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EXHIBIT 2(a)
STOCK PURCHASE AGREEMENT
by and among
IT Acquisition Corporation
and
Xxxxxx-Field Health Products, Inc.,
Lumex/Basic American Holdings, Inc.
relating to the capital stock of
Irving Tanning Company
Dated as of
January 27, 1998
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TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF STOCK..................................... 1
1.1 Purchase and Sale...................................................... 1
ARTICLE II CONSIDERATION.................................................. 1
2.1 Consideration.......................................................... 1
2.2 Conversion of Stock Options............................................ 2
ARTICLE III [INTENTIONALLY OMITTED]........................................ 2
ARTICLE IV CLOSING........................................................ 2
4.1 Closing Time and Place................................................. 2
ARTICLE V REPRESENTATIONS AND WARRANTIES................................. 2
5.1 Representations and Warranties of the Seller........................... 2
5.1.1 Organization and Good Standing of the Company............... 2
5.1.2 Ownership of Shares; Ownership Interests.................... 3
5.1.3 Authorization............................................... 3
5.1.4 Title to Stock.............................................. 3
5.1.5 Non-Violation............................................... 3
5.1.6 Absence of Certain Changes or Events; Business Prospects.... 4
5.1.7 Tax Matters................................................. 4
5.1.8 Litigation.................................................. 5
5.1.9 Brokers..................................................... 5
5.1.10 Environmental Matters....................................... 5
5.1.11 Employee Benefit Plans...................................... 5
5.1.12 Disclosure.................................................. 6
5.1.13 Financial Statements........................................ 6
5.1.14 No Material Adverse Change.................................. 7
5.1.15 No Liabilities.............................................. 7
5.1.16 Books and Records........................................... 8
5.1.17 Insurance................................................... 8
5.2 Representations by the Purchaser....................................... 8
5.2.1 Organization and Good Standing of the Purchaser............. 8
5.2.2 Authorization by the Purchaser.............................. 8
5.2.3 Non-Violation............................................... 8
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5.2.4 Litigation.................................................. 9
5.2.5 HSR Act..................................................... 9
5.2.6 Nature of Purchase; Accredited Investor..................... 9
5.2.7 Brokers..................................................... 9
5.2.8 Disclosure.................................................. 9
ARTICLE VI [INTENTIONALLY OMITTED]....................................... 9
ARTICLE VII [INTENTIONALLY OMITTED]....................................... 10
ARTICLE VIII INDEMNIFICATION............................................... 10
8.1 Indemnification by the Seller......................................... 10
8.2 Indemnification by the Purchaser...................................... 10
8.3 Survival of Representations and Warranties; Limitations............... 10
8.4 Notice of Claims and Response......................................... 10
8.5 Opportunity to Cure................................................... 11
8.6 Resolution of Dispute as to Indemnification........................... 11
8.7 Defense of Claims..................................................... 11
8.8 Limitations on Indemnity.............................................. 12
8.9 Exclusive Remedy...................................................... 12
ARTICLE IX CLOSING DATE DELIVERIES AND ACTIONS........................... 12
9.1 Deliveries and Actions of the Purchaser............................... 12
9.1.1 Delivery of Certificates.................................... 12
9.1.2 Contribution of Debt........................................ 13
9.1.3 Delivery of Legal Opinion................................... 13
9.2 Deliveries and Actions of the Purchaser............................... 13
9.2.1 Delivery of Certificates.................................... 13
9.2.2 Delivery of Legal Opinion................................... 13
ARTICLE X GENERAL....................................................... 13
10.1 Confidentiality....................................................... 13
10.2 Further Assurances.................................................... 14
10.3 Entire Agreement...................................................... 14
10.4 Binding Effect; Assignment............................................ 14
10.5 Separate Counterparts................................................. 14
10.6 Transactional Costs................................................... 14
10.7 Notices............................................................... 14
10.8 Severability.......................................................... 15
10.9 Index and Article Headings............................................ 15
10.10 Publicity............................................................. 16
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10.11 Governing Law......................................................... 16
10.12 Tax Matters........................................................... 16
10.13 Permitting Matters.................................................... 17
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of this 27th day of January,
1998, by and among IT ACQUISITION CORPORATION, a Maine corporation (the
"Purchaser"), on the one hand, and XXXXXX-FIELD HEALTH PRODUCTS, INC., a
Delaware corporation ("GFHP"), LUMEX/BASIC AMERICAN HOLDINGS, INC., a Delaware
corporation ("Lumex") (GFHP and Lumex collectively, the "Seller") on the other
hand; and relates to the purchase and sale of all of the issued and outstanding
capital stock of Irving Tanning Company, a Delaware corporation (the "Company").
The Seller owns all of the issued and outstanding shares of stock of
the Company, which in turn owns and operates a business engaged in the
processing of leather and the manufacture of leather products. The Seller is
willing to sell to the Purchaser, and the Purchaser is willing to purchase from
the Seller, upon the terms and conditions herein set forth, the Stock, as
hereafter defined. Therefore, in consideration of the premises and the mutual
benefits to be derived from this Agreement, the parties hereto, intending
legally to be bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 Purchase and Sale. The Seller hereby sells, transfers, conveys,
assigns and delivers to the Purchaser, and the Purchaser hereby purchases from
the Seller, all of the issued and outstanding shares of common stock, without
par value, of the Company (the "Stock") by delivery to the Purchaser of a
certificate representing the stock, duly endorsed in blank or accompanied by
duly executed stock powers endorsed in blank.
ARTICLE II
CONSIDERATION
2.1 Consideration. The consideration to be paid by the Purchaser
pursuant to this Agreement shall be SIXTY-FOUR MILLION FOUR HUNDRED SIXTEEN
THOUSAND DOLLARS ($64,416,000.00) (the "Purchase Price"), which is represented
by the following payments and other considerations:
(a) Sixty Million, One Hundred Sixty-Six Thousand Dollars
($60,166,000.00) payable in cash or immediately available funds at the
Closing, as hereafter defined; and
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(b) Four Million Two Hundred Fifty Thousand Dollars
($4,250,000.00) by the issuance of Five Thousand shares of Series A
Preferred Stock, par value $.01, of the Purchaser (the "Preferred
Stock"), as more fully described on Exhibit 2.1(b).
2.2 Conversion of Stock Options. The Seller hereby causes the stock
options of the Seller that are owned by the principals of the Purchaser, whose
names and option amounts are set forth on Exhibit 2.2, to have been converted
into an equivalent amount, in dollar terms, of options to purchase shares of
common stock of the Company (the "IT Management Options").
ARTICLE III
[INTENTIONALLY OMITTED]
ARTICLE IV
CLOSING
4.1 Closing Time and Place. (a) The closing of the transactions
contemplated by this Agreement (the "Closing") is taking place concurrently with
the execution and delivery of this Agreement at the offices of Verrill & Xxxx,
One Portland Square, Portland, Maine, at 9:30 a.m. on January 27, 1998 (the
"Closing Date"). At the Closing, the Seller is transferring good and sufficient
instruments of transfer and assignment as are effective to vest in the Purchaser
good and valid title to the Stock. Simultaneously, Purchaser is paying the
Purchase Price in accordance with paragraphs (a) and (b) of Section 2.1.
(b) At the Closing, the parties are also delivering the items
and taking the actions described in Article IX.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Seller. As a material
inducement to the Purchaser to enter into and perform its obligations pursuant
to this Agreement, the Seller represents and warrants as of the date hereof as
follows:
5.1.1 Organization and Good Standing of the Company. The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is qualified as a
foreign corporation in the jurisdictions listed on
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Schedule 5.1.1, being all the jurisdictions where such qualification is
required by the nature of the Company's business, except for those
jurisdictions in which the adverse effects of all such failures by the
Company to be qualified could not in the aggregate reasonably be
expected to have a material adverse effect on the business or condition
of the Company, and the Company has corporate power to carry on its
business as it is now being conducted.
5.1.2 Ownership of Shares; Ownership Interests. The Seller
owns all of the issued and outstanding shares of capital stock of the
Company and all other equity securities of the Company, if any, and
there are no outstanding securities or options, warrants or other
rights to acquire any equity securities of the Company, other than the
IT Management Options. All of the issued and outstanding shares of
capital stock of the Company have been validly issued, fully paid and
are nonassessable, and the Seller has full authority to vote such
shares on all matters, if any, relating to the transactions
contemplated by this Agreement. Set forth on Schedule 5.1.2 is a list
of all capital stock, securities or other ownership interests owned or
held by the Company in any subsidiary or other entity.
5.1.3 Authorization. The execution and delivery by the Seller
of this Agreement, and the consummation by the Seller of the
transactions contemplated hereby and the performance of all of its
obligations hereunder, have been duly authorized by all necessary
action on the part of its Board of Directors and Shareholder, and this
Agreement, when executed and delivered by the Seller, will be the valid
and binding obligation of the Seller, enforceable in accordance with
its terms except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors generally and except as the
enforceability of this Agreement is subject to the application of
general principles of equity (regardless of whether considered in a
proceeding in equity or at law), including without limitation (i) the
possible unavailability of specific performance, injunctive relief or
any other equitable remedy and (ii) concepts of materiality,
reasonableness, good faith and fair dealing.
5.1.4 Title to Stock. Lumex has good and valid title to the
Stock, in its own name, free and clear of all claims, liens, charges,
encumbrances, and claimed interests of any kind of any other person or
persons whatsoever, and, except as disclosed on Schedule 5.1.4, has
full right, power and authority to sell, transfer, assign and deliver
the Stock to the Purchaser hereunder, without any required consent or
approval by any other party.
5.1.5 Non-Violation. The execution and delivery of this
Agreement by the Seller, and the consummation by it of the transaction
contemplated hereby (which does not include the subsequent merger of
the Company with the Purchaser), does not and will not violate the
provisions of (i) any applicable laws of the United States, the State
of Delaware, the State of Maine, or of any other state or jurisdiction
in which the Company does business, (ii) the Seller's and the Company's
Certificates of Incorporation or Bylaws, or (iii) any order, judgment
or decree or any other restriction of any kind or character applicable
to the Seller. No default or breach will occur by virtue of the
consummation of
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the transactions contemplated hereunder in any material respect under
any contract, agreement, deed of trust, indenture or other instrument
applicable to the Seller, and no rights of the Seller under any such
existing contract, agreement, indenture, deed of trust, or other
instrument will be limited, impaired or extinguished by virtue of the
consummation of the transactions contemplated hereunder, nor will the
consummation of the transactions contemplated hereunder result in the
creation of any lien, charge or encumbrance upon the Stock.
5.1.6 Absence of Certain Changes or Events; Business
Prospects. Except as set forth in the Schedules attached hereto and
except with respect to the environmental matters relating to the
Company, as to which the Seller makes no representation or warranty
other than the representation contained in Section 5.1.10, to the
Seller's knowledge, the Company has not conducted its business during
the Seller's period of ownership other than in the ordinary course and
consistent with the manner in which the business has been conducted
before such period. As used in this Agreement, the phrase "to the
Seller's knowledge" shall mean knowledge of matters about which Xxxxx
Xxxxxxxx or Xxxxxxx X. Xxxxxxx know or had reason to know and shall not
include the knowledge of Xxxxxxx Xxxxxxxxxx and the other executive
officers of the Company.
5.1.7 Tax Matters. Except as set forth on Schedule 5.1.7, all
returns, reports and other forms related to Taxes (as hereinafter
defined) with respect to the business, activities or assets of the
Company (collectively, "Tax Returns"), required to be filed on or
before the Closing Date including without limitation Consolidated
Returns (as hereinafter defined), have been timely filed or will be
timely filed on or before the Closing Date, in accordance with all
applicable laws (after taking into account extensions duly obtained)
and all Taxes shown to be due on such Tax Returns have been paid,
provided for in reserves, or properly protested. Except as set forth on
Schedule 5.1.7, no audit of any such Tax Return is pending or, to the
knowledge of the Seller or the Company, threatened, and no waiver or
agreement is in force for the extension of time for the assessment or
payment of any Tax. Schedule 5.1.7 sets forth the status of any audit
that is pending with respect to the Company, including the amounts of
any deficiencies and additions to Tax indicated on any notices of
proposed deficiency or statutory notices of deficiency that may have
been issued in connection therewith and, except as set forth on
Schedule 5.1.7, all of such deficiencies or additions to Tax have been
paid. The term "Tax" or "Taxes" shall mean all requisite federal,
state, local or foreign taxes, including taxes on or measured by
income, withholding taxes, excise taxes, franchise taxes, real and
personal property taxes, inventory and merchandise, capital stock
taxes, sales and use taxes, value added taxes, taxes on services, and
transfer taxes, and interest, penalties and additions to tax thereon,
including any obligations under any tax sharing, tax allocation or
similar agreements to which the Company is a party. For purposes of
this Agreement, "Consolidated Return" means any consolidated federal
income tax return or similar return with respect to any other Tax that
has been or will be filed by the Seller or any affiliate or predecessor
of the Seller on behalf of an affiliated group of corporations of which
the
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Company was or is, as of the Closing Date, a member. For the purposes
of this Agreement the term "Code" means the Internal Revenue Code of
1986, as amended.
5.1.8 Litigation. Except as disclosed on Schedule 5.1.8 and
except with respect to environmental matters relating to the Company,
as to which the Seller makes no representation or warranty other than
the representation contained in Section 5.1.10, (i) no litigation,
proceeding, investigation or claim is pending or, to the Seller's
knowledge, threatened against or relating to the Stock nor does the
Seller know of any basis for any such litigation, proceeding,
investigation or claim; (ii) the Seller is not involved in and has not
been served or put on notice of any litigation, claim, proceeding or
governmental investigation pending or threatened against or relating to
the Company that will adversely affect the Seller's ability to
consummate the transactions contemplated by this Agreement; and (iii)
to the Seller's knowledge, no investigation of the Seller has been
conducted or is intended, nor remedial action taken or intended against
the Seller, by any governmental authority, which would affect its
ability to consummate the transactions contemplated by this Agreement.
5.1.9 Brokers. Except as set forth or Schedule 5.1.9, neither
the Seller nor the Company has incurred any obligation to pay
compensation or commissions to any broker or other intermediary in
connection with the transactions contemplated hereby. The Seller will,
independent of the provisions of Article VIII, indemnify the Purchaser
and hold the Purchaser harmless without deduction or offset against
payment of any such compensation or commissions.
5.1.10 Environmental Matters. Set forth on Schedule 5.1.10
hereto is a list of certain written reports delivered to GFHP relating
to environmental matters of the Company. To the knowledge of Seller,
except as disclosed in such written reports, the Company is not in
violation, of, and has no obligations under, any current environmental
laws, rules or regulations (as currently interpreted) which could
reasonably be expected to result in liabilities which in the aggregate
exceed $3,000,000.
5.1.11 Employee Benefit Plans. Set forth on Schedule 5.1.11
hereto is a true and complete list of every employee benefit and
related plan which the Seller administers on behalf of the Company
("Employee Benefit Plans").
(a) The Seller represents and warrants that each Employee
Benefit Plan is and has at all times during its ownership of the
Company been in material compliance with all Plan terms, laws,
regulations, reporting and other requirements applicable to such Plan,
or any participant in such Plans, including but not limited to material
compliance with all pertinent federal and state requirements and that
any Employee Benefit Plan intended to be qualified under section 401(a)
of the Code is so qualified and has been qualified since its adoption
and each trust thereunder is exempt from tax under section 501(a) of
the Code and has been so exempt since its creation. Neither the Seller
nor the Company has received notification from any federal or state
agency that any Employee Benefit Plan is
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not in compliance with any statute, regulation, ruling or any other
authority having effect of law that is applicable to any of the
Employee Benefit Plans.
(b) The Seller and/or the Company have made all required
contributions under each of the Employee Benefit Plans for all periods
through and including the Closing Date or accruals therefore have been
provided for as shown on the financial statement of Company. No
accumulated funding deficiency has occurred with respect to any of the
Employee Benefit Plans and there are no unfunded liabilities in
connection with any of the Plans. In addition, the Seller and/or the
Company have made all payments due under any individual or group
insurance arrangement, plan, or policy for all periods through and
including the Closing Date.
(c) The Seller shall be responsible for the payment of all
benefit liabilities incurred under any Employee Benefit Plan of the
Company prior to or as of the Closing Date, whether or not claims for
such liabilities have been filed prior to or on such Closing Date,
except that the Seller shall not be liable for continuation benefits
under Section 4980 of the Code for employees of the Company if the
liability for such benefits is incurred after the Closing Date. In
addition, with respect to any of the Company's health, medical, or
dental insurance policies, the Seller agrees that the Purchaser shall
have no liability for any penalties of any kind resulting from early or
off-anniversary cancellation of any such policy, or for claims for
benefits liability incurred under such policy, prior to and on the
Closing Date, whether or not any such claim has been filed prior to or
on such date, including, but not limited to, any runout claims paid
from reserves, or any terminal premium arrangements such as a deficit
recoupment, retrospective premium, or delayed premium payment.
(d) No assets, liabilities, or obligations with respect to any
Employee Benefit Plan shall be accepted by Purchaser, except as
specifically set forth in this Agreement or otherwise required by law.
Neither the Company nor any entity which is under common control with
the Company has incurred, or reasonably expects to incur any liability
under the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the Code with respect to any Employee Benefit Plan,
including without limitation, any liability subject to Title IV of
ERISA that could become a liability to the Company.
5.1.12 Disclosure. No representation or warranty by the Seller
made herein, or in any Exhibit or Schedule hereto, contains any untrue
statement of material fact, or omits to state a material fact necessary
to make the statements contained herein and therein, in light of the
circumstances under which they were made, not misleading.
5.1.13 Financial Statements. Except as otherwise disclosed in
the footnotes thereto and except with respect to environmental matters
relating to the Company, as to which the Seller makes no representation
or warranty other than the representation contained in Section 5.1.10,
the balance sheets of the Company as of December 31, 1995 and December
31, 1996 and the related statements of income, shareholders' equity and
cash
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flows for the years then ended, including the footnotes thereto,
audited by Ernst & Young, independent certified public accountants,
which have been delivered to the Purchaser, fairly present in all
material respects the financial position of the Company for such
respective periods, in each case in accordance with generally accepted
accounting principles consistently applied for the periods covered
thereby (the "Audited Financials"). Except with respect to
environmental matters relating to the Company, as to which the Seller
makes no representation or warranty other than the representation in
Section 5.1.10, the unaudited balance sheet of the Company as of
November 30, 1997, and the related statement of income which have been
delivered to the Purchaser, fairly present in all material respects the
financial position of the Company as at such date and the results of
operations of the Company for the eleven months then ended, in each
case in conformity with generally accepted accounting principles
applied on a basis consistent with that of the Audited Financials
(subject to the normal year-end adjustments described in Schedule
5.1.13 and except as otherwise disclosed on such Schedule or in the
footnotes to such unaudited balance sheet). (The balance sheet included
in the "Audited Financials" is sometimes referred to herein as the
"Balance Sheet" and December 31, 1996 is sometimes referred to herein
as the "Balance Sheet Date").
5.1.14 No Material Adverse Change. Except with respect to
environmental matters relating to the Company, as to which Seller makes
no representation or warranty other than the representation contained
in Section 5.1.10, and except as set forth on Schedule 5.1.14, since
the Balance Sheet Date, there has been no material adverse change in
the business, properties, results of operations or financial condition
of the Company (collectively, the "Condition of the Company"), other
than those occurring as a result of general economic or financial
conditions or other developments which are not unique to the Company
but also affect other companies in the manufacture and sale of leather
goods, and the Seller knows of no such change which is threatened, nor
has there been any damage, destruction or loss which could have or has
had a material adverse effect on the Condition of the Company.
5.1.15 No Liabilities. Except with respect to environmental
matters relating to the Company, as to which Seller makes no
representation or warranty other than the representation contained in
Section 5.1.10, and except as otherwise disclosed in this Agreement or
the Schedules hereto, (i) as of the Balance Sheet Date, the Company did
not have any liabilities of a kind required by generally accepted
accounting principles to be set forth on a financial statement or in
the notes thereto ("Liabilities") that were not fully and adequately
reflected or reserved against on the Balance Sheet or described in the
notes to the Audited Financials; and (ii) the Company has not, except
in the ordinary course of business, incurred any Liabilities since the
Balance Sheet Date and has not declared any dividends or made any
distributions upon or relating to the Stock, except as set forth on
Schedule 5.1.15. Except as otherwise disclosed in the Agreement or the
Schedules hereto, and except with respect to environmental matters
relating to the Company, as to which the Seller makes no representation
or warranty other than the representation in Section 5.1.10, the Seller
has no knowledge of any circumstance,
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condition, event or arrangement that may hereafter give rise to any
Liabilities of the Company or any successor to their businesses except
in the ordinary course of business.
5.1.16 Books and Records. The books of account, minute books,
corporate record books and other records of the Company, all of which
have been made available to Purchaser, are complete and correct in all
material respects and have been maintained in accordance with sound
business practices and the requirements of Section 13(b)(2) of the
Securities Exchange Act of 1934, as amended (regardless of whether or
not the Company is subject to that Section), including the maintenance
of an adequate system of internal controls. The minute books of the
Company contain accurate and complete records in all material respects
of all meetings held of, and corporate action taken by, the
stockholders, the Board of Directors, and committees of the Board of
Directors of the Company during Seller's ownership of the Company, and
no meeting of any such stockholders, Board of Directors, or committee
has been held for which minutes have not been prepared and are not
contained in such minute books for such period.
5.1.17 Insurance. The Seller and the Company have maintained
in full force and effect substantially the same insurance coverage upon
the Company that was in effect on December 29, 1997, and the Seller
knows of no existing disputes as to coverage under any such policies.
5.2 Representations by the Purchaser. As a material inducement to the
Seller to enter into and perform its obligations pursuant to this Agreement, the
Purchaser represents and warrants, as of the date hereof and the Closing Date,
as follows:
5.2.1 Organization and Good Standing of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maine and has corporate power
to carry on its business as it is now being conducted and to enter into
and perform its obligations pursuant to this Agreement.
5.2.2 Authorization by the Purchaser. The execution and
delivery by the Purchaser of this Agreement, and the consummation by
the Purchaser of the transactions contemplated hereby, have been duly
authorized by all necessary action on the part of the Purchaser, and
this Agreement, when executed and delivered by the Purchaser, will be
the valid and binding obligation of the Purchaser, enforceable in
accordance with its terms except as enforcement may be subject to laws
relating to bankruptcy, insolvency and creditors' rights.
5.2.3 Non-Violation. The execution and delivery of this
Agreement by the Purchaser and the consummation of the transactions
contemplated hereby, including the subsequent merger of the Company
with the Purchaser, does not and will not violate the provisions of (i)
any applicable laws of the United States, the State of Maine, or of any
other state of jurisdiction in which the Purchaser does business, (ii)
the Purchaser's Articles of Incorporation or Bylaws, or (iii) any
order, judgment or decree or any other
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restriction of any kind or character applicable to the Purchaser. No
default or breach will, by virtue of the consummation of the
transactions contemplated hereunder, occur in any material respect
under any material contract, agreement, deed of trust, indenture or
other instrument applicable to the Purchaser.
5.2.4 Litigation. The Purchaser is not involved in and has not
been served or put on notice of any material litigation, proceeding or
governmental investigation pending or threatened against or relating to
the Purchaser that will adversely affect the Purchaser's ability to
consummate the transactions contemplated by this Agreement.
5.2.5 HSR Act. For purposes of section 7A of the Xxxxxxx Act,
15 U.S.C. Section 18a, and the rules and regulations thereunder, 16
C.F.R. Section 801.1 et seq., (i) the Purchaser is not "controlled" by
any other entity and (ii) the Purchaser, including all entities which
it "controls," does not have "annual net sales" or "total assets" of
$10 million or more, as determined pursuant to such act and the rules
and regulations promulgated thereunder.
5.2.6 Nature of Purchase; Accredited Investor. (a) The
Purchaser is acquiring the Stock for its own account for investment,
not as a nominee or agent, and not with a view to the resale or
distribution of the Stock or any part thereof, and the Purchaser has no
present intention of selling, granting any participation in, or
otherwise distributing the same. The Purchaser acknowledges that the
sale of the Stock pursuant to this Agreement will not be registered
under the Securities Act or any state securities or blue sky law, on
the grounds that the offering and sale of the Stock contemplated by
this Agreement are exempt from registration pursuant to exceptions
available under such laws, and that the Seller's reliance upon such
exemptions is predicated upon the Purchaser's representations set forth
in this Agreement.
(b) The Purchaser is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act.
5.2.7 Brokers. The Purchaser has incurred no obligation to pay
compensation or commissions to any broker or other intermediary in
connection with the consummation of the transactions contemplated
hereby.
5.2.8 Disclosure. No representation or warranty by the
Purchaser herein contains any untrue statement of material fact, or
omits to state a material fact necessary to make the statements
contained herein, in light of the circumstances in which they were
made, not misleading.
ARTICLE VI
[INTENTIONALLY OMITTED]
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ARTICLE VII
[INTENTIONALLY OMITTED]
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by the Seller. The Seller shall indemnify, defend,
and save and hold harmless the Purchaser from and against any damage, liability,
loss, expense or injury (including without limitation reasonable attorneys' fees
and costs and expenses incident to any claim, suit, action or proceeding)
suffered by the Purchaser in respect of any and all breaches of any
representation or warranty, or nonfulfillment of any covenant by the Seller
contained in this Agreement, including the Exhibits and Schedules hereto and any
certificate or other instrument furnished or to be furnished to the Purchaser by
or on behalf of the Seller or the Company.
8.2 Indemnification by the Purchaser. The Purchaser shall indemnify,
defend, and save and hold harmless the Seller from and against any damage,
liability, loss, expense or injury (including without limitation reasonable
attorneys' fees and costs and expenses incident to any claim, suit, action or
proceeding), suffered by the Seller in respect of any and all breaches of any
representation or warranty, or nonfulfillment of any covenant by the Purchaser
made or contained in this Agreement, including the Exhibits and Schedules hereto
and any certificate or other instrument furnished or to be furnished to the
Seller by or on behalf of the Purchaser.
8.3 Survival of Representations and Warranties; Limitations. The
representations, warranties and covenants set forth in this Agreement shall
survive the Closing. Notwithstanding any provision of law which may apply to
limit the right to bring an action for indemnification under this Article VIII,
no party shall assert any claim for indemnification hereunder later than January
26, 2001, except for (i) claims relating to a breach of the representations
contained in Sections 5.13, 5.14, and 5.15, which may not be asserted after June
30, 1999; and (ii) claims relating to noncompliance with the covenants and
undertakings set forth in this Agreement or any document constituting a Schedule
or an Exhibit hereto, which may be asserted at any time subject to applicable
statutes of limitations in respect thereof, and any Tax claim under Section
10.12, which may be asserted until the later of (i) the date upon which the
liability to which any such Tax claim may relate is barred by all applicable
statutes of limitations and (ii) the date upon which any claim for refund or
credit related to such Tax claim is barred by all applicable statutes of
limitations.
8.4 Notice of Claims and Response. If the party seeking indemnification
hereunder (for purposes of this Article VIII, the "Indemnified Party") shall
demand indemnification hereunder against the other party (for purposes of this
Article VIII, the "Indemnifying Party"), such Indemnified Party shall notify the
Indemnifying Party of the facts and circumstances giving rise to such claim for
indemnification. The Indemnified Party shall afford to the
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Indemnifying Party access to all records and information relating to such claim,
facts and circumstances (except those matters privileged under applicable state
or federal law or rules of evidence) reasonably necessary to permit the
Indemnifying Party to evaluate the merits of such claim or the accuracy of such
facts and circumstances. Within thirty (30) days after receipt of any such
demand for indemnification, the Indemnifying Party shall by notice to the
Indemnified Party acknowledge its obligation to indemnify the Indemnified Party
in respect of such claim, fact or circumstance, or reject the demanded
indemnification. A failure to respond to any such demand within said thirty day
period shall be deemed to be a rejection of the demand.
8.5 Opportunity to Cure. Notwithstanding any rejection of a demand for
indemnification pursuant to Article 8.4, the Indemnifying Party shall be
entitled, within thirty (30) days after notice of any demand for
indemnification, at its sole cost and expense, to undertake to cure any
circumstances or pay or settle any claim which is the subject of said notice,
provided, however, that any indemnification hereunder with respect to such
claim, fact or circumstance shall continue to be available notwithstanding such
undertaking to cure.
8.6 Resolution of Dispute as to Indemnification. Any dispute relating
to indemnification may, at the election of any party, be resolved by an
arbitration to be held at Portland, Maine, and to be conducted in accordance
with the rules then in effect of the American Arbitration Association, except
that the arbitrators shall be appointed as follows: (a) within fifteen (15) days
after any rejection of a demand for indemnification, the parties jointly shall
appoint a single arbitrator whose resolution of the dispute shall be conclusive,
or (b) if the parties fail jointly to appoint a single arbitrator within said
fifteen day period, either the Indemnified Party or the Indemnifying Party may
appoint one arbitrator by notice to the other such party, and the other party
shall name a second arbitrator within fifteen (15) days after receipt of such
notice, whereupon the two arbitrators so named shall jointly select a third
arbitrator within fifteen (15) days after the date of appointment of the second
arbitrator, failing which the third arbitrator shall be appointed by the
President of the American Arbitration Association. In the event that any party
entitled to name the second arbitrator as set forth in this Section 8.6 fails to
do so within the time period provided herein, the arbitrator appointed by the
other party shall be the sole arbitrator. Any arbitrator or arbitrators shall
promptly conduct an arbitration and render a decision resolving the dispute, and
the parties agree to abide by the decision of any single arbitrator or by a
decision of a majority of any three arbitrators appointed as aforesaid. The
costs and expenses of any arbitrator shall be borne by the party appointing such
arbitrator, except that the costs and expenses of any arbitrator jointly named
or appointed as a third arbitrator shall be borne fifty percent by the
Indemnified Party and fifty percent by the Indemnifying Party.
8.7 Defense of Claims. Should any claims be made or suits or
proceedings be instituted which, if successfully prosecuted, would give rise to
any obligation to indemnify under this Article VIII, the control of the defense
thereof shall be vested in the Indemnifying Party, and the Indemnified Party
shall be entitled to participate in such defense.
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Notwithstanding the foregoing control of the defense provisions, no settlement
of any claim, suit or proceeding which will result in liability pursuant to this
Article VIII may be made without the consent of the party bearing such
liability, which consent will not unreasonably be withheld.
8.8 Limitations on Indemnity. Notwithstanding the foregoing, no
payments in respect of any indemnification claim shall be required of any
Indemnifying Party unless and until the total amount of all indemnification
claims payable by such Indemnifying Party has exceeded One Million Three Hundred
Thousand Dollars ($1,300,000), in which event the Indemnifying Party shall be
obligated to pay the Indemnified Party the amount of all claims payable in
excess of Six Hundred Seventy-Five Thousand Dollars ($675,000); provided,
however, that the aggregate liability for any Indemnifying Party shall not
exceed Six Million Seven Hundred Fifty Thousand Dollars ($6,750,000) (the "Cap")
and provided further, that the foregoing limitations shall not apply to the
parties' obligations set forth in Section 10.12. The foregoing notwithstanding,
the parties acknowledge and agree that, in the event of a breach of the
representation contained in Section 5.1.10 (an "Environmental
Misrepresentation"), (i) no claim shall be brought hereunder for indemnification
unless, until and only to the extent that the total amount of indemnification
claims for Environmental Misrepresentations payable hereunder exceed Three
Million Dollars ($3,000,000), and (ii) in the event that Seller has made
payments to the Indemnified Parties hereunder in an amount equal to the Cap, the
Cap shall be increased on a dollar-for-dollar basis to an amount not exceeding
Nine Million Seven Hundred and Fifty Thousand Dollars ($9,750,000) to cover
amounts payable for indemnification claims in respect of additional
Environmental Misrepresentations.
8.9 Exclusive Remedy. The parties agree that, except for the
representations contained in Sections 5.1.2, 5.1.3, 5.1.4, 5.1.5, 5.1.9, 5.2.2,
5.2.3, and 5.2.7, their sole and exclusive remedy for breach of Article V shall
be indemnification under this Article VIII. Except as otherwise provided in this
Agreement, no party shall have a separate cause of action under contract, tort
or otherwise except for a claim brought under, and subject to the limitations
of, this Article VIII.
ARTICLE IX
CLOSING DATE DELIVERIES AND ACTIONS
9.1 Deliveries and Actions of the Purchaser. Simultaneously with the
delivery of the Stock and the Purchase Price on the date hereof, Seller is
taking the following actions or delivering to Purchaser the following items:
9.1.1 Delivery of Certificates. (a) a certificate dated the
Closing Date and signed by the Secretary of the Seller and the Company
as to the adoption of resolutions on behalf of the Board of Directors
necessary to authorize the transactions contemplated by this Agreement,
and containing copies of Lumex's and the
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Company's Certificate of Incorporation and Bylaws as then in effect,
(b) a certificate as to the legal existence and good standing of the
Company and a certificate issued by the Secretary of State of each
state in which the Company is qualified to transact business, if any,
as to the qualification and good standing of the Company in each such
state, (c) a certificate of tax clearance or similar certificate issued
by the appropriate taxing authorities of the State of Delaware
certifying that the Seller and the Company have paid all taxes due and
payable in respect of the Stock and or the Company (or reasonably
acceptable certification in lieu thereof if such official certificates
are unavailable at the Closing), and (d) a certificate dated the
Closing Date and signed by the Secretary of the Seller as to (i) the
incumbency of any officers executing on behalf of the Seller, (ii) this
Agreement and (iii) any document contemplated by this Agreement.
9.1.2 Contribution of Debt. Lumex is contributing to the
capital of the Company the indebtedness of the Company owing to Lumex.
9.1.3 Delivery of Legal Opinion. The opinion of Messrs.
Milbank, Tweed, Xxxxxx & XxXxxx, counsel to the Seller and to the
Company, in form and content reasonably satisfactory to the Purchaser.
9.2 Deliveries and Actions of the Purchaser. Simultaneously with the
delivery of the Stock and the Purchase Price on the date hereof, Purchaser is
taking the following actions or delivering to Seller the following items:
9.2.1 Delivery of Certificates. (a) a certificate dated the
Closing Date and signed by the Clerk of the Purchaser as to the
adoption of resolutions on behalf of the Purchaser necessary to
authorize the transactions contemplated by this Agreement, (b) a
certificate issued by the Secretary of State of Maine as to the legal
existence and good standing of the Purchaser, and (c) a certificate
dated the Closing Date and signed by the Clerk of the Purchaser as to
the incumbency of any officers executing this Agreement or any document
contemplated by this Agreement on behalf of the Purchaser.
9.2.2 Delivery of Legal Opinion. The opinion of Messrs.
Verrill & Xxxx, counsel to the Purchaser, in form and content
reasonably satisfactory to the Seller.
ARTICLE X
GENERAL
10.1 Confidentiality. Each party to this Agreement acknowledges that it
has received or may have received information from other parties of a
confidential or proprietary nature and, except for such information to be used
by the Purchaser in the conduct of the Business after the Closing, each party
agrees to maintain such information as confidential.
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The foregoing does not apply to the disclosure by the parties of the existence
of this Agreement and the transaction contemplated hereunder.
10.2 Further Assurances. (a) The parties hereto agree to execute and
deliver, at any time after the Closing Date, any and all papers and documents
which may be reasonably necessary to carry out the terms of this Agreement.
(b) Following the Closing, each party shall afford the other party, its
counsel, accountants, and professional advisors during normal business hours,
reasonable access to the property, books, records and other data relating to the
Company in its possession with respect to periods prior to the Closing and the
right to make copies and extracts therefrom, to the extent that such access may
be reasonably required by the requesting party in connection with (i) the
preparation of tax returns, (ii) the determination or enforcement of rights and
obligations under this Agreement, (iii) compliance with the requirements of any
governmental or regulatory authority, (iv) the determination or enforcement of
the rights and obligations of any party to this Agreement, (v) in connection
with any actual or threatened litigation or proceeding; or (vi) other reasonable
business purposes.
10.3 Entire Agreement. The Exhibits and Schedules annexed hereto and
delivered concurrently herewith shall be deemed to be incorporated into and made
part of this Agreement. This Agreement, including said Exhibits and Schedules,
contains the entire agreement between the parties hereto and there are no
agreements, representations, or warranties which are not set forth herein. This
Agreement may not be amended or revised except by a writing signed by all
parties hereto, and no waiver hereunder shall be effective unless in writing.
10.4 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, except as provided below, this Agreement and all
rights hereunder may not be assigned except by written consent of all parties
hereto. The foregoing notwithstanding, the Purchaser shall be entitled to assign
all or any portion of its rights and/or obligations hereunder to a wholly-owned
subsidiary of the Purchaser upon written notice thereof to the Seller.
10.5 Separate Counterparts. This Agreement may be executed in several
identical counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one and the same instrument.
10.6 Transactional Costs. Each party to this Agreement shall be
responsible for its own costs for any legal, accounting and other consulting
services, if any, attendant to the transactions contemplated by this Agreement.
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10.7 Notices. All notices hereunder, to be effective, shall be in
writing and shall be delivered by hand, or by certified mail, postage and fees
prepaid, or via facsimile transmission to the party to be notified as follows:
(i) If to the Purchaser, to:
Xxxxxxx X. Xxxxxxxxxx
c/o Irving Tanning Company
0 Xxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Facsimile No., (000)000-0000
with a copy to:
Xxxx X. XxxXxxx, Esq.
Verrill & Xxxx
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000-0000
Facsimile No., (000)000-0000
(ii) If to the Seller, to:
Xxxxxxx X. Xxxxxxx, Esq., Vice President and General Counsel
Xxxxxx-Field Health Products, Inc.
000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile No., (000)000-0000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Milbank, Tweed, Xxxxxx & XxXxxx
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No., (000)000-0000
unless and until notice of another or different address or facsimile number
shall be given as provided herein. Notice shall be deemed to be given and
received when delivered by hand or by courier service or (i) in the case of
notice sent by certified mail, three (3) business days after deposited with the
Canadian or the United States Postal Service, whichever shall apply or (ii) in
the case of notice sent by facsimile transmission, upon receipt.
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10.8 Severability. The provisions of this Agreement are severable, and
the invalidity of any provision shall not affect the validity of any other
provision.
10.9 Index and Article Headings. The descriptive index and Article
headings in this Agreement have been inserted solely for convenience of
reference, and shall not be deemed to be a part of this Agreement.
10.10 Publicity. After the Closing, the parties shall be entitled to
make such public statements as each deems appropriate with regard to the
transactions contemplated by this Agreement.
10.11 Governing Law. The execution, interpretation, and performance of
this Agreement shall be governed by the laws in effect in the State of New York.
10.12 Tax Matters.
10.12.1 The Seller shall prepare and file, or cause to be
prepared and filed, in a manner consistent with prior years and
applicable laws and regulations, all Consolidated Returns (as defined
in Section 5.1.7) required to be filed before or after the Closing Date
and shall pay, or cause to be paid, all Taxes shown as due on such
Consolidated Returns.
10.12.2 The Seller shall be liable for, and shall hold the
Purchaser and the Company harmless from and against, any and all Taxes
due or payable by the Company for any taxable year or tax period ending
on or before the Closing Date. Taxes for which the Seller shall be
liable and hold the Purchaser and the Company harmless under the
preceding sentence shall include, without limitation, any liability for
Taxes that arises because the Company ceases on the Closing Date to be
a member of a group filing Consolidated Returns of which it had been a
member and any and all Taxes due or payable by the Company or by the
Purchaser resulting from or arising out of the transactions
contemplated by this Agreement.
10.12.3 The Purchaser and the Company shall be liable for, and
shall hold the Seller harmless from and against, any and all Taxes due
or payable by the Company or by the Seller with respect to the Company
for any taxable year or tax period beginning after the Closing Date.
10.12.4 Any Taxes for a tax period beginning before the
Closing Date and ending after the Closing Date shall be apportioned
between the Seller and the Purchaser, in the case of real and personal
property taxes, on a per diem basis and, in the case of other Taxes,
shall be determined based on the actual operations of the Company
during the portion of such period ending on the Closing Date and the
portion of such period beginning after the Closing Date, and each such
portion shall be deemed to be a tax period subject to the provisions of
Sections 10.12.2 and 10.12.3, above. The Purchaser shall file, in a
manner consistent with prior years and applicable laws and regulations,
any required federal, state,
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local and foreign Tax Returns (other than Consolidated Returns) for any
such tax period, and the Purchaser shall pay, or cause its subsidiaries
or affiliates to pay (subject to the Seller's obligations to reimburse
the Purchaser therefor as provided in Section 10.12.2) all federal,
state, local or foreign Taxes shown as due on any such return with
respect to the Company.
10.12.5 Notwithstanding the foregoing, the Seller shall be
liable for, and shall hold the Purchaser and the Company harmless from
and against, any Taxes attributable to any other member of any group of
affiliated corporations that file Consolidated Returns for federal
income tax purposes of which the Company was a member before the
Closing Date by reason of Treas. Reg. Section 1.1502-6 or any
comparable provision of state, local or foreign law that provides for
joint and several liability, in whole or in part.
10.12.6 Any refunds or credits of Taxes, to the extent that
such refunds or credits relate to a taxable year or tax period
(including a period deemed to be a tax period under Section 10.12.4)
ending on or before the Closing Date, shall be for the account of the
Seller, and, to the extent that such refunds or credits relate to a
taxable year or tax period (including a period deemed to be a tax
period under Section 10.12.4) beginning after the Closing Date shall be
for the account of the Purchaser.
10.12.7 The Purchaser shall prepare, in a manner consistent
with prior practices and applicable laws and regulations, all
information required for inclusion in any Consolidated Return required
to be filed by the Seller or any affiliate of the Seller which includes
the operations of the Company for any period ending on or prior to the
Closing Date, and shall transmit, or cause the Company to transmit,
such information to the Seller at least 45 days before the due date of
any such Consolidated Return. In filing any Consolidated Return which
includes the operations of the Company for the period ending on the
Closing Date, the Seller shall not, without the consent of the
Purchaser (which shall not be unreasonably withheld), report any item
in a manner different from the manner in which such item is reflected
on the information provided to the Seller in accordance with the
preceding sentence hereof. The Seller and the Purchaser shall each
maintain (or, in the case of the Purchaser, cause the Company to
maintain) all books and records that relate to any Tax Return of the
Company or to any Consolidated Return for a period of not less than 6
years following the filing date of such Tax Return or Consolidated
Return. As soon as practicable after a request by the Seller or the
Purchaser ("Requesting Party"), the Purchaser or the Seller, as the
case may be (the "Delivering Party"), shall deliver to the Requesting
Party such information and data as the Requesting Party may reasonably
request, in order to enable the Requesting Party to complete and file
all Tax Returns which it may deem appropriate or desirable to file with
respect to the activities or assets of the Company or to respond to
audits by any taxing authorities with respect to such activities or
assets. The Delivering Party's obligation under this paragraph to
permit the Requesting Party access to and to review the foregoing
materials is conditioned upon the Requesting Party's execution of a
reasonable confidentiality agreement with respect thereto.
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10.13 Permitting Matters. Purchaser shall be responsible for obtaining,
modifying or giving notice that is required, by any governmental entity with
respect to permits, licenses, or approvals by such entity, as a consequence of
the merger of the Company and the Purchaser.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representative as an instrument under seal as
of the day and year first above written.
WITNESS: SELLER:
XXXXXX-FIELD HEALTH PRODUCTS,
INC.
____________________________ By: _______________________________
Its: _______________________________
LUMEX/BASIC AMERICAN
HOLDINGS, INC.
____________________________ By: ________________________________
Its:________________________________
PURCHASER:
IT ACQUISITION CORPORATION
____________________________ By: _______________________________
Its: _______________________________
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