EXHIBIT 2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), made and entered into
this 16th day of April, 1999, by and among Swiss Army Brands, Inc., a Delaware
corporation ("SABI"); Bear Cutlery, Inc., a Delaware corporation and a
wholly-owned subsidiary of SABI (the "Buyer"); Bear MGC Cutlery, Inc., an
Alabama corporation (the "Seller"); and Xxxxxx XxXxxxxx, an individual resident
of the State of Alabama; Xxxxxxx X. Xxxxxxx, Xx., an individual resident of the
State of Alabama; and Xxxxxxx Xxxx, an individual resident of the State of
Alabama; each in his capacity as a shareholder of the Seller (collectively, the
"Principals");
W I T N E S S E T H:
WHEREAS, Seller, Principals, SABI and Buyer desire to enter into this
Agreement pursuant to which Seller will sell to Buyer, and Buyer will purchase
from Seller, certain assets and properties of Seller, Buyer will assume certain
obligations of Seller (the "Acquisition"), SABI is guaranteeing certain of
Buyer's obligations hereunder and the Principals, in their capacity as
shareholders of Seller, are guaranteeing certain of Seller's obligations
hereunder; and
WHEREAS, Seller, Principals, SABI and Buyer desire to make certain
representations, warranties and agreements in connection with the Acquisition;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE 1
Purchase and Sale
1.1 Agreement to Purchase and Sell. Subject to the terms and conditions of
this Agreement, except as otherwise specifically provided in this Article 1,
Seller hereby grants, sells, assigns, transfers and delivers to Buyer, and Buyer
hereby purchases and acquires from Seller, all right, title and interest of
Seller in and to (a) Seller's business as a going concern (the "Business"), and
(b) except for the Excluded Assets (as hereinafter defined) all of the assets,
properties and rights of Seller of every kind and description, real, personal
and mixed, tangible and intangible, wherever situated (which Business, assets,
properties and rights are hereinafter collectively referred to as the "Assets"),
free and clear of all mortgages, liens, pledges, security interests, charges,
claims, restrictions and encumbrances of any nature whatsoever. Incidental to
the purchase and sale of the Assets, the Buyer hereby assumes certain
liabilities more particularly described in Section 1.4 below.
1.2 Assets. Except as otherwise expressly set forth in Section 1.3 hereof,
the Assets include the following assets, properties and rights of Seller as of
the date hereof:
(1) except for the License Rights as defined in Section 1.3(a) hereof,
all intangible rights relating to the Business, including, without
limitation, copyrights, know-how, proprietary processes and formulas,
technical documentation, computer software (in both source code and object
code form), trade secrets, trademarks, trade names and goodwill, and all
rights thereto and applications and registrations therefor (in the United
States and in foreign countries); including, without limitation, the rights
listed in Schedule 1.2(a);
(2) all furniture, fixtures, machinery, equipment (including, without
limitation, computer hardware and software), tools, dies, molds, parts,
vehicles, office supplies and other tangible property, whether or not
carried on the books of Seller, including, without limitation, those which
are set forth on Schedule 1.2(b);
(3) all right, title and interest of Seller in those contracts
(written or oral), agreements or other instruments with suppliers or
customers (including the right to supply products or perform services for
customers that are not currently performed pursuant to contracts),
suppliers and others and all leases of real and personal property,
including, without limitation, those which are set forth on Schedule 1.2(c)
("Assumed Contracts");
(4) all inventories, including finished products, work-in-process, raw
materials, spare parts, stores and supplies, and other inventory items;
(5) all accounts receivable, notes receivable, letters of credit (and
all rights to the proceeds thereof), deposits, advances, prepaid expenses
and credits of Seller related to the Business, including all accounting
records of Seller, credit files, notes, guarantees and collateral relating
thereto;
(6) all cash, cash equivalents, bank accounts and deposits and
marketable securities, including xxxxx cash and cash deposits on existence
on the date hereof;
(7) all guarantees, warranties, indemnities and similar rights in
favor of Seller;
(8) all governmental permits, licenses of any kind or similar rights
relating to the Business to the extent transferrable;
(9) all current and historical information, files, correspondence and
other records related to the Business, including, without limitation, all
marketing information and databases, lists of current and potential
customers, supplier and distributor lists, bid and quote information, and
personnel records;
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(10) all casualty, liability or other policies of insurance maintained
by or on behalf of Seller and rights thereunder and all rights under
self-insurance programs maintained or established with respect to the
Business, except for insurance plans, programs or proceeds relating to
Excluded Assets or Excluded Liabilities as defined herein; and
(11) all other tangible and intangible assets of any kind or
description, wherever located, that are carried on the books of Seller or
which are owned by Seller and relate to the Business.
1.3 Excluded Assets. Notwithstanding anything to the contrary set forth
herein, the Assets do not include the following assets, properties and rights of
Seller (collectively, the "Excluded Assets"):
(1) all patent and know-how rights licensed to SABI in accordance with
the Patent and Know-How License Agreement between Seller and SABI, dated
the date hereof (the "License Rights");
(2) minute books and stock ledger records of Seller;
(3) all Benefit Plans as defined in Section 3.13(a) of this Agreement,
and any other employee benefit or insurance plans;
(4) the rights to any federal, state, local or foreign income tax
refunds;
(5) those assets set forth on Schedule 1.3(e);
(6) that portion of Seller's working capital (as defined in Section
3.22(d) hereof) that is greater than Two Million Three Hundred Thousand
Dollars ($2,300,000); and
(7) the rights that accrue to Seller under this Agreement.
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1.4 Assumption of Assumed Liabilities.
(1) Except to the extent specified in Section 1.4(b), Buyer does not
assume, in connection with the transactions contemplated hereby, any
liability or obligation of Seller whatsoever, and Seller hereby retains
responsibility for all liabilities and obligations accrued or incurred on
and prior to date hereof, whether known or unknown, and all liabilities and
obligations arising from Seller's operations on and prior to the date
hereof, whether or not accrued or whether or not disclosed. Seller agrees
to pay and settle all of such liabilities and obligations in a timely
manner.
(2) As the sole exceptions to the provisions of Section 1.4(a),
effective as of the date hereof, Buyer shall assume and agree to pay,
discharge or perform, as appropriate, the following liabilities and
obligations of Seller existing as of the date hereof and arising out of the
conduct of Seller's business prior to the date hereof (collectively, the
"Assumed Liabilities"):
(1) obligations of Seller under Assumed Contracts listed on
Schedule 1.2(c) hereto (including any Letter of Credit for the foreign
purchase of inventory listed thereon) to the extent such obligations
are not required to be performed prior to the date hereof, are
disclosed on the face of such Assumed Contracts and accrue and relate
to the operation of the Business subsequent to the date hereof;
(2) Seller's trade accounts payable incurred in the ordinary
course of the Business to the extent such accounts payable are current
(meaning that no amount owed by Seller in connection with such trade
payables shall relate to an item purchased or service received prior
to January 21, 1999) and are set forth on a schedule delivered to
Buyer on the date hereof ("Trade Payables"), up to an aggregate
maximum amount of Four Hundred and Fifty Thousand Dollars ($450,000);
(3) Amounts outstanding under Seller's working capital line of
credit with AmSouth Bank ("Line of Credit") to the extent such amounts
are current (meaning that no amount owed by Seller in connection with
such Line of Credit shall relate to an item purchased or service
received prior to January 21, 1999) hereof, up to a maximum aggregate
amount, including both principal and interest, of Three Hundred
Thousand Dollars ($300,000); and
(4) obligations relating to ordinary course repair, credit or
replacement claims arising after the date hereof under Seller's
written knife warranties described on Schedule 3.28 hereto.
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1.5 Excluded Liabilities. Specifically, and without in any way limiting the
generality and exclusivity of Section 1.4, in no event does Buyer assume, agree
to pay, discharge or perform or incur any liability or obligation under this
Agreement or otherwise become responsible in respect of the following (together
with all other liabilities and obligations of Seller that are not Assumed
Liabilities, the "Excluded Liabilities"):
(1) except for the Assumed Liabilities, any liability or obligation
whatsoever which accrued at any time on or prior to the date hereof,
whether or not such liability or obligation arises prior or subsequent to
the date hereof, including, without limitation, any accounts payable,
accrued liability, bonus, commission (other than commissions attributable
to account receivables collected after the date hereof), taxes (as defined
in Section 3.12(e) hereof), insurance claim, including workers'
compensation claims, (asserted or unasserted, whether or not reported and
whether or not reserved for, and including liability for the payment of
deductible amounts), lawsuit or claim (including any product liability
lawsuit or claim), whether or not of or owed to any affiliate (as described
in Section 3.18) of Seller and whether asserted or unasserted;
(2) any liability or obligation of Seller relating to or arising from
the breach of, default under or failure to comply with, at any time on or
prior to the date hereof, whether or not such liability or obligation
arises prior or subsequent to the date hereof, any Assumed Contract or the
failure in a timely manner to pay or perform any other liability or
obligation which accrued at any time on or prior to the date hereof,
whether or not such liability or obligation arises prior or subsequent to
the date hereof;
(3) any liability or obligation of Seller arising out of or incurred in
connection with (i) the operation and administration of any employee
benefit plan, policy or program of any kind or description whatsoever
currently or previously maintained or sponsored by Seller or to which
Seller was obligated (through collective bargaining or otherwise) to make
contributions, including, without limitation, any plan or contract
providing for deferred compensation or health or death benefits, any
multiemployer plan or any plan subject to Title IV of ERISA or (ii) any
contract or agreement relating to any such employee benefit plan, policy or
program;
(4) any liability or obligation arising out of or with respect to any
third party or governmental claim pending on the date hereof or thereafter
initiated based on or arising out of the operation of Seller's business on
or prior to the date hereof, whether or not such liability or obligation
arises prior or subsequent to the date hereof;
(5) any accrued vacation, personal days and sick leave or other
obligations incurred through the date hereof for both hourly and salaried
employees;
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(6) any liability or obligation of Seller arising or incurred in
connection with the negotiation, preparation and execution of this
Agreement and the transactions contemplated hereby and any fees and
expenses of counsel, accountants, brokers, financial advisors or other
experts of Seller;
(7) any product liability or similar claim for injury to person or
property, regardless of when made or asserted, related to any products
sold, leased or distributed by Seller prior to the date hereof;
(8) any product liability or similar claim for injury to person or
property, regardless of when made or asserted, related to any products
sold, leased or distributed by Buyer on or after the date hereof, to the
extent such lawsuit or claim arises out of or is based on an alleged defect
in a product for which Seller completed manufacture prior to the date
hereof but only with respect to amounts in excess of any insurance proceeds
actually recovered by Buyer relating thereto;
(9) any product liability or similar claim for injury to person or
property, regardless of when made or asserted, which arises out of or is
based upon any express or implied representation, warranty, agreement or
guarantee made by Seller, or alleged to have been made by Seller, or which
is imposed or asserted to be imposed by operation of law, in connection
with any service performed or product manufactured, sold or leased by or on
behalf of Seller or its Affiliates including without limitation any claim
relating to any product delivered in connection with the performance of
such service and any claim seeking recovery for consequential damages, lost
revenue or income but only with respect to amounts in excess of any
insurance proceeds actually recovered by Buyer relating thereto; and
(10) except for the Assumed Liabilities, any other claim, loss,
liability, damage, cost or expense which arises out of the conduct of the
Business prior to the date hereof.
ARTICLE 2
Purchase Price
2.1 Purchase Price. The purchase price for the Assets is equal to an amount
equal to Eight Million Four Hundred Seventy Thousand Dollars ($8,470,000) (the
"Initial Purchase Price"), any additional amount calculated pursuant to Section
2.3 (the "Post-Closing Purchase Price") and the assumption by Buyer of the
Assumed Liabilities, collectively the "Purchase Price". The Purchase Price shall
be payable as provided in Sections 2.2 and 2.4 in cash and shares of SABI common
stock, par value $.10 per share ("Common Stock").
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2.2 Payment of Initial Purchase Price. The Initial Purchase Price will be
paid as follows:
(1) Buyer has paid to Seller on the date hereof an amount equal to Six
Million Nine Hundred Seventy Thousand Dollars ($6,970,000) by wire transfer
of immediately available federal funds to an account designated in writing
by Seller.
(2) Subject to the terms of Section 2.5 hereof, Buyer shall transfer to
Seller shares of SABI Common Stock (the "First Share Payment") as follows:
(i) on the first anniversary of the date hereof, Buyer shall transfer to
Seller a number of shares of SABI Common Stock equal to Five Hundred
Thousand Dollars ($500,000) divided by the Average Share Price (as herein
defined); (ii) on the second anniversary of the date hereof, Buyer shall
transfer to Seller a number of shares of SABI Common Stock equal to Five
Hundred Thousand Dollars ($500,000) divided by the Average Share Price; and
(iii) on the third anniversary of the date hereof, Buyer shall transfer to
Seller a number of shares of SABI Common Stock equal to Five Hundred
Thousand Dollars ($500,000) divided by the Average Share Price, in each
case rounded up to the nearest whole share.
2.3 Calculation of Post-Closing Purchase Price. The Post-Closing Purchase
Price, if any, shall be calculated as follows:
(1) Subject to the terms of Section 2.5 hereof, if the combined
Adjusted EBITDA of (A) Seller for the period January 1, 1999 to the date
hereof and (B) Buyer for the period from the date hereof through December
31, 1999 is equal to or greater than One Million Five Hundred Thousand
Dollars ($1,500,000), Buyer will pay to Seller a Post-Closing Purchase
Price in either cash or a combination of cash and shares of SABI Common
Stock as determined in accordance with Exhibit A hereto. In no event shall
the Post-Closing Purchase Price exceed Two Million Five Hundred Thousand
Dollars ($2,500,000), with the stock component based on the value of SABI
Common Stock determined in accordance with Section 2.6, plus interest on
the Cash Portion of any Post-Closing Purchase Price pursuant to Section
2.4(a) hereof. Notwithstanding anything in this Agreement to the contrary,
there shall be no Post-Closing Purchase Price if the combined Adjusted
EBITDA of (A) Seller for the period January 1, 1999 to the date hereof and
(B) Buyer for the period from the date hereof through December 31, 1999 is
less than One Million Five Hundred Thousand Dollars ($1,500,000). If the
combined Adjusted EBITDA of (A) Seller for the period January 1, 1999
through the date hereof and (B) Buyer for the period from the date hereof
through December 31, 1999 is less than Two Million Dollars ($2,000,000) and
the Business was materially adversely affected as a result of a natural
disaster or act of God, then Seller shall have the option (as it relates to
the period of such impairment) to defer the calculation of the Post-Closing
Purchase Price by using Adjusted EBITDA for the same period as the impaired
period in the next full calendar year.
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(2) The term "Adjusted EBITDA" shall mean earnings from operations of
the Business before interest, taxes, depreciation and amortization
determined in accordance with generally accepted accounting principles
("GAAP") consistently applied, subject to the following adjustments
(whether or not in accordance with GAAP):
(1) The costs and expenses of purchasing, installing and
maintaining an inventory monitoring system for the
Business, including the cost of any hardware and software
related thereto and the cost of consultants and
additional employees requested by Buyer related thereto
(collectively, the "Inventory System Cost") shall not be
included in calculating Adjusted EBITDA;
(2) All compensation and other expenses relating to the
new national sales manager to be employed by Buyer shall
be included in calculating Adjusted EBITDA;
(3) All costs and expenses incurred by Buyer or SABI from the
date hereof until December 31, 1999 in connection with
all employee benefit plans and programs maintained by, or
on behalf of, Buyer in excess of $2,082 (Two Thousand
Eighty-Two Dollars) per month (pro rated for any partial
month) during such period shall not be included in
calculating Adjusted EBITDA; and
(4) Salaries and other benefit expenses relating to Xxxx
Xxxx, Xxxxxx Xxxxxxx and such other persons as Seller and
Buyer may, from time to time, agree on shall not be
included in calculating Adjusted EBITDA; provided,
however, reasonable travel and other expenses incurred by
such persons in connection with visits to Buyer's
facility in Jacksonville, Alabama shall be included in
Adjusted EBITDA.
(3) Buyer shall use commercially reasonable efforts to prepare and
submit to Seller by April 1, 2000 a statement reflecting Seller's and
Buyer's Adjusted EBITDA for the time periods reflected in Section 2.3(a)
above ("Statement of Adjusted EBITDA" or "Statement"). Seller shall timely
provide all information reasonably requested by Buyer for purposes of
preparing such statement. Seller or an independent accounting firm engaged
by Seller ("Seller's Auditor") will have the opportunity to examine the
work papers, schedules and other documents prepared or relied on by Buyer
in preparing the Statement. During the period from the date of delivery of
the Statement until the expiration of 30 days following delivery to Seller
of the Statement, Buyer will give Seller, the Seller's Auditor and other
appropriate personnel such assistance and access to the assets and books
and records of Buyer related to the Business as Seller and/or Seller's
Auditor reasonably request during Buyer's normal business hours in order to
enable Seller and/or Seller's Auditor to evaluate the Statement. Seller
will be responsible for the fees and expenses of Seller's Auditor.
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(4) If Seller objects to the Statement, Seller shall, within 30 days
following delivery of the Statement to Seller, deliver to Buyer a notice of
objection ("Objection Notice") specifying in reasonable detail the items on
the Statement disputed and information in the possession of or available to
Seller which forms the basis of such dispute, as well as the amount in
dispute. The Statement will be final and binding on the parties if no
Objection Notice is delivered to Buyer within such 30 days. If an Objection
Notice is given, the parties will consult with each other with respect to
the objection. If the parties are unable to reach agreement within 10 days
after an Objection Notice has been given, any unresolved disputed issues
shall promptly be referred to an independent national accounting firm
reasonably acceptable to Buyer and Seller (the "Unrelated Accounting
Firm"), which shall not be the auditor of any of the parties. The Unrelated
Accounting Firm will be directed to resolve the disputed issues in
accordance with the terms of this Agreement and render a written report on
the unresolved disputed issues (and only the unresolved disputed issues) as
promptly as practicable. Such report shall also set forth the amount of
Adjusted EBITDA in accordance with Section 2.3(b) hereof. The resolution of
the disputed issues by the Unrelated Accounting Firm shall be final and
binding on the parties. The fees and expenses of the Unrelated Accounting
Firm will be borne equally by Seller, on the one hand, and Buyer, on the
other.
2.4 Payment of Post-Closing Purchase Price. The Post-Closing Purchase
Price, if any, will be paid in cash, or in cash and in shares of SABI Common
Stock, as follows:
(1) Subject to the terms of Section 2.3 hereof, on the first
anniversary of the date hereof, Buyer shall pay to Seller an amount in cash
determined in accordance with Section 2.3(a) hereof (the "Cash Portion of
the Post-Closing Purchase Price"); provided that if pursuant to Sections
2.3(c) or 2.3(d) the final determination of such Post-Closing Purchase
Price occurs after the first anniversary of the date hereof, Buyer shall
make any payment called for in this Section 2.4(a) within ten (10) business
days after (i) Buyer and Seller agree to the amount of the Post-Closing
Purchase Price, or (ii) receipt by Buyer of the report of the Unrelated
Accounting Firm as described in Section 2.3(d) hereof, as applicable. In
addition, Buyer shall pay to Seller interest on the Cash Portion of any
Post-Closing Purchase Price equal to 5.5% per annum, calculated from the
date hereof through the date the Cash Portion of the Post-Closing Purchase
Price is paid pursuant to this Section 2.4(a). Amounts, if any, payable
pursuant to this Section 2.4(a) shall be paid by wire transfer of
immediately available federal funds to an account designated in writing by
Seller, or by the delivery to Seller of a bank or certified check in the
same amount.
(2) Subject to the terms of Sections 2.3 and 2.5 hereof, Buyer shall
transfer to Seller as the stock component, if any, of any Post-Closing
Purchase Price a number of shares of SABI Common Stock equal to the dollar
value of such shares as determined in accordance with Section 2.3(a) hereof
divided by the Average Share Price, rounded up to the nearest whole share
(the "Second Share Payment"), and distributed to Seller as follows:
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(1) on the first anniversary of the date hereof, Buyer shall
transfer to Seller one-third (1/3) of the shares of SABI
Common Stock constituting the Second Share Payment,
rounded up to the nearest whole share; provided that if
pursuant to Sections 2.3(c) or 2.3(d) the final
determination of such Post-Closing Purchase Price occurs
after the first anniversary of the date hereof, Buyer
shall make any payment called for in this Section
2.4(b)(i) within ten (10) business days after (i) Buyer
and Seller agree to the amount of the Post-Closing
Purchase Price, or (ii) receipt by Buyer of the report of
the Unrelated Accounting Firm as described in Section
2.3(d) hereof, as applicable;
(2) on the second anniversary of the date hereof, Buyer shall
transfer to Seller one-third (1/3) of the shares of SABI
Common Stock constituting the Second Share Payment,
rounded up to the nearest whole share; and
(3) on the third anniversary of the date hereof, Buyer shall
transfer to Seller one-third (1/3) of the shares of SABI
Common Stock constituting the Second Share Payment,
rounded up to the nearest whole share.
(3) In the event the calculation of the Post-Closing Purchase Price is
deferred as a result of a natural disaster or act of God, then, the payment
of any Post-Closing Purchase Price shall be similarly deferred.
(4) In the event Buyer, prior to the third anniversary of the date
hereof, ceases all or substantially all of the operations of the Business
(a "Business Shut-down"), then (i) the First Share Payment or portion
thereof not yet paid shall thereafter be due and payable in full and (ii)
the Post-Closing Purchase Price, if any, or portion thereof not yet paid
shall thereafter be due and payable. Further, in the event the Business
Shut-down occurs on or prior to December 31, 1999, the Post-Closing
Purchase Price shall equal Two Million Five Hundred Thousand Dollars
($2,500,000), payable in cash and SABI Common Stock as contemplated in
Section 2.3(a). If the Business Shut-down occurs after December 31, 1999,
the Post-Closing Purchase Price, if any, shall be an amount determined in
accordance with the terms hereof. The parties specifically acknowledge that
a Business Shut-down does not include Buyer's failure to operate the
business in the ordinary course, consistent with past practices. Rather,
subject to the terms of this Section 2.4(d), Buyer shall operate the
Business as it, in its discretion, may determine. During the period from
the date hereof through December 31, 1999 and any additional period under
Section 2.4(c) hereof, Buyer will continue to manufacture and sell private
label products. In addition, during the period
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described in the previous sentence, Buyer will sell goods to the persons
and on the terms listed on Schedule 2.4(d) hereto who request to purchase
such goods as are reasonably available, unless SABI and the Principals
agree otherwise in writing, provided that any failure to sell in accordance
with this sentence made by or at the direction of any of the Principals and
not agreed to in writing by SABI shall not be considered a breach of
Buyer's covenant with regard to sales to Seller's customers listed on
Schedule 2.4(d) hereto. Notwithstanding anything to the contrary herein,
Seller's and Principals' sole remedy in connection with any Business
Shut-down is the acceleration of payment of the First Share Payment and any
Post-Closing Purchase Price as provided for in this Section 2.4(d).
2.5 Continued Employment Contingency. Notwithstanding the terms of Sections
2.2(b) and 2.4(b) hereof, if Xx. Xxxxxx XxXxxxxx'x employment is terminated
under the Employment and Consulting Agreement dated the date hereof between
Buyer and Xx. XxXxxxxx (the "Employment and Consulting Agreement") on or prior
to the expiration of the Employment Term (as defined in the Employment and
Consulting Agreement), or if either of Messrs. Xxxxxxx Xxxxxxx'x or Xxxxxxx
Xxxx'x employment is terminated under his Employment Agreement also dated the
date hereof between Buyer and Messrs. Griffey and Xxxx, respectively
("Employment Agreements") on or prior to the third anniversary of the date
hereof, pursuant to Section 4.1(a)(i) (good cause) or 4.1(b) (voluntarily by
executive) (but not including Section 4.1(a)(ii) (good reason)) of such
Employment and Consulting Agreement or Employment Agreements, as applicable,
then Buyer shall have no further obligation to, and shall not, transfer to
Seller the shares of SABI Common Stock otherwise due to be transferred to Seller
in accordance with Sections 2.2(b) and 2.4(b) hereof, provided that the value of
transfers of shares of SABI Common Stock (based on the Average Share Price)
otherwise due to be transferred to Seller in accordance with Sections 2.2(b) and
2.4(b) hereof but not transferred as a result of application of this Section 2.5
shall not exceed One Million Dollars ($1,000,000).
2.6 Calculation of Share Value. All calculations of the value and number of
shares of SABI Common Stock, regardless of when such shares are to be
transferred (or in the case of application of Section 2.5 not transferred),
shall be based on the Average Share Price. For purposes of this Agreement, the
term "Average Share Price" shall mean the average daily closing price of one
share of SABI Common Stock traded on The Nasdaq Stock Market, as reported in The
Wall Street Journal, during the thirty (30) trading days immediately preceding
the date hereof for which quotes are available. The Average Share Price shall be
adjusted by Buyer in an equitable manner to reflect any dividend payable in SABI
Common Stock subsequent to the date hereof but on or before the date of any
transfer of SABI Common Stock pursuant to this Agreement, or to reflect any
stock split, reverse stock split, or recapitalization relating to SABI Common
Stock.
2.7 Allocation of Purchase Price. The Purchase Price shall be allocated to
all Assets in accordance with the respective fair market values of such Assets,
as to which Buyer and Seller will use their good faith efforts to agree upon
within ninety (90) days following the date hereof. If the parties reach such
agreement, such agreed allocations shall be binding on the Buyer and Seller and
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their respective affiliates for all purposes (including without limitation,
financial accounting purposes, financial and regulatory reporting purposes and
tax purposes), and none of the parties or such affiliates shall take for tax
purposes any position in any tax return, report, form, declaration or
questionnaire that is inconsistent with such allocation.
2.8 Allocation of Certain Items. With respect to certain expenses incurred
in the operation of the Business, the following allocations will be made between
Buyer and Seller:
(1) Taxes. Ad valorem property taxes will be apportioned, as of the
date hereof, based upon current tax bills if available; and if not
available, such apportionment will be based on the most recent tax xxxx
available, with appropriate subsequent adjustment when bills for 1999 are
received.
(2) Utilities. Utilities, water and sewer charges will be apportioned
based upon the number of operating days occurring before and after the date
hereof during the billing period for each such charge.
(3) Workers' Compensation. Pursuant to the provisions of this
Agreement, Seller will be responsible for and pay any and all workers'
compensation and other similar claims asserted by or with respect to any
employee or former employee of Seller in respect of any injury or other
compensable event or occupational illness or disease which occurred or is
attributable to any event, state of facts or condition which existed or
occurred in whole prior to or on the date hereof. Buyer is responsible for
and will pay any and all workers' compensation and other similar claims
asserted by or with respect to any employee of Buyer in respect of any
injury or other compensable event or occupational illness or disease which
occurred or is attributable to any event, state of facts or condition which
existed or occurred in whole after the date hereof. If any such injury or
other compensable event or occupational illness or disease of a person who
was employed by both Seller prior to or on the date hereof and by the Buyer
after the date hereof is attributable in part to causes occurring prior to
or on the date hereof and in part to causes occurring subsequent to the
date hereof and is the basis of a workers' compensation or other similar
claim asserted after the date hereof, then liability for any such claim
will be shared by Seller and Buyer in the proportion of the periods of
employment of the employee (i) by Seller prior to or on the date hereof and
(ii) by Buyer after the date hereof, respectively.
Appropriate cash payments by Seller or Buyer, as the case may require, will
be made under this Agreement from time to time, as soon as practicable after the
facts giving rise to the obligation for such payments are known to Seller and
Buyer, in the amounts necessary to give effect to the allocations provided for
in this Section 2.8.
ARTICLE 3
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Representations and Warranties of Seller and Principals
Seller and Principals hereby, jointly and severally, represent and warrant
to SABI and Buyer as follows:
3.1 Organization. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Alabama and has all
requisite power and authority (corporate and other) to own, lease and operate
its properties and to carry on its business as now being conducted. Seller is
duly qualified to transact business and is in good standing as a foreign
corporation in each jurisdiction where the character of its activities requires
such qualification. The Seller's Articles of Incorporation, Bylaws, minute books
and stock book are complete and correct and contain all amendments thereto to
date (in the case of the Articles of Incorporation and Bylaws), a record of all
corporate proceedings of the Seller (in the case of the minute books), and a
record of all stock issuances and transfers of the Seller (in the case of the
stock book). Schedule 3.1 contains a true and correct list of the jurisdictions
in which Seller is qualified to do business as a foreign corporation.
3.2 Authorization and Approval of Agreement. Seller and Principals have all
requisite corporate power and authority to execute and deliver this Agreement
and the other agreements, documents and instruments executed and delivered by
Seller or Principals in connection with the transactions contemplated by this
Agreement (the "Seller Ancillary Agreements"), and to fully perform the
obligations required to be performed by them hereunder and thereunder. All
corporate proceedings required by Seller's charter documents or otherwise
required by law for the execution and delivery of this Agreement and the Seller
Ancillary Agreements and for the consummation of the transactions provided for
herein and therein have been duly taken. This Agreement and each of the Seller
Ancillary Agreements has been duly and validly executed and delivered by Seller
and/or Principals and is enforceable against Seller and/or Principals in
accordance with its terms, except as the enforceability may be limited by laws
of general application relating to bankruptcy, insolvency and debtors' relief,
and by the general principles of equity.
3.3 Ownership of Seller. The authorized capital stock of Seller consists of
Two Thousand Seven Hundred (2,700) shares of common stock, par value One Dollar
($1) per share, of which Two Thousand Seven Hundred (2,700) shares are issued,
outstanding and owned by the shareholders as set forth in Schedule 3.3 hereof
(the "Seller's Shares"). All the Seller's Shares are validly issued, fully paid,
and nonassessable. There are no outstanding options, warrants, contracts,
preemptive rights, or other rights of any character obligating Seller to issue
any share of stock of Seller or options or rights with respect thereto, whether
or not upon the payment of any sums or the happening of any event, and there are
no existing or outstanding securities of any kind convertible into or
exchangeable for shares of stock of Seller and there are no existing voting
agreements, trusts, or other agreements with respect to the stock of Seller.
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3.4 Absence of Restrictions and Conflicts. Except as set forth on Schedule
3.4, the execution, delivery and performance of this Agreement and the Seller
Ancillary Documents, the consummation of the transactions contemplated by this
Agreement and the Seller Ancillary Documents and the fulfillment of and
compliance with the terms and conditions of this Agreement and the Seller
Ancillary Documents do not or will not (as the case may be), with the passing of
time or the giving of notice or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any material benefit under, or
permit the acceleration of any obligation under, (a) any term or provision of
the articles of incorporation or bylaws of Seller, (b) any Assumed Liability or
any other contract or agreement of Seller, (c) any judgment, decree or order of
any court or governmental authority or agency to which Seller is a party or by
which Seller or any of its properties is bound or (d) to Seller's and each
Principal's knowledge, any statute, law, rule or regulation applicable to
Seller. Schedule 3.4 lists each Assumed Liability (including each assumed
contract) which requires the consent of, or a notice to, a third party for the
assignment of such Assumed Liability to Buyer pursuant to this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental agency or public or regulatory unit, agency, body
or authority with respect to Seller or Principals is required in connection with
the execution, delivery or performance of this Agreement or the Seller Ancillary
Documents by Seller or Principals or the consummation of the transactions
contemplated by this Agreement or the Seller Ancillary Documents by Seller or
Principals.
3.5 Subsidiaries. The Assets do not include any shares of capital stock or
any other ownership interest in, or securities of, any corporation, firm,
partnership, joint venture, association or other entity.
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3.6 Ownership of Assets and Related Matters.
(1) Assets. The Assets, together with the License Rights, constitute
all of the assets currently used to conduct the operations of the Business
or required for such operations or conduct in accordance with Seller's past
practices. Seller owns no real property that is used in connection with the
Business. Seller has conveyed to Buyer as of the date hereof good and
marketable title to the Assets free and clear of all liens, pledges,
leases, security interests, charges, claims, restrictions and encumbrances
of any nature whatsoever. All equipment and other items of tangible
property and assets included in the Assets are in good operating condition
and in a state of good maintenance and repair, ordinary wear and tear
excepted, are usable in the regular and ordinary course of business and, to
Seller's and each Principal's knowledge, conform to all applicable laws,
ordinances, codes, rules and regulations applicable thereto. All properties
and assets of Seller used in accordance with the Business are in the
possession or control of Seller. All material tangible personal property of
Seller used in connection with the Business are usable for the purposes to
which they are to be put. Except as described in Schedule 3.6(a) hereto,
neither Seller's shareholders, including the Principals, nor any officer,
director or employee of Seller, nor any spouse, child or other relative of
any of these persons, owns, or has any interest, directly or indirectly, in
any of the personal property, tangible or intangible, owned by Seller,
including any copyrights, patents, trademarks, tradenames, or trade secrets
owned by or licensed to Seller. To Seller's knowledge, Seller does not
occupy any real property in violation of any applicable zoning regulation,
ordinance or other law, order, regulations, restriction or requirement
relating to its operations or properties. Since December 31, 1998, Seller
has not sold, transferred or disposed of any Assets other than sales in the
ordinary course of business.
(2) List of Assets. Schedule 1.2(b) sets forth a true and complete list
of each individual Asset or related group of Assets having a book value of
more than Five Thousand Dollars ($5,000) as of the date hereof.
(3) Inventories. The inventories of Seller (i) are sufficient for the
operation of the business of Seller in the ordinary course consistent with
past practice, (ii) consist of items which are good and merchantable within
normal trade tolerances, (iii) are of a quality and quantity presently
usable or saleable in the ordinary course of business of Seller (subject to
applicable reserves), (iv) are valued on the books and records of Seller
based on a standard cost accounting system consistent with past practice
and (v) are subject to reserves determined in accordance with GAAP as
modified in accordance with Exhibit B hereto ("Modified GAAP"),
consistently applied. No previously sold inventory is subject to returns in
excess of those historically experienced by Seller.
(4) Accounts Receivable. The accounts receivable of Seller arose from
bona fide transactions in the ordinary course of business, have been
executed on terms consistent with
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the past practice of Seller, are not subject to any counterclaims or
setoffs and are fully collectible in accordance with their terms (except
for the amount of any applicable existing reserves).
(5) No Third Party Options. There are no existing agreements, options,
commitments or rights with, of or to any person to acquire any of Seller's
assets, properties or rights or any interest therein.
(6) Real Property. There are no real property rights owned by Seller or
used at any time in the Business other than those leased to Buyer under the
Real Property Lease entered into between Buyer and an affiliate as of the
date hereof (the "Real Property Lease").
3.7 Financial Statements. Schedule 3.7 to this Agreement sets forth the
balance sheet of Seller as of December 31, 1998 and the related statements of
income, retained earnings and cash flow, including footnotes, for the year ended
on December 31, 1998, compiled by Xxxxxxxx & Company of Anniston, P.C., Seller's
independent certified public accountants, whose opinion with respect to such
financial statements is included in that Schedule. Schedule 3.7 to this
Agreement also sets forth the unaudited balance sheet of Seller as of February
28, 1999, together with the related unaudited statements of income, retained
earnings and cash flow for the two-month period ended on that date, certified by
the president and the principal financial officer of Seller. The financial
statements in Schedule 3.7 are referred to as the "Financial Statements." The
Financial Statements (i) have been prepared in accordance with Modified GAAP
consistently followed by Seller throughout the periods indicated; (ii) have been
prepared from, and are in accordance with, the books and records of Seller; and
(iii) fairly present the financial position of Seller as of the respective dates
of the balance sheets included in the Financial Statements, and the cash flows
and results of its operations for the respective periods indicated.
3.8 Absence of Certain Changes/Undisclosed Liabilities.
(1) Except as disclosed in the Financial Statements, since Seller's
inception there has not been (i) any material adverse change in the assets,
liabilities, business, financial condition, results of operations or
prospects of Seller, (ii) any damage, destruction, loss or casualty to
property or assets of Seller, whether or not covered by insurance, or (iii)
any material change in the operation of the business of Seller. Since
December 31, 1998, Seller has (i) used its best efforts to preserve its
business and customers and (ii) conducted its business in the ordinary
course on a basis consistent with past practice and not engaged in any new
line of business or entered into any agreement, transaction or activity or
made any commitment except those in the ordinary course of business.
(2) Except as set forth in Schedule 3.8(b), since December 31, 1998,
there have not been with respect to Seller (i) any assets (including any of
the Assets) mortgaged, pledged or made subject to any lien, obligation,
charge or other encumbrance, (ii) any
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liability or obligation (absolute, accrued or contingent) incurred except
in the ordinary course of business, (iii) any increase in the compensation
of officers, directors or employees, whether now or hereafter payable, (iv)
any transactions entered into other than in the ordinary course of
business, (v) any loss of contracts or clients or receipt of notice
(written or oral) with respect thereto, (vi) any agreements to do any of
the foregoing or (vii) any other events, developments or conditions of any
character that have had or are reasonably likely to have a material adverse
effect on the assets, liabilities, results of operations, business or
prospects of Seller.
(3) Seller has no material debt, liability, or obligation of any
nature, whether accrued, absolute, contingent or otherwise and whether due
or to become due, and whether known or unknown, that is not reflected or
reserved against in Seller's balance sheet in accordance with Modified GAAP
as of December 31, 1998 or as set forth in Schedule 3.8(c) to this
Agreement, except for those that were both (i) incurred after the date of
that balance sheet and (ii) not required by generally accepted accounting
principles to be included in a balance sheet. All debts, liabilities and
obligations incurred by Seller in connection with the Business after
December 31, 1998 were incurred in the ordinary course of business and are
usual and normal in amount, both individually and in the aggregate.
3.9 Legal Proceedings. Except as set forth in Schedule 3.9, there are no
suits, claims, investigations or legal, administrative or arbitration
proceedings pending or, to the knowledge of any Principal or Seller, threatened
against (i) any Principal or Seller, (ii) the officers or directors of Seller,
or (iii) any other person or entity for whom the Principals or Seller may be
vicariously liable at law or in equity. The Principals are not subject to, and
Seller is not operating under or subject to, any order, writ, injunction or
decree of any court or governmental authority.
3.10 Compliance with Law. To Seller's and each Principal's knowledge,
Seller has all authorizations, approvals, licenses, permits and orders of and
from all governmental and regulatory officers and bodies necessary to carry on
the Business as it is currently being conducted, to own or hold under lease the
properties and assets it owns or holds under lease and to perform all of its
obligations under the agreements to which it is a party (collectively, the
"Licenses"). To Seller's and each Principal's knowledge, Seller is (and has been
since inception) in compliance with all applicable laws, regulations and
administrative orders (including, without limitation, laws relating to
employment of labor or use or occupancy of properties or any part thereof) of
any country, state or municipality or of any subdivision thereof to which its
business is subject. Schedule 3.10 sets forth a true, correct and complete list
of all Licenses. Prior to the date hereof, Seller will deliver to Buyer all
reports and filings made or filed by Seller pursuant to the Occupational Safety
and Health Act. Except as described in Schedule 3.10 hereto, during the period
beginning on Seller's inception date and ending on the date hereof, to Seller's
and each Principal's knowledge, Seller has not violated or failed to comply
with, or been the subject of any allegation that it has violated or failed to
comply with, the Occupational Safety and Health Act.
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3.11 Seller Contracts. Schedule 3.11 sets forth a true, correct and
complete list of all contracts (written or oral), agreements or other
instruments with customers or raw materials suppliers (including, without
limitation, arrangements with customers or raw materials suppliers that are not
currently undertaken pursuant to contracts) (the "Active Accounts") (including
every amendment, modification or supplement to the foregoing). True and complete
copies of all Active Accounts have been made available to Buyer. The Active
Accounts are valid and enforceable in accordance with their respective terms
with respect to Seller and, to the best knowledge of Seller, each other party
thereto. There are no existing defaults of Seller under any Active Accounts, or,
to the best knowledge of Seller, of any of the other parties thereto (or events
or conditions which with notice or lapse of time or both would constitute a
default). Seller has no information and is aware of no facts indicating that any
of these customers or suppliers intends to cease doing business with the Seller,
or materially alter the amount of business that they are presently doing or have
forecasted doing with Seller.
3.12 Tax Matters.
(1) Filing of Tax Returns. Seller has timely filed with the appropriate
taxing authorities all Tax Returns (as hereinafter defined) required to be
filed through the date hereof. All Tax Returns and other information filed
are complete and accurate in all material respects. Except as disclosed in
Schedule 3.12(a), Seller is not the beneficiary of any extension of time
within which to file any Tax Return. Seller has not received written notice
of a claim by a taxing authority in a jurisdiction where Seller has not
filed Tax Returns that it is or may be subject to taxation by that
jurisdiction with respect to taxable periods for which the due date for
filing such returns has passed.
(2) Payments of Taxes. All Taxes (as hereinafter defined) that are due
and payable by Seller (whether or not shown on any return) before the date
hereof have been paid. There are no liens on any of the Assets of Seller
that arose in connection with any failure (or alleged failure) to pay any
Tax. Seller has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party. To the
extent required by generally accepted accounting principles, an adequate
reserve has been established in the Financial Statements (disregarding any
reserve for deferred Taxes established to reflect timing differences
between book and taxable income) for all unpaid Taxes payable by Seller
with respect to all periods through the date of such Financial Statements,
and Seller is not required under generally accepted accounting principles
to reserve for any liability for Taxes in excess of the reserves so
established. Except as described in Schedule 3.12(b), no portion of the
reserve established on the Financial Statements for Taxes reflects any
contingent liability or other potential liability for Taxes that are due
and payable, or that may become due and payable in the future, as a result
of an audit, amended return or otherwise. Seller is not a party to any Tax
allocation or sharing agreement. Seller has never been a member of an
affiliated group filing a consolidated federal income Tax Return and has no
liability for
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Taxes of any person under Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(3) Audit History. Except as set forth in Schedule 3.12(c):
(1) no deficiencies for Taxes have been claimed, proposed or
assessed by any taxing or other governmental authority
against Seller which have not been paid or otherwise
finally settled and resolved;
(2) Seller has not waived the statute of limitations in
respect of any Tax or agreed to any extension of time
with respect to the assessment of any Tax; and
(3) Seller is not currently under audit with respect to Taxes
by any governmental authority.
(4) Subchapter S Election. Effective as of January 10, 1991, Seller
made a valid election pursuant to Section 1362(a) of the Internal Revenue
Code of 1986, as amended (the "Code") to be an "S corporation" within the
meaning of Section 1361(a)(1) of the Code. At all times since January 10,
1991, to and including the date hereof, Seller is and has been subject to
taxation as an "S corporation."
(5) Taxes. For purposes of this Agreement, "Taxes" shall mean all
federal, state, local, foreign and other taxes, assessments, or other
governmental charges, including, without limitation, income, estimated
income, business, occupation, franchise, property, sales, employment, or
withholding taxes, including interest, penalties, fines and additions in
connection therewith.
(6) Tax Return. For purposes of this Agreement, "Tax Return" shall mean
any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto,
and including any amendment thereof.
(7) Tax Accounting. Seller uses the accrual method of accounting for
income tax purposes.
3.13 Employee Benefit Plans.
(1) Schedule 3.13(a) contains a true and complete list of each plan,
program, practice, policy or arrangement ("Benefit Plans") that provides
compensation or benefits of any kind or description whatsoever (whether
current or deferred and whether paid in cash or in kind) to, or on behalf
of, one, or more than one, current employee (whether active or on leave) of
Seller or their dependents ("Employees"), including, but not limited to:
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(1) any employee benefit plan as defined in Section 3(3) of
the Employee Retirement Security Act of 1974, as amended
("ERISA"); or
(2) any other pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive,
bonus, vacation, severance, disability, hospitalization,
medical, life insurance, or other employee benefit plan,
program, policy, or arrangement, which Seller maintains
or to or under which Seller has any outstanding, present,
or future obligations to contribute or make payments,
whether voluntary, contingent or otherwise.
(2) Seller has made available to Buyer true, correct and complete
copies of all documents that Buyer has requested relating to the Benefit
Plans, including but not limited to: (i) all plan documents, amendments,
trust instruments and other material agreements adopted or entered into in
connection with each of the Benefit Plans; (ii) all insurance and annuity
contracts related to any Benefit Plans; (iii) all administrative notices
and forms used for the Benefit Plans, including the notices and election
forms used to notify employees and their dependents of their continuation
coverage rights under Seller's group health plans; and (iv) the most
recently available Form 5500 annual reports, certified financial
statements, actuarial reports, summary plan descriptions and favorable
determination letters for the Benefit Plans. Since the date these documents
were supplied to Buyer, no plan amendments have been adopted, no changes to
these documents have been made, and no amendments or changes will be
adopted or made prior to the date hereof.
(3) Except as set forth in Schedule 3.13(c), all of the Benefit Plans
have been administered in accordance with their terms and in compliance
with applicable law, and there are no pending disputes or to the best of
Seller's knowledge threatened disputes with respect to the Benefit Plans
(other than routine claims for benefits under the Benefit Plans).
(4) Seller has complied in all material respects with the continuation
health coverage requirements of Section 4980B of the Code and Sections 601
through 608 of ERISA ("COBRA").
(5) Seller does not make and has not made, nor has or has had an
obligation to make, nor reimburses or has reimbursed, nor has or has had an
obligation to reimburse, another employer, directly or indirectly, for
making, contributions to a "multiemployer plan" as described in Title IV of
ERISA.
(6) Each Benefit Plan which is intended to be qualified under Code
Section 401(a) is qualified under Code Section 401(a) and its related trust
is tax-exempt under Code Section 501 and either has been amended to comply
with all applicable laws or the remedial
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amendment period for making such amendments has not expired with respect to
such plan. For each such plan, Seller either has received from the Internal
Revenue Service a favorable determination letter with respect to the
current form of the plan or the period for obtaining such a letter on the
current form of the plan has not expired.
(7) Seller's records accurately reflect its Employees' employment
histories, including their hours of service and years of vesting and
eligibility service.
(8) Except as provided in Schedule 3.13(h), the consummation of this
transaction will not result in any payments to any Employee in the nature
of severance payments.
3.14 Personnel, Labor and Employment Matters.
(1) Schedule 3.14(a) sets forth a true and complete list of the names,
titles, locations of employment, annual salaries or wage rate and other
compensation and benefits of all individuals classified on the payroll and
paid as employees of Seller (including employees on leave of absence,
whether or not approved) ("Employees). Except as set forth on Schedule
3.14(a), Seller does not have any employment, consulting, loan-out,
retainer or other contracts, agreements or arrangements whereby a person
performs personal services for Seller as an Employee, independent
contractor or as a contingent employee, including, but not limited to
leased employees, contract employees, casual employees, on-call employees
and seasonal employees; and there are no Employees who are on military,
disability, family or other leave of absence (whether or not approved) and
who have reemployment rights.
(2) Except to the extent set forth in Schedule 3.14(b):
(1) Seller is not a party to any collective bargaining
agreements;
(2) None of Seller's employees are or have been represented
by a labor organization that was either National Labor
Relations Board ("NLRB") certified or voluntarily
recognized under foreign law;
(3) Seller has not conducted negotiations with respect to any
future contract with or commitment to any labor union or
association, and, to the best knowledge of Seller, no
representation election petition has been filed by
employees of Seller or is pending with the NLRB, no union
organizing campaign involving employees of Seller has
occurred or is in progress, and there are no current or
threatened attempts to organize or establish any labor
union or association;
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(4) Seller is in compliance with all applicable laws and
collective bargaining agreements respecting employment
and employment practices, terms and conditions of
employment, wages, and hours, occupational safety and
health, and is not engaged in an unfair labor or unfair
employment practices;
(5) There is no unfair labor practice, charge or complaint or
any other matter against or involving Seller pending or,
to the knowledge of Seller, threatened before the
National Labor Relations Board or any court of law;
(6) There is no labor strike, dispute, slowdown or stoppage
actually pending or, to the knowledge of Seller,
threatened against Seller;
(7) No certification or decertification question or
organizational drive exists or has existed within the
past thirty-six months respecting the employees of
Seller;
(8) No grievance proceeding or arbitration proceeding arising
out of or under any collective bargaining agreement is
pending against Seller, or, to the knowledge of Seller,
threatened;
(9) No agreement (including any collective bargaining
agreement), arbitration or court decision or governmental
order which is binding on Seller in any way limits or
restricts Seller from relocating or closing any of its
operations;
(10) Seller has not experienced any hand billing, picketing,
organized work stoppage (sympathetic or otherwise) or
other labor difficulty since its inception;
(11) No breach of contract and/or denial of fair
representation claim has been filed or is pending against
Seller and/or any labor organization representing its
employees;
(12) There are no charges, investigations, administrative
proceedings or formal complaints for unpaid wages or
overtime, child labor or record keeping violations under
the Fair Labor Standards Act, Xxxxx-Xxxxx Act,
Xxxxx-Xxxxx Act, Service Contract Act or similar law;
violations of workers compensation laws; violations of
immigration laws; violations of any required affirmative
action plans, discrimination (including discrimination
based upon sex, age, marital status, race,
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national origin, sexual preference, handicap or veteran
status) or retaliation; violations of the Americans with
Disabilities Act or the Family and Medical Leave Act or
any other law pending or, to the knowledge of Seller,
threatened before the Department of Labor, the Equal
Employment Opportunity Commission or any federal, state
or local agency or court against Seller. There have been
no governmental audits of the equal employment
opportunity practices of Seller and, to the knowledge of
Seller, no basis for any such claim exists;
(13) There are no citations, investigations, administrative
proceedings or formal complaints of violations of local,
state or federal occupational safety and health laws
pending or, to the knowledge of Seller, threatened before
the Occupational Safety and Health Review Commission or
any federal, state or local agency or court against
Seller; and
(14) Seller has not terminated the employment of or laid off
any employees within the 90 day period preceding the date
hereof.
(3) Seller has provided Buyer with a copy of Seller's policy for
providing leaves of absence under the Family and Medical Leave Act ("FMLA")
and Schedule 3.14(c) identifies each Employee who is eligible to request
FMLA leave and the amount of FMLA leave utilized by each such Employee
during the current leave year; each Employee who is on FMLA leave as of the
date hereof and his or her job title and description, salary and benefits;
each Employee who has requested FMLA leave to begin after the date hereof;
a description of the leave requested; and a copy of all notices provided to
such Employee regarding that leave.
3.15 Seller's Environmental Representation. Except as disclosed on Schedule
3.15 hereto, (i) the operations of Seller comply, and have complied, in all
respects with all applicable Environmental Laws; (ii) Seller has obtained all
environmental, health and safety permits necessary for the operation of the
Business, and all such permits are valid and are in good standing and are not
subject to any modification or revocation proceeding, and Seller is in
compliance in all respects with all terms and conditions of such Permits; (iii)
Seller and all of its present facilities or operations, as well its past
facilities and operations, are not subject to any uncured written order or
unsatisfied agreement or other agreement with additional obligations with any
governmental authority or private party respecting (a) any Environmental Laws,
(b) any Remedial Actions, or (c) any Environmental Claims arising from the
Release of a Contaminant into the environment; (iv) none of the operations of
Seller on or prior to the date hereof are subject to any judicial or
administrative proceeding alleging a violation of any Environmental Law,
relating to a Release or otherwise related to an Environmental Claim; (v) none
of the operations of Seller on or prior to the date hereof are the
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subject of any federal or state investigation evaluating whether any Remedial
Action is needed to respond to a Release of any Contaminant into the environment
under any applicable law; (vi) neither Seller nor any predecessor of Seller has
filed any notice under any Environmental Law indicating past or present
treatment, storage, or disposal of a hazardous waste or solid waste or reporting
a spill or Release of a Contaminant into the environment under any applicable
Environmental Law; (vii) none of the Seller's operations involve, or have
involved, the generation, transportation, storage, treatment or disposal of
hazardous waste, as defined under 40 C.F.R. Parts 260-270; (viii) Seller has not
disposed of any Contaminant by placing it in, under or on the ground, waters, or
other environmental medium of any premises owned, leased or used by Seller; (ix)
no underground storage tanks or waste water management impoundments are or ever
have been on Seller's property and no asbestos is currently in, on or about
Seller's property; (x) no lien in favor of any governmental authority for (A)
any liability under Environmental Laws, or (B) damages arising from or costs
incurred by such governmental authority in response to a Release of a
Contaminant into the environment, has been filed or attached to Seller's
property; and (xi) no proposed or scheduled change to any Environmental Law or
Permit has been announced which, if enacted, could have a material adverse
effect on Seller's operations as currently conducted.
For purposes of this Agreement, the terms set forth below shall have the
following meaning:
"Contaminant" shall mean those substances, waste, materials or articles,
which as of the date hereof are in a form or condition creating liability under,
or regulated by any Environmental Law including, without limitation, hazardous
wastes, hazardous substances, regulated substances, toxic substances, solid
wastes, petroleum or any by-products or fractions thereof, any form of natural
gas, asbestos, polychlorinated biphenyls ("PCBs"), radon and other radioactive
substances, toxic, infectious, carcinogenic, mutagenic, or etiologic agents,
pesticides, defoliants, explosives, flammables, corrosives or urea formaldehyde.
"Environmental Claims" shall mean any notice of violation, claims, demand,
abatement or other order or direction (conditional or otherwise) by any
governmental authority or any person for personal injury (including sickness,
disease or death), tangible or intangible property damage, damage to the
environment (including natural resource damages), nuisance, pollution,
contamination, other adverse effects on the environment or natural resources,
cleanup costs, remediation, removal, other response costs (which without
limitation shall include costs to come into compliance with Environmental Laws),
or investigation cost (including without limitation fees of consultants, counsel
and other experts in connection with any environmental investigation, testing,
audits, or studies), and/or for fines, penalties, losses, liabilities (including
any actual, punitive or consequential damages under any statutory or common law
cause of action, regardless of whether the liabilities are imposed through
operation of strict liability or otherwise), or restrictions, resulting from or
based upon (a) the existence, or the continuation of the existence, of a Release
or the potential for a Release (including, without limitation, sudden or
non-sudden, accidental or nonaccidental Releases) of, or exposure to, any
Contaminant, or other release, migration or emission in, on, into or under the
environment (including, without limitation, the air, soil, subsurface strata,
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groundwater, any surface water or any sediments associated with any water body)
and, in, by, or from the Seller's properties or related to Seller's operations,
(b) the transportation, storage, treatment, disposal, generation, recycling,
reclamation, use or other handling of any Contaminants on the properties or in
connection with the operation of the Seller, or (c) the violations, or alleged
violations, of any Environmental Laws or Permits relating to Seller's properties
or operations of the Business.
"Environmental Laws" shall mean all laws, statutes, regulations, ordinances
and common laws relating to the environment, the protection of natural
resources, safety, health and the regulation of Contaminants, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. 'SS' 9601 et seq.) the Hazardous Materials
Transportation Act (49 U.S.C. 'SS' 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. 'SS' 6901 et seq.), the Clean Water Act (33 U.S.C. 'SS'
1251 et seq.), the Clean Air Act (42 U.S.C. 'SS' 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. 'SS' 2601 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. 'SS' 136 et seq.), the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. 'SS' 11001 et seq.), the
Safe Drinking Water Act (42 U.S.C. 'SS' 300f et seq.) and the Occupational
Safety and Health Act (29 U.S.C. 'SS' 651 et seq.), as such laws have been and
hereafter may be amended or supplemented, and any analogous future federal,
or present or future state or local laws and all rules, orders, and regulations
promulgated pursuant to any of such federal, state, or local laws.
"Permit" shall mean any permit, approval, authorization, registration,
license or variance, required by a governmental authority having jurisdiction
under an applicable Environmental Law.
"Release" shall mean any release, spill, emission, leaking, escaping,
pumping, injection, pouring, emptying, abandonment, deposit, disposal,
discharge, dispersal, leaching or migration of Contaminants (including, but not
limited to, Contaminants in barrels, drums or other containers) into the
environment, including the movement of Contaminants through, on, under, or in
the air, soil, subsurface strata, surface water or groundwater.
"Remedial Action" shall mean all actions required to (a) clean up, remove,
treat, respond to, or minimize the effect of Contaminants in the indoor or
outdoor environment; (b) prevent the further Release of Contaminants so they do
not migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; or (c) perform pre-remedial studies and
investigations and post-remedial monitoring and care in respect of actions
contemplated in the preceding clauses (a) and (b).
3.16 Trademarks, Tradenames, etc.
(1) To Seller's and each Principal's knowledge, Schedule 3.16(a) lists
all tradenames, trademarks, service marks, slogans and logos (collectively,
the "Identifying
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Marks") that are material to the Business as currently conducted, and which
are used by Seller as the Business' tradenames, trademarks, service marks,
slogans and logos.
(2) Except as set forth in Schedule 3.16(b), the Seller is the sole and
exclusive owner, free and clear of all encumbrances, of all rights, title
and interest in the Identifying Marks, and, except as set forth in Schedule
3.16(b), Seller has the absolute right to use and assign those rights
without seeking the approval or consent of any third party and without
payment to any third party. Schedule 3.16(b) lists and contains copies of
all registrations and all applications for registration of Seller, with
respect to the Identifying Marks in the United States and in those
jurisdictions outside the United States where Seller operates its Business.
All registrations for the Identifying Marks, if any, are in full force and
effect.
(3) Except as set forth in Schedule 3.16(c), there are no existing or,
to Seller's knowledge, threatened claims, actions, suits, arbitrations,
inquiries, proceedings or investigations by or before any United States
federal, state or local or foreign governmental, regulatory or
administrating authority, agency, commission or any court, tribunal, or
judicial or arbitral body (a "Government Authority") by any third party
relating to the validity, current use and/or current registration of the
Identifying Marks, or challenging Seller's ownership of the Identifying
Marks. To Seller's knowledge, none of the Identifying Marks are subject to
any rule, regulation, executive order, injunction or other order, writ,
judgment, decree, stipulation, determination or award entered by, or with,
any Governmental Authority or encumbrance limiting the scope of or ability
to use and/or register the Identifying Marks in the United States of
America or in any other jurisdiction where Seller operates its Business
except as set forth in Schedule 3.16(c). To Seller's knowledge, there are
no third party uses, applications or registrations of the Identifying Marks
for any products or services, except as set forth in Schedule 3.16(c).
(4) Seller has not granted any license, franchise or consent to any
third party to use any of the Identifying Marks other than those set forth
in Schedule 3.16(d). Seller has not received any license, franchise or
consent from any third party to use any of the Identifying Marks, other
than those set forth in Schedule 3.16(d).
3.17 Intellectual Property Rights. To Seller's and each Principal's
knowledge, Schedule 3.17 contains an accurate and complete description of (a)
all intellectual property rights used, and all licenses and other agreements
relating thereto that are necessary for the conduct of the Business, and (b) all
agreements relating to technology, know-how, processes or such other
intellectual property that Seller is licensed or authorized to use by others in
connection with the Business, other than the Identifying Marks and the License
Rights ( the "Intellectual Property"). Seller owns, or is licensed or otherwise
has the right to use, all Intellectual Property. Except as set forth in Schedule
3.17, Seller has the sole and exclusive right to use the Intellectual Property
referred to in Schedule 3.17, and the consummation of the transactions
contemplated hereby will not alter or impair any such rights; no claims have
been asserted by any person to the use of any such Intellectual Property
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or challenging or questioning the validity or effectiveness of any such license
or agreement, and Seller does not know of any valid basis for any such claim;
and the use of such Intellectual Property Rights by Seller does not infringe on
the rights of any person. There are no trade secrets relating to the Business.
3.18 Interest in Customers, Suppliers and Competitors; Transactions with
Affiliates. Except as set forth in Schedule 3.18, neither the Principals, nor,
to Seller's knowledge, any officer, director, or employee of Seller, nor any
spouse or child of any of them (each, an "Affiliate"):
(1) Has any direct or indirect interest in any competitor, supplier, or
customer of Seller or in any person from whom or to whom Seller leases any
real or personal property, or in any other person with whom Seller is doing
business;
(2) Owes money to Seller;
(3) Has any claim against Seller;
(4) Has any interest in any property or assets used by Seller in
connection with the Business;
(5) Has any benefits which are contingent on the transaction
contemplated by this Agreement;
(6) Has any agreement with Seller that is not terminable by Seller
without penalty or notice;
(7) Has any agreement providing severance benefits or other benefits
(which are conditioned upon a change of control) after the termination of
employment of such employee regardless of the reason for such termination
of employment; or
(8) Has any agreement or plan, any of the benefits of which will be
increased, or the vesting of benefits which will be accelerated by the
occurrence of any of the transactions contemplated by this Agreement where
the value of any of the benefits which will be calculated on the basis of
any of the transactions contemplated by this Agreement.
3.19 Nondisclosed Payments. Neither Seller, Principals, Seller's officers,
directors or employees, nor anyone acting on behalf of any of them, has made or
received any payments not correctly categorized and fully disclosed in Seller's
books and records in connection with or in any way relating to or affecting
Seller or the Business.
3.20 Brokers, Finders and Investment Bankers. Neither Seller, Principals,
nor Seller's officers, directors or employees, has employed any broker, finder
or investment banker or incurred
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any liability for any investment banking fees, financial advisory fees,
brokerage fees or finders' fees in connection with the transactions contemplated
herein.
3.21 Insurance. Schedule 3.21 hereto sets forth a complete and correct list
of all insurance policies currently in effect which are owned or held by Seller,
insuring the Business and Assets and Seller's potential liabilities to third
parties, and all general liability policies maintained by Seller. All such
policies are in full force and effect and all premiums due and payable in
respect thereof have been paid. Since the respective dates of such policies, no
notice of cancellation or non-renewal with respect to any such policy has been
received by Seller. Schedule 3.21 sets forth a list of all pending claims and
the status as of the date of this Agreement of all deductibles with respect to
all such policies.
3.22 Balance Sheet Amounts. Seller represents and warrants that as of the
date hereof:
(1) The aggregate amount of Seller's Trade Payables and Line of Credit
as defined in Section 1.4(b)(ii) and 1.4(b)(iii), respectively, both
determined in accordance with GAAP, except that Seller has not recorded
amounts for warranty reserves and sales return reserves and allowances,
will not exceed Seven Hundred Fifty Thousand Dollars ($750,000);
(2) Seller's inventory, determined in accordance with Modified GAAP
consistently applied will not be less than One Million Dollars
($1,000,000);
(3) Seller's cash, cash equivalents and accounts receivable, determined
in accordance with Modified GAAP, consistently applied will not be less
than One Million Four Hundred Thousand Dollars ($1,400,000); and
(4) Seller's working capital (current assets less current liabilities,
determined in accordance with Modified GAAP, consistently applied)
(excluding the Line of Credit) will not be less than Two Million Three
Hundred Thousand Dollars ($2,300,000).
3.23 Banking. Schedule 3.23 lists the names and addresses of all banks or
other financial institutions in which the Seller has an account, deposit or
safe-deposit box, with the names of all persons authorized to draw on these
accounts or deposit to these boxes.
3.24 Agreements Affecting Competition. Except as set forth on Schedule
3.24, the Seller is neither a party to nor bound by any agreement which, in
whole or in part, (i) presently restricts or precludes the Seller or any present
or future affiliate of the Seller from conducting any business anywhere in the
world, or (ii) upon the occurrence of any event, the giving of notice or the
passage of time, by its terms would have such an effect.
3.25 Schedule 3.25 to this Agreement is a correct and current list of
Seller's sales backlog as of March 30, 1999.
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3.26 Corporate Documents. The Seller has furnished to the Buyer for its
examination:
(1) Copies of the Articles of Incorporation and Bylaws of the Seller;
(2) The minute book of Seller, containing all records of all
proceedings, consents, actions and meetings of the shareholders of Seller
and Board of Directors of Seller; and
(3) The stock transfer books of the Seller setting forth all transfers
of any capital stock.
3.27 Defects in Products or Designs; Product Safety. Except as set forth on
Schedule 3.27, there has been no pattern of material defects in any product line
in the design, construction, manufacturing, assembly or installation of any
material product ("Product") made, manufactured, constructed, distributed, sold,
leased or installed by Seller or its employees or agents, that would adversely
affect the performance or quality of such Product. Each Product to Seller's and
each Principal's knowledge has been designed, manufactured, packaged and labeled
in material compliance with all regulatory, engineering and industrial codes
applicable thereto and Seller has not received notice of any alleged
noncompliance with such codes. Seller has not been required to file, nor has
filed, a notification or other report with the United States Consumer Product
Safety Commission concerning actual or potential hazards with respect to any
Product manufactured or sold by it. A catalog describing each Product currently
being manufactured, constructed, distributed, sold, leased or installed by
Seller or its employees or agents as of the date hereof is attached to Schedule
3.27.
3.28 Product Warranties.
(1) Each Product manufactured, sold, leased or delivered by Seller has
been in conformity in all material respects with all applicable contractual
commitments and all express and implied warranties, and Seller has no
liability and, to the knowledge of Seller, there is no reasonable basis for
any present or future action, suit, proceeding, hearing, investigation,
charge, claim or demand giving rise to any liability, for replacement
thereof or other damages in connection therewith, not covered by the
reserve for product warranty claims reflected in the Financial Statements.
Complete and correct copies of all written warranties, warranty reports,
guaranties and return policies applicable to the Company and its Products
have been provided to Buyer and are listed on or attached to Schedule 3.28.
No Product manufactured, sold, leased or delivered by Seller is subject to
any guaranty, warranty or other indemnity beyond the standard terms and
conditions of such sale or lease.
(2) Seller incurred less than $140,000 of expenses in connection with
product warranty claims for the year ended December 31, 1998.
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3.29 Products Liability. There are not presently nor have there been since
Seller's inception any (a) liabilities, fixed or contingent, with respect to any
product liability (as distinct from warranty claims described in clause (b)
below) or any similar claim that relates to any product manufactured and sold by
Seller to others in the conduct of the Business, or (b) liabilities of Seller,
except as set forth in Schedule 3.29, fixed or contingent, which have been
asserted, with respect to any claim for the breach of any express or implied
product warranty or any other similar claim with respect to any product
manufactured or sold by Seller to others in the conduct of the Business other
than any claim based on standard warranty obligations (to replace, repair or
refund) made by Seller in the ordinary course of the conduct of the Business to
purchasers of its products.
3.30 Full Disclosure. All of the representations and warranties set forth
in this Agreement made by the Seller and Principals, or made in any exhibit,
certificate or memorandum furnished or to be furnished by any of them, or on
their behalf, are true correct and complete and none of them contains or will
contain any untrue statement of material fact, or omit any material fact the
omission of which would be misleading.
ARTICLE 2
Representations and Warranties of SABI and Buyer
SABI and Buyer jointly and severally represent and warrant that:
3.31 Organization. Each of SABI and Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority (corporate and other) to own, lease
and operate its respective properties and to carry on its respective businesses
as now being conducted. Both SABI and Buyer are duly qualified to transact
business and are in good standing as a foreign corporation in each jurisdiction
where the character of their activities requires such qualification. SABI's and
Buyer's Certificate of Incorporation, Bylaws, minute books and stock book are
complete and correct and contain all amendments thereto to date (in the case of
the Certificate of Incorporation and Bylaws), a record of all corporate
proceedings of SABI and Buyer (in the case of the minute books), and a record of
all stock issuances and transfers of SABI and Buyer (in the case of the stock
book). Schedule 4.1 contains a true and correct list of the jurisdictions in
which SABI and Buyer are qualified to do business as foreign corporations.
3.32 Authorization and Approval of Agreement. SABI and Buyer have all
requisite corporate power and authority to execute and deliver this Agreement
and the other agreements, documents and instruments executed and delivered by
SABI or Buyer in connection with the transactions contemplated by this Agreement
(the "SABI Ancillary Agreements"), and to fully perform the obligations required
to be performed by them hereunder and thereunder. All corporate proceedings
required by SABI's and Buyer's respective charter documents or otherwise
required by
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law for the execution and delivery of this Agreement and the SABI Ancillary
Agreements and for the consummation of the transactions provided for herein and
therein have been duly taken. This Agreement and each of the SABI Ancillary
Agreements has been duly and validly executed and delivered by SABI and Buyer,
as applicable, and is enforceable against SABI and Buyer, as applicable, in
accordance with its terms, except as the enforceability may be limited by laws
of general application relating to bankruptcy, insolvency and debtors' relief,
and by the general principles of equity.
3.33 Ability to Carry Out Agreement. The execution and delivery of this
Agreement and the SABI Ancillary Agreements by SABI and Buyer and the
performance by SABI and Buyer of their obligations hereunder and thereunder will
not conflict with, violate or result in any breach of or constitute a default
under any provisions of SABI's and Buyer's charter documents or of any of the
provisions of any material indenture, mortgage, lease, agreement, license,
permit, instrument, order, arbitration award, judgment, decree, law, ordinance,
regulation or any other restriction of any kind or character to which SABI or
Buyer is a party or by which either of them is bound. Except for compliance with
the applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 0000 (xxx "XXX Xxx") and the Securities Act, the Securities Exchange Act of
0000, (xxx "Xxxxxxxx Xxx"), applicable state securities laws and the rules of
The Nasdaq Stock Exchange, no consent of any governmental authority or other
third party is required to be obtained on the part of SABI or Buyer in
connection with SABI's and/or Buyer's execution, delivery or performance of this
Agreement or the SABI Ancillary Agreements.
3.34 Brokers, Finders and Investment Bankers. Neither SABI, Buyer nor their
officers, directors or employees, has employed any broker, finder or investment
banker or incurred any liability for any investment banking fees, financial
advisory fees, brokerage fees or finders' fees in connection with the
transactions contemplated herein.
3.35 SABI Common Stock. The shares of SABI Common Stock to be issued in
connection with the Acquisition will, when issued, be validly issued, fully
paid, nonassessable and free of pre-emptive rights.
3.36 SABI SEC Reports. SABI has made available to Seller true and complete
copies of each registration statement, report and proxy or information statement
filed by SABI with the SEC since January 1, 1998, (collectively, the "SABI SEC
Reports"), all of which, as of their respective filing dates, complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act, as applicable, and the rules and regulations promulgated
thereunder. None of such SABI SEC Reports, as of the respective dates they were
filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the audited consolidated financial statements of SABI
(including any related notes and schedules) included in its Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, fairly present, in
conformity with GAAP applied on a
-31-
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of SABI and its subsidiaries as of the date
thereof and the consolidated results of their operations and their cash flows
for the periods then ended. The unaudited financial statements of SABI
(including any related notes and schedules) in its Quarterly Report on Form 10-Q
for the quarter ended September 30, 1998 fairly present, in conformity with GAAP
applied on a consistent basis (except as may be indicated in the notes thereto
and subject to normal year-end audit adjustments) the consolidated financial
position of SABI and its subsidiaries as of the date thereof and the
consolidated results of operations and cash flows for the period then ended.
3.37 Absence of Certain Changes. Since September 30, 1998, there has not
been (i) any material adverse change in the assets, liabilities, business,
financial condition, results of operations or prospects of SABI, (ii) any
material damage, destruction, loss or casualty to property or assets of SABI,
whether or not covered by insurance or (iii) any material change in the
operation of the business of SABI. Since September 30, 1998, SABI has (i) used
its best efforts to preserve its business and customers and (ii) conducted its
business in the ordinary course on a basis consistent with past practice and not
engaged in any new line of business or entered into any agreement, transaction
or activity or made any commitment except those in the ordinary course of
business.
3.38 Agreements with Competitors. None of SABI, the Buyer or any affiliate
has any contract (written or oral) or other agreement with any entity listed on
Schedule 4.8 hereto.
ARTICLE 4
Covenants
4.1 Inspection and Access to Information. From the date of this Agreement
until the final determination of the Post-Closing Purchase Price, if any, the
Buyer shall (and shall cause its officers, directors, employees, auditors and
agents to) provide the Principals and their accountants, counsel and other
authorized representatives full access during reasonable hours and under
reasonable circumstances, to any and all of the books, records and other
information relating to the Business which is relevant to determination of the
Post-Closing Purchase Price.
4.2 Public Announcements. No public release or announcement concerning this
Agreement or the transactions contemplated by this Agreement may be made without
prior approval by SABI and Seller (which may not be unreasonably withheld or
delayed), except for (i) such releases and announcements as may, in the opinion
of counsel to the disclosing party, be required by applicable law or the rules
or regulations of any securities exchange or regulatory agency (including The
Nasdaq Stock Market) and (ii) releases and announcements by SABI that do not
include Seller's name.
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4.3 Employees.
(1) Commencing on the date hereof, Buyer shall hire the employees of
the Business who are actively at work on the date hereof, all of whom are
listed on Schedule 3.13(a) (the "Seller Employees"). All of the Seller
Employees and their related employment agreements, if any, shall be
assigned to Buyer without any interruption in such employees' employment.
The terms under which Xxxxxxx Xxxxxxx and Xxxxxxx Xxxx will be employed by
Buyer are set forth in Exhibit C and Exhibit D, respectively, and the terms
under which Xxxxxx XxXxxxxx is to be employed and subsequently retained as
a consultant by Buyer are set forth in Exhibit E.
(2) On the date hereof, Seller shall pay to its employees, or to Buyer
on behalf of its employees, all accrued, earned and unused vacation, sick
leave and personal days. In addition, on the date hereof Seller shall pay
to its employees, or to Buyer on behalf of its employees, the pro rata
amount of any bonuses earned by such employees for any period prior to the
date hereof (such pro rata amount shall include year-end bonuses).
4.4 Transfer Taxes. Any sales taxes, real property transfer or gains taxes,
or any other taxes payable as a result of the sale of the Assets or Business or
any other action contemplated by this Agreement shall be paid by Seller. Buyer
shall pay any recording fees. The parties shall cooperate in the preparation,
execution and filing of all returns, questionnaires, applications, or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated hereby that are required or
permitted to be filed on or before the date hereof.
4.5 Expenses. Except as otherwise provided herein, each party shall pay its
own fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including, the fees, costs and expenses of its
financial advisors, accountants and counsel.
4.6 Resolution of Certain Balance Sheet Representations.
(1) Buyer shall use commercially reasonable efforts to prepare and
submit to Seller by ninety (90) days after the date hereof a statement
reflecting the closing date balance sheet amounts for the items described
in Section 3.22 hereto ("Balance Sheet Statement"). Seller shall provide
all information reasonably requested by Buyer for purposes of preparing
such statement. Seller or an independent accounting firm engaged by Seller
("Seller's Accountant") will have the opportunity to examine the work
papers, schedules and other documents prepared or relied on by Buyer in
preparing the Balance Sheet Statement. During the period from the date of
delivery of the Balance Sheet Statement until the expiration of 30 days
following delivery to Seller of the Balance Sheet Statement, Buyer will
give Seller, the Seller's Accountant and other appropriate personnel such
assistance and access to the
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assets and books and records related to the Business as Seller and/or
Seller's Accountant reasonably request during Buyer's normal business hours
in order to enable Seller and/or Seller's Accountant to evaluate the
Balance Sheet Statement. Seller will be responsible for the fees and
expenses of Seller's Accountant.
(2) If Seller objects to the Balance Sheet Statement, Seller shall,
within 30 days following delivery of the Balance Sheet Statement to Seller,
deliver to Buyer a notice of objection ("Balance Sheet Objection Notice")
specifying in reasonable detail the items on the Balance Sheet Statement
disputed and information in the possession of or available to Seller which
forms the basis of such dispute, as well as the amount in dispute. The
Balance Sheet Statement will be final and binding on the parties if no
Balance Sheet Objection Notice is delivered to Buyer within such 30 days.
If a Balance Sheet Objection Notice is given, the parties will consult with
each other with respect to the objection. If the parties are unable to
reach agreement within 30 days after a Balance Sheet Objection Notice has
been given, any unresolved disputed issues shall promptly be referred to an
independent national accounting firm reasonably acceptable to Buyer and
Seller (the "Unrelated Firm"), which shall not be the auditor of any of the
parties. The Unrelated Firm will be directed to resolve the disputed issues
in accordance with the terms of this Agreement and render a written report
on the unresolved disputed issues (and only the unresolved disputed issues)
as promptly as practicable. Such report shall also set forth the amount of
the balance sheet items listed in Section 3.22 hereof as of the date
hereof. The resolution of the disputed issues by the Unrelated Firm shall
be final and binding on the parties. The fees and expenses of the Unrelated
Firm will be borne equally by Seller, on the one hand, and Buyer, on the
other.
(3) If Seller does not deliver a Balance Sheet Objection Notice within
the thirty (30) day period required by Section 5.6(b) hereof, then (i) in
the event the amount of the working capital as of the date hereof
determined in accordance with Section 5.6 hereof ("Closing Date Working
Capital") is less than Two Million Three Hundred Thousand Dollars
($2,300,000) ("Working Capital Target"), Seller shall within five (5)
business days after the expiration of such thirty (30) day period pay to
Buyer the amount by which the Closing Date Working Capital is less than the
Working Capital Target, or (ii) in the event the Closing Date Working
Capital exceeds the Working Capital Target, Buyer shall within five (5)
business days after the expiration of such thirty (30) day period pay to
Seller the amount by which the Closing Date Working Capital exceeds the
Working Capital Target. If Seller delivers a Balance Sheet Objection Notice
within the thirty (30) day period required by Section 5.6(b) hereof, then
within five (5) days after the resolution of any dispute by the parties or
by the Unrelated Firm, (i) in the event the amount of the Closing Date
Working Capital is less than the Working Capital Target, Seller shall pay
to Buyer the amount by which the Closing Date Working Capital is less than
the Working Capital Target, or (ii) in the event the Closing Date Working
Capital exceeds the Working Capital Target, Buyer shall pay to Seller the
amount by which the Closing Date Working Capital exceeds the Working
Capital Target.
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(4) Any payment pursuant to Section 5.6(c) hereof shall be made by
certified or bank cashier's check, or, at the recipient's option, by wire
transfer of immediately available federal funds. Any payment pursuant to
Section 5.6(c) hereof made to Seller by Buyer shall include interest on
such payment equal to 5.5% per annum calculated during the period, if any,
from the date sixty (60) days after the date hereof until ninety (90) days
after the date hereof during which Buyer has not yet delivered the Balance
Sheet Statement called for pursuant to Section 5.6(a) hereof.
(5) The mechanisms provided for in Section 5.6(c) hereof shall not
reduce or otherwise limit the parties' rights relating to indemnification
as set forth in Section 8.1 hereof, including without limitation Buyer's
right of offset set forth in Section 8.1(g) hereof.
4.7 COBRA Covenants. Seller (or a person that is a member of a control
group with Seller as described in Section 414(b), (c), (m) or (o) of the Code)
will remain liable for providing COBRA coverage to any qualified beneficiary
whose qualifying event precedes the date hereof or occurs as a result of the
sale of the Business to Buyer and Seller covenants that it (or a person that is
a member of a control group with Seller as described in Section 414(b), (c), (m)
or (o) of the Code) will maintain a group health plan that will provide COBRA
coverage to such qualified beneficiaries for the maximum period of such coverage
to which each such qualified beneficiary is entitled.
4.8 Further Assurances. Buyer, Seller and Principals covenant and agree
that from and after the date hereof each will execute, deliver and acknowledge
(or cause to be executed, delivered and acknowledged), from time to time at the
request of any party and without further consideration, all such further
instruments and take all such further action as may be reasonably necessary or
appropriate to transfer more effectively to Buyer, or to perfect or record the
Buyer's title to or interest in or to enable Buyer to use, the Assets, or
otherwise to confirm or carry out the provisions and intent of this Agreement.
4.9 Compliance with Bulk Sales Laws. Buyer and Seller hereby waive
compliance by Buyer and Seller with the bulk sales laws and other similar laws
in any applicable jurisdiction in respect of the transactions contemplated by
this Agreement.
4.10 Insurance. For a period of five (5) years subsequent to the date
hereof, Buyer shall maintain liability insurance in types and amounts
appropriate in Buyer's reasonable discretion and shall name the Seller and the
Principals as additional insureds; provided that Buyer incurs no additional cost
to name such persons as additional insureds, and provided that Buyer shall not
be required to obtain insurance for the benefit of Seller or Principals that
provides coverage for Excluded Liabilities as defined herein. For a period of
five (5) years subsequent to the date hereof, Seller and/or the Principals shall
maintain liability insurance providing coverage for the Excluded Liabilities in
types and amounts appropriate in Seller's and/or the Principals' reasonable
discretion
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and shall name Buyer and SABI as additional insureds, provided that Seller
and/or the Principals incur no additional cost to name Buyer and SABI as
additional insureds.
ARTICLE 3
Closing Deliveries
4.11 Documents Delivered by Seller and/or Principals. As of the date hereof
(or, with respect to vehicle change of ownership procedures, as soon after the
date hereof as reasonably practicable), Seller and/or Principals have delivered,
or caused to be delivered, to SABI and Buyer the following:
(1) a xxxx of sale in the form attached hereto as Exhibit F;
(2) instruments of assignment, certificates of title and other
conveyance documents, dated the date hereof, transferring to Buyer all of
Seller's right, title and interest in and to the Assets together with
possession of the Assets;
(3) the assumption agreement relating to the Assumed Liabilities in the
form attached hereto as Exhibit G (the "Assignment and Assumption
Agreement");
(4) documents evidencing the assignment of any assignable permits and
licenses;
(5) the Real Property Lease;
(6) the Seller's Counsel Opinions;
(7) the Employment and Consulting Agreement;
(8) the Employment Agreements;
(9) the License Agreement; and
(10) the Registration Rights Agreement.
4.12 Documents Delivered by Buyer. As of the date hereof, SABI and Buyer
have delivered to Seller and Principals the following:
(1) documents evidencing the acceptance of assignable permits and
licenses and the Assignment and Assumption Agreement;
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(2) the Real Property Lease;
(3) the Buyer's Counsel Opinion;
(4) the Employment and Consulting Agreement;
(5) the Employment Agreements;
(6) the License Agreement; and
(7) the Registration Rights Agreement.
ARTICLE 4
Modification; Waiver
4.13 Modification. The parties hereto may, by mutual written consent,
amend, modify or supplement this Agreement in such manner as may be agreed upon
by them in writing at any time.
4.14 Waivers. SABI or Buyer, by an instrument in writing, may extend the
time for or waive the performance of any of the obligations of Seller or
Principals or waive compliance by either of them with any of the covenants or
conditions of Seller or Principals contained herein, and Seller or Principals,
by an instrument in writing, may extend the time for or waive the performance of
any of the obligations of SABI or Buyer or waive compliance by SABI or Buyer
with any of the covenants or conditions of SABI or Buyer contained herein.
ARTICLE 5
Obligations After Closing
4.15 Indemnification.
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(1) Indemnification by the Seller. The Seller hereby agrees to
indemnify and hold SABI, the Buyer, their officers, directors, employees,
agents and affiliates (collectively, the "Buyer Indemnified Parties")
harmless from any and all liabilities, losses, claims, judgments, damages,
expenses and costs (including, without limitation, reasonable counsel fees
and costs and expenses incurred in connection therewith) (collectively, the
"Indemnifiable Damages") which it may suffer or incur by reason of (i) the
breach or inaccuracy of any of the representations and warranties of the
Seller or Principals contained in this Agreement, (ii) the breach by the
Seller or Principals of any of the covenants or agreements made by it,
(iii) any misrepresentation contained in any certificate furnished by the
Seller or Principals pursuant to this Agreement, (iv) any claims against or
liabilities or obligations of the Seller or Principals arising prior to the
date hereof not specifically assumed by the Buyer pursuant to the Agreement
(including but not limited to any claims with respect to the Excluded
Liabilities set forth in Section 1.5 hereof); provided, however,
notwithstanding the provisions of this Section 8.1(a), the Seller will not
be obligated to indemnify, defend or hold harmless the Buyer Indemnified
Parties from or against any Indemnifiable Damages incurred by reason of
matters enumerated in (i) through (iii) above until the aggregate amount of
Indemnifiable Damages exceeds One Hundred Thousand Dollars ($100,000.00)
(the "Threshold"), after which the amount of all Indemnifiable Damages
(including those consisting the $100,000.00) shall be subject to indemnity
by the Seller; provided further, however, that the Threshold shall not
apply with respect to breaches of the representations and warranties set
forth in Section 3.22 (Balance Sheet Amounts) or with respect to breaches
of the covenants set forth in Section 5.6 (Resolution of Certain Balance
Sheet Representations). The Seller's total obligation to the Buyer
Indemnified Parties for matters enumerated in (i) through (iii) above shall
not exceed, in the aggregate, the sum of Seven Million Five Hundred
Thousand Dollars ($7,5000,000) less the value of any SABI Common Stock
(determined in accordance with Section 2.6 hereof) which is not transferred
to Seller in accordance with the provisions of Section 2.5 (Continued
Employment Contingency).
(2) Indemnification by Buyer. The Buyer hereby agrees to indemnify and
hold the Seller and Principals harmless from any and all liabilities,
losses, claims, judgments, damages, expenses and costs (including, without
limitation, reasonable counsel fees and costs and expenses incurred in
connection therewith) (collectively, the "Indemnifiable Damages") which
they may suffer or incur by reason of (i) the breach or inaccuracy of any
of the representations or warranties of Buyer or SABI contained in this
Agreement, (ii) the breach by Buyer or SABI of any of the covenants or
agreements made by it, (iii) any misrepresentation contained in any
certificate furnished by Buyer or SABI pursuant to this Agreement, or (iv)
any claims or liabilities or obligations of the Seller assumed by the Buyer
pursuant to this Agreement; provided, however, notwithstanding the
provisions of this Section 8.1(b), the Buyer will not be obligated to
indemnify, defend or hold harmless the Seller and the Principals from or
against any Indemnifiable Damages incurred by reason of matters enumerated
in (i) through (iii) above until the aggregate amount of Indemnifiable
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Damages exceeds One Hundred Thousand Dollars ($100,000.00), after which the
amount of all Indemnifiable Damages (including those constituting the
$100,000.00) shall be subject to indemnity by the Buyer; provided further,
however, that the Threshold shall not apply with respect to breaches of the
covenants set forth in Section 5.6 (Resolution of Certain Balance Sheet
Representations). The Buyer's total obligation to the Seller Indemnified
Parties for matters enumerated in (i) through (iii) above shall not exceed,
in the aggregate, the sum of Seven Million Five Hundred Thousand Dollars
($7,500,000), less the value of any SABI Common Stock (determined in
accordance with Section 2.6 hereof) which is not transferred to Seller in
accordance with the provisions of Section 2.5 (Continued Employment
Contingency).
(3) Third Party Claims. If any claim or demand is asserted against the
indemnified party by a third party with respect to any matter set forth in
subsections 8.1(a) or 8.1(b) (a "Third Party Claim"), the indemnified party
shall promptly give written notice and details thereof, including copies of
all pleadings and the pertinent documents, to the indemnifying party.
Within twenty (20) days of receipt of such notice, the indemnifying party
shall (i) pay the Third Party Claim either in full or upon compromise
agreed to by the indemnifying party or (ii) notify the indemnified party
that the indemnifying party disputes the Third Party Claim and intends to
defend against it, and thereafter so defend and pay any adverse final
judgment or award or settlement amount in regard thereto. Such defense
shall be controlled by the indemnifying party, and the cost of such defense
shall be borne by it, except that the indemnified party shall have the
right to participate in such defense at its own expense.
If the indemnifying party fails to take action within twenty (20) days
as set forth above, then the indemnified party shall have the right to pay,
compromise or defend any Third Party Claim and to assert the amount of any
payment on the Third Party Claim plus the expense of defense or settlement
as an indemnity claim. The indemnified party shall also have the right,
exercisable in good faith, to take such action as may be necessary to avoid
a default prior to the assumption of the defense of the Third Party Claim
by the indemnifying party and any expenses incurred by so acting shall be
paid by the indemnifying party.
(4) Payment. Payment of Third Party Claims shall be made in accordance
with subsection 8.1(c) above. With respect to any claims other than Third
Party Claims, the indemnifying party shall promptly pay or reimburse the
indemnified party in respect of any claim or liability for Indemnifiable
Damages to which the foregoing indemnities relate after receipt of written
notice from the indemnified party outlining with reasonable particularity
the nature and amount of the claim(s). All claims for indemnity hereunder
must be submitted by the indemnified party to the indemnifying party within
the applicable time periods set forth above; provided, however, that the
failure to so notify the indemnifying party shall not relieve the
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indemnifying party from liability for such claim arising otherwise than
under this Agreement and such failure to so notify the indemnifying party
shall relieve the indemnifying party from liability hereunder with respect
to such claim if, but only if, and only to the extent that, such failure to
notify the indemnifying party results in the forfeiture by the indemnifying
party of rights and defenses otherwise available to such party with respect
to such claim. In the event the indemnifying party fails or refuses to make
payment for such claims within a period of twenty (20) days from the date
of notice to the indemnifying party, the indemnified party shall be
entitled to exercise all legal means of relief available.
(5) Access and Information. With respect to any claim for
indemnification hereunder, the indemnified party will give to the
indemnifying party and its counsel, accountants and other representatives
full and free access, during normal business hours and upon the giving of
reasonable prior notice, to its books and records relating to such claims,
and to its employees, accountants, counsel and other representatives, all
without charge to the indemnifying party, except for reimbursement of
reasonable out-of-pocket expenses. In this regard, the indemnified party
agrees to maintain any of its books and records which may relate to a claim
for indemnification hereunder for such period of time as may be necessary
to enable the indemnifying party to resolve such claim.
(6) Limitations on Indemnification. All representations and warranties
made by the parties herein or in any certificate furnished in connection
herewith shall survive the closing and such representations and warranties
and all rights to indemnification and other relief under this Agreement
shall expire and be deemed released and waived on the third anniversary of
the date hereof, except as to any specific matter as to which a specific
claim is submitted in writing to the indemnifying or guaranteeing party
prior to such date and identified as a claim for indemnification or
performance of guaranty pursuant to this Agreement. The foregoing time
limitation shall not be applicable with respect to a claim for
indemnification upon the breach or inaccuracy of a representation,
warranty, covenant or agreement contained in Sections 1.5 (Excluded
Liabilities), 3.1 (Organization), 3.2 (Authorization and Approval of
Agreement), 3.3 (Ownership of Seller), 3.6(a) (Assets), 3.12 (Tax Matters),
3.13 (Employee Benefit Plans), 3.14 (Personnel, Labor and Employment
Matters), 3.15 (Seller's Environmental Representation) and 3.20 (Brokers,
Finders and Investment Bankers) (collectively, the "Seller Surviving
Matters") and which Seller Surviving Matters shall be governed by the
applicable statute of limitations.
(7) Right of Offset. With respect to any losses, liabilities, damages,
costs or expenses as to which SABI or Buyer is entitled to indemnification
pursuant to this Section 8.1 and which Seller and Principals have failed to
pay under this Section 8.1, SABI or Buyer shall have the right to offset
such losses, liabilities, damages, costs or expenses against either or both
of the First Share Payment and any Post-Closing Purchase Price. This right
of offset shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity.
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4.16 Unconditional Guaranty of Payment and Performance by Principals. To
induce the Buyer and SABI to enter into this Agreement and in consideration for
the benefits to be derived by the Principals from the transactions contemplated
hereby, the Principals unconditionally guarantee, severally and jointly, the
payment and timely performance when due of any and all obligations of the Seller
under this Agreement, including without limitation the Seller's indemnification
obligations pursuant to Article 9 hereof. Upon default by the Seller in making
any payment hereunder or any other failure to perform its obligations hereunder,
the Principals shall make such payment or cause such obligation to be performed,
promptly upon the demand of the Buyer or SABI. The Principals agree that SABI
and/or the Buyer and the Seller may from time to time extend or renew provisions
of this Agreement for any period and may grant any releases, compromises or
indulgences with respect thereto (including but not limited to the failure or
refusal to exercise one or more of the rights or remedies provided herein),
without notice to or consent of the Principals, and without affecting the
liability of the Principals hereunder, except that the dates for limitation for
indemnification set forth in Section 8.1(f) may not be extended without such
consent.
4.17 Unconditional Guaranty of Payment by SABI. To induce the Seller and
the Principals to enter into this Agreement and in consideration of the benefits
to be received by SABI from the transactions contemplated hereby, SABI
unconditionally guarantees the payment when due of any and all payment
obligations of the Buyer under this Agreement including without limitation the
Buyer's indemnification obligations pursuant to Article 9 hereof. Upon default
by the Buyer in making any payment hereunder, SABI shall make such payment
promptly upon demand of the Seller or the Principals. SABI agrees that the
Seller and/or the Principals and the Buyer may from time to time extend or renew
provisions of this Agreement for any period and may grant any releases,
compromises or indulgences with respect thereto (including, but not limited to
the failure or refusal to exercise one or more of the rights or remedies
provided herein), without notice to or the consent of SABI, and without
affecting the liability of SABI hereunder, except that the dates for limitation
for indemnification set forth in Section 8.1(f) may not be extended without such
consent.
4.18 Arbitration
(1) Any controversy, claim or question of interpretation in dispute
between SABI and/or Buyer, on one hand, and Seller and/or Principals, on
the other hand arising out of or relating to this Agreement or the breach
thereof shall be finally settled by arbitration in the State of New York
under the then-effective Commercial Arbitration Rules of the American
Arbitration Association, and judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction. The award
rendered by the arbitrators shall be final and binding on the parties and
not subject to further appeal. Such arbitration can be initiated by written
notice by either party (the "Claimant") to the other party, which notice
shall identify the Claimant's selected arbitrator. The party receiving such
notice (the "Respondent") shall identify its arbitrator within ten (10)
business days following its receipt of such notice. The arbitrator selected
by the Claimant and the arbitrator selected by the Respondent shall, within
ten (10) business days of their appointment, select a third neutral
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arbitrator. In the event that they are unable to do so, either party may
request the American Arbitration Association to appoint the third neutral
arbitrator. The arbitrators shall have the authority to award any remedy or
relief that a court in New York could order or grant, including, without
limitation, specific performance of any obligation created under this
Agreement, the issuance of injunctive or other provisional relief, or the
imposition of sanctions for abuse or frustration of the arbitration
process. The arbitration award will be in writing and specify the factual
and legal basis for the award.
(2) It is the intent of the parties that any arbitration shall be
concluded as quickly as reasonably practicable. Unless the parties
otherwise agree, once commenced, the hearing on the disputed matters shall
be held four days a week until concluded with each hearing date to begin at
9:00 a.m. and to conclude at 5:00 p.m. The arbitrators shall use all
reasonable efforts to issue the final award or awards within a period of
five business days after closure of the proceedings. Failure of the
arbitrators to meet the time limits of this Section shall not be a basis
for challenging the award.
(3) The arbitrators shall instruct the non-prevailing party to pay all
costs of the proceedings, including the fees and expenses of the
arbitrators and the reasonable attorneys' fees and expenses of the
prevailing party. If the arbitrators determine that there is not a
prevailing party, each party shall be instructed to bear its own costs and
to pay one-half of the fees and expenses of the arbitrators.
(4) Each party hereto agrees that any legal proceeding instituted to
enforce an arbitration award hereunder will be brought in the U.S. federal
or state courts situated in Delaware, and hereby submits to personal
jurisdiction therein and irrevocably waives any objection as to venue
therein, and further agrees not to plead or claim in any such court that
any such proceeding has been brought in an inconvenient forum. Seller and
Principals hereby designate, appoint and empower Xxxxxxx X. Xxxxxxx, Xx. as
such person's true and lawful agent for service of process to receive and
accept on Seller's or Principal's behalf service of process in any such
proceeding brought in any such courts. SABI and Buyer hereby designate,
appoint and empower their Presidents, respectively, as such person's true
and lawful agent for service of process to receive and accept on SABI's and
Buyer's behalf, respectively, service of process in any such proceeding
brought in any such courts. Each of the foregoing persons agrees that the
failure of the process agent appointed by such person to give notice of
process to such person shall not impair or affect the validity of service
upon such agent or of any judgment based thereon, and each such person
irrevocably consents to the service of process in any such proceeding by
the mailing of copies thereof by certified mail, postage prepaid, to such
person's address for notices under this Agreement.
ARTICLE 6
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Miscellaneous
4.19 Notices. All notices, communications and deliveries hereunder shall be
made in writing signed by or on behalf of the party making the same and shall be
delivered personally or by telecopy transmission or sent by registered or
certified mail (return receipt requested) or by any national overnight courier
service (with postage and other fees prepaid) as follows:
(a) To SABI or Buyer:
Swiss Army Brands, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: President
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxx
Telephone No.:(000) 000-0000
Telecopy No.: (000) 000-0000
(b) To Seller or Principals:
Bear Cutlery, Inc.
0000 Xxxx Xxxxxxxxx, XX
X.X. Xxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Xx.
Telephone No.: (000) 000-0000
Telecopy No: (000) 000-0000
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with a copy to:
Spain & Xxxxxx, L.L.C.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx, Xx.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing. Any such notice,
communication or delivery shall be deemed given or made (a) on the date of
delivery if delivered in person (by courier service or otherwise), (b) upon
transmission by facsimile if receipt is confirmed by telephone, provided
transmission is made during regular business hours, or if not, the next business
day, or (c) on the fifth (5th) business day after it is mailed by registered or
certified mail.
4.20 Entire Agreement. This Agreement (including the Schedules and Exhibits
hereto) and the documents executed pursuant hereto supersede all negotiations,
agreements and understandings among the parties with respect to the subject
matter hereof (including, without limitation, that certain letter agreement,
dated January 26, 1999, between SABI and Seller and constitutes the entire
agreement among the parties hereto. Annex I hereto lists all of the Exhibits and
Schedules to this Agreement, which are hereby incorporated herein by this
reference.
4.21 Binding Effect. This Agreement shall inure to the benefit of and shall
be binding upon the parties hereto and, in the case of SABI and Buyer, their
successors and permitted assigns, in the case of Seller, its distributees in
liquidation and, in the case of Principals, their personal representatives,
estate planning trusts and permitted assigns.
4.22 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any Person
other than the parties hereto and their respective successors, assigns, or
representatives, as applicable, any rights or remedies under or by reason of
this Agreement.
4.23 Severability. It is the desire and intent of the parties hereto that
the provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as
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not to be invalid, prohibited or unenforceable in such jurisdiction, it shall,
as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
4.24 Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of any provisions of this Agreement.
4.25 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
4.26 Governing Law and Choice of Forum. THIS AGREEMENT WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED. IN
FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF NEW YORK WILL
CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER
SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE
LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
4.27 Equitable Remedies. The parties agree that the assets and business of
Seller as a going concern constitute unique property and that there is no
adequate remedy at law for the damage which any party might sustain for failure
of the other parties to consummate the transactions contemplated by this
Agreement, and accordingly, each party shall be entitled, at its option, to the
remedy of specific performance to enforce the consummation of the transactions
described in this Agreement. Neither rescission nor reformation of this
Agreement shall be available as a remedy to any of the parties hereto.
4.28 Construction. The provisions of this Agreement shall be construed
according to their fair meaning and neither for nor against any party hereto
irrespective of which party caused such provisions to be drafted. Each of the
parties acknowledge that it has been represented by an attorney in connection
with the preparation and execution of this Agreement.
4.29 Survival. Each of the representations, obligations and agreements of
the parties included or provided for herein shall survive the consummation of
the transactions contemplated by this Agreement in accordance with Section
8.1(f) hereof, notwithstanding any investigation heretofore or hereafter made by
any of them or on behalf of any of them.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the date first above written.
BEAR MGC CUTLERY, INC.
By: ------------------------------
Xxxxxx XxXxxxxx
President
SWISS ARMY BRANDS, INC.
By: /s/ J. Xxxxxxx Xxxxxxx
-------------------------------
J. Xxxxxxx Xxxxxxx
President
BEAR CUTLERY, INC.
By: /s/ J. Xxxxxxx Xxxxxxx
------------------------------
J. Xxxxxxx Xxxxxxx
President
[SIGNATURES CONTINUED ON NEXT PAGE]
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PRINCIPALS:
/s/ Xxxxxx XxXxxxxx
---------------------------------
Xxxxxx XxXxxxxx
/s/ Xxxxxxx X. Xxxxxxx, Xx.
----------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
/s/ Xxxxxxx Xxxx
----------------------------------
Xxxxxxx Xxxx
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ANNEX A
LIST OF SCHEDULES AND EXHIBITS
SCHEDULE
--------
Schedule 1.2(a) Intangible Rights
Schedule 1.2(b) Personal Property
Schedule 1.2(c) Assumed Contracts
Schedule 1.3(e) Excluded Assets
Schedule 2.4(d) Customers and Terms of Sale
Schedule 3.1 Jurisdictions in which Seller is Qualified to do Business
Schedule 3.3 Ownership of Seller's Shares
Schedule 3.4 Default or Acceleration of Obligations by Reason of Sale
Schedule 3.6(a) Interest in Seller's Assets by Affiliates of Seller
Schedule 3.7 Financial Statements
Schedule 3.8 Business Changes
Schedule 3.8(c) Material Debt, Liability or Obligations
Schedule 3.9 Legal Proceedings
Schedule 3.10 Licenses
Schedule 3.11 Seller's Contracts
Schedule 3.12(a) Tax Filing Extensions
Schedule 3.12(b) Contingent or Potential Liability for Taxes
Schedule 3.12(c) Audit History; Waivers of Statute of Limitations
Schedule 3.13(a) Employee Benefit Plans
Schedule 3.13(c) Benefit Plans Noncompliance and Disputes
Schedule 3.13(h) Severance Payments
Schedule 3.14(a) Seller's Employees and Indepenent Contractors
Schedule 3.14(b) Collective Bargaining and Union Matters
Schedule 3.14(c) Family and Medical Leave Act Information
Schedule 3.15 Environmental Matters
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Schedule 3.16(a) Trademarks, Trade Names
Schedule 3.16(b) Encumbrances or Restrictions on Identifying Marks
Schedule 3.16(c) Actions and Claims with Respect to Identifying Marks
Schedule 3.16(d) License and Use of Identifying Marks
Schedule 3.17 Intellectual Property Rights
Schedule 3.18 Transactions with Affiliates
Schedule 3.21 Insurance Policies and Claims
Schedule 3.23 Seller's Banks
Schedule 3.24 Agreements Affecting Competition
Schedule 3.25 Seller's Sales Backlog
Schedule 3.27 Defects in Product or Design
Schedule 3.28 Warranties and Return Policies
Schedule 3.29 Product Liability Claims
Schedule 4.1 Jurisdictions in which SABI and Buyer are Qualified to do Business
Schedule 4.8 SABI and Buyer's Agreements with Competitors
EXHIBIT
-------
Exhibit A Post-Closing Purchase Price Cash/Stock Allocation
Exhibit B Definition of Modified GAAP
Exhibit C Employment Agreement of Xxxxxxx Xxxxxxx
Exhibit D Employment Agreement of Xxxxxxx Xxxx
Exhibit E Employemnt and Consulting Agreement of Xxxxxx XxXxxxxx
Exhibit F Xxxx of Sale
Exhibit G Assignment and Assumption Agreement
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