ASSET PURCHASE AGREEMENT
AMONG
MOYCO TECHNOLOGIES, INC.,
XXXXXXXX DENTAL MFG., INC.,
SWEET PEA TECHNOLOGIES, INC.
AND
MILTEX INSTRUMENT COMPANY, INC.
Dated as of January 10, 2001
TABLE OF CONTENTS
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I. PURCHASE AND SALE. .......................................................1
1.1 Purchase and Sale of Assets .........................................1
1.2 Assumption of Certain Liabilities ...................................2
1.3 Closing .............................................................3
1.4 Adjustment ..........................................................4
1.5 Purchase Price Allocation ...........................................7
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. ...........................7
2.1 Organization of the Company; Authority ..............................7
2.2 Subsidiaries ........................................................7
2.3 No Violation; Consents and Approvals ................................8
2.4 Financial Statements ................................................8
2.5 Absence of Certain Changes or Events ................................9
2.6 Absence of Undisclosed Liabilities ..................................9
2.7 Personal Property ...................................................9
2.8 Real Property ......................................................10
2.9 Intellectual Property ..............................................12
2.10 Litigation .........................................................12
2.11 Employee Benefit Plans .............................................12
2.12 Taxes ..............................................................14
2.13 Contracts and Commitments ..........................................15
2.14 Compliance with Laws ...............................................17
2.15 Insurance ..........................................................17
2.16 Labor Matters ......................................................17
2.17 Environmental Matters ..............................................18
2.18 Transactions with Affiliates .......................................19
2.19 Material Suppliers and Customers ...................................19
2.20 Brokers ............................................................19
2.21 Complete Assets ....................................................19
2.22 Product Warranties .................................................19
III. REPRESENTATIONS AND WARRANTIES OF BUYER. ................................19
3.1 Organization; Authority ............................................19
3.2 No Violation; Consents and Approvals ...............................20
3.3 Litigation .........................................................20
3.4 Brokers ............................................................20
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IV. COVENANTS OF THE PARTIES. ..............................................20
4.1 Conduct of the Company's Business .................................20
4.2 Access to Information Prior to the Closing; Confidentiality .......22
4.3 Reasonable Best Efforts ...........................................22
4.4 Consents ..........................................................22
4.5 Public Announcements ..............................................23
4.6 Payment of Transaction Fees .......................................23
4.7 Employees .........................................................23
4.8 Action by Stockholders ............................................24
4.9 No Solicitation ...................................................24
V. TAX MATTERS. ...........................................................25
5.1 Transfer and Conveyance Taxes .....................................25
VI. CONDITIONS TO CLOSING. .................................................25
6.1 Conditions to the Company's Obligations ...........................25
6.2 Conditions to Buyer's Obligations .................................26
VII. TERMINATION. ...........................................................28
7.1 Termination .......................................................28
7.2 Procedure and Effect of Termination ...............................28
VIII. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION. .......................................................29
8.1 Survival of Representations and Warranties ........................29
8.2 The Company's Agreement to Indemnify ..............................29
8.3 The Company's Limitation of Liability .............................30
8.4 Buyer's Agreement to Indemnify ....................................30
8.5 Buyer's Limitation of Liability ...................................30
8.6 Conditions of Indemnification With Respect to Third-Party Claims ..30
8.7 Adjustment to Purchase Price ......................................31
8.8 Additional Provision For Tax Indemnity ............................31
IX. DEFINITIONS. .............................................................33
X. MISCELLANEOUS. .........................................................34
10.1 Further Assurances ................................................34
10.2 Notices ...........................................................34
10.3 Amendment, Modification and Waiver ................................36
10.4 Entire Agreement ..................................................36
10.5 Severability ......................................................36
10.6 Binding Effect; Assignment ........................................36
10.7 No Third-Party Beneficiaries ......................................36
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10.8 Fees and Expenses ................................................36
10.9 Counterparts .....................................................37
10.10 Interpretation ...................................................37
10.11 Forum: Service of Process ........................................37
10.12 Governing Law ....................................................37
10.13 WAIVER OF JURY TRIAL .............................................37
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Exhibit 6.1(e) Opinion of Buyer's Counsel
Exhibit 6.1(h) Assumption of Liabilities Agreement
Exhibit 6.2(h)(i) Opinion of Company's Counsel
Exhibit 6.2(h)(ii) Opinion of Company's Special Counsel
Exhibit 6.2 (j) Consulting Agreement
Exhibit 6.2(o) Transition Agreement
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DEFINITIONS INDEX
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Adjustment Event .............................................................34
affiliate ....................................................................37
Agreement .....................................................................1
Allocation ....................................................................7
Alternative Transaction ......................................................25
Applicable Law ................................................................8
ASCP .........................................................................22
Assets .......................................................................33
Assumed Liabilities ...........................................................2
Balance Sheet .................................................................8
Basket .......................................................................30
Business ......................................................................1
Buyer .........................................................................1
Buyer Agreements .............................................................20
Buyer Cap ....................................................................30
Buyer Claims .................................................................30
Buyer Excess ..................................................................6
Cap ..........................................................................30
Closing .......................................................................1
Closing Date ..................................................................4
Closing Date Statement ........................................................4
Closing Working Capital Difference ...........................................33
COBRA ........................................................................13
Code ..........................................................................7
Company .......................................................................1
Company Claims ...............................................................30
Company Excess ................................................................6
Company's Objection ...........................................................5
Confidentiality Agreements ...................................................22
Damages ......................................................................29
defined benefit plan .........................................................13
Defined Contribution Plans ...................................................23
Dentsply International Settlement ............................................33
Disclosure Schedule ...........................................................7
Division Material Adverse Effect .........................................26, 33
eligible rollover distribution ...............................................23
employee benefit plan ........................................................13
Employee Transaction Bonus Payments ..........................................33
Environmental Laws ...........................................................18
ERISA ........................................................................13
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Escrow Agent ..................................................................1
Escrow Agreement ..............................................................4
Escrowed Amount ...............................................................1
Estimated Net Working Capital .................................................4
Excess Capital Lease Amount ..................................................33
Exchange Act .................................................................24
Excluded Liabilities ..........................................................2
Existing Indebtedness ........................................................34
Facility Indebtedness ........................................................34
Final Adjustment Date .........................................................6
Final Closing Date Statement ..................................................6
Financial Statements ..........................................................8
Foot Powder Settlement .......................................................33
foreign person ...............................................................27
Governmental Approval .........................................................8
Governmental Authority ........................................................8
Hazardous Substances .........................................................18
HIPAA ........................................................................13
Income Taxes .................................................................32
Indebtedness Liability .......................................................33
Intellectual Property ........................................................12
Letter of Credit ..............................................................1
Liens .........................................................................9
mass layoff ..................................................................21
Material Contract ............................................................15
Moyco ........................................................................12
Moyco Precision Abrasives, Inc. ..............................................12
Moyco Technologies, Inc. .....................................................12
multiemployer plan ...........................................................13
Net Working Capital ..........................................................34
Neutral Accounting Firm .......................................................5
Non-Adjustment Event .........................................................34
Order .........................................................................8
parachute payment ............................................................14
Permits ......................................................................17
Permitted Liens ...............................................................9
person .......................................................................37
Plan .........................................................................13
Plans ........................................................................13
plant closing ................................................................21
prohibited transaction .......................................................13
Purchase Price ................................................................1
Real Estate Permitted Liens ..................................................10
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Real Property ................................................................10
SEC ..........................................................................24
Seller Indemnities ...........................................................30
Seller Persons ...............................................................24
single-employer plan .........................................................14
Special Meeting ..............................................................24
Statement ....................................................................24
Subsidiaries ..................................................................1
subsidiary ...................................................................37
Sweet Pea ....................................................................33
Tax Return ...................................................................15
tax-exempt use property ......................................................15
Taxes ........................................................................15
Termination Fee ..............................................................29
Third-Party Claims ...........................................................31
Xxxxxxxx .....................................................................12
Total Enterprise Value .......................................................34
Trade Payables and Accrued Expenses ..........................................34
Transaction Fees .............................................................34
Transferring Employees .......................................................23
Union Xxxxxx .................................................................12
WARN Act .....................................................................18
Welfare Plans ................................................................23
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ASSET PURCHASE AGREEMENT, dated as of January 10, 2001 (this
"Agreement"), among MOYCO TECHNOLOGIES, INC., a Pennsylvania corporation (the
"Company"), XXXXXXXX DENTAL MFG., INC., a Montana corporation, and SWEET PEA
TECHNOLOGIES, INC., a Delaware corporation (collectively, the "Subsidiaries"),
and MILTEX INSTRUMENT COMPANY, INC., a New York corporation (together with its
successors and permitted assigns, "Buyer").
WHEREAS, the Company and the Subsidiaries are engaged in the business
of manufacturing, marketing and distributing dental supplies (the "Business");
WHEREAS, subject to the terms and conditions of this Agreement, Buyer
has agreed to purchase from the Company and the Subsidiaries at the Closing the
Assets used in connection with the Business;
WHEREAS, Buyer may assign its right to purchase the Assets relating to
the Business to be purchased by it hereunder to one or more affiliates, in which
event each such affiliate shall be considered the "Buyer" for all purposes of
this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
I. PURCHASE AND SALE.
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1.1 Purchase and Sale of Assets. (a) Upon the terms and subject to the
conditions of this Agreement, at the closing provided for in Section 1.3 hereof
(the "Closing"), Buyer shall purchase from the Company and the Subsidiaries, and
the Company and the Subsidiaries shall sell to Buyer, all of their right, title
and interest in the Assets, free and clear of and expressly excluding all debts,
liabilities, obligations, Taxes, Liens and encumbrances (other than Permitted
Liens) of any kind, character or description, whether accrued, absolute,
contingent or otherwise (and whether or not reflected or reserved against in the
balance sheets, books of account and records of the Company), except as
otherwise expressly provided in Section 1.2 hereof.
(b) Consideration. The aggregate consideration for the Assets shall consist
of (i) an amount equal to the Total Enterprise Value, subject to adjustment as
set forth in Section 1.4 (the "Purchase Price") and (ii) the assumption by the
Buyer of the Assumed Liabilities. Simultaneously with the payment of the
Purchase Price, either (A) the Buyer shall deposit $1,000,000 in cash by means
of wire or interbank transfer of immediately available funds to the account of
PNC Bank, National Association, in Philadelphia, Pennsylvania, as escrow agent
hereunder (the "Escrow Agent") (which amount shall be increased by any earnings
thereon and shall be reduced by any disbursements or losses on investments), or
(B) the Company shall deliver to the Buyer an irrevocable standby letter of
credit available for drawings for up to an aggregate amount of $1,000,000 in
favor of the Buyer (the "Letter of Credit") which shall expire on the later of
(x) the 180th day following the Closing Date or (y) the Final Adjustment Date
(either of (A) or (B) shall be referred to herein as the "Escrowed Amount"). The
Escrowed Amount, in the case of clause (A), shall be
held, administered, and distributed by the Escrow Agent in accordance with the
terms of this Agreement and an Escrow Agreement in the customary form thereof of
PNC Bank, National Association, with such modifications as required to reflect
the terms of this Agreement (the "Escrow Agreement").
For information purposes, the calculation relating to each of the
amounts set forth in Section 1.1 (b) to be delivered at the Closing is set forth
on Schedule 1.1(b). The actual amounts to be delivered at the Closing will be
determined pursuant to this Section 1.1.
1.2 Assumption of Certain Liabilities. (a) The Company and the Subsidiaries
will assign, and Buyer will assume and perform as they become due, for all
periods on or after the Closing Date, solely the following liabilities and
obligations of the Company (collectively, the "Assumed Liabilities"): (i) any
Taxes which properly relate to periods after the Closing Date in connection with
the ownership of the Assets and the operation of the Business; and (ii) the
following liabilities and obligations of the Company and the Subsidiaries:
(A) Trade Payables and Accrued Expenses;
(B) The capital lease and the operating lease liabilities for the lease
of equipment set forth in Section 1.2(a)(B) of the Disclosure Schedule; and
(C) all liabilities properly accruing and relating to periods on or
after the Closing Date under, arising from or incurred in connection with
contracts and agreements relating to the Assets or to the Business as set
forth on Schedule 1.2(a)(C).
(b) Except for the Assumed Liabilities, Buyer will not assume or have any
responsibility for any liabilities or obligations of the Company or the
Subsidiaries or their respective predecessors, including any which arise out of,
result from, or relate to, the conduct of the Business prior to the Closing Date
including but not limited to the following (collectively, the "Excluded
Liabilities"):
(A) any liabilities from Environmental Laws, arising from (1) the
ownership or operation of the Business or the Assets before the Closing
Date or (2) any Hazardous Substances that were present in, on or under any
of the Assets at any time before the Closing Date;
(B) any and all Taxes of the Company and its Subsidiaries for any
period, including, without limitation, Taxes arising out of the ownership
or operation of the Business or the Assets by any Person at any time on or
before the Closing;
(C) any liability of the Company or the Subsidiaries for unpaid federal
and state income Taxes of any Person (other than the Company) under Treas.
Reg. Section 1.1502-6 (or similar provision of state, local or foreign
law), as a transferee or successor by contract or otherwise;
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(D) all liabilities of the Company and the Subsidiaries for the
Transaction Fees and the Employee Transaction Bonus Payments;
(E) all obligations, liabilities and expenses of the Company and the
Subsidiaries under or arising as a result of this Agreement;
(F) all Taxes of the Company and the Subsidiaries on the sale of the
Assets pursuant to this Agreement;
(G) any patent, trademark, copyright or other infringement claims
arising out of, resulting from, or relating to, the conduct of the Business
prior to the Closing Date, including, without limitation, any such claims
relating to the Dentsply International Settlement;
(H) all liabilities relating to the Foot Powder Settlement;
(I) all liabilities of the Company and the Subsidiaries relating to its
Precision Abrasives business or any other business conducted by them other
than the Business;
(J) any liabilities in connection with or arising from the maintenance
of or contribution to any Plan, including, but not limited to, any
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA or a
defined benefit plan within the meaning of Section 3(35) of ERISA;
(K) except as set forth in Section 1.2(a)(B) above, all Indebtedness
Liability of the Company and its Subsidiaries;
(L) for products of the Business manufactured prior to the Closing
Date, all product liability claims, personal injury claims and other claims
(other than warranty claims) for loss or damage that are asserted against
the Buyer, the Company or the Subsidiaries within 12 months following the
Closing Date (except for any claims relating to products of the Business
which have been recalled, which may be asserted at any time); any such
claim that is asserted against the Buyer, the Company or the Subsidiaries
more than 12 months following the Closing Date (except for claims relating
to recalled products) shall be deemed to be an Assumed Liability under
Section 1.2(a)(ii)(C) of this Agreement;
(M) all liabilities of the Company and its Subsidiaries for lawsuits
relating to actions taken, or omitted to be taken, prior to the Closing or
in connection with the transactions contemplated herein; and
(N) all liabilities of the Company and its Subsidiaries for fees and
expenses of professionals (ie., attorneys, accountants, consultants, etc.)
engaged by the Company or its Subsidiaries prior to the Closing to render
services thereto.
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1.3 Closing. The Closing of the transactions contemplated by this Agreement
shall take place at the offices of Xxxx, Scholer, Fierman, Xxxx & Handler, LLP,
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., local time, on the
second day after the conditions set forth in Article VI shall have been
satisfied or waived or such other date as mutually agreed to by the parties (the
"Closing Date"), but in no event later than May 2, 2001. At the Closing, the
following transactions will take place:
(a) Buyer will pay the Company an amount equal to the difference between
(i) the Purchase Price and (ii) the Escrowed Amount by wire transfer of
immediately available funds to an account or accounts designated by the Company
at least five business days prior to the Closing by written notice to Buyer;
provided, however, that if the Company elects to fund the Escrowed Amount with
the Letter of Credit, the amount payable by Buyer at the Closing pursuant to
this Section 1.3(a) shall not be reduced by the Escrowed Amount.
(b) Buyer (in the event the Company shall have elected not to fund the
Escrowed Amount with the Letter of Credit) will deliver the Escrowed Amount by
wire transfer of immediately available funds to the Escrow Agent to be held
pursuant to the Escrow Agreement. Each of the parties hereto will execute and
deliver the Escrow Agreement on the Closing Date.
(c) The Company shall pay the Transaction Fees and deliver to Buyer
satisfactory evidence that such payments constitute the final payments with
respect to such fees.
(d) The Company shall pay the Employee Transaction Bonus Payments, if any,
subject to any required withholding or other Taxes.
1.4 Adjustment. (a) Not later than five days prior to the Closing Date, the
Company shall provide Buyer with its good faith estimate of the Net Working
Capital (the "Estimated Net Working Capital") of the Business as of the close of
business on the day immediately preceding the Closing Date, which shall be
prepared by the Chief Financial Officer of the Company on the same basis that
the Closing Date Statement is to be prepared pursuant to this Section 1.4(a). As
soon as practicable, but in no event later than 90 days following the Closing
Date, Buyer shall prepare, or cause to be prepared, and deliver to the Company a
statement of the Net Working Capital of the Business as of the close of business
on the day immediately preceding the Closing Date, without giving effect to the
consummation of any of the transactions contemplated hereby (the "Closing Date
Statement"). The Closing Date Statement shall be prepared as if the day
immediately preceding the Closing Date was the Company's normal year end, in
accordance with generally accepted accounting principles ("GAAP") applied (to
the extent consistent with GAAP) on a basis consistent with the Financial
Statements; except that (i) no Existing Indebtedness (including, without
limitation, capital lease obligations) shall be included in the Closing Date
Statement, (ii) no liability for the Transaction Fees, the Employee Transaction
Bonus Payments or any fees of Buyer or any of its affiliates in accordance with
Section 10.8 shall be included in the Closing Date Statement, (iii) no deferred
financing fees shall be included in the Closing Date Statement, (iv) no
receivables from the Company, any Subsidiary, any stockholder or any of their
affiliates shall be included in the Closing Date Statement, (v) no deferred
income Tax asset or liability shall be included in the Closing Date
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Statement, (vi) no Tax assets or liabilities shall be included in the Closing
Date Statement, (vii) any asset which is otherwise required to be reflected on
the Closing Date Statement, which is not reflected on the Balance Sheet, unless
acquired after June 30, 2000 from an unrelated party in the ordinary course of
business, shall be excluded from the Closing Date Statement, (viii) inventory
shall be valued at the lower of cost (using the first-in, first-out method) or
market, determined on an item by item basis, in accordance with GAAP, (ix) no
reserves, liabilities, asset valuation allowances, or similar items reflected in
the Balance Sheet or created thereafter shall be reversed or shall be
reallocated to cover any other reserve, liability, asset valuation allowance or
similar item required to be provided for on the Closing Date Statement and (x)
no Excluded Liabilities shall be included on the Closing Date Statement.
Inventory quantities shall be determined based on a physical inventory taken by
the Company and observed by representatives of Buyer and the Company as of the
close of business on the third day preceding the Closing Date.
(b) The Company shall within 30 days after the delivery by Buyer of the
Closing Date Statement complete its review of the Closing Date Statement and the
Net Working Capital reflected thereon. In the event that the Company determines
that the Closing Date Statement has not been prepared, or that the Net Working
Capital reflected on the Closing Date Statement has not been determined, on the
basis set forth in Section 1.4(a), the Company shall inform Buyer in writing
("Company's Objection"), setting forth a description in reasonable detail of the
basis of its objection and the adjustments to the Closing Date Statement and the
Net Working Capital which the Company believes should be made, on or before the
last day of such 30 day period. Buyer shall have 20 days to review and respond
to the Company's Objection. During such 20 day review period and the subsequent
10 day period the parties shall seek in good faith to resolve any differences
which they may have with respect to the matters specified in the Company's
Objection. If Buyer and the Company are unable to resolve all of their
disagreements with respect to the Company's Objection within the 10 day period
following completion of Buyer's review of the Company's Objection, they shall
refer their remaining differences to PricewaterhouseCoopers or another
nationally recognized firm of independent public accountants as to which the
Company and Buyer mutually agree (or in the event the parties cannot agree, as
chosen by the American Arbitration Association) (the "Neutral Accounting Firm"),
who shall determine on the basis of the standards set forth in Section 1.4(a),
and only with respect to the remaining differences so submitted, whether and to
what extent, if any, the Closing Date Statement and the Net Working Capital
require adjustment. The parties shall instruct the Neutral Accounting Firm to
deliver its written determination to Buyer and the Company no later than the
twentieth day after the remaining differences underlying the Company's Objection
are referred to the Neutral Accounting Firm. The Neutral Accounting Firm's
determination shall be conclusive and binding upon Buyer and the Company, and
shall be based solely on written submissions by Buyer and the Company and not by
independent review. The Neutral Accounting Firm shall address only those issues
in dispute, and may not assign a value to any item greater than the greatest
value for such item claimed by either party or lower than the lowest value
claimed by either party. The fees and expenses of the Neutral Accounting Firm
(i) shall be borne by the Company in the proportion that the aggregate dollar
amount of such disputed items so submitted that are unsuccessfully disputed by
the Company (as finally determined by the Neutral Accounting Firm) bears to the
aggregate dollar amount of such items so submitted and (ii) shall be borne by
Buyer in the proportion that the aggregate dollar amount of such disputed items
so submitted that are
5
successfully disputed by the Company (as finally determined by the Neutral
Accounting Firm) bears to the aggregate dollar amount of such items so
submitted. The "Final Closing Date Statement" shall be (i) the Closing Date
Statement in the event that (x) no Company's Objection is delivered to Buyer
during the 30-day period specified above, or (y) the Company and Buyer so agree,
(ii) the Closing Date Statement, adjusted in accordance with the Company's
Objection in the event that Buyer does not respond to the Company's Objection
within the 20-day period following receipt by Buyer of the Company's Objection
or agrees with the Company's Objection, or (iii) the Closing Date Statement, as
adjusted by either (x) the agreement of the Company and Buyer or (y) the Neutral
Accounting Firm. Neither the Company nor Buyer shall have any ex parte
conversations or meetings with the Neutral Accounting Firm without the prior
consent of Buyer (in the case of the Company) and the Company (in the case of
Buyer).
(c) If there has been an Adjustment Event, then within five business days
after the later of the date (i) the Final Closing Date Statement is issued, or
(ii) any remaining disputed items with respect to the Final Closing Date
Statement are ultimately resolved pursuant to Section 1.4(b) (such date being
the "Final Adjustment Date"): (x) if the amount of Net Working Capital set forth
in the Final Closing Date Statement equals or exceeds the amount of Estimated
Net Working Capital (the "Company Excess"), (1) Buyer shall instruct the Escrow
Agent to pay to the Company from the Escrowed Amount the Escrowed Amount, and
(2) Buyer shall pay to the Company the Company Excess; and (y) if the amount of
Estimated Net Working Capital exceeds the amount of the Net Working Capital set
forth in the Final Closing Date Statement (the "Buyer Excess"), the Company and
Buyer shall instruct the Escrow Agent to pay (1) to Buyer from the Escrowed
Amount the Buyer Excess (and, if the Escrowed Amount is less than the Buyer
Excess, the Company shall pay to Buyer the amount if any of any such
insufficiency) and (2) to the Company from the Escrowed Amount the balance of
the Escrowed Amount, if any (in each case such payment shall be made by wire
transfer in immediately available funds to an account specified by the Company
or Buyer, as applicable).
(d) If there has been a Non-Adjustment Event, then within five business
days after the Final Adjustment Date: (x) if the amount of Net Working Capital
set forth in the Final Closing Date Statement equals or exceeds $3,950,000 (the
"Company Excess"), (1) Buyer shall instruct the Escrow Agent to pay to the
Company from the Escrowed Amount the Escrowed Amount, and (2) Buyer shall pay to
the Company the Company Excess; and (y) if $3,950,000 exceeds the amount of the
Net Working Capital set forth in the Final Closing Date Statement (the "Buyer
Excess"), the Company and Buyer shall instruct the Escrow Agent to pay (1) to
Buyer from the Escrowed Amount the Buyer Excess (and, if the Escrowed Amount is
less than the Buyer Excess, the Company shall pay to Buyer the amount if any of
any such insufficiency) and (2) to the Company from the Escrowed Amount the
balance of the Escrowed Amount, if any (in each case such payment shall be made
by wire transfer in immediately available funds to an account specified by the
Company or Buyer, as applicable).
(e) In the event that the Company shall elect to deliver the Letter of
Credit, the Letter of Credit shall provide for payment to Buyer of the amounts
described in paragraph (c) or (d)
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(whichever is applicable) as being payable from the Escrowed Amount, upon
instruction from Buyer to the bank issuing the Letter of Credit.
1.5 Purchase Price Allocation. For income tax purposes, the Company, the
Subsidiaries and Buyer agree that allocation of the Purchase Price (and the
Assumed Liabilities that are properly included in the Buyer's tax basis for the
Assets) (the "Allocation") will be prepared jointly by both the Buyer and the
Company within 120 days after the Closing Date in accordance with Section 1060
of the Internal Revenue Code of 1986, as amended (the "Code"). The Company and
Buyer agree that the Allocation mutually agreed upon shall be used by each of
them in the preparation and filing of all Tax Returns (including IRS Form 8594,
or any successor form) and each party agrees that it shall take no position, and
cause its affiliates to take no position, inconsistent with the Allocation on
any Tax Return or in any proceeding before any governmental body, taxing
authority or otherwise; provided, however that the Buyer may allocate the
Purchase Price for general accounting purposes in accordance with GAAP. If,
contrary to the intent of the parties hereto as expressed in this Section 1.5,
any taxing authority makes or proposes an allocation different from the
Allocation determined under this Section 1.5, the Company and Buyer shall
cooperate with each other in good faith to contest such taxing authority's
allocation (or proposed allocation).
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
----------------------------------------------
Except as set forth on the disclosure schedule delivered by the Company to
Buyer simultaneously with the execution of this Agreement (the "Disclosure
Schedule"), the Company represents and warrants to Buyer as follows:
2.1 Organization of the Company; Authority. The Company is a corporation
duly organized and validly subsisting under the laws of the Commonwealth of
Pennsylvania, has all requisite corporate power and corporate authority to enter
into this Agreement, to own, lease and operate its properties and to conduct its
business, and, upon the approval of a majority of votes cast by the shareholders
of the Company entitled to vote, shall have all requisite corporate power and
corporate authority to consummate the transactions contemplated hereby. The
execution, delivery and performance by the Company of this Agreement, and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of the Company. Upon the approval of a majority of the
votes cast by the shareholders of the Company entitled to vote, this Agreement
shall constitute a valid and binding obligation of the Company, subject to the
qualification that enforcement of the rights and remedies created hereby are
subject to (a) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other laws of general application affecting the rights and
remedies of creditors, and (b) general principles of equity, regardless of
whether enforcement is considered in a proceeding in equity or at law. The
Company is duly qualified or licensed to do business as a foreign corporation
and is in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to obtain such qualification
or license would not, individually or in the aggregate, have a Division Material
Adverse Effect. The Company has heretofore delivered to Buyer complete and
correct copies of the Articles of Incorporation and Bylaws of the Company, as in
effect as of the date of this Agreement.
7
2.2 Subsidiaries. The Company has no subsidiaries that relate to the
Business other than the Subsidiaries. Section 2.2 of the Disclosure Schedule
sets forth, with respect to each of the Subsidiaries, its type of entity, the
jurisdiction of its organization, its authorized and outstanding capital stock,
partnership interests or equivalent ownership interests and the Company's
current ownership of such shares or interests. Each Subsidiary is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
own, lease and operate its properties and to conduct its business and to
consummate the transactions contemplated hereby.
2.3 No Violation; Consents and Approvals. Except as set forth in Section
2.3 of the Disclosure Schedule, the execution and delivery by the Company of
this Agreement does not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, conflict with, or result
in any violation of or default (or an event which, with notice or lapse of time
or both, would constitute a default) under, (a) any provision of the Articles of
Incorporation or Bylaws of the Company or any Subsidiary, (b) any judgment,
order, injunction or decree (an "Order"), or statute, law, ordinance, rule or
regulation ("Applicable Law") applicable to the Company or the Subsidiaries with
respect to the Business or the Assets, which such conflict, violation or default
would have a Division Material Adverse Effect or (c) give rise to any right of
termination, cancellation or acceleration under, or result in the creation of
any Lien upon any of the Assets under, any Material Contract relating to the
Business or Permit to which the Company or any Subsidiary is a party or by which
the Company or the Subsidiaries or any Assets may be bound, which termination,
cancellation or acceleration, or creation of any Lien, would give rise to a
Division Material Adverse Effect. Except as set forth in Section 2.3 of the
Disclosure Schedule, no consent, approval, order or authorization of, or
registration, declaration or filing with ("Governmental Approval") any court,
administrative agency or commission or other governmental entity, authority or
instrumentality, domestic or foreign ("Governmental Authority"), is required to
be obtained or made by or with respect to the Company or the Subsidiaries in
connection with the execution and delivery of this Agreement or the consummation
by them of the transactions contemplated hereby.
2.4 Financial Statements. The Company has heretofore delivered to Buyer
true and correct copies of (i) the audited consolidated balance sheets of the
Company and its Subsidiaries as of June 30, 2000 and June 30, 1999 and the
related audited consolidated statements of operations, shareholders' equity and
cash flows of the Company and its Subsidiaries for each of the three years in
the period ended June 30, 2000, (ii) the unaudited consolidated balance sheet of
the Company and its Subsidiaries as of September 30, 2000 and the related
unaudited consolidated statements of operations, changes in shareholders equity
and cash flow of the Company and its Subsidiaries for the three months ended
September 30, 2000 and September 30, 1999, (iii) the unaudited balance sheets of
the Business as of June 30, 2000 and June 30, 1999 and the related unaudited
statements of operations and cash flows of the Business for each of the three
years in the period ended June 30, 2000 and (iv) the unaudited balance sheet of
the Business as of September 30, 2000 and the related unaudited statements of
operations and cash flows of the Business for the three months ended September
30, 2000 and September 30, 1999 (collectively, the "Financial Statements"). The
balance sheet of the Business as of June 30, 2000 is hereinafter referred to as
the "Balance Sheet". The
8
Financial Statements (a) have been prepared from the books and records of the
Company and its subsidiaries, (b) are in accordance with GAAP, (c) fairly
present in all material respects the consolidated financial condition and the
results of operations and cash flows of the Company and the Subsidiaries or the
financial condition and the results of operations and cash flows of the
Business, as applicable, as of the dates and for the periods indicated, and (d)
have been prepared on a consistent basis throughout and among the periods
covered thereby; provided, however, that those Financial Statements prepared as
of September 30, 2000 are subject to normal year-end adjustments.
2.5 Absence of Certain Changes or Events. Except as set forth in Section
2.5 of the Disclosure Schedule or as otherwise contemplated by this Agreement,
during the period from the date of the Balance Sheet to the date of this
Agreement, (i) the Company and the Subsidiaries have operated the Business
solely in the ordinary course of business consistent with past practices, (ii)
the Company and the Subsidiaries have not engaged in any of the activities
prohibited by Section 4.1 with respect to the Business, and (iii) there have
occurred no changes or events which, individually or in the aggregate, would
have a Division Material Adverse Effect.
2.6 Absence of Undisclosed Liabilities. Except as set forth in Section 2.6
of the Disclosure Schedule and for liabilities or obligations which are accrued
or reserved against on the Balance Sheet or disclosed in the notes thereto, the
Company and the Subsidiaries do not have any material liabilities or obligations
relating to the Business, whether accrued, absolute, contingent, matured or
unmatured, other than material liabilities or obligations incurred in the
ordinary course of business and consistent with past practice since the date of
the Balance Sheet, or incurred as permitted by Section 4.1.
2.7 Personal Property. (a) Except as set forth in Section 2.7(a) of the
Disclosure Schedule, the Company and the Subsidiaries have good and marketable
title to all personal property, whether tangible or intangible, owned by them,
and a valid and enforceable right to use all personal property leased by or
licensed to them relating to the Business (collectively, the "Personal
Property"), in each case, free and clear of all liens, claims, encumbrances,
options, xxxxxx and security interests ("Liens"), imperfections of title or
encumbrances of any nature whatsoever, other than (i) mechanics', carriers', or
workmen's, repairmen's or similar Liens arising or incurred in the ordinary
course of business, (ii) Liens for taxes, assessments and any other governmental
charges which are not due and payable or which may hereafter be paid without
penalty or which are being contested in good faith and for which appropriate
reserves are reflected on the Balance Sheet, and (iii) other imperfections of
title or encumbrances, if any, which imperfections of title or other
encumbrances, individually or in the aggregate, do not materially impair the use
or value of the property to which they relate (the Liens, imperfections of title
and encumbrances described in clauses (i), (ii) and (iii) above are hereinafter
referred to collectively as the "Permitted Liens").
(b) Except as set forth in Section 2.7(b) of the Disclosure Schedule, all
material tangible items of Personal Property, excluding all inventories relating
to the Business, necessary for the operation or conduct of the Business as
currently conducted are in the aggregate in adequate operating condition and
repair, normal wear and tear excepted, other than machinery and equipment under
repair or out of service in the ordinary course of business.
9
(c) Except as set forth in Section 2.7(c) of the Disclosure Schedule, all
inventories relating to the Business carried by the Company and the Subsidiaries
as of June 30, 2000 and reflected on the Balance Sheet are, and as of the
Closing Date and reflected on the Final Closing Date Statement will be, valued
at the lower of cost (using the first-in first-out method) or market, determined
on an item by item basis, in accordance with GAAP. The Company has adequate
obsolescence reserves to cover inventory items which have a market value lower
than cost. Except to the extent of inventory reserves reflected in the Balance
Sheet or in the calculation of Net Working Capital on the Final Closing Date
Statement, as the case may be, the items included in said inventories are normal
items of inventory carried by the Company and the Subsidiaries, and are current,
suitable and merchantable at customary prices for the filling of orders in the
normal course of business, and are not obsolete, damaged, defective or slow
moving.
(d) Except as set forth in Section 2.7(d) of the Disclosure Schedule, the
accounts receivable and notes receivable relating to the Business reflected on
the Balance Sheet are, and those reflected on the Final Closing Date Statement
will be, valid receivables arising in the ordinary course of business,
collectible within 120 days of the date of the invoices giving rise thereto (or,
in the case of notes receivable, the due date) at their face amount, and not
subject to any valid counterclaims or setoffs, except to the extent of the
accounts receivable reserves reflected on the Balance Sheet. All notes and
accounts receivable of the Company and the Subsidiaries are reflected properly
on their books and records. Notwithstanding the fact that any accounts
receivable or notes receivable are disclosed in Section 2.7(d) of the Disclosure
Schedule as an exception to this subsection, the representation in this
paragraph shall apply to those receivables without regard to such disclosure.
Accordingly, the Company shall indemnify and hold harmless the Buyer to the
extent that any such receivables are not collected at their face amount within
120 days of the date of the invoices (or, in the case of notes receivable, the
due date) giving rise thereto, in accordance with Article VIII of this
Agreement. If Buyer collects any account or note receivable after having
received indemnification therefor (either directly or by offset pursuant to the
Consulting Agreement), Buyer will remit the amount so collected to the Company.
2.8 Real Property. (a) As used in this Agreement, the term "Real Property"
shall mean all (i) real property owned by the Company or its Subsidiaries
relating to the Business and (ii) interests in real property leased by the
Company or the Subsidiaries relating to the Business. Section 2.8(a) of the
Disclosure Schedule lists all Real Property. Except as set forth in Section
2.8(a) of the Disclosure Schedule, the Real Property constitutes all real
property and interests in real property used in the conduct of the Business by
the Company and the Subsidiaries.
(b) As used in this Agreement, the term "Real Estate Permitted Liens" shall
mean:
(i) All building codes and zoning ordinances and other laws,
ordinances, regulations, rules, orders or determinations of any federal,
state, county, municipal or other governmental authority heretofore, now or
hereafter enacted, made or issued by any such governmental authority
affecting the Real Property which do not impair in any material respect the
use of the Real Property to which they relate;
10
(ii) All easements, rights-of-way, covenants, conditions, restrictions,
reservations, licenses, agreements and other similar matters which do not
impair in any material respect the use of the Real Property to which they
relate;
(iii) All electric power, telephone, gas, sanitary sewer, storm sewer,
water, steam, compressed air and other utility lines, pipelines, service
lines and similar facilities now located on, over or under the Real
Property, and all licenses, easements, flowage rights, rights-of-way and
other similar agreements relating thereto granted in the ordinary course of
business and which do not impair in any material respect the use of the
Real Property to which they relate; and
(iv) All existing public and private roads and streets (whether
dedicated or undedicated), and all railroad lines and rights-of-way
affecting the Real Property.
(c) Except as set forth in Section 2.8(c) of the Disclosure Schedule, the
Company and the Subsidiaries have valid leasehold interests in all Real Property
leased by them, in each case, free and clear of all mortgages, liens, security
interests, easements, covenants, rights-of-way and other encumbrances or
restrictions of any nature created by the Company, except for Permitted Liens
and Real Estate Permitted Liens which, individually or in the aggregate, would
not have a Division Material Adverse Effect.
(d) Except as set forth in Section 2.8(d) of the Disclosure Schedule,
there are no condemnation proceedings or eminent domain proceedings of any kind
pending or, to the best of the Company's knowledge, threatened against the Real
Property.
(e) Except as set forth in Section 2.8(e) of the Disclosure Schedule, to
the best of the Company's knowledge, all of the Real Property owned by the
Company and the Subsidiaries is occupied under a valid and current certificate
of occupancy or similar permit, the transactions contemplated by this Agreement
will not require the issuance of any new or amended certificate of occupancy and
there are no facts which would prevent the Real Property from being occupied
after the Closing Date in the same manner as before.
(f) Except as set forth in Section 2.8(f) of the Disclosure Schedule, to
the best of the Company's knowledge, all improvements on the Real Property owned
by the Company and the Subsidiaries were constructed in compliance with
applicable federal, state, local or foreign statutes, laws, ordinances,
regulations, rules, codes, orders or requirements (including, but not limited
to, any building, zoning or environmental laws or codes) affecting such
property, except where the failure to be in compliance would not, individually
or in the aggregate, materially impair the value or materially interfere with
the present use of such Real Property or otherwise materially impair business
operations.
(g) Except as set forth in Section 2.8(g) of the Disclosure Schedule, to
the best of the Company's knowledge, all improvements on the Real Property owned
by the Company and the
11
Subsidiaries and the present use and conditions thereof do not violate any
applicable deed restrictions or other applicable covenants, restrictions,
agreements, existing site plan approvals, zoning or subdivision regulations or
urban redevelopment plans as modified by any duly issued variances, and no
permits, licenses or certificates pertaining to the ownership or operation of
all improvements on the Real Property, other than those which are transferable
with the Real Property, are required by any governmental agency having
jurisdiction over the Real Property.
(h) Except as set forth in Section 2.8(h) of the Disclosure Schedule, to
the best of the Company's knowledge, all improvements on the Real Property owned
by the Company and the Subsidiaries are structurally sound in all material
respects and in reasonably good maintenance and repair, normal wear and tear
excepted.
2.9 Intellectual Property.
(a) Section 2.9(a) of the Disclosure Schedule sets forth a complete list of
all material registered patents, trademarks, trade names, service marks, assumed
names, copyrights and all applications therefor (collectively, the "Intellectual
Property") owned, filed or licensed by the Company or the Subsidiaries relating
to the Business and, with respect to registered trademarks, all jurisdictions in
which such trademarks are registered.
(b) As used in this Section 2.9(b), "Intellectual Property" shall also
include, to the extent related to or necessary for the operation of the
Business, all inventions (including Xxxx), invention studies (whether patentable
or unpatentable), designs, copyrights, mask works, trademarks (including,
without limitation, the use of the names "Moyco", "Union Xxxxxx" and "Xxxxxxxx"
in connection with the manufacture and sale of medical and dental devices),
service marks, trade dress, trade names, secret formulae, trade secrets, secret
processes, computer programs and know-how; provided however that the Company
shall retain ownership of and the right to use the names "Moyco Precision
Abrasives, Inc." in connection with the abrasives business and "Moyco
Technologies, Inc." as the Company's corporate name. Except as set forth in
Section 2.9(b) of the Disclosure Schedule, (i) the consummation of the
transactions contemplated by this Agreement will not materially impair any right
to use any Intellectual Property, (ii) all Intellectual Property owned by the
Company or the Subsidiaries is owned by the Company or such Subsidiary free and
clear of all Liens, (iii) the Company and the Subsidiaries own or have the right
to use all of the Intellectual Property used in the conduct of the Business, and
(iv) no claims have been asserted of which the Company or the Subsidiaries has
been given written notice by any person with respect to the ownership or use by
the Company or the Subsidiaries of the Intellectual Property.
2.10 Litigation. Except as set forth in Section 2.10 of the Disclosure
Schedule, there are no claims, actions, suits or proceedings pending, or to the
best of the Company's knowledge, investigations pending or claims, actions,
suits, proceedings or investigations threatened in writing against or affecting
the Company, the Subsidiaries or the Assets, at law or in equity, by or before
any Governmental Authority, or by or on behalf of any third party, except those
(if any) arising after the date hereof and prior to the Closing Date which, if
adversely determined, would not have a Division Material Adverse Effect. Except
as set forth in Section 2.10 of the Disclosure Schedule, the
12
Company has not received any notice that the Company, the Subsidiaries or any of
their respective assets relating to the Business is subject to any material
decree, order or judgment.
2.11 Employee Benefit Plans.
(a) Section 2.11(a) of the Disclosure Schedule sets forth a complete list
of all plans, contracts, agreements, practices, policies or arrangements, oral
or written, providing for employment or for any bonuses, deferred compensation,
excess benefits, pensions, retirement benefits, profit sharing, stock bonuses,
stock options, stock purchases, life, accident and health insurance,
hospitalization, savings, holiday, vacation, severance pay, change of control
payments or benefits, sick pay, leave, disability, tuition refund, service
awards or any other employee or executive benefits, including, without
limitation, any such plan, contract, agreement, practice, policy or arrangement
which is an "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, and the regulations
promulgated thereunder (collectively, "ERISA"), providing employee benefits or
compensation to current employees of the Business maintained or contributed to
by the Company or the Subsidiaries or to which the Company or any Subsidiary is
a party (each a "Plan" and, collectively, the "Plans").
(b) With respect to each Plan, the Company has delivered to Buyer a
current, accurate and complete copy of all documents which comprise the most
current version of each such Plan and any related trust agreement or other
funding instrument.
(c) None of the Plans is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA or a "defined benefit plan" within the meaning of
Section 3(35) of ERISA and, neither the Company nor the Subsidiaries have
contributed to such a plan in the preceding five (5) years.
(d) Except as set forth in Section 2.11(d) of the Disclosure Schedule, (i)
for each Plan that is intended to be qualified under Code Section 401(a), the
Company has obtained a favorable determination letter from the IRS to such
effect, and nothing has occurred, whether by action or inaction, that could
reasonably be expected to cause the loss of such qualification, and(ii) no
reportable event within the meaning of Section 4043 of ERISA or "prohibited
transaction" within the meaning of Section 406 of ERISA has occurred with
respect to any Plan and no material tax has been imposed pursuant to Section
4975 or Section 4976 of the Code in respect thereof.
(e) Except as set forth in Section 2.11(e) of the Disclosure Schedule,
there are no claims, suits or actions pending or, to the knowledge of the
Company, threatened by or on behalf of any of the Plans, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
(f) Each Plan listed on Section 2.11(a) of the Disclosure Schedule is in
material compliance with the provisions of ERISA, the Code, its governing
documents and all other Applicable Law, including, without limitation, all
notice and other requirements of the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA").
13
(g) The Company and the Subsidiaries are in material compliance with the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
and all other Applicable Laws which require the continuation of benefit coverage
upon the happening of certain events, such as the termination of employment or
change in beneficiary or dependent status. Neither the Company nor the
Subsidiaries has any obligation to provide health or other non-pension benefits
to retired or other former employees, except as specifically required by COBRA.
(h) There are no unpaid contributions due prior to the date hereof with
respect to any Plan that are required to have been made under its terms and
provisions, any related insurance contract, or Applicable Law.
(i) Neither the Company nor the Subsidiaries has incurred any liability or
taken any action and none of them has any knowledge of any action or event that
could cause any one of them to incur any liability under Section 412 of the Code
or Title IV of ERISA with respect to any "single-employer plan" (as defined in
Section 4001(a)(15) of ERISA).
(j) Except as set forth in Section 2.11(j) of the Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation of any
or all of the contemplated transactions will: (i) entitle any current or former
employee of the Company or its Subsidiaries to severance pay, unemployment
compensation or any similar payment, (ii) accelerate the time of payment or
vesting or increase the amount of any compensation due to any such employee or
former employee, or (iii) directly or indirectly result in any payment made or
to be made to or on behalf of any person to constitute a "parachute payment"
within the meaning of Section 280G of the Code.
2.12 Taxes. (a) Except as set forth in Section 2.12(a) of the Disclosure
Schedule:
(i) The Company and its Subsidiaries have timely filed (after giving
effect to applicable extensions) or caused to be filed, and will timely
file or cause to be filed, with the appropriate taxing authorities all Tax
Returns (as hereinafter defined) required to be filed by or with respect to
the Company, the Subsidiaries, the Business and the Assets for all periods
ending on or prior to the Closing Date, pursuant to the laws of any
governmental authority with taxing power over the Company or its assets or
businesses, and such Tax Returns are, and in the case of Tax Returns not
yet filed, will be, true, correct and complete in all material respects;
(ii) The Company and the Subsidiaries have paid or made adequate
provision for, or will pay or make adequate provision for, the payment of
all Taxes (as hereinafter defined) of the Company and the Subsidiaries that
are, or will become, due and payable by the Company or the Subsidiaries
relating to the Company, the Subsidiaries, the Business or the Assets for
all periods ending prior to, or on, the Closing Date. The Company and the
Subsidiaries have made provisions for, or will make adequate provision for,
and will timely pay, all Taxes relating to the Company, the Subsidiaries,
the Business or the Assets as finally
14
determined and payable after the Closing that relate to the Company's and
the Subsidiaries' ownership or sale of the Assets or operation of the
Business prior to the Closing;
(iii) No waivers of statutes of limitation have been given or
requested with respect to the Company or the Subsidiaries in connection
with any Tax Returns covering the Company or the Subsidiaries or with
respect to any Taxes payable by them;
(iv) The Company and the Subsidiaries have or have caused to be duly
and timely withheld, or will withhold or cause to be withheld on a timely
basis, and have paid, or will pay, over to the appropriate taxing
authorities all Taxes required to be so withheld and paid over (including,
without limitation, all employment related Taxes and withholdings) owed by
the Company and the Subsidiaries under all applicable laws for all periods
ending prior to or as of the Closing Date;
(v) There are no liens with respect to Taxes (except for Taxes which
are not yet delinquent) upon any of the Assets of the Company or the
Subsidiaries;
(vi) Neither the Company nor the Subsidiaries have received any notice
of deficiency or assessment or has any actual knowledge of any proposed
deficiency or assessment from any federal, state, local or other taxing
authority with respect to liabilities for which the Company and/or the
Subsidiaries may be liable;
(vii) No claim has been received from any taxing jurisdiction where
the Company or the Subsidiaries do not file Tax Returns that the Company or
the Subsidiaries are or may be subject to taxation by that jurisdiction;
and
(viii) None of the Assets is property that (a) is or will be required
to be treated as being owned by another party pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in
effect immediately before the enactment of the Tax Reform Act of 1986, (b)
is "tax-exempt use property" within the meaning of Section 168(h) of the
Code or, (c) secures any debt the interest on which is exempt from Tax
under Code Section 103.
(b) As used in this Agreement:
(i) "Taxes" means (i) all taxes, levies or other like assessments,
charges or fees (including estimated taxes, charges and fees), including,
without limitation, net income, gross income, corporation, advance
corporation, gross receipts, branch profits, premium, estimated, customs,
duties, transfer, excise, property, sales, use, value-added, license,
payroll, pay as you earn, withholding, social security and franchise or
other governmental taxes or charges, imposed by the United States or any
state, county, local or foreign government or subdivision or agency thereof
and any interest, penalties or additions to tax with respect thereto, and
(ii) any payments with respect to the items described in clause (i) that
are
15
required to be made under any other agreement, including, without
limitation, any tax-sharing or tax indemnification agreement.
(ii) "Tax Return" means any report, return, statement, estimate,
informational return, declaration or other written information required to
be supplied to a taxing authority in connection with Taxes.
2.13 Contracts and Commitments. Section 2.13 of the Disclosure Schedule
sets forth a list of all of the following agreements, contracts and commitments
relating to the Business to which the Company or any of the Subsidiaries is a
party or by which the Company, any of the Subsidiaries or the Assets are bound
(except for purchase orders for inventory by the Company or any of the
Subsidiaries in the ordinary course of business) (each, a "Material Contract"):
(a) employment agreements, severance agreements or employee termination
arrangements that are not terminable at will by the Company or a Subsidiary
without penalty;
(b) any change of control agreements with employees of the Company or the
Subsidiaries;
(c) agreements, contracts, commitments or arrangements containing any
covenant limiting the ability of the Company or the Subsidiaries to engage in
any line of business or to compete with any business or person;
(d) agreements or contracts with any Stockholder or any affiliate of a
Stockholder (other than the Company and the Subsidiaries) or any officer,
director or employee of the Company, the Subsidiaries, any Stockholder or any of
such affiliates (other than employment, severance and change of control
agreements covered by clause (a) or (b) above);
(e) agreements or contracts under which the Company or the Subsidiaries has
borrowed or loaned money, or any note, bond, indenture, mortgage, installment
obligation or other evidence of indebtedness for borrowed or loaned money or any
guarantee of such indebtedness;
(f) joint venture agreements or other agreements involving the sharing of
profits;
(g) leases pursuant to which Personal Property or Real Property is leased
to or from the Company or the Subsidiaries;
(h) powers of attorney from the Company or any Subsidiaries;
(i) guaranties, suretyships or other contingent agreements of the Company
or the Subsidiaries;
16
(j) any agreement, contract, commitment or arrangement relating to capital
expenditures with respect to the Company or the Subsidiaries and involving
future payments which exceed $50,000 in any 12-month period;
(k) any agreement, contract, commitment or arrangement relating to the
acquisition of assets (other than in the ordinary course of business consistent
with past practice) or any capital stock of any business enterprise;
(l) contracts (other than those covered by clauses (a) through (k) above)
pursuant to which the Company and the Subsidiaries will receive or pay in excess
of $100,000 over the life of the contract; and
(m) any other material agreements, contracts and commitments not entered
into in the ordinary course of business.
Except as set forth in Section 2.13 of the Disclosure Schedule, neither the
Company, the Subsidiaries nor, to the knowledge of the Company, any other party
thereto, is in material breach of or in material default under any Material
Contract. Each such Material Contract is in full force and effect, and is a
legal, valid and binding obligation of the Company and/or the Subsidiaries and,
to the knowledge of the Company, each of the other parties thereto, enforceable
in accordance with its terms, subject to the qualification that enforcement of
the rights and remedies created thereby are subject to (a) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and other laws of
general application affecting the rights and remedies of creditors, and (b)
general principles of equity, regardless of whether enforcement is considered in
a proceeding in equity or at law.
2.14 Compliance with Laws. Except as set forth in Section 2.14 of the
Disclosure Schedule, the Company and the Subsidiaries are in compliance with all
Applicable Laws and all Orders of, and agreements with, any Governmental
Authority applicable to the Company, or the Subsidiaries with respect to the
Business or the Assets except to the extent that such noncompliance would not
reasonably be likely to result in any material liability or obligations of the
Company or any Subsidiaries relating to the Business. Except as set forth in
Section 2.14 of the Disclosure Schedule, the Company and the Subsidiaries have
all material permits, certificates, licenses, approvals and other authorizations
required under Applicable Laws or necessary in connection with the conduct of
the Business (collectively, "Permits").
2.15 Insurance. Except as set forth in Section 2.15 of the Disclosure
Schedule, the Company and the Subsidiaries maintain policies of fire and
casualty, liability and other forms of insurance in such amounts, with such
deductibles and retained amounts, and against such risks and losses, as are, in
the judgment of the Company, reasonable for the conduct of the Business and the
assets relating to the Business. Section 2.15 of the Disclosure Schedule sets
forth a list of such insurance policies as are in full force and effect as of
the date of this Agreement, which policies the Company shall maintain in full
force and effect during the period from the date of this Agreement through the
Closing Date.
17
2.16 Labor Matters. Except as set forth in Section 2.16 of the Disclosure
Schedule, with respect to employees who are employed by the Business, to the
best knowledge of the Company, (a) the Company and the Subsidiaries are in
substantial compliance with all Applicable Laws regarding employment and
employment practices, (b) there is no unfair labor practice charge or complaint
against the Company nor the Subsidiaries pending before the National Labor
Relations Board nor is there any material grievance nor any material arbitration
proceeding arising out of or under collective bargaining agreements pending, (c)
there is no labor strike, slowdown, work stoppage or lockout in effect, or
threatened against or otherwise affecting the Company or the Subsidiaries, and
the Company and the Subsidiaries have not experienced any such labor controversy
within the past five years, (d) there is no material charge or complaint pending
against the Company or the Subsidiaries before the Equal Employment Opportunity
Commission, the Office of Federal Contract Compliance Programs or any similar
state, local or foreign agency responsible for the prevention of unlawful
employment practices, (e) neither the Company nor the Subsidiaries is a party
to, or otherwise bound by, any consent decree with, or citation by, any
Governmental Authority relating to employees or employment practices; (f) the
Company and the Subsidiaries will not have any material liability under any
benefit or severance policy, practice, agreement, plan, or program which exists
or arises, or may be deemed to exist or arise, under any Applicable Law or
otherwise, as a result of the transactions contemplated hereunder; (g) neither
the Company nor the Subsidiaries is a party to any collective bargaining
agreement; and (h) the Company and the Subsidiaries are in compliance with its
obligations pursuant to the Worker, Adjustment and Retraining Notification Act
of 1988 ("WARN Act"), and in substantial compliance with all other notification
and bargaining obligations arising under any collective bargaining agreement,
statute or otherwise. Neither the Company nor the Subsidiaries has received
written notice of the intent of any federal, state, local or foreign agency
responsible for the enforcement of employment laws to conduct an investigation
of or relating to the Company or the Subsidiaries with respect to the employment
of employees who are employed in the Business, and no such investigation is in
progress.
2.17 Environmental Matters. Except as set forth in Section 2.17 of the
Disclosure Schedule, (i) neither the Company nor the Subsidiaries has with
respect to the Business, as of the date hereof, received any notice alleging the
material violation of, or any material actual or potential liability relating
to, any applicable Federal, state or local statutes, laws, regulations, rules,
decrees, orders, judgments, ordinances, or common law related to the protection
of human health or the environment, or the use, treatment, storage, disposal,
release or transportation of Hazardous Substances, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, the Emergency Planning and Community Right-To-Know Act, the Solid Waste
Disposal Act, the Resource Conservation and Recovery Act, the Clean Air Act, the
Water Pollution Control Act, the Toxic Substances Control Act, the Hazardous
Materials Transportation Act, and the Occupational Safety and Health Act, each
as amended and supplemented, and any regulations promulgated pursuant to such
laws, and any similar state or local statutes or regulations ("Environmental
Laws"), which violation or liability has not been resolved and, to the knowledge
of the Company, no such notice is threatened or otherwise expected, (ii) the
Company and the Subsidiaries, with respect to the Business, are and have been in
material compliance with all applicable Environmental Laws and, to the knowledge
of the Company, there is no condition that could prevent or materially interfere
with such compliance in the future, (iii) the
18
Company and the Subsidiaries have obtained and are and have been in material
compliance with all governmental environmental permits, registrations and
authorizations required under Environment Laws for the operation of the
Business, (iv) no hazardous waste, substance, material, pollutant, contaminant,
or chemical, including, without limitation, petroleum and petroleum products,
asbestos and any other material regulated under, or that can result in liability
under, applicable Environmental Laws ("Hazardous Substances"), has been
transported, stored, treated or disposed of by the Company or the Subsidiaries
in operating the Business on or, solely as a result of the activities of the
Company or the Subsidiaries, is present on or under the real property included
in the Assets, except as would not result in material liability under any
applicable Environmental Laws, (v) neither the Company nor the Subsidiaries has
with respect to the Business entered into, agreed to, or is subject to any
judgment, decree or order of any governmental authority under any Environmental
Laws, (vi) there are no (w) underground or aboveground storage tanks, (x)
surface impoundments, (y) landfills or (z) septic systems currently or formerly
present at or about any of the properties or facilities owned or leased by the
Company or the Subsidiaries and included within the Assets that would be
reasonably likely to result in material liability to the Business under any
applicable Environmental Laws, and (vii) there are no actions, activities,
events, conditions or circumstances occurring or existing during the time of the
Company's or the Subsidiaries' operation of the Business and ownership of its
properties as a direct result of the activities of the Company or the
Subsidiaries, including without limitation the release, threatened release,
emission, discharge, generation, treatment, storage or disposal of Hazardous
Substances, that would be reasonably likely to result in any material liability
or obligation of the Business under or relating to any Environmental Laws.
2.18 Transactions with Affiliates. Except as disclosed in Section 2.13 or
2.18 of the Disclosure Schedule, there are no contracts, agreements or
arrangements between the Company (or the Subsidiaries) and any Stockholder (or
any affiliate of a Stockholder) relating to the Business.
2.19 Material Suppliers and Customers. Section 2.19 of the Disclosure
Schedule sets forth the names of the ten suppliers and ten customers to whom the
Company and the Subsidiaries paid or from whom they received the greatest sum of
money in respect of services, products or materials provided to or from the
Company and the Subsidiaries between June 30, 1999 and June 30, 2000 relating to
the Business. Except as disclosed in Section 2.19 of the Disclosure Schedule,
since June 30, 1999, none of the suppliers or customers listed in Section 2.19
of the Disclosure Schedule has notified the Company or any Subsidiary that it is
canceling, otherwise terminating or significantly reducing or that it intends to
cancel, otherwise terminate or significantly reduce its relationship with the
Company.
2.20 Brokers. Except for Exit Strategies, Inc., whose fees will be paid by
the Company, no broker, finder or financial advisor or other person is entitled
to any brokerage fees, commissions, finders' fees or financial advisory fees in
connection with the transactions contemplated hereby by reason of any action
taken by any Stockholder or the Company or any of their respective directors,
officers, employees, representatives or agents.
2.21 Complete Assets. Except as set forth on Schedule 2.21, the Assets
represent all assets, properties, franchises, licenses, permits, consents,
certificates, authorities, operating rights,
19
leases, contracts, agreements, commitments and arrangements necessary for the
conduct of the Business in the ordinary course in the same manner as that in
which the Business is currently conducted by the Company and the Subsidiaries.
2.22 Product Warranties. Except as set forth in Schedule 2.22 of the
Disclosure Schedule, there are no express product warranties applicable to
products sold by the Company or the Subsidiaries in connection with the
Business.
III. REPRESENTATIONS AND WARRANTIES OF BUYER.
----------------------------------------
Buyer hereby represents and warrants to the Company as follows:
3.1 Organization; Authority. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, and has
all requisite power and authority to enter into this Agreement and the
agreements contemplated by this Agreement to be entered into by Buyer at Closing
(collectively, "Buyer Agreements"), and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Buyer of this Agreement and the other Buyer Agreements, and the consummation of
the transactions contemplated hereby and thereby, have been duly authorized by
all necessary action on the part of Buyer. This Agreement has been duly executed
and delivered by Buyer and constitutes a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. Each other Buyer
Agreement will be duly executed and delivered by Buyer and, assuming that such
other Buyer Agreement constitutes a valid and binding obligation of the Company,
will constitute a valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms.
3.2 No Violation; Consents and Approvals. The execution and delivery by
Buyer of this Agreement and the other Buyer Agreements do not, and the
consummation of the transactions contemplated hereby and thereby and compliance
with the terms hereof and thereof, will not, conflict with, or result in any
violation of or default under, (a) any provision of the organizational documents
of Buyer, (b) any Order or Applicable Laws applicable to Buyer or the property
or assets of Buyer or (c) any contracts to which Buyer is a party or by which
Buyer or its assets may be bound, which conflict, violation or default would
materially impair Buyer's ability to consummate the transactions contemplated
hereby. Except as set forth in Section 3.2 of the Disclosure Schedule, no
Governmental Approval is required to be obtained or made by or with respect to
Buyer or its affiliates in connection with the execution and delivery of this
Agreement, or the consummation by Buyer of the transactions contemplated hereby,
other than, in each case, those the failure of which to obtain, individually or
in the aggregate, would not materially impair Buyer's ability to consummate the
transactions contemplated hereby.
3.3 Litigation. There are no claims, actions, suits, investigations or
proceedings pending or, to the knowledge of Buyer, threatened against or
affecting Buyer or its assets, at law or in equity, by or before any
Governmental Authority, or by or on behalf of any third party, which, if
adversely determined, would materially impair Buyer's ability to consummate the
transactions contemplated hereby, and there are no outstanding Orders of any
Governmental Authority, affecting Buyer or its
20
assets, at law or in equity, or which would impair materially Buyer's ability to
consummate the transactions contemplated hereby.
3.4 Brokers. Other than American Securities Capital Partners, L.P., the
fees of which will be paid by Buyer or an affiliate thereof at Closing, no
broker, finder or financial advisor or other person is entitled to any brokerage
fees, commissions, finders' fees or financial advisory fees in connection with
the transactions contemplated hereby by reason of any action taken by Buyer or
any of its partners, officers, employees, representatives or agents.
IV. COVENANTS OF THE PARTIES.
------------------------
4.1 Conduct of the Company's Business. Except as contemplated by this
Agreement and as set forth in Section 4.1 of the Disclosure Schedule, during the
period from the date hereof to the Closing Date, the Company will, and will
cause the Subsidiaries to, conduct the Business solely in the ordinary course of
business consistent with past practice and use reasonable commercial efforts to
keep available the services of its officers and employees associated with the
Business and preserve its current relationships with customers, suppliers,
licensors, creditors and others having business dealings with the Business.
Without limiting the generality of the foregoing, except as expressly provided
by this Agreement and as set forth in Section 4.1 of the Disclosure Schedule,
during the period from the date of this Agreement to the Closing Date, without
the prior written consent of Buyer, not to be unreasonably withheld, neither the
Company nor the Subsidiaries, with respect to the Business, will:
(a) create, incur, assume or guarantee any indebtedness for borrowed money,
other than borrowings (including, without limitation, obligations in respect of
capital leases) and issuances of letters of credit in the ordinary course of
business and consistent with past practice;
(b) increase the rate of compensation or benefits of, or pay or agree to
pay any benefit to (including, but not limited to, severance or termination
pay), present or former directors, officers or employees, except (i) salary
increases and bonuses granted in accordance with past practices, and (ii) as may
be required by any existing Plan, agreement or arrangement disclosed to Buyer
prior to the date hereof;
(c) enter into, adopt, terminate or amend any Plan, employment or severance
agreement or any plan, agreement, program, policy, trust, fund or other
arrangement that would be a Plan if it were in existence as of the date of this
Agreement, except as required by law;
(d) sell, lease, transfer, or otherwise dispose of capital assets, real,
personal or mixed, which have an aggregate book value in excess of $50,000 or
mortgage or encumber any properties or assets, whether real or personal, which
have an aggregate book value in excess of $50,000;
(e) agree to acquire any assets which are material, individually or in the
aggregate, to the Company and the Subsidiaries, except raw materials and
finished goods acquired in the ordinary course of business;
21
(f) enter into, modify, amend or terminate any Material Contract, except
(i) modifications or amendments in connection with renewals of Material
Contracts in the ordinary course of business and (ii) any modification,
amendment or termination approved by Buyer prior to the date hereof of any
agreement;
(g) waive or release any rights of material value, or cancel, compromise,
release or assign any material indebtedness owed to it or any material claims
held by it;
(h) cancel or terminate any insurance policy naming it as a beneficiary or
a loss payable payee without obtaining comparable substitute insurance coverage;
(i) effectuate a "plant closing" or "mass layoff" (as those terms are
defined under the WARN Act) affecting in whole or in part any site of
employment, facility, operating unit or employees of the Company or the
Subsidiaries;
(j) amend its certificate of incorporation or by-laws;
(k) change any of its accounting principles, methods or practices;
(l) change its fiscal year end inventory, shipping operations or cut-off
procedures; or
(m) agree, whether in writing or otherwise, to do any of the foregoing.
4.2 Access to Information Prior to the Closing; Confidentiality. (a) During
the period from the date of this Agreement through the Closing Date, the Company
will give Buyer and its agents and authorized representatives (including
prospective lenders) full and complete access to all offices, facilities, books
and records, officers, employees and advisors (including audit and tax working
papers prepared by its independent accountants, provided that Buyer will execute
releases reasonably requested by the independent accountants if requested to do
so) of the Company and the Subsidiaries relating to the Business as Buyer may
reasonably request during normal business hours; provided, however, that the
Buyer must first obtain the verbal consent of a duly authorized officer of the
Company prior to contacting any employee of the Company or the Subsidiaries.
(b) Until the Closing, Buyer will hold and will cause its employees,
agents, affiliates, consultants, representatives and advisors to hold any
information which it or they receive in connection with the activities and
transactions contemplated by this Agreement in strict confidence in accordance
with and subject to the terms of the Confidentiality and Non-Disclosure
Agreement dated as of August 4, 2000 between American Securities Capital
Partners, L.P. ("ASCP") (an affiliate of the Buyer) and the Company and the
Confidentiality and Non-Disclosure Agreement dated as of March 9, 2000 between
Buyer and the Company (collectively, the "Confidentiality Agreements") to the
same extent as though each were a party to the Confidentiality Agreements.
22
4.3 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement at the earliest
practicable date.
4.4 Consents. (a) Without limiting the generality of Section 4.3 hereof,
each of the parties hereto will use its reasonable best efforts to obtain all
licenses, Permits, consents and approvals of all third parties and Governmental
Authorities necessary in connection with the consummation of the transactions
contemplated by this Agreement prior to the Closing. Each of the parties hereto
will make or cause to be made all filings and submissions under laws and
regulations applicable to it as may be required for the consummation of the
transactions contemplated by this Agreement. The parties hereto will coordinate
and cooperate with each other in exchanging such information and assistance as
any of the parties hereto may reasonably request in connection with the
foregoing.
(b) Without limiting the generality of Section 4.3 hereof, the Company
shall provide reasonable assistance to Buyer in its efforts to arrange the
borrowing of funds in connection with the transaction, including facilitating
customary due diligence, arranging for senior officers of the Company to meet
with prospective lenders and providing reliance letters for customary legal
opinions of the Company's attorneys; provided, however, that the Company shall
not be required to extend assistance to more than 2 prospective lending groups,
without its consent (which shall not be unreasonably withheld).
4.5 Public Announcements. The parties hereto shall not issue any report,
statement or press release or otherwise make any public statement with respect
to this Agreement and the transactions contemplated hereby without prior
consultation with and approval of the other parties, except as may be required
by law, in which case such party shall advise the other party and discuss the
contents of the disclosure before issuing any such report, statement or press
release.
4.6 Payment of Transaction Fees. The Company hereby agrees that any
Transaction Fees which are not paid by the Company on or before the Closing Date
shall be the sole responsibility of the Company.
4.7 Employees. (a) Buyer hereby agrees that it will notify the Company at
least 10 days prior to the Closing of the current employees of the Business that
it intends to hire as of the Closing (the "Transferring Employees"). As of the
Closing Date, the Transferring Employees who have an account balance in any
defined contribution plan (the "Defined Contribution Plans") maintained by the
Company or any Subsidiary shall receive a distribution of their account balances
and shall be permitted to rollover his or her "eligible rollover distribution"
(as defined under Section 402(c)(4) of the Code) to a retirement plan
established or maintained by Buyer that contains a cash or deferred arrangement
under Section 401(k) of the Code, including the rollover of an in-kind
distribution of any outstanding loan balances. The Company acknowledges that, on
and after the Closing Date, the account balances of the Transferring Employees
shall be distributed from the Defined Contribution
23
Plans in accordance with Section 401(k)(10) of the Code. Effective as of the
Closing Date, the Transferring Employees shall cease to be covered by the
Company's welfare benefit plans, including, but not limited to, plans, programs,
and arrangements which provide medical and dental coverage, life and accident
insurance, disability insurance and severance pay ("Welfare Plans"). The Company
shall retain responsibility only for those claims incurred by the Transferring
Employees (or their eligible dependents) under any benefit plan of the Company
or the Subsidiaries, including any Welfare Plan, prior to the Closing Date; a
claim shall be deemed to be incurred on the date on which medical or other
treatment or service was rendered (and not the date of inception of an illness
or injury or the date on which a claim for treatment or service is submitted).
Buyer shall include the Transferring Employees in its welfare plans as of the
Closing Date, and, unless commercially unreasonable, such plans shall honor any
deductible and out of pocket expenses incurred by the Transferring Employees
under Seller's Welfare Plans during the portion of the year prior to the Closing
Date, and shall waive any preexisting condition exclusion under such insurance.
(b) The Company and the Seller Persons hereby agree that for a period of
two years following the Closing, without the prior written consent of Buyer,
which shall be in its sole discretion, none of the Seller Persons will offer
employment to, or employ, any Transferring Employees.
4.8 Action by Stockholders. (a) In accordance with all requirements of the
Pennsylvania Business Corporation Law and subject to the provisions of
subsection (b) of this Section 4.8, the Company shall: (i) promptly after the
execution and delivery of this Agreement, duly call, give notice of, convene and
hold a special meeting (the "Special Meeting") of the shareholders of the
Company for the purpose of approving the plan of asset transfer and the
transactions contemplated by this Agreement; and (ii) unless the Company
receives an unsolicited proposal for an Alternative Transaction after the date
hereof and the Company's Board of Directors determines in good faith (after
consultation with counsel) that in order to comply with its fiduciary duties to
its shareholders under Applicable Law it may not do so, include in any Statement
(and not modify or amend) the determination and recommendation of the Board of
Directors to the effect that the Board of Directors, having determined that this
Agreement and the transactions contemplated hereby are in the best interests of
the Company and its shareholders, has approved this Agreement, the plan of asset
transfer and such transactions and recommends that the shareholders of the
Company vote in favor of and approve this Agreement and the transactions
contemplated hereby.
(b) As soon as practicable after the execution and delivery of this
Agreement, but in no event later than January 19, 2001, the Company shall file
with the Securities and Exchange Commission (the "SEC") under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and shall use
commercially reasonable efforts to clear with the SEC and mail to the
shareholders of the Company no later than March 9, 2001, a proxy information
statement with respect to the Special Meeting (the "Statement"). The Company and
Buyer shall cooperate in the preparation of any Statement; without limiting the
generality of the foregoing, Buyer shall furnish to the Company the information
relating to Buyer required by the Exchange Act to be set forth in the Statement.
The Company agrees that the Statement shall comply in all material respects with
the Exchange Act and the rules and regulations thereunder; provided, however,
that no agreement
24
is made by the Company with respect to information supplied by Buyer expressly
for inclusion in the Statement. Buyer and its counsel shall be given a
reasonable opportunity to review the Statement, all amendments and supplements
thereto, and all replies to SEC comments with respect thereto, prior to the
filing or sending thereof with or to the SEC.
4.9 No Solicitation. Unless this Agreement has been terminated in
accordance with Section 7 hereof, none of the Company, Xxxxxx X. Xxxxxxxxx, nor
any of their respective affiliates nor their respective advisors, controlling
shareholders or other representatives (collectively, the "Seller Persons"), will
initiate, encourage, solicit, direct any of their employees to encourage, or,
unless the Company's Board of Directors determines in good faith (after
consultation with counsel) that such negotiations or discussions or provision of
information is required in order for the Board of Directors of the Company to
comply with its fiduciary duty to the shareholders of the Company, continue or
conduct any negotiations or discussions with, or provide any information to, any
third party other than Buyer or any of its designated affiliates or financing
sources concerning the acquisition or merger of the Company, the forming of any
type of business combination with the Company or the sale of Assets (except for
inventory in the ordinary course of business) or any equity securities of the
Company nor will any of such Seller Persons enter into any agreement relating to
any of the foregoing (collectively, an "Alternative Transaction").
V. TAX MATTERS.
-----------
5.1 Transfer and Conveyance Taxes. The Company shall be liable for and shall
pay all applicable sales, transfer, recording, deed, stamp and other similar
taxes, including, without limitation, any real property transfer or gains taxes
(if any), resulting from the consummation of the transactions contemplated by
this Agreement; provided, however, that, in accordance with customary practices,
any Pennsylvania real property transfer taxes shall be paid one-half by the
Company and one-half by the Buyer.
5.2 Clearance Certificate. Within 5 days following the Closing Date, the
Company and the Subsidiaries shall each file an application for a tax clearance
certificate with the Department of Revenue and the Department of Labor and
Industry of the Commonwealth of Pennsylvania. Upon receipt of each such
certificate, the Company shall promptly provide a copy of that certificate to
the Buyer.
VI. CONDITIONS TO CLOSING.
---------------------
6.1 Conditions to the Company's Obligations. The obligations of the Company
to consummate the transactions contemplated by this Agreement are subject to the
fulfillment at or prior to the Closing of each of the following conditions (any
or all of which may be waived in whole or in part by the Company).
(a) Representations and Warranties. The representations and warranties of
Buyer in this Agreement shall be true and correct in all material respects as at
the date when made and at and as
25
of the Closing Date as though such representations and warranties were made at
and as of the Closing Date, except for changes permitted by the terms of this
Agreement.
(b) Performance. Buyer shall have, in all material respects, performed and
complied with all agreements, obligations, covenants and conditions required by
this Agreement to be so performed or complied with by Buyer at or prior to the
Closing.
(c) Officer's Certificate. Buyer shall have delivered to the Company a
certificate, dated as of the Closing Date, executed by an officer of Buyer,
certifying the fulfillment of the conditions specified in Sections 6.2(a) and
6.2(b) hereof.
(d) No Injunction. On the Closing Date, there shall not be in effect any
order issued by a court of competent jurisdiction restraining or prohibiting
consummation of the transactions contemplated by this Agreement.
(e) Legal Opinion. The Company shall received a legal opinion of Xxxx,
Scholer, Fierman, Xxxx & Handler, LLP, counsel to Buyer, substantially in the
form of Exhibit 6.1 (e) hereto.
(f) Closing Deliveries. Each of the other parties to this Agreement (other
than the Company) shall have executed and delivered each of the agreements
required to be delivered by them pursuant to Section 1.3.
(g) Consents and Approvals. The Company shall have obtained all Governmental
Approvals set forth in Section 2.3 of the Disclosure Schedule.
(h) Assumption of Liabilities Agreement. Buyer shall have delivered to the
Company an Assumption of Liabilities Agreement substantially in the form of
Exhibit 6.1(h) hereto with respect to the Assumed Liabilities.
(i) Shareholder Approval. The shareholders of the Company shall have approved
this Agreement and the transactions contemplated hereby in accordance with
Section 1932 of the Pennsylvania Business Corporation Law.
(j) Consulting Agreement. The Buyer shall enter into the Consulting
Agreement, substantially in the form of Exhibit 6.2 (j) hereto.
6.2 Conditions to Buyer's Obligations. The obligations of Buyer to consummate
the transactions contemplated by this Agreement are subject to the fulfillment
at or prior to the Closing of each of the following conditions (any or all of
which may be waived in whole or in part by Buyer):
(a) Representations and Warranties. The representations and warranties of the
Company in this Agreement which are qualified as to materiality or "Division
Material Adverse Effect" shall be true and correct in all respects and all other
representations and warranties of the Company in this
26
Agreement shall be true and correct in all material respects as at the date when
made and at and as of the Closing Date as though such representations and
warranties were made at and as of the Closing Date.
(b) Performance. The Company shall have, in all material respects,
performed and complied with all agreements, obligations, covenants and
conditions required by this Agreement to be so performed or complied with by the
Company at or prior to the Closing.
(c) Officer's Certificate. The Company shall have delivered to Buyer a
certificate, dated as of the Closing Date, executed by an officer of the
Company, certifying the fulfillment of the conditions specified in Sections
6.1(a) and 6.1(b) hereof.
(d) No Injunction. On the Closing Date, there shall not be in effect any
Order issued by a court of competent jurisdiction restraining or prohibiting
consummation of the transactions contemplated by this Agreement.
(e) Consents and Approvals. Buyer shall have been provided with all
material consents and approvals, or waivers thereof, of third parties,
including, without limitation, all Governmental Approvals (including, without
limitation, all governmental consents required by the Foot Powder Settlement)
and any required in order to assign to Buyer all rights of the Company and its
Subsidiaries to the contracts set forth on Schedule 1.2(a)(C) and to the
Permits. In addition, at Buyer's option, Buyer shall have obtained policies of
title insurance dated the time and date of the Closing Date with respect to the
Real Property with liability equal to the fair market value of the Real Property
as determined for purposes of Section 1.5 hereof, and the improvements therein,
as reasonably determined by Buyer, insuring Buyer (or its assignee) as the sole
owner of good, marketable and indefeasible title thereto, subject only to the
Permitted Liens, and containing all endorsements reasonably requested by Buyer.
(f) Transfer Documents. The Company shall have delivered to Buyer customary
bills of sale, deeds, assignments and other instruments of transfer sufficient
to convey good and marketable title to the Assets, free of all encumbrances
other than Permitted Liens, in accordance with the terms of this Agreement.
(g) Material Adverse Effect. There shall not have been any Division
Material Adverse Effect from June 30, 2000 to the Closing Date, nor shall there
exist any condition occurring after June 30, 2000 which could reasonably be
expected to result in a Division Material Adverse Effect.
(h) Legal Opinion. Buyer shall have received a legal opinion of (i)
Posternak, Xxxxxxxxxx & Xxxx, LLP, counsel to the Company, and (ii) Xxxxxx
Xxxxxx, P.C., special Pennsylvania counsel to the Company, substantially in the
forms of Exhibit 6.2 (h)(i) and 6.2(h)(ii), respectively.
(i) Closing Deliveries. Each of the other parties to this Agreement shall
have executed and delivered each of the agreements required to be delivered by
them pursuant to Section 1.3.
27
(j) Consulting Agreement. Xxxxxx X. Xxxxxxxxx shall enter into the
Consulting Agreement, substantially in the form of Exhibit 6.2(j) hereto.
(k) FIRPTA. The Company shall execute, and deliver to Buyer, a certificate
stating that it is not a "foreign person" for purposes of Section 1445 of the
Code.
(l) Due Diligence. Buyer shall have completed its due diligence review of
the Business and the Assets, and such review shall be satisfactory to it in all
respects; provided that this shall not be a condition to Buyer's obligations
hereunder unless Buyer shall have notified Seller in writing on or before
January 31, 2001 that this condition has not been satisfied.
(m) Shareholder Approval. The shareholders of the Company shall have
approved this Agreement, the plan of asset transfer and the transactions
contemplated hereby in accordance with Section 1932 of the Pennsylvania Business
Corporation Law.
(n) Termination Agreement. The Trademark License Agreement between Sweet
Pea and the Company shall be terminated.
(o) Transition Agreement. The Company shall enter into a Transition
Agreement, substantially in the form of Exhibit 6.2(o) hereto.
VII. TERMINATION.
-----------
7.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned:
(a) at any time, by mutual written agreement of the Company and Buyer;
(b) on or before January 31, 2001, by Buyer or the Company, if on or before
such date Buyer shall have provided to the Company the written notice referred
to in Section 6.2(m);
(c) at any time after May 2, 2001, by the Company upon written notice to
Buyer, if the Closing shall not have occurred for any reason other than a breach
of this Agreement by the Company;
(d) at any time after May 2, 2001, by Buyer upon written notice to the
Company, if the Closing shall not have occurred for any reason other than a
breach of this Agreement by Buyer;
(e) by either Buyer or the Company if a court of competent jurisdiction
shall have issued an order permanently restraining or prohibiting the
transactions contemplated by the Agreement, and such order shall have become
final and nonappealable; or
(f) by either Buyer or the Company if the shareholders of the Company shall
not have approved this Agreement, the plan of asset transfer and the
transactions at the Special Meeting
28
contemplated hereby in accordance with Section 1932 of the Pennsylvania Business
Corporation Law.
7.2 Procedure and Effect of Termination. (a) Subject to paragraph (b), in
the event of the termination of this Agreement and the abandonment of the
transactions contemplated hereby pursuant to Section 7.1 hereof, this Agreement
shall become void and there shall be no liability on the part of any party
hereto except (i) the obligations provided for in this Section 7.2 and Section
10.8 hereof, the confidentiality provision contained in Section 4.2 hereof, the
Confidentiality Agreements referred to in such Section, the Cap in Section
8.3(b) hereof, and the Buyer's Cap in Section 8.5 hereof shall survive any such
termination of this Agreement and (ii) nothing herein shall relieve any party
from liability for breach of this Agreement. The Buyer agrees that for a period
of two years following the termination of this Agreement, without the prior
written consent of the Company, which shall be in its sole discretion, the Buyer
shall not solicit for employment any of the employees of the Company or of the
Subsidiaries, provided, however, that an advertisement regarding the
availability of employment in a newspaper, an Internet site, or the like, shall
not be considered a solicitation hereunder.
(b) If (i) the Company's Board of Directors shall fail to recommend, or
shall modify or amend its recommendation, that the shareholders of the Company
vote in favor of this Agreement, the plan of asset transfer and the transactions
contemplated hereby, (ii) the Company or the Buyer shall terminate this
Agreement pursuant to Section 7.1(f) and (iii) the Company shall within 90 days
thereafter enter into an agreement for an Alternative Transaction, the Company
shall promptly pay to Buyer a fee of $750,000 (the "Termination Fee").
VIII. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION.
----------------------------------------------------------------------
8.1 Survival of Representations and Warranties. The representations and
warranties in this Agreement and in any other document delivered in connection
herewith shall survive the Closing Date. A claim for indemnification relating to
the representations and warranties (i) may be made at any time prior to the date
which is 15 months from the Closing Date (except as set forth in (ii) hereof)
and (ii) in Sections 2.1, 2.11, 2.12 and 2.17 may be made at any time until the
expiration of the applicable statute of limitations. A claim for indemnification
with respect to the Excluded Liabilities may be made at any time. The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty, covenant
or obligation. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages or other remedy based on such representations, warranties, covenants and
obligations.
29
8.2 The Company's Agreement to Indemnify. Upon the terms and subject to
the conditions of this Article VIII, the Company shall indemnify, defend and
hold harmless Buyer and its officers, directors, partners, employees, agents and
affiliates at any time after the Closing, from and against any and all demands,
claims, actions or causes of action, assessments, losses, damages, liabilities,
costs and expenses, including, without limitation, interest, penalties and
reasonable attorneys' fees and expenses (collectively, "Damages") asserted
against, relating to, imposed upon or incurred by Buyer or such affiliates or
other indemnified persons arising from or in connection with (i) a breach of any
representation or warranty of the Company contained in or made pursuant to this
Agreement; (ii) non-fulfillment of any agreement or covenant of the Company
contained in or made pursuant to this Agreement; or (iii) the Excluded
Liabilities (collectively, "Buyer Claims").
8.3 The Company's Limitation of Liability. (a) Notwithstanding anything to
the contrary contained in Section 8.2 hereof, the Company shall have no
liability for indemnification under this Article VIII unless the Company has
been notified of the claim within the survival period specified in Section 8.1
hereof.
(b) Notwithstanding anything to the contrary set forth in this Agreement,
the Company shall not be liable hereunder to Buyer, its directors, officers,
shareholders, employees, agents, representatives, successors and assigns except
to the extent that the Damages incurred shall exceed in the aggregate Three
Hundred Fifty Thousand Dollars ($350,000) (the "Basket"), in which event the
Company shall be liable for all Buyer Claims (including amounts included in the
Basket); provided, that the indemnified party shall not be required to sustain
Damages in excess of the Basket amount prior to being indemnified against
Damages resulting from the Excluded Liabilities, and the Company shall be liable
for all Damages relating thereto; provided further, that the Company shall not
be liable hereunder for any amount in the aggregate in excess of Seventeen
Million Dollars ($17,000,000) (the "Cap").
8.4 Buyer's Agreement to Indemnify. Upon the terms and subject to
conditions of this Article VIII, Buyer shall indemnify, defend and hold harmless
the Company and its officers, directors, partners, employees, agents and
affiliates (collectively, the "Seller Indemnities"), at any time after the
Closing, from and against and shall reimburse such person for all Damages
asserted against, relating to, imposed upon or incurred by the Company or such
affiliates or other indemnified persons arising from or in connection with (i) a
breach of any representation or warranty of Buyer contained in or made pursuant
to this Agreement or (ii) non-fulfillment of any agreement or covenant of Buyer
contained in or made pursuant to this Agreement (collectively, "Company
Claims").
8.5 Buyer's Limitation of Liability. Buyer shall have no liability for
indemnification under Section 8.4 unless it has been notified of the claim
within the survival period specified in Section 8.1 hereof. Notwithstanding
anything to the contrary set forth in this Agreement, Buyer shall not be liable
under this Article VIII or for any other claim related to this Agreement or the
contemplated transactions for any amount in the aggregate in excess of Seven
Hundred Fifty Thousand Dollars ($750,000) (the "Buyer Cap"). The Buyer Cap shall
be the sole and exclusive remedy of the Seller Indemnities for a Company Claim
or any other claim against Buyer relating to this Agreement and the transactions
contemplated herein. Upon receipt of the Buyer Cap, the Seller
30
Indemnities shall be precluded from exercising any other right or remedy
available under this Agreement or applicable law against Buyer.
8.6 Conditions of Indemnification With Respect to Third-Party Claims. The
obligations and liabilities of the Company and Buyer with respect to Buyer
Claims and Company Claims, respectively, which arise or result from claims for
Damages made by third parties ("Third-Party Claims") shall be subject to the
following terms and conditions:
(i) The indemnified party will give the indemnifying party prompt
notice of any such Third-Party Claim, setting forth therein in reasonable
detail the basis for such Third Party Claim, and the indemnifying party
shall have the right (unless (a) the indemnifying party is also a party to
such proceeding and the indemnified party determines in good faith that
joint representation would be inappropriate, or (b) the indemnifying party
fails to provide reasonable assurance to the indemnified party of its
financial capacity to defend such proceeding and provide indemnification
with respect to such proceeding) to undertake the defense thereof by
representatives chosen by it, provided, that failure to provide such
prompt notice shall not affect the indemnifying party's obligations
hereunder, except to the extent that the indemnifying party is actually
prejudiced by such failure; and provided, further, that the indemnified
party will reasonably cooperate with the indemnifying party in defending
such Third Party Claim;
(ii) If the indemnifying party, within a reasonable time after notice
of any such Third-Party Claim, fails to defend the indemnified party
against which such Third-Party Claim has been asserted, the indemnified
party shall (upon further notice to the indemnifying party) have the right
to undertake the defense, compromise or settlement of such Third Party
Claim on behalf of and for the account and risk of the indemnifying party
subject to the right of the indemnifying party to assume the defense of
such Third-Party Claim at any time prior to settlement, compromise or
final determination thereof; and
(iii) Any provision in this Article VIII to the contrary
notwithstanding, (A) if there is a reasonable probability that a
Third-Party Claim may materially and adversely affect the indemnified
party other than as a result of money damages or other money payments, the
indemnified party shall have the right, to defend, compromise or settle
such Third-Party Claim; provided, however, that if such Third Party Claim
is settled without the indemnifying party's consent, the indemnified party
shall be deemed to have waived all rights hereunder against the
indemnifying party for money damages arising out of such Third-Party
Claim; and (B) the indemnifying party shall not, without the written
consent of the indemnified party, settle or compromise any Third-Party
Claim or consent to the entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to
the indemnified party a release from all liability in respect to such
Third-Party Claim.
8.7 Adjustment to Purchase Price. Any payments made pursuant to this
Article VIII shall be considered as an adjustment to the Purchase Price.
31
8.8 Additional Provision For Tax Indemnity. For purposes of Sections
1.2(b), 2.12 and 8.2, the Closing Date shall be treated as the last day of a
taxable year, whether or not a taxable year in fact ends on such date, and the
Company's allocable portion of Taxes relating to the Business with respect to a
taxable period which includes (but does not end on) the Closing Date shall be
(x) in the case of any Taxes other than Taxes based upon or related to income or
receipts, an amount equal to the Tax for the entire taxable period relating to
the Business multiplied by a fraction, the numerator of which is the number of
days in the period for which such Taxes are paid 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 Taxes relating to the Business based upon or related to
income or receipts, the amount that would be payable if the taxable period ended
on the Closing Date. The party that has the primary obligation to do so under
applicable law shall file any Tax Return that is required to be filed in respect
of the applicable Taxes, and that party shall pay the Taxes shown on such Tax
Return and the other party shall reimburse the filing party for its share of
such Tax as determined under this Agreement by wire transfer of immediately
available funds no later than ten days after receipt of written notice that such
Tax has been paid to the applicable governmental body; provided however that the
non-filing party shall have the right to review and participate in the drafting
of any Tax Return required to be filed for any taxable year that includes the
Closing Date. For purposes of Taxes based upon or measured by net income
("Income Taxes"), the Company shall include the net income attributable to the
Company, the Business and the Assets in its income through the Closing Date and
shall file the appropriate Tax Returns. The Company shall be responsible for the
payment of all Taxes, including, without limitation, Income Taxes imposed on the
Company, if any, as a result of the transfer of the Business and the Assets to
Buyer. The Company and Buyer shall provide each other with such cooperation and
information as either of them reasonably may request of the other with respect
to the Company, the Business or the Assets in filing any Tax Return, amended
return or claim for refund, determining a liability for Taxes or a right to
refund of Taxes or in conducting any audit or other proceeding in respect of
Taxes with respect to the Company, the Business or the Assets. Such cooperation
and information shall include, without limitation, providing copies of all
relevant portions of Tax Returns with respect to the Company, together with
accompanying schedules and related work papers, documents relating to rulings or
other determinations by taxing authorities and records concerning the ownership
and tax basis of property, which either party may possess. Each party shall make
its employees available on a mutually convenient basis to provide explanation of
any documents or information provided hereunder. The party requesting assistance
hereunder shall reimburse the other for any reasonable out-of-pocket costs
incurred in providing any return, document or other written information, and
shall compensate the other for any reasonable costs (excluding wages and
salaries) of making employees available, upon receipt of reasonable
documentation of such costs. Each party shall retain all returns, schedules and
work papers and all material records or other documents relating thereto, until
the expiration of the statute of limitations (including extensions) of the
taxable years to which such returns and other documents relate and, unless the
relevant portions of such returns and other documents are offered to the other
party, until the final determination of any payments which may be required in
respect of such years under this Agreement. Any information obtained under this
Section 8.8 shall be kept confidential, except as may be otherwise necessary in
connection with the filing of Tax Returns or
32
claims for refund or in conducting any audit or other proceeding and shall be
used solely for the purposes set forth in this Section 8.8.
IX. DEFINITIONS.
-----------
"Assets" shall mean all properties, privileges, rights, interests and
claims, real and personal, tangible and intangible, of every type and
description that are owned, leased, used or held for use in the Business in
which the Company or any Subsidiary has any right, title or interest or in which
the Company or any Subsidiary acquires any right, title or interest on or before
the Closing Date, including, without limitation, accounts receivable, notes
receivables, inventories, supplies, prepaid expenses, goodwill, governmental
permits, intangibles, contracts, equipment, Intellectual Property, Real
Property, Personal Property and all other assets included in the Closing Date
Statement, together with the Intellectual Property related to the Business owned
by Sweet Pea Technologies, Inc. ("Sweet Pea"), but excluding (i) any Assets
disposed of by the Company or the Subsidiaries in the ordinary course of
business prior to the Closing Date and (ii) the capital stock of the
Subsidiaries.
"Closing Working Capital Difference" shall mean the difference between the
Estimated Net Working Capital and $3,950,000.
"Dentsply International Settlement" shall refer to the settlement of the
lawsuit filed by Dentsply International, Inc., Civil Action No. 1:CV-98-0668,
against the Company pursuant to a certain Settlement Agreement effective as of
October 1, 2000, between Dentsply International Inc., Tulsa Dental Products Inc.
and the Company.
"Division Material Adverse Effect" shall mean any event, change or effect,
individually or in the aggregate with other events, changes or effects, that (a)
is materially adverse to the Assets or the business, properties, financial
condition, results of operations or prospects of the Business or (b) would
impair or delay in any material respect the ability of the Company to consummate
the transactions contemplated hereby.
"Employee Transaction Bonus Payments" shall mean an amount, if any,
payable to any employee of the Company or its Subsidiaries as a result of the
transactions contemplated hereby and any required withholding and other Taxes
payable by the Company or its Subsidiaries with respect thereto.
"Excess Capital Lease Amount" shall mean an amount equal to the excess, if
any, of (a) the capital lease liabilities (determined in accordance with GAAP)
for the lease of equipment set forth in Schedule 1.2(B) on the Closing Date over
(b) $1.35 million.
"Facility Indebtedness" shall mean the Indebtedness Liability of the
Company under the Installment Sale Agreement dated April 28, 1994 between the
Company and the York County Industrial Development Corporation.
33
"Foot Powder Settlement" shall refer to the settlement with the U.S.
Government relating to the Company's manufacture and sale of Itch-Away Foot
Powder pursuant to contracts with the United States Defense Department.
"Indebtedness Liability" shall mean the outstanding principal of, accrued and
unpaid interest on, any prepayment penalties or premiums on, and any other
amounts payable with respect to, all indebtedness of the Company and its
Subsidiaries for borrowed money, including, without limitation, any bank
overdrafts, any notes payable to the Stockholders, their predecessors or any
affiliates of either, any deferred compensation liabilities, any capital lease
obligations and any mortgages on the Real Property (the "Existing
Indebtedness").
"Net Working Capital" shall mean the total current Assets (i.e., Assets which
are classified as current assets on a balance sheet prepared in accordance with
GAAP) of the Business minus the total Trade Payables and Accrued Expenses of the
Business, in each case as reflected on the Closing Date Statement or the Final
Closing Date Statement, as applicable, prepared in accordance with Section
1.4(a).
"Total Enterprise Value" shall mean (i) in the event that the Closing Working
Capital Difference equals or exceeds $250,000 (an "Adjustment Event"), an amount
equal to $17 million, minus $3,950,000, plus the amount of the Estimated Net
Working Capital, minus the Excess Capital Lease Amount, minus the amount of the
Facility Indebtedness and (ii) in the event that the Closing Working Capital
Difference is less than $250,000 (a "Non-Adjustment Event"), an amount equal to
$17 million, minus the Excess Capital Lease Amount, minus the amount of the
Facility Indebtedness. For information purposes, based on the assumptions set
forth on Schedule 1.1(b), the Total Enterprise Value would be $15,300,000.
"Trade Payables and Accrued Expenses" shall mean all trade accounts payable
and accrued expenses of the Company and the Subsidiaries incurred in the
ordinary course of operating the Business, relating exclusively to the Business,
to the extent reflected or accrued on the Final Closing Date Statement but
excluding all liabilities which are Excluded Liabilities.
"Transaction Fees" shall mean an amount in cash equal to, as of the Closing
Date, the sum of (i) the outstanding fees and expenses of Posternak, Xxxxxxxxxx
& Xxxx, LLP, BDO Xxxxxxx, LLP and Exit Strategies, Inc. incurred in connection
with the transactions contemplated by this Agreement and (ii) all other
outstanding fees and expenses incurred by the Company in connection with the
transactions contemplated by this Agreement (other than the fees and expenses of
Buyer and its affiliates pursuant to Section 10.8).
X. MISCELLANEOUS.
-------------
10.1 Further Assurances. From time to time after the Closing Date, at the
request of the other party hereto and at the expense of the party so requesting,
the parties hereto shall execute and deliver to such requesting party such
documents and take such other action as such requesting party may reasonably
request in order to consummate the transactions contemplated hereby.
34
10.2 Notices. All notices, requests, demands, waivers and communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered (i) by hand (including by
reputable overnight courier), (ii) by mail (certified or registered mail, return
receipt requested) (iii) by telecopy facsimile transmission (receipt of which is
confirmed), or (iv) by email:
(a) If to Buyer, to:
Miltex Instrument Company, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx
email: xxxxxxxxxx@xxxxxx.xxx
with a copy to:
American Securities Capital Partners, L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxx
email: xxxxxxx@xxxxxxxx-xxxxxxxxxx.xxx
with a copy to:
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx, Esq.
email: xxxxxxxx@xxxxxxxxxxx.xxx
(b) If to the Company or the Subsidiaries, to:
Moyco Technologies, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxx
email: xxxxx@xxxxxxxxx.xxx
35
with a copy to:
Posternak, Xxxxxxxxxx & Xxxx, LLP
000 Xxxxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxxxxx, Esq.
email: xxxxxxxx@xxx.xxx
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been given (i) on the date on which so
hand-delivered, (ii) on the third business day following the date on which so
mailed and (iii) on the date on which telecopied and confirmed, except for a
notice of change of address, which shall be effective only upon receipt thereof.
10.3 Amendment, Modification and Waiver. This Agreement may be amended,
modified or supplemented at any time by written agreement of the parties hereto.
Any failure of the Company to comply with any term or provision of this
Agreement may be waived by Buyer, and any failure of Buyer to comply with any
term or provision of this Agreement may be waived by the Company, at any time by
an instrument in writing signed by or on behalf of such other party, but such
waiver shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure to comply.
10.4 Entire Agreement. This Agreement, the Disclosure Schedule and the
exhibits, schedules and other documents referred to herein which form a part
hereof (including, without limitation, the Confidentiality Agreements referred
to in Section 4.2 (b) hereof) contain the entire understanding of the parties
hereto with respect to the subject matter hereof. This Agreement supersedes all
prior agreements and understandings, oral and written, with respect to its
subject matter.
10.5 Severability. Should any provision of this Agreement for any reason be
declared invalid or unenforceable, such decision shall not affect the validity
or enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect and the application of such
invalid or unenforceable provision to persons or circumstances other than those
as to which it is held invalid or unenforceable shall be valid and be enforced
to the fullest extent permitted by law.
10.6 Binding Effect; Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, executors, successors and permitted assigns, but except
as contemplated herein, neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned, directly or indirectly, by any party
without the prior written consent of the other parties hereto, except that Buyer
may assign all or any portion of its rights hereunder to one or more of its
affiliates, provided that, no such assignment shall
36
relieve Buyer of its obligations hereunder. Any attempted assignment in
violation of this Section shall be null and void.
10.7 No Third-Party Beneficiaries. This Agreement is not intended and shall
not be deemed to confer upon or give any person except the parties hereto and
their respective successors and permitted assigns any remedy, claim, liability,
reimbursement, cause of action or other right under or by reason of this
Agreement.
10.8 Fees and Expenses. Subject to Article I and the immediately succeeding
sentence, whether or not the transactions contemplated hereby are consummated
pursuant hereto, each party hereto shall pay all fees and expenses incurred by
it or on its behalf in connection with this Agreement, and the consummation of
the transactions contemplated hereby. Buyer shall not be responsible for any
acquisition related expenses incurred by the Company, its shareholders, or the
fees and expenses of Exit Strategies, Inc. The Company shall not be responsible
for any acquisition related expenses incurred by the Buyer or the fees and
expenses of American Securities Capital Partners.
10.9 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
10.10 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. As used in this Agreement, the term "person" shall mean and
include an individual, a partnership, a joint venture, a corporation, a limited
liability company, a trust, an unincorporated organization and a government or
any department or agency thereof. As used in this Agreement, the term
"affiliate" shall have the meaning set forth in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended. As used
in this Agreement, the term "subsidiary" shall mean any person with respect to
which a specified person (or a subsidiary thereof) owns a majority of the common
stock or other voting securities or has the power to vote or direct the voting
of sufficient securities to elect a majority of the directors or individuals
exercising similar functions.
10.11 Forum: Service of Process. Any legal suit, action or proceeding
brought by any party or any of its affiliates arising out of or based upon this
Agreement shall be instituted in any federal or state court in the State of
Delaware, and each party waives any objection which it may now or hereafter have
to the laying of venue of any such proceeding, and irrevocably submits to the
jurisdiction of such courts in any such suit, action or proceeding.
10.12 Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania, without regard to the principles of conflicts of
law thereof.
10.13 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, THE
PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
37
AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
THE PARTIES HERETO ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER
IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE
WAIVER IN THEIR RELATED FUTURE DEALINGS. THE PARTIES HERETO FURTHER WARRANT AND
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS OR HIS, AS THE CASE MAY
BE, LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE
TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
38
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MOYCO TECHNOLOGIES, INC.
By:____________________________
Name:
Title:
SWEET PEA TECHNOLOGIES, INC.
By:____________________________
Name:
Title:
XXXXXXXX DENTAL MFG., INC.
By:____________________________
Name:
Title:
MILTEX INSTRUMENT COMPANY, INC.
By:____________________________
Name:
Title:
Solely with respect to Sections 4.7(b) and 4.9:
______________________________________
Xxxxxx X. Xxxxxxxxx
39
