1
AGREEMENT AND PLAN OF REORGANIZATION
Among
FALCON PRODUCTS, INC.
as Acquiror
and
THE X.X. XXXXXXX CORPORATION
as Transferor
XXXX X. XXXXXXX
as the Sole Shareholder of Transferor
October 28, 1996
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Table of Contents
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Page
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I. DEFINITIONS 1
II. TRANSFER OF ASSETS 5
2.01 Transfer of Assets 5
2.02 Transfer of Falcon Shares 5
2.03 Assumption of Liabilities 5
2.04 Transactions at Closing 7
2.05 Plan of Reorganization 7
2.06 Employees 7
III. ADJUSTMENT; CONTINGENT STOCK; HOLDBACK 8
3.01 Closing Adjustment 8
3.02 Contingent Stock 8
3.03 Closing Adjustment Holdback 9
3.04 Mortgage Lien Holdback 9
IV. WARRANTIES AND REPRESENTATIONS OF XXXXXXX 9
4.01 Organization and Standing of Xxxxxxx 9
4.02 Authority 10
4.03 Good Title and Condition of Assets 10
4.04 Financial Statements 10
4.05 Absence of Changes 11
4.06 Payment of All Debts and Liabilities 11
4.07 No Conflicting Agreements or Orders 12
4.08 Compliance 12
4.09 Litigation 12
4.10 Condition of Xxxxxxx 13
4.11 Employment Agreements 13
4.12 Labor Relations 13
4.13 Taxes 14
4.14 Name of Company 14
4.15 Inventory 14
4.16 Leases 14
4.17 Insurance 14
4.18 Other Contracts 15
4.19 Documents 15
4.20 Suppliers 15
4.21 Real Property 15
4.22 Customers; Accounts Receivable 15
4.23 ERISA 16
4.24 Environmental Matters 16
4.25 No Misrepresentation 18
V. REPRESENTATIONS AND WARRANTIES OF FALCON 18
5.01 Organization and Standing of Falcon 18
5.02 Binding Agreement 18
5.03 Agreement Within Authority 18
5.04 No Conflicting Agreements or Orders 18
5.05 Corporate Action 18
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5.06 No Conflict 18
5.07 No Misrepresentation 19
5.08 Valid Issuance 19
VI. COVENANTS OF FALCON 19
6.01 Information 19
6.02 Satisfaction of Assumed Liabilities 19
6.03 Execution of Facility Lease 19
VII. COVENANTS OF XXXXXXX AND SHAREHOLDER 19
7.01 Access to Information 19
7.02 Maintain Properties 20
7.03 Maintain Organization 20
7.04 Regular Course of Business 20
7.05 Insurance 20
7.06 Employees 20
7.07 Business Changes 20
7.08 Consents 20
7.09 Execution of Facility Lease 21
7.10 Exclusive Dealing 21
VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF FALCON 21
8.01 No Adverse Change 21
8.02 Representations, Warranties and Agreements of Xxxxxxx 21
8.03 Opinion of Counsel 21
8.04 Absence of Litigation 22
8.05 Corporate Approval 22
8.06 Consents 22
8.07 Officers' Certificate 22
8.08 Approval of Documents 22
8.09 Casualty Loss 22
8.10 Satisfactory Review of Xxxxxxx' Business and the Assets;
Inspections 22
8.11 Facility Lease 23
8.12 Certificates, Permits and Approvals 23
8.13 Employment and Non-Competition Agreement 23
8.14 Mortgage Lien Holdback Agreement 23
IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXXX AND SHAREHOLDER 23
9.01 Representations, Warranties and Agreements of Falcon 23
9.02 Performance of Assumed Liabilities 23
9.03 Corporate Approval 23
9.04 Consents 24
9.05 Falcon's Certificate 24
9.06 Approval of Documents 24
9.07 Employment 24
9.08 Facility Lease 24
9.09 Opinion of Counsel 24
9.10 Mortgage Lien Holdback Agreement 24
X. INDEMNIFICATION 24
10.01 Indemnification of Falcon by Xxxxxxx and Shareholder 25
10.02 Indemnification of Xxxxxxx by Falcon 26
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10.03 Notice to Indemnifying Party 27
XI. REGISTRATION STATEMENT 27
11.01 Preparation and Filing of Registration Statement 27
11.02 Blue Sky Requirements 27
XII. CLOSING AND RISK OF LOSS. 27
12.01 Place and Time 27
12.02 Risk of Loss 27
12.03 Simultaneous Performance 27
12.04 Transfer of Possession 28
XIII. MISCELLANEOUS 28
13.01 No Commission 28
13.02 Survival of Representations and Warranties 28
13.03 Change of Name; Liquidation 28
13.04 Incorporation of Schedules 28
13.05 Further Assurances 28
13.06 No Assumption of Xxxxxxx' Liabilities 28
13.07 Transfer Taxes 28
13.08 Notices 28
13.09 Entire Agreement 29
13.10 Designation of Falcon as Agent 29
13.11 Binding Effect 30
13.12 Third Parties 30
13.13 Expenses of the Parties 30
13.14 Counterparts 30
13.15 Missouri Law to Govern; Venue 30
13.16 Headings 30
13.17 Publicity 31
13.18 Mail and Communications 31
13.19 Determination of Net Working Capital 31
13.20 Acquisition Subsidiary 32
13.21 Right of Set Off 32
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AGREEMENT AND PLAN OF REORGANIZATION
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This Agreement and Plan of Reorganization (the "Agreement")
is made as of the 28th day of October, 1996, by and among FALCON PRODUCTS,
INC., a Delaware corporation ("Falcon"), THE X.X. XXXXXXX CORPORATION, a
California corporation ("Xxxxxxx") and XXXX X. XXXXXXX, sole shareholder of
Xxxxxxx ("Shareholder").
WHEREAS, Xxxxxxx owns all of the assets, rights and property
necessary for, and operates a business which is engaged in, the design,
manufacture, sale and distribution of wood chairs and upholstered furniture
for the restaurant and hospitality industries (the "Business"); and
WHEREAS, the sole director and the sole shareholder of
Xxxxxxx have authorized and approved this Agreement and have determined that
it is in the best interests of Xxxxxxx to transfer the Business to Falcon, in
exchange for the Shares and the assumption by Falcon of the Assumed
Liabilities as provided for herein, all upon the terms and conditions and
subject to the provisions of this Agreement; and
WHEREAS, it is intended that the Transaction qualify as a
tax-free reorganization under Section 368(a)(1)(C) of the Code, it being
understood by Falcon that as an integral part of the Transaction, that
Xxxxxxx will distribute the Shares in complete liquidation of Xxxxxxx and
dissolve.
NOW, THEREFORE, in consideration of the premises and of the
agreements and provisions set forth herein, and subject to the conditions
herein contained, it is mutually agreed as follows:
I. DEFINITIONS.
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For purposes of this Agreement, the following words and
phrases have the following meanings:
1.01 "Accounting Firm" means the firm of Xxxxxx X.
XxXxxxxx, certified public accountant.
1.02 "Arbitrator" means the firm of independent certified
auditors, other than the Accounting Firm, mutually agreed upon by Falcon and
Xxxxxxx to review the Closing Balance Sheet and issue its report pursuant to
Section 13.19.
1.03 "Accounts Receivables Schedule" is defined in
Section 4.22.
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1.04 "Assigned Contracts" means all of Xxxxxxx'
contracts, leases and other agreements, a true copy of each of which has been
attached hereto by Xxxxxxx in Schedule 1.04, which Assigned Contracts will be
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assigned by Xxxxxxx to Falcon at the Closing, and the performance of which
shall be assumed by Falcon at the Closing.
1.05 "Assumed Liabilities" means (i) all current
liabilities and obligations of Xxxxxxx arising in the regular and ordinary
course of the Business as existing on the Closing Date, to the extent that
the same remain unpaid and undischarged on the Closing Date and are accrued
or reserved for on the Closing Balance Sheet (excluding, however those
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liabilities and obligations referred to in Section 2.03 or as otherwise
provided herein) and (ii) all liabilities and obligations arising after the
Closing Date in connection with the performance by Falcon of the Assigned
Contracts.
1.06 "Assets" means all of the right, title and interest
of Xxxxxxx in and to the property, leasehold interests, personal and mixed,
tangible or intangible, of whatever kind or character and wherever located,
which Assets shall include (but not be limited to) the following:
(a) All inventory, stock in trade, merchandise,
goods, supplies and other products owned by Xxxxxxx or
otherwise under the control of Xxxxxxx as of the Closing
Date, including the rights and payment obligations of
Xxxxxxx under the orders for the purchase of goods set
forth in Schedule 1.06(a), complete copies of which have
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been provided to Falcon by Xxxxxxx, but not including any
commitment of Xxxxxxx for the purchase of goods which is
not set forth in Schedule 1.06(a);
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(b) The Closing Accounts Receivable;
(c) All pre-paid expenses;
(d) All machinery, equipment, tools, vehicles,
furniture, fixtures, goods and other items of tangible
personal property owned by Xxxxxxx set forth and described
in Schedule 1.06(d);
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(e) All technologies, methods, formulations, data
bases, trade secrets, know-how, inventions and intangible
property rights, including the name and all other trade
names;
(f) All contract rights, including the Assigned
Contracts;
(g) All rights, privileges, claims, demands and
choses in action, including, without limitation, all rights
under express or implied warranties; and
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(h) All records, files, books of account, customer
and supplier lists and other books and records of Xxxxxxx
relating to the Business, including those relating to the
Transferred Assets and Assumed Liabilities.
1.07 "Balance Sheet Date" means the date upon which the
Closing occurs.
1.08 "Closing" means the consummation of the Transaction
contemplated by this Agreement.
1.09 "Closing Accounts Receivable" is defined in Section
4.22.
1.10 "Closing Balance Sheet" means the balance sheet of
Xxxxxxx as of the Balance Sheet Date.
1.11 "Closing Customer List" is defined in Section 4.22.
1.12 "Closing Date" means 10:00 a.m. on October ---,
1996, or such other date and time as are mutually agreed upon in writing by
Falcon and the Xxxxxxx; provided, however, that if all of the conditions to
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Closing have not been met, then Falcon shall have the option to extend the
Closing Date once, to a date not later than December 31, 1996.
1.13 "Closing Inventory Count" means a physical count and
valuation to be taken by Falcon and Xxxxxxx, of the inventory of goods and
supplies included in the Transferred Assets, determined in accordance with
the provisions of Section 4.15 as of the Balance Sheet Date and included in
the Closing Balance Sheet.
1.14 "Code" means the Internal Revenue Code of 1986, as
amended.
1.15 "Contingency Period" means each consecutive three
month period commencing on the first day of the calendar month first
succeeding the Closing Date and ending on the third anniversary date thereof.
1.16 "Contingent Stock" means those shares of Falcon
$0.02 par value common stock, to be issued and delivered by Falcon pursuant
to Section 3.02.
1.17 "Employment Agreement" is defined in Section 8.13.
1.18 "Environmental Laws and Regulations" means all
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any Laws relating to
pollution, nuisance, or the environment including, without, (i) the Federal
Clean Air Act, 42 U.S.C. Sec.Sec. 7401 et sec.; (ii) the Comprehensive
-- ---
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Sec.Sec. 9601
et sec.; (iii)
-- ---
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the Federal Emergency Planning and Community Right-to-Know Act, 42 U.S.C.
Sec.Sec. 1101 et sec.; (iv) the Federal Insecticide, Fungicide and Rodenticide
-- ---
Act, 7 U.S.C. Sec.Sec. 136 et sec.; (v) the Federal Water Pollution Control Act,
-- ---
33 U.S.C. Sec.Sec. 1251 et sec.; (vi) the Solid Waste Disposal Act, 42 8.S.C.
-- ---
Sec.Sec. 6901 et sec.; (vii) the Toxic Substances Control Act, 15 U.S.C.
-- ---
Sec.Sec. 2601 et sec.; (viii) laws relating in whole or part to emissions,
-- ---
discharges, releases, or threatened releases of any Hazardous Material; and (ix)
Laws relating in whole or part to the manufacture, processing, distribution,
use, coverage, disposal, transportation, storage or handling of any Hazardous
Material.
1.19 "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations thereunder.
1.20 "Excluded Assets" means all cash and cash
equivalents and those other Assets listed in Schedule 1.20, which the parties
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hereby expressly agree shall not be included in the Transferred Assets.
1.20A "Facility" is defined in Section 8.11.
1.21 "Facility Lease" is defined in Section 8.11.
1.22 "Financial Statements" are defined in Section 4.04.
1.23 "Hazardous Materials" means any hazardous,
infectious or toxic substance, chemical, pollutant, contaminant, emission or
waste which is or becomes regulated by any local, state, federal or foreign
authority. Hazardous Materials include, without limitation, anything which
is (i) defined as a "pollutant" pursuant to 33 U.S.C. Sec. 1362(6); (ii) defined
as a "hazardous waste" pursuant to 42 U.S.C. Sec. 6921; (iii) defined as a
"regulated substance" pursuant to 42 U.S.C. Sec.6991; (iv) defined as a
"hazardous substance" pursuant to 42 U.S.C. Sec. 9601(14); (v) defined as a
"pollutant or contaminant" pursuant to 42 U.S.C. Sec. 9601(33); (vi) petroleum;
(vii) asbestos; (viii) polychlorinated biphenyl.
1.24 "Mortgage Liens" means those liens against the
Assets granted by Xxxxxxx to Imperial Thrift and Loan Association, as
successor in interest to [FOOTHILL], as collateral for certain loans made
to Shareholder by Imperial Thrift and Loan Association with respect to the
Facility.
1.25 "Net Working Capital" means (a) the total current
assets of Xxxxxxx other than Excluded Assets, minus (b) the total current
liabilities of Xxxxxxx, determined in accordance with generally accepted
accounting principles, consistently applied and consistent with Xxxxxxx' past
accounting practices.
1.26 "1996 Balance Sheet" means the balance sheet of at
and for the year ended June 30, 1996, reviewed and reported upon by the
Accounting Firm.
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1.27 "Registration Statement" is defined in Section
11.01.
1.28 "Securities Act" means the Securities Act of 1933,
as amended.
1.29 "Shares" means those shares of Falcon $0.02 par
value common stock, to be issued and delivered by Falcon pursuant to Section
2.02, subject to the closing adjustment provided in Section 3.01.
1.30 "Transaction" means the acquisition by Falcon or a
subsidiary of Falcon of the Transferred Assets in exchange for the Shares and
the assumption by Falcon of the Assumed Liabilities pursuant to this
Agreement.
1.31 "Transferred Assets" means all of the Assets except
the Excluded Assets.
II. TRANSFER OF ASSETS.
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2.01 Transfer of Assets. At the Closing, and subject to
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the terms, provisions and conditions of this Agreement, and in reliance on
the representations, warranties and covenants contained herein, Xxxxxxx shall
transfer, convey and assign to Falcon, and Falcon shall acquire, the
Transferred Assets in exchange for the Shares (subject to Sections 3.01, 3.03
and 3.04) and the assumption by Falcon of the Assumed Liabilities.
2.02 Transfer of Falcon Shares. At the Closing, Falcon
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shall deliver to Xxxxxxx certificates representing 241,400 Shares subject to
adjustment as set forth in Section 3.01 and further subject to Sections 3.03
and 3.04. Such certificates shall be issued in the name of Xxxx X. Xxxxxxx,
Falcon having been advised by Xxxxxxx that Xxxxxxx has authorized the
distribution of the Shares, as received, to Shareholder, as its sole
shareholder pursuant to Xxxxxxx' plan of liquidation.
2.03 Assumption of Liabilities. At the Closing, Falcon
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shall assume and agree to pay, discharge or perform, as appropriate, the
Assumed Liabilities of Xxxxxxx. Such agreement by Falcon shall be evidenced
by an assumption agreement in the form attached hereto as Schedule 2.03 (the
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"Assumption Agreement"). In no event shall Falcon assume or incur any
liability or obligation under this Section 2.03 or under any other provision
of the Agreement in respect of any liability of Xxxxxxx not expressly assumed
hereunder, including without limitation any of the following:
(a) any liability or obligation under or in
connection with any Excluded Asset;
(b) liabilities or obligations arising out of any
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breach by Xxxxxxx of any provision of any
agreement, contract, commitment or lease,
including but not limited to liabilities or
obligations arising out of Xxxxxxx' failure to
perform any agreement, contract, commitment or
lease in accordance with its terms prior to the
Closing;
(c) any product liability or similar claim for
injury to person or property, regardless of when
made or asserted, which arises out of or is
based upon any express or implied representation,
warranty, agreement or guarantee made by Xxxxxxx,
or alleged to have been made by Xxxxxxx, or which
is imposed or asserted to be imposed by operation
of law, in connection with any service performed
or product sold or leased by or on behalf of
Xxxxxxx on or prior to the Closing, including
without limitation any claim related to damages or
personal injury caused as a result of any
defective product, the return or replacement of
defective products or any claim seeking recovery
for consequential damage, lost revenue or income;
(d) any claims for service under any warranty in
excess of $50,000 in the aggregate (other than
claims for product liability or similar injury
claims) made by Xxxxxxx in connection with any
product sold by or on behalf of Xxxxxxx prior to
the Closing (such claims being limited to the
actual cost to replace or repair).
(e) any federal, state or local income or other tax
(i) payable with respect to the Business,
Assets, properties or operations of Xxxxxxx for
any period prior to the Closing Date; or (ii)
incident to or arising as a consequence of the
negotiation or consummation by Xxxxxxx and the
transactions contemplated hereby;
(f) any liability or obligation arising prior to or
as a result of the Closing to any employee,
agent or independent contractor of Xxxxxxx,
whether or not employed by Falcon after the
Closing, or under any benefit arrangement with
respect thereto; or
(g) any liability or obligation of Xxxxxxx arising
prior to the Closing related to any violation of
any Environmental Law, whether or not disclosed
in any Schedule hereto;
(h) any liability, damages, costs or expenses
arising from or in connection with those matters
described in Schedule 4.09; or
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(i) any liability listed on Schedule 2.03(h) hereof.
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2.04 Transactions at Closing. At the Closing:
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(a) Xxxxxxx will deliver to Falcon full possession
of the Transferred Assets and such xxxx(s) of
sale, endorsements, assignments and other good
and sufficient instruments of sale, conveyance,
transfer and assignment, all containing
covenants of general warranty, in form and
substance satisfactory to Falcon (including,
without limitation, a Xxxx of Sale and
Assignment in the form of Schedule 2.04(a)), as
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will be required or as may be desirable in the
opinion of Falcon's counsel in order to
effectively vest in Falcon full, indefeasible,
merchantable, legal, equitable and beneficial
title to the Transferred Assets with full
substitution and subrogation to all rights and
actions of warranty, free and clear of all
debts, claims, security interests, liens,
encumbrances and other title retention
agreements, pledges, assessments, covenants,
restrictions and charges of every nature, except
for those shown on Schedule 4.03(a), and will
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assign the Assigned Contracts to Falcon;
(b) Falcon will deliver the Shares to Shareholder,
as the sole shareholder of Xxxxxxx, in
furtherance of the liquidation and dissolution
of Xxxxxxx;
(c) Falcon will assume the Assumed Liabilities
pursuant to the Assumption Agreement; and
(d) the parties shall perform all of the other
obligations required to be performed by them
hereunder on or before the Closing.
2.05 Plan of Reorganization. Consistent with their
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intention that the Transaction qualify as a tax-free reorganization under
Section 368(a)(1)(C) of the Code, the parties agree that this Agreement,
together with the resolutions adopted in connection herewith by the Boards of
Directors of Falcon and Xxxxxxx shall constitute the Plan of Reorganization
of Falcon and Xxxxxxx.
2.06 Employees. Falcon shall not be obligated to hire
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any employees of the Business. Falcon shall notify Xxxxxxx at least three
(3) days prior to the Closing Date of those of Xxxxxxx' employees which
Falcon intends to hire, provided, however, that such notification shall not
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be deemed to alter the employment at will nature of the relationship between
Falcon and such individuals.
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III. ADJUSTMENT; CONTINGENT STOCK; HOLDBACK.
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3.01 Closing Adjustment. The number of Shares to be
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delivered by Falcon at Closing shall be adjusted if, and to the extent that
the Net Working Capital of Xxxxxxx shown on the Closing Balance Sheet either
(i) is greater than the sum of $140,000 (the "Excess Amount") or (ii) is less
than the sum of $90,000 (the "Deficiency Amount"). If an Excess Amount is
indicated on the Closing Balance Sheet, then the Shares issued and delivered
to Xxxxxxx in the name of Shareholder at Closing shall be increased by the
number of Shares determined by dividing the Excess Amount by 14.50.
Conversely, if a Deficiency Amount is indicated on the Closing Balance Sheet,
then the number of Shares delivered to Xxxxxxx in the name of Shareholder at
the Closing shall be reduced by that number of Shares determined by dividing
the Deficiency Amount by 14.50.
3.02 Contingent Stock. On account of various factors
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contributing to the difficulty in currently valuing the Business for purposes
of the Transaction and in ascertaining the proper number of Shares to be
delivered by Falcon as the purchase price in the Transaction and in
determining the future level of earnings of the Business, all of which
collectively depend, in part, on the continued participation by Shareholder
in the Business, Falcon will issue a portion of the Shares that could be
delivered hereunder as Contingent Stock during each Contingency Period,
subject to the terms and conditions set forth in this Section 3.02.
Accordingly, within ten days following the completion of each Contingency
Period, Falcon shall issue and deliver to Shareholder 6,250 shares of
Contingent Stock; provided, however, that the total amount of Contingent
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Stock delivered to Shareholder shall not exceed in the aggregate 75,000
shares of Contingent Stock; and, provided, further, that no Contingent Stock
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shall be issued and delivered to Shareholder from and after (i) the
termination by Falcon "for cause" of the employment of Shareholder with
Falcon or any subsidiary of Falcon (as such term is defined in the Employment
Agreement) prior to the occurrence of a Change of Control (as defined below)
or (ii) the voluntary termination by Shareholder of his employment with
Falcon or any subsidiary of Falcon at any time. In the case of the issuance
of any shares of stock as a dividend upon the shares of Falcon $0.02 par
value common stock (the "Common Stock") or in the case of any subdivision
stock split or reverse stock split whose only effect is either to increase or
decrease in the same proportion the outstanding number of shares of Common
Stock then held, the number of shares of Contingent Stock to be issued and
delivered to Shareholder shall be appropriately adjusted to ensure that the
right of Shareholder will not be diluted as a result of such stock dividend,
subdivision, stock split or reverse stock split. Neither the right to
receive Contingent Stock nor any interest therein shall be transferable or
assignable by Shareholder other than by will or the laws of descent and
distribution. For purposes of this Section 3.02 "Change of Control" shall
mean (x)
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acquisition by an individual or entity that is not currently a shareholder of
Falcon of more than fifty percent (50%) of the Common Stock of Falcon or (y) the
termination of the employment of Xxxxxxxx X. Xxxxxx as an executive officer of
Falcon for reasons other than death or disability.
3.03 Closing Adjustment Holdback. If, on the Closing
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Date (i) the Closing Balance Sheet has not been delivered, (ii) the period
for raising disputes with respect thereto has not been completed or (iii)
there exists an unresolved dispute with respect to the Closing Balance Sheet,
Falcon shall retain shares equal to ten percent (10%) of the aggregate number
of Shares otherwise deliverable to Xxxxxxx at the Closing. Upon delivery of
the Closing Balance Sheet, the completion of the period for raising disputes
and the resolution of outstanding disputes, if any, Falcon shall promptly
deliver to Shareholder any remaining Shares due and owing to Xxxxxxx.
3.04 Mortgage Lien Holdback. For so long as the Mortgage
----------------------
Liens shall remain outstanding, Falcon shall retain 50,000 Shares otherwise
deliverable to Xxxxxxx at the Closing. Such Shares shall be held by Falcon
pursuant to a mortgage lien holdback agreement in the form attached hereto as
Schedule 3.04 (the "Mortgage Lien Holdback Agreement"). Upon the delivery to
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Falcon by Shareholder of evidence, in form and substance satisfactory to
Falcon, that the Mortgage Liens have been terminated and released, Falcon
shall promptly deliver to Shareholder the Shares held pursuant to the
Mortgage Lien Holdback Agreement, subject to any indemnification or set off
rights of Falcon.
IV. WARRANTIES AND REPRESENTATIONS OF XXXXXXX.
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Xxxxxxx and Shareholder, jointly and severally, hereby
represent and warrant to, and covenant and agree with, Falcon as follows:
4.01 Organization and Standing of Xxxxxxx. Xxxxxxx is a
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corporation duly organized, validly existing and is in good standing with
respect to the conduct of the Business under the corporate and other laws of
the State of California and has all necessary power and authority to own its
assets as now owned and to carry on its Business as now being conducted.
Xxxxxxx is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its Business or the ownership of
its property requires Xxxxxxx to be so qualified. A list of such states is
attached hereto as Schedule 4.01.
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4.02 Authority. Xxxxxxx has full power and authority to
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enter into this Agreement and to consummate the transactions contemplated
hereby, which have been duly authorized by all proper and necessary corporate
and other action on the part of Xxxxxxx and Shareholder, and, no further
authorization, consent or approval of Xxxxxxx, its board of directors,
Shareholder, or of any regulatory body or third party is required as a
condition to
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the validity of this Agreement or to give effect to the transactions
contemplated hereby. This Agreement constitutes a valid and binding agreement
of each of Xxxxxxx and Shareholder and is enforceable against them in accordance
with its terms.
4.03 Good Title and Condition of Assets. Except for the
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Mortgage Liens, Xxxxxxx has good and marketable title to and interest in all
of the Transferred Assets. The unpaid balance of the mortgage debt to
Imperial Thrift and Loan Association secured by the Mortgage Liens is
approximately $729,000, as of October 18, 1996. Except for those liens
shown in Schedule 4.03(a), the Transferred Assets are free and clear of
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restrictions on or conditions to transfer or assignment, and free and clear
of all mortgages, conditional sales agreements, liens, pledges, charges,
encumbrances, claims, security interests, easements, covenants, conditions or
restrictions. At Closing, Xxxxxxx shall convey to Falcon good and marketable
title to and interests in the Transferred Assets, free and clear of all
restrictions on or conditions to transfer or assignment, mortgages,
conditional sales agreements, liens, pledges, charges, encumbrances, claims,
security interests, easements, covenants, conditions and restrictions, except
for the those liens shown on Schedule 4.03(a), including the Mortgage Liens.
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Except as listed on Schedule 4.03(a), all of the tangible personal property
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constituting a part of the Transferred Assets is in good operating condition
and repair, ordinary wear and tear excepted, and conforms to all applicable
laws, ordinances and regulations.
4.04 Financial Statements. The balance sheet of Xxxxxxx
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at June 30, 1996, and the income and expense statement for the year then
ended, reviewed and reported upon the Accounting Firm, are attached hereto as
Schedule 4.04 (the "Financial Statements"). Xxxxxxx has provided and will
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continue to provide Falcon with comparable financial statements for each
calendar month concluding with the financial statement for the calendar month
immediately preceding the Closing Date (the "Operating Reports"). Except as
expressly stated on Schedule 4.04, the Financial Statements and Operating
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Reports have been and will continue to be prepared in accordance with
generally accepted accounting principles and practices consistently applied,
are, and will continue to be, accurate and complete, and fairly represent and
will continue to fairly represent the financial condition of Xxxxxxx and the
income, expenses and results of operations of Xxxxxxx, for the time period(s)
covered thereby, and do not, and will not, omit to state or reflect any
material fact concerning Xxxxxxx or the Business required to be stated or
reflected therein or necessary to make the statements therein not misleading.
Xxxxxxx has no outstanding or potential unasserted claims, contingent
obligations (whether as a guarantor, indemnitor, surety, accommodation party
or otherwise), liability for taxes or forward or long-term commitments or
obligations, except as set forth in the Financial Statements, the Operating
Statements or as set forth in the Schedules to this Agreement.
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4.05 Absence of Changes.
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(a) Since June 30, 1996, there has not been any:
(i) transaction by Xxxxxxx except in the
ordinary course of business as theretofore
conducted;
(ii) adverse change in the financial condition,
Assets, Business or prospects of Xxxxxxx;
(iii) amendment or termination of any contract,
agreement or license to which Xxxxxxx is a party,
except for the termination of contracts and
agreements in the ordinary course of business, none
of which are material, individually or in the
aggregate, to the continued conduct of the Business
of Xxxxxxx as heretofore conducted;
(iv) mortgage, pledge or other encumbrance of, or
the granting of any security interest or lien with
respect to, any of the Assets; or
(v) any other event or condition of any character
that has had or in the future may have a materially
adverse affect on the financial condition, Business,
Assets or prospects of Xxxxxxx or the Business as
heretofore conducted.
(b) Except as shown in Schedule 4.05(b), since June
----------------
30, 1996, Xxxxxxx has not had any customer account to which
Xxxxxxx had sales in the Business in excess of $50,000
during the year then ended which ceased doing business with
Xxxxxxx or advised Xxxxxxx that it intended to cease doing
business with Xxxxxxx or substantially reduce the amount of
business it does or proposes to do with Xxxxxxx. There are
no bids currently outstanding to customers or proposed
customers of Xxxxxxx.
4.06 Payment of All Debts and Liabilities. On or prior
------------------------------------
to the Closing Date, Xxxxxxx shall have paid or provided for the payment of
all accounts, debts, bills and liabilities of Xxxxxxx which are or subsequent
to the Closing could become a lien or encumbrance on or result in a security
interest in the Transferred Assets or otherwise affect the use of the
Transferred Assets subsequent to the Closing.
4.07 No Conflicting Agreements or Orders. There is no
-----------------------------------
provision of the Articles of Incorporation or By-laws of Xxxxxxx, or of any
mortgage, indenture, lease, contract, security agreement, document,
instrument, license or agreement binding on Xxxxxxx or affecting its
properties, or of any federal, state or local law, rule or regulation, which
conflicts with or in any way prevents or will be violated by the execution,
delivery or carrying out of the terms of this Agreement, the consummation of
16
the Transaction, nor will such execution, delivery or consummation constitute
a default, or an event which with the giving of notice or the passage of
time, or both, would constitute a default, under any of the foregoing, nor be
the grounds for the suspension, revocation, impairment, forfeiture,
nonrenewal or termination of any license, permit, franchise, certificate,
consent or authorization. The execution, delivery or consummation of this
Agreement will not constitute or result in: (a) the creation or imposition
of a security interest in or any lien, charge or encumbrance on, or give to
others any interest or right in or with respect to, any of the Transferred
Assets, or (b) a complete or partial withdrawal from any employer or
multi-employer/employee benefit plan under ERISA or any funding deficiency or
lien under ERISA or any other law, rule or regulation against the Transferred
Assets. Neither of Xxxxxxx or Shareholder is subject to any order, writ,
injunction, decree, judgment, award, determination, direction or demand of
any court, arbitrator, or federal, state, municipal or other governmental
department, bureau, agency or instrumentality which would be violated by the
execution, delivery or carrying out of the terms of this Agreement, or the
consummation of the Transaction.
4.08 Compliance. Except as set forth in Schedule 4.08,
---------- -------------
Xxxxxxx has conducted its Business and maintained its properties, including
all owned real property and the real property covered by leases, in
compliance with, and is not in violation of, applicable laws, rules,
regulations and orders of federal, state and local governments and regulatory
bodies (including, without limitation, any and all applicable building,
zoning and licensing laws, ordinances, regulations or orders affecting the
location, size and function of the Assets and all Environmental Laws).
Xxxxxxx has not received any claim or notice that Xxxxxxx has not complied in
all respects in the operation of its Business and related properties with
such laws, rules and regulations. Xxxxxxx has all licenses, permits and
consents required to be obtained from federal, state, county or municipal
authorities with respect to the ownership or use of the Assets or the
operation of the Business or otherwise, a complete list of which is set forth
in Schedule 4.08.
-------------
4.09 Litigation. Except as set forth in Schedule 4.09,
---------- -------------
no suit, action, decree, arbitration or legal, administrative or other
proceeding, controversy or investigation is pending or threatened against
Xxxxxxx, or which otherwise might materially affect the Business or financial
condition of Xxxxxxx or any of the Assets, Xxxxxxx' right to transfer the
same, the possession and use thereof or the operation by Falcon of a business
similar to that heretofore conducted by Xxxxxxx. To the knowledge of Xxxxxxx
and Shareholder, and without notice to the contrary, there is no basis for
any such litigation, proceeding, controversy or investigation. Xxxxxxx is
not in default with respect to any order, writ, injunction or decree of any
federal, state, local or foreign court, department, agency or instrumentality,
nor has the time period of Xxxxxxx' compliance with respect to any of the same
17
been extended or stayed. Xxxxxxx is not presently a party to any legal action
to recover moneys due to Xxxxxxx or damages sustained by Xxxxxxx.
4.10 Condition of Xxxxxxx. Since June 30, 1996, Xxxxxxx
--------------------
has kept its Business and its organization intact; has kept available the
services of its principal managerial and supervisory employees and agents;
has maintained the good will of its customers; and has conducted its Business
in the same manner as it had been conducted prior to that date.
4.11 Employment Agreements. Except as disclosed on
---------------------
Schedule 4.11 hereof, Xxxxxxx has not entered into, and has no obligation or
-------------
liability with respect to, any employment or consulting agreement, executive
compensation plan, collective bargaining agreement, deferred compensation
agreement, bonus plan, employee pension plan or retirement plan, employee
profit sharing plan, employee stock purchase or stock option plan, severance
agreement or any other agreement or arrangement providing for remuneration or
benefits to employees or their dependents.
4.12 Labor Relations. Xxxxxxx is not a party to any
---------------
collective bargaining agreement. Xxxxxxx has complied with all applicable
laws, rules and regulations relating to the employment of labor, including
those relating to wages (including overtime), benefits (including vacation),
hours, employee safety or other conditions of employment, collective
bargaining and the withholding and payment of taxes. Xxxxxxx has withheld
all amounts required by law or agreement to be withheld from the wages or
salaries of its employees, and is not liable for any arrears of wages or any
tax or penalties for failure to comply with the foregoing. Xxxxxxx has paid
over, and will pay over, to the appropriate governmental agencies or
depositories, at the time or times required by law (without any extensions or
stays), all "employment taxes" and "withholding taxes." There are no labor
disputes, controversies, grievances, strikes, work slowdowns or stoppages,
nor are there any proceedings before any court, governmental agency or
arbitrator relating to such matters, including unfair labor practice claims,
existing, pending or threatened against Xxxxxxx or between Xxxxxxx and any of
its employees or any union representing or claiming to represent any such
employees, and except as described in Schedule 4.12, no discharge has
-------------
occurred which forms the basis for any claim of discrimination against
Xxxxxxx.
4.13 Taxes. Except as set forth in Schedule 4.13,
----- -------------
Xxxxxxx has filed all federal, state and local tax returns and estimates
required to be filed by Xxxxxxx, which returns were filed within the times
and in the manner prescribed by law. Xxxxxxx has delivered to Falcon true
and complete copies of the federal income tax returns of Xxxxxxx for the
three (3) years ended June 30, 1993, 1994 and 1995 and the results of the
most recent audit of Xxxxxxx' tax returns, if any, by the Internal Revenue
Service and the State of California. There are no pending audits with respect
18
to such returns. No waiver or extension of any filing or payment date or of any
statute of limitations with respect to taxes has been requested of or given by
Xxxxxxx. No claims have been asserted or threatened for taxes against Xxxxxxx
or the Transferred Assets. Xxxxxxx has accrued on their books and records
all taxes, charges and assessments accruing on the Assets, the Business or
the operation thereof which are presently payable. Except as set forth in
Schedule 4.13, all taxes which are due and payable or will become due and
-------------
payable by Xxxxxxx prior to the Closing Date have been, or prior to the Closing
Date will be, paid in full or fully provided for and will be paid by Xxxxxxx.
4.14 Name of Company. Xxxxxxx is the sole legal owner
---------------
of, and uses, those trade names listed on Schedule 4.14 (collectively, the
-------------
"Names"), and the use of the Names does not conflict with the rights of
others. At Closing, Xxxxxxx will assign each of the Names to Falcon.
4.15 Inventory. The inventories contained in the
---------
Transferred Assets consist of items of a quality and quantity currently
usable and saleable in the ordinary course of business. None of Xxxxxxx'
inventories are held by Xxxxxxx on consignment from others.
4.16 Leases. Except as set forth on Schedule 4.16, no
------ -------------
personal or real property used by Xxxxxxx in connection with the Business is
held under any lease. Each of the leases identified on Schedule 4.16 is
-------------
currently in full force and effect. Neither Xxxxxxx nor, to the knowledge of
Xxxxxxx and without notice to the contrary, any other party to such lease is
in default, nor to the knowledge of Xxxxxxx and without notice to the
contrary has any event occurred, nor does any condition exist, which with the
giving of notice or the passage of time, or both, would constitute a default
thereunder.
4.17 Insurance. Xxxxxxx has maintained and now maintains
---------
(a) "all risk" insurance on the full fair market value of all of the Assets
and on its Business, covering property damage by fire or other casualties,
and (b) adequate insurance protection against all other liabilities, claims
and risks against which it is customary to insure. Xxxxxxx has included a
true and correct copy of all such insurance policies in Schedule 4.17. All
-------------
such policies of insurance shall be in form and substance satisfactory to
Falcon with insurers reasonably recognized as adequate by Falcon and all such
policies shall be in such amounts as may be reasonably satisfactory to
Falcon.
4.18 Other Contracts. Except as listed on Schedule 4.18,
--------------- -------------
Xxxxxxx is not a party to, nor is the property of Xxxxxxx bound by, any
agreement not entered into in the ordinary course of business, any indenture,
mortgage, deed of trust, lease or any other agreement between Xxxxxxx and any
third party relating to the Transferred Assets or the Business of Xxxxxxx.
There is no default of Xxxxxxx or event that with notice or lapse of time, or
19
both, would constitute a default nor, to the knowledge of Xxxxxxx any default
or threatened default by any other party thereto, existing with respect to
any of such agreements. Xxxxxxx has received no notice that any party to any
of such agreements intends to cancel or terminate any of such agreements or
to exercise or not exercise any options under any of such agreements.
Xxxxxxx is not a party to, nor is Xxxxxxx or the Assets bound by, any
agreement that is materially adverse to the Assets or the business of
Xxxxxxx.
4.19 Documents. Xxxxxxx has furnished to Falcon for its
---------
examination: (a) copies of all agreements, policies, leases, and other
instruments and documents listed on the Schedules attached hereto and (b)
copies of all tax receipts (including receipts for the payment of sales
taxes) for all taxes required to be paid by Xxxxxxx for three (3) years prior
to the Closing Date, each of which shall be in form and substance reasonably
acceptable to Falcon.
4.20 Suppliers. Attached hereto as Schedule 4.20 is a
--------- -------------
list of the suppliers of goods and services to Xxxxxxx as of the date of this
Agreement and for the year ended June 30, 1996.
4.21 Real Property. Schedule 4.21 contains a complete
------------- -------------
and accurate legal description of each parcel of real property owned by or
leased to Xxxxxxx. Xxxxxxx does not own or lease any real property nor use
any real property in the conduct of its Business other than the real property
described in Schedule 4.21. The use of such property in Xxxxxxx' Business as
-------------
heretofore used does not violate or encroach upon the rights of any other
party.
4.22 Customers; Accounts Receivable.
------------------------------
(a) Except as shown in Schedule 4.22(a), no customer
----------------
of Xxxxxxx accounted for more than 10% of Xxxxxxx' sales
during the 12 month period ended June 30, 1996. Xxxxxxx
has provided Falcon with a list of Xxxxxxx' customers (the
"Closing Customer List") and the amount of purchases of
each of them for such period.
(b) Xxxxxxx has delivered to Falcon a current aged
list of unpaid accounts receivable owing to Xxxxxxx (the
"Accounts Receivable Schedule"), and will deliver to
Falcon, as of the close of business on the Balance Sheet
Date (the "Closing Accounts Receivable") and as of the
Closing Date, such updates of the Accounts Receivable
Schedule and other information pertaining to the accounts
receivable of Xxxxxxx, certified as correct by Xxxxxxx.
The Accounts Receivable Schedule and any such updates
thereto or other related information provided to Falcon set
forth or will set forth a true and correct list of all
Accounts Receivable as of the respective dates thereof.
The Accounts Receivable are, and the Closing Accounts
Receivable will be, legal, valid and binding claims, do not
reflect any goods placed on a
20
consignment or other basis whereby payment is conditional, and
are and will be fully collectible in the ordinary course of
business in accordance with their terms, without litigation or
other collection expenses, within 120 days of the Closing Date
at the full face value thereof, and are not subject to any
counterclaim or right of set off.
4.23 ERISA. Xxxxxxx has not established, and does not
-----
maintain or contribute to any employee benefit plan within the meaning of
Section 3(3) of ERISA or to which ERISA otherwise applies.
4.24 Environmental Matters.
---------------------
(a) The operations and activities of Xxxxxxx comply,
and have in the past complied, in all respects, with all
Environmental Laws and Regulations. There are no pending
or currently proposed changes to any Environmental Laws and
Regulations which, when implemented or effective, would
have a material adverse effect on the operations of Xxxxxxx
or the Business.
(b) Xxxxxxx has obtained and is and has been in full
compliance with all requirements, permits, licenses and
other authorizations which are required with respect to
Xxxxxxx' operations, as well as the transactions
contemplated hereby under all Environmental Laws and
Regulations. Schedule 4.24 lists each such permit, license
-------------
or other authorization. There are no other such permits,
licenses or other authorizations which are required by any
Environmental Laws and Regulations to be obtained after the
Closing or will be needed for the operation of the business
contemplated by Falcon post-closing.
(c) There is no civil, criminal, administrative or
other action, suit, demand, claim, hearing, notice of
violation, proceeding, investigation, notice or demand
pending, received, or, to the knowledge of Xxxxxxx,
threatened against Xxxxxxx relating in any way to any
Environmental Laws and Regulations except as shown in
Schedule 4.24.
-------------
(d) Except as shown in Schedule 4.24, Xxxxxxx has
-------------
not caused, and neither Xxxxxxx nor any of its owned or
leased real property has experienced any past or present
events, conditions, circumstances, plans or other matters
which: (i) are not in compliance with all Environmental
Laws and Regulations; (ii) may give rise to any statutory,
common law, or other legal liability, or otherwise form the
basis of any material claim, action, demand, suit,
proceeding, hearing, notice of violation or investigation
based on or relating to Hazardous Materials including,
without limitation, such matters relating to any property
owned, leased or utilized by Xxxxxxx; (iii) arise from
inventory of or waste from
21
Hazardous Materials; or (iv) arise from any off-site disposal,
release or threatened release of Hazardous Materials.
(e) No asbestos, polychlorinated biphenyls or
ead-based paints are on any real property or in any
building owned, operated, leased or utilized by Xxxxxxx
except as shown in Schedule 4.24.
-------------
(f) No past or present employee of Xxxxxxx has been
exposed to any Hazardous Material owned, produced or
utilized except as is anticipated in the normal operation
of the Xxxxxxx.
(g) Except as shown in Schedule 4.24, Xxxxxxx, has
-------------
not received any notice or indication from any governmental
agency or private or public entity advising it that it is
or may be responsible for any investigation or response
costs with respect to a release, threatened release or
cleanup of chemicals or materials produced by, used,
stored, treated, or resulting from any business, commercial
or industrial activities, operations or processes,
including, without limitation, any Hazardous Materials.
Xxxxxxx is not aware of any facts which might give rise to
such notice.
(h) Except as shown in Schedule 4.24, no underground
-------------
tanks, piping or subsurface structures of any type exist or
have existed on any real property now or previously owned,
operated, leased or utilized by Xxxxxxx.
(i) Schedule 4.24 contains a complete description of
-------------
all environmental investigations, assessments, audits,
studies, tests and related materials in possession of
Xxxxxxx, or known to Xxxxxxx to exist, which relate to the
current or prior operations of Xxxxxxx or any real property
now or previously owned, operated or utilized by Xxxxxxx
and Xxxxxxx has delivered to Falcon copies of all of the
above.
4.25 No Misrepresentation. No representation or warranty
--------------------
made by either Xxxxxxx or Shareholder in this Agreement or any Schedule
hereto contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein and therein not misleading.
V. REPRESENTATIONS AND WARRANTIES OF FALCON.
----------------------------------------
Falcon hereby represents and warrants to, and covenants and
agrees with, each of Xxxxxxx and Shareholder as follows:
5.01 Organization and Standing of Falcon. Falcon is a
-----------------------------------
Delaware corporation, validly existing and in good standing under the laws of
the State of Delaware and is duly qualified to transact business in the State
of California.
22
5.02 Binding Agreement. This Agreement constitutes, and
-----------------
each other instrument to be executed and delivered by Falcon in accordance
herewith will constitute, when executed and delivered pursuant hereto, the
valid and legally binding obligations of Falcon.
5.03 Agreement Within Authority. The execution and
--------------------------
delivery of this Agreement by Falcon, the consummation of the transactions
contemplated hereunder and the performance by Falcon of this Agreement and
the agreements and instruments which are executed and delivered in connection
herewith in accordance with each of their terms will not (a) violate the
Articles of Incorporation or Bylaws of Falcon, or (b) violate any judgment,
order, writ, injunction, decree or demand against Falcon of any court or
federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality.
5.04 No Conflicting Agreements or Orders. No approval or
-----------------------------------
consent of any foreign, federal, state, county, local or other governmental
or regulatory body is required as a condition to the validity of this
Agreement or to give effect to the transactions contemplated hereby.
5.05 Corporate Action. The execution and delivery of
----------------
this Agreement by Falcon and the performance of all acts contemplated to be
performed by it hereunder have been duly authorized by all necessary
corporate action. Falcon has duly executed and delivered this Agreement and
the agreements or instruments which are executed in connection herewith.
5.06 No Conflict. The execution and delivery of this
-----------
Agreement and each other instrument to be executed by Falcon in accordance
herewith and the consummation of the transactions contemplated herein by
Falcon will not conflict or be inconsistent with or result in the termination
of or constitute a breach of or default under the terms of any indenture,
mortgage, deed of trust, covenant, agreement or other instrument to which
Falcon is a party or to which its property is subject.
5.07 No Misrepresentation. No representation or warranty
--------------------
made by Falcon in this Agreement or any Exhibit or Schedule hereto contains
or will contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary to make the statements contained herein
and therein not misleading.
5.08 Valid Issuance. Each of the Shares, when issued
--------------
pursuant to and as contemplated by this Agreement, and the Contingent Stock,
when issued pursuant to and as contemplated by this Agreement and the
Employment Agreement, will be validly issued, fully paid and nonassessable,
and free and clear of all liens, encumbrances and restrictions, except as
contemplated herein.
23
VI. COVENANTS OF FALCON.
-------------------
6.01 Information. In the event the Transaction is not
-----------
consummated for any reason, all copies of non-public proprietary documents
and information provided to Falcon by Xxxxxxx hereunder shall be returned to
Xxxxxxx by Falcon, and Falcon shall maintain the same in confidence and shall
not disclose or utilize the same except with the consent, or for the benefit,
of Xxxxxxx.
6.02 Satisfaction of Assumed Liabilities. After Closing,
-----------------------------------
Falcon shall pay, perform and discharge, and shall indemnify Xxxxxxx with
respect to, the Assumed Liabilities and shall promptly pay any amount thereof
determined to be due. Falcon, however, shall have the right to contest in
good faith any of such Assumed Liabilities, and Xxxxxxx shall cooperate fully
with Falcon in connection with any such contest.
6.03 Execution of Facility Lease. Falcon covenants and
---------------------------
agrees to enter into the Facility Lease with Shareholder at the Closing of
the Transaction.
VII. COVENANTS OF XXXXXXX AND SHAREHOLDER.
------------------------------------
Pending Closing, each of Xxxxxxx and Shareholder, jointly
and severally, covenant and agree as follows:
7.01 Access to Information. Falcon and its counsel,
---------------------
accountants and other representatives shall have full access during normal
business hours to all properties, books, accounts, records, agreements and
documents of or relating to the Business. Xxxxxxx shall furnish or cause to
be furnished to Falcon and its counsel, accountants and representatives all
data and information concerning the operations, finances and assets of
Xxxxxxx requested by Falcon, including, without limitation, the updating of
any of the Schedules attached hereto.
7.02 Maintain Properties. Xxxxxxx shall maintain the
-------------------
Assets on a current basis and in customary repair, order and condition.
7.03 Maintain Organization. Xxxxxxx shall keep its
---------------------
organization intact, keep available the services of its employees and
maintain the relationship and goodwill of its customers.
7.04 Regular Course of Business. Xxxxxxx shall continue
--------------------------
to operate the Business consistent with its past practices and shall not,
without the prior written consent of Falcon, purchase, sell or otherwise
dispose of any property or assets, or incur any liability, obligation or
commitment or engage in any activity or transaction, except in the regular
and customary course of business.
7.05 Insurance. Xxxxxxx shall cause its policies of
---------
24
insurance relating to the Business and the Assets of Xxxxxxx to continue to
be kept in full force and effect and will refrain from taking any action
which impairs the continued insurability of the Transferred Assets or the
Business.
7.06 Employees. Without the prior written consent of
---------
Falcon, Xxxxxxx will not, and will not agree to, enter into or amend any
representation, employment or compensation agreement or grant any increase or
change in the salaries or other compensation or benefits payable or to become
payable by Xxxxxxx to any officer, employee, sales agent or representative of
Xxxxxxx.
7.07 Business Changes. Xxxxxxx will not do or agree to
----------------
do any of the following without the prior written consent of Falcon:
(a) Enter into any contract, commitment or
transaction not in the usual and ordinary course of
Xxxxxxx' Business as heretofore conducted;
(b) Make any material capital expenditure;
(c) Agree to, modify, amend, cancel or terminate any
of its existing contracts or agreements; or
(d) Cause its aggregate receivables and inventory to
decrease or trade payables to increase over the existing
amount as of the date of this Agreement to any significant
extent.
7.08 Consents. As soon as reasonably practical after the
--------
execution and delivery of this Agreement, and in any event on or before the
Closing Date, Xxxxxxx will obtain the written consent of all persons whose
consent to the execution of, and closing of the transactions contemplated by,
this Agreement is required, in form and substance acceptable to Falcon; and
Xxxxxxx will furnish Falcon original executed copies of such consents as they
are obtained.
7.09 Execution of Facility Lease. Shareholder covenants
---------------------------
and agrees to enter into the Facility Lease with Falcon at the Closing of the
Transaction.
7.10 Exclusive Dealing. Xxxxxxx will not enter into any
-----------------
agreement, discussion or negotiation with, or provide information to, any
other corporation, firm or other person, or solicit, encourage, entertain or
consider any inquiries or proposals, with respect to (i) the possible
disposition of a material portion of the Business, or (ii) any business
combination involving the Business, whether by way of merger, consolidation,
share exchange or other transaction.
7.11 No Future Advances. Xxxxxxx and Shareholder
------------------
covenant and agree that neither of them will incur any additional
indebtedness or make any additional draws under or with respect to
25
the loans to Shareholder from Imperial Thrift and Loan Association secured by
the Mortgage Liens or in any way increase the amount of indebtedness secured
by the Mortgage Liens.
VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF FALCON.
---------------------------------------------
The obligations of Falcon hereunder are subject to
fulfillment (or waiver by Falcon), prior to or on the Closing Date, of the
following conditions:
8.01 No Adverse Change. There shall have been no adverse
-----------------
change in or loss or damage to the Transferred Assets or the Business of
Xxxxxxx as heretofore conducted.
8.02 Representations, Warranties and Agreements of
---------------------------------------------
Xxxxxxx. The representations, warranties, covenants and agreements of
-------
Xxxxxxx and Shareholder herein shall be true and not breached as of the
Closing Date, with the same effect as though such representations,
warranties, covenants and agreements had been repeated by Xxxxxxx and
Shareholder as of the Closing Date, and all of the obligations of Xxxxxxx and
Shareholder hereunder shall have been duly performed.
8.03 Opinion of Counsel. Falcon shall have received the
------------------
favorable opinion of counsel for Xxxxxxx and Shareholder, dated as of the
Closing Date, in the form of Schedule 8.03 and otherwise in form and
-------------
substance reasonably satisfactory to Falcon and Falcon's counsel. In
rendering such opinion, counsel for Xxxxxxx and Shareholder may rely on
written certificates of the chief executive officer or the chief financial
officer of Xxxxxxx and appropriate public officials as to factual matters,
provided a copy thereof is attached to and forms a part of the opinion of
counsel with the knowledge and consent of the chief executive officer or the
chief financial officer of Xxxxxxx.
8.04 Absence of Litigation. No action, suit or
---------------------
proceeding before any court or any governmental body or authority pertaining
to the Transaction or to its consummation or to the Assets or the Business of
Xxxxxxx shall have been instituted or threatened on or before the Closing
Date except as detailed in Schedule 4.09.
-------------
8.05 Corporate Approval. The execution and delivery of
------------------
this Agreement by Xxxxxxx and the performance of its covenants and
obligations under it, shall have been duly authorized by all necessary
corporate and other action of Xxxxxxx, and Falcon shall have received copies
of all resolutions pertaining to such authorization and approval, certified
by the Secretary of Xxxxxxx.
8.06 Consents. All necessary agreements, approvals and
--------
consents of any parties to the consummation of the Transaction and other
transactions by Xxxxxxx and Shareholder contemplated by this Agreement or
otherwise pertaining to the related matters covered by this Agreement related
to Xxxxxxx and/or Shareholder, shall have been obtained by Xxxxxxx and
Shareholder and delivered to Falcon.
26
8.07 Officers' Certificate. Falcon shall have received a
---------------------
certificate, dated the Closing Date, signed and verified by the Chief
Executive Officer and Chief Financial Officer of Xxxxxxx certifying, in the
form of Schedule 8.07 hereto, that the conditions specified in this Article
-------------
VIII have been fulfilled.
8.08 Approval of Documents. The form and substance of
---------------------
all certificates, instruments, opinions and other documents delivered to
Falcon under this Agreement shall be satisfactory to Falcon and its counsel.
8.09 Casualty Loss. The Business shall not have been
-------------
curtailed or interrupted by, and the Transferred Assets shall not have been
affected by, any loss, destruction or damage due to fire or other casualty
unless, if any such destruction or damage shall have occurred, Falcon shall
have determined that such loss, destruction or damage is not of such nature
as to curtail or interrupt the Business of Xxxxxxx or determined that
available insurance proceeds are sufficient to repair or replace any damaged
or lost Transferred Assets and Xxxxxxx shall have assigned the proceeds of
any such insurance to Falcon, which Xxxxxxx agrees to do upon the request of
Falcon.
8.10 Satisfactory Review of Xxxxxxx' Business and the
------------------------------------------------
Assets; Inspections. Falcon shall have been given access to and been
-------------------
permitted to review the Assets, the Business of Xxxxxxx and such other
information as shall have been requested by Falcon, and Falcon shall be
satisfied, in its sole discretion, with the physical, operating and financial
condition of the Assets and the Business of Xxxxxxx.
8.11 Facility Lease. Falcon shall have entered into a
--------------
lease agreement (the "Facility Lease") with Shareholder for the occupancy by
Falcon of the facility housing the Business, commonly known and numbered as
000 Xxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx, 00000 (the "Facility"), which Facility
Lease (a) shall be for an initial term of five (5) years, (b) provide for
three renewal options on the part of Falcon, each for a period of five years,
(c) shall otherwise provide for rental payments on the basis of $.295 per
square foot, triple net, and (d) shall be in the form of Schedule 8.11.
-------------
8.12 Certificates, Permits and Approvals. Falcon, at its
-----------------------------------
own expense, shall have obtained all certificates, permits and approvals
required in connection with the operation of the Business by Falcon.
8.13 Employment and Non-Competition Agreement.
----------------------------------------
Shareholder shall have executed and delivered an Employment and
Non-Competition Agreement with Falcon or a subsidiary of Falcon in the form
of Schedule 8.15 (the "Employment Agreement").
-------------
8.14 Mortgage Lien Holdback Agreement. Xxxxxxx and
--------------------------------
27
Shareholder shall have executed and delivered the Mortgage Lien Holdback
Agreement, together with a stock executed in blank by Shareholder.
IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXXX AND
--------------------------------------------------
SHAREHOLDER.
-----------
The obligations of Xxxxxxx and Shareholder hereunder are
conditioned upon the fulfillment (or waiver by Xxxxxxx), prior to or at the
Closing Date, of the following:
9.01 Representations, Warranties and Agreements of Falcon.
----------------------------------------------------
The representations, warranties, covenants and agreements of Falcon contained
herein shall be true and not breached at and as of the Closing Date, with the
same effect as though such representations, warranties, covenants and
agreements had been repeated by Falcon at and as of such time, and all of the
obligations of Falcon hereunder shall have been duly performed.
9.02 Performance of Assumed Liabilities. Falcon shall
----------------------------------
have assumed and agreed to perform the Assumed Liabilities from and after the
Closing Date, as provided in Sections 2.03, 2.04 and 6.02.
9.03 Corporate Approval. The execution and delivery of
------------------
this Agreement by Falcon and the performance of Falcon's respective covenants
and obligations under it, shall have been duly authorized by all necessary
corporate and other action of Falcon, and Xxxxxxx shall have received copies
of all resolutions pertaining to such authorization, certified by the
Secretary of Falcon.
9.04 Consents. All necessary agreements and consents of
--------
any parties to the consummation of the transactions by Falcon contemplated by
this Agreement, or otherwise pertaining to the matters covered by it, shall
have been obtained by Falcon and delivered to Xxxxxxx.
9.05 Falcon's Certificate. Xxxxxxx shall have received a
--------------------
certificate, dated the Closing Date, signed and verified by Falcon's chief
executive officer and chief financial officer certifying, in the form of
Schedule 9.05 hereto, that the conditions specified in this Article IX have
-------------
been fulfilled.
9.06 Approval of Documents. The form and substance of
---------------------
all certificates, instruments, opinions and other documents delivered to
Xxxxxxx under this Agreement shall be satisfactory to Xxxxxxx and its
counsel.
9.07 Employment Agreement. Falcon shall have executed
--------------------
and delivered to Shareholder the Employment Agreement.
9.08 Facility Lease. Falcon and Shareholder shall have
--------------
entered into the Facility Lease.
28
9.09 Opinion of Counsel. Xxxxxxx shall have received the
------------------
favorable opinion of counsel for Falcon, dated as of the Closing Date, in the
form of Schedule 9.09 and otherwise in form and substance satisfactory to
-------------
Xxxxxxx and Xxxxxxx' counsel. In rendering their opinion, counsel for Falcon
may rely on written certificates of the officers of Falcon and appropriate
public officials as to factual matters, provided a copy thereof is attached
to and forms part of the opinion of Falcon's counsel with the knowledge and
consent of such officers.
9.10 Mortgage Lien Holdback Agreement. Falcon shall have
--------------------------------
executed and delivered the Mortgage Lien Holdback Agreement.
X. INDEMNIFICATION
---------------
This Article sets forth the respects in which Falcon shall
be indemnified by Xxxxxxx and Shareholder in the event Falcon shall become
obligated or liable for, or shall discharge, obligations or liabilities of
Xxxxxxx and/or in the event of any misrepresentation or breach of warranty or
agreement on the part of either of Xxxxxxx or Shareholder hereunder, and the
respects in which Xxxxxxx shall be indemnified by Falcon in the event Xxxxxxx
shall become obligated for, or shall discharge, any liabilities of Falcon in
the event of any misrepresentations or breach of warranty or agreement on the
part of Falcon hereunder.
10.01 Indemnification of Falcon by Xxxxxxx and Shareholder.
----------------------------------------------------
(a) Representations, Warranties, Covenants and
------------------------------------------
Agreements. Each of Xxxxxxx and Shareholder, jointly and
----------
severally, agree to indemnify Falcon and hold Falcon
harmless against any and all loss, liability, damage,
claim, cost and expense of any nature whatsoever,
including, without limitation, attorneys' fees, arising
from or in connection with any representation or warranty
made by either of Xxxxxxx or Shareholder not being
complete, accurate and true at the date of this Agreement
and on the Closing Date or the failure by either of Xxxxxxx
or Shareholder to fulfill and fully perform each covenant
or agreement on the part of either of Xxxxxxx or
Shareholder under this Agreement or under any other
instrument or document executed and delivered by either
Xxxxxxx or Shareholder in connection with the transactions
contemplated hereby, as any of the same may be amended from
time to time.
(b) Failure to Discharge Liabilities. Each of
--------------------------------
Xxxxxxx and Shareholder, jointly and severally, agree to
indemnify Falcon and hold Falcon harmless against any and
all loss, liability, damage, claim, cost and expense of any
nature whatsoever, including, without limitation,
attorneys' fees, arising from or in connection with: (i)
any transferee liability law (other than the unemployment
compensation
29
experience rating of former employees of Xxxxxxx), (ii) any
payment or performance made by Falcon to any third party in
order to perform or discharge fully or partially any liability
or obligation of Xxxxxxx (except for the Assumed Liabilities),
which Falcon shall have the option or be required to do, (iii)
any judgment or other circumstances pursuant to which Falcon
may be held liable or accountable for, or the Transferred
Assets to be acquired hereunder may be charged in respect of,
any liability or obligation of Xxxxxxx other than the Assumed
Liabilities, (iv) the presence of contaminants, pollutants
and other harmful substances in, on under or emanating from
the premises subject to any lease or occupancy assumed by
Falcon hereunder, (v) the non-compliance by Xxxxxxx with
any Environmental Laws, (vi) any liability in connection
with the consummation of the Transaction to any third party
with whom Xxxxxxx, or its agents, engaged in discussion
regarding the disposition of the Business; (vii) any
services provided by Falcon in excess of $50,000 in the
aggregate under any warranty in connection with any product
sold by or on behalf of Xxxxxxx prior to the Closing; and
(viii) any payment or performance made by Falcon to
Imperial Thrift and Loan Association or any other third
party in order to perform or discharge fully or partially
any liability or obligation of Xxxxxxx or Shareholder with
respect to the Mortgage Liens or the debt secured thereby.
(c) Remedies Not Exclusive. The rights and remedies
----------------------
of Falcon provided for in this Article or otherwise in this
Agreement shall be deemed to be cumulative and in addition
to and not in limitation or exclusion of all other rights
and remedies, whether by terms of other provisions of this
Agreement or at law or in equity or otherwise, which may
exist on the part of Falcon by reason of any
misrepresentation or breach of warranty, covenant or
agreement on the part of Xxxxxxx or Shareholder. Such
rights and remedies shall be cumulative and may be
exercised at any time or from time to time, and any failure
or delay of Falcon in exercising any right or remedy at any
time shall not constitute a waiver thereof or restrict its
subsequent enforcement or the enforcement of any other
right or remedy of Falcon. In addition to any other rights
and remedies of Falcon hereunder or otherwise, any amounts
due and payable to Falcon by reason of the obligations of
Xxxxxxx and/or Shareholder to indemnify Falcon and hold
Falcon harmless hereunder shall be subject to a right of
setoff and reduction on the part of Falcon against any
amounts due and payable by Falcon to Xxxxxxx or Shareholder
hereunder or under any other agreement, at the discretion
and designation of Falcon, in whole or in part.
10.02 Indemnification of Xxxxxxx by Falcon.
------------------------------------
(a) Representations, Warranties, Covenants and
-------------------------------------------
Agreements. Falcon agrees to indemnify Xxxxxxx and hold
----------
30
Xxxxxxx harmless against any and all loss, liability,
damage, claim, cost and expense of any nature whatsoever,
including, without limitation, attorneys' fees, arising
from or in connection with any representation or warranty
made by Falcon not being complete, accurate and true at the
date of this Agreement and on the Closing Date or the
failure by Falcon to fulfill and fully perform each
covenant or agreement on the part of Falcon under this
Agreement (including, but not limited to, Falcon's failure
to discharge the Assumed Liabilities as and when they
become due) or under any other instrument or document
executed and delivered by Falcon in connection with the
transactions contemplated hereby, as any of the same may be
amended from time to time.
(b) Remedies Not Exclusive. The rights and remedies
----------------------
of Xxxxxxx provided for in this Article or otherwise in
this Agreement shall be cumulative and in addition to and
not in limitation or exclusion of all other rights and
remedies, whether by the terms of other provisions of this
agreement or at law or in equity or otherwise, which may
exist on the part of Xxxxxxx by reason of any
misrepresentation or breach of warranty, covenant or
agreement on the part of Falcon hereunder. Such rights or
remedies may be exercised at any time or from time to time,
and any failure or delay of Xxxxxxx in exercising any right
or remedy at any time shall not constitute a waiver thereof
or restrict its subsequent enforcement or the enforcement
of any other right or remedy of Xxxxxxx.
10.03 Notice to Indemnifying Party. In the event that any
----------------------------
party may be entitled to, or intends to assert a claim for, indemnification
hereunder, not later than thirty (30) days after actual notice of any claim
or the filing of any action giving rise to such claim for indemnification,
the indemnified party will, if a claim in respect thereof is to be made
against another party or parties hereto, notify the indemnifying party or
parties thereof. In case any action is threatened or brought against any
indemnified party, and it notifies the indemnifying party or parties thereof,
the indemnifying party or parties will be entitled to participate in or
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party and, after notice of its election to assume the defense
thereof, the indemnifying party or parties will no longer be liable for any
legal or other expense subsequently incurred by the indemnified party in
connection with the defense thereof; provided, however, that the indemnified
party shall be entitled at all times to participate in the defense of any
such action at its own cost.
XI. REGISTRATION STATEMENT.
----------------------
11.01 Preparation and Filing of Registration Statement.
------------------------------------------------
Promptly after the Closing Date, Falcon shall prepare and file as soon as
reasonably practicable with the Securities and Exchange Commission ("SEC") a
Registration Statement on Form S-4 (the
31
"Registration Statement") for the registration of the Shares and the Contingent
Stock under the Securities Act in connection with the Transaction, and shall use
all reasonable efforts to cause the Registration Statement to be declared
effective by the SEC and to keep the Registration Statement effective for a
period of two years following the Closing Date.
11.02 Blue Sky Requirements. Falcon shall take any action
---------------------
required to be taken under any applicable state Blue Sky or securities laws
in connection with the issuance of the Shares and the Contingent Stock.
XII. CLOSING AND RISK OF LOSS.
------------------------
12.01 Place and Time. The Closing shall take place on the
--------------
Closing Date at the offices of Gallop, Xxxxxxx & Xxxxxx, X.X., 101 So. Xxxxxx
Xxxx, 00xx Xxxxx, Xx. Xxxxx, Xxxxxxxx 00000, or at such other place as may be
agreed upon by Falcon and Xxxxxxx.
12.02 Risk of Loss. The entire risk of loss with respect
------------
to the Transferred Assets will remain on Xxxxxxx until the transactions
contemplated hereby are closed.
12.03 Simultaneous Performance. None of the transactions
------------------------
described herein will occur unless all such transactions occur.
12.04 Transfer of Possession. Possession of the
----------------------
Transferred Assets shall be delivered to Falcon at Closing.
XIII. MISCELLANEOUS.
-------------
13.01 No Commission. All negotiations on behalf of
-------------
Xxxxxxx and Falcon, respectively, relative to this Agreement and the
transactions contemplated hereby have been carried on by Xxxxxxx and Falcon
directly between Xxxxxxx and Falcon and without the intervention of any third
party, either as the result of any action of Xxxxxxx or Falcon, or otherwise,
to the knowledge of Xxxxxxx or Falcon, in such manner as to give rise to any
valid claim against Xxxxxxx or Falcon for a finders' fee, brokerage
commission or other like payment.
13.02 Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of Falcon and Xxxxxxx and Shareholder,
respectively, contained herein shall survive the Closing, regardless of any
investigations made by or on behalf of or any disclosure to Falcon or
Xxxxxxx, for two (2) years following the Closing Date.
13.03 Change of Name; Liquidation. Immediately following
---------------------------
the Closing, Xxxxxxx shall change its name to a name other than The X.X.
Xxxxxxx Corporation or any portion thereof or any name similar thereto. From
and after the Closing Date, Xxxxxxx will not engage in any business and will
promptly liquidate and dissolve as a corporation.
32
13.04 Incorporation of Schedules. The Schedules hereto
--------------------------
shall be deemed to be incorporated in and form a part of this Agreement.
13.05 Further Assurances. Each of the parties agrees to
------------------
do, execute, acknowledge and deliver, and cause to be done, executed,
acknowledged and delivered, all such further acts, assignments, transfers,
instruments, documents, deeds and assurances as shall be required in order to
carry out this Agreement and give effect hereto.
13.06 No Assumption of Xxxxxxx' Liabilities. EXCEPT FOR
-------------------------------------
THE ASSUMED LIABILITIES, FALCON DOES NOT HEREBY, OR OTHERWISE, ASSUME OR
AGREE TO DISCHARGE OR PERFORM ANY LIABILITY OR OBLIGATION OF XXXXXXX, AND NO
SUCH ASSUMPTION OF ANY LIABILITY OF XXXXXXX SHALL ACCRUE TO FALCON BY
OPERATION OF LAW OR OTHERWISE.
13.07 Transfer Taxes. All sales, transfer, excise and
--------------
other taxes, if any, payable by reason of the transactions contemplated
hereunder shall be paid by Xxxxxxx.
13.08 Notices. Any notice, consent, request, claim or
-------
other communication hereunder shall be in writing and shall be deemed to have
been duly given at the time of mailing by United States Certified, Registered
or Express mail, or by next business day courier (for example, Federal
Express) postage or charges prepaid, addressed as follows:
If to Falcon:
Xxxxxxx X. Xxxxxxx
Vice President-Finance
Falcon Products, Inc.
0000 Xxxxxxx Xxxxxxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Gallop, Xxxxxxx & Xxxxxx, X.X.
16th Floor
000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
If to Xxxxxxx:
Xxxx X. Xxxxxxx
President
The X.X. Xxxxxxx Corporation
000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
33
Fax: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx, XX, Esq.
0000 X. Xxxxxx Xxxx., Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
or to such other address as any party may designate by written notice
hereunder.
13.09 Entire Agreement. This Agreement embodies the
----------------
entire Agreement between the parties, and no representations, inducements,
promises or other agreements, oral or otherwise, not embodied herein, shall
be of any force or effect. This Agreement may not be modified or terminated
except in writing signed by the parties hereto.
13.10 Designation of Falcon as Agent. Xxxxxxx hereby
------------------------------
designates and constitutes Falcon, its officers and agents, as agents and
attorneys-in-fact of Xxxxxxx, with power (for the purposes of collecting sums
due to the Falcon hereunder, or for sales made by Falcon subsequent to
Closing) to sign and endorse the name of Xxxxxxx and transfer all checks,
drafts, notes, money orders and other instruments that may come into the
possession of Falcon, granting to Falcon, its officers and agents, full power
to do any and all things necessary to be done as fully and effectively as
Xxxxxxx might or could do, in order to give effect to this Agreement
subsequent to the Closing, hereby ratifying all that Falcon, its officers and
agents, shall lawfully do or cause to be done by virtue hereof. This power
of attorney shall be deemed to be coupled with an interest and shall be
irrevocable.
13.11 Binding Effect. This Agreement shall be binding
--------------
upon and inure to the benefit of the parties and their respective successors
and assigns.
13.12 Third Parties. Nothing contained in this Agreement
-------------
or in any instrument or document executed by any party hereto in connection
with the transactions contemplated hereby shall create any rights in, or be
deemed to have been executed for the benefit of, any person, firm or
corporation that is not a party hereto.
13.13 Expenses of the Parties. All expenses involved in
-----------------------
the preparation, authorization and consummation of this Agreement, including,
without limitation, all fees and expenses of agents, representatives, counsel
and accountants in connection therewith, shall be borne solely by the party
who shall have incurred the same, and no other party shall have any liability
in respect thereof.
13.14 Counterparts. This Agreement may be executed
------------
simultaneously in two or more counterparts, each of which shall be
34
deemed an original, but all of which taken together shall constitute one and the
same instrument.
13.15 Missouri Law to Govern; Venue. This Agreement shall
-----------------------------
be governed by and interpreted and enforced in accordance with the internal
laws of the State of Missouri, without regard to its conflicts of law
provisions or interpretations. With respect to any suit, action or
proceeding relating to this Agreement ("Proceeding"), each party irrevocably
(i) submits to the jurisdiction of the Missouri state court located in St.
Louis County, Missouri, and the United States District Court for the Eastern
District of Missouri, and (ii) waives any objections which it may have at any
time to the laying of venue of any Proceedings brought in any such court,
waives any claim that such Proceedings have been brought in an inconvenient
forum, and further waives the right to object, with respect to such
Proceedings, that such court did not have jurisdiction over such party.
13.16 Headings. The headings in the Articles and Sections
--------
of this Agreement are inserted for convenience only and shall not constitute
a part hereof.
13.17 Publicity. Contemporaneously with the execution of
---------
this Agreement, or as soon thereafter as practicable, Falcon may, in its sole
discretion, issue a press release with respect to the execution of this
Agreement and the Transaction contemplated hereby. Nothing contained herein
shall prevent any party to this Agreement from furnishing any required
information to any governmental entity or complying with its legal or
contractual obligations, in each case in the opinion of counsel to such
party. Falcon and Xxxxxxx shall, as soon as practicable following the
execution hereof, prepare a joint press release regarding this transaction to
be delivered to the news media.
13.18 Mail and Communications. After the Closing, each
-----------------------
party will promptly deliver to the other party the original of any mail or
other communication received by that party but pertaining to the business of
the other party.
13.19 Determination of Net Working Capital. In order to
------------------------------------
determine the Net Working Capital of Xxxxxxx, not later than ten days
following the Balance Sheet Date, Xxxxxxx shall prepare the Closing Balance
Sheet in accordance with generally accepted accounting principles,
consistently applied. In preparing such Closing Balance Sheet, Xxxxxxx shall
consult with Falcon and shall permit Falcon to participate in and review the
preparation thereof, including all work papers, schedules and calculations
related thereto, prior to the issuance thereof. Falcon shall commence its
review of said work papers, schedules and calculations as soon as
practicable. Any dispute which may arise between Xxxxxxx on the one hand and
Falcon on the other hand as to the Closing Balance Sheet shall be resolved in
the following manner:
(a) Falcon, if it disputes the Closing Balance
Sheet,
35
shall notify Xxxxxxx in writing within ten days
after its receipt of Closing Balance Sheet that Falcon
disputes the Closing Balance Sheet, specifying in
reasonable detail the nature of the dispute;
(b) During the five day period following the date of
such notice, Xxxxxxx and Falcon shall attempt to resolve
such dispute and determine the appropriateness of the
Closing Balance Sheet; and
(c) If at the end of such five day period, the
parties shall have failed to reach an agreement with
respect to such dispute, the matter shall be referred to an
Arbitrator mutually agreed upon by Falcon and Xxxxxxx. The
Arbitrator shall issue its report as to the Closing Balance
Sheet within ten days after such dispute is referred to the
Arbitrator. Each of the parties shall bear all costs and
expenses incurred by it in connection with such arbitration
except for the fees and expenses of the Arbitrator which
shall be borne equally by Xxxxxxx on the one hand and
Falcon, on the other hand. This provision for arbitration
shall be specifically enforceable by the parties and the
decision of the Arbitrator in accordance with the
provisions hereof shall be final and binding and there
shall be no right of appeal therefrom.
13.20 Acquisition Subsidiary. Falcon may, in its sole
----------------------
discretion, establish a subsidiary wholly owned by Falcon for the purpose of
acquiring the Transferred Assets and assuming the Assumed Liabilities and, if
such subsidiary is so established, all references to Falcon hereunder, where
applicable, shall be deemed to be reference to such subsidiary; provided,
--------
however, that nothing contained in this Section 13.20 shall affect the
-------
indemnification obligations of Falcon set forth in Section 10.02.
13.21 Right of Set Off. Xxxxxxx and Shareholder agree
----------------
that in the event of a breach of this Agreement by either or both of them,
Falcon shall have the right to set off against any Contingent Stock
deliverable to Shareholder on behalf of Xxxxxxx hereunder, to the extent of
Falcon's claim for damages and any cost incurred by Falcon in the bringing of
(or defense against a counterclaim by Employee) such claim.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION CLAUSE WHICH MAY BE ENFORCED BY
THE PARTIES.
FALCON PRODUCTS, INC.,
a Delaware corporation
By:
--
Title:
--
36
THE X.X. XXXXXXX CORPORATION,
a California corporation
By:
--
Title:
--
--
XXXX X. XXXXXXX
