EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
AMONG
PENN ENGINEERING & MANUFACTURING CORP.
AND
XXXXXXX XXXXX, NOW KNOWN AS XXXXXXX XXXXXX,
TRUSTEE OF TRUST B under
WILL OF XXXXXXX X. XXXXX, Deceased
XXXXXX X. XXXXXXX
XXXX X. XXXXXXX
XXXX X. XXXXXX
XXXXXXXXX X. XXXXXX
AND
XXXXXX XXXX XXXXXXXX
September 16, 1999
TABLE FOR CONTENTS
Page
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1. Definitions......................................................................1
2. Purchase and Sale of Company Shares..............................................6
(a) Basic Transaction.......................................................6
(b) Purchase Price..........................................................6
(c) Post-Closing Adjustment.................................................6
(d) Escrow..................................................................7
(e) The Closing.............................................................7
(f) Deliveries at the Closing...............................................7
(g) FOGA Business...........................................................7
(h) Manufacturer's Representative Business..................................8
3. Representations and Warranties Concerning the Transaction........................8
(a) Representations and Warranties of the Sellers...........................8
(b) Representations and Warranties of the Buyer.............................9
4. Representations and Warranties Concerning the Company and Its Subsidiaries......10
(a) Organization, Qualification, and Corporate Power.......................10
(b) Capitalization.........................................................11
(c) Noncontravention.......................................................11
(d) Brokers' Fees..........................................................11
(e) Title to Assets........................................................11
(f) Subsidiaries...........................................................11
(g) Financial Statements...................................................11
(h) Events Subsequent to Most Recent Fiscal Year End.......................12
(i) Undisclosed Liabilities................................................14
(j) Legal Compliance.......................................................14
(k) Taxes..................................................................14
(l) Real Property..........................................................16
(m) Intellectual Property..................................................16
(n) Tangible Assets........................................................18
(o) Inventory..............................................................18
(p) Contracts..............................................................18
(q) Notes and Accounts Receivable..........................................19
(r) Powers of Attorney.....................................................19
(s) Insurance..............................................................20
(t) Litigation.............................................................20
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(u) Product Warranty.......................................................20
(v) Product Liability......................................................21
(w) Employees..............................................................21
(x) Employee Benefits......................................................21
(y) Guaranties.............................................................22
(z) Environment, Health, and Safety Matters................................22
(aa) Certain Business Relationships With the Company and Its Subsidiaries...23
(bb) Disclosure.............................................................24
5. Pre-Closing Covenants...........................................................24
(a) General................................................................24
(b) Notices and Consents...................................................24
(c) Operation of Business..................................................24
(d) Preservation of Business...............................................25
(e) Full Access............................................................25
(f) Notice of Developments.................................................25
(g) Exclusivity............................................................25
(h) Existing Agreements....................................................25
(i) Company's Qualified Plan...............................................25
6. Post-Closing Covenants..........................................................26
(a) General................................................................26
(b) Litigation Support.....................................................26
(c) Transition.............................................................26
(d) Confidentiality........................................................27
(e) Covenant Not to Compete................................................27
7. Conditions to Obligation to Close...............................................27
(a) Conditions to Obligation of the Buyer..................................27
(b) Conditions to Obligation of the Sellers................................29
8. Remedies for Breaches of This Agreement.........................................30
(a) Survival of Representations and Warranties.............................30
(b) Indemnification Provisions for Benefit of the Buyer....................30
(c) Indemnification Provisions for Benefit of the Sellers..................31
(d) Matters Involving Third Parties........................................32
(e) Determination of Adverse Consequences..................................32
(f) Exclusive Remedy.......................................................33
9. Tax Matters.....................................................................33
(a) Tax Periods Ending on or Before the Closing Date.......................33
(b) Tax Periods Beginning Before and Ending After the Closing Date.........33
(c) Refunds and Tax Benefits...............................................34
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(d) Cooperation on Tax Matters.............................................34
(e) Tax Sharing Agreements.................................................35
(f) Certain Taxes..........................................................35
(g) Allocation and 338(h)(10) Election.....................................35
10. Termination.....................................................................36
(a) Termination of Agreement...............................................36
(b) Effect of Termination..................................................36
11. Miscellaneous...................................................................36
(a) Nature of Certain Obligations..........................................36
(b) Press Releases and Public Announcements................................37
(c) No Third-Party Beneficiaries...........................................37
(d) Entire Agreement.......................................................37
(e) Succession and Assignment..............................................37
(f) Counterparts...........................................................37
(g) Headings...............................................................37
(h) Notices................................................................38
(i) Governing Law..........................................................39
(j) Amendments and Waivers.................................................39
(k) Severability...........................................................39
(l) Expenses...............................................................39
(m) Construction...........................................................39
(n) Incorporation of Exhibits, Annexes, and Schedules......................40
(o) Arbitration............................................................40
Exhibit A -- Form of Escrow Agreement
Exhibit B -- Historical Financial Statements
Exhibit C -- Form of Real Property Agreement
Exhibit D -- Form of Opinion of Counsel to the Sellers
Exhibit E -- Form of Opinion of Counsel to the Buyer
Exhibit F -- Allocation of Sales Price
Annex I -- Exceptions to the Sellers' Representations and Warranties
Concerning the Transaction
Annex II -- Exceptions to the Buyer's Representations and Warranties
Concerning the Transaction
Disclosure Schedule--Exceptions to Representations and Warranties
Concerning the Company and Its Subsidiaries
Schedule 2(h) -- Manufacturer's Representative Employees
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STOCK PURCHASE AGREEMENT
Agreement entered into on September 16, 1999, by and among Penn
Engineering & Manufacturing Corp., a Delaware corporation (the "Buyer"), and
Xxxxxxx Xxxxx, now known as Xxxxxxx Xxxxxx, Trustee of Trust B under Will of
Xxxxxxx X. Xxxxx, Deceased, Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxxxx, Xxxx X. Xxxxxx,
Xxxxxxxxx X. Xxxxxx and Xxxxxx Xxxx Xxxxxxxx (collectively the "Sellers" and
referred to individually as a "Seller"). The Buyer and the Sellers are referred
to collectively herein as the "Parties".
The Sellers in the aggregate own all of the outstanding capital stock of X.
X. Xxxxx & Company, Inc. a California corporation (the "Company").
This Agreement contemplates a transaction in which the Buyer will purchase
from the Sellers, and the Sellers will sell to the Buyer, all of the outstanding
capital stock of the Company in return for cash.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
ss.1504(a).
"Applicable Rate" means the prime rate of interest publicly announced
from time to time by First Union National Bank.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in ss.2(c) below.
"Closing Date" has the meaning set forth in ss.2(c) below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code ss.4980B.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Share" means any share of the Common Stock, par value $0.10 per
share, of the Company.
"Confidential Information" means any information concerning the
businesses and affairs of the Company and its Subsidiaries that is not already
generally available to the public.
"Controlled Groups" has the meaning set forth in Code ss.1563.
"Disclosure Schedule" has the meaning set forth in ss.4 below.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation
or retirement plan or arrangement, (b) Employee Pension Benefit Plan, (c)
Employee Welfare Benefit Plan, (d) material fringe benefit or other retirement,
bonus, or incentive plan or program or other plan or arrangement providing
additional compensation or benefits.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
ss.3(1).
"Environmental, Health, and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations, and all common law concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity which is treated as a single
employer with Seller for purposes of Code ss.414.
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"Escrow" has the meaning set forth in ss.2(d) below.
"Escrow Agreement" has the meaning set forth in ss.2(b) below.
"Fiduciary" has the meaning set forth in ERISA ss.3(21).
"Financial Statements" has the meaning set forth in ss.4(g) below.
"FOGA Business" shall mean the business, including without limitation,
the assets and liabilities, of the FOGA Division of the Company which extrudes
aluminum for point of purchase displays and trade show exhibits.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Indemnified Party" has the meaning set forth in ss.8(d) below.
"Indemnifying Party" has the meaning set forth in ss.8(d) below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related
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documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Manufacturer's Representative Business" shall mean the Company's
business acting as a manufacturer's representative on a commissionable basis for
manufacturers of fasteners and other products.
"Material Adverse Effect" means a material adverse effect on the
business, financial condition, operations or results of operations of the
Company.
"Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in ss.4(g)
below.
"Most Recent Fiscal Month End" has the meaning set forth in ss.4(g)
below.
"Most Recent Fiscal Year End" has the meaning set forth in ss.4(g)
below.
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
"1998 Balance Sheet" means the Company's balance sheet for the Xxxxx
Division as of September 30, 1998 which is included in the Financial Statements.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA ss.406 and
Code ss.4975.
"Pro-Rata" has the meaning set forth in ss.2(b).
"Purchase Price" has the meaning set forth in ss.2(b) below.
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"Real Property Agreement" means the agreement of sale by and among the
Buyer and certain of the Sellers providing for the purchase by Buyer of the real
property leased and operated by the Company and located in the City of Oxnard,
Ventura County, California, the form of which is attached hereto as Exhibit C.
"Reportable Event" has the meaning set forth in ERISA ss.4043.
"Requisite Sellers" means Sellers holding a majority in interest of the
Company Shares as set forth in ss.4(b) of the Disclosure Schedule.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable; (c) purchase
money liens and liens securing rental payments under capital lease arrangements,
and (d) other liens arising in the Ordinary Course of Business and not incurred
in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tax" or "Taxes" means any federal, state, local and foreign income,
payroll, withholding, excise, sales, use, personal property, use and occupancy,
business and occupation, mercantile, real estate, gross receipts, license,
employment, severance, stamp, premium, windfall profits, social security (or
similar unemployment), disability, transfer, registration, value added,
alternative, or add-on minimum, estimated, or capital stock and franchise and
other tax of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not.
"Tax Return" or "Tax Returns" means all returns, reports, forms,
declarations, claims for refunds or other information required to be filed or
supplied to any Person in connection with Taxes (including without limitation
information returns and declarations of estimated Tax) (Any reference to "filed"
or "file" with respect to Taxes shall also be deemed to include "supplied" or
"supply").
"Third Party Claim" has the meaning set forth in ss.8(d) below.
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2. Purchase and Sale of Company Shares.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from each of the Sellers, and each
of the Sellers agrees to sell to the Buyer, all of his or her Company Shares for
the consideration specified below in this ss.2.
(b) Purchase Price. The Buyer agrees to pay to the Sellers at the
Closing $34,000,000 (the "Purchase Price") by delivery of (i) cash of $3,400,000
payable by wire transfer or other immediately available funds to the escrow
agent designated in the escrow agreement (the "Escrow Agreement") in the form of
Exhibit A attached hereto and (ii) cash for the balance of the Purchase Price
payable to Sellers by wire transfer or delivery of other immediately available
funds. The Purchase Price shall be allocated among the Sellers in proportion to
their respective holdings of Company Shares as set forth in ss.4(b) of the
Disclosure Schedule ("Pro-Rata").
(c) Post-Closing Adjustment. Immediately after the consummation of the
Closing hereunder Buyer shall, at Buyer's expense, engage Ernst & Young LLP to
determine the consolidated net working capital (current assets minus current
liabilities) of the X.X. Xxxxx Division (excluding the FOGA Division) of the
Company ("Net Working Capital") as of the close of business on the Closing Date
(the "Closing Statement"), which shall be prepared in accordance with generally
accepted accounting principles. Ernst & Young LLP shall be required to deliver
the Closing Statement to Buyer not later than 60 days after the Closing Date.
Promptly after Buyer's receipt thereof, Buyer shall deliver a copy of the
Closing Statement to Xxxxxx X. Xxxxxxx who is authorized to act as agent for
Sellers with respect to adjustments of the Purchase Price hereunder (the
"Sellers' Agent"). Upon receipt of the Closing Statement, Sellers' Agent shall
give written notice to Buyer within 15 days if Sellers' Agent disputes the
Closing Statement and the parties shall negotiate in good faith to resolve such
dispute. If Buyer and Sellers' Agent are unable to resolve such dispute within
fifteen (15) days after Buyer is notified thereof, the matter shall be referred
to an independent public accountant satisfactory to the Buyer and Sellers' Agent
which shall be directed to determine the Net Working Capital of the X.X. Xxxxx
Division (excluding the FOGA Division) of the Company as of the Closing Date and
the determination of such accountant shall be binding on the parties hereto.
Buyer and Sellers shall each pay one-half of the cost of the services of such
independent accountant. If and to the extent that the Net Working Capital of the
X.X. Xxxxx Division (excluding the FOGA Division) of the Company reflected on
the Closing Statement ("Net Working Capital at Closing") shall be less than
$13,322,400 ("Minimum Required Working Capital"): (i) the Purchase Price shall
be retroactively and immediately reduced by an amount equal to the amount
("Working Capital Deficit") by which the Net Working Capital at Closing is less
than the Minimum Required Working Capital, and (ii) an amount equal to the Net
Working Capital Deficit shall become immediately due and payable to Buyer from
Sellers, such amount being payable first from the Escrow and if in excess of the
Escrow, then by the Sellers Pro-Rata. The Closing Statement shall be prepared
using the asset and liability accounts used in the preparation of the 1998
Balance Sheet, and valuing inventory on the last-in, first-out (LIFO) method
used in the preparation of the 1998 Balance Sheet, but not reflecting any
disclosures or statements made in the Disclosure
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Schedule. The Closing Statement shall not include any assets or liabilities of
the FOGA Business or any interdivisional accounts receivable.
(d) Escrow. In order to secure Buyer with respect to: (i) any reduction
in the Net Working Capital of the X.X. Xxxxx Division of the Company between
September 30, 1998 and the Closing Date and (ii) the accuracy of the
representations, warranties, and the prompt performance and payment of the
covenants, agreements and indemnifications, of Sellers provided for in this
Agreement and all other documents and instruments executed by Sellers in
connection herewith, on the Closing Date Sellers and Buyer shall enter into an
escrow agreement (the "Escrow Agreement") substantially in the form of Exhibit A
hereto with U.S. Trust Company (provided that if the fees of U.S. Trust Company
are not reasonable and competitive with other similar institutions, the parties
will mutually agree on another escrow agent) as escrow agent (with such changes
therein relative to the rights and duties of the escrow agent as may be required
by said escrow agent.) Buyer shall deposit $3,400,000 (the "Escrow") pursuant to
the Escrow Agreement. Upon the later of (i) 120 days after the Closing Date,
(ii) the final determination of the Purchase Price, and (iii) the final
determination of any indemnification claims made by Buyer against Sellers
pursuant to Section 8 hereof on or before 120 days after the Closing Date, Buyer
shall be entitled to receive from the Escrow an amount equal to the sum of (A)
any reduction in the Purchase Price as finally determined, and (b) the amount of
any indemnification to which Buyer is entitled under Section 8 hereof as
determined by agreement between Buyer and Sellers or, in the absence of
agreement, by the final judgment of any court of competent jurisdiction, and the
remaining balance of such Escrow, if any, shall be distributed to Sellers.
One-third of the Escrow shall be distributed each six months after the Closing,
subject to retention at all times of funds reasonably required in Buyer's good
faith judgment to cover any pending and bona fide claims of Buyer for
indemnification. Interest earned on the Escrow shall be distributed to the
Sellers monthly Pro-Rata and the Sellers shall be responsible for reporting all
taxable interest and dividends distributed from the Escrow. Buyer shall pay the
fees and costs of the escrow agent.
(e) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of the Company
commencing at 9:00 a.m. local time on September 30, 1999 or such other date as
the Buyer and the Requisite Sellers may mutually determine (the "Closing Date").
(f) Deliveries at the Closing. At the Closing, (i) the Sellers will
deliver to the Buyer the various certificates, instruments, and documents
referred to in ss.7(a) below, (ii) the Buyer will deliver to the Sellers the
various certificates, instruments, and documents referred to in ss.7(b) below,
(iii) each of the Sellers will deliver to the Buyer stock certificates
representing all of his or her Company Shares, endorsed in blank or accompanied
by duly executed assignment documents, and (iv) the Buyer will deliver to the
Escrow and to each of the Sellers the consideration specified in ss.2(b) above.
(g) FOGA Business. Sellers do not intend to sell or transfer to Buyer,
and Buyer does not intend to purchase or assume from Sellers, any assets ("FOGA
Assets") or liabilities
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("FOGA Liabilities") of the Company's FOGA Business. Sellers agree that prior to
the Closing, Sellers will cause the Company either to sell the FOGA Assets and
transfer the FOGA Liabilities to a third-party, or to another entity controlled
by Sellers, such that on the Closing Date the Company will own no FOGA Assets
and all FOGA Liabilities (which term shall include all liabilities related to
the FOGA business, whether known or unknown, whether now existing or hereafter
incurred or arising, matured or unmatured, direct or indirect, absolute or
contingent, joint or several) will have been assumed by such third-party or
other entity. Sellers agree to indemnify Buyer and hold Buyer harmless from and
against any and all FOGA Liabilities including attorneys fees and costs related
thereto incurred by the Company or by the Buyer after the Closing in connection
with FOGA Liabilities. Any proceeds of sale received by the Company from the
sale of the FOGA Assets shall belong to Sellers and may be distributed by the
Company to Sellers prior to the Closing. Sellers agree to continue existing
product liability coverage for the FOGA Business at Sellers' expense for a
period of five (5) years after the Closing Date. Sellers will cause all FOGA
Assets to be removed from the Company's premises prior to the Closing.
(h) Manufacturer's Representative Business. Prior to the Closing the
parties shall cause the manufacturer's representative agreement between the
Company and the Buyer to be terminated. Buyer agrees that in the event that (i)
Sellers are able to locate or organize a new manufacturer's representative
organization meeting Buyer's criteria (or which agrees in writing to meet such
criteria within four months after the Closing Date) and (ii) Buyer enters into a
manufacturer's representative agreement satisfactory in form and substance to
Buyer with such new organization, any amount payable by such new organization
for the goodwill, customer lists and other intangible assets of the Company's
existing manufacturer's representative business for fasteners and related
products shall belong to the Sellers and neither the Company nor the Buyer shall
have any interest therein, provided that the Buyer shall have no obligation to
approve any new manufacturer's representative organization recommended by
Sellers unless it meets all of Buyer's specified criteria (or agrees to do so
within four months after the Closing and makes substantial progress acting in
good faith to meet such criteria within such period) and is reasonably
satisfactory in all other respects to Buyer and enters into a manufacturer's
representative agreement with Buyer satisfactory in form and substance to Buyer.
Sellers shall have the right to request those employees of the Company listed on
Schedule 2(h) attached hereto to become employees of such new manufacturer's
representative organization, but shall not at any time solicit or permit such
new organization to employ any other employees of the Company. Any new
manufacturer's representative agreement shall be cancellable by the Buyer on
thirty (30) days notice.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Sellers. Each of the Sellers
represents and warrants to the Buyer that the statements contained in this
ss.3(a) are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
ss.3(a)) with respect to himself or itself, except as set forth in Annex I
attached hereto.
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(i) Authorization of Transaction. The Seller has full power and
authority to execute and deliver this Agreement and to perform his or her
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of the Seller, enforceable in accordance with its terms and
conditions. The Seller need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this Agreement.
(ii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Seller is subject or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller is a party or by which he
or she is bound or to which any of his or her assets is subject.
(iii) Brokers' Fees. The Seller has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
(iv) Company Shares. The Seller holds of record and owns
beneficially the number of Company Shares set forth next to his or her name in
ss.4(b) of the Disclosure Schedule, free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act and state
securities laws), taxes, Security Interests, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands. The Seller is not a party
to any option, warrant, purchase right, or other contract or commitment that
could require the Seller to sell, transfer, or otherwise dispose of any capital
stock of the Company (other than this Agreement). The Seller is not a party to
any voting trust, proxy, or other agreement or understanding with respect to the
voting of any capital stock of the Company.
(b) Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Sellers that the statements contained in this ss.3(b) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this ss.3(b)),
except as set forth in Annex II attached hereto.
(i) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions. The Buyer need not give any notice
9
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its charter or bylaws or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Buyer is a party or by which it is bound or to which any of its assets is
subject.
(iv) Brokers' Fees. The Buyer has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which any Seller could become
liable or obligated.
(v) Investment. The Buyer is acquiring the Company Shares for
investment purposes only and is not acquiring the Company Shares with a view to
or for sale in connection with any distribution thereof within the meaning of
the Securities Act.
4. Representations and Warranties Concerning the Company and Its
Subsidiaries. The Sellers represent and warrant to the Buyer that the statements
contained in this ss.4 are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this ss.4), except as set forth in the disclosure schedule delivered
by the Sellers to the Buyer on the date hereof and initialed by the Parties (the
"Disclosure Schedule"). Although the Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this ss.4, disclosures made with respect to one paragraph of the Disclosure
Schedule shall be deemed to be made with respect to all of the paragraphs of the
Disclosure Schedule, to the extent relevant thereto. The representations and
warranties contained in this ss.4 do not apply to (i) the FOGA Business as to
which Sellers have agreed to indemnify Buyer pursuant to ss.2(g) or (ii) the
Manufacturer's Representative Business.
(a) Organization, Qualification, and Corporate Power. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Company is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the lack of such
qualification would not have a material adverse effect on the business,
financial condition, operations, results of operations, or future prospects of
the Company. The Company has full corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. ss.4(a) of the Disclosure Schedule lists the directors and officers
of the Company.
10
(b) Capitalization. The entire authorized capital stock of the Company
consists of 750,000 Company Shares, of which 866 Company Shares are issued and
outstanding and no Company Shares are held in treasury. All of the issued and
outstanding Company Shares have been duly authorized, are validly issued, fully
paid, and nonassessable, and are held of record by the respective Sellers as set
forth in ss.4(b) of the Disclosure Schedule. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Company to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Company. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of the Company.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any provision
of the charter or bylaws of the Company or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Company is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). The Company is not required to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except where the failure to give
notice, to file, or to obtain any authorization, consent, or approval would not
have a material adverse effect on the business, financial condition, operations,
or results of operations of the Company and its Subsidiaries or on the ability
of the Parties to consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. The Company has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) Title to Assets. The Company has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, located on
its premises, or shown on the Most Recent Balance Sheet or acquired after the
date thereof, free and clear of all Security Interests, except for properties
and assets disposed of in the Ordinary Course of Business since the date of the
Most Recent Balance Sheet.
(f) Subsidiaries. The Company has no Subsidiaries.
(g) Financial Statements. Attached hereto as Exhibit B are the following
financial statements (collectively the "Financial Statements"): (i) reviewed
balance sheets and statements of income, changes in stockholders' equity, and
cash flow as of and for the fiscal years ended
11
September 30, 1997 and September 30, 1998 (the "Most Recent Fiscal Year End")
for the X.X. Xxxxx Division of the Company; and (ii) unaudited management
prepared balance sheets and statements of income, changes in stockholders'
equity, and cash flow (the "Most Recent Financial Statements") as of and for the
9 months ended June 30, 1999 (the "Most Recent Fiscal Month End") for the X.X.
Xxxxx Division of the Company. The Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby and present fairly the financial
condition of the Company as of such dates and the results of operations of the
Company for such periods; provided, however, that the Most Recent Financial
Statements are subject to normal year-end adjustments (which will not be
material individually or in the aggregate) and lack footnotes and other
presentation items. The parties acknowledge that the Financial Statements
include information with respect to and results of operations of the
Manufacturer's Representative Business.
(h) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, or results of operations of the
Company. Without limiting the generality of the foregoing, since that date:
(i) the Company has not sold, leased, transferred, or assigned any
material assets, tangible or intangible, outside the Ordinary Course of
Business, except for the sale of the FOGA Business;
(ii) the Company has not entered into any material agreement,
contract, lease, or license outside the Ordinary Course of Business except with
respect to the sale of the FOGA Business;
(iii) no party (including the Company) has accelerated, terminated,
made material modifications to, or canceled any material agreement, contract,
lease, or license to which the Company is a party or by which it is bound except
in the Ordinary Course of Business and except in connection with the sale of the
FOGA Business and the termination of the Manufacturer's Representative Business;
(iv) the Company has not imposed any Security Interest upon any of
its assets, tangible or intangible;
(v) the Company has not made any material capital expenditures
outside the Ordinary Course of Business;
(vi) the Company has not made any material capital investment in, or
any material loan to, any other Person outside the Ordinary Course of Business;
(vii) the Company has not created, incurred, assumed, or guaranteed
more than $100,000 in aggregate indebtedness for borrowed money and capitalized
lease obligations;
12
(viii) the Company has not granted any license or sublicense of any
material rights under or with respect to any Intellectual Property;
(ix) there has been no change made or authorized in the charter or
bylaws of any of the Company.
(x) the Company has not issued, sold, or otherwise disposed of any
of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of its
capital stock;
(xi) the Company has not declared, set aside, or paid any dividend
or made any distribution with respect to its capital stock (whether in cash or
in kind) or redeemed, purchased, or otherwise acquired any of its capital stock
except for distributions to Sellers which do not reduce the Net Working Capital
of the X.X. Xxxxx Division of the Company on the Closing Date to the less than
the Minimum Required Working Capital;
(xii) the Company has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) to its property;
(xiii) the Company has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xiv) the Company has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(xv) the Company has not granted any increase in the base
compensation of any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xvi) the Company has not adopted, amended, modified, or terminated
in any material respect any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any other
Employee Benefit Plan) except for changes in commitments in the Ordinary Course
of Business;
(xvii) the Company has not made any other material change in
employment terms for any of its directors, officers, and employees outside the
Ordinary Course of Business; and
(xviii) the Company has not committed to any of the foregoing.
(i) Undisclosed Liabilities. The Company has no material liability
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued
13
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due, including any liability for taxes), except for (i) liabilities set forth on
the face of the Most Recent Balance Sheet (rather than in any notes thereto) and
(ii) liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business.
(j) Legal Compliance. The Company has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against the Company alleging any failure so to comply, except
where the failure to comply would not have a material adverse effect on the
business, financial condition, operations, results of operations of the Company.
(k) Taxes. Except as otherwise set forth in ss.4(k) of the Disclosure
Schedule:
The Company has duly and timely filed all Tax Returns that it was
required to file on or prior to the date hereof. All such Tax Returns were true,
complete and correct. All Taxes owed or required to be remitted by the Company
(whether or not shown on any Tax Return) have been paid or remitted, or are
being contested and adequately reserved in accordance with GAAP on the financial
statements of the Company. The Company is not currently the beneficiary of any
extension of time within which to file any Tax Return. The most recent financial
statements delivered to Buyer by the Company hereunder reflect an adequate
reserve in accordance with GAAP for all Taxes of the Company for all taxable
periods and portions thereof through the date of such financial statements. The
Company maintained reserves in accordance with GAAP for all Taxes for the period
from the date of the most recent financial statements through the Closing Date.
The Company has satisfied all federal, state, local and foreign
withholding tax requirements including but not limited to income, social
security and employment tax.
None of the assets of the Company (i) is property that is required to be
treated as owned by another person pursuant to the "safe harbor lease"
provisions of former Section 168(f)(8) of the Code, (ii) is "tax-exempt use
property" within the meaning of Section 168(h) of the Code or (iii) directly or
indirectly secures any debt the interest of which is tax-exempt under Section
103(a) of the Code.
There are no Liens for Taxes on any of the assets of the Company.
The Company is not a party to any tax allocation, tax sharing or tax
benefit transfer agreement. The Company (A) has not been a member of an
affiliated, combined or unitary group filing a consolidated, combined or unitary
Tax Return (other than a group the common parent of which was the Company) and
(B) has no liability for the Taxes of any Person under Treas. Reg. ss.1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
14
To the Knowledge of any of the Sellers and the directors and officers of
the Company, no written claim has ever been made by a taxing authority in a
jurisdiction where the Company does not file Tax Returns that the Company is or
may be subject to taxation by that jurisdiction.
There is no dispute or claim concerning any Tax liability of the Company
either (A) claimed or raised by any taxing authority in writing or (B) as to
which any of the Sellers has knowledge based upon personal contact with any
agent of such taxing authority. No taxing authority is now asserting or, to the
knowledge of the Sellers, threatening to assert, any deficiency or assessment
for additional Taxes of the Company or has notified the Company of its intent to
examine or audit the Company. The Company has not (A) waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency or (B) received any written notice of
deficiency of assessment from any taxing authority with respect to liability for
Taxes that has not been fully paid or finally settled.
The Sellers have delivered to the Buyer correct and complete copies of all
federal income Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by the Company since December 31, 1993.
The Company has not filed a consent under Code section 341(f) concerning
collapsible corporations.
For all tax periods from and after 1987, up to and including the Effective
Time of Closing (collectively, the "S Corporation Tax Period"), the Company has
elected (with the consent of all of its shareholders), in compliance with all
applicable legal requirements, and has qualified to be taxed under Subchapter S
of the Code and corresponding provisions under any applicable state and local
laws, and such elections are in effect for the Company. No action has been taken
by the Company or any shareholder of the Company that may result in the
revocation of any such elections and, with respect to the S Corporation Tax
Period, the Company has no liability, absolute or contingent, for the payment of
any income Taxes under the Code or under the laws of such states or localities
which afford tax treatment similar to that under Subchapter S of the Code. With
respect to each subsidiary, directly or indirectly, owned by the Company, the
Company has made an election under section 1361(b)(3) of the Code and
corresponding provisions under any applicable state and local laws to treat such
subsidiary as a qualified subchapter S corporation ("QSSS"), such subsidiary has
been a QSSS since the effective date of such election and will continue to have
such status up to and including the Effective Time, and Section 4(k) of the
Disclosure Schedule sets forth, for each subsidiary, the effective date of its
QSSS election.
The Sellers represent and warrant that each is qualified to make a Code
section 338(h)(10) election under Treasury Regulations section 1.338(h)(10)-1
with respect to the sale of the Shares to Buyer, and agree to join Buyer in
making an election under section 338(h)(10) of the Code and one or more similar
elections under any applicable state income tax law (individually, a "Section
15
338(h)(10) Election" and collectively, the "Section 338(h)(10) Elections"), with
respect to Buyer's purchase of the Shares.
(l) Real Property.
(i) The Company does not own any real property.
(ii) ss.4(l)(ii) of the Disclosure Schedule lists and describes
briefly all real property leased or subleased to the Company. The Sellers have
delivered to the Buyer correct and complete copies of the leases and subleases
listed in ss.4(l)(ii) of the Disclosure Schedule (as amended to date). With
respect to each material lease and sublease listed in ss.4(l)(ii) of the
Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect in all material respects;
(B) no party to the lease or sublease is in material breach or
default, and no event has occurred which, with notice or lapse of time, would
constitute a material breach or default or permit termination, modification, or
acceleration thereunder;
(C) no party to the lease or sublease has repudiated any
material provision thereof;
(D) there are no material disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(E) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold or
subleasehold; and
(F) all facilities leased or subleased thereunder have received
all approvals of governmental authorities (including licenses and permits)
required in connection with the operation thereof, and have been operated and
maintained in accordance with applicable laws, rules, and regulations in all
respects other than where the absence of the foregoing would not cause a
Material Adverse Effect.
(m) Intellectual Property.
(i) To the Knowledge of any of the Sellers and the directors and
officers of the Company, the Company has not interfered with, infringed upon,
misappropriated, or violated any material Intellectual Property rights of third
parties in any material respect, and none of the Sellers and the directors and
officers of the Company has ever received any written charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any written claim that the Company
must license or refrain from using any
16
Intellectual Property rights of any third party). To the Knowledge of any of the
Sellers and the directors and officers of the Company, no third party has
interfered with, infringed upon, misappropriated, or violated any material
Intellectual Property rights of any of the Company in any material respect.
(ii) ss.4(m)(ii) of the Disclosure Schedule identifies each patent
or registration which has been issued to the Company with respect to any of its
Intellectual Property, identifies each pending patent application or application
for registration which the Company has made with respect to any of its
Intellectual Property, and identifies each material license, agreement, or other
permission which the Company has granted to any third party with respect to any
of its Intellectual Property (together with any exceptions). The Sellers have
delivered to the Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as amended
to date). ss.4(m)(ii) of the Disclosure Schedule also identifies each material
trade name or unregistered trademark used by the Company in connection with any
of its businesses. With respect to each item of Intellectual Property required
to be identified in ss.4(m)(ii) of the Disclosure Schedule except where there
would not be a Material Adverse Effect:
(A) the Company possesses all right, title, and interest in and
to the item, free and clear of any Security Interest, license, or other
restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation, charge,
written complaint, claim, or written demand is pending or, to the Knowledge of
any of the Sellers and the directors and officers of the Company, is threatened
which challenges the legality, validity, enforceability, use, or ownership of
the item; and
(D) the Company has never agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other conflict with
respect to the item.
(iii) ss.4(m)(iii) of the Disclosure Schedule identifies each
material item of Intellectual Property that any third party owns and that the
Company uses pursuant to license, sublicense, agreement, or permission. The
Sellers have delivered to the Buyer correct and complete copies of all such
material licenses, sublicenses, agreements, and permissions (as amended to
date). With respect to each item of Intellectual Property required to be
identified in ss.4(m)(iii) of the Disclosure Schedule except where there would
not be a Material Adverse Effect:
(A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and effect;
17
(B) no party to the license, sublicense, agreement, or
permission is in material breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
(C) no party to the license, sublicense, agreement, or
permission has repudiated any material provision thereof; and
(D) the Company has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
(n) Tangible Assets. The buildings, machinery, equipment, and other
tangible assets that the Company owns and leases are free from material defects
(patent and latent, to the Knowledge of any of the Sellers and the directors and
officers of the Company), have been maintained in accordance with normal
industry practice, and are in good operating condition and repair (subject to
normal wear and tear).
(o) Inventory. The inventory of the Company consists of raw
materials and supplies, manufactured and processed parts, work in process, and
finished goods, all of which is merchantable in the Ordinary Course of Business
(including, without limitation, normal marketing programs, discounts, rebates,
commissions, incentives and the like) and fit for the purpose for which it was
procured or manufactured, and none of which is slow-moving (on hand for more
than one year without being written down to nominal value), obsolete, damaged,
or defective, subject only to the reserve for inventory writedown set forth on
the face of the Most Recent Balance Sheet (rather than in any notes thereto) as
adjusted for operations and transactions through the Closing Date in accordance
with the past custom and practice of the Company.
(p) Contracts. ss.4(p) of the Disclosure Schedule lists the
following contracts and other agreements to which the Company is a party:
(i) any agreement (or group of related agreements) for the lease
of personal property to or from any Person;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, or under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
18
(v) any material agreement concerning confidentiality or
noncompetition;
(vi) any material agreement with any of the Sellers and their
Affiliates (other than the Company);
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the Ordinary
Course of Business;
(xi) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business, financial
condition, operations, or results of operations of the Company and its
Subsidiaries; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $25,000.
The Sellers have delivered to the Buyer a correct and complete copy of
each written agreement listed in ss.4(p) of the Disclosure Schedule (as amended
to date) and a written summary setting forth the material terms and conditions
of each oral agreement referred to in ss.4(p) of the Disclosure Schedule. With
respect to each such agreement except where there would not be a Material
Adverse Effect: (A) the agreement is legal, valid, binding, enforceable, and in
full force and effect; (B) no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (C) no party has repudiated any provision of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts receivable
of the Company are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, are current and collectible,
and will be collected in accordance with their terms at their recorded amounts,
subject only to the reserve for bad debts set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) as adjusted for
operations and transactions through the Closing Date in accordance with the past
custom and practice of the Company.
(r) Powers of Attorney. To the Knowledge of any of the Sellers and
the directors and officers of the Company, there are no material outstanding
powers of attorney executed on behalf of the Company.
19
(s) Insurance. ss.4(s) of the Disclosure Schedule sets forth the
following information with respect to each material insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) with respect to which the Company is
a party, a named insured, or otherwise the beneficiary of coverage:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage is
on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments or other
material loss-sharing arrangements.
With respect to each such insurance policy, except where there would not
be a Material Adverse Effect: (A) the policy is legal, valid, binding,
enforceable, and in full force and effect; (B) neither the Company nor any other
party to the policy is in breach or default (including with respect to the
payment of premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy; and (C) no
party to the policy has repudiated in writing any provision thereof. ss.4(s) of
the Disclosure Schedule describes any material self-insurance arrangements
affecting any of the Company and its Subsidiaries.
(t) Litigation. ss.4(t) of the Disclosure Schedule sets forth each
instance in which the Company (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of any of the Sellers and the directors and officers of the Company,
is threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator.
(u) Product Warranty. Substantially all of the products manufactured,
sold, leased, and delivered by the Company have conformed in all material
respects with all applicable contractual commitments and all express and implied
warranties, and the Company has no material liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due) for replacement or repair thereof or other damages in connection therewith,
subject only to the reserve for product warranty claims set forth on the face of
the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for
operations and transactions through the
20
Closing Date in accordance with the past custom and practice of the Company.
Substantially all of the products manufactured, sold, leased, and delivered by
the Company are subject to standard terms and conditions of sale or lease.
ss.4(u) of the Disclosure Schedule includes copies of the standard terms and
conditions of sale or lease for the Company (containing applicable guaranty,
warranty, and indemnity provisions).
(v) Product Liability. The Company has no material liability (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by the Company. The parties agree that
Sellers shall have no responsibility to Buyer under Sections 3(u) or 3(v) with
respect to product liability claims or product warranty claims involving
allegedly defective products sold by Buyer to the Company to the extent such
claims are covered by Buyer's standard warranty or by Buyer's product liability
insurance policy.
(w) Employees. To the Knowledge of any of the Sellers and the directors
and officers of the Company, except for those of the Company's officers and
directors Buyer does not intend to maintain an employment relationship with
following the Closing as confirmed in writing by Buyer to the Company, no
executive, key employee, or significant group of employees plans to terminate
employment with the Company during the next 12 months. The Company is not a
party to or bound by any collective bargaining agreement, nor has it experienced
any strike or material grievance, claim of unfair labor practices, or other
collective bargaining dispute within the past three years. The Company has not
committed any material unfair labor practice. None of the Sellers and the
directors and officers of the Company has any Knowledge of any organizational
effort presently being made or threatened by or on behalf of any labor union
with respect to employees of the Company.
(x) Employee Benefits.
(i) ss.4(x) of the Disclosure Schedule lists each Employee Benefit
Plan that the Company maintains or to which the Company contributes or has any
obligation to contribute. The Company does not have, and has never had, any
ERISA Affiliates
(A) At no time has the Company ever sponsored or otherwise
contributed to or had any obligation to contribute to any Multiemployer Plan or
defined benefit plan (as such term is defined in ERISA ss.3(35)) or otherwise
has incurred any withdrawal liability as defined in ERISA ss.4201 or liability
to the PBGC (whether known or unknown, asserted or unasserted), nor has the
Company ever sponsored or otherwise contributed to or has any obligation to
contribute to any plan providing benefits to current or future retired or
terminated employees, their spouses, or their dependents, except for required
continuation coverage under Part 6 of Title I of ERISA and Code ss.4908B.
21
(B) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all material
respects with the applicable requirements of ERISA, the Code and other
applicable laws.
(C) All required reports and descriptions (including Form 5500
Annual Reports, summary annual reports, PBGC-l's, and summary plan descriptions)
have been timely filed and distributed appropriately with respect to each such
Employee Benefit Plan. The requirements of COBRA have been met in all material
respects with respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(D) All contributions (including all employer contributions,
employee salary reduction contributions and insurance premiums and other
payments) which are due have been paid to each such Employee Benefit Plan and
all contributions for any period ending on or before the Closing Date which are
not yet due have been paid to each such Employee Benefit Plan or accrued in
accordance with the past custom and practice of the Company.
(E) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan intended to be a "qualified plan" under Code ss.401(a) meets the
requirements, both in form and operation of Code ss.401(a), has received a
favorable determination letter from the Internal Revenue Service that it is a
"qualified plan," and such determination letter is currently in effect, and
Seller is not aware of any facts or circumstances that could result in the
revocation of such determination letter.
(F) The Sellers have delivered to the Buyer correct and complete
copies of the plan documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service, the most recent
Form 5500 Annual Report, and all related trust agreements, insurance contracts,
and other funding agreements which implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the Company
maintains or ever has maintained or to which it contributes, ever has
contributed, or ever has been required to contribute, there have been no
Prohibited Transactions with respect to any such Employee Benefit Plan. No
Fiduciary has any liability for material breach of fiduciary duty or any other
material failure to act or comply in connection with the administration or
investment of the assets of any such Employee Benefit Plan. No action, suit,
proceeding, hearing, or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan (other than routine
claims for benefits) is pending or, to the Knowledge of any of the Sellers and
the directors and officers of the Company, threatened.
(y) Guaranties. The Company is not a guarantor or otherwise responsible
for any liability or obligation (including indebtedness) of any other Person.
(z) Environment, Health, and Safety Matters.
22
(i) The Company, has complied and is in compliance, in each case in
all material respects, with all Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, the Company
has obtained, has complied, and is in compliance with, in each case in all
material respects, all material permits, licenses and other authorizations that
are required pursuant to Environmental, Health, and Safety Requirements for the
occupation of its facilities and the operation of its business; a list of all
such material permits, licenses and other authorizations is set forth on the
attached "Environmental and Safety Permits Schedule."
(iii) The Company has not received any written notice, report or
other information regarding any actual or alleged material violation of
Environmental, Health, and Safety Requirements, or any material liabilities or
potential material liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any material investigatory, remedial or
corrective obligations, relating to any of them or its facilities arising under
Environmental, Health, and Safety Requirements.
(iv) Except as set forth on the attached "Environmental and Safety
Matters Schedule", none of the following exists at any property or facility
owned or operated by the Company: (1) underground storage tanks, (2)
asbestos-containing material in any friable and damaged form or condition, (3)
materials or equipment containing polychlorinated biphenyls, or (4) landfills,
surface impoundments, or disposal areas.
(v) The Company has not treated, stored, disposed of, arranged for
or permitted the disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned or operated any
property or facility (and no such property or facility is contaminated by any
such substance) in a manner that has given or would give rise to material
liabilities, including any material liability for response costs, corrective
action costs, personal injury, property damage, natural resources damages or
attorney fees, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA") or the Solid Waste
Disposal Act, as amended ("SWDA") or any other Environmental, Health, and Safety
Requirements.
(vi) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any material obligations
for site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Requirements.
(aa) Certain Business Relationships With the Company and Its
Subsidiaries. None of the Sellers and their Affiliates has been involved in any
material business arrangement or relationship with the Company within the past
12 months, and none of the Sellers and their Affiliates owns any material asset,
tangible or intangible, which is used in the business of any of the Company,
23
except that certain of the Sellers own the real property in Oxnard, California
which is leased by the Company and is being sold to the Buyer pursuant to the
Real Property Agreement.
(bb) Disclosure. The representations and warranties contained in this
ss.4 do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this ss.4 not misleading. Other than as set forth in this Agreement
and the Disclosure Schedule and any other exhibits and schedules hereto, neither
the Company nor any Seller is making any representations or warranties and Buyer
is placing no reliance on any representations or warranties which are not set
forth in this Agreement, the Disclosure Schedule and any other exhibits and
schedules hereto.
5. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or her reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in ss.7 below).
(b) Notices and Consents. The Sellers will cause the Company to give any
notices to third parties, and will cause the Company to use its reasonable best
efforts to obtain any third party consents, that the Buyer reasonably may
request in connection with the matters referred to in ss.4(c) above. Each of the
Parties will (and the Sellers will cause the Company to) give any notices to,
make any filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in ss.3(a)(ii), ss.3(b)(ii), and
ss.4(c) above. Without limiting the generality of the foregoing, each of the
Parties will file (and the Sellers will cause the Company to file) any
Notification and Report Forms and related material that he or she may be
required to file with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, and
will make (and the Sellers will cause the Company to make) any further filings
pursuant thereto that may be necessary, proper, or advisable in connection
therewith. Buyer will assist Sellers and the Company in the preparation of
filings under the Xxxx-Xxxxx-Xxxxxx Act, but Sellers shall be responsible for
the filings being complete and accurate as required by the Xxxx-Xxxxx-Xxxxxx
Act.
(c) Operation of Business. The Sellers will not cause or permit the
Company to engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, the Sellers will not cause or permit the Company to
(i) declare, set aside, or pay any dividend or make any distribution with
respect to its capital stock or redeem, purchase, or otherwise acquire any of
its capital stock, (ii) otherwise engage in any practice, take any action, or
enter into any transaction of the sort described in ss.4(h) above, except as set
forth in the Disclosure Schedule, provided that any dividends or distributions
referenced in the Disclosure Schedule shall not reduce the Net Working Capital
of the Company on the Closing Date below the Net Working Capital on the 1998
Balance Sheet.
24
(d) Preservation of Business. The Sellers will cause the Company to keep
its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees.
(e) Full Access. Each of the Sellers will permit, and the Sellers will
cause the Company to permit, representatives of the Buyer to have full access at
all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company, to all premises, properties, personnel,
books, records (including tax records), contracts, and documents of or
pertaining to the Company. The Buyer will treat and hold as such any
Confidential Information it receives from any of the Sellers and the Company in
the course of the reviews contemplated by this ss.5(e), will not use any of the
Confidential Information except in connection with this Agreement, and, if this
Agreement is terminated for any reason whatsoever, will return to the Sellers
and the Company all tangible embodiments (and all copies) of the Confidential
Information which are in its possession.
(f) Notice of Developments. The Sellers will give prompt written notice
to the Buyer of any material adverse development causing a breach of any of the
representations and warranties in ss.4 above. Each Party will give prompt
written notice to the others of any material adverse development causing a
breach of any of his or her own representations and warranties in ss.3 above. No
disclosure by any Party pursuant to this ss.5(f), however, shall be deemed to
amend or supplement Annex I, Annex II, or the Disclosure Schedule or to prevent
or cure any misrepresentation, breach of warranty, or breach of covenant.
(g) Exclusivity. None of the Sellers will (and the Sellers will not
cause or permit the Company to) (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities, or any substantial portion of
the assets, of the Company (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. None of the Sellers will vote their
Company Shares in favor of any such acquisition structured as a merger,
consolidation, or share exchange.
(h) Existing Agreements. The Buyer will not terminate or otherwise alter
in any material respect any of the terms or conditions of its existing
agreements with the Company, except for termination of the manufacturer's
representative agreement between the Company and the Buyer.
(i) Company's Qualified Plan. Sellers shall cause the Company to adopt
such resolutions as may be necessary to terminate the X.X. Xxxxx & Company, Inc.
Retirement Plan ("Qualified Plan") as of a date no later than the day prior to
the Closing Date ("Termination Date"). Such resolutions shall further provide
that the Qualified Plan be amended to cease all future contributions and benefit
accruals under the Qualified Plan as of the Termination Date and vest all
participants thereunder as of the Termination Date. In addition, such
resolutions shall provide that
25
the termination of the Qualified Plan shall be subject to the condition
subsequent that the Internal Revenue Service determines that the termination of
the Qualified Plan will not adversely affect its qualified status under Code
ss.401(a) and that the Company shall make such submission as may be necessary to
obtain such determination. The resolutions shall also direct the liquidation and
termination of the trust established under the Qualified Plan upon receipt of a
favorable determination with respect to the termination of the Qualified Plan.
Sellers shall also cause the Company to adopt amendments to the Qualified Plan
to the extent necessary to implement the resolutions, such amendments to be
effective subject to the condition subsequent of the determination by the
Internal Revenue Service that such amendment(s) will not adversely affect the
qualified status of the Qualified Plan under Code ss.401(a) of the Code.
6. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
(a) General. In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor under ss.8 below). The Sellers acknowledge
and agree that from and after the Closing the Buyer will be entitled to
possession of all documents, books, records (including tax records), agreements,
and financial data of any sort relating to the Company.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving any of the Company and its Subsidiaries, each of
the other Parties will cooperate with him or it and his or her counsel in the
contest or defense, make available their personnel, and provide such testimony
and access to their books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under ss.8 below).
(c) Transition. None of the Sellers will take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Company from maintaining
the same business relationships with the Company after the Closing as it
maintained with the Company prior to the Closing.
(d) Confidentiality. Each of the Sellers will treat and hold as such all
of the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the Buyer or destroy, at the request and option of the Buyer, all tangible
embodiments (and all copies) of the Confidential Information which are in his or
her possession, except nothing herein shall restrict any Seller who becomes an
employee
26
of the Company after the Closing from using Confidential Information in the
course of his employment by the Company. In the event that any of the Sellers is
requested or required (by oral question or request for information or documents
in any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, that Seller will
notify the Buyer promptly of the request or requirement so that the Buyer may
seek an appropriate protective order or waive compliance with the provisions of
this ss.6(d). If, in the absence of a protective order or the receipt of a
waiver hereunder, any of the Sellers is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable for
contempt, that Seller may disclose the Confidential Information to the tribunal;
provided, however, that the disclosing Seller shall use his or her reasonable
best efforts to obtain (at Buyer's sole cost and expense), at the reasonable
request of the Buyer, an order or other assurance that confidential treatment
will be accorded to such portion of the Confidential Information required to be
disclosed as the Buyer shall designate.
(e) Covenant Not to Compete. For a period of five years from and after
the Closing Date, none of the Sellers will engage directly or indirectly in any
business that the Company conducts as of the Closing Date in any geographic area
in which the Company conducts that business as of the Closing Date; provided,
however, that no owner of less than 1% of the outstanding stock of any
publicly-traded corporation shall be deemed to engage solely by reason thereof
in any of its businesses. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this ss.6(e) is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.3(a) and ss.4
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Sellers shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing;
(iii) the Company shall have procured all of the material third
party consents specified in ss.5(b) above;
27
(iv) no action, suit, or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of the Buyer to own the
Company Shares and to control the Company or (D) affect materially and adversely
the right of the Company to own its assets and to operate its businesses (and no
such injunction, judgment, order, decree, ruling, or charge shall be in effect);
(v) the Sellers shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in ss.7(a)(i)-(iv) is
satisfied in all respects;
(vi) all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been terminated
and the Parties, and the Company, shall have received all other material
authorizations, consents, and approvals of governments and governmental agencies
referred to in ss.3(a)(ii), ss.3(b)(ii), and ss.4(c) above;
(vii) closing of the transactions contemplated by the Real Property
Agreement shall occur concurrently with the Closing hereunder and Buyer shall
acquire the real property which is the subject thereof pursuant to the terms and
conditions of the Real Property Agreement;
(viii) the Buyer shall have received from counsel to the Sellers an
opinion in form and substance as set forth in Exhibit D attached hereto,
addressed to the Buyer, and dated as of the Closing Date;
(ix) the Buyer shall have received the resignations, effective as of
the Closing, of each director and officer of the Company.
(x) the Buyer shall have entered into employment agreements or
otherwise reached satisfactory understandings with key employees of the Company;
(xi) the Sellers and the Buyer shall have executed mutual releases
of all claims prior to the Closing Date reasonably satisfactory to Sellers and
Buyer; and
(xii) all actions to be taken by the Sellers in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Buyer.
The Buyer may waive any condition specified in this ss.7(a) if it
executes a writing so stating at or prior to the Closing.
28
(b) Conditions to Obligation of the Sellers. The obligation of the
Sellers to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.3(b) above
shall be true and correct in all material respects at and as of the Closing
Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing including
without limitation payment of the Purchase Price as provided herein;
(iii) no action, suit, or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement or (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(iv) the Buyer shall have delivered to the Sellers a certificate to
the effect that each of the conditions specified above in ss.7(b)(i)-(iii) is
satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been terminated
and the Parties, the Company, and its Subsidiaries shall have received all other
material authorizations, consents, and approvals of governments and governmental
agencies referred to in ss.3(a)(ii), ss.3(b)(ii), and ss.4(c) above;
(vi) closing of the transactions contemplated by the Real Property
Agreement shall occur concurrently with the closing hereunder and the Sellers of
the real property which is the subject thereof shall receive the consideration
provided for therein;
(vii) the Sellers shall have received from counsel to the Buyer an
opinion in form and substance as set forth in Exhibit E attached hereto,
addressed to the Sellers, and dated as of the Closing Date;
(viii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Requisite Sellers;
(ix) the Sellers and the Buyer shall have executed mutual releases
of all claims prior to the Closing Date reasonably satisfactory to Sellers and
Buyer; and
29
(x) Buyer and its affiliates shall have waived all claims they may
have against Sellers under Sections 500 et. seq of the California Corporations
Code regarding all preclosing distributions disclosed on the Disclosure
Schedule.
The Requisite Sellers may waive any condition specified in this
ss.7(b) if they execute a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Sellers contained in ss.4 above (other
than ss.4(k) above) shall survive the Closing hereunder (even if the Buyer knew
or had reason to know of any misrepresentation or breach of warranty at the time
of Closing) and continue in full force and effect for a period of two years
thereafter; provided, however, that the representations and warranties contained
in ss.4(z) above shall survive the Closing hereunder (even if the Buyer knew or
had reason to know of any misrepresentation or breach of warranty at the time of
Closing) and continue in full force and effect for a period of five years
thereafter. All of the other representations and warranties of the Parties
contained in this Agreement (including the representations and warranties of the
Parties contained in ss.3 above and the representations and warranties of the
Sellers contained in ss.4(k) above) shall survive the Closing (even if the
damaged Party knew or had reason to know of any misrepresentation or breach of
warranty at the time of Closing) and continue in full force and effect forever
thereafter (subject to any applicable statutes of limitations). Upon termination
of any representations and warranties of Sellers as expressly provided above,
Buyer shall have no right to make a claim for indemnification for breach of such
representations and warranties, except with respect to claims made in writing
prior to such termination.
(b) Indemnification Provisions for Benefit of the Buyer.
(i) In the event any of the Sellers breaches any of their
representations, warranties, and covenants contained herein (other than the
covenants in ss.2(a) above and the representations and warranties in ss.3(a)
above), and, if there is an applicable survival period pursuant to ss.8(a)
above, provided that the Buyer makes a written claim for indemnification against
any of the Sellers pursuant to ss.11(h) below within such survival period, then
each of the Sellers agrees to indemnify the Buyer from and against the entirety
of any Adverse Consequences the Buyer may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences the Buyer may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach; provided,
however, that (A) the Sellers shall not have any obligation to indemnify the
Buyer from and against any Adverse Consequences resulting from, arising out of,
relating to, in the nature of, or caused by the breach of any representation or
warranty of the Sellers contained in ss.4 above until the Buyer has suffered
Adverse Consequences by reason of all such breaches in excess of $340,000 (after
which point the Sellers will be obligated to indemnify the Buyer from and
against all such Adverse Consequences whether greater or less than such amount)
and (B) there will be a $7,500,000 aggregate ceiling on
30
the obligation of the Sellers to indemnify the Buyer from and against Adverse
Consequences resulting from, arising out of, relating to, in the nature of, or
caused by breaches of the representations and warranties of the Sellers
contained in ss.4 above.
(ii) In the event any of the Sellers breaches any of his or her
covenants in ss.2(a) above or any of his or her representations and warranties
in ss.3(a) above, and, if there is an applicable survival period pursuant to
ss.8(a) above, provided that the Buyer makes a written claim for indemnification
against the Seller pursuant to ss.11(h) below within such survival period, then
the Seller agrees to indemnify the Buyer from and against the entirety of any
Adverse Consequences the Buyer may suffer through and after the date of the
claim for indemnification (including any Adverse Consequences the Buyer may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach.
(iii) Each of the Sellers agrees to indemnify the Buyer from and
against the entirety of any Adverse Consequences the Buyer may suffer resulting
from, arising out of, relating to, in the nature of, or caused by any Liability
of the Company (x) for any Taxes of the Company with respect to any Tax year or
portion thereof ending on or before the Closing Date (or for any Tax year
beginning before and ending after the Closing Date to the extent allocable
(determined in a manner consistent with ss.9(b)) to the portion of such period
beginning before and ending on the Closing Date), to the extent such Income
Taxes are not reflected in the reserve for Tax Liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) shown on the face of the Closing Statement, and (y) for the
unpaid taxes of any Person (other than the Company) under Reg. ss.1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(c) Indemnification Provisions for Benefit of the Sellers. In the event
the Buyer breaches any of its representations, warranties, and covenants
contained herein, and, if there is an applicable survival period pursuant to
ss.8(a) above, provided that any of the Sellers makes a written claim for
indemnification against the Buyer pursuant to ss.11(h) below within such
survival period, then the Buyer agrees to indemnify each of the Sellers from and
against the entirety of any Adverse Consequences the Sellers may suffer through
and after the date of the claim for indemnification (including any Adverse
Consequences the Sellers may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in the nature of, or caused
by the breach. In addition, the Buyer agrees to indemnify each of the Sellers
from and against the entirety of any Adverse Consequences the Sellers may suffer
resulting from, arising out of or relating to, in the nature of, or caused by
Buyer's ownership and operation of the business of the Company after Closing,
other than with respect to (i) matters for which Sellers are required to
indemnify Buyers pursuant to Section 8(b) and (ii) matters related to the
representation of Buyer as a manufacturer's representative.
(d) Matters Involving Third Parties.
31
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this ss.8, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, however, that no delay on the
part of the Indemnified Party in notifying any Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to assume the
defense of the Third Party Claim with counsel of his or her choice reasonably
satisfactory to the Indemnified Party at any time within 15 days after the
Indemnified Party has given notice of the Third Party Claim; provided, however,
that the Indemnifying Party must conduct the defense of the Third Party Claim
actively and diligently thereafter in order to preserve its rights in this
regard; and provided further that the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in (but not control) the
defense of the Third Party Claim.
(iii) So long as the Indemnifying Party has assumed and is
conducting the defense of the Third Party Claim in accordance with ss.8(d)(ii)
above, (A) the Indemnifying Party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (not to be withheld or delayed
unreasonably) unless the judgment or proposed settlement involves only the
payment of money damages by one or more of the Indemnifying Parties and does not
impose an injunction or other equitable relief upon the Indemnified Party and
(B) the Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld or delayed
unreasonably).
(iv) In the event none of the Indemnifying Parties assumes and
conducts the defense of the Third Party Claim in accordance with ss.8(d)(ii)
above, however, (A) the Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with respect to, the Third
Party Claim in any manner he or she reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith) and (B) the Indemnifying Parties
will remain responsible for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim to the fullest extent provided in this ss.8.
(e) Determination of Adverse Consequences. The Parties shall make
appropriate adjustments for tax consequences and insurance coverage and take
into account the time cost of money (using the Applicable Rate as the discount
rate) in determining Adverse Consequences for purposes of this ss.8. All
indemnification payments under this ss.8 shall be deemed adjustments to the
Purchase Price.
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(f) Exclusive Remedy. The Buyer and the Seller acknowledge and agree
that the foregoing indemnification provisions in this ss.8 shall be the
exclusive remedy of the Buyer and the Seller with respect to the Company, and
the transactions contemplated by this Agreement. Without limiting the generality
of the foregoing, the Buyer and the Seller hereby waive any statutory,
equitable, or common law rights or remedies relating to any environmental
matters, including without limitation any such matters arising under any
Environmental, Health, and Safety Requirements and including without limitation
any arising under the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA"). Each of the Sellers hereby agrees that he or she will
not make any claim for indemnification against the Company by reason of the fact
that he or she was a director, officer, employee, or agent of any such entity or
was serving at the request of any such entity as a partner, trustee, director,
officer, employee, or agent of another entity (whether such claim is for
judgments, damages, penalties, fines, costs, amounts paid in settlement, losses,
expenses, or otherwise and whether such claim is pursuant to any statute,
charter document, bylaw, agreement, or otherwise) with respect to any action,
suit, proceeding, complaint, claim, or demand brought by the Buyer against such
Seller (whether such action, suit, proceeding, complaint, claim, or demand is
pursuant to this Agreement, applicable law, or otherwise).
9. Tax Matters.
The following provisions shall govern the allocation of responsibility as
between Buyer and Sellers for certain tax matters following the Closing Date:
(a) Tax Periods Ending on or Before the Closing Date. Sellers shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for the Company for all periods ending on or prior to the Closing Date which are
filed after the Closing Date. Sellers shall permit Buyer to review and comment
on each such Tax Return described in the preceding sentence prior to filing and
shall make such revisions to such Tax Returns as are reasonably requested by
Buyer. Sellers shall be responsible for the payment of Taxes of the Company with
respect to such periods except to the extent such Taxes are reflected in the
reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) shown on
the face of the Closing Statement.
(b) Tax Periods Beginning Before and Ending After the Closing Date.
Buyer shall prepare or cause to be prepared and file or cause to be filed
(subject to review and approval by Seller's Agent which approval shall not be
unreasonably withheld or delayed) any Tax Returns of the Company for Tax periods
which begin before the Closing Date and end after the Closing Date. Seller shall
pay to Buyer within fifteen (15) days after the date on which Taxes are paid
with respect to such periods an amount equal to the portion of such Taxes which
relates to the portion of such Taxable period ending on the Closing Date to the
extent such Taxes are not reflected in the reserve for Tax Liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) shown on the face of the Closing Statement. For
purposes of this Section, in the case of any Taxes that are imposed on a
periodic basis and are payable for a Taxable period that includes (but does not
end on) the Closing Date, the portion of such Tax which relates
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to the portion of such Taxable period ending on the Closing Date shall (x) in
the case of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Taxable period
multiplied by a fraction the numerator of which is the number of days in the
Taxable period ending on the Closing Date and the denominator of which is the
number of days in the entire Taxable period, and (y) in the case of any Tax
based upon or related to income or receipts be deemed equal to the amount which
would be payable if the relevant Taxable period ended on the Closing Date. Any
credits relating to a Taxable period that begins before and ends after the
Closing Date shall be taken into account as though the relevant Taxable period
ended on the Closing Date. All determinations necessary to give effect to the
foregoing allocations shall be made in a manner consistent with prior practice
of the Company.
(c) Refunds and Tax Benefits. Any Tax refunds that are received by Buyer
or the Company, and any amounts credited against Tax to which Buyer or the
Company become entitled, that relate to Tax periods or portions thereof ending
on or before the Closing Date that were not reflected on the Closing Statement
or the 1998 Balance Sheet shall be for the account of Seller, and Buyer shall
pay over to Seller any such refund or the amount of any such credit within
fifteen (15) days after receipt or entitlement thereto. In addition, to the
extent that a claim for refund or a proceeding results in a payment or credit
against Tax by a taxing authority to the Buyer or the Company of any Tax accrued
on the Closing Statement, the Buyer shall pay such amount to Seller within
fifteen (15) days after receipt or entitlement thereto provided that such
payment or credit against Tax was not reflected on the 1998 Balance Sheet or on
the Closing Statement.
(d) Cooperation on Tax Matters.
(i) Buyer, the Company and Sellers shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Section and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. The Company and Sellers agree (A) to retain all books and records
with respect to Tax matters pertinent to the Company relating to any taxable
period beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or Sellers, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (B) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other party so requests, the Company or
Sellers, as the case may be, shall allow the other party to take possession of
such books and records.
(ii) Buyer and Seller further agree, upon request, to use their best
efforts to obtain any certificate or other document from any governmental
authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).
34
(iii) Buyer and Seller further agree, upon request, to provide the
other party with all information that either party may be required to report
pursuant to ss.6043 of the Code and all Treasury Department Regulations
promulgated thereunder.
(iv) If the Company becomes obligated to pay any state Taxes (other
than California Taxes) with respect to any period ending on or prior to the
Closing Date, Buyer will cooperate with Sellers by amending the Company's
California Tax Returns as may be appropriate in order to obtain any refund or
credit to which the Company is entitled in order to mitigate the amount of any
Tax for which Sellers are liable to indemnify Buyer hereunder, provided that
such amendment does not have an adverse effect on the Company or the Buyer for
periods ending after the Closing Date.
(e) Tax Sharing Agreements. All tax sharing agreements or similar
agreements with respect to or involving the Company shall be terminated as of
the Closing Date and, after the Closing Date, the Company shall not be bound
thereby or have any liability thereunder.
(f) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be 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 transfer, documentary, sales,
use, stamp, registration and other Taxes and fees, and, if required by
applicable law, Buyer will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
(g) Allocation and 338(h)(10) Election. Buyer shall prepare Internal
Revenue Service Form 8023 (and any required attachments) and any similar state
forms (and any required attachments) that may be required to make the Section
338(h)(10) Elections (collectively, the "Forms") and shall submit for Forms to
the Sellers not later than 10 days prior to the Closing for review by Sellers.
After review and approval by Sellers, Sellers and Buyer shall sign the forms
which shall be delivered to Buyer at Closing. The Sellers agree to provide the
necessary information to Buyer in connection with the preparation of the Forms.
The Sellers and the Buyer agree upon an allocation of the modified aggregate
deemed sales price (as such term is defined in Treasury regulations under
section 338) among the Company's assets (the "Allocation") in accordance with
the attached Exhibit F. The parties acknowledge that Exhibit F has been prepared
based on the Company's June 30, 1999 balance sheet and that such allocation will
be appropriately revised based upon the balance sheet as of the Closing Date.
The Buyer shall file the Forms in accordance with applicable Tax laws. The
Sellers and the Buyer shall take or cause to be taken any other actions that are
necessary for making or perfecting the Section 338(h)(10) Elections. The Buyer
shall provide the Sellers with a copy of the Forms as filed. With respect to
each Section 338(h)(10) Election, the Sellers shall treat the Section 338(h)(10)
Election as valid and shall not take any action inconsistent with such
treatment, except to the extent otherwise provided under applicable Tax law. Any
Taxes payable by the Company as a result of such election shall be accrued as a
liability on the Closing Statement.
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10. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Requisite Sellers may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Requisite Sellers at any time prior to the Closing (A) in the
event any of the Sellers has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, the Buyer has
notified the Requisite Sellers of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach or (B) if the
Closing shall not have occurred on or before October 31, 1999, by reason of the
failure of any condition precedent under ss.7(a) hereof (unless the failure
results primarily from the Buyer itself breaching any representation, warranty,
or covenant contained in this Agreement); and
(iii) the Requisite Sellers may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing (A) in the event
the Buyer has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, any of the Sellers has
notified the Buyer of the breach, and the breach has continued without cure for
a period of 30 days after the notice of breach or (B) if the Closing shall not
have occurred on or before October 31, 1999, by reason of the failure of any
condition precedent under ss.7(b) hereof (unless the failure results primarily
from any of the Sellers themselves breaching any representation, warranty, or
covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to ss.10(a) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party (except
for any liability of any Party then in breach); provided, however, that the
confidentiality provisions contained in ss.5(e) above shall survive termination.
11. Miscellaneous.
(a) Nature of Certain Obligations.
(i) The covenants of each of the Sellers in ss.2(a) above
concerning the sale of his or her Company Shares to the Buyer and the
representations and warranties of each of the Sellers in ss.3(a) above
concerning the transaction are several obligations. This means that the
particular Seller making the representation, warranty, or covenant will be
solely responsible to the extent provided in ss.8 above for any Adverse
Consequences the Buyer may suffer as a result of any breach thereof.
36
(ii) The remainder of the representations, warranties, and
covenants in this Agreement are joint and several obligations. This means that
each Seller will be responsible to the extent provided in ss.8 above for the
entirety of any Adverse Consequences the Buyer may suffer as a result of any
breach thereof.
(b) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
Buyer and the Requisite Sellers; provided, however, that any Party may make any
public disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will use its reasonable best efforts to advise the
other Parties prior to making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the Real Property
Agreement and the other documents referred to herein) constitutes the entire
agreement among the Parties and supersedes any prior understandings, agreements,
or representations by or among the Parties, written or oral, to the extent they
related in any way to the subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or her rights, interests, or obligations hereunder without the prior written
approval of the Buyer and the Requisite Sellers; provided, however, that the
Buyer may (i) assign any or all of its rights and interests hereunder to one or
more of its Affiliates and (ii) designate one or more of its Affiliates to
perform its obligations hereunder (in any or all of which cases the Buyer
nonetheless shall remain responsible for the performance of all of its
obligations hereunder).
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
37
If to the Sellers:
Xxxxxx X. Xxxxxxx
X. X. Xxxxx & Company, Inc.
000 Xxx Xxxxx Xxxx.
Xxxxxx, XX 00000
With a copy to:
Weinstock, Manion, Xxxxxxx,
Shore and Xxxxxxx, a Law Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
If to the Buyer:
Penn Engineering & Manufacturing Corp.
0000 Xxx Xxxxxx Xxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Chairman
With a copy to:
Duane, Morris & Heckscher LLP
0000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esquire
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
38
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Requisite Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties and the Company, will bear his or her
or its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. Sellers
and Buyer shall each pay one-half of the Xxxx-Xxxxx-Xxxxxx filing fee and the
fees and expenses of Duane, Morris & Heckscher LLP incurred in connection with
such filing. The Sellers agree that the Company has not borne and will not bear
any of the Sellers' costs and expenses (including any of their legal fees and
expenses) in connection with this Agreement or any of the transactions
contemplated hereby, except that the Company shall be permitted to pay up to
$200,000 for the Sellers' and the Company's costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby,
including Seller's portion of the Xxxx-Xxxxx-Xxxxxx filing fee and legal and
accounting fees and expenses) but only to the extent that the Net Working
Capital of the X.X. Xxxxx Division of the Company on the Closing Date after
payment of such items is not less than the Net Working Capital of the Company as
shown on the 1998 Balance Sheet.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(n) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(o) Arbitration. Except for disputes concerning the preparation of the
Closing Statement and any reduction of the Purchase Price under Section 2(c)
which shall be resolved in accordance with such Section 2(c), any other dispute
arising under the indemnification provisions or any other provisions of this
Agreement or the Escrow Agreement shall be resolved by binding arbitration
conducted in Wilmington, Delaware in accordance with the procedures of the
American Arbitration Association and judgment may be entered in any court of
competent jurisdiction based upon the decision reached in such arbitration. Each
of the Parties agrees that notices given to the Parties in connection with any
arbitration proceeding shall be properly given if sent in accordance with
ss.11(h) hereof.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
PENN ENGINEERING &
MANUFACTURING CORP.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title:
/s/ Xxxxxxx Xxxxx Xxxxxx
-----------------------------------
XXXXXXX XXXXX, NOW KNOWN AS XXXXXXX
XXXXXX, Trustee of Trust B under
Will of Xxxxxxx X. Xxxxx, Deceased
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
XXXXXX X. XXXXXXX
/s/ Xxxx X. Xxxxxxx
-----------------------------------
XXXX X. XXXXXXX
/s/ Xxxx X. Xxxxxx
-----------------------------------
XXXX X. XXXXXX
/s/ Xxxxxxxxx X. Xxxxxx
-----------------------------------
XXXXXXXXX X. XXXXXX
/s/ Xxxxxx Xxxx Xxxxxxxx
-----------------------------------
XXXXXX XXXX XXXXXXXX
40
