenant,
agreement or obligation of, the Company or any Seller in this Agreement or
any other document contemplated hereby, or in any document relating hereto
or thereto or contained in any exhibit or Schedule to this Agreement, (ii)
any Liabilities, Adverse Consequences or remediation, clean-up or similar
obligations or costs under Environmental Laws and relating to the Business
and activities or the ownership, operation or lease by the Company of
facilities in respect of any periods prior to the Closing, or (iii) any
demands, assessments, judgments, costs and reasonable legal and other
expenses or other Adverse Consequences arising from, or in connection with,
any investigation, action, suit, proceeding or other claim incident to any
of the foregoing and, if there is an applicable survival period pursuant
to Section 9.1, then, in each case, provided that the Buyer make a written
claim for indemnification against the Company within such survival period,
the Management Sellers (the "Company Indemnifying Parties") agree (subject
----------------------------
to the limitations set forth in this Section 9.2) to, jointly and
-----------
severally, indemnify the Buyer and its Affiliates, directors, officers.
employees, stockholders, representatives and agents (collectively the
"Buyer Indemnified Parties") from and against the entirety of any Adverse
-------------------------
Consequences the Buyer Indemnified Parties may suffer through and after the
date of the claim for indemnification (including any Adverse Consequences
the Buyer Indemnified Parties may suffer through and after the end of the
applicable survival period) resulting from, arising out of, relating to, in
the nature of, or caused by any breach (or alleged breach) of the
foregoing; provided, however, that (A) except for breaches of the
-------- -------
representations and warranties contained in Sections 4.11 and 4.25 of this
------------- ----
Agreement, the Company Indemnified Parties shall not have any obligation to
indemnify the Buyer Indemnified Parties from and against any Adverse
Consequences resulting from, arising out of, relating to, in the nature of,
or caused by any breach (or alleged breach) by the Company until the Buyer
Indemnified Parties have suffered Adverse Consequences by reason of all
such breaches (or alleged breaches) in excess of a $50,000 aggregate
threshold (at which point the Company Indemnifying Parties will be
obligated to indemnify the Buyer Indemnified Parties from and against all
such Adverse Consequences) and (B) there will be a $1,500,000 aggregate
ceiling on the obligation to indemnify the Buyer Indemnified Parties from
and against Adverse Consequences resulting from, arising out of, or
relating to, the items identified in this Article IX.
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(b) Subject to the provisions of Section 9.2(a) (including any
--------------
applicable threshold and ceiling provisions), the Management Sellers agree
to indemnify the Buyer, jointly and severally, from and against the
entirety of any Adverse Consequences the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any Liability
of the Company (x) for any Taxes of the Company and any entities owned by
or affiliated with the Company with respect to any Tax year or portion
thereof ending on or before the Closing Date (or for any Tax period
beginning before and ending after the Closing Date to the extent allocable
(determined in a manner consistent with Section 10.3) to the portion of
------------
such period beginning before and ending on the Closing Date), to the extent
such Taxes are not reflected in the reserve for Tax Liability (rather than
any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) shown on the face of the Latest Balance Sheet,
(y) for the unpaid Taxes of any Person (other than the Company) under Reg.
(S)1.1502-6 (or any similar provision of state, local, or foreign Law), as
a transferee or successor, by Contract, or otherwise and (z) for any Taxes
imposed upon the Company as a result of the Trust Agreements or the
Xxxxxxxx Transaction.
(c) Subject to the provisions of Section 9.2(a) (including any
--------------
applicable threshold and ceiling provisions), the Management Sellers agree
to indemnify the Buyer, jointly and severally, from and against the
entirety of any Adverse Consequences the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any unknown,
undisclosed, or contingent debts or obligations (including but not limited
to environmental, legal, employee benefit and product Liability exposures)
of the Company to the extent such debts or obligations relate to any time
periods prior to the Closing Date.
SECTION 9.3. Indemnification by the Buyer. Provided that the Sellers
----------------------------
make a written claim for indemnification against the Buyer within the survival
period set forth in Section 9.1, the Buyer agrees to indemnify the Sellers
-----------
against, and agrees to hold them harmless from, any and all Adverse Consequences
the Sellers may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Sellers may suffer
through and after the end of the applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by (i) any breach of or
any inaccuracy in any representation or warranty made by the Buyer pursuant to
this Agreement, any agreement, or instrument contemplated hereby, any document
relating hereto or thereto or contained in any exhibit or Schedule to this
Agreement; (ii) any breach of or failure by the Buyer to perform any agreement,
covenant or obligation of the Buyer set out in this Agreement, any agreement, or
instrument contemplated hereby, any document relating hereto or thereto or
contained in any exhibit or Schedule to this Agreement; and (iii) any
obligations and Liabilities in respect of the Company from and after the Closing
Date.
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SECTION 9.4. Third-Party Claims.
------------------
(a) If any third party shall notify any party (the "Indemnified
-----------
Party") with respect to any matter (a "Third Party Claim") which may give
----- -----------------
rise to a claim for indemnification against any other party (the
"Indemnifying Party") under this Article IX, then the Indemnified Party
------------------ ----------
shall promptly notify each Indemnifying Party thereof in writing; provided,
--------
however, that no delay on the part of the Indemnified Party in notifying
-------
any Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced. For purposes of this Section
-------
9.4, in all instances where the Indemnifying Party would be the Company or
---
any Seller, the term "Indemnifying Party" shall be limited to the
Management Sellers.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (C) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable relief, (D)
settlement of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (E) the
Indemnifying Party conducts the defense of the Third Party Claim actively
and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 9.4(b) above, (A) the
--------------
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the entry
of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party (not
to be withheld unreasonably).
(d) In the event any of the conditions in Section 9.4(b) above is or
--------------
becomes unsatisfied in the reasonable judgment of the Indemnified Party,
however, (A) the Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably
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may deem appropriate (and the Indemnified Party need not consult with, or
obtain any consent from, any Indemnifying Party in connection therewith),
(B) the Indemnifying Parties will reimburse the Indemnified Party promptly
and periodically for the reasonable costs of defending against the Third
Party Claim (including attorneys' fees and expenses), and (C) the
Indemnifying Parties will remain responsible for any Adverse Consequences
the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the fullest
extent provided in this Article IX.
----------
SECTION 9.5. Other Indemnification Provisions.
--------------------------------
(a) The liability of any party under this Article IX shall be in
----------
addition to, and not exclusive of any other liability that such party may
have at law or equity based on a party's fraudulent acts or omissions.
None of the provisions of this Agreement shall be deemed a waiver of any
defenses which may be available in respect of actions or claims for fraud,
including but not limited to, defenses of statutes of limitations or
limitations of damages.
(b) Each Seller hereby agrees that he will not make any claim for
indemnification against the Company by reason of the fact that he was a
director, manager, officer, employee, or agent of any such entity or was
serving at the request of any such entity as a partner, member, trustee,
director, manager, officer, employee, or agent of another entity (whether
such claim is for judgments, damages, penalties, fines, costs, amounts paid
in settlement, losses, expenses, or otherwise and whether such claim is
pursuant to any statute, charter document, bylaw, agreement, or otherwise)
with respect to any action, suit, proceeding, complaint, claim, or demand
brought by the Buyer against the Seller (whether such action, suit,
proceeding, complaint, claim, or demand is pursuant to this Agreement,
applicable Law, or otherwise).
(c) Indemnification claims shall be reduced, by and to the extent,
that an Indemnified Party shall be entitled to receive proceeds under
insurance policies, risk sharing pools, or similar arrangements
specifically as a result of, and in compensation for, the subject matter of
an indemnification claim by such Indemnified Party, net of any increased
premiums or similar costs arising out of the making of such claims against
such arrangements; provided, however, that indemnification claims shall not
be reduced by Tax benefits, if any.
(d) The Buyer shall have the right to offset indemnification amounts
due either of them or from the Company Indemnifying Parties pursuant to
this Agreement against payments due to the Company Indemnifying Parties
pursuant to this Agreement or any other agreement between the Buyer and any
Company Indemnifying Party.
SECTION 9.6. Holdback. Buyer agrees that to the fullest extent permitted
--------
by Law, after the Closing and with respect to any claim or cause of action
asserted by Buyer relating to or
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arising from breaches of the representations, warranties or covenants of the
Company or the Sellers contained in this Agreement, Buyer will first take any
amounts owed to the Buyer by the Company Indemnifying Parties pursuant to this
Article IX from the Holdback Amount. The Holdback Amount shall be the Buyer's
sole and exclusive remedy against the Company Indemnifying Parties until the
Holdback Amount is completely depleted, at which point the Buyer shall look to
collect any additional amounts owed hereunder from the Company Indemnifying
Parties.
ARTICLE X
TAX MATTERS
SECTION 10.1. Tax Matters. The following provisions shall govern the
-----------
allocation of responsibility as between Buyer and Sellers for certain tax
matters following the Closing Date:
SECTION 10.2. Tax Periods Ending on or Before the Closing Date. The
------------------------------------------------
Sellers shall prepare or cause to be prepared and file or cause to be filed all
Tax Returns for the Company for all periods ending on or prior to the Closing
Date which are filed after the Closing Date. The Sellers shall permit the Buyer
to review and comment on each such Tax Return described in the preceding
sentence prior to filing. Buyer and Seller shall attempt in good faith to
resolve any disagreements regarding such Tax Returns; provided, however, that
-------- -------
the final decision regarding any such Tax Return shall rest with the Sellers.
The Sellers shall reimburse Buyer for Taxes of the Company with respect to such
periods within fifteen (15) days after payment by Buyer or the Company of such
Taxes to the extent such Taxes are not reflected in the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) shown on the face of the Latest
Balance Sheet.
SECTION 10.3. Tax Periods Beginning Before and Ending After the Closing
---------------------------------------------------------
Date. Buyer shall prepare or cause to be prepared and file or cause to be filed
----
any Tax Returns of the Company for Tax periods which begin before the Closing
Date and end after the Closing Date. Buyer shall permit the Sellers to review
and comment on each such Tax Return described in the preceding sentence prior to
filing. Buyer and the Sellers shall attempt in good faith to resolve any
disagreements regarding such Tax Returns; provided, however, that the final
-------- -------
decision regarding any such Tax Return shall rest with Buyer. The Sellers shall
pay to Buyer within fifteen (15) days after the date on which Taxes are paid
with respect to such periods an amount equal to the portion of such Taxes which
relates to the portion of such Tax period ending on the Closing Date to the
extent such Taxes are not reflected in the reserve for Tax Liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) shown on the face of the Latest Balance Sheet.
Buyer shall pay to the Sellers the amount, if any, by which Taxes prepaid by the
Sellers exceed the portion of such Taxes which relates to the portion of such
Tax period ending on the Closing Date. For purposes of this Section, in the
case of any Taxes that are imposed on a periodic basis and are payable for a Tax
period that includes (but does not end on) the Closing Date, the portion of such
Tax which
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relates to the portion of such Tax period ending on the Closing Date
shall (x) in the case of any Taxes other than Taxes based upon or related to
income or receipts, be deemed to be the amount of such Tax for the entire Tax
period multiplied by a fraction the numerator of which is the number of days in
the Tax period ending on the Closing Date and the denominator of which is the
number of days in the entire Tax period, and (y) in the case of any Tax based
upon or related to income or receipts be deemed equal to the amount which would
be payable if the relevant Tax period ended on the Closing Date. Any credits
relating to a Tax period that begins before and ends after the Closing Date
shall be taken into account as though the relevant Tax period ended on the
Closing Date. All determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior practice of the
Company.
SECTION 10.4. Cooperation on Tax Matters.
--------------------------
(a) Buyer, the Company and Sellers shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Article X and any audit, litigation
---------
or other proceeding with respect to Taxes. Such cooperation shall include
the retention and (upon the other party's request) the provision of records
and information which are reasonably relevant to any such audit, litigation
or other proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. The Company and the Sellers agree (A) to retain all
books and records with respect to Tax matters pertinent to the Company
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Buyer or Sellers, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with
any taxing Authority, and (B) to give the other party reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if the other party so requests, the Company or Sellers, as the
case may be, shall allow the other party to take possession of such books
and records.
(b) Buyer and Sellers further agree, upon request, to use their
reasonable efforts to obtain any certificate or other document from any
governmental Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby);
provided, however, that no party shall be required to take any action which
-------- -------
would reasonably be expected to have an adverse effect on such party.
(c) Buyer and Sellers further agree, upon request, to provide the
other party with all information that either party may be required to
report pursuant to Section 6043 of the Code and all Treasury Department
Regulations promulgated thereunder.
SECTION 10.5. Tax Sharing Agreements. All Tax sharing agreements or
----------------------
similar agreements with respect to or involving the Company shall be terminated
as of the Closing Date
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and, after the Closing Date, the Company shall not be bound thereby or have any
Liability thereunder.
SECTION 10.6. Certain Taxes. All transfer, documentary, sales, use,
-------------
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by Sellers
when due, and Sellers will, at their own expense, file all necessary Tax Returns
and other documentation with respect to all such transfer, documentary, sales,
use, stamp, registration and other Taxes and fees, and, if required by
applicable Law, Buyer will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
ARTICLE XI
TERMINATION
SECTION 11.1. Termination of Agreement. Certain of the parties may
------------------------
terminate this Agreement as provided below:
(a) the Buyer and the Sellers may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written notice
to the Sellers on or before the 30th day following the date of this
Agreement, but prior to the Closing, if the Buyer is not reasonably
satisfied with the results of its continuing business, legal,
environmental, and accounting due diligence regarding the Company;
(c) the Buyer may terminate this Agreement by giving written notice
to the Sellers at any time prior to the Closing (A) in the event any Seller
has breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, the Buyer has notified the
Sellers of the breach, and the breach has continued without cure for a
period of 30 days after the notice of breach or (B) if the Closing shall
not have occurred on or before April 30, 1998 by reason of the failure of
any condition precedent under Article VII hereof (unless the failure
-----------
results primarily from the Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(d) the Sellers may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Closing (A) in the event that the
Buyer has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Sellers have
notified the Buyer of the breach, and the breach has continued without cure
for a period of 30 days after the notice of breach or (B) if the Closing
shall not have occurred on or before April 30, 1998, by reason of the
failure of any condition precedent under Article VIII hereof (unless the
------------
failure results primarily
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from any Seller breaching any representation, warranty, or covenant
contained in this Agreement).
(e) the Buyer may terminate this Agreement by giving written notice
to the Sellers at any time prior to the Closing in the event: (x) the
Sellers or the Company supplement or amend the Schedules with facts or
circumstances that would reasonably be expected to have a Material Adverse
Effect on the Company or (y) the Company does anything outside of the
Ordinary Course of Business to affect the working capital of the Company
between the date hereof and the Closing Date.
SECTION 11.2. Effect of Termination. If any party terminates this
---------------------
Agreement pursuant to Section 11.1 above, all rights and obligations of the
------------
parties hereunder shall terminate other than those set forth in Sections 6.4 and
------------
6.18, without any Liability of any party to any other party (except for any
----
Liability of any party then in breach).
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Expenses. Each party will bear his or its own costs and
--------
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
SECTION 12.2. Press Releases and Public Announcements. No party shall
---------------------------------------
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the Buyer and the
Sellers; provided, however, that any party may make any public disclosure it
-------- -------
believes in good faith is required by applicable Law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing party will use its best efforts to advise the other parties prior to
making the disclosure).
SECTION 12.3. No Third-Party Beneficiaries. Subject to the provisions of
----------------------------
Section 12.5, this Agreement shall not confer any rights or remedies upon any
------------
Person other than the parties and their respective successors and permitted
assigns.
SECTION 12.4. Entire Agreement. This Agreement (including the documents
----------------
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements, or representations by or among
the parties, written or oral, to the extent they related in any way to the
subject matter hereof.
SECTION 12.5. Succession and Assignment. This Agreement shall be
-------------------------
binding upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns. No party may assign either this
Agreement or any of his or its rights, interests, or
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obligations hereunder without the prior written approval of the Buyer and the
Sellers; provided, however, that the Buyer may, upon prior written notice (i)
-------- -------
assign any or all of its rights and interests hereunder to one or more of its
Affiliates, (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder) and
(iii) grant a security interest in respect of its rights hereunder to its
lenders.
SECTION 12.6. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
SECTION 12.7. Headings. The section headings contained in this
--------
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 12.8. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
(a) If to the Sellers, to the addresses set forth in the Company's records:
with a copy to:
Xxxxx & Xxxxx
Ohio Edison Building
00 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
(b) If to the Buyer, addressed as follows:
Crystaloid Technologies, Inc.
c/x Xxxxxxx Products, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
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with a copy to:
Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
SECTION 12.9. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the domestic Laws of the State of Missouri without
giving effect to any choice or conflict of Law provision or rule (whether of the
State of Missouri or any other jurisdiction) that would cause the application of
the Laws of any jurisdiction other than the State of Missouri.
SECTION 12.10. Amendments and Waivers. No amendment of any provision of
----------------------
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and Sellers. No waiver by any party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
SECTION 12.11. Xxxxxxx. Unless otherwise stated in this Agreement,
-------
neither Xxxxxxx nor any of its Affiliates (other than the Buyer) will have any
obligations or liabilities in respect of this Agreement, except with respect to
the obligations of Xxxxxxx pursuant to Section 6.20.
SECTION 12.12. Severability. Any term or provision of this Agreement that
------------
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
SECTION 12.13. Construction. The parties have participated jointly in the
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negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
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SECTION 12.14. Incorporation of Exhibits, Annexes, and Schedules. The
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Exhibits, Annexes, and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
SECTION 12.15. Specific Performance. Each of the parties acknowledges and
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agrees that the other parties would be damaged irreparably in the event any of
the provisions of Sections 6.4, 6.5, 6.10, 6.18, 6.19 and 6.21 of this Agreement
--- --- ---- ---- ---- ----
are not performed in accordance with their specific terms or otherwise are
breached. Accordingly, each of the parties agrees that the other parties shall
be entitled to an injunction or injunctions to prevent breaches of the
aforementioned provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
parties and the matter (subject to the provisions set forth in Section 12.15
below), in addition to any other remedy to which they may be entitled, at law or
in equity.
SECTION 12.16. Submission to Jurisdiction. Each of the parties submits to
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the jurisdiction of any state or federal court sitting in St. Louis, Missouri in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other party with respect thereto. Any
party may make service on any other party by sending or delivering a copy of the
process to the Party to be served at the address and in the manner provided for
the giving of notices in Section 12.8 above. Nothing in this Section 12.15,
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however, shall affect the right of any party to bring any action or proceeding
arising out of or relating to this Agreement in any other court or to serve
legal process in any other manner permitted by law or at equity. Each party
agrees that a final judgment in any action or proceeding so brought shall be
conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or at equity.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CRYSTALOID TECHNOLOGIES, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
Title: Vice President
CRYSTALOID ELECTRONICS COMPANY
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
Title: Chairman and Chief Executive
Officer
XXXX PARTNERS INCORPORATED
By: /s/ Xxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxx X. Xxxx
Title: Chairman and Chief Executive
Officer
MANAGEMENT SELLERS:
/s/ Xxxxxx X. Xxxx
-------------------------------------
Xxxxxx X. Xxxx
/s/ Xxxxxx X. Xxxxxx, Xx.
-------------------------------------
Xxxxxx X. Xxxxxx, Xx.
XXXXXXX PRODUCTS, INC.
(for purposes of Section 6.20 only)
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By: /s/ Xxxxxxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxxxxx X. Xxxxx
Title: Vice President
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