----------------------
ASSET PURCHASE AGREEMENT
By and Among
XXXX XXX CORPORATION,
a Maryland corporation
THE ARISTOTLE CORPORATION,
a Delaware corporation
AND
THE XXXXXXX, XXXXX COMPANY,
a Delaware corporation
Dated March 3, 1998
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TABLE OF CONTENTS
PAGE
Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . i
ARTICLE I PURCHASE AND SALE OF ASSETS. . . . . . . . . . . . . . . . . . . 1
1.1 Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1 Cash and Investments. . . . . . . . . . . . . . . . . . . . 2
1.1.2 Accounts Receivable . . . . . . . . . . . . . . . . . . . . 2
1.1.3 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.4 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.5 Records . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.6 Intellectual Property . . . . . . . . . . . . . . . . . . . 2
1.1.7 Personal Property Leases. . . . . . . . . . . . . . . . . . 2
1.1.8 Real Property Leases. . . . . . . . . . . . . . . . . . . . 2
1.1.9 Sale and Purchase Contracts . . . . . . . . . . . . . . . . 2
1.1.10 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1.11 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1.12 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1.13 Telephone Numbers. . . . . . . . . . . . . . . . . . . . . 3
1.1.14 Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . 3
1.1.15 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Limitations on Assignability . . . . . . . . . . . . . . . . . . . . 3
1.3 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3.1 Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3.2 Receivables . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3.3 Agreement Rights. . . . . . . . . . . . . . . . . . . . . . 4
1.3.4 Corporate Records . . . . . . . . . . . . . . . . . . . . . 4
1.3.5 Tax Refunds . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3.7 Plan Assets . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3.8 Tax Sharing Agreement; Tax Records. . . . . . . . . . . . . 4
1.3.9 Other Excluded Assets . . . . . . . . . . . . . . . . . . . 4
ARTICLE II LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Assumption of Liabilities. . . . . . . . . . . . . . . . . . . . . . 5
2.1.1 Balance Sheet Liabilities . . . . . . . . . . . . . . . . . 5
2.1.2 Ordinary Course Liabilities . . . . . . . . . . . . . . . . 5
2.1.3 Executory Liabilities . . . . . . . . . . . . . . . . . . . 5
2.2 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2.1 Transaction Expenses. . . . . . . . . . . . . . . . . . . . 5
2.2.2 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.3 Breach of This Agreement. . . . . . . . . . . . . . . . . . 6
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2.2.4 Liability Claims. . . . . . . . . . . . . . . . . . . . . . 6
2.2.5 Breach of Contract. . . . . . . . . . . . . . . . . . . . . 6
2.2.6 Employee Plans and Obligations. . . . . . . . . . . . . . . 6
2.2.7 Environmental Claims. . . . . . . . . . . . . . . . . . . . 7
2.2.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2.9 Performance . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2.10 Unassumed Executory Liabilities. . . . . . . . . . . . . . 7
2.2.11 Related Party Obligations. . . . . . . . . . . . . . . . . 7
2.2.12 General Provision. . . . . . . . . . . . . . . . . . . . . 7
2.3 No Expansion of Third Party Rights . . . . . . . . . . . . . . . . . 7
ARTICLE III PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Consideration; Payment at Closing. . . . . . . . . . . . . . . . . . 8
3.2 Closing Date Balance Sheet; Closing Statement; Bonus Adjustment. . . 8
3.2.1 Closing Reports. . . . . . . . . . . . . . . . . . . . . 8
3.2.2 Accrued Management Bonus . . . . . . . . . . . . . . . . 9
3.3 Closing Net Book Value . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Sellers' Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2.1 Corporate Resolutions . . . . . . . . . . . . . . . . . . . 10
4.2.2 Closing Certificate . . . . . . . . . . . . . . . . . . . . 10
4.2.3 Instruments of Transfer . . . . . . . . . . . . . . . . . . 11
4.2.4 UCC Releases. . . . . . . . . . . . . . . . . . . . . . . . 11
4.2.5 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2.6 Cash; Negotiable Instruments. . . . . . . . . . . . . . . . 11
4.2.7 Name Change . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2.8 Payoff Letters. . . . . . . . . . . . . . . . . . . . . . . 11
4.2.9 Tax Compliance. . . . . . . . . . . . . . . . . . . . . . . 11
4.2.10 Additional Agreements. . . . . . . . . . . . . . . . . . . 11
4.3 Purchaser's Deliveries . . . . . . . . . . . . . . . . . . . . . . . 11
4.3.1 Corporate Resolutions . . . . . . . . . . . . . . . . . . . 12
4.3.2 Closing Certificate . . . . . . . . . . . . . . . . . . . . 12
4.3.3 Closing Payment . . . . . . . . . . . . . . . . . . . . . . 12
4.3.4 Assumption Agreement. . . . . . . . . . . . . . . . . . . . 12
4.3.5 Additional Agreements . . . . . . . . . . . . . . . . . . . 12
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . . 12
5.1 Corporate Organization and Authority . . . . . . . . . . . . . . . . 12
5.2 Capitalization and Subsidiaries. . . . . . . . . . . . . . . . . . . 12
5.3 Authority Relative to Agreement. . . . . . . . . . . . . . . . . . . 13
5.4 Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . 13
5.5 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 14
5.7 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . 14
5.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . 15
5.8.1 Material Adverse Changes. . . . . . . . . . . . . . . . . . 15
5.8.2 Certain Events. . . . . . . . . . . . . . . . . . . . . . . 15
5.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . 18
5.9.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.9.2 Hazardous Substances. . . . . . . . . . . . . . . . . . . . 18
5.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.11 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . 20
5.12 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.13 Leased Real Property. . . . . . . . . . . . . . . . . . . . . . . . 20
5.14 Structural Defects. . . . . . . . . . . . . . . . . . . . . . . . . 21
5.15 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.16 Personal Property Leases. . . . . . . . . . . . . . . . . . . . . . 21
5.17 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.18 Reserve for Returns . . . . . . . . . . . . . . . . . . . . . . . . 22
5.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 22
5.20 Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.21 Sale and Purchase Contracts . . . . . . . . . . . . . . . . . . . . 23
5.22 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.23 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.24 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.25 Employee Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.25.1 Identification . . . . . . . . . . . . . . . . . . . . . . 24
5.25.2 Documentation. . . . . . . . . . . . . . . . . . . . . . . 25
5.25.3 Code and ERISA . . . . . . . . . . . . . . . . . . . . . . 25
5.25.4 Contributions and Accrual. . . . . . . . . . . . . . . . . 25
5.25.5 Reportable Events. . . . . . . . . . . . . . . . . . . . . 25
5.25.6 Termination Benefits . . . . . . . . . . . . . . . . . . . 26
5.25.7 Withdrawal Liability . . . . . . . . . . . . . . . . . . . 26
5.25.8 Employee Plan Grievances . . . . . . . . . . . . . . . . . 26
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5.26 Labor and Employee Matters. . . . . . . . . . . . . . . . . . . . . 27
5.26.1 Labor Agreements . . . . . . . . . . . . . . . . . . . . . 27
5.26.2 Labor/Employment Controversies . . . . . . . . . . . . . . 27
5.26.3 Employee Matters . . . . . . . . . . . . . . . . . . . . . 27
5.27 Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . 28
5.28 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.29 Effect of Transaction . . . . . . . . . . . . . . . . . . . . . . . 28
5.30 Transactions with Related Parties . . . . . . . . . . . . . . . . . 28
5.31 Bank Accounts, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 29
5.32 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.33 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.34 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.35 Information Supplied. . . . . . . . . . . . . . . . . . . . . . . . 29
5.36 Opinion of Financial Advisor. . . . . . . . . . . . . . . . . . . . 30
5.37 Company Board Recommendation. . . . . . . . . . . . . . . . . . . . 30
5.38 Required Company Vote . . . . . . . . . . . . . . . . . . . . . . . 30
5.39 Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.40 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . 30
5.41 Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER.. . . . . . . . . . 31
6.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . 31
6.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.3 Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . 31
6.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.5 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.6 Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.7 Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1 Conduct of Business of Xxxxxxx Xxxxx Prior to the Closing Date . . . 32
7.2 Preparation of Proxy Statement; Stockholders Meeting . . . . . . . . 33
7.2.1 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . 33
7.2.2 Comments. . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.2.3 Stockholders Meeting. . . . . . . . . . . . . . . . . . . . 34
7.3 Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.4 Confidentiality; Public Announcements. . . . . . . . . . . . . . . . 37
7.5 Xxxx-Xxxxx-Xxxxxx Filings. . . . . . . . . . . . . . . . . . . . . . 37
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7.6 Bulk Sales Compliance. . . . . . . . . . . . . . . . . . . . . . . . 37
7.7 Employees; 401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . 37
7.8 Access to Information. . . . . . . . . . . . . . . . . . . . . . . . 38
7.9 All Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . 38
7.10 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . 39
7.11 Supplements to Schedules. . . . . . . . . . . . . . . . . . . . . . 39
7.12 Attorney-in-Fact. . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.13 Potential Successor Taxes . . . . . . . . . . . . . . . . . . . . . 39
7.14 5500 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VIII RESTRICTIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 40
8.1 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.2 Non-competition. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.3 Non Interference with Business Relations . . . . . . . . . . . . . . 41
8.4 Solicitation of Customers and Employees. . . . . . . . . . . . . . . 41
8.5 Confidential Information . . . . . . . . . . . . . . . . . . . . . . 41
8.6 Scope. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.7 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.8 Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE IX INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 42
9.1 Survival of Representations, Warranties and Covenants. . . . . . . . 42
9.2 Sellers' Indemnification . . . . . . . . . . . . . . . . . . . . . . 43
9.3 Purchaser's Indemnification. . . . . . . . . . . . . . . . . . . . . 44
9.4 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.5 Indemnification Procedure for Third Party Claims Against
Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . 44
9.6 Nature of Other Liabilities. . . . . . . . . . . . . . . . . . . . . 46
9.7 Basket; Cap. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE X CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . . . . . . . 47
10.1 Conditions to Obligations of Purchaser. . . . . . . . . . . . . . . 47
10.1.1 Representations and Warranties of Sellers. . . . . . . . . 47
10.1.2 Performance of Sellers' and Stockholders' Obligations. . . 47
10.1.3 Consents and Approvals . . . . . . . . . . . . . . . . . . 47
10.1.4 Pending Proceedings. . . . . . . . . . . . . . . . . . . . 47
10.1.5 Board Approval . . . . . . . . . . . . . . . . . . . . . . 47
10.1.6 Expiration of Waiting Period . . . . . . . . . . . . . . . 47
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10.1.7 No Material Adverse Change . . . . . . . . . . . . . . . . 47
10.1.8 Other Closing Documents. . . . . . . . . . . . . . . . . . 48
10.2 Conditions to Obligations of Sellers. . . . . . . . . . . . . . . . 48
10.2.1 Representations and Warranties of Purchaser. . . . . . . . 48
10.2.2 Performance of Purchaser's Obligations . . . . . . . . . . 48
10.2.3 Consents and Approvals . . . . . . . . . . . . . . . . . . 48
10.2.4 Pending Proceedings. . . . . . . . . . . . . . . . . . . . 48
10.2.5 Expiration of Waiting Period . . . . . . . . . . . . . . . 48
10.2.6 Other Closing Documents. . . . . . . . . . . . . . . . . . 49
ARTICLE XI POST-CLOSING OBLIGATIONS. . . . . . . . . . . . . . . . . . . . 49
11.1 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.2 Use of Marks. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.3 Collection of Accounts . . . . . . . . . . . . . . . . . . . 49
11.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XII TERMINATION AND ABANDONMENT. . . . . . . . . . . . . . . . . . 49
12.1 Methods of Termination. . . . . . . . . . . . . . . . . . . . . . . 49
12.2 INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . . . . . 50
12.3 Procedure Upon Termination. . . . . . . . . . . . . . . . . . . . . 50
12.4 Termination Expenses and Fees . . . . . . . . . . . . . . . . . . . 51
ARTICLE XIII MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . 52
13.1 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . 52
13.2 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.3 Title; Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . 52
13.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.5 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.6 Waivers, Amendments and Remedies. . . . . . . . . . . . . . . . . . 53
13.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.8 Section Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.9 Counterparts; Terms . . . . . . . . . . . . . . . . . . . . . . . . 54
13.10 Governing Law; Consent to Jurisdiction; Venue. . . . . . . . . . . 54
13.11 Documentation. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
13.12 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . 55
13.13 Waivers of Trial by Jury . . . . . . . . . . . . . . . . . . . . . 55
EXHIBIT A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 00
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XXXXXXXXX AND EXHIBITS
SCHEDULES DESCRIPTION
--------- -----------
1.1 Permitted Liens
1.3.9 Other Excluded Assets
2.1.3 Executory Liabilities
3.3 Closing Net Book Value
5.1 Qualifications
5.2(a) Securities
5.2(b) Equity Owners
5.4 Violations
5.5 Variations from GAAP re: Books and Records
5.7 Liens on Accounts Receivable
5.8.1 Material Adverse Changes Since June 30, 1997
5.8.2 Certain Events Since June 30, 1997
5.9.1 Compliance With Laws
5.9.2 Hazardous Substances
5.12 Liens
5.13 Real Property Leases
5.14 Structural Defects
5.15 Condition and Ownership of Equipment
5.16 Personal Property Leases
5.18 Reserves for Returns
5.19 Intellectual Property
5.20 Licenses
5.21 Sale and Purchase Contracts
5.22 Contracts
5.23 Litigation
5.24 Consents
5.25 Employee Plans
5.26 Labor Agreements and Employee Matters
5.27 Customers and Suppliers
5.28 Insurance
5.30 Transactions with Related Parties
5.31 Bank Accounts
5.40 Year 2000 Compliance
EXHIBITS DESCRIPTION
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A Definitions
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "AGREEMENT"), dated March 3, 1998, by and
among XXXX XXX CORPORATION, a Maryland corporation ("XXXX XXX"), The
Aristotle Corporation, a Delaware corporation (the "COMPANY"), and The
Xxxxxxx, Xxxxx Company, a Delaware corporation ("XXXXXXX XXXXX") (the Company
and Xxxxxxx Xxxxx sometimes being individually and collectively called
"SELLER" or "SELLERS").
R E C I T A L S:
- - - - - - - -
A. The Company owns 100% of the outstanding capital stock of Xxxxxxx
Xxxxx. Xxxxxxx Xxxxx is engaged in the manufacture, marketing, distribution
and sale of certain lines of women's intimate apparel (the "BUSINESS").
Sellers desire that Xxxxxxx Xxxxx sell to Xxxx Xxx or its designee
("PURCHASER"), and Xxxx Xxx desires to purchase from Xxxxxxx Xxxxx,
substantially all of Xxxxxxx Adler's assets, and assume certain specified
liabilities of Xxxxxxx Xxxxx, all on the terms and subject to the conditions
hereinafter set forth.
B. Concurrent with the execution hereof, certain stockholders of the
Company (the "STOCKHOLDERS") are entering into a Stockholders' Agreement with
Purchaser (the "STOCKHOLDERS' AGREEMENT") as a condition to Purchaser's
execution, delivery and performance of this Agreement.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties intending to be
legally bound, hereby agree as follows. Capitalized terms used herein have
the definitions referred to, or set forth in, EXHIBIT A hereto.
ARTICLE I PURCHASE AND SALE OF ASSETS.
1.1 PURCHASED ASSETS. At the Closing and in reliance upon the
representations, warranties and agreements and subject to the conditions set
forth in this Agreement, Xxxxxxx Xxxxx shall sell, assign, transfer, convey
and deliver to Purchaser, free and clear of all liens, claims, options,
charges, security interests, pledges, mortgages or other encumbrances
whatsoever (collectively "LIENS"), other than Liens listed on SCHEDULE 1.1
(collectively "PERMITTED LIENS"), and Purchaser shall purchase from Xxxxxxx
Xxxxx, for the purchase price set forth in Article III hereof, all of the
assets and properties of every kind and nature, real and personal, tangible
and intangible, wherever situated, whether or not carried or reflected on the
books and records of Xxxxxxx Xxxxx, which are owned by Xxxxxxx Xxxxx or in
which Xxxxxxx Xxxxx has any right, title or interest as of the Closing Date,
except for the Excluded Assets (all of the assets, properties, rights and
interests being acquired hereby are collectively called the "PURCHASED
ASSETS").
The Purchased Assets shall include, without limitation, the
following items, including all proceeds therefrom, but shall not include any
Excluded Assets:
1.1.1 CASH AND INVESTMENTS. All cash on hand and in banks,
cash equivalents, marketable securities, bonds and investments of every kind
and nature (collectively, "CASH AND CASH EQUIVALENTS");
1.1.2 ACCOUNTS RECEIVABLE. All accounts receivable and other
receivables, billed and unbilled, and all negotiable instruments, or other
instruments and chattel paper, as are payable to Xxxxxxx Xxxxx ("ACCOUNTS
RECEIVABLE");
1.1.3 EQUIPMENT. All machinery, equipment, tools, motor
vehicles, rolling stock, furniture, supplies, office equipment, improvements,
parts and other tangible personal property other than Inventory
(collectively, the "EQUIPMENT");
1.1.4 INVENTORY. All inventory, including, without
limitation, raw materials, work-in-process, finished goods and packing
supplies (collectively, the "INVENTORY");
1.1.5 RECORDS. All books and records, customer files,
customer lists and records, vendor files, vendor lists and records, cost
files and records, credit information, distribution records, business records
and plans, Tax returns and other Tax records (except that with respect to
income Tax returns and other Tax records, only copies thereof shall be
included as Purchased Assets), studies, surveys, reports, correspondence,
sales and promotional literature and materials, advertising and advertising
copy, and other similar materials, microfilm, microfiche, computer and other
records, and all computer software, and all similar data, documents and
items, wherever located (collectively, the "BOOKS AND RECORDS");
1.1.6 INTELLECTUAL PROPERTY. All (i) Patents, (ii)
Trademarks, (iii) Trade Names, (iv) Know-how, (v) proprietary rights in trade
dress and packaging, and (vi) shop rights, copyrights, inventions, trade
secrets, service marks and all other intellectual property rights, in each
case whether registered or not and in each case wherever such rights exist
throughout the world, and including the right to recover for any past
infringement (collectively, the "INTELLECTUAL PROPERTY");
1.1.7 PERSONAL PROPERTY LEASES. All rights and benefits under
leases of personal property (collectively, the "PERSONAL PROPERTY LEASES");
1.1.8 REAL PROPERTY LEASES. All rights and benefits under
Real Property Leases;
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1.1.9 SALE AND PURCHASE CONTRACTS. All rights and benefits
under sale contracts, purchase or supply contracts, dealer arrangements and
distributorship arrangements, whether oral or written (collectively, the
"SALE AND PURCHASE CONTRACTS");
1.1.10 LICENSES. All rights and benefits under licenses,
permits, quotas, authorizations, franchises, registrations and other
approvals from any Governmental Authority or from any private party
(collectively, the "LICENSES");
1.1.11 CONTRACTS. All rights and benefits under contracts,
agreements, commitments of whatever nature or description, whether oral or
written (including, without limitation, confidentiality agreements executed
in connection with the possible sale of the Business or Xxxxxxx Xxxxx
(regardless of form) (except that copies of confidentiality agreements,
including the identity of the parties thereto, will not be delivered or
otherwise disclosed to Purchaser prior to Closing if doing so would violate
or breach such agreements), Personal Property Leases, Sale and Purchase
Contracts, Real Property Leases and Licenses) (collectively, the "CONTRACTS");
1.1.12 CLAIMS. All claims, causes of action, chooses in
action, rights of recovery, rights of set-off and other rights of every
nature and description (including, without limitation, all rights arising
under warranties, representations and guarantees made to Xxxxxxx Xxxxx) and
all benefits arising therefrom (collectively, the "CLAIMS");
1.1.13 TELEPHONE NUMBERS. All telephone numbers and white and
yellow-page listings;
1.1.14 PREPAID EXPENSES. All prepaid expenses, advance
payments, deposits and claims for refund (other than refunds pertaining to
liabilities which are not being assumed by Purchaser), credit and the like,
other than any prepaid insurance; and
1.1.15 GOODWILL. All goodwill associated with Xxxxxxx Xxxxx
and its business.
1.2 LIMITATIONS ON ASSIGNABILITY. Notwithstanding anything in this
Agreement to the contrary, to the extent that any of the Purchased Assets are
not assignable without the consent of a third party, neither this Agreement,
nor any of the instruments or documents executed and delivered in connection
herewith or contemplated hereby, shall constitute an assignment or assumption
thereof, or attempted assignment or attempted assumption thereof, if such
assignment or attempted assignment, or assumption or attempted assumption,
would constitute a breach thereof. If, prior to the Closing, Xxxxxxx Xxxxx
has not obtained a consent or approval necessary for the assignment and
assumption of any of the Purchased Assets, then it shall use its best efforts
where requested by Purchaser to obtain such consents and approvals after the
Closing, or, at Purchaser's request, shall cooperate in any reasonable
arrangement requested by Purchaser to provide to Purchaser the benefits
thereof subject to the performance by Purchaser of Xxxxxxx Adler's
obligations arising or to be performed after
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the Closing thereunder. Nothing contained in this Section 1.2 shall require
Purchaser to enter into, or to accept as a substitute for performance by
Xxxxxxx Xxxxx hereunder, any arrangement that would impose any additional
cost, expense or liability on Purchaser, or that would deprive Purchaser of
any benefits contemplated by this Agreement; provided, however, that nothing
herein shall require Purchaser to close the transactions contemplated hereby
in the event the failure to deliver any of the Purchased Assets would
constitute a failure to satisfy any of the conditions contained in Section
10.1.
1.3 EXCLUDED ASSETS. The Excluded Assets shall consist solely of
the following:
1.3.1 CLAIMS. Any claims (including benefits arising
therefrom) which are related solely to liabilities of Xxxxxxx Xxxxx which are
not Assumed Liabilities or which are related solely to Excluded Assets;
1.3.2 RECEIVABLES. All accounts, notes and other receivables
due from any Affiliate of Xxxxxxx Xxxxx or of the Company or from any
stockholders, directors, employees or any other Related Party of either of
them;
1.3.3 AGREEMENT RIGHTS. Sellers' rights under this Agreement
and any Additional Documents;
1.3.4 CORPORATE RECORDS. The corporate charter, minute and
stock record books and corporate seal of Xxxxxxx Xxxxx;
1.3.5 TAX REFUNDS. Xxxxxxx Adler's rights to claims for
refunds of Taxes;
1.3.6 INSURANCE. Subject to Section 11.1, all insurance
policies (including the proceeds thereof) owned by Xxxxxxx Xxxxx, except
that, at Purchaser's election, Xxxxxxx Xxxxx shall assign to Purchaser
(subject to the assignability provisions therein) health and medical
insurance policies owned by Xxxxxxx Xxxxx covering its employees;
1.3.7 PLAN ASSETS. Any assets held in trust by or for the
benefit of any current or former employees of Xxxxxxx Xxxxx under any
Employee Plan, other than assets of The Xxxxxxx, Xxxxx Company Cash or
Deferred Profit Sharing Plan ("401(K) PLAN") in the event such 401(k) Plan is
assumed by Purchaser at Purchaser's election in accordance with Section 7.7.2
or in the event Purchaser establishes a similar plan and elects to have the
assets of the 401(k) Plan transferred to Purchaser's new plan for such
employees;
1.3.8 TAX SHARING AGREEMENT; TAX RECORDS. Any rights or
benefits under any tax sharing agreements between Sellers and the original
income tax returns and other original income tax records of Xxxxxxx Xxxxx; and
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1.3.9 OTHER EXCLUDED ASSETS. All underground storage tanks
owned or used by Xxxxxxx Xxxxx and all such other assets as are listed in
SCHEDULE 1.3.9.
ARTICLE II LIABILITIES.
2.1 ASSUMPTION OF LIABILITIES. At the Closing, Purchaser shall
assume and agree to discharge and perform when due only the following
liabilities and obligations of Xxxxxxx Xxxxx as the same shall exist on the
Closing Date (collectively, the "ASSUMED LIABILITIES"):
2.1.1 BALANCE SHEET LIABILITIES. The following liabilities of
Xxxxxxx Xxxxx which are reflected on the Balance Sheet, and which have not
been paid or otherwise discharged prior to the Closing Date, but only to the
extent said liabilities are fully reflected or reserved against therein: (a)
accounts payable, (b) obligations under the capital lease described in item 1
of SCHEDULE 2.1.3, and (c) accrued vacation and, subject to Section 3.2.2,
accrued management bonuses for periods prior to July 1, 1998, in each case,
for those employees of Xxxxxxx Xxxxx who Purchaser hires immediately
following the Closing;
2.1.2 ORDINARY COURSE LIABILITIES. Liabilities and
obligations of Xxxxxxx Xxxxx of the type set forth in the Balance Sheet and
assumed pursuant to Section 2.1.1 above which are incurred between December
31, 1997 and the Closing Date in the usual and ordinary course of business of
Xxxxxxx Xxxxx and consistent with its past practice (other than management
bonuses accrued for any period after June 30, 1998), provided and only to the
extent that said liabilities and obligations are fully reflected or reserved
against in the Closing Statement; and
2.1.3 EXECUTORY LIABILITIES. Liabilities and obligations of
Xxxxxxx Xxxxx, after the Closing Date, under the executory portion of each of
the Contracts listed in SCHEDULE 2.1.3 to the extent Xxxxxxx Xxxxx has
provided to Purchaser true and complete copies thereof and is bound
thereunder on the Closing Date and provided each such Contract is part of the
Purchased Assets assigned to Purchaser pursuant to this Agreement; provided,
however, that Purchaser shall not assume any liability or obligation under
any such Contract described in Section 2.2.5; and further, provided that for
purposes of this Agreement, the executory portion of any Contract which is an
Assumed Liability shall not include any obligation, regardless of the fact
that payment may be due after the Closing, for taxes, expenses, or any other
matter which relates to any period prior to the Closing Date.
2.2 EXCLUDED LIABILITIES. Notwithstanding Section 2.1 (and
without implication that Purchaser is assuming any liability not expressly
excluded in this Section 2.2 and, where applicable, without implication that
any of the following would constitute Assumed Liabilities but for the
provisions of this Section 2.2), the following liabilities of Xxxxxxx Xxxxx
are excluded and shall not be assumed or discharged by Purchaser:
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2.2.1 TRANSACTION EXPENSES. Any liabilities for legal,
accounting and investment banking fees and other expenses incurred in
connection with the preparation of and performance under this Agreement and
the sale of the Purchased Assets to Purchaser, as described in Section 13.2
("TRANSACTION EXPENSES");
2.2.2 TAXES. Any liabilities for Taxes, including, without
limitation, liabilities arising as a result of the transfer of the Purchased
Assets or otherwise by virtue of the consummation of the transactions
contemplated hereby;
2.2.3 BREACH OF THIS AGREEMENT. Any liabilities of Xxxxxxx
Xxxxx to the extent that their existence or magnitude constitutes or results
in a breach of a representation, warranty or covenant made by either Seller
herein or in any agreement, instrument or document executed and/or delivered
by either Seller in connection herewith or contemplated hereby, including,
without limitation, the Stockholders' Agreement, or makes information
contained in any representations, warranties, Exhibit or Schedule hereto or
thereto substantively incorrect or incomplete (all such additional
agreements, instruments and documents executed or delivered by any party in
connection with this Agreement being called the "ADDITIONAL DOCUMENTS");
2.2.4 LIABILITY CLAIMS. Any liabilities relating to the
operation of the Business prior to the Closing, whether for injury to or
death of persons or damage to or destruction of property (including, without
limitation, any worker's compensation claim), for violation of any Rules, for
any matter relating to any past or present Employee Plan, including any
annuity contract or guarantee relating thereto or for any other matter
regardless of when said claim or liability is asserted, including, without
limitation, any claim for consequential damages in connection with the
foregoing; it being understood and agreed that any claim or liability
asserted after the Closing Date which arises out of or by virtue of the
conduct of the Business prior to the Closing (and does not result principally
from Purchaser's conduct following the Closing) shall be considered to be a
claim against or a liability of Xxxxxxx Xxxxx (whether for injury to or death
of persons or damage to or destruction of property or otherwise) and,
therefore, not assumed hereunder by Purchaser;
2.2.5 BREACH OF CONTRACT. Any liabilities (whether asserted
before or after Closing) for any breach of a representation, warranty or
covenant, or for any claim for indemnification, contained in any Contract
which is an Assumed Liability which Purchaser has agreed to perform to the
extent that such breach or claim arose out of or by virtue of performance (or
omission) thereunder by Xxxxxxx Xxxxx or any agent of Xxxxxxx Xxxxx prior to
the Closing, it being understood that, as between Xxxxxxx Xxxxx and
Purchaser, this Section 2.2.5 shall apply notwithstanding any provisions
which may be contained in any form of consent to the assignment of any such
Purchased Asset which, by its terms, imposes such liabilities upon Purchaser
and which assignment is accepted by Purchaser notwithstanding the presence of
such a provision, and that Xxxxxxx Adler's failure to discharge any such
liability shall entitle Purchaser to indemnification in accordance with the
provisions of Article IX;
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2.2.6 EMPLOYEE PLANS AND OBLIGATIONS. Except for accrued
vacation and bonus described in Section 2.1.1, and, in the event Purchaser
elects to assume the 401(k) Plan pursuant to Section 7.7.2, except for
contributions arising and relating to periods after the Closing Date under
the 401(k) Plan, any liabilities arising out of or in connection with any
employment agreement, executive compensation agreement, or any bonus,
pension, benefit, welfare, retirement, disability, insurance, collective
bargaining, deferred compensation or other Employee Plan or Labor Agreement,
relating to Xxxxxxx Adler's employees, whether oral or written, or any
liabilities arising out of or in connection with the termination of
employment of any employee by Xxxxxxx Xxxxx, or any liabilities for medical
disability or similar benefits (both long term and short term), whether
insured or self-insured, which arise by virtue of or in connection with an
employment relationship at any time with Xxxxxxx Xxxxx, regardless of when a
claim for such benefits is asserted, or any other obligation relating to
Xxxxxxx Adler's employees;
2.2.7 ENVIRONMENTAL CLAIMS. Any claim, action, suit or
proceeding arising from or related to the presence, generation, emission,
storage, treatment, transport or disposal of any Hazardous Substance from,
to, at, in, on or under any facility owned or used by Xxxxxxx Xxxxx on or
before the Closing Date and liabilities arising from violations of
Environmental Laws;
2.2.8 INSURANCE. Any liabilities for retrospective or similar
insurance premium adjustments;
2.2.9 PERFORMANCE. Any liabilities or obligations of Xxxxxxx
Xxxxx arising out of or relating to its performance under this Agreement
(regardless of whether such performance is required prior to or after the
Closing Date), including, without limitation, any liability or obligation
arising under Sellers' indemnification obligations under Article IX;
2.2.10 UNASSUMED EXECUTORY LIABILITIES. Any liabilities under
or associated with Contracts or other properties which are not listed in
SCHEDULE 2.1.3 or, if listed, which were not properly assigned to Purchaser
as contemplated by Section 1.2 above unless Purchaser notifies Xxxxxxx Xxxxx
of its election to retain the rights and benefits under such Contracts
notwithstanding any such improper assignment;
2.2.11 RELATED PARTY OBLIGATIONS. Any obligations of either
Seller under any promissory note payable to a Related Party or any guaranty
or surety obligation or agreement for the benefit of a Related Party; and
2.2.12 GENERAL PROVISION. Without limitation by the specific
enumeration of the foregoing, any debt, liability or other obligation of
Xxxxxxx Xxxxx or the Company, whether now or hereafter existing, known or
unknown, accrued or contingent, not expressly assumed by Purchaser pursuant
to the provisions of Section 2.1, including, without
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limitation, all liabilities of the type set forth on the Balance Sheet except
as expressly set forth in Section 2.1.1.
2.3 NO EXPANSION OF THIRD PARTY RIGHTS. The assumption by
Purchaser of the Assumed Liabilities shall in no way expand the rights or
remedies of any third party against Purchaser or Xxxxxxx Xxxxx as compared to
the rights and remedies, which such third party would have had against
Xxxxxxx Xxxxx had Purchaser not assumed such liabilities. Without limiting
the foregoing, the assumption by Purchaser of the Assumed Liabilities shall
not create any third party beneficiary rights. Xxxxxxx Xxxxx shall pay and
discharge when due (unless payment is subject to a bona fide dispute) or, as
contemplated by Section 9.2, reimburse Purchaser for, all liabilities of
Xxxxxxx Xxxxx which Purchaser has not specifically agreed to assume under
this Article II.
ARTICLE III PURCHASE PRICE.
3.1 CONSIDERATION; PAYMENT AT CLOSING. The aggregate
consideration to be paid by Purchaser for the Purchased Assets shall be the
Purchase Price plus the assumption of the Assumed Liabilities. The purchase
price (the "PURCHASE PRICE") shall be $16,500,000.00 minus the sum of the
Accrued Bonus Amount and any Potential Successor Taxes (the "CLOSING
PAYMENT"), reduced by the amount, if any, by which the Closing Net Book Value
is less than $15,250,000.00 and increased by the amount, if any, by which the
Closing Net Book Value exceeds $15,250,000.00. The Closing Payment shall be
payable in full at the Closing by means of a wire transfer of immediately
available funds.
3.2 CLOSING DATE BALANCE SHEET; CLOSING STATEMENT; BONUS
ADJUSTMENT.
3.2.1 CLOSING REPORTS. No later than 90 days after the
Closing, Xxxx Xxx, at its cost and expense, shall prepare and close the
financial books and records of the Business as of the close of business,
Connecticut time, on the Closing Date, and, based on the Books and Records,
shall prepare and deliver, or cause to be prepared and delivered, to the
Company, a balance sheet, dated as of the effective date of the Closing (the
"CLOSING DATE BALANCE SHEET"). Subject to SCHEDULE 3.3, the Closing Date
Balance Sheet shall be prepared in accordance with generally accepted
accounting principles, consistently applied in accordance with past practices
of Xxxxxxx Xxxxx ("GAAP"), shall present fairly the financial condition of
the Business as of the effective date of the Closing. In order that
Purchaser may cause the preparation of the Closing Date Balance Sheet and
Closing Statement, Purchaser and Sellers shall cause a physical count of
Xxxxxxx Adler's Inventory on hand as of the Closing Date and Xxxxxxx Xxxxx
shall cooperate and provide Purchaser, its representatives and agents with
access to the Inventory for this purpose. Representatives of Xxxxxxx Xxxxx
and its agents, including auditors, may be present during the Inventory
count. As used herein, the term "CLOSING STATEMENT" shall mean the Closing
Date Balance Sheet of the Business, adjusted to delete any items which are
not included in the calculation of Closing Net Book Value.
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Purchaser shall deliver to the Company the Closing Date Balance
Sheet and the Closing Statement, and if the Company objects to either, then
within 30 calendar days of its receipt of the Closing Date Balance Sheet and
Closing Statement, the Company shall give written notice (the "NOTICE") of
its objections to Purchaser. During such 30-day period, Purchaser and
Purchaser's accountants shall give the Company and its accountants access,
upon reasonable notice and during normal business hours, to all books,
records and work papers of Purchaser and its accountants related to the
preparation or review audit of the Closing Date Balance Sheet and Closing
Statement. If Purchaser has not received the Notice within such 30-day
period, Sellers shall be deemed to have no objection to the Closing Statement
and the Closing Statement shall become final and binding on the parties
hereto for all purposes of this Agreement. The parties shall negotiate in
good faith to resolve any disputes as promptly as practicable. If the
parties are unable to resolve all disputes within twenty calendar days of
receipt by Purchaser of the Notice, then only the unresolved disputes shall
be submitted to the New York office of Coopers & Xxxxxxx or if that firm
declines such engagement, another independent certified public accounting
firm mutually agreed to by the parties (the "INDEPENDENT ACCOUNTANT"). The
parties shall be entitled to provide the Independent Accountant with
supporting documentation in connection with resolution of such disputes. The
Independent Accountant shall, within 30 calendar days of its engagement,
provide a final and conclusive resolution of all unresolved disputes and
shall conform the Closing Statement accordingly. All references in this
Agreement to the Closing Statement shall mean the Closing Statement as
modified pursuant to this resolution procedure, as the case may be, and the
resolution of the Independent Accountant shall be binding on the parties
hereto. The fees and expenses of the Independent Accountant shall be borne
equally by Purchaser and the Company. If the Closing Payment exceeds the
Purchase Price based on the Closing Statement as finally determined pursuant
to this Section 3.2, then Sellers shall be jointly and severally liable to
promptly pay the amount of such excess to Purchaser; if the Purchase Price as
so determined exceeds the Closing Payment, Purchaser shall promptly pay the
amount of such excess to Xxxxxxx Xxxxx. All sums payable under this Section
3.2.1 and 3.2.2 below shall be paid by wire transfer of immediately available
funds on the first business day following such final determination.
3.2.2 ACCRUED MANAGEMENT BONUS. As promptly as
practicable following June 30, 1998 or the Closing Date, whichever is later,
Purchaser shall calculate the bonuses owed in accordance with the terms of
The Xxxxxxx, Xxxxx Bonus Program ("BONUS PLAN") to management employees of
Xxxxxxx Xxxxx who were hired by Purchaser immediately following the Closing
and who are employed by Purchaser on June 30, 1998 ("BONUS RECIPIENTS"). If
Xxxxxxx Adler's Pro Rata Share of the Actual Bonus Amount exceeds the Accrued
Bonus Amount, then Sellers shall be jointly and severally liable to and shall
promptly pay such excess to Purchaser; and if the Accrued Bonus Amount
exceeds Xxxxxxx Adler's Pro Rata Share of the Actual Bonus Amount, Purchaser
shall promptly pay such excess amount to Xxxxxxx Xxxxx. As used herein, the
term "XXXXXXX ADLER'S PRO RATA SHARE OF THE ACTUAL BONUS AMOUNT" means the
amount of bonus payments due Bonus Recipients for the twelve-month period
ending June 30, 1998 (calculated in accordance with the Bonus Plan)
multiplied by a fraction, the numerator of which is the number of days from
July 1,
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1997 through the Closing Date and the denominator of which is 365. Bonuses
owed pursuant to the Bonus Plan shall be paid by Purchaser in the ordinary
course of business consistent with Xxxxxxx Adler's past practice.
3.3 CLOSING NET BOOK VALUE. As used herein, the term "CLOSING NET
BOOK VALUE" shall mean an amount, calculated, as of the close of business,
Connecticut time, on the Closing Date, in the manner set forth in SCHEDULE
3.3, by which the assets of Xxxxxxx Xxxxx exceed the liabilities of Xxxxxxx
Xxxxx, as reflected on the Closing Statement; provided, however, that to the
extent the Closing Date Balance Sheet reflects accrued vacation for employees
of Xxxxxxx Xxxxx who are not hired by Purchaser ("INAPPLICABLE ACCRUED
VACATION"), the Closing Net Book Value shall be increased by the amount of
the Inapplicable Accrued Vacation.
3.4 ALLOCATION. Within 30 days of the final determination of the
Closing Net Book Value, Purchaser shall provide Sellers with an allocation of
the Purchase Price among the Purchased Assets which allocation shall be
mutually agreeable to the parties hereto. The parties shall file a Form 8594
with the Internal Revenue Service ("IRS") reflecting such allocation in
accordance with Section 1060 of the Internal Revenue Code, as amended (the
"CODE").
ARTICLE IV CLOSING.
4.1 THE CLOSING. Subject to Article XII, the closing of the
transactions contemplated hereby (the "CLOSING") shall take place at 10:00
A.M., Chicago time, on May 30, 1998 (or if the conditions to the Closing
shall not have been satisfied or waived by such date then as soon as
practicable thereafter, but in no event later than September 15, 1998 (the
"CLOSING DATE")), at the offices of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, 0000 Xxxxx
Xxxxx, Xxxxxxx, Xxxxxxxx, or at such other time or place as the parties
hereto shall agree in writing. The Closing shall be deemed effective at the
start of business on the date of the Closing.
4.2 SELLERS' DELIVERIES. Subject to the conditions set forth in
this Agreement, at the Closing, simultaneous with Purchaser's deliveries
hereunder, Sellers shall deliver to Purchaser all of the following documents
and instruments, all in form and substance reasonably satisfactory to
Purchaser and its counsel:
4.2.1 CORPORATE RESOLUTIONS. A copy of directors' and
stockholders' resolutions for each Seller, all certified as of the Closing
Date by such Seller's corporate secretary or assistant secretary as having
been duly and validly adopted and as being in full force and effect on the
Closing Date, authorizing the execution and delivery by such Seller of this
Agreement, the Additional Documents and the performance by such Seller of the
transactions contemplated hereby and thereby;
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4.2.2 CLOSING CERTIFICATE. A certificate executed on behalf
of each Seller by its chief executive officer, to the effect that (i) the
representations and warranties of Sellers contained herein were true on the
date hereof, and are true on the Closing Date with the same effect as though
made on and as of the Closing Date; and (ii) Sellers have performed and
complied with all of the agreements and covenants to be performed or complied
with by each of them under this Agreement prior to and as of the Closing Date;
4.2.3 INSTRUMENTS OF TRANSFER. Duly-executed Warranty Bills
of Sale, Warranty Deeds, Assignments of Trademarks and Patents and all such
other instruments of sale, assignment and transfer as are necessary or
appropriate to sell, assign and transfer to Purchaser and to vest in
Purchaser good and marketable title to the Purchased Assets (in recordable
form, where appropriate), including, without limitation, certificates of
title or origin (or like documents) with respect to all vehicles and other
Equipment included in the Purchased Assets for which a certificate of title
or origin is required in order for title thereto to be transferred to
Purchaser;
4.2.4 UCC RELEASES. UCC termination statements releasing each
of the Liens upon the Purchased Assets other than Permitted Liens;
4.2.5 PERMITS. All special permits or licenses issued by the
municipality in which each parcel of Leased Real Property is located which
are required in connection with the operation of the Business (including any
and all environmental protection permits);
4.2.6 CASH; NEGOTIABLE INSTRUMENTS. All Cash and Cash
Equivalents and notes, checks, drafts, chattel paper, and other instruments
included in the Purchased Assets of which Xxxxxxx Xxxxx is the payee, holder
or assignee, all duly endorsed by Xxxxxxx Xxxxx, to the order of Purchaser;
4.2.7 NAME CHANGE. Evidence that Xxxxxxx Xxxxx shall have
changed its corporate name to a name bearing no resemblance to its present
corporate name effective as of the Closing Date; and
4.2.8 PAYOFF LETTERS. Letter from Bank Boston, if applicable,
setting forth, as of the Closing Date, the amount of principal and interest
necessary to pay in full all indebtedness of each Seller to such person or
entity.
4.2.9 TAX COMPLIANCE. Evidence of compliance with Section
7.13 and all certificates, clearances, correspondence and the like relating
to Sellers' notices and request pursuant to such Section.
4.2.10 ADDITIONAL AGREEMENTS. All such other documents and
instruments as Purchaser or its counsel shall reasonably request in
connection with the consummation of the transactions contemplated by this
Agreement.
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4.3 PURCHASER'S DELIVERIES. Subject to the conditions set forth in
this Agreement, at the Closing, simultaneous with the deliveries of Sellers
hereunder, Purchaser shall deliver all of the following documents and
instruments, all in form and substance reasonably satisfactory to Sellers and
their counsel:
4.3.1 CORPORATE RESOLUTIONS. A copy of directors' resolutions
for Purchaser, certified as of the Closing Date by Purchaser's corporate
secretary or assistant secretary as having been duly and validly adopted and
as being in full force and effect on the Closing Date, authorizing the
execution and delivery by Purchaser of this Agreement, the Additional
Documents and the performance by Purchaser of the transactions contemplated
hereby and thereby;
4.3.2 CLOSING CERTIFICATE. A certificate executed on behalf
of Purchaser by an officer, dated the Closing Date, to the effect that (i)
the representations and warranties of Purchaser contained herein were true
when made on the date hereof, and are true on the Closing Date with the same
effect as though made on and as of the Closing Date; and (ii) Purchaser has
performed and complied with all of the agreements and covenants to be
performed or complied with by it under this Agreement prior to and as of the
Closing Date;
4.3.3 CLOSING PAYMENT. The Closing Payment as provided in
Article III; and
4.3.4 ASSUMPTION AGREEMENT. A duly-executed assumption
agreement pursuant to which Purchaser assumes the Assumed Liabilities in
accordance with Section 2.1.
4.3.5 ADDITIONAL AGREEMENTS. All such other documents and
instruments as Sellers or their counsel shall reasonably request in
connection with the consummation of the transactions contemplated by this
Agreement.
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers hereby jointly
and severally represent, warrant and covenant to Purchaser as follows:
5.1 CORPORATE ORGANIZATION AND AUTHORITY. Each Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite power and authority
(corporate and other) to own, lease and operate its properties and assets and
to conduct its business as now being conducted. Each Seller has qualified as
a foreign corporation and is in good standing under the laws of all
jurisdictions where the nature of the Business or the nature and location of
its assets requires such qualification, all as set forth in SCHEDULE 5.1,
except in those jurisdictions where the failure to qualify would not have a
Material Adverse Effect.
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5.2 CAPITALIZATION AND SUBSIDIARIES.
(a) All of the issued and outstanding capital stock of
Xxxxxxx Xxxxx is owned beneficially and of record by the Company. The
Company owns no subsidiary other than Xxxxxxx Xxxxx and Xxxxxxx Xxxxx owns no
subsidiaries. SCHEDULE 5.2(a) sets forth all of the securities (marketable or
otherwise) and other instruments, if any (as those terms are defined in the
Uniform Commercial Code as enacted in the State of Connecticut), owned by
Xxxxxxx Xxxxx.
(b) The Stockholders own, of record and beneficially, the
shares of capital stock of the Company set forth in SCHEDULE 5.2(b), which
shares represent 36.7% of the Company's outstanding voting securities as of
the date hereof and the percentage of the Company's voting securities on a
Fully-Diluted Basis as of the date hereof, as of June 30, 1998 and as of
September 15, 1998, all as set forth in SCHEDULE 5.2(b). Further, the
Stockholders own, of record and beneficially, the rights to acquire capital
stock of the Company, whether pursuant to the exercise of warrants,
conversion of securities, exercise of stock options or otherwise
(collectively, "COMMON STOCK EQUIVALENTS") as set forth in SCHEDULE 5.2(b),
which Schedule identifies the terms of such Common Stock Equivalents,
including, without limitation, (i) the time and price at which the Common
Stock Equivalents may be exercised, converted or exchanged to acquire capital
stock of the Company and (ii) the voting rights and powers of all capital
stock issuable upon such exercise, conversion or exchange. Assuming that no
Stockholder acquires capital stock of the Company after the date hereof
pursuant to the exercise, conversion or exchange of Common Stock Equivalents
or otherwise, the Stockholders own, of record and beneficially, on a
Fully-Diluted Basis, 34.88% of the Company's outstanding voting securities as
of the date hereof and would own as of June 30, 1998 and as of September 15,
1998 the percentage of the Company's outstanding voting securities set forth
in SCHEDULE 5.2(b). Schedule 5.2(b) further sets forth all outstanding
capital stock and Common Stock Equivalents of the Company (and the terms of
such Common Stock Equivalents) as of the date hereof. No voting securities
of the Company are entitled to vote by class or have any voting right or
preference different, on a per share basis, than shares of the Company's
common stock, par value $0.1 per share, with respect to the matters described
in the last sentence of this Section 5.2(b). There are no voting trusts or
other agreements (other than the Stockholders' Agreement) or understandings
to which either Seller is a party or of which either Seller has knowledge
with respect to the capital stock of either Seller. No Seller is required to
redeem, repurchase or otherwise acquire shares of capital stock of either
Seller at any time prior to September 16, 1998. For purposes of this SECTION
5.2(b), all references to voting securities means shares of capital stock of
the Company having the voting power and rights with respect to Significant
Transactions, including, without limitation, matters described in Section 271
of the Delaware General Corporation Law, as amended (the "DGCL").
5.3 AUTHORITY RELATIVE TO AGREEMENT. Each Seller has the corporate
power and authority to enter into this Agreement and the Additional
Documents, and to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the
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Additional Documents and the performance by each Seller of its respective
obligations hereunder and thereunder have been duly authorized by its Board
of Directors and, in the case of Xxxxxxx Xxxxx, its sole stockholder, and no
other corporate proceedings on the part of either Seller are necessary to
authorize such execution, delivery and performance other than the approval of
the stockholders of the Company. This Agreement and the Additional Documents
have been duly executed by each Seller and to Sellers' knowledge, the
Stockholders' Agreement has been duly executed by each Stockholder, and,
assuming the due authorization, execution and delivery by Xxxx Xxx, are the
valid and legally binding obligations of each of them (limited, in the case
of the Stockholders, to the Stockholders' Agreement), and are enforceable
against each of them in accordance with their terms.
5.4 ABSENCE OF CONFLICTS. Except as disclosed in SCHEDULE 5.4, the
execution, delivery and performance by each Seller of this Agreement and the
Additional Documents, and, to Sellers' knowledge, the execution, delivery and
performance by the Stockholders of the Stockholders' Agreement, and the
transactions contemplated hereby and thereby, do not and will not conflict
with or result in any violation of or constitute a breach or default under
any term of the charter documents or by-laws of either Seller, of any
agreement, permit or other instrument to which either Seller or, to Seller's
knowledge, any Stockholder is a party, or by which either Seller or, to
Seller's knowledge, any Stockholder is bound or to which any of the Purchased
Assets or the Business is subject, or any order, judgment or decree of any
court or other Governmental Authority to which either Seller, the Purchased
Assets or the Business is bound or subject, or any law, statute or regulation
of any Governmental Authority, and will not result in the creation of any
Lien upon any of the Purchased Assets.
5.5 BOOKS AND RECORDS. Except as set forth in SCHEDULE 5.5, the
Books and Records are true and complete, and have been maintained in each
Seller's usual, regular and ordinary manner, in accordance with GAAP, and all
transactions of Xxxxxxx Xxxxx are properly reflected therein. All Books and
Records are (and at the Closing will be) located at 00 Xxxxx Xxxxxx, Xxx
Xxxxx, Xxxxxxxxxxx.
5.6 FINANCIAL STATEMENTS. Sellers have delivered to Purchaser true
and complete (i) copies of the audited consolidated balance sheets of the
Company and its subsidiaries as of the last day of each of the three fiscal
years of the Company for the periods ended June 30, 1997, 1996 and 1995,
respectively, together with the related audited consolidated statements of
income, stockholders' equity and changes in cash flows for such fiscal years,
and the notes thereto, accompanied by the reports thereon of the Company's
independent public accountants ("AUDITED STATEMENTS"), and (ii) copies of the
unaudited balance sheet of Xxxxxxx Xxxxx as of December 31, 1997 (the
"BALANCE SHEET"), together with the related unaudited consolidated statements
of income, stockholders' equity and changes in cash flows for the six-month
period ended on such date, certified by the President of Xxxxxxx Xxxxx
("UNAUDITED STATEMENTS"). The Audited Statements, including the notes
thereto, (a) were prepared in accordance with GAAP, (b) present fairly the
financial position, results of operations and changes in cash flows of the
Company and its subsidiaries as of such dates and for the periods then ended,
(c) are accurate, correct and complete and in accordance with
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the books and records of the Company and its subsidiaries, and (d) can be
reconciled with the financial statements and the financial records maintained
and the accounting methods applied by the Company and its subsidiaries for
federal income tax purposes.
The Unaudited Statements, (w) were prepared in accordance with GAAP
(except for immaterial year-end adjustments and the absence of notes
thereto), (x) present fairly the financial position, results of operations
and changes in cash flows of Xxxxxxx Xxxxx as of such date and for the period
then ended, (y) are accurate, correct and complete and in accordance with the
books and records of Xxxxxxx Xxxxx, and (z) can be reconciled with the books
and records, financial statements and the financial records maintained and
the accounting methods applied by the Company and its subsidiaries for
federal income tax purposes.
5.7 ACCOUNTS RECEIVABLE. All outstanding Accounts Receivable
reflected on the Balance Sheet (and which will be reflected on the Closing
Date Balance Sheet) (i) have arisen (and will arise) in bona fide
transactions, (ii) are (and will be) valid claims against account debtors for
goods or services delivered or rendered, subject to no defenses, offsets or
counterclaims, except as reserved against on the applicable Balance Sheet in
accordance with GAAP (the "RESERVES"), and (iii) are collectible in the
ordinary course of Xxxxxxx Adler's business. All receivables arose (and will
have arisen prior to the Closing Date) in the ordinary course of business and
none of the obligors of such receivables have refused or given notice that it
refuses to pay the full amount thereof. No receivables are subject to prior
assignment, claim or other Lien, other than as described in SCHEDULE 5.7.
Xxxxxxx Xxxxx has no liability for any refunds, allowances, returns or
discounts in respect of products manufactured, processed, distributed,
shipped or sold by it or for its account except to the extent of the reserves
and liabilities therefor reflected on the applicable Balance Sheet in
accordance with GAAP and except as otherwise incurred in the ordinary course
of business. Where receivables arose out of secured transactions, all
financing statements and other instruments required to be filed or recorded
to perfect the title or security interest of Xxxxxxx Xxxxx have been properly
filed and recorded. After the Closing Date, Purchaser will not have any
obligation (whether in bankruptcy or insolvency proceedings or otherwise) to
repay any receivables collected by Xxxxxxx Xxxxx prior to the Closing Date or
any receivables reflected on the Closing Date Balance Sheet which Purchaser
collects after the Closing Date.
5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
5.8.1 MATERIAL ADVERSE CHANGES. Except as set forth in
SCHEDULE 5.8.1, since June 30, 1997, there has not been, nor does either
Seller have reason to know of, any development (including, without
limitation, consummation of the transactions contemplated hereby) or
threatened development (other than general economic conditions) of a nature
which may cause any material adverse change in the financial condition, net
worth, assets, liabilities, personnel, prospects or operations (including,
without limitation, Xxxxxxx Adler's relationship with suppliers, employees,
customers and others) of the Business or the ability of either Seller to
perform this Agreement and the Additional
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Documents or, to Sellers' knowledge, the ability of any Stockholder to
perform the Additional Documents (collectively, "MATERIAL ADVERSE EFFECT").
5.8.2 CERTAIN EVENTS. Except as set forth in SCHEDULE 5.8.2,
since June 30, 1997, Xxxxxxx Xxxxx has conducted (and from the date hereof
through the Closing, will conduct) the Business only in the ordinary course
using its best efforts to maintain and enhance the Business and, without
limiting the foregoing, neither Seller has (and from the date hereof through
the Closing, neither Seller will have):
(a) created or suffered to exist any Liens or restrictions with
respect to any of the Purchased Assets;
(b) sold, leased to others, licensed to others, disposed of, or
otherwise transferred any of Xxxxxxx Adler's assets or properties which,
but for such sale, lease, license, disposal or transfer, would constitute a
Purchased Asset, except for sales of Inventory in the usual and ordinary
course of the Business;
(c) suffered any material loss, or material interruption in use, of
any material asset or property of the Business (whether or not covered by
insurance) on account of fire, flood, riot, strike or other hazard or Act
of God;
(d) purchased, called, redeemed or otherwise acquired, or declared or
paid any dividends or other distributions on or with respect to, any shares
of capital stock or other securities of either Seller, except that the
foregoing shall not apply to (i) payments made by Xxxxxxx Xxxxx to the
Company pursuant to that certain tax sharing agreement between them, (ii)
payments of interest or principal made by Xxxxxxx Xxxxx to the Company
(which principal and interest payments will not exceed $500,000.00 from
March 3, 1998 to Closing, or (iii) payments by the Company of dividends on
preferred stock of the Company in accordance with the terms of such
preferred stock;
(e) increased, other than in the ordinary course of business
consistent with past practices of Xxxxxxx Xxxxx, the compensation,
commission, bonus, or other direct or indirect remuneration (or the rate
thereof) payable or to become payable to any officers, employees, directors
or agents of the Business or adopted any Employee Plan or Labor Agreement
or amended any Employee Plan or Labor Agreement to increase remuneration or
other benefits payable thereunder;
(f) made any material change in the conduct or nature of any aspect
of the Business whether made in the ordinary course of business or not and
whether or not the change had a Material Adverse Effect;
(g) waived any material rights relating to the Business or arising
under or in connection with any of the Purchased Assets;
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(h) acquired any assets or properties other than in the ordinary
course of the Business;
(i) entered into any merger, consolidation, recapitalization, or
other business combination or reorganization, except, in the case of the
Company, the merger of ASI Sub, Inc. into the Company or a Permitted
Company Transaction;
(j) made any loans, advances or capital contributions to or
investments in any person or entity, except that the foregoing shall not
prohibit the Company from doing any of the foregoing so long as the Company
is in full compliance with the other provisions of this Section 5.8.2 and
of this Agreement before and after such action;
(k) induced any key employee of Xxxxxxx Xxxxx to leave his or her
employment, or acted to otherwise adversely affect the relations of Xxxxxxx
Xxxxx with any key employee;
(l) accelerated collection of receivables, prepaid or accelerated
payment of Indebtedness for Borrowed Funds, delayed payment of payables in
a manner inconsistent with past practices, changed credit practices or done
anything to materially and adversely affect the relationship of Xxxxxxx
Xxxxx to any of its customers or suppliers;
(m) failed to replenish its inventories and supplies in a normal and
customary manner consistent with its prior practice and any prudent
business practices prevailing in the industry, or made any purchase
commitment in excess of the normal ordinary and usual requirements of the
Business or at any price in excess of the then- current market price or
upon terms and conditions more onerous than those usual and customary in
the industry or made any change in its selling, pricing, advertising or
personnel practices inconsistent with its prior practice and prudent
business practices prevailing in the industry;
(n) made any change in any method of accounting or accounting
practice, except as may be required by law and after written notice to
Purchaser;
(o) discharged or satisfied any Lien other than those then required
to be discharged or satisfied, or paid any obligation or liability,
absolute, accrued, contingent or otherwise, whether due or to become due,
other than current liabilities for trade or business obligations shown on
the Balance Sheet and current liabilities for trade or business obligations
incurred since the date of the Balance Sheet in the ordinary course of the
Business and consistent with prior practices;
(p) entered into any transaction, agreement, contract or
understanding with any Related Party affecting the Business other than in
the ordinary course of business
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or altered the terms of any transaction, agreement, contract or
understanding with any Related Party;
(q) taken any action or omitted to take any action which action or
omission could dilute, reduce or adversely affect the aggregate voting
power or rights, on a Fully-Diluted Basis, of the shares of capital stock
held of record or owned beneficially by the Stockholders as of the date
hereof;
(r) without limiting the foregoing, entered into any material
transaction (except as contemplated by this Agreement) affecting any of the
Purchased Assets or the Business, operations, prospects or financial
condition of either Seller, other than in the usual and ordinary course of
business; or
(s) except for this Agreement, entered into any oral or written
agreement, contract, commitment, arrangement or understanding with respect
to any of the matters described in clauses (a) through (r) above.
5.9 COMPLIANCE WITH LAWS.
5.9.1 GENERAL. Except as set forth in SCHEDULE 5.9.1, Xxxxxxx
Xxxxx is not and has not been in violation of, and the Business has been and
is being conducted in accordance with, all federal, state, municipal, foreign
and other laws, regulations, orders and other legal requirements applicable
thereto (including, without limitation, laws and regulations relating to
occupational health and safety, equal employment opportunities, fair
employment practices and the environment) (collectively, "RULES"), the
failure to comply with which could have a Material Adverse Effect, and
neither Seller has knowledge or reason to know of, nor has either Seller
received notice of, any violation or alleged violation by either Seller of
any Rule or that either Seller is in default with respect to any order,
judgment, award, injunction or decree of any court or Governmental Authority
or arbitrator, applicable, in any such case, to either Seller, the Business
or any of the Purchased Assets.
5.9.2 HAZARDOUS SUBSTANCES. Without limiting Section 5.9.1,
and notwithstanding any matters disclosed in SCHEDULE 5.9.2:
(a) Xxxxxxx Xxxxx has been at all times and is in compliance with the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorizing Act of 1986, the Federal Water
Pollution Control Act, the Clean Air Act, as amended, and all other
applicable federal, state and local laws relating to pollution or
protection of public health, welfare and the environment, including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of toxic or hazardous substances or hazardous wastes or
other pollutants, contaminants, petroleum products or chemicals
(collectively, "HAZARDOUS SUBSTANCES") into the environment (including,
without limitation, ambient air, surface
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water, ground water, land surface or sub-surface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances
(collectively the "ENVIRONMENTAL LAWS").
(b) Xxxxxxx Xxxxx has obtained and is in compliance with all permits,
licenses and other authorizations which it is required to obtain and
maintain with respect to the operation of the Business under the
Environmental Laws, all of which are listed in SCHEDULE 5.9.2, including,
without limitation, those which are required of Xxxxxxx Xxxxx (i) to
operate or install any equipment or facilities operated or installed by
Xxxxxxx Xxxxx, and (ii) to generate, store, handle, transport, discharge,
emit or dispose of Hazardous Substances used or generated by the Business
and its assets (the "ENVIRONMENTAL PERMITS"), and a true and complete list
of such Environmental Permits is set forth in SCHEDULE 5.9.2 hereto.
(c) There are no polychlorinated biphenyls or asbestos generated,
treated, stored, disposed of, or otherwise deposited in or located on any
of the Leased Real Property and there are no above ground or underground
storage tanks located on any of the Leased Real Property, except as shown
on SCHEDULE 5.9.2 hereto.
(d) There has been no "release" pursuant to the Environmental Laws,
including but not limited to 42 U.S.C. Section 9603(a) or 40 C.F.R.
Section 264, Subpart F or, from or under any of the Leased Real Property or
any other property from which the Business has been or is being conducted.
(e) Neither Seller has received any notice or other information that
it has any potential liability with respect to the cleanup of any site at
which Hazardous Substances have been generated, treated, stored,
discharged, emitted or disposed of, and there are no past or present
events, conditions or circumstances which may interfere with or prevent
compliance or continued compliance by Xxxxxxx Xxxxx, or by Purchaser
conducting, after the Closing, the Business in a manner similar to that of
Xxxxxxx Xxxxx in accordance with applicable current Environmental Laws or
with any order, decree, judgment, injunction, notice or demand issued,
entered, promulgated or approved thereunder, or which may give rise to any
common law or other legal liability, including, without limitation,
liability under any current Environmental Laws or which otherwise form the
basis under the current law of any meritorious claim, action, demand, suit,
proceeding, hearing, notice of violation or investigation, based on or
related to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge,
release or threatened release into the environment, of Hazardous Substances
by either Seller or as a result of any act or omission of either Seller.
(f) Xxxxxxx Xxxxx has made available, and Purchaser has had access
to, a materially correct summary of all available information on Hazardous
Substances used by Xxxxxxx Xxxxx in the conduct of the Business.
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(g) Xxxxxxx Adler's current and past disposal practices are in
compliance with all applicable Environmental Laws.
(h) All environmental assessment or impact reports on the Leased Real
Property done for or on behalf of or received by Xxxxxxx Xxxxx within the
last five years of the date of this Agreement are listed on SCHEDULE 5.9.2
hereto.
5.10 TAXES. Each Seller has properly completed and filed on a
timely basis and in correct form all tax returns (federal, provincial,
state, county, local and other) relating to all excise, payroll, real
estate, capital stock, intangible, value-added, income, sales, use,
service, employment, property and, without limitation of the foregoing,
all other taxes of every kind and nature which such Seller has been
required to file. No claim with respect to the Business or the Purchased
Assets has ever been made by an authority in a jurisdiction where Sellers
do not file Tax returns that either Seller is or may be subject to
taxation by that jurisdiction. All taxes of the type herein referred to
(whether or not requiring the filing of returns), including all deficiency
assessments, additions to tax, penalties and interest (collectively,
"TAXES"), have been paid to the extent due or are being contested in the
manner permitted by applicable law, and to the extent not due or not paid
because of such contest, have been properly accrued on such Seller's books
and records and segregated to the extent required by sound accounting
practice. No federal, provincial, state, county, local or other Tax
return of either Seller is being audited. Neither Seller has received any
notice of and neither Seller has any knowledge or reason to know of any
tax deficiency proposed or threatened against either Seller. No Tax Liens
exist (or at any time could exist) on or as to any of the Purchased Assets
on account of any Taxes due or to become due at any time from either
Seller.
5.11 UNDISCLOSED LIABILITIES. Xxxxxxx Xxxxx has no obligation
or liability, absolute or contingent, known or unknown, liquidated or
unliquidated, whether due or to become due and regardless of when or by
whom asserted, not shown or provided for in the Balance Sheet, except for
(i) liabilities which are immaterial (individually and in the aggregate)
to the Business, its financial condition, net worth, assets, liabilities,
personnel, prospects or operations, and arose in the ordinary course of
business, (ii) the Transaction Expenses, (iii) current liabilities
incurred in the usual and ordinary course of business subsequent to
December 31, 1997, and (iv) liabilities comprising Assumed Liabilities.
As of the Closing Date, Xxxxxxx Xxxxx shall have no obligation or
liability, absolute or contingent, known or unknown, not shown or provided
for in the Closing Date Balance Sheet, except for the Transaction
Expenses, and except for liabilities under the executory portion of any
Contract by which Xxxxxxx Xxxxx is bound on the Closing Date and (a) which
was made in the usual and ordinary course of business of Xxxxxxx Xxxxx,
(b) which is part of the Purchased Assets assigned to Purchaser pursuant
to this Agreement, (c) which, if required by this Agreement, is disclosed
in a Schedule hereto, and (d) the existence of which does not otherwise
constitute or result from a breach of any representation, warranty or
covenant of this Agreement.
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5.12 TITLE TO ASSETS. Xxxxxxx Xxxxx has good and marketable
title to all of the Purchased Assets, in each case free and clear of all
Liens except Liens set forth in SCHEDULE 5.12. Upon transfer of the
Purchased Assets to Purchaser at Closing, Purchaser will have good and
marketable title to all of the Purchased Assets, free and clear of all
Liens other than Permitted Liens.
5.13 LEASED REAL PROPERTY. Xxxxxxx Xxxxx owns no real property.
SCHEDULE 5.13 sets forth a true and complete list of all real property
leased or subleased by Xxxxxxx Xxxxx (the "LEASED REAL PROPERTY"),
including identification of the lease or sublease, street address and list
of contracts, agreements, leases, subleases, options and commitments, oral
or written, affecting such real estate or any interest therein to which
Xxxxxxx Xxxxx is a party or by which any of its interests in real property
is bound (the "REAL PROPERTY LEASES"). Xxxxxxx Xxxxx is in peaceable
possession of the Leased Real Property and has performed all obligations
required to be performed by it under each Real Property Lease which is a
Purchased Asset and has performed in all material respects all obligations
required to be performed by it under any other Real Property Leases.
Except as disclosed on SCHEDULE 5.13, neither the Real Property Leases nor
the leasehold interest of Xxxxxxx Xxxxx with respect to the Leased Real
Property is subject to any Liens which have arisen out of any action or
omission taken by Xxxxxxx Xxxxx; and none of such Leased Real Property is
subject to any easements, rights of way, licenses, grants, building or use
restrictions, exceptions, reservations, limitations or other impediments
which materially and adversely affect the value to Xxxxxxx Xxxxx of the
leasehold interest therein or which materially interfere with or impair
the present and continued use thereof in the usual and normal conduct of
the Business as presently conducted.
5.14 STRUCTURAL DEFECTS. To the best knowledge of Sellers,
except as set forth in SCHEDULE 5.14, there are no structural or other
material physical defects or deficiencies in the condition of any Leased
Real Property or improvements thereon, or in any portion of any of the
foregoing, which have not been corrected.
5.15 EQUIPMENT. Except for Equipment which has been fully
depreciated on the Balance Sheet, the Equipment is (and will be as of the
Closing) in working condition and repair, ordinary wear, tear and
maintenance excepted. Other than property subject to the Personal Property
Leases, Xxxxxxx Xxxxx does not hold or use any machinery, equipment,
inventory, motor vehicles, furniture, fixtures, or other tangible personal
property in the Business which is owned by any person or entity, other
than Xxxxxxx Xxxxx. All Equipment comprising part of the Purchased Assets
is (and will be as of the Closing) physically located as set forth on
SCHEDULE 5.15. No Equipment (other than a motor vehicle) has been removed
from the Leased Real Property since December 31, 1997. Xxxxxxx Xxxxx owns
no motor vehicles or other Equipment for which a certificate of title or
origin is required in order to transfer title to Purchaser.
5.16 PERSONAL PROPERTY LEASES. Set forth in SCHEDULE 5.16 is a
true and complete list of all Personal Property Leases. Xxxxxxx Xxxxx is
not in default with respect to
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any Personal Property Lease, and no event has occurred which constitutes,
or with due notice or lapse of time or both may constitute, a default by
Xxxxxxx Xxxxx under any such Personal Property Lease. SCHEDULE 5.16 sets
forth all of the accrued and unpaid obligations and other liabilities of
Xxxxxxx Xxxxx on or with respect to any of such Personal Property Leases
through the date hereof.
5.17 INVENTORY. All items of Inventory reflected on the Balance
Sheet, or acquired by Xxxxxxx Xxxxx after the date thereof and prior to
the Closing, (i) are (and will be) of a quality and quantity useable or
saleable in the ordinary course of business and are (and will be) of a
quantity sufficient to enable Purchaser to carry on the Business as
currently conducted, (ii) are (and will be) carried at amounts which
reflect valuations pursuant to Xxxxxxx Adler's normal inventory valuation
policy of stating the inventory at the lower of cost or market on a
first-in-first-out basis, all in accordance with GAAP, and (iii) do not
include any obsolete or defective materials or any inventory items which
should be written-off or written-down by Xxxxxxx Xxxxx for which there is
not (and will not be) an adequate reserve calculated in accordance with
GAAP.
5.18 RESERVE FOR RETURNS. Except as set forth in SCHEDULE 5.18,
the reserve for returns of Inventory reflected on the Balance Sheet (and
to be reflected on the Closing Date Balance Sheet) is (and will be)
adequate and in accordance with GAAP.
5.19 INTELLECTUAL PROPERTY. Set forth in SCHEDULE 5.19 is a
true and complete list of all Intellectual Property, which list includes a
summary description of each item and specifies, where applicable, the date
granted or applied for, the expiration date and the correct status
thereof. There is no restriction affecting the use of any of the
Intellectual Property by Xxxxxxx Xxxxx, and no license has been granted
with respect thereto. Each item of Intellectual Property is valid and in
good standing, is not subject to any Liens, is not currently being
challenged or infringed, is not involved in any pending or threatened
administrative or judicial proceeding, and does not conflict with any
rights of any other person or entity. Each item of Intellectual Property
is freely transferable by Xxxxxxx Xxxxx to Purchaser without the consent
of any third party, and the Intellectual Property is sufficient in all
respects to permit the continued lawful conduct by Purchaser of the
Business in the manner now conducted by Xxxxxxx Xxxxx, and Xxxxxxx Xxxxx
has not violated and is not now violating any of the terms or conditions
under which any Intellectual Property was acquired, obtained or granted.
Xxxxxxx Xxxxx is not in default or in violation with respect to any of the
Intellectual Property or the terms or conditions by which such
Intellectual Property was acquired or obtained, and no event has occurred
which constitutes, or with due notice or lapse of time or both may
constitute, a default by Xxxxxxx Xxxxx under or a violation of any item of
Intellectual Property. None of the products or operations of Xxxxxxx
Xxxxx in the conduct of the Business involves any infringement of any
proprietary right of any other person or entity. Neither Seller has any
knowledge or any reason to know of any fact which could give rise to a
claim of infringement by any person or entity relating to the ownership,
licensing or use of the Intellectual Property by Xxxxxxx Xxxxx.
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5.20 LICENSES. Set forth in SCHEDULE 5.20 is a true and
complete list of all Licenses, which list includes a summary description
of each item and, where applicable, specifies the date issued, granted or
applied for, the expiration date and current status thereof. Each of the
Licenses has been duly obtained, is valid and in full force and effect,
and is not subject to any Liens or any pending or threatened
administrative or judicial proceeding to revoke, cancel or declare such
License invalid in any respect. Each of the Licenses is freely
transferable by Xxxxxxx Xxxxx to Purchaser without the consent of any
third party, and is sufficient in all respects to permit the continued
lawful conduct by Purchaser of the Business in the manner now conducted by
Xxxxxxx Xxxxx. Xxxxxxx Xxxxx is not conducting the Business in a manner
which violates any of the terms or conditions under which any License was
granted. Xxxxxxx Xxxxx is not in default or in violation with respect to
any of the Licenses, and no event has occurred which constitutes, or with
due notice or lapse of time or both may constitute, a default by Xxxxxxx
Xxxxx under or violation of any License. Xxxxxxx Xxxxx does not possess
and is not subject to any quotas relating to the export of its products.
5.21 SALE AND PURCHASE CONTRACTS. Set forth in SCHEDULE 5.21 is
a description of all Sale and Purchase Contracts between Xxxxxxx Xxxxx and
any party relating to the sale or purchase by Xxxxxxx Xxxxx of any product
purchased, sold or distributed by Xxxxxxx Xxxxx pursuant to which Xxxxxxx
Xxxxx incurs liabilities or obligations to purchase or sell (whether by
payment or delivery of goods or services), individually or in the
aggregate, of more than $50,000.00 in any year. Since December 31, 1997,
except for "close outs" and participation in customers' sales promotions
which occur in the ordinary course of business, Xxxxxxx Xxxxx has not
offered to any person or entity and Sellers have no knowledge (or reason
to know) of any person or entity entitled to claim any cash discount,
profit participation, stock adjustment, or other rebate or premium in
excess of $25,000.00, individually or in the aggregate for any one or more
persons or entities, in connection with or on account of the purchase or
sale of products of Xxxxxxx Xxxxx.
5.22 CONTRACTS. Set forth in SCHEDULE 5.22 is a description of
each Contract to which Xxxxxxx Xxxxx is a party or bound thereby, other
than those contracts set forth in another Schedule to this Agreement, (i)
which involves aggregate payments or expenditures by Xxxxxxx Xxxxx of in
excess of $25,000, but excluding Sale and Purchase Contracts, Personal
Property Leases, Real Property Leases and Licenses; (ii) which cannot be
terminated by Xxxxxxx Xxxxx at any time on 30 days' written notice or less
without liability to Xxxxxxx Xxxxx; (iii) for the purchase, sale, lease
(as lessee or lessor), or mortgage (as mortgagee or mortgagor), of any
Purchased Assets, except with respect to sales of Inventory made in the
ordinary course of business; (iv) with any Related Party; (v) which limits
or restrains Xxxxxxx Xxxxx from engaging or competing in any business or
with any person or entity; (vi) which involves any arrangement relating to
the borrowing or loaning of money, including, without limitation, letters
of credit, warranties, guarantees, indemnification and surety agreements;
(vii) which is not made in the ordinary course of the Business; (viii) for
the purchase of property which, if acquired as of the Closing Date, would
be a Purchased Asset and, contracts for the sale of property which, if
consummated prior to the Closing
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Date, would be a Purchased Asset (other than Inventory sold in the
ordinary course); (ix) the benefits of which are contingent or
accelerated, or the terms of which are materially altered, by the
occurrence of the transactions contemplated by this Agreement or the
Additional Documents; and (x) pursuant to which services (other than
routine professional services) are rendered by or to Xxxxxxx Xxxxx.
SCHEDULE 5.22 also set forth all other material Contracts to which Xxxxxxx
Xxxxx is a party or bound.
All Contracts are valid and binding upon Xxxxxxx Xxxxx and
enforceable against the other parties thereto in accordance with their
respective terms. Xxxxxxx Xxxxx has performed all obligations required to
be performed by it under all Contracts which are Purchased Assets and has
performed in all material respect all obligations required to be performed
by it under all other Contracts. Xxxxxxx Xxxxx is not in default under
any of such Contracts, nor to the best knowledge of Sellers is any other
party to any such Contract in default thereunder, nor does any condition
exist which, with notice or lapse of time or both, would constitute a
default by Xxxxxxx Xxxxx, or, to the best knowledge of Sellers, by any
other party thereunder. Without limiting the foregoing, Xxxxxxx Xxxxx is
not a party or subject to any Contract which materially and adversely
affects or, so far as Sellers can now foresee, may in the future
materially and adversely affect Xxxxxxx Xxxxx, its Business, the Purchased
Assets or the prospects or financial condition of Xxxxxxx Adler's
Business. SCHEDULE 5.22 further sets forth all such Contracts currently
in negotiation or proposed by Xxxxxxx Xxxxx, of a type which, if entered
into by Xxxxxxx Xxxxx, would be required to be listed in SCHEDULE 5.22 or
in any other Schedule.
5.23 LITIGATION. Except as set forth in SCHEDULE 5.23, which
contains a list and summary description of certain pending actions, suits,
proceedings and investigations, there are no claims, actions, suits,
proceedings, labor disputes or investigations pending or, to the best
knowledge of each Seller, threatened, before any court or Governmental
Authority, or before any arbitrator of any nature, brought by or against
either Seller, or any of its officers, directors, employees or agents
involving, affecting or relating to any of the Purchased Assets, the
Business, or the transactions contemplated by this Agreement or the
Additional Documents, nor to the best knowledge of each Seller, is there
any basis for any such action, suit, proceeding or investigation. Neither
Sellers, the Business nor any Purchased Asset is subject to any order,
writ, judgment, award, injunction or decree of any court or Governmental
Authority or arbitrator, which affects or which, to the best knowledge of
each Seller, might affect either Seller, any of the Purchased Assets or
the Business, or which would or might interfere with the transactions
contemplated by this Agreement or the Additional Documents.
5.24 CONSENTS. Except for consents and approvals of, or filings
or registrations with the Federal Trade Commission ("FTC") and Department
of Justice pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended ("HSR"), the Securities and Exchange Commission
("COMMISSION") pursuant to the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), and the parties listed on SCHEDULE 5.24, no notice
to and no permit, authorization, consent or approval of any federal,
state, local,
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foreign or other governmental or regulatory authority ("GOVERNMENTAL
AUTHORITY") or of any third party is necessary for the consummation by
either Seller of the transactions contemplated by this Agreement or the
Additional Documents.
5.25 EMPLOYEE PLANS.
5.25.1 IDENTIFICATION. Set forth in SCHEDULE 5.25 is a
true and complete list and summary description of all bonus, pension,
stock option, stock purchase, benefit, welfare, profit sharing,
retirement, disability, vacation, severance, hospitalization, insurance,
incentive, deferred compensation and other similar fringe or employee
benefit plans, funds, programs or arrangements, and all employment
contracts or executive compensation agreements, written or oral, in each
of the foregoing cases which cover, are maintained for the benefit of, or
relate to any or all employees of Xxxxxxx Xxxxx or any member of its
controlled group (the "CONTROLLED ENTITIES") as described in Sections
414(b), (c), (m), and (o) of the Code (the "EMPLOYEE PLANS"). Set forth
in SCHEDULE 5.25 is a true and complete list of all manuals, brochures or
publications or similar documents of Xxxxxxx Xxxxx and each Controlled
Entity regarding office administration, personnel matters and hiring,
evaluation, supervision, training, termination and promotion of employees
of Xxxxxxx Xxxxx or any Controlled Entity, including but not limited to
Xxxxxxx Adler's or any Controlled Entity's affirmative action plan, if
any, and all communications to employees concerning such matters (the
"PERSONNEL DOCUMENTS").
5.25.2 DOCUMENTATION. With respect to each Employee Plan,
Sellers have made available to Purchaser true and complete copies of (i)
all plan documents, (ii) the most recent determination letters received
from the IRS, (iii) the most recent application for determination filed
with the IRS, (iv) the latest actuarial valuations, (v) the latest
financial statements, (vi) the latest Form 5500 Annual Report and Schedule
A and Schedule B thereto, (vii) all related trust agreements, insurance
contracts or other funding arrangements which implement any of such
Employee Plans, and (viii) all Summary Plan Descriptions and summaries of
material modifications and all modifications thereto communicated to
employees. Xxxxxxx Xxxxx has no stock options or stock appreciation
rights issued under any Employee Plan. With respect to each Personnel
Document, Sellers have furnished to Purchaser true and complete copies of
all the documents listed in SCHEDULE 5.25.
5.25.3 CODE AND ERISA. Each of the Employee Plans and,
with respect to each Employee Plan, Xxxxxxx Xxxxx and each Controlled
Entity is in material compliance, in form and operation, with the
requirements provided by any and all statutes, orders or governmental
rules or regulations currently in effect, including, but not limited to,
ERISA and the Code, and applicable to such Employee Plans.
5.25.4 CONTRIBUTIONS AND ACCRUAL. With respect to the
Employee Plans, all applicable contributions for all periods ending prior
to Closing have been made in full. Subject only to normal retrospective
adjustments in the ordinary course, all insurance premiums, including
premiums to the Pension Benefit Guaranty Corporation (the "PBGC"),
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have been paid in full with regard to such Employee Plan for policy years
or other applicable policy periods ending on or before Closing. As of
Closing, none of the Employee Plans has unfunded benefit liabilities, as
defined in Section 4001(a)(16) of ERISA. No accumulated funding
deficiency within the meaning of Section 302 of ERISA or Section 412 of
the Code has been incurred with respect to any Employee Plan, whether or
not waived.
5.25.5 REPORTABLE EVENTS. None of the Employee Plans which
are subject to Title IV of ERISA has been completely or partially
terminated and none has been the subject of a "REPORTABLE EVENT" as that
term is defined in Section 4043 of ERISA as to which a notice would be
required to be filed with the PBGC. No proceeding by the PBGC to
terminate any Employee Plan pursuant to Subtitle 1 of Title IV of ERISA
has been instituted or threatened, there is no pending or threatened legal
action, proceeding or investigation against or involving any Employee Plan
and there is no basis for any such legal action, proceeding or
investigation. Neither Xxxxxxx Xxxxx nor any Controlled Entity has any
liability (i) for the termination of any single-employer plan under
Section 4062 of ERISA, (ii) for any lien imposed under Section 302(f) of
ERISA or Section 412(n) of the Code, (iii) for any interest payments
required under Section 302(e) of ERISA or Section 412(m) of the Code, (iv)
for any excise tax imposed by Section 4971 of the Code, (v) for any
minimum funding contributions under Section 302(c)(11) of ERISA or Section
412(c)(11) of the Code, or (vi) to provide security pursuant to Section
307 of ERISA or Section 401(a)(29) of the Code. None of the Employee
Plans provides for any unpredictable contingent event benefit (as that
term is defined in Section 302(d)(7)(B) of ERISA or Section 412(l)(7)(B)
of the Code).
5.25.6 TERMINATION BENEFITS. Neither Xxxxxxx Xxxxx nor any
Controlled Entity maintains, contributes to, or has any liability (fixed,
contingent or otherwise) for medical, health, life, or other welfare
benefits for present or future terminated employees (other than any
welfare benefits provided in compliance with the Consolidated Omnibus
Budget Reconciliation Act of 1985 or other similar law). Xxxxxxx Xxxxx
and each Controlled Entity are in compliance with Section 4980B of the
Code (or Section 162 of the Code, as in effect prior to the effective date
of Section 4980B of the Code).
5.25.7 WITHDRAWAL LIABILITY. Except as set forth in
SCHEDULE 5.25, none of the Employee Plans is a multiemployer plan as
defined in Section 3(37) or Section 4001(a)(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 414(f) of
the Code (a "MULTIEMPLOYER PLAN"). Neither Xxxxxxx Xxxxx nor any
Controlled Entity has incurred or expects to incur any withdrawal
liability (either as a contributing employer or as part of a controlled
group which includes a contributing employer) to any Multiemployer Plan in
connection with any complete or partial withdrawal from such plan
occurring on or before the Closing, except as set forth in SCHEDULE 5.25.
Sellers have provided Purchaser with all necessary documents for Purchaser
to determine Xxxxxxx Adler's withdrawal liability, including but not
limited to any guidelines established by the trustees of such plans.
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5.25.8 EMPLOYEE PLAN GRIEVANCES. With respect to each
Employee Plan that is not a Multiemployer Plan and to the best knowledge
of the Sellers, with respect to each Employee Plan that is a Multiemployer
Plan (i) no prohibited transactions as defined in Section 406 of ERISA or
Section 4975 of the Code have occurred, (ii) no action, suit, grievance,
arbitration or other manner of litigation, or claim with respect to the
assets thereof (other than routine claims for benefits made in the
ordinary course of plan administration for which plan administrative
review procedures have not been exhausted) are pending, threatened or
imminent against or with respect to any of the Employee Plans, Xxxxxxx
Xxxxx, any Controlled Entity, or any fiduciary, as such term is defined in
Section 3(21) of ERISA ("FIDUCIARY"), of any Employee Plan, including but
not limited to any action, suit, grievance, arbitration or other manner of
litigation, or claim regarding conduct which allegedly interferes with the
attainment of rights under any Employee Plan, and (iii) none of Xxxxxxx
Xxxxx, the Controlled Entities, or the Fiduciaries has any knowledge of
any facts which would give rise to or could give rise to any such actions,
suits, grievances, arbitration or other manner of litigation, or claims
with respect to each Employee Plan. None of Xxxxxxx Xxxxx, the Controlled
Entities, or their directors, officers, or employees, or the Fiduciaries
has any liability for failure to comply with ERISA or the Code for any
action or failure to act in connection with the administration or
investment of such plans.
5.26 LABOR AND EMPLOYEE MATTERS.
5.26.1 LABOR AGREEMENTS. Xxxxxxx Xxxxx is not a party to
any collective bargaining agreement or any other agreement with any labor
organization applicable to employees of or persons or entities providing
services to Xxxxxxx Xxxxx (a "LABOR AGREEMENT"). Except as set forth in
SCHEDULE 5.23 or 5.26, no unfair labor practice charges or complaints are
pending or, to Sellers' knowledge, threatened against Xxxxxxx Xxxxx before
the National Labor Relations Board, no similar claims are pending or
threatened before any similar foreign agency and no current union
representation questions involving employees of or persons or entities
providing services to Xxxxxxx Xxxxx are outstanding. To Sellers'
knowledge, no activity or proceeding of any labor organization (or
representative thereof) to organize any unorganized employees of or
persons or entities providing services to Xxxxxxx Xxxxx, and no strike,
slowdown, work stoppage, lockout or other collective labor action by or
with respect to any employees of or persons or entities providing services
to Xxxxxxx Xxxxx is in progress, is pending or has been threatened.
5.26.2 LABOR/EMPLOYMENT CONTROVERSIES. Except as set forth
in SCHEDULE 5.23 or SCHEDULE 5.26, no present or former employee of
Xxxxxxx Xxxxx has a pending claim or charge which has been asserted or
threatened against Xxxxxxx Xxxxx (whether under any foreign, federal,
state or common law, through a government agency, private arbitral body,
or otherwise) for (i) overtime pay, other than overtime pay for the
current period; (ii) wages, salaries or profit sharing (excluding wages,
salaries or profit sharing for the current payroll period); (iii) any
material violation of any statute, ordinance, contract or regulation
relating to minimum wages or maximum hours or work; (iv) discrimination
against employees on any basis; (v) unlawful or wrongful employment or
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termination practices; (vi) unlawful retirement, termination or labor
relations practices, breach of contract or other claim arising under a
Labor Agreement or individual contract; or (vii) any violation of
occupational safety or health standards.
5.26.3 EMPLOYEE MATTERS.
(a) Except as set forth in SCHEDULE 5.26, there are no agreements,
arrangements or understandings that would restrict the ability of Xxxxxxx
Xxxxx to terminate the employment of any or all of Xxxxxxx Adler's
employees at any time, for any lawful reason or for no reason, without
penalty or liability.
(b) Set forth in SCHEDULE 5.26 is the name, past twelve months'
salary and most recent bonus of each salaried and hourly employee of
Xxxxxxx Xxxxx.
(c) Except as set forth on the Closing Date Balance Sheet, no
employee of Xxxxxxx Xxxxx is, or will be as of the Closing Date, entitled
to accrued vacation.
5.27 CUSTOMERS AND SUPPLIERS. Set forth in SCHEDULE 5.27 is a
list of (a) all of the current customers of Xxxxxxx Xxxxx, (b) customers
of Xxxxxxx Xxxxx from 1996 or 1997 who are no longer customers, and (c)
current suppliers of Xxxxxxx Xxxxx which have sold $10,000 or more of
goods or services to Xxxxxxx Xxxxx during the past twelve months and a
designation as to which suppliers supply Xxxxxxx Xxxxx with the textiles
used in the manufacture of products in the Business. Except as set forth
on SCHEDULE 5.27, (i) no material customer or supplier of Xxxxxxx Xxxxx
has threatened within the last twelve months to cancel or otherwise
terminate, or to the knowledge of Sellers, intends to cancel or otherwise
terminate, the relationship of such person or entity with Xxxxxxx Xxxxx,
(ii) no such person or entity has during the last twelve months decreased
materially or threatened in writing to decrease or limit materially, or to
the knowledge of Sellers, intends to modify materially its relationship
with Xxxxxxx Xxxxx or intends to decrease or limit materially its services
or supplies to Xxxxxxx Xxxxx or its usage or purchase of services or
products of Xxxxxxx Xxxxx, and (iii) to the knowledge of Sellers, the
purchase of the Business by Purchaser will not materially and adversely
affect the relationship of the Business with any material supplier or
customer.
5.28 INSURANCE. Xxxxxxx Xxxxx owns insurance sufficient for
compliance with all requirements of law and all agreements to which
Xxxxxxx Alder is a party or otherwise bound, and which provides insurance
coverage for Xxxxxxx Xxxxx, the Business, and the Purchased Assets which
is consistent with that of other companies with similar assets and
operations and engaged in similar businesses. Xxxxxxx Xxxxx has not
received any notice of cancellation or non-renewal of any such policy.
Except as set forth in SCHEDULE 5.28, Xxxxxxx Xxxxx has not received any
notice from any of its insurance carriers that any insurance premiums will
be materially increased in the future or that any insurance coverage
listed in SCHEDULE 5.28 will not be available to Xxxxxxx Xxxxx in the
future on substantially the same terms as now in effect. Xxxxxxx Xxxxx
has delivered to Purchaser true and complete
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copies of the most recent reports prepared by any property and casualty
insurer with respect to Xxxxxxx Xxxxx or any of the Purchased Assets.
5.29 EFFECT OF TRANSACTION. The Purchased Assets constitute all
of the assets and properties, tangible and intangible (other than Excluded
Assets), which are used (whether or not owned) by Xxxxxxx Xxxxx in the
operation of the Business or which are necessary for the operation of the
Business in the ordinary course and at the sales levels at which the
Business is operating and has operated during Xxxxxxx Adler's 1997 and
1998 fiscal years.
5.30 TRANSACTIONS WITH RELATED PARTIES. For purposes of this
Agreement, the term "RELATED PARTY" shall mean (i) any past or present
director, officer, executive or management level employee, Stockholder or
Affiliate of either Seller, or (ii) spouse of any such director, officer,
executive or management level employee, Stockholder or Affiliate (such
persons in (i) or (ii) referred to herein as a "RELATED PARTY" or
collectively as the "RELATED PARTIES"). Except as set forth in SCHEDULE
5.30, during the past three years no Related Party has been a director or
officer of, or has had any direct or indirect interest in, any person or
entity, which during such period has been a supplier or customer of
products or services or sales agent of Xxxxxxx Xxxxx or otherwise done
business with Xxxxxxx Alder, or has competed with or been engaged in any
business similar to the Business. Except as set forth in SCHEDULE 5.30 or
in the footnotes to the Audited Financial Statements, no Related Party
owns, directly or indirectly, in whole or in part, any tangible or
intangible property of Xxxxxxx Xxxxx, or that Xxxxxxx Xxxxx uses in the
conduct of the Business. Except as set forth in SCHEDULE 5.30, no Related
Party owes any money or other amounts to, nor is any Related Party owed
any money or other amounts by, Xxxxxxx Xxxxx other than salaries owed by
Xxxxxxx Xxxxx as described in the following sentence. All Indebtedness
for Borrowed Funds of Xxxxxxx Xxxxx to any Related Party is set forth on
the Balance Sheet, and since December 31, 1997, Xxxxxxx Xxxxx has not
directly or indirectly (i) created, incurred, assumed or guaranteed any
Indebtedness for Borrowed Funds or otherwise to or for any Related Party,
or (ii) made any loans, payments or transfers of its assets to any Related
Party other than for salaries paid for services actually performed in
amounts in keeping with past practice and in the ordinary course of
business and not in violation of any other provision of this Agreement,
other than as permitted by Section 5.8.2(d), and other than as set forth
on SCHEDULE 5.30.
5.31 BANK ACCOUNTS, ETC. SCHEDULE 5.31 sets forth a true and
complete list of each bank in or with which Xxxxxxx Xxxxx has an account,
credit line or safety deposit box, and a brief description thereof
including amounts and the names of all persons currently authorized to
draw thereon or having access thereto.
5.32 NAME. Xxxxxxx Xxxxx has never operated during the past
five years under any corporate name other than "Xxxxxxx Xxxxx" and "The
Xxxxxxx, Xxxxx Company".
5.33 REPORTS. The Company has filed all forms, reports and
documents required under Section 13(a) under the Exchange Act with the
Commission since June 30,
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1996, and none of such forms, reports or documents, including without
limitation any financial statements or schedules included therein, when
filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein not misleading.
5.34 BROKERS. No agent, broker, investment banker, financial
advisor or other person or entity is or will be entitled to any brokerage
commission, finder's fee or like payment in connection with any of the
transactions contemplated by this Agreement based upon such arrangements
made by or on behalf of either Seller, except Xxxxx X. Xxxxxxx Company
Limited whose compensation shall be the sole responsibility of Sellers.
5.35 INFORMATION SUPPLIED. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference
in the Proxy Statement will, at the date it is first mailed to the
Company's stockholders or at the time of the Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation is made
by the Company with respect to statements made or incorporated by
reference therein based on information supplied in writing by or on behalf
of Purchaser specifically for inclusion therein.
5.36 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Xxxxx X. Xxxxxxx Company Limited to the effect that, as of such
date, the Purchase Price and other terms of this Agreement are fair to
Xxxxxxx Xxxxx and the Company from a financial point of view.
5.37 COMPANY BOARD RECOMMENDATION. The Board of Directors of
the Company, and in the case of clause (i), the Board of Directors of
Xxxxxxx Xxxxx, at a meeting duly called and held, has duly (i) determined
that this Agreement, the Additional Documents and the transactions
contemplated hereby and thereby, including the Purchase Price, are fair to
and in the best interests of the stockholders of the Company, (ii)
resolved to recommend that the holders of the Company's outstanding
capital stock approve this Agreement and the transactions contemplated
herein, and (iii) resolved to approve this Agreement and the transactions
contemplated hereby in its capacity as the sole stockholder of Xxxxxxx
Xxxxx. No "fair price," "moratorium," "control share acquisition" or
other similar antitakeover statute or regulation enacted under state or
federal laws in the United States applicable to the Company is applicable
to the transactions contemplated hereby, the Additional Documents or the
transactions contemplated thereby. The Board of Directors of the Company
has taken all appropriate action to render the restrictions on business
combinations contained in Section 203 of the DGCL inapplicable to this
Agreement, the Additional Documents and the consummation of the
transactions contemplated hereunder and thereunder.
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5.38 REQUIRED COMPANY VOTE. The affirmative vote of at least
50% plus one share of the outstanding shares of the Company's capital
stock, voting as a single class, is the only vote of the holders of any
class or series of the Company's securities necessary to approve this
Agreement, the Additional Documents and the other transactions
contemplated hereby and thereby.
5.39 RIGHTS AGREEMENT. The Company has no "Rights Agreement" or
similar instruments or plans which will be triggered on account of the
execution of this Agreement by Sellers or the Additional Documents.
5.40 YEAR 2000 COMPLIANCE. Except as set forth on SCHEDULE
5.40, all of Sellers' computer systems are fully "Year 2000 Compliant,"
i.e., no hardware or software on such systems will have to be modified,
implemented or enhanced in order for such system to function as correctly
and efficiently for periods after December 31, 1999 as they have
functioned to date.
5.41 ACCURACY OF INFORMATION. None of the representations,
warranties or statements contained in this Agreement, in the Schedules or
Exhibits hereto, or in any of the Additional Documents contains any untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary in order to make any of such
representations, warranties or statements, in the context in which made,
not false or misleading. Copies of all documents furnished by or on
behalf of Sellers to Purchaser or its representatives in connection with
or pursuant to the terms of this Agreement and the Additional Documents
are complete and accurate. All documents (or copies thereof) referred to
in the Schedules or Exhibits hereto have been delivered to Purchaser. All
financial projections provided by Sellers to Xxxx Xxx were prepared by
Sellers in good faith based upon reasonable assumptions; and although
Sellers do not guarantee the results of these projections, all such
projections are reasonable and reflect Sellers' best estimate of the
financial results reflected therein. All facts set forth in the Recitals
are true and correct.
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
hereby represents, warrants and covenants to Sellers as follows:
6.1 CORPORATE ORGANIZATION. Xxxx Xxx is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Maryland, and has all requisite power and authority (corporate and other)
to own, lease and operate its properties and assets and to conduct its
business as now being conducted. Xxxx Xxx has qualified as a foreign
corporation and is in good standing under the laws of all jurisdictions where
the nature of its business or the nature and location of its assets require
such qualification, except in those jurisdictions where the failure to
qualify would not have a material adverse effect on the financial condition,
business, assets or operations of Xxxx Xxx and its consolidated subsidiaries,
taken as a whole.
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6.2 AUTHORITY. Xxxx Xxx has the corporate power and authority
to enter into this Agreement and the Additional Documents and to carry out
its obligations hereunder and thereunder. The execution and delivery of
this Agreement and the Additional Documents and the performance by Xxxx
Xxx of its obligations hereunder and thereunder require authorization by
the Board of Directors of Xxxx Xxx, and no other corporate proceedings on
the part of Xxxx Xxx are necessary to authorize such execution, delivery
and performance. Subject to obtaining such Board approval, this Agreement
and the Additional Documents will be duly executed by Xxxx Xxx and,
assuming the due authorization, execution and delivery by the Sellers and
Stockholders, will be the valid and legally binding obligations of Xxxx
Xxx, enforceable against Xxxx Xxx in accordance with their terms.
6.3 ABSENCE OF CONFLICTS. Subject to the required authorization
by Xxxx Xxx'x Board of Directors, the execution, delivery and performance
by Xxxx Xxx of this Agreement and the Additional Documents, and the
transactions contemplated hereby and thereby, do not and will not,
conflict with or result in any violation of, or constitute a breach or
default under any term of the charter documents or by-laws of Xxxx Xxx.
6.4 CONSENTS. Except for consents and approvals of, or filings
or registrations with the FTC and DOJ pursuant to HSR, no notice to and no
permit, authorization, consent or approval of any Governmental Authority
or any third party is necessary for the consummation by Xxxx Xxx of the
transactions contemplated by this Agreement or the Additional Documents.
6.5 BROKERS. Xxxx Xxx has not employed any investment banker,
broker or finder in connection with the transactions contemplated hereby.
6.6 RECOMMENDATION. If Xxxx Xxx does not have any knowledge,
at the time of the meeting of its Board of Directors, of the existence of
(i) any inaccuracy in any material respect of any representation and
warranty of Sellers in this Agreement or of Sellers or the Stockholders in
the Additional Documents, or (ii) any failure to comply by Sellers with
their covenants in this Agreement or by Sellers or the Stockholders in the
Additional Documents, then (a) Xxxx Xxx will cause the transactions
contemplated hereby to be placed on the agenda for consideration at Xxxx
Xxx'x next regularly scheduled meeting of its Board of Directors (or if a
special meeting of the Board of Directors is called prior to such
regularly scheduled meeting, then at such special meeting) and (b) the
management of Xxxx Xxx'x intimate apparel division will recommend the
approval by Xxxx Xxx'x Board of Directors of the transactions contemplated
hereby at such meeting; provided, however, that nothing in this Section
6.6 constitutes a representation, warranty or covenant regarding the vote
to be taken by the Board of Directors of Xxxx Xxx regarding the
transactions contemplated by this Agreement.
6.7 INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Xxxx Xxx for inclusion or incorporation by reference in
the Proxy Statement will, at the date it is first mailed to the Company's
stockholders or at the time of the Stockholders
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Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they are made, not misleading.
ARTICLE VII COVENANTS.
7.1 CONDUCT OF BUSINESS OF XXXXXXX XXXXX PRIOR TO THE CLOSING
DATE. During the period from the date of this Agreement and continuing
through the Closing Date, Sellers agree that except as expressly contemplated
or permitted by this Agreement or to the extent that Xxxx Xxx shall otherwise
consent, Sellers shall use their best efforts to carry on the Business and
their respective affairs in such a manner so that the representations,
warranties and covenants contained in Article V shall continue to be true and
correct throughout such period, and on and as of the Closing Date as if made
by Sellers on the Closing Date, and throughout such period Xxxxxxx Xxxxx
shall, except in response to matters which neither it nor the Company can
reasonably control, carry on the Business in the ordinary course in
substantially the same manner as heretofore conducted and use reasonable best
efforts (i) to preserve intact its present business organization, (ii) keep
available the services of its present officers and employees, (iii) preserve
its relationships with customers, suppliers and others having business
dealings with it, and (iv) not do or permit to be done any of the actions
described in Section 5.8.2. Without limiting the generality of the
foregoing, prior to the Closing Date, and except as expressly contemplated or
permitted by Section 7.3 of this Agreement, or required by applicable law,
neither Seller will, without the prior written consent of Xxxx Xxx:
(i) except to the extent expressly permitted by
Section 7.3 amend, modify or repeal the resolutions of the Board of
Directors of the Company, the resolutions of the Company as sole
stockholder of Xxxxxxx Xxxxx, or the recommendation of the Board of
Directors of the Company to the Company stockholders that the stockholders
adopt resolutions of stockholders of the Company approving the execution
and delivery of this Agreement and the Additional Documents, the
consummation of the transactions contemplated hereby and thereby and the
performance by Sellers of their respective obligations hereunder and
thereunder;
(ii) change its capital structure, pursuant to a
reclassification, exchange, combination, split or otherwise, or issue
capital stock, or redeem or repurchase stock, or take any other action,
the effect of which could be to dilute the aggregate voting power of the
Stockholders to a percentage level less than that which exists on the date
of this Agreement;
(iii) cause or declare any dividends or distributions
to holders of capital stock of Xxxxxxx Xxxxx other than as permitted by
Section 5.8.2(d);
(iv) (a) adopt or amend any Employee Plan, other than
to comply with applicable law or in the ordinary course consistent with
past practice, (b) grant,
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or become obligated to grant, any increase in the compensation of officers
or employees of Xxxxxxx Xxxxx, including any such increase pursuant to any
Employee Plan (except for increases in compensation in the ordinary course
of business consistent with past practice), or (c) enter into any
employment or similar agreement or arrangement with any employee of
Xxxxxxx Xxxxx or other person or entity; or
(v) enter into any transaction not in the ordinary
course of business, except with respect to the transactions contemplated
hereby.
7.2 PREPARATION OF PROXY STATEMENT; STOCKHOLDERS MEETING.
7.2.1 PROXY STATEMENT. Promptly following the date of this
Agreement, the Company shall prepare a proxy statement relating to a
meeting of the holders of the Company's common stock and any other
securities having voting rights for the purpose of obtaining stockholder
approval of this Agreement, the Additional Documents and the transactions
contemplated hereby and thereby ("STOCKHOLDERS MEETING") pursuant to the
DGCL (the "PROXY STATEMENT"), and the Company shall prepare and file with
the Commission the Proxy Statement. Xxxx Xxx will cooperate with the
Company in connection with the preparation of the Proxy Statement
including, but not limited to furnishing to the Company any and all
information regarding Xxxx Xxx and its Affiliates as may be required to be
disclosed therein. The information provided and to be provided by Xxxx
Xxx and the Company, respectively, for use in the Proxy Statement shall,
at the date it is first mailed to the Company's stockholders and on the
date of the Stockholders Meeting referred to below, be true and correct in
all material respects and shall not omit to state any material fact
required to be stated therein or necessary in order to make such
information not misleading, and the Company and Xxxx Xxx each agree to
correct any information provided by it for use in the Proxy Statement
which shall have become false or misleading.
7.2.2 COMMENTS. The Company will as promptly as
practicable notify Xxxx Xxx of (i) the receipt of any comments from the
Commission, and (ii) any request by the Commission for any amendment to
the Proxy Statement or for additional information. All filings by the
Company with the Commission, including the Proxy Statement and any
amendment thereto, and all mailings to the Company's stockholders in
connection with the transactions contemplated by this Agreement and the
Additional Documents, including the Proxy Statement, shall be subject to
the prior review, comment and approval of Xxxx Xxx (such approval not to
be unreasonably withheld or delayed). Xxxx Xxx will furnish to the
Company the information relating to it and its Affiliates required by the
Exchange Act and the rules and regulations promulgated thereunder to be
set forth in the Proxy Statement.
7.2.3 STOCKHOLDERS MEETING. The Company will: (i) as
promptly as practicable following the date of this Agreement, duly call,
give notice of, convene and hold a Stockholders Meeting for the purpose of
approving this Agreement and the transactions contemplated hereby to the
extent required by the DGCL and the Company's Certificate of
Incorporation; (ii) through its Board of Directors, and subject to the
other provisions hereof,
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recommend to its stockholders approval of the foregoing matters; and (iii)
use its reasonable best efforts to obtain the necessary approval of this
Agreement and the transactions contemplated hereby by its stockholders;
provided, however, that, subject to Section 12.4, and, without limiting
the Company's obligations set forth in subclause (i) above (which the
Company agrees to fulfill notwithstanding any other term of this Article
7), the Company may fail to make or may withdraw or modify such
recommendation and shall not be obligated to use its reasonable best
efforts or take any action pursuant to clause (ii) or (iii) of this
Section 7.2.3 if the Company shall have concluded in good faith, after
review of advice provided in writing by outside legal counsel to the
Company, that such actions would be in breach of the Company's Board of
Directors' fiduciary duties under applicable law. Any such recommendation
shall be included in the Proxy Statement.
7.3 NON-SOLICITATION.
(a) Neither Seller nor its Affiliates will, and each
Seller and its Affiliates will advise their respective directors,
officers, employees, representatives, investment bankers, attorneys,
accountants, advisors and agents (the foregoing being collectively called
"REPRESENTATIVES") to not, directly or indirectly, encourage, solicit or
initiate inquiries or proposals from, or provide any confidential
information to, or participate in any discussions or negotiations with,
any person or entity (other than Xxxx Xxx and its Affiliates and their
respective directors, officers, employees, representatives and agents)
concerning any proposed (i) merger, consolidation, share exchange,
business combination or other similar transaction with Xxxxxxx Xxxxx or,
except for Permitted Company Transactions, with the Company, (ii) sale,
lease, exchange, transfer, or other disposition, directly or indirectly,
of all or a substantial portion of the consolidated assets of either or
both Sellers, or (iii) transaction in which any person (whether by itself
or as a member of any "group" (as such term is defined in the Exchange
Act)) would acquire beneficial ownership (as such term is defined in Rule
13d-3 under the Exchange Act) of, or the right to acquire beneficial
ownership, of 5% or more of the outstanding voting capital stock of either
of the Sellers (all such inquiries and proposals being referred to herein
as "ACQUISITION PROPOSALS" and any such transaction being called a
"SIGNIFICANT TRANSACTION"), provided, however, that nothing contained in
this Section 7.3 shall prohibit the Company or its Board of Directors from
(A) subject to Section 7.4 below, issuing a press release or otherwise
publicly disclosing the terms of this Agreement; (B) proceeding with the
transactions contemplated by this Agreement; (C) communicating to the
Company's stockholders a position as required by Rule 14e-2 promulgated
under the Exchange Act and any other applicable laws; or (D) disclosing
the terms of this Section 7.3 to the extent required by law; and,
PROVIDED, FURTHER, that the Board of Directors of the Company may, on
behalf of the Company, furnish or cause to be furnished information and
may direct the Company and its Representatives to furnish information, in
each case pursuant to appropriate confidentiality agreements (which do not
limit the Company's disclosure of any information to Xxxx Xxx), and to
participate in discussions or negotiations with any person or entity
concerning any Acquisition Proposal which was not encouraged, solicited or
initiated by either Seller or any of its Affiliates or any of their
respective Representatives, or which did not otherwise result from a
breach of
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this Section 7.3, if (x) the Board of Directors of the Company shall
conclude in good faith, only after receipt of written advice from its
financial advisor, that such person or entity has made a bona fide
Acquisition Proposal for a transaction more favorable to the Company's
stockholders from a financial point of view than the transactions
contemplated hereby provided such transaction is not subject to any
financing contingency and is otherwise reasonably probable to be
consummated, and (y) in the opinion of the Board of Directors of the
Company, only after receipt of written advice of outside legal counsel to
the Company, the failure to provide such information or access or to
engage in such discussions or negotiations would cause the Board of
Directors of the Company to violate its fiduciary duties to the Company's
stockholders under applicable law (an Acquisition Proposal which satisfies
clauses (x) and (y) being referred to herein as a "SUPERIOR PROPOSAL")
(the furnishing of information and/or participation in discussions or
negotiations as permitted by this proviso being collectively called
"PERMITTED FIDUCIARY CONDUCT"). The Company will immediately notify Xxxx
Xxx of the terms of any proposal, discussion, negotiation or inquiry (and
will disclose to Xxxx Xxx any written materials received by either Seller
in connection with such proposal, discussion, negotiation, or inquiry) and
the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction and will keep Xxxx Xxx apprised
of the status of any such proposals, discussions, negotiations or
inquiries. Each Seller agrees not to release any person or entity from,
or waive any provision of, any standstill agreement to which either Seller
is a party or any confidentiality agreement between either Seller and
another person or entity. Each Seller shall immediately cease and cause
to be terminated any existing activities, discussions or negotiations by
either Seller or any Representative of either Seller with parties
conducted heretofore with respect to any of the foregoing and shall use
all reasonable efforts to enforce the terms of all standstill and
confidentiality agreements, including, without limitation, obtaining the
return or the destruction of any proprietary information provided to any
such parties.
(b) Neither the Board of Directors of either Seller nor
any committee thereof shall, directly or indirectly, (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Xxxx Xxx,
the approval or recommendation by such Board of Directors or any such
committee of this Agreement, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal, or (iii) enter into, or
resolve, or agree to enter into, any agreement with respect to any
Acquisition Proposal. Notwithstanding the foregoing, the Board of
Directors of the Company may withdraw or modify its approval or
recommendation of this Agreement to approve or recommend a Superior
Proposal if and only if (x) the Company shall have furnished Xxxx Xxx with
written notice specifying the material terms and conditions of such
Superior Proposal and identifying the person or entity making such
Superior Proposal (and including a written copy of such proposal) not
later than noon (Chicago time) seven business days in advance of any date
that the Board of Directors intends to take any such action ("DESIGNATED
PERIOD"), and (y) the Company and its Representatives have complied in all
respects with the terms of the following sentence. During the Designated
Period, the Company shall, and shall cause its financial and legal
advisors, to negotiate in good faith with Xxxx Xxx to make such amendments
to the terms and conditions of this Agreement as would make this Agreement
as
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so amended, in the view of its financial advisors, at least as favorable
to the Company's stockholders from a financial point of view as the
Superior Proposal, and if Xxxx Xxx makes a proposal to enter into an
agreement at least as favorable to the Company's stockholders from a
financial point of view as the Superior Proposal, then the Company's Board
of Directors shall be prohibited from withdrawing or modifying its
approval or recommendation of this Agreement, or from approving or
recommending such Superior Proposal. The taking of any Permitted
Fiduciary Conduct by the Board of Directors of the Company or the taking
of any conduct or action described in clause (i) or (ii) of this Section
7.3(b) by either Seller or either Seller's Board of Directors shall not
constitute a breach of this Agreement by such party so long as such
conduct or action is taken in strict compliance with the terms of this
Section 7.3, but this Section 7.3 shall not give any Seller the right to
terminate this Agreement, or engage in any conduct or action described in
clause (iii) of this subsection (b), or otherwise cease performance of its
obligations under this Agreement except pursuant to Article XII.
7.4 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS. This Agreement and
the terms hereof are confidential and no party or signatory hereto shall
disclose any of the terms of this Agreement, the transaction contemplated
hereby or the fact that the parties are engaged in negotiations, without
the prior approval of the other parties. Xxxx Xxx and Sellers shall
consult with each other on the desirability, timing and substance of any
press release or public announcement, publicity statement or other public
disclosure relating to the transaction contemplated hereby or the fact
that negotiations among the parties are being held. Xxxx Xxx and Sellers
each agree not to make any such public disclosures without the prior
consent of the other as to the content and timing of such disclosure;
provided, however, that either party may make such disclosures as required
to comply with applicable law, regulations or stock exchange requirements
provided the other party is afforded prior notice thereof; it being agreed
that, subject to the terms of this Section 7.4, and in all cases subject
to prior consultation with Xxxx Xxx, Xxxxxxx Xxxxx shall notify its
employees of the transactions contemplated hereby, and the Company shall
issue one or more press releases, file forms 8-K and form 10-Q under the
Exchange Act and describe the transactions contemplated hereby in the
Proxy Statement and attach a copy of this Agreement and Additional
Documents if required.
7.5 XXXX-XXXXX-XXXXXX FILINGS. (i) Each of Xxxx Xxx, on the one
hand, and Sellers, on the other hand, shall within ten business days after
the date hereof, prepare and make all filings required pursuant to the
notification and reporting obligations of HSR, and (ii) Xxxx Xxx will pay
two-thirds and Sellers will pay one-third of the filing fee under HSR.
7.6 BULK SALES COMPLIANCE. Except with respect to each Seller's
obligations which comprise the Assumed Liabilities, each Seller shall pay
in full from the proceeds of the Closing all sums due and owing its
creditors. Purchaser and Sellers hereby waive compliance with any bulk
sales law under any applicable uniform commercial code. Sellers shall
jointly and severally indemnify and hold the S.L. Indemnified Parties
harmless as provided in Article IX for any claim, liability or expense
arising from or in connection with
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non-compliance with any applicable bulk sales law as it pertains to the
transactions contemplated hereby.
7.7 EMPLOYEES; 401(k) PLAN.
7.7.1 Each Seller shall use its best efforts to aid
Purchaser in engaging such of Xxxxxxx Adler's employees at the Closing
whom Purchaser desires to engage after the Closing. Purchaser agrees to
offer employment (and to provide service credit for years of employment by
Xxxxxxx Xxxxx for purposes of eligibility or satisfaction of waiting
periods for any benefits offered to such employees by Purchaser) to all
those persons employed by Xxxxxxx Xxxxx on the date hereof and at the time
of Closing on a full-time basis, at levels of salary and benefits which,
in the aggregate, are substantially comparable to the salary and benefits
paid or provided to such persons by Xxxxxxx Xxxxx at Closing (but
excluding those benefits marked with an asterisk on SCHEDULE 5.25) so long
as Xxxxxxx Xxxxx is in compliance with the terms of this Agreement;
provided, however that this Section 7.7 shall not obligate Purchaser with
respect to any salary, severance or benefits payable or provided to Xxxxxx
Xxxxxxx, Xxxxx Xxxxx or Xxxx XxXxxxxx, it being agreed that Purchaser
shall not assume any employment agreement between any such person and
Xxxxxxx Xxxxx, and shall use reasonable efforts to negotiate employment
terms with each such individual (other than Xxxx XxXxxxxx who Sellers
desire to retain in the employ of Xxxxxxx Xxxxx or the Company). It is
further agreed that Purchaser shall have no obligation under this
Agreement to employ any person other than on an "at will" basis and that
Purchaser shall offer former Xxxxxxx Xxxxx employees hired by Purchaser
severance upon termination of employment by Purchaser without cause in
accordance with SCHEDULE 7.7 in the event such termination occurs within
the first year of employment and subject to the condition that such
persons deliver duly executed and effective general releases to Purchaser
prior to payment of any such severance, including, without limitation,
release of claims relating to discrimination on the basis of age, sex,
race or any other matter.
7.7.2 Purchaser may, in its discretion, elect to assume the
401(k) Plan, in which event the parties will do all things necessary or
appropriate as requested by Purchaser to accomplish Purchaser's adoption
of the Plan; PROVIDED, HOWEVER, that in no event shall Purchaser be
responsible for any liabilities or contributions relating to such 401(k)
Plan which result from, arise in connection with or pertain to any act or
omission of Xxxxxxx Xxxxx on or prior to the Closing Date or any
contributions relating to any period on or prior to the Closing Date
(collectively "401(k) LIABILITIES"). If Purchaser elects to form a new
plan, then at Purchaser's request, Xxxxxxx Xxxxx shall cause the assets of
the 401(k) Plan relating to those employees hired by Purchaser to be
transferred to Purchaser's new plan.
7.8 ACCESS TO INFORMATION. Between the date of this Agreement
and the Closing Date, upon reasonable notice and at reasonable times
without significant disruption to the Business, Xxxxxxx Xxxxx will give
Xxxx Xxx and its authorized representatives full access to all personnel,
offices and other facilities, and to all Books and Records of Xxxxxxx
Xxxxx (including tax returns and accounting work papers) and will permit
Xxxx Xxx to make
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copies thereof and will fully cooperate with regard to such inspections
(in order to conduct, among other things, interviews of individuals,
visual inspections of facilities, Phase I and, if necessary, with two
business days' advance notice in consultation with Sellers, Phase II
environmental assessments of the facilities) as it may reasonably request
for any purpose, including, without limitation, verification that the
representations and warranties were true when made and continue to be true
through and including the Closing Date and will cause its officers to
furnish Xxxx Xxx such financial and operating data and other information
with respect to the business and properties of Xxxxxxx Xxxxx which Xxxx
Xxx may from time to time reasonably request. The representations and
warranties of Sellers contained herein and in any Additional Documents
shall not be deemed waived or otherwise affected by any such investigation
made by Xxxx Xxx or any of its representatives.
7.9 ALL REASONABLE EFFORTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to
be done as promptly as practicable, all things necessary, proper and
advisable under applicable laws and regulations to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement; PROVIDED, HOWEVER, that in no event shall Xxxx Xxx be obligated
to consider, or consummate, any sale, disposition, segregation or other
arrangement affecting any assets or properties owned by Xxxx Xxx, on the
one hand, or by Xxxxxxx Xxxxx, on the other hand, on account of the
transactions contemplated by this Agreement, or any other action which
would limit the freedom of Xxxx Xxx and its Affiliates to own and operate
their businesses, assets and properties as they see fit.
7.10 CONSENTS AND APPROVALS. Each party hereto shall (a) use
reasonable efforts to obtain all necessary permits, consents, waivers,
approvals, orders and authorizations of all Governmental Authorities and
other persons or entities required to be obtained by such party hereto in
connection with the execution, delivery and performance of this Agreement,
the Additional Documents and the consummation of the transactions
contemplated hereby or thereby by such party, (b) diligently assist and
cooperate with the other parties hereto in preparing and filing all
documents required to be submitted by the other parties hereto to any
Governmental Authority in connection with the execution, delivery and
performance of this Agreement, the Additional Documents and the
consummation of the transactions contemplated hereby and thereby (which
assistance and cooperation in the case of Xxxx Xxx shall include timely
furnishing to the Company all information concerning Xxxx Xxx, which, in
the opinion of counsel to the Company, is required to be included in such
documents), and in obtaining any permits, consents, waivers, approvals,
orders and authorizations which may be required to be obtained by Xxxx Xxx
in connection therewith, and (c) keep the other parties hereto apprised of
the status of any inquiries made by any Governmental Authority with
respect to this Agreement, the Additional Documents or the transactions
contemplated hereby or thereby.
7.11 SUPPLEMENTS TO SCHEDULES. From time to time prior to the
Closing, Sellers will promptly supplement or amend the Schedules to this
Agreement with respect to
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any matter which, if existing, occurring or known at the date of this
Agreement, would have been required to be set forth or described in such
Schedules or which is necessary to correct any information in such
Schedules which has been rendered inaccurate thereby. No supplement or
amendment shall have any effect for the purpose of determining (i)
satisfaction of the conditions to Closing set forth in Section 10.1.1
hereof, (ii) the compliance by Sellers with the covenants of Sellers set
forth herein, or (iii) whether Sellers shall have breached any
representation or warranty of Sellers contained herein.
7.12 ATTORNEY-IN-FACT. Effective as of the Closing, Xxxxxxx
Xxxxx hereby appoints Purchaser as its agent and attorney-in-fact to
endorse any checks received by Purchaser in payment of Accounts Receivable
comprising part of the Purchased Assets, and agrees to remit to Purchaser,
promptly upon receipt thereof and in a form duly endorsed to Purchaser,
all checks received by Xxxxxxx Xxxxx in payment of any such Accounts
Receivable.
7.13 POTENTIAL SUCCESSOR TAXES. Unless otherwise directed by
Purchaser, Sellers shall give all required notices and make all required
filings, on behalf of Purchaser when required, of the transactions
contemplated hereby, including, without limitation, pursuant to Title 12,
Chapter 219 of the Connecticut General Statutes. If Sellers do not
provide to Purchaser at Closing all appropriate tax clearances and
certificates, then Purchaser shall deduct from the Purchase Price, as
provided in Section 3.1, the amount of the Potential Successor Taxes, and
Purchaser shall thereafter cause such Taxes to be paid, to the extent of
such deduction, on Xxxxxxx Adler's behalf.
7.14 5500 FILINGS. Seller shall cause to be timely filed prior
to the Closing, in accordance with applicable laws and following review by
Purchaser, Form 5500 filings applicable to the 401(k) Plan (for Plan years
ended September 30, 1997 and December 31, 1997) and to the Xxxxxxx Xxxxx
Company Employee Welfare Benefit Plan.
ARTICLE VIII RESTRICTIVE COVENANTS. In consideration of the Purchase
Price and $5,000,000.00 payable in full by Purchaser to the Company at the
Closing by wire transfer of immediately available funds, Sellers covenant
with Purchaser as follows:
8.1 RESTRICTIONS. Sellers acknowledge that Purchaser has paid
valuable consideration for the assets of Xxxxxxx Xxxxx, particularly customer
and supplier lists, distribution records, know-how, goodwill and other
proprietary business information and trade secrets of Xxxxxxx Xxxxx. The use
by either Seller of these relationships and such confidential information in
a business or activity which competes with Purchaser or a Related Affiliate
would provide the competing business with an unfair advantage over Purchaser
or such Related Affiliate. Accordingly, Purchaser wishes to restrict
Sellers' use of such information and their ability to compete with Purchaser
and its Related Affiliates. Sellers agree, for the Purchase Price described
in Article III, to comply with the terms of this Agreement, all of which are
reasonable and necessary to protect the confidential business information and
trade secrets being acquired by Purchaser and to prevent any unfair
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advantage from being conferred upon a competing business of Purchaser or a
Related Affiliate, as set forth below.
8.2 NON-COMPETITION. For a period of five years from the date
hereof, neither Seller shall, directly or indirectly, either by itself, or
as a stockholder, partner, associate, consultant, owner, agent, creditor,
coventurer of any other person or entity, or in any other capacity,
directly or indirectly, engage in the business of manufacturing,
marketing, distributing and/or selling, on a wholesale basis, women's
intimate apparel and any other product serviced, distributed or sold or
similar to products serviced, distributed or sold by Xxxxxxx Xxxxx on the
Closing Date or within a two-year period prior to the Closing Date (each a
"PROHIBITED BUSINESS") within the Prohibited Area; provided that nothing
herein shall prohibit either Seller from being an owner of not more than
1% of the outstanding stock of any class of a corporation which is
publicly traded, so long as neither Seller actively participates in the
business of such corporation. The term "PROHIBITED AREA" shall mean North
America and the Caribbean. The term "RELATED AFFILIATE" means any
Affiliate of Purchaser which engages in a Prohibited Business. Sellers
further agree that neither of them shall directly or indirectly engage in
any business at any time under a trademark or trade name that is
confusingly similar to or may connote an association with "XXXXXXX XXXXX",
or any other trademark, trade name or logo of Xxxxxxx Xxxxx acquired by
Purchaser pursuant to this Agreement.
8.3 NON INTERFERENCE WITH BUSINESS RELATIONS. For a period of
five years after the Closing Date, neither Seller shall, directly or
indirectly, without the written consent of Purchaser, solicit, induce or
attempt to solicit or induce any supplier, licensee or other business
relation of Purchaser or its Affiliates to cease doing business with
Purchaser or its Affiliates, or in any way interfere with the relationship
between any customer or business relation of Purchaser or its Affiliates.
8.4 SOLICITATION OF CUSTOMERS AND EMPLOYEES. For a period of
five years after the Closing Date, neither Seller shall, directly or
indirectly, on behalf of itself, or as a stockholder, partner, consultant,
adviser, owner, associate, agent, creditor, coventurer of any other person
or entity, or in any other capacity, (i) sell to or solicit sales of
Products from any customer or account which was a customer or account of
Xxxxxxx Xxxxx as of the Closing Date or within one year prior thereto, or
(ii) solicit, hire, attempt to solicit or hire, or participate in any
attempt to solicit or hire any person who was an employee of Xxxxxxx Xxxxx
or any of their respective Affiliates as of the Closing Date or within the
six-month period prior thereto, except for such employees which Purchaser
does not offer to hire or hired by Purchaser and whose employment
Purchaser has terminated at its election. As used herein, "PRODUCTS"
shall mean women's intimate apparel and any other product distributed,
serviced or sold by Xxxxxxx Xxxxx at the time, or within two years prior
to, the Closing Date.
8.5 CONFIDENTIAL INFORMATION. Each Seller recognizes that
Purchaser's business interests require the fullest practical protection
and confidential treatment of all information not generally known within
the relevant trade group or by the public, including
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all documents, writings, memoranda, business plans, illustrations,
designs, plans, processes, programs, inventions, computer software,
reports, sources of supply, customer lists, supplier lists, trade secrets,
and all other valuable or unique information and techniques acquired,
developed or used by Xxxxxxx Xxxxx relating to its businesses, operations,
employees and customers (hereinafter collectively termed "PROTECTED
INFORMATION"). Each Seller expressly acknowledges and agrees that
Protected Information constitutes trade secrets, confidential and
proprietary business information of Purchaser. Protected Information
shall not include information which is or becomes part of the public
domain through no breach of this Agreement by either Seller. Each Seller
acknowledges that Protected Information is essential to the success of
business, and it is the policy of Purchaser to maintain as secret and
confidential Protected Information, which gives Purchaser a competitive
advantage over those who do not know the Protected Information and is
expressly and implicitly protected by Purchaser from unauthorized
disclosure. Accordingly, each Seller agrees to hold such Protected
Information in a fiduciary capacity, to keep secret and to treat
confidentially and not to, and not to permit any other person or entity
to, directly or indirectly, appropriate, divulge, disclose or otherwise
disseminate to any other person or entity nor use in any manner for either
Seller's or any other person's or entity's purposes or benefit any
Protected Information, and not to use or aid others in using any such
Protected Information in competition with Purchaser or a Related Affiliate
except to the extent that disclosure is required by law; provided,
however, that Sellers shall provide Xxxx Xxx with notice as far in advance
of any required disclosure as is practicable in order for Xxxx Xxx to
obtain an order or other assurance that any information required to be
disclosed will be treated as Protected Information and Sellers shall use
all reasonable efforts to cooperate with Xxxx Xxx in connection therewith
and in furtherance thereof. This obligation of non-disclosure of
information shall continue to exist for so long as such information
remains Protected Information. For purposes of this Agreement, trade
secrets are subject to the protection of the Illinois Trade Secret Act.
8.6 SCOPE. If, at the time of enforcement of this Section 8, a
court shall hold that the duration, scope or area restrictions stated
herein are unreasonable under circumstances then existing, the parties
agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area.
8.7 REMEDIES. Each Seller agrees that if it shall commit or
threaten to commit a breach of any of the covenants and agreements
contained in this Section 8, then Purchaser shall have the right to seek
and obtain all appropriate injunctive and other equitable remedies
therefor, in addition to any other rights and remedies that may be
available at law, it being acknowledged and agreed that any such breach
would cause irreparable injury to Purchaser and that money damages would
not provide an adequate remedy therefor.
8.8 DISSOLUTION. The Company shall not voluntarily dissolve,
liquidate, or otherwise terminate its corporate existence, or distribute
more than 20% of the net proceeds
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from the sale contemplated by this Agreement to its respective
stockholders, prior to the end of the Indemnification Period.
ARTICLE IX INDEMNIFICATION.
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
respective representations, warranties and covenants of each of the parties
to this Agreement, including all statements contained in any Schedule
delivered pursuant hereto, shall be deemed to be material and to have been
relied upon by the parties hereto, and shall survive the Closing, and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by or on behalf of, or disclosure to, any party to whom
such representations, warranties or covenants have been made. No party or
other person or entity entitled to indemnification under this Article IX
shall commence any suit or proceeding alleging a Third Party Claim due to a
breach of any representation or warranty in Article IV or V of this Agreement
after the period ending September 1, 1999, subject to extension as provided
below, except insofar as (i) any party or other person or entity entitled to
indemnification under this Article shall have asserted in writing a specific
Third Party Claim prior to the expiration of such eighteen-month period, in
which event the representations and warranties shall continue in effect and
remain a basis for indemnity with respect to each such asserted Third Party
Claim until such Claim is finally resolved (pursuant to a non-appealable
order by a court of competent jurisdiction or agreement of Sellers and
Purchaser) (said period ending September 1, 1999 as extended hereby being
called the "INDEMNIFICATION PERIOD"), or (ii) any Third Party Claim relating
to Sections 5.1, 5.2, 5.3, 5.12, 6.1 and 6.2, it being agreed that the
representations and warranties of those Sections shall continue indefinitely
beyond the eighteen-month anniversary of the Closing Date (regardless of
whether the facts giving rise to such claim are also the subject of any
expired representation and warranty). The rights and remedies of any person
or entity based upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or
agreement contained in this Agreement, including, without limitation, the
right of S.L. Indemnified Parties to be indemnified for Excluded Liabilities,
shall in no way be limited by the fact that the act, omission, occurrence or
other state of facts upon which any claim of any such inaccuracy, breach or
indemnity is based may also be the subject matter of any representation,
warranty, covenant or agreement contained in this Agreement or any Additional
Document as to which there is no inaccuracy or breach or as to which the
Basket or Cap applies, or as to which the Indemnification Period has expired.
9.2 SELLERS' INDEMNIFICATION. Sellers, acting jointly and
severally, shall indemnify and hold harmless Purchaser and its Affiliates and
their respective officers, directors, stockholders, agents, successors and
assigns (collectively, "S.L. INDEMNIFIED PARTIES"), from and against and in
respect of any and all demands, claims, causes of action, administrative
orders and notices, losses, costs, fines, liabilities, penalties, damages
(direct or indirect) and expenses (including, without limitation, reasonable
legal, paralegal, accounting and consultant fees and other expenses incurred
in the investigation and defense
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of claims and actions) (hereinafter collectively called "LOSSES")
resulting from, in connection with or arising out of:
(a) any incorrect representation or warranty made by Sellers in
Article V of this Agreement or in any Additional Document delivered by
Sellers in connection herewith or therewith;
(b) the failure of either Seller to comply with, or the breach by
either Seller or any of the Stockholders of, any of the covenants of this
Agreement or any Additional Document;
(c) any Excluded Liabilities;
(d) any failure to comply with any so-called "BULK SALES" laws
applicable to the transactions contemplated hereby;
(e) any claim, action, suit or proceeding initiated by or on behalf
of any stockholder of the Company (in his, her or its capacity as a
stockholder) against Purchaser in connection with any communication to, or
failure to communicate to, any stockholder of the Company by the Company or
any of its Representatives;
(f) any claim, action, suit or proceeding arising from or related to
the presence, generation, emission, storage, treatment, transport or
disposal of any Hazardous Substance from, to, at, in, on or under any
facility owned or used by Xxxxxxx Xxxxx on or before the Closing Date and
liabilities arising from violations of Environmental Laws; and
(g) any claim, action, suit or proceeding relating to any of the
foregoing.
9.3 PURCHASER'S INDEMNIFICATION. Purchaser shall indemnify and
hold harmless each Seller and its Affiliates and their respective
officers, directors, stockholders, agents, successors and assigns, from
and against and in respect of any and all Losses resulting from, in
connection with or arising out of:
(a) any incorrect representation or warranty made by Purchaser in
Article VI of this Agreement or in any Additional Document delivered by
Purchaser in connection herewith or therewith;
(b) the failure of Purchaser to comply with, or the breach by
Purchaser of, any of the covenants of this Agreement or any Additional
Document; and
(c) any claim, action, suit or proceeding relating to any of the
foregoing.
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9.4 COOPERATION. Subject to the provisions of Section 9.5, a
party or parties against whom a claim for indemnification has been
asserted (individually and collectively "INDEMNIFYING PARTY") shall have
the right, at its own expense, to participate in the defense of any action
or proceeding brought by a third party which resulted in said claim for
indemnification, and if said right is exercised, the party or parties
entitled to indemnification (individually and collectively "INDEMNIFIED
PARTY") and the Indemnifying Party shall cooperate in the defense of said
action or proceeding.
9.5 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS AGAINST
INDEMNIFIED PARTIES.
9.5.1 In the event that subsequent to the Closing Date
any Indemnified Party asserts a claim for indemnification under this
Article IX, on account of or in connection with any claim or the
commencement of any action or proceeding against such Indemnified Party by
any person or entity who is not a party to this Agreement (including any
Governmental Authority) (a "THIRD PARTY CLAIM"), the Indemnified Party
shall promptly give written notice thereof together with a statement of
any available information regarding such claim (the "NOTICE OF CLAIM") to
the Indemnifying Party promptly after learning of such Third Party Claim.
If the Indemnifying Party is one or both Sellers and the potential
aggregate amount of such Third Party Claim, together with all other
pending Third Party Claims for which indemnity is being sought against one
or more of them, is or is reasonably expected to be $100,000.00 or less,
and such Claim does not seek injunctive or other equitable relief
involving Xxxx Xxx or its Affiliates, or if Xxxx Xxx'x insurance carrier
does not require, as a condition to Xxxx Xxx'x eligibility to recover
insurance proceeds on account of such Third Party Claim, that such carrier
control the defense of any such Claim, or if the Indemnifying Party is
Xxxx Xxx, then in any such case, the Indemnifying Party shall have the
right, upon written notice to the Indemnified Party (the "DEFENSE NOTICE")
within fifteen days of its receipt from the Indemnified Party of the
Notice of Claim, to conduct at its expense the defense against such Claim
in its own name, or, if necessary, in the name of the Indemnified Party;
provided, however, that the Indemnified Party shall have the right to
approve the defense counsel representing the Indemnifying Party in such
defense, which approval shall not be unreasonably withheld or delayed, and
in the event the Indemnifying Party and the Indemnified Party cannot agree
upon such counsel within ten days after the Defense Notice is provided,
then the Indemnifying Party shall propose an alternate defense counsel,
which shall be subject again to the Indemnified Party's approval, which
approval shall not be unreasonably withheld or delayed.
9.5.2 In the event that the Indemnifying Party shall
fail to give the Defense Notice within the time and as prescribed by
Section 9.5.1, or if the Indemnifying Party does not have the right to
defend such Third Party Claim pursuant to Section 9.5.1, then in either
such event the Indemnified Party shall have the right to conduct such
defense in good faith with counsel reasonably acceptable to the
Indemnifying Party, but the Indemnified Party (or any insurance carrier
defending such Third Party Claim on the Indemnified Party's behalf) shall
be prohibited from compromising or settling the claim
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without the prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed.
9.5.3 In the event that the Indemnifying Party does
deliver a Defense Notice and thereby elects to conduct the defense of such
Third Party Claim in accordance with Section 9.5.1, the Indemnified Party
will cooperate with and make available to the Indemnifying Party such
assistance and materials as it may reasonably request, all at the expense
of the Indemnifying Party. Regardless of which party defends such Third
Party Claim, the other party shall have the right at its expense to
participate in the defense assisted by counsel of its own choosing.
Without the prior written consent of the Indemnified Party, the
Indemnifying Party (and any insurance carrier defending such Third Party
Claim on the Indemnified Party's behalf) will not enter into any
settlement of any Third Party Claim if pursuant to or as a result of such
settlement, such settlement would lead to liability or create any
financial or other obligation on the part of the Indemnified Party for
which the Indemnified Party is not entitled to indemnification hereunder.
If a firm offer is made to settle a Third Party Claim, which offer the
Indemnifying Party is permitted to settle under this Section 9.5, and the
Indemnifying Party desires to accept and agree to such offer, the
Indemnifying Party will give written notice to the Indemnified Party to
that effect. If the Indemnified Party objects to such firm offer within
ten days after its receipt of such notice, the Indemnified Party may
continue to contest or defend such Third Party Claim and, in such event,
the maximum liability of the Indemnifying Party as to such Third Party
Claim will not exceed the amount of such settlement offer, plus costs and
expenses paid or incurred by the Indemnified Party up to the point such
notice had been delivered. Failure at any time of the Indemnifying Party
to diligently defend a Third Party Claim as required herein shall entitle
the Indemnified Party to assume the defense and settlement of said Third
Party Claim as if the Indemnifying Party had never elected to do so as
provided in this Section. Failure by an Indemnified Party to provide
notice on a timely basis of a Third Party Claim shall not relieve the
Indemnifying Party of its obligations hereunder, except that the foregoing
shall not constitute a waiver by the Indemnifying Party of any claim for
direct damages caused by such delay.
9.5.4 Any judgment entered or settlement agreed upon in
the manner provided herein shall be binding upon the Indemnifying Party,
and shall be conclusively deemed to be an obligation with respect to which
the Indemnified Party is entitled to prompt indemnification hereunder,
subject to the Indemnifying Party's right to appeal an appealable judgment
or order.
9.5.5 For purposes of this Section 9.5 and the actions
and decisions to be made by Sellers, the Company shall be deemed to be the
representative of Sellers and the S.L. Indemnified Parties shall be
entitled to rely exclusively on the acts and omissions of the Company with
respect to actions to be taken by, or inferences from omissions of, either
Seller, in their capacity, collectively or individually, as the
Indemnifying Party.
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9.6 NATURE OF OTHER LIABILITIES. In the event any Indemnified
Party should have a claim against any Indemnifying Party hereunder which
does not involve a Third Party Claim, the Indemnified Party shall transmit
to the Indemnifying Party a written notice (the "INDEMNITY NOTICE")
describing in detail the nature of the claim, and the basis of the
Indemnified Party's request for indemnification under this Agreement. If
the Indemnifying Party does not notify the Indemnified Party within 30
days from its receipt of the Indemnity Notice that the Indemnifying Party
disputes such claim, the claim specified by the Indemnified Party in the
Indemnity Notice shall be deemed a liability of the Indemnifying Party
hereunder.
9.7 BASKET; CAP. Sellers shall not be obligated to indemnify
S.L. Indemnified Parties pursuant to Section 9.2(a) of this Agreement on
account of any breach of representations or warranties under this
Agreement (i) unless claims for indemnification against Sellers on account
of any such breach of representations or warranties exceed in the
aggregate $400,000.00 (the "BASKET"), at which point Purchaser shall be
entitled to indemnification for all Losses relating to any breach of
representations or warranties beginning with the first dollar of Losses,
or (ii) for Losses in excess of the Purchase Price ("CAP"). No
adjustments to the Purchase Price to be made under Section 3.2 hereof and
no payment payable under any other provision of Section 9.2, other than
Section 9.2(a), as the case may be, shall be counted in calculating the
Basket.
ARTICLE X CONDITIONS TO CLOSING.
10.1 CONDITIONS TO OBLIGATIONS OF PURCHASER. All obligations of
Purchaser under this Agreement are subject to the fulfillment, at or prior to
the Closing, of the following conditions, any one or more of which may be
waived by Purchaser:
10.1.1 REPRESENTATIONS AND WARRANTIES OF SELLERS. All
representations and warranties made by Sellers in this Agreement and the
Stockholders in the Additional Documents shall be true and correct in all
material respects on and as of the Closing Date and as of the time of the
Closing, as if again made by each Seller on and as of such dates.
10.1.2 PERFORMANCE OF SELLERS' AND STOCKHOLDERS'
OBLIGATIONS. Each Seller and Stockholder shall have delivered all
documents and agreements to which it is a party or signatory described in
Section 4.2 and each Seller and the Stockholders shall have otherwise
performed in all respects all obligations required under this Agreement
and the Additional Documents to be performed by it or them on or prior to
the Closing Date.
10.1.3 CONSENTS AND APPROVALS. All consents, waivers,
authorizations and approvals required in connection with the execution,
delivery and performance of this Agreement and the transfer to Purchaser
of all of the Purchased Assets and the assumption by Purchaser of the
Assumed Liabilities, as contemplated hereby shall have been duly obtained,
including, without limitation, the affirmative vote of the stockholders
described in Section 5.38, unless waived in writing by Purchaser.
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10.1.4 PENDING PROCEEDINGS. No action or proceeding shall
be pending before any court or Governmental Authority seeking to restrain
or prohibit or obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby
(including, without limitation, the Additional Documents) or the proposed
operation of the Business by Purchaser.
10.1.5 BOARD APPROVAL. The Board of Directors of Xxxx Xxx
shall have approved this transaction by March 31, 1998.
10.1.6 EXPIRATION OF WAITING PERIOD. The statutory waiting
period required under HSR shall have expired and neither the DOJ nor the
FTC shall have taken any action to enjoin or delay the consummation of the
transactions contemplated hereby or require the sale or divestiture of any
of the Purchased Assets.
10.1.7 NO MATERIAL ADVERSE CHANGE. During the period from
the date hereof to the Closing, there shall have been no Material Adverse
Effect.
10.1.8 OTHER CLOSING DOCUMENTS. Purchaser shall have
received such other certificates, instruments and documents, reasonably
satisfactory in form and substance to Purchaser, in confirmation of the
representations and warranties of each Seller or in furtherance of the
transactions contemplated by this Agreement and the Additional Agreements
as Purchaser or its counsel may reasonably request, including, without
limitation, agreements duly signed by each employee of Xxxxxxx Xxxxx who
has an employment agreement with Xxxxxxx Xxxxx and who is hired by
Purchaser at Closing (it being understood, however, that such hiring is
not a condition to Closing) to the effect that such employee has no claims
against Purchaser or its Affiliates on account of any liability owed to
such employee by Xxxxxxx Xxxxx, except for accrued vacation to the extent
reflected on the Closing Statement and accrued management bonus to the
extent provided in Section 3.2.2.
10.2 CONDITIONS TO OBLIGATIONS OF SELLERS. All obligations of
Sellers under this Agreement are subject to the fulfillment, at or prior
to the Closing, of the following conditions, any one or more of which may
be waived by Sellers:
10.2.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER. All
representations and warranties made by Purchaser in this Agreement and the
Additional Documents shall be true and correct in all material respects on
and as of the Closing Date and as of the time of Closing, as if again made
by Purchaser on and as of such dates.
10.2.2 PERFORMANCE OF PURCHASER'S OBLIGATIONS. Purchaser
shall have delivered all documents and agreements described in Section 4.3
and otherwise performed in all respects all obligations required under
this Agreement and the Additional Documents to be performed by it on or
prior to the Closing Date.
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10.2.3 CONSENTS AND APPROVALS. The affirmative vote as set
forth in Section 5.38 shall have been duly obtained.
10.2.4 PENDING PROCEEDINGS. No action or proceeding
against either Seller shall be pending before any court or Governmental
Authority seeking to restrain or prohibit, or obtain damages or other
relief in connection with this Agreement or the consummation of the
transactions contemplated hereby (including, without limitation, the
Additional Documents); PROVIDED, HOWEVER, that each Seller shall be
obligated to perform hereunder, notwithstanding this Section 10.2.4 if, in
the event of such an action or proceeding, Purchaser agrees to indemnify
Sellers in accordance with Article IX hereof for all costs, expenses and
damages incurred by either of them in connection with or as a result of
such action or proceeding.
10.2.5 EXPIRATION OF WAITING PERIOD. The statutory waiting
period required under HSR shall have expired and neither the DOJ nor the
FTC shall have taken any action to enjoin or delay the consummation of the
transactions contemplated hereby or require the sale or divestiture of any
of the Purchased Assets.
10.2.6 OTHER CLOSING DOCUMENTS. Sellers shall have
received such other certificates, instruments and documents, reasonably
satisfactory in form and substance to Sellers, in confirmation of the
representations and warranties of Purchaser or in furtherance of the
transactions contemplated by this Agreement as Sellers or their counsel
may reasonably request.
ARTICLE XI POST-CLOSING OBLIGATIONS.
11.1 SUBROGATION. In the event that Purchaser shall suffer any
damage with respect to any matter which was covered by insurance maintained
by Xxxxxxx Xxxxx at or prior to the Closing, Sellers agree that Purchaser
shall be and hereby is subrogated to any rights of Xxxxxxx Xxxxx under such
insurance coverage, and, in addition, Sellers agree promptly to remit to
Purchaser any insurance proceeds which Xxxxxxx Xxxxx may receive on account
of any such damage, but not to exceed the amount of all costs and damages
incurred by Purchaser in connection with such matter; it being agreed,
however, that to the extent Purchaser receives such insurance proceeds as
part of the Purchased Assets (in lieu of any Purchased Asset), the Closing
Date Balance Sheet shall reflect such proceeds.
11.2 USE OF MARKS. As of the Closing, each Seller shall cease to
use any of the Purchased Assets, including, without limitation, logos, marks
and other Intellectual Property comprising a part thereof.
11.3 COLLECTION OF ACCOUNTS. If after the date hereof either
Seller shall receive any payment on any Accounts Receivable acquired by
Purchaser hereunder, such Seller shall forward such payment to Purchaser
within five business days after such Seller's
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receipt thereof, together with any endorsement required so as to permit
Purchaser to collect on such Accounts Receivable.
11.4 FURTHER ASSURANCES.
(a) Upon the request of Purchaser at any time after the Closing,
each Seller will forthwith execute and deliver such instruments of
assignment, transfer, conveyance, endorsement, direction or authorization
and other documents as Purchaser or its counsel may request in order to
perfect title of Purchaser and its successors and assigns to the Purchased
Assets or otherwise to effectuate the purposes of this Agreement.
(b) Upon the request of either Seller at any time after the
Closing, Purchaser will forthwith execute such instruments of assumption
and other documents as Sellers or their counsel may request to effectuate
the purposes of this Agreement.
ARTICLE XII TERMINATION AND ABANDONMENT.
12.1 METHODS OF TERMINATION. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned at any time prior
to the Closing:
(a) by the mutual written consent of Purchaser and Sellers; or
(b) by Purchaser, if all of the conditions set forth in Section
10.1 of this Agreement shall not have been satisfied or waived on or
prior to September 15, 1998; provided, however, that Purchaser shall
not have the right to terminate this Agreement pursuant to this
subsection if such conditions have not been satisfied due to
Purchaser's breach of this Agreement; or
(c) INTENTIONALLY OMITTED;
(d) by Sellers, if all of the conditions set forth in Section
10.2 of this Agreement shall not have been satisfied or waived on or
prior to September 15, 1998; provided, however, that Sellers shall not
have the right to terminate this Agreement pursuant to this subsection
if such conditions have not been satisfied due to either Seller's
breach of this Agreement; or
(e) by either Purchaser or the Company if Xxxx Xxx'x Board of
Directors has not approved this Agreement on or before March 31, 1998;
or
(f) by Purchaser if either Seller or either Seller's Board of
Directors or any Representative of either Seller breaches this
Agreement, including, without limitation, by engaging in any conduct
or act described in clause (iii) of Section 7.3(b); or
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(g) by Purchaser if the condition specified in Section 10.2.3
requiring the stockholder approval described in Section 5.38 is not
satisfied at the time of the Stockholders Meeting; or
(h) subject to Sellers' compliance with Section 7.3, by Sellers
no sooner than 14 days after the Stockholders Meeting if the condition
specified in Section 10.2.3 requiring the stockholder approval
described in Section 5.38 is not satisfied at such Meeting; or
(i) by Purchaser if either Seller or the Board of Directors of
either Seller engages in any conduct or act described in clause (i) or
(ii) of Section 7.3(b).
12.2 INTENTIONALLY OMITTED.
12.3 PROCEDURE UPON TERMINATION. In the event of termination of
this Agreement by Sellers or Purchaser pursuant to this Article XII,
written notice thereof shall forthwith be given to the other parties and
this Agreement shall terminate and the transactions contemplated hereby
shall be abandoned, without further action by any party to this Agreement.
If this Agreement is so terminated, no party to this Agreement shall have
any right or claim against another party on account of such termination
unless this Agreement is terminated by a party on account of the breach of
any representation, warranty, term or covenant herein by the other party
or parties (including, without limitation, the respective Representatives
and Boards of Directors of Sellers) or on account of circumstances which
give rise to payment obligations under Section 12.4, in which case the
terminating party or parties shall be entitled to all of its rights and
remedies at law or in equity. The agreements set forth in this Section
12.3, Section 12.4, Article IX and Article XIII shall survive the
termination of this Agreement.
12.4 TERMINATION EXPENSES AND FEES. Xxxx Xxx shall be entitled
to receive a fee in cash in an amount equal to $995,000.00 (the
"TERMINATION FEE") and reimbursement of the Termination Expenses, if: (i)
this Agreement is terminated pursuant to Section 12.1(i); or (ii) at any
time after the receipt of an Acquisition Proposal which the Company's
Board of Directors entertains or which, directly or indirectly, is
communicated to the Stockholders of the Company or in any other manner
becomes public, this Agreement is terminated pursuant to Section 12.1(g)
or 12.1(h); or (iii) this Agreement is terminated pursuant to Section
12.1(f); or (iv) at any time during the twelve-month period following the
termination of this Agreement pursuant to Section 12.1(b) (other than on
account of a failure of a condition described in Section 10.1.5 or 10.1.6
to have been satisfied) or pursuant to Section 12.1(d) (other than on
account of a failure of the condition described in Section 10.2.5 to have
been satisfied), either Seller enters into any agreement involving a
Significant Transaction. As used in this Agreement, the term "TERMINATION
EXPENSES" means Xxxx Xxx'x and its Affiliates' out-of-pocket fees and
expenses, not to exceed $500,000.00, (including, without limitation, legal
and investment banking and commercial banking fees and
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expenses) actually incurred in connection with (x) this Agreement and the
transactions contemplated hereby, (y) due diligence investigation, and (z)
the negotiation and execution of this Agreement and all Additional
Documents contemplated hereby. Sellers shall be jointly and severally
liable for payment of the Termination Fee and the Termination Expenses.
The Termination Fee shall be payable to Xxxx Xxx within two business days
after the occurrence of any of the events set forth in subclauses (i)
through (iv) of this Section 12.4 and the Termination Expenses shall be
paid promptly but in no event later than two business days after Purchaser
furnishes the Company with documentation supporting such Expenses.
ARTICLE XIII MISCELLANEOUS PROVISIONS.
13.1 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective
successors, heirs, representatives and assigns, as the case may be; provided,
however, that no party shall assign or delegate this Agreement or any of the
rights or obligations created hereunder without the prior written consent of
the other party. Notwithstanding the foregoing, Purchaser shall have the
unrestricted right to assign this Agreement and all or any part of its rights
hereunder and to delegate all or any part of its obligations hereunder to any
transferee, lender, subsidiary or Affiliate of Purchaser, but in such event
Purchaser shall remain fully liable for the performance of all of such
obligations in the manner prescribed in this Agreement. Nothing in this
Agreement shall confer upon any person or entity not a party to this
Agreement, or the legal representatives of such person or entity, any rights
(including, without limitation, rights as a third party beneficiary) or
remedies of any nature or kind whatsoever under or by reason of this
Agreement.
13.2 EXPENSES. Except as otherwise provided in this Agreement,
including Section 12.4, and except with respect to HSR filing fees which
shall be paid in accordance with Section 7.5, Sellers shall bear all expenses
incurred on their behalf in connection with the preparation, execution and
performance of this Agreement, the Additional Documents and the transactions
contemplated hereby and thereby, and Purchaser shall bear all expenses of
such nature incurred on its own behalf.
13.3 TITLE; RISK OF LOSS. Legal title, equitable title and risk
of loss with respect to the Purchased Assets shall not pass to Purchaser
until the Purchased Assets are transferred at the Closing.
13.4 NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopier or facsimile or
similar writing), shall be given to such party at its address or facsimile
number set forth below or at such other addresses as shall be furnished by
any party by like notice to the others. Except as otherwise expressly
provided herein, each such notice, request or other communication shall be
effective upon the earlier of (i) actual receipt, and (ii) receipt of
confirmation of delivery, in each case at the address specified in this
Section. Any notice, request or communication
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delivered by telecopier, facsimile or similar means shall be confirmed by
hard copy delivered as soon as practicable.
(a) if to Purchaser, to:
Xxxx Xxx Corporation
Three First Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx Xxxxx
Senior Vice President, Secretary
and General Counsel
Fax No. 000-000-0000
(b) if to Sellers, to:
The Aristotle Corporation
c/o Mintz Xxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxx PC
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Stanford X. Xxxxxxx, Xx.
Fax No. 000-000-0000
or such other address or persons as the parties may from time to time
designate in writing in the manner provided in this Section 13.4.
13.5 ENTIRE AGREEMENT. This Agreement, together with the
Exhibits attached hereto and the Schedules, represent the entire agreement
and understanding of the parties hereto with reference to the transactions
contemplated herein and therein, and no representations, warranties or
covenants have been made in connection with this Agreement other than
those expressly set forth herein. This Agreement supersedes all prior
negotiations, discussions, correspondence, communications, understandings
and agreements among the parties relating to the subject matter of this
Agreement and all prior drafts thereof, all of which are merged into this
Agreement or such other agreements, as the case may be, except for the
Confidentiality Agreement dated December 22, 1997, the terms of which
shall continue notwithstanding execution of this Agreement.
13.6 WAIVERS, AMENDMENTS AND REMEDIES. This Agreement may be
amended, superseded, cancelled, renewed or extended, and the terms hereof
may be waived, and consents may be provided, only by a written instrument
signed by Purchaser and Sellers or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof; nor
shall any waiver on the part of any party of any such right, power or
privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any further exercise thereof or the exercise of any
other such right, power or privilege. The rights and remedies
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herein provided are cumulative and are not exclusive of any rights or
remedies that any party may otherwise have at law or in equity. The
rights and remedies of any party based upon, arising out of or otherwise
in respect of any inaccuracy in or breach of any representation, warranty,
covenant or agreement contained in this Agreement or any Additional
Document shall in no way be limited by the fact that the act, omission,
occurrence or other statement of facts upon which any claim of any such
inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement contained in this
Agreement (or in any other agreement among the parties) as to which there
is no inaccuracy or breach. Notwithstanding anything herein to the
contrary, if either Seller has dissolved or liquidated, then the consent,
waiver or the like of such Seller shall be deemed properly given if such
consent, waiver or the like has been given by the other Seller. Also, the
consent, approval or waiver of the Company shall constitute consent,
approval or waiver of Xxxxxxx Xxxxx.
13.7 SEVERABILITY. This Agreement shall be deemed severable,
and the invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of this Agreement or of
any other term or provision hereof.
13.8 SECTION HEADINGS. The section headings contained in this
Agreement are solely for convenience of reference and shall not affect the
meaning or interpretation of this Agreement or of any term or provision
hereof.
13.9 COUNTERPARTS; TERMS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and all of
which together shall be considered one and the same agreement. All
references herein to Articles, Sections, Subsections, clauses, Exhibits
and Schedules shall be deemed references to such parts of this Agreement,
unless the context shall otherwise require. All references to singular or
plural or masculine or feminine shall include the other as the context may
require.
13.10 GOVERNING LAW; CONSENT TO JURISDICTION; VENUE. This
Agreement shall be governed by, and construed in accordance with the
internal laws (as opposed to conflicts of law provisions) of the State of
Delaware; provided, however, that any interpretation or application of
Section 8.5 shall be governed by the Illinois Trade Secret Act. As a
further inducement to Purchaser to enter into this Agreement and the
Additional Documents, and in consideration thereof, Sellers agree (i) that
any state or federal court within New Castle County, Delaware shall have
exclusive jurisdiction of any action or proceeding relating to, or arising
under or in connection with this Agreement and the Additional Documents
and Sellers consent to personal jurisdiction of such courts and waive any
objection to such courts' jurisdiction, (ii) that service of any summons
and complaint or other process in any such action or proceeding may be
made by registered or certified mail directed to Sellers at the address
set forth in Section 13.4 above, and service so made shall be deemed to be
completed upon the earlier of actual receipt or three days after the same
shall have been posted as aforesaid, Sellers hereby waiving personal
service thereof. The parties hereto agree that any claim or suit between
or among any of the parties hereto relating to or arising
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under or in connection with this Agreement or any of the Additional
Documents may only be brought in and decided by the state or federal
courts located in the County of New Castle, State of Delaware, such courts
being a proper forum in which to adjudicate such claim or suit, and each
party hereby waives any objection to each such venue and waives any claim
that such claim or suit has been brought in an inconvenient forum.
13.11 DOCUMENTATION. This Agreement and the Additional
Documents were initially prepared by Purchaser's legal counsel as a matter
of convenience only, and such documents have been thoroughly reviewed by
Sellers and their respective legal counsel and the input of Sellers and
their legal counsel was properly considered, and, therefore, no
interpretation will be made in favor of any of the parties or signatories
or any of their Affiliates with respect to this Agreement and the
Additional Documents for the reason that such documents were prepared by
Purchaser's legal counsel.
13.12 EXHIBITS AND SCHEDULES. The Exhibits attached hereto are
a part of this Agreement as if fully set forth herein. The Schedules
referred to herein mean the schedules set forth in that certain letter
agreement, of even date herewith, being furnished to Purchaser by Sellers.
13.13 WAIVERS OF TRIAL BY JURY. SELLERS AND PURCHASER HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
ADDITIONAL DOCUMENTS, AND CONSENT TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
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IN WITNESS WHEREOF, Purchaser and Sellers have caused this Agreement
to be signed as of the date first written above.
XXXX XXX CORPORATION, a Maryland corporation
By: /s/ Xxxx XxXxxxxxxx
--------------------------------
Name: Xxxx XxXxxxxxxx
Title: Senior Vice President
THE ARISTOTLE CORPORATION, a
Delaware corporation
By: /s/ Xxxx Xxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxx
Title: Chairman
THE XXXXXXX, XXXXX COMPANY, a
Delaware corporation
By: /s/ Xxxx Xxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxx
Title: Chairman
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EXHIBIT A
DEFINED TERMS
The following terms shall have the meanings as ascribed to them or
referenced below:
ACCOUNTS RECEIVABLE shall have the meaning set forth in Section 1.1.2
ACCRUED BONUS AMOUNT shall mean the amount of management bonus accrued for
any period up to and including June 30, 1998 and reflected on Xxxxxxx
Xxxxx'x most recent monthly balance sheet prior to the Closing.
ACQUISITION PROPOSALS shall have the meaning set forth in Section 7.3(a)
ADDITIONAL DOCUMENTS shall have the meaning set forth in Section 2.2.3
AFFILIATES shall mean a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common
control with, another person or entity.
AGREEMENT shall have the meaning set forth in the Preamble
ASSUMED LIABILITIES shall have the meaning set forth in Section 2.1
AUDITED STATEMENTS shall have the meaning set forth in Section 5.6
BALANCE SHEET shall have the meaning set forth in Section 5.6
BASKET shall have the meaning set forth in Section 9.7
BONUS PLAN shall have the meaning set forth in Section 3.2.2.
BONUS RECIPIENTS shall have the meaning set forth in Section 3.2.2.
BOOKS AND RECORDS shall have the meaning set forth in Section 1.1.5
BUSINESS shall have the meaning set forth in the Recitals
CAP shall have the meaning set forth in Section 9.7.
CASH AND CASH EQUIVALENTS shall have the meaning set forth in Section
1.1.1
CLAIMS shall have the meaning set forth in Section 1.1.12
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CLOSING shall have the meaning set forth in Section 4.1
CLOSING DATE shall have the meaning set forth in Section 4.1
CLOSING DATE BALANCE SHEET shall have the meaning set forth in Section 3.2
CLOSING NET BOOK VALUE shall have the meaning set forth in Section 3.3
CLOSING PAYMENT shall have the meaning set forth in Section 3.1
CLOSING STATEMENT shall have the meaning set forth in Section 3.2
CODE shall have the meaning set forth in Section 3.4
COMMISSION shall have the meaning set forth in Section 5.24
COMMON STOCK EQUIVALENTS shall have the meaning set forth in Section 5.2(b)
COMPANY shall have the meaning set forth in the Preamble
CONTRACTS shall have the meaning set forth in Section 1.1.11
CONTROLLED ENTITIES shall have the meaning set forth in Section 5.25.1
DEFENSE NOTICE shall have the meaning set forth in Section 9.5.1
DESIGNATED PERIOD shall have the meaning set forth in Section 7.3
DGCL shall have the meaning set forth in Section 5.2(b)
EMPLOYEE PLANS shall have the meaning set forth in Section 5.25.1
EMPLOYMENT AGREEMENTS shall have the meaning set forth in Section 4.2.4
ENVIRONMENTAL LAWS shall have the meaning set forth in Section 5.9.2(a)
ENVIRONMENTAL PERMITS shall have the meaning set forth in Section 5.9.2(b)
EQUIPMENT shall have the meaning set forth in Section 1.1.3
ERISA shall have the meaning set forth in Section 5.25.7
EXCHANGE ACT shall have the meaning set forth in Section 5.24
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401(K) LIABILITIES shall have the meaning set forth in Section 7.7.2
401(K) PLAN shall have the meaning set forth in Section 1.3.7.
FIDUCIARY shall have the meaning set forth in Section 5.25.8
FIXED ASSETS shall have the meaning set forth in Section 3.3
FTC shall have the meaning set forth in Section 5.24
FULLY-DILUTED BASIS shall mean taking into account the number of shares of
outstanding shares issuable upon exercise of outstanding warrants, options
or other rights to acquire shares (and regardless of whether such rights
are vested) and conversion or issuance of all securities which may be
converted into or exchanged for shares.
GAAP shall have the meaning set forth in Section 3.2
GOVERNMENTAL AUTHORITY shall have the meaning set forth in Section 5.24
HAZARDOUS SUBSTANCES shall have the meaning set forth in Section 5.9.2(a)
HSR shall have the meaning set forth in Section 5.24
INAPPLICABLE ACCRUED VACATION shall have the meaning set forth in Section
3.3
INDEBTEDNESS FOR BORROWED FUNDS shall mean, as to any person or entity,
without duplication, (i) all obligations (whether interest, principal,
fees, penalties or otherwise) of such person or entity for borrowed money,
(ii) all obligations of such person or entity evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of
such person or entity to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such person or entity as lessee under
equipment leases and (v) any of the foregoing guaranteed by such person or
entity.
INDEMNIFICATION PERIOD shall have the meaning set forth in Section 9.1
INDEMNIFIED PARTY shall have the meaning set forth in Section 9.4
INDEMNIFYING PARTY shall have the meaning set forth in Section 9.4
INDEMNITY NOTICE shall have the meaning set forth in Section 9.6
INDEPENDENT ACCOUNTANT shall have the meaning set forth in Section 3.2
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INTELLECTUAL PROPERTY shall have the meaning set forth in Section 1.1.6.
INVENTORY shall have the meaning set forth in Section 1.1.4
IRS shall have the meaning set forth in Section 3.4
KNOW-HOW shall mean specialized knowledge which is proprietary to Xxxxxxx
Xxxxx (including product knowledge and use and application knowledge),
formulae, product formulations, processes, product designs,
specifications, quality control, procedures, manufacturing, engineering
and other drawings, computer data bases and software, technology, other
intangibles, technical information, safety information, engineering data
and design and engineering specifications, research records, market
surveys and all promotional literature, customer and supplier lists and
similar data.
LABOR AGREEMENT shall have the meaning set forth in Section 5.26.1
LEASED REAL PROPERTY shall have the meaning set forth in Section 5.13.
LICENSES shall have the meaning set forth in Section 1.1.10
LIENS shall have the meaning set forth in Section 1.1
LOSSES shall have the meaning set forth in Section 9.2
MATERIAL ADVERSE EFFECT shall have the meaning set forth in Section 5.8.1
MULTIEMPLOYER PLAN shall have the meaning set forth in Section 5.25.7
NOTICE shall have the meaning set forth in Section 3.2
NOTICE OF CLAIM shall have the meaning set forth in Section 9.5.1
PBGC shall have the meaning set forth in Section 5.25.4
PATENTS shall mean patents (including all reissues, reexaminations,
divisions, continuations in part and extensions thereof), utility models,
patent applications and disclosures docketed; patent continuations.
PERMITTED COMPANY TRANSACTIONS shall mean any merger, consolidation,
business combination or similar transaction to which the Company is a
party on or prior to September 15, 1998, and pursuant to which the Company
acquires any other entity or business, so long as, following such
transaction all of the following terms are met: (i) the Company is the
survivor of such transaction or has accomplished such transaction through
a subsidiary of the Company, (ii) such transaction does not dilute, reduce
or adversely affect
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the aggregate voting power or rights, on a Fully-Diluted Basis, of the
shares of capital stock held of record or owned beneficially by the
Stockholders, (iii) any shares of capital stock of the Company issued or
delivered in connection with such transaction have no voting rights
(individually, as a class or otherwise) prior to the day following (a) the
Closing Date or (b) September 15, 1998, whichever is earlier, and (iv)
such transaction will not, and could not reasonably be expected to,
impede, interfere with, delay, postpone, discourage or adversely affect
this Agreement, the Additional Documents or the consummation or
contemplated economic benefits of the transactions contemplated hereby or
thereby.
PERMITTED LIENS shall have the meaning set forth in Section 1.1
PERSONAL PROPERTY LEASES shall have the meaning set forth in Section 1.1.7
PERSONNEL DOCUMENTS shall have the meaning set forth in Section 5.25.1
POTENTIAL SUCCESSOR TAXES means any Taxes owed by Xxxxxxx Xxxxx as of the
Closing Date with respect to which Purchaser may have successor liability,
including, without limitation, pursuant to Title 12, Chapter 219 of the
Connecticut General Statutes.
PRODUCTS shall have the meaning set forth in Section 8.4
PROHIBITED AREA shall have the meaning set forth in Section 8.2
PROHIBITED BUSINESS shall have the meaning set forth in Section 8.2
PROTECTED INFORMATION shall have the meaning set forth in Section 8.5
PROXY STATEMENT shall have the meaning set forth in Section 7.2.1
PURCHASE PRICE shall have the meaning set forth in Section 3.1
PURCHASED ASSETS shall have the meaning set forth in Section 1.1
PURCHASER shall have the meaning set forth in the Recitals
REAL PROPERTY LEASES shall have the meaning set forth in Section 1.1.8
RELATED PARTY shall have the meaning set forth in Section 5.30
RELATED PARTIES shall have the meaning set forth in Section 5.30
RELATED AFFILIATE shall have the meaning set forth in Section 8.2
REPORTABLE EVENT shall have the meaning set forth in Section 5.25.5
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REPRESENTATIVE shall have the meaning set forth in Section 7.3
RESERVES shall have the meaning set forth in Section 5.7
RIGHTS AGREEMENT shall have the meaning set forth in Section 5.39
RULES shall have the meaning set forth in Section 5.9.1
SALE AND PURCHASE CONTRACTS shall have the meaning set forth in Section
1.1.9
XXXX XXX shall have the meaning set forth in the Preamble
SCHEDULES shall have the meaning set forth in Section 13.12
SELLERS shall have the meaning set forth in the Preamble
SIGNIFICANT TRANSACTION shall have the meaning set forth in Section 7.3
S.L. INDEMNIFIED PARTIES shall have the meaning set forth in Section 9.2
STOCKHOLDERS shall have the meaning set forth in the Recitals
STOCKHOLDERS' AGREEMENT shall have the meaning set forth in the Recitals
STOCKHOLDERS MEETING shall have the meaning set forth in Section 7.2.1
XXXXXXX XXXXX'X PRO RATA SHARE OF THE ACTUAL BONUS AMOUNT shall have the
meaning set forth in Section 3.2.2.
XXXXXXX XXXXX shall have the meaning set forth in the Preamble
SUPERIOR PROPOSAL shall have the meaning set forth in Section 7.3(a)
TAXES shall have the meaning set forth in Section 5.10
TERMINATION EXPENSES shall have the meaning set forth in Section 12.4
TERMINATION FEE shall have the meaning set forth in Section 12.4
THIRD PARTY CLAIM shall have the meaning set forth in Section 9.5
TRADE NAMES shall mean (i) trade names, (ii) brand names, and (iii) logos
and all other names and slogans used in the Business
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TRADEMARKS shall mean trademarks, service marks, brand marks,
registrations thereof, pending applications for registration thereof, and
such unregistered rights which are used in the Business
TRANSACTION EXPENSES shall have the meaning set forth in Section 2.2.1.
UNAUDITED STATEMENTS shall have the meaning set forth in Section 5.6
WORKING CAPITAL shall have the meaning set forth in Section 3.3
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