EXHIBIT 10.5
STOCK FOR STOCK EXCHANGE AGREEMENT
This Stock for Stock Exchange Agreement (this "Agreement"), dated
October 23, 1997, is made and entered into by and among Exmark Manufacturing
Company Incorporated, a Nebraska corporation ("Exmark"), and Xxxxx Xxxxx
("Xxxxx"), an individual resident of New Cumberland, Pennsylvania, and the owner
of all of the outstanding shares of capital stock of The Xxxxxxx Co., Inc., a
Pennsylvania corporation ("Xxxxxxx").
RECITAL
Xxxxx desires to deliver to Exmark, and Exmark desires to acquire from
Xxxxx, all of the capital stock of Xxxxxxx, which is owned beneficially and of
record by Xxxxx, pursuant to the terms and conditions set forth in this
Agreement. It is intended that the transactions contemplated by this Agreement
qualify, for federal income tax purposes, as a tax-free reorganization under the
provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended (the "Code").
In consideration of the foregoing and the mutual covenants, conditions and
agreements set forth in this Agreement (the receipt and sufficiency of which are
hereby acknowledged), the parties hereto agree as follows:
1. AGREEMENT BY XXXXX TO DELIVER SHARES AND EXMARK TO ACQUIRE SHARES.
Subject to the terms and conditions of this Agreement, on the Closing Date (as
defined in Section 8 below), Xxxxx agrees to deliver and Exmark agrees to
acquire from Xxxxx all of the outstanding shares of capital stock of Xxxxxxx
(the "Shares"). At the Effective Time (as defined in Section 2(c) below), and
subject to the terms and conditions of this Agreement, Exmark shall be the sole
owner of all outstanding shares of capital stock of Xxxxxxx.
2. EXCHANGE OF SHARES. The Shares shall be acquired solely in exchange
for shares of Class C Preferred Stock, $.01 par value per share, of Exmark (the
"Exmark Class C Stock") as follows:
(a) EXCHANGE OF SHARES. In exchange for the delivery of the Shares
by Xxxxx to Exmark, Exmark shall deliver to Xxxxx, as full consideration for the
Shares, 3,689 shares of Exmark Class C Stock (the "Acquisition Consideration").
Such exchange is referred to herein as the "Share Exchange."
(b) PAYMENT OF ACQUISITION CONSIDERATION. On the Closing Date,
Exmark shall deliver the Acquisition Consideration to Xxxxx and
contemporaneously Xxxxx shall deliver to Exmark share certificates representing
the Shares together with duly executed stock powers attached thereto
transferring the Shares to Exmark.
(c) EFFECTIVE TIME. The Share Exchange shall be effected as promptly
as practicable, but in no event more than three business days, after the
satisfaction or waiver of the conditions set forth in Sections 6 and 7 of this
Agreement. The time at which the Share Exchange is effected is referred to
herein as the "Effective Time."
3. REPRESENTATIONS AND WARRANTIES OF XXXXX. Xxxxx hereby represents and
warrants to Exmark as follows, except as set forth in the Disclosure Schedule
delivered by Xxxxx to Exmark on the date hereof (the "Disclosure Schedule")
(which Disclosure Schedule sets forth certain exhibits referenced herein and
exceptions to the representations and warranties contained in this Agreement
under captions referencing each and every Section to which such exhibits or
exceptions apply):
(a) INCORPORATION AND CORPORATE POWER. Xxxxxxx is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of Pennsylvania, and Xxxxxxx has the requisite corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
Xxxxxxx has the corporate power and authority and all authorizations, licenses,
permits and certifications necessary to own and operate its properties and to
carry on its business as now conducted and presently proposed to be conducted.
The copies of the articles of incorporation and bylaws of Xxxxxxx are set forth
in the Disclosure Schedule and reflect all amendments made thereto and are
correct and complete as of the date hereof. Xxxxxxx is qualified to do business
as a foreign corporation in every jurisdiction in which the nature of its
business or its ownership of property requires it to be so qualified.
(b) NO BREACH. The execution, delivery and performance of this
Agreement by Xxxxx and the consummation by Xxxxx of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, constitute a default under, result in a violation of, result in
the creation of a right of termination or acceleration or any lien, security
interest, charge or encumbrance upon any assets of Xxxxxxx, or require any
authorization, consent, approval, exemption or other action by or notice to any
court, other governmental body or other "Person" (such term shall mean an
individual, corporation, partnership, association, joint-stock company, trust,
unincorporated organization, or government or political subdivision thereof)
under the provisions of the articles of incorporation or bylaws of Xxxxxxx or
any contract, indenture, mortgage, lease, loan agreement or other agreement,
relationship, commitment or instrument, written or oral, by which Xxxxxxx or
Xxxxx are bound or affected, or any law, statute, rule or regulation or order,
judgment or decree to which Xxxxxxx or Xxxxx are subject.
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(c) GOVERNMENTAL AUTHORITIES; CONSENTS. Neither Xxxxx nor Xxxxxxx is
required to submit any notice, report or other filing with any governmental
authority in connection with the execution or delivery by Xxxxx of this
Agreement or the consummation of the transactions contemplated hereby. No
consent, approval or authorization of any governmental or regulatory authority
or any other party or person is required to be obtained by Holiman or Xxxxx in
connection with Xxxxx'x execution, delivery and performance of this Agreement or
the transactions contemplated hereby.
(d) SUBSIDIARIES; PREDECESSORS. Xxxxxxx does not own any stock,
partnership interest, joint venture interest or any other security or ownership
interest issued by any other corporation, organization, joint venture,
partnership, limited liability company or entity.
(e) CAPITAL STOCK.
(i) On the date hereof, the authorized capital stock of
Xxxxxxx consists of 4,000 shares of common stock, par value $10.00 per
share, ("Xxxxxxx Common Stock"), of which 2,820 shares are issued and
outstanding as of the date hereof. On the date hereof and immediately
prior to the Effective Time, all of Xxxxxxx'x issued and outstanding
capital stock is held of record by Xxxxx. All such outstanding shares of
Xxxxxxx Common Stock (A) have been duly authorized and are validly issued,
fully paid and nonassessable, (B) are not subject to preemptive rights
created by statute, Xxxxxxx'x articles of incorporation or bylaws, or any
other agreement to which either Xxxxxxx or Xxxxx is bound and (C) were
issued in full compliance with all applicable securities laws.
(ii) There are no rights, subscriptions, warrants, options,
conversion rights or agreements of any kind outstanding to purchase or
otherwise acquire from Xxxxxxx any shares of Xxxxxxx Common Stock or other
securities of Xxxxxxx of any kind (and there are no agreements or other
obligations of Xxxxxxx to xxxxx any of the foregoing) and there are no
agreements or other obligations (contingent or otherwise) which may require
Holiman to repurchase or otherwise acquire any shares of Xxxxxxx Common
Stock.
(iii) No persons other than Xxxxx and Xxxxxxxx X. Xxxxx are, in
Xxxxxxx'x reasonable judgment, "affiliates" of Xxxxxxx within the meaning
of Rule 145 promulgated by the Securities Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "Securities Act").
(f) FINANCIAL STATEMENTS. The Disclosure Schedule sets forth copies
of the unaudited balance sheets, as of June 30, 1997, June 30, 1996 and June 30,
1995, of Xxxxxxx and the unaudited statements of earnings, shareholders' equity
and cash flows of Xxxxxxx for each of the years ended June 30, 1997, June 30,
1996 and June 30, 1995 (collectively, the "Xxxxxxx Annual Financial
Statements"). Except as set forth in the Disclosure Schedule, the Xxxxxxx
Annual Financial Statements are based upon the information contained in the
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books and records of Xxxxxxx and fairly present the financial condition of
Xxxxxxx as of the dates thereof and respective results of operations for the
periods referred to therein. The Xxxxxxx Annual Financial Statements have been
prepared in accordance with generally accepted accounting principles (as such
principles apply to unaudited financial statements ("GAAP")), on a basis
consistent with the method used by Xxxxxxx in preparing the unaudited financial
statements of Xxxxxxx for the three-year period from July 1, 1994 to June 30,
1997, which financial statements are presented in accordance with GAAP.
(g) ABSENCE OF UNDISCLOSED LIABILITIES. Except as reflected in the
June 30, 1997 balance sheet included in the Xxxxxxx Annual Financial Statements
(the "Latest Balance Sheet"), Xxxxxxx has no liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise, whether due or to become due,
whether known or unknown, and regardless of when asserted) arising out of
transactions or events heretofore entered into, or any action or inaction, or
any state of facts existing, with respect to or based upon transactions or
events heretofore occurring, except liabilities which have arisen in the
ordinary course of business (none of which is an uninsured liability in excess
of $10,000 for breach of contract, breach of warranty, tort, infringement, claim
or lawsuit).
(h) NO MATERIAL ADVERSE CHANGES. Since the date of the Latest
Balance Sheet, there has been no material adverse change in the assets,
financial condition, operating results, co-distributor, customer, employee or
supplier relations, business condition or prospects of Xxxxxxx (other than as a
direct result of general economic conditions or an industry downturn).
(i) ABSENCE OF CERTAIN DEVELOPMENTS. Since May 1, 1997, Xxxxxxx has
not (except as described in the Disclosure Schedule):
(i) borrowed any amount or incurred or become subject to any
liability in excess of $25,000, except (A) current liabilities incurred in
the ordinary course of business and (B) liabilities under contracts entered
into in the ordinary course of business;
(ii) mortgaged, pledged or subjected to any lien, charge or
any other encumbrance, any of its assets with a fair market value in excess
of $25,000, except (A) liens for current property Taxes not yet due and
payable, (B) liens imposed by law and incurred in the ordinary course of
business for obligations not yet due to carriers, warehousemen, laborers,
materialmen and the like, (C) liens in respect of pledges or deposits under
workers' compensation laws, or (D) liens voluntarily created in the
ordinary course of business, all of which liens aggregate less than
$25,000;
(iii) discharged or satisfied any lien or encumbrance or paid
any liability, in each case with a value in excess of $25,000, other than
current liabilities paid in the ordinary course of business;
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(iv) sold, assigned or transferred (including, without
limitation, transfers to any employees, affiliates or shareholders) any
tangible assets with a fair market value in excess of $25,000, or canceled
any debts or claims, in each case, except in the ordinary course of
business;
(v) sold, assigned or transferred (including, without
limitation, transfers to any employees, affiliates or shareholders) any
patents, trademarks, trade names, copyrights, trade secrets or other
intangible assets;
(vi) disclosed, to any person other than Exmark, the Toro
Company, a Delaware corporation ("Toro"), and authorized representatives of
Exmark and Toro, any proprietary confidential information, other than
pursuant to a confidentiality agreement prohibiting the use or further
disclosure of such information, which agreement is identified in the
Disclosure Schedule and is in full force and effect on the date hereof;
(vii) waived any rights of material value or suffered any
extraordinary losses or adverse changes in collection loss experience,
whether or not in the ordinary course of business or consistent with past
practice;
(viii) declared or paid any dividends or other distributions
with respect to any shares of Xxxxxxx'x capital stock or redeemed or
purchased, directly or indirectly, any shares of Xxxxxxx'x capital stock or
any options, warrants or other rights to purchase the same, except for the
payment of a one-time cash dividend to be paid between the date hereof and
the Effective Time, which dividend shall not exceed the difference between
(A) the net worth of Holiman prior to the payment of such dividend and (B)
$200,000;
(ix) issued, sold or transferred any of its equity securities,
securities convertible into or exchangeable for its equity securities or
options, warrants or other rights to acquire its equity securities, or any
bonds or debt securities;
(x) taken any other action or entered into any other
transaction other than in the ordinary course of business and in accordance
with past custom and practice, or entered into any transaction with any
"Insider" (as defined in Section 3(u) hereof) other than employment
arrangements otherwise disclosed in this Agreement and the Disclosure
Schedule, or the transactions expressly contemplated by this Agreement;
(xi) suffered any material theft, damage, destruction or loss
of or to any property or properties owned or used by it, whether or not
covered by insurance;
(xii) other than in the ordinary course of business consistent
with past practices, and except as expressly contemplated by Section 5(b)
of this
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Agreement, made or granted any bonus, or any wage, salary or compensation
increase to any director, officer, employee or consultant whose annual
compensation from Xxxxxxx in the preceding fiscal year exceeded $45,000, or
made or granted any increase in any employee benefit plan or arrangement,
or amended or terminated any existing employee benefit plan or arrangement,
or adopted any new employee benefit plan or arrangement or made any
commitment or incurred any liability to any labor organization;
(xiii) made any single capital expenditure or commitment
therefor in excess of $25,000;
(xiv) made any loans or advances to, or guarantees for the
benefit of, any persons in excess of $10,000;
(xv) made any charitable contributions or pledges in excess
of $10,000;
(xvi) made any change in accounting principles or practices
from those utilized in the preparation of the Xxxxxxx Annual Financial
Statements;
(xvii) experienced any amendment, modification or termination
of any existing, or entered into any new, contract, agreement, plan, lease,
license, permit or franchise which is, either individually or in the
aggregate, material to the business, operations, financial position or
prospects of Holiman other than in the ordinary course of business;
(xviii) experienced any labor dispute material to the business,
operations, financial position or prospects of Xxxxxxx;
(xix) experienced any change in any assumption underlying or
method of calculating, any bad debt, inventory, contingency or other
reserve;
(xx) experienced any lapse or termination of any material
permit that was issued or relates to Xxxxxxx or its business, including any
failure to renew any such permit; or
(xxi) discontinued or altered, in any material respect, its
advertising or promotional activities or its pricing and purchasing
policies.
(j) TITLE TO PROPERTIES.
(i) Xxxxxxx does not own any real property. The real
property listed as leased (the "Leased Property") in the Disclosure
Schedule constitutes all of the real property owned, used or occupied by
Xxxxxxx (the "Real Property"). Such Disclosure Schedule includes the
location, uses thereof and Xxxxxxx indebtedness
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thereon, if any, for all Real Property. The Real Property has access,
sufficient for the conduct of the business of Xxxxxxx as now conducted or
as presently proposed to be conducted, to public roads and to all
utilities, including electricity, sanitary and storm sewer, potable water,
natural gas and other utilities, used in the operation of the business of
Xxxxxxx at that location.
(ii) The leases for the Leased Property (the "Leases") are in
full force and effect, and Xxxxxxx holds a valid and existing leasehold
interest under each of the Leases for the term set forth in the Disclosure
Schedule. Xxxxxxx has delivered to Exmark complete and accurate copies of
each of the Leases, and none of the Leases has been modified in any
respect, except to the extent that such modifications are disclosed by the
copies delivered to Exmark. Except as set forth in the Disclosure
Schedule, Xxxxxxx is not in default, and to the knowledge of Xxxxxxx no
circumstances exist which, if unremedied, would, either with or without
notice or the passage of time or both, result in such default under any of
the Leases; nor to the knowledge of Xxxxxxx is any other party to any of
the Leases in default.
(iii) Xxxxxxx owns good and marketable title to each of the
tangible properties and tangible assets reflected on the Latest Balance
Sheet or acquired since the date thereof, free and clear of all liens and
encumbrances, except for (A) liens for current Taxes not yet due and
payable, (B) liens set forth in the Disclosure Schedule, (C) the properties
subject to the Leases, (D) assets disposed of since the date of the Holiman
Latest Balance Sheet in the ordinary course of business, (E) liens imposed
by law and incurred in the ordinary course of business for obligations not
yet due to carriers, warehousemen, laborers and materialmen and (F) liens
in respect of pledges or deposits under workers' compensation laws, all of
which liens aggregate less than $25,000.
(iv) All of the buildings, machinery, vehicles, equipment and
other tangible assets necessary for the conduct of the business of Xxxxxxx
are in good condition and repair, ordinary wear and tear excepted, and are
usable in the ordinary course of business. There are no defects in such
assets or other conditions relating thereto which adversely affect the
operation or value of such assets. Xxxxxxx owns or leases under valid
leases, all buildings, machinery, equipment and other tangible assets
necessary for the conduct of its business as presently conducted, except
for defects of title that do not materially affect the use of such assets
by Xxxxxxx and except for such assets that can be purchased or leased for
nominal consideration.
(k) ACCOUNTS RECEIVABLE. The accounts receivable reflected on the
Xxxxxxx Latest Balance Sheet and those arising thereafter are valid receivables,
are not subject to valid counterclaims or set-offs, and are collectible in
accordance with their terms, except to the extent of the bad debt reserve
reflected on the Xxxxxxx Latest Balance Sheet.
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(l) TAX MATTERS.
(i) Each of Xxxxxxx and any affiliated, combined or unitary
group of which Xxxxxxx is or was a member, any predecessor of Xxxxxxx and
any Plans (as defined in Section 3(q) hereof), as the case may be (each, a
"Tax Affiliate" and, collectively, the "Tax Affiliates"), has: (A) timely
filed (or has had timely filed on its behalf) all returns, declarations,
reports, estimates, information returns, and statements ("Returns")
required to be filed or sent by it in respect of any Taxes (as defined in
Section 3(l)(xi) hereof) or required to be filed or sent by it by any
taxing authority having jurisdiction and all such Returns are true and
correct in all material respects; (B) timely and properly paid (or has had
paid on its behalf) all Taxes due and payable with respect to the periods
covered by such Returns; (C) established on its Latest Balance Sheet, in
accordance with GAAP, reserves that are adequate for the payment of any
Taxes not yet due and payable for all Tax periods or portions thereof
ending on, prior to, or including the Closing Date, the amount of which as
of the date of the Latest Balance Sheet is set forth in the Disclosure
Schedule; and (D) complied with all applicable laws, rules, and regulations
relating to the withholding of Taxes and the payment thereof (including,
without limitation, withholding of Taxes under Sections 1441 and 1442 of
the Code, or similar provisions under any foreign laws), and timely and
properly withheld from individual employee wages or other payments to
employees and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over under all applicable laws. Since
the incorporation of Xxxxxxx, all of the compensation paid to Xxxxx was
"reasonable allowance for salaries or other compensation" within the
meaning of Section 162(a)(1) of the Code and was fully deductible by
Xxxxxxx. True and correct copies of any and all Returns filed by any Tax
Affiliate have been provided to Exmark.
(ii) There are no liens for Taxes upon any assets of Xxxxxxx
or of any Tax Affiliate, except liens for Taxes not yet due. Xxxxxxx is
not a party to any tax sharing agreement or other arrangement for the
payment or reimbursement of Taxes.
(iii) No deficiency for any Taxes has been proposed, asserted
or assessed against Xxxxxxx or the Tax Affiliates that has not been
resolved and paid in full. No waiver, extension or comparable consent
given by Xxxxxxx or the Tax Affiliates regarding the application of the
statute of limitations with respect to any Taxes or Returns is outstanding,
nor is any request for any such waiver or consent pending. There has been
no Tax audit or other administrative proceeding or court proceeding with
regard to any Taxes or Returns, nor is any such Tax audit or other
proceeding pending, nor has there been any notice to Xxxxxxx by any Taxing
authority regarding any such Tax, audit or other proceeding, nor, to the
best knowledge of Xxxxxxx, is any such Tax audit or other proceeding
threatened with regard to any Taxes or Returns. Xxxxxxx does not expect
the assessment of any additional Taxes of Xxxxxxx or the Tax Affiliates and
is not aware of any
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unresolved questions, claims or disputes concerning the liability for Taxes
of Xxxxxxx or the Tax Affiliates which would exceed the estimated reserves
established on its books and records.
(iv) Neither Xxxxxxx nor any Tax Affiliate is a party to any
agreement, contract or arrangement that would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code and the consummation of the
transactions contemplated by this Agreement will not be a factor causing
payments to be made by Holiman or any Tax Affiliate that are not deductible
(in whole or in part) under Section 280G of the Code.
(v) Neither Xxxxxxx nor any Tax Affiliate has requested any
extension of time within which to file any Return, which Return has not
since been filed.
(vi) No property of Xxxxxxx or any Tax Affiliate is property
that Xxxxxxx or any Tax Affiliates is or will be required to treat as being
owned by another person under the provisions of Section 168(f)(8) of the
Code (as in effect prior to amendment by the Tax Reform Act of 1986) or is
"tax-exempt use property" within the meaning of Section 168 of the Code.
(vii) Neither Xxxxxxx nor any Tax Affiliate is required to
include in income any adjustment under Section 481(a) of the Code by reason
of a voluntary change in accounting method initiated by Xxxxxxx or any Tax
Affiliate as a result of the Tax Reform Act of 1986 and neither Xxxxxxx nor
any Tax Affiliate has knowledge that the Internal Revenue Service has
proposed any such adjustment or change in accounting method.
(viii) All transactions that could give rise to an
understatement of federal income tax (within the meaning of Section 6661 of
the Code as it applied prior to repeal) or an underpayment of tax (within
the meaning of Section 6662 of the Code) were reported in a manner for
which there is substantial authority or were adequately disclosed (or, with
respect to Returns filed before the Effective Time, will be reported in
such a manner or adequately disclosed) on the Returns required in
accordance with Sections 6661(b)(2)(B) and 6662(d)(2)(B) of the Code.
(ix) Neither Xxxxxxx nor any Tax Affiliate has engaged in any
transaction that would result in a deemed election under Section 338(e) of
the Code, and neither Xxxxxxx nor any Tax Affiliate will engage in any such
transaction within any applicable "consistency period" (as such term is
defined in Section 338 of the Code).
(x) Neither Xxxxxxx nor any Tax Affiliate has filed any
consent under Section 341(f) of the Code.
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(xi) For purposes of this Agreement, the term "Taxes" means
all taxes, charges, fees, levies, or other assessments, including, without
limitation, all net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding, payroll,
employment, social security, unemployment, excise, estimated, severance,
stamp, occupation, property, or other taxes, customs duties, fees,
assessments, or charges of any kind whatsoever, including, without
limitation, all interest and penalties thereon, and additions to tax or
additional amounts imposed by any taxing authority, domestic or foreign,
upon Xxxxxxx or any Tax Affiliate.
(m) CONTRACTS AND COMMITMENTS.
(i) The Disclosure Schedule lists the following agreements,
whether oral or written, to which Xxxxxxx is a party or by which Xxxxxxx or
its assets are bound: (A) collective bargaining agreement or contract with
any labor union; (B) bonus, pension, profit sharing, retirement or other
form of deferred compensation plan; (C) hospitalization insurance or other
welfare benefit plan or practice, whether formal or informal; (D) stock
purchase or stock option plan; (E) contract for the employment of any
officer, individual employee or other person on a full-time or consulting
basis or relating to severance pay for any such person; (F) confidentiality
agreement with employees and with consultants, vendors, customers or other
third parties; (G) contract, agreement or understanding relating to the
voting of Xxxxxxx'x capital stock or the election of directors of Xxxxxxx;
(H) agreement or indenture relating to the borrowing of money or to
mortgaging, pledging or otherwise placing a lien on any of the assets of
Xxxxxxx; (I) guaranty of any obligation for borrowed money or otherwise;
(J) lease or agreement under which it is lessee of, or holds or operates
any property, real or personal, owned by any other party; (K) lease or
agreement under which it is lessor of, or permits any third party to hold
or operate, any property, real or personal, for which the annual rental
exceeds $10,000 (L) contract or group of related contracts with the same
party (other than any contract or group of related contracts for the
purchase or sale of products or services) continuing over a period of more
than six months from the date or dates thereof, not terminable by it on 30
days' or less notice without penalty and involving more than $10,000;
(M) contract which prohibits Xxxxxxx from freely engaging in business
anywhere in the world; (N) contract for the distribution of products
through or in conjunction with Xxxxxxx (including any distributor, sales
and original equipment manufacturer contract); (O) franchise agreement;
(P) license agreement or agreement providing for the payment or receipt of
royalties or other compensation by Xxxxxxx in connection with the
intellectual property rights set forth in the Disclosure Schedule;
(Q) contract or commitment for capital expenditures in excess of $10,000,
(R) agreement for the sale of any capital asset; (S) contract with any
affiliate which in any way relates to Xxxxxxx (other than for employment on
customary terms); or (T) other agreement which is either material to the
business of Xxxxxxx or was not entered into in the ordinary course of
business (other than agreements required to be listed in the Disclosure
Schedule).
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(ii) The Disclosure Schedule lists the following agreements,
whether oral or written, to which Xxxxxxx is a party or by which Xxxxxxx or
its assets are bound: (A) contract or group of related contracts with the
same party for the purchase of products or services by Xxxxxxx under which
the undelivered balance of such products or services is in excess of
$10,000; (B) contract or group of related contracts with the same party for
the sale of products or services by Xxxxxxx under which the undelivered
balance of such products or services (including, without limitation, any
free upgrades or ongoing services) has a sales price in excess of $10,000;
and (C) sales agreement or other customer commitment (other than the
standard form of purchase order) which entitles any purchaser to a rebate
from or right of set-off against Xxxxxxx, to return any product to Xxxxxxx
after acceptance thereof or to delay the acceptance thereof, to receive
future services, upgrades or enhancements, or which varies in any material
respect from Xxxxxxx'x standard form agreements for sales.
(iii) Xxxxxxx has performed all material obligations required
to be performed through the date hereof by it in connection with the
contracts or commitments required to be disclosed in the Disclosure
Schedule and has not been notified of any claim of default under any
contract or commitment required to be disclosed in the Disclosure Schedule;
Xxxxxxx has no present expectation or intention of not fully performing any
material obligation pursuant to any contract or commitment required to be
disclosed thereunder; and Xxxxxxx has no knowledge of any breach or
anticipated breach by any other party to any contract or commitment
required to be disclosed in the Disclosure Schedule.
(iv) Prior to the date of this Agreement, Exmark has been
provided with a correct and complete copy of each written contract or
commitment referred to in the Disclosure Schedule, together with all known
amendments, waivers or other changes thereto.
(n) INTELLECTUAL PROPERTY RIGHTS.
(i) Xxxxxxx does not own, hold or possess any patents,
registrations for trademarks, service marks, trade names, copyrights or
mask works, and none are necessary to the conduct of the business of
Xxxxxxx as now conducted or as planned to be conducted as described herein.
(ii) Xxxxxxx is not a party to any agreement granting to
Xxxxxxx rights in patents, patent applications, trademarks, service marks,
trade names, corporate names, copyrights, mask works, trade secrets or
other intellectual property rights used in or necessary to the conduct of
the business of Xxxxxxx as now conducted or as planned to be conducted as
described herein.
(iii) Xxxxxxx has not received any notice of any infringement,
misappropriation or violation by Holiman of any intellectual property
rights of any
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third parties and Xxxxxxx, to its knowledge, has not infringed,
misappropriated or otherwise violated any such intellectual property
rights; and to the knowledge of Xxxxxxx, no infringement,
misappropriation or violation of any intellectual property rights of any
third parties has occurred or will occur with respect to products
currently being sold by Holiman or with respect to the products
currently under development (in their present state of development) or
with respect to the conduct of the business of Xxxxxxx as now conducted.
(iv) Xxxxxxx has not entered into any agreement restricting
Xxxxxxx from selling, leasing or otherwise distributing any of its current
products or products under development to any class of customers, in any
geographic area, during any time period or in any segment of the market.
(v) To Xxxxxxx'x knowledge, Xxxxxxx has the right to make
available to Exmark all trade secrets and other confidential information
entrusted to Xxxxxxx by third parties.
(o) LITIGATION. There are no actions, suits, proceedings, orders or
investigations pending or, to the best knowledge of Xxxxxxx, threatened against
Xxxxxxx, at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, nor is there any basis therefor.
(p) EMPLOYEES. (i) To the best knowledge of Xxxxxxx, no employee of
Xxxxxxx and no group of the employees of Xxxxxxx has any plans to terminate his,
her or their employment; (ii) Xxxxxxx has complied with all laws relating to the
employment of labor, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining and the payment of social security and
other taxes; (iii) Xxxxxxx has no labor relations problem pending and Xxxxxxx'x
labor relations are satisfactory; (iv) there are no workers' compensation claims
pending against Xxxxxxx nor is Xxxxxxx aware of any facts that would give rise
to such a claim; and (v) no employee of Holiman is subject to any secrecy or
noncompetition agreement or any other agreement or restriction of any kind that
would impede in any way the ability of such employee to carry out fully all
activities of such employee in furtherance of the business of Holiman. The
Disclosure Schedule lists, as of the date set forth in the Disclosure Schedule,
each employee of Holiman. The Disclosure Schedule also states the position,
title, remuneration (including any scheduled salary or remuneration increases),
date of employment and accrued vacation pay of each such employee.
(q) EMPLOYEE BENEFIT PLANS.
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(i) For the purpose of this Section 3(u), "ERISA" means the
Employee Retirement Income Security Act of 1974, as amended, and the term
"plan" means every plan, fund, contract, program and arrangement (whether
written or not) which is maintained or contributed to by Holiman for the
benefit of present or former employees, including those intended to
provide: (A) medical, surgical, health care, hospitalization, dental,
vision, workers' compensation, life insurance, death, disability, legal
services, severance, sickness or accident benefits (whether or not defined
in Section 3(1) of ERISA), (B) pension, profit sharing, stock bonus,
retirement, supplemental retirement or deferred compensation benefits
(whether or not tax qualified and whether or not defined in Section 3(2) of
ERISA), (C) bonus, incentive compensation, stock option, stock appreciation
right, phantom stock or stock purchase benefits, or (D) salary
continuation, unemployment, supplemental unemployment, termination pay,
vacation or holiday benefits (whether or not defined in Section 3(3) of
ERISA).
(ii) The term "plan" shall include every such plan, fund,
contract, program and arrangement: (A) which Xxxxxxx has committed to
implement, establish, adopt or contribute to in the future, (B) for which
Xxxxxxx is or may be financially liable as a result of the direct sponsor's
affiliation to Xxxxxxx or its owners (whether or not such affiliation
exists at the date of this Agreement and notwithstanding that the plan is
not maintained by Holiman for the benefit of its employees or former
employees), (C) which is in the process of terminating (but such term does
not include any arrangement that has been terminated and completely wound
up prior to the date of this Agreement such that Xxxxxxx has no present or
potential liability with respect to such arrangement), or (D) for or with
respect to which Xxxxxxx is or may become liable under any common law
successor doctrine, express successor liability provisions of law,
provisions of a collective bargaining agreement, labor or employment law or
agreement with a predecessor employer.
(iii) The Disclosure Schedule sets forth all plans by name and
brief descriptions identifying: (A) the type of plan, (B) the funding
arrangements for the plan, (C) the sponsorship of the plan, and (D) the
participating employers in the plan.
(iv) Each plan identified in the Disclosure Schedule is
further identified on such Disclosure Schedule by reference to such one or
more of the following characteristics as may apply to such plan:
(A) defined contribution plan as defined in Section 3(34) of ERISA or
Section 414(i) of the Code, (B) defined benefit plan as defined in Section
3(35) of ERISA or Section 414(j) of the Code, (C) plan which is or is
intended to be tax qualified under Section 401(a) or 403(a) of the Code,
(D) plan which is or is intended to be an employee stock ownership plan as
defined in Section 4975(e)(7) of the Code (and whether or not such plan has
entered into an exempt loan), (E) nonqualified deferred compensation
arrangement, (F) employee
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welfare benefit plan as defined in Section 3(1) of ERISA, (G) multiemployer
plan as defined in Section 3(37) of ERISA or Section 414(f) of the Code,
(H) plan maintained by more than one employer as defined in Section 413(c)
of the Code (a "multiple employer plan"), (I) plan providing benefits after
separation from service or termination of employment, (J) plan which owns
any Company or other employer securities as an investment, (K) plan which
provides benefits (or provides increased benefits or vesting) as a result
of a change in control of Xxxxxxx, (L) plan which is maintained pursuant to
collective bargaining, and (M) a plan funded, in whole or in part, through
a voluntary employees' beneficiary association exempt from tax under
Section 501(c)(9) of the Code.
(v) The Disclosure Schedule sets forth the identity of each
corporation, trade or business (separately for each category below that
applies): (A) which is (or was during the preceding five years) under
common control with Xxxxxxx within the meaning of Section 414(b) or (c) of
the Code, (B) which is (or was during the preceding five years) in an
affiliated service group with Xxxxxxx within the meaning of Section 414(m)
of the Code, (C) which is (or was during the preceding five years) the
legal employer of persons providing services to Xxxxxxx as leased employees
within the meaning of Section 414(n) of the Code, and (D) with respect to
which Xxxxxxx is a successor employer for purposes of group health or other
welfare plan continuation rights (including Section 601 et. seq. of ERISA)
or the Family and Medical Leave Act.
(vi) To the extent that they exist, Xxxxxxx has furnished
Exmark with true and complete copies of: (A) the most recent determination
letter, if any, received by Holiman from the Internal Revenue Service
regarding each plan, (B) the most recent determination or opinion letter
ruling from the Internal Revenue Service that each trust established in
connection with plans which are intended to be tax exempt under Section
501(a) or (c) of the Code are so tax exempt, (C) all pending applications
for rulings, determinations, opinions, no action letters and the like filed
with any governmental agency (including but not limited to the Department
of Labor, Internal Revenue Service, Pension Benefit Guaranty Corporation
and the SEC), (D) the financial statements for each plan for the three most
recent fiscal or plan years (in audited form if required by ERISA) and,
where applicable, Annual Report/Return (Form 5500) with disclosure
schedules, if any, and attachments for each plan, (E) the most recently
prepared actuarial valuation report for each plan (including but not
limited to reports prepared for funding, deduction and financial accounting
purposes), (F) plan documents, trust agreements, insurance contracts,
service agreements and all related contracts and documents (including any
employee summaries and material employee communications) with respect to
each plan, and (G) collective bargaining agreements (including side
agreements and letter agreements) relating to the establishment,
maintenance, funding and operation of any plan.
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(vii) The Disclosure Schedule identifies each employee of
Xxxxxxx who is: (A) absent from active employment due to short or long
term disability, (B) absent from active employment on a leave pursuant to
the Family and Medical Leave Act or a comparable state law, (C) absent from
active employment on any other leave or approved absence (together with the
reason for such leave or absence), (D) absent from active employment due to
military service (under conditions that give the employee rights to
re-employment), or (E) not an "at will" employee.
(viii) With respect to continuation rights arising under
federal or state law as applied to plans that are group health plans (as
defined in Section 601 et. seq. of ERISA), the Disclosure Schedule
identifies: (A) each employee, former employee or qualifying beneficiary
who has elected continuation, and (B) each employee, former employee or
qualifying beneficiary who has not elected continuation coverage but is
still within the period in which such election may be made.
(ix) Except as set forth in the Disclosure Schedule: (A) all
plans intended to be tax qualified under Section 401(a) or Section 403(a)
of the Code are so qualified; (B) all trusts established in connection with
plans which are intended to be tax exempt under Section 501(a) or (c) of
the Code are so tax exempt; (C) to the extent required either as a matter
of law or to obtain the intended tax treatment and tax benefits, all plans
comply in all respects with the requirements of ERISA and the Code; (D) all
plans have been administered in accordance with the documents and
instruments governing the plans; (E) all reports and filings with
governmental agencies (including but not limited to the Department of
Labor, Internal Revenue Service, Pension Benefit Guaranty Corporation and
the SEC) required in connection with each plan have been timely made; (F)
all disclosures and notices required by law or plan provisions to be given
to participants and beneficiaries in connection with each plan have been
properly and timely made; (G) no plan, separately or in the aggregate,
requires or would result in the payment of any "excess parachute payments"
within the meaning of Section 280G of the Code, and the consummation of the
transactions contemplated by this Agreement will not be a factor in causing
payments to be made by Exmark or Xxxxxxx that are not deductible (in whole
or in part) under Section 280G of the Code; and (H) Xxxxxxx has made a good
faith effort to comply with the reporting and taxation requirements for
FICA taxes with respect to any deferred compensation arrangements under
Section 3121(v) of the Code.
(x) Except as set forth in the Disclosure Schedule: (A) all
contributions, premium payments and other payments required to be made in
connection with the plans as of the date of this Agreement have been made;
(B) a proper accrual has been made on the books of Xxxxxxx for all
contributions, premium payments and other payments due in the current
fiscal year but not made as of the date of this Agreement; (C) no
contribution, premium payment or other
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payment has been made in support of any plan that is in excess of the
allowable deduction for federal income tax purposes for the year with
respect to which the contribution was made (whether under Section 162,
Section 280G, Section 404, Section 419, Section 419A of the Code or
otherwise); and (D) with respect to each plan that is subject to
Section 301 et. seq. of ERISA or Section 412 of the Code, Xxxxxxx is not
liable for any accumulated funding deficiency as that terms is defined in
Section 412 of the Code and the projected benefit obligations determined as
of the date of this Agreement do not exceed the assets of the plan.
(xi) Except as set forth in the Disclosure Schedule: (A) no
action, suit, charge, complaint, proceeding, hearing, investigation or
claim is pending with regard to any plan other than routine uncontested
claims for benefits; (B) the consummation of the transactions contemplated
by this Agreement will not cause any plan to increase benefits payable to
any participant or beneficiary; (C) the consummation of the transactions
contemplated by this Agreement will not: (1) entitle any current or former
employee of Xxxxxxx to xxxxxxxxx pay, unemployment compensation or any
other payment, benefit or award, or (2) accelerate or modify the time of
payment or vesting, or increase the amount of any benefit, award or
compensation due any such employee; (D) no plan is currently under
examination or audit by the Department of Labor, the Internal Revenue
Service or the Pension Benefit Guaranty Corporation; (E) Xxxxxxx has no
actual or potential liability arising under Title IV of ERISA as a result
of any plan that has terminated or is in the process of terminating; (F)
Xxxxxxx has no actual or potential liability under section 4201 et. seq. of
ERISA for either a complete withdrawal or a partial withdrawal from a
multiemployer plan; and (G) with respect to the plans, Xxxxxxx has no
liability (either directly or as a result of indemnification) for (and the
transaction contemplated by this Agreement will not cause any liability
for): (1) any excise taxes under section 4971 through section 4980B,
section 4999, section 5000 or any other section of the Code, (2) any
penalty under section 502(i), section 502(l), Part 6 of Title I or any
other provision of ERISA, or (3) any excise taxes, penalties, damages or
equitable relief as a result of any prohibited transaction, breach of
fiduciary duty or other violation under ERISA or any other applicable law.
(xii) Except as set forth in the Disclosure Schedule: (A) all
accruals required under FAS 106 have been properly accrued on the financial
statements of Xxxxxxx; (B) no condition, agreement or plan provision limits
the right of Xxxxxxx to amend, cut back or terminate any plan (except to
the extent such limitation arises under ERISA); and (C) Xxxxxxx has no
liability for life insurance, death or medical benefits after separation
from employment other than: (1) death benefits under the plans set forth
in the Disclosure Schedule or (2) Health care continuation benefits
described in section 4980B of the Code.
(r) INSURANCE. The Disclosure Schedule lists and briefly describes
each insurance policy maintained by Xxxxxxx with respect to the properties,
assets and
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operations of Xxxxxxx (collectively, the "Insurance Policies") and sets forth
the date of expiration of each such insurance policy. All of such insurance
policies are in full force and effect and are issued by insurers of recognized
responsibility. Xxxxxxx is not in default with respect to its obligations under
any of such insurance policies.
(s) AFFILIATE TRANSACTIONS. Other than pursuant to this Agreement,
no officer, director or employee of Xxxxxxx or any member of the immediate
family of any such officer, director or employee, or any entity in which any of
such persons owns any beneficial interest (other than any publicly held
corporation whose stock is traded on a national securities exchange or in the
over-the-counter market and less than one percent of the stock of which is
beneficially owned by any of such persons) (collectively, "Insiders"), has any
agreement with Xxxxxxx (other than normal employment arrangements) or any
interest in any property, real, personal or mixed, tangible or intangible, used
in or pertaining to the business of Xxxxxxx (other than ownership of capital
stock of Xxxxxxx). None of the Insiders has any direct or indirect interest
(other than beneficial ownership of less than one percent of the stock of a
publicly held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market) in any competitor, supplier (other
than Exmark) or customer of Holiman or in any person, firm or entity from whom
or to whom Holiman leases any property, or in any other person, firm or entity
(other than Exmark) with whom Xxxxxxx transacts business of any nature. For
purposes of this Section 3(s), the members of the immediate family of an
officer, director or employee shall consist of the spouse, parents, children,
siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers-
and sisters-in-law of such officer, director or employee. All agreements and
transactions between Xxxxxxx and any Insider identified in the Disclosure
Schedule were made for bona fide business purposes on terms no less favorable
than could be obtained from an unaffiliated third party.
(t) DISTRIBUTORS/DEALERS. The Disclosure Schedule lists (i) all
former distributors/dealers of Xxxxxxx that have been terminated since
January 1, 1992 and the circumstances surrounding such termination; (ii) all
litigation and disputes between Xxxxxxx and any of its past or present
distributors/dealers, including any claims initiated by any distributors/dealers
against Xxxxxxx, whether such litigation dispute resulted in a settlement,
financial payment or not; and (iii) all buying consortium arrangements by which
any distributors/dealers of Xxxxxxx purchases goods (including wholegoods,
parts, supplies or other goods) or services from Xxxxxxx.
(u) OFFICERS AND DIRECTORS; BANK ACCOUNTS. The Disclosure Schedule
lists all officers and directors of Xxxxxxx and all of the bank accounts of
Xxxxxxx (designating each authorized signer).
(v) COMPLIANCE WITH LAWS; PERMITS.
(i) Xxxxxxx, its predecessors and their respective officers,
directors, agents and employees have complied in all material respects with
all
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applicable laws, regulations and other requirements, including, but not
limited to, federal, state, local and foreign laws, ordinances, rules,
regulations and other requirements pertaining to product labeling, consumer
products safety, equal employment opportunity, employee retirement,
affirmative action and other hiring practices, occupational safety and
health, workers' compensation, unemployment and building and zoning codes
to which Xxxxxxx (including any product sold by Xxxxxxx) may be subject,
and Xxxxxxx has received no notice of any allegation or claim of any
noncompliance and no claims have been filed against Xxxxxxx alleging a
violation of any such laws, regulations or other requirements. Xxxxxxx has
no knowledge of any action, pending or threatened, to change the zoning or
building ordinances or any other laws, rules, regulations or ordinances
affecting the Real Property. Xxxxxxx is not relying on any exemption from
or deferral of any such applicable law, regulation or other requirement
that would not be available to Xxxxxxx or Exmark after the Effective Time.
(ii) Xxxxxxx has, in full force and effect, all licenses,
permits and certificates, from federal, state, local and foreign
authorities (including, without limitation, federal and state agencies
regulating occupational health and safety) necessary to conduct its
business and own and operate its properties (other than Environmental
Permits, as such term is defined in Section 3(w)(iii) hereof)
(collectively, the "Permits"). Xxxxxxx has conducted its business in
compliance with all material terms and conditions of the Permits.
(iii) Xxxxxxx has not made or agreed to make gifts of money,
other property or similar benefits (other than incidental gifts of articles
of nominal value) to any actual or potential customer, supplier,
governmental employee or any other person in a position to assist or hinder
Xxxxxxx in connection with any actual or proposed transaction.
(w) ENVIRONMENTAL MATTERS.
(i) As used in this Section 3(w), the following terms shall
have the following meanings:
(A) "Hazardous Materials" means any dangerous, toxic
or hazardous pollutant, contaminant, chemical, waste, material or
substance as defined in or governed by any federal, state or local
law, statute, code, ordinance, regulation, rule or other requirement
relating to such substance or otherwise relating to the environment or
human health or safety, including without limitation any waste,
material, substance, pollutant or contaminant that might cause any
injury to human health or safety or to the environment or might
subject Xxxxxxx to any imposition of costs or liability under any
Environmental Law (as defined in Section 3(w)(i)(B) hereof).
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(B) "Environmental Laws" means all applicable federal,
state, local and foreign laws, rules, regulations, codes, ordinances,
orders, decrees, directives, permits, licenses and judgments relating
to pollution, contamination or protection of the environment
(including, without limitation, all applicable federal, state, local
and foreign laws, rules, regulations, codes, ordinances, orders,
decrees, directives, permits, licenses and judgments relating to
Hazardous Materials in effect as of the date of this Agreement).
(C) "Release" shall mean the spilling, leaking,
disposing, discharging, emitting, depositing, ejecting, leaching,
escaping or any other release or threatened release, however defined,
whether intentional or unintentional, of any Hazardous Material.
(ii) Xxxxxxx and the Real Property are in compliance with all
applicable Environmental Laws.
(iii) Xxxxxxx has obtained, and maintained in full force and
effect, all environmental permits, licenses, certificates of compliance,
approvals and other authorizations necessary to conduct its business and
operate the Real Property (collectively, the "Environmental Permits"). A
correct and complete copy of each such Environmental Permit shall be
provided by Xxxxxxx to Exmark at least 14 days prior to the Effective Time.
Xxxxxxx has conducted its business in compliance with all terms and
conditions of the Environmental Permits. Xxxxxxx has filed all reports and
notifications required to be filed under and pursuant to all applicable
Environmental Laws.
(iv) (A) No Hazardous Materials have been generated, treated,
contained, handled, located, used, manufactured, processed, buried,
incinerated, deposited, stored, or released on, under or about any part of
the Real Property during the period Xxxxxxx was in possession thereof,
(B) the Real Property and any improvements thereon, contain no asbestos,
urea, formaldehyde, radon at levels above natural background,
polychlorinated biphenyls ("PCB"s) or pesticides, and (C) no aboveground or
underground storage tanks are located on, under or about the Real Property.
(v) Xxxxxxx has not received any notice alleging in any
manner that it is, or might be potentially responsible for any Release of
Hazardous Materials, or any costs arising under or violation of
Environmental Laws.
(vi) No expenditure, including penalties, fines or cleanup
costs arising under applicable Environmental Laws, will be required in
order for Exmark or Xxxxxxx to comply with any Environmental Laws in effect
at the time of the Effective Time in connection with the operation or
continued operation of the
-19-
business of Xxxxxxx or the Real Property in a manner consistent with the
current operation thereof by Xxxxxxx.
(vii) Xxxxxxx and the Real Property are not and have not been
listed on the United States Environmental Protection Agency National
Priorities List of Hazardous Waste Sites (the "National Priorities List"),
or any other list, schedule, law, inventory or record of hazardous or solid
waste sites maintained by any federal, state or local agency.
(viii) Xxxxxxx has disclosed and delivered to Exmark all
environmental reports and investigations which Xxxxxxx has obtained or
ordered with respect to the business of Xxxxxxx and the Real Property.
(ix) To the knowledge of Xxxxxxx, no part of the business of
Xxxxxxx, or the Real Property has been used as a landfill, dump or other
disposal, storage, transfer, handling or treatment area for Hazardous
Materials, or as a gasoline service station or a facility for selling,
dispensing, storing, transferring, disposing or handling petroleum and/or
petroleum products.
(x) No lien has been attached or filed against Xxxxxxx or
the Real Property in favor of any governmental or private entity for
(A) any liability or imposition of costs under or violation of any
applicable Environmental Law, or (B) any Release of Hazardous Materials.
(xi) Xxxxxxx, on behalf of itself and its successors and
assigns, hereby waives, releases and agrees not to bring any claim, demand,
cause of action or proceeding, including without limitation any cost
recovery action, against Exmark under any Environmental Law for any
condition existing prior to the Closing.
(xii) The storage, transportation, handling, use or disposal,
if any, by Xxxxxxx of Hazardous Materials on or under the Real Property
and/or disposal elsewhere, if any, of Hazardous Materials generated on or
from the Real Property is currently, and at all times has been, in
compliance in all materials respects with all applicable Environmental
Laws. Xxxxxxx has not transported or arranged for the transportation of
any Hazardous Materials or other material or substances to any location
which is: (A) listed on the National Priorities List, or (B) listed for
possible inclusion on the National Priorities List, in the Comprehensive
Environmental Response, Compensation and Liabilities Act of 1980 ("CERCLA")
or on any similar state list.
(xiii) For purposes of the representations and warranties
provided in this Section 3(w), the term "Real Property" shall include all
real property owned, used or occupied by Xxxxxxx currently or previously
owned, used or occupied by Xxxxxxx and its predecessors.
-20-
(x) BROKERAGE. No third party shall be entitled to receive any
brokerage commissions, finder's fees, fees for financial advisory services or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Xxxxxxx.
(y) REGISTRATION STATEMENT. None of the information regarding
Xxxxxxx supplied or to be supplied by Xxxxxxx to Exmark or Toro for inclusion in
the registration statement on Form S-4 (the "Registration Statement") under the
Securities Act relating to the merger consideration to be paid by Toro pursuant
to that certain Agreement and Plan of Merger by and among Toro, EMCI Acquisition
Corp. and Exmark, dated October 23, 1997 (the "Merger Agreement") and any other
related documents regarding Xxxxxxx supplied or to be supplied by Xxxxxxx to be
filed with the SEC or any regulatory authority in connection with the
transactions contemplated herein or in the Merger Agreement will, at the
respective times the Registration Statement, Prospectus-Proxy Statement (as
defined in the Merger Agreement) and other related documents are filed with the
SEC or any regulatory authority and, in the case of the Registration Statement,
when it becomes effective and, with respect to the Prospectus-Proxy Statement,
when mailed, and, in the case of the Prospectus-Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Stockholders' Meeting (as
defined in the Merger Agreement) and at the Effective Time (for purposes of this
Subsection (y) only, as such term is defined in the Merger Agreement), contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. All documents which Xxxxxxx is responsible for filing with the SEC
and any other regulatory authority in connection with the Merger will comply as
to form in all material respects with the provisions of applicable law,
including the applicable provisions of the Securities Act and the Exchange Act
of 1934, as amended (the "Exchange Act").
(z) DISCLOSURE. Neither this Agreement nor any of the exhibits
hereto nor any of the documents delivered by or on behalf of Xxxxx or Holiman
pursuant to Sections 3 or 6 hereof, the Disclosure Schedule or any of the
financial statements referred to in Section 3 hereof contains any untrue
statement of a material fact regarding Xxxxx or Xxxxxxx or any of the other
matters dealt with in this Section 3 relating to Xxxxx or Holiman or the
transactions contemplated by this Agreement. This Agreement, the exhibits
hereto, the documents delivered to Exmark by or on behalf of Xxxxx or Xxxxxxx
pursuant to Sections 3 or 6 hereof, the Disclosure Schedule or any of the
financial statements referred to in Section 3 hereof do not omit any material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they were made, not misleading, and there is no fact
which has not been disclosed to Exmark of which Holiman or any officer or
director of Xxxxxxx is aware which materially affects adversely or could
reasonably be anticipated to materially affect adversely the business, including
the operating results, assets, customer relations, employee relations and
business prospects, of Xxxxxxx. Xxxxx has delivered to Toro copies of all
documents delivered to Exmark by or on behalf of Xxxxx or Holiman pursuant to
this Agreement.
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(aa) TREATMENT OF COMPENSATION. All amounts owing for compensation
and benefits, including a proportionate part (determined in accordance with
GAAP) of all bonuses, are accrued on a monthly basis on the books of Xxxxxxx.
4. REPRESENTATIONS AND WARRANTIES OF EXMARK. Exmark hereby represents
and warrants to Xxxxx that:
(a) INCORPORATION AND CORPORATE POWER. Exmark is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Nebraska, with the requisite corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder.
(b) EXECUTION, DELIVERY AND PERFORMANCE; VALID AND BINDING
AGREEMENT. The execution, delivery and performance of this Agreement by Exmark,
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all requisite corporate action, and no other corporate
proceedings are necessary to authorize the execution, delivery or performance of
this Agreement. This Agreement has been duly executed and delivered by Exmark
and constitutes the valid and binding obligation of Exmark, enforceable in
accordance with its terms.
(c) NO BREACH. The execution, delivery and performance of this
Agreement by Exmark, and the consummation by Exmark of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, constitute a default under, result in a violation of, result in
the creation of a right of termination or acceleration or any lien, security
interest, charge or encumbrance upon any assets of Exmark, or require any
authorization, consent, approval, exemption or other action by or notice to any
court or other governmental body, under the provisions of the articles of
incorporation or bylaws of Exmark or any indenture, mortgage, lease, loan
agreement or other agreement or instrument by which Exmark is bound or affected,
or any law, statute, rule or regulation or order, judgment or decree to which
Exmark is subject.
(d) GOVERNMENTAL AUTHORITIES; CONSENTS. Exmark is not required to
submit any notice, report or other filing with any governmental authority in
connection with the execution or delivery by it of this Agreement or the
consummation of the transactions contemplated hereby, and no consent, approval
or authorization of any governmental or regulatory authority or any other party
or person is required to be obtained by Exmark in connection with its execution,
delivery and performance of this Agreement or the transactions contemplated
hereby.
(e) BROKERAGE. No third party shall be entitled to receive any
brokerage commissions, finder's fees, fees for financial advisory services or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Exmark.
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(f) CAPITAL STOCK. On the date hereof, the authorized capital
stock of Exmark consists of 24,000 shares of Common Stock, par value $10.00 per
share, of Exmark of which 15,431 shares are issued and outstanding as of the
date hereof; and 21,000 shares of Preferred Stock, par value $40.00 per share,
of Exmark of which 7,416 shares are issued and outstanding as of the date
hereof. Prior to the Effective Time, Exmark's articles of incorporation shall
have been amended to authorize 10,000 shares of Class B Stock, par value $.01
per share, of Exmark ("Exmark Class B Stock"), and 10,000 shares of Exmark Class
C Stock and, as of the Effective Time, 10,000 shares of Exmark Class B Stock and
3,689 shares of Exmark Class C Stock will be issued and outstanding. All such
outstanding shares of Exmark's capital stock (A) have been duly authorized and
are validly issued, fully paid and nonassessable, (B) are not subject to
preemptive rights created by statute, Exmark's articles of incorporation or
bylaws, or any other agreement to which either Exmark or, to the knowledge of
Exmark, Exmark's stockholders are bound and (C) were not issued in violation of
any applicable securities laws that would subject the Surviving Corporation to
fines, penalties, or rescission or civil damages that are material in amount.
As used in this Agreement, "knowledge" of Exmark and similar words to that
effect shall mean the actual knowledge of Exmark's officers after due inquiry.
5. CERTAIN MATTERS PENDING THE CLOSING. Unless written waiver or consent
to the contrary is obtained from Exmark, from and after the effective date of
this Agreement and until the Closing, Xxxxxxx and Xxxxx shall comply (and Xxxxx
shall cause Xxxxxxx to so comply) with the following covenants, as applicable:
(a) ACCESS. Exmark and Toro and Exmark's and Toro's authorized
agents and representatives shall have reasonable access to the properties,
books, records, contracts, information and documents of Xxxxxxx to conduct such
examination and investigation of Xxxxxxx as they deem necessary, and Xxxxxxx
shall cooperate in all reasonable respects with such examinations and
investigations; provided, however, such examinations (i) shall be conducted
during Xxxxxxx'x normal business hours, and (ii) shall not unreasonably
interfere with Xxxxxxx'x operations and activities.
If the transactions covered by this Agreement are not consummated, Exmark and
Exmark's agents and representatives will hold in confidence, and will not
utilize in any manner, any information obtained from Xxxxx or Holiman, with the
exception of any such information which: (i) was or is in the public domain;
(ii) was in fact known to Exmark or Exmark's agents or representatives prior to
disclosure by Xxxxx or Holiman; (iii) becomes information generally available to
the public through no act or failure to act on the part of Exmark or Exmark's
agents or representatives; or (iv) is required to be disclosed by court order.
(b) CARRY ON BUSINESS IN THE ORDINARY COURSE. Xxxxxxx shall carry
on its business in the ordinary course substantially in the same manner as
heretofore conducted and will not enter into any agreement outside of the
ordinary course involving an amount in excess of $10,000 for each separate
agreement or in excess of an aggregate amount of $50,000 for all agreements
collectively. Notwithstanding anything in this Agreement to the
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contrary, Xxxxxxx may pay to Xxxxx a one-time bonus or dividend prior to the
Effective Time, provided that after payment of such bonus or dividend, the book
value of Xxxxxxx (equal to total assets minus total liabilities) at the
Effective Time, as determined in accordance with GAAP, is in excess of $200,000
and such assets are cash or other readily marketable Securities.
(c) USE AND MAINTENANCE OF EQUIPMENT AND OTHER ASSETS. Xxxxxxx
shall use, operate, maintain and repair all of its equipment and other assets
and properties in accordance with its previous practices.
(d) PRESERVATION OF RELATIONSHIPS. Xxxxxxx will use its best
efforts to preserve its business organization intact, to retain the services of
its present employees and to conduct business with suppliers, customers and
others having business relations with Xxxxxxx in the same manner in which such
business has been conduct by Xxxxxxx in the past.
(e) NO DEFAULT. Xxxxxxx shall not do any act or omit to do any
act, or (to the extent such conduct is within Xxxxxxx'x control) permit any act
or omission to act, which will cause a breach of any contracts or agreements to
which Xxxxxxx is a party.
(f) INSURANCE POLICIES. Xxxxxxx shall maintain all Insurance
Policies in full force and effect.
(g) COOPERATION. Xxxxxxx and Xxxxx will cooperate in all respects
in connection with securing any consents of third parties necessary for the
consummation of the transactions contemplated hereby and the giving of any
notices to any person or the securing of permission, approval, determination,
consent or waiver of any person required in connection with the transactions
contemplated by this Agreement.
(h) COMPENSATION; NEW AGREEMENTS. Xxxxxxx shall not:
(i) except as expressly provided for in Section 5(b) above,
grant any increase in the rate of pay to or pay bonuses to any person,
other than the payment of normal base salary increases and bonuses to
employees and Xxxxx pursuant to historic practices and policies of Xxxxxxx
(provided that all such bonus payments have been and continue to be accrued
monthly and that Xxxxx provides the name of the recipient of such bonus to
Exmark 15 days prior to payment thereof and provided further that no
bonuses shall be accrued for any officer, director or employee of Xxxxxxx
for services performed after October 31, 1997);
(ii) institute any new employee benefit plans, as described
in Section 3(q) above; or
(iii) except as contemplated in this Agreement, enter into any
employment or consulting or noncompetition agreements with any person.
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(i) INDEBTEDNESS. Xxxxxxx shall not guarantee the obligations of
any person; and, other than in amounts and for purposes encountered in the
ordinary course of conducting its business, Xxxxxxx shall not create, incur or
assume any indebtedness for any borrowed money.
(j) NO ISSUANCE OF OR REDEMPTIONS OF SHARES AND NO DISTRIBUTIONS.
Xxxxxxx:
(i) shall not issue any additional shares of any class or
grant any warrants, options or rights to subscribe for any additional
shares of any class; and
(ii) shall not directly or indirectly redeem, purchase or
otherwise acquire or recapitalize or reclassify any of its capital shares.
(k) COMPLIANCE WITH LAWS. Xxxxxxx shall comply with all applicable
laws and orders of any court or federal, state, municipal or other unit of
government.
(l) TAXES. Xxxxxxx shall timely and properly file all Returns
which are required to be filed, and shall pay or make provision for the payment
of all Taxes owed by it.
(m) AMENDMENT TO DISCLOSURE SCHEDULE. From time to time after the
date hereof and prior to the Effective Time, Xxxxxxx shall promptly supplement
or amend any of its representations and warranties which apply to the period
after the date hereof by delivering an updated Disclosure Schedule to Exmark
pursuant to this Section 5(m) with respect to any matter hereafter arising which
would render any such representation or warranty after the date of this
Agreement materially untrue, inaccurate or incomplete as a result of such
matter. Such supplement or amendment to Xxxxxxx'x representations and
warranties contained in an updated Disclosure Schedule delivered pursuant to
this Section 5(m) shall be deemed to have modified the representations and
warranties of Xxxxxxx, and no such supplement or amendment, or the information
contained in such updated Disclosure Schedule, shall constitute a breach of a
representation or warranty of Xxxxxxx; provided that no such supplement or
amendment may cure any breach of a covenant or agreement of Xxxxxxx under this
Section 5. Within 15 days after receipt of such supplement or amendment, Exmark
may terminate this Agreement pursuant to Section 9 hereof if the information in
such supplement or amendment together with the information in any and all of the
supplements or amendments previously provided by Xxxxxxx indicate that Xxxxxxx
has suffered or is reasonably likely to suffer a material adverse change.
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EXMARK. Each and every
obligation of Exmark to be performed under this Agreement shall be subject to
the satisfaction prior to or at the Effective Time of the following conditions
precedent:
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(a) COMPLIANCE WITH AGREEMENT BY XXXXX AND XXXXXXX. Xxxxx and
Xxxxxxx shall have substantially performed and complied with all of their
respective obligations under this Agreement which are to be performed or
complied with by them prior to or at the Effective Time.
(b) PROCEEDINGS AND INSTRUMENTS TO BE SATISFACTORY. All
proceedings, corporate or other, required to be taken in order to give effect to
the transactions contemplated by this Agreement, and all material documents
incidental thereto, shall be reasonably satisfactory in form and substance to
Exmark and Exmark's legal counsel; and Xxxxx and Xxxxxxx shall have made
available to Exmark and Exmark's agents and representatives for examination the
originals, or true and complete copies of, all documents which Exmark may
reasonably request in connection with the transactions contemplated by this
Agreement.
(c) NO ADVERSE PROCEEDINGS. No investigation, suit, action or
other proceeding shall be threatened or pending before any court or governmental
agency that seeks the restraint, prohibition, damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
(d) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Xxxxx in this Agreement shall be true and correct as of the
Effective Time with the same force and effect as though said representations and
warranties had been made at the Effective Time.
(e) APPROVALS AND CONSENTS; FILINGS. Xxxxxxx shall have obtained
such approvals, determinations, consents and waivers in, and all filings with
and notifications of governmental authorities, regulatory agencies or other
entities which regulate the business of Xxxxxxx, if any, as may be required
under the provisions of any material law, permit, contract, agreement or
instrument, to which Xxxxxxx or Xxxxx are parties (or which are deemed material
and necessary by Exmark) in order to consummate the transactions contemplated by
this Agreement or to permit the continued operation of the business of Xxxxxxx
in the same manner after the Effective Time as theretofore conducted.
(f) NO ADVERSE CHANGE; CONDUCT OF BUSINESS IN THE ORDINARY COURSE.
At the Effective Time, no condition nor fact which, individually or in the
aggregate, is or may be materially adverse to the financial condition,
properties, business, results of operation or prospects of Xxxxxxx shall have
arisen or become known to Exmark which was not disclosed to or known by Exmark
as of the date of the Latest Balance Sheet. In addition, except as specifically
provided for in Section 5(b) of this Agreement, during the period from the date
of execution of this Agreement through the Effective Time, Holiman shall not
have conducted its business or entered into any transaction other than in the
ordinary course, and shall not have incurred or become subject to any
liabilities or obligations other than those entered into in the ordinary course
or approved by Exmark.
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(g) CORPORATE ACTION TAKEN. This Agreement shall have been duly
and validly authorized by Xxxxxxx'x board of directors and shall have been duly
and validly approved by Xxxxx, and Xxxxx shall have delivered to Exmark
evidence, in form satisfactory to Exmark's legal counsel, of such authorization
and approval.
(h) EMPLOYMENT AGREEMENT. Xxxxx shall have entered into an
employment agreement with Exmark and Toro in the form attached to the Merger
Agreement as Exhibit 12.03(c) (the "Employment Agreement").
(i) OTHER DOCUMENTS. Xxxxx shall have delivered to Exmark such
certificates and documents of officers of Xxxxxxx and of public officials as may
be reasonably requested to establish the existence and good standing of Xxxxxxx
and the due authorization by Xxxxxxx of this Agreement and performance of the
transactions contemplated by this Agreement.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF XXXXX AND XXXXXXX. Each
and every material obligation of Xxxxx and Xxxxxxx to be substantially performed
under this Agreement shall be subject to the reasonable satisfaction prior to or
at the Effective Time of the following conditions precedent:
(a) COMPLIANCE WITH AGREEMENT BY EXMARK. Exmark shall have
substantially performed and complied with all material obligations under this
Agreement which are to be performed or complied with by Exmark prior to or at
the Effective Time.
(b) PROCEEDINGS AND INSTRUMENTS TO BE SATISFACTORY. All
proceedings required to be taken in order to give effect to the transactions
contemplated by this Agreement, and all documents incidental thereto, shall be
reasonably satisfactory in form and substance to Xxxxx and Smith's legal
counsel.
(c) NO ADVERSE PROCEEDINGS. No investigation, suit, action or
other proceeding shall be threatened or pending before any court or governmental
agency that seeks the restraint, prohibition, damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
(d) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Exmark in or as contemplated by this Agreement shall be true
and correct as of the Effective Time with the same force and effect as though
said representations and warranties had been made on the Effective Time.
(e) CORPORATE ACTION TAKEN. This Agreement shall have been duly
and validly authorized and approved by Exmark's board of directors and shall
have been duly and validly approved by Exmark's stockholders, and Exmark shall
have delivered to Xxxxx and Xxxxxxx evidence, in form satisfactory to Xxxxx'x
and Xxxxxxx'x legal counsel, of such authorization and approval.
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(f) CONDITIONS PRECEDENT FOR MERGER. All conditions of Toro and
Exmark described in Article VIII of the Merger Agreement shall have been
satisfied or waived.
(g) OTHER DOCUMENTS. Exmark shall have delivered to Xxxxx such
documents as Xxxxx may reasonably request relative to the transactions
contemplated by this Agreement.
(h) OUTSTANDING EXMARK STOCK. At the time of the Closing, the
representations and warrants made by Exmark in Section 3.07 of the Merger
Agreement shall be true and correct in all respects.
8. CLOSING AND CLOSING DATE. The Closing will take place at the offices
of Xxxxxx & Whitney LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000 on
a date to be specified by the parties, which shall be no later than the third
business day after satisfaction or waiver of the conditions set forth in
Sections 6 and 7 hereof (the "Closing Date"). The parties shall hold the
Closing on the same day as the closing of the merger described in the Merger
Agreement. At the Closing, the parties hereto shall deliver to each other the
following items:
(a) DELIVERIES BY XXXXX TO EXMARK. Xxxxx shall deliver to Exmark
the following documents and considerations against the simultaneous delivery by
Exmark of the documents and considerations described in Section 8(b) below to
Xxxxx:
(i) Share certificates issued by Xxxxxxx to Xxxxx
representing in the aggregate all of the issued and outstanding shares of
Xxxxxxx'x capital stock, together with duly executed stock powers attached
thereto transferring the shares represented by such certificates to Exmark.
(ii) Resignations of all officers and directors of Xxxxxxx,
effective as of the Closing.
(iii) Corporate records of Xxxxxxx.
(iv) Xxxxx'x closing certificate in a form acceptable to
Exmark.
(v) Opinion of legal counsel for Xxxxxxx acceptable to legal
counsel for Exmark.
(vi) Other documents as may be required to consummate the
transactions contemplated by this Agreement.
(b) DELIVERIES BY EXMARK TO XXXXX. Exmark shall deliver to Xxxxx
the following documents and considerations against the simultaneous delivery of
the documents and considerations by Xxxxx to Exmark as set forth in Section 8(a)
above:
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(i) The Acquisition Consideration.
(ii) Exmark's closing certificate in a form acceptable to
Xxxxxxx.
(iii) Opinion of legal counsel for Exmark acceptable to legal
counsel for Xxxxxxx.
(iv) Other documents as may be reasonably required to
consummate the transactions contemplated by this Agreement.
9. TERMINATION. In addition to the rights of termination set forth
elsewhere in this Agreement, this Agreement may be terminated and the
transactions contemplated herein abandoned at any time prior to the Closing Date
in the manner hereinafter provided upon the happening of the following events:
(a) MISREPRESENTATION; NONFULFILLMENT OF CONDITIONS. If Xxxxx or
Exmark has made any material misrepresentation of a material fact to the other
party and such misrepresentation is not cured within 10 days after notice
thereof from the other party; or if the material conditions precedent to the
Closing to be performed by a party shall not have been substantially fulfilled
by such party on or before the Closing Date (unless waived by the other party);
(b) DEFAULT. If either party fails to observe or perform in a
timely manner any of the covenants and agreements herein contained and fails to
substantially cure the same within a period of 10 days after notice thereof from
the other party;
(c) ACTION BY COURT. If there shall be a final nonappealable order
of a federal or state court in effect preventing consummation of the
transaction, or there shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
transaction by any governmental authority or agency, foreign or domestic, which
would make the consummation of the transaction illegal and such action, statute,
rule, regulation or order shall have become final and unappealable;
(d) ACTION BY GOVERNMENT AUTHORITY. If there shall be any action
taken, or any statute, rule, regulation or order enacted, promulgated or issued
or deemed applicable to the transaction by any governmental authority or agency,
which would (i) prohibit Xxxxxxx'x or Exmark's ownership or operation of all or
a portion of Xxxxxxx'x business, or (ii) compel Exmark or Xxxxxxx to dispose of
or hold separate all or a portion of the business or assets of Xxxxxxx or Exmark
as a result of the transaction;
(e) IMPOSSIBILITY. If any of the conditions to either party's
obligations to consummate the transaction as set forth in Section 6 or Section 7
become impossible to satisfy; or
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(f) MUTUAL WRITTEN CONSENT. If the parties hereto agree by mutual
written consent.
Provided, however, the options to terminate this Agreement as set forth in
Subsections (a), (b), (c), (d) and (e) of this Section 9 shall be deemed to be
an additional right of the party having the power to exercise the option, and it
shall not relieve the other party from the obligation to perform the provisions
of this Agreement or preclude an action for specific performance of the
provisions of this Agreement by the party having the power to exercise the
option.
10. SURVIVAL OF REPRESENTATIONS, WARRANTIES, UNDER-TAKINGS AND AGREEMENTS;
INDEMNITIES. The parties hereto agree that all representations, warranties,
undertakings and agreements of Xxxxx contained in or made pursuant to this
Agreement shall survive the Closing for the greater of the following periods:
(a) 30 months from the Effective Time, or (b) with respect to any specific
representation or warranty under which Exmark shall have made a claim with
respect to any Loss (as defined in Section 10(b) below) for indemnification
hereunder prior to the 30-month anniversary of the Effective Time and as to
which such claim has not been completely and finally resolved prior to the
30-month anniversary of the Effective Time, such representation or warranty
shall survive for the period of time beyond the 30-month anniversary of the
Effective Time sufficient to resolve, completely and finally, the claim relating
to such representation or warranty; provided, however, that the representations
of Xxxxx in Section 3(l) shall survive until the expiration of any applicable
statute of limitations with respect thereto. During such period, Xxxxx agrees
as follows regarding indemnification of Exmark concerning claims, actions or
proceedings arising from this Agreement:
(a) XXXXX'X INDEMNITIES. Xxxxx agrees to save harmless, defend and
otherwise indemnify Exmark from and against any and all losses, damages, costs,
expenses, liabilities, obligations and claims of any kind (including without
limitation, reasonable attorney's fees and other legal costs and expenses) that
Exmark may at any time suffer or incur, or become subject to as a result of or
in connection with:
(i) BREACH OR INACCURACY OF REPRESENTATIONS AND WARRANTIES
BY XXXXX. Any breach or inaccuracy of any of the representations and
warranties made by Xxxxx in or pursuant to this Agreement.
(ii) FAILURE BY XXXXX OR XXXXXXX TO PERFORM AGREEMENTS. Any
failure by Xxxxx or Xxxxxxx to substantially carry out, perform, satisfy or
discharge any of their respective covenants, agreements, undertakings,
liabilities or obligations under this Agreement or under any of the
documents and materials delivered to Exmark by Xxxxx or Xxxxxxx pursuant to
this Agreement.
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(iii) RESULTING LITIGATION. Any suit, action or other
proceeding brought by any governmental authority or Person arising out of,
or in any way related to, any of the matters referred to in clauses (i) and
(ii) above.
(iv) TAXES. Any amounts payable in respect of Taxes arising
out of, or in any way related to, the payment of dividends, distributions
or compensation by Xxxxxxx to Xxxxx prior to the Effective Time.
The amounts for which Xxxxx shall be liable under this Section 10(a) shall be
net of insurance proceeds, if any, received by Exmark in connection with the
facts giving rise to the right of indemnification.
(b) METHOD OF ASSERTING CLAIMS. As used herein, "Losses" shall
mean any loss, liability, deficiency, damage, expense or cost covered under
Section 10(a).
(i) In the event that Exmark is made a defendant in or party
to any action or proceeding, judicial or administrative, instituted by any
third party for the liability or the costs or expenses of which are Losses
(any such third party action or proceeding being referred to as a "Claim"),
Exmark shall give Xxxxx prompt notice thereof. The failure to give such
notice shall not affect Exmark's ability to seek reimbursement unless such
failure has materially and adversely affected Xxxxx'x ability to defend
successfully a Claim. Xxxxx shall be entitled to contest and defend such
Claim; provided, that Xxxxx (A) has a reasonable basis for concluding that
such defense may be successful and (B) diligently contests and defends such
Claim. Notice of the intention so to contest and defend shall be given by
Xxxxx to Exmark within 20 business days after Exmark's notice of such Claim
(but, in all events, at least five business days prior to the date that an
answer to such Claim is due to be filed). Such contest and defense shall
be conducted by reputable attorneys employed by Xxxxx. Exmark shall be
entitled at any time, at its own cost and expense (which expense shall not
constitute Losses unless Exmark reasonably determines that Xxxxx is not
adequately representing or, because of a conflict of interest, may not
adequately represent, the interests of Exmark, and only to the extent that
such expenses are reasonable), to participate in such contest and defense
and to be represented by attorneys of Exmark's own choosing. If Exmark
elects to participate in such defense, Exmark will cooperate with Xxxxx in
the conduct of such defense. Neither Exmark nor Xxxxx may concede, settle
or compromise any Claim without the consent of the other party, which
consents will not be unreasonably withheld. Notwithstanding the foregoing,
(A) if a Claim seeks equitable relief or (B) if the subject matter of a
Claim relates to the ongoing business of Exmark, which Claim, if decided
against Exmark, would materially adversely affect the ongoing business or
reputation of Exmark, then, in each such case, Exmark alone shall be
entitled to contest, defend and settle such Claim in the first instance
and, if Exmark does not contest, defend or settle such Claim, Xxxxx shall
then have the right to contest and defend (but not settle) such Claim.
-31-
(ii) In the event Exmark should have a claim against Xxxxx
that does not involve a Claim, Exmark shall deliver a notice of such claim
with reasonable promptness to Xxxxx. If Xxxxx notifies Exmark that he does
not dispute the claim described in such notice or fails to notify Exmark
within 30 days after delivery of such notice by Exmark whether Xxxxx
disputes the claim described in such notice, Losses in the amount specified
in Exmark's notice will be conclusively deemed a liability of Xxxxx and
Xxxxx shall pay the amount of such Losses to Exmark on demand. If Xxxxx
has timely disputed its liability with respect to such claim, duly
authorized representatives of each of Xxxxx and Exmark will proceed in good
faith to negotiate a resolution of such dispute, and if not resolved
through the negotiations of such representatives within 60 days after the
delivery of Exmark's notice of such claim, such dispute shall be resolved
fully and finally in Minneapolis, Minnesota by an arbitrator selected
pursuant to, and an arbitration governed by, the Commercial Arbitration
Rules of the American Arbitration Association. The arbitrator shall
resolve the dispute within 30 days after selection and judgment upon the
award rendered by such arbitrator may be entered in any court of competent
jurisdiction.
(iii) After the Effective Time, the rights set forth in this
Section 10 shall be Exmark's sole and exclusive remedies against Xxxxx for
misrepresentations or breaches of covenants contained in this Agreement and
the documents and materials delivered by Xxxxx to Exmark pursuant to this
Agreement. Notwithstanding the foregoing, nothing herein shall prevent
Exmark from bringing an action based upon allegations of fraud or other
intentional breach of an obligation of or with respect to Xxxxx in
connection with this Agreement and such documents and materials. In the
event such action is brought, the prevailing party's attorneys' fees and
costs shall be paid by the nonprevailing party.
(c) LIMITATIONS ON XXXXX'X LIABILITY FOR CERTAIN REPRESENTATIONS.
Xxxxx shall be liable under Section 10(a) only if the aggregate amount of all
Losses exceeds $30,000 (the "Basket Amount"), in which case Xxxxx shall be
obligated to indemnify Exmark only for the excess of the aggregate amount of
such Losses over the Basket Amount, and only up to a maximum amount of $318,000
(the "Indemnification Limit"); provided, however, that neither the Basket Amount
nor the Indemnification Limit shall apply to any Loss associated with any
misrepresentation claims in respect of Taxes, and provided further that the
Basket Amount shall not apply to any Loss for claims under Section 10(a)(ii)
above.
11. ADDITIONAL INSTRUMENTS AND FURTHER ASSURANCES. Xxxxx and Xxxxxxx
agree from time to time, upon the request of Exmark, to execute and deliver to
Exmark such other instruments of transfer, assignment and conveyance and to take
such other action as Exmark may reasonably request more effectively to vest
ownership of the Shares in Exmark and to put Exmark in possession of all the
assets of Xxxxxxx. Exmark agrees from time to time, to execute and deliver to
Xxxxx and Xxxxxxx such additional instruments and to take such additional action
as Xxxxx and Xxxxxxx may reasonably
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request to evidence the assumption, covenants and agreements of Exmark under
this Agreement.
12. SPECIFIC PERFORMANCE. Exmark and Xxxxx agree that the assets and the
business of Xxxxxxx as a going concern constitute unique property and that the
Shares of Xxxxxxx to be transferred under the terms of this Agreement also
constitute unique property since such shares evidence indirect ownership of
control of the assets and business of Xxxxxxx. Accordingly, Xxxxx acknowledges
and agrees that there is no adequate remedy at law for the damage which Exmark
might sustain in the event of the failure of Xxxxx to consummate the
transactions contemplated by this Agreement. Therefore, Xxxxx agrees that
Exmark shall be entitled, at Exmark's option, to the remedy of specific
performance to enforce the terms of this Agreement.
13. TORO IS A THIRD PARTY BENEFICIARY. The parties hereto agree that the
transactions contemplated by this Agreement were entered into in contemplation
of the merger by and among Toro, Exmark and EMCI Acquisition, Inc. (the
"Merger") pursuant to the terms of the Merger Agreement and further agree that,
following the effective time of the Merger, the rights and obligations of Exmark
hereunder shall inure to the benefit of Toro, including its subsidiaries, as if
Toro replaced Exmark as a party hereto. Except for Toro, no third party is
entitled to rely on any of the representations, warranties or agreements of
Exmark or Xxxxx contained in this Agreement. Exmark and Xxxxx assume no
liability to any third party, other than Toro, because of any reliance on the
representations, warranties and agreements of Exmark or Xxxxx contained in this
Agreement.
14. PRESS RELEASES AND ANNOUNCEMENTS. Prior to the Effective Time, no
party hereto shall issue any press release (or make any other public
announcement) related to this Agreement or the transactions contemplated hereby
or make any announcement to either party's employees, customers or suppliers
without prior written approval of the other party, except that Toro may issue
any such release (or other announcement) as it determines, in its sole
discretion, as may be necessary to comply with the requirements of this
Agreement or applicable law or by obligations pursuant to any listing agreement
with any national securities exchange. If Toro determines any such press
release or public announcement is so required, Toro shall use reasonable efforts
to consult in good faith with the parties hereto (but shall not be required to
obtain their consent) prior to issuing such press release or making such
announcement.
15. EXPENSES. Except as otherwise expressly provided for herein, the
parties hereto will each pay all of their own expenses (including attorneys',
financial advisors' and accountants' fees) in connection with the negotiation of
this Agreement, the performance of their respective obligations under this
Agreement and the Articles of Share Exchange and the consummation of the
transactions contemplated hereby and thereby (whether consummated or not). Each
party will indemnify and hold harmless the other against the claims of any
brokers or finders in respect of the Share Exchange.
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16. AMENDMENT AND WAIVER. This Agreement may not be amended or waived
except in a writing executed by the party against which such amendment or waiver
is sought to be enforced; provided, however, that after the approval of this
Agreement by Xxxxxxx'x shareholders, no amendment may be made which reduces the
Acquisition Consideration or which effects any changes that would materially
adversely affect Xxxxxxx'x shareholders without the further approval of
Xxxxxxx'x shareholders. No course of dealing between or among any persons
having any interest in this Agreement will be deemed effective to modify or
amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
17. NOTICES. All notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or three
days after being mailed, if mailed by first class mail, return receipt
requested, or when receipt is acknowledged, if sent by facsimile, telecopy or
other electronic transmission device. Notices, demands and communications to
Exmark, Xxxxxxx, Xxxxx and Smith's Closing Agent will, unless another address is
specified in writing, be sent to the address indicated below:
NOTICES TO EXMARK: WITH A COPY TO:
----------------- --------------
Exmark Manufacturing Company Incorporated Croker, Huck, Kasher, DeWitt,
0000 Xxxxxxx Xxxxxx
Xxxxxxxx & Gonderinger, P.C.
Xxxxxxxx, Xxxxxxxx 00000 Suite 1250
Attn: H. Xxxx Xxxxx, Commercial Federal Tower
President and Chief Executive Officer 0000 Xxxxx 00xx Xxxxxx
Facsimile: (000) 000-0000 Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. XxXxxx
Facsimile: (000) 000-0000
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NOTICES TO XXXXX: WITH A COPY TO:
Xxxxx Xxxxx Koley, Jessen, Xxxxxxx &
000 Xxxxxx Xxxx Xxxx
Xxxxxxx, P.C.
New Xxxxxxxxxx, Xxxxxxxxxxxx 00000 Xxx Xxxxxxx Xxxxx, Xxxxx 000
0000 Xxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attn:
Xxxxxxx X. Xxxx
Facsimile: (000) 000-0000
18. ARBITRATION. In the event of any dispute between the parties
regarding this Agreement or the documents attached hereto, the parties agree to
resolve such dispute through binding arbitration by a single arbitrator pursuant
to the Commercial Arbitration Rules of the American Arbitration Association.
The arbitration shall be conducted in Minneapolis, Minnesota. Any award
rendered shall be final and conclusive upon the parties and a judgment thereon
may be entered in any court of competent jurisdiction. All costs and expenses,
including reasonable attorneys' fees and experts' fees, of all parties incurred
in any dispute which is determined by arbitration pursuant to this Section 19
shall be borne by the party determined to be liable in respect of such dispute;
provided, however, that if complete liability is not assessed against only one
party, the parties shall share the total costs in proportion to their respective
amounts of liability so determined. Except where clearly prevented by the area
in dispute, both parties agree to continue performing their respective
obligations under this Agreement and the documents attached hereto while the
dispute is being resolved. Nothing herein shall preclude a party hereto from
seeking equitable relief to prevent any immediate, irreparable harm to its
interest, including multiple breaches of this Agreement or the documents
attached hereto. Otherwise, these procedures are exclusive and shall be fully
exhausted prior to the initiation of any litigation. Either party may seek
specific enforcement of any arbitrator's decision under this Section 19. The
other party's only defense to such a request for specific enforcement shall be
fraud by or on the arbitrator.
19. ASSIGNMENT. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by any party
hereto without the prior written consent of the other parties hereto.
20. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or
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invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
21. COMPLETE AGREEMENT. This Agreement, the Disclosure Schedule and the
other documents attached hereto and referred to herein contain the complete
agreement between the parties and supersede any prior understandings, agreements
or representations by or between the parties, written or oral, which may have
related to the subject matter hereof in any way.
22 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument. Any such counterpart may be delivered by facsimile. Any party
delivering a counterpart by facsimile shall deliver an original copy within 48
hours, provided that the failure to so deliver an original shall not effect the
enforceability of this agreement against such party.
23. GOVERNING LAW. The internal law, without regard for conflicts of laws
principles, of the State of Minnesota will govern all questions concerning the
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
EXMARK MANUFACTURING XXXXX XXXXX
COMPANY INCORPORATED
By /s/ H. Xxxx Xxxxx /s/ Xxxxx Xxxxx
---------------------------- ------------------------------
Its President
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