1
EXHIBIT 10.5
ASSET PURCHASE AGREEMENT
This Agreement is entered into as of the 5th day of August, 1997, by
and between VALLEY INDUSTRIES, LLC, a Delaware limited liability company (the
"Buyer"), AAS HOLDINGS, LLC, a Delaware limited liability company (the
"Parent", and together with Buyer, the "Buyer Companies"), VALLEY INDUSTRIES,
INC., a Delaware corporation (the "Company"), XXXXXX FAMILY HOLDINGS LIMITED
PARTNERSHIP, a Nevada limited partnership ("FHLP", and together with the
Company, individually, a "Seller" and, jointly, the "Sellers"), XXXXXX FAMILY
HOLDINGS, INC., a Nevada corporation ("FFHI"), XXXXXX PARENT HOLDINGS, INC., a
Nevada corporation ("FPHI"), XXXXXX PARENT HOLDINGS LIMITED PARTNERSHIP, a
Nevada limited partnership ("Parent LP"), XXXXXX X. XXXXXX ("Xxxxxx"), XXXXX X.
XXXXXX ("Xxxxxx", and together with FFHI, FPHI, Parent LP and Xxxxxx,
individually, an "Equityholder" and, collectively, the "Equityholders"). The
Buyer Companies, Sellers and Equityholders are sometimes referred to herein
individually as a "Party" and, collectively, as the "Parties." The Sellers and
Equityholders are sometimes referred to herein, jointly, severally and
collectively, as the "Selling Group Members."
RECITALS
A. The Company is engaged in the business (the "Company Business")
of designing, engineering, manufacturing, marketing, selling and distributing
towing products, including trailer hitches, trailer balls, ball mounts,
couplers, tow bars and brush guards. As of the Closing (as defined below),
substantially all of the assets, rights and properties used in the conduct of
the Company Business (as further defined hereinbelow, the "Valley Assets") are
owned by the Sellers.
B. The Equityholders collectively own directly or indirectly all
of the capital stock, partnership interests and other equity interests in the
Sellers.
C. Pursuant to the terms and conditions herein set forth, the
Buyer will purchase and acquire all of the right, title and interest of
the Sellers in and to all of the Valley Assets and Third Party Property from
the Sellers and the Sellers will sell, transfer, assign and convey all of their
respective right, title and interest in and to Valley Assets and Third Party
Property to the Buyer.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
meaning ascribed to them in this Section 1:
2
"Action" means any action, suit, arbitration, inquiry, proceeding,
hearing or investigation by or before any court, arbitration tribunal or
panel or any Governmental Authority.
"Adjustment Date" has the meaning defined in Section 3(c)(iv) below.
"Adjustment Notice" has the meaning set forth in Section 3(c)(i) below.
"Affiliate" means, as to any Person, any other Person (i) which
directly or indirectly controls, is controlled by, or is under
common control with such Person, (ii) which beneficially owns or holds
5% or more of any class of voting interests or other equity interests
of such Person or (iii) 5% or more of any class of voting interests or
other equity interests of which is beneficially owned or held, directly
or indirectly, by such Person. As used herein, the term "control" of a
Person shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract
or otherwise.
"Affiliate Debt" means the indebtedness of the Sellers described on
EXHIBIT A-1 attached hereto and any other indebtedness of either Seller
to any Equityholder or any Affiliate of either Seller or any
Equityholder otherwise unpaid on the Closing Date.
"Affiliated Group" means any affiliated group within the meaning of Code
Section 1504(a).
"Allocable Portion" means, with respect to the share of any Selling
Group Member in a particular amount, (i) in the case of Xxxxxx, a
percentage amount equal to ten percent (10%) and (ii) in the case
of each of the other Selling Group Members, jointly, severally and
collectively, a percentage amount equal to ninety percent (90%).
"Applicable Laws" means, as to the Person to which reference is made,
all laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of all
Governmental Authorities applicable to such Person, its assets or
properties or its operations.
"Arbitrator" means the accounting firm of Deloitte & Touche LLP or,
subject to the mutual agreement of the Buyer and the Valley
Equityholder Representative, such other firm of certified public
accountants as may be so mutually agreed.
"Assumed Contracts" means each of the Contracts, other than any Excluded
Contracts.
"Assumed Funded Debt" means the portion of the Funded Debt, to the
extent outstanding as of the Closing Date, identified on EXHIBIT A-2
attached hereto.
"Assumption Documents" means each of the instruments and other
documents which are executed by the Buyer and delivered to the Sellers
to further evidence the Buyer's assumption of the obligations of the
Sellers to pay and discharge the Valley Liabilities and
-2-
3
otherwise assume all of the liabilities and obligations of the Sellers'
under the terms of the Assumed Contracts.
"Auburn Hills Lease" means that certain Lease between the Company and
Xxxxxx Xxxxxx and Xxxxxxx Xxxxxx dated October 1, 1996, relating to the
real property and improvements located at 0000 Xxxxx Xxxx xx Xxxxxx
Xxxxx, Xxxxxxxx, as amended, modified or supplemented.
"Base Equity Value" means an amount equal to $23,645,000.
"Blanket Purchase Orders" mean such purchase orders for products of the
Company as have been submitted to the Company by customers such as
Chrysler Corporation, Ford Motor Company and General Motors Corporation
and which cover all or a portion of such customer's annual requirements
for a particular product.
"Business Day" means a day other than a Saturday, Sunday, holiday or
other day on which commercial banks in the locale of any Party are
authorized by law to be closed.
"Buyer" has the meaning set forth in the preface above.
"Buyer Auditors" means Price Waterhouse L.L.P. or such other firm of
independent certified public accountants as may be designated by the
Buyer.
"Buyer Companies" has the meaning set forth in the preface above.
"Charter Documents" mean the respective certificates of incorporation,
bylaws, partnership agreements and other agreements, instruments or
documents (i) pursuant to which the Selling Group Members have, as
applicable, been formed, incorporated or organized or (ii) which
otherwise govern or restrict the respective rights, powers and
authority of the Selling Group Members.
"Claims Period" has the meaning set forth in 7(a) below.
"Closing" has the meaning set forth in Section 3(e) below.
"Closing Asset Value" means the Net Book Value of the Valley Assets
determined as of the Closing Date on the basis of the Closing Balance
Sheet, provided, that, notwithstanding anything to the contrary herein,
in determining the Closing Asset Value (a) no value shall be
recognized for or in respect of (i) the deferred loss on the
sale/leaseback relating to the Dequindre Road real property and
improvements, (ii) prepaid travel expenses, (iii) unamortized
tooling or (iv) nonreimbursable tooling and (b) the lost contract
reserve shall be fixed at the amount of $128,000.
"Closing Balance Sheet" has the meaning set forth in Section 3(c)(i)
below.
-3-
4
"Closing Date" has the meaning set forth in Section 3(e) below.
"Closing Equity Value" means an amount equal to the difference between
the Closing Asset Value and Closing Liability Value, provided, however,
that no effect shall be given to any increase in property, plant or
equipment as a result of an "involuntary conversion" as defined in
GAAP.
"Closing Liability Value" means the Net Book Value of the Valley
Liabilities determined as of the Closing Date on the basis of the
Closing Balance Sheet.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Business" has the meaning set forth in Recital A above.
"Confidential Information" means any confidential information
pertaining to the Company and Company Business as of the date hereof,
including, but not limited to, information concerning its financial
condition, prospects, customers, sources of leads, methods of doing
business, and the manner of design, manufacture, financing, marketing
and distribution of its products, provided, however, that Confidential
Information does not include information that is or becomes generally
available to the public other than as a result of a disclosure
in violation of Section 8(d) by any Covered Person.
"Contract" means each contract, agreement or arrangement, whether
written or oral, to which the Company is a party, or by which the
Company or any of its assets is bound.
"Conveyance Documents" means each of the instruments and other
documents which are executed by either of the Sellers and delivered to
the Buyer to further evidence the sale, transfer, assignment or other
conveyance of the rights, title and interests of the Sellers in and to
the Valley Assets and Third Party Property by the Sellers to
Buyer.
"Covered Persons" has the meaning set forth in Section 8(d) below.
"Customer Tooling" means the tooling identified on EXHIBIT B attached
hereto.
"Dequindre Road Lease" means that certain Lease Agreement between the
Company and Valley Realty dated January 21, 1997, relating to the real
property and improvements located at 32451 and 00000 Xxxxxxxxx Xxxx xx
Xxxxxxx Xxxxxxx, Xxxxxxxx, as amended, modified or supplemented.
"Disputed Matter(s)" has the meaning set forth in Section 3(c)(iii)
below.
-4-
5
"Documents" mean this Agreement, the Parent Subscription Documents, the
Reorganization Documents, the Employment Agreement, the Conveyance
Documents and the Assumption Documents, in each instance, each as
amended, modified or supplemented from time to time.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee
Pension Benefit Plan, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c)
qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan, or (d) Employee Welfare Benefit Plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Employment Agreement" means an Employment Agreement, dated as of the
Closing Date between the Buyer and Xxxxxx, in form satisfactory to
Xxxxxx.
"Environmental Claim" means any notice or claim, written or oral, by any
Person or any governmental authority alleging potential liability
(including, without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources
damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from now or at any time in the past on property
currently or formerly owned or operated by the Company (a) the presence,
or release into the environment, of any Material of Environmental Concern
at any location, whether or not owned or leased by the Company presently
or at any time in the past or (b) any violation, or alleged violation, of
any Environmental Law.
"Environmental Laws" means all federal, state, local and foreign laws and
regulations relating to pollution or protection of the environment
(including, without limitation, ambient air, surface water, ground water,
land surface or subsurface strata) or the protection of human health from
environmental hazards, including, without limitation, laws and
regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern.
"Equityholder" and "Equityholders" have the meaning set forth in the
preface above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means the Excluded Contracts and such other assets,
rights and properties identified on EXHIBIT C attached hereto.
-5-
6
"Excluded Contracts" means the Excluded Debt Documents and each of the
other Contracts identified on EXHIBIT D attached hereto.
"Excluded Debt Closing Payments" has the meaning set forth in Section
3(b)(ii).
"Excluded Debt Documents" means each of the Contracts which evidence any
Excluded Obligations or any security therefor or other agreements
incidental thereto.
"Excluded Funded Debt" means the Funded Debt to the extent not Assumed
Fund Debt.
"Excluded Obligations" means, collectively, the Excluded Funded Debt,
Affiliate Debt and such other liabilities, indebtedness and obligations
of the Company identified on EXHIBIT E attached hereto.
"Excluded Representations and Warranties" means those representations and
warranties of the Parties set forth in subsections (a), (b), (c), (d),
(e), (f), (g), and, as to matter of title, (h) of Section 4 hereof and
subsections (a), (b), (c), (d) and (f) of Section 5 hereof.
"Facility Leases" means the Auburn Hills Lease, the Dequindre Road Lease
and the Xxxxxx Road Lease.
"FFHI", "FHLP" and "FPHI" have the meaning set forth in the preface
above.
"Financial Statements" has the meaning set forth in Section 4(i) below.
"Xxxxxx" has the meaning set forth in the preface above.
"FHLP/Valley Assets" means that portion of the Valley Assets consisting
of (a) accounts and notes receivable, (b) inventory, and (c) prepaid
items.
"Funded Debt" means, without duplication, the aggregate amount (including
the current portions thereof) outstanding as of the Closing Date of all
(a) indebtedness of the Sellers for money borrowed from others and
purchase money indebtedness (other than accounts payable or trade letters
of credit issued in the ordinary course and outstanding as of the Closing
Date); (b) indebtedness of the type described in clause (a) in respect of
which a Seller has provided a Guaranty to any other Person, (c)
indebtedness of the type described in clause (a) above secured by any
Lien upon property owned by a Seller, even though each Seller has not in
any manner become liable for the payment of such indebtedness; and (d)
interest expense accrued but unpaid, and all prepayment premiums. on or
relating to any of such indebtedness.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time, applied on a basis consistent with such
principles and methodologies as employed by the Company in the
preparation of the Financial Statements, so long as such
-6-
7
principles and methodologies do not conflict with such United States
generally accepted accounting principles.
"Governmental Authority" means any foreign, federal, state or local
government or political subdivision, or any department or agency thereof.
"Guaranty" means, with respect to the Person to which reference is made,
any agreement, contingent or otherwise, excluding endorsements of checks,
instruments or other items of payment in the ordinary course for deposit
or collection, to guarantee or in effect guarantee or assure the payment
of, or performance with respect to, any indebtedness, liability or other
obligation of any other Person (a "primary obligor"), including, without
limitation, any agreement made with a creditor of such primary obligor,
primarily for the purpose of enabling such primary obligor to make
payment of the indebtedness or to assure the owners or holders of the
indebtedness against loss, (a) to supply funds to, or in any other manner
invest in, such primary obligor or (b) to purchase indebtedness, or
Co-purchase and pay for property if not delivered, or pay for services if
not performed.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or
not, including any tax on or based upon net income, gross income, or
income as specially defined, or earnings, profits, or selected items of
income, earnings or profits, including all taxes payable in respect of
the Michigan Single Business Tax and California Corporate Income Tax.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes,
including any schedule or attachment thereto.
"Indemnifiable Loss" means, with respect to any claim for indemnification
made by a Party entitled to indemnification pursuant to this Agreement,
any and all losses, liabilities, claims (including assertion of claims),
damages, obligations, payments, costs and expenses incurred by such Party
(including attorney's fees and expenses) with respect to such claim,
including, without limitation, the costs and expenses of any and all
Actions, demands, assessments, judgments, settlements and compromises
relating thereto.
"Indemnified Party" has the meaning set forth in Section 7(e) below.
"Indemnifying Party" has the meaning set forth in Section 7(e) below.
"Indemnity Claim Notice" has the meaning set forth in Section 7(e) below.
-7-
8
"Interim Balance Sheet" means the unaudited balance sheet of the Company
as of March 31, 1997.
"Interim Financial Statements" means the Interim Balance Sheet and the
related unaudited statement of income and changes in stockholders' equity
and cash flow for the three month period ending as of March 31, 1997.
"Knowledge" or "known" means actual knowledge of the matter to which
reference is made.
"Leased Property" means the property leased by the Company under the Real
Property Leases and each of the other leases identified on EXHIBIT F
attached hereto.
"Licensed Property" means the property or technology which is licensed to
the Company as identified on EXHIBIT G attached hereto.
"Lien" means any security interest mortgage, pledge, lien, encumbrance or
other charge upon any property, including the leasehold interest of the
lessor under any capital lease.
"Lodi Environmental Liabilities" means Indemnifiable Losses any of the
Buyer Indemnified Persons shall incur as a direct result of any breach or
inaccuracy in the representations and warranties of the Sellers under
Section 4(n) hereof to the extent relating to the Lodi Facility.
"Lodi Facility" means the real property described on EXHIBIT H attached
hereto, and all buildings, improvements, fixtures and fittings thereon
and all easements, rights-of-way and other appurtenants thereto (such as
appurtenant rights in and to public streets).
"Material Adverse Change" and "Material Adverse Effect" mean, as related
to the circumstances, events or conditions to which reference is made,
any such circumstances, events or conditions which (a) has any material
adverse effect upon the validity or enforceability of any of the
Documents, (b) impairs, in any material respect, any of the rights of the
Buyer or Parent under any of the Documents or (c) is material and adverse
to the business, properties, assets, financial condition or results of
operations, of the Company Business, taken as a whole.
"Material Agreements" means, (a) the Real Property Leases, (b) each other
Material Lease and (c) other than the Excluded Contracts, each other
Contract of the following nature:
(i) letters of credit, pledges, bonds or similar arrangements
running to the account of or for the benefit of the Company,
excluding, however, trade letters of credit and bonds issued for
the benefit or account of the Company in the ordinary course of
business and, which do not evidence obligations in excess of
$25,000, determined as of the Closing Date;
-8-
9
(ii) Contracts relating to the purchase, maintenance or
acquisition, or sale or furnishing of materials, supplies,
merchandise, machinery, equipment, parts or any other property or
services, excluding, however, any such Contract made in the
Ordinary Course of Business and which is expected to be fully
performed within 30 days of the Closing Date or which involves
revenues or expenditures of less than $50,000);
(iii) any collective bargaining agreement;
(iv) Contracts obligating the Company to refrain from competing
with any business, or to conduct any business with only certain
parties, or which otherwise restrains or prevents the Company from
carrying on any lawful business or which restricts the right of the
Company to use or disclose any information in its possession,
excluding, however, such nondisclosure arrangements incidental to
the Company's supply of product to customers pursuant to such
customer's designs or specifications;
(v) employment, compensation, severance or consulting Contracts,
not otherwise terminable by the Company, without penalty, on no
more than 30 days advance written notice, involving, in any
instance, an annual expenditure, by the Company, including any such
amounts as would be payable upon termination of such Contract
(computed as if so terminated effective as of the Closing Date), of
in excess of $25,000 (excluding however any such arrangements
provided for under the written employment policies of the Company
generally applicable to all employees of the Company);
(vi) any Contract with any Equityholder, or any Affiliate of any
Equityholder, excluding, however, any such Contract which has been
terminated, without further liability to the Company, effective as
of the Closing Date;
(vii) any Contract, not otherwise cancelable by the Company without
material penalty or loss, for capital expenditures or the
acquisition or construction of fixed assets for or in respect of
any real property involving payments in excess of $100,000 per
year;
(viii) any Contract granting any Person a Lien on any of the assets
of the Company, in whole or in part, other than a Permitted Lien
or, in the case of any real property, any Permitted Real Estate
Restriction;
(ix) any Contract, not otherwise cancellable without liability on
30 days notice, by which (A) the Company retains any manufacturer's
representatives, broker, sales agent or other distributor or (B)
the Company is appointed or authorized as a sales agent,
distributor or representative of any other Person;
-9-
10
(x) any Contract under which the Company has granted or received
a license or sublicense or under which the Company is obligated to
pay, or has the right to receive. a royalty, license fee or similar
payment of in excess of $25,000 per annum;
(xi) any Contract for the Company's participation in any joint
venture or partnership;
(xii) any Contract for (A) the storage, transportation, treatment
and disposal of any materials subject to regulation under any
Environmental Laws, or (B) for storage, transportation or similar
services with carriers or warehousemen, excluding, however, any
such Contract entered into in the ordinary course and involving
annual expenditures not exceeding $25,000;
(xiii) other than as related to the insurance policies described on
SCHEDULE 4(U) hereto, any Employee Benefit Plan or any Contract
otherwise a Material Agreement or excluded by reason of the
foregoing provisions of this definition, any Contract which is
otherwise material to the assets, business, operations or financial
condition of the Company and (A) is not otherwise described in a
Schedule, or (B) involves the payment of more than $50,000 by the
Company or (C) is not cancellable by the Company on 30 days notice
without liability.
"Material Leases" means (a) the Facility Leases and Real Property Leases
and (b) each other lease or sublease of real property, or a lease,
sublease or other title retention agreement or conditional sales
agreement relating to any machinery, equipment, vehicle or other tangible
personal property, which, individually, involves annual payments in
excess of $25,000.
"Material Real Property" means the Lodi Facility and the real property
leased by the Company under the Facility Leases and Real Property Leases.
"Materials of Environmental Concern" means chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum
and petroleum products in each case with respect to which liability or
standards of conduct are imposed pursuant to any Environmental Laws.
"Members Agreement" means the Second Amended and Restated Members'
Agreement among the Parent, Xxxxxx, Xxxxxx and the other members of the
Parent, dated as of the Closing Date.
"Xxxxxx" has the meaning set forth in the preface above.
-10-
11
"Xxxxxx Note" means that certain Promissory Note dated January 1, 1995,
executed by Xxxxx X. Xxxxxx in favor of the Company, in the original
principal amount of $291,500.00.
"Most Recent Year-End" means December 31, 1996.
"Most Recent Year-End Balance Sheet" means the balance sheet of the
Company as of the Most Recent Year-End included in the Most Recent
Year-End Financial Statements.
"Most Recent Year-End Financial Statements" means the Financial
Statements of the Company for, and as of, the fiscal year ending as of
the Most Recent Year-End.
"Net Book Value" means the net book value of the Valley Assets or the
Valley Liabilities, as the case may be, as determined in accordance with
GAAP.
"Notice of Dispute" has the meaning set forth in Section 3(c)(iii) below.
"Operating Agreement" means the Second Amended and Restated Operating
Agreement of the Parent, dated as of the Closing Date.
"Ordinary Course of Business" or "ordinary course of business" means the
ordinary course of business consistent with past custom and practice
(including with respect to quantity and frequency).
"Other Taxes" means Taxes, other than Income Taxes.
"Parent" has the meaning set forth in the preface above.
"Parent LP" has the meaning set forth in the preface above.
"Parent LP/Valley Assets" means that portion of the Valley Assets
consisting of the Company's machinery, equipment, tooling, jigs, dies and
other tangible personal property, other than inventory.
"Parent Subscription Documents" means the Subscription Agreements, the
Operating Agreement, the Members Agreements and each of the other
agreements, instruments or documents executed by, or delivered to, Xxxxxx
and Xxxxxx in connection with their subscription for Units of the Parent.
"Party" or "Parties" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
-11-
12
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or any Governmental Authority.
"Permits" means, with respect to the Person to which reference is made,
all governmental permits, licenses and authorizations necessary for the
conduct of such Person's business as presently conducted.
"Permitted Liens" means (a) Liens securing taxes, assessments or other
governmental charges or levies, or the claims or demands of materialmen,
mechanics, contractors, carriers, warehousemen, landlords and other
similarly situated Persons, incurred in the ordinary course of business
and which are not yet due and payable, or which are being contested in
good faith through appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP, and (b) Liens
incurred or deposits made in the ordinary course of business, and
provided that no amounts secured thereby are overdue or delinquent, (i)
in connection with worker's compensation, unemployment insurance, social
security and other like laws or (ii) to secure performance of letters of
credit, bids, tenders, sales contracts, leases, statutory obligations,
surety, appeal and performance bonds incurred in the ordinary course of
business and (c) such other Liens, if any, described on EXHIBIT I
attached hereto.
"Permitted Real Estate Restrictions" means (a) reservations, exceptions,
rights of way, encroachments, easements, covenants, conditions,
restrictions, and other similar title exceptions or encumbrances
affecting real property, provided that the same do not materially detract
from the value of said real properties or materially interfere with their
use in the ordinary conduct of business and (b) such other exceptions to
title, if any, as are described in EXHIBIT J attached hereto.
"Purchase Price" has the meaning set forth in Section 3(b) below.
"Real Property Leases" mean the Facility Leases and each other lease of
real property to which the Company is a party, other than any leases or
storage agreements for warehouse space used to store inventory, entered
into in the Ordinary Course of Business, and which are terminable by the
Company, without penalty, on the delivery of written notice of not more
than sixty (60) days.
"Reorganization" means the transactions consummated pursuant to the
Reorganization Documents and as further described in Section 2 below.
"Reorganization Documents" mean each of those agreements, instruments and
other documents to which any of the Selling Group Members are a party
relating to the reorganization of Xxxxxx'x ownership of the Company and
the transfer of Valley Assets ultimately to FHLP immediately prior to
Closing.
-12-
13
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Response Period" has the meaning set forth in Section 7(e) below.
"Review Period" means the thirty (30) day period following the Buyer's
receipt of the Adjustment Notice.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Seller" and "Sellers" have the meaning set forth in the preface above.
"Selling Group Members" has the meaning set forth in the preface above.
"Subscription Agreements" means those certain Subscription Agreements
dated as of the Closing Date between the Parent and Xxxxxx and the Parent
and Xxxxxx, respectively, relating to the purchase by Xxxxxx and Xxxxxx
of certain Class A Units of the Parent.
"Tax" or "Taxes" means, with respect to any Person, all Income Taxes and
all gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment or windfall profits taxes, alternative
or add-in minimum taxes, customs duties or other taxes of any kind
whatsoever, together with any interest and any penalties, additions to
tax or additional amounts imposed by any taxing authority on such Person.
"Threatened Claims" means those matters described on EXHIBIT K attached
hereto.
"Third Party Claim" has the meaning set forth in Section 7(f) below.
"Third Party Property" means, collectively, Leased Property, Licensed
Property and Customer Tooling.
"Transactions" means, collectively, the transactions contemplated to be
effected under the terms of the Documents.
"Xxxxxx Road Lease" means that certain Lease dated April 23, 1996 between
Xxxxxxx Xxxxxxxx, as Lessor, and the Company, as Lessee, for Unit C at
000 Xxxx Xxxxxx Xxxx in Lodi, California, as supplemented by that certain
Agreement to Lease Additional Space dated March 12, 1997 between such
parties relating to the lease of Unit B at 000 Xxxx Xxxxxx Xxxx in Lodi,
California and that certain Lease Extension dated June 20, 1997 between
such parties extending the term of the lease as related to Unit C.
"Valley Assets" means, to the extent not otherwise an Excluded Asset, all
of the Sellers' right, title and interest to and under all assets,
properties, interests in properties and rights of the Sellers of every
kind, nature and description, whether real, personal or mixed,
-13-
14
moveable or immoveable, tangible or intangible, wherever located as the
same shall exist immediately prior to Closing including the following:
(a) the Lodi Facility;
(b) all of the assets, properties and rights of the Sellers in
and to all of each Seller's (i) accounts and notes receivable and,
regardless of the nature, other amounts which may be owing to
either such Seller, (ii) inventories of raw materials and supplies,
manufactured and purchased parts, goods in process and finished
goods, (iii) machinery, equipment, furniture, automobiles, trucks,
tractors, trailers, tools, jigs, dies and other tangible personal
property, (iv) in respect of Third Party Property, including all
leasehold interests under all Leases (including the Material Leases
and any other lease of real or personal property), (v) intellectual
property, goodwill associated therewith, licenses and sublicenses
granted and obtained with respect thereto, and rights thereunder,
remedies against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions, (vi) rights
under, and interests in, any Contracts or other arrangements
relating to, or arising out of the conduct of, its business,
including all Assumed Contracts, (vii) claims, deposits,
prepayments, refunds, causes of action, chooses in action, rights
of recovery, rights of set off, and rights of recoupment (exclusive
of any such item relating to the payment of Income Taxes in respect
of periods prior to the Closing Date), (viii) franchises,
approvals, Permits, licenses, orders, registrations, certificates,
variances, and similar rights obtained from governments and
governmental agencies, (ix) books, records, ledgers, files,
documents, correspondence, lists, plats, architectural plans,
drawings, and specifications, creative materials, advertising and
promotional materials, studies, reports, and other printed or
written materials, and (x) rights in and with respect to the assets
associated with its Employee Benefit Plans; and
(c) all other assets, properties, rights, interests and other
items existing as of the Closing Date to the extent categorized as
"assets" (including "other assets") on the balance sheet of either
Seller included in the Financial Statements, including all
unamortized expenses, prepaid expenses or items, deposits and the
like.
The term "Valley Assets" shall not include the Excluded Assets.
"Valley Auditors" means Ernst & Young LLP.
"Valley Closing Bonuses" means bonus payments to be made by the Company
on the Closing Date as set forth on EXHIBIT L attached hereto.
"Valley Liabilities" means each of the following:
-14-
15
(a) all liabilities and obligations of the Company, whether known
or unknown, asserted or unasserted, absolute or contingent, accrued
or unaccrued, liquidated or unliquidated, and whether due or to
become due, including, without limitation, all such liabilities and
obligations for, under, in respect of or arising out of (i)
accounts payable and other liabilities and expenses incurred in the
Ordinary Course of Business on or before the Closing Date, (ii)
unpaid Taxes, other than Income Taxes, with respect to periods
prior to the Closing Date, (iii) any agreements, contracts, leases,
licenses, and other arrangements to which the Company is or was a
party, including, without limitation, each of the Assumed
Contracts, (iv) goods manufactured or sold prior to Closing,
including all warranty and product liability claims relating
thereto, (v) the Assumed Funded Debt, and (vi) all other
liabilities and obligations of the Company arising out of the
conduct of its business prior to the Closing Date or any of the
facts, events, circumstances or conditions set forth in any of the
Schedules hereto;
(b) all liabilities and obligations of FHLP for or in respect of
any of the liabilities or obligations described in clause (a)
above; and
(c) all other liabilities and obligations of the Company
categorized as "liabilities" on the balance sheets of the Company
included in the Financial Statements.
The term "Valley Liabilities" shall not include the Excluded Obligations.
"Valley Equityholder Representative" means Xxxxxx X. Xxxxxx or such
successor representative as may be designated in writing by Xxxxxx.
"Valley/FHLP Partnership Interest" has the meaning set forth in Section
2(a) below.
"Valley/Parent LP Partnership Interest" has the meaning set forth in
Section 2(a) below.
"Valley Realty" means Valley Industries Realty, L.P., a Delaware limited
partnership.
-15-
16
2. REORGANIZATION.
Prior to the consummation of the transactions contemplated hereby,
(i) the Company has transferred all of its right, title and interest in
and to the Parent LP/Valley Assets to Parent LP in return for a limited
partnership interest in Parent LP (the "Valley/Parent LP Partnership
Interest"), (ii) Parent LP has, in turn, transferred all of its right,
title and interest in the Valley Assets to FHLP in consideration of the
issuance of a preferred limited partnership interest in FHLP to Parent LP
and (iii) the Company has otherwise transferred all of its right, title
and interest in and to FHLP/Valley Assets directly to FHLP in
consideration of the issuance to the Company of a common limited
partnership interest in FHLP (the "Valley/FHLP Partnership Interest").
3. BASIC TRANSACTION.
(a) Purchase and Sale of Valley Assets/Assumption of Valley Liabilities.
On and subject to the terms and conditions of this Agreement, and for the
consideration specified below in this Section 3:
(i) The Buyer agrees to purchase and acquire from the Sellers,
and each of the Sellers agrees to sell, transfer, assign, convey,
and deliver to the Buyer, all of the Valley Assets, including all
such rights, title and interests of each Seller with respect to any
Third Party Property free and clear of all Liens other than
Permitted Liens and with respect to the Lodi Facility free and
clear of all Liens other than Permitted Real Estate Restrictions.
(ii) The Buyer agrees to assume, pay and discharge, as and when
due, all of the Valley Liabilities.
(iii) Simultaneously with the execution herewith, the Sellers are
executing and delivering (or causing to be executed and delivered)
to the Buyer, the Conveyance Documents necessary to sell, transfer,
convey and assign to the Buyer, in accordance with the terms
hereof, the Valley Assets, free and clear of all Liens (other than
Permitted Liens). Simultaneously with the execution herewith, the
Sellers shall relinquish to the Buyer possession and operating
control of the Valley Assets and shall take all other steps that
may be required or desirable to pass title to the Valley Assets to
the Buyer.
(iv) The Sellers shall promptly pay or deliver to the Buyer any
amounts or items which may be received by the Sellers after the
Closing which constitute Valley Assets and shall cause all customer
orders and purchase orders placed with Affiliates of the Sellers
and relating to the products or services of the Company Business to
be assigned at the Closing to the Buyer. Each of the Selling Group
Members shall, at any time and from time to time after the Closing,
upon the reasonable request of the Buyer, and at Buyer's sole cost
and expense, do,
-16-
17
execute, acknowledge, deliver and file, or cause to be done,
executed, acknowledged, delivered and filed, all such further acts,
transfers, conveyances, assignments or assurances as may reasonably
be required for better selling, transferring, conveying, assigning
and assuring to the Buyer, or for aiding and assisting in the
collection of or reducing to possession by the Buyer, any of the
Valley Assets.
(v) Anything contained in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement
or attempted agreement to transfer, sublease or assign any
contract, license, real or personal property lease, sales order,
purchase order or other agreement, or any claim or right with
respect to any benefit arising thereunder or resulting therefrom,
or any Permit, if an attempted transfer, sublease or assignment
thereof, without the required consent of any other party thereto,
would constitute a breach thereof or in any respect affect the
rights of the Buyer or the Sellers thereunder. The Sellers shall
use their commercially reasonable efforts to obtain the consent of
any such third party to any of the foregoing to the transfer or
assignment thereof to the Buyer in all cases in which such consent
is required for such transfer or assignment. If such consent is
not obtained, the Sellers, at Buyer's sole cost and expense, shall
make any arrangements necessary or desirable to provide for the
Buyer the benefits thereunder, including, without limitation,
enforcement by the Sellers for the benefit of the Buyer of any and
all rights of the Sellers thereunder against the other parties
thereto.
(vi) The Sellers hereby constitute and appoint the Buyer and its
successors and assigns the true and lawful attorney of the Sellers
with full power of substitution, in the name of the Buyer, or the
name of the Sellers on behalf of and for the benefit of the Buyer,
to collect all accounts and notes receivable and other items being
sold, transferred, conveyed and assigned to the Buyer hereunder to
endorse, without recourse, checks, notes and other instruments
constituting the Valley Assets in the name of the Sellers, to
institute and prosecute all proceedings which the Buyer may deem
proper in order to collect, assert or enforce any claim, right or
title of any kind in or to the Valley Assets, to defend and
compromise any and all actions, suits or proceedings in respect of
any of the Valley Assets or the Company Business and to all such
acts and things in relation thereto as the Buyer may deem
advisable. The foregoing powers are coupled with an interest and
shall be irrevocable by the Sellers, directly or indirectly,
whether by the dissolution of the Sellers or in any manner or for
any reason.
(b) The Purchase Price
(i) Purchase Price. The aggregate purchase price (the "Purchase
Price") to be paid by the Buyer to the Sellers for the Valley
Assets, and the covenants set forth in Section Sections 8(c) and
8(e) hereof, shall be an amount equal to:
-17-
18
(A) $___________ (the "Closing Payment Amount"); and
(B) less, the amount, if any, by which the Closing Equity
Value is less than the Base Equity Value, or plus, the
amount, if any, by which the Closing Equity Value exceeds the
Base Equity Value.
The Purchase Price, as increased to reflect the Closing Liability
Value, shall be subject to allocation among the Valley Assets by
the Buyer in accordance with the allocation principles attached as
EXHIBIT M hereto, provided, that, the allocation so made by the
Buyer shall be subject to the Sellers' consent, which will not be
unreasonably withheld. The Parties agree to use such allocation
for all purposes and to assist each other as reasonably requested
in the preparation of IRS Form 8594.
(ii) Payment of Closing Payment Amount. The Closing Payment Amount
shall be paid, on the Closing Date, to or for the account of the
Sellers as follows:
(A) such amounts as may be required to discharge any Liens
(not otherwise a Permitted Lien) securing any Excluded Funded
Debt (the "Excluded Debt Closing Payments") shall be paid and
delivered by Buyer, out of and as a credit against the
Closing Payment Amount, directly to the holders of such
Excluded Funded Debt; and
(B) the balance of the Closing Payment Amount (i.e. after
credit for Excluded Debt Closing Payments) shall be paid by
wire transfer of immediately available funds to such
account(s) as the Sellers may direct.
The amount of the Excluded Debt Closing Payments shall be
determined on the basis of the payoff letters from the holders of
such Excluded Funded Debt required to be so paid as delivered to
Buyer under the provisions of Section 3(f)(i)(G) below.
(iii) Payment of Adjustments. Following the finalization of the
Closing Balance Sheet in accordance with the provisions of Section
3(c) below, the Buyer and Sellers shall, within five (5) Business
Days following the Adjustment Date, make such final payments in
respect of the Purchase Price as follows:
(A) If the Closing Equity Value is greater than the Base
Equity Value (the amount of such excess being referred to
herein as the "Underpayment Amount"), the Buyer shall pay the
Underpayment Amount to the Sellers; or
(B) If the Closing Equity Value is less than the Base
Equity Value (the amount of such shortfall being
referred to herein as the "Overpayment Amount"), the Sellers
shall pay the Overpayment Amount to the Buyer.
-18-
19
(iv) Reliance. The Buyer shall be entitled to rely on the such
written disbursement instructions or payment directions as may be
executed by each of the Sellers in making any payment required to
be made to the Sellers under this Agreement.
(c) Closing Balance Sheet.
(i) Preparation of Closing Balance Sheet. Promptly following the
Closing, the Company's internal accounting staff shall prepare a
balance sheet of the Company as of Closing Date (the "Closing
Balance Sheet") which, for purposes of this Agreement, shall
reflect the Net Book Value of FHLP's interest in the Valley Assets
as if such interest were wholly-owned by the Company. The Valley
Auditors shall, at the expense of the Sellers, review the Closing
Balance Sheet as so prepared and issue their report thereon as
provided below. For such purposes, the Buyer shall provide the
Valley Auditors with such access to, and copies of, such financial
information and reports concerning the Valley Assets and Valley
Liabilities as the Valley Auditors deem necessary or appropriate so
as to enable them to so review the Closing Balance Sheet. The
Closing Balance Sheet shall be prepared in accordance with GAAP and
reviewed subject to standards otherwise consistent with the
"review" provisions of Statement No. 1, entitled "Compilation and
Review of Financial Statements" (December 1978) of the Accounting
and Review Services Committee of the American Institute of
Certified Public Accountants. For purposes of the foregoing, the
Closing Balance Sheet shall specifically identify any Excluded
Obligations otherwise discharged on the Closing Date.
The Valley Auditors shall provide the Parties with the Closing
Balance Sheet, together with its report thereon to the effect that
there are no material modifications that should be made to the
Closing Balance Sheet in order for them to be in conformity with
GAAP, as soon as practicable but in any event not later than 45
days after the Closing Date. In addition to such report, the
Valley Auditors shall, at the time of delivery of the report on the
Closing Balance Sheet, also provide the Buyer and Sellers with a
separate schedule setting forth the calculation of the Closing
Equity Value. The Closing Equity Value shall be calculated in
accordance with the agreed-upon procedures set forth on EXHIBIT N
attached hereto, which the Parties agree shall be followed in
making such calculation. Upon calculation of the Closing Equity
Value, the Sellers shall promptly deliver a written notice to Buyer
setting forth, as applicable, the calculation of the Underpayment
Amount or Overpayment Amount, if any (the "Adjustment Notice").
(ii) Review by Buyer's Auditors. In rendering the foregoing
review and report, the Valley Auditors shall consult with the Buyer
Auditors, and permit the
-19-
20
Buyer Auditors and Buyer at the earliest practicable date to review
the report of the Valley Auditors, including all work papers,
schedules and calculations related thereto, whether prior to or
after the issuance thereof. The Buyer Auditors shall commence its
review of said work papers, schedules and calculations as soon as
practicable after the Valley Auditors have completed the field work
phase of its review. Final review of the Closing Balance Sheet as
prepared by the Valley Auditors, and the related determination of
the Closing Equity Value, shall be completed by the Buyer and Buyer
Auditors within the Review Period.
(iii) Dispute Resolution. To the extent the Buyer (or the Buyer
Auditors) dispute the Closing Balance Sheet, or the amount of the
Closing Equity Value, such dispute (a "Disputed Matter(s)") shall
be resolved in the following manner:
(A) Buyer shall notify the Valley Equityholder
Representative in writing of such Disputed Matter(s),
describing such Disputed Matter(s) in reasonable detail,
prior to the expiration of the Review Period (such notice
being referred to as a "Notice of Dispute"). In the absence
of the timely delivery of a Notice of Dispute to the Valley
Equityholder Representative, the Closing Balance Sheet, and
Closing Equity Value, as determined by the Valley Auditors
shall be final and binding upon the Parties;
(B) during the 30 day period following the date of receipt
of a Notice of Dispute, the Valley Equityholder
Representative and Buyer shall attempt, in good faith,
to resolve the Disputed Matter(s) and to determine the
appropriateness of the Closing Balance Sheet or the Closing
Equity Value; and
(C) if at the end of the 30 day period specified in
subsection (c)(iii)(B) above, the Valley Equityholder
Representative and Buyer shall have failed to reach a written
agreement with respect to the Disputed Matter(s), such
matter(s) shall be referred for final binding resolution to
the Arbitrator, which shall act as an arbitrator and shall
issue its report as to the Closing Balance Sheet and Closing
Equity Value within sixty (60) days after such dispute is
referred to the Arbitrator. The Arbitrator shall issue such
report using the methodologies specified in this Agreement.
Each of the parties hereto shall bear all costs and expenses
incurred by it in connection with such arbitration, except
that the fees and expenses of the Arbitrator hereunder shall
be borne equally by the Selling Group Members on the one hand
(in accordance with their Allocable Portion) and Buyer on the
other hand. This provision for arbitration shall be
specifically enforceable by the parties and the decision of
the Arbitrator in accordance with the provisions hereof shall
be final, binding, not subject to collateral attack and there
shall be no right of appeal therefrom.
-20-
21
(iv) Adjustment Date. The "Adjustment Date", as such term is used
herein, shall be the later of the last day of the Review Period,
or, assuming a Notice of Dispute is delivered by the Buyer to the
Valley Equityholder Representative, the date upon which the
Disputed Matter(s), if any, are finally resolved pursuant to the
foregoing procedures of this Section 3(c).
(d) Allocation to Non-Compete and Non-Solicitation Covenants. $100,000
of the Purchase Price shall be allocated to, and deemed consideration for
the covenants set forth in Section Section 8(c) and 8(e) below.
(e) The Closing. The closing ("Closing") of the transactions
contemplated hereby shall, unless a later date is otherwise mutually
agreed upon in writing by the Buyer and Valley Equityholder
Representative, take place on the date hereof. The date of the Closing
is herein referred to as the "Closing Date."
(f) Actions Taken at Closing. At the Closing and subject to the terms
and conditions herein contained:
(i) unless otherwise waived by the Buyer, the Sellers shall
deliver to Buyer the following:
(A) such bills of sale, deeds, assignments, releases and
other instruments, documents and certificates (including
Conveyance Documents), duly executed by the Sellers or, as
applicable, the holders of any Liens, as may, in the opinion
of the Buyer, be required to effectively vest in Buyer all of
the right, title and interest of the Sellers in and to the
Valley Assets, free and clear of all Liens of any nature,
other than Permitted Liens;
(B) such opinion(s) of counsel from counsel to the Selling
Group Members, addressed to the Buyer and dated as of the
Closing Date, in form and substance satisfactory to the
Buyer;
(C) copies of the Charter Documents of each Selling Group
Member other than Xxxxxx and Xxxxxx, accompanied by a
certificate of the Secretary of such Selling Group Member (or
the General Partner thereof);
(D) good standing certificates for the Company from the
States of Delaware, Michigan and California and from each of
the other Selling Group Members (other than Xxxxxx and
Xxxxxx) from the respective jurisdiction of such
organization;
(E) to the extent that the rights of the Company under, or
in respect of, any Assumed Contract or Permit would be
subject to termination or
-21-
22
revocation by reason of the sale and transfer of the Valley
Assets to the Buyer unless the consent of another Person is
first obtained, and such termination or revocation would
result in a Material Adverse Effect, such consent(s) with
respect thereto as Buyer may reasonably require;
(F) such estoppel letters, subordination, non-disturbance
and attornment agreements and landlord waiver agreements,
in such form as Buyer may reasonably require, executed by
the owners and/or mortgagees of the real property leased to
the Company under the Facility Leases.
(G) customary forms of pay-off letters from all holders of
Excluded Funded Debt secured by any Lien, together with, in
recordable form where appropriate, such lien releases,
termination statements, trademark and patent assignments and
other documents reasonably requested by the Buyer in order to
evidence the release and/or termination of any Liens securing
the repayment of any such Excluded Funded Debt, it being
agreed by the Buyer that all such instruments effecting the
release of Liens may be delivered under reasonable conditions
of escrow requiring the payment of the related Excluded
Funded Debt as a condition of delivery to the Buyer; and
(H) a certificate, executed by the Selling Group Members,
to the effect that:
(1) the representations and warranties made by such
Selling Group Members under the Documents do not
contain any untrue statement of a material fact and,
when taken together, do not omit to state any material
fact necessary to make such representations and
warranties, in light of the circumstances under which
they are made, not materially misleading;
(2) the Selling Group Members holders have performed
and complied with all of their respective covenants
under the Documents in all material respects through
the Closing Date; and
(3) no injunction, judgment, order, decree, ruling,
or charge in effect preventing consummation of any of
the Transactions; and
(I) MESC Form 1027, executed by the Company.
(ii) Unless otherwise agreed by the Valley Equityholder
Representative, Buyer shall deliver to the Sellers the following:
-22-
23
(A) the Closing Payment Amount in accordance with Section
3(b)(ii) hereof; and
(B) an opinion of counsel from counsel to Buyer addressed
to the Sellers, dated as of the Closing Date, and in form and
substance satisfactory to the Sellers;
(C) an instrument of assumption evidencing Buyer's
assumption of the Valley Liabilities in form reasonably
acceptable to the Sellers, together with such additional
forms of assignment and assumption with respect to such of
the Assumed Contracts as the Sellers may reasonably require.
(D) a certificate, executed by the Buyer Companies, to the
effect that:
(1) the representations and warranties made by the
Buyer Companies under the Documents do not contain any
untrue statement of a material fact and, when taken
together, do not omit to state any material fact
necessary to make such representations and warranties,
in light of the circumstances under which they are
made, not materially misleading;
(2) the Buyer Companies have performed and complied
with all of their respective covenants under the
Documents in all material respects through the Closing
Date; and
(3) no injunction, judgment, order, decree, ruling,
or charge in effect preventing consummation of any of
the Transactions.
(iii) Unless otherwise agreed by Xxxxxx, the Buyer shall otherwise
deliver the Employment Agreement, duly executed by Buyer, to Xxxxxx
and Xxxxxx shall execute and deliver to the Buyer, a copy of such
Employment Agreement.
(iv) Sellers shall cause, or have caused, Medikmark, Inc. and
Automed, Inc. to repay all amounts owed to the Company as
reimbursement for claims paid by the Company to, or for the account
of, employees and beneficiaries of Medikmark, Inc. and Automed,
Inc. under the Company's health plan.
4. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Each of the Sellers hereby jointly and severally represent and
warrant to the Buyer that:
(a) Organizational Matters. Each Selling Group Member (other than
Xxxxxx and Xxxxxx) is a corporation or limited partnership duly organized,
validly existing, and in good
-23-
24
standing under the laws of the state of its incorporation, formation or
organization. Each Selling Group Member has all requisite power and
authority to own, lease and operate its assets and properties and to
conduct its business as it has been and is now conducted. The Charter
Documents of each Selling Group Member delivered under Section 3(f)(i)(C)
above are correct complete and in full force and effect on the date
hereof. Each Selling Group Member is qualified to do business and in good
standing as a foreign Person in each jurisdiction where the conduct of
its business or the ownership of its assets requires it to be so
qualified. Except to the extent otherwise disclosed herein, and except
as may relate to Xxxxxx or Xxxxxx, none of the Selling Group Members has
any subsidiary corporations, nor does any such Selling Group Member own
any interest, directly or indirectly, in any other business, enterprise,
firm or corporation.
(b) FHLP Interests. After giving effect to the Reorganization and the
Closing of the transactions contemplated by this Agreement, none of the
Selling Group Members has any interest in any of the Valley Assets.
Prior to the Closing, FHLP, FFHI, FPHI and Parent LP did not engage in
any transactions or conduct any business whatsoever except in connection
with the consummation of the Reorganization. On and as of the Closing
Date, the Reorganization has been fully consummated in accordance with
its terms. None of the Selling Group Members (other than the Company)
has any employees. The entirety of the Company Business is operated by
the Company.
(c) Authorization of Transactions. Each of the Selling Group Members
has full power and authority to execute and deliver each of the
Documents to which it is a party and to perform his or its obligations
under all such Documents. Each of the Documents constitutes the valid
and legally binding obligation of each of the Selling Group Members a
party thereto, enforceable in accordance with its terms and conditions.
Except as set forth on SCHEDULE 4(C) hereto, no filing with, and no
Permit, authorization, consent or approval of, any Person is necessary to
be made or obtained by any of the Selling Group Members for the
consummation of the Transactions which has not otherwise been so made or
obtained. The execution, delivery and performance by each of the Selling
Group Members of this Agreement and each other Document to which he or it
is or will be a party, and the consummation of the Transactions, have
been duly and validly authorized by all necessary action on the part of
each such Party.
(d) Litigation. There are no Actions pending or, to the knowledge of
any of the Sellers, threatened against or involving any Selling
Group Member, or any of his or its assets or properties, that question
the validity of any of the Documents or seeks to prohibit, enjoin or
otherwise challenge the consummation of the Transactions. There are no
outstanding orders, judgments, injunctions, stipulations, awards or
decrees of any Governmental Authority against any Selling Group Member,
or any of his or its assets or properties, which prohibit or enjoin the
consummation of the Transactions.
(e) Noncontravention. Except as set forth on SCHEDULE 4(E) hereto,
neither the execution and the delivery of the Documents by any Selling
Group Member, nor the
-24-
25
performance by any such Selling Group Member of his or its obligations
thereunder, will (i) violate any law, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any Governmental Authority or court to which any such Selling Group
Member is subject or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require
any notice under any Contract, Permit or other arrangement to which any
such Selling Group Member is a party or by which he or it is bound or to
which any of his or its assets is subject.
(f) Consents and Authorizations. Except as set forth in SCHEDULE 4(F)
attached hereto, none of the Selling Group Members need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the
Parties to consummate any of the Transactions.
(g) Brokers' Fees. The Selling Group Members will be and remain solely
and fully liable for, and will pay and discharge, all fees or commissions
which are payable with respect to the transactions contemplated by this
Agreement to any broker, finder, or agent who was engaged by any of the
Selling Group Members with respect to the sale of the Company Business.
(h) Title to Valley Assets. The Valley Assets, together with the Third
Party Property, constitute all of the assets, properties and rights used
in carrying on the Company Business as conducted by the Company prior to
the Closing, and the Sellers have good, valid title to, or a valid
leasehold interest in, or right to use, all of such assets, properties
and rights. The interest of Sellers in and to the Valley Assets, and the
interests of the Sellers under the Assumed Contracts, will be transferred
to the Buyer on the Closing Date free of all Liens, other than any such
Liens as may be created by Buyer at Closing, Permitted Liens and, in the
case of any real property, any Permitted Real Estate Restrictions. Other
than as related to the Third Party Property otherwise identified herein,
there are no assets, properties or rights which are used in the operation
of the Company Business which are owned by any Person other than the
Sellers which are of any material value or which are otherwise material
to the operations of the Company Business. The Sellers enjoy peaceful
and undisturbed possession of all Leased Property.
(i) Financial Statements. Attached hereto as EXHIBIT O are (i) the
audited balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal years ended December 31,
1996, December 31, 1995, December 31, 1994 for the Company and (ii) the
Interim Financial Statements (collectively the "Financial Statements").
The Financial Statements (including the notes thereto) have been prepared
in accordance with the books and records of the Company and, in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby and fairly present the financial condition of the Company
as of such dates and the results of operations of the Company for such
periods subject, in the case of the Interim Financial Statements, to
normal year end audit adjustments, none of which are material.
-25-
26
(j) Events Subsequent to Most Recent Year-End. Since the Most Recent
Year-End, and except as otherwise disclosed on, or reflected in, the
Interim Financial Statements or SCHEDULE 4(J) hereto, (i) no event,
condition or circumstance has occurred which has resulted, or is
reasonably expected to result, in any Material Adverse Change, (ii) the
Company has been operated in the Ordinary Course of Business and (iii)
the Company has not suffered any damage, destruction or casualty loss to
any of its assets (whether or not covered by insurance) having a
replacement cost or fair market value in excess of $50,000.
(k) Liabilities. Except as disclosed on SCHEDULE 4(K) hereto or
otherwise disclosed or reflected on the Most Recent Year-End Balance
Sheet and the Interim Balance Sheet, and/or the notes thereto, neither of
the Sellers have any liabilities (matured or unmatured, fixed or
contingent) except (i) liabilities incurred by the Company in the
Ordinary Course of Business since the Most Recent Year-End, (ii)
liabilities of the Company disclosed on any Schedule hereto, (iii)
liabilities of the Company arising (A) under any Contracts or (B) in
respect of warranty or product liability claims in amounts consistent
with historical claims experience, (iv) obligations of the Company for
borrowed money or under any guarantees of obligations of third parties
not required by GAAP to be reflected, reserved against or disclosed on
the Most Recent Year-End Balance Sheet or the Interim Balance Sheet
which, individually or in the aggregate, could not reasonably be expected
by the Sellers to have a Material Adverse Effect and (v) other
liabilities of the Company which, individually or in the aggregate, could
not reasonably be expected by the Sellers to have a Material Adverse
Effect.
(l) Legal Compliance. Except as otherwise disclosed on SCHEDULE 4(L)(I)
hereto, the Sellers are in compliance with all Applicable Laws. Except
as otherwise disclosed on SCHEDULE 4(S) hereto in connection with any
threatened or pending Action, none of the Selling Group Members have
received any written notice of any alleged claim or threatened claim,
violation of or liability under any such Applicable Law which has not
heretofore been cured or for which there is no remaining liability not
otherwise reflected, or reserved for, in the Interim Balance Sheet.
SCHEDULE 4(L)(II) hereto sets forth a list of all Permits held by the
Company. Except as set forth on SCHEDULE 4(L)(II), the Company is the
holder of all Permits and is in compliance with all of the Permits and
all such Permits are valid, binding, and in full force and effect and no
loss or termination of any such Permit is pending, threatened or
reasonably foreseeable (other than expiration upon the end of the term
thereof).
(m) Tax Matters. Except as set forth on SCHEDULE 4(M)(I) hereto, or
in respect of which any resulting liability has been properly accrued in
accordance with GAAP (i) the Sellers have filed, or caused to be filed in
compliance with Applicable Laws, all returns, declarations of estimated
tax, tax reports, information returns and statements required to be filed
by each such Seller prior to the Closing Date relating to any Taxes due
from the either Seller with respect to any income, assets or operations
of the Sellers prior to the Closing Date (collectively, the "Returns"),
(ii) as of the time of filing, the Returns were
-26-
27
true and correct in all respects, (iii) the Sellers have paid all Taxes
shown to be due on such Returns, (iv) the Sellers have not waived any
statute of limitations affecting any Tax liability or agreed to any
extension of time during which a Tax assessment or deficiency assessment
may be made, (v) there are no pending Tax audits of any Returns of either
of the Sellers and neither Seller has received written notice of any
unresolved questions or claims concerning its Tax liability, and (vi)
neither of the Sellers have consented to have the provisions of Section
341(f)(2) of the Code applied to it. Neither of the Sellers have, during
the five-year period ending on the Closing Date, been a personal holding
company within the meaning of Section 541 of the Code. Except as set
forth on SCHEDULE 4(M)(II) hereto, each of the Sellers have complied in
all respects with all Applicable Laws relating to the payment and
withholding of Taxes and have withheld all amounts required to be
withheld from the wages or salaries of employees in accordance with
Applicable Laws. Neither of the Sellers is, or has been, a party to any
Tax sharing agreement. Neither of the Sellers has any obligation,
including in connection with this Agreement and the other Documents, to
make any payments that will be non-deductible under Section 280G of the
Code (or any corresponding provision of any applicable state, local or
foreign law relating to Income Taxes). Since December 31, 1986, neither
of the Sellers has filed or been included in any combined or consolidated
Return with any other Person or been a member of an Affiliated Group
within the meaning of Section 1504 of the Code.
(n) Environmental Matters.
Except as set forth on SCHEDULE 4(N) hereto:
(i) the Company is in compliance with all Environmental Laws and,
other than as to matters heretofore corrected or resolved, the
Company has not received any communication from a Governmental
Authority that alleges that the Company is not in such compliance;
(ii) there is no Environmental Claim currently pending or, to the
knowledge of any of the Selling Group Members, threatened against
(A) the Company, (B) any Person whose liability for such
Environmental Claim the Company has retained or assumed either
contractually or by operation of law or (C) against any real or
personal property or operations which the Company currently or
formerly owns/owned, leases/leased or operates/operated;
(iii) the Company has not disposed of or released any substance,
arranged for the disposal of any substance, knowingly exposed any
employee or other individual to any substance or condition, or
owned or operated its businesses or any property or facility nor at
any time in the past which could reasonably be expected to give
rise to any liability or corrective or remedial obligation of the
Company under any Environmental Laws;
-27-
28
(iv) no real property currently or formerly owned or operated by
the Company is currently listed on the National Priorities List or
the Comprehensive Environmental Response, Compensation and
Liability Information System, both promulgated under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), or on any comparable state
list, nor does the Company have any knowledge of any facts that
could, if known to any Governmental Authority, give rise to a
potential claim under any Environmental Law, and the Company has
not received any written notice of potential liability from any
Person under or relating to CERCLA or any comparable state or local
Environmental Law;
(v) the Company has not disposed or arranged for the disposal of
any waste at any off-site location which is listed on the National
Priorities List or on any comparable state list, nor has the
Company received any written notice from any Person with respect to
any such off-site location, of potential or actual liability or a
written request for information from any Person under or relating
to CERCLA or any comparable state or local law; and
(vi) to the knowledge of Sellers, no underground storage tanks
("USTs"), asbestos containing materials ("ACMs"), polychlorinated
biphenyls ("PCBs"), above ground storage tanks ("ASTs") or other
storage containers are located on, under, in, or otherwise
connected to any property or facility currently or formerly owned
or operated by the Company.
(o) Real Property.
(i) The Lodi Facility constitutes the only real property that the
Company owns. As related to the Lodi Facility:
(A) the Company has good and marketable fee simple title to
the same, free and clear of any Lien or other easement,
covenant, or other restriction, except for Permitted Liens
and Permitted Real Estate Restrictions;
(B) there are no leases, subleases, licenses or other
agreements granting to any party or parties the right of use
or occupancy of any portion of the Lodi Facility; and
(C) there are no outstanding options or rights of first
refusal to purchase the Lodi Facility, or any portion thereof
or interest therein.
(ii) SCHEDULE 4(O)(II) hereto lists all Real Property Leases,
other than the Facility Leases. The Sellers have delivered to the
Buyer correct and complete copies of each of the Real Property
Leases. Neither Seller subleases any real
-28-
29
property. Each Real Property Lease is legal, valid, binding,
enforceable, and in full force and effect.
(iii) With respect to the Material Real Property, no portion
thereof is subject to any pending condemnation proceeding or
proceeding by any public or quasi-public authority and there is no
threatened condemnation or proceeding with respect thereto.
(iv) All plant structures and equipment of the Sellers are in good
operating condition and repair, subject to normal wear and tear and
the provision of usual and customary maintenance and repair
performed in the ordinary course with respect to similar properties
of like age and construction.
(v) Other than as related to customary service agreements, and
such agreements as the Company has otherwise entered into in
connection with certain construction-in-progress at the Company's
facility located at 00000 Xxxxxxxxx Xxxx, neither of the Sellers
has entered into any Contract, arrangement, license, concession or
easement, either recorded or unrecorded, written or oral, affecting
any of the Material Real Property, or any portion thereof or the
use thereof.
(vi) With respect to the Material Real Property, there are no (i)
pending improvement Liens to be made by any Governmental Authority;
(ii) violations of zoning ordinances, building codes or related
regulations; or (iii) pending Actions to which either of the
Sellers is a named party or in respect of which it has otherwise
received notice, including any pending condemnation proceedings.
(vii) All improvements made by the Company on the Material Real
Property were permitted and conforming structures under applicable
zoning and building laws and ordinances in effect when the
improvements were constructed and the present uses thereof are
permitted and conforming uses under applicable zoning and building
laws and ordinances.
(p) Intellectual Property. SCHEDULE 4(P)(I) hereto sets forth an
accurate and complete list of all patents, pending patent applications,
trademarks, servicemarks, pending trademark or servicemark applications
and trade names licensed to, applied for or registered in the name of,
either of the Sellers, and all copyright registrations or pending
applications for registrations of the Sellers, including the nature
(e.g., patent, trademark, etc.) of the intellectual property, the
application or registration number, the jurisdiction and the record owner
(the "Listed Intellectual Property"). Except as set forth on SCHEDULE
4(P)(II), with respect to the Listed Intellectual Property, no
registration relating thereto (if any) has lapsed, expired or been
abandoned or canceled or is the subject of cancellation proceedings.
Except as set forth on SCHEDULE 4(P)(III), the Sellers own or possess
adequate and enforceable licenses to use all Listed Intellectual Property
and any other intellectual property rights (including, without
limitation, drawings, trade secrets,
-29-
30
know-how and confidential information) currently used by the Sellers, or
necessary to permit the Sellers to conduct the Company Business as now
conducted (the Listed Intellectual Property and the other intellectual
property rights hereinafter collectively called the "Intellectual
Property"). SCHEDULE 4(P)(IV) sets forth all licenses to which either of
the Sellers are a party relating to the Intellectual Property (the
"Intellectual Property Licenses"). Except as set forth on SCHEDULE
4(P)(V), the operations of the Company Business as currently conducted do
not infringe upon the proprietary rights of others, nor have any of the
Selling Group Members received any notice or claim from any third party
of any such infringement. The Company is not aware of any infringement
by any third party on, or any competing claim of right to use or own any
of the Intellectual Property. No Contract between the Company and any
other Person exists and no Liens, other than Permitted Liens, exist which
in either case would impede or prevent the continued use by the Company
of the entire right, title and interest of the Company in and to any of
the Intellectual Property.
(q) Contracts. SCHEDULE 4(Q) hereto sets forth an accurate and complete
list of each Material Agreement. All of the Material Agreements are
enforceable in all respects by the Company in accordance with their terms
except to the extent that such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally and the Company is not in breach
or default under (and no event has occurred which with notice or the
passage of time or both would constitute a breach or default under) any
Material Agreement. To the knowledge of the Company, no other party to a
Material Agreement is in beach or default thereunder.
(r) Powers of Attorney. SCHEDULE 4(R) hereto sets forth outstanding
powers of attorney executed on behalf of either of the Sellers.
(s) Litigation. SCHEDULE 4(S) hereto sets forth each instance in which
either of the Sellers (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge, (ii) is a party to any Action
or (iii) has, to the knowledge of any of the Selling Group Members, been
threatened with any claim or litigation which has not otherwise been
finally resolved,.
(t) Employee Benefits.
(i) The Company is not a party to, or bound by, any collective
bargaining agreement covering its employees. The Company is in
compliance with all Applicable Laws respecting employment and
employment practices, terms and conditions of employment and wages
and hours. There is no labor strike, dispute, slowdown, stoppage
or organizational effort pending or threatened against or involving
the Company (other than individual grievances that arise in the
ordinary course).
-30-
31
(ii) Except as set forth on SCHEDULE 4(T)(II) hereto, the Company
(A) does not maintain any Employee Benefit Plan, (B) does not
presently contribute to any Employee Benefit Plan maintained by any
other Person and (C) is not liable for any payments pursuant to any
Employee Benefit Plan maintained by the Company or any other
Person. Each Employee Benefit Plan has been maintained in all
respects in accordance with its terms and, where applicable, in
compliance with ERISA, the Code and all other Applicable Laws. The
Company has not maintained or contributed to any Employee Benefit
Plan which is an "employee defined pension benefit plan" as such
term is defined in Section 3(35) of ERISA or a "multi-employer
plan" as such term is defined in Section 3(37) of ERISA.
(iii) With respect to each such Employee Benefit Plan governed by
ERISA, the Company previously has furnished to Buyer a true and
correct copy of, where applicable, (A) the most recent annual
report (Form 5500) filed with the Internal Revenue Service (the
"IRS"), (B) the plan document, (C) each trust agreement and group
annuity contract, if any, relating to such ERISA Plan, (D) the most
recent summary plan description and (E) the most recent
determination letter issued by the IRS.
(iv) Except as set forth in SCHEDULE 4(T)(IV) hereto, with respect
to each such Employee Benefit Plan, there are no funded benefit
obligations for which contributions have not been made or properly
accrued.
(v) No such Employee Benefit Plan has incurred any "accumulated
funding deficiency" (as defined in Section 412 of the Code),
whether or not waived.
(vi) Except as set forth in SCHEDULE 4(T)(VI) hereto, each of such
Employee Benefit Plans which is intended to be a qualified plan
within the meaning of Section 40l(a) of the Code has been
determined by the IRS to be so qualified and nothing has occurred
to cause the loss of such qualified status.
(vii) Except as set forth in SCHEDULE 4(T)(VII) hereto, no such
Employee Benefit Plan provides health, medical or life insurance
benefits with respect to any current or former employees of the
Company beyond their retirement or other termination of service
other than (A) coverage mandated by applicable law, or (B) benefits
the full cost of which are borne by the current or former employee
(or his or her beneficiary).
(viii) With respect to all of its past and present employees, the
Company has complied with the notice and continuation requirements
of Part 6 of Subtitle B of Title I of ERISA and of Section 4980B of
the Code.
-31-
32
(ix) All contributions (including all employer contributions and
employee salary reduction contributions, if any) which are due have
been paid to each such ERISA Plan which is an "Employee Pension
Benefit Plan", (as defined in ERISA).
(x) Each such Employee Benefit Plan which is intended to meet the
requirements of Section 125 of the Code meets such requirements and
each program of benefits for which employee contributions are
provided pursuant to elections under any such Employee Benefit Plan
meets the requirements of the Code applicable thereto.
(xi) No "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) has occurred with
respect to any such ERISA Plan which is an Employee Pension Benefit
Plan (as defined in ERISA), or its related trust, which could
subject the Company, or any officer, director or employee of the
Company, to any Tax or penalty imposed under Section 4975 of the
Code or liability under Section 406 of ERISA.
(xii) There are no actions, suits, proceedings, hearings or
investigations with respect to the administration or the investment
of assets of any such Employee Benefit Plan (other than routine
claims for benefits) and none of the Selling Group Members have
received any written notice threatening any such action, suit,
proceeding, hearing or investigation.
(xiii) All reporting and disclosure obligations imposed under ERISA
and the Code have been satisfied with respect to each Employee
Benefit Plan.
(u) Insurance. SCHEDULE 4(U) hereto contains an accurate and complete
list and a brief description of all insurance policies currently in
effect which are presently owned or held by either of the Sellers,
insuring the products, properties, assets, business and operations of the
Company and its potential liabilities to third parties, and all general
liability policies maintained by either of the Sellers. As of the
Closing Date, all premiums due have been paid and no notice of
cancellation or termination or intent to cancel has been received by
either of the Sellers with respect to any such policy. To the knowledge
of the Sellers, the Company is not in default under any such insurance
policies, nor do such Sellers have any reason to believe the Company is
in violation of any of the conditions necessary for the maintenance of
continued coverage under such policies.
(v) Bank Accounts. SCHEDULE 4(V) hereto contains a correct and complete
list of the name of each bank or other financial institution which the
Company has an account or safe deposit box, and the names of all Persons
authorized to draw thereon or to have access thereto.
(w) Product Liability. Except as set forth on SCHEDULE 4(W) hereto and
except for routine warranty claims for the return of defective or
non-conforming merchandise, there
-32-
33
exist no claims made and not otherwise covered by insurance, but subject
otherwise to currently applicable deductibles threatened claims against
the Company for injury to persons or property suffered by any Person as a
result of the sale of any product by the Company, including, but not
limited to, claims alleging defective or unsafe nature of the products of
the Company.
(x) HSR. The Selling Group Members have received notice of the early
termination of the waiting required under the provisions the
Xxxx-Xxxxx-Xxxxxx Act.
(y) Inventories; Accounts and Notes Receivable.
(i) Except as set forth on SCHEDULE 4(Y)(I) hereto, the
inventories of the Sellers include no items which are obsolete, of
below standard quality or of a quality or quantity not usable or
salable in the normal course of business, the aggregate value of
which has not been written down on the books of account of the
Sellers to realizable market value or with respect to which
adequate reserves have not been provided.
(ii) All of the accounts receivable and notes receivable owing to
the Sellers as of the Closing Date constitute and as of the Closing
will constitute valid and enforceable claims arising from bona fide
transactions in the Ordinary Course of Business. SCHEDULE 4(Y)(II)
hereto sets forth all known or asserted claims, refusals to pay or
other rights of set-off against the accounts receivable and notes
receivable owing to the Sellers as of the Closing Date which are in
excess of $_________________________.
(z) Customers. SCHEDULE 4(Z)(I) sets forth a list of each customer of
the Company to which the Company, individually or in the aggregate, sold
more than $750,000.00 in goods or service in its most recent fiscal year
(the "Principal Customers"). Except as set forth on SCHEDULE 4(Z)(I),
the relationships of the Company with its customers are good commercial
relationships, and the Company does not know of any plan or intention of
any customer and has not received any written threat or notice from any
customer to terminate, cancel or modify its relationship with the
Company.
(aa) Suppliers and Vendors. Since March 31, 1997, no material supplier
or vendor of the Company has canceled or otherwise terminated, or
threatened to cancel or otherwise terminate, its relationship with the
Company or has decreased, limited or otherwise modified, or threatened to
decrease, limit or otherwise modify, the services, supplies or materials
it provides to the Company.
(bb) Certain Business Relationships with Valley. Except as set forth on
SCHEDULE 4(BB) hereto, and except for normal advances to employees
consistent with past practices, payment of compensation to employees
consistent with past practices, and participation in Employee Benefit
Plans by employees, neither of the Sellers has purchased, acquired or
-33-
34
leased any property or services from, or sold, transferred or leased any
property or services to, or loaned or advanced any money to, or borrowed
any money from, or entered into or been subject to any management,
consulting or similar agreement with, any Affiliate of such Person or any
officer, director, manager or partner of the Company or their respective
Affiliates (including, the Selling Group Members).
(cc) Reimbursement of Advances. All amounts owed to the Company as
reimbursements for claims paid by the Company to, or for the account of,
employees and beneficiaries of Medikmark, Inc. and Automed, Inc. under
the Company's health plan have been fully reimbursed to Valley.
(dd) Trust Representation. No more than $____________________ of the
Closing Payment Amount shall be distributed by the Selling Group Members
to the Trust established under that certain Trust Agreement dated August
__, 1997 between Xxxxxxx X. X'Xxxxx and Citicorp Trust South Dakota, as
Trustees, and Xxxxxx, as Settlor.
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
The Buyer represents and warrants to the Selling Group Members that:
(a) Organization of Buyer Companies. The Buyer is a limited liability
company duly formed, validly existing, and in good standing under the
laws of the State of Delaware. Parent is a limited liability company,
duly formed, validly existing, and in good standing under the laws of the
State of Delaware.
(b) Authorization of Transactions. Each of the Buyer Companies has full
power and authority to execute and deliver this Agreement and each of the
other Documents to which it is a party, and to perform its obligations
under the Documents to which it is a party. Each of the Documents
constitutes the valid and legally binding obligation of each of the Buyer
Companies a party thereto, enforceable in accordance with its terms and
conditions. Except as set forth on SCHEDULE 5(B) hereto, no filing with,
and no permit, authorization, consent or approval of, any Person is
necessary to be obtained by the either of the Buyer Companies for the
consummation by the Buyer Companies of the Transactions. The execution,
delivery and performance by each of the Buyer Companies of this Agreement
and each other Document to which such Party is or will be a party, and
the consummation of the Transactions, have been duly and validly
authorized by all necessary action on the part of such Party.
(c) Noncontravention. Neither the execution and the delivery of the
Documents by either of the Buyer Companies, nor the performance by such
Party of its obligations thereunder, will (i) violate any law, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or court to
which either such Party is subject or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to
-34-
35
accelerate, terminate, modify, or cancel, or require any notice under any
other agreement, contract, instrument, or other arrangement which, if
terminated or otherwise violated, would as to the Parent and its
subsidiaries, taken as a whole, have a Material Adverse Effect.
(d) Consents and Authorizations. Except as required under the
provisions of the Xxxx-Xxxxx-Xxxxxx Act, neither of the Buyer
Companies, nor any member of the Parent needs to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency or other Person in order for the
Parties to consummate the Transactions, which authorization, consent, or
approval has not otherwise been so obtained.
(e) Litigation. There are no Actions pending or, to the knowledge of
either of the Buyer Companies, threatened against or involving such
Party, any of its assets or properties, or otherwise that question the
validity of the Documents or seek to prohibit, enjoin or otherwise
challenge the consummation of the Transactions. There are no outstanding
orders, judgments, injunctions, stipulations, awards or decrees of any
Governmental Authority against either of the Buyer Companies or any of
its assets or properties which prohibit or enjoin the consummation of the
Transactions.
(f) Brokers' Fees. The Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which any of the Seller
Group Members could become liable or obligated.
6. EMPLOYEE MATTERS.
(a) Employment. On the Closing Date, Buyer will offer employment
to all employees (whether working or on a leave of absence) of the
Company Business, effective as of the Closing Date and at rates of
compensation at least equal to the rates of compensation applicable to
such employees as of the Closing Date.
(b) Employee Benefit Obligations. Buyer acknowledges that, except as
set forth in SCHEDULE 6(B) hereto, the Valley Liabilities shall include
all employee benefit-related obligations or liabilities of the Sellers
existing at the Closing Date with respect to the current and former
employees of the Company Business under the provisions of each Employee
Benefit Plan or other employee benefit plan, fund, program or arrangement
sponsored or maintained by Sellers as of the Closing Date, including,
without limitation, all liabilities and obligations of the Sellers in
respect of vacation pay, sick pay, severance pay, insurance and payroll
taxes and all accrued contributions, if any, required under the terms of
any Employee Benefit Plans, or salary reduction amounts and matching
contributions with respect thereto through the Closing Date. Nothing
contained in this Agreement shall obligate the Buyer to continue or
maintain any Employee Benefit Plan or paid time off policy adopted or
sponsored by the Company prior to the Closing Date, or to continue to
provide the same level of benefits
-35-
36
under any Employee Benefit Plan or paid time off policy adopted or
sponsored by the Company prior to the Closing.
(c) Medikmark/Automed Coverage. Effective as of the Closing Date, the
Sellers shall cause Medikmark, Inc. ("Medikmark") and Automed, Inc.
("Automed") to have established their own separate 401(k) plan and
employee health and medical plan coverage and all coverage of employees
of Medikmark and Automed under the Employee Benefit Plan shall thereupon
terminate; provided, however, the Buyer shall administer all claims
incurred prior to the Closing Date under, and subject to, the terms of
the Company's self-insured health plan, and Sellers shall immediately
reimburse all payments made by the Buyer with respect to such claims.
(d) Severance Liabilities. Buyer will be responsible for, and will
indemnify Sellers against, any and all liabilities for severance pay,
including liability under the Worker Adjustment and Retraining
Notification Act or any similar state law relating to or arising out of
the layoff or termination of employment of any employees of the Company
Business after the Closing Date.
(e) No Third-Party Rights. Nothing contained in this Agreement shall
confer upon any employee any rights or remedies of any nature or kind
whatsoever under or by reason of this Agreement, including, without
limitation, any right to employment or continued employment or to any
benefits that may be provided, directly or indirectly, under any employee
benefit plan, policy or arrangement of the Buyer or Sellers, nor shall
anything contained in this Agreement constitute a limitation on or
restriction against the right of the Buyer or Sellers to amend, modify or
terminate any such plan, policy or arrangement or the terms or conditions
of employment.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT AND THE OTHER DOCUMENTS.
(a) Survival of Representations and Warranties/Claims Period. The
representations and warranties of the Parties contained in the Documents,
shall survive the Closing and continue in full force and effect for a
period (the "Claims Period") determined as follows: (i) the
representations and warranties of the Sellers set forth in Section 4(a),
(b), (c), (d), (e), (f), (g) and, as to matters of title, (h), and the
representations and warranties of the Buyer in Section 5(a), (b), (c),
(d) and (f), shall continue in full force and effect indefinitely, (ii)
the representations and warranties of the Seller in Section 4(n) shall
continue in full force and effect for a period of 3 years after Closing
and (iii) all other representations and warranties of the Parties shall
continue in full force and effect for a period of 18 months after the
Closing.
(b) Indemnification Provisions for Benefit of the Buyer. Each of the
Selling Group Members shall indemnify the Buyer and its officers,
directors, stockholders, partners, trustees, beneficiaries, employees,
agents, Affiliates, successors and assigns (collectively, the "Buyer
Indemnified Persons") from and against such Selling Group Member's
Allocable Portion of any Indemnifiable Losses such Buyer Indemnified
Persons shall incur as a result of (i) any breach or inaccuracy in any
representation or warranty made by any
-36-
37
of the Selling Group Members under the Documents, (ii) except as set
forth in clause (D) below, any breach by any of the Selling Group Members
of any of the Selling Group Members' covenant or other agreement of any
of the Selling Group Members as provided for in the Documents, (iii) all
costs and penalties incurred by any of the Buyer Indemnified Persons,
including legal fees, if any, as a result of the alleged failure of the
Company to file Annual Reports with respect to the Company's 125 Plan,
(iv) any claims asserted in respect of the Threatened Claims or (v) the
assertion against any of the Buyer Indemnified Persons of any Excluded
Obligation, provided, that:
(A) such claim for indemnification must be asserted by Buyer
Indemnified Persons within the related Claims Period (if any),
pursuant to a written claim for indemnification delivered to the
Valley Equityholder Representative by written notice in the manner
provided herein, provided, however, that after the assertion of any
such claim hereunder on or prior to the expiration of the Claims
Period (if any), the Buyer Indemnified Persons shall be fully
entitled to the benefits of this Section 7 (and the other
indemnification provisions in this Agreement) notwithstanding the
fact that such claim shall not be finally resolved on or prior to
the expiration of the Claims Period (if any);
(B) except for any Lodi Environmental Liabilities or
Indemnifiable Losses caused by the breach of an Excluded
Representation or Warranty, the Selling Group Members shall not
have any obligation to indemnify the Buyer Indemnified Persons from
and against any Indemnifiable Losses arising out of any Threatened
Claims or caused by the breach of any representation or warranty
contained in Section 4 of this Agreement until the Buyer
Indemnified Persons have incurred such Indemnifiable Losses which,
in the aggregate, exceed a $750,000 aggregate deductible, it being
acknowledged and agreed that the Selling Group Members will only be
obligated to indemnify the Buyer Indemnified Persons from and
against such further Indemnifiable Losses in excess of such
$750,000 deductible amount;
(C) except for Indemnifiable Losses caused by the breach of an
Excluded Representation or Warranty, the Selling Group Members
shall not have any obligation to indemnify the Buyer Indemnified
Persons from and against any Indemnifiable Losses caused by the
breach of any representation or warranty contained in Section 4 of
this Agreement, any Lodi Environmental Liabilities or any
Threatened Claims to the extent the indemnification claims which
the Selling Group Members have, in the aggregate, paid, discharged
or otherwise satisfied, exceed an aggregate ceiling of $6,000,000,
it being acknowledged and agreed that the maximum liability of the
Selling Group Members to the Buyer Indemnified Persons in respect
of such Indemnifiable Losses shall be the aggregate amount of
$6,000,000; and
(D) with regard to any breach of any of the covenants set forth
in subsections (c), (d) or (e) of Section 8 hereof, (1) Xxxxxx shall
be solely liable to the
-37-
38
Buyer Indemnified Persons for any breach of any such covenant(s) by
Xxxxxx, and neither Xxxxxx, nor any other Selling Group Member,
shall have any liability to the Buyer Indemnified Persons for such
breach and (2) Xxxxxx and each of the other Selling Group Members
(other than Xxxxxx) shall be solely liable to the Buyer Indemnified
Persons for any breach of any covenant(s) by Xxxxxx or such other
Selling Group Member (other than Xxxxxx), and Xxxxxx shall have no
liability to the Buyer Indemnified persons for such breach.
Notwithstanding anything to the contrary contained herein, the
limitations set forth in the foregoing provisions of clauses (B) and (C)
above shall not apply to the willful breach of any representation or
warranty.
(c) Indemnification Provisions for Benefit of Selling Group Members.
The Buyer Companies shall jointly and severally indemnify the Selling
Group Members and each of the officers, directors, stockholders,
partners, trustees, beneficiaries, employees, agents, Affiliates,
successors and assigns of each of the Selling Group Members
(collectively, the "Seller Indemnified Persons") from and against all
Indemnifiable Losses any of the Seller Indemnified Persons shall incur as
a direct result of (i) any breach or inaccuracy in any representation or
warranty made by the Buyer Companies under the Documents, and (ii) any
breach by the Buyer Companies of any of the covenants or other agreements
of the Buyer Companies as provided for in the Documents or (iii) the
assertion against any of the Seller Indemnified Persons of any liability
for any of the Valley Liabilities, provided, that:
(A) such claim for indemnification must be asserted by a
Stockholder within the related Claims Period, pursuant to a written
claim for indemnification delivered to the Buyer by written notice
as herein provided, however, that after the assertion of any such
claim hereunder on or prior to the expiration of the Claims Period
(if any), the Seller Indemnified Persons shall be fully entitled to
the benefits of this Section 7 (and the other indemnification
provisions in this Agreement) notwithstanding the fact that such
claim shall not be finally resolved on or prior to the expiration
of the Claims Period (if any).;
(B) the Buyer Companies shall not have any obligation to
indemnify the Seller Indemnified Persons from and against any
Indemnifiable Losses caused by the breach of any representation or
warranty (other than an Excluded Representation or Warranty)
contained in Section 5 of this Agreement, or any representation or
warranty made to Xxxxxx or Xxxxxx under the Parent Subscription
Documents, until the Seller Indemnified Persons have incurred such
Indemnifiable Losses which, in the aggregate, exceed a $60,000.00
aggregate deductible, it being acknowledged and agreed that the
Buyer Companies will only be obligated to indemnify the Seller
Indemnified Persons from and against such further Indemnifiable
Losses in excess of such $60,000.00 deductible amount; and
-38-
39
(C) the Buyer Companies shall not have any obligation to
indemnify the Seller Indemnified Persons from and against any
Indemnifiable Losses caused by the breach of any representation or
warranty (other than an Excluded Representation or Warranty)
contained in Section 5 of this Agreement, or any representation or
warranty made to Xxxxxx or Xxxxxx under the Parent Subscription
Documents, to the extent the indemnification claims which the Buyer
Companies have, in the aggregate, paid, discharged or otherwise
satisfied, exceed an aggregate ceiling of $480,000.00, it being
acknowledged and agreed that the maximum liability of the Selling
Group Members to the Buyer Indemnified Persons in respect of such
Indemnifiable Losses shall be the aggregate amount of $480,000.00.
Notwithstanding anything to the contrary contained herein, the
limitations set forth in the foregoing provisions of clauses (B) and (C)
above shall not apply to the willful breach of any representation or
warranty.
(d) Closing Equity Value. Notwithstanding anything to the contrary set
forth in this Section 7, the Selling Group Members have no liability to
the Buyer Indemnified Persons for any claims arising out of the breach of
any representation or warranty set forth in Section 4 hereof to the
extent the liability or loss claimed to have been incurred by the Buyer
Indemnified Person(s) has otherwise been reflected or reserved for in the
determination of the Closing Equity Value, as finally determined and
adjustment to the Purchase Price shall have been made in accordance with
this Agreement.
(e) Notice of Claim. In the event a Party, or Parties, desire(s) to
make a claim for indemnification under the provisions of this Agreement,
including any claim for indemnification in respect of a Third Party Claim
under subsection (f) below, against any other Party(ies), the Party(ies)
seeking indemnification (the "Indemnified Party") shall, within the
Claims Period, promptly notify the other Party(ies) (the "Indemnifying
Party"), in writing (an "Indemnity Claim Notice"), of such claim or
demand, specifying in reasonable detail the nature of such claim or
demand and the amount or estimated amount thereof to the extent then
feasible. The Indemnifying Party shall have fifteen (15) days after
receipt of the Indemnity Claim Notice (the "Response Period") within
which to notify the Indemnified Party (i) whether or not such
Indemnifying Party disputes liability to the Indemnified Party hereunder
with respect to such claim or demand and (ii) in the case of a claim for
indemnity involving a Third Party Claim, and notwithstanding whether the
Indemnifying Party disputes his or its liability to the Indemnified
Party, whether or not the Indemnifying Party desires, at its sole cost
and expense, to defend the Indemnified Party against such Third Party
Claim. If the Indemnifying Party disputes his or its liability with
respect to such claim or demand for indemnification, or the amount
thereof (and whether or not, in the case of any Third Party Claim, such
Indemnifying Party otherwise desires to defend the Indemnified Party
against such claim as otherwise provided in subsection (e) below), the
dispute as to the liability of the Indemnifying Party with respect to
such claim or demand for indemnification, or the amount thereof, shall,
unless otherwise agreed by the Indemnified Party and Indemnifying Party,
be resolved in accordance with the
-39-
40
provisions of subsection (g) below. If the Indemnifying Party fails to
notify the Indemnified Party within the Response Period that it disputes
the claim or demand for indemnification made by the Indemnified Party, or
the amount thereof, or otherwise admits such liability in such
notification, the amount of such claim shall be conclusively deemed a
liability of the Indemnifying Party hereunder.
(f) Third Party Claims.
(i) In the event that any claim or demand made by an
Indemnified Party for indemnification in an Indemnity Claim Notice
arises out of the assertion of any claim or demand against the
Indemnified Party by any third party (a "Third Party Claim"), then
the defense of such Third Party Claim shall be handled in
accordance with the provisions of this subsection (f).
(ii) In the event the Indemnifying Party notifies the
Indemnified Party within the Response Period that they desire to
defend against the Third party Claim, then the Indemnifying Party
will have the right thereafter to assume and thereafter conduct the
defense of the Third Party Claim with counsel of his or its choice
reasonably satisfactory to the Indemnified Party; provided,
however, that:
(A) in the event the Indemnifying Party has otherwise
disputed his or its liability with respect to such claim or
demand for indemnification made by the Indemnified Party, or
the amount thereof, the Indemnifying Party will not consent
to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior
written consent of the Indemnified Party;
(B) in the event the Indemnifying Party has otherwise
admitted or accepted his or its liability with respect to
such claim or demand for indemnification made by the
Indemnified Party, and the amount thereof, the Indemnifying
Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party.
(iii) In the event the Indemnifying Party does not elect to
assume the defense of a Third Party Claim within the Response
Period, such Indemnifying Party may, at any time thereafter, and
provided such Indemnifying Party agrees to assume liability for
such Third Party Claim and the underlying indemnity claim made by
the Indemnified Party, elect to assume such defense, provided,
that, the assumption of such defense at such time would not
otherwise unduly prejudice the rights or interests of the
Indemnified Party.
(iv) Unless and until an Indemnifying Party assumes the
defense of a Third Party Claim as provided in Section 7(f)(ii) or
(iii) above, the Indemnified Party may
-40-
41
defend against such Third Party Claim in any manner he or it
reasonably may deem appropriate.
(iv) In no event will the Indemnified Party 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 in the event the Indemnifying Party has
otherwise elected to assume and conduct the defense of such Third
Party Claim or otherwise prior to the expiration of the Response
Period.
(g) Arbitration. The parties shall attempt in good faith to resolve all
disputes with respect to any claims for indemnification under this
Agreement by arbitration in Detroit, Michigan, before a single arbitrator
pursuant to the rules of the American Arbitration Association.
Arbitration may be commenced at any time by any Party hereto by giving
written notice to each other Party to such dispute that such dispute has
been referred to arbitration under the provisions of this subsection (g).
The arbitrator shall be selected by the joint agreement of the
Indemnified Party and Indemnifying Party, but if they do not so jointly
agree within twenty (20) days after the date of the notice referred to
above, the selection shall be made pursuant to the rules from the panels
of arbitrators maintained by such Association. Any award rendered by the
arbitrator shall be appealable by any Party in accordance with Section
9(i). The Selling Group Members on the one hand and the Buyer Companies
on the other hand shall each bear their own expenses of arbitration,
provided, that, the expenses of the arbitrator shall be equally shared by
the Selling Group Members and the Buyer Companies.
(h) Determination of Indemnifiable Loss. In the determination of
Indemnifiable Losses for purposes of this Agreement, appropriate
adjustments for tax benefits resulting in actual reduced tax payments in
the fiscal year in which the Indemnified Loss was paid shall be made. All
indemnification payments under this Agreement shall be deemed adjustments
to the Purchase Price.
(i) Exclusive Remedy. The indemnification provisions of this Agreement
are intended to be the exclusive remedy of the Parties for any breach of
the representations, warranties or covenants set forth in this Agreement,
provided, however, that, in such instances where injunctive or other
equitable relief is otherwise appropriate, nothing herein shall be deemed
to preclude a Party from commencing an action in a court specified in
Section 9(i) for the purpose of obtaining any such injunctive or other
equitable relief otherwise deemed necessary or appropriate by such Party.
8. POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period following
the Closing:
-41-
42
(a) General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any
other Party reasonably may request, all at the sole cost and expense of
the requesting Party (unless the requesting Party is entitled to
indemnification therefor under Section 7 above).
(b) Litigation Support. In the event and for so long as any Party is
actively contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection
with (i) any transaction contemplated under this Agreement or the other
Documents or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to
act, or transaction on or prior to the Closing Date involving the
Company, each of the other Parties will cooperate with the contesting or
defending Party and his or its counsel in the contest or defense, make
available his or its personnel, and provide such testimony and access to
his or its books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 7 above).
(c) Non-Competition. For a period commencing on the Closing Date and
terminating on the fifth anniversary thereof, no Restricted Party (as
defined below) will, directly or indirectly, engage in or have any
interest in any sole proprietorship, partnership, corporation or business
or any other Person (whether as an employee, officer, director, partner,
agent, security holder, creditor, consultant or otherwise) that directly
or indirectly is engaged in the Company Business (collectively
"Competitive Businesses'') in the United States of America or Canada;
provided, however, that nothing herein shall be deemed to prevent any
Restricted Party from acquiring through market purchases and owning,
solely as an investment, less than two percent of the equity securities
of any class of any issuer whose shares are registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, and
are listed or admitted for trading on any national securities exchange or
are quoted on the National Association of Securities Dealers Automated
Quotations System or any similar system of automated dissemination of
quotations of securities prices in common use, so long as the Restricted
Party is not a member of any ''control group" (within the meaning of the
rules and regulations of the United States Securities and Exchange
Commission) of any such issuer and which is engaged in a Competitive
Business. The Restricted Parties agree that the covenant provided for in
this Section 8(c) is reasonable and necessary in terms of time, activity
and territory to protect the Buyer's interest as a buyer of the Purchased
Shares. To the extent that the covenant provided for in this Section
8(c) may later be deemed by a court to be too broad to be enforced with
respect to its duration or with respect to any particular activity or
geographic area, the court making such determination shall have the power
to reduce the duration or scope of the provision, and to add or delete
specific words or phrases to or from the provision. The provision as
modified shall then be enforced. As used in this Agreement, a "Restricted
Party" shall mean the Selling Group Members and their respective
Affiliates.
-42-
43
(d) Non-Disclosure.
(A) Neither the Selling Group Members nor any of their respective
Affiliates (collectively, the "Covered Persons") shall disclose.
divulge, furnish or make accessible to anyone (other than the Buyer
or any of its Affiliates or representatives) any Restricted
Confidential Information (as defined below), or in any way use any
such Restricted Confidential Information in the conduct of any
business.
(B) Nothing in this Section 8(d) shall prohibit the disclosure by
any Covered Person of any Restricted Confidential Information to
(i) any federal, state or other regulatory authority having
jurisdiction over such Covered Person or (ii) any other Person to
which such disclosure shall, in the opinion of counsel, be legally
necessary (x) to effect compliance with any law, rule, regulation
or order applicable to such Covered Person, (y) in response to any
subpoena or other legal process, (z) in connection with any
litigation to which such Covered Person is a party; provided,
however, that no disclosure shall be made until such Covered Person
shall give written notice to the Buyer of the intention to disclose
such Restricted Confidential Information so that the Buyer may
contest the need for disclosure, and such Covered Person shall
reasonably cooperate at the request of the Buyer with the Buyer in
connection with any such proceeding.
(C) For purposes of this Section 8(d), "Restricted Confidential
Information" means any Confidential Information pertaining to the
Company immediately prior to the Closing, including, but not
limited to, information concerning its financial condition,
prospects, customers, sources of leads, methods of doing business,.
and the manner of design, manufacture, financing, marketing and
distribution of its products; provided, however, that Restricted
Confidential Information does not include information that is or
becomes generally available to the public other than as a result of
a disclosure in violation of this Section 8(d) by any Covered
Person.
(e) Non-Solicitation of Employees and Customers. For a period of five
years following the Closing Date, no Restricted Party will, directly or
indirectly, for itself or for any other Person, (a) attempt to employ or
enter into any contractual employment arrangement with any employee of
the Buyer or any former employee of the Buyer until nine months after
such Person's employment with the Buyer ended, or (b) call on or solicit
any of the customers or clients of the Buyer for the purpose of competing
with the Borrower.
9. MISCELLANEOUS.
-43-
44
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement
shall survive the Closing hereunder as and to the extent provided in
Section 7 above.
(b) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the other
Party; provided, however, that any Party may make any public disclosure
it believes in good faith is required by applicable law or any listing or
trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will advise the other Party prior to making the
disclosure and allow the other Party to comment upon the disclosure).
(c) No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents listed as
Exhibits and Schedules and attached hereto) constitutes the entire
agreement between the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties, written or
oral, to the extent they related in any way to the subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Party, provided, however,
that the Buyer may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and to any financing
institutions providing financing for the transactions contemplated
hereunder and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) 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.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given if (and then two business days after) it is sent by
-44-
45
registered or certified mail, return receipt requested, postage prepaid,
and addressed to the intended recipient as set forth below:
If to the Selling Group Members or Valley
Equityholders Representative:
Xxxxxx X. Xxxxxx
Ocean Reef Club
00 X. Xxxxxxx Xxxxx Xxxxx
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copies to:
Xxxxx X. Xxxxxx
c/o Valley Industries, Inc.
00000 Xxxxxxxxx Xxxx
Xxxxxxx Xxx., XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Xxxxx & Xxxxxx
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. X'Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Buyer: Valley Industries, LLC
c/o Advanced Accessory Systems, LLC
Sterling Town Center
00000 Xxxx Xxxx
Xxxxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
-45-
46
with a copies to:
c/o Chase Capital Partners
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
and
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000;
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set
forth above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it actually is
received by the intended recipient. Any Party may change the address to
which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in the
manner herein set forth.
(i) Governing Law.
(i) This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other
than the State of Michigan.
(ii) Each party hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so,
trial by jury in any suit, action or proceeding arising hereunder.
(iii) The parties to this Agreement agree that any and all actions
arising under or in respect of this Agreement (including, without
limitation, the resolution of any dispute under Section 7(g)) shall
be litigated exclusively in any federal or state court of competent
jurisdiction located in the State of Michigan. By execution and
delivery
-46-
47
of this Agreement, each party to this Agreement irrevocably submits
to the personal and. exclusive jurisdiction of such courts for
itself or himself and in respect of its or his property with
respect to such action. Each party to this Agreement agrees that
venue would be proper in any of such courts, and hereby waives any
objection that any such court is an improper or inconvenient forum
for the resolution of any such action. The parties further agree
that the mailing by certified or registered mail, return receipt
requested, to he addresses specified for notice in this Agreement,
of any processor summons required by any such court shall
constitute valid and lawful service of process against them,
without the necessity for service by any other means provided by
statute or rule of court.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed
by the Buyer and each of the Stockholders. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to be a continuous waiver or
to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term
or provision in any other situation or in any other jurisdiction.
(l) Expenses. Each of the Buyer and the Stockholders will bear its own
costs and expenses (including investment banking and legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue
of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local, or foreign statute or law shall
be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including"
shall mean including without limitation.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and
made a part hereof.
(o) Maintenance of Books and Records. Until the third anniversary of
the Closing Date, the Buyer shall preserve all of the records relating to
any of the assets, liabilities or business of the Company prior to the
Closing Date. After the Closing Date, where there is a legitimate
purpose, the Selling Group members, and their respective representatives,
-47-
48
shall be provided with access, upon prior reasonable written request
specifying the need therefor, during regular business hours, to (i) the
former officers and employees of the Company and (ii) the books of
account and records of the Company, but, in each case, only to the extent
relating to the assets, liabilities or business of the Company prior to
the Closing Date, and the Selling Group Members, and their respective
representatives, shall have the right to make copies of such books and
records; provided, however, that the foregoing right of access shall not
be exercisable in such a manner as to interfere unreasonably with the
normal operations and business of such party. Such records may
nevertheless be destroyed by the Buyer if the Buyer sends written notice
of its intent to destroy records to the Valley Equityholder
Representative, specifying with particularity the contents of the records
to be destroyed. Such records may then be destroyed after the 30th day
after such notice is given unless the Valley Equityholder Representative
objects to the destruction in which case the Buyer shall deliver such
records to the objecting party.
(p) Transfer Taxes. Buyer acknowledges that in addition to the Buyer's
liability to assume the Valley Liabilities, Buyer shall be, subject to
receipt from Sellers of relevant sales and resales certificates which are
required by the relevant state tax authorities in connection with the
transfers contemplated by the Reorganization and evidence of payment,
responsible to reimburse to Sellers all sums paid to any state or local
taxing authority by the Sellers or any of the other Selling Group Members
as sales or use taxes, or any transfer or conveyance fees or taxes, which
may be payable by reason of the transfer of any of the Valley Assets to
the Buyer and the consummation otherwise of the Transactions.
(q) Release of Assets. Each Selling Group Member agrees that after
giving effect to the Closing of the transactions contemplated by this
Agreement, the Buyer shall be the owner of the Valley Assets, free and
clear of all Liens, other than Permitted Liens and Liens granted by
Buyer. To the extent that any Selling Group Member is deemed to have any
interest in any Valley Asset, whether by operation of law, contract or
otherwise, such Party hereby releases irrevocably, such interest and
agrees, at the request of the Buyer to execute such further documents or
instruments to further evidence of such release.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on [as
of] the date first above written.
VALLEY INDUSTRIES, LLC AAS HOLDINGS, LLC
By: By:
-------------------------------- ---------------------------------
Title: Title:
----------------------------- ------------------------------
VALLEY INDUSTRIES, INC. XXXXXX PARENT HOLDINGS, INC.
By: By:
-------------------------------- ---------------------------------
Title: Title:
----------------------------- ------------------------------
49
XXXXXX FAMILY HOLDINGS, INC. XXXXXX PARENT HOLDINGS LIMITED
PARTNERSHIP
By:
--------------------------------
Title: By: Xxxxxx Parent Holdings, Inc.
----------------------------- General Partner
By:
---------------------------------
Title:
------------------------------
XXXXXX FAMILY HOLDINGS LIMITED
PARTNERSHIP
By: Xxxxxx Family Holdings, Inc. -------------------------------------
General Partner Xxxxxx X. Xxxxxx
By:
--------------------------------
Title:
----------------------------- -------------------------------------
Xxxxx X. Xxxxxx
50
INDEX TO SCHEDULES
Schedule 4(c) Third-Party Approvals to be Obtained by the Selling Group
Members
Schedule 4(e) Noncontravention
Schedule 4(f) Governmental Consents to Transactions
Schedule 4(j) Interim Events
Schedule 4(k) Liabilities
Schedule 4(l)(i) Non-Compliance with Applicable Laws
Schedule 4(l)(ii) Permits
Schedule 4(m)(i) Pending Tax Audits of the Company
Schedule 4(m)(ii) Non-Compliance with Applicable Laws Regarding Withholding
of Taxes
Schedule 4(n) Environmental Claims and Non-Compliance
Schedule 4(o)(ii) Real Property Leases
Schedule 4(p)(i) Listed Intellectual Property
Schedule 4(p)(ii) Lapsed Listed Intellectual Property
Schedule 4(p)(iii) Exceptions to License Rights
Schedule 4(p)(iv) Intellectual Property Licenses
Schedule 4(p)(v) Notice of Third-Party Claims for Infringement of
Proprietary Rights of Others
Schedule 4(q) Material Agreements
Schedule 4(r) Powers of Attorney on Behalf of Valley
Schedule 4(s) Litigation for Valley
Schedule 4(t)(ii) Employee Benefit Plans
Schedule 4(t)(iv) Funded Benefit Obligations Under Employee Benefit Plans
Schedule 4(t)(vi) Non-Qualified Employee Benefit Plans
51
Schedule 4(t)(vii) Employee Benefit Plans Providing Health, Medical or Life
Insurance Benefits
Schedule 4(u) Schedule of Insurance
Schedule 4(v) Bank Accounts of the Company
Schedule 4(w) Warranty Claims of the Company
Schedule 4(y)(i) Obsolete Inventory
Schedule 4(y)(ii) Accounts Receivable and Notes Receivable Disputes
Schedule 4(z)(i) Principal Customers
Schedule 4(z)(ii) Notices from Principal Customers to Terminate, Cancel or
Modify a Relationship
Schedule 4(bb) Stockholder or Affiliate Agreements with the Company
