STOCK PURCHASE AGREEMENT
By and among
KANDERS FLORIDA HOLDINGS, INC.,
XXXXX XXXXXXXX, INC.
and
THE ADDITIONAL PURCHASERS
SET FORTH ON EXHIBIT A HERETO
with respect to the purchase of
the capital stock of
AMERICAN BODY ARMOR & EQUIPMENT, INC.
December ____, 1995
TABLE OF CONTENTS
Page
ARTICLE I
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Purchase of Shares; Consideration . . . . . . . . . . . . . . . . . . 2
2.1 Shares to be Purchased . . . . . . . . . . . . . . . . . . . . 3
2.2 Consideration . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
Representations and Warranties of Purchaser . . . . . . . . . . . . . 3
3.1 Organization; Standing and Power . . . . . . . . . . . . . . . 3
3.2 Authorization; Enforceability . . . . . . . . . . . . . . . . 4
3.3 No Violation or Conflict . . . . . . . . . . . . . . . . . . . 4
3.4 Consent of Governmental Authorities . . . . . . . . . . . . . 4
3.5 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV
Representations and Warranties of Seller . . . . . . . . . . . . . . 5
4.1 Representations and Warranties by Seller . . . . . . . . . . . 5
(a) Organization . . . . . . . . . . . . . . . . . . . . . . 5
(b) Authorization; Enforceability . . . . . . . . . . . . . . 5
(c) No Violation or Conflict . . . . . . . . . . . . . . . . 5
(d) Consents of Governmental Authorities and Others . . . . . 6
(e) Conduct of Business . . . . . . . . . . . . . . . . . . . 6
(f) Litigation . . . . . . . . . . . . . . . . . . . . . . . 6
(g) Rights, Warrants, Options . . . . . . . . . . . . . . . . 6
(h) Title to Shares . . . . . . . . . . . . . . . . . . . . . 7
(i) Related Parties . . . . . . . . . . . . . . . . . . . . . 7
(j) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 7
(k) Accuracy of Other Representations and Warranties . . . . 7
ARTICLE V
Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1 Survival of the Representations and Warranties . . . . . . . . 7
5.2 Investigation . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 7
(a) By Seller . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) By Purchaser . . . . . . . . . . . . . . . . . . . . . . 8
(c) Indemnity Procedure . . . . . . . . . . . . . . . . . . . 8
(d) Limitations . . . . . . . . . . . . . . . . . . . . . . . 9
5.4 General Release . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VI
Closing; Deliveries; Conditions Precedent. . . . . . . . . . . . . . 10
6.1 Closing; Effective Date . . . . . . . . . . . . . . . . . . . 10
6.2 Conditions Precedent to the Obligations of Purchaser . . . . . 11
(a) Representations and Warranties True . . . . . . . . . . . 11
(b) Performance . . . . . . . . . . . . . . . . . . . . . . . 11
(c) No Material Adverse Change . . . . . . . . . . . . . . . 11
(d) Seller's, the Company's and the Managers' Certificates . 11
(e) No Litigation . . . . . . . . . . . . . . . . . . . . . . 12
(f) Consents . . . . . . . . . . . . . . . . . . . . . . . . 12
(g) Opinion of Counsel . . . . . . . . . . . . . . . . . . . 12
(h) Employment Agreement . . . . . . . . . . . . . . . . . . 12
(i) Due Diligence Review . . . . . . . . . . . . . . . . . . 12
(j) Opinion of Accountants . . . . . . . . . . . . . . . . . 12
(k) Resignation of Directors . . . . . . . . . . . . . . . . 12
(l) Payments of Dividends . . . . . . . . . . . . . . . . . . 12
(m) Inducement Agreement . . . . . . . . . . . . . . . . . . 13
(n) Company Certificate . . . . . . . . . . . . . . . . . . . 13
6.3 Conditions Precedent to the Obligations of Seller . . . . . . 13
(a) Representations and Warranties True . . . . . . . . . . . 13
(b) Performance . . . . . . . . . . . . . . . . . . . . . . . 13
(c) No Material Adverse Change . . . . . . . . . . . . . . . 13
(d) Officers' Certificate . . . . . . . . . . . . . . . . . . 13
(e) No Litigation . . . . . . . . . . . . . . . . . . . . . . 13
6.4 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.5 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.1 Interim Operations of the Company . . . . . . . . . . . . . . 14
7.2 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.3 Notification . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.4 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.5 Non-competition . . . . . . . . . . . . . . . . . . . . . . . 17
7.6 General Confidentiality . . . . . . . . . . . . . . . . . . . 18
7.7 Continuing Obligations . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VIII
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 19
8.3 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 19
8.4 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.5 Waiver and Amendment . . . . . . . . . . . . . . . . . . . . . 19
8.6 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . 20
8.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.9 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.11 Time of the Essence. . . . . . . . . . . . . . . . . . . . . . 20
8.12 Injunctive Relief. . . . . . . . . . . . . . . . . . . . . . . 20
8.13 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . 21
8.14 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 21
8.15 Participation of Parties . . . . . . . . . . . . . . . . . . . 21
8.16 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 21
8.17 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Exhibit A - Schedule of Purchasers
Exhibit B - Note
Exhibit C - Pledge Agreement
Exhibit D - Company Certificate
STOCK PURCHASE AGREEMENT
Stock Purchase Agreement (the "Agreement"), dated as of December
____, 1995, by and among SPRINGS INDUSTRIES, INC., a South Carolina
corporation ("Springs") and XXXXX XXXXXXXX, INC., a Delaware corporation
and an indirect wholly-owned subsidiary of Springs ("Xxxxxxxx"; and,
together with Springs, collectively referred to herein as "Seller"); and
KANDERS FLORIDA HOLDINGS, INC., a Delaware corporation ("KFH"), and
certain other investors whose names are set forth on Exhibit A attached
hereto, as the same may from time to time be amended by Kanders Florida
Holdings, Inc. (Kanders Florida Holdings, Inc. and such other investors as
set forth on Exhibit A attached hereto, as the same may from time to time
be amended by Kanders Florida Holdings, Inc. are collectively referred to
as "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller owns 2,172,043 shares of common stock, par value $.03
per share, of American Body Armor & Equipment, Inc., a Florida corporation
(the "Company") (the "Common Shares") and 708,765 shares of 3% convertible
preferred stock, stated value $1.00 per share, of the Company (the
"Preferred Shares"; and together with the Common Shares, the "Shares");
and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires
to purchase from Seller, the Shares subject to the terms and conditions of
this Agreement.
NOW THEREFORE, in consideration of the premises and the respective
mutual representations, warranties, covenants and agreements contained
herein, the parties hereto 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:
"Affiliate" shall mean with respect to a specified Person, a
partnership, corporation 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. For purposes of this definition,
the term "control" (including, with correlative meanings, the terms
"controlled by" and "under 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, by contract or
otherwise.
"Agreement" shall mean this Stock Purchase Agreement together with
all exhibits and schedules referred to herein.
"Closing" shall have the meaning set forth in Section (6.1).
"Closing Date" shall mean the date that the Closing takes place.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statements" shall mean (i) the audited balance sheet of
the Company for the year ended December 31, 1994 and the related audited
statements of income, cash flows and stockholders' equity, and (ii) the
unaudited balance sheet and the unaudited statements of income and cash
flows of the Company for the nine months ended September 30, 1995, in each
such case including any related notes, each prepared according to United
States generally accepted accounting principles, consistently applied with
prior periods.
"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.
"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).
"Investments" shall mean, with respect to any Person, all advances,
loans or extensions of credit to any other Person, all purchases or
commitments to purchase any stock, bonds, notes, debentures or other
securities of any other Person, and any other investment in any other
Person, including partnerships or joint ventures (whether by capital
contribution or otherwise) or other similar arrangement (whether written
or oral) with any Person, including but not limited to arrangements in
which (i) the Person shares profits and losses, (ii) any such other Person
has the right to obligate or bind the Person to any third party, or (iii)
the Person may be wholly or partially liable for the debts or obligations
of such partnership, joint venture or other arrangement.
"Person" shall mean any natural person, corporation, unincorporated
organization, partnership, association, joint stock company, joint
venture, trust or government, or any agency or political subdivision of
any government or any other entity.
"Related Party" shall have the meaning set forth in Section 4.1(i).
"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 effectively be
controlled, directly or indirectly, by such Person.
ARTICLE II
Purchase of Shares; Consideration
2.1 Shares to be Purchased. Subject to the terms and conditions
set forth herein, on the Closing Date, Seller shall sell to each
Purchaser, and each Purchaser, severally and not jointly, shall purchase
from Seller, the Shares, as set forth on Exhibit A attached hereto, which
constitute all of the shares of capital stock of the Company owned by
Seller. At the Closing, Seller shall deliver to each Purchaser the
certificates representing the Shares so purchased, together with stock
powers separate from the certificates duly executed by Seller in blank and
sufficient to convey to Purchaser good and marketable title to the Shares,
free and clear of any and all claims, liens, charges, security interests,
pledges or encumbrances of any nature whatsoever and together with all
accrued benefits and rights attaching thereto. Notwithstanding the
foregoing, in the event that any Purchaser shall default in its purchase
obligations hereunder, KFH shall purchase such Shares not so purchased by
such defaulting Purchaser.
2.2 Consideration. The aggregate purchase price for the Shares
shall be Two Million Six Hundred Thousand Dollars ($2,600,000), payable by
each Purchaser, severally and not jointly, to Seller at the Closing as
more fully identified on Exhibit A attached hereto as follows: (i) an
aggregate of Two Million Dollars ($2,000,000) shall be payable in cash by
wire transfer of immediately available funds to Seller's account as
designated in writing by Seller to Purchaser at least one business day
prior to the Closing, and (ii) Six Hundred Thousand Dollars ($600,000)
shall be payable by the delivery by KFH to Seller of a promissory note in
the original principal amount of Six Hundred Thousand Dollars ($600,000)
payable to Seller, maturing two years from the Closing Date and bearing
interest at 8% per annum (the "Note"). The Note shall be substantially in
the form of Exhibit B attached hereto, and shall provide, among other
things, that interest payments shall be made on a quarterly basis at the
end of each calendar quarter, the entire outstanding principal amount
shall be payable at maturity, and Purchaser shall have the right, but not
the obligation, to prepay the Note, in whole or in part, without penalty
or premium. In order to secure its payment obligations under the Note,
each Purchaser, severally and not jointly, shall pledge to Seller such
number of Common Shares and/or, at the option of such Purchaser, such
number of Preferred Shares, as shall have a value of Nine Hundred Thousand
Dollars ($900,000), all as more fully identified on Exhibit A attached
hereto, pursuant to a Stock Pledge Agreement substantially in the form of
Exhibit C attached hereto (the "Pledge Agreement").
ARTICLE III
Representations and Warranties of Purchaser
In order to induce Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, each Purchaser (solely
with respect to itself and not with respect to any other Purchaser)
represents and warrants to Seller as follows:
3.1 Organization; Standing and Power. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of
the state of its incorporation. Purchaser 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 so qualify would not have a
material adverse affect on the business, operations or properties of
Purchaser. Purchaser has all requisite right, power and authority to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby.
3.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement by Purchaser and the consummation by
Purchaser of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of Purchaser.
This Agreement and all other documents to be executed and delivered by
Purchaser pursuant to this Agreement have been and will be duly executed
and delivered by Purchaser, and constitute the legal, valid and binding
obligation of Purchaser, enforceable in accordance with their respective
terms, except to the extent that their enforcement is limited by
bankruptcy, insolvency, reorganization, moratorium 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 by Purchaser and the consummation by
Purchaser of the transactions contemplated hereby: (a) do not violate or
conflict with any provision of law or regulation (whether federal, state
or local), or any writ, order or decree of any court or governmental or
regulatory authority, or any provision of Purchaser's Certificate of
Incorporation or Bylaws; and (b) do not, with or without the passage of
time or the giving of notice, result in the breach of, or constitute a
default, cause the acceleration of performance or require any consent
under, or, except as contemplated by this Agreement and the Pledge
Agreement, result in the creation of any lien, charge or encumbrance upon
any property or assets of Purchaser pursuant to any material instrument or
agreement to which Purchaser is a party or by which Purchaser or its
property may be bound or affected, other than material instruments or
agreements as to which consent shall have been obtained at or prior to the
Closing (each of which instruments or agreements is listed in Schedule 3.3
hereto).
3.4 Consent of Governmental Authorities. No consent, approval or
authorization of, or registration, qualification or filing with any
federal, state or local governmental or regulatory authority is required
to be made by Purchaser in connection with the execution, delivery or
performance by Purchaser of this Agreement or the consummation by
Purchaser of the transactions contemplated hereby.
3.5 Brokers. Other than Stone Ventures, Inc., Purchaser has not
employed any financial advisor, broker or finder and has 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. Purchaser will be solely responsible for all fees of
Stone Ventures, Inc. incurred in connection with this transaction.
3.6 Litigation. There are no actions, suits, investigations,
claims or proceedings pending or, to the knowledge of Purchaser,
threatened before any court or by or before any governmental or regulatory
authority or arbitrator against Purchaser, relating to the transactions
contemplated by this Agreement and there exists no facts or circumstances
known to Purchaser creating any reasonable basis for the institution of
any such action, suit, investigation, claim or proceeding described above.
ARTICLE IV
Representations and Warranties of Seller
4.1 Representations and Warranties by Seller. In order to induce
Purchaser to enter into this Agreement and to consummate the transactions
contemplated hereby, Seller represents and warrants to Purchaser as
follows (whenever reference is made herein as to Seller's best knowledge
after due inquiry, the same shall mean diligent inquiry of the matter in
question by Seller of each of Xxxxxxxx X. Xxxxxxx, Xxxxxxx Xxxxxxxx, J.
Xxxxxxx Xxxxxxx and Xxxxx X. Xxxxx (collectively, the "Managers"), and
such other reasonable inquiry as the circumstances require, and Purchaser
shall use its reasonable efforts to cause the Company to make the Managers
available to Seller for such purposes):
(a) Organization. Each of the Company, Springs and Xxxxxxxx
is a corporation duly organized, validly existing and in good standing
under the laws of the States of Florida, South Carolina and Delaware,
respectively. Seller and, to the best of Seller's knowledge, after due
inquiry, except as set forth on Schedule 4.1(a) hereto, the Company is
duly qualified to transact business as a foreign corporation in all
jurisdictions where the ownership or leasing of its respective properties
or the conduct of its respective businesses requires such qualification,
except where and the failure to so qualify would not have a material
adverse effect on the Company or Seller, as the case may be. Each
jurisdiction in which the Company and Seller is so qualified is listed on
Schedule 4.1(a) hereto. Each of the Company and Seller has the requisite
power and authority to own or lease and operate its respective properties
and conduct its respective businesses as presently conducted.
(b) Authorization; Enforceability. The execution, delivery
and performance of this Agreement by Seller and the consummation by Seller
of the transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of Seller. This Agreement and all
other documents to be executed and delivered by Seller pursuant to this
Agreement have been and will be duly executed and delivered by Seller, and
constitute the valid and legally binding obligations of Seller,
enforceable in accordance with their respective terms, except to the
extent that their enforcement is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the
enforcement of creditors' rights generally and by general principals of
equity.
(c) No Violation or Conflict. The execution, delivery and
performance of this Agreement by Seller and the consummation by Seller of
the transactions contemplated hereby: (a) do not violate or conflict with
any provision of law or regulation (whether federal, state or local), or
any writ, order or decree of any court or governmental or regulatory
authority except as set forth in Schedule 4.1(c) hereto, or any provision
of the Company's or Seller's Certificate of Incorporation or Bylaws; and
(b) except as set forth on Schedule 4.1(c) hereto, do not, with or without
the passage of time or the giving of notice, result in the breach of or
constitute a default, cause the acceleration of performance or require any
consent under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of, Seller or, to the best of
Seller's knowledge after due inquiry, the Company, pursuant to any
material instrument or agreement to which Seller or the Company is a party
or by which Seller or the Company or their respective properties may be
bound or affected, other than material instruments or agreements as to
which consent shall have been obtained at or prior to the Closing (each of
which instruments or agreements is listed in Schedule 4.1 (c) hereto).
(d) Consents of Governmental Authorities and Others. Except
as set forth on Schedule 4.1(d) hereto, no consent, approval or
authorization of, or registration, qualification or filing with any
federal, state or local governmental or regulatory authority, or, to the
best of Seller's knowledge after due inquiry, any other Person, is
required to be made by Seller or the Company in connection with the
execution, delivery or performance of this Agreement by Seller or the
consummation by Seller of the transactions contemplated hereby.
(e) Conduct of Business. Except as disclosed on Schedule
4.1(e) hereto, to the best of Seller's knowledge after due inquiry, since
September 30, 1995, the Company has conducted its businesses in the
ordinary and usual course consistent with past practices and there has not
occurred any adverse change in the condition (financial or otherwise),
results of operations, properties, assets, liabilities, business or
prospects of the Company, without limiting the generality of the
foregoing, except as disclosed on Schedule 4.1(e) hereto, to the best of
Seller's knowledge after due inquiry, since September 30, 1995, the
Company has not: (a) amended its Certificate of Incorporation or Bylaws;
(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 or sell 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; or (d) granted or made any mortgage or pledge or
subjected itself or any of its properties or assets to any lien, charge or
encumbrance of any kind, except liens for taxes not currently due.
(f) Litigation. Except as set forth on Schedule 4.1(f)
hereto, there are no actions, suits, investigations, claims or proceedings
("Litigation") pending or, to the best knowledge of Seller after due
inquiry, threatened before any court or by or before any governmental or
regulatory authority or arbitrator, (a) affecting the Company (as
plaintiff or defendant) which could, individually or in the aggregate,
have a material adverse effect on the condition (financial or otherwise),
results of operations, properties,assets, liabilities, business or
prospects of the Company or (b) relating to the Shares or the consummation
and closing of the transactions contemplated by this Agreement. To the
best of Seller's knowledge after due inquiry, Schedule 4.1(f) hereto sets
forth a list of any Litigation commenced against the Company since
September 20, 1993.
(g) Rights, Warrants, Options. Except as set forth on
Schedule 4.1(g) hereto, to the best of Seller's knowledge after due
inquiry, there are no outstanding (a) securities or instruments
convertible into or exercisable for any of the capital stock or other
equity interests of the Company; (b) options, warrants, subscriptions or
other rights to acquire capital stock or other equity interests of the
Company; or (c) commitments, agreements or understandings of any kind,
including employee benefit arrangements, relating to the issuance or
repurchase by the Company of any capital stock or other equity interests
of the Company, any such securities or instruments convertible or
exercisable for securities or any such options, warrants or rights.
(h) Title to Shares. Seller is the record and beneficial
owner of the Shares and such Shares are owned free and clear of any liens,
encumbrances, pledges, security interests and claims whatsoever;
including, without limitation, claims or rights under any voting trust
agreements, shareholder agreements or other agreements. At the Closing,
Seller will transfer and convey, and Purchaser will acquire, good and
marketable title to the Shares, free and clear of all liens, encumbrances,
pledges, security interests and claims whatsoever.
(i) Related Parties. Except as set forth on Schedule 4.1(i)
hereto, none of Seller, nor any current or former (within the past five
(5) years) director, officer or 10% or more stockholder of Seller
(individually a "Related Party" and collectively the "Related Parties") or
any Affiliate of Seller or any Related Party: (a) owns, directly or
indirectly, any interest in any person which is a competitor of the
Company, or of a supplier or customer of the Company; (b) owns, directly
or indirectly, in whole or in part, any 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 the Company; or (c) has an interest in or is, directly or
indirectly, a party to any contract, agreement, lease or arrangement
pertaining or relating to the Company.
(j) Brokers. Seller has not employed any financial advisor,
broker or finder and has 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.
(k) Accuracy of Other Representations and Warranties. Seller
has no reason to believe that the representations and warranties of the
Managers contained in that certain Inducement Agreement, dated as of
December ____, 1995, among the Managers and Purchaser (the "Inducement
Agreement"), are not true and correct in all respects.
ARTICLE V
Additional Agreements
5.1 Survival of the Representations and Warranties. The
representations and warranties of the parties hereto set forth in this
Agreement shall survive the Closing Date to the extent provided in Section
5.3.
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 any schedule, certificate, exhibit, list or other document
delivered pursuant hereto, shall be deemed to be representations and
warranties for purposes of this Agreement.
5.3 Indemnification.
(a) By Springs. Subject to the limitations set forth in
Section 5.3(d), Springs agrees to indemnify and hold harmless Purchaser
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, taxes, penalties, interest,
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 Seller 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.
(b) By Purchaser. Subject to the limitations set forth in
Section 5.3(d), each Purchaser agrees (solely with respect to itself and
not with respect to any other Purchaser) to indemnify and hold harmless
Springs from, against and in respect of, the full amount of any and all
liabilities, damages, claims, deficiencies, fines, assessments, losses,
taxes, penalties, interest, 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 such 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".
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 within sixty (60)
business days of the receipt of any written claim from any such third
party, but not later than twenty (20) 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.
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 fifteen (15) 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 might 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 or settle such 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 inappropriate. If the Indemnifying Party does not
make such election, or having made such election does not, in the
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 expenses 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.
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.
With regard to claims of third parties for which
indemnification is payable hereunder, such indemnification shall be paid
by the Indemnifying Party upon the earlier 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 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.
(d) Limitations. Except as otherwise set forth herein, no
party shall have any obligation under the indemnification provisions set
forth in Sections 5.3(a) or 5.3(b) unless a notice of a claim for
indemnity in respect of any matter has been given to such party on or
before the date which is two years after the Closing Date.
Notwithstanding anything to the contrary contained herein, to the extent
that the Indemnified Party receives insurance proceeds for damages
incurred, the liability of the Indemnifying Party shall be reduced by the
amount of such insurance proceeds. Notwithstanding anything to the
contrary contained herein, the liability of Springs under this Article V
shall not be in excess of Two Million Six Hundred Thousand Dollars
($2,600,000) and the liability of any Purchaser under this Article V shall
not be in excess of the aggregate purchase price paid by such Purchaser as
more fully identified on Exhibit A attached hereto; provided, however,
that no party shall have any claim against the other unless and until all
damages incurred by such party are in excess of $100,000, in which case
such claim shall be only for the amounts in excess of $100,000; provided,
further, that if the aggregate of all such claims is in excess of
$260,000, then all such damages, including the initial $100,000 of damages
herein described, shall be indemnifiable hereunder; and provided, further,
that for purposes hereof, all claims and damages of each Purchaser shall
be aggregated in determining the threshold levels herein described. None
of the limitations of this Section 5.3(d) shall apply with respect to any
action based upon fraud, willful misconduct or gross negligence of any
party.
5.4 General Release. As additional consideration for the sale of
the Shares pursuant to this Agreement, Seller hereby unconditionally and
irrevocably releases and forever discharges, effective as of the Closing
Date, the Company and its officers, directors, employees and agents, 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 the Company by virtue of
Seller's ownership of the Shares which ever existed, now exist, or may
hereafter 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
Company to the Seller by virtue of Seller's ownership of the Shares;
provided, however, that the Company's trade payables to Seller shall not
be released by this Section 5.4. 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 Seller.
ARTICLE VI
Closing; Deliveries; Conditions Precedent.
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 January
____, 1996, 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.
(a) At Closing, Seller shall deliver the following documents
to Purchaser:
(i) the certificates representing the Shares, together
with stock powers duly executed in blank;
(ii) the Pledge Agreement, substantially in the form of
Exhibit C hereto, duly executed by Seller;
(iii) the Certificate referred to in Section 6.2(d);
and
(iv) such other documents and instruments as the
Purchaser may reasonably request.
(b) At Closing, Purchaser shall deliver the following
documents to Seller:
(i) a wire transfer of immediately available funds to
Seller in the aggregate amount of Two Million Dollars ($2,000,000);
(ii) the Note, substantially in the form of Exhibit B
hereto, duly executed by Purchaser;
(iii) the Pledge Agreement, substantially in the form
of Exhibit C hereto, duly executed by Purchaser;
(iv) the Certificate referred to in Section 6.3(d); and
(v) such other documents and instruments as Seller may
reasonably request.
6.2 Conditions Precedent to the Obligations of Purchaser. Each
and every obligation of Purchaser to consummate the transactions described
in this Agreement and any and all liability of Purchaser to Seller shall
be subject to the fulfillment on or before the Closing Date of the
following conditions precedent;
(a) Representations and Warranties True. Each of the
representations and warranties of Seller contained herein and each of the
representations and warranties of the Managers contained in the Inducement
Agreement or in any certificate or other document delivered pursuant
hereto or thereto or in connection with the transactions contemplated
hereby or thereby shall be true and correct in all material respects as of
the Closing Date with the same force and effect as though made on and as
of such date (except for changes specifically permitted by this Agreement,
including, without limitation, Section 7.1 hereof).
(b) Performance. Seller and the Managers shall have
performed and complied in all material respects with all of the
agreements, covenants and obligations required under this Agreement and
the Inducement Agreement to be performed or complied with by them on or
prior to the Closing Date.
(c) No Material Adverse Change. Except as expressly
permitted or contemplated by this Agreement, from September 30, 1995
through the Closing Date, no event or condition shall have occurred which
has materially adversely affected or may materially adversely affect in
any respect the condition (financial or otherwise) of the Company or of
the Company's assets, liabilities (whether accrued, absolute, contingent
or otherwise), earnings, book value, business or operations, and the
Company shall have operated its business in the ordinary course during
such period, consistent with past practices.
(d) Seller's, the Company's and the Managers' Certificates.
Seller, the Company and the Managers shall have delivered to Purchaser a
certificate dated the Closing Date, certifying that the conditions
specified in Section 6.2(a), (b) and (c) above have been fulfilled and as
to such other matters as Purchaser may reasonably request.
(e) No Litigation. No litigation, arbitration or other legal
or administrative proceeding shall have been commenced or be pending by or
before any court, arbitration panel or governmental authority or official,
and no statute, rule or regulation of any foreign or domestic, national or
local government or agency thereof shall have been enacted after the date
of this Agreement, and no judicial or administrative decision shall have
been rendered which enjoins, restrains, prohibits, or obtains material
damages from Purchaser, with respect to the consummation of all or any of
the transactions contemplated by this Agreement if, in the good faith
opinion of counsel to Purchaser, such litigation, arbitration, or other
legal or administrative proceeding would subject Purchaser to risk of
material loss if the Closing were to occur.
(f) Consents. All authorizations, consents, waivers and
approvals of all appropriate governmental regulatory agencies and all
other appropriate parties as may be required to consummate the
transactions contemplated by this Agreement shall have been obtained,
including, but not limited to, the consents of any of the landlords to the
Company's leased property (including, without limitation, the consent of
the landlord of the Yulee, Florida leased property) which is required in
accordance with the terms of the leases and consents with respect to any
material agreement to which the Company is a party (including, without
limitation, the consent of LaSalle Business Credit, Inc.).
(g) Opinion of Counsel. An opinion letter from counsel to
Seller addressed to Purchaser in form and substance reasonably acceptable
to Purchaser.
(h) Employment Agreement. At the Closing, the Company shall
have entered into employment agreements that are acceptable to Purchaser
with each of Xxxxxxx, Xxxxxxxx and Xxxxxxx.
(i) Due Diligence Review. Purchaser shall have completed its
due diligence investigation of the Company to its satisfaction, on or
before the Closing.
(j) Opinion of Accountants. At or prior to the Closing,
Purchaser shall have received confirmation (satisfactory to Purchaser)
from Deloitte & Touche LLP that substantially all of the Company's
currently available tax loss carryforwards will be available for use by
the Company after the Closing.
(k) Resignation of Directors. At the Closing, three members
of the Company's current Board of Directors (excluding Xxxxxxx) shall have
resigned, leaving three vacancies, with respect to which Purchaser's
nominees shall be elected.
(l) Payments of Dividends. At the Closing, the cash dividend
due and payable by the Company on the Preferred Shares shall be paid by
the Company to Purchaser or, if the Company has previously paid the same
to Seller, Seller shall pay such amount to Purchaser or, at Purchaser's
election, Purchaser shall offset such amount from the wire transfer of
funds to be made by Purchaser to Seller pursuant to Section 2.2.
(m) Inducement Agreement. The Managers shall have entered
into the Inducement Agreement with Purchaser.
(n) Company Certificate. The Company shall have delivered
its Certificate, substantially in the form of Exhibit D hereto, dated as
of the Closing Date, to the Purchaser.
6.3 Conditions Precedent to the Obligations of Seller. Each and
every obligation of Seller to consummate the transactions described in
this Agreement and any and all liability of Seller to Purchaser shall be
subject to the fulfillment on or before the Closing Date of the following
conditions precedent:
(a) Representations and Warranties True. Each of the
representations and warranties of 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 as of the Closing Date with the same
force and effect as though made on and as of such date.
(b) Performance. Purchaser shall have performed and complied
in all material respects with all of the agreements, covenants and
obligations required under this Agreement to be performed or complied with
by it on or prior to the Closing Date.
(c) No Material Adverse Change. No event or condition shall
have occurred which has materially adversely affected or may materially
adversely affect in any respect the condition (financial or otherwise) of
Purchaser.
(d) Officers' Certificate. Purchaser shall have delivered to
Seller, a certificate dated the Closing Date, certifying that the
conditions specified in Sections 6.3(a), (b) and (c) above have been
fulfilled.
(e) No Litigation. No litigation, arbitration or other legal
or administrative proceeding shall have been commenced or be pending by or
before any court, arbitration panel or governmental authority or official,
and no statute, rule or regulation of any foreign or domestic, national or
local government or agency thereof shall have been enacted after the date
of this Agreement, and no judicial or administrative decision shall have
been rendered which enjoins, restrains, prohibits, or obtains material
damages from Seller, or seeks to enjoin, restrain, prohibit, or obtain
material damages from Seller, with respect to the consummation of all or
any of the transactions contemplated by this Agreement if, in the good
faith opinion of counsel to Seller, such litigation, arbitration, or other
legal or administrative proceeding would subject Seller to risk of
material loss if the Closing were to occur.
6.4 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.
6.5 Termination. This Agreement and the transactions contemplated
hereby may be terminated (i) at any time by the mutual consent of the
parties hereto; (ii) by Seller or by Purchaser, if the Closing has not
occurred on or prior to January 31, 1996 (such date of termination being
referred to herein as the "Termination Date"), provided the failure of the
Closing to occur by such date is not the result of the failure of the
party seeking to terminate this Agreement to perform or fulfill any of its
obligations hereunder; (iii) by Purchaser at any time at or prior to
Closing in its sole discretion if (1) any of the representations or
warranties of Seller in this Agreement are not in all material respects
true, accurate and complete or if Seller breaches in any material respect
any covenant contained in this Agreement, provided that such
misrepresentation or breach is not cured within ten (10) business days
after notice thereof, but in any event prior to the Termination Date, or
(2) any of the conditions precedent to Purchaser's obligations to conduct
the Closing have not been satisfied by the date required thereof; (iv) by
Seller at any time at or prior to Closing in its sole discretion if
(1) any of the representations or warranties of Purchaser in this
Agreement are not in all material respects true, accurate and complete or
if the Purchaser breaches in any material respect any covenant contained
in this Agreement, provided that such misrepresentation or breach is not
cured within ten (10) business days after notice thereof, but in any event
prior to the Termination Date or (2) any of the conditions precedent to
Seller's obligations to conduct the Closing have not been satisfied by the
date required thereof. If this Agreement is terminated pursuant to this
Section B, written notice thereof shall promptly be given by the party
electing such termination to the other party and, subject to the
expiration of the cure periods provided in clauses (iii) and (iv) above,
if any, this Agreement shall terminate without further actions by the
parties and no party shall have any further obligations under this
Agreement. Notwithstanding the preceding sentence, the respective
obligations of the parties under Sections 7.6, 8.8 and 8.14 shall survive
the termination of this Agreement. Notwithstanding anything to the
contrary contained herein, if the termination of this Agreement is a
result of the willful or grossly negligent misrepresentation, willful or
grossly negligent inaccuracy or omission in a representation, willful or
grossly negligent breach of warranty, fraud or any willful or grossly
negligent failure to perform or comply with any covenant or agreement
contained herein, the aggrieved party shall be entitled to recover from
the non-performing party all out-of-pocket expenses which such aggrieved
party has incurred and the termination of this Agreement shall not be
deemed or construed as limiting or denying any other legal or equitable
right or remedy of such party.
ARTICLE VII
Covenants
7.1 Interim Operations of the Company. During the period from the
date of this Agreement to the Closing Date, except with Purchaser's prior
specific written consent or as expressly contemplated by this Agreement,
Seller shall not take any action to cause the Company to operate its
business other than in the ordinary and usual course consistent with past
practices and to preserve intact its business organization and good will
in all material respects. Additionally, during the period from the date
of this Agreement to the Closing Date, Seller shall not take any action to
cause the Company to do any of the following and shall vote its Shares
against any of the following to the extent a shareholder vote is taken
(unless otherwise expressly contemplated by this Agreement or permitted in
writing by Purchaser):
(i) amend its Certificate of Incorporation or By-Laws;
(ii) issue, sell or authorize 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 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 its capital stock or any option, warrant
or other right to purchase or acquire any such shares;
(iv) declare or pay any dividend or other distribution
(whether in cash, stock or other property) with respect to its
capital stock;
(v) voluntarily sell, transfer, surrender, abandon or
dispose of any of its assets or property rights (tangible or
intangible), other than in the ordinary course of business consistent
with past practices;
(vi) grant or make any mortgage or pledge or subject
itself or any of its properties or assets to any lien, charge or
encumbrance of any kind, except liens for taxes not currently due;
(vii) create, incur or assume any liability or
indebtedness, except in the ordinary course of business consistent
with past practices;
(viii) make or commit to make any capital expenditures
exceeding in the aggregate Ten Thousand Dollars ($10,000);
(ix) become subject to any Guaranty;
(x) 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 Seller or any
Affiliate of Seller or any Related Party or to the prepayment of any
such amounts, other than compensation benefits, and expenses payable
in the ordinary course of business to Seller and scheduled lease
payments under leases listed on Schedule 4.1(i);
(xi) 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);
(xii) except as listed on Schedule 7.1, enter into
any material agreement or amend or terminate any existing material
agreement, which is outside the ordinary course of business
consistent with past practices;
(xiii) alter the manner of keeping its books, accounts
or records, or change in any manner the accounting practices therein
reflected;
(xiv) 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;
(xv) do any act, or omit to do any act, or permit to the
extent within the Company's or the Seller's control, any act or
omission to act which would cause a violation or breach of any of the
representations, warranties or covenants of Seller set forth in this
Agreement;
(xvi) take any action which has a material adverse
effect on the condition (financial or otherwise), results of
operations, assets, liabilities, properties, business or prospects of
the Company, or on employee, customer or supplier relations;
(xvii) alter in any manner any of the Company's
existing working capital facilities; or
(xviii) agree, whether in writing or otherwise, to do
any of the foregoing.
7.2 Access. Seller shall use its reasonable best efforts to cause
the Company to, afford to Purchaser and its agents and representatives,
access throughout the period prior to the Closing Date to the properties,
books, records and contracts of the Company, for the purpose of permitting
Purchaser to fully investigate and perform a due diligence review of the
Company, its businesses, assets and properties, and financial condition,
provided that such access shall be granted during normal business hours in
such a manner as to not unreasonably interfere with the Company's normal
business operations. During such period, Seller shall use its reasonable
best efforts to cause the Company to furnish promptly to Purchaser copies
of (i) all correspondence received or sent by or on behalf of the Company
from or to any governmental authority and (ii) all other information and
documents concerning its business, assets, liabilities, properties and
personnel as Purchaser may reasonably request.
7.3 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 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 with 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
relating to a representation or warranty shall identify the applicable
representation or warranty contained in this Agreement, and shall be
deemed to have amended and cured any misrepresentation or breach of
warranty that otherwise might have existed hereunder by reason of such
event, occurrence or other information; but shall not otherwise limit or
alter any of the 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
covenant; provided, however, that the Purchaser shall have the right to
terminate this Agreement in the event that any such notification relating
to a representation or warranty is determined by Purchaser, in its sole
discretion, to adversely affect the Company, its operations, assets,
properties or condition (financial or otherwise).
7.4 Exclusivity.
(a) Seller agrees that unless this Agreement has been
terminated as herein provided, neither the Seller, nor its Affiliates,
representatives, employees or agents (collectively, "Agents") will,
commencing on the date of this Agreement and continuing through January
31, 1996 (the "Exclusive Period"), directly or indirectly, (i) solicit,
encourage or negotiate any proposal (whether solicited or unsolicited)
for, or execute any agreement relating to, a sale of all or any part of
the Shares, and Seller and the Agents shall use their best reasonable
efforts (subject to the fiduciary obligations of any Agents serving as
director of the Company) to prevent, and shall vote all Shares against, a
sale of the Company's assets or a sale of any equity or debt security of
the Company's or any merger, consolidation, recapitalization or similar
transaction involving the Company with any party other than Purchaser (any
of the foregoing is referred to as an "Acquisition Proposal"), (ii)
subject to the fiduciary obligations of any Agents serving as directors of
the Company, provide any information regarding the Company or the Shares
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 Seller or any of its
Agents from providing information as required by legal process); or (iii)
vote their Shares for any operation of the business of the Company other
than in the ordinary course of business, consistent with past practices.
For purposes of this Section 7.4 only, the Company shall not be deemed to
be an Affiliate of Seller.
(b) In the event that Seller does not consummate the
Acquisition as a result of the Seller's breach of Section 7.4(a) hereof,
Seller shall be liable to Purchaser for the payment of liquidated damages
to Purchaser in the agreed upon amount of One Hundred Thousand Dollars
($100,000); provided, however, that if Purchaser does not consummate the
Acquisition because Seller has sold the Shares to the Company due to the
request of Commonwealth Associates, or financial accommodations or other
arrangements have been made by Commonwealth Associates which have the
effect of causing the Company to purchase such Shares or preventing
Purchaser from purchasing the Shares from Seller on terms acceptable to
Purchaser as contemplated hereby, then Seller shall be liable to Purchaser
for the payment of liquidated damages to Purchaser in the agreed upon
amount of Two Hundred Fifty Thousand Dollars ($250,000).
7.5 Non-competition. Seller acknowledges that in order to assure
Purchaser that Purchaser will retain the value of the Company as a "going
concern," Seller agrees on the terms set forth in this Section 7.5, not to
utilize its special knowledge or the business of the Company and their
relationships with customers, suppliers and others to compete with the
Company. For a period of three (3) years, in the case of Springs, and for
a period of two (2) years, in the case of Xxxxxxxx, in each case beginning
on the Closing Date, Seller and its Affiliates at the time of
determination, shall not engage or have an interest, anywhere in the
United States of America or any other geographic area where the Company
does business at the date hereof or in which its products are marketed at
the date hereof, alone or in association with others, as principal,
officer, agent, employee, director, partner or stockholder (except as an
employee or consultant of Purchaser or any of its Affiliates or 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 competitive with or
similar to that engaged in by the Company at the date hereof. During the
same period, Seller and its then respective employees, agents or others
then under their control to, directly or indirectly, on behalf of Seller
or any other Person, (i) call upon, accept competitive business from, 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 or supplier of
the Company or any successor to the business, of the Company or any such
successor, or (ii) recruit or otherwise solicit or induce any person who
is an employee of, or otherwise engaged by, the Company or any successor
to the business of the Company to terminate his or her employment or other
relationship with the Company or such successor, or hire any person who
has left the employ of Purchaser or any such successor during the
preceding three (3) years. Seller shall not at any time, directly or
indirectly, use or purport to authorize any Person to use any name, xxxx,
logo, a trade dress or other identifying words or images which are the
same as or similar to those used currently or in the past by the Company
in connection with any product or service, whether or not such use would
be in a business competitive with that of the Company. Seller
acknowledges that compliance with the restrictions set forth in this
Section 7.5 will not prevent it from conducting its business as heretofore
conducted. As used herein, the phrase "competitive business" means any
business competitive with the type of business engaged in by the Company,
Purchaser or any of their Subsidiaries or Affiliates at the date hereof.
Notwithstanding the provisions of this Section 7.5, nothing contained
herein shall restrict Seller from (x) conducting its business as presently
conducted, which includes supplying raw materials and other supplies to
the Company and to competitors of the Company, or (y) becoming a
stockholder of any competitor of the Company that is indebted to Seller by
reason of such competitor's bankruptcy and the conversion of Seller's debt
of such competitor into equity of such competitor pursuant to a plan of
reorganization of such competitor.
7.6 General Confidentiality. Seller acknowledges that the
intangible property and all other confidential or proprietary information
with respect to the business and operations of the Company are valuable,
special and unique assets of the Company. 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 the Company or Purchaser, whether
or not for Seller's own benefit, without the prior written consent of
Purchaser or unless required by law, including without limitation,
information as to the financial condition, results of operations,
customers, suppliers, products, products under development, inventions,
sources, leads or methods of obtaining new products or business,
intangible property, pricing methods or formulas, cost of supplies,
marketing strategies or any other information relating to the Company or
Purchaser, which could reasonably be regarded as confidential. Seller
acknowledges that 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 this Company.
7.7 Continuing Obligations. The restrictions set forth in
Sections 7.5 and 7.6 are considered by the parties to be reasonable for
the purposes of protecting the value of the business and goodwill of the
Company and Purchaser. Purchaser and Seller acknowledge that Purchaser
would be irreparably harmed and that monetary damages would not provide an
adequate remedy to Purchaser in the event the covenants contained in
Sections 7.5 and 7.6 were not complied with in accordance with their
terms. Accordingly, Seller agrees that any breaches or threatened breach
by it of any provision of Sections 7.5 or 7.6 shall entitle Purchaser 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 to Purchaser. If Seller breaches the covenant set forth
in Section 7.5, 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 and 7.6 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
Sections 7.5 or 7.6 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 7.5 or 7.6 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.
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 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 Xxxx Xxxxxxx, P.C., 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx 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 with respect to the subject matter hereof, 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 and inure to
the benefit of the parties hereto and their respective successors, heirs,
personal representatives, legal representatives, 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, Purchaser
may assign this Agreement to an Affiliate of Purchaser.
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. 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 heirs, personal representatives, legal
representatives, 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
provision shall be interpreted as closely as possible to the manner in
which it was written.
8.8 Expenses. 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. No expenses of Seller relating to the
transactions contemplated hereby shall be paid by the Company, but all
such fees shall be paid directly by Seller.
8.9 Headings. 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.
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.
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 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 time through the
execution hereof.
8.16 Further Assurances. The parties hereto shall deliver any and
all other instruments or documents required to be delivered pursuant to,
or necessary or proper 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.
8.17 Publicity. No public announcement or other publicity
regarding this Agreement or the transactions contemplated hereby shall be
made prior to or after the date hereof without the prior written consent
of both Purchaser and the Company as to form, content, timing and manner
of distribution. Notwithstanding the foregoing, nothing in this Agreement
shall preclude any party or its Affiliates from making public announcement
or filing required by federal or state securities laws or stock exchange
rules.
IN WITNESS WHEREOF, the parties hereto have each executed and
delivered this Agreement as of the day and year first above written.
KANDERS FLORIDA HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
Address: c/o American Body Armor &
Equipment, Inc.
00 Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
FAX: (000) 000-0000
SPRINGS INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
Address: 000 X. Xxxxx Xxxxxx
Xxxx Xxxx, Xxxxx Xxxxxxxx 00000
FAX: (000) 000-0000
XXXXX-XXXXXXXX, INC.
By: /s/ X. X. Xxxxxxxx
Name: X. X. Xxxxxxxx
Title: Vice President
Address: c/o Springs Industries, Inc.
000 X. Xxxxx Xxxxxx
Xxxx Xxxx, Xxxxx Xxxxxxxx 00000
FAX: (000) 000-0000
