EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into effective
the 28th day of December, 1996, by and among THE SAFE SEAL COMPANY, INC.
("Purchaser"), a Texas corporation with its chief executive office at 00000
Xxxxxxx Xxxxx, Xxxxx X000, Xxxxxxx, Xxxxx 00000, XXXX XXXXX ("Xx. Xxxxx"), an
individual whose address is 0000 X. 00xx Xxxxx, Xxxxx, Xxxxxxxx 00000, XXXXXXX
GROUNDS ("Mr. Grounds"), an individual whose address is 0000 X. 00xx X. Xxxxxx,
Xxxxx, Xxxxxxxx 00000, HUB ASSOCIATES, a California general partnership with its
chief executive office at 0 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000 (Xx. Xxxxx, Mr. Grounds and Hub Associates being sometimes
hereinafter referred to collectively as the "Sellers" and individually as a
"Seller"), and HARLEY INDUSTRIES, INC. (the "Company"), a California corporation
with its chief executive office and principal place of business at 0000 Xxxx
00xx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxxx 00000. Purchaser, Sellers and the
Company are sometimes hereinafter referred to collectively as the "Parties" or
individually as a "Party."
W I T N E S S E T H :
WHEREAS, Sellers are the legal and beneficial owners and holders of seven
hundred fifty-six thousand four hundred twenty-eight shares (756,428) shares
(the "Subject Shares") of the Company, the Subject Shares constituting
ninety-six and nine-tenths percent (96.9 %) of the issued and outstanding
capital stock of the Company; and
WHEREAS, Purchaser desires to purchase from Sellers, and Sellers desire to
sell to Purchaser, all of the Subject Shares, on the terms and conditions and
for the consideration set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements, representations and warranties contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and confessed, the Parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 ADVERSE CONSEQUENCES. The term "Adverse Consequences" shall mean all
actions, suits, proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, amounts paid in defense, investigation or
settlement, liabilities, obligations, taxes, liens, losses, expenses and fees,
including court costs and attorneys fees.
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1.2 AFFILIATE. The term "Affiliate" of a person shall mean, with respect
to that person, a person who directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
or is acting as agent on behalf of, or as an officer or director of, that
person. Specifically, and without limiting the definition of the term
"Affiliate," the Sellers are all agreed to be Affiliates of one another. As used
in the definition of Affiliate, the term "control" (including the terms
"controlling," "controlled by," or "under common control with") means the
possession, direct or indirect, of the power to direct, cause the direction of,
or influence the management and policies of a person, whether through the
ownership of voting securities, by contract, through the holding of a position
as a partner, director or officer of such person, as a trustee, or otherwise. As
used in this Section, the term "person" means an individual, a corporation, a
partnership, a limited liability company, an association, a joint stock company,
a trust, an incorporated organization, or a government or political subdivision
thereof, or any other form of entity.
1.3 ASSETS. The term "Assets" shall mean all of the assets, other than the
Leased Assets, owned or used by the Company in the Business, including without
limitation those assets set forth on that certain Schedule of Assets previously
delivered to the Purchaser (subject to nonmaterial diminution thereof in the
ordinary course of business.
1.4 BALANCE SHEET. The term "Balance Sheet" shall mean the August 31, 1996
balance sheet of the Company, including the notes thereto, prepared internally
from the books and records of the Company, without audit, and included in the
Financial Statements attached hereto as SCHEDULE 1.22.
1.5 BALANCE SHEET DATE. The term "Balance Sheet Date" shall mean August
31, 1996.
1.6 BANK OF OKLAHOMA DEBT. The term "Bank of Oklahoma Debt" shall mean the
indebtedness of the Company to Bank of Oklahoma under the Revolving Credit and
Term Loan Agreement dated March 18, 1991, as amended through the Ninth Amendment
to Revolving Credit and Term Loan Agreement dated November 1, 1996.
1.7 BUSINESS. The term "Business" shall mean the current business of the
Company of selling, repairing and servicing valves and equipment.
1.8 CLASS A REPRESENTATIONS. The term "Class A Representations" shall mean
those representations and warranties of Sellers set forth in (i) Sections 3.1,
3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.18, 3.23, 3.25 and 3.28, (ii) Sections 3.12,
3.13 and 3.14 to the extent, but only to the extent, such sections deal with
title issues, and (iii) Section 3.17, except to the extent that such section
deals with Environmental, Health & Safety Laws.
1.9 CLASS B REPRESENTATIONS. The term "Class B Representations" shall mean
all of the representations and warranties of Sellers set forth in Article III of
this Agreement, other than those which are Class A Representations,
Environmental Representations, or Financial Representations.
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1.10 CLOSING. The term "Closing" shall mean the consummation of the
purchase of the Subject Shares on the Closing Date.
1.11 CLOSING DATE. The term "Closing Date" shall mean the later of (a)
January 31, 1997, or (b) the date that all of the conditions set forth in
Article VI are first met or waived, or such other date as may be otherwise
provided in this Agreement or otherwise established by agreement of the Parties.
1.12 CLOSING FINANCIAL STATEMENTS. The term "Closing Financial Statements"
shall mean a balance sheet and income statement of the Company prepared
internally from the books and records of the Company, without audit, as of the
Measurement Date, and attached hereto as SCHEDULE 1.12.
1.13 CODE. The term "Code" shall mean the Internal Revenue Code of 1986,
as amended.
1.14 EMPLOYEE. The term "Employee" shall mean any employee of the Company
who as of the Closing Date is employed or otherwise performs work or provides
services in connection with the operation of the Business, including those, if
any, on disability, sick leave, layoff or leave of absence, who, in accordance
with the Company's applicable policies, would be eligible to return to active
status, as set forth on SCHEDULE 3.22 attached hereto.
1.15 EMPLOYEE BENEFIT PLAN. The term "Employee Benefit Plan" means any (a)
nonqualified deferred compensation or retirement plan or arrangement which is an
Employee Pension Benefit Plan, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare Benefit
Plan or material fringe benefit plan or program.
1.16 EMPLOYEE PENSION BENEFIT PLAN. The term "Employee Pension Benefit
Plan" has the meaning set forth in ERISA Sec. 3(2).
1.17 EMPLOYEE WELFARE BENEFIT PLAN. The term "Employee Welfare Benefit
Plan" has the meaning set forth In ERISA Sec. 3(l).
1.18 ENVIRONMENTAL, HEALTH & SAFETY LAWS. The term "Environmental, Health
& Safety Laws" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976,
the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act, the
Hazardous Materials Transportation Act, the Federal Insecticide, Fungicide and
Rodenticide Act and the Occupational Safety and Health Act of 1970, each as
amended, together with all other laws (including rules and regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, local, and foreign governments and all agencies thereof
concerning pollution or protection of the environment, public health and safety,
or employee health and safety, including laws relating to emissions,
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discharges, releases, or threatened releases of any solid, hazardous,
industrial, or toxic pollutants, contaminants, substances or wastes into ambient
air, surface water, ground water, or lands or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of any solid, hazardous, industrial or toxic pollutants,
contaminant, substances or wastes.
1.19 ENVIRONMENTAL REPRESENTATIONS. The term "Environmental
Representations" shall mean all of the representations and warranties of Sellers
set forth in (i) Section 3.30 and (ii) Section 3.17, to the extent that such
section deals with Environmental, Health & Safety Laws.
1.20 ERISA. The term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.21 FINANCIAL REPRESENTATIONS. The term "Financial Representations" shall
mean all of the representations and warranties of Sellers set forth in Section
3.31.
1.22 FINANCIAL STATEMENTS. The term "Financial Statements" shall mean the
August 31, 1996 Financial Statements of the Company attached hereto as SCHEDULE
1.22.
1.23 HARLEY SUBSIDIARIES. The term "Harley Subsidiaries" shall mean (i)
Harley Equipment Company, an Oklahoma corporation, (ii) Harley Industries Inc.
S.A. de CV, a corporation organized and existing under the laws of the Republic
of Mexico (the "Mexican Subsidiary") and (iii) Valve Repair of South Carolina,
Inc.
1.24 INTELLECTUAL PROPERTY. The term "Intellectual Property" shall mean
the following (a) all inventions (whether patentable or unpatentable and whether
or not reduced to practice), all improvements thereto and all patents, patent
applications, and patent disclosures together with all reissuance,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in connection therewith,
(e) all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary rights,
and (h) all copies and tangible embodiments hereof (in whatever form or medium).
1.25 MEASUREMENT DATE. The term "Measurement Date" shall mean October 31,
1996.
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1.26 ORDINARY COURSE OF BUSINESS. The term "Ordinary Course of Business"
shall mean the ordinary course of business consistent with past custom and
practice (including with respect to quantity and frequency).
1.27 PBGC. The term "PBGC" shall mean the Pension Benefits Guaranty
Corporation.
1.28 PERMITTED BONUS. The term "Permitted Bonus" shall mean the
distribution by the Company to its shareholders of bonuses in the aggregate
amount not to exceed Six Hundred Twenty Five Thousand and No/100 Dollars
($625,000.00) the proceeds of which will be used to acquire, on or before the
Closing Date, the following nonproducing assets: (i) the stock of the Mexican
Subsidiary whose sole asset is the property located in San Xxxxxx xx Xxxxxxx,
Mexico; (ii) a note receivable owed to the Company by Xx. Xxxxx in the
outstanding principal amount of $150,000; (iii) the investment securities in
Industrial Equipment Rentals, Inc. and (iv) two automobiles and a country club
membership utilized by Xx. Xxxxx, all of which as of the Measurement Date had an
aggregate net book value which did not exceed Six Hundred Twenty-Five Thousand
Dollars ($625,000).
ARTICLE II
PURCHASE AND SALE OF SUBJECT SHARES
2.1 PURCHASE AND SALE OF SUBJECT SHARES. Subject to the terms and
conditions set forth in this Agreement, Sellers hereby agree to sell, convey,
transfer, assign and deliver to Purchaser, and Purchaser hereby agrees to
purchase from Sellers, on the Closing Date, the Subject Shares, free and clear
of any restrictions or conditions to transfer or assignment, rights of first
refusal, mortgages, liens, pledges, charges, encumbrances, equities, claims,
covenants, conditions, restrictions, options or agreements, other than the
pledge of the Subject Shares to secure the Bank of Oklahoma Debt.
2.2 PURCHASE PRICE CONSIDERATION. As consideration for the purchase of the
Subject Shares and upon delivery thereof to Purchaser at Closing, Purchaser
shall deliver to Sellers the following (the "Purchase Price"):
(A) in cash or other immediately available funds, the amounts of two
million, three hundred thirty four thousand, four hundred seventy three
dollars ($2,334,473), payable to Xx. Xxxxx, three hundred thirty five
thousand, two hundred and six dollars ($335,206), payable to Mr. Grounds,
and one million, five hundred fifty-six thousand, three hundred and
thirteen dollars ($1,556,313), payable to Hub Associates, subject to
reduction as set forth in Section 9.2; and
(B) in cash or other immediately available funds, the amounts of
thirty-six thousand, eight hundred eighty-eight dollars ($36,888), payable
to Xx. Xxxxx, five thousand, two hundred and ninety seven dollars
($5,297), payable to Mr. Grounds, and twenty four thousand, five hundred
and ninety two dollars ($24,592) payable to Hub Associates, all of which
is independent consideration for the execution, delivery and performance
of the
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Agreements Not to Compete to be entered into at Closing between each
Seller (including the individual partners of Hub Associates) and Purchaser
pursuant and ancillary to this Agreement, in the form attached hereto as
Exhibit A and incorporated herein by reference; and
(C) Three (3) Subordinated Promissory Notes (the "Subordinated Notes"),
executed by Allwaste, Inc., a Delaware corporation ("Allwaste"), and
payable to the order of Purchaser in the original principal amounts of one
million, eight hundred forty-four thousand, three hundred and ninety-one
dollars ($1,844,391), two hundred sixty-four thousand, eight hundred
thirty six dollars ($264,836) and one million two hundred twenty-nine
thousand, five hundred ninety-three dollars ($1,229,593), in the form of
Subordinated Promissory Note attached hereto as Exhibit B and incorporated
herein by reference, to be endorsed and assigned, without recourse, to Xx.
Xxxxx, Mr. Grounds and Hub Associates, respectively, at Closing; and
(D) The right of Xx. Xxxxx, Mr. Grounds and Hub Associates each to
receive, respectively five hundred fifty two thousand, four hundred and
eight dollars ($552,408), seventy nine thousand, three hundred and twenty
dollars ($79,320) and three hundred sixty eight thousand, two hundred and
seventy-two dollars ($368,272), an aggregate of one million dollars
($1,000,000), in the event that within four years of the Closing the
Purchaser becomes a "Public Entity". For purposes of this Agreement the
Company shall be deemed to have become a Public Entity if (i) it or any
successor shall have closed the offering to the public of any class of
equity securities of the Purchaser or such successor pursuant to a
registration statement ordered effective under the Securities Act of 1933,
as amended, (ii) the Purchaser or any successor shall merge or consolidate
with, or sell all or substantially all of its assets to, (x) any entity
which has a class of equity securities registered under the Securities Act
of 1934, as amended (the "Exchange Act"), (y) an Affiliate of any such
entity with such a class equity securities registered under the Exchange
Act, or (z) Allwaste or any Affiliate thereof or (iii) 80% or more of the
issued and outstanding voting securities of the Purchaser or any successor
to the Purchaser otherwise becomes owned, directly or indirectly, by an
entity which has a class of equity securities registered under the
Exchange Act.
2.3 TAXES OF SELLERS. Sellers shall pay all income or other taxes arising
out of the transfer of the Subject Shares, or receipt of payments for the
Subject Shares, or any consideration delivered in connection with the purchase
of the Subject Shares, or as independent consideration for the Agreements Not to
Compete payable as contemplated in Section 2.2 hereof. Neither Purchaser nor the
Company shall be responsible for any business, occupation, income, withholding
or similar tax, or any taxes of any kind, of the Sellers.
2.4 ADJUSTMENT OF PURCHASE PRICE. The Company shall as soon as possible
prepare final unaudited financial statements of the Company, dated as of the
Measurement Date. Such unaudited financial statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied,
and in a manner consistent with the Company's historical accounting policies
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with respect to audited financial statements (including the materiality
threshold previously used by the Company's independent public accountants in
calculating the Company's net worth). At such time as unaudited financial
statements have been delivered, the Purchase Price shall automatically be
reduced without further action by the Parties by an aggregate amount (the
"Initial Deficiency Amount") equal to the amount, if any, by which four million
two hundred fifty thousand dollars ($4,250,000) exceeds the Company's
Stockholders' Equity as of the Measurement Date, as set forth in such unaudited
financial statements, after reducing such Stockholders' Equity to give effect to
the Permitted Bonus.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant, jointly and severally, to Purchaser
that:
3.1 ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing, under the laws of the State of California, has
all necessary corporate powers to own its properties and to operate the Business
as now owned and operated by it, and is qualified to do business in all of the
states in which the Assets or any Leased Assets are located or the nature and
operation of the Business require such qualification. Sellers shall deliver at
Closing certificates (i) issued by the California Secretary of State evidencing
the Company's existence and good standing in such state, and (ii) evidencing the
Company's good standing and authority to do business in all other states in
which the Company is required to qualify to do business. Hub Associates (i) is a
general partnership duly organized and validly existing under the laws of the
State of California, (ii) has all necessary powers to own its properties and to
carry on its business as now owned and operated by it, (iii) is qualified to do
business in all states in which the nature of its business and the operation
thereof requires such qualification, and (iv) consists solely of the following
general partners: Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxxxx.
3.2 AUTHORITY. Each Seller has the full right, power, legal capacity and
authority to execute, deliver and perform his or its obligations under this
Agreement. The execution, delivery and performance of this Agreement by Hub
Associates has been duly authorized and approved by both of its partners, which
constitutes all of the necessary partnership action for Hub Associates to
consummate the transactions contemplated by this Agreement and to perform its
obligations hereunder.
3.3 CONSENTS AND APPROVALS; NO BREACH OR DEFAULT. Except for the consents
required from the Bank of Oklahoma with respect to the Bank of Oklahoma Debt,
and as set forth on SCHEDULE 3.3(A), no consent, approval or authorization of,
or filing or registration with, any governmental or regulatory authority, or any
other person or entity, is required to be made or obtained by any Seller or by
the Company or any Harley Subsidiary in connection with the execution, delivery
or performance of this Agreement, or the consummation by Sellers of the
transactions contemplated hereby (except that no representation or warranty is
made with respect to the Mexican Subsidiary). Except as set forth on SCHEDULE
3.3(B), neither the execution and
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delivery of this Agreement by Sellers, nor the consummation of the transactions
contemplated herein by Sellers, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency or court to which any Seller,
the Company or any Harley Subsidiary is subject (except that no representation
or warranty is made with respect to the Mexican Subsidiary), or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, promissory note, conditional sales contract, partnership agreement
or other arrangement to which any Seller or the Company is a party or by which
he or it is bound or to which any of his or its assets are subject, or (C)
conflict with or violate the Articles of Incorporation, Bylaws or other charter
document of the Company.
3.4 VALID AND BINDING OBLIGATION. Upon execution and delivery, this
Agreement and each document, instrument or agreement to be executed by Sellers,
or any of them, in connection herewith, will constitute the legal, valid, and
binding obligation of each Seller which is a party thereto, enforceable against
each such Seller in accordance with its terms, except as same may be limited by
applicable bankruptcy laws, insolvency laws, and other similar laws affecting
the rights of creditors generally.
3.5 CAPITAL. The authorized capital stock of the Company consists of (i)
three million (3,000,000) shares of common stock, $0.01 par value per share, of
which seven hundred eighty thousand, four hundred twenty-eight (780,428) shares
are issued and outstanding, and (ii) one million nine hundred fifty thousand
shares (1,950,000) shares of preferred stock, none of which is issued or
outstanding. Four hundred seventeen thousand eight hundred fifty-seven (417,857)
Subject Shares are owned by Xx. Xxxxx, two hundred seventy-eight thousand five
hundred seventy-one (278,571) Subject Shares are owned by Hub Associates, and
sixty thousand (60,000) Subject Shares are owned by Mr. Grounds. All of the
Company's outstanding capital stock, including the Subject Shares, is duly and
validly authorized and issued, fully paid and nonassessable, and none of such
capital stock has been issued in violation of the rights of any stockholder of
the Company. The only outstanding subscriptions, options, rights, warrants,
convertible securities, conversion rights, exchange rights or other agreements
or commitments which obligate the Company to issue or transfer from treasury
additional shares of the Company's common stock are set forth in SCHEDULE 3.5.
There are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Company or its capital
stock. There are no voting rights, voting agreements, proxies or other
agreements or understandings with respect to the voting of any capital stock of
the Company. The Subject Shares represent ninety-six and nine-tenths percent
(96.9%) of the issued and outstanding capital stock of the Company, and
represent all of the outstanding capital stock of the Company other than the
twenty-four thousand (24,000) shares owned by Xxxx Xxxxxx.
3.6 TITLE TO SUBJECT SHARES. The Sellers have, and shall deliver to
Purchaser on the Closing Date, good, indefeasible and marketable title to the
Subject Shares, free and clear of restrictions or conditions to transfer or
assignment, rights of first refusal, mortgages, liens, pledges,
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charges, encumbrances, equities, claims, covenants, conditions, restrictions,
options or agreements, other than the security interests securing payment of the
Bank of Oklahoma Debt.
3.7 TITLE TO ASSETS. Except for the security interests securing payment of
the Bank of Oklahoma Debt and as set forth on SCHEDULE 3.7, the Company has good
and defensible title to the Assets, free and clear of restrictions or conditions
to transfer or assignment, or mortgages, liens, pledges, charges, encumbrances,
equities, claims, easements, rights-of-way, covenants, conditions or
restrictions, except for items which do not materially interfere with or
restrict the use of the Assets as presently utilized.
3.8 POSSESSION OF ASSETS; LEASED ASSETS. The Company is in possession of
all of the Assets and all of the assets leased to it from others. Au assets
leased to the Company from others, whether real, personal or mixed, are
described in Schedule 3.8 and 1.3 or SCHEDULE 3.17(B) attached hereto (the
"Leased Assets"). The Assets listed in the schedule referenced in Section 1.3,
and the Leased Assets constitute all of the material assets, whether real or
personal property or mixed, tangible or intangible, that are owned or used in
the Business by the Company. The Company does not own legal or equitable title
to any material assets or interests in assets except the Assets and the Leased
Assets. Sellers shall deliver to Purchaser on the Closing Date, possession of
and/or control or dominion over all of the Assets and Leased Assets, including
without limitation all of the Company's cash, accounts receivable, property,
plant and equipment, other personal property, contract rights and general
intangibles, customer and supplier lists, and assumed and trade names. Solely
for purposes of this Section 3.8, the term "material assets" shall refer to
assets having a net book value individually greater than $10,000, or
collectively greater than $150,000.
3.9 CONDITION. Except as expressly set forth on SCHEDULE 3.9, all of the
Assets and Leased Assets are in adequate condition and repair for their intended
use, except for such Assets which are out of service in the ordinary course of
business the aggregate value of which does not exceed $20,000.
3.10 CONTRACTS AND LEASES. All material contracts, leases and agreements,
written or oral, to which the Company is a party or by which the Company or its
assets may be bound (collectively, the "Contracts") are set forth in SCHEDULE
3.10. Except as set forth on SCHEDULE 3.10, all of the Contracts are in full
force and effect, and to the knowledge of Sellers after due inquiry are valid,
and there has not been any default by the Company, or to the knowledge of
Sellers after due inquiry by any third party to any of said Contracts, or any
event, fact or circumstance which with notice or lapse of time or both, would
constitute a default by the Company, or to the knowledge of Sellers after due
inquiry by any other party to any of the Contracts. Neither the Company nor any
of the Sellers has received notice or has actual knowledge that any party to any
of the Contracts intends to cancel or terminate any of the Contracts or exercise
or not exercise any options that such party might have under any of the
Contracts. Solely for purposes of this Section 3.10, the term "material
contracts" shall refer to contracts under which the Company is obligated to
perform in any calendar year, obligations greater than $10,000 greater than
$150,000 in the aggregate.
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3.11 OTHER CONTRACTS. Except as set forth in SCHEDULE 3.11, attached
hereto, the Company is not a party to, nor is any of its property bound by, any
distributor's or manufacturer's representative or agency agreement, any output
or requirements agreement, any agreement not entered into in the Ordinary Course
of Business, or any agreement requiring the performance of any obligation for a
period of time extending beyond one (1) year from the date hereof or calling for
consideration of more than $5,000 per agreement or $50,000 in the aggregate.
Except as set forth on SCHEDULE 3.11, the Company is not a party to, nor is any
of its property bound by, any agreement which is materially adverse to the
businesses, properties or financial condition of the Company. Except as set
forth in SCHEDULE 3.11, neither the Company nor any Harley Subsidiary is a party
to any agreement which: (i) prohibits it from engaging in the business that it
currently conducts, or upon consummation of the transactions contemplated
herein, will prohibit it from engaging in any type of business, or (ii) will,
upon consummation of the transactions contemplated herein, prohibit Purchaser
from engaging in any type of business.
3.12 EQUIPMENT. Except for the security interests securing payment of the
Bank of Oklahoma Debt, all of the equipment owned by the Company (collectively,
the "Equipment") is owned free and clear of any lien, security, claim or
encumbrance, and none of the Equipment is held under any security agreement,
conditional sales contract, or other title retention or security arrangement or
is located other than in the possession of the Company. The Equipment is in
adequate operating condition for its intended use.
3.13 ACCOUNTS RECEIVABLE. All of the accounts receivable of the Company as
set forth in the books and records of the Company (collectively, the
"Accounts"), and all papers and documents relating thereto, are genuine and in
all respects what they purport to be, and each such Account is valid and
subsisting and arises out of a bona fide sale or lease of goods sold or leased
and delivered to, or out of and for services theretofore actually rendered by
the Company to, the account debtor named in such Account. The amount of each
Account represented as owing as of the date indicated is the correct amount
actually and unconditionally owing as of the date indicated, except for normal
cash discounts, and is not subject to any set-offs, credits, disputes, defenses,
deductions or countercharges, except those arising in the Ordinary Course of
Business which do not exceed $10,000 individually nor $150,000 in the aggregate.
Except for the security interests securing payment of the Bank of Oklahoma Debt,
the Company is the owner of each such Account free and clear of any charges,
liens, security interests, adverse claims, and encumbrances of any and every
nature whatsoever.
3.14 INVENTORIES. The inventories of raw materials, work in process and
finished goods (collectively called "Inventories") shown on the Closing
Financial Statements as of the Measurement Date, consist of items of a quality
and quantity useable and saleable in the Ordinary Course of Business by the
Company, except for obsolete and slow moving items and items below standard
quality, all of which have been written down on the books of the Company to
estimated net realizable value or have been provided for by adequate reserves
based upon the advice of the Company's independent accountants. Au items
included in the Inventories are the property of the Company and in its
possession, except for sales made in the Ordinary Course of Business since the
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Measurement Date; for each of these sales either Purchaser has made full payment
(subject to customary discounts, allowances and carrying charges) or Purchaser's
liability to make payment is reflected in the books of the Company. Except for
the security interests securing payment of the Bank of Oklahoma Debt, no items
included in the Inventories have been pledged as collateral or are held on
consignment from others. The Inventories shown on the Financial Statements and
on the Closing Financial Statements are based on quantities determined by
physical count or measurement, taken within the preceding twelve (12) months,
and are valued at the lower of cost (determined on a first-in, first-out basis)
or market value and on a basis consistent with that of prior years.
3.15 LICENSES. All licenses owned by the Company or in which the Company
has any rights, licenses or sublicenses (collectively, the "Licenses"), together
with a brief description of each, are set forth on SCHEDULE 3.15. The Company
has not infringed, and is not now infringing, on any license belonging to any
other person or other entity. The Company owns and holds adequate licenses
necessary for the Business as now conducted by it, and neither the Company nor
any seller has received any claim nor has actual knowledge that such use
conflicts with, infringes on or otherwise violates any rights. of others. The
sale of the Subject Shares contemplated herein will not result in the
termination of any License.
3.16 INTELLECTUAL PROPERTY. Except for the rights of the Company to use
the names of various manufacturers under its distributorship agreements, the
Company does not own any Intellectual Property, nor require any Intellectual
Property to permit the Company to conduct the Business in the manner in which it
is currently conducted without any infringement or conflict with the rights of
others. No adverse claims have been asserted against the Sellers, the Company or
the Business with respect to infringement upon or conflict with the Intellectual
Property rights of others.
3.17 REAL PROPERTY; LEASED REAL PROPERTY. Except as set forth in SCHEDULE
3.17(A) with respect to real property owned by the Company, and SCHEDULE 3.17(B)
with respect to real property leased by the Company (collectively, the "Real
Property"), the Company neither owns nor leases any real property or
improvements or interests therein. Neither the Company nor Sellers have received
any notice, nor does any of them have actual knowledge of any change
contemplated in any applicable laws, ordinances or restrictions, or any judicial
or administrative action, or any action by adjacent landowners, or natural or
artificial conditions upon the Real Property, which would have a material
adverse effect upon the Business, the Assets, or the Leased Assets. There is no
zoning, deed restriction, land use provision or restriction, or other material
adverse fact or condition of any kind or character whatsoever, which adversely
affects the continued use of the Real Property in the manner in which it is
currently used. Except for the facility in Beaumont, Texas, a portion of which
is subleased to the Texas Department of Corrections for use as a storage
facility, there are no parties in possession of any portion of the Real Property
as lessees, tenants at will or at sufferance, trespassers or otherwise, other
than the Company. The improvements included within the Real Property (the
"Improvements") and any renovations thereof have been, or by Closing will be,
substantially completed and installed in compliance with all applicable laws and
in a good and workmanlike manner, and the Company has not received any notice,
and none of the Sellers has actual knowledge, of any structural defects. The
heating, electrical, plumbing and other building
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equipment, as of the Closing, was adequate in quantity and quality for normal
operations of the Business, as presently conducted. To the knowledge of Sellers,
all utilities required for the operation of the Improvements enter the Real
Property through adjoining public streets or, if they pass through an adjoining
private tract, do so in accordance with valid public easements or private
easements which inure to the benefit of and are enforceable by the Company. To
the knowledge of the Sellers, the Real Property has full and free access to and
from public streets and roads and Sellers have no knowledge of any fact or
condition which would result in the termination of such access. To the knowledge
of the Sellers, the Improvements do not encroach upon any adjacent real property
nor any easements or building set-back lines to which the Real Property is
subject, and no improvements upon adjacent real property encroach upon the Real
Property. There is no pending condemnation or similar proceeding affecting the
Real Property or any portion thereof, and neither the Company nor the Sellers
has received any notice, and none of them has actual knowledge, that any such
action is presently contemplated.
3.18 Subsidiaries. Each of the Harley Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Neither Harley Subsidiary has conducted any
business or operations. Neither Harley Subsidiary has violated any federal,
state or local ordinance, statute, law, rule or regulation applicable to it. All
of the issued and outstanding capital stock of each Harley Subsidiary is duly
and validly authorized d issued, fully paid and nonassessable, and the Company
owns good, indefeasible and marketable title to all of such capital stock, free
and clear of restrictions or conditions to transfer or assignment, rights of
first refusal, mortgages, liens, pledges, charges, encumbrances, equities,
claims, covenants, conditions, restrictions, options or agreements. There are no
outstanding subscriptions, options, rights, warrants, convertible securities,
conversion rights, exchange rights or other agreements or commitments which
obligate any Harley Subsidiary to issue or transfer from treasury additional
shares of such Harley Subsidiary's capital stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to any Harley Subsidiary or the capital stock of any of the
Harley Subsidiaries. There are no voting trusts, voting agreements, proxies or
other agreements or understandings with respect to any capital stock of any
Harley Subsidiary. As of the Balance Sheet Date and through the Closing Date,
neither of the Harley Subsidiaries will have any assets or liabilities or
conduct any business, nor be or become a party to any contract, lease,
instrument or agreement. Neither the Company nor Purchaser will maintain or
incur any debt, liability, obligation or commitment of any nature, whether
accrued, absolute, contingent or otherwise, by, through or under either of the
Harley Subsidiaries, arising out of any event, fact, or circumstance, or any
action taken or not taken, prior to Closing. Except for the Harley Subsidiaries,
the Company does not own, directly or indirectly, any interest or investment
(whether equity or debt) in any corporation, partnership, business, trust, or
other entity.
3.19 INSURANCE. Attached hereto as SCHEDULE 3.19 is a true, complete and
accurate list of all insurance policies maintained by the Company, and the
Company has maintained uninterrupted insurance coverage of such types and in
such amounts for a period of at least four (4)years prior to Closing.
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3.20 BANKING. The names and addresses of all banks or other financial
institutions in which the Company has an account, deposit or safe deposit box,
with the account numbers and other descriptions and names of all persons
authorized to draw on these accounts or deposits or access to these boxes, are
set forth on SCHEDULE 3.20 attached hereto.
3.21 POWERS OF ATTORNEY. No person or other entity holds a general or
special power of attorney from the Company or any of the Harley Subsidiaries.
3.22 PERSONNEL. Attached hereto as SCHEDULE 3.22 is a list of the names,
addresses, hire dates, dates of birth and annual salaries of all Employees of
the Company as of November 4, 1996. Also set forth on SCHEDULE 3.22 is a list of
those Employees who are not actively working in the Business and the reasons
therefor. The Harley Subsidiaries do not have any employees.
3.23 EMPLOYEE BENEFITS.
(A) SCHEDULE 3.23 is a true, correct and complete list of each Employee
Benefit Plan that the Company, or any Harley Subsidiary, maintains, or to which
any of them contribute.
(i) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all
respects with the applicable requirements of ERISA, the Code, and other
applicable laws.
(ii) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-l's, and Summary Plan
Descriptions) have been filed or distributed appropriately with respect to
each such Employee Benefit Plan. The requirements of Part 6 of Subtitle B
of Title I of ERISA and of Code Sec. 4980B have been met with respect to
each such Employee Benefit Plan which is an Employee Welfare Benefit Plan.
(iii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to
each such Employee Benefit Plan which is an Employee Pension Benefit Plan
and all contributions for any period ending on or before the Closing Date
which are not yet due have been paid to each such Employee or accrued in
accordance with the past custom and practice of the Company and the Harley
Subsidiaries. All premiums or other payments for all periods ending on or
before the Closing Date have been and will be paid with respect to each
such Employee Benefit Plan which is an Employee Welfare Benefit Plan.
(iv) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan" under Code Sec.
401(a) and has received, within the last two years, a favorable
determination letter from the Internal Revenue Service.
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(v) The market value of assets under each such Employee Benefit Plan
which is an Employee Pension Benefit Plan (other than any Multiemployer
Plan) equals or exceeds the present value of all vested and nonvested
liabilities thereunder determined in accordance with PBGC methods,
factors, and assumptions applicable to an Employee Pension Benefit Plan
terminating on the date for determination.
(vi) The Sellers have delivered to Purchaser correct and complete
copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue Service,
the most recent Form 5500 Annual Report, and all related trust agreements,
insurance contracts, and other funding agreements which implement each
such Employee Benefit Plan.
(B) With respect to each Employee Benefit Plan that the Company or any
Harley Subsidiary maintains or ever has maintained or to which any of them
contributes, ever has contributed, or ever has been required to contribute:
(i) No such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multi-Employer Plan) has been
completely or partially terminated or been the subject of a
reportable event as to which notices would be required to be filed
with the PBGC. No proceeding by the PBGC to terminate any such
Employee Pension Benefit Plan (other than any Multi-employer Plan)
has been instituted or threatened.
(ii) There have been no prohibited transactions with respect to any
such Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment
of the assets of any such Employee Benefit Plan (other than routine
claims for benefits) is pending, or, to the best of any Seller's
knowledge, threatened. None of the Sellers has any knowledge of any
basis for any such action, suit, proceeding, hearing, or
investigation.
(iii) Neither the Company nor any of the Harley Subsidiaries has
incurred, and none of the Sellers expect that the Company or any
Harley Subsidiary will incur, any Liability to the PBGC (other than
PBGC premium payments) or otherwise under Title IV or ERISA
(including any withdrawal liability) or under the Code with respect
to any such Employee Benefit Plan which is an Employee Pension
Benefit Plan.
(C) Neither the Company nor any Harley Subsidiary contributes to, ever has
contributed to, or ever has been required to contribute to, any Multiemployer
Plan or has any liability (including withdrawal liability) under any
Multiemployer Plan.
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(D) Except as set forth on SCHEDULE 3.23, neither the Company nor any
Harley Subsidiary maintains or has ever maintained or contributes, has ever
contributed, or ever has been required to contribute to any Employee Welfare
Benefit Plan providing medical, health, or life insurance or other welfare-type
benefits for retired or terminated employees, their spouses, or their dependents
(other than in accordance with Code Sec. 4980B).
3.24 EMPLOYMENT AGREEMENTS. Except as set forth on SCHEDULE 3.24, the
Company is not a party to any employment agreements, consulting agreements,
agreements providing for director or officer indemnification or other agreements
or arrangements providing for employee or other remuneration or benefits (other
than the Plans). Each Employee is terminable in accordance with the terms and
provisions of the Company's Employee Handbook, revised as of March 1989. Except
as set forth on SCHEDULE 3.24, no Employees are represented by any labor
organization, and, as of the date hereof, no labor organization or group of
Employees has made a written demand to the Company for recognition, or filed a
petition with the National Labor Relations Board, or announced its intention to
hold an election of a collective bargaining representative. There is no pending,
or to the best knowledge and reasonable belief of Sellers threatened, labor
dispute, strike or work stoppage affecting or potentially affecting the
Business.
3.25 NO SEVERANCE PAYMENTS. Except for the potential bonus payment to Xxx
Xxxxxxxx described in the Schedules hereto, the Company will not owe a severance
payment or similar obligation to any of its employees, officers, or directors,
as a result of the transactions contemplated by this Agreement, nor will any of
such persons be entitled to an increase in severance payments or other benefits
as a result of the transactions contemplated hereby, nor in the event of the
subsequent termination of their employment.
3.26 LIABILITIES. The Company does not have, and as of the Closing Date
will not have, any liabilities, obligations or commitments of any nature,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due (herein "Liabilities"), except (i) Liabilities which are adequately
disclosed or accrued against in the Financial Statements, (ii) Liabilities which
have been incurred in the Ordinary Course of Business and in accordance with
standard, customary and historical practices and experiences of the Company, and
(iii) Liabilities expressly set forth, as to the nature and amount thereof, on
SCHEDULE 3.26. Neither of the Harley Subsidiaries has any Liabilities. In no
event shall the Company, either Harley Subsidiary or Purchaser be liable for (or
have paid any) legal, accounting or other costs or expenses incurred by the
Company or any Seller in connection with the transfer of the Subject Shares, or
any of the transactions contemplated in this Agreement, except for (i) the
reasonable invoices of the Company's independent accountants in connection with
preparation the audit in contemplation of the transactions described in this
Agreement or (ii) as expressly set forth in a written instrument executed by
Sellers and Purchaser.
3.27 LITIGATION. Except as set forth on SCHEDULE 3.27, there is no suit,
action, arbitration or legal, administrative or other proceeding or governmental
investigation pending, and neither the Company nor any Seller has received any
written or oral notice that any is threatened, against or affecting the Company,
its Affiliates, the Assets, the Leased Assets or the Business.
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3.28 TAX MATTERS.
(A) The Company and the Harley Subsidiaries have filed all tax returns
that they were required to file, and all such tax returns were correct and
complete in all respects. All taxes owed by the Company or either of the Harley
Subsidiaries (whether or not shown on any tax return) have been paid. Neither
the Company nor any Harley Subsidiary is the beneficiary of any extension of
time within which to file any tax return. No claim has ever been made by an
authority in a jurisdiction where any of the Company or any Harley Subsidiary
does not file tax returns, that the Company or any Harley Subsidiary is or may
be subject to taxation by that jurisdiction. There are no security interests on
any of the assets of the Company or any Harley Subsidiary that arose in
connection with any failure (or alleged failure) to pay any tax.
(B) Each of the Company and the Harley Subsidiaries has withheld and paid
all taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or
other third party.
(C) No Seller or director or officer (or employee responsible for tax
matters) of the Company or any Harley Subsidiary expects any authority to assess
any additional taxes for any period for which tax returns have been filed.
Except as set forth on SCHEDULE 3.28, there is no dispute or claim concerning
any tax liability of the Company or any Harley Subsidiary either (i) claimed or
raised by any authority in writing or (ii) as to which any of the Sellers or the
directors and officers (and employees responsible for tax matters) of the
Company or the Harley Subsidiaries has knowledge based upon personal contact
with any agent of such authority. SCHEDULE 3.28 lists all federal, state, local,
and foreign income tax returns filed with respect to the Company or the Harley
Subsidiaries for taxable periods ended on or after October 31, 1989, indicates
those tax returns that have been audited, and indicates those tax returns that
currently are the subject of audit. The Sellers have delivered to Purchaser
correct and complete copies of all federal income tax returns, examination
reports, and statements of deficiencies assessed against or agreed to by the
Company or any Harley Subsidiary since October 31, 1989.
(D) Neither the Company nor any Harley Subsidiary has waived any statute
of limitations in respect of taxes or a xxxx to any extension of time with
respect to a tax assessment or deficiency.
3.29 COMPLIANCE WITH LAWS. The Company has complied with, and is not in
violation of, applicable federal, state or local ordinances, statutes, laws,
rules, restrictions and regulations (excluding Environmental, Health & Safety
Laws) that will result, or are likely to result, directly or indirectly, in
Adverse Consequences to the Business, the Assets, the Leased Assets, or the
customers, suppliers or financial prospects of the Company. There are not any
uncured violations of federal, state or local laws, ordinances, statutes,
orders, rules, restrictions, regulations or requirements (excluding
Environmental, Health & Safety Laws) affecting any portion of the Business, the
Real Property, the Assets or the Leased Assets, and neither any of the Assets,
the Leased Assets or the Real Property, nor the operation thereof nor the
conduct of the Business,
-16-
violates any applicable federal, state or municipal laws, ordinances, orders,
regulations or requirements (excluding Environmental, Health & Safety Laws).
3.30 ENVIRONMENTAL, HEALTH & SAFETY LAWS. Except as described on SCHEDULE
3.30 (i) neither the ownership nor the operation of the Business or any Assets
or Leased Assets has violated or violates any Environmental, Health & Safety
Laws, (ii) neither the Real Property, nor any real property previously owned or
occupied by the Company or any of the Harley Subsidiaries, nor to the knowledge
of the Sellers any property adjacent to any of the foregoing, has been used for
the use, manufacture, storage, treatment, generation, transportation,
processing, handling or disposal of any solid, hazardous, industrial or toxic
pollutant, contaminant, substance or waste in violation of any Environmental,
Health & Safety Laws, (iii) neither the Company, nor any of the Harley
Subsidiaries, nor any of the Sellers has received nor has knowledge of any
notice of or any threat of any claim, suit, proceeding, inquiry, investigation,
citation, notice, violation, consent order or judicial or administrative action
arising out of or based upon any Environmental, Health & Safety Laws, (iv) no
solid, hazardous, industrial or toxic pollutant, contaminant, substance or waste
has been disposed of, spilled onto, discharged or released as those terms are
defined in the Environmental, Health and Safety Laws occurred on or within the
Real Property or, to the best of Sellers' knowledge, any property adjacent
thereto, nor any real property previously owned or occupied by the Company or
any of the Harley Subsidiaries, (v) no underground storage tanks, above ground
storage tanks, solid or hazardous waste management units, xxxxx, underground
injection systems, landfills, lagoons, settling ponds or any other impoundment
used to treat, store or dispose of any solid, hazardous or toxic substances,
pollutants, contaminants or wastes regulated by the Environmental Health &
Safety Laws have ever been placed on the Real Property, and if any underground
storage tanks are disclosed in SCHEDULE 3.30, none of such tanks are leaking,
(vi) neither the Company, nor any of the Harley subsidiaries, nor any of the
Sellers have received notice of any past, present or future event, condition,
circumstance, activity, practice, incident or action or plan which may interfere
with or prevent compliance or continued compliance with the Environmental,
Health and Safety Laws or which may give rise to any common laws or legal
liability, or otherwise form the basis of any claim action, demand, lawsuit,
proceeding, hearing, study or investigation, based on, related to, or alleging
any violation of the Environmental Health & Safety Laws and (vii) all wastes
generated by the Company have been treated and/or disposed of at appropriately
licensed recycling, reclamation, reuse, or treatment, storage and disposal
facilities. There is no environmental condition relating to any of the Assets,
the Leased Assets or the Business that may reasonably be expected to have a
materially adverse effect on any of the Assets, the Leased Assets or the
Business or the value thereof. The Company has all permits, licenses,
franchises, operating authorities and other authorizations or documented
exemptions or variances thereto necessary to the conduct of the Business in the
manner and in the areas in which the Business is presently conducted, the
Company is in full compliance with all the terms and conditions thereof and all
such permits, licenses, franchises, and authorizations are valid and in full
force and effect. The Company has not engaged in any activity which could cause
the revocation or suspension of any such permits, licenses, franchises, or other
authorizations, and no actions or proceedings looking to or contemplating
revocation or suspension of any thereof are pending or, to the best knowledge
and reasonable belief of Sellers, threatened.
-17-
3.31 FINANCIAL STATEMENTS. The Financial Statements (i) are true,
complete, and correct in all material respects, (ii) fairly and accurately
present the financial position of the Company as of the periods described
therein, and the results of the operations of the Company for the periods
indicated, and (iii) have been prepared in accordance with generally accepted
accounting principles, consistently applied (except for certain footnote
disclosures normally required by GAAP, the omission of which, in the good faith
opinion of Sellers, will not cause the Financial Statements to be misleading).
The Closing Financial Statements (i) are true, complete, and correct in all
material respects, (ii) fairly and accurately present the financial position of
the Company as of the periods described therein, and the results of the
operations of the Company for the periods indicated, (iii) have been prepared in
accordance with generally accepted accounting principles, consistently applied
(except for certain footnote disclosures normally required by GAAP, the omission
of which, in the good faith opinion of Sellers, will not cause the Closing
Financial Statements to be materially misleading), and (iv) reflect all
necessary eliminating entries and normal adjustments (including without
limitation year-end adjustments). After due inquiry of the Company's management,
Sellers know of no adjustments that will be required by the Company's
independent public accountants in order for such accountants to render an
unqualified report on the Company's financial statements.
3.32 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in SCHEDULE
3.32, since the Balance Sheet Date, there has been no:
(A) material adverse change in the financial condition, liabilities,
assets, business or prospects of the Company;
(B) loss, destruction or damage to any property of the Company,
whether or not insured, exceeding $150,000 in net book value in the
aggregate;
(C) material contract, commitment or obligation entered into or
incurred by the Company outside the Ordinary Course of Business;
(D) labor trouble, pending or threatened, involving the Company, or
change in the personnel of the Company or the terms or conditions of their
employment, other than changes in personnel of the Company below the level
of manager and occurring in the Ordinary Course of Business; or
(E) other event or condition of any character that has or might
reasonably be expected to have an adverse effect on the financial
condition, business, assets, liabilities or prospects of the Company.
3.33 CUSTOMERS. SCHEDULE 3.33 to this Agreement is a correct and current
list of all customers of the Company and/or the Harley Subsidiaries, together
with summaries of the sales made to each customer during the most recent fiscal
year and the immediately preceding fiscal year by each such entity. Except as
indicated in SCHEDULE 3.33, Sellers do not have any information, nor are they
aware of any facts, indicating that any of these customers intend to cease doing
business
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with the Company or the Harley Subsidiaries, or to materially alter the volume
or terms of such business.
3.34 INTERESTS IN CUSTOMERS, SUPPLIERS AND COMPETITORS. None of the
Sellers, and no shareholder, officer, director or manager (nor any former
shareholder, officer, director or manager) of the Company, nor to the best
knowledge and reasonable belief of Sellers any relative of any of them, has any
direct or indirect interest in any supplier or customer of the Company, or any
person or other entity who has done business with the Company in the twenty-four
(24) months preceding the Closing.
3.35 CORPORATE DOCUMENTS. Sellers have furnished to Purchaser for its
examination (i) true and correct copies of the certificates or articles of
incorporation and bylaws of the Company and of each Harley Subsidiary, as
amended to date; (ii) true and correct copies of the contents of the minute
books of the Company and of each Harley Subsidiary (including proceedings of
audit and other committees), each of which contains all records for all
proceedings, consents, actions and meetings of the shareholders, board of
directors and committees, of each of them since their respective dates of
incorporation.
3.36 ADVERSE INFORMATION. After due inquiry of Company management, none of
the Sellers has any information or knowledge of any change contemplated in any
applicable laws, ordinances or restrictions, or any judicial or administrative
action, or any event, fact or circumstance which will, or could be reasonably
expected to, have a material adverse effect on the Company or its condition,
financial or otherwise, the Assets, the Leased Assets or the condition, value or
operation thereof.
3.37 DISCLOSURE. Sellers have provided to Purchaser actual copies of all
Contracts, documents concerning all litigation and administrative proceedings,
employee benefit plans, licenses, insurance policies, lists of suppliers,
customers, and Employees, and corporate and partnership records relating to the
Company and/or the Harley Subsidiaries or their assets and liabilities or the
Business, and such information covers all material commitments and liabilities
of the Company. In addition, (i) Purchaser has been fully informed with respect
to all material developments in the business of the Company since the Balance
Sheet Date, (ii) management of the Company has not made any material commitments
nor taken any material actions of which Purchaser has not been advised, and
(iii) Purchaser and its agents have been granted unlimited access to the books
and records of the Company (whether retained electronically, on discs or on
paper).
3.38 FULL DISCLOSURE. This Agreement, the schedules and exhibits hereto,
and all other documents and written information furnished by the Sellers, the
Company, or their Affiliates on behalf of Sellers, the Company or their
respective Affiliates, to Purchaser or its representatives pursuant hereto or in
connection herewith, are true, complete and correct in all material respects,
and do not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made herein and therein not
misleading. After due inquiry of management of the Company, Sellers are not
aware of any presently existing facts or circumstances relating to the
-19-
Business or the assets, liabilities, prospects, operations or financial
condition of the Company which materially and adversely affects, or in the
reasonable judgment of Sellers is likely to materially and adversely affect, the
Business, the Company, or the assets, liabilities, prospects, operations or
financial condition thereof, or the ability of the Sellers to perform this
Agreement or the obligations of any Seller hereunder.
All of the representations and warranties of Sellers contained in this
Agreement shall be true, complete and correct as of the date of this Agreement
and shall be deemed to have been made again at and as of the Closing Date, and
then shall be true, complete and correct in all respects, and shall survive the
Closing and the execution and delivery of all documents, instruments and
agreements executed in connection therewith. To the extent that a factual
situation is set forth as a disclosure item on such schedule and such factual
situation may under the express terms of this Agreement require disclosure on
another schedule under this Agreement, such factual situation shall be deemed to
have been disclosed on such other schedule to the extent that the factual
description would be sufficient to apprize the reader of the relevant facts
which would otherwise be required to be set forth on such other schedule.
ARTICLE IV
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants that:
4.1 ORGANIZATION. Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Texas, and has all
necessary corporate powers to own its properties and to carry on its business as
now owned and operated by it.
4.2 AUTHORITY. Purchaser has the right, power, legal capacity, and
authority to execute, deliver and perform its obligations under this Agreement.
The execution, delivery and performance of this Agreement by Purchaser has been
duly authorized by Purchaser's Board of Directors, which constitutes all of the
necessary corporate action for Purchaser to consummate the transactions
contemplated by this Agreement and to perform its obligations hereunder.
4.3 CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 4.3, no
consent, approval or authorization of, or filing or registration with, any
governmental or regulatory authority, or any other person or entity, is required
to be made or obtained by Purchaser in connection with the execution, delivery
or performance of this Agreement or the consummation by Purchaser of the
transactions contemplated hereby.
4.4 VALID AND BINDING OBLIGATIONS. Upon execution and delivery, this
Agreement and each document, instrument or agreement to be executed by Purchaser
in connection herewith will constitute the legal, valid, and binding obligation
of Purchaser, enforceable against Purchaser in accordance with its terms, except
as same may be limited by bankruptcy laws, insolvency laws, and other similar
laws affecting the rights of creditors generally.
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All of the representations and warranties of Purchaser contained in this
Agreement shall be true, complete and correct as of the date of this Agreement
and shall be deemed to have been made again at and as of the Closing Date, and
then shall be true, complete and correct in all respects, and shall survive the
Closing and the execution and delivery of all documents, instruments and
agreements executed in connection therewith.
ARTICLE V
ADDITIONAL WARRANTIES AND
CERTAIN COVENANTS AND AGREEMENTS
5.1 SELLERS' COVENANTS. Sellers jointly and severally represent, warrant,
covenant and agree that from the Balance Sheet Date through the Closing Date,
except for the Permitted Bonus:
(A) the Company, the Harley Subsidiaries and the Sellers have used
and will use their best efforts to preserve the business organization of
the Company and the Harley Subsidiaries intact, to keep available to the
Business the Employees, and to preserve the present relationships of the
Company and the Harley Subsidiaries with their suppliers, customers and
others having business relationships with them;
(B) the Company has maintained and will maintain its existing
insurance as to the Business and the Assets (and as applicable, the Leased
Assets);
(C) the Company has maintained and operated and will maintain and
operate the Business in a good and businesslike manner in accordance with
good and prudent business practices and the Company's historical policies;
(D) the Company has maintained and operated, and will continue to
maintain and operate, the Assets and the Leased Assets, including the Real
Property, in a good and businesslike manner in accordance with good and
prudent business practices and the Company's historical policies, in as
good working order and condition as existed as of September 24, 1996,
ordinary wear and tear excepted;
(E) the Company has not issued or sold, nor directly or indirectly
redeemed or acquired, and will not issue or sell, or directly or
indirectly redeem or acquire, any shares of its capital stock, or any
other of its securities or granted or agreed to grant any options or
rights with respect thereto, and has not changed or agreed to change and
will not change its capital structure;
(F) except with respect to the Permitted Bonus, the Company has not
declared, set aside nor paid and will not declare, set aside or pay a
dividend or other distribution in respect to its capital stock;
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(G) except with respect to the Permitted Bonus, the Company has not
made and will not make any payment of any type to the holders of any
capital stock of the Company or any of their Affiliates, other than
ordinary salary or expenses which have been fully disclosed to Purchaser;
or
(H) the Company has neither waived nor released and will not waive
or release any material right of or material claim held by it, and has not
discounted and will not discount any of its receivables;
(I) the Company has not acquired nor disposed of and will not
acquire or dispose of, any material assets, individually or in the
aggregate, and has not entered into and will not enter into any contract
or arrangement therefor, and has not entered into and will not enter into
any other transaction other than for value in the Ordinary Course of
Business and in accordance with prudent business practices and the
Company's historical policies;
(J) the Company has not revalued and will not revalue any of its
assets or liabilities;
(K) the Company has not, other than in the Ordinary Course of
Business, changed and will not change the salary or other compensation
payable or to become payable by the Company to any of its officers,
directors, employees or agents, and has not declared, made or committed,
and will not declare, make or commit to any kind of payment of a bonus or
other additional salary or compensation to any such person;
(L) the Company has not made and will not make a loan to any person
or entity, and has not guarantied and will not guaranty any loan;
(M) the Company has not amended nor terminated, and will not amend
or terminate, any material contract, agreement, permit or license to which
the Company or either of the Harley Subsidiaries is a party, or by which
the Company, either Harley Subsidiary, or any of the Assets or Leased
Assets are bound;
(N) the Company has maintained and will maintain all debt and lease
instruments, and has not entered into and will not enter into any new or
amended debt or lease instruments, without the prior written approval of
Purchaser;
(O) the Company has not entered into and will not enter into any
agreement or instrument which would constitute an encumbrance, mortgage or
pledge of the Assets, or which would bind Purchaser, the Company or the
Assets after Closing, which have been entered into outside the normal
scope of maintaining and operating the Business and the Assets in the
Ordinary Course of Business;
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(P) the Company has not removed, nor permitted the removal of, and
will not remove nor permit the removal of, any personal property or
fixtures from the Real Property, unless such personal property or fixtures
are replaced with an item of at least equal value that is properly suited
for its intended purpose, other than inventory sold in the Ordinary Course
of Business, or other personal property in an amount which is not
material, either individually or in the aggregate;
(Q) subject to the prior approval of Maxon (which approval will not
be unreasonably withheld), the Company and the Sellers will afford
Purchaser the continuing right to review and inspect the Assets and the
Leased Assets, including the Real Property, at reasonable hours, and any
and all books, records, contracts, and other documents or data pertaining
to the ownership, use, insurance, operation, renovation and maintenance of
the Assets and Leased Assets, including the Real Property, and the
Business;
(R) subject to the prior approval of Maxon (which approval will not
be unreasonably withheld), the Company and the Sellers will afford
Purchaser free and open access to the Employees during regular business
hours, to assist Purchaser in the contemplated due diligence review, and
to allow Purchaser to gather information to make employment decisions to
be effective after Closing;
(S) the Company has performed and will perform all of the Company's
obligations under all contracts and commitments applicable to the Company
or the Assets, and has maintained and will maintain the Company's books of
account and records in the usual, regular and customary manner;
(T) except as otherwise expressly set forth in this Agreement, the
Company has complied and will comply with all statutes, laws, ordinances
and regulations applicable to the Company, the Assets, the Leased Assets
and the conduct of the Business and will provide Purchaser with immediate
notice of any violation of any Environmental, Health and Safety Laws;
(U) the Company has paid and will pay in the ordinary course of
business all bills and other payments due with respect to the ownership,
use, insurance, operation and maintenance of the Business, the Assets, and
the Leased Assets, including the Real Property, except for items being
contested in good faith and for which proper and adequate security has
been given, where required (which contested matters, if adversely resolved
do not aggregate in excess of $15,000) within thirty (30) days after such
bills or other payments were due, and has taken and will take all action
necessary or prudent to prevent liens or other claims for the same from
being filed or asserted against any part of the Assets or the Leased
Assets, including the Real Property, provided however, that the Company
shall not make any expenditures outside the Ordinary Course of Business,
nor any capital expenditures, individually or in the aggregate in excess
of $3,000, without the prior written approval of Purchaser;
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(V) the Company has not made and will not make any material changes
in its management, operations, accounting or business practices or methods
(including without limitation, any change in depreciation or amortization
policies or rates), nor negotiate or pursue the acquisition or the
start-up of any new business or line of business;
(W) all revenues or cash or other receipts from all sources in all
media received by the Company have been deposited and will be deposited in
the Company's account;
(X) the Sellers will cause all of the representations and warranties
set forth in Section 3.32 hereof to be and remain true, complete and
correct as of the Closing;
(Y) to the extent any Seller receives notice, such Seller will
immediately advise Purchaser in writing of any material adverse change in
the financial condition, results of operations, business or prospects of
the Company or any of the Harley Subsidiaries, and any event which could
reasonably be expected to result in such a change; and
(Z) there has been no agreement by the Company to do any of the
things described above in this Section 5.1 which, if such were to occur
between the Balance Sheet Date and the Closing Date, would constitute a
breach of a covenant contained in this Section 5.1.
5.2 THIRD PARTY CONSENTS. Except as set forth in Section 6.1(E), Sellers
shall use their best efforts to obtain the respective consents or approvals of
each third party whose consent or approval is required for the consummation of
the transactions contemplated hereby.
5.3 COMPETING PROPOSALS. Sellers will not initiate, and will not permit
the Company to initiate, directly or indirectly, contact with any person or
entity in an effort to solicit any takeover proposal, nor will any of them
authorize any officer, director or employee of the Company, or any investment
banker, attorney, accountant or any representative, to directly or indirectly
initiate any such contact. As used in this Section 5.3, "takeover proposal"
shall mean any proposal for an acquisition, merger or other business combination
involving the Company or any of the Harley Subsidiaries or for the acquisition
of a substantial equity interest therein or a substantial portion of any of
their assets, other than the transaction contemplated by this Agreement.
Further, the Sellers will not, and will not permit the Company to, directly or
indirectly, cooperate or negotiate with, or furnish or cause to be furnished any
non-public information concerning the Business, properties or assets to, any
person or entity in connection with any takeover proposal. Sellers shall
immediately notify Purchaser orally of, and confirm in writing, all relevant
details relating to any takeover proposal which Sellers or the Company may
receive. Sellers will use their best efforts to consummate the transactions
contemplated in this Agreement on the Closing Date, and will, at or prior to
Closing, take all necessary action to perform their obligations under this
Agreement.
5.4 COOPERATION; SATISFACTION OF CONDITIONS. Sellers shall (a) give
assistance, to the extent within their control (and upon prior notice to
Purchaser of any expense, at Purchaser's
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expense), to Purchaser in preparing any required filings and seeking any
required consents or approvals in any manner reasonably requested, and (b) use
their best efforts to pursue, to the extent within their control, the
satisfaction of all other conditions to the consummation of the transaction's
contemplated herein. Upon the fulfillment of all the conditions precedent to the
obligations of the Parties contained herein, Sellers will forthwith proceed to
Closing.
5.5 REPAYMENT OF LOANS. As of the Balance Sheet Date, the Company did not
owe, and from the Balance Sheet Date through the Closing Date the Company will
not incur, any indebtedness liability or obligation to any Seller, except the
Permitted Bonus and for salary accrued in the Ordinary Course of Business.
Except for the promissory note of Xx. Xxxxx described in the Financial
Statements as a "Note Receivable from a Related Party" and the Permitted Bonus
as of the Balance Sheet Date no Seller owed, and from the Balance Sheet Date
through the Closing Date no Seller will incur, an indebtedness, liability or
obligation to the Company.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 CONDITIONS TO PURCHASER'S OBLIGATIONS. The obligations of Purchaser
hereunder to consummate the transactions contemplated hereby are subject to the
satisfaction, as of the Closing Date, of the following respective conditions
(any of which may be waived in whole or in part in writing by Purchaser at or
prior to the Closing):
(A) REPRESENTATIONS AND WARRANTIES OF SELLERS TO BE TRUE. The
representations and warranties of Sellers herein contained shall be true,
complete and correct in all material respects at the Closing Date with the same
effect as though made at Closing (except insofar as such representations and
warranties are given as of a particular date) except to the extent waived
hereunder or affected by the transactions contemplated or permitted herein.
(B) PERFORMANCE BY SELLERS. Sellers shall have performed in all material
respects all obligations and complied in all material respects with all
covenants and conditions required by this Agreement to be performed or complied
with by them at or prior to the Closing Date.
(C) NO LEGAL PROCEEDINGS. No injunction shall have been obtained, or no
suit, action or other proceeding shall be pending before any court or
governmental agency, in which it is sought to restrain or prohibit the
consummation of the transactions contemplated hereby, or in which it is sought
to obtain damages in connection therewith, or involving a claim that the
consummation of the transactions contemplated hereby would result in a violation
of any law, decree or regulation of any government or agency thereof having
jurisdiction. There shall not have been enacted, voted or promulgated by any
legislative or administrative body having jurisdiction any legislation, ruling
or decree which in the reasonable judgment of Purchaser would be materially
prejudicial to Purchaser with respect to the transactions contemplated by this
Agreement.
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(D) STATUTORY REQUIREMENTS. All other statutory requirements for the valid
consummation by Purchaser of the transactions contemplated by this Agreement
shall have been fulfilled; all authorizations, consents and approvals of all
federal, state and local governmental agencies and authorities, required to be
obtained in order to permit consummation by Purchaser of the transactions
contemplated by this Agreement and to permit the businesses presently carried on
by Purchaser, the Company and the Harley Subsidiaries to continue unimpaired
immediately following the Closing shall have been obtained and shall be in full
force and effect.
(E) REQUIRED CONSENTS. Sellers shall have obtained the written consent or
approval of each person listed on Schedule 3.3, in form and content reasonably
acceptable to Purchasers, provided that Sellers shall not be required to deliver
the consent of any party to a distributorship agreement which is terminable in
accordance with its terms, by such party for no reason, upon notice given ninety
(90) or fewer days in advance.
(F) RESIGNATIONS OF DIRECTORS AND OFFICERS. There shall have been
delivered to Purchaser the immediately effective written resignations of such
directors and officers of the Company and all of the Harley Subsidiaries as
Purchaser may request.
(G) ENVIRONMENTAL CONDITIONS. The following shall have each occurred at or
prior to the Closing:
(i) NORFOLK, VIRGINIA FACILITY REMEDIATION. (a) All underground storage
tanks at the Company's Norfolk, Virginia facility shall have been removed
and the soil and groundwater shall have been fully remediated; (b) all
containers of hazardous materials which are stored on site, including but
not limited to containers of cyanide and hydrogen chloride, shall be
inventoried, sampled and properly disposed of at appropriate disposal
sites, and there shall be no unremediated impact on soil and groundwater
at the site, (c) all areas evidencing standing oil or stained soil shall
have been evaluated by an appropriate environmental consultant and any
remediated; (d) the appropriate governmental agencies shall have approved
each of the foregoing that shall require such approval; and (e) one or
more qualified environmental consulting firms engaged by the Company and
approved by Purchaser shall have evaluated each of the foregoing and
determined that they have been fully accomplished in accordance with good
environmental consulting and remediation industry practices by qualified
environmental professionals;
(ii) JACKSONVILLE, FLORIDA LOCATION. (a) The above-ground storage tank at
the Company's Jacksonville, Florida locations shall have been removed and
the soil and groundwater shall have been remediated; (b) all containers of
hazardous materials which are stored on site shall be inventoried, sampled
and properly disposed of at appropriate disposal sites, and there shall be
no unremediated impact on soil and groundwater at the site, (c) the
appropriate governmental agencies shall have approved each of the
foregoing that shall require such approval; and (d) one or more qualified
environmental consulting firms engaged by the Company and approved by
Purchaser shall have evaluated each of the foregoing and
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determined that they have been fully accomplished in accordance with good
environmental consulting and remediation industry practices by qualified
environmental professionals;
(iii) ABSENCE OF ADDITIONAL VIOLATIONS OF ENVIRONMENTAL, HEALTH AND SAFETY
LAWS. Purchaser shall have completed such environmental site inspections
or surveys at the Tacoma, and Bellingham Washington facilities of the
Company. There shall be no material violations or any Environmental,
Health and Safety Laws or other potential environmental problems with
respect to such facilities or other material violations of such Laws with
respect to the Company, other than those set forth or contemplated in this
SUBSECTION 6.1(G) which shall have been fully remediated at the Closing;
and
(iv) With respect to all inventories, surveys, inspections, remediation or
any other activity contemplated in this Subsection, Purchaser and its
consultants shall be fully advised, in advance, of such activity and shall
have the right to fully observe, consult and otherwise fully participate
in such activity in order for Purchaser and its consultants to verify the
Company's compliance with the provisions of this Subsection and such
consultants shall be fully satisfied as to the results of such
inventories, surveys, inspections and remediation.
(H) DELIVERY OF AUDITED FINANCIAL STATEMENTS. The audited financial
statements of the Company at the Measurement Date shall have been delivered in
accordance with SECTION 9.2.
(I) NO MATERIAL ADVERSE CHANGE. Except for matters of a general economic
or political nature, no event or series of events shall have occurred between
the Balance Sheet Date and the Closing Date, the effect of which is or may
reasonably be expected to be materially adverse to the business, prospects or
financial condition of the Company and the Harley Subsidiaries, taken as a
whole, other than the information already disclosed to Purchaser by Sellers
pursuant to this Agreement. As of the date of this Agreement, Sellers hereby
represent and warrant that none of them is aware of any such event or series of
events which would represent such a change from the information already
disclosed. Any material change in any disclosure set forth in any of the
Schedules to this Agreement shall for purposes of this condition be deemed to be
a material adverse change.
(J) APPROVAL OF DOCUMENTS. The form and substance of the Closing Financial
Statements and all certificates, instruments, opinions and other documents
delivered to Purchaser under this Agreement shall be satisfactory in all
reasonable respects to Purchaser and its counsel.
Purchaser may waive any or all of the foregoing conditions in whole or in part
only in writing but without prior notice; provided, however, that no such waiver
of a condition shall constitute a waiver by Purchaser of any other conditions or
of its other rights or remedies, at law or in equity, if Sellers shall be in
default of any of their representations, warranties, covenants or agreements
under this Agreement.
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6.2 CONDITIONS TO SELLERS' OBLIGATIONS. The obligations of Sellers'
hereunder to consummate the transactions contemplated hereby are subject to the
satisfaction, as of the Closing Date, of the following respective conditions
(any of which may be waived in whole or in part in writing by Sellers at or
prior to the Closing):
(A) REPRESENTATIONS AND WARRANTIES OF PURCHASER TO BE TRUE. The
representations and warranties of Purchaser herein contained shall be true,
complete and correct in all material respects at the Closing Date with the same
effect as though made at Closing (except insofar as such representations and
warranties are given as of a particular date) except to the extent waived
hereunder or affected by the transactions contemplated or permitted herein.
(B) PERFORMANCE BY PURCHASER. Purchaser shall have performed in all
material respects all obligations and complied in all material respects with all
covenants and conditions required by this Agreement to be performed or complied
with by Purchaser at or prior to the Closing Date.
(C) NO LEGAL PROCEEDINGS. No injunction shall have been obtained, or no
suit, action or other proceeding shall be pending before any court or
governmental agency, in which it is sought to restrain or prohibit the
consummation of the transactions contemplated hereby, or in which it is sought
to obtain damages in connection therewith, or involving, a claim that the
consummation of the transactions contemplated hereby would result in a violation
of any law, decree or regulation of any government or agency thereof having
jurisdiction. There shall not have been enacted, voted or promulgated by any
legislative or administrative body having jurisdiction any legislation, ruling
or decree which in the reasonable judgment of Sellers would be materially
prejudicial to Sellers with respect to the transactions contemplated by this
Agreement.
(D) STATUTORY REQUIREMENTS. All other statutory requirements for the valid
consummation by Sellers of the transactions contemplated by this Agreement shall
have been fulfilled; all authorizations, consents and approvals of all federal,
state and local governmental agencies and authorities required to be obtained in
order to permit consummation by Sellers of the transactions contemplated by this
Agreement shall have been obtained and shall be in full force and effect.
(E) NO MATERIAL ADVERSE CHANGE. Except for matters of a general economic
or political nature, no event or series of events shall have occurred between
August 31, 1996 and the Closing Date, the effect of which is or may reasonably
be expected to be materially adverse to the business, prospects or financial
condition of Purchaser, other than the information already disclosed to Sellers
by Purchaser pursuant to this Agreement. As of the date of this Agreement,
Purchaser hereby represents and warrants that it is not aware of any such event
or series of events which would represent such a change from the information
already disclosed.
(F) APPROVAL OF DOCUMENTS. The form and substance of all certificates,
instruments, opinions and other documents delivered to Sellers under this
Agreement shall be satisfactory in all reasonable respects to Sellers and their
counsel.
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Sellers may waive any or all of the foregoing conditions in whole or in part
only in writing but without prior notice; provided, however, that no such waiver
of a condition shall constitute a waiver by Sellers of any other conditions or
of their other rights or remedies, at law or in equity, if Purchaser shall be in
default of any of its representations, warranties, covenants or agreements under
this Agreement.
ARTICLE VII
THE CLOSING
7.1 TIME AND PLACE. Delivery of the Purchase Price by Purchaser to Sellers
on the Closing Date, and the transfer of the Subject Shares by Sellers to
Purchaser, and the other transactions contemplated hereby (the "Closing") shall
take place at the offices of Texas Commerce Bank-Richmond/Sage, 0000 Xxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxx 00000, at or about 10:00 a.m. on the Closing Date.
7.2 SELLERS' DELIVERIES. At or before the Closing, Sellers shall deliver
or cause to be delivered to Purchaser:
(a) All of the stock certificates evidencing the Subject Shares,
together with irrevocable stock powers in form and content acceptable to
Purchaser, duly authorized and executed by the record holder of each such
stock certificate;
(b) An Investor Representation Letter in substantially the form
attached hereto as EXHIBIT C executed by each of the Sellers with respect
to each Seller's acquisition of the Subordinated Notes as part of the
Purchase Price at Closing;
(c) Agreements Not to Compete in substantially the form attached
hereto as EXHIBIT A, duly executed by Xx. Xxxxx, Mr. Grounds, Xxxxxx X.
Xxxxxxx and Xxxxxxx X. Xxxxxxxxx;
(d) An opinion of counsel issued by Xxxxxxxxxx, Fist & Xxxxxxx,
counsel for Sellers, in the form attached hereto as EXHIBIT D and
incorporated herein by reference;
(e) Certificate in form and substance satisfactory to Purchaser,
dated the Closing Date and executed by all of the Sellers, stating that
after due inquiry, each of them has determined that (1) all of the
Sellers' representations and warranties set forth in ARTICLE III of this
Agreement are true, complete and correct as of the Closing Date, (2)
Sellers have performed all of the covenants and agreements to be performed
by Sellers pursuant to ARTICLE V of this Agreement, and (3) all conditions
to Closing set forth in SECTION 6.1 of this Agreement have been satisfied;
(f) Resignations of all officers and directors of the Company;
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(g) Certified resolutions or other certificate of both of the
general partners of Hub Associates, in form and content reasonably
acceptable to Purchaser, authorizing the transactions contemplated herein;
(h) Such consents, waivers, estoppel letters or similar
documentation as Purchaser shall request, in Purchaser's sole discretion,
in connection with the transfer of the Subject Shares (except that the
Company and Sellers shall only be required to use their respective best
efforts to obtain all landlord's waivers); and
(i) All other items required to be delivered hereunder or as may be
reasonably requested which are necessary or would reasonably facilitate
consummation of the transactions contemplated hereby.
In addition, Sellers will put Purchaser into full possession and enjoyment of
the Company, the Harley Subsidiaries, the Business, the Assets, and the Leased
Assets, including without limitation the Real Property and all documents, books,
records, agreements, and financial data of any sort relating to the Business,
immediately upon the occurrence of the Closing.
7.3 PURCHASER'S OBLIGATIONS. At the Closing, Purchaser will deliver or
cause to be delivered to Sellers, the following:
(a) Certified checks or wire transfers of funds to Xx. Xxxxx, Mr.
Grouds and Hub Associates in payment of the cash consideration for the
Subject Shares payable pursuant to SECTION 2.2(A) of this Agreement;
(b) Certified checks or wire transfers of funds to Xx. Xxxxx, Mr.
Grounds and Hub Associates, in payment of the independent consideration
payable pursuant to Section 2.2(b) of this Agreement;
(c) The Subordinated Notes, duly endorsed and assigned without
recourse to Sellers;
(d) Agreements Not to Compete in substantially the form attached
hereto as EXHIBIT A, duly executed by Purchaser, for execution by Xx.
Xxxxx, Mr. Grounds, Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxxxx;
(e) An opinion of counsel issued by (i) Xxxxx, Xxxxx & Xxxxxx
Incorporated, counsel for Sellers, in the form attached hereto as EXHIBIT
E and incorporated herein by reference and (ii) general counsel of
Allwaste as to the valid issuance of the Subordinated Notes;
(f) Certificate in form and substance satisfactory to Sellers, dated
the Closing Date and executed by Purchaser, stating that after due
inquiry, Purchaser has determined that (1) all of purchaser's
representations and warranties set forth in ARTICLE IV of this Agreement
are true, complete and correct as of the Closing Date, (2) Purchaser has
performed all of the
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covenants and agreements to be performed by Purchaser pursuant to SECTION
5.5 of this Agreement, and (3) all conditions to Closing set forth in
SECTION 6.2 of this Agreement have been satisfied;
(g) Certified resolutions of the Board of Directors of Purchaser, in
form and content reasonably acceptable to Sellers, authorizing the
transactions contemplated herein; and
(h) All other items required to be delivered hereunder or as may be
requested or which are necessary or would reasonably facilitate
consummation of the transactions contemplated hereby.
7.5 FURTHER ASSURANCES. At and after the Closing, each of the Parties
shall take all appropriate action and execute all documents of any kind which
may be reasonably necessary or desirable to carry out the transactions
contemplated hereby. Each Seller, at any time at or after the Closing, will
execute, acknowledge and deliver any further stock powers, bills of sale,
assignments and other assurances, documents and instruments of transfer,
reasonably requested by Purchaser, and will take any other action consistent
with the terms of this Agreement that may reasonably be requested by Purchaser,
for the purpose of assigning and confirming to Purchaser, all of the Subject
Shares, or if necessary, any of the Assets.
ARTICLE VIII
TERMINATION OF OBLIGATIONS, WAIVERS
OF CONDITIONS AND PAYMENT OF EXPENSES
8.1 TERMINATION OF AGREEMENT. Anything herein to the contrary
notwithstanding, this Agreement and the transactions contemplated herein may be
terminated at any time prior to Closing, as follows, and in no other manner:
(A) MUTUAL CONSENT. By mutual written consent of Purchaser and Sellers;
(B) EXPIRATION DATE. By either Purchaser or Sellers if Closing shall not
have occurred on or before February 28, 1997 (as same may be extended by mutual
agreement of Purchaser and Sellers), provided, however, that the Party seeking
to terminate shall be in compliance with all of its covenants and obligations
hereunder.
(C) PURCHASER'S OPTION. By the Board of Directors of Purchaser at any time
after the Closing Date (as same may be extended by mutual agreement of Purchaser
and Sellers) if, by that date, the conditions set forth in SECTION 6.1 hereof
have not been met, provided, however, that the failure to meet such conditions
was not caused by the failure of Purchaser to perform any of its covenants or
obligations hereunder.
(D) SELLERS' OPTION. By any Seller at any time after the Closing Date (as
same may be extended by mutual agreement of Purchaser and Sellers) if, by that
date, the conditions set forth in
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SECTION 6.2 hereof have not been met, provided, however, that the failure to
meet such conditions was not caused by the failure of any Seller to perform any
of his or its covenants or obligations hereunder.
8.2 PAYMENT OF EXPENSES; WAIVER OF CONDITIONS. In the event that this
Agreement shall be terminated pursuant to SECTION 8.1, all obligations of the
Parties under this Agreement shall terminate and there shall be no liability of
any Party to another (except by reason of default hereunder which has not been
waived). Absent such default, each Party will pay all costs and expenses
incident to his or its negotiation and preparation of this Agreement and all
documents, instruments and agreements relating to the transactions contemplated
herein, and such Party's performance of and compliance with all agreements and
conditions contained herein or therein on his or its part to be performed or
complied with, including the fees, expenses and disbursements of its counsel,
its auditors and its investment bankers. If any of the conditions specified in
Section 6.1 have not been satisfied, Purchaser may nevertheless elect to waive
such conditions and proceed with the transactions contemplated hereby and, if
any of the conditions specified in Section 6.2 have not been satisfied, Sellers
may nevertheless elect to waive such conditions and proceed with the
transactions contemplated hereby. Any such waiver and election shall be
evidenced by a written instrument executed by the President of Purchaser and all
of the Sellers, setting forth with particularity the condition which has been
waived.
ARTICLE IX
INDEMNIFICATION, ADJUSTMENT TO
PURCHASE PRICE AND OTHER REMEDIES
9.1 INDEMNIFICATION.
A. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations, warranties, covenants and agreements of the Sellers and
Purchaser shall survive the Closing hereunder (notwithstanding any investigation
by or on behalf of Seller or Purchaser) and continue in full force and effect
thereafter subject only to the applicable statute of limitations; PROVIDED,
HOWEVER, that the Class B Representations shall survive the Closing hereunder
and continue in full force and effect for a period of three (3) years
thereafter, the Environmental Representations shall survive the Closing
hereunder and continue in full force and effect for a period of five (5) years
thereafter, and provided further that (i) the Purchaser shall not be indemnified
for breach of any representation, warranty, covenant or agreement to the extent
that Purchaser had actual knowledge of such breach at or prior to the Closing,
(ii) the Purchaser shall for purposes of this Article IX be deemed to have
actual knowledge of all information of which Allwaste had actual knowledge by
reason of any due diligence investigation conducted by Allwaste in contemplation
of this Agreement and (iii) the foregoing shall not be deemed to extend an
indemnity claim with respect to a factual situation with respect to which the
applicable statute of limitations has run without any damage to, or claim
against, the Purchaser, beyond such applicable statute of limitations.
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B. INDEMNIFICATION PROVISIONS FOR BENEFIT OF PURCHASER.
(i) In the event any of the Sellers breaches any of their
representations, warranties and covenants contained herein, and, if there is an
applicable survival period pursuant to SECTION 9.1(A) above, provided that
Purchaser makes a written claim for indemnification against any of the Sellers
within such survival period, then each of the Sellers agrees (subject to SECTION
10.9) to indemnify Purchaser from and against the entirety of any Adverse
Consequences Purchaser may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences Purchaser may suffer after
the end of any applicable period) resulting from, arising out of, relating to,
in the nature of, or caused by the breach; SUBJECT, HOWEVER, to the following
limitations:
(a) the Sellers shall not have any obligation to indemnify Purchaser from
and against any Adverse Consequences resulting from, arising out of,
relating to, in the nature of, or caused by the breach of any Class A
Representations until Purchaser has suffered Adverse Consequences by
reason of all such breaches in excess of a Twenty-Five Thousand Dollar
($25,000) aggregate deductible (after which point the Sellers will be
obligated only to indemnify Purchaser from and against further such
Adverse Consequences);
(b) the Sellers shall not have any obligation to indemnify Purchaser from
and against any Adverse Consequences resulting from, arising out of,
relating to, in the nature of, or caused by the breach of any Class B
Representations until Purchaser has suffered Adverse Consequences by
reason of all such breaches in excess of a Three Hundred Eighty Thousand
Dollar ($380,000) aggregate deductible (after which point the Sellers will
be obligated only to indemnify Purchaser from and against further such
Adverse Consequences) and there will be an aggregate ceiling on the
obligation of the Sellers to indemnify Purchaser from and against Adverse
Consequences resulting from, arising out of, relating to, in the nature
of, or caused by breaches of the Class B Representations, which ceiling
shall equal one-half (1/2) of the sum of the amount of the Purchase Price;
(c) (1) the Sellers shall not have any obligation to indemnify Purchaser
from and against any Adverse Consequences resulting from, arising out of,
relating to, in the nature of, or caused by the breach of any
Environmental Representations until Purchaser has suffered Adverse
Consequences by reason of all such breaches in excess of a Five Hundred
Thousand Dollar ($500,000) aggregate deductible, (2) after Purchaser has
suffered Adverse Consequences in the amount of such deductible, the
Sellers will be obligated to indemnify Purchaser from and against further
such Adverse Consequences up to an aggregate amount of Five Hundred
Thousand Dollars ($500,000), and (3) thereafter, the Sellers will be
obligated to indemnify Purchaser from and against one-half (1/2) of all
further such Adverse Consequences, up to an aggregate ceiling on the
obligation of the Sellers to indemnify Purchaser from and against Adverse
Consequences resulting from, arising out of, relating to, in the nature
of, or caused by breaches of the Environmental Representations, which
ceiling shall equal one-half (1/2) of the sum of the amount of the
Purchase Price; and
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(d) Notwithstanding any other limitation in this SUBSECTION 9.1(B)(I), the
Sellers shall be fully obligated to indemnify Purchaser for any (1)
federal income tax liability, together with any penalties and interest
thereon, to the extent of (a) any assessments occurring at or prior to
Closing, (b) to the extent occurring after Closing, such liability results
from any disallowance of any deductions or amortization with respect to
goodwill of the Company or any Harley Subsidiaries for any tax year of the
Company or such Harley Subsidiaries ended on or prior to December 31,
1996, but only to the extent that such liability and related interest and
penalties have not been accrued in the audited financial statements of the
Company at October 31, 1996, and (c) any corporate tax liability of the
Company for any tax year resulting from the failure of the IRS to allow
any deductions for the Permitted Bonus, and (2) any liability with respect
to Environmental, Health & Safety Laws with respect to the specific
matters set forth in SUBSECTIONS 6.1(G)(I) and (II) irrespective of any
waiver of such conditions at Closing.
(ii) In the event any of the Sellers commits any fraud in connection
with the transactions contemplated herein, or conceals or permits the
concealment of any matters from Purchaser or its representative during the due
diligence process, and Purchaser makes a written claim for indemnification under
this Subsection 9.1(B)(ii), then each of the Sellers agrees to indemnify
Purchaser from and against the entirety of any Adverse Consequences Purchaser
may suffer through and after the date of the claim for indemnification resulting
from, arising out of, relating to, in the nature of, or caused by such fraud or
concealment; PROVIDED, HOWEVER, that the Sellers shall not have any obligation
to indemnify Purchaser from and against any Adverse Consequences resulting from,
arising out of, relating to, in the nature of, or caused by such fraud or
concealment until Purchaser has suffered Adverse Consequences by reason of all
such fraud or concealment in excess of a Twenty-Five Thousand Dollar ($25,000)
aggregate deductible (after which point the Sellers will be obligated only to
indemnify Purchaser from and against further such Adverse Consequences).
C. INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLERS. In the
event Purchaser breaches any of its representations, warranties and covenants
contained herein, provided that any of the Sellers makes a written claim for
indemnification against Purchaser prior to the expiration of the applicable
statute of limitations, then Purchaser agrees to indemnify each of the Sellers
from and against the entirety of any Adverse Consequences the Seller may suffer
through after the date of the claim for indemnification resulting from, arising
out of, relating to, in the nature of, or caused by the breach.
D. MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this SECTION 9.1, then the Indemnified Party shall promptly notify
each Indemnifying Party thereof in writing; PROVIDED, however, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying
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Party from any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to assume the defense of
the Third Party Claim with counsel of his or its choice reasonably satisfactory
to the Indemnified Party at any time within fifteen (15) days after the
Indemnified Party has given notice of the Third Party Claim; PROVIDED, HOWEVER,
that the Indemnifying Party must conduct the defense of the Third Party Claim
actively and diligently thereafter in order to preserve its rights in this
regard; and PROVIDED FURTHER that the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense of the
Third Party Claim.
(iii) So long as the Indemnifying Party has assumed and is
conducting the defense of the Third Party Claim in accordance with SECTION
9.1(D)(II) above, (a) the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (not to be withheld
unreasonably) unless the judgment or proposed settlement involves only the
payment of money damages by one or more of the Indemnifying Parties and does not
impose an injunction or other equitable relief upon the Indemnified Party, and
(b) the Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld unreasonably).
(iv) In the event none of the Indemnifying Parties assumes and
conducts the defense of the Third Party Claim in accordance with SECTION
9.1(D)(II) above, or the Third Party Claim involves an injunction or other
equitable relief, however, (a) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner he or it reasonably may deem appropriate
(and the Indemnified Party need not consult with, or obtain any consent from,
any Indemnifying Party in connection therewith) and (b) the Indemnifying Parties
will remain responsible for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim to the fullest extent provided in this SECTION 9.1.
E. DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall make
appropriate adjustments for tax consequences and insurance coverage and take
into account the time value of money (using the per annum rate of Eight Percent
(8.0%) as the discount rate) in determining the Adverse Consequences for
purposes of this SECTION 9.1.
F. OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of representation,
warranty or covenant; PROVIDED, HOWEVER, that Purchaser acknowledges and agrees
that the foregoing indemnification provisions in this SECTION 9.1 shall be the
exclusive remedy of Purchaser for any breach of the representations and
warranties in Section 3 above. Each of the Sellers hereby agrees that he or it
will not make any claim for indemnification against the Company or either of the
Harley Subsidiaries by reason of the
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fact that he or it was a director, officer, employee or agent of any such entity
or was serving at the request of any such entity as a partner, trustee,
director, officer, employee, or agent of another entity (whether such claim is
for judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses, or otherwise and whether such claim is pursuant to any
statute, charter document, bylaw, agreement, or otherwise) with respect to any
action, suit, proceeding, complaint, claim, or demand brought by Purchaser
against such Seller (whether such action, suit, proceeding, complaint, claim, or
demand is pursuant to this Agreement, applicable law, or otherwise).
9.2 ADJUSTMENT TO PURCHASE PRICE AT CLOSING. Sellers have engaged Deloitte
& Touche at the Company's expense to prepare audited financial statements of the
Company, dated as of the Measurement Date. Such audited financial statements
shall be prepared in accordance with Generally accepted accounting principles,
consistently applied, and in a manner consistent with the Company's historical
accounting policies with respect to audited financial statements (including the
materiality threshold previously used by the Company's independent public
accountants in calculating the Company's net worth). The determination of such
accounting firm with respect to any accounting issue shall be final and binding
on the Parties. The Purchase Price shall be reduced by an aggregate amount (the
"Deficiency Amount") equal to (A) the sum of (i) the amount, if any, by which
four million two hundred fifty thousand dollars ($4,250,000) exceeds the
Company's Stockholders' Equity as of the Measurement Date, as set forth in such
audited financial statements, after giving effect to the Permitted Bonus (such
excess being reduced by any prior adjustment of the Purchase Price under Section
2.4), plus (ii) the amount of any Adverse Consequences resulting from, arising
out of, relating to, in the nature of, or caused by any breach of the Financial
Representations, minus (B) eighty thousand dollars ($80,000).
9.3 SPECIFIC PERFORMANCE. Each of the Parties hereby agrees that the
transactions contemplated by this Agreement are unique. Each Party hereby
acknowledges and agrees that it would be impossible to measure the damages which
would result if any Party should default in his or its obligations under this
Agreement; accordingly the Parties hereby agree that each Party shall have, in
addition to any other legal or equitable remedy available to him or it, the
right to enforce this Agreement by decree of specific performance or other
equitable remedy, and each Party hereby irrevocably waives any defense, claim or
assertion that a remedy in damages will be adequate.
9.4 OFFSET; ATTORNEYS' FEES. Subject to the limitations on liability set
forth in SECTION 9.1 hereof, to the extent permitted by applicable law, all
amounts due and owing to any Seller under this Agreement, the Subordinated Notes
or any document, instrument, or agreement executed in connection herewith or
therewith shall be subject to offset by Purchaser or Allwaste to the extent of
any damages incurred as a result of any Seller's breach of this Agreement or any
document, instrument, or agreement executed by any Seller in connection
herewith. Each Seller hereby acknowledges and agrees that but for the right of
offset contained in this SECTION 9.4, Purchaser would not have entered into this
Agreement or any of the transactions contemplated herein. If any legal action or
other proceeding is brought for the enforcement of this Agreement, or because of
an alleged dispute, breach, default or misrepresentation in connection with any
of the provisions of this Agreement, the successful or prevailing Party or
Parties shall be entitled to recover
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reasonable attorneys' fees and other costs incurred in that action or proceeding
in addition to any other remedies to which it or they may be entitled at law or
equity. The rights and remedies granted herein are cumulative and not exclusive
of any other right or remedy granted herein or provided by law.
9.5 RIGHTS AND LIABILITIES OF PARTIES. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the Parties and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
Party to this Agreement, nor shall any provision give any third person any right
of subrogation or action over against any Party to this Agreement.
ARTICLE X
MISCELLANEOUS
10.1 CONFIDENTIALITY. Unless and until Closing has occurred, or such
information is or becomes public through no fault of the disclosing Party, each
Party hereby agrees that he or it will not disclose any information of a
confidential or proprietary nature concerning the other Parties or their
respective businesses or operations to any third parties, except for the
following, each of whom shall be informed of the confidential nature of such
information and the necessity to retain it in confidence: (A) Purchaser's and
Sellers' officers, directors, partners, or employees, as applicable, (B) a
limited number of outside legal, accounting and other professional consultants
or key agents, and (a) such other parties to whom such Party is required to
disclose such information under applicable law, pursuant to the advice of legal
counsel for such Party, in which event the disclosing Party shall (i) give prior
written notice to the other Parties of the disclosing Party's legal obligation
to disclose such information, including the person(s) to whom such information
is legally required to be disclosed, and (ii) disclose only the portion of such
information which the disclosing Party reasonably believes, on the advice of
legal counsel, is legally required to be disclosed. Each Party agrees that prior
to Closing, he or it and all of his or its Affiliates will use information
obtained in connection with the transactions contemplated in this Agreement
solely for the purpose of evaluating such transactions, and in no event shall
any Party use any of such confidential or proprietary information for his or its
own benefit or to the detriment of the other Parties. In the event that Closing
does not occur each Party shall, promptly upon request, return all of such
confidential or proprietary information to the appropriate Party, including any
and all copies thereof.
10.2 ANNOUNCEMENTS. No public or private announcement or disclosure shall
be made of the transactions contemplated herein, whether by press release or
filing of a report or disclosure with any securities exchange or governmental
authority, except as expressly contemplated herein, unless and until the Party
proposing such announcement or disclosure shall have supplied the proposed text
of such announcement or disclosure to the other Parties for review and comment
at least twenty-four (24) hours prior to release; provided however, that if in
the good faith opinion of legal counsel to the announcing or disclosing Party,
such announcement or disclosure is required
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under applicable federal or state law to be made sooner, a copy of such
announcement or disclosure shall be made available to all other Parties as soon
as possible, but in any event prior to release.
10.3 BROKERAGE COMMISSIONS AND OTHER FEES. Sellers hereby represent and
warrant that neither the Sellers nor the Company has incurred any liability for,
nor knows of any person or entity entitled to, any commission or finder's fee in
connection with this Agreement or the transactions contemplated herein.
Purchaser hereby represents and warrants that Purchaser has not incurred any
liability for, and does not know of any person or entity entitled to, any
commission or finder's fee in connection with this Agreement or the transactions
contemplated herein. Each Party shall be responsible for all costs, fees and
expenses (including attorney and accountant fees and expenses) paid or incurred
by such Party, and Sellers shall be responsible for all costs, fees and expenses
paid or incurred by the Sellers or the Company, in connection with the
preparation, negotiation, execution, delivery and performance of this Agreement,
or otherwise in connection with the transactions contemplated hereby, except
that the Company shall pay all the reasonable accounting and auditing costs of
its outside accountants necessary to consummate the transactions contemplated
herein, including the costs of the preparation of any financial statements
required to be delivered under the terms of this Agreement and reasonable
expenses for travel, meals, lodging and other reasonable incidental expenses
related to the preparation, negotiation, execution, delivery and performance of
this Agreement.
10.4 MODIFICATION OF AGREEMENT. This Agreement may be amended or modified
only in writing signed by all of the Parties.
10.5 NOTICES. All notices, consents, demands or other communications
required or permitted to be given pursuant to this Agreement shall be deemed
sufficiently given when delivered personally or telefaxed during regular
business hours during a business day to the appropriate location described in
the preamble to this Agreement, or three (3) business days after posting thereof
by United States first-class, registered or certified mail, return receipt
requested, with postage and fees prepaid and addressed at his or its address set
forth in the preamble to this Agreement, with a copy to legal counsel for such
Party, at the address set forth on the letterhead on which such counsel's legal
opinion was delivered. Any Party may designate a different address for
subsequent notices or communications by furnishing notice to the other Parties
in the manner described above.
10.6 ATTORNEY'S FEES. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing Party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or proceeding
in addition to any other remedies to which it may be entitled at law or equity.
10.7 FEES AND OTHER EXPENSES. Except as expressly set forth herein to the
contrary, all costs, fees and expenses (including attorney and accountant fees
and expenses) shall be paid by the Party incurring same in connection with the
preparation, negotiation, execution, delivery and
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performance of this Agreement, or otherwise in connection with the transactions
contemplated hereby.
10.8 ADDITIONAL REMEDIES. All rights and remedies of each Party hereunder
are cumulative of every other right or remedy that such Party may otherwise have
at law or in equity or under this Agreement or any other document, instrument or
agreement. The exercise of one or more rights or remedies shall not prejudice or
impair the concurrent or subsequent exercise of other rights or remedies.
10.9 SEVERAL LIABILITY OF SELLERS. All of Sellers' liabilities and
obligations hereunder shall be several and not joint.
10.10 NON-WAIVER. Failure on the part of a Party in any one or more
instances to enforce any of such Party's rights which arise in connection with
this Agreement, or to insist upon the strict performance of any of the terms,
conditions or covenants of this Agreement, shall not be construed as a waiver or
relinquishment for the future of any such rights, terms, conditions or
covenants. No waiver of any condition of this Agreement shall be valid unless it
is in writing, and executed by the Party against whom such waiver is sought to
be enforced. Any valid waiver shall be effective only for the purposes expressly
set forth therein.
10.11 GOVERNING LAW; JURISDICTION; VENUE. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Texas, without regard to conflicts of law principles, and the laws of the
United States applicable in Texas. Venue for any litigation between or among the
Parties with respect to the subject matter of this Agreement shall be Xxxxxx
County, Texas. Each Party hereby irrevocably submits to personal jurisdiction in
Texas. Each Party hereby waives all objections to personal jurisdiction in Texas
and venue in Xxxxxx County for purposes of such litigation.
10.12 CONSTRUCTION. The Parties and their respective legal counsel have
participated extensively in the preparation, negotiation and drafting of this
Agreement. Accordingly, no presumption will apply in favor of either Sellers or
Purchaser in the interpretation of this Agreement or in the resolution of the
ambiguity of any provision hereof. All words used herein shall be construed to
be as the circumstances require. As used herein the term "this Agreement" shall
mean this Agreement as a whole and as the same may, from time to time hereafter,
be amended, supplemented or modified. The words "herein," "hereof," "hereto,"
"hereunder," "hereinafter," "hereinabove," and "hereinbelow," and other words of
similar import, refer to this Agreement as a whole and not to any particular
article, section, paragraph, clause or other subdivision hereof, unless
otherwise specifically noted. As used herein, the words "include" or "including"
shall mean "including without limitation."
10.13 HEADINGS. The headings and subheadings of the Articles and Sections
contained herein or on any Schedule or Exhibit attached hereto are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement or any provisions hereof. Any reference
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herein to an Article or Section shall be deemed to be a reference to the
corresponding Article or Section of this Agreement unless otherwise stated
herein.
10.14 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective, valid and enforceable
under applicable law, but if any provision of this Agreement shall be prohibited
by, or invalid or unenforceable under, applicable law, then (i) the Parties
agree that they will amend such provisions by the minimal amount necessary to
bring such provisions within the ambit of enforceability, and (ii) any court of
competent jurisdiction may, at the request of either Party, revise, reform or
reconstruct such provisions in a manner sufficient to cause them to be
enforceable. In no event shall any prohibition against, or the invalidity or
unenforceability of, any provision hereof affect the validity or enforceability
of any other provision hereof.
10.15 SCHEDULES AND EXHIBITS. All schedules and exhibits attached to this
Agreement are hereby incorporated into and made a part of this Agreement.
10.16 FURTHER ASSURANCES. Each of the Parties shall perform such actions
and deliver or cause to be delivered any and all such documents, instruments and
agreements as the other Party may reasonably request for the purpose of fully
and effectively carrying out this Agreement and the transactions contemplated
hereby.
10.17 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the Parties and their respective successors and assigns.
10.18 ENTIRE AGREEMENT. This Agreement and all of the documents and
agreements executed in connection herewith set forth the entire agreement
between the Parties with respect to the subject matter hereof, and supersede all
prior or contemporaneous oral agreements or understandings, and all prior or
contemporaneous written agreements, with respect thereto.
10.19 MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall have the force and effect of an original, and
all of which together shall constitute but one and the same agreement.
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EXECUTED AND DELIVERED EFFECTIVE as of the date first written above.
PURCHASER:
THE SAFE SEAL COMPANY, INC.
a Texas corporation
By: ________________________________
XXXXXXX X. XXXXXX, President
and CEO
SELLERS:
____________________________________
XXXX XXXXX, Individually
____________________________________
XXXXXXX GROUNDS, Individually
HUB ASSOCIATES
a California General Partnership
By: ________________________________
XXXXXX X. XXXXXXX,
General Partner
By: ________________________________
XXXXXXX X. XXXXXXXXX,
General Partner
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THE COMPANY:
HARLEY INDUSTRIES, INC.
a California corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
The undersigned, the spouses of each of Xx. Xxxxx and Mr. Grounds, are
fully aware of, understand, and fully consent and agree to the provisions of
this Stock Purchase Agreement, and its binding effect upon any community or
other property interests that they may own, and their awareness, understanding,
consent and agreement are evidenced by their execution hereof. The undersigned
spouses of each of Xx. Xxxxx and Mr. Grounds additionally join in the execution
hereof in order to sell, assign and transfer unto Purchaser all of their
respective rights, titles and interests, legal or beneficial if any, in the
Subject Shares.
____________________________________
Name: ______________________________
Spouse of Xxxx Xxxxx
____________________________________
Name: ______________________________
Spouse of Xxxxxxx Grounds
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Schedule 1.12 - Closing Financial Statements (Unaudited October 31)
Schedule 1.14 - Employees
Schedule 1.22 - Financial Statements (Unaudited August 31)
Schedule 3.3 - (A) Sellers' Consents and Approvals
Schedule 3.3 - (B) Sellers' Breaches and Defaults
Schedule 3.5 - Options, etc.
Schedule 3.7 - Exceptions to Title to Assets
Schedule 3.8 - Leased Assets (Personal Property)
Schedule 3.9 - Condition of Assets and Leased Assets
Schedule 3.10 - Contracts
Schedule 3.11 - Other Contracts
Schedule 3.15 - Licenses
Schedule 3.17 - (A) Real Property Owned
(B) Real Property Leased
Schedule 3.18 - Subsidiaries
Schedule 3.19 - Insurance
Schedule 3.20 - Banking
Schedule 3.22 - Personnel
Schedule 3.23 - Employee Benefits
Schedule 3.24 - Employment Agreements
Schedule 3.26 - Additional Liabilities
Schedule 3.27 - Litigation
Schedule 3.28 - Tax Matters
Schedule 3.30 - Environmental, Health and Safety
Schedule 3.32 - Certain Changes or Events
Schedule 3.33 - Customers
Exhibit A - Form of Agreement Not to Compete
Exhibit B - Form of Allwaste Subordinated Note
Exhibit C - Form of Sellers' Investor Representation Letters
Exhibit D - Seller's Opinion of Counsel
Exhibit E - Purchaser's Opinion of Counsel
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