STOCK PURCHASE AGREEMENT
AMONG
AFFINITY GROUP, INC. AS THE BUYER,
AND
THE SHAREHOLDERS OF CAMPING WORLD, INC.
AS THE SELLERS
DATED AS OF FEBRUARY 25, 1997
TABLE OF CONTENTS
Page
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1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. SALE AND TRANSFER OF SHARES; CLOSING . . . . . . . . . . . . . . . . . 12
2.1 SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.3 DETERMINATION OF PURCHASE PRICE.. . . . . . . . . . . . . . . . . . . . 12
2.4 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.5 ESCROW AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 13
2.6 CLOSING OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . 14
2.7 CLOSING LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . 15
2.8 ENCUMBRANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS . . . . . . . . . . . . . 16
3.1 ORGANIZATION AND GOOD STANDING. . . . . . . . . . . . . . . . . . 17
3.2 AUTHORITY; NO CONFLICT. . . . . . . . . . . . . . . . . . . . . . 17
3.3 CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . 19
3.5 BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . 20
3.6 TITLE TO PROPERTIES; ENCUMBRANCES . . . . . . . . . . . . . . . . 20
3.7 CONDITION AND SUFFICIENCY OF ASSETS . . . . . . . . . . . . . . . 21
3.8 ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . . . . . . . . . . 21
3.9 INVENTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.10 NO UNDISCLOSED LIABILITIES. . . . . . . . . . . . . . . . . . . . 22
3.11 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.12 NO MATERIAL ADVERSE CHANGE. . . . . . . . . . . . . . . . . . . . 23
3.13 EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . 23
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS;
CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.15 LEGAL PROCEEDINGS; ORDERS . . . . . . . . . . . . . . . . . . . . 25
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS . . . . . . . . . . . . . . 26
3.17 CONTRACTS; NO DEFAULTS. . . . . . . . . . . . . . . . . . . . . . 28
3.18 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.19 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . 29
3.20 EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.21 LABOR RELATIONS; COMPLIANCE . . . . . . . . . . . . . . . . . . . 31
3.22 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . 32
3.23 CERTAIN PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 32
3.24 DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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3.25 RELATIONSHIPS WITH RELATED PERSONS. . . . . . . . . . . . . . . . 33
3.26 BROKERS OR FINDERS. . . . . . . . . . . . . . . . . . . . . . . . 33
3.27 PROJECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.28 SC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.29 NON-MANAGEMENT SELLERS OTHER THAN SC. . . . . . . . . . . . . . . 34
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER . . . . . . . . . . . . . . 34
4.1 ORGANIZATION AND GOOD STANDING. . . . . . . . . . . . . . . . . . 34
4.2 AUTHORITY; NO CONFLICT. . . . . . . . . . . . . . . . . . . . . . 34
4.3 CERTAIN PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . 35
4.4 BROKERS OR FINDERS. . . . . . . . . . . . . . . . . . . . . . . . 35
4.5 INVESTMENT REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . 36
5. COVENANTS OF THE SELLERS PRIOR TO CLOSING DATE. . . . . . . . . . . . . 36
5.1 ACCESS AND INVESTIGATION. . . . . . . . . . . . . . . . . . . . . 36
5.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES . . . . . . 37
5.3 NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 38
5.4 REQUIRED APPROVALS. . . . . . . . . . . . . . . . . . . . . . . . 38
5.5 NOTIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.6 NO NEGOTIATION. . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.7 BEST EFFORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.8 AGREEMENTS FOR SAR OBLIGATIONS. . . . . . . . . . . . . . . . . . 39
5.9 CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . 39
6. COVENANTS OF THE BUYER. . . . . . . . . . . . . . . . . . . . . . . . . 40
6.1 APPROVALS OF GOVERNMENTAL BODIES. . . . . . . . . . . . . . . . . 40
6.2 BEST EFFORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.3 NOTIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7. CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATION TO CLOSE. . . . . . . . . 40
7.1 ACCURACY OF REPRESENTATIONS . . . . . . . . . . . . . . . . . . . 40
7.2 THE SELLERS' PERFORMANCE. . . . . . . . . . . . . . . . . . . . . 41
7.3 CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.4 ADDITIONAL DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . 41
7.5 NO PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.6 NO CLAIM REGARDING SHARE OWNERSHIP OR SALE PROCEEDS . . . . . . . 42
7.7 NO PROHIBITION. . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.8 WORKING CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.9 TITLE INSURANCE COMMITMENTS . . . . . . . . . . . . . . . . . . . 42
8. CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATION TO CLOSE. . . . . . . . 42
8.1 ACCURACY OF REPRESENTATIONS . . . . . . . . . . . . . . . . . . . 42
8.2 THE BUYER'S PERFORMANCE . . . . . . . . . . . . . . . . . . . . . 43
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8.3 CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.4 ADDITIONAL DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . 43
8.5 NO PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.6 NO PROHIBITION. . . . . . . . . . . . . . . . . . . . . . . . . . 43
9. TERMINATION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.1 TERMINATION EVENTS. . . . . . . . . . . . . . . . . . . . . . . . 44
9.2 EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . 44
10. INDEMNIFICATION; REMEDIES . . . . . . . . . . . . . . . . . . . . . . . 44
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE. . . 44
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE SELLERS . . . . . . 45
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE BUYER . . . . . . . 46
10.4 TIME LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 46
10.5 SATISFACTION OF CLAIMS BY THE BUYER SOLELY BY RIGHT OF SET-OFF. . 46
10.6 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS . . . . . . . 46
10.7 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS . . . . . . . . . . 48
10.8 LIMITED RECOURSE. . . . . . . . . . . . . . . . . . . . . . . . . 48
11. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.1 EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.2 PUBLIC ANNOUNCEMENTS. . . . . . . . . . . . . . . . . . . . . . 48
11.3 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . 48
11.4 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.5 FURTHER ASSURANCES AND POST-CLOSING COOPERATION . . . . . . . . 50
11.6 WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.7 ENTIRE AGREEMENT AND MODIFICATION . . . . . . . . . . . . . . . 51
11.8 ASSIGNMENTS SUCCESSORS, AND NO THIRD-PARTY RIGHTS . . . . . . . 51
11.9 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.10 SECTION HEADINGS, CONSTRUCTION. . . . . . . . . . . . . . . . . 51
11.11 TIME OF ESSENCE . . . . . . . . . . . . . . . . . . . . . . . . 52
11.12 DELIVERY OF DISCLOSURE LETTER; RIGHT OF TERMINATION BY THE
BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.13 SC OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 52
11.14 ATTORNEYS' FEES . . . . . . . . . . . . . . . . . . . . . . . . 52
11.15 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.16 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . 52
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of February 25,
1997 by and among:
AFFINITY GROUP, INC., a Delaware corporation (the "Buyer"), and
3i Securities Corporation, a Massachusetts corporation ("SC"), Xxxxx X.
Xxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxxxx, Xxxxxx
Xxxxx, Xxx Chance, Xxxx Xxxxx, Xxxx Xxxxx, Xxxxx Xxxxxx, and Xxxx Xxxxxxx
(individually a "Seller" and collectively the "Sellers").
RECITAL
The Sellers desire to sell, and the Buyer desires to purchase all of the
issued and outstanding shares of capital stock (such stock being collectively
referred to herein as the "Shares") of Camping World, Inc., a Kentucky
corporation (the "Company") for the consideration and on the terms set forth in
this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACQUIRED COMPANIES" -- The Company and its Subsidiaries, collectively.
"AGH" -- Affinity Group Holding, Inc., a Delaware corporation, and the
owner of all of the outstanding shares of the Buyer.
"AGREEMENT" -- as defined in the preamble to this Agreement.
"ASSETS" -- the properties, assets and business, of every kind and
description, wherever located, constituting substantially all of the assets and
properties used or usable in the Business. The Assets include, but are not
limited to, the following:
(a) INVENTORY. All stock, raw materials, supplies, work-in-
process and other items used or useable in the Business.
(b) CURRENT ASSETS. Cash, accounts receivable, investments and
other current assets of the Business, including barter and trade
credits or
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receivables existing on the Closing Date, prepaid expenses and other
prepaid items relating to the Business.
(c) PERSONAL PROPERTY. All equipment, furniture, fixtures and
other tangible personal property used or useable in the Business
together with such additions, modifications and replacements thereto
(and subject to deletions therefrom in connection with any such
replacements) as may be made in the ordinary course of business
between the date hereof and the Closing Date.
(d) BUSINESS LEASES AND AGREEMENTS. All Contracts, including
all agreements, leases, commitments and orders that are identified on
Part 3.17 of the Disclosure Letter.
(e) INTANGIBLES. All copyrights and applications therefor,
trademarks, service marks, trade secret rights, patents, patent
rights, trade names, trade name rights or other similar rights used or
useable in the Business including, specifically, the name "Camping
World" and any logo or xxxx used in connection therewith and the good
will of the Business as a going concern, including lists of customers
and suppliers, correspondence, purchase orders and the general
intangibles of the Business and the licenses, permits and
authorizations used or useable in the operation of the Business.
(f) COMPUTER HARDWARE AND COMPUTER SOFTWARE. The computer
hardware and computer software used or useable in the Business,
together with copies of source code, instruction manuals and other
data for the effective use thereof.
(g) MEMBERSHIPS, MAILING LISTS AND PROPRIETARY INFORMATION. All
memberships, permits, mailing lists, subscriber and advertiser lists,
subscriptions, advertising contracts, processes, trade secrets, know-
how and other proprietary or confidential information used or useable
in or relating to the Business.
(h) REAL PROPERTY. The real property used in connection with
the Business, including the real property identified on Part 3.6 of
the Disclosure Letter and all improvements thereon (the "Owned Real
Estate").
(i) REAL ESTATE LEASES. The real estate leases used in
connection with the Business, including the real estate leases
identified in Part 3.6 of the Disclosure Letter (the "Real Estate
Leases") and all of the rights of the Acquired Companies thereunder
and to the properties described therein (the "Leased Real Estate").
(j) RECORDS. All logs, books, business and financial records
(or true copies thereof) in connection with or relating to the
Business.
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(k) TAX REFUNDS AND BENEFITS. All federal, state and local refunds,
credits and benefits, if any, (and the right to file claims for such
refunds, credits and benefits) arising from the losses of the Acquired
Companies with respect to periods through the Closing Date.
(l) CAUSES OF ACTION. All rights and claims of the Acquired
Companies against any person arising prior to Closing, including but not
limited to, causes of action.
"BALANCE SHEET" -- as defined in Section 3.4.
"BUSINESS" -- the business in which the Acquired Companies are engaged,
which consists principally of the retail and wholesale sale of specialized
merchandise and services for the owners of recreational vehicles, through retail
stores, mail order catalogs and direct mail solicitations, and the operation of
a membership club for owners and users of recreational vehicles called the
President's Club, together with the Assets used and usable in the operation
thereof.
"BUYER" -- as defined in the preamble to this Agreement.
"CLASS A SHARES" -- as defined in Section 3.3.
"CLASS B SHARES" -- as defined in Section 3.3.
"CLOSING" -- as defined in Section 2.3.
"CLOSING DATE" -- the date and time as of which the Closing actually takes
place.
"CLOSING LIABILITIES" -- as defined in Section 2.6.
"COMPANY" -- as defined in the preamble to this Agreement.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONSULTING AND NON-COMPETITION AGREEMENTS" -- as defined in Section
2.6(a)(iii).
"CONTRACT" -- any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding, including rights under any insurance policy.
"DAMAGES" -- as defined in Section 10.2.
"DEPOSIT" -- as defined in Section 2.5.
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"DISCLOSURE LETTER" -- the disclosure letter to be delivered by the
Management Sellers to the Buyer pursuant to Section 11.12.
"ENCUMBRANCE" -- any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" -- any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and
health, and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
responses, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective
action, including any investigation, cleanup, removal, containment, or
other remediation or response actions required by applicable
Environmental Law or Occupational Safety and Health Law (whether or
not such cleanup has been required or requested by any Governmental
Body or any other Person) for any natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and
Health Law.
"ENVIRONMENTAL LAW" -- any applicable Legal Requirement that requires or
relates to:
(a) advising appropriate authorities, employees, and the public
of intended or actual releases of pollutants or hazardous substances
or materials, violations of discharge limits, or other prohibitions
and of the commencement of activities, such as resource extraction or
construction, that could have significant impact on the Environment;
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(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged,
and used so that they do not present unreasonable risks to human
health or the Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in
transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
(g) cleaning up pollutants that have been released, preventing
the threat of release, or paying the costs of such clean up or
prevention; or
(h) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest to
recover for injuries done to public assets.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ESCROW AGENT" -- as defined in Section 2.5.
"ESCROW AGREEMENT" -- as defined in Section 2.5.
"FACILITIES" -- any real property, leaseholds, or other interests currently
owned or operated by any Acquired Company and any buildings, plants, structures,
or equipment (including motor vehicles) currently owned or operated by any
Acquired Company.
"FINANCIAL STATEMENTS" -- as defined in Section 3.4.
"FREE CASH FLOW" -- means, for any period, (x) the sum, without
duplication, of (i) net income, (ii) interest expense, (iii) taxes (or provision
therefor) for such period, (iv) depreciation and (v) amortization, less (y) the
amount of Regularized Capital Expenditures, all calculated in accordance with
GAAP to the extent not otherwise expressly provided in this Agreement.
"FUNDED DEBT" means obligations for principal, interest, fees or premium in
respect of money borrowed including, without limitation, borrowings of the
Company from Xxxxxx
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Financial, Inc. and any other liabilities historically reflected on the
balance sheet of the Company in the following categories: "Revolving Credit
Agreement", "Other Current Notes Payable", "Current Portion of Term Loan",
"Current Portion of Mortgage Notes", "Long Term Portion of Mortgage Notes",
"Long Term Portion of Xxxxxx Expansion Loans", "Long Term Portion of Term
Loan", "Long Term Portion of Notes Payable", "Junior Subordinated Debt",
"Acquisition Subordinated Debt"; and all liabilities for borrowed money
arising from or in connection with instruments evidencing any of the above
referenced indebtedness. Any obligation of the Company for deferred income
taxes shall not constitute Funded Debt.
"GAAP" -- generally accepted United States accounting principles.
"GARVIN" -- Xxxxx X. Xxxxxx, one of the Sellers.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" -- any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory,
or taxing authority or power of any nature.
"HAZARDOUS ACTIVITY" -- the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment.
"HAZARDOUS MATERIALS" -- any waste or other substance that is currently
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any mixture or solution thereof,
and specifically including petroleum and all
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derivatives thereof or synthetic substitutes therefor and asbestos or
asbestos-containing materials.
"HSR ACT" -- the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"INCENTIVE MANAGEMENT AGREEMENTS" -- as defined in Section 2.6(a)(ii).
"INDEMNIFIED PERSONS" -- as defined in Section 10.2.
"IRC" -- the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS" -- the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"KNOWLEDGE" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual would have discovered or otherwise
become aware of such fact or other matter in the course of conducting
a reasonably comprehensive investigation (without engaging
professionals or making inquiry of third parties) concerning the
existence of such fact or other matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual serving as a director,
officer, shareholder or partner of such Person (or in any similar capacity) has,
or at any time had, Knowledge of such fact or other matter.
"LEASED REAL ESTATE" -- the Leased Real Estate as defined in subsection (i)
of the definition of Assets.
"LEGAL REQUIREMENT" -- any applicable federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty existing on the date of this Agreement.
"MANAGEMENT SELLERS" -- Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxxx X.
Xxxxxxxxx, Xxxxxx Xxxxx, Xxxx Xxxxx, Xxxxx Xxxxxx and Xxx Chance.
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"NON-MANAGEMENT SELLERS" -- Xxxx Xxxxx, Xxxx Xxxxxxx and SC.
"OCCUPATIONAL SAFETY AND HEALTH LAW" -- any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"OPTIONS" -- as defined in Section 3.3.
"ORDER" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day
operations of such Person;
(b) such action is not required to be newly authorized by the
board of directors of such Person (or by any Person or group of
Persons exercising similar authority); and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors
(or by any Person or group of Persons exercising similar authority),
in the ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such Person.
"ORGANIZATIONAL DOCUMENTS" (a) the articles or certificate of incorporation
and the bylaws of a corporation; (b) the partnership agreement and any statement
of partnership of a general partnership; (c) the limited partnership agreement
and the certificate of limited partnership of a limited partnership; (d) any
charter or similar document adopted or filed in connection with the creation,
formation, or organization of a Person; and (e) any amendment to any of the
foregoing.
"OWNED REAL ESTATE" -- the Owned Real Estate as defined in subsection (h)
of the definition of Assets.
"OWNER" -- as defined in the definition of Subsidiary.
"PERMITTED ENCUMBRANCES" -- (a) mortgages or security interests shown on
the Balance Sheet in respect of Funded Debt, (b) mortgages or security interests
incurred in
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connection with the purchase of property or assets after the date of the
Balance Sheet (such mortgages and security interests being limited to the
property or assets so acquired), with respect to which no default (or event
that, with notice or lapse of time or both, would constitute a default)
exists, (c) liens for current taxes not yet delinquent, and (d) with respect
to the Real Property, (i) matters disclosed in the Disclosure Letter, (ii)
minor imperfections of title, if any, none of which is substantial in amount,
materially detracts from the value or materially impairs the use of the
property subject thereto, or materially impairs the operations of any
Acquired Company, and (iii) zoning laws and other land use restrictions that
do not materially impair the present or anticipated use of the property
subject thereto.
"PERSON"-- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PLANS" -- as defined in Section 3.13.
"PORTFOLIO INVESTMENT" -- with respect to any Person, a financial or
investment interest in another Person in which the operations and management of
such other Person are not directed by the Owner or holder of the financial
interest or investment.
"PROCEEDING"-- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any third party, Governmental Body or arbitrator.
"PROJECTIONS" -- as defined in Section 3.27.
"PROPRIETARY RIGHTS AGREEMENT" -- as defined in Section 3.20(b).
"PURCHASE PRICE" -- as defined in Section 2.2.
"REAL ESTATE LEASES" -- as defined in subsection (i) of the definition of
Assets.
"REAL PROPERTY" -- the Owned Real Estate and the Leased Real Estate as
identified in Part 3.6 of the Disclosure Letter.
"REGULARIZED CAPITAL EXPENDITURES" -- means the sum of (i) one fourth of
all capital expenditures of the Company for its 1994, 1995 and 1996 Fiscal years
and budgeted for its 1997 Fiscal year other than capital expenditures reflected
in the Company's fixed asset ledgers in the following categories: "Land-WCDC,"
"Land-Xxxxxx," "Land-Other," "Land-Las Vegas," "Land-Salt Lake," Xxxxxx, MN
FFE," "POS," "Land-LaMirada," Henderson,NV FEE," "Bridgeport,NJ FFE," "Draper,UT
FFE," "WCDC-Expansion," "Bridgeport-Bldg," "Tampa-Building," "POS-NEW,"
"Computer Hardware and Software," "CIP 9-96 POS System," "CIP 9-96 LaMirada,"
"CIP 0-00 Xxx Xxxxxx," Completion of LaMirada Building," "LaMirada FF&E,"
"LaMirada RV Sales Lot" and "San Marcos FF&E," (ii) one sixth of all
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capital expenditures of the Company for its 1994, 1995 and 1996 Fiscal Years
and budgeted for its 1997 Fiscal year reflected in the Company's financial
statements in the following categories: "POS," "POS-NEW," "Computer Hardware
and Software" and "CIP 9-96 POS System," and (iii) one sixth of the
difference between (x) all capital expenditures of the Company for its 1994,
1995 and 1996 Fiscal Years and budgeted for its 1997 Fiscal year reflected in
the Company's financial statements in the following categories:
"Land-LaMirada," "CIP 9-96 LaMirada," "Completion of LaMirada Building,"
"LaMirada FF&E" and "LaMirada RV Sales Lot" and (y) amounts received or
reasonably expected to be received by the Company from condemning authorities
in respect of the Company's Anaheim facility. It is agreed that Regularized
Capital Expenditures are $2,028,000.
"RELATED PERSON" -- with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by any
one or more members of such individual's Family;
(c) any Person in which members of such individual's Family hold
(individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which one or more members of such
individual's Family serves as a director, officer, partner, executor,
or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity);
and
(f) any Related Person of any individual described in clause (b)
or (c).
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For purposes of this definition, (a) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse, (iii) any other natural
person who is related to the individual or the individual's spouse within the
first degree of sanguinity, and (iv) any other natural person who resides
with such individual, and (b) "Material Interest" means direct or indirect
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934) of voting securities or other voting interests representing at
least 35% of the outstanding voting power of a Person or equity securities or
other equity interests representing at least 35% of the outstanding equity
securities or equity interests in a Person.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SAR AGREEMENTS" -- as defined in Section 5.8.
"SAR OBLIGATIONS" -- the compensation (in case of the Options) and interest
(in the case of the Warrants) obligations of the Company to holders of Options
and Warrants arising in connection with the cancellation of the Options and
Warrants pursuant to the agreements with the holders thereof obtained by the
Company pursuant to Section 5.8 hereof.
"SC" -- as defined in the preamble to this Agreement.
"SCHEDULED CONTRACTS" -- as defined in Section 3.17.
"SECURITIES ACT" -- the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"SELLERS" -- as defined in the preamble to this Agreement.
"SHARES" -- as defined in the Recital.
"SUBSIDIARY" -- with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to elect
a majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
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"TAX" -- any tax (including any income tax, capital gains tax, value-added
tax, sales tax, use tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body or payable pursuant to any tax-sharing agreement or any
other Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"THREAT OF RELEASE" -- a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
"THREATENED" -- a claim, Proceeding, dispute, action, or other matter will
be deemed to have been "Threatened" if any demand or statement has been made
orally (on or after January 1, 1996) or in writing or any notice has been given
orally (on or after January 1, 1996) or in writing.
"WARRANTS" -- as defined in Section 3.3.
"WORKING CAPITAL" -- the current assets of the Company less current
liabilities of the Company (other than current liabilities in respect of Funded
Debt) as determined in accordance with GAAP on a consolidated basis.
2. SALE AND TRANSFER OF SHARES; CLOSING.
2.1 SHARES. Subject to the terms and conditions of this Agreement, at the
Closing, each Seller severally agrees (as to the Shares listed as owned by such
Seller on Part 3.3 of the Disclosure Letter) to sell and transfer such Shares to
the Buyer, and the Buyer will purchase such Shares from the Sellers. Each
Seller severally covenants and agrees that such Shares will be conveyed to the
Buyer and received by the Buyer on the Closing Date free and clear of all
Encumbrances.
2.2 PURCHASE PRICE. The purchase price (the "Purchase Price") for the
Shares shall be $44,883,837.
2.3 DETERMINATION OF PURCHASE PRICE. The Purchase Price has been
determined on the assumption that (i) the Funded Debt of the Acquired Companies
on September 30, 1996 is $33,974,870 and (ii) the aggregate amount of the SAR
Obligations is $6,634,757. The Purchase Price shall be appropriately adjusted
if Funded Debt on September 30, 1996 or the aggregate amount of the SAR
Obligations is determined to be other than such amounts.
2.4 CLOSING. The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Xxxxxx, Xxxxxxxx and Xxxxxx, P.A. or
such other location mutually acceptable to the Buyer and the Seller, at 10:00
a.m. (local time) on the later of (i) March 31, 1997, and (ii) the twenty-first
business day following the satisfaction or waiver of the conditions precedent
set forth in Sections 7 and 8 hereof, or at such other
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time and place as the parties may agree. Subject to the provisions of
Section 9, failure to consummate the purchase and sale provided for in this
Agreement on the date and time and at the place determined pursuant to this
Section 2.4 will not result in the termination of this Agreement and will not
relieve any party of any obligation under this Agreement.
2.5 ESCROW AGREEMENT. Contemporaneously with the execution of this
Agreement, the Sellers and the Buyer will enter into an escrow agreement in the
form of Exhibit 2.5 (the "Escrow Agreement") with Trans Financial Bancorp, Inc.
(the "Escrow Agent") pursuant to which the Buyer will deposit with Escrow Agent
$2,500,000 (the "Deposit"). IF THE BUYER IS IN MATERIAL BREACH OF THIS
AGREEMENT AND THE SELLERS ELECT TO TERMINATE THIS AGREEMENT, THE SELLERS SHALL
RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES AS THE SOLE REMEDY OF THE SELLERS. THE
BUYER AND THE SELLERS AGREE THAT, UNDER THE CIRCUMSTANCES EXISTING AS OF THE
DATE OF THIS AGREEMENT, ACTUAL DAMAGES WOULD BE DIFFICULT TO ASCERTAIN AND THAT
THE DEPOSIT AND ALL INTEREST THEREON IS A REASONABLE ESTIMATE OF THE DAMAGES
THAT WILL BE INCURRED BY THE SELLER IF THE BUYER IS IN MATERIAL BREACH OF THIS
AGREEMENT AND FAILS TO PURCHASE THE SHARES IN ACCORDANCE WITH THIS AGREEMENT.
SELLERS' INITIALS BUYER'S INITIALS
_______________ _______________
_______________
_______________
_______________
_______________
_______________
_______________
_______________
_______________
_______________
_______________
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2.6 CLOSING OBLIGATIONS. At the Closing:
(a) The Sellers will deliver or cause to be delivered to the Buyer:
(i) certificates representing the Shares (duly endorsed or
accompanied by duly executed stock powers) for transfer to the Buyer;
(ii) incentive management agreements, substantially in the form of
Exhibit 2.6(a)(ii), executed by the Management Sellers and other parties
thereto (collectively, the "Incentive Management Agreements");
(iii) consulting letter agreements and non-competition
agreements, substantially in the form of Exhibit 2.6(a)(iii), executed
by Xxxxxx, the Management Sellers and certain employees of the
Acquired Companies (collectively, the "Consulting and Noncompetition
Agreements");
(iv) a certificate executed by the Management Sellers
representing and warranting to the Buyer that the Sellers'
representations and warranties in this Agreement were accurate in all
material respects as of the date of this Agreement and are accurate in
all material respects as of the Closing Date as if made on the Closing
Date (giving full effect to any supplements to the Disclosure Letter
that were delivered by the Management Sellers to the Buyer prior to
the Closing Date in accordance with Section 5.5) and that the Sellers
have performed in all material respects the covenants and obligations
of the Sellers hereunder to be performed at or prior to Closing; and
(v) the SAR Agreements executed by all of the holders of the
Options and Warrants.
(b) The Buyer will deliver to the Seller or Management, as applicable:
(i) $44,883,837 by immediately available wire transfer to an
account or accounts specified by the Sellers;
(ii) a certificate executed by the Buyer to the effect that,
except as otherwise stated in such certificate, each of the Buyer's
representations and warranties in this Agreement were accurate in all
material respects as of the date of this Agreement and are accurate in
all material respects as of the Closing Date as if made on the Closing
Date and that the Buyer has performed in all material respects the
covenants and obligations of the Buyer hereunder to be performed at or
prior to Closing;
(iii) the Incentive Management Agreements, executed by AGH; and
(iv) the Consulting and Noncompetition Agreements executed by the
Buyer.
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(c) Upon Closing, the Company will take such action as is necessary
to pay the Funded Debt and to satisfy the payment obligations of the
Company arising from satisfaction of the SAR Obligations as contemplated in
this Agreement.
(d) Escrow Agent will deliver to the Buyer the $2,500,000 deposit and
the balance of funds held under the Escrow Agreement as provided in the
Escrow Agreement.
2.7 CLOSING LIABILITIES. At the Closing, the Acquired Companies shall be
subject only to the following liabilities and obligations (the "Closing
Liabilities):
(a) the Funded Debt (including the current portion thereof) subject,
however, to the provisions of Section 2.8 hereof;
(b) the obligations arising after the Closing Date with respect to
the Real Estate Leases and the Scheduled Contracts;
(c) the current liabilities of the Acquired Companies in
connection with the operation of the Business arising in the Ordinary
Course of Business and in existence on the Closing Date (including the
payment obligations of the Company arising from satisfaction of the
SAR Obligations as set forth in Section 5.8 hereof), including,
without limitation, the current liabilities of the Acquired Companies
in respect of the Real Estate Leases and the Scheduled Contracts;
(d) the current obligations of the Acquired Companies to employees of
the Acquired Companies in respect of (i) compensation, (ii) accrued
vacation pay, (iii) sick pay and (iv) other benefits payable on the Closing
Date (or with respect to periods through the Closing Date) to such
employees pursuant to the Plans disclosed in the Disclosure Letter;
(e) the barter and trade liabilities existing on the Closing
Date to the extent that they do not exceed the realizable fair market
value of the barter and trade credits and receivables existing on the
Closing Date included in the Assets;
(f) the deferred income taxes or other taxes payable or tax
returns filed with respect to periods prior to the end of the 1996
fiscal year of the Acquired Companies, but only to the extent reserved
for in the Balance Sheet and not paid prior to the Closing Date;
(g) the taxes arising with respect to periods between
September 30, 1996 through the Closing Date;
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(h) the deferred income liability of the Acquired Companies
arising in the ordinary course of the Business and in existence on the
Closing Date;
(i) the liabilities arising from the Proceedings disclosed in Part
3.15 of the Disclosure Letter (as supplemented) that do not have a material
adverse effect on the Buyer, the Business or the Assets;
(j) the liabilities of the Company arising from the following
Proceeding: AFFINITY GROUP PLANS, INC. AND NATIONAL ALLIANCE INSURANCE
COMPANY V. XXXXXX X. XXXXXXXX, XXXXXXX X. XXXXXXX, CAMPING WORLD, INC. AND
CWI, INC. (Civ. Action No. 4:97CV00209DDN); and
(k) the Company's obligation under the Company's Organizational
Documents to indemnity and defend Xxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxx
for claims made against them in the Proceeding referenced in subparagraph
(j) above to the extent such claims arise from actions taken by them in
their capacity as members of the board of directors or officers of the
Company or, at the request of the Company, as members of the board of
directors or officers of another corporation.
It is expressly understood and agreed that the Acquired Companies shall not
be subject to any liabilities or obligations, whether direct or indirect and
whether contingent or otherwise, except for the Closing Liabilities.
2.8 ENCUMBRANCES. Notwithstanding anything herein to the contrary, in the
event that, on the Closing Date, (a) any of the Acquired Companies should be
liable for, or any of the Assets shall be subject to any Encumbrance in respect
of, indebtedness other than the Funded Debt, or (b) with respect to any
liability, including Funded Debt, the Acquired Companies are obligated to pay
any prepayment penalties, premiums, any other costs, including legal fees and
costs, incurred to obtain the discharge of any such liabilities or Encumbrance
with respect thereto, to cause the Assets to be free and clear of any such
Encumbrance (i) the Sellers shall undertake to pay such obligations and
discharge the obligations secured by such Encumbrance in accordance with their
respective terms and (ii) if such obligations are not so discharged by the
Sellers, the Purchase Price shall be reduced by the amount necessary, in the
reasonable determination of the Buyer, to remedy such failure by the Sellers.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. (a) The Management
Sellers, jointly and severally, as to Sections 3.1 through 3.27, (b) SC as to
Section 3.28, and (c) the Sellers, other than the Management Sellers and SC,
severally (but not jointly and severally) as to Section 3.29 represent and
warrant to the Buyer as follows:
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3.1 ORGANIZATION AND GOOD STANDING.
(a) Part 3.1 of the Disclosure Letter contains a complete and accurate
list for each Acquired Company of its name, its jurisdiction of incorporation,
other jurisdictions in which it is authorized to do business, and its
capitalization (including the identity of each shareholder and the number of
shares, options and warrants held by each). Each Acquired Company is a
corporation duly organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all its
obligations under all Contracts to which it is a party. Each Acquired Company
is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each state or other jurisdiction in which any of the
Assets are located or in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it, requires
such qualification. There is no state, country or territory wherein the absence
of licensing or qualification as a foreign corporation or partnership has had an
adverse effect upon the Business.
(b) The Management Sellers have delivered to the Buyer copies of the
Organizational Documents of each Acquired Company, as currently in effect.
(c) Since January 1, 1989, no Acquired Company has at any time had any
subsidiaries except as set forth in Part 3.1 of the Disclosure Letter. Since
January 1, 1989, except as set forth in Part 3.1 of the Disclosure Letter, no
Acquired Company has any equity investment or other interest or has made
advances to any corporation, association, partnership, joint venture or other
entity.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding obligation of
the Sellers, enforceable against the Sellers in accordance with its terms. Upon
the execution and delivery by the applicable Sellers of the Escrow Agreement,
the Incentive Management Agreements, and the Consulting and Noncompetition
Agreements (collectively, the "Seller Closing Documents"), the Seller Closing
Documents will constitute the legal, valid, and binding obligations of the
applicable Sellers, enforceable against the Sellers that are parties thereto, in
accordance with their respective terms. The Sellers have the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and, as applicable, the Seller Closing Documents and to perform their
obligations under this Agreement and the Seller Closing Documents.
(b) Except as set forth in Part 3.2 of the Disclosure Letter, neither the
execution and delivery of this Agreement nor the consummation or performance of
any of the transactions contemplated hereby will, directly or indirectly (with
or without notice or lapse of time):
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(i) contravene, conflict with, or result in a violation of
(a) any provision of the Organizational Documents of the Acquired
Companies, or (b) any resolution adopted by the board of directors or
the shareholders of any Acquired Company;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any
of the transactions contemplated hereby or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which
any Acquired Company or any Seller, or any of the assets owned or used
by any Acquired Company or any Seller, may be subject;
(iii) contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by any Acquired Company or
that otherwise relates to the business of, or any of the assets owned
or used by, any Acquired Company;
(iv) result in the imposition of any Tax for which Buyer is
liable or the imposition or creation of any Encumbrance upon or with
respect to the Shares;
(v) contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any Contract to which any Acquired
Company is a party; or
(vi) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by any
Acquired Company.
Except as set forth in Part 3.2 of the Disclosure Letter, no Seller or Acquired
Company is or will be required to give any notice to or obtain any Consent from
any Person in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the transactions contemplated hereby.
3.3 CAPITALIZATION. The authorized equity securities of the Company
consists of (a) 13,000,000 shares of Class A common stock, par value $0.01 per
share, of which 1,236,880 shares are issued and outstanding (the "Class A
Shares"), (b) 2,000,000 shares of Class B common stock, par value $0.01 per
share, of which 1,276,828 shares are issued and outstanding (the "Class B
Shares" and collectively with the Class A Shares referred to as the "Shares"),
(c) options to purchase 326,165 shares of Class A common stock and no shares of
Class B common stock (the "Options"), and (d) warrants for the purchase of
210,739 shares of Class A common stock and no shares of Class B common stock
(the "Warrants"). Part 3.3 of the Disclosure Letter lists all of the holders of
the Shares, Options and Warrants. The
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Sellers are and will be on the Closing Date, the record and beneficial owners
and holders of the Shares, free and clear of all Encumbrances. With the
exception of the Shares (which are owned by the Sellers), all of the
outstanding equity securities and other securities of each Acquired Company
are owned of record and beneficially by the Company or one or more of the
Acquired Companies, free and clear of all Encumbrances. Except for standard
state and federal securities registration legends and a legend disclosing the
shareholders agreement described in the Disclosure Letter, no legend or other
reference to any purported Encumbrance appears upon any certificate
representing equity securities of any Acquired Company. All of the
outstanding equity securities of each Acquired Company have been duly
authorized and validly issued and are fully paid and nonassessable. Except
as described in Part 3.3 of the Disclosure Letter, there are no Contracts
relating to the issuance, sale, or transfer of any equity securities or other
securities of any Acquired Company. None of the outstanding equity
securities or other securities of any Acquired Company was issued in
violation of the Securities Act or any other Legal Requirement. Except as
disclosed in the Disclosure Letter, no Acquired Company owns, or has any
Contract to acquire, any equity securities or other securities of any Person
(other than Acquired Companies) or any direct or indirect equity or ownership
interest in any other business.
3.4 FINANCIAL STATEMENTS. The Sellers have delivered to the Buyer and
included as Part 3.4 of the Disclosure Letter consolidated balance sheets of the
Acquired Companies as at September 30 in each of the years 1994 through 1996,
and the related consolidated statements of income, changes in shareholders'
equity, and cash flow for each of the fiscal years then ended, together with the
report thereon of Deloitte & Touche, LLP, and the internally prepared, unaudited
consolidated balance sheets and statements of income, changes in shareholders'
equity, and cash flow for the quarters ended December 31, 1995 and 1996 (the
"Financial Statements"). The balance sheet of the Acquired Companies as at
September 30, 1996 (including the notes thereto) is herein called the "Balance
Sheet." The Financial Statements are true and correct, are in accordance with
the books and records of the Acquired Companies and fairly present the financial
condition and the results of operations, changes in shareholders' equity, and
cash flow of the Acquired Companies as at the respective dates of and for the
periods referred to in such Financial Statements, all in accordance with GAAP
(except that interim statements do not contain the footnotes required under GAAP
to be contained in the year-end statements); the Financial Statements reflect
the consistent application of such accounting principles throughout the periods
involved. No financial statements of any Person other than the Acquired
Companies are required by GAAP to be included in the consolidated financial
statements of the Company. None of the Acquired Companies now has, nor will
have on the Closing Date, any liabilities required to be reflected in financial
statements prepared in accordance with GAAP which are not fully reflected on or
reserved against in the Balance Sheet other than (i) such liabilities as are
disclosed herein or in the Disclosure Letter or (ii) liabilities incurred by the
Acquired Companies between the date of the Balance Sheet and the Closing Date in
the Ordinary Course of Business and consistent with the limitations and
restrictions contained in this Agreement. Promptly upon their being available
and, in any event, by the 25th day of the subsequent calendar month, the Sellers
will provide to the Buyer the internally prepared, unaudited monthly balance
sheets and profit and loss statements with respect to the Acquired
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Companies for each month following the date of the Balance Sheet through the
Closing Date and, with respect to each such balance sheet and profit and loss
statement (all of which shall constitute "Financial Statements" as used
herein), the representations heretofore set forth in this Section will be
applicable and true and correct.
3.5 BOOKS AND RECORDS. The books of account, minute books, stock record
books, and other records of the Acquired Companies, all of which have been made
available to the Buyer, are complete and correct and have been maintained in
accordance with sound business practices. The minute books of the Acquired
Companies contain accurate and complete records of all significant meetings held
of, and corporate action taken by, the shareholders, the Boards of Directors,
and committees of the Boards of Directors of the Acquired Companies, and no
significant meeting of any such shareholders, Board of Directors, or committee
of the Board of Directors has been held for which minutes have not been prepared
and are not contained in such minute books. At the Closing, all of those books
and records will be delivered to the Buyer.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. Part 3.6 of the Disclosure Letter
contains a complete and accurate list of the Real Property, which includes all
real property, leaseholds, or other interests therein owned by any Acquired
Company or used in the operation of the Business. The Sellers have delivered or
made available to the Buyer copies of the deeds and other instruments (as
recorded) by which the Acquired Companies acquired the Real Property and copies
of the most recent title insurance policies, opinions, abstracts, and surveys in
the possession of the Sellers or the Acquired Companies and relating to the Real
Property (collectively, the "Real Estate Reports"). Except as described in
Part 3.6 of the Disclosure Letter, to the Knowledge of the Sellers and the
Acquired Companies, (i) none of the buildings, structures or improvements
constructed on any Real Property encroaches upon adjoining real estate and
(ii) all such buildings, structures and improvements are constructed in
accordance with all "set back lines," easements and other restrictions, or
rights of record, that have been established by any applicable building or
safety code. To the Knowledge of the Sellers and the Acquired Companies, no
utility lines serving the Real Property pass over the lands of others except
where appropriate easements have been obtained. Part 3.6 of the Disclosure
Letter contains a complete and accurate list of all Real Estate Leases. The
Sellers have delivered to the Buyer correct and complete copies of all of the
Real Estate Leases. All of the leasehold estates purported to be granted by
each Real Estate Lease is owned and held by an Acquired Company and such
Acquired Company is the owner of all equipment, machinery and other personal
property thereon or in the buildings and structures thereon, in each case free
and clear of all Encumbrances (other than Permitted Encumbrances). Except as
described in Part 3.6 of the Disclosure Letter, each Real Estate Lease is in
full force and effect and constitutes a legal, valid and binding obligation of,
and is legally enforceable against, the Acquired Company that is party thereto
and grants or purports to grant a leasehold estate, free and clear of all
Encumbrances (other than Permitted Encumbrances). Except as described in Part
3.6 of the Disclosure Letter, no lessor under any Real Estate Lease is a Related
Person to any Seller or Acquired Company. All necessary Governmental
Authorizations with respect to each Real Estate Lease have been obtained and all
necessary filings or registrations therefor have been made, and there have
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been no threatened cancellations thereof or outstanding disputes thereunder.
Except as described in Part 3.6 of the Disclosure Letter, each Acquired
Company has performed all of the obligations required to be performed by it
to date under each Real Estate Lease. Except as described in Part 3.6 of the
Disclosure Letter, no Acquired Company is in default under any Real Estate
Lease, and there has not occurred any event which (whether with or without
notice, lapse of time or the happening or occurrence of any other event)
would constitute such a default. All of the property subject to the Real
Estate Leases is in good operating condition and repair, ordinary wear and
tear excepted. The Acquired Companies own all the Assets and have good and
marketable title to the Owned Real Estate and to the tangible personal
property included within the Assets, including all of such properties and
assets reflected in the Financial Statements (except for assets held under
capitalized leases disclosed or not required to be disclosed in Part 3.6 of
the Disclosure Letter and personal property sold since the date of the
Balance Sheet, as the case may be, in the Ordinary Course of Business), and
all of the properties and assets purchased or otherwise acquired by the
Acquired Companies since the date of the Balance Sheet (except for personal
property acquired and sold since the date of the Balance Sheet in the
Ordinary Course of Business and consistent with past practice). All Assets
are free and clear of all Encumbrances (other than Permitted Encumbrances)
and are not, in the case of the Real Property, subject to any rights of way,
building use restrictions, exceptions, variances, reservations, or
limitations of any nature except Permitted Encumbrances.
3.7 CONDITION AND SUFFICIENCY OF ASSETS. The buildings, plants and
structures of the Acquired Companies are structurally sound, are in good
operating condition and repair (ordinary wear and tear excepted), and are
adequate for the uses to which they are being put, and none of such
buildings, plants or structures is in need of maintenance or repairs except
for ordinary, routine maintenance and repairs that are not material in nature
or cost. The building, plants and structures of the Acquired Companies are
sufficient for the continued conduct of the Acquired Companies' businesses
after the Closing in substantially the same manner as conducted prior to the
Closing. Set forth in Part 3.7 of the Disclosure Letter is a complete and
accurate list, as of December 31, 1996, of all material items of tangible
personal property or interests therein used in the operation of the
businesses of the Acquired Companies. Such tangible personal property will,
on the Closing Date, be in good operating condition and repair, ordinary wear
and tear excepted, and constitute all material items of tangible assets used
in the operation and conduct of the businesses of the Acquired Companies as
conducted on the date hereof and on the Closing Date.
3.8 ACCOUNTS RECEIVABLE. The accounts receivable generated from and
after September 30, 1995 or reflected in the Financial Statements are
accounts which were generated by the Acquired Companies with genuine
expectation of collection thereof, and the revenues reflected in such
Financial Statements have been or will be collected in full except to the
extent reserved for in the Balance Sheet as an "allowance for bad debts".
3.9 INVENTORY. The "value" of the inventories of the Acquired Companies
as of the date of the last Financial Statement shall be no less than the book
value of such inventory as reflected on the last Financial Statement. For
purposes hereof, the "value" of
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such inventory shall mean the lower of the last in first out cost of the
Acquired Companies or "market" and, for purposes hereof, "market" shall mean
the price for which the Acquired Companies last purchased an item of
inventory (or an item of comparable quality if the same item is unavailable)
in stock at the place where such inventory is situated, due regard being
given any damage to or obsolescence of inventory in determining the
replacement cost thereof.
3.10 NO UNDISCLOSED LIABILITIES. Except as set forth in Part 3.10 of the
Disclosure Letter and except for the Closing Liabilities, the Acquired Companies
have no liabilities or obligations of any nature (whether known or unknown and
whether absolute, accrued, contingent, or otherwise).
3.11 TAXES. Except as described in Part 3.11 of the Disclosure Letter,
each of the Acquired Companies has filed and, on the Closing Date, will have
filed all federal, state, county and local income, excise, property,
withholding, workers unemployment compensation, sales, use, franchise or
doing business and other tax returns which are required to be filed by any of
them as of such dates; and such returns are true, correct and complete. Each
of the Acquired Companies has paid or will pay all Taxes, estimated Taxes,
interest, penalties, assessments and deficiencies which have become due prior
to such date, pursuant to such returns and no additional Taxes, interest,
penalties, assessments or deficiencies will be payable with respect thereto.
The accrual for Taxes in the Balance Sheet is sufficient and no Acquired
Company will have any liability for taxes in respect of periods ending on or
prior to the close of the Company 1996 fiscal year in excess of the amount
accrued therefor in the Balance Sheet.
The federal income, state income and state sales and use Tax returns of the
Acquired Companies have been examined by the applicable taxing authority for the
periods specified in Part 3.11 of the Disclosure Letter and all deficiencies
proposed as a result of such examinations have been paid or settled. Except as
specified in Part 3.11 of the Disclosure Letter, no unresolved claim for
assessment or collection of Taxes has been asserted against any of the Acquired
Companies. The Acquired Companies are not party to any pending action or
proceeding and, to the Knowledge of the Management Sellers, there is no action
or proceeding threatened by any government or authority against the Acquired
Companies which subjects or might subject the Acquired Companies to any claim or
lien relating to the payment of Taxes. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any Tax
return of the Acquired Companies for any period. Except as specified in Part
3.11 of the Disclosure Letter and except for consents or elections duly made in
federal tax returns of the Acquired Companies that have been provided to the
Buyer, there are no outstanding consents or elections made under the Code which
are binding upon the Acquired Companies. There are no liens outstanding for any
Taxes upon the assets of the Acquired Companies except with respect to Taxes not
yet delinquent. True and complete copies of all returns of Taxes and all
schedules thereto filed by, on behalf of, or with respect to the Acquired
Companies with the IRS or any other taxing authority for any of the last seven
taxable years, and all written communications with the IRS relating to all such
returns, have been made available to the Buyer.
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3.12 NO MATERIAL ADVERSE CHANGE. Since the date of the Balance Sheet,
there has not been any material adverse change in the business, operations,
properties, prospects, assets, or condition (financial or otherwise) of the
Acquired Companies considered as a whole, and no event unique to the Acquired
Companies has occurred or circumstance or condition exists, or to the Knowledge
of any Seller or any Acquired Company, is contemplated or threatened, that may
result in such a material adverse change.
3.13 EMPLOYEE BENEFITS. Part 3.13 of the Disclosure Letter sets forth a
description of all of the existing employee benefit plans of the Acquired
Companies, personnel policies and a listing of all employee benefit brochures or
handbooks and personnel brochures or handbooks delivered to employees or in
effect during the past twelve months. There are no "employee benefit plans"
(the "Plans") as such term is defined in Section 3(3) of ERISA maintained by the
Acquired Companies or under which the Acquired Companies have any liability,
other than those described in Part 3.13 of the Disclosure Letter. No Plan
intended to be a qualified plan under Section 401(a) of the Code or trust
forming a part thereof has been completely terminated since September 1, 1974.
All Plans and any trusts forming a part thereof which are subject to ERISA are
and have been administered in all material respects in compliance with ERISA; no
"reportable event," as such term is used in ERISA, has heretofore occurred with
respect to any Plan; and to the Knowledge of the Sellers and the Acquired
Companies, there does not exist any fact or circumstance that might cause the
Pension Benefit Guaranty Corporation to seek to terminate any Plan pursuant to
Section 4042 of ERISA. Neither the Acquired Companies, the Sellers, trustees,
administrators, or fiduciaries of any plans has participated in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
that could subject the Acquired Companies or any trustee, administrator or other
fiduciary to any tax, penalty or liability. No liability to the Pension Benefit
Guaranty Corporation has been or is expected to be incurred with respect to any
Plan. Except as otherwise disclosed in the Disclosure Letter, all Plans which
are "employee pension benefit plans" (as such term is defined in Section 3(2) of
ERISA) and which are intended to be qualified plans under Section 401(a) of the
Code, have received, within the last three years, favorable determination
letters from the Internal Revenue Service regarding their qualification and the
tax-exempt status of their trusts under Section 501(a) of the Code. All Plans
and the trusts forming a part thereof have been administered and enforced in all
material respects in accordance with their terms and the applicable provisions
of the Code and ERISA, and no material disputes are pending or, to the Knowledge
of the Sellers or the Acquired Companies, threatened with respect thereto. The
present value of all vested accrued benefits under any Plan that is an "employee
pension benefit plan" subject to Title IV of ERISA did not, as of the latest
valuation date, exceed the value of the assets of any such Plan allocable to
such vested accrued benefits, based upon the actuarial assumptions which are set
forth in Part 3.13 of the Disclosure Letter. The present value of all accrued
benefits, whether vested or not, under any Plan that is an "employee pension
benefit plan" subject to Title IV of ERISA did not, as of the latest valuation
date, exceed the value of the assets of such Plan allocable to such vested and
non-vested accrued benefits. None of the Plans is a "multi- employer plan," as
defined in ERISA. The Acquired Companies have not suffered or otherwise caused a
"complete withdrawal" or "partial withdrawal," as such terms are respectively
defined in Section 4203
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and 4205 of ERISA. None of the Plans subject to Section 412 of the Code or
any trust established in connection therewith has incurred any "accumulated
funding deficiency," as such term is defined in Section 412 of the Code,
whether or not waived, since the effective date of Section 412. None of the
assets of any Plan has at any time included any stock or securities issued by
any Acquired Company since before 1989.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS;
CONSENTS.
(a) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and since September 30, 1995 has
been, in material compliance with each Legal Requirement that is or
was applicable to it or to the conduct or operation of its business or
the ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may constitute or result in a
violation by any Acquired Company of, or a failure on the part of any
Acquired Company to comply with, any Legal Requirement, or may give
rise to any obligation on the part of any Acquired Company to
undertake, or to bear all or any portion of the cost of, any remedial
action of any nature; and
(iii) no Acquired Company has received any written notice or
other communication from any Governmental Body or any other Person
regarding any actual, alleged, possible, or potential violation of,
or failure to comply with, any Legal Requirement, or any actual,
alleged, possible, or potential obligation on the part of any Acquired
Company to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete and accurate
list of each Governmental Authorization that is held by any Acquired Company or
that otherwise relates to the business of, or to any of the assets owned or used
by, any Acquired Company, and such Governmental Authorizations listed in Part
3.14 of the Disclosure Letter constitute all Governmental Authorizations which
are required for the operation of the Business as operated by the Acquired
Companies on the date hereof. Each Governmental Authorization listed or
required to be listed in Part 3.14 of the Disclosure Letter is valid and in full
force and effect. Except as set forth in Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and since September 30, 1995 has
been, in material compliance with all of the terms and requirements of
each Governmental Authorization identified or required to be
identified in Part 3.14 of the Disclosure Letter;
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(ii) no event has occurred or circumstance exists that may (with
or without notice or lapse of time) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or
requirement of any Governmental Authorization listed or required to be
listed in Part 3.14 of the Disclosure Letter, or result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any Governmental Authorization
listed or required to be listed in Part 3.14 of the Disclosure Letter;
(iii) no Acquired Company has received any written notice or
other communication from any Governmental Body or any other Person
regarding any actual, alleged, possible, or potential violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or any actual, proposed, possible, or potential
revocation, withdrawal, suspension, cancellation, termination of, or
modification to any Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be
listed in Part 3.14 of the Disclosure Letter have been duly filed on a
timely basis with the appropriate Governmental Bodies, and all other
filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies.
(c) Except as set forth in Part 3.14 of the Disclosure Letter, no
Acquired Company is subject to any statute, law, ordinance, regulation, rule,
determination, order, judgment, writ, injunction, decree, charter, bylaw,
mortgage, deed of trust, indenture, note, agreement, commitment, lease,
contract, instrument or other restriction of any kind or character whatsoever
which would prevent the execution or delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby, or a
transfer of the Assets, or would result in any material penalty, forfeiture
or contract termination as a result thereof, without the consent of the
holders of or parties to such instruments or any other parties. Except as
set forth in Part 3.14 of the Disclosure Letter, all consents which are
necessary to permit the consummation of the transactions described above have
been obtained or will be obtained prior to Closing.
3.15 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 3.15 of the Disclosure Letter, there is no
pending Proceeding:
(i) that has been commenced by or against any Acquired Company
or would materially and adversely affect the business of, or any of
the assets owned or used by, the Acquired Companies considered as a
whole; or
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(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated hereby.
To the Knowledge of the Sellers and the Acquired Companies, no such Proceeding
has been Threatened. The Sellers have delivered to the Buyer copies of all
pleadings, correspondence, and other documents relating to each Proceeding
listed in Part 3.15 of the Disclosure Letter.
(b) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) there is no Order to which any of the Acquired Companies, or
any of the assets owned or used by any Acquired Company, is subject;
(ii) no Seller is subject to any Order that relates to the
business of, or any of the assets owned or used by, any Acquired
Company; and
(c) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) each Acquired Company is, and has been, in material
compliance with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or has been
subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any
Order to which any Acquired Company, or any of the assets owned or
used by any Acquired Company, is subject; and
(iii) no Acquired Company has received any notice or other
communication (whether oral or written) from any Governmental Body or
any other Person regarding any actual, alleged, possible, or potential
violation of, or failure to comply with, any term or requirement of
any Order to which any Acquired Company, or any of the assets owned or
used by any Acquired Company, is or has been subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in Part
3.16 of the Disclosure Letter, since the date of the Balance Sheet, the Acquired
Companies have conducted their businesses only in the Ordinary Course of
Business and, without the written consent of the Buyer, there has not been any:
(a) change in any Acquired Company's authorized or issued
capital stock; grant of any stock option or right to purchase shares
of capital stock of any Acquired Company; issuance of any security
convertible into such capital stock; grant of any registration rights;
purchase, redemption, retirement, or
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other acquisition by any Acquired Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of any Acquired
Company;
(c) payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any shareholder, director, officer,
or (except in the Ordinary Course of Business) employee or entry into
any employment, severance, or similar Contract with any director,
officer, or employee;
(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or
with any employees of any Acquired Company;
(e) damage to or destruction or loss of any asset or property of
any Acquired Company, whether or not covered by insurance, materially
and adversely affecting the properties, assets, business, financial
condition, or prospects of the Acquired Companies, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or
(ii) any Contract or transaction involving, in either case, a total
remaining commitment by or to any Acquired Company of at least $50,000
in the aggregate as to all such agreements and transactions;
(g) sale (other than sales of inventory in the Ordinary Course
of Business), lease, or other disposition of any asset or property of
any Acquired Company other than in the Ordinary Course of Business or
mortgage, pledge, or imposition of any lien or other encumbrance on
any asset or property of any Acquired Company other than Permitted
Encumbrances;
(h) cancellation or waiver of any claims or rights with a value
to any Acquired Company in excess of $50,000 in the aggregate as to
all such claims and rights;
(i) change in the accounting methods or accounting practices
used by any Acquired Company or any credit collection or payment
practice, or written down the value of the Assets or properties or
written-off as uncollectible any notes or accounts receivable, except
write-downs and write-offs in the Ordinary Course of Business, none of
which, individually or in the aggregate, are material;
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(j) agreement, whether oral or written, by any Acquired Company
to do any of the foregoing.
From the date hereof, neither the Sellers nor any Acquired Company will,
directly or indirectly, do or agree to do any of the foregoing without the
Buyer's written consent.
3.17 CONTRACTS; NO DEFAULTS.
Except for the contracts, agreements and commitments set forth in Part 3.17
of the Disclosure Letter (the "Scheduled Contracts"), none of the Acquired
Companies is a party to any oral or written (i) contract for the employment of
any officer, employee, consultant or independent contractor; (ii) license
agreement or distributor, dealer, manufacturer's representative, sales agency,
advertising, property management or brokerage contract requiring aggregate
payments in future in excess of $50,000 in the aggregate as to all such
contracts; (iii) contract with any labor organization or other collective
bargaining unit; (iv) contract for the future purchase of materials, supplies,
services, merchandise (excluding inventory) or equipment involving payments of
more than $50,000 in the aggregate as to all such contracts over its remaining
term (including periods covered by any option to renew by either party); (v)
contract for the purchase, sale or lease of any real estate; (vi)
profit-sharing, bonus, incentive compensation, deferred compensation, stock
option, severance pay, stock purchase, employee benefit, insurance,
hospitalization, pension, retirement or other similar plan or agreement; (vii)
agreement or arrangement for the sale of any of its assets or properties or the
grant of any preferential rights to purchase any of its assets, properties or
rights, other than in the Ordinary Course of Business involving payments of more
than $50,000 in the aggregate as to all such agreements or arrangements; (viii)
contract which contains any provisions requiring the Acquired Companies to
indemnify any other party thereto for an amount that might reasonably exceed
$50,000 in the aggregate as to all such contracts; (ix) joint venture agreement
or arrangement or other agreement involving the sharing of profits; (x)
outstanding loan to any person or entity or receivable due from any shareholder
of the Acquired Companies, the Sellers or persons or entities controlling,
controlled by or under common control with the Acquired Companies or the
Sellers; or (xi) other contract, commitment or agreement involving payments of
more than $50,000 in the aggregate as to all such contracts, commitments or
agreements which by its terms does not terminate or is not terminable within 30
days or upon 30 days' (or less) notice. Except as described in Part 3.17 of the
Disclosure Letter, each of the Contracts is in full force and effect and
constitutes a legal, valid and binding obligation of, and is legally enforceable
against, the Acquired Company party thereto. The Acquired Companies have in all
material respects performed all the obligations required to be performed by each
of them to date under the Contracts. To the Knowledge of the Sellers and the
Acquired Companies, no party is in default under any of the Contracts. Except
as specified in Part 3.17 of the Disclosure Letter, none of the Contracts is a
"capitalized" lease or a "financing" lease (as those terms are used in GAAP).
Except as specified in Part 3.17 of the Disclosure Letter, none of the other
parties to any of the Contracts is an affiliate of the Acquired Companies or the
Sellers.
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Part 3.17 of the Disclosure Letter also contains a true, correct and
complete list of all material trade or barter agreements of the Acquired
Companies (advertising exchanged for goods and services with third parties) as
of the date hereof, including the nature of the trade, the parties to the trade
and the positive or negative trade balance.
3.18 INSURANCE. Set forth in Part 3.18 of the Disclosure Letter is a list
and brief description of all policies of property, fire, casualty, liability,
life, worker's compensation and other forms of insurance of any kind owned or
held by the Acquired Companies. All such policies (a) are in full force and
effect; (b) are valid, outstanding and enforceable policies; and (c) provide
that they will remain in full force and effect through the respective dates set
forth in Part 3.18 of the Disclosure Letter.
3.19 ENVIRONMENTAL MATTERS. Except as set forth in Part 3.19 of the
Disclosure Letter:
(a) Each Acquired Company is, and at all times has been, in
material compliance with, and has not been and is not in violation of
or liable under, any Environmental Law. No Seller or Acquired Company
has any basis to expect, nor has any of them or any other Person for
whose conduct they are or may be held to be responsible received, any
actual or Threatened order, notice, or other communication from
(i) any Governmental Body or private citizen acting in the public
interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply
with any Environmental Law, or of any actual or Threatened obligation
to undertake or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which any
Acquired Company has had an interest, or with respect to any property
or Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed by
any Acquired Company, or any other Person for whose conduct they are
or may be held responsible, or from which Hazardous Materials have
been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
(b) There are no pending or, to the Knowledge of the Sellers and
the Acquired Companies, Threatened claims, Encumbrances, or other
restrictions of any nature, resulting from any Environmental, Health,
and Safety Liabilities or arising under or pursuant to any
Environmental Law, with respect to or affecting any of the Facilities
or any other properties and assets (whether real, personal, or mixed)
in which any Acquired Company has or had an interest.
(c) No Seller or Acquired Company has any basis to expect, nor
has any of them or any other Person for whose conduct they are or may
be held responsible, received, any citation, directive, inquiry,
notice, Order,
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summons, warning, or other communication that relates
to Hazardous Activity, Hazardous Materials, or any alleged, actual, or
potential violation or failure to comply with any Environmental Law,
or of any alleged, actual, or potential obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities
with respect to any of the Facilities or any other properties or
assets (whether real, personal, or mixed) in which any Acquired
Company had an interest, or with respect to any property or facility
to which Hazardous Materials generated, manufactured, refined,
transferred, imported, used, or processed by any Acquired Company, or
any other Person for whose conduct they are or may be held
responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(d) No Seller or Acquired Company, or any other Person for whose
conduct they are or may be held responsible, has any Environmental,
Health, and Safety Liabilities with respect to the Facilities or, to
the Knowledge of the Sellers and the Acquired Companies, with respect
to any other properties and assets (whether real, personal, or mixed)
in which any Acquired Company (or any predecessor), has or had an
interest, or at any property geologically or hydrologically adjoining
the Facilities or any such other property or assets.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities or, to the Knowledge of the Sellers and
the Acquired Companies, at any geologically or hydrologically
adjoining property, including any Hazardous Materials contained in
barrels, above or underground storage tanks, landfills, land deposits,
dumps, equipment (whether moveable or fixed) or other containers,
either temporary or permanent, and deposited or located in land,
water, sumps, or any other part of the Facilities or such adjoining
property, or incorporated into any structure therein or thereon. No
Seller, Acquired Company, any other Person for whose conduct they are
or may be held responsible, or to the Knowledge of the Sellers and the
Acquired Companies, any other Person, has permitted or conducted, or
is aware of, any Hazardous Activity conducted with respect to the
Facilities or any other properties or assets (whether real, personal,
or mixed) in which any Acquired Company has or had an interest.
(f) There has been no Release or, to the Knowledge of the
Sellers and the Acquired Companies, Threat of Release, of any
Hazardous Materials at or from the Facilities or at any other
locations where any Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used, or processed from or
by the Facilities, or from or by any other properties and assets
(whether real, personal, or mixed) in which any Acquired Company has
or had an interest, or to the Knowledge of the Sellers and the
Acquired Companies any geologically or hydrologically adjoining
property, whether by the Sellers, any Acquired Company, or any other
Person.
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(g) The Sellers have delivered to the Buyer true and complete
copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by the Sellers or any Acquired
Company pertaining to Hazardous Materials or Hazardous Activities in,
on, or under the Facilities, or concerning compliance by the Sellers,
any Acquired Company, or any other Person for whose conduct they are
or may be held responsible, with Environmental Laws.
3.20 EMPLOYEES.
(a) Part 3.20 of the Disclosure Letter contains a complete and accurate
list as of January 31, 1997 of the following information for each employee of
the Acquired Companies, including each employee on leave of absence or layoff
status: employer; name; job title; current compensation paid or payable and any
change in compensation since the Balance Sheet Date; vacation accrued; and
service credited for purposes of vesting and eligibility to participate under
any Acquired Company's pension, retirement, profit-sharing, thrift-savings,
deferred compensation, stock bonus, stock option, cash bonus, employee stock
ownership (including investment credit or payroll stock ownership), severance
pay, insurance, medical, welfare, or vacation plan, other Employee Pension
Benefit Plan or Employee Welfare Benefit Plan, or any other employee benefit
plan or any Director Plan.
(b) To the Knowledge of the Sellers and the Acquired Companies, no
employee of any Acquired Company is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, non-competition, or
proprietary rights agreement, between such employee and any other Person (the
"Proprietary Rights Agreement") that in any way adversely affects or will
adversely affect (i) the performance of his duties as an employee of the
Acquired Companies, or (ii) the ability of any Acquired Company to conduct its
business, including any Proprietary Rights Agreement with any Seller or with any
Acquired Company by any such employee. To the Knowledge of the Sellers and the
Acquired Companies, no officer, or other key employee of any Acquired Company
intends to terminate his employment with such Acquired Company as a result of
consummation of the transactions contemplated hereby.
(c) Part 3.20 of the Disclosure Letter also contains a complete and
accurate list of the following information for each retired employee of the
Acquired Companies, or their dependents, receiving benefits or scheduled to
receive benefits in the future: name, pension benefit, pension option election,
retiree medical insurance coverage, retiree life insurance coverage, and other
benefits.
3.21 LABOR RELATIONS; COMPLIANCE. Since September 30, 1993, no Acquired
Company has been or is a party to any collective bargaining or other labor
Contract. Except as set forth in Part 3.21 of the Disclosure Letter, since
September 30, 1993, there has not been, there is not presently pending or
existing, and to the Knowledge of the Sellers and the Acquired Companies, there
is not Threatened, (a) any strike, slowdown, picketing, work stoppage, or
employee grievance process, (b) any Proceeding against or affecting any
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Acquired Company relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor Relations
Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational activity, or other labor or employment
dispute against or affecting any of the Acquired Companies or their premises,
or (c) any application for certification of a collective bargaining agent.
To the Knowledge of the Sellers and the Acquired Companies, no event has
occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute. There is no lockout of any employees by any
Acquired Company, and no such action is contemplated by any Acquired Company.
Each Acquired Company has complied in all respects with all Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. No Acquired Company is liable for the
payment of any compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for failure to comply with any of the foregoing
Legal Requirements.
3.22 INTELLECTUAL PROPERTY. Set forth in Part 3.22 of the Disclosure
Letter is a list of all material franchises, licenses, trademarks, trade names,
service marks, service names, copyrights, patents and applications therefor
owned or licensed by or registered in the name of the Acquired Companies or any
other person which is used in the operation of the businesses of the Acquired
Companies. The Acquired Companies own or license all of the franchises,
licenses, trademarks, trade names, service marks, service names, copyrights,
patents and applications therefor listed in Part 3.22 of the Disclosure Letter
and, except to the extent reflected in Part 3.22 of the Disclosure Letter, none
of the Acquired Companies previously paid any royalty or other amount to anyone
under any of them. On the Closing Date, the Acquired Companies will own or
possess the right to use all franchises, licenses, trademarks, trade names,
service marks, service names, copyrights, patents and applications therefor as
used in the conduct of the businesses of the Acquired Companies on the date
hereof and on the Closing Date. None of the Acquired Companies has received
written notice to the effect that any service or publication of the businesses
of the Acquired Companies may infringe any trademark, trade name, copyright or
patent, trade secret or legally protectable right of another.
3.23 CERTAIN PAYMENTS. Except as described in Part 3.23 of the Disclosure
Letter, since September 30, 1993, no Acquired Company or, to the Knowledge of
the Sellers and the Acquired Companies, any other Person associated with or
acting for or on behalf of any Acquired Company, has directly or indirectly
(a) made any contribution, gift, bribe, rebate, payoff, influence payment,
kickback, or other payment to any Person, private or public, regardless of form,
whether in money, property, or services (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for business secured,
(iii) to obtain special concessions or for special concessions already obtained,
for or in respect of any Acquired Company or any Affiliate of an Acquired
Company, or (iv) in violation of any Legal Requirement, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Acquired Companies.
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3.24 DISCLOSURE. No representation or warranty of the Sellers in this
Agreement and no statement in the Disclosure Letter omits to state a material
fact necessary to make such representation, warranty or statement herein or
therein, in light of the circumstances in which it was made, not misleading.
3.25 RELATIONSHIPS WITH RELATED PERSONS. Except as disclosed in Part 3.25
of the Disclosure Letter, none of the Management Xxxxxxx, Xxxxxx or any Related
Person of any Acquired Company, any Management Seller or Xxxxxx has, or, since
September 30, 1995 has had, any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used in or pertaining to
the Acquired Companies' businesses. Except as disclosed in the Disclosure
Letter, since September 30, 1995, none of the Management Xxxxxxx, Xxxxxx or any
Related Person of any Management Seller or Xxxxxx (i) has had any business
dealings or a material financial interest in any transaction with any Acquired
Company, or (ii) has engaged in competition with any Acquired Company with
respect to any line of products or services of such Acquired Company (a
"Competing Business") in any market presently served by such Acquired Company.
Except as disclosed in the Disclosure Letter, none of the Acquired Companies,
the Management Xxxxxxx, Xxxxxx or any Related Person of any Acquired Company,
any Management Seller or Xxxxxx is, or since September 30, 1995, has owned (of
record or as a beneficial owner), a material equity interest or any other
material financial or profit interest in, a Person that has (i) had business
dealings or a material financial interest in any transaction with any Acquired
Company, or (ii) engaged in competition with any Acquired Company with respect
to a Competing Business in any markets presently served by such Acquired
Company. Except as set forth in Part 3.25 of the Disclosure Letter, no Acquired
Company, Seller or Related Person of any Acquired Company or any Seller is a
party to any Contract with, or has any claim or right against, any Acquired
Company. For purposes of this Section 3.25, Portfolio Investments of SC or SC's
affiliates shall not be deemed to be Related Persons of the Acquired Companies.
3.26 BROKERS OR FINDERS. Except as disclosed in Part 3.26 of the
Disclosure Letter, none of the Sellers, any Acquired Company or any of their
agents have incurred any obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
3.27 PROJECTIONS. Part 3.27 of the Disclosure Letter sets forth the
projections for the financial performance of the business of the Acquired
Companies for their 1997 and 1998 Fiscal Years (the "Projections"). The
Projections have been prepared in accordance with realistic estimates of the
financial performance achievable by the Acquired Companies for the periods
presented and none of the Acquired Companies or the Management Sellers has any
reason to believe that the Acquired Companies will be unable to achieve the
financial performance reflected therein, it being understood, however, (i) that
the Management Sellers make no warranty to the Buyer that the Acquired Companies
will achieve the financial performance presented in the Projections and (ii) the
Projections may be affected by general economic conditions and conditions
particular to the Business.
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3.28 SC.
(a) SC is a corporation duly organized, validly existing, and in good
standing under the laws of the Commonwealth of Massachusetts, with full
corporate power and authority to conduct its business as it is now being
conducted. This Agreement constitutes the legal, valid, and binding obligation
of SC, enforceable against SC in accordance with its terms. SC has the absolute
and unrestricted right, power, authority, and capacity to execute and deliver
this Agreement and to perform its obligations under this Agreement.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the transactions contemplated hereby will,
directly or indirectly (with or without notice or lapse of time) contravene,
conflict with, or result in a violation of any provision of the Organizational
Documents of SC, or any resolution adopted by the board of directors or the
shareholders of SC;
(c) SC is and will be on the Closing Date the record and beneficial owner
and holder of the Shares identified in the Disclosure Letter as owned by SC,
free and clear of all Encumbrances and, upon delivery of the instruments
contemplated by Section 2.6(a), the Buyer will acquire good title to such
Shares, free and clear of all Encumbrances.
3.29 NON-MANAGEMENT SELLERS OTHER THAN SC.
(a) This Agreement constitutes the legal, valid, and binding obligation of
the Sellers other than the Management Sellers and SC, enforceable against them
in accordance with its terms. Each such Seller has the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and to perform his obligations under this Agreement.
(b) The Non-Management Sellers are and will be on the Closing Date the
record and beneficial owner and holder of the Shares as identified in the
Disclosure Letter, free and clear of all Encumbrances and, upon delivery of the
instruments contemplated by Section 2.6(a), the Buyer will acquire good title to
such Shares, free and clear of all Encumbrances.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to the Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Buyer is not a "foreign person" as defined in section 1445 of the
Internal Revenue Code of 1986, as amended.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding obligation of
the Buyer, enforceable against the Buyer in accordance with its terms. Upon the
execution and
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delivery by the Buyer or AGH, as the case may be, of the instruments
contemplated to be executed pursuant to this Agreement by the Buyer and AGH
(collectively, the "Buyer's Closing Documents"), the Buyer's Closing
Documents will constitute the legal, valid, and binding obligations of the
Buyer or AGH, as the case may be, enforceable against the Buyer or AGH, as
the case may be, in accordance with their respective terms. The Buyer has
the absolute and unrestricted right, power, and authority to execute and
deliver this Agreement and the Buyer and AGH, as the case may be, has the
absolute and unrestricted right, power and authority to execute and deliver
the notes, documents and agreements referred to in Section 2.5(b)(i) and
(iii)-(v), the Buyer's Closing Documents and to perform their respective
obligations under this Agreement and the Buyer's Closing Documents once all
appropriate authorizations have been obtained.
(b) Neither the execution and delivery of this Agreement by the Buyer nor
the consummation or performance of any of the transactions contemplated hereby
by the Buyer or AGH will, directly or indirectly (with or without notice or
lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of Organizational Documents of the Buyer or AGH, as the
case may be, or (B) any action adopted by the Buyer or AGH, as the
case may be;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any
of the transactions contemplated hereby or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which
the Buyer or AGH may be subject; or
(iii) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a
conflict or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate or modify, any Contract to
which the Buyer or AGH is a party or by which the Buyer or AGH may be
bound.
Except as set forth in Schedule 4.2, neither the Buyer nor AGH is and will be
required to obtain any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
transactions contemplated hereby.
4.3 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against the Buyer or AGH and that challenges, or may have the effect
of preventing, delaying, making illegal, or otherwise interfering with, any of
the transactions contemplated hereby. To the Buyer's Knowledge, no such
Proceeding has been Threatened.
4.4 BROKERS OR FINDERS. The Buyer and its officers and agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement and will indemnify
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and hold the Sellers harmless from any such payment alleged to be due by or
through the Buyer as a result of the action of the Buyer or its officers or
agents.
4.5 INVESTMENT REPRESENTATIONS.
The Buyer is capable of evaluating the risks and merits of an investment
in the Shares and of protecting its own interests in connection with such
investment. The Buyer has not seen, received, been presented with, or been
solicited by any leaflet, public promotional meeting, newspaper or magazine
article or advertisement, radio or television advertisement, or any other
form of advertising or general solicitation with respect to the sale of the
Shares. The Buyer is acquiring the Shares for its own account only not with a
view to or for sale in connection with any distribution of all or any part of
the Shares. Without limiting the representations and warranties of the
Sellers and damages as a result of the breach thereof, the Buyer acknowledges
that the Buyer is financially able to bear the economic risk of an investment
in the Shares, including the total loss thereof. The Buyer acknowledges that
the Shares have not been registered under the Securities Act in reliance, in
part, on its representations, warranties and agreement herein. The Buyer
understands that the Shares are a "restricted security" under the Securities
Act in that the Shares will be acquired in a transaction not involving a
public offering, and that the Shares may be resold without registration under
the Securities Act only in certain limited circumstances. The Buyer
represents, warrants, and agrees that the Sellers are under no obligation to
register or qualify the Shares under the Securities Act or under any state
securities law, or to assist the Buyer in complying with any exemption from
registration and qualification. The Buyer acknowledges that there are
substantial restrictions on the transferability of the Shares pursuant to
this Agreement, that there is no public market for the Shares and none is
expected to develop. Without limiting the representations and warranties of
the Sellers and damages as a result of the breach thereof, the Buyer
acknowledges that the Buyer (i)has had an opportunity to ask questions and
receive answers from the Sellers regarding the terms and conditions of
purchase of the Shares and regarding the business, financial affairs, and
other aspects of the Acquired Companies, (ii) has further had the opportunity
to obtain all information which its deems necessary to evaluate the
investment and to verify the accuracy of information otherwise provided to it
and (iii) has received and reviewed all information it considers necessary or
appropriate for deciding whether to purchase the Shares.
5. COVENANTS OF THE SELLERS PRIOR TO CLOSING DATE.
5.1 ACCESS AND INVESTIGATION. Between the date of this Agreement and
the Closing Date, the Sellers will, and will cause each Acquired Company and
its Representatives to, (a) afford the Buyer and its Representatives and
prospective lenders and their Representatives (collectively, the "Buyer's
Advisors") full and free access (upon reasonable notice) to each Acquired
Company's personnel, properties (including subsurface testing), contracts,
books and records, and other documents and data, (b) furnish the Buyer and
the Buyer's Advisors with copies of all such contracts, books and records,
and other existing documents and data as the Buyer may reasonably request,
and (c) furnish the Buyer and the Buyer's Advisors with such additional
financial, operating, and other data and
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information as the Buyer may reasonably request. From the date hereof, at
the request of the Buyer, and provided that such action would not have an
adverse effect on the Acquired Companies if Closing does not occur, the
Sellers shall cause the Acquired Companies to take such actions as the Buyer
may reasonably request in respect of tax elections, accounting methodologies,
governmental filings and the adoption of other practices, policies or
procedures, in which event the implementation of any such practices, policies
or procedures and the taking of any such actions (i) shall not constitute a
breach of any representation, warranty or covenant hereof and (ii) shall be
deemed to have been made with the consent of the Buyer. The Sellers agree to
cause the Acquired Companies not to file the federal income tax returns of
the Acquired Companies for the fiscal year ending September 30, 1996 on or
before the Closing Date unless the Closing Date has not occurred prior to the
due date, as presently extended, for filing such return.
5.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES. Between the
date of this Agreement and the Closing Date, the Management Sellers will, and
will cause each Acquired Company to:
(a) conduct the business of such Acquired Company only in the
Ordinary Course of Business, in material conformity with (i) all
applicable laws, ordinances, regulations, rules, and orders, and
consistent with past practice, (ii) except for instances of force
majeure or other events outside of the control of the Acquired
Companies, amounts budgeted in the Projections in respect of
expenditures for capital improvements and expenditures for advertising
to promote the Business.
(b) use their best efforts to preserve the Business intact, keep
available the services of the current officers, employees, and agents
of such Acquired Company, and, to the extent commercially advisable,
maintain the relations and good will with suppliers, customers,
landlords, creditors, employees, agents, and others having business
relationships with such Acquired Company, and continue to conduct the
financial operations of the Business, including the credit, collection
and payment policies and practices of the Acquired Companies, with the
same effort, to the same extent and in the same manner as in the prior
conduct of the business of the Acquired Companies;
(c) maintain all Assets in their present good operating
conditions, repair and order, reasonable wear and tear in ordinary
usage expected, and maintain the inventories of the Business at levels
normally maintained for the Business (subject to normal seasonal
adjustment);
(d) maintain the books, accounts and records of the Business in
the usual and ordinary manner and deliver to the Buyer copies of
monthly internally prepared, unaudited operating statements and
balance sheets for the
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Business and any other information concerning the financial condition of
the Business as the Buyer may from time to time reasonably request;
(e) pay or caused to be paid or provided for all property,
sales, use, franchise, excise, social security, withholding, worker's
compensation and unemployment insurance taxes and all other Taxes of
or relating to the Business and employees of the Acquired Companies,
required to be paid to avoid penalties and interest to city, county,
state, federal or other governmental units up to the Closing Date;
(f) confer with the Buyer regarding changes to operational
matters of a material nature; and
(g) otherwise report periodically to the Buyer concerning the
status of the business, operations, and finances of such Acquired
Company.
5.3 NEGATIVE COVENANTS. Except as otherwise expressly permitted by
this Agreement, between the date of this Agreement and the Closing Date, the
Sellers will not, and will cause each Acquired Company not to, without the
prior written consent of the Buyer, take any affirmative action, or fail to
take any reasonable action within their or its reasonable control, as a
result of which any of the changes or events listed in Section 3.16 is likely
to occur or which is likely to result in a material breach of any of the
representations and warranties contained in Section 3 hereof.
5.4 REQUIRED APPROVALS. As promptly as practicable after the date of
this Agreement, the Sellers will, and will cause each Acquired Company to,
make all filings required by Legal Requirements to be made by them in order
to consummate the transactions contemplated hereby (including all filings, if
any, required under the HSR Act). Between the date of this Agreement and the
Closing Date, the Sellers will, and will cause each Acquired Company to, (a)
cooperate with the Buyer with respect to all filings that the Buyer elects to
make or is required by Legal Requirements to make in connection with the
transactions contemplated hereby, and (b) cooperate with the Buyer in
obtaining all consents identified in Schedule 4.2.
5.5 NOTIFICATION. Between the date of this Agreement and the Closing
Date, the Sellers will promptly notify the Buyer in writing if any Seller or any
Acquired Company becomes aware of any fact or condition that causes or
constitutes a breach of any representations and warranties of the Sellers as of
the date of this Agreement, or if any Seller or any Acquired Company becomes
aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. Should any such fact or condition require any change
in the Disclosure Letter if the Disclosure Letter were dated the date of the
occurrence or discovery of any such fact or condition, the Sellers will promptly
deliver to the Buyer a supplement to the Disclosure
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Letter specifying such change. During the same period, each Seller will
promptly notify the Buyer of the occurrence of any breach of any covenant of
the Sellers in this Section 5 or of the occurrence of any event that may make
the satisfaction of the conditions in Section 7 impossible or unlikely. In
the case of SC, the notification requirements in this Section 5.5 shall apply
only to representations and warranties made by SC.
5.6 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Section 9, each Seller will not, and the Management
Sellers will cause each Acquired Company and each of their Representatives
not to, directly or indirectly solicit, initiate, or encourage any inquiries
or proposals from, discuss or negotiate with, provide any non-public
information to, or consider the merits of any unsolicited inquiries or
proposals from, any Person (other than the Buyer) relating to any transaction
involving the sale of the business or assets (other than in the Ordinary
Course of Business) of any Acquired Company, or any of the capital stock of
any Acquired Company, or any merger, consolidation, business combination, or
similar transaction involving any Acquired Company.
5.7 BEST EFFORTS. Between the date of this Agreement and the Closing
Date, each Seller will use its best efforts to cause the conditions in
Sections 7 and 8 to be satisfied, provided, however, that this obligation to
use best efforts will not require a Seller to take actions that would have a
material adverse effect on any of the Acquired Companies or that would result
in a material adverse change in the benefits to be obtained by such Seller as
a result of the transactions contemplated hereby.
5.8 AGREEMENTS FOR SAR OBLIGATIONS. The Sellers shall obtain from
each holder of the Options and Warrants an agreement with the Company to
cancel such holder's Options or Warrants (the "SAR Agreements"), and, prior
to the Closing, (i) the Company shall agree to pay such holders the payments
contemplated by the SAR Agreements and (ii) upon providing such agreement to
pay, the Options and Warrants shall immediately be cancelled, with the
Company having no further liability or obligation with respect thereto other
than the payment obligations of the Company described in subparagraph (i)
hereof to satisfy the SAR Obligations.
5.9 CAPITAL CONTRIBUTIONS. Unless such indebtedness, fees and liabilities
shall have been paid prior to or contemporaneously with the Closing Date from
funds other than funds of the Acquired Companies, prior to or contemporaneously
with the Closing the Sellers shall make capital contributions to the Company
equal to the aggregate of (i) all indebtedness (except Closing Liabilities) of
any Acquired Company on the Closing Date to any Seller or Related Person of any
Seller (except Funded Debt held by a Seller or Related Person), (ii) all
indebtedness of any Acquired Company on the Closing Date to any broker or other
Person for commissions or fees due in connection with the transactions
contemplated by this Agreement or any proposed transaction for the sale of the
Shares, the Assets or the Business, (iii) the fees and expenses of any attorney
of any of the Acquired Companies or any of the Sellers in connection with the
transactions contemplated by this Agreement or any other proposal or other
transaction (made within the past 180 days)
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relating to the sale of the Shares, the Assets, or the Business which have
been paid (or committed to be paid) by any Acquired Company prior to Closing,
and (iv) one half of the HSR filing fee. To the extent such contribution
shall not have been made prior to Closing, the Purchase Price shall be
reduced for the amount of any contribution to the capital of the Company to
be made as provided in this Section 5.9.
6. COVENANTS OF THE BUYER.
6.1 APPROVALS OF GOVERNMENTAL BODIES. As promptly as practicable after
the date of this Agreement, the Buyer will, and will cause each of its
Related Persons to, make all filings required by Legal Requirements to be
made by them to consummate the transactions contemplated hereby (including
all filings under the HSR Act). Between the date of this Agreement and the
Closing Date, the Buyer will, and will cause each Related Person to, (i)
cooperate with the Sellers with respect to all filings that the Sellers are
required by Legal Requirements to make in connection with the transactions
contemplated hereby, and (ii) cooperate with the Sellers in obtaining all
consents identified in Part 3.2 of the Disclosure Letter; provided that this
Agreement will not require the Buyer to dispose of or make any change in any
portion of its business or to incur any other burden to obtain a Governmental
Authorization.
6.2 BEST EFFORTS. Except as set forth in the proviso to Section 6.1,
between the date of this Agreement and the Closing Date, the Buyer will use
its best efforts to cause the conditions in Sections 7 and 8 to be satisfied.
6.3 NOTIFICATION. Between the date of this Agreement and the Closing
Date, the Buyer will promptly notify the Sellers in writing if the Buyer
becomes aware of any fact or condition that causes or constitutes a breach of
any of the Buyer's representations and warranties as of the date of this
Agreement, or if the Buyer becomes aware of the occurrence after the date of
this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty has such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. During the
same period, the Buyer will promptly notify the Sellers of the occurrence of
any breach of any covenant of the Buyer in this Section 6 or of the
occurrence of any event that may make the satisfaction of the conditions in
Section 8 impossible or unlikely.
7. CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATION TO CLOSE. The
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by the Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS.
(a) All of the Sellers' representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered
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individually), must have been accurate in all material respects as of the
date of this Agreement, and must be accurate in all material respects as of
the Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Letter.
(b) Each of the Sellers' representations and warranties in Sections 3.3
and 3.4 must have been accurate in all respects as of the date of this
Agreement, and must be accurate in all respects as of the Closing Date as if
made on the Closing Date, without giving effect to any supplement to the
Disclosure Letter and the waiting period under the HSR Act shall have passed
or been terminated.
7.2 THE SELLERS' PERFORMANCE.
(a) All of the covenants and obligations that the Sellers are required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
(b) Each document required to be delivered pursuant to Section 2.6(a)
must have been delivered.
7.3 CONSENTS. Each Consent identified in Part 3.2 of the Disclosure
Letter must have been obtained and must be in full force and effect.
7.4 ADDITIONAL DOCUMENTS. Each of the following documents must have
been delivered to the Buyer:
(a) an opinion of Bass, Xxxxx & Xxxx PLC, dated the Closing
Date, in substantially the form of Exhibit 7.4(a);
(b) resignations of all directors of the Acquired Companies;
(c) the corporate minute book and stock book for each Acquired
Company; and
(d) such other documents as the Buyer may reasonably request for
the purpose of (i) enabling its counsel to provide the opinion
referred to in Section 8.4(a), (ii) evidencing the accuracy of any of
the Sellers' representations and warranties, (iii) evidencing the
performance by the Sellers of, or the compliance by the Sellers with,
any covenant or obligation required to be performed or complied with
by the Sellers, (iv) evidencing the satisfaction of any condition
referred to in this Section 7, or (v) otherwise facilitating the
consummation or performance of any of the transactions contemplated
hereby.
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7.5 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced or Threatened against the Buyer, or against any Person
affiliated with the Buyer, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the transactions
contemplated hereby, or (b) that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with any of the transactions
contemplated hereby.
7.6 NO CLAIM REGARDING SHARE OWNERSHIP OR SALE PROCEEDS. There must
not have been made or Threatened by any Person (that is not a Seller) any
claim asserting that such Person (a) is the holder or the beneficial owner
of, or has the right to acquire or to obtain beneficial ownership of any
stock of, or any other voting, equity, or ownership interest in, any of the
Acquired Companies, or (b) is entitled to all or any portion of the Purchase
Price.
7.7 NO PROHIBITION. Neither the consummation nor the performance of
any of the transactions contemplated hereby will, directly or indirectly
(with or without notice or lapse of time), materially contravene, or conflict
with, or result in a material violation of, or cause the Buyer or any Person
affiliated with the Buyer to suffer any material adverse consequence under,
(a) any applicable Legal Requirement or Order adopted or issued since the
date of this Agreement, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise formally proposed by or before any
Governmental Body since the date of this Agreement.
7.8 WORKING CAPITAL. The Working Capital of the Acquired Companies as
of the Closing Date must be a positive number and, at the Closing, the
Management Sellers will deliver to the Buyer a certificate executed by the
Management Sellers to that effect.
7.9 TITLE INSURANCE COMMITMENTS. If any title commitment, survey or
other report related to the Owned Real Estate that the Buyer may elect to
obtain prior to February 28, 1997, discloses any matter that is not a
Permitted Encumbrance, such matter must have been cured or removed within 30
days of the disclosure thereof to the Buyer.
8. CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATION TO CLOSE. The
Sellers' obligation to sell the Shares and to take the other actions required
to be taken by the Sellers at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which
may be waived by the Sellers, in whole or in part).
8.1 ACCURACY OF REPRESENTATIONS. All of the Buyer's representations
and warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and must
be accurate in all material respects as of the Closing Date as if made on the
Closing Date.
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8.2 THE BUYER'S PERFORMANCE.
(a) All of the covenants and obligations that the Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with in all material respects.
(b) The Buyer must have delivered each of the documents required to be
delivered by the Buyer pursuant to Section 2.6(b).
8.3 CONSENTS. Each of the Consents identified in Part 3.2 of the
Disclosure Letter must have been obtained and must be in full force and
effect and the waiting period under the HSR Act shall have passed or been
terminated.
8.4 ADDITIONAL DOCUMENTS. The Buyer must have caused the following
documents to be delivered to the Sellers:
(a) an opinion of Xxxxxx, Xxxxxxxx and Xxxxxx, P.A. dated the
Closing Date, in the form of Exhibit 8.4(a);
(b) such other documents as the Sellers may reasonably request for
the purpose of (i) enabling their counsel to provide the opinion referred
to in Section 7.4(a), (ii) evidencing the accuracy of any representation or
warranty of the Buyer, (iii) evidencing the performance by the Buyer of, or
the compliance by the Buyer with, any covenant or obligation required to be
performed or complied with by the Buyer, (iv) evidencing the satisfaction
of any condition referred to in this Section 8, or (v) otherwise
facilitating the consummation of any of the transactions contemplated
hereby.
8.5 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced or Threatened against the Sellers, or against any Person
affiliated with the Sellers, any Proceeding (a) involving any challenge to,
or seeking damages or other relief in connection with, any of the
transactions contemplated hereby, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of
the transactions contemplated hereby.
8.6 NO PROHIBITION. Neither the consummation nor the performance of
any of the transactions contemplated hereby will, directly or indirectly
(with or without notice or lapse of time), materially contravene, or conflict
with, or result in a material violation of, or cause the Sellers or any
Person affiliated with the Sellers to suffer any material adverse consequence
under, (a) any applicable Legal Requirement or Order adopted or issued since
the date of this Agreement, or introduced, or otherwise formally proposed by
or before any Governmental Body since the date of this Agreement.
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9. TERMINATION.
9.1 TERMINATION EVENTS. This Agreement may, by notice given prior to
or at the Closing, be terminated:
(a) by either the Buyer or the Sellers if a material breach of
any material provision of this Agreement has been committed by the
other party and such breach has not been waived or cured within 30
days of notice from the other party hereto;
(b) (i) by the Buyer if any of the conditions in Section 7 has
not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
the Buyer to comply with its obligations under this Agreement) and the
Buyer has not waived such condition on or before the Closing Date; or
(ii) by the Sellers, if any of the conditions in Section 8 has not
been satisfied of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
the Sellers to comply with their obligations under this Agreement) and
the Sellers have not waived such condition on or before the Closing
Date;
(c) by mutual consent of the Buyer and the Sellers; or
(d) by either the Buyer or the Sellers if the Closing has not
occurred (other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations under
this Agreement) on or before April 30, 1997, or such later date as the
parties may agree upon.
9.2 EFFECT OF TERMINATION. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under Article 10
of this Agreement. If this Agreement is terminated pursuant to Section 9.1,
all further obligations of the parties under this Agreement will terminate,
except that the obligations in Sections 11.1 and 11.3 will survive; provided,
however, that if this Agreement is terminated by a party because of the
breach of the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue its
remedies under Section 10 will survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES.
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE. All
representations, warranties, covenants, and obligations in this Agreement,
the Disclosure Letter, the supplements to the Disclosure Letter, the
certificate delivered pursuant to Section 2.4(a)(v), and any other
certificate or document delivered pursuant to this Agreement will survive the
Closing. The right to indemnification will not be affected by any
investigation
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conducted with respect to, or any Knowledge acquired (or capable of being
acquired) at any time, whether before or after the execution and delivery of
this Agreement or the Closing Date, with respect to the accuracy or
inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE SELLERS. Subject to
Sections 10.4 and 10.5 hereof, (a) the Management Sellers, jointly and
severally, as to all claims under this Section 10, SC, severally and not
jointly, as to representations and warranties made by it under Section 3,28
(but not as to any other claims made under Section 10, including this Section
10.2) and (c) Non-Management Sellers other than SC, severally (but not
jointly and severally) as to claims for breaches of representations and
warranties made by them under Section 3.29, will indemnify and hold harmless
the Buyer and its respective Representatives, shareholders, controlling
persons, and affiliates (collectively, the "Indemnified Persons") for, and
will pay to the Indemnified Persons the amount of, any loss, liability,
claim, damage (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' fees)
or diminution of value, whether or not involving a third-party claim
(collectively, "Damages"), arising from or in connection with:
(a) any breach of any representation or warranty made by the
Sellers in this Agreement, the Disclosure Letter, the supplements to
the Disclosure Letter, or any other certificate or document delivered
by the Sellers pursuant to this Agreement;
(b) any breach of any representation or warranty made by the Sellers
in this Agreement as if such representation or warranty were made on and as
of the Closing Date without giving effect to any supplement to the
Disclosure Letter, other than any such breach that is disclosed in a
supplement to the Disclosure Letter and is expressly identified in the
certificate delivered pursuant to Section 2.5(a)(iv) as having caused the
condition specified in Section 7.1 not to be satisfied;
(c) any breach by any Seller of any covenant or obligation of
such Seller in this Agreement that is not cured within 30 days of
notice from the Buyer;
(d) any Taxes in respect of the operation of the Business
through the end of 1996 fiscal year of the Acquired Companies except
to the extent provided for in the Balance Sheet;
(e) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with the
Sellers or any Acquired Company (or any Person acting on their behalf)
in connection with any of the transactions contemplated hereby; and
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(f) any and all actions, suits, proceedings, damages,
assessments, judgments, costs and expenses, including reasonable
attorneys' fees, incurred by the Buyer or any Acquired Company as a
result of the Sellers' failure or refusal to compromise or defend any
claim incident to, or otherwise comply with, any of the foregoing
provisions.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE BUYER. The Buyer will
indemnify and hold harmless the Sellers, and will pay to the Sellers the amount
of, any Damages arising from or in connection with (a) any breach of any
representation or warranty made by the Buyer in this Agreement or in any
certificate delivered by the Buyer pursuant to this Agreement, (b) any breach by
the Buyer of any covenant or obligation of the Buyer or AGH in this Agreement,
or (c) any claim by any Person for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding alleged to have been
made by such Person with the Buyer (or any Person acting on its behalf) in
connection with any of the transactions contemplated hereby.
10.4 TIME LIMITATIONS. The Sellers will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date unless on or before (a) the applicable statute of limitations with respect
to claims for breaches of representations or warranties made under Sections 3.1,
3.2, 3.3, and 3.11, or (b) May 1, 1998 with respect to all other claims, the
Buyer notifies the Sellers of a claim specifying the factual basis of that claim
in reasonable detail to the extent then known by the Buyer. The Buyer will have
no liability (for indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, unless on or before May 1, 1998 the
Sellers notify the Buyer of a claim specifying the factual basis of that claim
in reasonable detail to the extent then known by the Sellers.
10.5 SATISFACTION OF CLAIMS BY THE BUYER SOLELY BY RIGHT OF SET-OFF.
Notwithstanding anything herein to the contrary, any liability of the Sellers
under this Section 10, upon notice to the Sellers specifying in reasonable
detail the basis for such set-off, shall be satisfied solely by the Buyer's or
AGH's setting off such amount against amounts otherwise payable under the
Incentive Management Agreements or the Consulting and Non-competition
Agreements. The Sellers shall have no liability for individual claims unless
the amount of any such claim is $10,000 or greater (regardless of the number of
such claims) and, as to all such claims of $10,000 or greater, until the
aggregate amount of such claims is $250,000 or greater, from and after which
time, subject to the limitations in the foregoing sentence, the Sellers having
such liability shall be liable for all such claims in excess of $10,000,
including the first $250,000 thereof.
10.6 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party under Section 10.2 or
10.3 of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the
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indemnifying party of the commencement of such claim, but the failure to
notify the indemnifying party will not relieve the indemnifying party of any
liability that it may have to any indemnified party, except to the extent
that the indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnified party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.6(a) is brought against
an indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes (unless (i)
the indemnifying party is also a party to such Proceeding and the indemnified
party determines in good faith that joint representation would be
inappropriate, or (ii) the indemnifying party fails to provide reasonable
assurance to the indemnified party of its financial capacity to defend such
Proceeding and provide indemnification with respect to such Proceeding), to
assume the defense of such Proceeding with counsel satisfactory to the
indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding,
the indemnifying party will not, as long as it diligently conducts such
defense, be liable to the indemnified party under this Section 10 for any
fees of other counsel or any other expenses with respect to the defense of
such Proceeding, in each case subsequently incurred by the indemnified party
in connection with the defense of such Proceeding, other than reasonable
costs of investigation. If the indemnifying party assumes the defense of a
Proceeding, (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within the scope of and
subject to indemnification; (ii) no compromise or settlement of such claims
may be effected by the indemnifying party without the indemnified party's
consent unless there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on
any other claims that may be made against the indemnified party, and the
sole relief provided is monetary damages that are paid in full by the
indemnifying party; and (iii) the indemnified party will have no liability
with respect to any compromise or settlement of such claims effected without
its consent. If notice is given to an indemnifying party of the commencement
of any Proceeding and the indemnifying party does not, within ten days after
the indemnified party's notice is given, give notice to the indemnified party
of its election to assume the defense of such Proceeding, the indemnifying
party will be bound by any determination made in such Proceeding or any
compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary
damages for which it would be entitled to indemnification by set-off under
this Agreement, the indemnified party may, by notice to the indemnifying
party, assume the exclusive right to defend, compromise, or settle such
proceeding, but the indemnifying party will not be bound by any determination
of a Proceeding so defended or any compromise or settlement effected without
its consent (which may not be unreasonably withheld).
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(d) The Sellers hereby consent to the non-exclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on the Sellers with respect to such a claim anywhere in
the world.
10.7 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
10.8 LIMITED RECOURSE. In the absence of fraud, the indemnification rights
described in this Article 10 shall be the exclusive remedy of the parties hereto
respecting this Agreement or the transactions contemplated hereby.
11. GENERAL PROVISIONS.
11.1 EXPENSES. Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the transactions contemplated hereby, including all fees and expenses of
agents, representatives, counsel, and accountants. The Buyer will pay one-half
and the Sellers will pay one-half of the HSR Act filing fee. The Sellers will
cause the Acquired Companies not to incur any attorneys' fees, broker's fees or
other costs or expenses in connection with this Agreement and, unless such fees,
costs and expenses shall have been paid prior to or simultaneously with the
Closing from funds other than the funds of an Acquired Company, prior to the
Closing, the Sellers shall make a capital contribution in an amount equal to any
of such fees paid by any Acquired Company, all as provided in Section 5.9. In
the event of termination of this Agreement, the obligation of each party to pay
its own expenses will be subject to any rights of such party arising from a
breach of this Agreement by another party.
11.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
with respect to this Agreement or the transactions contemplated hereby will be
issued, if at all, at such time and in such manner as the parties may agree.
Unless consented to by the parties hereto in advance or required by Legal
Requirements, prior to the Closing the parties hereto shall, and the Sellers
shall cause the Acquired Companies to, keep this Agreement strictly confidential
and may not make any disclosure of this Agreement to any Person. The Sellers
and the Buyer will consult with each other concerning the means by which the
Acquired Companies' employees, customers, and suppliers and others having
dealings with the Acquired Companies will be informed of the transactions
contemplated hereby, and the Buyer will have the right to be present for any
such communication.
11.3 CONFIDENTIALITY. Between the date of this Agreement and the Closing
Date, the Buyer and each Seller will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of the Buyer and the
Acquired Companies to maintain in confidence, any written, oral, or other
information obtained in confidence from another party
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or an Acquired Company in connection with this Agreement or the transactions
contemplated hereby, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of
such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
transactions contemplated hereby, or (c) the furnishing or use of such
information is required by or necessary or appropriate in connection with
legal proceedings. If the transactions contemplated hereby are not
consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.
11.4 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt),
(b) sent by telecopier (with written confirmation of receipt), provided that a
copy is mailed by registered mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and telecopier
numbers as a party may designate by notice to the other parties):
if to any of the Sellers:
Xxxxxx X. Xxxxxxxx
Camping World, Inc.
000 Xxxxx Xxxxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000
Telecopy No. 000-000-0000
with a copy to (which copy shall not constitute notice):
Bass, Xxxxx & Xxxx PLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: T. Xxxxxx Xxxxx
Telecopy No. 615-742-6293
with a copy to (which copy shall not constitute notice):
3i Securities Corporation
c/o 3i Capital Partners
00 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Telecopy No. 000-000-0000
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if to the Buyer:
Affinity Group, Inc.
00 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Telecopy No. 000-000-0000
with a copy to (which copy shall not constitute notice):
Xxxxxx, Xxxxxxxx and Xxxxxx, P.A.
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy No. 000-000-0000
Any notice given to the Sellers in the manner hereinabove provided shall be
deemed sufficient notice to all the Sellers and any notice given by any of the
Sellers pursuant to the provisions hereof shall be deemed notice on behalf of
all the Sellers.
11.5 FURTHER ASSURANCES AND POST-CLOSING COOPERATION. The parties agree
(a) to furnish upon request to each other such further information, (b) to
execute and deliver to each other such other documents, (c) to make such
accounting and tax elections or changes (other than a Section 338(h)
election) and take such actions with respect thereto, and (d) to do such
other acts and things, all as the other party may reasonably request for the
purpose of carrying out the intent of this Agreement and the documents
referred to in this Agreement. Each of the parties hereto agrees to make
available to the other (during normal business hours), at the expense of the
party making such request, such books and records (including tax books and
records) (with respect to SC, only with respect to the Acquired Companies,
the Assets or the Business) as such party may reasonably request for
reasonable business purposes it being understood, however, that neither
party shall have an obligation to preserve records beyond its customary
document retention practices and policies, as such practices and policies may
be modified from time to time. To the extent that any Contract requires the
consent of any other party to the Contract to the transactions contemplated
under this Agreement, and if such consent is not given, the Buyer shall not
assume or be liable for any obligations or liabilities thereunder. Without
in any way limiting the Seller's obligations to obtain all consents and
waivers necessary with respect to the Contracts, if any such consent is not
obtained and the Closing hereunder is consummated, the Sellers shall (i)
continue to use their reasonable efforts to obtain such consent, (ii)
cooperate with the Buyer in any reasonable arrangement designed to provide
the Buyer with the rights and benefits (subject to the assumption by the
Buyer hereunder of the obligations) under such Contracts, and (iii) fulfill
all of the Buyer's reasonable requests in connection with the transfer of
such Contracts.
11.6 WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising
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any right, power, or privilege under this Agreement or the documents referred
to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out
of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable except in the specific
instance for which it is given; and (c) no notice to or demand on one party
will be deemed to be a waiver of any obligation of such party or of the right
of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to
in this Agreement.
11.7 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
11.8 ASSIGNMENTS SUCCESSORS, AND NO THIRD-PARTY RIGHTS. The Buyer may
assign any of its rights under this Agreement without the prior consent of the
Sellers and this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and assigns of the Buyer. Any such
assignment shall not relieve the Buyer of any of its obligations hereunder. The
Sellers may not assign any of their rights under this Agreement without the
prior consent of the Buyer except that SC may merge with, or assign any of its
rights hereunder to, another direct or indirect wholly owned subsidiary of 3i
Group plc. Any such assignment shall not relieve SC of any of its obligations
hereunder. Nothing expressed or referred to in this Agreement will be construed
to give any Person other than the parties to this Agreement any legal or
equitable right, remedy, or claim under or with respect to this Agreement or any
provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
11.9 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.10 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or
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number as the circumstances require. Unless otherwise expressly provided,
the word "including" does not limit the preceding words or terms.
11.11 TIME OF ESSENCE. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
11.12 DELIVERY OF DISCLOSURE LETTER; RIGHT OF TERMINATION BY THE
BUYER. The parties hereto acknowledge that this Agreement has been entered
into without the Disclosure Letter and the documents referred to therein
having been delivered to the Buyer and that the Disclosure Letter and the
documents referred to therein have not been otherwise approved by the Buyer.
The Management Sellers agree to deliver to the Buyer, within five business
days of the date hereof, the Disclosure Letter and the documents referred to
therein. The Buyer shall have the right to terminate this Agreement by
giving written notice thereof to the Sellers within ten business days after
delivery of the complete Disclosure Letter and all documents referred to
therein if the Buyer determines, in the reasonable discretion of the Buyer
that any of the disclosures or documents referred to in the Disclosure Letter
is materially adverse to the conduct of the Business in the manner
contemplated by the Buyer or the Assets. Upon any termination of this
Agreement pursuant to this Section 11.12, no party hereto shall have any
further liability to the other party and this Agreement shall be deemed null
and void and of no further force and effect, except that the Buyer and the
Sellers shall issue the appropriate instructions for the Escrow Agent to
return to the Buyer all funds and other property which the Escrow Agent is
holding under the Escrow Agreement.
11.13 SC OBLIGATIONS. Notwithstanding any provision of this
Agreement to the contrary, any agreement, obligation or liability of SC under
this Agreement shall be several and not joint, and SC shall have no
obligation or liability for any action or omission of any other Seller.
11.14 ATTORNEYS' FEES. Except for claims with respect to which
indemnification is sought pursuant to Section 10 hereof, which shall be
governed by the provisions of Section 10, in the event of any dispute arising
from the transactions contemplated by this Agreement, the prevailing party in
any Proceedings instituted with respect to such transactions shall be
entitled to recover for the non-prevailing parties all of the costs and
expenses incurred by the prevailing party, including specifically its
reasonable attorneys fees and the costs of its expert witnesses.
11.15 GOVERNING LAW. This Agreement will be governed by the laws of
the State of Delaware without regard to conflicts of laws principles.
11.16 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
AFFINITY GROUP, INC. 3i SECURITIES CORPORATION
By:_______________________________ By:__________________________________
Its: __________________________ Its: _____________________________
__________________________________ _____________________________________
XXXXX X. XXXXXX XXX CHANCE
__________________________________ _____________________________________
XXXXXX X. XXXXXXXX XXXX XXXXX
__________________________________ _____________________________________
XXXXXXX X. XXXXXXX XXXX XXXXX
__________________________________ _____________________________________
XXXXXXX X. XXXXXXXXX XXXXX XXXXXX
__________________________________ _____________________________________
XXXXXX XXXXX XXXX XXXXXXX
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