STOCK PURCHASE AGREEMENT
DATED AS OF AUGUST 28, 1997
BY AND AMONG
THE TRIUMPH GROUP OPERATIONS, INC.,
HYDRO-MILL CO.,
XXXXXX XXXXX-XXXXXXXXX,
XXXXXXXXX CHARITABLE REMAINDER UNITRUST
AND
XXXXX CHARITABLE REMAINDER UNITRUST
TABLE OF CONTENTS
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1. DEFINITIONS ................................................... 1
Balance Sheet ................................................... 1
Base Net Operating Assets ....................................... 1
Best Efforts .................................................... 1
Business Day .................................................... 1
Buyer ........................................................... 1
Certificates .................................................... 2
Closing ......................................................... 2
Closing Balance Sheet ........................................... 2
Closing Date .................................................... 2
Closing Net Operating Assets .................................... 2
Closing Purchase Price Payment .................................. 2
Company ......................................................... 2
Consent ......................................................... 2
Contract ........................................................ 2
Damages ......................................................... 2
Deferred Payment ................................................ 2
Encumbrance ..................................................... 2
Environment ..................................................... 2
Environmental, Health, and Safety Liabilities ................... 2
Environmental Law ............................................... 2
ERISA ........................................................... 3
Escrow Account .................................................. 3
Escrow Agent .................................................... 3
Escrow Agreement ................................................ 3
Escrow Amount ................................................... 3
Escrow Fund ..................................................... 4
Facilities ...................................................... 4
Final Closing Net Asset Value ................................... 4
Final Purchase Price Payment .................................... 4
Financial Statements ............................................ 4
GAAP ............................................................ 4
Governmental Authorization ...................................... 4
Hazardous Activity .............................................. 4
Hazardous Materials.............................................. 4
HSR Act ......................................................... 4
IRC ............................................................. 5
IRS ............................................................. 5
Indemnified Persons ............................................. 5
Knowledge ....................................................... 5
Legal Requirement ............................................... 5
Material Adverse Change ......................................... 5
Material Adverse Effect ......................................... 5
Net Operating Assets ............................................ 5
Non-Compete Payment ............................................. 5
Occupational Safety and Health Law .............................. 5
Open Orders ..................................................... 6
Order ........................................................... 6
Pay-Off Statements .............................................. 6
Permitted Encumbrances .......................................... 6
Person .......................................................... 6
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TABLE OF CONTENTS (Continued)
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Plan ............................................................ 6
Policies ........................................................ 6
Preliminary Closing Balance Sheet ............................... 6
Preliminary Closing Balance Sheet ............................... 6
Preliminary Net Operating Assets ................................ 6
Proceeding ...................................................... 6
Purchase Price .................................................. 7
Purchase Price Indebtedness ..................................... 7
Related Person .................................................. 7
Release ......................................................... 7
Representative .................................................. 7
Securities Act .................................................. 8
Shares .......................................................... 8
Tax ............................................................. 8
Tax Return ...................................................... 8
Threat of Release ............................................... 8
Threatened ...................................................... 8
2. SALE AND TRANSFER OF SHARES; CLOSING ......................... 8
2.1 Shares ..................................................... 8
2.2 Purchase Price ............................................. 8
2.3 Adjustments to Purchase Price .............................. 9
2.4 Closing .................................................... 10
2.5 Closing Obligations ........................................ 11
3. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND COMPANY ..... 11
3.1 Organization and Good Standing .............................. 11
3.2 Authority and Legal Capacity; Due Authorization,
Execution and Delivery; No Conflict ......................... 12
3.3 Capitalization .............................................. 13
3.4 Financial Statements ........................................ 13
3.5 Books and Records ........................................... 13
3.6 Title to Properties; Encumbrances ........................... 14
3.7 Condition and Sufficiency of Assets ......................... 14
3.8 Accounts Receivable ......................................... 14
3.9 Open Orders ................................................. 15
3.10 Inventory ................................................... 15
3.11 No Undisclosed Liabilities .................................. 15
3.12 Taxes ....................................................... 16
3.13 No Material Adverse Change .................................. 16
3.14 Employee Benefits ........................................... 16
3.15 Compliance With Legal Requirements .......................... 20
3.16 Legal Proceedings; Orders ................................... 20
3.17 Absence of Certain Changes and Events ....................... 20
3.18 Contracts; No Defaults ...................................... 21
3.19 Insurance ................................................... 22
3.20 Environmental Matters ....................................... 22
3.21 Labor Relations; Compliance ................................. 24
3.22 Intellectual Property ....................................... 24
3.23 Certain Payments ............................................ 25
3.24 Product Liability ........................................... 26
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TABLE OF CONTENTS (Continued)
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3.25 Disclosure .................................................. 26
4. REPRESENTATIONS AND WARRANTIES OF BUYER ........................ 26
4.1 Organization, Good Standing and Capitalization .............. 26
4.2 Authority; Due Authorization, Execution and Delivery ........ 26
4.3 No Conflict ................................................. 26
4.4 Investment Intent ........................................... 27
4.5 Certain Proceedings ......................................... 27
4.6 Availability of Funds ....................................... 27
5. COVENANTS OF STOCKHOLDERS AND THE COMPANY ...................... 27
5.1 Access and Investigation .................................... 27
5.2 Operation of the Businesses of the Company .................. 27
5.3 Negative Covenant ........................................... 27
5.4 Required Approvals .......................................... 28
5.5 Payment of Indebtedness by Related Persons .................. 28
5.6 No Negotiation .............................................. 28
5.7 Notification ................................................ 28
5.8 Legal Requirements .......................................... 29
5.9 Tax Returns ................................................. 29
6. COVENANT OF BUYER .............................................. 29
7. EMPLOYMENT AND EMPLOYEE BENEFIT ARRANGEMENTS ................... 30
7.1 Employment .................................................. 30
7.2 No Third Party Beneficiary Rights ........................... 31
8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE ............ 31
8.1 Accuracy of Representations ................................. 31
8.2 Stockholders' Performance ................................... 31
8.3 Approvals and Consents ...................................... 31
8.4 Delivery of Documents ....................................... 31
8.5 No Material Adverse Change .................................. 32
8.6 No Injunction ............................................... 32
8.7 No Proceedings .............................................. 32
8.8 Corporate Action ............................................ 32
8.9 HSR Notification ............................................ 32
9. CONDITIONS PRECEDENT TO STOCKHOLDERS' OBLIGATION TO CLOSE ...... 32
9.1 Accuracy of Representations ................................. 32
9.2 Buyer's Performance ......................................... 33
9.3 Approvals and Consents ...................................... 33
9.4 Delivery of Documents ....................................... 33
9.5 No Injunction ............................................... 33
9.6 HSR Notification ............................................ 33
10. TERMINATION ................................................... 33
10.1 By Buyer .................................................... 33
10.2 By Stockholders ............................................. 34
10.3 Effect of Termination ....................................... 34
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TABLE OF CONTENTS (Continued)
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11. INDEMNIFICATION; REMEDIES ..................................... 34
11.1 Survival .................................................. 34
11.2 Indemnification and Payment of Damages by the
Stockholders .............................................. 35
11.3 Indemnification and Payment of Damages by Buyer ........... 36
11.4 Procedure For Indemnification -- Third Party Claims ....... 36
11.5 Limitation of Indemnification ............................. 37
11.6 Procedure For Indemnification-- Other Claims .............. 38
11.7 Release of Claims ......................................... 38
11.8 Pursuit of Remedies ....................................... 38
11.9 Reduced Period for Claims ................................. 39
11.10 Resolution of Claims; Court Costs and Other Expenses ...... 39
12. RIGHT OF SETOFF ............................................... 40
13. GENERAL PROVISIONS ............................................ 40
13.1 Expenses .................................................. 40
13.2 Public Announcements ...................................... 40
13.3 Confidentiality ........................................... 41
13.4 Notices ................................................... 41
13.5 Further Assurances ........................................ 42
13.6 Waiver .................................................... 42
13.7 Entire Agreement and Modification ......................... 42
13.8 Assignments, Successors, And No Third-Party Rights ........ 42
13.9 Severability .............................................. 43
13.10 Section Headings, Construction ............................ 43
13.11 Governing Law ............................................. 43
13.12 Counterparts .............................................. 43
Schedule 2.2 Stockholders Allocations
Schedule 3.2 Stockholders and the Company's Conflicts
Schedule 3.6 Title to Properties and Encumbrances
Schedule 3.8 Accounts Receivable
Schedule 3.9 Open Orders
Schedule 3.11 Undisclosed Liabilities
Schedule 3.13 Material Adverse Changes
Schedule 3.14 Employee Benefits
Schedule 3.15 Legal Requirements
Schedule 3.16 Legal Proceedings
Schedule 3.17 Absence of Certain Charges
Schedule 3.18 Contracts
Schedule 3.20 Environmental Matters
Schedule 3.22 Intellectual Property
Schedule 4.3 Buyer's Conflicts
Exhibit 2.5(d) Form of Escrow Agreement
Exhibit 8.4(a) Form of Legal Opinion of Stockholders' Counsel
Exhibit 8.4(b) Form of Stockholders' and the Company's Certificates
Exhibit 8.4(c) Form of Employment Agreement
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TABLE OF CONTENTS (Continued)
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Exhibit 8.4(d) Form of Non-Competition Agreement
Exhibit 9.4(b) Form of Buyer's Certificate
Exhibit 11.7 Form of Release
v
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of this 28th
day of August, 1997, by and among The Triumph Group Operations, Inc., a
Delaware corporation, ("Buyer"), Hydro-Mill Co., a California corporation
(the "Company"), Xxxxxx Xxxxx-Xxxxxxxxx ("Xxxxx-Xxxxxxxxx"), Xxxxxxxxx
Charitable Remainder Unitrust, Xxxxxx Xxxxx-Xxxxxxxxx, as Trustee ("Xxxxxxxxx
Trust"), and Xxxxx Charitable Remainder Unitrust, Xxxxxx Xxxxx-Xxxxxxxxx as
Trustee ("Xxxxx Trust") (with Xxxxx-Xxxxxxxxx, Xxxxxxxxx Trust and Xxxxx
Trust, hereinafter collectively referred to as the "Stockholders").
RECITALS
The Company is located in Chatsworth, California, and operates two
facilities engaged in providing precision machined parts and assemblies to
the aerospace industry. All of the issued and outstanding shares of capital
stock of the Company are owned by the Stockholders.
The Stockholders desire to sell, and Buyer desires to purchase, all of
the issued and outstanding shares of common stock, par value $1.00 of the
Company (the "Shares"), for the consideration and on the terms set forth in
this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms have
the meanings set forth in this Section 1:
"Balance Sheet" has the meaning set forth in Section 3.4.
"Base Net Operating Assets" has the meaning set forth in Section 2.3(b).
"Best Efforts" means the efforts that a reasonable Person desirous of
achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible provided that such efforts
shall not require the unreasonable payment of consideration.
"Business Day" means a day on which commercial banks are open for
business in Philadelphia, Pennsylvania.
"Buyer" has the meaning set forth in the first paragraph of this
Agreement.
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"Certificates" has the meaning set forth in Section 2.5(a).
"Closing" has the meaning set forth in Section 2.4.
"Closing Balance Sheet" has the meaning set forth in Section 2.3.
"Closing Date" means the date and time as of which the Closing actually
takes place.
"Closing Net Operating Assets" has the meaning set forth in Section
2.3(b).
"Closing Purchase Price Payment" has the meaning set forth in Section
2.2(a).
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Consent" means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contract" means any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Damages" has the meaning set forth in Section 11.2.
"Deferred Payment" has the meaning set forth in Section 2.2(c).
"Encumbrance" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, or restriction of any kind, including any restriction on
use, voting, transfer, receipt of income, or exercise of any other attribute
of ownership.
"Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities" means any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law.
"Environmental Law" means any Legal Requirement that requires or relates
to:
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(a) advising appropriate authorities, employees and the public of
intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction,
that could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants, contaminants or hazardous substances or materials into the
Environment or the exposure of members of the public or the Environment to
pollutants, contaminants, or hazardous substances or materials;
(c) reducing the quantities, preventing the release or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged and used so
that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil or other potentially
harmful substances;
(g) investigating or cleaning up pollutants or hazardous or regulated
substances that have been released, removing or preventing the threat of
release or paying the costs of such investigation, clean up, removal or
prevention; or
(h) making responsible parties pay governmental authorities or private
parties, or groups of them, for damages done to their health or the
Environment, or permitting self-appointed representatives of the public
interest to recover for injuries done to public assets.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor law, and regulations and rules issued pursuant to
that Act or any successor law.
"Escrow Account" has the meaning set forth in Section 2.5(d).
"Escrow Agent" has the meaning set forth in Section 2.5(d).
"Escrow Agreement" has the meaning set forth in Section 2.5(d).
"Escrow Amount" means an amount equal to Two Million Two Hundred Thousand
Dollars ($2,200,000) to be held in escrow pursuant to the Escrow Agreement.
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"Escrow Fund" has the meaning set forth in Section 2.5(d).
"Facilities" means any real property, leaseholds or other interests
currently owned or operated by the Company and any buildings, plants,
structures or equipment (including motor vehicles, tank cars and rolling
stock) currently owned or operated by the Company including, without
limitation, the real property and leaseholds listed on Schedule 3.6.
"Final Closing Balance Sheet" has the meaning set forth in Section 2.3(e).
"Final Closing Net Asset Value" has the meaning set forth in Section
2.3(e).
"Final Purchase Price Payment" has the meaning set forth in Section
2.3(e).
"Financial Statements" has the meaning set forth in Section 3.4.
"GAAP" means generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet was
prepared.
"Governmental Authorization" means any approval, Consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise
made available by or under the authority of any governmental body or pursuant
to any Legal Requirement.
"Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about or from the Facilities or any part thereof into the Environment, and
any other act, business, operation or thing that increases the danger, or
risk of danger, or poses an unreasonable risk of harm to persons or property
on or off the Facilities, or that may affect the value of the Facilities or
the Company.
"Hazardous Materials" means any waste or other substance that is listed,
defined, designated or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution
thereof, and specifically including petroleum and all derivatives thereof or
synthetic substitutes therefor and asbestos or asbestos-containing materials.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976
or any successor law, and regulations and rules issued pursuant to that Act
or any successor law.
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"IRC" means the Internal Revenue Code of 1986, as amended, or any
successor law, and regulations issued by the IRS pursuant to the IRC or any
successor law.
"IRS" means the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Indemnified Persons" has the meaning set forth in Section 11.2.
"Knowledge" means an individual will be deemed to have "Knowledge" of a
particular fact or other matter if (a) such individual is actually aware of
such fact or other matter; or (b) a prudent individual could be expected to
discover or otherwise become aware of such fact or other matter in the course
of conducting a reasonably comprehensive investigation concerning the
existence of such fact or other matter. A Person other than an individual
will be deemed to have "Knowledge" of a particular fact or other matter if
any individual who is currently serving, as of the date of this Agreement, as
a director, officer, partner, executor, or trustee of such Person (or in any
similar capacity) has, or at any time had, Knowledge of such fact or other
matter.
"Legal Requirement" means any federal, state, local, municipal, foreign,
international, multinational or other judicial or administrative order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty.
"Material Adverse Change" means any material adverse change in the
condition (financial or other), properties, assets, or business of the
Company taken as a whole.
"Material Adverse Effect" means an effect that would result in a change
in the condition (financial or other), properties, assets, or business of the
Company taken as a whole, which is likely to result in any loss, claim,
obligation, action, damage, penalty, liability, cost, expense or other
adverse monetary effect in an amount equal to or greater than $100,000.
"Net Operating Assets" means the total assets of the Company minus all
current liabilities of the Company (except Purchase Price Indebtedness
including accrued interest) all as determined in accordance with GAAP applied
consistently with the Company's past practices and policies. Closing Net
Operating Assets will be determined using the same accounting principles
consistently applied as used by KPMG Peat Marwick, LLP in preparing the
audited Balance Sheet.
"Non-Compete Payment" has the meaning set forth in Section 2.2(b).
"Occupational Safety and Health Law" means any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards.
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"Open Orders" means orders for goods and services with customers of the
Company under which the Company has unperformed delivery requirements,
together with related purchase orders, contracts, subcontracts and accounts
receivable and credit support associated with such orders.
"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other governmental body or by any arbitrator.
"Pay-Off Statements" has the meaning set forth in Section 2.3(a).
"Permitted Encumbrances" means (i) liens for current state and local
property taxes or assessments not yet due or delinquent or which are being
contested in good faith; (ii) mechanics', carriers', workers', repairers' and
other similar liens arising or incurred in the ordinary course of business
relating to obligations as to which there is no default on the part of the
Company; (iii) exceptions shown on the surveys furnished by the Company to
Buyer or otherwise disclosed on a Schedule on or before the date hereof or
which do not have a Material Adverse Effect individually or in the aggregate;
(iv) mortgages on the landlord's interest in property leased to the Company;
(v) liens and encumbrances reflected in the Balance Sheet other than those
liens and encumbrances securing the Purchase Price Indebtedness if such liens
and encumbrances remain after Closing; (vi) liens or encumbrances incurred or
created since the date of the Preliminary Closing Balance Sheet incurred in
the ordinary course of business and which do not have a Material Adverse
Effect individually or in the aggregate; and (vii) such other non-monetary
liens, encroachments, easements, reservations of oil and mineral rights,
imperfections of title, building and other restrictions, rights of way, land
use ordinances and zoning plans which do not have a Material Adverse Effect
individually or in the aggregate.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, labor union or other
entity or governmental body.
"Plan" has the meaning set forth in Section 3.13.
"Policies" has the meaning set forth in Section 3.19.
"Preliminary Closing Balance Sheet" has the meaning set forth in Section
2.3(c).
"Preliminary Net Operating Assets" has the meaning set forth in Section
2.3(c)
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil,
6
criminal, administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any governmental
body or arbitrator.
"Purchase Price" has the meaning set forth in Section 2.2.
"Purchase Price Indebtedness" means all indebtedness for borrowed money
of the Company owed to Mellon Bank, N. A. as reflected in the Pay-Off
Statements and including any pre-payment penalties.
"Related Person" means with respect to a particular individual: (a) each
other member of such individual's Family; (b) any Person that is directly or
indirectly controlled by such individual or one or more members of such
individual's Family; (c) any Person in which such individual or members of
such individual's Family hold (individually or in the aggregate) a Material
Interest; and (d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer,
partner, executor or trustee (or in a similar capacity). "Related Person"
means with respect to a specified Person other than an individual: (a) any
Person that directly or indirectly controls, is directly or indirectly
controlled by, or is directly or indirectly under common control with such
specified Person; (b) any Person that holds a Material Interest in such
specified Person; (c) each Person that serves as a director, officer,
partner, executor, or trustee of such specified Person (or in a similar
capacity); (d) any Person in which such specified Person holds a Material
Interest; (e) any Person with respect to which such specified Person serves
as a general partner or a trustee (or in a similar capacity); and (f) any
Related Person of any individual described in clause (b) or (c). For
purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse and former spouses, (iii) any
other natural person who is related to the individual or the individual's
spouse within the second degree, and (iv) any other natural person who
resides with such individual, and (b) "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of voting securities or other voting interests
representing at least 10% of the outstanding voting power of a Person or
equity securities or other equity interests representing at least 10% of the
outstanding equity securities or equity interests in a Person.
"Release" means any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping or other releasing into the Environment, whether
intentional or unintentional.
"Representative" means, with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor or other
representative of such Person, including legal counsel, accountants and
financial advisors.
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"Securities Act" means the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"Shares" has the meaning set forth in the Recitals of this Agreement.
"Tax" means any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax or estate tax), levy,
assessment, tariff, duty (including any customs duty) deficiency, or other
fee, and any related charge or amount including any fine, penalty, interest
or addition to tax), imposed, assessed or collected by or under the authority
of any governmental body or payable pursuant to any tax-sharing agreement or
any Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"Tax Return" means any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed
with or submitted to, or required to be filed with or submitted to any
governmental body in connection with the determination, assessment,
collection or payment of any Tax or in connection with the administration,
implementation, or enforcement of or compliance with any Legal Requirement
relating to any Tax.
"Threat of Release" means a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
"Threatened" means a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any written demand or statement
has been made or any written notice has been given that would lead a
reasonable Person to conclude that such a claim, Proceeding, dispute, action,
or other matter is likely to be asserted, commenced, taken or otherwise
pursued in the future.
2. SALE AND TRANSFER OF SHARES; CLOSING.
2.1 Shares. Subject to the terms and conditions of this Agreement, at
the Closing, the Stockholders will sell and transfer the Shares to Buyer, and
Buyer will purchase the Shares from the Stockholders.
2.2 Purchase Price. The purchase price for the Shares will be the
following (the "Purchase Price"):
(a) $31,760,000, as adjusted pursuant to Section 2.3 and less the Escrow
Amount payable in cash at the Closing and allocated among the Stockholders as
provided on Schedule 2.2 (the "Closing Purchase Price Payment);
8
(b) The Escrow Amount deposited with the Escrow Agent on the Closing
Date; and
(c) $1,000,000 (the "Deferred Payment"), payable to the Stockholders as
provided in Schedule 2.2 on the first anniversary of the Closing Date. The
Deferred Payment shall not accrue any interest.
2.3 Adjustments to Purchase Price.
(a) The Purchase Price shall be decreased by one dollar for each dollar
of Purchase Price Indebtedness, as reflected in pay off statements provided
by Mellon Bank, N.A. on the Closing Date ("Pay-Off Statements").
(b) The Purchase Price shall be further adjusted, either upward or
downward on a dollar-for-dollar basis, for any change in the Net Operating
Assets of the Company as of the close of business (taking into account all
sales shipped on such date) on August 31, 1997 (the "Closing Net Operating
Assets"), as compared to the Net Operating Assets of the Company as of
December 31, 1996 (the "Base Net Operating Assets").
(c) Prior to the Closing, Stockholders shall furnish to Buyer unaudited
financial statements for the Company as of the close of business on July 31,
1997 prepared in accordance with GAAP, properly and consistently applied,
including a balance sheet at July 31, 1997 (the "Preliminary Closing Balance
Sheet"), and a calculation of any required adjustment to the Purchase Price
based on the Preliminary Closing Balance Sheet, as if the Closing had
occurred on that date. The amount payable to the Stockholders at the Closing
pursuant to Section 2.2(a) shall be increased or decreased, as appropriate,
to reflect any increase or decrease in the Net Operating Assets of the
Company, as reflected on the Preliminary Closing Balance Sheet (the
"Preliminary Closing Net Operating Assets"), as compared to the Base Net
Operating Assets.
(d) After delivery to Buyer of the Preliminary Closing Balance Sheet,
Buyer and its Representatives shall be afforded the opportunity to review and
inspect all of the financial records, work papers, schedules and other
supporting papers relating to the preparation of the Preliminary Closing
Balance Sheet and to consult with Stockholders, the Company and their
Representatives, if necessary, regarding the methods used in the preparation
of the Preliminary Closing Balance Sheet.
(e) Promptly following the Closing Date, but not longer than 30 days,
Buyer shall prepare and furnish to Stockholders a balance sheet of the
Company as of the Closing Date (the "Final Closing Balance Sheet") showing
the Net Operating Assets of the Company as of such date (the "Final Closing
Net Operating Assets"). Following the determination of the Final Closing Net
Operating Assets, the Purchase Price shall be increased or decreased, as
appropriate, to reflect any increase or decrease in the Final Closing Net
Operating Assets as compared to the Base Net Operating
9
Assets as determined in accordance with Section 2.3(b). If such
determination indicates an additional amount is due Stockholders, Buyer shall
pay to Stockholders such additional amount within ten (10) Business Days of
the delivery of the Final Closing Balance Sheet (the "Final Purchase Price
Payment"). If such determination indicates that the Purchase Price paid to
the Stockholders at the Closing exceeds the amount due the Stockholders
hereunder, subject to Section 2.3(f) the excess shall be repaid to Buyer from
the Escrow Fund upon joint written instruction of Buyer and Stockholders to
the Escrow Agent within ten (10) Business Days following receipt of the Final
Closing Balance Sheet.
(f) In the event Stockholders dispute the calculation of the Final
Closing Net Operating Assets, Stockholders shall notify Buyer in writing of
such dispute and the basis therefor within ten (10) Business Days and Buyer
and Stockholders shall attempt to resolve such dispute for a period of thirty
(30) days. In the event Buyer and Stockholders are unable to resolve such
dispute within thirty (30) days, they shall reduce to writing those points on
which they agree and those points on which they disagree and shall (i) retain
as arbitrator Deloitte & Touche, provided neither Buyer, Stockholders nor the
Company has an existing relationship with them, or failing their agreement to
act as arbitrator, such other independent accounting firm as may be mutually
agreed upon by Buyer and Stockholders to review such matters as to which the
parties have not agreed in writing and (ii) request such arbitrator to act as
promptly as practicable in accordance with the rules to be established by
Buyer, Stockholders and such arbitrator to resolve all such disputed matters
within thirty (30) days after being retained. The decision of the arbitrator
shall be issued in writing to both Buyer and Stockholders and shall be final,
non-appealable and binding on Stockholders and Buyer, and the fees and
expenses, if any, of such arbitrator shall be paid one-half by Stockholders
and one-half by Buyer. The obligations of the Buyer to pay any additional
amount on account of the Purchase Price and of the Stockholders to return any
previously paid amounts pursuant to Section 2.3(e) shall be deferred until
the issuance of the arbitrator's decision. In the event Buyer is required to
pay Stockholders any additional amount as a result of the arbitrator's
decision, Buyer shall pay such additional amount to Stockholders within ten
(10) Business Days. Any amount owed to the Buyer by the Stockholders as
determined by the arbitrator shall be paid to Buyer from the Escrow Fund
within ten (10) Business Days of the arbitrator's decision.
2.4 Closing. The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of the Company at 7:00 a.m. (local
time), on September 2, 1997, with the wire transfer of the Closing Purchase
Price Payment to be initiated by Buyer to accounts designated by Stockholders
in writing before 8:00 a.m. Pacific Daylight Savings Time. If the Closing
Purchase Price Payment is not received by Stockholders on the Closing Date,
Buyer shall pay interest to the Stockholders at the rate of 6% per annum from
and including the Closing Date to the date that the wire transfer is received
by Stockholders, provided,
10
that no such interest shall be payable if (1) the Stockholders or anyone of
them have been the cause of such delay or (2) Buyer has initiated the wire as
provided above.
2.5 Closing Obligations. At the Closing:
(a) The Stockholders will deliver to Buyer certificates representing the
Shares, accompanied by duly executed stock powers (the "Certificates"), for
transfer to Buyer.
(b) Buyer will deliver to Mellon Bank, N.A. an amount equal to the
Purchase Price Indebtedness owed such lender by the Company as set forth in
the Pay-Off Statements by wire transfer to an account or accounts specified
by such lender.
(c) Buyer will deliver to the Stockholders an amount equal to the
Closing Purchase Price Payment by wire transfer to an account specified by
the Stockholders.
(d) Buyer shall deposit in an account (the "Escrow Account") the Escrow
Amount (together with income earned thereon, the "Escrow Fund") in accordance
with an Escrow Agreement (the "Escrow Agreement") in the form of Exhibit
2.5(d) among Buyer, Stockholders and a bank, trust company or similar
institution named by Stockholders, as Escrow Agent (the "Escrow Agent"). The
Escrow Fund shall be payable to Stockholders as provided in the Escrow
Agreement on the first anniversary of the Closing Date. Buyer shall pay all
fees and expenses in connection with the Escrow Fund including without
limitation fees due to the Escrow Agent. The Escrow Fund shall be invested
as Stockholders shall determine so long as the Escrow Fund shall hold
investments of the type and quality which could be purchased and held by a
charitable remainder trust such as the Xxxxx Trust and the Xxxxxxxxx Trust.
(e) Without in any way limiting Buyer's rights and remedies under
Sections 11 or 12 of this Agreement, Buyer shall have recourse in accordance
with the provisions of the Escrow Agreement until the first anniversary of
the Closing Date to the Escrow Fund for payments due to Buyer from
Stockholders under Sections 2.3(e) and (f) and 11; provided, however, that
Buyer shall only have recourse to the Escrow Fund after Buyer has exercised
its right of set-off against the Deferred Payment as provided in Section 12.
3. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND COMPANY. Subject to
the last paragraph of Section 11.2 and to Section 11.8, the Xxxxx Trust and
the Xxxxxxxxx Trust represent and warrant to Buyer and Xxxxx-Xxxxxxxxx and
the Company jointly and severally represent and warrant to Buyer that:
3.1 Organization and Good Standing.
(a) The Company is a corporation duly organized, validly existing, and
in good standing under the laws of the State
11
of California, with full corporate power and authority to conduct its
business as it is now being conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
each state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by
it, requires such qualification, except for failures to be so qualified or in
good standing, as the case may be, that would not reasonably be expected, in
the aggregate, to have a Material Adverse Effect individually or in the
aggregate on the operations or assets of the Company.
(b) The Company has delivered to Buyer copies of the Articles of
Incorporation and Bylaws of the Company, as currently in effect.
3.2 Authority and Legal Capacity; Due Authorization, Execution and
Delivery; No Conflict.
(a) The Company has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations under this Agreement.
The execution, delivery, and performance by the Company of this Agreement and
the consummation of the transactions contemplated hereby, subject to the
conditions set forth herein, have been duly authorized by all necessary
corporate action on the part of the Company. Each Stockholder has the full
power and legal right and authority to execute and deliver this Agreement and
to perform her or its obligations under this Agreement. This Agreement has
been duly and validly executed and delivered by Stockholders and the Company.
This Agreement constitutes the legal, valid and binding obligation of
Stockholders and the Company, enforceable against Stockholders and Company in
accordance with its terms.
(b) Except as set forth in Schedule 3.2, neither the execution and
delivery of this Agreement nor the consummation or performance of any
obligations hereunder will, directly or indirectly (i) contravene, conflict
with or result in a violation of the charter or Bylaws of the Company or the
trust agreements of Stockholders which are trusts; (ii) contravene, conflict
with or result in a violation of, or give any governmental body or other
Person the right to challenge any of the transactions contemplated by this
Agreement or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which any of the Stockholders or the Company, or
any of the assets owned or used by the Company, may be subject; or (iii)
contravene, conflict with or result in a violation or breach of any provision
of, or give any Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any material Contract. Except as set forth in Schedule
3.2, Stockholders and the Company are not and will not be required to obtain
any Consent from any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the transactions
contemplated by this Agreement.
12
3.3 Capitalization. The authorized equity securities of the Company
consist of 2,000,000 shares of Common Stock, $1.00 par value per share
("Common Stock"), of which 1,000,000 shares of Common Stock are currently
issued and outstanding, which, in the aggregate, constitute the Shares. The
Stockholders are and will be on the Closing Date the record and beneficial
owners and holders of the Shares, free and clear of all Encumbrances. There
are no Contracts relating to the issuance or transfer of any equity
securities or other securities of the Company and no legend or other
reference to any purported Encumbrance appears upon any certificate
representing equity securities of the Company. None of the outstanding
equity securities or other securities of the Company was issued in violation
of the Securities Act or any other Legal Requirement. The Company neither
owns nor has any Contract to acquire, any equity securities or other
securities of any Person or any direct or indirect equity or ownership
interest in any other business.
3.4 Financial Statements. The Company has delivered to Buyer: (a)
audited balance sheets of the Company as at December 31 in each of the years
1994 through 1995, and the related audited statements of income, changes in
stockholders' equity, and cash flow for each of the fiscal years then ended,
together with the report thereon of KPMG Peat Marwick LLP, independent
certified public accountants, (b) an audited balance sheet of the Company as
at December 31, 1996 (including the notes thereto, the "Balance Sheet"), and
the related audited statements of income, changes in stockholders' equity,
and cash flow for the fiscal year then ended, together with the report
thereon of KPMG Peat Marwick LLP, independent certified public accountants,
and (c) the Preliminary Closing Balance Sheet and the related unaudited
statements of income, changes in stockholders' equity, and cash flow for the
seven months then ended, including in each case the notes thereto. Such
financial statements and notes fairly present in all material respects the
financial condition and the results of operations, changes in stockholders'
equity, and cash flow of the Company as at the respective dates of and for
the periods referred to in such financial statements, all in accordance with
GAAP; the financial statements referred to in this Section 3.4 reflect the
consistent application of such accounting principles throughout the periods
involved, except as disclosed in the notes to such financial statements. No
financial statements of any Person other than the Company are required by
GAAP to be included in the financial statements of the Company.
3.5 Books and Records. The books of account, minute books, stock record
books and other records of the Company, all of which have been made available
to Buyer, are complete and correct and have been maintained in accordance
with sound business practices. No meeting of any Stockholders of the
Company, the Board of Directors of the Company or any committee of the Board
of Directors of the Company has been held for which minutes have not been
prepared and are not contained in the minute books of the Company except
where the failure to have such minutes does not have a Material Adverse
Effect individually or in the aggregate.
13
The Board of Directors of the Company or any committee of the Board of
Directors of the Company has not authorized the guaranty or surety by the
Company of any obligations or liabilities of any third parties or any Related
Parties of the Company or any officer, director, employee or shareholder of
the Company.
3.6 Title to Properties; Encumbrances. Schedule 3.6 contains a true and
complete list of all real property, leaseholds, or other interests therein
owned by the Company. The Company owns (with good and marketable title in
the case of real property) all the properties and assets (whether real,
personal, or mixed and whether tangible or intangible) reflected as owned in
the books and records of the Company, including all of the properties and
assets reflected in the Balance Sheet (except for personal property sold
since the date of the Balance Sheet in the ordinary course of business). All
material properties and assets reflected in the Balance Sheet are free and
clear of all Encumbrances other than Permitted Encumbrances. Except as set
forth on Schedule 3.6, Real property, including leaseholds and other
interests therein owned by the Company, are not subject to any rights of way,
building use restrictions, exceptions, variances, reservations or limitations
of any nature except minor imperfections of title, if any, other than
Permitted Encumbrances. Except as set forth on Schedule 3.6, all buildings,
plants and structures owned by the Company lie wholly within the boundaries
of the real property owned by the Company and do not encroach upon the
property of, or otherwise conflict with the property rights of, any other
person, except where any such encroachments or conflicts do not have a
Material Adverse Effect individually or in the aggregate.
3.7 Condition and Sufficiency of Assets. To the Knowledge of the
Company and the Stockholders, the buildings, plants, structures, and
equipment of the Company are structurally sound, are in good operating
condition and repair normal wear and tear excepted and are adequate for the
uses to which they are being put except where such inadequacy does not have a
Material Adverse Effect individually or in the aggregate, and none of such
buildings, plants, structures, or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs. To the
Knowledge of the Company and the Stockholders, the building, plants,
structures, and equipment of the Company are sufficient for the continued
conduct of the Company's businesses after the Closing in substantially the
same manner as conducted prior to the Closing. No representation or warranty
is made about equipment not currently in use by the Company.
3.8 Accounts Receivable. All accounts receivable of the Company that
are reflected on the Balance Sheet or the Preliminary Closing Balance Sheet
(collectively, the "Accounts Receivable") represented or will represent valid
obligations arising from sales actually made or services actually performed
in the ordinary course of business. Unless paid prior to the Closing Date,
the Accounts Receivable are or will be as of the Closing Date current and
collectible net of the respective reserves shown on the Balance Sheet, the
Preliminary Closing Balance Sheet or the Closing
14
Balance Sheet (which reserves are adequate and calculated consistent with
past practice and, in the case of the reserve as of the Closing Date, will
not represent a greater percentage of the Accounts Receivable as of the
Closing Date than the reserve reflected in the Preliminary Closing Balance
Sheet represented of the Accounts Receivable reflected therein and will not
represent a Material Adverse Change in the composition of such Accounts
Receivable in terms of aging). Subject to such reserves, each of the
Accounts Receivable either has been or will be collected in full, without any
set-off. There is no contest, claim, or right of set-off, other than returns
in the ordinary course of business, under any Contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable. Schedule 3.8 contains a true and complete list of all Accounts
Receivable as of the date of the Preliminary Closing Balance Sheet, which
list sets forth the aging of such Accounts Receivable.
3.9 Open Orders. All Open Orders are valid, binding and in full force
and effect and neither the Company nor, to the Knowledge of the Company and
the Stockholders, the other party thereto is in default thereunder. Schedule
3.9 is a true and complete list of all Open Orders showing contract/purchase
order numbers, names of corresponding customers and the respective amount of
each order as of June 30, 1997. None of the Open Orders contains any
provision giving any Person the right to terminate such Open Order by reason
of the execution of this Agreement or the consummation of the transactions
contemplated hereby, and none of the terms of any Open Order will be
adversely affected in any material respect by reason of the execution of this
Agreement or the consummation of the transactions contemplated hereby. The
Company has no obligation to make any payments to representatives or any
other Person on or with respect to Open Orders.
3.10 Inventory. All inventory of the Company, as reflected in the
Balance Sheet or the Preliminary Closing Balance Sheet, consists of a quality
and quantity usable and salable in the ordinary course of business, except
for obsolete items and items of below-standard quality, all of which have
been written off or written down to net realizable value in the Balance
Sheet, the Preliminary Closing Balance Sheet or on the Closing Balance Sheet,
as the case may be. All inventories not written off have been priced at the
lower of cost or market on a first in, first out basis. The quality and
quantities of each item of inventory (whether raw materials, work-in-process,
or finished goods) are saleable in the normal course of the business of the
Company and are not excessive in kind and amount, but are reasonable in the
present circumstances of the Company's operations.
3.11 No Undisclosed Liabilities. Except as set forth in Schedule 3.11,
to the Knowledge of the Company and the Stockholders, the Company has no
liabilities or obligations of any nature whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations reflected or
reserved against in the Balance Sheet or the Preliminary Closing Balance
Sheet, and the Closing Balance Sheet.
15
3.12 Taxes.
(a) The Company has filed or caused to be filed all Tax Returns that are
or were required to be filed by or with respect to it, pursuant to applicable
Legal Requirements. The Company has made available to Buyer copies of all
such Tax Returns filed since 1994. The Company has paid, or made provision
for the payment of, all Taxes that have or may have become due pursuant to
those Tax Returns or otherwise, or pursuant to any assessment received by the
Company, except such Taxes, if any, as are being contested in good faith and
as to which adequate reserves (determined in accordance with GAAP) have been
provided in the Closing Balance Sheet.
(b) The charges, accruals, and reserves with respect to Taxes on the
respective books of the Company are adequate (determined in accordance with
GAAP) and are at least equal to the Company's liability for Taxes. There
exists no proposed Tax assessment against the Company except as disclosed in
the Closing Balance Sheet. All Taxes that the Company is or was required by
Legal Requirements to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper
governmental body or other Person.
3.13 No Material Adverse Change. Except as disclosed on Schedule 3.13,
since the date of the Balance Sheet, there has not been any Material Adverse
Change in the business, operations, properties, assets, or condition of the
Company, and no event has occurred or circumstance exists that could result
in such a Material Adverse Change.
3.14 Employee Benefits.
(a) For purposes of this Section 3.14, the following terms have the
meanings set forth below:
"Company Plan" means all Plans which the Company or an ERISA
Affiliate of the Company sponsors or maintains, or to which the Company or an
ERISA Affiliate of the Company otherwise contributes, or in which the Company
or an ERISA Affiliate of the Company otherwise participates. All references
to Plans are to Company Plans unless the context requires otherwise.
"Company VEBA" means a VEBA whose members include employees of the
Company or any ERISA Affiliate of the Company.
"ERISA Affiliate" means, with respect to the Company, any other
Person that, together with the Company, would be treated as a single employer
under IRC Section 414.
"Multiemployer Plan" has the meaning set forth in ERISA Section
3(37)(A).
"Pension Plan" has the meaning set forth in ERISA
Section 3(2).
16
"Plan" means (i) an "employee benefit plan" within the meaning of
ERISA Section 3(3), (ii) any severance, bonus, stock option, stock purchase,
incentive compensation or deferred compensation arrangement, including but
not limited to any such arrangement, contained in an employment agreement,
(iii) any plan or policy providing for "fringe benefits" to employees of the
Company, including but not limited to vacation, paid holidays, permanent
leave. employee discounts, educational benefits or similar programs, (iv) any
employment agreement, or each oral or written contract, commitment and
understanding with each current or former director, officer, employee or
stockholder or any associate or relative of any thereof, which is not
immediately terminable without cost or other liability to Buyer and (v) any
funding or insurance arrangement for workers' compensation benefits.
"Qualified Plan" means any Plan that meets or purports to meet the
requirements of IRC Section 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title
IV of ERISA, 29 U.S.C. Section 1301 et seq., other than Multiemployer Plans.
"VEBA" means a voluntary employees' beneficiary association under
IRC Section 501(c)(9).
"Welfare Plan" has the meaning set forth in ERISA Section 3(1).
(b) Schedule 3.14 contains a true and complete list of all Company
Plans and Company VEBAs which the Company or any ERISA Affiliate sponsors or
maintains, or in which the Company or any ERISA Affiliate participates, or to
which the Company or any ERISA Affiliate contributes and in which employees
of the Company participate, and identifies as such all Company Plans that are
severance or deferred compensation arrangements (including such arrangements
contained within an employment agreement) other than Qualified Plans.
(c) With respect to Company Plans and Company VEBAs identified in
Schedule 3.14, the Company has delivered to Buyer, or will deliver to Buyer
within ten days of the date of this Agreement:
(i) true, correct and complete copies of all documents
creating or evidencing any Plan, and true, correct and complete copies of all
reports, forms and other documents required to be filed with any governmental
entity or distributed to Plan participants or employees (including, without
limitation, summary plan descriptions, Forms 5500 (including all schedules
and attachments hereto) and summary annual reports for the past three (3)
years for all Plans subject to ERISA). In the case of a Plan which is
unwritten or consists of an oral agreement, a true, correct and accurate
summary of such Plan or oral agreement shall be provided.
17
(ii) all registration statements filed with the Securities and
Exchange Commission with respect to any Company Plan;
(iii) the current insurance policies purchased by or to provide
benefits under any Company Plan;
(iv) all material written Contracts with third party
administrators, actuaries, investment managers, consultants and other
independent contractors that relate to any Company Plan or Company VEBA;
(v) all notices that were given by the IRS, the PBGC, or the
Department of Labor to the Company, any ERISA Affiliate of the Company or any
Company Plan within the two years preceding the date of this Agreement; and
(vi) The most recent IRS determination letter for each Company
Plan that is a Qualified Plan and the IRS letter recognizing the tax exempt
status of each Company VEBA.
(d) Neither the Company nor any ERISA Affiliate is, or has at any
time been, a party to any Multiemployer Plan or is, or has at any time been,
required to contribute to any such Multiemployer Plan.
(e) Neither the Company nor any ERISA Affiliate has at any time
sponsored or maintained, directly or indirectly, a Title IV Plan or an
employee pension benefit plan that is or was subject to the minimum funding
requirements of Section 302 of ERISA or Section 412 of the Code.
(f) With respect to employees of the Company, except as set forth in
Schedule 3.14:
(i) The Company has performed, in all material respects, its
respective obligations under all Company Plans and Company VEBAs, and each
Company Plan and Company VEBA has been administered in all material respects
in accordance with its terms. The Company has made appropriate entries in
its financial records and statements for all material amounts of obligations
and liabilities under such Plans and VEBAs that have accrued but are not due.
(ii) The Company, with respect to all Company Plans and Company
VEBAs, is and each Company Plan and Company VEBA in which the Company
participates or to which it contributes is in material compliance with ERISA,
the IRC and other applicable laws, including the provisions of such laws
expressly mentioned in this Section 3.14, including that:
(A) No transaction prohibited by ERISA Section 406 and no
"prohibited transaction" under IRC Section 4975(c) have occurred with respect
to any Company Plan.
18
(B) Neither the Company nor, to the Company's knowledge, any
fiduciary with respect to any Plan has any liability (whether joint or
several) for any excise tax imposed by Sections 4975, 4976, 4977, 4979, 4980A
or 4980D of the IRC, or (iv) to a fine under Section 502 of ERISA.
(C) All filings required by ERISA and the IRC as to each Plan
have been timely filed, and all notices and disclosures to participants
required by either ERISA or the IRC have been timely provided.
(D) All contributions and payments made or accrued with
respect to all Company Plans and Company VEBAs are deductible under IRC
Section 162 or Section 404. No amount, or any asset of any Company Plan or
Company VEBA is subject to tax as unrelated business taxable income.
(iii) Other than claims for benefits submitted by participants or
beneficiaries and Qualified Domestic Relations Orders (as defined in IRC
Section 414(p), no claim against, or Proceeding involving, any Company Plan
or Company VEBA is pending or, to the Knowledge of Stockholders and the
Company, is Threatened.
(iv) Each Plan intended to qualify under Section 401(a) of the IRC
is the subject of a favorable unrevoked determination letter issued by the
Internal Revenue Service as to its qualified status, the Internal Revenue
Service has not threatened to revoke any favorable determination or opinion
letter with respect to such Plan, and nothing has occurred since the date of
the most recent determination letter to cause the loss or potential loss of
any Plan's qualification.
(v) Except to the extent required under ERISA Section 601 et seq.
and IRC Section 4980B or state law conversion or continuation rights, the
Company does not provide health or welfare benefits for any retired or former
employee or is obligated to provide health or welfare benefits to any active
employee following such employee's retirement or other termination of service.
(vi) The Company has substantially complied with the provisions of
ERISA Section 601 et seq. and IRC Section 4980B relating to COBRA
continuation coverage, the Family and Medical Leave Act of 1993 and the
Health Insurance Portability and Accountability Act of 1996 to the extent
legally required to do so.
(vii) All insurance premiums have been paid in full, subject only
to normal retrospective adjustments in the ordinary course, with regard to
the Plans for plan years ending on or before the Closing Date. With respect
to periods from the close of the most recent plan year through the Closing
Date with respect to the Plans, all insurance premiums due or payable through
the Closing Date have been or will be paid in full, and no such premium is
overdue or in a grace period for late payment.
19
3.15 Compliance With Legal Requirements. Except as set forth in Schedule
3.15 and except for compliance matters involving Environmental Laws which are
dealt with in Section 3.20, (i) the Company is in compliance with each Legal
Requirement that is applicable to it, except where the failure so to comply
could not, in the aggregate, have a Material Adverse Effect on the operations
or assets of the Company; and (ii) the Company has not received, at any time
since February 1, 1993, any written notice or other written communication
from any governmental body regarding any actual or potential material
violation of, or material failure to comply with, any Legal Requirement
except where such failure could not have a Material Adverse Effect
individually or in the aggregate on the operations or assets of the Company.
Schedule 3.15 contains a complete and accurate list of each Governmental
Authorization that is material to the operation or assets of the Company and
that is held by the Company or that otherwise relates to the business of, or
to any of the assets owned or used by, the Company. Each Governmental
Authorization listed or required to be listed in Schedule 3.15 is valid and
in full force and effect and will remain in full force and effect following
consummation of the transaction described in this Agreement.
3.16 Legal Proceedings; Orders.
(a) Except as set forth in Schedule 3.16, there is no pending Proceeding
(i) that has been commenced by or against the Company, other than those that
could not, in the aggregate, have a Material Adverse Effect individually or
in the aggregate on the operations or assets of the Company; or (ii) that
challenges, or that may have the effect of preventing or delaying, any of the
transactions contemplated by this Agreement; and, to the Knowledge of
Stockholders and Company, no such Proceeding has been Threatened.
(b) Except as set forth in Schedule 3.16, there is no Order to which the
Company, or any of the assets owned or used by it, is subject that could have
a Material Adverse Effect individually or in the aggregate on the operations
or assets of the Company.
3.17 Absence of Certain Changes and Events. Except as set forth in
Schedule 3.17, since the date of the Balance Sheet, the Company has conducted
its business only in the ordinary course of business and there has not been
any:
(a) change in the Company's authorized or issued capital stock; grant of
any stock option or right to purchase shares of capital stock of the Company;
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition
by the Company of any shares of any such capital stock; or declaration or
payment of any dividend or other distribution or payment in respect of shares
of capital stock;
20
(b) damage to or destruction or loss of any asset or property of the
Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition or prospects
of the Company;
(c) except in the ordinary course of business consistent with past
practice (which transactions are set forth on Schedule 3.16), entry into,
termination of or receipt of notice of termination of (i) any license,
distributorship, dealer, sales representative, joint venture, credit, or
similar agreement, or (ii) any Contract or transaction, involving a total
remaining commitment by or to the Company of at least $25,000; or
(d) sale (other than sales of inventory in the ordinary course of
business), lease, or other disposition of any material asset or property of
the Company or mortgage, pledge, or imposition of any Encumbrance on any
material asset or property of the Company.
3.18 Contracts; No Defaults.
(a) Schedule 3.18 contains a true and complete list of:
(i) each Contract that involves performance of services or delivery
of goods or materials to or by the Company of an amount or value in excess of
$25,000 (other than the purchase of inventory in the ordinary course of
business);
(ii) each Contract that was not entered into in the ordinary course
of business and that involves expenditures or receipts of the Company in
excess of $25,000;
(iii) each Contract with any employee and each collective bargaining
agreement and other Contract to or with any labor union or other employee
representative of a group of employees;
(iv) each lease, rental or occupancy agreement, license, installment
and conditional sale agreement and other Contract affecting the ownership of,
leasing of, title to, use of, or any leasehold or other interest in, any real
or personal property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate payments of
less than $1,000 and with terms of less than one year);
(v) each licensing agreement or other Contract with respect to
patents, trademarks, copyrights, or other intellectual property, including
agreements with current or former employees, consultants or contractors
regarding the appropriation of a nondisclosure of intellectual property;
(vi) each joint venture, partnership and other Contract (however
named) involving a sharing of profits, losses, costs, or liabilities by the
Company with any other Person; and
21
(vii) each Contract containing covenants that in any way purport to
restrict the business activity of the Company or any Related Person of the
Company or limit the freedom of the Company or any Related Person of the
Company to engage in any line of business or to compete with any Person; and
(viii) each written warranty, guaranty, and other similar
undertaking with respect to contractual performance extended by the Company
other than in the ordinary course of business.
(b) Except as set forth in Schedule 3.18, the Company is in compliance
with applicable terms and requirements of each Contract under which the
Company has any obligation or liability or by which the Company or any of the
assets owned or used by the Company is bound, except where the failure so to
comply could not, in the aggregate, have a Material Adverse Effect
individually or in the aggregate on the operations or assets of the Company.
3.19 Insurance.
(a) The Company has delivered to Buyer true and complete copies of all
policies of insurance (and applications therefor) to which the Company is a
party or under which the Company, or any director of the Company, is covered
(the "Policies").
(b) Neither any Stockholder nor the Company has received since February
1, 1993, (i) any written refusal of coverage, or (ii) any written notice of
cancellation or any other written indication that any insurance policy is no
longer in full force or effect or will not be renewed or that the issuer of
any policy is not willing or able to perform its obligations thereunder.
(c) Except as set forth on Schedule 3.19(c), the Policies, taken
together, provide insurance coverage for the assets and the operations of the
Company for all risks to which the Company is normally exposed, and are
sufficient for compliance with all legal requirements and contracts to which
the Company is a party or by which it is bound. All reserves established by
the Company, if any, for liabilities and obligations of the Company to
furnish warranty service under unexpired warranties for the repair or
replacement of products manufactured and shipped by the Company prior to the
Closing are adequate.
3.20 Environmental Matters. Except as set forth in Schedule 3.20:
(a) The Company is in compliance in all material respects, with and is
not in violation of or liable under any Environmental Law which noncompliance
or violation could have a Material Adverse Effect individually or in the
aggregate. Neither any Stockholder nor the Company has received any actual or
Threatened order, notice, or other communication in writing from (i) any
governmental body or private citizen acting in the public interest, or (ii)
the current or prior owner or operator of any
22
Facilities, of any actual or potential violation or failure to comply with
any Environmental Law, or of any actual or Threatened obligation on the part
of Stockholders or the Company to undertake or bear the cost of any
Environmental, Health and Safety Liabilities pertaining to the Company's
Facilities or operations except where any such order, notice or communication
does not have a Material Adverse Effect individually or in the aggregate.
(b) There are no pending or to the Knowledge of Stockholders and the
Company Threatened claims, Encumbrances, or other restrictions of any nature,
resulting from any Environmental, Health and Safety Liabilities or arising
under or pursuant to any Environmental Law, with respect to or affecting the
Company or any of the Facilities or any other properties and assets in which
the Company has an interest except where any of the foregoing does not have a
Material Adverse Effect individually or in the aggregate.
(c) There are no Hazardous Materials present on or in the Environment at
the Facilities in violation of any applicable Environmental Laws which
violation could have a Material Adverse Effect individually or in the
aggregate or at any geologically or hydrologically adjoining property,
including any Hazardous Materials contained in barrels, above or underground
storage tanks, landfills, land deposits, dumps, equipment (whether moveable
or fixed) or other containers, either temporary or permanent, and deposited
or located in land, water, sumps, or any other part of the Facilities or, to
Stockholders' and the Company's actual knowledge without duty of inquiry or
investigation, such adjoining property, or incorporated into any structure
therein or thereon, except where the presence of any such Hazardous Materials
does not have a Material Adverse Effect individually and in the aggregate.
Neither any Stockholder nor the Company, nor any other Person for whose
conduct they are or may be held responsible, or, to the Knowledge of
Stockholders and the Company, any other Person, has permitted or conducted,
or is aware of, any Hazardous Activity conducted with respect to the
Facilities or any other properties or assets (whether real, personal, or
mixed) in which Stockholders or the Company has or had an interest, except in
full compliance with all applicable Environmental Laws or except where the
conduct of any such Hazardous Activity does not have a Material Adverse
Effect individually or in the aggregate.
(d) There has been no Release or to the Knowledge of Stockholders and
the Company Threat of Release, of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used or
processed from or by the Facilities, or from or by any other properties and
assets (whether real, personal, or mixed) in which Stockholders or the
Company has or had an interest, or any, to the actual knowledge without duty
of inquiry or investigation of Stockholders or the Company, geologically or
hydrologically adjoining property, whether by Stockholders, the Company, or
any other Person which could have a Material Adverse Effect individually or
in the aggregate.
23
(e) Stockholders have delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests or monitoring possessed or
initiated by or for Stockholders or the Company pertaining to Hazardous
Materials or Hazardous Activities in, on, or under the Facilities, or
concerning compliance by the Company, or any other Person for whose conduct
the Company is or may be held responsible, with Environmental Laws.
(f) No work, repairs, remedy, construction or capital expenditures are
required by any Environmental Law existing as of the time of this Agreement
and as of the Closing Date in order for the continued lawful operation of the
Company in the conduct of its present business, which work, repairs, remedy,
construction or capital expenditures would have a Material Adverse Effect
individually or in the aggregate.
(g) The Company has neither transported nor arranged for the
transportation (directly or indirectly) or disposal of any Hazardous
Materials to or at any location which is listed or proposed for listing on
the federal Comprehensive Environmental Response, Compensation and Liability
Information System ("CERCLIS"), or any similar state list, or which is the
subject of federal, state or local enforcement actions or other
investigations in a manner which could have a Material Adverse Effect
individually or in the aggregate.
(h) The Company neither owns nor operates any underground storage tanks,
nor are any underground storage tanks located on any portion of the
Facilities.
(i) The Company has not entered into any agreements with any third party
under which the Company has agreed to undertake any definite or contingent
obligations relating to any Environmental, Health and Safety Liabilities.
3.21 Labor Relations; Compliance. The Company is not a party to any
collective bargaining agreement. Since the date of the Preliminary Closing
Balance Sheet, there is not presently pending or existing, and to the
Knowledge of Stockholders and the Company there is not Threatened, (a) any
strike, slowdown, picketing, or work stoppage, (b) any Proceeding against the
Company relating to the alleged violation of any Legal Requirement pertaining
to labor relations or employment matters, including any charge or complaint
filed by an employee or union with the National Labor Relations Board,
affecting the Company that could have a Material Adverse Effect individually
or in the aggregate on the Company, or (c) any application for certification
of a collective bargaining agent.
3.22 Intellectual Property.
(a) Patents. Schedule 3.22 contains a true and complete list of all
patents and patent applications owned by the Company (collectively, the
"Patents"). The Company is the owner of all right, title, and interest in
and to each of the Patents, free and
24
clear of all Encumbrances and other adverse claims. No Patent is now
involved in any interference, reissue, reexamination or opposition proceeding
and, to the Knowledge of Stockholders and the Company, no such action is
Threatened with respect to any of the Patents. To the Knowledge of
Stockholders and the Company, there is no potentially interfering patent or
patent application of any third party. No Patent is infringed or, to the
Knowledge of the Stockholders and the Company, has been challenged or
threatened in any way. None of the products manufactured and sold, nor any
process or know-how used, by the Company infringes or is alleged to infringe
any patent or other proprietary right of any other Person.
(b) Trademarks. Schedule 3.22 contains a true and complete list of all
registered and unregistered trademarks and service marks owned by the Company
(the "Marks"). The Company is the owner of all right, title, and interest in
and to each of the Marks, free and clear of all Encumbrances and other
adverse claims. No Xxxx is now involved in any opposition, invalidation or
cancellation proceeding and, to the Knowledge of the Stockholders and the
Company, no such action is Threatened with the respect to any of the Marks.
To the Knowledge of the Stockholders and the Company, there is no potentially
interfering trademark or trademark application of any third party. No Xxxx
is infringed or, to the Knowledge of the Stockholders and the Company, has
been challenged or threatened in any way. None of the Marks used by the
Company infringes or is alleged to infringe any trade name, trademark, or
service xxxx of any third party.
(c) Copyrights. Schedule 3.22 contains a true and complete list and
summary description of all copyrights owned by the Company (the
"Copyrights"). The Company is the owner of all right, title, and interest in
and to each of the Copyrights free and clear of all Encumbrances and other
adverse claims. All the Copyrights have been registered and are currently in
compliance with formal legal requirements, are valid and enforceable, and are
not subject to any maintenance fees or taxes or actions falling due within 90
days after the Closing Date. No Copyright is infringed or, to the Knowledge
of the Stockholders and the Company, has been challenged or threatened in any
way. None of the subject matter of any of the Copyrights infringes or is
alleged to infringe any copyright of any third party or is a derivative work
based on the work of a third party. All work encompassed by the Copyrights
have been marked with the proper copyright notice.
3.23 Certain Payments. Neither the Company nor any director, officer,
agent or employee of the Company or to the Knowledge of the Stockholders and
the Company, any other Person associated with or acting for or on behalf of
the Company, has directly or indirectly (a) made any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to any
Person, private or public, regardless of form, whether in money, property, or
services (i) to obtain favorable treatment in securing business, (ii) to pay
for favorable treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained for the Company, or
(iv) in violation
25
of any Legal Requirement, or (b) established or maintained any fund or asset
that has not been recorded in the books and records of the Company.
3.24 Product Liability. All goods and products manufactured and shipped
prior to the Closing Date were manufactured in accordance with specifications
provided by the Company's customers. There is not presently any action,
suit, proceeding, claim or investigation pending, or to the Knowledge of the
Stockholders and the Company, threatened, against the Company for personal
injury or property damage or otherwise relating to the safety or fitness of
the goods or products of the Company which action, suit, proceeding, claim or
investigation would have a Material Adverse Effect individually or in the
aggregate.
3.25 Disclosure. No representation or warranty of Stockholders or the
Company in this Agreement and no statement in the Schedules omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants
to Stockholders that:
4.1 Organization, Good Standing and Capitalization. Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Buyer has assets in excess of liabilities, as
set forth on its most recent audited balance sheet, dated March 31, 1997, of
$24,797,000.
4.2 Authority; Due Authorization, Execution and Delivery. Buyer has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations under this Agreement. The execution, delivery, and
performance by Buyer of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly and
validly executed and delivered by Buyer. This Agreement constitutes the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms.
4.3 No Conflict. Except as set forth in Schedule 4.3, neither the
execution and delivery of this Agreement nor the consummation or performance
of any of the transactions contemplated by this Agreement will give any
Person the right to prevent, delay, or otherwise interfere with any of the
transactions contemplated by this Agreement pursuant to (i) any provision of
Buyer's charter or Bylaws; (ii) any resolution adopted by the board of
directors or stockholders of Buyer; (iii) any Legal Requirement or Order to
which Buyer may be subject; or (iv) any Contract to which Buyer is a party or
by which Buyer may be bound. Except as set forth in Schedule 4.3, Buyer is
not and will not be required to obtain any Consent from any Person in
connection with the execution and
26
delivery of this Agreement or the consummation or performance of any of the
transactions contemplated by this Agreement.
4.4 Investment Intent. Buyer is acquiring the Shares for its own
account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act.
4.5 Certain Proceedings. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of
the transactions contemplated by this Agreement. To Buyer's Knowledge, no
such Proceeding has been Threatened.
4.6 Availability of Funds. Buyer has sufficient funds available to it
to enable it to consummate the transactions contemplated by this Agreement.
5. COVENANTS OF STOCKHOLDERS AND THE COMPANY. From and after the date
hereof and until the Closing Date, Stockholders and the Company hereby
covenant and agree with Buyer as follows:
5.1 Access and Investigation. Between the date of this Agreement and
the Closing Date during normal business hours in a manner that does not
disrupt the Company's ability to conduct its business, Stockholders and the
Company will (a) afford Buyer and its Representatives and prospective lenders
and their Representatives (collectively, "Buyer's Advisors") full and free
access to the Company's personnel, properties (including subsurface testing),
contracts, books and records, and other documents and data, (b) furnish Buyer
and Buyer's Advisors with copies of all such contracts, books and records,
and other existing documents and data as Buyer may reasonably request, (c)
furnish Buyer and Buyer's Advisors with such additional financial, operating,
and other data and information as Buyer may reasonably request, and (d)
permit Buyer and Buyer's Advisors to confirm the terms of Open Orders with
the persons who are parties to such Open Orders.
5.2 Operation of the Businesses of the Company. Between the date of
this Agreement and the Closing Date, Stockholders and the Company will: (a)
conduct the business of the Company only in the ordinary course of business;
(b) use their Best Efforts to preserve intact the current business
organization of the Company, keep available the services of the current
officers, employees, and agents of the Company, and maintain the relations
and good will with suppliers, customers, landlords, creditors, employees,
agents, and others having business relationships with the Company; and (c)
confer with Buyer concerning operational matters of a material nature.
5.3 Negative Covenant. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, neither
Stockholders nor the Company will, without the prior consent of Buyer, (a)
take any affirmative
27
action, or fail to take any reasonable action within their or its control, as
a result of which any of the changes or events listed in Section 3.17 is
likely to occur; (b) declare, set aside, or pay any dividends or other
distributions in respect of its capital stock or redeem, purchase, or
otherwise acquire any of its capital stock; (c) amend its certificate of
incorporation or bylaws; or (d) make adjustments to the compensation of, or
bonuses to, any of its employees or enter into any new employment, severance
or similar agreements or modify any such existing agreements, other than any
one time bonuses paid at or prior to Closing.
5.4 Required Approvals. As promptly as practicable after the date of
this Agreement, Stockholders will make all filings required by Legal
Requirements to be made by them in order to consummate the transactions
contemplated by this Agreement. Between the date of this Agreement and the
Closing Date, Stockholders and the Company will (a) cooperate with Buyer with
respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the transactions contemplated by this
Agreement, and (b) cooperate with Buyer in obtaining all Consents identified
in Schedules 3.2 and 4.3.
5.5 Payment of Indebtedness by Related Persons. Except as expressly
provided in this Agreement, Stockholders will cause all indebtedness owed to
the Company by any Stockholder or Related Person of any Stockholder to be
paid in full prior to Closing.
5.6 No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Section 10, Stockholders will not, and will cause each
of their Representatives not to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or respond to any unsolicited inquiries or
proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the ordinary
course of business) of the Company, or any of the capital stock of the
Company, or any merger, consolidation, business combination, or similar
transaction involving the Company.
5.7 Notification. Between the date of this Agreement and the Closing
Date, each Stockholder and the Company will promptly notify Buyer in writing
if such Seller or the Company becomes aware of any fact or condition that
causes or constitutes a breach of any of Stockholders' or the Company's
representations and warranties as of the date of this Agreement, or if such
Seller or the Company becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. During the
same period, each Stockholder will promptly notify Buyer of the occurrence of
any breach of any covenant of Stockholders in this Section 5 or of the
occurrence of any event that may make the satisfaction of the conditions in
Section 8 impossible or unlikely.
28
5.8 Legal Requirements. Stockholders and the Company hereby covenant
and agree with Buyer, that as promptly as practicable after the date of this
Agreement, Stockholders and the Company will, and will cause each of their
Related Persons to, make all filings required by Legal Requirements to be
made by them to consummate the transactions contemplated by this Agreement.
Between the date of this Agreement and the Closing Date, Stockholders and the
Company will, and will cause each Related Person to, (i) cooperate with Buyer
with respect to all filings that Buyer is required by Legal Requirements to
make in connection with the transactions contemplated by this Agreement, and
(ii) cooperate with Buyer in obtaining any necessary Consents.
5.9 Tax Returns. Stockholders shall have the right to cause the Company
to prepare and file the United States federal income and California Franchise
Tax Returns of the Company for the taxable periods ending on or prior to the
Closing Date. Stockholders shall provide Buyer an opportunity to review and
approve of, all such Tax Returns of the Company for taxable periods after the
Company converted from subchapter "S" status to subchapter "C" status, which
approval may not be unreasonably withheld and which review and approval shall
be limited to determining whether a position taken in such Tax Returns could
adversely affect another taxable period of the Company. If Buyer should
withhold such approval, it shall notify Stockholders within ten (10) Business
Days of receipt of the Tax Returns of its disapproval or otherwise waive its
right to challenge the Tax Returns. The parties shall then use reasonable
efforts to resolve such disagreement. If the parties remain unable to
resolve such disagreement within ten (10) Business Days of notice of
disagreement from Buyer to Stockholders, Stockholders shall retain a "Big
Six" national accounting firm, other than KPMG Peat Marwick LLP or Ernst &
Young LLP (the "Tax Arbitrator"), to determine whether the Tax Returns were
prepared in accordance with prudent tax practices. If the Tax Arbitrator
determines that such Tax Returns were prepared in such manner, then the Tax
Returns shall be filed with the respective governmental agency in the manner
prepared by Stockholders and Buyer shall be responsible for all costs
incurred by the Tax Arbitrator in resolving the dispute. If the Tax
Arbitrator determines that such Tax Returns were not prepared in accordance
with prudent tax practices, then the Tax Returns shall be filed in the manner
directed by the Tax Arbitrator and Stockholders shall be responsible for all
costs incurred by the Tax Arbitrator in resolving the dispute.
6. COVENANT OF BUYER. Buyer hereby covenants and agrees with Stockholders,
that as promptly as practicable after the date of this Agreement, Buyer will,
and will cause each of its Related Persons to, make all filings required by
Legal Requirements to be made by them to consummate the transactions
contemplated by this Agreement. Between the date of this Agreement and the
Closing Date, Buyer will, and will cause each Related Person to, cooperate
with Stockholders with respect to all filings that Stockholders are required
by Legal Requirements to make in connection with the
29
transactions contemplated by this Agreement, and (ii) cooperate with
Stockholders in obtaining any necessary Consents.
7. EMPLOYMENT AND EMPLOYEE BENEFIT ARRANGEMENTS.
7.1 Employment.
(a) Continuation of Employment. Following the Closing Date, Buyer will
cause the Company to continue to employ all employees of the Company as of
the Closing Date, including, without limitation, all employees who on the
Closing Date are on layoff or leave of absence and who, under applicable
policies and procedures of the Company as in effect on the day immediately
preceding the Closing Date, are entitled to recall or return rights which
have not yet expired (including but not limited to circumstances where such
employees have the right to be reinstated to active employment under the
terms of an applicable collective bargaining agreement or applicable law,
including, without limitation, the Family and Medical Leave Act of 1993, as
amended, and the Americans with Disabilities Act of 1990, as amended, or the
expiration of any holiday, vacation or leave taken pursuant to the policies
or practices of the Company in effect as of the Closing Date, and Buyer
reasonably determines are able, with or without reasonable accommodation, to
adequately perform all of the essential functions of the job that they held
immediately prior to the Closing); provided, however, that neither Buyer nor
the Company are required to continue such employment thereafter. Buyer is
specifically responsible to cause the Company to make all severance payments
to those employees of the Company who do not elect to continue their
employment after the Closing Date as may be required by an existing severance
policy of the Company or employment agreement between the Company and such
employee.
(b) Installation of Buyer's Benefit Plans. As of the Closing Date,
Buyer agrees to establish a package of compensation, welfare and other
benefit plans (including, without limitation, group health insurance),
programs and arrangements for the benefit of the current employees of the
Company that are substantially comparable in the aggregate to those plans,
programs and arrangements currently maintained by Buyer and Related Persons
for their current employees. Notwithstanding the foregoing, Buyer shall have
the right, in its sole discretion consistent with applicable law, to make
changes from time to time in the package of benefits available to employees,
including to add and/or discontinue benefits and/or benefit providers. Buyer
will cause the Company to recognize, for all purposes, including but not
limited to eligibility, vesting, level of benefits and benefit accruals, all
service, compensation, and plan participation credited to each employee by
the Company through the Closing Date.
(c) Personnel Information. The Company will furnish to Buyer such
information in its personnel files as Buyer may reasonably request in connection
with determining whether to employ
30
a person currently employed by the Company as an employee of the Company.
7.2 No Third Party Beneficiary Rights. Nothing in this Section 7 will
create any third party beneficiary rights in any employee or former employee
of the Company or Buyer (including any dependent or beneficiary thereof) to
continued or resumed employment or to benefits that may be provided under any
employee benefits plan or arrangement.
8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's obligation
to purchase the Shares and to take the other actions required to be taken by
Buyer at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by
Buyer, in whole or in part):
8.1 Accuracy of Representations. The representations and warranties of
Stockholders and the Company set forth in Section 3 hereof shall be true and
complete as of the Closing in all material respects.
8.2 Stockholders' Performance. The covenants of Stockholders set forth
in Sections 5 and 7 hereof shall have been duly performed and complied with
in all material respects.
8.3 Approvals and Consents. Each of the Consents identified in Schedule
3.2 shall have been obtained and shall be in full force and effect.
8.4 Delivery of Documents. Each of the following documents shall have
been delivered to Buyer:
(a) an opinion of Xxxxxxx & XxXxxxxx, dated the Closing Date,
substantially in the form of Exhibit 8.4(a);
(b) a certificate executed by Stockholders and the Company representing
and warranting to Buyer that each of the Stockholders' and the Company's
representations and warranties set forth in Section 3 hereof is true and
complete as of the Closing Date, in the form of Exhibit 8.4(b);
(c) employment agreement executed by Xxxxxx Xxxxx, in the form of Exhibit
8.4(c);
(d) a non-competition agreement executed by Xxxxx- Xxxxxxxxx, in the form
of Exhibit 8.4(d) for which no consideration hereunder has been allocated.
(e) the Certificates;
(f) the Pay-Off Statements and U.C.C.-3 termination statements and/or
mortgage satisfaction pieces releasing and
31
terminating any liens and security interests held by Mellon Bank securing the
Purchase Price Indebtedness;
(g) the release in the form of Exhibit 11.7;
(h) the Escrow Agreement in the form of Exhibit 2.5(d); and
(i) such other documents as Buyer may reasonably request for the purpose
of facilitating the consummation or performance of any of the transactions
contemplated by this Agreement.
8.5 No Material Adverse Change. Since the date of the Balance Sheet,
there shall not have been any Material Adverse Change in the business,
operations, properties, assets, or condition of the Company, and no event
shall have occurred or circumstance shall exist that could result in such a
Material Adverse Change individually or in the aggregate.
8.6 No Injunction. There must not be in effect any Legal Requirement or
any injunction or other Order that (a) prohibits the sale of the Shares by
Stockholders to Buyer, and (b) has been adopted or issued, or has otherwise
become effective, since the date of this Agreement.
8.7 No Proceedings. Since the date of this Agreement, there must not
have been commenced or threatened against Buyer, or against any Related
Person to Buyer, any Proceeding (a) involving any challenge to, or seeking
damages or other relief in connection with, any of the transactions
contemplated by this Agreement that could have a Material Adverse Effect
individually or in the aggregate, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of
the transactions contemplated by this Agreement.
8.8 Corporate Action. All corporate and other actions necessary to
authorize and effectuate the consummation of the transactions contemplated
hereby by Buyer shall have been duly taken prior to the Closing.
8.9 HSR Notification. All applicable waiting periods pursuant to HSR
shall have expired.
9. CONDITIONS PRECEDENT TO STOCKHOLDERS' OBLIGATION TO CLOSE. The
Stockholders' obligation to sell the Shares and to take the other actions
required to be taken by the Stockholders at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Stockholders, in whole or in part):
9.1 Accuracy of Representations. The representations and warranties of
Buyer set forth in Section 4 hereof shall be true and complete as of the
Closing in all material respects.
32
9.2 Buyer's Performance. The covenant of Buyer set forth in Section
2.5(b) hereof shall have been duly performed and complied with in all
respects, and the covenants of Buyer set forth in Sections 6 and 7 hereof
shall have been duly performed and complied with in all material respects.
9.3 Approvals and Consents. Each of the Consents identified in Schedule
4.3 shall have been obtained and shall be in full force and effect.
9.4 Delivery of Documents. Each of the following documents shall have
been delivered to Stockholders:
(a) a certificate executed by Buyer representing and warranting to
Stockholders that each of Buyer's representations and warranties set forth in
Section 4 hereof is true and complete as of the Closing Date, in the form
attached hereto as Exhibit 9.4(b);
(b) such other documents as Stockholders may reasonably request for the
purpose of facilitating the consummation of any of the transactions
contemplated by this Agreement; and
(c) the Escrow Agreement in the form of Exhibit 2.5(d).
(d) an employment agreement executed by Xxxxxx Xxxxx, in the form of
Exhibit 8.4(c).
9.5 No Injunction. There must not be in effect any Legal Requirement or
any injunction or other Order that (a) prohibits the sale of the Shares by
Stockholders to Buyer, and (b) has been adopted or issued, or has otherwise
become effective, since the date of this Agreement.
9.6 HSR Notification. All applicable waiting periods pursuant to HSR
shall have expired.
10. TERMINATION.
10.1 By Buyer.
(a) Failure to Satisfy Conditions Precedent. If any of the conditions
set forth in Section 8 have not been satisfied prior to the Closing Date,
Buyer shall deliver written notice to Stockholders specifying such
unsatisfied condition and the Stockholders shall have five days during which
to cure the unsatisfied condition. The Closing Date will then be postponed
five days. If, at the end of such five day period, the Stockholders have
failed to cure such unsatisfied condition, then Buyer may terminate this
Agreement by written notice delivered to the Stockholders, whereupon Buyer
shall be relieved of all liability hereunder, or Buyer may waive the
unsatisfied condition or conditions and proceed with the Closing. Buyer's
waiver of any unsatisfied condition of the Closing shall not constitute a
waiver by Buyer of any other condition or any right or remedy to which
33
Buyer may be entitled except with respect to the waived unsatisfied condition.
(b) Due Diligence Inspection. If Buyer, in Buyer's sole and absolute
discretion, is not satisfied with the results of any of the inspections
relating to environmental matters, then Buyer, at its option, may terminate
this Agreement by giving written notice to the Stockholders; provided, in
order to be effective, that notice must be given on or before August 18, 1997.
10.2 By Stockholders. If any of the conditions set forth in Section 9
have not been satisfied prior to the Closing Date, the Stockholders shall
deliver written notice to Buyer specifying such unsatisfied condition and
Buyer shall have five days during which to cure the unsatisfied condition.
The Closing Date will then be postponed five days. If, at the end of such
five day period, Buyer has failed to cure such unsatisfied condition, then
the Stockholders may terminate this Agreement by written notice delivered to
Buyer, whereupon the Stockholders shall be relieved of all liability
hereunder, or the Stockholders may waive the unsatisfied condition or
conditions and proceed with the Closing. The Stockholders' waiver of any
unsatisfied condition of the Closing shall not constitute a waiver by the
Stockholders of any other condition or any right or remedy to which the
Stockholders may be entitled.
10.3 Effect of Termination. Each party's right of termination under
Section 10 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not
be an election of remedies.
11. INDEMNIFICATION; REMEDIES.
11.1 Survival. Subject to Section 11.9 below, the representations and
warranties set forth in this Agreement, the Schedules and any other
certificate or document delivered pursuant to this Agreement, and the
covenants and obligations set forth in this Agreement, will survive the
Closing Date and, except for the representations set forth in Sections 3.3
(relating to capitalization) and 3.11 (relating to Taxes) which will survive
the Closing Date until the expiration of the applicable statutory period of
limitation, and except for the representations set forth in Section 3.20
(relating to environmental matters) which will survive the Closing Date for a
period of ten (10) years which beginning on the first anniversary of the
Closing Date will be based only on, and qualified by, the Stockholders'
actual knowledge as of the date of the execution of this Agreement without
duty of inquiry or investigation, will expire on the first anniversary of the
Closing Date, and, thereafter, no claim may be brought arising under or in
connection with this Agreement or any of the transactions contemplated
hereby; provided, however, that any covenants and obligations of Buyer set
forth in this Agreement to be performed by Buyer after the Closing Date will
survive without limitation. The right to indemnification, payment of Damages
or
34
other remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted, or any
Knowledge acquired (or capable of being acquired) at any time, whether before
or after the execution and delivery of this Agreement or the Closing Date,
with respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation except for the
representations set forth in Section 3.20 which beginning on the first
anniversary of the Closing Date will be qualified by the actual knowledge of
the Stockholders as of the date of execution of this Agreement without duty
of inquiry or investigation beginning on the first anniversary of the Closing
Date.
11.2 Indemnification and Payment of Damages by the Stockholders. Xxxxx
Trust and Xxxxxxxxx Trust, jointly and severally between each other, and
Xxxxx-Xxxxxxxxx jointly and severally, in accordance with the procedures and
limitations set forth in Section 11.8, jointly and severally, will indemnify
and hold harmless Buyer, and its respective Representatives, stockholders,
controlling persons, and Related Persons and the Company (collectively, the
"Indemnified Persons") for, and will pay to the Indemnified Persons the
amount of, any loss, liability, claim, damage (including incidental and
consequential damages), expense (including costs of investigation and defense
and reasonable attorneys' fees), or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with (a) any breach of any representation
or warranty made by the Stockholders and the Company in Section 3 of this
Agreement, the Schedules, or any other certificate or document delivered by
Stockholders to Buyer pursuant to this Agreement; (b) any breach by any
Stockholder of any covenant or obligation of such Stockholder in this
Agreement; (c) any product shipped by, or any services provided by, the
Company prior to the Closing Date; (d) taxes of the Company or Stockholders
attributable to taxable periods ending on or before the Closing Date; (e) any
tax imposed by any government authority upon an audit of any taxable period
ending on or before the Closing Date; or (f) any claim arising out of,
relating to or in connection with the Company on account of any matter
arising, occurring or taking place prior to the Closing Date except for such
matters reflected or reserved for in the Closing Balance Sheet or such
matters as set forth in the Schedules, except for the Stockholders'
obligation to indemnify Buyer for item 1 on Schedule 3.16 which shall not be
subject to any limitations under this Agreement.
The remedies provided in this Section 11.2 will not be exclusive of or
limit any other remedies that may be available to Buyer or the other
Indemnified Persons.
Subject to Section 11.4 and 11.5, the parties agree and acknowledge that
all claims of indemnification by Buyer against the Stockholders, must be
satisfied by set-off as provided under Section 12 against all amounts due and
owing under the Deferred Payment prior to recourse to the Escrow Fund.
Subject to Section 11.4, in the event of a Proceeding in which Buyer seeks
35
indemnification from Stockholders under Section 11.4, Buyer shall notify
Stockholders in writing of Buyer's belief that it has a right of set-off
against part or all of the Deferred Payment for a claim against the
Stockholders as indemnifying parties hereunder. Stockholders shall have
30-days to respond to Buyer's notice and if Stockholders do not dispute, in
whole or in part, the amount claimed by Buyer as a set-off, the undisputed
amount shall be set-off against the Deferred Payment. Any disputed amount
shall be resolved by the parties in good faith, subject to the provisions of
Section 11.10. If any amount of Deferred Payment is subject to a claim as
yet unresolved when the Deferred Payment is otherwise payable on the first
anniversary of the Closing Date, such amount of Deferred Payment shall be
paid into the Escrow Account to be held until such dispute is resolved and
any amounts of Deferred Payment which have not then been set-off against or
is not then the subject of a dispute, shall be paid as provided in Section
2.2(c). Subject to the foregoing provisions, Buyer shall set-off against,
amounts due and owing under the Deferred Payment, until all of Buyer's
remaining payment obligations, if any, under the Deferred Payment have been
exhausted. Any remaining amounts due to Buyer from Stockholders under such
Proceeding or any subsequent Proceeding may be satisfied by the Escrow Fund.
11.3 Indemnification and Payment of Damages by Buyer. Buyer will
indemnify and hold harmless the Stockholders, and will pay to the
Stockholders the amount of any Damages arising, directly or indirectly, from
or in connection with (a) any breach of any representation or warranty made
by Buyer in this Agreement, the Schedules delivered by Buyer to Stockholders
pursuant to this Agreement; (b) any breach by Buyer of any covenant or
obligation of Buyer in this Agreement; or (c) any claim arising out of,
relating to or in connection with the Company on account of any matter
arising, occurring or taking place on or after the Closing Date.
11.4 Procedure For Indemnification -- Third Party Claims.
(a) Promptly after receipt by an indemnified party under Sections 11.2,
or 11.3 of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying
party under such Section, give notice to the indemnifying party of the
commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to
any indemnified party, except to the extent that the indemnifying party
demonstrates that the defense of such action is prejudiced by the indemnified
party's failure to give such notice.
(b) The indemnifying party will, unless the claim involves Taxes, be
entitled to participate in such Proceeding and, to the extent that it wishes
(unless (i) the indemnifying party is also a party to such Proceeding and the
indemnified party determines in good faith that joint representation would be
inappropriate, or (ii) the indemnifying party fails to provide reasonable
assurance to the indemnified party of its financial
36
capacity to defend such Proceeding and provide indemnification with respect
to such Proceeding), to assume the defense of such Proceeding with counsel
satisfactory to the indemnified party and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently
conducts such defense, be liable to the indemnified party under this Section
11 for any fees of other counsel or any other expenses with respect to the
defense of such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such Proceeding. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made
in that Proceeding are within the scope of and subject to indemnification;
and (ii) no compromise or settlement of such claims may be effected by the
indemnifying party without the indemnified party's consent; provided however,
that if such consent to a compromise or settlement of such claims is withheld
by the indemnified party, the indemnifying party shall only be liable to the
indemnified party for the compromise or settlement amount that the
indemnifying party has negotiated regarding such Proceeding. If notice is
given to an indemnifying party of the commencement of any Proceeding and the
indemnifying party does not, within thirty (30) days after the indemnified
party's notice is given, give notice to the indemnified party of its election
to assume the defense of such Proceeding, the indemnifying party will be
bound by any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party with the consent of the
indemnifying party (which consent shall not be unreasonably withheld).
(c) Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a Proceeding may
adversely affect it or any Related Person other than as a result of monetary
damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding,
but the indemnifying party will not be bound by any determination of a
Proceeding so defended or any compromise or settlement effected without its
consent (which may not be unreasonably withheld).
(d) Stockholders hereby consent to the non-exclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this
Agreement with respect to such Proceeding or the matters alleged therein, and
agree that process may be served by an indemnified party on Stockholders with
respect to such a claim anywhere in the world.
11.5 Limitation of Indemnification.
(a) Subject to the provisions of Section 11.9, the obligation of the
Stockholders to indemnify Buyer under Section 11.2 will expire on the first
anniversary of the Closing Date,
37
except for claims for indemnification under Section 11.2(a) relating to
Sections 3.3 (relating to Capitalization) and 3.11 (relating to Taxes) which
will expire upon the expiration of the applicable statutory period of
limitation, Section 3.6 (relating to Title to Properties and Encumbrances)
which will expire on the Closing Date and Section 3.20 (relating to
Environmental Matters) which beginning on the first anniversary of the
Closing Date will be based on and qualified by the Stockholders' actual
knowledge as of the date of execution of this Agreement without duty of
inquiry or investigation, survive the Closing Date for a period of ten (10)
years. The obligation of the Buyer to indemnify the Stockholders under
Section 11.3 will expire on the first anniversary of the Closing Date. No
such termination shall occur as to matters as to which an indemnified person
has given notice of a claim for indemnification in accordance with Section
11.4 on or prior to the applicable termination date, in which case the
obligation shall survive until the claim is finally resolved, and with
respect to any fraudulent misrepresentation or fraudulent material omission
or fraudulent breach of warranty, which shall survive without time limitation.
(b) The right of either party to be indemnified pursuant to Section 11
shall not apply until the sum of the Damages suffered by such party on a
cumulative basis equals or exceeds $250,000 at which point the indemnifying
party shall become obligated to indemnify the indemnified party for all
Damages relating back to the first dollar. In no event shall the collective
liability of the Stockholders under this Section 11 exceed $6,000,000 nor
shall the Stockholders be liable for more than $2,000,000 with respect to
their indemnification obligations pursuant to Section 3.20 (relating to
Environmental Matters) for any claim made after the first anniversary of the
Closing Date.
(c) Any Amounts owed to Buyer by any Stockholder under Sections 2.3(e),
2.3(f) or 11 shall be offset by (i) any income tax benefit to the Company
resulting from the payment of any Damages which are indemnified hereunder,
(ii) the amount of any insurance payment under the insurance policy of the
Company resulting from any Damages which are indemnified hereunder, and (iii)
any amounts recovered by the Company in connection with the lawsuit against
Hayward, Tilton & Rolapp, et al.
11.6 Procedure For Indemnification-- Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be
asserted by notice to the party from whom indemnification is sought.
11.7 Release of Claims. Each Stockholder hereby agrees to release any
claims against the Company including but not limited to claims for
contribution for any obligation of the Stockholders under this Agreement, or
otherwise, and to execute a Release Agreement in the form of Exhibit 11.7.
11.8 Pursuit of Remedies. Notwithstanding any other provision of this
Agreement, Buyer and Stockholders acknowledge and
38
agree that any Person entitled to indemnification from the Stockholders under
this Agreement must first seek indemnification from each of the Stockholders
on a pro rata basis based on share ownership. Should the Person entitled to
indemnification be unable to collect the full pro rata portion of the
indemnifiable amount from each Stockholder after fully pursuing all legal
remedies, that Person may then seek indemnification from any of the
Stockholders; provided, however, that under no circumstances shall the Xxxxx
Trust or the Xxxxxxxxx Trust be liable for any portion of the indemnifiable
amount not paid by Xxxxx-Xxxxxxxxx.
11.9 Reduced Period for Claims. Notwithstanding any provision of this
Agreement to the contrary with respect to the period during which claims may
be made, no claim may be brought against the Stockholders after the date on
which (a) the Company sells substantially all of its assets except for a
transfer of such assets to a wholly owned subsidiary of Triumph Group, Inc.,
(b) Buyer ceases to own more than 50% of the outstanding voting stock of the
Company or more than 50% in value of the outstanding stock of the Company,
except for the transfer of such outstanding stock by Buyer to a wholly-owned
subsidiary of Triumph Group, Inc., or (c) Triumph Group, Inc. ceases to own,
directly or indirectly, more than 50% of the outstanding voting stock of
Buyer or more than 50% in value of all outstanding stock of Buyer except for
a transfer in ownership to a wholly owned subsidiary of Triumph Group, Inc.
11.10 Resolution of Claims; Court Costs and Other Expenses. If Buyer
makes any claim for an amount pursuant to this Section 11 for itself or for
indemnification of any third party claim, Buyer shall submit such additional
information as it may have available excluding (i) confidential and
proprietary information of the Company, (ii) confidential information subject
to the attorney-client privilege and/or constituting attorney work product,
and (iii) confidential information subject to a confidentiality agreement
with a third party, to allow Stockholders to evaluate such claim and Buyer
shall cooperate, and shall cause the Company to cooperate, with Stockholders
in order for the Stockholders to determine whether they are liable under this
Section 11 and the extent of such liability. If, after such review,
Stockholders believe that they will not be liable for any payment under this
Agreement or that they are liable for a lesser amount than the amount of
claims submitted by Buyer, Buyer and Stockholders shall endeavor in good
faith to resolve such disagreement, including referring any dispute as to
accounting issues to arbitration as provided in Section 2.3(f). If Buyer
files suit against Stockholders to collect the amount of such claim, Buyer
shall pay Stockholders' legal fees and court costs if the amount admitted by
the Court with respect to such claim is closer to the amount of claim
admitted by Stockholders than the amount of claim claimed by Buyer and
Stockholders shall pay Buyer's legal fees and court costs if the amount
awarded by the Court with respect to such claim is closer to the amount
claimed by Buyer than the amount admitted by Stockholders. If Buyer makes
claims aggregating more than $2 million against Stockholders and if it is
ultimately determined that Buyer does not recover more than $2
39
million, Buyer shall pay $50,000 to Xxxxx-Xxxxxxxxx as liquidated damages for
her time and inconvenience with respect to such claim.
12. RIGHT OF SETOFF.
Subject to the last paragraph of Section 11.2, Buyer may and is hereby
authorized at any time and from time to time to setoff and apply against any
sum which is due and payable to the Stockholders by Buyer, including without
limitation the Escrow Amount pursuant to the terms of the Escrow Agreement
and the Deferred Payment, any sum which is due and payable to Buyer by the
Stockholders. The rights under this Section 12 are in addition to any other
rights and remedies which Buyer may otherwise have.
13. GENERAL PROVISIONS.
13.1 Expenses. Except as otherwise expressly provided in this Agreement,
(a) all expenses incurred by Buyer in connection with the preparation,
execution, and performance of this Agreement and the transactions
contemplated by this Agreement, including payment to Value Finders, Inc. and
all fees and expenses of agents, representatives, investment bankers,
counsel, and accountants, whether incurred as of the date hereof or later
incurred, will be paid by Buyer; and (b) all expenses incurred by
Stockholders in connection with the preparation, execution, and performance
of this Agreement and the transactions contemplated by this Agreement,
including all fees and expenses of agents, representatives, investment
bankers, counsel, and accountants, whether incurred as of the date hereof or
later incurred, will be paid by the Stockholders, or by the Company prior to
Closing, provided, however, that if the Stockholders elect to have their
expenses paid by or charged to the Company, the Stockholders acknowledge that
the amount of such payment or charge will reduce the Net Operating Assets for
purposes of calculating the adjustment to the Purchase Price in accordance
with Section 2.3. Further, Buyer will pay any fee required in order to
obtain any Governmental Authorization necessary to consummate the
transactions contemplated by this Agreement including the HSR Notification
and Report Form.
13.2 Public Announcements. Any public announcement or similar publicity
with respect to this Agreement or the transactions contemplated by this
Agreement will be issued, if at all, at such time and in such manner as Buyer
determines; provided that Stockholders shall first be afforded an opportunity
to review such public announcement and that no such announcement may be made
without Stockholders' written consent, except as may otherwise be required by
law. Prior to the Closing, unless consented to by Buyer in advance or
required by Legal Requirements, Stockholders will keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to
any Person. Buyer and Stockholders will consult with each other concerning
the means by which the Company's employees, customers and suppliers and
others having dealings with the Company will be informed of the transactions
40
contemplated by this Agreement, and Buyer will have the right to be present
for any such communication; provided, however, that Stockholders shall have
the right to make a written communication with the Company's customers, which
communication shall be subject to the review and consent of the Buyer (which
consent may not be unreasonably withheld).
13.3 Confidentiality. Between the date of this Agreement and the Closing
Date, Buyer and Stockholders will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and the Company
to maintain in confidence, and not use to the detriment of another party any
written, oral, or other information obtained in confidence from another party
in connection with this Agreement or the transactions contemplated by this
Agreement, unless (a) such information is already known to such party or to
others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the transactions
contemplated by this Agreement, or (c) the furnishing or use of such
information is required by or necessary or appropriate in connection with
legal proceedings or legal filings required to be made by Buyer or
Stockholders.
If the transactions contemplated by this Agreement are not consummated,
each party will return or destroy as much of such written information as the
other party may reasonably request.
13.4 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand, (b) sent by telecopier, provided that a
copy is concurrently mailed by first class mail, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service, in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate
by notice to the other parties):
Stockholders: Xxxxxx Xxxxx-Xxxxxxxxx
12712 Parkyns
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx & XxXxxxxx
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. XxXxxxxx
Telecopier: (000) 000-0000
41
Buyer: The Triumph Group Operations, Inc.
Four Glenhardie Corporate Center
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000-0000
Attention: General Counsel
Telecopier: (000) 000-0000
13.5 Further Assurances. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each
other such other documents, and (c) to do such other acts and things, all as
the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
13.6 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or
the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of
such right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim
or right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except
in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
13.7 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter
(including the letter of intent between Buyer and Xxxxx-Xxxxxxxxx dated May
12, 1997) and constitutes (along with the documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may
not be amended except by a written agreement executed by the party to be
charged with the amendment.
13.8 Assignments, Successors, And No Third-Party Rights. Neither party
may assign any of its rights under this Agreement without the prior consent
of the other parties, except that Buyer may assign any of its rights under
this Agreement to any Subsidiary of Buyer; provided however, that any
assignment of this Agreement shall not relieve Buyer of its obligations
hereunder. Subject to the preceding sentence, this Agreement will apply to,
be binding in all respects upon, and inure to the benefit of the successors
and permitted assigns of the parties. Nothing expressed or referred to
42
in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or
with respect to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Agreement and their successors and
assigns.
13.9 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
13.10 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement. All
references to Schedules or Exhibits refer to Schedules and Exhibits attached
to this Agreement. All words used in this Agreement will be construed to be
of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words
or terms.
13.11 Governing Law. This Agreement will be governed by the laws of the
State of California without regard to conflicts of laws principles.
13.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
43
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER:
THE TRIUMPH GROUP OPERATIONS, INC.
By:________________________________
Name:
Title:
THE COMPANY:
HYDRO-MILL CO.
By:________________________________
Name:
Title:
THE STOCKHOLDERS:
___________________________________
Xxxxxx Xxxxx-Xxxxxxxxx
Xxxxxxxxx Charitable Remainder Unitrust
By:________________________________
Xxxxxx Xxxxx-Xxxxxxxxx
Trustee
Xxxxx Charitable Remainder Unitrust
By:________________________________
Xxxxxx Xxxxx-Xxxxxxxxx
Trustee
44
Exhibit 2.5(d) Form of Escrow Agreement
ESCROW AGREEMENT
ESCROW AGREEMENT dated as of August 28, 1997 (the "Escrow Agreement"),
among Triumph Group Operations, Inc., a Delaware corporation ("Buyer"),
Xxxxxx Xxxxx Xxxxxxxxx, an individual ("Stockholder Representative"),
Xxxxxxxxx Charitable Remainder Unitrust, Xxxxxx Xxxxx Xxxxxxxxx, as trustee
("Xxxxxxxxx Trust"), Xxxxx Charitable Remainder Unitrust, Xxxxxx Xxxxx
Xxxxxxxxx, as trustee ("Xxxxx Trust"), (collectively, the Xxxxx Trust, the
Xxxxxxxxx Trust and Xxxxxx Xxxxx Xxxxxxxxx shall be referred to as
"Stockholders") and Imperial Trust Company, a California corporation, as
Escrow Agent (the "Escrow Agent").
Buyer and Stockholders are parties to a Stock Purchase Agreement dated
August 28, 1997 (the "Purchase Agreement). This Escrow Agreement is being
entered into pursuant to Section 2.5(d) of the Purchase Agreement.
I. DEPOSIT.
1.1. Simultaneously with the execution and delivery of this Escrow
Agreement, Buyer is depositing with the Escrow Agent a total of $2,200,000 in
cash, by wire transfer of funds. The Escrow Agent hereby acknowledges upon
receipt of such amount, and will deposit it in a segregated escrow account
and not commingle it with its own funds.
1.2. As used herein, the term "Deposit" means the $2,200,000 referred to
in Section 1.1, any investments thereof and all amounts earned upon any such
investments.
II. DELIVERY OF DEPOSIT BY ESCROW AGENT.
The Escrow Agent shall hold the Deposit in escrow until authorized
hereunder to deliver the same or any specified portion thereof, by wire
transfer or otherwise, as directed by Buyer and/or Stockholder
Representative, as the case may be, as follows:
2.1. On August 31, 1998, the Escrow Agent shall deliver the Deposit, or
the portion thereof which is not subject to Buyer's instruction to the Escrow
Agent set forth in Section 2.3 below (which instruction has not been already
resolved) to the Stockholders according to the allocation set forth in
Attachment A attached hereto.
2.2. Upon receipt of any joint written instruction from Buyer and
Stockholder Representative, the Escrow Agent shall deliver the Deposit in
accordance with that instruction.
2.3. Upon receipt by the Escrow Agent of a written notice from Buyer that
the Deposit or a portion thereof is to be delivered to Buyer, the Escrow
Agent shall promptly deliver a copy of that notice to Stockholder
Representative. If within thirty (30) days of delivery of such notice to
Stockholder Representative, Stockholder Representative does not
notify the Escrow Agent in writing that it disputes Buyer's notice, then the
amount of the Deposit requested by Buyer shall be delivered to Buyer. If
Stockholder Representative timely notifies the Escrow Agent that it disputes
Buyer's notice, then the Escrow Agent shall promptly deliver a copy of
Stockholder Representative's notice to Buyer and shall hold such disputed
amount of the Deposit until the dispute is finally resolved in accordance
with Article III hereof.
2.4. Notwithstanding the provisions of the Agreement to the contrary, the
Escrow Agent shall pay all income earned on the Escrow Account to the
Stockholders in accordance with the allocation in Attachment A attached
hereto at such time or times as Stockholder Representative shall request in
writing. Stockholders shall be responsible for the payment of all taxes on
such income and shall furnish appropriate Forms W-9 to Escrow Agent.
III. SETTLEMENT OF DISPUTES.
3.1. Any dispute which may arise under this Escrow Agreement with respect
to the rights of the parties to any portion of the Deposit or the duties of
the Escrow Agent hereunder shall be settled either by: (a) mutual written
agreement of Buyer and Stockholder Representative, a copy of which, together
with appropriate joint instructions, shall be given to the Escrow Agent; or
(b) the procedure set forth in the Purchase Agreement applicable to such
dispute, or alternatively if no such procedure applies, a final order, decree
or judgment of the Supreme Court of the State of California or the U.S.
District Court for the Central District of California (the time for appeal
having expired and no appeal having been perfected), a copy of which shall be
given to the Escrow Agent. Any claim regarding the Deposit shall be deemed
to be a claim under Section 11 of the Purchase Agreement and shall be
resolved in the manner set forth in Section 11.10 of the Purchase Agreement.
The Escrow Agent shall be under no duty whatsoever to institute or defend any
such proceedings. Prior to the resolution of any such dispute, the Escrow
Agent is authorized and directed to retain in its possession, without
liability on the part of the Escrow Agent to anyone, that portion of the
Deposit which is the subject of such dispute.
3.2. In the event unresolved conflicting demands are made or notices
served upon the Escrow Agent with respect to this escrow, the Escrow Agent
may file a suit in interpleader and obtain an order from the court requiring
the parties to interplead and litigate in such court their several claims and
rights among themselves. In the event such interpleader action is brought,
the Escrow Agent shall ipso facto be fully released and discharged from all
obligations and all duties or obligations imposed upon it by this Escrow
Agreement.
2.
IV. INVESTMENTS OF DEPOSIT.
The Deposit shall be invested or reinvested by the Escrow Agent, until
required to be distributed by the Escrow Agent as provided in Article II
hereof, in investments selected by the Stockholder Representative in a
written direction delivered to Escrow Agent which investments shall be in
accordance with the guidelines set forth in Attachment B, without liability
on the part of the Escrow Agent to anyone in implementing such investment
selection.
V. CONCERNING THE ESCROW AGENT.
5.1. The Escrow Agent shall be paid a lump sum fee ("Annual Fee") of
$2,500 per year during each year of this Escrow Agreement, plus a transaction
fee of $10 per transaction, for its services hereunder and shall be
reimbursed for any and all reasonable expenses, disbursements and advances
incurred or made by the Escrow Agent in the performance of its duties
hereunder, including the reasonable fees and disbursements of its counsel.
All fees and expenses, including without limitation, the Annual Fee, of the
Escrow Agreement shall be paid by Buyer upon execution of the Escrow
Agreement. The escrow hereunder will not open until the Annual Fee is paid.
5.2. The Escrow Agent may resign and be discharged from its duties
hereunder at any time by giving 60 days' notice of such resignation
("Resignation Notice") to Buyer and Stockholder Representative specifying a
date when such resignation shall take effect. Upon resignation, the Escrow
Agent shall deliver the Deposit to the successor agent; provided, that the
Escrow Agent shall have the right to withhold, from the Escrow Account, an
amount equal to such fees and expenses as are then due and owing the Escrow
Agent pursuant to Section 5.1 hereof.
5.3. Following receipt of the Escrow Agent's Resignation Notice, a bank,
trust company or similar institution shall be appointed by Stockholder
Representative as a successor escrow agent, such successor escrow agent to
become an Escrow Agent hereunder upon the resignation date specified in such
Resignation Notice. Until a new successor escrow agent is appointed, the
Escrow Agent's only duty shall be to hold the Deposit until its successor
accepts the escrow and receives the Deposit. Buyer and Stockholder
Representative may agree at any time to substitute a new escrow agent upon
giving 30 days prior notice to the Escrow Agent then acting.
5.4. The Escrow Agent undertakes to perform only such duties as are
specifically set forth herein and may conclusively rely and shall be
protected in acting or refraining from acting in accordance with any written
notice, instrument or signature believed by it to be genuine and to have been
signed or presented by the proper party or parties duly
3.
authorized to do so. The Escrow Agent shall have no responsibility for the
contents of any writing contemplated herein and may rely without any
liability upon the contents thereof.
5.5. The Escrow Agent shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized hereby or within the
rights or powers conferred upon it hereunder, nor for action taken or omitted
by it in good faith, and in accordance with advice of counsel (which counsel
may be of the Escrow Agent's own choosing) and shall not be liable for any
mistake of fact or error of judgment or any acts or omissions of any kind
unless caused by willful misconduct or negligence. The Escrow Agent shall
not be responsible for any losses resulting from investments of the Deposit
in accordance with the terms of this Escrow Agreement.
5.6. Buyer, Stockholder Representative, severally agree to indemnify the
Escrow Agent and hold it harmless against any and all liabilities incurred by
it hereunder (including reasonable attorney's fees) as a consequence of such
party's action, and further agree severally to indemnify the Escrow Agent and
hold it harmless against one-half of any and all liabilities incurred by the
Escrow Agent hereunder which are not a consequence of any party's actions,
except in either case liabilities incurred by the Escrow Agent resulting from
its own willful misconduct or negligence.
VI. MATTERS BETWEEN BUYER AND STOCKHOLDERS.
If the Escrow Account is charged with fees and expenses of the
Escrow Agreement or if Stockholders (or Stockholder Representative) are
required to indemnify Escrow Agent for any reason other than as a direct
consequence of actions taken by the Shareholder Representative outside the
scope of this Agreement, Buyer shall indemnify, and hold harmless, the Escrow
Account, the Stockholders and the Stockholder Representative for any
resulting liability or loss.
VII. MISCELLANEOUS.
7.1. This Escrow Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Escrow
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any party hereto without the prior written consent of the other
parties, except that Buyer may assign its rights hereunder to a wholly-owned
subsidiary of Buyer and Stockholder Representative may assign its rights
hereunder to an affiliate of Stockholder Representative, provided that no
such assignment by Buyer or Stockholder Representative shall relieve the
assignor of any of its obligations hereunder, and the Escrow Agent may assign
its rights and obligations hereunder to its successor pursuant to Section 5.3
hereof.
7.2. This Escrow Agreement contains the entire understanding of the
parties
4.
with respect to its subject matter, and may be amended only by a written
instrument duly executed by all the parties hereto.
7.3. This Escrow Agreement shall terminate upon delivery of the entire
Deposit in accordance with Article II hereof, provided, however, that the
provisions of Section 5.6 and Article VI hereof shall survive such
termination.
7.4. All notices, claims, requests, demands and other communications
hereunder ("notices") shall be in writing and shall be delivered by hand,
transmitted by facsimile (with copy by mail) or mailed (registered or
certified mail, postage prepaid, return receipt requested) to the following
addresses:
(a) If to Buyer, to:
Triumph Group Operations, Inc.
Four Glenhardie Corporate Center
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxxxx
with a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxx
(b) If to Stockholder Representative, to:
Xxxxxx Xxxxx Xxxxxxxxx
12712 Parkyns
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
5.
with a copy to:
Xxxxxxx & XxXxxxxx
000 X. Xxxxx Xxx., 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Xxxxxxx X. XxXxxxxx
Fax: (000) 000-0000
and a copy to:
Xxxxx, Xxx & Xxxxxxx
00000 Xxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxx
(c) If to the Escrow Agent, to:
Imperial Trust Company
000 Xxxxx Xxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx XxXxxxxx
Phone No.: (000) 000-0000
Fax No.: (000) 000-0000
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above.
All notices shall be deemed given upon receipts
7.5. The Escrow Agreement shall be construed and the rights and duties of
the parties determined in accordance with the laws of the State of
California, without regard to the conflicts of law doctrine thereof.
7.6. This Escrow Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute but one and the same instrument.
7.7. The Escrow Agent shall not be bound by any agreement or contract
between the other parties hereto (whether or not the Escrow Agent shall have
knowledge thereof), and the Escrow Agent's only duties and responsibilities
shall be to act in accordance with the terms of this Escrow Agreement.
6.
IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be
executed, each by its duly authorized officer, all as of the date first above
written.
BUYER: ESCROW AGENT:
TRIUMPH GROUP OPERATIONS, INC. IMPERIAL TRUST COMPANY
By:___________________________ By:___________________________
Title: Title:
STOCKHOLDERS:
XXXXXX XXXXX XXXXXXXXX
______________________________
XXXXX CHARITABLE REMAINDER
UNITRUST
______________________________
Xxxxxx Xxxxx Xxxxxxxxx, as trustee
XXXXXXXXX CHARITABLE REMAINDER
UNITRUST
______________________________
Xxxxxx Xxxxx Xxxxxxxxx, as trustee
ATTACHMENT A
ALLOCATION OF ESCROW FUNDS TO STOCKHOLDERS
Stockholder Percentage
----------- -----------
Xxxxx Charitable Remainder Unitrust 54%
Xxxxxxxxx Charitable Remainder Unitrust 36%
Xxxxxx Xxxxx Xxxxxxxxx 10%
ATTACHMENT B
Any amount of the Deposit, up to the whole thereof, may be invested
entirely or in part in any of the following:
(a) Debt instruments issued by United States, any of the states or
any local governmental unit including, but not limited to, counties, cities,
school districts, and public utilities districts;
(b) Certificates of deposit, savings accounts, or checking accounts
of a financial institution insured by the Federal Depository Insurance
Corporation or the Federal Savings and Loan Insurance Corporation (amounts so
deposited may exceed the amounts insured by the United States government);
(c) Money market accounts sponsored by any financial institution
with deposits of more than $500,000,000;
(d) Debt instruments (including commercial paper) of any publicly
traded entity;
(e) Securities that are publicly traded on any securities exchange
(either within or without the United States); or
(f) Mutual funds, investment partnerships or other investment
funds, that are primarily invested in assets described in paragraphs 1
through 5.
Exhibit 8.4(a) Form of Legal Opinion
August 28, 1997
00-000-000
The Triumph Group Operations, Inc.
Four Glenhardie Corporate Center
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000-0000
Re: Stock Purchase Agreement
Gentlemen:
We have acted as counsel to Hydro-Mill Co. (the "Company"), a California
corporation, Xxxxxx Xxxxx-Xxxxxxxxx, an individual ("Xxxxx-Xxxxxxxxx"), and
Xxxxxxxxx Charitable Remainder Unitrust and Xxxxx Charitable Remainder
Unitrust (collectively, the "Trusts" and, with Xxxxx-Xxxxxxxxx, the "Selling
Stockholders"), each a charitable remainder trust established under the laws
of the State of California, in connection with the execution and delivery of
the Stock Purchase Agreement dated as of August 28, 1997 (the "Stock Purchase
Agreement") by and among The Triumph Group Operations, Inc. (the "Buyer"),
the Company and the Selling Stockholders. This opinion is furnished to you
pursuant to Section 8.4(a) of the Stock Purchase Agreement.
Unless defined in this opinion, capitalized terms are used herein as
defined in the Stock Purchase Agreement.
In so acting, we have examined executed originals or counterparts of the
following documents, each dated the date hereof (the "Transaction Documents"):
(a) the Stock Purchase Agreement;
(b) the Escrow Agreement;
(c) the Release from the Selling Stockholders to the Company (the
"Release"); and
(d) the Noncompetition Agreement between Xxxxx-Xxxxxxxxx, the Company
and the Buyer (the "Noncompetition Agreement").
We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such corporate and trust records,
agreements and other documents, and of certificates or comparable documents
of public officials and of officers and representatives of the Company and
have made such examinations of law as we have deemed necessary in connection
with the opinions set forth below.
We have assumed the legal capacity and competence of natural persons, the
genuineness of all signatures (except the Selling Stockholders and officers
of the Company on the Transaction Documents), the authenticity of all
documents submitted to us as originals and the conformity to original
documents of documents submitted to us as certified, conformed, photostatic
or facsimile copies.
We have also assumed, without verification (i) that the parties to the
Transaction Documents and the other agreements, instruments and documents
executed in connection therewith, other than the Company and the Selling
Stockholders, have the power (including, without limitation, corporate power
where applicable) and authority to enter into and perform the Transaction
Documents and such other agreements, instruments and documents, (ii) the due
authorization, execution and delivery by such parties other than the Company
and the Selling Stockholders of each Transaction Document and such other
agreements, instruments and documents, and (iii) that the Transaction
Documents and such other agreements, instruments and documents constitute
legal, valid and binding obligations of each such party other than the
Company and the Selling Stockholders.
We have investigated such questions of law for the purpose of rendering
this opinion as we have deemed necessary. We are admitted only in
California. We are opining herein only as to the effect on the subject
transaction of California law and the federal law of the United States, as
such laws presently stand; and we are not opining upon, and assume no
responsibility as to the applicability to or the effect on any of the matters
covered herein of, the laws of any other jurisdiction. We express no opinion
with respect to (i) antifraud laws; (ii) antitrust laws; or (iii) state
securities or "blue sky" laws.
Based upon the foregoing and subject to the exceptions, limitations and
qualifications set forth herein, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and has the corporate
power to own its properties and to carry on its business as presently
conducted.
2. The Company has all requisite corporate power and authority to enter
into and perform its obligations under the Transaction Documents to which it
is a party and to incur the obligations provided therein, and has taken all
corporate action necessary (including stockholder approvals to the extent
necessary) to authorize the execution, delivery and performance of such
Transaction Documents.
3. Each Trust is a duly formed and validly existing charitable
remainder trust under the laws of the State of California and has all
requisite trust power and authority to enter into and perform its obligations
under the Transaction Documents to which it is a party and to incur the
obligations provided therein, and has taken all action necessary to authorize
the execution, delivery and performance of such Transaction Documents.
4. Xxxxx-Xxxxxxxxx has full legal right and authority to execute and
deliver the Transaction Documents to which she is a party and to incur the
obligations provided therein.
5. The execution, delivery and performance by the Company and the
Selling Stockholders of the Transaction Documents to which each is a party do
not (a) violate the Company's Articles of Incorporation or Bylaws or the
trust agreements under which the Trusts are formed, (b) violate any present
statute, rule or regulation promulgated by the United States or the State of
California, (c) conflict with or breach any judgments, court orders and
arbiter's decrees applicable to the Company or the Selling Stockholders of
which we have knowledge, or, to our knowledge, result in the creation or
imposition of any security interest in or lien or encumbrance upon, any of
the assets of the Company pursuant to any item referred to in the preceding
clause (c).
6. Each Transaction Document to which it is a party has been duly
executed and delivered on behalf of the Company and each Selling Stockholder
and constitutes the legal, valid and binding obligation of the Company and
each Selling Shareholder, enforceable in accordance with its respective terms.
7. No consent or approval of, or notice to or filing with, any federal
or state regulatory authority of the United States or the State of California
is required by the Company or the Selling Stockholders in connection with the
execution, delivery or performance by the Company or the Selling Stockholders
of the Transaction Documents or the consummation of the transactions
contemplated thereby, except for filings required to be
made under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (which filings have been made and the applicable waiting period has
expired).
8. The authorized capital stock of the Company consist of 2,000,000
shares of Common Stock, $1.00 par value per share ("Common Stock"), of which
1,000,000 shares of Common Stock are currently issued and outstanding (the
"Outstanding Shares"). The Selling Stockholders are the record owners of all
the Outstanding Shares. The Outstanding Shares have been duly authorized and
validly issued and are fully paid and nonassessable. To our knowledge, no
preemptive right, co-sale right, registration right, right of first refusal
or other similar right exists with respect to any of the Outstanding Shares.
We confirm to you that, to our knowledge, no litigation or governmental
proceeding is pending or threatened in writing against any Selling
Stockholder with respect to the Transaction Documents.
Our opinion in paragraph 6 is subject to and limited by the following:
a. the effect of (A) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, fraudulent transfer
and other similar laws affecting the rights of creditors generally, and
(B) principles of equity, regardless of whether the enforcement is sought
in a proceeding at law or in equity;
b. the effect of court decisions, invoking statutes or
principles of equity, which have held that certain covenants and
provisions of agreements are unenforceable where enforcement of such
covenants or provisions under the circumstances would violate the
enforcing party's implied covenant of good faith and fair dealing or
which subject the enforceability of such covenants or provisions under
such circumstances to notions of materiality, reasonableness or
impairment of security;
c. the enforceability under certain circumstances of any
provision in any document expressly or by implication waiving broadly or
vaguely stated rights, unknown future rights, or defenses to obligations
or rights granted by law, when such waivers are against public policy or
prohibited by law;
d. the unenforceability under certain circumstances of any
provision in any document to the effect that rights or remedies are not
exclusive, that rights or remedies may be exercised without notice, that
every right or remedy is cumulative and may be exercised in addition to
or with any other right or remedy, that election of a particular remedy
or remedies does not preclude recourse to one or more remedies, or that
failure to exercise or delay in exercising rights or remedies will not
operate as a waiver of any such right or remedy;
e. the unenforceability under certain circumstances of any
provision in any document indemnifying a party against, or requiring
contributions toward, that party's liability for its own wrongful or
negligent acts, or where indemnification or contribution is contrary to
public policy;
f. the unenforceability of any provision in any document
relating to payment or reimbursement of attorneys' fees in excess of
statutory limits or an amount determined to be reasonable by any court or
other tribunal;
g. the effect on enforceability of rights and remedies
resulting from certain procedural requirements, such as statutes of
limitation, the required format and timing of service or process, court
filings, recordation and notices which must meet the minimum statutory
requirements; and
h. the unenforceability of any provisions regarding covenants
not to compete which conflict with Section 16600 et seq. of the
California Business and Professions Code relating to the invalidity of
contracts by which a party is restrained from engaging in a lawful
profession, trade or business of any kind.
As used in this opinion, the phrase "to our knowledge" and other similar
phrases signify that, in the course of our representation of the Company, no
facts have come to our attention that would give us actual knowledge that any
such opinions or other matters are not accurate. Except as otherwise stated
in this opinion, we have undertaken no investigation or verification of such
matters. Further, the words "to our knowledge" as used in this opinion are
intended to be limited to the actual knowledge of the attorneys within our
firm who have been directly involved in representing the Company in
connection with the
transactions described in the Agreement. No inference as to our knowledge of
the existence or nonexistence of any fact should, or may, be drawn merely
from the fact that we represent the Company to the extent indicated above.
This opinion may be relied upon by you only in connection with the
consummation of the transactions described herein and may not be used or
relied upon by you or any other person for any other purpose, without in each
instance our prior written consent.
This opinion is limited to the matters expressly stated herein. No
implied opinion may be inferred to extend this opinion beyond the matters
expressly stated herein. We do not undertake to advise you of any changes in
the opinions expressed herein resulting from changes in law, changes in facts
or any other matters that hereafter might occur or be brought to our
attention.
Very truly yours,
Exhibit 8.4(b) Form of Stockholder's Certificate
Hydro-Mill Co.
Stockholder Certificate
The undersigned, pursuant to Section 8.4(b) of the Stock Purchase
Agreement (the "Agreement"), dated as of August 28, 1997, by and among The
Triumph Group Operations, Inc., Hydro-Mill Co. (the "Company"), Xxxxxx
Xxxxx-Xxxxxxxxx, Xxxxxxxxx Charitable Remainder Unitrust (the "Xxxxxxxxx
Trust") and Xxxxx Charitable Remainder Unitrust (the "Xxxxx Trust"), hereby
certifies that:
1. I am an individual and am otherwise qualified and competent to
execute and deliver the Agreement and all other documents or agreements
described therein and to undertake and perform my obligations thereunder.
2. Each statement contained in the Agreement regarding a
representation and warranty made by me is true and correct as of the date
hereof.
3. I have duly performed all obligations and satisfied all
conditions precedent to be performed or satisfied by me pursuant to Section 8
of the Agreement at or prior to the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of
August, 1997.
_______________________________
Xxxxxx Xxxxx-Xxxxxxxxx
Exhibit 8.4(b) Form of Officer's Certificate
Hydro-Mill Co.
Officer's Certificate
The undersigned is the duly elected, qualified and serving Chief
Executive Officer of Hydro-Mill Co. (the "Company"). Capitalized terms used
herein and not otherwise defined herein shall have the meaning given such
terms in the Stock Purchase Agreement (the "Agreement"), dated as of August
28, 1997, by and among The Triumph Group Operations, Inc., the Company,
Xxxxxx Xxxxx-Xxxxxxxxx, Xxxxxxxxx Charitable Remainder Unitrust and Xxxxx
Charitable Remainder Unitrust. This Certificate is delivered pursuant to
Section 8.4(b) of the Agreement.
In such capacities, we hereby certify as follows:
1. Each statement contained in the Agreement regarding a
representation and warranty of the Company is true and correct as of the date
hereof.
2. The Company has duly performed all obligations and satisfied
all conditions precedent on its part to be performed or satisfied pursuant to
Section 8 of the Agreement at or prior to the date hereof.
3. Attached hereto as Exhibit A is a true and complete copy of the
Articles of Incorporation of the Company, as amended, as in full force and
effect at all times through the date hereof.
4. Attached hereto as Exhibit B is a true and complete copy of the
Bylaws of the Company, as amended, as in full force and effect at all times
through the date hereof.
5. Attached hereto as Exhibit C is a true and correct copy of
certain resolutions duly adopted by the Board of Directors of the Company on
the dates set forth thereon authorizing and directing the proper officers of
the Company to enter into the Agreement and to take or cause to be taken all
such further actions necessary to complete the transactions contemplated
thereby. Such resolutions have not been amended, modified or rescinded and
remain in full force and effect as of the date hereof.
6. Each person who, as a director or officer of the Company,
signed the Agreement or any other instrument, agreement or document delivered
prior to or on the date hereof in connection with the transactions
contemplated by the Agreement was, at the time or the respective times of
such signing and delivery, duly elected, qualified and serving as such
director or officer, and the signature of each person appearing on any such
document is his or her genuine signature.
7. The below-named person is duly serving on this date as an
officer of the Company in the capacity set forth next to her name; the manual
signature set forth opposite her name is the genuine signature of such
person; and the officer and has been duly authorized to sign each document
signed by such person in connection with the transactions contemplated by the
Agreement.
Name Office Manual Signature
------------ ---------- -------------------
Xxxxxx Xxxxx-Xxxxxxxxx Chief Executive
Officer
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal
of the Company this __ day of August, 1997.
______________________________________
Xxxxxx Xxxxx-Xxxxxxxxx
Chief Executive Officer
CORPORATE SEAL
Exhibit 8.4(b) Form of Trustee's Certificate - Xxxxxxxxx Trust
Xxxxxxxxx Charitable Remainder Unitrust
Trustee Certificate
The undersigned, pursuant to Section 8.4(b) of the Stock Purchase
Agreement (the "Agreement"), dated as of August 28, 1997, by and among The
Triumph Group Operations, Inc., Hydro-Mill Co., Xxxxxx Xxxxx-Xxxxxxxxx,
Xxxxxxxxx Charitable Remainder Unitrust (the "Xxxxxxxxx Trust") and Xxxxx
Charitable Remainder Unitrust, hereby certifies that:
1. I am the Trustee of the Xxxxxxxxx Trust, and, as such, am
authorized to furnish this certificate on behalf of the Xxxxxxxxx Trust.
2. Each statement contained in the Agreement regarding a
representation and warranty of the Xxxxxxxxx Trust is true and correct of the
date hereof.
3. The Xxxxxxxxx Trust has duly performed all obligations and
satisfied all conditions precedent on its part to be performed or satisfied
pursuant to Section 8 of the Agreement at or prior to the date hereof.
4. Attached hereto as Exhibit A is a true and complete copy of the
trust agreement of the Xxxxxxxxx Trust, as amended, as in full force and
effect at all times through the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal
of the Xxxxxxxxx Trust this 28th day of August, 1997.
_______________________________
Xxxxxx Xxxxx-Xxxxxxxxx, Trustee
TRUST SEAL
Exhibit 8.4(b) Form of Trustee's Certificate - Xxxxx Trust
Xxxxx Charitable Remainder Unitrust
Trustee Certificate
The undersigned, pursuant to Section 8.4(b) of the Stock Purchase
Agreement (the "Agreement"), dated as of August 28, 1997, by and among The
Triumph Group Operations, Inc., Hydro-Mill Co., Xxxxxx Xxxxx-Xxxxxxxxx,
Xxxxxxxxx Charitable Remainder Unitrust and Xxxxx Charitable Remainder
Unitrust (the "Xxxxxxxxx Trust"), hereby certifies that:
1. I am the Trustee of the Xxxxx Trust, and, as such, am
authorized to furnish this certificate on behalf of the Xxxxx Trust.
2. Each statement contained in the Agreement regarding a
representation and warranty of the Xxxxx Trust is true and correct of the
date hereof.
3. The Xxxxx Trust has duly performed all obligations and
satisfied all conditions precedent on its part to be performed or satisfied
pursuant to Section 8 of the Agreement at or prior to the date hereof.
4. Attached hereto as Exhibit A is a true and complete copy of the
trust agreement of the Xxxxx Trust, as amended, as in full force and
effect at all times through the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal
of the Xxxxx Trust this 28th day of August, 1997.
_______________________________
Xxxxxx Xxxxx-Xxxxxxxxx, Trustee
TRUST SEAL
Exhibit 8.4(c) Form of Employment Agreement
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 31st day of July, 1997, by and between
The Triumph Group Operations, Inc., a Delaware corporation ("Triumph") and
Xxxxxx Xxxxx ("Employee").
W I T N E S S E T H
WHEREAS, all of the capital stock of Hydro-Mill Co., a California
corporation, (sometimes referred to in this agreement as the "Company") is
being acquired by Triumph by virtue of a Stock Purchase Agreement between the
shareholders of Hydro-Mill Co. and Triumph dated August , 1997 (the
"Agreement"), and following such transaction, the Company will be operated as
either a subsidiary or a division of Triumph; and
WHEREAS, the assets, business and goodwill of the Company have in large
part been developed over a period of years and sustained through the efforts,
knowledge and skill of Employee; and
WHEREAS, Employee will hold a position of trust and confidence and will
be entrusted by Triumph with knowledge of its methods of doing business,
including the working of its products, the marketing and sale of new and
existing products, the names and addresses of its customers and other private
and important information; and
WHEREAS, Triumph desires to assure itself that the experience and skill
of Employee will remain available to Triumph for the continued development of
the assets, business and goodwill of Company;
NOW, THEREFORE, in consideration of the foregoing premises, and the
mutual covenants contained in this agreement and for other good and valuable
consideration, including, but not limited to, the continued employment of
Employee by Triumph, the parties, INTENDING TO BE LEGALLY BOUND, agree as
follows:
1. Employment Period. Effective upon the Closing Date (as defined in
the Agreement), Triumph shall employ Employee to serve the Company, and any
affiliated companies engaged in the marketing area presently serviced by the
Company, on a full
time basis for a period commencing on the Closing Date and continuing until
March 31, 2001, unless sooner terminated as hereinafter provided ("Employment
Period"). It is understood that the services to be rendered by Employee
hereunder shall be as the President of the Company, subject always to the
direction and control of the President of Triumph. Employee understands and
agrees that Triumph has the right to establish and enforce its customary
rules, procedures, and policies, and to define objectives and goals relative
to Employee's performance under this Agreement consistent with the business
goals of the Company and Triumph. During the Employment Period, Employee
agrees to devote his full business time, attention and energy to such
operation of the Company and to perform to the best of his ability and with
all of his skill and diligence the duties reasonably assigned to him pursuant
to the terms of this agreement.
2. Compensation During Employment Period. As compensation in full for
his services hereunder and for his entering into a separate and distinct
non-competition arrangement as part of his Employment Agreement, Triumph
shall cause Company to pay Employee a base salary at the rate of $150,000 per
year ("Base Salary") for the fiscal year ending March 31, 1998, payable in
monthly payments from the date hereof, less applicable payroll deductions,
subject to such increases in Base Salary during the Employment Period as
shall be approved by the Board of Directors of Triumph Group, Inc., the
parent corporation of Triumph. In addition, Employee will be eligible to
receive a target annual bonus of 50% of Base Salary, with an overachievement
potential of up to 100% of Base Salary, in accordance with the bonus plan
available to senior executives of Triumph's operating companies based upon
the achieving the operational and financial goals set forth on Appendix I to
his agreement, subject to such deferral arrangements as are provided in the
Triumph Supplemental Executive Retirement Plan effective April 1, 1994 (the
"Supplemental Retirement Plan") or otherwise approved by the Board of
Directors of Triumph Group, Inc.. For the fiscal year ending March 31, 1998,
Triumph agrees that Employee's bonus shall be no less than $30,000.
Triumph further agrees that, during the Employment Period, Employee shall
be entitled to (a) reasonable vacations without cessation of salary payments
consistent
with Triumph's policies applicable thereto; (b) hospitalization and health
and major medical benefits consistent with the existing policies of Company;
(c) group term life insurance coverage of $350,000, (d) reimbursement for
travel and entertainment expenses related to Business consistent with
policies of Triumph; (d) participation in the Triumph Group, Inc. 1996 Stock
Option Plan at levels consistent with senior executives of Triumph operating
companies, (e) the travel and accidental death life insurance program, and
the short term disability and insured long term disability programs
applicable to Triumph's operation company presidents, and (f) such other
benefits, including sick leave and eligibility for the Triumph Group, Inc.
401(k) plan, as are made generally available to other managers of companies
within Triumph occupying similar positions.
3. Annuity/Death Benefit.
(a) In addition to any other benefits to be provided by Triumph under
this agreement, Triumph agrees that it shall provide a paid up annuity of $1
million for the benefit of the Employee, subject to the terms of this Section
3, to be funded by Triumph over a period of four years from the Closing Date
of Triumph's purchase of the business of the Company. Triumph shall fund
the annuity by making a payment of $300,000 into Employee's annuity account
upon the Closing Date (or as soon thereafter a practicable). Thereafter,
Triumph shall make additional annual payments on each succeeding anniversary
date in amounts to be actuarially determined consistent with the commitment
to fund $1 million as of the fourth year after closing.
(b) In the event Employee is terminated for Cause or quits his employment
with the Company, Triumph's obligations to make additional annuity payments
under subparagraph (a) of this Section 3 shall cease immediately and Triumph
shall have no further obligations under subparagraph (a), provided however
that any payments made by Triumph to Employee's annuity account through the
date of such termination of employment shall be vested in Employee.
(c) In the event of Employee's death during the Employment Period, any
payments made by Triumph pursuant to subparagraph (a) through the date of
death shall be vested in Employee. Upon such death, and in full satisfaction
of Triumph's
obligations under this Section 3, Triumph shall provide Employee with a total
death benefit of one million dollars ($1,000,000). Such $1,000,000 benefit
shall be funded by Triumph by payment to Employee's legal representatives of
the vested portion of the annuity account, by payment of Employee's group
term life insurance benefits, and by such other life insurance as Triumph may
elect to obtain to fund its obligations hereunder in the event of Employee's
death. In the event Employee's employment is terminated other than for Cause
or other than as the result of Employee quitting his employment with Triumph,
Triumph shall continue to make the payments set forth in subparagraph (a) of
this Section 3 as though the Employee had remained employed for the remainder
of the Employment Period, and after the Employment Period shall transfer such
account to Employee as Employee may direct in writing.
4. Inability to Perform. In the event that, during the Employment
Period, Employee is substantially unable to perform his duties, by reason of
illness or any other incapacity or disability, for a period of six
consecutive months, then Triumph, by serving thirty days' prior written
notice on Employee, shall have the right, exercisable at its option, to
terminate its obligations to Employee at any time after the end of such
six-month period (in which event Employee would be eligible to receive all
benefits available under the Triumph Group, Inc. short term and long term
disability programs).
5. Termination of Employee. Notwithstanding any other provision of
this agreement, Triumph may terminate this agreement (and any future payment
obligations) for Employee's breach of duty, gross negligence, or any willful
act that constitutes common law fraud or a felony ("Cause"). The phrase
"breach of duty" as used herein means the failure by Employee to abide by or
follow rules, procedures or policies reasonably promulgated by Triumph, its
officers and authorized representatives provided that such failure has not
been substantially cured in the judgement of the President of Triumph within
thirty (30) days following Employee's receipt of notice from Triumph
specifying such failure.
In the event of a termination under this Section 5, Triumph shall pay to
Employee the compensation and benefits otherwise payable to him under Section
2 of this agreement through the last day of his actual employment by Triumph,
including
accrued vacation allocable to the period worked. In the event Employee is
terminated for reasons other than Cause, the parties agree that Triumph's
sole and exclusive responsibility and obligation shall be to continue to make
regular payments to Employee of his Base Salary for the remainder of this
agreement through March 31, 2001 or, at the exclusive option of Triumph, to
make a lump sum payment to Employee of his remaining Base Salary, discounted
to present value in accordance with published discount tables applicable at
the time of termination. In either event, Employee shall be entitled to such
benefits under Section 3 of this agreement as are set forth therein.
Under no circumstances shall Employee, upon termination of his employment
hereunder, be entitled to receive any incentive compensation payments with
respect to the fiscal year in which an early termination occurs, unless
otherwise approved by the Board of Directors of Triumph Group, Inc. Nothing
herein, however, shall affect Employee's right to receive any previously
earned but unpaid deferred compensation payments to which the Employee may be
entitled under the Supplemental Retirement Plan.
6. No-Solicitation. In consideration of Triumph's agreements contained
herein, and in order to preserve and protect the acquisition by Triumph of
the Company in accordance with the Agreement, Employee hereby agrees to
refrain, during the Employment Period and any continued employment with the
Company thereafter, and for a period of two (2) years from the date of
termination of his employment with the Company, from directly or indirectly
soliciting business from any of the Company's customers with respect to the
products sold and services performed by the Company. During Employee's
employment and the subsequent two (2) year period, Employee shall neither
induce nor encourage any employee involved in the above-described business to
leave the Company or any other Triumph division or subsidiary.
7. Remedies. Employee acknowledges and agrees that, in the event of
Employee's breach of the non-compete provision of this agreement, Triumph
will suffer irreparable harm and Triumph will be entitled to immediate
injunctive or other equitable relief from continued breach hereof without
prejudice to any of Triumph's other rights and remedies. In addition to the
provisions of Section 8 regarding the resolution of
disputes generally, Employee and Triumph agree that in the event of a breach
of the non-solicitation covenant contained in Section 6, Triumph would have
the right to seek injunctive relief from a court of law.
8. Arbitration of Disputes. In the event Employee's employment is
terminated, and Employee contends that such termination was wrongful or
otherwise in violation of his rights or privileges, express or implied,
whether founded in fact or in law, or any other rights or privileges, or was
in violation of any express or implied condition, term, or covenant, whether
founded in law or in fact, including but not limited to the covenant of good
faith and fair dealing, or otherwise in violation of law, Employee and
Triumph agree to submit the above-described disputed matter to binding
arbitration. Employee and Triumph further expressly agree that in any such
arbitration, the exclusive remedy for Employee which may be awarded by the
arbitrator(s) shall be limited to back pay owing up to and including the date
the arbitration award becomes final, and Employee agrees that he shall not be
entitled to any other remedy at law or in equity, including but not limited
to general damages, punitive damages, and/or injunctive relief.
9. Release. In order to induce Triumph to buy the capital stock of the
Company pursuant to the Agreement, and for good and valuable consideration
including the promises of Triumph made to Employee as contained herein, the
receipt and sufficiency of which is hereby acknowledged, Employee hereby
releases and forever discharges Triumph and the Company, on behalf of
himself, his heirs, successors, representatives and assigns, from any and all
claims, demands, liabilities, or causes of action whatsoever, whether known
or unknown, which Employee has or ever had against the Company, arising out
of his employment or otherwise, at any time prior to, or contemporaneously
with, the closing of the transaction contemplated by the Agreement , provided
however that nothing contained herein shall operate to release any
obligations of Triumph arising under this employment agreement. Employee
hereby expressly waives any rights he might have under California Civil Code
Section 1542 and agrees that this paragraph will cover all claims
contemplated by California Civil Code Section 1542.
10. Successors and Assigns. The rights and obligations of Triumph under
this agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of Triumph.
11. Entire Agreement. This instrument contains the entire agreement of
the parties hereto. It may not be changed orally but may be changed only by
an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.
12 Governing Law. This agreement shall be governed by the laws of the
State of California.
13. Other Agreements.
(a) This agreement shall be unenforceable and of no further force
and effect if the transaction contemplated by the Agreement does not occur.
(b) This agreement supersedes all prior employee and compensation
agreements involving Employee; provided, however, that Employee shall be
bound by the terms and conditions of the "Confidentiality and Non-Disclosure
Agreement" attached hereto as Exhibit A and incorporated herein by reference,
as though such agreement had been separately executed and delivered by him.
14. Notices. All notices and other communications under this agreement
shall be in writing and must be given by postage prepaid, registered or
certified mail, as follows:
(a) If to Triumph, to:
Triumph Group, Inc.
Attn: Vice President & General Counsel
Four Glenhardie Corporate Center
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000-0000
(b) If to Employee, to:
Xxxxxx Xxxxx
0000 Xxxxxxxxx Xxxx
_______________________
Xxxxxxx Xxxxx, XX 00000
_______________________
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the day and year first above written.
Triumph Group, Inc.
By: ________________________
Title:
Employee
_______________________________
Xxxxxx Xxxxx
Witness: __________________________
Exhibit A - Confidentiality and Non-Disclosure Agreement
Appendix 1 - Bonus Objectives
Appendix 1
Bonus Objectives
Employee's bonus objectives for the fiscal years ending March 31, 1998, 1999,
and 2000 shall be as follows:
The Employee shall be on the same bonus matrix applicable to Triumph's
operating company presidents generally consisting of performance measurements
of return on net operating assets and operating income targets. For
Employee, the return on net operating assets parameters shall be the
operation income target divided by the budgeted net operating assets and the
operating income targets shall be determined based upon the following EBITDA
goals:
CY 1997 6.0 million
CY 1998 6.3 million
CY 1999 6.8 million
CY 2000 7.5 million
CY 2001 8.3 million
The above EBITDA goals will be adjusted to reflect the Triumph fiscal
year end of March 31 so that the EBITDA goal for the period from the Closing
Date through March 31, 1998 shall be the remaining portion of EBITDA for CY
1997 plus the first three months (January 1 through March 31) of EBITDA for
CY 1998. For each year thereafter during the Employment Period, the EBITDA
goal for the remaining nine months of the calendar year and the first three
months of the succeeding calendar year shall form the EBITDA goal for the
corresponding Triumph fiscal year.
TRIUMPH GROUP, INC.
CONFIDENTIALITY AND PATENT AGREEMENT
I, , in consideration of my employment by Hydro-Mill
Co., a Triumph Group company, and the compensation to be paid or to be paid
to me, agree as follows:
1. Definitions. The term ""Triumph'' as used in this Agreement
includes Triumph Group, Inc. and all of its divisions, subsidiaries or
affiliates, including the above-named employer.
2. Disclosure of Confidential Information. I shall not at any
time during my employment or thereafter, except as properly required in the
course of my employment, use, publish, disclose or authorize anyone else to
use, publish or disclose any Confidential Information belonging to Triumph.
Confidential Information includes, but is not limited to, models, drawings,
blueprints, memoranda and other materials, documents or records of a
proprietary nature; information relating to research, manufacturing
processes, bills of material, finance, accounting, sales, personnel
management and operations; and information particularly relating to customer
lists, price lists, customer service requirements, costs of providing service
and equipment, pricing, and equipment maintenance costs.
3. Use and Return of Company Property. I shall not, in the course
of my employment or thereafter, use or permit others to use materials,
equipment or other company property for personal purposes. Further, I shall
not make copies of, resell or transfer any computer software owned or
licensed by Triumph. On termination of my employment, I will deliver to
Triumph all property belonging to Triumph, and will not retain any copies or
reproductions of correspondence, reports, drawings, photographs or documents
containing Confidential Information or relating in any way to the business of
Triumph.
4. Patents, Copyrights and Trade Secrets. I will disclose and
assign to Triumph any and all material of a proprietary nature, particularly
including, but not limited to, material subject to protection as trade
secrets or as patentable or copyrightable ideas which I may conceive, invent,
or discover during the course of my employment with Triumph. Upon Triumph's
request, either during or at any time after the termination of my employment
with Triumph, I shall execute and deliver all papers, including applications
for patents and do such other acts (entirely at Triumph's expense) as may be
necessary for Triumph to obtain and maintain proprietary rights in any and
all countries and to vest title thereto in Triumph.
5. Term; Modifications. THE PROVISIONS OF THIS AGREEMENT SHALL
SURVIVE TERMINATION OF MY EMPLOYMENT RELATIONSHIP WITH TRIUMPH. This
Agreement may be modified or waived only by a written instrument signed by an
officer or other authorized executive Triumph.
6. Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any provision shall not
affect the validity and enforceability of the other provisions hereof. If any
provision of this Agreement is unenforceable for any reason whatever, such
provision shall be appropriately limited and given effect to the extent that
it may be enforceable.
I HAVE READ THIS AGREEMENT AND FULLY UNDERSTAND ITS TERMS.
Signed at ____________________, this ________ day of ____________, 19____
Witness: ____________________________________ _________________________
Exhibit 8.4(d) Form of Non-Competition Agreement
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "Agreement") is made as of this 28th
day of August, 1997, by and among The Triumph Group Operations, Inc., a Delaware
corporation, or its wholly-owned nominee ("Buyer"), Hydro-Mill Co., a California
corporation (the "Company") and Xxxxxx Xxxxx-Xxxxxxxxx, an individual residing
at 12712 Parkyns, Xxx Xxxxxxx, Xxxxxxxxxx 00000 ("Seller").
RECITALS
Concurrently with the execution and delivery of this Agreement, Buyer is
purchasing from Seller, Xxxxxxxxx Charitable Remainder Unitrust (the
"Xxxxxxxxx Trust") and Xxxxx Charitable Remainder Unitrust (the "Xxxxx
Trust", and collectively with the Xxxxxxxxx Trust, the "Trusts"), all of the
issued and outstanding shares (the "Shares") of Common Stock, $1.00 par value
per share, of the Company, pursuant to the terms and conditions of a Stock
Purchase Agreement dated as of August __, 1997 (the "Stock Purchase
Agreement"). Section 8.4(d) of the Stock Purchase Agreement requires that a
non-competition agreement be executed and delivered by Seller as a condition
to the purchase of the Shares by Buyer.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS. Capitalized terms used but not expressly defined in this
Agreement have the meanings assigned to them in the Stock Purchase Agreement.
2. ACKNOWLEDGMENTS BY SELLER. Seller acknowledges that (a) Seller has occupied
a position of trust and confidence with the Company prior to the date hereof and
has become familiar with the following, any and all of which constitute
confidential information of the Company (collectively, the "Confidential
Information"): (i) any and all Trade Secrets (as defined below) concerning the
business and affairs of the Company, (ii) any and all information concerning the
business and affairs of the Company (which includes historical financial
statements, financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials), however documented, and
(iii) any and all notes, analysis, compilations, studies, summaries and other
material prepared by or for the Company containing or based, in whole or in
part, on any information included in the foregoing, excluding
in each case, information that has been made public prior to the date hereof,
information that has been made public after the date hereof through no breach
of Seller, information that otherwise has become available in the public
domain beginning after the date hereof through no breach of Seller,
excluding, further, any information in general nature including financial
information related to the history of the Company prior to the date hereof;
(b) the business of the Company is national in scope; (c) its products and
services are marketed throughout the United States; (d) the Company competes
with other businesses that are or could be located in any part of the United
States; (e) Buyer has required that Seller make the covenants set forth in
Sections 3 and 4 of this Agreement as a condition to Buyer's purchase of the
Shares owned by Seller and the Trusts; (f) the provisions of Sections 3 and 4
of this Agreement are reasonable and necessary to protect and preserve the
Company business; and (g) for purposes of obtaining injunctive relief, the
Company would be irreparably damaged if Seller were to breach the covenants
set forth in Sections 3 and 4 of this Agreement, provided however that for
purposes of other remedies no such acknowledgment is hereby made. As used
herein, the term "Trade Secrets" will mean product specifications, data,
know-how, formulae, compositions, processes, designs, sketches, photographs,
graphs, drawings, samples, inventions and ideas, past, current and planned
research and development, current and planned manufacturing and distribution
methods and processes, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans, computer software
and programs (including object code and source code), computer software and
database technologies, systems, structures and architectures of the Company
and any other information, however documented, of the Company that is a
"trade secret" within the meaning of the California Uniform Trade Secrets Act.
3. CONFIDENTIAL INFORMATION. Seller acknowledges and agrees that all
Confidential Information known or obtained by Seller, whether before or after
the date hereof, is the property of the Company. Therefore, Seller agrees that
Seller will not, at any time, disclose to any unauthorized Persons or use for
her own account or for the benefit of any third party (other than the Company or
any of their successors) any Confidential Information, whether Seller has such
information in Seller's memory or embodied in writing or other physical form,
without Buyer's written consent, unless and to the extent that the Confidential
Information is or becomes generally known to and available for use by the public
other than as a result of Seller's fault. Seller agrees to deliver to Buyer,
at any time Buyer may request, all documents, memoranda, notes, plans, records,
reports and other documentation, models, components, devices or computer
software, whether embodied in a disk or in other form (and all copies of all of
the foregoing), relating to the businesses,
- 2 -
operations or affairs of the Company and any other Confidential Information
that Seller may then possess or have under Seller's control.
4. NONCOMPETITION. As an inducement for Buyer to enter into the Stock Purchase
Agreement and as additional consideration for the consideration to be paid to
Seller under the Stock Purchase Agreement, Seller agrees that:
(a) For a period of five years after the Closing:
(i) Seller will not, directly or indirectly, engage or invest in, own,
manage, operate, finance, control or participate in the ownership, management,
operation, financing, or control of, be employed by, associated with, or in any
manner connected with, lend Seller's name or any similar name to, lend Seller's
credit to, or render services or advice to, any business whose products or
activities compete in whole or in part with the products or activities of the
Company, anywhere within the United States; provided, however, that Seller may
purchase or otherwise acquire any class of securities of any enterprise (but
without otherwise participating in the activities of such enterprise) if such
securities are listed on any national or regional securities exchange or have
been registered under Section 12(g) of the Securities Exchange Act of 1934.
Seller agrees that this covenant is reasonable with respect to its duration,
geographical area and scope.
(ii) Seller will not, directly or indirectly, either for herself or
any other Person, (A) induce or attempt to induce any employee of the Company to
leave the employ of the Company, (B) in any way interfere with the relationship
between the Company and any employee of the Company, (C) employ, or otherwise
engage as an employee, independent contractor or otherwise, any non-secretarial
employee of the Company, or (D) induce or attempt to induce any customer,
supplier, licensee or business relation of the Company to cease doing business
with the Company, or in any way interfere with the relationship between any
customer, supplier, licensee or business relation of the Company.
(iii) Seller will not, directly or indirectly, either for herself or
any other Person, solicit the business of any Person known to Seller to be a
customer of the Company, whether or not Seller had personal contact with such
Person, with respect to products or activities which compete in whole or in part
with the products or activities of the Company.
(b) In the event of a breach by Seller of any covenant set forth in Section
4(a) of this Agreement, the term of such
- 3 -
covenant will be extended by the period of the duration of such breach.
5. BUYERS' REMEDIES. If Seller breaches the covenants set forth in Sections 3
or 4 of this Agreement, Buyer and the Company will be entitled to the following
remedies:
(a) Damages from Seller which, at Buyer's election, may be offset against
any and all amounts owing to Seller under the Stock Purchase Agreement including
without limitation, the Escrow Amount, in which event such offset shall be made
in accordance with Sections 11 and 12 of the Stock Purchase Agreement; and
(b) In addition to its right to Damages and any other rights it may have,
to obtain injunctive or other equitable relief to restrain any breach or
threatened breach or otherwise to specifically enforce the provisions of
Sections 3 and 4 of this Agreement, it being agreed that money damages alone
would be inadequate to compensate Buyer and the Company and would be an
inadequate remedy for such breach.
7. SELLER'S REMEDIES. If a court of competent jurisdiction determines that
Buyer breached any covenant set forth in Section 5 of this Agreement, Seller may
elect to terminate this Agreement whereupon Seller will be released from all of
the covenants set forth in Sections 3 and 4 of this Agreement and Buyer and the
Company will be relieved of all liability hereunder.
8. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon Buyer, Company
and Seller and will inure to the benefit of Buyer and Company and their
respective affiliates, successors and assigns and Seller and Seller's assigns,
heirs and legal representatives. Buyer may assign any of its rights under this
Agreement to any Subsidiary of Buyer.
9. WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power or privilege under this Agreement will operate as
a waiver of such right, power or privilege, and no single or partial exercise of
any such right, power or privilege will preclude any other or further exercise
of such right, power or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement can be discharged by one party, in whole or
in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any
- 4 -
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement.
10. GOVERNING LAW. This Agreement will be governed by the laws of the State of
California without regard to conflicts of laws principles.
11. SEVERABILITY. Whenever possible each provision and term of this Agreement
will be interpreted in a manner to be effective and valid but if any provision
or term of this Agreement is held to be prohibited or invalid, then such
provision or term will be ineffective only to the extent of such prohibition or
invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of this
Agreement. If any of the covenants set forth in Section 4 of this Agreement are
held to be unreasonable, arbitrary or against public policy, such covenants will
be considered divisible with respect to scope, time and geographic area, and in
such lesser scope, time and geographic area, will be effective, binding and
enforceable against Seller.
12. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
13. SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this Agreement
are provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement unless otherwise specified.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
14. NOTICES. All notices, consents, waivers and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is mailed
by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below
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(or to such other addresses and facsimile numbers as a party may designate by
notice to the other parties):
Seller: Xxxxxx Xxxxx-Xxxxxxxxx
12712 Parkyns
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx X. XxXxxxxx, Esq.
Xxxxxxx & XxXxxxxx
000 Xxxxx Xxxxx Xxxxxx 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Telecopier: (000) 000-0000
Buyer: The Triumph Group, Inc.
Four Glenhardie Corporate Center
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000-0000
Attention: General Counsel
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopier: (000) 000-0000
15. ENTIRE AGREEMENT. This Agreement and the Stock Purchase Agreement
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersede all prior written and oral agreements and
understandings between Buyer and Seller with respect to the subject matter of
this Agreement. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
- 6 -
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
BUYER:
THE TRIUMPH OPERATIONS GROUP, INC.
By:_______________________________
Name:
Title:
SELLER:
__________________________________
Xxxxxx Xxxxx-Xxxxxxxxx
COMPANY:
HYDRO-MILL CO.
By:_______________________
Name:
Title:
- 7 -
Exhibit 9.4(b) Form of Buyer's Certificate
The Triumph Group Operations, Inc.
Officers' Certificate
The undersigned are the duly elected, qualified and serving President
and Chief Executive Officer and the Vice President, General Counsel and
Secretary, respectively, of The Triumph Group Operations, Inc. (the "Company").
Capitalized terms used herein and not otherwise defined herein shall have the
meaning given such terms in the Stock Purchase Agreement (the "Agreement"),
dated as of August 28, 1997, by and among the Company, Hydro-Mill Co., Xxxxxx
Xxxxx-Xxxxxxxxx, Xxxxxxxxx Charitable Remainder Unitrust and Xxxxx Charitable
Remainder Unitrust. This Certificate is delivered pursuant to Section 9.4(a) of
the Agreement.
In such capacities, we hereby certify as follows:
1. Each representation and warranty of the Company contained in the
Agreement was true and correct as of the date of the execution and delivery of
the Agreement and is true and correct as of the date hereof.
2. The Company has duly performed all obligations and satisfied all
conditions precedent on its part to be performed or satisfied pursuant to
Section 9 of the Agreement at or prior to the date hereof.
3. Attached hereto as Exhibit A is a true and complete copy of the
Amended and Restated Certificate of Incorporation of the Company as in full
force and effect as of the date hereof.
4. Attached hereto as Exhibit B is a true and complete copy of the
Bylaws of the Company, as amended, as in full force and effect as of the date
hereof.
5. Attached hereto as Exhibit C is a true and correct copy of
certain resolutions duly adopted by the Board of Directors of the Company on the
dates set forth thereon authorizing and directing the proper officers of the
Company to enter into the Agreement and to take or cause to be taken all such
further actions necessary to complete the transactions contemplated thereby.
Such resolutions have not been amended, modified or rescinded and remain in full
force and effect as of the date hereof.
6. Each person who, as a director or officer of the Company, signed
the Agreement or any other instrument, agreement or document delivered prior to
or on the date hereof in connection with the transactions contemplated by the
Agreement was, at the time or the respective times of such signing and delivery,
duly elected, qualified and serving as such director or officer, and the
signature of each person appearing on any such document is his or her genuine
signature.
7. The below-named persons are duly serving on this date as officers
of the Company in the capacities set forth next to their names; the manual
signature set forth opposite each such name is the genuine signature of such
person; and each such person has been duly authorized to sign each document
signed by such person in connection with the transactions contemplated by the
Agreement.
Name Office Manual Signature
---- ------ ----------------
Xxxxxxx X. Ill President and
Chief Executive ____________________
Officer
Xxxxxxx X. Xxxxxxxxxxx Vice President,
General Counsel, ____________________
Secretary
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal
of the Company this 29th day of August, 1997.
_________________________________
Xxxxxxx X. Xxxxxxxxxxx, Secretary
CORPORATE SEAL
Exhibit 11.7 Form of Release
RELEASE
This Release is being executed and delivered in accordance with Section
8.4(g) of the Stock Purchase Agreement dated August 28, 1997 (the "Agreement")
by and among The Triumph Group Operations, Inc., a Delaware corporation, or its
wholly-owned nominee ("Buyer"), Hydro-Mill Co., a California corporation (the
"Company"), Xxxxxx Xxxxx-Xxxxxxxxx ("Xxxxx-Xxxxxxxxx"), Xxxxxxxxx Charitable
Remainder Unitrust, Xxxxxx Xxxxx-Xxxxxxxxx, as Trustee ("Xxxxxxxxx Trust"), and
Xxxxx Charitable Remainder Unitrust, Xxxxxx Xxxxx-Xxxxxxxxx, as Trustee ("Xxxxx
Trust") (with Xxxxx-Xxxxxxxxx, Xxxxxxxxx Trust and Xxxxx Trust, hereinafter
collectively referred to as the "Stockholders"). Capitalized terms used in this
Release without definition have the respective meanings given to them in the
Agreement.
Each Stockholder acknowledges that execution and delivery of this Release
is a condition to Buyer's obligation to purchase the outstanding capital stock
of the Company pursuant to the Agreement and that Buyer is relying on this
Release in consummating such purchase.
Each Stockholder, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound,
in order to induce Buyer to purchase the outstanding capital stock of the
Company pursuant to the Agreement, hereby agrees as follows:
Each Stockholder, on behalf of herself or itself and each of her or its
Related Persons, hereby releases and forever discharges the Buyer, the Company
and each of their respective individual, joint or mutual, past, present and
future Representatives, affiliates, stockholders, controlling persons,
successors and assigns (individually, a "Releasee" and collectively,
"Releasees") from any and all claims, demands, Proceedings, causes of action,
Orders, obligations, contracts, agreements, debts and liabilities whatsoever,
whether known or unknown, suspected or unsuspected, both at law and in equity
(the "Obligations"), which each of the Stockholders or any of their respective
Related Persons now has, have ever had or may hereafter have against the
respective Releasees arising contemporaneously with or prior to the Closing Date
or on account of or arising out of any matter, cause or event occurring
contemporaneously with or prior to the Closing Date, except for (i) the rights
of Xxxxx-Xxxxxxxxx as an officer and director of the Company to indemnification
or reimbursement from the Company pursuant to the Company's Articles of
Incorporation whether or not relating to claims pending on, or asserted after,
the Closing Date, provided, however, nothing in this Release shall create an
obligation of the Company (other than as may be permitted under the Articles of
Incorporation of the Company) to indemnify Xxxxx-Xxxxxxxxx; and (ii) claims by
Xxxxx-Xxxxxxxxx for reimbursement of medical expenses under the Company's health
care plans which shall be submitted no later than ninety (90) days after
the Closing date after which date Xxxxx-Xxxxxxxxx shall not be permitted to
submit any claims; and (iii) rights of Xxxxx-Xxxxxxxxx to obtain coverage
under, and to receive reimbursements from, the health care insurance policies
of the Company pursuant to the Consolidated Omnibus Budget Reconciliation Act
of 1995; provided, however, that nothing contained herein shall operate to
release any Obligations of Buyer of the Company arising under the Agreement
or any Obligation of the Company which Obligation has been disclosed in the
Schedules to the Agreement.
Each Stockholder hereby irrevocably covenants to refrain from, directly or
indirectly, asserting any claim or demand, or commencing, instituting or causing
to be commenced, any proceeding of any kind against any Releasee, based upon any
matter purported to be released hereby.
Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, Stockholder, Xxxxx Trust and Xxxxxxxxx Trust jointly
and severally between each other and Xxxxx-Xxxxxxxxx, jointly and severally,
shall indemnify and hold harmless each Releasee from and against all loss,
liability, claim, damage (including incidental and consequential damages) or
expense (including costs of investigation and defense and reasonable attorney's
fees) whether or not involving third party claims, arising directly or
indirectly from or in connection with the assertion by or on behalf of the
Stockholders of any claim or other matter purported to be released pursuant to
this Release.
If any provision of this Release is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Release will
remain in full force and effect. Any provision of this Release held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
This Release may not be changed except in a writing signed by the person(s)
against whose interest such change shall operate. This Release shall be
governed by and construed under the laws of the California without regard to
principles of conflicts of law.
All words used in this Release will be construed to be of such gender or
number as the circumstances require.
2
IN WITNESS WHEREOF, each of the undersigned have executed and delivered
this Release as of this 28th day of August, 1997.
___________________________________
Xxxxxx Xxxxx-Xxxxxxxxx
Xxxxxxxxx Charitable Remainder
Unitrust
By:________________________________
Xxxxxx Xxxxx-Xxxxxxxxx
Trustee
Xxxxx Charitable Remainder Unitrust
By:________________________________
Xxxxxx Xxxxx-Xxxxxxxxx
Trustee
