EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
dated as of
August 23, 2002
among
USI MAYFAIR LIMITED
and
MEGAPRO TOOLS, INC.
and
S AND J ACQUISITION CORP.
TABLE OF CONTENTS
PAGE
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ARTICLE 1. DEFINITIONS................................................................................1
Section 1.01 Definitions.......................................................................1
ARTICLE 2. Purchase and Sale..........................................................................5
Section 2.01 Purchase and Sale of Shares.......................................................5
Section 2.02 The Closing.......................................................................5
ARTICLE 3. Representations and Warranties of Seller...................................................6
Section 3.01 Corporate Existence and Power.....................................................6
Section 3.02 Corporate Authorization...........................................................7
Section 3.03 Governmental Authorization........................................................7
Section 3.04 Noncontravention..................................................................7
Section 3.05 Capitalization....................................................................7
Section 3.06 Ownership of Shares...............................................................7
Section 3.07 Company Subsidiaries..............................................................7
Section 3.08 Financial Statements..............................................................8
Section 3.09 Material Adverse Effect...........................................................8
Section 3.10 No Undisclosed Material Liabilities...............................................8
Section 3.11 Material Contracts................................................................9
Section 3.12 Litigation........................................................................9
Section 3.13 Compliance with Laws and Court Orders.............................................9
Section 3.14 Real Property.....................................................................9
Section 3.15 Intellectual Property.............................................................9
Section 3.16 Finders' Fees....................................................................10
Section 3.17 Tax Matters......................................................................10
Section 3.18 Environmental Matters............................................................10
Section 3.19 Investment.......................................................................11
Section 3.20 Inspections; No Other Representations............................................11
ARTICLE 4. Representations and Warranties of Buyer...................................................11
Section 4.01 Corporate Existence and Power....................................................11
Section 4.02 Corporate Authorization..........................................................12
Section 4.03 Governmental Authorization.......................................................12
Section 4.04 Noncontravention.................................................................12
Section 4.05 Capitalization...................................................................12
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TABLE OF CONTENTS
(continued)
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Section 4.06 Buyer Subsidiaries...............................................................13
Section 4.07 SEC Reports, Financial Statements................................................13
Section 4.08 Material Adverse Effect..........................................................13
Section 4.09 No Undisclosed Material Liabilities..............................................14
Section 4.10 Litigation.......................................................................14
Section 4.11 Compliance with Laws and Court Orders............................................14
Section 4.12 Finders' Fees....................................................................14
Section 4.13 Tax Matters......................................................................14
Section 4.14 Inspections; No Other Representations............................................15
ARTICLE 5. CoNDUCT OF BUSINESS; ACCESS TO INFORMATION................................................15
Section 5.01 Conduct of the Business..........................................................15
Section 5.02 Access to Information............................................................16
ARTICLE 6. POST-CLOSING Covenants....................................................................16
Section 6.01 Access...........................................................................16
Section 6.02 Trademarks; Tradenames...........................................................17
Section 6.03 Preservation of Records..........................................................17
Section 6.04 Certain Post-Closing Assistance by Buyer.........................................17
Section 6.05 Wednesbury Transaction...........................................................17
Section 6.06 Certain Tax Matters..............................................................17
ARTICLE 7. Covenants of Buyer and Seller.............................................................18
Section 7.01 Best Efforts; Further Assurances.................................................18
Section 7.02 Certain Filings..................................................................19
Section 7.03 Public Announcements.............................................................19
Section 7.04 Notices of Certain Events........................................................19
Section 7.05 Consents.........................................................................19
Section 7.06 Insurance Policies...............................................................19
ARTICLE 8. Conditions to Closing.....................................................................20
Section 8.01 Conditions to Obligations of Buyer and Seller....................................20
Section 8.02 Conditions to Obligation of Buyer................................................20
Section 8.03 Conditions to Obligation of Seller...............................................21
ARTICLE 9. Survival; Indemnification.................................................................22
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TABLE OF CONTENTS
(continued)
PAGE
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Section 9.01 Survival.........................................................................22
Section 9.02 Indemnification..................................................................22
Section 9.03 Procedures.......................................................................23
Section 9.04 Calculation of Damages...........................................................24
Section 9.05 Assignment of Claims.............................................................24
Section 9.06 Exclusivity......................................................................24
ARTICLE 10. Termination...............................................................................25
Section 10.01 Grounds for Termination..........................................................25
Section 10.02 Effect of Termination............................................................25
ARTICLE 11. Miscellaneous.............................................................................26
Section 11.01 Notices..........................................................................26
Section 11.02 Amendments and Waivers...........................................................27
Section 11.03 Expenses.........................................................................27
Section 11.04 Successors and Assigns...........................................................27
Section 11.05 Governing Law....................................................................27
Section 11.06 WAIVER OF JURY TRIAL.............................................................27
Section 11.07 Counterparts; Third Party Beneficiaries..........................................27
Section 11.08 Entire Agreement.................................................................28
Section 11.09 Interpretation...................................................................28
Section 11.10 Disclosure Schedules.............................................................28
Section 11.11 English Language.................................................................28
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TABLE OF CONTENTS
(continued)
EXHIBITS
Exhibit A-1 and A-2 Form of Promissory Notes
Exhibit B Form of Stockholders' Agreement
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Wednesbury Lease
COMPANY GROUP SCHEDULES
Schedule 3.03 Governmental Approvals
Schedule 3.04 Material Consents
Schedule 3.05 Company Capitalization and Other Particulars
Schedule 3.07 Company Subsidiaries Capitalization and Other Particulars
Schedule 3.08(a) Preliminary Balance Sheet and US GAAP Exceptions
Schedule 3.08(b) Audited Financial Statements - US GAAP Exceptions
Schedule 3.09 Material Adverse Effect
Schedule 3.10 Undisclosed Liabilities
Schedule 3.11 Material Contracts
Schedule 3.12 Litigation
Schedule 3.14 Real Property
Schedule 3.15 Intellectual Property
Schedule 3.17 Tax Matters
BUYER GROUP SCHEDULES
Schedule 4.03 Governmental Approvals
Schedule 4.05 Capitalization
Schedule 4.06 Buyer Subsidiaries
Schedule 4.08 Material Adverse Effect
Schedule 4.09 Undisclosed Liabilities
Schedule 4.10 Litigation
Schedule 4.13 Tax Matters
OTHER SCHEDULES
Schedule 2.01(c) Purchase Price Allocation
Schedule 5.01 Conduct of Business - Exceptions
Schedule 6.05 Wednesbury Transactions
Schedule 7.06 Non-transferred Insurance Policies
Schedule 8.01(b) Liens to be Discharged
Schedule 8.03(c) MTI Capitalization
Schedule 8.03(d) Wednesbury Property Transfer
Schedule 8.03(e) Credit Support Documents
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STOCK PURCHASE AGREEMENT
AGREEMENT dated as of August 23, 2002 between USI Mayfair Limited, a
company organized under the laws of England ("SELLER"), and Megapro Tools, Inc.,
a corporation organized under the laws of the State of Nevada, U.S.A. ("MTI")
and S and J Acquisition Corp., a Florida corporation ("MTI-SUB" and together
with MTI, "BUYER").
PRELIMINARY STATEMENT:
Seller owns all of the Shares (as defined below). On the terms and
subject to conditions set forth herein, Seller wishes to sell, and Buyer wishes
to purchase, all of the Shares.
AGREEMENT:
ARTICLE 1.
DEFINITIONS
SECTION 1.01 DEFINITIONS.
(a) The following terms, as used herein, have the following
meanings:
"AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such Person; provided that none of the Transferred Companies shall
be considered an Affiliate of Seller.
"BALANCE SHEET DATE" means June 30, 2002.
"XXXXXX SHARES" means the 50,000 fully paid ordinary shares of
(pound)1 each and the 950,000 "A" Ordinary Shares of (pound)0.01 each of Xxxxxx
Group plc together comprising the whole of the issued share capital of Xxxxxx
Group plc.
"BUYER GROUP" means Buyer and Buyer Subsidiaries.
"BUYER SUBSIDIARY" means each of the Subsidiaries of Buyer,
details of which are set out in Schedule 4.06; and collectively such entities
shall be referred to as the "BUYER SUBSIDIARIES."
"CLOSING DATE" means the date of the Closing.
"CODE" means the United States Internal Revenue Code of 1986,
as amended.
"COMPANIES ACT" means the Companies Xxx 0000, as promulgated
under the laws of England and Wales.
"COMPANY" means each of Spear & Xxxxxxx plc and Xxxxxx Group
plc details of each of which are set out in Schedule 3.05; and collectively such
entities shall be referred to as the "COMPANIES."
"COMPANY GROUP" means the Companies and each of the Company
Subsidiaries; provided, that for the purposes of Article 3 (other than the last
sentence of Section 3.07), Company Group shall exclude any Company Subsidiary
designated as dormant in Schedule 3.07.
"COMPANY SUBSIDIARY" means each of the Subsidiaries of the
Company, details of which are set out in Schedule 3.07; and collectively such
entities shall be referred to as the "COMPANY SUBSIDIARIES."
"CONSTITUENT DOCUMENTS" means, as to any Person (other than
individual), the certificate of incorporation, bylaws, certificate of formation,
partnership agreement, limited liability agreement, operating agreement, trust
instrument, memorandum of association or other similar constituent document or
documents of such Person.
"CONTRACT" means any contract, agreement or other binding
arrangement.
"GOVERNMENTAL AUTHORITY" means any national, regional, state,
municipal, other governmental or regulatory authority, administrative body or
government, department, board, body, instrumentality or commission.
"GROUP" means the Company Group or the Buyer Group, as the
context may require.
"INTELLECTUAL PROPERTY RIGHT" means any trademark, service
xxxx, trade name, mask work, invention, patent, trade secret, copyright,
know-how (including any registrations or applications for registration of any of
the foregoing) or any other similar type of proprietary intellectual property
right.
"KNOWLEDGE OF BUYER" or words of similar import shall mean
actual knowledge possessed by Mr. Xxxx Xxxxxx or Mr. Xxxxxx Xxxxxxx.
"KNOWLEDGE OF SELLER" or words of similar import shall mean
actual knowledge possessed by Xx. Xxxxx Xxxxxxxxxxxx, Managing Director of Spear
& Xxxxxxx plc.
"LEASE" means any lease of real property.
"LIEN" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest or encumbrance in respect of
such property or asset.
"MATERIAL ADVERSE EFFECT" means, as to any Person or group of
Persons, a material adverse effect on the business, results of operations or
financial condition of such Person or group of Persons, taken as whole, except
any such effect resulting from or arising in connection with (i) The Transaction
Documents or the transactions contemplated thereby, (ii) changes or conditions
2
affecting the industries in which such Person any member of such group of
Persons operates generally or (iii) changes in economic, regulatory, financial
or political conditions generally.
"MATERIAL CONTRACT" means, as to any Group, any Contract, the
absence of which might reasonably be expected to have a Material Adverse Effect
on such Group.
"MATERIAL LEASE" means, as to any Group, a Lease material to
the operations of such Person.
"OWNED PROPERTY" means, as to any Group, all real property
owed in fee by such Group.
"PERMITTED LIENS" means, as to any Group, (i) Liens reflected
or reserved against in the financial statements of such Group disclosed to the
other Group or one of its Affiliates (including in the notes thereto), (ii)
Liens reflected in any title abstracts or similar documents of such Group (and
disclosed to the other Group or one of its Affiliates) with respect to real
properties of such Group, (iii) Liens, imperfections of title, easements,
encroachments, rights-of-way, pledges, charges, restrictions and encumbrances,
including, without limitation, survey matters, mechanics' liens, repairmen's
liens and other similar liens, if any, that do not materially detract from the
value of the property subject thereto or materially interfere with the manner in
which it is currently being used by the applicable Group, (iv) taxes and general
and special assessments not yet due and payable without penalty or interest or
being contested in good faith, and (v) Liens otherwise disclosed in one of the
Schedules.
"PERSON" means an individual, corporation, partnership,
limited liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"S&J SHARES" means the 507,927,861 fully paid ordinary shares
of 10 xxxxx each of Spear & Xxxxxxx plc and the 225,993,087 fully paid deferred
shares of 10 xxxxx each in Spear & Xxxxxxx plc comprising the whole of the
issued share capital of Spear & Xxxxxxx plc.
"SHARES" means the Xxxxxx Shares and the S&J Shares.
"SUBSIDIARIES" means, as to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.
"TAX" means any tax, duty, fee, assessment, dues or charge of
any nature whatsoever imposed by any government or taxing authority, domestic or
foreign, including, without limitation, any gross or net income, gross or net
receipts, minimum, sales, use, ad valorem, value added, stamp, transfer,
franchise, withholding, payroll, employment, employment insurance, excise,
occupation, employer health premium or property tax, duty, fee, assessment, dues
or charge together with any interest, fine, penalty, addition to tax, duty, fee,
assessment, dues or charge or additional amount imposed with respect thereto.
3
"TAX RETURNS" means any return, report, reports subsequent or
form required to be filed under applicable law.
"TRANSACTION DOCUMENTS" means this Agreement, the Notes, the
Stockholders' Agreement, the Registration Rights Agreement, the Wednesbury Lease
and any other document contemplated to be executed and/or delivered in
connection herewith.
"USI" means U.S. Industries, Inc., a Delaware corporation.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
TERM SECTION
---- -------
Buyer Preamble
Buyer Intellectual Property Rights 4.13(a)
Claim 9.03(a)
Closing 2.02
Company Intellectual Property Rights 3.15
Damages 9.02
Environmental Disclosure Materials 3.18
Environmental Law 3.18
Exchange Act 4.07(a)
Indemnified Party 9.03(a)
Indemnifying Party 9.03(a)
MTI Preamble
MTI-Sub Preamble
Potential Contributor 9.05
Notes 2.01(b)
Preliminary Balance Sheet 3.08(a)
Purchase Price 2.01(b)
Registration Rights Agreement 8.02(e)
Relevant Period 3.18
Schedules 11.11
SEC 4.07(a)
SEC Reports 4.07(a)
Securities Act 4.07(a)
Seller Preamble
Stock Consideration 2.01(b)
Stockholders' Agreement 8.02(d)
Third Party Claim 9.03(b)
US GAAP 3.08(a)
Warranty Breach 9.02
Wednesbury Lease 8.02(f)
4
ARTICLE 2.
PURCHASE AND SALE
SECTION 2.01 PURCHASE AND SALE OF SHARES.
(a) Upon the terms and subject to the conditions of this
Agreement, at the Closing, Seller agrees to sell, or cause to be sold, to Buyer,
and Buyer agrees to purchase from Seller, the Shares.
(b) The purchase price for the Shares (the "PURCHASE PRICE")
shall consist of (i) 3,543,281 shares of duly authorized, validly issued, fully
paid and non-assessable shares of the common stock, par value $.001 per share,
of Buyer (the "STOCK CONSIDERATION"), PLUS (ii) two promissory notes issued by
Buyer to Seller in the aggregate principal amount of (pound)100,000 and
(pound)50,000 in the form of Exhibits A-1 and A-2 (the "NOTES").
(c) The Purchase Price shall be allocated in accordance with
Schedule 2.01(c). Each of Seller and Buyer agree to (i) be bound, and to cause
its Affiliates to be bound, by the allocations on Schedule 2.01(c), and (ii)
act, and to cause its Affiliates to act, in accordance with the allocations set
forth in Schedule 2.01(c) in the preparation, filing and/or audit of any Tax
Return and for all other tax and accounting purposes.
SECTION 2.02 THE CLOSING. Subject to Article 10, the closing (the
"CLOSING") of the purchase and sale of the Shares hereunder shall take place at
the offices of Xxxxx Xxxxxx Xxxxx Tischman Xxxxxxx & Xxxxx P.A., Newark, New
Jersey on August 31, 2002; provided, that if the conditions set forth in Article
8 are not satisfied (or waived by the appropriate party) by such date, then the
Closing shall take place as soon as possible (but in no event later than three
business days after) after the satisfaction (or waiver) of such conditions or at
such other time or place as Buyer and Seller may otherwise agree. At the
Closing:
(a) Seller shall deliver to Buyer (or cause to be delivered to
Buyer) the following:
(i) certificates representing the Shares free and
together with any documentation required to effect the transfer of the
Shares to MTI- Sub; provided, that if any such certificate is lost,
mutilated, stolen or otherwise missing, Seller shall deliver to Buyer
an express indemnity in a form reasonably satisfactory to Buyer;
(ii) to the extent Seller is so directed by Buyer by
written notice received at least three business days prior to Closing,
letters of resignation from each director and secretary of each
Company;
(iii) the statutory books of each Company, together
with their respective common seals (if any) and relevant Constituent
Documents (it being agreed that constructive delivery of the same to a
Company Group location shall satisfy the foregoing requirement);
5
(iv) a copy of resolutions of the board of directors
of Seller authorizing the execution, delivery and performance of the
Transaction Documents to which it is a party by each Seller and a
certificate of an appropriate officer of Seller, dated the Closing
Date, that such resolutions were duly adopted and are in full force and
effect; and
(v) a certificate, dated the Closing Date, executed
by a senior officer of Seller certifying to the fulfillment of the
conditions specified in Section 8.02(a).
(b) Seller shall cause a board meeting of each Company to be
held at which the directors shall:
(i) approve the registration of the share transfers
referred to in Section 2.02(a)(i) (subject only to stamping); and
(ii) accept the resignations referred to in Section
2.02(a)(ii), if any, and appoint the persons nominated by Buyer as
directors and secretary of each member of the Company Group with effect
from the end of the meeting;
(c) Buyer shall deliver to Seller (or cause to be delivered to
Seller) the following:
(i) the Stock Consideration in form reasonably
acceptable to Seller and free and clear of all Liens;
(ii) the Notes, duly executed by Buyer;
(iii) a copy of resolutions of the board of directors
of Buyer authorizing the execution, delivery and performance of each
Transaction Document to which Buyer is a party and a certificate of the
secretary or assistant secretary, dated the Closing Date, of Buyer that
such resolutions were duly adopted and are in full force and effect;
and
(iv) a certificate, dated the Closing Date, executed
by a senior officer of Buyer certifying to the fulfillment of the
conditions specified in Section 8.03(a).
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date hereof that:
SECTION 3.01 CORPORATE EXISTENCE AND POWER. Seller and each Company is
an entity validly formed and validly existing under the laws of its jurisdiction
of its formation and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not reasonably be expected to
have a Material Adverse Effect on the Company Group, taken as a whole.
6
SECTION 3.02 CORPORATE AUTHORIZATION. The execution, delivery and
performance by Seller of the Transaction Documents to which Seller is a party
and the consummation of the transactions contemplated thereby by Seller are
within the corporate powers of Seller and have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement constitutes a
valid and binding agreement of Seller.
SECTION 3.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Seller of the Transaction Documents to which Seller is a party
and the consummation of the transactions contemplated thereby require no
material action by or in respect of, or material filing with, any Governmental
Authority other than (i) those listed on Schedule 3.03; and (iii) any such
action or filing as to which the failure to make or obtain would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company Group, taken as a whole.
SECTION 3.04 NONCONTRAVENTION. The execution, delivery and performance
by Seller of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated thereby by Seller do not and will
not (a) violate the Constituent Documents of Seller, (b) assuming compliance
with the matters referred to in Section 3.03, violate any applicable law, rule,
regulation, judgment, injunction, order or decree, except for any such
violations which would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company Group, taken as a whole,
(c) except as disclosed in Schedule 3.04 or as to matters which would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company Group, taken as a whole, require any consent or
other action by any Person under, constitute a default under, or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of any member of the Company Group or to a loss of any benefit to
which any such member of the Company Group is entitled under any provision of
any Contract binding upon such member of the Company Group or (d) result in the
creation or imposition of any Lien on any asset of any member of the Company
Group, except for any Permitted Liens.
SECTION 3.05 CAPITALIZATION. The authorized and outstanding capital
stock of each Company on the date hereof is set forth in Schedule 3.05. All
outstanding shares of capital stock of each Company have been duly authorized
and validly issued and are fully paid and non-assessable. Except as set forth in
Schedule 3.05, there are no outstanding (a) shares of capital stock or voting
securities of the Companies, (b) securities of any Company convertible into or
exchangeable for shares of capital stock or voting securities of such Company or
(c) options or other rights to acquire from any Company, or other obligation of
such Company to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of such
Company.
SECTION 3.06 OWNERSHIP OF SHARES. Seller is the record and beneficial
owner of the Shares and will transfer and deliver to Buyer at the Closing valid
title to the Shares free and clear of any Lien other than Liens created by any
member of the Buyer Group or its Affiliates.
SECTION 3.07 COMPANY SUBSIDIARIES. Except as disclosed on Schedule
3.07, each Company Subsidiary is duly organized and validly existing under the
laws of its jurisdiction of organization and has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals required
7
to carry on its business as now conducted, except for those licenses,
authorizations, consents and approvals the absence of which would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company Group, taken as a whole. Except as disclosed in Schedule 3.07,
all of the outstanding capital stock or other voting securities of each Company
Subsidiary is owned by a Company, directly or indirectly, free and clear of any
Lien. Except as disclosed in Schedule 3.07, there are no outstanding (a)
securities of any Company Subsidiary convertible into or exchangeable for shares
of capital stock or voting securities of any Company Subsidiary or (b) options
or other rights to acquire from any Company Subsidiary, or other obligation of
any Company Subsidiary to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of any Company Subsidiary. To the Knowledge of Seller, each Company
Subsidiary designated as dormant in Schedule 3.07 is dormant.
SECTION 3.08 FINANCIAL STATEMENTS.
(a) The unaudited pro forma combined balance sheet of the
Company Group dated as of the Balance Sheet Date (the "PRELIMINARY BALANCE
SHEET") and the related unaudited combined statement of operations, and cash
flow for the nine (9) months then ended set forth in Schedule 3.08(a), present
fairly, in all material respects, the combined financial condition of the
Company Group as at such date in accordance with United States generally
accepted accounting principles ("US GAAP") with such exceptions as are described
in Schedule 3.08(a).
(b) The audited combined balance sheets of the Company Group
as of September 30, 2000 and 2001, and the audited combined statement of
operations, and cash flows for the years ended September 30, 1999, 2000 and 2001
present fairly, in all material respects, the combined financial position of the
Company Group and the combined results of their operations and their cash flows
during such periods, in conformity with US GAAP with such exceptions as are
described in Schedule 3.08(b).
SECTION 3.09 MATERIAL ADVERSE EFFECT. Except as disclosed in Schedule
3.09 or as otherwise permitted or contemplated by this Agreement, since the
Balance Sheet Date, the Company Group has conducted business in the ordinary
course consistent with past practices and there has not been any change in
business or operations of the Company Group which has had or which might
reasonably be expected to have a Material Adverse Effect on the Company Group,
taken as a whole.
SECTION 3.10 NO UNDISCLOSED MATERIAL LIABILITIES. There are no
liabilities of the Company Group of any kind, other than (a) liabilities
provided for in the Preliminary Balance Sheet (including to the extent reserved
therefor therein) or disclosed in the notes thereto; (b) liabilities not
required under US GAAP to be shown on the Preliminary Balance Sheet; (c)
liabilities disclosed in, related to or arising under any agreements,
instruments or other matters disclosed in any Transaction Document or any
Schedule thereto including in Schedule 3.10; (d) liabilities and obligations not
required to be so disclosed because of their failure to meet the materiality or
minimum dollar thresholds set forth in the relevant Section; (e) liabilities
incurred in the ordinary course of business since the Balance Sheet Date; and
(f) other undisclosed liabilities which, individually or in the aggregate do not
have or would not reasonably be expected to have a Material Adverse Effect on
the Company Group, taken as a whole.
8
SECTION 3.11 MATERIAL CONTRACTS. Schedule 3.11 lists of all Material
Contracts of the Company Group. Seller has made available to Buyer complete and
correct copies of all items listed on Schedule 3.11. Except as disclosed in
Schedule 3.11, to the Knowledge of Seller, no member of the Company Group is in
default under the terms of any item listed on Schedule 3.11 which default has
had a Material Adverse Effect on the Company Group, taken as a whole. To the
Knowledge of Seller, each of the Contracts listed in Schedule 3.11 is valid and
in full force and effect, and no party has notified any member of the Company
Group in writing of its intention to cease to perform any material services
required to be performed by it or withhold any material payment required to be
made by it thereunder.
SECTION 3.12 LITIGATION. Except as disclosed on Schedule 3.12, there is
no action, suit, investigation or proceeding pending against, or to the
Knowledge of Seller, threatened in writing against or affecting, the Company
Group or any of its properties before any court or arbitrator or any
Governmental Authority (a) which might reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company
Group, taken as a whole or (b) which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay the transactions contemplated by the
Transaction Documents.
SECTION 3.13 COMPLIANCE WITH LAWS AND COURT ORDERS. To the Knowledge of
Seller, no member of the Company Group is in violation of any applicable law,
rule, regulation, judgment, injunction, order or decree, except for violations
that have not had and would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company Group, taken as a
whole.
SECTION 3.14 REAL PROPERTY. Schedule 3.14 (Part A) sets forth all of
the material Owned Property of the Company Group. Except as set forth on
Schedule 3.14 (Part A), to the Knowledge of Seller, each member of the Company
Group has good, valid and marketable fee simple title to each such parcel of
Owned Property listed next to its name on Schedule 3.14 (Part A), except for
properties sold since the Balance Sheet Date in the ordinary course of business
consistent with past practice. None of the material Owned Properties of the
Company Group is subject to a Lien other than Permitted Liens or as otherwise
disclosed in Schedule 3.14 (Part A). Schedule 3.14 (Part B) sets forth a list of
all of the Material Leases in effect as of the date hereof under which any
member of the Company Group is a lessee. To the Knowledge of Seller, all such
Material Leases are valid, binding and enforceable in accordance with their
terms, and are in full force and effect as of the date hereof. To the Knowledge
of Seller, there are no existing defaults by any member of the Company Group
beyond any applicable grace periods under such Material Leases, except for
defaults which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company Group, taken a whole. No
member of the Company Group has received any notice of default with respect to
any such Material Lease, except for defaults which would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company Group, taken as a whole.
SECTION 3.15 INTELLECTUAL PROPERTY. Schedule 3.15 contains a list of
all registered Intellectual Property Rights owned or licensed and used or held
for use by the Company Group the absence of which might reasonably be expected
to have a Material Adverse Effect on the Company Group, taken as a whole
("COMPANY INTELLECTUAL PROPERTY RIGHTS"). Schedule 3.15 sets forth a list of all
9
material licenses, sublicenses and other agreements as to which a member of the
Company Group is a party and pursuant to which any Person is authorized to use
any Company Intellectual Property Right.
SECTION 3.16 FINDERS' FEES. Except for Credit Suisse First Boston and
Deutche Bank Xxxx Xxxxx, whose fees will be paid by Seller, there is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of Seller or the Company Group who might be
entitled to any fee or commission from the Company Group in connection with the
transactions contemplated by this Agreement.
SECTION 3.17 TAX MATTERS.
(a) To the Knowledge of Seller, and except as set forth in the
Preliminary Balance Sheet (including the notes thereto) or on Schedule 3.17, (i)
each member of the Company Group and Seller have filed (or caused to be filed)
in a timely manner, all material Tax Returns required to be filed by it under
applicable law and such Tax Returns are true, complete and correct in all
material respects; (ii) each member of the Company Group has paid all Taxes
shown due on the Tax Returns described in the preceding clause (i), except for
Taxes that are being contested in good faith by appropriate proceedings; and
(iii) no member of the Company Group is a party to or is otherwise bound by any
Contract providing for the allocation or sharing of Taxes or has any obligation
or liability under any Contract to which it was once a party or otherwise bound.
(b) Neither Seller nor USI is in control of Buyer within the
meaning of Section 304(c) of the Code.
SECTION 3.18 ENVIRONMENTAL MATTERS. Except (y) as have not had and
might reasonably be expected not to have, individually or in the aggregate, a
Material Adverse Effect on the Company Group, taken as a whole, and (z) for
those facts, circumstances and other matters disclosed in the Environmental
Disclosure Materials, to the Knowledge of Seller: (i) during the Relevant Period
and as relating to the Company Group, no notice, demand, request for
information, citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review is pending or threatened by any Governmental Authority
relating to any Environmental Law; and (ii) the Company Group is in compliance
with all Environmental Laws. Seller delivered to Buyer all of the Environmental
Disclosure Materials (and Buyer acknowledges receipt of the same). Buyer
acknowledges and agrees that except as set forth in Section 9.02(a) hereof,
Buyer shall be apportioned all environmental liabilities associated with the
Company Group, whenever incurred, and whether pursuant to exclusion and
apportionment of liability for contaminated land (and in particular Xxxxxxxxx
X00 to D61 - "Test Three - Sold With Information" of Annex 3 of Circular 2/200)
or otherwise.
For the purposes of this Section 3.18, the following definitions shall
apply:
"ENVIRONMENTAL DISCLOSURE MATERIALS" means those material environmental
reports, surveys and other documents listed in that certain letter dated August
23, 2002 from Seller to Buyer.
10
"ENVIRONMENTAL LAW" means any law, rule, regulation, order or permit or
other requirement of any Governmental Authority relating to the environment or
to pollutants, contaminants, or other hazardous substances, wastes or materials.
"RELEVANT PERIOD" means in the case of S&J, the period commencing on
December 3, 1997 and ending on the date hereof, and, in the case of Xxxxxx,
means the period commencing on January 26, 1999 and ending on the date hereof.
SECTION 3.19 INVESTMENT. Seller is acquiring the Stock Consideration
for investment for its own account and not with a view to, or for sale in
connection with, any distribution thereof and will not sell the Stock
Consideration in violation of applicable federal, state or foreign securities
laws. Seller (either alone or together with its advisors) has sufficient
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of its investment in the Stock Consideration
and is capable of bearing the economic risks of such investment.
SECTION 3.20 INSPECTIONS; NO OTHER REPRESENTATIONS. Seller is informed
and sophisticated and has engaged expert advisors, experienced in the evaluation
of companies such as the Buyer. Seller has undertaken such investigation and has
been provided with and has evaluated such documents and information as it has
deemed necessary to enable it to make an informed and intelligent decision with
respect to the execution, delivery and performance of this Agreement. Seller
acknowledges that Buyer has given Seller full access to the key employees,
documents and facilities of the Buyer Group. Seller will undertake prior to
Closing such further investigation and request such additional documents and
information as it deems necessary. Seller agrees to accept the Stock
Consideration based upon its own inspection, examination and determination with
respect thereto as to all matters, and without reliance upon any express or
implied representations or warranties of any nature made by or on behalf of or
imputed to Buyer (or any other Person), except as expressly set forth in the
Transaction Documents. Without limiting the generality of the foregoing, Seller
acknowledges that neither Buyer nor any other Person makes or has made any
representation or warranty with respect to (i) any projections, estimates or
budgets delivered to or made available to Seller of future revenues, future
results of operations (or any component thereof), future cash flows or future
financial condition (or any component thereof) of the Buyer Group or the future
business and operations of the Buyer Group or (ii) any other information or
documents made available to Seller or its counsel, accountants or advisors with
respect to the Buyer Group or their respective businesses or operations, except
as expressly set forth in the Transaction Documents.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof that:
SECTION 4.01 CORPORATE EXISTENCE AND POWER. Buyer is a corporation
validly incorporated, validly existing and in good standing under the laws of
its jurisdiction of incorporation and has all corporate powers and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted, except for those licenses,
11
authorizations, permits, consents and approvals the absence of which would not
reasonably be expected to have a Material Adverse Effect on the Buyer Group,
taken as a whole.
SECTION 4.02 CORPORATE AUTHORIZATION. The execution, delivery and
performance by Buyer of the Transaction Documents to which Buyer is a party and
the consummation of the transactions contemplated thereby are within the
corporate powers of Buyer and have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement constitutes a valid and
binding agreement of Buyer.
SECTION 4.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Buyer of the Transaction Documents to which Buyer is a party and
the consummation of the transactions contemplated thereby require no material
action by or in respect of, or material filing with, any Governmental Authority
other than (i) those listed on Schedule 4.03 and (ii) any such action or filing
as to which the failure to make or obtain would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the Buyer
Group, taken as a whole.
SECTION 4.04 NONCONTRAVENTION. The execution, delivery and performance
by Buyer of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated thereby do not and will not (i)
violate the Constituent Documents of Buyer, (ii) assuming compliance with the
matters referred to in Section 4.03, violate any applicable law, rule,
regulation, judgment, injunction, order or decree, except for any such
violations which would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Buyer Group, taken as a whole,
(iii) except as to matters which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Buyer Group,
taken as a whole, require any consent or other action by any Person under,
constitute a default under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of any member of the
Buyer Group or to a loss of any benefit to which any member of the Buyer Group
is entitled under any provision of any Contract binding upon such member of the
Buyer Group; (iv) require the consent or approval of the stockholders of Buyer;
or (v) result in the creation or imposition of any Lien on any asset of any
member of the Buyer Group, except for Permitted Liens.
SECTION 4.05 CAPITALIZATION. The authorized and outstanding capital
stock of Buyer on the date hereof is set forth in Schedule 4.05. Schedule 4.05
sets forth a list of each stockholder of Buyer that beneficially owns ten
percent (10%) or more of the voting securities of Buyer - such disclosure to
contain the registered name, address, amount of such securities and beneficial
ownership percentage. All outstanding shares of capital stock of Buyer have been
duly authorized and validly issued and are fully paid and non-assessable. Except
as set forth in this Section 4.05 or on Schedule 4.05, there are no outstanding
(i) shares of capital stock or voting securities of Buyer, (ii) securities of
Buyer convertible into or exchangeable for shares of capital stock or voting
securities of Buyer or (iii) options or other rights to acquire from Buyer, or
other obligation of Buyer to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of Buyer. There are no outstanding obligations of any Company to
repurchase, redeem or otherwise acquire any securities of Buyer.
12
SECTION 4.06 BUYER SUBSIDIARIES. Except as disclosed on Schedule 4.06,
each Buyer Subsidiary is duly organized and validly existing under the laws of
its jurisdiction of organization and has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted, except for those licenses,
authorizations, consents and approvals the absence of which would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on Buyer, taken as a whole. Except as disclosed in Schedule 4.06, all of the
outstanding capital stock or other voting securities of each Buyer Subsidiary is
owned by Buyer, directly or indirectly, free and clear of any Lien. Except as
disclosed in Schedule 4.06, there are no outstanding (i) securities of any Buyer
Subsidiary convertible into or exchangeable for shares of capital stock or
voting securities of any Buyer Subsidiary or (ii) options or other rights to
acquire from any Buyer Subsidiary, or other obligation of any Buyer Subsidiary
to issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of any Buyer Subsidiary.
SECTION 4.07 SEC REPORTS, FINANCIAL STATEMENTS.
(a) Buyer has timely filed all forms, reports and documents
with the Securities and Exchange Commission ("SEC") required to be filed by it
since June 20, 2000 pursuant to the Securities Act of 1933, as amended, and the
rule and regulations promulgated thereunder (the "SECURITIES ACT") and the
Exchange Act and the rules and regulations promulgated thereunder (the "EXCHANGE
ACT") (collectively, the "SEC REPORTS"), all of which have complied, at the time
filed, in all material respects with all applicable requirements of the
Securities Act and the Exchange Act, as applicable, and the rules and
regulations promulgated thereunder. None of such SEC Reports, at the time filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) The balance sheets and the related statements of
operations, cash flows and shareholders' equity (including the notes thereto) of
Buyer and its subsidiaries contained or incorporated by reference in the SEC
Reports comply in all material respects with applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto,
and present fairly the financial position and stockholders' equity of Buyer and
its subsidiaries as of their respective dates, and results of their operations
and their cash flows for the periods presented therein subject to the exceptions
stated therein, in conformity with US GAAP applied on a consistent basis, (i)
except as otherwise noted therein, (ii) subject in the case of unaudited
financial statements to normal year-end audit adjustments, (iii) except that the
unaudited financial statements may not contain all of the footnote disclosures
required by US GAAP, and (iv) except with respect to Form 10-QSB as may
otherwise be permitted by Form 10-QSB.
SECTION 4.08 MATERIAL ADVERSE EFFECT. Except as disclosed in Schedule
4.08, since the June 30, 2002, Buyer Group has conducted business in the
ordinary course consistent with past practices and there has not been any change
in business, operations or assets of the Buyer Group, taken as a whole, which
has had or which might reasonably be expected to have a Material Adverse Effect
on the Buyer Group, taken as a whole.
13
SECTION 4.09 NO UNDISCLOSED MATERIAL LIABILITIES. There are no
liabilities of Buyer of any kind, other than (a) liabilities provided for in the
balance sheet in Form 10-QSB filed by Buyer with the SEC for the quarterly
period ended June 30, 2002 (including to the extent reserved therefor therein)
or disclosed in the notes thereto; (b) liabilities not required under US GAAP to
be shown on such balance sheet; (c) liabilities disclosed in, related to or
arising under any agreements, instruments or other matters disclosed in this
Agreement or any Schedule hereto including in Schedule 4.09 and liabilities and
obligations not required to be so disclosed because of their failure to meet the
materiality or minimum dollar thresholds set forth in the relevant Section; (d)
liabilities incurred in the ordinary course of business since June 30, 2002; and
(e) other undisclosed liabilities which, individually or in the aggregate, do
not have and may not reasonable be expected to have a Material Adverse Effect on
the Buyer Group, taken as a whole.
SECTION 4.10 LITIGATION. Except as disclosed on Schedule 4.11, there is
no action, suit, investigation or proceeding pending against, or to the
Knowledge of Buyer, threatened in writing against, or affecting the Buyer Group
before any court or arbitrator or any Governmental Authority (a) which might
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Buyer Group, taken as a whole or (b) which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by the Transaction Documents.
SECTION 4.11 COMPLIANCE WITH LAWS AND COURT ORDERS. To the Knowledge of
Buyer, no member of the Buyer Group is in violation of any applicable law, rule,
regulation, judgment, injunction, order or decree, except for violations that
have not had and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Buyer Group, taken as a whole.
SECTION 4.12 FINDERS' FEES. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of the Buyer Group who might be entitled to any fee or commission from
the Buyer Group in connection with the transactions contemplated by this
Agreement.
SECTION 4.13 TAX MATTERS.
(a) To the Knowledge of Buyer and except as set forth in the
on Schedule 4.13, (i) each member of the Buyer Group has filed (or caused to be
filed) in a timely manner, all Tax Returns required to be filed by it under
applicable law, and such Tax Returns are true, complete and correct in all
material respects; and (ii) each member of the Buyer Group has paid all Taxes
shown due on the Tax Returns described in the preceding clause (i), except for
Taxes that are being contested in good faith by appropriate proceedings.
(b) Buyer is not a person, with respect Seller and USI,
specified in any of the paragraphs of Section 267(b) of the Code.
(c) Buyer does not own at least 5% of the stock of Seller of
USI for the purposes of Section 304 including 304(c)(3)(B) of the Code. Buyer
has no plan or intention to acquire additional stock of Seller or USI as part of
this transaction.
14
(d) Taking into account, relative to the transactions
contemplated hereby, (i) any issuance of stock of Buyer to parties other than
Seller, (ii) any issuance of stock for services, (iii) the exercise of any Buyer
stock rights, warrants or subscriptions, (iv) a public offering of Buyer
securities, and (iv) the sale, exchange, transfer by gift or other disposition
of any of the securities of Buyer to be received by Seller hereunder, Buyer has
not, and will not, cause Seller together with all transferors, to be in
"control" of Buyer within the meaning of Section 368(c) of the Code.
(e) The Notes to be issued by Buyer to Seller hereunder
constitutes indebtedness for US federal income tax purposes and will be treated
as such by Buyer for all relevant tax filings.
SECTION 4.14 INSPECTIONS; NO OTHER REPRESENTATIONS. Buyer is an
informed and sophisticated purchaser, and has engaged expert advisors,
experienced in the evaluation and purchase of companies such as the Company
Group, as contemplated hereunder. Buyer has undertaken such investigation and
has been provided with and has evaluated such documents and information as it
has deemed necessary to enable it to make an informed and intelligent decision
with respect to the execution, delivery and performance of this Agreement. Buyer
acknowledges that Seller has given Buyer full access to the key employees,
documents and facilities of the Company Group. Buyer will undertake prior to
Closing such further investigation and request such additional documents and
information as it deems necessary. Buyer agrees to accept the Shares (and the
related members of the Company Group and their respective assets and
liabilities) in the condition they are in on the Closing Date based upon its own
inspection, examination and determination with respect thereto as to all
matters, and without reliance upon any express or implied representations or
warranties of any nature made by or on behalf of or imputed to Seller (or any
other Person), except as expressly set forth in the Transaction Documents.
Without limiting the generality of the foregoing, Buyer acknowledges that
neither Seller nor any other Person makes or has made any representation or
warranty with respect to (i) any projections, estimates or budgets delivered to
or made available to Buyer of future revenues, future results of operations (or
any component thereof), future cash flows or future financial condition (or any
component thereof) of the Company Group or the future business and operations of
the Company Group or (ii) any other information or documents made available to
Buyer or its counsel, accountants or advisors with respect to the Company Group
or their respective businesses or operations, except as expressly set forth in
the Transaction Documents.
ARTICLE 5.
CONDUCT OF BUSINESS; ACCESS TO INFORMATION
SECTION 5.01 CONDUCT OF THE BUSINESS. From the date hereof until the
Closing Date, except as contemplated by this Agreement, Seller shall cause each
member of the Company Group, and Buyer shall and shall cause each member of the
Buyer Group, to conduct its business in the ordinary course consistent with past
practice and to use its commercially reasonable efforts to preserve intact its
business organizations and relationships with third parties and to keep
available the services of its present officers and employees; provided, however,
that any member of the Company Group shall be permitted to (a) make dividend
payments (or similar distribution) and to repay, prepay or otherwise settle
payables, receivables or other accounts due to or from any Seller or its
15
Affiliates or (b) effect any of the transactions contemplated by this Agreement,
including those described or referenced in Section 8.03. Without limiting the
generality of the foregoing, from the date hereof until the Closing Date, except
as disclosed on Schedule 5.01 or as contemplated in the immediately preceding
clauses (a) and (b), Seller will not permit any member of the Company Group, and
Buyer will not and will not permit any other member of the Buyer Group, to:
(a) adopt or propose any change any of its Constituent
Documents;
(b) merge or consolidate with any other Person or acquire a
material amount of assets from any other Person;
(c) sell, lease, license or otherwise dispose of any material
assets or property except (i) pursuant to existing Contracts or (ii) otherwise
in the ordinary course consistent with past practice; or
(d) agree or commit to do any of the foregoing.
SECTION 5.02 ACCESS TO INFORMATION. From the date hereof until the
Closing Date, Seller will cause the Company Group, and Buyer will and will cause
each of the other members of the Buyer Group, to (i) give to the other and its
counsel, financial advisors, auditors and other authorized representatives
reasonable access to its offices, properties, books and records, (ii) furnish to
the other and its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information relating
to it, as such Persons may reasonably request and (iii) instruct its employees,
counsel and financial advisors to cooperate with the other in the others
investigation. Any investigation pursuant to this Section shall be conducted in
such manner as not to interfere unreasonably with the conduct of the business of
the Company Group or the Buyer Group, as the case may be. Notwithstanding the
foregoing, neither party shall have access to personnel records of the other
relating to individual performance or evaluation records, medical histories or
other information which in the other's good faith opinion is sensitive or the
disclosure of which could subject it or any of its Affiliates to risk of
liability.
ARTICLE 6.
POST-CLOSING COVENANTS
SECTION 6.01 ACCESS. Buyer will and will cause each member of the
Company Group, on and after the Closing Date, to afford promptly to Seller and
their agents reasonable access to their properties, books, records, employees
and auditors to the extent necessary to permit Seller to determine any matter
relating to its rights and obligations hereunder or to any period ending on or
before the Closing Date; provided that any such access by Seller shall not
unreasonably interfere with the conduct of the business of Buyer or any member
of the Company Group. Seller will hold, and will use their commercially
reasonable efforts to cause their officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, in confidence, unless
16
compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
Company Group provided to it pursuant to this Section.
SECTION 6.02 TRADEMARKS; TRADENAMES. After the Closing, Buyer shall
not, and shall not permit its Affiliates to, use the names "USI" or "U.S.
Industries, Inc.," any trademark, tradename, logo or similar Intellectual
Property Right of Seller or its Affiliates or any derivative thereof. Buyer and
the Company Group shall promptly, but no later than one month after the Closing
Date, destroy all business cards, signs, displays and other materials that
contain any such Intellectual Property Right.
SECTION 6.03 PRESERVATION OF RECORDS. Buyer agrees, at its own expense,
that it (a) shall preserve and keep the records of the Company Group for a
period of seven years from the Closing, or for any longer periods as may be
required by any Governmental Authority or ongoing litigation and (b) shall make
such records available to Seller or its Affiliates as may be reasonably
requested. In the event Buyer wishes to destroy such records after the time
specified above, Buyer shall first give sixty (60) days' prior written notice to
Seller and Seller shall have the right at its option and expense, upon prior
written notice given to Buyer within that sixty (60) days period, to take
possession of the records within ninety (90) days after the date Seller receives
such notice.
SECTION 6.04 CERTAIN POST-CLOSING ASSISTANCE BY BUYER. After the
Closing, Buyer agrees to cause the appropriate personnel of the Company Group at
no cost or expense to Seller, to prepare all customary accounting, tax,
environmental, employment, benefits-related and similar reports for the Company
Group for periods up to the Closing Date which are reasonably requested by
Seller or one of its Affiliates. After the Closing, Seller agrees to provide
Buyer, at no cost or expense to Buyer, with information in the possession and
control of Seller in respect of accounting, tax, environmental employment,
benefits-related and similar reports for Buyer after the Closing Date to the
extent reasonably requested by Buyer.
SECTION 6.05 WEDNESBURY TRANSACTION. After the Closing, Buyer shall
(and shall cause each of its Affiliates, including each member of the Company
Group) to use its best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary or desirable under applicable laws
and regulations to effect the transactions relative to the Wednesbury property
described in Schedule 6.05, in each case, as may be reasonably directed by
Seller or one of its Affiliates from time to time; provided, that if at anytime
prior to the time such transactions are required to be consummated a party
requests that one or more of terms set forth in Schedule 6.05 be modified on a
commercially reasonable basis because of materially changed market conditions or
other similar material events or circumstances outside the control of the
parties, then the parties shall negotiate in good faith such modifications.
SECTION 6.06 CERTAIN TAX MATTERS.
(a) Buyer shall and shall cause each member of the Company
Group, on and after the Closing, to:
(i) upon the request of Seller and to the extent
permitted by law, in respect of any accounting period commencing before
the Closing, make (A) such provisional or final claims to surrender to
17
Seller or any member of the Seller group any group relief capable of
being surrendered pursuant to Chapter IV Part X Income and Corporation
Taxes Xxx 0000, as promulgated under the laws of England and Wales,
and/or (B) such claims or disclaimers in relation to capital
allowances, in case as Seller may in its absolute discretion direct in
writing;
(ii) take all such steps as Seller may reasonably
request to permit and effect any such surrender, claim or disclaimer as
is referred to in (i) above; and
(iii) without prejudice to the generality of any of
provision of this Agreement, provide to Seller (or any of its agents or
representatives) (A) access to the books, accounts and records of each
member of the Company Group and (B) such other assistance as Seller (or
such agent or representative) may reasonably require in relation to the
Tax affairs of the Company Group in order to consider the matters
referred to in (i) above and otherwise in the context of dealing with
the Tax affairs of Seller and the Seller group. For the avoidance of
doubt, in the absence of a breach of this section 6.06(a) by Buyer,
nothing in this section 6.06(a) shall require Buyer to pay to Seller
any additional out-of-pocket cash consideration.
(b) Buyer agrees that, during the two-year period following
the Closing, Spear & Xxxxxxx plc will not carry out a distribution described in
Section 368(a)(2)(G) of the Code in any form, including, without limitation, a
liquidation, merger or check-the-box election, unless Buyer has received
Seller's prior written consent to that distribution, which consent may be
withheld or granted by Seller in Seller's sole and absolute discretion.
(c) Buyer agrees not to make an election pursuant to Section
338(g) of the Code unless Buyer has received Seller's prior written consent to
such election, which consent may be withheld or granted by Seller in Seller's
sole and absolute discretion.
(d) Buyer agrees that it will not acquire any equity security
of Seller or U.S. Industries, Inc. during the four months after Closing unless
Buyer has received Seller's prior written consent to such acquisition, which
consent may be withheld or granted by Seller in Seller's sole and absolute
discretion.
ARTICLE 7.
COVENANTS OF BUYER AND SELLER
SECTION 7.01 BEST EFFORTS; FURTHER ASSURANCES. Subject to the terms and
conditions of this Agreement, Buyer and Seller will use their best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement. Seller and Buyer
agree, and Seller, prior to the Closing, and Buyer, after the Closing, agree to
cause the members of the Company Group, to execute and deliver such other
documents, certificates, agreements and other writings and to take such other
actions as may be necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement.
18
SECTION 7.02 CERTAIN FILINGS.
(a) Seller and Buyer shall cooperate with one another in
determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement.
(b) As promptly as practicable after the execution of this
Agreement, each party shall, in cooperation with the other, but at its own
expense, file any reports or notifications or furnish information and pay any
fees that may be required to be paid by it under applicable law, and shall
furnish to the other all such information in its possession as may be necessary
for the completion of the reports or notifications to be filed by the other.
Each party will use its best efforts to obtain early termination of any
applicable waiting period, and shall as soon as practicable make any further
filings pursuant thereto that may be necessary, proper or advisable.
SECTION 7.03 PUBLIC ANNOUNCEMENTS. The parties agree to consult with
each other before issuing any press release or making any public statement with
respect to this Agreement or the transactions contemplated hereby and, except
for any press releases and public announcements the making of which may be
required by applicable law or any listing agreement with any national securities
exchange, will not issue any such press release or make any such public
statement prior to such consultation. If Buyer, Seller, or other affiliated
entity of such parties, is so required to issue a press release or otherwise
make a public statement it shall inform and provide draft copies to the other
party hereto for review and comment prior to issuing it.
SECTION 7.04 NOTICES OF CERTAIN EVENTS. From the date hereof until the
Closing Date, Seller and Buyer shall promptly notify the other of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
and
(c) any actions, suits, claims, investigations or proceedings
commenced relating to Seller, the Buyer Group or the Company Group that, if
pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 3.12 or Section 4.11.
SECTION 7.05 CONSENTS. Each of the parties hereto will use its
commercially reasonable efforts to obtain consents of all Persons and
Governmental Authorities necessary to the consummation of the transactions
contemplated by this Agreement.
SECTION 7.06 INSURANCE POLICIES. Buyer acknowledges that Seller or one
of its Affiliates (other than a member of the Company Group) has insurance
policies covering those risks of the Company Group described in Schedule 7.06.
Buyer acknowledges and agrees that neither Seller nor any of its Affiliates
19
shall have any obligation to assign or otherwise transfer to Buyer (or any other
Person) those insurance policies (or any portion thereof) covering such risks
described in Schedule 7.06.
ARTICLE 8.
CONDITIONS TO CLOSING
SECTION 8.01 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER. The
obligations of Buyer and Seller to consummate the Closing are subject to the
satisfaction of the following conditions:
(a) No provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Closing.
(b) Each of Seller and Buyer shall have received evidence
reasonably satisfactory to it that Liens listed on Schedule 8.01(b) have been
released by the holders thereof.
SECTION 8.02 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer
to consummate the Closing is subject to the satisfaction of the following
further conditions:
(a) (i) Seller shall have performed in all material respects
all of their obligations hereunder required to be performed by them on or prior
to the Closing Date, and (ii) the representations and warranties of Seller,
contained in this Agreement and in any certificate or other writing delivered by
Seller pursuant hereto shall be true, disregarding all qualifications and
exceptions contained therein relating to materiality or Material Adverse Effect,
at and as of the Closing Date, as if made at and as of such date, with only such
exceptions (A) as would not in the aggregate reasonably be expected to have a
Material Adverse Effect or (B) as are results of any action permitted by Section
5.01.
(b) Execution and delivery of a stockholders' agreement in the
form of Exhibit B (the "STOCKHOLDERS' AGREEMENT") by all of the parties thereto
other than Buyer.
(c) Execution and delivery of a registration rights agreement
in the from of Exhibit C (the "REGISTRATION RIGHTS AGREEMENT") by all the
parties thereto other than Buyer.
(d) Execution and delivery of a real property lease relative
to the Wednesbury property in the form of Exhibit D (the "WEDNESBURY LEASE") by
the parties thereto (other than any party affiliated with Buyer).
(e) None of the members of the Company Group shall have any
bank debt, or other similar debt for borrowed money to Seller, any Affiliate of
Seller or any other Person (other than accounts payable in the ordinary course
of business); it being agreed that, anything in this Agreement to the contrary
notwithstanding, anytime prior to the Closing, Seller shall have the right to
(or shall have the right to cause one or more of its Affiliates, including any
members of the Company Group to) use any cash (or cash equivalent) of the
Company Group (or otherwise take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary or desirable under applicable laws and
regulations) to pay off or other satisfy in full any such debt obligation.
20
(f) Those actions described in Section 2.02(a) and Section
2.02(b) shall have occurred.
(g) Seller shall have (or shall have caused) the partial
repayment of intercompany accounts of the Company Group in the amount of $2
million; provided that to the extent Seller or any of Seller's Affiliates (other
than the Company Group) have guaranteed or otherwise extended credit support in
respect of any obligations under any letters of credit issued for the benefit of
any member of the Company Group (collectively, "LETTER OF CREDIT OBLIGATIONS"),
then out of such $2 million an amount equal to such Letter of Credit Obligations
shall be held in escrow and such escrowed amount shall be released to Buyer from
time to time after and to the extent that Seller or its Affiliates are released
from such Letter of Credit Obligations.
SECTION 8.03 CONDITIONS TO OBLIGATION OF SELLER. The obligation of
Seller to consummate the Closing is subject to the satisfaction of the following
further conditions:
(a) (i) Buyer shall have performed in all material respects
all of its obligations hereunder required to be performed by them at or prior to
the Closing Date and (ii) the representations and warranties of Buyer contained
in this Agreement and in any certificate or other writing delivered by Buyer
pursuant hereto shall be true, disregarding all qualifications and exceptions
contained therein relating to materiality or Material Adverse Effect, in all
material respects at and as of the Closing Date, as if made at and as of such
date.
(b) Execution and delivery of the Stockholders' Agreement, the
Registration Rights Agreement, the Wednesbury Lease by all the parties thereto
other than Seller (or any party affiliated with Seller).
(c) On or prior to the Closing, MTI shall have closed an
equity round of financing with net proceeds to Buyer of at least $2,000,000 on
terms and conditions reasonably satisfactory to Seller; and the other
transactions relative to the equity capitalization of MTI described in Schedule
8.03(c) shall have been consummated on terms and conditions reasonably
satisfactory to Seller; and after giving effect to such transactions and the
transactions contemplated hereby, the capitalization of MTI shall be as
disclosed in Schedule 8.03(c).
(d) On or prior to the Closing, the transactions described on
Schedule 8.03(d) relative to the Wednesbury property shall have occurred.
(e) Seller shall have received one or more deeds of release or
similar documents in form satisfactory to Seller to release Seller from any and
all liabilities or obligations under or otherwise terminate any guarantees,
letters of credit or other similar credit support documents that provide credit
support to the Company Group from Seller or any of its Affiliates (other than
any member of the Company Group), including those listed on Schedule 8.03(e).
(f) Seller shall have received consent for the transactions
contemplated hereby by those financial institutions that are party to certain
credit facilities of U.S. Industries Inc., in form and substance satisfactory to
Seller.
21
(g) Those actions described in Sections 2.02(c) shall have
occurred.
(h) Seller shall have received an opinion (in a form
satisfactory to Seller) which provides that the sale of the Shares as
contemplated herein is a transaction on which gain or loss is currently
recognized under Section 1001 of the Code.
ARTICLE 9.
SURVIVAL; INDEMNIFICATION
SECTION 9.01 SURVIVAL. The covenants, agreements, representations and
warranties of the parties hereto contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection herewith
shall survive the Closing until April 30, 2003; provided that (i) the covenants,
agreements, representations and warranties contained in Sections 2.01, 3.18,
4.16 and Articles 6, 9, 10 and 11 shall survive indefinitely and (ii) the
representation and warranties contained in Section 3.17 and 4.13 shall survive
until the expiration of the applicable statute of limitations. Notwithstanding
the preceding sentence, any covenant, agreement, representation or warranty in
respect of which indemnity may be sought under this Agreement shall survive the
time at which it would otherwise terminate pursuant to the preceding sentence
with respect to the specific claim, if notice of the inaccuracy or breach
thereof giving rise to such right of indemnity shall have been given to the
party against whom such indemnity may be sought prior to such time.
SECTION 9.02 INDEMNIFICATION. (a) Subject to the other provisions of
this Article 9, Seller hereby indemnifies Buyer and its Affiliates against and
agrees to hold each of them harmless from any and all damage, loss, liability
and expense (including, without limitation, reasonable expenses of investigation
or remediation, any consulting or engineering fees in connection with any
investigation or remediation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) ("DAMAGES") incurred or suffered
by Buyer or any of its Affiliates arising out of (i) any misrepresentation or
breach of warranty (each such misrepresentation and breach of warranty a
"WARRANTY BREACH") or (ii) material breach of covenant or agreement made or to
be performed by Seller pursuant to this Agreement; provided that with respect to
indemnification by Seller for any Warranty Breach pursuant to this Section, (A)
Seller shall not be liable unless the aggregate amount of Damages with respect
to such Warranty Breaches exceeds $250,000 and then only to the extent of such
excess and, (B) Seller's maximum liability for all such Warranty Breaches shall
not exceed $1,250,000; provided further that Seller shall not indemnify Buyer or
its Affiliates for any deductibles under insurance policies.
(b) Subject to the other provisions of this Article 9, Buyer
hereby indemnifies Seller and its Affiliates against and agree to hold each of
them harmless from any and all Damages incurred or suffered by Seller or any of
its Affiliates arising out of (i) any Warranty Breach, (ii) material breach of
covenant or agreement made or to be performed by Buyer pursuant to this
Agreement or (iii) any liability or obligation of any kind or nature (whether,
known, unknown, fixed, contingent, liquidated, direct, indirect or otherwise)
arising out of or relating to any member of the Company Group, its assets or
business other than any liability or obligation for which Seller is required to
indemnify Buyer pursuant to Section 9.02(a); provided that with respect to
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indemnification by Buyer for any Warranty Breach pursuant to this Section, (A)
Buyer shall not be liable unless the aggregate amount of Damages with respect to
such Warranty Breaches exceeds $250,000 and then only to the extent of such
excess and (B) Buyer's aggregate maximum liability for all such Warranty
Breaches shall not exceed $1,250,000.
(c) For the avoidance of doubt, to the extent that any
Transaction Document (other than this Agreement) contains any indemnification
provision, such indemnification provision shall apply to such document.
SECTION 9.03 PROCEDURES.
(a) The party seeking indemnification under Section 9.02 (the
"INDEMNIFIED PARTY") agrees to give prompt written notice, but no later than 5
days after receipt thereof, to the party against whom indemnity is sought (the
"INDEMNIFYING PARTY") of the assertion of any claim, or the commencement of any
suit, action or proceeding ("CLAIM") in respect of which indemnity may be sought
under such Section and will provide the Indemnifying Party such information with
respect thereto that the Indemnifying Party may reasonably request.
(b) The Indemnifying Party shall be entitled to participate in
the defense of, investigation of, or corrective action required to be undertaken
in response to, any Claim asserted by a third party, including any Governmental
Authority ("THIRD PARTY CLAIM") and, subject to the limitations set forth in
this Section or Section 9.04, shall be entitled to control and appoint lead
counsel for such defense, in each case at its expense subject to the deductible
and maximum liability described in Section 9.02.
(c) If the Indemnifying Party shall assume the control of the
defense of any Third Party Claim in accordance with the provisions of this
Section or Section 9.04, (i) the Indemnifying Party shall obtain the prior
written consent of the Indemnified Party (which shall not be unreasonably
withheld) before entering into any settlement of such Third Party Claim if the
settlement does not release the Indemnified Party from all liabilities and
obligations with respect to such Third Party Claim or if the settlement imposes
injunctive or other equitable relief against the Indemnified Party and (ii) the
Indemnified Party shall be entitled to participate in the defense of such Third
Party Claim and to employ separate counsel of its choice for such purpose. The
fees and expenses of such separate counsel shall be paid by the Indemnified
Party.
(d) Each party shall cooperate, and cause their respective
Affiliates to cooperate, in the defense or prosecution of any Third Party Claim
(including any counterclaims filed by Seller) and shall provide access to
properties and individuals as reasonably requested and furnish or cause to be
furnished records, information and testimony, and attend such conferences,
discovery proceedings, hearings, trials or appeals, as may be reasonably
requested in connection therewith. This cooperation shall be provided without
cost or expense of the other party other than reimbursement of out-of-pocket
travel or similar expenses subject to the provisions of Section 9.02.
(e) Each Indemnified Party shall use reasonable efforts to
collect any amounts available under insurance coverage, or from any other Person
alleged to be responsible, for any Damages payable under Section 9.02. In
addition, each party agrees that it will not, and agrees to use its best efforts
23
to ensure that its Affiliates do not, voluntarily or by discretionary action,
accelerate the timing, or increase the cost, of any obligations of the other
party under this Article 9.
SECTION 9.04 CALCULATION OF DAMAGES.
(a) The amount of any Damages payable under Section 9.02 by
the Indemnifying Party shall be net of any amounts recovered or recoverable by
the Indemnified Party under applicable insurance policies from any other third
party with indemnification obligations or from any other Person alleged to be
responsible therefor. If the Indemnified Party receives any amounts under
applicable insurance policies, from any other third party with indemnification
obligations or from any other Person alleged to be responsible for any Damages,
subsequent to an indemnification payment by the Indemnifying Party, then such
Indemnified Party shall promptly reimburse the Indemnifying Party for any
payment made or expense incurred by such Indemnifying Party in connection with
providing such indemnification payment up to the amount received by the
Indemnified Party, net of any expenses incurred by such Indemnified Party in
collecting such amount.
(b) The Indemnifying Party shall not be liable under Section
9.02 for any (i) Damages relating to any matter to the extent that there is
included in the Preliminary Balance Sheet a specific liability or reserve
relating to such matter, (ii) consequential or punitive Damages or (iii) Damages
for lost profits.
(c) Notwithstanding any other provision of this Agreement to
the contrary, if on the Closing Date the Indemnified Party has actual knowledge
of any information that would cause one or more of the representations and
warranties made by the Indemnifying Party to be inaccurate as of the date made,
the Indemnified Party shall have no right or remedy after the Closing with
respect to such inaccuracy and shall be deemed to have waived its rights to
indemnification in respect thereof.
SECTION 9.05 ASSIGNMENT OF CLAIMS. If the Indemnified Party receives
any payment from an Indemnifying Party in respect of any Damages pursuant to
Section 9.02 and the Indemnified Party could have recovered all or a part of
such Damages from a third party (a "POTENTIAL CONTRIBUTOR") based on the
underlying Claim asserted against the Indemnifying Party, the Indemnified Party
shall assign such of its rights to proceed against the Potential Contributor as
are necessary to permit the Indemnifying Party to recover from the Potential
Contributor the amount of such payment.
SECTION 9.06 EXCLUSIVITY. Except as specifically and expressly set
forth in Article 9 of Agreement and claims for fraud, Buyer waives any rights
and claims it may have against Seller, whether in law or in equity (or
otherwise), arising out of or otherwise relating to the any member of the
Company Group (or any of their respective assets or liabilities) or the Shares,
or the transactions contemplated hereby. The rights and claims waived by Buyer
include, without limitation, claims for contribution or other rights of recovery
arising out of or relating to any statute, law, regulation or rule, claims for
breach of contract, breach of representation or warranty, negligent
misrepresentation and all other claims under any and all legal theories. After
the Closing, Article 9 of this Agreement, will provide the sole and exclusive
24
remedy of Buyer or its Affiliates for any misrepresentation, breach of warranty,
covenant or other agreement (other than those contained in Sections 2.01) or
other claim (other than a claim for fraud) arising out of or otherwise relating
to the any member of the Company Group (or any of their respective assets or
liabilities), the Shares, or the transactions contemplated hereby arising out of
this Agreement.
ARTICLE 10.
TERMINATION
SECTION 10.01 GROUNDS FOR TERMINATION. This Agreement may be terminated
at any time prior to the Closing:
(a) by mutual written agreement of Seller and Buyer;
(b) by either Seller or Buyer if the Closing shall not have
been consummated on or before September 15, 2002; provided, however, that the
terminating party may not exercise this right if it or any of its Affiliates is
in breach of its obligations under this Agreement; or
(c) by either Seller or Buyer if consummation of the
transactions contemplated hereby would violate any nonappealable final order,
decree or judgment of any court or Governmental Authority having competent
jurisdiction.
The party desiring to terminate this Agreement pursuant to
clauses 10.01(b) or 10.01(c) shall give notice of such termination to the other
party. If this Agreement is terminated as provided herein:
(i) upon written request therefor, each party will
redeliver to the other all documents, work papers and other material of
the other (or its Affiliates) relating to the transactions contemplated
hereby, whether obtained before or after the execution hereof; and
(ii) all filings, applications and other submissions
made shall, to the extent practicable, be withdrawn from the agency or
other person to which made.
SECTION 10.02 EFFECT OF TERMINATION. If this Agreement is terminated as
permitted by Section 10.01, such termination shall be without liability of
either party (or any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other party to this Agreement; provided
that if such termination shall result from the willful (i) failure of either
Buyer or Seller to fulfill a condition to the performance of the obligations of
the other party, (ii) failure to perform a covenant of this Agreement or (iii)
breach by either Buyer or Seller hereto of any representation or warranty
contained herein, such party shall be fully liable for any and all Damages
incurred or suffered by the other party as a result of such failure or breach.
The provisions of Section 10.02 and Article 11 shall survive any termination
hereof pursuant to Section 10.01.
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ARTICLE 11.
MISCELLANEOUS
SECTION 11.01 NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Buyer, to:
Megapro Tools, Inc.
c/o PNC Investments Limited
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0-000
Xxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Fax: 000-000-0000
with a copy to:
Xxxxxx & Xxxx
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
Fax: (000) 000-0000
if to Seller, to:
c/o U.S. Industries, Inc.
Xxxxxxxx Point - West Tower
000 X. Xxxxxxx Xxxxx, Xxxxx 0000
Xxxx Xxxx Xxxxx, XX 00000-0000
Attention: General Counsel
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxxxx Radin Xxxxxxxx Xxxxxxx & Xxxxx P.A.
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Xxxxxx Xxxxx
Fax: (000) 000-0000
with a copy to (only relating to environmental matters):
Xxxxxxx & Xxxxxx, LLP
00 Xxxx X. Xxxxxxx Xxxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
26
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding business day in the place of receipt.
SECTION 11.02 AMENDMENTS AND WAIVERS.
(a) Any provision of this Agreement may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed, in the
case of an amendment, by Seller and Buyer, or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 11.03 EXPENSES. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 11.04 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that Seller and Buyer, respectively,
may not assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of Buyer or Seller, respectively,
except that Seller may assign its right accept the Buyer Shares to its
Affiliates but no such assignment shall relieve Seller of its obligations
hereunder.
SECTION 11.05 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of Florida.
SECTION 11.06 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 11.07 COUNTERPARTS; THIRD PARTY BENEFICIARIES. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. Facsimile execution and delivery of this Agreement shall be legal,
valid and binding execution and delivery for all purposes. This Agreement shall
become effective when each party hereto shall have received a counterpart hereof
signed by the other parties hereto. No provision of this Agreement is intended
to confer upon any Person other than the parties hereto any rights or remedies
hereunder.
27
SECTION 11.08 ENTIRE AGREEMENT. This Agreement together with the other
Transaction Documents constitute the entire agreement between the parties with
respect to the subject matter of this Agreement and supersede all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter of this Agreement.
SECTION 11.09 INTERPRETATION. The following interpretative conventions
shall apply to this Agreement: (i) the singular includes the plural and the
plural includes the singular; (ii) "or" is not exclusive; (iii) a reference to
any Person includes its, his or her permitted successors and permitted assigns;
(iv) accounting terms have the meanings assigned to them by generally accepted
accounting principles, as applied by the accounting entity to which they refer;
(v) the words "include," "includes" and "including" are not limiting; (vi) the
phrases "arising out of" or "arises out of" mean arising out of, in connection
with or otherwise relating to (notwithstanding that in some cases all of such
words may be used and in most cases they are not); (vii) a reference in a
document to an Article, section, Exhibit or Schedule is to the Article, section,
Exhibit or Schedule of such document unless otherwise indicated; (viii)
references to any document (1) shall include all exhibits, schedules and other
attachments thereto, (2) shall include all documents issued or executed in
replacement thereof, and (3) shall mean such document or replacement or
predecessor thereto, as amended, modified or supplemented from time to time and
in effect at any given time; (ix) the words "hereof," "herein" and "hereunder"
and words of similar import when used in any document shall refer to such
document as a whole and not to any particular provision of such document; (x)
any reference to Buyer, shall mean MTI and MTI-Sub, jointly and severally,
unless the context expressly provides otherwise, and (xi) all pronouns shall be
deemed to include all other genders and gender neutral terms (i.e., he, she and
it). In addition, this Agreement is a result of negotiations among, and has been
reviewed by Seller Buyer, and their respective counsel. Accordingly, this
Agreement shall be deemed to be the product of all parties hereto, and no
ambiguity shall be construed in favor of or against Seller or Buyer. The
captions herein are included for convenience of reference only and shall be
ignored in the construction or interpretation hereof.
SECTION 11.10 DISCLOSURE SCHEDULES. The parties acknowledge and agree
that (i) the disclosure schedules ("SCHEDULES") attached to this Agreement may
include certain items and information solely for informational purposes for the
convenience of Buyer and (ii) the disclosure by Seller of any matter in the
Schedules shall not be deemed to constitute an acknowledgment by Seller that the
matter is required to be disclosed by the terms of this Agreement or that the
matter is material. If any Schedule discloses an item or information in such a
way as to make its relevance to the disclosure required by another Schedule
readily apparent, the matter shall be deemed to have been disclosed in such
other Schedule, notwithstanding the omission of an appropriate cross-reference
to such other Schedule.
SECTION 11.11 ENGLISH LANGUAGE. The parties confirm that it is their
wish that this Agreement as well as any other documents relating hereto
including notices, have been and shall be drawn up in English only.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
USI MAYFAIR LIMITED
By:
------------------------------------
Name:
Title:
MEGAPRO TOOLS, INC.
By:
------------------------------------
Name:
Title:
S AND J ACQUISITION CORP.
By:
------------------------------------
Name:
Title:
The undersigned hereby guaranties the obligations of Seller under this
Agreement.
U.S. INDUSTRIES, INC.
By:
-----------------------------------
Name:
Title:
29
