Exhibit 2.1
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
among
VIEWPOINT INTERNATIONAL, INC.,
THE STOCKHOLDERS OF
VIEWPOINT INTERNATIONAL, INC.
and
OXFORD INDUSTRIES, INC.
Dated as of April 26, 2003
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TABLE OF CONTENTS
Page
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1. DEFINITIONS.............................................................................................. 1
1.1. Cross Reference Table........................................................................... 1
1.2. Certain Definitions............................................................................. 4
1.3. Certain Matters of Construction................................................................ 10
2. ACQUISITION............................................................................................. 11
3. PAYMENT AND CLOSING..................................................................................... 11
3.1. Cash Equity Amount............................................................................. 11
3.2. Stock Equity Amount............................................................................ 12
3.3. Earnout Agreement.............................................................................. 12
3.4. Time and Place of Closing...................................................................... 12
3.5. Delivery....................................................................................... 12
3.6. Adjustments to Purchase Price.................................................................. 13
4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS........................................................... 15
4.1. Organization and Authority..................................................................... 15
4.2. Authorization and Enforceability............................................................... 15
4.3. Non-Contravention, etc......................................................................... 15
4.4. Title to Securities............................................................................ 15
4.5. Voting Trusts, etc............................................................................. 16
4.6. Brokers, etc................................................................................... 16
4.7. Amounts Owed to Sellers........................................................................ 16
4.8. Investment and Securities Matters.............................................................. 16
5. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY.................................................. 18
5.1. Organization, Power, Standing and Authority.................................................... 18
5.2. Capitalization and Investments................................................................. 18
5.3. Financial Statements, etc...................................................................... 20
5.4. Inventories.................................................................................... 20
5.5. Accounts Receivable; Accounts Payable; Capital Expenditures.................................... 21
5.6. No Undisclosed Liabilities..................................................................... 21
5.7. Title to Assets; Sufficiency of Assets......................................................... 21
5.8. Licenses, Permits, Compliance with Laws, etc................................................... 22
5.9. Non-Contravention, etc......................................................................... 22
5.10. Real Property.................................................................................. 22
5.11. Litigation, etc................................................................................ 23
5.12. Intellectual Property Rights................................................................... 23
5.13. Contracts, etc................................................................................. 24
5.14. Debt........................................................................................... 26
5.15. Change in Condition............................................................................ 26
5.16. Insurance...................................................................................... 28
5.17. Tax Matters.................................................................................... 28
5.18. Employee Benefit Plans......................................................................... 30
5.19. Environmental Matters.......................................................................... 31
5.20. Labor Relations................................................................................ 32
5.21. Officers, Directors and Employees.............................................................. 32
5.22. Customers and Suppliers........................................................................ 32
5.23. No Governmental Consent or Approval Required................................................... 33
5.24. Books and Records.............................................................................. 33
5.25. Acceleration, Etc. of Certain Payments......................................................... 33
5.26. Nondisclosed Payments.......................................................................... 33
5.27. Unsanctioned Boycotts; Transactions in Certain Countries....................................... 34
5.28. Product and Service Warranties; Product Liability.............................................. 34
5.29. Disclosure..................................................................................... 34
5.30. Financial Advisory, Finder's or Broker's Fees.................................................. 34
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER............................................................. 34
6.1. Corporate Matters, etc......................................................................... 34
6.2. Financial Condition, etc....................................................................... 35
6.3. Investment Intent.............................................................................. 35
6.4. Investigation; No Additional Representations; No Reliance, etc................................. 36
6.5. Litigation..................................................................................... 36
6.6. Brokers, etc................................................................................... 36
6.7. Oxford Securities.............................................................................. 36
6.8. Reports, Financial Statements and SEC Reports.................................................. 36
6.9. Other Information.............................................................................. 37
6.10. Final Closing Statement........................................................................ 37
7. CERTAIN AGREEMENTS OF THE PARTIES....................................................................... 37
7.1. Payment of Transfer Taxes and Other Charges.................................................... 37
7.2. Operation of Business, Related Matters......................................................... 37
7.3. Preparation for Closing........................................................................ 39
7.4. Further Assurances............................................................................. 40
7.5. Access to Properties and Records; Access to Customers, Supplier, and Vendors................... 40
7.6. Stockholders Agreement......................................................................... 40
7.7. Sellers' Representatives....................................................................... 40
7.8. Real Property Holding Corporation Certificate.................................................. 41
7.9. Indemnification of Directors, Officers and Employees........................................... 41
7.10. Tax Matters.................................................................................... 41
7.11. Employee Benefits.............................................................................. 44
7.12. No Solicitation; Acquisition Proposals......................................................... 44
7.13. Audit of Year-End Financial Statements......................................................... 45
7.14. Interim Financials; Cooperation with Financing................................................. 45
7.15. Notification of Certain Matters................................................................ 45
7.16. Accounts Receivables Collections............................................................... 45
7.17. Oxford Disposition Legal Opinion............................................................... 46
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8. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE BUYER...................................................... 46
8.1. Representations, Warranties and Covenants...................................................... 46
8.2. Legality; Governmental Authorization; Litigation............................................... 46
8.3. General........................................................................................ 47
8.4. Opinions of Counsel............................................................................ 47
8.5. Pay-Off Letter for the Bank Debt............................................................... 47
8.6. Pay-Off Letter for the Senior Subordinated Notes............................................... 47
8.7. Governmental Consents and Approvals............................................................ 47
8.8. Consents....................................................................................... 47
8.9. Management Agreement........................................................................... 48
8.10. Resignation of Directors and Officers.......................................................... 48
8.11. Escrow Agreement............................................................................... 48
8.12. Earnout Agreement.............................................................................. 48
8.13. Non-Competition Agreements..................................................................... 48
8.14. Employment and Consulting Agreements........................................................... 48
8.15. Cancellation of Warrant........................................................................ 48
8.16. Transfer of Shares............................................................................. 48
8.17. Statements for Section 3.1 Fees and Expenses................................................... 48
8.18. Sellers' Release............................................................................... 49
8.19. Termination of Financing....................................................................... 49
8.20. Registration Rights Agreement.................................................................. 49
9. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE COMPANY AND THE SELLERS.................................... 49
9.1. Representations, Warranties and Covenants...................................................... 49
9.2. Legality; Government Authorization; Litigation................................................. 49
9.3. General........................................................................................ 49
9.4. Escrow Agreement............................................................................... 50
9.5. Earnout Agreement.............................................................................. 50
9.6. Payments....................................................................................... 50
9.7. Opinion of Counsel............................................................................. 50
9.8. Registration Rights Agreement.................................................................. 50
10. INDEMNIFICATION......................................................................................... 50
10.1. Buyer's Indemnification........................................................................ 50
10.2. Sellers' Indemnification....................................................................... 50
10.3. Monetary Limitations........................................................................... 51
10.4. Time Limitations............................................................................... 52
10.5. Limitation on Remedies......................................................................... 52
10.6. Third Party Claims............................................................................. 52
10.7. Tax Benefits................................................................................... 53
10.8. Cash Purchase Price Adjustment................................................................. 53
11. CONSENT TO JURISDICTION; JURY TRIAL WAIVER.............................................................. 53
11.1. Consent to Jurisdiction........................................................................ 53
11.2. WAIVER OF JURY TRIAL........................................................................... 54
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12. TERMINATION............................................................................................. 54
12.1. Termination of Agreement....................................................................... 54
12.2. Effect of Termination.......................................................................... 55
13. MISCELLANEOUS........................................................................................... 55
13.1. Entire Agreement; Waivers...................................................................... 55
13.2. Amendment or Modification...................................................................... 55
13.3. Severability................................................................................... 55
13.4. Successors and Assigns......................................................................... 56
13.5. Action by the Required Sellers................................................................. 56
13.6. Notices........................................................................................ 56
13.7. Public Announcements........................................................................... 57
13.8. Headings, etc.................................................................................. 58
13.9. Disclosure..................................................................................... 58
13.10. Third Party Beneficiaries...................................................................... 58
13.11. Counterparts................................................................................... 58
13.12. Governing Law.................................................................................. 58
13.13. Expenses....................................................................................... 58
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EXHIBITS
Exhibit 3.1 Form of Escrow Agreement
Exhibit 3.3 Form of Earnout Agreement
Exhibit 3.6 Accounting Methodology
Exhibit 4.1 Form of Spousal Consent
Exhibit 8.13(a) Form of Noncompetition Agreement for S. Xxxxxxx
Xxxxxxxx and Xxxxx Xxxxx Gasperina
Exhibit 8.13(b) Form of Noncompetition Agreement for Xxxxxx Beach
Blues, Inc. and Xxxxxx Xxxxxxx
Exhibit 8.13(c) Form of Whole Duty Investment, LTD Nonsolicitation
and Nondisclosure Agreement
Exhibit 8.13(d) Form of SKM-TB, LLC Nonsoliciation and Nondisclosure
Agreement
Exhibit 8.14(a) Form of S. Xxxxxxx Xxxxxxxx Employment Agreement
Exhibit 8.14(b) Form of Xxxxx Xxxxx Gasperina Employment Agreement
Exhibit 8.14(c) Form of Xxx X. Kong Employment Agreement
Exhibit 8.14(d) Form of Xxxxxx Xxxxxxx Consulting Agreement
Exhibit 8.14(e) Form of Xxxx Xxxxx Consulting Agreement
Exhibit 8.18 Form of Sellers' Release
Exhibit 8.20 Form of Registration Rights Agreement
SCHEDULES
Schedule 1 Sellers
Schedule 4.1 Sellers' Organization and Authority
Schedule 4.3 Sellers' Consents
Schedule 4.4 Title to Securities
Schedule 4.5 Voting/Share Transfer Restrictions
Schedule 4.7 Amounts Owed to Sellers
Schedule 5.1 Foreign Qualifications
Schedule 5.2 Stock Obligations
Schedule 5.3 Financial Statements
Schedule 5.4 Inventories
Schedule 5.5.2 Accounts Payable Exceptions
Schedule 5.5.3(a) 2003 Capital Expenditures
Schedule 5.5.3(b) 2004 Capital Expenditures
Schedule 5.6 Undisclosed Liabilities
Schedule 5.7 Title to Assets; Sufficiency of Assets
Schedule 5.8 Licenses and Permits
Schedule 5.9 Company Consents
Schedule 5.10 Business Locations and Real Property
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Schedule 5.11 Litigation
Schedule 5.12(a) Owned Intellectual Property
Schedule 5.12(b) Licensed Intellectual Property
Schedule 5.12(c) Intellectual Property Disputes
Schedule 5.13 Contractual Obligations
Schedule 5.14 Bank Debt, Loans, Etc.
Schedule 5.15 Change in Condition
Schedule 5.16 Insurance Policies
Schedule 5.17 Tax Matters
Schedule 5.18(a) Employee Benefit Plans
Schedule 5.18(b) Company Deferred Compensation Plans
Schedule 5.19 Environmental Matters
Schedule 5.20 Labor Relations
Schedule 5.21 Compensation of Officers, Directors, Employees and
Consultants
Schedule 5.22 Customers and Suppliers
Schedule 5.23 Governmental Consents
Schedule 5.25 Acceleration, Etc. of Certain Payments
Schedule 5.28 Product and Service Warranties; Product Liability
Schedule 7.2 Operation of Business, Related Matters
Schedule 7.3.2 Consents
Schedule 7.11(b) Continuing Company Employees
Schedule 8.7 Government Consents
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made as of the 26th
day of April, 2003, among Viewpoint International, Inc., a Delaware corporation
(the "Company," and unless the context requires otherwise, the term Company
shall include the Subsidiaries of Viewpoint International, Inc.), each holder of
Shares and/or Warrants of the Company listed on Schedule 1 (each, a "Seller" and
collectively, the "Sellers"), and Oxford Industries, Inc., a Georgia corporation
(the "Buyer").
RECITALS
1. Each of the Sellers respectively owns the number of issued and
outstanding shares (the "Shares") of Class A Common Stock of the Company, $.0001
par value per share ("Class A Common Stock") and Class C Common Stock of the
Company, $.0001 par value per share ("Class C Common Stock" and, together with
the Class A Common Stock, the "Common Stock"), in each case as set forth
opposite such Seller's name on Schedule 1. The Class A Common Stock is held by
S. Xxxxxxx Xxxxxxxx, the Xxxxxxxx Family Stock Trust u/a/d May 1, 2001, Xxxxx
Xxxxx Xxxxxxxxx, Xxxxxx Beach Blues, Inc., a Florida corporation, and Whole Duty
Investment, Ltd., a Hong Kong corporation. The Class C Common Stock is held by
SKM-TB, LLC, a Delaware limited liability company. Certain Sellers hold
$25,000,000 in aggregate principal amount of Senior Subordinated Notes of the
Company issued on February 9, 2001 (the "Senior Subordinated Notes").
2. The Sellers desire to sell and transfer the issued and
outstanding Shares to the Buyer and the Buyer desires to acquire such Shares
from the Sellers, and the holder of the Warrant desires to cancel such Warrant,
all upon the terms and subject to the conditions set forth in this Agreement.
AGREEMENT
Therefore, in consideration of the foregoing and the mutual agreements
and covenants set forth below, the parties hereto hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
1.1. Cross Reference Table. The following terms defined elsewhere
in this Agreement in the Sections set forth below shall have the respective
meaning therein defined
Term Definition
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"AAA" Section 3.6.4
"Acquisition Proposal" Section 7.12
"Agreement" Preamble
"Arbitration Rules" Section 3.6.4
"Arbitrator" Section 3.6.4
"Assets" Section 5.7
"Assumed Net Working Capital" Section 3.6.2.3
Term Definition
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"Bonus Employees" Section 1.2.5
"Bonus Payments" Section 1.2.5
"Bonus Withholding Amounts" Section 1.2.5
"Bridge Commitment Letter" Section 6.2
"Bridge Financing" Section 6.2
"Buyer" Preamble
"Buyer Indemnitees" Section 10.2
"2003 Capital Expenditures Budget" Section 5.5.3
"2004 Capital Expenditures Budget" Section 5.5.3
"Cash Equity Amount" Section 3.1
"Cash Purchase Price" Section 3.1
"Class A Common Stock" Recitals
"Class C Common Stock" Recitals
"Closing" Section 3.4
"Closing Date" Section 3.4
"Closing Date Accounts Receivables" Section 7.16
"Common Stock" Recitals
"Company" Preamble
"Company Auditors" Section 7.13
"Company Deferred Compensation Plans" Section 5.18.6
"Company Employee Plan" Section 5.18.1
"Contracts" Section 5.13
"Credit Facility Commitment Letter" Section 6.2
"Credit Facility Engagement Letter" Section 6.2
"Credit Facility Financing" Section 6.2
"Current Assets" Section 3.6.1
"Current Liabilities" Section 3.6.1
"Debt Payoff Amount" Section 3.1
"Earnout Agreement" Section 3.3
"Earnout Amount" Section 3.3
"Escrow Account" Section 3.1
"Escrow Agreement" Section 3.1
"ERISA Affiliate" Section 5.18.2
"Estimated Closing Statement" Section 3.6.2.1
"Estimated Net Working Capital" Section 3.6.2.2
"Estimated Working Capital Deficit" Section 3.6.2.3
"Estimated Working Capital Surplus" Section 3.6.2.3
"Exchange Act" Section 6.8
"Final Closing Statement" Section 3.6.4
"Final Tax Return" Section 7.10.3
"Financial Statements" Section 5.3.1.2
"Fully Diluted Shares" Section 1.2.40
"Hazardous Substance" Section 5.19
"Indemnified Party" Section 10.6
"Indemnifying Party" Section 10.6
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Term Definition
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"Insurance Policies" Section 5.16
"Interim Financials" Section 5.3.1.2
"IRS" Section 5.17.4
"Leases" Section 5.10.2
"Licenses" Section 5.12.2
"Maximum Aggregate Loss" Section 10.3
"Xxxxxxx Xxxxx" Section 6.2
"Minimum Aggregate Loss" Section 10.3
"Net Working Capital" Section 3.6.1
"New York Lawsuit" Section 5.11
"Noncompetition / Nonsolicitation and Nondisclosure Agreements" Section 8.14
"Notes" Section 6.2
"Oxford Securities" Section 3.2
"PCBs" Section 5.19
"Pension Plan" Section 1.2.17
"Proposed Closing Statement" Section 3.6.3
"Proposed Tax Return" Section 7.10.3
"Registration Rights Agreement" Section 8.20
"Required Pro Forma Financials" Section 7.13
"Review Period" Section 3.6.4
"SEC" Section 6.8
"SEC Reports" Section 6.8
"Seller Indemnitees" Section 10.1
"Seller" or "Sellers" Preamble
"Sellers' Representatives" Section 7.7
"Senior Subordinated Notes" Recitals
"Shanghai Commercial Bank" Section 1.2.4
"Shares" Recitals
"Stock Equity Amount" Section 3.2
"SunTrust" Section 6.2
"Surplus Payment" Section 3.6.5.2
"Surviving Representations, Warranties and Obligations" Section 10.3
"Tax Arbitrator" Section 7.10.3
"Tax Item" Section 7.10.3
"Tax Review Period" Section 7.10.3
"Third Party Claim" Section 10.6
"Unaudited Buyer Financial Information" Section 6.9
"Uncollected Receivables" Section 7.16
"Welfare Plan" Section 1.2.17
"Working Capital Deficit" Section 3.6.5.1
"Working Capital Guidelines" Section 3.6.1
"Working Capital Payment" Section 3.6.5.1
"Working Capital Surplus" Section 3.6.5.2
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Term Definition
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"Year End Financials" Section 5.3.1.1
1.2. Certain Definitions. The following terms shall have the
following meanings:
1.2.1. "Action" shall mean (i) any judicial or administrative
action, (ii) any suit or proceeding, or (iii) to the extent within the Knowledge
of the Company, any audit or investigation brought or conducted by a third-party
or any Governmental Authority.
1.2.2. "Affiliate" shall mean, as to the Company (or other
specified Person), each Person directly or indirectly controlling or controlled
by or under common control with the Company (or such specified Person). For
purposes of this definition, the term "control" (including the terms
"controlling," "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities, contract or otherwise.
1.2.3. "Balance Sheet Date" shall mean March 31, 2002.
1.2.4. "Bank Debt" shall mean all Debt (including all
outstanding principal, prepayment premiums or penalties, if any, and accrued
interest, fees and expenses related thereto) of the Company under the Credit
Agreement, dated as of January 26, 2001, by and between the Company and Shanghai
Commercial Bank Limited, New York Branch ("Shanghai Commercial Bank").
1.2.5. "Bonus Employee Amounts" shall mean the cash bonuses to
the employees identified on Schedule 7.2 (the "Bonus Employees") in the amounts
specified therein, less the amounts required to be withheld, under applicable
law, for purposes of income and payroll Taxes (the "Bonus Withholding Amounts")
(the sum of the Bonus Employee Amounts and the Bonus Withholding Amounts being
referred to herein as the "Bonus Payments").
1.2.6. "Business" shall mean the business of the Company as
such business is currently conducted.
1.2.7. "Business Day" shall mean any day on which banking
institutions in New York, New York are customarily open for the purpose of
transacting business.
1.2.8. "By-laws" shall mean the corporate by-laws of a
corporation, as from time to time in effect.
1.2.9. "Capital Expenditures" shall mean any expenditure that
would be classified as a capital expenditure on a statement of cash flows of the
Company prepared in accordance with GAAP on a basis consistent with the
Financial Statements.
1.2.10. "Charter" shall mean the certificate or articles of
incorporation or organization or other charter or organizational documents of
any Person (other than an individual), each as from time to time in effect.
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1.2.11. "Closing Date Liabilities" shall mean the amounts
payable on the Closing Date pursuant to Section 3.1(i), 3.1(ii), 3.1(iii),
3.1(iv) and 3.1(v).
1.2.12. "Code" shall mean the federal Internal Revenue Code of
1986, as amended and as in effect as of the date hereof.
1.2.13. "Compensation" shall mean, as applied to any Person,
all salaries, compensation, remuneration or bonuses, and all retirement,
vacation, insurance or other fringe benefits paid or provided, directly or
indirectly, by the Company to such Person or members of the immediate family of
such Person.
1.2.14. "Contractual Obligation" shall mean, with respect to
any Person, any oral or written contract, agreement, deed, mortgage, lease,
license, indenture, note, bond, loan, insurance policy, sales order, purchase
order or other document or instrument (including any document or instrument
evidencing any indebtedness but excluding the Charter and By-laws of such
Person) to which or by which such Person is legally bound.
1.2.15. "Debt" of any Person means all obligations of such
Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the Ordinary Course of
Business), (iv) under capital leases, (v) for bankers acceptances payable (other
than bankers acceptances payable incurred in the Ordinary Course of Business),
(vi) for "off-balance sheet" financing arrangements or (vii) in the nature of
Guarantees of the obligations described in clauses (i) through (vi) above of any
other Person.
1.2.16. "Distribution" shall mean, with respect to the capital
stock of, partnership interest of or other evidence of beneficial interest in
any Person, (i) the declaration or payment of any dividend on or in respect of
any shares of any class of such capital stock or beneficial interest; (ii) the
purchase, redemption or other retirement of any shares of any class of such
capital stock or beneficial interest, directly, or indirectly through a
Subsidiary or otherwise; and (iii) any other distribution on or in respect of
any shares of any class of such capital stock, partnership interest or other
beneficial interest, or on or in respect of any stock appreciation or similar
right.
1.2.17. "Employee Plan" shall mean any (i) welfare benefit
plan within the meaning of Section 3(1) of ERISA (a "Welfare Plan"); (ii)
pension benefit plan within the meaning of Section 3(2) of ERISA (a "Pension
Plan"); (iii) stock bonus, stock purchase, stock option, restricted stock, stock
appreciation right or similar equity-based plan; or (iv) other
deferred-compensation, retirement, welfare-benefit, bonus, incentive, severance,
health, vacation, supplemental unemployment, hospitalization, medical, dental,
legal or fringe-benefit plan, fund, program, agreement, arrangement or scheme
(whether within or outside the United States of America and whether written or
unwritten, to the extent that, if unwritten, it provides for benefits having a
value greater than $100,000 to any individual or greater than $1,000,000 to
individuals in the aggregate) maintained or required to be maintained by a
Person or to which such Person makes or has made, or has or has had an
obligation to make, contributions providing for employee benefits or for the
remuneration, direct or indirect, of the employees, former
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employees, directors, managers, officers, consultants, independent contractors,
contingent workers or leased employees of such Person or the dependents of any
of them.
1.2.18. "Enforceable" shall mean, with respect to any
Contractual Obligation, that such Contractual Obligation is the legal, valid and
binding obligation of the Person in question, enforceable against such Person in
accordance with its terms.
1.2.19. "Enforcement Exceptions" shall mean except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally and general principles of equity
(whether considered in a proceeding at law or in equity).
1.2.20. "Environmental Laws" shall mean any federal, state,
local or municipal law, statute, regulation or ordinance of any Governmental
Authority imposing liability or establishing standards of conduct for protection
of the environment.
1.2.21. "ERISA" shall mean the federal Employee Retirement
Income Security Act of 1974 or any successor statute, as amended.
1.2.22. "GAAP" shall mean generally accepted accounting
principles in the United States as in effect from time to time.
1.2.23. "Governmental Authority" shall mean any domestic or
foreign national, state, multi-state or municipal or other local government or
any subdivision, agency, commission or authority or regulatory or administrative
agency thereof.
1.2.24. "Governmental Order" shall mean any ruling, award,
decision, injunction, judgment, order, decree, subpoena entered, issued or made
by any Governmental Authority.
1.2.25. "Guarantee" shall mean (i) any guarantee of the
payment or performance of, or any contingent obligation in respect of, any
indebtedness or other obligation of any other Person, (ii) any other arrangement
whereby credit is extended to one obligor on the basis of any promise or
undertaking of another Person (A) to pay the indebtedness of such obligor, (B)
to purchase any obligation owed by such obligor, (C) to purchase or lease assets
(other than inventory in the Ordinary Course of Business) under circumstances
that would enable such obligor to discharge one or more of its obligations, or
(D) to maintain the capital, working capital, solvency or general financial
condition of such obligor, and (iii) any liability as a general partner of a
partnership or as a venturer in a joint venture in respect of indebtedness or
other obligations of such partnership or venture.
1.2.26. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
1.2.27. "Intangibles" shall mean (a) all inventions, patent
registrations and applications, and related filings, and all rights therein
provided by statute, international treaties or conventions and all improvements
to the inventions disclosed in each such registration, application or filing;
(b) all computer software and source codes; (c) all trade names, trademarks,
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service marks, trade dress, configurations, design marks, logos or slogans,
registered or pending and applications thereof, including any foreign, U.S.
federal and state filings and all rights therein provided by statute,
international treaties or conventions, as well as all related common law rights;
(d) all domain names, whether or not registered; (e) all proprietary customer
lists; and (f) all copyrights, including registrations and pending applications
for registration thereof, and all rights therein provided by statute,
international treaties or conventions.
1.2.28. "Interim Balance Sheet" shall mean the unaudited
consolidated balance sheet of the Company as of February 28, 2003, a copy of
which is attached to Schedule 5.3.
1.2.29. "Investment" shall mean (i) any share of capital
stock, partnership or other equity interest, evidence of indebtedness or other
security issued by any other Person, (ii) any loan, advance, prepayment or
extension of credit to, or contribution to the capital of, any other Person
(other than the creation of receivables in the Ordinary Course of Business),
(iii) any acquisition of a business of any other entity or (iv) any commitment
or option to acquire or make any of the foregoing.
1.2.30. "Knowledge" shall mean, with respect to a Person, the
knowledge after reasonable inquiry of the specified Person. In the case of the
Knowledge of the Company, "Knowledge" shall mean the knowledge after reasonable
inquiry of each of S. Xxxxxxx Xxxxxxxx, Xxxxx Xxxxx Gasperina, Xxxxxx Xxxxxxx,
Xxx X. Kong, Xxxx Xxxxx, Xxxx Xxxxxxxxx, Xxxx Xxxx, Xxxx X. Xxxxxx, Xx., Xxxxx
X. Xxxx, X.X. Xxxxx, Xxxxxxxxx XxXxxxxx, Xxxxxx Xxxxxxxxxx, Xxxx Xxxxxxx, Xxx
Xxxxxxx, Xxxx Xxxxxx, and Xxxxx Xxxxx. In the case of Knowledge of the Buyer,
"Knowledge" shall mean the knowledge after reasonable inquiry of each of X.
Xxxxx Xxxxxx, Xxx X. Xxxxxx, Xx., Xxxxxx X. Xxxxx, III, J. Xxxxx Xxxxxx, Xx., K.
Xxxxx Xxxxxxxxx and Xxx Xxxxxxxxx.
1.2.31. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign, international or multinational constitution, treaty,
statute, ordinance, code, rule or regulation, or any Governmental Order, or any
license, franchise, consent, approval, permit or similar right granted under any
of the foregoing, including the Textile Fiber Products Identification Act (Pub.
L. 85-897, Sec. 2, Sept. 2, 1958, 72 Stat. 1717) and United States customs laws
and regulations.
1.2.32. "Lien" shall mean any mortgage, pledge, lien, security
interest, attachment or other similar encumbrance.
1.2.33. "Loans" shall mean all obligations of the Company
(including bankers' acceptances) for borrowed money (including all outstanding
principal, prepayment premiums or penalties, if any, and accrued interest, fees
and expenses related thereto) other than the Bank Debt and the Senior
Subordinated Notes.
1.2.34. "Loss" shall mean any and all losses, damages,
deficiencies, awards, assessments, judgments, civil or criminal fines, civil or
criminal penalties, costs and expenses; provided, however, that the amount of
any such Losses for the purposes of indemnification hereunder shall be
determined net of the sum of any amounts that are in fact recoverable by the
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Indemnitee under insurance policies that were in effect on or prior to the
Closing Date with respect to such Loss.
1.2.35. "Management Agreement" shall mean the Management
Agreement dated as of February 9, 2001 between the Company and Xxxxxxxx Xxxx &
Xxxxxx, X.X.
1.2.36. "Material Adverse Effect" shall mean any result,
occurrence, change, event, effect or circumstance (a) that individually or in
the aggregate with any such other result, occurrence, change, effect, event or
circumstance is or is reasonably likely to be adverse to the assets,
liabilities, financial condition or results of operations of the Company or the
Business and which could reasonably result in a loss to the Company, either
individually or in the aggregate, of more than $2,500,000, or a reduction in
income of the Company, either individually or in the aggregate, of more than
$2,500,000 over any consecutive 12-month period, or (b) that materially and
adversely affects the ability of the Sellers or the Company to perform their
respective obligations under this Agreement and consummate the transactions
contemplated hereby; provided, however, that notwithstanding the foregoing, the
term "Material Adverse Effect" shall not include the impact of (i) changes in
Legal Requirements or interpretations thereof by courts or any Governmental
Authority, (ii) changes in GAAP, (iii) actions or omissions of one or more
Sellers, the Company or any Subsidiary taken with the written consent of the
Buyer in contemplation of the transactions contemplated hereby, (iv) general
economic conditions and events or conditions generally affecting the apparel
wholesale, specialty retail or restaurant industries, (v) current national or
international hostilities (without any escalation thereof), and (vi) this
Agreement or the announcement thereof.
1.2.37. "Ordinary Course of Business" shall mean the ordinary
course of the Business, consistent with past practices.
1.2.38. "Person" shall mean any individual, partnership,
limited liability company, corporation, association, trust, joint venture,
unincorporated organization, labor union or other entity other than any
Governmental Authority.
1.2.39. "Permitted Liens" shall mean (i) statutory liens for
Taxes to the extent that the payment thereof is not in arrears or otherwise due,
(ii) encumbrances in the nature of zoning restrictions, easements, rights or
restrictions of record on the use of real property if the same do not materially
impair the use of such property in the Business, (iii) liens to secure
landlords, lessors or renters under leases or rental agreements confined to the
premises rented, to the extent that the payment thereof is not in arrears, (iv)
deposits or pledges made in connection with, or to secure payment of, worker's
compensation, unemployment insurance, old age pension programs mandated under
applicable Legal Requirements or other social security regulations, (v) liens in
favor of carriers, warehousemen, mechanics and materialmen, liens to secure
claims for labor, materials or supplies and other similar liens to the extent
that the payment thereof is not in arrears, (vi) restrictions on transfer of
securities imposed by applicable state and federal securities laws, (vii) liens
securing only Bank Debt, and (viii) liens securing only the Senior Subordinated
Notes.
1.2.40. "Price Per Common Share" shall mean an amount equal to
(a) an amount equal to (i) the Cash Equity Amount plus the aggregate exercise
price of the Warrant less (ii) the
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sum of the amounts payable pursuant to Sections 3.1(i), 3.1(ii), 3.1(iii),
3.1(iv) and 3.1(v) divided by (b) the number which is the sum of (y) the number
of shares of Common Stock which are issued and outstanding immediately prior to
the Closing and (z) the number of shares of Common Stock subject to the Warrant
outstanding immediately prior to the Closing (the sum of (y) and (z) shall be
referred to herein as the "Fully Diluted Shares").
1.2.41. "Reference Balance Sheet" shall mean the audited
consolidated balance sheet of the Company as of March 31, 2002, a copy of which
is attached to Schedule 5.3.
1.2.42. "Required Sellers" shall mean such Sellers who, as of
the date hereof, hold an aggregate of at least 70% of the Fully Diluted Shares,
except that with respect to Section 12, "Required Sellers" shall mean such
Sellers who, as of the date hereof, hold an aggregate of more than 50% of the
Fully Diluted Shares.
1.2.43. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.2.44. "Seller's Percentage" shall mean, as to each Seller
(calculated as of the Closing Date), a percentage equal to (i) the sum of (a)
the number of shares of Common Stock owned by such Seller and (b) the number of
shares of Common Stock subject to the Warrant owned by such Seller divided by
(ii) the Fully Diluted Shares.
1.2.45. "Senior Lenders" shall mean the lenders under the
Loans.
1.2.46. "Signing Date Average Oxford Trading Price" shall be
$25.76.
1.2.47. "Stockholders Agreement" shall mean the Company's
Stockholders Agreement dated as of February 9, 2001, as amended from time to
time.
1.2.48. "Subordinated Lenders" shall mean the holders of the
Senior Subordinated Notes.
1.2.49. "Subsidiary" shall mean any Person of which the
Company (or other specified Person) shall own directly or indirectly through a
Subsidiary, a nominee arrangement or otherwise at least a majority of the
outstanding capital stock (or other shares of beneficial interest) entitled to
vote generally or otherwise have the power to elect a majority of the board of
directors or similar governing body or the legal power to direct the business or
policies of such Person; provided, however, that, with respect to the Company,
the term Subsidiary shall not include The Paradise Shoe Company, LLC.
1.2.50. "Tax" shall mean any federal, state, local or foreign
income, gross receipts, franchise, withholding, estimated, alternative minimum,
add-on minimum, sales, use, transfer, registration, value added, ad valorem,
excise, severance, stamp, occupation, premium, windfall profit, custom, duty,
real property, personal property, capital stock, social security, employment,
unemployment, disability, payroll, license, employee or other tax, including all
interest, fines, penalties and additions with respect to any of the foregoing.
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1.2.51. "Tax Benefit" shall mean any Tax refund, Tax credit or
reduction in Tax actually realized by the Buyer or its Subsidiaries (including
for all periods after the Closing Date, the Company).
1.2.52. "Tax Return" shall mean any federal, state, local and
foreign return, report, statement or form relating to any Tax and any claim for
refund of Tax, and any declaration of estimated Tax, and any schedule or
attachment to any of the foregoing or amendment thereto, including, where
permitted or required, any consolidated, combined or unitary returns for any
group of entities.
1.2.53. "Transaction Expenses" shall mean (i) all fees and
expenses incurred by the Company, to the extent not paid prior to the Closing
Date, in connection with the negotiation and preparation of this Agreement,
related agreements and the transactions contemplated hereby and thereby,
including the fees and expenses of Ropes & Gray, Goldman, Sachs & Co., Ernst &
Young LLP, Xxxxxx & Bird LLP and Xxxxxxx Xxxxx & Co., CPA, P.C., (ii) all
penalties, fees and expenses associated with the termination of the Management
Agreement, and (iii) all penalties, fees and expenses associated with the
termination of any employment or consulting agreements of the Company.
1.2.54. "Warrant" shall mean the Contingent Warrant to
Purchase Shares of Class C Common Stock of the Company, issued to SKM-TB, LLC on
February 9, 2001.
1.2.55. "Warrant Consideration" shall mean (i) the Price Per
Common Share less the exercise price of the Warrant multiplied by (ii) the
number of shares of Common Stock subject to the Warrant.
1.3. Certain Matters of Construction. In addition to the
definitions referred to or set forth in this Section 1:
1.3.1. The words "hereof", "herein", "hereunder" and words of
similar import shall refer to this Agreement as a whole and not to any
particular Section or provision of this Agreement, and reference to a particular
Section of this Agreement shall include all subsections thereof.
1.3.2. The words "party" and "parties" shall refer to the
Sellers, the Company and the Buyer.
1.3.3. Definitions shall be equally applicable to both the
singular and plural forms of the terms defined, and references to the masculine,
feminine or neuter gender shall include each other gender.
1.3.4. Accounting terms used herein and not otherwise defined
herein are used herein as defined by GAAP in effect as of the date hereof,
consistently applied.
1.3.5. The word "including" shall mean including without
limitation.
1.3.6. All references herein to "dollars" or "$" shall refer
to United States dollars.
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2. ACQUISITION.
Upon the terms, subject to the conditions, and in reliance on the
representations, warranties and covenants set forth herein, each of the Sellers
and the Buyer hereby agree that on the Closing Date: (i) each of the Sellers
severally will sell, transfer and deliver to the Buyer, free and clear of any
Liens, the number of Shares of Class A Common Stock and Class C Common Stock set
forth opposite such Seller's name on Schedule 1, (ii) the Warrant shall be
terminated as described in Section 3.5, (iii) the Buyer will pay the Cash Equity
Amount in accordance with Section 3.1 hereof (and accordingly, the Buyer, on
behalf of the Company, will pay the Closing Date Liabilities and the Buyer will
pay the Cash Purchase Price to the Sellers), (iv) the Buyer will pay the Stock
Equity Amount in accordance with Section 3.2 hereof, (v) the Buyer will purchase
and acquire from each Seller, the number of shares of Class A Common Stock and
Class C Common Stock set forth opposite such Seller's name on Schedule 1, (vi)
the Buyer, the Sellers and the Sellers' Representatives shall enter into the
Earnout Agreement and (vii) the Buyer, the Sellers, the Sellers' Representatives
and JPMorganChase Bank shall enter into the Escrow Agreement.
3. PAYMENT AND CLOSING.
3.1. Cash Equity Amount. The aggregate cash amount to be paid by
the Buyer at the Closing shall be Two Hundred Forty Million Dollars
($240,000,000), less any Estimated Working Capital Deficit or plus any Estimated
Working Capital Surplus pursuant to Section 3.6.2.3 (such net amount being
referred to herein as the "Cash Equity Amount"). At the Closing, the Buyer shall
pay the Cash Equity Amount as follows: by wire transfer of immediately available
funds (i) to such account or accounts as the Company specifies, an amount
sufficient to pay the Transaction Expenses, (ii) to such account or accounts as
the Company specifies, an amount sufficient to pay the Bonus Payments, (iii) to
such account or accounts as the Company specifies, the insurance premiums
payable to obtain the insurance coverage required under Section 7.9 hereof, (iv)
to such account or accounts as Shanghai Commercial Bank specifies, an amount
sufficient to prepay in full all outstanding principal and accrued interest on
the Company's outstanding Bank Debt (including all prepayment premiums and
penalties and any fees and expenses associated with such prepayment), (v) to
such account or accounts as the Subordinated Lenders specify, an amount
sufficient to prepay in full all outstanding principal and accrued interest on
the Senior Subordinated Notes (including all prepayment premiums and penalties
and any fees and expenses associated with such prepayment) (the amounts to be
paid under this Section 3.1(iv) and (v) sometimes being referred to herein as
the "Debt Payoff Amount"), (vi) to such account or accounts as the holder of the
Warrant specifies to the Buyer in writing at least three Business Days prior to
the Closing, an amount sufficient to pay the aggregate Warrant Consideration and
(vii) to such account or accounts as each Seller specifies to the Buyer in
writing at least three Business Days prior to the Closing, an amount equal to
(A) the Price Per Common Share multiplied by (B) the number of Shares of Common
Stock owned by such Seller immediately prior to the Closing (the Cash Equity
Amount, less the amounts described in clauses (i), (ii), (iii), (iv) and (v)
above, is referred to herein as the "Cash Purchase Price"); provided, that the
Sellers agree that Twenty-Two Million Five Hundred Thousand Dollars
($22,500,000) of the Cash Purchase Price (allocated in accordance with each
Seller's respective Seller's Percentage) shall be deposited into an escrow
account (the "Escrow Account") pursuant to the terms and conditions of an Escrow
Agreement substantially in the
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form attached hereto as Exhibit 3.1 (the "Escrow Agreement") to satisfy any
potential obligations of the Sellers pursuant to Sections 3.6.5.1 and 10.2.
Pursuant to the terms of the Escrow Agreement, $2.5 million of the escrow amount
minus the amount of the Working Capital Deficit, if any, will be released upon
finalization of the Final Closing Statement.
3.2. Stock Equity Amount. At the Closing, the Buyer will issue
to the Sellers, in the aggregate, 388,200 shares of common stock of the Buyer
(which constitutes the number of shares of common stock of the Buyer equal to
Ten Million Dollars ($10,000,000) divided by the Signing Date Average Oxford
Trading Price) (such number of shares of common stock of Buyer being referred to
herein as the "Stock Equity Amount" or the "Oxford Securities"), which shares
shall be issued to the respective Sellers pro rata based upon the respective
Seller's Percentage of each Seller. The number of shares of common stock of the
Buyer included in the Stock Equity Amount shall be equitably adjusted as
necessary to reflect the effect of any forward or reverse stock split, stock
dividend, recapitalization or other similar change with respect to common stock
of the Buyer which has an applicable record date occurring during the period
commencing the date hereof and ending on the Closing Date.
3.3. Earnout Agreement. At the Closing, the Buyers and the Sellers
will enter into an Earnout Agreement in the form of Exhibit 3.3 hereto (the
"Earnout Agreement"), pursuant to which the Sellers shall be entitled to receive
up to an additional Seventy-Five Million Dollars ($75,000,000) (the "Earnout
Amount") in consideration for the Shares and the Warrant. The Earnout Amount, if
any, shall be payable in accordance with, and subject to the terms and
conditions of, the Earnout Agreement.
3.4. Time and Place of Closing. The consummation of the
transactions described above (the "Closing") shall take place at the offices of
King & Spalding LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at
10:00 a.m. (local time) on (a) the later of (i) June 3, 2003 and (ii) the third
Business Day after (1) the satisfaction or waiver of all conditions precedent to
Closing as set forth in Sections 8 and 9 which can be satisfied prior to Closing
and (2) the Buyer has sold $175,000,000 in principal amount of notes (as
contemplated by the Bridge Commitment Letter) or SunTrust and/or Merrill Lunch
are prepared to loan $175,000,000 to the Buyer (contemporaneously with the
Closing) as contemplated by the Bridge Commitment Letter and SunTrust and/or
Xxxxxxx Xxxxx (and other participating lenders) are prepared to loan up to
$295,000,000 to the Buyer (contemporaneously with the Closing) as contemplated
by the Credit Facility Commitment Letter, or (b) such earlier date, after the
satisfaction or waiver of all conditions precedent to Closing as set forth in
Sections 8 and 9, as may be agreed to in writing by the Buyer and the Sellers'
Representatives (the day on which the Closing takes place being referred to
herein as the "Closing Date").
3.5. Delivery. At the Closing: (a) each of the Sellers shall
deliver to the Buyer the certificate or certificates evidencing all of the
Shares of Common Stock owned by such Seller, together with a duly executed stock
power; (b) the holder of the Warrant shall deliver to the Buyer evidence of the
cancellation of the Warrant owned by such holder; and (c) each party will
deliver to the other such certificates, opinions and other documents as are
contemplated hereby.
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3.6. Adjustments to Purchase Price.
3.6.1. Definition of "Net Working Capital." For purposes of
this Section 3.6, the term "Net Working Capital" means (i) the aggregate amount
of the "Current Assets" (as defined below) of the Company less (ii) the "Current
Liabilities" (as defined below) of the Company, both determined as of 11:59
p.m., Hawaiian Standard Time, on the Closing Date after giving effect to the
payments described in Section 3.1 and any resulting Tax Benefits. As used
herein, the term "Current Assets" means those assets of the Company and each of
its Subsidiaries of the type listed on Part I of Exhibit 3.6 hereto, and the
term "Current Liabilities" means those liabilities of the Company and each of
its Subsidiaries of the type listed on Part II of Exhibit 3.6. The Current
Assets and the Current Liabilities will be calculated in accordance with the
guidelines (the "Working Capital Guidelines") set forth on Part III of Exhibit
3.6.
3.6.2. Preparation and Delivery of Estimated Closing
Statement.
3.6.2.1 Not less than five (5) Business Days prior
to the Closing Date, the Company shall prepare in good faith and deliver to the
Buyer, at the sole expense of the Company, an estimated closing statement of the
Company as of Closing Date (the "Estimated Closing Statement"), which Estimated
Closing Statement shall set forth the proposed estimation of the Current Assets,
the Current Liabilities, and the Net Working Capital.
3.6.2.2 The Estimated Closing Statement and the
estimated Net Working Capital as of the Closing Date (the "Estimated Net Working
Capital") reflected on the Estimated Closing Statement shall be subject to the
approval of the Buyer, which approval shall not be unreasonably withheld.
3.6.2.3 The parties hereto acknowledge that the
consideration being paid to Sellers pursuant to Section 3.1 is based on the
assumption that the Net Working Capital of the Company shall be equal to Forty
One Million Nine Hundred Thousand Dollars ($41,900,000) (the "Assumed Net
Working Capital"). Accordingly, the parties hereto agree that if the Estimated
Net Working Capital is less than the Assumed Net Working Capital (the amount of
such shortfall, if any, is hereinafter referred to as the "Estimated Working
Capital Deficit"), the Buyer shall deduct from the Cash Equity Amount, on a
dollar for dollar basis, the Estimated Working Capital Deficit. If the Estimated
Net Working Capital is greater than the Assumed Net Working Capital (the amount
of such excess is hereinafter referred to as the "Estimated Working Capital
Surplus"), the Buyer shall add to the Cash Equity Amount, on a dollar for dollar
basis, the Estimated Working Capital Surplus.
3.6.3. Preparation of Proposed Closing Statement. Within one
hundred twenty (120) days after the Closing Date, the Buyer shall prepare and
deliver to the Sellers' Representatives a closing statement of the Company as of
Closing Date (the "Proposed Closing Statement"), which Proposed Closing
Statement shall set forth the proposed calculation of the Current Assets, the
Current Liabilities, and the Net Working Capital.
3.6.4. Examination of Proposed Closing Statement. The
Sellers' Representatives shall review the Proposed Closing Statement to confirm
the accuracy of the Proposed Closing Statement and of the Buyer's calculation of
the Net Working Capital. In connection with such
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review, the Buyer will provide the Sellers' Representatives and their
representatives with reasonable access to appropriate personnel, books, records,
documents and other information of the Company. If the Sellers' Representatives
fail to give the Buyer written notice of any disputed amounts within fifteen
(15) days after the Sellers' Representatives receive the Proposed Closing
Statement (the "Review Period"), then the Proposed Closing Statement shall
become the "Final Closing Statement" (as defined below) for purposes hereof. If
the Sellers' Representatives give the Buyer written notice of any disputed items
within the Review Period, the Sellers' Representatives and the Buyer shall
attempt in good faith to agree on any adjustments that should be made to the
Proposed Closing Statement in order to reflect the Net Working Capital. If the
Sellers' Representatives and the Buyer are unable to resolve any disputed
amounts within forty-five (45) days after the Sellers' Representatives receive
the Proposed Closing Statement, the Buyer and the Sellers' Representatives shall
submit their final calculations of the items in dispute to an arbitrator (the
"Arbitrator") who shall be, or shall have previously been, an audit partner in a
nationally recognized independent accounting firm and who shall be appointed by
agreement of the Buyer and the Sellers' Representatives or, failing such
agreement, by the American Arbitration Association (the "AAA") in accordance
with the Commercial Arbitration Rules (the "Arbitration Rules") of the AAA. The
Arbitrator shall review such final calculations and make a selection as to which
of the final calculations presented to it is, in the aggregate, more accurate.
The decision of the Arbitrator shall be made in accordance with the Arbitration
Rules and in accordance with the terms of this Agreement, including the
procedures set forth on Exhibit 3.6. The decision of the Arbitrator shall be
made within thirty (30) days after being engaged, or as soon thereafter as
reasonably practicable, and shall be final and binding on the parties. The costs
and expenses of the Arbitrator shall be paid by the party whose proposed
calculation is not selected by the Arbitrator. The Buyer and the Sellers'
Representatives shall make available to the Arbitrator all relevant books and
records relating to the calculations submitted and all other information
reasonably requested by the Arbitrator. The Proposed Closing Statement shall be
revised, if necessary, to reflect the final determination of the Net Working
Capital (the final form of the Proposed Closing Statement, including any
revisions which are made thereto pursuant to this Section 3.6.4, is referred to
herein as the "Final Closing Statement").
3.6.5. Adjustments.
3.6.5.1 If the Net Working Capital as reflected on
the Final Closing Statement is less than the Estimated Net Working Capital (the
amount of such shortfall, if any, is hereinafter referred to as the "Working
Capital Deficit"), the Sellers shall be obligated on a joint and several basis
to pay to the Buyer, on a dollar for dollar basis, an amount equal to the
Working Capital Deficit (such payment shall be hereinafter referred to as a
"Working Capital Payment"). The Working Capital Payment, if any, shall be paid
in cash by the Sellers to the Buyer within ten (10) days of the final
determination of the Final Closing Statement; provided, however, that if any
Working Capital Payment is due to the Buyer pursuant to this Section 3.6.5.1,
the Buyer shall first seek to recover up to $2,500,000 of such payment from the
Escrow Account pursuant to the terms of the Escrow Agreement. Subject to the
foregoing, the Buyer may, at its sole discretion, claim all or any part of any
Working Capital Payment due to it from any Seller pursuant to this Section
3.6.5.1 either directly from such Seller or from the Escrow Account pursuant to
the terms of the Escrow Agreement or may set off such amount from any Earnout
Amount pursuant to the terms of the Earnout Agreement.
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3.6.5.2 If the Net Working Capital as reflected on
the Final Closing Statement is greater than the Estimated Net Working Capital
(the amount of such excess is hereinafter referred to as the "Working Capital
Surplus"), the Buyer shall pay the Sellers, on a dollar for dollar basis, pro
rata according to each Seller's Seller's Percentage, an amount equal to the
Working Capital Surplus (such payment shall be hereinafter referred to as a
"Surplus Payment"). The Surplus Payment, if any, shall be paid in cash by the
Buyer to the Sellers within ten (10) days of the final determination of the
Final Closing Statement.
3.6.5.3 The determination of the Working Capital
Payment or the Surplus Payment, as the case may be, shall be made by the Buyer
and the Sellers' Representatives immediately following the final determination
of the Final Closing Statement. Any amounts required to be paid pursuant to
Section 3.6.5 shall accrue simple interest thereon at a rate of 5% per annum
commencing on the Closing Date and continuing to and including the date of
payment, and such interest shall be paid together with the adjustment amount
being paid.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the Sellers,
solely as to itself, represents and warrants that:
4.1. Organization and Authority. In the case of a Seller that is
not an individual, such Seller is an entity duly formed, legally existing and in
good standing under the laws of the jurisdiction of its organization. Such
Seller has full power, capacity and authority to enter into this Agreement and
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The equity holders of each Seller that is not an individual
are set forth on Schedule 4.1. Each Seller that is an individual has caused his
spouse to execute a consent in the form attached hereto as Exhibit 4.1.
4.2. Authorization and Enforceability. This Agreement has been duly
authorized, executed and delivered by such Seller and, assuming the due
authorization, execution and delivery by the other parties hereto, is
Enforceable against such Seller.
4.3. Non-Contravention, etc. Except as set forth on Schedule 4.3,
the execution and delivery of this Agreement by such Seller and the consummation
by such Seller of the Closing hereunder in accordance with the terms and
conditions of this Agreement do not and will not conflict with or result in the
breach of any of the terms or provisions of, or constitute a default under, (a)
any provision of the organizational documents of such Seller, if applicable, (b)
any Contractual Obligation to which such Seller is a party or by which such
Seller is, the Shares to be sold by such Seller hereunder are or the Warrant to
be cancelled by such Seller is, bound or (c) any Legal Requirement applicable to
such Seller, to the Shares to be sold by such Seller or to the Warrant to be
cancelled by such Seller. Assuming expiration or termination of all applicable
waiting periods under the HSR Act and except as set forth on Schedule 4.3, no
consent or approval is required to be obtained by such Seller in connection with
the execution, delivery and performance of this Agreement by such Seller, the
sale of the Shares to be sold by such Seller or the cancellation of the Warrant
by such Seller, all as contemplated hereby.
4.4. Title to Securities. Except as set forth on Schedule 4.4, such
Seller is the record and beneficial owner of and has good and valid marketable
title to the Shares of Common Stock and/or Warrant set forth opposite such
Seller's name on Schedule 1, free and clear of any Liens,
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except as created by the Stockholders Agreement (which Lien shall be terminated
at or prior to Closing). Each Seller has the exclusive right, power and
authority to vote and transfer the Shares owned by such Seller and/or to cancel
the Warrant owned by such Seller. At the Closing, each Seller will transfer and
convey, and the Buyer will acquire, good and valid marketable title to the
Shares of Common Stock, free and clear of any and all Liens, other than
applicable securities laws. At the Closing, the Seller which owns the Warrant
will duly cancel the Warrant pursuant to Section 3.5 without any remaining
obligation of the Company thereunder.
4.5. Voting Trusts, etc. Except as set forth on Schedule 4.5, there
are no voting trusts, shareholder agreements, commitments, undertakings,
understandings, proxies or other restrictions to which such Seller is a party
which directly or indirectly restrict or limit in any manner, or otherwise
relate to, the voting, sale or other disposition of any shares of capital stock
of the Company or the Warrant.
4.6. Brokers, etc. Except as contemplated by Section 5.30, no
broker, finder, investment bank or similar agent is entitled to any brokerage or
finder's fee from the Company or such Seller in connection with the transactions
contemplated by this Agreement based upon agreements or arrangements made by or
on behalf of such Seller.
4.7. Amounts Owed to Sellers. Except as set forth on Schedule 4.7,
the Company does not owe and is not obligated to pay such Seller any amount and
such Seller has no claim of any kind against the Company or any officer or
director of the Company.
4.8. Investment and Securities Matters.
4.8.1. No Registration. Such Seller acknowledges and
understands that the (i) issuance of the Oxford Securities will not be
registered under the Securities Act, or any other applicable securities laws and
(ii) issuance of the Oxford Securities is intended to be exempt from
registration under the Securities Act and any other applicable securities laws
by virtue of certain exemptions thereunder, including Section 4(2) of the
Securities Act and the provisions of Regulation D promulgated thereunder, and,
therefore, the Oxford Securities cannot be resold unless registered under the
Securities Act and any other applicable securities laws or unless an exemption
from registration is available.
4.8.2. Reliance on Representations. Such Seller acknowledges
that Buyer and its advisors will rely on the representations and warranties of
such Seller contained in this Section 4.8 for purposes of determining whether
the issuance of the Oxford Securities is exempt from registration under the
Securities Act and any other applicable securities laws.
4.8.3. Restricted Securities/Rule 144. Such Seller
understands that the Oxford Securities will be characterized as "restricted
securities" under the Securities Act. In this connection, such Seller represents
that such Seller is familiar with Rule 144 promulgated under the Securities Act
and understands that Rule 144 is not presently available with respect to sales
of the Oxford Securities.
4.8.4. Acquiring For Own Account. Such Seller is acquiring
the Oxford Securities solely for his or its own account for investment purposes
and not with a view toward any distribution.
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4.8.5. Review of Reports. Such Seller has reviewed the SEC
Reports.
4.8.6. Financial Ability. Such Seller (i) has the financial
ability to bear the economic risk of the investment in the Oxford Securities,
(ii) has adequate means for providing for his or its current needs and
contingencies, (iii) has no need for liquidity with respect to the investment in
the Oxford Securities, and (iv) can afford a complete loss of the investment in
the Oxford Securities at this time and in the foreseeable future.
4.8.7. Knowledge and Experience. Such Seller has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in Oxford Securities and of
making an informed investment decision with respect thereto.
4.8.8. Tax Consequences. Such Seller understands that the
transactions contemplated by this Agreement are not structured to obtain
"tax-free" treatment under the Code. Accordingly, such Seller may be required to
recognize taxable gain based on the fair market value of the Oxford Securities
as of the date received even though it will likely not be permissible to
liquidate the Oxford Securities in order to pay such taxes.
4.8.9. Accredited Investor. Such Seller is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D promulgated
under the Securities Act.
4.8.10. Further Limitations on Dispositions. Without in any
way limiting the representations set forth above, such Seller further agrees not
to make any disposition of all or any portion of the Oxford Securities unless
and until:
(i) there is then in effect a registration
statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with
such registration statement; or
(ii) (A) such Seller shall have notified the
Buyer of the proposed disposition and shall have furnished the
Buyer with a statement of the circumstances surrounding the
proposed disposition and (B) unless waived by the Buyer, the
Buyer shall have received an opinion of counsel to the Buyer
providing that such disposition will not require registration
of such securities under the Securities Act or any other
applicable securities laws.
Notwithstanding any other provision in this Agreement or the
Registration Rights Agreement, such Seller agrees not to sell, transfer or
otherwise dispose of (a) any of the Oxford Securities issued to such Seller
pursuant to Section 3.2 of this Agreement prior to the six month anniversary of
the Closing Date and (b) more than one-half of the Oxford Securities issued to
such Seller pursuant to Section 3.2 of this Agreement prior to the first
anniversary of the Closing Date.
4.8.11. Legend. Such Seller acknowledges and agrees that the
certificates representing the Oxford Securities shall bear substantially the
following legend:
The shares represented by this certificate have not been
registered under the
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Securities Act of 1933, as amended (the "Securities Act"),
or under any other applicable securities laws in reliance
upon various exemptions therefrom. These shares have been
acquired for investment and may not be offered for sale,
sold, transferred, or otherwise disposed of, nor will any
assignee or transferee thereof be recognized by the
Corporation as having any interest in such shares, in the
absence of (i) an effective registration statement with
respect to the shares under the Securities Act or (ii) an
opinion of Corporation's counsel to the effect that the
transaction by which such shares will be offered for sale,
sold, transferred, or otherwise disposed of, is exempt
from or otherwise in compliance with the registration
requirements of the Securities Act and any other
applicable securities laws. The shares represented by this
certificate may not be sold, transferred, or otherwise
disposed of, nor will any assignee or transferee thereof
be recognized by the Corporation as having any interest in
such shares, unless such sale, transfer or disposition is
otherwise in accordance with the terms of the Stock
Purchase Agreement, dated as of April 26, 2003, among
Viewpoint International, Inc., the stockholders of
Viewpoint International, Inc. and the Corporation.
5. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY. The Company
represents and warrants that:
5.1. Organization, Power, Standing and Authority. Each of the
Company and its Subsidiaries is a corporation or a limited liability company
duly organized, validly existing and in good standing under the laws of the
states in which each has been organized, and has all requisite power and
authority to execute, deliver and perform this Agreement, to own its property,
to carry on the Business and to consummate the transactions contemplated hereby.
The Company has heretofore made available to the Buyer a true and complete copy
of (a) the Charter and By-laws of the Company and the organizational documents
of each of its Subsidiaries, (b) the minute books of the Company and each of its
Subsidiaries, and (c) the stock ledger and the stock books (or equivalent
documents) of the Company and each of its Subsidiaries, each of which is
accurate and complete through the date hereof. The Company and each of its
Subsidiaries is duly qualified or licensed to do business as a foreign
corporation or limited liability company, and is in good standing as such, in
each jurisdiction where the failure to be so qualified or licensed and in good
standing could reasonably be expected to have a Material Adverse Effect.
Schedule 5.1 contains a true and correct list of the jurisdictions in which the
Company and each of its Subsidiaries is qualified or licensed to do business as
a foreign corporation or limited liability company. The execution, delivery and
performance of this Agreement by the Company have been duly authorized by all
necessary corporate (or other) action of the Company. This Agreement has been
duly executed and delivered by the Company and, assuming the due authorization,
execution and delivery by the other parties hereto, is the legal, valid and
binding obligation of the Company, Enforceable against the Company in accordance
with its terms.
5.2. Capitalization and Investments.
5.2.1. As of the date hereof, and as of the Closing Date,
the authorized capital stock of the Company consists and will consist of
40,000,000 shares of Class A Common Stock,
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675,000 shares of Class B Common Stock and 6,200,000 shares of Class C Common
Stock. As of the date hereof, and as of the Closing Date, the total capital
stock issued and outstanding of the Company (including a list of the record
holders of the outstanding capital stock of the Company and the number of shares
held) is, and will be as, set forth on Schedule 1. All of such outstanding
shares of capital stock of the Company are duly authorized, validly issued,
fully paid and nonassessable. As of the date hereof, and as of the Closing Date,
the Shares shown as outstanding on Schedule 1 hereto constitute, and shall
constitute, all of the issued and outstanding shares of capital stock of the
Company.
5.2.2. Except as set forth on Schedule 5.2, there is no
Contractual Obligation, Charter, or By-law provision (including any
subscription, option, convertible security, call, put, right, warrant, or other
agreement, claim, or commitment of any nature whatsoever) which obligates the
Company to issue, purchase or redeem, or make any payment in respect of, any
shares of capital stock or other securities convertible into or exchangeable for
shares of capital stock or partnership interests or which provides for any stock
appreciation or similar right or grants any right to share in the equity,
income, revenues or cash flow of the Company. Additionally, except as set forth
on Schedule 5.2, there are no Distributions that have accrued or been declared
but are unpaid on the capital stock or equity of the Company.
5.2.3. Except as set forth on Schedule 5.2, there are no
voting trusts, shareholder agreements, commitments, undertakings,
understandings, proxies or other restrictions to which the Company is a party
which directly or indirectly restrict or limit in any manner, or otherwise
relate to, the voting, sale or other disposition of any shares of capital stock
of the Company.
5.2.4. Schedule 5.2 sets forth a list of each of the
Subsidiaries of the Company. Except as set forth on Schedule 5.2, the Company
owns all of the capital stock and other equity interests in each such
Subsidiary, free and clear of any Liens, restrictions on transfer or
restrictions on voting, other than restrictions on transfer imposed by
applicable securities laws. All of the issued and outstanding equity interests
in the Subsidiaries are duly authorized, validly issued, fully paid and
non-assessable. Except as set forth on Schedule 5.2, there is no Contractual
Obligation, Charter, or By-law provision (including any subscription, option,
convertible security, call, put, right, warrant, or other agreement, claim, or
commitment of any nature whatsoever) which obligates any Subsidiary to issue,
purchase or redeem, or make any payment in respect of, any shares of capital
stock or other securities convertible into or exchangeable for shares of capital
stock or partnership interests or which provides for any stock appreciation or
similar right or grants any right to share in the equity, income, revenues or
cash flow of such Subsidiary. Except as set forth on Schedule 5.2 or with
respect to Distributions from wholly-owned Subsidiaries of the Company to the
Company or to other wholly-owned Subsidiaries of the Company, there are no
Distributions that have accrued or been declared but are unpaid on the capital
stock or equity of any Subsidiary.
5.2.5. Except as set forth on Schedule 5.2, neither the
Company nor any of its Subsidiaries has an Investment in any Person that is not
a Subsidiary of the Company other than Investments in (a) demand deposit or
money market accounts and (b) cash equivalents (i.e., marketable obligations
issued or guaranteed by the government of the United States that mature within
180 days of the acquisition thereof or money market funds that invest in
securities similar to such United States government securities).
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5.3. Financial Statements, etc.
5.3.1. Financial Information. The Company has heretofore
delivered to the Buyer true and complete copies of each of the following:
5.3.1.1 The audited consolidated balance sheets of
the Company as of March 31, 2000, 2001 and 2002, and the consolidated
statements of operations, of stockholders' equity (deficiency), and of
cash flow for the respective fiscal years ended March 31, 2000, 2001
and 2002, together with the notes thereto, each accompanied by the
audit report of Xxxxxxx Xxxxx & Co., CPA, P.C. (the "Year End
Financials").
5.3.1.2 An unaudited financial statement of the
Company, consisting of the Interim Balance Sheet and related
consolidated statements of operations, of stockholders' equity
(deficiency), and of cash flow for the 11 month period ending on
February 28, 2003 (collectively, the "Interim Financials" and together
with the Year End Financials, the "Financial Statements"). Copies of
the Financial Statements are attached to Schedule 5.3.
5.3.2. Character of Financial Information. The Financial
Statements have been prepared from, and are in accordance with, the books and
records of the Company. Except as set forth on Schedule 5.3, the Financial
Statements (including the notes thereto) were prepared in accordance with GAAP
consistently applied throughout the periods specified therein, and are correct
and complete and present fairly, in all material respects, the financial
position and results of operations of the Company for the periods specified
therein, subject in the case of the Interim Financials to an absence of notes
and normal year-end adjustments.
5.3.3. Offering Memorandum. To the Knowledge of Xxxx Xxxx,
Xxx Kong and Xxxxx Xxxxxx, the Management's Discussion and Analysis of Financial
Condition and Results of Operations of the Company beginning on page 64 and
ending on page 74 of the Buyer's preliminary offering memorandum relating to the
Buyer's offering of notes in connection with the transactions contemplated by
this Agreement does not include any untrue statement of a material fact or omit
to state a material fact necessary to make such statements, in light of the
circumstances in which they were made, not misleading.
5.3.4. Final Closing Statement. To the Knowledge of the
Company, the Final Closing Statement, as finalized in accordance with Section
3.6.4 hereof, shall have been prepared, and shall be accurate and complete, in
accordance with the Working Capital Guidelines. For the purposes of this Section
5.3.4, any item in the Final Closing Statement which has been accounted for in
accordance with the final decision of the Arbitrator pursuant to Section 3.6.4
shall be deemed to be accurate and complete for purposes of this Agreement.
5.4. Inventories. Except as set forth on Schedule 5.4 hereto or as
otherwise reflected in the Financial Statements, the inventories of the Company
(a) are sufficient for the operation of the Company in the Ordinary Course of
Business, (b) consist of items that are good and merchantable within the
Company's normal tolerances, (c) conform to the specifications therefor within
the Company's normal tolerances, (d) are of a quality and quantity presently
usable or
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saleable in the Ordinary Course of Business (subject to applicable reserves) and
(e) are not obsolete, damaged or defective outside the Company's normal
tolerances.
5.5. Accounts Receivable; Accounts Payable; Capital Expenditures.
5.5.1. The accounts receivable of the Company arose from
bona fide transactions in the Ordinary Course of Business, have been executed on
terms consistent with the past practice of the Company in all material respects
and are reflected properly on the books and records of the Company.
5.5.2. The accounts payable of the Company arose from bona
fide transactions in the Ordinary Course of Business, have been executed on
terms consistent with the past practice of the Company in all material respects,
are reflected properly on the books and records of the Company and are valid
payables in accordance with GAAP. Except as set forth on Schedule 5.5.2 hereto,
none of the accounts payable reflected on the Interim Balance Sheet shall have
been outstanding more than the shorter of (a) their scheduled due date in the
Ordinary Course of Business or (b) thirty (30) days after the respective invoice
date for such account payable.
5.5.3. Attached to Schedule 5.5.3(a) hereto is a true and
complete copy of the Company's Capital Expenditures budget (the "2003 Capital
Expenditures Budget") for April 1, 2002 through March 31, 2003 as well as a true
and complete summary of those budgeted Capital Expenditures which were actually
incurred by the Company during the period from April 1, 2002 through February
28, 2003. Attached to Schedule 5.5.3(b) hereto is a true and complete copy of
the Company's Capital Expenditure budget (the "2004 Capital Expenditures
Budget") for each month from April 1, 2003 through March 31, 2004.
5.6. No Undisclosed Liabilities. Except as set forth on Schedule
5.6, the Company does not have any liabilities or obligations required under
GAAP to be reflected on its consolidated balance sheet or in the notes thereto
which are not adequately reflected or provided for on the Financial Statements,
except liabilities and obligations incurred since the date of the Interim
Financials in the Ordinary Course of Business, none of which, either
individually or in the aggregate, will have a Material Adverse Effect.
5.7. Title to Assets; Sufficiency of Assets.
(a) The Company has good and marketable title to or, in
the case of property held under lease or any other Contract, a
valid and Enforceable (subject to Enforcement Exceptions)
right to use, all of the properties, rights and assets
reflected on the Reference Balance Sheet (collectively, the
"Assets"), except for inventory which has been sold or
otherwise disposed of since the Balance Sheet Date in the
Ordinary Course of Business or as described on Schedule 5.15
hereto. The Assets are not subject to any Lien other than
Permitted Liens and Liens described on Schedule 5.7. Except as
disclosed on Schedule 5.7, upon payment of the Debt Payoff
Amount by the Buyer and application of the Cash Equity Amount
as contemplated by Section 3.1, all Liens disclosed on
Schedule 5.7 will be released.
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(b) The tangible Assets are in good working order,
operating condition and state of repair, ordinary wear and
tear excepted. The Assets, together with all other assets used
by the Company pursuant to the Contracts, constitute all of
the assets and properties necessary to permit the Company to
conduct the Business.
5.8. Licenses, Permits, Compliance with Laws, etc. The Company
holds, and Schedule 5.8 sets forth, all material licenses, permits, franchises
and other authorizations under any Legal Requirement necessary for the conduct
of the Business as currently conducted. All such licenses, permits, franchises
and other authorizations are current and valid, and neither the execution and
delivery of this Agreement nor the consummation by the Company of any of the
transactions contemplated hereby does or will constitute, result in or give rise
to a violation under any such license, permit, franchise or other authorization.
The operations of the Business as heretofore or currently conducted were not and
are not in violation of, nor is the Company in default or violation under, any
Legal Requirement. The merchandise imported by the Company (i) has been
appraised in all material respects in accordance with section 402 of the Tariff
Act of 1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C. Section
1401a), (ii) has been classified in all material respects in accordance with the
Harmonized Tariff Schedule of the United States (pursuant to the publication
authority of 19 U.S.C. Section 1202), (iii) has not been imported in a manner
that is a material violation of 19 U.S.C. Section 1592, and (iv) has been
properly entered in all material respects in accordance with 19 U.S.C. Section
1484.
5.9. Non-Contravention, etc. Neither the execution and delivery of
this Agreement nor the consummation by the Company of any of the transactions
contemplated hereby does or will constitute, result in or give rise to (a) a
breach of or a default or violation under any provision of the Charter or
By-laws of the Company or (b) except as set forth on Schedule 5.9, (i) a breach
or violation under any provision of any Contract of the Company or a "change of
control" under any Contract of the Company, (ii) the acceleration of the time
for performance of any obligation under any such Contract, (iii) the imposition
of any Lien upon or the forfeiture of any asset of the Company (including any
such asset held under a lease or license), (iv) a requirement that any consent
under, or waiver of, any such Contract, Charter or By-law provision be obtained,
or (v) a violation of any Legal Requirement applicable to the Company.
5.10. Real Property.
5.10.1. Schedule 5.10 sets forth a list of the addresses of
each location at which any furniture, fixtures, equipment or inventory is
located or where the Company has an office or other place of business.
5.10.2. The Company does not and has never owned any real
property. Schedule 5.10 lists all contracts for the lease or sublease of real
property by the Company currently in effect (the "Leases"). The Company has made
available to the Buyer correct and complete copies of the Leases (as amended to
date). With respect to each Lease:
5.10.2.1 to the Knowledge of the Company, the Lease
is Enforceable (subject to Enforcement Exceptions);
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5.10.2.2 except as set forth on Schedule 5.10,
neither the Company nor, to the Knowledge of the Company, any other
party to the lease or sublease is in breach or default, and, to the
Knowledge of the Company, no event has occurred (including the failure
to obtain any consent) which, with notice or lapse of time or both,
would constitute a breach or default or permit termination,
modification, or acceleration thereunder or impair any right of the
Company to exercise and obtain the benefit of any options contained in
such Lease;
5.10.2.3 with respect to each Lease that is a
sublease, the representations and warranties set forth in subsections
5.10.2.1 through 5.10.2.2 above are true and correct with respect to
the underlying Lease;
5.10.2.4 to the Knowledge of the Company, all
facilities leased or subleased thereunder have received all approvals
of governmental authorities (including licenses and permits) required
in connection with the operation thereof and have been operated and
maintained in accordance with applicable laws, rules, and regulations;
5.10.2.5 to the Knowledge of the Company, all
facilities leased or subleased abut on and have direct vehicular access
to a public road or have access to a public road via a permanent,
irrevocable, appurtenant easement benefiting such facilities; and
5.10.2.6 to the Knowledge of the Company, all
facilities leased or subleased thereunder are in a good condition and
state of repair, ordinary wear and tear excepted.
5.11. Litigation, etc. Except as set forth on Schedule 5.11, (i)
there is no Action pending or, to the Knowledge of the Company, otherwise
threatened, against the Company or any property or assets of the Company and
(ii) the Company is not subject to any judgment, decree, writ, injunction or
order of any Governmental Authority. The Company has provided the Buyer with
complete and correct copies of all material written materials related to each
Action set forth on Schedule 5.11.
5.12. Intellectual Property Rights.
5.12.1. Owned Intangibles. Schedule 5.12(a) lists all
Intangibles that are owned by the Company. Except as disclosed on Schedule
5.12(a), (i) the Company possesses all right, title and interest in and to each
Intangible listed on Schedule 5.12(a), free and clear of any Lien other than
Permitted Liens, (ii) the ownership and uses, as the case may be, by the Company
of any Intangibles does not infringe any rights of any third party, (iii) such
Intangibles are not subject to any outstanding injunction, judgment, order,
decree or ruling, (iv) no Action is pending or, to the Knowledge of the Company,
threatened which challenges the legality, validity, enforceability, use or
ownership of such Intangibles, (v) there is no license or other Contractual
Obligation under which the Company is a licensor with respect to any such
Intangible (except as disclosed in Section 12 of Schedule 5.13), (vi) to the
Knowledge of the Company, no activity of any third party infringes upon or
misappropriates the rights of the Company with respect to any such Intangible,
(vii) to the Knowledge of the Company, all authorized third-party uses are being
-23-
exercised within the limitations set forth in the respective agreements, (viii)
the Company, in connection with any Debt, has not granted to any third party,
including Shanghai Commercial Bank, any security interest in any trademark
applications, and (ix) to the extent that any Intangible has been developed or
created by a third party for the Company, the Company has a written agreement
with such third party with respect thereto and the Company thereby either (A)
has obtained ownership of, or (B) has obtained a license (sufficient for the
conduct of the Business as currently conducted and as proposed to be conducted)
to use such Intangible.
5.12.2. Licensed Intangibles. Schedule 5.12(b) lists all
Intangibles not owned by the Company which are used in the Business, other than
commercially available computer software programs licensed under "shrink wrap"
or other off-the-shelf standard form software licenses, and lists each license
or other Contractual Obligation under which any such Intangible is used by the
Company (collectively, the "Licenses"). Additionally, to the Knowledge of the
Company, (i) the use by the Company of the Intangibles listed on Schedule
5.12(b) does not infringe any rights of any third party, (ii) each License is
Enforceable (subject to Enforcement Exceptions) and in full force and effect,
(iii) no party to a License is in breach or default thereof, (iv) the
Intangibles underlying each License are not subject to any outstanding
injunction, judgment, order, decree or ruling and (v) no activity of any third
party infringes upon the rights of the Company with respect to any of the
Licenses; and (vi) except as set forth on Schedule 5.12(b), nothing in any of
the Licenses listed on Schedule 5.12(b) prohibits the Company from transferring
its rights in the Licenses listed on Schedule 5.12(b), or otherwise limits the
Company's transfer of such rights.
5.12.3. Intangibles Disputes. Except as set forth on Schedule
5.12(c), there is no domestic or foreign action pending, and there is no demand,
proceeding, claim, assertion or dispute made or, to the Knowledge of the
Company, threatened by any third party which could have the effect of
diminishing any right, interest or title of the Company to the Intangibles
listed on Schedule 5.12(a). With respect to the items disclosed on Scheduled
5.12(c), the Company has taken, is taking and will take reasonable actions
necessary to protect its right, title and interest to each Intangibles owned by
the Company.
5.13. Contracts, etc. Set forth on Schedule 5.13 hereto is a true
and complete list of all of the following Contractual Obligations of the Company
(collectively, the "Contracts"):
5.13.1. all Contractual Obligations involving collective
bargaining agreements and other labor agreements, all employment or consulting
agreements, termination or severance agreements, change-of-control agreements
and all other plans, agreements, arrangements, practices or other Contractual
Obligations (other than any Company Employee Plan) respecting the terms and
conditions of employment, a consulting arrangement or Compensation or benefits,
including post-retirement benefits, to any of the current or former officers,
employees, consultants or independent contractors of the Company, except for
obligations arising generally in connection with employment at-will
relationships;
5.13.2. all Contractual Obligations under which the Company
is or may become obligated to pay any brokerage, finder's or similar fees or
expenses in connection with, or has incurred any severance pay or special
Compensation obligations which would become payable
-24-
by reason of, this Agreement or consummation of the transactions contemplated
hereby, other than any such fees payable to Xxxxxxx, Xxxxx & Co;
5.13.3. all Contractual Obligations (including options) to
sell or otherwise dispose of any assets other than in the Ordinary Course of
Business;
5.13.4. all Contractual Obligations under which the Company
has or will have after the Closing any liability or obligation to or for the
benefit of any stockholder, any Affiliate of any stockholder or any other
Affiliate of the Company;
5.13.5. all Contractual Obligations under which the Company
currently has or during the prior two years has had any liability or obligation
to or for the benefit of any stockholder, any Affiliate of any stockholder or
any other Affiliate of the Company;
5.13.6. all Contractual Obligations (other than Leases) under
which the Company has any liability or obligation for any Debt (including the
Bank Debt and the Senior Subordinated Notes) or constituting a Guarantee of any
liability or obligation of any Person, or under which any Person has any
liability or obligation constituting a Guarantee of any liability or obligation
of the Company (including partnership and joint venture agreements), in each
case having a value of at least $100,000 in any year or $1,000,000 in the
aggregate;
5.13.7. all Contractual Obligations under which the Company
is or may become obligated to pay any amount in respect of deferred or
conditional purchase price (other than ordinary trade terms), indemnification
obligations, purchase price adjustment or otherwise in connection with any (i)
acquisition or disposition of all or substantially all of the assets or
securities constituting a line of business of any Person, (ii) merger,
consolidation or other business combination, or (iii) series or group of related
transactions or events of a type specified in subclauses (i) and (ii);
5.13.8. all Contractual Obligations for the sale or purchase
of products or provision of services by or to the Company (other than ordinary
course purchase orders or sales orders) that (i) involve products or services
having a value of at least $100,000 in any year or $1,000,000 in the aggregate,
(ii) have a term extending more than one year after the Closing Date, or (iii)
to which the United States federal government or any state, local or foreign
government or any agency or department of any of the foregoing is a party;
5.13.9. all Contractual Obligations relating to advertising
having a value of at least $100,000 in any year or $1,000,000 in the aggregate;
5.13.10. all Contractual Obligations having a value of at
least $100,000 in any year or $1,000,000 in the aggregate under which any
tangible personal property is held or used by the Company;
5.13.11. all Contractual Obligations having a value of at
least $100,000 in any year or $1,000,000 in the aggregate under which the
Company is liable as lessor or lessee with respect to any tangible personal
property;
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5.13.12. all Contractual Obligations under which the Company
is a licensor or licensee (or a sublicensor or sublicensee) with respect to any
Intangibles or otherwise grants or receives any franchise or similar rights
having a value of at least $100,000 in any year or $1,000,000 in the aggregate;
5.13.13. all Contractual Obligations under which the Company
or any employee/designer is or may be prohibited or restricted from competing
(i) in any business, (ii) in any geographic area and/or (iii) for any current or
potential wholesale customers anywhere in the world;
5.13.14. all Contractual Obligations under which the Company
is a joint venturer or partner or under which the Company shares profits,
losses, costs, or liabilities with any other Person; and
5.13.15. all other Contractual Obligations (other than Leases
and ordinary course purchase orders or sales orders and other than Contractual
Obligations of the type described in Section 5.13.8) which individually have a
value in excess of $100,000 in any year or $1,000,000 in the aggregate.
Except as otherwise noted on Schedule 5.13 hereto, the Company has heretofore
made available to the Buyer a true and complete copy of each of the Contracts,
or a narrative description of those Contracts that are not in writing. Subject
to the Enforcement Exceptions, each Contract is Enforceable by the Company,
except for such failures to be so Enforceable as have not had and would not
reasonably be expected to have in the aggregate a Material Adverse Effect.
Except as set forth on Schedule 5.13 hereto, no breach or default by the Company
under any Contract has occurred and is continuing, and no event has occurred
which with notice or lapse of time would constitute such a breach or default. To
the Knowledge of the Company, except as set forth on Schedule 5.13 hereto, no
breach or default by any other Person under any Contract has occurred and is
continuing, and no event has occurred which with notice or lapse of time would
constitute such a breach or default.
5.14. Debt. The Company does not have any Debt outstanding other
than the Bank Debt, the Senior Subordinated Notes, capital leases set forth on
Schedule 5.14 hereto and Guarantees entered into in the Ordinary Course of
Business. The Company does not have any Loans outstanding.
5.15. Change in Condition. From and after the Balance Sheet Date,
the Company has conducted its Business only in the Ordinary Course of Business
and, except as set forth on Schedule 5.15, has maintained its relationships with
wholesale customers, distributors, suppliers, vendors, employees, agents and
others consistent with past practice. Without limiting the generality of the
foregoing, except as set forth on Schedule 5.15, since the Balance Sheet Date
the Company has not:
5.15.1. (i) entered into any transaction otherwise than on an
arms' length basis, (ii) entered into any transaction with any Affiliate, any of
its stockholders or any Affiliate thereof, or (iii) made or committed to make
any Distributions or any other payments or transfers
-26-
of assets to any stockholder or Affiliate of the Company other than Compensation
paid in the Ordinary Course of Business;
5.15.2. incurred or otherwise become liable in respect of any
Debt (other than Bank Debt and Guarantees issued in connection with new leases
of the Company), except for borrowings and deferred purchase payments in the
Ordinary Course of Business that do not exceed $4,000,000 in the aggregate;
5.15.3. created or suffered the imposition of any Lien (other
than Permitted Liens) upon any assets, whether tangible or intangible, of the
Company;
5.15.4. (i) sold, leased to others or otherwise disposed of
any of its assets other than in the Ordinary Course of Business, (ii) entered
into any Contractual Obligation relating to (A) the purchase of any capital
stock of or interest in any Person (other than in connection with the formation
of any wholly-owned Subsidiaries of the Company), (B) the purchase of assets
constituting a business or (C) any merger, consolidation or other business
combination, (iii) canceled or compromised any Debt or claim (other than
compromises of accounts receivable in the Ordinary Course of Business), (iv)
waived or released any right of material value or (v) instituted, settled or
agreed to settle any material Action;
5.15.5. (i) made any changes in the rate of Compensation of
any director, officer, employee, or consultant to, or agent of the Company,
except for changes in the Ordinary Course of Business to the Compensation of
Persons other than directors, officers and Affiliates of the Company, or (ii)
paid or agreed to pay any Compensation in connection with the transactions
contemplated hereby;
5.15.6. suffered any material damage, destruction or loss
(whether or not covered by insurance) to any of its assets, whether tangible or
intangible;
5.15.7. made any change in its customary methods of
accounting or accounting practices, pricing policies or payment or credit
practices, or granted any extensions of credit other than in the Ordinary Course
of Business;
5.15.8. made any change in the Company's cash management,
including with respect to payment of Debt, collection of receivables, payment of
payables or maintenance of working capital levels;
5.15.9. adopted, amended or terminated any Company Employee
Plan;
5.15.10. except in the Ordinary Course of Business, sold any
material amount of product of the Company or its Subsidiaries (i) with payment
terms longer than terms customarily offered by the Company or its Subsidiaries
for such product, (ii) at a discount from the listed price materially differing
from any discounts customarily offered by the Company or its Subsidiaries for
such product, or (iii) with shipment terms materially differing from the
shipment terms customarily offered by the Company or its Subsidiaries for such
product;
5.15.11. entered into any Contractual Obligation to do any of
the things referred to in clauses 5.15.1 through 5.15.10 above;
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5.15.12. otherwise taken any action of the type described in
Section 7.2 which, if such action were to occur after the date hereof, would be
in violation of such Section; or
5.15.13. suffered or incurred any Material Adverse Effect, nor
any event or events which in the aggregate would reasonably be expected to have
a Material Adverse Effect.
5.16. Insurance. Set forth on Schedule 5.16 is a list of all
liability (including public liability, products liability and automobile
liability), workers' compensation, property, casualty, directors and officers,
errors and omissions and other policies by which the Company has been insured
since March 31, 2002 (the "Insurance Policies"), copies of which have been made
available to the Buyer. All premiums for such policies have been timely paid,
such policies are in full force and effect and there has been no threatened
termination or modification of any such policy. The Company is not in default
under any such policy and no event has occurred which with notice or lapse of
time, or both, would permit termination or modification of any such policy. Such
list includes the type of policy, form of coverage, policy number and insurer,
coverage dates, named insured, limit of liability and deductible.
5.17. Tax Matters. Except as set forth on Schedule 5.17:
5.17.1. all income Tax returns and other material Tax Returns
that are required to have been filed by or with respect to the Company and each
Subsidiary have been duly and timely filed; all such Tax Returns were correct
and complete in all material respects; no written claim has been made and, to
the Knowledge of the Company, no other claim has been made by any taxing
authority in a jurisdiction where the Company or any Subsidiary does not file
Tax Returns that the Company or any Subsidiary is or may be subject to taxation
by that jurisdiction;
5.17.2. all Taxes shown as due and payable on any Tax Return
in respect of the Company and each Subsidiary have been paid in full;
5.17.3. the unpaid Taxes of the Company and each Subsidiary
did not, as of the date of the Balance Sheet Date, exceed the reserve for Taxes
on the Reference Balance Sheet.
5.17.4. no Tax Return referred to in Section 5.17.1 is
currently or has been (for a period with respect to which the statute of
limitations has not expired) the subject of examination or audit by the Internal
Revenue Service ("IRS") or the appropriate state, local or foreign taxing
authority;
5.17.5. no deficiencies have been asserted in writing, and,
to the Knowledge of the Company, no other deficiencies have been asserted or
assessments made in writing as a result of any examinations of the Tax Returns
referred to in Section 5.17.1 by the IRS and/or a state, local or foreign taxing
authority;
5.17.6. there is no action, suit, proceeding, claim,
deficiency or assessment pending (or, to the Knowledge of the Company,
threatened) with respect to any Taxes of the Company or any Subsidiary, and
there are no Liens on any of the assets of the Company or any Subsidiary that
arose in connection with any failure (or alleged failure) to pay any Tax other
than for current Taxes not yet due and payable;
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5.17.7. no waivers of statutes of limitations (other than
waivers no longer in force) have been given or requested in writing by or with
respect to any Taxes of the Company or any Subsidiary, and the Company and the
Subsidiaries are not currently a party to any agreement extending the time with
respect to a Tax assessment or deficiency;
5.17.8. no powers of attorney with respect to Taxes of the
Company or any Subsidiary are currently in force;
5.17.9. the Company does not have any equity interest in
another entity (other than the Subsidiaries and the Paradise Shoe Company, LLC)
that is classified for tax purposes as a corporation or partnership;
5.17.10. none of the Company and the Subsidiaries has any
liability for the Taxes of any Person (other than members of the affiliated
group of corporations of which the Company is the parent) under Treas. Reg.
Section 1.1502-6 (or any similar provision of state, local, or foreign law), as
a transferee or successor, by contract, or otherwise, and is not a party to or
bound by any Contractual Obligation relating to any allocation or sharing of
Taxes;
5.17.11. the Company has made available to the Buyer true and
complete copies of all material income Tax Returns filed by it or a Subsidiary
with taxing authorities for tax periods ending on or after March 31, 1999 and
all requests for extensions or waivers and notices or claims given or received
with respect thereto;
5.17.12. no consent to the application of Section 341(f) of
the Code has been made by or on behalf of the Company or any Subsidiary with
regard to any assets or property held, acquired or to be acquired by the Company
or a Subsidiary;
5.17.13. the Company is not as of the Closing, and has not
been during the five-year period ending on the Closing Date, a United States
real property holding corporation, and none of the securities issued by the
Company pursuant to this transaction either constitute United States real
property interest or are being issued in exchange for United States real
property interest, in each case as determined under Section 897 of the Code;
5.17.14. each of the Company and the Subsidiaries has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party;
5.17.15. none of the Company and the Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any agreement that
under any circumstances could obligate it to make any payments the deductibility
of which could be limited under Section 280G of the Code;
5.17.16. none of the Company and the Subsidiaries has engaged
in a transaction within the six-year period ending on the date of this Agreement
that, if such transaction were entered into on or after February 28, 2003, would
constitute a "listed transaction", a "transaction with contractual protection,"
a "loss transaction," a "transaction involving a brief asset holding period,"
or, except for transactions disclosed on the Tax Returns made available to Buyer
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pursuant to Section 5.17.11, a "transaction with a significant book-tax
difference," all within the meaning of Treasury Regulation Section 1.6011-4(b).
5.17.17. the accounting methods used by the Company and the
Subsidiaries in computing their tax liabilities have at all times complied with
Section 446 of the Code and the Treasury Regulations thereunder.
5.18. Employee Benefit Plans.
5.18.1. Disclosure. Set forth on Schedule 5.18(a) is a list
of all Employee Plans currently sponsored, maintained or contributed to by the
Company (each a "Company Employee Plan") identifying each Company Employee Plan
and whether any Company Employee Plan is intended to be "qualified" under
Section 401(a) of the Code or to constitute a Voluntary Employees Beneficiary
Association under Section 501(a)(9) of the Code. With respect to each Company
Employee Plan and each Employee Plan sponsored, maintained, or contributed to by
the Company within the six (6) year period ending on the Closing Date, the
Company has used its reasonable best efforts to make available, and to the
Company's Knowledge has made available to the Buyer true and complete copies of
each of the following: (i) where the Employee Plan has been reduced to writing,
the Employee Plan document together with all amendments; (ii) where the Employee
Plan has not been reduced to writing, a written summary of all material Employee
Plan terms; (iii) where applicable, any trust agreements, custodial agreements,
insurance policies, administration agreements and similar agreements, and
investment management or investment advisory agreements; (iv) any summary
Employee Plan descriptions, employee handbooks or similar employee
communications; (v) in the case of any Employee Plan that is intended to be
qualified under Section 401(a) of the Code, the most recent determination
letter, if any, from the IRS and, a copy of any request for such a determination
and nondiscrimination and coverage tests for the past six plan years; (vi) in
the case of any funding arrangement intended to qualify as a VEBA under Section
501(c)(9) of the Code, the IRS letter determining that it so qualifies; and
(vii) in the case of any Employee Plan for which Forms 5500 are required to be
filed, the six most recently filed Forms 5500, with schedules attached.
5.18.2. No Defined Benefit Pension Plans. None of the Company
nor any corporation, trust, partnership or other entity that would be considered
as a single employer with the Company under Section 4001(b)(1) of ERISA or
Sections 414(b), (c), (m) or (o) of the Code (an "ERISA Affiliate") has within
the six years preceding the date hereof maintained or been required to
contribute to any Employee Plan subject to Title IV of ERISA.
5.18.3. Employee Plan Qualification; Employee Plan
Administration; Certain Taxes and Penalties. Except as previously disclosed to
Buyer or as set forth on Schedule 5.18(a), (i) each Company Employee Plan that
is intended to be qualified under Section 401(a) of the Code is so qualified,
(ii) each Company Employee Plan and each other Employee Plan sponsored,
maintained or contributed to by the Company within the six year period ending on
the Closing Date, including any associated trust or fund, has been established,
registered, qualified, invested, operated and administered in all respects in
accordance with its terms and in compliance with ERISA, the Code and other
applicable Legal Requirements and (iii) the Company has not incurred, nor is it
reasonably expected to incur any liability to the Pension Benefit Guaranty
Corporation with respect to any Company Employee Plan (including any
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former Company Employee Plan) or any Employee Plan sponsored or maintained at
any time by any ERISA Affiliate (other than to pay premiums, contributions or
benefits in the ordinary course). Each Pension Plan that permits participants to
direct the investments thereof, if any, is intended to constitute an "ERISA
Section 404(c) Plan" within the meaning of Department of Labor Regulation
Section 1.404(c)-1. The Company's records accurately reflect the employment or
service histories of its employees, independent contractors, contingent workers
and leased employees, including their hours of service for the period beginning
January 1, 2000 through the date hereof and all such records are maintained in a
usable form. The assets of each Company Employee Plan are reported at their fair
market value on the financial statements of each such plan.
5.18.4. All Contributions and Claims and Premiums Paid.
Except as previously disclosed to Buyer or as set forth on Schedule 5.18(a), (i)
all required contributions, assessments and premium payments required to be made
by the Company on account of each Company Employee Plan have been made in a
timely fashion in accordance with ERISA, the Code and other applicable Legal
Requirements, (ii) there are no existing (or, to the Knowledge of the Company,
threatened) lawsuits, claims or other controversies relating to a Company
Employee Plan, other than routine claims for information or benefits in the
normal course, (iii) no Company Employee Plan is or within the last six calendar
years has been the subject of examination, audit, investigation or other
proceeding by a government agency or a participant in a government sponsored
amnesty, voluntary compliance or similar program or is any such examination,
audit, investigation, compliance or other proceeding pending or, to the
Knowledge of the Company, threatened, and (iv) to the Knowledge of the Company,
there exists no state of facts that after notice or lapse of time or both
reasonably could be expected to give rise to any situation referred to in (ii)
or (iii). Contributions or premiums will be paid or accrued by the Company for
the period up to the Closing even though not otherwise required to be made until
a later date.
5.18.5. Retiree Benefits; Certain Welfare Plans. Other than
as required under Section 601 et seq. of ERISA, no Company Employee Plan that is
a Welfare Plan provides benefits or coverage following retirement or other
termination of employment. Each welfare benefit trust or fund that constitutes
or is associated with a Company Employee Plan and that is intended to be exempt
from federal income tax under Section 501(c)(9) of the Code is so exempt. No
Company Employee Plan or is or was a "multiple employer welfare arrangement" (as
defined in Section 3(40) of ERISA).
5.18.6. Deferred Compensation Plans. Schedule 5.18(b) sets
forth (i) a list of each Company Employee Plan or former Company Employee Plan
that is a deferred compensation plan ("Company Deferred Compensation Plans"),
(ii) a list of the name of each employee of the Company and the amounts payable
to such employee as of March 31, 2003 under each Company Deferred Compensation
Plan and (iii) the balance, as of March 31, 2003 of all amounts held in the
rabbi trust established to fund the Company's obligations under the Company
Deferred Compensation Plans. Schedule 5.18(b) has been certified as true and
complete by the administrator of the Company Deferred Compensation Plans.
5.19. Environmental Matters. There is no Action pending or, to the
Knowledge of the Company, threatened, against the Company in respect of (a)
noncompliance by the Company with any Environmental Law or (b) release into the
environment of any pollutant, contaminant or
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toxic or hazardous material, substance or waste, whether solid, liquid or gas,
(each, a "Hazardous Substance") on, at or from any property presently or
formerly occupied or operated by the Company. Except as set forth on Schedule
5.19, there has been no release or threatened release of Hazardous Substances
on, upon, into or from any site currently or heretofore owned, leased or
otherwise used by the Company. Except as set forth on Schedule 5.19, there have
been no Hazardous Substances generated by the Company that have been disposed of
or come to rest at any site that has been included in any published U.S.
federal, state or local "superfund" site list or any other similar list of
hazardous or toxic waste sites published by any governmental authority in the
United States. Except as set forth on Schedule 5.19, there are no underground
storage tanks located on, no polychlorinated biphenyls ("PCBs") or
PCB-containing equipment used or stored on, and no hazardous waste as defined by
the Resource Conservation and Recovery Act, as amended, stored on, any site
owned or operated by the Company, except for the storage of hazardous waste in
quantities that are used by the Company in the Ordinary Course of Business.
Schedule 5.19 lists all environmental audits, inspections, assessments or
similar reports in the Company's possession or of which the Company has
Knowledge relating to the Company or any predecessor.
5.20. Labor Relations. The Company is not a party to any collective
bargaining agreement, contract or legally binding commitment to any trade union
or employee organization or group in respect of or affecting employees; the
Company is not currently engaged in any labor negotiation; the Company has not
engaged in any unfair labor practice, and, except as set forth on Schedule 5.20,
there is no pending or, to the Knowledge of the Company, threatened complaint
regarding any alleged unfair labor practices; there is no strike, labor dispute,
work slow down or stoppage pending or, to the Knowledge of the Company,
threatened against the Company; there is no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement which is pending or,
to the Knowledge of the Company, threatened against the Company; the Company has
not experienced any material work stoppage; and the Company is not the subject
of any union organization effort. To the Knowledge of the Company, goods
produced on the Company's behalf by contract manufacturers have been produced in
compliance with all labor laws in the host country, including those related to
minimum working age and the payment of wages and benefits. To the Knowledge of
the Company, no goods produced on the Company's behalf have been produced using
forced or prison labor.
5.21. Officers, Directors and Employees. Schedule 5.21 sets forth:
(a) the name, title and total Compensation of each officer of the Company; and
(b) the name, title and total Compensation of each other employee, consultant,
agent or other representative of the Company whose total Compensation for the
calendar year 2002 exceeded or whose current or committed annual rate of
Compensation (including bonuses and commissions) exceeds $250,000. Except as
contemplated by this Agreement, none of such persons has stated orally or in
writing to the Company that he or she is planning to terminate such person's
employment or service relationship with the Company. Schedule 5.21 also sets
forth the name of each director of the Company.
5.22. Customers and Suppliers. Schedule 5.22 contains a complete and
accurate list of the ten largest, in terms of volume, distributors, wholesale
customers, vendors and suppliers of the Company and its Subsidiaries. To the
Knowledge of the Company, no event has occurred that could adversely affect the
relations of the Company and its Subsidiaries with any material
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distributor, wholesale customer, vendor or supplier. Except as set forth on
Schedule 5.22, no distributor, wholesale customer, vendor or supplier (or former
distributor, wholesale customer, vendor or supplier) during the prior eighteen
(18) months has canceled, terminated or made any threat in writing or, to the
Knowledge of the Company, in any other manner to cancel or otherwise terminate,
any of its contracts, agreements or other arrangements with the Company or any
of its Subsidiaries or to decrease its usage or supply of the products or
services of or to the Company or its Subsidiaries. No significant vendor (or
group of vendors which in the aggregate is significant) of the Business has
given the Company notice or has taken any other action which has given the
Company any reason to believe that such vendor (or group of vendors) will cease
to supply or adversely change its price or terms to the Company of products or
services. The Company does not have any Knowledge to the effect that any current
distributor, wholesale customer, vendor or supplier may terminate or materially
alter its business relations with the Company or its Subsidiaries, either as a
result of the transactions contemplated hereby or otherwise. The Company has
timely paid all trade accounts to vendors and suppliers as they come due and in
accordance with their terms.
5.23. No Governmental Consent or Approval Required. Except as
disclosed on Schedule 5.23 and except for (a) filings required by the HSR Act or
(b) any authorizations, consents, approvals, permits, filings or notifications
as shall have been obtained or made at or prior to Closing, no authorization,
consent, approval or other order of, declaration to, or filing with, any
Governmental Authority by or on behalf of the Company is required for or in
connection with the authorization, execution, delivery and performance by the
Sellers or Company of their respective obligations under this Agreement.
5.24. Books and Records. The books and all corporate records
(including minute books and stock record books) and financial records of the
Company and its Subsidiaries are complete and correct in all material respects
and have been maintained in accordance with applicable Legal Requirements.
5.25. Acceleration, Etc. of Certain Payments. Except as set forth on
Schedule 5.25, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will (either
alone or in conjunction with any other event) result in, cause the accelerated
vesting or delivery of, or increase the amount or value of, any payment or
benefit to any director, officer, employee or independent contractor of the
Company.
5.26. Nondisclosed Payments. Since July 23, 1992, neither the
Company nor any director, officer, or employee of the Company, or, to the
Knowledge of the Company, any other Person associated with or acting for or on
behalf of the Company, has in violation of any Legal Requirement directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other similar payment to any person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of the Company or any Affiliate
of the Company, or (b) established or maintained any fund or asset that has not
been recorded in the books and records of the Company.
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5.27. Unsanctioned Boycotts; Transactions in Certain Countries.
Neither the Company nor any director, officer, agent, or employee of the
Company, or any other Person associated with or acting for or on behalf of the
Company, has, since the inception of its business, through the Company (a) taken
any action in furtherance of any boycott not sanctioned by the United States of
America; or (b) entered into any contract or agreement to conduct any
transaction with any Governmental Authority, agent, representative or resident
of, or any Person based or resident in, any of the following countries:
Afghanistan; Angola (UNITA); Burma (Myanmar); Cuba; Iran; Iraq; Libya; North
Korea; Sudan; Syria; and the Federal Republic of Yugoslavia (Serbia and
Montenegro).
5.28. Product and Service Warranties; Product Liability. Except as
set forth in Schedule 5.28, neither the Company nor any of its Subsidiaries
makes any express warranties or guaranties on its own behalf as to goods sold or
services provided by the Company or any of its Subsidiaries, and there is no
pending or, to the Knowledge of the Company, threatened claim alleging any
breach of any such warranty or guaranty.
5.29. Disclosure. No representation, warranty, or covenant made by
the Sellers or the Company in this Agreement (including the Schedules hereto)
contains an untrue statement of a material fact or omits to state a material
fact required to be stated herein or therein or necessary to make the statements
contained herein or therein not misleading.
5.30. Financial Advisory, Finder's or Broker's Fees. No financial
advisor, finder agent or similar intermediary other than Xxxxxxx, Xxxxx & Co.
has acted on behalf of the Sellers or the Company in connection with this
Agreement or the transactions contemplated hereby, and there are no brokerage
commissions, finders' fees or similar fees or commissions payable in connection
therewith based on any agreement, arrangement or understanding with the Sellers
or the Company or on any action taken by the Sellers or the Company other than
fees and commissions that will be paid to Xxxxxxx, Sachs & Co. pursuant to
Section 3.1.
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants that:
6.1. Corporate Matters, etc.
6.1.1. Organization, Power and Standing of the Buyer. The
Buyer is a corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has full power and
authority, corporate and otherwise, to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
6.1.2. Authorization and Enforceability. This Agreement has
been duly authorized, executed and delivered by the Buyer and, assuming the due
authorization, execution and delivery by the other parties hereto, is
Enforceable against, the Buyer.
6.1.3. Non-Contravention, etc. The execution, delivery and
performance of this Agreement by the Buyer and the consummation by the Buyer of
the Closing hereunder in accordance with the terms and conditions of this
Agreement does not and will not conflict with or result in the breach of any
terms or provisions of, or constitute a default under, any
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Contractual Obligation or the Charter or By-laws of the Buyer or a breach of any
Legal Requirement applicable to the Buyer. Assuming expiration or termination of
all applicable waiting periods under the HSR Act, no approval, consent, waiver,
authorization or other order of, and no declaration, filing, registration,
qualification or recording with, any Governmental Authority is required to be
obtained or made by or on behalf of the Buyer in connection with the execution,
delivery or performance of this Agreement and the consummation of the
transactions contemplated hereby, except (a) for items which shall have been
obtained or made on or prior to, and shall be in full force and effect at, the
Closing Date and (b) where failure to obtain such approval, consent, waiver,
authorization or other order, or to make such declaration, filing, registration,
qualification or recording, would not adversely affect the Buyer's ability to
consummate the Closing hereunder in accordance with the terms and conditions of
this Agreement and would not prevent the Buyer from performing in all material
respects any of its other obligations under this Agreement.
6.2. Financial Condition, etc. The Buyer has received (i) a
commitment letter (the "Credit Facility Commitment Letter") and engagement
letter (the "Credit Facility Engagement Letter"), each dated as of April 26,
2003, from SunTrust Bank ("SunTrust") and Xxxxxxx Xxxxx Capital ("Xxxxxxx
Xxxxx"), pursuant to which SunTrust and Xxxxxxx Xxxxx have committed, subject to
the terms and conditions set forth therein, to provide the Buyer at Closing debt
financing in connection with the transactions contemplated by this Agreement
(the "Credit Facility Financing") and (ii) a commitment letter (the "Bridge
Commitment Letter"), dated as of April 26, 2003, from SunTrust and Xxxxxxx
Xxxxx, pursuant to which SunTrust and Xxxxxxx Xxxxx have committed, subject to
the terms and conditions set forth therein, to provide the Buyer at Closing
bridge financing in connection with the transactions contemplated by this
Agreement (the "Bridge Financing"). A true and complete copy of the Credit
Facility Commitment Letter, the Credit Facility Engagement Letter and the Bridge
Commitment Letter have been furnished to the Company. Upon receipt of the funds
to be advanced pursuant to the Credit Facility Financing and the Bridge
Financing, the Buyer will have funds in an amount sufficient to pay the Cash
Equity Amount. The Buyer shall use its commercially reasonable efforts (a) to
sell $175,000,000 in principal amount of notes (the "Notes") (as contemplated by
the Bridge Commitment Letter) as soon as possible following the date hereof, and
if the Notes have not been sold by June 3, 2003, to borrow $175,000,000 from
SunTrust and/or Xxxxxxx Xxxxx as contemplated by the Bridge Commitment Letter as
soon as possible thereafter, and (b) to borrow up to $295,000,000 (or as much
thereof as shall be necessary, when combined with other funds available to the
Buyer, to close the transactions contemplated hereunder) from SunTrust and/or
Xxxxxxx Xxxxx (and other participating lenders) as contemplated by the Credit
Facility Commitment Letter as soon as possible following the date hereof.
6.3. Investment Intent. The Buyer is acquiring the Shares for its
own account for the purpose of investment and not with a view to, or for sale in
connection with, any distribution thereof. The Buyer can bear the risk of loss
of the entire value of its purchase of the Shares. The Buyer acknowledges that
the Shares have not been registered or qualified under any federal or state
securities laws, and may not be offered, sold, transferred, pledged,
hypothecated or otherwise assigned unless they are registered under the
Securities Act, and any applicable "Blue Sky" laws of any state or an exemption
from such registration is available. The Buyer has been provided access to such
information and documents regarding the Company as it has requested and has been
afforded an opportunity to ask questions of, and receive answers from,
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representatives of the Company concerning the terms and conditions of this
Agreement and the Shares.
6.4. Investigation; No Additional Representations; No Reliance,
etc. The Buyer acknowledges that neither the Sellers nor the Company or any of
their respective partners, directors, officers, employees, advisors, agents,
stockholders, consultants, investment bankers, brokers, representatives or
controlling persons, or any Affiliate of any of the foregoing, have made nor
shall any of them be deemed to have made, nor has the Buyer relied on, any
representation, warranty, covenant or agreement, express or implied, with
respect to the Company, the Business or the transactions contemplated by this
Agreement, other than those explicitly set forth herein. The Buyer acknowledges
and agrees that it (a) has made its own inquiry and investigation into, and
based thereon has formed an independent judgment concerning, the Business and
the Company, (b) has been furnished with or given adequate access to such
information about the Business and the Company as it has requested and (c) to
the extent it has deemed appropriate, has addressed in this Agreement, or the
agreements contemplated hereby, any matters arising out of its investigation and
the information provided to it.
6.5. Litigation. There is no Action pending or threatened in
writing (a) against the Buyer or any of its Affiliates which has had or would
reasonably be expected to have a material adverse effect on the ability of the
Buyer to perform its obligations under this Agreement or (b) which seeks
rescission of or seeks to enjoin the consummation of this Agreement or any of
the transactions contemplated hereby
6.6. Brokers, etc. Except for fees payable to the Buyer's financial
advisors, no broker, finder, investment bank or similar agent is entitled to any
brokerage or finder's fee in connection with the transactions contemplated by
this Agreement based upon agreements or arrangements made by or on behalf of the
Buyer or any of its Affiliates.
6.7. Oxford Securities. The Oxford Securities will be, when issued
in accordance with this Agreement or the Earnout Agreement, duly authorized,
validly issued, fully paid, and nonassessable and will not be issued in
violation of any preemptive rights.
6.8. Reports, Financial Statements and SEC Reports. The Buyer has
timely filed all required registration statements, prospectuses, reports,
schedules, forms, statements, and other documents required to be filed by it
with the United States Securities and Exchange Commission (the "SEC") since
January 1, 2000 (collectively, including all exhibits thereto, the "SEC
Reports"). The Buyer has previously furnished or made available to the Sellers
complete and accurate copies, as amended or supplemented, of the SEC Reports. As
of their respective dates, none of the SEC Reports contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the financial
statements (including the related notes) included in the SEC Reports presents
fairly, in all material respects, the consolidated financial position and
consolidated results of operations and cash flows of the Buyer and its wholly
owned subsidiaries as of the respective dates or for the respective periods set
forth therein, all in conformity with GAAP consistently applied during the
periods involved, except as otherwise noted therein, and subject, in the case of
the unaudited interim financial statements, to normal and recurring year-end
adjustments. All of such SEC Reports, as of their
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respective dates (and as of the date of any amendment to the respective SEC
Report), complied as to form in all material respects with the applicable
requirements of the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder.
6.9. Other Information. The Buyer has heretofore delivered to the
Sellers true and complete copies of Buyer's consolidated statements of
operations, of stockholders' equity (deficiency), and of cash flow for the nine
month period ended February 28, 2003 (the "Unaudited Buyer Financial
Information"). The Unaudited Buyer Financial Information has been prepared from,
and is in accordance with, the books and records of the Buyer, was prepared in
accordance with GAAP consistently applied throughout the periods specified
therein, and is correct and complete and presents fairly, in all material
respects, the financial position and results of operations of the Buyer and its
Subsidiaries for the periods specified therein, subject to the absence of notes
and normal year end adjustments. The Buyer makes no representation or warranty
with respect to any financial projection or other forward looking statement
contained in any information provided or disclosed to the Sellers.
6.10. Final Closing Statement. To the Knowledge of the Buyer, the
Final Closing Statement, as finalized in accordance with Section 3.6.4 hereof,
shall have been prepared, and shall be accurate and complete, in accordance with
the Working Capital Guidelines. For the purposes of this Section 6.10, any item
in the Final Closing Statement which has been accounted for in accordance with
the final decision of the Arbitrator pursuant to Section 3.6.4 shall be deemed
to be accurate and complete for purposes of this Agreement.
7. CERTAIN AGREEMENTS OF THE PARTIES.
7.1. Payment of Transfer Taxes and Other Charges. The Buyer and
Sellers shall be equally responsible for and shall jointly pay all stock
transfer taxes, real property transfer taxes, sales taxes, documentary stamp
taxes, recording charges and other similar Taxes (exclusive of any Taxes based
on income), if any, arising in connection with the transactions contemplated by
this Agreement. Each of the parties hereto shall prepare and file, and shall
fully cooperate with each other party with respect to the preparation and filing
of, any Tax Returns and other filings relating to any such Taxes or charges as
may be required.
7.2. Operation of Business, Related Matters. From the date hereof
through the earlier of the date this Agreement is terminated pursuant to Section
12 or the Closing Date, unless the Buyer shall otherwise agree and except as
otherwise permitted or required by this Agreement, the Company will (A) conduct
the Business in the Ordinary Course of Business and substantially in the same
manner as presently operated and use reasonable commercial efforts to maintain
the value of the Business as a going concern, (B) duly and timely file or cause
to be filed all reports and returns required to be filed with any Governmental
Authority and promptly pay or cause to be paid when due all taxes, assessments,
and governmental charges, including interest and penalties levied or assessed,
unless diligently contested in good faith by appropriate proceedings and (C)
manage its working capital, including cash, receivables, other current assets,
trade payables and other current liabilities, in a fashion consistent with past
practice, including by selling inventory and other property in an orderly and
prudent manner and paying outstanding obligations, trade accounts and other
Debts as they become due and in accordance with their
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terms. Except as set forth on Schedule 7.2, from the date hereof and prior to
the Closing Date, the Company shall not, without the prior written consent of
Buyer, which will not be unreasonably withheld or delayed:
7.2.1. enter into any transactions with any Seller or any
other Affiliate of the Company (other than as contemplated by this Agreement and
transactions in the Ordinary Course of Business by the Company);
7.2.2. make any changes in the rate of Compensation of any
director, officer, employee or agent of, or consultant to, the Company, except
for changes in the Ordinary Course of Business to the Compensation of Persons
other than directors, officers and Affiliates of the Company; provided, however,
that the Company may pay cash bonuses to the employees identified on Schedule
7.2 in the amounts specified therein immediately prior to, and in connection
with, the Closing.
7.2.3. incur any Debt except (i) capital leases listed on
Schedule 5.10 or capital leases which individually have a value of less than
$100,000 in any year or $1,000,000 in the aggregate, (ii) Guarantees issued in
connection with new leases of the Company and (iii) related to the Bank Debt and
the Senior Subordinated Notes, in each case, which is incurred in the Ordinary
Course of Business;
7.2.4. amend the Charter or By-laws of the Company or sell,
lease or otherwise dispose of any material assets except (i) for sales or other
dispositions of inventory or excess equipment in the Ordinary Course of Business
and (ii) as may otherwise be permitted by the terms of this Agreement;
7.2.5. (i) sell, lease to others or otherwise dispose of any
of its assets other than in the Ordinary Course of Business, (ii) enter into any
Contractual Obligation relating to (A) the purchase of any capital stock of or
interest in any Person (other than in connection with the formation of any
wholly-owned Subsidiaries of the Company), (B) the purchase of assets
constituting a business or (C) any merger, consolidation or other business
combination, (iii) cancel or compromise any Debt or claim (other than
compromises of accounts receivable in the Ordinary Course of Business), (iv)
waive or release any right of material value or (v) institute, settle or agree
to settle any material Action;
7.2.6. incur Liens, except for Permitted Liens and Liens
securing Debt permitted by Section 7.2.3;
7.2.7. make any change in the Company's customary methods of
accounting or accounting practices, pricing policies or payment or credit
practices, or grant any extensions of credit other than in the Ordinary Course
of Business;
7.2.8. make any change in the Company's cash management,
including with respect to payment of Debt, collection of receivables, payment of
payables or maintenance of working capital levels; provided, however, that
nothing herein shall prevent the Company from making any payments in respect of
the Bank Debt and the Senior Subordinated Notes;
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7.2.9. declare, set aside, or pay any dividend or make any
Distribution with respect to its capital stock or the Warrant or redeem,
purchase, or otherwise acquire any of its capital stock;
7.2.10. cancel or reduce the benefits under any of the
Insurance Policies (other than changes made in benefits in the Ordinary Course
of Business in connection with the renewals of Insurance Policies);
7.2.11. incur any Capital Expenditures other than in
accordance with the 2004 Capital Expenditures Budget and other than Capital
Expenditures less than $100,000 individually or $1,000,000 in the aggregate;
7.2.12. enter into any lease or sublease of real property
except as set forth on Schedule 7.2; or
7.2.13. enter into any Contractual Obligation to do any of
the actions referred to in this Section 7.2.
7.3. Preparation for Closing. The Buyer on the one hand and the
Company and the Sellers on the other hand will each use all commercially
reasonable efforts to bring about the fulfillment of each of the conditions
precedent to the obligations of the other set forth in this Agreement, subject
to the following:
7.3.1. Regulatory Compliance. Promptly upon execution and
delivery of this Agreement, each of the Buyer and the Company will use their
commercially reasonable efforts to prepare and file as promptly as possible, or
cause to be prepared and filed, with the appropriate Governmental Authorities, a
notification with respect to the transactions contemplated by this Agreement
pursuant to the HSR Act, supply all information requested by Governmental
Authorities in connection with the HSR Act notification and cooperate with each
other in responding to any such request. The Buyer shall be solely responsible
for all filing fees required to be paid in connection therewith. The parties
will use their respective commercially reasonable efforts and will cooperate
fully with one another to comply as promptly as practicable with all
governmental requirements applicable to the transactions contemplated by this
Agreement and to obtain promptly all approvals, orders, permits or other
consents of any applicable Governmental Authorities necessary for the
consummation of the transactions contemplated by this Agreement. Each of the
parties will furnish to the other parties and, upon request, to any Governmental
Authorities such information and assistance as may be reasonably requested in
connection with the foregoing, including by responding promptly to and complying
fully with any request for additional information or documents under the HSR
Act. The parties will use their respective commercially reasonable efforts to
resolve favorably any review or consideration of the antitrust aspects of the
transactions contemplated hereby by any Governmental Authority with jurisdiction
over the enforcement of any applicable antitrust laws. Notwithstanding the
foregoing, in connection with any filing or submission required or action to be
taken by a party to consummate the transactions contemplated by this Agreement,
(i) no party nor any Affiliate of any party is required to become subject to any
requirement or condition that it divest or "hold separate" any assets or
businesses or any similar transaction or restriction, (ii) no party nor any
Affiliate of any party is required to divest or hold separate or otherwise take
(or refrain from taking) or commit
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to take (or refrain from taking) any action that limits its freedom of action
with respect to, or its ability to retain, any of the businesses, product lines
or assets of such party or any of its Affiliates and (iii) no party nor any
Affiliate of any party is required to litigate or otherwise contest in any
judicial proceeding any adverse determination by any Governmental Authority with
respect to this Agreement or the transactions contemplated by this Agreement.
7.3.2. Consents, etc. Prior to the Closing Date, upon the
Buyer's written request and at the Company's expense, the Company shall use its
commercially reasonable efforts (but the Sellers shall have no obligation to pay
any fees or incur any expenses) to assist the Buyer in securing such written
consents or waivers under or with respect to the Contracts that the Buyer
reasonably requests in connection with the consummation of the transactions
contemplated by this Agreement, including written consents or waivers under or
with respect to the Contracts set forth on Schedule 7.3.2.
7.4. Further Assurances. Each party, upon the request from time to
time of any other party hereto after the Closing, and at the expense of the
requesting party but without further consideration, will take such actions as
may be necessary or reasonably requested to consummate the transactions
contemplated hereby in an orderly fashion.
7.5. Access to Properties and Records; Access to Customers,
Supplier, and Vendors. Subject to the provisions of Section 13.7, the Company
will permit the Buyer and its appropriate representatives to have reasonable
access, prior to the Closing Date, to the wholesale customers, employees,
properties and books and records of the Company, during normal working hours and
upon reasonable notice, to familiarize itself with the Company's respective
wholesale customers, properties, business and operating and financial
conditions; provided, however, that the Buyer and its representatives shall not
unreasonably disrupt the personnel and operations of the Company.
7.6. Stockholders Agreement. The Company and each of the Sellers
hereby agree to take all actions necessary to cause the Stockholders Agreement
to terminate as of the Closing Date (except for the indemnification provisions
set forth therein, which shall continue in full force and effect after the
Closing) and to thereafter be of no further force and effect. The Sellers shall
deliver written evidence reasonably satisfactory to the Buyer of such
termination. Notwithstanding any provision in this Agreement or the Stockholders
Agreement, no provision in the Stockholders Agreement shall limit in any way the
rights of any Buyer Indemnitee or the obligation of any Seller pursuant to
Article 10 of this Agreement.
7.7. Sellers' Representatives. Without any further act of the
Sellers and unless otherwise specified herein, Xxxxx X. Xxxx and S. Xxxxxxx
Xxxxxxxx (acting jointly and not separately) are hereby constituted and
appointed by the Sellers as the representatives of the Sellers (the "Sellers'
Representatives") to act as agents for and on behalf of the Sellers, to give and
receive notices and communications, to agree to, negotiate or enter into any
settlement, compromise or submission to arbitration of any claim hereunder, or
the determination of any other matter requiring consent or approval of the
Sellers or their assigns pursuant to this Agreement, the Earnout Agreement, the
Escrow Agreement, the Registration Rights Agreement or any other agreement
entered into in connection with the transactions contemplated by this Agreement.
Unless otherwise specified herein, the Buyer and the Company shall be fully
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authorized to act on the joint written consent or approval of the Sellers'
Representatives. The identity of the Sellers' Representatives may be changed by
the Required Sellers from time to time.
7.8. Real Property Holding Corporation Certificate. The Company
shall provide the Sellers with a certificate pursuant to Treas. Reg. Sections
1.897-2(h) and 1.1445-2(c)(3) (in a form reasonably satisfactory to the Sellers)
to the effect that the Company is not, and has not been at any time during the
previous five years, a United States real property holding corporation within
the meaning of Section 897 of the Code. The certificate shall be signed by a
duly authorized officer of the Company under penalties of perjury and dated as
of the Closing Date. In connection with such certification, the Company shall
comply with the notification requirements of Treas. Reg. Section 1.897-2(h)(2).
The Sellers shall provide such certificate to the Buyer in order for the Buyer
not to withhold tax from the sales proceeds under Section 897 and Section 1445
of the Code.
7.9. Indemnification of Directors, Officers and Employees. The
parties agree that (a) at the Closing, the Buyer shall pay to the Company (or to
a third party at the direction of the Company) pursuant to Section 3.1(iii) an
amount sufficient to enable the Company to purchase "tail" coverage for a period
of six years under the directors and officers liability insurance policy of the
Company, as in effect on the Closing Date, and (b) following the Closing, the
Company shall, and the Buyer shall cause the Company to, ensure that no change
will be made to the Company's Charter or By-laws that would adversely affect any
director's or officer's right to indemnification under the Delaware General
Corporation Law or otherwise with respect to any periods prior to the Closing.
This Section 7.9 shall be for the benefit of, and shall be enforceable by, the
individuals who were directors, officers and employees of the Company prior to
the Closing Date, and their respective heirs and estates. Notwithstanding any
provision in this Agreement or the insurance policies contemplated by this
Section 7.9, no provision or indemnification right in such insurance policies
shall limit in any way the right of any Buyer Indemnitee or the obligation of
any Seller pursuant to Article 10 of this Agreement.
7.10. Tax Matters.
7.10.1. Tax Periods Ending on or Before the Closing Date.
Subject to Section 7.10.3, the Buyer shall prepare or cause to be prepared and
file or cause to be filed all Tax Returns of the Company and the Subsidiaries
for all periods ending on or prior to the Closing Date which are due to be filed
after the Closing Date. The Sellers shall reimburse the Buyer, on a pro rata
basis according to each Seller's Seller's Percentage, for Taxes of the Company
and the Subsidiaries with respect to such periods reflected on a Final Tax
Return (as defined below) to the extent such Taxes are not reflected in the
reserve for Tax liability (excluding any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) shown on the face of
the Final Closing Statement. The Sellers shall make such reimbursement within
fifteen (15) days after the later to occur of (a) the date an applicable Final
Tax Return becomes final pursuant to Section 7.10.3 hereof, or (b) the date the
Final Closing Statement becomes final pursuant to Section 3.6.4 hereof. All Tax
Returns will be prepared in a manner reasonably consistent with prior practice
of the Company and the Subsidiaries, to the extent such prior practices are in
compliance with all applicable Legal Requirements.
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7.10.2. Tax Periods Beginning Before and Ending After the
Closing Date. Subject to Section 7.10.3, the Buyer shall prepare or cause to be
prepared and file or cause to be filed any Tax Returns of the Company and the
Subsidiaries for Tax periods which begin before the Closing Date and end after
the Closing Date. The Sellers shall pay to the Buyer, on a pro rata basis
according to each Seller's Seller's Percentage, an amount equal to the portion
of such Taxes which relates to the portion of such Taxable period ending on the
Closing Date reflected on a Final Tax Return to the extent such Taxes are not
reflected in the reserve for Tax liability (excluding any reserve for deferred
Taxes established to reflect timing differences between book and Tax income)
shown on the face of the Final Closing Statement. The Sellers shall make such
reimbursement within fifteen (15) days after the later to occur of (a) the date
an applicable Final Tax Return becomes final pursuant to Section 7.10.3 hereof,
or (b) the date the Final Closing Statement becomes final pursuant to Section
3.6.4 hereof. For purposes of this Section 7.10.2, in the case of any Taxes that
are imposed on a periodic basis and are payable for a Taxable period that
includes (but does not end on) the Closing Date, the portion of such Tax which
relates to the portion of such Taxable period ending on the Closing Date shall
(x) in the case of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Taxable period
multiplied by a fraction the numerator of which is the number of days in the
Taxable period ending on the Closing Date and the denominator of which is the
number of days in the entire Taxable period, and (y) in the case of any Tax
based upon or related to income or receipts, be deemed equal to the amount which
would be payable if the relevant Taxable period ended on the Closing Date. Any
credits relating to a Taxable period that begins before and ends after the
Closing Date shall be taken into account as though the relevant Taxable period
ended on the Closing Date. All determinations necessary to give effect to the
foregoing allocations shall be made in a manner consistent with prior practice
of the Company and the Subsidiaries.
7.10.3. Tax Returns. Not less than sixty (60) days prior to
the due date (including extensions) of any Tax Return to be filed by the Buyer
pursuant to Section 7.10.1 or 7.10.2, the Buyer shall deliver to the Sellers'
Representatives a copy of such Tax Return (a "Proposed Tax Return") for their
review and comment. The Sellers' Representatives shall have fifteen (15) days
after the date of receipt of the Proposed Tax Return (the "Tax Review Period")
to give the Buyer written notice of any disputed amounts or positions (each a
"Tax Item") with respect to such return. If the Sellers' Representatives fail to
give written notice of any disputed Tax Item with respect to a Proposed Tax
Return during the Tax Review Period, then the Proposed Tax Return shall become a
Final Tax Return (as defined below) for purposes hereof. If the Sellers'
Representatives give the Buyer written notice of any disputed Tax Item within
the Review Period, the Sellers' Representatives and the Buyer shall attempt in
good faith to agree on any adjustments that should be made to the Proposed Tax
Return. If the Sellers' Representatives and the Buyer are unable to resolve any
disputed Tax Item within twenty (20) days after the Sellers' Representatives
receive the Proposed Tax Return, the Buyer and the Sellers' Representatives
shall submit (as soon as practicable, but in any event, within two (2) days of
the end of such 20 day period) their final calculations of the Tax Item in
dispute to an arbitrator (the "Tax Arbitrator") who shall be, or shall have
previously been, a tax partner in a nationally recognized independent accounting
firm and who shall be appointed by agreement of the Buyer and the Sellers'
Representatives or, failing such agreement, by the AAA in accordance with the
Arbitration Rules of the AAA. The Arbitrator shall review the calculations of
the Buyer and the Sellers' Representatives with respect to the disputed Proposed
Tax Return
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and make a selection for each disputed Tax Item as to which of the final
calculations presented to it is, in the aggregate, more accurate. The decision
of the Arbitrator shall be made in accordance with the Arbitration Rules and in
accordance with the terms of this Agreement. The decision of the Arbitrator
shall be made within twenty (20) days after being engaged, or as soon thereafter
as reasonably practicable, and shall be final and binding on the parties. The
costs and expenses of the Arbitrator shall be paid by the party whose proposed
calculations are, in the aggregate, more accurate, or, if it is not clear which
party's calculations are, in the aggregate, more accurate (as determined by the
Arbitrator), the costs and expenses shall be shared equally by the Buyer on the
one hand and the Sellers, on a pro rata basis based on each Seller's Seller's
Percentage, on the other hand. The Buyer and the Sellers' Representatives shall
make available to the Arbitrator all relevant books and records relating to the
calculations submitted and all other information reasonably requested by the
Arbitrator. A Proposed Tax Return shall be revised, if necessary, to reflect the
final determination of the Tax Items with respect to such return (the final form
of the Proposed Tax Return, including any revisions which are made thereto
pursuant to this Section 7.10.3, is referred to herein as a "Final Tax Return").
7.10.4. Tax Reimbursements by Buyer. The Buyer shall
reimburse the Sellers, on a pro rata basis according to each Seller's Seller's
Percentage, the amount, if any, by which the reserves shown on the face of the
Final Closing Statement with respect to Taxes exceed the aggregate amount
actually paid by or on behalf of the Company and/or the Subsidiaries for Taxes
that are reflected on a Final Tax Return for all Tax periods contemplated by
Section 7.10.1 and for the portion of such Tax periods contemplated by Section
7.10.2 ending on the Closing Date. The Buyer shall make such reimbursement
within fifteen (15) days after the later to occur of (a) the date an applicable
Final Tax Return becomes final pursuant to Section 7.10.3 hereof, or (b) the
date the Final Closing Statement becomes final pursuant to Section 3.6.4 hereof.
7.10.5. Tax Refunds. The Sellers shall be entitled to all
refunds of Taxes of the Company, and any amounts credited against Taxes to which
the Company becomes entitled, to the extent such refunds or credits relate to
Tax periods or portions thereof that end on or before the Closing Date. The
Sellers shall not be entitled to any refunds or credits attributable to
carrybacks from Tax periods or portions thereof that began after the Closing
Date. If the Buyer or the Company receives any refund or credit to which the
Sellers are entitled under this Section 7.10.5, the Buyer shall within fifteen
(15) days of receipt pay in cash (or cause the Company to pay) the amount of
such refund or credit to the Sellers in accordance with each Seller's respective
Seller's Percentage.
7.10.6. Cooperation. The Sellers and the Buyer shall
cooperate fully with each other and make available to each other in a timely
fashion such Tax data and other information as may be reasonably required by the
Sellers or the Buyer for the preparation of any Tax Returns required to be
prepared and filed by the Required Sellers or the Buyer hereunder, or in
connection with the preparation or filing of any election, consent,
certification, information statement or similar document or in preparing for any
audits or disputes with any taxing authorities after the Closing Date. The Buyer
will cause the Company to provide to the Sellers full access, at any reasonable
time and from time to time, at the business location at which the books and
records are maintained, to such Tax data of the Company as the Sellers may from
time to time reasonably request. The Buyer agrees to retain all books and
records provided to it with respect to Tax matters pertinent to Company or the
Sellers relating to any taxable period
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beginning before the Balance Sheet Date until the expiration of the applicable
statute of limitations (and, to the extent notified by a Seller, any extensions
thereof) of the respective taxable periods. The Buyer and each Seller further
agrees, upon request, to use their commercially reasonable efforts to obtain any
certificate or other document from any Governmental Authority or any other
Person as may be necessary to mitigate, reduce or eliminate any Tax that could
be imposed (including, but not limited to, with respect to the transactions
contemplated hereby).
7.11. Employee Benefits.
(a) The Buyer agrees that for purposes of participation,
vesting and accrual of vacation time and other benefits, as applicable (i)
service under any qualified defined contribution plans of the Company shall be
treated as service under the Buyer's qualified defined contribution plans, and
(ii) service under any other employee benefit plans of the Company shall be
treated as service under any corresponding employee benefit plans maintained by
the Buyer. The Buyer shall cause the Buyer's welfare benefit plans that cover
the Company's employees after the Closing to (i) waive any waiting period and
restrictions and limitations for pre-existing conditions or insurability (except
for pre-existing conditions that were excluded under the Company's welfare
benefit plans), and (ii) cause any deductible, co-insurance or maximum
out-of-pocket payments made by the Company's employees under the Company's
welfare benefit plans to be credited to such employees under the Buyer's welfare
benefit plans, so as to reduce the amount of any deductible, co-insurance or
maximum out-of-pocket payments payable by the Company's employees under the
Buyer's welfare benefit plans.
(b) Following the Closing, the Buyer shall cause the
Company to continue the employment of those individuals listed on Schedule
7.11(b) hereto until at least the first anniversary of the Closing Date on terms
at least as favorable as the terms of employment for such individuals as of the
date hereof. Notwithstanding the foregoing, the Company shall retain the right
to terminate the employment of any such individual for appropriate cause.
7.12. No Solicitation; Acquisition Proposals. The Company and the
Sellers agree that from the date hereof through the Closing Date or the date of
termination of this Agreement in accordance with Section 12.1, as the case may
be, neither the Company nor any Seller will, directly or indirectly, through any
officer, director, employee, leased employee, partner, stockholder, agent, or
Affiliate or otherwise, except in furtherance of the transactions contemplated
by this Agreement (a) solicit, initiate, or encourage submission of proposals or
offers from any Person relating to any transactions contemplated herein or to
the direct or indirect purchase of a material amount of the assets of, or any
equity interest in, or any merger, consolidation, or business combination with,
the Company (collectively, an "Acquisition Proposal"), (b) participate in any
discussions or negotiations regarding, or furnish to any other Person any
information with respect to, or otherwise cooperate in any way with or assist,
facilitate, or encourage, any Acquisition Proposal by any Person, (c) enter into
any agreement, arrangement, or understanding with respect to an Acquisition
Proposal, or (d) sell, transfer, or otherwise dispose of, or enter into any
agreement, arrangement, or understanding with respect to, any interest in the
assets, capital stock or other equity interests of the Company.
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7.13. Audit of Year-End Financial Statements. If requested by the
Buyer, the Company and the Sellers shall (a) use their commercially reasonable
efforts to cause the Company's independent auditors (the "Company Auditors") to
deliver such representations, reports, and consents as are requested by the
Buyer in order to comply with the rules and regulations of the SEC and other
Legal Requirements applicable to the Buyer and (b) if any pro forma financial
statements are required by such SEC rules and regulations or other Legal
Requirements (the "Required Pro Forma Financials"), use their commercially
reasonable efforts to, and use their commercially reasonable efforts to cause
the Company Auditors to, assist with and facilitate the completion and audit of
such Required Pro Forma Financials prior to the sixtieth (60th day) following
the Closing Date.
7.14. Interim Financials; Cooperation with Financing. During the
period prior to the Closing Date, the Company shall provide to the Buyer
consolidated monthly balance sheets, statements of operations, stockholders'
equity (deficiency), and cash flow within 10 Business Days after the end of each
month. Further, the Company shall provide, and shall cause the Subsidiaries to
provide, all reasonable cooperation in connection with the arrangement of the
Buyer's financing including (a) promptly providing to the Buyer's financing
sources all material financial information in their possession with respect to
the Company and the transactions contemplated by this Agreement reasonably
requested by the Buyer, including information and projections prepared by the
Company relating to the Company and the transactions contemplated in this
Agreement, (b) causing the Company's senior officers and other Company
representatives to be reasonably available to the Buyer's financing sources in
connection with such financing, to reasonably participate in due diligence
sessions and to reasonably participate in presentations related to such
financing, including "road show" presentations to rating agencies, potential
lenders and other investors, (c) reasonably assisting in the preparation of one
or more appropriate offering documents and assisting the Buyer's financing
sources in preparing other appropriate marketing materials, in each case to be
used in connection with such financing and (d) providing necessary consents and
approvals reasonably requested by the Buyer or the Buyer's financing sources in
connection with such financing.
7.15. Notification of Certain Matters. During the period prior to
the Closing Date, the Company shall give prompt written notification to the
Buyer of (a) the occurrence, or failure to occur, of any event that would be
likely to cause any representation or warranty made by such party contained in
this Agreement to be materially untrue or inaccurate and (b) any failure of the
Company or the Sellers, or of any officer, director, employee or agent thereof,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder. No such notification will have any effect
with respect to claims for indemnification pursuant to Section 10 for the
purpose of determining satisfaction of the conditions to Closing set forth in
this Agreement. For purposes of determining whether there is any
misrepresentation or breach of a representation, warranty, covenant or agreement
by the Sellers or the Company hereunder, the Schedules delivered by the Sellers
and the Company shall be deemed to include only the information contained
therein on the date of this Agreement.
7.16. Accounts Receivables Collections. Following the Closing, the
Buyer shall cause the Company to use its commercially reasonable efforts
(consistent with past practice) to collect all accounts receivables which are
outstanding as of the Closing Date (the "Closing Date Accounts Receivables") (it
being understood that the Closing Date Accounts Receivables shall
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be reflected on the Final Closing Statement). Any Closing Date Accounts
Receivables which remain unpaid as of the date of the determination of the Final
Closing Statement in accordance with Section 3.6 hereof and which, in accordance
with the Working Capital Guidelines, shall be fully reserved for on the Final
Closing Statement shall be referred to herein as the "Uncollected Receivables."
Within five (5) Business Days of receipt by the Buyer of any portion of the
Uncollected Receivables, the Buyer shall pay to the Sellers such amount received
on a pro rata basis according to each Seller's Seller's Percentage.
7.17. Oxford Disposition Legal Opinion. If any Seller proposes to
make a disposition of Oxford Securities in accordance with Section 4.8.10(ii)
herein, the Buyer shall use its commercially reasonable efforts to obtain the
opinion of counsel to the Buyer contemplated by Section 4.8.10(ii)(B) herein.
7.18. Employee Cash Bonus Plan. The parties agree that immediately
prior to or at the Closing, the Company shall adopt a written employee cash
bonus plan (the "Plan"), which shall be in form and substance reasonably
satisfactory to the Buyer and which will be administered by the President of the
Company. Pursuant to the terms of the Earnout Agreement, certain funds which
become due and payable under the Earnout Agreement shall be paid to the Plan and
distributed under the terms of the Plan.
8. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE BUYER. The obligations of
the Buyer to consummate the Closing under this Agreement are subject to the
satisfaction, at or prior to the Closing, of all of the following conditions,
compliance with which, or the occurrence of which, may be waived prior to the
Closing by the Buyer in its sole discretion:
8.1. Representations, Warranties and Covenants. All representations
and warranties of the Sellers and the Company contained in this Agreement that
are qualified by materiality shall be true and correct in all respects and all
representations and warranties of the Sellers and the Company contained in this
Agreement that are not qualified by materiality shall be true and correct in all
respects except, in both cases, for inaccuracies that in the aggregate do not
have, and would not reasonably be expected to have, a Material Adverse Effect,
in either case as of the Closing Date as if made on the Closing Date, except for
(a) changes expressly permitted or required by this Agreement and (b) those
representations and warranties which address matters only as of a particular
date (which, as of such date, shall be true and correct to the same extent as
set forth above). The Sellers and the Company shall have performed and
satisfied, in all material respects, all covenants and agreements required by
this Agreement to be performed or satisfied by them at or prior to the Closing.
The Sellers shall have furnished to the Buyer a certificate, signed by or on
behalf of each of the Sellers, dated as of the Closing Date, to the effect that
the conditions specified in this Section, to the extent relating to
representations, warranties, covenants and agreements of the Company and such
Seller, have been satisfied.
8.2. Legality; Governmental Authorization; Litigation. The
acquisition of the Shares and the consummation of the other transactions
contemplated hereby, shall not be prohibited by any Legal Requirement, and all
necessary filings, if any, pursuant to the HSR Act shall have been made and all
applicable waiting periods thereunder shall have expired or been terminated. No
nonfrivolous Action shall have been instituted at or prior to the Closing by any
Person other than a party hereto or any Affiliate thereof, or instituted by any
Governmental Authority, relating
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to this Agreement or any of the transactions contemplated hereby, the result of
which would prevent or make illegal the consummation of any such transaction.
8.3. General. All corporate proceedings required to be taken on the
part of the Company in connection with the transactions contemplated by this
Agreement shall have been taken. The Buyer shall have received copies of such
officers' certificates, good standing certificates, incumbency certificates and
other customary closing documents as the Buyer may reasonably request in
connection with the transactions contemplated hereby.
8.4. Opinions of Counsel. The Sellers shall have delivered to the
Buyer the opinions, dated the Closing Date, of Xxxxxx & Bird LLP and Ropes &
Xxxx, special counsel to the Company and certain Sellers, in forms reasonably
satisfactory to the Buyer.
8.5. Pay-Off Letter for the Bank Debt. The Company and the Buyer
shall have received a letter from Shanghai Commercial Bank stating (a) the
aggregate amount of any outstanding Bank Debt as of the Closing Date (including
all prepayment premiums and penalties and fees and expenses associated with
prepayment), (b) that, if such aggregate amount so identified is paid to
Shanghai Commercial Bank on the Closing Date, the Bank Debt will be paid in full
(including all prepayment premiums and penalties and fees and expenses
associated with prepayment) and (c) that, if such aggregate amount so identified
is paid to Shanghai Commercial Bank on the Closing Date, Shanghai Commercial
Bank will release any and all Liens and guaranties that it or its Affiliates may
have with respect to the Company or any of its assets and will take all actions
necessary to effectuate such release (including executing and delivering to the
Buyer all reasonably necessary documentation in form suitable for filing with
all appropriate government Persons).
8.6. Pay-Off Letter for the Senior Subordinated Notes. The Company
and the Buyer shall have received a letter from each Subordinated Lender stating
(a) the prepayment amount of the outstanding Senior Subordinated Notes held by
such Subordinated Lender as of the Closing Date (including all prepayment
premiums and penalties and fees and expenses associated with prepayment), (b)
that, if such aggregate amount so identified is paid to such Subordinated Lender
on the Closing Date, such Senior Subordinated Notes will be paid in full
(including all prepayment premiums and penalties and fees and expenses
associated with prepayment) and (c) that, if such prepayment amount so
identified is paid to such Subordinated Lender on the Closing Date, such
Subordinated Lender will release any and all Liens and guaranties that it or its
Affiliates may have with respect to the Company or any of its assets and will
take all actions necessary to effectuate such release (including executing and
delivering to the Buyer all reasonably necessary documentation in form suitable
for filing with all appropriate government Persons).
8.7. Governmental Consents and Approvals. The Company shall have
received, each in form and substance reasonably satisfactory to the Buyer, all
authorizations, consents, orders and approvals of Governmental Authorities set
forth on Schedule 8.7.
8.8. Consents. The Company shall have received, each in form and
substance reasonably satisfactory to the Buyer, such written consents or waivers
under or with respect to the Contracts set forth on Schedule 7.3.2.
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8.9. Management Agreement. The Management Agreement shall have been
terminated, and the Buyer shall have received written evidence of such
termination reasonably satisfactory to Buyer.
8.10. Resignation of Directors and Officers. The Buyer shall have
received the resignation, effective upon the Closing, of all officers and
directors of the Company specified in writing at least five Business Days prior
to the Closing by the Buyer.
8.11. Escrow Agreement. Each Seller shall have executed and
delivered to the Buyer the Escrow Agreement, in substantially the form as set
forth in Exhibit 3.1.
8.12. Earnout Agreement. Each Seller shall have executed and
delivered to the Buyer the Earnout Agreement, in substantially the form as set
forth in Exhibit 3.3.
8.13. Non-Competition Agreements. Each of S. Xxxxxxx Xxxxxxxx and
Xxxxx Xxxxx Gasperina shall have executed and delivered to the Buyer a
Noncompetition Agreement, in substantially the form as set forth in Exhibit
8.13(a), each of Xxxxxx Beach Blues, Inc. and Xxxxxx Xxxxxxx shall have executed
and delivered to the Buyer a Noncompetition Agreement, in substantially the form
as set forth in Exhibit 8.13(b), each of Xxxx Xxxxx and Whole Duty Investment,
LTD shall have executed and delivered to the Buyer a Nonsolicitation and
NonDisclosure Agreement, in substantially the form as set forth in Exhibit
8.13(c), and SKM-TB, LLC shall have executed and delivered to the Buyer a
Nonsolicitation and Nondisclosure Agreement, in substantially the form as set
forth in Exhibit 8.13(d) (together, the "Noncompetition / Nonsolicitation and
Nondislosure Agreements").
8.14. Employment and Consulting Agreements. At the written request
of the Buyer, the Company shall have terminated (effective as of the Closing
Date) the respective employment and/or consulting agreements currently in effect
between the Company and each of S. Xxxxxxx Xxxxxxxx, Xxxxx Xxxxx Gasperina,
Xxxxxx Xxxxxxx, Xxx X. Kong and Xxxx Xxxxx. In addition, S. Xxxxxxx Xxxxxxxx
shall have entered into an employment agreement with the Company, in
substantially the form as set forth in Exhibit 8.14(a); Xxxxx Xxxxx Gasperina
shall have entered into an employment agreement with the Company, in
substantially the form as set forth in Exhibit 8.14(b); Xxx X. Kong shall have
entered into an employment agreement with the Company, in substantially the form
as set forth in Exhibit 8.14(c); Xxxxxx Xxxxxxx shall have entered into a
consulting agreement with the Company, in substantially the form as set forth in
Exhibit 8.14(d); and Xxxx Xxxxx shall have entered into a consulting agreement
with the Company, in substantially the form as set forth in Exhibit 8.14(e).
8.15. Cancellation of Warrant. The Company and the holder of the
Warrant shall have taken all necessary actions to terminate the Warrant as of
the Closing, and the Buyer shall have received written evidence of such
termination reasonably satisfactory to Buyer.
8.16. Transfer of Shares. The Buyer shall have received from the
Sellers duly executed stock certificates evidencing all of the Shares.
8.17. Statements for Section 3.1 Fees and Expenses. The Company
shall have caused to be delivered to the Company and the Buyer statements (or
letters) related to the payments contemplated by Section 3.1(i), Section 3.1(ii)
and Section 3.1(iii), which statements (or letters)
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shall acknowledge that, upon payment of the amounts specified therein, such
party shall have been paid in full by the Company and the Sellers.
8.18. Sellers' Release. Each of the Sellers shall have delivered to
the Buyer a release executed by such Seller in the form of Exhibit 8.18.
8.19. Termination of Financing. The Bridge Commitment Letter and the
Credit Facility Commitment Letter shall not have been terminated by SunTrust or
Xxxxxxx Xxxxx; provided, that the Buyer shall not be entitled to rely on this
Section 8.19 unless it has fully complied with the provisions of Section
13.13.1.
8.20. Registration Rights Agreement. Each Seller shall have executed
and delivered to the Buyer a Registration Rights Agreement (the "Registration
Rights Agreement") in substantially the form as set forth in Exhibit 8.20.
9. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE COMPANY AND THE SELLERS.
The obligations of the Company and the Sellers to consummate the Closing under
this Agreement are subject to the satisfaction, at or prior to the Closing, of
all of the following conditions, compliance with which, or the occurrence of
which, may be waived prior to the Closing by the Company and the Sellers in
their sole discretion:
9.1. Representations, Warranties and Covenants. All representations
and warranties of the Buyer contained in this Agreement that are qualified by
materiality shall be true and correct in all respects and all representations
and warranties of the Buyer contained in this Agreement that are not qualified
by materiality shall be true and correct in all respects except, in both cases,
for inaccuracies that do not have, and would not reasonably be expected to have,
a Material Adverse Effect, in either case as of the Closing Date as if made on
the Closing Date, except for changes expressly permitted or required by this
Agreement. The Buyer shall have performed and satisfied, in all material
respects, all covenants and agreements required by this Agreement to be
performed or satisfied by the Buyer at or prior to the Closing. The Buyer shall
have furnished to the Company a certificate signed by the President or any Vice
President of the Buyer, dated as of the Closing Date, to the effect that the
conditions specified in this Section have been satisfied.
9.2. Legality; Government Authorization; Litigation. The Sellers'
consummation of the transactions contemplated hereby shall not be prohibited by
any Legal Requirement, and all necessary filings, if any, pursuant to the HSR
Act shall have been made and all applicable waiting periods thereunder shall
have expired or been terminated. No nonfrivolous Action shall have been
instituted at or prior to the Closing by any Person other than a party hereto or
any Affiliate thereof, or instituted by any Governmental Authority, relating to
this Agreement or any of the transactions contemplated hereby, the result of
which would prevent or make illegal the consummation any such transaction.
9.3. General. All corporate proceedings required to be taken by the
Buyer in connection with the transactions contemplated by this Agreement shall
have been taken. The Sellers shall have received copies of such officers'
certificates, good standing certificates,
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incumbency certificates and other customary closing documents as the Sellers may
reasonably request in connection with the transactions contemplated hereby.
9.4. Escrow Agreement. The Buyer shall have executed and delivered
to the Sellers the Escrow Agreement, in substantially the form as set forth in
Exhibit 3.1.
9.5. Earnout Agreement. The Buyer shall have executed and delivered
to the Sellers the Earnout Agreement, in substantially the form as set forth in
Exhibit 3.3.
9.6. Payments. The Buyer shall have paid the Cash Equity Amount in
accordance with Section 3.1 and the Stock Equity Amount in accordance with
Section 3.2.
9.7. Opinion of Counsel. The Buyer shall have delivered to the
Sellers the opinion, dated the Closing Date, of King & Spalding LLP, counsel to
the Buyer, in a form reasonably satisfactory to the Sellers.
9.8. Registration Rights Agreement. The Buyer shall have executed
and delivered to the Buyer the Registration Rights Agreement in substantially
the form as set forth in Exhibit 8.21.
10. INDEMNIFICATION.
10.1. Buyer's Indemnification. Subject to the limitations set forth
in this Section 10, from and after the Closing, each of the Buyer and the
Company shall jointly and severally indemnify, defend and hold harmless, to the
fullest extent permitted by law, the Sellers (collectively, the "Seller
Indemnitees") from, against and in respect of Losses incurred as a result of any
of the following:
10.1.1. any breach or default in performance by the Buyer of
any covenant or agreement of the Buyer contained in this Agreement and any
breach or default in performance by the Company of any covenant or agreement
made by the Company contained in this Agreement that is to be performed after
the Closing; or
10.1.2. any breach of, or inaccuracy in, any representation
or warranty made by the Buyer in this Agreement (for purposes of this Article
10, representations and warranties shall be read without reference to
materiality, or similar phrases).
10.2. Sellers' Indemnification. Subject to the limitations set forth
in this Section 10, and except as set forth in Section 3.6.5.1, from and after
the Closing, each of the Sellers shall severally (but not jointly) indemnify,
defend and hold harmless, to the fullest extent permitted by law, the Buyer and
the Company (collectively, the "Buyer Indemnitees") from, against and in respect
of:
10.2.1. Losses incurred as a result of any breach or default
in performance by such Seller of any covenant or agreement of such Seller
contained in this Agreement;
10.2.2. Losses incurred as a result of any breach of, or any
inaccuracy in, any representation or warranty made by such Seller in Section 4
of this Agreement;
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10.2.3. Losses incurred as a result of such Seller's fraud or
criminal activity;
10.2.4. Losses incurred as result of any breach or default in
performance by such Seller of any representation, warranty, covenant or
agreement of such Seller contained in any of the Noncompetition /
Nonsolicitation and Nondisclosure Agreements;
10.2.5. such Seller's Seller's Percentage of Losses incurred
as a result of any breach or default in performance by the Company of any
covenant or agreement of the Company contained in this Agreement;
10.2.6. such Seller's Seller's Percentage of Losses incurred
as a result of any breach of, or any inaccuracy in, any representation or
warranty made by the Company in this Agreement (for purposes of this Article 10,
representations and warranties shall be read without reference to materiality,
Material Adverse Effect or similar phrases);
10.2.7. such Seller's Seller's Percentage of Losses incurred
as a result of the Company's fraud or criminal activity;
10.2.8. such Seller's Seller's Percentage of Losses
attributable to any liability of the Company or the Subsidiaries for Taxes with
respect to any Tax period or portion thereof ending on or before the Closing
Date (or for any Tax period beginning before and ending after the Closing Date
to the extent allocable (determined in a manner consistent with Section 7.10.2)
to the portion of such period beginning before and ending on the Closing Date)
to the extent such Taxes are not reflected in the reserve for Tax liability
(excluding any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) shown on the face of the Final Closing
Statement; and
10.2.9. such Seller's Seller's Percentage of Losses
attributable to any liability of the Company or the Subsidiaries relating to,
resulting from or arising out of any failure of any Employee Plan to comply with
any Legal Requirement in respect of or relating to any period ending on or prior
to the Closing Date.
10.3. Monetary Limitations. Notwithstanding any other provision of
this Agreement, (i) no Seller shall have any obligation to indemnify any Buyer
Indemnitee pursuant to Section 10.2.6 (other than with respect to breaches or
inaccuracies of the representations and warranties contained in Sections 5.1,
5.2, 5.7(a), 5.14, 5.17, 5.18 and 5.30) unless and until, and only to the extent
that, the aggregate of all such individual Losses incurred or sustained by all
Buyer Indemnitees with respect to which Buyer Indemnitees are entitled to
indemnification under Section 10.2.6 (other than with respect to breaches or
inaccuracies of the representations and warranties contained in Sections 5.1,
5.2, 5.7(a), 5.14, 5.17, 5.18 and 5.30) exceeds Two Million Dollars ($2,000,000)
(the "Minimum Aggregate Loss"), in which case the Sellers shall only be liable
for the amount by which all such Losses exceed the Minimum Aggregate Loss and
(ii) the aggregate liability of the Sellers to indemnify the Buyer Indemnitees
for Losses under Section 10.2.6 (other than with respect to breaches or
inaccuracies of the representations and warranties contained in Sections 5.1,
5.2, 5.7(a), 5.14, 5.17, 5.18 and 5.30) shall in no event exceed Forty Million
Dollars ($40,000,000) (the "Maximum Aggregate Loss"). Notwithstanding the
foregoing, it is understood that the Sellers' obligations to indemnify any Buyer
Indemnitee
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pursuant to Section 10.2.6 with respect to breaches or inaccuracies of the
representations or warranties contained in Sections 5.1, 5.2, 5.7(a), 5.14,
5.17, 5.18 or 5.30 or pursuant to Sections 10.2.1, 10.2.2, 10.2.3, 10.2.4,
10.2.5, 10.2.7, 10.2.8 or 10.2.9 (together, the "Surviving Representations,
Warranties and Obligations") shall not be subject to the Minimum Aggregate Loss
or the Maximum Aggregate Loss. It is further understood and agreed that the sole
source of payment for any Buyer Indemnitee against, and the sole responsibility
of, any Seller for indemnification pursuant to this Article 10 (except for
claims for breaches of the Surviving Representations, Warranties and
Obligations) shall be from such Seller's Seller's Percentage of the Escrow
Account pursuant to the Escrow Agreement and from amounts due to such Seller
pursuant to the Earnout Agreement. In no event shall the aggregate liability of
any Seller for indemnification pursuant to this Article 10 exceed the aggregate
consideration received by such Seller pursuant to this Agreement, the Earnout
Agreement and the Escrow Agreement.
10.4. Time Limitations. Regardless of any investigation made at any
time by or on behalf of any party hereto or of any information any party may
have in respect thereof, no claim for indemnification pursuant to this Article
10 (other than (i) for breach of the representations and warranties contained in
Sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 5.1, 5.2, 5.7(a) and 6.1 and (ii) claims
pursuant to Section 10.2.3, 10.2.4, 10.2.7, 10.2.8 and 10.2.9 which shall
survive indefinitely, subject to any applicable statutes of limitation) shall be
valid unless notice thereof, describing with reasonable specificity (in light of
the facts then known) the amount and basis of such claim, is delivered to the
relevant indemnifying parties on or prior to the close of business on the second
anniversary of the Closing Date.
10.5. Limitation on Remedies. From and after the Closing, the sole
and exclusive remedy of each Seller Indemnitee and Buyer Indemnitee as against
any Person, with respect to all claims relating to the subject matter of this
Agreement, shall be pursuant to the indemnification provisions set forth in this
Section 10, other than with respect to such Person's fraud or criminal activity.
10.6. Third Party Claims. Promptly after the receipt by any Person
entitled to indemnification pursuant to this Section 10 (the "Indemnified
Party") of notice of the commencement of any action, including the commencement
of any audit or other proceedings conducted by Tax authorities, against such
Indemnified Party by a third party (such action, a "Third Party Claim"), such
Indemnified Party shall, if a claim with respect thereto is to be made against
any party obligated to provide indemnification pursuant to this Section 10 (the
"Indemnifying Party"), give such Indemnifying Party written notice of such Third
Party Claim in reasonable detail in light of the circumstances then known to
such Indemnified Party. The failure to give such notice shall not relieve any
Indemnifying Party from any obligation hereunder except to the extent that such
failure prejudices such Indemnifying Party. Such Indemnifying Party shall have
the right to defend such Third Party Claim, at such Indemnifying Party's expense
and with counsel of its choice reasonably satisfactory to the Indemnified Party,
provided that the Indemnifying Party conducts the defense of such Third Party
Claim actively and diligently. If the Indemnifying Party assumes the defense of
such Third Party Claim, the Indemnified Party agrees to reasonably cooperate in
such defense at the expense of the Indemnifying Party. So long as the
Indemnifying Party is conducting the defense of such claim actively and
diligently, the Indemnified Party may retain separate co-counsel at its sole
cost and expense and may participate in the defense of such Third Party Claim,
and neither any
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Indemnifying Party nor any Indemnified Party will consent to the entry of any
judgment or enter into any settlement with respect to such Third Party Claim
without the prior written consent of the other, which consent will not be
unreasonably withheld, unless (i) the proposed settlement imposes only monetary
payment obligations less than the indemnification obligations of the
Indemnifying Party to the Indemnified Party pursuant to Section 10, and (ii)
such settlement includes a full release of the Indemnified Party in respect of
all indemnifiable Losses resulting therefrom, related thereto or arising
therefrom. In the event the Indemnifying Party does not or ceases to conduct the
defense of such Third Party Claim actively and diligently, (x) the Indemnified
Party may defend against, and, with the prior written consent of the
Indemnifying Party (which consent shall not be unreasonably withheld), consent
to the entry of any judgment or enter into any settlement with respect to, such
Third Party Claim (provided that the Indemnifying Party may retain separate
co-counsel at its sole cost and expense and may participate in the defense of
such Third Party Claim), (y) the Indemnifying Party will reimburse the
Indemnified Party for the costs of defending against such Third Party Claim to
the extent provided in this Section 10 and (z) the Indemnifying Party will
remain responsible for any Losses the Indemnified Party may suffer as a result
of such Third Party Claim to the extent provided in this Section 10.
10.7. Tax Benefits. At such time, if ever, as the Buyer or its
Subsidiaries (including, for all periods after the Closing Date, the Company)
realizes a Tax Benefit as a result of a Loss for which the Buyer has been
indemnified by the Sellers hereunder (any such Tax Benefit to be determined
after taking into consideration any Tax effect of the indemnification payment
made to Buyer with respect to such Loss), the Buyer shall pay an amount equal to
such Tax Benefit to the Sellers (on a pro rata basis based on their respective
Seller's Percentage) who indemnified the Buyer with respect to such Loss.
10.8. Cash Purchase Price Adjustment. Any indemnification payment
made by the Company, the Buyer or the Sellers pursuant to this Agreement shall
be treated by the Buyer and the Sellers as an adjustment to the Cash Purchase
Price for Tax purposes.
11. CONSENT TO JURISDICTION; JURY TRIAL WAIVER.
11.1. Consent to Jurisdiction. Each party to this Agreement, by its
execution hereof, (a) hereby irrevocably submits, and agrees to cause each of
its Subsidiaries to submit, to the exclusive jurisdiction of the state courts of
the State of New York located in New York County or the United States District
Court for the Southern District of New York for the purpose of any action,
claim, cause of action or suit (in contract, tort or otherwise), inquiry
proceeding or investigation arising out of or based upon this Agreement or
relating to the subject matter hereof, (b) hereby waives, and agrees to cause
each of its Subsidiaries to waive, to the extent not prohibited by applicable
law, and agrees not to assert, and agrees not to allow any of its Subsidiaries
to assert, by way of motion, as a defense or otherwise, in any such action, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution, that
any such proceeding brought in one of the above-named courts is improper, or
that this Agreement or the subject matter hereof may not be enforced in or by
such court and (c) hereby agrees not to commence or to permit any of its
Subsidiaries to commence any action, claim, cause of action or suit (in
contract, tort or otherwise), inquiry, proceeding or investigation arising out
of or based upon this Agreement or
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relating to the subject matter hereof other than before one of the above-named
courts nor to make any motion or take any other action seeking or intending to
cause the transfer or removal of any such action, claim, cause of action or suit
(in contract, tort or otherwise), inquiry, proceeding or investigation to any
court other than one of the above-named court whether on the grounds of
inconvenient forum or otherwise. Each party hereby consents to service of
process in any such proceeding in any manner permitted by New York law, and
agrees that service of process by registered or certified mail, return receipt
requested, at its address specified pursuant to Section 13.6 is reasonably
calculated to give actual notice.
11.2. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES,
AND AGREES TO CAUSE EACH OF ITS SUBSIDIARIES TO WAIVE, AND COVENANTS THAT
NEITHER IT NOR ANY OF ITS SUBSIDIARIES WILL ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, ACTION, CLAIM, CAUSE OF ACTION, SUIT (IN CONTRACT, TORT OR
OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON
THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING. THE BUYER ACKNOWLEDGES THAT IT HAS
BEEN INFORMED BY THE SELLERS THAT THIS SECTION 11.2 CONSTITUTES A MATERIAL
INDUCEMENT UPON WHICH THE SELLERS ARE RELYING AND WILL RELY IN ENTERING INTO
THIS AGREEMENT AND ANY OTHER AGREEMENTS RELATING HERETO OR CONTEMPLATED HEREBY.
ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 11.2
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE
WAIVER OF ITS RIGHT TO TRIAL BY JURY.
12. TERMINATION.
12.1. Termination of Agreement. This Agreement may be terminated by
the parties only as provided below:
12.1.1. The Buyer and the Required Sellers may terminate this
Agreement by mutual written consent at any time prior to the Closing.
12.1.2. The Buyer may terminate this Agreement by delivering
written notice to the Sellers at any time prior to the Closing in the event the
Sellers or the Company are in material breach of any representation, warranty,
covenant or agreement contained in this Agreement, the Buyer has notified the
Sellers and the Company of the breach in writing, there is a reasonable
likelihood that such breach (unless cured, if curable) will result in an
inability of the Sellers or the Company to satisfy the conditions set forth in
Section 8 and such breach, if curable, has continued without cure for a period
of 30 days after delivery of such notice of breach.
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12.1.3. The Required Sellers may terminate this Agreement by
delivering written notice to the Buyer at any time prior to the Closing in the
event the Buyer is in material breach of any representation, warranty, covenant
or agreement contained in this Agreement, the Sellers have notified the Buyer of
the breach in writing, there is a reasonable likelihood that such breach will
(unless cured, if curable) result in an inability of the Buyer to satisfy the
conditions set forth in Section 9 and such breach, if curable, has continued
without cure for a period of 30 days after delivery of such notice of breach.
12.1.4. The Buyer or the Required Sellers may terminate this
Agreement by providing written notice to the other at any time on or after June
30, 2003, if the Closing of the transactions contemplated by this Agreement
shall not have occurred by reason of the failure of any condition set forth in
Section 8, in the case of the Buyer, or Section 9, in the case of the Required
Sellers, to be satisfied (other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations under this
Agreement).
Further, notwithstanding anything else contained in this Agreement, the right to
terminate this Agreement under this Section 12.1 shall not be available to any
party (a) that is in material breach of its obligations hereunder or (b) whose
failure to fulfill its obligations or to comply with its covenants under this
Agreement has been the cause of, or resulted in, the failure to satisfy any
condition to the obligations of either party hereunder.
12.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 12.1, all obligations of the parties hereunder
(other than obligations under Sections 11 and 12, which shall survive
termination) shall terminate without any liability of any party to any other
party, except for liabilities with respect to breaches by any party on or prior
to the date of termination of any covenants or agreements contained herein.
13. MISCELLANEOUS.
13.1. Entire Agreement; Waivers. This Agreement constitutes the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect to such subject matter. No waiver of any provision of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), shall constitute a continuing waiver unless otherwise
expressly provided nor shall be effective unless in writing and executed (a) in
the case of a waiver by the Buyer, by the Buyer, and (b) in the case of a waiver
by the Sellers, by the Required Sellers.
13.2. Amendment or Modification. The parties hereto may amend or
modify this Agreement only by a written instrument executed by the Buyer and the
Required Sellers, and any such amendment or modification shall be Enforceable
against the Buyer and all the Sellers.
13.3. Severability. In the event that any provision hereof would,
under applicable law, be invalid or unenforceable in any respect, such provision
shall (to the extent permitted under applicable law) be construed by modifying
or limiting it so as to be valid and enforceable to the maximum extent
compatible with, and possible under, applicable law. The provisions hereof are
severable, and in the event any provision hereof should be held invalid or
unenforceable in any
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respect, it shall not invalidate, render unenforceable or otherwise affect any
other provision hereof.
13.4. Successors and Assigns. All of the terms and provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective permitted transferees and assigns (each of
which transferees and assigns shall be deemed to be a party hereto for all
purposes hereof); provided, however, that (a) no transfer or assignment by any
party hereto shall be permitted without the prior written consent of the other
parties hereto and any such attempted transfer or assignment without consent
shall be null and void and (b) no transfer or assignment by any party shall
relieve such party of any of its obligations hereunder; provided, further, that
Buyer may assign its rights, but not its obligations, under this Agreement, in
whole or in part, to any Affiliate; and provided, further, that after the
Closing, the Buyer may assign its rights under this Agreement (i) to any lender
providing financing to the Buyer in connection with the transactions
contemplated by this Agreement, or (ii) to any purchaser of all or substantially
all capital stock or assets of the Company.
13.5. Action by the Required Sellers. Any action taken by the
Required Sellers or Sellers' Representatives in accordance with and pursuant to
the terms of this Agreement shall bind and otherwise affect any rights and
obligations of each Seller hereunder.
13.6. Notices. Any notices or other communications required or
permitted hereunder shall be deemed to have been properly given and delivered if
in writing by such party or its legal representative and delivered personally or
sent by nationally recognized overnight courier service guaranteeing overnight
delivery, or registered or certified mail, postage prepaid, addressed as
follows:
If to the Company, before the Closing, to: Viewpoint International, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
With a copy to: Xxxxxx & Bird LLP
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx, III, Esq.
and
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
If to any Seller to: The address of such Seller set
forth on the signature pages hereto
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With a copy to: Xxxxxx & Bird LLP
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx, III, Esq.
and
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
If to the Buyer or, after the Closing, Oxford Industries, Inc.
the Company, to: 000 Xxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, III, Esq.
With a copy to: King & Spalding LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Unless otherwise specified herein, such notices or other communications shall be
deemed given (a) on the date delivered, if delivered personally, (b) one
Business Day after being sent by a nationally recognized overnight courier
guaranteeing overnight delivery, and (c) five Business Days after being sent, if
sent by registered or certified mail. Each of the parties hereto shall be
entitled to specify a different address by delivering notice as aforesaid to
each of the other parties hereto.
13.7. Public Announcements. No party hereto will issue or make any
report, statement or release to the public (including employees, customers and
suppliers of the parties) with respect to this Agreement or the transactions
contemplated hereby without the consent of the other parties hereto, which
consent shall not be unreasonably withheld or delayed. If any party hereto is
unable to obtain, after reasonable effort, the approval of its public report,
statement or release from the other parties hereto and such report, statement or
release is, in the opinion of legal counsel to such party, required by law in
order to discharge such party's disclosure obligations, then such party may make
or issue the legally required report, statement or release and promptly furnish
the other parties with a copy thereof. Each party hereto will also obtain the
prior approval by the other parties hereto of any press release to be issued
announcing the consummation of the transactions contemplated by this Agreement,
which approval shall not be unreasonably withheld or delayed. Notwithstanding
the foregoing and any confidentiality provision of any other agreement between
the parties hereto, each party hereto (and each employee, representative, or
other agent thereof) may disclose to any and all persons, without limitation of
any kind, the tax treatment and tax structure of the transactions contemplated
by this Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to any party hereto relating to such tax treatment
and tax structure.
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13.8. Headings, etc. Section and subsection headings are not to be
considered part of this Agreement, are included solely for convenience, are not
intended to be full or accurate descriptions of the content thereof and shall
not affect the construction hereof.
13.9. Disclosure. Any item listed or referred to in any Schedule
pursuant to any Section of this Agreement shall be deemed to have been listed in
or incorporated by reference into any other Schedule to the extent that the
applicability of the information disclosed to such other representation and
warranty or Schedule is reasonably apparent from the face of such disclosure.
13.10. Third Party Beneficiaries. Except as otherwise set forth
herein, nothing in this Agreement is intended or shall be construed to entitle
any Person, other than the parties hereto, their respective transferees and
assigns permitted hereby, to any claim, cause of action, remedy or right of any
kind.
13.11. Counterparts. This Agreement and any claims related to the
subject matter hereof may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
but one and the same instrument.
13.12. Governing Law. This Agreement and any claims related to the
subject matter hereof shall be governed by and construed in accordance with the
domestic substantive laws of the State of New York, without giving effect to any
choice or conflict of law provision or rule that would cause the application of
the laws of any other jurisdiction.
13.13. Expenses. Whether or not the transactions contemplated hereby
are consummated, all Transaction Expenses shall be paid by the Company and/or
the Sellers (including payment from the Cash Equity Amount in the manner
contemplated by Section 3.1) and all fees and expenses incurred by the Buyer in
connection with the negotiation and preparation of this Agreement, related
agreements and the transactions contemplated hereby and thereby shall be paid by
the Buyer.
13.13.1. Notwithstanding anything else contained herein, in
the event the Closing does not occur as a result of the termination of:
13.13.1.1 the Bridge Commitment Letter (unless such
termination thereunder is pursuant to Section 7 due to the failure to
satisfy or waive the condition(s) set forth in (i) paragraph (a) of
Exhibit C thereof, (ii) any other paragraph of Exhibit C thereof to the
extent that termination under such paragraph results from the failure
by the Company or any of the Sellers or any of their representatives or
advisors to undertake any actions required to be taken by them
thereunder (or the taking of any actions not permitted to be taken by
them thereunder), (iii) paragraph (b) of Exhibit C thereof to the
extent that the event or condition giving rise to any such "Material
Adverse Effect" referred to in paragraph (b) of Exhibit C thereof is an
event or condition referred to in paragraph (a) of Exhibit C thereof,
(iv) Section 3(i) to the extent such failure relates to a condition in
the Interim Loan Agreement that is substantially identical to paragraph
(a) of Exhibit C thereof or otherwise results from the failure by the
Company or any of the Sellers or any of their representatives or
advisors to undertake any actions required to be
-58-
taken by them thereunder (or the taking of any actions not permitted to
be taken by them thereunder), (v) Section 3(ii) thereof to the extent
that the concurrent funding referred to therein has not occurred as a
result of an event or condition referred to in paragraph (a) of Exhibit
C, a "Material Adverse Effect" referred to in paragraph (b) of Exhibit
C caused by an event or condition referred to in paragraph (a) of
Exhibit C or otherwise as a result of the failure by the Company or any
of the Sellers or any of their representatives or advisors to undertake
any actions required to be taken by them thereunder (or the taking of
any actions not permitted to be taken by them thereunder), or (vi)
Section 3(iii) thereof to the extent such failure results from the
failure by the Company or any of the Sellers or any of their
representatives or advisors to undertake any actions required to be
taken by them thereunder (or the taking of any actions not permitted to
be taken by them thereunder)); or
13.13.1.2 the Credit Facility Commitment Letter
(unless such termination thereunder is pursuant to (i) Section D(ii)(b)
thereof, (ii) Section D(ii)(a) thereof to the extent that the event or
condition giving rise to any "Material Adverse Change" referred to in
Section D(ii)(a) thereof is an event or condition referred to in
Section D(ii)(b) thereof), or (iii) Section D(iii) thereof to the
extent such termination relates to information provided in writing to
the Buyer by the Company or any of the Sellers).
then the Buyer shall, within five (5) days of such termination,
reimburse the Company and the Sellers for all fees and expenses
incurred by the Company and the Sellers (up to a maximum of $1,000,000
in the aggregate) in connection with the negotiation and preparation of
this Agreement, related agreements and the transactions contemplated
hereby.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed, as of the date first above
written by their respective officers thereunto duly authorized.
THE COMPANY: VIEWPOINT INTERNATIONAL, INC.
By: /s/ S. Xxxxxxx Xxxxxxxx
_______________________________
Name: S. Xxxxxxx Xxxxxxxx
Title: President and Chief Executive Officer
THE SELLERS: SKM-TB, LLC
By: SKM EQUITY FUND III, L.P.
By: SKM PARTNERS, L.L.C.
By: /s/ Xxxxx X. Xxxx
_____________________________
Name: Xxxxx X. Xxxx
A duly authorized signatory
x/x Xxxxxxxx Xxxx & Xxxxxx, LLC
000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
WHOLE DUTY INVESTMENT, LTD.
By: /s/ CT Xxxxx
______________________________
Name: CT Xxxxx
A duly authorized signatory
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
/s/ S. Xxxxxxx Xxxxxxxx
-----------------------------------
S. Xxxxxxx Xxxxxxxx
c/o Viewpoint International, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
XXXXXXXX FAMILY STOCK TRUST u/a/d
May 1, 2001
By: /s/ Xxxxxxx X. Xxxxxx, III
______________________________
Name: Xxxxxxx X. Xxxxxx, III, Esq.
Title: Trustee
c/o Alston & Bird LLP
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
/s/ Xxxxx Xxxxx Gasperina
----------------------------------
Xxxxx Xxxxx Gasperina
c/o Viewpoint International, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
XXXXXX BEACH BLUES, INC.
By: /s/ Xxxxxx Xxxxxxx
______________________________
Name: Xxxxxx Xxxxxxx
Title: President
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxxx 00000
THE BUYER: OXFORD INDUSTRIES, INC.
By: /s/ X. Xxxxx Xxxxxx
______________________________
Name: X. Xxxxx Xxxxxx
Title: Chairman, President & Chief Executive
Officer
