Exhibit 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
KEY COMPONENTS, INC.,
ACTUANT CORPORATION
AND
THE SHAREHOLDERS OF KEY COMPONENTS, INC.
DATED AS OF NOVEMBER 18, 2004
TABLE OF CONTENTS
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ARTICLE I. PURCHASE OF SHARES..........................................................................1
1.1 Purchase and Sale of Shares.....................................................................1
1.2 Payment of Option Debt..........................................................................2
1.3 Change of Control Debt..........................................................................2
1.4 Payments........................................................................................2
1.5 Working Capital Adjustment......................................................................3
ARTICLE II. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.......................................4
2.1 Organization and Qualification..................................................................4
2.2 Capitalization..................................................................................5
2.3 Authorization and Validity of Agreement.........................................................6
2.4 Consents and Approvals..........................................................................6
2.5 Noncontravention................................................................................6
2.6 SEC Reports; Financial Statements...............................................................6
2.7 Compliance......................................................................................8
2.8 Absence of Certain Changes......................................................................8
2.9 No Undisclosed Liabilities......................................................................8
2.10 Litigation......................................................................................8
2.11 Employee Benefit Matters........................................................................8
2.12 Taxes..........................................................................................10
2.13 Intellectual Property..........................................................................10
2.14 Brokers and Finders............................................................................11
2.15 Real Property..................................................................................11
2.16 Environmental Matters..........................................................................12
2.17 Labor Matters..................................................................................13
2.18 Contracts......................................................................................14
2.19 Licenses and Permits...........................................................................15
2.20 Assets.........................................................................................15
2.21 Insurance......................................................................................15
2.22 Accounts Receivable............................................................................16
2.23 Inventory......................................................................................16
2.24 Internal Accounting Controls...................................................................16
2.25 Related Parties................................................................................17
2.26 Customers and Suppliers........................................................................17
2.27 Full Disclosure................................................................................17
2.28 No Other Representations or Warranties.........................................................17
ARTICLE IIA REPRESENTATIONS AND WARRANTIES CONCERNING THE SHAREHOLDERS.................................18
2A.1 Power..........................................................................................18
2A.2 Authorization..................................................................................18
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2A.3 Noncontravention...............................................................................18
2A.4 Validity.......................................................................................18
2A.5 Title..........................................................................................18
2A.6 Brokers and Finders............................................................................19
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PURCHASER................................................19
3.1 Organization and Qualification.................................................................19
3.2 Authorization and Validity of Agreement........................................................19
3.3 Consents and Approvals.........................................................................19
3.4 Noncontravention...............................................................................19
3.5 Financing......................................................................................19
3.6 Brokers and Finders............................................................................20
ARTICLE IV. COVENANTS..................................................................................20
4.1 Conduct of the Business of the Company Pending the Closing.....................................20
4.2 Access; Confidentiality........................................................................21
4.3 Further Actions................................................................................22
4.4 Public Announcements...........................................................................23
4.5 HSR Act Compliance.............................................................................23
4.6 D&O Insurance..................................................................................23
4.7 Payment of Bonuses.............................................................................23
4.8 Notification of Certain Matters................................................................23
4.9 Exclusivity....................................................................................24
4.10 Delivery of Information Regarding Shares to Purchaser..........................................24
4.11 Litigation Assistance..........................................................................24
4.12 Post-Closing Environmental Actions.............................................................24
4.13 Shareholder Approval of Certain Benefit Arrangements...........................................25
ARTICLE V. CLOSING....................................................................................25
5.1 Conditions Precedent to Purchaser's Obligations................................................25
5.2 Conditions Precedent to the Shareholders' Obligations..........................................26
5.3 Closing........................................................................................27
5.4 Deliveries by Shareholders.....................................................................27
5.5 Deliveries by Purchaser........................................................................29
ARTICLE VI SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION...............................30
6.1 General........................................................................................30
6.2 Survival.......................................................................................30
6.3 Indemnification Covenants of Shareholders......................................................30
6.4 Indemnification Covenants of Purchaser.........................................................31
6.5 Special Environmental Indemnification..........................................................31
6.6 Claims for Indemnification.....................................................................31
6.7 Escrow.........................................................................................32
6.8 Limitations on Liability.......................................................................33
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6.10 Exclusive Remedy...............................................................................33
6.11 Acknowledgement and Agreement..................................................................33
ARTICLE VII. TERMINATION................................................................................34
7.1 Termination....................................................................................34
7.2 Effect of Termination..........................................................................35
7.3 Fees and Expenses..............................................................................35
ARTICLE VIII. SHAREHOLDERS' REPRESENTATIVE AND CONTROLLING SHAREHOLDERS..................................35
8.1 Appointment; Acceptance........................................................................35
8.2 Authority......................................................................................35
8.3 Actions........................................................................................36
8.4 Effectiveness..................................................................................37
8.5 Reimbursement of Expenses of Shareholders' Representative......................................37
8.6 Exculpation and Indemnification of Shareholders' Representative................................37
8.7 Exculpation and Indemnification of the Controlling Shareholders................................37
ARTICLE IX. DEFINITIONS................................................................................37
9.1 Definitions....................................................................................37
ARTICLE X. MISCELLANEOUS..............................................................................43
10.1 Notices........................................................................................43
10.2 Entire Agreement...............................................................................45
10.3 Assignment; Binding Effect.....................................................................45
10.4 Amendments and Modifications...................................................................45
10.5 Waivers........................................................................................45
10.6 Validity.......................................................................................45
10.7 Captions.......................................................................................46
10.8 Counterparts; Facsimiles.......................................................................46
10.9 Governing Law..................................................................................46
Exhibits:
Exhibit A Escrow Agreement
Exhibit B Baseline Working Capital
Exhibit C Form of Shareholder's Release
Exhibit D Opinion of XxXxxxxxx, Will & Xxxxx
Exhibit E Opinion of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
Exhibit F Opinion of counsel to KEP VI, LLC and Xxxxx Investment
Associates, VI, L.P.
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of November
18, 2004, is entered into by and among Key Components, Inc., a New York
corporation (the "COMPANY"), Actuant Corporation, a Wisconsin corporation (the
"PURCHASER"), Xxxxx Xxxxx, August X. Xxxxxxx, Xxxxx X. Xxxx, Xxx Xxxxxxx,
Coinvestment I, LLC, a Delaware limited liability company, Xxxxx Xxxxxxx, Xxxx
Xxxxx, Xxxxxxx X. Xxxxx 1976 Trust, Xxxxxxx X. Xxxxx 1968 Trust, Xxxx X. Xxxxx,
Xxxxxxxx Xxxxx 1968 Trust, Xxxxx Xxxxxx, Xxxx Xxxxxxx, U. Xxxxxxx Xxxxx, Xx.,
Xxxx Xxxx, Xxxxxx X. Xxxxxxxxxx, Xxxxx Investment Associates VI, L.P., a
Delaware limited partnership, Louis and Xxxxxxxx Xxxxx Trust, KEP VI, LLC, a
Delaware limited liability company, Xxxx X. Xxxxxxxxxx, Xxxx X. Xxxxxxxxxx, as
custodian under the New York U/G/M/A for Xxxxxx Xxxxxxx Xxxxxxxxxx, Xxxx X.
Xxxxxxxxxx, as custodian under the New York U/G/M/A for Xxxxxx Xxx Lifflander,
Xxxxxxxx Xxxxx, Magnetite Asset Investors, L.L.C., a Delaware limited liability
company, Xxxxxxx X. Xxxxxxxx, Xxxx X. XxXxxxxxxxxx, The Xxxxx & Xxxxx X'Xxxxxxx
2002 Trust, Created U/D/T Dated May 21, 2002, J. Xxxxx X'Xxxxxxx, Xxxxxx
Xxxxxxxx, Xxxx X. Xxxxxx, Xxxxx X. Xxxxxxxx, Xxxx Xxxxxxxx XXX, Xxxxxx Xxxxxxx,
Xxxxxx X. Xxxxx, Xxxx Tinghtella, Xxxx Xxxxxxxx (each a "SHAREHOLDER" and
collectively, the "SHAREHOLDERS"). Certain capitalized terms used herein are
defined in Article VIII.
RECITALS
WHEREAS, on the date of this Agreement, the Shareholders collectively
own all of the issued and outstanding shares of Common Stock and Preferred Stock
of the Company;
WHEREAS, immediately prior to the Closing Date, all of the outstanding
Preferred Stock of the Company shall be converted into Common Stock;
WHEREAS, prior to the Closing, all Stock Options and Exit Options shall
have been terminated; and
WHEREAS, on the Closing Date, the Purchaser desires to purchase all of
the issued and outstanding shares of Common Stock (collectively, the "SHARES")
from the Shareholders, and the Shareholders desire to sell the Shares to the
Purchaser, upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the foregoing and of the respective
representations, warranties, covenants, and agreements set forth in this
Agreement, the parties hereto hereby agree as follows:
ARTICLE I.
PURCHASE OF SHARES
1.1 Purchase and Sale of Shares. Subject to the terms and conditions of
this Agreement, on the Closing Date, the Shareholders shall sell to the
Purchaser (or its designated Affiliate), and the Purchaser (or its designated
Affiliate) shall purchase from the Shareholders, all right, title and interest
in and to all of the Shares, free and clear of all Encumbrances, which Shares
will comprise all of the issued and outstanding equity interests in the Company
as of the Closing. The aggregate purchase price payable by the Purchaser for all
the Shares pursuant to this Section 1.l shall be Three Hundred and Sixteen
Million Seven Hundred Thousand Dollars ($316,700,000) as adjusted pursuant to
Sections 1.4 and 1.5 of this Agreement (the "Purchase Price").
1.2 Payment of Option Debt. Each Stock Option (other than an Exit
Option), whether or not vested or exercisable on the Closing Date, shall be
cancelled in exchange for a cash payment made by the Purchaser on the Closing
Date to the holder of such Stock Option in accordance with Section 1.4(f) of
this Agreement (collectively, the "OPTION HOLDERS") in an amount equal to the
product of (i) the amount, if any, by which the Share Price exceeds the Exercise
Price of such Stock Option, multiplied by (ii) the number of shares subject to
such Stock Option. Notwithstanding the foregoing, any Exit Option and any Stock
Option that has an Exercise Price that equals or exceeds the Share Price shall
be cancelled as of the Closing Date without payment of any consideration to the
holder of such Exit Option or Stock Option. The aggregate amount payable by the
Purchaser pursuant to this Section 1.2 with respect to all Stock Options shall
be hereinafter referred to as the "OPTION DEBT". For purposes of this Section
1.2, "SHARE PRICE" shall be calculated by dividing (i) the Closing Payment plus
$20,000,000 by (ii) the number of Shares.
1.3 Change of Control Debt. The Executive Employees are entitled to
receive payment upon the sale of the Shares on the Closing Date of an aggregate
amount calculated as set forth in the Sale Bonus Agreements entered into by each
of them with the Company (collectively, the "CHANGE OF CONTROL DEBT"). For
purposes of this Section 1.3, the "EXECUTIVE EMPLOYEES" shall mean the
following: Xxxxxx X. Xxx, Xxxxx XxXxxxx, Ruzgar Barisik and Xxxxxx X. Xxxxxxxx.
1.4 Payments. At the Closing, the Purchaser shall pay the Purchase
Price in the following manner:
(a) an amount equal to the Change of Control Debt will be deducted
pursuant to Section 1.4(h) and such amount less amounts required to be withheld
for tax purposes will be paid to the Executive Employees in accordance with the
amounts set forth on Schedule 1.3 to be delivered by the Company not later than
five (5) days prior to the Closing Date (the "CHANGE OF CONTROL DEBT PAYMENTS");
(b) an amount (the "INDEBTEDNESS PAYMENTS") equal to the aggregate
amount required to satisfy (including any prepayment penalty or premium and
accrued interest) all Indebtedness of the Company (on a consolidated basis) as
of the Closing Date (other than the 10.5% Notes) shall reduce the amount of the
Closing Payment pursuant to subsection (h) below and the aggregate amounts of
the indebtedness described in clauses (i) and (ii) of the definition thereof
(the "DEBT PAYMENTS"), shall be paid to the holders of such Indebtedness.
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(c) an amount equal to the principal and accrued interest on the
10.5% Notes as of the Closing Date plus $1,600,000 (the "OUTSTANDING NOTE
BALANCE") shall reduce the Purchase Price and the amount of the Closing Payment
pursuant to subsection (h) below;
(d) $20,000,000 (the "ESCROW PAYMENT") shall be deposited in an
escrow account pursuant to an Escrow Agreement substantially in the form of
Exhibit A (the "ESCROW AGREEMENT"), to be executed and delivered at the Closing,
which escrow account shall be established for the purpose of satisfying the
Working Capital Adjustment and the Shareholders' indemnification obligations
hereunder (the "ESCROW ACCOUNT");
(e) the amount of the Commissions will be paid as directed in the
Company Disclosure Schedule;
(f) an amount equal to the Option Debt, less amounts required to be
withheld for tax purposes, will be paid to the Option Holders;
(g) an amount equal to the fees and expenses incurred by the
Company in connection with this Agreement or the transactions contemplated
hereby and unpaid as of the Closing as certified by the Chief Financial Officer
of the Company in a certificate delivered not later than five (5) days prior to
the Closing Date (the "UNPAID TRANSACTION FEES") shall reduce the Purchase Price
and shall be paid at the Closing; and
(h) an amount equal to the Purchase Price, as adjusted pursuant to
Section 1.5(a), but excluding adjustments in subsections (a) through (g) above,
less (i) the amount of the Change of Control Debt, (ii) the amount of the
Indebtedness Payments less the amount of cash of the Company (determined in
accordance with GAAP) as of the close of business on the day immediately
preceding the Closing Date (the "CLOSING CASH"), as estimated by the Company in
a certificate delivered to Purchaser not less than five (5) days prior to the
Closing, (iii) the amount of the Outstanding Note Balance, (iv) the Escrow
Payment, (v) the amount of the Option Debt, (vi) the amount of the Unpaid
Transaction Fees and (vii) the aggregate amount of the Commissions (the "CLOSING
PAYMENT") shall be paid to the Shareholders in the relative "Closing Payment
Percentages" set forth next to the name of each Shareholder on the written
notice to be delivered pursuant to Section 4.10.
All payments under this Section 1.4 shall be made in U.S. Dollars and
be made by wire transfer of immediately available funds in accordance with
wiring instructions to be given to the Purchaser by written notice not less than
twenty-four hours prior to the time for payment specified herein.
1.5 Working Capital Adjustment.
(a) If, as of the Closing Date, there is a Working Capital Deficit
based on the Company's reasonable good faith estimate of the Working Capital to
be delivered not less than five (5) days prior to the Closing Date, there shall
be a Purchase Price and Closing Payment adjustment in favor of the Purchaser
equal to the estimated Working Capital Deficit.
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(b) Within sixty (60) days after the Closing Date, Purchaser shall
prepare and deliver to the Controlling Shareholders a balance sheet as of the
Closing Date prepared in accordance with GAAP applied consistently for all
periods and in accordance with the past accounting practices of the Company (the
"CLOSING DATE BALANCE SHEET") and a statement setting forth Purchaser's
calculation of the Working Capital as of the Closing Date based on the Closing
Date Balance Sheet (the "WORKING CAPITAL STATEMENT"). If the Controlling
Shareholders have any objections to the Closing Date Balance Sheet or Working
Capital Statement prepared by Purchaser, they will deliver a detailed statement
describing their objections to Purchaser within thirty (30) days after delivery
of the Closing Date Balance Sheet and the Working Capital Statement. If the
Controlling Shareholders fail to deliver a notice of objection within such
thirty (30) day period, the Closing Date Balance Sheet shall become final and
binding on all parties. The Controlling Shareholders and Purchaser will use
reasonable best efforts to resolve any such disputes, but if a final resolution
is not obtained within thirty (30) days after the Controlling Shareholders have
submitted any objections, any remaining matters which are in dispute will be
resolved by the Chicago, Illinois office of Deloitte and Touche LLP. Deloitte
and Touche LLP will prepare and deliver a written report to both parties and
will submit a proposed resolution of such unresolved disputes promptly, but in
any event within thirty (30) days after the dispute is submitted to such
accounting firm. Such accounting firm's determination of the Closing Date
Balance Sheet and Working Capital Statement will be final and binding upon all
parties. If such determination results in a Working Capital Deficit, then the
entire amount (after adjustment to reflect any purchase price adjustment
previously made under Section 1.5(a)) of the Working Capital Deficit shall be
satisfied out of the Escrow Account; it being understood between the
Shareholders and the Purchaser that Purchaser's sole recourse for such Working
Capital Deficit is from the Escrow Account. The decision of Deloitte and Touche
LLP shall be final and not subject to appeal. The fees and expenses of Deloitte
and Touche LLP shall be equitably allocated by Deloitte and Touche LLP. Deloitte
and Touche LLP shall also verify the Closing Cash and any adjustment thereto
shall be either paid out of the Escrow Account or paid to the Shareholders (or
set-off against any Working Capital Deficit).
ARTICLE II.
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
The Company hereby represents and warrants to the Purchaser that the
statements contained in this Article II are correct and complete, except as set
forth in the Company's Disclosure Schedule delivered to the Purchaser in
connection with this Agreement (the "COMPANY DISCLOSURE SCHEDULE"). The Company
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Agreement.
2.1 Organization and Qualification. Each of the Company and each
Subsidiary (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, which is set
forth in the Company Disclosure Schedule, (b) has the requisite corporate or
other power and authority to own, lease and operate its assets and to carry on
its business as it is now being conducted and (c) is in good standing and duly
qualified to do business in each jurisdiction in which the ownership, leasing or
operation of its assets or the transaction of its business makes such
qualification necessary, except where the failure to be so qualified and in good
standing would not have a Material Adverse Effect on the Company. True and
complete copies of the Organizational Documents of the Company and its
Subsidiaries have been made available to the Purchaser.
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2.2 Capitalization. (a) The authorized capital stock of the Company
consists of 5,000,000 shares of Common Stock, with a par value of $.001 (the
"COMMON STOCK"), and 1,100,000 shares of Preferred Stock, with a par value $.001
per share (the "PREFERRED STOCK"). The issued capital stock of the Company
consists of only: (i) 382,001.74 shares of Common Stock, all of which are
outstanding and (ii) 918,065.24 shares of Preferred Stock all of which are
outstanding. All outstanding shares of Common Stock and Preferred Stock are duly
authorized, validly issued, fully paid and nonassessable, have been issued
without violation of any preemptive or other right to purchase, and are held of
record by the Shareholders as set forth in the Company Disclosure Schedule.
There are no outstanding subscriptions, options, warrants, calls, rights,
convertible or exchangeable securities, commitments or any other agreements to
which the Company is a party or by which the Company is bound that obligate the
Company to (i) issue, deliver or sell or cause to be issued, delivered or sold
any additional shares of capital stock of the Company or any other securities
convertible into, or exercisable or exchangeable for, or evidencing the right to
subscribe for, any such shares of capital stock of the Company or (ii) purchase,
redeem or otherwise acquire any shares of capital stock of the Company. There
are no bonds, debentures, notes or other indebtedness having general voting
rights (or convertible into securities having such rights) of the Company or any
of its Subsidiaries issued and outstanding. There are no authorized or
outstanding share appreciation, phantom share, profit participation or similar
rights with respect to the Company. The Company Disclosure Schedule sets forth
the exercise price of each of the Stock Options and Exit Options (the "EXERCISE
PRICE").
(b) The Company owns, directly or indirectly, all of the
outstanding shares of capital stock or other equity interests in each of its
Subsidiaries, which Subsidiaries are listed in the Company Disclosure Schedule.
The Company Disclosure Schedule lists the shareholders (or with respect to those
Subsidiaries that are not corporations, equity holders) of the Company's
Subsidiaries other than the Company and such other shareholders' (or equity
holders') holdings in such Subsidiaries. Each of the outstanding shares of
capital stock of or other equity interest in each of the Company's Subsidiaries
has been duly authorized, validly issued, fully paid and nonassessable and has
been issued without violation of any preemptive or other right to purchase. Each
outstanding share of or other equity interest in the Company's Subsidiaries
owned by the Company is free and clear of all Encumbrances. There are no
outstanding subscriptions, options, warrants, calls, rights, convertible or
exchangeable securities, commitments or any other agreements to which any of the
Company's Subsidiaries is a party or by which it is bound that obligate the
Subsidiary to (i) issue, deliver or sell or cause to be issued, delivered or
sold any additional capital stock or other equity interest of the Subsidiary or
any other securities convertible into, or exercisable or exchangeable for, or
evidencing the right to subscribe for, any such capital stock or other equity
interest or (ii) purchase, redeem or otherwise acquire any capital stock or
other equity interest of the Subsidiary. There are no authorized or outstanding
share appreciation, phantom share, profit participation or similar rights with
respect to any Subsidiary.
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(c) The Company does not own, directly or indirectly, any equity
interest or investment in any Person (other than investments in short term
investment securities). The Company is not subject to any agreement or
requirement to provide funds for, or to make any investment (in the form of a
loan, capital contribution or otherwise) in any person.
(d) There are no voting trusts or shareholder agreements to which
the Company is a party with respect to the voting of the capital stock of the
Company.
2.3 Authorization and Validity of Agreement. The Company has the
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof. The Board of Directors has duly authorized this Agreement and the
transactions contemplated hereby, and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes the legal, valid and binding
obligation of the Purchaser, constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as may be limited by any bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
2.4 Consents and Approvals. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, nor the
change in control of the Company as of the Closing, will require on the part of
the Company or any of its Subsidiaries any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority, except
for applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 0000 (xxx "XXX XXX").
2.5 Noncontravention. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) conflict with or violate the Organizational Documents of the Company or any
of its Subsidiaries, (b) conflict with any provision of, result in a violation
or breach of, constitute a default (with or without notice or lapse of time, or
both) under, give rise to any right of termination, cancellation or acceleration
of, or result in the imposition of any Encumbrance on any assets or properties
of the Company or any of its Subsidiaries, impair any rights, or give rise to
any right to damage, penalty or payment, pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license or other instrument or obligation
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any of their respective assets or
properties are bound, or (c) violate any order, writ, injunction, decree, law,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their respective assets or properties. Xxxxx has exercised its Drag
Along Rights (as defined in the Shareholders Agreement) under the Shareholders
Agreement.
2.6 SEC Reports; Financial Statements. (a) Since January 1, 2001, the
Company has filed with the SEC all forms, reports, schedules, statements and
other documents required to be filed by it with the SEC pursuant to the Exchange
Act, the Securities Act and the SEC's rules and regulations promulgated
thereunder (collectively, the "COMPANY SEC DOCUMENTS"). The Company SEC
Documents, including, without limitation, any financial statements or schedules
included therein, at the time filed (or, if amended, at the time of such amended
filing), or in the case of registration statements on their respective effective
dates, (i) conformed in all material respects with the applicable requirements
of the Exchange Act and the Securities Act, as the case may be, and the
applicable rules and regulations promulgated thereunder and (ii) did not at the
time filed (or, if amended, at the time of such amended filing and, in the case
of registration statements, at the time of effectiveness), contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
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(b) Each of the consolidated financial statements of the Company
(including any related notes thereto) included in the Company SEC Documents
conformed at the time filed in all material respects with applicable accounting
requirements and with the applicable rules and regulations of the SEC, have been
prepared in accordance with GAAP applied on a consistent basis during the period
involved (except as may be indicated in such financial statements or in the
notes thereto or, in the case of unaudited financial statements, as permitted by
the requirements of Form 10-Q) and fairly present in all material respects
(subject, in the case of the unaudited statements, to normal year-end
adjustments and the absence of footnotes) the financial position of the Company
and its Subsidiaries as of the dates thereof and the results of the Company's
and its Subsidiaries' operations and cash flows for the periods presented
therein.
(c) The Purchaser has been provided a separate unaudited
consolidated balance sheet and statement of income, changes in shareholders'
equity and cash flow for the Company for the nine month period ended September
30, 2004 prepared by Chief Financial Officer of the Company (the "INTERIM
FINANCIAL STATEMENTS"). The Interim Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis and fairly present in all
material respects the financial position of the Company and its Subsidiaries as
of the date thereof and the results of the Company's and its Subsidiaries'
operations and cash flows for the period presented therein (subject to normal
year-end adjustments and the absence of footnotes).
(d) The books, records and accounts of the Company and its
Subsidiaries fairly reflect in all material respects the activities and
transactions of the Company and its Subsidiaries, respectively.
(e) Neither the Company nor any Subsidiary has committed any act of
bankruptcy, is insolvent, has proposed a compromise or arrangement to its
creditors generally, has had any petition for a receiving order in bankruptcy
filed against it, has made a voluntary assignment in bankruptcy, has taken any
proceeding with respect to a compromise or arrangement, has taken any proceeding
to have itself declared bankrupt or wound-up, has taken any proceeding to have a
receiver appointed to any part of its assets, or has had any debtor take
possession of any of its property.
(f) All of the Company's existing Indebtedness is described in the
Company Disclosure Schedule.
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2.7 Compliance. Each of the Company and its Subsidiaries has complied
with all of the terms, conditions and provisions of (a) its Organizational
Documents, (b) the KCI Contracts, and (c) all statutes, laws, ordinances, rules,
regulations, codes, judgments, decrees, orders or other governmental
authorizations of any federal, state, local, supra-national (e.g., the European
Union) or foreign government and agency thereof, applicable to the Company or
any of its Subsidiaries.
2.8 Absence of Certain Changes. Since December 31, 2003, the Company
and its Subsidiaries have conducted their respective businesses in the ordinary
course consistent with past practice and there has not been (a) any Material
Adverse Effect on the Company or (b) the occurrence of any event, or the taking
of any action, described in Section 4.1.
2.9 No Undisclosed Liabilities. Except (i) as reflected on the balance
sheet included in the Interim Financial Statements or (ii) for liabilities
incurred in the ordinary course of business, after September 30, 2004, the
Company and its Subsidiaries have no liabilities that would be required to be
reflected in or reserved against in a consolidated balance sheet of the Company
prepared in accordance with GAAP.
2.10 Litigation. Neither the Company nor any of its Subsidiaries is a
party to any claim, action, proceeding, arbitration or governmental
investigation nor, to the Knowledge of the Company, is any such threatened
against the Company or any of its Subsidiaries. None of the Company, its
Subsidiaries, nor any of their respective assets is subject to any outstanding
and unsatisfied order, writ, judgment, injunction or decree.
2.11 Employee Benefit Matters. (a) All employee benefit, bonus or
severance plans and other benefit arrangements and agreements covering current
or former directors, employees, officers, independent contractors, agents or
consultants (collectively, "EMPLOYEES") of the Company or its Subsidiaries are
listed in the Company Disclosure Schedule (the "COMPANY BENEFIT PLANS"). The
Company has made available to the Purchaser prior to the Closing true and
complete copies of all documents, if any, embodying each Company Benefit Plan,
including all amendments thereto and written interpretations thereof; the three
most recent annual reports (Form 5500 Series with applicable schedules), if
applicable, filed with respect to each Company Benefit Plan; the most recent
summary plan description, if applicable, with respect to each Company Benefit
Plan; the most recent favorable determination letter from the IRS, if
applicable, with respect to each Company Benefit Plan; and all material
communications, if any, to any Employee relating to each Company Benefit Plan.
(b) The Company Benefit Plans comply with the applicable
requirements of applicable law, ERISA and the Code. Each Company Benefit Plan
intended to be qualified under Section 401(a) of the Code meets the requirements
for qualification under the Code and the regulations thereunder and has received
a determination letter from the IRS stating that it is so qualified and no such
determination letter has been revoked nor, to the Knowledge of the Company, has
revocation been threatened. Nothing has occurred or is expected to occur that
would adversely affect the qualified status of such plan subsequent to the
issuance of such determination letter.
-8-
(c) No Company Benefit Plan is covered by any defined benefit
pension plan subject to Title IV of ERISA. Neither the Company nor its
Subsidiaries nor any entity under "common control" with the Company or its
Subsidiaries within the meaning of Section 4001 of ERISA has at any time
contributed to, or been required to contribute to, any defined benefit pension
plan subject to Title IV of ERISA).
(d) Neither the Company nor any of its Subsidiaries has incurred
any liability or penalty under Section 4975 of the Code or Section 502(i) of
ERISA with respect to any Company Benefit Plan. All premiums required by any
Company Benefit Plan have been paid thereunder, all outstanding indebtedness for
services performed or accrued vacation, holiday pay, earned commissions, accrued
bonuses or other benefits owed to any Employees have been paid when due or
accrued on the books of the Company; all contributions due to and payments from,
the Company Benefit Plans that may have been required to be made have been made.
The Company and its Subsidiaries have performed all obligations required to be
performed under each Company Benefit Plan. Each Company Benefit Plan has been
maintained and administered in all material respects in compliance with its
terms and with ERISA and the Code to the extent applicable thereto. There are no
pending, nor threatened, claims, investigations, suits or proceedings against or
otherwise involving any of the Company Benefit Plans, to the Knowledge of the
Company.
(e) Neither the Company nor its Subsidiaries nor any entity under
"common control" with the Company has contributed to, or been required to
contribute to, any "multiemployer plan" (as defined in Sections 3(37) and 4001
(a)(3) of ERISA) or any plan described in Section 4063(a) of ERISA.
(f) Neither the Company nor any of its Subsidiaries maintains or
contributes to any employee benefit plan that provides, or has any liability to
provide, life insurance, medical or other employee welfare benefits (other than
severance and accrued vacation and holiday pay) to any Employee upon his or her
retirement or termination of employment, except as may be required by statute.
Each "group health plan" within the meaning of Section 4980B(g)(2) of the Code
maintained by the Company or any of its Subsidiaries or any entity under "common
control" with the Company or its Subsidiaries has been administered in good
faith in compliance with the continuation coverage requirements contained in the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), as
set forth at Section 4980B of the Code and any regulations promulgated
thereunder.
(g) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or when taken together
with any additional or subsequent events) constitute an event under any Company
Benefit Plan that will or may result in any payment, upon a change in control or
otherwise, whether of severance, accrued vacation, or otherwise, acceleration,
vesting, distribution, increase in benefits or obligation to fund benefits with
respect to any Employee. No payment or benefit which will or may be made by the
Company, its Subsidiaries, the Purchaser or any of its Affiliates with respect
to any Employee as a result of the transactions contemplated hereby will be
characterized as an "excess parachute payment" within the meaning of Section
280G(b)(1) of the Code.
-9-
(h) All foreign employee benefit plans comply in all material
respects with all applicable law, and the Company and its Subsidiaries have
performed all material obligations with respect to such plans and have obtained
all necessary approvals from governmental agencies to ensure beneficial tax
treatment and otherwise.
2.12 Taxes. The Company and each of its Subsidiaries (a) have filed all
federal, state and foreign Tax Returns required to be filed by the Company or
any of its Subsidiaries prior to the date of this Agreement, within the times
and the manner prescribed by law or regulation, and will file all Tax Returns
that are required to be filed on or after the date hereof and on or before the
Closing Date, and all such returns are and will be true, correct and complete,
(b) have paid or accrued all Taxes which are or may become payable, and (c) have
"open" years for federal income Tax Returns only as set forth in the Company
Disclosure Schedule. All Taxes owed by the Company and its Subsidiaries required
to have been paid have been paid. There are no Encumbrances for Taxes on the
assets of the Company or any of its Subsidiaries, and there is no pending, nor
to the Knowledge of the Company any threatened, Tax audit, examination, refund
litigation or adjustment in controversy. Neither the Company nor any of its
Subsidiaries is a party to any agreement providing for the allocation or sharing
of Taxes. The Company has not filed a request with the IRS for changes in
accounting methods within the last two years. Each of the Company and its
Subsidiaries has duly and timely withheld all Taxes required to be withheld by
it and such withheld Taxes have been either duly and timely paid to the proper
taxing authority or properly set aside in accounts for such purpose and will be
duly and timely paid to the proper taxing authority. There is no material
dispute or claim concerning any Tax liability of any of the Company or any
Subsidiary claimed by any authority.
2.13 Intellectual Property. (a) The Company Disclosure Schedule
contains a correct and complete list of (i) all patents issued to the Company or
any Subsidiary and all pending patent applications by the Company or any
Subsidiary, including for each such patent or patent application the serial or
patent number, country, filing date and title, (ii) all registered trademarks of
the Company or any Subsidiary and pending trademark applications by the Company
or any Subsidiary, including, for each such trademark, the registration number,
country, filing date, xxxx and class, (iii) all registered copyrights of the
Company or any Subsidiary and copyright applications by the Company or any
Subsidiary, including the registration number, country and filing date of each
such copyright registration and (iv) all unregistered service marks, trade names
and brand names and registered domain names used by the Company or any
Subsidiary in conduct of its business ("INTELLECTUAL Property"). All annuity,
maintenance, renewal and other fees in connection with any of the foregoing are
current.
(b) The Company Disclosure Schedule contains a true, correct and
complete list of all material licenses, contracts and commitments (including,
without limitation, confidentiality agreements) to which the Company or any
Subsidiary is a party or otherwise subject relating to the Intellectual Property
and other material intellectual property used in the conduct of the business of
the Company or any of its Subsidiaries, including, without limitation, computer
software, but excluding so-called shrink-wrap or click through licenses for
computer software.
-10-
(c) None of the Intellectual Property described in Sections 2.13
(a)(i), (ii) and (iii) ("REGISTERED INTELLECTUAL PROPERTY") is subject to any
extensions, renewals, or fees due within ninety (90) days after Closing. With
respect to the Registered Intellectual Property, (a) the Company is the sole and
exclusive owner or has the right to use the Registered Intellectual Property;
(b) no action, suit, proceeding or investigation is pending or, to the Knowledge
of the Company, threatened with respect to the Intellectual Property; (c) none
of the Intellectual Property nor the operation of the Company interferes with,
infringes upon, conflicts with or otherwise violates the rights of others or, to
the Knowledge of the Company, is being interfered with or infringed upon by
others, and none is subject to any outstanding order, decree, judgment,
stipulation or charge; (d) there are no royalty, commission or similar
arrangements, and no licenses, sublicenses or agreements, pertaining to any of
the Intellectual Property; and (e) except to the extent implied in law, the
Company has not agreed to indemnify any person for or against any infringement
of or by the Registered Intellectual Property.
(d) The Company has been taking reasonable precautions to protect
the secrecy of, and to prevent disclosure to unauthorized parties of, all
information in the nature of know-how, trade secrets or proprietary information
which provides the Company with an advantage over competitors who do not know or
use it, including formulae, patterns, molds, tooling, inventions, industrial
models, processes, designs, devices, engineering data, cost data, compilations
of information, copyrightable material and technical information, if any, of the
Company. (the "TECHNICAL INFORMATION"). The Company has no Knowledge of any
violation of any trade secret rights or copyrights with respect to such
Technical Information.
2.14 Brokers and Finders. No broker, finder or investment bank has
acted directly or indirectly for the Company, nor has the Company incurred any
obligation to pay any brokerage, finder's or other fee or commission in
connection with the transactions contemplated hereby, other than CIBC World
Markets Corp., Millbrook Capital Management Corp. and Xxxxx & Company, the fees
and expenses of which in the respective amounts set forth in the Company
Disclosure Schedule (the "COMMISSIONS") shall be borne by the Company.
2.15 Real Property. Except for Permitted Encumbrances, the Company and
its Subsidiaries have good and marketable title interests to all real property
owned by them ("OWNED REAL PROPERTY") or used in the conduct of their respective
businesses as currently conducted ("LEASED REAL PROPERTY") or reflected in the
Interim Financial Statement, free and clear of all Encumbrances. The buildings
and other structures located on the Owned Real Property are in operational
condition, consistent with the age and prior use of such buildings and
structures, and are supplied with utilities and other services necessary for the
operation of the business as currently conducted at such facilities. Except as
set forth in the Company Disclosure Schedule, there are no persons in possession
of, or having a right to possession of, any part of the Owned Real Property
other than the Company or its Subsidiary, as the case may be; and the Company is
not a party to any contract, agreement or commitment to sell, convey, assign,
transfer, provide rights of first refusal or other similar rights or otherwise
dispose of any portion of the Owned Real Property. The owners of fee simple
title to the Owned Real Property are set forth in the Company Disclosure
Schedule. Neither the Company nor any Subsidiary has received any notice of any
special Tax, levy or assessment for benefits or betterments that affects the
Owned Real Property, and no such special Taxes, levies or assessments are in
existence, pending or, to the Knowledge of the Company, contemplated. There is
no structural defect or deficiency in the condition of the Owned Real Property,
or any portion thereof, that would materially adversely impair the use,
occupancy or operation of the Owned Real Property. No materials have been
furnished to the Owned Real Property or any portion thereof the cost of which
has not been fully paid or accrued, which might give rise to the filing of a
mechanic's, materialman's or other Liens against such property or any portion
thereof. All buildings and structures located on the Owned Real Property are
located completely within the boundary lines of the Owned Real Property, and no
buildings, structures or other improvements or appurtenances thereto owned by
others encroach onto or under the Owned Real Property. The Owned Real Property
abuts on and has adequate direct vehicular access to a public road and there is
no pending or, to the Knowledge of the Company, threatened, termination of such
access.
-11-
The Company Disclosure Schedule sets forth a list of all leases,
subleases, licenses or similar agreements to which the Company or any Subsidiary
is a party, which are for the use or occupancy of real estate owned by a third
party and are used in the operation of the business of the Company or Subsidiary
(the "REAL PROPERTY LEASES") (accurate copies of which have previously been
furnished to Purchaser), in each case, setting forth: (i) the lessor and lessee
thereof and the commencement date, term and renewal rights under each of the
Real Property Leases; (ii) the street address or legal description of each
property covered thereby; and (iii) a brief description (including approximate
size and function) of the principal improvements and buildings thereon. Each
Real Property Lease is legal, valid, binding, enforceable and in full force and
effect against the Company or its Subsidiary, as the case may be, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors rights and remedies generally and equitable principles. With
respect to each parcel of Leased Real Property: (i) all improvements, buildings
and systems on any such parcel are in operational condition, consistent with the
age and prior use of such buildings and structures, and are supplied with
utilities and other services necessary for the operation of the business as
currently conducted at such facilities; (ii) neither the Company nor any
Subsidiary has received any notice of any special Tax, levy or assessment for
benefits or betterments that affect any such parcel and, to the Knowledge of the
Company, no such special Taxes, levies or assessments are pending or
contemplated; and (iii) each such parcel abuts on and has adequate direct
vehicular access to a public road and there is no pending or, to the Knowledge
of the Company, threatened termination of such access. None of the Permitted
Encumbrances substantially interferes with the conduct of the business as
currently conducted by the Company or any Subsidiary.
2.16 Environmental Matters. (a) No written notice, notification,
demand, complaint, penalty, request for information, citation, summons or order
has been received, no complaint has been filed, no penalty has been assessed and
no action, claim, suit, legal proceeding or investigation or review is pending,
or to the Knowledge of the Company, threatened by any Governmental Authority or
any other Person with respect to any matters relating to the Company or any of
its Subsidiaries, or any of their respective predecessors, and relating to or
arising out of any Environmental Law or the Release of Hazardous Materials;
(b) No property owned or leased by the Company or any of its
Subsidiaries or, to the Knowledge of the Company, any of their respective
predecessors, currently or in the past, is listed on the National Priorities
List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any
similar federal, state or foreign list of sites requiring investigation or
clean-up; and
-12-
(c) The Company and its Subsidiaries are in compliance with all
Environmental Laws, have obtained all necessary Environmental Permits, and are
in compliance with all Environmental Permits and such Environmental Permits are
valid and in full force and effect and will not be terminated or impaired or
become terminable, in whole or in part, as a result of the transactions
contemplated hereby.
(d) To the Knowledge of the Company, there has been no written
report regarding any environmental investigation, study, audit, test, review or
other analysis conducted by or on behalf of the Company or any of its
Subsidiaries that is in the possession or control of the Company or any of its
Subsidiaries or their legal counsel or advisors in relation to the current or
prior business of the Company or any of its Subsidiaries or any property or
facility now or previously owned or leased by the Company or any of its
Subsidiaries which is not disclosed in the Company Disclosure Schedule.
(e) There have been no Releases of Hazardous Material by the
Company or its Subsidiaries or, to the Knowledge of the Company, by any Person
on or under any of the Owned Real Property or Leased Real Property.
(f) Neither the Company nor its Subsidiaries or, to the Knowledge
of the Company, their respective predecessors have transported or disposed of,
or arranged for the transportation or disposal of, any hazardous substances to
any location (i) which is listed on the National Priorities List promulgated
pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal,
state or foreign list of sites requiring investigation or clean-up, (ii) which
is the subject of any federal, state or local enforcement action or other
governmental or private investigation, or (iii) about which the Company has
reason to expect to receive a potentially responsible party notice or similar
letter under any Environmental Law.
2.17 Labor Matters. To the Knowledge of the Company, no executive, key
or significant group of employee(s) plans to terminate employment with either
the Company or any of its Subsidiaries during the next twelve (12) months. The
Company and its Subsidiaries (i) have been during the past five years and are in
compliance with all applicable federal and state laws, rules and regulations in
the jurisdictions where they operate, with respect to employment practices,
terms and conditions of employment and wages and hours, and are not engaged in
any unfair labor practice and (ii) are not liable for any arrears of wages or
any Taxes or any penalty for failure to comply with any of the foregoing.
Neither the Company nor any its Subsidiaries (i) is a party, or is otherwise
subject, to any collective bargaining agreement or other labor union contract
applicable to its employees, or (ii) has experienced any strike or material
grievance, claim of unfair labor practices, or other collective bargaining
dispute within the past three (3) years. To the Knowledge of the Company, there
are no current activities or proceedings by a labor union or representative
thereof to organize any employees of the Company or any Subsidiary. There are no
pending negotiations between the Company and any Subsidiary and any labor union
or representative thereof regarding any proposed changes to any existing
collective bargaining agreement. Neither the Company nor any Subsidiary is
obligated to provide more than ninety (90) days' notice prior to the termination
of the employment of any employee nor is any employee entitled to severance
payments in excess of ninety (90) days salary upon termination of employment.
There is no current or unresolved material employment grievance brought by any
employee of the Company or any Subsidiary and no material proceeding relating to
employment by the Company or any Subsidiary is pending or, to the Knowledge of
the Company, threatened and no claim related thereto has been asserted.
-13-
2.18 Contracts. The Company Disclosure Schedule lists all written and
oral contracts and other written agreements, arrangements and understandings
("CONTRACTS") to which any of the Company and its Subsidiaries is a party or is
bound:
(i) where the performance of which will involve consideration
in excess of $100,000;
(ii) which restrict the Company or any of its Subsidiaries from
engaging in any line of business in any geographic area or competing with any
person or entity or restricting the ability of the Company or any of its
Subsidiaries from acquiring equity securities of any Person;
(iii) which are employment, engagement, consulting or severance
contracts applicable to any employee, officer, director, consultant,
stockholder, distributor, dealer or sales representative of any of the Company
or a Subsidiary;
(iv) which are acquisition, disposition, joint venture or
similar agreements (each, an "ACQUISITION OR DIVESTITURE AGREEMENT");
(v) which is an evidence of any Indebtedness;
(vi) which is an intercompany agreement, including without
limitation, any tax sharing, expense sharing, employee leasing or other similar
agreement;
(vii) which is a contract with any Governmental Authority;
(viii) which is a lease pursuant to which the Company leases
(as lessor or lessee) any personal property in excess of $100,000;
(ix) which is an agreement, arrangement or program pursuant to
which the Company has offered or made available to its customers
(including its distributors) any volume discount, rebate or
advertising or promotional credit or allowance;
(x) which is an agreement with a customer which provides for a
rebate, lowest price guarantee or volume discount;
(xi) which is a guaranty under which the Company is a guarantor
or otherwise responsible for any liability or obligation (including
Indebtedness) of any other Person;
-14-
(xii) which is an outstanding power of attorney;
(xiii) which is an other agreement or commitment which is
material to the Company or its business or operations; or
(xiv) which is a management, administrative services or data
processing Contract (the Contracts in clause (i)-(xiv), each a "KCI
CONTRACT" and collectively, the "KCI CONTRACTS").
Except as set forth in the Company Disclosure Schedule, there are no
continuing or contingent payment obligations under any Acquisition or
Divestiture Agreement, and there are no outstanding indemnity claims under any
Acquisition or Divestiture Agreement. The Company has made available to
Purchaser a correct and complete copy of each of the KCI Contracts. With respect
to each KCI Contract: (A) the KCI Contract is legal, binding, enforceable, and
in full force and effect, subject to the laws of general application relating to
bankruptcy, insolvency and relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies; and (B) none of the
Company and its Subsidiaries is, and to the Knowledge of the Company, no other
party is, in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default. Neither the Company nor any
Subsidiary has received or given any written notice of an intention to cancel or
terminate any KCI Contract.
2.19 Licenses and Permits. The Company and each of its Subsidiaries are
in compliance with and have obtained all licenses, certificates, permits,
franchises and rights from all appropriate Governmental Authorities necessary
for the conduct of their respective businesses and the use of their respective
assets (collectively, the "LICENSES AND PERMITS") and such Licenses and Permits
are in full force and effect.
2.20 Assets. The Company and its Subsidiaries have good title to, or a
valid leasehold interest in, all properties and assets reflected in the Interim
Financial Statements (other than inventory disposed of in the ordinary course of
business since September 30, 2004), free and clear of all Encumbrances. The
assets currently owned or leased by the Company and owned and leased by its
Subsidiaries constitute all of the assets used by the Company or the Subsidiary,
as the case may be, and constitute all assets necessary to continue to operate
the business of the Company and the Subsidiaries consistent with current
practices and as presently contemplated to be conducted, are in reasonably good
working condition, normal wear and tear excepted, and have been maintained in
accordance with good business practices. None of the Shareholders owns any of
the assets used in the operation of the business of either the Company or its
Subsidiaries.
2.21 Insurance. The Company and its Subsidiaries maintain policies of
fire and other forms of insurance with respect to their businesses in such
amounts and against such risks and losses as are customary for comparably sized
companies engaged in businesses similar to the businesses of the Company and its
Subsidiaries. The Company Disclosure Schedule sets forth an accurate and
complete list of all binders, policies of insurance, self insurance programs and
fidelity bonds of the Company and any Subsidiary for the past three years
(including name of insurer, coverage, premium and expiration date). All
insurance premiums have been paid in full. There are no pending or asserted
claims against any insurance maintained by the Company or any Subsidiary as to
which any insurer has denied liability or reserved rights, and there are no
claims under any such insurance that have been disallowed or improperly filed
within the last three years. The Company Disclosure Schedule sets forth the
claims experience (both insured and self-insured) since January 1, 2001.
-15-
2.22 Accounts Receivable. All Accounts Receivable are properly
reflected on the Company's books and records in accordance with GAAP
consistently applied and have been generated by bona fide sales in the ordinary
course of business. The Company Disclosure Schedule includes an accounts
receivable aging schedule as of a date within seven (7) days prior to the date
hereof, and such schedule is correct and complete.
2.23 Inventory. The inventory of the Company and its Subsidiaries is
accounted for in accordance with GAAP consistently applied. Additionally, there
are no blanket agreements with suppliers that require purchases for obsolete
products or customers who are no longer active. The inventory of the Company and
its Subsidiaries disposed of subsequent to the date of the most recent balance
sheet included in the Interim Financial Statements has been disposed of only in
the ordinary course of business.
2.24 Internal Accounting Controls.
(a) The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(b) Since January 1, 2001 (i) none of the Company, any of its
Subsidiaries nor, to the Knowledge of the Company, any director, officer,
employee, auditor, accountant or representative of the Company or its
Subsidiaries, has received or otherwise had or obtained knowledge of any written
or material unwritten complaint, allegation, assertion or claim regarding the
accounting or auditing practices, procedures, methodologies or methods of the
Company or any of its Subsidiaries or their respective internal accounting
controls, including any complaint, allegation, assertion or claim of any type
that the Company or any of its Subsidiaries has engaged in improper or illegal
accounting or auditing practices and (ii) no attorney representing the Company
or any of its Subsidiaries, whether or not employed by the Company or any of its
Subsidiaries has reported evidence of a material violation of securities laws,
breach of fiduciary duty or similar violation by the Company or any of its
Subsidiaries or any of its officers, directors, employees or agents to the
Company or the board of directors or any committee thereof or to any director or
officer of the Company.
-16-
2.25 Related Parties.
(a) The Company Disclosure Schedule sets forth each agreement
between the Company, on the one hand, and any Shareholder or any Affiliate of
the Company or any Shareholder, on the other hand.
(b) Since December 31, 2003, no distributions or payments have been
accrued on behalf of or made to any Shareholder or an Affiliate of any
Shareholder, other than as set forth in the Company Disclosure Schedule.
2.26 Customers and Suppliers. The Company Disclosure Schedule sets
forth a list of the Company's ten (10) largest customers in terms of dollar
volume of sales for the three (3) preceding fiscal years and for the current
fiscal year to the date of the most recent balance sheet included in the Interim
Financial Statements, showing the approximate total dollar amount of sales to
each such customer during each such fiscal year. The Company Disclosure Schedule
sets forth a list of the Company's ten (10) largest suppliers in terms of dollar
volume of purchases for the three (3) preceding fiscal years showing the
approximate total dollar amount of purchases from each supplier during each such
fiscal year. To the Knowledge of the Company, no customer or supplier is
intending to cease to do business or materially reduce their business with the
Company after, or as a result of, the consummation of any transactions
contemplated hereby and no customer or supplier is threatened with bankruptcy or
insolvency.
2.27 Full Disclosure. No representation or warranty by the Company in
this Agreement and no statement of Shareholders or the Company contained in any
certificate, Exhibit, the Company Disclosure Schedule or other writing furnished
to Purchaser by Shareholders or the Company pursuant to this Agreement, contains
any untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein not misleading.
2.28 No Other Representations or Warranties. Notwithstanding anything
contained in this Articles II and IIA or any other provision of this Agreement,
it is the explicit understanding and intention of each party hereto that none of
the Company, the Shareholders or any other Person is making any representation
or warranty whatsoever to Purchaser, express or implied, other than those
representations and warranties specifically set forth in this Agreement and the
Company and the Shareholders hereby disclaim any such representation or
warranty, whether by or on behalf of the Company or any of its officers,
directors, employees, Shareholders or agents or representatives or any other
Person. Without limiting the generality of the foregoing, it is understood that
any projections or other predictions or other information contained or referred
to in the offering memorandum distributed by CIBC World Markets Corp. or which
otherwise may have been provided to the Purchaser in any other manner are not
and shall not be deemed representations or warranties of the Company or any of
the Shareholders. The Purchaser acknowledges that there are uncertainties
inherent in attempting to make such projections and other predictions, that the
Purchaser is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all projections and other predictions received by it,
and that the Purchaser shall have no claim against any party with respect
thereto.
-17-
ARTICLE IIA
REPRESENTATIONS AND WARRANTIES CONCERNING THE SHAREHOLDERS
Each of the Shareholders severally (and not jointly) represents and
warrants to the Purchaser that the statements in this Article IIA are correct
and complete as of the date of this Agreement (except for the conversion of the
Preferred Stock immediately prior to the Closing Date) and will be correct and
complete as of the Closing Date.
2A.1 Power. The Shareholder has full power, legal right and authority
to enter into, execute and deliver this Agreement and to carry out the
transactions contemplated hereby.
2A.2 Authorization. If the Shareholder is other than a natural person,
the execution and delivery of this Agreement, and full performance hereunder,
have been duly authorized by the board of directors and stockholders (if
required by its Organizational Documents or otherwise) of the Shareholder (or in
the case of any other form of entity, the governing body and owners (if required
by its Organizational Documents or otherwise) of such entity), and no other or
further corporate act on the part of the Shareholder is necessary therefor.
2A.3 Noncontravention. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, by the
Shareholder will (i) violate any order, writ, injunction, decree, law, statute,
rule or regulation applicable to the Shareholder or any of the Shareholder's
assets or properties, (ii) if the Shareholder is a corporation or other form of
entity, violate any provision of its Organizational Documents, or (iii) conflict
with any provision of, result in a violation or breach of, constitute a default
(with or without notice or lapse of time, or both) under, give rise to any right
of termination, cancellation or acceleration of, or result in the imposition of
any Encumbrance on any assets or properties of the Shareholder pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license or other
instrument or obligation to which the Shareholder is a party or by which the
Shareholder's assets or properties are bound.
2A.4 Validity. This Agreement has been duly executed and delivered by
the Shareholder and, assuming this Agreement constitutes the legal, valid and
binding obligation of the Purchaser, constitutes the legal, valid and binding
obligation of Shareholder, enforceable against the Shareholder in accordance
with its terms.
2A.5 Title. The Shareholder holds of record and owns beneficially the
number of shares of Common Stock and Preferred Stock set forth next to his, her
or its name in Section 2.2(a) of the Company Disclosure Schedule, free and clear
of any Encumbrances except for restrictions imposed by federal or state
securities laws and regulations and except as disclosed in the Section 2A.5 of
the Company Disclosure Schedule. Except as disclosed in Section 2.2(a) of the
Company Disclosure Schedule, the Shareholder holds no other ownership interest
in the Company and is not a party to any option, warrant, purchase right, or
other contract or commitment relative to its equity interest in the Company,
including any voting trust, proxy, or other agreement or understanding with
respect to the voting of any of his/her or its shares of Shares.
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2A.6 Brokers and Finders. No broker, finder or investment bank has
acted directly or indirectly for the Shareholder, nor has the Shareholder
incurred any obligation to pay any brokerage, finder's or other fee or
commission in connection with the transactions contemplated hereby which will
become the liability of the Purchaser.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Shareholders and
the Company as follows:
3.1 Organization and Qualification. The Purchaser (a) is duly
organized, validly existing and in good standing under the laws of Wisconsin,
and (b) has the requisite power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted.
3.2 Authorization and Validity of Agreement. The Purchaser has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby in accordance with the
terms hereof. The Board of Directors of the Purchaser has duly authorized the
execution, delivery and performance of this Agreement by the Purchaser, and no
other corporate act on the part of the Purchaser is necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Purchaser and, assuming this Agreement constitutes
the legal, valid and binding obligation of the Company and the Shareholders,
constitutes the legal, valid and binding obligation of Purchaser, enforceable
against the Purchaser in accordance with its terms.
3.3 Consents and Approvals. Neither the execution and delivery of this
Agreement by Purchaser nor the consummation by the Purchaser of the transactions
contemplated hereby will require on the part of Purchaser any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, except for applicable requirements of the HSR Act.
3.4 Noncontravention. Neither the execution and delivery of this
Agreement by Purchaser nor the consummation by the Purchaser of the transactions
contemplated hereby will (a) conflict with or violate the Organizational
Documents of Purchaser (b) conflict with any provision of, result in a violation
or breach of, constitute a default (with or without notice or lapse of time, or
both) under any note, bond, mortgage, indenture, contract, agreement, lease,
license or other instrument or obligation to which the Purchaser is a party or
by which the Purchaser or any of its assets or properties are bound or (c)
violate any order, writ, injunction, decree, law, statute, rule or regulation
applicable to the Purchaser or any of its assets or properties.
3.5 Financing. The Purchaser as of the Closing Date will have all of
the cash that the Purchaser will need on the Closing Date to consummate the
purchase of the Shares and the payment of the Option Debt, the Change of Control
Debt, the Indebtedness Payments and all of its related fees and expenses.
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3.6 Brokers and Finders. The Purchaser has not incurred any obligation
to pay any brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby which will become the liability of the
Shareholders.
ARTICLE IV.
COVENANTS
4.1 Conduct of the Business of the Company Pending the Closing. Except
as disclosed in Section 4.1 of the Company Disclosure Schedule, from the date
hereof until the Closing Date, the Company shall, and shall cause its
Subsidiaries to, conduct their respective businesses in the ordinary course
consistent with past practice, and except as otherwise required by applicable
law, the Company shall not, and shall cause each of its Subsidiaries not to,
without the prior consent of the Purchaser (which shall not be unreasonably
withheld or delayed):
(a) amend its Organizational Documents;
(b) declare, set aside or pay any dividend or other distribution or
payment in cash, stock or property in respect of its capital stock (other than
dividends by a Subsidiary to its parent), and not reclassify, combine, split,
subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any
of its or its Subsidiaries' capital stock (excluding, however, redemptions or
repurchases of shares of capital stock of the Company or its Subsidiaries
pursuant to the Shareholders Agreement);
(c) issue, grant, sell or pledge or agree to or authorize the
issuance, grant, sale or pledge of any shares of, or rights of any kind to
acquire any shares of, the capital stock of the Company or any of its
Subsidiaries other than shares of Common Stock issuable upon the exercise of
Stock Options;
(d) acquire, sell, transfer, lease or encumber any assets except in
the ordinary course of business, consistent with past practices;
(e) incur or modify any material Indebtedness or other material
liability, other than in the ordinary course of business;
(f) adopt a plan of complete or partial liquidation or adopt
resolutions providing for the complete or partial liquidation, dissolution,
consolidation, merger, restructuring or recapitalization;
(g) grant any severance or termination pay to, or enter into any
employment or severance agreement with, any of its executive officers or
directors, other than in the ordinary course of business;
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(h) except in the ordinary course of business or pursuant to
obligations imposed by collective bargaining agreements, increase the
compensation or benefits payable or to become payable to its directors,
executive officers or employees, enter into any contract with or other binding
commitment to any of its directors, executive officers, or other employees, with
respect to any such increase, or enter into any severance agreement with any of
its employees, and the Company shall not establish, adopt, enter into, or make
any new grants or awards under or amend, any Company Benefit Plan, except as
required by applicable law, including any obligation to engage in good faith
collective bargaining, to maintain tax-qualified status or as may be required by
any Company Benefit Plan as of the date hereof, nor fail to pay any compensation
or commission or provide any employee benefit other than in the ordinary course
of business, consistent with past practices.
(i) enter into any material contract or agreement, modify, amend or
terminate any of its material contracts or waive, release or assign, or permit
to lapse, any material rights or claims, or make any payment, direct or
indirect, of any material liability before the same becomes due and payable in
accordance with its terms other than in the ordinary course of business,
consistent with past practices;
(j) take any action, other than in the ordinary course of business,
with respect to accounting policies or procedures (including tax accounting
policies and procedures), except as may be required by law or GAAP;
(k) make any material tax election or permit any material insurance
policy naming it as a beneficiary or a loss payable payee to be canceled or
terminated without notice to the Purchaser, except in the ordinary course of
business; and
(l) (i) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the material
obligations of any other Person, except in the ordinary course of business; or
(ii) make any material loans, advances or capital contributions to, or
investments in, any other Person (other than to Subsidiaries of the Company),
other than in the ordinary course of business;
(m) cause a material change in investment policy or a material
change in investment vehicles related to the assets in any pension plan, other
than actions taken in the ordinary course of business or that are consistent
with or required by its fiduciary duties;
(n) materially change its methods of doing business, including
changing its pricing practices, supplier payment practices, selling practices or
collection practices;
(o) authorize or enter into an agreement to do any of the
foregoing.
4.2 Access; Confidentiality. (a) From the date of this Agreement until
the Closing Date, the Shareholders shall cause the Company and its Subsidiaries
to, upon reasonable prior written notice to the Company (i) give the Purchaser
and its authorized representatives access during normal business hours to its
properties, books and records, customers, suppliers, employees and others doing
business with the Company, provided, that the Purchaser and its authorized
representatives shall not unreasonably interfere in the business and operations
of the Company and its Subsidiaries, and (ii) furnish the Purchaser and its
authorized representative with such financial and operating data and other
information concerning the business and properties of the Company and the
Subsidiaries as the Purchaser may from time to time reasonably request.
Notwithstanding the foregoing sentence, the Purchaser agrees that it will not
prior to the Closing conduct any invasive environmental investigations, study,
audit or testing on any of the properties owned or leased by the Company or its
Subsidiaries.
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(b) The Purchaser shall hold and treat all documents and
information concerning the Company furnished to the Purchaser or its respective
representatives in connection with the transactions contemplated by this
Agreement confidential in accordance with the Confidentiality Agreement dated
March 7, 2003, between the Company (or its representative) and Purchaser (the
"CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement shall remain in
full force and effect in accordance with its terms, the Purchaser hereby
adopting and agreeing to be bound by the terms thereof.
(c) The Shareholders shall use their commercially reasonable
efforts to cause the Company and its Subsidiaries and their respective officers
to reasonably cooperate with Purchaser in connection with the financing
necessary to consummate the transactions contemplated hereby, including by (i)
providing direct contact between prospective lenders and the officers of the
Company and its Subsidiaries and (ii) providing assistance in the preparation
for, and participating in, meetings, due diligence sessions, road shows and
similar presentations to and with, among others, prospective lenders, investors
and rating agencies.
4.3 Further Actions. (a) Upon the terms and subject to conditions of
this Agreement and applicable law, each of the parties shall act in good faith
and use commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable, to consummate and make effective the transactions contemplated by
this Agreement, including such actions or things as any other party may
reasonably request in order to cause any of the conditions to such other party's
obligation to consummate the transactions contemplated by this Agreement to be
fully satisfied. Without limiting the foregoing, the parties shall (and shall
cause their respective Subsidiaries, and use commercially reasonable efforts to
cause their respective Affiliates, directors, officers, employees, agents,
attorneys, accountants and representatives, to) consult and fully cooperate with
and provide assistance to each other in (i) obtaining all necessary consents,
approvals, waivers, licenses, permits, authorizations, registrations,
qualifications, or other permission or action by, and giving all necessary
notices to and making all necessary filings with and applications and
submissions to, any Governmental Authority or any other Person; (ii) providing
all such information concerning such party, its Subsidiaries and its officers,
directors, partners and Affiliates and making all applications and filings as
may be necessary or reasonably requested in connection with any of the
foregoing; and (iii) in general, consummating and making effective the
transactions contemplated hereby. Without limiting the generality of the
foregoing, the Purchaser will promptly inform the Company of all material
amendments, modifications and substitutions to the terms of the Financing, and
will promptly respond to all inquires from the Shareholders regarding the status
of the Financing. Prior to making any application to or filing with any
Governmental Authority or other Person in connection with this Agreement, each
party shall provide the other party with drafts thereof and afford the other
party a reasonable opportunity to comment on such drafts.
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4.4 Public Announcements. Except as may be required by applicable law
or the regulations of the SEC or the New York Stock Exchange, such parties will
consult with one another prior to issuing any release or otherwise making any
public statements with respect to the transactions contemplated hereby and shall
not issue any such press release or make any public statement prior to such
consultation.
4.5 HSR Act Compliance. The Company and the Purchaser shall (a) as
promptly as practicable after the date hereof, and in no event later than
fifteen (15) days after the date hereof, make such filings required by the HSR
Act with respect to the transactions contemplated hereby, (b) respond promptly
to inquiries from the Department of Justice and the Federal Trade Commission in
connection with such filings, (c) file or cause to be filed promptly as
practicable with the Department of Justice and Federal Trade Commission any
supplemental information that may be requested pursuant to the HSR Act, and (d)
seek the earliest possible termination or waiver of the waiting period under
such statute.
4.6 D&O Insurance. (a) The Company shall not amend with retroactive
effect to any period prior to the Closing Date the provisions in the Certificate
of Incorporation and Bylaws of the Company providing for exculpation of director
and officer liability and its indemnification of the Indemnified Parties to the
fullest extent permitted by law.
(b) The Purchaser acknowledges that prior to the Closing the
Company will purchase a six year extended reporting endorsement to its existing
policies of directors' and officers' liability insurance and fiduciary liability
insurance.
(c) In the event that the Company or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, to the extent necessary
to effectuate the purposes of this Section 4.6, proper provision shall be made
so that the successors and assigns of the Company shall succeed to the
obligations set forth in this Section 4.6 and none of the actions described in
clauses (i) or (ii) shall be taken until such provision is made.
4.7 Payment of Bonuses. The Purchaser will cause the Company to pay all
bonuses to the employees of the Company and its Subsidiaries to the extent
accrued and taken into account for purposes of the Working Capital adjustment
under Section 1.5 of this Agreement in January, 2005 in accordance with the
Company's bonus plan.
4.8 Notification of Certain Matters. The Company and the Shareholders
shall give prompt notice to the Purchaser and the Purchaser shall give prompt
notice to the Company and the Shareholders, of (i) the occurrence, or
non-occurrence of any event the occurrence, or non-occurrence of which would
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at the Closing Date and (ii) any material
failure of the Company, the Shareholders or the Purchaser, as the case may be,
to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder at or prior to the
Closing Date; provided, however, that the delivery of any notice pursuant to
this Section 4.8 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
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4.9 Exclusivity. From the date of this Agreement until the Closing Date
or, if earlier, the termination of this Agreement in accordance with Section
7.1, the Shareholders shall not (whether directly or indirectly through its
representatives) and shall cause the Company and its Subsidiaries and their
respective representatives not to, directly or indirectly, (x) solicit,
initiate, knowingly encourage or knowingly facilitate (including by way of
furnishing information) any inquiries or the making or submission of any
proposal that constitutes, or may reasonably be expected to lead to, an
Acquisition Proposal, (y) participate or engage in any discussions or
negotiations with, or disclose any non-public information or data relating to
the Company or any of its Subsidiaries or afford access to the properties, books
or records of the Company or any of its Subsidiaries to, assist or participate
in, or facilitate any effort or attempt by any Person to make or pursue, any
Acquisition Proposal or (z) accept any Acquisition Proposal or enter into any
Contract providing for or relating to an Acquisition Proposal or enter into any
Contract requiring the Company to abandon, terminate or fail to consummate the
transactions contemplated by this Agreement. None of the Shareholders will enter
into or vote or consent in favor of any Acquisition Proposal.
4.10 Delivery of Information Regarding Shares to Purchaser. No later
than ten (10) days prior to the Closing Date, the Company shall deliver to
Purchaser a written notice specifying the total number of issued and outstanding
shares of Common Stock as of the Closing Date, the number of shares of Common
Stock that each Shareholder is the holder of as of the Closing Date and the
Closing Payment Percentage for each of the Shareholders.
4.11 Litigation Assistance. Xxxx X. Xxxxxx and Xxxx Xxxxxxxxxx each
agree reasonably to cooperate with the Company and the Purchaser in the defense
or prosecution of any claims or actions now in existence or which may be brought
in the future against or on behalf of the Company that relate to events or
occurrences that transpired prior to the Closing Date, subject to the payment by
the Company of all out-of-pocket expenses incurred by Messrs. Xxxxxx and
Lifflander in connection with providing such cooperation. Messrs. Xxxxxx'x and
Lifflander's cooperation in connection with such claims and actions shall be at
mutually convenient times and places which shall take into account Messrs.
Xxxxxx'x and Lifflander's personal and professional commitments. Any obligation
to cooperate and provide assistance under this Section shall be subject to any
assertion by Messrs. Xxxxxx and Xxxxxxxxxx of all applicable privileges.
4.12 Post-Closing Environmental Actions.
(a) Following the Closing until the third anniversary of the
Closing Date, the Purchaser agrees it shall not permit, and shall cause the
Company and its Subsidiaries not to permit, (i) any invasive environmental
investigation, study, audit or testing to be conducted at, on or beneath any
Owned Real Property and Leased Real Property, or (ii) any self-disclosure of
environmental conditions to a Governmental Authority (collectively,
"ENVIRONMENTAL ACTION"), except to the extent such Environmental Action (i) is
required in good faith by a financing source of the Company as a condition to
the receipt of such financing by the Company, (ii) is required by Environmental
Law or (iii) is required in good faith by a financing source of a third party
purchaser of such property as a condition to such purchase or (iv) is mutually
agreed to in writing by the Controlling Shareholders and the Purchaser;
provided, however, in the event of (i), (ii) or (iii) above, the Company shall
notify the Controlling Shareholders prior to the commencement of any
Environmental Action and shall provide the Controlling Shareholders with written
notice (the "ENVIRONMENTAL ACTION NOTICE") describing in detail: (1) the
specific Environmental Action to be taken; (2) the reasons for conducting such
Environmental Action; (3) the property on which such Environmental Action will
be conducted; and (4) the Person conducting the Environmental Action. If the
Environmental Action is being conducted pursuant to or in connection with an
investigation by or at the order or request of a Governmental Authority, the
Purchaser shall provide to the Controlling Shareholders copies of all
correspondence between the Governmental Authority and the Company relating to
such Environmental Action. The Company and the Purchaser shall respond promptly
to any requests for further information by the Controlling Shareholders
regarding the proposed Environmental Action.
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(b) If the Purchaser or the Company fails to comply with this
Section 4.12, the Purchaser shall not be entitled to indemnification pursuant to
Article VI of this Agreement for any Losses or Environmental Liabilities arising
out or in connection with any the Environmental Action to the extent such Losses
are attributable to such failure.
4.13 Shareholder Approval of Certain Benefit Arrangements. The Company
shall prior to the Closing Date solicit a vote of its shareholders to approve
pursuant to Section 280G of the Code all payments that absent such approval
would be subject to Section 280(G)(a) of the Code.
ARTICLE V.
CLOSING
5.1 Conditions Precedent to Purchaser's Obligations. Each and every
obligation of the Purchaser to be performed on the Closing Date shall be subject
to the satisfaction (or waiver) prior to or at the Closing of each of the
following conditions:
(a) No Breach. (i) Neither the Company nor any Shareholder shall
have breached or failed in any material respect to comply with any of its
obligations under this Agreement to be performed or complied with on or before
the Closing Date and (ii) the representations and warranties of the Company and
the Shareholders contained in this Agreement shall have been true and correct
when made and (except for representations and warranties made as of a particular
date which need only be true and correct as of such date) shall be true and
correct as of the Closing Date as though made on and as of such date, except
where the failure of any such representations and warranties to be true and
correct would not have a Material Adverse Effect on the Company or materially
adversely affect the ability of such party to perform its obligations under this
Agreement.
(b) No Injunctive Proceedings. No action, suit, or proceeding shall
be pending or reasonably likely to be instituted before any Governmental
Authority wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (i) prevent consummation of any of the transactions contemplated by
this Agreement, (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, (iii) affect adversely the
right of the Purchaser to consummate the transactions contemplated by this
Agreement, or (iv) affect adversely the right of any of the Company or its
Subsidiaries to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect).
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(c) Statutes; Consents. (i) No statute, rule, order, decree or
regulation shall have been enacted or promulgated by any Governmental Authority
which prohibits the consummation of the transactions contemplated by this
Agreement and (ii) all material consents, orders and approvals required for the
consummation of the transactions contemplated by this Agreement, including those
set forth on Schedule 5.1(c), shall have been obtained and shall be in effect on
the Closing Date.
(d) HSR Act Notification. In respect of notifications of the
Purchaser and the Company pursuant to the HSR Act, the applicable waiting period
and any extensions thereof shall have expired or been terminated.
(e) Material Adverse Effect. There shall have been no Material
Adverse Effect on the Company and no event or occurrence which could reasonably
be expected to have a Material Adverse Effect on the Company, since the date of
this Agreement.
(f) Termination of Options. All Stock Options and Exit Options
shall have been terminated.
(g) Payoff Letters. The Shareholders shall have delivered to
Purchaser payoff and release letters with respect to all Indebtedness required
to be paid at the Closing, together with UCC-3 termination statements with
respect to all financing statements filed against the assets of the Company or
its Subsidiaries and the stock of the Subsidiaries pledged as security therefor.
(h) Termination of Qualifying Share Arrangements. The Company shall
have caused to be delivered to the designee of the Purchaser all shares of
Subsidiaries held by nominees of the Company or any Subsidiary.
(i) Approval of Certain Benefits Arrangement. The Company shall
have received the approval of the requisite percentage of its shareholders
pursuant to Section 280G of the Code with respect to the payments referred to in
Section 4.13 of this Agreement.
5.2 Conditions Precedent to the Shareholders' Obligations. Each and
every obligation of the Shareholders to be performed on the Closing Date shall
be subject to the satisfaction (or waiver) prior to or at the Closing of each of
the following conditions:
(a) No Breach. (i) The Purchaser shall not have breached or failed
to in any material respect comply with any of its obligations under this
Agreement to be performed or complied with on or before the Closing Date and
(ii) the representations or warranties of the Purchaser contained in this
Agreement shall have been true and correct when made and (except for
representations and warranties made as of a particular date which need only be
true and correct as of such date) shall be true and correct as of the Closing
Date as though made on and as of such date, except where the failure of any such
representations and warranties to be true and correct would not have a material
adverse effect on the ability of the Purchaser to consummate the transactions
contemplated by, or perform its obligations under, this Agreement.
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(b) No Injunctive Proceedings. No action, suit, or proceeding shall
be pending or reasonably likely to be instituted before any Governmental
Authority wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (i) prevent consummation of any of the transactions contemplated by
this Agreement, (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, or (iii) affect adversely the
right of the Company or the Shareholders to consummate the transactions
contemplated by this Agreement.
(c) Statutes; Consents. (i) No statute, rule, order, decree or
regulation shall have been enacted or promulgated by any Governmental Authority
which prohibits the consummation of the transactions contemplated by this
Agreement and (ii) all material consents, orders and approvals of Governmental
Authorities required for the consummation of the transactions contemplated by
this Agreement shall have been obtained and shall be in effect at the Closing
Date except where the failure to obtain such consent, order or approval would
not have a material adverse effect on the ability of the Purchaser to consummate
the transactions contemplated by this Agreement.
(d) HSR Act Notification. In respect of notifications of the
Purchaser and the Company pursuant to the HSR Act, the applicable waiting period
and any extensions thereof shall have expired or been terminated.
5.3 Closing. Subject to the satisfaction of the conditions to Closing
set forth in Section 5.1 and Section 5.2, the closing of this transaction (the
"CLOSING") shall take place at the offices of XxXxxxxxx, Will & Xxxxx 00
Xxxxxxxxxxx Xxxxx, Xxx Xxxx, XX 00000, at 10:00 a.m. on December 31, 2004, or at
such other time and place as the parties hereto shall agree upon. Such date is
referred to in this Agreement as the "CLOSING DATE."
5.4 Deliveries by Shareholders. At the Closing, the Shareholders shall
deliver or cause to be delivered to the Purchaser the following:
(a) Stock Certificate(s). A stock certificate or certificates
representing the Shares, duly endorsed for transfer or with duly executed stock
powers attached.
(b) Compliance Certificate from the Company. A certificate signed
by an executive officer of the Company that
(i) each of the representations and warranties made by the
Company in this Agreement is true and correct in all respects on and as of the
Closing Date (except for any changes permitted by the terms of this Agreement or
consented to in writing by the Purchaser and the representations and warranties
made as of a particular date which need only be true and correct as of such
date), except where the failure of any such representations and warranties to be
true and correct would not have a Material Adverse Effect on the Company or
materially adversely affect the ability of the Company to perform its
obligations under this Agreement; and
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(ii) it has in all material respects performed and complied
with the Company's obligations under this Agreement which are to be performed or
complied with on or prior to the Closing Date.
(c) Compliance Certificate from the Shareholders. A certificate
signed by the Shareholder Representative on behalf of each Employee Shareholder
and each Shareholder other than the Employee Shareholders that:
(i) each of the representations and warranties made by such
Shareholder in this Agreement is true and correct in all respects on and as of
the Closing Date (except for any changes permitted by the terms of this
Agreement or consented to in writing by the Purchaser and the representations
and warranties made as of a particular date which need only be true and correct
as of such date), except where the failure of any such representations and
warranties to be true and correct would not have a Material Adverse Effect on
the Company; and
(ii) that such Shareholder has in all material respects
performed and complied with such Shareholder's obligations under this Agreement
which are to be performed or complied with on or prior to the Closing Date.
(d) Secretary's Certificate. A certificate of the secretary of the
Company certifying (i) the Organizational Documents of the Company; (ii) the
resolutions of the Board of Directors of the Company approving the transactions
contemplated by this Agreement; and (iii) the names and offices of the
individuals authorized on behalf of the Company to execute this Agreement.
(e) Opinion of Counsel. Purchaser shall have received Shareholders'
Legal Opinions.
(f) Good Standing. Purchaser shall have received from the
Shareholders evidence of the continued existence and good standing of the
Company.
(g) Escrow Agreement. The Controlling Shareholders' Representative
(as identified in the Escrow Agreement) shall have executed and delivered the
Escrow Agreement.
(h) Termination of Certain Agreements. Purchaser shall have
received from the Shareholders evidence that each of the Shareholders Agreement,
Management Agreement and Advisory Agreement have been terminated.
(i) Shareholder Releases. Purchaser shall have received releases
from each of the Shareholders substantially in the form of Exhibit C.
(j) Resignations. Purchaser shall have received resignations from
the directors of the Company and each of its Subsidiaries.
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(k) Certificate of Closing Cash. Purchaser shall have received a
certificate from the Chief Financial Officer of the Company certifying the cash
of the Company as of the close of business on the day immediately preceding the
Closing Date.
(l) Termination of Certain Plans. Purchaser shall have received
evidence from the Company that it has terminated any plan pursuant to which
employees have any right to use bonuses to purchase shares or options of the
Company.
(m) Other Documents. Such other instruments and documents which
Purchaser or its counsel may reasonably request not inconsistent with the
provisions hereof.
5.5 Deliveries by Purchaser. At the Closing, the Purchaser shall
deliver or cause to be delivered to Shareholders (or to such designee as
designated by the Shareholder) the following:
(a) Purchase Payment. The Purchaser shall deliver the Closing
Payment.
(b) Option Debt. The Purchaser shall deliver the Option Debt in
accordance with Section 1.4(f) of this Agreement.
(c) Change of Control Debt. The Purchaser shall deliver to the
Executive Employees the Change of Control Debt in accordance with Section 1.4(a)
of this Agreement.
(d) Debt Payments. The Purchaser shall make the Debt Payments to
the holders thereof in accordance with Section 1.4.
(e) Compliance Certificate. A certificate signed by an executive
officer of the Purchaser that:
(i) the representations and warranties made by the Purchaser in
this Agreement are true and correct in all respects on and as of the Closing
(except for any changes permitted by the terms of this Agreement or consented to
in writing by the Company and the Shareholders Representative and the
representations and warranties made as of a particular date which need only be
true and correct as of such date), except where the failure of any such
representations and warranties to be true and correct or the failure of
performance of or compliance with such obligations would not materially
adversely affect the ability of the Purchaser to perform its obligations under
this Agreement; and
(ii) the Purchaser has in all material respects performed and
complied with all of its obligations under this Agreement which are to be
performed or complied with on or prior to the Closing Date.
(f) Secretary's Certificate. A certificate of the secretary of the
Purchaser certifying (i) the Organizational Documents of the Purchaser; (ii) the
resolutions of the Board of Directors of the Purchaser authorizing the execution
of this Agreement and the performance by the Purchaser of its obligations
hereunder; and (iii) the names and offices of the individuals authorized on
behalf of the Purchaser to execute this Agreement.
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(g) Opinion of Counsel. The Shareholders shall have received a
legal opinion of XxXxxxxxx, Will & Xxxxx substantially in the form of Exhibit D.
(h) Good Standing. The Shareholders shall have received from the
Purchaser evidence of the continued existence and good standing of the
Purchaser.
(i) Escrow Agreement. The Purchaser shall have executed and
delivered the Escrow Agreement.
(j) Other Documents. Such other instruments and documents which the
Company, the Shareholders or their counsel may reasonably request not
inconsistent with the provisions hereof.
ARTICLE VI.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
6.1 General. From and after the Closing, the parties shall indemnify
each other as provided in this Article VI. The party or parties seeking
indemnification are sometimes referred to herein as the "INDEMNIFIED PARTY" and
the party or parties against which indemnification is sought are sometimes
referred to as the "INDEMNIFYING PARTY."
6.2 Survival All representations, warranties, covenants and agreements
of the parties contained in this Agreement shall survive the Closing Date until
the second anniversary of the Closing Date, except for the representations and
warranties of the Company contained in Sections 2.11 (Employee Benefit Matters),
2.12 (Taxes) and 2.16 (Environmental), which shall survive the Closing Date
until the third anniversary of the Closing Date.
6.3 Indemnification Covenants of Shareholders. (a) Provided the
Purchaser makes written claim for indemnification under this Article VI within
the survival period referred to in Section 6.2, the Shareholders shall,
severally and not jointly, indemnify Purchaser for and hold Purchaser harmless
from and against his or its Allocable Portion of any and all losses, damages,
taxes, costs, expenses, liabilities, obligations, interest, penalties and
reasonable attorneys' fees and disbursements, interest or penalties ("LOSSES")
sustained or incurred by Purchaser as a result of, arising out of or incidental
to:
(i) any breach or inaccuracy of any representation or warranty
made by the Company to the Purchaser in this Agreement as of the date of this
Agreement or as of the Closing Date or in any certificate or other document
delivered by the Company or any Shareholder to Purchaser in connection with the
transactions contemplated hereby or thereby; provided, however, in the case of
the compliance certificate delivered by the Company pursuant to Section 5.4(b)
of this Agreement, such certification is deemed to be made for purposes of this
Section 6.3(a) without regard to any qualification as to "Material Adverse
Effect"; or
(ii) any failure of the Company or any Shareholder to comply
with, or any breach or nonfulfillment of any covenant or agreement of the
Company or any Shareholder set forth in this Agreement or in any certificate or
other document delivered by the Company or any Shareholder to Purchaser in
connection with the transactions contemplated hereby or thereby; provided, that
this Section 6.3(a) shall not apply to any breach of any representation,
warranty or covenant of a Shareholder contained in Article IIA.
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(b) Provided the Purchaser makes written claim for indemnification
under this Article VI within the survival period referred to in Section 6.2,
each Shareholder shall, severally and not jointly, indemnify Purchaser for, and
hold Purchaser harmless from and against any and all Losses sustained or
incurred by Purchaser as a result of, arising out of or incidental to any breach
or inaccuracy of any representation or warranty made by such Shareholder to
Purchaser in Article IIA.
References to Purchaser in this Section 6.3 and in Section 6.5 includes its
shareholders and other Affiliates (including after the Closing, the Company and
its Subsidiaries), officers, directors, agents, successors and assigns.
6.4 Indemnification Covenants of Purchaser. Provided any Shareholder
makes a written claim for indemnification under this Article VI within the
survival period referred to in Section 6.2, Purchaser shall indemnify
Shareholders for and hold Shareholders harmless from and against any and all
Losses sustained or incurred by Shareholders as a result of, arising out of or
incidental to:
(a) any breach or inaccuracy of any representation or warranty made
by Purchaser to Shareholders in this Agreement or in any certificate or other
document delivered by Purchaser to Shareholders in connection with the
transactions contemplated hereby or thereby; or
(b) any failure of Purchaser to comply with, or any breach or
nonfulfillment by Purchaser of, any covenant or agreement of Purchaser set forth
in this Agreement or in any certificate or other document delivered by Purchaser
to Shareholders in connection with the transactions contemplated hereby.
References to Shareholders in this Section 6.4 includes Shareholders'
agents and successors.
6.5 Special Environmental Indemnification. Subject to Section 6.8
(Limitations on Liability) and Section 4.12 (Post Closing Environmental Actions)
and provided the Purchaser makes a written claim for indemnification under this
Section 6.5 within three (3) years following the Closing Date, the Shareholders
shall indemnify the Purchaser for and hold the Purchaser harmless from and
against any and all Environmental Liabilities. Notwithstanding anything to the
contrary stated in this Agreement, it is agreed by the Shareholders and the
Purchaser that this Section 6.5 provides the exclusive remedy of the Purchaser
in respect of Environmental Liabilities and that Purchaser shall have no claims
under Section 6.3(a) in respect thereof, including claims for breaches of
Section 2.16 (Environmental Matters) that may give rise to Environmental
Liabilities.
6.6 Claims for Indemnification.
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(a) Promptly upon the Indemnified Party obtaining knowledge of any
facts causing it to believe that it has a claim for indemnification against the
Indemnifying Party hereunder, the Indemnified Party shall give written notice of
such claim to the Indemnifying Party. Such written notice shall set forth in
reasonable detail the nature and (to the extent then known) the amount of the
claim. Notwithstanding the foregoing, the Indemnified Party's right of
indemnification hereunder shall not be affected by its failure to give or by its
delay in giving such notice unless, and then only to the extent that, the rights
of the Indemnifying Party are materially prejudiced as a result of such failure
or delay.
(b) Any Indemnifying Party will have the right to assume the
defense of any claim, suit, proceeding, action or assessment brought by any
third party (hereinafter "THIRD PARTY CLAIM") with counsel of his or its choice
reasonably satisfactory to the Indemnified Party at any time within 15 days
after the Indemnified Party has given notice of the Third Party Claim; provided,
however, that the Indemnifying Party must conduct the defense of the Third Party
Claim actively and diligently thereafter in order to preserve its rights in this
regard; and provided further that the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense of the
Third Party Claim.
(c) So long as the Indemnifying Party has assumed and is conducting
the defense of the Third Party Claim in accordance with Section 6.5(b) above,
(i) the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (not to be withheld unreasonably)
unless the judgment or proposed settlement involves only the payment of money
damages by one or more of the Indemnifying Parties and does not impose an
injunction or other equitable relief upon the Indemnified Party and (ii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld unreasonably).
(d) In the event none of the Indemnifying Parties assumes and
conducts the defense of the Third Party Claim in accordance with Section
6.5(b)above, however, (i) the Indemnified Party may defend against, and consent
to the entry of any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner he or it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith) and (ii) the Indemnifying Parties
will remain responsible for any Losses the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided in this Article VI.
(e) The parties shall cooperate with each other in connection with
any Third Party Claim and provide each other with access to relevant personnel,
books, records and other information in its possession.
6.7 Escrow. Purchaser shall have recourse solely to the funds held
pursuant to the Escrow Account in respect of the indemnification obligations of
the Shareholders and any obligation to pay to the Purchaser a Working Capital
Deficit pursuant to Section 1.5(b) or adjustment to the Closing Cash pursuant to
Section 1.5(b).
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6.8 Limitations on Liability.
(a) With respect to any claims for indemnification under Section
6.3(a) and under Section 6.5 in respect of the Xxxxx Matter, the Binghamton
Matter or the Lock Matter, the Purchaser shall not be entitled to
indemnification therefor until the aggregate of Shareholders' indemnification
obligations thereunder, determined without regard to this Section 6.8 or any
indemnification obligation by Shareholders pursuant to Section 6.5 other than
with respect to the Xxxxx Matter, Binghamton Matter or the Lock Matter, exceeds
$1,000,000, and then only to the extent that such Losses exceed $1,000,000 (the
"$1 MILLION INDEMNITY DEDUCTIBLE"). Notwithstanding the foregoing, the $1
Million Indemnity Deductible shall not apply to claims by Purchaser based on
breaches of representations and warranties contained in Sections 2.11 (Employee
Benefit Matters), 2.12 (Taxes) and Section 2A.5 (Title).
(b) With respect to any claims for indemnification under Section
6.5 other than in connection with the Xxxxx Matter, Binghamton Matter or the
Lock Matter, Purchaser shall not be entitled to indemnification until the
aggregate of Shareholders' indemnification obligations thereunder (other than in
respect of the Xxxxx Matter, Binghamton Matter or the Lock Matter), determined
without regard to this Section 6.8, exceed $2,000,000, and then only to the
extent that such Environmental Liabilities exceed $2,000,000; provided that
Purchaser shall be entitled to only 50% of the indemnification otherwise
available under Section 6.5 (other than in respect of the Xxxxx Matter,
Binghamton Matter or the Lock Matter) to the extent the Environmental
Liabilities exceed $2,000,000 up to $7,000,000; and provided, further, any such
Environmental Liabilities exceeding $7,000,000 for which the Purchaser is
entitled to indemnification under Section 6.5 shall be the sole obligation of
the Shareholders.
(c) Notwithstanding anything to the contrary stated in this
Agreement, the aggregate liability of the Shareholders to the Purchaser pursuant
to Article VI and with respect to any Working Capital Deficit due to the
Purchaser under Section 1.5 (b) shall not exceed $20,000,000 (the "LIABILITY
CAP") and the Purchaser's sole recourse in respect of the Shareholders'
indemnification obligations hereunder shall be the funds held pursuant to the
Escrow Agreement. For the avoidance of doubt, the Liability Cap shall not apply
to the claims for indemnification by reason of the Shareholders' failure to
comply with its obligations under Section 4.9 (Exclusivity) or if this Agreement
is terminated by Purchaser pursuant to Section 7.1(d)(ii) (the "CAP
EXCEPTIONS").
6.9 Determination of Losses. The Purchaser and the Shareholders shall
make appropriate adjustments for tax benefits and insurance coverage in
determining Losses for purposes of this Article VI. All indemnification payments
under this Article VI shall be deemed adjustments to the Purchase Price.
6.10 Exclusive Remedy. The Purchaser acknowledges and agrees that the
foregoing indemnification provisions in this Article VI shall be the exclusive
remedy of the Purchaser following the Closing with respect to the transactions
contemplated by this Agreement.
6.11 Acknowledgement and Agreement. Without limiting the generality of
Section 6.10, the Purchaser understands and agrees that its right to
indemnification under Section 6.5 for breach of the representations and
warranties contained in Section 2.16 and for Environmental Liabilities shall
constitute its sole and exclusive remedy against the Shareholders with respect
to any environmental, health, or safety matter relating to the past, current or
future facilities, properties or operations of the Company, its Subsidiaries,
and all of their respective predecessors or Affiliates, including without
limitation any such matter arising under any Environmental Laws. Aside from such
right to indemnification, the Purchaser hereby waives any right, whether arising
at law or in equity, to seek contribution, cost recovery, damages, or any other
recourse or remedy from the Shareholders, and hereby releases the Shareholders
from any claim, demand or liability, with respect to any such environmental,
health, or safety matter (including without limitation any arising under any
Environmental Laws and including without limitation any arising under CERCLA,
any analogous state law, or the common law).
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ARTICLE VII.
TERMINATION
7.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written consent of the Company and the Purchaser;
(b) by the Company or the Purchaser, if (i) any federal or state
court of competent jurisdiction or other federal or state Governmental Authority
shall have issued any judgment, injunction, order or decree prohibiting,
enjoining or otherwise restraining the transactions contemplated by this
Agreement and such judgment, injunction, order or decree shall have become final
and nonappealable (provided, that the party seeking to terminate this Agreement
pursuant to this clause (b) shall have used commercially reasonable efforts to
remove such judgment, injunction, order or decree) or (ii) any statute, rule,
regulation or executive order is promulgated or enacted by any federal or state
Governmental Authority after the date of this Agreement which prohibits the
consummation of the transactions contemplated by this Agreement shall be in
effect;
(c) by written notice to the Purchaser from the Company and the
Shareholder Representative, if (i) the Closing shall not have occurred by March
31, 2005 or (ii) the Purchaser shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform (A)
would give rise to the failure of the conditions set forth in Section 5.2 and
(B) either is not reasonably capable of being cured or, if it is reasonably
capable of being cured, has not been cured within thirty (30) days after giving
of written notice to the Purchaser of such breach or failure to perform.
(d) by written notice to the Company and the Shareholders from the
Purchaser, if (i) the Closing shall not have occurred by March 31, 2005 or (ii)
the Company or the Shareholders shall have breached or failed to perform in any
material respect any of its or their representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to perform
(i) would give rise to the failure of the conditions set forth in Section 5.1
and (ii) either is not reasonably capable of being cured or, if it is reasonably
capable of being cured, has not been cured within thirty (30) days after giving
of written notice to the Company and the Shareholders of such breach or failure
to perform.
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7.2 Effect of Termination. In the event of any termination of this
Agreement pursuant to Section 7.1, this Agreement forthwith shall become void
and of no further force or effect, and no party hereto (or any of its
Affiliates, directors, officers, agents or representatives) shall have any
liability or obligation hereunder, except in any such case (a) as provided in
Sections 4.2(b) (Confidentiality), 4.4 (Public Announcements), 7.3 (Fees and
Expenses) and 7.4 (Remedies Upon Termination), which shall survive any such
termination and (b) to the extent such termination results from the breach by
such party of any of its representations, warranties, covenants or agreements
contained in this Agreement.
7.3 Fees and Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby (including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants) shall, subject to Sections 1.4 and 1.5, be borne by the party which
incurs such cost or expense, and the liability for all applicable sales,
transfer, recording, deed, stamp, gains and other similar taxes resulting from
the consummation of the transactions contemplated hereby shall be paid by the
Company.
ARTICLE VIII.
SHAREHOLDERS' REPRESENTATIVE AND CONTROLLING SHAREHOLDERS
8.1 Appointment; Acceptance. By executing this Agreement, each of the
Employee Shareholders hereby irrevocably constitutes and appoints the
Shareholders' Representative or any assignee or successor thereof, acting
individually as hereinafter provided, as his or her attorney-in-fact and agent
to act in his or her name, place and xxxxx in connection with all matters
arising from and under this Agreement after the date of this Agreement, and
agrees and acknowledges that such appointment is coupled with an interest. By
executing this Agreement, the Shareholders' Representative hereby (i) accepts
its appointment and authorization to act as the Shareholders' Representative and
as attorney-in-fact and agent in accordance with the terms hereof and (ii)
agrees to perform its obligations hereunder, and otherwise to comply with this
Article VIII.
8.2 Authority. Each Employee Shareholder fully and completely, without
restriction:
(a) agrees to be bound by all notices received or given by, and all
agreements and determinations made by, and all documents executed and delivered
by the Shareholders' Representative under this Agreement after the date of this
Agreement, including the compliance certificate as provided in Section 5.4(b)
hereof;
(b) agrees to take no action that would make such certificate
inaccurate in any respect;
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(c) agrees to deliver his or her certificate with duly executed
stock powers to the Shareholders' Representative and authorize the Shareholders'
Representative to deliver the same to the Purchaser at Closing;
(d) authorizes the Shareholders' Representative, after the Closing
Date:
(i) to assert claims, make demands and commence actions on
behalf of the Shareholder and under this Agreement;
(ii) to dispute or to refrain from disputing any claim made by
Shareholders,
(iii) to negotiate and compromise any dispute which may arise
under, and exercise or refrain from exercising remedies available to the
Shareholder under, this Agreement, and to sign any releases or other documents
with respect to such dispute or remedy (and to bind the Shareholders in so
doing),
(iv) to give such instructions and do such other things and
refrain from doing such things as the Shareholders' Representative shall deem
appropriate to carry out the provisions of this Agreement,
(v) to give any and all consents and notices under this
Agreement, and
(vi) to perform all actions, exercise all powers, and fulfill
all duties otherwise assigned to the Shareholders' Representative in this
Agreement;
(e) authorizes and directs the Shareholders' Representative to
receive all payments under this Agreement payable to Employee Shareholders after
the Closing Date on its behalf, to invest such funds pending their disbursement
in such manner as the Shareholders' Representative in its sole discretion deems
appropriate, and to disburse pro rata any payments due to the Employee
Shareholders under this Agreement in accordance with the Shareholders'
Representative instructions.
8.3 Actions. Each of the Employee Shareholders hereby expressly
acknowledges and agrees that the Shareholders' Representative has the sole and
exclusive authority to act on his/her behalf in respect of all matters arising
under or in connection with this Agreement after the date of this Agreement,
notwithstanding any dispute or disagreement among them, and that no Employee
Shareholder shall have any authority to act unilaterally or independently of
Shareholders' Representative in respect to any such matter. Accordingly, the
Purchaser and the Company shall be entitled to rely on any and all actions taken
by the Shareholders' Representative under this Agreement without any liability
to, or obligation to inquire of, any of the Employee Shareholders. The
Purchaser, the Company and any other Person is hereby expressly authorized to
rely on the genuineness of the signature of the Shareholders' Representative,
and upon receipt of any writing which reasonably appears to have been signed by
the Shareholders' Representative and may act upon the same without any further
duty of inquiry as to the genuineness of the writing.
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8.4 Effectiveness. The authorizations of the Shareholders'
Representative shall be irrevocable and effective until the Shareholders'
Representative's rights and obligations under this Agreement terminate by virtue
of the termination of all obligations of the Shareholders to the Purchaser and
the Purchaser and to Shareholders under this Agreement.
8.5 Reimbursement of Expenses of Shareholders' Representative. The
Employee Shareholders agree to reimburse the Shareholders' Representative for
any out-of-pocket costs and expenses it incurs in performing its services
hereunder. The Employee +Shareholders shall share such reimbursement expense,
pro rata.
8.6 Exculpation and Indemnification of Shareholders' Representative.
The Shareholders' Representative shall in no event be liable for any action or
omission taken under or in connection with this Agreement, except for the
Shareholders' Representative's gross negligence or willful misconduct. The
Employee Shareholders shall severally indemnify and save harmless the
Shareholders' Representative from and against any and all liability, including
all expenses reasonably incurred in its defense and all costs and expenses
reasonably incurred in enforcing its right to indemnification hereunder, to
which the Shareholders' Representative shall be subject by reason of any action
taken or omitted to be taken, except as may result from the Shareholders'
Representative's gross negligence or willful misconduct; provided, however, that
such indemnification shall not apply to any actions taken or omitted in the
Shareholders' Representative's capacity as a shareholder. This Section 8.6 shall
survive the termination of this Agreement.
8.7 Exculpation and Indemnification of the Controlling Shareholders.
The Controlling Shareholders shall in no event be liable to any Shareholder for
any action or omission taken under Sections 1.5(b) or 4.12(a) of this Agreement
or in the capacity of the Controlling Shareholders' Representative under the
Escrow Agreement. The Shareholders shall severally indemnify and save harmless
the Controlling Shareholders from and against any and all liability, including
all expenses reasonably incurred in its defense and all costs and expenses
reasonably incurred in enforcing its right to indemnification hereunder, to
which the Controlling Shareholders shall be subject by reason of any action
taken or omitted to be taken under Sections 1.5(b) or 4.12(a) of this Agreement
or in the capacity of the Controlling Shareholders' Representative under the
Escrow Agreement. This Section 8.7 shall survive the termination of this
Agreement.
ARTICLE IX.
DEFINITIONS
9.1 Definitions. The following terms, when used in this Agreement,
shall have the following respective meanings:
(a) "10.5% NOTES" means the 10.5% Senior Notes due 2008 issued by
Key Components LLC and Key Components Finance Corp.
(b) "1998 INCENTIVE PLAN" means the Key Components, Inc. 1998
Long-Term Incentive Plan.
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(c) "2000 INCENTIVE PLAN" means the Key Components, Inc. Stock
Incentive Plan adopted by the Company in May, 2000.
(d) "ADVISORY AGREEMENT" means the Advisory Agreement dated May 23,
2000, between Key Components, Inc. and Xxxxx and Company, L.P.
(e) "AFFILIATES" shall have the meaning assigned to such term in
Section 12(b)-2 of the Exchange Act.
(f) "ACQUISITION PROPOSAL" means any offer or proposal regarding a
merger, consolidation, exchange, recapitalization, reclassification,
liquidation, acquisition, purchase or other business combination involving the
Company or any of its Subsidiaries or the acquisition or purchase of ten percent
(10%) or more of any class of equity securities or significant assets of the
Company or any of its Subsidiaries, or any tender offer (including self-tenders)
or exchange offer or stock purchase (including any repurchase by the Company)
that if consummated would result in any Person (other than the Company)
beneficially owning ten percent (10%) or more of any class of equity securities
of the Company or any of its Subsidiaries, or a substantial portion of the
assets or properties.
(g) "ALLOCABLE PORTION" means, with respect to any Shareholder,
that percentage of the total number of Shares sold by all Shareholders hereunder
which is sold by such Shareholder. The Allocable Portion is the same as the
"Closing Payment Percentage" for each Shareholder.
(h) "BASELINE WORKING CAPITAL" means $36,987,000 as calculated in
the manner set forth on Exhibit B.
(i) "BINGHAMTON MATTER" means any Environmental Liability incurred
by the Company or any Subsidiary in connection with the release of Hazardous
Materials at, under or from the property located at 00 Xxxxxxxx, Xxxxxxxxxx, Xxx
Xxxx.
(j) "CERCLA" means Comprehensive Environmental Response,
Compensation and Liability Act of 1990, as amended.
(k) "XXXXX MATTER" means any Environmental Liability incurred by
the Company or any Subsidiary in connection with the waste disposal site 859015
located in the Village of Xxxxx.
(l) "CODE" means the Internal Revenue Code of 1986, as amended.
(m) "CONTROLLING SHAREHOLDERS" means the Shareholders owning,
collectively, at least seventy-five percent (75%) of the issued and outstanding
shares of Common Stock and Preferred Stock (with each share of Preferred Stock
equal to such number of shares of Common Stock into which such share Preferred
Stock is then convertible).
(n) "EMPLOYEE SHAREHOLDER" shall mean each of the following: [to
include all employee shareholders who are not officers or directors].
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(o) "ENCUMBRANCE" and "ENCUMBRANCES" mean any and all mortgages,
liens, security interests, claims, pledges, licenses, levies, easements,
covenants, restrictions, rights-of-way, charges, leases, encroachments, title
defects, assignments or any other restrictions or encumbrances, other than
Permitted Encumbrances.
(p) "ENVIRONMENTAL LAWS" means any current applicable federal,
state, local or foreign law (including, without limitation, common law),
statute, ordinance, code, judicial decision, regulation, rule, judgment, order,
decree, injunction, permit, or legally binding governmental restriction or
requirement, or any legally binding agreement with any governmental authority or
other third party, relating to the environment or, protecting human health or to
pollutants, contaminants, wastes or chemicals or any toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials.
(q) "ENVIRONMENTAL LIABILITY" means the cost or expense arising out
of or relating to any environmental condition or circumstance existing prior to
or on the Closing Date on or in respect of any of the properties or facilities
now or previously owned or leased by the Company or any of its Subsidiaries or
predecessors, or any past or present use, transport, disposal or Release of any
Hazardous Materials and all fines, penalties, judgments, awards, settlements,
legal or administrative proceedings, damages, losses and claims incurred by the
Company or a Subsidiary related thereto.
(r) "ENVIRONMENTAL PERMITS" means all permits, licenses,
franchises, certificates, approvals and other similar authorizations of
Governmental Authorities required by Environmental Laws regarding the business
of the Company or any of its Subsidiaries.
(s) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(t) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(u) "EXIT OPTIONS" means any Stock Option that, by its terms,
becomes exercisable solely upon a Change of Control of the Company (as defined
in the 2000 Incentive Plan) if certain performance targets (as set forth in the
stock option agreement between the Company and the holder of such Stock Options)
are satisfied.
(v) "HAZARDOUS MATERIALS" means any substance, chemical, compound,
product, pollutant, contaminant or material that is classified or regulated as
"hazardous" or "toxic" pursuant to any Environmental Law, including asbestos,
polychlorinated biphenyls, petroleum products or by-products and
urea-formaldehyde insulation.
(w) "GAAP" means the generally accepted accounting principles from
time to time in effect in the United States.
(x) "GOVERNMENTAL AUTHORITY" means any court, administrative agency
or commission or other governmental authority or instrumentality, domestic or
foreign.
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(y) "INCLUDE," "INCLUDES" or "INCLUDING" shall be deemed to be
followed by the words "WITHOUT LIMITATION."
(z) "INDEBTEDNESS" means the aggregate (without duplication) of (i)
indebtedness for borrowed money; (ii) obligations evidenced by bonds,
debentures, notes or similar instruments; (iii) capitalized lease obligations,
determined in accordance with GAAP consistently applied; and (iv) any guarantees
of Indebtedness of third parties;
(aa) "IRS" means the United States Internal Revenue Service.
(bb) "XXXXX" means, collectively, Xxxxx Investment Associates VI,
L.P. and KEP VI, LLC.
(cc) "KNOWLEDGE" means the actual knowledge of Xxxxxx X. Xxx,
President and Chief Executive Officer of the Company, Xxxxx X. XxXxxxx, Chief
Financial Officer of the Company and Xxxx X. Xxxxxx, a Vice President of the
Company and each of the following division heads: (i) Xxxxx Xxxxx, President of
Gits Manufacturing Company, LLC, (ii) Xxxxxxx Xxxxx, President of Xxxxxx
Electric, LLC, (iii) Xxxxxx X. Arena, General Manager of Acme Electric
Corporation, (iv) Xxxxxx X. Xxxxxxx, President of X.X. Xxxxxx Manufacturing Co.,
LLC (v) J. Xxxxx X'Xxxxxxx, President and Chief Executive Officer of Marine
Industries Company, LLC, and (vi) Xxxxxx X. Xxxxxxxx, Ruzgar Barisik, Xxxx
Xxxxxxx and all directors of the Company.
(dd) "LOCK MATTER" means obligations of the Company under Section
8(b) of the Asset Purchase Agreement, dated October 7, 2004, among the Company,
Key Components, LLC, Xxxxxx Lock LLC and the HL Acquisition LLC.
(ee) "MANAGEMENT AGREEMENT" means Management Agreement dated May
28, 1998 between Key Components, LLC and Millbrook Capital Management, Inc.
(ff) "MATERIAL ADVERSE EFFECT" means, with respect to any Person,
any change or effect that is materially adverse to the business, operations,
assets, liabilities, financial condition or results of operations of such Person
and its Subsidiaries, taken as a whole.
(gg) "ORGANIZATIONAL DOCUMENTS" means in the case of a corporation,
the certificate of incorporation and the bylaws of such corporation, each
amended to date, and in the case of a limited liability company, the certificate
of formation and operating agreement of such limited liability company, each as
amended to date, and with respect to any other form of entity, the equivalent
forms of the organizational documents of such entity, each amended to date.
(hh) "PERMITTED ENCUMBRANCES" means (i) any liens or encumbrances
for taxes not yet due and payable or which are being contested in good faith;
(ii) any inchoate mechanic's or materialmen's liens and encumbrances for
construction in progress; (iii) any workmen's, repairmen's, warehousemen's or
carriers' liens and encumbrances arising in the ordinary course of business; and
(v) with respect to real property, any liens, encumbrances or defects which are
matters of record, including but not limited to, easements, quasi-easements,
rights of way, land use ordinances and zoning plans.
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(ii) "PERSON" means any natural person, corporation, limited
liability company, partnership, unincorporated organization or other entity.
(jj) "RELEASE" means any spilling, leaking, emitting, emptying,
discharging, injecting, escaping, dumping, or disposing.
(kk) "SEC" means the Securities and Exchange Commission.
(ll) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(mm) "SHAREHOLDERS AGREEMENT" means the Shareholders Agreement,
dated as of May 23, 2000, as amended, among Key Components, Inc., Xxxxx
Investment Associates VI, L.P., KEP VI, LLC and certain shareholders of Key
Components, Inc.
(nn) "SHAREHOLDERS LEGAL OPINION" means the legal of opinions of
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP and of counsel to KEP VI, LLC, and Xxxxx
Investment Associates VI, L.P., substantially in the form of Exhibits E and F.
(oo) "SHAREHOLDERS' REPRESENTATIVE" means Xxxx X. Xxxxxx.
(pp) "STOCK OPTIONS" means, collectively, the following: (i) any
and all outstanding Options (as defined in the 2000 Incentive Plan) issued under
the 2000 Incentive Plan whether or not vested or exercisable on the Closing
Date, and (ii) any and all outstanding Options (as defined in the 1998 Incentive
Plan) issued under the 1998 Incentive Plan whether or not vested or exercisable
on the Closing Date.
(qq) "SUBSIDIARY" "Subsidiary" means any corporation, company or
other legal entity (i) at least fifty percent (50%) of whose shares or other
securities entitled to vote for the election or removal of directors (or other
managing authority), or the majority of whose voting rights is controlled,
directly or indirectly, by the Company (or a Subsidiary thereof); or (ii) which
does not have outstanding shares or securities but fifty percent (50%) or more
of whose ownership interests representing the right to manage such corporation
or other legal entity is owned and controlled, directly or indirectly, by the
Company (or a Subsidiary thereof), all of which are listed in the Company
Disclosure Schedule.
(rr) "TAXES" shall mean any and all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, real or personal property, sales, withholding, social security,
occupation, use, service, service use, license, net worth, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the IRS or any taxing
authority (domestic or foreign), including, without limitation, any state,
county, local or foreign government or any subdivision or taxing agency thereof
(including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest, penalties or additional amounts attributable to, or imposed upon,
or with respect to, any such taxes, charges, fees, levies or other assessments;
and
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(ss) "TAX RETURN" shall mean any report, return, document,
declaration or other information or filing required to be supplied to any taxing
authority or jurisdiction (domestic or foreign) with respect to Taxes.
(tt) "WORKING CAPITAL" means an amount equal to any excess of the
amount of the current assets (excluding cash) of the Company over the amount of
the current liabilities (excluding Indebtedness and accrued interest) of the
Company, on a consolidated basis, and as determined in accordance with GAAP
applied consistently for all periods and in accordance with the past accounting
practices of the Company and its Subsidiaries; provided, that the calculation of
Working Capital shall exclude any assets or liabilities attributable to the
Company's Xxxxxx Lock business which were transferred on October 22, 2004.
(uu) "WORKING CAPITAL DEFICIT" means the amount by which the
Working Capital as of the Closing Date is less than (x) the Baseline Working
Capital minus (y) $2,500,000.
The following additional terms are defined in the section or part of
this Agreement indicated below:
Term Definition
---- ----------
$1 Million Indemnity Deductible Section 6.8(a)
Agreement Introductory paragraph
Acquisition and Divestiture Agreements Section 2.18(iv)
Cap Exceptions Section 6.8(c)
Change of Control Debt Section 1.3
Change of Control Debt Payments Section 1.4(a)
Claims Section 4.6(a)
Closing Section 5.3
Closing Cash Section 1.4(h)
Closing Date Section 5.3
Closing Date Balance Sheet Section 1.5(b)
Closing Payment Section 1.4(h)
Closing Payment Percentages Section 1.4(h)
COBRA Section 2.11(f)
Commissions Section 2.14
Common Stock Section 2.2(a)
Company Introductory paragraph
Company Benefit Plan Section 2.11(a)
Company Disclosure Schedule Article II
Company SEC Documents Section 2.6
Confidentiality Agreement Section 4.2(b)
Contracts Section 2.18
Costs Section 4.6(a)
Debt Payments Section 1.4
Employees Section 2.11(a)
Environmental Action Section 4.12(a)
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Term Definition
---- ----------
Environmental Action Notice Section 4.12(a)
Escrow Account Section 1.4(d)
Escrow Agreement Section 1.4(d)
Escrow Payment Section 1.4(d)
Executive Employees Section 1.3
Exercise Price Section 2.2(a)
HSR Act Section 2.4
Indebtedness Payments Section 1.4(b)
Indemnified Party Section 6.1(a)
Indemnifying Party Section 6.1(a)
Intellectual Property Section 2.13(a)
Interim Financial Statements Section 2.6(c)
Leased Real Property Section 2.15(a)
Liability Cap Section 6.8(c)
Licenses and Permits Section 2.19
Losses Section 6.3(a)
KCI Contracts Section 2.18(xiv)
Option Debt Section 1.2
Option Holders Section 1.2
Outstanding Note Balance Section 1.4(c)
Owned Real Property Section 2.15
Preferred Stock Section 2.2(a)
Purchase Price Section 1.1
Purchaser Introductory paragraph
Purchaser Disclosure Schedule Section 3.3
Registered Intellectual Property Section 2.13(c)
Real Property Leases Section 2.15
Shareholder(s) Introductory paragraph
Share Price Section 1.2
Shares Recitals
Technical Information Section 2.13(d)
Third Party Claim Section 6.6(b)
Unpaid Transaction Fees Section 1.4(g)
Working Capital Statement Section 1.5(b)
ARTICLE X.
MISCELLANEOUS
10.1 Notices. All notices, demands and requests required by this
Agreement shall be in writing and shall be deemed to have been given for all
purposes (a) upon personal delivery, (b) one (1) day after being sent, when sent
by professional overnight courier service from and to locations within the
continental United States, (c) three (3) days after posting when sent by
registered or certified mail (postage prepaid, return receipt requested),
addressed as set forth below or (d) when sent, if sent by facsimile provided the
receipt of successful transmission is received by sender:
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(i) if to Purchaser, to:
Actuant Corporation
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Facsimile No.:000-000-0000
With a copy to:
XxXxxxxxx, Will & Xxxxx
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xx 00000
Attention: Xxxxx X. Xxxxxxx, P.C.
Facsimile No.: 000-000-0000
(ii) if to the Company, to:
Key Components, Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxx
Facsimile: 000-000-0000
With a copy to:
Xxxxx Investment Associates, VI, L.P.
KEP VI, LLC
x/x Xxxxx & Xxxxxxx, 00xx Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, XX, Esq.
Facsimile: 000-000-0000
and to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP
1221 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: 000-000-0000
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(iii) if to a Shareholder, to the addresses set forth under
such Shareholder's signature to this Agreement.
or to such other Person or address or facsimile number as any party shall
specify by like written notice to the other parties hereto (any such notice of a
change of address to be effective only upon actual receipt thereof).
10.2 Entire Agreement. This Agreement (including the schedules,
exhibits and other documents referred to herein), together with the
Confidentiality Agreement, constitutes the entire agreement between and among
the parties hereto and supersedes all prior agreements and understandings, oral
and written, between or among any of the parties with respect to the subject
matter hereof.
10.3 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, benefits or obligations hereunder may be assigned, in whole or in part,
by any party (whether by operation of law or otherwise) without the prior
written consent of the other party hereto. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, other than
rights conferred upon Indemnified Parties under Section 4.6.
10.4 Amendments and Modifications. This Agreement may not be amended or
modified except by a written instrument signed by the Purchaser, the Company and
the Controlling Shareholders; provided, however, that no amendment or
modification which disproportionately affects a Shareholder shall be effective
against such Shareholder without his, her or its written consent.
10.5 Waivers. At any time prior to the Closing Date, the Purchaser, on
the one hand, or the Company and the Controlling Shareholders, on the other
hand, may, (a) extend the time specified herein for the performance of any of
the obligations or other acts of the other, (b) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document
delivered pursuant hereto, or (c) waive compliance by the other with any of the
agreements or covenants of such other party contained herein. Any such extension
or waiver shall be valid only if set forth in a written instrument signed by the
parties identified above. No such extension or waiver shall constitute a waiver
of, or estoppel with respect to, any subsequent or other breach or failure to
strictly comply with the provisions of this Agreement. The failure of any party
to insist on strict compliance with this Agreement or to assert any of its
rights or remedies hereunder or with respect hereto shall not constitute a
waiver of such rights or remedies.
10.6 Validity. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
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10.7 Captions. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.8 Counterparts; Facsimiles. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument. Delivery of an
executed signature page of this Agreement by facsimile transmission shall be
effective as an in-hand delivery of an original executed counterpart hereof.
10.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York, without regard to
any applicable principles of conflicts of law.
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IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the date first above written.
PURCHASER:
ACTUANT CORPORATION
By: /s/
-------------------------------------------------------
Name:
--------------------------------------------------
Title:
------------------------------------------------
THE COMPANY:
KEY COMPONENTS, INC.
By: /s/
-------------------------------------------------------
Name:
Title:
THE SHAREHOLDERS' REPRESENTATIVE:
/s/ Xxxx X. Xxxxxx
------------------------------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxx Xxxxx
------------------------------------------------------------
Xxxxx Xxxxx
/s/ August X. Xxxxxxx
------------------------------------------------------------
August X. Xxxxxxx
/s/ Xxxxx X. Xxxx
------------------------------------------------------------
Xxxxx X. Xxxx
/s/ Xxx Xxxxxxx
------------------------------------------------------------
Xxx Xxxxxxx
COINVESTMENT I, LLC
By: /s/
-------------------------------------------------------
Name:
------------------------------------------------------
Title:
-----------------------------------------------------
/s/ Xxxxx Xxxxxxx
------------------------------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxx Xxxxx
------------------------------------------------------------
Xxxx Xxxxx
XXXXXXX X. XXXXX 1976 TRUST
By: /s/ Xxxx X. Xxxxx
-------------------------------------------------------
Xxxx X. Xxxxx, Trustee
and
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------------------------------
Xxxx X. Xxxxxxxxxx, Trustee
XXXXXXX X. XXXXX 1968 TRUST
By: /s/ Xxxx X. Xxxxx
-------------------------------------------------------
Xxxx X. Xxxxx, Trustee
and
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------------------------------
Xxxx X. Xxxxxxxxxx, Trustee
/s/ Xxxx X. Xxxxx
------------------------------------------------------------
Xxxx X. Xxxxx
XXXXXXXX XXXXX 1968 TRUST
By: /s/ Xxxx X. Xxxxx
-------------------------------------------------------
Xxxx X. Xxxxx, Trustee
and
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------------------------------
Xxxx X. Xxxxxxxxxx, Trustee
/s/ Xxxxx Xxxxxx
------------------------------------------------------------
Xxxxx Xxxxxx
/s/ Xxxx Xxxxxxx
------------------------------------------------------------
Xxxx Xxxxxxx
/s/ U. Xxxxxxx Xxxxx, Xx.
------------------------------------------------------------
U. Xxxxxxx Xxxxx, Xx.
/s/ Xxxx Xxxx
------------------------------------------------------------
Xxxx Xxxx
/s/ Xxxxxx X. Xxxxxxxxxx
------------------------------------------------------------
Xxxxxx X. Xxxxxxxxxx
XXXXX INVESTMENT ASSOCIATES VI, L.P.
By: Xxxxx XX VI, LLC,
its general partner
By: /s/
-------------------------------------------------------
Name:
------------------------------------------------------
Title: Manager
LOUIS AND XXXXXXXX XXXXX TRUST
By: /s/
-------------------------------------------------------
______________________________, Trustee
KEP VI, LLC
By: /s/
-------------------------------------------------------
Name:
------------------------------------------------------
Title: Managing Member
/s/ Xxxx X. Xxxxxxxxxx
------------------------------------------------------------
Xxxx X. Xxxxxxxxxx
/s/ Xxxx X. Xxxxxxxxxx
------------------------------------------------------------
Xxxx X. Xxxxxxxxxx, as custodian for Xxxxxx Xxxxxxx
Xxxxxxxxxx
/s/ Xxxx X. Xxxxxxxxxx
------------------------------------------------------------
Xxxx X. Xxxxxxxxxx, as custodian for Xxxxxx Xxx Lifflander
/s/ Xxxxxxxx Xxxxx
------------------------------------------------------------
Xxxxxxxx Xxxxx
MAGNETITE ASSET INVESTORS, L.L.C.
By: /s/
-------------------------------------------------------
Name:
------------------------------------------------------
Title:
-----------------------------------------------------
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxx X. XxXxxxxxxxxx
------------------------------------------------------------
Xxxx X. XxXxxxxxxxxx
The Xxxxx & Xxxxx X'Xxxxxxx 2002 Trust,
Created U/D/T Dated May 21, 2002
By: /s/ J. Xxxxx X'Xxxxxxx
--------------------------------------------------------
J. Xxxxx X'Xxxxxxx, Trustee
/s/ Xxxxxx Xxxxxxxx
------------------------------------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxx X. Xxxxxx
------------------------------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxxx
------------------------------------------------------------
Xxxxx X. Xxxxxxxx
XXXX XXXXXXXX XXX
By: /s/
--------------------------------------------------------
Name:
------------------------------------------------------
Title:
-----------------------------------------------------
/s/ Xxxxxx Xxxxxxx
------------------------------------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxxx X. Xxxxx
------------------------------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxx Tinghtella
------------------------------------------------------------
Xxxx Tinghtella
/s/ Xxxx Xxxxxxxx
------------------------------------------------------------
Xxxx Xxxxxxxx
