EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
among
XXXXXXXXX TECHNOLOGIES CORPORATION
KIRKHILL RUBBER COMPANY
AND
KIRKHILL RUBBER COMPANY EMPLOYEE STOCK
OWNERSHIP AND SAVINGS PLAN
Dated as of August 10, 1998
CONTENTS
ARTICLE I - DEFINITIONS 1
ARTICLE II - PURCHASE AND SALE OF SHARES 4
2.1 Purchase and Sale of Shares 4
2.2 Consideration for Common Stock 4
2.2.1 Payment for Common Stock 4
2.2.2 Closing Adjustment 4
2.3 Closing 5
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF KIRKHILL 6
3.1 Organization 6
3.2 Enforceability 6
3.3 Capitalization 7
3.4 Subsidiaries and Affiliates 7
3.5 No Approvals or Notices Required; No Conflicts With
Instruments 7
3.6 Financial Statements 8
3.7 Absence of Certain Changes or Events 9
3.8 Taxes 12
3.9 Property 13
3.10 Contracts 14
3.11 Customers and Suppliers 15
3.12 Orders, Commitments and Returns 15
3.13 Claims and Legal Proceedings 15
3.14 Labor Matters 16
3.15 Employee Benefit Plans 16
3.16 Patents, Trademarks, etc. 21
3.17 Accounts Receivable 21
3.18 Inventory 21
3.19 Corporate Books and Records 22
3.20 Licenses, Permits, Authorizations, etc. 22
3.21 Compliance With Laws 22
3.22 Insurance 24
3.23 Brokers, Finders or Financial Advisors 25
3.24 Government Contracts 25
3.25 Absence of Questionable Payments 26
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3.26 Personnel 26
3.27 Bank Accounts 26
3.28 Previous Conduct of Business; Insider Interests 27
3.29 Full Disclosure 27
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE ESOP 28
4.1 Good Title 28
4.2 Enforceability 28
4.3 No Approvals or Notices Required; No Conflicts With
Instruments 29
4.4 Employee Benefit Plans 29
4.5 Insider Interests 31
4.6 Full Disclosure 31
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF ESTERLINE 31
5.1 Organization 31
5.2 Enforceability 32
5.3 No Approvals or Notices Required; No Conflicts With
Instruments 32
5.4 Legal Proceedings 32
5.5 Brokers or Finders 32
5.6 Full Disclosure 33
ARTICLE VI - CONDITIONS PRECEDENT TO OBLIGATIONS OF ESTERLINE 33
6.1 Accuracy of Representations and Warranties 33
6.2 Performance of Agreements 33
6.3 Opinion of Counsel for Kirkhill 33
6.4 Opinion of Counsel for the ESOP 34
6.5 ESOP-Related Conditions 34
6.6 Consents to Sale of Shares 34
6.7 Officers' Certificate 34
6.8 ESOP's Certificate 34
6.9 Material Adverse Change 35
6.10 Due Diligence and Board Approval 35
6.11 Approvals and Consents 35
6.12 Proceedings and Documents; Secretary's Certificate 35
6.13 Compliance With Laws 35
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6.14 Legal Proceedings 36
6.15 Employment Agreements 36
6.16 Delivery of Certificates 36
6.17 Fairness Opinion 36
6.18 Other Matters 36
ARTICLE VII - CONDITIONS PRECEDENT TO OBLIGATIONS OF KIRKHILL AND THE ESOP 36
7.1 Accuracy of Representations and Warranties 37
7.2 Performance of Agreements 37
7.3 ESOP Approval 37
7.4 Officers' Certificate 37
7.5 Legal Proceedings 37
7.6 Approvals and Consents 37
7.7 Compliance With Laws 38
7.8 Fairness Opinion 38
7.9 Opinion of Counsel for Esterline 38
ARTICLE VIII - COVENANTS 38
8.1 Conduct of Business by Kirkhill Pending the Closing 38
8.2 Access to Information; Confidentiality 40
8.3 Exclusivity 41
8.4 Notification of Certain Matters 42
8.5 Further Action; Reasonable Best Efforts 42
8.6 Publicity 43
8.7 Offer by Esterline 43
8.8 Employment and Compensation 43
ARTICLE IX - TERMINATION, AMENDMENT AND WAIVER 44
9.1 Termination 44
9.2 Effect of Termination 44
9.3 Amendment 45
9.4 Waiver 45
ARTICLE X - GENERAL 45
10.1 Survival 45
10.2 Expenses 45
10.3 Notices 46
10.4 Severability 47
10.5 Entire Agreement 48
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10.6 Assignment 48
10.7 Parties in Interest 48
10.8 Specific Performance 48
10.9 Consequential Damages 48
10.10 Governing Law 49
10.11 Entire Understanding 49
10.12 Headings 49
10.13 Counterparts 49
EXHIBITS
--------
2.2.2 - Net Asset Calculation
3.3 - Schedule of Kirkhill Shareholders
6.3 - Form of Opinion of Counsel to Kirkhill Rubber Company
6.4 - Form of Opinion of Counsel to Kirkhill Rubber Company Employee Stock
Ownership and Savings Plan
6.7 - Form of Officers' Certificate of Kirkhill Rubber Company
6.8 - Form of ESOP's Certificate
6.12 - Form of Secretary's Certificate of Kirkhill Rubber Company
6.15 - Form of Employment Agreement
6.18 - Kirkhill ESOP Transition Plan
7.4 - Form of Officers' Certificate of Esterline
7.9 - Form of Opinion of Counsel to Esterline
8.7 - Form of Offer Documents
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into
as of August 10, 1998 by and among Xxxxxxxxx Technologies Corporation, a
Delaware corporation ("Esterline"), Kirkhill Rubber Company, a California
corporation ("Kirkhill"), and the Kirkhill Rubber Company Employee Stock
Ownership and Savings Plan made as of September 1, 1988 (the "ESOP").
RECITALS
A. The ESOP owns 24,433 shares of the Common Stock of Kirkhill (the
"Shares") and desires, and intends, to sell the Shares to Esterline at the
price and on the terms and subject to the conditions hereinafter set forth.
X. Xxxxxxxxx desires and intends to purchase the Shares from the ESOP
together with any and all other shares of the Common Stock of Kirkhill at the
price and on the terms and subject to the conditions hereinafter set forth.
AGREEMENT
In consideration of the terms hereof, the parties hereto agree as
follows:
ARTICLE I - DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
meanings set forth below:
"Accounts": As defined in Section 3.17.
"Agreement": This Agreement and all schedules and exhibits hereto.
"Balance Sheet": As defined in Section 3.6.
"Closing": As defined in Section 2.3.
"Closing Adjustment": As defined in Section 2.2.2.
"Closing Date": As defined in Section 2.3.
"Code": The Internal Revenue Code of 1986 and all regulations promulgated
thereunder, all as amended and in effect from time to time.
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"Common Stock": As defined in Section 3.3.
"Disclosure Memorandum": That certain Disclosure Memorandum dated as of
the date hereof and delivered by Kirkhill and the ESOP to Esterline in
connection with this Agreement.
"Employee Benefit Plans": As defined in Section 3.15.
"Employee Jurisdiction": Any state jurisdiction in which Kirkhill employs
any employees.
"Environmental Laws": As defined in Section 3.21(c).
"ERISA": The Employee Retirement Income Security Act of 1974 and all
regulations promulgated thereunder, all as amended and in effect from time to
time.
"ESOP": The Kirkhill Rubber Company Employee Stock Ownership and Savings
Plan, as amended and in effect as of the date of this Agreement and as of the
Closing Date.
"Esterline": Xxxxxxxxx Technologies, Inc., a Delaware corporation.
"Financial Statements": As defined in Section 3.6.
"GAAP": Generally Accepted Accounting Principles as used in the United
States.
"HSR Act": The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
"Intellectual Property Licenses": As defined in Section 3.16.
"IRS": The Internal Revenue Service.
"Kirkhill": Kirkhill Rubber Company, a California corporation.
"knowledge": Actual awareness of a particular fact or other matter.
Knowledge of a corporate entity is deemed to include actual knowledge of its
officers and directors.
"Listed Intellectual Property": As defined in Section 3.16.
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"material": When used with respect to an event, circumstance, failure,
condition, obligation, commitment, liability or other matter shall mean that
such event, circumstance, failure, condition, obligation, commitment, liability
or matter has an adverse affect on or cost to the Company exceeding $100,000,
individually or on the aggregate in value.
"Net Assets": As defined in Section 2.2.2.
"Non-Employee Jurisdiction": Any state jurisdiction other than an
Employee Jurisdiction.
"Offer": As defined in Section 8.7.
"Operative Documents": As defined in Section 4.1.
"Permits": As defined in Section 3.20.
"Person": As defined in Section 3.5.
"Personal Property": As defined in Section 3.9(b).
"Purchase Price": As defined in Section 2.2.
"Real Property": As defined in Section 3.9.
"Regulated Substances": As defined in Section 3.21(d).
"Release": As defined in Section 3.21(f).
"Returns": As defined in Section 3.8.
"Shares": The 24,433 shares of the Common Stock of Kirkhill owned by the
ESOP.
"Subsidiary": When used in reference to any Person, shall mean any
corporation of which outstanding securities having ordinary voting power to
elect a majority of the Board of Directors of such corporation are owned
directly or indirectly by that Person.
"Taxes": All payroll taxes, whether or not material, and all other
material taxes, charges, fees, levies or other assessments, including, but not
limited to, income, excise, gross receipts, property, sales, use, ad valorem,
transfer, franchise, profits, license, withholding, employment, severance,
stamp, occupation, windfall profits,
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social security and unemployment or other taxes imposed by the United States or
any agency or instrumentality thereof and any state government, or any agency
or instrumentality thereof, and any interest or fines, and any and all
penalties or additions relating to such taxes, charges, fees, levies or other
assessments.
"Trustee": Collectively, Xxxx X. Xxxxx and Xxxxxx X. Xxxxxxxxx.
ARTICLE II - PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of Shares
On the terms and subject to the conditions of this Agreement, Esterline
agrees to purchase the Shares from the ESOP, and the ESOP agrees to sell the
Shares to Esterline.
2.2 Consideration for Common Stock
The purchase price for the Common Stock shall be $2,264.1664 per share in
cash in lawful currency of the United States (the "Purchase Price"), equal to
$83,000,000, less the sum of $50,000 heretofore advanced to Kirkhill, divided
by the total number of outstanding shares, currently, 36,636, to be adjusted
and payable as set forth below in this Section 2.2.
2.2.1 Payment for Common Stock
Esterline shall pay to the ESOP and any tendering shareholders by
check or wire transfer of immediately available funds the sum obtained by
multiplying the Purchase Price by the number of shares of Common Stock being
tendered promptly upon delivery of certificates (or satisfactory evidence of
ownership) representing such shares.
2.2.2 Closing Adjustment
The Purchase Price shall be adjusted as of the Closing by
increasing or decreasing such amount by the amount of the increase or decrease,
respectively, in the aggregate dollar amount of the Net Assets from the date of
the Balance Sheet (as defined in Section 3.6) to June 30, 1998 (the "Closing
Adjustment"). The Closing Adjustment shall be determined as follows:
(a) "Net Assets" shall mean (i) Kirkhill's total assets less (ii)
Kirkhill's aggregate operating liabilities and less (iii) fifty-percent of the
total current and long-term debt of the ESOP, determined on a basis consistent
with that
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used to prepare Kirkhill's audited balance sheet at December 31, 1997 and in
accordance with Exhibit 2.2.2. Net Assets reflected on the Balance Sheet were
$17,195,282. No later than two business days prior to Closing, Kirkhill shall
determine the increase or decrease in the aggregate dollar amount of the Net
Assets, calculated in accordance with this Section 2.2.2, and shall deliver to
Esterline a certificate, signed by the chief financial and accounting officer
of Kirkhill, showing the Net Asset amount as of June 30, 1998, and stating the
amount of the Closing Adjustment.
(b) If Esterline does not object in writing to the determination
of the Closing Adjustment within 5 business days after Kirkhill delivers its
determination of the Closing Adjustment pursuant to Section 2.2.2(a), then, if
necessary, the Purchase Price shall be adjusted in accordance with Section
2.2.2(c) below.
(c) If the Closing Adjustment is a positive number, Esterline
shall immediately adjust the Purchase Price by the full amount of the Closing
Adjustment, which shall be paid by check or wire transfer of immediately
available funds in the manner provided in Section 2.2.1 above, or in such other
manner upon which the parties mutually agree. If the Closing Adjustment is a
negative number, Esterline shall be entitled to reduce the Purchase Price by
the amount of the Closing Adjustment.
(d) In the event of any dispute as to the determination of the
Net Assets on the Closing, the parties shall engage in negotiations with a view
to reaching a resolution of any dispute as to the determination of the amount
of the increase or decrease in the aggregate dollar amount of the Net Assets,
but if they are unable to reach such a resolution within 30 days after Closing,
the parties shall submit the dispute to Xxxxxx Xxxxxxxx & Co. LLP for
resolution. Each party shall submit all information deemed relevant by such
firm and shall make any records relating to or bearing upon such dispute
available to the other party and to such firm. Each party shall further
instruct such firm to render its decision within 120 days after Closing and
shall cooperate with such firm to enable it to render the decision within such
period. The decision of such firm shall be the final determination of such
dispute, binding on both parties. The parties shall share the fees and expenses
of such firm equally. Nothing in this Agreement shall require that any matter
other than disputes under this Section 2.2.2 be resolved by the procedure
described above.
2.3 Closing
The first closing of the transactions contemplated herein (the "Closing")
shall be held at 10:00 a.m., local time, no later than August 31, 1998, or such
earlier time
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and date as Esterline, the ESOP and Kirkhill shall agree (the "Closing Date"),
at the offices of the Kirkhill Rubber Company, 000 Xxxx Xxxxxxx Xxxxxx, Xxxx,
Xxxxxxxxxx 00000, or at such other time, date and place as the parties shall
agree. At the Closing, each of Xxxxxxxxx, Kirkhill and the ESOP shall take all
such action and deliver all such funds, documents, instruments, certificates
and other items as may be required, under this Agreement or otherwise, in order
to perform or fulfill all covenants, conditions and agreements on its part to
be performed or fulfilled at or before the Closing Date and to cause all
conditions precedent to the other parties' obligations under this Agreement to
be satisfied in full. Subsequent purchases and payment shall be made promptly
upon receipt of certificates or satisfactory evidence of ownership of shares
being delivered for purchase.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
OF KIRKHILL
To induce Esterline and the ESOP to enter into and perform this
Agreement, and except as is otherwise set forth in the Disclosure Memorandum
executed concurrently herewith and attached hereto and made a part hereof (the
"Disclosure Memorandum"), which exceptions shall specifically identify the
paragraph or paragraphs of this Article III to which such exceptions relate,
and which shall constitute in its entirety a representation and warranty under
this Article III, Kirkhill represents and warrants to Esterline and the ESOP as
of the date of this Agreement and as of the Closing as follows in this
Article III.
3.1 Organization
Kirkhill is a corporation duly organized, validly existing and in good
standing under the laws of the state of California. Kirkhill has all requisite
corporate power and authority to own, operate and lease its properties and
assets, to carry on its business as now conducted and as proposed to Esterline
by Kirkhill to be conducted, and to execute, deliver and perform its
obligations under this Agreement and the other Operative Documents to which it
is a party, and to carry out the transactions contemplated hereby and thereby.
Kirkhill does not own property or employ any person in any jurisdiction outside
of the state of California.
3.2 Enforceability
All actions on the part of Kirkhill and its officers and directors
necessary for the authorization, execution, delivery and performance of this
Agreement and the other Operative Documents, the consummation of the
transactions contemplated hereby and thereby, and the performance of all of
Kirkhill's obligations under this
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Agreement and the other Operative Documents have been taken or will be taken
prior to the Closing. This Agreement has been, and the other Operative
Documents to which Kirkhill is a party on the Closing will be, duly executed
and delivered by Kirkhill, and this Agreement is, and each of the other
Operative Documents to which it is a party on the Closing will be, a legal,
valid and binding obligation of Kirkhill, enforceable against Kirkhill in
accordance with its terms.
3.3 Capitalization
(a) The authorized capital stock of Kirkhill consists solely of
200,000 shares of common stock, no par value (the "Common Stock").
(b) The issued and outstanding capital stock of Kirkhill consists and
as of the Closing will consist solely of 36,636 shares of Common Stock, which
are and as of the Closing will be held of record by the parties listed on the
Schedule of Kirkhill Shareholders attached hereto as Exhibit 3.3. All shares of
Common Stock that are issued and outstanding are, and as of the Closing Date
will be, duly authorized and validly issued, fully paid and nonassessable, and
issued in compliance with all applicable federal, state and foreign securities
laws. To Kirkhill's knowledge, except for the parties listed on the Schedule of
Kirkhill Shareholders attached hereto, no Person holds any interest in any
shares of Common Stock.
(c) Except as provided in the ESOP, there are no outstanding rights of
first refusal, preemptive rights, options, warrants, conversion rights or other
agreements, either direct or indirect, for the purchase or acquisition from
Kirkhill or the ESOP of any shares of Common Stock.
(d) Except as provided in the ESOP, Kirkhill is not a party or subject
to any agreement or understanding, and there is no agreement or understanding
between any Persons, that affects or relates to the voting or giving of written
consents with respect to any securities of Kirkhill or the voting by any
director of Kirkhill.
3.4 Subsidiaries and Affiliates
To Kirkhill's knowledge, Kirkhill does not have, and has never had, any
Subsidiaries. Kirkhill does not own, directly or indirectly, any ownership,
equity, profits or voting interest in, or otherwise control, any corporation,
partnership, joint venture or other entity, and has no agreement or commitment
to purchase any such interest, except for holdings that are not material, in
the aggregate, to Kirkhill.
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3.5 No Approvals or Notices Required; No Conflicts With Instruments
The execution, delivery and performance of this Agreement and the other
Operative Documents by Kirkhill, and the consummation of the transactions
contemplated hereby and thereby, will not (a) constitute a violation (with or
without the giving of notice or lapse of time, or both) of any provision of any
law or any judgment, decree, order, regulation or rule of any court, agency or
other governmental authority applicable to Kirkhill, (b) require any consent,
approval or authorization of, or declaration, filing or registration with, any
person, corporation, partnership, joint venture, association, organization,
other entity or governmental or regulatory authority (a "Person"), except
compliance with the requirements of the HSR Act, and except for the Forms 5310
and 5500 to be filed with the IRS in connection with the termination of the
ESOP following Closing, (c) result in a default (with or without the giving of
notice or lapse of time, or both) under, acceleration or termination of, or the
creation in any party of the right to accelerate, terminate, modify or cancel,
any agreement between Kirkhill on the one hand and The Boeing Company, Thiokol
Corporation or Xxxx, Inc. on the other hand, (d) except for any statutory liens
related to changes in control, result in the creation of any lien or
encumbrance upon the assets of Kirkhill, or upon any shares of the Common
Stock, (e) conflict with or result in a breach of or constitute a default under
any provision of the Articles of Incorporation of Kirkhill, or (f) invalidate
or adversely affect any permit, license, authorization or status used in the
conduct of Kirkhill's business.
3.6 Financial Statements
Kirkhill has delivered to Esterline (a) balance sheets and statements of
operations, shareholders' equity and cash flows of Kirkhill at and for the
fiscal years ended December 31, 1997, 1996 and 1995, and accompanying notes,
certified without qualification by Xxxxxxxxx, Xxxxxx & Xxxxxx, Inc.,
independent auditors and certified public accountants, and (b) unaudited
balance sheets and unaudited statements of operations and cash flows of
Kirkhill at and for the nine-month period ended September 30, 1997 (the balance
sheet of Kirkhill as of September 30, 1997 being herein referred to as the
"Balance Sheet"). All the foregoing financial statements (including the notes
thereto) are herein referred to as the "Financial Statements." The Financial
Statements have been prepared in conformity with GAAP consistently applied
throughout the periods covered therein, except as may be indicated in the notes
thereto, and present fairly the financial position, results of operations and
changes in financial position of Kirkhill as at the dates and for the periods
indicated, subject, in the case of the above unaudited financial statements, to
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normal recurring period-end adjustments. Kirkhill has no liabilities or
obligations of any nature (absolute, accrued or contingent) that are not fully
reflected or reserved against in the Balance Sheet, as prescribed by GAAP and
the Financial Accounting Standards Board, except liabilities or obligations
incurred since the date of the Balance Sheet in the ordinary course of business
and consistent with past practice and except for any contingent liabilities to
ESOP participants following retirement or termination. Kirkhill maintains and
will continue to maintain standard systems of accounting established and
administered in accordance with GAAP. Kirkhill is not a guarantor, indemnitor,
surety or other obligor of any indebtedness of any other Person. Since the date
of the Balance Sheet, Kirkhill has not suffered any material adverse change in
its working capital, assets, liabilities (absolute, accrued or contingent),
earnings, reserves, financial condition, business or operations.
3.7 Absence of Certain Changes or Events
Except as required by this Agreement, since the date of the Balance
Sheet, neither Kirkhill nor any of its officers, directors or employees in
their representative capacities on behalf of Kirkhill have
(a) received oral or written notice that there has been, will be
or may be a loss of, or contract cancellation by, any current customer of
Kirkhill which loss or cancellation would result in lost annual revenues to
Kirkhill of at least $100,000, or formed the basis for any belief that there
may be such a loss or cancellation;
(b) taken any action or entered into or agreed to enter into any
transaction, agreement or commitment other than in the ordinary course of
business;
(c) forgiven or canceled any indebtedness or waived any claims or
rights of material value (including, without limitation, any indebtedness owing
by any shareholder, officer, director, employee or affiliate of Kirkhill);
(d) granted, other than in the ordinary course of business and
consistent with past practice, any increase in the compensation of directors,
officers, employees or consultants (including any such increase pursuant to any
employment agreement or bonus, pension, profit-sharing, lease payment or other
plan or commitment, which is disclosed on Schedule 3.7(d) to the Disclosure
Memorandum) or any increase in the compensation payable or to become payable to
any director, officer, employee or consultant;
(e) borrowed or agreed to borrow any funds, assumed or become
subject to, whether directly or by way of guarantee or otherwise, any
liabilities or
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obligations (absolute, accrued or contingent), or incurred any liabilities or
obligations (absolute, accrued or contingent) except liabilities and
obligations incurred in the ordinary course of business and consistent with
past practice not to exceed $50,000 individually, or $250,000 in the aggregate,
or increased, or experienced any change in any assumptions underlying or
methods of calculating, any bad debt, contingency or other reserves;
(f) paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued or contingent) other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice of claims, liabilities and obligations reflected or reserved against
in the Balance Sheet or incurred in the ordinary course of business and
consistent with past practice since the date of the Balance Sheet, or prepaid
any obligation having a fixed maturity of more than 90 days from the date such
obligation was issued or incurred;
(g) permitted or allowed any of its property or assets (real,
personal or mixed, tangible or intangible) to be subjected to any mortgage,
pledge, lien, security interest, encumbrance, institutional control,
restriction or charge, except (i) conditional sales or similar security
interests granted in connection with the purchase of equipment or supplies in
the ordinary course of business, (ii) assessments for current taxes not yet due
and payable, and (iii) mechanics', materialmen's, carriers' and other similar
statutory liens securing indebtedness that is in the aggregate less than
$50,000, incurred in the ordinary course of business and not yet due and
payable;
(h) written down the value of any inventory (including
write-downs by reason of shrinkage or markdown) or written off as uncollectible
any notes or accounts receivable, except for write-downs and write-offs that
are in the aggregate less than $50,000, incurred in the ordinary course of
business and consistent with past practice;
(i) sold, transferred or otherwise disposed of any of its
properties or assets (real, personal or mixed, tangible or intangible) with an
aggregate net book value in excess of $25,000, except the sale of inventory in
the ordinary course of business and consistent with past practice;
(j) disposed of or permitted to lapse any rights to the use of
any trademark, trade name, patent or copyright, or disposed of or disclosed to
any Person other than representatives of Xxxxxxxxx any trade secret, formula,
process or know-how not theretofore a matter of public knowledge, except as
disclosed on Schedule 3.7(j) to the Disclosure Memorandum;
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(k) made any single capital expenditure or commitment in excess
of $100,000 for additions to property, plant, equipment or intangible capital
assets or made aggregate capital expenditures in excess of $400,000 for
additions to property, plant, equipment or intangible capital assets;
(l) made any change in any method of accounting or accounting
practice or internal control procedure;
(m) issued any capital stock, other securities or options or
other rights to acquire capital stock or other securities, or declared, paid or
set aside for payment any dividend or other distribution in respect of its
capital stock (other than any dividend or other distribution that has been
declared, paid or set aside for payment with respect to any shares of Common
Stock held by the ESOP and which declaration, payment or set aside is described
in Schedule 3.7(m) to the Disclosure Memorandum), or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares of capital stock or
other securities of Kirkhill, or otherwise permitted the withdrawal by any of
the holders of capital stock of Kirkhill of any cash or other assets (real,
personal or mixed, tangible or intangible), in compensation, indebtedness or
otherwise, other than payments of compensation in the ordinary course of
business and consistent with past practice;
(n) except for transactions that are not material in the
aggregate, transactions in the ordinary course of business or the payment of
mid-year bonuses to executive officers and others listed on Schedule 3.7(n) to
the Disclosure Memorandum in accordance with existing incentive plans
(notwithstanding that the timing of such payments will not be made consistently
with past practice), loaned or advanced any amount to, or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any of
Kirkhill's officers, directors or employees or any affiliate of Kirkhill's
officers, directors or employees, except directors' fees and compensation paid
to officers and employees at rates not exceeding the rates of compensation
disclosed on Schedules 3.7(d) and 3.26 to the Disclosure Memorandum;
(o) except as set forth on Schedule 3.7(o) to the Disclosure
Memorandum, entered into or agreed to enter into, or otherwise suffered to be
outstanding, any power of attorney of Kirkhill or any obligations or
liabilities (absolute, accrued or contingent) of Kirkhill, as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or otherwise, in respect of
the obligation of any other Person;
(p) received notice, or otherwise obtained knowledge, of (i) any
claim, action, suit, arbitration, proceeding or investigation involving,
pending against
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or threatened against Kirkhill or any employee of Kirkhill before or by any
court or governmental or nongovernmental department, commission, board, bureau,
agency or instrumentality, or any other Person; (ii) any valid basis for any
claim, action, suit, arbitration, proceeding, investigation or the application
of any fine or penalty adverse to Kirkhill or any officer or director of
Kirkhill before or by any Person; or (iii) any outstanding or unsatisfied
judgments, orders, decrees or stipulations to which Kirkhill or any officer,
director or employee of Kirkhill is a party that relate directly to the
transactions contemplated herein or that would have any material adverse effect
on the business, assets, liabilities or financial condition of Kirkhill;
(q) except as set forth on Schedule 3.7(q) to the Disclosure
Memorandum, entered into or agreed to any sale, assignment, transfer or license
of any patents, trademarks, copyrights, trade secrets or other intangible
assets of Kirkhill to a third party or any amendment or change to any existing
license or other agreement relating to intellectual property; or
(r) agreed, whether in writing or otherwise, to take any action
described in this Section 3.7.
3.8 Taxes
Kirkhill has (a) timely filed, including valid extensions, with the
appropriate governmental agencies of the United States and all Employee
Jurisdictions all tax returns, information returns and reports ("Returns") for
all Taxes required to have been filed with such agencies with respect to
Kirkhill and its business, and all such Returns are true, correct and complete,
and (b) paid in full or provided for all Taxes that are due or claimed to be
due by any governmental agency of the United States or any Employee
Jurisdiction, other than such payments as are being contested in good faith by
appropriate proceedings, which payments are set forth on Schedule 3.8 to the
Disclosure Memorandum. To Kirkhill's knowledge, Kirkhill has (y) timely filed,
including valid extensions, with the appropriate government agencies of all
Non-Employee Jurisdictions all Returns for all Taxes required to have been
filed with respect to Kirkhill and its business in all Non-Employee
Jurisdictions, and all such returns are, to Kirkhill's knowledge, true, correct
and complete, and (z) paid in full or provided for all Taxes that are due or
claimed to be due by any governmental agency of any Non-Employee Jurisdiction,
other than such payments as are being contested in good faith, which payments
are set forth on Schedule 3.8 to the Disclosure Memorandum. To Kirkhill's
knowledge, the reserves and provisions for Taxes reflected in the Financial
Statements are adequate for the payment of Taxes not yet due and payable, as
determined in accordance with GAAP consistently applied. No
12
unresolved claim for assessment or collection of Taxes has been asserted or
threatened against Kirkhill and no audit or investigation by any governmental
authority is under way with respect to Taxes, interest or other governmental
charges. No circumstances exist that would constitute grounds for assessment
against Kirkhill of any tax liability with respect to any period for which
Returns have been filed. Kirkhill has not entered into any election, consent or
extension agreement or any waiver that extends any applicable statute of
limitations. Kirkhill has not filed any consent to the application of Section
341(f)(2) of the Code, to any assets held, acquired or to be acquired by it.
Kirkhill has furnished Xxxxxxxxx with complete and correct copies of all
Returns. There are no tax liens on any property or assets of Kirkhill other
than statutory liens related to changes in control or special assessments liens
for current taxes not yet payable. No claim has been made by an authority in
any jurisdiction where Kirkhill does not file Returns that Kirkhill is or may
be subject to taxation by that jurisdiction. Kirkhill has not made any
payments, is not obligated to make any payments, and is not a party to any
agreement that could obligate it to make any payments that will not be
deductible under Section 280G of the Code; Kirkhill is not a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(2)(i) of
the Code; Kirkhill is not a party to any Tax allocation or sharing agreement;
and Kirkhill (A) is not and has not been a member of an affiliated group filing
a consolidated income Tax Return and (B) does not have any liability for Taxes
of any person under Treasury Regulations [SECTION] 1.1502-6 (or any similar
provision of state, local or foreign law) as a transferor or successor by
contract or otherwise.
3.9 Property
(a) Schedule 3.9(a) to the Disclosure Memorandum contains a complete
and accurate list of all real property that is currently, or has been within
the last fifteen years, owned, leased, rented or used by Kirkhill (the "Real
Property"). Kirkhill has delivered to Xxxxxxxxx true and complete copies of all
leases, subleases, rental agreements, contracts of sale, tenancies or licenses
relating to the Real Property.
(b) Schedule 3.9(b) to the Disclosure Memorandum contains an accurate
list of each item of personal property as of June 30, 1998 having an original
cost in excess of $1,000 that is owned, leased, rented or used by Kirkhill (the
"Personal Property"); provided, however, that such list need not describe the
Listed Intellectual Property or the Intellectual Property Licenses. Kirkhill
has delivered to Xxxxxxxxx true and complete copies of all leases, subleases,
rental agreements, contracts of sale, tenancies or licenses relating to the
Personal Property. The Real Property and the Personal Property include all
properties and assets (whether real, personal or mixed, tangible or
13
intangible) (other than, in the case of the Personal Property, property rights
with an individual original cost of less than $1,000, the Listed Intellectual
Property and the Intellectual Property Licenses) reflected in the Balance Sheet
and all the properties and assets purchased by Kirkhill since the date of the
Balance Sheet (except for such properties or assets sold since the date of the
Balance Sheet in the ordinary course of business and consistent with past
practice). The Real Property and the Personal Property include all property
used in the business of Kirkhill.
(c) except for property taxes which are not delinquent, Kirkhill's
title to or leasehold interest in, as applicable, each parcel of the Real
Property is free and clear of all liens, mortgages, pledges, deeds of trust,
security interests, charges, encumbrances, institutional controls and other
adverse claims or interests of any kind.
(d) to Kirkhill's knowledge, Kirkhill's offices, manufacturing and
production facilities and other structures and Kirkhill's Personal Property are
adequate for the uses to which they are being put.
(e) Except for (i) assessments for current taxes not yet due and
payable and (ii) mechanics', materialmen's, carriers' and other similar
statutory liens securing indebtedness that is in the aggregate less than
$50,000, incurred in the ordinary course of business and not yet due and
payable, the Personal Property is free and clear of all liens, and Kirkhill
owns such Personal Property.
(f) Each material lease, license, rental agreement, contract of sale or
other agreement to which the Personal Property is subject is valid, binding and
enforceable in accordance with its terms against the parties thereto; Kirkhill
has performed all obligations imposed upon it thereunder; and Kirkhill is not
in default thereunder, nor to Kirkhill's knowledge is there any event that with
notice or lapse of time, or both, would constitute a default thereunder. No
consent is required from any Person under any lease or other agreement or
instrument relating to the Personal Property in connection with the
consummation of the transactions contemplated by this Agreement, and Kirkhill
has not received notice that any party to any such lease or other agreement or
instrument intends to cancel, terminate or refuse to renew the same or to
exercise or decline to exercise any option or other right thereunder. Kirkhill
has not granted any lease, sublease, tenancy or license of any portion of the
Personal Property.
(g) Neither the whole nor any portion of the owned Real Property,
leaseholds or any other assets or property of Kirkhill is subject to any
currently outstanding governmental decree or order to be sold or is being
condemned, expropriated or otherwise taken by any public authority with or
without payment of
14
compensation therefor, nor has any such condemnation, expropriation or taking
been proposed.
3.10 Contracts
Schedule 3.10 to the Disclosure Memorandum contains a complete and
accurate list as of June 30, 1998 of all material contracts, agreements,
arrangements and understandings to which Kirkhill is a party or by which
Kirkhill is bound. To Kirkhill's knowledge, all agreements with The Boeing
Company, Thiokol Corporation and Xxxx, Inc. are valid, binding and enforceable
in accordance with their terms against each party thereto and are in full force
and effect; Kirkhill has performed all obligations imposed upon it thereunder;
and Kirkhill is not in default thereunder; nor is there any event that with
notice or lapse of time, or both, would constitute a default thereunder. True
and complete copies of each such contract have been heretofore delivered to
Xxxxxxxxx. No consent is required from any Person under the agreements with
Thiokol and Xxxx in connection with the consummation of the transactions
contemplated by this Agreement, and Kirkhill has not received notice, and is
not otherwise aware, that any party to any such contract, agreement,
arrangement or understanding intends to cancel, terminate or refuse to renew
such contract, agreement, arrangement or understanding or to exercise or
decline to exercise any option or right thereunder.
3.11 Customers and Suppliers
Schedule 3.11 to the Disclosure Memorandum sets forth (a) a complete and
accurate list of the customers of Kirkhill accounting for 2% or more of
Kirkhill's revenues during the fiscal year last ended and the six months ended
June 30, 1998, showing the approximate total revenues from each such customer
during the fiscal year last ended and the six months ended June 30, 1998; and
(b) a complete and accurate list of the suppliers of Kirkhill from whom
Kirkhill has purchased 5% or more of the goods or services purchased by
Kirkhill in the fiscal year last ended and the six months ended June 30, 1998.
Kirkhill has not received any notice from its customers or suppliers that would
cause it, in its reasonable judgment, to expect any material modification to
its relationship with any customers or suppliers named on Schedule 3.11 to the
Disclosure Memorandum.
3.12 Orders, Commitments and Returns
Schedule 3.12 to the Disclosure Memorandum contains an accurate summary
as of June 30, 1998 of Kirkhill's total backlog (including all accepted and
unfulfilled service contracts and research agreements) and the aggregate of all
outstanding
15
purchase orders issued by Kirkhill (which aggregates include all material
contracts or commitments for the purchase by Kirkhill of materials or other
supplies). All such sale and purchase commitments were made in the ordinary
course of business.
3.13 Claims and Legal Proceedings
Except as set forth on Schedule 3.13 to the Disclosure Memorandum , there
are no claims, actions, suits, arbitrations, criminal or civil investigations
or proceedings pending or involving or, to Kirkhill's knowledge, threatened
against Kirkhill before or by any court or governmental or nongovernmental
department, commission, board, bureau, agency or instrumentality, or any other
Person. To Kirkhill's knowledge, there is no valid basis for any claim, action,
suit, arbitration, investigation or proceeding that could reasonably be
expected to be materially adverse to the business, assets, operations or
condition (financial or other) of Kirkhill before or by any Person. There are
no outstanding or unsatisfied judgments, orders, decrees or stipulations to
which Kirkhill is a party that involve the transactions contemplated herein or
that would have a material adverse effect on the business, assets, operations
or condition (financial or other) of Kirkhill.
3.14 Labor Matters
There are no labor disputes, material employee grievances or material
disciplinary actions pending or, to Kirkhill's knowledge, threatened against or
involving Kirkhill or any present or former employee of Kirkhill. To Kirkhill's
knowledge, Kirkhill has complied with all provisions of law relating to
employment and employment practices, terms and conditions of employment, wages
and hours including, without limitation, equal opportunity, workplace safety,
workers' compensation and other similar laws. Kirkhill is not engaged in any
unfair labor practice and does not have any liability for any arrears of wages
or Taxes or penalties for failure to comply with any such provisions of law.
There is no labor strike, dispute, slowdown or stoppage pending or threatened
against Kirkhill, and Kirkhill has not experienced any work stoppage or similar
concerted employee activities. To Kirkhill's knowledge, no supplier or customer
is experiencing a labor strike, dispute, slowdown or stoppage that is
reasonably likely to have a material adverse effect on Kirkhill. No collective
bargaining agreement is binding on Kirkhill. Kirkhill does not have any
knowledge of any organizational efforts presently being made or threatened by
or on behalf of any labor union with respect to employees of Kirkhill, and
Kirkhill has not been requested by any group of employees or others to enter
into any collective bargaining agreement or other agreement with any labor
union or other employee organization.
16
3.15 Employee Benefit Plans
(a) Schedule 3.15 to the Disclosure Memorandum sets forth a true,
accurate and complete list and description of each employee benefit plan, fund,
program, contract, arrangement and payroll practice, whether formal or informal
and whether legally binding or not, (i) sponsored, maintained or contributed to
by Kirkhill, (ii) covering or benefiting any current or former officer,
employee, agent, director or independent contractor of Kirkhill (or any
dependent or beneficiary of any such individual) or (iii) with respect to which
Kirkhill has (or to Kirkhill's knowledge could have) any obligation or
liability, including, but not limited to, all "employee benefit plans" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and specifically including each retirement, pension,
profit sharing, deferred compensation, stock bonus, savings, bonus, incentive,
cafeteria, medical, dental, vision, hospitalization, life insurance, accidental
death and dismemberment, medical expense reimbursement, dependent care
assistance, tuition reimbursement, disability, sick pay, holiday, vacation,
severance, stock purchase, stock option, stock appreciation rights and fringe
benefit plan, policy, program, contract, arrangement or payroll practice and
each employment or consulting contract (such plans, policies, programs,
contracts, arrangements and payroll practices are hereinafter referred to
collectively as "Employee Benefit Plans" and each individually as an "Employee
Benefit Plan"). Also set forth on Schedule 3.15 to the Disclosure Memorandum is
the annual cost expected to be incurred by Kirkhill pursuant to each Employee
Benefit Plan for the fiscal year last ended. Kirkhill does not have any
agreement, arrangement or commitment, whether formal or informal and whether
legally binding or not, to create any additional plan, fund, program, contract,
arrangement or payroll practice or to modify or amend any existing Employee
Benefit Plan (other than amendments that are required to reflect the
transactions contemplated herein, including, but not limited to, the
termination of the ESOP, and which are fully described in Section 3.15(a) to
the Disclosure Memorandum). The terms of each Employee Benefit Plan permit
Kirkhill to amend or terminate such Employee Benefit Plan at any time and for
any reason without penalty. There has been no amendment, written interpretation
or announcement (whether or not written) by Kirkhill relating to, or change in
participation or coverage under, any Employee Benefit Plan that would
materially increase the expense of maintaining such Employee Benefit Plan above
the level of expense incurred with respect to such Employee Benefit Plan for
the most recent fiscal year included in Kirkhill's financial statements.
(b) Kirkhill has delivered to Xxxxxxxxx true, correct and complete
copies (or, in the case of unwritten Employee Benefit Plans, descriptions) of
all Employee Benefit Plans (and all amendments thereto), along with, to the
extent applicable to the
17
particular Employee Benefit Plan, the following information: (i) copies of the
annual reports (Form 5500 series) filed for the last three years; (ii) copies
of the summary plan descriptions, summary annual reports, summaries of material
modifications and all material employee manuals or communications filed or
distributed with respect to the Employee Benefit Plan during the last three
years; (iii) copies of any insurance contracts or trust agreements (and any
amendments thereto) through which the Employee Benefit Plan is funded; (iv)
copies of all documents relating to any loans to the Employee Benefit Plan,
including, but not limited to, any and all notes, security agreements and
guarantees; (v) copies of all contracts (and any amendments thereto) relating
to the Employee Benefit Plan, including, but not limited to, service provider
agreements, insurance contracts, investment management agreements, subscription
and prescription agreements and recordkeeping agreements; (vi) a copy of the
most recent IRS determination letter issued with respect to the Employee
Benefit Plan; (vii) notice of any material adverse change occurring with
respect to the Employee Benefit Plan since the date of the most recently
completed and filed annual report; and (viii) a copy of the appraisal by an
independent financial advisor of the fair market value of the Shares held by
the ESOP as of December 31, 1997.
(c) Except as otherwise disclosed to Xxxxxxxxx and to Kirkhill's
knowledge, with respect to each Employee Benefit Plan: (i) such Employee
Benefit Plan is, and at all times since inception has been, maintained,
administered and operated in material compliance with its terms and with the
requirements prescribed by any and all applicable laws, statutes, orders, rules
and regulations, including, but not limited to, ERISA and the Code; (ii) all
amendments and actions required to bring such Employee Benefit Plan into
conformity with the applicable provisions of ERISA, the Code and other
applicable laws and regulations have been made or taken within the time
prescribed by law, except to the extent that such amendments or actions are not
required by law to be made or taken until after the Closing Date and are
disclosed in Schedule 3.15 to the Disclosure Memorandum; (iii) all tax returns,
information returns, reports and information relating to such Employee Benefit
Plan required to be filed with any governmental entity or agency have been
accurately, timely and properly filed; (iv) all notices, statements, reports
and other disclosure required to be given or made to participants in such
Employee Benefit Plan or their beneficiaries have been accurately, timely and
properly disclosed or provided; (v) neither Kirkhill nor any other fiduciary of
such Employee Benefit Plan has engaged in any transaction or acted or failed to
act in a manner that violates the fiduciary requirements of ERISA or any other
applicable law; (vi) no event has occurred or is threatened or about to occur
that would constitute a nonexempt prohibited transaction under Section 406 or
407 of ERISA or under Section 4975 of the Code; and (vii) none of the
transactions contemplated in this Agreement (including, but not limited to, the
tender of the Shares
18
held by the ESOP) will constitute or result in a transaction described in
either (or both) clause (v) or (vi) of this Section 3.15(c). Furthermore, to
Kirkhill's knowledge, no event or omission has occurred, or is about to occur
(including, but not limited to, any of the transactions contemplated in this
Agreement), in connection with any Employee Benefit Plan (or with respect to
any employee benefit plan, fund, program, contract, arrangement or payroll
practice maintained by any other Person) that could subject Kirkhill, or any
officer, employee, agent, director or independent contractor of Kirkhill, to a
fine, penalty, tax or similar liability, whether pursuant to any agreement,
instrument, indemnification obligation, statute, regulation, rule of law or
otherwise, including, but not limited to, a tax under Chapter 43 of Subtitle D
of the Code or a civil penalty under Section 502(i) or 502(l) of ERISA.
(d) Each Employee Benefit Plan that is intended to be qualified under
Section 401(a) of the Code is, and, to Kirkhill's knowledge, at all times since
inception has been, so qualified and its related trust is, and at all times
since inception has been, exempt from taxation under Section 501(a) of the
Code, and such Employee Benefit Plan has received an unrevoked favorable
determination letter from the IRS to that effect. To Kirkhill's knowledge,
nothing has occurred since the most recent favorable determination letter
issued with respect to each such Employee Benefit Plan that could cause such
Employee Benefit Plan to lose its ability to rely on such determination letter
or could cause the IRS to revoke such determination letter.
(e) Each Employee Benefit Plan that constitutes a "group health plan"
within the meaning of Section 607(1) of ERISA or Section 4980B(g)(2) of the
Code has been administered and operated at all times since inception in
material compliance with the requirements of Sections 601 through 609 of ERISA,
Section 4980B(f) of the Code, any regulations under such ERISA and Code
sections and the requirements of any applicable foreign, national, state or
local law regarding continued insurance coverage.
(f) All contributions, premiums and other payments (including, but not
limited to, all employer contributions and all employee salary reduction or
deferral contributions) due or required to be made to each Employee Benefit
Plan from Kirkhill or any other Person have been timely paid, or, if not yet
due, have been properly recorded on the books of Kirkhill. All benefits,
expenses and other amounts payable under or with respect to each Employee
Benefit Plan (whether payable by Kirkhill, the Employee Benefit Plan or any
other Person) have been timely paid, or, if not yet due, have been properly
recorded on the books of Kirkhill or the Employee Benefit Plan, as applicable.
All income taxes and wage taxes that are required by law to be withheld from
benefits derived under the Employee Benefit Plans, have been
19
properly withheld and remitted to the proper depository. Neither Kirkhill nor
any other Person has been called upon (or expects to be called upon) to perform
or make good under any guaranty given with respect to any Employee Benefit
Plan.
(g) Kirkhill is not, and has never been, a member of (i) a controlled
group of corporations, within the meaning of Section 414(b) of the Code, (ii) a
group of trades or businesses under common control, within the meaning of
Section 414(c) of the Code, (iii) an affiliated service group, within the
meaning of Section 414(m) of the Code, or (iv) any other group of Persons
treated as a single employer under Section 414(o) of the Code.
(h) Kirkhill does not maintain or contribute to, and has never
maintained or contributed to (or been obligated to contribute to), any
multiemployer plan within the meaning of Section 3(37) or Section 4001(a)(3) of
ERISA or 414(f) of the Code, any multiple employer plan within the meaning of
Section 4063 or Section 4064 of ERISA or Section 413(c) of the Code, or any
employee benefit plan, fund, program, contract or arrangement that is subject
to Section 412 of the Code, Section 302 of ERISA (except for the ESOP) or Title
IV of ERISA.
(i) No Employee Benefit Plan provides or has any obligation to provide
(or contribute toward the cost of) welfare benefits (within the meaning of
Section 3(1) of ERISA) with respect to any current or former officer, employee,
agent, director or independent contractor of Kirkhill or any other entity
beyond such individual's retirement or other termination of service, including,
but not limited to, post-retirement (or post-termination) medical, dental, life
insurance, severance or any other similar benefit, whether provided on an
insured or self-insured basis (other than continuation coverage mandated by
Sections 601 through 608 of ERISA or Section 4980B of the Code).
(j) There are no actions, suits or claims (other than routine claims
for benefits or actions in connection with marriage dissolution proceedings)
pending or, to Kirkhill's knowledge, threatened with respect to any Employee
Benefit Plan or against the assets of any Employee Benefit Plan, nor, to
Kirkhill's knowledge, is there a basis for any such action, suit or claim. No
Employee Benefit Plan is currently under investigation, audit or review by the
IRS, Department of Labor or any other governmental entity or agency, and, to
Kirkhill's knowledge, no such action is contemplated or under consideration by
the IRS, Department of Labor or any other governmental entity or agency.
(k) Except for any liabilities to ESOP participants following
retirement or termination, all expenses and liabilities of Kirkhill relating to
the Employee Benefit
20
Plans have been fully and properly accrued on Kirkhill's books and records and
disclosed in the Financial Statements in accordance with GAAP.
(l) The consummation of the transactions contemplated by this Agreement
or the other Operative Documents will not (i) entitle any current or former
officer, employee, agent, director or independent contractor of Kirkhill to
severance pay, unemployment compensation or any other payment from Kirkhill, or
increase the amount of compensation due to any such individual; (ii) result in
any benefit becoming established, or accelerate the time of payment or vesting
of any benefit, under any Employee Benefit Plan; or (iii) require Kirkhill to
make any contribution to a "rabbi" trust.
(m) Kirkhill has not made any payments, is not obligated to make any
payments, and is not a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under
Section 280G of the Code.
(n) On and after the Closing Date, neither Kirkhill nor Xxxxxxxxx will
have any liability (whether actual or contingent or direct or indirect) for any
contribution or similar payment (or for the failure to make any contribution or
similar payment) with respect to the ESOP, except for salary deferrals made
under the ESOP with respect to periods commencing on or after the Closing Date,
and any matching contributions related thereto.
(o) Kirkhill has made substantial and recurring contributions to the
ESOP.
(p) Except as provided in Schedule 3.15(p) to the Disclosure
Memorandum, all shares held by the ESOP have been allocated or are allocable to
the participants' accounts.
(q) There are no outstanding loans to the ESOP.
3.16 Patents, Trademarks, etc.
Schedule 3.16 to the Disclosure Memorandum sets forth a true and complete
list of all patents, trademarks, service marks, trade names, brand names, and
registered copyrights, and any applications for any of the foregoing
(collectively, the "Listed Intellectual Property") of any kind used now or
within the five-year period immediately preceding the date of this Agreement in
the business of Kirkhill. Schedule 3.16 to the Disclosure Memorandum contains a
complete and accurate list of all licenses or agreements that in any way affect
the rights of Kirkhill to any of the
21
Listed Intellectual Property or any trade secret material to Kirkhill (the
"Intellectual Property Licenses"). Kirkhill has not received notice of any
claim of infringement or other interference with third-party rights with
respect to the Listed Intellectual Property or any trade secret material to
Kirkhill.
3.17 Accounts Receivable
All accounts receivable of Kirkhill reflected in the Balance Sheet or
existing at the time of the Closing ("Accounts") represent amounts due for
services performed or sales actually made in the ordinary course of business
and properly reflect the amounts due. To Kirkhill's knowledge, the bad debt
reserves and allowances reflected in the Balance Sheet are adequate. To
Kirkhill's knowledge, all Accounts existing and remaining unpaid at the time of
the Closing and not reserved for will be collectible by Xxxxxxxxx in the
ordinary course of business consistent with past practice. To Kirkhill's
knowledge, uncollectible accounts existing and remaining unpaid at the time of
Closing will not exceed the amount of bad debt reserves and allowances
reflected in the Balance Sheet.
3.18 Inventory
All items in the inventory reflected in the Balance Sheet or as currently
owned by Kirkhill (a) have been valued at cost or at market, whichever is
lower, as of June 30, 1997, and have been adjusted for purchases and sales
subsequent thereto, consistent with past practice and (b) are of a quality and
quantity usable and salable in the ordinary course of business. All such
inventory is not and shall not become unsalable by Kirkhill by reason of any
event that would constitute a violation of the representations and warranties
contained in Sections 3.16, 3.20 and 3.21, without regard to any materiality
provisions of such Sections.
3.19 Corporate Books and Records
Kirkhill has furnished to Xxxxxxxxx or its representatives for their
examination true and complete copies of (a) the Articles of Incorporation of
Kirkhill as currently in effect, including all amendments thereto, (b) the
minute books of Kirkhill, and (c) the stock transfer books of Kirkhill. Such
minutes reflect all meetings of Kirkhill's shareholders, Board of Directors and
any committees thereof during the last five years, and such minutes accurately
reflect in all material respects the events of and actions taken at such
meetings. To Kirkhill's knowledge, such stock transfer books accurately reflect
all issuances and transfers of shares of capital stock of Kirkhill since its
inception.
22
3.20 Licenses, Permits, Authorizations, etc.
Kirkhill has received all currently required governmental approvals,
authorizations, consents, licenses, orders, registrations and permits of all
agencies, whether federal, state, local or foreign (the "Permits"), the failure
to obtain which would have a material adverse effect on its business, assets,
operations or condition (financial or other), to Kirkhill's knowledge, Kirkhill
is in compliance with the terms of all the Permits, and all the Permits are
valid and in full force and effect, and no proceeding is pending or, to
Kirkhill's knowledge, threatened the object of which is to revoke, limit or
otherwise effect any of the foregoing. Kirkhill has not received any
notifications of any asserted present failure to have obtained any such
governmental approval, authorization, consent, license, order, registration or
permit, or past and unremedied failure to obtain such items.
3.21 Compliance With Laws
(a) To Kirkhill's knowledge, Kirkhill has complied, and is in
compliance, with all federal, state, local and foreign laws, rules,
regulations, ordinances, decrees and orders applicable to the operation of its
business, to its employees, or to the Real Property and the Personal Property,
the failure to comply with which would, individually or in the aggregate, have
a material adverse effect on the business, assets or operations of Kirkhill,
including, without limitation, all such laws, rules, ordinances, decrees and
orders relating to antitrust, consumer protection, currency exchange,
environmental protection, equal opportunity, health, occupational safety, good
laboratory practices, pension, securities and trading-with-the-enemy matters.
As of the date hereof, Kirkhill has not received any notification of any
asserted present or past unremedied failure by Kirkhill to comply with any of
such laws, rules, regulations, ordinances, decrees or orders.
(b) Except as set forth on Schedule 3.21(b) to the Disclosure
Memorandum Kirkhill has not received notification of any alleged violation of
any applicable building, zoning, environmental or other law, ordinance or
regulation in respect of the Real Property or its plant, structures or
operations.
(c) To Kirkhill's knowledge, Kirkhill is not in violation of, and has
not violated, in connection with the ownership, use, maintenance or operation
of the Real Property or the Personal Property or the conduct of its business,
any applicable foreign, federal, state, county and local statutes, laws,
regulations, guidances, rules, ordinances, codes, licenses, permits, judgments,
writs, decrees, injunctions or orders of any governmental entity relating to
environmental (air, water, groundwater, soil, natural resource, noise and odor)
matters, including, by way of illustration and not by
23
way of limitation, the Clean Air Act, the Federal Water Pollution Control Act,
the Resource Conservation and Recovery Act and the regulations issued
thereunder, the Comprehensive Environmental Response, Compensation, and
Liability Act, the Clean Water Act, the Hazardous Materials Transportation Act,
the Toxic Substances Control Act, the Hazardous Waste Control Act, the Model
Toxics Control Act and comparable California laws, and the regulations issued
thereunder (collectively, "Environmental Laws"), except where such violation
would not have a material adverse effect on the business, assets, operations or
condition (financial or other) of Kirkhill.
(d) To Kirkhill's knowledge, Kirkhill has not transported, stored,
treated, recycled, handled or disposed of, or allowed or arranged for any third
party to transport, store, treat, recycle, handle or dispose of (i) any
flammable substances, explosives, radioactive materials, hazardous substances,
hazardous wastes, toxic substances, pollutants, contaminants or any wastes,
materials or substances identified in or regulated by any Environmental Laws;
(ii) asbestos, polychlorinated biphenyls, urea formaldehyde, nuclear fuel or
material, chemical waste, carcinogens and radon, all to the extent regulated by
any Environmental Laws; or (iii) gasoline, oil and other petroleum products
(all of the foregoing collectively, "Regulated Substances"), to or at any
location in violation of any Environmental Laws.
(e) To Kirkhill's knowledge and except as set forth on Schedule 3.21(e)
to the Disclosure Memorandum, no part of the Real Property, including, but not
limited to, all surface and subsurface soil, sediments, groundwater and surface
water located on, in or under the Real Property, was during the period of use
by Kirkhill contaminated with any Regulated Substances or constituents thereof,
which contamination has given or may give rise to any obligation of Kirkhill
under any applicable Environmental Laws, the common law or otherwise. To
Kirkhill's knowledge, no real property adjacent to or adjoining the Real
Property has been or is being so contaminated.
(f) Kirkhill has reported, recorded or filed, and has provided to
Xxxxxxxxx, true, accurate and complete copies of all reports with respect to
any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, migrating, leaching, dumping or disposing into the
environment (including the abandonment or discarding of drums, barrels,
containers or other closed receptacles) (any of the foregoing, a "Release"),
required by applicable Environmental Laws to be filed by Kirkhill with any
government authority. Kirkhill has maintained all environmental and operating
documents and records in the manner and for the time periods required by
applicable Environmental Laws.
24
(g) To Kirkhill's knowledge, since 0000 Xxxxxxxx has not caused or
permitted the Release of any Regulated Substances or constituents thereof on,
from or off-site of its property, or of any Release from any facility owned or
operated by third parties but with respect to which Kirkhill is alleged to have
liability, including, but not limited to, liability for personal injury,
cleanup or restoration, which Release caused or could reasonably be expected to
cause a material loss to Kirkhill.
(h) There are no tanks that, when considered with all associated
piping, are underground storage tanks located either wholly or partially below
the surface of the ground, and, without regard to whether they are in contact
with soil, within a building or containment structure or otherwise are located
in, on or under the Real Property owned or leased by Kirkhill.
3.22 Insurance
Schedule 3.22 to the Disclosure Memorandum sets forth a true and complete
list of all of Kirkhill's policies of insurance currently in effect. Kirkhill
maintains insurance (a) on all of its property (including leased premises) that
insures against loss or damage by fire or other casualty (including extended
coverage) and (b) against liabilities, claims and risks of a nature and in such
amounts as are normal and customary in Kirkhill's industry. All insurance
policies of Kirkhill are in full force and effect, all premiums with respect
thereto covering all periods up to and including the date this representation
is made have been paid, and no notice of cancellation or termination has been
received with respect to any such policy or binder. Except as set forth in
Schedule 3.22 to the Disclosure Memorandum, such policies or binders are
sufficient for compliance with all requirements of law currently applicable to
Kirkhill and of all agreements to which Kirkhill is a party, will remain in
full force and effect through the respective expiration dates of such policies
or binders without the payment of additional premiums, and will not in any way
be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. Except as set forth in Schedule 3.22 to the
Disclosure Memorandum, Kirkhill has not been refused any insurance with respect
to its respective assets or operations, nor has its coverage been limited, by
any insurance carrier to which it has applied for any such insurance or with
which it has carried insurance.
3.23 Brokers, Finders or Financial Advisors
Except as set forth on Schedule 3.23 to the Disclosure Memorandum,
Kirkhill has not incurred, and will not incur, directly or indirectly, as a
result of any action taken by or on behalf of Kirkhill, any liability for
brokerage, finders', valuation or
25
financial advisory fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
3.24 Government Contracts
To Kirkhill's knowledge, Kirkhill has never been, nor as a result of the
consummation of the transactions contemplated by this Agreement (without giving
any consideration to the identity or conduct of Xxxxxxxxx) will it be,
suspended or debarred from bidding on contracts or subcontracts for any agency
of the United States government or any foreign government, nor to Kirkhill's
knowledge has such suspension or debarment been threatened or action for
suspension or debarment been commenced. Kirkhill has not been nor is it
currently being audited, except in the ordinary course of business or as is
customary in the industry or as provided by the Federal Acquisition Regulations
or, to the knowledge of Kirkhill, investigated by the United States Government
Accounting Office, the United States Department of Justice, the United States
Department of Defense or any of its agencies, the Defense Contract Audit Agency
or the inspector general or other authorities of any agency of the United
States government, or any foreign government, nor, to Kirkhill's knowledge, has
such audit or investigation been threatened. There is no valid basis for
Kirkhill's suspension or debarment from bidding on contracts or subcontracts
for any agency of the United States government or any foreign government and
there is no valid basis for a claim pursuant to an audit or investigation by
the United States Government Accounting Office, the United States Department of
Justice, the United States Department of Defense or any of its agencies, the
Defense Contract Audit Agency or other authorities of any agency of the United
States government or any foreign government, or any prime contractor with any
such governmental body. Kirkhill has not had a contract or subcontract
terminated for default by Kirkhill and has not been determined to be
nonresponsible by any agency of the United States government or any foreign
government. To Kirkhill's knowledge, Kirkhill does not have any outstanding
agreements, contracts or commitments that require it to obtain or maintain a
government security clearance except for the Thiokol agreement.
3.25 Absence of Questionable Payments
Neither Kirkhill, nor any of its directors or officers or to Kirkhill's
knowledge, agents, employees or any other Person acting on behalf of Kirkhill,
has used any funds of Kirkhill for improper or unlawful contributions,
payments, gifts or entertainment, or made any improper or unlawful expenditures
relating to political activity to government officials or others. Kirkhill has
adequate financial controls to prevent such improper or unlawful contributions,
payments, gifts, entertainment or
26
expenditures. Neither Kirkhill nor any of its current directors or officers,
agents, employees or any other Person acting on behalf of Kirkhill has accepted
or received any improper or unlawful contributions, payments, gifts or
expenditures. Kirkhill has at all times complied, and is in compliance, in all
respects with the applicable provisions of the U.S. Foreign Corrupt Practices
Act, as amended, and other applicable domestic and foreign laws and regulations
relating to corrupt practices and similar matters.
3.26 Personnel
Schedule 3.26 to the Disclosure Memorandum sets forth as of June 30, 1998
a true and complete list of
(a) the names and current compensation amounts of all directors
and all employees, full or part-time, of Kirkhill and the family relationships,
if any, among the senior management of Kirkhill, including Kirkhill's
directors, officers and key employees;
(b) the names and current compensation packages of all
independent contractors and consultants of Kirkhill; and
(c) all oral and written agreements and understandings related to
the employment of any employee of Kirkhill, including all employee handbooks
and statements of Kirkhill's policy regarding employment matters.
Kirkhill is not in default with respect to any of its obligations to the
Persons listed in subsections (a) and (b) above.
3.27 Bank Accounts
Schedule 3.27 to the Disclosure Memorandum sets forth the names and
locations of all banks, trust companies, savings and loan associations and
other financial institutions at which Kirkhill maintains safe deposit boxes or
accounts of any nature and the names of all Persons authorized to draw thereon,
make withdrawals therefrom or have access thereto.
3.28 Previous Conduct of Business; Insider Interests
Since December 31, 1990, all the transactions of Kirkhill with third
parties have been conducted on an arm's-length basis. To Kirkhill's knowledge,
no officer, director, employee or other representative of Kirkhill has any
interest, and the ESOP has no interest, other than as a shareholder of Kirkhill
(a) in any property, real or
27
personal, tangible or intangible, used in or directly pertaining to the
business of Kirkhill, including, without limitation, inventions, patents,
trademarks or trade names, or (b) in any agreement, contract, arrangement or
obligation relating to Kirkhill, its present or prospective business or its
operations. There are no agreements, understandings or proposed transactions
between Kirkhill and any of its officers, directors, or affiliates or any
affiliate thereof, or between Kirkhill or any affiliates thereof. Except as set
forth on Schedule 3.28 to the Disclosure Memorandum, to Kirkhill's knowledge,
neither Kirkhill nor any of its officers, directors or employees has any
interest, either directly or indirectly, in any entity, including, without
limitation, any corporation, partnership, joint venture, proprietorship, firm,
licensee, business or association (whether as an employee, officer, director,
shareholder, agent, independent contractor, security holder, creditor,
consultant or otherwise) that presently (i) provides any services, produces
and/or sells any products or product lines, or engages in any activity that is
the same, similar to or competitive with any activity or business in which
Kirkhill is now engaged or proposes to engage; (ii) is a supplier, customer or
creditor, or has an existing contractual relationship with any of Kirkhill's
employees (or Persons performing similar functions); or (iii) has any direct or
indirect interest in any asset or property, real or personal, tangible or
intangible, of Kirkhill or any property, real or personal, tangible or
intangible, that is necessary or desirable for the present or anticipated
future conduct of Kirkhill's business.
3.29 Full Disclosure
To Kirkhill's knowledge, no information furnished by Kirkhill to
Xxxxxxxxx in connection with this Agreement (including, but not limited to, the
Financial Statements and all information in the Disclosure Memorandum and the
Exhibits hereto) or to be furnished prior to the Closing by or on behalf of
Kirkhill to Xxxxxxxxx, or to others in connection with obtaining approval of
the transaction contemplated by this Agreement, is false or misleading in any
material respect. Kirkhill has not made any untrue statement of a material fact
nor omitted to state a material fact necessary to make the statements made or
information delivered in or pursuant to this Agreement, including, but not
limited to, the Disclosure Memorandum and Exhibits hereto, or in or pursuant to
closing certificates executed or delivered by Kirkhill, not misleading.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
OF THE ESOP
To induce Xxxxxxxxx and Kirkhill to enter into and perform this
Agreement, and except as is otherwise set forth in the Disclosure Memorandum
executed concurrently herewith and attached hereto and made a part hereof,
which exceptions shall
28
specifically identify the paragraph or paragraphs of this Article IV to which
such exceptions relate, and which shall constitute in its entirety a
representation and warranty under this Article IV, the ESOP represents and
warrants to Xxxxxxxxx and Kirkhill as of the date of this Agreement and as of
the Closing as follows in this Article IV.
4.1 Good Title
The ESOP owns 24,433 Shares of the Common Stock of Kirkhill. Such Shares
are owned free and clear of any lien, encumbrance, adverse claim, restriction
on sale or transfer (other than restrictions imposed by applicable securities
laws), preemptive right or option, and upon the consummation of the sale of the
Shares as contemplated hereby, Xxxxxxxxx will have good title to the Shares,
free and clear of any lien, encumbrance, adverse claim, restriction on sale or
transfer (other than restrictions imposed by applicable securities laws),
preemptive right or option. The ESOP, through the Trustee (as directed by the
Administrative Committee), has the full power, right and authority to enter
into this Agreement and each of the agreements, certificates, instruments and
documents executed or delivered pursuant to the terms of this Agreement
(collectively, and including this Agreement, the "Operative Documents"), to
consummate the transactions contemplated hereby and thereby, and to sell and
transfer the Shares hereunder without the consent or approval of any other
Person.
4.2 Enforceability
All actions on the part or on behalf of the ESOP and the Trustee
necessary for the authorization, execution, delivery and performance of this
Agreement and the other Operative Documents, the consummation of the
transactions contemplated hereby and thereby, and the performance of all of the
ESOP's and the Trustee's obligations under this Agreement and the other
Operative Documents have been taken or will be taken prior to the Closing. This
Agreement has been, and the other Operative Documents to which the ESOP is a
party on the Closing will be, duly executed and delivered by the ESOP, and this
Agreement is, and each of the other Operative Documents to which it is a party
on the Closing will be, the legal, valid and binding obligation of the ESOP,
enforceable against the ESOP in accordance with its terms.
29
4.3 No Approvals or Notices Required; No Conflicts With Instruments
The execution, delivery and performance of this Agreement and the other
Operative Documents by the ESOP and the consummation of the transactions
contemplated hereby and thereby will not (a) constitute a violation (with or
without the giving of notice or lapse of time, or both) of any provision of any
law or any judgment, decree, order, regulation or rule of any court, agency or
other governmental authority applicable to the ESOP, (b) require any consent,
approval or authorization of, or declaration, filing or registration with, any
Person, except for the Forms 5310 and 5500 to be filed with the IRS in
connection with the termination of the ESOP following Closing, (c) result in a
default (with or without the giving of notice or lapse of time, or both) under,
acceleration or termination of, or the creation in any party of the right to
accelerate, terminate, modify or cancel, any agreement, lease, note or other
restriction, encumbrance, obligation or liability to which the ESOP is a party
or by which it is bound or to which any assets of the ESOP are subject, (d)
result in the creation of any lien or encumbrance upon the assets of the ESOP,
or upon any Shares owned by the ESOP, or (e) conflict with or result in a
breach of or constitute a default under any provision of the trust agreement of
the ESOP.
4.4 Employee Benefit Plans
(a) To the ESOP's knowledge, the ESOP is, and at all times since
inception has been, maintained, administered and operated in compliance with
its terms and with the requirements prescribed by any and all applicable laws,
statutes, orders, rules and regulations, including, but not limited to, ERISA
and the Code. To the ESOP's knowledge, all amendments and actions required to
bring the ESOP into conformity with the applicable provisions of ERISA, the
Code and other applicable laws and regulations have been made or taken within
the time prescribed by law, except to the extent that such amendments or
actions are not required by law to be made or taken until after the Closing
Date and are disclosed in Schedule 4.4 to the Disclosure Memorandum. All tax
returns, information returns, reports and information relating to such Employee
Benefit Plan required to be filed with any governmental entity or agency have
been accurately, timely and properly filed. All notices, statements, reports
and other disclosure required to be given or made to participants in the ESOP
or their beneficiaries have been accurately, timely and properly disclosed or
provided. None of the transactions contemplated in this Agreement (including,
but not limited to, the tender of the Shares held by the ESOP) will constitute
or result in a transaction described in either (or both) clause (v) or (vi) of
Section 3.15(c). Furthermore, to the ESOP's knowledge, no event or omission has
occurred, or is about to occur (including,
30
but not limited to, any of the transactions contemplated in this Agreement), in
connection with the ESOP that could subject Kirkhill, or any officer, employee,
agent, director or independent contractor of Kirkhill, to a fine, penalty, tax
or similar liability, whether pursuant to any agreement, instrument,
indemnification obligation, statute, regulation, rule of law or otherwise,
including, but not limited to, a tax under Chapter 43 of Subtitle D of the Code
or a civil penalty under Section 502(i) or 502(l) of ERISA.
(b) To the ESOP's knowledge, the ESOP is, and at all times since
inception has been, qualified under Section 401(a) of the Code, and its related
trust is, and at all times since inception has been, exempt from taxation under
Section 501(a) of the Code. To the ESOP's knowledge, nothing has occurred since
the most recent favorable determination letter issued with respect to the ESOP
that could cause the ESOP to lose its ability to rely on such determination
letter or could cause the IRS to revoke such determination letter.
(c) All benefits, expenses and other amounts payable from the ESOP have
been timely paid, or, if not yet due, have been properly recorded on the books
of the ESOP. All income taxes and wage taxes required by law to be withheld
from benefits derived under the ESOP have been properly withheld and remitted
to the proper depository.
(d) There are no actions, suits or claims (other than routine claims
for benefits) pending or, to the ESOP's knowledge, threatened with respect to
the ESOP or against the assets of the ESOP, nor, to the ESOP's knowledge, is
there a basis for any such action, suit or claim. The ESOP is not currently
under investigation, audit or review, directly or indirectly, by the IRS,
Department of Labor or any other governmental entity or agency, and, to the
ESOP's knowledge, no such action is contemplated or under consideration by the
IRS, Department of Labor or any other governmental entity or agency.
(e) On and after the Closing Date, neither Kirkhill nor Xxxxxxxxx will
have any liability (whether actual or contingent or direct or indirect) for any
contribution or similar payment (or for the failure to make any contribution or
similar payment) with respect to the ESOP, except for salary deferrals made
under the ESOP with respect to periods commencing on or after the Closing Date,
and any matching contributions related thereto.
(f) Except as provided in Schedule 3.15(p) to the Disclosure
Memorandum, all shares held by the ESOP have been allocated or are allocable to
the participants' accounts.
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(g) There are no outstanding loans to the ESOP.
4.5 Insider Interests
The ESOP has no interest, other than as a shareholder of Kirkhill, (a) in
any property, real or personal, tangible or intangible, used in or directly
pertaining to the business of Kirkhill, including, without limitation,
inventions, patents, trademarks or trade names, or (b) in any agreement,
contract, arrangement or obligation relating to Kirkhill, its present or
prospective business or its operations. Except for transactions contemplated by
the ESOP plan documents, there are no agreements, understandings or proposed
transactions between Kirkhill and the ESOP or any affiliates thereof.
4.6 Full Disclosure
No information furnished by the ESOP to Xxxxxxxxx in connection with this
Agreement (including, but not limited to, all information in the Disclosure
Memorandum and the Exhibits hereto) or to be furnished prior to the Closing by
or on behalf of the ESOP to Xxxxxxxxx, or to others in connection with
obtaining approval of the transaction contemplated by this Agreement, is false
or misleading in any material respect. The ESOP has not made any untrue
statement of a material fact nor omitted to state a material fact necessary to
make the statements made or information delivered in or pursuant to this
Agreement, including, but not limited to, the Disclosure Memorandum and
Exhibits hereto, or in or pursuant to closing certificates executed or
delivered by Kirkhill or the ESOP, not misleading.
ARTICLE V - REPRESENTATIONS AND WARRANTIES
OF XXXXXXXXX
To induce Kirkhill and the ESOP to enter into and perform this Agreement,
Xxxxxxxxx represents and warrants to Kirkhill and the ESOP as of the date of
this Agreement and as of the Closing as follows in this Article V:
5.1 Organization
Xxxxxxxxx is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware. Xxxxxxxxx has full corporate
power and authority to own, operate and lease its properties and assets and to
carry on its business as now conducted and as proposed to be conducted, to
execute, deliver and perform this Agreement and the other Operative Documents
to which it is a party, and to carry out the transactions contemplated hereby
and thereby.
32
5.2 Enforceability
All corporate action on the part of Xxxxxxxxx and its officers, directors
and stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and the other Operative Documents to which it is
a party, the consummation of the transaction contemplated hereby and thereby,
and the performance of all of Xxxxxxxxx'x obligations under this Agreement and
the other Operative Documents to which it is a party has been taken or will be
taken prior to the Closing. This Agreement has been, and each of the other
Operative Documents to which it is a party on the Closing will be, duly
executed and delivered by Xxxxxxxxx, and this Agreement is, and each of the
other Operative Documents to which it is a party on the Closing will be, a
legal, valid and binding obligation of Xxxxxxxxx, enforceable against Xxxxxxxxx
in accordance with its terms.
5.3 No Approvals or Notices Required; No Conflicts With Instruments
The execution, delivery and performance by Xxxxxxxxx of this Agreement
and the other Operative Documents to which it is a party, and the consummation
of the transactions contemplated hereby and thereby, will not (a) constitute a
violation (with or without the giving of notice or lapse of time, or both) of
any provision of law or any judgment, decree, order, regulation or rule of any
court, agency or other governmental authority applicable to Xxxxxxxxx or (b)
require Xxxxxxxxx to obtain any consent, approval or authorization of, or make
any declaration, filing or registration with, any Person, except compliance
with the requirements of the HSR Act.
5.4 Legal Proceedings
There is no claim, action, suit, arbitration, proceeding or investigation
pending or, to Xxxxxxxxx'x knowledge, threatened against Xxxxxxxxx before or by
any court or governmental or nongovernmental department, commission, board,
bureau, agency or instrumentality, or any other Person, that questions the
validity of this Agreement or any action taken or to be taken by Xxxxxxxxx
pursuant to this Agreement or in connection with the transactions contemplated
hereby.
5.5 Brokers or Finders
Xxxxxxxxx has not incurred, nor will it incur, directly or indirectly, as
a result of any action taken by or on behalf of Xxxxxxxxx, any liability for
broker's or finder's fees or agent's commissions or any similar charges in
connection with this Agreement
33
or any transaction contemplated hereby other than fees and expenses of Xxxxxx
Xxxxx Associates.
5.6 Full Disclosure
No information furnished by Xxxxxxxxx to Kirkhill or the ESOP in
connection with this Agreement or to be furnished prior to the Closing by or on
behalf of Xxxxxxxxx to Kirkhill or the ESOP, or to others in connection with
obtaining approval of the transaction contemplated by this Agreement, is false
or misleading in any material respect. Xxxxxxxxx has not made any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements made or information delivered in or pursuant to
this Agreement or in or pursuant to closing certificates executed or delivered
by Xxxxxxxxx not misleading.
ARTICLE VI - CONDITIONS PRECEDENT TO
OBLIGATIONS OF XXXXXXXXX
The obligations of Xxxxxxxxx to perform and observe the covenants,
agreements and conditions hereof to be performed and observed by it at or
before the Closing shall be subject to the satisfaction of the following
conditions, which may be expressly waived only in writing signed by Xxxxxxxxx.
6.1 Accuracy of Representations and Warranties
Each of the representations and warranties of Kirkhill and the ESOP
contained herein (including applicable Exhibits and the Disclosure Memorandum)
shall be true and correct as of the date hereof and at and as of the Closing
Date as though made on that date; except that to the extent such
representations and warranties are made as of a specified date, in which case
such representations and warranties shall be true and correct as of the
specified date.
6.2 Performance of Agreements
Kirkhill and the ESOP shall have performed all obligations and agreements
and complied with all covenants and conditions contained in this Agreement or
any other Operative Document to be performed and complied with by them at or
prior to the Closing.
6.3 Opinion of Counsel for Kirkhill
Xxxxxxxxx shall have received the opinion of Xxxx X. Xxxx, counsel for
Kirkhill, dated the Closing Date, in substantially the form attached hereto as
Exhibit 6.3.
34
6.4 Opinion of Counsel for the ESOP
Xxxxxxxxx shall have received the opinion of Xxxxxx Xxxxxxxx & Xxxxxxx, A
Professional Corporation, counsel for the ESOP, dated the Closing Date, in
substantially the form attached hereto as Exhibit 6.4.
6.5 ESOP-Related Conditions
(a) The Trustee and the ESOP's Administrative Committee (as defined in
the ESOP plan document), on behalf of the ESOP and the participants in the
ESOP, shall have duly and validly approved the sale of the Shares and the
execution, delivery and performance by the ESOP of this Agreement and the other
Operative Documents to which the ESOP is party in accordance with all
applicable laws; and
(b) Except for the 401(k) portion of the ESOP, Kirkhill shall have
taken all steps necessary to freeze benefit accruals (and to discontinue
contributions) under the ESOP, effective as soon as practicable after the
Closing Date (and following the expiration of any notice periods).
6.6 Consents to Sale of Shares
Kirkhill shall have received and shall have delivered to Xxxxxxxxx
written consents to the sale of the Shares from each of the parties (other than
Kirkhill) to those agreements, leases, notes or other documents set forth as
requiring such consent on Schedules 3.5, 3.9(f) and 3.10 to the Disclosure
Memorandum, which consents shall be satisfactory in all respects to Xxxxxxxxx
in its sole and absolute discretion.
6.7 Officers' Certificate
Xxxxxxxxx shall have received a certificate of the President and the
Chief Financial Officer of Kirkhill, dated the Closing Date, substantially in
the form attached hereto as Exhibit 6.7, certifying that the conditions set
forth in Sections 6.1, 6.2, 6.6, 6.9 and 6.11 have been fulfilled.
6.8 ESOP's Certificate
Xxxxxxxxx shall have received a certificate of the ESOP, executed on
behalf of the ESOP by the Trustee, dated the Closing Date, substantially in the
form attached hereto as Exhibit 6.8, certifying that the conditions set forth
in Sections 6.1, 6.2, 6.5, and 6.11 have been fulfilled.
35
6.9 Material Adverse Change
Since the date hereof and through the Closing, there shall not have
occurred any material adverse change in the business, operations, assets,
liabilities, earnings, condition (financial or other), or prospects of
Kirkhill.
6.10 Due Diligence and Board Approval
The results of Xxxxxxxxx'x due diligence investigation of Kirkhill shall
be satisfactory in all respects to Xxxxxxxxx, and the Board of Directors of
Xxxxxxxxx shall have approved this Agreement and the transactions contemplated
hereby.
6.11 Approvals and Consents
All transfers of permits or licenses and all approvals, applications or
notices to public agencies, federal, state, local or foreign, the granting or
delivery of which is necessary for the consummation of the transactions
contemplated hereby or for the continued operation of Kirkhill, shall have been
obtained, and all waiting periods specified by law shall have passed. The
parties shall have obtained, and the parties shall have received notification
of the expiration or early termination of the waiting period under the HSR Act.
All other consents, approvals and notices material to the consummation of the
transactions contemplated by this Agreement and referred to herein shall have
been obtained or delivered.
6.12 Proceedings and Documents; Secretary's Certificate
All corporate and other proceedings in connection with the transactions
contemplated hereby and all documents and instruments incident to such
transactions shall have been approved by counsel to Xxxxxxxxx, and Xxxxxxxxx
shall have received a certificate of the Secretary of Kirkhill, substantially
in the form attached hereto as Exhibit 6.12, as to the authenticity and
effectiveness of the actions of the Board of Directors of Kirkhill authorizing
the sale of the Shares and the other transactions contemplated by this
Agreement, and the other Operative Documents to which Kirkhill is a party, and
such other documents as are reasonably specified by counsel to Xxxxxxxxx.
6.13 Compliance With Laws
The consummation of the transactions contemplated by this Agreement shall
be legally permitted by all laws and regulations to which Xxxxxxxxx is subject.
36
6.14 Legal Proceedings
No order of any court or administrative agency shall be in effect that
enjoins, restrains, conditions or prohibits consummation of this Agreement, and
no litigation, investigation or administrative proceeding shall be pending or
threatened that would enjoin, restrain, condition or prevent consummation of
this Agreement or the transactions contemplated hereby.
6.15 Employment Agreements
Employment Agreements, substantially in the form attached hereto as
Exhibit 6.15 shall have been executed and delivered by Kirkhill, Xxxxxxxxx and
each of Xxxxxx Xxxxxx, Xxxxxx X. Xxxxxxxxx, Xxxx Xxxxx, Xxxxx Xxxxxxxx, Xxxx
Xxxxxxxxx, Xxxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxx XxXxxxx, Dell
XxXxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxxxxx.
6.16 Delivery of Certificates
The ESOP shall deliver to Xxxxxxxxx at Closing certificates representing
the Shares, duly endorsed for transfer on Kirkhill's books.
6.17 Fairness Opinion
The ESOP shall have received an opinion, as of the Closing Date, of Duff
& Xxxxxx, LLC, financial advisor to the ESOP, substantially to the effect that
(a) the sale of the shares held by the ESOP will be made for adequate
consideration (within the meaning of Section 3(18) of ERISA) and (b) the
transactions contemplated by this Agreement are fair, from a financial point of
view, to the ESOP, and Xxxxxxxxx shall have received a copy of such opinion,
unless the dissemination of such a copy would violate the terms of any
applicable agreement.
6.18 Other Matters
Determination of the post-closing treatment of the ESOP shall have been
resolved in accordance with the Kirkhill ESOP Transition Plan attached as
Exhibit 6.18 hereto in a manner satisfactory to Xxxxxxxxx and Kirkhill.
ARTICLE VII - CONDITIONS PRECEDENT TO
OBLIGATIONS OF KIRKHILL AND THE ESOP
The obligations of Kirkhill and the ESOP to perform and observe the
covenants, agreements and conditions hereof to be performed and observed by
each of
37
them at or before the Closing shall be subject to the satisfaction of the
following conditions, which may be expressly waived only in writing signed by
Kirkhill and the ESOP.
7.1 Accuracy of Representations and Warranties
Each of the representations and warranties of Xxxxxxxxx shall be true and
correct as of the date hereof and at and as of the Closing Date as though made
on that date; except that to the extent such representations and warranties are
made as of a specified date, in which case such representations and warranties
shall be true and correct as of the specified date.
7.2 Performance of Agreements
Xxxxxxxxx shall have performed all obligations and agreements and
complied with all covenants and conditions contained in this Agreement or any
other Operative Document to be performed and complied with by it at or prior to
the Closing.
7.3 ESOP Approval
The Trustee and the ESOP's Administrative Committee (as defined in the
ESOP plan document), on behalf of the ESOP and the participants in the ESOP,
shall have duly and validly approved the sale of the Shares and the execution,
delivery and performance by the ESOP of this Agreement and the other Operative
Documents to which the ESOP is a party in accordance with all applicable laws.
7.4 Officers' Certificate
Kirkhill shall have received a certificate of an officer of Xxxxxxxxx,
dated the Closing Date, substantially in the form attached hereto as Exhibit
7.4, certifying that the conditions in Sections 7.1 and 7.2 have been
fulfilled.
7.5 Legal Proceedings
No order of any court or administrative agency shall be in effect that
enjoins, restrains, conditions or prohibits consummation of this Agreement, and
no litigation, investigation or administrative proceeding shall be pending or
threatened that would enjoin, restrain, condition or prevent consummation of
this Agreement or the transactions contemplated hereby.
38
7.6 Approvals and Consents
All transfer of permits or licenses and approvals, applications or
notices to public agencies, federal, state, local or foreign, required to be
obtained by Xxxxxxxxx for the consummation of the transactions contemplated
hereby shall have been obtained, and all waiting periods specified by law shall
have passed. The parties shall have obtained, and the parties shall have
received notification of the expiration or early termination of the waiting
period under the HSR Act.
7.7 Compliance With Laws
The consummation of the transactions contemplated by this Agreement shall
be legally permitted by all laws and regulations to which Kirkhill and the ESOP
are subject.
7.8 Fairness Opinion
The ESOP shall have received an opinion, as of the Closing Date, of Duff
& Xxxxxx, LLC, financial advisor to the ESOP, substantially to the effect that
(a) the sale of the shares held by the ESOP will be made for adequate
consideration (within the meaning of Section 3(18) of ERISA) and (b) the
transactions contemplated by this Agreement are fair, from a financial point of
view, to the ESOP.
7.9 Opinion of Counsel for Xxxxxxxxx
Kirkhill and the ESOP shall have received the opinion of Xxxxxxx Coie
LLP, counsel for Xxxxxxxxx, dated the Closing Date, in substantially the same
form attached hereto as Exhibit 7.9.
ARTICLE VIII - COVENANTS
Between the date of this Agreement and the time of Closing or August 31,
1998, whichever is earlier, the parties covenant and agree as set forth in this
Article VIII.
8.1 Conduct of Business by Kirkhill Pending the Closing
Unless Xxxxxxxxx shall otherwise agree in writing, the business of
Kirkhill shall be conducted by the directors and officers in a manner
consistent with past practice and in accordance with applicable law; and
Kirkhill shall use its reasonable best efforts to preserve substantially intact
the business organization of Kirkhill, to keep available the services of the
current directors, officers, employees and consultants of
39
Kirkhill and to preserve the current relationships of Kirkhill with customers,
suppliers and other Persons with which Kirkhill has significant business
relations. By way of amplification and not limitation, except as otherwise
contemplated by this Agreement, Kirkhill shall not, between the date of this
Agreement and the time of Closing, or thirty days from the date of this
Agreement, if earlier, directly or indirectly do, or propose to do, any of the
following without giving Xxxxxxxxx prior written notice thereof and receiving
Xxxxxxxxx'x prior written consent:
(a) amend or otherwise change its Articles of Incorporation;
(b) except as disclosed on Schedule 8.1(b) to the Disclosure
Memorandum, issue, sell, pledge, dispose of, grant, encumber or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of
capital stock of any class of Kirkhill, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such capital
stock, or any other ownership interest (including, without limitation, any
phantom interest) of Kirkhill, or (ii) any assets of Kirkhill;
(c) except for annual distributions to the ESOP in accordance
with the terms thereof, declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to
any of its capital stock;
(d) reclassify, combine, split, subdivide, redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock, except as
may be required pursuant to the ESOP;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) or form any corporation,
partnership, other business organization or division thereof, or acquire
directly or indirectly any material amount of assets; (ii) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any Person, or make any loans or advances, except in the
ordinary course of business and consistent with past practice which loans shall
be on terms and conditions satisfactory to Xxxxxxxxx and repaid in full at or
prior to the Closing; (iii) enter into any contract or agreement other than in
the ordinary course of business, consistent with past practice; (iv) authorize
any single capital expenditure that is in excess of $50,000 or capital
expenditures that are, in the aggregate, in excess of $250,000; or (v) enter
into or amend any contract, agreement, commitment or arrangement with respect
to any matter set forth in this subsection (e);
40
(f) except for transactions in the ordinary course of business or
the payment of mid-year bonus to executive officers and others listed on
Schedule 8.1(f) to the Disclosure Memorandum in accordance with existing
incentive plans (notwithstanding that the timing of such payments will not be
made consistently with past practice), enter into any employment, consulting or
agency agreement, or increase the compensation payable or to become payable to
its officers, employees or consultants, except for increases in accordance with
existing agreements or past practices for employees of Kirkhill who are not
officers of Kirkhill, or grant any severance or termination pay to, or enter
into any employment or severance agreement with, any director, officer or other
employee of Kirkhill, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee;
(g) take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past practice, with respect
to accounting policies or procedures (including, without limitation, procedures
with respect to the payment of accounts payable and collection of accounts
receivable);
(h) make any tax election inconsistent with past practices or
settle or compromise any material federal, state, local or foreign income tax
liability;
(i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of business
and consistent with past practice, of liabilities reflected or reserved against
in the Balance Sheet or subsequently incurred in the ordinary course of
business and consistent with past practice;
(j) take any action that would or is reasonably likely to result
in any of the representations and warranties of Kirkhill or the ESOP set forth
in this Agreement being untrue, or in any covenant of Kirkhill or the ESOP set
forth in this Agreement being breached, or in any of the conditions to the sale
of the Shares specified in Article VI not being satisfied;
(k) enter into any equipment lease; or
(l) take or agree to take any action specified in Section 3.7, or
enter into any other material transaction other than those specified above, or
agree to do any of the foregoing.
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8.2 Access to Information; Confidentiality
From the date hereof to the time of Closing, Kirkhill shall continue to,
and shall cause its representatives to continue to, afford Xxxxxxxxx and its
representatives complete access at all reasonable times to the officers,
employees, agents, properties, offices, plants and other facilities, books and
records of Kirkhill and shall furnish Xxxxxxxxx with all financial, operating
and other data and information as Xxxxxxxxx may reasonably request and as such
access is necessary to the consummation of the transactions contemplated
hereby. From the date hereof until the time of Closing, Kirkhill shall provide
Xxxxxxxxx with monthly and other financial statements of Kirkhill as they
become available internally at Kirkhill, all of which financial statements
shall be prepared in conformity with GAAP and shall fairly present the
financial position and results of operations of Kirkhill as of the dates and
for the periods therein specified.
Except as required by law, or necessary to carry the transactions
contemplated hereby, all information or documents furnished in connection with
such transaction and this Agreement by any party shall by kept confidential by
the party or parties to whom furnished at all times prior to the Closing, and
in the event such transactions are not consummated, each such party shall
promptly return to the other all documents furnished hereunder and shall
continue to keep confidential all information furnished hereunder and shall not
thereafter use the same for its advantage; provided, however, that any such
obligation to keep information confidential shall not apply to any information
that (a) becomes or has become available to such party from other sources not
known by such party to be bound by a confidentiality agreement, (b) is
disclosed with the prior written approval of the party to which such
information pertains, or (c) is or becomes readily ascertainable from published
information or trade sources.
8.3 Exclusivity
Kirkhill and the ESOP shall not, directly or indirectly, through any
officer, director, agent, investment banker, attorney or otherwise, solicit,
initiate or encourage the submission of any proposal, offer, inquiry or contact
from any Person relating to any acquisition or purchase of all or (other than
in the ordinary course of business) any portion of the assets of, or any equity
interest in, Kirkhill or any business combination with Kirkhill, or participate
in any negotiations or discussions regarding, or furnish to any other Person
any information with respect to, or otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by any
other Person, to do or seek any of the foregoing. Kirkhill and the ESOP
immediately shall cease and cause to be terminated with no obligation,
42
financial or otherwise, on the part of Kirkhill or the ESOP, all existing
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Kirkhill and the ESOP shall notify Xxxxxxxxx promptly
if any such proposal or offer, or any inquiry or contact with any Person with
respect thereto, is made and shall, in any such notice to Xxxxxxxxx, indicate
in reasonable detail the identity of the Person making such proposal, offer,
inquiry or contact and the terms and conditions of such proposal, offer,
inquiry or contact. Kirkhill agrees not to release any third party from, or
waive any provision of, any confidentiality or standstill agreement to which
Kirkhill is a party.
8.4 Notification of Certain Matters
Kirkhill shall give prompt written notice to Xxxxxxxxx, and Xxxxxxxxx
shall give prompt written notice to Kirkhill, of (a) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to (i) cause any representation or warranty of Kirkhill or Xxxxxxxxx,
respectively, contained in this Agreement to be materially untrue or inaccurate
or (ii) result in the material failure to satisfy a closing condition in
Article VI; (b) any material failure of Kirkhill or Xxxxxxxxx, respectively, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; and (c) any written communication from any third
parties alleging that the consent of such party may be required in connection
with the transactions contemplated by this Agreement; provided, however, that
the delivery of any notice pursuant to this Section 8.4 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
8.5 Further Action; Reasonable Best Efforts
Upon the terms and subject to the conditions hereof, each of the parties
hereto shall (a) make promptly its respective filings, and thereafter make any
other required submissions, under applicable laws with respect to the
transactions contemplated hereby and shall cooperate with the other party with
respect to such filings and submissions; and (b) use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated hereby, including, without limitation, using its reasonable best
efforts to obtain all waivers, licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts as are necessary for the consummation of the transactions
contemplated hereby and to fulfill the conditions to the closing of the sale of
the Shares to Xxxxxxxxx. In case at any time after the Closing Date any further
action is necessary or desirable
43
to carry out the purposes of this Agreement, each party to this Agreement shall
use its reasonable best efforts to take all such action. None of Xxxxxxxxx,
Kirkhill and the ESOP will undertake any course of action inconsistent with
this Agreement or that would make any representations, warranties or agreements
made by such party in this Agreement untrue or any conditions precedent to this
Agreement unable to be satisfied at or prior to the Closing.
8.6 Publicity
None of the parties hereto shall disclose, make or issue, or cause to be
disclosed, made or issued, any statement or announcement concerning this
Agreement or the transactions contemplated hereby to any third parties (other
than its officers, directors, employees, authorized representatives, legal
advisors and financial advisors who need to know such information in connection
with carrying out or facilitating the transactions contemplated hereby) without
the prior written consent of the other parties, except as required by law or
any listing or other agreement with any public securities trading exchange or
market to which Xxxxxxxxx is a party and after providing written notice to the
other parties of such required disclosure.
8.7 Offer by Xxxxxxxxx
Concurrently with the execution of this Agreement, Xxxxxxxxx shall
commence an offer (the "Offer") to purchase any and all outstanding shares of
Common Stock, including the Shares, at the Purchase Price by delivering or
mailing offer documents in substantially the form attached hereto as
Exhibit 8.7 to each shareholder of Kirkhill, including the ESOP. Xxxxxxxxx
shall keep the Offer open for a period of at least thirty days and shall extend
Offer for up to three successive thirty-day periods. The ESOP hereby agrees to
tender the Shares to Xxxxxxxxx immediately upon the commencement of the Offer.
Kirkhill shall cooperate with Xxxxxxxxx and use its reasonable best efforts to
take, or cause to be taken, all appropriate action and to do, or cause to be
done, all things necessary, proper or advisable to assist Xxxxxxxxx in the
purchase of the shares of Common Stock of the remaining Kirkhill shareholders.
Xxxxxxxxx agrees that it will not pay consideration unequally per share to any
shareholder of Kirkhill in the Offer.
8.8 Employment and Compensation
Xxxxxxxxx agrees that for one year following execution of this Agreement,
Kirkhill's existing terms and conditions of employment, wages and salary rates,
and fringe benefits will continue, provided, however, that:
44
(a) the Employment Agreements referenced in Section 6.15 shall
govern the employment relationship with the individuals named in Section 6.15;
(b) all other Kirkhill employees shall be employed at will;
(c) Xxxxxxxxx may increase wages, salaries or benefits, or may
change the form in which they are provided or paid with ten business days'
advance written notice to employees; and
(d) the requirements of this Section 8.8 shall not apply to the
ESOP (or the benefits provided thereunder), which shall instead be determined
as set forth in the memorandum attached as Exhibit 6.18 hereto.
ARTICLE IX - TERMINATION, AMENDMENT AND
WAIVER
9.1 Termination
The parties agree that time is of the essence of this Agreement. This
Agreement may be terminated at any time prior to Closing:
(a) by mutual written consent of Kirkhill, Xxxxxxxxx and the
ESOP;
(b) by any of Kirkhill, Xxxxxxxxx, or the ESOP if the other party
shall have breached their representations, warranties or agreements hereunder;
(c) by either Kirkhill, Xxxxxxxxx or the ESOP if the Closing has
not occurred by August 31, 1998; provided, however, that the right to terminate
this Agreement under this subsection (c) shall not be available to any party
(i) if all conditions to Closing other than those set forth in Sections 6.11
and 7.6 with respect to the HSR Act have been satisfied or (ii) if that party's
failure to fulfill any obligation under this Agreement has been the cause of,
or resulted in, the failure of the Closing to occur on or before such date; or
(d) by either Kirkhill, Xxxxxxxxx or the ESOP if there shall be
any law or regulation that makes consummation of the sale of the Shares by the
ESOP to Xxxxxxxxx illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Xxxxxxxxx or Kirkhill from consummating
the sale of the Shares by the ESOP to Xxxxxxxxx is entered and such judgment,
injunction, order or decree shall become final and nonappealable; provided,
however, that the party seeking to terminate this Agreement pursuant to this
subsection (d) shall have used all reasonable efforts to remove such judgment,
injunction, order or decree.
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9.2 Effect of Termination
In the event of the termination of this Agreement pursuant to
Section 9.1, there shall be no further obligation on the part of any party
hereto, except that the confidentiality obligations under Section 8.2 and
Section 10.2 shall survive any such termination and nothing herein shall
relieve any party from liability for any breach hereof. In the event of the
termination of this Agreement pursuant to this Article IX, Kirkhill shall
retain the $50,000 paid by Xxxxxxxxx concurrently with execution of the Letter
of Intent dated February 3, 1998.
9.3 Amendment
Xxxxxxxxx, Kirkhill and the ESOP may amend, modify or supplement this
Agreement at any time, but only in writing duly executed on behalf of each of
the parties to be bound thereby.
9.4 Waiver
At any time prior to the Closing, any party hereto may (a) extend the
time for the performance of any obligation or other act of any other party
hereto, (b) waive any inaccuracy in the representations and warranties
contained herein or in any document delivered pursuant hereto, or (c) waive
compliance with any agreement or condition contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed
by the party or parties to be bound thereby. The failure of any party at any
time or times to require performance of any provisions hereof shall in no
manner affect its right at a later time to enforce the same. No waiver by any
party of any condition or of any breach of any terms, covenants,
representations, warranties or agreements contained in this Agreement shall be
deemed to be a further or continuing waiver of any such condition or breach in
other instances or a waiver of any other condition or any breach of any other
terms, covenants, representations, warranties or agreements.
ARTICLE X - GENERAL
10.1 Survival
All representations and warranties contained in this Agreement or the
other Operative Documents or in any certificate delivered pursuant hereto or
thereto shall terminate immediately after Closing. The covenants and agreements
contained in this Agreement that contemplate performance after the Closing
shall survive the Closing
46
and shall continue until all obligations with respect thereto shall have been
performed or satisfied or shall have been terminated in accordance with their
terms.
10.2 Expenses
Whether or not the transactions contemplated by this Agreement are
consummated, each party shall each pay its own fees and expenses incident to
the negotiation, preparation and carrying out of this Agreement and the other
Operative Documents (including legal and accounting fees and expenses);
provided, however, that, should any action be brought hereunder, the attorneys'
fees and expenses of the prevailing party shall be paid by the other party to
such action. To the extent permissible under the ESOP plan documents, ERISA and
other applicable law, Kirkhill shall pay any fees or expenses of the ESOP
related to the transactions contemplated by this Agreement, including, but not
limited to, fees and expenses, whether incurred by legal or financial advisors
or otherwise, related to valuation of the Common Stock.
10.3 Notices
Any notice or demand desired or required to be given hereunder shall be
in writing given by personal delivery or certified or registered mail, telegram
or confirmed facsimile transmission, addressed as respectively set forth below
or to such other address as any party shall have previously designated by such
a notice. The effective date of any notice or request shall be three days from
the date it is sent by the addressor with charges prepaid so long as it is in
fact received within five days, or when successful transmission is confirmed if
sent by facsimile, or when personally delivered.
TO ESTERLINE:
Xxxxxxxxx Technologies Corporation
00000 XX 0xx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: X. X. Xxxxxxxxx
47
with a copy to:
Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxx, Esq.
TO KIRKHILL:
Kirkhill Rubber Company
000 Xxxx Xxxxxxx Xxxxxx
Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
with a copy to:
Xxxx X. Xxxx
Law Offices of Xxxx X. Xxxx
000 X. Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
TO THE ESOP:
Kirkhill Rubber Company
Employee Stock Ownership and Savings Plan
000 Xxxx Xxxxxxx Xxxxxx
Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Trustee
with a copy to:
48
Xxxxxx Xxxxxxxx & Xxxxxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxxx-Xxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
10.4 Severability
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.
10.5 Entire Agreement
This Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, among the parties with
respect to the subject matter hereof and thereof, including, but not limited
to, the Letter of Intent, dated February 3, 1998 between Esterline and
Kirkhill.
10.6 Assignment
This Agreement shall not be assigned by operation of law or otherwise,
except that Esterline may assign all or any of its rights and obligations
hereunder to any of its affiliates. In the event of any such permitted
assignment, Esterline shall guarantee the performance of such obligations by
such assignee.
10.7 Parties in Interest
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, each such party's successors and permitted assigns, and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person
49
(other than the shareholders of Kirkhill) any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement. There are no intended
or incidental third-party beneficiaries to this Agreement (other than the
shareholders of Kirkhill) and no Person (other than the shareholders of
Kirkhill) not a party hereto shall have any rights under this Agreement.
10.8 Specific Performance
The parties hereto agree that irreparable damage would occur in the event
any provision of this Agreement was not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
10.9 Consequential Damages
Neither party shall be liable to the other for any special, indirect,
incidental or consequential damages resulting from any breach of this Agreement
other than a breach of Section 8.2.
10.10 Governing Law
This Agreement shall be governed by, and construed in accordance with,
the laws of the state of California applicable to contracts executed in and to
be performed in that state.
10.11 Entire Understanding
The terms set forth in this Agreement (including Exhibits) and the other
Operative Documents are intended by the parties as a final, complete and
exclusive expression of the terms of their agreement and may not be
contradicted, explained or supplemented by evidence of any prior agreement, any
contemporaneous oral agreement or any additional terms.
10.12 Headings
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
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10.13 Counterparts
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.
XXXXXXXXX TECHNOLOGIES CORPORATION
By /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
Its President and Chief Operating Officer
KIRKHILL RUBBER COMPANY
By /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxxx
Its Chairman and Chief Executive Officer
KIRKHILL RUBBER COMPANY
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
By /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxxx, Trustee
52
