STOCK PURCHASE AGREEMENT
BETWEEN
COMPX INTERNATIONAL INC.
AND THE
SHAREHOLDERS OF FORT LOCK CORPORATION
February 3, 1998
TABLE OF CONTENTS
SCHEDULES/EXHIBITS
SCHEDULE I Disclosure Schedule
SCHEDULE II Financial Statements
EXHIBIT A Form of Asset Purchase Agreement
EXHIBIT B Real Estate Purchase Agreement
EXHIBIT C Form of Escrow Agreement
EXHIBIT D Form of Legal Opinion - Acquired Corporation's Counsel
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
February 3, 1998, by and between CompX International Inc., a Delaware
corporation (the "Buyer"), and the undersigned shareholders (collectively, the
"Seller") of Fort Lock Corporation. The Buyer and the Seller are referred to
individually as a "Party" and collectively as the "Parties."
The Seller holds all of the outstanding capital stock of Fort Lock
Corporation, an Illinois corporation (the "Acquired Corporation").
This Agreement contemplates a transaction in which the Buyer will
purchase from the Seller, and the Seller will sell to the Buyer, all of the
outstanding capital stock of Acquired Corporation in return for cash.
Now, therefore, in consideration of the premises and the mutual
promises, representations, warranties and covenants set forth below, the Parties
agree as follows.
Error! Bookmark not defined.1. Definitions{tc \l 1 "1. Definitions"}.
"Acquired Assets
Agreement.
"Acquired Corporation" has the meaning set forth in the preface above.
"Acquired Corporation Share
value, of Acquired Corporation.
"Acquired Subsidiaries
S.A., corporations organized under the laws of the United Kingdom and France,
respectively.
"Additional Taxes" has the meaning set forth in Section 8(e) below.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group
meaning of Code Section 1504(a).
"Applicable Rate
Journal Money Rates section from time to time as the base rate of interest for
corporate loans.
"Calculation" has the meaning set forth in Section 9(b)(i) below.
"Calculation Notice" has the meaning set forth in Section 9(b)(i) below.
"Buyer" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents (including marketable securities,
short term investments and any cash or checks held in lockbox accounts)
calculated in accordance with GAAP applied on a basis consistent with the
preparation of the Financial Statements.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Balance Sheet
below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Closing Date Offset" has the meaning set forth in Section 2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information " has the meaning set forth in Section
6(c)(iii) hereof.
"Contract" has the meaning set forth in Section 4(m) below.
"Disclosure Schedule" has the meaning set forth in Section 3(a) below.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement that is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement that is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement that is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan.
"Employee Pension Benefit Plan
3(2).
"Employee Welfare Benefit Plan
3(1).
"Environmental Laws
the environment, including laws relating to emissions, discharges, generation,
storage, releases or threatened releases of Waste into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling or Waste including, without limitation, the Federal Water Pollution
Control Act (33 U.S.C. Section1321 et seq.), the Clean Air Act (42 U.S.C.
Section7401 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Section6962 et seq.), the Toxic Substances Control Act (15 U.S.C. Section2601 et
seq.) and the Comprehensive Environmental Responsibility, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section9601 et seq.) ("CERCLA") and
their state and local counterparts. Environmental Laws shall also include any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter used, entered, promulgated, or approved under the Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent
Escrow Agreement.
"Escrow Agreement" has the meaning set forth in Section 2(b)(i) below.
"Final Calculation" has the meaning set forth in Section 9(b)(i) below.
"Final Offset" has the meaning set forth in Section 2(c) below.
"Financial Statements" has the meaning set forth in Section 4(g) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Xxxx-Xxxxx-Xxxxxx Act
Act of 1976, as amended.
"Holdback" has the meaning set forth in Section 2(b)(i) below.
"Income Tax
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"Indemnified Party" has the meaning set forth in Section 8(d) below.
"Indemnifying Party" has the meaning set forth in Section 8(d) below.
"Initial Payment" has the meaning set forth in Section 2(b)(i) below.
"Knowledge" of a person means if such person, after making reasonable
inquiry of the appropriate parties with respect to a particular fact or matter,
actually knows of the existence of such fact or matter. "Knowledge" of the
Acquired Corporation and Acquired Subsidiaries in Section 4 hereof shall refer
only to the Knowledge of Xxx Xxxx, Xxxxx X. Xxxx, Xxxxxxx Xxxxx, Xxxx Xxxxx and
Xxx Xxxxx.
"Letter of Intent
between Buyer and Acquired Corporation.
"Losses" has the meaning set forth in Section 8(a) below.
"Most Recent Financial Statements
4(g) below.
"Most Recent Interim Statements
below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Net Worth Adjustment" has the meaning set forth in Section 2(b)(ii) below.
"Ordinary Course of Business
consistent with past custom and practice (including, without limitation, with
respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Post-Closing Audit" has the meaning set forth in Section 2(b)(ii) below.
"Purchase Price" has the meaning set forth in Section 2(b)(i) below.
"Purchase Price Adjustment
below.
"Purchase Price Adjustment Closing" means the closing of the Purchase Price
Adjustment which shall be held as soon as reasonably possible after the Parties
have agreed upon the Closing Balance Sheet.
"Real Estate Purchase Agreement
below.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Returns" means all returns, declarations, reports, statements and other
documents required to be filed in respect of Taxes, and the term "Return" means
any one of the foregoing Returns.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act
amended.
"Security Interest
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Subsidiary" means any corporation or other entity with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or other equity interests, or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors or other persons
performing similar functions with respect to such entity.
"Taxes" means all federal, state, local, foreign and other net income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, lease, service, use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, customs, duties or other taxes,
fees, assessments or charges of any kind whatever, together with any interest
and any penalties, additions to tax or additional amounts with respect thereto,
and the term "Tax" means any one of the foregoing Taxes.
"Third Party Claim" has the meaning set forth in Section 8(d) below.
"Trustee" means any person identified as a Trustee on the signature pages
of this Agreement.
"Waste" means pollutant, contaminate, chemicals or industrial, toxic,
hazardous, or petroleum-based substances or wastes.
{PRIVATE }2. Purchase and Sale of Acquired Corporation Shares
"2. Purchase and Sale of Acquired Corporation Shares"}.
{PRIVATE }(a) Basic Transaction{tc \l 2 "(a) Basic Transaction"
the terms and subject to the conditions of this Agreement, the Buyer agrees to
purchase from the Seller, and the Seller agrees to sell to the Buyer, at
Closing, all of the issued and outstanding Acquired Corporation Shares for the
consideration specified below in this Section 2.
{PRIVATE }(b) Purchase Price{tc \l 2 "(b) Purchase Price"}.
{PRIVATE }(i) Purchase Price Amount{tc \l 3 "(i) Purchase
Price Amount"
$29,500,000 (subject to adjustment pursuant to Section 5(f), the "Initial
Payment") and to pay to the Escrow Agent under the Escrow Agreement at the
Closing U.S. $500,000 (the "Holdback," together with the Initial Payment, the
"Purchase Price") by, with respect to the Initial Payment, delivery of cash in
the applicable amount payable by wire transfer or delivery of other immediately
available funds at such bank account or accounts as Seller has designated in
writing to Buyer, and with respect to the Holdback, by delivery of cash in the
applicable amount by the wire transfer or delivery of other immediately
available funds to the Escrow Agent pursuant to the Escrow Agreement by and
between the Escrow Agent, Seller and Buyer, the form of which is attached as
Exhibit C, which shall govern the distribution of the Holdback.
{PRIVATE }(ii) Purchase Price Adjustment{tc \l 3 "(ii)
Purchase Price Adjustment"
cause Coopers & Xxxxxxx LLP to prepare and deliver to the Parties an audited
consolidated balance sheet of the Acquired Corporation and the Acquired
Subsidiaries within 45 days after the Closing (the "Post-Closing Audit"), which
shall be prepared in accordance with GAAP and generally consistent with the
accounting principles and methodology utilized in prior audits of the Acquired
Corporation and Acquired Subsidiaries. If within 20 days after the date such
balance sheet is delivered to the Seller, Seller has not given written notice to
Buyer setting forth any objection to such balance sheet, then such balance sheet
shall constitute the "Closing Balance Sheet." In the event Seller, within such
20 day period, gives written notice to Buyer of any objection to such balance
sheet, Seller and Buyer shall use their best efforts to reach agreement on all
differences within the 20 day period following the giving of notice. If Seller
and Buyer are unable to reach agreement within such 20 day period, the matter
shall be submitted to a firm of independent public accountants (the "Independent
Accountants") to be mutually selected by Buyer and Seller, the decision of which
shall be final and binding upon the Parties. The balance sheet agreed upon by
Buyer and Seller or determined by the Independent Accountants shall constitute
the "Closing Balance Sheet." Seller and Buyer shall bear equally the expenses
if the Independent Accountants, if necessary. The Parties agree that the
Closing Balance Sheet shall not reflect the repayment of debt contemplated by
Section 2(c). The Purchase Price shall be reduced on a dollar-for-dollar basis
to the extent that the consolidated net worth as set forth on the Closing
Balance Sheet, as adjusted to reflect reserves for inventory obsolescence based
upon an aging of inventory on hand in a manner to be mutually agreed to by the
Parties prior to Closing (or, if the Parties cannot agree on the manner or
amount of such adjustment, such determination will be made in the Post-Closing
Audit described above) (the "Net Worth") is less than U.S. $4.5 million (the
"Net Worth Adjustment"). The Purchase Price shall also be subject to reduction
pursuant to Sections 2(c) and 10(b). The sum of the Net Worth Adjustment and
any reductions made pursuant to Sections 2(c) and 10(b) shall be the "Purchase
Price Adjustment." If the Purchase Price Adjustment exceeds the amount of the
Holdback, Escrow Agent shall pay to Buyer the Holdback and Seller shall promptly
pay over to Buyer an amount equal to the excess of the Purchase Price Adjustment
over the Holdback. If the Purchase Price Adjustment is equal to or less than
the amount of the Holdback, Escrow Agent shall pay to the Buyer out of the
Holdback an amount equal to the Purchase Price Adjustment and Escrow Agent and
shall remit to Seller the balance of the Holdback, if any.
{PRIVATE }(c) Repayment of Debt{tc \l 2 "(c) Repayment of Debt
Except as provided below, simultaneously with the Closing, Seller shall, on
behalf of the Acquired Corporation, pay in full and terminate all of the
outstanding obligations (including the aggregate amount of checks issued in
excess of funds on deposit exclusive of outstanding employee payroll checks (the
"Bank Overdrafts"), if any) and commitments of the Acquired Corporation as set
forth on Section 2(c) of the Disclosure Schedule; provided, however, that Seller
will receive an offset on the Closing Date (the "Closing Date Offset"), against
its obligation to pay in full such Bank Overdrafts equal to the amount, if any,
that the consolidated net worth of the Acquired Corporation and the Acquired
Subsidiaries as shown on the Most Recent Interim Statements exceeds $4.8
million. A final offset (the "Final Offset") equal to the amount, if any, that
the Net Worth as determined in the Post-Closing Audit and set forth on the
Closing Balance Sheet exceeds $4.8 million, will also be calculated. If the
amount of the Final Offset exceeds the amount of the Closing Date Offset,
Acquired Corporation shall pay to Seller an amount equal to such excess. If the
amount of the Closing Date Offset exceeds the amount of the Final Offset, Seller
shall pay to Acquired Corporation an amount equal to such excess. Seller
acknowledges that, in addition to Seller's obligation to repay the outstanding
obligations set forth in Section 2(c) of the Disclosure Schedule, Seller shall
also be wholly responsible for the repayment of any obligation of Acquired
Corporation for the repayment of money to any person where such obligation stems
from the advance of money to Acquired Corporation without regard to the
limitations of Section 8 below. Seller shall provide Buyer with reasonable
proof of termination and release of liens or encumbrances under such outstanding
obligations.
{PRIVATE }(d) The Closing{tc \l 2 "(d) The Closing"}. The closing of
the transactions contemplated by this Agreement (the "Closing") shall take place
at the offices of Buyer in Dallas, Texas, commencing at 9:00 a.m. local time on
the second business day following the satisfaction or waiver of all conditions
to the obligations of the Parties to consummate the transactions contemplated by
this Agreement (other than conditions with respect to actions the respective
Parties will take at the Closing itself) or such other date as the Buyer and the
Seller may mutually determine (the "Closing Date"); provided, however that the
Closing Date shall be no later than February 28, 1998.
{PRIVATE }(e) Deliveries at the Closing{tc \l 2 "(e) Deliveries at
the Closing"}. At the Closing, (i) the Seller will execute,
acknowledge (if appropriate), and deliver to the Buyer the
various certificates, instruments,
and documents referred to in Section 7(a) below, (ii) the Buyer will execute,
acknowledge (if appropriate), and deliver to the Seller the various
certificates, instruments, and documents referred to in Section 7(b) below,
(iii) the Seller will deliver to the Buyer stock certificates representing 100%
of the outstanding shares of Acquired Corporation and all of the Acquired
Subsidiary Shares held by Acquired Corporation or Sellers, and, as to Acquired
Corporation's Shares, endorsed in blank or accompanied by duly executed
assignment documents, and (iv) the Buyer will deliver to the Seller the
consideration specified in Section 2(b)(i) above.
{PRIVATE }(f) Additional Transactions{tc \l 2 "(f) Additional
Transactions"}. Subsequent to Closing (but on the date thereof) the closing of
the transactions contemplated by (i) the Asset Purchase Agreement by and between
the Acquired Corporation and Fortronics, Inc., an Illinois corporation (the
"Asset Purchase Agreement") for the consideration U.S. $500,000 set forth
therein, and (ii) the Real Estate Purchase Agreement by and between Buyer and
Itasca Bank and Trust Company, as trustee under Trust Agreement dated April 21,
1992 and known as Trust No. 11014 (the "Real Estate Purchase Agreement"), the
form of which is attached hereto as Exhibit B will occur and which agreements
shall be deemed executed simultaneously with this Agreement.
{PRIVATE }3. Representations and Warranties Concerning the Transaction{tc
\l 1 "3. Representations and Warranties Concerning the Transaction"}.
{PRIVATE }(a) Representations and Warranties of the Seller{tc \l 2 "(a)
Representations and Warranties of the Seller"}. Each Seller represents and
warrants to the Buyer that the statements contained in this Section 3(a) are
correct and complete as of the date of this Agreement as they relate to such
Seller and will be correct and complete as of the Closing Date as they relate to
such Seller (as though made then and as though the Closing Date were substituted
for the date of this Agreement throughout this Section 3(a)), except as set
forth in the disclosure schedule attached hereto as Schedule I and incorporated
in this Agreement by this reference (the "Disclosure Schedule"). The Disclosure
Schedule may be amended prior to the Closing Date in the manner set forth in
Section 5(e) hereof. Further, unless otherwise indicated herein, all Section
references in the Disclosure Schedule are to Sections of this Agreement,
provided, however, that references herein to a particular Section or Sections of
this Agreement are not intended to limit, and shall not be construed as
limiting, disclosures contained herein which may be applicable to another
Sections or Sections. The disclosures in the Disclosure Schedule are made in
response to the representations and warranties of the Acquired Corporation,
Acquired Subsidiaries and Seller and certain covenants of the Acquired
Corporation, Acquired Subsidiaries and Seller contained in this Agreement
without fully taking into consideration the standard of materiality set forth in
certain of such representations, warranties or covenants, and no disclosure made
herein shall (i) constitute an admission or determination that any fact or
matter so disclosed is material to the Acquired Corporation or the Acquired
Subsidiaries taken as a whole, or (ii) be deemed to modify in any respect the
standard of materiality set forth in any representation, warranty, covenant or
other provision contained in this Agreement.
{PRIVATE } (i) The Seller{tc \l 3 " (i) The Seller "}.
The Seller is comprised of Persons who are either (i) residents of the
state of
Illinois, or (ii) trust(s) organized under the laws of the state of Illinois.
{PRIVATE } (ii) Authorization of Transaction{tc \l 3 " (ii)
Authorization of Transaction
authority where applicable to execute and deliver this Agreement and to perform
its respective obligations under this Agreement and the execution and delivery
of this Agreement has been approved where necessary by the appropriate trustees
and/or guardians. This Agreement constitutes the valid and legally binding
obligation of each Seller, enforceable in accordance with its terms and
conditions except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditor's rights generally, and by
general equitable principles.
{PRIVATE } (iii) Xxxxxxxxxxxxxxxx{xx \x 0 " (iii)
Noncontravention"}. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated by this
Agreement, will (A) to the Knowledge of each Seller, violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
each Seller is subject or any provision of its governing instruments or
agreements where applicable or (B) to the Knowledge of each Seller, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice or consent under any agreement, contract,
lease, license, instrument, or other arrangement to which the Seller is a party
or by which it is bound or to which any of its assets is subject, except where
together with all other such violations, conflicts, breaches, defaults,
accelerations, terminations, modifications, cancellations or failure to give
notices would not reasonably be expected to have a material adverse effect on
the financial condition or results of operation of the Acquired Corporation or
its Acquired Subsidiaries. Other than in connection with the provisions of the
Xxxx-Xxxxx-Xxxxxx Act, each Seller does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
{PRIVATE } (iv) Brokers' Fees{tc \l 3 " (iv) Brokers' Fees
Seller has no liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement except Seller shall be fully responsible for all fees payable to
Business Search Ltd. in connection with the transactions contemplated by this
Agreement.
{PRIVATE } (v) Acquired Corporation Shares{tc \l 3 " (v)
Acquired Corporation Shares
beneficially (except each Trustee has only legal title to the Acquired
Corporation Shares) the number of Acquired Corporation Shares set forth in
Section 3(a)(v) of the Disclosure Schedule, free and clear of any restrictions
on transfer (other than restrictions on transfer imposed by the Securities Act
and state securities laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands. No
Seller is a party to any option, warrant, purchase right, or other contract or
commitment (other than this Agreement) that could require the Seller to sell,
transfer, or otherwise dispose of any capital stock of Acquired Corporation that
will exist after the Closing. No Seller is a party to any voting trust, proxy,
or other agreement or understanding with respect to the voting of any capital
stock of Acquired Corporation that will exist after the Closing.
{PRIVATE }(b) Representations and Warranties of the Buyer{tc \l 2 "(b)
Representations and Warranties of the Buyer
warrants to the Seller that the statements contained in this Section 3(b) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section
3(b)), except as set forth in the Disclosure Schedule.
{PRIVATE } (i) Organization of the Buyer{tc \l 3 " (i)
Organization of the Buyer
and in good standing under the laws of the jurisdiction of its incorporation.
{PRIVATE } (ii) Authorization of Transaction{tc \l 3 " (ii)
Authorization of Transaction
authority to execute and deliver this Agreement and to perform its obligations
hereunder and the execution and delivery of this Agreement has been approved by
the Buyer's Board of Directors. No other or further corporate act or proceeding
on the part of the Buyer is necessary to authorize this Agreement or the other
documents and instruments to be executed and delivered by the Buyer hereunder,
or the consummation of the transaction contemplated hereby and thereto. This
Agreement constitutes the valid and legally binding obligation of the Buyer,
enforceable in accordance with its terms and conditions except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditor's rights generally, and by general equitable principles.
{PRIVATE } (iii) Xxxxxxxxxxxxxxxx{xx \x 0 " (iii)
Noncontravention"}. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated by this
Agreement, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Buyer is subject or any
provision of its charter or bylaws or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice or
consent under any agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets is subject, which has not been given or obtained. Other than
in connection with the provisions of the Xxxx-Xxxxx-Xxxxxx Act, the Buyer does
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement.
{PRIVATE } (iv) Brokers' Fees{tc \l 3 " (iv) Brokers' Fees
The Buyer has no liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which any Seller could become liable or obligated.
{PRIVATE }(v) Investment{tc \l 3 "(v) Investment"}. The Buyer
is acquiring Acquired Corporation Shares for investment and not with a view to
or for sale in connection with any distribution thereof within the meaning of
the Securities Act.
{PRIVATE }(vi) Liquidity{tc \l 3 "(vi) Liquidity"}. Buyer will,
at Closing, have adequate financial resources to consummate the transactions
contemplated by this Agreement and the closing of the transactions contemplated
by this Agreement is not contingent upon consummation of the initial public
offering of Buyer.
{PRIVATE }(vii) Compliance With Laws{tc \l 3 "(vii)
Compliance With Laws"
state securities law which would have the effect of creating any liability for
Seller.
{PRIVATE }4. Representations and Warranties Concerning Acquired
Corporation and Its Acquired Subsidiaries{tc \l 1 "4. Representations and
Warranties Concerning Acquired Corporation and Its Acquired Subsidiaries"}.
Acquired Corporation and Acquired Subsidiaries represent and warrant
to the Buyer that the statements contained in this Section 4 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4), except as
set forth in Disclosure Schedule.
{PRIVATE }(a) Organization, Qualification, and Corporate Power
"(a) Organization, Qualification, and Corporate Power
Corporation and its Acquired Subsidiaries is a corporation validly existing, and
in good standing under the laws of the jurisdiction of its incorporation. Each
of Acquired Corporation and its Acquired Subsidiaries is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. Each of Acquired Corporation and its
Acquired Subsidiaries has the corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. The Acquired Corporation holds of record and owns beneficially all
of the outstanding shares of each Acquired Subsidiary of Acquired Corporation
except as set forth in Section 4(a) and Section 4(f) of the Disclosure Schedule.
Section 4(a) of the Disclosure Schedule lists all the directors and executive
officers of each of Acquired Corporation and its Acquired Subsidiaries holding
such office prior to Closing.
{PRIVATE }(b) Capitalization{tc \l 2 "(b) Capitalization"}. The
authorized capital stock of Acquired Corporation consists of 10,000 Acquired
Corporation Shares, all of which are common stock shares, no par value. There
are 100 shares of Acquired Corporation common stock issued and outstanding. No
Acquired Corporation Shares are held in treasury. All of the issued and
outstanding Acquired Corporation Shares have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record by the Seller.
There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require Acquired Corporation to issue, sell, or otherwise
cause to become outstanding any of its capital stock that will exist at Closing.
There are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Acquired Corporation.
{PRIVATE }(c) Noncontravention{tc \l 2 "(c) Noncontravention"}.
Neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated by this Agreement, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which any of Acquired Corporation and its Acquired Subsidiaries is
subject, (ii) violate any provision of the charter or bylaws of any of Acquired
Corporation and its Acquired Subsidiaries or (iii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice or consent under any Contract to which any of Acquired Corporation and
its Acquired Subsidiaries is a party or by which it is bound or to which any of
its assets is subject which has not been given or obtained (or result in the
imposition of any Security Interest upon any of its assets). Other than in
connection with the provisions of the Xxxx-Xxxxx-Xxxxxx Act and regulations,
none of Acquired Corporation and its Acquired Subsidiaries needs to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
{PRIVATE }(d) Brokers' Fees{tc \l 2 "(d) Brokers' Fees
Acquired Corporation and its Acquired Subsidiaries has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
{PRIVATE }(e) Title to Tangible Assets{tc \l 2 "(e) Title to Tangible
Assets"}. Except as set forth in Section 4(e) to the Disclosure Schedule,
Acquired Corporation and its Acquired Subsidiaries have good title to, or a
valid leasehold interest in, the material tangible assets (including items of
personal property) they purport to own or that are reflected in the Financial
Statements free and clear of any Security Interest(s) and that such assets are
sufficient for the conduct and future operation of the businesses.
{PRIVATE }(f) Acquired Subsidiaries{tc \l 2 "(f) Acquired
Subsidiaries"}. Section 4(f) of the Disclosure Schedule sets forth for each
Acquired Subsidiary of Acquired Corporation (i) its name and jurisdiction of
incorporation, (ii) the number of shares of authorized capital stock of each
class of its capital stock, (iii) the number of issued and outstanding shares of
each class of its capital stock, the names of the holders thereof, and the
number of shares held by each such holder, and (iv) the number of shares of its
capital stock held in treasury.
{PRIVATE }(g) Financial Statements{tc \l 2 "(g) Financial Statements"
Attached hereto as Schedule II
(collectively, the "Financial Statements"): (i) audited consolidated balance
sheets and statements of income, changes in stockholders' equity, and cash flow
as of and for the fiscal years ended June 24, 1995, June 29, 1996, and June 28,
1997 (the June 28, 1997 audited consolidated balance sheet and related
statements of income and changes in stockholders' equity, and cash flow being
referenced hereto as the "Most Recent Financial Statements
Corporation and its Acquired Subsidiaries; and (ii) unaudited consolidated
balance sheets and statements of income, changes in stockholders' equity, and
cash flow as of and for the six months ended December 27, 1997 (the "Most Recent
Interim Statements
The Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby and present fairly the financial condition of Acquired
Corporation and its Acquired Subsidiaries as of such dates and the results of
operations of Acquired Corporation and its Acquired Subsidiaries for such
periods; provided, however, that the Most Recent Interim Statements are subject
to normally occurring year-end adjustments, lack footnotes and do not include a
physical inventory.
{PRIVATE }(h) Events Subsequent to Most Recent Xxxxxxx Xxxxxxxxxx{xx \x 0
"(h) Events Subsequent to Most Recent Interim Statements
1997 there has not been any material adverse change in the financial condition
or results of operations of Acquired Corporation and its Acquired Subsidiaries.
Without limiting the generality of the foregoing, since that date, except as
disclosed in Section 4(h) of the Disclosure Schedule, none of Acquired
Corporation and its Acquired Subsidiaries has engaged in any practice, taken any
action, or entered into any transaction outside the Ordinary Course of Business.
{PRIVATE }(i) Legal Compliance{tc \l 2 "(i) Legal Compliance
of Acquired Corporation and its Acquired Subsidiaries has complied with all
applicable and valid laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof),
except where the failure to comply would not have an adverse effect upon the
financial condition or results of operations of Acquired Corporation or its
Acquired Subsidiaries except as set forth in Section 4(i) of the Disclosure.
{PRIVATE }(j) Tax Matters{tc \l 2 "(j) Tax Matters"}.
(i) Each of Acquired Corporation and its Acquired Subsidiaries
has filed on a timely basis, all Returns that it was required to file, and has
paid all Taxes shown thereon as owing, except where the failure to file Returns
or to pay Taxes would not have an adverse effect on the financial condition of
Acquired Corporation or its Acquired Subsidiaries.
(ii) Section 4(j) of the Disclosure Schedule lists all Income Tax
Returns filed with respect to any of Acquired Corporation and its Acquired
Subsidiaries for taxable periods ended on or after June 30, 1993, indicates
those Income Tax Returns that have been audited, and indicates those Income Tax
Returns that currently are the subject of audit. Except to the extent shown on
Section 4(j) of the Disclosure Schedule, all deficiencies asserted or
assessments made as a result of any examinations have been fully paid, or are
fully reflected as a liability on the respective financial statements of each of
the Acquired Corporation and its Acquired Subsidiaries. The Seller has
delivered to the Buyer correct and complete copies of all Income Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed
to by any of Acquired Corporation and its Acquired Subsidiaries for taxable
periods ended on or after June 30, 1993.
(iii) None of Acquired Corporation and its Acquired
Subsidiaries has waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or deficiency.
(iv) None of Acquired Corporation and its Acquired Subsidiaries
is a party or subject to any Income Tax allocation or sharing agreement.
(v) None of Acquired Corporation and its Acquired Subsidiaries
has been a member of an Affiliated Group filing a consolidated federal Income
Tax Return.
(vi) The Acquired Corporation's tax basis in each Acquired
Subsidiary is set forth in Section 4(j)(vi) of the Disclosure Schedule as of the
date of Acquired Corporation's most recently filed Income Tax return. The
earnings and profits for each Acquired Subsidiary is set forth in Section
4(j)(vi) of the Disclosure Schedule as of the date of Acquired Corporation's
most recently filed Income Tax return.
(vii) The Acquired Corporation does not have a permanent
establishment in any foreign country as defined in any applicable Tax Treaty
between the United States and such foreign country.
{PRIVATE }(k) Real Property{tc \l 2 "(k) Real Property"}.
(i) Acquired Corporation and its Acquired Subsidiaries do not
own any real property.
(ii) Section 4(k)(ii) of the Disclosure Schedule lists all real
property leased or subleased to any of Acquired Corporation and its Acquired
Subsidiaries. The Seller has delivered to the Buyer correct and complete copies
of the leases and subleases listed in Section 4(k)(ii) of the Disclosure
Schedule (as amended to date). Each lease and sublease listed in Section
4(k)(ii) of the Disclosure Schedule is legal, valid, binding, enforceable in
accordance with its terms, and in full force and effect, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principals.
{PRIVATE }(l) Intellectual Property{tc \l 2 "(l) Intellectual
Property"}. Section 4(l) of the Disclosure Schedule identifies each patent or
trademark registration that has been issued to any of Acquired Corporation and
its Acquired Subsidiaries with respect to any of its intellectual property,
identifies each pending patent application or application for trademark
registration that any of Acquired Corporation and its Acquired Subsidiaries has
made with respect to any of its intellectual property, and identifies each
license, agreement, or other permission that any of Acquired Corporation and its
Acquired Subsidiaries has granted to any third party with respect to any of its
intellectual property. Except as disclosed on Section 4(l) of the Disclosure
Schedule, each of the patents and trademarks listed in Section 4(l) of the
Disclosure Schedule is owned by the Acquired Corporation or its Acquired
Subsidiaries, and the Acquired Corporation and its Acquired Subsidiaries have
the exclusive right to use all such intellectual property in their respective
business and operations. Except as set forth and so noted in Section 4(l) of
the Disclosure Schedule, Acquired Corporation and its Acquired Subsidiaries own
all intellectual property and other proprietary rights necessary to manufacture
and sell their respective products and to conduct their respective operations
and businesses and none of Acquired Corporation or its Acquired Subsidiaries has
Knowledge of any claim, any potential claim or any valid basis of any claim,
that any of Seller, Acquired Corporation or its Acquired Subsidiaries has
infringed any patent, copyright, trademark, trade name, know-how, trade secret
or other proprietary right of any other person.
{PRIVATE }(m) Contracts{tc \l 2 "(m) Contracts"}. Section 4(m) of the
Disclosure Schedule lists all written contracts (including any customer/vendor
supply/distribution agreements) and other written agreements including
indentures, mortgages, notes, bonds, leases and licenses to which any of
Acquired Corporation and its Acquired Subsidiaries is a party the performance of
which will involve consideration in excess of $25,000 (the "Contracts"). The
Seller has delivered to the Buyer a correct and complete copy of each contract
or other agreement listed in Section 4(m) of the Disclosure Schedule (as amended
to date). Neither Acquired Corporation nor any of its Acquired Subsidiaries is
in default or violation (and no event has occurred which with notice or the
lapse of time or both would constitute a default or violation) of any term,
condition or provision of any Contract.
{PRIVATE }(n) Litigation{tc \l 2 "(n) Litigation"}. Section 4(n) of the
Disclosure Schedule sets forth each instance in which any of Acquired
Corporation and its Acquired Subsidiaries (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator, mediator or panel thereof.
{PRIVATE }(o) Employee Benefits{tc \l 2 "(o) Employee Benefits"}.
(i) Section 4(o) of the Disclosure Schedule lists each Employee
Benefit Plan that any of Acquired Corporation and its Acquired Subsidiaries
maintains or to which any of Acquired Corporation and its Acquired Subsidiaries
contributes.
(ii) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all respects
with the applicable requirements of ERISA and the Code, except where the failure
to comply would not have an adverse effect on the financial condition of such
Employee Benefit Plan.
(iii) All contributions (including all employer contributions
and employee salary reduction contributions) that are due have been paid to each
such Employee Benefit Plan.
(iv) Each such Employee Benefit Plan has received, if issuable, a
determination letter from the Internal Revenue Service to the effect that it
meets the requirements of Code Section 401(a).
(v) Except as set forth in Section 4(o)(v) of the Disclosure
Schedule, each such Employee Benefit Plan will be fully funded and paid at and
as of the Closing Date.
{PRIVATE }(p) Environmental Matters{tc \l 2 "(p) Environmental
Matters"}. Except as disclosed in Section 4(p) of the Disclosure Schedule, the
Acquired Corporation and its Acquired Subsidiaries are in compliance with all
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws.
Except as set forth in Section 4(p) the Disclosure Schedule, there is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending or
threatened against the Acquired Corporation and its Acquired Subsidiaries
relating in any way to the Environmental Laws with respect to real property
owned or leased by the Acquired Corporation and its Acquired Subsidiaries.
Except as set forth in Section 4(p) of the Disclosure Schedule, there are no
past or present events, conditions, circumstances, activities, practices,
incidents, actions, omissions or plans which prevent compliance or continued
compliance by the Acquired Corporation and its Acquired Subsidiaries with the
Environmental Laws, or give rise to any liability on the part of the Acquired
Corporation and its Acquired Subsidiaries under the Environmental Laws,
including, without limitation, liability under CERCLA or similar state or local
laws, or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, notice of violation, study or investigation against the
Acquired Corporation and its Acquired Subsidiaries, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any Waste by the Acquired Corporation and its Acquired
Subsidiaries.
{PRIVATE }(q) Product Liabilities and Warranty Claims{tc \l 2 "(q)
Product Liabilities and Warranty Claims
"}. Section 4(q) of the Disclosure
Schedule sets forth each liability associated with the Acquired Corporation's
and its Acquired Subsidiaries' products and sets forth each warranty claim
regarding the Acquired Corporation's and its Acquired Subsidiaries' products
where such liability or claim is in an amount greater than $5,000.
{PRIVATE }(r) Labor Matters{tc \l 2 "(r) Labor Matters"}. Except as set
forth in Section 4(r) of the Disclosure Schedule, there are no activities or
controversies, including, without limitation, any labor organizing activities,
election petitions or proceedings, proceedings preparatory thereto, unfair labor
practice complaints, labor strikes, disputes, slowdowns, or work stoppages,
pending, or to the Knowledge of the Acquired Corporation, threatened, between
the Acquired Corporation and its Acquired Subsidiaries and any of its or their
employees.
{PRIVATE }(s) Former Operating Sites{tc \l 2 "(s) Former Operating
Sites"}. Set forth in Section 4(s) of the Disclosure Schedule are any and all
sites utilized by Acquired Corporation or its Acquired Subsidiaries or the
predecessors of Acquired Corporation or its Acquired Subsidiaries for any their
respective operations at any time.
{PRIVATE }5. Pre-Closing Covenants{tc \l 1 "5. Pre-Closing Covenants"}.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
{PRIVATE }(a) General{tc \l 2 "(a) General"}. Each of the Parties
will use its reasonable efforts to take all action and to do all things
necessary in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section 7 below).
{PRIVATE }(b) Notices and Consents{tc \l 2 "(b) Notices and Consents
Each Party will give any notices (and cause each of its Subsidiaries to give any
notices) to third parties, and each Party will use its reasonable efforts to
obtain (and will cause each of its Subsidiaries to use its reasonable efforts to
obtain) any third party consents, that the other Party reasonably may request in
connection with the matters referred to in Section 3(a)(iii), Section 3(b)(iii)
and Section 4(c) above and the related Disclosure Schedule. Each of the Parties
will (and the Seller will cause Acquired Corporation and each of its Acquired
Subsidiaries to) give any notices to, make any filings with, and use its
reasonable efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the matters referred to
in Section 3(a)(iii), Section 3(b)(iii) and Section 4(c) above and the related
Disclosure Schedule. Without limiting the generality of the foregoing, each of
the Parties will file (and will cause each of its Subsidiaries to file as
applicable) any notification and report forms and related material that it may
be required to file with the Internal Revenue Service, the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
under the Xxxx-Xxxxx-Xxxxxx Act or otherwise, will use its reasonable efforts to
obtain (and will cause each of its Subsidiaries to use its reasonable efforts to
obtain) early termination of the applicable waiting period, and will make (and
will cause each of its Subsidiaries to use its reasonable efforts to obtain) any
further filings pursuant thereto that may be necessary.
{PRIVATE }(c) Operation of Business{tc \l 2 "(c) Operation of
Business"}. The Seller will not engage (and will not cause or permit any of
Acquired Corporation and its Acquired Subsidiaries to engage) in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business without the prior written consent of Buyer.
{PRIVATE }(d) Access{tc \l 2 "(d) Access"}. The Seller will permit
(and will cause each of Acquired Corporation and its Acquired Subsidiaries to
permit) representatives of the Buyer to have access at all reasonable times, and
in a manner so as not to interfere with the normal business operations of
Acquired Corporation and its Acquired Subsidiaries, to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to each of Acquired Corporation and its Acquired Subsidiaries as
Buyer may reasonably request from time to time solely for the purpose of
confirming Seller's compliance with Section 5(c) above. The Buyer will treat
and hold as such any information it receives from the Seller, Acquired
Corporation, and its Acquired Subsidiaries in the course of the reviews
contemplated by this Section 5(d) as confidential pursuant to that certain
Confidentiality Agreement dated September 25, 1997 between Buyer and Business
Search, Ltd. which is hereby incorporated herein by reference, will not use any
of such information except in connection with this Agreement, and, if this
Agreement is terminated for any reason whatsoever, will return to the Seller,
Acquired Corporation, and its Acquired Subsidiaries all tangible embodiments
(and all copies) of such information that are in its possession.
{PRIVATE }(e) Notice of Developments{tc \l 2 "(e) Notice of
Developments"}.
(i) The Seller, Acquired Corporation and its Acquired
Subsidiaries will give prompt written notice to the Buyer of any development
causing a breach of any of Seller's, Acquired Corporation's or its Acquired
Subsidiaries' representations and warranties in Sections 3 or 4 above. Unless
the Buyer has the right to terminate this Agreement pursuant to Section 9(a)(ii)
or (iii) below by reason of the development and exercises that right within the
period of ten (10) business days referred to in Section 9(a)(ii) or (iii) below,
the written notice pursuant to this Section 5(e)(i) will be deemed to have
amended the Disclosure Schedule, to have qualified the representations and
warranties contained in Section 3 or 4 above, and to have cured any
misrepresentation or breach of warranty that otherwise might have existed
hereunder by reason of the development except for purposes of Section 9(a)(iii)
including calculating aggregate Losses.
(ii) Buyer will give prompt written notice to the Seller of any
material adverse development causing a breach of any of Buyer's representations
and warranties. No disclosure by Buyer pursuant to this Section 5(e)(ii),
however, shall be deemed to amend or supplement the Disclosure Schedule or to
prevent or cure any misrepresentation or breach of warranty.
{PRIVATE }(f) Reduction in Purchase Price for Losses{tc \l 2 "(f)
Reduction in Purchase Price for Losses"}. To the extent that the Buyer has
received from the Seller, Acquired Corporation or its Acquired Subsidiaries,
prior to the Closing Date, notice(s) pursuant to Section 5(e)(i) above of
developments that in the aggregate would create Losses (as determined in
accordance with and subject to the provisions of Section 9(b) below), the
Initial Payment shall be reduced by the amount of such Losses.
{PRIVATE }(g) Completion of Phase I Studies{tc \l 2 "(g) Completion of
Phase I Studies "}. Buyer shall complete
(with Seller's full cooperation) a
Phase I environmental engineering study of the Acquired Corporation's operations
and plant site(s) (including certain adjoining property and former plant
site(s)) and shall complete boring samples and other tests on the real property
that is the subject of the Real Estate Purchase Agreement.
{PRIVATE }6. Post-Closing Covenants{tc \l 1 "6. Post-Closing
Covenants"}.
The Parties agree as follows with respect to the period following the
Closing.
{PRIVATE }(a) General{tc \l 2 "(a) General"}. In case at any time
after the Closing any further action is necessary to carry out the purposes of
this Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as the other
Party reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Section 8 below).
{PRIVATE }(b) Litigation Support{tc \l 2 "(b) Litigation Support"}. In
the event and for so long as any Party actively is contesting or defending
against any action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand in connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving any of Acquired
Corporation and its Acquired Subsidiaries, the other Party shall cooperate with
such party and such party's counsel in the defense or contest, make available
its personnel, and provide such testimony and access to its books and records as
shall be necessary in connection with the defense or contest, all at the sole
cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under Section 8 below).
{PRIVATE }(c) Non-Competition, Confidentiality and Non-Solicitation{tc \l
2 "(c) Non-Competition, Confidentiality and Non-Solicitation"}.
(i) Seller acknowledges that Seller's relationships with
Acquired Corporation are of a special character and that Seller's position with
Acquired Corporation places Seller in a position of trust and confidence with
Acquired Corporation's customers and employees and allows Seller access to
confidential information (as hereinafter defined). Furthermore, Seller
acknowledges that the customers of Acquired Corporation and Acquired
Subsidiaries have been developed over several decades, that Acquired Corporation
has expended over the years hundreds of thousands of dollars in developing and
maintaining customer relationships, that customer relationships have tended to
be of long standing nature involving hundreds of hours of employee time
nurturing such relationships to ensure a high level of attentiveness and
customer satisfaction and employee knowledge of customer requirements; that
these investments are important to the Acquired Corporation and Acquired
Subsidiaries due to the expense and difficulty in development of new customers,
that the relationships with many customers are such that the Acquired
Corporation and Subsidiaries regularly produce and ship products monthly over
the years of the relationship. In order to induce Buyer to enter into this
Agreement, Seller hereby covenants and agrees that Seller will not, directly or
indirectly, while Seller is in the employ of Acquired Corporation or any of its
Acquired Subsidiaries and through the period ending four (4) years after the
termination of Seller's employment for any reason whatsoever, or, if Seller is
not in the employ of Acquired Corporation or any of its Acquired Subsidiaries on
the Closing Date, for a period ending four (4) years after the Closing Date:
(A) disclose or use or otherwise exploit for Seller's own
benefit, or the benefit of any other person or entity, except as may be
necessary in the performance of Seller's duties hereunder, any Confidential
Information disclosed to Seller or of which Seller became aware by reason of
Seller's employment with Acquired Corporation;
(B) solicit or divert or appropriate to any Competing
Business, directly or indirectly, on Seller's own behalf or in the service of or
on behalf of any Competing Business, or attempt to solicit or divert or
appropriate to any such Competing Business any person or entity who was a
customer of Acquired Corporation at any time during the last twenty four (24)
months (i) prior to the Closing Date (if Seller is not in the employ of Acquired
Corporation or any of its Acquired Subsidiaries or (ii) of Seller's employment
hereunder and with whom Seller had contact prior to the Closing Date or during
the term of Seller's employment, as applicable;
(C) solicit the employment, attempt to solicit the
employment or assist anyone else in the solicitation of employment of, any
Competing Business any managerial or executive employee of Acquired Corporation
(whether or not such employment is full time or is pursuant to a written
contract with Acquired Corporation); and
(D) engage in or render any services to or be employed by
any Competing Business, within the Area, in the capacity of officer, managerial
or executive employee, director, consultant or shareholder (other than as the
owner of less than one (1%) percent of the shares of a publicly-owned
corporation whose shares are traded on a national securities exchange or in the
over-the-counter market).
(ii) Seller agrees that Seller will not take with Seller or
retain without written authorization, and Seller will promptly deliver to
Acquired Corporation, originals and all copies of all papers, files or other
documents containing any Confidential Information and all other property
belonging to Acquired Corporation and in Seller's possession or under Seller's
control as of the later of (x) the Closing Date if Seller is not employed by
Acquired Corporation or its Acquired Subsidiaries on such date or (y) if
employed by Acquired Corporation or its Acquired Subsidiaries, upon the
termination of Seller's employment (whether voluntarily or involuntarily).
(iii) For purposes of this Section 6(c), the term (x) "Area"
means Arkansas, California, Illinois, Iowa, Missouri, Oklahoma, Pennsylvania,
New York, Texas and Wisconsin; (y) "Competing Business" means any business
engaged in the manufacture or distribution of mechanical or electronic locks,
locking devices, or any product or device currently manufactured or sold by
Acquired Corporation or its Acquired Subsidiaries; and (z) "Confidential
Information" means any and all data and information dated within the last four
(4) years relating to the business of Acquired Corporation that is, has been or
will be disclosed to Seller or of which Seller became or becomes aware as a
consequence of or through Seller's relationship with Acquired Corporation and
that has value to Acquired Corporation and is not generally known by its
competitors, including, without limitation, information relating to Acquired
Corporation's or Seller's financial affairs, products, processes, services,
customers, employees or employees' compensation, research, development,
inventions, manufacture, purchasing, accounting, engineering or marketing.
Confidential Information shall also include information that constitutes a trade
secret, regardless of the age of such information. Notwithstanding the
foregoing, no information will be deemed to be Confidential Information unless
such information has been reduced to writing and marked clearly and
conspicuously as confidential information, or it is otherwise treated by
Acquired Corporation as confidential. Confidential Information shall not
include any data or information that has been voluntarily disclosed to the
public by Acquired Corporation (except where such public disclosure has been
made without authorization by Acquired Corporation), or that has been
independently developed and disclosed by others, or that otherwise enters the
public domain through lawful means.
(iv) Seller acknowledges that irreparable loss and injury would
result to Buyer and, following the Closing, Acquired Corporation upon the breach
of any of the covenants contained in this Section 6(c) and that damages arising
out of such breach would be difficult to ascertain. Seller hereby agrees that,
in addition to all other remedies provided at law or in equity, Buyer or,
following the Closing, Acquired Corporation, may petition from a court of law or
equity both temporary and permanent injunctive relief to prevent a breach by
Seller of any covenant contained in this Section 6(c).
{PRIVATE }7. Conditions to Xxxxxxxxxx xx Xxxxx{xx \x 0 "7. Conditions
to Obligation to Close"}.
{PRIVATE }(a) Conditions to Obligation of the Buyer{tc \l 2 "(a)
Conditions to Obligation of the Buyer
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3(a)
and Section 4 above shall be true and correct in all material respects at and as
of the Closing Date;
(ii) the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) the Seller shall have delivered to the Buyer a certificate
to the effect that each of the conditions specified below in Section 7(b)(i)-
(xi) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been terminated;
(vi) Employment, Confidentiality and Non-Compete Agreements shall
have been executed in form and substance reasonably satisfactory to Buyer with
Xxxxx X. Xxxx and Xxx Xxxx;
(vii) Buyer shall be reasonably satisfied with the
conclusions of the Phase I and other studies of Section 5(g);
(viii) all actions to be taken by the Seller in connection
with consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Buyer;
(ix) the Asset Purchase Agreement (which shall be drafted to
contain terms consistent with the Letter of Intent and, to the extent reasonably
prudent, the same terms and conditions as this Agreement), the Escrow Agreement
and the Real Estate Purchase Agreement shall have been executed and delivered by
all parties thereto and the Asset Purchase Agreement and the Real Estate
Purchase Agreement shall be consummated simultaneously with the Closing;
(x) Buyer shall have received from Much Shelist Freed Xxxxxxxxx
Xxxxx Xxxx & Xxxxxxxxxx, P.C., counsel to Acquired Corporation, an opinion or
opinions dated as of the Closing Date covering the matters addressed in Sections
3(a)(ii), (iii), (v), 4(a), (b), (c) and (f) and such other matters as shall be
reasonably requested by Buyer in a form substantially in the form of Exhibit D
(in rendering such opinions such counsel may, as to factual matters rely upon
certificates, of officers and public officials and limit factual statements by
the use of "to our knowledge" or phrases of similar meaning) (it is expressly
understood that such opinion will be based on Illinois law and assuming Delaware
law would be interpreted the same as Illinois); and
(xi) Buyer and Acquired Corporation and its Acquired Subsidiaries
shall have obtained all consents, approvals, permits or authorizations
contemplated by Sections 3(a)(iii), 3(b)(iii) and 4(c) above and the related
Disclosure Schedule except for such consents, approvals, permits or
authorizations which, if not obtained, would not individually or in the
aggregate, reasonably be anticipated to have a material adverse effect on the
Acquired Corporation or its Acquired Subsidiaries. Buyer and Acquired
Corporation and its Acquired Subsidiaries shall also have received from Xxxxxxx
Xxxxx a binding waiver of notice and waiver of Xx. Xxxxx'x right to exercise the
options granted to Xx. Xxxxx under that certain Option Agreement by and between
Xx. Xxxxx and Acquired Corporation dated June 13, 1995 and that certain Sales
Option Agreement by and between Xx. Xxxxx and Acquired Corporation dated
June 13, 1995.
The Buyer may waive any condition specified in this Section 7(a) if it
executes a writing so stating at or prior to the Closing.
{PRIVATE }(b) Conditions to Obligation of the Seller{tc \l 2 "(b)
Conditions to Obligation of the Seller
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3(b)
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) the Buyer shall have delivered to the Seller a certificate
to the effect that each of the conditions specified above in Section 7(a)(i)-
(ix) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been terminated
and the Parties, Acquired Corporation, and its Subsidiaries shall have received
all other authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3(a)(ii), Section 3(b)(ii), and
Section 4(c) above;
(vi) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Seller.
(vii) Employment, Confidentiality and Non-Compete Agreements
shall have been executed in form and substance reasonably satisfactory to Buyer
with Xxxxx X. Xxxx and Xxx Xxxx;
(viii) Buyer shall be reasonably satisfied with the
conclusions of the Phase I studies of Section 5(g);
(ix) the Asset Purchase Agreement (which shall be drafted to
contain terms consistent with the Letter of Intent and, to the extent reasonably
prudent, the same terms and conditions as this Agreement), the Escrow Agreement
and the Real Estate Purchase Agreement shall have been executed and delivered by
all parties thereto and the Asset Purchase Agreement and the Real Estate
Purchase Agreement shall be consummated simultaneously with the Closing;
(x) Seller shall have received from Xxxxxx & Xxxxxx, counsel to
Buyer, an opinion or opinions dated as of the Closing Date covering the matters
addressed in Sections 3(b)(i) - (iii) (in rendering such opinions such counsel
may, as to factual matters rely upon certificates, of officers and public
officials and limit factual statements by the use of "to our knowledge" or
phrases of similar meaning) (it is expressly understood that such opinion will
be based on Delaware law); and
(xi) Buyer and Acquired Corporation and its Acquired Subsidiaries
shall have obtained all consents, approvals, permits or authorizations
contemplated by Sections 3(a)(iii), 3(b)(iii) and 4(c) above and the related
Disclosure Schedule except for such consents, approvals, permits or
authorizations which, if not obtained, would not individually or in the
aggregate, reasonably be anticipated to have a material adverse effect on the
Acquired Corporation or its Acquired Subsidiaries.
The Seller may waive any condition specified in this Section 7(b) if
it executes a writing so stating at or prior to the Closing.
{PRIVATE }8. Remedies for Breaches of this Agreement{tc \l 1 "8.
Remedies for Breaches of this Agreement"}.
{PRIVATE }(a) Indemnification Provisions for Benefit of the Buyer{tc \l 2
"(a) Indemnification Provisions for Benefit of the Buyer
occurs, and subject to the other provisions of this Section 8, Buyer shall be
entitled to indemnification from each Seller (jointly and severally) for and
shall be held harmless from and against any loss, liability, claim, damage or
expense (including costs of investigation and defense and reasonable attorneys'
fees, and, with respect to claims relating to environmental matters, reasonable
costs of clean-up, containment or other remediation), but excluding lost profits
and unforeseeable consequential damages, whether or not involving a third party
claim (collectively, "Losses"), caused by breaches of any of Seller's, Acquired
Corporation's or its Acquired Subsidiaries' representations, warranties or
covenants contained in this Agreement.
{PRIVATE }(b) Indemnification Provisions for Benefit of the Seller
2 "(b) Indemnification Provisions for Benefit of the Seller
Closing occurs, and subject to the other provisions of this Section 8, Seller
shall be entitled to indemnification for and shall be held harmless from and
against any Losses caused by breaches of any of Buyer's representations,
warranties or covenants contained in this Agreement.
{PRIVATE }(c) Survival of Representations and Warranties{tc \l 2 "(c)
Survival of Representations and Warranties
and warranties of the Parties contained above (other than those in Sections 4(e)
and 4(p) which shall have no limitation on the time in which a claim must be
made) shall survive the Closing and continue in full force and effect until the
expiration of the applicable statute of limitations.
{PRIVATE }(d) Matters Involving Third Parties{tc \l 2 "(d) Matters
Involving Third Parties"}.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") that may give rise to
a claim for indemnification against the other Party (the "Indemnifying Party
under this Section 8, then the Indemnified Party shall promptly (and in any
event within ten (10) business days after receiving notice of the Third Party
Claim) notify the Indemnifying Party thereof in writing.
(ii) The failure to give any notice required shall not relieve an
Indemnifying Party of any obligation except to the extent that the failure to
give timely notice actually and materially prejudices the rights of such
Indemnifying Party or the notice occurs after the applicable survival period on
which the claim is based.
(iii) The Indemnifying Party will have the right to assume
and thereafter conduct the defense of the Third Party Claim with counsel of its
choice.
(iv) Unless and until the Indemnifying Party assumes the defense
of the Third Party Claim as provided in Section 8(d)(ii) above, however, the
Indemnified Party may defend against the Third Party Claim in any manner it
reasonably may deem appropriate.
(v) In no event will the Indemnified Party consent to the entry
of any judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnifying Party.
{PRIVATE }(e) Other Indemnification Provisions{tc \l 2 "(e) Other
Indemnification Provisions
are the sole remedy any Party may have for breach of representation, warranty,
or covenant other than breaches by Seller of the representations, warranties or
covenants contained in Section 6(c) (relating to non-competition,
confidentiality and non-solicitation) or Section 2(c) (relating to Seller's
repayment of certain outstanding liabilities of Acquired Corporation); provided,
however, that each Party acknowledges and agrees that no claim for
indemnification may be made until the aggregate of all claim(s) for
indemnification against that Party reach a value of U.S. $100,000; whereupon,
such claims will be recoverable from the first dollar of Loss claimed against
such Party including the first $100,000 in claimed Losses. Seller agrees to
indemnify the Buyer from and against (x) the imposition of Taxes, including
interest and penalties thereon, arising out of or attributable to all taxable
periods ending on or before the Closing Date to the extent such Taxes have not
been fully paid or fully reserved by or on the Closing Balance Sheet; (y)
including Taxes of any Person other than any of Acquired Corporation and its
Subsidiaries under Reg. Section 1.1502-6 (or similar provision of state, local
or foreign law); and (z) any foreign transfer taxes attributable to or arising
out of the Purchase and Sale contemplated by this Agreement under Section 2
(collectively all of which being "Additional Taxes"). All claim(s) by Buyer
against Seller shall be capped so that the aggregate value of all Losses
recoverable by Buyer shall be limited to U.S. $2,000,000, including the first
$300,000 in Additional Taxes (it being understood that if Buyer suffered Losses
relating to Additional Taxes in an amount of $300,000 and other Losses in
amounts greater than $1,700,000, under such circumstances Seller would only be
liable to Buyer for up to $1,700,000 of such other Losses). To the extent
Additional Taxes exceed $300,000 Buyer shall be entitled to recover such
Additional Taxes from Seller without limitation. All claim(s) by Seller against
Buyer shall be capped so that the aggregate value of all Losses recoverable by
Seller shall be limited to U.S. $250,000.
{PRIVATE }(f) Determination of Losses in Section 8(e){tc \l 2 "(f)
Determination of Losses in Section 8(e)"}.
(i) The Parties shall make appropriate adjustments for tax
benefits and insurance coverage and take into account the time cost of money
(using the Applicable Rate as the discount rate) in determining Losses for
purposes of this Section 8. All indemnification payments under this Section 8
shall be deemed adjustments to the Purchase Price.
(ii) Seller shall have twenty (20) days after receiving from Buyer a
claim for indemnification for Losses made pursuant to Section 8(d) above to
submit to Buyer written notice setting forth any objection to such claim. If,
such written objection of Seller is not received by Buyer within such twenty
(20) days, then such claim of Buyer shall be binding upon the Parties. In the
event Seller, within such twenty (20) day period, gives written notice to Buyer
of any objection to such claim, Seller and Buyer shall use their best efforts to
reach agreement on all differences within the twenty (20) day period following
the receipt by Seller of the claim for indemnification by Buyer.
(iii) If Seller and Buyer are unable to reach agreement within the
twenty (20) day period described in Section 8(f)(ii) above, the Parties shall
cause such matter to be submitted for determination by arbitration in accordance
with the provisions of the Federal Arbitration Act and the commercial rules of
the American Arbitration Association then in effect. Such proceeding shall take
place in Chicago, Illinois. The arbitrator shall have the right to award or
include in any award such relief which the arbitrator deems proper under the
circumstances, in keeping with the spirit and intent of the terms of this
Agreement, including, without limitation, money damages, specific performance,
injunctive relief and legal fees and costs. The award and decision of the
arbitrator shall be conclusive and binding upon all of the Parties, and judgment
upon the award may be entered in any court of competent jurisdiction.
{PRIVATE }9. Xxxxxxxxxxx{xx \x 0 "0. Xxxxxxxxxxx"}.
{PRIVATE }(a) Termination of Agreement{tc \l 2 "(a) Termination of
Agreement"}. The Parties may terminate this Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing in the event (A) the
Seller, Acquired Corporation or its Acquired Subsidiaries have within the then
previous ten (10) business days given the Buyer any notice pursuant to Section
5(e)(i) above and (B) the development that is the subject of such notice is in
the nature of a product liability claim or an environmental claim that, in the
reasonable opinion of Buyer will have, when considered together with all other
such developments, a material adverse impact upon the long term financial
condition, results of operations or prospects of Acquired Corporation and its
Subsidiaries taken as a whole;
(iii) the Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing in the event the
Seller, Acquired Corporation or its Acquired Subsidiaries has given the Buyer
notice(s) pursuant to Section 5(e)(i) above of developments that in the
aggregate would create Losses in excess of $1,000,000 (as determined in
accordance with and subject to the provisions of Section 9(b) below);
(iv) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing in the event of fraud on
the part of Seller in connection with any representation, warranty, or covenant
contained in this Agreement or in the event that Seller does not provide timely
notice of any material breach of any representation, warranty or covenant
pursuant to Section 5(e)(i); and
(v) the Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (A) in the event the Buyer
has breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, the Seller has notified the Buyer of the
breach, and the breach has continued without cure for a period of thirty (30)
days after the notice of breach or (B) if the Closing shall not have occurred on
or before March 16, 1998, by reason of the failure of any condition precedent
under Section 7(b) hereof (unless the failure results primarily from the Seller
itself breaching any representation, warranty, or covenant contained in this
Agreement).
{PRIVATE }(b) Xxxxxxxxxxxxx xx Xxxxxx xx Xxxxxx{xx \x 0 "(b)
Determination of Amount of Losses"}.
(i) Buyer shall, (x) within ten (10) days after receipt from
Seller, Acquired Corporation or its Acquired Subsidiaries of any notices
pursuant to Section 5(e)(i) above or (y) promptly after otherwise becoming aware
of developments that, in the reasonable opinion of Buyer, individually or in the
aggregate would create Losses that would allow Buyer to make a reduction in the
Initial Payment by the amount of such Losses under Section 5(f) hereof, provide
to Seller a written calculation of any such Losses (a "Calculation") and the
basis for such Calculation (the "Calculation Notice"). If, within ten (10) days
after the date such Calculation Notice is received by Seller, Seller has not
given written notice to Buyer setting forth any objection to such Calculation,
then such Calculation shall be binding upon the Parties (a "Final Calculation").
In the event Seller, within such ten (10) day period, gives written notice to
Buyer of any objection to such Calculation, Seller and Buyer shall use their
best efforts to reach agreement on all differences within the ten (10) day
period following the giving of the Calculation Notice.
(ii) Buyer shall, (x) within ten (10) days after receipt from Seller,
Acquired Corporation or its Acquired Subsidiaries of any notices pursuant to
Section 5(e)(i) above or (y) promptly after otherwise becoming aware of
developments that, in the reasonable opinion of Buyer, individually or in the
aggregate would, at the option of the Buyer, either create Losses that would
allow Buyer to make a reduction in the Initial Payment by an amount greater than
$1,000,000 under Section 5(f) above, or allow Buyer to terminate this Agreement
under Section 9(a)(iii) above (in each case because such Losses were in excess
of $1,000,000), provide to Seller a Calculation Notice. If Buyer intends to
terminate the Agreement as a result of such Losses, the Calculation Notice shall
so state. If, within twenty (20) days after the date such Calculation Notice is
received by Seller, Seller has not given written notice to Buyer setting forth
any objection to such Calculation and/or setting forth its intent to cure the
Losses described in such Calculation Notice within such twenty (20) day period,
then the Calculation shall be a Final Calculation, and Buyer may terminate this
Agreement at the end of such period. In the event Seller, within such twenty
(20) day period, gives written notice to Buyer of any objection to such
Calculation, Seller and Buyer shall use their best effort to reach agreement on
all differences within the twenty (20) day period following the giving of the
Calculation Notice.
(iii) If Seller and Buyer are unable to reach agreement within the
ten (10) day period described in Section 9(b)(i) above or within the twenty (20)
day period described in Section 9(b)(ii) above (as applicable), the Parties
shall cause such matter to be submitted for determination by arbitration in
accordance with the provisions of the Federal Arbitration Act and the commercial
rules of the American Arbitration Association then in effect. Such proceeding
shall take place in Chicago, Illinois. The arbitrator shall have the right to
award or include in any award such relief which the arbitrator deems proper
under the circumstances, in keeping with the spirit and intent of the terms of
this Agreement, including, without limitation, money damages, specific
performance, injunctive relief and legal fees and costs. The award and decision
of the arbitrator shall be conclusive and binding upon all of the Parties, and
judgment upon the award may be entered in any court of competent jurisdiction.
(iv) The Closing Date shall be extended as necessary to accommodate
the notice and response procedures set forth above with respect to the
calculation of any Losses.
{PRIVATE }(c) Effect of Termination{tc \l 2 "(c) Effect of
Termination"}. If any Party terminates this Agreement pursuant to Section 9(a)
above, all rights and obligations of the Parties hereunder shall terminate
without any liability of any Party to any other Party (except for any liability
of any Party then in breach); provided, however, that the confidentiality
provisions contained in Section 5(d) above shall survive termination.
{PRIVATE }10. Tax Matters{tc \l 1 "10. Tax Matters"}.
{PRIVATE }(a) Income Tax Sharing Agreements{tc \l 2 "(a) Income Tax
Sharing Agreements
Corporation and its Acquired Subsidiaries is terminated as of the Closing Date
and will have no further effect for any future taxable year.
{PRIVATE }(b) Payment of Taxes{tc \l 2 "(b) Payment of Taxes
the amount of Income Taxes attributable to the Acquired Corporation and its
Acquired Subsidiaries prior to the Closing Date which have been paid (but for
which Income Tax Returns were not filed prior to the Closing Date) are
determined to be deficient based on the Post-Closing Audit Seller shall be
liable to Buyer and shall promptly pay to Buyer such deficiency. If it is
determined that Acquired Corporation or its Acquired Subsidiaries overpaid the
amount of such Income Taxes based upon the Post-Closing Audit, Buyer shall
promptly refund the amount of such overpayment to Seller. The amount due to or
from the Seller pursuant to this Section shall be a Purchase Price Adjustment
pursuant to Section 2(b)(ii).
{PRIVATE }(c) Tax Proceedings{tc \l 2 "(c) Tax Proceedings
shall exercise, at its expense, complete control over the handling, disposition
and settlement of any governmental inquiry, examination or proceeding that could
result in a determination with respect to Taxes due or payable by the Acquired
Corporation or its Acquired Subsidiaries with respect to which it is estimated
that a majority of such Taxes due or payable by the Acquired Corporation or its
Acquired Subsidiaries would be paid by the Acquired Corporation or its Acquired
Subsidiaries and would not be subject to indemnification by Seller pursuant to
Section 10(b) above. Seller shall exercise, at its expense, complete control
over the handling, disposition and settlement of any governmental inquiry,
examination or proceeding that could result in a determination with respect to
Taxes due or payable by the Acquired Corporation or its Acquired Subsidiaries
with respect to which it is estimated that a majority of such Taxes due or
payable by the Acquired Corporation or its Acquired Subsidiaries would be
subject to indemnification by the Seller pursuant to Section 10(b) above. Buyer
shall promptly notify Seller if, in connection with any such inquiry,
examination or proceeding, any government authority proposes in writing to make
an assessment or adjustment with respect to Tax items of the Acquired
Corporation or its Acquired Subsidiaries, which assessments or adjustments are
attributable or could affect the taxable periods ending on or before the Closing
Date for which Seller may be liable, or against which Seller may be required to
indemnify Buyer or Acquired Corporation pursuant hereto. Each Party, when it is
not in control of any such inquiry, examination or proceeding following
notification to the other Party, at its own expense, may participate in such
inquiry, examination or proceeding. Each Party shall cooperate with the other
Party, as each may reasonably request, in any such examination or proceeding.
If such inquiry, examination or proceeding results in a Tax deficiency or Tax
refund in excess of or less than, respectively, the amount estimated for such
period in accordance with Section 10(b) which is attributable or partly
attributable to taxable periods ended on or before the Closing Date, Seller
agrees to promptly pay such amount to Buyer. If such inquiry, examination or
proceeding results in a Tax refund or Tax deficiency in excess of or less than,
respectively, the amount estimated for such period in accordance with Section
10(b) which is attributable or partly attributable to taxable periods ended on
or before the Closing Date, Buyer agrees to promptly pay such amount to Seller.
{PRIVATE }(d) Cooperation and Record Retention{tc \l 2 "(d)
Cooperation and Record Retention
provide the other, with such assistance as may reasonably be requested by any of
them in connection with the preparation of any Return, audit or other
examination by any taxing authority or judicial or administrative proceedings
relating to liability for Taxes, (ii) each retain and provide the other with any
records of other information which may be relevant to such Return, audit or
examination, proceeding or determination, and (iii) each provide the other with
any final determination of any such audit or examination, proceeding or
determination that affects any amount required to be shown on any Return of the
other for any period. Without limiting the generality of the foregoing, Buyer
shall retain, and shall cause the Acquired Corporation to retain, and Seller
shall retain, until the applicable statutes of limitations (including any
extensions) have expired, copies of all Returns, supporting work schedules and
other records or information which may be relevant to such returns for all tax
periods or portions thereof ending before or including the Closing Date and
shall not destroy or otherwise dispose of any such records without first
providing the other party with a reasonable opportunity to review and copy the
same.
{PRIVATE }(e) Preparation of Returns{tc \l 2 "(e) Preparation of
Returns"}. Seller agrees to prepare or cause to be prepared Returns for all
taxable periods ending on or before the Closing Date, excluding the short
taxable period beginning on June 29, 1997 and ending on the Closing Date. Buyer
agrees to prepare or cause to be prepared Returns for all taxable periods ending
after the Closing Date and to prepare Returns for the short taxable period
beginning June 29, 1997 and ending on the Closing Date. In this regard, Buyer
and Seller shall fully cooperate with each other in the timely preparation of
such Returns (including the exchange of all necessary information, records, and
documents). Seller agrees to provide Buyer with copies of all Returns to be
filed subsequent to Closing, relating to taxable periods ending on or before the
Closing Date, 30 days prior to their filing. Buyer agrees to provide Seller
copies of all Returns filed for the short taxable period ended on the Closing
Date 30 days prior to their filing.
{PRIVATE }11. Miscellaneous{tc \l 1 "11. Miscellaneous"}.
{PRIVATE }(a) Press Releases and Public Announcements{tc \l 2 "(a) Press
Releases and Public Announcements
"}. No Party shall issue any press release or
make any public announcement relating to the subject matter of this Agreement
prior to the Closing without the prior written approval of the other Party;
provided, however, that any Party or any affiliate of such Party may make any
public disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the Party that intends, or that has an affiliate that intends, to issue
such press release or make such public announcement will advise the other Party
prior to making the disclosure and provide the other Party opportunity to
comment upon the release or announcement).
{PRIVATE }(b) No Third Party Beneficiaries{tc \l 2 "(b) No Third Party
Beneficiaries"}. This Agreement shall not confer any rights or remedies upon
any Person other than the Parties and their respective successors and permitted
assigns.
{PRIVATE }(c) Entire Agreement{tc \l 2 "(c) Entire Agreement"}. This
Agreement (including the documents referred to herein) constitutes the entire
agreement between the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties, written or oral, to
the extent they related in any way to the subject matter hereof.
{PRIVATE }(d) Succession and Assignment{tc \l 2 "(d) Succession and
Assignment"}. This Agreement shall be binding upon and inure to the benefit of
the Parties named herein and their respective successors and permitted assigns.
No Party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other Party.
{PRIVATE }(e) Counterparts{tc \l 2 "(e) Counterparts"}. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.
{PRIVATE }(f) Headings{tc \l 2 "(f) Headings"}. The section headings
contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this Agreement.
{PRIVATE }(g) Notices{tc \l 2 "(g) Notices"}. All notices, requests,
demands, claims, and other communications hereunder will be in writing. Any
notice, request, demand, claim, or other communication hereunder shall be deemed
duly given if (on the next business day after) it is sent by reputable overnight
courier, charges prepaid, and addressed to the intended recipient as set forth
below:
If to the Seller:
0000 Xxxxx Xxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Copy to:
Much Shelist Freed Xxxxxxxxx
Xxxxx Xxxx & Xxxxxxxxxx, P.C.
000 X. XxXxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
If to the Buyer:
CompX International Inc.
000 Xxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Copies to:
Valcor, Inc.
Three Lincoln Centre, Suite 1700
0000 XXX Xxxxxxx
Xxxxxx, XX 00000-0000
Attention: J. Xxxx Xxxxxxxxxxxxx
Facsimile: (000) 000-0000
Xxxxxx & Xxxxxx LLP
2700 International Tower
Suite 2700
000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, registered or certified U.S.
mail, messenger service, telecopy, telex, ordinary mail, or electronic mail),
but no such notice, request, demand, claim, or other communication shall be
deemed to have been duly given unless and until it actually is received by the
intended recipient. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.
{PRIVATE }(h) Governing Law{tc \l 2 "(h) Governing Law
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of Delaware without giving effect to any choice or conflict of
law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
{PRIVATE }(i) Amendments and Waivers{tc \l 2 "(i) Amendments and
Waivers"}. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by the Buyer and the Seller. No
waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any such
prior or subsequent occurrence.
{PRIVATE }(j) Severability{tc \l 2 "(j) Severability"}. Any term or
provision of this Agreement that is invalid or unenforceable in any situation in
any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other jurisdiction.
{PRIVATE }(k) Expenses{tc \l 2 "(k) Expenses"}. Each of the Buyer and
the Seller will bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby. Notwithstanding the foregoing sentence, Buyer shall bear
the costs of any and all transfer taxes, including without limitation any use or
sales taxes, associated with the sale of the Acquired Corporation.
{PRIVATE }(l) Construction{tc \l 2 "(l) Construction"}. In the event
an ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise. The word "including" shall mean including without limitation.
{PRIVATE }(m) Incorporation of Exhibits{tc \l 2 "(m) Incorporation of
Exhibits"}. The Exhibits and any annexes and schedules identified in this
Agreement are incorporated herein by reference and made a part hereof.
{PRIVATE }(n) Trustee Exculpatory Clause{tc \l 2 "(n) Trustee
Exculpatory Clause
individually or personally, but as Trustees as aforesaid, in the exercise of the
power and authority conferred upon and vested in it as such Trustee and under
the express direction of the beneficiaries under such respective trusts. It is
expressly understood and agreed that nothing in this Agreement contained shall
be construed as creating any liability whatsoever against said Trustee
personally, and in particular, without limiting the generality of the foregoing,
there shall be no personal liability to pay any indebtedness accruing hereunder
or to perform any covenant, either express or implied, herein contained, to
keep, preserve or sequester any property of said Trusts, and that all personal
liability of said Trustees, of every sort, if any, is hereby expressly waived by
Buyer, and by every person now or hereafter claiming any right or security
hereunder; and that so far as the parties hereto are concerned, the owner of any
indebtedness or liability accruing hereunder shall look solely to the trust
estate under the respective trusts from time to time for the payment thereof.
It is further understood and agreed that the said Trustees have no beneficial
interest in the Acquired Corporation and merely hold naked title to the Acquired
Corporation Shares hereby described and have no control over the management
thereof or the income therefrom and have no knowledge respecting the Acquired
Corporation, except as represented to it by the beneficiary or beneficiaries of
said Trusts.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
BUYER:
COMPX INTERNATIONAL INC.
By: _/s/ Xxxxx X. Xxxxxx.__
Title: __President______
SELLER:
XXXXX X. XXXX
__/s/ Xxxxx X. Falk__________________
Xxxxx X. Xxxx, as trustee of the Xxxxx X. Xxxx
Trust dated June 29, 1989
XXXX XXXX
_/s/ Xxxx Xxxx
Signature
XXX XXXX
__/s/ Xxx Xxxx
Signature
XXXXX X. FINE
__/s/ Kanen Fine____________
Signature
XXXXX XXXXX
__/s/ Julile Raske____
Signature
XXXXXX XXXX
__/s/ Xxxxxx Falk_______
Signature
FINE FAMILY TRUST
By: _/s/Xxxxx X. Fine____
Xxxxx X. Fine, as trustee of the Fine Family
Trust dated March 31, 1997
XXXXX XXXXX FAMILY GIFT TRUST
By: __/s/Xxxxx Raske____
Xxxxx Xxxxx, as co-trustee of the Xxxxx Xxxxx
Family Gift Trust dated February 4, 1997
By: __/s/ Xxxxxx X. Cohen____________
Xxxxxx X. Xxxxx, as co-trustee of the Xxxxx
Xxxxx Family Gift Trust dated February 4, 1997
XXXXXX XXXX FAMILY GIFT TRUST
By: __/s/ Xxxxxx Falk______________
Xxxxxx Xxxx, as co-trustee of the Xxxxxx Xxxx
Family Gift Trust dated February 14, 1997.
By: /s/ Xxxxxx X. Cohen___________
Xxxxxx X. Xxxxx, as co-trustee of the Xxxxxx
Xxxx Family Gift Trust dated February 14, 1997.
CompX will provide the Commission with any of the following schedules upon
request.
SCHEDULE II
FINANCIAL STATEMENTS
EXHIBIT A
ASSET PURCHASE AGREEMENT
EXHIBIT B
REAL ESTATE
PURCHASE AGREEMENT
EXHIBIT C
ESCROW AGREEMENT
EXHIBIT D
FORM OF LEGAL OPINION - ACQUIRED CORPORATION'S COUNSEL
