EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
VENTSHADE HOLDINGS, INC.,
THE PERSONS LISTED ON SCHEDULE A HERETO,
XXXX INTERNATIONAL HOLDINGS, INC., AND
NEW HOLDINGS, INC.
DATED AS OF DECEMBER 11, 1998
TABLE OF CONTENTS
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ARTICLE I PURCHASE AND SALE
SECTION 1.1 Agreement to Sell and Purchase Capital Stock; Consideration............................... 1
SECTION 1.2 Redemption of Preferred Stock............................................................. 3
SECTION 1.3 Adjustments............................................................................... 3
SECTION 1.4 Closing................................................................................... 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS
SECTION 2.1 Title to Shares........................................................................... 5
SECTION 2.2 Due Authorization......................................................................... 6
SECTION 2.3 Consents and Approvals; Authority......................................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Corporate Existence and Power; Capitalization; Subsidiaries............................... 6
SECTION 3.2 Due Authorization......................................................................... 7
SECTION 3.3 No Conflicts; Consents.................................................................... 8
SECTION 3.4 Charter Documents and Corporate Records................................................... 8
SECTION 3.5 Financial Information..................................................................... 8
SECTION 3.6 Liabilities............................................................................... 9
SECTION 3.7 Company Receivables....................................................................... 9
SECTION 3.8 Inventories............................................................................... 9
SECTION 3.9 Absence of Certain Changes................................................................ 9
SECTION 3.10 Properties; Title......................................................................... 11
SECTION 3.11 Contracts................................................................................. 12
SECTION 3.12 Intangible Property and Warranties........................................................ 12
SECTION 3.13 Claims and Proceedings.................................................................... 14
SECTION 3.14 Taxes..................................................................................... 14
SECTION 3.15 Employee Benefit Plans.................................................................... 18
SECTION 3.16 Employee-Related Matters.................................................................. 22
SECTION 3.17 Insurance................................................................................. 22
SECTION 3.18 Compliance with Laws...................................................................... 23
SECTION 3.19 Permits................................................................................... 23
SECTION 3.20 Environmental Matters..................................................................... 23
SECTION 3.21 Customers and Suppliers................................................................... 24
SECTION 3.22 Potential Conflicts of Interest........................................................... 25
SECTION 3.23 Finders' Fees............................................................................. 25
SECTION 3.24 Depositaries; Powers of Attorney, Etc..................................................... 25
SECTION 3.25 Y2K....................................................................................... 25
SECTION 3.26 Disclosure................................................................................ 25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT
AND PURCHASER
SECTION 4.1 Authority Relative to This Agreement...................................................... 26
SECTION 4.2 No Conflicts; Consents.................................................................... 26
SECTION 4.3 Corporate Existence and Power............................................................. 27
SECTION 4.4 Finders' Fees............................................................................. 27
SECTION 4.5 Investment................................................................................ 27
SECTION 4.6 Equity Funding............................................................................ 27
SECTION 4.7 Tax Returns............................................................................... 27
SECTION 4.8 Disclaimer of Other Representations and Warranties;
Disclosure; Bring-Down.................................................................... 27
ARTICLE V COVENANTS AND AGREEMENTS PRIOR TO AND
SUBSEQUENT TO CLOSING
SECTION 5.1 Conduct of Business....................................................................... 28
SECTION 5.2 Corporate Examinations and Investigations................................................. 29
SECTION 5.3 Additional Financial Statements........................................................... 30
SECTION 5.4 Consents, Filings and Authorizations; Efforts to Consummate............................... 30
SECTION 5.5 Negotiations With Others.................................................................. 31
SECTION 5.6 Notices of Certain Events................................................................. 31
SECTION 5.7 Public Announcements...................................................................... 32
SECTION 5.8 Confidentiality........................................................................... 32
SECTION 5.9 Expenses.................................................................................. 34
SECTION 5.10 Supplements to Disclosure Schedules....................................................... 34
SECTION 5.11 HSR Act................................................................................... 34
SECTION 5.12 Further Assurances........................................................................ 34
SECTION 5.13 Tax Matters............................................................................... 35
ARTICLE VI CONDITIONS TO CLOSING
SECTION 6.1 Conditions to the Obligations of Sellers and Purchaser ................................... 35
SECTION 6.2 Conditions to the Obligations of Seller................................................... 35
SECTION 6.3 Conditions to the Obligations of Parent and Purchaser .................................... 36
ARTICLE VII TERMINATION
SECTION 7.1 Termination............................................................................... 39
SECTION 7.2 Effect of Termination; Right to Proceed................................................... 40
ARTICLE VIII INDEMNIFICATION
SECTION 8.1 Survival of Representations and Warranties ............................................... 41
SECTION 8.2 Obligation of Sellers to Indemnify........................................................ 41
SECTION 8.3 Obligation of Parent and Purchaser to Indemnify .......................................... 41
SECTION 8.4 Notice and Opportunity to Defend Third Party Claims ...................................... 41
SECTION 8.5 Limitation on Indemnification; Payment of Indemnification
Amounts................................................................................... 42
ARTICLE IX MISCELLANEOUS
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SECTION 9.1 Notices................................................................................... 44
SECTION 9.2 Entire Agreement.......................................................................... 45
SECTION 9.3 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies.................................................................. 45
SECTION 9.4 Governing Law............................................................................. 46
SECTION 9.5 Consent to Jurisdiction and Service of Process;
Waiver of Jury Trial...................................................................... 46
SECTION 9.6 Binding Effect; No Assignment............................................................. 47
SECTION 9.7 Exhibits.................................................................................. 47
SECTION 9.8 Severability.............................................................................. 47
SECTION 9.9 Counterparts.............................................................................. 47
ARTICLE X DEFINITIONS
SECTION 10.1 Definitions.............................................................................. 47
SECTION 10.2 Interpretation........................................................................... 54
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EXHIBITS
Exhibit A - Form of Escrow Agreement
Exhibit B - Form of Opinion of Counsel to Parent and Purchaser
Exhibit C - Nondisclosure and Nonsolicitation Agreement
Exhibit D - Form of Nonforeign Certificate
Exhibit E - Form of Release Agreement
Exhibit F - Form of Opinion of Counsel to Seller
Exhibit G - Form of Consent to Assignment and Estoppel Certificate
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STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of December 11, 1998, by and among VENTSHADE
HOLDINGS, INC., a Delaware corporation (the "Company"), THE PERSONS LISTED ON
SCHEDULE A HERETO (each, a "Seller", and collectively, "Sellers"), XXXX
INTERNATIONAL HOLDINGS, INC., a Delaware corporation ("Parent"), and NEW
HOLDINGS, INC., a Delaware corporation ("Purchaser").
R E C I T A L S
1. The Company and its only subsidiary, Auto Ventshade Company, a
Delaware corporation (the "Subsidiary"), are in the business of manufacturing
and selling various consumer products in the automobile and light truck
accessory markets to automobile manufacturers and local, national and
international distributors and retailers (collectively, the "Business").
2. Sellers desire to sell and transfer to Purchaser, and Purchaser
desires to purchase and acquire from Sellers, all of Sellers' right, title and
interest in and to 100% of the issued and outstanding capital stock of the
Company (the "Acquisition").
3. In furtherance of the consummation of the Acquisition and the other
transactions contemplated hereby (the "Other Contemplated Transactions"), the
parties hereto desire to enter into this Agreement (certain capitalized terms
used herein have the respective meanings set forth in Article X).
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE
SECTION 1.1 AGREEMENT TO SELL AND PURCHASE CAPITAL STOCK;
CONSIDERATION. (a) Subject to the terms and conditions of this Agreement, at the
Closing each Seller shall sell, assign, convey, transfer and deliver to
Purchaser, and Purchaser shall purchase, acquire and take assignment and
delivery of, all of each such Seller's right, title and interest in and to those
shares set forth opposite the name of each such Seller on Schedule A
(collectively, the "Purchased Shares"). The parties hereto agree that the
aggregate purchase price to be paid at Closing by Purchaser in consideration of
the Purchased Shares will be equal to (i) $66,875,000 less (ii) the sum of the
amounts specified in paragraph (b) below (the "Purchase Price").
Purchaser shall pay the Purchase Price as follows:
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(i) at the Closing, $3,000,000 (the "Escrowed Funds") into an
escrow account (the "Escrow") for the purpose of securing Sellers'
indemnification obligations pursuant to Article VIII, with such $3,000,000 to be
paid in accordance with the terms of an escrow agreement (the "Escrow
Agreement") in substantially the form and to the effect of Exhibit A;
(ii) at the Closing, an amount equal to the difference between
(A) the Purchase Price and (B) the sum of the Escrow Funds and the $875,000
described in paragraph (iii) below (the "Net Purchase Price") by wire transfer
to the Representative; and
(iii) $875,000 by wire transfer to the Representative not
later than 90 days after the Closing Date; provided, however, that if, prior to
90 days after the Closing Date, the Company shall have received a federal income
tax refund primarily as a result of the payment of the Sale Bonus and the
Xxxxxxxx 1994 Employment Agreement Termination Payment, then Purchaser shall pay
to the Representative the amount of such refund up to $875,000 within one (1)
business day after the receipt thereof. The parties hereto acknowledge and agree
that if such refund shall be less than $875,000, then such deficiency shall be
paid by Purchaser not later than 91 days after the Closing Date. The Company
shall specify in the IRS Form 4466 requesting such refund that such refund be
remitted to the Escrow Agent (as defined in the Escrow Agreement).
(b) In addition, at the Closing, Purchaser shall cause the Company to
pay, or shall pay on behalf of the Company, the following amounts:
(i) all principal of, interest on, premium, if any, expenses
and other amounts owing to the senior lenders under the Credit Agreement as such
amounts are set forth in the pay-off and discharge letter by such lenders and
delivered to the Company and Purchaser at the Closing (the "Senior Lender
Pay-Off Letter");
(ii) all principal of, interest on, premium, if any, expenses
and other amounts owing to JZ in respect of the JZ Purchase Agreement as such
amounts are set forth in the pay-off and discharge letter by JZ and delivered to
the Company and Purchaser at the Closing (the "JZ Pay-Off Letter");
(iii) all principal of, interest on, premium, if any, expenses
and other amounts owing with respect to interest-bearing indebtedness of the
Company and the Subsidiary (other than as set forth in items (i) and (ii) above)
as such amounts are set forth in pay-off and discharge letters delivered to the
Company and Purchaser at the Closing;
(iv) the redemption price, including all accrued and unpaid
dividends through the Closing Date, in respect of the Company's Preferred Stock
as such amounts are set forth in the pay-off and discharge letters by the
holders of the Company's Preferred Stock and delivered to the Company and
Purchaser at the Closing (the "Preferred Stock Pay-Off Letters");
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(v) (A) all accrued and unpaid management and consulting fees
and expenses under the TJC Consulting Agreement, and (B) all transaction fees
and expenses payable to The Jordan Company LLC in connection with investment
banking and financial advisory fees under the TJC Consulting Agreement with
respect to this Agreement, the Acquisition and the Other Contemplated
Transactions as such amounts are set forth in the payoff and discharge letter by
TJC Management Corporation and delivered to the Company and Purchaser at the
Closing (the "TJC Pay-Off Letter");
(vi) transaction fees and expenses incurred or payable by or
on behalf of the Company and the Subsidiary in connection with this Agreement,
the Acquisition and the Other Contemplated Transactions, including those of
Xxxxxx Xxxxxxxxx Xxxxxx & Co. set forth in a pay-off and discharge letter
delivered to the Company and Purchaser (the "BHC Pay-Off Letter") and of all
attorneys, accountants, actuaries, consultants, experts or other professionals,
if any, engaged by or on behalf of the Company and the Subsidiary in connection
with this Agreement and the Other Contemplated Transactions;
(vii) the Sale Bonus;
(viii) the Xxxxxxxx 1994 Employment Agreement Termination
Payment; and
(ix) any Taxes (federal, state, local or foreign) required to
be withheld or paid by the Company with respect to any of the payments set forth
in Sections 1.1(b)(iv), (vii) and (viii).
(c) At the Closing, the Representative shall pay to each Seller such
Seller's Ownership Percentage of the Net Purchase Price. The Representative will
deliver to Sellers a certificate setting forth (i) the Net Purchase Price and
(ii) each of the amounts paid to Sellers pursuant to the preceding sentence.
SECTION 1.2 REDEMPTION OF PREFERRED STOCK. (a) At the Closing, the
Company will redeem in full the Nonvoting Preferred Stock and Special Voting
Preferred Stock, and each Seller who is a holder of such Preferred Stock shall,
in connection with its redemption in full, deliver to the Company the stock
certificates evidencing its Preferred Stock, and the Company shall cancel such
stock certificates upon such redemption in full. Each Seller who is a holder of
Nonvoting Preferred Stock or Special Voting Preferred Stock agrees that such
redemption, including the concurrent payment of all accrued and unpaid dividends
through the Closing Date, constitutes full performance of all obligations of the
Company in respect of the Nonvoting Preferred Stock and Special Voting Preferred
Stock.
(b) For purposes of this Agreement, the number of Purchased Shares held
by each Seller and the Ownership Percentage of each Seller shall assume the
consummation of the redemption of all Preferred Stock contemplated by this
Section 1.2.
SECTION 1.3 ADJUSTMENTS. (a) The Purchase Price will be subject to
adjustment as provided in this Section 1.3. The Company's Working Capital as of
the Closing Date will be
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calculated based on the Audited Balance Sheet as hereinafter defined. The
Purchase Price shall be decreased by the amount by which Working Capital as so
calculated is less than $11,167,231 (the "Working Capital Decrease Amount") or
increased by the amount by which Working Capital as so calculated is greater
than $12,167,231 (the "Working Capital Increase Amount"). For purposes hereof,
"Working Capital" means the amount equal to (i) the Company's current assets
(excluding cash and cash equivalents) less (ii) the Company's current
liabilities (excluding (x) all Company Debt, amounts due under the TJC
Consulting Agreement and all other amounts due under Section 1.1(b) to the
extent such amounts would be included in current liabilities, (y) accrued income
taxes and (z) liabilities arising as a result of the matters set forth in
Section 3.9(i) of the Company Letter and the third paragraph of Section 3.12(b)
of the Company Letter), with the foregoing items (i) and (ii) to be determined
in accordance with GAAP, consistently applied. Included in Section 1.3 of the
Company Letter is an example of the Working Capital calculation based upon the
Company's balance sheet as of November 30, 1998, which Working Capital was
$11,667,231. The Purchase Price also shall be increased by the amount of cash or
cash equivalents, if any, less the amount of overdrafts, if any, each as
included on the Audited Balance Sheet (the "Cash Increase Amount"); provided,
however, that if the amount of overdrafts, if any, exceeds the amount of cash
and cash equivalents, then Sellers shall pay the amount of such excess (the
"Cash Decrease Amount") to Purchaser.
(b) (i) As soon as practicable after the Closing Date, Purchaser will
cause PricewaterhouseCoopers LLP, independent accountants, to prepare an audited
balance sheet of the Company as of the Closing Date, prepared on a pro forma
basis after giving effect to the Acquisition and the Other Contemplated
Transactions (the "Audited Balance Sheet"). The Audited Balance Sheet will be
prepared in accordance with GAAP consistently applied and, among other things,
shall set forth (i) the Working Capital as of its date, and (ii) the Working
Capital Decrease Amount, Working Capital Increase Amount, Cash Decrease Amount
or Cash Increase Amount, if any. The costs and expenses incurred in connection
with preparation of the Audited Balance Sheet shall be borne by Purchaser.
Purchaser shall use commercially reasonable efforts to cause the completion of
the Audited Balance Sheet and to deliver the Audited Balance Sheet to the
Representative within sixty (60) days of the Closing Date.
(ii) Within thirty (30) days after receipt of the Audited
Balance Sheet, the Representative shall deliver a written notice (the "Objection
Notice") to Purchaser stating whether Sellers have any objections to the Audited
Balance Sheet, describing in detail any objections thereto. Sellers hereby agree
to work diligently with, and to cause the Representative to work diligently
with, Parent and Purchaser to resolve any such objections. The failure by the
Representative to give the Objection Notice (or written notification from
Representative that it has no objection to the Audited Balance Sheet) shall
constitute acceptance and approval of the Audited Balance Sheet and the proposed
adjustments to the Purchase Price set forth therein, if any, and shall be final
and binding upon the parties hereto.
(iii) The parties hereto shall promptly consult with each
other and their respective Agents with respect to any objections by
Representative pursuant to the Objection Notice and shall use reasonable efforts
to resolve all such objections within thirty
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(30) days after delivery by Representative of the Objection Notice. If any
objections remain unresolved after the end of such 30-day period, the parties
hereto promptly shall retain (or one of them if the others fail to jointly
retain after a written notice) Xxxxxx Xxxxxxxx LLP (the "Resolving Accounting
Firm") to resolve any remaining disputes concerning the Audited Balance Sheet.
The parties hereto, and their respective Agents, shall cooperate fully with the
Resolving Accounting Firm. The parties hereto shall give, and shall cause their
respective Agents to give, the Resolving Accounting Firm and its Agents such
reasonable assistance and access to the Assets and books and records of the
Company, and any applicable work papers, schedules and other documents, as the
Resolving Accounting Firm reasonably shall request. The Resolving Accounting
Firm shall be directed to resolve all disputes within thirty (30) calendar days
after being retained by the parties hereto, and a resolution of the Resolving
Accounting Firm shall be final and binding on the parties hereto. Fees and
expenses of the Resolving Accounting Firm shall be paid one-half by Purchaser
and one-half by Sellers and shall be payable upon completion of the Resolving
Accounting Firm's work. For purposes of this Section 1.3, the Audited Balance
Sheet shall be deemed to be the statement finally determined after all disputes
have been resolved as provided herein.
(iv) To the extent there is a Working Capital Decrease Amount,
a Working Capital Increase Amount, a Cash Decrease Amount or a Cash Increase
Amount in accordance with the provisions of Section 1.3(c)(iii), then such
adjustments shall be paid within three (3) days after resolution of all disputes
relating to the Audited Balance Sheet pursuant to Section 1.3(d), (i) in the
case of a Working Capital Increase Amount or a Cash Increase Amount, by Parent
by wire transfer to such account as the Representative may designate, (ii) in
the case of a Working Capital Decrease Amount, by Sellers by wire transfer from
the Escrowed Funds to such account as Parent or Purchaser may designate, and
(iii) in the case of a Cash Decrease Amount by Sellers by wire transfer to such
account as Parent or Purchaser may designate.
SECTION 1.4 CLOSING. The closing (the "Closing") of the Acquisition and
the Other Contemplated Transactions shall take place at the offices of Xxxxxx
Xxxx & Priest LLP, New York, New York, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00AM, local time, on December 22, 1998, or at such other time or
place as the parties hereto shall agree, but no later than January 15, 1999. The
date of the Closing is hereinafter called the "Closing Date."
The parties hereto hereby agree to deliver at the Closing such documents,
certificates of officers and such other instruments as are specified in Article
VI hereof and as reasonably may be required to effect the transfer by Sellers of
the Purchased Shares pursuant to and as contemplated by this Agreement and to
consummate the Acquisition and the Other Contemplated Transactions. All events
which shall occur at the Closing shall be deemed to occur simultaneously.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller (severally and on behalf of himself, herself or itself
only) hereby represents and warrants to Parent and Purchaser, as of the date
hereof and as of the Closing Date (as if
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each such representation and warranty was remade on the Closing Date), that as
to such Seller, except as set forth in Section 2 of the Company Letter:
SECTION 2.1 TITLE TO SHARES. (a) The shares of Common Stock and
Preferred Stock, respectively, as set forth opposite each Person's name on
Schedule A and Schedule B are owned respectively by such Person, free and clear
of any and all Liens (other than restrictions on transfer arising under
applicable securities law) and, immediately prior to the Closing, will be owned
respectively by such Person, free and clear of any and all Liens (other than
restrictions on transfer arising under applicable securities law). In the
aggregate, the Persons listed on Schedule A and Schedule B are and, immediately
prior to the Closing, will be the holders of record of all of the outstanding
capital stock of the Company.
(b) There are no options, warrants, rights, convertible securities or
other agreements or commitments obligating such Seller, with respect to the
shares of capital stock of the Company owned by such Seller, to transfer or
sell, or cause the issuance, transfer or sale of, any shares of capital stock of
the Company.
SECTION 2.2 DUE AUTHORIZATION. Each Seller has duly and validly
executed and delivered this Agreement and has duly and validly executed and
delivered (or prior to or at the Closing will duly and validly execute and
deliver) the other Transaction Documents to which it is a party. This Agreement
constitutes the legal, valid and binding obligation of each Seller and the other
Transaction Documents of such Seller, upon execution and delivery by or on
behalf of such Seller (including by the Representative pursuant to the
Representative Agreement), will constitute legal, valid and binding obligations
of such Seller, in each case, enforceable against such Seller in accordance with
their respective terms, except as such obligations and their enforceability may
be limited by applicable bankruptcy and other similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies is subject to the discretion of the court before which any
proceeding therefor may be brought (whether at law or in equity).
SECTION 2.3 CONSENTS AND APPROVALS; AUTHORITY. Except for filings under
the HSR Act, the execution, delivery and performance by such Seller of this
Agreement and the respective other Transaction Documents to which such Seller is
a party will not (a) violate or conflict with any Law or Order of any
Governmental Body against, or binding upon, such Seller, (b) require any filing
or registration by such Seller with, or consent or approval with respect to such
Seller of, any Governmental Body, or (c) violate or conflict with or result in a
breach or default under any Contract to which such Seller is a party or by which
any of such Seller's Assets or properties are bound.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser, as of the
date of this Agreement and as of the Closing Date (as if each such
representation and warranty was remade on the Closing Date), that:
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SECTION 3.1 CORPORATE EXISTENCE AND POWER; CAPITALIZATION; SUBSIDIARIES.
(a) The Company and the Subsidiary each is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite power and all material Permits required to own, lease and operate
its respective properties and to conduct the Business as currently conducted.
Except in any such jurisdiction where failure to so qualify would not have a
Material Adverse Effect, the Company and the Subsidiary each is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, which jurisdictions
are listed in Section 3.1 of the Company Letter.
(b) The entire authorized capital stock of the Company consists of (A)
400,000 shares of Common Stock, $1.00 par value per share (the "Common Stock"),
consisting of (i) 200,000 shares of Class A Common Stock ("Class A Common
Stock") and (ii) 200,000 shares of Class B Common Stock ("Class B Common
Stock"), and (B) 10,001 shares of Preferred Stock, par value $.01 per share,
consisting of (i) 10,000 shares of Nonvoting Preferred Stock ("Nonvoting
Preferred Stock") and (ii) one share of Special Voting Preferred Stock ("Special
Voting Preferred Stock"). Of such authorized shares, (A) (i) 54,000 shares of
Class A Common Stock are issued and outstanding and (ii) 45,000 shares of Class
B Common Stock are issued and outstanding, (B) (i) 2,150 shares of Nonvoting
Preferred Stock are issued and outstanding and (ii) one share of Special Voting
Preferred Stock is issued and outstanding. All of the outstanding shares of the
Company's capital stock are validly issued, fully paid and nonassessable, and no
shares were issued in violation of the preemptive rights of any stockholder. At
the Closing, the aggregate number of Purchased Shares shall represent all of the
outstanding shares of the Company's capital stock. The entire authorized capital
stock of the Subsidiary consists of 10,000 shares of Common Stock, $1.00 par
value per share, of which 1,000 shares are issued and outstanding. All
outstanding shares of the Subsidiary are owned by the Company, free and clear of
any and all Liens and are validly issued, fully paid and nonassessable.
(c) Except as set forth in Section 3.1 of the Company Letter, there are
no options, warrants, rights, convertible securities or other agreements or
commitments obligating any Seller, the Company or the Subsidiary to issue,
transfer or sell, or cause the issuance, transfer or sale of, any shares of
capital stock of the Company or the Subsidiary or to make any payments in
respect of the value of any shares of the Company or the Subsidiary.
(d) Except for the Subsidiary, the Company has not owned and does not
own any subsidiaries and does not directly or indirectly own any interest or
investment in any other Person.
SECTION 3.2 DUE AUTHORIZATION. The Company has full power, capacity and
authority to execute and deliver this Agreement and each other Transaction
Document to which it is a party and to consummate the Acquisition and the Other
Contemplated Transactions. No other proceedings on the part of the Company (or
any other Person) are necessary to authorize the execution and delivery by or on
behalf of the Company of this Agreement or the other
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Transaction Documents to which it is a party or the consummation of the
Acquisition and the Other Contemplated Transactions. This Agreement and each
other Transaction Document to which the Company is a party has been duly and
validly executed and delivered by the Company, and (assuming the valid execution
and delivery thereof by the other parties thereto) constitutes the legal, valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as such obligations and their enforceability
may be limited by applicable bankruptcy and other similar Laws (as defined
herein) affecting the enforcement of creditors' rights generally and except that
the availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought (whether at law or in
equity).
SECTION 3.3 NO CONFLICTS; CONSENTS. Except as set forth in Section 3.3
of the Company Letter (the "Company Required Consents") and, with respect to
(ii), (iii), (iv) and (v) below, as would not have a Material Adverse Effect,
neither the execution, delivery and performance by the Company of this Agreement
and each other Transaction Document to which it is a party, nor the consummation
of the Acquisition and the Other Contemplated Transactions, (i) violates any
provision of the Certificate of Incorporation or by-laws (or comparable
instruments) of the Company or the Subsidiary; (ii) requires the Company or the
Subsidiary to obtain any consent, approval, Permit or action of or waiver from,
or make any filing with, or give any notice to, any Governmental Body or any
other Person; (iii) violates, conflicts with or results in a breach or default
under (after the giving of notice or the passage of time or both), or permits
the termination of, any Contract, right, other obligation or restriction
relating to or which affects the Purchased Shares or the Company or the
Subsidiary to which the Company or the Subsidiary is a party or by which either
of them or its Assets or the Business may be bound or subject, or results in the
creation of any Lien upon the Purchased Shares or upon any of the Assets of the
Company or the Subsidiary pursuant to the terms of any such Contract; (iv)
violates or conflicts with any Law or Order of any Governmental Body against, or
binding upon, the Company or the Subsidiary or upon their respective Assets or
the Business or the Purchased Shares; or (v) violates or results in the
revocation or suspension of any Permit.
SECTION 3.4 CHARTER DOCUMENTS AND CORPORATE RECORDS. (a) The Company has
heretofore delivered to Purchaser true and complete copies of the Certificate of
Incorporation and by-laws (or comparable instruments) of the Company and the
Subsidiary, as in effect on the date hereof. The stock and transfer books (or
comparable documents) of the Company and the Subsidiary have been made available
to Purchaser for its inspection and are true and complete. The Company has
heretofore delivered to Purchaser true and complete copies of the minutes of
meetings (or written consents in lieu of meetings) of the board of directors
(and all committees thereof) and shareholders of the Company and the Subsidiary.
(b) All financial, business and accounting books, ledgers, accounts and
other official records relating to the Company, the Subsidiary and the Business
have been properly and accurately kept and completed in all material respects,
and there are no material inaccuracies or discrepancies contained or reflected
therein.
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SECTION 3.5 FINANCIAL INFORMATION. The Company has previously furnished
to Purchaser true and complete copies of (i) the Company's audited, consolidated
financial statements at and for the years ended December 31, 1997, 1996 and 1995
(the "Annual Statements"), (ii) the Company's unaudited financial statements for
the nine (9) months ended September 30, 1998 (the "Interim Statements"), and
(iii) all management letters, audit letters and attorney audit response letters
issued in connection with the Annual Statements. The Annual Statements have been
prepared in accordance with GAAP consistently applied as set forth in the notes
thereto and were audited by Ernst & Young LLP, the Company's independent
accountants. Each of the Annual and Interim Statements presents fairly, in all
material respects, the consolidated financial position of the Company and the
Subsidiary as of its date, and its earnings and cash flows for the periods then
ended, except that there is not any statement of cash flows for the Interim
Statements. Each balance sheet contained in the Annual Statements fully sets
forth on a consolidated basis all Assets and Liabilities of the Company and the
Subsidiary existing as of its date which, under GAAP, should be set forth
therein, and each statement of earnings contained therein sets forth the items
of income and expense of the Company and the Subsidiary which should appear
therein under GAAP. The Interim Statements have been prepared in accordance with
GAAP (except that notes have not been included) in a manner consistent with the
Company's past practices and present fairly, in all material respects, the
consolidated financial position of the Company and the Subsidiary as of its date
and results of operations for the period then ended, subject to normal year-end
adjustments and accruals.
SECTION 3.6 LIABILITIES. Except as described in Section 3.6 of the
Company Letter and as and to the extent reflected in the Interim Statements at
September 30, 1998 (the "Latest Balance Sheet Date"), the Company and the
Subsidiary did not have, as of the Latest Balance Sheet Date, any Liabilities
(other than obligations of continued performance under Contracts and other
commitments and arrangements entered into in the ordinary course of the
Business); and except as described in Section 3.6 of the Company Letter, the
Company and the Subsidiary have not incurred any Liabilities since the Latest
Balance Sheet Date, except (i) current Liabilities for trade or business
obligations incurred in the ordinary course of the Business and consistent with
past practice, (ii) Liabilities in respect of borrowings under the Company Debt,
(iii) Liabilities in respect of this Agreement, (iv) Liabilities that are
otherwise disclosed pursuant to any other representation herein and (v) any
other Liability which would not have a Material Adverse Effect. Section 3.6 of
the Company Letter contains a true and correct list of all Company Debt as of
the date hereof.
SECTION 3.7 COMPANY RECEIVABLES. Except to the extent of the amount of
the reserve for doubtful accounts reflected in the Interim Statements or as set
forth in Section 3.7 of the Company Letter, all the Receivables of the Company
and the Subsidiary reflected in the Interim Statements and all Receivables that
have arisen since the Last Balance Sheet Date (except Receivables that have been
collected since such date) are valid and enforceable claims, and constitute bona
fide Receivables resulting from the sale of goods and services in the ordinary
course of the Business. There are no notes receivable or sales representative
advances of either the Company or the Subsidiary except as have been issued or
incurred in the ordinary course of business consistent with past practice or for
less than $25,000 in the aggregate.
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SECTION 3.8 INVENTORIES. All Inventory is free and clear of all Liens,
except for the Liens described in Section 3.8 of the Company Letter.
SECTION 3.9 ABSENCE OF CERTAIN CHANGES. Since the Latest Balance Sheet
Date, except as set forth in this Agreement or disclosed in Section 3.9 of, or
elsewhere in, the Company Letter, the Company and the Subsidiary have conducted
the Business in the ordinary course consistent with past practices and there has
not been:
(a) Except for (i) material changes in general economic or industry
conditions, (ii) matters directly resulting from the conduct of Purchaser or
Parent in connection with this Agreement, or (iii) through direct competition of
Parent or Purchaser, any change in the Business, the Assets of the Company or
the Subsidiary, or the financial condition or the results of operations of the
Company or the Subsidiary (collectively, the "Condition of the Business") which
would have a Material Adverse Effect, or, to the knowledge of the Company, any
event, occurrence or circumstance that would have a Material Adverse Effect;
(b) Any transaction or Contract involving a total commitment by or to
the Company or the Subsidiary of at least $100,000 or, together with all other
such transactions or contracts, $500,000 in the aggregate with respect to the
purchase, acquisition, lease, disposition or transfer of any Assets or any
capital expenditure (in each case, other than in the ordinary course of the
Business) or creation of any Lien on any Asset;
(c) Any declaration, setting aside or payment of any dividend, other
than a regularly scheduled dividend payment on the Preferred Stock in accordance
with its terms, or other distribution with respect to any interest in the
Company;
(d) Any damage, destruction or other casualty loss (whether or not
covered by insurance), condemnation or other taking of the Assets of the Company
or the Subsidiary with a book value exceeding, in the aggregate, $100,000;
(e) Any change in any method of accounting or accounting practice by
the Company;
(f) Other than in the ordinary course of the Business with respect to
employees of the Company or the Subsidiary whose annual compensation is more
than $100,000, any increase in the compensation payable or to become payable to
any officer, shareholder, director, sales representative or employee of the
Company or the Subsidiary, or any material alteration in the benefits payable to
any thereof;
(g) Except for (i) material changes in general economic or industry
conditions, (ii) matters directly resulting from the conduct of Purchaser or
Parent in connection with this Agreement, or (iii) through direct competition of
Parent or Purchaser, since the Latest Balance Sheet Date, (A) no customer which
accounted for more than $1,125,000 in Company and Subsidiary consolidated net
sales included in the Interim Statements has threatened in writing or, to the
knowledge of the Company, orally to cancel or
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terminate its relationship with the Company or the Subsidiary or to decrease
such customer's annual purchases from the Company and the Subsidiary, on
consolidated basis, by an amount equal to the lesser of (i) $2,500,000 and (ii)
50% of the Company's and Subsidiary's consolidated net sales attributed to such
customer in the Interim Statements, and (B) no supplier from which the Company
and the Subsidiary, in the aggregate, purchased more than $399,000 in goods
included in costs of goods sold in the Interim Statements has threatened in
writing or, to the knowledge of the Company, orally to cancel or terminate its
relationship with the Company or the Subsidiary or to cause the decrease in such
annual purchases by an amount equal to 50% of purchases by the Company and the
Subsidiary from such supplier included in costs of goods sold in the Interim
Statements.
(h) Except for any changes made in the ordinary course of the Business,
any change in any of the Company's or the Subsidiary's business policies,
including advertising, marketing, pricing, purchasing, personnel, returns or
budget policies which would have a Material Adverse Effect;
(i) Any material modification, termination, amendment or other
alteration or change in the terms or provisions of any Contract.
SECTION 3.10 PROPERTIES; TITLE. (a) Neither the Company nor the Subsidiary
owns any real property. Section 3.10A of the Company Letter is a correct and
complete list of all leases under which the Company or the Subsidiary is a
lessee (the "Leased Property"), true and complete copies of which have been
delivered to the Purchaser. The Company and the Subsidiary enjoy peaceful and
undisturbed possession under all such leases, all of such leases are valid,
neither the Company nor the Subsidiary is in default under any such lease and
neither of them has received notice of any increase in rent or other charges or
any proposed material modification of any such lease. The Company or the
Subsidiary, as the case may be, has good, marketable and insurable leasehold
title to the Leased Property, free and clear of all Liens and other title
defects of any nature whatsoever, except real estate Taxes (general and
specific) not yet due and payable, restrictions imposed by zoning ordinances,
Liens with respect to Company Debt, or as disclosed in Section 3.10A of the
Company Letter. Section 3.10A of the Company Letter also sets forth with respect
to such Leased Property a list of all title insurance policies, deeds, appraisal
reports, surveys and environmental reports held or controlled by the Company,
true and complete copies of which have been provided to Purchaser.
(b) To the knowledge of the Company, all structures and
buildings of the Business are in good operating condition (subject to normal
wear and tear) with no structural or other defects that could interfere with the
operation of the Business, are located within applicable boundary lines and are
suitable for the purposes for which they are currently used. The Business is not
in violation of any building, zoning, anti-pollution, health, occupational
safety or other Law or any Order or Permit in respect of such Leased Property,
structures and buildings. Except as disclosed in Section 3.10B of the Company
Letter, no Person, other than the Company or the Subsidiary, has any right to
occupy or possess any of the Leased Property or any such structures or
buildings.
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(c) Except as disclosed in Schedule 3.10C of the Company Letter, or as
reflected on the Interim Statements, the Company or the Subsidiary has good,
valid, marketable, legal and beneficial title to (or valid leasehold interest
in) all of its Assets and is the lawful owner of its Assets, free and clear of
all Liens. The machinery, equipment and other tangible personal property
constituting part of the Company's and the Subsidiary's Assets (whether owned or
leased) have been maintained in a commercially reasonable manner, are in good
condition and repair (subject to normal wear and tear). There are no outstanding
options, warrants, commitments, agreements or any other rights of any character,
entitling any Person other than Purchaser to acquire any interest in all, or any
part of, the Assets, except for purchase orders outstanding on the Closing Date
entitling customers to purchase items of Inventory in accordance with the terms
of the respective Contracts. Section 3.10C of the Company Letter contains a list
and description of all (i) equipment, and (ii) other tangible personal property
of the Company or the Subsidiary with a book value (before depreciation) of
$100,000 or more, in each case, excluding Inventory.
SECTION 3.11 CONTRACTS. Section 3.11 of the Company Letter sets forth (i)
an accurate and complete list of all written Contracts and (ii) an accurate and
complete description of all oral Contracts relating to the Purchased Shares, the
Business, the Company or the Subsidiary, in each case involving $100,000 or more
in any year. All such Contracts are valid, in full force and effect and binding
upon the Company or the Subsidiary and, to the knowledge of the Company, the
other parties thereto in accordance with their terms. Neither the Company nor
the Subsidiary is in material default (or alleged default) under any such
Contract, nor, to the knowledge of the Company, is any other party thereto in
material default thereunder, nor does any condition exist that with notice or
the lapse of time or both would constitute a material default (or give rise to a
termination right) thereunder. Neither the Company nor the Subsidiary has
received notice with respect to the termination or alteration of the provisions
thereof by reason of the Acquisition and the Other Contemplated Transactions or
otherwise. Since the Latest Balance Sheet Date, except as set forth in Section
3.11 of the Company Letter, neither the Company nor the Subsidiary has waived
any material right under any such Contract, amended or extended any such
Contract or failed to renew (or received notice of termination or failure to
renew with respect to) any such Contract. Section 3.11 of the Company Letter
also lists all sales representatives of the Company and the Subsidiary. The
Company has heretofore delivered to Purchaser true, correct and complete copies
of all of the written Contracts, in each case involving payments in any year in
excess of $100,000.
SECTION 3.12 INTANGIBLE PROPERTY AND WARRANTIES. (a) Section 3.12 of the
Company Letter sets forth a true, correct and complete list of all registered
trademarks, registered copyrights, registered service marks or registered trade
names (and all applications for any of the foregoing), Permits, license
agreements, grants and licenses running to or from, or used by, the Company or
the Subsidiary in the conduct of the Business, and there are no other material
trademarks, material copyrights, material service marks, material trade names or
other material intangible assets, properties or rights that are used in the
Business (the "Intellectual Property Rights").
(b) Except as disclosed in Section 3.12 of, or elsewhere in, the
Company Letter or for amounts which do not exceed reserves in the unaudited
consolidated financial
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statements of the Company for the month ended November 30, 1998, which financial
statements have been provided to Parent and Purchaser prior to the date hereof:
(i) the Company owns the entire United States right, title and
interest in and to the Intellectual Property Rights;
(ii) the Company has no knowledge that the Intellectual
Property Rights are either invalid or unenforceable;
(iii) the Company has no knowledge that the Company's business
activities, presently and during the past six months, including its manufacture
and sales of its consumer products in the Business and/or its use of the
Intellectual Property Rights, has infringed or conflicts with, does infringe or
conflict with, or will infringe or conflict with patent or any other
intellectual property rights of any third party;
(iv) the Company has no knowledge that any design,
manufacturing process or product which has been manufactured and/or sold by the
Company or the Subsidiary, includes any defect, or could result in any product
liability claim, or, except for (x) material changes in general economic or
industry conditions, (y) matters directly resulting from the conduct of
Purchaser or Parent in connection with this Agreement or (z) through direct
competition of Purchaser or Parent, could result in any recall or required
repair or replacement, or any significant credit or refund related to such
defect or product liability claim, other than in the ordinary course of
business, consistent with past practice;
(v) the Company has no knowledge that there has been any
notice that any design, manufacturing process, or product which has been
manufactured and/or sold by the Company or the Subsidiary includes any defect,
or could result in any product liability claim, or, except for (x) material
changes in general economic or industry conditions, (y) matters directly
resulting from the conduct of Purchaser or Parent in connection with this
Agreement or (z) through direct competition of Purchaser or Parent, could result
in any recall or required repair or replacement, or any significant credit or
refund, from any supplier or other third party;
(vi) the Company has no knowledge that there has been any
product liability, product defect or other liability claims or suits associated
with any product manufactured or sold by the Company or the Subsidiary (other
than the Litigation);
(vii) except for (x) material changes in general economic or
industry conditions, (y) matters directly resulting from the conduct of
Purchaser or Parent in connection with this Agreement or (z) through direct
competition of Purchaser or Parent, the Company has no knowledge that there has
been any contemplation by the Company or the Subsidiary to accept for return or
replacement any products previously sold by the Company or the Subsidiary other
than returns or replacements in the ordinary course of business consistent with
past practice;
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(viii) except for (x) material changes in general economic or
industry conditions, (y) matters directly resulting from the conduct of
Purchaser or Parent in connection with this Agreement or (z) through direct
competition of Purchaser or Parent, the Company has no knowledge that any
products sold by the Company or the Subsidiary have been the subject of any
recall or request for recall by a third party in the past;
(ix) the Company has no knowledge that there has been any
claim by a third party that the Company or the Subsidiary has violated any
express or implied warranty with respect to any product manufactured or sold by
the Company or the Subsidiary;
(x) no license or royalty to which the Company or the
Subsidiary is a party is or has been in material breach or default by any party
thereto or has been or is the subject of any notice of termination given or
threatened;
(xi) neither the Company nor the Subsidiary has ever granted
any license or permission to any third party to utilize the Intellectual
Property Rights; and
(xii) the Acquisition and the Other Contemplated Transactions
will not adversely affect any right of Purchaser to enjoy as owner all of the
Intellectual Property Rights in the same manner thereof as if Purchaser were
Sellers.
SECTION 3.13 CLAIMS AND PROCEEDINGS. Except as set forth in Section 3.13 of
the Company Letter, there are no outstanding Orders of any Governmental Body
against or directly involving by name the Company or the Subsidiary, the Assets
of the Company or the Subsidiary, or the Business. Except as set forth in
Section 3.13 of the Company Letter, there are no actions, suits, asserted claims
or counterclaims or legal, administrative or arbitral proceedings or, to the
Company's knowledge, investigations (collectively, "Claims") (whether or not the
defense thereof or Liabilities in respect thereof are covered by insurance),
pending or, to the knowledge of the Company, threatened on the date hereof,
against or involving the Company, the Subsidiary, the Purchased Shares, the
Assets or the Business. Section 3.13 of the Company Letter also indicates those
Claims the defense thereof or Liabilities in respect thereof are covered by
insurance. Except as set forth on Section 3.13 of the Company Letter, on the
date hereof there are no Claims pending or, to the knowledge of the Company,
threatened, other than Claims that would not have a Material Adverse Effect. All
notices required to have been given to any insurance company listed as insuring
against any Claim set forth in Section 3.13 of the Company Letter have been
timely and duly given and, except as set forth in Section 3.13 of the Company
Letter, no insurance company has asserted that such Claim is not covered by the
applicable policy relating to such Claim. There are no Claims pending or, to the
knowledge of the Company, threatened that would give rise to any right of
indemnification on the part of any director or officer of the Company or the
heirs, executors or administrators of such director or officer, against the
Company.
SECTION 3.14 TAXES. (a) Except as set forth in Section 3.14 of the Company
Letter:
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(i) the Company and the Subsidiary have timely filed or, if
not yet due, will timely file, all federal or state Tax Returns required to be
filed by it for all taxable periods ending on or before the Closing Date and all
such Tax Returns are, or will be when filed, true, correct and complete in all
material respects. Copies of all such Tax Returns for periods ending on or after
December 31, 1994 have been given to Purchaser;
(ii) the Company and the Subsidiary has paid or, if payment is
not yet due, has established, in accordance with GAAP and consistent with past
practice, accruals that are reflected on the Interim Statement for the payment
of, all Taxes imposed on the Company or the Subsidiary or for which the Company
or the Subsidiary is liable, whether to taxing authorities or to other Persons
(pursuant to a tax sharing agreement or otherwise);
(iii) no extension of time has been requested or granted for
the Company or the Subsidiary to file any Tax Return that has not yet been filed
or to pay any Tax that has not yet been paid;
(iv) the Company or the Subsidiary has not received notice of
a determination by a Tax Authority that Taxes are owed by the Company or the
Subsidiary (such determination to be referred to as a "Tax Deficiency") and, to
the knowledge of the Company, no Tax Deficiency is proposed or threatened;
(v) all Tax Deficiencies have been paid or finally settled and
all amounts determined by settlement to be owed have been paid;
(vi) there are no Tax liens or other security interests on or,
to the knowledge of the Company, pending against the Company or the Subsidiary
or any of their respective properties that arose in connection with any failure
or alleged failure to pay any Tax;
(vii) there are no presently outstanding waivers or extensions
or requests for waiver or extension of the time within which a Tax Deficiency
may be asserted or assessed;
(viii) no Claim has ever been made by any Tax Authority in any
jurisdiction where the Company or the Subsidiary does not file Tax Returns
indicating that the Company or the Subsidiary is or may be subject to taxation
in such jurisdiction;
(ix) no issue has been raised in any examination,
investigation, audit, suit, action, claim or proceeding relating to Taxes (a
"Tax Audit") which, by application of similar principles to any past, present or
future period, would result in a Tax Deficiency for such period;
(x) there are no pending or, to the knowledge of the Company,
threatened, Tax Audits of the Company or the Subsidiary;
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(xi) none of the federal income Tax Returns with respect to
the Company have been examined;
(xii) there are no requests for rulings in respect of any Tax
pending between the Company or the Subsidiary and any Tax Authority;
(xiii) the Company and the Subsidiary have complied with all
applicable laws, rules and regulations relating to the withholding and payment
of Taxes and have timely withheld and paid to the proper governmental
authorities all amounts required to have been withheld and paid in connection
with amounts paid or owing to any employee, independent contractor, creditor or
shareholder;
(xiv) the Company and the Subsidiary have not made any
payments, are not obligated to make any payments nor are a party to any
agreement that under certain circumstance (as a consequence of the Acquisition
or the Other Contemplated Transactions or otherwise) could obligate it to make
any payments that will not be deductible under Code Section 280G or Code Section
162(m);
(xv) the Company and the Subsidiary have disclosed on its
federal income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Code
Section 6662;
(xvi) after the date hereof, no election with respect to Taxes
will be made without the written consent of Purchaser (which consent shall not
be unreasonably withheld) other than those elections which would not have a
Material Adverse Effect and which are consistent with past practices of the
Company;
(xvii) none of the Assets of the Company or the Subsidiary is
property that it is required to treat as being owned by any other Person
pursuant to the "safe harbor lease" provisions of former Section 168(f)(8) of
the Code;
(xviii) none of the Assets of the Company or the Subsidiary
directly or indirectly secures any debt the interest on which is tax-exempt
under Section 103(a) of the Code;
(xix) none of the Assets of the Company or the Subsidiary is
"tax- exempt use property" within the meaning of Section 168(h) of the Code;
(xx) the Company and the Subsidiary have not agreed to make,
nor to the knowledge of Sellers or the Company is required to make, any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise;
(xxi) the Company and the Subsidiary have not participated in,
and will not participate between the date hereof through the Closing Date in, an
international boycott within the meaning of Section 999 of the Code;
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(xxii) the Company and the Subsidiary have not been a United
States real property holding corporation as defined in Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code;
(xxiii) the Company and the Subsidiary do not have, and have
not had, a permanent establishment in any foreign country, as defined in any
applicable tax treaty or convention between the United States and such foreign
country;
(xxiv) except as set forth in Section 3.14 of the Company
Letter, each of the Company and the Subsidiary is not a party to any Tax
allocation or Tax sharing agreement;
(xxv) each of the Company and the Subsidiary is not a Person
other than a United States Person within the meaning of the Code;
(xxvi) the Acquisition and the Other Contemplated Transactions
are not subject to tax withholding provisions of the Code; and
(xxvii) the Company and the Subsidiary have no liability for
Taxes of any other person under Treas. Reg. Section 1.1502-6 (or any similar
provision of state or local law) as a transferee or successor by contract or
otherwise.
(b) The Company represents that to its knowledge no previous ownership
change, as defined under Section 382 of the Internal Revenue Code of 1986, as
amended, has occurred, direct or indirectly, with respect to the Company or the
Subsidiary.
(c) Neither the Company nor the Subsidiary has been at any time a
member of (i) any combined, consolidated or affiliated group of corporations
(other than the group of which the Company is the common parent corporation), or
(ii) any partnership or joint venture or the holder of a beneficial interest in
any trust for any period for which the statute of limitations for any Tax has
not expired.
(d) Neither the Company nor the Subsidiary:
(i) has or is projected to have any amount includible in its
income for the current taxable year under Section 951 of the Code,
(ii) has been a passive foreign investment company within the
meaning of the Section 1296 of the Code,
(iii) has an unrecaptured overall foreign loss within the
meaning of Section 904(f) of the Code,
(iv) has been a personal holding company within the meaning of
Section 542 of the Code, or
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(v) has been a foreign personal holding company within the
meaning of Section 552 of the Code.
(e) Neither the Company nor the Subsidiary has any (i) income
reportable for a period ending after the Closing Date but attributable to a
transaction (e.g., installment sale) or a change in accounting method occurring
in or made for a period ending on or prior to the Closing Date which resulted in
a deferred reporting on income from such transaction or from such change in
accounting method (other than a deferred intercompany transaction), or (ii) a
deferred gain or loss arising out of any deferred intercompany transaction,
which income, gain or loss has been reflected on the Interim Statements in
accordance with GAAP, but for which no Tax liability accrual has been reflected
on the Interim Statement.
(f) Section 3.14 of the Company Letter contains (i) a schedule of the
filing dates of all Tax Returns required to be filed by the Company, (ii) a
description of all past Tax Audits involving the Company, (iii) a list of all
elections made by the Company relating to Taxes, including whether the Company
has made an election pursuant to Section 754 of the Code, and (iv) a list of the
states, territories and jurisdictions (whether foreign or domestic) to which any
Tax is properly payable by the Company. Except as set forth in Section 3.14 of
the Company Letter, the Company has retained all supporting and backup papers,
receipts, spreadsheets and other information necessary for (i) the preparation
of all Tax Returns that have not yet been filed, and (ii) the defense of all Tax
Audits involving taxable periods either ending on or during the four (4) years
prior to the Closing Date or from which there are unutilized net operating loss,
capital loss or investment tax credit carryovers.
(g) Except for sales, use and similar Taxes which do not exceed
$100,000, the Company or the Subsidiary has collected and remitted to the
appropriate Tax Authority all sales and use or similar Taxes required to have
been collected, including any interest and any penalty, addition to tax or
additional amount unpaid, and has been furnished properly completed exemption
certificates for all exempt transactions. To the knowledge of the Company, the
Company or the Subsidiary has collected and/or remitted to the appropriate Tax
Authority all withholding, payroll, employment, property, customs duty, fee,
assessment or charge of any kind whatsoever (including Taxes assessed to real
property and water and sewer rents relating thereto), including any interest and
any penalty, addition to tax or additional amount unpaid.
SECTION 3.15 EMPLOYEE BENEFIT PLANS. (a) Set forth in Section 3.15 of
the Company Letter is a list of each employee benefit plan (within the meaning
of Section 3(3) of ERISA), written or oral employment or consulting agreement,
severance pay plan or agreement, employee relations policy (or practice,
agreement or arrangement), agreements with respect to leased or temporary
employees, vacation plan or arrangement, sick pay plan, stock purchase plan,
stock option plan, fringe benefit plan, incentive plan, bonus plan, cafeteria or
flexible spending account plan and any deferred compensation agreement (or plan,
program, or arrangement) covering any present or former employee of the Company
or the Subsidiary and which is, or at any time during the last four (4) years
was, sponsored or maintained by (or to which contributions are required to be,
were during the last four (4) years or were required to have been during the
last four (4) years) made by the Company. Each and
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every such plan, program, policy, practice, arrangement and agreement included
on the list set forth in Section 3.15 of the Company Letter is hereinafter
referred to as an "Employee Benefit Plan".
(b) With respect to each Employee Benefit Plan, there has been
delivered to Purchaser (i) current, accurate and complete copies of each such
Employee Benefit Plan (including all trust agreements, insurance or annuity
contracts, summary plan descriptions, and any other material documents or
instruments relating thereto); (ii) the most recent audited financial statement
with respect to each such Employee Benefit Plan that is required to have an
audited financial statement; (iii) copies of the most recent determination
letters with respect to any such Employee Benefit Plan which is an employee
pension benefit plan (as such term is defined in Section 3(2) of ERISA) intended
to qualify under the Code; (iv) copies of the three most recent actuarial
reports with respect to each such Employee Benefit Plan that is required to have
an actuarial report; and (v) copies of the three most recent annual reports
(Forms 5500) with respect to each Employee Benefit Plan required to file an
annual report.
(c) With respect to each Employee Benefit Plan:
(i) each such Plan which is an employee pension benefit plan
(as such term is defined in ERISA Section 3(2)) intended to qualify under the
Code so qualifies and has received a favorable determination letter as to its
qualification under the Code, and, to the knowledge of the Company, no event has
occurred that will or could be expected to give rise to disqualification or loss
of tax-exempt status of any such plan or related trust;
(ii) the Company has complied in all material respects with
all provisions of ERISA, the Code and other applicable law, and, to the
knowledge of the Company, no act or omission by the Company, or any fiduciary of
any Employee Benefit Plan, has occurred that will or could be reasonably
expected to give rise to liability for a breach of fiduciary responsibilities
under ERISA or to any fines or penalties under ERISA Section 502(l);
(iii) Except as disclosed in Section 3.15 of the Company
Letter, no Employee Benefit Plan provides for any post-retirement life, medical,
dental or other welfare benefits (whether or not insured) for any current or
former employee except as required under Code Section 4980B, Part 6 of Title I
of ERISA or applicable state or local Law;
(iv) all contributions, insurance and annuity premiums and
salary deferrals elected by an employee or required to have been made by the
Company under law or under the terms of any contract, agreement or Employee
Benefit Plan for all complete and partial periods up to and including the date
hereof have been made or will be made to the appropriate plan on or before such
date;
(v) the Acquisition and the Other Contemplated Transactions
will not be the direct or indirect cause of any amount paid or payable from such
Employee Benefit Plan being classified as an excess parachute payment under Code
Section 280G;
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(vi) there are no matters pending before the IRS, the United
States Department of Labor or the Pension Benefit Guaranty Corporation ("PBGC");
(vii) there have been no claims or notice of claims filed
under any fiduciary liability insurance policy covering any Employee Benefit
Plan;
(viii) each and every such Employee Benefit Plan which is a
group health plan (as such term is defined under the Code or ERISA Section
607(1)) is in material compliance with the applicable requirements of Code
Section 4980B, Part 6 of Title I of ERISA, the applicable requirements of the
Health Insurance Portability and Accountability Act of 1996, and all other
federal, state or local Laws or ordinances requiring the provision or
continuance of health or medical benefits; and
(ix) neither the Company nor any other organization which has
a member of controlled group of organizations (within the meaning of Code
Section 414(b), (c), (m) or (o) (the "Controlled Group") maintains, sponsors or
has contributed to (or has at any time within the last four (4) years
maintained, sponsored or contributed to, or been obligated to maintain, sponsor
or contribute to): (1) any voluntary employees' beneficiary association within
the meaning of Section 501(c)(9) of the Code; (2) any welfare benefit fund
within the meaning of Section 419 of the Code; (3) any plan or arrangement which
is subject to (A) the minimum funding requirements of Code Section 412, (B)
Subtitle B, Part 3 of Title I of ERISA, or (C) Title IV of ERISA; or (4) any
multi-employer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA)
other than those set forth in Section 3.15 of the Company Letter.
(d) With respect to any employee benefit plan (within the meaning of
Section 3(3) of ERISA), stock purchase plan, stock option plan, fringe benefit
plan, bonus plan or any deferred compensation agreement, plan or program
(whether or not any such plan, program or agreement is currently in effect):
(i) there are no actions, suits or claims (other than routine
claims for benefits in the ordinary course) pending or, to the knowledge of the
Company, threatened, and the Company has no knowledge of any facts which could
reasonably give rise to any such actions, suits or claims (other than routine
claims for benefits in the ordinary course), which could subject the Company to
any liability;
(ii) None of the Company, any member of the Controlled Group
or any other Person has engaged in a prohibited transaction, as such term is
defined in Code Section 4975 or ERISA Section 406, which would subject the
Company to any taxes, penalties or other liabilities resulting from prohibited
transactions under Code Section 4975 or under ERISA Sections 409 or 502(i);
(iii) to the knowledge of the Company, no event has occurred
and no condition exists that could subject the Company to any tax or penalty
under Code Sections 511, 4971, 4972, 4976, 4977, 4978, 4979, 4979A, 4980B or
5000, or to a fine under ERISA Section 502(c);
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(iv) neither the Company nor any member of the Controlled
Group is subject to (1) any liability, lien or other encumbrance under any
agreement imposing secondary liability on either the Company or on any member of
the Controlled Group as a seller of the assets of a business in accordance with
Section 4204 of ERISA or under any other provision of Title IV of ERISA or Code
Section 412, (2) contingent liability under Title IV of ERISA to the PBGC or to
any plan, participant or other Person, or (3) a lien or other encumbrance under
Section 4068 of ERISA; and
(v) the Company is not subject to any liability pursuant to
Section 4069 of ERISA.
(e) (i) except as set forth in Section 3.15 of the Company Letter, the
Company is not subject to any legal, contractual, equitable or other obligation
to (1) establish as of any date any employee benefit plan of any nature,
including any pension, profit sharing, welfare, post-retirement welfare, stock
option, stock or cash award, non-qualified deferred compensation or executive
compensation plan, policy or practice, or (2) continue any employee benefit plan
of any nature, including any Employee Benefit Plan or any other pension, profit
sharing, welfare or post-retirement welfare plan, or any stock option, stock or
cash award, non-qualified deferred compensation or executive compensation plan,
policy or practice (or to continue their participation in any such benefit plan,
policy or practice) on or after the date hereof;
(ii) the Company may, in any manner, subject to the
limitations imposed by applicable law, and without the consent of any employee,
beneficiary or other Person, prospectively terminate, modify or amend any such
Employee Benefit Plan or any other plan, program or practice (or its
participation in such Employee Benefit Plan or any other plan, program or
practice) effective as of any date on or after the date hereof; and
(iii) to the knowledge of the Company, no representations or
communications (directly or indirectly, orally, in writing or otherwise) with
respect to participation, eligibility for benefits, vesting, benefit accrual
coverage or other material terms of any Employee Benefit Plan have been made to
any employee, beneficiary or other Person other than those which are in
accordance with the terms and provisions of each such Plan as in effect
immediately prior to the date hereof and the Closing Date.
(f) With respect to each multi-employer pension plan in which either
the Company or any member of the Controlled Group participates or has
participated in the last four (4) years: (i) no such company has withdrawn,
partially withdrawn or received any notice of any claim or demand for withdrawal
liability or partial withdrawal liability; (ii) no such company has received any
notice that any such plan is in reorganization, that increased contributions may
be required to avoid a reduction in plan benefits or the imposition of any
excise tax, or that any such plan is or may become insolvent; (iii) no such
company has failed to make any required contributions; (iv) no such
multi-employer plan is a party to any pending merger or asset or liability
transfer; (v) there are no proceedings of the PBGC against or affecting any such
multi-employer plan; (vi) no such company has (or will have as a result of the
Acquisition and the Other Contemplated Transactions) any withdrawal liability by
reason
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of a sale of assets pursuant to Section 4204 of ERISA; and (vii) Section
3.15 of the Company Letter includes for each such multi-employer plan, as of its
last valuation date, an estimate of the amount of potential withdrawal liability
of each such company, calculated according to the information made available
pursuant to ERISA Section 4221(e), and identifies the specific obligor, and
nothing has occurred or is expected to occur that would materially increase the
amount of the total potential withdrawal liability of a specified obligor for
any such plan over the amount shown in Section 3.15 of the Company Letter.
(g) With respect to each and every Employee Benefit Plan subject to
Title IV of ERISA: (i) no such Plan or related trust has been terminated or
partially terminated; (ii) no liability to the PBGC has been or is expected to
be incurred with respect to such a Plan; (iii) the PBGC has not instituted and
is not expected to institute any proceedings to terminate such a Plan; (iv)
there has been no reportable event (within the meaning of Section 4043 of
ERISA); (v) there exists no condition or set of circumstances that presents a
material risk of the termination of such a Plan by the PBGC; (vi) no accumulated
funding deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, exists with respect to such a Plan; and (vii) the
current value of all vested accrued benefits under each such Plan did not as of
the last day of the most recently ended fiscal year of such Plan, and will not
as of the Closing Date, exceed the current value of the assets of each such Plan
allocable to such vested accrued benefits.
SECTION 3.16 EMPLOYEE-RELATED MATTERS. (a) Section 3.16 of the Company
Letter contains a true and correct list of each director and employee of the
Company and the Subsidiary whose aggregate compensation exceeds $100,000 per
annum, including any agreement, whether oral or written, relating thereto, and a
general description of the rate and nature of all compensation and benefits
payable by the Company or the Subsidiary to each such Person. Section 3.16 of
the Company Letter also contains a general description of all existing
severance, accrued vacation obligations or retiree benefits of any current or
former director, officer or employee (to the extent not included in Section 3.15
of the Company Letter). Except as set forth in such Section 3.16 of the Company
Letter, the employment or contractual arrangement of all such Persons is
terminable at will without additional or further economic obligation on the part
of the Company or the Subsidiary.
(b) Except as set forth in Section 3.16 of the Company Letter,
(i) neither the Company nor the Subsidiary is a party to any Contract with any
labor organization or other representative of its employees; (ii) there is no
unfair labor practice charge or complaint pending or, to the knowledge of
Sellers or the Company, threatened against the Company or the Subsidiary, nor
has any been pending or threatened within the past three (3) years; (iii)
neither the Company nor the Subsidiary has experienced any labor strike,
picketing, hand billing, slowdown, work stoppage or similar labor controversy
within the past three (3) years; (iv) no representation question is pending or
has been raised respecting any of the employees of the Company or the Subsidiary
working within the past three (3) years, nor, to the knowledge of the Company,
are there any campaigns being conducted to solicit authorization from the
employees of the Company or the Subsidiary to be represented by any labor
organization; (v) no Claim before any Governmental Body brought by or on behalf
of or relating to any employee, prospective employee, former employee, retiree,
labor organization
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or other representative of the employees or the Company or the Subsidiary or
relating to its employment practices, is pending or, to the knowledge of the
Company, threatened against the Company or the Subsidiary; (vi) neither the
Company nor the Subsidiary is a party to, or otherwise bound by, any Order
relating to its employees or employment practices; and (vii) each of the Company
and the Subsidiary has paid in full to all of its employees all wages, salaries,
commissions, bonuses, benefits and other compensation due and payable to such
employees consistent with past practices (except for disputed amounts).
SECTION 3.17 INSURANCE. Section 3.17 of the Company Letter sets forth a
list of all insurance policies, fidelity and surety bonds and fiduciary
liability policies (the "Insurance Policies") covering the Assets, the Business,
operations, employees, officers and directors of the Company or the Subsidiary
and true and complete copies of all such Insurance Policies have been delivered
to Purchaser. Section 3.17 of the Company Letter also sets forth a true and
complete list of Claims made in respect of Insurance Policies during the three
(3) years prior to the date hereof (other than under health or other employee
benefit policies). There is no Claim exceeding $50,000 by the Company or the
Subsidiary pending under any of such Insurance Policies as to which coverage has
been questioned, denied or disputed by the underwriters of such Insurance
Policies or requirement by any insurer to perform work which has not been
satisfied. All premiums due under all Insurance Policies have been paid in
accordance with their terms and the Company or the Subsidiary is otherwise in
compliance with the terms and conditions of all such Insurance Policies. All
Insurance Policies are in full force and effect. To the knowledge of the
Company, there is not any threatened termination of, premium increase with
respect to, or uncompleted requirements under, any material Insurance Policy.
SECTION 3.18 COMPLIANCE WITH LAWS. To the knowledge of the Company,
neither the Company nor the Subsidiary is in violation of any order, judgment,
injunction, award, citation, decree, consent decree or writ (collectively,
"Orders"), or any law, statute, code, ordinance, rule, regulation or other
requirement (collectively, "Laws"), of any government or political subdivision
thereof, whether federal, state, local or foreign, or any agency or
instrumentality of any such government or political subdivision, or any court or
arbitrator (collectively, "Governmental Bodies") affecting its Assets of the
Company or the Subsidiary or the Business, except where any such violation would
not have a Material Adverse Effect.
SECTION 3.19 PERMITS. The Company or the Subsidiary has obtained all
licenses, permits (including environmental permits), certificates, certificates
of occupancy, orders, authorizations and approvals (collectively, "Permits"),
and has made all required registrations and filings with, any Governmental Body
that are required for the conduct of the Business. All Permits that are required
for the conduct of the Business are listed in Section 3.19 of the Company Letter
and are in full force and effect; no violations are or have been recorded in
respect of any Permit; and no proceeding is pending or threatened to revoke or
limit any Permit. Except as listed in Section 3.19 of the Company Letter, no
Permit will terminate by reason of the Acquisition and the Other Contemplated
Transactions. To the knowledge of the Company, this Agreement and the
Acquisition and the Other Contemplated Transactions will not invalidate, revoke
or otherwise adversely affect the validity of any such Permit.
-23-
SECTION 3.20 ENVIRONMENTAL MATTERS. (a) Except as set forth in Section
3.20 of the Company Letter:
(i) To the knowledge of the Company, the Company and the
Subsidiary are in material compliance with all Environmental Laws;
(ii) To the knowledge of the Company, there have been no
Releases of Hazardous Substances by the Company or violations of Environmental
Laws by the Company or the Subsidiary;
(iii) To the knowledge of the Company, the Company or the
Subsidiary holds all Environmental Permits, licenses and other authorizations
necessary for lawful operation of the Business and all are in full force and are
disclosed in Section 3.20 of the Company Letter, and to the Company's and the
Subsidiary's knowledge, this Agreement and the Acquisition and the Other
Contemplated Transactions will not invalidate, revoke or otherwise adversely
affect the validity of any such Environmental Permit;
(iv) Neither the Company, the Subsidiary nor any Seller has
received oral or written notice of a violation or of a claim of potential or
actual liability by any Governmental Body or third-party against the Company or
the Subsidiary under Environmental Laws, nor are any such potential claims known
to the Company, the Subsidiary or any Seller;
(v) Except as set forth in Section 3.20 of the Company Letter,
none of the sites or facilities owned, leased or controlled by the Company or
the Subsidiary (both currently or, to the knowledge of the Company, ever in the
past) (a) are or have been used by the Company, the Subsidiary or any other
entity to generate, manufacture, process, refine, handle, use or dispose of any
Hazardous Substances, or (b) have or have had areas of contamination from
Releases of Hazardous Substances that have been remediated or that require
remediation under Environmental Laws; and
(vi) Except as set forth in Section 3.20 of the Company
Letter, no underground storage tanks, polychlorinated biphenyl-containing or
asbestos-containing structures or items are in place at any facility owned or
leased or controlled by the Company or the Subsidiary (both currently or, to the
knowledge of the Company, ever in the past) and any such previously located
tanks, items or structures have been removed (and area of location remediated)
in accordance with applicable Environmental Laws.
(b) Section 3.20 of the Company Letter also lists with particularity
all off-site locations where, to the knowledge of the Company, the Company and
the Subsidiary, directly or indirectly, has stored, discharged, transported,
deposited or otherwise used for, the disposal of Hazardous Substances.
SECTION 3.21 CUSTOMERS AND SUPPLIERS. Section 3.21 of the Company
Letter lists, by dollar amount and on a consolidated basis, for the nine (9)
months ended on the Latest Balance Sheet Date, the fifteen (15) largest
customers of the Company and the Subsidiary (collectively, the "Major
Customers") and the six (6) largest suppliers of the Company and the
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Subsidiary (collectively, the "Major Suppliers"). Except as set forth in Section
3.21 of the Company Letter or for (i) material changes in general economic or
industry conditions, (ii) matters directly resulting from the conduct of
Purchaser or Parent in connection with this Agreement, or (iii) through direct
competition of Parent or Purchaser, no customer which accounted for more than
$1,125,000 in the Company's and Subsidiary's consolidated net sales included in
the Interim Statements has threatened in writing or, to the knowledge of the
Company, orally to cancel or terminate its relationship with the Company or the
Subsidiary or to decrease such customer's annual purchases from the Company and
the Subsidiary, on a consolidated basis, by an amount equal to the lesser of (i)
$2,500,000 and (ii) 50% of the Company's and the Subsidiary's consolidated net
sales attributed to such customer in the Interim Statements, and no supplier
from which the Company and the Subsidiary, in the aggregate, purchased more than
$399,000 in goods included in costs of goods sold in the Interim Statements has
threatened in writing or, to the knowledge of the Company, orally to cancel or
terminate its relationship with the Company or the Subsidiary or to cause the
decrease in such annual purchases by an amount equal to 50% of purchases by the
Company and the Subsidiary from such supplier included in costs of goods sold in
the Interim Statements.
SECTION 3.22 POTENTIAL CONFLICTS OF INTEREST. (a) Except as set forth
in Section 3.22 of the Company Letter, no officer of the Company, no spouse of
any such officer, nor, to the knowledge of the Company, no entity controlled by
one or more of the foregoing: (i) owns, directly or indirectly, any interest in
(excepting less than 1% stock holdings for investment purposes in securities of
publicly held and traded companies), or is an officer, director or employee of,
any Person that carries on business in direct competition with the Company or
the Subsidiary; or (ii) has any material Claim whatsoever against, or owes any
amount to, the Company or the Subsidiary, except for claims in the ordinary
course of the Business such as for accrued vacation pay and accrued benefits
under employee benefit plans; or
(b) Except as set forth in Section 3.22 of the Company Letter, no
officer, director or Affiliate of the Company, no spouse of any such officer,
director or Affiliate, nor, to the knowledge of the Company, no entity
controlled by one or more of the foregoing, owns, directly or indirectly, in
whole or in part, any material Asset that the Company or the Subsidiary uses in
the conduct of its business.
SECTION 3.23 FINDERS' FEES. Except as set forth in Section 3.23 of the
Company Letter, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
Sellers, the Company or the Subsidiary who might be entitled to any fee or
commission from Parent, Purchaser, Sellers, the Company or the Subsidiary upon
consummation of the Acquisition and the Other Contemplated Transactions.
SECTION 3.24 DEPOSITARIES; POWERS OF ATTORNEY, ETC. Section 3.24 of the
Company Letter sets forth (i) the name of each bank or similar entity in which
the Company or the Subsidiary has an account, lock box or safe deposit box and
the names of all Persons authorized to draw thereon or to have access thereto,
and (ii) the name of each Person holding
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a general or special power of attorney from the Company or the Subsidiary and a
description of the terms thereof.
SECTION 3.25 Y2K. The Company and the Subsidiary have reviewed the
areas within the Business and operations of the Company and the Subsidiary which
could be adversely affected by, and have developed or are developing programs to
address on a timely basis, the "year 2000 problem" (i.e., the risk that computer
applications used by the Company and the Subsidiary may be unable to recognize
or perform properly date-sensitive functions involving certain dates prior to
and any date on or after December 31, 1999) (the "Year 2000 Problem"). Based on
such review and program with respect to the Company and the Subsidiary and any
inquiries of suppliers and vendors made to date, to the knowledge of the
Company, the Year 2000 Problem will not have a Material Adverse Effect.
SECTION 3.26 DISCLOSURE. Neither this Agreement, the Schedules hereto
or to the Company Letter, nor any audited or unaudited financial statements,
documents or certificates furnished or to be furnished to Purchaser or any of
its Agents or Affiliates by or on behalf of Sellers, the Company or the
Subsidiary pursuant to this Agreement or in connection with the Acquisition and
the Other Contemplated Transactions contain or will contain any untrue statement
of a material fact or omit or will omit a material fact necessary in order to
make the statements contained herein or therein not misleading. All
representations and warranties made by Sellers and the Company will be deemed to
have been relied on by Parent and Purchaser (notwithstanding any investigation
by Parent and Purchaser).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and warrant to
Sellers and the Company, as of the date of this Agreement and as of the Closing
Date (as if each such representation and warranty was made on the Closing Date),
that:
SECTION 4.1 AUTHORITY RELATIVE TO THIS AGREEMENT. Parent and Purchaser
each has full corporate power and authority to execute and deliver this
Agreement and each other Transaction Document to which it is a party and to
consummate the Acquisition and the Other Contemplated Transactions. The
execution, delivery and performance by Parent and Purchaser of this Agreement
and the other Transaction Documents to which either of them is a party and the
consummation by it of the Acquisition and the Other Contemplated Transactions
have been duly and validly authorized and approved by Parent's and Purchaser's
board of directors, and no other corporate proceedings on the part of Parent and
Purchaser are necessary to authorize the execution and delivery by Parent or
Purchaser of this Agreement or the other Transaction Documents to which Parent
or Purchaser is a party or the consummation of the Acquisition and the Other
Contemplated Transactions to which Parent or Purchaser is a party. This
Agreement has been duly and validly executed and delivered by Parent and
Purchaser and (assuming the valid execution and delivery of this Agreement by
the other parties hereto) constitutes the legal, valid and binding agreement of
Parent and Purchaser, enforceable against Purchaser in accordance with its
terms, except as such obligations and their
-26-
enforceability may be limited by applicable bankruptcy and other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought (whether at law or in
equity).
SECTION 4.2 NO CONFLICTS; CONSENTS. Except as set forth in Section 4.2
of the Company Letter, neither the execution, delivery and performance by Parent
or Purchaser of this Agreement and each other Transaction Document to which
either of them is a party nor the consummation of the Acquisition and the Other
Contemplated Transactions to which Parent or Purchaser is a party (i) violates
any provision of the Certificate of Incorporation or By-laws of Parent or
Purchaser; (ii) requires Parent or Purchaser to obtain any consent, approval or
action of or waiver from, or make any filing with, or give any notice to, any
Governmental Body or any other Person; (iii) violates, conflicts with or results
in the breach or default under (after the giving of notice or the passage of
time), or permits the termination of, any material Contract to which Parent or
Purchaser is a party or by which any of them or any of their respective assets
may be bound or subject; or (iv) violates any Law or Order of any Governmental
Body against, or binding upon, Parent or Purchaser or upon their assets or
businesses.
SECTION 4.3 CORPORATE EXISTENCE AND POWER. Parent and Purchaser are
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware and have all requisite powers and all material
Permits required to own, lease and operate its properties and to conduct its
business as currently conducted. Parent and Purchaser are duly qualified to do
business as a foreign corporations and are in good standing in each jurisdiction
where the character of the property owned or leased by Parent or Purchaser or
the nature of their activities, makes such qualification necessary, except for
those jurisdictions where the failure to be so qualified would not have a
material adverse effect on the business, assets, financial condition or the
results of operations of Parent or Purchaser.
SECTION 4.4 FINDERS' FEES. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of Parent or Purchaser who might be entitled to any fee or commission
from Sellers, the Company or the Subsidiary upon consummation of the Acquisition
and the Other Contemplated Transactions.
SECTION 4.5 INVESTMENT. Purchaser is not acquiring the Purchased Shares
with a view to or for sale in connection with any distribution thereof within
the meaning of the Securities Act of 1933, as amended.
SECTION 4.6 EQUITY FUNDING. Parent shall provide equity financing to
Purchaser in an amount not less than $25,000,000 simultaneously with the
Closing.
SECTION 4.7 TAX RETURNS. Purchaser shall prepare or cause to be
prepared and file or cause to be filed all Tax Returns for the Company and the
Subsidiary for all periods ending on or prior to the Closing Date which are
filed after the Closing Date.
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SECTION 4.8 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES;
DISCLOSURE; BRING-DOWN. (a) Neither Sellers, the Representative nor the Company
make, and they have not made, any representations or warranties relating to the
Company or the Subsidiary in connection with the Acquisition and the Other
Contemplated Transactions other than those contained in Article II and Article
III of this Agreement. It is also understood that any cost estimates,
projections or other productions, any data, any financial information or any
memoranda or presentations are not and shall not be deemed to be or to include
representations or warranties of Sellers and the Company, except to the extent
otherwise covered by the representations and warranties of Sellers and the
Company in Article II and Article III of this Agreement. No person has been
authorized by Sellers or the Company to make any representation or warranty
relating to the Company, the Subsidiary or the Business in connection with the
Acquisition and the Other Contemplated Transactions except as set forth in
Article II and Article III of this Agreement and, if made, such representation
or warranty must not be relied upon as having been authorized by the Company,
the Subsidiary or any Seller.
(b) Notwithstanding anything to the contrary contained in this
Agreement or in any of the Exhibits or Schedules hereto or to the Company
Letter, any information disclosed in one Exhibit or Schedule hereto or to the
Company Letter shall be deemed to be disclosed for any other representation or
warranty to which the disclosure relates on its face.
ARTICLE V
COVENANTS AND AGREEMENTS PRIOR TO
AND SUBSEQUENT TO CLOSING
SECTION 5.1 CONDUCT OF BUSINESS. (a) From the date hereof through the
Closing Date, the Company agrees, and the Company agrees to cause the
Subsidiary:
(i) To operate the Business according to the ordinary and
usual course of the Business consistent with past practice, to preserve intact
their present business organization and structure, to keep available the
services of their present officers, sales representatives and full-time
employees, to use commercially reasonable efforts to preserve and maintain their
Assets and the goodwill of the Business and to use commercially reasonable
efforts to preserve their relationships with customers, suppliers, independent
contractors, employees and other Persons having material business dealings with
them or material to the operation of the Business;
(ii) To maintain in the ordinary course of the Business,
consistent with past practice and in accordance with Contracts to which either
of them is a party, the Leased Property and all their material structures,
equipment and other tangible property in their present repair, order and
condition, subject to ordinary wear and tear;
(iii) To maintain the books and records relating to the
Business in the usual and ordinary manner and in a manner that fairly and
correctly reflects the income, expenses, Assets and Liabilities of the Company
and the Subsidiary consistent with GAAP, and to record and effect sales in the
usual and ordinary manner consistent with past practices;
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(iv) Except for short term indebtedness, not to incur any
Liability (other than Liabilities incurred in the ordinary course of the
Business, consistent with past practice);
(v) Not to undertake (nor permit to be undertaken) any of the
actions specified in Section 3.9;
(vi) Not to pay, discharge or satisfy any material Claim or
Liability, other than the payment, discharge or satisfaction in the ordinary
course of the Business of Claims or Liabilities incurred in the ordinary course
of the Business, consistent with past practice;
(vii) Not to sell, transfer, convey, assign or otherwise
dispose of any Assets, including Inventory, except in the ordinary course of the
Business consistent with past practice, or create, incur or assume any Lien on
any Assets of the Company or the Subsidiary;
(viii) Not to waive, release or cancel any material claims
against third parties or debts owing to the Company or the Subsidiary or any
material rights which have any value or make any Tax election or settle or
compromise any federal, state, local or foreign income Tax liability, or waive
or extend the statute of limitations in respect of any such Taxes;
(ix) Not to authorize for issuance, issue, sell, deliver or
agree or commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, convertible or exchangeable securities,
commitments, subscriptions, rights to purchase or otherwise) any shares of the
Company's or the Subsidiary's capital stock or any other securities, or amend
any of the terms of any such securities;
(x) Not to amend their respective Certificates of
Incorporation or by-laws;
(xi) Not to merge into or consolidate with any other entity or
permit any other entity to merge into or consolidate with it, or liquidate or
sell or dispose of any material assets other than in the ordinary course of
business; and
(xii) Not to enter into, adopt or amend or terminate any
Employee Benefit Plan.
(b) From the date hereof through the Closing Date, the Company agrees
and the Company agrees to cause the Subsidiary to consult with Parent and
Purchaser prior to any renewal, amendment, extension or termination of, waiver
of any material right under, or any failure to renew, any material Contract to
which the Company or Subsidiary is a party and not to take any such action if
Parent and Purchaser object thereto in writing; provided, however, that such
objection shall not be unreasonably withheld.
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(c) From the date hereof through the Closing Date, the Company agrees
and the Company agrees to cause the Subsidiary to continue to carry all
Insurance Policies and shall not allow any termination, cancellation or material
breach or default of such Insurance Policies to occur or exist.
SECTION 5.2 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the
Closing Date, Sellers and the Company agree that Parent and Purchaser shall be
entitled, through their directors, officers, Affiliates, employees, attorneys,
accountants, representatives, lenders, consultants and other agents
(collectively, the "Agents") who are identified in Section 5.2 (the "Due
Diligence Agents") of the Company Letter, which may be amended from time to time
with the approval of the Company, which approval shall not be unreasonably
withheld, to make such investigation of the Business and the Assets and
operations of the Company and the Subsidiary, and such examination of the books,
records and financial condition of the Company and the Subsidiary, as Parent and
Purchaser shall deem necessary or appropriate. Any such investigation and
examination shall be conducted at reasonable times, under reasonable
circumstances and upon reasonable notice, and Sellers and the Company shall, and
the Company shall cause the Subsidiary to, cooperate fully therein. In that
connection, Sellers and the Company shall make available to the Due Diligence
Agents during such period, without however causing any unreasonable interruption
in the operations of the Business, all such information and copies of such
documents and records concerning the affairs of the Company and the Subsidiary
as the Due Diligence Agents may reasonably request, shall permit the Due
Diligence Agents access to the Assets of the Company and the Subsidiary and all
parts thereof and to the Company's and the Subsidiary's Agents, customers,
suppliers and others, and shall cause the Company's and the Subsidiary's Agents
to cooperate fully in connection with such review and examination; provided,
however, that access to the Company's and the Subsidiary's Agents, customers,
suppliers and others shall be coordinated by Xxx X. Xxxxxxxx, as Agent for
Sellers and the Company, and Xxxxxx X. Vollmershausen, as Agent for Parent and
Purchaser, and provided, further, that the Subsidiary shall be entitled to have
one of its employees attend any in person or telephonic meetings between such
Agents, customers, suppliers or others, on the one hand, and the Due Diligence
Agents, on the other hand. No investigation by Parent or Purchaser shall
diminish or obviate any of the representations, warranties, covenants or
agreements of Sellers or the Company contained in this Agreement.
SECTION 5.3 ADDITIONAL FINANCIAL STATEMENTS. Prior to the Closing Date,
as soon as available and in any event within fifteen (15) calendar days after
the end of each month ending after the Latest Balance Sheet Date of the Interim
Statements, the Company shall furnish to Parent and Purchaser an unaudited
consolidated financial statement of the Company for such month in form and
substance comparable to the Interim Statements.
SECTION 5.4 CONSENTS, FILINGS AND AUTHORIZATIONS; EFFORTS TO
CONSUMMATE. (a) As promptly as practicable after the date hereof, Parent,
Purchaser and the Company shall, and the Company shall cause the Subsidiary to,
make all filings and submissions under such Laws as are applicable to them or to
their respective Affiliates, as may be required for them to consummate the
Acquisition and the Other Contemplated Transactions in accordance with the terms
of this Agreement and shall furnish copies thereof to each other party prior to
such filing and shall not make any such filing or submission to which the
Company or Purchaser, as the
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case may be, reasonably objects in writing. All such filings shall comply in
form and content in all material respects with applicable Law. Subject to the
terms and conditions herein, each party hereto, without payment or further
consideration, shall use its best efforts to take or cause to be taken all
action and to do or cause to be done all things necessary, proper or advisable
under applicable Laws, Permits and Orders, to consummate and make effective, as
soon as reasonably practicable, the Acquisition and the Other Contemplated
Transactions, including the obtaining of all Company Required Consents and
Permits or consents of any third party, whether private or governmental,
required in connection with such party's performance of such transactions and
each party hereto shall cooperate with the other in all of the foregoing.
(b) The Company, Sellers which have executed this Agreement as of the
date hereof who in the aggregate hold a majority of the issued and outstanding
shares of capital stock of the Company, and the Representative agree to use
their collective best efforts to cause each Seller which has not executed this
Agreement as of the date hereof to deliver a counterpart signature page to this
Agreement to the Company, Parent and Purchaser within ten (10) business days
hereof; provided, that if all such Sellers do not execute a counterpart
signature page to this Agreement within such time, the Company and Sellers
signatories hereto hereby agree, upon the request of Purchaser, to execute any
documents required or necessary in order to effect the sale of the Purchased
Shares pursuant to a merger whereby the Company would be merged with and into
Purchaser and to obtain all consents necessary in connection with such merger;
provided, further that the economic, financial and tax effects to Sellers,
Parent and Purchaser upon such merger are as favorable to the economic,
financial and tax effects to Sellers, Parent and Purchaser upon the sale of the
Purchased Shares as contemplated hereby and, as a condition to Parent's and
Purchaser's obligation to consummate the merger, there shall not have been
asserted any appraisal or dissenter's rights by any stockholder of the Company.
If the sale of the Purchased Shares is to be effected pursuant to a merger, the
Company and Sellers shall use their best efforts to cause each holder of
Purchased Shares not a signatory hereto to tender their Purchased Shares
pursuant to the terms of this Agreement for the consideration set forth herein,
together with a letter of transmittal in a form satisfactory to Purchaser
setting forth, among other things, the representations and warranties contained
in Article II.
SECTION 5.5 NEGOTIATIONS WITH OTHERS. From and after the date hereof
unless and until this Agreement shall have been terminated in accordance with
its terms, Sellers and the Company hereby agree that (i) Sellers, the Company
and their Agents shall immediately cease any existing discussions or
negotiations with any parties conducted heretofore with respect to any sale of
any of the Company, or any substantial portion of the Business or the Assets of
the Company or the Subsidiary or the Company's or Subsidiary's capital stock,
directly or by merger or consolidation, or the sale of Sellers' shares of the
Company capital stock; and (ii) Sellers, the Company their Agents will not
solicit, initiate, encourage, continue or enter into negotiations or discussions
of any type, directly or indirectly, with, or furnish any information or data
to, any Person relating to any such sale, including any Person with whom Sellers
or the Company are currently negotiating, other than Purchaser, with respect to
an offer for the sale of the Company, or any substantial portion of the
Business, the Company's or the Subsidiary's Assets, or the Company's or
Subsidiary's capital stock, directly or by merger or consolidation.
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SECTION 5.6 NOTICES OF CERTAIN EVENTS. Prior to the Closing Date,
Sellers, the Company, Parent and Purchaser shall promptly notify each other of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the Acquisition
and the Other Contemplated Transactions;
(b) any notice or other communication from any Governmental Body in
connection with the Acquisition and the Other Contemplated Transactions; and
(c) any event, condition or circumstance occurring from the date hereof
through the Closing Date that would constitute a violation or breach of any
representation or warranty, whether made as of the date hereof or as of the
Closing Date, or that would constitute a violation or breach of any covenant of
any party contained in this Agreement.
SECTION 5.7 PUBLIC ANNOUNCEMENTS. Sellers, the Company, Parent and
Purchaser will consult with each other before issuing any press release or
otherwise making any public statement with respect to the Acquisition and the
Other Contemplated Transactions, and will not issue any such press release or
make any such public statement without the prior approval of the Representative
or Purchaser, as the case may be, except as may be required by applicable Law in
which event the other party shall have the right to review and comment upon (but
not approve) any such press release or public statement prior to its issuance.
SECTION 5.8 CONFIDENTIALITY. (a) Each of Parent and Purchaser shall
hold in strict confidence, and shall use its best efforts to cause all the Due
Diligence Agents to hold in strict confidence, unless compelled to disclose by
judicial or administrative process, or by other requirements of Law, all
Confidential Information (defined below) concerning Sellers, the Company and the
Subsidiary which any of them has obtained from Sellers, the Company or the
Subsidiary or their Agents prior to, on or after the date hereof, in connection
with the Acquisition and the Other Contemplated Transactions, and Parent and
Purchaser shall not use or disclose to others, or permit the use of or
disclosure of, any such Confidential Information so obtained, and will not
release or disclose such information to any other Person, except the Due
Diligence Agents who need to know such information in connection with this
Agreement (and who shall be advised of the provisions of this Section 5.8). The
foregoing provisions shall not apply to any such information to the extent (i)
known by Parent or Purchaser prior to the date such information was provided to
Purchaser by or on behalf of Sellers, the Company or the Subsidiary in
connection with the Acquisition and the Other Contemplated Transactions, (ii)
made known to Parent or Purchaser from a third party, to the knowledge of Parent
and Purchaser, not in breach of any confidentiality requirement, or (iii) made
public through no fault of Parent, Purchaser or any of the Due Diligence Agents.
(b) If this Agreement is terminated as provided herein and the
Acquisition and the Other Contemplated Transactions are not consummated and if
requested by Sellers, Purchaser shall return to the Representative all tangible
evidence of such information regarding Sellers, the Company and the Subsidiary,
or provide, at Purchaser's option, a certificate to the Representative stating
that such information has been destroyed.
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(c) The term "Confidential Information" shall mean all written
information provided to Purchaser or Parent by, for or on behalf of the Sellers,
the Company or the Subsidiary or their Agents and will also include, without
limitation, the Confidential Due Diligence Information, as well as all notes,
compilations and analyses derived therefrom and all copies, summaries, notes and
other written materials so provided.
(d) In the event that Parent, Purchaser or any of the Due Diligence
Agents are requested in any legal or governmental proceeding to disclosure any
of the Confidential Information, Parent, Purchaser or such Representative, as
the case may be, shall give the Company prompt written notice of such request so
that the Company may seek an appropriate order or decree restricting such
disclosure. If, in the absence of such an order or decree, Parent, Purchaser
and/or any of the Due Diligence Agents are nonetheless compelled to disclose any
Confidential Information, Purchaser, Parent or the Due Diligence Agent, as the
case may be, may disclose such information in such proceeding without liability
hereunder provided that Parent, Purchaser or such Due Diligence Agent gives the
Company written notice of the Confidential Information to be disclosed as far in
advance of its disclosure as is practicable and, upon the Company's request and
at its expense, Parent, Purchaser or such Due Diligence Agent shall use its
reasonable commercial efforts to assist the Company to obtain assurances that
confidential treatment will be accorded to such information.
(e) The Confidential Information will be kept confidential by Parent
and Purchaser and will not be photocopied, distributed or disclosed to any
person other than the Due Diligence Agents for the sole purpose of the
Acquisition and the Other Contemplated Transactions. Notwithstanding the
foregoing, Parent, Purchaser and the Due Diligence Agents shall be permitted to
use the Confidential Information for the purpose of complying with the
disclosure requirements of any state or federal securities laws or the National
Association of Securities Dealers Automated Quotation System. No individual or
entity may be added to Section 5.2 of the Company Letter after the date hereof
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Each such Due Diligence Agent shall be advised of this
Agreement by Parent and Purchaser, shall agree to be bound by the terms of this
Agreement and shall not disclose such information to any other individual or
entity other than to another Due Diligence Agent or to Parent or Purchaser or as
permitted by Section 5.8(a). Parent and Purchaser agree to be responsible for
the breach of this Section 5.8 by the Due Diligence Agents.
(f) For a period of two years from the date hereof, without the prior
written consent of the Company, Parent and Purchaser will not, and will direct
the Due Diligence Agents not to hire or solicit the employment of any employees
of the Company listed in Section 5.8 of the Company Letter.
(g) Parent and Purchaser understand and acknowledge the economic and
competitive value and the confidential nature of the Confidential Information
and each further agrees that the breach of this Section 5.8 by it or the Due
Diligence Agents will result in irreparable harm to the Company and that
remedies at law, alone, will be inadequate to remedy any breach of this
Agreement and, therefore, each of Parent and Purchaser (i) consents
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to the issuance of injunctive or other equitable relief against it and/or the
Due Diligence Agents to prevent or end any violation of this Agreement in such
event and (ii) waives the requirement of the posting of any bond or other
security by the Company in connection therewith.
(h) The terms of this Section 5.8 are not to be construed to limit the
scope of relevant information or otherwise preclude Parent from obtaining
discovery relevant to the issues in the pending litigation between Xxxx
Industries, Incorporated and the Subsidiary (case no. 98-1441 JMR/FLN) (the
"Litigation"). Discovery in the Litigation, including any confidential
information that is produced during discovery, shall be handled under the terms
of the protective order that the court enters in the Litigation. The terms of
this Agreement shall not apply to the confidential information produced by the
parties during discovery in the Litigation, unless those terms are expressly
recited in the protective order entered by the court.
(i) In consideration for the Company's provision of the Confidential
Information, Parent and Purchaser agree to reduce any assessed damages, and to
toll prejudgment interest in connection with the Litigation as follows: (a) for
sales of the accused product from June 2, 1998 (the date the Complaint in the
Litigation was filed), to the date on which this Agreement is terminated in
accordance with Article VII, any assessed damage shall be reduced at a rate of
100%; and (b) for the period of time from June 2, 1998 to the date on which this
Agreement is terminated in accordance with the terms of Article VII, prejudgment
interest shall be tolled. The Litigation is also subject to dismissal pursuant
to Section 7.2(b).
(j) The parties agree that the terms of this Agreement supersede the
terms of the Confidentiality Agreement between Harvest Partners, Inc., Parent,
the Company and the Subsidiary dated August 13, 1998, as amended, and that such
Confidentiality Agreement is hereby terminated.
SECTION 5.9 EXPENSES. Except as otherwise specifically provided in this
Agreement, the parties hereto shall bear their respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the Acquisition and the Other Contemplated Transactions, including all fees and
expenses of their respective Agents.
SECTION 5.10 SUPPLEMENTS TO DISCLOSURE SCHEDULES. It is understood and
agreed that, from time to time prior to the Closing, Sellers and the Company may
amend or supplement the Company Letter with respect to any matter that is
required to be set forth or described therein or that is necessary to complete
or correct any information in any representation or warranty of Sellers or the
Company contained in this Agreement; provided, however, that the disclosure
provided in any such amended, supplemented or revised Section of the Company
Letter shall in no way affect or be deemed to limit Parent's or Purchaser's
ability to terminate this Agreement and the Acquisition and the Other
Contemplated Transactions prior to the Closing.
SECTION 5.11 HSR ACT. Each party hereto shall have filed prior to the
date hereof, with respect to the Acquisition and the Other Contemplated
Transactions, and use good faith efforts to pursue a premerger notification form
under the Xxxx-Xxxxx-Xxxxxx Antitrust
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Improvements Act of 1976, as amended (the "HSR Act"). Purchaser shall bear the
$45,000 fee payable to the U.S. federal government in connection with each such
filing by Sellers and Purchaser.
SECTION 5.12 FURTHER ASSURANCES. Sellers hereby agree, without further
consideration, to execute and deliver, or to cause to be executed and delivered
on their behalf, following the Closing such other instruments of transfer and
take such other action as Purchaser may reasonably request in order to put
Purchaser in possession of, and to vest in Purchaser, good, valid, and
unencumbered title to the Purchased Shares in accordance with this Agreement and
to consummate the Acquisition and the Other Contemplated Transactions. Purchaser
hereby agrees, without further consideration, to take such other action
following the Closing and execute and deliver such other documents as Sellers
may reasonably request in order to consummate the Acquisition and the Other
Contemplated Transactions in accordance with this Agreement.
SECTION 5.13 TAX MATTERS. All sales Taxes (including any penalties and
interest) incurred in connection with the transfer of the Purchased Shares or
the consummation of the Acquisition and the Other Contemplated Transactions
shall be borne and paid by Sellers when due, and Sellers will, at their own
expense, file all necessary Tax Returns and other documentation with respect to
all such Taxes and fees.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 CONDITIONS TO THE OBLIGATIONS OF SELLERS AND PURCHASER. The
obligations of Sellers, the Company, Parent and Purchaser to consummate the
Acquisition and the Other Contemplated Transactions are subject to the
satisfaction of the following conditions on or prior to the Closing Date:
(a) No Injunction. No provision of any applicable Law and no Order
shall prohibit the consummation of the Acquisition and the Other Contemplated
Transactions.
(b) No Proceeding or Litigation. No Claim instituted by any Person
shall have been commenced or pending against Sellers, the Company, the
Subsidiary, Parent or Purchaser or any of their respective Affiliates, officers
or directors which Claim seeks to restrain, prevent, change or delay in any
material respect the Acquisition and the Other Contemplated Transactions or
seeks to challenge any of the material terms or provisions of this Agreement or
seeks material damages in connection with any of such transactions, except as
would not have a Material Adverse Effect.
(c) HSR Act. The waiting period under the HSR Act shall have expired or
been terminated.
SECTION 6.2 CONDITIONS TO THE OBLIGATIONS OF SELLER. All obligations of
Sellers and the Company to consummate the Acquisition and the Other Contemplated
Transactions are
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subject to the fulfillment (or waiver by the Representative) on or prior to the
Closing Date of each of the following further conditions:
(a) Performance. Each of Parent and Purchaser shall have performed and
complied with all agreements, obligations and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
(b) Representations and Warranties. The representations and warranties
of Parent and Purchaser contained in this Agreement and in any certificate or
other writing delivered by Parent and Purchaser pursuant hereto shall be true in
all material respects at and as of the Closing Date as if made at and as of such
time.
(c) Purchase Price. The Purchase Price shall have been paid by
Purchaser in accordance with Section 1.1 on the Closing Date.
(d) Documentation. There shall have been delivered to the
Representative the following:
(i) A certificate, dated the Closing Date, of Parent and Purchaser
confirming the matters set forth in Section 6.2(a) and (b) hereof.
(ii) A certificate, dated the Closing Date, of each of the Secretary or
Assistant Secretary of Parent and Purchaser certifying that attached to such
certificate (A) is a true and correct copy of its Certificate of Incorporation
and all amendments, if any, thereto as of the date thereof; (B) is a true and
correct copy of its By-laws as of the date thereof; (C) is a true copy of all
corporate actions taken by it, including resolutions of its board of directors
authorizing the consummation of the Acquisition and the Other Contemplated
Transactions and the execution, delivery and performance of this Agreement and
each other Transaction Document to be delivered by Parent or Purchaser pursuant
hereto; and (D) are the names and signatures of its duly elected or appointed
officers who are authorized to execute and deliver this Agreement, the other
Transaction Documents to which Parent or Purchaser is a party and any
certificate, document or other instrument in connection herewith.
(iii) A signed opinion of Parent and Purchaser's counsel, dated the
Closing Date and addressed to Sellers, substantially in the form and to the
effect of the opinion annexed as Exhibit B hereto.
SECTION 6.3 CONDITIONS TO THE OBLIGATIONS OF PARENT AND PURCHASER. All
obligations of Parent and Purchaser to consummate the Acquisition and the Other
Contemplated Transactions hereunder are subject to the fulfillment (or waiver by
Parent and Purchaser) on or prior to the Closing of each of the following
further conditions:
(a) Performance. Except for (i) material changes in general economic or
industry conditions, (ii) matters directly resulting from the conduct of Parent
or Purchaser in connection with this Agreement or (iii) through direct
competition of Parent or Purchaser, Sellers and the Company shall have performed
and complied with all agreements, obligations
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and covenants required by this Agreement to be performed or complied with by
them on or prior to the Closing Date; provided, however, that this condition
shall be deemed to have not been fulfilled if the failure to perform and comply
with such agreements, obligations and covenants causes a Material Adverse
Effect.
(b) Representations and Warranties of Sellers. Except for such
inaccuracies which would not have a Material Adverse Effect, the representations
and warranties of Sellers contained in this Agreement and in any certificate or
other writing delivered by Sellers or the Representative pursuant hereto shall
be true at and as of the Closing Date as if made at and as of such time.
(c) Representations and Warranties of the Company. Except for (i)
material changes in general economic or industry conditions, (ii) matters
directly resulting from the conduct of Parent or Purchaser in connection with
this Agreement, or (iii) through direct competition of Parent or Purchaser, the
representations and warranties of the Company contained in this Agreement and in
any certificate or other writing delivered by the Company, the Subsidiary or the
Representative pursuant hereto shall be true at and as of the Closing Date as if
made at and as of such time, except for such inaccuracies that do not have a
Material Adverse Effect; provided, however, that those representations and
warranties which are qualified by references to "material", "Material Adverse
Effect" or "to the knowledge of the Company" shall be deemed not to include such
qualifications.
(d) No Adverse Change. Except for (i) material changes in general
economic or industry conditions, (ii) matters directly resulting from the
conduct of Parent or Purchaser in connection with this Agreement, or (iii)
through direct competition of Parent or Purchaser, during the period from the
Latest Balance Sheet Date to the Closing Date, there shall not have been (x) any
change in the Condition of the Business; (y) any damage, destruction, casualty,
determination or other event to or affecting the Assets of the Company or the
Subsidiary; or (z) any Claims or Liens filed or threatened against or affecting
the Company, the Subsidiary or their Assets which in the case of (x), (y) and
(z) above would have a Material Adverse Effect.
(e) Company Required Consents. All Company Required Consents shall have
been obtained.
(f) [Omitted.]
(g) [Omitted.]
(h) Termination of TJC Consulting Agreement. The TJC Consulting
Agreement shall have been terminated and discharged, and the Company and the
Subsidiary shall have been released from all obligations and liabilities under
the TJC Consulting Agreement pursuant to the TJC Pay-Off Letter.
(i) Repayment of Indebtedness. The indebtedness obligations and
liabilities under the Credit Agreement, the 1994 Purchase Agreement and other
Company Debt shall
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have been paid in full, and the Company and the Subsidiary shall have been
released from all obligations and liabilities in accordance with the Senior
Lender Pay-Off Letter and the JZ PayOff Letter.
(j) Redemption of Preferred Stock. The Company shall have redeemed all
outstanding shares of Preferred Stock and shall have paid all accrued dividends
thereon pursuant to the Certificate of Incorporation of the Company, as amended,
and in accordance with Section 1.2.
(k) Documentation. There shall have been delivered to Parent and
Purchaser the following:
(i) A certificate, dated the Closing Date, of the
Representative and the Company confirming the matters set forth in Sections
6.3(a), (b) and (c);
(ii) A certificate, dated the Closing Date, of the
Representative and the Company certifying that attached to such certificate (A)
is a true and correct copy of the Certificate of Incorporation and by-laws (or
comparable instruments) of Sellers and the Company, and all amendments, if any,
thereto as of the date thereof; (B) are the names of the directors and officers
of the Company; (C) is a true copy of all corporate actions taken by the board
of directors and the shareholders of the Company (which actions shall have been
taken prior to the date of entering into this Agreement) to authorize the
Acquisition and the Other Contemplated Transactions (including the approval of
the shareholders of the Company of the Sale Bonus); and (D) are the names and
signatures of the duly elected or appointed officers of the Company who are
authorized to execute and deliver this Agreement, the other Transaction
Documents to which the Company is a party and any certificate, document or other
instrument in connection herewith;
(iii) True, correct and complete copies of all the Company
Required Consents and Permits;
(iv) An executed Escrow Agreement;
(v) An executed Nondisclosure and Nonsolicitation Agreement;
(vi) The resignation of all officers and directors of the
Company and the Subsidiary, as may have been requested by Purchaser;
(vii) A Nonforeign Certificate executed by the Company and the
Representative in accordance with Section 1445(b) of the Code, substantially in
the form and to the effect of Exhibit D attached hereto;
(viii) A release, executed by the Representative and in favor
of Parent and Purchaser, substantially in the form and to the effect of Exhibit
E attached hereto;
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(ix) Good standing certificates for the Company and the
Subsidiary from the Secretary of State of the State of Delaware and each other
jurisdiction in which the Company is qualified to do business as a foreign
corporation;
(x) A signed opinion of Seller's counsel, dated the Closing
Date, addressed to Parent and Purchaser, substantially in the form and to the
effect of Exhibit F attached hereto;
(xi) the Senior Lender Pay-Off Letter;
(xii) the JZ Pay-Off Letter;
(xiii) the Preferred Stock Pay-Off Letters;
(xiv) the TJC Pay-Off Letter;
(xv) the BHC Pay-Off Letter;
(xvi) certificates evidencing all of the Purchased Shares,
which certificates shall be duly endorsed in blank or accompanied by duly
executed stock powers assigning them to Purchaser;
(xvii) releases from payees of the Sale Bonus and the Xxxxxxxx
1994 Employment Agreement Termination Payment;
(xviii) releases of or amendments to the change in control
provisions, as requested by Purchaser, of the Employment Agreements;
(xix) evidence of the release by Jordan/Zalaznick Capital
Corporation of the security interest in the Purchased Shares owned by Xxxx
Xxxxxxxxx;
(xx) evidence of the termination of the Stockholders
Agreement, dated November 21, 1994, pertaining to the capital stock of the
Company; and
(xxi) a Landlord Consent and Estoppel Certificate in
substantially the form and to the effect of Exhibit G attached hereto.
(l) Confidential Due Diligence Information. One (1) business day after
the date hereof, there shall have been made available to Parent and Purchaser
the information described in Section 6.3 of the Company Letter (the
"Confidential Due Diligence Information").
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ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. This Agreement may be terminated and the
Acquisition and the Other Contemplated Transactions may be abandoned at any time
prior to the Closing:
(a) By mutual written consent of the parties hereto, and after January
15, 1999, by any party hereto, if the Closing has not occurred by that date and
if failure to close is not the result of a breach of this Agreement or a willful
failure to complete closing conditions by the parties hereto.
(b) By the Representative, on behalf of each Seller and the Company, if
(i) there has been a misrepresentation or breach of warranty on the part of
Parent or Purchaser in the representations and warranties contained herein and
such misrepresentation or breach of warranty, if curable, is not cured within
thirty (30) days after written notice thereof from the Representative, but in
any event prior to January 15, 1999, (ii) either of Parent or Purchaser has
committed a breach of any covenant imposed upon it hereunder and fails to cure
such breach within thirty (30) days after written notice thereof from the
Representative, but in any event prior to January 15, 1999, or (iii) any
condition to Sellers' obligations hereunder becomes incapable of fulfillment
through no fault of Sellers and is not waived by the Representative.
(c) By Parent or Purchaser if (i) there has been a misrepresentation or
breach of warranty on the part of Sellers or the Company in the representations
and warranties contained herein and such misrepresentation or breach of
warranty, if curable, is not cured within thirty (30) days after written notice
thereof from Parent and Purchaser, but in any event prior to January 15, 1999,
(ii) any Seller or the Company has committed a breach of any covenant imposed
upon it hereunder and fails to cure such breach within thirty (30) days after
written notice thereof from Parent and Purchaser, but in any event prior to
January 15, 1999, or (iii) any condition to Parent's and Purchaser's obligations
hereunder becomes incapable of fulfillment through no fault of Parent or
Purchaser and is not waived by Purchaser.
(d) By Parent and Purchaser, on the one hand, or by Representative, on
behalf of each Seller and the Company, on the other hand, if there shall be any
Law that makes consummation of the Acquisition and the Other Contemplated
Transactions illegal or otherwise prohibited, or if any Order enjoining Parent
or Purchaser, on the one hand, or the Company and Sellers, on the other hand,
from consummating the Acquisition and the Other Contemplated Transactions is
entered and such Order shall have become final and nonappealable.
SECTION 7.2 EFFECT OF TERMINATION; RIGHT TO PROCEED. (a) In the event
of termination of this Agreement by either Sellers and the Company, on the one
hand, or Parent and Purchaser, on the other hand, as provided in Section 7.1,
this Agreement forthwith shall become null and void and there shall be no
liability on the part of Sellers, the Company, Purchaser or Parent, except that
upon termination of this Agreement pursuant to:
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(i) Section 7.1(b), Parent and Purchaser, jointly and
severally, shall (x) cause the withdrawal, with prejudice, of the Litigation and
(y) pay to the Representative $500,000 by wire transfer to an account designated
by the Representative not later than three (3) business days after the date of
such termination, and upon such withdrawal of the Litigation and payment of such
amount, Parent and Purchaser shall have no further obligation to Sellers or the
Company under this Agreement or otherwise, except with respect to the agreements
contained in Sections 5.7, 5.8, 5.9 and 5.11; and
(ii) Section 7.1(c), the Company will remain liable to Parent
and Purchaser for any misrepresentation or breach of warranty or nonfulfillment
of or failure to perform any covenant or agreement of any Seller or the Company
existing at the time of such termination, and in such event Parent and Purchaser
may seek such remedies, including Losses against the Company with respect to any
such breach as are provided in this Agreement or as are otherwise available at
Law or in equity and, without limiting the generality of the foregoing, the
Company shall reimburse Parent and Purchaser for all costs and expenses
resulting from any such breach.
(b) The agreements contained in Sections 5.7, 5.8, 5.9 and 5.11 shall
survive the termination of this Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. (a)
Notwithstanding any right of Parent or Purchaser fully to investigate the
affairs of the Company and any knowledge of facts determined or determinable by
Parent or Purchaser pursuant to such investigation or right of investigation,
each of Parent and Purchaser has the right to rely fully upon the
representations, warranties, covenants and agreements of Sellers and the Company
contained in this Agreement, or listed or disclosed on any Schedule attached
hereto or in the Company Letter or in any instrument delivered in connection
with or pursuant to any of the foregoing.
(b) All representations, warranties, covenants and agreements shall
survive the execution and delivery of this Agreement and the Closing hereunder
for a period of two (2) years following the Closing Date; provided, however,
notwithstanding such survival, Sellers shall not have any claim, direct or
indirect, including for contribution, against the Company or the Subsidiary,
pursuant to this Agreement or otherwise.
SECTION 8.2 OBLIGATION OF SELLERS TO INDEMNIFY. Subject to the
limitations set forth in Section 8.5, each Seller hereby agrees to indemnify,
defend and hold harmless Parent and Purchaser (and their directors, officers,
employees, Affiliates, successors, assigns and Agents) from and against all
Claims, losses, liabilities, damages, deficiencies, judgments, settlements,
costs of investigation or other expenses (including interest, penalties and
reasonable attorneys' fees and disbursements and expenses incurred in enforcing
this indemnification or in any litigation between the parties or with third
parties) (collectively, the "Losses") suffered or incurred by Purchaser or any
of the foregoing Persons arising out of (a)
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any breach of the representations, warranties, covenants and agreements of such
Seller or the Company contained in this Agreement or in the Company Letter or
any other Transaction Document, or (b) any Claim, including any Claim arising
out of or relating to Environmental Laws, whether made before or after the date
of this Agreement, or any litigation, proceeding or governmental investigation,
including any Claim arising out of or relating to Environmental Laws, whether
commenced before or after the date of this Agreement, arising out of the
Business, or otherwise relating to Sellers, the Company or the Subsidiary, prior
to the Closing, or otherwise arising out of any act or occurrence prior to, or
any state or facts existing as of, the Closing.
SECTION 8.3 OBLIGATION OF PARENT AND PURCHASER TO INDEMNIFY . Subject
to the limitations set forth in Section 8.5, Parent and Purchaser hereby agree,
jointly and severally, to indemnify, defend and hold harmless Sellers from and
against any Losses suffered by Sellers by reason of any breach of the
representations and warranties of Parent and Purchaser or of the covenants and
agreements of Parent or Purchaser contained in this Agreement or in the Company
Letter or any other Transaction Document.
SECTION 8.4 NOTICE AND OPPORTUNITY TO DEFEND THIRD PARTY CLAIMS.
(a) Promptly after receipt by any party hereto (the "Indemnitee") of notice of
any demand, claim, circumstance or Tax Audit which would or might give rise to a
claim or the commencement (or threatened commencement) of any action, proceeding
or investigation (an "Asserted Liability") that may result in a Loss, the
Indemnitee shall give prompt notice thereof (the "Claims Notice") to the party
or parties obligated to provide indemnification pursuant to Section 8.2 or 8.3
(the "Indemnifying Party"). The Claims Notice shall describe the Asserted
Liability in reasonable detail and shall indicate the amount (estimated, if
necessary, and to the extent feasible) of the Loss that has been or may be
suffered by the Indemnitee.
(b) The Indemnifying Party may elect to defend, at its own expense and
with its own counsel satisfactory to Indemnitee, any Asserted Liability, unless
(i) the Asserted Liability seeks an Order, injunction or other equitable or
declaratory relief against the Indemnitee, or (ii) the Indemnitee shall have
reasonably concluded that (x) there is a conflict of interest between the
Indemnitee and the Indemnifying Party in the conduct of such defense, or (y) the
Indemnitee shall have one or more defenses not available to the Indemnifying
Party; provided, however, that the Indemnifying Party shall not be permitted to
make such election if the Indemnifying Party fails to provide Indemnitee with
evidence reasonably acceptable to Indemnitee that the Indemnifying Party will
have the financial resources to defend against the Asserted Liability and
fulfill its indemnification obligations hereunder. If the Indemnifying Party
elects to defend such Asserted Liability, it shall within thirty (30) calendar
days (or sooner, if the nature of the Asserted Liability so requires) notify the
Indemnitee of its intent to do so, and the Indemnitee shall cooperate, at the
expense of the Indemnifying Party, in the defense of such Asserted Liability. If
the Indemnifying Party assumes the defense against any Asserted Liability it
will be conclusively established for purposes of this Agreement that such
Asserted Liability is within the scope of, and subject to, indemnification. If
the Indemnifying Party elects not to defend the Asserted Liability, is not
permitted to defend the Asserted Liability by reason of the first sentence of
this Section 8.4(b), fails to notify the Indemnitee of its election as herein
provided or contests its obligation to indemnify under this Agreement
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with respect to such Asserted Liability, the Indemnitee may pay, compromise or
defend such Asserted Liability at the sole cost and expense of the Indemnifying
Party. Notwithstanding the foregoing, neither the Indemnifying Party nor the
Indemnitee may settle or compromise any claim over the reasonable written
objection of the other, provided, however, that the Indemnitee may settle or
compromise any claim as to which the Indemnifying Party has failed to notify the
Indemnitee of its election as herein provided or is contesting its
indemnification obligations hereunder. In any event, the Indemnitee and the
Indemnifying Party may participate, at their own expense, in the defense of such
Asserted Liability. If the Indemnifying Party chooses to defend any Asserted
Liability, the Indemnitee shall make available to the Indemnifying Party any
books, records or other documents within its control that are necessary or
appropriate for such defense. Any expenses of any Indemnitee for which
indemnification is available hereunder shall be paid upon written demand
therefor.
SECTION 8.5 LIMITATION ON INDEMNIFICATION; PAYMENT OF INDEMNIFICATION
AMOUNTS. (a) Sellers' liability for indemnifiable damages pursuant to this
Article VIII shall accrue but shall not be payable until the amount of Losses
suffered or incurred by Parent and Purchaser (and their directors, officers,
employees, Affiliates, successors, assigns and other Agents) exceeds in the
aggregate $200,000 (the "Basket Amount"), and then Sellers shall be responsible
for the payment only of amounts in excess of such Basket Amount as may be
payable by Sellers pursuant to this Article VIII (subject to the limitation set
forth in paragraph (b) below); provided, however, that all Losses arising as a
result of an inaccuracy or breach of the representations and warranties
contained in Sections 2.1 (Title to Shares) and 3.14 (Taxes) shall become
immediately due and payable without giving effect to the Basket Amount (subject
to the limitation set forth in paragraph (b) below) (except that any Losses
arising as a result of an inaccuracy or breach of the representation and
warranty contained in Section 3.14(g) shall not be payable until the amount of
such Losses so incurred exceeds $100,000, at which time any and all such Losses
shall become immediately due and payable without giving effect to such amount in
accordance with this proviso).
(b) Any amounts payable by Sellers under this Article VIII shall be
payable only to the extent that Escrowed Funds are available, and when such
funds are fully released, Sellers shall be released from all Claims arising in
connection with the Acquisition and the Other Contemplated Transactions, except
with respect to (i) the Noncompetition and Nonsolicitation Agreement referred to
in Section 6.3(k)(v) and (ii) the Liabilities of each of Xxx X. Xxxxxxxx, Xxxx
Xxxxxxxxxxx and Xxxxxxx X. Xxxxxx under their respective Employment Agreements.
(c) The parties hereto will act in good faith so that any amounts
payable by an Indemnifying Party to an Indemnitee pursuant to this Article VIII
shall be treated, for Tax purposes, as an adjustment to the Purchase Price,
unless a Final Determination with respect to an Indemnitee or any of its
Affiliates causes any such payment not to be treated as an adjustment to
Purchase Price for United States federal income tax purposes. If such payment
cannot be treated as an adjustment to the Purchase Price for Tax purposes, then
such indemnification payment shall be increased to take account of any net Tax
cost incurred by the Indemnitee as a result of the receipt or accrual of such
payments.
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(d) Parent and Purchaser will not be entitled to indemnification:
(i) with respect to punitive damages, except where such
damages are incurred by or awarded to a third party making a claim against such
an indemnitee;
(ii) with respect to any claim by or liability to any employee
employed by the Company or the Subsidiary arising as the result of the
termination of such employee's employment with the Company or the Subsidiary
subsequent to the Closing Date or any action by Purchaser subsequent to the
Closing Date (except with respect to any misrepresentation or breach of a
warranty or covenant by the Company);
(iii) to the extent of any reserves, accruals or amounts
recorded as of the Closing Date with respect to any obligation, liability or
matter for which reserves or accruals are reflected in the Interim Statements;
and
(iv) with respect to any obligation, liability or matter,
including environmental remediation and clean-up, arising under Laws that arise
or are promulgated or announced after the Closing Date.
(e) Any amounts payable under this Article VIII shall be calculated
after giving effect to any net proceeds actually received from insurance
policies covering the damage, loss, liability or expense that is the subject to
the claim for indemnity.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 NOTICES. (a) Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally by
hand or by recognized overnight courier, telecopied or mailed (by registered or
certified mail, postage prepaid) as follows:
(i) If to Parent or Purchaser, one copy to:
Xxxx International Holdings, Inc.
000 Xxxx Xxxxxxxxx
Xxxxx, Xxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: President & Chief Executive Officer
with a simultaneous copy to:
Xxxx International Holdings, Inc.
c/o Harvest Partners, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
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Telecopier: (000) 000-0000
Attention: Xxx X. Xxxxxxxx
with a simultaneous copy to:
Xxxxxx Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxxx, Esq.
(ii) If to Sellers or the Company, one copy to:
TJC Management Corporation,
as Representative
c/o The Jordan Company
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx
with a simultaneous copy to:
Xxxxx Xxxx LLP
3500 One Kansas City Place
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: G. Xxxxxx Xxxxxx, Esq.
(b) Each such notice or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in Section 9.1(a) (with confirmation of transmission), or (ii) if
given by any other means, when received at the address specified in Section
9.1(a). Any party by notice given in accordance with this Section 8.1 to the
other party may designate another address (or telecopier number) or Person for
receipt of notices hereunder. Notices by a party may be given by counsel to such
party.
SECTION 9.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits
and Schedules hereto and to the Company Letter) and the collateral agreements
executed in connection with the consummation of the Acquisition and the Other
Contemplated Transactions contain the entire agreement between the parties with
respect to the subject matter hereof and related transactions and supersede all
prior agreements, written or oral, with respect thereto.
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SECTION 9.3 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES;
PRESERVATION OF REMEDIES. This Agreement may be amended, superseded, canceled,
renewed or extended only by a written instrument signed by the parties hereto.
The provisions hereof may be waived in writing by the parties hereto. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. Except as otherwise
provided herein, the rights and remedies herein provided are cumulative and are
not exclusive of any rights or remedies that any party may otherwise have at law
or in equity.
SECTION 9.4 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflict of laws rules thereof.
SECTION 9.5 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF
JURY TRIAL. IN THE EVENT ANY PARTY TO THIS AGREEMENT COMMENCES ANY LITIGATION,
PROCEEDING OR OTHER LEGAL ACTION IN CONNECTION WITH OR RELATING TO THIS
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY MATTERS DESCRIBED OR
CONTEMPLATED HEREIN OR THEREIN, THE PARTIES TO THIS AGREEMENT HEREBY (A) AGREE
UNDER ALL CIRCUMSTANCES ABSOLUTELY AND IRREVOCABLY TO INSTITUTE ANY LITIGATION,
PROCEEDING OR OTHER LEGAL ACTION IN A COURT OF COMPETENT JURISDICTION LOCATED
WITHIN THE STATE OF NEW YORK AND THE COUNTY OF NEW YORK, WHETHER A STATE OR
FEDERAL COURT; (B) AGREE THAT IN THE EVENT OF ANY SUCH LITIGATION, PROCEEDING OR
ACTION, SUCH PARTIES WILL CONSENT AND SUBMIT TO PERSONAL JURISDICTION IN ANY
SUCH COURT DESCRIBED IN CLAUSE (A) OF THIS SECTION AND TO SERVICE OF PROCESS
UPON THEM IN ACCORDANCE WITH THE RULES AND STATUTES GOVERNING SERVICE OF PROCESS
(IT BEING UNDERSTOOD THAT NOTHING IN THIS SECTION SHALL BE DEEMED TO PREVENT ANY
PARTY FROM SEEKING TO REMOVE ANY ACTION TO A FEDERAL COURT IN NEW YORK); (C)
AGREE TO WAIVE TO THE FULL EXTENT PERMITTED BY LAW ANY OBJECTION THAT THEY MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH LITIGATION, PROCEEDING OR ACTION
IN ANY SUCH COURT OR THAT ANY SUCH LITIGATION, PROCEEDING OR ACTION WAS BROUGHT
IN AN INCONVENIENT FORUM; (D) DESIGNATE, APPOINT AND DIRECT CORPORATION SERVICE
COMPANY AS ITS AUTHORIZED AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ANY AND ALL
PROCESS AND DOCUMENTS IN ANY LEGAL PROCEEDING IN THE STATE OF NEW YORK; (E)
AGREE TO NOTIFY THE OTHER PARTIES TO THIS AGREEMENT IMMEDIATELY IF SUCH AGENT
SHALL REFUSE TO ACT, OR BE PREVENTED FROM ACTING, AS AGENT AND, IN SUCH EVENT,
PROMPTLY TO DESIGNATE ANOTHER AGENT IN THE STATE OF NEW YORK, SATISFACTORY TO
SELLERS AND PURCHASER, TO SERVE IN PLACE OF SUCH AGENT AND DELIVER TO THE OTHER
PARTY WRITTEN EVIDENCE OF SUCH SUBSTITUTE AGENT'S
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ACCEPTANCE OF SUCH DESIGNATION; (F) AGREE, AS AN ALTERNATIVE METHOD OF SERVICE
OF PROCESS IN ANY LEGAL PROCEEDING, TO MAILING OF COPIES OF SERVICE OF PROCESS
TO SUCH PARTY AT ITS ADDRESS SET FORTH IN SECTION 9.1 FOR COMMUNICATIONS TO SUCH
PARTY; (G) AGREE THAT ANY SERVICE MADE AS PROVIDED HEREIN SHALL BE EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT; AND (H) AGREE THAT NOTHING HEREIN SHALL AFFECT
THE RIGHTS OF ANY PARTY TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY
DISPUTE IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY TRANSACTION
DOCUMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, AND AGREE
TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.
SECTION 9.6 BINDING EFFECT; NO ASSIGNMENT. This Agreement and all of
its provisions, rights and obligations shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors, heirs and
legal representatives. This Agreement may not be assigned (including by
operation of Law) by a party without the express written consent of Parent and
Purchaser (in the case of assignment by Sellers or the Company) or the
Representative (in the case of assignment by Parent or Purchaser) and any
purported assignment, unless so consented to, shall be void and without effect.
Nothing herein express or implied is intended or shall be construed to confer
upon or to give anyone other than the parties hereto and their respective heirs,
legal representatives and successors any rights or benefits under or by reason
of this Agreement and no other party shall have any right to enforce any of the
provisions of this Agreement.
SECTION 9.7 EXHIBITS. All Exhibits, Schedules attached hereto and the
Company Letter are hereby incorporated by reference into, and made a part of,
this Agreement.
SECTION 9.8 SEVERABILITY. If any provision of this Agreement for any
reason shall be held to be illegal, invalid or unenforceable, such illegality
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such illegal, invalid or unenforceable provision had never
been included herein.
SECTION 9.9 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
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ARTICLE X
DEFINITIONS
SECTION 10.1 DEFINITIONS. (a) The following terms, as used herein, have the
following meanings:
"Adjusted EBITDA" is defined, without duplication, as net income of the
Company and the Subsidiary, on a consolidated basis, before income taxes,
interest expense, The Jordan Company LLC and/or affiliates management fees,
depreciation and amortization, financing fees, gain or loss on revalued assets,
market development costs, general corporate overhead charges (which charges do
not reflect actual operating costs of the Company or Subsidiary), and management
bonus expenses in excess of 4% of adjusted operating income (as defined in the
executive employment agreements). Market development costs are defined as
discreet discounts and allowances or payments made to new or existing customers
for the purpose of obtaining new business or expanding existing business.
"Affiliate" of any Person means any other Person directly or indirectly
through one or more intermediary Persons, controlling, controlled by or under
common control with such Person.
"Agreement" or "this Agreement" means, and the words "herein", "hereof"
and "hereunder" and words of similar import refer to, this agreement as it from
time to time may be amended.
"Assets" means properties, rights, interests and assets of every kind,
real, personal or mixed, tangible and intangible, used or usable in the
Business.
The term "audit" or "audited" when used in regard to financial
statements means an examination of the financial statements by a firm of
independent certified public accountants in accordance with generally accepted
auditing standards for the purpose of expressing an opinion thereon.
"Certificate of Incorporation" means, in the case of any corporation,
the certificate of incorporation, articles of incorporation or charter of a
corporation, howsoever denominated under the laws of the jurisdiction of its
incorporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Debt" means (i) money borrowed by the Company or the
Subsidiary from any Person; (ii) any indebtedness of the Company or the
Subsidiary arising under leases required to be capitalized under GAAP or
evidenced by a note, bond, debenture or similar instrument; (iii) any
indebtedness of the Company or the Subsidiary arising under purchase money
obligations or representing the deferred purchase price of property and services
(other than current trade payables incurred in the ordinary course of the
Business); and (iv) any Liability of the Company or the Subsidiary under any
guaranty, letter of credit, performance credit or other agreement having the
effect of assuring a creditor against loss.
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"Company Letter" means that certain letter, dated as of the date
hereof, of the Company delivered to Parent and Purchaser.
"Contract" means any contract, agreement, indenture, note, bond, lease,
conditional sale contract, mortgage, license, franchise, instrument, commitment
or other binding arrangement, whether written or oral.
The term "control", with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Credit Agreement" means the Revolving Credit and Term Loan Agreement,
dated November 21, 1994, as amended through the date hereof, among the Company,
the Subsidiary and BankBoston, N.A., formerly known as The First National Bank
of Boston, as agent for itself and other lending institutions.
"Employment Agreements" means the Employment and Noncompetition Agreements
by and between the Subsidiary and each of Xxx X. Xxxxxxxx, Xxxx Xxxxxxxxxxx,
Xxxxxxx X. Xxxxxx and Xxxx X. Xxxxxxx, each dated as of July 1, 1998.
"Environmental Laws" means any and all Laws (including common law),
Orders, Permits, agreements or any other requirement or restriction promulgated,
imposed, enacted or issued by any federal, state, local and/or foreign
Governmental Bodies relating to human health or the environment, including the
emission, discharge or Release of pollutants, contaminants, Hazardous Substances
or wastes into the environment (which includes ambient air, surface water,
ground water, or land), and the remediation thereof, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof, including the Clean Air
Act, the Comprehensive Environmental Response, Compensation and Liability Act,
the Emergency Planning and Community Right To Know Act, the Federal Water
Pollution Control Act, the Oil Pollution Act of 1990, the Pollution Prevention
Act of 1990, the Resource Conservation and Recovery Act, the Safe Drinking Water
Act, the Endangered Species Act, the Toxic Substances Control Act, each as
amended, any state or local counterparts thereof and any state or local laws of
a similar nature for the protection of human health and welfare.
"Environmental Permits" with respect to the Company or the Subsidiary
means those Permits, authorizations, approvals and permission required to be
obtained by the Company or the Subsidiary under Environmental Laws in connection
with the Business or the use and operation of the Assets owned or leased by
them.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"Final Determination" means (i) with respect to United States federal
income Taxes, a "determination" as defined in Section 1313(a) of the Code or
execution of an Internal Revenue Service Form 870AD; (ii) with respect to Taxes
other than United States federal income Taxes and any final determination of
liability in respect of a Tax provided for under applicable Law, and shall
include the payment of Tax by Purchaser or the Company, whichever is responsible
for payment of such Tax under applicable law, with respect to any item
disallowed by a Tax Authority, provided that the other party is notified that
Purchaser or the Company, whichever is responsible, determines that no action
should be taken to recoup such disallowed item, and such other party agrees with
such determination; and (iii) any final determination of liability in respect of
a Loss provided for under applicable law.
"GAAP" means generally accepted accounting principles in effect on the
date hereof as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States.
"Hazardous Substances" means any dangerous, toxic, reactive, corrosive,
ignitable, radioactive, caustic or otherwise hazardous material, pollutant,
contaminant, chemical, waste or substance defined, listed or described as any of
such in or governed by any Environmental Law, including urea-formaldehyde,
solvents, acids, bases, heavy metals, polychlorinated biphenyls, asbestos or
asbestos-containing materials, radon, explosives, known carcinogens, petroleum
and its derivatives or petroleum products.
"Inventory" means, as of any date, collectively, all inventories of
merchandise and other products owned by the Company or the Subsidiary and held
for resale or for distribution, together with packaging and samples thereof
owned by the Company or the Subsidiary as of such date.
"IRS" means the Internal Revenue Service.
"JZ" means JZ Equity Partners PLC, a public investment trust
incorporated in England, formerly known as MCIT PLC and Mezzanine Capital &
Income Trust 2001 PLC.
"JZ Purchase Agreement" means the Purchase Agreement, dated as of
November 21, 1994, as amended through the date hereof, between the Company and
JZ.
"Knowledge of the Company" shall mean actual knowledge, after diligent
inquiry and after performance of the duties reasonably within the scope of each
such person's responsibility in the position held, of Xxx X. Xxxxxxxx, Xxxx
Xxxxxxxxxxx, Xxxxxxx X. Xxxxxx and Xxxx X. Xxxxxxx.
"Liability" means any direct or indirect indebtedness, liability,
assessment, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, actual or potential,
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contingent or otherwise (including any liability under any guaranties, letters
of credit, performance credits or with respect to insurance loss accruals).
"Lien" means, with respect to any Asset, any mortgage, lien (including
mechanics, warehousemen, laborers and landlords liens), claim, pledge, charge,
security interest, preemptive right, right of first refusal, option, judgment,
title defect or encumbrance of any kind in respect of or affecting such Asset.
"Material Adverse Effect" shall mean an effect on the Condition of the
Business which is or would be materially adverse; provided, however, that with
respect to the matters and conditions set forth in Sections 6.1, 6.2, 6.3 and
Article VII, if all such effects, conditions or matters in the aggregate would
have (i) an adverse effect of more than $1,000,000 on Adjusted EBITDA, on a
consolidated basis, during any 12 month period, or (ii) an adverse effect of
more than $3,200,000 on the tangible net worth of the Company, on a consolidated
basis, it nonexclusively shall be deemed to constitute a Material Adverse
Effect.
"Ownership Percentage" means shall mean the percentage set forth
opposite each Seller's name on Schedule A.
"Pay-Off Letters" means the Senior Lender Pay-Off Letter, the JZ
Pay-Off Letter, the Preferred Stock Pay-Off Letters, and the TJC Pay-Off Letter
and the BHC Pay-Off Letter.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity, including a government or political subdivision or
an agency or instrumentality thereof.
"Xxxxxxxx 1994 Employment Agreement Termination Payment" means the
$550,000 payment by the Subsidiary to Xxx X. Xxxxxxxx in connection with his
Employment and Noncompetition Agreement with the Subsidiary, dated as of
November 20, 1994.
"Preferred Stock" means the Nonvoting Preferred Stock and the Special
Voting Preferred Stock.
"Receivables" means as of any date any trade accounts receivable of the
Company or the Subsidiary arising in the ordinary course of the Business.
"Regulatory Actions" means any claim, demand, action, suit or
proceeding brought or instigated by any Governmental Body in connection with any
Environmental Law, including civil, criminal and/or administrative proceedings,
whether or not seeking costs, damages, penalties, expenses or injunctive relief.
"Release" means the intentional or unintentional, spilling, leaking,
disposing, discharging or disturbance of, or emitting, depositing, injecting,
leaching, escaping or any other release or threatened release, however defined,
of any Hazardous Substance.
"Representative" is defined in the Representative Agreement.
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"Representative Agreement" means the Representative Agreement, dated as
of the date hereof, by and among the parties hereto and TJC Management
Corporation.
"Sale Bonus" means the maximum amount of the special bonus (before any
deduction or other provision deferring payment of the Sale Bonus until release
of the Escrowed Funds), contingent upon consummation of this Agreement and the
Acquisition and the Other Contemplated Transactions, payable to Xxx X. Xxxxxxxx,
Xxxx Xxxxxxxxxxx, Xxxxxxx X. Xxxxxx and Xxxx X. Xxxxxxx referenced in Section
10.1 of the Company Letter.
"Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") means (i) any net income, gross income, gross receipts, sales, use,
ad valorem, transfer, transfer gains, franchise, profits, license, withholding,
payroll, employment, social security (or similar), unemployment, disability,
excise, severance, stamp, rent, recording, registration, occupation, premium,
real or personal property, intangibles, environmental (including taxes under
Code ss. 59A) or windfall profits tax, alternative or add-on minimum tax,
capital stock, customs duty or other tax, fee, duty, levy, impost, assessment or
charge of any kind whatsoever (including taxes assessed to real property and
water and sewer rents relating thereto), together with any interest and any
fine, penalty, addition to tax or additional amount or deductions imposed by any
Governmental Body (domestic or foreign) (a "Tax Authority") responsible for the
imposition of any such tax, whether disputed or not, including any liability
arising under any tax sharing agreement, with respect to the Company or the
Subsidiary, the Business or the Assets (or the transfer thereof); (ii) any
liability for the payment of any amount of the type described in the immediately
preceding clause (i) as a result of the Company or the Subsidiary being a member
of an affiliated or combined group with, or as a successor to or transferee
from, any other corporation at any time on or prior to the Closing Date; and
(iii) any liability of the Company or the Subsidiary for the payment of any
amounts of the type described in the immediately preceding clause (i) as a
result of a contractual obligation to indemnify any other person.
"Tax Return" means any return or report (including elections,
declarations, disclosures, schedules, attachments, estimates and information
returns) relating to Taxes required to be supplied to any Tax Authority, and
including any amendment thereof.
"TJC Consulting Agreement" means the Management Consulting Agreement,
dated as of November 21, 1994, between TJC Management Corporation and the
Company, as amended.
"Transaction Documents" means, collectively, this Agreement and each of
the other agreements, instruments, certificates and other documents to be
executed and delivered by all or some of the parties hereto (including the
Representative) in connection with the consummation of the Acquisition and the
Other Contemplated Transactions.
The term "voting power" when used with reference to the capital stock
of, or units of equity interests in, any person means the power under ordinary
circumstances (and not merely upon the happening of a contingency) to vote in
the election of directors of such person (if
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such person is a corporation) or to participate in the management and control of
such person (if such person is not a corporation).
(b) The following additional terms are defined in the following
sections of this Agreement:
TERM SECTION
Acquisition Recital 2
Agents 5.2
Annual Statements 3.5
Asserted Liability 8.4(a)
Audited Balance Sheet 1.3(c)(i)
Basket Amount 8.5(a)
BHC Pay-Off Letter 1.1(b)(vi)
Business Recital 1
Cash Decrease Amount 1.3(a)
Cash Increase Amount 1.3(a)
Claims 3.13
Claims Notice 8.4(a)
Class A Common Stock 3.1(b)
Class B Common Stock 3.1(b)
Closing 1.4
Closing Date 1.4
Common Stock 3.1(b)
Company Preamble
Company Required Consents 3.3
Condition of the Business 3.9(a)
Confidential Due Diligence Information 6.3(l)
Confidential Information 5.8(c)
Controlled Group 3.15(c)
Due Diligence Agents 5.2
Employee Benefit Plan 3.15(a)
Escrow 1.1(a)(i)
Escrow Agreement 1.1(a)(i)
Escrowed Funds 1.1(a)(i)
Governmental Bodies 3.18
HSR Act 5.11
Indemnifying Party 8.4(a)
Indemnitee 8.4(a)
Insurance Policies 3.17
Intellectual Property Rights 3.12
Interim Statements 3.5
JZ Pay-Off Letter 1.1(b)(ii)
Latest Balance Sheet Date 3.6
Laws 3.18
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Leased Property 3.10(b)
Litigation 5.8
Losses 8.2
Major Customers 3.21
Major Suppliers 3.21
Net Purchase Price 1.1(a)(ii)
Nonvoting Preferred Stock 3.1(b)
Objection Notice 1.3(c)(ii)
Orders 3.18
Other Contemplated Transactions Recital 3
Parent Preamble
PBGC 3.15(c)(vi)
Permits 3.19
Preferred Stock Pay-Off Letters 1.1(a)(iv)
Purchase Price 1.1(a)
Purchased Shares 1.1(a)
Purchaser Preamble
Resolving Accounting Firm 1.3(c)(iii)
Sellers Preamble
Senior Lender Pay-Off Letter 1.1(b)(i)
Special Voting Preferred Stock 3.1(b)
Subsidiary Recital 1
Tax Audit 3.14(a)(ix)
Tax Deficiency 3.14(a)(iv)
TJC Pay-Off Letter 1.1(b)(v)
Working Capital 1.3(a)
Working Capital Decrease Amount 1.3(a)
Working Capital Increase Amount 1.3(a)
Year 2000 Problem 3.25
SECTION 10.2 INTERPRETATION. Unless the context otherwise requires, the
terms defined in Section 10.1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. All accounting terms defined in Section 10.1,
and those accounting terms used in this Agreement not defined in Section 10.1,
except as otherwise expressly provided herein, shall have the meanings
customarily given thereto in accordance with GAAP. When a reference is made in
this Agreement to Sections or Exhibits, such references shall be to a Section of
or Exhibit to this Agreement, unless otherwise indicated. The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
-54-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
VENTSHADE HOLDINGS, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: President
XXXX INTERNATIONAL HOLDINGS, INC.
By: /s/ Xxx X. Xxxxxxxx
----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Chairman of the Board
NEW HOLDINGS, INC.
By: /s/ Xxx X. Xxxxxxxx
----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Chairman of the Board
[Signatures of Sellers on following pages.]
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/s/ Xxxxxxxx X. Xxxxxxx
----------------------------------
XXXXXXXX X. XXXXXXX
/s/ Xxxx X. Xxxx III
----------------------------------
XXXX X. XXXX III
/s/ A. Xxxxxxx Xxxxxx
----------------------------------
A. XXXXXXX XXXXXX
/s/ Xxxx Xxxxxxxxx
----------------------------------
XXXX XXXXXXXXX
XXXXX X. XXXXXX XX.
PROFIT SHARING PLAN & TRUST
By: /s/ Xxxxx X. Xxxxxx Xx.
-----------------------------
Name: Xxxxx X. Xxxxxx Xx.
Title:
XXXX X. XXXX III
PROFIT SHARING PLAN & TRUST
By: /s/ Xxxx X. Xxxx III
-----------------------------
Name: Xxxx X. Xxxx III
Title: Trustee
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THE JORDAN TRUST
By: /s/ Xxxx X. Xxxxxx XX
------------------------------
Name: Xxxx X. Xxxxxx XX
Title: Trustee
JZ EQUITY PARTNERS PLC
By: /s/ Xxxxx X. Xxxxxx Xx.
-----------------------------
Name: Xxxxx X. Xxxxxx Xx.
Title: Partner
LEUCADIA INVESTORS, INC.
By: /s/ Xxxxxx X. Orlando
-----------------------------
Name: Xxxxxx X. Orlando
Title: Vice President
/s/ Xxxx X. Xxxxxx
----------------------------------
XXXX X. XXXXXX
/s/ Xxxx X. Max
----------------------------------
XXXX X. MAX
/s/ Xxx X. Xxxxxxxx
------------------------------------
XXX X. XXXXXXXX
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/s/ Xxxx Xxxxxxxx
------------------------------------
XXXX XXXXXXXX
/s/ Xxxx Xxxxxxxxxxx
------------------------------------
XXXX XXXXXXXXXXX
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
XXXXXXX X. XXXXXX
/s/ Xxxxx X. Xxxxxxxxx
------------------------------------
XXXXX X. XXXXXXXXX
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Section 4.2
PARENT AND PURCHASER CONSENTS
Reference is made to the Credit Agreement, dated as of February 27,
1998 (the "Xxxx/Xxxxxx Credit Agreement"), by and among Parent, certain of its
affiliates, the lenders named therein and Xxxxxx Financial, Inc., as agent and
as lender. In order to consummate the Acquisition and the Other Contemplated
Transactions, Parent is required to obtain the consent of the lenders named in
the Xxxx/Xxxxxx Credit Agreement and, as of the date hereof, such consent has
not been obtained.
