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EXHIBIT 2.1
AGREEMENT
This Agreement, dated as of May 9, 1997, is made by and among Xxxxxx
Corporation, a Delaware corporation (the "COMPANY"), the stockholders of the
Company named on Exhibit "B" hereto (collectively, the "STOCKHOLDERS"), and
Dayton Superior Corporation, an Ohio corporation ("PURCHASER").
RECITALS
A. The Company is engaged in the business of manufacturing, selling and
renting concrete forms, equipment and systems and concrete accessories and
hardware. The Stockholders own 5,000 shares (constituting 100%) of the
outstanding Common Stock, par value $.0l per share (the "STOCK"), of the
Company.
B. Purchaser is engaged in the manufacture and distribution of
specialized metal accessories used in concrete and masonry construction.
C. On the terms and subject to the conditions herein, on the Closing
Date, Purchaser will purchase from Xxxxxxx X. Xxxx ("XXXX"), and Xxxx will sell
to Purchaser, 2,500 shares of the Stock, in exchange for cash in the amount of
$12,000,000 and a promissory note of Purchaser in the form of EXHIBIT A (the
"NOTE") in the principal amount of $5,000,000. The Note (i) will be due on the
seventh anniversary of the Closing Date (as herein defined), (ii) will bear
interest at a rate of 10.5%, compounded semi-annually and payable monthly, (iii)
may be redeemed in whole at the option of Purchaser at any time after the death
of Xxxx, and (iv) may be redeemed in whole or in part at the option of Xxxx at
any time after the first anniversary of the Closing Date.
D. On the terms and subject to the conditions herein, on the Closing
Date, Purchaser will purchase from the Stockholders other than Xxxx (the "XXXXXX
STOCKHOLDERS"), and the Xxxxxx Stockholders will sell to Purchaser, an aggregate
of 2,500 shares of the Stock, for cash in the amount of $6,800 per share (an
aggregate of $17,000,000). The Xxxxxx Stockholders acknowledge that they were
offered a Note as part of their consideration in lieu of cash and declined to
accept a Note.
E. On the Closing Date, Purchaser will cause the Company to pay in full
the then outstanding principal amount of the notes of the Company payable to
Stockholders, and all interest thereon, in accordance with their present terms
listed on Schedule 3.2(c).
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AGREEMENT
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In consideration of the premises and the mutual covenants contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings:
"BALANCE SHEET DATE" shall mean August 31, 1996.
"CLOSING" shall mean the closing of the transactions contemplated by
this Agreement, as provided in Article III.
"CLOSING BALANCE SHEET" shall mean the audited balance sheet of the
Company as of the opening of business on the Closing Date, prepared in
accordance with Section 2.3 hereof.
"CLOSING DATE" shall mean the date on which the Closing occurs, which
shall be the fifth business day following the date on which the last condition
in Articles VII and VIII is satisfied (other than those conditions which by
their terms are to be satisfied on the Closing Date), or such other date as
Purchaser and Stockholders shall mutually agree.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONTRACTS" shall mean all of the Company's agreements, contracts,
licenses, leases or commitments, written or oral.
"CUT-OFF DATE" shall mean the earlier of ten months from the date hereof
or the date that is 60 days after the last of the conditions in Sections 7.2,
7.3, 8.2 and 8.3 hereof has been satisfied.
"DISCLOSURE SCHEDULE" shall mean the schedule attached hereto which sets
forth the exceptions to the representations and warranties contained in Article
IV hereof and certain other information called for by Article IV hereof and
other provisions of this Agreement.
"ENVIRONMENTAL CONDITIONS" means the introduction into, or presence in,
the environment prior to Closing of any Hazardous Substance (whether or not upon
any property of the Company) as a result of which the Company has any obligation
under Environmental Laws to provide notice, investigate or remediate, or by
reason of which any property of the Company may be subjected to any Lien.
"ENVIRONMENTAL LAWS" shall mean the terms of all laws as they exist at
the Closing Date which regulate or relate to the protection or clean-up of the
environment, or the use, treatment,
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storage, transportation, generation, manufacture, processing, distribution,
handling or disposal of, or emission, discharge or other release or threatened
release of, Hazardous Substances.
"FACILITIES" shall mean the plants, offices, production facilities,
warehouses and related facilities of the Company.
"FIXTURES AND EQUIPMENT" shall mean all of the furniture, fixtures,
furnishings, machinery and equipment owned or used by the Company.
"HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, chemical,
waste and any toxic, infectious, reactive, corrosive, ignitible or flammable
chemical or chemical compound or hazardous substance, material or waste, whether
solid, liquid or gas, including, without limitation, any quantity of asbestos in
any form, urea formaldehyde, PCB's, radon gas, crude oil or any fraction
thereof, all forms of natural gas, petroleum products or by-products or
derivatives, radioactive substance or material, and any other substance,
material or waste that is subject to regulation, control or remediation under
any Environmental Laws.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"KNOWLEDGE OF THE COMPANY" or words of similar effect shall mean that,
without having conducted any special investigation, none of Xxxx, Xxx Xxxxxx,
Xxx Xxxxxxxxxxx or Xxxxxxx Xxxxxxxxx has actual knowledge of any exceptions.
"LIEN" shall mean any mortgage, lien, pledge, claim, encumbrance,
charge, security interest, option or restriction of any kind.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
business, assets, or properties of the Company, taken as a whole, or on the
financial condition or results of operations of the Company, or on the ability
of the Company or any Stockholder to consummate the transactions contemplated
hereby.
"MATERIAL LIEN" shall mean any Lien other than (a) mechanic's,
materialmen's, and similar liens arising in the Ordinary Course of Business, (b)
liens for taxes not yet due and payable or which the taxpayer is contesting in
good faith by appropriate proceedings, (c) purchase money liens, (d) liens
granted pursuant to the provisions of the Company's credit agreements in
accordance with their terms as they exist on the date hereof to the lenders
under such credit agreements, and (e) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money, and
which, individually and in the aggregate, (x) do not materially interfere with
the use to which the asset is presently devoted by the Company and (y) do not
have a Material Adverse Effect.
"NET WORTH" shall mean total assets minus total liabilities as set forth
on the Closing Balance Sheet.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of
the Company consistent with past custom and practice (including with respect to
quantity and frequency).
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"OWNED REAL PROPERTY" shall mean all real property owned by the Company,
including, without limitation, all rights, easements and privileges appertaining
or relating thereto and all buildings, fixtures, and improvements located
thereon, which real property is listed on Schedule 4.8.
"PASADENA FACILITY" shall mean the Company's office located at 000 Xxxxx
Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx.
"PERMITS" shall mean the material licenses, permits and other
governmental authorizations required by the Company to carry on its business as
presently conducted, all of which are listed in Schedule 4.16.
"PROPRIETARY RIGHTS" shall mean all of the patents, patent applications,
trade secrets, trade names, trademarks, together with the goodwill associated
therewith, inventions, processes, designs, formulas, know-how, software and
other industrial and intellectual property rights owned by the Company.
"RELEASE" shall mean and include any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment in violation of Environmental Laws of any
Hazardous Substance prior to the Closing.
"RENTAL FLEET" shall mean the concrete forming equipment of the Company
which in the Ordinary Course of Business is leased or rented to others.
1.2 OTHER DEFINED TERMS. The following terms shall have the meanings
defined for such terms in the Sections set forth below:
Term Section
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Accounting Firm 2.3
Act 4.1(d)
Affiliate 4.13(a)
Audited Financial Statements 4.5
Benchmark 2.2
Company Heading
Compensation Plan 4.18(a)
Damages 10.2(a)
Employee Plans 4.18(a)
Environmental Remediation Claim 10.2(c)
ERISA 4.18(a)
Financial Statements 4.5
GAAP 2.3
Xxxxxx Stockholders Recital D
Indemnified Party 10.2(c)
Interim Financial Statements 4.5
Xxxx Recital C
Note Recital C
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Notice of Disagreement 2.2
Pension Plan 4.18(a)
Post-Closing Tax Period 4.13(a)
Pre-Closing Tax Period 4.13(a)
Purchaser Heading
Required Consents 4.10
Returns 4.13(a)
Second Request 11.7
Stock Recital A
Stockholders Heading
Straddle Periods 4.13(c)
Straddle Taxes 4.13(c)
Tax 4.13(a)
Tax Asset 4.13(a)
Tax Claim 10.2(d)
Taxing Authority 4.13(a)
Third Party Claim 10.2(c)
Welfare Plan 4.18(a)
ARTICLE II
PURCHASE AND SALE
2.1 PURCHASE AND SALE. On the terms and subject to the conditions
herein, on the Closing Date:
(a) Xxxx will sell, assign, transfer and deliver to Purchaser, and
Purchaser will acquire absolute ownership of, 2,500 shares of the Stock, free
and clear of Liens other than those arising from acts of Purchaser or its
affiliates, in exchange for the consideration set forth in Recital C.
(b) Each of the Xxxxxx Stockholders severally will sell, assign,
transfer and deliyer to Purchaser, and Purchaser will acquire absolute ownership
of, that number of shares of Stock set forth opposite the name of such Xxxxxx
Stockholder on Exhibit B (and totalling 2,500 shares of the Stock), free and
clear of Liens other than those arising from acts of Purchaser or its
affiliates, in exchange for the consideration set forth in Recital D.
2.2 ADJUSTMENT. On the first business day immediately following the day
on which the Closing Balance Sheet is finalized pursuant to Section 2.3 hereof,
an amount equal to the difference, if any, between Net Worth and $21,438,000
(the "BENCHMARK") shall be determined by Purchaser's independent auditors. If
the Net Worth on the Closing Date is less than the Benchmark, the Stockholders
shall pay to Purchaser the amount of the difference; and if the Net Worth on the
Closing Date is more than the Benchmark, Purchaser shall pay to the Stockholders
the amount of the difference. All payments will be in immediately available
funds and payments by or to the Stockholders shall be made in the proportions in
which they own Stock as set forth on Exhibit B.
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2.3 CLOSING BALANCE SHEET. The Company will cause to be prepared and
delivered to the Stockholders, within 60 days after the Closing Date, the
Closing Balance Sheet. The Closing Balance Sheet shall be prepared by
Purchaser's independent auditors from the books and records of the Company in
accordance with United States generally accepted accounting principles ("GAAP"),
applied on a basis consistent with the policies employed in the preparation of
the Audited Financial Statements. The Closing Balance Sheet shall fully and
accurately reflect all the expenses of (and any rights to reimbursement under
Section 11.7 hereof related to) the transactions contemplated hereby incurred by
(or owed to) the Company (including any distribution of cash to Stockholders of
a value up to $2,000,000 pursuant to Section 6.4 and any unpaid fees and
expenses of BA Partners, Xxxxxx & Xxxxxxx and Xxxxx & Xxxxx LLP to be paid by
the Company) and the expenses of closure of the Pasadena Facility, including
severance costs, in each case unless previously paid and reflected in Net Worth,
but shall not include any purchase accounting adjustments. Notwithstanding the
foregoing, the Closing Balance Sheet shall reflect as environmental reserve for
the matters described in Schedule 2.3 only so much of the environmental reserve
described on Schedule 2.3 as at the time shall not have been expended, and
(without duplication) shall reflect any dividend or distribution by the Company
to the Stockholders permitted by Section 6.4 which occurs on the Closing Date.
Representatives of Purchaser and the Stockholders may observe and comment upon
the preparation of the Closing Balance Sheet.
During the 45-day period following the Stockholders' receipt of the
Closing Balance Sheet, the Stockholders and their independent auditors shall be
permitted to review the working papers of Purchaser's independent auditors
relating to the Closing Balance Sheet and to have access to the Company's
pertinent financial and other records. The Closing Balance Sheet shall become
final and binding upon the parties on the forty-fifth day following the
Stockholders' receipt thereof, unless the Stockholders give written notice to
Purchaser prior to such date of their disagreement with the Closing Balance
Sheet or that they have not been provided necessary access to requisite working
papers or records ("NOTICE OF DISAGREEMENT"). Any Notice of Disagreement shall
specify in reasonable detail the nature of any disagreement or lack of access,
and include only disagreements based on mathematical errors, the Closing Balance
Sheet not being calculated in accordance with this Section 2.3, or the
determination of amounts involving discretion or judgment (including the amounts
of reserves). If a Notice of Disagreement is received by Purchaser in a timely
manner, then the Closing Balance Sheet (as it may be revised pursuant to the
procedures described below) shall become final and binding upon the Stockholders
and Purchaser on the earlier of (a) the date the Stockholders and Purchaser
resolve in writing any differences they have with respect to the matters
specified in the Notice of Disagreement or (b) the date any disputed matters are
finally resolved in writing by the Accounting Firm (as defined below).
During the 45-day period following the delivery of a Notice of
Disagreement, the Stockholders and Purchaser shall seek in good faith to resolve
in writing any differences which they may have with respect to the matters
specified in the Notice of Disagreement. At the end of such 45-day period, the
Stockholders and Purchaser shall submit to an independent accounting firm (the
"ACCOUNTING FIRM") for review and resolution any and all matters which remain in
dispute and which were properly included in the Notice of Disagreement. The
Accounting Firm shall be any "Big 6" national accounting firm not employed
(currently or within the preceding 24 months) by the Company, any of the
Stockholders or Purchaser, as
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shall be agreed upon by the parties hereto in writing. If the parties do not so
agree in writing by the end of the 45-day period, Deloitte & Touche LLP will be
selected as the Accounting Firm. The Accounting Firm so selected shall notify
the parties of its determination concerning the matter(s) included in the Notice
of Disagreement within 45 days of its appointment. The Stockholders and
Purchaser agree that judgment may be entered upon the determination of the
Accounting Firm in any court having jurisdiction over the party against which
such determination is to be enforced. The cost of any arbitration (including the
fees and expenses of the Accounting Firm and reasonable attorney fees and
expenses of the parties) pursuant to this Section 2 shall be borne by Purchaser
and the Stockholders in inverse proportion as they may prevail on matters
resolved by the Accounting Firm, which proportionate allocations shall also be
determined by the Accounting Firm at the time the determination of the
Accounting Firm is rendered on the merits of the matters submitted. The fees and
disbursements of Ernst & Young LLP incurred in connection with their review of
the Statement and certification of any Notice of Disagreement shall be borne by
the Stockholders, and the fees and disbursements of Purchaser's independent
auditors incurred in connection with their preparation of the Closing Balance
Sheet and review of any Notice of Disagreement shall be borne by Purchaser.
2.4 PHYSICAL INVENTORY. In connection with the preparation of the
Closing Balance Sheet as set forth in Section 2.3, a physical inventory as of
the Closing Date shall be taken at such time as Purchaser and Stockholders
mutually agree (but in any event not more than three business days after the
Closing Date), pursuant to which all inventory will be counted as to quantity by
personnel of the Company using procedures normally used by the Company to take
inventories of the type of inventory being counted. Both Purchaser and
Stockholders will have the right to have Representatives present to observe the
physical inventories.
ARTICLE III
CLOSING
3.1 CLOSING. The Closing shall be held at 10:00 a.m. local time on the
Closing Date at the offices of Xxxxxx & Xxxxxxx, 000 X. Xxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxxxxx, Xxxxxxxxxx, unless the parties hereto otherwise agree.
3.2 DELIVERIES. To effect the transactions referred to in Section 2.1,
Stockholders and Purchaser shall, on the Closing Date, deliver or cause to be
delivered the following:
(a) Stockholders shall deliver to Purchaser certificates evidencing
all the shares of the Stock, duly endorsed in blank or accompanied by stock
powers duly executed in blank in proper form for transfer, with appropriate
transfer stamps, if any, affixed;
(b) Purchaser shall pay the Xxxxxx Stockholders and Xxxx the
purchase price of the Stock to be sold by them, as provided in Section 2.1, and
shall deliver to Xxxx the Note;
(c) Purchaser shall cause the Company to pay in full the then
outstanding principal amounts of the notes of the Company payable to the
Stockholders listed on Schedule 3.2(c) plus all accrued but unpaid interest
thereon, in accordance with their present terms;
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(d) Stockholders and Purchaser shall deliver or cause to be
delivered all documents required to be delivered by each pursuant to Articles
VII and VIII, respectively; and
(e) the Stockholders shall deliver letters of resignation, effective
on the Closing Date, of each member of the Board of Directors of the Company,
together with waivers of such directors' right to indemnification from the
Company for actions undertaken as a director or officer of the Company prior to
the Closing Date, except to the extent such indemnification is covered by the
Company's existing insurance or required by law.
All amounts required to be paid shall be paid in immediately available
funds. All instruments and documents executed and delivered to or for the
account of Purchaser pursuant hereto shall be in form and substance, and shall
be executed in a manner, reasonably satisfactory to Purchaser. All instruments
and documents executed and delivered to or for the account of Stockholders
pursuant hereto shall be in form and substance, and shall be executed in a
manner, reasonably satisfactory to Stockholders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS
Each of the Stockholders hereby severally represents and warrants to
Purchaser, except as set forth with respect to a specifically identified
representation and warranty in the Disclosure Schedule, to the effect set forth
in Sections 4.1, 4.10, 4.11, 4.13, 4.21, 4.26 and 4.27, in each case, to the
extent that such representation and warranty relates to such Stockholder. The
Company hereby represents and warrants to Purchaser, except as set forth with
respect to a specifically identified representation and warranty in the
Disclosure Schedule, as follows:
4.1 REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) COMPANY AUTHORIZATION. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. The Company has all requisite corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. All corporate acts and other
proceedings required to be taken by the Company to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and properly taken. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
(b) STOCKHOLDER AUTHORIZATION. Each Stockholder has full power and
authority to execute and deliver this Agreement and to perform his obligations
hereunder. This Agreement has been duly executed and delivered by such
Stockholder and constitutes a legal, valid and binding obligation of such
Stockholder, enforceable in accordance with its terms.
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(c) COMPANY STOCK. Each Stockholder holds of record and owns
beneficially the number of shares of Stock set forth opposite his name on
Exhibit B, free and clear of any Liens. Assuming Purchaser has the requisite
power and authority to be the lawful owner of such shares of Stock, upon
delivery to Purchaser at the Closing of certificates representing such shares of
Stock, duly endorsed by the Stockholder for transfer to Purchaser, and upon such
Stockholder's receipt of the consideration therefor specified in Section 2.1,
ownership of such shares of Stock will pass to Purchaser, free and clear of any
Liens, other than those arising from acts of Purchaser or its affiliates. Such
Stockholder is not a party to any option, warrant, purchase right, or other
contract or commitment relating to or affecting the Stock. Such Stockholder does
not require any spousal consent to dispose of any shares of Stock, except for
consents which have been obtained and are disclosed on Schedule 4.1(c).
(d) INVESTMENT. Xxxx (i) understands that the Note has not been, and
will not be, registered under the Securities Act of 1933, as amended (the
"Act"), or under any state securities laws, and is being offered and sold in
reliance upon federal and state exemptions for transactions not involving any
public offering, (ii) is acquiring the Note solely for his own account for
investment purposes, and not with a view to distribution thereof, (iii) is
sophisticated and experienced in business, investment and financial matters,
(iv) is an "accredited investor" as such term is defined under the Act, (v) has
received certain information concerning Purchaser and has had the opportunity to
obtain additional information as desired in order to evaluate the merits and
risk in acquiring and holding the Note, (vi) is able to bear the economic risk
and lack of liquidity inherent in holding the Note, and (vii) has consulted with
professional tax advisers regarding the tax consequences of the transactions
contemplated by this Agreement.
4.2 AUTHORIZATION GENERALLY. The Company has full corporate power and
authority to conduct its business as it is presently being conducted and to own
and lease its properties and assets, and has the Permits set forth in Schedule
4.16. The Company is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which such qualification is
necessary under the applicable law as a result of the conduct of its business or
the ownership of its properties or assets and where the failure to be so
qualified would have a Material Adverse Effect.
4.3 CAPITALIZATION. The entire authorized capital stock of the Company
consists of 5,000 shares of Stock, of which 5,000 shares are issued and
outstanding, and 25,000 shares of Preferred Stock, par value $.01 per share, of
which none are outstanding. All the Stock has been duly authorized, validly
issued, and is fully paid and nonassessable. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Company to issue, sell, or otherwise cause to become outstanding, purchase
or redeem any of its capital stock. The Stock has not been issued in violation
of, and is not subject to, any purchase option, call, right of first refusal,
preemptive, subscription or similar rights under any provision of applicable
law, the Certificate of Incorporation or Bylaws of the Company, any contract,
agreement or instrument to which the Company is subject, bound or a parry, any
law or otherwise. There are no outstanding bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which stockholders of
the Company may vote.
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4.4 SUBSIDIARIES. The Company has no subsidiaries and the Company does
not directly or indirectly own any capital stock of or other equity interests in
any corporation, limited liability company, partnership or other person and the
Company is not a member or partner of or participant in any limited liability
company, partnership, joint venture or similar person.
4.5 FINANCIAL STATEMENTS. Included in the Disclosure Schedule are (i)
the audited balance sheets of the Company and the related statements of income,
shareholders' equity, and cash flows for each of the fiscal years ended August
31, 1994, 1995 and 1996, together with the notes thereto (the "AUDITED FINANCIAL
STATEMENTS"), and (ii) the unaudited balance sheet of the Company as of February
28, 1997 and the related statements of operations for the six month period then
ended, together with the notes thereto (the "INTERIM FINANCIAL STATEMENTS" and,
together with the Audited Financial Statements, the "FINANCIAL STATEMENTS"). The
Audited Financial Statements have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby, except as set
forth in the notes thereto, and present fairly the financial condition of the
Company as of such dates and the results of the Company's operations and cash
flows for such periods. The Interim Financial Statements have been prepared in
accordance with the Company's customary practices in preparing monthly balance
sheets and statements of operations and in accordance with GAAP, except as set
forth in the notes thereto and except that such Interim Financial Statements do
not include all financial statements, notes, or certain accruals or adjustments
required to be included by GAAP.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as contemplated by
this Agreement, since August 31, 1996:
(i) the Company has not engaged in transactions other than in the
Ordinary Course of Business;
(ii) there have been no material adverse changes in the condition
(financial or otherwise), business, prospects (other than adverse changes
resulting directly or indirectly from the execution of this Agreement or the
announcement or consummation of the transactions contemplated hereby),
operations, net worth, assets, properties, liabilities (fixed or contingent),
obligations or commitments of the Company (it being understood that seasonal
effects consistent with prior years do not constitute a material adverse
change);
(iii) the Company has not disposed of, or agreed to dispose of, any
asset or property, tangible or intangible, except sales of inventory in the
Ordinary Course of Business, nor has the Company leased or licensed to others,
or agreed so to lease or license, any asset or property, except leases or
agreements to lease in the Ordinary Course of Business; and
(iv) the Company has conducted its business in the ordinary course
and in substantially the same manner as previously conducted and has made
reasonable efforts consistent with past practices to preserve its relation ships
with customers, suppliers and others with whom the Company deals.
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(b) Except as set forth in Schedule 4.6 and as expressly permitted
hereby, since February 28, 1997 to the date of this Agreement, the Company has
not taken any action that, if taken after the date of this Agreement, would
constitute a breach of the covenants set forth in Section 6.3.
4.7 CONDITION OF ASSETS.
(a) FACILITIES. The Facilities are in good operating condition and
repair, normal wear and tear excepted, are sufficient for the operation of the
Company's business as presently conducted and are in conformity with applicable
laws, ordinances, orders, regulations and other requirements relating thereto
currently in effect, except where the failure to conform would not have a
Material Adverse Effect.
(b) ACCOUNTS AND NOTES RECEIVABLE. All accounts and notes receivable
of the Company included in the Interim Financial Statements are valid and
collectible, subject to an appropriate reserve therefor consistent with past
practice in the Ordinary Course of Business.
(c) INVENTORY. The Company's inventory consists of items of a type
and quality which will be useable and saleable in the Ordinary Course of
Business, subject to an appropriate reserve therefor consistent with past
practice in the Ordinary Course of Business. The inventories of the Company are
reflected in the Financial Statements in accordance with GAAP applied on a basis
consistent with past practice (except as described in the notes thereto). Since
the date of the Audited Financial Statements, there has not been any write-down
of the value of, or establishment of any reserves against, any inventory, except
for write-downs and reserves established in the Ordinary Course of Business and
consistent with past practice which have not had, either individually or in the
aggregate, a Material Adverse Effect.
(d) FIXTURES AND EQUIPMENT. The Fixtures and Equipment are in good
operating condition and repair, normal wear and tear excepted, and are
sufficient for the operation of the Company's business as presently conducted.
(e) RENTAL FLEET. The assets constituting the Rental Fleet are in
good operating condition and repair, normal wear and tear excepted, and
sufficient for the operation of the Company's rental business as presently
conducted.
4.8 REAL PROPERTY.
(a) Schedule 4.8 lists each parcel of real property owned or leased
by the Company at the date hereof.
(b) With respect to each such parcel of Owned Real Property, and
except as disclosed in Schedule 4.8, (i) the Company has good and marketable
title to the parcel, free and clear of any Material Lien; (ii) there are no
leases, licenses, concessions or other agreements granting to any party or
parties the right of use or occupancy of any portion of the Owned Real Property;
and (iii) there are no outstanding options or rights of first refusal to
purchase the parcel of Owned Real Property, or any portion thereof or interest
therein.
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(c) With respect to such real property leased or subleased by the
Company, the Company has furnished to Purchaser true copies of the leases and
subleases relating thereto. The Company is the lessee or sublessee under the
leases and subleases set forth on Schedule 4.8(c) and holds its interest in such
leases and subleases free of any Material Liens arising as a result of actions
by the Company.
4.9 CONTRACTS. Schedule 4.9 lists all Contracts to which the Company is
a party (other than Contracts entered into affer the date hereof with the
consent of Purchaser pursuant to Section 6.3(c)) that (i) involve, in any
instance, an obligation or commitment on the part of the Company, or a benefit
to the Company, in an amount greater than $50,000, other than open purchase
contracts which can be terminated by the Company at will at no cost, (ii)
include a covenant by the Company not to compete or (iii) provide for
indemnification by the Company for material liabilities. The Company has
furnished or made available to Purchaser true copies of the listed Contracts.
With such exceptions as would not have a Material Adverse Effect, each Contract
listed is legal, valid, binding, enforceable, and in full force and effect.
4.10 NONCONTRAVENTION. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by the
Company and the Stockholders will not (i) result in any violation by the Company
or the Stockholders of (A) any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court applicable to the Company or any
Stockholder or their respective properties or assets (except that no
representation is made as to the impact, if any, of antitrust or trade
regulation laws on such transactions), or (B) any provision of the Certificate
of Incorporation or Bylaws of the Company, or (ii) conflict with, result in a
breach of, constitute a default (with or without notice or lapse of time, or
both) under, result in the acceleration of or the loss of any material benefit
under or increased or additional rights of any person under, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Company or any Stockholder is a party or by which any of them is
bound or to which any of their properties or assets is subject (or result in the
creation of any Lien on any of their properties or assets), except for the
consents set forth in Schedule 4.10 (the "REQUIRED CONSENTS") and except, in the
case of (i) (A) and (ii) above, any such violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Lien which, individually or in the aggregate, would not have a Material
Adverse Effect.
4.11 CONSENTS AND APPROVALS. Except as permitted by Section 4.10 and for
requisite filings under the HSR Act and the Required Consents, no consent,
approval or authorization of, or declaration or filing with, any governmental or
regulatory authority, or any other person or entity, is required to be made or
obtained by any Stockholder or the Company that has not been made or obtained in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
4.12 LEGAL COMPLIANCE. The Company has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, ruling and charges thereunder) of federal, state, local and foreign
governments or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or
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instrumentality, domestic or foreign, except where the failure to comply would
not have a Material Adverse Effect.
4.13 TAX MATTERS.
(a) DEFINITIONS.
The following terms, as used herein, have the following meanings:
(1) "AFFILIATE" shall mean (with respect to any individual or
entity) any other individual or entity that directly, or indirectly controls, is
controlled by, or is under common control with, such specified individual or
entity.
(2) "POST-CLOSING TAX PERIOD" means any Tax period (or portion
thereof, beginning after the close of business on the Closing Date.
(3) "PRE-CLOSING TAX PERIOD" means any Tax period (or portion
thereof, ending on or before the close of business on the Closing Date.
(4) "RETURN" means any Tax return, statement, report or form
required to be filed with any Taxing Authority by or with respect to the
Company.
(5) "TAX" means (i) any tax or other like assessment or charge
of any kind whatsoever (including, without limitation, any income, franchise,
withholding, sales or property tax), together with any interest, penalty,
addition to tax or additional amount due from, or in respect of, the Company (or
as a result of the Company being a member of an affiliated, consolidated,
combined or unitary group prior to the Closing Date) imposed by any governmental
authority (domestic or foreign) responsible for the imposition of any such tax
(a "TAXING AUTHORITY"), and (ii) any liability of the Company with respect to
the payment of any amounts of the type described in (i) as a result of any
express obligation to indemnify any other person.
(6) "TAX ASSET" means any tax credit, net operating loss or
other tax attribute which could reduce Taxes; PROVIDED HOWEVER that such term
shall not include the Tax basis of any assets of the Company.
(b) TAX REPRESENTATIONS.
(1) The Company is a small business corporation as defined in
Section 1361 of the Code and has had in effect since October 1, 1990, a valid
election to be treated as an "S" corporation for federal income Tax purposes
under the Code, and neither the Company nor any Stockholder (nor any prior
stockholder) has taken or caused or permitted to be taken any action during such
period that would have caused a termination of S election.
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(2) The Company is registered to do business in the states and
localities set forth in Schedule 4.13(b)(2)(A), and the Company files Tax
Returns in the states and localities set forth in Schedule 4.13(b)(2)(B).
(3) Except as expressly set forth in Schedule 4.13(b)(3): (i) all
Returns required to be filed on or before the Closing Date (including applicable
extensions) by the Company have been (or will be) filed on or before the Closing
Date in accordance with all applicable laws, and such Returns are (or will be)
complete and accurate in all material respects, (ii) all Taxes which were shown
to be due on such Returns have been (or will be) timely paid, (iii) there is no
material audit or claim by any Taxing Authority with respect to the Company in
respect of any Tax, (iv) the Company is not delinquent in the payment of any
material Tax and has not requested any extension of time within which to file
any material Return, (v) there are no outstanding requests for rulings or
determinations in respect of any Tax or Tax Asset pending between the Company
and any Taxing Authority, (vi) there are no Liens for Taxes (except for Taxes
not yet due) on any of the assets of the Company, and no action, to the
knowledge of the Company, has been instituted against the Company that would
reasonably result in any such Lien, (vii) the Company is not under any
contractual obligation to pay the Tax obligations of, or to indemnify, any other
person with respect to any Tax, (viii) the Company is not a "foreign person"
within the meaning of Section 1445 of the Code, (ix) there are no outstanding
waivers or agreements to extend the statutory period of limitations applicable
to the assessment or collection of any Taxes payable by the Company, (x) no
power of attorney has been executed by the Company with respect to any matter
relating to Taxes which is currently in force, (xi) the Company has not filed a
consent under Code Section 341(f), (xii) the Company will not be required to
recognize for Tax purposes in a taxable year beginning on or after the Closing
Date any income or gain which would otherwise have been required to be
recognized under the accrual method of accounting for Tax purposes in a
Pre-Closing Tax Period as a result of the Company, in a Pre-Closing Tax Period,
(A) using the installment method of accounting, (B) making a change in method of
accounting, or (C) otherwise deferring the recognition of income into a
Post-Closing Tax Period as a result of the accounting method used in a
Pre-Closing Tax Period, and (xiii) the Company is not a party to any agreement
providing for the allocation or sharing of Taxes and has not been a party to any
such agreement as to which it would have any continuing liability.
(4) The Company has delivered or made available to Purchaser complete
copies of all Returns (and related workpapers), examination reports, and
statements of deficiencies assessed against or agreed to by the Company for all
Tax periods ending on or after December 31, 1989.
(c) TAX COVENANTS.
(1) Any Returns required to be filed by the Company after the Closing
Date will be prepared by the Company at Purchaser's direction. Any such Returns
pertaining to periods ending on or before the Closing Date, or pertaining to
periods of the Company beginning before the Closing Date and ending after the
Closing Date (such periods are hereinafter referred to as "STRADDLE PERIODS" and
any Company Taxes with
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respect thereto as "STRADDLE TAXES"), will be prepared on a basis consistent
with past Returns and Purchaser shall provide Stockholders and their
representatives at least a three week period to review and comment on each such
Return prior to filing and Purchaser shall (A) with respect to Tax periods
ending on or before the Closing Date, make revisions to such Returns as
Stockholders shall reasonably request, PROVIDED that any such revisions shall
not cause a material increase in the Tax liability of the Company or the
Purchaser after the Closing Date, and (B) with respect to Straddle Periods,
consider in good faith any revisions to such Returns submitted by the
Stockholders. Each Stockholder severally agrees to include his or her respective
shares of the Company's income, loss, deduction or credit items for taxable
periods ending on or before the Closing Date as and to the extent required by
law.
(2) For purposes of determining the amount of Taxes for or which relate
to a Straddle Period, the day prior to the Closing Date shall be treated as the
last day of a taxable period, and the portion of any such Tax that is allocable
to the taxable period that is so deemed to end on and include the day prior to
the Closing Date: (i) in the case of Taxes that are either (x) based upon or
related to income or receipts or (y) imposed in connection with any sale or
other transfer or assignment of property, shall be deemed equal to the amount
which would be payable if the period for which such tax is assessed ended on and
included the day prior to the Closing Date and (ii) in the cases of Taxes other
than Taxes described in clause (i) hereof, shall be computed on a per diem
basis.
(3) The Company, the Stockholders severally, and Purchaser, shall
reasonably cooperate, and shall cause their respective Affiliates and
representatives reasonably to cooperate, in preparing and filing Company Returns
and Company statements prepared for the Stockholders, including, without
limitation, maintaining and making available to each other all records necessary
in connection with the Company and in resolving all disputes and audits with
respect to all taxable periods relating to the Company.
(4) The amount or economic benefit of any refunds, credits or offsets of
Taxes of the Company for any taxable period ending before the Closing Date shall
be for the account of the Stockholders. The amount or economic benefit of any
refunds, credits or offsets of Taxes of the Company for any taxable period
beginning after the Closing Date shall be for the account of Purchaser. The
amount or economic benefit of any refunds, credits or offsets of Taxes of the
Company for any Straddle Period shall be apportioned between the Stockholders
and Purchaser in the manner provided in Section 4. 13(c)(2). Any amounts owing
to the Stockholders as provided in this Section 4.13(c) shall be paid by
Purchaser within 15 days of the receipt of any such refunds or the determination
of any such credits or offsets of Taxes. Purchaser shall not cause or permit the
Company to carry back to any taxable period ending on or prior to the Closing
Date any net operating loss, loss from operations or other Tax attribute, unless
required by law. Nothing in this paragraph shall, however, affect the meaning of
"Damages" herein.
(5) All transfer, documentary, stamp, sales, use, registration and
similar transaction Taxes (and any penalties and interest relating thereto)
incurred in connection
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with the transactions contemplated by this Agreement shall be borne and
paid equally by the Stockholders (severally) and the Purchaser. The
party that is required by applicable law to file any Return or make any
payment with respect to such Tax shall do so and the other party (or
parties) shall cooperate with respect thereto as necessary. The
non-paying party (or parties) shall reimburse the paying party (or
parties) in accordance with this provision within 5 business days after
it receives notice of the payment of such Tax.
4.14 LITIGATION. Schedule 4.14 lists all (i) outstanding orders, writs,
injunctions or decrees of any court, governmental agency or arbitration tribunal
against the Company, and (ii) actions, suits or legal, administrative or
arbitration proceedings or investigations pending or, to the knowledge of the
Company, threatened against the Company. which in the case of (ii), if
determined adversely to the Company, could reasonably be expected to have a
Material Adverse Effect.
4.15 LIABILITIES.
(a) ORDINARY COURSE. All liabilities reflected in the Financial
Statements have arisen from bona fide transactions in the Ordinary Course of
Business or in transactions expressly contemplated by this Agreement, except as
set forth in the notes to the Financial Statements.
(b) PRODUCT WARRANTIES AND LIABILITIES. The Company has furnished
Purchaser with true copies of all standard written warranties provided generally
to customers of the Company during the past three years. The Company has not
been notified of any defect in workmanship or materials with respect to any
products of the Company which might give rise to product warranty or product
liability claims in excess of $250,000 in the aggregate subsequent to the
Closing Date, except as set forth on Schedule 4.15(b).
(c) UNDISCLOSED LIABILITIES. The Company has no material
liabilities or obligations of any nature (whether accrued, absolute, contingent,
unasserted or otherwise), except (i) as disclosed, reflected or reserved against
in the Financial Statements and the notes thereto, (ii) for items described or
referred to in Schedule 4.15(c), (iii) liabilities or obligations arising in the
Ordinary Course of Business consistent with past practice or in connection with
the transactions contemplated hereby since the date of the Audited Financial
Statements, (iv) liabilities or obligations arising after the date of this
Agreement that are of a type described or referred to in Section 6.3 and not
prohibited thereby, and (v) liabilities or obligations arising under Contracts
listed in the Disclosure Schedule or not required to be so listed.
4.16 PERMITS. Schedule 4.16 sets forth a list of Permits. The Company
holds all Permits necessary for the conduct of the Company's business as
presently conducted, and such Permits are valid and in effect as of the date
hereof and the Company has not received any notice that any appropriate
governmental authority intends to cancel, terminate or not renew any Permit.
4.17 LABOR MATTERS. Schedule 4.17 lists all material employment and
labor agreements with respect to the Company's employees. The Company has
furnished Purchaser with true
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copies of the listed agreements. The Company enjoys generally good employee
relations and there is no labor strike or labor disturbance pending or, to the
knowledge of the Company, threatened against the Company which could reasonably
be expected to have a Material Adverse Effect. With such exceptions as could not
reasonably be expected to cause a Material Adverse Effect, the Company is in
compliance with all applicable laws respecting employment, employment practices,
employment terms and conditions and wages and hours. There is no pending, or to
the knowledge of the Company, threatened, material charge, complaint or
grievance against the Company arising out of a collective bargaining agreement
or related to any other employment law.
4.18 EMPLOYEE BENEFIT PLANS.
(a) DEFINITIONS. The following terms, when used in this Section
4.18, shall have the following meanings. Any of these terms may, unless the
context otherwise requires, be used in the singular or the plural depending on
the reference.
(1) COMPENSATION PLAN. "COMPENSATION PLAN" means each plan,
program, contract or understanding providing incentive, bonus,
commission, profit-sharing, change in control or stock-based benefits or
compensation which the Company maintains, administers, contributes to or
has any liability with respect to.
(2) EMPLOYEE PLANS. "EMPLOYEE PLANS" shall mean all Pension Plans,
Welfare Plans and Compensation Plans.
(3) ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(4) PENSION PLAN. "PENSION PLAN" shall mean each plan, program,
contract or arrangement providing pension benefits as defined pursuant
to Section 3(2) of ERISA which the Company maintains, administers,
contributes to or has any liability with respect to.
(5) WELFARE PLAN. "WELFARE PLAN" shall mean each plan, program,
contract or arrangement providing welfare benefits as defined pursuant
to Section 3(1) of ERISA which the Company maintains, administers,
contributes to or has any liability with respect to.
(b) DISCLOSURE SCHEDULE. The Disclosure Schedule contains a
complete list of the Employee Plans.
(c) REPRESENTATIONS.
(1) Each Employee Plan maintained by the Company complies in form
and operation in all material respects with ERISA, the Code and other
applicable laws;
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(2) Each Employee Plan maintained by the Company has filed with
regulatory agencies and distributed to employees all material reports
and descriptions required to be so filed or distributed;
(3) All contributions and premiums which are due to or in respect
of Employee Plans of the Company have been paid when due. There has been
no waiver of the obligation to make any contributions to any Employee
Plan and no application or request for such a waiver is outstanding;
(4) No event has occurred and, to the knowledge of the Company, no
condition or set of circumstances exists in connection with which the
Company, any Employee Plan or any fiduciary to an Employee Plan could be
subject to any material liability under ERISA (including any actual or
contingent liability under Title IV of ERISA), the Code or any other law
related to employee benefit plans;
(5) Each Pension Plan of the Company maintained by the Company
intended to be qualified under Section 401(a) of the Code has been the
subject of a determination letter from the Internal Revenue Service to
the effect that such Employee Plan is so qualified and no event has
occurred and, to the knowledge of the Company, no circumstances exist
that could adversely affect the qualification of any such Pension Plan;
(6) Each Welfare Plan maintained by the Company may be amended or
terminated by the Company without material liability to the Company or
the Employee Plan on or after the Closing Date;
(7) The deduction of any compensation paid or presently payable
under the Employee Plans shall not be subject to disallowance under
Sections 162(m) or 280G of the Code; and
(8) The Company has furnished Purchaser with true copies of plan
documents (including trust agreements, insurance contracts, plan
provisions, summary plan descriptions, Internal Revenue Service
determination letters, actuarial valuations and the two most recent
reports on Form 5500) for Employee Plans maintained by the Company and
copies of comparable documents in the Company's files (if any) with
respect to Employee Plans not maintained by the Company but with respect
to which the Company contributes. The Company agrees to use reasonable
efforts to obtain any documents requested by Purchaser related to
Employee Plans not maintained by the Company.
4.19 PROPRIETARY RIGHTS. Schedule 4.19 lists or describes all material
Proprietary Rights. The Company owns the Proprietary Rights, free of Material
Liens. None of the Proprietary Rights has been held or stipulated to be invalid
in any litigation and the validity of any of the Proprietary Rights has not been
challenged by any third party or questioned in any litigation, pending or, to
the knowledge of the Company, threatened. To the knowledge of the Company, in
conducting the business of the Company, the Company has not infringed,
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and is not infringing, any proprietary rights of any third party and no third
party has infringed or is infringing any of the Proprietary Rights.
4.20 INSURANCE. Schedule 4.20 lists all insurance policies, and
summaries of the coverage thereof, in effect as of the date of this Agreement
with respect to the Company. The Company has furnished Purchaser with true
copies of such policies. To the knowledge of the Company. the activities and
operations of the Company have been conducted in a manner so as to conform in
all material respects to all applicable provisions of such insurance policies.
4.21 CERTAIN RELATIONSHIPS. None of the Stockholders has been involved
in any material business relationship with the Company (other than as an
employee, officer, director, or stockholder of the Company) within the past 12
months and none of the Stockholders owns any material asset which is used in the
business of the Company.
4.22 CORPORATE NAME. The Company (i) has the exclusive right to use its
name in connection with its business in any jurisdiction in which the Company
does business and (ii) has not received any notice of conflict during the past
two years with respect to the rights of others regarding the corporate name of
the Company. Except as set forth in Schedule 4.22, no person is presently
authorized by the Company to use the name of the Company. The Company has
previously delivered to Purchaser copies of any documents in the possession of
the Company granting any authorizations of the type referred to in the previous
sentence.
4.23 SUPPLIERS. Between August 31, 1996 and the date of this Agreement,
the Company has not entered into or made any contract or commitment for the
purchase of merchandise other than in the Ordinary Course of Business consistent
with past practice. Except for the suppliers named in Schedule 4.23, the Company
does not have any supplier from whom it purchased during its 1996 fiscal year
goods in an amount greater than 5% of its sales during such fiscal year.
4.24 EFFECT OF TRANSACTION. Except as set forth in Schedule 4.24, at the
date of this Agreement to the knowledge of the Company, no creditor, employee,
client, customer or other person having a material business relationship with
the Company has informed the Company that such person intends to change such
relationship because of the purchase and sale of the Stock or the consummation
of any other transaction contemplated hereby.
4.25 CUSTOMERS. The Company does not have any customer to whom it made
more than 5% of it sales during its 1996 fiscal year. During the past two years,
the Company has received no customer complaints concerning their products and
services, nor have they had any of their products returned by a purchaser
thereof, other than complaints and returns in the Ordinary Course of Business
which have not, and are not likely to have, individually or in the aggregate, a
Material Adverse Effect (and other than such, if any, as result directly or
indirectly from the execution of this Agreement or the announcement or
consummation of the transactions contemplated hereby).
4.26 PRIVATE OFFERING. Neither the Company, any Stockholder nor anyone
acting on its or their behalf has issued, sold or offered any security of the
Company to any person under circumstances that would cause the sale of the
Stock, as contemplated by this Agreement, to
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be subject to the registration requirements of the Act. Assuming the
representations of Purchaser contained in Section 5.8 are true and correct, the
sale and delivery of the Stock hereunder are exempt from the registration and
prospectus delivery requirements of the Act.
4.27 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. To the knowledge of
each Stockholder, the representations and warranties of the Company in this
Agreement are correct.
4.28 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Except as set
forth in this Article IV, neither the Stockholders nor the Company makes any
representation or warranties, express or implied, at law or in equity, in
respect of the Stockholders or the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company and the
Stockholders as follows:
5.1 ORGANIZATION OF PURCHASER. Purchaser is duly organized, validly
existing and in good standing under the laws of Ohio and has full corporate
power and authority to conduct its business as it is presently being conducted
and to own and lease its properties and assets.
5.2 AUTHORIZATION BY PURCHASER. Purchaser has all necessary corporate
power and authority and has taken all corporate action necessary to enter into
this Agreement and to perform its obligations hereunder.
5.3 VALID AND BINDING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by Purchaser and is a valid and binding
agreement of Purchaser enforceable against Purchaser in accordance with its
terms. The Note has been duly authorized, and when executed and delivered by
Purchaser as provided herein, will be a valid and binding obligation of
Purchaser, enforceable in accordance with its terms.
5.4 NONCONTRAVENTION. Neither the execution and delivery of this
Agreement and the Note, nor the consummation of the transactions contemplated
hereby, will (i) cause Purchaser to violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency or court to which Purchaser
is subject (except that no representation is made as to the impact, if any, of
antitrust or trade regulations laws on such transactions) or any provision of
the Certificate of Incorporation or Bylaws of Purchaser, or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any parry the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which Purchaser is a parry or by which it is bound or to
which any of its assets is subject (or result in the creation of any Lien on any
of its assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Lien would not have a material adverse effect on the financial condition or
business of Purchaser.
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5.5 CONSENTS AND APPROVALS. Except for requisite filings under the HSR
Act, the Securities Exchange Act of 1934, as amended, and as set forth on
Schedule 5.5, no consent, approval or authorization of, or declaration, filing
or registration with, any governmental or regulatory authority, or any other
person or entity, is required to be made or obtained by Purchaser that has not
been obtained or made in connection with the execution, delivery and performance
of this Agreement or the consummation of the transactions contemplated hereby.
5.6 AVAILABLE FUNDS. Purchaser has commitments for funds sufficient to
consummate the transactions described herein, copies of which have been
delivered to Xxxx.
5.7 FINANCIAL STATEMENTS. Purchaser has previously delivered to the
Stockholders Purchaser's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, including the audited consolidated balance sheets of
Purchaser and the related statements of income, shareholders' equity, and cash
flows for the fiscal years ended December 31, 1995 and 1996. Such financial
statements have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, except as set forth in the notes
thereto, and present fairly the consolidated financial condition of the
Purchaser as of such dates and the consolidated results of Purchaser's
operations and cash flows for such periods. Such Form 10-K complies in all
material respect with the requirements of the Securities Exchange Act of 1934,
as amended.
5.8 ACQUISITION FOR INVESTMENT. The Stock to be acquired by Purchaser
pursuant to this Agreement will be acquired for investment for Purchaser's own
account and not with a view to a distribution or resale of any such Stock.
5.9 PRIVATE OFFERING. Assuming the representations of Xxxx contained in
Section 4.1 (d) are true and correct, the sale and delivery of the Note
hereunder is exempt from the registration and prospectus delivery requirements
of the Act.
5.10 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Except as set
forth in this Article V, Purchaser makes no representations or warranties,
express or implied, at law or in equity.
ARTICLE VI
INTERIM COVENANTS
Between the date hereof and the Closing Date, except as expressly
contemplated by this Agreement:
6.1 MAINTENANCE OF BUSINESS PRIOR TO CLOSING. The Company agrees to
continue to carry on its business in the ordinary course and in accordance with
past custom and practice (including with respect to quantity and frequency) and
will not take any action inconsistent therewith or with the consummation of the
Closing. Provided that it continues to be available to the Company on
commercially reasonable terms, the Company agrees to continue to carry the
insurance described in Schedule 4.20.
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6.2 INVESTIGATION BY PURCHASER. The Company shall allow Purchaser at its
own expense during regular business hours to make such inspection of the Company
and to inspect and make copies of Contracts, books and records or information
requested by Purchaser and necessary for or reasonably related to the operation
of the Company; PROVIDED, HOWEVER the Company shall not be required to allow
Purchaser access to competitively sensitive information such as that relating to
prices or customers, as to which the Company has been advised by its legal
counsel that such access may be considered to be improper as between
competitors; PROVIDED FURTHER, that any information obtained from the Company or
the Stockholders is subject to Section 11.11; and PROVIDED FURTHER that such
access does not disrupt the normal operations of the Company. All such
information shall be provided to Purchaser in such form as such information may
presently exist or be readily available.
6.3 CERTAIN PROHIBITED TRANSACTIONS. The Company will not, except as
expressly permitted hereby or with the prior written approval of Purchaser:
(a) other than in the Ordinary Course of Business, incur any
indebtedness for borrowed money, assume, guarantee, endorse or otherwise become
responsible for obligations of any other individual, partnership, firm or
corporation, or make any loans or advances to any individual, partnership, firm
or corporation; PROVIDED that in no event shall the Company incur, assume,
guarantee, endorse or otherwise become responsible for any long-term
indebtedness for borrowed money;
(b) permit any of its assets to become subject to a Material Lien or
sell, transfer or otherwise dispose of any assets (other than inventory in the
Ordinary Course of Business) or cancel, release or assign any indebtedness owed
to it (except for trade accounts receivable) or any claims held by it;
(c) enter into any Contract which would be required to be listed on
Schedule 4.9 or terminate or make any material change in any Contract listed on
Schedule 4.9 or entered into after the date hereof with the consent of Purchaser
pursuant to this Section 6.3(c);
(d) do any other act which would cause any representation or
warranty of the Company or the Stockholders in this Agreement to be or become
untrue in any material respect;
(e) declare or pay any dividend or make any distribution to the
Stockholders;
(f) redeem or otherwise acquire any shares of its capital stock or
issue any capital stock or any option, warrant or right relating thereto or any
securities convertible into or exchangeable for any shares of capital stock;
(g) adopt or amend in any material respect any Employee Plan or
collective bargaining agreement, except as required by law;
(h) amend its Certificate of Incorporation or Bylaws;
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(i) acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof or otherwise acquire any assets which are material,
individually or in the aggregate, to the Company;
(j) make or incur any capital expenditure which, individually, is in
excess of $50,000, or make or incur any such expenditures which, in the
aggregate, are in excess of $100,000, except in each case, for items which are
currently budgeted for fiscal year 1997 and, with respect to expenditures made
or incurred in 1998, for items which are currently budgeted for fiscal year
1998;
(k) make material expenditures for hardware or software in
connection with the implementation of new management information systems or
material changes to the Company's existing management information systems;
(1) settle any Tax audit or dispute with any Taxing Authority on a
basis that would have a material adverse effect on Purchaser or the Company
after the Closing Date; or
(m) agree, whether in writing or otherwise, to do any of the
foregoing.
6.4 CERTAIN OTHER ACTIONS. Prior to the Closing:
(a) The Company may distribute to the Stockholders all furniture,
fixtures and equipment of the Pasadena Facility which the Stockholders choose to
have distributed;
(b) The Company may distribute cash to the Stockholders of a value
up to $2,000,000;
(c) The Company may pay performance bonuses to members of senior
management of the Company (other than Xxxx) up to an aggregate of $500,000; and
(d) Each of the parties will give any notices to, make any filings
with, and use his reasonable efforts to obtain any authorizations, consents and
approvals of governments, governmental agencies or third parties required to
complete the Closing and take such other actions as may be reasonably necessary
to obtain financing for the transactions contemplated hereby and to satisfy the
conditions to Closing contained herein.
It is understood by the parties that any distribution or payment by the
Company pursuant to Section 6.4(a), (b) or (c) will have the effect under GAAP
of reducing Net Worth.
6.5 OTHER TRANSACTIONS. None of the Stockholders nor the Company shall,
and they severally shall make reasonable efforts to cause their respective
officers, directors, stockholders or other representatives not to, directly or
indirectly, encourage, solicit, initiate or participate in discussions or
negotiations with, or provide any information or assistance to, any person or
group (other than Purchaser and its representatives) concerning any merger, sale
of securities, sale of substantial assets or similar transaction involving the
Company. In the event that the Stockholders or the Company or any of their
representatives receives a proposal relating to any
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such transaction, the Stockholders shall promptly notify Purchaser of the terms
of such proposal.
ARTICLE VII
CONDITIONS TO STOCKHOLDERS' OBLIGATIONS
The obligations of the Stockholders to consummate the Closing are
subject, in the discretion of the Stockholders, to the satisfaction, on or prior
to the Closing Date, of each of the following conditions; PROVIDED that the
Stockholders shall have the right to waive any such condition.
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of Purchaser contained in this Agreement shall be true and correct in
all material respects at and as of the Closing Date, except for those that
expressly relate to a particular date. which shall be true and correct in all
material respects as of such date, and Purchaser shall have performed in all
material respects all agreements and covenants required hereby to be performed
by it on or prior to the Closing Date.
7.2 GOVERNMENTAL CONSENTS. All applicable waiting periods under the HSR
Act shall have expired or otherwise been terminated and there shall have been
received all other requisite authorizations, consents and approvals of
government and governmental agencies (if any).
7.3 NO INJUNCTION. No preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction preventing
consummation of the transactions contemplated hereby shall be in effect.
7.4 CERTIFICATES. Purchaser will furnish the Stockholders with such
certificates of its officers and others to evidence compliance with the
conditions set forth in this Article VII as may be reasonably requested by the
Stockholders.
7.5 GUARANTEES. The personal guarantees by Xxxx and Xxx Xxxxxx of
Company's obligations listed on Schedule 7.5 shall have been released.
7.6 LEGAL OPINION. The Stockholders shall have received an opinion,
dated the Closing Date, of Xxxxxxxx, Xxxx & Xxxxx LLP, counsel to the Purchaser,
substantially in the form of Exhibit C.
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to consummate the Closing are subject, in
the discretion of Purchaser, to the satisfaction, on or prior to the Closing
Date, of each of the following conditions; PROVIDED that Purchaser shall have
the right to waive any such condition, and PROVIDED FURTHER, that the condition
in Section 8.6 shall be a condition to the obligations of Purchaser if, and only
after, the conditions to the Closing set forth in Sections 7.2 and 8.2 (to
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the extent they relate to the expiration or other termination of the applicable
waiting period under the HSR Act) and the conditions to the Closing set forth in
Sections 7.3 and 8.3 (to the extent that they relate to government actions,
suits or proceedings or injunctions or other orders issued to prevent a
violation of or otherwise related to antitrust laws) are first satisfied, and if
such other conditions are not first satisfied, the condition to the Closing set
forth in Section 8.6 shall not be a condition to the obligation of Purchaser.
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of the Company and the Stockholders contained in this Agreement shall
be true and correct in all material respects at and as of the Closing Date,
except for those that expressly relate to a particular date, which shall be true
and correct in all material respects as of such date, and the Stockholders shall
have performed in all material respects all agreements and covenants required
hereby to be performed by them on or prior to the Closing Date.
8.2 GOVERNMENTAL CONSENTS. All applicable waiting periods under the HSR
Act shall have expired or otherwise been terminated and there shall have been
received all other requisite authorizations, consents and approvals of
government and governmental agencies (if any).
8.3 NO GOVERNMENTAL PROCEEDINGS, LITIGATION OR INJUNCTION. No action,
suit or proceeding before any court or governmental body shall have been
instituted (and be pending) by any governmental authority to restrain or
prohibit this Agreement or the consummation of the transactions contemplated
hereby, and no preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction preventing consummation of the
transactions contemplated hereby shall be in effect.
8.4 CERTIFICATES. The Stockholders and the Company will furnish
Purchaser with certificates to evidence compliance with the conditions set forth
in this Article VIII as may be reasonably requested by Purchaser.
8.5 LEGAL OPINIONS. Purchaser shall have received opinions, dated the
Closing Date. of Xxxxxx & Xxxxxxx, counsel to the Company and to Xxxx, and of
Zapruder & Xxxxx, counsel to the Xxxxxx Stockholders, substantially in the forms
of Exhibits D and E, respectively (it being agreed that in lieu of an
enforceability opinion as to the agreement from Xxxxxx & Xxxxxxx and Zapruder &
Xxxxx, such an opinion may be delivered by Xxxxxxxx, Xxxxxx & Finger or other
Delaware counsel reasonably acceptable to Purchaser).
8.6 FINANCING. Purchaser shall have obtained third parry financing for
the consummation of the transactions contemplated hereby on terms acceptable to
Purchaser in the exercise of its reasonable judgment (it being agreed that the
terms set forth in the commitment letters referred to in Section 5.6 and
furnished to the Stockholders are acceptable to Purchaser).
ARTICLE IX
COVENANTS OF THE COMPANY, THE STOCKHOLDERS AND PURCHASER
9.1 CONFIDENTIALITY. The Stockholders shall keep confidential all
information relating to the Company and its business, except as required by law
or administrative process and
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except for information which is available to the public on the date of this
Agreement, or hereafter becomes available to the public other than as a result
of a breach of this Section 9.1. The covenant set forth in this Section 9.1
shall terminate 5 years after the Closing Date.
9.2 ASSIGNMENT OF CONFIDENTIALITY AGREEMENTS. On the Closing Date, the
Stockholders shall assign to Purchaser their rights (if any) under all
confidentiality agreements entered into by the Stockholders with any person in
connection with the proposed sale of the Company to the extent such rights
relate to the Company. Copies of such confidentiality agreements shall be
provided to Purchaser on the Closing Date.
9.3 NON-COMPETE. As an inducement to Purchaser to enter into this
Agreement, and (without in any way diminishing the binding nature and
enforceability of this covenant not to compete) with no portion of the value of
the consideration payable by Purchaser to the Stockholders to be apportioned to
this covenant not to compete, each of the Stockholders severally agrees that for
a period of five years after the Closing, he will not, without Purchaser's prior
written consent, directly or indirectly, (A) own, manage, operate, join, control
or participate in the ownership, management, operation or control of, or be
connected as a partner, consultant or otherwise with, any business or
organization in the United States or Canada, which competes with the business of
the Company as conducted on the Closing Date or (B) perform any action, activity
or course of conduct which is substantially detrimental to the Company's
business or business reputation, including (i) soliciting, recruiting or hiring
any employees of the Company or persons who have worked for the Company; or (ii)
soliciting or encouraging any employee of the Company to leave the employment of
the Company; PROVIDED, HOWEVER that, notwithstanding the foregoing, the
Stockholders (and each of them) may (i) continue to conduct any business
disclosed on Schedule 9.3 and currently conducted by any of them other than the
business of the Company, and (ii) may own less than 5% of the stock of a
publicly traded company which engages in any such business. In the event the
agreement in this Section 9.3 shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its extending for too great a
period of time or over too great a geographical area or by reason of its being
too extensive in any other respect, it shall be interpreted to extend only over
the maximum period of time for which it may be enforceable and/or over the
maximum geographical area as to which it may be enforceable and/or to the
maximum extent in all other respects as to which it may be enforceable, all as
determined by such court in such action.
Each Stockholder acknowledges that a breach of the covenant contained in
this Section 9.3 will cause irreparable damage to Purchaser, the exact amount of
which will be difficult to ascertain, and that the remedies at law for any such
breach will be inadequate. Accordingly, each Stockholder agrees that if he
breaches the covenant contained in this Section 9.3, in addition to any other
remedy which may be available at law or in equity, Purchaser shall be entitled
to specific performance and injunctive relief, without posting bond or other
security.
9.4 ACCESS TO BOOKS AND RECORDS; LITIGATION SUPPORT. Purchaser agrees
that it will cooperate with and make available to the Stockholders, during
normal business hours, all books and records, information and employees of the
Company (without substantial disruption) retained and remaining in existence
after the Closing Date which are necessary or useful in connection with any
litigation, investigation or any other matter requiring any such books and
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records, information or employees for any reasonable business purpose. Such
books, records and information shall be retained for a period reasonably
necessary after the Closing Date to comply with obligations under this
Agreement, applicable record retention laws and until the expiration of
applicable statutes of limitations. The Stockholders and Purchaser shall each
provide the other with such assistance as may reasonably be requested by any of
them in connection with the preparation of any return, audit, or other
examination by any taxing authority or any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand in connection with the
transactions contemplated by this Agreement or the operations of the Company
prior to the Closing Date. The party requesting any such books and records,
information, employees or assistance shall bear all of the costs and expenses
(including, without limitation, attorneys' fees) reasonably incurred in
connection therewith. Appropriate steps will be implemented to avoid the waiver
of any privilege.
9.5 FURTHER ASSURANCES. After the Closing, each of the parties agrees to
cooperate in good faith with the others and will take all reasonable action and
execute any documents, instruments or conveyances of any kind which may be
reasonably necessary to carry out any of the transactions contemplated hereby.
ARTICLE X
INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS. Etc. The representations and
warranties in this Agreement and in any certificate delivered pursuant hereto
shall survive the Closing. The representations and warranties shall terminate
and expire 12 months after the Closing Date, except that the representations of
the Company and the Stockholders contained in (i) Section 4.13 shall survive
until the expiration of the relevant Tax statute of limitations (taking into
account any extensions thereof), and (ii) Sections 4.1(c) and 4.3 shall survive
without limitation. After the Closing, the indemnity provided for in this
Article X shall be the exclusive remedy for money damages for any breach of
representation or warranty made in or pursuant to this Agreement (including in
any Closing certificate) or of the covenants contained in Section 4.13 or
Article VI, except for any breach of the representations and warranties
contained in Section 4.1(c) or 4.3.
10.2 INDEMNIFICATION.
(a) BY STOCKHOLDERS. Subject to and as provided in Section 10.2(f),
Xxx Xxxxxx and Xxxx shall severally indemnify, save and hold harmless Purchaser,
and without duplication, its subsidiaries (including the Company), from and
against any and all costs, losses, liabilities, damages, lawsuits, deficiencies,
claims and expenses, including without limitation, interest, penalties and
reasonable attorneys' fees (herein, the "Damages"), incurred in connection with
or arising out of or resulting from:
(i) Any breach of any representation or warranty in this
Agreement or in a Closing certificate or of any covenant contained in
Section 4.13 or Article VI by the Company or the Stockholders;
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(ii) (A) all Taxes of the Company for Pre-Closing Tax Periods,
including Taxes resulting from the failure of the Company to be an S
corporation (or its equivalent) and the imposition of any Taxes on the
Company for any taxable period in which the Company's election of
subchapter S status was in effect (including, without limitation. those
Taxes described in Sections 1374 and 1375 of the Code or comparable
provisions of state or local Tax laws), (B) all Taxes of any entity
which is currently or has been Affiliate of the Company imposed on the
Company as a result of Treasury Regulation Section 1.502-6(a) or other
similar provision, and (C) any Straddle Taxes, but only with respect to
the portion of such Straddle Period ending the day before the Closing
Date;
(iii) Any Release or Environmental Conditions (A) at any of the
Owned Real Property occurring on or prior to the Closing, (B) at any of
the leased property described in Schedule 4.8, occurring on or after
the commencement of the Company's tenancy and prior to the Closing, or
(C) at any other location at any time prior to the Closing, in each
case either asserted by a governmental authority or third party in a
judicial or administrative proceeding or required by Environmental Laws
to be investigated or remediated; or
(iv) Any product liability claim against the Company relating
to accidents or injuries which occurred prior to the Closing Date to
the extent not indemnified pursuant to the terms of an insurance
policy.
Notwithstanding the foregoing paragraph (iii), the Stockholders shall
have no obligation to indemnify Purchaser for (A) any contribution to or
aggravation of any such Release or Environmental Condition on any such Owned
Real Property or leased property which occurred after the Closing (and in the
event of any such contribution or aggravation, Purchaser shall establish the
amount of such Release or Environmental Condition not allocable to the period
after the Closing), or (B) any investigation unless such investigation
ultimately leads to liability for violation of Environmental Laws.
Further notwithstanding the foregoing, the Stockholders shall have no
obligation to indemnify Purchaser unless a reasonably detailed claim in writing
specifying the nature of the breach or claim is received by the Stockholders
from Purchaser within the applicable period of survival specified in this
Section 10.1 (or in the case of the indemnification provided in paragraph (ii)
above with respect to Taxes, until the expiration of the relevant Tax statute of
limitations (including extensions); or in the case of the indemnification
provided in paragraph (iii) above with respect to environmental matters, within
36 months after the Closing Date; or in the case of indemnification provided in
paragraph (iv) above with respect to product liability claims, within 24 months
after the Closing Date).
The calculation of the amount of Damages shall take into account
applicable insurance to the extent recovered. Purchaser shall. cause the
properties, assets and businesses of the Company to be insured as it is at the
Closing Date or, at its election, by reputable insurers, against risks, in
amounts, and with deductibles normal among corporations in the same or similar
lines of business. Purchaser agrees to use reasonable efforts to make and
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pursue claims for coverage under applicable insurance policies (whether in force
before or after the Closing).
The calculation of the amount of Damages shall be made on an after Tax
basis taking into account any Tax benefits or detriments (assuming maximum
statutory tax rates for federal and state and local income and franchise taxes)
obtained or suffered, as the case may be, by Purchaser or any subsidiary;
PROVIDED that the parties agree to treat indemnification payments as adjustments
to basis or purchase price, and only in the event such treatment is disallowed
by the applicable Taxing Authority may any claim be made by Purchaser for Taxes
in respect of an indemnification payment hereunder. The gross liability for
Damages hereunder in respect of the sum of any primary indemnity claim and all
Taxes on indemnity payments in respect of it may not exceed 1.6 times the amount
of the primary indemnity claim.
It is agreed that the reserves and accruals on the Closing Balance Sheet
shall first be applied to the matters relating to the period prior to the
Closing Date of the class of matters in respect of which they were established,
and subject to this Section 10.2(a) and Section 10.2(f) below, that no
indemnifiable Damages as to any such matter shall be owed to Purchaser hereunder
until the applicable reserve or accrual has been exhausted, and then only to the
extent that such Damages, in the aggregate, exceed the amount of such reserves
and accruals and any amount which may be available under Section 10.2(f)(i), but
subject to the limit of Section 10.2(f)(ii). Only out-of-pocket expenses and
charges (and not internal expenses and allocations, such as charges for
management time and general and administrative allocations, which shall not be
indemnified) shall be charged against such reserves.
In satisfaction of any amounts required to be paid by Xxxx to Purchaser
pursuant to the provisions of this Section 10.2(a), Xxxx shall have the option
to surrender to Purchaser for cancellation that principal amount of the Note,
which, together with accrued interest, equals (as nearly as may be practicable)
his obligation in respect of Damages. In no event shall Purchaser set off the
amount of any Damages owed by Xxxx hereunder against any amounts owed by it in
respect of the Note.
(b) BY PURCHASER. Subject to Section 10.2(f), Purchaser shall indemnify,
save and hold harmless the Stockholders from and against any and all Damages
incurred in connection with or arising out of or resulting from any breach of
any representation or warranty in this Agreement or a Closing certificate or any
covenant contained in Section 4.13 or Article VI by Purchaser. The calculation
of the amount of damages shall take into account applicable insurance to the
extent recovered. The calculation of the amount of Damages shall be made on an
after Tax basis taking into account any Tax benefits (assuming maximum statutory
Tax rates for federal and state and local income taxes) actually obtained or
suffered by the Stockholder seeking indemnification. The gross liability for
Damages hereunder in respect of the sum of any primary indemnity claim and all
Taxes on indemnity payments in respect of it may not exceed 1.6 times the amount
of the primary indemnity claim. The Stockholders shall not have any obligation
to carry or maintain any insurance against any liability described in this
Section 10.2(b). Notwithstanding the foregoing, Purchaser shall not be obligated
to indemnify the Stockholders unless a reasonably detailed claim in writing
specifying the nature of the breach or claim is received from the Stockholders
(or any of them) by Purchaser prior to 12 months after the Closing Date.
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(C) PROCEDURES RELATING TO INDEMNIFICATION (OTHER THAN WITH RESPECT TO
TAX CLAIMS).
(I) THIRD-PARTY CLAIMS OTHER THAN ENVIRONMENTAL REMEDIATION CLAIMS.
In order for a party (the "INDEMNIFIED PARTY") to be entitled to any
indemnification provided for under this Agreement (other than for Tax Claims (as
defined) or Environmental Remediation Claims (as defined)) in respect of,
arising out of or involving a claim or demand made by any person against the
indemnified party (a "THIRD PARTY CLAIM"), such indemnified party must notify
the indemnifying party of the Third Party Claim reasonably promptly after
receipt by such indemnified party of written notice of the Third Party Claim;
PROVIDED HOWEVER, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the indemnifying party
shall have been actually prejudiced as a result of such failure (except that the
indemnifying party shall not be liable for any expenses incurred during the
period in which the indemnified party failed to give such notice). After such
notice, if the indemnifying party shall acknowledge in writing to the
indemnified party that the indemnifying party is obligated to indemnify the
indemnified party in connection with such Third Party Claim, then the
indemnifying party shall be entitled, if it so elects, to take control of the
defense and investigation of such Third Party Claim and to employ and engage
attorneys of its own choice who are reasonably satisfactory to the indemnified
party to handle and defend the same, at the indemnifying party's cost, risk and
expense. The indemnified party shall cooperate in all reasonable respects with
the indemnifying party and such attorneys in the investigation, trial and
defense of such Third Party Claim and any appeal arising therefrom; PROVIDED,
HOWEVER, that the indemnified party may, at its own cost, participate in the
investigation, trial and defense of such Third Party Claim and any appeal
arising therefrom. If the indemnifying party shall assume the defense with
counsel reasonably satisfactory to the indemnified party, the indemnifying party
shall not be liable for any legal expenses subsequently incurred by the
indemnified party. The indemnifying party shall be liable for the fees and
expenses of counsel employed by the indemnified party for any period during
which the indemnifying party has failed to assume the defense thereof (other
than during the period prior to the time the indemnified party shall have given
notice of the Third Party Claim as provided above). If the indemnifying party
shall have assumed the defense of a Third Party Claim, the indemnified party
shall agree to any settlement, compromise or discharge of a Third Party Claim
which the indemnifying party may recommend and which by its terms obligates the
indemnifying parry to pay the full amount it is obligated to pay hereunder in
connection with such Third Party Claim, which releases the indemnified party
completely in connection with such Third Parry Claim and which would not
otherwise have a material adverse effect on the indemnified party. In no event
may settlement of any such indemnified matter be effected without the prior
written consent of the indemnifying party, which consent shall not be
unreasonably withheld, and provided the settlement releases the indemnifying
party and would not otherwise have a material adverse effect on the indemnifying
parry other than any obligation to make indemnification payments.
Notwithstanding the foregoing, if. the indemnified parry so elects, the
indemnifying party shall not be entitled to assume the defense of any Third
Party Claim if the Third Party Claim seeks an order, injunction or other
equitable relief or relief for other than money damages against the indemnified
party which the indemnified parry reasonably determines, after conferring with
its outside counsel, cannot be separated from any related
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claim for money damages. The indemnifying party shall not be responsible for
indemnity hereunder in respect of any claim which it is not permitted to defend
pursuant to the foregoing provision. If such equitable relief or other relief
portion of the Third Party Claim can be so separated from that for money
damages, the indemnifying party shall be entitled to assume the defense of the
portion relating to money damages.
(ii) ENVIRONMENTAL REMEDIATION CLAIMS. In order for the
Purchaser to be entitled to any indemnification provided for under this
Agreement in respect of, arising out of, or involving an obligation under
Environmental Laws to clean up or remove Hazardous Substances in circumstances
in respect of which Purchaser is otherwise entitled to indemnification pursuant
to the provisions of Section 10.2(a)(iii) (an "ENVIRONMENTAL REMEDIATION
CLAIM"), Purchaser must notify the Stockholders of such obligation and afford
them the opportunity to effect or supervise remediation activities. After such
notice, if the Stockholders acknowledge in writing the obligation to indemnify
and state their election to effect or supervise remediation, they shall be
allowed to do so at their cost and expense. The Stockholders shall cause the
remediation to be commenced and pursued with reasonable promptness, shall
consult with the Company concerning the remediation, and shall use reasonable
efforts not to disrupt unduly the personnel or operations of the Company. The
Company shall cooperate with the Stockholders and their agents in effecting such
remediation. If the Stockholders do not elect to supervise or effect
remediation, the Company may do so.
(iii) OTHER (NON-TAX AND NON-ENVIRONMENTAL REMEDIATION)
Claims. In the event any indemnified party should have a claim against the
indemnifying party under Section 10.2(a) or (b) that does not involve a Third
Party Claim, a Tax Claim or an Environmental Remediation Claim, the indemnified
party shall deliver notice of such claim with reasonable promptness to the
indemnifying party. The failure by any indemnified party so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
which it mav have to such indemnified party under Section 10.2(a) or (b), except
to the extent that the indemnifying party demonstrates that it has been actually
prejudiced by such failure. If the indemnifying party has disputed its liability
with respect to such claim, the indemnifying party and the indemnified party
shall proceed in good faith to negotiate a resolution of such dispute and, if
not resolved through negotiations, such dispute shall be resolved by litigation
in the appropriate court of competent jurisdiction.
(d) TAX CLAIMS.
(1) If any party becomes aware of any audit, assessment or other
claim with respect to Taxes (a "TAX CLAIM") that has been or will be
initiated against the Company by any Taxing Authority for which
Purchaser is entitled to indemnification from the Stockholders, such
party shall promptly notify the other parties in writing of such Tax
Claim. The Stockholders may control the defense of a Tax Claim at the
Stockholders' own cost and expense and with their own counsel if the
Stockholders notify Purchaser of their intent to do so within 30
calendar days of receipt of notice of the asserted Tax liability (but
not less than five days before the due date of any protest or other
claim in respect thereof) and the Stockholders acknowledge in writing
that such Tax Claim involves Pre-Closing Tax Period Taxes or Straddle
Taxes for which the Company may be responsible. If the Stockholders
elect to assume the defense of any such Tax Claim,
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notwithstanding anything to the contrary contained herein, (i) the
Stockholders shall consult with Purchaser and shall not enter into any
settlement with respect to any such Tax Claim without Purchaser's prior
written consent if the effect of such settlement would be to increase
the liability for Taxes of the Company or Purchaser for any period
ending after the Closing Date, which consent shall not be unreasonably
withheld; (ii) the Stockholders shall keep Purchaser informed of all
material developments and events relating to such Tax Claim; and (iii)
Purchaser shall have the right to participate, at its own cost and
expense, in the defense of such Tax Claim.
(2) If, after receiving notification of a Tax Claim, the
Stockholders (i) do not timely assume control of a Tax Claim involving
Pre-Closing Tax Period Taxes or Straddle Taxes for which the
Stockholders are responsible, or (ii) do not provide Purchaser with
timely notice of a Tax Claim involving Taxes for which Purchaser is
entitled to indemnification and as a result of such lack of notice
Purchaser is actually prejudiced, then Purchaser shall have the full
right to contest such Tax Claim, and shall be entitled to settle or pay
in full such Tax Claim (in its reasonable discretion), and thereafter
pursue its right to indemnification under Section 10.2(a) without
prejudice. In any such contest, Purchaser shall keep the Stockholders
informed of all material developments and events relating to such Tax
Claim, and Stockholders shall have the right to participate, at their
own cost and expense, in the defense of such Tax Claim. The Stockholders
shall reimburse Purchaser for all reasonable legal fees, costs and
expenses incurred by Purchaser in connection with the defense, contest
or settlement of any Tax Claim referred to in Section 10.2(d)(2).
(e) BROKERS AND FINDERS. Pursuant to the provisions of this Section
10.2, (i) Purchaser shall indemnify, hold harmless and defend the Stockholders
from the payment of any and all broker's and finder's expenses, commissions,
fees or other terms of compensation or indemnification which may be due or
payable in connection with the transactions contemplated by this Agreement or
may have been earned by any broker or finder acting on behalf of Purchaser in
connection with the negotiation and execution hereof and the consummation of the
transactions contemplated hereby, and any Damages related thereto, and (ii) each
Stockholder shall indemnify, hold harmless and defend Purchaser from the payment
of any and all broker's and finder's expenses, commissions, fees or other forms
of compensation or indemnification which may be due or payable in connection
with the transactions contemplated by this Agreement (other than the Company's
Agreement with BA Partners dated August 9, 1996, which shall be payable by the
Company (except with respect to indemnity obligations, if any)) or may have been
earned by any broker of finder acting on behalf of such Stockholder in
connection with the negotiation and execution hereof and the consummation of the
transactions contemplated hereby, and any Damages related thereto.
(f) LIMITATIONS. AFTER THE CLOSING:
(i) Neither Xxx Xxxxxx or Xxxx, on the one hand, nor Purchaser, on
the other, shall be liable to the other under Section 10.2 for any
Damages (except for breaches of the representations and warranties
contained in Sections 4.1(c), 4.3 and 4.13, and except for the tax
indemnification contained in Section 10.2(a)(ii), as to each of which no
deductible shall apply), until (and then only
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to the extent that) the aggregate amount otherwise due the party being
indemnified exceeds on a cumulative basis $300,000; and
(ii) No Stockholder (other than Xxxxxx for himself and the
Xxxxxx Stockholders) shall be responsible for the breach by any other
Stockholder of his representations in Section 4.1. Neither Xxx Xxxxxx
nor Xxxx shall be individually liable for more than 50% of any Damages,
except for Damages resulting from the breach of Section 4.1(b), (c) or
(d) by Xxxx (for which Xxxx shall be liable 100%) or by any other
Stockholder (for which Xxx Xxxxxx shall be liable 100%). Except for
breaches of Sections 4.1(c), 4.3 and 4.13, and except for the Tax
Indemnification contained in Section 10.2(a)(ii), as to each of which no
maximum shall apply, in no event shall the aggregate Damages payable
hereunder by Xxx Xxxxxx and Xxxx, on the one hand, or Purchaser on the
other, exceed $3,000,000.
ARTICLE XI
MISCELLANEOUS
11.1 TERMINATION. (a) Anything herein to the contrary notwithstanding,
this Agreement may be terminated and the transactions contemplated hereby
abandoned at any time prior to the Closing, in each case by notice to the other
parties, (i) by mutual consent of the parties, (ii) by the Stockholders if the
Closing shall not have occurred on or before the Cut-Off Date, by reason of the
failure of any condition precedent in Article VII hereof (unless the failure
results from the Stockholders or the Company breaching in a material respect any
representation, warranty or covenant in this Agreement), or (iii) by Purchaser
if the Closing shall not have occurred on or before the Cut-Off Date, by reason
of the failure of any condition precedent in Article VIII hereof (unless the
failure results from Purchaser breaching in a material respect any
representation, warranty or covenant in this Agreement).
In the event that a condition precedent to its obligations is not
satisfied, nothing contained herein shall be deemed to require any party to
terminate this Agreement, rather than to waive such condition precedent and
proceed with the Closing.
Subject to Section 11.1(b) hereof, in the event of the termination of
this Agreement by either the Stockholders or Purchaser as above provided,
neither the Stockholders or the Company, on the one hand, nor Purchaser, on the
other, shall have any liability hereunder of any nature whatsoever (other than
pursuant to Sections 11.7, 11.11 and 11.16) to the other, including any
liability for damages, unless either the Stockholders or the Company, on the one
hand, or Purchaser, on the other, is in default under its obligations hereunder,
in which event the parties in breach shall be liable to the other party for such
breach.
(b) If (x) this Agreement is terminated by the Stockholders pursuant to
Section 11.1 (a)(ii) or by Purchaser pursuant to Section 11. 1(a)(iii) and (y)
at the time of termination any one of the conditions to the Closing set forth in
Sections 7.2 and 8.2 (to the extent that they relate to expiration or other
termination of the applicable waiting period under the HSR Act) or any one of
the conditions to the Closing set forth in Sections 7.3 and 8.3 (to the extent
they relate to governmental actions, suits or proceedings, or injunctions or
other orders issued
33
34
to prevent a violation of or otherwise related to antitrust laws) has not been
satisfied, then Purchaser shall promptly pay to the Company $5,000,000 in
immediately available funds. Notwithstanding the foregoing, Purchaser shall not
pay such amount if at the time of termination any condition to the obligations
of Purchaser contained in Article VIII (other than the condition set forth in
Section 8.2 to the extent it relates to the expiration or other termination of
the applicable waiting period under the HSR Act or the condition set forth in
Section 8.3 to the extent it relates to governmental actions, suits, or
proceedings or injunctions or other orders issued to prevent a violation of or
otherwise related to antitrust laws) has not been satisfied (or in the case of
the conditions set forth in Sections 8.1 , 8.4 and 8.5, would not be capable of
being satisfied if the Closing were to take place at the time of termination).
11.2 ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party without the prior written
consent of the other parties. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
11.3 NOTICES. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder shall be in writing and
delivered personally or mailed by prepaid first-class mail, overnight courier,
telex. or facsimile, as follows:
If to the Stockholders, addressed to:
Xxxxxxx X. Xxxx
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
and
Xxx Xxxxxx
00 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
With copies to:
Xxxxxx X. Xxxxxx
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
and
Xxxxxxx Xxxxxx
Zapruder & Xxxxx
000 Xxxxxxxxxx Xxxxxx, X.X., Xxxxx 000 Xxxxx
Xxxxxxxxxx X.X. 00000
Telecopier: (000) 000-0000
34
35
If to the Company, addressed to:
Xxxxxx Corporation
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
With a copy to:
Xxxxxx X. Xxxxxx
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
If to Purchaser, addressed to:
Dayton Superior Corporation
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx
With a copy to:
Xxxx Xxxxxxxx
Xxxxxxxx, Xxxx & Xxxxx
0000 Xxxxxxxxxx Xxxxx X.X.
Xxxxxx, XX 00000
Telecopier: (000) 000-0000
or to such other place and with such other copies as any party may designate as
to itself by written notice to the others. All such notices and communications
shall be deemed to have been duly given: if delivered by hand, when personally
delivered; if mailed as aforesaid, two business days after being deposited in
the mail, postage prepaid; if by overnight courier with guaranteed delivery, the
next day; if telexed, when answered back; and if transmitted by facsimile, when
receipt is acknowledged.
11.4 CHOICE OF LAW.
(a) This Agreement shall be construed, interpreted and the rights of the
parties determined in accordance with the laws of the State of Delaware (without
reference to the choice of law provisions of Delaware law) except with respect
to matters of law concerning the internal corporate affairs of any corporate
entity which is a party to or the subject of this
35
36
Agreement, and as to those matters the law of the jurisdiction under which the
respective entity derives its powers shall govern.
(b) Each of the parties hereto irrevocably consents to the service of
any process, pleading, notices or other papers by the mailing of copies thereof
by registered, certified or first class mail, postage prepaid, to such party at
such party's address set forth herein, or by any other method provided or
permitted under Delaware law. Additionally. each party hereby appoints RL&F
Service Corp., Xxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, as agent for
service of process in Delaware.
(c) Each party irrevocably and unconditionally agrees and consents that
any suit, action or other legal proceeding arising out of or related to this
Agreement shall be brought and heard in New Castle County, State of Delaware (a
"DELAWARE COURT"), and each party irrevocably consents to personal jurisdiction
in any and all tribunals in said County.
(d) To the extent that Purchaser, the Company or any of the Stockholders
has or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, each hereby irrevocably waives such immunity in
respect of its obligations with respect to this Agreement. Each of the parties
hereto: (i) waives and agrees not to plead or make any objection to the venue of
any action, suit or proceeding in respect of this Agreement (a "PROCEEDING") in
a Delaware Court; (ii) waives and agrees not to plead or make any claim that any
Proceeding brought in a Delaware Court has been brought in an improper or
otherwise inconvenient forum; (iii) waives and agrees not to plead or make any
claim that a Delaware Court lacks personal jurisdiction; and (iv) waives any
right to remove any Proceeding to a federal court except where such courts are
vested with sole and exclusive jurisdiction.
11.5 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together
with all exhibits and schedules hereto (including the Disclosure Schedule), and
the Confidentiality Agreement, dated October 16, 1996, among the parties,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
11.6 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.7 EXPENSES. Except as set forth below or as otherwise specified
herein, each party hereto shall pay its own legal, accounting, out-of-pocket and
other expenses incident to this Agreement and to any action taken by such party
in preparation for carrying this Agreement into effect. Notwithstanding the
foregoing, it is understood and agreed that the Company will
36
37
pay the fees and expenses of BA Partners, Xxxxxx & Xxxxxxx and Xxxxx & Xxxxx LLP
in connection with this Agreement and the transactions contemplated hereby.
Purchaser agrees that if there is a request for additional information from a
governmental agency (including an informal inquiry short of a formal second
request, a "SECOND REQUEST") under the HSR Act as a result of Purchaser's
proposed purchase of the Stock, Purchaser will reimburse the Stockholders and/or
the Company for up to an aggregate of $750,000 of reasonable costs (including
fees and expenses of attorneys and advisors) actually incurred in responding to,
preparing to respond to, or incurred in preparations in anticipation of, such
request. The Company may invoice Purchaser, in reasonable detail, on a monthly
basis for the reimbursement of such costs.
11.8 INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein shall,
for any reason, be held to be invalid, illegal or unenforceable in any respect,
then to the maximum extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or any
other such instrument.
11.9 TITLES. The titles, captions or headings of the Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.10 PUBLICITY. No party shall issue any press release or make any
public statement regarding the transactions contemplated hereby, without the
prior approval of the other parties except as such release or statement may be
required by law or the rules of the New York Stock Exchange.
11.11 CONFIDENTIAL INFORMATION. In connection with the negotiation of
this Agreement and the preparation for the consummation of the transactions
contemplated hereby, Purchaser acknowledges that it will have access to
confidential information of the Company. Such confidential information shall be
subject to the Confidentiality Agreement, dated October 16, 1996, between the
parties.
11.12 NO THIRD-PARTY BENEFICIARIES. Except as provided in Section 10.2,
no person (other than parties to this Agreement or their respective successors
or permitted assigns) shall have or be construed to have any legal or equitable
right, remedy or claim under or in respect of or by virtue of this Agreement or
any provision herein contained.
11.13 STOCKHOLDER MATTERS. Whenever any representation or promise is
made herein by the Stockholders, it is made severally by each Stockholder. Any
action required or permitted to be taken by the Stockholders hereunder,
including any amendment, waiver or consent of such Stockholders, may be effected
by Xxxx for himself and Xxx Xxxxxx on behalf of the Xxxxxx Stockholders. Each
Xxxxxx Stockholder has appointed Xxx Xxxxxx as his attorney-in-fact for all such
purposes.
11.14 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden
37
38
of proof shall arise favoring or disfavoring any party by virtue of authorship
of any provision of this Agreement.
11.15 VARIATION OF PRONOUNS. All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity or identities of the antecedent person or persons may
require.
11.16 ATTORNEYS' FEES. In an action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the successful party shall be entitled to recover, to the extent
successful, reasonable attorneys' fees in addition to any other remedy.
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39
IN WITNESS WHEREOF, each of the parties has duly executed or caused this
Agreement to be duly executed on its behalf as of the day and year first above
written.
DAYTON SUPERIOR CORPORATION
By: /s/ Xxxx X. Xxxxxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: President and CEO
XXXXXX CORPORATION
By: /s/ Xxxxxxx X. Xxxx
-----------------------------
Name: Xxxxxxx X. Xxxx
Title: President
/s/ Xxxxxxx Xxxxxx
--------------------------------
XXXXXX STOCKHOLDERS
By their Attorney-in-Fact,
Xxxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxx
--------------------------------
XXXXXXX X. XXXX
39
40
EXHIBIT A
SENIOR NOTE
-----------
$5,000,000
___________, 1997
for value received, the undersigned Dayton Superior Corporation, an Ohio
corporation (the "COMPANY"), promises to pay to Xxxxxxx X. Xxxx (the "HOLDER"),
on ________, 2004 [7th anniversary] , in lawful money of the United States of
America and in immediately available funds, the principal amount of FIVE MILLION
DOLLARS ($5,000,000), or if less, the aggregate unpaid and outstanding principal
amount of this Note, and all other amounts owed by the Company to the Holder
hereunder, including any accrued and unpaid interest hereunder.
1. INTEREST. The Company promises to pay to the Holder interest on the
principal amount of the Note then outstanding at the rate of 10.5% per annum,
compounded semi-annually, payable in arrears on the first day of each month,
commencing on __________, 1997, or if any such day is not a Business Day, on the
next succeeding business day (each an "INTEREST PAYMENT DATE"). "BUSINESS DAY"
means any day other than a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed.
Interest will be computed on the basis of a 360-day year of twelve
30-day months. Interest on the Note will accrue from the most recent date to
which interest has been paid or duly provided for or, if no interest has been
paid or duly provided for, from the date of original issuance of the Note. To
the extent lawful, the Company shall pay interest (including post-petition
interest in any proceeding under any bankruptcy law) on overdue principal at the
interest rate on the Note set forth above plus three percent; it shall pay
interest on overdue installments of interest (without regard to applicable grace
periods) at the same rate, all to the extent lawful.
2. METHOD OF PAYMENT. Principal and interest on the Note will be payable
by check mailed to the Holder at his address set forth below; provided that if
Holder has given wire transfer instructions to the Company, the Company will be
required to make all payments by wire transfer of immediately available funds to
the account specified by the Holder. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts.
3. RANKING. This Note shall rank pari passu with all unsecured and
unsubordinated debt of the Company, and senior to any subordinated debt of the
Company.
4. REDEMPTION AT THE OPTION OF THE HOLDER. The Note is not redeemable at
the Holder's option until __________, 1998 [one year anniversary). Thereafter,
the Note will be subject to redemption at the option of the Holder, in whole or
in part, upon not less than 30 days' notice, at 100% of the principal amount
being redeemed, plus accrued and unpaid interest thereon. Provided no default is
made in payment of the redemption price, during the period commencing upon
receipt by the Company of notice of redemption to the date of such redemption,
no interest shall be payable on the portion of the Note to be redeemed.
Notwithstanding the foregoing, in the event of a Rating
41
Decline (as defined below) this Note shall be redeemable at the option of the
Holder upon ten days notice. The Company shall give notice of any Rating Decline
to Rolder within two Business Days of such event. "RATING DECLINE" means (i)
there has been an announcement by any "nationally recognized statistical rating
organization," as defined for purposes of Rule 436(g) under the Securities Act
of 1933, as amended, that (a) it is downgrading its rating assigned to any debt
or class of securities of the Company or (b) it is reviewing its ratings
assigned to any debt or class of securities of the Company with a view to
possible downgrading, or with negative implications, or direction not
determined, or (ii) the net worth of the Company reported in its financial
statements filed with the Securities and Exchange Commission for any quarter
shall decline by 25 % or more from the net worth of the Company in the previous
quarter.
Following receipt by the Company of such notice of redemption, the
Company shall deliver to Holder funds representing the amount of this Note so
redeemed, together with all accrued and unpaid interest on such redeemed portion
and a new Note representing the portion of unredeemed principal amount of the
Note, on the Interest Payment Date immediately following the thirtieth day after
receipt of the notice of redemption by the Company.
5. REDEMPTION AT THE OPTION OF THE COMPANY. The Note is redeemable at
the Company's option upon the death of Holder. Thereafter, the Note will be
subject to redemption at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' notice, at 100% of the principal amount
to be redeemed, plus accrued and unpaid interest thereon to the redemption date.
The Company shall deliver to Holder's representative funds representing the
amount of this Note so redeemed, together with all accrued and unpaid interest
on such redeemed portion and a new Note representing the portion of unredeemed
principal amount of the Note, on the Interest Payment Date immediately following
the dispatch of the notice of redemption.
6. DEFAULTS AND REMEDIES. The following constitute Events of Default
(each an "EVENT OF DEFAULT") under this Note: (i) a default for 30 days in the
payment when due of interest on this Note; (ii) a default in payment when due of
the principal of this Note; (iii) failure by the Company for 60 days after
notice to comply with any of its other agreements in this Note; (iv) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any indebtedness for money borrowed
by the Company or any of its subsidiaries (or the payment of which is guaranteed
by the Company or any of its subsidiaries) whether such indebtedness or
guarantee now exists, or is created after the date of this Note, which default
(a) is caused by a failure to pay principal of or interest on such indebtedness
prior to the expiration of any grace period provided in such indebtedness on the
date of such default (a "PAYMENT DEFAULT") or (b) results in the acceleration of
such indebtedness prior to its express maturity and, in each case, the principal
amount of any such indebtedness, together with the principal amount of any
other such indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $1,000,000 or more; (v)
failure by the Company or any of its subsidiaries to pay final judgments
aggregating in excess of $1,000,000, which judgments are not paid, discharged or
stayed, for a period of 60 days; (vi) the Company or any of its subsidiaries
pursuant to or within the meaning of any bankruptcy law (a) commences a
voluntary case, (b) consents to the entry of an order for relief against it in
an involuntary case, (c) consents to the appointment of a custodian of it or for
all or substantially all of its property, (d) makes a general assignment for the
benefit of its creditors, or (e) generally is unable to pay its debts as the
same become due; or (vii) a court of competent jurisdiction enters an order or
decree under any bankruptcy law that (a) is for relief against the Company or
any of its subsidiaries in an involuntary case, (b) appoints a custodian of the
Company or any of its subsidiaries or for all or substantially all of their
property, (c) orders the liquidation of the Company or any of its subsidiaries,
and the order or decree remains unstayed and in
2
42
effect for 60 days. Upon the occurrence of any Event of Default, the Company
shall deliver to Holder by next day mail or facsimile at his address set forth
herein notice of such Event of Default stating the Event of Default, the date of
occurrence of such Event of Default, and any action taken or being taken by the
Company to remedy such Event of Default. If any Event of Default occurs and is
continuing, the Holder may declare all outstanding principal and accrued but
unpaid interest under this Note to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company or any
subsidiary as set forth in clauses (vi) and (vii) of this paragraph, all amounts
outstanding under the Note will become due and payable without further action or
notice.
7. TRANSFER OR EXCHANGE. The Note may not be, directly or indirectly,
assigned, transferred or exchanged by the Holder.
8. NOTICE. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by the Company to the Holder
or by the Holder to the Company shall be in writing and delivered personally or
mailed by prepaid first-class mail, overnight courier, telex, or facsimile,
addressed to:
Xxxxxxx X. Xxxx
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
With a copies to:
Xxxxxx & Xxxxxxx
000 X. Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
and:
Dayton Superior Corporation
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Facsimile No. (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx
9. GOVERNING LAW. This Note shall be construed and interpreted in
accordance with and governed by the internal laws of the State of Delaware,
without regard to the rules of conflict of laws thereof.
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43
10. MISCELLANEOUS. The Company agrees to pay all costs and expenses,
including without limitation reasonable attorneys' fees, incurred by Holder and
the Company in connection with the enforcement of this Note.
DAYTON SUPERIOR CORPORATION
----------------------------
By: Xxxx X. Xxxxxxxxxx
Its: President and CEO
4
44
NOTICE OF REDEMPTION
The undersigned owner of this Note hereby irrevocably exercises the
option to redeem this Note, or portion hereof (which is $1,000 or an integral
multiple thereof) below designated, in accordance with the terms of this Note,
and directs that the payment for this Note or portion of this Note indicated
below be delivered to the undersigned in the manner provided for payments of
interest on this Note.
Principal amount to be redeemed (in an integral multiple of $1,000, if
less than all):$_____________________
Name and address:
Name: Xxxxxxx X. Xxxx
Address: 0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
Social Security Number: ___________________
5
45
EXHIBIT B
SHAREHOLDER
NAME AND ADDRESS PERCENTAGE SHARES CONSIDERATION
---------------- ---------- ------ -------------
XXXXXXX X. XXXX 50.00% 2,500 $17,000,000
XXX X. XXXXXX 8.32% 416 2,828,800
XXXXX XXXXXX 8.34% 417 2,835,600
XXXX X. XXXXXX 8.34% 417 2,835,600
XXXXX XXXXXX 8.34% 417 2,835,600
XXXXXXXXX
XXXXXXXX XXXXXX XXXX 8.34% 417 2,835,600
XXXXX X. XXXXXX 2.08% 104 707,200
XXXX X. XXXXXX 2.08% 104 707,200
XXXXX X. XXXXXX 2.08% 104 707,200
XXXXXX XXXXXX 2.08% 104 707,200
XXXXXXXXX
------- ----- -----------
100.00% 5,000 $34,000,000
46
DESCRIPTION OF OMITTED
EXHIBITS AND SCHEDULES
----------------------
Exhibit Description
------- -----------
C Form of Opinion of Xxxxxxxx Xxxx & Xxxxx
D Form of Opinion of Xxxxxx & Xxxxxxx
E Form of Opinion of Zapruder & Xxxxx
Disclosure Schedule
-------------------
2.3 Environmental Expense Reserves
3.2(c) Promissory Notes
4.1(a) Enforceability Exceptions
4.1(b) Spousal Consents
4.5 Interim Financial Statements
4.5A Audited Financial Statements
4.6(a) Certain Changes or Events since August 31, 1997
4.6(b) Certain Changes or Events since February 28, 1997
4.8 Real Property
4.9 Contracts
4.10 Exceptions to Noncontravention
4.13(b)(2)(A) Jurisdictions in which Tax Returns Filed
4.13(b)(2)(B) Taxes Filed
4.13(b)(3) Pending Tax Audits
4.14 Litigation
4.15(b) Product Warranties and Liabilities
4.15(c) Undisclosed Liabilities
4.16 Permits
4.17 Employment and Labor Agreements
4.18 Employee Plans
4.19 Proprietary Rights
4.20 Insurance Contracts
5.5 Consents and Approvals
7.5 Guarantees
9.3 Non-Compete Exceptions
