Exhibit 10.1
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Explanatory Note: This Stock Purchase Agreement is included as an Exhibit to the
Quarterly Report of Simclar, Inc. on Form 10-Q for the quarter ending June 30,
2005 to provide information concerning its terms. Except for its status as the
agreement between the parties with respect to the transaction described therein,
it is not intended to provide factual information about the parties. The
representations and warranties contained in the Stock Purchase Agreement were
made only for purposes of such agreement, and as of specific dates, were solely
for the benefit of the contracting parties, and may be subject to limitations
agreed by the contracting parties, including being qualified by disclosures
between them. These representations and warranties were also made for the
purpose of allocating contractual risk between the contracting parties instead
of establishing them as facts, and may be subject to standards of materiality
applicable to the contracting parties that differ from those applicable to
investors. Accordingly, they should not be relied upon by investors as
statements of factual information.
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made on May 19, 2005, but
effective May 1, 2005, by and between Simclar, Inc., a Florida corporation with
principal offices at 0000 Xxxx 00xx Xxxxxx, Xxxxxxx, XX 00000 ("Buyer") and
Simclar Group Limited, a private limited company organized under the laws of the
United Kingdom and registered in Scotland (Company No. SC219243), with
registered office at 0 Xxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx XX0 0XX ("Seller").
Recital
Seller desires to sell, and Buyer desires to purchase, all of the issued
and outstanding shares (the "Shares") of capital stock of Simclar (North
America), Inc., a North Carolina corporation (the "Company"), for the
consideration and on the terms set forth in this Agreement.
Statement of Agreement
The parties, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article I:
"Applicable Contract"-- any Contract (a) under which the Company has or may
acquire any rights, (b) under which the Company has or may become subject to any
obligation or liability, or (c) by which the Company or any of the assets owned
or used by it is or may become bound.
"Balance Sheet"-- as defined in Section 3.4.
"Breach"-- a "Breach" of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
"Buyer"-- as defined in the first paragraph of this Agreement.
"Closing"-- as defined in Section 2.3.
"Closing Date"-- the date and time as of which the Closing takes place.
"Company"-- as defined in the Recitals of this Agreement.
"Consent"-- any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
"Contemplated Transactions"-- all of the transactions contemplated by this
Agreement.
"Contract"-- any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Damages"-- as defined in Section 6.2.
"Disclosure Letter"-- the disclosure letter delivered by Seller to Buyer
concurrently with the execution and delivery of this Agreement.
"Employee Plan" - any plan, program, contract, arrangement, practice or policy
that is or was at any time during the last six years sponsored, maintained,
administered or contributed to by the Company or any ERISA Affiliate, whether or
not written, which provides pension, retirement, profit sharing, deferred
compensation, bonus, incentive compensation, stock option, stock appreciation,
health, medical, dental, vision, life insurance, death benefits, workers'
compensation, disability, severance, supplemental unemployment benefits,
vacation benefits or any similar benefits (including but not limited to
cafeteria plans), to or for the benefit of any current or former employee,
owner, shareholder or independent contractor (or to any beneficiary or dependent
thereof) of the Company or any of its ERISA Affiliates, regardless of whether
such Employee Plan is governed by ERISA.
"Employment Agreement"-- as defined in Section 2.4(a)(iii).
"Encumbrance"-- any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"Environment"-- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental, Health, and Safety Liabilities"-- any cost, damages, expense,
liability, obligation, or other responsibility arising from or under any
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions (including
on-site or off-site contamination, occupational safety and health, and
regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
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(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or
(d) any other compliance, corrective, investigative, or remedial measures
required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended
("CERCLA").
"Environmental Law"-- any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of pollutants
or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used so
that they do not present unreasonable risks to human health or the Environment
when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the transportation
of hazardous substances, pollutants, oil, or other potentially harmful
substances;
(g) cleaning up pollutants that have been released, preventing the threat
of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them, for
damages done to their health or the Environment, or permitting self-appointed
representatives of the public interest to recover for injuries done to public
assets.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any successor
law, as construed to include all applicable regulations, orders, rules,
judgments, rulings and other pronouncements issued thereunder.
"ERISA Affiliate" -- with respect to any Person any other Person, trade or
business, or entity that is or was treated as a single employer under IRC
Section 414(b), (c), (m) or (o) or Section 4001(a)(14) or (b)(1) of ERISA.
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"Facilities" -- any real property, leaseholds, or other interests currently or
formerly owned or operated by the Company and any buildings, plants, structures,
or equipment (including motor vehicles, tank cars, and rolling stock) currently
or formerly owned or operated by the Company.
"GAAP" -- generally accepted United States accounting principles.
"Governmental Authorization" -- any approval, consent, license, permit, waiver,
or other authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"Governmental Body" -- any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, or entity and any court
or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Hazardous Activity" -- the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or risk of danger, or
poses an unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities or the Company.
"Hazardous Materials" -- any waste or other substance that is listed, defined,
designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"Intellectual Property Assets" -- as defined in Section 3.20.
"IRC" -- the Internal Revenue Code of 1986 or any successor law, and regulations
issued by the IRS pursuant to the Internal Revenue Code or any successor law.
"IRS" -- the United States Internal Revenue Service or any successor agency,
and, to the extent relevant, the United States Department of the Treasury.
"Knowledge"-- an individual will be deemed to have "Knowledge" of a particular
fact or other matter if:
(a) such individual is actually aware of such fact or other matter; or
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(b) a prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter.
"Legal Requirement" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Occupational Safety and Health Law" -- any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"Order"-- any award, decision, injunction, judgment, order, ruling, subpoena, or
verdict entered, issued, made, or rendered by any court, administrative agency,
or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" -- an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person and
is taken in the ordinary course of the normal day-to-day operations of such
Person;
(b) such action is not required to be authorized by the board of directors
of such Person (or by any Person or group of Persons exercising similar
authority) and is not required to be specifically authorized by the parent
company (if any) of such Person; and
(c) such action is similar in nature and magnitude to actions customarily
taken, without any authorization by the board of directors (or by any Person or
group of Persons exercising similar authority), in the ordinary course of the
normal day-to-day operations of other Persons that are in the same line of
business as such Person.
"Organizational Documents" -- (a) the articles or certificate of incorporation
and the bylaws of a corporation; (b) any charter or similar document adopted or
filed in connection with the creation, formation, or organization of a Person;
and (c) any amendment to any of the foregoing.
"Person"-- any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"Proceeding" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Release" -- any spilling, leaking, emitting, discharging, depositing, escaping,
leaching, dumping, or other releasing into the Environment, whether intentional
or unintentional.
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"Representative"-- with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"Securities Act" -- the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Seller" -- as defined in the first paragraph of this Agreement.
"Shares" -- as defined in the Recitals of this Agreement.
"Subsidiary" -- with respect to the Company, any corporation or other entity of
which securities or other interests having the power to elect a majority of that
entity's board of directors or similar governing body, or otherwise having the
power to direct the business and policies of that corporation or other entity,
are held by the Company or one or more of its Subsidiaries.
"Tax"-- any income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental, windfall profit,
customs, vehicle, airplane, boat, vessel or other title or registration, capital
stock, franchise, employees' income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative, add-on minimum and
other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever
and any interest, penalty, addition or additional amount thereon imposed,
assessed or collected by or under the authority of any Governmental Body or
payable under any tax-sharing agreement or any other Contract.
"Tax Return" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release" -- a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may result
from such Release.
"Threatened" -- a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
ARTICLE II
SALE AND TRANSFER OF SHARES; CLOSING
2.1 Shares. Subject to the terms and conditions of this Agreement, at the
Closing, Seller will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Seller.
2.2 Purchase Price. The purchase price (the "Purchase Price") for the
Shares will be $37,000, subject to adjustment as provided in Section 2.6 The
Purchase Price will be paid by crediting against the Purchase Price the balance
of any intercompany loans from Buyer to Seller on the Closing Date, which shall
be deemed to be paid to the extent so credited. Any remaining balance of the
Purchase Price shall be accounted for as an intercompany loan from Seller to
Buyer, which shall bear interest at a variable rate of LIBOR plus 1.5%. The loan
balance shall not have a fixed repayment schedule, but which shall be repaid in
the amounts and at the times agreed between Buyer and Seller.
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2.3 Closing. The purchase and sale (the "Closing") provided for in this
Agreement will take place simultaneously with the execution of this Agreement at
the offices of Xxxxx's counsel at 00 Xxxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxx 00000.
2.4 Closing Obligations. At the Closing:
(a) Seller will deliver to Buyer:
(i) a certificate or certificates representing the Shares,
duly endorsed (or accompanied by duly executed stock powers) for transfer to
Buyer; and
(ii) such other documents as Buyer may reasonably request for
the purpose of (i) evidencing the accuracy of any of Seller's representations
and warranties, (ii) evidencing the performance by Seller of, or the compliance
by Seller with, any covenant or obligation required to be performed or complied
with by Seller, or (iii) otherwise facilitating the consummation or performance
of any of the Contemplated Transactions
(b) Buyer will deliver to Seller:
(i) the Purchase Price, by adjustment of the intercompany
account between Xxxxx and Seller as described in Section 2.2; and
(ii) such other documents as Seller may reasonably request for
the purpose of (i) evidencing the accuracy of any representation or warranty of
Buyer, (ii) evidencing the performance by Buyer of, or the compliance by Buyer
with, any covenant or obligation required to be performed or complied with by
Buyer, or (iii) otherwise facilitating the consummation of any of the
Contemplated Transactions.
2.5 Effective Date and Time. Notwithstanding when the Closing Date occurs,
the parties agree that the effective date and time of the Contemplated
Transactions will be May 1, 2005, at 12:01 a.m., Eastern Time.
2.6 Audit Adjustments. The parties will use their best efforts to cause an
audit of the Company's balance sheet and and the related statements of income
and cash flows for the fiscal year ended December 31, 2004 to be completed by
June 1, 2005. In the event that as a result of the completion of the audit there
are any adjustments to the assets or liabilities of the Company as of December
31, 2004 (other than any adjustment to deferred tax assets or liabilities) that
would change the assets or liabilities of the Company as of March 31, 2005 as
reported on the Interim Balance Sheet, the Purchase Price shall be increased or
decreased by the net increase or decrease in shareholder's equity resulting from
such adjustments, and the intercompany loan balance adjusted accordingly.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrant to Buyer as follows:
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3.1 Organization and Good Standing
(a) The Company is a corporation duly organized, validly existing,
and in good standing under the laws of its North Carolina, with full corporate
power and authority to conduct its business as it is now being conducted, to own
or use the properties and assets that it purports to own or use, and to perform
all its obligations under Applicable Contracts. The Company is duly qualified to
do business as a foreign corporation and is in good standing under the laws of
each state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification.
(b) Seller has delivered to Buyer copies of the Organizational
Documents of the Company, as currently in effect.
(c) The Company has no Subsidiaries.
3.2 Authority; No Conflict
(a) This Agreement constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
Seller has the absolute and unrestricted right, power, authority, and capacity
to execute and deliver this Agreement and to perform its obligations thereunder.
(b) Except as set forth in Part 3.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Company, or (B) any
resolution adopted by the board of directors or the stockholders of the Company;
(ii) contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which the Company or Seller, or any of the
assets owned or used by the Company, may be subject;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by the Company or that otherwise relates to the
business of, or any of the assets owned or used by, the Company;
(iv) cause Buyer or the Company to become subject to, or to
become liable for the payment of, any Tax;
(v) cause any of the assets owned by the Company to be
reassessed or revalued by any taxing authority or other Governmental Body;
(vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Applicable Contract; or
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(vii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by the Company.
Except as set forth in Part 3.2 of the Disclosure Letter, neither Seller nor the
Company is or will be required to give any notice to or obtain any Consent from
any Person in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated Transactions.
3.3 Capitalization. The authorized equity securities of the Company
consist of 100,000 shares of common stock, par value $1.00 per share, of which
100 shares are issued and outstanding and constitute the Shares. Seller is the
record and beneficial owner and holder of all the Shares, free and clear of all
Encumbrances. All of the Shares have been duly authorized and validly issued and
are fully paid and nonassessable. Other than the Shares, there are no equity
securities or other securities exercisable for or convertible into equity
securities that have been authorized or issued by the Company. There are no
Contracts relating to the issuance, sale, or transfer of any Shares or other
securities of the Company. No Shares or other securities of the Company have
been issued in violation of the Securities Act or any other Legal Requirement.
The Company does not own, or have any Contract to acquire, any equity securities
or other securities of any Person or any direct or indirect equity or ownership
interest in any other business.
3.4 Financial Statements. Seller has delivered to Buyer: (a) the unaudited
balance sheet of the Company as at December 31, 2004 (the "Balance Sheet"), and
the related unaudited statement of income for the fiscal year then ended, and
(b) an unaudited balance sheet of the Company as at March 31, 2005 (the "Interim
Balance Sheet") and the related unaudited statement of income for the three
months then ended. Such financial statements fairly present the financial
condition and the results of operations of the Company as at the respective
dates of and for the periods referred to in such financial statements, all in
accordance with GAAP, subject, in the case of interim financial statements, to
normal recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse). The financial
statements referred to in this Section 3.4 reflect the consistent application of
such accounting principles throughout the periods involved. It is understood and
agreed that all accounting terms used herein shall be interpreted and all
accounting determinations hereunder shall be made in accordance with GAAP.
3.5 Books and Records. The books of account, minute books, stock record
books, and other records of the Company, all of which have been made available
to Buyer, are complete and correct and have been maintained in accordance with
sound business practices, including the maintenance of an adequate system of
internal controls. The minute book of the Company contains accurate and complete
records of all meetings held of, and corporate action taken by, the
stockholders, the Board of Directors, and committees of the Boards of Directors
of the Company, and no meeting of any such stockholders, Board of Directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute book.
3.6 Title to Properties; Encumbrances. The Company owns no real property.
Part 3.6 of the Disclosure Letter contains a complete and accurate list of all
leaseholds or other interests in real property owned by the Company. The Company
owns all the properties and assets (whether real, personal, or mixed and whether
tangible or intangible) that it purports to own located in the Facilities or
reflected as owned in the books and records of the Company, including all of the
properties and assets reflected in the Balance Sheet and the Interim Balance
Sheet (except for personal property sold since the date of the Balance Sheet and
the Interim Balance Sheet, as the case may be, in the Ordinary Course of
Business), and all of the properties and assets purchased or otherwise acquired
by the Company since the date of the Balance Sheet (except for personal property
acquired and sold since the date of the Balance Sheet in the Ordinary Course of
Business and consistent with past practice). All material properties and assets
reflected in the Balance Sheet and the Interim Balance Sheet are free and clear
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of all Encumbrances except, with respect to all such properties and assets, (a)
security interests shown on the Balance Sheet or the Interim Balance Sheet as
securing specified liabilities or obligations, with respect to which no default
(or event that, with notice or lapse of time or both, would constitute a
default) exists, (b) security interests incurred in connection with the purchase
of property or assets after the date of the Interim Balance Sheet (such security
interests being limited to the property or assets so acquired), with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, and (c) liens for current taxes not yet due.
3.7 Condition and Sufficiency of Assets. To the Knowledge of Seller, the
buildings, plants, structures, and equipment of the Company are structurally
sound, are in good operating condition and repair, and are adequate for the uses
to which they are being put, and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The building,
plants, structures, and equipment of the Company are sufficient for the
continued conduct of the Company's businesses after the Closing in substantially
the same manner as conducted prior to the Closing.
3.8 No Undisclosed Liabilities. Except as set forth in Part 3.8 of the
Disclosure Letter, the Company has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Balance Sheet and current liabilities incurred in the Ordinary Course of
Business since the date thereof. The Company has no liabilities for funds
advanced or credit extended (other than trade accounts payable) to the Company
except as disclosed on the Balance Sheet.
3.9 Taxes. Except as set forth in Part 3.9 of the Disclosure Letter, the
Company has filed or caused to be filed on a timely basis all Tax Returns and
all reports with respect to Taxes that are or were required to be filed pursuant
to applicable Legal Requirements. The Company has paid, or made provision for
the payment of, all Taxes that have or may have become due, or pursuant to any
assessment received by the Company or Seller. No claim has ever been made or is
expected to be made by any Governmental Body in a jurisdiction where the Company
does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. The charges, accruals, and reserves with respect to Taxes on the
books of the Company are adequate (determined in accordance with GAAP) and are
at least equal to the Company's liability for Taxes. All Taxes that the Company
is or was required by Legal Requirements to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Body or other Person.
3.10 No Material Adverse Change. Since the date of the Balance Sheet,
there has not been any material adverse change in the business, operations,
properties, prospects, assets, or condition of the Company, and no event has
occurred or circumstance exists that may result in such a material adverse
change.
3.11 Employee Benefits.
(a) Disclosure of Employee Plans. Part 3.11(a) of the Disclosure
Letter identifies each Employee Plan. Except as set forth in Part 3.11(a) of the
Disclosure Letter, true and complete copies of the following materials have been
previously furnished to Buyer with respect to each Employee Plan to the extent
applicable: (i) all current and prior plan documents and amendments, (ii) all
current and prior trust agreements and amendments, (iii) the summary plan
description and any summary of material modifications (including any formal or
informal summaries and written interpretations of such Employee Plan) for the
previous six years, (iv) annual reports filed on Form 5500 for the previous
three plan years, (v) all current insurance policies relating to benefits under
any Employee Plan, (vi) all current administrative contracts, (vii) all current
and prior favorable determination letters from the Internal Revenue Service,
(viii) all current sample administrative forms, (ix) nondiscrimination tests for
the previous three years, (x) all current investment contracts, and (xiii)
actuarial or other financial reports for the previous three years.
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(b) Compliance. Except as set forth in Part 3.11(b) of the
Disclosure Letter, each Employee Plan has been administered and maintained, from
the time of such Employee Plan's inception up to and including the Closing Date,
in substantial compliance with (i) the terms of such Employee Plan, (ii) any
applicable statutes, orders, rules or regulations, and (iii) any fiduciary
standards prescribed under ERISA.
(c) Tax-Qualified Status. Except as set forth in Part 3.11(c) of the
Disclosure Letter, each Employee Plan which is intended to be qualified under
IRC Section 401(a) is currently so qualified and has been so qualified during
the period from the time of such Employee Plan's inception, and each trust
forming a part thereof is exempt from tax pursuant to IRC Section 501(a). Except
as set forth in Part 3.11(c) of the Disclosure Letter, each Employee Plan which
is a "cafeteria" or other similar plan that is intended to satisfy the
requirements of IRC Section 125 does satisfy such requirements from the time of
such Employee Plan's inception up to and including the Closing Date.
(d) Funding and Contribution Issues. No Employee Plan constitutes
(i) a "multiemployer plan," as defined in Section 3(37) of ERISA, (ii) a
"defined benefit plan," as defined in Section 3(35), (iii) any other plan
subject to Title IV of ERISA, or (iv) a plan maintained in connection with any
trust described in IRC Section 501(c)(9). No condition exists and no event has
occurred that could constitute grounds for termination of any Employee Plan, and
the Company has not incurred any material liability under Title IV of ERISA
arising in connection with the termination of, or complete or partial withdrawal
from, any plan covered or previously covered by Title IV of ERISA. No
"accumulated funding deficiency," as defined in Section 412 of the IRC, has been
incurred with respect to any Employee Plan, whether or not waived. Full payment
has been made of all amounts which the Company is required to have paid as
contributions to or benefits under any Employee Plan as of the end of the most
recent plan year and there are no unfunded obligations under any Employee Plan
that have not been disclosed to Buyer in writing prior to the Closing. Except as
set forth in Part 3.13(d) of the Disclosure Letter, all contributions and
contribution obligations have been reflected on the Interim Balance Sheet.
(e) Reporting and Disclosure. Except as set forth in Part 3.11(e) of
the Disclosure Letter, the Company has complied with all reporting and
disclosure obligation to all governmental entities and all participants and
beneficiaries with respect to each Employee Plan required by the terms of such
Employee Plan, or any statutes, orders, rules or regulations.
(f) Other Liabilities and Reportable Events. Nothing done or omitted
to be done and no transaction or holding of any asset under or in connection
with any Employee Plan has or will make the Company or any party to this
Agreement subject to any liability under Title I of ERISA or liable for any tax
or penalty. There is no pending or threatened litigation, arbitration, disputed
claim, adjudication, audit, investigation, examination or other proceeding with
respect to any Employee Plan or any fiduciary or administrator thereof in their
capacities as such. No "reportable event," within the meaning of Section 4043 of
ERISA, and no event described in Section 4041, 4042, 4062 or 4063 of ERISA has
occurred in connection with any Employee Plan.
(g) Nondeductible Benefits. Except as set forth in Part 3.11(g) of
the Disclosure Letter, no benefit under any Employee Plan has in the past or
could give rise in the future to the payment of any amount that would not be
deductible pursuant to the current provisions of the IRC.
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(h) No Retiree Medical Benefits. Except as set forth in Part 3.11(h)
of the Disclosure Letter and except as required by IRC Section 4908B and Title
I, Part 6 of ERISA, there is no liability in respect of or any obligation to
provide post-retirement health and medical benefits for retired or former
employees of the Company, and the Company has reserved its right to amend or
terminate any Employee Plan providing health or medical benefits under the terms
of any such plan and descriptions thereof given to employees.
(i) COBRA Compliance. Except as set forth in Part 3.11(i) of the
Disclosure Letter, with respect to the Employee Plans which are "group health
plans" under IRC Section 4980B or Section 607(1) of ERISA, there has been
compliance in all material respects with all requirements imposed under IRC
Section 4980B and Part 6 of Title I of ERISA, so that the Company has not had
any (and will not incur any) loss, assessment, tax penalty, or other sanction
with respect to any such Employee Plan.
(j) No Employment or Severance Arrangements. Except as set forth in
Part 3.11(j) of the Disclosure Letter, the Company is not a party or subject to
any union contract or any employment contract or arrangement providing for
annual future compensation to any employee, owner, shareholder or independent
contractor, including (without limitation) any severance or other similar
contract, arrangement or policy, whether written or oral, providing for
compensation or benefits upon termination.
3.12 Compliance With Legal Requirements; Governmental Authorizations
(a) Except as set forth in Part 3.12 of the Disclosure Letter:
(i) the Company is, and at all times since January 1, 2002 has
been, in compliance in all material respects with each Legal Requirement that is
or was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result in a violation
by the Company of, or a failure on the part of the Company to comply with, any
Legal Requirement, or (B) may give rise to any obligation on the part of the
Company to undertake, or to bear all or any portion of the cost of, any remedial
action of any nature; and
(iii) the Company has not received, at any time since January
1, 2002, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or potential obligation on
the part of the Company to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature.
(b) The Governmental Authorizations currently held by the Company
constitute all of the Governmental Authorizations necessary to permit the
Company to lawfully conduct and operate its business in the manner it currently
conducts and operates such business and to permit the Company to own and use its
assets in the manner in which its currently owns and uses such assets. Each such
Governmental Authorization is valid and in full force and effect. Except as set
forth in Part 3.12 of the Disclosure Letter:
(i) the Company is, and at all times since January 1, 2002 has
been, in compliance in all material respects with all of the terms and
requirements of each Governmental Authorization;
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(ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or requirement
of any Governmental Authorization, or (B) result directly or indirectly in the
revocation, withdrawal, suspension, cancellation, or termination of, or any
modification to, any Governmental Authorization;
(iii) the Company has not received, at any time since January
1, 2002, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations have been duly filed on a timely
basis with the appropriate Governmental Bodies, and all other filings required
to have been made with respect to such Governmental Authorizations have been
duly made on a timely basis with the appropriate Governmental Bodies.
3.13 Legal Proceedings; Orders
(a) Except as set forth in Part 3.13 of the Disclosure Letter, there
is no pending Proceeding:
(i) that has been commenced by or against the Company or that
otherwise relates to or may affect the business of, or any of the assets owned
or used by, the Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
To the Knowledge of Seller and the Company, (1) no such Proceeding has been
Threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding. Seller
have delivered to Buyer copies of all pleadings, correspondence, and other
documents relating to each Proceeding listed in Part 3.13 of the Disclosure
Letter. The Proceedings listed in Part 3.13 of the Disclosure Letter will not
have a material adverse effect on the business, operations, assets, condition,
or prospects of the Company.
(b) Except as set forth in Part 3.13 of the Disclosure Letter:
(i) there is no Order to which any of the Company, or any of
the assets owned or used by the Company, is subject;
(ii) Seller is not subject to any Order that relates to the
business of, or any of the assets owned or used by, the Company; and
(iii) no officer, director, agent, or employee of the Company
is subject to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or practice
relating to the business of the Company.
(c) Except as set forth in Part 3.15 of the Disclosure Letter:
13
(i) the Company is, and at all times since January 1, 2002 has
been, in full compliance with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or has been subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Order to which the
Company, or any of the assets owned or used by the Company, is subject; and
(iii) the Company has not received, at any time since January
1, 2002, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding any actual, alleged, possible,
or potential violation of, or failure to comply with, any term or requirement of
any Order to which the Company, or any of the assets owned or used by the
Company, is or has been subject.
3.14 Absence of Certain Changes and Events. Except as set forth in Part
3.14 of the Disclosure Letter, since the date of the Balance Sheet, the Company
has conducted its business only in the Ordinary Course of Business and there has
not been any:
(a) change in the Company's authorized or issued capital stock;
grant of any stock option or right to purchase shares of capital stock of the
Company; issuance of any security convertible into such capital stock; grant of
any registration rights; purchase, redemption, retirement, or other acquisition
by the Company of any shares of any such capital stock; or declaration or
payment of any dividend or other distribution or payment in respect of shares of
capital stock;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by the Company of any bonuses, salaries, or
other compensation to any stockholder, director, officer, or (except in the
Ordinary Course of Business) employee or entry into any employment, severance,
or similar Contract with any director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of the
Company;
(e) damage to or destruction or loss of any asset or property of the
Company, whether or not covered by insurance, materially and adversely affecting
the properties, assets, business, financial condition, or prospects of the
Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by or to the Company of at least $10,000;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of the Company
or mortgage, pledge, or imposition of any lien or other encumbrance on any
material asset or property of the Company, including the sale, lease, or other
disposition of any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a value to
the Company in excess of $10,000;
14
(i) material change in the accounting methods used by the Company;
or
(j) agreement, whether oral or written, by the Company to do any of
the foregoing.
3.15 Contracts; No Defaults.
(a) Part 3.15(a) of the Disclosure Letter contains a complete and
accurate list, and /or Seller has delivered to Buyer true and complete copies,
of:
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials by the Company of an amount or value
in excess of $10,000;
(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to the Company of an amount or value
in excess of $10,000;
(iii) each Applicable Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures or receipts of
the Company in excess of $10,000;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property (except personal property
leases and installment and conditional sales agreements having a value per item
or aggregate payments of less than $10,000 and with terms of less than one
year);
(v) each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual property,
including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
(vi) each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a group
of employees;
(vii) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs, or
liabilities by the Company with any other Person;
(viii) each Applicable Contract containing covenants that in
any way purport to restrict the business activity of the Company or any
Affiliate or limit the freedom of the Company or any Affiliate to engage in any
line of business or to compete with any Person;
(ix) each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct payments for
goods;
(x) each power of attorney that is currently effective and
outstanding;
(xi) each Applicable Contract for capital expenditures in
excess of $10,000;
(xii) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
(b) Except as set forth in Part 3.15(b) of the Disclosure Letter,
each Contract identified or required to be identified in Part 3.15(a) of the
Disclosure Letter is in full force and effect and is valid and enforceable in
accordance with its terms.
15
(c) Except as set forth in Part 3.15(c) of the Disclosure Letter, to
the Knowledge of Seller:
(i) the Company is, and at all times since January 1, 2002 has
been, in full compliance with all applicable terms and requirements of each
Contract under which the Company has or had any obligation or liability or by
which the Company or any of the assets owned or used by it is or was bound;
(ii) each other Person that has or had any obligation or
liability under any Contract under which the Company has or had any rights is,
and at all times since January 1, 2002 has been, in full compliance with all
applicable terms and requirements of such Contract;
(iii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) may contravene, conflict with, or result in
a violation or breach of, or give the Company or other Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract; and
(iv) the Company has not given to or received from any other
Person, at any time since January 1, 2002, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any Contract.
(d) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to the
Company under current or completed Contracts with any Person and no such Person
has made written demand for such renegotiation.
(e) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Company have been entered into in the
Ordinary Course of Business and have been entered into without the commission of
any act alone or in concert with any other Person, or any consideration having
been paid or promised, that is or would be in violation of any Legal
Requirement.
3.16 Insurance.
(a) Seller has delivered or made available to Buyer:
(i) true and complete copies of all policies of insurance to
which the Company is a party or under which the Company, or any director of the
Company, is or has been covered at any time within the five years preceding the
date of this Agreement; and
(ii) true and complete copies of all pending applications for
policies of insurance.
(b) Part 3.16(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting the
Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by the Company; and
16
(iii) all obligations of the Company to third parties with
respect to insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is provided.
(c) Except as set forth in Part 3.16(c) of the Disclosure Letter,
neither Seller nor the Company has received (A) any refusal of coverage or any
notice that a defense will be afforded with reservation of rights, or (B) any
notice of cancellation or any other indication that any insurance policy is no
longer in full force or effect or will not be renewed or that the issuer of any
policy is not willing or able to perform its obligations thereunder.
(d) The Company has paid all premiums due, and have otherwise
performed all of their respective obligations, under each policy to which the
Company is a party or that provides coverage to the Company or director thereof.
3.17 Environmental Matters.
Except as set forth in Part 3.17 of the Disclosure Letter:
(a) The Company is, and at all times has been, in full compliance
with, and has not been and is not in violation of or liable under, any
Environmental Law. Neither Seller nor the Company has any basis to expect, nor
have any of them or any other Person for whose conduct they are or may be held
to be responsible received, any actual or Threatened order, notice, or other
communication from (i) any Governmental Body or private citizen acting in the
public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which Seller or the Company has had an interest, or with
respect to any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or processed by
Seller, the Company, or any other Person for whose conduct they are or may be
held responsible, or from which Hazardous Materials have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the Knowledge of Seller and the
Company, Threatened claims, Encumbrances, or other restrictions of any nature,
resulting from any Environmental, Health, and Safety Liabilities or arising
under or pursuant to any Environmental Law, with respect to or affecting any of
the Facilities or any other properties and assets (whether real, personal, or
mixed) in which Seller or the Company has or had an interest.
(c) Neither Seller nor the Company has Knowledge of any basis to
expect, nor has any of them or any other Person for whose conduct they are or
may be held responsible, received, any citation, directive, inquiry, notice,
Order, summons, warning, or other communication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential violation or
failure to comply with any Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of any Environmental, Health,
and Safety Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which Seller or the
Company had an interest, or with respect to any property or facility to which
Hazardous Materials generated, manufactured, refined, transferred, imported,
used, or processed by Seller, the Company, or any other Person for whose conduct
they are or may be held responsible, have been transported, treated, stored,
handled, transferred, disposed, recycled, or received.
17
(d) Neither Seller nor the Company, nor any other Person for whose
conduct they are or may be held responsible, has any Environmental, Health, and
Safety Liabilities with respect to the Facilities or with respect to any other
properties and assets (whether real, personal, or mixed) in which Seller or the
Company, has or had an interest, or at any property geologically or
hydrologically adjoining the Facilities or any such other property or assets.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities or at any geologically or hydrologically adjoining
property, including any Hazardous Materials contained in barrels, above or
underground storage tanks, landfills, land deposits, dumps, equipment (whether
moveable or fixed) or other containers, either temporary or permanent, and
deposited or located in land, water, sumps, or any other part of the Facilities
or such adjoining property, or incorporated into any structure therein or
thereon. Neither the Seller, the Company, nor any other Person for whose conduct
they are or may be held responsible, or to the Knowledge of Seller and the
Company, any other Person, has permitted or conducted, or is aware of, any
Hazardous Activity conducted with respect to the Facilities or any other
properties or assets (whether real, personal, or mixed) in which Seller or the
Company has or had an interest except in full compliance with all applicable
Environmental Laws.
(f) There has been no Release or, to the Knowledge of Seller and the
Company, Threat of Release, of any Hazardous Materials at or from the Facilities
or at any other locations where any Hazardous Materials were generated,
manufactured, refined, transferred, produced, imported, used, or processed from
or by the Facilities, or from or by any other properties and assets (whether
real, personal, or mixed) in which Seller or the Company has or had an interest,
or to the Knowledge of Seller and the Company any geologically or hydrologically
adjoining property, whether by Seller, the Company, or any other Person.
(g) Seller have delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by Seller or the Company pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities, or concerning compliance
by Seller, the Company, or any other Person for whose conduct they are or may be
held responsible, with Environmental Laws.
3.18 Employees.
(a) Part 3.18 of the Disclosure Letter contains a complete and
accurate list of the following information for each employee or director of the
Company, including each employee on leave of absence or layoff status: employer;
name; job title; current compensation paid or payable and any change in
compensation since January 1, 2002; vacation accrued; and service credited for
purposes of vesting and eligibility to participate under the Company's pension,
retirement, profit-sharing, thrift-savings, deferred compensation, stock bonus,
stock option, cash bonus, employee stock ownership (including investment credit
or payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, or other Employee Plan.
(b) No employee or director of the Company is a party to, or is
otherwise bound by, any agreement or arrangement, including any confidentiality,
noncompetition, or proprietary rights agreement, between such employee or
director and any other Person ("Proprietary Rights Agreement") that in any way
adversely affects or will affect (i) the performance of his duties as an
employee or director of the Company, or (ii) the ability of the Company to
conduct its business, including any Proprietary Rights Agreement with Seller or
the Company by any such employee or director. To Seller' Knowledge, no director,
officer, or other key employee of the Company intends to terminate his
employment with the Company.
18
3.19 Labor Relations; Compliance. Since January 1, 2002, the Company has
not been a party to any collective bargaining or other labor Contract. Since
January 1, 2002, there has not been, there is not presently pending or existing,
and to Seller's Knowledge there is not Threatened, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process, (b) any Proceeding
against or affecting the Company relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body in the United States, organizational activity, or other labor
or employment dispute against or affecting any of the Company or their premises,
or (c) any application for certification of a collective bargaining agent. No
event has occurred or circumstance exists that could provide the basis for any
work stoppage or other labor dispute. There is no lockout of any employees by
the Company, and no such action is contemplated by the Company. The Company has
complied in all respects with all Legal Requirements relating to employment,
equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, occupational safety and health, and plant closing. The Company is not
liable for the payment of any compensation, damages, taxes, fines, penalties, or
other amounts, however designated, for failure to comply with any of the
foregoing Legal Requirements.
3.20 Intellectual Property.
(a) Intellectual Property Assets -- The term "Intellectual Property
Assets" includes:
(i) the name "Simclar (North America)," all fictional business
names, trading names, registered and unregistered trademarks, service marks, and
applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries of the Company that may be patentable (collectively, "Patents");
(iii) all copyrights of the Company in both published works
and unpublished works (collectively, "Copyrights");
(iv) all rights of the Companies in mask works (collectively,
"Rights in Mask Works"); and
(v) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process technology,
plans, drawings, and blue prints (collectively, "Trade Secrets") owned, used, or
licensed by the Company as licensee or licensor.
(b) Agreements -- Part 3.20(b) of the Disclosure Letter contains a
complete and accurate list and summary description, including any royalties paid
or received by the Company, of all Contracts relating to the Intellectual
Property Assets to which the Company is a party or by which the Company is
bound, except for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs with a value of less
than $1,000.00 under which the Company is the licensee. There are no outstanding
and, to Seller's Knowledge, no Threatened disputes or disagreements with respect
to any such agreement.
(c) Know-How Necessary for the Business.
(i) The Intellectual Property Assets are all those necessary
for the operation of the Company's business as currently conducted. The Company
is the owner of all right, title, and interest in and to each of the
Intellectual Property Assets, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims, and has the right to
use without payment to a third party all of the Intellectual Property Assets.
19
(ii) Except as set forth in Part 3.20(c) of the Disclosure
Letter, all former and current employees of the Company have executed written
Contracts with the Company that assign to the Company all rights to any
inventions, improvements, discoveries, or information relating to the business
of the Company. No employee of the Company has entered into any Contract that
restricts or limits in any way the scope or type of work in which the employee
may be engaged or requires the employee to transfer, assign, or disclose
information concerning his work to anyone other than one or more of the Company.
(d) Patents. The Company own no Patents. None of the products
manufactured and sold, nor any process or know-how used, by the Company
infringes or is alleged to infringe any patent or other proprietary right of any
other Person
(e) Trademarks. The Company has no Marks except for the name
"Simclar (North America)."
(f) Copyrights. The Company has no Copyrights except for common law
copyrights in its promotional and marketing literature. None of the subject
matter of any of the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the work of a
third party
(g) Trade Secrets.
(i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient in detail and
content to identify and explain it and to allow its full and proper use without
reliance on the knowledge or memory of any individual.
(ii) The Company has taken all reasonable precautions to
protect the secrecy, confidentiality, and value of itsTrade Secrets.
(iii) The Company has good title and an absolute (but not
necessarily exclusive) right to use the Trade Secrets. The Trade Secrets are not
part of the public knowledge or literature, and, to Seller's Knowledge, have not
been used, divulged, or appropriated either for the benefit of any Person (other
than one or more of the Company) or to the detriment of the Company. No Trade
Secret is subject to any adverse claim or has been challenged or threatened in
any way.
3.21 Disclosure.
(a) No representation or warranty of Seller in this Agreement and no
statement in the Disclosure Letter omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
(b) There is no fact known to Seller that has specific application
to either Seller or the Company (other than general economic or industry
conditions) and that materially adversely affects or, as far as any Seller can
reasonably foresee, materially threatens, the assets, business, prospects,
financial condition, or results of operations of the Company that has not been
set forth in this Agreement or the Disclosure Letter.
20
3.22 Brokers or Finders. Except as disclosed in Part 3.22 of the
Disclosure Letter, Seller and its agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Florida.
4.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Buyer has the right, power, and authority to execute and deliver this Agreement
and to perform its obligations under this Agreement.
(b) Neither the execution and delivery of this Agreement by Buyer
nor the consummation or performance of any of the Contemplated Transactions by
Xxxxx will give any Person the right to prevent, delay, or otherwise interfere
with any of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or the
shareholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which Buyer
may be bound.
Buyer is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
4.3 Investment Intent. Buyer is acquiring the Shares for its own account
and not with a view to their distribution within the meaning of Section 2(11) of
the Securities Act.
4.4 Certain Proceedings. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
Threatened.
4.5 Brokers or Finders. Buyer and its officers and agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold Seller harmless from any such payment
alleged to be due by or through Buyer as a result of the action of Buyer or its
officers or agents.
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ARTICLE V
POST-CLOSING COVENANTS
5.1 Assistance in Proceedings. Each of Seller and Buyer will cooperate
with the other and their respective counsel in the contest or defense of, and
make available its personnel and provide any testimony and access to its books
and Records in connection with, any Proceeding involving or relating to (a) any
Contemplated Transaction, or (b) any action, activity, circumstance, condition,
conduct, event, fact, failure to act, incident, occurrence, plan, practice,
situation, status or transaction on or before the Closing Date involving the
Company or its business.
5.2 Further Assurances. The parties shall cooperate reasonably with each
other and with their respective Representatives in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, and shall (a) furnish upon request to each other such further
information; (b) execute and deliver to each other such other documents; and (c)
do such other acts and things, all as the other party may reasonably request for
the purpose of carrying out the intent of this Agreement and the Contemplated
Transactions.
ARTICLE VI
INDEMNIFICATION; REMEDIES
6.1 Survival. All representations, warranties, covenants, and obligations
in this Agreement, the Disclosure Letter, and any other certificate or document
delivered pursuant to this Agreement will survive the Closing.
6.2 Indemnification and Payment of Damages By Seller. Seller will
indemnify and hold harmless Buyer, the Company, and their respective
Representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons") for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage (including incidental
and consequential damages), expense (including costs of investigation and
defense and reasonable attorneys' fees) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by Seller in
this Agreement, the Disclosure Letter, or any other certificate or document
delivered by Seller pursuant to this Agreement;
(b) any Breach by Seller of any covenant or obligation of Seller in
this Agreement;
(c) any product shipped or manufactured by, or any services provided
by, the Company prior to the Closing Date;
(d) any Environmental, Health, and Safety Liabilities arising out of
or relating to: (i) (A) the ownership, operation, or condition at any time on or
prior to the Closing Date of the Facilities or any other properties and assets
(whether real, personal, or mixed and whether tangible or intangible) in which
Seller or the Company has or had an interest, or (B) any Hazardous Materials or
other contaminants that were present on the Facilities or such other properties
and assets at any time on or prior to the Closing Date; or (ii) (A) any
Hazardous Materials or other contaminants, wherever located, that were, or were
allegedly, generated, transported, stored, treated, Released, or otherwise
handled by the Company or by any other Person for whose conduct they are or may
be held responsible at any time on or prior to the Closing Date, or (B) any
Hazardous Activities that were, or were allegedly, conducted by the Company or
by any other Person for whose conduct they are or may be held responsible;
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(e) the matters disclosed in Parts 3.8 and 3.13 of the Disclosure
Letter arising out of the leasehold interests of the Company in the Facilities
located at 0000 Xxxxxx Xxxx, Xxxxxxx, Xxxxx, xxx 000 Xxxx Xxxxxx, Xxxxxxxxxxxx
Xxxxx Xxxxxxxx;
(f) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with either Seller or the Company
(or any Person acting on their behalf) in connection with any of the
Contemplated Transactions, regardless of whether disclosed in the Disclosure
Letter; or
(g) any event, matter or facts that are disclosed as a result of the
audit of the Company's balance sheet and the related statements of income or
cash flow for the year ended December 31, 2004 referenced in Section 2.6, that
would make any of the financial statements referenced in Section 3.4 to be
untrue or inaccurate in any material respect.
6.3 Indemnification and Payment of Damages by Xxxxx. Buyer will indemnify
and hold harmless Seller, and will pay to Seller the amount of any Damages
arising, directly or indirectly, from or in connection with (a) any Breach of
any representation or warranty made by Buyer in this Agreement or in any
certificate delivered by Buyer pursuant to this Agreement, (b) any Breach by
Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any claim
by any Person for brokerage or finders fees or commissions or similar payments
based upon any agreement or understanding alleged to have been made by such
Person with Buyer (or any Person acting on its behalf) in connection with any of
the Contemplated Transactions.
6.4 Time Limitations. Seller will have no liability (for indemnification
or otherwise) with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Closing Date, unless
on or before the second anniversary of the Closing Date Buyer notifies Seller of
a claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Buyer. Buyer will have no liability (for indemnification or
otherwise) with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Closing Date, unless
on or before the second anniversary of the Closing Date Seller notifies Buyer of
a claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Seller.
6.5 Right of Set-Off. Upon notice to Seller specifying in reasonable
detail the basis for such set-off, Buyer may set off any amount to which it may
be entitled under this Article VI against amounts otherwise payable to the
Seller following the Closing. Neither the exercise of nor the failure to
exercise such right of set-off or to give a notice of a Claim will constitute an
election of remedies or limit Buyer in any manner in the enforcement of any
other remedies that may be available to it.
6.6 Procedure for Indemnification--Third Party Claims.
(a) Promptly after receipt by an indemnified party under Section 6.2
or Section 6.3 of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of the commencement of
such claim, but the failure to notify the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnifying party's failure to give
such notice.
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(b) If any Proceeding referred to in Section 6.7(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will, unless the
claim involves Taxes, be entitled to participate in such Proceeding and, to the
extent that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Article VI for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within ten
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
(d) Seller hereby consents to the non-exclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on Seller with respect to such a claim anywhere in the
world.
6.7 Procedure for Indemnification--Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
ARTICLE VII
GENERAL PROVISIONS
7.1 Expenses. Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants.
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7.2 Public Announcements. Any public announcement or similar publicity
with respect to this Agreement or the Contemplated Transactions will be issued,
if at all, at such time and in such manner as Buyer determines. Buyer will
determine in its sole discretion the manner in which employees, customers, and
suppliers and others having dealings with the Company will be informed of the
Contemplated Transactions.
7.3 Notices. All notices, Consents, waivers and other communications
required or permitted by this Agreement shall be in writing and shall be deemed
given to a party when (a) delivered to the appropriate address by hand or by
nationally recognized overnight courier service (costs prepaid); (b) sent by
facsimile or e-mail with confirmation of transmission by the transmitting
equipment; or (c) received or rejected by the addressee, if sent by certified
mail, return receipt requested, in each case to the following addresses,
facsimile numbers or e-mail addresses and marked to the attention of the person
(by name or title) designated below (or to such other address, facsimile number,
e-mail address or person as a party may designate by notice to the other
parties):
Seller:
Simclar Group Limited with a copy to: Xxxxx, Xxxxxxx, W.S.
Pitreavie Business Park 0 Xxxxx Xxxxx
Xxxxxxxxxxx, Xxxx Xxxxxxxxx, Xxxxxxxx XX0 0XX
Xxxxxxxx XX00 0XX Attention: Xxxxxx X. Xxxxx
Attention: Xxx Xxxxx Fax no.: x00 (000) 000 0000
Fax no.: +44 (1383) 625629 E-mail address: xxx.xxxxx@xxxxx.xx.xx
E-mail address: xxx.xxxxx@xxxxxxx.xxx
Buyer:
Simclar, Inc. with a copy to: Xxxxxx, Xxxxxx, Xxxxxx & Xxxxxx LLP
0000 Xxxx 00xx Xxxxxx 00 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000 Xxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxx, President Attention: Xxxxxxx X. Xxxxx, Xx.
Fax no.: (000) 000-0000 Fax no.: (000) 000-0000
E-mail address: Xxxxx.Xxxxxx@xxxxxxx.xxx E-mail address: xxxxxxx@xxxxxxxxxxxx.xxx
7.4 Jurisdiction; Service of Process. Any Proceeding arising out of or
relating to this Agreement or any Contemplated Transaction may be brought in the
courts of the State of Florida, County of Dade, or, if it has or can acquire
jurisdiction, in the United States District Court for the Southern District of
Florida, and each of the parties irrevocably submits to the exclusive
jurisdiction of each such court in any such Proceeding, waives any objection it
may now or hereafter have to venue or to convenience of forum, agrees that all
claims in respect of the Proceeding shall be heard and determined only in any
such court and agrees not to bring any Proceeding arising out of or relating to
this Agreement or any Contemplated Transaction in any other court. The parties
agree that any of them may file a copy of this paragraph with any court as
written evidence of the knowing, voluntary and bargained agreement between the
parties irrevocably to waive any objections to venue or to convenience of forum.
Process in any Proceeding referred to in the first sentence of this section may
be served on any party anywhere in the world. THE PARTIES HEREBY WAIVE ANY RIGHT
TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE
THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES
IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY PROCEEDING WHATSOEVER BETWEEN
THEM RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS SHALL
INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT
A JURY.
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7.5 Enforcement of Agreement. Seller acknowledges and agrees that Xxxxx
would be irreparably damaged if any of the provisions of this Agreement are not
performed in accordance with their specific terms and that any Breach of this
Agreement by Seller could not be adequately compensated in all cases by monetary
damages alone. Accordingly, in addition to any other right or remedy to which
Buyer may be entitled, at law or in equity, it shall be entitled to enforce any
provision of this Agreement by a decree of specific performance and to
temporary, preliminary and permanent injunctive relief to prevent Breaches or
threatened Breaches of any of the provisions of this Agreement, without posting
any bond or other undertaking.
7.6 Further Assurances. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
7.7 Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
7.8 Entire Agreement and Modification. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
7.9 Disclosure Letter. In the event of any inconsistency between the
statements in the body of this Agreement and those in the Disclosure Letter
(other than an exception expressly set forth as such in the Disclosure Letter
with respect to a specifically identified representation or warranty), the
statements in the body of this Agreement will control.
7.10 Assignments, Successors, and No Third-Party Rights. No party may
assign any of its rights under this Agreement without the prior consent of the
other parties. Subject to the preceding sentence, this Agreement will apply to,
be binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
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7.11 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
7.12 Section Headings, Construction. The headings of Articles and Sections
in this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Articles," "Sections" and
"Parts" refer to the corresponding Articles, Sections and Parts of this
Agreement and the Disclosure Letter. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
7.13 Time of Essence. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
7.14 Governing Law. This Agreement will be governed by the laws of the
State of Florida, without regard to conflicts of laws principles.
7.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
BUYER: SELLER:
Simclar, Inc. Simclar Group Limited
By: /s/ Xxxxx X. Xxxxxx By: /s/ X. Xxx Xxxxx
---------------------------------- ----------------------------------
Xxxxx X. Xxxxxx, President X. Xxx Xxxxx, Finance Director
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