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STOCK PURCHASE AGREEMENT
BY AND AMONG
ARMOR HOLDINGS, INC., A DELAWARE CORPORATION,
BENGAL ACQUISITION CORP., A DELAWARE CORPORATION, AS PURCHASER,
AND
THE XXXXX-X'XXXX COMPANY, AN OHIO CORPORATION,
AS SELLER OF THE CAPITAL STOCK OF
X'XXXX-XXXX & XXXXXXXXXX ARMORING COMPANY,
THE O'GARA COMPANY, AND
O'GARA SECURITY ASSOCIATES, INC.
DATED AS OF APRIL 20, 2001
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS............................................................................................1
ARTICLE II. PURCHASE OF SECURITIES; CONSIDERATION.................................................................9
2.1 Purchase of Securities..............................................................................9
2.2 Consideration......................................................................................10
2.3 Certain Closing Adjustments and Covenants..........................................................10
2.4 [Intentionally Omitted]............................................................................13
2.5 Calculation of Deferred Consideration..............................................................13
2.6 Resale of Consideration Shares.....................................................................13
2.7 Section 338(h)(10) and Section 338(g) Elections....................................................14
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................................................14
3.1 Organization; Standing and Power...................................................................14
3.2 Authorization; Enforceability......................................................................14
3.3 No Violation or Conflict...........................................................................15
3.4 Consent of Governmental Authorities................................................................15
3.5 Brokers............................................................................................15
3.6 Public Documents; Compliance.......................................................................15
3.7 Consideration Shares...............................................................................16
3.8 Registration Statement.............................................................................16
3.9 Litigation.........................................................................................16
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANIES.......................................16
4.1 Organization.......................................................................................16
4.2 Authorization; Enforceability......................................................................17
4.3 No Violation or Conflict...........................................................................17
4.4 Consents of Governmental Authorities...............................................................18
4.5 Conduct of Business................................................................................18
4.6 Litigation; Disputes...............................................................................19
4.7 Brokers............................................................................................19
4.8 Compliance.........................................................................................19
4.9 Charter, Bylaws, Code of Regulations and Corporate Records.........................................19
4.10 Capitalization of the Companies....................................................................20
4.11 Rights, Warrants, Options..........................................................................21
4.12 Financial Statements...............................................................................21
4.13 Absence of Undisclosed Liabilities.................................................................22
4.14 Title to Securities................................................................................22
4.15 Title to and Condition of Personal Property........................................................22
4.16 Real Property......................................................................................23
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TABLE OF CONTENTS CONT'D
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4.17 Insurance..........................................................................................24
4.18 Governmental Authorizations........................................................................25
4.19 Intellectual Property Rights.......................................................................25
4.20 Major Customers and Suppliers; Supplies............................................................27
4.21 Related Parties....................................................................................27
4.22 List of Accounts and Proxies.......................................................................28
4.23 Employee Policies, Manuals, etc....................................................................28
4.24 Labor Relations....................................................................................28
4.25 Employee Benefit Plans.............................................................................29
4.26 Taxes..............................................................................................31
4.27 Material Agreements................................................................................32
4.28 Guaranties.........................................................................................35
4.29 Products...........................................................................................35
4.30 Environmental and Safety Matters...................................................................36
4.31 Accounts Receivable, Notes Receivable, and Costs in Excess of Billing..............................36
4.32 Accounts and Notes Payable.........................................................................37
4.33 Inventory Valuation................................................................................37
4.34 Absence of Certain Business Practices..............................................................37
4.35 Review of Forms 10-K, 10-Q and 8-K.................................................................37
4.36 Public Documents; Compliance.......................................................................38
4.37 FIRPTA.............................................................................................38
4.38 Investment Representations.........................................................................38
4.39 No Claims..........................................................................................38
4.40 Disclosure.........................................................................................39
4.41 Assumptions in the Execution Date Legal Opinion....................................................39
4.42 Projections........................................................................................39
ARTICLE V. INDEMNIFICATION; RELEASES, ETC........................................................................39
5.1 Survival of the Representations and Warranties.....................................................39
5.2 Investigation......................................................................................40
5.3 Indemnification Generally..........................................................................40
5.4 General Releases...................................................................................43
5.5 Joint and Several Obligation.......................................................................44
5.6 Tax Matters........................................................................................44
5.7 Brazilian Tax-Related Indemnity....................................................................47
ARTICLE VI. CLOSING; CONDITIONS PRECEDENT; DELIVERIES............................................................48
6.1 Closing; Effective Date............................................................................48
6.2 Conditions Precedent to the Obligations of AHI and the Purchaser...................................48
6.3 Conditions Precedent to the Obligations of the Seller..............................................52
6.4 Execution Date Deliveries by the Seller and the Companies..........................................54
6.5 Closing Date Deliveries by the Seller and the Companies............................................54
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TABLE OF CONTENTS CONT'D
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6.6 Closing Date Deliveries by AHI and/or the Purchaser................................................55
6.7 Best Efforts.......................................................................................56
6.8 Termination........................................................................................56
6.9 Liquidated Damages and Break-up Fees...............................................................57
ARTICLE VII. COVENANTS AND OTHER AGREEMENTS......................................................................58
7.1 Interim Operations of the Seller, the Companies and the Company Subsidiaries.......................58
7.2 Access.............................................................................................61
7.3 Confidentiality (through Closing Date).............................................................61
7.4 Notification.......................................................................................62
7.5 Acquisition Proposals; No Solicitation.............................................................62
7.6 Non-competition and Non-disparagement..............................................................63
7.7 General Confidentiality............................................................................64
7.8 Continuing Obligations; Equitable Remedies.........................................................65
7.9 Change of Name.....................................................................................66
7.10 Advice of Changes..................................................................................66
7.11 Maintenance of Insurance...........................................................................66
7.12 Sale of the French Carosserie......................................................................66
7.13 Registration Statement.............................................................................67
7.14 HSR Application....................................................................................68
7.15 Transfers of Company Subsidiaries..................................................................68
7.16 Bank Consents......................................................................................69
7.17 ERISA Actions......................................................................................69
7.18 Inter-company Transfers............................................................................70
7.19 Assignment of Intellectual Property................................................................70
7.20 Aircraft Lease Transfer............................................................................70
7.21 Shareholder Approval...............................................................................70
ARTICLE VIII. MISCELLANEOUS......................................................................................70
8.1 Notices............................................................................................70
8.2 Entire Agreement...................................................................................71
8.3 Binding Effect.....................................................................................71
8.4 Assignment.........................................................................................71
8.5 Waiver and Amendment...............................................................................71
8.6 No Third Party Beneficiary.........................................................................71
8.7 Severability.......................................................................................71
8.8 Fees and Expenses..................................................................................72
8.9 Headings; Construction.............................................................................72
8.10 Counterparts.......................................................................................72
8.11 Time of the Essence................................................................................72
8.12 Injunctive Relief..................................................................................72
8.13 Remedies Cumulative................................................................................72
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TABLE OF CONTENTS CONT'D
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8.14 Governing Law......................................................................................73
8.15 Jurisdiction and Venue.............................................................................73
8.16 Participation of Parties...........................................................................73
8.17 Further Assurances.................................................................................73
8.18 Publicity..........................................................................................73
TABLE OF EXHIBITS
Exhibit Description Section Reference
1 Form of Confidentiality and Non-competition Agreement 6.2(k)
2 The Principal Stockholder Releases 6.2(n)
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STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of April 20, 2001, by
and among The Xxxxx-X'Xxxx Company, an Ohio corporation (the "Seller");
X'Xxxx-Xxxx & Xxxxxxxxxx Armoring Company, a Delaware corporation ("OHEAC"); The
O'Gara Company, an Ohio corporation ("O'Gara Company"); and O'Gara Security
Associates, Inc., a Delaware corporation ("OSA" and, together with OHEAC and
O'Gara Company, the "Companies"), Armor Holdings, Inc., a Delaware corporation
("AHI"), Bengal Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of AHI ("Purchaser").
PREAMBLE
WHEREAS, the Seller owns all the outstanding capital stock of each of the
Companies;
WHEREAS, the Companies and their respective Subsidiaries comprise the
Security and Products and Services Group of the Seller, which includes the
manufacture, distribution, sale and marketing of ballistic and blast protected
armoring systems for commercial and military vehicles and aircraft and missile
components, and the provision of security services, including advanced driver
training, threat recognition and avoidance training, and firearms training.
WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser
desires to acquire, on the terms and subject to the conditions set forth in this
Agreement, all of the issued and outstanding capital stock of the Companies;
NOW, THEREFORE, in consideration of the premises and the respective mutual
covenants, representations and warranties herein contained, the parties hereto
hereby agree as follows:
ARTICLE I.
DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following
terms when used in this Agreement shall have the meanings indicated below:
"Acquisition Proposal" shall have the meaning set forth in Section 7.5(a).
"Additional Break-up Fee" shall have the meaning set forth in Section 6.9.
"Affiliate" shall mean with respect to a specified Person, a partnership,
corporation, limited liability company, or any other Person which, directly or
indirectly, through one or more intermediaries, controls or is controlled by or
is under common control with such Person, and without limiting the generality of
the foregoing, includes, with respect to a Person (a) any other Person which
beneficially owns or holds twenty percent (20%) or more of any class of voting
securities or other securities convertible into voting securities of such Person
or beneficially owns or holds twenty percent (20%) or more of any other equity
interests in such Person, (b) any other Person with respect to which such Person
beneficially owns or holds twenty percent (20%) or more of any class of voting
securities or other securities convertible into voting securities of such
Person, or owns or holds twenty percent (20%) or more of the equity interests of
the other Person, and (c) any director or executive officer of such Person. For
purposes of this definition, the term "control" (including, with correlative
meanings, the terms "controlled by" and "under
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common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"Agents" shall have the meaning set forth in Section 7.5(a).
"Agreement" shall mean this stock purchase agreement together with all
exhibits and schedules referred to herein.
"AHI" shall have the meaning set forth in the preamble hereof.
"AHI Common Stock" shall have the meaning set forth in Section
2.2(b)(i).
"Aircraft Lease Assignment" shall have the meaning set forth in Section
7.21.
"Applicable Law" shall mean, with respect to any Person, any
international, national, regional, state or local treaty, statute, law,
ordinance, rule, administrative action, regulation, order, writ, injunction,
judgment, decree or other requirement of any Governmental Authority and any
requirements imposed by common law or case law, applicable to such Person or any
of its properties, assets, officers, directors, employees, consultants or agents
(in connection with their activities on behalf of such Person or any of its
Affiliates). Applicable Law includes, without limitation, Environmental and
Safety Requirements, and state and local zoning and building laws.
"Average Closing Price" shall mean the average closing price of the AHI
Common Stock on the New York Stock Exchange for a ten (10) consecutive trading
day period ending three (3) trading days prior to the relevant date of
determination.
"Bank Consents" shall have the meaning set forth in Section 6.2(t)
hereof.
"Break-up Fee" shall have the meaning set forth in Section 6.9.
"Bring Down Execution Date Legal Opinion" shall have the meaning set
forth in Section 6.2(j).
"Bring Down Fairness Opinion" shall mean a fairness opinion of Xxxxxx
Securities Incorporated reaffirming their opinion as set forth in the Seller's
Fairness Opinion and confirming that the statements and conclusions set forth in
the Seller's Fairness Opinion are true and correct as of the Closing Date.
"Carosserie" shall have the meaning set forth in Section 7.12.
"Carosserie Sale" shall have the meaning set forth in Section 7.12.
"Cash at Closing" shall have the meaning set forth in Section
2.2(a)(i).
"CERCLA" shall have the meaning set forth in Section 4.30(c).
"Claims" shall have the meaning set forth in Section 5.4.
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"Closing" shall have the meaning set forth in Section 6.1.
"Closing Date" shall mean the date that the Closing takes place.
"Closing Date Balance Sheet" shall have the meaning set forth in
Section 2.3(b).
"Closing Payment" shall have the meaning set forth in Section
2.2(a)(i).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality and Non-Competition Agreements" shall have the meaning
set forth in Section 6.2(k).
"Companies" shall have the meaning set forth in the preamble hereof.
"Company Intellectual Property" shall have the meaning set forth in
Section 4.19(a).
"Company Subsidiary" shall mean any direct or indirect Subsidiary of
any of the Companies other than any direct or indirect Subsidiary of any Company
which Subsidiary is the subject of a Company Subsidiary Transfer.
"Company Subsidiary Transfers" shall have the meaning set forth in
Section 7.15.
"Competitive Business" shall have the meaning set forth in Section 7.6.
"Consideration Shares" shall have the meaning set forth in Section
2.2(b).
"Content" shall mean any and all information, pictures, images,
graphics, video, text, and any other content or information, in whatever form or
on any media.
"Deferred Consideration" shall have the meaning set forth in Section
2.2(a)(iii).
"Disclosure Schedule" shall mean the disclosure schedule attached
hereto.
"Determining Accountants" shall have the meaning set forth in Section
2.3(c).
"DOJ" shall mean the Department of Justice of the United States.
"Encumbrance" shall mean any claim, lien, charge, security interest,
pledge, mortgage, or any other restriction or encumbrance of any kind or nature.
"Environmental and Safety Requirements" shall mean all Applicable Law
concerning public health and safety, worker health and safety and pollution or
protection of the environment (including, without limitation, all those relating
to the presence, use, production, generation, handling, transport, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
Environmental Release, threatened Environmental Release, control or cleanup of
any hazardous or otherwise regulated materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals,
petroleum products or distillates, asbestos, polychlorinated biphenyls, noise or
radiation).
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"Environmental Lien" shall mean any lien, whether recorded or
unrecorded, in favor of any Governmental Authority, relating to any liability of
any of the Companies, or the Seller with respect to the Companies, arising under
any Environmental and Safety Requirements.
"Environmental Release" shall have the meaning set forth in CERCLA.
"ERISA" shall have the meaning set forth in Section 4.25(a).
"Escrow Agent" shall mean the party to the Escrow Agreement who is to
act as escrow agent thereunder, including all successor escrow agents as
provided in the Escrow Agreement.
"Escrow Agreement" shall mean the Escrow Agreement among AHI, the
Purchaser, and the Seller, in a form reasonably satisfactory to the parties
thereto.
"Escrow Amount" shall have the meaning set forth in Section 2.2(a)(ii)
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"Execution Date Legal Opinion" shall mean that certain legal opinion
letter, addressed to the Seller, AHI, and the Purchaser and in form and
substance satisfactory to AHI and the Purchaser, dated April 19, 2001, by
Squire, Xxxxxxx & Xxxxxxx, L.L.P., special Ohio counsel to the Seller, opining
that the vote or other consent of the stockholders of the Seller is not required
to authorize the Seller to enter into this Agreement and carry out the terms
hereof and consummate the transactions contemplated hereby.
"Financial Statements" shall mean (a) the audited balance sheets and
the audited statements of income, cash flows and retained earnings of the
Companies on a combined basis and consolidated with the Company Subsidiaries as
of and for the fiscal years ended December 31, 1999 and 1998, including the
notes thereto and the reports thereon of the Seller's independent auditors, each
prepared in accordance with GAAP, consistently applied with prior periods and
(b) the unaudited balance sheet and the unaudited statement of income of the
Companies on a combined basis and consolidated with the Company Subsidiaries as
of and for the fiscal year ended December 31, 2000.
"401(k) Plan" shall have the meaning set forth in Section 7.17(a).
"FTC" shall mean the Federal Trade Commission of the United States.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authority" shall mean any domestic, international,
national, territorial, regional, state or local governmental authority,
quasi-governmental authority, instrumentality, court, commission, arbitrator or
arbitration panel, or tribunal or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"Governmental Authorizations" shall have the meaning given such term in
Section 4.18.
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"Governmental Contract MAE" shall have the meaning set forth in Section
4.27(d).
"Gross Profit" shall have the meaning set forth in Section 2.5(b).
"Guaranty" shall mean, as to any Person, all liabilities or obligations
of such Person, with respect to any indebtedness or other obligations of any
other person, which have been guaranteed, directly or indirectly, in any manner
by such Person, through an agreement, contingent or otherwise, to purchase such
indebtedness or obligation, or to purchase or sell property or services,
primarily for the purpose of enabling the debtor to make payment of such
indebtedness or obligation or to guarantee the payment to the owner of such
indebtedness or obligation against loss, or to supply funds to or in any manner
invest in the debtor, or otherwise.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" shall have the meaning set forth in Section 5.3(c).
"Indemnifying Party" shall have the meaning set forth in Section
5.3(c).
"Insurance Organizations" shall have the meaning set forth in Section
4.16(d).
"Intellectual Property" shall mean any United States, foreign,
international and state patents and patent applications, industrial design
registrations, certificates of invention and utility models (collectively,
"Patents"); trademarks, service marks, and trademark or service xxxx
registrations and applications, trade names, logos, designs, slogans, and
general intangibles of like nature, together with all goodwill related to the
foregoing (collectively, "Trademarks"); Internet domain names; copyrights,
copyright registrations, renewals and applications for copyrights, including
without limitation for the Content and the Software (each as defined herein)
(collectively, "Copyrights"); Content; Software, technology, trade secrets and
other confidential information, know-how, proprietary processes, formulae,
algorithms, models and methodologies (collectively, "Trade Secrets"), rights of
privacy and publicity, including but not limited to, the names, likenesses,
voices and biographical information of real persons, and all license agreements
and other agreements granting rights relating to any of the foregoing.
"Intellectual Property Assignments" shall have the meaning set forth in
Section 7.19.
"Xxxx Xxxxxxx Opinion" shall have the meaning set forth in Section
6.3(g).
"Knowledge", "know", "known", and all other words of similar meaning,
whether or not capitalized, when used with respect to the Seller, the Companies,
or any of their respective Subsidiaries, shall mean the knowledge of any of
Xxxxxxx X. Xxxxxxxxx, Xxxxx X. Xxxxx, Xxxxxxx X. X'Xxxx, Xxxxxxxxx Xxxxxxxx,
Xxxxx Xxxxxxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxx, or Xxxxx X. Xxxxxx, including
knowledge which was obtained after reasonable inquiry of Xxxx Xxxxxxx, Xxxxxxx
Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxx and Xxxxxxx Xxxxxxx.
"Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP Opinion" shall have the meaning
set forth in Section 6.2(i).
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"Leased Property" shall have the meaning set forth in Section 4.16(a).
"Leases" shall have the meaning set forth in Section 4.16(a).
"Liabilities" shall have the meaning set forth in Section 4.13.
"License Agreements" shall have the meaning set forth in Section
4.19(a).
"Liquidated Damage Amount" shall have the meaning set forth in Section
6.9(b)(ii).
"Litigation" shall have the meaning set forth in Section 4.6.
"Losses" shall have the meaning set forth in Section 5.3(a).
"MADSP" shall have the meaning set forth in Section 2.7.
"Material Agreements" shall have the meaning set forth in Section
4.27(a).
"Material Adverse Change" shall mean any material adverse change in the
condition (financial or otherwise), results of operations, assets, liabilities,
properties, or business of the Companies, taken as a whole, other than a
material adverse change that arises out of or results from the announcement or
consummation of the transactions contemplated by this Agreement.
"Material Adverse Effect" shall mean any change, event or condition of
any character, taken together with any and all other acts, omissions,
conditions, changes, or events of any character which constitute breaches or
violations of any representation or warranty herein, including any
representation or warranty which has expired pursuant to Section 5.2, that is
qualified by Material Adverse Effect, which, in the aggregate, has had or is
reasonably likely to have a material adverse effect on the condition (financial
or otherwise), results of operations, assets, liabilities, properties, or
business of the Companies taken as a whole or which is reasonably likely to
prevent or delay the consummation of the transactions contemplated hereby.
"Minimum Tangible Net Assets Requirement" shall have the meaning set
forth in Section 2.3(a).
"Non-U.S. Anti-Trust Law" shall mean any anti-trust or similar law of
any Governmental Authority other than a Governmental Authority within the United
States.
"Outstanding OHEAC Capital Stock" shall have the meaning set forth in
Section 4.10(a).
"Outstanding O'Gara Company Capital Stock" shall have the meaning set
forth in Section 4.10(b).
"Outstanding OSA Capital Stock" shall have the meaning set forth in
Section 4.10(c).
"Owned Property" shall have the meaning set forth in Section 4.16(a).
"Permitted Encumbrances" shall mean any and all mechanics' liens,
workmen's liens, common carrier liens, warehousemen's liens and other similar
liens or Encumbrances incurred in
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the ordinary course of business and any and all restrictions, easements or other
imperfections of title or Encumbrances on any Real Property or other property or
asset that do not materially diminish the value thereof or materially interfere
with the use thereof in the operations of the Companies and the Company
Subsidiaries.
"Person" whether or not capitalized, shall mean any natural person,
corporation, unincorporated organization, partnership, limited liability
company, association, joint stock company, joint venture, trust or government,
or any agency or political subdivision of any government or any other entity.
"Post-Closing Settlement" shall have the meaning set forth in Section
2.3(d).
"Principal Stockholder Releases" shall have the meaning set forth in
Section 6.2(n).
"Product" shall have the meaning set forth in Section 4.29.
"Projections" shall have the meaning set forth in Section 4.42.
"Purchaser Indemnified Parties" shall have the meaning set forth in
Section 5.6(a).
"Purchase Price" shall have the meaning set forth in Section 2.2(a).
"Purchaser" shall have the meaning set forth in the preamble hereof.
"Purchaser's Certificates" shall have the meaning set forth in Section
6.3(c).
"Purchaser's Fairness Opinion" shall mean the opinion of Bear, Xxxxxxx
& Co. Inc. that the Securities to be received by the Purchaser in exchange for
the Purchase Price are fair to the stockholders of AHI from a financial point of
view.
"Real Property" shall have the meaning set forth in Section 4.16(a).
"Real Property Permits" shall have the meaning set forth in Section
4.16(d).
"Related Costs" shall have the meaning set forth in Section 5.6(a).
"Related Party" shall have the meaning set forth in Section 4.21.
"Registration Statement" shall have the meaning set forth in Section
7.13.
"Review Period" shall have the meaning set forth in Section 2.3(b).
"SEC" shall mean the Securities and Exchange Commission of the United
States.
"Securities" shall mean, individually and/or collectively, the
Outstanding OHEAC Capital Stock, the Outstanding O'Gara Company Capital Stock,
and the Outstanding OSA Capital Stock.
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"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Seller" shall have the meaning set forth in the preamble hereof.
"Seller's Chief Financial Officer's Certificates" shall have the
meaning set forth in Section 6.2(e).
"Seller's Closing Tax Returns" shall have the meaning set forth in
Section 5.6(d).
"Seller's Fairness Opinion" shall mean the opinion of Xxxxxx Securities
Incorporated that the Purchase Price to be received by the Seller in exchange
for the capital stock of the Companies is fair to the stockholders of the Seller
from a financial point of view.
"Seller's Officers' Certificates" shall have the meaning set forth in
Section 6.2(d).
"Seller's Taxes" shall have the meaning set forth in Section 5.6(c).
"Software" shall mean any and all (i) computer programs, including any
and all software implementations of algorithms, models and methodologies,
whether in source code or object code form, (ii) databases, compilations, and
any other electronic data files, including any and all collections of data,
whether machine readable or otherwise, (iii) descriptions, flow-charts,
technical and functional specifications, and other work product used to design,
plan, organize, develop, test, troubleshoot and maintain any of the foregoing,
(iv) without limitation to the foregoing, the software technology supporting any
functionality contained on any of the Companies' Internet site(s), and (v) all
documentation, including technical, end-user, training and troubleshooting
manuals and materials, relating to any of the foregoing.
"Straddle Returns" shall have the meaning set forth in Section 5.6(d).
"Subsidiary" of any Person shall mean any Person, whether or not
capitalized, in which such Person owns, directly or indirectly, an equity
interest of more than fifty percent (50%), or which may be controlled, directly
or indirectly, by such Person.
"Sultan Receivable" shall have the meaning set forth in Section
2.3(f)(ii).
"Tangible Net Assets" shall mean (i) assets of the Companies set forth
on Schedule 2.3 hereof, which in no event shall include balances for
intercompany accounts receivable, deferred tax assets, net goodwill, net
intangibles, or investments in subsidiaries less (ii) the liabilities of the
Companies set forth on Schedule 2.3 hereof, which in no event shall include
balances for any revolving line of credit of the Seller or any of the Companies,
the current portion of long term debt, intercompany payables, deferred taxes,
long tem debt, other long-term obligations, or the eliminating
differences/balance account but shall include any debt related to fixed assets
acquired as part of the transactions contemplated hereby and a provision for
"risk in France" in the amount of $62,000.
"Tangible Property" shall have the meaning set forth in Section 4.15.
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"TACOM" shall have the meaning set forth in Section 2.3(f)(i).
"TACOM Excess" shall have the meaning set forth in Section 2.3(f)(i).
"Tax Group" shall have the meaning set forth in Section 4.26.
"Tax Election" shall have the meaning set forth in Section 2.7.
"Tax Notification Periods" shall have the meaning set forth in Section
5.6(f).
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Termination Date" shall mean June 30, 2001; provided, however, that
the Termination Date shall be extended daily until ten (10) days after the
Registration Statement is declared effective; but in no event later than
September 14, 2001. Notwithstanding the immediately preceding sentence, if the
Seller chooses to seek the approval of its shareholders of this Agreement or the
transactions contemplated hereby as a result of either (i) the issuance of an
order by a Governmental Authority enjoining the consummation of the transactions
contemplated hereby by reason of the failure of the Seller to obtain the
approval of its shareholders of this Agreement and the transactions contemplated
hereby or (ii) the inability of the Seller to deliver the Bring Down Closing
Date Legal Opinion due to a change in Ohio law, the Termination Date shall be
extended for an additional ninety (90) days after the date such order is issued
or such law is changed.
"TNA Aircraft Adjustment" shall have the meaning set forth in Section
7.21.
"Transaction Expenses" shall have the meaning set forth in Section 6.9.
"Transferred Company Subsidiaries" shall have the meaning set forth in
Section 7.15(e).
"Uncollected Receivables" shall have the meaning set forth in Section
2.5(b).
ARTICLE II.
PURCHASE OF SECURITIES; CONSIDERATION
2.1 Purchase of Securities. Subject to the terms and conditions set forth
herein, on the Closing Date, the Seller shall sell to Purchaser, and Purchaser
shall purchase from the Seller, all of the Seller's right, title and interest in
and to the Securities, which shall collectively constitute one hundred percent
(100%) of the issued and outstanding capital stock of each of the Companies. At
the Closing, the Seller shall deliver to Purchaser all of the certificates
representing the Securities together with stock powers separate from the
certificates duly executed by the Seller in blank and sufficient to convey to
Purchaser good title to all of the
9
Securities free and clear of any and all Encumbrances of any nature whatsoever,
other than restrictions arising under applicable securities laws or Encumbrances
placed thereon by Persons claiming by, through or under Purchaser.
2.2 Consideration
(a) Subject to adjustment as set forth in Section 2.3, the aggregate
purchase price for the Securities shall be up to Fifty-six Million Five Hundred
Thousand ($56,500,000) Dollars (the "Purchase Price"), payable by Purchaser to
the Seller as follows:
(i) $53,000,000 (the "Closing Payment") shall be payable in cash by
wire transfer of immediately available funds at the Closing (the
"Cash at Closing");
(ii) $1,500,000 (the "Escrow Amount") shall be deposited by the
Purchaser with the Escrow Agent on the Closing Date, which amount
shall be held and distributed, subject to the set-offs, if any,
authorized herein, pursuant to the terms and provisions hereof
and the Escrow Agreement; and
(iii) Contingent upon and subject to the achievement of the Gross
Profit to the extent set forth in Section 2.5 below, up to
$2,000,000 (the "Deferred Consideration").
(b) Notwithstanding anything else contained herein, in the sole and
exclusive discretion of AHI and the Purchaser, up to $15,000,000 of the Closing
Payment, may be paid by the issuance of duly authorized and nonassessable shares
(the "Consideration Shares") of AHI's common stock, par value $.01 per share
(the "AHI Common Stock"). For purposes of determining the number of shares of
AHI Common Stock which shall constitute the Consideration Shares issued as a
portion of the Closing Payment or the Escrow Amount, the value of AHI Common
Stock shall be determined based upon the Average Closing Price with respect to
the Closing Date. For purposes of determining the number of shares of AHI Common
Stock which shall constitute the Consideration Shares issued as a portion of the
Deferred Consideration, the value of AHI Common Stock shall be determined based
upon the Average Closing Price with respect to the date of issuance of such
shares of AHI Common Stock.
2.3 Certain Closing Adjustments and Covenants.
(a) The Purchase Price shall be reduced dollar for dollar to the extent
that the Tangible Net Assets, as set forth in the Closing Date Balance Sheet are
less than $37,392,000 (the "Minimum Tangible Net Assets Requirement").
(b) For purposes of calculating the Tangible Net Assets, the Purchaser's
independent accountants shall conduct a post-closing audit of the Companies
promptly after the Closing and within 75 days following the Closing Date, the
Purchaser shall deliver to the Seller a balance sheet of the Companies as at the
Closing Date, prepared in accordance with GAAP applied on a basis consistent
with the Financial Statements (the "Closing Date Balance Sheet"). The Seller and
its accountants shall be afforded access to and shall review the books and
records
10
of the Companies and the workpapers of the Purchaser and its accountants in
connection with the preparation of the Closing Date Balance Sheet. The Closing
Date Balance Sheet shall become final and binding upon the parties unless,
within 30 days following delivery to the Seller (such 30 day period hereinafter
referred to as the "Review Period"), notice is given by the Seller to the
Purchaser of the Seller's dispute of the Closing Date Balance Sheet, setting
forth in reasonable detail the Seller's basis for such objection. If notice of
dispute is timely given by the Seller, the parties shall work together in good
faith to resolve such dispute.
(c) If the parties are unable to reach agreement within 30 days after
notice of dispute has been received by the Purchaser, the dispute shall be
referred for resolution to Ernst & Young (the "Determining Accountants") as
promptly as practicable. The Determining Accountants will make a determination
as to each item in dispute, which determination will be (i) in writing, (ii)
furnished to AHI, the Purchaser, and the Seller as promptly as practicable after
the items in dispute have been referred to the Determining Accountants, (iii)
made in accordance with this Agreement, and (iv) conclusive and binding upon
each party hereto. Each of Purchaser and the Seller will use reasonable efforts
to cause the Determining Accountants to render its decision as soon as
reasonably practicable, including without limitation by promptly complying with
all reasonable requests by the Determining Accountants for information, books,
records and similar items.
(d) If any post-closing adjustment or other set-off is required or
permitted to be made pursuant hereto, the settlement thereof (the "Post-Closing
Settlement") shall take place at the offices of Xxxx Xxxxxxx, P.C. at 10:00 a.m.
local time on the fifth business day following the end of the Review Period, or
in the event such matter has been referred to the Determining Accountants, on
the fifth business day following the date upon which the written determination
of the Determining Accountants becomes final and binding upon the parties, or at
such other time and place as the Purchaser and the Seller may mutually agree in
writing. The Purchaser shall first set-off and deduct from the Escrow Amount the
amount of the Post-Closing Settlement; provided, however, that the Purchaser
shall first set off and deduct from the Escrow Amount any Consideration Shares
held by the Escrow Agent pursuant to the Escrow Agreement, such shares to be
valued for purposes of such set off and deduction at the Average Closing Price
with respect to the date of release of such Consideration Shares from the Escrow
Agreement. If the Post-Closing Settlement shall exceed the Escrow Amount, the
amount of such excess shall be a liability of the Seller to Purchaser and shall
be paid by the Seller to the Purchaser at the Post-Closing Settlement by
certified or cashier's check. The fees and expenses of each party's respective
accountants shall be borne by such party. The fees and expenses of the
Determining Accountants incurred in connection with its review and determination
shall be borne one-half by the Purchaser and one-half by the Seller.
(e) In order to secure the Post-Closing Settlement, the indemnification
obligations of the Seller pursuant to Section 5.3(a), 5.6, 5.7 and 7.13(c), and
the obligations of the Seller pursuant to Sections 5.6(d) and 7.9, the Purchaser
shall place the Escrow Amount in escrow with the Escrow Agent pursuant to the
terms of the Escrow Agreement. The Escrow Amount shall be held and released
pursuant to and in accordance with the terms of the Escrow Agreement. The Escrow
Agreement shall provide that the Escrow Amount will be released upon the later
of the Payment of the Post-Closing Settlement pursuant to Section 2.3 and the
Seller's satisfaction of its obligations set forth in Section 7.9.
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(f) The parties agree that for the purposes of calculating the Purchase
Price, preparing the Closing Date Balance Sheet, and calculating the Tangible
Net Assets, the parties, and the Determining Accountants, shall take into
account, in addition to the provisions of Sections 2.3(a)-(e), the following:
(i) With respect to any account receivable owed to any one or more of
the Companies by the United States Tank Automotive Armored
Command ("TACOM"), only the amount that such Company and TACOM
agree in writing is due and owing by TACOM to such Company as of
the Closing Date shall be included on the Closing Date Balance
Sheet as an account receivable. The Purchase Price shall be
reduced dollar for dollar by an amount equal to the excess of the
amount that such Company asserts is due and owing from TACOM as
of the Closing Date over the amount TACOM admits is due and owing
to such Company as of the Closing Date (the "TACOM Excess"). Any
portion of the TACOM Excess which is paid by TACOM and collected
by such Company after the Closing Date shall be promptly remitted
by such Company to the Seller.
(ii) The Purchase Price shall be reduced dollar for dollar by the
amount of the outstanding receivable, in the approximate amount
of $223,000, owed to one of the Companies by Saudi Arabian Prince
Sultan (the "Sultan Receivable") to the extent the Sultan
Receivable is outstanding on the Closing Date. At the Closing,
the Purchaser shall assign to the Seller or its designee the
obligation represented by the Sultan Receivable. All payments
received by any Company from Prince Sultan with respect to any
account receivable shall be applied first to any undisputed,
unpaid portion of the Sultan Receivable.
(iii) The Seller shall use commercially reasonable efforts to resolve
the matters listed on Schedule 2.3(f). The Purchase Price shall
be reduced dollar for dollar for any matters listed on Schedule
2.3(f) that are unresolved at Closing.
(iv) If, prior to the Closing, the Seller has not settled all
outstanding tax claims by Governmental Authorities in Brazil
against X'Xxxx-Xxxx & Xxxxxxxxxx do Brasil LTDA, the purchase
price shall be reduced by $750,000, unless X'Xxxx-Xxxx &
Xxxxxxxxxx do Brasil LTDA has obtained an insurance policy in a
form reasonably acceptable to AHI, the premium for which shall be
paid by the Seller, insuring such tax claims in an amount not
less than $3,000,000 To the extent such taxes and any associated
costs and expenses are finally resolved for less than $750,000,
the difference between $750,000 and the amount of such final
resolution shall be promptly remitted to the Seller.
12
(v) The Purchase Price shall be reduced dollar for dollar to the
extent that the Taxes indicated on Schedule 4.26 as being
contested in good faith exceed $100,000 (other than Taxes set
forth on Schedule 2.3(f) and the Taxes for which indemnification
is provided in Section 5.7); provided, however, that if any
amount being contested which results in a Purchase Price
adjustment is determined in a final, non-appealable decision of a
Governmental Authority not to be owed by the Companies, such
amount shall be promptly remitted to the Seller.
2.4 [Intentionally Omitted]
2.5 Calculation of Deferred Consideration
(a) If the Companies' Gross Profit (as defined below) shall equal or exceed
$27,832,000, then the Deferred Consideration shall equal $2,000,000. If the
Companies' Gross Profit shall be less than $27,832,000 but shall equal or exceed
$26,400,000, then the Deferred Consideration shall be $1,000,000. If the
Companies' Gross Profit shall be less than $26,400,000, then there shall be no
Deferred Consideration. Any Deferred Consideration to be paid to the Seller
shall be reduced dollar for dollar by the amount of any Uncollected Receivables,
but shall not be reduced to less than $0. All Uncollected Receivables credited
against the Deferred Consideration shall be transferred to the Seller or its
designee.
(b) "Gross Profit", for purposes of calculating Deferred Consideration,
shall mean the excess of (i) the combined revenue of the Companies for the
twelve month period ended December 31, 2001 over (ii) combined costs of sales of
the Companies for such twelve month period, all as determined in accordance with
GAAP consistently applied with prior periods, reduced by the amount of (x) any
one-time, non-recurring costs or operating expenses which arose from or are
related to prior periods, and (y) the amount of (i) any accounts receivable,
after giving effect to corresponding reserves set forth on the Closing Date
Balance Sheet, which are uncollected as of the date of calculation and (ii) any
accounts receivable included within the costs in excess of xxxxxxxx account set
forth on the Closing Date Balance Sheet which are uncollected as of the date of
calculation ("Uncollected Receivables") and shall be calculated on a combined,
stand-alone basis for the Companies and shall include a reasonable allocation of
overhead by AHI to the Companies or reasonable allocation of overhead by AHI
which is reasonably related to the generation of the Gross Profit. For purposes
of calculating Gross Profit, the property and equipment purchased by one of the
Companies from Longline Leasing, Incorporated shall be amortized over one year.
(c) The Purchaser shall use reasonable efforts to calculate the amount of
the Gross Profit and the amount, if any, of Deferred Consideration payable to
the Seller hereunder as soon as reasonably practicable, but in no event later
than May 15, 2002. The Deferred Consideration shall be paid within 15 days after
the determination of the Gross Profit.
2.6 Resale of Consideration Shares. The Seller shall sell or otherwise
dispose of the Consideration Shares solely in accordance with the procedures set
forth on Schedule 2.6. The obligations of AHI and the Purchaser under Schedule
2.6 are absolute and unconditional, except
13
as expressly set forth on Schedule 2.6, and neither AHI nor the Purchaser shall
have any right of set off, counterclaim, deduction or other diminution of any
kind whatsoever with respect to any claim for indemnification under this
Agreement or otherwise with respect to such obligations.
2.7 Section 338(h)(10) and Section 338(g) Elections. At the election of the
Purchasers, the Seller and the Purchaser agree to make irrevocable, timely, and
effective joint elections provided under Section 338(h)(10) of the Code
(including under any comparable statutes in any other jurisdiction) with respect
to all acquired U.S. Companies and Companies Subsidiaries and to make
irrevocable, timely, and effective elections under Section 338(g) of the Code
for the non U.S. Companies and the non U.S. Company Subsidiaries. Such elections
(the "Tax Elections") shall be in accordance with the Code and the regulations
promulgated thereunder and other applicable laws. Based on the actual date of
Closing, the Purchaser shall notify the Seller as to the exact date by which the
Tax Elections must be made. In the event that the Purchaser elects to make the
Tax Elections, the Purchaser shall give timely notice thereof to the Seller, and
the Seller and such Companies shall each cooperate with the Purchaser in order
to facilitate the Tax Elections, and the Purchaser, the Seller, and the
Companies shall jointly file an IRS Form 8023 ("Tax Election Form") on a timely
basis. Prior to Closing, Purchaser and Seller shall use their best efforts to
agree on the calculations which shall be used concerning (i) the assets deemed
purchased pursuant to the Section 338(h)(10) or 338(g) Tax Elections contained
in this Section 2.7, (ii) the computation of the Modified Aggregate Deemed Sale
Price (as defined under applicable Treasury Regulations) ("MADSP"), and (iii)
the allocation of such MADSP among such assets. The Seller shall be responsible
for all Taxes attributable to the Section 338(h)(10) or 338(g) Tax Elections
(whether payable on a consolidated return including, or separate returns of,
such Companies) other than those taxes described in Section 5.6(b). The Seller
shall indemnify and pay AHI and the Purchaser for the loss of any Tax Benefits
of AHI and reasonable fees and expenses of the Purchaser as a result of a
failure or refusal of the Seller to make the Section 338(h)(10) or 338(g) Tax
Elections provided Purchaser shall have given adequate notice to Seller pursuant
to this Section 2.7.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
In order to induce the Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, AHI and the Purchaser, jointly
and severally, make the representations and warranties set forth below to the
Seller.
3.1 Organization; Standing and Power. Each of AHI and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. AHI and the Purchaser have all requisite right, power
and authority to execute, deliver and perform this Agreement and the other
agreements and documents contemplated hereby to be executed by them and to
consummate the transactions contemplated hereby and thereby.
3.2 Authorization; Enforceability. The execution, delivery and performance
of this Agreement and all other agreements and documents to be executed by AHI
or Purchaser in connection with the transactions contemplated hereby and the
consummation by AHI and Purchaser of the transactions contemplated hereby and
thereby have been and will be duly authorized by all requisite corporate action
on the part of each of AHI and Purchaser. This
14
Agreement has been, and all other agreements and documents contemplated hereby
to be executed and delivered by AHI and Purchaser, when so executed and
delivered, will have been, duly executed and delivered by AHI and Purchaser and
constitute or will constitute the legal, valid and binding obligations of AHI or
Purchaser, as the case may be, enforceable against them in accordance with their
respective terms, except to the extent that such enforcement is limited by
bankruptcy, insolvency, reorganization or other laws relating to or affecting
the enforcement of creditors' rights generally and by general principles of
equity.
3.3 No Violation or Conflict. The execution, delivery and performance of
this Agreement and the other agreements and documents contemplated hereby to be
executed by AHI or Purchaser and the consummation by AHI and Purchaser of the
transactions contemplated hereby and thereby do not violate or conflict with any
(a) Applicable Law or any writ, order or decree of any court or Governmental
Authority, the violation of which would interfere in any material respect with
AHI's or Purchaser's ability to consummate the transactions contemplated hereby,
(b) any provision of AHI's or Purchaser's respective certificate of
incorporation or bylaws, or (c) any instrument or material agreement to which
AHI or the Purchaser is a party or by which AHI or the Purchaser or their
respective properties is bound.
3.4 Consent of Governmental Authorities. No consent, approval or
authorization of, or registration, qualification or filing with any Governmental
Authority is required to be made by AHI or Purchaser in connection with the
execution, delivery or performance by AHI and Purchaser of this Agreement or the
other agreements or documents contemplated hereby to be executed and delivered
by AHI and the Purchaser, or the consummation by AHI and Purchaser of the
transactions contemplated hereby or thereby, other than (a) as required by the
Securities Act with respect to the issuance of the Consideration Shares and (b)
any filing and approval required under the HSR Act or any Non-U.S. Anti-Trust
Law.
3.5 Brokers. Except for Bear, Xxxxxxx & Co. Inc. and as set forth on
Schedule 3.5 hereto, AHI and Purchaser have not employed any financial advisor,
broker or finder and have not incurred and will not incur any broker's,
finder's, investment banking or similar fees, commissions or expenses, in
connection with the transactions contemplated by this Agreement. AHI and
Purchaser shall be responsible for payment of the commissions and fees of Bear,
Xxxxxxx & Co. Inc. and any other Person set forth on Schedule 3.5 hereto.
3.6 Public Documents; Compliance. The forms, reports, schedules,
registration statements, and documents filed by AHI with the SEC (i) complied as
to form in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, each as in effect on the date so filed or
amended, and (ii) did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading (in each case as of the respective dates that
they were filed with the SEC, or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing). All forms,
reports, schedules, registration statements and documents required to be filed
by AHI with the SEC under the Securities Act and the Exchange Act have been
filed on a timely basis for the last 12 months and AHI is eligible to file a
registration statement on Form S-3 under the Securities Act. Since the date of
the latest financial statements of AHI included in any report filed by AHI with
the SEC, there has been no material adverse change in the condition (financial
15
or otherwise), results of operations, assets, liabilities or business of AHI and
its Subsidiaries, taken as a whole. AHI has previously delivered to the Seller
copies of AHI's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K filed by it with the SEC since January 1, 2000 and
AHI's Registration Statement on Form S-3, Registration No. 333-75053.
3.7 Consideration Shares. Any Consideration Shares to be issued pursuant to
Section 2.2(b) have been, or upon issuance will be, duly authorized, validly
issued, fully paid and non-assessable.
3.8 Registration Statement. The Registration Statement, at the time it is
filed and at the time it is declared effective, will comply as to form in all
material respects with the requirement of the Securities Act and will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make statements
therein, in light of the circumstances under which they are made, not
misleading.
3.9 Litigation. There are no actions, suits, investigations, arbitrations,
claims or proceedings pending or, to the knowledge of AHI or Purchaser,
threatened before any court or by or before any Governmental Authority or
arbitrator against AHI or the Purchaser, or any of their respective directors or
officers, as such, relating to the transactions contemplated by this Agreement
or that might prevent or delay the consummation of such transaction.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANIES
In order to induce Purchaser and AHI to enter into this Agreement and to
consummate the transactions contemplated hereby, the Seller and each of the
Companies jointly and severally, make the representations and warranties set
forth below to Purchaser and to AHI. For purposes of this Article IV, all
references to the Companies shall, unless the context clearly indicates
otherwise, be deemed to include each Company and each of their respective
Company Subsidiaries.
4.1 Organization
(a) The Seller and each of the Companies is a corporation duly organized,
validly existing and in good standing (or applicable concept in its jurisdiction
of incorporation) under the laws of the jurisdiction of its incorporation or
formation. Each of the Companies, other than the Company Subsidiaries, is duly
qualified to transact business as a foreign corporation in all jurisdictions
where the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified is not
reasonably likely to have a Material Adverse Effect. Each jurisdiction in which
any of the Companies, other than the Company Subsidiaries, is so qualified is
listed on Schedule 4.1(a) hereto. Each of the Companies, other than the Company
Subsidiaries, has the requisite power and authority to (i) own or lease and
operate its properties and (ii) conduct its business as presently conducted.
(b) Set forth on Schedule 4.1(b) hereto is a complete and accurate list of
Persons with respect to which any of the Companies beneficially owns, directly
or indirectly, any of the outstanding stock or other ownership interests of such
Person (the "Company
16
Subsidiaries") and such Company's percentage ownership of each such Company
Subsidiary. Schedule 4.1(b) lists each third-party which beneficially owns,
directly or indirectly, any of the outstanding stock or other ownership
interests of any Company Subsidiary and such third-party's percentage ownership
therein. Except as set forth on Schedule 4.1(b), there is no other Person with
respect to which: (i) any Company beneficially owns, directly or indirectly, any
outstanding stock or other ownership interests of such Person; (ii) any Company
may be deemed to be in control because of factors or relationships other than
the quantity of stock or other interests owned; (iii) any Company may be liable
under any circumstances for the payment of additional amounts with respect to
its interest, whether in the form of assessments, capital calls, installment
payments, general partner liability or otherwise; or (iv) any Company's
investment is accounted for by the equity method. Other than Seller, the
Companies with respect to the Company Subsidiaries, and the Company Subsidiaries
with respect to their Subsidiaries, no Person controls any of the Companies or
any of the Company Subsidiaries, whether by contract or otherwise. Each Company
Subsidiary is duly organized, validly existing and in good standing under the
laws of its jurisdiction of formation, which jurisdictions are set forth on
Schedule 4.1(b). Each Company Subsidiary is duly qualified to transact business
as a foreign corporation in all jurisdictions where the ownership or leasing of
its properties or the conduct of its business requires such qualification,
except where the failure to be so qualified is not reasonably likely to have a
Material Adverse Effect. Each jurisdiction in which a Company Subsidiary is so
qualified is listed on Schedule 4.1(b). Each Company Subsidiary has the
requisite power and authority to (i) own or lease and operate its properties and
(ii) conduct its business as presently conducted.
4.2 Authorization; Enforceability. The Seller and each Company has all
requisite corporate power and corporate authority to execute, deliver and
perform this Agreement and the other agreements and documents contemplated
hereby to be executed by them and to consummate the transactions contemplated
hereby and thereby. This Agreement and all other documents to be executed and
delivered by the Seller or any of the Companies, as the case may be, in
connection with the transactions contemplated hereby have been and will be duly
authorized by all requisite corporate action on the part of the Seller or any of
the Companies, as the case may be. This Agreement has been, and all other
agreements and documents contemplated hereby to be executed and delivered by the
Seller or any of the Companies will have been, duly executed and delivered and
constitute or will constitute the legal, valid and binding obligations of the
Seller or the Companies, as the case may be, enforceable against them in
accordance with their respective terms, except to the extent that such
enforcement is limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors' rights generally and by
general principals of equity.
4.3 No Violation or Conflict. The execution, delivery and performance of
this Agreement by the Seller and each of the Companies and the consummation by
the Seller and each of the Companies of the transactions contemplated hereby:
(a) do not violate or conflict with any provision of the Seller's or any
Company's certificate or articles of incorporation or bylaws or code of
regulations, as the case may be; (b) do not violate or conflict with any
provision of any Applicable Law or any writ, order or decree of any court or
Governmental Authority other than a violation or a conflict which would not have
a Material Adverse Effect; and (c) except as set forth on Schedule 4.3 hereto,
do not, with or without the passage of time or the giving of notice, result in
the material breach of, or constitute a material default, give rise to a
material right of termination, cancellation or acceleration of performance or
loss of material
17
benefit, or result in the creation of any material Encumbrance upon any material
property or assets of any of the Companies pursuant to any Material Agreement to
which the Seller or any of the Companies is a party or by which the Seller or
any of the Companies or their respective properties is bound or affected. Except
as set forth on Schedule 4.3, the consummation of the transactions contemplated
hereby will not require the notification or consent of any third party to any
Material Agreement.
4.4 Consents of Governmental Authorities. Except as set forth on Schedule
4.4, no consent, approval or authorization of, or registration, qualification or
filing with any Governmental Authority, is required to be made by the Seller or
any of the Companies in connection with the execution, delivery or performance
of this Agreement by the Seller or any of the Companies or the consummation by
the Seller or any of the Companies of the transactions contemplated hereby,
other than any filing and approval required under the HSR Act or Non-U.S.
Anti-Trust Law.
4.5 Conduct of Business. Except as disclosed on Schedule 4.5 hereto, since
December 31, 2000, each of the Companies has conducted its businesses in the
ordinary and usual course consistent with past practices and there has not
occurred any Material Adverse Change. Without limiting the generality of the
foregoing, except as disclosed on Schedule 4.5, since December 31, 2000, none of
the Companies has: (a) amended its certificate or articles of incorporation or
bylaws or code of regulations, as the case may be; (b) issued, sold or
authorized for issuance or sale, shares of any class of its securities
(including, but not limited to, by way of stock split or dividend) or any
subscriptions, options, warrants, rights or convertible securities or entered
into any agreements or commitments of any character obligating it to issue,
sell, redeem, purchase, or register any such securities; (c) redeemed, purchased
or otherwise acquired, directly or indirectly, any shares of its capital stock
or any option, warrant or other right to purchase or acquire any such shares;
(d) declared or paid any dividend or other distribution (whether in cash, stock
or other property) with respect to its capital stock other than dividends or
other distributions among the Companies and the weekly payments by OHEAC to the
Seller as set forth on Schedule 4.5; (e) suffered any material damage,
destruction or loss, whether or not covered by insurance, (f) sold, leased, or
disposed of any material assets or property of such Company other than in the
ordinary course of business; (g) granted or made any mortgage or pledge or
subjected itself or any of its properties or assets to any Encumbrance of any
kind, except liens for Taxes not currently due; (h) made or committed to make
any capital expenditures in excess of $50,000 in any single case or in excess of
an aggregate of $400,000 through the date hereof; (i) become subject to any
Guaranty; (j) materially changed any accounting method used by such Company or
been affected by any material change in any accounting method used by the
Seller; (k) granted any increase in the compensation payable or to become
payable to directors, officers, employees (including, without limitation, any
such increase pursuant to any bonus, pension, profit-sharing or other plan or
commitment), except, with respect to non-officer employees, customary annual
increases consistent with past practices; (l) materially amended or terminated
any existing Material Agreement or received written notice or, to the Seller's
knowledge, oral notice of any such amendment or termination; (m) experienced any
strike, material work stoppage or material slowdown; (n) received written notice
or, to the Seller's knowledge, oral notice of any Material Adverse Change in its
relationship with any financial institution, customer or supplier with which it
currently does business, or (o)
18
entered into any agreement to do any the foregoing. SARL Essonne Securite has
conducted no business since its inception.
4.6 Litigation; Disputes. Except as set forth on Schedule 4.6 and as
described in Section 5.7, there are no actions, suits, investigations,
arbitrations, claims or proceedings ("Litigation") pending or, to the knowledge
of the Seller or any of the Companies, threatened before any court or by or
before any Governmental Authority, (a) against (as plaintiff or defendant) any
of the Companies or (b) against (as plaintiff or defendant) the Seller relating
to the Securities or the transactions contemplated by this Agreement other than
Litigation which is not reasonably likely to have a Material Adverse Effect. To
the Seller's knowledge Schedule 4.6 together with Section 5.7 sets forth a
complete and accurate list and description of any material Litigation commenced
against any of the Companies in the last three (3) years. To the knowledge of
the Seller no material dispute or claim exists between any of the Companies and
any of their customers, suppliers, or distributors that could reasonably be
expected to have a Material Adverse Effect.
4.7 Brokers. Except as set forth on Schedule 4.7 hereto, neither the Seller
nor the Companies has employed any financial advisor, broker or finder, and
neither of them has incurred or will incur any other broker's, finder's,
investment banking or similar fees, commissions or expenses in connection with
the transactions contemplated by this Agreement. The Seller shall be solely
responsible for all fees, commissions, and expenses of any Person set forth on
Schedule 4.7 hereto incurred in connection with the transactions contemplated by
this Agreement.
4.8 Compliance. Each of the Companies is in compliance with all Applicable
Law including, but not limited to, those relating to (a) the development,
manufacture, distribution, marketing and sale of products and services and (b)
the bidding for contracts by and the conduct of business by federal or state
contractors, except where the failure to be in compliance would not have a
Material Adverse Effect. Except as set forth on Schedule 4.8, none of the
Companies is subject to any material judicial, governmental or administrative
order, judgment or decree and the Seller is not subject to any material
judicial, governmental or administrative order, judgment or decree. Attached
hereto as Schedule 4.8 are true and correct copies of all reports of material
inspections of each of the Company's business and properties which occurred
during the past three (3) years through the date hereof, under Applicable Laws
which resulted in the imposition of a material fine, penalty, or other material
restrictions. Neither the Seller nor any of the Companies has received written
notice, or has knowledge of any oral notice, of any material violation (or any
investigation, inspection, audit, or other proceeding by any Governmental
Authority involving an allegation of any material violation) of any material
Applicable Law by or affecting any of the Companies, and to the knowledge of the
Seller and each of the Companies, no investigation, inspection, audit, or other
proceeding by any Governmental Authority involving an allegation of material
violation of any material Applicable Law is threatened or contemplated.
4.9 Charter, Bylaws, Code of Regulations and Corporate Records. A true,
correct and complete copy of (a) the certificate or articles of incorporation of
the Seller and each of the Companies, as amended and in effect on the date
hereof, (b) the bylaws or code of regulations of the Seller and each of the
Companies, as amended and in effect on the date hereof, and, if any of
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the Company Subsidiaries is not a corporation, the organizational and
operational documents of such Company Subsidiary, and (c) the stock ledgers and
stock transfer records of each of the Companies has previously been made
available to the Purchaser. The minute books of each of the Companies have
previously been made available to the Purchaser. Such minute books contain
complete and accurate, in all material respects, records of all meetings and
other corporate actions of the board of directors, committees of the board of
directors, incorporators and shareholders of each of the Companies from the date
of its incorporation to the date hereof. All such meetings were duly called and
held, and a quorum was present and acting throughout each such meeting, except
as disclosed in such minute books. Such stock ledgers and stock transfer records
reflect all issuances and registrations of transfer of all shares of capital
stock of the Companies, and certificates representing all canceled shares of
capital stock have been returned to the stock ledger, except as to which the
relevant Company has received a lost certificate affidavit from the registered
owner (or their lawful representative) of the shares evidenced thereby.
4.10 Capitalization of the Companies
(a) X'Xxxx-Xxxx & Xxxxxxxxxx Armoring Company. The authorized capital stock
OHEAC consists of (i) 100,000 shares of common stock, no par value, of which
13,625 shares are issued and outstanding and owned by the Seller and (ii) no
shares of preferred stock (such outstanding common stock, the "Outstanding OHEAC
Capital Stock"). All shares of the Outstanding OHEAC Capital Stock have been
duly authorized, are validly issued and outstanding, and are fully paid and
nonassessable. No securities issued by OHEAC from the date of its incorporation
to the date hereof were issued in violation of any statutory or common law
preemptive rights. There are no dividends which have accrued or been declared
but are unpaid on the Outstanding OHEAC Capital Stock. All Taxes required to be
paid in connection with the issuance and any transfers of the Outstanding OHEAC
Capital Stock have been paid. All permits or authorizations required to be
obtained from or registrations required to be effected with any Governmental
Authority in connection with any and all issuances of securities of OHEAC from
the date of the its incorporation to the date hereof have been obtained or
effected, and all securities of OHEAC have been issued in accordance with the
provisions of all applicable Federal and state securities or other laws.
(b) The O'Gara Company. The authorized capital stock of O'Gara Company
consists of (i) 15,000,000 shares of common stock, par value $0.01 per share, of
which 100 shares are issued and outstanding and owned by the Seller, and (ii)
100,000 shares of preferred stock par value $0.01 per share, of which 0 shares
are issued and outstanding and owned by the Seller (such outstanding common
stock and outstanding preferred stock, the "Outstanding O'Gara Company Capital
Stock"). All shares of the Outstanding O'Gara Company Capital Stock have been
duly authorized, are validly issued and outstanding, and are fully paid and
nonassessable. No securities issued by O'Gara Company from the date of its
incorporation to the date hereof were issued in violation of any statutory or
common law preemptive rights. There are no dividends which have accrued or been
declared but are unpaid on the Outstanding O'Gara Company Capital Stock. All
Taxes required to be paid in connection with the issuance and any transfers of
the Outstanding O'Gara Company Capital Stock have been paid. All permits or
authorizations required to be obtained from or registrations required to be
effected with any Governmental Authority in connection with any and all
issuances of securities of O'Gara
20
Company from the date of the its incorporation to the date hereof have been
obtained or effected, and all securities of O'Gara Company have been issued in
accordance with the provisions of all applicable Federal and state securities or
other laws.
(c) O'Gara Security Associates, Inc.. The authorized capital stock of OSA
consists of (i) 850 shares of common stock, no par value, of which 100 shares
are issued and outstanding and owned by the Seller and (ii) no shares of
preferred stock (such outstanding common stock, the "Outstanding OSA Capital
Stock"). All shares of the Outstanding OSA Capital Stock have been duly
authorized, are validly issued and outstanding, and are fully paid and
nonassessable. No securities issued by OSA from the date of its incorporation to
the date hereof were issued in violation of any statutory or common law
preemptive rights. There are no dividends which have accrued or been declared
but are unpaid on the Outstanding OSA Capital Stock. All Taxes required to be
paid in connection with the issuance and any transfers of the Outstanding OSA
Capital Stock have been paid. All permits or authorizations required to be
obtained from or registrations required to be effected with any Governmental
Authority in connection with any and all issuances of securities of OSA from the
date of the its incorporation to the date hereof have been obtained or effected,
and all securities of OSA have been issued in accordance with the provisions of
all applicable Federal and state securities or other laws.
(d) Company Subsidiaries. The authorized capital stock of each of the
Company Subsidiaries is set forth on Schedule 4.10 hereto. All shares of the
outstanding capital stock of the Company Subsidiaries have been duly authorized,
are validly issued and outstanding, and are fully paid and nonassessable. No
securities issued by any of the Company Subsidiaries from the date of its
incorporation to the date hereof were issued in violation of any statutory or
common law preemptive rights. There are no dividends which have accrued or been
declared but are unpaid on any of such shares of capital stock. All Taxes
required to be paid in connection with the issuance and any transfers of such
shares of capital stock have been paid. All permits or authorizations required
to be obtained from or registrations required to be effected with any
Governmental Authority in connection with any and all issuances of securities of
any of the Company Subsidiaries from the date of its incorporation to the date
hereof have been obtained or effected, and all securities of the Company
Subsidiaries have been issued in accordance with the provisions of all
applicable Federal and state securities or other laws.
4.11 Rights, Warrants, Options. Except as set forth on Schedule 4.11, there
are no outstanding (a) securities or instruments convertible into or exercisable
for any of the capital stock or other equity interests of any of the Companies;
(b) options, warrants, subscriptions or other rights to acquire capital stock or
other equity interests of any of the Companies; or (c) commitments, agreements
or understandings of any kind, including employee benefit arrangements, relating
to the issuance or repurchase by any of the Companies of any capital stock or
other equity interests of such Company, or any instruments convertible or
exercisable for any such securities or any options, warrants or rights to
acquire such securities.
4.12 Financial Statements. Attached hereto as Schedule 4.12 are true and
complete copies of the Financial Statements. The Financial Statements (a) have
been prepared in accordance with the books of account and records of the
Companies; (b) fairly present in all material respects the Companies' financial
condition and the results of its operations and cash flows at the dates and for
the periods specified in those statements; and (c) have been prepared in
21
accordance with GAAP consistently applied with prior periods; provided, however,
that (i) the unaudited balance sheet and the unaudited statement of income of
the Companies as of and for the fiscal year ended December 31, 2000 do not
contain inter-Company eliminations or footnotes as required by GAAP and (ii) the
Financial Statements for the fiscal years ended December 31, 1998 and December
31, 1999 (a) include the accounts of Securify, Inc., which will not be a
Subsidiary of the Companies after the Closing, (b) include corporate debt of the
Seller which will not be an obligation of the Companies after the Closing, and
(c) reflect allocations of corporate overhead by the Seller to the Companies.
4.13 Absence of Undisclosed Liabilities. As of the Closing Date, none of
the Companies shall have any liability for borrowed money other than long term
lease or mortgage obligations with respect to which the assets securing such
obligations are included in the Closing Date Balance Sheet. As of December 31,
2000, none of the Companies had any material direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, known
or unknown, fixed or unfixed, xxxxxx or inchoate, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise, including,
without limitation, liabilities on account of Taxes, other governmental charges
or lawsuits brought ("Liabilities"), except for Liabilities (a) adequately
reflected in the Financial Statements or (b) that would not have been required
under GAAP to be reflected in the Financial Statements. Since December 31, 2000,
the Companies have only incurred Liabilities in the ordinary course of business
consistent with past practice or as otherwise set forth on Schedule 4.13, except
for Liabilities which are not material in the aggregate.
4.14 Title to Securities. The Seller is the record and beneficial owner of,
and has good and marketable title to, the Securities listed opposite the
Seller's name on Schedule 4.14, and, except as set forth on Schedule 4.14 such
Securities are owned free and clear of any Encumbrances and claims whatsoever,
including, without limitation, claims or rights under any voting trust
agreements, shareholder agreements or other agreements. The Securities
constitute all of the issued and outstanding capital stock of the Companies (for
purposes of this sentence, "Companies" shall not include the Company
Subsidiaries.) At the Closing, the Seller will transfer and convey, and
Purchaser will acquire, good title to the Securities, free and clear of all
Encumbrances and claims whatsoever, other than Encumbrances placed thereon by
Persons claiming by, through, or under AHI, the Purchaser, or any of their
Affiliates. Except as set forth on Schedule 4.14, upon the transfer of the
Securities to Purchaser, the Companies will posses ownership of the entire
business necessary to operate the Companies as a going concern as such business
is presently being conducted and there will be no material assets of the Seller
not owned by the Companies which are necessary to conduct the business of the
Companies as presently conducted. Each of the Companies and the Company
Subsidiaries is the record and beneficial owner of, and has good and marketable
title to, the securities of the Company Subsidiaries listed opposite such
Company's or Company Subsidiary's name on Schedule 4.14, and, such securities
are owned free and clear of any Encumbrances and claims whatsoever, including,
without limitation, claims or rights under any voting trust agreements,
shareholder agreements or other agreements, except as set forth on Schedule
4.14.
4.15 Title to and Condition of Personal Property. Schedule 4.15 sets forth
the list of plant, machinery, equipment, furniture, leasehold improvements,
fixtures, vehicles, structures, any related capitalized items and other tangible
property used in the business of the Companies
22
in the form provided to the Seller's independent accountants in connection with
the preparation of the Seller's financial statements for the year ended December
31, 2000 ("Tangible Property"). The Companies have good title to, or in the case
of leased or licensed property, has a valid leasehold or license interest in,
each material item of Tangible Property, free and clear of any options or
Encumbrances whatsoever, except (i) Permitted Encumbrances, (ii) as set forth in
Schedule 4.15 hereto, (iii) specifically identified as such in the Financial
Statements, and (iv) items sold or disposed of in the ordinary course of
business after December 31, 2000. Except as set forth in Schedule 4.15, all
material Tangible Property owned by the Companies or used by the Companies on
the date hereof in the operation of its business is in good operating condition
and in a good state of maintenance and repair and is adequate for the business
as conducted by the Companies. Other than leased or licensed assets, or other
assets for which the Company has a valid right to use, and except as set forth
on Schedule 4.15, there are no material assets owned by any third party which
are used in the operation of the business of the Companies as conducted by the
Companies.
4.16 Real Property
(a) None of the Companies owns any fee simple interest in real property
other than as set forth on Schedule 4.16. None of the Companies leases or
subleases (as lessee or sublessee) any real property other than as set forth on
Schedule 4.16. Schedule 4.16 sets forth the street address of each parcel of
real property owned by each of the Companies (the "Owned Property") or leased or
subleased (as lessee or sublessee) by each of the Companies (the "Leased
Property" and, together with the Owned Property, the "Real Property"). Attached
hereto as Schedule 4.16 is a list of all of the lease and sublease agreements
and all other instruments granting such leasehold interests, rights, options, or
other interests, as amended to date (the "Leases") relating to the Leased
Property. A true, complete, and correct copy of each of the Leases has
previously been made available to the Purchaser. The Leases are valid, binding
and in full force and effect, except to the extent that enforcement is limited
by bankruptcy, insolvency, reorganization, or other laws resulting to or
affecting the enforcement of creditor's rights generally and by general
principles of equity, all rent and other sums and charges payable thereunder are
current, no notice of default or termination under any of the Leases is
outstanding, no termination event or condition or uncured default on the part of
any of the Companies or, to the knowledge of the Seller or any of the Companies,
on the part of the landlord or sublandlord, as the case may be, thereunder,
exists under the Leases, and no event has occurred and no condition exists
which, with the giving of notice or the lapse of time or both, would constitute
such a default or termination event or condition. In the event that any of the
Leases is a sublease, the relevant Company, as sublessee or sublessor, as the
case may be, has obtained the required consent of the prime landlord to such
sublease, and such prime lease is in full force and effect, there are no
outstanding uncured notices of default or termination, and no right of such
Company in any such sublease conflicts with such prime lease. There are no
subleases, licenses or other agreements granting to any person other than the
relevant Company any right to the possession, use, occupancy or enjoyment of the
premises demised by the Leases. All of the premises are used in the conduct of
the Companies' business.
(b) The Companies have good title in fee simple or otherwise to the Owned
Property and good leasehold title to the Leased Property and to all plants,
buildings, and improvements thereon, free and clear of any mortgages,
imperfections of title, encroachments,
23
easements, rights-of-way, squatters' rights, covenants, conditions,
restrictions, or Encumbrances, except Permitted Encumbrances and except as
described on Schedule 4.16. The Companies enjoy a peaceful and undisturbed
possession of the Real Property. No Person other than the Companies has any
right to use or occupy any part of the Real Property.
(c) Except as set forth on Schedule 4.16, all improvements located on the
Real Property are in a state of good maintenance and repair and in a condition
adequate and reasonably suitable for the conduct therein of the business as
conducted by the Companies. Except as set forth on Schedule 4.16, the heating,
ventilation, air conditioning, plumbing and electrical systems at the Real
Property are in good working order and repair. The Companies have not
experienced any material interruption in such services provided to any of the
premises located on the Real Property within the last year. To the knowledge of
the Seller or any of the Companies, no landlord under the Leases has any plans
to make any material alterations to any of the Leased Property, the construction
of which would interfere in any material respect with the use of any material
portion of the Leased Property. To the knowledge of the Seller or any of the
Companies, no landlord under the Leases has any plans to make any material
alterations to any of the buildings located on any Leased Property, the costs of
which alterations would be borne in any part by a tenant under the applicable
Lease.
(d) All required material permits, licenses, franchises, approvals and
authorizations (collectively, the "Real Property Permits") of (i) all
Governmental Authorities having jurisdiction over each Real Property and (ii)
from all insurance companies and fire rating and other similar boards and
organizations having jurisdiction over such Real Property (collectively, the
"Insurance Organizations"), are set forth on Schedule 4.16 and have been issued
to the Companies to enable each Real Property to be lawfully occupied and used
for all of the purposes for which they are currently occupied and used and are,
as of the date hereof, in full force and effect in all material respects.
Neither the Seller nor any of the Companies has received any written notice, or
has knowledge of any oral notice, from any Governmental Authority having
jurisdiction over any Real Property or from any Insurance Organization
threatening a suspension, revocation, modification or cancellation of any Real
Property Permit or of any insurance policies, and the Seller has no knowledge of
a violation of a material Real Property Permit.
(e) Except as set forth on Schedule 4.16, neither the Seller nor any of the
Companies has received any written notice nor have they any knowledge of any
pending or threatened condemnation or eminent domain proceeding with respect to
or affecting any Real Property or any part thereof.
4.17 Insurance. Schedule 4.17 sets forth a true and complete in all
material respects list of all insurance policies providing insurance coverage of
any nature to the Companies. The Companies have previously provided the
Purchaser with true and complete copies in all material respects of all of such
insurance policies, as amended to the date hereof. Such policies provide
adequate and customary coverage for the business in which the Companies are
engaged and are sufficient for compliance in all material respects by the
Companies with all requirements of Applicable Law and all Material Agreements to
which any of the Companies is a party or by which any of the material assets of
any of the Companies are bound. All of such policies are in full force and
effect and are valid and enforceable in accordance with their terms, and each of
the
24
Companies has complied in all material respects with all terms and conditions of
such policies, including premium payments. None of the insurance carriers has
indicated to the Seller or any of the Companies an intention to cancel, or
materially alter the coverage under, any such policy. None of the Companies has
any claim pending against any of the insurance carriers under any of such
policies and, to the knowledge of the Seller or any of the Companies, there has
been no actual or alleged occurrence of any kind which may give rise to any such
claim and has not made any claims under any policy at any time since January 1,
1998, except as set forth in Schedule 4.17. All applications for such policies
are accurate in all material respects.
4.18 Governmental Authorizations. Schedule 4.18 lists all material
authorizations, consents, approvals, franchises, licenses and permits required
under Applicable Law or regulation for the operation of the business of the
Companies as presently operated (the "Governmental Authorizations"). All the
Governmental Authorizations are in full force and effect, and each of the
Companies is in compliance with the terms and conditions of all the Governmental
Authorizations, except where the failure to obtain such Governmental
Authorizations or the failure to comply with the terms thereof would not have a
Material Adverse Effect. The Seller has no knowledge that any of the
Governmental Authorizations will not be renewed in the ordinary course or will
be revoked, terminated, suspended, or impaired.
4.19 Intellectual Property Rights
(a) Except as set forth on Schedule 4.19, the Companies, directly or
indirectly, own or have the valid right to use pursuant to license agreements
(the "License Agreements"), all Intellectual Property currently used in
connection with the business of the Companies as currently conducted (such
Intellectual Property, together with the License Agreements the "Company
Intellectual Property").
(b) Schedule 4.19 sets forth a complete and accurate list of all United
States, international and state (i) patents and patent applications, (ii)
Trademark registrations and applications and all material unregistered
Trademarks, (iii) Internet domain names, and (iv) copyright registrations and
applications, and all material unregistered copyrights, including websites and
Software (excluding commercially available off the shelf Software), owned by any
of the Companies or any other person listed on Schedule 4.19 or used in the
business of the Companies or Seller as currently conducted, indicating for each,
the applicable jurisdiction, registration number (or application number), date
issued (or date filed) and descriptions of such property.
(c) Except as set forth on Schedule 4.19, the Intellectual Property set
forth on Schedule 4.19 is solely and exclusively owned by the Companies free and
clear of all Encumbrances, and as for all registered Intellectual Property, one
of the Companies is listed in the records of the appropriate United States,
state or foreign agency as the sole owner of record for each registration and
application for any Patent, Trademark, Internet domain name and Copyright.
Except as set forth on Schedule 4.19, all of the Intellectual Property
registrations and applications and common law trademarks set forth on Schedule
4.19, and the trademark rights underlying any trademark registrations,
applications and common law marks set forth on Schedule 4.19, are valid and
subsisting, in full force and effect, and have not been cancelled, expired, or
abandoned. Neither the Seller nor any of the Companies has received any written,
25
or, to the knowledge of the Seller or any of the Companies, oral notification of
any pending or threatened opposition, interference or cancellation proceeding
before any court or registration authority in any jurisdiction against the items
set forth on Schedule 4.19 or any other Company Intellectual Property, directly
or indirectly, owned by any of the Companies or against any Company Intellectual
Property not owned by any of the Companies.
(d) Except as set forth on Schedule 4.19, there are no settlements,
injunctions, forbearances to xxx, consents, judgments, or orders or similar
obligations to which any of the Companies is a party or is otherwise bound,
which (i) restrict any of the Company's rights to use any Company Intellectual
Property, (ii) restrict any of the Company's business in order to accommodate a
third party's Intellectual Property rights or (iii) permit third parties to use
any Intellectual Property which would otherwise infringe any Company
Intellectual Property. None of the Companies has licensed or sublicensed its
rights in any Company Intellectual Property other than pursuant to the License
Agreements set forth on Schedule 4.19 and no royalties, honoraria or other fees
are payable by any of the Companies for the use of or right to use any Company
Intellectual Property in connection with the Companies' business as currently
conducted, except pursuant to the License Agreements set forth on Schedule 4.19.
(e) The License Agreements, permits and other agreements under which any of
the Companies has rights to the Company Intellectual Property are valid and
binding obligations of such Company or Companies and all other parties thereto,
enforceable in accordance with their terms, and Seller is aware of no event or
condition which will result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both), a default by any of the Companies,
under any such License Agreement or other agreement.
(f) Each of the Companies takes reasonable measures to protect the
confidentiality of its Trade Secrets. Except as set forth in Schedule 4.19, no
material Trade Secret of any of the Companies as currently operated or planned
to be operated has been improperly disclosed or authorized to be disclosed to
any third party.
(g) The Seller or the Companies have received no written notice, or, to the
knowledge of the Seller or any of the Companies, oral notification that the
conduct of the business of the Seller or the Companies as currently conducted
infringes any Intellectual Property rights owned or controlled by any third
party (either directly or indirectly such as through contributory infringement
or inducement to infringe) or is defamatory or violative in any way of any
publicity, privacy, or other rights. Neither the Seller nor any of the Companies
has received any written notice or, to the knowledge of the Seller or any of the
Companies, oral notification of any pending or threatened claims or suits (i)
alleging that the Companies' activities or the conduct of their businesses
infringes upon or constitutes the unauthorized use of the Intellectual Property
rights of any third party, nor alleging libel, slander, defamation, or other
violation of a personal right, or (ii) challenging the ownership, use, validity
or enforceability of any Company Intellectual Property.
(h) To the knowledge of the Seller or any of the Companies, no third party
is misappropriating, infringing, diluting, or otherwise violating any Company
Intellectual Property, and no such claims are pending against a third party by
any of the Companies.
26
(i) The consummation of the transactions contemplated hereby will not
result in the loss or impairment of the Companies' right to own or use any of
the Company Intellectual Property nor require the consent of any Governmental
Authority or third party in respect of any such Company Intellectual Property.
(j) Except as set forth on Schedule 4.19, after the deliveries provided for
in this Agreement have occurred, none of the Seller or any current or former
officer, director or employee of the Seller or any of the Companies will retain
any rights of ownership or use with respect to the Company Intellectual
Property. Except as set forth on Schedule 4.19 and except for commercially
available off-the shelf computer software, all computer software and inventions
currently used by any of the Companies or necessary for the conduct of the
current business of any of the Companies were either (i) developed by an
employee of the Companies within the scope of employment of the employee and
pursuant to a binding invention assignment or work for hire agreement, (ii)
developed by a third-party under a binding work for hire and assignment
agreement, (iii) developed by a third party and transferred and assigned to one
of the Companies under a binding transfer and assignment agreement or (iv) used
by the Companies under license or permission set forth on Schedule 4.19.
(k) Except as set forth on Schedule 4.19, none of the Companies is
currently licensing to a third party, and has not assigned or waived, its rights
to any Company Intellectual Property anywhere in the world. Other than as set
forth on Schedule 4.19, there are no restrictions on use of the Company
Intellectual Property.
4.20 Major Customers and Suppliers; Supplies. Schedule 4.20 sets forth a
list of the largest customers with aggregate purchases in excess of $400,000
(measured by dollar volume) of the Companies and the ten (10) largest suppliers
of material goods or services to each Company for the year ended December 31,
2000. Schedule 4.20 identifies those suppliers of significant goods or services
with respect to which alternative sources of supply are not readily available on
comparable terms and conditions. Except as indicated on Schedule 4.20, all
supplies and services necessary for the conduct of the business of the
Companies, as presently conducted, may be obtained from alternate sources on
terms and conditions comparable to those presently available to the Companies.
To the Seller's knowledge, none of the Companies' major customers or suppliers
has or is contemplating terminating its relationship with any of the Companies.
To the knowledge of the Seller or any of the Companies, no major customer or
supplier has experienced any material work stoppage or other material adverse
circumstances or conditions that is reasonably likely to jeopardize or
materially adversely affect any Company's future relationship with any major
customer or supplier. Except as set forth on Schedule 4.20, there are no pending
material disputes or controversies between any major customer or supplier of any
of the Companies.
4.21 Related Parties. Except as set forth on Schedule 4.21, neither the
Seller nor any of the Companies, nor any current or former (within the past
three (3) years) director, or officer of the Seller or any of the Companies, or
any of their family members (individually a "Related Party" and collectively the
"Related Parties"), or any Affiliate of the Seller or any of the Companies or
any Related Party: (a) owns, directly or indirectly, any interest in any Person
which is a competitor of any of the Companies, or of a supplier or customer of
any of the Companies (except as an owner of one percent (1%) or less of the
stock of any company listed
27
on a national securities exchange or traded in the over-the-counter market); (b)
owns, directly or indirectly, in whole or in part, any material property, asset
or right, real, personal or mixed, tangible or intangible (including, but not
limited to, any of the intangible property) which is utilized in the operation
of the business of any of the Companies; (c) has an interest in or is, directly
or indirectly, a party to any material contract, agreement, lease or arrangement
pertaining or relating to any of the Companies, except for employment,
consulting or other personal service agreements that may be in effect and which
are listed on Schedule 4.21 hereto; or (d) to the knowledge of the Seller, has
any cause of action or other claim whatsoever against, or owes any amount to,
any of the Companies.
4.22 List of Accounts and Proxies. Set forth on Schedule 4.22 is: (a) the
name and address of each bank or other institution in which any of the Companies
maintains an account (cash, securities or other) or safe deposit box; (b) the
name and phone number of each Company's contact person at such bank or
institution; (c) the account number of the relevant account and a description of
the type of account; (d) the name of each person authorized by any of the
Companies to effect transactions therewith or to have access to any safe deposit
box or vault; and (e) all proxies, powers of attorney or other like instruments
to act on behalf of any of the Companies in matters concerning its business or
affairs.
4.23 Employee Policies, Manuals, etc. Schedule 4.23 contains the names,
descriptive title, and annual salary rates and other compensation of all
officers, directors, consultants and senior employees of each of the Companies
and the Seller who do work for any of the Companies (including compensation paid
or payable by any of the Companies under the Company Plans and the entity paying
the same). Schedule 4.23 sets forth a list of all employee policies, employee
manuals or other written statements of rules or policies as to working
conditions, vacation and sick leave applicable to such persons.
4.24 Labor Relations
(a) There is no strike, sympathy strike, sit-down, slow-down, stay-in,
sick-out, walk-out, picketing, work stoppage, retarding of work, boycott or any
other interference with any of the Companies' business or the operation or
conduct of the business of any of its affiliated companies or its subsidiaries
(all of the foregoing referred to as "work interference"), and the Seller has no
knowledge of any pending or threatened work interference. There have been no
work interferences within the past five years. None of the Companies is in
breach in any material respect of any provision of any collective bargaining
agreement, and the Companies have not received any written notification or to
the knowledge of the Companies any oral notification that any such claims have
been made or are pending. None of the Companies is in breach of any court,
arbitration, administrative decision or order which is reasonably likely to
result in any work interference or give rise to a claim that a work interference
is protected by, or does not violate, any law or provision of any collective
bargaining agreement.
(b) There are no unfair labor practices, representation or other
proceedings claimed, pending or, to the Seller's knowledge, threatened before
any Governmental Authority.
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(c) There are no filed, pending or, to the knowledge of Seller, threatened
injunctions against any of the Companies which would have the effect of
constituting a work interference.
4.25 Employee Benefit Plans
(a) None of the Companies has had any defined benefit plan. None of the
Companies has, nor does any of the Companies contribute to any pension,
profit-sharing, defined contribution, option, other incentive plan, or any other
type of Employee Benefit Plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), or have any
obligation to or customary arrangement with employees for bonuses, incentive
compensation, vacations, severance pay, insurance, or other benefits and it is
not part of a controlled group with regard to any of the foregoing, except as
set forth in Schedule 4.25. The Companies have made available to AHI true and
correct copies of all documents evidencing plans, obligations, qualification,
IRS determination or arrangements referred to in Schedule 4.25 (or true and
correct in all material respects written summaries of such plans, obligations,
or arrangements to the extent not evidenced by documents) and true and correct
in all material respects copies of all documents evidencing trusts relating to
any such plans. Schedule 4.25 also contains a true and correct statement of the
names, relationship with each Company, job description, present rates of
compensation (delineated by annual salary, bonuses, commissions, benefits, or
other supplemental compensation now or hereafter payable), and aggregate
compensation for the fiscal year ended December 31, 2000 of (i) each officer of
each Company that is paid by the Seller or any of its Subsidiaries other than
the Company or any of its Subsidiaries. Except as set forth on Schedule 4.25,
none of the Companies has changed the rate of compensation of any of its
directors, officers, employees, agents, dealers, or distributors since December
31, 2000.
(b) No Employee Benefit Plan (as so defined) of any of the Companies or of
any plan of any controlled group relating to any of the Companies is, or during
the last three years was, subject to Title IV of ERISA.
(c) There has been no violation of the reporting and disclosure
requirements imposed either under ERISA or the Code for which a penalty has been
or may be imposed with respect to any such Employee Benefit Plan. There is no
investigation, litigation, arbitration, claim, governmental or other proceeding
(formal or informal), pending and, to the knowledge of the Seller, there is no
litigation, arbitration, claim, governmental or other proceeding (formal or
informal), or investigation threatened with respect to any such Employee Benefit
Plan or related trust or with respect to any fiduciary, administrator, or
sponsor (in its capacity as such) of any such Employee Benefit Plan. No event
has occurred or, to the knowledge of the Seller, is threatened which would
constitute a non-exempt prohibited transaction under Section 406 of ERISA.
(d) Except as set forth in Schedule 4.25, none of the Companies has any
Employee Pension or Employee Welfare Benefit Plans (as defined in Section 3(2)
of ERISA) and is not part of any controlled group that has any Employee Pension
Benefit Plan.
29
(e) None of the Companies contributes or has an obligation to contribute to
including but not limited to actual or potential withdrawal liability payable to
any multiemployer Pension Plan within the meaning of Section 3(37) of ERISA and
is not part of any controlled group that contributes, or has an obligation to
contribute, to any multi-employer Pension Plan.
(f) Each of the Companies is in material compliance with all present and
past collective bargaining agreements, memoranda of agreement, side letters,
court, administrative, arbitration, ADR, or mediation decisions or awards, wage
or benefit schedules and all other documents which reflect or pertain to
understandings or practices communicated or agreed upon between such Company and
any union representatives.
(g) There are no claims or grievances filed, pending or, to the Seller's of
any of the Company's knowledge, threatened pertaining to present or past
collective bargaining agreements, memoranda of agreement, side letters, court,
administration, arbitration, ADR or mediation decisions or awards or other
documents.
(h) There are no complaints, charges, claims, allegations or grievances
pending or to the knowledge of the Seller or any of the Companies threatened
which reflects or pertains to: (i) any federal, state or local labor,
employment, wage or hour, workers compensation, disability or unemployment law,
regulation or ordinance; (ii) any claim for wrongful discharge, breach of
employment contract or employment related tort (iii) any employment agreement,
restrictive convent, non-competitive agreement or employee confidentiality
agreement, except for such failures to be in compliance that will not have a
Material Adverse Effect.
(i) Each of the Companies is in material compliance with all past and
present profit sharing plans, money purchase plans, target benefit plans,
ESOP's, stock bonus plans, defined benefit plans or any other tax qualified
employee benefit plan, whether terminated or not, and any amendments thereto.
(j) Each of the Companies is in material compliance with all past and
present welfare benefit plans, (i.e., health, dental, vision, long term
disability, short term disability, life insurance), child care, tuition
reimbursement, prepaid legal services, severance plans, programs or
arrangements.
(k) Each of the Companies is in material compliance with all past and
present supplemental benefit plans, deferred compensation plans, executive
compensation agreements, bonus agreements, consulting agreements or any other
non-qualified employee benefit plans.
(l) Each of the Companies is in material compliance with all past and
present trusts, group annuity contracts, IRC Section 501(c)(9) Voluntary
Employees' Beneficiary Association, cafeteria plans and any Multiple Employer
Welfare Arrangements as described in Sections 3(1) and 40(A) of ERISA.
(m) None of the Companies is engaged in any non-exempt prohibited
transaction with respect to any employee benefit plan governed by ERISA.
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(n) In connection with subparagraphs (i) through (m) above, there are no
complaints, charges, claims, litigation, audits, investigations or
administrative proceedings filed, pending or, to the knowledge of the Seller or
any of the Companies, threatened against any of the Companies.
4.26 Taxes
(a) The Seller has previously delivered to Purchaser true, correct and
complete copies of pro forma tax returns of the Companies for the past five
fiscal years which were due, without regard to any extensions granted, on or
before the date hereof. All material tax returns and tax reports required to be
filed with respect to the income, operations, business or assets of any of the
Companies or each affiliated, combined or unitary group ("Tax Group") of which
any of the Companies has been a member have been timely filed (or appropriate
extensions have been obtained which extensions are listed on Schedule 4.26) with
the appropriate governmental agencies in all jurisdictions in which such returns
and reports are required to be filed. All of the foregoing as filed are true,
correct and complete and, in all respects, reflect accurately all liability for
Taxes of each of the Companies for the periods to which such returns relate, and
all amounts shown as owing thereon have been paid, other than Liabilities for
Taxes on the Closing Date Balance Sheet and except for Taxes being contested in
good faith as set forth on Schedule 4.26. All income, profits, franchise, sales,
use, value added, occupancy, property, excise, payroll, withholding, FICA, FUTA
and other Taxes (including interest and penalties), if any, collectible or
payable by the Seller or any of the Companies or relating to or chargeable
against any of its assets, revenues or income or relating to any employee,
independent contractor, creditor, stockholder or other third party through
December 31, 2000, were fully collected and paid by such date or provided for by
adequate reserves in the Financial Statements or, for periods thereafter, on the
books of the Seller or the Companies, as the case may be.
(b) To the knowledge of the Seller, no taxation authority has sought to
audit, and none of the Companies has received notice of an audit of, the records
of the Seller, with respect to the Companies or any of the Companies for the
purpose of verifying or disputing any tax returns, reports or related
information and disclosures provided to such taxation authority, or related to
the Seller or any of the Companies' alleged failure to provide any such tax
returns, reports or related information and disclosure. Except as provided on
Schedule 4.26, no claims, deficiencies, or assessments have been asserted
against or inquiries raised with the Seller or any of the Companies with respect
to any Taxes of the Companies or other governmental charges or levies which have
not been paid or otherwise satisfied, including claims that, or inquiries
whether the Seller, with respect to the Companies, or such Company, as the case
may be, has not filed a tax return that it was required to file, and there
exists no reasonable basis for the making of any such claims or inquiries.
Neither the Seller nor any of the Companies has waived any restrictions on
assessment or collection of Taxes relating to a Company or consented to the
extension of any statute of limitations relating to taxation of a Company.
Neither the Seller nor any of the Companies has filed a consent under Section
341(f) of the Code with respect to the Companies concerning collapsible
corporations, and none of the Companies has been a United States real property
holding corporation within the meaning of Code Section 897 (c)(2), during the
applicable period specified in Code Section 897(c)(1)(A)(ii).
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(c) No claim has been made, nor does the Seller or any of the Companies
know of any claim that is pending, by an authority in any jurisdiction where
neither of the Seller nor any of the Companies files tax returns alleging that
the Seller, with respect to any of the Companies, or any of the Companies is or
may be subject to taxation in that jurisdiction.
(d) Except for (i) Taxes for the payment of which an adequate reserve has
been established on the Closing Date Balance Sheet and (ii) property taxes that
are not delinquent, there is no Tax lien imposed by any taxing authority
outstanding against any of the assets or properties of any of the Companies.
(e) Neither the Seller, with respect to any of the Companies, nor any of
the Companies has executed any "closing agreement" or similar agreement with any
taxing authority, domestic or international.
(f) Neither the Seller, with respect to any of the Companies, nor any of
the Companies has agreed or is required to make any adjustments pursuant to
Section 481(a) of the Code or any similar provision of other tax law, domestic
or foreign, by reason of a change in accounting method initiated by it or any
other relevant party nor has it any knowledge that any taxing authority has
proposed any such adjustment or change in accounting method. Neither the Seller
with respect to the Companies nor any of the Companies has any application
pending with any taxing authority anywhere in the world requesting permission
for any changes in accounting methods.
(g) Neither the Seller, with respect to any of the Companies, nor any of
the Companies has made any payments, nor is the Seller, with respect to any of
the Companies, or any of the Companies obligated to make any payments, nor is
the Seller, with respect to the Companies or any of the Companies a party to any
agreement that under certain circumstances could obligate it to make payments
that will not be deductible under Section 280G or 162(m) of the Code.
(h) None of the Companies is a member of a Tax Group that has filed an
election pursuant to Rev. Proc. 95-11, 1995-1 C.B. 505 or under Treasury
Regulation Section 1.1502-75(c) or any similar provision of national, foreign,
state or local law with respect to the Company.
(i) Neither the Seller, with respect to the Companies, nor any of the
Companies has reported on its income tax returns any positions taken therein
that could give rise to a substantial understatement of federal or other income
tax within the meaning of Section 6662 of the Code or similar statute.
4.27 Material Agreements
(a) Schedule 4.27(a) sets forth a list of the following contracts,
agreements, binding bids, binding proposals, or binding quotations to which, as
of the date hereof, any of the Companies is a party or signatory or pursuant to
which any of the Companies has third party rights (except with respect to the
Leases, which are set forth on Schedule 4.16, which is hereby incorporated by
reference into Schedule 4.27 and made a part thereof): (i) contract or series of
contracts resulting in a commitment or potential commitment for expenditure or
other obligation
32
or potential obligation, or which provides for the receipt or potential receipt,
involving in excess of Fifty Thousand Dollars ($50,000.00) in any instance, or
series of related contracts that in the aggregate give rise to rights or
obligations exceeding such amount other than contracts with Governmental
Authorities referred to in clause (ii) and armoring contracts referred to in
clause (iii); (ii) contract, agreement, binding bid, binding proposal, or
binding quotation with a Governmental Authority resulting in a commitment or
potential commitment for expenditure or other obligation or potential
obligation, or which provides for the receipt or potential receipt, involving in
excess of One Hundred Thousand Dollars ($100,000.00) in any instance, or series
of related contracts that in the aggregate give rise to rights or obligations
exceeding such amount; (iii) contract, agreement, binding bid, binding proposal,
or binding quotation relating to the provision of armoring services resulting in
a commitment or potential commitment for expenditure or other obligation or
potential obligation, or which provides for the receipt or potential receipt,
involving in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) in any
instance, or series of related contracts that in the aggregate give rise to
rights or obligations exceeding such amount other than contracts referred to in
clause (i) and contracts with Governmental Authorities referred to in clause
(ii); (iv) employment agreements, collective bargaining agreements and any
amendments or modifications thereof and union recognition agreements, (v)
indenture, mortgage, promissory note, loan agreement, guarantee or other
agreement or commitment for the borrowing or lending of money or Encumbrance of
assets involving more than Twenty Five Thousand Dollars ($25,000.00) in each
instance; (vi) agreement which restricts any of the Companies from engaging in
any line of business or from competing with any other Person; (vii) warranties
made with respect to products manufactured, packaged, distributed or sold by any
of the Companies; or (viii) any partnership, shareholder, joint venture, or
similar agreement or arrangement to which the Seller or any of the Companies is
a party (collectively, and together with the Leases, Company Plans and all other
agreements required to be disclosed on any schedule to this Agreement, the
"Material Agreements"). Each of the Companies has previously made available to
Purchaser true, complete and correct copies of all written agreements, as
amended, required to be listed on Schedule 4.27.
(b) None of the Material Agreements was entered into outside the ordinary
course of business of the Company which is party to such Material Agreement.
(c) Except as set forth on Schedule 4.27(b), each of the Material
Agreements is in full force and effect and are the valid and legally binding
obligations of the Company which is party to such Material Agreement and, to the
knowledge of Seller, the other parties thereto, enforceable in accordance with
their respective terms, subject only to bankruptcy, insolvency or similar laws
affecting the rights of creditors generally and to general equitable principles.
Neither the Seller nor any of the Companies has received written or, to the
Seller's knowledge, oral notice of default by any of the Companies under any of
the Material Agreements, including any contract or agreement relating to
borrowed money to which any of the Companies is a party or by or to which it or
its assets are bound or subject, and no event has occurred which, with the
passage of time or the giving of notice or both, would constitute a material
default by any of the Companies thereunder. Neither the Company which is party
to any Material Agreement nor, to the knowledge of the Seller or any of the
Companies, any of the other parties to any of the Material Agreements is in
material default thereunder, nor, to the knowledge of the Seller or any of the
Companies, has an event occurred which, with the passage of time or the giving
of notice or both would constitute a material default by such other party
thereunder. Neither the Seller nor
33
any of the Companies has received written notice or, to the knowledge of Seller,
oral notice of the pending or threatened cancellation, revocation or termination
of any of the Material Agreements, including, without limitation, any agreements
relating to borrowed money to which any of the Companies is a party or by or to
which it or its assets are bound or subject, nor are any of them aware of any
facts or circumstances which are reasonably likely to lead to any such
cancellation, revocation or termination.
(d) Except as otherwise indicated on Schedule 4.27(c), the Seller and the
Companies have, with respect to all Governmental Contracts that are Material
Agreements: (i) complied in all respects with all certifications and
representations they have executed, acknowledged or set forth with respect to
each such Material Agreement, (ii) complied in all respects with all clauses,
provisions and requirements incorporated expressly, by reference or by operation
of law in each such Material Agreement, and (iii) submitted certifications and
representations with respect to each such Material Agreement that were accurate,
current and complete when submitted, and were properly updated to the extent
required by law, regulation or the applicable Material Agreement, except where
the failure to so comply or submit such certifications and representations is
not reasonably likely to have, when considered in the aggregate with any other
action or omission referred to in Sections 4.27(d) and (e), a material adverse
effect on the validity or effectiveness of any of such Material Agreement, the
rights of any of the Companies under any such Material Agreement, or the ability
of any of AHI, the Purchaser, or the Companies to enter into any Material
Agreement with a U.S. Governmental Authority (a "Governmental Contract MAE").
(e) Except as otherwise indicated on Schedule 4.27(e), neither the Seller
nor any of the Companies has, with respect to all Governmental Contracts that
are Material Agreements: (i) received written notice, or to the Seller's
knowledge, oral notice that the Companies have breached or violated any law,
regulation, statute, certification, representation, clause, provision, or
requirement with respect to any such Material Agreement, (ii) received any show
cause notice or cure notice with respect to any such Material Agreement, (iii)
received any formal or informal determination that costs incurred under any such
Material Agreement have been questioned or disallowed, (iv) received any adverse
decision from a contracting officer relating to any such Material Agreement
issued by any Governmental Authority, (v) received any written, or to the
Seller's knowledge, oral notice that monies due under any such Material
Agreement are or may be subject to withholding or setoff, which breach,
violation, show cause notice, cure notice, determination, final decision,
withholding, or setoff is reasonably likely to have a Governmental Contract MAE.
(f) Except as otherwise indicated on Schedule 4.27(f), with respect to all
Governmental Contracts identified as Material Agreements, there are no pending
claims against any Governmental Authority or, to the knowledge of the Seller,
threatened claims against any prime contractor, subcontractor or vendor arising
out of or relating to any such Governmental Contract, except for routine demands
in the ordinary course of business which are not reasonably likely to have a
Governmental Contract MAE.
(g) With respect to each of the United States, Mexico, Philippines, France,
Colombia, and Brazil:
34
(i) Neither the Seller nor any of the Companies has received any
written notice that any of the Companies is currently debarred or
suspended from doing business with any Governmental Authority,
nor have they received any written notice that they have been
declared ineligible for doing business with any Governmental
Authority. Neither the Seller nor any of the Companies has any
knowledge of any reasonably likely institution of debarment,
suspension, or ineligibility proceedings in the future.
(ii) Neither the Seller nor any of the Companies has received a
written negative determination of responsibility by any
Governmental Authority or government prime contractor with
respect to any of the Companies. Neither the Seller nor any of
the Companies has any knowledge of any reasonably likely negative
determination of responsibility by any Governmental Authority or
government prime contractor with respect to any of the Companies.
(iii) The Companies possess all necessary security clearances and
permits for the execution of their obligations with respect to
any contract with or bid, proposal or quotation submitted to any
Governmental Authority or government prime contractor. None of
the Companies has ever been denied a facility security clearance
and none of their employees have been denied a personal clearance
for reasons that is reasonably likely to have a Material Adverse
Effect on any of the Companies or the Seller with respect to any
of the Companies.
4.28 Guaranties. Except as set forth on Schedule 4.28, none of the
Companies is a party to any Guaranty, and no Person is a party to any Guaranty
for the benefit of any of the Companies.
4.29 Products
(a) To the Seller's knowledge, there exists no reasonably likely basis for
(i) the withdrawal or suspension of any Governmental Authorization, approval or
consent of any Governmental Authority with respect to any product distributed or
sold by any of the Companies (a "Product") or (ii) the recall, withdrawal or
suspension by order of any Governmental Authority of any Product. To the
knowledge of the Seller, there are no defects in the designs, specifications, or
process with respect to any Product sold or otherwise distributed that will give
rise to any material Losses.
(b) Schedule 4.29 sets forth a list and brief description of all
correspondence received or sent by or on behalf of the any of the Companies
during the past five (5) years from or to any Governmental Authority with
respect to a contemplated or actual recall, withdrawal, or suspension from the
market of any Product. Copies of all such correspondence have previously been
made available to Purchaser.
35
4.30 Environmental and Safety Matters
(a) Except as set forth on Schedule 4.30, to the knowledge of Seller, the
Seller and each of the Companies is currently in compliance with all
Environmental and Safety Requirements, and neither the Seller nor any of the
Companies has incurred Liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) or is subject to any corrective, investigatory or
remedial obligations arising under Environmental and Safety Requirements which
relate to any of the Companies or any of their respective properties or
facilities, except for such matters which is not reasonably likely to result in
a Material Adverse Effect. Without limiting the generality of the foregoing,
each of the Companies has obtained and complies with, all permits, licenses and
other authorizations that is required pursuant to any Environmental and Safety
Requirements for the occupancy of its properties or facilities or the operation
of its Businesses as it is presently being conducted, and as it has been
conducted in the past, except for such permits the absence of which or
non-compliance with which is not reasonably likely to result in a Material
Adverse Effect. Seller has provided Purchasers with an opportunity to review
files containing all such permits, licenses and other authorizations of the
Companies.
(b) To the knowledge of Seller, neither this Agreement nor the consummation
of the transactions contemplated by this Agreement shall impose any obligations
to notify or obtain the consent of any Governmental Authority or Regulatory
Entities or third parties under any Environmental and Safety Requirements
(including, without limitation, any so called "transaction-triggered" or
"responsible property transfer" laws and regulations).
(c) To the knowledge of Seller, neither the Seller nor any of the Companies
has treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled or Released any hazardous substance causing any of them to
incur any Liabilities for response costs, natural resource damages or attorneys
fees pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), or any other Environmental and
Safety Requirements, which is not reasonably likely to give rise to a Material
Adverse Effect.
(d) To the knowledge of Seller, none of the Companies, nor the Seller on
behalf of the Companies, has either expressly or by operation of law, assumed or
undertaken any liability or corrective, investigatory or remedial obligation of
any other Person relating to any Environmental and Safety Requirements, which is
not reasonably likely to give rise to a Material Adverse Effect.
(e) No Environmental Lien has attached to any property leased or operated
by any of the Companies or the Seller on behalf of any of the Companies.
4.31 Accounts Receivable, Notes Receivable, and Costs in Excess of Billing.
All accounts, notes receivable and costs in excess of billing of each of the
Companies as of the date hereof have arisen in the ordinary course of business,
represent valid obligations to such Company for sales made, services performed
or other charges and are, to the knowledge of Seller, not subject to claims or
set-off, or other defenses or counter-claims. All items which are required by
GAAP to be reflected as accounts and notes receivable on the Financial
Statements
36
and on the books and records of the Companies are so reflected and have been
recorded in accordance with GAAP on a consistent basis in a manner consistent
with past practice.
4.32 Accounts and Notes Payable. The aggregate amount of accounts and notes
payable as of the date hereof does not exceed the aggregate amount of accounts
and notes payable as of December 31, 2001. All such accounts and notes payable
have arisen in the ordinary course of business and represent valid indebtedness
of the Companies. All items which are required by GAAP to be reflected as
accounts and notes payable on the Financial Statements and on the books and
records of the Companies are so reflected and have been recorded in accordance
with GAAP on a consistent basis in a manner consistent with past practice.
4.33 Inventory Valuation. The raw materials, work in process, spare parts,
and other inventory of the Companies as set forth on the Financial Statements
was, and the raw materials, work in process, spare parts, and other inventory of
the Companies currently is, in usable or salable condition in the ordinary
course of business. The raw materials, work in process, spare parts, and other
inventory are not obsolete or excessive in any material amount and are not
materially in excess of the normal purchasing patterns of the Companies. Neither
the Seller nor any of the Companies knows of any material adverse condition
affecting the supply of materials available to any of the Companies. The amounts
of the inventories reflected on the Financial Statements and on the books and
records of the Companies have been determined in accordance with GAAP
consistently applied.
4.34 Absence of Certain Business Practices. None of the Seller nor any of
the Companies, or any Affiliates of any of the Companies or any other Person
acting with authority on behalf of any of the Companies, or for which any of the
Companies would have liability, acting alone or together, has with respect to
the business or activities of any of the Companies: (a) received, directly or
indirectly, any rebates, payments, commissions, promotional allowances or any
other economic benefits, regardless of their nature or type, from any customer,
supplier, trading company, shipping company, governmental employee or other
Person with whom any of the Companies has done business directly or indirectly
in violation of Applicable Law; or (b) directly or indirectly in violation of
Applicable Law, given or agreed to give any gift or similar benefit to any
customer, supplier, trading company, shipping company, governmental employee or
other Person who is or may be in a position to help or hinder the business of
any of the Companies (or assist any of the Companies in connection with any
actual or proposed transaction) which (i) may subject any of the Companies to
any material damage or any material penalty in any civil, criminal or
governmental litigation or proceeding, (ii) if not given in the past, may have
had a Material Adverse Effect, or (iii) if not continued in the future, may have
a Material Adverse Effect or subject any of the Companies to suit or penalty in
any private or governmental litigation or proceeding. Each of the Companies has
conducted its business in a manner that materially complies with the U.S.
Foreign Corrupt Practices Act, except where such failure is not reasonably
likely to have a Material Adverse Effect.
4.35 Review of Forms 10-K, 10-Q and 8-K. The Seller has (1) received AHI's
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K filed by it with the Commission since January 1, 2000, as well as
AHI's Registration Statement on Form S-3, Registration No. 333-75053, and (2)
had the opportunity to ask questions and receive answers from AHI concerning
such Forms 10-K, 10-Q and 8-K, the documents incorporated by
37
reference therein and the terms and conditions of this Agreement and to obtain
any documents relating to AHI which are on file with the Commission and
available for inspection by the public. The Seller is aware of the risks
inherent in an investment in AHI and specifically the risks of an investment in
the AHI Common Stock. In addition, Seller is aware and acknowledges that there
can be no assurance of the future viability or profitability of AHI, nor can
there be any assurance relating to the current or future price of the AHI Common
Stock, as quoted on the New York Stock Exchange, or market conditions generally.
4.36 Public Documents; Compliance. Except as set forth on Schedule 4.36,
the Seller has filed with the SEC all forms, reports, schedules, registration
statements, and documents which it was required to file since November 1, 1996
through the date hereof pursuant to the Securities Act and the Exchange Act. The
forms, reports, schedules, registration statements, and documents filed by the
Seller (i) complied as to form in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations thereunder, each as in effect on the date so filed or amended, and
(ii) did not contain any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which there were
made, not misleading (in each case as of the respective dates that they were
filed with the SEC, or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing). No Subsidiary of the Seller is
required to file any form, report, statement, schedule, registration statement,
or other document with the SEC.
4.37 FIRPTA. Neither the Seller nor any of the Companies is a `foreign
person' within the meaning of Section 1445 of the Code.
4.38 Investment Representations. The Seller is acquiring the Consideration
Shares for its own account and will not sell, transfer, or otherwise dispose of
any of the Consideration Shares or any interest therein, without registration
under the Securities Act and applicable state "blue sky" laws, except in a
transaction which in the opinion of counsel reasonably acceptable to AHI is
exempt therefrom. The Seller is an "accredited investor" as that term is defined
in rules promulgated under the Securities Act. The Seller has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risk of an investment in the AHI Common Stock and has obtained, in
its judgment, sufficient information from AHI to evaluate the merits and risks
of an investment in the AHI Common Stock. The Seller has been provided the
opportunity to obtain information and documents concerning AHI and the AHI
Common Stock, and has been given the opportunity to ask questions of, and
receive answers from, the directors and officers of AHI concerning AHI and the
AHI Common Stock and other matters pertaining to this investment. The Seller
acknowledges that the offer of the AHI Common Stock will not be reviewed by any
governmental agency and is being sold to the Seller in reliance upon exemption
from the Securities Act. The Seller acknowledges that a customary legend
reflecting the above restrictions will appear on the certificates representing
the Consideration Shares. Nothing in this Section 4.38 limits or otherwise
affects the Seller's right to rely upon the representations and warranties of
AHI and the Purchaser made in this Agreement.
4.39 No Claims. Except as set fourth on Schedule 4.39, to the knowledge of
the Seller, none of the officers, directors, employees, consultants, or agents
of the Seller or any of its
38
Subsidiaries has Claims against any of the Companies or the Company Subsidiaries
by reason of any tort, breach of contract or violation of law.
4.40 Disclosure. No representation or warranty of the Seller or any of the
Companies contained in this Agreement, or the schedules hereto, and no closing
certificate furnished by the Seller or any of the Companies to AHI and/or the
Purchaser at the Closing contains or will contain any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances in which
they are made, not misleading.
4.41 Assumptions in the Execution Date Legal Opinion. All the assumptions
of facts in the Execution Date Legal Opinion and to the extent they are relied
upon or assumed in the Bring Down Execution Date Legal Opinion are correct in
all respects, except to the extent it would not adversely affect the opinion
rendered in the Execution Date Legal Opinion. Without limiting the generality of
the foregoing:
(a) The information set forth in Exhibit A of the Execution Date Legal
Opinion is correct and complete in all respects, except to the extent it would
not adversely affect the opinion rendered in the Execution Date Legal Opinion.
(b) The assumptions in the Execution Date Legal Opinion regarding (i) the
current market value of all of the Seller's operating assets, and (ii) the
assets to be sold to the Purchaser (i.e., 100% of the outstanding capital stock
of the Companies) not accounting for a greater percentage of the current market
value of the Seller's assets than the percentage of the book value of the
Seller's assets set forth in Exhibit A to the Execution Date Legal Opinion are
correct and complete in all respects, except to the extent it would not
adversely affect the opinion rendered in the Execution Date Legal Opinion.
(c) The assumptions in the Execution Date Legal Opinion regarding the
transfer of the Companies and the Company Subsidiaries is correct and complete
in all respects, except to the extent it would not adversely affect the opinion
rendered in the Execution Date Legal Opinion.
4.42 Projections. The projections relating to operations of the Companies
for the quarter ended March 31, 2001 attached hereto as Schedule 4.42 (the
"Projections"), have been prepared in good faith. The Seller reasonably believes
that the assumptions on which the Projections are based are reasonable; however,
there can be no assurances that the Projections will be achieved.
ARTICLE V.
INDEMNIFICATION; RELEASES, ETC.
5.1 Survival of the Representations and Warranties. The representations and
warranties contained in Sections 4.1, 4.2, 4.14 (with respect to matters
relating to title to the Securities), 4.25, 4.26, and 4.34 shall survive the
Closing and remain in effect until the expiration of the applicable statute of
limitations. The representations and warranties contained in Section 4.30 shall
survive the Closing and remain in effect for a period of four and one-half (4
1/2) years following the Closing. All other representations and warranties of
AHI, Purchaser, the
39
Seller and the Companies set forth in this Agreement shall survive the Closing
for the lesser of (i) two (2) years following the Closing Date and (ii) 30 days
following the completion of the second consolidated year end audit of AHI by
AHI's independent accountants. The parties to this Agreement agree that except
with respect to all equitable remedies, including injunctive relief and specific
performance, the exclusive remedies for any breach of a representation,
warranty, covenant, or agreement set forth herein shall be the indemnification
provisions set forth in any applicable Section herein. AHI and the Purchaser
shall have all remedies available at law or equity with respect to a claim of
fraud by the Seller or any of the Companies.
5.2 Investigation. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made. All statements contained herein or in the
Disclosure Schedule or in any certificate delivered pursuant hereto at the
Closing shall be deemed to be representations and warranties for purposes of
this Agreement.
5.3 Indemnification Generally
(a) By the Companies and the Seller. The Seller and the Companies (but,
with respect to the Companies, only if the Closing has not occurred), agree,
jointly and severally, to be responsible for and shall pay and indemnify and
hold harmless Purchaser and AHI and its directors, officers, employees and
agents from, against and in respect of, the full amount of any and all
liabilities, damages, claims, deficiencies, fines, assessments, losses,
penalties, interest costs and expenses, including, without limitation,
reasonable fees and disbursements of counsel (collectively, "Losses"), arising
from, in connection with, or incident to (i) any breach or violation of any of
the representations, warranties, covenants or agreements of the Seller or any of
the Companies contained in this Agreement (other than the representations and
warranties set forth in Section 4.26), the Disclosure Schedule, or any closing
certificate delivered at Closing; (ii) any liability resulting from any
litigation involving the Companies, if no accrual for such liability was taken
into account in the preparation of the Closing Date Balance Sheet or if an
accrual for such liability was taken into account in the preparation of the
Closing Date Balance Sheet, to the extent such liability exceeds the accrual for
such liability set forth on the Closing Date Balance Sheet, regardless of
whether or not such litigation was disclosed by the Seller on Schedule 4.6;
(iii) Seller's failure to obtain the approval of its shareholders of the
consummation of the transactions contemplated hereby; (iv) any and all claims
arising out of, relating to, resulting from or caused (whether in whole or in
part) by any transaction, event, condition, occurrence or situation in any way
relating to the Seller, its Subsidiaries (other than the Companies and the
Company Subsidiaries) and the Transferred Company Subsidiaries or the conduct of
their business at any time (v) the transfer of the Transferred Company
Subsidiaries to the Seller; (vi) any Claims asserted by Xxxxxx X'Xxxx against
any of the Companies or the Company Subsidiaries; (vii) any liability arising
from or relating to any item set forth on Schedule 4.30, (viii) any liability
resulting from any shareholders derivative action instituted against the Seller
relating to or resulting from this Agreement and the transactions contemplated
hereby and (ix) any and all actions, suits, proceedings, demands, assessments or
judgments, costs and expenses incidental to any of the foregoing.
40
(b) By the Purchaser. AHI and the Purchaser agree, jointly and severally,
to indemnify and hold harmless the Seller, and its directors, officers,
employees, and agents from, against and in respect of, the full amount of any
and all Losses, costs and expenses, including, without limitation, reasonable
fees and disbursements of counsel arising from, in connection with, or incident
to (i) any breach or violation of any of the representations, warranties,
covenants or agreements of AHI or the Purchaser contained in this Agreement or
any agreement referred to herein and delivered at or prior to the Closing and
(ii) any and all actions, suits, proceedings, demands, assessments or judgments,
costs and expenses incidental to any of the foregoing.
(c) Indemnity Procedure. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnity is referred to as the "Indemnified Party".
(i) An Indemnified Party under this Agreement shall, with respect to
claims asserted against such party by any third party, give
written notice to the Indemnifying Party of any liability which
might give rise to a claim for indemnity under this Agreement, to
the extent reasonably possible, not later than fifteen (15) days
prior to the date any answer or responsive pleading is due, and
with respect to other matters for which the Indemnified Party may
seek indemnification, give prompt written notice to the
Indemnifying Party of any liability which might give rise to a
claim for indemnity; provided, however, that any failure to give
such notice will not waive any rights of the Indemnified Party,
except to the extent the rights of the Indemnifying Party are
materially prejudiced.
(ii) The Indemnifying Party shall have the right, at its election, to
take over the defense or settlement of such claim by giving
written notice to the Indemnified Party at least ten (10) days
prior to the time when an answer or other responsive pleading or
notice with respect thereto is required. If the Indemnifying
Party makes such election, it may conduct the defense of such
claim through counsel of its choosing (subject to the Indemnified
Party's approval of such counsel, which approval shall not be
unreasonably withheld), shall be solely responsible for the
expenses of such defense and shall be bound by the results of its
defense or settlement of the claim. The Indemnifying Party shall
not settle any such claim without prior notice to and
consultation with the Indemnified Party, and no such settlement
involving any equitable relief or which is reasonably likely to
have an adverse effect on the Indemnified Party may be agreed to
without the written consent of the Indemnified Party (which
consent shall not be unreasonably withheld). So long as the
Indemnifying Party is diligently contesting any such claim in
good faith, the Indemnified Party may pay, settle, or compromise
such
41
claim only at its own expense and the Indemnifying Party will not
be responsible for the fees of separate legal counsel to the
Indemnified Party, unless the named parties to any proceeding
include both parties and representation of both parties by the
same counsel would be a conflict of interest for such counsel. If
the Indemnifying Party does not make such election, or having
made such election does not, in the good faith reasonable opinion
of the Indemnified Party proceed diligently to defend such claim,
then the Indemnified Party may (after written notice to the
Indemnifying Party), at the expense of the Indemnifying Party,
elect to take over the defense of and proceed to handle such
claim in its discretion and the Indemnifying Party shall be bound
by any defense or settlement that the Indemnified Party may make
in good faith with respect to such claim. In connection
therewith, the Indemnifying Party will fully cooperate with the
Indemnified Party should the Indemnified Party elect to take over
the defense of any such claim.
(iii) The parties agree to cooperate in defending such third party
claims and the Indemnified Party shall provide such cooperation
and such access to its books, records and properties as the
Indemnifying Party shall reasonably request with respect to any
matter for which indemnification is sought hereunder; and the
parties hereto agree to cooperate with each other in order to
ensure the proper and adequate defense thereof.
(iv) With regard to claims of third parties for which indemnification
is payable hereunder, such indemnification shall be paid by the
Indemnifying Party upon the earliest to occur of: (i) the entry
of a judgment against the Indemnified Party and the expiration of
any applicable appeal period, or if earlier, five (5) days prior
to the date that the judgment creditor has the right to execute
the judgment; (ii) the entry of an unappealable judgment or final
appellate decision against the Indemnified Party; or (iii) a
settlement of the claim. Notwithstanding the foregoing, provided
that there is no good faith dispute as to the applicability of
indemnification, the reasonable expenses of counsel to the
Indemnified Party shall be reimbursed on a current basis by the
Indemnifying Party if such expenses are a liability of the
Indemnifying Party. With regard to other claims for which
indemnification is payable hereunder, such indemnification shall
be paid promptly by the Indemnifying Party upon demand by the
Indemnified Party. Seller may elect to satisfy, in whole or in
part, any obligation under this Section 5.3 by delivering to AHI
Consideration Shares valued at the Average Price with respect to
the date of such delivery.
(d) Right To Set-off. Should Purchaser or AHI be entitled to
indemnification by the Seller against the Seller, the Purchaser or AHI may first
set-off and deduct from the
42
Escrow Amount the amount of any Losses for which the Seller is required to
indemnify Purchaser or AHI hereunder. The Seller may set off the amount of any
Loss for which the Seller is required to indemnify the Purchaser or AHI pursuant
to Section 5.6(b)(iii) against the amount of any Loss for which the Purchaser or
AHI is required to indemnify the Seller. Except as set forth in Section 2.6, the
Purchaser or AHI may set-off the amount of any Loss for which the Purchaser or
AHI is required to indemnify the Seller against the amount of any Loss for which
the Seller is required to indemnify the Purchaser or AHI. Seller may elect to
satisfy, in whole or in part, any obligation under this Section 5.3(d) by
delivering to AHI Consideration Shares valued at the Average Price as of the
date of such delivery.
(e) Limitations on Indemnification.
(i) No indemnification payment shall be made to the Purchaser, AHI,
or their respective directors, officers, employees or agents
pursuant to this Agreement, until the amounts which the Purchaser
would otherwise be entitled to receive as indemnification under
this Agreement aggregate at least $500,000 (the "Deductible"), at
which point AHI and/or Purchaser, as applicable, shall be
entitled to be indemnified with respect to aggregate Losses in
excess of the Deductible. The indemnification provisions set
forth in Sections 5.3(a)(i) (with respect to Section 4.25),
5.3(a)(iii), 5.3(a)(vi), 5.3(a)(viii), 5.6, 5.7 or 7.13(c) or
with respect to a claim of fraud by the Seller or the Companies
shall not be subject to the limitations set forth in this Section
5.3(e).
(ii) Anything in this Agreement to the contrary notwithstanding, no
indemnification payment shall be required to be made to
Purchaser, AHI and their respective directors, officers,
employees or agents with respect to a breach by Seller or the
Companies of any representation or warranty set forth herein, in
excess of $40,000,000; provided, however, that the foregoing
limitation shall not apply to the indemnification provisions set
forth in Section 5.3(a)(i) (with respect to Sections 4.25, and
4.30), 5.3(a)(iii), 5.3(a)(vi), 5.3(a)(vii), 5.3(a)(viii), 5.6,
5.7 or 7.13(c) or with respect to a claim of fraud by the Seller
or the Companies hereto.
(iii) The indemnification obligations of any party to this Agreement
under this Section 5.3 shall be reduced by any insurance proceeds
which the Indemnified Party has received in respect of such
Losses, costs and expenses.
(iv) AHI and the Purchaser hereby waive their rights to punitive
damages.
5.4 General Releases. As additional consideration for the sale of the
Securities pursuant to this Agreement, the Seller, on behalf of itself and its
Subsidiaries (other than the
43
Companies and the Company Subsidiaries) and controlled Affiliates hereby
unconditionally and irrevocably releases and forever discharges, effective as of
the Closing Date, each of the Companies, the Company Subsidiaries, and the
officers, directors, employees and agents of the Companies and the Company
Subsidiaries, from any and all rights, claims, demands, judgments, obligations,
liabilities and damages, whether accrued or unaccrued, asserted or unasserted,
and whether known or unknown ("Claims"), relating to any of the Companies or the
Company Subsidiaries which ever existed or now exist, by reason of any tort,
breach of contract, violation of law or other act or failure to act which shall
have occurred at or prior to the Closing Date, or in relation to any other
liabilities of any of the Companies or Company Subsidiaries to the Seller. The
Seller expressly intends that the foregoing release shall be effective
regardless of whether the basis for any claim or right hereby released shall
have been known to or anticipated by the Seller.
5.5 Joint and Several Obligation. All representations, warranties,
covenants, agreements, and liabilities of the Seller and the Companies, on the
one hand, and AHI and the Purchaser, on the other hand, under this Agreement,
including without limitation under Sections 5.3 and 5.6 hereof, shall be the
joint and several obligation of the Seller and each of the Companies and for the
benefit of AHI and the Purchaser, on the one hand, and the joint and several
obligations of AHI and the Purchaser for the benefit of Seller, on the other
hand. In the case of any breach or other violation of any of the terms and
provisions of this Agreement, AHI or the Purchaser may seek to enforce any
remedy against any or all of the Seller and the Companies as AHI or the
Purchaser shall determine in their sole discretion with respect to any breach or
violation by Seller or any of the Companies, and Seller may seek to enforce any
remedy against AHI or the Purchaser in its sole discretion with respect to any
breach or violation by AHI or the Purchaser. None of the provisions of this
Agreement shall give rise to any right of action by or for the Seller, and the
Seller shall not have any rights, against any of the Companies or any of the
Company Subsidiaries if a remedy is sought or obtained against the Seller
because any one or more Companies breaches any representation, warranty,
covenant or agreement set forth herein.
5.6 Tax Matters
(a) The Seller shall be responsible for, and shall pay or cause to be paid,
and shall indemnify and hold the Companies, the Company Subsidiaries, AHI, the
Purchaser, and their Affiliates and successors (the "Purchaser Indemnified
Parties") harmless from and against any and all Taxes that may be imposed on or
assessed against them on account of Taxes imposed upon the Companies or the
Company Subsidiaries or their assets (i) with respect to all taxable periods
ended on or prior to the Closing Date (including, but not limited to, the
contested items set forth on Schedule 4.26, to the extent, but only to the
extent, such amounts are due and owing), if and to the extent, but only to the
extent, that the liability for such Taxes exceeds the liabilities or accruals
taken into account in the preparation of the Closing Date Balance Sheet for
Taxes relating to such periods; (ii) with respect to any Person other than any
of the Companies or the Company Subsidiaries arising under Reg. Section 1.1502-6
(or any similar provision or state, local, or foreign law), or as a transferee
or successor or by contract or otherwise; (iii) with respect to any and all
Taxes allocated to Seller pursuant to Section 5.6(c) hereof, if and to the
extent, but only to the extent, that the liability for such Taxes exceeds the
liabilities or accruals taken into account in the preparation of the Closing
Date Balance Sheet for Taxes relating to
44
such periods; (iv) with respect to any Taxes incurred by or imposed upon any of
the Companies, the Company Subsidiaries, the Purchaser or AHI in connection with
the transactions contemplated hereby, other than as described in Section 5.6(b);
(v) with respect to Tax liabilities of the Seller and its Subsidiaries (other
than the Companies or the Company Subsidiaries) arising after the Closing Date,
(vi) arising from any misrepresentation or breach of warranty contained in
Sections 2.7 and 4.26 hereof. The Seller shall also pay or cause to be paid and
shall indemnify and hold harmless the Purchaser Indemnified Parties from and
against all losses, damages and reasonable third party costs and expenses
(including reasonable attorney, accountant and expert witness fees and
disbursements) ("Related Costs") incurred in connection with the Taxes for which
the Seller indemnifies the Purchaser Indemnified Parties pursuant to this
Section 5.6(a) (or any asserted deficiency, claim demand or assessment,
including the defense or settlement thereof) or the enforcement of this Section
5.6(a). Any payment required to made by the Seller pursuant to this Section
5.6(a) shall be made within 30 days after written notice from the Purchaser.
(b) The Purchaser shall be responsible for, and shall pay or cause to be
paid, and shall indemnify and hold the Seller harmless from and against, any and
all Taxes that may be imposed on or assessed against the Seller on account of
Taxes imposed on any of the Companies or the Company Subsidiaries or their
assets (i) for any taxable periods ended on or prior to the Closing Date, if and
to the extent, but only to the extent, that the liability for such Taxes does
not exceed the liabilities or accruals taken into account in the preparation of
the Closing Date Balance Sheet for Taxes relating to such periods; (ii) with
respect to taxable periods of the Companies and the Company Subsidiaries
beginning after the Closing Date; (iii) that result from the Tax Elections, and
for any interest and penalties accruing on such Taxes and all costs of defending
against the imposition of such Taxes, but only to the extent that the Taxes
incurred and actually paid by the Seller or any of the Companies with respect to
the gain allocated to the Seller or any of the Companies on the deemed asset
sale resulting from the Tax Elections are greater than the Taxes which would
have been incurred by the Seller or any of the Companies if the Tax Elections
had not been made; increased by any Tax cost incurred by Seller or any of the
Companies as a result of the receipt of the indemnity payment and decreased by
any Tax benefit received by Seller or any of the Companies as a result of the
receipt of such payment; provided, however, such indemnity shall be reduced
dollar for dollar by the amount of any Tax benefits obtained by Seller,
including foreign tax credits, as a result of making the Tax Elections which
would not have been obtained by the Seller or any of the Companies if the Tax
Elections had not been made and further, provided, in no event shall Purchaser's
indemnification obligation pursuant to this Section 5.6 exceed $2,000,000,
provided further that (A) the Seller's utilization of tax loss carryovers, Tax
credits and other Tax benefits will be verified annually by the third party
preparer of Seller's tax returns. Such verification will be provided in writing
to the Purchaser 30 days prior to the actual filing date of Seller's federal
income tax return. In addition, at the time of issuance of the verification,
Seller agrees to allow Purchaser and its tax advisors 30 days to review Form
1118 and all workpapers supporting the Seller's utilization of foreign tax
credits or other Tax benefits resulting from the Tax Elections. This
verification process will remain in effect until all such Tax benefits are
utilized or expire; and (iv) with respect to any and all Taxes allocated to the
Purchaser pursuant to Section 5.6(c) hereof. The Purchaser shall also pay or
cause to be paid and shall indemnify and hold harmless the Seller from and
against all Related Costs of the Seller incurred in connection with the Taxes
for which the Purchaser indemnifies the Seller pursuant to this Section 5.6(b)
(or any asserted deficiency,
45
claim, demand or assessment, including the defense or settlement thereof) or the
enforcement of this Section 5.6(b). Any payment required to be made by the
Purchaser pursuant to this Section 5.6(b) shall be made within 30 days of
written notice from the Seller.
(c) The Companies, the Company Subsidiaries, and the Purchaser shall close
the taxable period of the Companies and the Company Subsidiaries on the Closing
Date, unless such action is prohibited by law. In any case where Applicable Law
prohibits any Company or any Company Subsidiary from closing its taxable year on
the Closing Date, then Taxes, if any, attributable to the taxable period of such
Company or Company Subsidiary beginning before and ending after the Closing Date
shall be allocated (i) to Seller for the period up to and including the Closing
Date, and (ii) to Purchaser for the period subsequent to the Closing Date. For
purposes of this Section 5.6(c), Taxes for the period up to and including the
Closing Date ("Seller's Taxes") shall be determined on the basis of an interim
closing of the books as of the end of the Closing Date; provided, however, that
in the case of any Tax not based on income or receipts, such Seller's Taxes
shall be equal to the amount of such Tax for the taxable year multiplied by a
fraction, the numerator of which shall be the number of days from the beginning
of the taxable year through the Closing Date, and the denominator of which shall
be the number of days in the taxable year.
(d) Seller shall be responsible for filing or causing to be filed all tax
returns required to be filed by or on behalf of the Companies and the Company
Subsidiaries for all periods ending prior to the Closing Date, which tax returns
shall be filed by their due dates after the Closing Date. Seller shall provide
AHI with a copy of each such tax return at least ten days prior to filing.
Seller shall file the federal and non-U.S. tax returns (and related state
returns) for the tax year of Seller that includes the Closing Date ("Seller's
Closing Tax Returns") by or on behalf of the Companies for the period ending on
the Closing Date, which returns shall reflect and include the Tax Elections, on
or before their due dates and shall provide to the Purchaser, for review and
approval, pro-forma tax returns of the Companies derived from Seller's Closing
Tax Returns at least ten (10) days prior to the filing date. The Purchaser's
approval shall not be unreasonably withheld, and in no event shall this section
operate to cause any such return to be filed after the due date (including any
extension thereof) for the filing of such return. Purchaser shall be responsible
for filing or causing to be filed all tax returns required to be filed by or on
behalf of the Companies and the Company Subsidiaries after the Closing Date.
With respect to returns for periods that begin before but end after the Closing
Date ("Straddle Returns"), the Purchaser shall pay or cause to be paid all Taxes
to which such returns relate for all periods covered by such returns; provided,
however, that the Seller shall pay to the Purchaser the amount determined
pursuant to Section 5.6(c) hereof, but only to the extent the Seller has an
obligation to indemnify the Purchaser for such amounts pursuant to Section
5.6(a) hereof, not later than fifteen days before the due date for payment of
Taxes with respect to such tax returns. The Purchaser shall provide the Seller
with a statement setting forth in reasonable detail the amount, if any, payable
pursuant to this Section 5.6(d). Seller and its tax advisors shall cooperate
with Purchaser and its tax advisors from the Closing Date, and shall make
available all work papers and relevant schedules for the preparation of the
Companies and Company Subsidiaries' tax returns including the Tax Election Form,
the Straddle Returns and Seller's Closing Tax Returns.
(e) The Seller and the Purchaser shall cooperate fully with each other and
make available to each other in a timely fashion such Tax data and other
information and
46
personnel as may be reasonably required for the payment of any estimated Taxes
and the preparation of any tax returns required to be prepared hereunder. The
Seller and the Purchaser shall make available to the other, as reasonably
requested, all information, records or documents in their possession relating to
Tax liabilities of the Companies and the Company Subsidiaries for all taxable
periods thereof ending on, before or including the Closing Date and shall
preserve all such information, records and documents until the expiration of any
applicable Tax statute of limitations or extensions thereof; provided, however,
that in the event a proceeding has been instituted for which the information,
records or documents are required prior to the expiration of the applicable
statute of limitations such information, records or documents shall be retained
until there is a final determination with respect to such proceeding.
(f) The Purchaser and the Seller shall promptly notify each other in
writing upon receipt by the Purchaser or the Seller, as the case may be, of any
notice of any tax audits, reviews, examinations, or investigations of or
assessments against any of the Companies or the Company Subsidiaries for taxable
periods beginning prior to the Closing Date and ending prior to, on or after the
Closing Date (the "Tax Notification Periods"). The failure of one party promptly
to notify the other party of any such audit or assessment shall not forfeit the
right to indemnity except to the extent that the Seller is materially prejudiced
as a result. The Purchaser shall have the sole right to represent the Companies'
and the Company Subsidiaries' interests in any Tax proceeding relating to such
tax audits or assessments and to employ counsel of its choice at its expense;
provided, however, that Seller shall have the right to consult with the
Purchaser regarding any tax audit or assessment relating to any Tax Notification
Period, and provided further, that any settlement or other disposition of any
such tax audit or assessment relating to any Tax Notification Period that would
result in an indemnity payment by the Seller to the Purchaser shall be made
subject to the consent of the Seller, which consent shall not be unreasonably
withheld or delayed. The Purchaser, on the one hand, and the Seller, on the
other, each agree to cooperate fully with the other and its or their respective
counsel in the defense against or compromise of any claim in any tax proceeding.
(g) The Seller and the Purchaser agree that any payments made hereunder
(whether made directly to a party or to another indemnitee) will be treated by
the parties as an adjustment to the aggregate Purchase Price for the Securities.
(h) All obligations under this Section 5.6 shall survive the Closing
hereunder and continue until 10 days following the expiration of the statute of
limitations on assessment of the relevant Tax. Notwithstanding the foregoing,
any claim for indemnification hereunder shall survive such termination date if,
prior to the termination date, the party making the claim shall have advised the
other party in writing of facts that may constitute or give rise to an alleged
claim for indemnification, specifying in reasonable detail the basis under this
Agreement for such claim.
(i) Except as expressly provided in this Section 5.6, any claims for
indemnification made pursuant to this Section 5.6 shall be made in accordance
with the procedures set forth in Section 5.3(c).
5.7 Brazilian Tax-Related Indemnity. Notwithstanding anything to the
contrary contained in this Article V, including without limitation Section 5.6,
the Seller agrees to be
47
responsible for and shall pay and indemnify and hold harmless the Purchaser
Indemnified Parties and their respective officers, directors, employees and
agents from, against and in respect of, the full amount of any and all Losses
arising from, in connection with, or incident to any Brazilian Tax-Related
Losses (as hereinafter defined). For purposes of this Agreement, "Brazilian
Tax-Related Losses" shall mean any Losses incurred, directly or indirectly, by
the Purchaser Indemnified Parties and their respective officers, directors,
employees and agents as a result of any tax position taken, or change in tax
position taken, in or with respect to the Companies' or the Company
Subsidiaries' operations in Brazil (collectively, the "Brazilian Companies")
including, but not limited to, value added taxes and similar taxes payable to
Governmental Authorities in Brazil, and related interest, penalties and other
charges and shall include, but not be limited to, any diminution in value to the
Brazilian Companies resulting, directly or indirectly, from such changes in tax
positions, which the parties agree to use their best efforts to quantify prior
to Closing. The diminution in value of the Brazilian Companies shall be deemed
to be comprised of all costs or liabilities associated with the following: (i)
for a period of up to nine (9) months, but in no event longer than is required
to complete fully the actions listed in (iii) below, the incremental tax owed by
the Brazilian Companies, as a result of being taxed at a rate applicable to
manufacturing companies rather than service companies, (ii) the shut-down or
other closure of existing facilities, property, plant and equipment, (iii) the
opening, construction, lease or other acquisition of replacement facilities,
property, plant and equipment, and any and all costs and other expenses
associated with the relocation from one such facility to another such facility,
and (iv) the profits lost between the shut-down or closure specified in (ii)
above and the opening set forth in (iii) above. In no event shall the Brazilian
Tax-Related Losses exceed $5,000,000.
ARTICLE VI.
CLOSING; CONDITIONS PRECEDENT; DELIVERIES
6.1 Closing; Effective Date. Subject to the terms and conditions set forth
herein, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Xxxx Xxxxxxx, P.C., 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the third business day following the
date on which the Registration Statement has been declared effective by the SEC
and all other conditions to Closing have been satisfied or waived by the
appropriate party or on such other date and at such other place as may be agreed
to by the parties. All proceedings to be taken and all documents to be executed
at the Closing shall be deemed to have been taken, delivered and executed
simultaneously, and no proceeding shall be deemed taken nor documents deemed
executed or delivered until all have been taken, delivered and executed.
6.2 Conditions Precedent to the Obligations of AHI and the Purchaser. Each
and every obligation of AHI and the Purchaser to consummate the transactions
described in this Agreement and any and all liability of AHI and the Purchaser
to the Seller under this Agreement shall be subject to the fulfillment on or
before the Closing Date of the following conditions precedent or the waiver
thereof by AHI and the Purchaser:
(a) Representations and Warranties True; No Breach. Each of the
representations and warranties of the Seller and the Companies contained herein
or in any certificate or other document delivered pursuant to this Agreement or
in connection with the
48
transactions contemplated hereby shall be true and correct in all material
respects (except to the extent such representations and warranties contain a
materiality qualification, in which case they shall be true and correct in all
respects) at and as of the Closing Date (unless made with respect to a
particular date, then as of such date) with the same force and effect as though
made on and as of the Closing Date, except for changes contemplated by this
Agreement.
(b) Performance. The Seller and the Companies shall have performed and
complied in all material respects with each of the agreements, covenants and
obligations, and delivered all the deliveries, required under this Agreement to
be performed, complied with, or delivered by them, on or prior to the Closing
Date.
(c) Certain Financial Matters. The Seller shall have delivered to the
Purchaser the audited balance sheets and the audited statements of income, cash
flows, and retained earnings of the Companies on a combined basis and
consolidated with the Company Subsidiaries as of and for the fiscal year ended
December 31, 2000, including the notes thereto and the reports thereon (without
qualification) of the Seller's independent auditors, which shall not differ in
any material respect from the Financial Statements for the fiscal year ended
December 31, 2000 attached hereto as part of Schedule 4.1.2 (except as set forth
in Schedule 6.2(c)). In addition, if the Closing occurs on or after May 15,
2001, the Seller shall have delivered to the Purchaser an unaudited balance
sheet (showing the Tangible Net Assets as calculated in accordance with Section
2.3 hereof) and statement of income of the Companies on a combined basis and
consolidated with the Company Subsidiaries as of and for the three month period
ended March 31, 2001. If the Closing occurs on or after August 15, 2001, the
Seller shall have delivered to the Purchaser an unaudited balance sheet (showing
the Tangible Net Assets as calculated in accordance with Section 2.3 hereof) and
statement of income of the Companies on a combined basis and consolidated with
the Company Subsidiaries as of and for the six month period ended June 30, 2001.
The Seller and the Sellers accountants, at AHI's expense with respect to any
such quarterly and six month financial statements, shall have reviewed such
balance sheets and statements of income and advised AHI and the Purchaser in
writing that they (a) have been prepared in accordance with the books of account
and records of the Companies, (b) fairly present in all material respects the
Companies' financial condition and the results of its operations and cash flows
at the dates and for the periods specified in those statements, and (c) have
been prepared in accordance with GAAP consistently applied with prior periods.
(d) Seller's and Companies' Certificates. The Seller and each of the
Companies shall have delivered to AHI and the Purchaser (i) a certificate, dated
the Closing Date and signed on behalf of such Company by each such Company's
president or chief executive officer, certifying (x) that the conditions
specified in Sections 6.2(a), (b), (f), (g) and (h) have been fulfilled in all
material respects (except to the extent any such section contains a materiality
qualification, in which case it shall have been fulfilled in all respects), and
as to such other matters as Purchaser may reasonably request and (ii) a
certificate of the secretary of the Seller and each of the Companies attesting
the names and true signatures of the officers of the Seller and each of the
Companies authorized to execute this Agreement and each other document,
instrument, or certificate to be delivered pursuant hereto, together with the
true signature of each such officer (the "Seller's Officers' Certificates").
49
(e) Chief Financial Officers' Certificates. The Seller and each of the
Companies shall have delivered to AHI and the Purchaser a certificate, dated the
Closing Date and signed on behalf of the Seller by the Seller's chief financial
officer, certifying that there has occurred no Material Adverse Change (the
"Seller's Chief Financial Officers' Certificates"). The Chief Financial Officer
of the Seller, on behalf of the Seller, shall have delivered to AHI and the
Purchaser a certificate stating that, to his knowledge after reasonable inquiry
of the responsible officers of the Seller and after giving effect to the
transactions contemplated hereby, on the Closing Date the Seller is able to pay
its debts as they mature and the transfer of the Securities by the Seller to the
Purchaser and the consummation of the transactions, in accordance with the terms
of this Agreement, will not render Seller insolvent and is not a transfer in
fraud of any creditor under applicable federal or state solvency law.
(f) No Litigation; Applicable Law. No litigation, arbitration or other
legal or administrative proceeding shall have been commenced or be pending by or
before any Governmental Authority which enjoins or prohibits, or seeks to enjoin
or prohibit, the consummation of all or any of the transactions contemplated by
this Agreement; no Applicable Law of any Governmental Authority shall have been
enacted after the date of this Agreement which would prohibit the consummation
of any or all of the transactions contemplated by this Agreement; and no
judicial or administrative decision shall have been rendered which enjoins or
prohibits, or seeks to enjoin or prohibit, the consummation of all or any of the
transactions contemplated by this Agreement.
(g) Governmental Permits and Approvals. The Seller shall have obtained all
permits, approvals, authorizations, consents, waivers, and novations of any
Governmental Authority as may be required to consummate the transactions
contemplated by this Agreement.
(h) Consents. The Seller shall have obtained all material authorizations,
consents, waivers and approvals as may be required to consummate the
transactions contemplated by this Agreement including, but not limited to, any
required consents of any of the landlords to the Leased Property which is
required in accordance with the terms of the Leases, and consent of a third
party required with respect to any Material Agreement.
(i) Opinion of Counsel. AHI and the Purchaser shall have received (i) a
favorable opinion letter from Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, legal counsel
to the Seller, addressed to AHI and the Purchaser and dated the Closing Date, in
a form reasonably acceptable to AHI and the Purchaser (the "Xxxxxx Xxxxx
Xxxxxxxx & Xxxxxxx LLP Opinion") and (ii) such favorable opinion letters from
counsel to each of the Companies and the material Company Subsidiaries and their
respective material Subsidiaries as AHI and the Purchaser shall reasonably
request, addressed to AHI and the Purchaser, and dated the Closing Date, opining
as to the Companies and the Company Subsidiaries in France, Mexico, Brazil, and
Columbia as to valid issuance of securities, and good standing and valid
existence (if applicable in the jurisdiction of formation), and that no material
Governmental Authorizations are required to be obtained that have not been
obtained with respect to the consummation of the transactions contemplated
hereby, and otherwise in a form reasonably acceptable to AHI and the Purchaser.
(j) Bring Down Execution Date Legal Opinion. A letter of Squire, Xxxxxxx &
Xxxxxxx L.L.P., dated as of the Closing Date, in form and substance reasonably
satisfactory to
50
AHI and the Purchaser, reaffirming their opinion as set forth in the Execution
Date Legal Opinion (the "Bring Down Execution Date Legal Opinion").
(k) Confidentiality and Non-competition Agreement. (i) Messrs. Xxxxx Xxxxx
and Xxxxxxx X'Xxxx shall have entered into the Confidentiality and
Non-competition Agreement substantially in the form of Exhibit 1 hereto (the
"Confidentiality and Non-competition Agreements"); and (ii) Xxxxxx X'Xxxx has
executed and delivered a Restrictive Covenant Agreement as of the date hereof
for the benefit of AHI and the Purchaser (the "Xxxxxx X'Xxxx Agreement"), and
the Seller agrees that it will not, and will cause its Affiliates not to, pay
any amounts owed by the Seller, the Companies, the Company Subsidiaries, or
their respective Affiliates to Xxxxxx X'Xxxx (other than severance obligations)
if Xxxxxx X'Xxxx has breached or threatened to breach the Xxxxxx X'Xxxx
Agreement, or if AHI or the Purchaser has notified the Seller in writing of any
such breach or threatened breach.
(l) [Intentionally Omitted]
(m) Intellectual Property Assignments. The Purchaser shall have received
the executed Intellectual Property Assignments.
(n) Release by Xxxxx Xxxxx, and Xxxxxxx X'Xxxx. Each of Messrs. Xxxxx Xxxxx
and Xxxxxxx X'Xxxx shall execute a release, substantially in the form of Exhibit
2 hereto unconditionally and irrevocably releasing and forever discharging,
effective as of the Closing Date, each of the Companies, the Company
Subsidiaries, and the officers, directors, employees, agents, and Affiliates of
the Companies and the Company Subsidiaries, from any and all Claims relating to
the Companies and the Company Subsidiaries which ever existed or now exist, by
reason of any tort, breach of contract, violation of law or other act or failure
to act which shall have occurred at or prior to the Closing Date, or in relation
to any other liabilities of the Companies and the Company Subsidiaries to Xxxxx
Xxxxx or Xxxxxxx X'Xxxx (the "Principal Stockholder Releases").
(o) Fairness Opinions. The Board of Directors of AHI shall have received
the Purchaser's Fairness Opinion. The Board of Directors of the Seller shall
have received the Seller's Fairness Opinion and the Bring Down Fairness Opinion.
(p) Registration Statement Effective. If any portion of the Closing Payment
is to be paid in Consideration Shares, the Registration Statement shall have
been declared effective by the SEC and shall be effective as of the Closing Date
and no stop order with respect thereto shall have been issued or threatened, and
the Consideration Shares shall have been listed for trading on the New York
Stock Exchange, subject to official notice of issuance.
(q) Good Standing. Each of the Companies and the Company Subsidiaries shall
be in good standing (where applicable) in its respective jurisdiction of
incorporation or formation.
(r) Subsidiary Guarantees. Each of the Subsidiaries of the Seller, other
than the Companies and the Company Subsidiaries, shall have executed and
delivered a subordinated guaranty agreement in favor of AHI and the Purchaser
("Subsidiary Guarantees") guaranteeing all of the liabilities and obligations of
the Seller hereunder, which guarantees shall be in form
51
and substance reasonably acceptable to such Subsidiaries of the Seller executing
a Subsidiary Guarantee, AHI, the Purchaser, Seller, Seller's senior lender, the
holders of Seller's senior notes, prospective lenders of Seller and the
respective counsel to each of the foregoing.
(s) No Shareholder Approval Required. The laws of the state of
incorporation of the Seller shall not require the consent of the shareholders of
the Seller for the consummation of the transactions contemplated hereby;
provided however that if the Seller chooses to seek the approval of its
shareholders of this Agreement or the transactions contemplated hereby as a
result of either (i) the issuance of an order by a Governmental Authority
enjoining the consummation of the transactions contemplated hereby by reason of
the failure of the Seller to obtain the approval of its shareholders of this
Agreement and the transactions contemplated hereby or (ii) the inability of the
Seller to deliver the Bring Down Closing Date Legal Opinion due to a change in
Ohio law, such shareholder approval shall have been obtained.
(t) Bank Approval. AHI and the Purchaser shall have received all consents
with respect to this Agreement and the transactions contemplated hereby required
pursuant to the terms of the Credit Agreement, dated as of February 12, 1999,
among AHI, First Union National Bank, SunTrust Bank, North Florida, N.A., and
The Several Lenders from Time to Time Parties Thereto, Nationsbank, N.A., as
Documentation Agent, and Canadian Imperial Bank of Commerce, as Administrative
Agent, as amended, and the other agreements and documents entered into in
connection therewith (the "Bank Consents").
(u) HSR and Non-U.S. Anti-Trust Law Approval. The applicable waiting period
under the HSR Act shall have expired or been terminated and any waiting period
shall have expired or been terminated, or any necessary consent shall have been
granted, under any Non-U.S. Anti-Trust Law.
(v) Subsidiary Transfers. The Company Subsidiary Transfers shall have been
completed in form and substance reasonably satisfactory to the Purchaser.
(w) Escrow Agreement. The Seller shall have entered into the Escrow
Agreement.
(x) Russian Licenses. The Seller shall have caused each of X'Xxxx-Xxxx &
Xxxxxxxxxx CIS, X'Xxxx Security Systems, Inc., and O'Xxxx Xxxxx Automotive
(Russia) to transfer to a designee of the Purchaser all licenses, permits and
similar consents issued to them with respect to the armoring of vehicles (the
"Russian Licenses") if the Russian Licenses are transferable and, if the Russian
Licenses are not transferable, to cancel, rescind or terminate the Russian
Licenses.
(y) Subsidiary in Mexico. The Seller, at AHI's sole cost and expense, shall
have used its commercially reasonable efforts to take all actions and sign all
documents as are reasonably necessary in order to form a S.A. de C.V. in Mexico
that is a direct, wholly-owned subsidiary of X'Xxxx-Xxxx & Xxxxxxxxxx Armoring
Company and to cause such S.A. de C.V. to enter into a contract with The O'Gara
Company, Mexico S.A. de C.V. for the provision of employees.
52
6.3 Conditions Precedent to the Obligations of the Seller. Each and every
obligation of the Seller to consummate the transactions described in this
Agreement and any and all liability of the Seller to AHI and the Purchaser under
this Agreement shall be subject to the fulfillment on or before the Closing Date
of the following conditions precedent or the waiver thereof by the Seller:
(a) Representations and Warranties True. Each of the representations and
warranties of AHI and the Purchaser contained herein or in any certificate or
other document delivered pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects (except to the extent such representations and warranties contain a
materiality qualification, in which case they shall be true and correct in all
respects) at and as of the Closing Date (unless made with respect to a
particular date, then as of such date) with the same force and effect as though
made on and as of the Closing Date, except for changes contemplated by this
Agreement.
(b) Performance. AHI and the Purchaser shall have performed and complied in
all material respects with each of the agreements, covenants and obligations
required under this Agreement to be performed or complied with by AHI and the
Purchaser on or prior to the Closing Date.
(c) Officers' Certificate. Each of AHI and the Purchaser shall have
delivered to the Seller (i) a certificate, dated the Closing Date and signed by
each such company's president or chief executive officer, certifying that the
conditions specified in Sections 6.3(a) and (b) above have been fulfilled and
(ii) a certificate of the secretary of each such company attesting the names and
true signatures of the officers of AHI and the Purchaser authorized to execute
this Agreement and each other document, instrument, or certificate to be
delivered pursuant hereto, together with the true signature of each such officer
(the "Purchaser's Certificates").
(d) No Litigation; Applicable Law. No litigation, arbitration or other
legal or administrative proceeding shall have been commenced or be pending by or
before any Governmental Authority, and no Applicable Law of any Governmental
Authority shall have been enacted after the date of this Agreement which would
prohibit the consummation of any or all of the transactions contemplated by this
Agreement, and no judicial or administrative decision, shall have been rendered
which enjoins or prohibits, the consummation of all or any of the transactions
contemplated by this Agreement; provided that Seller shall not use any order
restraining or enjoining the consummation of the transaction primarily as a
result of Seller's failure to obtain approval of its shareholders to such
transaction as a basis for terminating this Agreement in order to avoid the
payments required of Seller by Section 6.9(d).
(e) Consents. AHI and the Purchaser shall have obtained all material
authorizations, consents, waivers and approvals as may be required by them to
consummate the transactions contemplated by this Agreement.
(f) Fairness Opinion. The Board of Directors of the Seller shall have
received the Seller's Fairness Opinion and the Bring Down Fairness Opinion.
53
(g) Opinion of Counsel. The Seller shall have received a favorable opinion
letter from Xxxx Xxxxxxx, P.C., legal counsel to the AHI and the Purchaser,
addressed to the Seller and dated the Closing Date, in the form reasonably
acceptable to the Seller (the "Xxxx Xxxxxxx Opinion").
(h) HSR Approval. The applicable waiting period under the HSR Act shall
have expired or been terminated.
(i) Registration Statement Effective. If any portion of the Closing Payment
is to be paid in Consideration Shares, the Registration Statement shall have
been declared effective by the SEC and shall be effective as of the Closing Date
and no stop order with respect thereto shall have been issued or threatened, and
the Consideration Shares shall have been listed for trading on the New York
Stock Exchange, subject to official notice of issuance.
(j) Shareholder Approval. If the Seller chooses to seek the approval of its
shareholders of this Agreement or the transactions contemplated hereby as a
result of either (i) the issuance of an order by a Governmental Authority
enjoining the consummation of the transactions contemplated hereby by reason of
the failure of the Seller to obtain the approval of its shareholders of this
Agreement and the transactions contemplated hereby or (ii) the inability of the
Seller to deliver the Bring Down Closing Date Legal Opinion due to a change in
Ohio law, such shareholder approval shall have been obtained.
6.4 Execution Date Deliveries by the Seller and the Companies. Concurrently
with the execution and delivery of this Agreement by the Seller and the
Companies, the Seller and the Companies shall deliver to AHI and the Purchaser
the Execution Date Legal Opinion.
6.5 Closing Date Deliveries by the Seller and the Companies. At the
Closing, the Seller and/or the Companies shall deliver the following documents
to AHI and the Purchaser:
(a) the certificates representing the Securities, together with stock
powers duly executed in blank, and certificates evidencing 100% of the capital
stock of the Company Subsidiaries issued in the name of the Companies and/or a
designee of AHI;
(b) a certificate, dated the Closing Date, of the Secretary of the Seller
and each of the Companies, setting forth the authorizing resolutions adopted by
the Seller's and each Company's Board of Directors with respect to the
transactions contemplated hereby;
(c) the written resignations of each of the directors and officers of each
of the Companies and the Company Subsidiaries, effective upon Closing;
(d) the minute books of the Companies and the Company Subsidiaries,
including corporate seals, unissued stock certificates, stock registers,
certificates of incorporation, bylaws and corporate minutes, and other formation
and organizational documents, certified by the Secretaries of the Companies and
the Seller;
(e) certificates issued by the Secretary of State or other similar
appropriate governmental department, as to the good standing (or similar
certificate) of each of the Companies and the Company Subsidiaries in its
jurisdiction of incorporation or formation and
54
certifying its certificate of incorporation or formation documents, as the case
may be, as amended to date; provided, however, no such certificate shall be
required for any Company Subsidiary if its jurisdiction of incorporation or
formation does not provide in the normal course for the issuance of such a
certificate.
(f) the consents or other permits, waiver, licenses or similar documents
referred to in Sections 6.2(g) and (h) hereof;
(g) the Confidentiality and Non-competition Agreements;
(h) the Seller's Officers' Certificates;
(i) the Seller's Chief Financial Officer's Certificates;
(j) the Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP Opinion;
(k) the Bring Down Execution Date Legal Opinion;
(l) the Seller's Fairness Opinion;
(m) the Principal Stockholder Releases;
(n) the Subsidiary Guarantees;
(o) the Intellectual Property Assignments; and
(p) such other documents and instruments as the Purchaser may reasonably
request.
6.6 Closing Date Deliveries by AHI and/or the Purchaser. At Closing, AHI
and/or the Purchaser shall deliver the following documents and funds to the
Seller:
(a) a wire transfer of funds (provided that the Seller shall, at least two
business days prior to Closing, have furnished appropriate wire instructions) to
the Seller in the aggregate amount of the Cash at Closing;
(b) certificates representing the Consideration Shares;
(c) a certificate of the Secretary of State of the State of Delaware, as of
a recent date, as to the good standing of AHI and the Purchaser and certifying
their respective certificates of incorporation;
(d) a certificate, dated the Closing Date, of the Secretary of AHI and the
Purchaser, setting forth the authorizing resolutions adopted by AHI and the
Purchaser's Board of Directors with respect to the transactions contemplated
hereby;
(e) the Purchaser's Certificates;
(f) the Xxxx Xxxxxxx Opinion; and
55
(g) such other documents and instruments as the Seller may reasonably
request;
6.7 Best Efforts. Subject to the terms and conditions provided in this
Agreement, each of the parties shall use their respective best efforts in good
faith to take or cause to be taken as promptly as practicable all reasonable
actions that are within its power to cause to be fulfilled those of the
conditions precedent to its obligations or the obligations of the other parties
to consummate the transactions contemplated by this Agreement that are dependent
upon its actions, including obtaining all necessary consents, authorizations,
orders, approvals and waivers.
6.8 Termination.
(a) This Agreement and the transactions contemplated hereby may be
terminated:
(i) at any time by the mutual consent of the Seller, the Companies,
Purchaser, and AHI;
(ii) by AHI or the Purchaser at any time at or prior to Closing in
their sole discretion if:
(1) any of the representations or warranties of the Seller or any
of the Companies in this Agreement are not true, accurate and complete
in all material respects (except to the extent such representations
and warranties contain a materiality qualification, in which case they
shall be true and correct in all respects) and such breach, if
curable, is not cured by the Termination Date;
(2) the Seller, its Subsidiaries, any of the Companies, or any of
the Company Subsidiaries materially breaches any covenant contained in
this Agreement and such breach, if curable, is not cured by the
Termination Date;
(3) any of the conditions precedent to the Purchaser's
obligations to conduct the Closing have not been satisfied by the date
required thereof;
(4) any legal proceeding is commenced or threatened by any
governmental agency or other person directed against the consummation
of the Closing or any other transaction contemplated hereby, and
either AHI or the Purchaser reasonably and in good xxxxx xxxxx it
impractical or inadvisable to proceed in view of such legal proceeding
or threat thereof;
(5) the Bank Consents are not granted;
(6) the Closing has not occurred on or prior to the Termination
Date due to the failure of any consents or authorizations required
under the HSR Act to be granted or otherwise.
56
(7) AHI and the Purchaser's due diligence investigation of the
Companies and the Company Subsidiaries shall not have been completed
to their satisfaction, in their sole and complete discretion, with
respect to any Closing occurring after September 14, 2001 due to the
election of the Seller to seek the approval of its shareholders of
this Agreement or the transactions contemplated hereby.
(iii) by the Seller at any time at or prior to Closing in its sole
discretion if:
(1) any of the representations or warranties of the Purchaser in
this Agreement are not true, accurate and complete in all material
respects (except to the extent such representations and warranties
contain a materiality qualification, in which case they shall be true
and correct in all respects) and such breach, if curable, is not cured
by the Termination Date;
(2) if AHI or the Purchaser materially breaches any covenant
contained in this Agreement and such breach, if curable, is not cured
by the Termination Date;
(3) any of the conditions precedent to Seller's obligations to
conduct the Closing have not been satisfied by the date required
thereof;
(4) if the Closing has not occurred on or prior to the
Termination Date due to the failure of AHI to obtain the Bank Consents
or the failure of any consents or authorizations required under the
HSR Act to be granted; or
(5) If the Seller accepts any Acquisition Proposal, has
terminated this Agreement in writing and has paid the Break-up Fee and
Purchaser's Transactions Expenses.
(b) If this Agreement is terminated pursuant to this Section 6.8, written
notice thereof shall promptly be given by the party electing such termination to
the other party and, this Agreement shall terminate without further actions by
the parties and, except as set forth in Section 6.9, no party shall have any
further obligations under this Agreement. Notwithstanding the preceding
sentence, the provisions of Sections 7.3, 7.6(c) and (d), 7.7, 7.8, 8.8, 8.14,
8.15, and 8.18 shall survive the termination of this Agreement.
6.9 Liquidated Damages and Break-up Fees.
(a) If AHI and Purchaser elect to terminate this Agreement pursuant to
Section 6.8(a)(ii)(7) or in accordance with Section 6.8 on account of (i) the
occurrence or existence of a Material Adverse Change, (ii) a material breach of
a representation or warranty by the Seller or any Company, or Seller elects not
to close based on the failure of the condition precedent set forth in Section
6.3(d) (unless due to any of the reasons set forth in Section 6.3(j)), then
Seller shall promptly pay to AHI and the Purchaser upon notice thereof to the
Seller, all of AHI's and the Purchaser's out of pocket costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby, including without limitation the fees of all their advisers (including
accountants, attorneys, environmental consultants, financial advisors,
investigators, investment bankers and tax consultants and the expenses of such
advisers billable to AHI and/or the Purchaser), and travel expenses
("Transaction Expenses").
57
(b) If the Seller or any Company (i) materially breaches a covenant or
agreement set forth in Section 7.1, 7.2, 7.6(c) (other than Xxxxxx X'Xxxx), 7.12
(the last sentence), 7.13(b), 7.14, 7.15, 7.17 or 7.19, (ii) fails to provide
the Bring Down Execution Date Legal Opinion, (iii) chooses to seek shareholder
approval and such shareholder approval is not obtained, (iv) fails to receive
the Bring Down Fairness Opinion, or (v) if the audited Financial Statements for
the fiscal year ended December 31, 2000, shall be materially different from the
unaudited Financial Statements for the fiscal year ended December 31, 2000
attached hereto as Schedule 4.12 (except as set forth in Schedule 6.2(c)), and
AHI and Purchaser elect to terminate this Agreement in accordance with Section
6.8, Seller shall promptly pay to AHI and the Purchaser shall be entitled to
receive, promptly upon notice thereof to the Seller:
(i) AHI's and the Purchaser's Transaction Expenses; and
(ii) liquidated damages in the amount of Two Million Five Hundred
Thousand and 00/100 ($2,500,000.00) Dollars (the "Liquidation
Damage Amount").
(c) If the Closing does not occur on account of any reason set forth in
paragraph (b) above, and within 18 months after the termination of the Agreement
by AHI and the Purchaser, the Seller enters into an agreement for an Acquisition
Proposal with any other person then the Seller shall promptly pay to AHI and/or
the Purchaser, in addition to the Liquidated Damage Amount payable under
paragraph (b) above, an additional fee of One Million Five Hundred Thousand and
00/100 ($1,500,000.00) Dollars (the "Additional Break-up Fee").
(d) If the Closing does not occur because the Seller or the Companies or
any controlled affiliates of the Seller or any Company have entered into an
agreement for an Acquisition Proposal with any other person and terminates this
Agreement in accordance with Section 6.8 then the Seller shall promptly pay to
AHI and/or the Purchaser:
(i) The Transaction Expenses of AHI and Purchaser; plus
(ii) $4,000,000 (the "Break-Up Fee")
(e) Payment by Seller of the Transaction Expenses, Liquidation Damages
Amount, Break-up Fee and Additional Break-up Fee as the case may be as required
by paragraphs (a) through (d) above, shall be in lieu of, and shall fully
satisfy and discharge, any claims for damages by AHI or the Purchaser in
connection with such matters, excluding damages in connection with a claim of
fraud.
ARTICLE VII.
COVENANTS AND OTHER AGREEMENTS
7.1 Interim Operations of the Seller, the Companies and the Company
Subsidiaries.
(a) During the period from the date of this Agreement to, and including,
the Closing Date, except with Purchaser's prior specific written consent, or as
required or contemplated by Sections 7.15 and 7.18, or as otherwise expressly
contemplated by this
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Agreement, the Companies and the Company Subsidiaries shall, and the Seller
shall cause the Companies and the Company Subsidiaries to, operate their
respective businesses only in the ordinary and usual course consistent with past
practices and to use reasonable efforts to preserve intact their business
organization and good will in all material respects, including without
limitation the good will and relationships of the Companies' and the Company
Subsidiaries' customers, suppliers, employees and vendors. Additionally, during
the period from the date of this Agreement to the Closing Date, the Companies
and the Company Subsidiaries shall not, and the Seller shall cause the Companies
and the Company Subsidiaries not to, do any of the following (unless otherwise
expressly contemplated by this Agreement or permitted in writing by Purchaser):
(i) amend their respective certificate or articles of incorporation
or bylaws or code of regulation or other formation and
organizational documents;
(ii) issue, sell or authorize for issuance or sale, shares of any
class of their respective securities (including, but not limited
to, by way of stock split or dividend) or any subscriptions,
options, warrants, rights or convertible securities, or enter
into any agreements or commitments of any character obligating it
to issue or sell any such securities;
(iii) redeem, purchase or otherwise acquire, directly or indirectly,
any shares of their capital stock or any option, warrant or other
right to purchase or acquire any such capital stock;
(iv) declare or pay any dividend or other distribution other than
between and among the Companies and the Company Subsidiaries
(whether in cash, stock or other property) with respect to their
capital stock;
(v) voluntarily sell, transfer, surrender, abandon or dispose of any
of their material assets or property rights (tangible or
intangible), other than in the ordinary course of business
consistent with past practices, and provided that any such sale,
transfer, surrender, abandonment or disposition which would
otherwise be in the ordinary course of business does not violate
this Agreement;
(vi) grant or make any mortgage or pledge or subject itself or any of
its properties or assets to any Encumbrance of any kind, except
liens for Taxes not currently due and Permitted Encumbrances not
incurred in connection with borrowed money;
(vii) create, incur or assume any liability or indebtedness, except
trade indebtedness in the ordinary course of business consistent
with past practices;
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(viii) create, incur or assume (1) any account or note payable, in
excess of $300,000 individually (without Purchaser's consent
which shall not be unreasonably withheld) or (2) accounts or
notes payable that exceed the amount of accounts or notes payable
as of March 31, 2001 by more than $3.4 million.
(ix) make or commit to make any capital expenditures exceeding Fifty
Thousand Dollars ($50,000.00), individually, or One Million
Dollars ($1,000,000), in the aggregate.
(x) become subject to any Guaranty;
(xi) apply any of its assets to the direct or indirect payment,
discharge, satisfaction or reduction of any amount payable
directly or indirectly to or for the benefit of the Seller or any
Affiliate of the Seller or any Related Party or to the prepayment
of any such amounts, other than expenses payable in the ordinary
course of business to the Seller or scheduled lease payments
under Leases listed on Schedule 4.16;
(xii) grant any increase in the compensation payable or to become
payable to directors, officers or employees (including, without
limitation, any such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment), except for annual
raises to employees other than executive officers in the ordinary
course of business consistent with past practices;
(xiii) except as listed on Schedule 7.1, enter into any agreement
which would be a Material Agreement, or amend or terminate any
existing Material Agreement, which is outside the ordinary course
of business consistent with past practices. With respect to the
foregoing, the Seller shall provide Purchaser with a complete
list of any such Material Agreements entered into, amended, or
terminated between the date hereof and the Closing Date;
(xiv) alter the manner of keeping their books, accounts or records, or
change in any manner the accounting practices therein reflected;
(xv) except as set forth on Schedule 7.1, enter into any commitment or
transaction other than in the ordinary course of business
consistent with past practices;
(xvi) do any act, or omit to do any act, or permit to the extent
within the Seller's, or any Company's or any Company
Subsidiary's, control, any act or omission to act which would
cause a material violation or breach of any of the
representations, warranties or covenants of the Seller or any of
the Companies set forth in this Agreement or cause any
representation or warranty set forth herein, or in any
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certificate or other document delivered in connection herewith,
to be untrue in any material respect on the Closing Date;
(xvii) take any action which has or could have a Material Adverse
Effect;
(xviii) alter in any manner any of the Companies' or Company
Subsidiaries' existing working capital facilities, or prepay any
debt other than a mandatory prepayment in the ordinary course of
business;
(xix) transfer, directly or indirectly, in any way, any cash, cash
equivalents, securities, or other assets to the Seller, or for
the benefit of the Seller, including, but not limited to, by way
of dividend, loan, repayment of indebtedness, payment of fees, or
other distribution or transfer except as expressly permitted by
the terms hereof (including Schedule 7.1); or
(xx) agree, whether in writing or otherwise, to do any of the
foregoing.
(b) During the period from the date of this Agreement to, and including,
the Closing Date, the Seller shall not sell or transfer any its assets, or
otherwise take any action, if, under the laws of the state of incorporation of
the Seller, such sale, transfer, or action would have the effect of requiring
the shareholders of the Seller to approve, or making it more likely that the
shareholders of the Seller would be required to approve, the transactions
contemplated hereby.
7.2 Access. The Seller shall, and shall cause the Companies and the Company
Subsidiaries to, afford to AHI and the Purchaser and their agents and
representatives, access throughout the period prior to the Closing Date to the
properties, books, records, contracts and all other information and documents
concerning its business, assets, liabilities, properties, and personnel of the
Companies and the Company Subsidiaries, for the purpose of permitting AHI and
the Purchaser to fully investigate and perform a due diligence review of the
Companies and the Company Subsidiaries, their respective businesses, assets and
properties, and financial condition, provided that such access shall be granted
upon reasonable notice during normal business hours in such a manner as to not
unreasonably interfere with the Companies' and the Company Subsidiaries' normal
business operations. During such period the Seller shall furnish promptly to
Purchaser copies of all material correspondence received or sent by or on behalf
of any of the Companies or the Company Subsidiaries from or to any Governmental
Authority.
7.3 Confidentiality (through Closing Date). Except as otherwise required in
the performance of obligations under this Agreement and except as otherwise
required by law, any non-public information received by a party or its advisors
from the other party shall be kept confidential and shall not be used or
disclosed for any purpose other than in furtherance of the transactions
contemplated by this Agreement. Such confidential information includes, without
limitation, audited and unaudited financial statements that show the Companies'
and the Company Subsidiaries' current and projected costs, and detailed
financial information supporting such statements. Neither AHI nor the Purchaser
shall use (or permit to be used) any confidential information in any manner to
compete against Seller or any of the Companies or the Company
61
Subsidiaries, whether with respect to corporate acquisitions, sales, financing,
development, management, investment, or otherwise. The obligation of
confidentiality shall not extend to information (a) which is or shall become
generally available to the public other than as a result of an unauthorized
disclosure by a party to this Agreement or a person to whom a party has provided
such information, (b) which was available to a party to this Agreement on a
nonconfidential basis prior to its disclosure by one party to the other pursuant
to this Agreement as evidenced by such other party's records on the date of such
disclosure, (c) was independently developed by Purchaser or (d) which is
disclosed by Purchaser in any legal proceeding requiring any such disclosure.
Upon any termination of this Agreement, each party shall promptly return any
confidential information received from the other party and, upon request, shall
destroy all copies of such information in its possession. The covenants of the
parties contained in this Section 7.3 shall survive any termination of this
Agreement until the earlier of (i) three (3) years from the date hereof, or (ii)
the date when such information becomes generally available to the public, but
shall terminate at the Closing, if it occurs, with respect to information
concerning the Companies and the Company Subsidiaries.
7.4 Notification. Each party to this Agreement shall promptly notify the
other party in writing of the occurrence, or pending or threatened occurrence,
of any event that would constitute a material breach or violation of this
Agreement by any party or that would cause any representation or warranty made
by the notifying party in this Agreement to be false or misleading in any
respect (including without limitation, any event or circumstance which would
have been required to be disclosed on any schedule to this Agreement had such
event or circumstance occurred or existed on or prior to the date of this
Agreement). Any such notification shall not limit or alter any of the
representations, warranties or covenants of the parties set forth in this
Agreement nor any rights or remedies a party may have with respect to a breach
of any representation, warranty or covenant.
7.5 Acquisition Proposals; No Solicitation. In consideration of the
substantial expenditure of time, effort, and expense undertaken by AHI and the
Purchaser in connection with the negotiation and execution of this Agreement,
the Seller and the Companies, jointly and severally, agree that unless this
Agreement has been terminated by the mutual agreement of the parties, neither
the Seller, nor any of the Companies nor the Company Subsidiaries, nor their
respective Affiliates, representatives, employees or agents (collectively,
"Agents") will, between the date hereof and the Closing, directly or indirectly,
(i) solicit, encourage, negotiate, or accept any proposal (whether solicited or
unsolicited) for, or execute any agreement relating to, a sale of all or any
part of the Securities, the Companies, or the Company Subsidiaries, or their
respective assets or a sale of any equity or debt security of the Seller or any
of the Companies or the Company Subsidiaries or any merger, consolidation,
combination, recapitalization, sale of any asset or other transaction involving
any of the Companies or the Company Subsidiaries with any other party (any of
the foregoing is referred to as an "Acquisition Proposal"), or (ii) provide any
information regarding any of the Companies or the Company Subsidiaries to any
third party for the purpose of soliciting, encouraging or negotiating an
Acquisition Proposal (it being understood that nothing contained in clauses (i)
or (ii) above shall restrict the Seller or any of its Agents from providing
information as required by legal process). In addition, the Seller and each of
the Companies shall promptly notify the Purchaser in writing of any third
party's Acquisition Proposal, or communication in connection with any potential
Acquisition Proposal, to the Seller or any of the Companies, together with all
relevant terms and conditions thereof.
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7.6 Non-competition and Non-disparagement.
(a) For purposes of this Section 7.6, all references to the Companies shall
be deemed to include all of the Company Subsidiaries and successors and assigns
of the Companies and the Company Subsidiaries, and all references to the Seller
shall be deemed to include the Seller on behalf of itself and all of its
Subsidiaries which are not one of the Companies or the Company Subsidiaries. The
Seller acknowledges that in order to assure AHI and the Purchaser that AHI and
the Purchaser will retain the value of the Companies as a "going concern," the
Seller, on and subject to the terms set forth in this Section 7.6, shall not
utilize its special knowledge of the business of the Companies and its
relationships with customers, prospective customers, suppliers and others to
compete with any of the Companies. For a period of five (5) years beginning on
the Closing Date, the Seller and its Affiliates shall not engage or have an
interest, anywhere in the United States of America or any other geographic area
where any of the Companies does business or in which any of the Companies'
products are marketed, alone or in association with others, as principal,
officer, agent, employee, director, partner or stockholder (except as an owner
of two percent (2%) or less of the stock of any company listed on a national
securities exchange or traded in the over-the-counter market), or through the
investment of capital, lending of money or property, rendering of services or
capital, or otherwise, in any business involving, relating or similar to,
directly or indirectly, the business of any of the Companies. During the same
period, the Seller and its controlled Affiliates shall not, and shall not permit
any of their employees, agents or others then under their control to, directly
or indirectly, on behalf of the Seller, its controlled Affiliates, or any other
Person, (i) call upon, accept competitive business from (as defined below), or
solicit the competitive business of any Person who is, or who had been at any
time during the preceding three (3) years, a customer, known prospective
customer, or supplier of any of the Companies or (ii) recruit, employ, or
otherwise solicit or induce any person who is an employee or consultant of, or
otherwise engaged by any of the Companies to terminate his or her employment or
other relationship with any of the Companies, or such successor, or hire any
person who has left the employ of the Companies, or any such successor during
the preceding two (2) years. The Seller and its Affiliates shall not at any
time, directly or indirectly, use or purport to authorize any Person to use any
name, xxxx, copyright, logo, trade dress or other identifying words or images
which are the same as or similar to those used currently or in the past by any
of the Companies in connection with any product or service, whether or not such
use would be in a business competitive with that of the Companies. The Seller
acknowledges that compliance with the restrictions set forth in this Section
7.6(a) will not prevent it from earning a livelihood. As used herein, the phrase
"competitive business" means any business competitive with the type of business
engaged in by the any of the Companies as of the date hereof. Notwithstanding
anything contained in this Section 7.6(a), (i) nothing shall prevent the Seller
or any of its Subsidiaries from providing consulting and other services relating
to executive protection and security/threat assessment or from using the phrase
"risk mitigation" in connection with the promotion, marketing and sale of their
products and services, and (ii) nothing shall prevent X'Xxxx-Xxxx & Xxxxxxxxxx
CIS, O'Xxxx Xxxxx Automotive (Russia), and OSS (Russia) from providing armoring
services in Russia.
(b) Each of AHI, Purchaser, on behalf of itself and their Affiliates, agree
that for a period of 18 months after the date hereof it will not solicit
American International Group ("AIG") as a customer for its kidnap and xxxxxx
services; provided, that such restriction shall terminate upon the sale of all
or substantially all of the assets of AIG, the sale of the capital stock
63
of AIG such that the existing shareholders of AIG do not own at least 50% of the
capital stock of AIG immediately after such sale, the merger of AIG with and
into another entity in which AIG is not the surviving entity or whereby AIG's
existing shareholders do not own at least 50% of the surviving entity, and shall
not apply to any Person which is currently a customer of AHI, the Purchaser or
any of the Companies or the Company Subsidiaries if such Person is acquired by
or merged into AIG.
(c) The Seller, on behalf of itself and its officers, directors, and
Subsidiaries, agrees not to make or cause to be made, directly or indirectly,
any disparaging or derogatory statements concerning any of the Companies, AHI,
the Purchaser, their Affiliates, their respective businesses, services,
reputations, or prospects, or their respective past or present officers,
directors, employees, attorneys, and agents.
(d) AHI and the Purchaser, on behalf of themselves and their officers and
directors, agree not to make or cause to be made, directly or indirectly, any
disparaging or derogatory statements concerning the Seller and its Subsidiaries
(other than the Companies and the Company Subsidiaries) their respective
businesses, services, reputations, or prospects, or their respective past or
present officers, directors, employees, attorneys, and agents.
7.7 General Confidentiality.
(a) For purposes of this Section 7.7(a), all references to AHI shall be
deemed to include all of AHI's Affiliates and Subsidiaries, including the
Purchaser, each of the Companies and the Company Subsidiaries. The Seller
acknowledges that the intangible property and all other confidential or
proprietary information with respect to the business and operations of AHI are
valuable, special and unique assets of AHI. The Seller shall not, at any time
after the Closing Date, disclose, directly or indirectly, to any Person, or use
or purport to authorize any Person to use any confidential or proprietary
information with respect to AHI, whether or not for the Seller's own benefit,
without the prior written consent of AHI or unless required by law, including
without limitation, (i) trade secrets, designs, formulae, drawings, intangible
property, diagrams, techniques, research and development, specifications, data,
know-how, formats, marketing plans, business plans, budgets, strategies,
forecasts and client data; (ii) information relating to the products developed
by AHI, (iii) the names of AHI's customers and contacts, AHI's marketing
strategies, the names of AHI's vendors and suppliers, the cost of materials and
labor, the prices obtained for goods or services sold (including the methods
used in price determination, manufacturing and sales costs), lists or other
written records used in AHI's business, compensation paid to employees and
consultants and other terms of employment, production operation techniques or
any other confidential or proprietary information of, about or pertaining to the
business of AHI, and any other confidential or proprietary information and
material relating to any customer, vendor, licensor, licensee, or other party
transacting business with AHI, (iv) all tangible material that embodies any
confidential and proprietary information as well as all records, files,
memoranda, reports, price lists, drawings, plans, sketches and other written and
graphic records, documents, equipment, and the like, relating to the business of
AHI, and (vi) any other confidential information or trade secrets relating to
the business or affairs of AHI which the Seller may acquire or develop in
connection with or as a result of the performance of his or its performance of
the terms and conditions of this Agreement, excepting only such information as
is already known to the
64
public or which may become known to the public without any fault of the Seller
or in violation of any confidentiality restrictions. The Seller acknowledges
that AHI and the Purchaser would not enter into this Agreement without the
assurance that all such confidential and proprietary information will be used
for the exclusive benefit of AHI.
(b) For purposes of this Section 7.7(b), all references to the Seller shall
be deemed to include all of the Seller's Subsidiaries other than the Companies
and the Company Subsidiaries. AHI and the Purchaser acknowledge that the
intangible property and all other confidential or proprietary information with
respect to the business and operations of the Seller are valuable, special and
unique assets of the Seller. AHI and the Purchaser shall not, at any time after
the Closing Date, disclose, directly or indirectly, to any Person, or use or
purport to authorize any Person to use any confidential or proprietary
information with respect to the Seller, whether or not for their own benefit,
without the prior written consent of the Seller or unless required by law,
including without limitation, (i) trade secrets, designs, formulae, drawings,
intangible property, diagrams, techniques, research and development,
specifications, data, know-how, formats, marketing plans, business plans,
budgets, strategies, forecasts and client data; (ii) information relating to the
products developed by the Seller, (iii) the names of the Seller's customers and
contacts, the Seller's marketing strategies, the names of Seller's vendors and
suppliers, the cost of materials and labor, the prices obtained for services
sold (including the methods used in price determination, manufacturing and sales
costs), lists or other written records used in the Seller's business,
compensation paid to employees and consultants and other terms of employment,
production operation techniques or any other confidential or proprietary
information of, about or pertaining to the business of the Seller, and any other
confidential or proprietary information and material relating to any customer,
vendor, licensor, licensee, or other party transacting business with the Seller,
(iv) all tangible material that embodies any confidential and proprietary
information as well as all records, files, memoranda, reports, price lists,
drawings, plans, sketches and other written and graphic records, documents,
equipment, and the like, relating to the business of the Seller, and (vi) any
other confidential information or trade secrets relating to the business or
affairs of the Seller which AHI or the Purchaser may acquire or develop in
connection with or as a result of the performance of his or its performance of
the terms and conditions of this Agreement, excepting only such information as
is already known to the public or which may become known to the public without
any fault of AHI or the Purchaser or in violation of any confidentiality
restrictions. AHI and the Purchaser acknowledge that the Seller would not enter
into this Agreement without the assurance that all such confidential and
proprietary information will be used for the exclusive benefit of the Seller.
7.8 Continuing Obligations; Equitable Remedies. The restrictions set forth
in Sections 7.6 and 7.7 are considered by the parties to be reasonable for the
purposes of protecting the value of the business and goodwill of the Seller, the
Companies, the Company Subsidiaries, AHI, and the Purchaser. AHI and Purchaser
and the Seller acknowledge that the Seller, AHI, and the Purchaser would be
irreparably harmed and that monetary damages would not provide an adequate
remedy to the aggrieved party in the event the covenants contained in Sections
7.5, 7.6 and 7.7 were not complied with in accordance with their terms.
Accordingly, the Seller, on the one hand, and AHI and the Purchaser on the
other, agree that any breach or threatened breach by any of them of any
provision of Sections 7.5, 7.6 or 7.7 shall entitle the other to injunctive and
other equitable relief to secure the enforcement of these provisions, in
addition to any other remedies (including damages) which may be available. If
the Seller breaches the covenant set
65
forth in Section 7.6, the running of the five (5) year non-compete period
described therein shall be tolled for so long as such breach continues. It is
the desire and intent of the parties that the provisions of Sections 7.5, 7.6,
and 7.7 be enforced to the fullest extent permissible under the laws and public
policies of each jurisdiction in which enforcement is sought. If any provisions
of Sections 7.5 and 7.6 relating to the time period, scope of activities or
geographic area of restrictions is declared by a court of competent jurisdiction
to exceed the maximum permissible time period, scope of activities or geographic
area, as the case may be, the time period, scope of activities or geographic
area shall be reduced to the maximum which such court deems enforceable. If any
provisions of Section 7.6 or 7.7 other than those described in the preceding
sentence are adjudicated to be invalid or unenforceable, the invalid or
unenforceable provisions shall be deemed amended (with respect only to the
jurisdiction in which such adjudication is made) in such manner as to render
them enforceable and to effectuate as nearly as possible the original intentions
and agreement of the parties. In addition, if any party brings an action to
enforce Sections 7.3, 7.5, 7.6 or 7.7 hereof or to obtain damages for a breach
thereof, the prevailing party in such action shall be entitled to recover from
the non-prevailing party all attorney's fees and expenses incurred by the
prevailing party in such action.
7.9 Change of Name. Within ten days of Closing, Seller and each of its
direct and indirect subsidiaries shall use their commercial reasonable efforts
to file a doing business or equivalent certificate under a name that does not
include O'Gara or words similar to or susceptible of confusion with O'Gara in
all jurisdictions in which it is qualified to do business. Within 90 days
following the Closing Date, Seller shall change its name and the names of all
its direct and indirect Subsidiaries to remove the words "O'Gara" or words
similar to or susceptible to confusion with "O'Gara", by amendment of its
certificate of incorporation.
7.10 Advice of Changes. Until the Closing, the Seller and the Companies on
the one hand and AHI and the Purchaser on the other will immediately provide the
other parties hereto written notice in reasonable detail of any fact or
occurrence or any pending or threatened occurrence with respect to its
obligations hereunder of which any of them obtains knowledge which (i) if
existing and known as of the date of this Agreement, would have been required to
be set forth or disclosed pursuant to this Agreement, (ii) if existing and known
at any time prior to or at the Closing, would make the performance by any party
of a covenant contained herein impossible or make that performance materially
more difficult, (iii) if existing and known at the time of Closing, would cause
a condition to any party's obligations under this Agreement not to be satisfied,
(iv) results in a breach of any representation, warranty, covenant, or agreement
of the Seller or the Companies set forth in this Agreement or any document or
certificate executed in connection herewith, or (v) would cause the Tangible Net
Assets to be less than the Minimum Tangible Net Assets.
7.11 Maintenance of Insurance. To the extent Seller or its Subsidiaries
obtains insurance covering any violations of Environmental and Safety
Requirements, the Seller and its Subsidiaries shall name AHI and the Purchaser
as an additional insured and a loss payee under such policy.
7.12 Sale of the French Carosserie. If, prior to the first anniversary of
the Closing Date, the Purchaser shall sell, agree to sell, or liquidate (the
"Carosserie Sale") the French division of the Companies, known as the French
Carosserie and its related service businesses
66
(the "Carosserie"), the Purchaser shall remit to the Seller an amount equal to
67% of the proceeds of the Carosserie Sale, less (i) U.S.$1,779,000,
representing the portion of the Purchase Price attributable to the purchase of
the Carosserie as a part of the transactions contemplated hereby, (ii) any
expenses incurred by the Purchaser or any of its Affiliates in connection with
the Carosserie Sale, (iii) working capital and other capital investments in the
French Carosserie made by or on behalf of the Purchaser, and (iv) the amount of
any liabilities of the French Carosserie not assumed (including severance pay to
Carosserie employees) by the purchaser in the Carosserie Sale. The Seller and
the Companies, on behalf of themselves and their controlled Affiliates, agree
that prior to the Closing they shall not without the prior consent of the
Purchaser (i) make any announcement to any employees of any of O'Gara France
S.A., X'Xxxx-Xxxx & Xxxxxxxxxx France S.A. (formerly known as Xxxxx X.X.),
Hellio Poids Lourds-Carosserie, Tolene, Peinture S.A., SARL Normandie
Carosserie, Societe de Blindage et de Securite, Essonne Carosserie VI S.A.R.L.
(formerly known as M.C.P.L., S.A.) concerning the transactions contemplated
hereby, any or potential sale or closing of the Carosserie or (ii) terminate the
employment of any person employed by the Carosserie as of the date hereof.
Announcements permitted pursuant to Section 8.18 shall not be deemed a violation
of this Section 7.12.
7.13 Registration Statement.
(a) AHI and the Seller shall use their respective best efforts to file, as
soon as practical after the date hereof, with the SEC under the Securities Act a
registration statement on Form S-3 covering the resale by the Seller of the
Consideration Shares (the "Registration Statement") and shall use their
respective best efforts to cause the Registration Statement to be declared
effective on or prior to the Closing Date and to cause the Consideration Shares
to be admitted for trading on the New York Stock Exchange upon official notice
of issuance on or prior to the Closing.
(b) The Seller shall furnish all information concerning the Seller, or
Subsidiaries of the Seller, including the Companies and Company Subsidiaries, or
their respective officers and directors, including financial statements, as may
be required by the Securities Act, as may be requested by the SEC or as AHI may
reasonably request in connection with the preparation of the Registration
Statement. None of the information supplied by the Seller for inclusion or
incorporation by reference in the Registration Statement shall at the time the
Registration Statement is filed with the SEC, at the time the Registration
Statement becomes effective, or at the time any post-effective amendment thereto
becomes effective contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time any event or circumstance relating to the
Seller, or any Subsidiary of the Seller, including the Companies and Company
Subsidiaries, or their respective officers or directors, should be discovered by
the Seller that should be set forth in an amendment or supplement to the
Registration Statement, the Seller shall promptly inform AHI.
(c) The Seller shall indemnify and hold harmless AHI for any Loss incurred
by AHI should any information provided by the Seller for inclusion or
incorporation by reference in the Registration Statement ("Seller Information")
contain any untrue statement ("Seller Information") of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
67
are made, not misleading. AHI shall indemnify and hold harmless the Seller for
any Loss incurred by the Seller should the Registration Statement, except for
the Seller Information, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
7.14 HSR Application. The Seller, the Companies, AHI, and the Purchaser
shall
(a) Take promptly all actions necessary to make the filings required of
them or any of their Affiliates under the HSR Act or any Non-U.S. Anti-Trust
Law.
(b) Comply at the earliest practicable date with any request for additional
information or documentary material received by the Seller, the Companies, and
AHI or any of their Affiliates from the FTC or the DOJ pursuant to the HSR Act
or from any state Attorney General or other Governmental Authority in connection
with antitrust matters.
(c) Cooperate with each other in connection with any filing under the HSR
Act or any Non-U.S. Anti-Trust Law and in connection with resolving any
investigation or other inquiry concerning the transactions contemplated hereby
commenced by the FTC, DOJ, any state Attorney General or any other Governmental
Authority.
(d) Use all commercially reasonable efforts to resolve such objections, if
any, as may be asserted with respect to the transactions contemplated hereby
under any antitrust law.
(e) Advise the other parties promptly of any material communication
received by such party from the FTC, DOJ, any state Attorney General or any
other Governmental Authority regarding any of the transactions contemplated
hereby, and of any understandings, undertakings or agreements (oral or written)
such party proposes to make or enter into with the FTC, DOJ, any state Attorney
General or any other Governmental Authority in connection with the transactions
contemplated hereby.
(f) Notwithstanding the foregoing or any other covenant herein contained,
in connection with the receipt of any necessary approvals under the HSR Act or
any Non-U.S. Anti-Trust Law, none of AHI, the Seller, the Companies nor any of
the Company Subsidiaries shall be required to (i) divest or hold separate or
otherwise take or commit to take any action that limits AHI's or the Purchaser's
freedom of action with respect of, or its ability to retain, the Companies or
any of the Company Subsidiaries or any material portions thereof or any of the
businesses, product lines, properties or assets of AHI, the Purchaser, the
Companies or any of the Company Subsidiaries, without AHI's and the Purchaser's
prior written consent; or (ii) to commence any litigation against any entity in
order to facilitate the consummation of any of the transactions contemplated
hereby.
7.15 Transfers of Company Subsidiaries.
(a) Prior to the Closing, the Seller shall cause 100% of the outstanding
stock of O'Gara Security International, Inc., ("OSI") to be transferred from
OHEAC to the Seller or its designee prior to the Closing Date.
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(b) Prior to the Closing Date, the Seller shall cause OSA to transfer to
the Seller or its designee Xxxxx Information Services, Inc. and Xxxxx-X'Xxxx
Crisis Management Group, Inc.
(c) Prior to the Closing Date, the Seller shall cause OHEAC to transfer to
the Seller or its designee X'Xxxx-Xxxx & Xxxxxxxxxx Armoring Company (England)
Limited and X'Xxxx-Xxxx & Xxxxxxxxxx Armoring Company Limited.
(d) Prior to the Closing Date, the Seller shall cause O'Gara Philippines,
Inc. to transfer all of its assets to The Xxxxx-X'Xxxx Co. (Phils.), now known
as X'Xxxx-Xxxx & Xxxxxxxxxx Philippines, and shall cause OHEAC to transfer
O'Gara Philippines to the Seller or its designee.
(e) Prior to the Closing, the Seller shall cause its ownership interest in
S.A.R.L. Essonne Securite to be transferred to the Seller or its designee.
(f) Following the actions set forth in Sections 7.15(a) - (e) above, the
Seller shall take all actions necessary, and pay all associated costs, expenses,
and transfer and excise taxes, so that each Company Subsidiary is a direct or
indirect wholly-owned by a Company prior to the Closing; provided, however, that
with respect to any Company Subsidiary which, pursuant to Applicable Law, is
required to have more than one shareholder, the Seller shall take all actions
necessary, and pay all associated costs, expenses and transfer and excise taxes,
so that any shares of such Company Subsidiary not owned by one of the Companies
is transferred to a designee of the Purchaser prior to Closing. At Purchaser's
request, the Determining Accountant may conduct an audit of the books of The
O'Gara Company de Mexico, S.A. de C.V. to properly allocate liabilities between
Seller and such Company. The cost of such audit shall be shared by Seller and
Purchaser. Seller shall assume all such liabilities determined to be the
obligation of Seller and indemnify AHI and Purchaser against such liabilities.
(g) The transfers and reorganizations referred to in Sections 7.15(a) - (e)
are referred to herein as the "Company Subsidiary Transfers" and the Company
Subsidiaries transferred pursuant to Sections 7.5 (a)-(e) are referred to herein
as the "Transferred Company Subsidiaries".
(h) The Seller shall give the Purchaser reasonable advance notice of
Company Subsidiary Transfers and the transfer of any other Company Subsidiary
and shall consult in detail with the Purchaser regarding the form and structure
of such transfers.
7.16 Bank Consents. AHI shall use its reasonable best efforts to obtain the
Bank Consents in a timely manner.
7.17 ERISA Actions.
As of the Closing Date, Seller and the Companies shall have:
(a) taken all steps necessary to cause the Companies to cease to be
participating employers under the Xxxxx-X'Xxxx Retirement Plan (as amended and
restated effective January 1 1999) (the " 401(k) Plan") as of the Closing Date;
69
(b) provided that employees who cease to be eligible to participate in the
401(k) Plan as a result of the sale of the Companies be fully vested in their
account balances under the 401(k) Plan as of the Closing Date in accordance with
the terms of the 401(k) Plan and applicable Treasury regulations pertaining to
the partial termination of a plan intended to be qualified within the meaning of
section 401(a) of the Code; and
(c) taken all steps necessary to permit participants affected by the sale
to receive a distribution of their account balances in accordance with and to
the extent allowed by the exception to the separation from service requirement
for distributions from plans like the 401(k) Plan set forth in section
401(k)(10) of the Code and applicable Treasury regulations.
7.18 Inter-company Transfers. Between the date hereof and the Closing,
OHEAC shall be permitted to transfer to the Seller up to a maximum of $50,000
per week; provided however, that Seller shall refund to the Companies $200,000
of cash withdrawn from the Companies in April, 2001, or, in lieu thereof,
refrain from taking any permitted transfer of cash from the Companies during the
four weeks following the date hereof.
7.19 Assignment of Intellectual Property. At the Closing, the Seller shall
execute, or cause to be executed, assignments in a form acceptable to the
Purchaser and capable of being recorded with the appropriate Governmental
Authority sufficient to effect the assignment to the Company, or other Person
designated by the Purchaser, of all of the Intellectual Property set forth on
Schedule 4.19, all other Company Intellectual Property, and, if requested by AHI
or the Purchaser, the contracts listed as items 4, 6, 7, and 8 on Schedule 4.14,
to the extent not previously owned, transferred, or assigned to one of the
Companies (the "Intellectual Property Assignments.")
7.20 Aircraft Lease Transfer. Prior to the Closing Date, OHEAC shall
transfer and assign to the Seller the aircraft lease for a Gulfstream G-II
aircraft owned by Victory Aviation, which was entered into in February 1995 and
amended effective June 1, 1998 (the "Aircraft Lease Assignment"). To the extent
that OHEAC has any prepaid amounts with respect to such lease arrangement, such
amounts shall be a reduction to the calculation of the Closing Date Tangible Net
Assets (the "TNA Aircraft Adjustment").
7.21 Shareholder Approval. If the board of directors of the Seller resolves
to seek the approval of the shareholders of the Seller with respect to this
Agreement or the transactions contemplated hereby, the Seller shall notify AHI
and the Purchaser no later than the next business day after such resolution.
ARTICLE VIII.
MISCELLANEOUS
8.1 Notices. Any notice, demand, claim or other communication under this
Agreement shall be in writing and shall be deemed to have been given upon the
delivery, mailing or transmission thereof, as the case may be, if delivered
personally or sent by certified mail, return receipt requested, postage prepaid,
or sent by facsimile or prepaid overnight courier to the parties at the
addresses set forth below their names on the signature pages of this Agreement
(or
70
at such other addresses as shall be specified by the parties by like notice). A
copy of any notices delivered to Purchaser shall also be sent to (i) Xxxx
Xxxxxxx, P.C., 0000 Xxxxxx xx xxx Xxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx X. Xxxxxxxx, Esq., Fax No. (000) 000-0000. A copy of any notices
delivered to the Seller shall also be sent to Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx
LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxxxx,
Esq., Fax No. (000) 000-0000.
8.2 Entire Agreement. This Agreement contains every obligation and
understanding between the parties relating to the subject matter hereof and
merges all prior discussions, negotiations and agreements, if any, between them,
and none of the parties shall be bound by any conditions, definitions,
understandings, warranties or representations other than as expressly provided
or referred to herein.
8.3 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
8.4 Assignment. This Agreement may not be assigned by any party without the
written consent of the other party; provided, that AHI and the Purchaser may
assign this Agreement to a corporation, partnership, or limited liability
company of which either AHI or the Purchaser maintains majority control;
provided, however, that no such assignment shall relieve AHI or the Purchaser of
any liability hereunder.
8.5 Waiver and Amendment. Any representation, warranty, covenant, term or
condition of this Agreement which may legally be waived, may be waived, or the
time of performance thereof extended, at any time by the party hereto entitled
to the benefit thereof, and any term, condition or covenant hereof (including,
without limitation, the period during which any condition is to be satisfied or
any obligation performed) may be amended by the parties thereto at any time. Any
such waiver, extension or amendment shall be evidenced by an instrument in
writing executed on behalf of the appropriate party by its President or any Vice
President or other person, who has been authorized by its Board of Directors to
execute waivers, extensions or amendments on its behalf. Except as otherwise
expressly provided in this Agreement, no waiver by any party hereto, whether
express or implied, of its rights under any provision of this Agreement shall
constitute a waiver of such party's rights under such provisions at any other
time or a waiver of such party's rights under any other provision of this
Agreement. No failure by any party thereof to take any action against any breach
of this Agreement or default by another party shall constitute a waiver of the
former party's right to enforce any provision of this Agreement or to take
action against such breach or default or any subsequent breach or default by
such other party.
8.6 No Third Party Beneficiary. Except for the provisions of Section 5.4,
nothing expressed or implied in this Agreement is intended, or shall be
construed, to confer upon or give any Person other than the parties hereto and
their respective successors and permitted assigns, any rights or remedies under
or by reason of this Agreement.
8.7 Severability. In the event that any one or more of the provisions
contained in this Agreement shall be declared invalid, void or unenforceable,
the remainder of the provisions of this Agreement shall remain in full force and
effect, and such invalid, void or unenforceable
71
provision shall be interpreted as closely as possible to the manner in which it
was written. It is the desire and intent of the parties that the provisions of
this Agreement be enforced to the fullest extent permissible under the laws and
public policies of each jurisdiction in which enforcement is sought. If any
provision of this Agreement relating to a time period or scope of activities is
declared by a court of competent jurisdiction to exceed the maximum permissible
time period or scope of activities, as the case may be, the time period or scope
of activities shall be reduced to the maximum which such court deems
enforceable.
8.8 Fees and Expenses. Except as provided in Section 6.9, each party agrees
to pay, without right of reimbursement from the other party, the costs incurred
by it incident to the performance of its obligations under this Agreement and
the consummation of the transactions contemplated hereby, including, without
limitation, costs incident to the preparation of this Agreement, and the fees
and disbursements of counsel, accountants and consultants employed by such party
in connection herewith; provided; however, AHI shall pay the Seller's
incremental audit costs associated with the audit of the Companies' Financial
Statements as of and for the years ended December 31, 1999 and 1998, up to the
amount of $60,000 in fees and up to $10,000 in reasonable expenses associated
therewith. Notwithstanding the foregoing, AHI and the Seller shall each bear 50%
of the fees payable in connection with the filing required by the HSR Act or any
Non-U.S. Anti-Trust Law. No expenses of the Seller relating to the transactions
contemplated hereby shall be paid by any of the Companies or the Company
Subsidiaries, but all such fees shall be paid directly by the Seller.
8.9 Headings; Construction. The section and other headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of any provisions of this Agreement. Any reference in this
Agreement to a section, exhibit or schedule shall, unless otherwise expressly
indicated, refer to a section of or an exhibit or schedule to this Agreement.
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.11 Time of the Essence. Wherever time is specified for the doing or
performance of any act or the payment of any funds, time shall be considered of
the essence.
8.12 Injunctive Relief. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to equitable
relief including, without limitation, injunctive relief, specific performance or
other equitable remedies in addition to all other remedies provided hereunder or
available to the parties hereto at law or in equity.
8.13 Remedies Cumulative. No remedy made available by any of the provisions
of this Agreement is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity.
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8.14 Governing Law. This Agreement has been entered into and shall be
construed and enforced in accordance with the laws of the State of New York
without reference to the choice of law principles thereof.
8.15 Jurisdiction and Venue. This Agreement shall be subject to the
exclusive jurisdiction of the state or federal courts sitting in New York
County, New York. The parties to this Agreement agree that any breach of any
term or condition of this Agreement shall be deemed to be a breach occurring in
the State of New York by virtue of a failure to perform an act required to be
performed in the State of New York and irrevocably and expressly agree to submit
to the jurisdiction of the United States District Court for the Southern
District of New York or courts of the State of New York for the purpose of
resolving any disputes among the parties relating to this Agreement or the
transactions contemplated hereby. The parties irrevocably waive, to the fullest
extent permitted by law, any objection which they may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or relating
to this Agreement, or any judgment entered by any court in respect hereof
brought in New York County, New York, and further irrevocably waive any claim
that any suit, action or proceeding brought in New York County, New York has
been brought in an inconvenient forum. The parties hereto agree to service of
process by certified or registered United States mail, postage prepaid,
addressed to the party in question.
8.16 Participation of Parties. The parties hereto acknowledge that this
Agreement and all matters contemplated herein, have been negotiated among all
parties hereto and their respective legal counsel and that all such parties have
participated in the drafting and preparation of this Agreement from the
commencement of negotiations at all times through the execution hereof.
8.17 Further Assurances. The parties hereto shall deliver any and all other
instruments or documents reasonably requested by the other party in order to
give effect to all of the terms and provisions of this Agreement including,
without limitation, all necessary stock powers and such other instruments of
transfer as may be necessary or desirable to transfer ownership of the
Securities.
8.18 Publicity. No public announcement or other publicity regarding this
Agreement, the transactions contemplated hereby AHI, the Purchaser, the
Companies, or the Company Subsidiaries shall be made without the prior written
consent of the AHI and the Seller as to form, content, timing and manner of
distribution. Notwithstanding the foregoing, nothing in this Agreement shall
preclude the Seller from making any public announcement or filing required
pursuant to any federal or state securities laws or stock exchange rules;
provided that prior to such filing AHI shall be given a reasonable opportunity
to review and comment on such public announcement or filing.
[SIGNATURE PAGES FOLLOW:]
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IN WITNESS WHEREOF, the parties hereto have each executed and delivered
this Agreement as of the day and year first above written.
ARMOR HOLDINGS, INC. THE XXXXX-X'XXXX COMPANY
By: By:
/s/ Xxxxxx X. Xxxxxxxx /s/ Xxxxxxx Xxxxxxxxx
--------------------------------- ---------------------------------
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxxx Xxxxxxxxx
------------------------ ------------------------
Title: Executive Vice President Title: Authorized Signatory
------------------------ ------------------------
BENGAL ACQUISITION CORP. X'XXXX-XXXX & XXXXXXXXXX ARMORING COMPANY
By: By:
/s/ Xxxxxx X. Xxxxxxxx /s/ Xxxxxxx Xxxxxxxxx
--------------------------------- ---------------------------------
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxxx Xxxxxxxxx
------------------------ ------------------------
Title: Vice President Title: Authorized Signatory
------------------------ ------------------------
THE O'GARA COMPANY
By:
/s/ Xxxxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxxx
------------------------
Title: Authorized Signatory
------------------------
O'GARA SECURITY ASSOCIATES, INC.
By:
/s/ Xxxxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxxx
------------------------
Title: Authorized Signatory
------------------------
