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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
between
TRIDAN INTERNATIONAL, INC.
an Illinois corporation,
and
KAYDON CORPORATION,
a Delaware corporation
("Purchaser")
As of August 11, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I
PURCHASE AND SALE OF ACQUIRED ASSETS; CLOSING
1.1. Purchase and Sale........................................................................................1
1.2. Purchase Price; Allocation...............................................................................3
1.3. Closing Balance Sheet; Calculation of the Additional Consideration.......................................3
1.4. Assumption of Liabilities................................................................................5
1.5. Closing; Payment of the Purchase Price and the Additional Consideration..................................7
1.6. Escrow...................................................................................................8
1.7. Certain Definitions......................................................................................8
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
2.1. Organization of Seller; Qualification....................................................................9
2.2. Authority; No Violation or Consent.......................................................................9
2.3. No Subsidiaries or Investments..........................................................................10
2.4. Financial Statements....................................................................................10
2.5. No Undisclosed Liabilities..............................................................................11
2.6. Absence of Certain Changes or Events....................................................................11
2.7. Real Estate and Tangible Personal Properties; Title.....................................................11
2.8. Patents, Trademarks, Trade Names, Etc...................................................................12
2.9. Environmental Matters...................................................................................13
2.10. Insurance...............................................................................................16
2.11. Labor Matters...........................................................................................17
2.12. ERISA; Benefit Plans....................................................................................17
2.13. Certain Contracts and Arrangements......................................................................19
2.14. Legal Proceedings, Etc..................................................................................20
2.15. Governmental Authorizations and Regulations.............................................................20
2.16. Taxes...................................................................................................20
2.17. Transactions with Stockholders, Officers, Directors, Etc................................................21
2.18. Change in Control Agreements............................................................................21
2.19. Commissions.............................................................................................21
2.20. Inventory...............................................................................................21
2.21. Accounts and Notes Receivable...........................................................................21
2.22. Suppliers...............................................................................................21
2.23. Customers...............................................................................................21
2.24. Officers, Directors and Employees.......................................................................22
2.25. Effect of Transaction...................................................................................22
2.26. Compliance with Law.....................................................................................22
2.27. Absence of Certain Commercial Practices.................................................................22
2.28. No Competing Business...................................................................................23
2.29. Accuracy of Certain Information.........................................................................23
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.1. Organization............................................................................................23
3.2. Authority Relative to this Agreement....................................................................23
3.3. Consents and Approvals; No Violation....................................................................23
3.4. Financing...............................................................................................24
ARTICLE IV
COVENANTS OF THE PARTIES
4.1. Conduct of Business of Seller...........................................................................24
4.2. Access to Information...................................................................................25
4.3. Additional Financial Statements.........................................................................25
4.4. Consents................................................................................................25
4.5. Filings.................................................................................................25
4.6. No Shopping, Etc........................................................................................26
4.7. Furnishing Information; Announcements...................................................................26
4.8. Additional Agreements...................................................................................26
4.9. Notification of Certain Matters.........................................................................26
4.10. Tax Matters.............................................................................................27
4.11. Illinois Responsible Property Transfer Act..............................................................27
4.12. 401(k) Plan.............................................................................................27
4.13. Change of Corporate Name................................................................................28
ARTICLE V
CONDITIONS TO OBLIGATIONS OF PURCHASER
5.1. Representations and Warranties; Agreements..............................................................28
5.2. Authorization; Consents.................................................................................28
5.3. Opinion of Seller's Counsel.............................................................................28
5.4. Absence of Litigation...................................................................................28
5.5. Title Policy Commitment.................................................................................29
5.6. Consent and Estoppel Certificate........................................................................29
5.7. Non-Competition Agreement...............................................................................29
5.8. Secured Indebtedness....................................................................................29
5.9. Employment Agreement....................................................................................29
5.10. Other Deliveries........................................................................................29
5.11. Simultaneous Closings...................................................................................30
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SELLER
6.1 Representations and Warranties; Agreements..............................................................30
6.2 Authorization; Consents.................................................................................30
6.3 Opinion of Purchaser's Counsel..........................................................................30
6.4. Secured Indebtedness....................................................................................30
6.5. Other Deliveries........................................................................................31
6.6. Simultaneous Closings...................................................................................31
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ARTICLE VII
INDEMNIFICATION
7.1. Indemnification.........................................................................................31
7.2. Payment for Indemnity Claims............................................................................33
ARTICLE VIII
MISCELLANEOUS
8.1 Termination.............................................................................................34
8.2. Survival................................................................................................34
8.3. Expenses................................................................................................35
8.4. Headings................................................................................................35
8.5. Notices.................................................................................................35
8.6. Assignment..............................................................................................36
8.7. Entire Agreement........................................................................................36
8.8. Modifications, Amendments and Waivers...................................................................36
8.9. Counterparts............................................................................................36
8.10. Governing Law...........................................................................................36
8.11. Accounting Terms........................................................................................37
8.12. Severability............................................................................................37
8.13. Specific Performance....................................................................................37
8.14. Third Parties...........................................................................................37
SIGNATURES.......................................................................................................38
INDEX OF DEFINED TERMS SECTION
1999 Financial Statements...........................................................................2.4(a)
1999 FSC Commissions................................................................................1.2(a)
Accountant's Determination..........................................................................1.3(c)
Acquired Assets........................................................................................1.1
Additional Consideration............................................................................1.2(a)
Additional Consideration Worksheets.................................................................1.3(a)
Agreement.........................................................................................Preamble
Arbitrating Accountants.............................................................................1.3(c)
Assumed Liabilities.................................................................................1.4(a)
Business Days .........................................................................................1.7
Closing.............................................................................................1.5(a)
Closing Balance Sheet...............................................................................1.3(a)
Closing Date........................................................................................1.5(a)
Code................................................................................................2.7(b)
Environmental Actions...............................................................................2.9(c)
Environmental Costs.................................................................................2.9(m)
Environmental Laws..................................................................................2.9(m)
Environmental Matter................................................................................2.9(m)
Environmental Permits...............................................................................2.9(m)
ERISA..............................................................................................2.12(c)
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Escrow Amount..........................................................................................1.6
Escrow Agreement.......................................................................................1.6
Excluded Assets........................................................................................1.1
Excluded Debt..........................................................................................1.7
Excluded Liabilities................................................................................1.4(b)
Final Determination Date............................................................................1.3(c)
First 30-Day Period.................................................................................1.3(b)
GAAP...................................................................................................1.7
Hazardous Waste.....................................................................................2.9(m)
HSR Act.............................................................................................2.2(e)
Indemnified Party...................................................................................7.1(c)
Indemnifying Party..................................................................................7.1(c)
Intellectual Property..................................................................................2.8
Interim Financial Statements........................................................................2.4(b)
IRPTA...............................................................................................2.2(e)
Key Employees..........................................................................................1.7
Leases.................................................................................................1.7
Legal Expenses......................................................................................7.1(c)
Lien...................................................................................................1.7
Losses..............................................................................................7.1(c)
Material Adverse Effect................................................................................1.7
Non-Competition Agreement..............................................................................5.8
Objection Notice....................................................................................1.3(b)
Person.................................................................................................1.7
Plans..............................................................................................2.12(a)
Post-May 2000 Earnings..............................................................................1.2(a)
Post-May 2000 FSC Commissions.......................................................................1.2(a)
Purchase Price......................................................................................1.2(a)
Purchased Business................................................................................Preamble
Purchaser.........................................................................................Preamble
Real Estate............................................................................................1.7
Regulated Substances................................................................................2.9(m)
Required Consents......................................................................................4.4
Seller............................................................................................Preamble
Seller's Calculation of a Disputed Item.............................................................1.3(d)
Settlement Agreement................................................................................1.3(c)
Shareholders...........................................................................................1.7
Tangible Property...................................................................................2.7(a)
Tax Differential....................................................................................1.2(a)
Taxes.................................................................................................2.16
SCHEDULES:
Schedule 1.1 -- Excluded Assets
Schedule 1.2(a) -- Calculation of Tax Differential
Schedule 1.2 (b) -- Allocation of Purchase Price and Assumed
Liabilities
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Schedule 1.7 -- Exceptions from GAAP
Schedule 2.7 -- Properties; Title
Schedule 2.8 -- Intellectual Property
Schedule 2.9 -- Environmental Matters
Schedule 2.10 -- Insurance
Schedule 2.12 -- ERISA; Benefit Plans
Schedule 2.13 - Certain Contracts and Arrangements
Schedule 2.16 -- Taxes
Schedule 2.17 -- Certain Transactions
Schedule 2.21 -- Accounts and Notes Receivable
Schedule 2.23 -- Customers
Schedule 2.24 -- Officers, Directors and Employees
Schedule 2.29 - Accuracy of Certain Information
Schedule 4.4 -- Required Consents
Schedule 5.3 -- Opinion of Seller's Counsel
Schedule 6.3 -- Opinion of Purchaser's Counsel
EXHIBITS:
Exhibit A -- Form of Escrow Agreement
Exhibit B -- Form of Non-Competition Agreement
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made as of August
11, 2000 by and between KAYDON CORPORATION, a Delaware corporation
("Purchaser"), and TRIDAN INTERNATIONAL, INC., an Illinois corporation
("Seller"). Purchaser desires to purchase substantially all of the assets of
Seller used by Seller or useful in the manufacture and sale of products at
Seller's facilities located in Danville, Illinois, which constitute the entire
business conducted by Seller (the "Purchased Business"), and Seller desires to
sell all such assets to Purchaser on the terms and conditions hereinafter set
forth. Capitalized terms not otherwise defined herein shall have the meanings
given to them in Section 1.7 hereof.
In consideration of the premises and of the respective covenants and
agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ACQUIRED ASSETS; CLOSING
1.1. Purchase and Sale. Upon and subject to the terms and conditions
hereof, Seller will sell, convey, transfer, assign and deliver to Purchaser and
Purchaser will purchase from Seller, as a going concern, as of and with effect
from the beginning of business on the Closing Date, all of the assets and
properties owned, directly or indirectly, beneficially or of record, by Seller
or to which Seller is entitled and belonging to or used in the Purchased
Business of every kind and description, whether tangible or intangible, real,
personal or mixed, and wheresoever situate (the "Acquired Assets"), except those
assets listed in Schedule 1.1 hereto (the "Excluded Assets"). Without limiting
the generality of the foregoing, the Acquired Assets to be sold and purchased
hereunder include:
(a) all cash, cash equivalents, investment securities, accounts
receivable and miscellaneous receivables of the Purchased Business, including
(but not limited to) xxxxxxxx not collected, goods shipped and not billed and
miscellaneous receivables relating to goods shipped and not yet billed;
(b) all of Seller's right, title and interest in the Real Estate and
all right, title and interest of Seller under the Leases;
(c) all plants, buildings, structures, erections, improvements,
appurtenances and fixtures situate on or forming part of the Real Estate;
(d) all fixed machinery and fixed equipment situate on or forming
part the Real Estate;
(e) all other machinery and equipment and all vehicles, computers
(hardware, software, documentation and manuals therefor), tools, spare parts,
handling equipment, furniture, furnishings, supplies and accessories owned by
Seller and used in connection with the Purchased Business;
(f) the full benefit of all leases of machinery and equipment in
which is lessee relating to the Purchased Business;
(g) all inventories of raw materials, work-in-process and finished
goods and spare parts;
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(h) all new and unused manufacturing, office, preventive maintenance,
shipping and packaging supplies owned by Seller and relating to the Purchased
Business;
(i) the full benefit of all franchise, license, management and
non-compete agreements, and all other contracts or commitments to which Seller
is entitled in connection with the Purchased Business including, without
limiting the generality of the foregoing, all unfilled orders received by Seller
in connection with the Purchased Business; and all forward commitments to Seller
for supplies or materials entered into in the course of the Purchased Business
for use in the Purchased Business whether or not there are any written contracts
with respect thereto;
(j) the full benefit of all licenses, registrations, permits and
quotas used to carry on the Purchased Business in its usual and ordinary course
including, without limiting the generality of the foregoing, the licenses,
registrations, permits and quotas listed or described on any Schedule hereto;
(k) all the right, title, benefit and interest of Seller in and to
all intellectual, industrial and proprietary rights including without limitation
(i) inventions, (ii) all granted patents and any reissues thereof, (iii)
copyrights, whether registered or unregistered, (iv) designs and industrial
designs and all registrations and applications for registration therefor, (v)
trademarks, service marks, trade names and any word, symbol, icon, logo or other
indicia of origin adopted or used in connection with any product made or service
provided in the Purchased Business including, without limitation, the name
"Tridan International"and any derivation or variation thereof or name similar
thereto, whether registered or unregistered, and rights to prevent unfair
trading, (vi) trade secrets, confidential information and know-how, (vii) all
applications and registrations for all of the foregoing, (viii) all licenses,
including sublicenses to use intellectual, industrial or proprietary rights of
third parties, and (x) all licenses, including sublicenses granted to third
parties to use any of the foregoing, including, but not limited to, the
Intellectual Property assets identified in Schedule 2.8 hereto;
(l) the goodwill of the Purchased Business including, without
limiting the generality of the foregoing, the exclusive right of Purchaser to
represent itself as carrying on the Purchased Business in continuation of and in
succession to Seller and the right to use any words indicating that the
Purchased Business is so carried on; and all records of sales, customer lists
and supplier lists of, or used in connection with, the Purchased Business;
(m) all prepaid expenses and deposits relating to the Purchased
Business including, without limiting the generality of the foregoing, all
prepaid taxes and water rates, all prepaid purchases of gas, oil and water, and
all prepaid lease payments;
(n) all plans and specifications in Seller's possession or under its
control relating to the plants, buildings, structures, erections, improvements,
appurtenances and fixtures situate on or forming part of the Real Estate
including, without limiting the generality of the foregoing, all such
electrical, mechanical and structural drawings related thereto and all building
location surveys for the Real Estate as are in the possession or under the
control of Seller;
(o) all personnel records, inspection records, issued invoices,
accounting and business records (except Seller's stock transfer books and
records and minute books) and other records, books, documents and databases
relating to the Purchased Business, the Acquired Assets and those
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employees who are, pursuant to the provisions of this Agreement, to be employed
by Purchaser as are in the possession or under the control of Seller; and
(p) all warranties and guaranties running to the benefit of Seller.
The Acquired Assets shall be transferred to Purchaser free and clear of all
Liens, except Liens for real or personal property taxes not yet due and payable
on the Closing Date, and except as otherwise provided herein.
1.2. Purchase Price; Allocation.
(a) The purchase price payable to Seller for the Acquired Assets
shall be $16,986,628 plus the Additional Consideration (as defined below) (the
"Purchase Price"). The "Additional Consideration" shall mean the following: (i)
all fiscal year 2000 pre-tax earnings of Seller from June 1, 2000, to the
Closing Date, determined in accordance with GAAP, but only to the extent such
earnings are not distributed to the Shareholders prior to Closing, (the
"Post-May 2000 Earnings"), (ii) fiscal year 1999 Foreign Sales Corporation
commissions of $221,492 (the "1999 FSC Commissions") to the extent not paid
prior to Closing, (iii) all fiscal year 2000 Foreign Sales Corporation
commissions from June 1, 2000, to the Closing Date (the "Post-May 2000 FSC
Commissions") to the extent not paid prior to Closing, and (iv) the amount that
will make Shareholders whole for the differential (resulting from the use of the
asset sale form of transaction and Purchaser's write-up of the Acquired Assets)
between long-term capital gain and ordinary income tax rates, calculated as set
forth on Schedule 1.2(a) (the "Tax Differential");
(b) The parties have agreed upon an allocation of the Purchase Price
and the Assumed Liabilities among the Acquired Assets, as set forth on Schedule
1.2(b). Seller and Purchaser, in filing their respective income and other tax
returns (including IRS Form 8594), will use the agreed upon allocation of the
Purchase Price and the Assumed Liabilities, and each party agrees to notify the
other if any Taxing authority proposes to reallocate the Purchase Price.
1.3. Closing Balance Sheet; Calculation of the Additional
Consideration.
(a) As promptly as practicable following the Closing, Seller, at
Seller's cost and expense, shall prepare in accordance with GAAP and based on a
physical inventory: (i) a balance sheet for Seller as of the beginning of
business on the Closing Date (the "Closing Balance Sheet"), reflecting the
financial position of Seller as of the Closing Date; (ii) a statement of
operations of Seller for the period from June 1, 2000, through the Closing Date
which sets forth the sum of the Post-May 2000 Earnings and the Post-May 2000 FSC
Commissions (i.e., while Post-May 2000 FSC Commissions will not be separately
calculable until Seller's tax returns are prepared following year-end, Seller
will be able to promptly calculate the sum of Post-May 2000 Earnings and
Post-May 2000 FSC Commissions); and (iii) a calculation of the Tax Differential
(which statement of operations and Tax Differential calculation are together
referred to as the "Additional Consideration Worksheets"). During and after the
preparation of the Closing Balance Sheet and the Additional Consideration
Worksheets and until the Final Determination Date (as defined below), Purchaser
and Seller shall each provide the other and its advisors with timely access to
the records of Seller and Purchaser,
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their respective accountants and the work papers, trial balances and similar
materials used in connection with the preparation of the Closing Balance Sheet
and all Additional Consideration Worksheets. Notwithstanding the foregoing,
Seller shall have full and complete access after Closing, at reasonable times
and places, to its accounting and business records for the purposes of
preparation or audit of its year 2000 income tax returns, or the audit of any
prior year income tax return, and for purposes of fulfilling their indemnity
obligations under Article VII.
(b) Following receipt of each of the Additional Consideration
Worksheets , Purchaser will have thirty (30) days (the "First 30-Day Period") to
review such Additional Consideration Worksheet. At or before the end of the
First 30-Day Period, Purchaser will either (i) accept such Additional
Consideration Worksheet in its entirety, or (ii) deliver to Seller a written
notice (the "Objection Notice") setting forth Purchaser's calculation of the
amount in such Additional Consideration Worksheet, in which case the difference
between Seller's and Purchaser's calculations shall be deemed to be in dispute.
The failure by Purchaser to deliver the Objection Notice within the First 30-
Day Period shall constitute Purchaser's acceptance of such Additional
Consideration Worksheet.
(c) If Purchaser delivers an Objection Notice under Section 1.3(b) in
a timely manner, then, within a further period of ten (10) Business Days from
the end of the First 30-Day Period, the parties and, if desired, their
respective accountants will attempt to resolve in good faith any disputed items
and reach a written agreement (the "Settlement Agreement") with respect thereto.
Failing such resolution, the unresolved disputed items will be referred for
final binding determination to an independent nationally-recognized firm of
certified public accountants mutually agreed upon by Seller and Purchaser (the
"Arbitrating Accountants"). Such determination (the "Accountant's
Determination") shall be (i) in writing, (ii) furnished to Seller and Purchaser
as soon as practicable after the items in dispute have been referred to the
Arbitrating Accountants, (iii) made in accordance with GAAP, and (iv)
nonappealable and incontestable by Seller or Purchaser and not subject to
collateral attack for any reason. For purposes of this Section 1.3, the "Final
Determination Date," as to each of the Additional Consideration Worksheets,
shall mean the earliest to occur of (i) the 31st day (or if not a Business Day,
the first Business Day thereafter) following the receipt by Purchaser of the
Additional Consideration Worksheet if Purchaser shall have failed to deliver the
Objection Notice to Seller within the First 30-Day Period, (ii) the date on
which either Seller or Purchaser gives the other a written notice to the effect
that such party has no objection to the other party's determination of the
Additional Consideration Worksheet, (iii) the date on which Seller and Purchaser
execute and deliver a Settlement Agreement, (iv) the date as of which Seller and
Purchaser shall have received the Accountant's Determination, or (v) as to the
undisputed portion of an Additional Consideration Worksheet, the first date as
of which the undisputed portion is identified.
(d) If an Accountant's Determination under Section 1.3(c) is at least
95% of the amount of Seller's Calculation of a Disputed Item, then the fees and
expenses of the Arbitrating Accountants for such Accountant's Determination of
such disputed item shall be paid entirely by the Purchaser. If an Accountant's
Determination under Section 1.3(c) is at least 80% but less than 95% of the
amount of Seller's Calculation of a Disputed Item, then the fees and expenses of
the Arbitrating Accountants for such Accountant's Determination of such disputed
item shall be borne equally by Seller and Purchaser. If an Accountant's
Determination under Section 1.3(c) is less than 80% of the
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amount of Seller's Calculation of a Disputed Item, then the fees and expenses of
the Arbitrating Accountants for such Accountant's Determination of such disputed
item shall be paid entirely by Seller. As used in this subsection 1.3(d), the
"Seller's Calculation of a Disputed Item" means Seller's calculation after any
attempted good faith resolution with Purchaser, but prior to submission to the
Arbitrating Accountants, of (i) the sum of the Post-May 2000 Earnings and the
Post-May 2000 FSC Commissions, or (ii) the Tax Differential.
1.4. Assumption of Liabilities.
(a) In addition to payment of the Purchase Price, upon and subject to
the terms and conditions hereof, at the Closing, Purchaser shall assume and
agree to pay, perform and discharge only the following liabilities of Seller
exclusively relating to the Purchased Business (the "Assumed Liabilities"):
(i) those liabilities reflected on the Interim Financial
Statements which remain unpaid on the Closing Date and which are not
Excluded Liabilities (as defined in Section 1.4(b));
(ii) those liabilities which have arisen in the ordinary course
of Seller's business up to and including the date of the Interim
Financial Statements, which were not of a type or nature required to
be, or that could be, reflected on either such Statement under GAAP,
including warranty claims relating to products manufactured by Seller
prior to Closing;
(iii) those liabilities which have arisen in the ordinary course
of Seller's business subsequent to the date of the Interim Financial
Statements, including warranty claims relating to products manufactured
by Seller prior to Closing;
(iv) those liabilities and obligations arising under Seller's
contracts, agreements, other instruments, commitments, arrangements and
understandings which are either (1) listed on Schedule 2.13 or other
Schedules to this Agreement, or (2) exempt from listing on Schedule
2.13 by the terms of Section 2.13;
(v) liabilities on a capital lease of a Mazak lathe, the
principal amount being shown on the December 31, 1999 balance sheet as
$19,192 current portion and $79,629 non-current portion;
(vi) liabilities to the former owners of Seller's real estate
and factory/office building at 000 X. Xxxxxxx Xx., Xxxxxxxx, Xxxxxxxx,
under Agreement dated March 3, 1994, as amended December 1, 1999, the
principal amount being shown on Seller's March 31, 2000 balance sheet
as $370,355;
(vii) bank debt incurred for the purchase of the real estate and
building known as the Interstate Publisher's building, at 000 X.
Xxxxxxxx Xx., Xxxxxxxx, Xxxxxxxx, in a principal amount not exceeding
$275,000;
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(viii) bank debt incurred in connection with the purchase from a
subsidiary of Lennox International, Inc., of certain fin press designs,
other product designs, inventory, manufacturing equipment and casting
molds, in a principal amount not exceeding $600,000; and
(ix) those liabilities and obligations otherwise disclosed in
this Agreement (including any schedule, exhibit or document delivered
pursuant to this Agreement) unless such disclosure identifies the
liability or obligation as an Excluded Liability.
(b) Notwithstanding anything in this Agreement to the contrary, the
Assumed Liabilities are the only liabilities of Seller or the Purchased Business
to be assumed, paid, performed and discharged by Purchaser. All liabilities and
obligations of Seller or the Purchased Business other than the Assumed
Liabilities are herein sometimes referred to as the "Excluded Liabilities."
Without limiting the generality of the foregoing, Purchaser shall not assume,
pay, perform or discharge any of the following Excluded Liabilities:
(i) any liability or obligation of Seller for fees, costs and
expenses of Seller's attorneys, independent public accountants or other
outside representatives incurred in connection with the negotiation,
preparation or consummation of this Agreement or the transactions
contemplated hereby;
(ii) liabilities or obligations of Seller to its Shareholders as
such or in connection with or arising out of the issuance or redemption
of any shares;
(iii) liabilities of Seller arising out of any claim, demand or
proceeding based on any Environmental Matter;
(iv) liabilities arising out of or based on any contract or
commitment entered into prior to the Closing Date and which is required
to be, but is not disclosed herein or in any Schedule hereto or any
document to be delivered hereunder, provided that Seller shall be
entitled to all benefits arising under or out of any such contract or
commitment not assumed by Purchaser;
(v) liabilities or obligations of Seller for any income taxes
imposed by federal, state, municipal or any other governmental
authority, payable by the Shareholders based on income of Seller
accrued through the Closing Date;
(vi) liabilities or obligations of the Sellers for Excluded
Debt; provided that between June 1, 2000 and the Closing Date, Seller
shall not pay down the Excluded Debt by an amount that exceeds 50% of
the Post-May 2000 Earnings (it being recognized that Seller may
inadvertently violate this proviso since at the Closing Date the exact
amount of the Post- May 2000 Earnings will not yet be known). Upon
determination of the Post-May 2000 Earnings, if it is determined that
between June 1, 2000 and the Closing Date the Excluded Debt was paid
down by an amount exceeding 50% of the Post-May 2000 Earnings, then an
adjustment shall be payable from Sellers to Purchaser (in the form of
an offset against the Post-May 2000 Earnings and Tax Differential
payable by Purchaser to Seller) to reflect what
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the Excluded Debt would have been on the Closing Date had it been paid
down after May 31, 2000 by an amount equal to 50% of the Post-May 2000
Earnings;
(vii) any liabilities or obligations of Seller with respect to
any transaction entered into after the Closing Date;
(viii) liabilities or obligations of the Seller for legal and
accounting expenses, user fees and other administrative costs of
terminating any Plans which are to be terminated by Seller pursuant to
this Agreement, but excluding Plan contributions accrued as liabilities
accrued on Seller's books as of the Closing and mandatory post-Closing
administrative costs, which shall be Assumed Liabilities, and
liabilities under any Plans of Seller that are not terminated by
Seller;
(ix) COBRA obligations arising under any health or medical
benefit plan maintained by Seller, with respect to any employee
terminated prior to Closing; or
(x) any liability for which Seller is indemnifying Purchaser
under this Agreement.
1.5. Closing; Payment of the Purchase Price and the Additional
Consideration.
(a) Subject to the conditions set forth in this Agreement, the
purchase and sale of the Acquired Assets pursuant to this Agreement (the
"Closing") shall take place at the offices of Xxxxxx Xxxxxxx PLLC, 000 Xxxx
Xxxxxxxxxx Xxxxxxx, Xxx Xxxxx, Xxxxxxxx, at 10:00 o'clock a.m., local time, on
August 28, 2000, or at such other time, place and date as shall be mutually
agreed on by Purchaser and Seller but in no event later than September 15, 2000.
The date on which the Closing is to occur is herein referred to as the "Closing
Date" and the Closing shall be deemed to be effective as of the beginning of
business on the Closing Date.
(b) At the Closing, Seller shall sell, assign, convey, transfer and
deliver to Purchaser all of the Acquired Assets, wherever located and whether or
not recorded on the books of Seller, by executing and delivering to Purchaser
such customary instruments of transfer and such other bills of sale, assignments
and other instruments as Purchaser shall reasonably require, including, without
limitation, assignments of Seller's right, title and interest under the Leases;
(c) At the Closing, Purchaser shall accept and purchase the Acquired
Assets from Seller and in payment therefor shall assume the Assumed Liabilities
by such instruments as Seller shall reasonably require, and shall deliver to
Seller (by intrabank or wire transfer to a bank account designated by Seller
upon two days' prior written notice to Purchaser) the sum of $16,986,628, less
the Escrow Amount (as defined below), plus an amount equal to the 1999 FSC
Commissions to the extent not previously paid. Seller may direct Purchaser to
deliver a portion of the Purchase Price to certain third parties for fees,
expenses, costs or other obligations arising out of or in connection with the
transactions contemplated in this Agreement, including without limitation,
payments of Excluded Liabilities to American National Bank or other creditors of
Seller.
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(d) Each item of Additional Consideration, or undisputed portion
thereof, will be paid by Purchaser to Seller, without deduction or offset of any
kind, by intrabank or wire transfer to a bank account designated by Seller upon
two days' prior written notice to Purchaser within three (3) Business Days after
the Final Determination Date with respect to such item of Additional
Consideration, or undisputed portion thereof.
(e) Each assignment, transfer, xxxx of sale, agreement and other
instrument or document required in connection with the sale of the Acquired
Assets or the assumption of the Assumed Liabilities otherwise as required under
the Agreement shall be reasonably satisfactory in form and substance to the
receiving party and its counsel.
1.6. Escrow. At the Closing, $750,000 of the Purchase Price to be paid
to Seller (the "Escrow Amount") shall be deposited into escrow by Purchaser to
be held in accordance with the terms of the Escrow Agreement in substantially
the form attached hereto as Exhibit A (the "Escrow Agreement"). To the extent
that amounts are to be paid by Seller to Purchaser pursuant to this Agreement,
such amounts may be paid from the Escrow Amount pursuant to the terms of the
Escrow Agreement. Funds remaining in the Escrow Amount following the
satisfaction by Seller of its obligations to Purchaser, if any, shall be
released to Seller according to the terms of the Escrow Agreement.
1.7. Certain Definitions. For purposes of this Agreement:
"Business Days" means Monday through Friday, inclusive, but excluding
any day which is a federal legal holiday in the United States;
"Excluded Debt" means be indebtedness owing by Seller to any bank or
Shareholder, other than the principal amount of bank debt, capital
lease and real estate contract payable specifically described in
Section 1.4(a) as Assumed Liabilities;
"GAAP" means generally accepted accounting principles, consistently
applied, except as provided on Schedule 1.7;
"Key Employees" means Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx and Xxxxxx
X. Xxxxxx;
"Leases" means any written or oral lease agreement under which either
of Seller leases real or tangible personal property, including any
equipments leases and capitalized leases.
"Lien" means any pledge, lien (including without limitation any Tax
lien), charge, claim, community property interest, condition, equitable
interest, encumbrance, security interest, mortgage, option, restriction
on transfer (including without limitation any buy-sell agreement or
right of first refusal or offer), forfeiture, penalty, equity or other
right of another person of every nature and description whatsoever;
"Material Adverse Effect" means any change in, or effect on, Seller
which is, or is reasonably likely to be, materially adverse to the
business, properties, results of operations,
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financial condition or prospects of Seller taken as a whole, other than
a change or effect that is caused by or results from general economic
conditions or that affects generally the industry in which Seller
operates;
"Person" or "person" means an individual or any corporation,
partnership, joint venture, association, limited liability company,
trust, unincorporated organization, or other legal entity or a
government or governmental entity;
"Real Estate" means the lands described on Schedule 2.7, and all
appurtenances, improvements, buildings and fixtures thereto or thereon;
and
"Shareholders" means Xxxxxx X. Xxxxxxxx and Xxxxx Xxxxxxxxxxxx.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller represents and warrants to Purchaser that the following
representations and warranties are true and correct:
2.1. Organization of Seller; Qualification. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Illinois and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. Seller is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
and in good standing will not have a Material Adverse Effect.
2.2. Authority; No Violation or Consent. Seller has full power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby and all proceedings required to be taken by or on its part
to authorize the execution, delivery and performance of this Agreement have been
duly and properly taken. This Agreement has been duly and validly executed and
delivered by Seller and constitutes a valid and binding agreement of Seller
enforceable in accordance with its terms. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby, and the
compliance with the terms of this Agreement do not and will not:
(a) conflict with or result in any breach of any provision of
Seller's Articles of Incorporation or Bylaws, (or other similar
governing documents) or the terms of any agreement or other instrument
to which Seller is a party or by which it or any of its property may be
bound;
(b) conflict with, result in a breach of any provision of,
constitute (with or without due notice or lapse of time or both) a
default under, result in the modification or cancellation of, or give
rise to any right of termination or acceleration in respect of, any
contract, agreement, commitment, understanding, arrangement or
restriction of any kind to which Seller is a party or to which Seller
or any of its property is subject (excluding
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however, any mortgage, security agreement, loan agreement or other
credit arrangement or facility with American National Bank & Trust
Company of Chicago or any other secured creditor of Seller);
(c) result in the creation of any Lien upon, or any Person
obtaining the right to acquire, any of the Acquired Assets;
(d) violate or conflict with any law, ordinance, code, rule,
regulation, decree, order or ruling of any court or governmental
authority, to which Seller or any of the Acquired Assets is subject;
(e) require any authorization, consent, order, permit or
approval of, or notice to, or filing, registration or qualification
with, any governmental, administrative or judicial authority except as
may be required to be in compliance with the provisions of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act") or the Illinois Responsible Property Transfer Act of 1988
("IRPTA"); or
(f) except for the Required Consents listed on Schedule 4.4,
require any consent of any Person to the execution, delivery or
performance of this Agreement or to the consummation of the
transactions contemplated hereby or to the operation of the Purchased
Business after the Closing Date substantially as operated prior
thereto, including (but not limited to) consents from parties to leases
or other agreements or commitments.
2.3. No Subsidiaries or Investments. Seller does not beneficially own,
directly or indirectly, any outstanding voting stock of any other corporation,
nor is Seller a party to or involved with any partnership, joint venture,
limited liability company or other entity in which Seller, directly or
indirectly, has, or pursuant to any agreement has or will have the right to
acquire by any means, an interest or investment representing an equity, profit
or voting interest entitling Seller or any subsidiary of Seller to vote for or
appoint the management of such entity.
2.4. Financial Statements.
(a) Seller has previously furnished to Purchaser (i) the unaudited
balance sheet of Seller as of December 31, 1999; and (ii) the related unaudited
statements of operations and unaudited retained earnings of Seller for the
fiscal year then ended. Such unaudited financial statements are hereinafter
referred to as the "1999 Financial Statements." The balance sheet included in
the 1999 Financial Statements presents fairly the financial position of Seller,
and the related statements of operations included therein presents fairly the
results of operations and for the fiscal year then ended, in each case in
accordance with GAAP.
(b) Seller has previously furnished to Purchaser (i) a balance sheet
of Seller as of May 31, 2000, and (ii) a statement of operations of Seller for
the five-month period ended May 31, 2000. Such financial statements are titled
and are hereinafter referred to as the "Interim Financial Statements." The
Interim Financial Statements were prepared in conformity with GAAP, except as
noted therein, and fairly present (subject to normal year-end adjustments) the
financial position and results of operations of Seller for the periods covered
by such statements.
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2.5. No Undisclosed Liabilities. To Seller's knowledge after inquiry
of the Key Employees, except as assumed by Purchaser in Section 1.4(a) or
disclosed on any Schedule to this Agreement, Seller has no liability or
obligation, secured or unsecured (whether known or unknown, asserted or
unasserted, absolute, accrued, contingent or otherwise, and whether due or to
become due), nor is there any such liability or obligation for which Seller is
or may become liable, contingently or otherwise, which is of the type required
under GAAP to be reflected in the financial statements but which is not
reflected in the Interim Financial Statements or disclosed in the notes thereto,
except those which were incurred in the ordinary course of business after May
31, 2000, and are consistent with past practices in nature and are individually
and in the aggregate in an amount consistent with the Interim Financial
Statements. Seller has no knowledge, after inquiry of the Key Employees, of any
circumstance, condition, event or arrangement that will hereafter give rise to
any liabilities of Seller or any successor to the Purchased Business, other than
in the ordinary course of business.
2.6. Absence of Certain Changes or Events. Except as otherwise
expressly contemplated by this Agreement, since December 31, 1999, there has not
been: (a) any Material Adverse Effect or; (b) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock, property
or any combination thereof) in respect of Seller's capital stock or any
repurchase, redemption or other acquisition by Seller of any shares of capital
stock or other equity interests of Seller; (c) any damage, destruction or
casualty loss, whether covered by insurance or not, materially adversely
affecting the business, operations, financial condition or prospects of Seller,
taken as a whole; or (d) any material change by Seller in accounting methods,
principles or practices.
2.7. Real Estate and Tangible Personal Properties; Title.
(a) Schedule 2.7 hereto sets forth a list of all Real Estate owned by
Seller and also lists any lease pursuant to which Seller leases real property as
lessee or lessor. The buildings, facilities, machinery, equipment (other than
de-commissioned machinery and equipment in storage or held for possible future
use), furniture, leasehold and other improvements, fixtures, vehicles,
structures, any related capitalized items and other tangible property material
to the business or operations of Seller (the "Tangible Property") (i) are in
good operating condition and repair (normal wear and tear and temporary service
outages for repair or replacement excepted), (ii) have received or are receiving
through the date hereof repair and replacement in accordance with Seller's past
practices, (iii) are suitable for their current use and are currently in use by
Seller in the operation of its businesses in the ordinary course (other than
items awaiting or undergoing repair, or de-commissioned machinery and equipment
in storage or held for possible future use). The Tangible Property is free of
any material structural or engineering defects that would have a Material
Adverse Effect. Seller is currently undertaking roof repairs on a building owned
by it, most of the cost of which should be covered by an insurance payment
already received by it.
(b) Seller has good, valid and marketable fee simple title to all of
the Real Estate listed on Schedule 2.7 hereto, and Seller has good, valid and
marketable title to the Tangible Property and all of the other assets reflected
on the Interim Financial Statements, free and clear of all Liens other than (i)
those listed on Schedule 2.7 hereto, (ii) Liens for current Taxes, assessments
or governmental charges not yet due or delinquent, (iii) those which do not,
individually or in the aggregate, materially interfere with the use of the real
properties or materially detract from their
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value, (iv) liens of mechanics, materialmen, laborers, warehousemen, carriers
and other similar common law or statutory liens arising in the ordinary course
of business which are not yet due and payable or, if due and payable, have been
adequately bonded and (v) zoning, entitlement and other land use and
environmental regulations by governmental agencies. Seller is not in violation
of any local zoning or similar land use laws or governmental regulations, except
where such violation would not have a Material Adverse Effect. Seller is not in
violation of or in noncompliance with any covenant, condition, restriction,
order or easement affecting the Real Estate owned by Seller, except where such
violation or noncompliance would not have a Material Adverse Effect. Seller is
not a "foreign person" within the meaning of Section 1445(f) of the Internal
Revenue Code of 1986, as amended (the "Code").
(c) The assets, rights and properties owned or leased by Seller
constitute all of the assets, rights and properties (i) used or held for use by
Seller in the Purchased Business, and (ii) reasonably necessary for the conduct
of such business by Seller.
(d) Neither the whole nor any portion of the Real Estate or the
leaseholds owned or held by Seller is subject to any governmental decree or
order to be sold or is being condemned, expropriated or otherwise taken by any
governmental authority, body or other Person with or without payment of
compensation therefor, nor, to Seller's knowledge, has any such condemnation,
expropriation or taking been proposed.
2.8. Patents, Trademarks, Trade Names, Etc. Seller has made available
to Purchaser its files of all United States and foreign patents, patent
applications and invention disclosures of Seller. Seller owns or has the right
to use, pursuant to license, sublicense, agreement or permission, all
Intellectual Property (as defined below) necessary for the operation of its
businesses as presently conducted. Seller has not received any charge,
complaint, claim, demand or notice alleging any interference, infringement,
misappropriation or violation with or of any Intellectual Property rights of a
third party (including any claims that Seller must license or refrain from using
any Intellectual Property rights of a third party). To its knowledge, Seller has
not interfered with, infringed upon, misappropriated or otherwise come into
conflict with any Intellectual Property rights of third parties and, to the
knowledge of Seller, no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of Seller. Schedule 2.8 hereto sets forth a complete and correct list of
(a) all United States and foreign patents and patent applications, trademarks,
trade names, service marks and copyrights owned by Seller, and all licenses and
other agreements relating thereto, and (b) all agreements relating to
third-party Intellectual Property that Seller is licensed or authorized to use.
With respect to each item of Intellectual Property owned by Seller and
identified on Schedule 2.8, Seller possesses all right, title and interest in
and to the item, free and clear of any Lien. With respect to each item of
Intellectual Property identified on Schedule 2.8 that Seller is licensed or
authorized to use, the license, sublicense, agreement or permission covering
such item (i) is legal, valid, binding, enforceable and in full force and effect
and will not be affected by consummation of the transactions contemplated
hereby, and (ii) has not been breached by any party thereto. As used herein,
"Intellectual Property" means all U.S. and foreign patents, patent applications,
inventions, trade secrets, know-how, registered or unregistered trademarks,
trade names, service marks (including the goodwill associated therewith) and
copyrights.
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2.9. Environmental Matters.
(a) Seller holds all Environmental Permits necessary, to its
knowledge, to conduct the Purchased Business as presently conducted. All such
Environmental Permits are in full force and effect and Seller has made all
appropriate filings and registrations where necessary for the issuance or
renewal of such Environmental Permits. Schedule 2.9 hereto lists (A) each
Environmental Permit now held, (ii) the governmental entity which has
jurisdiction with respect to such Environmental Permit, (iii) the entity which
is required to hold such Environmental Permit and (iv) the effective date and
duration of such Environmental Permit. Seller is in material compliance with all
terms and conditions of all such Environmental Permits and, to its knowledge,
all Environmental Laws.
(b) Except as set forth on Schedule 2.9, consummation of the
transactions contemplated hereby will not, to Seller's knowledge, require
Purchaser or Seller to provide notice, obtain governmental approval, or take any
other actions in order to enable Purchaser to continue to hold all Environmental
Permits and to remain in compliance with the terms and conditions of all
Environmental Permits and all Environmental Laws. Seller has not obtained
information from regulatory agencies having jurisdiction or any other Person,
which would lead a reasonable Person with knowledge of the facts and
circumstances to believe that such Permits may not be issued, renewed, extended
or reissued in due course and as requested without material cost or penalty.
(c) Except as set forth on Schedule 2.9, there is not pending against
Seller any civil, criminal or administrative action, suit, summons, citation,
complaint, claim, notice of violation, demand, judgment, order, lien, proceeding
or hearing or any study, inquiry, proceeding or investigation (collectively,
"Environmental Actions"), based on or related to any Environmental Permit or any
Environmental Law or the presence, manufacture, generation, processing,
distribution, use, sale, treatment, recycling, receipt, storage, disposal,
transport, arranging for transportation, treatment or disposal, or handling, or
the emission, discharge, release or threatened release into the environment, of
any Regulated Substance, nor to Seller's knowledge, has any such Environmental
Action been threatened within the last five years.
(d) Except as set forth on Schedule 2.9, since January 1, 1996,
Seller has not manufactured, generated, processed, distributed, used, sold,
treated, recycled, received, stored, disposed of, transported, arranged for
transportation, treatment or disposal of, handled or conducted any other
activity involving, any Regulated Substance except in compliance in all material
respects with Environmental Laws and Environmental Permits.
(e) All of the real property owned or leased by Seller (including
improvements thereon) and all of the Tangible Property are free of any Hazardous
Substances (except those authorized pursuant to and in accordance with
Environmental Permits held by Seller) and free of all contamination, including
but not limited to groundwater contamination, arising from, relating to, or
resulting from any such Hazardous Substances.
(f) Except as set forth in Schedule 2.9, Seller knows of no past or
present conditions, events, circumstances, facts, activities, practices,
incidents, actions, omissions or plans: (1) that will interfere with or prevent
continued material compliance by Seller with Environmental Laws and the
requirements of Environmental Permits, (2) that will give rise to any liability
or other obligation
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under any Environmental Laws that will require Seller or Purchaser to incur any
actual or potential Environmental Costs, or (3) that will form the basis of any
claim, action, suit, proceeding, hearing, investigation or inquiry against or
involving Seller or Purchaser based on or related to any Environmental Matter or
which will require Seller to incur any Environmental Costs.
(g) Except as set forth in Schedule 2.9, there are no underground or
aboveground storage tanks, incinerators, surface impoundments or lagoons at, on,
under or within the Real Estate owned by Seller. Schedule 2.9 also lists all
underground or aboveground storage tanks, incinerators or surface impoundments
that, to Seller's knowledge, were removed from or closed at any such properties.
(h) Seller has not received any written notice or other communication
that it is or may be a potentially responsible person or otherwise liable, nor
to Seller's knowledge is Seller otherwise liable, in connection with an
Environmental Matter relating to any waste disposal site or other location
allegedly containing, used for, or resulting from the disposal of, any Regulated
Substances.
(i) To the knowledge of Seller, since January 1, 1996, Seller has not
used any waste disposal or waste treatment site, or otherwise disposed of or
treated, transported for disposal or treatment, or arranged for the
transportation for disposal or treatment of, any Hazardous Waste to any place or
location in violation of any Environmental Laws. Since January 1, 1996, Seller
has not generated, stored, disposed of, transported or arranged for the
transportation of any Hazardous Waste to, a landfill or other facility, except
those which are listed on Schedule 2.9. Seller has not received, nor is Seller
aware of, any request for response action, administrative or other order (or
request therefor), judgment, complaint, claim, investigation, request for
information or other request for relief in any form relating to any facility
where Hazardous Waste generated or transported by Seller has been or may have
been handled, stored, disposed of, placed or located. Except as set forth on
Schedule 2.9, Seller has not been requested or required by any governmental
authority or any other person to perform any investigatory or remedial activity
or other action in connection with any Matter.
(j) Except as set forth in Schedule 2.9, to the knowledge of Seller,
there has been no release or other discharge by Seller at any time of any
Regulated Substances at, on, or about, under or within the Real Estate currently
owned, leased, operated or controlled by Seller (other than pursuant to and in
accordance with Environmental Permits held by Seller). The Real Estate is not
and never has been listed on the United States Environmental Protection Agency's
National Priorities List, or any analogous state of Illinois listing.
(k) To the extent requested by Purchaser, Seller has provided to
Purchaser true, accurate and complete information in its possession or control
pertaining to all of the matters set forth in paragraphs (a) through (k) hereof,
including all documents and information pertaining to all environmental audits
or assessments prepared by or for Seller, any governmental entity or any third
party (including any financial institution) and including all reports of
environmental audits or assessments.
(l) The Real Estate and the Purchased Business are, to Seller's
knowledge in substantial compliance with all Environmental Laws.
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(m) As used in this Section 2.9:
(i) "Environmental Laws" means any currently applicable
federal, state, local or foreign statutory or common law, and
any rule, regulation, code, plan, ordinance, order, decree,
judgment, permit, grant, franchise, concession, restriction,
agreement, requirement or injunction issued, entered,
promulgated or approved thereunder, relating to the
environment, including, without limitation, any law relating
to emissions, discharges, disseminations, releases or
threatened releases of Regulated Substances into the
environment (including, without limitation, air, surface
water, groundwater and land surface or subsurface), or
relating to the presence, manufacture, generation, processing,
distribution, use, sale, treatment, recycling, receipt,
storage, disposal, transport, arranging for transportation,
treatment of disposal, or handling of Regulated Substances;
(ii) "Environmental Permits" means, collectively, permits,
consents, licenses, approvals, registrations, certifications and
authorizations required under Environmental Laws;
(iii) "Environmental Costs" means, without limitation, any
actual or potential cleanup costs, remediation, removal, or
other response costs (which without limitation shall include
costs to cause Seller to come into compliance with
Environmental Laws), investigation costs (including without
limitation fees of consultants, counsel, and other experts in
connection with any environmental investigation, testing,
audits or studies), fees, losses, liabilities or obligations
(including without limitation, liabilities or obligations
under any lease or other contract), payments, damages (including
without limitation any actual, punitive or consequential damages
under any statutory laws, common law cause of action or
contractual obligations or otherwise, including without
limitation damages (a) of third parties for personal injury or
property damage, or (b) to natural resources), civil,
administrative or criminal fines or penalties, judgments and
amounts paid in settlement arising out of or relating to or
resulting from any Environmental Matter; and
(iv) "Environmental Matter" means any matter having a Material
Adverse Effect arising out of, relating to, or resulting from:
(a) any matters relating to emissions, discharges,
disseminations, releases or threatened releases, of Regulated
Substances into the air (indoor and outdoor), surface water,
ground water, soil, land surface or subsurface, buildings,
facilities, real or personal property or fixtures in violation
of an Environmental Law, or (b) otherwise arising out of,
relating to, or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport,
handling, release or threatened release of Regulated
Substances in violation of an Environmental Law.
(v) "Hazardous Waste" means a solid waste, or combination of
solid wastes, which because of its quantity, concentration, or
physical, chemical, or infectious characteristics may (a)
cause, or significantly contribute to an increase in mortality
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or an increase in serious irreversible, or incapacitating
reversible, illness; or (b) pose a substantial present or
potential hazard to human health or the environment when
improperly treated, stored, transported, or disposed of, or
otherwise managed.
(vi) "Regulated Substances" means any substance, compound or
material regulated by or pursuant to any Environmental Law;
2.10. Insurance. Schedule 2.10 hereto sets forth a listing and a brief
description of the type, amount of coverage and term of all policies of fire,
liability, worker's compensation and other forms of insurance owned or held by
and insuring Seller, each of which is in full force and effect. All premiums
with respect to such insurance policies covering all periods up to and including
the Closing Date have been or will be paid (other than retrospective premiums
which may be payable with respect to worker's compensation insurance policies),
and no notice of cancellation or termination has been received with respect to
any such policy. Such policies are valid, outstanding and enforceable and will
not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. Except as set forth in Schedule
2.10: (i) the insurance policies to which Seller are a party are sufficient for
compliance with all requirements of law and for all agreements to which Seller
is a party; (ii) in the reasonable judgment of Seller's management, provide
adequate insurance coverage for the assets and operations of Seller in light of
present insurance market conditions; (iii) there are no outstanding claims by
Seller under any such insurance policies except for routine claims under
worker's compensation and employee benefit plans; (iv) Seller has not been
refused any insurance with respect to its assets or operations nor has its
coverage been limited by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance during the last 36 months;
and (v) all notices required to have been given by any of Seller to any
insurance company have been timely and duly given, and no insurance company has
asserted in writing that any claim is not covered by the applicable policy
relating to such claim.
2.11. Labor Matters. Seller is not a party to or subject to any labor
union or collective bargaining agreement. Seller is in compliance in all
material respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and is not
engaged in any unfair labor practice. There is not actually pending or
threatened against Seller: (i) any labor strike, slowdown or work stoppage, (ii)
any material grievance or arbitration proceeding arising out of or under any
collective bargaining agreements, or (iii) any unfair labor practice complaint
against Seller before the National Labor Relations Board. Since January 1, 1995,
no representation petition respecting the employees of Seller has been filed
with the National Labor Relations Board of which Seller has notice, nor has
Seller experienced any primary work stoppage or labor strike involving its
employees.
2.12. ERISA; Benefit Plans.
(a) Schedule 2.12 contains a true and complete list of all
employment-related plans, including but not limited to, employment or consulting
agreements, collective bargaining and supplemental agreements, pension, profit
sharing, incentive, bonus, deferred compensation, retirement, stock option,
stock purchase, severance, medical and hospitalization, insurance, vacation,
salary continuation, sick pay, welfare, fringe benefit and other employee
benefit plans, contracts,
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programs, policies and arrangements, whether written or oral, which Seller
maintains or has maintained, or under which Seller has or had any obligations
with respect to any employee, now or at any time during the five year period
ending on the Closing Date (the "Plans").
(b) Except as set forth in Schedule 2.12, (1) Seller has no unfunded
liabilities in connection with any of the Plans; (2) all contributions, premium
payments and other payments due from Seller to or under such Plans have been
paid in a timely manner; and (3) all additional contributions, premium payments
and other payments due on or before the Closing Date shall have been paid by
that date.
(c) Except as set forth in Schedule 2.12, with respect to each of the
Plans:
(i) each Plan has been established, maintained, funded and
administered in all material respects in accordance with its governing
documents, and all applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), the Code, other
applicable law, and all regulations thereunder;
(ii) all disclosures to employees and all filings and other
reports relating to each such Plan and required (under ERISA, the Code,
other applicable law, including federal and state securities laws, and
all regulations thereunder) to have been made or filed on or before the
Closing Date have been or will be duly and timely made or filed by that
date;
(iii) there is no litigation, disputed claim (other than routine
claims for benefits), governmental proceeding, audit, inquiry or
investigation pending or, to the knowledge of Seller, threatened with
respect to any such Plan, its related assets or trusts, or any
fiduciary, administrator or sponsor of such Plan;
(iv) Seller has delivered to Purchaser true and complete
copies of the following: the current Plan document (including a written
description of all oral Plans), any amendments thereto, and the related
summary plan description, if any; each trust or custodial agreement and
each deposit administration, group annuity, insurance or other funding
agreement associated with each such Plan; for the last three Plan
years, the financial information or reports (including any FASB
required reports, if applicable), valuation reports, and/or actuarial
reports relating to each such Plan; all Internal Revenue Service and
other governmental agency rulings relating thereto, and all
applications for such rulings; and all filing and reports (including
the Annual Report Form 5500 series, if applicable) filed with any
governmental agency at any time during the three year period ending on
the Closing Date, along with all schedules and reports filed therewith;
(v) neither any such Plan nor any other person or entity has
engaged in a "prohibited transaction" (as defined in ERISA Section 406
or Code Section 4975) with respect to such Plan, for which no
individual or class exemption exists;
(vi) each Plan which is a "group health plan" (as defined in
Code Section 5000(b)(1)) has complied and will comply at all times
(whether before, on, or after the Closing Date) in all respects with
the applicable requirements of ERISA Sections 601 and
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602, Code Section 162(k) (through December 31, 1988) and Code Section
4980B (commencing on January 1, 1989); and
(vii) no such Plan is an "employee welfare benefit plan" (as
defined in ERISA Section 3(1)) that provides benefits to or on behalf
of any person following retirement or other termination of employment
(except to the extent required by Code Section 4980B).
(d) Except as set forth in Schedule 2.12, with respect to each Plan
which is an "employee pension benefit plan" (as defined in ERISA Section 3(2)):
(i) no event has occurred and no condition exists relating to
any such Plan that would subject Seller or Purchaser to any tax under
Code Sections 4972 or 4979, or to any liability under ERISA Section
502;
(ii) to the extent applicable, no such Plan has experienced any
"accumulated funding deficiency" (as defined in Code Section 412),
whether or not waived, at any time;
(iii) no such Plan is subject to Title IV of ERISA; and
(iv) no such Plan is a "multiemployer plan" (as defined in
ERISA Section 3(37)).
(v) with respect to each Plan which is a "multiemployer plan"
(as defined in ERISA Section 3(37)), Seller has no knowledge such that
the foregoing representations would not also be true with respect to
such multiemployer plan; and Seller has delivered to Purchaser data
which accurately discloses its total contribution base units for each
of the last eight consecutive Plan years.
2.13. Certain Contracts and Arrangements. (a) Schedule 2.13 sets forth
a list of the following: (i) open purchase orders, purchase commitments, sales
orders and sales commitments greater than $100,000 entered into in the ordinary
course of business, (ii) current employment agreements, consulting agreements or
other employee or similar agreements with any employee of Seller and other
similar arrangements or understandings not terminable at will by Seller without
penalty; (iii) each current indenture, mortgage, note, installment obligation,
agreement or other instrument relating to the borrowing of money in excess of
$50,000 by Seller or the guaranty of any obligation for the borrowing of money
in excess of $50,000 by Seller; (iv) each other current contract, agreement,
commitment, arrangement or understanding which is not terminable by Seller on 30
or fewer days' notice at any time without penalty and which involves the receipt
or payment by Seller of more than $50,000; (v) any current partnership, joint
venture, shareholder or similar agreement; (vi) any current guaranty, letter of
credit, currency or interest rate exchange or other derivative agreement,
keep-well or similar instrument or agreement; (vii) any current agreement
containing non-competition or other limitations restricting the conduct of the
business of Seller; (viii) any current manufacturer's representative agreement,
broker's agreement, distributorship or dealer agreement or other agreement
relating to the sale or distribution of products to or by persons or other
retailers; (ix) any current agreement with any manufacturer, supplier or
customer with respect to discounts, allowances, chargebacks, rebates or
retroactive price adjustments; (x) any current agreement entered into since
January 1, 1996 (other than for the purchase of machinery and
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equipment in the ordinary course of business), relating to the acquisition or
disposition of businesses, product lines or a material amount of assets; or (xi)
any current indemnification agreement with any employee of Seller.
(b) All purchase orders and commitments and all sales orders and
commitments of Seller have been entered into in the ordinary course of business
consistent with past practices.
(c) To Seller's knowledge, no material default or alleged material
default or any event which, with the lapse of time or the election of any Person
other than Seller, will become a material default exists under any of the
contracts, agreements, commitments, arrangements or understandings which are
required to be disclosed pursuant to this Agreement. Each of such contracts,
agreements, commitments, arrangements or understandings is now valid, in full
force and effect and enforceable in accordance with its terms and Seller has
fulfilled in all material respects, or taken all action reasonably necessary to
enable it to fulfill when due, all its obligations under such contracts,
agreements, commitments, arrangements or understandings.
(d) Seller has provided to Purchaser copies of all of the agreements
and documents listed Schedule 2.13.
2.14. Legal Proceedings, Etc. Except as described on Schedule 2.10,
there is no claim, suit, action, proceeding or investigation pending or, to
Seller's knowledge, threatened against Seller before any court or governmental
or regulatory authority or body, or any arbitral body, nor does Seller know of
any basis in fact for any such claim, suit, action, proceeding or investigation.
Seller is not subject to any outstanding judicial order, writ, injunction or
decree whatsoever.
2.15. Governmental Authorizations and Regulations. There are no
licenses, permits or other governmental authorizations (other than Environmental
Permits) issued to Seller by any governmental authority or agency which are
necessary for the conduct of business by Seller or which are necessary to enable
Seller to use its respective corporate names or to own, lease, hold or use its
respective properties and assets. To Seller's knowledge, the business of Seller
is being conducted in material compliance with all applicable licenses, permits
and other governmental authorizations.
2.16. Taxes. Seller has duly made an election pursuant to Subchapter S
of the Code, and at all times since such election has qualified as an "S
Corporation," as defined in Section 1361(a)(1) of the Code through the Closing
Date. Seller has duly filed (or caused to be filed) all returns of Taxes (as
defined below) required to be filed by it, and Seller has paid all Taxes for all
periods covered by such returns. Such returns of Taxes are true, correct and
complete in all material respects. Except as set forth on Schedule 2.16, no
action or proceeding for the assessment or collection of any Taxes is pending
or, proposed against Seller, and no deficiency, assessment or other claim for
any Taxes has been asserted or made against Seller that has not been fully paid.
No issue has been raised by any Taxing authority in connection with an audit or
examination of any return of Taxes. Seller has not taken any action that could
jeopardize the federal or state "S Corporation" status of Seller prior to the
Closing Date. Seller has not agreed, nor is it required, to include in income
any adjustment pursuant to Section 481(a) of the Code (or similar provisions of
other law or regulations) by reason of a change in accounting method or
otherwise. There are no
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outstanding agreements or waivers extending the applicable statutory periods of
limitation for the assessment or collection of Taxes for Seller for any period.
Seller has not, with regard to any assets or property held by Seller, filed a
consent to the application of Section 341(f)(2) of the Code. All Taxes which
Seller has been required to collect or withhold have been duly withheld or
collected and, to the extent required, have been paid to the proper Taxing
authority. Seller has not received any reports or other written assertions by
agents of any Taxing authority of any deficiencies or other liabilities for
Taxes with respect to Taxable periods for which the limitations period has not
run. There is no contract, agreement, plan or arrangement of Seller covering any
person that, individually or collectively, as a consequence of the transactions
contemplated hereby, could give rise to the payment of any amount that would not
be deductible by Purchaser by reason of Section 280G of the Code. Seller is not,
nor has it been, a party to any tax allocation or tax sharing agreement. There
are no liens or encumbrances asserted by a governmental body as a result of the
failure of Seller to pay Taxes upon the Acquired Assets. None of the Acquired
Assets is subject to a "safe harbor lease" under Section 168(f)(8) of the Code,
as in effect immediately prior to the Tax Equity and Fiscal Responsibility Act
of 1982. As used herein, "Taxes" shall mean all taxes, charges, fees, levies or
other assessments including, without limitation, income, excise, property,
transfer, payroll, withholding, employment, value added, capital, net worth,
estimated, sales, use and franchise taxes, imposed by the United States, or any
state, county, local or foreign government or subdivision or agency thereof, and
including any interest, penalties or additions attributable thereto, whether or
not disputed.
2.17. Transactions with Stockholders, Officers, Directors, Etc. Except
as disclosed on Schedule 2.17 hereto, and other than accrued but unpaid salary
due from the end of the last pay period and routine payment pursuant to Sections
2.12 or 2.13(a), there are no amounts owing from Seller to any present or former
stockholder, officer, director, member or employee of Seller, nor are there any
amounts owing from any such person to Seller, nor have there been since December
31, 1999, or are there currently pending any transactions between Seller and any
such Person.
2.18. Change in Control Agreements. Seller is not party to any plan,
agreement, contract, authorization or arrangement pursuant to which any
participant, beneficiary or party is or will become entitled to any benefit upon
a change of control of Seller.
2.19. Commissions. Seller will pay or otherwise discharge, and will
indemnify and hold Purchaser harmless from and against and any and all claims or
liabilities for all brokerage fees, commissions and finder's fees arising out of
the sale of the Acquired Assets as set forth in this Agreement incurred by
reason of any action taken by or on behalf of Seller or any of its officers,
directors, agents or employees.
2.20. Inventory. All the inventories of Seller are suitable, usable
and, in the case of finished goods and products, saleable at applicable prices
and, in the case of raw materials and work-in-process, properly valued under
GAAP at no less than the values reflected on the books of Seller, in the
ordinary course of business consistent with past practices for the purposes for
which intended, except to the extent written down or reserved against. Seller
does not know of any adverse condition affecting a material source of materials
available to Seller.
2.21. Accounts and Notes Receivable. The accounts and notes receivable
of Seller (a) are
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bona fide accounts and notes receivable created in the ordinary and usual course
of business in connection with bona fide transactions and consistent with past
practice, (b) are outstanding as set forth on the aging schedules made available
to the Purchaser, and (c) are fully collectible when due at their face amounts,
except to the extent of any allowance for doubtful accounts and sales
adjustments set forth on Schedule 2.21, which allowance has been fairly
determined in accordance with GAAP, consistent with past practices.
2.22. Suppliers. No supplier of materials or services to Seller in an
amount in excess of $100,000 per year has during the last 12 months decreased
materially or, to the knowledge of Seller, threatened to decrease or limit
materially, except upon Seller's request, its provision of services or supplies
to Seller. Seller does not know of any termination, cancellation or limitation
of, or any material modification or change in, the business relationships of
Seller with any supplier of Seller of materials or services in an amount in
excess of $100,000 per year.
2.23. Customers. Schedule 2.23 sets forth a list of the 15 largest
customers of Seller in terms of sales during the fiscal year ended December 31,
1999. To the knowledge of Seller, except as set forth on Schedule 2.23, there
has not been any adverse change in the business relationships of Seller with any
customer identified on Schedule 2.23. Except for the customers identified on
Schedule 2.23, Seller has no customer which accounted for more than 2% of such
Seller's sales during such fiscal year. To the knowledge of Seller, consummation
of the transactions contemplated by this Agreement will not adversely affect the
relationship with any customer.
2.24. Officers, Directors and Employees. Schedule 2.24 sets forth (i)
the name and total calendar year 1999 compensation (including bonuses,
commissions or incentive compensation) of each officer and director of Seller
and (ii) the name and total calendar year 1999 compensation (including bonuses,
commissions or incentive compensation) of each other employee whose aggregate
compensation for federal income tax purposes during calendar year 1999 was in
excess of $50,000. Except as disclosed on Schedule 2.24, none of the Persons
referred to in clause (i) or (ii) above has notified Seller or been notified by
Seller that he or she will cancel, have canceled, or otherwise terminate such
Person's relationship with Seller.
2.25. Effect of Transaction. To the knowledge of Seller, no creditor,
employee or customer or other Person having a material business relationship
with Seller has informed Seller that such Person intends to change the
relationship because of the purchase and sale of the Acquired Assets, nor does
Seller have knowledge of any such intent.
2.26. Compliance with Law. The operations of Seller have been conducted
at all times in all material respects in accordance with all applicable laws,
regulations and other requirements of all governmental authorities having
jurisdiction over Seller, including, without limitation, all such laws,
regulations and requirements relating to antitrust, consumer protection,
currency exchange, equal opportunity, health, occupational safety, pension,
securities and trading-with-the-enemy matters. Seller has not received any
notification of any asserted present or past failure by Seller to comply with
any such laws, rules, regulations or requirements. Seller has all material
licenses, permits, orders or approvals from governmental authorities required
for the conduct of their current activities, and are not in material violation
of any such license, permit, order or approval. All such material licenses,
permits, orders and approvals are in full force and effect and, to the knowledge
of Seller, no suspension or cancellation thereof has been threatened.
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2.27. Absence of Certain Commercial Practices. Seller is not, and no
director, officer, agent, employee or other Person acting on behalf of Seller
is, in violation of federal or state law: (a) given or agreed to give any gift
or similar benefit of more than nominal value to any customer, supplier,
governmental employee or official or any other Person who is or may be in a
position to help or hinder Seller or assist in connection with any proposed
transaction, or (b) used any corporate or other funds for unlawful
contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to governmental officials or others
or established or maintained any unlawful or unrecorded funds. Seller has not,
and to Seller's knowledge, no director, officer, agent, employee or other Person
acting on behalf of Seller has, with respect to Seller, accepted or received any
unlawful contributions, payments, gifts, entertainment or expenditures.
2.28. No Competing Business. Neither Seller nor any officer, director
or Shareholder of Seller has any direct or indirect equity interest in any
Person that competes with or conducts any business similar to that of Seller,
other than equity interests in such Persons that are listed for trading on a
national securities exchange or in the NASDAQ Stock Market and which represent
not more than 1% of the outstanding voting power of any such Person.
2.29. Accuracy of Certain Information. In a letter dated October 5,
1999, the Shareholders delivered to Purchaser certain written information
describing and profiling the Purchased Business and certain other affiliated
businesses. There were no material statements or conclusions in such information
that were based upon or derived from information known to Seller to be false or
misleading or which failed to take into account material information regarding
the matters reported therein. Except as described on Schedule 2.29, any
projections of revenues or profits included in such information were based on
historical performance, reasonable assumptions and attainable sales at the time
the projections were prepared. Except as described on Schedule 2.29, to the
knowledge of Seller, since the date of preparation of such projections through
the Closing Date, there has not been any material change in the requirements or
demands of any customer of Seller or the loss or threatened loss of any contract
or program that would have materially affected such financial projections.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that the following
representations and warranties are true and correct:
3.1. Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation.
3.2. Authority Relative to this Agreement. Purchaser has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors
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of Purchaser, and no other corporate proceedings on the part of Purchaser are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby or thereby. This Agreement has been duly and validly
executed and delivered by Purchaser and this Agreement constitutes a valid and
binding agreement of Purchaser, enforceable against Purchaser in accordance with
its terms.
3.3. Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by Purchaser nor the consummation of the transactions
contemplated hereby or thereby will (i) conflict with or result in any breach of
any provision of the Certificate of Incorporation or Bylaws of Purchaser, (ii)
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except in connection
with the HSR Act or IRPTA, (iii) assuming compliance with the HSR Act and IRPTA,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Purchaser or any of its assets, which violation would in the
opinion of Purchaser impair in any material respect its ability to consummate
the transactions contemplated hereby, (iv) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under,
any of the material terms, conditions or provisions of any note, bond, mortgage,
indenture, license, lease, contract, agreement or other instrument or obligation
to which Purchaser is a party or by which any of its properties or assets may be
bound, or (v) violate any order, judicial writ, injunction or decree,
legislative statute, or governmental agency rule or regulation applicable to
Purchaser, or any of its properties or assets.
3.4. Financing. Purchaser has sufficient funds available (through
existing credit arrangements or otherwise) to purchase the Acquired Assets and
to pay all fees and expenses related to the transactions contemplated by this
Agreement.
ARTICLE IV
COVENANTS OF THE PARTIES
4.1. Conduct of Business of Seller. Except as contemplated by this
Agreement, during the period from the date of execution of this Agreement to the
Closing Date, Seller will conduct its business and operations according to its
ordinary and usual course of business and consistent with past practices.
Without limiting the generality of the foregoing, and except as expressly
contemplated in this Agreement, prior to the Closing Date, without the prior
written consent of Purchaser, Seller will not:
(a) create, incur or assume any indebtedness, including obligations in
respect of capital leases, except for short-term borrowings for working
capital purposes that may be unsecured or secured;
(b) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person or persons except in the ordinary
course of business consistent with past practices not exceeding
individually or in the aggregate $25,000; except that Seller may
endorse negotiable instruments in the ordinary course of business
consistent with past practices;
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(c) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock or other equity interests, or issue,
pledge or sell any shares of their capital stock or other equity
interests or other securities convertible into, exchangeable for or
conferring the right to acquire shares of its capital stock or other
equity interests, or repurchase or redeem or otherwise acquire any
shares of their capital stock or other equity interests or such other
securities;
(d) (i) increase the rate or terms of compensation payable or to become
payable by Seller to its directors, officers or employees listed on
Schedule 2.24; or (ii) increase the rate or terms of any, or commit
itself to any additional, bonus, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with any such
directors, officers or employees;
(e) amend its Articles of Incorporation or Bylaws (or similar
governing documents), merge, consolidate or amalgamate with or into any
other Person, subdivide, combine or reclassify any shares of its
capital stock, equity interests or other securities;
(f) take or omit to take any action that would cause any of the
representations and warranties contained in Article II to be untrue; or
(g) buy or sell any futures contract, option or forward commitment
relating to commodities used as raw materials by Seller or enter into
any contract, agreement, arrangement or other understanding to do any
act prohibited by any of the foregoing provisions of this Section 4.1.
4.2. Access to Information. Between the date of this Agreement and the
Closing Date, Seller, during ordinary business hours, will (i) give Purchaser
and its authorized representatives reasonable access to all books, records
(including, without limitation, all work papers and other documents of Seller
and its independent auditors, plants, offices and other facilities and
properties of Seller, (ii) permit Purchaser to make such inspections thereof as
Purchaser may reasonably request and (iii) cause their officers and advisors to
furnish Purchaser with such financial and operating data and other information
with respect to the business and properties of Seller as Purchaser may from time
to time reasonably request. Any such inspection or investigation shall be
conducted in such a manner as not to interfere unreasonably with the operation
of the business of Seller. In addition, Seller shall not be required to take any
action which would constitute a waiver of the attorney-client privilege and
Seller need not supply Purchaser with any information which Seller is under a
legal obligation not to supply.
4.3. Additional Financial Statements. As soon as reasonably
practicable after they become available, Seller will furnish to Purchaser an
unaudited internal balance sheet and a statement of operations of Seller, for
all interim monthly periods subsequent to the date of this Agreement and prior
to the Closing Date. Such financial statements will be prepared in conformity
with GAAP, except as noted therein and will fairly present (subject to normal
year-end audit adjustments) the financial position and results of operations of
Seller for the periods covered by such statements.
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4.4. Consents. Purchaser and Seller will use their respective best
efforts to obtain consents of all Persons and governmental authorities necessary
to the consummation of the transactions contemplated by this Agreement
including, but not limited to, the consents specified on Schedule 4.4 (the
"Required Consents").
4.5. Filings. Seller and Purchaser have filed with the United States
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice pursuant to the HSR Act all requisite documents and
notifications in connection with the transactions contemplated by this
Agreement. Additionally, Seller and Purchaser will file, or cause to be filed,
with any other federal, state or local governmental authority all such other
filings and submissions under laws and regulations applicable to Seller and
Purchaser, if any, as may be required for the consummation of the transactions
contemplated by this Agreement. The parties will coordinate and cooperate with
one another in exchanging such information and reasonable assistance as may be
requested in connection with all of the foregoing.
4.6. No Shopping, Etc. Seller will not, and will cause each of its
officers, directors and Shareholders not to, directly or indirectly, through any
officer, director, agent or otherwise, solicit, initiate or encourage submission
of proposals or offers from any Person relating to any acquisition or purchase
of any equity interest in, or all or (other than in the ordinary course of
business consistent with past practices) a portion of, the assets of Seller or
any business combination with Seller, or participate in any negotiations
regarding, or furnish to any other Person any information with respect to, or
otherwise cooperate in any way with, assist, or participate in, facilitate or
encourage, any effort or attempt by any other Person to do or seek any of the
foregoing.
4.7. Furnishing Information; Announcements. Seller and Purchaser will,
as soon as practicable after reasonable request therefor, furnish to the other
party all the information concerning Seller or the Purchaser required for
inclusion in any statement or application made to any governmental or regulatory
body in connection with the transactions contemplated by this Agreement. Neither
Seller nor Purchaser shall issue any press releases or otherwise make any public
statement with respect to the transactions contemplated hereby, without the
prior consent of the other party hereto, except as, in the reasonable judgment
of the party determining to issue such press release or make such public
statement, is otherwise required by law or by any stock exchange on which the
shares of Purchaser are listed, and then only upon prompt prior notice to the
other party hereto at least 24 hours prior to making any such press release or
public announcement.
4.8. Additional Agreements. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use its best efforts, at
its own expense, to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. If at any time after the Closing any further action is necessary
to carry out or perform a party's obligations under this Agreement, such party
shall take, at its own expense, such necessary action.
4.9. Notification of Certain Matters. Between the date hereof and the
Closing, Seller and Purchaser will give prompt notice in writing of: (i) any
information which indicates that any representation and warranty contained
herein was not true and correct as of the date hereof or will not be true and
correct as of the Closing, (ii) the occurrence of any event which will result,
or has
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a reasonable prospect of resulting, in a Material Adverse Effect or in the
failure to satisfy a condition specified in Article V hereof, and (iii) any
notice or other communication from any third person alleging that the consent of
such third person is or may be required in connection with the transactions
contemplated by this Agreement. Seller will confer on a regular and frequent
basis with one or more designated representatives of Purchaser to report
operational matters and to report the general status of on-going operations, and
will notify Purchaser of any emergency or other change in the normal course of
business or in the operation of the properties of Seller and of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) or adjudicatory proceedings involving any property of
Seller. As of the date of this Agreement, Purchaser does not have any reason to
believe that any representation and warranty of Seller contained herein was not
true and correct on such date.
4.10. Tax Matters.
(a) Between the date hereof and the Closing, Seller shall file on a
timely basis all Tax returns required to be filed by or with respect to Seller.
All such Tax returns will be true, correct and complete when filed by Seller.
Seller shall not make any election or file any amended Tax return reflecting any
position that could result in adverse Tax consequences to Purchaser for any
period beginning on or after the Closing Date. Following the date hereof, Seller
shall (a) give Purchaser and its authorized representatives full access to the
books and records of Seller, and permit Purchaser to make copies thereof, to the
extent relating to the Tax liabilities of Seller, as Purchaser may reasonably
request, (b) permit Purchaser to make inspections thereof and (c) cause Seller's
advisors, including (without limitation) its auditors, attorneys, financial
advisors and other consultants, to furnish Purchaser with such financial, Tax
and other operating data and other information with respect to the business and
properties of Seller for periods ending before or including the Closing Date as
Purchaser may reasonably request with respect to Taxes for purposes of preparing
Tax returns and conducting proceedings relating to Taxes.
(b) Seller shall cooperate with the Purchaser in timely filing any
forms required to comply with Illinois taxation statutes. In the event the state
of Illinois notifies the Purchaser in response to the filing of any such form or
forms that any Taxes of Seller remains owing, Seller consents to the payment
under the Escrow Agreement to Purchaser of such portion of the Purchase Price
(net of amounts accrued on Seller's books as payable to the state of Illinois
with respect to Taxes enumerated in such responses) as shall be necessary to
indemnify the Purchaser with respect to such unpaid Taxes.
4.11. Illinois Responsible Property Transfer Act. At least five (5)
days prior to the Closing, Seller shall deliver to Purchaser a disclosure
document in the form prescribed by IRPTA, or if Seller is not required to
deliver the disclosure document described therein, then a certificate, in a form
reasonably satisfactory to Purchaser's counsel, that the Real Estate (a) does
not contain any facility that is subject to reporting under Section 312 of the
Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C ss.11022);
(b) is not the site of one (1) or more Underground Storage Tanks for which
notification is required under 42 U.S.C ss.6991; and (c) is not listed on the
Comprehensive Environmental Response, Compensation and Liability Information
System (CERCLIS) in accordance with Section 116 of CERCLA (42 U.S.C ss.9616).
Purchaser is aware of
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the purpose and intent of the disclosure document and expressly waives the
30-day deadline set forth in IRPTA for delivery of the disclosure document.
4.12. 401(k) Plan. Prior to the Closing, Seller shall have taken all
action necessary to terminate the Tridan International, Inc. Profit Sharing
401(k) Plan through Lincoln Life and the Profit-Sharing Retirement Plan through
Vanguard.
4.13. Change of Corporate Name. At the Closing, Seller shall deliver to
Purchaser a Certificate of Amendment to the Articles of Incorporation of Seller,
fully authorized and executed by Seller and in suitable form for purposes of
filing same with the appropriate governmental authorities so as to change the
name of Seller so as to discontinue use of the words "Tridan International."
ARTICLE V
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser required to be performed by it at the
Closing shall be subject to the satisfaction, at or prior to the Closing, of
each of the following conditions, each of which may be waived by Purchaser as
provided herein except as otherwise required by applicable law:
5.1. Representations and Warranties; Agreements. Each of the
representations and warranties of Seller contained in this Agreement shall be
true and correct as of the Closing. Each of the obligations of Seller required
by this Agreement to be performed at or prior to the Closing shall have been
duly performed and complied with in all material respects as of the Closing. At
the Closing, Purchaser shall have received a certificate duly executed by an
officer of Seller, to the effect that the conditions set forth in the preceding
two sentences have been satisfied.
5.2. Authorization; Consents. Any filings required to be made in
connection with the transactions contemplated hereby, including the applicable
HSR filing, shall have been made and all applicable waiting periods with respect
to each such filing, including any extensions thereof, shall have expired or
been terminated. All notices to, and declarations, filings and registrations
with, and consents, authorizations, approvals and waivers from, governmental and
regulatory bodies required to consummate the transactions contemplated hereby,
and all other governmental, regulatory or third party consents or waivers shall
have been made or obtained. In addition, all consents of all Persons and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement including, but not limited to, the Required
Consents, shall have been obtained by Seller.
5.3. Opinion of Seller's Counsel. Purchaser shall have been furnished
with the opinion of counsel for Seller dated the Closing Date, in substance as
set forth in Schedule 5.3 and in form reasonably satisfactory to Purchaser and
its counsel. In rendering the foregoing opinion, such counsel may rely as to
factual matters upon certificates or other documents furnished by officers and
directors of Seller and by government officials and upon such other documents
and data as such counsel deem appropriate as a basis for their opinions. Such
counsel may specify the jurisdiction or jurisdictions in which they are admitted
to practice, that they are not admitted to the Bar in any
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other jurisdiction or experts in the law of any other jurisdiction and that such
opinions are limited to the law of the jurisdiction or jurisdictions in which
they are admitted to practice, the corporate law of the jurisdiction in which
Seller is incorporated, if different, and federal laws.
5.4. Absence of Litigation. No order, stay, injunction or decree of
any court of competent jurisdiction shall be in effect (i) that prevents or
delays the consummation of any of the transactions contemplated hereby, (ii)
that would impose any material limitation on the ability of Purchaser
effectively to exercise full rights of ownership of the Acquired Assets or (iii)
that would require the divestiture by Purchaser or Seller of shares of stock or
any business, assets or property of any of them, or that would impose any
material limitation on the ability of any of them to conduct its business or own
stock, assets or property. No action, suit or proceeding before any court or any
governmental or regulatory entity shall be pending (or threatened by any
governmental or regulatory entity), and no investigation by any governmental or
regulatory entity shall have been commenced (and be pending) (A) seeking to
restrain or prohibit (or questioning the validity or legality of) the
consummation of the transactions contemplated by this Agreement, (B) seeking to
require the divestiture by Purchaser or Seller of shares of stock or any
business, assets or property of any of them, or to impose any material
limitation on the ability of any of them to conduct their business or own stock,
assets or property, or (C) seeking material damages in connection therewith
which Purchaser, in good faith and with the advice of counsel, believes makes it
undesirable to proceed with the consummation of the transactions contemplated
hereby.
5.5. Title Policy Commitment. If desired by Purchaser in addition to
the existing title insurance policy owned by Seller, as of the Closing Date, a
title insurance company satisfactory to Purchaser, at Purchaser's sole expense,
shall have issued its commitment to approve and insure Seller's ownership of the
Real Estate, in an amount equal to the portion of the Purchase Price allocated
to the Real Estate, under its standard policy of title insurance, subject only
to the Liens and encumbrances specified in Section 2.7(b).
5.6. Consent and Estoppel Certificate. Seller shall obtain and deliver
to Purchaser at or prior to Closing a certificate from the lessor under each of
Seller's real estate leases, dated during the month in which the Closing occurs,
consenting to the assignment of such Lease to Purchaser, certifying (a) that
such lease is in good standing and full force and effect in accordance with its
terms and has not been modified, (b) the date to which rent and other charges
thereunder have been paid, and (c) that there is no default thereunder on the
part of any party thereto.
5.7. Non-Competition Agreement. At or prior to the Closing, Purchaser
and Xxxxxx X. Xxxxxxxx shall execute and deliver a non-competition agreement in
substantially the form attached hereto as Exhibit B (the "Non-Competition
Agreement").
5.8. Secured Indebtedness. At or prior to Closing, Seller and
Purchaser shall jointly arrange for the payment of all indebtedness of Seller
owing to American National Bank & Trust Company of Chicago and the execution and
delivery of UCC-3 termination statements for all existing security interests on
any of the Acquired Assets.
5.9. Employment Agreement. At or prior to the Closing, Purchaser and
Xxxxxxx X. Xxxxxx shall execute and deliver an employment agreement in form and
substance acceptable to Purchaser.
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5.10. Other Deliveries. Seller shall have delivered to Purchaser the
instruments contemplated in Section 1.5(b).
5.11. Simultaneous Closings. Simultaneously with the Closing
hereunder, Purchaser and certain other corporations and/or limited liability
companies affiliated with one or more of the owners of Seller must close the
transactions pursuant to which Purchaser shall acquire (a) substantially all of
the assets of Xxxxxxxx Technologies, Inc, a New Jersey corporation, and
Environmental Alloys, Inc., a Florida corporation, and (b) all of the
outstanding stock of Indiana Precision, Inc., an Indiana corporation, together
with the real estate owned by Tridan, L.L.C., an Indiana limited liability
company.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller required to be performed by it at the Closing
shall be subject to the satisfaction, at or prior to the Closing, of each of the
following conditions, each of which may be waived by Seller as provided herein
except as otherwise required by applicable law:
6.1 Representations and Warranties; Agreements. Each of the
representations and warranties of Purchaser contained in this Agreement shall be
true and correct as of the Closing. Each of the material obligations of
Purchaser required by this Agreement to be performed by it at or prior to the
Closing shall have been duly performed and complied with in all material
respects as of the Closing. At the Closing, Seller shall have received a
certificate, duly executed by an officer of Purchaser, to the effect that the
conditions set forth in the preceding two sentences have been satisfied.
6.2 Authorization; Consents. All corporate action necessary to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by Purchaser. Any filings required to be made in connection with
the transactions contemplated hereby shall have been made and all applicable
waiting periods with respect to each such filing (including any extensions
thereof) shall have expired or been terminated.
6.3 Opinion of Purchaser's Counsel. Seller shall have been furnished
with the opinion of counsel of Purchaser, dated the Closing Date, in substance
as set forth in Schedule 6.3 and in form reasonably satisfactory to Seller. In
rendering the foregoing opinion, Purchaser's counsel may rely as to factual
matters upon certificates or other documents furnished by officers and directors
of Purchaser and by government officials, and upon such other documents and data
as such counsel deems appropriate as a basis for their opinions, and may specify
the jurisdiction or jurisdictions in which they are admitted to practice, that
they are not admitted to the Bar in any other jurisdiction or experts in the law
of any other jurisdiction and that such opinions are limited to the law of the
jurisdiction or jurisdictions in which they are admitted to practice, the
corporate law of the jurisdiction in which Purchaser is incorporated, if
different, and federal laws.
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6.4. Secured Indebtedness. At or prior to Closing, Seller and
Purchaser shall jointly arrange for the payment of all indebtedness of Seller
owing to American National Bank & Trust Company of Chicago and the execution and
delivery of UCC-3 termination statements for all existing security interests on
any of the Acquired Assets.
6.5. Other Deliveries. The Purchaser shall have paid and delivered to
Seller the payments required by Section 1.5(c), and shall have assumed the
Assumed Liabilities.
6.6. Simultaneous Closings. Simultaneously with the Closing
hereunder, Purchaser and certain other corporations and/or limited liability
companies affiliated with one or more of the owners of Seller must close the
transactions pursuant to which Purchaser shall acquire (a) substantially all of
the assets of Xxxxxxxx Technologies, Inc., a New Jersey corporation, and
Environmental Alloys, Inc., a Florida corporation, and (b) all of the
outstanding stock of Indiana Precision, Inc., an Indiana corporation, together
with the real estate owned by Tridan, L.L.C., an Indiana limited liability
company.
ARTICLE VII
INDEMNIFICATION
7.1. Indemnification. The parties shall indemnify each other as set
forth below:
(a) Subject to the limitations of Sections 7.1(g), 7.1(h) and 8.2,
Seller shall indemnify and hold harmless Purchaser, its officers, directors,
employees and agents, from and against any and all Losses, hereinafter defined,
arising out of, based upon or resulting from (i) any material breach as of the
Closing Date of any representation or warranty of Seller which is contained in
or made pursuant to this Agreement, (ii) any material breach or nonfulfillment
by Seller of any of its covenants, agreements or other obligations contained in
or made pursuant to this Agreement, (iii) any Environmental Matter (whether or
not disclosed on a Schedule hereto), or (iv) any Excluded Liability. Any
provision in this Agreement to the contrary notwithstanding, Seller shall pay,
indemnify and hold harmless Purchaser, and its successors, from and against all
liabilities for federal, state and local income taxes attributable to taxable
periods ending on or before the Closing Date attributable to the income of
Seller. For purposes of this Section, the Closing Date shall be treated as the
last day of a taxable period whether or not the taxable period in fact ends on
the Closing Date. For purposes of this Section, and the calculation of any
indemnity, interest, penalties or additions to income tax accruing after the
Closing Date with respect to a liability for income taxes for which Seller is
required to indemnify Purchaser shall be deemed to be attributable to a taxable
period ending on or before the Closing Date.
(b) Subject to the limitations of Sections 7.1(i) and 8.2, Purchaser
shall indemnify and hold harmless Seller from and against any and all Losses
arising out of, based upon or resulting from (i) any material breach as of the
Closing Date of any representation or warranty of Purchaser which is contained
in or made pursuant to this Agreement, or (ii) any material breach or
nonfulfillment by the Purchaser of any of its covenants, agreements or other
obligations contained in or made pursuant to this Agreement.
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(c) For purposes of this Section 7.1, "Losses" shall mean and include
damages, liabilities and claims, net of all Taxes and, to the extent that the
person that is obligated to provide such indemnification (an "Indemnifying
Party") maintains or has maintained liability insurance and such coverage is
applicable to the person entitled to indemnification (an "Indemnified Party"),
insurance benefits paid to or for the benefit or protection of the Indemnified
Party. Losses shall include, without limitation, all reasonable fees, costs and
expenses related thereto, including, without limitation, any and all of the
Indemnified Party's Legal Expenses. As used herein, "Legal Expenses" shall mean
the fees, costs and expenses reasonably incurred by the Indemnified Party in
investigating, preparing for, defending against or providing evidence, producing
documents or taking other action with respect to, any threatened or asserted
claim, prior to assumption of control of the defense of such claim by the
Indemnifying Party.
(d) Promptly after receipt of notice of the commencement of any
action or claim by a third party in respect of which the Indemnified Party may
seek indemnification hereunder, the Indemnified Party shall promptly notify each
Indemnifying Party. The Indemnifying Party shall be entitled to control the
defense of such action; provided, however, that:
(i) the Indemnified Party shall be entitled to participate in
the defense of such action or claim and to employ counsel at its own
expense to assist in the handling of such action or claim;
(ii) the Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into any settlement
of such action or claim, or ceasing to defend against such action or
claim (with such approval not to be unreasonably withheld);
(iii) no Indemnifying Party shall consent to the entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to
each Indemnified Party of a release from all liability in respect of
such action or claim; and
(iv) the Indemnifying Party shall not be entitled to control
(but shall be entitled to participate at its own expense in the defense
of), and the Indemnified Party shall be entitled to have sole control
over, the defense or settlement of any action or claim to the extent
the claim seeks an injunction, non-monetary or other equitable relief
against the Indemnified Party which, if successful, would materially
interfere with the business, operations, assets, condition (financial
or otherwise) or prospects of the Indemnified Party.
After written notice by the Indemnifying Party to the Indemnified Party of its
election to assume control of the defense of any such action or claim, the
Indemnifying Party shall not be liable to such Indemnified Party hereunder for
any Legal Expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof. If the Indemnifying Party does not assume control of
the defense of such action or claim as provided in this Section 7.1(d), the
Indemnified Party shall have the right to defend such action or claim in such
manner as it may deem appropriate at the cost and expense of the Indemnifying
Party, and the Indemnifying Party will promptly reimburse the Indemnified Party
therefor in accordance with this Section 7.1. The reimbursement of fees, costs
and expenses required by this Section 7.1 shall be made by periodic payments
during the course of the investigations or defense, as and when bills are
received or expenses incurred.
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(e) In the event that the Indemnifying Party shall be obligated to
indemnify the Indemnified Party pursuant to this Section 7.1, the Indemnifying
Party shall, upon payment of such indemnity in full, be subrogated to all rights
of the Indemnified Party with respect to the actions or claims to which such
indemnification relates.
(f) All indemnification or reimbursement payments required pursuant
to this Agreement shall be made net of all Taxes and, to the extent that the
Indemnifying Party maintains or has maintained liability insurance and such
coverage is applicable to the Indemnified Party, insurance benefits actually
received by the party to be indemnified or reimbursed. In particular, in the
event that a claim for indemnity as to Losses arising out of, or based upon, a
breach of Seller's representations and warranties as to title to Real Estate
under Section 2.7, the Indemnified Party shall first seek compensation for such
Losses under any applicable title insurance policy issued for the benefit of
Seller or the Purchaser (or Purchaser's assignee), and subject to the
limitations set forth below, the Indemnifying Party shall be obligated to
provide indemnity for such Losses only to the extent that such title insurance
coverage is exhausted or is inapplicable. In the event that any claim for
indemnification asserted hereunder is, or may be, the subject of the
Indemnifying Party's liability insurance or other right to indemnification or
contribution from any third person, the Indemnified Parties expressly agree that
they shall promptly notify the applicable insurance carrier of any such claim or
loss and tender defense thereof to such carrier, and shall also promptly notify
any potential third party indemnitor or contributor which may be liable for any
portion of such losses or claims. The Indemnified Parties agree to pursue, at
the cost and expense of the Indemnifying Party, such claims diligently and to
reasonably cooperate, at the cost and expense of the Indemnifying Party, with
each applicable insurance carrier and third party indemnitor or contributor.
(g) Seller shall have no liability for indemnification with respect
to the matters described in this Section 7.1 or otherwise under this Agreement
unless and until, and only to the extent that the aggregate amount of all Losses
for which indemnification is sought from Seller exceeds $50,000.
(h) Notwithstanding any other provision of this Agreement to the
contrary, Seller shall have no liability for indemnification with respect to the
matters described in this Section 7.1 or otherwise under this Agreement to the
extent that the amount of all payments made by Seller on account of Losses
exceeds, or would exceed $750,000.
(i) Purchaser shall have no liability for indemnification with
respect to the matters described in this Section 7.1 or otherwise under this
Agreement unless and until, and only to the extent that, the aggregate amount of
all Losses for which indemnification is sought from Purchaser exceeds $50,000,
excluding however, payment of the Purchase Price or Additional Consideration.
7.2. Payment for Indemnity Claims. Purchaser will, in the first
instance, have the right to receive from the Escrow Amount the amount of any
Losses incurred by Purchaser from any third- party claim or any claim against
Seller under Section 7.1 that has been finally determined by agreement or by a
court of competent jurisdiction, as provided in the Escrow Agreement.
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ARTICLE VIII
MISCELLANEOUS
8.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date notwithstanding any requisite approval and adoption of this
Agreement by Purchaser or Seller:
(a) by mutual written consent duly authorized by the Board of
Directors of the Purchaser and the Boards of Directors of Seller; or
(b) by Purchaser or Seller if any court or Governmental Entity
of competent jurisdiction shall have issued an order, decree or ruling
or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action is or shall have become final and
nonappealable; or
(c) by Purchaser, if Purchaser is not in material breach of
this Agreement and there shall have been a material breach of any of
Seller's representations, warranties or covenants which breach cannot
be or has not been cured within ten (10) days following receipt of
written notice of such breach, provided however that if, in the
reasonable judgment of Purchaser, the breach is of such nature that it
can be cured, but cannot be completely cured within such 10-day period,
then Purchaser shall not be entitled to terminate this Agreement if
Seller shall have begun curing such breach within such 10-day period
and shall, with reasonable diligence and in good faith, proceed to cure
it as promptly as possible; or
(d) by Seller, if Seller is not in material breach of this
Agreement and there shall have been a material breach of any of
Purchaser's representations, warranties or covenants which breach
cannot be or has not been cured within ten (10) days of the receipt of
written notice thereof, provided however that if, in the reasonable
judgment of Seller, the breach is of such nature that it can be cured,
but cannot be completely cured within such 10-day period, then Seller
shall not be entitled to terminate this Agreement if Purchaser shall
have begun curing such breach within such 10-day period and shall, with
reasonable diligence and in good faith, proceed to cure it as promptly
as possible; or
(e) by either the Purchaser or Seller if the Closing shall not
have occurred on or before September 15, 2000.
8.2. Survival. All representations, warranties, covenants and
agreements contained in this Agreement, or in any Schedule, certificate,
document or statement delivered pursuant hereto, shall survive for a period of
18 months after the Closing Date and shall be deemed to have been relied upon
and shall not be affected in any respect by the Closing, any investigation
conducted by any party hereto, or by any information which any party may
receive. Notwithstanding the foregoing, the representations and warranties of
Seller contained in Section 2.7 (as to title to Real Estate only) and Section
2.9 shall survive until three years after the Closing Date, and the
representations and warranties of Seller contained in Section 2.16 shall survive
until the expiration of the applicable statute of limitations (or extensions or
waivers thereof) relating to any such liability for Taxes. The liability of any
party under Article VII shall not terminate with respect to any claim, whether
or not fixed as to liability or liquidated as to amount, with respect to which
such party has been given written notice prior to the date on which it would
otherwise terminate.
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8.3. Expenses. The Purchaser shall pay its own fees and expenses
(including the fees of any attorneys, accountants, investment bankers or others
engaged by Purchaser) and the Shareholders shall pay the fees and expenses of
Seller (including the fees of any attorneys, accountants, investment bankers or
others engaged by Seller) in connection with this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby are
consummated.
8.4. Headings. Section headings herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be deemed
to limit or otherwise affect any of the provisions hereof.
8.5. Notices. All notices or other communications required or
permitted hereunder shall be given in writing and shall be either delivered by
hand or by overnight courier (or by fax confirmed by one of such methods) as
follows:
If to Seller:
Tridan International, Inc.
000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Chairman
Fax: (000) 000-0000
With a copy to:
Henthorn, Harris, Xxxxxx & Xxxxxxxx
000 X. Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxxxxxx, Xxxxxxx 00000
Attention: J. Xxxxxx Xxxxxx
Fax: (000) 000-0000
If to Purchaser:
Kaydon Corporation
000 Xxxx Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, President
Fax: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxx
Fax: (000) 000-0000
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or such other address as shall be furnished in writing by such party, and any
such notice or communication shall be effective and be deemed to have been given
as of the date so delivered or; provided, however, that any notice or
communication changing any of the addresses set forth above shall be effective
and deemed given only upon its receipt.
8.6. Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, and the provisions of Article VII
hereof shall inure to the benefit of the indemnified parties referred to
therein; provided, however, that neither this Agreement nor any of the rights,
interests, or obligations hereunder may be assigned by any of the parties hereto
without the prior written consent of the other parties, except that this
Agreement and such rights, interests and obligations may be assigned by
Purchaser to a wholly owned direct or indirect subsidiary of Purchaser (provided
that Purchaser is not relieved of its obligations hereunder).
8.7. Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) and the October 14, 1999 confidentiality agreement between the
Purchaser and the Seller (among others) contain the entire agreement and
understanding of the parties with respect to the transactions contemplated
hereby and supersedes all prior or contemporaneous written or oral commitments,
arrangements or understandings with respect thereto. There are no restrictions,
agreements, promises, warranties, covenants or undertakings with respect to the
transactions contemplated hereby other than those expressly set forth herein.
8.8. Modifications, Amendments and Waivers. At any time prior to the
Closing, to the extent permitted by law, (i) Purchaser and Seller may, by
written agreement, modify, amend or supplement any term or provision of this
Agreement and (ii) any term or provision of this Agreement may be waived in
writing by the party which is entitled to the benefits thereof.
8.9. Counterparts. This Agreement may be executed with counterpart
signature pages or in two or more counterparts, all of which shall be considered
one and the same agreement and each of which shall be deemed an original.
8.10. Governing Law. This Agreement shall be governed by the laws of
the United States and the State of Illinois (regardless of the laws that might
be applicable under principles of conflicts of law) as to all matters including,
but not limited to, matters of validity, construction, effect and performance.
8.11. Accounting Terms. All accounting terms used herein which are not
expressly defined in this Agreement shall have the respective meanings given to
them in accordance with GAAP on the date hereof.
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8.12. Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining provisions of this Agreement shall
not be affected thereby and this Agreement will be construed and enforced as if
such invalid, illegal or unenforceable provisions had not been included herein.
To the extent permitted by applicable law, each party waives any provision of
law which renders any provision of this Agreement invalid, illegal or
unenforceable in any respect.
8.13. Specific Performance. Purchaser and Seller recognize that any
breach of the terms of this Agreement may give rise to irreparable harm for
which money damages would not be an adequate remedy, and accordingly agree that,
in addition to other remedies, any nonbreaching party shall be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy as a remedy of money damages.
8.14. Third Parties. Nothing in this Agreement shall be deemed to be
for the benefit of, or enforceable by or on behalf of any party, including,
without limitation, any employee or former employee of Seller, any dependent or
beneficiary of any such employee, any labor union or other party or
organization, any obligee, owner or holder of any obligation or liability, other
than the parties to this Agreement and the Indemnified Parties.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
KAYDON CORPORATION
By: /S/ XXXXX X. XXXXXXXX
----------------------------
Xxxxx X. Xxxxxxxx, President
TRIDAN INTERNATIONAL, INC.
By: /S/ XXXXXX X. XXXXXXXX
----------------------------
Xxxxxx X. Xxxxxxxx, Chairman
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EXHIBIT A
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of August , 2000 (the "Escrow Agreement"),
by and among KAYDON ACQUISITION XII, INC. ("Purchaser"), a Delaware corporation,
BANK ONE TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, as
escrow agent ("Escrow Agent") and TRIDAN INTERNATIONAL, INC., an Illinois
corporation (the "Seller").
A. WHEREAS, the Purchaser has contemporaneously consummated the
acquisition of substantially all assets of Seller pursuant to an Asset Purchase
Agreement, dated as of August 11, 2000 (as heretofore amended, modified or
supplemented from time to time in accordance with its terms, the "Asset Purchase
Agreement"), among Seller and the Purchaser which provides inter alia that U. S.
$750,000 shall be held in escrow subject to the terms and conditions of this
Escrow Agreement, from which amount Seller intends to provide indemnification to
the Purchaser pursuant to the terms of the Asset Purchase Agreement;
B. WHEREAS, the amount deposited in escrow pursuant to the terms of
the Asset Purchase Agreement is intended to be available to satisfy the claims
for indemnification of the Purchaser under the Asset Purchase Agreement;
C. WHEREAS, capitalized terms used herein and not otherwise defined
shall have the meaning given such terms in the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:
1. Delivery and Receipt of Funds: Designation of Representatives.
(a) Pursuant to Section 1.6 of the Asset Purchase Agreement,
Purchaser has delivered to the Escrow Agent to be held under the terms and
conditions set forth herein, the sum of U.S. $750,000 in immediately available
funds (such funds as increased or decreased by any investments made hereunder or
as decreased by any disbursements made in accordance herewith are referred to as
the "Escrow Fund"). The Escrow Agent agrees to hold the Escrow Fund in
accordance with the terms of this Escrow Agreement.
(b) The Purchaser and Seller (or Seller's assignee) shall each
execute and deliver to the Escrow Agent a certificate of incumbency
substantially in the form of Exhibit A hereto for the purpose of establishing
the identity of the representatives of the Purchaser and Seller (or Seller's
assignee) entitled to issue instructions or directions to the Escrow Agent on
behalf of each such party. In the event of any change in the identity of such
representatives, a new certificate of incumbency shall be executed and delivered
to the Escrow Agent by the appropriate party. Until such time as the Escrow
Agent shall receive a new incumbency certificate, the Escrow Agent shall be
fully protected in relying without inquiry on any then current incumbency
certificate on file with the Escrow Agent.
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2. Investment; Earnings; Maintenance of Escrow Fund.
(a) Until disbursement of the entire Escrow Fund in accordance with
the terms hereof, the Escrow Agent will invest the monies deposited in the
Escrow Fund and any accumulated income earned thereon, as directed by the
Seller, in one or more of the following:
(i) Direct obligations of and obligations fully guaranteed
by the United States of America, or any agency thereof,
the principal and interest of which are guaranteed by
the United States of America or its agencies;
(ii) Participation under a revolving repurchase agreement
maintained by the Escrow Agent with other entities
relative to an agreement for the sale and repurchase of
obligations itemized in paragraph (i) above;
(iii) Any time deposit which is fully insured by the Federal
Deposit Insurance Corporation;
(iv) Commercial paper notes which, at the time of investment,
are rated in one of the two highest credit ratings by
Xxxxx'x Investors Service, Inc. and/or Standard & Poor's
Corporation;
(v) Certificates of deposit of any bank organized under the
laws of the United States;
(vi) Any money market fund (including money market funds for
which the Escrow Agent serves in an advisory capacity
and/or other money market funds with which the Escrow
Agent has an existing relationship), the assets of which
are any of those obligations itemized in paragraphs (i)
through (v) above; or
(vii) Any one or more of the following mutual funds: Vanguard
High-Yield Tax-Exempt Fund, Vanguard New Jersey
Tax-Exempt Money Market Fund, Vanguard New Jersey
Insured Long-Term Tax-Exempt Fund, Vanguard 500 Index
Fund, Vanguard Prime Money Market or any other Vanguard
Group Mutual Fund as Seller shall designate with
Purchaser's written consent, which consent shall not be
unreasonably withheld.
The Escrow Agent shall make arrangements so that either (A) Seller
shall be permitted to deal directly with The Vanguard Group to transfer the
Escrow Fund, or any portion of it, between or among the above designated
Vanguard mutual funds, provided that in no event shall any portion of the Escrow
Fund be released to Seller or invested except as otherwise provided herein, or
(B) if such arrangements cannot be made with The Vanguard Group, then the Escrow
Agent shall designate a specific employee or employees to receive change of fund
investment instructions from Seller, which instructions shall be communicated to
The Vanguard Group prior to 4:00 p.m., Eastern Time, provided they are received
by the Escrow Agent prior to 2:00 p.m. Absent direction from the Seller, the
Escrow Agent shall invest the Escrow Funds in the Vanguard High-Yield Tax-Exempt
Fund, and the Escrow Agent shall use its best efforts to open such Vanguard
account in advance of
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46
the Closing Date, so that the Escrow Fund can be wired to such Vanguard fund at
the time of the Closing under the Asset Purchase Agreement.
(b) Seller shall be liable for and shall pay all taxes on the income
earned on the Escrow Fund and shall indemnify and hold Purchaser and the Escrow
Agent harmless therefrom. For fiduciary accounting purposes under this Escrow
Agreement, realized capital gains and losses shall be allocated to income and
the term "accumulated income" shall include such realized gains and losses.
Accumulated income on the Escrow Fund shall be distributed on a calendar quarter
basis to the Seller, provided that the market value of the Escrow Fund (before
deduction for any pending and unpaid Claimed Amounts) shall not be reduced below
the Minimum Escrow Fund Amount specified in paragraph (c) below. Any loss
incurred as a result of an investment shall be borne by the Escrow Account.
(c) If at the end of each calendar month the market value of the
Escrow Fund shall have diminished below the applicable Minimum Escrow Fund
Amount, then an amount of accumulated income on the Escrow Fund sufficient to
restore the market value of the Escrow Fund to the applicable Minimum Escrow
Fund Amount shall be transferred by the Escrow Agent to become principal of the
Escrow Fund and shall thereafter no longer be available for distribution to the
Seller until the next quarterly distribution of the accumulated income or the
termination and release of the Escrow Fund. The applicable "Minimum Escrow Fund
Amount" shall be as follows: for the period from August 28, 2000, through and
including August 27, 2001, $750,000; for the period from August 28, 2001,
through and including August 27, 2002, $500,000; for the period from August 28,
2002, through and including August 27, 2003, $250,000;
(d) The Escrow Agent is hereby authorized to execute purchases and
sales of permitted investments through the facilities of its own trading or
capital markets operations or those of any affiliated entity. The Escrow Agent
shall send statements to each of the parties hereto on a monthly basis
reflecting activity in the Escrow Account for the preceding month. Although the
Purchaser and Seller each recognize that it may obtain a broker confirmation or
written statement containing comparable information at no additional cost, the
Purchaser and the Seller hereby agree that confirmations of permitted
investments are not required to be issued by the Escrow Agent for each month in
which a monthly statement is rendered.
3. General Indemnity Obligation. The Escrow Fund shall be held by
the Escrow Agent as security for the indemnification obligation of Seller under
the Asset Purchase Agreement. Purchaser may make a claim against the Escrow Fund
for any amounts for which Seller may be so liable to Purchaser under the Asset
Purchase Agreement.
4. Claims. At any time that the Purchaser makes a claim against
Seller under Article VII of the Asset Purchase Agreement (a "Claim"), Purchaser
shall notify (a "Claim Notice") the Escrow Agent and Seller in writing of any
such Claim (identifying such Claim with reasonable specificity), and stating the
basis for the Claim and the amount or estimated amount thereof (the "Claimed
Amount"). On the 45th day after the Escrow Agent has received a Claim Notice,
unless it receives a Dispute Notice from Seller pursuant to Section 5 hereof (in
which case such Claim shall be resolved as provided in Section 5 hereof), the
Escrow Agent shall deliver to Purchaser out of the Escrow Fund cash equal in
amount to the Claimed Amount.
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47
5. Dispute of Claim. Seller shall have the right to dispute any
Claimed Amount by giving concurrently to the Escrow Agent and to Purchaser,
prior to the forty-fifth (45th) day after delivery to Seller of any Claim Notice
from Purchaser, written notice (a "Dispute Notice") that it disputes the matters
set forth in such Claim Notice either with respect to the validity or the amount
of the Claim in question or on the basis that the deficiency, liability or
obligation in question is not properly chargeable as a claim under the Asset
Purchase Agreement. Such Dispute Notice shall include the basis and amount, with
reasonable specificity, of the dispute. If such Dispute Notice covers less than
the full Claimed Amount, Seller shall state in its Dispute Notice the amount of
the Claimed Amount as to which Seller agrees Purchaser should be paid out of the
Escrow Fund, and such portion of the Claimed Amount shall be promptly paid by
the Escrow Agent to Purchaser. The Escrow Agent shall have no obligation to
determine the sufficiency of any such Dispute Notice or Claim Notice. Upon
receipt of any such Dispute Notice from the Seller, the Escrow Agent shall take
no action with respect to the amounts in dispute except: (a) upon the joint
written instructions of both Purchaser, and Seller; or (b) ten (10) days after
receipt by Escrow Agent of written notice (the "Order Notice") from either
Purchaser or Seller that the dispute has been resolved by a final order, decree
or judgment (from which no further appeal may be taken) of a court of competent
jurisdiction, which Order Notice shall be accompanied by a copy of any such
order, decree or judgment certified by the Clerk (or equivalent officer) of such
court and by an opinion of counsel stating that the time for appeal therefrom
has expired and no appeal has been perfected. A copy of such Order Notice shall
concurrently be given by the party giving the Order Notice to the other parties
hereunder. Upon receipt of joint instructions described in clause (a) above,
Escrow Agent shall make payment out of the Escrow Fund in accordance therewith,
and ten (10) days after receipt by Escrow Agent of an Order Notice described in
clause (b) above, Escrow Agent shall make payment out of the Escrow Fund in
accordance with the order, decree or judgment referenced therein and attached
thereto.
6. Partial Distribution, Termination and Release of Escrow Fund.
(a) On August 28, 2001, the Escrow Agent shall determine the
aggregate of all pending and unpaid Claimed Amounts as of that date and, shall
pay to Seller out of the Escrow Fund $250,000 less 50% of the aggregate of such
pending and unpaid Claimed Amounts; provided, however, that if 50% of the
aggregate of such pending and unpaid Claimed Amounts are greater than $250,000,
then all the assets in the Escrow Fund shall be retained in the Escrow Fund and
the Escrow Agent shall not make any payments to Seller out of the Escrow Fund
until otherwise permitted under this Escrow Agreement. In the event after August
27, 2001 but before August 28, 2002, any claim is resolved, by Order Notice or
by joint written instructions of Purchaser and Seller, in an amount less than
the full Claimed Amount, then the Escrow Agent shall within ten (10) days pay to
Seller out of the principal of the Escrow Fund such amount as will bring the
prior payment under this paragraph (a) up to $250,000 less 50% of the aggregate
of the remaining pending and unpaid Claimed Amounts; provided, however, that if
50% of the aggregate of the remaining pending and unpaid Claimed Amounts are
equal to or greater than $250,000, then no distribution shall be made under this
sentence.
(b) On August 28, 2002, the Escrow Agent shall determine the
aggregate of all pending and unpaid Claimed Amounts as of such date and as soon
as practicable after making such determinations shall pay to Seller such amount
as will leave in the Escrow Fund the sum of
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48
$250,000 plus 50% of the aggregate of such pending and unpaid Claimed Amounts.
In the event after August 27, 2002 but before August 28, 2003, any Claim is
resolved, by Order Notice or by joint written instructions of Purchaser and
Seller, in an amount less than the full Claimed Amount, then the Escrow Agent
shall within ten (10) days pay to Seller such amount as will leave in the Escrow
Fund the sum of (i) $250,000 plus (ii) 50% of the aggregate of the remaining
pending and unpaid Claimed Amounts.
(c) On August 28, 2003, the Escrow Agent shall determine the
aggregate of all pending and unpaid Claimed Amounts as of such date and as soon
as practicable after making such determination shall pay to Seller the remaining
balance of the Escrow Fund, including accumulated income, less such aggregate of
pending and unpaid Claimed Amounts. Any amount or amounts retained after August
28, 2003, pursuant to this Escrow Agreement on account of the pending and unpaid
Claimed Amounts shall continue to be held in accordance with this Escrow
Agreement until a final disposition thereof is made in accordance with this
Escrow Agreement.
(d) Upon receipt of a letter, in a form substantially similar to that
attached hereto as Exhibit B, signed on behalf of the Purchaser and Seller by an
authorized representative thereof, the Escrow Agent agrees to sell the Permitted
Investments and to pay the full balance and proceeds of the Escrow Account to
the Purchaser and Seller or as the Purchaser and Seller shall direct.
7. Liquidation of Investments. The Escrow Agent shall liquidate any
investments in the Escrow Fund necessary to provide funds in order to make any
payments required by this Escrow Agreement in accordance with written
instructions given to it by Seller with regard to the priority of investments to
be so liquidated. If Seller fails to give the Escrow Agent such written
instructions, the Escrow Agent shall use its discretion in liquidating
sufficient investments to pay any amounts due hereunder in a timely manner.
8. Concerning the Escrow Agent. Notwithstanding any provision
contained herein to the contrary, the Escrow Agent, including its officers,
directors, employees and agents, shall:
(a) not be held liable for any action taken or omitted under this
Escrow Agreement so long as it shall have acted in good faith and without gross
negligence;
(b) have no responsibility to inquire into or determine the
genuineness, authenticity, or sufficiency of any securities, check, or other
documents or instruments submitted to it in connection with its duties
hereunder;
(c) be entitled to deem the signatories of any documents or
instruments submitted to it hereunder as being those purported to be authorized
to sign such documents or instruments on behalf of the parties hereto and shall
be entitled to rely upon the genuineness of the signatures of such signatories
without inquiry and without requiring substantiating evidence of any kind;
(d) be entitled to refrain from taking any action contemplated by
this Escrow Agreement in the event that it becomes aware of any disagreement
between the parties hereto as to any facts or as to the happening of any
contemplated event precedent to such action;
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49
(e) have no responsibility or liability for any diminution in value
of any assets held hereunder which may result from any investment or
reinvestment made in accordance with any provision which may be contained
herein;
(f) be entitled to compensation for its services hereunder as per
Exhibit C attached hereto and for reimbursement of its out-of-pocket expenses
including, but not by way of limitation, the reasonable fees and costs of
attorneys or agents which it may find necessary to engage in performance of its
duties hereunder, to be paid in full by Purchaser, except that any sales loads,
fees or transaction charges assessed by The Vanguard Group ("Vanguard Charges")
shall be paid out of the Escrow Fund;
(g) be entitled to set off and apply the Escrow Fund against any fees
and expenses to which the Escrow Agent is entitled hereunder and which are due
and owing, but only after the Escrow Agent has given notice requesting payment
thereof to Sellers' Representative and Purchaser and such fees and expenses
remain unpaid for 60 days following the date of receipt by Sellers'
Representative and Purchaser of such notice. The Escrow Agent shall promptly
notify Sellers' Representative and Purchaser after any such setoff and
application made by the Escrow Agent, and Purchaser shall promptly reimburse the
Escrow Fund for the amount of such setoff, except that Sellers shall promptly
reimburse the Escrow Fund for the amount of such setoff where such setoff is
incurred due to Vanguard Charges;
(h) be under no obligation to invest the deposited funds or the
income generated thereby until it has received a U.S. Internal Revenue Service
Form W-9 (or W-8, if applicable) from Seller;
(i) be, and hereby is, jointly and severally indemnified and saved
harmless by the other parties hereto from all loss, costs, and expenses,
including attorney's fees, which may be incurred by it as a result of its
involvement in any litigation arising from the performance of its duties
hereunder, provided that such litigation shall not have resulted from any action
taken or omitted by it and for which it shall have been adjudged to have acted
in bad faith or to have been grossly negligent; such indemnification shall
survive termination of this Escrow Agreement and the resignation or removal of
the Escrow Agent pursuant to Section 10 hereof until extinguished by any
applicable statute of limitation. As between Seller and Purchaser, each shall be
responsible for one-half of such indemnification obligations;
(j) in the event any dispute shall arise between the parties with
respect to the disposition or disbursement of any of the assets held hereunder,
be permitted to interplead all of the assets held hereunder into a court of
competent jurisdiction, and thereafter be fully relieved from any and all
liability or obligation with respect to such interpleaded assets. The other
parties further agree to pursue any redress or recourse in connection with such
a dispute, without making the Escrow Agent a party to same unless required by
applicable law;
(k) only have those duties as are specifically provided herein, which
shall be deemed purely ministerial in nature;
(l) neither be responsible for, nor chargeable with knowledge of, the
terms and conditions of any other agreement, instrument, or document between the
other parties hereto, in
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50
connection herewith, including, without limitation, the Asset Purchase Agreement
and shall be required to act only pursuant to the terms and provisions of this
Escrow Agreement. This Escrow Agreement sets forth all matters pertinent to the
escrow contemplated hereunder and no additional obligations of the Escrow Agent
shall be implied from the terms of this Escrow Agreement or any other agreement;
(m) use Seller's federal employer identification number (00-0000000)
as the taxpayer identification number for all investments of the Escrow Fund
and, to the extent applicable, for Form 1099 or Schedule K-1 reporting purposes,
until such times as the Seller shall notify the Escrow Agent of a different
taxpayer identification number;
(n) have the right, but not the obligation, to consult with counsel
of choice and shall not be liable for action taken or omitted to be taken by
Escrow Agent either in accordance with the advice of such counsel or in
accordance with any opinion of counsel to the Purchaser and Seller addressed and
delivered to the Escrow Agent; and
(o) have the right to perform any of its duties hereunder through
agents, attorneys, custodians or nominees. Any banking association or
corporation into which the Escrow Agent may be merged, converted or with which
the Escrow Agent may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Escrow Agent shall be a party,
or any banking association or corporation to which all or substantially all of
the corporate trust business of the Escrow Agent shall be transferred, shall
succeed to all the Escrow Agent's rights, obligations and immunities hereunder
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
The immunities and protection and right to indemnification listed in
this Section 8, together with the Escrow Agent's right to compensation, shall
survive the termination of this Agreement and the Escrow Agent's resignation or
removal.
9. Notices. Any request, direction, notice, or other communication
required or permitted to be made or given by any party hereto shall be in
writing and shall be delivered by hand or by overnight commercial courier
service, (or by facsimile transmission confirmed by one of such methods), to the
addresses and facsimile numbers noted below (or to such other addresses and
facsimile numbers as a party may designate as to itself by notice to the other
parties in accordance with this Section 9).
(a) in the case of Seller:
Xxxxxx X. Xxxxxxxx
000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
with a courtesy copy to:
J. Xxxxxx Xxxxxx
Henthorn, Harris, Xxxxxx & Xxxxxxxx
000 X. Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
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(b) In the case of Purchaser:
Kaydon Acquisition XII, Inc.
000 Xxxx Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with courtesy copy to:
Xxxx X. Xxxxxxxxxx
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) In the case of the Escrow Agent:
Bank One, Trust Company, National Association
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Low
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
10. Resignation or Removal of Escrow Agent. The Escrow Agent may
resign as such following the giving of thirty (30) days' prior written notice to
the other parties hereto. Similarly, the Escrow Agent may be removed and
replaced following the giving of thirty (30) days' prior joint written notice to
the Escrow Agent by the other parties hereto. In either event, the duties of the
Escrow Agent shall terminate (30) thirty days after receipt of such notice (or
as such earlier date as may be mutually agreed by all parties hereto); and the
Escrow Agent, after it has been paid all the fees, costs and expenses to which
it is entitled hereunder (including the costs of transferring the monies or
assets in its possession), shall then deliver the balance of the monies or
assets then in its possession to a successor Escrow Agent as shall be jointly
appointed by the other parties hereto as evidenced by a written notice filed
with the Escrow Agent or to a successor Escrow Agent appointed pursuant to the
next paragraph.
If the other parties hereto are unable to agree upon a successor Escrow
Agent or shall have failed to appoint a successor Escrow Agent prior to the
expiration of thirty (30) days following receipt of the notice of resignation or
removal, the Escrow Agent may petition any court of competent jurisdiction for
the appointment of a successor Escrow Agent or for other appropriate relief;
and, any such resulting appointment shall be binding upon all the parties
hereto.
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Upon acknowledgment by any successor Escrow Agent of the receipt of the
balance of the monies or assets, in escrow, the Escrow Agent shall be fully
released and relieved of all duties, responsibilities and obligations under this
Escrow Agreement.
11. Entire Agreement: Modification. This Escrow Agreement
constitutes the entire understanding among the parties with respect to the
subject matter hereof and shall supersede any prior or contemporaneous agreement
or understanding, oral or written, with respect to the subject matter hereof. No
modification or amendment of this Escrow Agreement shall be valid unless the
same is in writing and is signed by Seller and the Purchaser and consented to by
the Escrow Agent.
12. Joint Direction. Notwithstanding anything contained herein to the
contrary, Purchaser and Seller may jointly direct the Escrow Agent, in writing,
to perform any action contemplated herein, and upon receipt of such joint
direction, the Escrow Agent shall act in compliance therewith and have no
liability to Purchaser, Seller or any third party beneficiary for such act.
13. Applicable Law. This Escrow Agreement shall be construed in
accordance with and governed by the laws of the State of Michigan without giving
effect to any applicable principles of conflicts of laws.
14. Counterparts. This Escrow Agreement may be executed with
counterpart signature of pages or in one or more counterparts, each of which
shall be deemed an original, but all which together shall constitute one and the
same instrument.
15. Invalid Clause. If any term, covenant, condition or provision of
this Escrow Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the provisions hereof shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby.
16. Binding Effect. This Escrow Agreement shall be binding upon and
inure to the benefit of, the heirs, administrators, executors, successors and
assigns of the parties hereto.
17. Recitals. The recitals to this Escrow Agreement are incorporated
herein as part of this Escrow Agreement.
18. Assignment by Seller. Seller shall have the right, upon written
notice to Purchaser and the Escrow Agent, to assign all of its rights, interests
and obligations under this Agreement, including all rights in and to the Escrow
Fund, (i) to a successor limited liability partnership, limited liability
company or other entity designated by Seller, or (ii) to the Seller's
shareholders in their ownership proportions of 50% to Xxxxxx X. Xxxxxxxx and 50%
to Xxxxx Xxxxxxxxxxxx.
19. Attachment of Escrow Fund; Compliance with Legal Orders.
In the event that any escrow property shall be attached, garnished or
levied upon by any court order, or the delivery thereof shall be stayed or
enjoined by an order of a court, or any order, judgment or decree shall be made
or entered by any court order affecting the property deposited
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under this Agreement, the Escrow Agent is hereby expressly authorized, in its
sole discretion, to obey and comply with all writs, orders or decrees so entered
or issued, which it is advised by legal counsel of its own choosing is binding
upon it, whether with or without jurisdiction, and in the event that the Escrow
Agent obeys or complies with any such writ, order or decree it shall not be
liable to any of the parties hereto or to any other person, firm or corporation,
by reason of such compliance notwithstanding such writ, order or decree be
subsequently reversed, modified, annulled, set aside or vacated.
20. Tax Matters.
(a) Reporting of Income. The Escrow Agent shall report to the
Internal Revenue Service, as of each calendar year-end, and to the Purchaser and
Seller, as applicable, all income earned from the investment of any sum held in
the Escrow Account as and to the extent required under the provisions of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder (the "Code").
(b) Preparation and Filing or Tax Returns. Seller or its successor
shall be required to prepare and file any and all income or other tax returns
applicable to the Escrow Account with the Internal Revenue Service and all
required state or local departments of revenue in all years in which income is
earned, as and to the extent required under the provisions of the Code.
(c) Payment of Taxes. Any taxes payable on income earned from the
investment of any sums held in the Escrow Account shall be paid by Seller
whether or not the income was distributed by the Escrow Agent during any
particular year as and to the extent required under the provisions of the Code.
(d) Unrelated Transactions. The Escrow Agent shall have no
responsibility for the preparation and/or filing of any tax or information
return with respect to any transaction, whether or not related to the Agreement,
that occurs outside the Escrow Account.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the day and year first above written.
TRIDAN INTERNATIONAL, INC.
By:
---------------------------------
Xxxxxx X. Xxxxxxxx, Chairman
KAYDON ACQUISITION XII, INC.
By:
---------------------------------
Xxxxx X. Xxxxxxxx, President
BANK ONE, TRUST COMPANY, NATIONAL
ASSOCIATION, as Escrow Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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EXHIBIT A
CERTIFICATE OF INCUMBENCY
The undersigned, , of , hereby certifies that the
following named officers are duly appointed, qualified and acting in the
capacity set forth opposite his/her name, and the following signature is the
true and genuine signature of said officer.
Name Title Signature
--------------------- --------------------- -------------------------
--------------------- --------------------- -------------------------
Such officers are hereby authorized to furnish the Escrow Agent with
directions relating to any matter concerning this Escrow Agreement and the funds
and/or property held pursuant thereto.
IN WITNESS WHEREOF, has caused this Certificate
of Incumbency to be executed by its officer duly authorized this day
, 2000.
[TRIDAN INTERNATIONAL, INC.]
[KAYDON CORPORATION]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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EXHIBIT B
,2000
----------------------
Bank One Trust Company, National Association
000 Xxxxxxxx Xxxxxx, Xxxxx X00-0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services Division/Xxxxx Low
Re: Escrow Account No. among Kaydon Corporation (the
"Purchaser"), a Delaware corporation, Bank One Trust Company, National
Association, as Escrow Agent (the "Escrow Agent") and Tridan
International, Inc., an Illinois corporation (the "Seller").
Please sell all investments held in the Escrow Account and distribute the full
balance and proceeds thereof by (wire transfer) (cashier's check) to
(If wire transfer - name of bank, bank's ABA number and customer's
account number for credit or as shall otherwise direct.
Very truly yours,
-------------------------------------------
By:
----------------------------------------
Name:
-------------------------------------
Title:
-----------------------------------
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EXHIBIT C
SCHEDULE OF FEES
ACCEPTANCE FEE: $1,000.00
For time devoted to review of drafts of escrow agreement, negotiations
and consultations with principals and attorneys, attendance at closing,
establishing procedures and records, opening of the account and report set-up.
This fee is due and payable at closing.
ANNUAL ADMINISTRATION: $2,500.00 per year, or portion thereof, payable in
advance.
Covers: account administration, review of any required compliance
certificates, maintenance of records, contacts and correspondence , responding
to auditors, etc. This fee is billed annually in advance and is due and payable
at closing.
ACTIVITY CHARGES:
A. Additional Cash Deposits: $10.00 each
B. Cash Disbursements: $20.00 each by check/ $25.00 each by wire
C. Investment Transactions: $70.00 per acquisition or disposal, plus any special
fees charged by the Vanguard Group (no transaction
charges for One Group Fund transactions)
D. Deposit or Withdrawal of Securities or Documents:
$70.00 per deposit or withdrawal of each distinctive
document or security on each occasion.
EXTRAORDINARY SERVICES:
At rates in effect from time to time, as shall be determined on the
basis of time, effort and responsibility for services provided beyond
the scope of those listed.
OUT-OF-POCKET EXPENSES:
Escrow Agent shall be entitled to reimbursement for its out-of-pocket
expenses incurred, including, but not limited to: registered or
certified postage, courier costs, travel and lodging, and amounts paid
to attorneys and agents, when required
MISCELLANEOUS:
All fees are subject to reasonable adjustment as changes in laws,
procedures, and costs of doing business demand. Escrow Agent's fees are
subject to modification should subsequent review disclose unanticipated
duties, conflicts of interest, environmental or credit standard
deficiencies. If the transaction fails to close for reasons beyond Bank
One Trust Company, N.A.'s control, we reserve the right to charge a fee
not to exceed the amount of the Acceptance Fee.
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EXHIBIT B
NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT (the "Agreement") is made as of August
____, 2000, by and among XXXXXX X. XXXXXXXX ("Xxxxxxxx"), KAYDON CORPORATION, a
Delaware corporation ("Kaydon"), KAYDON ACQUISITION XI, INC., a Delaware
corporation ("Acquisition XI"), KAYDON ACQUISITION XII, INC., a Delaware
corporation ("Acquisition XII"), KAYDON ACQUISITION XIII, INC., a Delaware
corporation ("Acquisition XIII") and INDIANA PRECISION, INC., an Indiana
corporation ("Indiana Precision").
Acquisition XI and Acquisition XII are wholly-owned subsidiaries of
Kaydon and have on this date completed the acquisition of two separate
businesses that were operated by corporations (the "Sellers") that were owned
principally by Xxxxxxxx. In addition, Acquisition XIII has on this date acquired
all of the voting stock of Indiana Precision, a majority of which stock was
previously owned by Xxxxxxxx. As a condition to the completion of such
acquisitions, Xxxxxxxx and Kaydon have agreed to enter into this Agreement.
Acquisition XI, Acquisition XII, Acquisition XIII and Indiana Precision are
hereafter referred to as the "Kaydon Subsidiaries". In consideration of the
compensation payable hereunder and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged by each party),
the parties agree as follows:
1. Confidentiality and Non-Competition. Xxxxxxxx acknowledges
that as the owner of shares in the voting stock of the Sellers and Indiana
Precision, he has had access to information relating to the businesses of the
Kaydon Subsidiaries that has not been disclosed to third parties ("Confidential
Information") that may include, without limitation, trade secrets and know-how,
computer programs, the names and addresses of customers and suppliers and their
particular business requirements and the names and addresses of employees, the
disclosure of which Confidential Information to competitors of the Kaydon
Subsidiaries, or to the general public would be highly detrimental to the best
interests of the Kaydon and the Kaydon Subsidiaries. Xxxxxxxx further
acknowledges and agrees that the right to maintain confidential the Confidential
Information constitutes a proprietary right that Kaydon and the Kaydon
Subsidiaries are entitled to protect. Accordingly, Xxxxxxxx covenants and agrees
with the Kaydon and the Kaydon Subsidiaries that:
(a) he will not disclose any Confidential Information to any
person nor will he use the same for any purposes other than
those advancing the interests of Kaydon and the Kaydon
Subsidiaries at any time during the two-year period commencing
on the date hereof;
(b) he will not (without the prior written consent of Kaydon), at
any time during the two-year period commencing on the date
hereof, either individually or in partnership or jointly or in
conjunction with any person as principal, agent, shareholder
or in any other manner whatsoever, carry on or be engaged in
or be concerned with or interested in or advise, lend money
to, guarantee the debts or obligations of or permit his name
or any part thereof to be used or employed by any person
engaged in or concerned with or interested in any business
anywhere in the United States of America which is involved in
the manufacture of solder, heat transfer coil making equipment
or machined molds for plastic closures (the "Competitive
Businesses"); provided, however, that the foregoing covenant
shall not act to prevent Xxxxxxxx from becoming solely a
stockholder in a corporation that is engaged in a Competitive
59
Business if the stock of such other corporation is listed for
trading on a national securities exchange or the Nasdaq Stock
Market and if the amount of shares owned by Xxxxxxxx does not
exceed 5% of the total outstanding voting stock of such
corporation; and
(c) he will not (without the prior written consent of Kaydon) at
any time during the two-year period commencing on the date
hereof:
(i) contact, for the purpose of soliciting any Competitive
Business any person or entity who is a customer of such
Kaydon Subsidiary; or
(ii) initiate contact with any employee or executive of any
Kaydon Subsidiary for the purpose of offering him or
her employment with any person or entity.
2. Compensation. As consideration for the foregoing agreement
not to compete with the Kaydon Subsidiaries, Kaydon agrees to pay to Xxxxxxxx
the sum of Five Thousand Dollars ($5,000) per annum, in a lump sum on the date
hereof and on the first anniversary of the date of this Agreement.
3. Severability. If any covenant or provision herein is
determined to be void or unenforceable in whole or in part, it shall not be
deemed to affect or impair the validity of any other covenant or provision, and
subsections 1(a), (b) and (c) and clauses 1(c)(i) and (ii) are each declared to
be separate and distinct covenants. Xxxxxxxx hereby agrees that all restrictions
in Section 1 are reasonable and valid and all defenses to the strict enforcement
thereof by the Purchaser are hereby waived by Xxxxxxxx.
4. Enforceability. Xxxxxxxx acknowledges that a violation of any
of the provisions of Section 1 will result in immediate and irreparable damage
to the Purchasers and to Kaydon, and agrees that, in the event of such
violation, any Purchaser or Kaydon shall, in addition to any other rights to
relief, be entitled to equitable relief by way of temporary or permanent
injunction and to such other relief as any court of competent jurisdiction may
deem just and proper. If Xxxxxxxx is in breach of any of such restrictions, the
running of the period of proscription shall be stayed and shall recommence upon
the date Xxxxxxxx ceases to be in breach thereof, whether voluntarily or by
injunction.
5. Applicable Law. This Agreement shall be construed, interpreted
and enforced in accordance with, and the respective rights and obligations of
the parties shall be governed by, the laws of the State of New Jersey and the
federal laws of the United States applicable therein and each party hereby
irrevocably and unconditionally submits to the exclusive jurisdiction of the
courts of such state and all courts competent to hear appeals therefrom.
IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto.
-------------------------------
Xxxxxx X. Xxxxxxxx
2
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KAYDON CORPORATION
By:
---------------------------------
Its:
--------------------------------
KAYDON ACQUISITION XI, INC.
By:
---------------------------------
Its:
--------------------------------
KAYDON ACQUISITION XII, INC.
By:
---------------------------------
Its:
--------------------------------
KAYDON ACQUISITION XIII, INC.
By:
---------------------------------
Its:
--------------------------------
INDIANA PRECISION, INC.
By:
---------------------------------
Its:
--------------------------------
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