EXHIBIT 10.20
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STOCK PURCHASE AGREEMENT
by and among
XXXXX II, INC., XXXXX HOLDINGS, INC.
and
XXXXXXX X. XXXXXXXX AND XXXXXXX X. XXXXXXXX
Dated as of December 16, 1997
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TABLE OF CONTENTS
Page
Section 1. Purchase and Sale of Shares................................... 1
(a) Purchase and Sale of Shares................................... 1
(b) The Closing................................................... 1
(c) Purchase Price................................................ 1
(d) Adjustment of Purchase Price.................................. 2
(e) Purchase Price Allocation..................................... 3
Section 2. Conditions to Obligation of the Purchasers.................... 3
(a) Representations and Warranties................................ 3
(b) Performance of Covenants...................................... 3
(c) Compliance with Applicable Laws............................... 3
(d) Consents...................................................... 3
(e) Supply Agreement.............................................. 4
(f) Employment Agreement.......................................... 4
(g) Resignations.................................................. 4
(h) Proceedings................................................... 4
(i) Title Insurance............................................... 4
(j) Surveys....................................................... 5
(k) Estoppel Certificates; Non-disturbance Agreements;
Landlord Lien Agreements; Releases of Liens................... 5
(l) Memoranda of Leases........................................... 5
(m) Sellers' Certificate.......................................... 5
(n) Opinion of Counsel to the Sellers and the Companies........... 5
(o) Approval of the Boards of Directors of the Purchasers......... 6
(p) Due Diligence................................................. 6
Section 3. Conditions to Obligation of the Sellers....................... 6
(a) Representations and Warranties................................ 6
(b) Performance of Covenants...................................... 6
(c) Officer's Certificate......................................... 6
(d) Supply Agreement.............................................. 6
(e) Employment Agreement.......................................... 6
(f) Opinion of Counsel to Parent.................................. 6
(g) Compliance With Applicable Laws............................... 7
Section 4. Representations and Warranties of the Sellers................. 7
(a) Organization, Corporate Power and Licenses of the Companies... 7
(b) Power and Authority of the Sellers............................ 7
(c) Capital Stock and Related Matters............................. 7
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(d) Subsidiaries; Investments..................................... 8
(e) Authorization; No Breach...................................... 8
(f) Financial Statements.......................................... 9
(g) Absence of Undisclosed Liabilities............................ 9
(h) No Material Adverse Change.................................... 9
(i) Absence of Certain Developments............................... 10
(j) Assets........................................................ 11
(k) Tax Matters................................................... 11
(l) Contracts and Commitments..................................... 13
(m) Proprietary Rights............................................ 15
(n) Litigation, etc............................................... 15
(o) Brokerage..................................................... 16
(p) Insurance..................................................... 16
(q) Employees..................................................... 16
(r) Employee Benefits............................................. 16
(s) Compliance with Laws.......................................... 17
(t) Affiliated Transactions....................................... 17
(u) Inventory..................................................... 17
(v) Customers and Suppliers....................................... 17
(w) Accounts and Notes Receivable................................. 18
(x) Real Property................................................. 18
(y) Environment, Health and Safety................................ 20
(z) Disclosure.................................................... 21
(aa) Consents and Approvals........................................ 21
(bb) Powers of Attorney............................................ 21
(cc) Investment.................................................... 21
(dd) Entire Business............................................... 22
(ee) Information................................................... 22
Section 5. Representations and Warranties of the Purchasers.............. 22
(a) Organization of the Purchasers................................ 22
(b) Authorization of Transaction.................................. 22
(c) Noncontravention.............................................. 22
(d) Brokers' Fees................................................. 22
(e) Investment.................................................... 23
Section 6. Remedies for Breaches of this Agreement....................... 23
(a) Survival of Representations and Warranties.................... 23
(b) Indemnification Provisions for Benefit of the Purchaser Group. 23
(c) Indemnification Provisions for Benefit of the Sellers......... 25
(d) Matters Involving Third Parties............................... 26
(e) Payment; Purchaser's Right of Set-Off......................... 27
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(f) Tax Treatment................................................. 27
(g) Other Indemnification Provisions.............................. 27
(h) Arbitration................................................... 28
Section 7. Tax Matters................................................... 28
(a) Cooperation on Tax Matters.................................... 28
(b) Tax Sharing Agreements........................................ 29
(c) Certain Taxes................................................. 29
Section 8. Additional Agreements......................................... 29
(a) Press Releases................................................ 29
(b) Expenses...................................................... 29
(c) Further Assurances............................................ 29
(d) Confidentiality............................................... 29
(e) Bryfogles, Inc. Employees..................................... 30
(f) Noncompetition; Nonsolicitation............................... 31
(g) Right of First Refusal........................................ 32
(h) Amendments to Leases.......................................... 32
(i) Corporate Name................................................ 33
Section 9. Definitions................................................... 33
Section 10. Miscellaneous................................................. 36
(a) No Third Party Beneficiaries; Succession and Assignment....... 36
(b) Entire Agreement.............................................. 37
(c) Counterparts.................................................. 37
(d) Headings...................................................... 37
(e) Notices....................................................... 37
(f) Governing Law; Jurisdiction................................... 38
(g) Amendments and Waivers........................................ 38
(h) Incorporation of Exhibits and Schedules....................... 39
(i) Construction.................................................. 39
(j) The Company................................................... 39
(k) Remedies...................................................... 39
(l) Severability of Provisions.................................... 39
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LIST OF EXHIBITS
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Exhibit A - Form of Seller Note
Exhibit B - Form of Supply Agreement
Exhibit C - Form of Employment Agreement
Exhibit D - Opinion of Counsel to the Companies and the Sellers
Exhibit E - Charter and Bylaws of the Companies
Exhibit F - Opinion of Counsel to Xxxxx Holdings, Inc.
LIST OF SCHEDULES
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Schedule 1(a) - Allocation of Shares and Purchase Price
Schedule 1(c) - Certain Indebtedness
Schedule 4(a) - Organization, Corporate Power and Licenses of the
Companies
Schedule 4(c) - Capital Stock and Related Matters
Schedule 4(d) - Subsidiaries; Investments
Schedule 4(f) - Financial Statements
Schedule 4(g) - Absence of Undisclosed Liabilities
Schedule 4(i) - Absence of Certain Developments
Schedule 4(j) - Assets
Schedule 4(k) - Taxes
Schedule 4(l) - Contracts and Commitments
Schedule 4(m) - Proprietary Rights
Schedule 4(n) - Litigation
Schedule 4(p) - Insurance
Schedule 4(q) - Employees
Schedule 4(r) - ERISA
Schedule 4(s) - Compliance with Laws
Schedule 4(t) - Affiliated Transactions
Schedule 4(v)(i) - Customers
Schedule 4(v)(ii) - Suppliers
Schedule 4(w) - Accounts and Notes Receivable
Schedule 4(x) - Real Property
Schedule 4(y) - Environment, Health and Safety
Schedule 4(a)(a) - Consents
Schedule 8(e) - List of Transferred Employees
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STOCK PURCHASE AGREEMENT
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THIS AGREEMENT is made and entered into as of December 16, 1997, by
and among Xxxxx Holdings, Inc., a Nevada corporation ("Parent"), Xxxxx II, Inc.,
a Delaware corporation ("Xxxxx," together with Parent, the "Purchasers"),
Xxxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxxx (collectively, the "Sellers").
The Purchasers and the Sellers are referred to collectively herein as the
"Parties." Capitalized terms used herein and not otherwise defined are defined
in Section 9.
WHEREAS, the Sellers own all of the issued and outstanding shares of
capital stock of Xxxxxxxx'x Co., Inc., Xxxxxxxx'x Wholesale, Inc. and Power
Plants II, Inc., each a Pennsylvania corporation (collectively, the
"Companies"); and
WHEREAS, the Parties desire to enter into this Agreement to provide
for the purchase by the Purchasers of all of the issued and outstanding shares
of capital stock of the Companies from the Sellers.
NOW, THEREFORE, in consideration of the mutual promises herein made,
and in consideration of the representations, warranties, and covenants herein
contained, the Parties, intending to be legally bound, hereby agree as follows:
Section 1. Purchase and Sale of Shares.
(a) Purchase and Sale of Shares. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as hereinafter defined),
the Purchasers shall purchase from the Sellers and the Sellers will sell,
transfer, deliver and convey to the Purchasers, all of the issued and
outstanding shares of capital stock of the Companies as set forth on Schedule
1(a) (the "Shares"), and the Sellers shall deliver to the Purchasers, free and
clear of any Liens, Taxes or other restrictions of any kind, certificates
representing all of the Shares, duly endorsed in blank.
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxxx & Xxxxx,
000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx, at 10:00 a.m. local time on the
business day immediately following the satisfaction of all of the conditions set
forth in Section 2 and Section 3 below, or such other time and place as the
Parties may mutually determine (the "Closing Date"). At the Closing, the
Purchasers and the Sellers shall each deliver to each other all funds,
certificates, instruments and documents contemplated herein to be delivered at
the Closing.
(c) Purchase Price The purchase price (the "Purchase Price") to be
paid by the Purchasers for all of the Shares shall be paid as follows: (i) by
wire transfer of immediately available funds by Xxxxx of an aggregate of
$13,000,000 (the "Cash Amount") to an account designated by the Sellers, (ii) by
the repayment by Xxxxx of certain Indebtedness as listed on Schedule 1(c), and
(iii) by
delivery by Parent to Xxxxxxx X. Xxxxxxxx of a convertible subordinated
promissory note of Parent in the aggregate principal amount of $1,000,000, in
the form of Exhibit A hereto (the "Seller Note").
(d) Adjustment of Purchase Price.
(i) EBITDA Payment. If EBITDA (as defined below) exceeds
$3,400,000, Xxxxx shall pay to the Sellers, as an adjustment to the Purchase
Price, an aggregate amount equal to $250,000 (the "EBITDA Payment").
(ii) Calculation of EBITDA. For purposes hereof, "EBITDA" shall
mean, with respect to the period beginning January 1, 1998 to and through
December 31, 1998, the consolidated net income of the Companies (exclusive of
any extraordinary gains or losses) for such period determined in accordance with
generally accepted accounting principles, plus (1) the amount of the net
provision for federal, state, local and foreign Taxes reflected in the
consolidated net income for the Companies for such period, plus (2) the amount
of interest expense for indebtedness for borrowed money (including capitalized
leases) reflected in the consolidated net income for the Companies for such
period, plus (3) the amount of depreciation reflected in the consolidated net
income for the Companies for such period, plus (4) the amount of amortization
reflected in the consolidated net income for the Companies for such period
relating to goodwill, financing fees and other intangibles; provided, however,
that (i) any acquisition (whether by merger, purchase of all or substantially
all of the stock or assets or otherwise) by the Purchasers or any of their
Affiliates of any other Person, (ii) the establishment by the Purchasers or any
of their Affiliates of any new business or product line or (iii) a fundamental
change in the nature of the businesses of the Companies (as such businesses were
conducted immediately prior to the Closing), shall not be included in the
definition of EBITDA.
(iii) Disputes. In connection with the audit of the financial
statements of the Companies (or their successor) for the fiscal year ending
December 31, 1998, Xxxxx shall cause its independent public accountants to
deliver a certificate to the Sellers setting forth such accountants'
determination of EBITDA, and the calculations and assumptions used in reaching
their determination (the "EBITDA Certificate"). In the event the Sellers
disagree with the determination of EBITDA as set forth in the EBITDA
Certificate, the Sellers shall notify Xxxxx of such disagreement within 20
business days of receipt of the EBITDA Certificate and, during such 20 business
day period, Xxxxx shall permit the Sellers and their advisors with full access
to the books of account and records with respect to the Companies. Within 20
business days following the end of such period, the Sellers shall further notify
Xxxxx of the Sellers' determination of EBITDA (the "Notice of Disagreement"). If
the Notice of Disagreement is not given, the determination of EBITDA set forth
in the EBITDA Certificate will be final and binding upon all Parties. If the
Sellers deliver the Notice of Disagreement and Xxxxx and the Sellers are unable
to resolve the disagreement within 10 business days thereafter, they shall
promptly cause an independent accounting firm mutually selected by the Parties
(the "Accounting Firm") to review the EBITDA Certificate and the Notice of
Disagreement and to make its own calculation of EBITDA. In making such review
and calculation, the Accounting Firm shall consider only those items or amounts
as to which the Parties
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disagree. The Accounting Firm shall deliver to Xxxxx and the Sellers, as soon as
practicable following the selection of the Accounting Firm, a report setting
forth its calculation of EBITDA and such report shall be final and binding upon
all Parties; provided that in no event shall the amount of EBITDA be less than
the amount set forth in the EBITDA Certificate nor greater than the amount set
forth in the Notice of Disagreement. The fees and expenses of the Accounting
Firm shall be paid one-half by Xxxxx, on the one hand, and one-half by the
Sellers, on the other hand.
(iv) Payment Procedures. Any EBITDA Payment to be made pursuant
to this Section 1(d) shall be made within seven business days of the final
determination of such payment, by wire transfer to an account previously
designated by the Sellers, allocated among the Sellers in proportion to their
respective holdings of Shares, as set forth in Schedule 1(a).
(e) Purchase Price Allocation. The Purchase Price shall be allocated
to the Shares, as set forth in the attached Schedule 1(a). The Parties shall
report the financial accounting of this acquisition for all federal, state,
local and foreign tax purposes in a manner consistent with such purchase price
allocation.
Section 2. Conditions to Obligation of the Purchasers. The obligation
of the Purchasers to consummate the transactions to be performed by them in
connection with the Closing is subject to the satisfaction (in the Purchasers'
sole judgment) of the following conditions as of the Closing:
(a) Representations and Warranties. The representations and
warranties set forth in Section 4 shall be true and correct as of the date of
this Agreement and at and as of the Closing.
(b) Performance of Covenants. The Sellers and the Companies shall
have performed in all material respects all of their covenants and agreements
required to be performed by them pursuant to the Transaction Documents prior to
the Closing.
(c) Compliance with Applicable Laws. The consummation of the
transactions contemplated by the Transaction Documents will not be prohibited by
any Legal Requirement or subject the Purchasers or the Companies to any penalty,
liability or any substantial regulatory or legal requirements arising under any
Legal Requirement or imposed by any Governmental Entity.
(d) Consents. All filings, notices, licenses, consents,
authorizations, accreditation, waivers, approvals and the like of, to or with,
any Governmental Entity or any other Person that are required (i) for the
consummation of the transactions contemplated by the Transaction Documents, (ii)
to obtain the Title Policies (as defined in Section 2(i)) and remove of record
or have the Title Company (as defined in Section 2(i)) insure over all Liens or
other title exceptions, (iii) for the assignment of any contract, license, Lease
or any other agreement, or (iv) for the conduct of the business of the
Companies, will have been duly made or obtained on terms and conditions
satisfactory to the Purchasers.
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(e) Supply Agreement. Xxxxx and Xxxxxxxx'x, Inc., d/b/a Spring Run
Flowers, a Pennsylvania corporation ("Xxxxxxxx'x, Inc." or "SRF"), shall have
entered into a Supply Agreement in the form of Exhibit B hereto (the "Supply
Agreement"), and the Supply Agreement shall not have been amended or modified
and shall be in full force and effect as of the Closing.
(f) Employment Agreement. Xxxxx and Xxxxxxx X. Xxxxxxxx shall have
entered into an Employment Agreement in the form of Exhibit C hereto (the
"Employment Agreement"), and the Employment Agreement shall not have been
amended or modified and shall be in full force and effect as of the Closing.
(g) Resignations. The Purchasers shall have received the
resignations, effective as of the Closing, of each officer and director of the
Companies and their Subsidiaries.
(h) Proceedings. All corporate and other proceedings taken or
required to be taken by the Companies or the Sellers in connection with the
transactions contemplated hereby to be consummated at or prior to the Closing
and all documents incident thereto shall be satisfactory in form and substance
to the Purchasers.
(i) Title Insurance. The Sellers shall have obtained and delivered to
the Purchasers, with respect to all of the Real Property identified by the
Purchasers, commitments (the "Title Commitments") for ALTA Owner's and Lender's
Policies of Title Insurance Form B-1970 (along with copies of all documents
referred to therein) issued by Chicago Title Insurance Company, or another
insurer reasonably satisfactory to the Purchasers (the "Title Company"), in such
amount as the Purchasers may reasonably determine to be the fair market value of
such Real Property. The Title Company shall have issued an Owner's and Lender's
Policy for each such Real Property, or a prepaid commitment thereof marked up at
the Closing, based on the Title Commitments (the "Title Policies"), insuring the
Purchasers' interest as of the Closing Date, with gap coverage from the Sellers
through the date of recording (subject only to the Permitted Liens and each in
form and substance reasonably satisfactory to the Purchasers). All Title
Policies shall contain: (i) an "extended coverage endorsement" insuring over
the general exceptions customarily contained in such policies, (ii) an ALTA
Zoning Endorsement 3.1, with parking (or equivalent), (iii) a survey "same as"
endorsement, (iv) a survey accuracy endorsement, (v) an endorsement insuring
that each street adjacent to each such parcel is a public street and insuring
that each such parcel has direct and unencumbered pedestrian and vehicular
access to such street, (vi) if the real estate covered by such policy consists
of more than one record parcel, a "contiguity" endorsement insuring that all of
the record parcels are contiguous to one another, (vii) a non-imputation
endorsement, (viii) a tax number endorsement, and (ix) such other endorsements
as the Purchasers or the Purchasers' lender shall reasonably request. The
Sellers shall have delivered to the Title Company all affidavits, undertakings
and other title clearance documents necessary to issue all Title Policies. The
costs and expenses of the Title Commitments and the Title Policies shall be paid
one-half by the Sellers, on the one hand, and one-half by the Purchasers, on the
other hand.
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(j) Surveys. With respect to the Real Property for which a Title
Policy is to be delivered to the Purchasers, the Purchasers, at their sole cost
and expense, shall have received a current survey of such Real Property
certified to the Purchasers, the Title Company and the Purchasers' lender,
prepared by a surveyor licensed in the state of Pennsylvania and conforming to
1992 ALTA/ASCM Minimum Detail Requirements for Urban Land Title Surveys,
including Table A Items 1, 2, 3, 4, 6, 7a-c, 8, 9, 10, 11a-d, and 12, and such
other standards as the Title Company requires as a condition to the removal of
any survey exceptions from the Title Policies; provided that no such survey
shall disclose any defect not corrected or insured over by the Title Company
prior to the Closing.
(k) Estoppel Certificates; Non-disturbance Agreements; Landlord Lien
Waiver Agreements; Releases of Liens. The Sellers shall have obtained and
delivered to the Purchasers estoppel certificates (providing, among other
things, (i) that the Companies have good and marketable title in fee simple
absolute (free and clear of any Lien, except the Permitted Liens) to all
Improvements located at each Leased Real Property and (ii) that the Companies
have the unrestricted right to remove, dispose of or otherwise deal with all
such Improvements upon any expiration or termination of the Leases), dated no
more than five (5) business days prior to the Closing Date, from each lessor
(each a "Landlord") under each Lease in form and substance satisfactory to the
Purchasers and the Purchasers' lender. If requested by the Purchasers' lender,
the Sellers shall obtain and deliver, each in form and substance reasonably
acceptable to the Purchasers and the Purchasers' lender, (i) non-disturbance
agreements from each lender of each Landlord with Liens encumbering any parcel
of Leased Real Property (including from each lender of each Landlord with Liens
encumbering any of the Improvements located on any of the Leased Real Property,
releases of all of such Liens) and (ii) landlord lien waiver agreements from
each Landlord with any Lien upon any Improvements, machinery, equipment or other
personal property of the Companies located at or on the Real Property.
(l) Memoranda of Leases. The Sellers shall have obtained from all
Landlords and delivered to the Purchasers a memorandum of each of the Leases
(each a "Memorandum of Lease") in form and substance reasonably acceptable to
the Purchasers. Each Memorandum of Lease shall reflect, among other things, (i)
the Companies' good and marketable title in fee simple absolute (free and clear
of any Lien, except the Permitted Liens) to all Improvements located on each
Leased Real Property, and (ii) the Companies' unrestricted right to remove,
dispose of or otherwise deal with all such Improvements upon any expiration or
termination of the Leases.
(m) Sellers' Certificate. Each Seller shall have delivered to the
Purchasers a certificate to the effect that each of the conditions specified in
Sections 2(a) - 2(l) have been fully satisfied.
(n) Opinion of Counsel to the Sellers and the Companies. The
Purchasers shall have received from Xxxxxxxx Xxxxxxxxx Professional Corporation,
special counsel for the Companies and the Sellers, an opinion with respect to
the matters set forth in Exhibit D attached hereto, which
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shall be addressed to the Purchasers, dated the Closing Date and in form and
substance satisfactory to the Purchasers.
(o) Approval of the Boards of Directors of the Purchasers. The board
of directors of Parent shall have approved the issuance of the Seller Note and
the consummation of the transactions contemplated by this Agreement and the
board of directors of Xxxxx shall have approved the consummation of the
transactions contemplated by this Agreement.
(p) Due Diligence. The Purchasers shall be satisfied in their sole
discretion with the results of their business, financial, legal, environmental
and accounting due diligence investigation and review of the Companies and the
Sellers.
The Purchasers may waive any condition specified in this Section 2 if they
execute a writing so stating at or prior to the Closing.
Section 3. 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 the satisfaction of the following conditions as
of the Closing:
(a) Representations and Warranties. The representations and
warranties set forth in Section 5 shall be true and correct as of the date of
this Agreement and at and as of the Closing.
(b) Performance of Covenants. The Purchasers shall have performed in
all material respects all of the covenants and agreements required to be
performed by them under this Agreement prior to the Closing.
(c) Officer's Certificate. The Purchasers shall have delivered to the
Sellers a certificate to the effect that each of the conditions specified in
Sections 3(a) and 3(b) have been satisfied.
(d) Supply Agreement. Xxxxx and SRF shall have entered into the
Supply Agreement, and the Supply Agreement shall not have been amended or
modified and shall be in full force and effect as of the Closing.
(e) Employment Agreement. Xxxxx and Xxxxxxx X. Xxxxxxxx shall have
entered into the Employment Agreement, and the Employment Agreement shall not
have been amended or modified and shall be in full force and effect as of the
Closing.
(f) Opinion of Counsel to Parent. The Sellers shall have received
from Xxxxxxx Xxxxxx, special Nevada counsel to Parent, an opinion with respect
to matters set forth on Exhibit F attached hereto, which shall be addressed to
the Sellers, dated the Closing Date and in form and substance satisfactory to
the Sellers.
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(g) Compliance With Applicable Laws. The consummation of the
transactions contemplated by the Transaction Documents will not be prohibited by
any Legal Requirement or subject the Sellers to any penalty, liability or any
substantial legal or regulatory requirement arising under any Legal Requirement
or imposed by any Governmental Entity.
The Sellers may waive any condition specified in this Section 3 if they execute
a writing so stating at or prior to the Closing.
Section 4. Representations and Warranties of the Sellers. As a
material inducement to the Purchasers to enter into and perform its obligations
under this Agreement, the Sellers jointly and severally represent and warrant to
the Purchasers that the statements contained in this Section 4 are true and
correct as of the date of this Agreement and as of the Closing Date.
(a) Organization, Corporate Power and Licenses of the Companies. Each
Company is a corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania and is qualified to do
business in every jurisdiction in which its ownership of property or conduct of
business requires it to be so qualified. Such jurisdictions are listed on
Schedule 4(a) attached hereto. Each Company possesses all requisite corporate
power and authority and all licenses, permits and authorizations necessary to
own and operate its properties, to carry on its businesses as presently
conducted and to carry out the transactions contemplated by this Agreement and
all of such licenses, permits and authorizations are listed on Schedule 4(a)
attached hereto. The copies of each Company's charter documents and bylaws
attached hereto as Exhibit E reflect all amendments made thereto at any time
prior to the date of this Agreement and are correct and complete in all material
respects. The minute books (containing the records of meetings of the
stockholders, the board of directors and any committees thereof) and the stock
record books of each of the Companies are correct and complete. None of the
Companies are in default under or in violation of any provision of its charter
or bylaws.
(b) Power and Authority of the Sellers. Each Seller possesses all
requisite power and authority necessary to carry out the transactions
contemplated by this Agreement. No act or proceeding on the part of any of the
Sellers is necessary for the due and valid authorization or performance of this
Agreement or the transactions contemplated hereby.
(c) Capital Stock and Related Matters. As of the date hereof and as
of the Closing, (i) the authorized capital stock of BCI shall consist of 20,000
shares of common stock, par value $10.00 per share, of which 420 shall be issued
and outstanding and held beneficially and of record by the Sellers in the
amounts set forth opposite their respective names on Schedule 4(c) attached
hereto, (ii) the authorized capital stock of BWI shall consist of 1,000 shares
of common stock, par value $1.00 per share, of which 500 shall be issued and
outstanding and held beneficially and of record by the Sellers in the amounts
set forth opposite their respective names on Schedule 4(c) attached hereto, and
(iii) the authorized capital stock of PPI shall consist of 1,000 shares of
common stock, par value $1.00 per share, of which 1,000 shall be issued and
outstanding and held beneficially and of record by the Sellers in the amounts
set forth opposite their respective names on Schedule 4(c)
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attached hereto. As of the date hereof and as of the Closing: (i) the Companies
shall not have outstanding any stock or securities convertible or exchangeable
for any shares of its capital stock or containing any profit participation
features, nor shall it have outstanding any rights or options to subscribe for
or to purchase its capital stock or any stock or securities convertible into or
exchangeable for its capital stock or any stock appreciation rights or phantom
stock plans; (ii) all of the outstanding shares of the Companies' capital stock
shall be validly issued, fully paid and nonassessable; (iii) there are no
statutory or contractual stockholders preemptive rights or rights of refusal
with respect to the Shares; and (iv) none of the Companies are subject to any
option or obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital stock or any warrants, options or
other rights to acquire its capital stock. The Companies have not violated any
applicable federal or state securities laws in connection with the offer, sale
or issuance of any of its capital stock. There are no agreements with respect to
the voting or transfer of the Companies' capital stock or among the Sellers with
respect to any other aspect of the Companies' affairs. The sale and delivery of
the Shares by the Sellers to the Purchasers pursuant to Section 1 hereof, will
vest in the Purchasers legal and valid title to the Shares, free and clear of
all Liens, Taxes or other restrictions of any kind.
(d) Subsidiaries; Investments. The attached Schedule 4(d) correctly
sets forth the name of each of the Company's Subsidiaries, the jurisdiction of
its organization and the Persons owning the outstanding capital stock or other
ownership interests of such Subsidiary. Each Subsidiary is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, possesses all requisite power and authority and all licenses,
permits and authorizations necessary to own its properties and to carry on its
businesses as now being conducted and is qualified to do business in every
jurisdiction in which its ownership of property or the conduct of business
requires it to qualify. All of the outstanding shares of capital stock or other
ownership interests of each Subsidiary (i) are validly issued, fully paid and
nonassessable, (ii) are owned by the Companies or another one of its
Subsidiaries free and clear of any Lien, Taxes or restriction of any kind, and
(iii) are not subject to any option or right to purchase any such shares or
interests. Except as set forth on the attached Schedule 4(d), neither the
Companies nor any of their Subsidiaries owns or holds the right to acquire any
shares of stock or any other security or interest in any other Person.
(e) Authorization; No Breach. The execution, delivery and performance
of each of the Transaction Documents to which the Sellers are a party have been
duly authorized by each of the Sellers. Each of the Transaction Documents to
which the Sellers are a party constitutes a valid and binding obligation of each
of the Sellers, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and other similar laws affecting the rights of creditors
generally. The execution and delivery by the Sellers of each of the Transaction
Documents to which the Sellers are a party and the fulfillment of and compliance
with the respective terms hereof and thereof, do not and shall not (i) conflict
with or result in a breach of the terms, conditions or provisions of, (ii)
constitute a default under, (iii) result in the creation of any Lien, or any
other restriction upon the Shares or any asset or property of the Companies
pursuant to, (iv) give any third party the right to modify, terminate or
accelerate any obligation under, (v) result in a violation of, or (vi) require
any authorization, consent, approval,
- 8 -
exemption or other action by or notice or declaration to, or filing with, any
court or administrative or governmental body or agency pursuant to, the charter
or bylaws of the Companies, or any agreement, instrument, order, judgment or
decree to which any of the Companies and/or any of the Sellers is subject, or to
the knowledge of the Sellers, any law, statute, rule or regulation to which any
of the Companies and/or any of the Sellers is subject.
(f) Financial Statements. Attached hereto as Schedule 4(f) are (i)
the reviewed combined balance sheet of the Companies as of December 31, 1996
(the "1996 Balance Sheet"), and the reviewed combined statements of income and
retained earnings and cash flows of the Companies for the twelve-month period
then ended, (ii) the audited combined balance sheet of the Companies as of
December 31, 1995, and the audited statements of income and retained earnings
and cash flows of the Companies for the twelve-month period then ended, and
(iii) the reviewed combined balance sheet of the Companies as of September 30,
1997 (the "Latest Balance Sheet") and the reviewed combined statements of income
and retained earnings and cash flows for the Companies for the nine-month period
ended September 30, 1997. Except as set forth on the attached Schedule 4(f),
each of the foregoing financial statements (including in all cases the notes
thereto, if any) is consistent in all material respects with the books and
records of the Companies (which, in turn, are accurate and complete in all
material respects) and presents fairly in all material respects the financial
condition, results of operations and cash flows of the Companies in accordance
with generally accepted accounting principles applied on a consistent basis as
of the dates and for the periods set forth therein, and in the case of the
Latest Balance Sheet, subject to changes resulting from normal year-end
adjustments for recurring accruals (none of which would, alone or in the
aggregate, have a material adverse effect on the financial condition, operating
results, assets, operations, business prospects, employee relations or customer
or supplier relations of any of the Companies).
(g) Absence of Undisclosed Liabilities. Except as set forth on the
attached Schedule 4(g), the Companies do not have any material obligation or
liability (whether accrued, absolute, contingent, unliquidated or otherwise)
(and, to the knowledge of the Sellers, there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand against any of them giving rise to any such liability) arising
out of any transaction entered into at or prior to the Closing, or any action or
inaction at or prior to the Closing, or any state of facts existing at or prior
to the Closing other than: (i) liabilities set forth on the Latest Balance
Sheet (including the notes thereto, if any), (ii) liabilities and obligations
which have arisen after the date of the Latest Balance Sheet in the ordinary
course of business (none of which is a liability resulting from violation of
law, breach of contract, breach of warranty, tort, infringement, claim or
lawsuit) and (iii) other liabilities and obligations expressly disclosed in the
other Schedules referred to in this Section 4.
(h) No Material Adverse Change. Since the date of the 1996 Balance
Sheet, there has been no material adverse change in the financial condition,
operating results, assets, operations, business prospects, employee relations or
customer or supplier relations of any of the Companies.
- 9 -
(i) Absence of Certain Developments. Except as expressly contemplated
by this Agreement or as set forth on the attached Schedule 4(i), since the date
of the Latest Balance Sheet, the Companies have not:
(i) issued any notes, bonds or other debt securities or any
capital stock or other equity securities or any securities convertible,
exchangeable or exercisable into any capital stock or other equity securities;
(ii) borrowed any amount or incurred or become subject to any
material liabilities, except current liabilities incurred in the ordinary course
of business and liabilities under contracts entered into in the ordinary course
of business;
(iii) mortgaged or pledged any of their properties or assets or
subjected them to any Lien, except Liens for current property taxes not yet due
and payable;
(iv) satisfied or paid any material obligation or liability,
other than current liabilities paid in the ordinary course of business and
liabilities owed to the Sellers and disclosed on the Latest Balance Sheet;
(v) declared, set aside or made any payment or distribution of
cash or other property with respect to their capital stock or other equity
securities or purchased or redeemed any shares of their capital stock or other
equity securities (including, without limitation, any warrants, options or other
rights to acquire their capital stock or other equity securities);
(vi) sold, assigned or transferred any of their tangible or
intangible assets, except for fair consideration in the ordinary course of
business, or canceled any material debts or claims;
(vii) sold, assigned, licensed or transferred any Proprietary
Rights or disclosed any proprietary confidential information to any Person
(other than in the ordinary course of business in circumstances in which the
Companies have imposed confidentiality restrictions);
(viii) suffered any extraordinary losses or waived any rights of
material value, whether or not in the ordinary course of business or consistent
with past practice;
(ix) other than the capital expenditures for the greenhouse
disclosed on Schedule 4(i), made capital expenditures or commitments therefor in
excess of $5,000 in the aggregate;
(x) made any loans or advances to, guarantees for the benefit
of, or any investments in, any Persons in excess of $10,000 in the aggregate;
- 10 -
(xi) suffered any damage, destruction or casualty loss exceeding
in the aggregate $25,000, whether or not covered by insurance;
(xii) entered into or granted any increase in, or amended or
terminated, any employee benefit plan, program, policy or arrangement, including
without limitation, those described in Section 4(r);
(xiii) paid any bonuses or other compensation to their
stockholders in an aggregate amount in excess of $15,000 per month (or such
amount pro-rated for any partial month) or made any other change in employment
terms for any of their directors, officers and employees outside the ordinary
course of business;
(xiv) entered into any other material transaction, whether or not
in the ordinary course of business; or
(xv) entered into any oral or written agreement, commitment or
understanding to do any of the foregoing.
None of the Companies have at any time made any payments for political
contributions or any bribes, kickbacks or other illegal payments.
(j) Assets. Except as set forth on the attached Schedule 4(j), each
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 thereafter, free and clear of all Liens, except (i)
for properties and assets disposed of in the ordinary course of business since
the date of the Latest Balance Sheet, (ii) for Liens disclosed on the Latest
Balance Sheet (including any notes thereto) and (iii) Liens for current property
taxes not yet due and payable. The Companies' buildings, equipment and other
tangible assets are being sold on an "as is" basis. Except as described on the
attached Schedule 4(j), each Company owns, or has a valid leasehold interest in,
all assets necessary for the conduct of its businesses as presently conducted.
(k) Tax Matters. The estimated Taxes for BWI for the period from
January 1, 1997 to the Closing Date are set forth on the attached Schedule 4(k).
Except as set forth on the attached Schedule 4(k):
(i) the Companies have filed all Tax Returns which they are
required to file under applicable laws and regulations, and all such Tax Returns
are complete and correct in all material respects and have been prepared in
compliance with all applicable laws and regulations;
(ii) the Companies have paid all Taxes due and owing by them
(whether or not such Taxes are required to be shown on a Tax Return) and have
withheld and paid over to the appropriate taxing authority all Taxes which they
are required to withhold from amounts paid or owing to any employee,
stockholder, creditor or other third party;
- 11 -
(iii) none of the Companies have waived any statute of
limitations with respect to any Taxes or agreed to any extension of time with
respect to any Tax assessment or deficiency;
(iv) since the date of the Latest Balance Sheet, none of the
Companies have incurred any liability for Taxes other than in the ordinary
course of business;
(v) no foreign, federal, state or local tax audits or
administrative or judicial proceedings are pending or being conducted with
respect to any of the Companies and none of the Companies have received from any
foreign, federal, state or local taxing authority any (A) written notice
indicating an intent to open an audit or other review or (B) request for
information related to Tax matters;
(vi) no deficiency or proposed adjustment which has not been
reflected on the Latest Balance Sheet, settled or otherwise resolved for any
amount of Tax has been proposed, asserted, assessed by any taxing authority
against any of the Companies and there are no material unresolved questions or
claims concerning any of the Companies' Tax liability;
(vii) none of the Companies (A) are liable for the Taxes of
another Person (1) under Treas. Reg. (S) 1.1502-6 (or comparable provisions of
state, local or foreign law), (2) as a transferee or successor, (3) by contract
or indemnity or (4) otherwise, (B) are a party to any tax sharing agreement or
(C) have made any payments, are obligated to make any payments or are parties to
an agreement that could obligate them to make any payments that would not be
deductible under Code (S)280G;
(viii) none of the Companies have been a member of an Affiliated
Group;
(ix) each of BCI and PPI made a valid election under Code Section
1362 and any corresponding state or local tax provisions to be an S corporation
for its taxable year ended December 31, 1981, and December 31, 1990,
respectively, and each such election has not been terminated on or prior to the
Closing except as a result of the transactions contemplated hereunder; Schedule
4(k) lists any Subsidiaries of BCI or PPI for which a qualified subchapter S
subsidiary election has been made under Code (S)1361(b)(3) and the effective
date of such election; and
(x) none of the Companies will be required to include any amounts
in income after the Closing Date as a result of (A) any closing agreement
entered into prior to the Closing Date, (B) any installment sale made prior to
the Closing Date, (C) any change of accounting method made prior to the Closing
Date, or (D) the receipt of any prepaid income prior to the Closing Date.
- 12 -
(l) Contracts and Commitments.
(i) Except as expressly contemplated by this Agreement or as set
forth on the attached Schedule 4(l), Schedule 4(r) or Schedule 4(x), none of the
Companies is a party to or bound by any written or oral:
(A) pension, profit sharing, stock option, employee stock
purchase or other plan or arrangement providing for deferred or other
compensation to employees, former employees or consultants, or any other
employee benefit plan or arrangement, or any collective bargaining agreement or
any other contract with any labor union, or severance agreements, programs,
policies or arrangements;
(B) contract for the employment of any officer, individual
employee or other Person on a full-time, part-time, consulting or other basis
providing annual compensation in excess of $75,000 (or providing for the payment
of any cash or other compensation upon a change in control of any of the
Companies), contract relating to loans to or any other contract with any of the
officers, directors or Affiliates of any of the Companies;
(C) contract under which any of the Companies has advanced
or loaned any other Person amounts in the aggregate exceeding $75,000;
(D) agreement or indenture relating to borrowed money or
other indebtedness or the mortgaging, pledging or otherwise placing a Lien on
any material asset or group of material assets of the Companies or any letter of
credit arrangements;
(E) guarantee of any obligation in excess of $75,000;
(F) lease or agreement under which any of the Companies is
lessee of or holds or operates any property, real or personal, owned by any
other party, except for any lease of real or personal property under which the
aggregate annual rental payments do not exceed $75,000;
(G) lease or agreement under which any of the Companies is
lessor of or permits any third party to hold or operate any property, real or
personal, owned or controlled by any of the Companies which involves
consideration in excess of $75,000;
(H) contract or group of related contracts with the same
party or group of affiliated parties the performance of which involves
consideration in excess of $75,000;
(I) assignment, license, indemnification or other agreement
with respect to any intangible property (including, without limitation, any
Proprietary Rights);
- 13 -
(J) warranty agreement with respect to its services rendered
or its products sold, leased or licensed which contains terms and conditions
that differ in any material respect from the Companies' standard warranty terms
and conditions (a copy of which standard terms and conditions is attached to
Schedule 4(l));
(K) agreement under which it has granted any Person any
registration rights (including, without limitation, demand or piggyback
registration rights);
(L) sales, distribution or franchise agreement or merchant
or dealer agreement which involves annual consideration in excess of $75,000;
(M) agreement with a term of more than six months which is
not terminable by the Companies upon less than 30 days notice without penalty
and which involves consideration in excess of $75,000;
(N) contract or agreement prohibiting it from freely
engaging in any business or competing anywhere in the world; or
(O) any other agreement which is material to its operations
and business prospects or involves a consideration in excess of $75,000
annually.
(ii) With respect to the Companies' respective obligations
thereunder and, to the knowledge of the Companies and each of the Sellers, with
respect to the obligations of the other parties thereto, all of the contracts,
agreements and instruments set forth or required to be set forth on the attached
Schedule 4(l) are valid, binding and enforceable in accordance with their
respective terms. Each Company has performed all material obligations required
to be performed by it under the contracts, agreements and instruments listed or
required to be listed on the attached Schedule 4(l) and is not in default under
or in breach of nor in receipt of any claim of default or breach under any such
contract, agreement or instrument; no event has occurred which with the passage
of time or the giving of notice or both would result in a material default or
breach by any of the Companies under any contract, agreement or instrument
listed or required to be listed on the attached Schedule 4(l); none of the
Companies have any present expectation or intention of not fully performing all
such obligations; to the knowledge of the Companies and each of the Sellers,
there is no breach or anticipated breach by the other parties to any contract,
agreement, instrument or commitment listed or required to be listed on the
attached Schedule 4(l); and, to the knowledge of the Companies and each of the
Sellers, none of the Companies are a party to any contract or commitment
requiring any of them to purchase or sell goods or services or lease property
above or below (as the case may be) prevailing market prices and rates.
(iii) A true and correct copy of each of the written instruments,
plans, contracts and agreements (together with all amendments or waivers
thereto) and an accurate description of each of the oral contracts and
agreements which are referred to on the attached Schedule 4(l), have been
delivered to the Purchasers and their counsel.
- 14 -
(m) Proprietary Rights
(i) Schedule 4(m) attached hereto contains a complete and
accurate list of all of the following that are owned, used by or licensed to the
Companies: (A) patented or registered Proprietary Rights and pending
applications for the foregoing; (B) unregistered trademarks, unregistered
service marks, trade dress, trade names, corporate names, logos, and slogans;
(C) material unregistered copyrights; (D) computer software (other than software
purchased or licensed for less than a total cost of $1,000); and (E) all
licenses or similar agreements or arrangements covering Proprietary Rights to
which the Companies are a party, either as licensee or licensor, or a third-
party beneficiary.
(ii) Except as set forth in Schedule 4(m): (A) the Companies own
and possess free and clear of all Liens and without restriction as to use, all
right, title and interest in and to the Proprietary Rights necessary for the
operation of the businesses of the Companies as currently conducted; (B) no
claim by any third party contesting the validity, enforceability, use or
ownership of any of the Proprietary Rights has been made, is currently
outstanding or is threatened, and to the knowledge of the Companies or the
Sellers, there are no grounds for the same; (C) to the knowledge of the
Companies or the Sellers, the Companies have not interfered with, infringed
upon, misappropriated or otherwise conflicted with, and the operation of the
businesses of the Companies as currently conducted will not infringe,
misappropriate or otherwise conflict with, the Proprietary Rights of third
parties; (D) to the knowledge of the Companies or the Sellers, no third party
has interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Proprietary Rights of the Companies; (E) immediately
subsequent to the Closing, the Companies' Proprietary Rights will be owned by or
available for use by the Purchasers on terms and conditions identical to those
under which the Companies owned and used such Proprietary Rights immediately
prior to the Closing; and (F) the Companies have taken and will continue to take
reasonable measures to maintain the confidentiality of the trade secrets,
processes and formulae, research and development results and other know-how of
the Companies, the value of which to the Companies is contingent upon
maintenance of the confidentiality thereof.
(n) Litigation, etc. Except as set forth on the attached Schedule
4(n), (i) there are no actions, suits, proceedings, orders, investigations or
claims pending or, to the knowledge of the Companies or any of the Sellers,
threatened against or affecting any of the Companies or the assets of the
Companies, including, without limitation, all real property (or to the knowledge
of the Companies or any of the Sellers, pending or threatened against or
affecting any of the officers, directors or employees of the Companies with
respect to the Companies' business activities), or pending or threatened by any
of the Companies or any of the Sellers against any third party, at law or in
equity, or before or by any governmental department, commission, board, bureau,
agency or instrumentality (including, without limitation, any actions, suits,
proceedings or investigations with respect to the transactions contemplated by
this Agreement); (ii) none of the Companies are subject to any arbitration
proceedings under collective bargaining agreements or otherwise or, to the
knowledge of the Companies or any of the Sellers, any governmental
investigations or inquiries; and (iii) to the knowledge of the Companies or any
of the Sellers, there is no valid basis for any of the
- 15 -
foregoing. None of the Companies or the assets of the Companies, including,
without limitation, all real property, are subject to any judgment, order or
decree of any court or other governmental agency, and none of the Companies or
any of the Sellers have received any opinion or memorandum or legal advice from
legal counsel to the effect that any of the Companies may be exposed, from a
legal standpoint, to any liability or disadvantage which may be material to
their businesses.
(o) Brokerage. Neither the Companies nor any of the Sellers has
retained any investment bank, broker, finder or any other intermediary in
connection with the transactions contemplated hereby who is entitled to a fee or
commission in connection with the transactions contemplated hereby. The Sellers
shall pay, and hold the Purchasers and the Companies harmless against, any
liability, loss or expense (including, without limitation, reasonable attorneys'
fees and out-of-pocket expenses) arising in connection with any claim for
brokerage commissions, finders' fees or similar compensation in connection with
the transactions contemplated by this Agreement based on any arrangement or
agreement binding upon any of the Companies or the Sellers.
(p) Insurance. The attached Schedule 4(p) lists and briefly describes
each insurance policy maintained for or on behalf of the Companies with respect
to their properties, assets and business. All of such insurance policies are in
full force and effect, and no default exists with respect to the obligations of
the Companies or the Sellers under any of such insurance policies and neither
the Sellers nor any of the Companies have received any notification of
cancellation of any of such insurance policies. None of the Companies have any
self-insurance or co-insurance programs.
(q) Employees. Except as set forth on the attached Schedule 4(q),
none of the Companies or any of the Sellers is aware that any executive or key
employee of any of the Companies or any group of employees of any of the
Companies has any plans to terminate employment with any of the Companies. The
Companies have complied in all respects with all laws relating to the employment
of labor (including, without limitation, provisions thereof relating to wages,
hours, equal opportunity, and sex, age, disability or other employment
discrimination, collective bargaining, immigration and the payment of Taxes),
and the Companies are not aware that they have any material labor relations
problems (including, without limitation, any union organization activities,
threatened or actual strikes or work stoppages or material grievances). None of
the Companies or, to the knowledge of the Companies or any of the Sellers, any
of the Companies' employees, is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreements relating to,
affecting or in conflict with the present or proposed business activities of any
of the Companies, except for agreements between the Companies and their present
and former employees. None of the Companies is subject to or a party to any
collective bargaining agreement with respect to any employee or any of the
Transferred Employees (as defined in Section 8(e)).
(r) Employee Benefits. The Companies do not maintain, contribute to
or have any actual or potential liability with respect to any (i) "employee
pension benefit plan" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")),
- 16 -
(ii) "employee welfare benefit plan" (as defined in Section 3(1) of ERISA), or
(iii) nonqualified deferred compensation, incentive, severance, bonus, fringe
benefit, stock bonus, vacation, employment contract or any other employee
benefit plan, policy, contract, agreement or arrangement. Each of the Welfare
Plans (as defined in Section 8(e)) has been maintained in accordance with its
terms and applicable law and all contributions, premiums or other payments which
are due have been paid.
(s) Compliance with Laws. Except as set forth on the attached
Schedule 4(s), the Companies and their respective predecessors and Affiliates
have complied with and are currently in compliance in all material respects with
all applicable laws, ordinances, codes, rules, requirements and regulations of
all federal, state and local governments and all agencies and instrumentalities
thereof relating to the operation and conduct of their businesses or any of
their properties or facilities (including, without limitation, the Immigration
Reform and Control Act of 1986, as amended, and all applicable building, zoning,
subdivision and other land use or similar laws affecting all real property), and
none of the Companies have received notice of any violation of any of the
foregoing (whether material or not).
(t) Affiliated Transactions. Except as set forth on the attached
Schedule 4(t), after the Closing, no employee, officer, director, stockholder or
Affiliate of any of the Companies or any individual related by blood, marriage
or adoption to any such individual or any entity in which any such Person or
individual owns any beneficial interest, will be a party to any agreement,
contract, commitment or transaction with any of the Companies or will have any
interest in any property used by any of the Companies.
(u) Inventory. The inventory of the Companies consists of living
plants and other material typically associated with greenhouses and
horticulture. None of such inventory is damaged or obsolete, but is subject to
normal rates of mortality. All of the inventories of the Companies (other than
inventory in transit) are located on the Companies' premises in Washingtonville,
Pennsylvania.
(v) Customers and Suppliers.
(i) The attached Schedule 4(v)(i) lists the ten largest customers
of the Companies (on a consolidated basis based on net sales to such customers)
for each of the two most recent fiscal years and sets forth opposite the name of
each such customer the percentage of consolidated net sales attributable to such
customer during such fiscal year. The attached Schedule 4(v)(i) also lists any
additional customers which the Companies anticipate will be among their ten
largest customers for the current fiscal year.
(ii) The attached Schedule 4(v)(ii) lists the ten largest
suppliers to the Companies (on a consolidated basis based on net purchases from
such suppliers) for each of the two most recent fiscal years and sets forth
opposite the name of each such supplier the amount of purchases from such
supplier during such fiscal year. The attached Schedule 4(v)(ii) also lists any
- 17 -
additional suppliers which the Companies anticipate will be among their ten
largest suppliers for the current fiscal year.
(iii) Since January 1, 1997, no material customer has indicated
that it shall stop, or materially decrease the rate of, buying materials,
products or services from any of the Companies, or materially alter its business
relationship with any of the Companies and no material supplier of any of the
Companies has indicated that it shall stop, or materially decrease the rate of,
supplying materials, products or services to any of the Companies, or materially
alter its business relationships with any of the Companies; provided, however,
that the Parties understand that Frank's Nursery, a major customer of the
Companies, has recently been acquired by the Cyprus Group and that no estimate
can be made as to the effect of such acquisition on the Companies' relationship
with Frank's Nursery.
(w) Accounts and Notes Receivable. All notes and accounts receivable
of the Companies are properly reflected in the Companies' books and records, are
current and collectible, and will, assuming the collection practices of Xxxxx
will be similar to the past custom and practice of the Companies, be collected
at their recorded amounts, subject only to the reserve for bad debts set forth
on the face of the Latest Balance Sheet and, except as set forth on the attached
Schedule 4(w), in accordance with generally accepted accounting principles
consistently applied.
(x) Real Property.
(i) Schedule 4(x) lists and describes briefly (A) all real
property leased to any of the Companies (the "Leased Real Property"), (B) the
leases (each a "Lease") pursuant to which all Leased Real Property is leased,
and (C) all real property owned by the Companies (including, without limitation,
all Improvements (as defined in Section 4(x)(vi) below) to the Leased Real
Property) (the "Owned Real Property," together with the Leased Real Property,
the "Real Property").
(ii) The Sellers have delivered to the Purchasers and their
counsel correct and complete copies of each Lease. With respect to each Lease
listed in Schedule 4(x) and except as set forth in Schedule 4(x):
(A) the Lease is legal, valid, binding, enforceable, and in
full force and effect;
(B) the Lease 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) none of the Companies and, to the knowledge of the
Sellers, no other party to the Lease, is in breach or default, and no event has
occurred which, with notice or
- 18 -
lapse of time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(D) none of the Companies and, to the knowledge of the
Sellers, no other party to the Lease, has repudiated any provision thereof;
(E) there are no disputes, oral agreements, or forbearance
programs in effect as to the Lease and, to the knowledge of the Companies, no
third party has any dispute as to the Lease;
(F) the Lease has not been modified in any respect and is
not subject to any other lease, except to the extent that such modifications or
leases are disclosed by the documents delivered to the Purchasers;
(G) none of the Companies has assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the Lease;
and
(H) the Lease continues in full force and effect following
the consummation of the transactions contemplated herein without the necessity
of any consent.
(iii) The Companies have a legal, valid and existing leasehold
interest in each Leased Real Property and good and marketable title in fee
simple absolute to the Owned Real Property, free and clear of any Lien, except
(A) Permitted Liens and (B) Liens of the landlord's lender listed on Schedule
4(x).
(iv) The Companies are in sole and exclusive possession of the
Real Property and none of the Companies is a sublessor, licensor, grantor or
otherwise a party to any sublease, consent, license, option, right of first
refusal, or other instrument or agreement granting to another Person any right
to the possession, use, occupancy or enjoyment of the Real Property.
(v) The Real Property provides to the Purchasers all of the real
property necessary for and currently used in the conduct and operation of the
business of the Companies. The current use of the Real Property does not
violate any Legal Requirement or any covenant, condition, restriction, easement,
agreement or any other instrument of record. The Real Property has access to
public roads and has, immediately prior to the Closing, been supplied with all
utilities and services necessary to operate each such property (including,
without limitation, access to water for irrigation purposes as required for the
cultivation of crops); and neither the Companies nor the Sellers are aware of
anything which would affect such access to public roads or such utilities and
services.
(vi) All buildings, improvements, structures and fixtures
included within the Real Property (the "Improvements") are, except for ordinary
wear and tear, in good condition and repair in all material respects.
- 19 -
(y) Environment, Health and Safety.
(i) Each of the Companies has complied and is in compliance with
all applicable Environmental and Safety Requirements.
(ii) Without limiting the generality of the foregoing, each of
the Companies has obtained and complied with, and is in material compliance
with, all permits, licenses and other authorizations that are required pursuant
to Environmental and Safety Requirements for the occupation of their facilities
and the operation of their businesses and all such permits, licenses and
authorizations may be relied upon by the Purchasers for the lawful operation of
the businesses of the Companies on and after the Closing without transfer,
reissuance or other governmental action. A list of all such permits, licenses
and other authorizations is set forth in Schedule 4(y) attached hereto.
(iii) Neither the Sellers nor any of the Companies have received
any written notice, report or other written information regarding any actual or
alleged violation of Environmental and Safety Requirements, or any liabilities
or potential liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective obligations,
relating to the business or facilities of any of the Companies and arising under
Environmental and Safety Requirements.
(iv) Except as set forth in Schedule 4(y) attached hereto, none
of the following exists at any property or facility owned or operated by any of
the Companies: (A) underground storage tanks; (B) asbestos-containing material
in any form or condition; (C) materials or equipment containing polychlorinated
biphenyls; or (D) landfills, surface impoundments or other disposal areas.
(v) Except as set forth in Schedule 4(y) attached hereto, neither
the Companies, their respective Affiliates nor, to the knowledge of the Sellers,
their respective predecessors, have 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 of
any of the Companies, including any liability for response costs, corrective
action costs, personal injury, property damage, natural resources damages or
attorney fees, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or the Solid Waste Disposal
Act, as amended, or any other Environmental and Safety Requirements.
(vi) Except as set forth in Schedule 4(y) attached hereto, no
facts, events or conditions relating to the past or present facilities,
properties or operations of any of the Companies will prevent, hinder or limit
continued compliance with Environmental and Safety Requirements, give rise to
any investigatory, remedial or corrective obligations pursuant to Environmental
and Safety Requirements, or give rise to any other liabilities (whether accrued,
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absolute, contingent, unliquidated or otherwise) pursuant to Environmental and
Safety Requirements, including without limitation any relating to onsite or
offsite releases or threatened releases of hazardous materials, substances or
wastes, personal injury, property damage or natural resources damage.
(vii) Neither this Agreement nor the consummation of the
transactions contemplated by the Transaction Documents 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 and
Safety Requirements.
(viii) None of the Companies have, 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 and Safety Requirements.
(z) Disclosure. Neither this Agreement nor any of the exhibits,
Schedules, attachments, written statements, documents, certificates or other
items prepared and supplied to the Purchasers by or on behalf of any of the
Companies with respect to the transactions contemplated hereby contain any
untrue statement of a material fact. There is no fact which has not been
disclosed to the Purchasers and of which any of the Sellers or the Companies'
officers or directors is aware and which has had or would reasonably be expected
to have a material adverse effect on the financial condition, operating results,
assets, operations, employee relations, business prospects or customer or
supplier relations of any of the Companies.
(aa) Consents and Approvals. The items described on Schedule 4(aa)
constitute all of the certificates of occupancy, permits, filings, notices,
licenses, franchises, consents, authorizations, accreditation, waivers,
approvals and the like of, to or with any Governmental Entity or any other
Person (collectively the "Consents") which are required for the consummation of
the transactions contemplated by the Transaction Documents, the continued
ownership of the assets, the continued occupation and use of the real property,
or the conduct of the businesses of the Companies. All consents have been or
will be validly issued and, as of the Closing, are in full force and effect.
Neither the Companies nor the Sellers have received any notice threatening a
suspension, revocation, modification or cancellation of any of the Consents,
and, to the best knowledge of the Companies and the Sellers, there is no basis
for the issuance of any such notice or the taking of any such action.
(bb) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of any of the Companies.
(cc) Investment. Xxxxxxx X. Xxxxxxxx (i) understands that the Seller
Note has not been, and will not be, registered under the Securities Act of 1933,
as amended (the "Securities Act"), or under any state securities laws, and is
being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, (ii) is acquiring the Seller
Note solely for his own account for investment purposes, and not with a view to
the distribution thereof, (iii) is
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a sophisticated investor with knowledge and experience in business and financial
matters, (iv) has received certain information concerning the Parent and has had
the opportunity to obtain additional information as desired in order to evaluate
the merits and the risks inherent in holding the Seller Note, (v) is able to
bear the economic risk and lack of liquidity inherent in holding the Seller
Note, and (vi) is an "accredited investor" as such term is defined in Regulation
D of the Securities Act.
(dd) Entire Business. The businesses of the Companies being purchased
hereunder consist of all companies and/or entities owned or controlled by the
Sellers and assets which are necessary and sufficient to carry out the
production, marketing, promotion, distribution and sale of the products of such
businesses, in substantially the same manner as conducted prior to the Closing
Date, except the Sellers' operation of SRF in Muncy, Pennsylvania.
(ee) Information. The Sellers have provided the Purchasers or their
representatives with all information requested to be provided to the Purchasers
or their representatives, has responded in good faith to all "due diligence"
information requests of the Purchasers or their representatives, and all such
information has been complete and accurate in all material respects.
Section 5. Representations and Warranties of the Purchasers. As a
material inducement to the Sellers to enter into and perform their obligations
under this Agreement, each Purchaser represents and warrants that the statements
made with respect to such Purchaser contained in this Section 5 are true and
correct as of the date of this Agreement and as of the Closing Date.
(a) Organization of the Purchasers. Xxxxx is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada.
(b) Authorization of Transaction. Each Purchaser has full corporate
power and corporate authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of each Purchaser, enforceable in accordance with its
terms and conditions.
(c) Noncontravention. The execution, delivery and performance of the
Transaction Documents to which each such Purchaser is a party do not and will
not (i) conflict with or result in a breach of the terms, conditions or
provisions of, (ii) constitute a default under, (iii) result in a violation of,
or (iv) require any authorization, consent, approval, exemption or other action
by or declaration or notice to any Governmental Entity pursuant to, the charter
or bylaws of such Purchaser or any agreement, instrument or other document, or
any Legal Requirement, to which such Purchaser or its assets is subject.
(d) Brokers' Fees. Other than JN Capital Partners, the Purchasers
have not retained any broker in connection with the transactions contemplated
hereby who is entitled to a fee or commission in connection with the
transactions contemplated hereby. The Purchasers shall pay, and hold the
Sellers harmless against, any liability, loss or expense (including, without
limitation,
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reasonable attorneys' fees and out-of-pocket expenses) arising in connection
with any claim for brokerage commissions, finders' fees or similar compensation
by JN Capital Partners or any other firm in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Purchasers.
(e) Investment. Solely for purposes of compliance with applicable
securities laws, each Purchaser hereby represents and warrants to the Sellers as
follows:
(i) Such Purchaser understands and acknowledges that the offering
and sale of Shares pursuant to this Agreement will not, as of the date hereof,
be registered under the Securities Act on the basis that the offering and sale
of the Shares contemplated by this Agreement is exempt from registration under
the Securities Act.
(ii) Such Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of the purchase of the Shares contemplated by this Agreement and such
Purchaser has the ability to bear the economic risk of such an investment.
(iii) Such Purchaser is acquiring the Shares for its own account,
not as nominee or agent, and not with a view to the sale or distribution of any
part thereof in violation of the Securities Act and such Purchaser has no
agreement, understanding or arrangement to subdivide, sell, assign, transfer,
pledge or otherwise dispose of all or any part of its interest in the Shares to
any other Person in violation of the Securities Act.
(iv) Such Purchaser acknowledges that it has examined and
investigated the Companies and has had access to such information as it deemed
necessary to make an investment in the Shares, and has had the opportunity to
ask questions of and receive answers from the Sellers, the Companies and its
officers, directors, employees and agents.
Section 6. Remedies for Breaches of this Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Purchasers and the Sellers contained in
this Agreement shall survive the Closing and continue in full force and effect
for the periods specified in Section 6(b)(i) below, and shall in no event be
affected by any investigation, inquiry or examination made for or on behalf of
the Purchasers.
(b) Indemnification Provisions for Benefit of the Purchaser Group.
The Sellers shall (jointly and severally) indemnify the Purchasers and their
officers, directors, shareholders, employees, agents, representatives,
successors, assigns and Affiliates (collectively, the "Purchaser Group") against
and hold them harmless from, and pay on behalf of or reimburse them as and when
incurred for, any Adverse Consequences they may suffer, sustain or become
subject to as the result of, arising out of, relating to, in the nature of, or
caused by (i) the breach or non-fulfillment by the
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Sellers of (or, in the event any third party alleges facts that, if true, would
mean the Sellers have breached or non-fulfilled) any representation, warranty,
covenant or agreement contained in this Agreement, any other Transaction
Document or any other instrument or document furnished to the Purchaser by the
Sellers pursuant to any Transaction Document or (ii) any liability or obligation
for Taxes with respect to taxable periods or portions thereof ending on or prior
to the date of this Agreement.
(i) Time Limitations.
(A) Notwithstanding anything herein to the contrary, the
representations and warranties made in Sections 4(a) [Organization, Corporate
Power and Licenses of the Companies], (b) [Power and Authority of the Sellers],
(c) [Capital Stock and Related Matters], (d) [Subsidiaries; Investments], (e)
[Authorization; No Breach] and (o) [Brokerage] hereof shall continue in full
force and effect indefinitely;
(B) The representations and warranties made in Section 4(k)
[Tax Matters] hereof shall continue in full force and effect until the
expiration of the applicable statute of limitations and any extension thereof;
and
(C) All other representations and warranties contained in
Section 4 hereof shall continue in full force and effect until the second
anniversary of the Closing Date;
provided, however, that all representations and warranties of the Sellers
contained in Section 4 shall terminate upon a Change of Control; and provided,
further, that any representation or warranty in respect of which indemnity may
be sought under this Section 6(b), and the indemnity with respect thereto, shall
survive the time at which it would otherwise terminate pursuant to this Section
6(b), if written notice of the inaccuracy or breach thereof giving rise to such
right of indemnity shall have been given to the Sellers prior to such time and
such notice shall have stated with particularity, the facts giving rise to such
claim. Notwithstanding anything to the contrary herein, any willful or
fraudulent breach of any representation, warranty, covenant or agreement
contained in this Agreement, any other Transaction Document or any other
instrument or document furnished to the Purchasers by the Sellers pursuant to
any Transaction Document, will not be subject to any time limitations.
(ii Baskets.
(A) The Sellers shall not be required to indemnify the
Purchaser Group with respect to any Adverse Consequence related to any breach of
the representations or warranties contained in Section 4 (other than Sections
4(k) [Tax Matters], 4(u) [Inventory] and 4(w) [Accounts and Notes Receivable])
hereof, unless and until the aggregate amount of all Adverse Consequences for
which the Sellers are liable under this Section 6(b) with respect to such
breaches exceeds $100,000 and then only to the extent such aggregate amount
exceeds $100,000 (disregarding any "materiality" qualifiers stated in any such
representations or warranties).
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(B) The Sellers shall not be required to indemnify the
Purchaser Group with respect to any Adverse Consequence related to any breach of
the representations or warranties contained in Sections 4(u) [Inventory] and
4(w) [Accounts and Notes Receivable] hereof, unless and until the aggregate
amount of all Adverse Consequences for which the Sellers are liable under this
Section 6(b) with respect to such breaches exceeds $100,000 and then only to the
extent such aggregate amount exceeds $100,000 (disregarding any "materiality"
qualifiers stated in any such representations or warranties).
(C) Notwithstanding anything herein to the contrary, the
limitations on indemnification set forth in this Section 6(b)(ii) shall not be
applicable to: (a) any willful breach by the Sellers of any representation or
warranty contained in Section 4, (b) any breach of any covenant or agreement
contained in this Agreement (whether willful or otherwise) (it being expressly
understood that any breach of the representations and warranties contained in
Section 4 hereof shall not be deemed a breach of any covenant or agreement
contained herein for purposes of this paragraph), (c) any claim based on fraud
or (d) any breach of the representations and warranties made in Section 4(k)
[Tax Matters].
(iii) Caps. The maximum amount of indemnification for any and
all Adverse Consequence for which the Sellers are required to indemnify the
Purchaser Group for breaches of representations and warranties contained in
Section 4 hereof (other than breaches of representations and warranties
contained in Sections 4(a) [Organization, Corporate Power and Licenses of the
Companies], (b) [Power and Authority of the Sellers], (c) [Capital Stock and
Related Matters], (d) [Subsidiaries; Investments], (e) [Authorization; No
Breach], (k) [Tax Matters] and (o) [Brokerage] hereof, which shall not be
subject to any cap) shall not exceed $2,000,000. Notwithstanding anything herein
to the contrary, the limitations on indemnification set forth in this Section
6(b)(iii) shall not be applicable to: (a) any willful breach by the Sellers of
any representation or warranty contained in Section 4, (b) any breach of any
covenant or agreement contained in this Agreement (whether willful or otherwise)
(it being expressly understood that any breach of the representations and
warranties contained in Section 4 hereof shall not be deemed a breach of any
covenant or agreement contained herein for purposes of this paragraph), or (c)
any claim based on fraud.
(c) Indemnification Provisions for Benefit of the Sellers. The
Purchasers shall indemnify the Sellers and hold them harmless against, and pay
on behalf of or reimburse them as and when incurred for, any Adverse
Consequences they may suffer, sustain or become subject to as the result of,
arising out of, relating to, in the nature of, or caused by a breach or non-
fulfillment by the Purchasers (or, in the event any third party alleges facts
that, if true, would mean that the Purchasers have breached or non-fulfilled) of
any representation, warranty or covenant contained in this Agreement, any
Transaction Document or any certificate delivered to the Sellers by the
Purchasers pursuant to any Transaction Document to which any Purchaser is a
party.
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(d) Matters Involving Third Parties.
(i) 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 Section 6, 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.
(ii) 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 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.
(iii) So long as the Indemnifying Party is conducting the defense
of the Third Party Claim in accordance with Section 6(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel 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 (which
consent shall not be withheld unreasonably) and (C) the Indemnifying Party will
not consent to the entry or any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnified Party (which consent shall not be withheld unreasonably).
(iv) In the event any of the conditions in Section 6(d)(ii) above
is or becomes unsatisfied, 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 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 costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses), and (C) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer
- 26 -
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 Section 6.
(v) The Sellers shall not settle any Third Party Claim with
respect to Taxes without the consent of the Purchasers (which consent shall not
unreasonably be withheld) if such settlement would have an adverse effect on the
Purchasers', or any of the Companies', or any of their Subsidiaries' liability
for Taxes in any tax period or partial tax period beginning on or after the
Closing Date.
(e) Payment; Purchaser's Right of Set-Off. Any indemnification of the
Purchaser Group or the Sellers pursuant to this Section 6 shall be effected by
wire transfer from the Sellers or the Purchasers, as the case may be, to the
account(s) designated by the Purchaser Group or the Sellers, as the case may be,
within ten business days after final determination thereof. Subject to the
limitations contained in Section 6(b), the Purchasers may, at their option and
in lieu of seeking any indemnification under Section 6(b), set-off from payment
to Xxxxxxx X. Xxxxxxxx under the Seller Note an amount equal to the Adverse
Consequences which the Purchasers have suffered. The Purchasers may make a set-
off by delivering a written notice to Xxxxxxx X. Xxxxxxxx setting forth their
determination of the amount of such set-off. Any amount set-off by the
Purchasers under this Section 6(e) shall be treated for all other purposes under
this Agreement as if such amount had been paid to Xxxxxxx X. Xxxxxxxx under the
Seller Note and paid by the Sellers to the Purchasers in satisfaction of the
Sellers' indemnification obligation.
(f) Tax Treatment. For income tax purposes, all indemnification
payments under this Section 6 shall be deemed adjustments to the Purchase Price.
(g) Other Indemnification Provisions. With respect to any Adverse
Consequences giving rise to a claim for indemnification by the Purchaser Group
under Section 6(b), to the extent permitted by law, the remedies provided herein
shall be exclusive and shall preclude assertion by any party hereto of any other
rights or the seeking of any other remedies (other than in any appropriate case,
any equitable remedies, including injunction and specific performance) against
any other party hereto. The Sellers and their Affiliates hereby agree that they
will not make any claim for indemnification against any of the Companies by
reason of the fact that he or it was a director, officer, employee, or agent of
any such entity or was serving at the request of any such entity as a partner,
trustee, director, 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
Purchasers against the Sellers (whether such action, suit, proceeding,
complaint, claim, or demand is pursuant to this Agreement, applicable law, or
otherwise). The Sellers and their Affiliates hereby agree that they will have
no right of contribution or indemnity from any of Companies with respect to
amounts paid by the Sellers pursuant to this Section 6.
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(h) Arbitration. In the event of a claim for indemnification arising
under Section 6 of this Agreement cannot be resolved by the Parties, the Parties
shall submit the dispute to arbitration, and such issue shall be settled by
arbitration in accordance with the Expedited Procedures of the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA Rules"), by
a single arbitrator who is mutually agreeable to the Parties. If the Parties
are unable to agree upon an arbitrator, one arbitrator shall be selected in
accordance with the AAA Rules and any judgment upon the award rendered by such
arbitrator may be entered in any court of competent jurisdiction. All
proceedings in any such arbitration shall be conducted in Harrisburg,
Pennsylvania. Each Party shall bear its respective costs, fees and expenses in
connection with such arbitration. Upon a final determination by the arbitrator
with respect to a claim for indemnification hereunder, the arbitrator shall
notify the Parties (such notice being the "Arbitration Order"). Jurisdiction of
such arbitrator shall be exclusive as to such claims and the Parties agree that
this agreement to arbitrate shall be specifically enforceable under the law of
the respective domiciliary jurisdiction of each of the Parties. No Party shall
have the right to appeal the Arbitration Order or otherwise to submit a dispute
of such Arbitration Order to a court of law.
Section 7. Tax Matters. The following provisions shall govern the
allocation of responsibility as between the Purchasers and the Sellers for
certain tax matters following the Closing Date:
(a) Cooperation on Tax Matters.
(i) The Purchasers, the Companies and each of their Subsidiaries
and the 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 Section 7 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 Companies, their Subsidiaries and the
Sellers agree (A) to retain all books and records with respect to Tax matters
pertinent to the Companies and their Subsidiaries relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by the Purchasers or the 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 Companies and their Subsidiaries or the Sellers, as the case may be, shall
allow the other party to take possession of such books and records.
(ii) The Purchasers, the Companies and the Sellers further agree,
upon request, to use their best 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).
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(ii) The Purchasers, the Companies and the Sellers further agree,
upon request, to provide any requesting Party with all information that such
Party may be required to report pursuant to Section 6043 of the Code and all
Treasury Department Regulations promulgated thereunder.
(b) Tax Sharing Agreements. All tax sharing agreements or similar
agreements with respect to or involving the Companies and each of their
Subsidiaries shall be terminated as of the Closing Date and, after the Closing
Date, the Companies and each of their Subsidiaries shall not be bound thereby or
have any liability thereunder.
(c) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties, interest
and filing fees) incurred in connection with this Agreement, shall be paid one-
half by the Sellers and one-half by the Purchasers when due, and the Sellers
shall 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, the Purchasers shall join in the
execution of any such Tax Returns and other documentation.
Section 8. Additional Agreements.
(a) Press Releases. Except as may otherwise be required by law, the
timing and content of all press releases and other public announcements and all
announcements to any of the Companies' customers, licensors or employees
relating to the transactions contemplated by this Agreement and the Transaction
Documents shall be determined jointly by the Purchasers and the Sellers.
(b) Expenses. The Purchasers shall pay all of their expenses incurred
in connection with the transactions contemplated hereby and by the other
Transaction Documents. The Sellers shall pay all of the respective expenses of
the Sellers and the Companies incurred in connection with the transactions
contemplated hereby and by the other Transaction Documents.
(c) Further Assurances. The Sellers shall execute and deliver such
further instruments of conveyance and transfer and take such additional action
as the Purchasers may reasonably request to effect, consummate, confirm or
evidence the assignment to the Purchasers of any contract, license or permits
held by any of the Companies, and execute such documents as may be necessary to
assist the Purchasers in preserving or perfecting their rights in and to such
contracts, licenses and permits.
(d) Confidentiality. Each Party and each of its shareholders,
partners, officers, directors, employees, agents and Affiliates shall keep
confidential all information and materials regarding the other Party. The
Sellers and its shareholders, partners, officers, directors and Affiliates shall
maintain confidential and shall not use or disclose, directly or indirectly
(except as required by law or as authorized in writing by the Purchasers prior
to such disclosure), any confidential or
- 29 -
proprietary information or materials regarding any of the Companies and its
business or prospects. In the event that any Party reasonably believes after
consultation with counsel that it is required by law to disclose any
confidential information described in this Section 8(d), the disclosing Party
will (i) provide the other Party with prompt written notice before such
disclosure, in order that any Party may attempt to obtain a protective order or
other assurance that confidential treatment will be accorded such confidential
information, and (ii) cooperate with the other Party in attempting to obtain
such order or assurance. The provisions of this Section 8(d) shall not apply to
any information, documents or materials which are, as shown by appropriate
written evidence, in the public domain or, as shown by appropriate written
evidence, shall come into the public domain, other than by reason of breach by
the applicable Party bound hereunder or its Affiliates. Notwithstanding anything
herein to the contrary, (a) any teaching (including any related academic
pursuit) conducted at any academic institution by Xxxxxxx X. Xxxxxxxx relating
to the greenhouses or the horticulture business with respect to the agriculture
production of horticulture crops and (b) any use of confidential information by
Xxxxxxx X. Xxxxxxxx for the purpose of producing and delivering green goods to
Xxxxx or any of its Affiliates pursuant to the Supply Agreement shall not be
deemed disclosure of any confidential information prohibited by this Section
8(d).
(e) Bryfogles, Inc. Employees.
(i) Effective on the Closing Date, the Companies shall retain or
Xxxxx shall offer to employ each active employee of the Companies who regularly
works in the business of one or more of the Companies at the same base rate of
compensation as each such employee had been receiving from the respective
Company immediately prior to the Closing Date. The Sellers shall encourage all
such employees to accept such offer of employment, and each such employee who is
retained by the Companies or who accepts such offer of employment shall be
referred to as a "Transferred Employee". Schedule 8(e) shall contain a list of
each Transferred Employee, his or her base compensation for 1997 and 1998 and
any additional compensation payable with respect to such Transferred Employee on
or after the Closing Date. Xxxxx shall assume or cause the appropriate Company
to assume the accrued vacation liability with respect to each Transferred
Employee, but only to the extent such vacation liability has been scheduled on
Schedule 8(e). In addition, Schedule 8(e) shall include all accrued vacation as
of the Closing Date for all employees of the Companies.
(ii) Subject to receiving the consent of the appropriate
insurance company, effective as of the Closing Date, Xxxxx shall assume or shall
cause one of the Companies to assume the life insurance, accidental death and
disability, and short term disability insurance plans provided by MetLife to
Xxxxxxxx'x, Inc. and the Xxxxxxxxx Health Plan provided by Xxxxxxxxx to
Xxxxxxxx'x, Inc. (the "Welfare Plans"). The Sellers shall reimburse and
indemnify Xxxxx for all costs, expenses or any other liability incurred by Xxxxx
or the Companies following the Closing Date with respect to those persons
covered under the Welfare Plans described above who are not Transferred
Employees. As soon as reasonably possible following the Closing Date, Xxxxx
shall terminate the Welfare Plans and provide other welfare benefit plans to and
with respect the Transferred Employees.
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(iii) The Sellers shall retain all liability with respect to the
Xxxxxxxx'x, Inc. 401(k) Plan (the "401(k) Plan"); provided, that, following the
Closing Date, Xxxxx shall at its expense, take such action as is considered
necessary or desirable, on behalf of Xxxxxxxx'x, Inc., to terminate the 401(k)
Plan, obtain a determination letter from the IRS and to assist the Transferred
Employees with their options for any 401(k) Plan distributions, including
rolling over their distributions to individual retirement accounts, and the
Sellers shall cooperate in such activities, including signing all necessary
documents on behalf of the 401(k) Plan sponsor to permit the 401(k) Plan to be
terminated and filed with the Internal Revenue Service. Following the Closing
Date, Xxxxx will contribute $16,936 to the 401(k) Plan as a discretionary
contribution for the period beginning July 1, 1997 and ending on the Closing
Date. Any other employer contributions for prior periods which have not been
made shall also be made by the Sellers at that time. Xxxxx shall also pay an
aggregate bonus of $18,225, allocated among the Transferred Employees as
provided on Schedule 8(e).
(iv) Except as provided in this Agreement, the Sellers shall
(jointly and severally) indemnify the Purchaser Group against and hold them
harmless from, and pay on behalf of or reimburse them as and when occurred for,
any Adverse Consequences they may suffer, sustain or become subject to as the
result of, arising out of or relating to any liability or obligation with
respect to any of the Transferred Employees which arose or relate to an event,
incident, plan, program, policy, contract or agreement on or prior to the
Closing Date.
(f) Noncompetition; Nonsolicitation. In consideration for the
significant benefits to be derived by each of the Sellers in connection with the
sale of the Shares to the Purchasers, and as a material inducement to the
Purchasers to enter into this Agreement and consummate the transactions
contemplated hereby, each Seller covenants and agrees as follows:
(i) During the period commencing on the date of this Agreement
and ending on the later of (A) the termination of Xxxxxxx X. Xxxxxxxx'x
employment with Xxxxx or any of its Affiliates (whether as an employee or
consultant) and (B) the first to occur of (1) the fifth anniversary of the
Closing Date or (2) the termination of the Supply Agreement by the Company
pursuant to the terms of the Supply Agreement (the "Non-Competition Period"),
Seller shall not, directly or indirectly, either for himself or for any other
Person, participate in (whether as owner, creditor, consultant, employee or
otherwise) any business (including, without limitation, any division, group or
franchise of a larger organization) anywhere in the United States which engages
or which proposes to engage in any business conducted by the Companies as of the
date of this Agreement. Nothing contained herein shall limit the ability of such
Seller to own less than 2% of any class of publicly traded securities of any
corporation. Notwithstanding anything contained herein to the contrary, this
noncompetition provision shall be subject to and qualified by Section 7 of the
Supply Agreement.
(ii) Following the Closing, Seller shall not (A) induce or
attempt to induce any employee of any of the Companies to leave the employ of
such Company, or in any way interfere with the relationship between any of the
Companies and any employee thereof, (B) hire directly or
- 31 -
through another entity any person who is employed by any of the Companies, or
(C) induce or attempt to induce any customer, supplier, licensee or other
business relation of any of the Companies to cease doing business with such
Company, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and any of the Companies
(including, without limitation, making any negative statements or communications
concerning any of the Companies). Each of the Sellers will refer all customer
inquiries relating to the businesses of the Companies to Xxxxx from and after
the Closing.
(iii) Seller acknowledges that the restrictions contained in this
Section 8(f) are reasonable in terms of geographic scope and duration and are
intended to protect the legitimate business interests of the Companies and the
Purchasers. Seller agrees that the Purchasers shall be entitled to specific
performance from any court of competent jurisdiction (without posting any bond)
to enforce the agreements of Seller under this Section 8(f). Seller agrees that
in the event a court of competent jurisdiction makes a determination that any
term or provision in this Section 8(f) is invalid or unenforceable, such court
shall have the power to reduce the scope, duration or area of any such term or
provision, to delete specific words or phrases or to replace any invalid or
unenforceable term or provision in this Section 8(f) with a term or provision
that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified.
(g) Right of First Refusal. Prior to the sale or other disposition by
the Companies or Xxxxx of all of the assets of BCI, BWI and PPI purchased
hereunder (collectively, the "Acquired Assets") (whether in a single transaction
or a series of transactions) to any Person (other than an Affiliate of Xxxxx or
as a result of the liquidation of the Companies), Xxxxx shall give written
notice (the "Sale Notice") to Xxxxxxx X. Xxxxxxxx. The Sale Notice will
disclose in reasonable detail the identity of the prospective transferee(s) and
the terms and conditions of the proposed transfer of the Acquired Assets.
Xxxxxxx X. Xxxxxxxx may elect to purchase the Acquired Assets to be transferred
upon the same terms and conditions as those set forth in the Sale Notice by
delivering a written notice of such election to Xxxxx within 45 days after
delivery of the Sale Notice as provided hereunder. In the event Xxxxxxx X.
Xxxxxxxx elects not to purchase the Acquired Assets pursuant to this Section
8(g), Xxxxx may thereafter sell or otherwise dispose of the Acquired Assets or
any portion thereof, at a price and on terms no more favorable to the
transferee(s) thereof than specified in the Sale Notice, without again offering
to sell the Acquired Assets to Xxxxxxx X. Xxxxxxxx. Notwithstanding anything
herein to the contrary, the rights of Xxxxxxx X. Xxxxxxxx under this Section
8(g) shall (i) continue only as long as the Non-Competition Period as described
in Section 8(f) above and (ii) terminate upon the filing of a registration
statement filed by Parent or any of its Affiliates with the Securities and
Exchange Commission under the Securities Act with respect to an offering of
Common Stock of Parent or any of its Affiliates; provided that if the
registration statement is withdrawn or abandoned before any shares of Xxxxx'x
Common Stock are sold thereunder, the provisions of this Section 8(g) shall
remain in effect pursuant to the terms hereof.
(h) Amendments to Leases. Xxxxxxx X. Xxxxxxxx shall, so long as he is
an employee of or consultant to Xxxxx or any of its Affiliates, use his best
efforts to obtain from any
- 32 -
Landlord any amendment to any Lease (the "Amendments") reasonably requested by
the Purchasers or the Purchasers' lender (including, without limitation,
Amendments to reflect (i) the Companies' good and marketable title in fee simple
absolute to the Improvements located at each Leased Real Property (free and
clear of any Lien, except Permitted Liens), and (ii) the Companies' unrestricted
right to remove, dispose of or otherwise deal with all such Improvements upon
any expiration or termination of the Leases).
(i) Corporate Name.
(i) The Sellers shall prepare and deliver at Closing a fictitious
name registration for Xxxxxxxx'x, Inc., to change its business and trade name to
Xxxxxxxx'x Inc., d/b/a Spring Run Flowers. The Sellers shall, at their own
expense, immediately following Closing, file such fictitious name registration
with the Secretary of the Commonwealth of Pennsylvania.
(ii) From and after the Closing Date, the Companies and their
Affiliates may use their current corporate names or any other corporate names
containing the word "Xxxxxxxx" in connection with the Companies' businesses.
Except as specifically provided by Section 8(i)(i) above, during the Non-
Competition Period and for two (2) years thereafter (the "Exclusive Use
Period"), neither Sellers nor any of their Affiliates shall use or authorize the
use of the word "Xxxxxxxx" or any confusingly similar word as all or part of any
corporate name anywhere in the United States. After the foregoing time period,
the Sellers may use the word "Xxxxxxxx" as all or part of a corporate name.
Notwithstanding the foregoing, the Sellers may use the name "Xxxxxxxx" in
businesses unrelated to that conducted at any time by the Purchasers and the
Companies.
(iii) If, prior to the end of the Exclusive Use Period, any
of the Purchasers determine in their reasonable discretion that the use of the
name "Xxxxxxxx" causes confusion, the Purchasers may require the Sellers to
immediately prepare and file, at the Sellers' sole cost and expense, an
amendment to the articles of incorporation of Xxxxxxxx'x Inc. to change its
corporate name to a name not including the word "Xxxxxxxx" or any confusingly
similar words. The Sellers hereby further agree that the Purchasers shall have
the right, in addition to all other rights and remedies they may have, to enjoin
(without the need to post any bond or provide any other security) the Sellers'
use of the name "Xxxxxxxx" upon the Purchasers' good faith determination that
the Sellers' use of the name "Xxxxxxxx" or any similar words is confusing. In
addition, the Sellers shall (jointly and severally) indemnify the Purchaser
Group against and hold them harmless from, and pay on behalf of or reimburse
them as and when occurred for, any Adverse Consequences they may suffer, sustain
or become subject to as the result of, arising out of or relating to any
liability or obligation with respect to the Sellers' use of the name "Xxxxxxxx."
Section 9. Definitions.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, interest, fines,
costs, amounts paid in settlement, liabilities,
- 33 -
obligations, Taxes, Liens, losses, expenses and fees, including court costs and
attorneys' fees and expenses.
"Affiliate" of any particular Person shall mean any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities or
otherwise; and such "control" will be presumed if the first Person owns 5% or
more of the voting capital stock or other ownership interests, directly or
indirectly, of such other Person.
"BCI" means Xxxxxxxx'x Co., Inc., a Pennsylvania S corporation.
"BWI" means Xxxxxxxx'x Wholesale, Inc., a Pennsylvania corporation.
"Change in Control" means the sale of Parent to an Independent Third
Party pursuant to which such party acquires (whether by merger,
recapitalization, consolidation, reorganization, combination or otherwise) (i) a
percentage of capital stock of the Company greater than that held by Madison
Dearborn Capital Partners, L.P. and its Affiliates or (ii) all or substantially
all of the Companies' assets determined on a consolidated basis.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Environmental and Safety Requirements" means all federal, state and
local statutes, regulations, ordinances and similar provisions having the force
or effect of law, all judicial and administrative orders and determinations, 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 materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, or radiation, each as amended.
"Governmental Entity" means the United States or any state, local or
other political subdivision thereof, or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of government.
"Indebtedness" means at a particular time, without duplication, (i)
any indebtedness for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, (ii) any indebtedness evidenced by any note,
bond, debenture or other debt security, (iii) any indebtedness for the deferred
purchase price of property or services with respect to which a Person is liable,
contingently or otherwise, as obligor or otherwise (other than trade payables
and other current liabilities incurred in the ordinary course of business which
are not more than 30 days past
- 34 -
due), (iv) any commitment by which a Person assures a creditor against loss
(including, without limitation, contingent reimbursement obligations with
respect to letters of credit), (v) any indebtedness guaranteed in any manner by
a Person (including, without limitation, guarantees in the form of an agreement
to repurchase or reimburse), (vi) any obligations under capitalized leases with
respect to which a Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or with respect to which obligations a Person assures a
creditor against loss, (vii) any indebtedness secured by a Lien on a Person's
assets and (viii) any unsatisfied obligation for "withdrawal liability" to a
"multiemployer plan" as such terms are defined under ERISA.
"Independent Third Party" means any Person who, immediately prior to
the contemplated transaction, does not own in excess of 10% of Parent's common
stock on a fully-diluted basis (a "10% Owner"), who is not controlling,
controlled by or under common control with any such 10% Owner and who is not the
spouse or descendent (by birth or adoption) of any such 10% Owner or a trust for
the benefit of such 10% Owner and/or such other Persons.
"Legal Requirement" means any requirement arising under any law, rule
or regulation or any determination, direction or order of any arbitrator or any
Governmental Entity, including any Environmental and Safety Requirements.
"Lien" means any security interest, pledge, bailment (in the nature of
a pledge or for purposes of security), mortgage, deed of trust, the grant of a
power to confess judgment, conditional sales and title retention agreement
(including any lease in the nature thereof), charge, encumbrance, easement,
option or other similar arrangement or interest in real or personal property.
"Permitted Liens" means (i) statutory liens for current taxes or other
governmental charges with respect to the Real Property not yet due and payable;
(ii) mechanics', carriers', workers', repairers' and similar statutory liens
arising in the ordinary course of business for amounts which are not delinquent
and which are not, individually or in the aggregate, material to the business of
the Companies; (iii) zoning, entitlement, building and other land use
regulations imposed by a Governmental Entity having jurisdiction over the Real
Property which are not violated by the current occupancy, use or operation of
the Real Property; and (iv) covenants, conditions, restrictions, easements and
other similar matters of record affecting title to the Real Property which do
not materially impair the occupancy, use or operation of the Real Property for
the business of the Companies.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"PPI" means Power Plants II, Inc., a Pennsylvania S corporation.
"Proprietary Rights" means the following: (i) patents, patent
applications, patent disclosures and inventions; (ii) trademarks, service marks,
trade dress, trade names, logos and
- 35 -
corporate names and registrations and applications for registration thereof
together with all goodwill associated with each of the foregoing; (iii)
copyrights and copyrightable works; (iv) trade secrets, confidential information
and know-how (including but not limited to ideas, formulae, compositions,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, financial and accounting data, business and marketing plans, and customer
and supplier lists and related information); and (v) computer software including
but not limited to data, data bases and documentation.
"Subsidiary" means, with respect to any Person, any corporation a
majority of the total voting power of shares of stock of which is entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or any partnership, association or
other business entity a majority of the partnership or other similar ownership
interest of which is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes of this definition, a Person is deemed to have a majority ownership
interest in a partnership, association or other business entity if such Person
is allocated a majority of the gains or losses of such partnership, association
or other business entity or is or controls the managing director or general
partner of such partnership, association or other business entity.
"Tax" means any federal, provincial, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security, unem ployment,
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, and including any obligation to indemnify or
otherwise assume or succeed to the Tax liability of any other Person.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any Schedule or
attachment thereto, and including any amendment thereof.
"Transaction Documents" means this Agreement and the other documents,
instruments and agreements contemplated hereby and thereby.
Section 10. Miscellaneous.
(a) No Third Party Beneficiaries; Succession and Assignment. This
Agreement shall not confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns. No Party may
assign either this Agreement or any of his or its rights, interests, or
obligations hereunder without the prior written approval of the other Parties;
provided, however, that the Purchasers may (i) assign any or all of its rights
and interests hereunder to one or more of its Affiliates and (ii) designate one
or more of its Affiliates to perform its
- 36 -
obligations hereunder (in any or all of which cases the Purchasers nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
(b) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements or representations by or between
the Parties, written or oral, that may have related in any way to the subject
matter hereof.
(c) Counterparts. This Agreement may be executed in two or more
counterparts (including by telecopied signature pages) each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
(d) 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.
(e) Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing ("Notices"). Any Notice shall be
deemed duly given as follows: (a) if sent by registered or certified mail,
return receipt requested, postage and fees prepaid, upon receipt; (b) if sent by
reputable private air courier (such as DHL, Federal Express or Airborne
Express), two business days after mailing; (c) if sent by facsimile
transmission, when transmitted and receipt is confirmed; or (d) if otherwise
actually personally delivered, when delivered. All Notices shall be addressed
to the intended recipient as set forth below:
If to the Sellers:
-----------------
Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxx 000
Xxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
--------------------------------------------------
Xxxxxxxx Ingersoll
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
- 37 -
If to the Purchasers:
--------------------
00000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: President
Facsimile: (000) 000-0000
with copies (which shall not constitute notice) to:
--------------------------------------------------
Madison Dearborn Partners, Inc.
Three First National Plaza, Suite 3800
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxx
Facsimile: (000) 000-0000
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, P.C.
Facsimile: (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, 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 Party notice in the manner herein set forth.
(f) Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the domestic laws of the Commonwealth of
Pennsylvania without giving effect to any choice or conflict of law provision or
rule that would cause the application of the laws of any jurisdiction other than
the Commonwealth of Pennsylvania. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Harrisburg, Pennsylvania
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 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.
(g) 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
Purchasers and the 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,
- 38 -
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.
(h) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(i) Construction. Where specific language is used to clarify by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement
shall be deemed to be the language chosen by the Parties to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
Whenever required by the context, any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural and vice versa. The
Parties intend that each representation, warranty, and covenant contained herein
shall have independent significance. If any Party has breached any
representation, warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty, or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant. The
terms "knowledge," "best of knowledge," "best knowledge," "aware" and similar
expressions of cognition shall mean the knowledge, after reasonably diligent
inquiry, of the officers, directors and managers of each applicable Person.
(j) The Company. Unless the context otherwise requires, any reference
to a "Company" contained in paragraphs 4(c) through 4(ee) or Sections 6 through
10 hereof shall be deemed to be references to such Company together with each of
its Subsidiaries, if any.
(k) Remedies. The Parties shall each have and retain all other rights
and remedies existing in their favor at law or equity, including, without
limitation, any actions for specific performance and/or injunctive or other
equitable relief (including, without limitation, the remedy of rescission) to
enforce or prevent any violations of the provisions of this Agreement. Without
limiting the generality of the foregoing, the Sellers hereby agree that in the
event any Seller fails to convey any Shares to the Purchasers in accordance with
the provisions of this Agreement, the Purchasers' remedy at law may be
inadequate. In such event, the Purchasers shall have the right, in addition to
all other rights and remedies it may have, to specific performance (without the
need to post any bond or provide any other security) of the obligations of the
Sellers to convey the Shares.
(l) Severability of Provisions. If any covenant, agreement, provision
or term of this Agreement is held to be invalid for any reason whatsoever, then
such covenant, agreement, provision or term will be deemed severable from the
remaining covenants, agreements, provisions and terms of this Agreement and will
in no way affect the validity or enforceability of any other provision of this
Agreement.
* * * * *
- 39 -
IN WITNESS WHEREOF, the Parties have duly executed this Stock Purchase
Agreement as of the date first above written.
THE PURCHASERS:
XXXXX HOLDINGS, INC.
By: /s/ Xxxx X. Xxxx
-------------------------------------
Name: Xxxx X. Xxxx
Its: Vice President and Assistant
Secretary
XXXXX II, INC.
By: /s/ Xxxx X. Xxxx
------------------------------------
Name: Xxxx X. Xxxx
Its: Vice President and Assistant
Secretary
THE SELLERS:
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx