AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
by and among
NEWCO, INC.,
GAME TIME, INC.,
XXXX X. XXXXXXXX, XX.
XXXX X. XXXXXXXX
AND
XXXXXXX X. XXXXXXXX
Dated as of March 13, 1997
TABLE OF CONTENTS
1. PURCHASE AND SALE OF SHARES . . . . . . . . . . . . . . . . . . 2
2. PURCHASE PRICE AND PAYMENT TERMS . . . . . . . . . . . . . . . . 2
2.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . 2
2.2. Payment of Purchase Price . . . . . . . . . . . . . . . . . 2
2.2.(a) Cash to Shareholders . . . . . . . . . . . . . . 3
2.2.(b) Notes . . . . . . . . . . . . . . . . . . . . . . 3
3. REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDERS . . . 3
3.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1.(a) Organization . . . . . . . . . . . . . . . . . . 3
3.1.(b) Corporate Power . . . . . . . . . . . . . . . . . 3
3.1.(c) Qualification . . . . . . . . . . . . . . . . . . 3
3.1.(d) Subsidiaries . . . . . . . . . . . . . . . . . . 4
3.1.(e) Corporate Documents. etc . . . . . . . . . . . . 4
3.1.(f) Capitalization of the Company . . . . . . . . . . 4
3.2. Shareholders . . . . . . . . . . . . . . . . . . . . . . . 4
3.2.(a) Power . . . . . . . . . . . . . . . . . . . . . . 4
3.2.(b) Validity . . . . . . . . . . . . . . . . . . . . 4
3.2.(c) Title . . . . . . . . . . . . . . . . . . . . . . 5
3.3. Authority . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4. No Violation . . . . . . . . . . . . . . . . . . . . . . . 5
3.5. Financial Statements . . . . . . . . . . . . . . . . . . . 5
3.6. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6.(a) Provision For Taxes . . . . . . . . . . . . . . . 6
3.6.(b) Tax Returns Filed . . . . . . . . . . . . . . . . 7
3.6.(c) Tax Audits . . . . . . . . . . . . . . . . . . . 7
3.6.(d) Consolidated Group . . . . . . . . . . . . . . . 7
3.6.(e) S Corporation Election . . . . . . . . . . . . . 7
3.6.(f) Other . . . . . . . . . . . . . . . . . . . . . . 7
3.7. Accounts Receivable . . . . . . . . . . . . . . . . . . . . 8
3.8. Inventory . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.9. Absence of Certain Changes . . . . . . . . . . . . . . . . 8
3.9.(a) Adverse Change . . . . . . . . . . . . . . . . . 8
3.9.(b) Damage . . . . . . . . . . . . . . . . . . . . . 8
3.9.(c) Increase in Compensation . . . . . . . . . . . . 8
3.9.(d) Labor Matters . . . . . . . . . . . . . . . . . . 8
3.9.(e) Commitments . . . . . . . . . . . . . . . . . . . 9
3.9.(f) Dividends . . . . . . . . . . . . . . . . . . . . 9
3.9.(g) Disposition of Property . . . . . . . . . . . . . 9
3.9.(h) Indebtedness . . . . . . . . . . . . . . . . . . 9
3.9.(i) Liens . . . . . . . . . . . . . . . . . . . . . . 9
3.9.(j) Amendment of Contracts . . . . . . . . . . . . . 9
3.9.(k) Loans and Advances . . . . . . . . . . . . . . . 9
3.9.(l) Credit . . . . . . . . . . . . . . . . . . . . . 9
3.9.(m) Unusual Events . . . . . . . . . . . . . . . . . 10
3.10. No Litigation . . . . . . . . . . . . . . . . . . . . 10
3.11. Absence of Undisclosed Liabilities . . . . . . . . . . 10
3.12. Compliance With Laws . . . . . . . . . . . . . . . . . 10
3.12.(a) Compliance . . . . . . . . . . . . . . . . . . . 10
3.12.(b) Licenses and Permits . . . . . . . . . . . . . . 11
3.12.(c) Environmental Matters . . . . . . . . . . . . . . 12
3.13. Title to and Condition of Properties . . . . . . . . . 12
3.13.(a) Marketable Title . . . . . . . . . . . . . . . . 12
3.13.(b) Condition . . . . . . . . . . . . . . . . . . . . 13
3.13.(c) Real Property . . . . . . . . . . . . . . . . . . 13
3.13.(d) No Condemnation or Expropriation . . . . . . . . 14
3.14. Insurance . . . . . . . . . . . . . . . . . . . . . . 14
3.15. Contracts and Commitments . . . . . . . . . . . . . . 15
3.15.(a) Real Property Leases . . . . . . . . . . . . . . 15
3.15.(b) Personal Property Leases . . . . . . . . . . . . 15
3.15.(c) Purchase Commitments . . . . . . . . . . . . . . 15
3.15.(d) Sales Commitments . . . . . . . . . . . . . . . . 16
3.15.(e) Contracts With Affiliates and Certain Others . . 16
3.15.(f) Powers of Attorney . . . . . . . . . . . . . . . 16
3.15.(g) Collective Bargaining Agreements . . . . . . . . 16
3.15.(h) Loan Agreements . . . . . . . . . . . . . . . . . 16
3.15.(i) Guarantees . . . . . . . . . . . . . . . . . . . 16
3.15.(j) Contracts Subject to Renegotiation . . . . . . . 16
3.15.(k) Burdensome or Restrictive Agreements . . . . . . 16
3.15.(l) Other Material Contracts . . . . . . . . . . . . 17
3.15.(m) No Default . . . . . . . . . . . . . . . . . . . 17
3.16. Labor Matters . . . . . . . . . . . . . . . . . . . . 17
3.17. Employee Benefit Plans . . . . . . . . . . . . . . . . 18
3.17.(a) Disclosure and Delivery of Documents . . . . . . 18
3.17.(b) Title IV of ERISA . . . . . . . . . . . . . . . . 19
3.17.(c) Multiemployer Plans . . . . . . . . . . . . . . . 19
3.17.(d) Severance and Post-Retirement Benefits . . . . . 19
3.17.(e) Payments and Compliance . . . . . . . . . . . . . 19
3.17.(f) COBRA . . . . . . . . . . . . . . . . . . . . . . 20
3.17.(g) Triggering of Obligations and Other Binding
Commitments . . . . . . . . . . . . . . . . . . . . . 20
3.18. Employment Compensation . . . . . . . . . . . . . . . 20
3.19. Trade Rights . . . . . . . . . . . . . . . . . . . . . 20
3.20. Major Customers and Suppliers . . . . . . . . . . . . 21
3.20.(a) Major Customers . . . . . . . . . . . . . . . . . 21
3.20.(b) Major Suppliers . . . . . . . . . . . . . . . . . 21
3.20.(c) Dealers and Distributors . . . . . . . . . . . . 22
3.21. Product Warranty and Product Liability . . . . . . . . 22
3.22. Bank Accounts . . . . . . . . . . . . . . . . . . . . 23
3.23. Affiliates' Relationships to Company . . . . . . . . . 23
3.23.(a) Contracts With Affiliates . . . . . . . . . . . . 23
3.23.(b) No Adverse Interests . . . . . . . . . . . . . . 23
3.23.(c) Obligations . . . . . . . . . . . . . . . . . . . 23
3.24. Assets Necessary to Business . . . . . . . . . . . . . 23
3.25. Disclosure . . . . . . . . . . . . . . . . . . . . . . 23
4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . 24
4.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.1.(a) Organization . . . . . . . . . . . . . . . . . . 24
4.1.(b) Corporate Power . . . . . . . . . . . . . . . . . 24
4.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.3. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 25
4.4. Investment Intent . . . . . . . . . . . . . . . . . . . . . 25
4.5. Buyer Reports; Financial Statements . . . . . . . . . . . . 25
4.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . 25
4.7. Financial Resources . . . . . . . . . . . . . . . . . . . . 25
5. OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.1. Environmental Survey . . . . . . . . . . . . . . . . . . . 26
5.1.(a) Retention of Engineers . . . . . . . . . . . . . 26
5.1.(b) Limitations on Access . . . . . . . . . . . . . . 26
5.1.(c) Environmental Quantification . . . . . . . . . . 26
5.2. Noncompetition; Confidentiality . . . . . . . . . . . . . . 27
5.2.(a) Covenant Not to Compete . . . . . . . . . . . . . 27
5.2.(b) Covenant of Confidentiality . . . . . . . . . . . 28
5.2.(c) Equitable Relief for Violations . . . . . . . . . 29
5.3. General Releases . . . . . . . . . . . . . . . . . . . . . 29
5.4. Title Insurance . . . . . . . . . . . . . . . . . . . . . . 29
5.5. Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.6. Shareholders' Representative . . . . . . . . . . . . . . . 30
5.6.(a) Appointment . . . . . . . . . . . . . . . . . . . 30
5.6.(b) Authority . . . . . . . . . . . . . . . . . . . . 30
5.6.(c) Tenure and Replacement of the Shareholders'
Representative . . . . . . . . . . . . . . . . . . . . 30
5.7. Transaction Expenses . . . . . . . . . . . . . . . . . . . 31
5.8. Certain Tax Matters . . . . . . . . . . . . . . . . . . . . 31
5.8.(a) Allocation of Purchase Price . . . . . . . . . . 31
5.8.(b) 338 (h)(10) Election . . . . . . . . . . . . . . 31
5.9. Post-Closing Employment Matters . . . . . . . . . . . . . . 32
5.9.(a) 1996 Bonuses . . . . . . . . . . . . . . . . . . 32
5.9.(b) Retention Bonuses . . . . . . . . . . . . . . . . 32
6. FURTHER COVENANTS OF THE COMPANY AND THE SHAREHOLDERS . . . . . 32
6.1. Access to Information and Records . . . . . . . . . . . . . 32
6.2. Conduct of Business Pending the Closing . . . . . . . . . . 33
6.2.(a) No Changes . . . . . . . . . . . . . . . . . . . 33
6.2.(b) No Transfer of Shares . . . . . . . . . . . . . . 33
6.2.(c) Maintain Organization . . . . . . . . . . . . . . 33
6.2.(d) No Breach . . . . . . . . . . . . . . . . . . . . 33
6.2.(e) No Material Contracts . . . . . . . . . . . . . . 34
6.2.(f) No Corporate Changes . . . . . . . . . . . . . . 34
6.2.(g) Maintenance of Insurance . . . . . . . . . . . . 34
6.2.(h) Maintenance of Property . . . . . . . . . . . . . 34
6.2.(i) Interim Financials . . . . . . . . . . . . . . . 34
6.2.(j) No Negotiations . . . . . . . . . . . . . . . . . 34
6.2.(k) No Dividends; No Increase in Compensation . . . 34
6.2.(l) No Change in Accounting Policies . . . . . . . . 35
6.2.(m) No Extraordinary Capital Expenditures . . . . . . 35
6.3. Consents . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.4. Other Action . . . . . . . . . . . . . . . . . . . . . . . 35
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS . . . . . . . . . . 35
7.1. Representations and Warranties True on the Closing Date . . 35
7.2. Compliance With Agreement . . . . . . . . . . . . . . . . . 36
7.3. Absence of Suit . . . . . . . . . . . . . . . . . . . . . . 36
7.4. Environmental Survey . . . . . . . . . . . . . . . . . . . 36
7.5. Title Insurance . . . . . . . . . . . . . . . . . . . . . . 36
7.6. Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.7. Lender's Consent . . . . . . . . . . . . . . . . . . . . . 36
7.8. Due Diligence . . . . . . . . . . . . . . . . . . . . . . . 36
7.9. Financing . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.10. Non-Competition and Confidentiality Agreements . . . . 36
8. CONDITIONS PRECEDENT TO THE SHAREHOLDERS' OBLIGATIONS . . . . . 37
8.1. Representations and Warranties True on the Closing . . . . 37
8.2. Compliance with Agreement . . . . . . . . . . . . . . . . . 37
8.3. Absence of Suit . . . . . . . . . . . . . . . . . . . . . . 37
8.4. Repayment of Certain Indebtedness . . . . . . . . . . . . . 37
9. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 37
9.1. By Shareholders . . . . . . . . . . . . . . . . . . . . . . 37
9.2. By Buyer . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.3. Indemnification for Third-Party Claims . . . . . . . . . . 38
9.3.(a) Notice and Defense . . . . . . . . . . . . . . . 38
9.3.(b) Failure to Defend . . . . . . . . . . . . . . . . 39
9.3.(c) Indemnified Party's Rights . . . . . . . . . . . 39
9.4. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.5. Effect of Payment . . . . . . . . . . . . . . . . . . . . . 40
9.6. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.7. Limitations on Company and Shareholder Indemnification . . 40
9.7.(a) Time Limitation . . . . . . . . . . . . . . . . . 40
9.7.(b) Amount Limitation . . . . . . . . . . . . . . . . 41
9.8. Limitations on Buyer Indemnification . . . . . . . . . . . 41
10. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.1. Documents to be Delivered by the Company and
Shareholders . . . . . . . . . . . . . . . . . . . . . . . 41
10.1.(a) Stock Certificates . . . . . . . . . . . . . . . 41
10.1.(b) Intentionally left blank. . . . . . . . . . . . . 41
10.1.(c) Opinion of Counsel . . . . . . . . . . . . . . . 42
10.1.(d) Certified Resolutions . . . . . . . . . . . . . . 42
10.1.(e) Articles; By-laws . . . . . . . . . . . . . . . . 42
10.1.(f) General Releases . . . . . . . . . . . . . . . . 42
10.1.(g) Termination and Waiver . . . . . . . . . . . . . 42
10.1.(h) Resignation . . . . . . . . . . . . . . . . . . . 42
10.1.(i) Consulting Agreement . . . . . . . . . . . . . . 42
10.1.(j) Other Documents . . . . . . . . . . . . . . . . . 42
10.2. Documents to be Delivered by Buyer . . . . . . . . . . 42
10.2.(a) Purchase Price . . . . . . . . . . . . . . . . . 42
10.2.(b) Note . . . . . . . . . . . . . . . . . . . . . . 42
10.2.(c) Intentionally left blank. . . . . . . . . . . . . 42
10.2.(d) Opinion of Counsel . . . . . . . . . . . . . . . 43
10.2.(e) Certified Resolutions . . . . . . . . . . . . . . 43
10.2.(f) Incumbency Certificate . . . . . . . . . . . . . 43
10.2.(g) Other Documents . . . . . . . . . . . . . . . . . 43
11. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.1. Termination Without Liability . . . . . . . . . . . . 43
11.2. Termination With Liability . . . . . . . . . . . . . . 44
12. POST-CLOSING OBLIGATIONS . . . . . . . . . . . . . . . . . . . . 44
12.1. Transition . . . . . . . . . . . . . . . . . . . . . . 44
12.2. Further Assurances . . . . . . . . . . . . . . . . . . 44
13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.1. Disclosures and Announcements . . . . . . . . . . . . 44
13.2. Assignment; Parties in Interest . . . . . . . . . . . 44
13.2.(a) Assignment . . . . . . . . . . . . . . . . . . . 44
13.2.(b) Parties in Interest . . . . . . . . . . . . . . . 45
13.3. Law Governing Agreement . . . . . . . . . . . . . . . 45
13.4. Amendment and Modification . . . . . . . . . . . . . . 45
13.5. Notice . . . . . . . . . . . . . . . . . . . . . . . . 45
13.6. Expenses . . . . . . . . . . . . . . . . . . . . . . . 47
13.6.(a) Brokerage . . . . . . . . . . . . . . . . . . . . 47
13.6.(b) Expenses . . . . . . . . . . . . . . . . . . . . 47
13.6.(c) Costs of Litigation . . . . . . . . . . . . . . . 47
13.7. Consent to Jurisdiction . . . . . . . . . . . . . . . 47
13.8. Entire Agreement . . . . . . . . . . . . . . . . . . . 47
13.9. Counterparts . . . . . . . . . . . . . . . . . . . . . 48
13.10. Headings . . . . . . . . . . . . . . . . . . . . . . . 48
13.11. Glossary of Terms . . . . . . . . . . . . . . . . . . 48
Schedules (To Be Provided)
Schedule 3.1(c) - Real Property
Schedule 3.1(d) - Subsidiaries
Schedule 3.1(e) - Directors and Officers
Schedule 3.1(f) - Capitalization
Schedule 3.4 - Violation, Conflict, Default
Schedule 3.5 - Financial Statements
Schedule 3.6(b) - Tax Returns
Schedule 3.6(c) - Tax Audits
Schedule 3.6(d) - Consolidated Tax Returns
Schedule 3.6(e) - Tax, Other
Schedule 3.7 - Accounts Receivable
Schedule 3.8 - Inventory Off Premises
Schedule 3.9 - Certain Changes
Schedule 3.10 - Litigation Matters
Schedule 3.11 - Undisclosed Liabilities
Schedule 3.12(a) - Non-Compliance With Laws
Schedule 3.12(b) - Licenses and Permits
Schedule 3.12(c) - Environmental Matters
Schedule 3.13(a) - Liens
Schedule 3.13(c) - Real Property
Schedule 3.14 - Insurance
Schedule 3.15(b) - Personal Property Leases
Schedule 3.15(d) - Sales Commitments
Schedule 3.15(e) - Contracts With Affiliates and Certain Others
Schedule 3.15(f) - Powers of Attorney
Schedule 3.15(g) - Collective Bargaining Agreements
Schedule 3.15(h) - Loan Agreements, etc.
Schedule 3.15(i) - Guarantees
Schedule 3.15(j) - Contracts Subject to Renegotiation
Schedule 3.15(k) - Restrictive Agreements
Schedule 3.15(l) - Material Contracts
Schedule 3.15(m) - Third Party Defaults
Schedule 3.16 - Labor Matters
Schedule 3.17(a) - Employee Plans/Agreements
Schedule 3.18 - Employment Compensation
Schedule 3.19 - Trade Rights
Schedule 3.20(a) - Major Customers
Schedule 3.20(b) - Major Suppliers
Schedule 3.20(c) - Dealers and Distributors
Schedule 3.21 - Product Warranty, Warranty Expense and Liability
Claims
Schedule 3.22 - Bank Accounts
Schedule 3.23(a) - Contracts With Affiliates
Schedule 3.23(b) - Adverse Interests
Schedule 3.23(c) - Obligations of and to Affiliates
Schedule 5.4 - Real Property Surveys and Title Insurance
EXHIBITS
EXHIBIT A - Form of Subordinated Note
EXHIBIT B - Form of Opinion of the Company and Shareholders'
Counsel
EXHIBIT C - Form of Consulting Agreement
EXHIBIT D - Form of Opinion of Buyer's Counsel
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
This AMENDED AND RESTATED STOCK PURCHASE AGREEMENT ("Agreement"),
dated March 13, 1997, is entered into by and among Newco, Inc., a
Wisconsin corporation ("Buyer"), Game Time, Inc., an Alabama corporation
(the "Company"), and Xxxx X. Xxxxxxxx, Xx., Xxxx X. Xxxxxxxx and Xxxxxxx
X. Xxxxxxxx (each individually "Shareholder" and together the
"Shareholders").
RECITALS
A. The Company is engaged in the design, manufacture, sale and
distribution of outdoor playground equipment, site amenities and related
products. Shareholders own all of the issued and outstanding shares of
capital stock of the Company (the "Shares").
B. Buyer desires to purchase from Shareholders, and Shareholders
desire to sell to Buyer, the Shares.
C. Swing-N-Slide Corp., a Delaware corporation ("SNSC"), the
Company and the Shareholders are parties to that certain Stock Purchase
Agreement dated January 21, 1997 (the "Prior Agreement"). SNSC has
assigned its rights and obligations under the Prior Agreement to Buyer.
Buyer, the Company and the Shareholders desire to amend and restate the
Prior Agreement as herein provided.
THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the
parties agree as follows:
1. PURCHASE AND SALE OF SHARES
Subject to the terms and conditions of this Agreement, on the Closing
Date (as defined herein) Shareholders shall sell, transfer, convey,
assign, and deliver to Buyer (or upon Buyer's request, to an assignee
affiliate of Buyer), and Buyer shall purchase the Shares.
2. PURCHASE PRICE AND PAYMENT TERMS
2.1. Purchase Price. The aggregate purchase price (the "Purchase
Price") payable for the Shares shall be Twenty-Seven Million Dollars
($27,000,000). All payments of the Purchase Price are to be made in
accordance with Section 2.2 hereof.
2.2. Payment of Purchase Price. The Purchase Price shall be paid
as follows:
2.2.(a) Cash to Shareholders. At the Closing (as defined
herein), Buyer shall deliver to Shareholders the sum of Twenty-Five
Million Dollars ($25,000,000) by wire transfer of immediately available
funds to such account or accounts and in such proportions as the
Shareholders' Representative (as defined herein) shall designate in
writing not less than forty-eight (48) hours prior to Closing.
2.2.(b) Notes. At the Closing, Buyer shall deliver to
Shareholders in such proportions as the Shareholders' Representative shall
designate in writing not less than 48 hours prior to closing, Buyer's
unsecured note or notes payable to Shareholders in the principal amount of
Two Million Dollars ($2,000,000) (collectively the "Notes") in the form
attached hereto as Exhibit A.
3. REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDERS
The Company and each Shareholder, jointly and severally, make the
following representations and warranties to Buyer, each of which is true
and correct on the date hereof and shall be unaffected by any
investigation heretofore or hereafter made by Buyer, or any knowledge of
Buyer other than as specifically disclosed in the schedules attached
hereto (the "Schedules"):
3.1. Corporate.
3.1.(a) Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Alabama.
3.1.(b) Corporate Power. The Company has all requisite
corporate power and authority to own, operate and lease its properties, to
carry on its business as and where such is now being conducted, to enter
into this Agreement and to carry out the transactions contemplated hereby.
3.1.(c) Qualification. The Company is duly licensed or
qualified to do business as a foreign corporation, and is in good
standing, in each jurisdiction wherein the character of the properties
owned or leased by it, or the nature of its business, makes such licensing
or qualification necessary, except where the Company's failure to be so
qualified or in good standing would not have a Material Adverse Effect (as
defined herein). For purposes of this Agreement, "Material Adverse
Effect" shall mean a material adverse effect on the assets, business,
properties, condition (financial or otherwise) or results of operations of
the Company, considered as a whole. The states in which the Company is
licensed or qualified to do business are listed in Schedule 3.1.(c).
3.1.(d) Subsidiaries. The Company does not own, directly or
indirectly, any capital stock or other equity securities of any
corporation or have any direct or indirect equity or other ownership
interest in any entity or business.
3.1.(e) Corporate Documents. etc. The copies of the
Certificate of Incorporation and By-Laws of the Company, including any
amendments thereto, which have been delivered by Shareholders to Buyer are
true, correct and complete copies of such instruments as presently in
effect. The corporate minute book and stock records of the Company which
have been furnished to Buyer for inspection are true, correct and complete
and accurately reflect all material corporate action taken by the Board of
Directors or the shareholders of the Company in their capacity as
directors or shareholders. The directors and officers of the Company are
listed in Schedule 3.1(e).
3.1.(f) Capitalization of the Company. The authorized
capital stock of the Company consists entirely of one thousand (1,000)
shares of common stock, par value $1.00 per share. No shares of such
capital stock are issued or outstanding except for 100 shares of common
stock of the Company which are owned of record and beneficially by the
Shareholders in the respective numbers set forth in Schedule 3.1.(f). All
such shares of capital stock of the Company are validly issued, fully paid
and nonassessable. Except as set forth in Schedule 3.1.(f), there are no
(i) securities convertible into or exchangeable for any of the Company's
capital stock or other securities, (ii) options, warrants or other rights
to purchase or subscribe to capital stock or other securities of the
Company or securities which are convertible into or exchangeable for
capital stock or other securities of the Company, or (iii) contracts,
commitments, agreements, understandings or arrangements of any kind
relating to the issuance, sale or transfer of any capital stock or other
equity securities of the Company, any such convertible or exchangeable
securities or any such options, warrants or other rights.
3.2. Shareholders.
3.2.(a) Power. Each Shareholder is a legally competent
adult with full power, right and authority to enter into, execute and
deliver this Agreement and the other agreements, instruments and documents
contemplated hereby (such other documents sometimes referred to herein
collectively as "Ancillary Instruments"), and to carry out the
transactions contemplated hereby.
3.2.(b) Validity. This Agreement has been duly and validly
executed and delivered by each Shareholder and is, and when executed and
delivered each Ancillary Instrument will be, the legal, valid and binding
obligation of such Shareholder, enforceable in accordance with its terms,
except as such may be limited by bankruptcy, insolvency, reorganization or
other laws affecting creditors' rights generally, and by general equitable
principles.
3.2.(c) Title. Each Shareholder has, and at Closing Buyer
will receive, good and marketable title to those Shares to be sold by such
Shareholder hereunder, free and clear of any liens, security interests,
pledges, assessments, levies, restrictions (including any restrictions on
transfers imposed by applicable federal or state securities law), options,
voting trusts or agreements, proxies, encumbrances, marital or community
property interests or other claims or charges of any nature whatever.
3.3. Authority. The execution and delivery of this Agreement by
the Company have been duly authorized by the Board of Directors of the
Company and the Shareholders. No other or further corporate act or
proceeding on the part of the Company is necessary to authorize this
Agreement. This Agreement constitutes a valid and binding agreement of
the Company, enforceable in accordance with its terms, except as such may
be limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors' rights generally, and by general equitable
principles.
3.4. No Violation. Except as set forth on Schedule 3.4, neither
the execution and delivery of this Agreement or the other documents and
instruments to be executed and delivered by the Company and the
Shareholders pursuant hereto, nor the consummation by Shareholders of the
transactions contemplated hereby and thereby (a) will violate any
applicable federal, state, local or foreign laws, ordinances, orders,
rules or regulations, (b) will require any authorization, consent,
approval, exemption or other action by or notice to any governmental
entity (including, without limitation, under any "plant-closing" or
similar law), or (c) subject to obtaining the consents referred to in
Schedule 3.4, will violate or conflict with, or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or will result in the termination of, or accelerate the
performance required by, or result in the creation of any lien upon any of
the assets of the Company under, any term or provision of the Certificate
of Incorporation or By-laws of the Company or of any contract, commitment,
agreement or restriction of any kind or character to which the Company or
any Shareholder is a party or by which the Company or any Shareholder or
any of their respective assets or properties may be bound or affected.
3.5. Financial Statements. Included as Schedule 3.5 are true and
complete copies of the financial statements of the Company consisting of
(a) balance sheets of the Company as of December 31, 1991, 1992, 1993,
1994 and 1995, and the related statements of income and cash flows for the
years then ended (including the notes contained therein or annexed
thereto), which financial statements have been reported on, and are
accompanied by, the signed, unqualified opinions of Xxxxxxxxxx, Melvoin &
Xxxxxxx, independent auditors for the Company for such years, and (b) an
unaudited balance sheet of the Company as of December 31, 1996 (the
"Recent Balance Sheet"), and the related unaudited statements of income
and cash flows for the twelve months then ended and for the corresponding
period of the prior year (including the notes and schedules contained
therein or annexed thereto). All of such financial statements (including
all notes and schedules contained therein or annexed thereto) are true,
complete and accurate, have been prepared in accordance with GAAP (except,
in the case of unaudited statements, for the absence of footnote
disclosure and subject to year-end adjustments on a basis and in amount
consistent with adjustments made in prior years), have been prepared in
accordance with the books and records of the Company, and fairly present
in all material respects the assets, liabilities and financial position,
the results of operations and cash flows of the Company as of the dates
and for the years and periods indicated. Reserves reflected on such
financial statements have been determined in all material respects in
accordance with GAAP and are consistent with the Company's past practice
as to kind and amount. The Recent Balance Sheet reflects those year-end
adjustments which are recurring adjustments and estimates the likely
amount of such adjustments for the fiscal year ending December 31, 1996.
For purposes of this Agreement, the term "GAAP" means generally accepted
U.S. accounting principles as in effect during any relevant period of
time, applied in a consistent manner.
3.6. Tax Matters.
3.6.(a) Provision For Taxes. The provision made for taxes
on the Recent Balance Sheet is sufficient for the payment of all federal,
state, foreign, county, local and other income, ad valorem, excise,
profits, franchise, occupation, property, payroll, sales, use, gross
receipts and other taxes (and any interest and penalties) and assessments
of the Company as of December 31, 1996, whether or not disputed at the
date of the Recent Balance Sheet, and for all years and periods prior
thereto, but without inclusion of any tax liability attributable to an
election subsequent to the date hereof under Section 338 of the Code.
Since the date of the Recent Balance Sheet, the Company has not incurred
any taxes other than taxes incurred in the Ordinary Course of Business.
For purposes of this Agreement, the "Ordinary Course of Business" shall
mean conduct, transactions or occurrences consistent in
both nature and amount with historical experience and past practice of the
Company.
3.6.(b) Tax Returns Filed. The Company previously has
delivered to Buyer true, accurate and complete copies of all federal,
state, foreign, county, local and other tax returns filed by or on behalf
of the Company within the past five (5) years. Except as set forth on
Schedule 3.6.(b), all federal, state, foreign, county, local and other tax
returns required to be filed by or on behalf of the Company have been
timely filed and when filed were true and correct in all material
respects, and the taxes shown as due thereon were paid or adequately
accrued. The Company has duly withheld and paid all taxes which it is
required to withhold and pay relating to salaries and other compensation
paid to the employees of the Company.
3.6.(c) Tax Audits. The federal and state income tax
returns of the Company have been audited by the Internal Revenue Service
and appropriate state taxing authorities for the periods and to the extent
set forth in Schedule 3.6.(c), and the Company has not received from the
Internal Revenue Service or from the tax authorities of any state, county,
local or other jurisdiction any notice of underpayment of taxes or other
deficiency which has not been paid nor any objection to any return or
report filed by the Company. Except as set forth in Schedule 3.6.(c),
there are outstanding no agreements or waivers extending the statutory
period of limitations applicable to any tax return or report.
3.6.(d) Consolidated Group. Schedule 3.6.(d) lists every
year from January 1, 1986 and thereafter that the Company was a member of
an affiliated group of corporations that filed a consolidated tax return
on which the statute of limitations does not bar a federal tax assessment,
and each corporation that has been part of such group. Except as set
forth on Schedule 3.6.(d), no affiliated group of corporations of which
the Company has been a member has discontinued filing consolidated returns
during the past ten years.
3.6.(e) S Corporation Election. The Company has made a
valid election under Section 1361 of the Code to be an S Corporation for
federal income tax purposes and the Company and the Shareholders have
taken all actions necessary to maintain the Company's S Corporation
status.
3.6.(f) Other. Except as set forth in Schedule 3.6.(f),
since January 1, 1987 the Company has not (i) filed any consent or
agreement under Section 341(f) of the Internal Revenue Code of 1986, as
amended (the "Code"), (ii) applied for any tax ruling, (iii) entered into
a closing agreement with any taxing authority, (iv) filed an election
under Section 338(g) or Section 338(h)(10) of the Code (nor has a deemed
election under Section 338(e) of the Code occurred), (v) made any
payments, or been a party to an agreement (including this Agreement) that
under any circumstances could obligate it to make payments that will not
be deductible because of Section 280G of the Code, or (vi) been a party to
any tax allocation or tax sharing agreement. The Company is not a "United
States real property holding Company" within the meaning of Section
897(c)(2) of the Code.
3.7. Accounts Receivable. All accounts receivable of the Company
reflected on the Recent Balance Sheet, or arising in the Ordinary Course
of Business since the date thereof, represent arm's length sales actually
made in the Ordinary Course of Business and are valid. The reserve for
doubtful accounts shown on the Recent Balance Sheet has been determined in
accordance with GAAP. Schedule 3.7 contains an aged schedule of accounts
receivable included in the Recent Balance Sheet.
3.8. Inventory. Except for the inventory listed or described on
Schedule 3.8, as of February 28, 1997 all inventory of the Company
consists of a quality and quantity usable and saleable in the Ordinary
Course of Business, and is valued in accordance with GAAP at the lower of
cost (on a FIFO basis) or market. All inventory purchased since February
28, 1997 consists of a quality and quantity usable and saleable in the
Ordinary Course of Business. Except as set forth in Schedule 3.8, all
inventory of the Company is located on premises owned or leased by the
Company as reflected in this Agreement. All work in process contained in
inventory constitutes items in process of production pursuant to the
Ordinary Course of Business.
3.9. Absence of Certain Changes. Except as and to the extent set
forth in Schedule 3.9 or otherwise set forth in the Schedules to this
Agreement, since the date of the Recent Balance Sheet there has not been:
3.9.(a) Adverse Change. Any change in the financial
condition, assets, liabilities, business, operations or, to the Best
Knowledge of the Shareholders, the prospects of the Company which would
have a Material Adverse Effect;
3.9.(b) Damage. Any loss, damage or destruction in excess
of Twenty-Five Thousand Dollars ($25,000) in the aggregate, whether
covered by insurance or not, affecting the Company's business or
properties;
3.9.(c) Increase in Compensation. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of the Company (including, without limitation, any
increase or change pursuant to any bonus, pension, profit sharing,
retirement or other plan or commitment), or any bonus or other employee
benefit granted, made or accrued;
3.9.(d) Labor Matters. Any union organizing petition or
campaign, labor dispute or disturbance, other than routine individual
grievances which are not material to the business, financial condition or
results of operations of the Company;
3.9.(e) Commitments. Any commitment or transaction by the
Company involving payments in excess of Ten Thousand Dollars ($10,000) in
the aggregate (including, without limitation, any borrowing or capital
expenditure) other than in the Ordinary Course of Business;
3.9.(f) Dividends. Any declaration, setting aside, or
payment of any dividend or any other distribution in respect of the
Company's capital stock (except for payment of dividends for the
Shareholders' tax obligations pursuant to Subchapter S of the Code on the
Company's income); any redemption, purchase or other acquisition by the
Company of any capital stock of the Company, or any security relating
thereto; or any other payment to any Shareholder in such person's capacity
as a shareholder;
3.9.(g) Disposition of Property. Any sale, lease or other
transfer or disposition of any properties or assets of the Company, except
for the sale of inventory items in the Ordinary Course of Business;
3.9.(h) Indebtedness. Any indebtedness for borrowed money
incurred, assumed or guaranteed by the Company;
3.9.(i) Liens. Any Lien (as defined herein) granted on any
of the properties or assets of the Company;
3.9.(j) Amendment of Contracts. Any entering into,
amendment or termination by the Company of any contract involving amounts
in excess of Ten Thousand Dollars ($10,000) in the aggregate, or any
waiver of material rights thereunder, other than in the Ordinary Course of
Business;
3.9.(k) Loans and Advances. Any loan or advance (other than
advances to employees in the Ordinary Course of Business for travel and
entertainment) to any person including, but not limited to, any officer,
director or employee of the Company, or any Affiliate (for the purposes of
this Agreement, the term "Affiliate" shall mean and include all
Shareholders, directors, and officers of the Company; the spouse of any
such person; any person who would be the heir or descendant of any such
person if he or she were not living; and any entity in which any of the
foregoing has a direct or indirect interest, except through ownership of
less than five percent (5%) of the outstanding shares of any entity whose
securities are listed on a National Securities Exchange traded in the
national over the counter market;
3.9.(l) Credit. Any grant of credit to any customer or
distributor on terms or in amounts more favorable than those which have
been extended to such customer or distributor in the past, any other
change in the terms of any credit heretofore extended, or any other change
of the Company's policies or practices with respect to the granting of
credit; or
3.9.(m) Unusual Events. Any other event or condition not in
the Ordinary Course of Business.
3.10. No Litigation. Except as set forth in Schedule 3.10, there is
no action, suit, arbitration, proceeding, investigation or inquiry pending
or, to the Best Knowledge of the Shareholders (as defined herein),
threatened against the Company or its directors (in such capacity), its
business or assets nor, to the Best Knowledge of the Shareholders, is
there any basis for any such proceedings, investigations or inquiries.
Schedule 3.10 also identifies all such actions, suits, proceedings,
investigations and inquiries to which the Company or any of its directors
(in such capacity) have been parties within the past five (5) years.
Except as set forth in Schedule 3.10, neither the Company nor its business
or assets is subject to any judgment, order, writ or injunction of any
court, arbitrator or federal, state, foreign, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality. For purposes of this Agreement, the term "Best Knowledge
of the Shareholders" shall mean the knowledge of any of the Shareholders
after due inquiry of appropriate operating personnel of the Company.
3.11. Absence of Undisclosed Liabilities. Except as and to the
extent specifically disclosed in the Recent Balance Sheet, in Schedule
3.11 or in any of the other Schedules to this Agreement, to the Best
Knowledge of the Shareholders, the Company does not have any material
liabilities other than commercial liabilities and obligations incurred
since the date of the Recent Balance Sheet in the Ordinary Course of
Business, none of which has or is reasonably likely to have a Material
Adverse Effect.
3.12. Compliance With Laws.
3.12.(a) Compliance. Except as set forth in Schedule
3.12.(a), to the Best Knowledge of the Shareholders the Company (including
all of its operations, practices, properties and assets) is in compliance
with all applicable federal, state, local and foreign laws, ordinances,
orders, rules and regulations (collectively, "Laws"), including, without
limitation, those applicable to discrimination in employment, occupational
safety and health, trade practices, competition and pricing, product
warranties, zoning, building and sanitation, employment, retirement and
labor relations, product advertising the Environmental Laws (as
hereinafter defined) and the Foreign Corrupt Practices Act, except where
the failure to so comply would not have a Material Adverse Effect. Except
as set forth in Schedule 3.12.(a), the Company has not received notice of
any violation or alleged violation of any Laws since January 1, 1986. All
reports and returns required to be filed by the Company with any
governmental authority have been filed, except where the failure to so
file would not, individually or in the aggregate, have a Material Adverse
Effect, and were accurate and complete when filed. Without limiting the
generality of the foregoing:
(i) To the Best Knowledge of the Shareholders, the
operation of the business of the Company as it is now
conducted does not, nor does any condition existing at any of
the facilities of the Company, in any manner constitute a
nuisance or other tortious interference with the rights of any
person or persons in such a manner as to give rise to or
constitute the grounds for a suit, action, claim or demand by
any such person or persons seeking compensation or damages or
seeking to restrain, enjoin or otherwise prohibit any aspect
of the conduct of such business or the manner in which it is
now conducted;
(ii) The Company has made all required payments to
its unemployment compensation reserve accounts with the
appropriate governmental departments of the states where it is
required to maintain such accounts, and each of such accounts
has a positive balance.
(iii) The Company has delivered to Buyer copies of
all reports of the Company for the past five (5) years made by
the Company under the federal Occupational Safety and Health
Act of 1970, as amended, and under all other applicable health
and safety laws and regulations. The deficiencies, if any,
noted on such reports have been corrected.
3.12.(b) Licenses and Permits. The Company has all licenses,
permits, approvals, authorizations and consents of all governmental and
regulatory authorities and all certification organizations required for
the conduct of the business as presently conducted and operation of its
facilities as presently operated. All material licenses, permits,
approvals, authorizations and consents of the Company (other than those
which relate to occupancy of its premises or the collection, withholding
or payment of taxes) are described in Schedule 3.12.(b), are in full force
and effect and will not be affected or made subject to loss, limitation or
any obligation to reapply as a result of the transactions contemplated
hereby. Except as set forth in Schedule 3.12.(b), the Company (including
its operations, properties and assets) is and has been in compliance with
all such permits and licenses, approvals, authorizations and consents,
except where the failure to so comply would not have a Material Adverse
Effect.
3.12.(c) Environmental Matters. The applicable Laws or
regulations adopted thereunder relating to pollution or protection of the
environment, including Laws relating to emissions, discharges, generation,
storage, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic, hazardous or petroleum or petroleum-based
substances or wastes ("Waste") into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
such substances including, without limitation, the Clean Water Act, the
Clean Air Act, the Resource Conservation and Recovery Act, the Toxic
Substances Control Act and the Comprehensive Environmental Response
Compensation Liability Act ("CERCLA"), as amended up to the date hereof,
and their state and local counterparts are herein collectively referred to
as the "Environmental Laws". Without limiting the generality of the
foregoing provisions of this Section 3.12, to the Best Knowledge of the
Shareholders the Company is in compliance in all material respects with
all Environmental Laws and any requirements contained in any plan, order,
decree, judgment, injunction, notice or demand letter issued to or entered
against the Company. Except as set forth in Schedule 3.12.(c), there is
no civil, criminal or administrative action, suit, hearing, demand, claim,
notice of violation, investigation, proceeding, notice or demand letter
pending or to the Best Knowledge of the Shareholders, threatened against
the Company relating in any way to the Environmental Laws or any order,
decree or judgment entered against the Company. Except as set forth in
Schedule 3.12.(c), to the Best Knowledge of the Shareholders, there are no
past or present conditions or activities which could give rise to a
violation of any Environmental Laws or which may give rise to any
liability, including, without limitation, liability under CERCLA or
similar state or local Laws based on the use, treatment, storage,
disposal, transport or handling, or the release into the environment, of
any Waste.
3.13. Title to and Condition of Properties.
3.13.(a) Marketable Title. The Company has good and
marketable title to all of its assets, business and properties, including,
without limitation, all such properties (tangible and intangible)
reflected in the Recent Balance Sheet, except for inventory or other
assets disposed of in the Ordinary Course of Business since the date of
the Recent Balance Sheet, free and clear of all mortgages, liens
(statutory or otherwise), security interests, claims, pledges, licenses,
equities, options, conditional sales contracts, assessments, levies,
covenants, reservations, restrictions, exceptions, limitations, charges or
encumbrances of any nature whatsoever (collectively, "Liens") except those
described in Schedule 3.13.(a) and, in the case of real property,
encumbrances, easements and rights of way revealed in the title insurance
commitment provided pursuant to Section 5.4 and on the survey(s) obtained
pursuant to Section 5.5, Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings (and which have been
sufficiently accrued or reserved against in the Recent Balance Sheet),
municipal and zoning ordinances and easements for public utilities, none
of which interfere in any material respect with the use of the property as
currently utilized. None of the Company's assets or properties are
subject to any restrictions with respect to the transferability thereof
(except for laws of general applicability), and the Company's title
thereto will not be affected in any way by the transactions contemplated
hereby.
3.13.(b) Condition. To the Best Knowledge of the
Shareholders, all property and assets owned or utilized by the Company are
in good operating condition and repair (subject to normal wear and tear
and consistent with their respective ages), free from any defects (except
such minor defects as do not materially interfere with the use thereof in
the conduct of the normal operations of the Company), have been maintained
consistent with the standards generally followed in the industry and are
sufficient to carry on the business of the Company as conducted during the
preceding twelve (12) months. All buildings, plants and other structures
owned or otherwise utilized by the Company are in good condition and
repair (subject to normal wear and tear and consistent with their
respective ages) and have no structural defects or defects affecting the
plumbing, electrical, sewerage, or heating, ventilating or air
conditioning systems (except such minor defects as do not materially
interfere with the use thereof in the conduct of the normal operations of
the Company).
3.13.(c) Real Property. Schedule 3.13.(c) sets forth all
real property owned, used or occupied by the Company (the "Real
Property"), including a description of all land, and all encumbrances,
easements or rights of way of record (or, if not of record, of which the
Company has notice or knowledge) granted on or appurtenant to or otherwise
affecting such Real Property, the zoning classification thereof, and all
plants, buildings or other structures located thereon. With respect to
each parcel of Real Property which is leased, Schedule 3.13.(c) identifies
such lease and provides a true and complete copy of such lease. To the
Best Knowledge of the Shareholders, to the extent required by applicable
law, there are now in full force and effect duly issued certificates of
occupancy permitting the Real Property and improvements located thereon to
be legally used and occupied as the same are now constituted. All of the
Real Property has permanent rights of access to dedicated public highways.
To the Best Knowledge of the Shareholders, no fact or condition exists
which would prohibit or adversely affect the ordinary rights of access to
and from the Real Property from and to the existing highways and roads and
there is no pending or, to the Best Knowledge of the Shareholders,
threatened restriction or denial, governmental or otherwise, upon such
ingress and egress. To the Best Knowledge of the Shareholders, no portion
of any of the Real Property has been used as a landfill or for storage of
hazardous or toxic materials. Except as set forth on Schedule 3.13.(c),
there is not (i) any claim of adverse possession or prescriptive rights
involving any of the Real Property, (ii) any structure located on any Real
Property which encroaches on or over the boundaries of neighboring or
adjacent properties or (iii) any structure of any other party which
encroaches on or over the boundaries of any of such Real Property. To the
Best Knowledge of the Shareholders, none of the Real Property is located
in a flood plain, flood hazard area, wetland or lakeshore erosion area
within the meaning of any Law, regulation or ordinance. No public
improvements have been commenced and, to the Best Knowledge of the
Shareholders, none are planned which in either case may result in special
assessments against or otherwise materially adversely affect any Real
Property. Except as set forth on Schedule 3.13.(c), to the Best Knowledge
of the Shareholders there is no (i) planned or proposed increase in
assessed valuations of any Real Property, (ii) governmental agency or
court order requiring repair, alteration, or correction of any existing
condition affecting any Real Property or the systems or improvements
thereat, (iii) condition or defect which could give rise to an order of
the sort referred to in "(ii)" above, (iv) underground storage tanks, or
any structural, mechanical, or other defects of material significance
affecting any Real Property or the systems or improvements thereat
(including, but not limited to, inadequacy for normal use of mechanical
systems or disposal or water systems at or serving the Real Property), or
(v) work that has been done or labor or materials that has or have been
furnished to any Real Property during the period of six (6) months
immediately preceding the date of this Agreement for which liens could be
filed against any of the Real Property.
3.13.(d) No Condemnation or Expropriation. Neither the whole
nor any portion of the property or any other assets of the Company is
subject to any governmental decree or order to be sold or is being
condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor to the Best Knowledge of the
Shareholders has any such condemnation, expropriation or taking been
proposed.
3.14. Insurance. Set forth in Schedule 3.14 is a complete and
accurate list of all policies of fire, liability, product liability,
workers compensation, health and other forms of insurance presently in
effect with respect to the business and properties of the Company, true
and correct copies of which have heretofore been delivered to Buyer.
Schedule 3.14 includes a list of any pending claims in excess of Ten
Thousand Dollars ($10,000) individually or Fifty Thousand Dollars
($50,000) in the aggregate per policy. All such policies are valid,
outstanding and enforceable policies; and no such policy (nor any previous
policy) provides for or is subject to any currently enforceable
retroactive rate or premium adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
arising prior to the date hereof, except as set forth in Schedule 3.14.
Schedule 3.14 indicates each policy as to which (a) the coverage limit has
been reached or (b) the total incurred losses to date equal seventy-five
percent (75%) or more of the coverage limit. No notice of cancellation or
termination has been received with respect to any such policy, and to the
Best Knowledge of the Shareholders the Company has not engaged in any act
or omission which could result in cancellation of any such policy prior to
its scheduled expiration date. To the Best Knowledge of the Shareholders,
the Company has duly and timely made all claims it has been entitled to
make under each policy of insurance. Since January 1, 1992, all products
liability and general liability policies maintained by or for the benefit
of the Company have been "occurrence" policies and not "claims made"
policies. There is no claim by the Company pending under any such
policies as to which coverage has been denied or disputed by the
underwriters of such policies nor, to the Best Knowledge of the
Shareholders, is there any basis for denial of any pending claim under any
such policy. The Company has not received any written notice from or on
behalf of any insurance carrier issuing any such policy that insurance
rates therefor will hereafter be substantially increased (except to the
extent that insurance rates may be increased for all similarly situated
risks) or that there will hereafter be a cancellation or an increase in a
deductible (or an increase in premiums in order to maintain an existing
deductible) or nonrenewal of any such policy.
3.15. Contracts and Commitments.
3.15.(a) Real Property Leases. Except as set forth in
Schedule 3.13.(c), the Company has no leases of real property.
3.15.(b) Personal Property Leases. Except as set forth in
Schedule 3.15.(b), the Company has no leases of personal property
involving consideration or other expenditures in excess of Five Thousand
Dollars ($5,000) in the case of any single contract.
3.15.(c) Purchase Commitments. The Company has no purchase
commitments for inventory items or supplies that, together with amounts on
hand, constitute in excess of twelve (12) months normal usage, except for
contracts which do not exceed Five Thousand Dollars ($5,000) for any
individual item or Twenty-Five Thousand Dollars ($25,000) in the
aggregate.
3.15.(d) Sales Commitments. Except as set forth in Schedule
3.15.(d), the Company has no sales contracts or commitments to customers
or distributors which aggregate in excess of One Hundred Thousand Dollars
($100,000) to any one customer or distributor (or group of affiliated
customers or distributors) outstanding as of February 28, 1997. The
Company has no sales contracts or commitments except those made in the
Ordinary Course of Business, at arm's length, and no such contracts or
commitments are for a sales price which would result in a loss to the
Company.
3.15.(e) Contracts With Affiliates and Certain Others.
Except as set forth in Schedule 3.15.(e), the Company has no agreement,
understanding, contract or commitment (written or oral) with any Affiliate
or any other officer, employee, agent, consultant, distributor, dealer or
franchisee that is not cancellable by the Company on notice of not longer
than thirty (30) days without liability, penalty or premium of any kind.
3.15.(f) Powers of Attorney. Except as set forth in Schedule
3.15.(f), the Company has not given a power of attorney, which is
currently in effect, to any person, firm or corporation for any purpose.
3.15.(g) Collective Bargaining Agreements. The Company is
not a party to any collective bargaining agreements with any unions,
guilds, shop committees or other collective bargaining groups.
3.15.(h) Loan Agreements. Except as set forth in Schedule
3.15.(h), the Company is not obligated under any loan agreement,
promissory note, letter of credit, or other evidence of indebtedness as a
signatory, guarantor or otherwise.
3.15.(i) Guarantees. Except as set forth in Schedule
3.15.(i), the Company has not guaranteed the payment or performance of any
person, firm or corporation, agreed to indemnify any person or act as a
surety, or otherwise agreed to be contingently or secondarily liable for
the obligations of any person.
3.15.(j) Contracts Subject to Renegotiation. Except as set
forth in Schedule 3.15.(j), the Company is not a party to any contract
with any governmental body which is subject to renegotiation.
3.15.(k) Burdensome or Restrictive Agreements. The Company
is not a party to nor is it bound by any agreement, deed, lease or other
instrument which is so burdensome as to materially affect or impair the
operation of the Company. Without limiting the generality of the
foregoing, except as disclosed on Schedule 3.15.(k), the Company is not a
party to nor is it bound by any agreement requiring the Company to assign
any interest in any trade secret or proprietary information, or
prohibiting or restricting the Company from competing in any business or
geographical area or soliciting customers or otherwise restricting it from
carrying on its business anywhere in the world.
3.15.(l) Other Material Contracts. Except for purchase or
sale commitments of the type described in Sections 3.15.(c) or 3.15.(d),
the Company has no lease, license, contract or commitment of any nature
involving consideration or other expenditure by the Company in excess of
Twenty-Five Thousand Dollars ($25,000) for a single contract or which is
otherwise individually material to the operations of the Company, except
as explicitly described in Schedule 3.15.(l).
3.15.(m) No Default. To the Best Knowledge of the
Shareholders, the Company is not in default under any lease, contract or
commitment, nor has any event or omission occurred which through the
passage of time or the giving of notice, or both, would constitute a
default thereunder or cause the acceleration of any of the Company's
obligations or result in the creation of any lien on any of the assets
owned, used or occupied by the Company, where such default would have a
Material Adverse Effect. Schedule 3.15(m) sets forth a schedule of aged
accounts receivable as of February 28, 1997. Except as set forth on
Schedule 3.15(m), to the Best Knowledge of the Shareholders no third party
is in default under any lease, contract or commitment to which the Company
is a party, nor has any event or omission occurred which, through the
passage of time or the giving of notice, or both, would constitute a
default thereunder or give rise to an automatic termination, or the right
of discretionary termination thereof.
3.16. Labor Matters. Except as set forth in Schedule 3.16, within
the last five (5) years the Company has not experienced any labor
disputes, union organization attempts or any work stoppage due to labor
disagreements in connection with its business. Except to the extent set
forth in Schedule 3.16, (a) to the Best Knowledge of the Shareholders the
Company is in compliance with all applicable laws respecting employment
and employment practices (including, without limitation, law applicable to
sexual harassment), terms and conditions of employment and wages and
hours, and is not engaged in any unfair labor practice, (b) there is no
unfair labor practice charge or complaint against the Company pending or,
to the Best Knowledge of the Shareholders, threatened, (c) there is no
labor strike, dispute, request for representation, slowdown or stoppage
actually pending or, to the Best Knowledge of the Shareholders, threatened
against or affecting the Company nor any secondary boycott with respect to
products of the Company, (d) no grievance which might have a Material
Adverse Effect, nor any arbitration proceeding arising out of or under
collective bargaining agreements, is pending, (e) there are no
administrative charges or court complaints against the Company concerning
alleged employment discrimination or other employment related matters
pending or threatened before the U.S. Equal Employment Opportunity
Commission or any state or federal or foreign court or agency, and (f)
there are no investigations, complaints, citations or other proceedings
pending or, to the Best Knowledge of the Shareholders, threatened against
the Company by the U.S. Occupational, Safety and Health Administration or
any state agency concerning any health or safety matters.
3.17. Employee Benefit Plans.
3.17.(a) Disclosure and Delivery of Documents. Schedule
3.17.(a) sets forth all pension, thrift, savings, profit sharing,
retirement, incentive bonus or other bonus, medical, dental, life,
accident insurance, benefit, employee welfare, disability, group
insurance, stock purchase, stock option, stock appreciation, stock bonus,
executive or deferred compensation, hospitalization and other similar
fringe or employee benefit plans, programs and arrangements, and any
employment or consulting contracts, "golden parachutes," collective
bargaining agreements, severance agreements or plans, vacation and sick
leave plans, programs, arrangements and policies, including, without
limitation, all "employee benefit plans" (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), all employee manuals, and all written or binding oral
statements of policies, practices or understandings relating to
employment, which are provided to, for the benefit of, or relate to, any
persons employed by the Company. The items described in the foregoing
sentence are hereinafter sometimes referred to collectively as "Employee
Plans/Agreements," and each individually as an "Employee Plan/Agreement."
True and correct copies of all the Employee Plans/Agreements, including
all amendments thereto, have heretofore been provided to Buyer, along
with, to the extent applicable to the particular Employee Plan/Agreement,
the following information: a copy of the annual report (form 5500 series)
filed for the last three years, a copy of the summary plan description,
summary annual report, summary of material modifications, and all material
manuals or communications filed or distributed with respect to the
Employee Plan/Agreement during the last three years, a copy of any
insurance contract or trust agreement through which the Employee
Plan/Agreement is funded, the most recent IRS determination letter issued
with respect to the Employee Plan/Agreement, and notice of any material
adverse change occurring with respect to any Employee Plan/Agreement since
the date of the most recently completed annual report.
3.17.(b) Title IV of ERISA. The Company does not maintain or
contribute to, and has never maintained or contributed to, an Employee
Plan/Agreement that is subject to Title IV of ERISA.
3.17.(c) Multiemployer Plans. The Company does not
contribute and has never contributed (or been obligated to contribute) to
a multiemployer plan as defined in Section 4001(a)(13) of ERISA.
3.17.(d) Severance and Post-Retirement Benefits. Neither the
Company nor any Employee Plan/Agreement maintained or contributed to by
the Company provides or has any obligation to provide (or contribute
toward the cost of) postretirement welfare benefits with respect to
current or former employees of the Company or any other entity, including,
without limitation, post-retirement medical, dental, life insurance,
severance or any other similar benefit, whether provided on an insured or
self-insured basis.
3.17.(e) Payments and Compliance. With respect to each
Employee Plan/Agreement, (i) all payments due from the Company with
respect to any such plan (or from the Company with respect to any such
plan) have been made, and all amounts properly accrued to date as
liabilities of the Company which have not been paid have been properly
recorded on the books of the Company; (ii) the Company has complied with,
and each such Employee Plan/Agreement conforms in form and operation to,
all applicable laws and regulations, including but not limited to ERISA
and the Code in all material respects, and all reports and information
relating to such Employee Plans/Agreements required to be filed with any
governmental entity have been timely filed; (iii) all reports and
information required to be disclosed or provided to participants or their
beneficiaries have been timely disclosed or provided; (iv) there have been
no prohibited transactions within the meaning of Sections 406 and 407 of
ERISA or Section 4975 of the Code with respect to any Employee
Plan/Agreement; (v) no event or omission has occurred in connection with
any Employee Plan/Agreement that would subject Company or any Employee
Plan/Agreement to a material fine, penalty, tax or liability, whether
pursuant to any agreement, instrument, indemnification obligation, or
statute, regulation or rule of law; (vi) each such Employee Plan/Agreement
which is intended to qualify under Section 401 of the Code has received a
favorable determination letter from the Internal Revenue Service with
respect to such qualification, its related trust has been determined to be
exempt from taxation under Section 501(a) of the Code, and nothing has
occurred since the date of such letter that has or is likely to adversely
affect such qualification or exemption; and (vii) there are no actions,
suits or claims pending (other than routine claims for benefits) or
threatened with respect to any Employee Plan/Agreement or against the
assets of such Employee Plan/Agreement.
3.17.(f) COBRA. The Company has complied in all material
respects with the continuation coverage requirements of Section 601
through 608 of ERISA, and the requirements of any similar state law
regarding continued insurance coverage, and the Company has incurred no
liability with respect to its failure to offer or provide continued
coverage in accordance with the foregoing requirements, nor is there any
suit or action pending or threatened with respect to such requirements.
3.17.(g) Triggering of Obligations and Other Binding
Commitments. Other than payments to be made under Section 5.9 or
otherwise under the agreements contemplated by Section 7.10, the
consummation of the transactions contemplated by this Agreement will not
entitle any current or former employee of the Company to severance pay,
unemployment compensation or any other payment, or accelerate the time of
payment or vesting, or increase the amount of compensation due to any such
employee or former employee. Further, the Company has not announced any
type of plan or binding commitment to create any additional Employee
Plan/Agreement or to amend or modify any existing Employee Plan/Agreement.
3.18. Employment Compensation. Schedule 3.18 contains a true and
correct list of (a) all employees to whom the Company is paying
compensation, including bonuses and incentives, at an annual rate,
effective January 1, 1997, in excess of Seventy Five Thousand Dollars
($75,000) for services rendered or otherwise and (b) all salaried
employees; and in the case of salaried employees such list identifies the
current annual rate of compensation for each employee, effective January
1, 1997, and in the case of hourly or commission employees identifies
certain reasonable ranges of rates and the number of employees falling
within each such range.
3.19. Trade Rights. Schedule 3.19 lists all Trade Rights (as
defined below) in which the Company now has any interest, specifying
whether such Trade Rights are owned, controlled, used or held (under
license or otherwise) by the Company, and also indicating which of such
Trade Rights are registered. All Trade Rights shown as registered in
Schedule 3.19 have been properly registered, all pending registrations and
applications have been properly made and filed and all annuity,
maintenance, renewal and other fees relating to registrations or
applications are current. In order to conduct the business of the
Company, as such is currently being conducted or proposed to be conducted,
the Company does not require any Trade Rights that it does not already
have. To the Best Knowledge of the Shareholders, the Company is not
infringing and has not infringed any Trade Rights of another in the
operation of the business of the Company, nor is any other person
infringing the Trade Rights of the Company. Except as set forth in
Schedule 3.19, the Company has not granted any license or made any
assignment of any Trade Right listed on Schedule 3.19, nor does the
Company pay any royalties or other consideration for the right to use any
Trade Rights of others. There are no inquiries, investigations or claims
or litigation challenging or, to the Best Knowledge of the Shareholders,
threatening to challenge the Company's right, title and interest with
respect to its continued use and right to preclude others from using any
Trade Rights of the Company. To the Best Knowledge of the Shareholders,
all Trade Rights of the Company are valid, enforceable and in good
standing, and there are no equitable defenses to enforcement based on any
act or omission of the Company. The consummation of the transactions
contemplated hereby will not alter or impair any Trade Rights owned or
used by the Company. As used herein, the term "Trade Rights" shall mean
and include: (a) all United States, state and foreign trademark rights,
business identifiers, trade dress, service marks, trade names and brand
names, including all claims for infringement, and all registrations
thereof and applications therefor and all goodwill associated with the
foregoing accruing from the dates of first use thereof; (b) all United
States and foreign copyrights, copyright registrations and copyright
applications, including all claims for infringement, and all other rights
associated with the foregoing and the underlying works of authorship; (c)
all United States and foreign patents and patent applications, including
all claims for infringement and all international proprietary rights
associated therewith; (d) all contracts or agreements granting any right,
title, license or privilege under the intellectual property rights of any
third party; and (e) all inventions, mask works and mask work
registrations, know-how, discoveries, improvements, designs, trade
secrets, shop and royalty rights, employee covenants and agreements
respecting intellectual property and non-competition and all other types
of intellectual property.
3.20. Major Customers and Suppliers.
3.20.(a) Major Customers. Schedule 3.20.(a) contains a list
of all of the Company's invoices over $20,000 for each of the two (2) most
recent fiscal years showing the total dollar amount of all invoices for
each customer or distributor of the Company during each such year. To the
Best Knowledge of the Shareholders, none of the customers so listed has
notified the Company in writing that it will not continue to be a customer
of the Company or will materially reduce the scope of its purchases from
the Company.
3.20.(b) Major Suppliers. Schedule 3.20.(b) contains a list
of the ten (10) largest suppliers to the Company for each of the two (2)
most recent fiscal years (determined on the basis of the total dollar
amount of purchases) showing the total dollar amount of purchases from
each such supplier (a "Major Supplier") during each such year. Except as
set forth in Schedule 3.20.(b), none of the Major Suppliers has notified
the Company that it will not continue to be a supplier to the Company
after the Closing or that it will not continue to supply the business with
substantially the same quantity and quality of goods at competitive
prices. To the Best Knowledge of the Shareholders, neither the Company
nor any Shareholder has received notice of any pending material change in
price or availability of materials, except for price adjustments imposed
in the Ordinary Course of Business on other customers purchasing similar
quantities of such materials. Schedule 3.20.(b) sets forth a list of all
Major Suppliers who have notified the Company of any pending price
increase in excess of ten percent (10%).
3.20.(c) Dealers and Distributors. Schedule 3.20.(c)
contains a list by product line of all sales representatives, dealers,
distributors and franchisees of the Company, together with representative
copies of all existing and pending sales representative, dealer,
distributor and franchise contracts. None of the representatives,
dealers, distributors or franchisees so listed has notified the Company
that it will terminate its relationship with the Company. Company
previously has provided to Buyer true and complete copies of all written
agreements between the Company and its current representatives, dealers,
distributors and franchisees.
3.21. Product Warranty and Product Liability. Schedule 3.21
contains a true, correct and complete copy of the Company's standard
warranty or warranties for sales of Products (as defined below) and,
except as stated therein, there are no other warranties, commitments or
obligations issued by the Company since January 1, 1990 with respect to
the return, repair or replacement of Products. Schedule 3.21 sets forth
the estimated aggregate annual cost to the Company of performing warranty
obligations for customers for each of the five (5) preceding fiscal years
and the current fiscal year to the date of the Recent Balance Sheet.
Schedule 3.21 contains a description of all product liability claims and
similar claims, actions litigation and other proceedings relating to
Products manufactured or sold, or services rendered, which are presently
pending or, to the Best Knowledge of the Shareholders, threatened, or
which have been asserted or commenced against the Company within the last
five (5) years, in which a party thereto either requests injunctive relief
or alleges damages in excess of Ten Thousand Dollars ($10,000) (whether or
not covered by insurance). Except as disclosed on Schedule 3.21, since
January 1, 1990, none of the Products has been the subject of any
replacement, field fix, retrofit, modification or recall campaign. The
Products have been designed, manufactured and labelled so as to meet and
comply with all mandatory governmental standards and specifications in
effect at the time of their manufacture and sale and have received all
governmental approvals necessary to allow their sale and use. Except as
disclosed on Schedule 3.21, all products currently manufactured,
distributed or sold by the Company under any brand name or xxxx (the
"Current Products") comply with all applicable standards of ASTM and the
Consumer Products Safety Commission currently in effect. As used in this
Section 3.21, the term "Products" means any and all Current Products and
all products at any time previously manufactured, distributed or sold by
the Company, or by any predecessor of the Company under any brand name or
xxxx under which products are or have been manufactured, distributed or
sold by the Company.
3.22. Bank Accounts. Schedule 3.22 sets forth the names and
locations of all banks, trust companies, savings and loan associations and
other financial institutions at which the Company maintains a safe deposit
box, lock box or checking, savings, custodial or other account of any
nature, the type and number of each such account and the signatories
therefore, a description of any compensating balance arrangements, and the
names of all persons authorized to draw thereon, make withdrawals
therefrom or have access thereto.
3.23. Affiliates' Relationships to Company.
3.23.(a) Contracts With Affiliates. All leases, contracts,
agreements or other arrangements between the Company and any Affiliate are
described on Schedule 3.23.(a).
3.23.(b) No Adverse Interests. Except as set forth in
Schedule 3.23.(b), no Affiliate has any direct or indirect interest in (i)
any entity which does business with the Company or is competitive with the
Company's business, or (ii) any property, asset or right which is used by
the Company in the conduct of its business.
3.23.(c) Obligations. All obligations of any Affiliate to
the Company, and all obligations of the Company to any Affiliate, are
listed on Schedule 3.23.(c).
3.24. Assets Necessary to Business. The Company presently has and
at the Closing will have good, valid and marketable title to all property
and assets, tangible and intangible, and all leases, licenses and other
agreements, necessary to permit the Company to carry on its business as
presently conducted.
3.25. Disclosure. No representation or warranty by the Company
and/or the Shareholders in this Agreement, nor any certificate, schedule,
document or exhibit hereto furnished or to be furnished by or on behalf of
the Company or the Shareholders pursuant to this Agreement contains or
shall contain any untrue statement of material fact or omits or shall omit
a material fact necessary to make the statements contained therein not
misleading. All statements and information contained in any certificate,
instrument, disclosure schedule or document delivered by or on behalf of
the Company and/or the Shareholders pursuant to this Agreement shall be
deemed representations and warranties by the Company and the Shareholders.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to the
Company and the Shareholders, each of which is true and correct on the
date hereof and shall be unaffected by any investigation heretofore or
hereafter made by the Company or any of the Shareholders or any knowledge
of the Company or any of the Shareholders other than as specifically
disclosed in the schedules hereto delivered to the Company and the
Shareholders at the time of execution of the Agreement:
4.1. Corporate.
4.1.(a) Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Wisconsin.
4.1.(b) Corporate Power. Buyer has all requisite corporate
power and authority to own, operate and lease its properties, to carry on
its business as and where such is now being conducted, to enter into this
Agreement and the other documents and instruments to be executed and
delivered by Buyer and to carry out the transactions contemplated hereby
and thereby.
4.2. Authority. The execution and delivery of this Agreement and
the Notes and the other documents and instruments to be executed and
delivered by Buyer pursuant hereto and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by
the Board of Directors of Buyer. No other corporate act or proceeding on
the part of Buyer or its shareholder is necessary to authorize this
Agreement and the Notes or the other documents and instruments to be
executed and delivered by Buyer pursuant hereto or the consummation of the
transactions contemplated hereby and thereby. No consent is required from
any third party in order for Buyer to consummate the transactions
contemplated by this Agreement. This Agreement constitutes, and when
executed and delivered, the Notes and the other documents and instruments
to be executed and delivered by Buyer pursuant hereto will constitute,
valid and binding agreements of Buyer, enforceable in accordance with
their respective terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights
generally, and by general equitable principles.
4.3. Disclosure. No representation or warranty by Buyer in this
Agreement, nor any certificate, schedule, document or exhibit hereto
furnished or to be furnished by or on behalf of Buyer pursuant to this
Agreement contains or shall contain any untrue statement of material fact
or omits or shall omit a material fact necessary to make the statements
contained therein not misleading.
4.4. Investment Intent. Buyer is purchasing the Shares for its own
account, for investment only and not with a view to resale, distribute or
other disposition thereof in violation of any federal, state or securities
laws. Buyer has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an
investment in the Shares.
4.5. Buyer Reports; Financial Statements. Buyer has delivered to
the Shareholders' Representative copies of all forms, reports and
documents (including exhibits and any amendments thereto) filed by SNSC
with the Securities and Exchange Commission (the "SEC") since July 1, 1995
(collectively, including without limitation any financial statements or
schedules included therein, the "SNSC Reports"). As of their respective
dates, the SNSC Reports did not contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of circumstances
in which they were made, not misleading. Each of the balance sheets
included in or incorporated by reference into the SNSC Reports (including
the related notes and Schedules) fairly presents in all material respects
the financial position of SNSC and its subsidiaries as of its date, and
each of the consolidated statements of income and cash flows included in
or incorporated by reference into the SNSC Reports (including any related
notes and schedules) fairly presents in all material respects the results
of operations, retained earnings and cash flows, as the case may be, of
SNSC and its subsidiaries for the periods set forth therein, in each case
in accordance with generally accepted accounting principles consistently
applied during the periods involved.
4.6. Litigation. There are no actions, suits, claims,
proceedings or investigations pending or, to the best knowledge of Buyer,
threatened against or affecting Buyer which seeks to prevent or enjoin the
consummation of the transactions contemplated by this Agreement.
4.7. Financial Resources. At the Closing, Buyer will have
sufficient resources or credit arrangements or facilities to enable it to
consummate the transactions contemplated by this Agreement and make
payment of cash in accordance with the terms of Section 2.2 of this
Agreement and deliver the Notes. Notwithstanding anything to the contrary
contained herein, the Company's and the Shareholders' sole and exclusive
remedy for any breach by Buyer of this Section 4.7 shall be to terminate
this Agreement in accordance with Section 11.1.(e).
5. OTHER MATTERS
5.1. Environmental Survey. Buyer and the Shareholders covenant and
agree as follows:
5.1.(a) Retention of Engineers. Subject to the limitations
set forth in Section 5.1.(b) below, Buyer shall retain an independent,
competent and qualified firm of nationally-recognized environmental
engineers or consultants (the "Engineers") to prepare and promptly submit
to Buyer a written report of site assessment and environmental survey (the
"Phase 1 Environmental Survey") relative to the assets, operations and
real property owned or used in the operations of the Company. The fees
and expenses of the Engineers, together with all other expenses incurred
in connection with the Phase 1 Environmental Survey, shall be paid by
Buyer.
5.1.(b) Limitations on Access. Notwithstanding any other
provision of this Agreement, the right of Buyer and/or its representatives
and the Engineers to enter on any parcel of real property or inspect any
portion of the business operations of the Company shall be subject to the
following restrictions:
(i) Activities conducted under this Section shall not
unreasonably interfere with the normal operation of the
Company's business;
(ii) Buyer shall give the Shareholders' Representative a
sufficient opportunity to review the scope of any proposed
activities prior to the entry on any parcel of real property;
(iii) All activities undertaken in connection with
the Phase 1 Environmental Survey shall comply with all
applicable law in all material respects; and
(iv) Buyer shall be responsible for and shall indemnify
the Company and the Shareholders against any material property
damage or personal injury incurred by the Company or any other
person resulting from any negligent or willful activities of
Buyer or its employees, agents, representatives, consultants
and Engineers.
5.1.(c) Environmental Quantification. Promptly upon its
completion, Buyer will provide to the Shareholders' Representative a copy
of the Phase 1 Environmental Survey. As part of the Phase 1 Environmental
Survey, the Engineers shall include a quantification (the "Environmental
Quantification") of the reasonably anticipated cost to correct or remedy
any violation of any Environmental Laws disclosed in the Phase 1
Environmental Survey (including the reasonably anticipated cost of any
fine or penalty reasonably likely to be assessed and paid in connection
with such violation or violations). The Environmental Quantification
shall also include any cost, liability, and expense (including but not
limited to costs to investigate, remediate, remove and dispose) associated
with the presence or release of any Waste disclosed by the Phase 1
Environmental Survey (including the reasonably anticipated cost of any
fine or penalty reasonably likely to be assessed and paid in connection
with such violation or violations. In the event the Environmental
Quantification exceeds Five Hundred Thousand Dollars ($500,000) in the
aggregate, Buyer may promptly notify the Shareholders' Representative in
writing of its intention to terminate this Agreement pursuant to the
provisions of Section 11.1.(c).
5.2. Noncompetition; Confidentiality. As an inducement to Buyer to
execute this Agreement and complete the transactions contemplated hereby,
and in order to preserve the goodwill associated with the business of the
Company being acquired pursuant to this Agreement, and in addition to and
not in limitation of any covenants contained in any agreement executed and
delivered pursuant hereto, each Shareholder hereby covenants and agrees as
follows:
5.2.(a) Covenant Not to Compete. For a period of five (5)
years after the Closing Date, each Shareholder, severally and not jointly,
will not directly or indirectly engage in any Competitive Activities (as
hereinafter defined). The term "Competitive Activities" as used herein
shall mean:
(i) directly or indirectly engaging in, continuing
in or carrying on the business of designing, manufacturing,
selling, distributing and dealing in and with recreational
equipment, including, playground equipment, park benches,
bleachers and shelters as conducted by the Company or Buyer on
the Closing Date, including owning or controlling any
financial interest in any corporation, partnership, firm or
other form of business organization which competes with or is
engaged in or carries on any aspect of such business or any
business substantially similar thereto;
(ii) directly or indirectly consulting with,
advising or assisting in any way, whether or not for
consideration, any corporation, partnership, firm or other
business organization which is now or becomes a competitor of
the Company or Buyer, including, but not limited to,
advertising or otherwise endorsing the products of any such
competitor; soliciting customers or otherwise serving as an
intermediary for any such competitor; loaning money or
rendering any other form of financial assistance to or
engaging in any form of business transaction on other than an
arm's length basis with any such competitor; or
(iii) offering employment to or employing an employee
of the Company or Buyer as of the date of this Agreement,
without the prior written consent of Buyer;
provided, however, that the term "Competitive Activities" shall not
include [A] the ownership of securities of corporations which are listed
on a national securities exchange or traded in the national
over-the-counter market in an amount which shall not exceed three percent
(3%) of the outstanding shares of any such corporation or [B] investment,
loans or advances or other financial assistance made by Xxxx X. Xxxxxxxx
to the business presently conducted by his son. The parties agree that
the geographic scope of this covenant not to compete shall extend to all
areas of the United States and all foreign countries where the Company or
Buyer currently does business, which countries are listed on Schedule
5.2.(a). The parties agree that Buyer may sell, assign or otherwise
transfer this covenant not to compete, in whole or in part, to any person,
corporation, firm or entity that purchases all or part of the business of
the Company. In the event a court of competent jurisdiction determines
that the provisions of this covenant not to compete are excessively broad
as to duration, geographical scope or activity, it is expressly agreed
that this covenant not to compete shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and
effect, and any such overly broad provisions shall be deemed, without
further action on the part of any person, to be modified, amended and/or
limited, but only to the extent necessary to render the same valid and
enforceable in such jurisdiction.
5.2.(b) Covenant of Confidentiality. No Shareholder shall
at any time subsequent to the Closing, except as explicitly requested by
Buyer, (i) use for any purpose, (ii) disclose to any person, or (iii) keep
or make copies of catalogues, brochures, documents, tapes, discs or
programs containing any confidential information concerning the Company.
For purposes hereof, "confidential information" shall mean and include,
without limitation, all Trade Rights in which the Company has an interest,
all customer lists and customer information, and all other information
concerning the Company's processes, apparatus, equipment, packaging,
products, marketing and distribution methods, except any of the foregoing
which shall have become public knowledge other than by breach of this
Agreement by any of the Shareholders.
5.2.(c) Equitable Relief for Violations. Each Shareholder
agrees that the provisions and restrictions contained in this Section 5.2
are necessary to protect the legitimate continuing interests of Buyer in
acquiring the Shares, and that any violation or breach of these provisions
will result in irreparable injury to Buyer for which a remedy at law would
be inadequate and that, in addition to any relief at law which may be
available to Buyer for such violation or breach and regardless of any
other provision contained in this Agreement, Buyer shall be entitled to
injunctive and other equitable relief as a court may grant after
considering the intent of this Section 5.2.
5.3. General Releases. At the Closing, each Shareholder shall
deliver general releases to Buyer, in form and substance satisfactory to
Buyer, releasing the Company, and the directors, officers, agents and
employees of the Company from all claims arising out of or relating to
events arising prior to or on the Closing Date, except (a) as may be
described in written contracts disclosed in the Schedules hereto and
expressly described and excepted from such releases, and (b) in the case
of persons who are employees of the Company, compensation for current
periods expressly described and excepted from such releases. Such
releases also shall contain waivers of any right of indemnification,
contribution or other recourse against the Company with respect to
representations, warranties or covenants made herein by the Company.
5.4. Title Insurance. Not less than fifteen (15) days prior to the
Closing, the Company shall provide to Buyer title insurance commitments,
issued by a title insurance company or companies reasonably satisfactory
to Buyer, agreeing to issue to Buyer standard form owner's policies of
title insurance with respect to all Real Property listed on Schedule 5.4,
together with a copy of each document to which reference is made in such
commitments. Such policies shall be standard ALTA 1990 Form B owner's
policies in the full amount of that portion of the Purchase Price
allocated respectively to each subject parcel of Real Property, insuring
good and marketable title thereto (expressly including all easements and
other appurtenances). All policies shall insure title in full accordance
with the representations and warranties set forth herein and shall be
subject only to such conditions and exceptions as shall be reasonably
acceptable to Buyer, and shall contain such endorsements as Buyer shall
reasonably request (including, but not limited to, an endorsement over
rights of creditors, if requested by Buyer or Buyer's lender).
5.5. Surveys. Not less than fifteen (15) days prior to the
Closing, the Company shall provide to Buyer surveys of all Real Property
listed on Schedule 5.4. Each such survey shall be prepared in accordance
with ALTA/ASCM standards, dated no more than ninety (90) days prior to the
Closing and detail the legal description, the perimeter boundaries, all
improvements located thereon, all easements and encroachments affecting
the relevant parcel of Real Property and such other matters as may be
reasonably requested by Buyer or the title insurance companies. Each
survey shall contain a surveyor certificate reasonably acceptable to Buyer
and the title insurance companies and prepared by a registered land
surveyor satisfactory to Buyer.
5.6. Shareholders' Representative
5.6.(a) Appointment. In order to administer efficiently the
rights and obligations of the Shareholders under this Agreement, the
Shareholders hereby designate and appoint Xxxx X. Xxxxxxxx, Xx. as the
Shareholders' Representative, to serve as the Shareholders' agent and
attorney-in-fact for the limited purposes set forth in Section 5.6.(b) of
this Agreement.
5.6.(b) Authority. Each of the Shareholders hereby appoints
the Shareholders' Representative as his agent, proxy and attorney-in-fact,
with full power of substitution, for all purposes set forth in this
Agreement, including, without limitation, the full power and authority on
such Shareholder's behalf (i) to consummate the transactions contemplated
by this Agreement, (ii) to cause the Company to pay the Transaction
Expenses (as defined herein), (iii) to disburse any funds received
hereunder to the Shareholders, (iv) to execute and deliver any
certificates representing the Shares and execution of such further
instruments of assignment as Buyer shall reasonably request, (v) to
execute and deliver on behalf of such Shareholder any amendment or waiver
under this Agreement, (vi) to retain legal counsel and other professional
services in connection with the performance by the Shareholders'
Representative of this Agreement, and (vii) to do each and every act and
exercise any and all rights which such Shareholder or the Shareholders are
permitted or required to do or exercise under this Agreement and the other
agreements, documents and certificates executed in connection herewith.
Each of the Shareholders agrees that such agency and proxy are coupled
with an interest, are therefore irrevocable without the consent of the
Shareholders' Representative and shall survive the death, bankruptcy or
other incapacity of any Shareholder; provided that such agency and proxy
shall terminate if this Agreement is terminated pursuant to its terms.
5.6.(c) Tenure and Replacement of the Shareholders'
Representative. Xxxx X. Xxxxxxxx, Xx. shall serve as the Shareholders'
Representative until he resigns or is otherwise unable or unwilling to
serve. In the event that a Shareholders' Representative resigns from such
position or is otherwise unable or unwilling to serve, the remaining
Shareholders shall select a successor representative to fill such vacancy,
shall provide prompt written notice to Buyer of such change and such
substituted representative shall then be deemed to be the Shareholders'
Representative for all purposes of this Agreement.
5.7. Transaction Expenses. The Company will pay all reasonable
expenses to a maximum aggregate amount of Three Hundred Thousand Dollars
($300,000) ("Transaction Expenses"), including attorneys' fees, incurred
in connection with its performance of the transactions contemplated by
this Agreement.
5.8. Certain Tax Matters.
5.8.(a) Allocation of Purchase Price.
(i) The parties agree that for federal, and to the
extent applicable, state and local income tax purposes, an
amount equal to the adjusted grossed up basis (as such term is
defined in the Treasury Regulations under Internal Revenue
Code Section 338) shall be allocated to the assets of the
Company (including goodwill) in accordance with the following:
The allocation will reflect a $300,000 xxxx-up over book value
of inventory, which will result in some lesser amount of
ordinary income on the federal income tax return of the
Company. An amount equal to book value minus one half the
difference between book value and tax basis will be assigned
to patterns, dies, machinery and equipment. All other assets
(other than goodwill) will be valued at book value which is
equal to tax basis. These values so assigned are agreed by
both parties to be the approximate fair market value of the
assets in question. Any excess of the total purchase price
over the value so assigned will be allocated to goodwill.
(ii) The parties shall prepare and file their respective
federal, state and local income tax returns and shall prepare
and file IRS form 8023-A in a manner consistent with such
allocation and shall not take a position on any tax return or
in any proceeding before any taxing authority that is in any
manner inconsistent with such allocation.
5.8.(b) 338 (h)(10) Election. At Buyer's request, and at
its option, the Company and the Shareholders will cooperate with Buyer in
filing an election under Section 338(h)(10) of the Code (the "338
Election"). Buyer will reimburse the Shareholders on an after-tax basis
(a) for the reasonable out-of-pocket expenses incurred by the Shareholders
in connection with the 338 Election (including, without limitation,
reasonable attorneys' and accountants' fees), which amounts shall be paid
by Buyer to the Shareholders from time to time as the same may be incurred
by the Shareholders, (b) for any increase in federal, state or other taxes
incurred by any of the Shareholders by reason of making the 338 Election
over the amount of such taxes otherwise payable by such Shareholders in
connection with the transactions contemplated hereby as if the 338
Election had not been made (such excess being referred to as the
"Anticipated Incremental 338 Tax Liability"), which amounts shall be paid
by Buyer to the Shareholders on or before the filing by the Buyer and the
Shareholders of IRS form 8023-A on which the 338 Election is made, and (c)
in the event of a challenge by the taxing authority to the 338 Election,
including but not limited to a challenge to the allocation made by the
parties consistent with Section 5.8(a)(i) hereof, for any additional
federal, state or other taxes payable by the Shareholders by reason of
such challenge over the Anticipated Incremental 338 Tax Liability, which
amounts shall be paid by Buyer to the Shareholders at the time of payment
of such additional taxes by the Shareholders to the respective taxing
authorities. Amounts reimbursable by Buyer to the Shareholders under
clauses (b) and (c) of the preceding sentence shall in no event exceed
$660,000 in the aggregate.
5.9. Post-Closing Employment Matters. From and after the Closing
Date, Buyer agrees with the Shareholders that:
5.9.(a) 1996 Bonuses. On or about March 15, 1997, Buyer
agrees to cause the Company to pay to those management and plant employees
who, on a basis consistent with the Company's past practice, are eligible
to participate therein, a bonus based on the Company's performance for
1996 in the amounts set forth on Schedule 3.9, which amounts Shareholders
represent have been calculated on the basis such bonus has been paid by
the Company during the past three (3) years.
5.9.(b) Retention Bonuses. Buyer agrees to pay a $30,000
retention bonus on September 30, 1997 to each of Xxxx Xxxx, Xxx Xxxxxxxx
and Xxxx Xxxx provided that such person remains employed by Buyer through
September 30, 1997.
6. FURTHER COVENANTS OF THE COMPANY AND THE SHAREHOLDERS
The Company and the Shareholders covenant and agree as follows:
6.1. Access to Information and Records. Promptly following
execution of this Agreement and until the Closing Date, the Company shall
give Buyer, its counsel, accountants and other representatives: (a)
reasonable access during normal business hours to all of the properties,
books, records, contracts and documents of the Company for the purpose of
such inspection and investigation as Buyer deems appropriate (and the
Company shall furnish or cause to be furnished to Buyer and its
representatives all information with respect to the business and affairs
of the Company within the possession of the Company as Buyer may request);
(b) with the prior consent of the Company (which consent will not be
unreasonably withheld), access to employees for the purposes of such
meetings and communications as Buyer reasonably desires; (c) access and
opportunity, at Buyer's expense, to observe the physical year-end
inventory conducted by the Company; and (d) with the prior consent (which
consent will not be unreasonably withheld) and, except as may be otherwise
requested by Buyer's financing sources for independent verification
purposes, participation of the Shareholders' Representative (or his
designee), access to vendors, customers, sales representatives,
manufacturers of its machinery and equipment, and others having business
dealings with the Company.
6.2. Conduct of Business Pending the Closing. From the date hereof
until the Closing, except as otherwise approved in writing by Buyer:
6.2.(a) No Changes. The Company will carry on its business
diligently and, in all material respects, in the same manner as heretofore
and will not make or institute any material changes in its methods of
purchase, sale, management, accounting or operation.
6.2.(b) No Transfer of Shares. No Shareholder shall pledge,
assign or otherwise transfer any portion of his interest in the Shares.
6.2.(c) Maintain Organization. The Company will take such
reasonable action as may be necessary to maintain, preserve, renew and
keep in effect the existence, rights and franchises of the Company and
will use its reasonable efforts to preserve the business organization of
the Company intact, to keep available to Buyer the present officers and
employees, and to preserve for Buyer its present relationships with
suppliers and customers and others having business relationships with the
Company.
6.2.(d) No Breach. The Company and the Shareholders will
not do or omit any act, or permit any omission to act, which may cause a
breach of any material contract, commitment or obligation, or any breach
of any representation, warranty, covenant or agreement made by the Company
and/or the Shareholders herein, or which would have required disclosure
hereunder had it occurred after the date of the Recent Balance Sheet and
prior to the date of this Agreement.
6.2.(e) No Material Contracts. No contract or commitment
will be entered into, and no purchase of raw materials or supplies and no
sale of goods or services (real, personal, or mixed, tangible or
intangible) will be made, by or on behalf of the Company, except
contracts, commitments, purchases or sales which are in the Ordinary
Course of Business. Notwithstanding the foregoing, the Company and the
Shareholders agree that the Company will not enter into any new sales
representative, dealer or distributor contracts, or amend any existing
contracts, without the prior consent of Buyer, regardless of the fact that
any such individual contract or amendment might otherwise be in the
Ordinary Course of Business.
6.2.(f) No Corporate Changes. The Company shall not amend
its Certificate of Incorporation or By-laws or make any changes in
authorized or issued capital stock, including, without limitation, any
issuance of additional shares or granting of any rights, options or
warrants to acquire any capital stock of the Company.
6.2.(g) Maintenance of Insurance. The Company shall
maintain all of the insurance in effect as of the date hereof.
6.2.(h) Maintenance of Property. The Company shall use,
operate, maintain and repair all property of the Company in a normal
business manner.
6.2.(i) Interim Financials. The Company will promptly
provide Buyer with interim monthly financial statements, daily debt
reports and other management reports as and when they are available.
6.2.(j) No Negotiations. Neither the Company nor any
Shareholder will directly or indirectly (through a representative or
otherwise) solicit or furnish any information to any prospective buyer,
commence, or conduct presently ongoing, negotiations with any other party
or enter into any agreement with any other party concerning the sale of
the Company, the Company's assets or business or any part thereof or any
equity securities of the Company (an "acquisition proposal"), and the
Company and the Shareholders shall immediately advise Buyer of the receipt
of any acquisition proposal.
6.2.(k) No Dividends; No Increase in Compensation. The
Company will not: (i) declare, set aside or pay any dividend or any other
distribution (except for payment of dividends for the Shareholders' tax
obligations on the Company's income but not including any income taxes
payable by the Shareholders as a result of the transactions contemplated
by this Agreement); any redemption, purchase or other acquisition by the
Company of any capital stock of the Company, or any security relating
thereto; or any other payment to any Shareholder (other than compensation
on a basis consistent with past practice of the Company as disclosed on
Schedule 3.9); or (ii) increase any compensation, salaries or wages
payable or to become payable to any employee or agent of the Company
(including, without limitation, any increase or change pursuant to any
bonus, pension, profit sharing, retirement or other plan or commitment),
or any bonus or other employee benefit granted made or accrued, except
compensation increases which have been committed to previously by the
Company or made in the Ordinary Course of Business, which increases are
described on Schedule 3.9.
6.2.(l) No Change in Accounting Policies. The Company shall
not make any change (whether or not material) in the Company's accounting
procedures, methods, policies or practices or the manner in which the
Company maintains its records.
6.2.(m) No Extraordinary Capital Expenditures. The Company
will not make any capital expenditures other than as reflected on capital
expense projections to be delivered to Buyer on a monthly basis, except as
may be required by any act or occurrence beyond the reasonable control of
Company or Shareholders, including, without limitation, fire, explosion,
power failure, act of God, war, revolution, civil commotion or act of a
public enemy.
6.3. Consents. The Company and the Shareholders will use their
best commercially reasonable efforts prior to Closing to obtain all
consents necessary for the consummation of the transactions contemplated
hereby.
6.4. Other Action. The Company and the Shareholders, on the one
hand, and the Buyer, on the other, will use their best commercially
reasonable efforts to cause the fulfillment at the earliest practicable
date of all of the conditions to the other parties' obligations to
consummate the transactions contemplated in this Agreement. Without
limiting the foregoing, the Shareholders agree to take all actions
necessary to cause the Company to perform its obligations under this
Agreement.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of
each of the following conditions:
7.1. Representations and Warranties True on the Closing Date. Each
of the representations and warranties made by Buyer in this Agreement
shall be true and correct in all material respects when made and shall be
true and correct in all material respects at and as of the Closing Date as
though such representations and warranties were made or given on and as of
the Closing Date, except for any changes permitted by the terms hereof.
7.2. Compliance With Agreement. The Company and each Shareholder
shall have in all material respects performed and complied with all
agreements and obligations under this Agreement which are to be performed
or complied with by the Company and each Shareholder prior to or on the
Closing Date.
7.3. Absence of Suit. No action, suit or proceeding before any
court or any governmental authority shall have been commenced or
threatened, and no investigation by any governmental or regulating
authority shall have been commenced, against Buyer, the Company or any of
the affiliates, officers or directors of any of them, seeking to restrain,
prevent or challenge the transactions contemplated hereby, or questioning
the validity or legality of any such transactions, or seeking damages in
connection with, or imposing any condition on, any such transactions.
7.4. Environmental Survey. The Environmental Quantification shall
be less than Five Hundred Thousand Dollars ($500,000) and the results of
the Phase 1 Environmental Survey shall be otherwise acceptable to Buyer in
all respects.
7.5. Title Insurance. Buyer shall have received good and valid
title insurance policies or, in final form, irrevocable title insurance
binders, dated as of the Closing Date, conforming to the specifications
set forth in Section 5.4 hereof.
7.6. Surveys. Buyer shall have received the surveys required
pursuant to Section 5.5 hereof.
7.7. Lender's Consent. Buyer shall have received the consent of
The First National Bank of Chicago ("FNBC") to the transactions
contemplated hereby, or in the alternative, shall contemporaneously with
the Closing prepay or otherwise discharge Buyer's entire loan facility
with FNBC.
7.8. Due Diligence. Buyer shall be satisfied with the results of
its due diligence investigation.
7.9. Financing. Buyer shall have obtained financing necessary to
consummate the purchase of the Shares from sources and on terms acceptable
to it, in its sole discretion.
7.10. Non-Competition and Confidentiality Agreements. Buyer shall
have received executed Non-Competition and Confidentiality Agreements, in
forms reasonably acceptable to Buyer, from key management personnel.
8. CONDITIONS PRECEDENT TO THE SHAREHOLDERS' OBLIGATIONS
Each and every obligation of the Shareholders to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the
Closing of the following conditions:
8.1. Representations and Warranties True on the Closing. Each of
the representations and warranties made by Buyer in this Agreement shall
be true and correct in all material respects when made and shall be true
and correct in all material respects at and as of the Closing Date as
though such representations and warranties were made or given on and as of
the Closing Date, except for any changes permitted by the terms hereof or
inaccuracies which, in the aggregate, do not constitute a Buyer Material
Adverse Effect.
8.2. Compliance with Agreement. Buyer shall have in all material
respects performed and complied with all of Buyer's agreements and
obligations under this Agreement which are to be performed or complied
with by Buyer prior to or on the Closing Date.
8.3. Absence of Suit. No action, suit or proceeding before any
court or any governmental authority shall have been commenced or
threatened, and no investigation by any governmental or regulating
authority shall have been commenced, against Buyer, the Company or the
Shareholders or any of the affiliates, officers or directors of any of
them, seeking to restrain, prevent or challenge the transactions
contemplated hereby, or questioning the validity or legality of any such
transactions, or seeking damages in connection with, or imposing any
condition on, any such transactions.
8.4. Repayment of Certain Indebtedness. At Closing, Buyer shall
have made payment in full of all indebtedness owing to LaSalle Northwest
National Bank and shall have secured the release and delivered to the
Shareholders all shares of Rockwell International Corp. common stock (or
any proceeds thereof) owned by the Shareholders and held by such bank as
collateral to secure repayment of such indebtedness by the Company.
9. INDEMNIFICATION
9.1. By Shareholders. Subject to the terms and conditions of this
Article 9, if the Closing occurs, each Shareholder jointly and severally
hereby agrees to indemnify, defend and hold harmless Buyer, its directors,
officers, employees and controlled persons (hereinafter "Buyer's
Affiliates") and the Company from and against all Claims asserted against,
resulting to, imposed upon, or incurred by Buyer, Buyer's Affiliates or
the Company, directly or indirectly, by reason of, arising out of or
resulting from (a) the inaccuracy or breach of any representation or
warranty of any Shareholder contained in this Agreement or any certificate
or schedule delivered by the Shareholders to the Buyer in connection with
this Agreement or (b) the breach of any covenant of any Shareholder or the
Company contained in this Agreement. As used in this Article 9, the term
"Claim" shall include: (i) all debts, liabilities and obligations; (ii)
all losses, damages (including, without limitation, consequential
damages), judgments, awards, settlements, costs and expenses (including,
without limitation, interest (including prejudgment interest in any
litigated matter), penalties, court costs and attorneys fees and
expenses); and (iii) all demands, claims, suits, actions, costs of
investigation, causes of action, proceedings and assessments, in each case
actually incurred by the claimant.
Notwithstanding the foregoing paragraph, the obligations of the
Shareholders to indemnify, defend and hold harmless Buyer, Buyer's
Affiliates and the Company if the Closing occurs shall be several and not
joint obligations with respect to Claims arising out of or related to any
inaccuracy or breach of such Shareholder's representations and warranties
set forth in Section 3.2 hereof or with respect to any breach of such
Shareholder's agreements set forth in Section 5.2 hereof and any amounts
recoverable by Buyer in connection with either such breach shall be solely
recoverable from such Shareholder.
9.2. By Buyer. Subject to the terms and conditions of this Article
9, if the Closing occurs, Buyer hereby agrees to indemnify, defend and
hold harmless each Shareholder from and against all Claims asserted
against, resulting to, imposed upon or incurred by any such person,
directly or indirectly, by reason of or resulting from (a) the inaccuracy
or breach of any representation or warranty of Buyer contained in this
Agreement or any certificate or schedule delivered by Buyer to the
Shareholders in connection with this Agreement or (b) the breach of any
covenant of Buyer contained in this Agreement.
9.3. Indemnification for Third-Party Claims. The obligations and
liabilities of any party to indemnify any other party under this Article 9
with respect to Claims asserted by third parties shall be subject to the
following terms and conditions:
9.3.(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give the
party from whom indemnification is sought (the "Indemnifying Party")
prompt written notice of any such Claim, and the Indemnifying Party will
undertake the defense thereof by representatives chosen by it. In all
matters concerning the Shareholders, the Shareholders' Representative
shall give and receive notice and otherwise act in all respects on their
behalf. Failure to give such notice shall not affect the Indemnifying
Party's duty or obligations under this Article 9, except to the extent the
Indemnifying Party is prejudiced thereby. So long as the Indemnifying
Party is defending any such Claim actively and in good faith, the
Indemnified Party shall not settle such Claim. The Indemnified Party
shall make available to the Indemnifying Party or its representatives all
records and other materials required by them and in the possession or
under the control of the Indemnified Party, for the use of the
Indemnifying Party and its representatives in defending any such Claim,
and shall in other respects give reasonable cooperation in such defense.
9.3.(b) Failure to Defend. If the Indemnifying Party,
within a reasonable time after notice of any such Claim, fails to defend
such Claim actively and in good faith, the Indemnified Party will (upon
further notice) have the right to undertake the defense, compromise or
settlement of such Claim or consent to the entry of a judgment with
respect to such Claim, on behalf of and for the account and risk of the
Indemnifying Party, and the Indemnifying Party shall thereafter have no
right to challenge the Indemnified Party's defense, compromise, settlement
or consent to judgment therein.
9.3.(c) Indemnified Party's Rights. Anything in this
Section 9.3 to the contrary notwithstanding, (i) if a Claim involves other
than solely monetary damages and may materially and adversely affect the
Indemnified Party, the Indemnifying Party shall not have the right to
compromise or settle such Claim without the prior written consent of the
Indemnified Party (which consent will not be unreasonably withheld), and
(ii) the Indemnifying Party shall not, without the written consent of the
Indemnified Party, which consent will not be unreasonably withheld, settle
or compromise any Claim or consent to the entry of any judgment which does
not include as an unconditional term thereof the giving by the claimant or
the plaintiff to the Indemnified Party of a release from all liability in
respect of such Claim.
9.4. Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 9, which payment shall
first be accomplished by the Indemnified Party setting off any amount owed
to the Indemnifying Party by the Indemnified Party. Upon judgment,
determination, settlement or compromise of any third party Claim, the
Indemnifying Party shall pay promptly on behalf of the Indemnified Party,
and/or to the Indemnified Party in reimbursement of any amount theretofore
required to be paid by it, the amount so determined by judgment,
determination, settlement or compromise and all other Claims of the
Indemnified Party with respect thereto, unless in the case of a judgment
an appeal is made from the judgment. If the Indemnifying Party desires to
appeal from an adverse judgment, then the Indemnifying Party shall post
and pay the cost of the security or bond to stay execution of the judgment
pending appeal.
9.5. Effect of Payment. Upon the payment in full by the
Indemnifying Party of such amounts, the Indemnifying Party shall succeed
to the rights of such Indemnified Party, to the extent not waived in
settlement against the third party who made such third party claim.
9.6. No Waiver. The closing of the transactions contemplated by
this Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of
condition constituting the basis of the Claim at or before the Closing,
and regardless of whether such breach, violation or failure is deemed to
be "material".
9.7. Limitations on Company and Shareholder Indemnification.
9.7.(a) Time Limitation. No claim or action shall be
brought under this Article 9 for breach of a representation or warranty
after March 31, 1999. Notwithstanding the foregoing, however, or any
other provisions of this Agreement:
(i) There shall be no time limitation on claims or
actions brought for breach of any representation or warranty
made in or pursuant to Section 3.1.(f) or Section 3.2, and the
Company and the Shareholders hereby waive all applicable
statutory limitation periods with respect thereto;
(ii) Any claim or action brought for breach of any
representation or warranty made in or pursuant to Section 3.6
may be brought at any time until the underlying tax obligation
is barred by the applicable period of limitation under federal
and state laws relating thereto without regard to any
extensions of any such period of limitation agreed to by Buyer
without the prior written consent of Shareholders'
Representative;
(iii) Any claim made by a party hereunder by filing a
suit or action in a court of competent jurisdiction or a court
reasonably believed to be of competent jurisdiction for breach
of a representation or warranty prior to the termination of
the survival period for such claim shall be preserved despite
the subsequent termination of such survival period;
(iv) If any act, omission, disclosure or failure to
disclose shall form the basis for a claim for breach of more
than one representation or warranty, and such claims have
different periods of survival hereunder, the termination of
the survival period of one claim shall not affect a party's
right to make a claim based on the breach of representation or
warranty still surviving; and
(v) All covenants and agreements in this Agreement
relating to periods after the Closing Date shall survive the
Closing indefinitely unless sooner terminated in accordance
with their terms.
9.7.(b) Amount Limitation. Except with respect to Claims
for breach of the representations or warranties contained in Section
3.1.(f) or Section 3.2 (for which an Indemnified Party shall be
indemnified in full), an Indemnified Party shall not be entitled to
indemnification under this Article 9 for breach of a representation or
warranty unless and to the extent the aggregate of the Indemnifying
Party's indemnification obligations to the Indemnified Party pursuant to
this Article 9 (but for this Section 9.7.(b)) exceeds Two Hundred Seventy
Thousand Dollars ($270,000). Further, the maximum amount of
indemnification payments to which a party shall be entitled, when added to
the aggregate amount of all other indemnification payments made by such
party, shall not exceed the Purchase Price.
9.8. Limitations on Buyer Indemnification. Notwithstanding
anything to the contrary contained anywhere else in this Agreement, the
Company's and the Shareholders' sole and exclusive remedy for any breach
by Buyer of Section 4.7 shall be to terminate this Agreement in accordance
with Section 11.2.(b).
10. CLOSING
The closing of this transaction (the "Closing") shall take place at
the offices of Xxxxx & Xxxxxxx, 000 X. Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000, at 10:00 A.M. on February 15, 1997 or at such other time
and place as the parties hereto shall agree upon. Such date is referred
to in this Agreement as the "Closing Date".
10.1. Documents to be Delivered by the Company and Shareholders. At
the Closing, the Company and the Shareholders shall deliver to Buyer the
following documents, in each case duly executed and in form and substance
satisfactory to Buyer.
10.1.(a) Stock Certificates. Stock certificates representing
the Shares, duly endorsed for transfer to Buyer or with duly executed
stock powers attached.
10.1.(b) Intentionally left blank.
10.1.(c) Opinion of Counsel. A written opinion of Xxxx &
Xxxxxxx, counsel to the Company and the Shareholders dated as of the
Closing Date, addressed to Buyer and Buyer's senior lender, substantially
in the form of Exhibit B hereto.
10.1.(d) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors and the Shareholders of the Company
authorizing this Agreement.
10.1.(e) Articles; By-laws. A copy of the By-laws of the
Company certified by the secretary of the Company, and a copy of the
Certificate of Incorporation of the Company certified by the Secretary of
State of the state of incorporation of the Company.
10.1.(f) General Releases. The General Releases referred to
in Section 5.3, duly executed by the persons referred to in such Section.
10.1.(g) Termination and Waiver. Evidence of the termination
of the September 1, 1990 Shareholders Agreement among the Company and
Shareholders, and a waiver by the Shareholders of any rights of first
refusal thereunder.
10.1.(h) Resignation. The written resignation effective as
of the Closing Date of each director of the Company and the resignation of
each Shareholder from any office held by such Shareholder, and the
resignation of any other officers requested by Buyer.
10.1.(i) Consulting Agreement. A consulting agreement
executed and delivered by Xxxx X. Xxxxxxxx, Xx., in the form of Exhibit C
hereto.
10.1.(j) Other Documents. All other documents, instruments
or writings required to be delivered to Buyer at or prior to the Closing
pursuant to this Agreement.
10.2. Documents to be Delivered by Buyer. At the Closing, Buyer
shall deliver to the Shareholders the following documents, in each case
duly executed or otherwise in proper form:
10.2.(a) Purchase Price. A wire transfer or transfers to the
Shareholders aggregating Twenty Five Million Dollars ($25,000,000).
10.2.(b) Note. Buyer's Note or Notes to the Shareholders in
the aggregate principal amount of Two Million Dollars ($2,000,000).
10.2.(c) Intentionally left blank.
10.2.(d) Opinion of Counsel. A written opinion of Xxxxx &
Xxxxxxx, counsel to Buyer, dated as of the Closing Date, addressed to the
Company, in substantially the form of Exhibit D hereto.
10.2.(e) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and approving
this Agreement and the Notes and the consummation of the transactions
contemplated by this Agreement.
10.2.(f) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered to
the Company by Buyer pursuant to the terms hereof.
10.2.(g) Other Documents. All other documents, instruments
or writings required to be delivered to the Company at or prior to the
Closing pursuant to this Agreement.
11. TERMINATION
11.1. Termination Without Liability. Except for a breach or
violation by any of the Shareholders or the Company of the covenants
contained in Section 6.2.(j), this Agreement may be terminated without
further liability of any party at any time prior to the Closing:
(a) by mutual written agreement of Buyer and Shareholders'
Representative; or
(b) by either Buyer or the Shareholders' Representative if
the Closing shall not have occurred on or before March 15, 1997; or
(c) by Buyer, if the Environmental Quantification is in
excess of Five Hundred Thousand Dollars ($500,000); or
(d) by Buyer, if (i) there has been a material violation or
breach by the Company of any of the covenants or agreements contained
in this Agreement (other than a breach of Section 6.2.(j) which has
not been waived in writing by Buyer), or (ii) there has been a
failure of satisfaction of a condition to the obligations of Buyer
which Buyer has not waived in writing, or (iii) the certificate
delivered pursuant to Section 10.1.(b) is not acceptable to Buyer in
its sole discretion; or
(e) by Company or Shareholders' Representative, if (i) there
has been a material violation or breach by Buyer of any of the
covenants or agreements contained in this Agreement which has not
been waived in writing by the Shareholders' Representative, or (ii)
there has been a failure of satisfaction of a condition to the
obligations of the Company and/or the Shareholders which the Company
and/or the Shareholders' Representative has not waived in writing.
11.2. Termination With Liability. If there has been a violation or
breach by the Company or the Shareholders of the covenants contained in
Section 6.2.(j) Buyer may, by written notice to the Company at any time
prior to the Closing that such violation or breach is continuing,
terminate this Agreement. Termination of this Agreement by Buyer pursuant
to this Section 11.2 shall not in any way terminate, limit or restrict the
rights and remedies of Buyer against the Company or the Shareholders by
reason of such breach or violation.
12. POST-CLOSING OBLIGATIONS
12.1. Transition. Each Shareholder hereby covenants and agrees to
assist in and facilitate an orderly transition of the Company ownership
and management after Closing.
12.2. Further Assurances. From time to time, prior to and after
Closing, at Buyer's request and without further consideration, the Company
and the Shareholders will execute and deliver to Buyer such documents and
take such other action as Buyer may reasonably request in order to
consummate more effectively the transactions contemplated hereby and to
vest in Buyer good, valid and marketable title to the Shares.
13. MISCELLANEOUS
13.1. Disclosures and Announcements. Both the timing and the
content of all disclosure to third parties and public announcements
concerning the transactions provided for in this Agreement by either the
Company, the Shareholders or Buyer shall be subject to the approval of the
others in all essential respects, except that the Company's approval shall
not be required as to any statements and other information which Buyer is
required to submit to the SEC or required to make pursuant to any rule or
regulation of the SEC or the American Stock Exchange or otherwise required
by law, provided that the Shareholders shall have been given two (2) days
prior written notice (and a copy of the text) of any such statement.
13.2. Assignment; Parties in Interest.
13.2.(a) Assignment. Except as expressly provided herein,
the rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the other
parties. Notwithstanding the foregoing, (i) Buyer may, without consent of
any other party, cause one or more subsidiaries of Buyer to carry out all
or part of the transactions contemplated hereby provided that Buyer shall
remain liable for all of its obligations, and those of any such
subsidiary, to the Company and the Shareholders hereunder and (ii) at or
subsequent to the Closing, Buyer may assign its interest in this Agreement
to Buyer's senior lender as additional collateral security for Buyer's
obligations to such senior lender and the Company and the Shareholders
agree to execute such acknowledgements of such assignment as may
reasonably be required by such lender.
13.2.(b) Parties in Interest. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the
respective successors and permitted assigns of the parties hereto.
Nothing contained herein shall be deemed to confer upon any other person
any right or remedy under or by reason of this Agreement.
13.3. Law Governing Agreement. This Agreement may not be modified
or terminated orally, and shall be construed and interpreted according to
the internal laws of the State of Illinois, excluding any choice of law
rules that may direct the application of the laws of another jurisdiction.
13.4. Amendment and Modification. Buyer and the Shareholders'
Representative may amend, modify and supplement this Agreement in such
manner as may be agreed upon by them in writing.
13.5. Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a)
personally delivered; (b) sent by confirmed facsimile transmission or
other electronic means of transmitting written documents; or (c) sent to
the parties at their respective addresses indicated herein by registered
or certified U.S. mail, return receipt requested and postage prepaid, or
by private overnight mail courier service. The respective addresses to be
used for all such notices, demands or requests are as follows:
(a) If to Buyer, to:
Swing-N-Slide Corp.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
(with a copy, which copy shall not constitute notice,
to):
GreenGrass Holdings, G.P.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
and
Xxxxx & Lardner
000 X. Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
or to such other person or address as Buyer shall furnish to the Company
in writing.
If to the Company or any of the Shareholders, to Shareholders'
Representative:
Xxxx X. Xxxxxxxx, Xx.
Straight Creek Farm
0000 Xxxxxx Xxxx 00
Xxxx Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
(with a copy, which copy shall not constitute
notice, to):
Xxxx & Xxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
or to such other person or address as the Shareholders' Representative
shall furnish to Buyer in writing.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this
paragraph, such communication shall be deemed delivered the next business
day after transmission (and sender shall bear the burden of proof of
delivery); if sent by overnight courier pursuant to this paragraph, such
communication shall be deemed delivered upon receipt; and if sent by U.S.
mail pursuant to this paragraph, such communication shall be deemed
delivered as of the date of delivery indicated on the receipt issued by
the relevant postal service, or, if the addressee fails or refuses to
accept delivery, as of the date of such failure or refusal. Any party to
this Agreement may change its address for the purposes of this Agreement
by giving notice thereof in accordance with this Section.
13.6. Expenses. Regardless of whether or not the transactions
contemplated hereby are consummated:
13.6.(a) Brokerage. Except as to Xxxxxxx Xxxx, who shall be
compensated by Buyer, the Company, the Shareholders and Buyer each
represent and warrant to each other that there is no broker involved or in
any way connected with the transfer provided for herein. Buyer agrees to
hold the Company and the Shareholders harmless from and against all claims
for brokerage commissions or finder's fees incurred through any act of
Buyer in connection with the execution of this Agreement or the
transactions provided for herein. The Company and the Shareholders,
jointly and severally, agree to hold Buyer harmless from and against all
claims for brokerage commissions or finder's fees incurred through any act
of either the Company or any Shareholder in connection with the execution
of this Agreement or the transactions provided for herein.
13.6.(b) Expenses. Each of the parties shall bear his or its
own expenses and the expenses of its counsel in connection with the
transactions contemplated hereby, except that the Company shall pay its
expenses and the expenses of the Shareholders in connection with the
negotiation and execution of, and the closing of the transactions
contemplated by, this Agreement.
13.6.(c) Costs of Litigation. The parties agree that the
prevailing party in any action brought with respect to or to enforce any
right or remedy under this Agreement shall be entitled to recover from the
other party or parties all reasonable costs and expenses of any nature
whatsoever incurred by the prevailing party in connection with such
action, including, without limitation, attorneys' fees and prejudgment
interest.
13.7. CONSENT TO JURISDICTION. THE COMPANY, THE SHAREHOLDERS AND
BUYER EACH HEREBY CONSENT TO THE JURISDICTION OF ANY STATE COURT WITHIN
XXXX COUNTY, ILLINOIS OR ANY FEDERAL COURT LOCATED WITHIN THE NORTHERN
DISTRICT OF THE STATE OF ILLINOIS FOR ANY PROCEEDING INSTITUTED HEREUNDER
OR UNDER ANY OF THE OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH. EACH
PARTY HERETO WAIVES ANY OBJECTION THAT IT MAY HAVE BASED UPON LACK OF
JURISDICTION OR FORUM NOW CONVENIENS TO THE CONDUCT OF ANY SUCH
PROCEEDING.
13.8. Entire Agreement. This Agreement amends and restates the
Prior Agreement in its entirety and embodies the entire agreement between
the parties hereto with respect to the transactions contemplated herein,
and there have been and are no agreements, representations or warranties
between the parties other than those set forth or provided for herein.
13.9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The parties agree
that a facsimile signature of any person shall be deemed to be an
original, binding signature.
13.10. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
13.11. Glossary of Terms. The following sets forth the location of
definitions of capitalized terms defined in the body of this Agreement:
"Affiliate" - Section 3.9.(k)
"Ancillary Instruments" - Section 3.2.(a)
"Best Knowledge of the Shareholders" - Section 3.10
"Buyer's Affiliates" - Section 9.1
"CERCLA" - Section 3.12.(c)
"Claim" - Section 9.1
"Closing" - Preamble to Article 10
"Closing Date" - Preamble to Article 10
"Code" - Section 3.6
"Company Employees" - Section 3.17.(a)
"Employee Plans/Agreements" - Section 3.17.(a)
"Environmental Laws" - Section 3.12.(c)
"Environmental Quantification" - Section 5.1.(c)
"ERISA" - Section 3.17.(a)
"Indemnified Party" - Section 9.3.(a)
"Indemnifying Party" - Section 9.3.(a)
"Laws" - Section 3.12.(a)
"Lien" - Section 3.13.(a)
"Major Supplier" - Section 3.20(b)
"Note" - Section 2.2.(b)
"PBGC" - Section 3.17.(b)(ii)
"Prior Agreement" - Recital C
"Products" - Section 3.21
"Purchase Price" - Section 2.1
"Real Property" - Section 3.13.(c)
"Recent Balance Sheet" - Section 3.5
"SNSC" - Recital C
"Schedules" - Preamble to Article 3
"Shares" - Recital A
"Subsidiary" - Section 3.1.(d)
"Trade Rights" - Section 3.19
"Transaction Expenses" - Section 5.7
"Waste" - Section 3.12.(c)
Where any group or category of items or matters is defined collectively in
the plural number, any item or matter within such definition may be
referred to using such defined term in the singular number.
* * * * *
(The next page is the signature page.)
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
BUYER:
NEWCO, INC.
By:
Title:
COMPANY:
GAME TIME, INC.
By:
Title:
XXXX X. XXXXXXXX, XX.,
SHAREHOLDER AND SHAREHOLDERS'
REPRESENTATIVE
XXXX X. XXXXXXXX, SHAREHOLDER
XXXXXXX X. XXXXXXXX, SHAREHOLDER
