STOCK PURCHASE AGREEMENT
by and among
XXXXXXXXX WORLD INDUSTRIES, INC.
XXXXXXXXX ENTERPRISES, INC.
and
INTERCO INCORPORATED
November 18, 1995
TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE OF SHARES . . . . . . . . . . . . . . . 1
1.1 Sale of Shares. . . . . . . . . . . . . . . . . . . . 1
1.2 Payment of Purchase Price. . . . . . . . . . . . . . . 2
2. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 The Closing; Post-Closing Purchase Price Adjustment . 2
2.2 Stock Certificates. . . . . . . . . . . . . . . . . . 2
2.3 Post-Closing Purchase Price Adjustment . . . . . . . . . 3
3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . 5
3.1 Organization and Corporate Power. . . . . . . . . . . 5
3.2 Authorization. . . . . . . . . . . . . . . . . . . . . 6
3.3 Financial Statements. . . . . . . . . . . . . . . . . 6
3.4 Absence of Undisclosed Liabilities. . . . . . . . . . 7
3.5 Absence of Certain Developments. . . . . . . . . . . . 7
3.6 Real Property. . . . . . . . . . . . . . . . . . . . . 9
3.7 Tangible Personal Property. . . . . . . . . . . . . . 10
3.8 Inventories and Supplies. . . . . . . . . . . . . . . 11
3.9 Intellectual Property Rights. . . . . . . . . . . . . 11
3.10 Accounts and Notes Receivable. . . . . . . . . . . . 12
3.11 Outstanding Capital Stock. . . . . . . . . . . . . . 12
3.12 Options or Other Rights. . . . . . . . . . . . . . . 13
3.13 Title to Shares. . . . . . . . . . . . . . . . . . . 13
3.14 Subsidiaries. . . . . . . . . . . . . . . . . . . . . 13
3.15 Compliance with Laws. . . . . . . . . . . . . . . . . 14
3.16 No Breach. . . . . . . . . . . . . . . . . . . . . . 14
3.17 Litigation. . . . . . . . . . . . . . . . . . . . . . 15
3.18 Material and Affiliated Contracts. . . . . . . . . . 16
3.19 Licenses and Permits. . . . . . . . . . . . . . . . . 17
3.20 Labor Matters. . . . . . . . . . . . . . . . . . . . 18
3.21 Charters and Bylaws. . . . . . . . . . . . . . . . . 18
3.22 Tax Matters. . . . . . . . . . . . . . . . . . . . . 19
3.23 Workers' Compensation . . . . . . . . . . . . . . . . 23
3.24 Insurance. . . . . . . . . . . . . . . . . . . . . . 23
3.25 Employee Benefit Plans. . . . . . . . . . . . . . . . 24
3.26 Necessary Property. . . . . . . . . . . . . . . . . . 31
3.27 Environmental Matters. . . . . . . . . . . . . . . . 32
3.28 Full Disclosure. . . . . . . . . . . . . . . . . . . 36
3.29 Limitation. . . . . . . . . . . . . . . . . . . . . . 37
4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . 37
4.1 Organization and Corporate Power. . . . . . . . . . . 37
4.2 Authorization. . . . . . . . . . . . . . . . . . . . . 37
4.3 No Breach. . . . . . . . . . . . . . . . . . . . . . . 38
4.4 No Investigation. . . . . . . . . . . . . . . . . . . 38
4.5 Buyer's Financing. . . . . . . . . . . . . . . . . . . 39
4.6 Securities Act of 1933. . . . . . . . . . . . . . . . 39
5. COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . 39
5.1 Preservation of Business. . . . . . . . . . . . . . . 39
5.2 Negative Covenants of Seller. . . . . . . . . . . . . 40
5.3 Seller Tax Matters. . . . . . . . . . . . . . . . . . 41
5.4 Buyer Tax Matters. . . . . . . . . . . . . . . . . . . 42
5.5 Other Tax Matters. . . . . . . . . . . . . . . . . . . 43
5.6 Intercompany Accounts. . . . . . . . . . . . . . . . . 46
5.7 Notice of Developments. . . . . . . . . . . . . . . . 46
5.8 Reasonable Efforts and Certain Filings. . . . . . . . 47
5.9 Employees and Employee Benefits. . . . . . . . . . . . 47
5.10 Exclusivity. . . . . . . . . . . . . . . . . . . . . 54
5.11 Non-Hire. . . . . . . . . . . . . . . . . . . . . . . 55
5.12 Noncompetition. . . . . . . . . . . . . . . . . . . . 55
5.13 Pre- and Post-Closing Cooperation. . . . . . . . . . 56
5.14 Insurance. . . . . . . . . . . . . . . . . . . . . . 57
5.15 Confidentiality. . . . . . . . . . . . . . . . . . . 59
5.16 Industrial Revenue Bonds. . . . . . . . . . . . . . . 60
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER . . . . 61
6.1 Representations and Covenants. . . . . . . . . . . . . 61
6.2 Closing Certificate. . . . . . . . . . . . . . . . . . 62
6.3 Legal Opinion. . . . . . . . . . . . . . . . . . . . . 62
6.4 Injunction. . . . . . . . . . . . . . . . . . . . . . 62
6.5 Governmental Authority. . . . . . . . . . . . . . . . 62
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER . . . . . 62
7.1 Representations and Covenants. . . . . . . . . . . . . 63
7.2 Closing Certificate. . . . . . . . . . . . . . . . . . 63
7.3 Legal Opinion. . . . . . . . . . . . . . . . . . . . . 63
7.4 Injunction. . . . . . . . . . . . . . . . . . . . . . 63
7.5 Governmental Authority. . . . . . . . . . . . . . . . 64
7.6 No Loss. . . . . . . . . . . . . . . . . . . . . . . . 64
7.7 Financing. . . . . . . . . . . . . . . . . . . . . . . 64
7.8 Resignations. . . . . . . . . . . . . . . . . . . . . 64
7.9 Trademark License. . . . . . . . . . . . . . . . . . . 64
7.10 Consents. . . . . . . . . . . . . . . . . . . . . . . 65
7.11 Environmental Reports. . . . . . . . . . . . . . . . 65
8. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 65
8.1 Indemnity of Seller. . . . . . . . . . . . . . . . . . 65
8.2 Indemnity of Buyer. . . . . . . . . . . . . . . . . . 66
8.3 Mitigation. . . . . . . . . . . . . . . . . . . . . . 67
8.4 Matters Involving Third Parties. . . . . . . . . . . . 68
8.5 Tax Indemnification. . . . . . . . . . . . . . . . . . 69
8.6 Indemnification Payment. . . . . . . . . . . . . . . . 69
8.7 Environmental Indemnification. . . . . . . . . . . . . 70
8.8 Procedures Relating to Environmental Indemnity by Seller 73
9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 76
9.1 Fees and Expenses. . . . . . . . . . . . . . . . . . . 76
9.2 Brokers. . . . . . . . . . . . . . . . . . . . . . . . 77
9.3 Access to the Company's Properties. . . . . . . . . . 77
9.4 Books and Records. . . . . . . . . . . . . . . . . . . 78
9.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . 79
9.6 Successors and Assigns. . . . . . . . . . . . . . . . 80
9.7 Entire Agreement and Modification. . . . . . . . . . . 80
9.8 Termination By Buyer. . . . . . . . . . . . . . . . . 81
9.9 Termination By Seller. . . . . . . . . . . . . . . . . 81
9.10 Other Termination. . . . . . . . . . . . . . . . . . 82
9.11 Effect of Termination. . . . . . . . . . . . . . . . 82
9.12 Survival of Representations, Covenants and Warranties. 83
9.13 Section and Other Headings. . . . . . . . . . . . . . 83
9.14 Governing Law. . . . . . . . . . . . . . . . . . . . 84
9.15 Counterparts. . . . . . . . . . . . . . . . . . . . . 84
9.16 Further Assurances. . . . . . . . . . . . . . . . . . 84
9.17 Severability. . . . . . . . . . . . . . . . . . . . . 84
9.18 Confidentiality. . . . . . . . . . . . . . . . . . . 84
9.19 No Third Party Beneficiaries. . . . . . . . . . . . . 85
9.20 Jurisdiction. . . . . . . . . . . . . . . . . . . . . 85
9.21 Specific Performance. . . . . . . . . . . . . . . . . 85
9.22 Intercompany Relationships. . . . . . . . . . . . . . 86
9.23 Parent Guarantee. . . . . . . . . . . . . . . . . . . 86
9.24 Definition of Knowledge. . . . . . . . . . . . . . . 86
STOCK PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement"), dated November 18, 1995, among
XXXXXXXXX WORLD INDUSTRIES, INC., a Pennsylvania corporation
("Parent"), XXXXXXXXX ENTERPRISES, INC., a Vermont corporation
("Seller"), and INTERCO INCORPORATED, a Delaware corporation
("Buyer").
WITNESSETH:
WHEREAS, Seller, a wholly-owned subsidiary of Parent, owns
beneficially and of record all of the issued and outstanding shares
(the "Shares") of Common Stock, par value $1.00 per share, of
Thomasville Furniture Industries, Inc., a Pennsylvania corporation
(the "Company"); and
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, the Shares upon the terms and subject to the
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained in this Agreement, Seller
and Buyer, intending to be legally bound, agree as follows:
1.PURCHASE AND SALE OF SHARES
1.1 Sale of Shares.
At the Closing (as defined in Section 2.1), Seller shall
sell, assign, transfer and deliver to Buyer, and Buyer shall purchase
and accept from Seller, the Shares for the aggregate purchase price of
$331,200,000 (the "Purchase Price"), payable as provided in Section
1.2. The Purchase Price is subject to adjustment as provided in
Section 2.3.
1.2 Payment of Purchase Price.
The Purchase Price shall be paid by Buyer to Seller on the
Closing Date by wire transfer of same day immediately available funds.
2. CLOSING
2.1 The Closing; Post-Closing Purchase Price Adjustment.
The closing ("Closing") of the sale and purchase of the
Shares contemplated hereby shall take place at the offices of the
legal counsel for Buyer s lead lender described in the Financing
Letters (as defined in Section 4.5) in New York, New York, at 10:00
a.m. local time on December 29, 1995 or, if later, the date that is
five business days following notice from Buyer to Seller of the
anticipated satisfaction of the condition set forth in Section 7.7, or
on such other date and such other place as the parties may agree, but
in any event not later than January 31, 1996 ( Termination Date );
provided, however, in the event that any of the conditions set forth
in Sections 6.4, 6.5, 7.4 and 7.5 shall not have been met or waived in
writing by the Termination Date, such date shall be extended to the
first to occur of (i) the satisfaction or written waiver of all such
conditions or (ii) March 15, 1996. The day of Closing is referred to
hereinafter as the "Closing Date."
2.2 Stock Certificates.
At the Closing, Seller shall deliver to Buyer stock
certificates representing all of the Shares, duly endorsed in blank or
accompanied by stock powers executed in blank, in proper form for
transfer, together with any required transfer stamps.
2.3 Post-Closing Purchase Price Adjustment.
(a) Within 60 days after the Closing Date, Buyer will
prepare and deliver to Seller a consolidated balance sheet (the
"Closing Date Balance Sheet") for the Company and the Subsidiaries as
of the close of business on the Closing Date (determined on a pro
forma basis as though the parties had not consummated the transactions
contemplated by this Agreement). The Closing Date Balance Sheet will
be audited by KPMG Peat Marwick ("Peat"), whose opinion will be
appended thereto. The Closing Date Balance Sheet will be prepared in
accordance with generally accepted accounting principles applied on a
basis consistent with the preparation of the Latest Balance Sheet (as
defined in Section 3.3. below); provided, however, that (i)
inventories will be calculated at cost (first-in, first-out) or
market, whichever is lower, (ii) intercompany receivables,
intercompany payables and notes payable to affiliates will be
excluded, (iii) any asset or liability of the Company and the
Subsidiaries retained by Seller pursuant to this Agreement will be
excluded and (iv) any other adjustments shall be made which were made
in the calculation of Target Net Worth attached hereto as Schedule 2.3
(iv) (Subsections (i), (ii), (iii) and (iv) hereof collectively
referred to as the Balance Sheet Adjustments ). Representatives from
both Seller and Buyer shall be entitled to participate in the taking
of any physical inventories conducted with respect to the Company and
the Subsidiaries on or after the date of this Agreement. The fees and
expenses of Peat will be paid by Buyer.
(b) On or prior to the date 20 business days after
delivery to Seller of the Closing Date Balance Sheet (the Adjustment
Date ), Seller and Buyer shall mutually agree upon the "Adjusted
Closing Net Worth". The "Adjusted Closing Net Worth" shall mean the
Shareholder's Equity of the Company and the Subsidiaries reflected on
the Closing Date Balance Sheet. In the event that Seller and Buyer
are unable to agree on the Adjusted Closing Net Worth within such 20
day period, Seller and Buyer shall submit the dispute to Xxxxxx
Xxxxxxxx & Co. (the "Arbiter"), for resolution. Promptly, but no
later than 20 days after its acceptance of its appointment as Arbiter,
the Arbiter shall determine, based solely on presentations by Seller
and Buyer, and not by independent review, only those issues in dispute
and shall render a report as to the dispute and the resulting
computation of the Adjusted Closing Net Worth which shall be
conclusive and binding upon the parties. The fees, costs and expenses
of the Arbiter shall be borne by each party in proportion that the
aggregate dollar amount of such disputed items so submitted that are
unsuccessfully disputed by such party bears to the aggregate dollar
amount of the items submitted by the Arbiter.
(c) To the extent the Adjusted Closing Net Worth is
less than the "Target Net Worth" in an amount that is greater than
$2,000,000, Seller shall pay the amount of such difference in excess
of $2,000,000 to Buyer (plus interest from the Adjustment Date through
the date of payment at the prime lending rate of Bankers Trust Company
from time to time prevailing ), as an adjustment to the Purchase
Price, by wire transfer of immediately available funds within two
business days of the final determination of Adjusted Closing Net
Worth. The "Target Net Worth" shall mean $250,895,000, which is the
Shareholder's Equity reflected on the Latest Balance Sheet, adjusted
to give effect to the Balance Sheet Adjustments. In the event the
Adjusted Closing Net Worth is equal to or greater than $248,895,000,
no adjustment to the Purchase Price will be made.
(d) Seller will make its books, records and personnel
available to Buyer and its accountants and other representatives, and
Buyer will cause the Company and the Subsidiaries to make their
respective books, records and personnel and Peat's work papers and
back-up materials used in preparing and auditing the Closing Date
Balance Sheet available to Seller and its accountants and other
representatives, at reasonable times and upon reasonable notice at any
time during (A) the preparation by Buyer of the Closing Date Balance
Sheet, (B) the review by Seller of the Closing Date Balance Sheet and
(C) the resolution by the parties and, if necessary, the Arbiter of
any disputes involving the Closing Date Balance Sheet.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that the statements
contained in this Article 3 are correct as of the date of this
Agreement, and will be correct as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article 3).
3.1 Organization and Corporate Power.
Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Vermont. Except as set
forth in Schedule 3.1, each of the Company and the Subsidiaries (as
defined in Section 3.14) (i) is a corporation duly organized and
validly existing in good standing under the laws of its jurisdiction
of incorporation and (ii) is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in
which the character of the properties owned or leased by it or the
nature of the business conducted therein requires it to be so
qualified except where the failure to qualify would have a material
adverse effect on the Company and the Subsidiaries, taken as a whole.
Schedule 3.1 sets forth each state in which the Company or the
Subsidiaries are qualified to do business as a foreign corporation.
Seller has full corporate power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated
hereby. Each of the Company and the Subsidiaries has full power and
authority to carry on its business as conducted at the present time
and to own and use the properties owned and used by it.
3.2 Authorization.
This Agreement has been duly authorized, executed and
delivered by Seller and constitutes a valid and legally binding
agreement of Seller, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
3.3 Financial Statements.
Delivered contemporaneously herewith to Buyer are the
following financial statements:
(a) the (i) audited statements of income and cash
flows for the years ended December 31, 1992, December 31, 1993 and
December 31, 1994 and (ii) the audited consolidated balance sheet of
the Company and the Subsidiaries as of December 31, 1993, and December
31, 1994, together with the notes thereto and the reports thereon of
KMPG Peat Marwick; and
(b) the unaudited consolidated balance sheet of the
Company and the Subsidiaries as of October 31, 1995 (the "Latest
Balance Sheet") and the related statement of income and cash flows for
the ten-month period then ended.
Except as set forth on Schedule 3.3, each of the foregoing
financial statements (including in all cases the notes thereto, if
any) fairly presents the financial position of and the results of
operations for the entities reported on and is consistent with the
books and records of the Company and the Subsidiaries and has been
prepared in accordance with generally accepted accounting principles,
consistently applied, subject in the case of the financial statements
referred in (b) above to changes resulting from normal year-end
adjustments. The books and records upon which the foregoing financial
statements are based are true and complete.
3.4 Absence of Undisclosed Liabilities.
Except as set forth on Schedule 3.4, neither the Company nor
any of the Subsidiaries has any material obligation or liability
(whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due) other than (a) liabilities set forth on
the Latest Balance Sheet (including the notes thereto), (b)
liabilities and obligations which have arisen after the date of the
Latest Balance Sheet in the ordinary course of business , (c)
obligations not arising from a default under contracts or commitments
described on any Schedules hereto or not required to be described
thereon because of the nature and amount of such contracts or
commitments, and (d) other liabilities and obligations expressly
disclosed in the other Schedules to this Agreement.
3.5 Absence of Certain Developments.
There has not been any material adverse change in the
financial position or results of operation of the Company and the
Subsidiaries since the date of the Latest Balance Sheet; except,
however, for changes (i) in the furniture industry in general, (ii) in
the economy in general, or (iii) as a result of the seasonality of the
business of the Company and the Subsidiaries, or any of them. In
addition, except as expressly contemplated by this Agreement or as set
forth on Schedule 3.5, since the date of the Latest Balance Sheet,
there has not occurred any of the following events without the prior
written consent of Buyer:
(a) the issuance of any notes, bonds or other debt
securities or any equity securities;
(b) the borrowing of any amount of money or the
incurring of or becoming subject to any liabilities, except (i)
current liabilities incurred in the ordinary course of business, and
(ii) liabilities under contracts entered into in the ordinary course
of business;
(c) the discharge or satisfaction of any lien or
encumbrance or the payment of any obligation or liability, other than
current liabilities paid in the ordinary course of business;
(d) the mortgage or pledge of any properties or assets
or the subjection of any property or asset to any lien, security
interest, charge or other encumbrance, except liens for current
property taxes not yet due and payable;
(e) the cancellation of any debts or claims except in
the ordinary course of business;
(f) the sale, assignment or transfer of (i) any
tangible assets, other than the sale of inventory in the ordinary
course of business, or (ii) any trademarks, service marks, trade
names, copyrights, trade secrets or other intangible assets;
(g) any capital expenditures or commitments therefor
that aggregate in excess of $2.5 million per calendar quarter;
(h) any loan or bonus payment to an officer, director,
shareholder or affiliate of the Company or any of the Subsidiaries;
(i) the adoption or entering into, or the amendment,
modification or termination of, any collective bargaining agreement,
Employee Benefit Plan, or Employee Benefit Arrangement (as such terms
are defined in Section 3.25 hereof), or the granting of any increase
in compensation or the making of any other material change in
employment terms for any of its directors, officers or employees
outside of the ordinary course of business;
(j) any loans or advances to, or guarantees for the
benefit of, any persons in excess of $150,000 in the aggregate, other
than endorsements of negotiable instruments made for collection;
(k) any material charitable contributions or pledges;
(l) any theft, damage, destruction or casualty loss
exceeding in the aggregate $500,000, whether or not covered by
insurance;
(m) any conduct of the business of the Company and the
Subsidiaries outside the ordinary course of business;
(n) any new elections or change in any current
election with respect to Taxes (as defined in Section 3.22 hereof)
affecting the Company or the Subsidiaries; and
(o) any commitment on the part of the Company and the
Subsidiaries to any of the foregoing.
3.6 Real Property.
Schedule 3.6 sets forth a complete list and summary
description of all real property, leases, subleases and other rights
or interests of record in real property and improvements thereon,
wherever located, owned, leased, occupied or used by the Company or
any of the Subsidiaries (the "Real Property Interests"), together with
a description of the instruments or other documents by which the same
were acquired and the recording data applicable thereto. Within ten
(10) days of the execution of this Agreement by the parties hereto,
Seller will deliver to Buyer true and correct copies of all deeds,
leases, subleases, surveys, documents of title, title opinions and
title insurance policies relating to the Real Property Interests which
are in the possession of Seller. Except as set forth on Schedule 3.6
and except for: (a) liens for current ad valorem taxes not yet
delinquent, (b) covenants, conditions and restrictions of record which
are not violated by existing uses or improvements and which do not
materially interfere with the use of the Real Property Interests and
do not adversely affect the merchantability of the title to the Real
Property Interests and (c) statutory liens with respect to current
obligations not yet delinquent (other than for current ad valorem
taxes not yet delinquent) and other title defects which do not
materially interfere with the existing use of the Real Property
Interests and do not materially adversely affect the merchantability
of the title thereto, the Company and the Subsidiaries have good and
marketable title to the Real Property Interests, free and clear of any
mortgage, security interest, lien, lease, encumbrance, option or
agreement and there are no pending or, the knowledge of Seller,
threatened condemnation or eminent domain proceedings, lawsuits or
administrative actions, special assessments or changes in assessed
valuation (other than routine changes to assessed valuations and tax
rates) relating to the property affecting materially and adversely the
current use or occupancy . Except as set forth in Schedule 3.6, each
of the Real Property Interests listed and described in Schedule 3.6 is
in full force and effect, and there is no material default by the
Company or any of the Subsidiaries or, to the knowledge of Seller, by
any other party under any such Real Property Interests.
3.7 Tangible Personal Property.
The Company and the Subsidiaries have good and marketable
title to all of the equipment, machinery, motor vehicles, furniture
and fixtures, inventory and supplies and other tangible personal
property owned or leased by the Company and the Subsidiaries, free and
clear of any mortgage, liability, security interest, pledge, lien or
encumbrance of any kind or nature whatsoever except as set forth in
Schedule 3.7 and except for liens for current ad valorem taxes not yet
delinquent. All such tangible personal property used at present in
the operations of the Company and the Subsidiaries is in good
operating condition and repair (subject to normal wear and tear).
3.8 Inventories and Supplies.
All of the inventories and supplies of each of the Company
and the Subsidiaries are reflected on the Latest Balance Sheet, at
standard cost, or latest purchase price when inventoried, whichever is
lower, and all such inventories and supplies, together with
inventories and supplies acquired since the date of the Latest Balance
Sheet, are of sufficient quality and quantity for the normal operation
of the business of the Company and the Subsidiaries, and are free and
clear of any claim, security interest, pledge or lien or encumbrance
of any kind or nature whatsoever.
3.9 Intellectual Property Rights.
Schedule 3.9 sets forth a true and correct list of all of
the patents (including all reissues, divisions, continuations,
continuations -in-part and extensions thereof), applications for
patents, patent disclosures docketed, inventions, improvements,
trademarks (including service marks), trademark applications, trade
names, copyrights and copyright registrations owned by the Company or
any of the Subsidiaries, and all licenses, franchises, permits,
authorizations, agreements and arrangements that concern the same or
that concern any intellectual property owned by others and used by the
Company or any of the Subsidiaries. True and correct and complete
copies of all such intellectual property, licenses, franchises,
permits, authorizations, agreements and arrangements will be delivered
by Seller to Buyer within ten (10) days of the execution of this
Agreement by the parties hereto. The use of such intellectual
property rights by the Company and the Subsidiaries does not conflict
with the rights of others, nor, to the knowledge of Seller, is any
third party infringing upon the intellectual property rights of the
Company or any Subsidiary. Each of the Company and the Subsidiaries
owns or is the licensee of all rights to all patents, patent
applications, inventions, improvements, trademarks, trademark
applications, trade names, copyrights or other intellectual property
necessary to conduct its present business operations.
3.10 Accounts and Notes Receivable.
The accounts and notes receivable reflected on the Latest
Balance Sheet are owned by the Company and the Subsidiaries free and
clear of any security interest, pledge or lien or encumbrance of any
kind or nature whatsoever except as set forth on Schedule 3.10 and,
subject to the amounts reflected in the Latest Balance Sheet for bad
debts or doubtful accounts, are collectible in the normal course of
business. The accounts and notes receivable of the Company and the
Subsidiaries created from and after the date of the Latest Balance
Sheet to the Closing Date will be free and clear of any pledge,
security interest or lien or encumbrance of any kind or nature
whatsoever except as set forth on Schedule 3.10 and, subject to the
amounts which are reflected in the books and records of the Company
and the Subsidiaries for bad debts or doubtful accounts and which are
consistent with the past practices of the Company and the Subsidiaries
with respect to the bad debts or doubtful accounts, will be
collectible in the normal course of business.
3.11 Outstanding Capital Stock.
For each of the Company and the Subsidiaries, the title, par
value, number of authorized shares, number of issued and outstanding
shares of each class of capital stock and the persons owning
beneficially and of record the outstanding shares of each such class
of capital stock are set forth on Schedule 3.11. No other class of
capital stock of the Company or any Subsidiary is authorized or
outstanding. All of the issued and outstanding shares of each of the
Company and the Subsidiaries, including the Shares, are duly
authorized and are validly issued, fully paid and nonassessable and
none of such shares have been issued in violation of any preemptive
rights of shareholders, the provisions of the applicable Articles or
Certificate of Incorporation or any applicable law. The Shares
constitute all of the issued and outstanding shares of capital stock
of the Company.
3.12 Options or Other Rights.
There is no outstanding right, subscription, warrant, call,
unsatisfied preemptive rights, option or other agreement of any kind
to purchase or otherwise to receive from the Company, any Subsidiary
or Seller any shares of the capital stock or any other security of the
Company or any Subsidiary, and there is no outstanding security of any
kind convertible into such capital stock.
3.13 Title to Shares.
Seller owns and holds beneficially and of record, free and
clear of any lien or other encumbrance, or owns of record and has full
power and authority to transfer and dispose of free and clear of any
claim, suit, proceeding, call, voting trust, proxy, restriction,
security interest, lien or other beneficial interest or encumbrance of
any kind or nature whatsoever (other than created by Buyer), all of
the Shares and, upon delivery of and payment for such Shares as herein
provided, Buyer will acquire good and valid title thereto, free and
clear of any claim, suit, proceeding, call, voting trust, proxy,
restriction, security interest, lien or other beneficial interest or
encumbrance of any kind or nature whatsoever.
3.14 Subsidiaries.
The sole first tier subsidiary corporation of the Company is
Thomasville Enterprises, Inc., a Vermont corporation (the "First Tier
Subsidiary"). The sole subsidiary corporations of the First Tier
Subsidiary are as set forth on Schedule 3.14 (collectively, the
"Second Tier Subsidiaries"). The First Tier Subsidiary and the Second
Tier Subsidiaries are referred to hereinafter collectively as the
"Subsidiaries" and individually as a "Subsidiary". Except as set
forth on Schedule 3.14, neither the Company nor any of the
Subsidiaries owns, directly or indirectly, any shares of capital stock
or any other security or interest in any other corporation,
partnership, entity or person. The Company has good and valid title
to all of the issued and outstanding shares of stock of the First Tier
Subsidiary, free and clear of any claim, suit, proceeding, call,
voting trust, proxy, restriction, security interest, lien or other
encumbrance of any kind or nature whatsoever, and the First Tier
Subsidiary has good and valid title to all of the issued and
outstanding shares of the stock of each of the Second Tier
Subsidiaries, free and clear of any claim, suit, proceeding, call,
voting trust, proxy, restriction, security interest, lien or other
encumbrance of any kind or nature whatsoever.
3.15 Compliance with Laws.
The Company and the Subsidiaries have complied in all
respects with all laws, statutes, rules, regulations and orders of,
and have secured all necessary permits and authorizations and licenses
issued by, federal, state, local and foreign agencies and authorities,
applicable to their business, properties and operations. This Section
3.15 does not relate to matters with respect to labor matters, tax
matters, employee benefit plans or environmental matters, which are
the subjects of Sections 3.20, 3.22, 3.25 and 3.27, respectively.
3.16 No Breach.
Except as disclosed on Schedule 3.16, the execution and
delivery of this Agreement by Seller, consummation of the transactions
herein contemplated and compliance with the terms of this Agreement do
not conflict with or violate any provision of the charter documents or
bylaws of Seller, the Company or any Subsidiary; nor do such actions
(a) conflict with, (b) result in a breach of the terms or conditions
of, (c) constitute a default under, (d) result in the creation of any
lien, security interest or encumbrance upon any of the capital stock
or assets of the Company or any Subsidiary, (e) give any third party
the right to accelerate any obligations under, or (f) require any
filing or the consent or approval under any material agreement,
contract, lease, license, permit, instrument or other arrangement to
which the Company or any Subsidiary is party or by which any of them
are bound or any of their assets are subject, or any law, statute,
rule or regulation to which Seller, the Company or any Subsidiary is
subject, or any order, judgment or decree to which Seller, the Company
or any Subsidiary is subject, or require Seller to make any filing
with or obtain the approval or consent of any foreign, federal, state,
county, local or other governmental or regulatory body, except for the
filing with the Federal Trade Commission and Antitrust Division of the
Department of Justice of Notification and Report Forms pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act") and the rules promulgated thereunder, and the expiration of
the waiting period and any extension thereof required to expire under
such Act and rules; provided, however, Seller makes no representations
with respect to the application to this Agreement and the transactions
contemplated hereby of antitrust laws or other laws or regulation
dealing with competition or restraint of trade.
3.17 Litigation.
Except as disclosed in Schedule 3.17, there are no legal or
governmental proceedings, actions, suits or arbitrations pending or,
to the best of Seller's knowledge, threatened with respect to which
the Company or any Subsidiary is a party or to which any property of
the Company or any Subsidiary is subject. Neither the Company nor any
of the Subsidiaries is in violation of any order, decree or judgment
of any court or arbitration tribunal or governmental board,
commission, instrumentality or agency.
3.18 Material and Affiliated Contracts.
Schedule 3.18 sets forth all oral and written contracts,
commitments, or other agreements to which the Company or any
Subsidiary is a party or to which the Company's or any Subsidiary's
assets or properties is bound or subject (a) having an annual cost to
the Company or any Subsidiary of $50,000 or more, (b) under which the
Company or any Subsidiary is entitled to receive $50,000 or more
annually, (c) covering indebtedness of the Company or any Subsidiary
in the principal amount of $50,000 or more, (d) covering the
employment of any employee of the Company or any Subsidiary where the
annual salary required is $50,000 or more or involving any obligation
to pay severance to any employee (regardless of amount), (e) covering
any other matter material to the business of the Company and any
Subsidiary, (f) which obligates Seller, the Company or any Subsidiary
to act as a guarantor irrespective of the amount involved, (g)
involving any franchise, dealer, showroom, distributor or
manufacturer's or sales representative contract which is not
terminable by the Company and its Subsidiaries on six months (or less)
notice without penalty, (h) restricting competition on the part of any
of the Company or any Subsidiary, (i) which is terminable by the other
party thereto upon a merger or change of control of the Company and
its Subsidiaries or (j) involving any purchase order which has an
annual cost to the Company and the Subsidiaries in excess of $250,000
and which has a term of 6 months or more. Buyer acknowledges and
agrees that, except for purchase orders required to be disclosed in
(j) above, no purchase order shall be required to be disclosed on
Schedule 3.18. There are no contracts, agreements, purchase orders,
commitments, leases, agreements, including loan arrangements, between
the Company or any Subsidiary and any of their officers, directors or
shareholders, or any related or affiliated person, corporation or
other entity, except as set forth on Schedule 3.18 (a true and correct
and complete copy of each such written document and a true and correct
and complete written description of each such oral relationship having
heretofore been delivered by Seller to Buyer), and none shall be
entered into by the Company or any Subsidiary from the date hereof
through the Closing Date without the prior written consent of Buyer.
Each such contract, commitment or other agreement is legal, valid,
binding, enforceable obligation of the Company and/or the Subsidiary
or Subsidiaries which is a party thereto. Neither the Company nor any
of the Subsidiaries nor, to the knowledge of Seller, any other party
thereto, is in material breach or material default of any such
contract, commitment or other agreement nor has any event occurred
which with notice or lapse of time would constitute such a breach or
default or permit termination, modification or acceleration by any
third party thereunder.
3.19 Licenses and Permits.
The Company and the Subsidiaries have all licenses, permits
and other authorizations from federal, state, local and other
governmental or administrative authorities necessary for the conduct
of their respective businesses and all present business activities of
the Company and the Subsidiaries. Except as set forth in Schedule
3.19, (a) each of said permits, licenses and other authorizations is
in full force and effect, (b) the Company and the Subsidiaries are in
compliance with the terms, provisions and conditions thereof, and (c)
there are no outstanding violations, notices of noncompliance,
judgments, consent decrees, agreed orders or judicial or
administrative action(s) or proceeding(s) affecting any of said
permits, licenses and other authorizations. This Section 3.16 does
not relate to matters with respect to environmental matters, which are
the subject of Section 3.27.
3.20 Labor Matters.
No union is certified as collective bargaining agent to
represent any employee of the Company or any Subsidiary. Except as
set forth in Schedule 3.20, the Company and the Subsidiaries are in
compliance with all applicable laws pertaining to employment and
employment practices, terms and conditions of employment, and wages
and hours. Except as set forth on Schedule 3.20, neither the Company
nor any Subsidiary (a) is a party to, involved in or threatened by any
labor dispute, work stoppage, unfair labor practice charge, labor
arbitration proceeding or grievance proceeding, (b) is currently
negotiating any collective bargaining agreement or (c) is aware of any
threatened work stoppage, strike or filing by any employee or employee
group seeking recognition as a collective bargaining representative or
unit. This Section 3.20 does not relate to matters with respect to
employee benefit plans, which are the subject of Section 3.25.
3.21 Charters and Bylaws.
True and complete copies of the charter documents and bylaws
of the Company and the Subsidiaries (and all amendments thereto at any
time prior to the date of this Agreement), and the minute books
thereof have been provided to Buyer. The minute books of the Company
and the Subsidiaries contain true and complete originals or copies of
all minutes of meetings of and actions by the stockholders, Boards of
Directors and all committees of the Boards of Directors of the Company
and the Subsidiaries. The aforesaid charter documents and bylaws are
true, correct and complete as of the date hereof, and there will be no
amendments or additions thereto prior to the Closing without the prior
written consent of Buyer.
3.22 Tax Matters.
(a) Except as set forth on Schedule 3.22(d), the
Company and the Subsidiaries have properly prepared and filed, or have
caused to be properly prepared and filed, in a timely manner, all
Returns required to be filed by them on or prior to the date hereof,
and have paid (or withheld and paid over) or will pay all of such
Taxes shown as due and payable on such Returns. All such Returns that
have been filed are true, complete and correct in all respects.
The Company and the Subsidiaries have properly accrued and
reflected on the Latest Balance Sheet, and have thereafter to the date
hereof properly accrued all liabilities for taxes and assessments, and
will timely and properly file all such federal, state, local and
foreign Returns which it is required to file for any taxable period
ending on or before the Closing Date, either on its own behalf or on
behalf of its employees or other persons or entities, all such Returns
to be true and correct and complete in all respects, and will pay or
cause to be paid when due all Taxes which have become due and payable
pursuant to such Returns for all taxable periods ending on or before
the Closing Date.
(b) Member of Affiliated Group. Since 1988, the
Company and the Subsidiaries have been members of an affiliated group
of corporations within the meaning of section 1504 of the Code, with
respect to which Parent is and at all times has been the common
parent, and have joined in or will join in the filing of Parent's
consolidated federal income tax returns for all its taxable periods
ending on or prior to the Closing Date. Since 1988, neither the
Company nor any of the Subsidiaries have been a member or any other
affiliated group of corporations within the meaning of section 1504 of
the Code.
(c) Statutes of Limitations. No waiver or extension
of any statute of limitations is in effect with respect to Taxes or
Returns of the Company, the Subsidiaries, Parent, Seller or any Tax
Affiliate.
(d) Tax Audits. The United States Internal Revenue
Service has examined the consolidated federal Income Tax Returns of
Parent which include the Company and Subsidiaries for all years up to
and including the year ended December 31, 1992. The separate state,
local and foreign Income Tax Returns of the Company and the
Subsidiaries for taxable periods ending on or after December 31, 1991
have been audited as set forth in Schedule 3.22(d). The combined
state and local income Returns in which the income of the Company and
the Subsidiaries are included for taxable periods ending on or after
December 31, 1991 have been audited as set forth in Schedule 3.22(d).
Except as set forth in Schedule 3.22(d), no audit is in
process, or pending with respect to the Company, the Subsidiaries',
Parents', Seller's or any Tax Affiliate's Returns, nor is any audit in
process, or pending in which issues have been raised specifically in
connection with present or former assets of the Company and the
Subsidiaries. To the knowledge of Seller, no audit is threatened with
respect to the Company s, any Subsidiary s, Parent s, Seller s or any
Tax Affiliate s Returns nor is any audit threatened in which issues
have been raised specifically in connection with present or former
assets of the Company and the Subsidiaries. All such issues raised in
connection with any past audits have been fully resolved or finally
settled and any deficiency in Taxes associated with such issues has
been satisfied.
(e) Returns Furnished. Seller has furnished to Buyer
or its counsel true and complete copies of (i) relevant portions of
tax audit reports, statements of deficiencies, closing or other
agreements received by the Company, the Subsidiaries, Parent or Seller
on behalf of the Company or the Subsidiaries relating to the assets or
business of the Company or the Subsidiaries from the Internal Revenue
Service, or from any other taxing authority (sometimes collectively
referred to as a "Taxing Authority") and (ii) all pro forma separate
federal, state and local income Returns of Company and Subsidiaries
and the relevant portions of all pro forma separate federal, state,
local and foreign Income Tax Returns of any Tax Affiliate relating to
the assets of Company and Subsidiaries for the Company and the
Subsidiaries taxable periods ending on or after December 31, 1991.
(f) Affiliated Group Allocation Agreement. The
Company and the Subsidiaries are parties to an unwritten affiliated
group consolidated return tax allocation agreement with Parent and its
Tax Affiliates.
(g) Foreign Taxes. None of the Company, the
Subsidiaries, Parent or Seller is liable for taxes to any foreign
taxing authority. Except as provided in Schedule 3.22(g), Company and
Subsidiaries do not have and have not had a permanent establishment in
any foreign country, as defined in any applicable tax treaty or
convention between the United States and such foreign country, any
branch operation in a foreign county or any other taxable presence in
a foreign jurisdiction. The Company, each Subsidiary, Parent and
Seller have evidence of payment of all Taxes of a foreign country, if
any, paid or accrued from the date of formation of each of them,
respectively.
(h) Accounting Methods. None of the Company, or the
Subsidiaries nor any Tax Affiliate is required to include in income
any adjustment under Section 481(a) of the Code by reason of a change in
accounting method initiated by the Company, the Subsidiaries or any
Tax Affiliate and the Internal Revenue Service has not proposed any
such adjustment or change in accounting method.
(i) Definitions. For purposes of this Agreement the
following definitions shall apply:
(1) "Code" shall mean the Internal Revenue Code
of 1986, as amended, and/or, where appropriate, its predecessor,
the Internal Revenue Code of 1954, as amended, or any successor
thereto.
(2) "Income Tax" shall mean (i) federal, state,
local or foreign income or franchise taxes or other taxes
measured by income and all other taxes reported on Returns which
include federal, state or local income or franchise taxes or
other taxes measured by income, together with any interest,
penalties or additions to tax imposed with respect thereto and
(ii) any obligations under any agreements or arrangements with
respect to any Income Taxes described in clause (i) above.
(3) "Returns" shall mean all returns including
without limitation all returns, declarations, forms, reports,
estimates, information statements, schedules, any amendments
thereto and returns relating to or required by law to be filed by
the Company or the Subsidiaries in connection with any Taxes and,
in the case of consolidated or combined tax returns, by Parent on
behalf of the Company or any Subsidiary, and all information
returns (e.g., Form W-2, Form 1099) and reports relating to Taxes
of the Company or any Subsidiary. Any one of the foregoing
Returns shall be referred to sometimes as a "Return."
(4) "Tax Affiliate" shall mean, with respect to a
company, any member of an affiliated group as defined in section
1504 of the Code or member or a combined or unitary group of
which such company is or was a member (other than such company).
(5) "Taxes" shall mean (i) all taxes (whether
federal, possession, state, local or foreign or any governmental
unit, agency or political subdivision of the foregoing) based
upon or measured by income and any other tax whatsoever,
including, without limitation, gross receipts, profits, sales,
use, occupation, value added, ad valorem, transfer, franchise,
withholding, payroll, employment, excise, real estate gains, real
estate transfer or property taxes, customs duties, levies or
other charges, and any other governmental charges of the same or
similar nature or in lieu thereof, together with any interest or
penalties or additions to tax imposed with respect thereto and
(ii) any obligations under any agreements or arrangements with
respect to any Taxes described in clause (i) above. Any Taxes,
penalties or interest payable as a result of an audit of any
Return or any other adjustment with respect thereto shall be
deemed to have accrued in the period to which such Taxes,
penalties or interest are attributable.
3.23 Workers' Compensation
The Company and the Subsidiaries have been self-insured or
have carried workers' compensation and employer liability insurance
coverage as required by applicable workers' compensation laws or
regulations covering all employees employed by the Company and the
Subsidiaries.
3.24 Insurance.
Schedule 3.24 sets forth: (i) each insurance policy under
which the Company and the Subsidiaries or their assets or properties
is a direct or indirect beneficiary; (ii) the name of the insurer with
which such policy is or was carried; (iii) the liabilities covered
thereunder; (iv) the amount of coverage thereunder; (v) the period of
coverage thereunder; (vi) a designation of which policies provide
coverage on a "claims made" basis and which provide coverage on an
"occurrence basis"; and (vii) a designation of whether such policy is
carried by the Company and the Subsidiary, or by any other person.
Schedule 3.24 also contains a description of any program of self-
insurance maintained by Seller or by the Company or the Subsidiaries
to cover claims against or losses incurred by the Company or the
Subsidiaries arising on or prior to the Closing Date. All insurance
policies and programs of self insurance listed on Schedule 3.24 will
be maintained or will be replaced with substantially equivalent
policies or programs and such coverage will not be canceled or
terminated prior to the Closing. Seller shall have no obligation to
continue any such insurance after the Closing.
3.25 Employee Benefit Plans.
(a) Whenever any of the terms set forth below is used
in this Agreement, it shall have the following meaning: (i) "COBRA"
means any liability or obligation to provide continued health care
coverage under ERISA Section 601 or in Code Section 4980B; (ii)
"Employee Benefit Arrangement" means any employment, severance, or
similar contract, arrangement, or policy (exclusive of any such
contract, arrangement or policy which is terminable within 30 days
without liability), or any plan or arrangement providing for severance
benefits, insurance coverage (including pursuant to any self-insured
plan or arrangement), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, fringe benefits
(other than retirement benefits, deferred compensation, profit sharing
and compensation benefits), sick leave, maternity, paternity, family
leave or other leave, bonuses, stock options, stock appreciation
rights, or other forms of incentive compensation or post-retirement
insurance or welfare benefits, any employment consulting, engagement
or retainer agreement, in each such case other than any Non-U.S.
Employee Benefit Arrangement; (iii) "Employee Benefit Plan" has the
meaning set forth in ERISA Section 3(3); (iv) "ERISA" means the
Employee Retirement Income Security Act of 1974, as amended; (v)
"ERISA Affiliate" means any entity which would be treated as a single
employer together with the Company and any Subsidiary under Code
Section 414; (vi) "Multi-Employer Plan" has the meaning set forth in
ERISA Section 3(37) or ERISA Section 4001(a)(3); (vii) "Non-U.S.
Employee Benefit Arrangement" means any employment, severance, or
similar contract arrangement, or policy, whether or not considered
legally binding, or any plan or arrangement providing for severance
benefits, insurance coverage (including pursuant to any self-insured
plan or arrangement), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, fringe
benefits, sick leave, maternity, paternity, family leave or other
leave, retirement benefits, deferred compensation profit-sharing,
bonuses, stock options, stock appreciation rights, or other forms of
incentive compensation or post-retirement insurance, compensation, or
benefits, any employment, consulting, engagement or retainer agreement
for the benefit of non-U.S. employees, non-U.S. former employees or
non-U.S. consultants; (viii) "PBGC" means the Pension Benefit Guaranty
Corporation, or any successor agency ; (ix) "Prohibited Transaction"
has the meaning set forth in ERISA Section 406 in Code Section 4975;
and (x) "Reportable Event" has the meaning set forth in ERISA Section
4043.
(b) Schedule 3.25(b) lists each Employee Benefit Plan
covered by or subject to ERISA that any of Parent, Seller, the
Company, and/or any Subsidiary maintains or administers, or to which
any of them contributes, in each such case covering any employee or
former employee of the Company and/or any Subsidiary. There are no
retirement benefit, deferred compensation, profit sharing or
compensation benefit plans that any of Parent, Seller, the Company
and/or the Subsidiaries maintains or administers, or to which any of
them contributes, in each case covering any employee of the Company or
former employee and/or any Subsidiary, which is not an Employee
Benefit Plan. There are no negotiations, demands or proposals which
are pending or threatened which concern matters now covered, or that
would be covered, by any Employee Benefit Plan.
(c) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in operation
with the applicable requirements of any and all statutes, orders or
governmental rules or regulations currently in effect, including but
not limited to ERISA, the Code, and other applicable laws. Parent,
Seller, Company and each of the Subsidiaries has performed all
obligations required to be performed by them under, and are not in
default under or in violation of, the terms or any of the Employee
Benefit Plans.
(d) All required notices, reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports, Forms
PBGC-1, and Summary Plan Descriptions) have been filed or distributed
where required with respect to each such Employee Benefit Plan. The
requirements of Part 6 of Subtitle B of Title I of ERISA and of Code
Sec. 4980B as well as the applicable provisions of the Social Security
Act and the Public Health Service Act have been met with respect to
each such Employee Benefit Plan that is a group health plan (within
the meaning ERISA Sec. 601 and Code Sec. 4980B).
(e) All contributions (including all employer
contributions and employee salary reduction contributions), premiums
and administrative charges which are due and payable with respect to
any Employee Benefit Plan for all periods ending prior to the Closing
Date have been or will be made prior to the Closing Date by Parent,
Seller, the Company, and/or the Subsidiaries in accordance with
applicable law and the terms of each such Employee Benefit Plan.
(f) Each such Employee Benefit Plan which is an
employee pension benefit plan and which is intended to meet the
requirements of a qualified plan under Code Sec. 401(a) has either (i)
received a favorable determination letter from the Internal Revenue
Service covering such Employee Benefit Plan as amended for the Tax
Reform Act of 1986, the Unemployment Compensation Act of 1992, and the
Omnibus Budget Reconciliation Act of 1993 (and the related trust has
been determined to be exempt from taxation under Section 501(a) of
the Code), or (ii) timely applied to the Internal Revenue Service for
a favorable determination letter covering such Employee Benefit Plan.
No amendment made (or the failure of such amendment to be made) to any
such Employee Benefit Plan subsequent to the date of such
determination letter has adversely affected the qualified status of
any such plan, and Seller knows of no fact or set of circumstances
that would adversely affect such qualification prior to the Closing.
(g) Seller has delivered to Buyer correct and complete
copies of the current plan document and summary plan description, the
most recent favorable determination letter received from the Internal
Revenue Service, the most recent Form 5500 Annual Report filed with
the Internal Revenue Service, the three most recent actuarial reports,
and all related trust agreements, insurance contracts, and other
funding agreements which implement or evidence each such Employee
Benefit Plan, in each case as applicable to such Employee Benefit
Plan. In addition, to the extent applicable with respect to each
Employee Benefit Plan, Seller has delivered to Buyer (i) correct and
complete copies of any Form 5310 and related filings with the PBGC;
(ii) ruling letters and any outstanding requests for ruling letters
with respect to the tax exempt status of any VEBA which is
implementing any Employee Benefit Plan; and (iii) general notification
to employees of their rights under Code Section 4980B and form of
letters distributed upon the occurrence of a qualifying event
described in Code Section 4980B, in the case of an Employee Benefit
plan that is a "group health plan" as defined in Code Section 162(i).
(h) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan (and there is no fact or
circumstance which may lead to the occurrence of any such Prohibited
Transaction) and no plan fiduciary nor any officer, director, or
employee of Parent, Seller, the Company or any of the Subsidiaries has
any liability for breach of fiduciary duty or any other failure to act
or comply in connection with the administration or investment of the
assets of or otherwise involving any such Employee Benefit Plan. No
action, suit, arbitration, proceeding, hearing, claim, or
investigation with respect to the administration of or otherwise
involving the assets of any such Employee Benefit Plan (other than
routine claims for benefits) is pending or, to the knowledge of any
facts which would or could give rise to any action, suit, grievance,
arbitration or other manner of litigation, or claim.
(i) Schedule 3.25(i) lists any Employee Benefit
Arrangement providing medical, health, or life insurance or other
welfare-type benefits for currently (or future) retired or terminated
employees, their spouses, or their dependents (other than in
accordance with Code Sec. 4980B) which any of Parent, Seller, the
Company and the Subsidiaries maintains or administers, or to which any
of them contributes, in each case covering any employee or former
employee of any of the Company and the Subsidiaries.
(j) With respect to each Employee Benefit Plan which
is an employee pension benefit plan subject to Title IV of ERISA that
any of the Parent, Seller, the Company, the Subsidiaries, and their
ERISA Affiliates maintains or administers or ever has maintained or
administered, or to which any of them contributes, ever has
contributed, or ever has been required to contribute, in each such
case since January 1, 1990:
(i) No such employee pension benefit plan has been completely or
partially terminated or been the subject of a Reportable
Event as to which notices would be required to be filed with
the PBGC, and no proceeding by the PBGC to terminate any
such employee pension benefit plan has been instituted or
threatened.
(ii) None of the Company, the Subsidiaries, and their respective
ERISA Affiliates has any liability to the PBGC (other than
for PBGC premium payments) or otherwise under ERISA or under
the Code (including any withdrawal liability or any
accumulated funding deficiency, whether or not waived,
within the meaning of ERISA Section 302 or Code Section 412,
or any termination liability under ERISA Section 4062 or 4063).
(k) Neither Parent, Seller, the Company, nor any of the
Subsidiaries contributes, ever has contributed, ever has been required
to contribute, or has ever been a participant in a Multiemployer Plan
in each such case during the period since January 1, 1985 and covering
any employee or former employee of any of the Company and the
Subsidiaries.
(l) Schedule 3.25(l) lists each Employee Benefit
Arrangement other than those described in Schedule 3.25(b) that has
been entered into, maintained, or administered, as the case may be, by
any of Parent, Seller, the Company, and the Subsidiaries and that
currently covers any employee or former employee of any of the Company
and the Subsidiaries. Each such Employee Benefit Arrangement and the
administration thereof complies with its terms and with the
requirements of applicable statutes, orders, rules, and regulations.
(m) Since January 1, 1990, neither Seller, the Company
nor the Subsidiaries has terminated or taken action to terminate any
Employee Benefit Plan covering any employee or former employee of the
Company and the Subsidiaries.
(n) The statements of assets and liabilities of the
Employee Benefit Plans covering any employee or former employee of any
of the Company and the Subsidiaries as of the end of the most recent
three fiscal years for which information is available, and the
statements of changes in fund balances, financial position and net
assets available for benefits under such Employee Benefit Plans for
such fiscal years, copies of which have been certified by Seller and
furnished to Buyer, fairly present the financial conditions of such
Employee Benefit Plans as of such date and the results of operations
thereof for the year ended on such date, all in accordance with GAAP
applied on a consistent basis. The actuarial assumptions used for
funding purposes have not been changed since the last written report
of actuaries on such Employee Benefit Plans, which written reports
have been furnished to Buyer.
(o) With respect to any Employee Benefit Plan covering
any employee or former employee of any of the Company and the
Subsidiaries which is a welfare plan as defined in Section 3(1) of
ERISA; (i) each such welfare plan which is intended to meet the
requirements for tax-favored treatment under Subchapter B of Chapter 1
of the Code meets such requirements; and (ii) there is no disqualified
benefit (as such term is defined in Code Section 4976(b)) which would
subject the Company or Buyer to a tax under Code Section 4976(a).
(p) Each Employee Benefit Plan covering any employee
or former employee of any of the Company and the Subsidiaries and each
Employee Benefit Arrangement covering any employee or former employee
of any of the Company and the Subsidiaries may be amended or
terminated by Parent, Seller, the Company or the Subsidiaries or Buyer
on or at any time after the Closing Date.
(q) The Company and the Subsidiaries have no liability
under ERISA or the Code as a result of their being members of a group
described in Code Sections 414(b), (c), (m) or (o).
(r) Neither Parent, Seller, the Company nor any
Subsidiary contributes, ever has contributed, ever has been required
to contribute, has ever been a participant in, or has any obligations
or liabilities under any Non-U.S. Employee Benefit Arrangement
covering any employee or former employee of the Company or any
Subsidiary.
(s) All expenses and liabilities relating to the
Employee Benefit Plans have been, and will on the Closing Date be
fully and properly accrued on the books and records of the Company and
the Subsidiaries and the financial statements of the Company and the
Subsidiaries reflect all of such liabilities in a manner satisfying
the requirements of GAAP applied on a consistent basis.
3.26 Necessary Property.
The Company and the Subsidiaries own, lease, or have the
valid and enforceable right to use all rights, properties and assets,
tangible or intangible, which are presently used in the conduct of
their respective businesses as presently conducted and as presently
proposed to be conducted until the Closing Date and, to the knowledge
of Seller, immediately following the Closing Date the Company and the
Subsidiaries will have the same rights with respect to such rights,
properties and assets.
3.27 Environmental Matters.
Except as disclosed in Schedule 3.27:
(a) the Company and the Subsidiaries have obtained and
hold all Environmental Permits, each of which is listed on Schedule
3.27;
(b) the Company and the Subsidiaries are in
substantial compliance with all terms, conditions and provisions of
all (i) Environmental Permits and (ii) applicable Environmental Laws;
(c) there are no pending, or to the knowledge of the
Company or the Subsidiaries: (i) threatened Environmental Claims
against the Company or the Subsidiaries; and (ii) neither the Company
nor the Subsidiaries are aware of any facts or circumstances which are
likely to form the basis for any Environmental Claim against the
Company or the Subsidiaries;
(d) no Releases of Hazardous Materials (except in
material compliance with applicable Environmental Laws) have occurred
at, from, in, to, on, or under any Site during the time when the
Company or the Subsidiaries owned, leased or operated thereon and, no
such releases of Hazardous Materials occurred prior to the time that
the Company or the Subsidiary owned, leased or operated thereon, that
could give rise to an Environmental Claim against the Company or the
Subsidiaries;
(e) neither the Company nor the Subsidiaries
(including any predecessor thereof) nor any entity previously owned by
the Company or the Subsidiaries, during the time when the Company or
the Subsidiaries owned such entity and to the knowledge of the Company
and the Subsidiaries prior to the time the Company owned such entity,
has transported or arranged for the treatment, storage, handling,
disposal, or transportation ofany Hazardous Material to any off-Site
location which is an Environmental Clean-up Site.
(f) No Site is on the National Priority List or any
state equivalent list, or to the knowledge of Seller, a proposed
Environmental Clean-up Site;
(g) There are no liens arising under or pursuant to
any Environmental Law on any property currently owned, leased or
operated by the Company or any Subsidiary and, to the knowledge of
Seller, there are no facts, circumstances, or conditions that could
reasonably be expected to restrict, encumber, or result in the
imposition of special conditions under any Environmental Law with
respect to the ownership, occupancy, development, use, or
transferability of any such property;
(h) there are no underground storage tanks,
polychlorinated biphenyl-containing equipment or friable or damaged
asbestos-containing material at any property now owned, leased or
operated by the Company or the Subsidiaries not in substantial
compliance with applicable Environmental Law; and
(i) to the knowledge of Seller, the currently
anticipated aggregate expenditures, solely of equipment, of the
Company and the Subsidiaries are not in excess of $1,000,000 to comply
with applicable Maximum Achievable Control Technology ( MACT )
standards, National Emissions Standards for Hazardous Air Pollutants
( NESHAPs ), or Reasonably Available Control Technology (RACT) under
the existing Federal Clean Air Act and existing state laws regulating
air emissions.
Within 72 hours following the execution of this Agreement by
the parties hereto, Seller will deliver or make available to Buyer all
environmental investigations, studies, audits, tests, reviews or other
analyses with respect to any Site (including any properties owned,
leased or operated by any predecessors of the Company or the
Subsidiaries or any entities previously owned by the Company or
Subsidiaries) ( Environmental Reports ) conducted by, on behalf of,
and which are in possession of the Company, the Subsidiaries, Seller
or Parent.
For purposes of this Agreement, the following definitions
shall apply:
"Environment" means all air, surface water, groundwater, or
land, including land surface or subsurface, including all fish,
wildlife, biota and all other natural resources.
"Environmental Claim" means any and all administrative or
judicial actions, suits, orders, claims, liens, notices, notices of
violations, investigations, complaints, requests for information,
proceedings, or other written communication, whether criminal or
civil, pursuant to or relating to any applicable Environmental Law by
any person (including but not limited to any Governmental or
Regulatory Authority, private person and citizen's group) based upon,
alleging, asserting, or claiming any actual (i) violation of or
liability under any Environmental Law, (ii) violation of any
Environmental Permit, or (iii) liability for investigatory costs,
cleanup costs, removal costs, remedial costs, response costs, natural
resource damages, property damage, personal injury, fines, or
penalties arising out of, based on, resulting from, or related to the
presence, Release, or threatened Release into the Environment, of any
Hazardous Materials at any location, including but not limited to any
off-Site location to which Hazardous Materials or materials containing
Hazardous Materials were sent for handling, storage, treatment, or
disposal.
"Environmental Clean-up Site" means any location which is
listed or proposed for listing on the National Priorities List, or on
any similar state list of sites requiring investigation or cleanup, or
which is currently the subject of any pending or threatened action,
suit, proceeding, or investigation related to or arising from any
alleged violation of any Environmental Law or Release or threatened or
suspected Release or a Hazardous Material.
"Environmental Law" means any and all current, federal,
state, local, provincial, and foreign, civil and criminal laws,
statutes, ordinances, orders, codes, rules, regulations, Environmental
Permits, judgments, decrees, injunctions, or agreements with any
Governmental or Regulatory Authority, relating to the protection of
health and the Environment, and/or governing the handling, use,
generation, treatment, storage, transportation, disposal, manufacture,
distribution, formulation, packaging, labeling, or Release of
Hazardous Materials, now existing, including but not limited to; the
Clean Air Act, 42 U.S.C. Sections 7401 et seq.; the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq.; the Hazardous
Material Transportation Act, 49 U.S.C. Sections 1801 et seq.; the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section
136 et seq.; the Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. Section 6901 et seq.; the Toxic Substances Control
Act, 15 U.S.C. Section 2601 et seq.; the Oil Pollution Act of 1990, 33
U.S.C. Section 2701 et seq.; and the state analogies thereto, and any
common law doctrine, including but not limited to, negligence,
nuisance, trespass, personal injury, or property damage related to or
arising out of the presence, Release, or exposure to a Hazardous
Material and, with respect to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section
9601 et seq. ( CERCLA ) any reauthorization, reenactment or replacement
thereof to the extent the same is no more stringent than the
provisions of CERCLA last in effect.
"Environmental Permit" means any federal, state, local,
provincial, or foreign permits, licenses, approvals, consents or
authorizations required by any Governmental or Regulatory Authority
under or in connection with any Environmental Law and includes any and
all orders, consent orders or binding agreements issued or entered
into by a Governmental or Regulatory Authority under any applicable
Environmental Law.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any
domestic or foreign state, country, city or other political
subdivision.
"Hazardous Material" means petroleum, petroleum hydrocarbons
or petroleum products, petroleum by-products, and any other chemicals,
materials, substances or wastes in any amount or concentration which
are now defined as or included in the definition of "hazardous
substances", "hazardous materials", "hazardous wastes", "extremely
hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", "pollutants", "regulated substances", "solid
wastes", or "contaminants" or words of similar import under any
Environmental Law.
"Release" means any current or prior spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing of a Hazardous Material into
the Environment.
"Site" means any of the real properties currently or
previously owned, leased or operated by the Company (including any
predecessors thereof) or the Subsidiaries (including any predecessors
thereof), including all soil, subsoil, surface waters and groundwater
thereat for purposes of this Section 3.27 of the Agreement.
3.28 Full Disclosure.
No representation or warranty of Seller in this Agreement
contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make
the statements contained herein or therein not misleading.
3.29 Limitation.
NO REPRESENTATION OR WARRANTY WHATSOEVER, OTHER THAN THE
EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 3, IS
MADE BY SELLER. SELLER EXPRESSLY HEREBY DISCLAIMS ANY OTHER SUCH
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that the statements
contained in this Article 4 are correct as of the date of this
Agreement, and will be correct as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article 4).
4.1 Organization and Corporate Power.
Buyer (a) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and (b)
is duly qualified to do business as a foreign corporation and is in
good standing in all jurisdictions where the failure so to qualify
would have a material adverse effect on Buyer. Buyer has full
corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
4.2 Authorization.
This Agreement has been duly authorized, executed and
delivered by Buyer and constitutes a valid and legally binding
agreement of Buyer, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
4.3 No Breach.
The execution and delivery of this Agreement by Buyer,
consummation of the transactions herein contemplated and compliance
with the terms of this Agreement will not conflict with or violate any
provision of the Articles of Incorporation or Certificate of
Incorporation, as the case may be, or any bylaw of Buyer; nor to the
best knowledge of Buyer, do such actions constitute a default of or
require the consent or approval under any agreement or instrument to
which Buyer is a party or by which Buyer's assets are bound, or
require Buyer to obtain the approval or consent of any foreign,
federal, state, county, local or other governmental or regulatory
body, except for the filing with the Federal Trade Commission and
Antitrust Division of the Department of Justice of Notification and
Report Forms pursuant to the HSR Act and the rules promulgated
thereunder, and the expiration of the waiting period and any extension
thereof required to expire under such Act and rules; nor will such
actions materially violate any applicable law, rule, regulation,
judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, presently applicable to
Buyer; provided, however, Buyer makes no representations with respect
to the application to this Agreement and the transactions contemplated
hereby of antitrust laws or other laws or regulation dealing with
competition or restraint of trade.
4.4 No Investigation.
There exists no investigation by any governmental or
regulatory authority, request for information or action by any third
party or legal proceeding, known to Buyer which seeks to prohibit or
restrain the consummation or performance of this Agreement or the
transactions contemplated hereby.
4.5 Buyer's Financing.
Buyer has provided to Seller copies of bank commitments and
other financing letters attached hereto as Schedule 4.5 (the
Financing Letters ) relating to the financing described in Section
7.7 below which have been executed by Buyer and delivered by Buyer to
the lenders named therein. The Financing Letters have not been
revoked or modified. Buyer does not presently anticipate that it will
not satisfy the conditions to the financing set forth in the Financing
Letters (other than any conditions that relate directly to the Company
and the Subsidiaries).
4.6 Securities Act of 1933.
Buyer is acquiring the Shares solely for its own account and
for the purpose of investment only and not with a view to any
distribution thereof. Buyer acknowledges that the Shares are not
registered under the Securities Act of 1933, as amended, and that such
Shares may not be transferred or sold except pursuant to the
registration provisions of such Act or pursuant to an applicable
exemption therefrom and pursuant to applicable state securities laws
and regulations.
5. COVENANTS AND AGREEMENTS
5.1 Preservation of Business.
From the date hereof through the Closing Date, Seller shall
cause the Company and the Subsidiaries to conduct their respective
businesses in the ordinary course of business consistent with past
business practices, and shall use its commercially reasonable efforts
to cause the Company and the Subsidiaries to preserve their business
organizations intact, keep available the services of their present
employees, consultants and agents, maintain their present suppliers
and customers and preserve their goodwill.
5.2 Negative Covenants of Seller.
Seller covenants and agrees that from and after the date
hereof, neither the Company nor any Subsidiary will, except with the
prior written consent of Buyer:
(a) Propose or effect a split or reclassification of
its outstanding capital stock or a recapitalization;
(b) Mortgage, pledge or otherwise encumber any assets,
or dispose of, or make any agreement with respect to the disposition
of, any assets except for the sale of the same in the ordinary course
of business;
(c) Make any capital commitment or expenditure of more
than $500,000 for any single commitment or $2,500,000 in the
aggregate, or incur or become liable for any other obligation or
liability except current liabilities in the ordinary course of
business;
(d) Adjust in any way, either directly or indirectly,
the compensation or benefits paid or payable to any shareholder,
officer, director, consultant, agent or employee of the Company or any
Subsidiary except for such adjustments as may be made in the ordinary
course of business and except as required under existing agreements
described in one or more of the Schedules hereto or enter into any
employment or severance agreement with any of the foregoing;
(e) Take any action, or enter into contract commitment
or other agreement, which if taken or in effect on the date hereof,
would be required to be disclosed on any Schedule hereto.
5.3 Seller Tax Matters.
(a) Federal Taxes for Periods Through the Closing
Date. Subject to Section 5.3(c) below, Seller will include the income
of the Company and the Subsidiaries (including any deferred income
triggered into income by Treas. Reg. Sections 1.1502-13 and Treas.
Reg. Sections 1.1502-14 and any excess loss accounts taken into income
under Treas. Reg. Sections 1.1502-19) on its consolidated federal
Income Tax Returns for all periods through the Closing Date and pay
any federal Income Taxes attributable to such income. Buyer will
cause the Company and the Subsidiaries to furnish information to
Seller for inclusion in Parent's consolidated federal Income Tax
Return for the period which includes the Closing Date in accordance
with Parent's past custom and practice. Seller will allow Buyer an
opportunity to review and comment upon such Income Tax Returns
(including any amended Returns) to the extent that they relate to the
Company or the Subsidiaries for taxable periods ending after the
Closing Date. Subject to Section 5.3(c) below, the income of the
Company and the Subsidiaries will be apportioned between the period up
to and including the Closing Date and the period after the Closing
Date by closing the books of the Company and the Subsidiaries as of
the end of the Closing Date.
(b) State, Local and Foreign Income Taxes. Seller
shall be liable for all state, local and foreign Income Taxes of the
Company and the Subsidiaries for all periods through the Closing Date.
Seller shall file returns for tax periods which end on or before the
Closing Date. Seller shall file such returns on a basis consistent
with past practice except for differences in filing that are required
by the effect of the Section 338(h)(10) elections on such returns.
Buyer shall file returns for tax periods which end after the Closing
Date. If any such return filed by Buyer includes any period which
begins on or before the Closing Date, Seller shall be liable for taxes
attributable to income in such return arising on or before the Closing
Date. The income of the Company and the Subsidiaries will be
apportioned between the period up to and including the Closing Date
and the period after the Closing Date based upon closing the books of
the Company and the Subsidiaries as contemplated in Section 5.3(a)
hereof. To the extent that the liability for such Income Tax is
reflected on a Return filed by Buyer, Seller shall pay to Buyer its
share of the tax shown on such Return as provided in Section 5.4
hereof.
5.4 Buyer Tax Matters.
(a) Except as otherwise provided in Sections 5.3(a)
and 5.3(b), Buyer shall be responsible for filing all Returns required
to be filed by or on behalf of Company and Subsidiaries, after the
Closing Date.
(b) With respect to any Income Tax Return required to
be filed by Buyer for a taxable period of Company and Subsidiaries
which includes (but does not close on) the Closing Date, Buyer shall
provide Seller and its authorized representatives with copies of such
completed Income Tax Return and a statement certifying the amount of
Tax shown on such Income Tax Return that is allocable to Seller
pursuant to Section 5.3(b) hereof (the "Statement") at least 30
calendar days prior to the due date for the filing of such Income Tax
Return, and Seller and its authorized representatives shall have the
right to review and approve such Income Tax Return and Statement prior
to the filing of such Income Tax Return. Seller and Buyer agree to
consult and resolve in good faith any issues arising as a result of
the review and approval of such Income Tax Return and Statement by
Seller or its authorized representatives and to mutually consent to
the filing of such Income Tax Return. No later than 5 business days
before the due date for payment of Taxes with respect to such Income
Tax Return, Seller shall pay to Buyer an amount equal to the Taxes
shown on the Statement as being allocable to Seller pursuant to
Section 5.3(b) hereof.
5.5 Other Tax Matters.
(a) 338(h)(10). After the Closing, Buyer, Seller and
Parent will make an election under Section 338(h)(10) of the Code, and
any corresponding elections under state, local, or foreign tax law
(collectively a "Section 338(h)(10) Election"), with respect to the
purchase and sale of the capital stock of the Company and the
Subsidiaries indicated on Schedule 5.5(a) hereto. Seller will pay any
Tax attributable to making the Section 338(h)(10) Election, regardless
of the taxable period in which such Tax is payable.
(b) Allocation of Purchase Price. The parties agree
that the Purchase Price, the liabilities of the Company and the
Subsidiaries, and any adjustments thereto will be allocated among the
assets of the Company and the Subsidiaries in accordance with the
provisions of a Schedule of Tax Allocations (which will be prepared in
accordance with the provisions of Tres. Reg. Sections 1.338(h)(10)-
1(f)). Schedule 5.5(b) hereto sets forth Buyer and Seller s
preliminary estimate of such tax allocations as of the date hereof.
The Schedule of Tax Allocations as of the Closing Date shall be agreed
to by Seller and Buyer as soon as practicable after the Closing Date.
If Buyer and Seller are unable to agree on such Schedule, the Schedule
of Tax Allocations shall be determined on the basis of an appraisal
prepared by KPMG Peat Marwick. In the event of an adjustment to the
Purchase Price in accordance with this Agreement by reason of an
indemnity payment or pursuant to Section 2.3 hereof, such adjustment
shall be made to the Purchase Price of the assets of the Company or
the assets of the particular Subsidiary to which the indemnity payment
of Section 2.3 adjustment relates or from which it arose. If such
indemnity payment or Section 2.3 adjustment cannot be allocated to the
Company or a particular Subsidiary, such adjustment shall be allocated
to the assets of the Company. The parties will file all Returns
(including amended Returns and claims for refund) and information
reports in a manner consistent with such allocation.
(c) Information. Upon Buyer's reasonable request,
from time to time, Seller shall deliver or make available to Buyer all
information (including, without limitation, all work papers,
schedules, memoranda and other information prepared by Parent, Seller
or its affiliates, subsidiaries and agents, relating to the assets of
the Company and the Subsidiaries) reasonably available to Seller or
Parent and necessary to the preparation of Company and Subsidiaries'
Returns for periods ending after the Closing Date. Seller shall also
provide to Buyer, upon Buyer's written request and after they become
available to Seller or Parent, copies of the Company and the
Subsidiaries' separate pro forma federal income and state Income Tax
Returns for all tax years of Company and Subsidiaries ending on or
after December 31, 1988, together with any data or schedules
reasonably necessary to support the computations and information shown
on such returns. In the event of an audit of Buyer, the Company or
the Subsidiaries by a taxing authority with respect to any Return for
any taxable period or periods ending subsequent to the Closing Date,
Seller shall provide Buyer with such information which Seller or
Parent possesses as Buyer may reasonably request, in writing, with
respect to the Company and the Subsidiaries and shall otherwise
provide such assistance as Buyer may reasonably request in connection
with such audit. Seller and Parent shall maintain and preserve their
respective tax records with respect to the Company or the Subsidiaries
for at least seven years from the Closing Date. Upon Seller's
reasonable request, Buyer shall deliver or make available to Seller
all information reasonably available to Buyer and necessary to the
preparation of Seller's Returns for periods ending on or before
Closing Date. In the event of an audit of Seller, the Company or any
of the Subsidiaries by a taxing authority with respect to any Return
of the Company or a Subsidiary for any taxable period or periods
ending prior to the Closing Date, Buyer shall cause the Company and
the Subsidiaries to provide Seller with such information which the
Company or the Subsidiaries possess as Seller may reasonably request,
in writing, with respect to the Company and Subsidiaries and shall
otherwise provide such assistance as Seller may reasonably request in
connection with such audit. Buyer shall cause Company and
Subsidiaries to maintain and preserve their tax records with respect
to the Company or the Subsidiaries for at least seven years from the
Closing Date.
(d) Tax Audit. Buyer will allow Seller and its
counsel to participate at Seller s expense in any outside tax audit of
the Company s or the Subsidiaries state and local Tax Returns to the
extent that such audits relate to a tax or tax period for which the
Seller has any liability hereunder. Seller shall not settle, resolve,
compromise or otherwise resolve any state or local tax audit of the
Company or any Subsidiary on or before the Closing Date without the
prior written consent of Buyer, which consent will not be unreasonably
withheld.
(e) Participation. Seller will allow Buyer and its
counsel to participate at Buyer's own expense in any outside tax
audits of Parent's consolidated federal Income Tax Returns to the
extent that such audits relate to a tax or tax period for which the
Company and the Subsidiaries have liability hereunder.
(f) Termination of Existing Tax Sharing Agreements.
All tax-sharing agreements or similar agreements, whether written or
not, with respect to or involving the Company or the Subsidiaries
shall be terminated prior to the Closing Date.
(g) Tax Elections. No new elections with respect to
Taxes or any changes in current elections with respect to Taxes
affecting the Company or the Subsidiaries shall be made by Seller or
Parent after the date of this Agreement without the prior written
consent of Buyer.
(h) Transfer Taxes. Seller shall pay all transfer
taxes imposed in respect of the transactions contemplated by this
Agreement.
5.6 Intercompany Accounts.
On the Closing Date, all intercompany account balances
between the Company and the Subsidiaries, on the one hand, and Seller,
Parent and their respective subsidiaries and affiliates, on the other
hand, will be canceled and marked to zero without any payment by the
Company and the Subsidiaries or Seller, as the case may be.
5.7 Notice of Developments.
Each of Buyer and Seller shall give prompt notice (written
upon reasonable request) to the other of (i) to the extent known by
Buyer or Seller, as the case may be, the existence of any state of
facts, the occurrence or failure to occur of any event, the existence,
occurrence or failure of which to occur would be likely to cause (1)
any representation or warranty contained in this Agreement to be
untrue or inaccurate at any time from the date hereof to the Closing
Date, (2) any condition set forth in Article 6 or Article 7 to not be
satisfied (ii) any failure of the notifying party or its officers,
directors, employees, or agents to comply with or satisfy any
covenant, condition, or agreement to be complied with or satisfied by
it under this Agreement, and (iii) in the case of Seller, any known
material claims, actions, proceedings, or investigations commenced or
threatened, involving or affecting any of the properties or assets of
the Company and the Subsidiaries; provided, however, that no such
notification or failure to notify shall affect the representations,
warranties, covenants or indemnification obligations of the parties or
the conditions to the obligations to the parties hereunder.
5.8 Reasonable Efforts and Certain Filings.
Subject to the terms and conditions of this Agreement, Buyer
and Seller each will use its commercially reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable to consummate the transactions
contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Articles 6 and 7 below
including those relating to Buyer s financing). Buyer and Seller
shall cooperate with one another and use their respective best efforts
in preparing and filing the necessary notification and report forms
under the HSR Act by November 22, 1995. Without limiting the
generality of the foregoing, Seller will take, or cause to be taken,
all actions and do, or cause to be done, all things necessary and
desirable to obtain all material consents required for the
consummation of the transactions contemplated by this Agreement,
including without limitation consents required under the High Point
Showroom Lease, the Appomatox Town Center Lease and the Industrial
Revenue Bonds issued by the Industrial Development Authority of
Fluvanna County, Virginia (collectively the "IRB").
5.9 Employees and Employee Benefits.
(a) Continuation of Benefits. With respect to any
individuals who after the Closing Date continue to be employees of the
Company and the Subsidiaries and who were covered by an employee
welfare benefit plan and/or qualified defined contribution pension
plan maintained by Seller, Buyer will, effective as of the Closing
Date (i) establish a similar plan providing comparable benefits as
well as comparable pre-existing condition, waiting period, co-
insurance, and deductible provisions (collectively "eligibility
provisions"), or (ii) provide benefits comparable to the benefits
afforded similarly situated employees of Buyer. For purposes of
satisfying any eligibility provisions under such plans, Buyer will
credit such employees with all past service with Seller, the Company
and the Subsidiaries. Buyer shall waive any pre-existing condition
limitation under any such group health plan and the amount of any
expenses incurred before the Closing Date by employees of the Company
or any Subsidiaries before the Closing Date shall be taken into
account for purposes of satisfying the applicable deductible,
coinsurance and maximum out-of-pocket and lifetime maximum provisions
of such group health plan.
(b) Certain Statutory Requirements. As of the Closing
Date Buyer will assume and be solely responsible for any liability or
obligation that any of Seller and its affiliates may have for
providing continued health care coverage under COBRA with respect to
all individuals who are COBRA beneficiaries of the Company or any
Subsidiary as of the Closing Date under any health plan that covers
employees of the Company and the Subsidiaries, to the extent that the
Company and the Subsidiaries, in accordance with past custom and
practice, were responsible for such liability or obligation prior to
the Closing Date.
(c) Employee Pension Benefit Plans. As soon as
practicable after the Closing Date, and after giving and receiving
appropriate governmental notifications and approvals, the Parties
shall take the following actions with regard to those Employee Benefit
Plans listed on Schedule 3.25(b) (or shall cause the following actions
to be taken by the trustees, custodians, and, where appropriate,
actuaries and other professionals retained by such plans) in which any
participant was an employee of, was terminated with a deferred vested
benefit from, or was a retiree from any of the Company and the
Subsidiaries (or their respective predecessors) prior to the Closing
Date (such participants, together with their beneficiaries, are
referred to collectively herein as "Company Participants"):
(i) With respect to those Employee Benefit Plans
(indicated by an "A" in parentheses alongside its
listing in Schedule 3.25(b)) which are non-
qualified defined benefit plans, non-qualified
defined contribution plans, qualified defined
benefit plans, deferred compensation plans or
employee stock option plans, Parent, Seller, the
Company, and the Subsidiaries shall amend the
Employee Benefit Plans to provide, effective as of
the Closing Date, that each employee of the
Company and the Subsidiaries who is a participant
in any such Employee Benefit Plan shall have a
fully vested and nonforteitable right to any
benefit or account accrued in his or her name, in
each case as of the Closing Date. Effective as of
the Closing Date, the Company and the Subsidiaries
shall cease sponsorship of and participation in
such Employee Benefit Plans and such Employee
Benefit Plans shall be sponsored solely by Seller.
Parent, Seller and the Company and the
Subsidiaries shall take all actions necessary to
terminate the sponsorship and participation of the
Company and the Subsidiaries in such Employee
Benefit Plans and to ensure that Seller sponsors
such plans as of the Closing Date, and Seller
shall be solely responsible for all liabilities
and obligations with respect to such plans
following the Closing. With respect to those
Employee Benefit Plans which are qualified or non-
qualified defined benefit plans, Seller shall take
all actions necessary to amend such plans to
provide that for purposes of determining
participants eligibility for early retirement
benefits, service will include service with Buyer
and retirement from employment with Buyer shall be
treated as retirement from active employment with
Seller.
(ii) With respect to each Employee Benefit Plan
(indicated by a "B" in parentheses alongside its
listing on Schedule 3.25(b)) which is a tax-
qualified defined contribution pension plan (other
than an employee stock ownership plan) and which
covers Company Participants as well as other
participants ("Non-Company Participants"), Seller
shall direct to Buyer's successor plan and trustee
a transfer, in cash, securities (other than
securities of Seller or any affiliate), other
property, or any combination thereof as agreed
upon by the Parties pursuant to good faith
bargaining (or in particular investments (other
than securities of Seller or any affiliate) if
such plan permitted participant directed
investments and both such plan and Buyer s
successor plan and trustee will permit such
transfer of particular investments) of that
portion of such plan's assets (including all
outstanding Company Participant loans, if any, and
including allocable earnings and losses of such
plan or, in the case of participant-directed
investments, including earnings and losses of the
individual Company Participant accounts), valued
as of the date of such transfer, allocable to
those Company Participants with a benefit or
account (whether or not vested) under such plan
(other than benefits or accounts which have been
distributed in the normal course as of the date of
such transfer). Thereafter Buyer shall assume (or
the applicable Company or Subsidiary shall retain)
all liabilities and responsibilities relating to
such Company Participant benefits and accounts and
the assets so transferred. With respect to all
such directions for transfer, Buyer shall provide
to Seller an opinion of counsel, in the form
attached hereto as Exhibit A, to the effect that
each and every successor plan and trust to which
transfer is requested is (A) tax-qualified under
applicable provisions of Code Secs. 401(a) and
501(a) and (B) complies in all applicable respects
with Code Sec. 414(l). With respect to all
benefits accrued as of the date of the transfer of
assets, Buyer shall preserve under all such
successor plans all optional forms of benefits
which are protected under Code Sec. 411(d)(6).
From and after each such transfer of assets with
respect to each such Employee Benefit Plan, Seller
shall cease to have any liability or
responsibility for all liabilities and
responsibilities that Buyer has assumed (or that
the Company and the Subsidiaries has retained)
with respect to such plans, their assets, and the
Company Participants.
(iii) Seller will make available any and all
necessary records for the purpose of
computing or establishing all employee
benefits, and such other employee benefits
information or records as to provide for a
smooth and orderly transition, including but
not limited to statements of accrued benefits
as of the Closing Date under the defined
benefit pension plans and statements of
account balances as of the Closing Date under
the defined contribution plans.
(d) Other Employee Plans. Except as otherwise
provided in subsections (e) and (f) below, Buyer shall be responsible
for any liabilities or obligations with respect to events which
occurred and claims incurred prior to the Closing (including
liabilities and obligations for incurred but not reported claims
outstanding as of the Closing Date, for disabilities or periods of
sickness commencing prior to the Closing Date, and for workers
compensation claims arising prior to the Closing Date) with respect to
Employee Benefit Arrangements covering individuals who were employees
(including any employees on leave) of, or terminated or retired from,
the Company and the Subsidiaries prior to the Closing Date.
(e) Post Employment Obligations. With respect to
employees of any of the Company and the Subsidiaries who terminated
employment with the Company and the Subsidiaries prior to the Closing
Date, Buyer shall (except as provided in Sections 5.9(c)(i) and
5.9(f)) be solely responsible for any and all liabilities and
obligations reflected as FAS 106 and 112 liabilities on the Closing
Date Balance Sheet and Seller shall (except as provided in Section
5.9(c)(ii)) be solely responsible for any and all other post
employment liabilities and obligations arising under the Employee
Benefit Plans and the Employee Benefit Arrangements.
(f) Thomasville Group Insurance Plan. Seller shall be
solely responsible for any liabilities or obligations with respect to
events which occurred and claims incurred prior to the Closing Date
(including liabilities and obligations for incurred but not reported
claims outstanding as of the Closing Date, and for disabilities or
periods of sickness commencing prior to the Closing Date) by
individuals who were employees (including any employees on leave) of,
or terminated or retired from, the Company and the Subsidiaries and
their dependents with respect to the Group Insurance Plan for
Employees of Thomasville Furniture Industries, Inc. in accordance with
the terms thereof, which plan encompasses the Group Life Insurance
Program for Hourly Employees of Thomasville Furniture Industries,
Inc., the Group Life Insurance Program for Salaried Employees and
Marketing Representatives of Thomasville Furniture Industries, Inc.,
the Group Long Term Disability Insurance for Salaried and Commissioned
Employees of Thomasville Furniture Industries, Inc., the Group Dental
Assistance Plan for Employees of Thomasville Furniture Industries,
Inc., and the Group Medical Care Benefits for Employees of Thomasville
Furniture Industries, Inc.
(g) Liabilities Triggered in Connection with the
Transaction. To the extent that either the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby (i) results in any payment (including, without limitation,
severance, unemployment compensation, deferred compensation, golden
parachute or otherwise) becoming due to any officer, director,
employee or other person from the Company or any of the Subsidiaries
under any Employee Benefit Plan, Employee Benefit Arrangement or
otherwise, (ii) increases any benefits otherwise payable under any
Employment Benefit Plan or Employee Benefit Arrangement, or (iii)
results in the acceleration of the time of payment or vesting of any
such benefits, Seller shall be solely responsible and liable for such
payment, increased benefits or acceleration of benefits.
(h) No Third Party Beneficiaries. Nothing contained
in this Section 5.9 or elsewhere in this Agreement shall grant or
create in any person not a party hereto any right to be offered, or to
continue, employment or to receive any benefit as an employee or
former employee. Without limiting the generality of the foregoing,
after the Closing neither Buyer, the Company nor any of the
Subsidiaries shall have any obligation arising out of this Agreement
to continue the employment of or provide any benefit to any person who
was or is employed by the Company or the Subsidiaries, and neither
Buyer, the Company nor the Subsidiaries assumes any liability or
obligation under any Employee Benefit Plan established or maintained
by Seller except as set forth in this Agreement.
5.10 Exclusivity.
Seller and Parent will not, and shall use their respective
best efforts to cause their investment bankers, attorneys, accountants
and other agents retained by Seller or Parent not to, solicit,
initiate, or encourage, directly or indirectly, the submission of any
proposal or offer from any third party or engage in negotiations or
discussions with, or furnish any information or data to, any third
party, relating to the acquisition of any capital stock or all or
substantially all of the assets of any of the Company and the
Subsidiaries (including any such acquisition structured as a merger,
consolidation, or share exchange), or respond to or discuss such a
proposal or offer if made.
5.11 Non-Hire.
With respect to any person who is an executive, management
or supervisory employee of the Company and the Subsidiaries on the
date hereof, for a period of 18 months following the Closing, neither
Parent (or any division or subsidiary of Parent) nor Seller will,
without the prior written consent of Buyer, hire such person or
solicit, encourage, entice or induce such person to terminate his or
her employment by the Company and the Subsidiaries.
5.12 Noncompetition.
As an inducement for Buyer to enter into this Agreement,
Seller and Parent agree that for a period of three years following the
Closing Date (the "Non-Competition Period"), neither of them (nor any
division or subsidiary of Parent) shall directly or indirectly own,
manage, operate, assist, join, control or participate in the
ownership, management, operation or control of, or be connected as a
partner, consultant or otherwise with, any third party that directly
or indirectly competes with, or is about to compete with, the business
of the Company and the Subsidiaries as it shall exist on the Closing
Date. In recognition that the business of the Company and the
Subsidiaries is currently conducted throughout the world, the
restrictions set forth in the foregoing sentence shall have no
geographic limits. In the event the restrictions set forth in this
subsection (5.12) shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its extending over too
great a period of time or over too great a geographical area or by
reason of its being too extensive in any other respect, it shall be
interpreted to extend only over the maximum period of time for which
it may be enforceable and/or over the maximum geographical area as to
which it may be enforceable and/or to the maximum extent in all other
respects as to which it may be enforceable, all as determined by such
court in such action. Nothing contained in this subsection (5.12)
shall restrict Seller, Parent or Parent s pension plan from owning 5%
or less of the corporate securities of any third party which
securities are listed on any national securities exchange or
authorized for quotation on the Automated Quotation System of the
National Association of Securities Dealers, Inc., if none of them has
any other connection or relationship, direct or indirect, with such
third party, nor prevent Parent or any division or subsidiary of
Parent from conducting their business as currently being conducted.
5.13 Pre- and Post-Closing Cooperation.
Prior to, at and, at Buyer s sole out-of-pocket cost and
expense, for a reasonable period subsequent to the Closing, Seller and
Parent shall cooperate with Buyer in connection with (i) the
initiation by Buyer of administrative, legal and management functions
previously provided by Seller, Parent or their affiliates with respect
to the businesses of the Company and the Subsidiaries, (ii) the
efforts by Buyer to complete its financing with respect to this
transaction (including the provision of information and access to
Parent s accountants and auditors and the reasonable assistance of
management of the Company and the Subsidiaries), (iii) the making of
future filings with the Securities and Exchange Commission, including
the assistance and cooperation of Parent and its auditors in the
preparation of financial statements for such filings and the provision
of any necessary consents in connection therewith and (iv) Buyer's
handling following the Closing of any liabilities and obligations of
the Company and the Subsidiaries with respect to which Seller has no
responsibility pursuant to Section 8.1 or otherwise. Such cooperation
shall include, but not be limited to, the provision by Seller and
Parent of any documents (or copies thereof) reasonably requested by
Buyer.
5.14 Insurance.
(a) Seller, at its sole cost and expense, shall obtain
and maintain following the Closing for a period of 4 years general
liability insurance providing coverage on substantially the same terms
as the general liability policy maintained by the Parent on behalf of
the Company and Subsidiaries prior to Closing (the GLI Policy )
naming Seller as an insured and naming the Company and the
Subsidiaries as additional insureds and loss payees (as their
interests may appear) in respect of any insured events under the GLI
Policy arising out of occurrences occurring prior to the Closing Date
( GLI Claims ). With respect to GLI Claims which are not covered by
the GLI Policy, Seller will remain liable for, and will indemnify and
hold Buyer, the Company and the Subsidiaries harmless from and
against, all such Claims incurred on or prior to the Closing Date.
Notwithstanding any other provision of this Agreement to the contrary,
Buyer acknowledges and agrees that except as explicitly provided in
the immediately preceding sentences of this Section 5.14, with respect
to any and all occurrences arising after the Closing Date and any and
all other claims made after the Closing Date, Buyer shall have sole
liability therefor (without regard to when the occurrence or
occurrences giving rise to such claims arose). In this regard,
without limiting the provisions of the immediately preceding sentence,
Buyer shall have sole liability for worker s compensation claims which
are made on or after the Closing Date.
(b) Notwithstanding the foregoing, from and after the
Closing, Seller shall make claims and receive recoveries for the
benefit of the Company and the Subsidiaries under any occurrence
basis insurance policies maintained (including, automobile insurance)
at any time prior to the Closing by Seller (collectively, the Pre-
Closing Insurance Policies ), in respect of any insured events of the
Company and the Subsidiaries that relate to or arise out of
occurrences prior to the Closing Date (an Insurance Claim );
provided, however, that any recoveries received by Seller in respect
of such insured events shall be promptly paid by Seller to or as
directed by Buyer, and Seller will have no right or interest therein.
The Company and the Subsidiaries will have the sole and exclusive
right, in their own names, to make directly any Insurance Claims with
respect to insured events under any Pre-Closing Insurance Policies
maintained at any time prior to, on or after Closing by the Company
and the Subsidiaries and to receive directly any recoveries
thereunder, and other than with respect to matters for which Seller
has retained responsibility pursuant to this Agreement, Seller and its
affiliates will have no right or interest therein.
(c) In order to implement Section 5.14(a), Seller
shall (i) cooperate fully and cause its affiliates to cooperate fully
with Buyer and the Company and the Subsidiaries in submitting good
faith Insurance Claims and GLI Claims on behalf of the Company and the
Subsidiaries under the Pre-Closing Insurance Policies or the GLI
Policy, as the case may be, and (ii) pay promptly over to or as
directed by Buyer any and all amounts received by Seller or its
affiliates under the Pre-Closing Insurance Policies and the GLI Policy
with respect to Insurance Claims and GLI Claims, as the case may be.
(d) Effective as of the Closing Date, except as
expressly provided herein, Seller will cause the Company and the
Subsidiaries to be removed from any insurance policies or self
insurance programs maintained prior to the Closing by, and Buyer and
the Company and the Subsidiaries will be solely liable for asserted
claims as provided herein.
5.15 Confidentiality.
Parent and Seller acknowledge that the Confidential
Information (as defined below) of the Company and the Subsidiaries is
valuable and proprietary to the business of the Company and the
Subsidiaries and agree not to (and to cause their affiliates not to),
directly or indirectly, use, publish, disseminate, describe or
otherwise disclose any Confidential Information of the Company and the
Subsidiaries without the prior written consent of Buyer. For purposes
of this Agreement, "Confidential Information" shall mean with respect
to the Company and the Subsidiaries all confidential information of
the Company and the Subsidiaries existing on or prior to the Closing
Date that is not otherwise publicly disclosed or generally available,
including information delivered in confidence by others to the Company
and the Subsidiaries. Without limiting the generality of the
foregoing, Confidential Information shall include: (i) customer
lists, lists of potential customers and details of agreements with
customers; (ii) acquisition, expansion, marketing, financial and other
business information and plans; (iii) research and development
performed exclusively by or for the benefit of the Company and/or the
Subsidiaries; (iv) computer programs and computer software; (v)
sources of supply; (vi) identity of specialized consultants and
contractors; (vii) purchasing, operating and other cost data; (viii)
special customer needs, cost and pricing data; and (ix) employee
information. Confidential Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, drawings,
designs, formula books, specifications, computer programs and records,
whether or not legended or otherwise identified as Confidential
Information, as well as information that is the subject of meetings
and discussions and not so recorded. Seller shall also fully exercise
all of its rights, contractual or otherwise, to retrieve from third
parties all Confidential Information (which for this purpose shall be
deemed to include all information subject to applicable
confidentiality agreements) of the Company and the Subsidiaries which
has been delivered to such third parties, whether in connection with
the contemplated sale by Seller of the Company and the Subsidiaries or
otherwise.
5.16 Industrial Revenue Bonds.
Buyer shall use its best efforts (and Seller shall
cooperate with Buyer) from and after the date hereof to cause Sovran
Bank, N.A., as Trustee under that certain Indenture of Trust dated as
of November 1, 1986, pursuant to which the IRB was issued (the
Trustee ), to permit the substitution by Buyer of (i) a letter of
credit to be issued by a lender which is chosen by Buyer and which is
satisfactory to the Trustee (the Substitute LOC ), for (ii) that
certain Irrevocable Letter of Credit issued by Union Bank of
Switzerland, New York Branch (the Bank ) in favor of the Trustee (the
Union LOC ) relative to the IRB. In the event the Substitute LOC has
not been issued on the Closing Date, Buyer, from and after the Closing
Date, shall (i) indemnify and hold Parent harmless from and against
any and all liabilities, obligations, losses, claims, and expenses
(including attorney s fees and costs of suit) incurred by Parent and
arising under or in connection with that certain Guarantee dated
November 1, 1986, made by Parent in favor of the Bank and (ii) as
security for the foregoing indemnity of Buyer, cause to be issued and
maintained in effect until the first to occur of the expiration of the
term of the Union LOC or the issuance of the Substitute LOC an
irrevocable letter of credit in favor of Parent (the Indemnity LOC )
by Bankers Trust Company, Nations Bank or such other lender which is
chosen by Buyer and which is satisfactory to Parent in the exercise of
its sole discretion and the Indemnity LOC shall be in an amount and
for a term equal to the Union LOC and contain such other terms as are
satisfactory to Parent. Notwithstanding the provisions of the first
sentence of this Section 5.16, in the event the substitution of the
Substitute LOC for the Union LOC would, by itself, adversely impair
the tax exemption of interest on the IRB or cause the IRB to not
remain outstanding after the Closing Date in accordance with the terms
of the IRB, Buyer s sole obligation under this Section 5.16 shall be
to provide to Parent the indemnity and Indemnity LOC contemplated by
the second sentence of this Section. In the event Buyer is unable to
cause the substitution of the Substitute LOC for the Union LOC and the
term of the Union LOC expires prior to end of the term of the IRB,
Parent shall use its reasonable commercial efforts to renew the Union
LOC or assist Buyer in obtaining a Substitute LOC so that the IRB
remains outstanding until the expiration of its term.
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligations of Seller hereunder are subject to the
fulfillment of the following conditions, any of which may be waived by
Seller:
6.1 Representations and Covenants.
All representations and warranties of Buyer contained herein
shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as though made on and as
of the Closing Date. Buyer shall have performed and complied in all
material respects with all covenants and agreements contained herein
and required to be performed or complied with by it on or prior to the
Closing Date.
6.2 Closing Certificate.
Buyer shall have delivered to Seller a certificate signed by
its President or any Vice President, dated as of the Closing Date, to
the effect set forth in Section 6.1.
6.3 Legal Opinion.
Seller shall have received an opinion of Xxxxx Xxxx LLP,
counsel for the Buyer, dated as of the Closing Date, substantially in
the form attached hereto as Exhibit B.
6.4 Injunction.
There shall not be any pending action, suit, or other
judicial proceeding brought by the United States Federal Trade
Commission or by the Antitrust Division of the United States
Department of Justice against any of the parties hereto with respect
to any of the transactions contemplated by this Agreement, and no
order or decree prohibiting or restraining the consummation of this
Agreement shall have been issued by any court or governmental or
regulatory body.
6.5 Governmental Authority.
The parties shall have filed with the Federal Trade
Commission and the Antitrust Division of the Department of Justice
notification and report forms with respect to the transactions
contemplated hereby pursuant to the HSR Act and the rules promulgated
thereunder, and the waiting period required to expire under such Act
and rules, including any extension thereof, shall have expired prior
to the Closing Date.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligation of Buyer to enter into and complete the
Closing is subject to the fulfillment of the following conditions, any
of which may be waived by Buyer:
7.1 Representations and Covenants.
All representations and warranties of Seller contained
herein shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as though made on and
as of the Closing Date. Seller shall have performed and complied in
all material respects with all covenants and agreements contained
herein and required to be performed or complied with by it on or prior
to the Closing Date.
7.2 Closing Certificate.
Seller shall have delivered to Buyer a certificate signed by
its President or any Vice President, dated as of the Closing Date, to
the effect set forth in Section 7.1.
7.3 Legal Opinion.
Buyer shall have received an opinion of Xxxxxxxx Ingersoll
Professional Corporation, counsel for Seller, dated as of the Closing
Date, substantially in the form attached hereto as Exhibit C.
7.4 Injunction.
There shall not be any pending or threatened action, suit,
or other judicial proceeding brought by the United States Federal
Trade Commission or by the Antitrust Division of the United States
Department of Justice against any of the parties hereto with respect
to any of the transactions contemplated by this Agreement, and no
order or decree prohibiting or restraining the consummation of this
Agreement or imposing any conditions to the consummation of this
Agreement which are burdensome in any material respect to Buyer shall
have been issued by any court or governmental or regulatory body.
7.5 Governmental Authority.
The parties shall have filed with the Federal Trade
Commission and the Antitrust Division of the Department of Justice
notification and report forms with respect to the transactions
contemplated hereby pursuant to the HSR Act and the rules promulgated
thereunder, and the waiting period required to expire under such Act
and rules, including any extension thereof, shall have expired prior
to the Closing Date.
7.6 No Loss.
Since the date of the Latest Balance Sheet, the Company and
the Subsidiaries shall not have suffered any loss on account of fire,
flood, accident, strike or other calamity which has had or may have a
material adverse effect on the financial condition or assets of the
Company and the Subsidiaries, taken as a whole, whether or not such
loss shall have been covered by insurance.
7.7 Financing.
Buyer shall have closed on financing for the purchase of all
of the Shares and consummation of the related transactions
contemplated in the Financing Letters.
7.8 Resignations.
Buyer shall have received resignations from each member of
the Board of Directors of each of the Company and the Subsidiaries,
who is not otherwise an employee of the Company or the Subsidiaries.
7.9 Trademark License.
Parent shall have executed and delivered to Buyer a
Trademark License Agreement, in a form mutually agreeable to Parent
and Buyer , pursuant to which Parent shall grant to the Company and
the Subsidiaries a royalty free license to use the Xxxxxxxxx name
solely in connection with the business operations of the Company and
the Subsidiaries for a period not to exceed eighteen (18) months
following the Closing Date.
7.10 Consents.
Buyer shall have received the consents and approvals set
forth on Schedule 7.10.
7.11 Environmental Reports.
Buyer shall have received the final Phase One Study
described in Section 9.3, from an environmental consultant selected by
Buyer and agreed to in writing by Seller, such agreement not to be
unreasonably withheld, with respect to the properties currently owned
or operated by the Company and the Subsidiaries which does not reveal
environmental remediation costs and compliance costs (exclusive of
Known Environmental Losses, as hereinafter defined) which are
reasonably likely to exceed $20,000,000. This condition shall be
deemed satisfied on December 29, 1995 (effective as of the Closing
Date), unless on or before such date Buyer notifies Seller in writing
that this condition is not satisfied.
8. INDEMNIFICATION
8.1 Indemnity of Seller.
Seller shall indemnify Buyer, its affiliates, the Company
and the Subsidiaries and their respective directors, officers,
shareholders, employees, agents, representatives, successors and
assigns (collectively, the Buyer Indemnitees ) against any and all
claims, losses, liabilities, damages, expenses, including reasonable
attorney's fees and costs of suit ( Losses ), resulting from or
related to: (i) any breach of Seller's covenants, warranties and
representations contained in this Agreement and (ii) any item
disclosed on Schedule 3.27 (exclusive of Known Environmental Losses,
as hereinafter defined) ( Other Environmental Losses ); provided,
however, that with respect to breaches of the representations and
warranties of Seller set forth in Article 3 (other than with respect
to breaches of representations and warranties set forth in Sections
3.2, 3.11, 3.12, 3.13, 3.14 and 3.22) and including Other
Environmental Losses, (i) the Buyer Indemnitees will not be entitled
to indemnification until the aggregate of all such claims exceeds the
sum of $2,500,000, and then only to the extent of any amount in excess
of $2,500,000 and (ii) Seller's aggregate liability to indemnify the
Buyer Indemnitees shall not exceed $30,000,000 (the Seller s
Indemnity Cap ). Buyer and Seller acknowledge and agree that,
notwithstanding the foregoing provision of this Section 8.1, in the
event the Phase One Study described in Section 9.3 discloses
environmental remediation costs (exclusive of Known Environmental
Losses, as hereinafter defined) and compliance costs which are in
excess of $5,000,000, then the Seller s Indemnity Cap shall be
increased by an amount equal to the amount of such environmental
remediation costs and compliance costs in excess of $5,000,000 but in
no event shall such increase exceed $15,000,000 ( Excess Environmental
Indemnity ).
8.2 Indemnity of Buyer.
Buyer shall indemnify Seller and its affiliates, directors,
officers, shareholders, employees, agents, representatives, successors
and assigns (collectively, the Seller Indemnitees ) against any and
all claims, and losses, liabilities, damages, expenses, including
reasonable attorney's fees and costs of suit, to Seller (i) resulting
from or related to any breach of Buyer's covenants, warranties and
representations contained in this Agreement and (ii) resulting from,
relating to or in connection with the operations of the Company and
the Subsidiaries subsequent to the Closing Date, including without
limitation, the sale of products by the Company and the Subsidiaries
under the Xxxxxxxxx brand name subsequent to the Closing Date (other
than with respect to infringement actions by third parties relative to
the use of the Xxxxxxxxx brand name).
8.3 Mitigation.
Every person seeking indemnification hereunder shall correct
or mitigate, to the extent commercially reasonable, any loss suffered
by such person for which indemnification is claimed hereunder, and the
indemnifying party shall be liable only for the amount thereof which
is net of any insurance proceeds and other amounts paid by, or offset
against any amount owed to, any person not a party to this Agreement
(including any costs or expenses incurred to so correct or mitigate);
provided, however, with respect to matters, including without
limitation, known Environmental Losses, Other Environmental Losses,
and Environmental Warranty Losses, for which Seller is required to
indemnify Buyer pursuant to this Agreement, Seller shall indemnify and
hold harmless Buyer with respect to such matters upon receipt of
notice of such claim notwithstanding the existence of a pending claim
for recovery of insurance proceeds (including any proceeds from any
applicable state underground storage tank fund). In the event Buyer
recovers insurance proceeds with respect to matters that Seller
provided indemnity pursuant to this Agreement, Buyer shall reimburse
Seller for its expenditures in an amount equal to the funds recovered
by Buyer from such insurer. If a person which has a right of
indemnification under this Article 8 reasonably can, by expenditure of
money, mitigate or otherwise reduce or eliminate any loss for which
indemnification would otherwise be claimed, such person shall take
such action and shall be entitled to reimbursement for such
expenditures and all related expenses. The parties acknowledge and
agree that, except as provided in Sections 8.5, 8.7, 9.2, 9.11 and
9.21, the indemnification provided under this Article 8 shall be the
sole and exclusive remedy of the parties with respect to the breach of
any covenant, representation or warranty contained herein.
Notwithstanding the foregoing, nothing in this Agreement shall relieve
Seller or Buyer from any liability arising from an intentional breach
of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
8.4 Matters Involving Third Parties.
(a) If any third party (including any governmental
agency or authority) shall notify any Buyer Indemnitee or Seller
Indemnitee, as the case may be (the Indemnified Party ) with respect
to any matter (a Third Party Claim ) which may give rise to a claim
for indemnification against either Buyer or Seller, as the case may be
(the Indemnifying Party ) under this Article 8, then the Indemnified
Party shall promtly notify the Indemnifying Party thereof in writing.
(b) The Indemnifying Party shall, within 30 days after
receipt of the notice described in Section 8.4(a), assume and
thereafter conduct the defense of the Third Party Claim with counsel
of its choice reasonably satisfactory to the Indemnified Party at the
sole expense of the Indemnifying Party; provided, however, that the
Indemnified Party may participate in such settlement or defense
through counsel chosen by such Indemnified Party, provided that the
fees and expenses of such counsel shall be borne by such Indemnified
Party; and provided, further, that the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of
the Indemnified Party (not to be withheld unreasonably) unless the
judgment or proposed settlement involves only the payment of money
damages by the Indemnifying Party and does not impose an injunction or
any other equitable relief upon the Indemnified Party.
(c) Unless and until the Indemnifying Party assumes
the defense of the Third Party Claim as provided in Section 8.4(b)
above, however, the Indemnified Party may defend against the Third
Party Claim in any manner it reasonably may deem appropriate, but
shall not thereby waive any right to indemnify therefor pursuant to
this Agreement; provided, however, that the Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of
the Indemnifying Party (not to be withheld unreasonably).
(d) The specific provisions of Sections 5.5(c),
5.5(d), 8.5 and 8.7 will govern in the event of any conflict with the
general provisions of this Section 8.4.
8.5 Tax Indemnification.
In addition to any other indemnification granted herein and
notwithstanding the survivability or limits, if any, of any
representation contained herein or the absence of any representation
herein, Seller agrees to indemnify, defend and hold harmless the Buyer
Indemnitees from and against all loss, liability including the Company
and the Subsidiaries liability for its own Taxes or its liability, if
any (for example, by reason of transferee liability or application of
Treas. Reg. Section 1.1502-6) for Taxes of others, including, but not
limited to, Seller or any Tax Affiliate or any majority-controlled
foreign affiliate, damage or reasonable expense (including but not
limited to reasonable attorneys fees and expenses) (collectively,
Costs ) payable with respect to Taxes claimed or assessed against the
Company and the Subsidiaries (i) for any taxable period ending on or
before the Closing Date or (ii) for any taxable period resulting from
a breach of any of the representations or warranties contained in
Section 3.22 hereof
8.6 Indemnification Payment.
With respect to any indemnity payment under this Article 8,
the parties agree to treat, to the extent permitted by law, all such
payments as an adjustment to the consideration paid for the sale and
transfer of the stock of the Company and the Subsidiaries, to be
allocated to the Company or the Subsidiary in respect of which the
adjustment arose, and if the source of any such adjustment cannot
reasonably be determined, such adjustment shall be allocated to the
Company.
8.7 Environmental Indemnification.
(a) Identified Properties. Seller agrees to indemnify,
defend and hold harmless the Buyer Indemnitees from and against all
existing and future claims, losses, liabilities, damages and expenses,
including, without limitation, claims, losses, liabilities, damages
and expenses for personal injury, property damage, reasonable costs of
investigation, attorneys fees and costs of suit and reasonable
consultant fees, resulting from or related to (i) the direct or
indirect disposal by the Company or any of its Subsidiaries of wastes
or other materials in the Buckingham County, Virginia landfill site
( Buckingham ) and (ii) the former Pleasant Garden, North Carolina
facility of the Company heretofore sold to Hooker Furniture
Corporation pursuant to an agreement dated February 17, 1993
(including but not limited to releases of volatile organic compounds)
( Pleasant Garden ) (hereinafter Buckingham and Pleasant Garden
referred to together as the Identified Properties ) ( Known
Environmental Losses ); provided however (i) with respect to the first
$4,000,000 of Known Environmental Losses relating to the Identified
Properties, Seller and Buyer shall each pay fifty percent (50%) of
such $4,000,000 of such Known Environmental Losses and (ii)
thereafter, the Buyer Indemnities will be entitled to indemnification
for additional Known Environmental Losses with respect to the
Identified Properties up to an aggregate amount, including such
$4,000,000, not to exceed $30,000,000. Thereafter, Seller shall have
no further obligation to Buyer or any other person relating to the
Identified Properties. This Section 8.7(a) sets forth Buyer
Indemnitees sole and exclusive rights of indemnification for Known
Environmental Losses.
(b) Period of Indemnity. Seller s Indemnification
obligations in Section 8.7 (a) herein shall apply only to Known
Environmental Losses actually incurred by the Buyer Indemnities before
the tenth anniversary of the Closing Date. Thereafter Seller shall
have no further obligation to indemnify Buyer or any other person for
Known Environmental Losses.
(c) Lowest Cost Response. Notwithstanding anything in
this Agreement to the contrary, Seller s indemnity obligation for
breach of any warranty in Section 3.27(a)-(h) ( Environmental Warranty
Losses ), Other Environmental Losses and Known Environmental Losses
(collectively Environmental Losses ) for which Seller has an
indemnity obligation pursuant to this Agreement shall be satisfied by
implementation or indemnification for implementation of the Lowest
Cost Response. The Lowest Cost Response shall mean any compliance
activity or any investigation, cleanup, remediation, removal action or
other response activity that (1) satisfies applicable Environmental
Laws that are in existence at the time of the contemplated activity,
(2) is acceptable to Governmental Authorities having jurisdiction over
the site, (3) is consistent with the operations being conducted at the
site, and (4) can be achieved for the lowest financial cost as
compared with other potential response activities.
(d) Limitation. Notwithstanding anything in this
Agreement to the contrary, Seller s indemnity obligation for
Environmental Losses shall be limited solely to Environmental Losses
arising out of or resulting from (1) investigative or remedial action
required by Environmental Law or Governmental Authorities, (2) third-
party claims, or (3) the discovery of the presence or Release of a
Hazardous Material as a result of: (i) a facility expansion or
renovation (ii) in the ordinary course of operations, including
pursuant to a corporate environmental compliance program (except for
findings resulting from soil or ground water sampling pursuant to such
programs), (iii) an investigation done in connection with a bona fide
offer received after the Closing Date to purchase or lease any of the
real property currently owned or leased by the Company or the
Subsidiaries and in particular to the Xxxxxxxxx Furniture Division of
the Company ( AFD ), a bona fide offer to purchase or a board approved
organized sale, disposition or bidding process to sell all or
substantially all of the assets of AFD (which for purposes hereof the
real property shall only include the real property listed on Schedule
8.7(d)(3)(iii) hereto) (the Assets ) or the stock of a subsidiary of
the Company owning directly or indirectly no real property other than
the Assets, or (iv) an investigation or remedial action which in the
reasonable business judgment of Buyer is required to protect human
health or safety. For purposes of Article 8, no indemnification is
provided by Seller for asbestos removal costs solely associated with
renovation of any property currently owned, leased, or operated by the
Company or any Subsidiary.
(e) Confidentiality. Buyer shall use its best efforts
to maintain in strict confidence, the existence and terms of Seller s
indemnity obligation with respect to the Identified Properties set
forth in Section 8.7(a) provided, however, Buyer may disclose the
terms and existence of such indemnity obligation (1) to any financial
institution that is considering or actually provides financing to
Buyer, and (2) to the extent required by law. In the event Buyer
discloses the existence or terms of Seller s indemnity obligation
pursuant to Section 8.7(a) to a financial institution, Buyer shall
take reasonable and appropriate measures to ensure that such financial
institution is familiar with the confidentiality requirement set forth
herein and agrees to comply with its terms.
8.8 Procedures Relating to Environmental Indemnity by Seller.
(a) Subject to the provisions of Section 8.7 (a) and
(b), the continued defense, settlement or compromise of the claims
giving rise to Known Environmental Losses shall continue with existing
counsel or other counsel selected by Seller and reasonably acceptable
to Buyer under the direction of Seller; provided, however, Buyer
Indemnitees shall have the right to retain, at their own expense
counsel and consultants of their own choosing to work with Seller s
current defense counsel and consultants.
(b) As a condition of the indemnity for Environmental
Warranty Losses and Other Environmental Losses Buyer shall, promptly
after becoming aware of facts that will likely result in such
Environmental Warranty Losses or Other Environmental Losses being
incurred for which Buyer Indemnitees are entitled to indemnity
hereunder ( Environmental Losses Claim ), submit to Seller a written
notice thereof within four years of the Closing Date, which notice
shall describe in reasonable detail the date when and circumstance by
which Buyer became aware of the Environmental Losses Claim; the nature
of the Environmental Losses Claim, and the basis for the alleged
liability. Seller shall have no obligation to Buyer for any
Environmental Warranty Losses or Other Environmental Losses for which
a notice as described above is not received before the fourth
anniversary of the Closing Date.
(c) With regard to any Environmental Losses Claim,
Seller may, at its option, defend such Environmental Losses Claim with
counsel or consultants selected by Seller reasonably acceptable to the
Buyer Indemnitees. If Seller does not elect to defend any such
Environmental Losses Claim, the Buyer Indemnitees shall defend such
Claim with counsel or consultants selected by the Buyer Indemnitees
reasonably acceptable to Seller. Seller shall provide Buyer with
copies of all correspondence, reports and other documentation,
including but not limited to settlement communications or documents
(excluding matters subject to confidentiality) (draft or final)
relating to any Other Environmental Losses or Environmental Warranty
Claims, excepting such documents as are routinely filed. If Seller
elects to defend such Environmental Losses Claim, Seller shall retain
control of the defense, compromise or settlement (including without
limitation the nature and scope of any work to be performed; the
contractors, consultants or engineers to be performing any work; the
making of any admissions against interest; the making of any decision
whether work should be performed voluntarily by the Buyer Indemnitees
or their contractors, consultants or engineers or, alternatively, by
an authorized governmental entity; and the making of any decision
whether to enter into any consent decree, consent order or consent
agreement and the terms of such decree, order or agreement) thereof;
provided, however, that if Buyer reasonably determines that the
defense, compromise or settlement of an Environmental Losses Claim may
reasonably be expected to materially and adversely affect the business
or operations of the Buyer Indemnitees, the Buyer Indemnitees shall
have the right to approve, such approval not to be unreasonably
withheld, the defense, compromise or settlement of such Environmental
Losses Claim. If the Buyer Indemnitees are conducting the defense,
compromise or settlement of such Environmental Losses Claim, the Buyer
Indemnitees shall have control over the defense, compromise or
settlement; provided, however, that Seller shall have the right to
approve the defense, compromise or settlement (including without
limitation the nature and scope of any work to be performed; the
contractors, consultants or engineers to be performing any work; the
making of any admissions against interest; the making of any decision
whether work should be performed voluntarily by the Buyer Indemnitees
or their contractors, consultants or engineers or, alternatively, by
an authorized governmental entity; and the making of any decision
whether to enter into any consent decree, consent order or consent
agreement and the terms of such decree, order or agreement) if the
Environmental Losses Claim may reasonably be expected to exceed
$250,000 in Environmental Warranty Losses or Other Environmental
Losses in any one or more years. The party conducting the defense,
compromise or settlement of an Environmental Losses Claim shall inform
the other party in a timely manner of any material information
concerning the Environmental Losses Claim or the defense, compromise
or settlement thereof and provide copies of correspondence, reports
and other documentation (draft or final) relating thereto.. If at any
xxxx Xxxxxx is not satisfied with the defense being provided by the
Buyer Indemnitees with regard to any Environmental Losses Claim that
may reasonably be expected to exceed $250,000 in Environmental Losses
Losses in any one or more years, Seller shall have the right, at its
option, to assume control of the defense, compromise or settlement of
such Environmental Losses Claim, including without limitation the
appointment of new counsel or consultants if Seller so elects;
provided, however, if Buyer reasonably determines that the defense,
compromise or settlement (including without limitation the nature and
scope of any work to be performed; the contractors, consultants or
engineers to be performing any work; the making of any admissions
against interest; the making of any decision whether work should be
performed voluntarily by the Buyer Indemnitees or their contractors,
consultants or engineers or, alternatively, by an authorized
governmental entity; and the making of any decision whether to enter
into any consent decree, consent order or consent agreement and the
terms of such decree, order or agreement) of such Environmental Losses
Claim may reasonably be expected to materially and adversely affect
the business or operations of the Buyer Indemnitees or result in not
insignificant Environmental Warranty Losses or Other Environmental
Losses to the Buyer Indemnitees, the Buyer Indemnitees shall have the
right to approve the defense, compromise or settlement of such
Environmental Losses Claim, such approval not to be unreasonably
withheld. Regardless of the party conducting the defense of any
Environmental Losses Claim, the parties agree to cooperate in the
defense, compromise or settlement of such claim. Where Seller decides
that the taking of any action to test, investigate, remove, remediate
or restore any environmental conditions with regard to a property
owned or operated by the Buyer Indemnitees is necessary to protect
Seller s interests under this Agreement, Seller shall provide advance
written notification to the Buyer Indemnitees of the nature of and
reasons for such action. The Buyer Indemnitees shall allow Seller to
perform all or part of any such action at Seller s option, using
Seller s own counsel, consultants, contractors and/or engineers
reasonably acceptable to the Buyer Indemnitees. Seller and the Buyer
Indemnitees will cooperate in attempting to minimize any disruption of
operations of the Buyer Indemnitees caused by such actions. In
connection with the obligations of Seller pursuant to this subsection
8.8(c) the Buyer Indemnitees shall cause the Company and its
Subsidiaries to deliver to Seller copies of all documents reasonably
necessary to Seller pertaining to environmental or other state or
federal regulatory matters with respect to which Seller may be
required to indemnify the Buyer Indemnitees hereunder.
9. MISCELLANEOUS
9.1 Fees and Expenses.
Each party to this Agreement shall pay its own expenses
(including, without limitation, the fees and expenses of their
respective agents, representatives, counsel and accountants)
incidental to the preparation, negotiation, and consummation of this
Agreement and the transactions contemplated hereby. All filing fees
required to be paid under the HSR Act and the rules promulgated
thereunder shall be paid by Buyer.
9.2 Brokers.
Buyer has not employed a finder or broker or other person
entitled to a brokerage commission or fee in respect of this Agreement
and the transaction contemplated hereby. Seller has engaged Xxxxxxx,
Xxxxx & Co. to act as its financial advisor in connection with the
transactions contemplated hereby and shall be solely responsible for
the payment of such firm's fees for such services.
9.3 Access to the Company's Properties.
Seller will, and will cause the Company to accord Buyer and
its authorized representatives reasonable access to all of the books,
records, personnel and properties of or pertaining to the Company and
the Subsidiaries commencing not later than the date of this Agreement.
Such access shall include, but not be limited to, the right to
conduct, at Buyer s sole expense, an environmental investigation
(which shall not include performance of soil, groundwater, surface
water and air sampling and analysis without the prior written consent
of Seller), at any of the properties currently owned or operated by
the Company and the Subsidiaries; provided however, that Buyer
acknowledges that such environmental investigation and report issued
thereon (the Phase One Study ) contains confidential information of
the Seller with respect to the Company and the Subsidiaries, and Buyer
agrees to not directly or indirectly use, publish, disseminate,
describe or otherwise disclose the Phase One Study to any person other
than its attorneys, accountants, financial institutions or other
advisors directly involved in the transaction contemplated by this
Agreement without the prior written consent of Seller. Buyer agrees
to cause any person to whom it discloses such Phase One Study to be
bound by the confidentiality provisions contained herein. Prior to
finalizing any Phase One Study, including any estimation of
environmental remediation or compliance costs, Buyer shall provide
Seller with an oral and an executive summary of the proposed Phase One
Study on or before December 8, 1995 and shall provide a copy of such
Phase One Study to Seller for meaningful review and comment by no
later than December 27, 1995. Buyer shall have the right to make
copies of any such records, files, tax returns and other materials as
it may deem advisable. Seller will cause the respective personnel of
Seller and the Company to assist Buyer in making such investigation,
and will make its counsel, accountants and other representatives
available for such purposes. All stock record books and all minute
books of the Company and the Subsidiaries will be delivered to Buyer
at the Closing. All other books and records of the Company and the
Subsidiaries in the possession of Seller will be delivered to Buyer at
the Closing.
9.4 Books and Records.
Seller (as it reasonably requires) and any taxing authority
in the United States shall have access for a period of six (6) years
after the Closing Date, during normal business hours, to personnel of
the Company and the Subsidiaries and to all books, records, files,
documents and other data relating to the business of the Company and
the Subsidiaries conducted prior to the Closing Date in connection
with any proceedings with any governmental authority.
9.5 Notices.
All notices or other communications given under this
Agreement shall be in writing and transmitted by registered or
certified mail, postage prepaid, or by telegram. Any such notice or
communication given hereunder shall be sent as follows:
If to Seller:
Xxxxxxxxx Enterprises, Inc.
c/o Armstrong World Industries, Inc.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Senior Vice
President
and General Counsel
Fax: 000-000-0000
Copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxxxx Xxxxxxxxx Professional Corporation
One Oxford Centre
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
If to Buyer:
INTERCO INCORPORATED
000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
Attn: Chairman of the Board
Telecopy No.: 000-000-0000
Copy to:
INTERCO INCORPORATED
000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
Attn: General Counsel
Telecopy No.: 000-000-0000
Any party may send notice or other communication hereunder
using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice or other communication shall be deemed to
have been duly given unless and until it actually is received. Any
party may change the address to which notices and other communications
hereunder are to be delivered by giving the other party notice in the
manner herein set forth.
9.6 Successors and Assigns.
This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted
assigns. This Agreement or any part thereof, may not be assigned
without the prior written consent of the other party, which consent
may be withheld in the sole discretion of the other party; provided,
however, that Buyer may (i) assign any or all of its rights and
interests hereunder (but not delegate any or all of its duties
hereunder) to one or more of its affiliates and (ii) designate one or
more of its affiliates to perform its obligations hereunder (in any or
all of which cases in subparagraphs (i) and (ii) Buyer nonetheless
shall remain responsible for the performance of all of its obligations
hereunder). References to Buyer and Seller shall include their
respective successors and permitted assigns.
9.7 Entire Agreement and Modification.
This Agreement supersedes all prior agreements and
understandings between the parties or any of their respective
affiliates (written or oral) relating to the subject matter (except
for that certain Confidentiality Agreement between the parties dated
June 30, 1995), and is intended to be the entire and complete
statement of the terms of the agreement between the parties, and may
be amended or modified only by a written instrument executed by the
parties. The waiver by one party of any breach of this Agreement by
the other party shall not be considered to be a waiver of any
succeeding breach (whether of a similar or a dissimilar nature) of any
such provision or other provision or a waiver of any such provision
itself. The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
Notwithstanding anything to the contrary contained herein, any matter
set forth or referred to or disclosed on any Schedule hereto shall be
deemed also to be set forth, referred to and disclosed on all
schedules, and deemed to be the disclosure under all Sections and
provisions of this Agreement. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been
made or relied upon by either party hereto.
9.8 Termination By Buyer.
Buyer may, without liability, terminate this Agreement by
written notice to Seller as follows:
(a) If Seller fails to comply with Section 2.2 or to
satisfy at or prior to Closing in all material respects any of the
conditions to Closing specified in Article 7 which are required to be
performed or satisfied by Seller at or prior to Closing, and if any
such failure either is not waived in writing by Buyer or cured by
Seller within twenty days after written notice thereof by Buyer; or
(b) If the Phase One Study prepared pursuant to
Section 9.3 discloses environmental remediation costs and compliance
costs which are in excess of $20,000,000, Buyer may, without
liability, terminate this Agreement by written notice to Seller on or
before December 29, 1995.
9.9 Termination By Seller.
Seller may, without liability, terminate this Agreement by
written notice to Buyer as follows:
(a) If Buyer fails to comply with Section 1.2 or to
satisfy at or prior to Closing in all material respects any of the
conditions to Closing specified in Article 6 which are required to be
performed or satisfied by Buyer at or prior to Closing, and if any
such failure either is not waived in writing by Seller or cured by
Buyer within twenty days after written notice thereof by Seller;
(b) If Buyer fails to obtain financing as required by
Section 7.7 on or before January 16, 1996 and Buyer does not waive the
condition set forth in Section 7.7 thereon or before such date; or
(c) If the Phase One Study prepared pursuant to
Section 9.3 discloses environmental remediation costs and compliance
costs which are in excess of $20,000,000, and Buyer provides the
notice set forth in Section 7.11, Seller may, without liability,
terminate this Agreement by written notice to Buyer on or before
January 3, 1996.
9.10 Other Termination.
If no Closing occurs by March 15, 1996, and the failure to
close is not the result of Seller's or Buyer's failure to satisfy in
all material respects any of the conditions to Closing specified in
Articles 6 and 7 at or prior to Closing, each of Buyer and Seller
shall have the right to terminate this Agreement upon written notice
to the other.
9.11 Effect of Termination.
If this Agreement is terminated pursuant to Sections 9.8,
9.9 or 9.10 above, all rights and obligations of the parties hereunder
shall terminate without any liability of any party to the other party
under or with respect to this Agreement; provided, however, that
nothing in this Section 9.11 or elsewhere in this Agreement shall
impair or restrict the rights of any party to any and all remedies at
law or in equity in the event of a breach of or default under this
Agreement by the other party. If this Agreement is terminated as
provided herein all filings, applications and other submissions made
pursuant to this Agreement shall, to the extent practicable, be
withdrawn from the agency or other persons to which they were made.
9.12 Survival of Representations, Covenants and Warranties.
The representations and warranties made by Seller and Buyer
herein shall survive the Closing for a period of two years; provided,
however, that the representations and warranties made by Seller in
Section 3.27(a)-(h) above shall survive the Closing and continue in
full force and effect for a period of four years; those contained in
Sections 3.2, 3.11, 3.12, 3.13 and 3.14 above shall survive the
Closing and continue in full force and effect forever thereafter
(subject to any applicable statutes of limitations); and those
contained in Section 3.27 (i) shall not survive the Closing. The
covenants and agreements set forth in the Agreement shall survive
Closing, each in accordance with its terms.
In the case of any representation or warranty of Seller in
Section 3.22 and any other representation or warranty relating to or
affecting the Company or the Subsidiaries liability for Taxes (the
Surviving Representations ) whether the Company s or the
Subsidiaries Taxes or their liability, if any (for example, by reason
of transferee liability or application of Treas. Reg. Section
1.1502-6) for the Taxes of others including, but not limited to Seller
or any former or present affiliate or subsidiary thereof, the same
shall survive until the later of the final resolution of any judicial
or administrative proceeding involving any such Tax or expiration of
any statute of limitations (including any suspensions, tollings or
extensions thereof).
9.13 Section and Other Headings.
The Section and other headings contained in this Agreement
are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
9.14 Governing Law.
This Agreement shall be interpreted and governed by the laws
of the Commonwealth of Pennsylvania without giving effect to any
choice or conflict of law provision.
9.15 Counterparts.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, and such counterparts
shall together constitute one and the same instrument.
9.16 Further Assurances.
Each of the parties shall execute such documents and other
papers and take such further actions as may be reasonably required to
carry out the provisions hereof and the transactions contemplated
hereby. Each party shall use its reasonable efforts to fulfill or
obtain the fulfillment of the conditions to the Closing.
9.17 Severability.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such
prohibition and unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
9.18 Confidentiality.
Seller and Buyer agree to keep the terms of this Agreement
and any amendments to it or transactions arising from it confidential
except as required by law or as otherwise agreed by the parties. The
parties hereto agree that before issuing any press release or making
any public statement with respect to this Agreement or the
transactions contemplated hereby, the content of any such disclosure
shall be communicated between the parties and agreed to prior to the
release thereof, except as required by applicable law or government
regulation.
9.19 No Third Party Beneficiaries.
Neither this Agreement nor any provision hereof is intended
to confer upon any person (other than the parties hereto and their
respective successors and permitted assigns ) any rights or remedies
hereunder.
9.20 Jurisdiction.
Each party agrees to bring all judicial proceedings against
the other arising out of or relating to this Agreement or any of the
Delaware or the appropriate state court located in New Castle County,
Delaware. In addition, each party accepts, generally and
unconditionally, the exclusive jurisdiction of such courts and waives,
to the fullest extent permitted by law, any objection (including any
objection that jurisdiction, situs, or venue is inconvenient or
improper) which it may now have or may hereafter have to the laying of
venue or the convenience of the forum of any action with respect to
bringing, prosecution or defense of any such judicial proceeding in
any such court.
9.21 Specific Performance.
Buyer and Seller acknowledge and agree that failure by the
other to perform its obligations under this Agreement would cause such
party or parties to be materially and irreparably injured and to
suffer material loss; and that such injury and loss cannot be fully or
adequately compensated by the payment of money or by an award of
damages and each shall be entitled to the specific performance of this
Agreement, in addition to all other remedies that each might have, and
that each of them will not object to and will not hinder or delay the
entry of a decree of specific performance against it in any action or
suit brought under or in respect of this Agreement.
9.22 Intercompany Relationships.
All leases, licenses, contracts, and other agreements
between any of the Company and the Subsidiaries on one hand and any of
Seller or any of its affiliates on the other hand shall be deemed
terminated as of the Closing and will have no further force or effect.
9.23 Parent Guarantee.
Parent hereby unconditionally and irrevocably guarantees the
full and prompt performance by Seller of all of its obligations under
this Agreement.
9.24 Definition of Knowledge.
As used herein, the phrase knowledge of Seller shall have
the meaning, and be limited to the persons, as set forth on Schedule
9.24.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
PARENT:
ATTEST: XXXXXXXXX WORLD INDUSTRIES, INC.
X.X. Xxxxxxxxx By: Xxxxxx X. Xxxxx
--------------------- ----------------------------
Title:
SELLER:
ATTEST: XXXXXXXXX ENTERPRISES, INC.
X. X. Xxxxxx By: X.X. Xxxxxxxxx
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Title:
BUYER
ATTEST: INTERCO INCORPORATED
X. X. Xxxxxxxxx By: X. X. Xxxxx
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Title: Chairman of the Board
SCHEDULES
2.3 (iv) Targeted Net Worth
3.1 Exceptions To Qualification Of TFI
3.3 Additional Footnotes/Exceptions To Financial Statements
3.4 Undisclosed Material Obligations And Liabilities
3.5 Events And Developments Since Latest Balance Sheet Date
3.6(A) Real Property Interest Held By Company
3.6(B) Liens And Other Encumbrances On Real Property
3.7 Liens And Encumbrances On Personal Property
3.9 Intellectual Property Rights
3.10 Pledges, Liens Or Encumbrances on Accounts Receivable
Accounts And Notes Receivable Not Collectible In
The Ordinary Course of Business
3.11 Capital Stock Of Company And Its Subsidiaries
3.14 List Of Second Tier Subsidiaries
Corporations Whose Securities Are Owned By The Company
3.16 Agreements For Which The Proposed Transaction Requires
Consent Or
Waiver Of Breach
3.17 Litigation
3.18 Material Contracts And Contracts With Affiliates
3.19 Outstanding Violations And Notices of Noncompliance
With icenses,
Permits And Governmental Authorizations
3.22(d) Possible Unfiled Returns And Tax Payments Owed
Tax Audits In Process Or Pending
3.22(g) Permanent Establishments In Foreign Countries
3.24 Insurance Policies Currently Covering The Company And
Its Subsidiaries
3.25(b) Employee Benefit Plans
3.25(i) Employee Benefit Plans
3.27 Environmental Matters
4.5 Financing Commitment Letters
5.5(a) List of Company And Subsidiaries For Which Election
Will Be Made
5.5(b) Preliminary Estimate Of Tax Allocation
7.10 Agreements For Which The Proposed Transaction Requires
Consent
8.7(d)(3)(iii) The Real Property Of The Xxxxxxxxx Furniture Division
9.24 Definition Of "Knowledge"
The Company agrees to furnish supplementally a copy of any of the
above schedules to the Commission upon request.
