EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BETWEEN
THE XXXXX-XXXXXXX-XXXXX CORPORATION
AND
WILMAR INDUSTRIES, INC.
TABLE OF CONTENTS
Page No.
1. The Acquisition................................................... 1
1.1 Purchase and Sale....................................... 1
1.2 The Purchase Price...................................... 1
1.3 Post Closing Adjustment to Base Purchase Price.......... 2
1.4 Intercompany Account Obligations; Cash.................. 3
2. The Closing....................................................... 3
2.1 Place and Time.......................................... 3
2.2 Deliveries by Seller.................................... 4
2.3 Deliveries by Buyer..................................... 4
3. Conditions to Buyer's Obligations................................. 4
3.1 No Injunction........................................... 4
3.2 Representations, Warranties and Agreements.............. 4
3.3 Legal Opinion........................................... 5
3.4 Regulatory Approvals.................................... 5
3.5 Consents of Third Parties............................... 5
3.6 Resignations of Director and Officers................... 5
3.7 Sales People............................................ 5
3.8 Removal as Borrower..................................... 5
3.9 Termination of Management Agreements and
Phantom Stock Plan..................................... 5
4. Conditions to Seller's Obligations................................ 5
4.1 No Injunction........................................... 5
4.2 Representations, Warranties and Agreements.............. 6
4.3 Legal Opinion........................................... 6
4.4 Regulatory Approvals.................................... 6
4.5 Releases................................................ 6
4.6 Substitute Letters of Credit and Performance
and Bid Bonds.......................................... 6
5. Representations and Warranties of Seller.......................... 6
5.1 Organization of the Company; Authorization.............. 6
5.2 No Conflict as to the Company........................... 7
5.3 Ownership of Shares..................................... 7
5.4 No Subsidiaries......................................... 8
5.5 Consents and Approvals of Governmental Bodies........... 8
5.6 Other Consents.......................................... 8
5.7 Financial Statements.................................... 8
5.8 Title to Properties..................................... 9
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5.9 Real Property.............................................. 9
5.10 No Condemnation or Expropriation........................... 11
5.11 Litigation................................................. 11
5.12 Absence of Certain Changes................................. 12
5.13 No Material Adverse Changes................................ 13
5.14 Intellectual Property...................................... 13
5.15 Commitments................................................ 14
5.16 Employee Matters........................................... 16
5.17 Tax and Other Returns and Reports.......................... 20
5.18 Compliance with Law........................................ 21
5.19 Environmental Matters...................................... 21
5.20 Borrowing and Guarantees................................... 22
5.21 Inventory.................................................. 22
5.22 Accounts Receivable........................................ 22
5.23 Accounts Payable........................................... 22
5.24 Relations with Customers, Distributors and Suppliers....... 23
5.25 Transactions with Affiliates............................... 23
5.26 Books of Account........................................... 23
5.27 Minute Books............................................... 23
5.28 Warranty Claims............................................ 23
5.29 Insurance.................................................. 23
5.30 Warranties................................................. 24
5.31 Full Disclosure............................................ 24
6. Representations and Warranties of Buyer............................... 25
6.1 Organization of Buyer; Authorization....................... 25
6.2 Conflict as to Buyer....................................... 25
6.3 Consents and Approvals of Governmental Bodies.............. 25
6.4 Other Consents............................................. 25
7. Certain Agreements.................................................... 25
7.1 Access..................................................... 25
7.2 Filings; Other Regulatory Matters.......................... 26
7.3 Tax Matters................................................ 26
7.4 Action by the Parties...................................... 30
7.5 Exclusivity................................................ 30
7.6 Restrictive Covenants...................................... 31
7.7 Maintenance of Salespeople................................. 32
7.8 Labor Relations............................................ 32
7.9 Access to Information...................................... 32
7.10 Insurance Matters.......................................... 34
7.11 Certain Agreements......................................... 36
7.12 Checking Accounts.......................................... 36
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7.13 Covered Matters........................................... 36
7.14 Assignment of Claims...................................... 38
7.15 Accounts Receivable....................................... 38
7.16 Automobile Leases......................................... 39
8. Conduct of the Company's Business Prior to the Closing............... 39
8.1 Operation in Ordinary Course.............................. 39
8.2 Business Organization..................................... 39
8.3 Corporate Organization.................................... 39
8.4 Other Restrictions........................................ 40
8.5 Real Property Rights Clarification........................ 41
9. Indemnification...................................................... 41
9.1 Indemnification by Seller................................. 41
9.2 Indemnification by Buyer.................................. 42
9.3 Certain Limits On and Provisions Relating
to Indemnification........................................ 43
9.4 Procedure for Claims...................................... 43
9.5 Claims Period............................................. 43
9.6 Third Party Claims........................................ 44
9.7 Effect of Investigation or Knowledge...................... 45
9.8 Losses Net................................................ 46
9.9 Sole and Exclusive Remedy................................. 46
10. Termination.......................................................... 46
10.1 Termination............................................... 46
10.2 Effect on Obligations..................................... 47
10.3 Return of Documentation................................... 47
10.4 Sole and Exclusive Remedy................................. 47
11. Notices.............................................................. 48
12. Brokers and Finders.................................................. 49
12.1 Seller's Obligations...................................... 49
12.2 Buyer's Obligations....................................... 49
13. Miscellaneous........................................................ 49
13.1 Expenses.................................................. 49
13.2 Captions; Section References.............................. 49
13.3 Modification and Waiver................................... 49
13.4 Exclusive Agreement; Amendment............................ 49
13.5 Governing Law............................................. 50
13.6 Binding Effect............................................ 50
13.7 Public Announcements...................................... 50
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13.8 Counterparts............................................ 50
13.9 Specific Performance and Injunctive Relief.............. 50
13.10 Waiver of Conflict of Interest Claim.................... 50
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This STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of November 15,
1999 by and between The Xxxxx-Xxxxxxx-Xxxxx Corporation, a Delaware corporation
(the "Seller") and Wilmar Industries, Inc., a New Jersey corporation (the
"Buyer"). Certain capitalized terms used herein are defined parenthetically in
this Agreement. Capitalized terms used but not defined parenthetically herein
are defined in Annex A hereto. The meanings assigned to such terms shall be
applicable to each use of such terms throughout this Agreement.
INTRODUCTION
Seller owns all of the outstanding equity securities of X.X. Xxxxxxx, Inc.,
a Delaware corporation ("Xxxxxxx") and Trayco of S.C., Inc., a Delaware
corporation ("Trayco"), consisting of 1,000 shares of common stock, par value
$1.00 per share of Xxxxxxx (the "Xxxxxxx Shares") and 1,000 shares of common
stock, par value $1.00 per share of Trayco (the "Trayco Shares"). The parties
desire to provide for Seller's sale of the Xxxxxxx Shares and the Trayco Shares
to Buyer and Buyer's purchase of the Xxxxxxx Shares and Trayco Shares from
Seller on the terms and conditions of this Agreement.
The term "Company" is used in this Agreement to mean Xxxxxxx, Trayco and
each of their respective subsidiaries collectively and the term "Shares" is used
in this Agreement to mean the Xxxxxxx Shares and the Trayco Shares collectively.
In consideration of the premises and of the representations, warranties,
covenants and agreements herein contained, the parties hereto, intending to be
legally bound, hereby agree as follows:
AGREEMENT
10 The Acquisition.
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1.1 Purchase and Sale. Subject to the terms and conditions of this
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Agreement, at the Closing to be held as provided in Section 2.1 hereof, Seller
shall sell the Shares to Buyer, and Buyer shall purchase the Shares from Seller,
free and clear of any security interest, mortgage, lien, charge, adverse claim
or restriction of any kind, including without limitation, any restriction on the
voting, transfer, receipt of income or other exercise of any attributes of
ownership, other than a restriction on transfer attributable solely to Federal
or state securities laws (each, an "Encumbrance" and collectively,
"Encumbrances").
1.2 The Purchase Price. The aggregate purchase price for the Shares (the
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"Base Purchase Price") shall be $85,000,000, subject to an adjustment as
provided in Section 1.3. At
the Closing, Buyer shall pay and deliver the Base Purchase Price to Seller in
immediately available funds.
1.3 Post Closing Adjustment to Base Purchase Price.
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(a) Within sixty (60) days after the Closing Date, Buyer and Deloitte
& Touche, LLP ("Buyer's Accountant") shall prepare (with such assistance from
Seller as Buyer reasonably requires) and deliver to Seller a combined balance
sheet of the Company as of the Closing Date (the "Closing Balance Sheet") and a
calculation, in reasonable detail, of the Closing Date Net Working Capital based
on the Closing Balance Sheet. The Closing Balance Sheet shall be prepared in
accordance with the Company's accounting principles reflected in the Interim
Balance Sheet (to the extent such are consistent with GAAP), except as otherwise
described on Schedule 1.3, and otherwise in accordance with Schedule 1.3. During
the foregoing 60-day period and during the Dispute Period (as defined in
subsection (c) below), Buyer and the Company shall, at the request of Seller, on
reasonably prior notice and during normal business hours, afford Seller and its
accountants access to Buyer's Accountants and their work papers with respect to
the Closing Balance Sheet and access to the Company's financial personnel and
its books and records, and shall otherwise reasonably cooperate with Seller in
connection with its evaluation and review of the Closing Balance Sheet and the
Closing Date Net Working Capital.
(b) For purposes hereof, the term "Closing Date Net Working Capital"
shall be defined in Schedule 1.3. Any dispute as to the amount and calculation
of the Closing Date Net Working Capital shall be resolved pursuant to the
procedures set forth in Sections 1.3(c) and (d).
(c) Seller shall have sixty (60) days after receipt of the Closing
Balance Sheet (the "Dispute Period") to dispute any of the elements of or
amounts reflected on the Closing Balance Sheet or the calculation of the Closing
Date Net Working Capital (the "Disputed Matters"). If Seller does not give
written notice of a Disputed Matter within the Dispute Period to Buyer (a
"Dispute Notice"), the Closing Balance Sheet and the calculation of the Closing
Date Net Working Capital shall be deemed to have been accepted and agreed to by
Seller in the form in which it was delivered by Buyer, and shall be final and
binding upon the parties hereto. If Seller has a Disputed Matter, Seller shall
give Buyer a Dispute Notice within the Dispute Period, setting forth in
reasonable detail the elements and amounts with which it disagrees. Within
thirty (30) days after delivery of such Dispute Notice, the parties hereto shall
attempt to resolve such Disputed Matter and agree in writing upon the final
Closing Balance Sheet and the calculation of the Closing Date Net Working
Capital.
(d) If Buyer and Seller are unable to resolve any Disputed Matters
within the thirty (30) day period after Buyer's receipt of a Dispute Notice, the
Disputed Matter shall be submitted to arbitration in accordance with this
Section 1.3, unless the parties agree in writing to extend such thirty (30) day
period in an attempt to negotiate a settlement of such Disputed Matters. The
arbitrator (the "Arbitrator") shall be experienced with distribution businesses
and a
partner at any one of the Big Five Accounting Firms other than Deloitte & Touche
or Xxxxxx Xxxxxxxx, mutually agreed to by Seller and Buyer. If Seller and Buyer
fail to agree upon the selection of the Arbitrator or any such Arbitrator
selected by them shall not have agreed to perform the services called for
hereunder, the Arbitrator shall thereupon be selected in accordance with the
rules of the American Arbitration Association, with preference being given to
any partner of a national accounting firm who may be willing to perform such
services other than any such firm which is then employed by Seller, the Company
or Buyer or any Affiliate thereof. The Arbitrator shall consider only the
Disputed Matters, and the arbitration shall be conducted in accordance with the
rules of the American Arbitration Association then in effect. The Arbitrator
shall act promptly to resolve all Disputed Matters and its decision with respect
to all Disputed Matters shall be set forth in writing and shall be final and
binding upon the parties hereto and shall not be appealable to any court, and
judgment may be entered on the record. The costs and expenses of the Arbitrator
shall be shared equally by Seller and Buyer.
(e) If the Closing Date Net Working Capital as finally determined is
less than $15,375,000, Seller shall, within ten (10) days after such final
determination, pay the difference to Buyer in cash, with interest at the rate of
eight percent (8%) per annum from the Closing Date to the date such difference
is paid. If the Closing Date Net Working Capital is more than $15,375,000, Buyer
shall within ten (10) days after such final determination, pay the difference to
Seller in cash, with interest at the rate of eight percent (8%) per annum from
the Closing Date to the date such difference is paid. The Base Purchase Price as
adjusted pursuant to this subsection (e) shall be the purchase price for the
Shares (the "Purchase Price").
1.4 Intercompany Account Obligations; Cash.
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(a) As of the Effective Time, all then outstanding intercompany
obligations of any Group Member to Seller or any of its Affiliates (other than
any Group Member) shall be canceled or otherwise eliminated, as determined by
Seller, and all then outstanding intercompany obligations of Seller or any of
its Affiliates (other than any Group Member) to any Group Member shall be
canceled or otherwise eliminated, and in all cases neither Seller, any of its
Affiliates nor any Group Member shall have any further liability or obligation
in respect of any such intercompany obligation; provided that nothing in this
Section 1.4 shall affect any and all of the covenants, agreements, obligations
and other provisions of and applicable to Seller, Buyer or any Group Member set
forth in this Agreement, including, without limitation, Section 7 hereof.
(b) Buyer agrees that on and prior to the Closing Date, Seller shall
be entitled to receive from the Group Members by way of dividends, advances,
repayment of indebtedness or otherwise all cash and cash equivalents owned or
held by or for the benefit of each Group Member prior to and as of the Effective
Time, all of which is and shall be the sole property of Seller.
2. The Closing.
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2.1 Place and Time. The closing of the sale and purchase of the Shares
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(the "Closing") shall take place at the offices of Xxxxxx, Xxxxx & Bockius LLP,
0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000 at 10:00 a.m. (Eastern
daylight time) on November 30, 1999, or as soon as practicable thereafter (the
"Closing Date") or at such other place, date and time as the parties may agree
in writing, subject to the following:
(a) If any of the conditions set forth in Section 3 hereof have not
been satisfied on the date on which the Closing would otherwise occur, Buyer
may, from time to time, by notice to Seller, defer the Closing to 10:00 a.m. on
a business day specified in that notice, but not later than December 31, 1999.
(b) If any of the conditions set forth in Section 4 hereof have not
been satisfied on the date on which the Closing would otherwise occur, Seller
may, from time to time, by notice to Buyer, defer the closing to 10:00 a.m. on a
business day specified in that notice, but not later than December 31, 1999.
2.2 Deliveries by Seller. At the Closing, Seller shall deliver the
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following to Buyer:
(a) certificates representing the Shares, duly endorsed for transfer
to Buyer or with separate stock transfer powers attached thereto and signed in
blank;
(b) the documents contemplated by Section 3 hereof; and
(c) all other documents, instruments and writings required by this
Agreement to be delivered by Seller at the Closing.
2.3 Deliveries by Buyer. At the Closing, Buyer shall deliver the
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following to Seller:
(a) wire transfers in immediately available funds to an account
designated by Seller in an amount equal to the Base Purchase Price;
(b) the documents contemplated by Section 4 hereof; and
(c) all other documents, instruments and writings required by this
Agreement to be delivered by Buyer at the Closing.
3. Conditions to Buyer's Obligations. The obligations of Buyer to effect the
---------------------------------
Closing shall be subject to the satisfaction at or prior to the Closing of the
following conditions, any one or more of which may be waived by Buyer:
3.1 No Injunction. There shall not be in effect any injunction, order or
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decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that restricts Buyer's
acquisition of the Shares or that will require any
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divestiture as a result of Buyer's acquisition of the Shares or that will
require all or any part of the business of the Company to be held separate and
no litigation or proceedings seeking the issuance of such an injunction, order
or decree or seeking to impose substantial penalties on Buyer if this Agreement
is consummated shall be pending.
3.2 Representations, Warranties and Agreements. (a) The representations
------------------------------------------
and warranties of Seller set forth in this Agreement shall be true and correct
in all material respects (except that representations and warranties that are
qualified by their terms as to materiality shall be true in all respects) as of
the date of this Agreement and as of the Closing Date with the same effect as
though made at such time (except where such representation and warranty speaks
as of a specific date), (b) Seller and Company shall have performed and complied
in all material respects with the agreements contained in this Agreement
required to be performed and complied with by them prior to or at the Closing
and (c) Buyer shall have received a certificate dated the Closing Date to the
foregoing effects signed by an officer of Seller.
3.3 Legal Opinion. Buyer shall have received an opinion from counsel to
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Seller dated the Closing Date reasonably acceptable to Buyer.
3.4 Regulatory Approvals. The waiting period (and any extensions
--------------------
thereof) applicable to the consummation of the transaction contemplated hereby
under the HSR Act shall have expired or been terminated.
3.5 Consents of Third Parties. All consents and approvals of third
-------------------------
parties identified with an asterisk in Schedule 5.6 to this Agreement shall have
been obtained on terms and conditions reasonably satisfactory to Buyer.
3.6 Resignations of Director and Officers. All directors and officers of
-------------------------------------
the Company whose resignations shall have been requested by Buyer shall have
submitted their resignations or shall have been removed effective as of the
Closing Date.
3.7 Sales People. There shall not be any change in the salespeople
------------
employed by the Company between October 1, 1999 and the Closing Date (including
salespeople who have given notice of their intent to depart the Company) which
could reasonably be expected to have a Material Adverse Effect.
3.8 Removal as Borrower. Seller shall deliver to Buyer evidence that the
-------------------
Company shall have been removed as a guarantor and shall have otherwise been
released from any and all liabilities and obligations in connection with those
certain (i) Credit Agreement (the "Credit Agreement") dated as of June 26, 1996,
as amended, among Seller, the guarantors named therein, the several lenders
parties thereto and NationsBank, N.A., as Administrative Agent, and (ii)
Subsidiary Guarantee of Seller's 7.54% Senior Secured Notes due May 31, 2006.
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3.9 Termination of Management Agreements and Phantom Stock Plan. Seller
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shall deliver Buyer evidence of the termination of the Management Agreement and
the X.X. Xxxxxxx Division 1992 Phantom Stock Plan (the "Phantom Stock Plan").
4. Conditions to Seller's Obligations. The obligations of Seller to effect
----------------------------------
the Closing shall be subject to the satisfaction at or prior to the Closing of
the following conditions, any one or more of which may be waived by Seller:
4.1 No Injunction. There shall not be in effect any injunction, order or
-------------
decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement or that restricts the sale of
the Shares to Buyer and no litigation or proceedings seeking the issuance of
such an injunction, order or decree or seeking to impose substantial penalties
on Seller if this Agreement is consummated shall be pending.
4.2 Representations, Warranties and Agreements. (a) The representations
------------------------------------------
and warranties of Buyer set forth in this Agreement shall be true and correct in
all material respects (except that representations and warranties that are
qualified by their terms as to materiality shall be true in all respects) as of
the date of this Agreement and as of the Closing Date with the same effect as
though made at such time, (b) Buyer shall have performed and complied in all
material respects with the agreements contained in this Agreement required to be
performed and complied with by it prior to or at the Closing and (c) Seller
shall have received a certificate dated the Closing Date to the foregoing
effects signed by an officer of Buyer.
4.3 Legal Opinion. Seller shall have received an opinion from Xxxxxx,
-------------
Xxxxx & Xxxxxxx LLP, counsel to Buyer, dated the Closing Date, reasonably
acceptable to Seller.
4.4 Regulatory Approvals. The waiting period (and any extensions thereof)
--------------------
applicable to the consummation of the transaction contemplated hereby under the
HSR Act shall have expired or been terminated. All other licenses,
authorizations, consents, orders and regulatory approvals of Governmental Bodies
necessary for the consummation of Seller's sale of the Shares to Buyer shall
have been obtained and shall be in full force and effect.
4.5 Releases. Seller shall have received general releases executed by the
--------
Group Members, in form and substance reasonably satisfactory to Buyer and
Seller, of all officers and directors of each Group Member with respect to acts
or omissions occurring on or prior to the Closing Date.
4.6 Substitute Letters of Credit and Performance and Bid Bonds. Seller
----------------------------------------------------------
shall have received for cancellation all existing letters of credit and
performance and bid bonds in favor of the Company or for which the Company is an
account party and issued under the Credit Agreement (as defined in Section 3.8)
and/or for which Seller and/or any Affiliate is liable, which are set forth on
Schedule 4.6 to this Agreement and which are entered into after the date hereof
in the ordinary course of business (collectively, the "Bonds"), and Seller shall
have
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received evidence, in form and substance satisfactory to Seller, that Buyer has
caused substitute letters of credit and performance and bid bonds to be issued
in favor of and delivered to the holders of the Bonds.
5. Representations and Warranties of Seller.
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(a) Seller represents and warrants to Buyer that as of the date hereof:
5.1 Organization of the Company; Authorization.
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(a) Each of Seller and Company is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. The Company has all
corporate authority and power to own, lease and operate its properties and
assets and to carry on its business as such business is now being conducted. The
execution, delivery and performance of this Agreement by Seller and of each
Transaction Document by Seller and Company have been duly and validly authorized
by all necessary corporate action of the Company and Seller and no other
corporate action on the part of the Company or Seller is necessary to authorize
this Agreement or to consummate the transactions contemplated hereby and this
Agreement constitutes a valid and binding obligation of Seller, enforceable
against it in accordance with its terms.
(b) The Company is duly qualified and in good standing to do business
in the jurisdictions set forth on Schedule 5.1(b) attached hereto, which
jurisdictions are the only jurisdictions wherein the character of the properties
owned, leased or operated or the nature of the activities conducted by it makes
such qualification necessary, except where the failure to so qualify
individually or in the aggregate, would not have a Material Adverse Effect. Set
forth on Schedule 5.1(b) is the location (specifying state, county and city)
where the Company (A) has a place of business, (B) owns or leases real property,
and (C) owns or leases any other property, including inventory, equipment or
furniture. The Company has delivered to Parent complete and accurate copies of
the Certificate of Incorporation and Bylaws of the Company, as currently in
effect.
5.2 No Conflict as to the Company. Neither the execution and delivery of
-----------------------------
the Transaction Documents nor the consummation of the sale of the Shares by
Seller to Buyer will (a) violate any provision of the certificate of
incorporation or by-laws (or other governing instrument) of the Company or
Seller or (b) subject to receipt of the consents listed in Schedule 5.6 to this
Agreement, violate, be in conflict with, or constitute breach or a default (or
an event which, with notice or lapse of time or both, would constitute breach or
a default) under, or result in the loss of any material benefit under or result
in the termination of, or accelerate the performance required by, or in any
material respect excuse performance by any Person of any of its obligations
under, or cause the acceleration of the maturity of any debt or obligation
pursuant to, or result in the creation or imposition of any Encumbrance upon any
property or assets of the
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Company or Seller under, any agreement or Commitment to which the Company or
Seller is a party or by which any of their property or assets are bound, or to
which any of the property or assets of the Company or Seller are subject, or (c)
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to the Company or Seller or by
which any of their property or assets are bound.
5.3 Ownership of Shares. The authorized capital stock of Xxxxxxx consists
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of 3,000 shares of common stock, par value $1.00 per share, of which 1,000
shares are duly and validly authorized, issued, outstanding, fully paid and non-
assessable and constitute the Xxxxxxx Shares. The authorized capital stock of
Trayco consist of 3,000 shares of common stock, par value $1.00 per share, of
which 1,000 shares are duly and validly authorized, issued, outstanding, fully
paid and non-assessable and constitute the Trayco Shares. Seller owns the
Shares, of record and beneficially, at the Closing, free and clear of all
Encumbrances. All issued and outstanding Xxxxxxx Shares and Trayco Shares have
been validly issued, are fully paid and non-assessable, and have not been issued
in violation of and are not currently subject to any preemptive rights. No
legend or other reference to any purported Encumbrance appears upon any
certificate representing the Shares. The delivery of such certificates to Buyer
as provided in Section 2.2 hereof and the payment to Seller as provided in
Section 2.3 hereof will result in Buyer's immediate acquisition of record
ownership of the Shares, free and clear of all Encumbrances, except Encumbrances
created solely as a result of Buyer's ownership of the Shares. There are no
outstanding or authorized subscriptions, options, warrants, calls, conversion
rights, restrictions (except as created by Buyer), arrangements, commitments or
any other agreements binding on Seller or the Company of any kind that, directly
or indirectly, relate to the issuance, pledge, sale, transfer or other
disposition or encumbrance by the Company of any equity or other securities of
the Company or relate to the voting or control of Xxxxxxx Shares or Trayco
Shares.
5.4 No Subsidiaries. Except as disclosed in Schedule 5.4 to this
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Agreement, the Company does not, directly or indirectly, own or control, and
does not have any option, right, agreement or commitment of any kind to acquire
any capital, equity securities, partnership, participation, or other ownership
interest or other securities of any other Person or any direct or indirect
equity or ownership interest in any other business.
5.5 Consents and Approvals of Governmental Bodies. Except for filings
---------------------------------------------
under the HSR Act, no consent, permit, approval or authorization of, or
declaration, filing or registration with, any Governmental Body is required to
be made or obtained by the Company or Seller in connection with the execution,
delivery and performance of the Transaction Documents by Seller or the
consummation of the sale by Seller of the Shares to Buyer.
5.6 Other Consents. Except as listed in Schedule 5.6 to this Agreement,
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no consent of any Person is required to be obtained by Seller or by the Company
for the execution, delivery and performance of the Transaction Documents by
Seller or the consummation of the sale by Seller of the Shares to Buyer,
including, without limitation, consents from parties to the Commitments.
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5.7 Financial Statements.
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(a) Seller has delivered to Buyer an audited combined balance sheet
of Xxxxxxx and Trayco and the related combined statements of income and cash
flows for the periods ended January 31, 1999 and 1998 (the "Audited Statements")
and an unaudited combined consolidated balance sheet (the "Interim Balance
Sheet") of the Company as of September 30, 1999, together with the related
combined statements of income and cash flow for the eight (8) month period then
ended (together, the "Financial Statements"). The Financial Statements, except
as set forth in Schedule 5.7, (i) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, and (ii)
present fairly, in all material respects, the financial position and the results
of operations of the Company as of and for the periods indicated.
(b) As of the date hereof, the Company has no Liabilities which are
required to be set forth or reserved against on the liability side of a balance
sheet in accordance with GAAP, except: (i) Liabilities set forth or reserved
against on the Interim Balance Sheet, (ii) Liabilities incurred after the
Balance Sheet Date in the ordinary course of business and consistent with past
practice of the Company (which are, in the case of Liabilities incurred after
the date of this Agreement, consistent with the terms of this Agreement), or
(iii) Liabilities described on Schedule 5.7 attached hereto. To the Knowledge of
Seller, there are no contingent Liabilities which are not reflected on the
Interim Balance Sheet, the Schedules to this Agreement or to be reflected on the
Closing Balance Sheet which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
(c) Since February 1, 1999, (i) there has been no adjustment to the
method in which the LIFO Inventory Reserve is calculated and (ii) all inventory
purchase decisions were made in the ordinary course of business without any
intention to reduce the Company's LIFO Inventory Reserve.
5.8 Title to Properties. The Company owns good and valid (and in the case
-------------------
of real property, marketable) title to all the properties and assets that it
purports to own (real, personal and mixed, tangible and intangible), including,
without limitation, all the properties and assets reflected as owned in the
Interim Balance Sheet (except for property sold since the Balance Sheet Date in
the ordinary course of business or leased under capitalized leases) and all the
properties and assets purchased or otherwise acquired by the Company since the
Balance Sheet Date. All properties and assets (other than real property)
reflected as owned in the Interim Balance Sheet are free and clear of all
Encumbrances, except Permitted Liens. All properties and assets purported to be
leased by the Company (including the Leased Real Property) are subject to valid
and effective (as to the Company and to Seller's Knowledge, as to the other
parties thereto) leases that are in full force and effect, and there does not
exist, and, subject to receipt of the consents set forth on Schedule 5.6 hereto,
the consummation of the transactions contemplated herein will not result in, any
default or event that with notice or the lapse of time, or both or
-9-
otherwise, would constitute a default under any such leases, except where such
default would not have a Material Adverse Effect. There are no existing
agreements, options, commitments or rights with, of or to any Person to acquire
any of the assets of the Company or any interest therein, except for contracts
for the sale of inventory entered into in the ordinary course of business
consistent with past practice. The assets and properties owned or leased by the
Company include all the material assets used in the conduct of the business of
the Company as currently conducted. The tangible properties and assets (other
than inventory) of the Company are in operating condition and repair, normal
wear and tear excepted and after taking into account the age thereof, and are,
as a whole, reasonably suitable for the business of the Company as currently
conducted.
5.9 Real Property. Except as set forth in Schedule 5.9:
-------------
(a) Schedule 5.9(a) contains a true, correct and complete list of all
real property (including, without limitation, addresses) owned by the Company
(together with all buildings, improvements and structures thereon and all
appurtenances relating thereto, the "Owned Real Property"). The Company owns the
Owned Real Property in fee subject to no Encumbrances, mortgages or pledges,
except Permitted Liens. The Company has no current leases outstanding with
respect to any part of any Owned Real Property, except as set forth in Schedule
5.9(a).
(b) Schedule 5.9(b) contains a true, correct and complete list of all
current and effective written leases and subleases under which the Company is
tenant or subtenant (as so modified, extended or amended, the "Real Property
Leases"), and the address of the demised premises (the "Leased Real Property",
together with the Owned Real Property, the "Real Property"), the names of the
lessor or sublessor and the tenant or subtenant (if other than the Company). The
tenant's interest in the Real Property Leases are subject to no Encumbrances
except Permitted Liens. The Company is not a party to any unwritten legally
enforceable leases or subleases.
(c) True and complete copies of the Real Property Leases have been
delivered or made available to Buyer by Seller. Subject to the terms of the
respective Real Property Leases and the Permitted Liens, the Company has a valid
and subsisting leasehold interest in each parcel of Leased Real Property for the
full term of the respective Real Property Lease. The Real Property Leases are in
full force and effect and are enforceable in accordance with their respective
terms (in each case as to the Company and, to Seller's Knowledge, the other
parties thereto), except as such enforceability may be subject to or limited by
bankruptcy, insolvency, reorganization or other similar Laws, now or hereafter
in effect, affecting the enforcement of creditors' rights generally and general
principles of equity. The Company has not assigned, pledged, mortgaged,
hypothecated or otherwise transferred any Real Property Lease. Neither the
Company nor Seller has received written notice of default from the landlord
under any Real Property Lease, Seller has no Knowledge of the existence of any
default under any Real Property Lease, and Seller has no Knowledge of any event
which, with the giving of notice or the passage
-10-
of time, or both, would constitute a default under any Real Property Lease,
except, in any case, where such default would not result in any material payment
by the tenant, material restriction of the right of the tenant to use the
property or the right of the landlord to terminate the lease. No landlord or
tenant under any Real Property Lease has, by notice to the Company given
pursuant to the applicable Real Property Lease, exercised any option or right to
(i) cancel or terminate such Real Property Lease or shorten the term thereof,
(ii) lease additional premises to the Company, (iii) reduce or relocate the
premises demised by the Company by such Real Property Lease or (iv) purchase any
property. The Company does not owe any brokerage commissions or finders fees
with respect to any Real Property Lease or any renewal or extension thereof or
the exercise of any right or option by the Company thereunder.
(d) The Company has obtained all Permits, variances, special
exemptions and permanent certificates of occupancy, the absence of which would,
singly or in the aggregate, have a Material Adverse Effect (the "Approvals"), if
any, needed by the Company in connection with the use and occupancy by the
Company of any parcel of Real Property, all of which have been duly issued and
paid for and are in full force and effect in accordance with the respective
terms thereof, except where the failure to be in force and effect would not have
a Material Adverse Effect. The Company has not assigned, pledged, mortgaged,
hypothecated or otherwise transferred any Approval. Each parcel of Real Property
is being operated in accordance with all the terms, covenants and conditions of
the Approvals, except where the failure to so operate would not have a Material
Adverse Effect.
(e) To Seller's Knowledge, there are no pending or contemplated
zoning changes, "floor area ratio" changes, variances or special zoning
exceptions adversely affecting any parcel of Real Property.
(f) The real estate Taxes with respect to the Owned Real Property,
cover the whole of the Owned Real Property and do not cover or apply to any
other property, except as set forth in the information received by Buyer as a
result of Section 5.17.
(g) No special assessments are levied or, to Seller's Knowledge,
contemplated against any parcel of Owned Real Property.
(h) There is no material construction at any parcel of Owned Real
Property.
(i) To the Knowledge of Seller, the Company is not in default under,
and has not breached any of the terms of, any of the Permitted Liens, except
where such default or breach would not have a Material Adverse Effect.
(j) The Owned Real Property, including, without limitation, all
buildings, building systems, structural components, roofs, and building
equipment, are in operating condition and repair (normal wear and tear excepted
(after taking into account the age thereof) and are reasonably suitable for the
business of the Company as currently conducted).
-11-
(k) Except for the Real Property, the Company does not own or hold
any interest in real property.
(l) There are no written notices received by the Company of any
uncured violation of any Law by the Company affecting or against any parcel of
Real Property.
(m) To the Knowledge of Seller, there are no actions or proceedings
pending or threatened against the Company or any parcel of Owned Real Property
by any Person which would materially affect the future use, occupancy or value
of any parcel of Real Property.
5.10 No Condemnation or Expropriation. Neither the whole nor any
--------------------------------
portion of the Owned Real Property is subject to any governmental decree or
order of or otherwise taken by any Governmental Body with or without payment or
compensation therefor.
5.11 Litigation. Except as listed in Schedule 5.11 and except for
----------
matters for which Seller indemnifies Buyer pursuant to Section 9.1(d) and 9.1(e)
hereof, there is no action, suit, proceeding or investigation by or before any
court or Governmental Body pending or, to Seller's Knowledge, threatened at law
or in equity, against or affecting the Company or its assets or which seeks to
enjoin or obtain damages in respect of the consummation of this Agreement, nor
has any such court or Governmental Body indicated in writing to the Company an
intention to conduct the same. The Company is not subject to any adverse
judgment, order, decree, writ, injunction or award of any court, Governmental
Body or any arbitrator.
5.12 Absence of Certain Changes. Except as set forth in Schedule 5.12,
--------------------------
since February 1, 1999 the Company has conducted its business only in the
ordinary course consistent with past practice. Without limiting the generality
of the foregoing, except as set forth in Schedule 5.12, since the February 1,
1999 the Company has not:
(a) suffered damage or destruction to any of its material properties
or assets (whether or not covered by insurance), or made any material
disposition of any of its properties or assets other than in the ordinary course
of business consistent with past practice;
(b) made any change or amendment in its certificate of incorporation
or by-laws, or other governing instruments;
(c) issued or sold any equity securities or other securities,
acquired, directly or indirectly, by redemption or otherwise, any such equity
securities, reclassified, split-up or otherwise changed any such equity
securities, or granted or entered into any options, warrants, calls or
commitments of any kind with respect thereto;
(d) organized any subsidiary or acquired any equity securities of any
Person or any equity or ownership interest in any business;
-12-
(e) except for intercompany obligations with Seller and its
Affiliates, borrowed any funds or incurred, assumed or otherwise become subject
to, whether directly or by way of guarantee or otherwise, any obligation or
liability with respect to any such indebtedness for borrowed money, or, except
in the ordinary course of business consistent with past practice, incurred any
other material obligation or liability of any nature, whether accrued, absolute,
contingent or otherwise;
(f) subjected any properties or assets to an Encumbrance, except
Permitted Liens;
(g) increased in any manner the compensation of any employee except
in the ordinary course of business;
(h) except as contemplated by Section 3.9 hereof and except as set
forth on Schedule 5.15 or Schedule 5.16, created or materially modified any
bonus, deferred compensation, pension, profit sharing, retirement, insurance,
stock purchase, stock option, phantom stock ownership plan, or other fringe
benefit plan, arrangement or practice or any other employee benefit plan (as
defined in Section 3(3) of ERISA);
(i) made any capital expenditure or acquired any property or assets,
other than inventory, raw materials and supplies, for a cost in excess of
$100,000;
(j) entered into any agreement that materially restricts the Company
from carrying on its business;
(k) paid, discharged or satisfied any material claim, liability or
obligation, absolute, accrued, contingent or otherwise, other than the payment,
discharge or satisfaction in the ordinary course of business;
(l) waived or canceled any material claims or rights;
(m) except as set forth on Schedule 5.7, changed or modified in any
material manner the Company's existing credit, collection and payment policies,
procedures and practices with respect to accounts receivable and accounts
payable, respectively, including without limitation, material acceleration of
collections and receivables, material delay of collections or receivables
(whether or not past due), material acceleration of payment of payables or
material failure to pay or delay in payment of payables;
(n) disposed of or has failed to keep in effect any rights in, to or
for the use of any franchise, license, permit or certificate material to the
business of the Company; or
-13-
(o) entered into any agreement or understanding, whether orally or
in writing, to take any of the actions specified in paragraphs (a) through (n).
5.13 No Material Adverse Changes. Except as set forth on Schedule 5.13,
---------------------------
since October 1, 1999 there has not been any (i) event or circumstance that
could reasonably be expected to have or has had a Material Adverse Effect on the
Company taken as a whole, other than those resulting from economic conditions
generally prevailing in the United States or in the industry in which the
Company operates; (ii) actions by Seller that, if taken on or after the date of
this Agreement, would require the consent or approval of Buyer under Section 8.3
or 8.4 hereof; (iii) change in any of the accounting principles followed by the
Company or the method of applying such principles or (iv) except as set forth on
Schedule 5.13 and except as contemplated by Section 5.12, otherwise taken any
actions that are not in the ordinary course of business.
5.14 Intellectual Property.
---------------------
(a) Schedule 5.14(a) contains a complete and accurate list of all
(i) federal, state or foreign registrations of trademarks, service marks and
other marks or trade names of the Company (collectively, the "Trademarks"), and
all pending applications for any such registrations, (ii) all of the federal and
foreign patent and copyright (including proprietary software) registrations of
the Company and all pending applications for any such registrations, and (iii)
all catalogs currently used by the Company to sell goods (the items referred to
in clauses (i) and (ii) above are collectively referred to herein as
"Intellectual Property"). All registered patents, Trademarks and copyrights are
valid and in full force, are held of record exclusively in the Company's name
free and clear of all Encumbrances, other than Permitted Liens, or are licensed
to the Company (unless otherwise indicated on Schedule 5.14(a)) and, to Seller's
Knowledge, no material registered patent, Trademark or copyright is the subject
of any cancellation or reexamination proceeding before any Governmental Body or
any other proceeding before any Governmental Body challenging their extent or
validity, and all fees or the costs necessary for maintaining the same in full
force and effect, including, without limitation, maintenance fees, annuities and
renewals fees, which are due and payable as of the Closing Date, have been paid
or are accrued on the Interim Balance Sheet to the extent then payable. All
Intellectual Property of the Company listed on Schedule 5.14(a) has the status
indicated therein and all applications are still pending in good standing and
have not been abandoned. Except to the extent specifically disclosed on Schedule
5.14(a): (i) the Intellectual Property of the Company is valid and is not being
challenged in any judicial or administrative proceeding; (ii) the Company has
made all statutorily required filings, if any, to record its interests in the
federally registered Intellectual Property of the Company; (iii) to Seller's
Knowledge, no Person nor such Person's business or products is infringing,
misusing, or misappropriating any Intellectual Property of the Company; and (iv)
no other Person has any contractual right to receive or any obligation to pay a
royalty with respect to any Intellectual Property of the Company. No current or
former shareholder, employee, or consultant of the Company or any Subsidiary has
any material rights in or to any of the Intellectual Property of the Company. To
Seller's Knowledge, the Intellectual Property and the catalogs used by the
Company constitute
-14-
all of the material intellectual property that has been used by the Company
during the past twelve (12) months. Except as disclosed in Schedule 5.14(a), the
Company has the right to use (without payment to a third party) all of the
Intellectual Property in connection with its services or products in respect of
which the Intellectual Property is being used, except when the failure to have
such right would not have a Material Adverse Effect.
(b) The Company is not infringing upon, misappropriating or misusing
any intellectual property of any other Person, except where such infringement,
misappropriation or misuse would not have a Material Adverse Effect. Neither
Seller nor the Company has received any written assertion, charge, complaint,
claim, demand or notice alleging any such infringement, misappropriation or
misuse (including any claim that the Company must license or refrain from using
any intellectual property of any Person).
(c) The Company owns or has the right to use all trade secrets,
including "know-how," inventions, designs, customer lists, processes,
technology, formulas, computer software programs and technical data and
information used in the conduct of the business of the Company as currently
conducted (collectively, the "Trade Secrets") free and clear of any
Encumbrances, except Permitted Liens, including, without limitation, any pending
claim of any present or former employee of or consultant to the Company.
5.15 Commitments. Schedule 5.15 to this Agreement contains a list
-----------
(which in the case of customer and employee Commitments contains only a
numerical listing without names of customers or employees), as of the date
hereof, of each contract, agreement, understanding or other commitment, whether
written or oral (including any and all amendments thereto), to which the Company
is a party or by which it is bound relating to the business of the Company
described below (collectively, the "Commitments"):
(a) contract with any employee or consultant;
(b) collective bargaining agreements;
(c) contracts or arrangements providing for bonuses, options,
deferred compensation, stock or phantom stock rights;
(d) agreements with Seller or any of its respective Affiliates which
will remain in effect after the Closing;
(e) guaranties, performance bonds and surety or indemnification
agreements which will remain in effect after the Closing;
(f) contract for the future purchase of, or payment for, supplies or
products or services in any single instance exceeding $50,000, or in the
aggregate $100,000, or of a duration
-15-
of more than twelve months, in any case, other than purchase orders in the
ordinary course of business for current delivery;
(g) contract to sell or supply products in excess of $50,000, or of a
duration of more than twelve months, in any case, other than purchase orders in
the ordinary course of business for current delivery;
(h) contract to sell or supply products to any Governmental Body,
other than purchase orders in the ordinary course of business for current
delivery;
(i) representative, franchise, distribution or sales agency contract;
(j) contract limiting or restraining it from engaging or competing in
any lines of business with any Person;
(k) contract with any customer providing for a volume refund,
retrospective price adjustment or price guarantee;
(l) commitment by others to guarantee the obligations of the
Company;
(m) leases or subleases, either as lessee or sublessee, lessor or
sublessor, of personal property where the lease or sublease provides for an
annual rent in excess of $25,000;
(n) mortgage, indenture, note debenture, bond, letter of credit
agreement, surety agreement, loan agreement or other commitment for the
borrowing or lending of money relating to the Company or agreement for a line of
credit, in any case, which will remain in effect after the Closing;
(o) license, franchise or distributorship agreement, including
those which relate in whole or in part to any software, technical assistance or
other know-how used in the conduct of the Company's business during the prior
twenty-four months;
(p) commitment or agreement for any capital expenditure or leasehold
improvement in excess of $100,000; and
(q) material contract, agreement or commitment not otherwise
disclosed herein.
True and complete copies of such Commitments have been delivered or made
available to Buyer prior to the date hereof (except customer and employee
Commitments which will be made available between the date hereof and the Closing
Date) and each Commitment is a valid and binding obligation enforceable (as to
the Company and, except as set forth on Schedule 5.15, to Seller's Knowledge, as
to the other parties thereto, except that no representation or warranty is
hereby made as to the enforceability against an individual of any employment,
noncompetition or
-16-
confidentiality agreement) in accordance with its terms, except as such
enforceability may be subject to or limited by bankruptcy, insolvency,
reorganization or similar Laws, now or hereafter in effect, affecting the
enforcement of creditors' rights generally and general principles of equity.
Except as set forth in Schedule 5.15, the Company is not in violation of or
default under any of the Commitments to which it is a party or by which it or
any of its properties or assets is bound and, to Seller's Knowledge, no third
party is in violation of or default under any of the Commitments, except, in any
case, where such violation or default would not have a Material Adverse Effect.
Schedule 5.15 sets forth a list of each salesperson and territory number with
respect to salespersons who have not entered into noncompetition Commitments
with the Company.
5.16 Employee Matters.
----------------
(a) The Company does not have a collective bargaining agreement with
any labor union or other representative of employees and, to Seller's Knowledge,
there has been no demand or attempt by employees to organize a union or labor
organization during the past twenty-four (24) months. There are no unfair labor
practice charges or complaints against the Company, to Seller's Knowledge,
threatened or pending before the National Labor Relations Board or any other
federal, state, local or foreign court or agency. There has been no general
labor dispute, strike, slowdown, stoppage or other occurrence, event or
condition of a similar character, which is occurring or, to Seller's Knowledge,
threatened.
(b) Seller has previously delivered to Buyer the title and current
salary of each employee of the Company who has an annual salary in excess of
$50,000.
(c) Schedule 5.16 contains a complete and accurate list of all
Employee Benefit Plans. Except as set forth in Schedule 5.16, true and complete
copies of all the following documents with respect to each Employee Benefit
Plan, to the extent applicable, have been delivered or made available to Buyer:
(i) all documents constituting the Employee Benefit Plan, including but not
limited to, trust agreements, insurance policies, service agreements, and formal
and informal amendments thereto; (ii) the three most recently filed Forms 5500
or 5500-C/R and any financial statements attached thereto; (iii) the most recent
IRS determination letter for the Employee Benefit Plan; (iv) the most recent
summary plan description and any amendments or modifications thereof; (v) all
reports submitted within the preceding three years by third-party
administrators, actuaries, investment managers, consultants, or other
independent contractors; (vi) all notices that were issued within the preceding
three years by the IRS, Department of Labor, or any other governmental entity
with respect to the Employee Benefit Plan; and (vii) all employee manuals or
handbooks containing personnel or employee relations policies. Except for the
plans set forth on Schedule 5.16, the Company does not sponsor or maintain any
plan, fund, program, policy, arrangement, contract or commitment, whether or not
qualified for federal income tax purposes, whether or not funded, whether formal
or informal, and whether for the benefit of a single individual or more than one
individual, which is in the nature of (i) an employee pension benefit plan (as
defined in Section 3(2) of ERISA), (ii) an
-17-
employee welfare benefit plan (as defined in Section 3(1) of ERISA), (iii) an
incentive current or deferred compensation, or other benefit or compensation
arrangement for employees, former employees, their dependents and/or their
beneficiaries or (iv) an arrangement that could be characterized as providing
for additional compensation, compensation associated with a change of control,
severance benefits, perquisites, or fringe benefits.
(d) The Company does not sponsor or maintain, and is not a
contributing employer or otherwise a party to, has no obligation or liability
under or with respect to, and has never sponsored, maintained or participated
in, or been obligated to contribute to any defined benefit plan (as defined in
Section 3(35) of ERISA), multiemployer plan (as defined in Section 3(37) of
ERISA), or other plan subject to Section 302 of ERISA, Section 412 of the Code
or Title IV of ERISA.
(e) The plans marked on Schedule 5.16 as "Qualified Plans" are the
only Employee Benefit Plans intended to be qualified under Section 401(a) and
401(k) of the Code and exempt from tax under Section 501(a) of the Code and are
so qualified and exempt on the Closing Date. Except as otherwise provided in
Schedule 5.16, the Company has never maintained or contributed to any other
Qualified Plan during the ten (10) year period ending on the Closing Date.
Except as otherwise provided in Schedule 5.16, as of the Closing Date, all
amendments and actions required to bring each Employee Benefit Plan into
conformity in all respects with all applicable Laws have been timely made or
taken to the extent that such amendments or actions are required by current Law
to be made or taken in order to obtain a favorable determination letter, if
applicable. Nothing has occurred with respect to the design or operation of any
Qualified Plan that could cause the loss of such qualification or exemption or
the imposition of any liability, lien, penalty or tax under ERISA or the Code.
All Qualified Plans satisfy the minimum coverage requirements of Section 410(b)
of the Code and the nondiscrimination requirements of Section 401(a)(4) of the
Code as of the Closing Date. The Company is not presently or potentially liable
for failure to make contributions to any such Qualified Plan or their fiduciary
conduct in connection with such Qualified Plan.
(f) Full payment has been made of all amounts which the Company is
required, under applicable Law or under any Employee Benefit Plan, to have paid
as contributions thereto as of the last day of the most recent fiscal year of
each Employee Benefit Plan ended prior to the date hereof. The Company has made
adequate provision for reserves in accordance with GAAP to meet contributions
that have not been made because they are not yet due under the terms of any
Employee Benefit Plan or related agreements and all monies withheld from
employee paychecks with respect to Employee Benefit Plans have been transferred
to the appropriate plan in a timely manner as required by Law. Benefits under
all Employee Benefit Plans are as represented and have not been increased
subsequent to the date of such documents.
(g) All Employee Benefit Plans conform (and have at all times
conformed) in all material respects to the requirements of ERISA, the Code and
all applicable laws. Each Employee Benefit Plan has been maintained in all
material respects in accordance with its
-18-
documents and with all applicable provisions of the Code, ERISA and other
applicable Laws; and all reporting, disclosure, and notice requirements of
ERISA, the Code and other applicable laws have been satisfied with respect to
each Employee Benefit Plan.
(h) With respect to each Employee Benefit Plan, there has occurred
no non-exempt "prohibited transaction" (within the meaning of Section 4975 of
the Code or Section 406 of ERISA) or breach of any fiduciary duty described in
Section 404 of ERISA that if successful, would reasonably be expected to result
in any liability, direct or indirect, for the Company or any stockholder,
officer, director, or employee of the Company.
(i) The Company has not incurred any liability for any excise, income
or other Taxes or penalties with respect to any Employee Benefit Plan which
remains unpaid or which is not accrued for on the Closing Balance Sheet and, to
Seller's Knowledge, no event has occurred and no circumstance exists or has
existed that could give rise to any such liability. There are no pending or, to
Seller's Knowledge, threatened claims by or on behalf of any Employee Benefit
Plans, or by or on behalf of any participants or beneficiaries of any Employee
Benefit Plans or other persons, alleging any breach of fiduciary duty on the
part of the Company or any of its officers, directors or employees under ERISA
or any applicable Law, or claiming benefit payments other than those made in the
ordinary operation of such plans, nor, to Seller's Knowledge is there any basis
for any such claim. No Employee Benefit Plan is presently under audit or
examination (nor has notice been received of a potential audit or examination)
by the IRS, the Department of Labor, or any other governmental entity, and no
matters are pending with respect to any Employee Benefit Plan under any IRS plan
compliance program.
(j) Except as set forth on Schedule 5.16(j), no Employee Benefit Plan
contains any provision or is subject to any Law that would prohibit the
transactions contemplated by this Agreement or that would give rise to any
vesting of benefits, severance, termination, or other payments or liabilities as
a result of the transactions contemplated by this Agreement, and no payments or
benefits under any Employee Benefit Plan or other agreement of the Company will
be considered "excess parachute payments" under Section 280G of the Code.
(k) With respect to any Employee Benefit Plan that is an employee
welfare plan (within the meaning of Section 3(1) of ERISA), (i) with respect to
any welfare benefit fund (within the meaning of Section 419 of the Code) related
to a welfare plan, there is no disqualified benefit (within the meaning of
Section 4976(b) of the Code) that would result in the imposition of tax under
section 4976(a) of the Code, (ii) any Employee Benefit Plan that is a group
health plan (within the meaning of Section 4980B(g)(2) of the Code) complies,
and in each and every case has complied, in all material respects with all of
the requirements of Section 4980B of the Code, ERISA, Title XXII of the Public
Health Service Act, the applicable provisions of the Social Security Act, the
Health Insurance Portability and Accountability Act of 1996, and other
applicable Laws, and (iii) no Employee Benefit Plan provides any health, life or
other welfare coverage to employees of the Company or any of its subsidiaries
beyond termination of their employment with the Company or any of its
subsidiaries by reason of retirement or otherwise,
-19-
other than coverage as may be required under Section 4980B of the Code or Part 6
of ERISA, or under the continuation of coverage provisions of the Laws of any
state or locality.
(l) All persons classified by the Company as independent contractors
satisfy and have at all times satisfied the requirements of applicable Law to be
so classified; the Company has fully and accurately reported their compensation
on IRS Forms 1099 when required to do so; and the Company has no obligations to
provide benefits with respect to such persons under Employee Benefit Plans or
otherwise. The Company does not employ and has not employed any "leased
employees" as defined in Section 414(n) of the Code.
(m) The consummation of the transactions contemplated by this
Agreement will not (other than any payment made pursuant to Code Section
401(k)(10) under any 401(k) Plan and other than in respect of agreements covered
by Section 7.11 hereof) accelerate the time of payment or vesting, or increase
any compensation due to any current employee or former employee of the Company.
(n) No provision of any Employee Benefit Plan, and no act or
omission of the Company, in any way limits, modifies or otherwise adversely
affects the right of Buyer to amend or terminate any Employee Benefit Plan after
the Closing, subject to the requirements of applicable Law and the applicable
Employee Benefit Plan. Except as expressly provided in this Agreement
(including the purchase of the Shares), neither the Company nor Seller has made
any commitment or taken any action, whether or not legally binding, which would
commit Buyer to establish or continue any plan, fund or program providing any
employee benefits of any kind whatsoever for any present or former employee of
the Company, nor has the Company or Seller made any commitment or taken any
action prior to the Closing which would prevent Buyer from changing the benefits
provided by any Employee Benefit Plan, subject to the requirements of the
applicable Employee Benefit Plan and applicable Law. To Seller's Knowledge, no
statement, either oral or written, has been made by the Company or Seller to any
person with regard to an Employee Benefit Plan that was not in accordance with
the Employee Benefit Plan and that would reasonably be expected to have an
adverse economic consequence to the Company or Buyer following the Closing.
Except as expressly provided in this Agreement (including the purchase of the
Shares), nothing in this Agreement or the consummation of this transaction will
require Buyer to assume any obligation of the Company or Seller under any
Employee Benefit Plan. Except as specified in the respective Employee Benefit
Plan or under applicable Law and except as expressly provided in this Agreement
(including the purchase of the Shares), Buyer has no obligation to continue any
Employee Benefit Plan as of the Closing and may, in its sole and absolute
discretion, terminate, amend, modify or discontinue any such Employee Benefit
Plan, in whole or in part, without penalty and without prior notice to the
Company, Seller, any participant, beneficiary or present or former employee of
the Company.
-20-
5.17 Tax and Other Returns and Reports.
---------------------------------
Except as set forth in Schedule 5.17:
(a) All Federal, state, local and foreign tax returns, reports,
statements and other similar filings required to be filed by the Company,
including any amendments thereto (the "Tax Returns") with respect to any
federal, state, local or foreign taxes, assessments, interest, penalties,
deficiencies, fees and other governmental charges or impositions (including
without limitation, all Income Tax, unemployment compensation, social security,
payroll, withholding, sales and use, excise, privilege, property, ad valorem,
franchise, license, school and any other tax or similar governmental charge or
imposition under laws of the United States or any state or municipal or
political subdivision thereof or any foreign country or political subdivision
thereof) (the "Taxes") have been timely filed with the appropriate governmental
agencies in all jurisdictions in which such Tax Returns are required to be
filed, and all such Tax Returns properly reflect the liabilities of each of the
Company for Taxes for the periods, property or events covered thereby. All
Taxes, including, without limitation, those that are called for by the Tax
Returns have been properly accrued or paid. The accruals for Taxes contained in
the Interim Balance Sheet contain an adequate provision for all Taxes, and
nothing has occurred subsequent to that date to make any of such accruals
inadequate. The Company has not received any written notice of assessment or
proposed assessment of any Taxes which remain pending and there are no pending
Tax examinations of or Tax claims asserted in writing (or to Seller's Knowledge,
orally) against the Company or any of their assets or properties. No
deficiencies for any Taxes are currently asserted or assessed against the
Company and no written requests for waivers of the time to assess any such Taxes
are pending. The Company has not extended, or waived the application of, any
statute of limitations of any jurisdiction regarding the assessment or
collection of any Taxes. There are no Tax liens (other than any lien for
current Taxes not yet due and payable) on any of the assets or properties of
the Company. The Company has made all deposits required by law to be made with
respect to employees' withholding and other employment taxes, including without
limitation, the portion of such deposits relating to Taxes imposed upon the
Company. To Seller's Knowledge, no written (or to Seller's Knowledge, oral)
claim has been made since January 1, 1994 by any taxing authority in a
jurisdiction where the Company does not pay Tax or file Tax Returns, that the
Company is or may be subject to Tax in such a jurisdiction.
(b) The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The
Company is not a party to any Tax allocation or sharing agreement which will
survive the Closing. The Company (A) has not been a member of an Affiliated
Group (as defined in the Code) filing a consolidated federal Income Tax Return
(other than a group, the common parent of which was Seller), or (B) has no
Liability for the Taxes of any Person (other than Seller, any Group Member or
any other member of Seller's consolidated group) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local, or foreign Law), as
a transferee or successor, by contract, or otherwise.
-21-
5.18 Compliance with Law. Except as set forth on Schedule 5.18, the
-------------------
operations and all activities of the Company have been, and are currently being,
conducted in accordance with all applicable Laws and regulations of all
Governmental Bodies having jurisdiction over the Company, except where the
failure so to be conducted would not have a Material Adverse Effect. Without
limiting the generality of the foregoing, to Seller's Knowledge, no Person with
apparent or actual authority to act on behalf of the Company, has unlawfully
offered, paid or agreed to pay, directly or indirectly, any money or anything of
value to or for the benefit of any individual who is or was an official or
employee or candidate for office of the government of any country or political
subdivision, agency or instrumentality thereof or any employee or agent of any
customer or supplier of the Company. Since January 1, 1994, the Company has not
received any written notification (or to Seller's Knowledge, oral) of any
asserted present or past failure by it to comply with any applicable Laws or
regulations which remain unsatisfied. Except as set forth on Schedule 5.18, the
Company has all Permits required to carry on and to conduct its businesses as
presently conducted and to own, lease, use and operate its properties and assets
at the places and in the manner now conducted and operated and is not in
violation of any such Permits, except, in any case, where the failure to have or
where such violation would not have a Material Adverse Effect. All such Permits
are, and immediately following the consummation of the transactions contemplated
hereby will be, in full force and effect, and, since January 1, 1994, the
Company has not received any written notice (or to Seller's Knowledge, oral)
pertaining to the failure to obtain or, to Seller's Knowledge, been threatened
in writing (or to Seller's Knowledge, orally) with the suspension or
cancellation of any Permits by any Governmental Body.
5.19 Environmental Matters.
---------------------
(a) Except as disclosed on Schedule 5.19, the Company has conducted
its business in compliance with all Environmental Laws, except where the failure
so to be conducted would not have a Material Adverse Effect.
(b) The Company has not received a written notice that any action,
suit, proceeding, administrative proceeding, hearing, investigation, charge,
complaint, claim, demand, cause of action, loss, judgment, decree, debt, damage,
liability, court costs, penalty or attorneys' fees (collectively, "Claims") has
been filed, sustained or commenced against the Company alleging any potential
liability under or any violation or failure to comply with any Environmental Law
which has not been satisfied. The Company is not a party to any agreement,
consent, order or adjudication of any type with any Person, including any
Governmental Body, that is authorized under any Environmental Law. Seller has
no Knowledge of any Claims against any Persons alleging potential liability
under any of the Environmental Laws with respect to the Leased Real Property.
(c) There has not been any spill, release or unauthorized discharge
of any Hazardous Substance in connection with the business of the Company or at
any of the properties or facilities used by the Company, where such spill,
release or discharge was required to be
-22-
reported under the Environmental Law or would require abatement or correction
under any Environmental Law. The Company has not disposed of, treated or stored
any Hazardous Substance on any Real Property used by the Company other than in
accordance with applicable Environmental Laws.
(d) There does not exist any Environmental Condition in connection
with the business of the Company at or relating to the properties or facilities
used by the Company or any predecessor, or at or relating to any property owned,
leased or operated at any time by the Company or any such predecessor, or at or
relating to any property at which Hazardous Substances have been deposited or
disposed by or at the direction of the Company or any such predecessor, in any
case, which would result in a Material Adverse Effect, nor has the Company
received written notice of any such Environmental Condition.
(e) The Company has provided to Buyer a copy of each environmental
audit in its possession conducted by the Company or their representatives or
anyone else relating to the properties and facilities used by the Company in the
operations of its business.
(f) Except as disclosed on Schedule 5.19, there are not now nor have
there ever been any underground storage tanks on any Owned Real Property or, to
Seller's Knowledge, any Leased Real Property.
5.20 Borrowing and Guarantees. Except as set forth in the Schedules to
------------------------
this Agreement, the Company (a) does not have any indebtedness for borrowed
money which will remain outstanding after the Closing, (b) is not lending or
committed to lend any money (except for advances to employees in the ordinary
course of business), and (c) is not a guarantor or surety with respect to the
obligations of any Person other than the Company or which will remain
outstanding after the Closing.
5.21 Inventory. All inventory of the Company reflected on the Interim
---------
Balance Sheet or acquired since the date thereof through the Closing Date (a)
was acquired in the ordinary course of business, (b) is of good and merchantable
quality and (c) is valued at the lower of cost or market value, the cost thereof
being determined on a last-in, first-out formula in accordance with GAAP for
Xxxxxxx and Trayco and on a first-in, first-out formula in accordance with GAAP
for Xxxxxxx Ltd.
5.22 Accounts Receivable. The accounts receivable of the Company as
-------------------
reflected on the Interim Balance Sheet or arising since the date thereof through
the Closing Date (a) are valid and genuine, (b) have arisen solely out of bona
fide sales and deliveries of goods, performance of services or other business
transactions in the ordinary course of business, (c) are not subject to
defenses, set-offs or counterclaims other than normal returns, allowances and
warranty claims and (d) are collectible within one hundred fifty (150) days
after the Closing Date at the full recorded amount thereof less the amount
reserved for doubtful accounts in the Closing Balance Sheet.
-23-
5.23 Accounts Payable. All accounts payable as set forth on the Interim
----------------
Balance Sheet or arising since the date thereof have been incurred in the
ordinary course of business consistent with past practice.
5.24 Relations with Customers, Distributors and Suppliers. The Company
----------------------------------------------------
has used reasonable business efforts to maintain good working relationships with
all of its suppliers, distributors and customers. Except as disclosed in
Schedule 5.24, since February 1, 1999, no customer, distributor or supplier of
the Company with sales or purchases in excess of $50,000 per annum has indicated
in writing that it intends to cease or materially reduce its purchases from or
sales to the Company. Since January 1, 1994, no material current supplier of
the Company has notified the Company in writing of any recall or any warning
(other than warnings included as part of the product literature at the time of
sale) with respect to any products distributed by the Company. Schedule 5.24
lists the top twenty (20) suppliers of products distributed by the Company as
measured by sales revenue earned by the Company for the twelve month period
ended October 31, 1999.
5.25 Transactions with Affiliates. Except as disclosed in Schedule
----------------------------
5.25, neither the Company, nor any Affiliate of the Company (including, without
limitation, Seller), nor any director or officer of the Company or, to Seller's
Knowledge, any member of his or her immediate family, owns or has a controlling
ownership interest in any corporation or other entity that is a party to any
Commitment or material business arrangement or relationship with respect to the
business of the Company which will continue after the Closing.
5.26 Books of Account. The Company has not engaged in any material
----------------
transaction, maintained any bank account or used any funds except for
transactions, bank accounts and funds which have been and are reflected in the
normally maintained books and records of the business. Schedule 5.26 sets forth
a list of each bank, broker or other depository with which the Company has an
account or safe deposit box and the names and numbers of such accounts or boxes.
Prior to the Closing, Seller shall deliver to Buyer the names of all persons
authorized to draw thereon or execute transactions.
5.27 Minute Books. The minute books of the Company, as previously made
------------
available to Buyer and its representatives, contain, in all material respects,
complete and accurate records of all meetings of and corporate actions or
written consents by the shareholders, Board of Directors, and committees of the
Board of Directors of the Company.
5.28 Warranty Claims. Except for law suits, damages and expenses covered
---------------
by insurance, but subject to applicable deductibles and self retention limits,
and except for matters for which Seller indemnifies Buyer pursuant to Section
9.1(d) and 9.1(e), there are, except for warranty claims of a nature and in
amounts incurred in the ordinary course of business and consistent with past
practice, no liabilities of the Company, fixed or contingent, asserted or
unasserted, with respect to any claim for the breach of any express or implied
product warranty with respect to any product sold by the Company prior to the
Closing Date.
-24-
5.29 Insurance. Schedule 5.29 sets forth a list of all policies of
---------
liability, theft, fidelity, life, fire, product liability, xxxxxxx'x
compensation, health and other forms of insurance held by the Company and all
such policies are, to Seller's Knowledge, valid and enforceable policies and are
outstanding and duly in force, have been issued for the benefit of the Company
and all premiums which are due with respect thereto are paid to date. The
Company has promptly and properly notified its insurance carriers of any and all
claims known to it with respect to its operations or products for which it is
insured, except where the failure would not have a Material Adverse Effect.
Except for claims set forth on Schedule 5.29 and except for matters for which
Seller indemnifies Buyer pursuant to Sections 9.1(d) and 9.1(e), there are no
outstanding claims under any insurance policy issued for the benefit of the
Company. No written notice of cancellation or nonrenewal with respect to, or
disallowance of any claim under, any insurance policy has been received by the
Company since January 1, 1994. Except for matters for which Seller indemnifies
Buyer pursuant to Sections 9.1(d) and 9.1(e), the Company has not been refused
any insurance, nor has coverage been limited by any insurance carrier to which
the Company has applied for insurance or which has carried insurance for the
Company during the last three years.
5.30 Warranties. The Company makes no express warranties as to the
----------
products manufactured or sold, or the services provided by the Company other
than manufacturer's warranties.
5.31 Full Disclosure. There are no materially misleading misstatements
---------------
in any of the representations and warranties made by Seller in this Agreement
(including the Schedules with respect thereto and certificates delivered by
Seller pursuant to Section 3.2 of this Agreement) and, to Seller's Knowledge,
Seller has not omitted to state any fact necessary to make statements made
herein or therein not materially misleading, except that no representation or
warranty is hereby made with respect to general economic conditions or the
general condition of the industry in which the Company operates.
(b) Agreement by Buyer Regarding No Other Representations or Warranties
-------------------------------------------------------------------
by Seller. Buyer agrees that except for the representations and warranties
---------
(including the Schedules with respect thereto) made by Seller and expressly set
forth in Section 5 of this Agreement, neither Seller nor any Affiliate nor
representative thereof has made and shall not be construed as having made to
Buyer or to any representative or Affiliate thereof, and neither Buyer nor any
Affiliate nor any representative thereof has relied upon, any representation or
warranty of any kind. Without limiting the generality of the foregoing, and
notwithstanding any otherwise express representations and warranties made by
Seller in Section 5 hereof, Buyer agrees that neither Seller nor any Affiliate
nor representative thereof makes or has made any representation or warranty to
Buyer or to any representative or Affiliate thereof with respect to:
(i) any projections, estimates or budgets heretofore or hereafter
delivered to or made available to Buyer or its counsel, accountants,
advisors, lenders, representatives
-25-
or Affiliates of future revenues, expenses or expenditures, future results
of operations (or any component thereof), future cash flows (or any
component thereof) or future financial condition (or any component thereof)
of the Group or any Group Member or the future business, operations or
affairs of the Group or any Group Member; and
(ii) any other information, statement or documents heretofore or
hereafter delivered to or made available to Buyer or its counsel,
accountants, advisors, lenders, representatives or Affiliates with respect
to the Group or any Group Member or the business, operations or affairs of
the Group or any Group Member, except to the extent and as expressly
covered by a representation and warranty (including the Schedules with
respect thereto) contained in Section 5 hereof.
6. Representations and Warranties of Buyer. Buyer represents and warrants to
---------------------------------------
Seller as follows as of the date hereof:
6.1 Organization of Buyer; Authorization. Buyer is a corporation duly
------------------------------------
organized, validly existing and in good standing under the laws of New Jersey,
with full corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution, delivery and
performance of each Transaction Document has been duly and validly authorized by
all necessary corporate action of Buyer and this Agreement constitutes a valid
and binding obligation of Buyer, enforceable against it in accordance with its
terms.
6.2 Conflict as to Buyer. Neither the execution and delivery of the
--------------------
Transaction Documents nor the consummation of the purchase of the Shares by
Buyer will (a) violate any provision of the certificate of incorporation or by-
laws of Buyer, (b) violate, be in conflict with, or constitute a default (or an
event which, with notice of lapse of time or both, would constitute a default)
under any agreement or Commitment to which Buyer is party or (c) violate any
statute or law or any judgment, decree, order, regulation or rule of any court
or other Governmental Body applicable to Buyer.
6.3 Consents and Approvals of Governmental Bodies. Except for filings
---------------------------------------------
under the HSR Act, no consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Body is required to be made or
obtained by Buyer in connection with the execution, delivery and performance of
the Transaction Documents by Buyer or the consummation of the purchase of the
Shares by Buyer.
6.4 Other Consents. No consent of any Person is required to be obtained
--------------
by Buyer to the execution, delivery and performance of the Transaction
Documents by Buyer or the consummation of the purchase of the Shares by Buyer.
7. Certain Agreements.
------------------
-26-
7.1 Access. Between the date of this Agreement and the earlier to occur
------
of the date of the termination of this Agreement and the Closing Date, Seller
shall, and shall cause the Company to, at Buyer's sole cost and expense, (a)
give Buyer and its authorized representatives and agents reasonable access, on
reasonable prior notice to Seller and during normal business hours, to all
plants, offices, warehouse and other facilities and properties of the Company,
to the customers, suppliers and accountants of the Company and to the books and
records of the Company, (b) permit Buyer and its authorized representatives and
agents to make inspections thereof and (c) cause its officers and its advisors
to furnish Buyer with such available financial and operating data and other
information with respect to the business and properties of the Company and to
discuss with Buyer and its authorized representatives and agents the affairs of
the Company, all as Buyer may from time to time reasonably request. Within
thirty (30) days after the end of each month, Seller shall provide Buyer with an
unaudited balance sheet and income statement as of the end of such month and
copies of all other monthly financial reports prepared by the Company for Seller
in the ordinary course of business.
7.2 Filings; Other Regulatory Matters.
---------------------------------
(a) As promptly as practical after the date hereof, Buyer and Seller
shall file with the Federal Trade Commission and the Antitrust Division of the
Department of Justice, the notification and other information required to be
filed under the HSR Act with respect to the transactions contemplated hereby.
Each of Buyer and Seller will, and Seller shall cause the Company to, use its
reasonable best efforts to ensure that all such filings by it shall be, as of
the date filed, true and accurate in all material respects and in accordance
with the requirements of the HSR Act and any such rules and regulations. Each
of Buyer and Seller agrees, and Seller shall cause the Company to, make
available, or cause to be made available, to the other, such information as each
of them may reasonably require relative to its business, assets and property and
to file any additional information required by such agencies under the HSR Act;
provided, that the parties shall have entered into mutually acceptable
--------
arrangements to ensure the continued confidentiality of any such information.
(b) Each party hereto agrees, subject to applicable Laws relating to
the exchange of information, to promptly furnish the other party hereto with
copies of written communications (and memoranda setting forth the substance of
all oral communications) received by such party, or any of its Affiliates or
associates (as such terms are defined in Rule 12b-2 under the Exchange Act as in
effect on the date hereof), from or delivered by any of the foregoing to, any
Governmental Body relating to or in respect of the transaction contemplated
under this Agreement.
7.3 Tax Matters.
-----------
(a) Consistency Statement. Seller and Buyer agree that the entire
---------------------
purchase price shall be treated for Tax purposes as amounts received by Seller
for the sale of the Shares. The Purchase Price shall be allocated $71,000,000
to the Xxxxxxx Shares and $14,000,000 to the
-27-
Trayco Shares. Neither Buyer nor Seller shall take, and Seller and Buyer, as
applicable, shall cause the Company to refrain from taking, any position
inconsistent with this understanding on any Tax Return, whether federal, state,
local or foreign. Any adjustments to the Base Purchase Price pursuant to Section
1.3 shall be allocated to the Xxxxxxx Shares.
(b) Tax Returns.
-----------
(A) Seller shall prepare or cause to be prepared on a basis
consistent with past practice and shall file or cause to be filed all Federal
Income Tax Returns for the Company for all periods ending on or prior to the
Closing Date which are due after the Closing Date, and shall pay or cause to be
paid any and all Federal Income Taxes which are reflected as being owed by the
Company on such Tax Returns.
(B) Buyer shall prepare or cause to be prepared all other Tax
Returns and shall file or cause to be filed all Tax Returns for the Company for
(i) all periods ending after the Closing Date and (ii) for all periods ending on
or prior to the Closing Date (other than in respect of Federal Income Taxes, as
to which subsection (a) above shall be applicable) and shall pay or cause to be
paid any and all Taxes which are reflected as being owed by the Company on such
Tax Returns.
(C) Any Tax Returns prepared pursuant to this Section 7.3(b)
shall be prepared on a basis consistent with the last previous Tax Returns of
the Company, unless Seller and Buyer agree that there is no reasonable basis for
such position or that a change is necessary to comply with a change in Law.
Buyer shall afford Seller the opportunity to review, comment upon and suggest
changes or corrections to any Tax Return prepared by it or the Company pursuant
to Section 7.3(b)(B) and Seller shall afford Buyer the opportunity to review,
comment upon and suggest changes or corrections to information with respect to
the Company set forth in any Tax Returns prepared by it pursuant to Section
7.3(b)(A), in any case prior to the filing thereof and in no event less than 30
days prior to such filing.
-28-
(c) Cooperation on Tax Matters.
--------------------------
(A) Buyer, Company and Seller shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Section 7.3 and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Buyer and the Company agree (i) to retain all books and records with
respect to Tax matters pertinent to the Company relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or Seller, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (ii) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other party so requests, Buyer, the
Company or Seller, as the case may be, shall allow the other party to take
possession of such books and records.
(B) Buyer and Seller further agree, upon request, to use their
best efforts to obtain any certificate or other document from any Governmental
Body or any other Person as may be necessary to mitigate, reduce or eliminate
any Tax that could be imposed on the Company (including, but not limited to,
with respect to the transactions contemplated hereby).
(C) Buyer and Seller further agree, upon request, to provide the
other party with all information that either party may be required to report
pursuant to Section 6043 of the Code and all Treasury Regulations promulgated
thereunder.
(d) Tax Sharing Agreements. Buyer, Seller and the Company hereby
----------------------
agree that all tax sharing agreements or similar agreements with respect to or
involving Xxxxxxx, Trayco, and each of their subsidiaries shall be and hereby
are terminated as of the Closing Date and, after the Closing Date, Xxxxxxx,
Trayco, and each of their subsidiaries shall not be bound thereby or have any
liability, benefit or entitlement thereunder.
(e) Certain Taxes. All transfer, documentary, sales, use, stamp,
-------------
registration and other similar Taxes (including any penalties and interest)
incurred in connection with this Agreement shall be paid by Seller when due, and
Seller will, at its own expense, file all necessary Tax Returns with respect to
all such transfer, documentary, sales, use, stamp, registration and other such
Taxes, and, if required by applicable law, Buyer will, and will cause its
Affiliates to, join in the execution of any such Tax Returns.
(f) Claims.
------
-29-
(i) If a claim shall be made by any taxing authority, which, if
successful, might result in an indemnity payment by Seller to any Buyer
Indemnitee pursuant to Section 9 hereof (a "Tax Claim"), Buyer shall
promptly notify Seller in writing (a "Tax Notice") of such claim. If a Tax
Notice is not given to Seller within a sufficient period of time to allow
Seller effectively to contest such Tax Claim, taking into account the facts
and circumstances with respect to such Tax Claim, Seller shall not be
liable to any Buyer Indemnitee to the extent that Seller's position is
prejudiced as a result thereof.
(ii) Without limiting the generality of Section 9.6 hereof (but,
in the event of any conflict between Section 9.6 and this clause (ii), this
clause (ii) shall control), with respect to any Tax Claim which deals
solely with claims which if successful would result in an indemnity payment
by Seller to any Buyer Indemnitee pursuant to Section 9 hereof, Seller
shall have the right to control and conduct all proceedings and
negotiations in connection with such Tax Claim (including, without
limitation, selection of counsel) and, without limiting the foregoing, may
in its sole discretion pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with any taxing authority with
respect thereto at its sole expense, and may, in its sole discretion,
either pay the Tax claimed and xxx for a refund where applicable Law
permits such refund suits or contest the Tax Claim in any permissible
manner at its sole expense. Seller shall, within thirty (30) days of
receipt of a Tax Notice with respect to a Tax Claim (the "Tax Notice
Period"), notify Buyer in writing of its intention to control and conduct
the proceedings and negotiations in connection with such Tax Claim. In the
event that Seller does notify Buyer of its intention to control and conduct
the proceedings and negotiations in connection with any Tax Claim as
provided above, Buyer shall have the right to fully participate in such
proceedings and negotiations (including, without limitation, with counsel
of its choice), at its sole expense, and Seller shall fully cooperate with
Buyer in connection with such participation. If Seller does not deliver to
Buyer within the Tax Notice Period written notice that it will control and
conduct the proceedings and negotiations in connection with such Tax Claim,
Buyer may control, or cause the applicable Group Member to control, and
conduct such proceedings and negotiations in such manner as it may deem
reasonably appropriate. In the event that Seller does not exercise its
right to control and conduct the proceedings and negotiations in connection
with any Tax Claim as provided above, Seller shall have the right to fully
participate in such proceedings and negotiations (including, without
limitation, with counsel of its choice), at its sole expense, and Buyer
shall, and shall cause each Group Member to, fully cooperate with Seller
and its accountants and other representatives in connection with such
participation, and in all cases Buyer shall keep Seller fully informed as
to all matters concerning such Tax Claim and shall promptly notify Seller
in writing of any and all significant developments relating thereto.
Without limiting the provisions hereof, Buyer and each of its respective
Affiliates shall (and Buyer shall cause the Group Members to) fully
cooperate with Seller in contesting any Tax Claim controlled by Seller
pursuant to this Section 7.3(f)(ii), which cooperation shall include,
without limitation, the
-30-
retention and (upon Seller's request) the provision to Seller of records
and information which are relevant to such Tax Claim, and making officers
and employees available on a timely and mutually convenient basis to
provide additional information or explanation of any material provided
hereunder or to testify at proceedings relating to such Tax Claim.
(iii) Notwithstanding anything to the contrary contained herein,
in no event shall Buyer or any Group Member settle or otherwise compromise
any Tax Claim without Seller's prior written consent which may not be
unreasonably withheld.
(g) Seller shall be entitled to any net refunds of Income Taxes with
respect to a Group Member for any period or portion hereof that begins prior to
the Closing Date and ends on or before the Closing Date (whether or not such
period or portion thereof ends for applicable Income Tax purposes on or before
Closing Date), except to the extent such refund arises as the result of a
carryback of a loss or other Tax benefit from a period after the Closing Date.
Seller or its Affiliates may amend any Tax Return of Seller or any Group Member
for any period that ends, for applicable Income Tax purposes, on or before the
Closing Date without the prior written consent of Buyer; provided, however, that
-------- -------
Seller shall not take any action that would have the effect of increasing the
Taxes of any Group Member for any taxable period (or portion thereof) beginning
after the Closing Date, in which event Buyer's prior written consent shall be
required, which consent shall not be unreasonably withheld or delayed. In no
event shall Buyer's written consent be required to amend any Tax Return which is
required by Law following resolution of a Tax dispute. Neither Buyer not any
Group Member shall amend, or take any similar action with respect to, any Tax
Return filed by Seller or by any Group Member with respect to any period that
ends, for applicable Income Tax purposes, on or before the Closing Date without
the prior written consent of Seller; provided that the foregoing shall not apply
to any amended Tax Return which may be required by Law following resolution of a
Tax dispute conducted in accordance with this Agreement. Buyer shall or shall
cause the Company to forward to Seller any refund of Income Taxes of the Company
pursuant to this subsection (g) within five (5) business days after such refund
is received (or reimburse Seller for any credit within five (5) business day
after the credit is allowed or applied against other Tax liability).
Notwithstanding the foregoing, the control of the prosecution of a claim for a
refund of Taxes paid pursuant to a deficiency assessed subsequent to the Closing
Date as a result of an audit shall be governed by the provisions of Section
7.3(f) hereof.
-31-
7.4 Action by the Parties.
---------------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties hereto will use its best efforts to take or cause
to be taken all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable Law or otherwise to consummate and make
effective in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including without limitation (i) the obtaining
of all necessary actions and non-actions, waivers and consents, if any, from any
Governmental Body, the making of all necessary registrations or the taking of
all reasonable steps as may be necessary to obtain an approval or waiver from,
or to avoid an action or proceeding by, any Governmental Body; (ii) the
obtaining of all necessary consents, approvals or waivers from any other Person;
(iii) the defending of any investigation, action, suit or other legal
proceeding, whether judicial or administrative, challenging this Agreement, or
the consummation of the transactions contemplated hereby; (iv) causing all the
conditions described in Articles 3 and 4, as applicable, to be satisfied; and
(v) the execution of all additional instruments necessary to consummate the
transactions contemplated by this Agreement.
(b) Seller shall cause the Company to comply with its obligations
under this Agreement which are to be performed prior to the Closing and Buyer
shall cause the Company to comply with its obligations under this Agreement
which are to be performed after the Closing.
(c) Without limiting the generality of subsection (a) above and
without limiting the condition set forth in Section 4.6 hereof, following
Closing, Buyer shall and shall cause the Company to use their respective best
efforts to cause substitute letters of credit and performance and bid bonds to
be issued in favor of and delivered to the holders of all Bonds which are not
canceled on or prior to the Closing Date.
7.5 Exclusivity.
-----------
(a) From the date hereof until the earlier of the Closing Date or the
termination of this Agreement, Seller shall not, and shall cause the agents,
officers, directors and representatives of the Company and any of their
Affiliates not to, directly or indirectly (i) solicit or initiate the submission
of proposals or offers from any Person for, (ii) participate in any discussions
or negotiate any terms pertaining to, or (iii) provide any nonpublic information
to any other Person, with respect to or in furtherance of, any proposal for a
merger or business combination involving, or acquisition of any interest in, or
(except in the ordinary course of business) sale of assets by, the Company,
except for the acquisition of the Shares by Buyer.
(b) From the date hereof until the earlier of the Closing Date or the
termination of this Agreement, Seller shall not and shall cause the agents,
officers, directors and representatives of the Company and any of their
Affiliates not to disclose Confidential Information (as defined in Section
7.6(c) hereof) relating to the business of the Company to any Person other than
as required by applicable Law, in order to enforce its rights hereunder, to
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auditors, counsel and other representatives, as may be compelled in any action
or suit, and to Governmental Bodies.
7.6 Restrictive Covenants.
---------------------
(a) Seller covenants that for the five (5) year period beginning on
the Closing Date, it will not, directly or indirectly, own, manage, operate,
join, control, finance or participate in the ownership, management, operation,
control or financing of, or be connected as a partner, principal, agent,
representative, consultant, employee or otherwise with any business or
enterprise engaged directly or indirectly within any portion of the United
States or Canada in the Business. It is recognized by Buyer and by Seller that
the Business is and is expected to continue to be conducted throughout the
United States and Canada and that more narrow geographical limitations of any
nature on this non-competition covenant (and the non-solicitation covenant set
forth in Section 7.6(b) hereof) are therefore not appropriate. The foregoing
restriction shall not be construed to prohibit the ownership by Seller as a
passive investment, of not more than five percent (5%) of any class of
securities or other ownership interests of any Person which is engaged in any of
the foregoing businesses having a class of securities or other ownership
interests registered pursuant to the Securities Exchange Act of 1934.
(b) Seller further covenants that for a five (5) year period
beginning the Closing Date, it will not, either directly or indirectly, solicit
the employment of any person who is currently employed in a managerial capacity
by the Company on a full or part-time basis, and who is so employed at the time
of such solicitation.
(c) Seller recognizes and acknowledges that by reason of Seller's
ownership of the Company it has had access to confidential information relating
to the Business including without limitation, information and knowledge
pertaining to products and services offered, innovations, designs, ideas, plans,
trade secrets, proprietary information, advertising, distribution and sales
methods and systems, sales and profit figures, customer and client lists, and
relationships with dealers, distributors, wholesalers, customers, clients,
suppliers and others who have business dealings with the Business ("Confidential
Information"). Seller acknowledges that such Confidential Information is a
valuable and unique asset and covenants that it will not use or disclose any
such Confidential Information after the Closing Date to any Person for any
reason whatsoever, unless such information (a) is in the public domain through
no wrongful act of Seller, (b) has been rightfully received by Seller from a
third party without restriction and without breach of this Agreement, (c) is
disclosed to any Governmental Body or (d) is required to be disclosed by Law.
(d) Seller acknowledges that the restrictions contained in this
Section 7.6 are reasonable and necessary to protect the legitimate interests of
Buyer, and that any violation will result in irreparable injury to Buyer and the
Company.
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Seller agrees that Buyer and the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, which rights shall be cumulative and in addition to any other
rights or remedies to which Buyer may be entitled. In the event that any of the
provisions of this Section 7.6 should ever be adjudicated to exceed the time,
geographic, product or service, or other limitations permitted by applicable Law
in any jurisdiction, then such provisions shall be deemed reformed in such
jurisdiction to the maximum time, geographic, product or service, or other
limitations permitted by applicable law.
(e) The covenants set forth in this Section 7.6 shall be binding
upon the successors and assigns of substantially all of the assets of Seller,
except that, in the event of any such transaction, the foregoing shall not
prohibit any such successor or assignee from continuing any of its then existing
businesses.
7.7 Maintenance of Salespeople. Prior to the Closing Date, Seller agrees
--------------------------
to, and agrees to cause the Company to, use their respective commercially
reasonable efforts (which shall not include the payment or agreement to pay
money or to institute or increase compensation or other benefits) to maintain
employment of all salespeople employed by the Company as of the date hereof. In
the event a salesperson or officer leaves the employ of the Company for any
reason, Seller shall notify Buyer within three (3) business days of such
person's separation of employment from the Company or within three (3) business
days of the Company or Seller receiving written notice of such salesperson's
intent to leave the employ of the Company (and, in any event, prior to the
Closing if such termination occurs prior to the Effective Time).
7.8 Labor Relations. Buyer hereby agrees to defend and indemnify Seller
---------------
Indemnitees, and to hold each Seller Indemnitee harmless, from and against all
Losses, which are sustained or incurred by any Seller Indemnitee by reason of or
in connection with any claim, proceeding or suit brought against any Seller
Indemnitee under the Worker Adjustment Retraining and Notification Act, or any
local, state, federal or foreign law, which relates to actions taken by Buyer or
any Group Member at any time after the Closing with regard to any site of
employment or one or more facilities or operating units within any site of
employment of any Group Member.
7.9 Access to Information.
---------------------
(a) Without limiting the generality of Section 7.3(c), for a period
of six years from the Closing Date, Buyer shall (and shall cause each of the
Group Members to), during normal business hours and upon reasonable advance
notice, make available and provide Seller and its representatives (including,
without limitation, counsel and independent auditors) with access to the
facilities and properties of each of the Group Members and to all information,
files, documents and records (written and computer) relating to any Group Member
or any of its businesses or operations for any and all periods prior to or
including the Closing Date which Seller (or any Affiliate) requires with respect
to any reasonable business purpose (other than competing with the Company or
soliciting employees of the Company after the end of the five year restrictive
period), and shall (and shall cause each of the Group Members to) cooperate
fully with Seller and
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its representatives (including, without limitation, its counsel and independent
auditors) in connection with the foregoing, including, without limitation, by
making tax, accounting and financial personnel and other appropriate employees
and officers of each Group Member available to Seller and its representatives
(including, without limitation, counsel and independent auditors). Without
limiting the requirements of Section 7.3(c) and Section 7.13, during such six
year period, Buyer shall retain all information, files, documents and records
relating to the Group Members using the same document retention policies that it
applies to its own similar information, files, documents and records.
(b) Without limiting the generality of Section 7.3(c), Section 7.9(a)
or Section 7.13, from and after the Closing Date, Buyer shall (and shall cause
each of the Group Members to) fully cooperate with and assist, and shall cause
its officers and employees (and the officers and employees of the Group Members)
to fully cooperate with and assist, Seller and its representatives (including,
without limitation, its counsel and independent auditors), in connection with:
(i) the preparation of the Group Members' (or any Group
Member's) portion of any Federal consolidated Income Tax Return, and of any
state consolidated, combined or unitary Income Tax Return, for any period
for which Seller is required to prepare such Tax Returns pursuant to
Section 7.3(b)(A), and to that end Buyer shall cause the Group Members to
prepare for and to deliver to Seller, within thirty (30) days following the
Closing Date, that portion of Seller's Federal consolidated Income Tax
Returns or Seller's state consolidated, combined or unitary Income Tax
Returns for any period for which any Group Member is included thereon which
relates to the Group Members and the Group Members' income, gains, losses,
deductions and credits for any such period and shall cause the officers and
employees of the Group Members to cooperate and assist Seller in Seller's
review and verification of the same;
(ii) any Tax audit, examination or proposed or final assessment
or the like relating to Seller, the Group Members (or any Group Member);
(iii) the preparation of any financial statements of the Group
Members (or any Group Member) for (or including) any period (or portion
thereof) ending on or before the Effective Time, and to that end Buyer
shall cause each Group Member to prepare for and to deliver to Seller any
financial information of the type historically prepared by any Group Member
for all periods (or portions thereof) ending on or before the Effective
Time and to cause the officers and employees of any Group Member to fully
cooperate and assist Seller in its review and verification of the same;
(iv) the preparation of the Closing Balance Sheet and the
calculation of the Closing Date Net Working Capital;
(v) providing factual information regarding the operation of
the Company prior to the Effective Time in connection with any disputes
under this Agreement, including, without limitation, any disputes under
Sections 1.3 and 7.3(b) hereof; or
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(vi) the investigation, prosecution or defense of or response to
any actions, claims or inquiries commenced by any Buyer Indemnitee, or by
any Governmental Body or any other Person (including arising out of matters
set forth in Section 9.1 hereof), against Seller (or any other Seller
Indemnitee or any Affiliate thereof) or against Buyer (or any other Buyer
Indemnitee), or by Seller (or any Affiliate thereof) against Buyer (or any
other Buyer Indemnitee).
(c) The cooperation and assistance of Buyer and the Group Members and
their respective officers and employees under this Section 7.9 shall be rendered
during normal business hours and in a manner which does not materially disrupt
the business and operations of the applicable Group Member, and Buyer shall use
its best efforts in the case of the preparation of any Tax Return and any
financial statement, to cause such cooperation and assistance to be rendered
without adverse consequences to Seller during the period that each of the Group
Members has normally assisted Seller in the preparation of Tax Returns and
financial statements. Seller shall reimburse Buyer and the Group Members for
any extraordinary actual out-of-pocket expenses incurred by them in the
preparation of any such Tax Returns and any such financial statement (however,
such obligation shall not extend to any reimbursement of any cost or expense for
time spent by officers or employees of the Group Members or Buyer in the
assistance or preparation thereof, any administrative overhead of any Group
Members or Buyer or any accounting or other ordinary course fees and expenses).
7.10 Insurance Matters.
-----------------
(a) (i) Buyer and each Group Member acknowledge and agree that,
effective on December 31, 1999, coverage under all health and medical insurance,
plans or programs sponsored or maintained by Seller or any Affiliate thereof
(other than the Group Members) for all Employees, Former Employees and their
Beneficiaries as applied to any and all of the Group Members (collectively, the
"Seller's Health Plan") shall terminate and be of no further force or effect;
(ii) Any expense incurred by an Employee, Former Employee or
Beneficiary prior to the Effective Time that would have been covered under
Seller's Health Plan shall continue to be the responsibility of Seller. From
and after the Effective Time, Buyer shall cause the Group Members to pay to
Seller any premium or other charges due in respect of coverage of Employees,
Former Employees or Beneficiaries under Seller's Health Plan through the
Effective Time within thirty (30) days after receipt of an invoice or statement
relating to the same. The amount of such premiums and charges shall be
calculated in accordance with Seller's and the Group Members' prior practices
regarding such premiums and charges. Buyer agrees to notify all Employees,
Former Employees and their Beneficiaries of the manner in which pre-Effective
Time expenses under Seller's Health Plan are to be submitted for reimbursement
and to request that all such expenses be submitted within sixty (60) days after
the Closing Date;
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(iii) During the period from the Effective Time and until
December 31, 1999 (the "Continuation Period"), Seller shall continue coverage
for Employees under Seller's Health Plan; provided, however, during the
-------- -------
Continuation Period, any such coverage shall be determined without the benefit
of stop loss protection and excess insurance (in either case except to the
extent Seller is actually reimbursed by an insurance carrier) or internal
pooling arrangements. Buyer shall or shall cause the Company to reimburse Seller
for all of the costs (including, for so long as applicable beyond the
Continuation Period, run-out and benefits coverage continuation provided
pursuant to Part 6 of Subtitle B of Title I of ERISA and/or Section 4980B of the
Code) of this continued coverage for covered expenses incurred by Employees
after the Effective Time in excess of the Premium Credit Amount by remitting to
Seller promptly upon being invoiced for the applicable premiums, premium
equivalents, losses and charges and reconciliation items that it was remitting
for such coverages immediately prior to the Closing Date; provided, however,
-------- -------
that any such amount shall be determined without the benefit of stop loss
protection and excess insurance (in either case except to the extent Seller is
actually reimbursed by an insurance carrier) or internal pooling arrangements.
Seller shall remit to Buyer any associated reconciliation amount in Buyer's
favor that was not credited against amounts owned. Neither Buyer nor the Group
Members shall have any obligation to Seller to provide any employee benefits
after December 31, 1999.
(iv) Buyer and each Group Member acknowledge and agree that,
effective as of the Effective Time, coverage for all Employees, Former Employees
and their Beneficiaries under all life insurance, disability, AD&D or any other
welfare or benefit plans or programs sponsored or maintained by Seller as
applied to any and all of the Group Members shall terminate and be of no further
force or effect.
(b) From and after the Effective Time, (i) the Group Members shall
cease to be covered with respect to any event or occurrence after the Effective
Time under all insurance policies covering any Group Member and (ii) with
respect to any event or occurrence prior to the Effective Time, the Group
Members shall, subject to the terms and conditions of such policies, continue to
be entitled to the benefits thereof.
(c) Buyer shall cause the Group Members to pay to Seller from time to
time any and all Retro-Premium Insurance Amounts within thirty (30) days after
receipt by Buyer of an invoice from Seller that Seller has paid Retro-Premium
Insurance Amounts other than in respect of matters for which Seller indemnifies
Buyer pursuant to Section 9.1(d) or 9.1(e) hereof. Buyer shall cause the Group
Members to promptly notify Xxxxxxxxx Planning and Seller of any claims which
would be subject to any insurance coverage maintained by Seller or any of its
Affiliates (other than any Group Member) for the benefit of any Group Member and
based on events or occurrences on or prior to the Closing Date, and shall cause
the Group Members to keep Xxxxxxxxx Planning and Seller advised of the status
(and any developments regarding) of any such claims, and to cooperate with
Xxxxxxxxx Planning and Seller and any insurance carrier in connection with the
investigation and defense of any such claims, all in accordance and
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consistent with the standard practices and procedures established from time to
time by Xxxxxxxxx Planning and Seller or any such insurance carrier.
(d) No covenant or agreement by any party hereto to indemnify any
other party hereto shall release, or be deemed to release, any insurer or other
indemnitor of any Losses which might be the basis for any Indemnification
Matter.
(e) Effective as of the Closing Date, Seller shall remain
responsible under Seller's Health Plan in respect of Former Employees under
Seller's Health Plan for benefits coverage continuation provided pursuant to
Part 6 of Subtitle B of Title I of ERISA and/or Section 4980B of the Code and
for post-retirement medical benefits.
7.11 Certain Agreements. Seller shall retain full responsibility for any
------------------
obligation of any Group Member to pay (i) any bonus, special or incentive
compensation, whether presently due or due after the Closing (other than all
salary continuation obligations), that in any case is related in any way to or
affected by the transactions contemplated hereunder and (ii) any payments owing
under the Phantom Stock Plan. At Seller's request, Buyer shall cause the
Company to pay such compensation. Seller shall promptly pay Buyer the amount
paid by the Company or its Affiliates, including any employer portions of Taxes
arising from such payments, net of any Tax benefits to be realized by the
Company or Buyer with respect to all such payments, to the extent that such Tax
benefits were not taken into account in a Seller Tax Period in the calculation
of Federal Income Taxes. The parties acknowledge and agree that the Company, as
a subsidiary of Seller, shall be entitled to deduct amounts paid under the
Phantom Stock Plan for Federal Income Tax purposes in respect of Seller Tax
Periods, irrespective of whether any such amounts are paid after the Closing
Date, such that Seller shall receive the benefit of any such deductions.
7.12 Checking Accounts. Seller hereby agrees to pay and be solely
-----------------
responsible for any check presented after the Closing Date on the accounts set
forth on Schedule 7.12 (the "Retained Accounts") or which was outstanding as of
the Closing Date but not included in the liabilities on the Closing Balance
Sheet. Buyer hereby agrees not to (and to cause each Group Member not to) write
any additional checks after the Closing Date on any of the Retained Accounts.
Seller hereby agrees not to write any additional checks on any account of a
Group Member after the Closing Date, except for the Retained Accounts. Seller
shall promptly either close the Retained Accounts or transfer ownership thereof
from the applicable Group Member to Seller.
7.13 Covered Matters.
---------------
(a) (i) It is understood and agreed by Buyer and each Group Member
that the Group Members are the owners of, and entitled to the benefits under,
certain insurance policies (the "Insurance Policies"), which Insurance Policies
cover claims and other matters which may be the subject of the indemnification
by Seller of Buyer Indemnities for asbestos claims and other product liability
claims as set forth in Section 9.1(d) and Section 9.1(e) hereof (the "Covered
Matters").
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(ii) Notwithstanding Section 9.6 hereof, Buyer and each Group
Member agree that, from and after the Closing Date, Seller shall have the sole
and exclusive right, exercised in its sole discretion, to assume and direct the
control of, and to conduct, prosecute and defend, all matters relating to or
arising out of the Insurance Policies and the Covered Matters. Seller's rights
referred to in the immediately preceding sentence shall include, without
limitation, the exclusive right, in its sole discretion, to (i) control and
conduct any and all proceedings, negotiations, settlements and related
activities in connection with the Insurance Policies and the Covered Matters,
(ii) retain (and dismiss) legal counsel and other advisors with respect thereto
as it deems necessary or appropriate, (iii) direct, control and conduct any and
all investigations, tests and studies, (iv) xxx in the name of and on behalf of
each of the Group Members to enforce rights against the insurers under the
Insurance Policies, whether at law, in equity or otherwise, and (v) to take all
such other actions as may be necessary or appropriate, in Seller's sole
discretion, in connection with the Insurance Policies and the Covered Matters.
(iii) In the event that, for any reason, Seller is unable to
execute or enforce any of the rights and remedies under this Section 7.13, Buyer
and each of the Group Members shall, promptly at the request and at the sole
expense of Seller, take any and all actions necessary or appropriate for Seller
to obtain the full benefit of such rights and remedies.
(b) Buyer, each Group Member and Seller agree that, effective at the
Effective Time, each Group Member hereby sells, assigns and transfers to Seller
any and all rights, entitlements and benefits, and any and all remedies that
each Group Member may have at law, in equity or otherwise, with respect to and
under (i) the Insurance Policies and the Covered Matters, (ii) all proceeds from
all Insurance Policies, which proceeds may be applied by Seller in its sole
discretion, including, but not limited to, to satisfy or discharge judgments,
settlements and defense costs and expenses, (iii) each Group Member's right to
direct and to xxx (whether at law, in equity or otherwise and whether for
declaratory judgment or otherwise) the insurers under the Insurance Policies,
all in the name and on behalf of the applicable Group Member (including, without
limitation, in order to enforce the coverages under the Insurance Policies) and
(iv) all attributes and incidents of ownership and coverage under each of the
Insurance Policies, all as shall be necessary or appropriate to obtain the
benefit of the Insurance Policies in respect of the Covered Matters. Without
limiting the generality of the foregoing, the rights and remedies referred to in
the immediately preceding sentence, shall include, without limitation, all
rights, remedies, benefits and entitlements under all of the Insurance Policies,
and any and all proceeds thereunder, maintained by or for the benefit of Group
Members covering (in whole or in part) any costs, expenses, settlements, damages
or other amounts relating to or arising out of any of the Covered Matters.
Buyer and each Group Member hereby agree that, in the event that Buyer or any
Group Member shall receive any proceeds from any of the Insurance Policies in
respect of a Covered Matter, such proceeds shall promptly be remitted and paid
to Seller, as Seller's sole and exclusive property. In the event that,
notwithstanding the foregoing, any such proceeds are retained by Buyer or any of
the Group Members, it is understood and agreed that such retention
-39-
shall constitute indemnification by Seller of the Buyer Indemnities in respect
of Covered Matters under Section 9.1 hereof.
(c) Without limiting the generality of Sections 7.3 or 7.9 hereof,
from and after the Closing Date, Buyer and each of the Group Members shall fully
cooperate with and assist, and shall cause their respective officers and
employees to fully cooperate with and assist, Seller, the insurers under the
Insurance Policies and their respective representatives (including without
limitation, counsel) in connection with the Insurance Policies and the Covered
Matters. Such cooperation shall include, but not be limited to, at Seller's
request and at its sole expense (i) providing during normal business hours
officers and employees of the Group Members as witnesses and as sources of
information, (ii) providing access to and copies of such documents, financial
records and other information in the possession of the Group Members as Seller
deems necessary or appropriate in the conduct of the matters contemplated by
this Section 7.13 or which otherwise impact on or otherwise affect the Covered
Matters (including, without limitation, all computer sales records, original
vendor cards, product catalogs, sample boards and salesmen's records), (iii) as
necessary, executing and delivering pleadings, interrogatories and other court
papers and (iv) providing prompt notice to Seller (and at Seller's request
appropriate insurers and counsel) of the receipt by any Group Member of service
of process and any other written materials with respect to the Insurance
Policies or the Covered Matters.
(d) Notwithstanding anything to the contrary contained herein,
effective at the Effective Time, the Group Members hereby sell, assign and
transfer to Seller all handwritten ledger sheets/schedules showing prepaid
insurance during the period December 1948 through December 1966. Buyer and each
of the Group Members acknowledge and agree that possession of the foregoing
documents shall be transferred to Seller on or prior to the Closing Date.
7.14 Assignment of Claims. After the Closing Date, to the extent that any
--------------------
applicable Group Member has a claim against a Person, which claim is based on an
Indemnification Matter pursuant to Sections 9.1(c), 9.1(d) or 9.1(e), such
applicable Group Member hereby assigns to Seller such Group Member's right,
title and interest in and to such claim that such Group Member has against such
Person up to the amount incurred by Seller and its Affiliates in connection with
the defense of such claim and the amount of the indemnification by Seller of
Buyer Indemnities under such Sections.
7.15 Accounts Receivable.
-------------------
(a) Following the 150th day after the Closing Date, Buyer shall send to
Seller notice signed by its President or Chief Financial Officer of the amount
(the "Uncollected Amount") of the accounts receivable of the Company arising
prior to the Closing Date which have not been collected (the "Receivables
Notice") if the Uncollected Amount is in excess of the reserve for bad debt set
forth on the Closing Balance Sheet. Upon the delivery of the Receivables
Notice, Buyer shall have the option, but not the obligation, to sell to Seller,
in which event Seller shall purchase, the accounts receivable of the Company
arising prior to the Closing Date which have
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not been collected (the "Uncollected Accounts") from the Company. In the event
that Buyer exercises its option to sell the Uncollected Accounts to Seller
pursuant to this Section, Seller shall pay to Buyer the amount by which the
Uncollected Amount exceeds the reserve for bad debt set forth on the Closing
Balance Sheet in immediately available funds within ten business days of
delivery of the Receivables Notice.
(b) Buyer shall apply all payments from customers which are accounts
receivable as directed by such customer. If the customer fails to direct
payment, the payment will be placed in an open account and the customer will be
telephoned to request direction as to which invoice the payment relates, the
payment shall be credited in accordance with the customer's instructions. In
the absence of direction from the customer after Buyer has requested direction,
payment shall be applied to the oldest account receivable first. Buyer shall
cause the Company to collect all of the accounts receivable of the Company
arising prior to the Closing Date in good faith and in a manner consistent with
the Company's standard collection practices. If a customer asserts that the
sole reason for failure to pay the accounts receivable is an action or omission
of the Company following the Closing, such outstanding accounts receivable shall
not be considered part of the Uncollected Amount.
7.16 Automobile Leases. Reference is made to the motor vehicle leases set
-----------------
forth on Schedule 5.15(f)(2) and Schedule 5.15.(f)(3) (the "Automobile Leases").
Seller shall use commercially reasonable efforts to obtain the consent of the
other contracting party to assign such Automobile Lease to the Company prior to
the Closing Date. In the event that Seller is able to obtain such consent, the
Company shall assume the liabilities and obligations of Seller arising or to be
performed under such Automobile Leases. In the event that Seller is unable to
obtain such consent, Seller shall not terminate the Automobile Leases and the
Company will make the payments under the Automobile Leases and insure the
automobiles and otherwise abide by the terms of the Automobile Leases.
8. Conduct of the Company's Business Prior to the Closing.
------------------------------------------------------
8.1 Operation in Ordinary Course. Between the date of this Agreement and
----------------------------
the earlier to occur of the termination of this Agreement and the Closing Date,
the Company shall, and Seller shall cause the Company to, conduct its businesses
in all material respects in the ordinary course and consistent with past
practice.
8.2 Business Organization. Between the date of this Agreement and the
---------------------
earlier to occur of the termination of this Agreement and the Closing Date, the
Company shall use commercially reasonable efforts (which shall not include the
payment or agreement to pay money or to institute or increase compensation or
other benefits) and Seller shall cause the Company to use commercially
reasonable efforts, to (a) preserve substantially intact the business
organization of the Company and keep available the services of the present
officers and employees of the Company, and (b) preserve in all material respects
the present business relationships of the Company.
-41-
8.3 Corporate Organization. Between the date of this Agreement and the
----------------------
earlier to occur of the termination of this Agreement and the Closing Date,
Seller shall not cause or permit any amendment of the certificate of
incorporation or by-laws (or other governing instrument) of the Company, and the
Company shall not and Seller shall cause the Company not to:
(a) issue, sell or otherwise dispose of any equity securities of the
Company or any of its subsidiaries, or create or suffer to be created any
Encumbrance thereon, or create, sell or otherwise dispose of any options,
rights, conversion rights or other agreements or commitments of any kind
relating to the sale or disposition of any equity securities of the Company or
any of its subsidiaries;
(b) reclassify, split up or otherwise change any of its equity
securities;
(c) grant any general increase in the rates of pay of its hourly-paid
employees, grant any increase in the salary or other compensation of any of its
officers or other salaried employees or grant any bonuses of any kind to any of
its employees, except, in any case, pursuant to existing compensation, bonus and
incentive plans and policies;
(d) be party to any merger, consolidation or other business
combination;
(e) sell, lease, license or otherwise dispose of any of its
properties or assets (including without limitation, rights with respect to any
Intellectual Property or other proprietary rights), except in the ordinary
course of business;
(f) organize any new subsidiary or acquire any equity securities of
any Person or any equity or ownership interest in any business; or
(g) commit to do any of the foregoing.
8.4 Other Restrictions. Between the date of this Agreement and the
------------------
earlier to occur of the termination of this Agreement and the Closing Date, the
Company shall not, and Seller shall cause the Company not to:
(a) except for intercompany borrowings and/or loans with, to or from
Seller and its Affiliates, borrow any funds or otherwise become subject to,
whether directly or by way of guarantee or otherwise, any indebtedness for
borrowed money;
(b) except for Permitted Liens, create any material Encumbrance on
any of its material properties or assets;
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(c) create or materially modify, except as noted in the Schedules to
this Agreement, any bonus, deferred compensation, pension, profit sharing,
retirement, insurance, stock purchase, stock option, or other fringe benefit
plan, arrangement or practice or any other employee benefit plan (as defined in
Section 3(3) of ERISA);
(d) terminate the employment of any officer, salesperson or other key
employee of the Company for any reason or permit any such employee to resign
from the Company, in any case, without giving notice to Buyer within three (3)
business days after, as applicable, such termination or receiving written notice
of (i) such termination or resignation or (ii) such employee's intention to
terminate employment or resign;
(e) make any capital expenditure or acquire any property or assets
(other than inventory, raw materials and supplies) for a cost in excess of
$50,000 in any one case or $100,000 in the aggregate;
(f) enter into any agreement that materially restricts the Company or
any of its subsidiaries from carrying on its business;
(g) pay, discharge or satisfy any material claim, liability or
obligation, absolute, accrued, contingent or otherwise, other than the payment,
discharge or satisfaction in the ordinary course of business;
(h) cancel or waive any material claims or rights;
(i) exercise any material right or option under any Real Property
Lease or extend or renew any Real Property Lease;
(j) enter into any amendment, modification, waiver, termination,
assignment, mortgage or hypothecation of any Real Property Lease or sublet or
encumber all or any portion of any Leased Real Property;
(k) acquire or purchase any interest in real property, including,
without limitation, fee and leasehold interests;
(l) sell, dispose of, transfer, mortgage, hypothecate or encumber all
or any portion of the Owned Real Property; or
(m) open any additional checking or money market accounts other than
the Retained Accounts.
8.5 Real Property Rights Clarification. On or prior to the Closing Date,
----------------------------------
Seller shall deliver or cause to be delivered to Buyer executed satisfaction or
discharges in recordable form of all mortgages which encumber the Owned Real
Property or any lease of any Real Property.
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9. Indemnification.
---------------
9.1 Indemnification by Seller. Subject to the limitations contained in
-------------------------
this Section 9, after the Closing Date, Seller shall indemnify Buyer, its
successors and assigns, and each of their respective directors, officers and
agents (the "Buyer Indemnitees") against and hold each of them harmless from any
and all claims, losses, damages (excluding any consequential damages, punitive
damages and lost profits), fines, penalties, liabilities and expenses
(including, without limitation, remediation or clean up costs, settlement costs
and any legal, accounting and other expenses for investigating or defending any
actions or threatened actions, or in asserting, preserving or enforcing any
indemnification rights hereunder) ("Losses") incurred by such Buyer Indemnitee
in connection with or arising out of each and all of the following:
(a) any breach of any representation or warranty made by Seller in
this Agreement (except with respect to clause (c) of the definition of Permitted
Liens and except with respect to Sections 5.7, 5.13(i) and 5.31 (in each case,
which shall retain any materiality or Material Adverse Effect qualifier
contained therein), without regard to any materiality or Material Adverse Effect
qualifier contained therein);
(b) any breach of any covenant, agreement or obligation of Seller to
be performed after the Closing Date contained in this Agreement or any other
certificate or document delivered pursuant to this Agreement;
(c) any liability to a Governmental Body arising out of unredeemed
credits for merchandise returned prior to the Closing in excess of the reserve
therefor on the Closing Balance Sheet;
(d) any asbestos claims arising out of the sale of products by the
Company prior to the Closing Date to the extent not actually paid by insurance;
(e) any product liability claims arising out of occurrences occurring
prior to the Closing Date and arising out of the sale of products by the Company
prior to the Closing Date to the extent not actually paid by insurance;
(f) any liability for Federal Income Taxes of any Group Member,
including but not limited to under Treasury Regulation Section 1.1502-6, with
respect to any Seller Tax Period. For purposes of this Agreement, all Federal
Income Taxes with respect to any Group Member shall be apportioned between the
Seller Tax Period and the period beginning the day after the Closing Date, as
though the taxable year of the Group Member terminated on the Closing Date;
(g) any liability arising under the Management Agreement or the
Phantom Stock Plan; and
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(h) any liability for the occurrence of workers compensation claims
occurring prior to the Closing Date to the extent exceeding the reserve for
workers compensation claims on the Closing Balance Sheet.
9.2 Indemnification by Buyer. Subject to the limitations contained in
------------------------
this Section 9, after the Closing Date, Buyer shall indemnify and hold harmless
Seller, its successors and assigns, and each of their respective employees,
directors, officers, stockholders and agents (the "Seller Indemnitees") against
and hold each of them harmless from any and all Losses incurred by such Seller
Indemnitee in connection with or arising out of each and all of the following:
(a) any breach of any representation or warranty made by Buyer in
this Agreement or in any certificate, schedule or exhibit delivered pursuant
hereto;
(b) the breach of any covenant, agreement or obligation of Buyer's or
the Company (to be performed after the Closing), contained in this Agreement or
any certificate or document delivered pursuant to this Agreement;
(c) any of the Bonds; and;
(d) any of the Automobile Leases.
9.3 Certain Limits On and Provisions Relating to Indemnification.
------------------------------------------------------------
(a) Notwithstanding the foregoing, with respect to any claim by a
Buyer Indemnitee for indemnification under Section 9.1(a) (other than any claims
for any inaccuracy in or breach of Section 5.1(a) or Sections 5.3 or 5.17
(insofar as such Section 5.17 covers Income Taxes)), such Buyer Indemnitee may
not seek indemnification with respect to any claim for Losses until the sum of
all Losses for which such Buyer Indemnitee is seeking indemnification under
Section 9.1(a) equals or exceeds $425,000 and then only for such excess. The
maximum aggregate amount recoverable from Seller with respect to any Losses in
connection with claims by a Buyer Indemnitee for indemnification under Section
9.1(a) (other than claims for any inaccuracy in or breach of Section 5.1(a) or
Sections 5.3 or 5.17) shall not exceed $25,000,000. For purposes of calculating
the amount of Losses for which a Buyer Indemnitee or Seller Indemnitee may be
entitled, only Losses in excess of $5,000, individually, shall be considered.
(b) Notwithstanding anything to the contrary contained herein, no
Buyer Indemnitee shall be entitled to indemnification for any Losses to the
extent that the Losses incurred or sustained by a Buyer Indemnitee are reflected
on the Closing Balance Sheet as a current liability and are included in the
calculation of Closing Date Net Working Capital.
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9.4 Procedure for Claims.
--------------------
(a) Any Person who desires to seek indemnification under any part of
this Section 9 (each, an "Indemnified Party") shall give written notice in
reasonable detail (a "Claim Notice") to each party responsible or alleged to be
responsible for indemnification hereunder (an "Indemnitor") prior to any
applicable Expiration Date. Such notice shall briefly explain the nature of the
claim and the parties known to be involved, and shall specify the amount of
Losses thereof to the extent then known. If the matter to which a claim relates
shall not have been resolved as of the date of the Claim Notice, the Indemnified
Party shall estimate the amount of the Losses in the Claim Notice, but also
specify therein that the claim has not yet been liquidated (an "Unliquidated
Claim"). If an Indemnified Party gives a Claim Notice for an Unliquidated
Claim, the Indemnified Party shall also give a second Claim Notice within a
reasonable period after the matter giving rise to the claim becomes finally
resolved (the "Liquidated Claim Notice") and the Liquidated Claim Notice shall
specify the amount of the Losses.
(b) If any Indemnitor shall be obligated to indemnify an Indemnified
Party pursuant to this Section 9, such Indemnitor shall pay to such Indemnified
Party the amount to which such Indemnified Party shall be entitled within
fifteen (15) days after the day on which such Indemnitor became so obligated to
the Indemnified Party.
(c) Any Claim Notice shall be considered timely made for the purposes
of this Section 9 if given prior to the termination of the applicable Expiration
Date and in accordance with the notice requirements of Section 11.
9.5 Claims Period. Any claim for indemnification under this Section 9
-------------
shall be made by giving a Claim Notice under Section 9.4 on or before the
applicable "Expiration Date" specified below in this Section 9.5. The following
claims shall have the following respective "Expiration Dates": (a) April 30,
2001 for any claims that are not specified in any of the succeeding clauses; (b)
the date on which the applicable statute of limitations expires for any claim
for Losses related to (i) a breach of any covenant or agreement to be performed
after the Closing Date, (ii) a breach of any representations or warranties of a
party to this Agreement that were made with an intent to mislead or defraud or
with a reckless disregard of the accuracy thereof or (iii) a breach of the
representation and warranty contained in Sections 5.1(a), 5.3 or 5.17; (c) in
perpetuity for any claim for Losses related to or arising under Sections 9.1(c),
9.1(d) or 9.1(e); or (d) the fifth anniversary of the Closing Date for a breach
of the representation and warranty contained in Section 5.19. If more than one
of such Expiration Dates applies to a particular claim, the latest of such
Expiration Dates shall be the controlling Expiration Date for such claim. So
long as an Indemnified Party gives a Claim Notice for an Unliquidated Claim on
or before the applicable Expiration Date, such Indemnified Party shall be
entitled to pursue its rights to indemnification regardless of the date on which
such Indemnified Party gives the related Liquidated Claim Notice.
-46-
9.6 Third Party Claims.
------------------
(a) As soon as is reasonable following the receipt of written notice
of a claim by a third party (a "Third Party Claim"), the party receiving such
Third Party Claim shall send a Claim Notice and, if applicable, a Liquidated
Claim Notice as required pursuant to Section 9.4(a). Failure of the Indemnified
Party to give a Claim Notice of such Third Party Claim to the Indemnitor shall
not relieve the Indemnitor of any liability pursuant to this Section 9 (except
(i) to the extent that the Indemnitor shall suffer actual prejudice thereby or
(ii) if the Claim Notice was sent after the applicable Expiration Date). Except
as hereinafter provided in this Section 9.6, the Indemnified Party shall not,
and the Indemnitor shall, have the right (using counsel reasonably satisfactory
to the Indemnified Party) to contest, defend, litigate or settle such Third
Party Claim which involves (and continues to involve) solely monetary damages;
provided that the Indemnitor shall have notified the Indemnified Party in
writing of its intention to contest, defend or litigate such Third Party Claim
within sixty (60) days of the Indemnified Party having given the Claim Notice to
the Indemnitor (or such shorter period as may be required to file an answer or
take other action to contest the Third Party Claim) and provided further that
the Indemnitor shall diligently contest the Third Party Claim (the condition
being referred to as the "Litigation Condition"). The Indemnified Party shall
have the right to participate in, and to be represented by counsel (at its own
expense) in any such contest, defense, litigation or settlement conducted by the
Indemnitor; provided, however, that the Indemnified Party shall be entitled to
reimbursement therefor after the Indemnified Party shall give written notice to
the Indemnitor of its failure to satisfy the Litigation Condition. In addition,
the Indemnitor may not settle any Third Party Claim seeking specific performance
or other equitable relief by or against the Indemnified Party if the result of
such settlement could have a Material Adverse Effect on the Company.
(b) Except as otherwise provided herein, the Indemnified Party, if it
shall have assumed the defense of any Third Party Claim as provided for in this
Agreement, shall not consent to a settlement of, or the entry of any judgment
arising from, any such Third Party Claim without the prior written consent of
the Indemnitor (which consent shall not be unreasonably withheld or delayed).
The Indemnitor shall not, without the prior written consent of the Indemnified
Party, enter into any compromise or settlement which commits the Indemnified
Party to take, or to forebear to take, any action or which does not provide for
a complete release by such third party of the Indemnified Party. The
Indemnified Party shall have the sole and exclusive right to settle any Third
Party Claim, on such terms and conditions as it deems reasonably appropriate, to
the extent such Third Party Claim involves solely equitable or other non-
monetary relief applicable solely to the Indemnified Party. All expenses
(including, without limitation, reasonable attorneys fees) incurred by the
Indemnitor in connection with the foregoing shall be paid by the Indemnitor. No
failure by an Indemnitor to acknowledge in writing its indemnification
obligations under this Section 9 shall relieve it of such obligations to the
extent they exist.
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(c) If an Indemnified Party is entitled to indemnification against a
Third Party Claim, and the Indemnitor fails to accept a tender of, or assume,
the defense of a Third Party Claim pursuant to this Section 9.6, or if the
Indemnitor fails to meet the Litigation Condition, (i) the Indemnitor shall not
be entitled, or shall lose its right, to contest, defend, litigate and settle
such a Third Party Claim and (ii) the Indemnified Party shall have the right,
without prejudice to its rights of indemnification hereunder, in its discretion
exercised in good faith, to contest, defend and litigate such Third Party Claim,
and may settle such Third Party Claim, either before or after the initiation of
litigation, at such time and upon such terms as the Indemnified Party deems fair
and reasonable, provided that at least three (3) business days prior to any such
settlement, written notice of its intention to settle is given to the
Indemnitor. If, pursuant to this Section 9.6, the Indemnified Party so
contests, defends, litigates or settles a Third Party Claim for which it is
entitled to indemnification hereunder, the Indemnified Party shall be reimbursed
by the Indemnitor for the Losses of contesting, defending, litigating and/or
settling the Third Party Claim which are incurred from time to time, forthwith
following the presentation to the Indemnitor of itemized bills for said Losses.
(d) Without limiting the generality of Section 7.3(c), Section 7.9 or
Section 7.13, Buyer shall cause the employees of the Company to cooperate with
Seller in defending any Third Party Claims in which Seller is the Indemnified
Party or is responsible pursuant to Section 9.1.
9.7 Effect of Investigation or Knowledge.
------------------------------------
(a) Any claim by a Buyer Indemnitee for indemnification shall not be
adversely affected by any investigation by or opportunity to investigate
afforded to Buyer, nor shall such a claim be adversely affected by Buyer's
knowledge on or before the Closing Date of any breach of the type specified in
Section 9 or of any state of facts that may give rise to such a breach. The
waiver of any condition based on the accuracy of any representation or warranty,
or on the performance of or compliance with any covenant or obligation, will not
adversely affect the right to indemnification, payment of Losses or other remedy
based on such representations, warranties, covenants or obligations.
(b) Notwithstanding Section 9.5 or Section 9.7(a) above, with respect
to any claim by Seller or Buyer against the other based upon a breach of any
covenant or agreement of the other herein which is required to be performed on
or prior to the Closing Date (the "Pre-Closing Covenants"), such Pre-Closing
Covenant shall not survive the Closing and the breach thereof shall be deemed to
have been waived by the party for whose benefit such Pre-Closing Covenant
exists; provided, that in the event that such breach has had a Material Adverse
Effect in the case of the Company, or a material adverse effect on Seller in the
case of Seller, and the party who has breached such Pre-Closing Covenant has
taken actions to intentionally conceal the existence of such breach from the
party for whose benefit such Pre-Closing Covenant exists, and provided further
that the party for whose benefit such Pre-Closing Covenant exists has sustained
or incurred Losses that would otherwise constitute an Indemnification Matter
covered by the
-48-
provisions of Sections 9.1 or 9.2, as the case may be, then the applicable Pre-
Closing Covenant shall be deemed to have survived the Closing.
9.8 Losses Net. The amount of Losses for which indemnification is
----------
provided under this Section 9 shall be net of Tax benefits to be received by the
Indemnified Party (assuming payment of the indemnification claim by the
Indemnifying Party), and net of any amounts recoverable by the Indemnified Party
under insurance policies with respect to such Losses.
9.9 Sole and Exclusive Remedy. After the Closing Date, each party hereto
-------------------------
acknowledges and agrees that such party's sole and exclusive remedy with respect
to Losses and any and all other claims relating to the subject matter of this
Agreement and the transactions contemplated hereby (other than disputes arising
under Section 1.3 hereof which disputes shall be resolved as set forth in such
Section and other than pursuant to Sections 7.3(b)(C) and 13.9) shall be in
accordance with, and limited by, the indemnification provisions set forth in
this Section 9 and in Section 12, except with respect to any intentional
misrepresentation, willful breach of representation set forth herein, or fraud
by Seller or Buyer.
10. Termination.
-----------
10.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing by:
(a) The mutual written consent of Buyer and Seller;
(b) Buyer, if the conditions set forth in Section 3 hereof shall not
have been met by December 31, 1999, except if such conditions have not been met
solely as a result of the action or inaction of the party seeking to terminate;
(c) Seller, if the conditions set forth in Section 4 hereof shall not
have been met by December 31, 1999, except if such conditions have not been met
solely as a result of the action or inaction of the party seeking to terminate;
(d) at any time before the Closing, by Buyer or Seller in writing, in
the event that any Governmental Body shall have issued an order, decree, ruling
or taken any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable; or
(e) at any time before the Closing, by either Buyer or Seller in
writing, without liability to the terminating party on account of such
termination, if such terminating party is not then in material breach of this
Agreement and the nonterminating party shall (i) fail to perform in any material
respect its agreements contained herein required to be performed on or prior to
the Closing Date and such nonterminating party has not cured in all material
respects such breach on or prior to December 31, 1999 and such nonterminating
party is diligently
-49-
pursuing such cure; provided that it is understood and agreed that the
nonterminating party shall not have the ability or right to cure a breach of its
obligation to close the transactions contemplated hereby (notwithstanding that
the nonterminating party's conditions to such obligation to close contained in
Sections 3 or 4, as the case may be, have been satisfied or that the terminating
party stands ready, willing and able to satisfy such conditions but for such
breach) or (ii) breach in any material respect any of its representations or
warranties contained herein and such nonterminating party has not cured in all
material respects such breach on or prior to December 31, 1999 and such
nonterminating party is diligently pursuing such cure. Any termination pursuant
to this Section 10.1 (other than a termination pursuant to Section 10.1(a)
hereof) shall be effected by written notice from the party so terminating to the
other parties hereto.
10.2 Effect on Obligations. Termination of this Agreement pursuant to
---------------------
Section 10.1 shall terminate all obligations and liabilities of the parties to
each other hereunder, except for the obligations under Sections 10.3, 12 and 13;
provided that in the event of a termination of this Agreement pursuant to
subsection 10.1(e) above under circumstances where the nonterminating party has
breached its obligation to close the transactions contemplated hereby
(notwithstanding that the nonterminating party's conditions to such obligation
to close contained in Sections 3 or 4, as the case may be, have been satisfied
or that the terminating party stands ready, willing and able to satisfy such
conditions but for such breach), the terminating party may exercise all
available rights and remedies at law.
10.3 Return of Documentation. Following a termination in accordance with
-----------------------
Section 10, Buyer shall return all agreements, documents, contracts,
instruments, books, records, materials and all other information of the Group,
any Group Member or any Affiliate thereof provided by any Group Member, Seller
or by any representative of any Group Member or Seller to Buyer or any
representatives of Buyer in connection with the transactions contemplated by
this Agreement, and Seller shall return all agreements, documents, contracts,
instruments, books, records, materials and all other information of Buyer
provided by Buyer or any representative of Buyer to Seller in connection with
the transactions contemplated by this Agreement.
10.4 Sole and Exclusive Remedy. Prior to the Closing, each party hereto
-------------------------
acknowledges and agrees that such party's sole and exclusive remedy with respect
to Losses and any and all claims for any breach or liability under this
Agreement or otherwise relating to the subject matter of this Agreement and the
transactions contemplated hereby shall be solely in accordance with, and limited
by, Sections 10.1, 10.2 and 13.9 hereof, except with respect to any intentional
misrepresentation, willful breach of the covenants set forth herein or fraud by
Seller or Buyer.
11. Notices. All notices, consents, assignments and other communications under
-------
this Agreement shall be in writing and shall be deemed to have been duly given
when (a) delivered by hand, (b) sent by telecopier (with receipt confirmed), (c)
three (3) business days after being sent by registered mail, return receipt
requested, or (d) one (1) business day after being sent by recognized overnight
delivery service, in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate as to itself by notice to the other parties).
(a) If to Buyer:
Wilmar Industries, Inc.
000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Telecopy: (000) 000-0000
With a copy to:
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(b) If to Seller:
The Xxxxx-Xxxxxxx-Xxxxx Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Telecopy: (000) 000-0000
With a copy to:
Xxxx Xxxxxx
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Cost, Esq.
Telecopy: (000) 000-0000
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12. Brokers and Finders.
-------------------
12.1 Seller's Obligations. Neither Buyer nor any Group Member shall have
--------------------
any obligation to pay any financial advisory, finder's fee or other compensation
to any Person claiming by, through or under Seller or any Group Member in
connection with the sale of the Shares contemplated by this Agreement and the
transactions contemplated herein, and Seller hereby agrees to defend, indemnify
and hold Buyer harmless from any Losses sustained or incurred by Buyer by reason
of any such claim for any such fee or other compensation.
12.2 Buyer's Obligations. Seller shall not have any obligation to pay any
-------------------
financial advisory, finder's fee or other compensation to any Person claiming
by, through or under Buyer (or any Affiliate thereof) in connection with this
Agreement and the transactions contemplated herein, and Buyer hereby agrees to
defend, indemnify and hold Seller harmless from any Losses sustained or incurred
by Seller by reason of any such claim for any such fee or other compensation.
It is understood and agreed that Buyer shall be solely responsible for the fees
and the expenses of Xxxxxx Xxxxxxxx & Company and Xxxxxxx Xxxxx & Company, LLC
in connection with this Agreement and the transactions contemplated hereby.
13. Miscellaneous.
-------------
13.1 Expenses. Each party shall bear its own expenses incident to the
--------
preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder.
13.2 Captions; Section References. The captions in this Agreement are for
----------------------------
convenience of reference only and shall not be given any effect in the
interpretation of this Agreement. Unless otherwise specified, section references
in this Agreement refer to the applicable section or subsection of this
Agreement.
13.3 Modification and Waiver. No amendment, modification or alteration of
-----------------------
the terms or provisions of this Agreement shall be binding unless the same shall
be in writing and duly executed by the parties hereto, except that any of the
terms or provisions of this Agreement may be waived in writing at any time by
the party which is entitled to the benefits of such waived terms or provisions
of this Agreement and the same shall not be deemed to or constitute a waiver of
any other provision hereof (whether or not similar). No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof.
13.4 Exclusive Agreement; Amendment. This Agreement supersedes all prior
------------------------------
agreements among the parties with respect to its subject matter other than the
Confidentiality Agreement dated June 7, 1999, and is intended (with the
Schedules referred to herein) as a complete and exclusive statement of the terms
of the agreement among the parties with respect thereto and cannot be changed or
terminated orally.
-52-
13.5 Governing Law. This Agreement and (unless otherwise provided) all
-------------
amendments hereof and waivers and consents hereunder shall be governed by the
internal law of the State of New Jersey, without regard to the conflicts of law
principles thereof.
13.6 Binding Effect. This Agreement shall inure to the benefit of and be
--------------
binding upon the parties hereto and their respective successors and assigns,
provided that neither party may assign its rights hereunder without the consent
of the other party.
13.7 Public Announcements. No party hereto shall make any public
--------------------
statements, including without limitation, any press releases, with respect to
this Agreement and the transactions contemplated hereby without the prior
written consent of the other party except as may be required by law and then,
only after reasonable prior notice to the other party hereto.
13.8 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument. It shall not be necessary in
making proof of this Agreement or any counterpart hereof to produce or account
for any of the other counterparts.
13.9 Specific Performance and Injunctive Relief. Each of the parties
------------------------------------------
acknowledges and agrees that the other party would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each of the
parties agrees that the other party shall be entitled to an injunction to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
parties and the matter in addition to any other remedy to which it may be
entitled as expressly set forth in this Agreement.
13.10 Waiver of Conflict of Interest Claim. It is expressly understood
------------------------------------
and agreed that in the event of any controversy, suit, petition, arbitration or
other legal action which arises or is commenced in connection with this
Agreement, its schedules or exhibits, or the transactions contemplated hereby,
Seller, Buyer and each Group Member shall be free following the Closing to
retain counsel of their choice to represent them in connection with any such
controversy, suit, petition, arbitration or other legal action. In furtherance
of the foregoing, Buyer, each Group Member and Seller expressly waive any claim
of conflict of interest and agree that they will not take any steps following
the Closing to attempt to disqualify Xxxx Xxxxxx or Xxxxxx, Xxxxx & Xxxxxxx LLP
if any such firm is selected and retained by the other for any reason whatsoever
and acknowledges that this waiver is granted with full knowledge of Xxxx
Xxxxxx'x and Xxxxxx, Xxxxx & Xxxxxxx' participation in, representation of a
party to, this Agreement and the transactions contemplated hereby.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
WILMAR INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
THE XXXXX-XXXXXXX-XXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Annex A
Definitions Used in the Stock Purchase Agreement
As used in this Agreement, the following terms shall have the meaning
assigned thereto in this Annex (or the meaning assigned thereto in the
referenced section of this Agreement):
"Affiliate" shall mean, with respect to any Person, any other Person which
shall be directly or indirectly controlling or controlled by or under common
control with such Person. For purposes of this Agreement, a particular Person
shall be deemed to control another Person if that Person or possesses, directly
or indirectly, the power to direct or cause the direction of the management and
policies of such entity, whether through ownership of voting securities, by
contract or otherwise.
"Agreement" shall have the meaning assigned thereto in the introduction to
this Agreement and as the same may be amended from time to time in accordance
with its terms.
"Approvals" shall have the meaning assigned thereto in Section 5.9(d) of
this Agreement.
"Arbitrator" shall have the meaning assigned thereto in Section 1.3(d) of
this Agreement.
"Audited Statements" shall have the meaning assigned thereto in Section
5.7(a) of this Agreement.
"Automobile Leases" shall have the meaning assigned thereto in Section 7.16
of this Agreement.
"Balance Sheet Date" shall mean September 30, 1999.
"Base Purchase Price" shall have the meaning assigned thereto in Section
1.2 of this Agreement.
"Beneficiary" shall mean the Person(s) designated by an Employee, Former
Employee, by operation of Law or otherwise, as the party entitled to
compensation, benefits, damages, insurance coverage, payments, indemnification
or any other goods or services as a result of any liability or claim under any
applicable welfare or benefit plan or program.
"Big Five Accounting Firm" shall mean any one of the following independent
public accounting firms or their successors: Xxxxxx Xxxxxxxx, Pricewaterhouse
Coopers & Xxxxxxx, Deloitte & Touche, Ernst & Young or KPMG Peat Marwick.
"Bonds" shall have the meaning assigned thereto in Section 4.6 of this
Agreement.
"Business" shall mean the business of distributing plumbing, heating,
electrical and general maintenance products of the type distributed by the
Company on the date hereof to the institutional, commercial (including apartment
houses) and industrial after markets, provided that such term shall not mean the
business of manufacturing and distributing any of such products.
"Buyer" shall mean Wilmar Industries, Inc., a New Jersey corporation.
"Buyer Indemnitees" shall have the meaning assigned thereto in Section 9.1
of this Agreement.
"Buyer's Accountant" shall have the meaning assigned thereto in Section
1.3(a) of this Agreement.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 U.S.C. (S)(S)9601 et seq.
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"Claim Notice" shall have the meaning assigned thereto in Section 9.4(a) of
this Agreement.
"Claims" shall have the meaning assigned thereto in Section 5.19(b) of this
Agreement.
"Closing" shall have the meaning assigned thereto in Section 2.1 of this
Agreement.
"Closing Balance Sheet" shall have the meaning assigned thereto in Section
1.3(a) of this Agreement.
"Closing Date" shall have the meaning assigned thereto in Section 2.1 of
this Agreement.
"Closing Date Net Working Capital" shall have the meaning assigned thereto
in Section 1.3(b) of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitments" shall have the meaning assigned thereto in Section 5.15 of
this Agreement.
"Company" shall have the meaning assigned thereto in the introduction to
this Agreement. For purposes of subsection (c) through (o) of Section 5.16 of
this Agreement, the term "Company" includes any ERISA Affiliate.
"Confidential Information" shall have the meaning assigned thereto in
Section 7.6(c) of this Agreement.
"Dispute Notice" shall have the meaning assigned thereto in Section 1.3(c)
of this Agreement.
"Dispute Period" shall have the meaning assigned thereto in Section 1.3(c)
of this Agreement.
"Disputed Matters" shall have the meaning assigned thereto in Section
1.3(c) of this Agreement.
"Effective Time" shall mean the close of business Eastern Standard Time on
the Closing Date.
"Employee Benefit Plans" shall mean (i) any pension plan, 401(k) plan,
profit-sharing plan, health or welfare plan, and any other employee benefit plan
(within the meaning of Section 3(3) of ERISA) that is maintained or sponsored by
the Company or to which the Company contributes, and (ii) any other benefit
arrangement, obligation, or practice, whether or not legally enforceable, to
provide benefits, other than salary, as compensation for services rendered, to
one or more present or former employees, that is maintained or sponsored by the
Company or to which the Company contributes, including, without limitation,
employment agreements, severance policies or agreements, executive compensation
arrangements, rabbi trusts, incentive arrangements, sick leave, vacation pay,
salary continuation, workers' compensation, bonus plans, stock option, stock
grant or stock purchase plans, medical insurance, life insurance, tuition
reimbursement programs or scholarship programs, any plans subject to section 125
of the Code, and any plans providing benefits or payments in the event of a
change of ownership or control.
"Employees" shall mean all individuals with whom a Group Member maintains,
on the Closing Date, an employer-employee relationship, including any
individuals on lay-off, disability or leave of absence, whether paid or unpaid.
"Encumbrance" shall have the meaning assigned thereto in Section 1.1 of
this Agreement.
"Environmental Condition" shall mean any condition or circumstance, that
(i) requires abatement or correction under any Environmental Law, (ii) includes
the presence of Hazardous Substances, (iii) gives rise to any civil or criminal
liability under any Environmental, Law, or (iv) creates a public or private
nuisance.
"Environmental Laws" shall mean CERCLA, RCRA, the Clean Water Act, 33
U.S.C. (S)(S) 1321 et seq., the Clean Air Act, 42 U.S.C. (S)7401 et seq. and any
-- --- -- ---
and all other federal, state, county, provincial, local laws, regulations and
ordinances and foreign statutes, regulations, ordinances, laws and requirements
relating to health and safety and pollution or protection of the environment,
including laws, regulations and requirements relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals, or
industrial, toxic or
Hazardous Substances into the environment (including without limitation ambient
air, surface water, groundwater or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, record keeping, notification, reporting or handling of Hazardous
Substances, pollutants, contaminants, chemicals, or industrial, toxic or other
hazardous substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and all regulations and rules issued thereunder, or any successor law
"ERISA Affiliate" means any person that, together with the Company, is or
was at any time treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA and any general partnership of which the Company is or has
been a general partner.
"Expiration Date" shall have the meaning assigned thereto in Section 9.5 of
this Agreement.
"Former Employees" shall mean all individuals as to whom an employer-
employee relationship with any Group Member existed prior to the Closing Date,
but does not exist on the Closing Date, who remain entitled to benefits under
any applicable welfare or benefit plan or program.
"Financial Statements" shall have the meaning assigned thereto in Section
5.7(a) of this Agreement.
"GAAP" shall mean generally accepted accounting principles consistently
applied.
"Governmental Body" shall mean any domestic or foreign national, state or
municipal or other local government or multi-national body (including without
limitation the European Union), any governmental or regulatory authority,
agency, commission, subdivision or any other such entity.
"Group" shall mean Xxxxxxx, Trayco and all of the subsidiaries of either
Xxxxxxx or Trayco, taken as a whole.
"Group Member" shall mean, individually, Xxxxxxx, Trayco and each of the
subsidiaries of either Xxxxxxx or Trayco.
"Hazardous Substance" shall mean (i) any petroleum products, explosives,
alcohols, chemical solvents, polychlorinated biphenyls ("PCBs") or related or
similar materials, (ii) any substance, waste, material or good defined as
hazardous, radioactive, extremely hazardous, toxic or dangerous, or as a
pollutant or contaminant, under any Environmental Law, or by any federal, state
or municipal government or governmental agency, (iii) nuclear fuel or materials,
chemical
waste or known human carcinogens, and (iv) any asbestos, asbestos-containing
substances or urea formaldehyde insulation.
"HSR Act" shall mean the Xxxx-Xxxxx Xxxxxx Antitrust Improvement Act of
1976, as amended, and the rules and regulations thereunder.
"Income Tax(es)" shall mean any Tax imposed on or measured by gross or net
income or net worth and commonly referred to as an income tax in the relevant
taxing jurisdiction, excluding any state or local gross receipts or business or
occupational taxes and excluding state or local franchise taxes imposed solely
by reason of the place of formation of an entity.
"Indemnification Matter" shall mean any matter in which either Buyer or
Seller or any Buyer Indemnitee or Seller Indemnitee reasonably believes that
such party has a claim for Losses in respect of which indemnity may be sought
pursuant to Sections 9 or 12 hereof.
"Indemnified Party" shall have the meaning assigned thereto in Section
9.4(a) of this Agreement.
"Indemnitor" shall have the meaning assigned thereto in Section 9.4(a) of
this Agreement.
"Intellectual Property" shall have the meaning assigned thereto in Section
5.14(a) of this Agreement.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" or words of similar effect shall mean the actual knowledge of
the officers of Seller and shall mean the actual knowledge of Messrs. Xxxxx,
Sbezzi and Pescoslido at the Company after reasonable inquiry of the appropriate
personnel at Seller and the Company.
"Laws" shall mean all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, its
political subdivisions or of any Governmental Body.
"Leased Real Property" shall have the meaning assigned thereto in Section
5.9(b) of this Agreement.
"Liabilities" shall mean any liability or obligation of any nature, whether
accrued, absolute, contingent or otherwise, asserted or unasserted, including,
without limitation, liabilities as guarantor or otherwise with respect to
obligations of others or liabilities for taxes due or then accrued or to become
due, or contingent liabilities relating to activities of the Company or the
conduct of its business prior to the date hereof or the Closing, as the case may
be, regardless of whether claims in respect hereof have been asserted as of such
date.
"Lien" shall mean any restriction on voting or transfer or pledge,
easement, right of way, mortgage, pledge, assessment, security interest, lease,
lien, adverse claim, levy, charge or other encumbrance of any kind or any
conditional sale contract, title retention contract or other contract to give
any of the foregoing.
"LIFO Inventory Reserve" shall mean the inventory reserve of the Company on
a last in, first out basis.
"Liquidated Claim Notice" shall have the meaning assigned thereto in
Section 9.4(a) of this Agreement.
"Litigation Condition" shall have the meaning assigned thereto in Section
9.6(a) of this Agreement.
"Losses" shall have the meaning assigned thereto in Section 9.1 of this
Agreement.
"Management Agreement" shall mean that certain Service and Management
Agreement dated as of March 1, 1988, as amended, and February 1, 1999, by and
between Xxxxxxxxx Planning and the Company.
"Material Adverse Effect" shall mean any event or condition individually or
in the aggregate that has or that is reasonably likely to have a material
adverse effect (i) on the business, financial condition, operating results,
properties or the assets and liabilities of the Company taken as a whole or (ii)
on the Company's ability to perform any of its obligations under this Agreement.
"Owned Real Property" shall have the meaning assigned thereto in Section
5.9(a) of this Agreement.
"Xxxxxxxxx Planning" shall mean Xxxxxxxxx Planning & Services, Inc., an
Affiliate of Seller.
"Permit" shall mean any license, franchise, permit, consent, concession,
order, approval, authorization or registration from, of or with a Governmental
Body.
"Permitted Liens" shall mean:
(a) Liens for Taxes not yet due or which are being contested in good
faith by appropriate proceedings (which suspend the collection of such
Taxes), provided that adequate reserves with respect to contested taxes and
ancillary charges are maintained on the books of any Group Member;
(b) pledges or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
social security legislation;
(c) easements, rights-of-way, restrictions and other similar
encumbrances (excluding monetary liens) incurred prior to the date of this
Agreement in the ordinary course of business which, in the case of such
encumbrances on the assets or properties of any Group Member, do not
materially detract from the value of any such properties or assets or
materially interfere with or materially and adversely affect any present
use of such properties or assets or render title unmarketable;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue or which are being contested in good faith by appropriate
proceedings (which suspend the performance under such obligations);
(e) deposits to secure the performance of bids, contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(f) statutory Liens on the property of any Group Member in favor of
landlords securing leases; and
(g) Liens in existence on the Closing Date listed on Schedule 5.8
hereto.
"Person" shall mean any natural person, corporation, partnership,
proprietorship, joint venture association, trust or other legal entity.
"Phantom Stock Plan" shall have the meaning assigned thereto in Section 3.8
of this Agreement.
"Premium Credit Amount" shall mean the amount of premiums in respect of
Seller's Health Plan and in respect of Employees for the month in which the
Closing occurs multiplied by a fraction, the numerator of which is the number of
days remaining in such month after the Closing Date and the denominator of which
is the number of days in such month. The parties understand and agree that in
the event the Closing Date occurs on the last day of a month, then the Premium
Credit Amount shall be zero.
"Purchase Price" shall have the meaning assigned thereto in Section 1.3 of
this Agreement.
"RCRA" means the Federal Resource Conservation and Recovery Act of 1976,
42 U.S.C. (S)6901 et seq.
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"Real Property" shall have the meaning assigned thereto in Section 5.9(b)
of this Agreement.
"Real Property Leases" shall have the meaning assigned thereto in Section
5.9(b) of this Agreement.
"Retro-Premium Insurance Amounts" shall mean any liability or other
obligation paid by Seller (or any Affiliate of Seller) and not reimbursed by a
Group Member on or prior to the Closing for any additional premiums and expenses
on retrospective adjustments, or amounts due under self insurance retentions
under any policies of insurance maintained by Seller (or any Affiliate of the
Seller) for the benefit of any Group Member attributable to events or
occurrences on or prior to the Closing Date.
"Seller" shall mean The Xxxxx-Xxxxxxx-Xxxxx Corporation, a Delaware
corporation.
"Seller Indemnitees" shall have the meaning assigned thereto in Section 9.2
of this Agreement.
"Seller Tax Period" means any period, as to Federal Income Taxes only, that
ends on or prior to the Closing Date.
"Xxxxxxx" shall mean X.X. Xxxxxxx, Inc., a Delaware corporation.
"Xxxxxxx Canada" shall mean Xxxxxxx, Ltd., an Ontario corporation.
"Xxxxxxx Shares" shall have the meaning assigned thereto in the
introduction to this Agreement.
"Shares" shall have the meaning assigned thereto in the introduction to
this Agreement.
"Taxes" shall have the meaning assigned thereto in Section 5.17(a) of this
Agreement.
"Tax Returns" shall have the meaning assigned thereto in Section 5.17(a) of
this Agreement.
"Third Party Claim" shall have the meaning assigned thereto in Section
9.6(a) of this Agreement.
"Threshold" shall have the meaning assigned thereto in Section 9.3 of this
Agreement.
"Trademarks" shall have the meaning assigned thereto in Section 5.14(a) of
this Agreement.
"Trade Secrets" shall have the meaning assigned thereto in Section 5.14(c)
of this Agreement.
"Transaction Documents" shall mean this Agreement and each agreement,
document and instrument executed and delivered pursuant to this Agreement.
"Trayco" shall mean Trayco of S.C., Inc., a Delaware corporation.
"Trayco Shares" shall have the meaning assigned thereto in the introduction
to this Agreement.
"Unliquidated Claim" shall have the meaning assigned thereto in Section
9.4(a) of this Agreement.
List of Exhibits and Schedules
------------------------------
Schedule 1.3 Closing Balance Sheet Rules
Schedule 4.6 Letters of Credit and Performance and Bid Bonds
Schedule 5.1(b) Foreign Qualification
Schedule 5.4 Subsidiaries
Schedule 5.6 Third Party Consents
Schedule 5.7 Liabilities/Financial Statements
Schedule 5.9 Real Property
Schedule 5.11 Litigation
Schedule 5.12 Absence of Certain Changes
Schedule 5.13 Material Adverse Changes
Schedule 5.14(a) Trademarks and Tradenames
Schedule 5.15 Commitments
Schedule 5.16 Employee Matters
Schedule 5.17 Tax and Other Returns and Reports
Schedule 5.18 Compliance with Law
Schedule 5.19 Environmental Matters
Schedule 5.24 Relations with Customer and Suppliers
Schedule 5.25 Transactions with Affiliates
Schedule 5.26 Checking Accounts
Schedule 5.29 Insurance
Schedule 7.12 Retained Accounts
The aforementioned is a list of all omitted schedules. The Company agrees to
furnish supplementally a copy of any omitted schedule to the Commission upon
request.
