EXECUTION COPY
STOCK PURCHASE AGREEMENT
by and among
Lehigh Consumer Products Corporation,
American Manufacturing Company, Inc.
and
Jarden Corporation
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT") is dated as of
August 15, 2003 by and among AMERICAN MANUFACTURING COMPANY, INC., a
Pennsylvania corporation ("SELLER"), LEHIGH CONSUMER PRODUCTS CORPORATION, a
Pennsylvania corporation and wholly-owned subsidiary of Seller (the "COMPANY"),
and JARDEN CORPORATION, a Delaware corporation ("BUYER"). Certain defined terms
are set forth in Section 13 hereof.
BACKGROUND
The Company and Desarrollo Industrial Fitec, S. R.L. de C.V.,
a Mexico variable capital limited liability partnership (the "SUBSIDIARY"),
99.999% of the outstanding equity interests of which are owned by the Company
and 0.001% of the outstanding equity interests of which are owned by American
Manufacturing Corporation, a Delaware corporation and an Affiliate of Seller
("AMCDE"), are engaged in the Business.
The parties hereto desire to provide for the acquisition by
Buyer of the Business through the sale by Seller of all of the outstanding
capital stock of the Company (the "STOCK") and the assignment by AMCDE of its
equity interest in the Subsidiary (the "SUBSIDIARY INTEREST" and, together with
the Stock, the "SECURITIES") and for certain other matters, all on the terms and
conditions set forth in this Agreement.
American Manufacturing Corporation, a Pennsylvania corporation
("AMCPA") and an Affiliate of AMCDE and Seller, has agreed to guaranty certain
of Seller's and AMCDE's obligations pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements herein contained,
Seller, the Company and Buyer, all intending to be legally bound, hereby agree
as follows:
SECTION 1 - ACQUISITION OF SECURITIES
1.1 Purchase and Sale of Securities. 1.2 Subject to the terms
and conditions of, and on the basis of and in reliance upon the covenants,
agreements and representations and warranties set forth in, this Agreement, at
the Closing, Buyer shall acquire, free and clear of all Encumbrances, all of the
Securities through the sale, assignment, transfer and conveyance of the Stock to
Buyer by Seller and the assignment of the Subsidiary Interest to Buyer by AMCDE.
SECTION 2 - PURCHASE PRICE AND PAYMENT
2.1 Purchase Price. Subject to the post-closing adjustment as
provided in paragraph (c) below, the aggregate purchase price for the Securities
shall be equal to the sum of (a) and (b) below:
(a) One Hundred and Fifty-Five Million Dollars
($155,000,000) (the "PURCHASE PRICE"), to be paid by Buyer in cash at Closing.
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(b) The additional consideration, if any, determined in
accordance with the terms set forth in Section 2.2 (the "CONTINGENT
CONSIDERATION").
(c) If, after the Closing Date, Buyer calculates the
Tangible Net Worth of the Company and the Subsidiary on a consolidated basis as
of the Closing Date (immediately prior to the Closing) and such Tangible Net
Worth is less than $42,000,000, then Seller shall pay to Buyer any such
shortfall promptly following (i) agreement between Buyer and Seller as to the
amount of the shortfall or (ii) final determination by the Arbitrating
Accountant pursuant to this Section 2.1(c). Any disputes between the parties
regarding the determination of Tangible Net Worth shall be finally determined by
the Arbitrating Accountant in a manner consistent with the last sentence of
Section 2.2(b) hereof.
2.2 Contingent Consideration.
(a) As soon as practicable, but in any event no later
than 90 days following December 31, 2004 and 75 days following December 31,
2005, Buyer shall (i) prepare in accordance with GAAP a statement derived from
the audited financial statements of Buyer (each, an "EARN-OUT STATEMENT") of the
Business EBITDA (as defined below) for each of the full fiscal years ending on
such dates (such one-year periods together being the "EARN-OUT PERIOD") and, in
the Earn-Out Statement for the fiscal year ending December 31, 2005, the Average
Annual Business EBITDA (as defined below) for the Earn-Out Period, and (ii)
deliver each Earn-Out Statement to Seller. Following delivery of an Earn-Out
Statement, Buyer shall upon reasonable notice provide Seller and Seller's
accountant with access to the management of the Company and Buyer during normal
business hours, shall, and shall cause Buyer's accountants, upon reasonable
notice and prior to the Final Earn-Out Determination Date (as defined below), to
provide access to any and all documents, records and work papers used in the
preparation of the Earn-Out Statements and shall cooperate with Seller and
Seller's accountants in connection with their review of the Earn-Out Statements
and the documents, records and work papers related thereto. Seller shall have
forty-five (45) days after receipt of the Earn-Out Statement prepared for the
fiscal year ending December 31, 2004 (such period, the "PRELIMINARY DISPUTE
PERIOD") to dispute any or all amounts or elements of such Earn-Out Statement
("PRELIMINARY DISPUTE"). Seller shall provide to Buyer, prior to the end of the
Preliminary Dispute Period, written notice of the Preliminary Dispute (a
"PRELIMINARY DISPUTE NOTICE"), setting forth in reasonable detail the amounts
and elements with which it disagrees. If Seller does not deliver a Preliminary
Dispute Notice to Buyer prior to the end of the Preliminary Dispute Period, such
Earn-Out Statement shall be final and binding upon Seller in the form in which
it was delivered to Seller and no amounts in such Earn-Out Statement may be
disputed by Seller in the Dispute Notice. Seller shall have forty-five (45) days
after receipt of the Earn-Out Statement prepared for the fiscal year ending
December 31, 2005 (the "FINAL EARN-OUT STATEMENT") (such period, the "FINAL
DISPUTE PERIOD") to dispute any or all amounts or elements of the Final Earn-Out
Statement and any items set forth in a Preliminary Dispute Notice with respect
to the Preliminary Dispute Period that have not been resolved between Buyer and
Seller in accordance with Section 2.2(b) (a "DISPUTE"). If Seller determines to
pursue a Dispute, Seller shall provide to Buyer, prior to the end of the Final
Dispute Period, written notice of the Dispute (a "DISPUTE NOTICE"), setting
forth in reasonable detail the amounts and elements with which it disagrees, and
any Dispute shall be limited to the matters included by Seller in the Dispute
Notice with respect to the Final Earn-Out Statement and any Preliminary Dispute
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Notice. If Seller does not deliver a Dispute Notice to Buyer prior to the end of
the Final Dispute Period, the Final Earn-Out Statement shall be final and
binding upon Seller in the form in which it was delivered to Seller.
(b) If Seller shall have delivered to Buyer a
Preliminary Dispute Notice prior to the end of the Preliminary Dispute Period,
Seller and Buyer shall attempt to resolve the Preliminary Dispute and agree in
writing upon the final content of the Earn-Out Statement relating to the fiscal
year ending December 31, 2004 within ninety (90) days following delivery by
Seller of the Preliminary Dispute Notice to Buyer. If Seller and Buyer cannot
agree upon the final content of such Earn-Out Statement within such 90-day
period, Seller shall retain the right to incorporate any and all unresolved
amounts or elements in a Dispute Notice. If Seller shall have delivered to Buyer
a Dispute Notice prior to the end of the Final Dispute Period, Seller and Buyer
shall attempt to resolve the Dispute and agree in writing upon the final content
of the Earn-Out Statements within fifteen (15) days following delivery by Seller
of the Dispute Notice to Buyer. If Seller and Buyer are unable to resolve the
Dispute within such fifteen (15) day period, then Seller and Buyer shall
promptly submit the Dispute for resolution to an independent certified public
accounting firm of recognized international standing, mutually acceptable to
Seller and Buyer (the "ARBITRATING ACCOUNTANT"), for review and resolution of
any and all matters that remain in dispute and that were properly included in
the Dispute Notice. In connection with the resolution of any Dispute, the
Arbitrating Accountant shall have access to the management of the Company and
Buyer and all work papers, records, documents and facilities necessary to
perform its functions as arbitrator. The Arbitrating Accountant's function shall
be to resolve the matters in Dispute in accordance with the terms and provisions
of this Section 2.2 and to revise the Earn-Out Statements (if required) in order
to conform with its resolution of the Dispute. In rendering its decision, the
Arbitrating Accountant shall, in its sole discretion, apportion its fees and
expenses in connection with the Dispute, based on its views as to the relative
merits of the positions of each party in the Dispute; provided, however, that
Seller shall advance half, and Buyer shall advance the other half, of any
retainer fee or deposit required by the Arbitrating Accountant in advance of a
final resolution, subject to reapportionment by the Arbitrating Accountant of
its fees and expenses as aforesaid. All determinations of the Arbitrating
Accountant, including any revisions made to the Earn-Out Statements and the
Arbitrating Accountant's apportionment of expenses as between Seller and Buyer,
shall be final and binding on the parties hereto, and neither Seller nor Buyer
shall have the right to appeal such determinations.
(c) Seller and Buyer agree to cooperate fully and
expeditiously with the Arbitrating Accountant in order to facilitate the receipt
of the final determinations of the Arbitrating Accountant within thirty (30)
days following submission of a Dispute to the Arbitrating Accountant.
(d)
(i) No later than five (5) business days
following the final determination of both Earn-Out Statements (whether as a
result of the failure by Seller to timely deliver a Dispute Notice, the
agreement by Seller and Buyer on the final content of the Earn-Out Statements or
the determination of the Arbitrating Accountant) (such date, the "FINAL EARN-OUT
DETERMINATION DATE"), Buyer shall pay to Seller or its assigns or designees in
cash or Buyer Common Stock, or a combination thereof, the following applicable
amount (subject to any
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withholdings required by applicable Law, provided that Buyer has provided Seller
with prior notice of such withholding requirements), if any, in respect of the
Contingent Consideration:
(1) If the Average Annual Business EBITDA (as
defined below) is less than $26,300,000, no amount shall be required to be paid.
(2) If the Average Annual Business EBITDA is
equal to or greater than $26,300,000 but less than $28,700,000, an amount equal
to:
(A) $5,000,000; plus
(B) an amount equal to (x) the excess of
Average Annual Business EBITDA over $26,300,000 multiplied by (y) 6.25, but in
no event will the aggregate of (A) and this (B) exceed $20,000,000.
(3) If the Average Annual Business EBITDA is
equal to or greater than $28,700,000 but less than $31,200,000, an amount equal
to $20,000,000.
(4) If the Average Annual Business EBITDA is
equal to or greater than $31,200,000, an amount equal to $25,000,000.
(ii) The parties acknowledge and agree that the
right to receive the Contingent Consideration represents additional
consideration and not a royalty payment. The parties agree to file Tax Returns
that are consistent with the characterization of the Contingent Consideration as
additional consideration and not a royalty payment to the extent consistent with
applicable Law.
(iii) In the event that the undisputed amounts
under the Earn-Out Statements are sufficient to satisfy one of the Average
Annual Business EBITDA targets set forth in subsections (2)-(4) above, Buyer
shall pay to Seller in accordance with the provisions of this Section 2.2 within
five (5) Business Days of Seller informing Buyer in writing of such undisputed
amounts (the date Buyer receives such written notice, the "INITIAL DETERMINATION
DATE"), the amount of Contingent Consideration applicable to such undisputed
amount of Average Annual Business EBITDA. The amount of Contingent Consideration
payable to Seller following the Final Earn-Out Determination Date shall be
reduced by the amount, if any, of Contingent Consideration paid to Seller
following the Initial Determination Date in accordance with this Section
2.2(d)(iii).
(e) Notwithstanding anything to the contrary contained
in this Section 2.2, in the event that (1) Buyer or Company terminates
the employment of Xxxxxxxxx Xxxxxx pursuant to the Xxxxxx Employment Agreement
other than for "Cause" (as defined in the Xxxxxx Employment Agreement), or (2)
the Company ceases to be an Affiliate of Buyer (through any sale, merger,
consolidation, recapitalization or otherwise) or all or substantially all of the
assets of the Lehigh Business are sold to a Person that is not an Affiliate of
Buyer (any event set forth in (1) or (2) above, an "EARN-OUT ACCELERATION
EVENT"), Buyer shall be required to pay to Seller or its assigns or designees in
cash or Buyer Common Stock, or a combination thereof, an amount equal to
$25,000,000 in respect of the Contingent
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Consideration (regardless of the actual amount of Business EBITDA), such payment
to be made on or before March 15, 2006. In the event that Buyer consummates a
Buyer Sale Transaction at any time prior to the Final Earn-Out Determination
Date, Buyer shall, at or prior to the closing of such Buyer Sale Transaction,
fund $25,000,000 into an escrow account for the benefit of Seller (and its
Permitted Assignees (as defined in Section 14.7(a) below)) with respect to the
payment of the Contingent Consideration on the Contingent Consideration Closing
Date, and such funds shall be subject to payment to Seller (and its Permitted
Assignees) and, if applicable, return to Buyer in accordance with the provisions
of this Section 2.2.
(f) On the Initial Determination Date, the Final Earn-Out
Determination Date or on the effective date of an Earn-Out Acceleration Event,
as applicable, Buyer shall provide to Seller a written statement (1) electing to
pay the Contingent Consideration, if any, in cash ("CASH PAYMENT ELECTION"), in
shares of the common stock, par value $.01 per share, of Buyer ("BUYER COMMON
STOCK") ("STOCK PAYMENT ELECTION"), or in some combination of the foregoing and
(2) setting forth a date within five (5) business days of the Initial
Determination Date, the Final Earn-Out Determination Date or the effective date
of the Earn-Out Acceleration Event, as applicable, on which the payment of the
Contingent Consideration shall be made by Buyer (the "CONTINGENT CONSIDERATION
CLOSING DATE"). The following provisions shall be applicable to the making of a
Stock Payment Election and a Cash Payment Election by Buyer:
(i) If a Stock Payment Election is made by Buyer, the
number of shares of Buyer Common Stock to be delivered to Seller or its assigns
or designees pursuant to this Section 2.2 shall be calculated on the basis of
the average closing price of a share of Buyer Common Stock on the New York Stock
Exchange ("NYSE") for the ten (10) consecutive trading days ending on the date
that is two (2) business days prior to the Contingent Consideration Closing Date
(such ten-day period, the "DETERMINATION PERIOD").
(ii) The Stock Payment Election may only be exercised,
and Buyer Common Stock may only be issued instead of cash, if (A) subject to
Section 2.2(f)(iii), the product obtained by multiplying the average daily
trading volume of the Buyer Common Stock on the NYSE during the Determination
Period by the average closing price per share of Buyer Common Stock on the NYSE
during the Determination Period is at least $2,000,000, (B) the registration
statement covering the registered resale of the shares of Buyer Common Stock
issued on the Contingent Consideration Closing Date shall be declared effective
by the Securities and Exchange Commission on or before the Contingent
Consideration Closing Date (except to the extent that the Registration Rights
Agreement has been terminated in accordance with Section 3.3(c) thereof) and (C)
Seller receives a legal opinion of counsel for Buyer dated the Contingent
Consideration Closing Date, and in form and substance reasonably satisfactory to
Seller, substantially to the effect that (1) the Buyer Common Stock has been
validly issued and is fully paid and non-assessable by Buyer, (2) the Buyer
Common Stock has been issued by Buyer in compliance with applicable federal and
state securities laws, (3) the registration statement has become effective under
the Securities Act of 1933, as amended (the "Securities Act"), (4) to the best
knowledge of such counsel, no stop order suspending the effectiveness thereof
has been issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, and (5) the registration
statement, the related prospectus and each
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amendment or supplement thereof comply as to form in all material respects with
the requirements of the Securities Act (except that such counsel need not
express any opinion as to financial statements contained therein).
Notwithstanding anything to the contrary contained in this Section 2.2, Buyer
shall be required to make payment of the Contingent Consideration in cash on the
Contingent Consideration Closing Date if any of the conditions set forth in (A),
(B) or (C) above are not satisfied in full, except in the event that such
conditions are not applicable as a result of the provisions of Section
2.2(f)(iii).
(iii) Notwithstanding anything herein to the contrary,
should Buyer then be prohibited from paying the Contingent Consideration in full
in cash pursuant to the Senior Credit Facility, Buyer shall be permitted to make
payment of the Contingent Consideration in Buyer Common Stock without having to
satisfy the condition set forth in Section 2.2(f)(ii)(A) and without having to
satisfy the conditions set forth in Section 2.2(f)(ii)(B) and (C) (other than
(C)(1) and (2)) if Buyer is unable to satisfy such conditions after using its
best efforts. If Buyer makes a Cash Payment Election or is otherwise required to
pay the Contingent Consideration in cash and is unable to pay the Contingent
Consideration in cash because of its failure to satisfy the condition in the
preceding sentence relating to the Senior Credit Facility, then Buyer and Seller
agree that Buyer shall, to the extent not prohibited under the Senior Credit
Facility, pay to Seller the Contingent Consideration in cash, and shall pay the
balance of any amounts due to Seller pursuant to Section 2.2(d) in Buyer Common
Stock (subject to Buyer using its best efforts to satisfy the conditions set
forth in Section 2.2(f)(ii)(B) and (C)).
(g)Between the Closing Date and continuing through December
31, 2005, Buyer shall comply in all respects with the following covenants:
(i) Buyer shall operate and manage the Lehigh Business
consistent with reasonable business practices. Buyer further agrees and
undertakes to Seller that Buyer will use commercially reasonable efforts to
promote, support and continue the operations of the Lehigh Business and will act
in good faith with regard to the achievement of the Average Annual Business
EBITDA target set forth in Section 2.2(d)(i)(4). Notwithstanding the foregoing
but subject to (ii) below, Buyer shall be entitled to do any act (or refrain
therefrom) in the conduct of the Lehigh Business if it acts in good faith,
consistent with reasonable business practices and reasonably considers such
action (or determination not to act) to be in the best interests of the business
of Buyer and not for the purpose of adversely affecting the calculation of the
Average Annual Business EBITDA.
(ii) Buyer shall maintain the separate legal existence
of the Company and the Subsidiary, provided that Buyer shall be permitted to
change the legal form of the Company and the Subsidiary so long as any such
change does not adversely affect the ability of the Company to achieve the
Average Annual Business EBITDA target set forth in Section 2.2(d)(i)(4).
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(h) For purposes of this Section 2.2, the following terms
shall have the following meanings:
(i) "ACQUIRED BUSINESS" shall mean any business (other
than the business described on Section 2.2(h)(i) of the Disclosure Schedule)
that is acquired by Buyer or any of its Affiliates (including the Company) and
that, by written agreement among Buyer and Seller, is included in the definition
of Lehigh Business for the purpose of calculating Business EBITDA, and for which
the Average Annual Business EBITDA targets set forth in Sections 2.2(d)(i)
hereof may be adjusted upon the mutual written agreement of Buyer and Seller.
(ii) "AVERAGE ANNUAL BUSINESS EBITDA" shall mean (x)
the sum of the Business EBITDA for each of the two full fiscal years ending
December 31, 2004 and 2005 divided by (y) 2.0.
(iii) "BUSINESS EBITDA" shall mean, for each full
fiscal year in the Earn-Out Period, the Net Income of the Lehigh Business
(without deducting any legal, accounting, investment banking and other expenses
incurred in connection with the transactions contemplated hereby, including
Transfer Taxes) plus an amount which, in the determination of Net Income for
each such fiscal year, has been deducted for (1) interest expense for such
fiscal year, (2) total Taxes for such fiscal year, (3) depreciation and
amortization expense for such fiscal year, and (4) Excluded Expenses.
(iv) "BUYER SALE TRANSACTION" shall mean (1) the sale,
transfer or other disposition of all or substantially all of the assets of Buyer
and its Affiliates, or (2) the acquisition of Buyer by a Person or group of
Persons by means of any transaction or series of related transactions
(including, without limitation, any merger, consolidation, or reorganization),
if, following such transaction or transactions, the Persons that were
stockholders of Buyer immediately prior to such transaction or transactions
beneficially own, directly or indirectly, less than 50 percent of the voting
power of the then outstanding securities of the purchaser, transferee or
successor.
(v) "EXCLUDED EXPENSES" shall mean the following
expenses: (1) Buyer's and any of its Affiliates' general corporate overhead and
administrative expenses, other than those directly related to the Company or the
Subsidiary, provided that such direct expenses shall not exceed the amount that
would be charged by an independent third party; (2) nonrecurring business
expenses that are not related to the generation of revenues in subsequent fiscal
periods and are mutually approved in writing by Seller and Buyer as nonrecurring
expenses; (3) any compensation expenses relating to the issuance, conversion,
cancellation and payments with respect to options or stock; (4) direct and
indirect costs (including time and travel expenses) incurred by the Company or
the Subsidiary in working with Buyer's corporate office on matters not directly
pertaining to the Lehigh Business, (5) other expenses allocated to the Company
or the Subsidiary and agreed to by Buyer and Seller, and (6) extraordinary items
as determined in accordance with GAAP.
(vi) "LEHIGH BUSINESS" shall mean the Business
(including the business described on Section 2.2(h)(i) of the Disclosure
Schedule and any additional product
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lines developed by the Company or the Subsidiary) and any Acquired Business as
of the date the acquisition of such Acquired Business is consummated.
(vii) "NET INCOME" shall mean, for any period, net
income as determined in accordance GAAP.
(viii) "SENIOR CREDIT FACILITY" shall mean Buyer's
credit facility under the Credit Agreement
dated as of April 24, 2002 by and among the Buyer, Bank of America, N.A. in its
capacity as administrative agent, and the various lenders signatory thereto (as
heretofore amended and as from time to time hereafter further amended, modified,
supplemented, restated, amended and restated, replaced, renewed, or refinanced
from time to time).
SECTION 3 - REPRESENTATIONS AND WARRANTIES REGARDING SELLER
Seller represents and warrants to Buyer as of the date of this
Agreement, except as set forth in the Disclosure Schedule attached hereto, as
follows:
3.1 Organization and Good Standing. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has all necessary corporate power and authority
to carry on its business as presently conducted. AMCDE is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. AMCPA is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania.
3.2 Power and Authorization. Seller has all requisite
corporate power and authority to enter into and perform its obligations under
this Agreement and under the other agreements and documents required to be
delivered by it pursuant hereto at the Closing (the "SELLER CLOSING DOCUMENTS").
AMCDE has all requisite corporate power and authority to enter into and perform
its obligations under the Assignment Agreement (as defined in Section 9.2(b)).
AMCPA has all requisite corporate power and authority to enter into and perform
its obligations under the joinder agreements (the "JOINDERS") annexed hereto and
to the Non-Compete Agreement. The execution, delivery and performance by Seller
of this Agreement and the Seller Closing Documents and the execution, delivery
and performance by AMCDE of the Assignment Agreement and the execution, delivery
and performance by AMCPA of the Joinders have been duly authorized by all
necessary corporate action. This Agreement has been duly and validly executed
and delivered by Seller and constitutes the legal, valid and binding obligation
of Seller, enforceable against it in accordance with its terms and, when
executed and delivered as contemplated herein, each of the Seller Closing
Documents shall constitute the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, in each case subject to
applicable bankruptcy, insolvency and similar laws affecting the enforceability
of creditors' rights generally, general equitable principles, the discretion of
courts in granting equitable remedies and matters of public policy. The joinder
agreement annexed hereto has been duly and validly executed and delivered by
AMCPA and constitutes the legal, valid and binding obligation of AMCPA,
enforceable against it in accordance with its terms, and when executed and
delivered as contemplated herein, the Assignment Agreement and the joinder
annexed to the
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Non-Compete Agreement shall constitute the legal, valid and binding agreement
obligation of AMCDE and AMCPA, respectively, enforceable against AMCDE and
AMCPA, respectively, in accordance with its terms, in each case subject to
applicable bankruptcy, insolvency and similar laws affecting the enforceability
of creditors rights generally, general equitable principles, the discretion of
courts in granting equitable remedies and matters of public policy.
3.3 No Conflicts.
(a) The execution, delivery and performance of this
Agreement, the Seller Closing Documents, the Joinders and the Assignment
Agreement do not and will not (with or without the passage of time or the giving
of notice): (i) violate or conflict with the articles of incorporation or bylaws
of Seller, AMCDE or AMCPA; (ii) violate or conflict with any Law (as defined in
Section 13) binding upon Seller, AMCDE, or AMCPA or violate or conflict with,
result in a breach of, constitute a default or otherwise cause any loss of
benefit under any material agreement or other material obligation to which
Seller, AMCDE or AMCPA is a party or by which either of them or any of their
assets are bound, except, in each case, for such violations, conflicts,
breaches, defaults or losses as would not have an adverse effect upon the
ability of Seller to enter into or perform its obligations under this Agreement
or any Seller Closing Document or the ability of AMCDE to enter into or perform
its obligations under the Assignment Agreement or the ability of AMCPA to enter
into or perform its obligations under the Joinders; or (iii) result in, require
or permit the creation or imposition of any Encumbrance upon or with respect to
the Securities. Except for filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX XXX"), no consent, authorization, waiver by
or filing with any governmental agency, administrative body or other third party
is required in connection with the execution, delivery or performance of this
Agreement by Seller or the consummation by Seller, AMCDE or AMCPA of the
transactions contemplated hereby, except for such consents, authorizations,
waivers or filings, as to which the failure to obtain would not have an adverse
effect upon the ability of Seller to enter into or perform its obligations under
this Agreement or any Seller Closing Document, the ability of AMCDE to enter
into or perform its obligations under the Assignment Agreement or the ability of
AMCPA to enter into or perform its obligations under the Joinders.
(b) There are no judicial, administrative or other
governmental actions or proceedings pending or, to the Knowledge of Seller,
threatened, and to the Knowledge of Seller, no governmental investigations are
pending or threatened, that question any of the transactions contemplated by, or
the validity of, this Agreement or any of the other agreements or instruments
contemplated hereby or which, if adversely determined, would have an adverse
effect upon the ability of Seller to enter into or perform its obligations under
this Agreement or any such other agreements or instruments, the ability of AMCDE
to enter into or perform its obligations under the Assignment Agreement or the
ability of AMCPA to enter into or perform its obligations under the Joinders.
3.4 Ownership of the Securities.
(a) Seller owns, and has good and valid title to, all
of the Stock of the Company, beneficially and of record, free and clear of any
Encumbrance. There are no shareholder or other agreements affecting the right of
Seller to convey the Stock to Buyer or any
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other right of Seller with respect to the Stock, and Seller has the absolute
right, authority, power and capacity to sell, assign and transfer the Stock to
Buyer, free and clear of any Encumbrance (except for restrictions imposed
generally by applicable securities laws). Upon delivery to Buyer of the
certificate for the Stock, Buyer will acquire good and valid title to such
Stock, free and clear of any Encumbrance (except for applicable securities laws
restrictions).
(b) AMCDE owns, and has good and valid title to, the
Subsidiary Interest, beneficially and of record, free and clear of any and all
Encumbrances. Other than pursuant to the Bylaws of the Subsidiary (the
"SUBSIDIARY BYLAWS"), there are no agreements affecting the right of AMCDE to
convey the Subsidiary Interest to Buyer or any other right of AMCDE with respect
to the Subsidiary Interest, and AMCDE has the absolute right, authority, power
and capacity to sell, assign and transfer the Subsidiary Interest to Buyer, free
and clear of any Encumbrance (except for those contained in the Subsidiary
Bylaws and restrictions imposed generally by applicable securities laws). Upon
Closing, Buyer will acquire good and valid title to the Subsidiary Interest,
free and clear of any Encumbrance (except for those contained in the Subsidiary
Bylaws, a copy of which is attached to Section 3.4(b) of the Disclosure
Schedule, and applicable securities laws restrictions).
SECTION 4 - REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY AND
THE SUBSIDIARY
Seller represents and warrants to Buyer, as of the date of
this Agreement, except as set forth on the Disclosure Schedule attached hereto,
as follows:
4.1 Organization and Good Standing. Each of the Company and
the Subsidiary is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, and has all
necessary corporate or other power and authority, as applicable, to conduct its
business as presently conducted and to own and lease the properties and assets
used in connection therewith and to perform all of its obligations under each
agreement and instrument by which it is bound. Each of the Company and the
Subsidiary is qualified to do business and is in good standing in each
jurisdiction where the nature or character of the property owned, leased or
operated by it or the nature of the business transacted by it makes such
qualification necessary, except where the failure to be so qualified or be in
good standing would not be reasonably likely to have a Material Adverse Effect.
Section 4.1 of the Disclosure Schedule sets forth all jurisdictions in which the
Company or the Subsidiary is qualified to do business.
4.2 Power and Authorization. The Company has all requisite
corporate power and authority to enter into and perform its obligations under
this Agreement. The execution, delivery and performance by the Company of this
Agreement have been duly authorized by all necessary corporate action. This
Agreement has been duly and validly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting the enforceability of creditors' rights
generally, general equitable principles, the discretion of courts in granting
equitable remedies and matters of public policy.
11
4.3 Capitalization.
(a) The total outstanding shares of the Company's
capital stock consist of 1,000 shares of common stock, par value $1.00 per
share, all of which are owned of record by Seller. There are no outstanding
offers, options, warrants, rights, agreements or commitments of any kind
(contingent or otherwise), including employee benefit arrangements, relating to
the issuance, conversion, registration, voting, sale, repurchase or transfer of
any equity interests or other securities of the Company or obligating the
Company or any other Person to purchase or redeem any such equity interests or
other securities. All of the issued and outstanding shares of the Company have
been duly authorized, are validly issued and outstanding, are fully paid and
nonassessable and have been issued and are held in compliance with all
applicable securities and other Laws. No securities issued by the Company from
the date of its incorporation to the date hereof were issued in violation of any
statutory or common law preemptive rights. There are no dividends which have
accrued or been declared but are unpaid on the Stock. All Taxes required to be
paid in connection with the issuance and any transfers of the Stock have been
paid. All permits or authorizations required to be obtained from or
registrations required to be effected with any Person in connection with any and
all issuances of securities of Company from the date of its incorporation to the
date hereof have been obtained or effected.
(b) The total outstanding equity interests of the
Subsidiary consist of two equity quotas, of which one, having a value of
16,981,383 pesos, is owned by the Company and one, having a value of 1 peso, is
owned by AMCDE. Other than pursuant to the Subsidiary Bylaws, there are no
outstanding offers, options, warrants, rights, agreements or commitments of any
kind (contingent or otherwise), including employee benefit arrangements,
relating to the issuance, conversion, registration, voting, sale, repurchase or
transfer of any equity interests or other securities of the Subsidiary or
obligating the Subsidiary or any other Person to purchase or redeem any such
equity interests or other securities. All of the issued and outstanding equity
quotas of the Subsidiary have been issued and are held in compliance with all
applicable securities and other Laws. No securities issued by the Subsidiary
from the date of its incorporation to the date hereof were issued in violation
of any statutory or common law preemptive rights. There are no dividends which
have accrued or been declared but are unpaid on the outstanding equity interests
of the Subsidiary. All Taxes required to be paid in connection with the issuance
and any transfers of the outstanding equity interests of the Subsidiary have
been paid. All permits or authorizations required to be obtained from or
registrations required to be effected with any Person in connection with any and
all issuances of securities of Subsidiary from the date of its incorporation to
the date hereof have been obtained or effected.
4.4 Investments and Subsidiaries. 4.5 The Business is
conducted solely by and through the Company and the Subsidiary, and neither the
Company nor the Subsidiary directly or indirectly owns, controls or has any
investment or other ownership interest in any corporation, partnership, limited
liability company, joint venture, business trust or other entity other than the
Company's ownership of its interest in the Subsidiary. Neither the Company nor
the Subsidiary has agreed, contingently or otherwise, to share any profits,
revenues, losses, costs or liabilities with, or to guaranty the obligations of,
any Person or entity.
4.5 No Conflicts. The execution, delivery and performance of
this Agreement and the Company Closing Documents do not and will not (with or
without the passage of time or
12
the giving of notice): (i) violate or conflict with the certificate of
incorporation or bylaws (or other organizational documents) of the Company or
the Subsidiary; (ii) violate or conflict with any Law binding upon the Company
or the Subsidiary, except as would not be reasonably likely to have a Material
Adverse Effect; (iii) violate or conflict with, result in a breach of,
constitute a default or otherwise cause any loss of benefit under any material
agreement or other obligation to which the Company or the Subsidiary is a party
(including, without limitation, the Contracts set forth on Section 4.14 of the
Disclosure Schedule) or by which either of them or any of their assets are
bound, except, in each case, for such violations, conflicts, breaches, defaults
or losses as would not have an adverse effect; or (iv) result in the creation of
an Encumbrance pursuant to, or give rise to any penalty, acceleration of
remedies, right of termination or otherwise cause any alteration of any rights
or obligations of any party under any material Contract to which either the
Company or the Subsidiary is a party or by which either of them or any of their
assets are bound . Except for filings under the HSR Act, no consent, notice,
authorization, waiver by or filing with any governmental agency, administrative
body or other third party is required in connection with the execution or
performance of this Agreement by the Company or the consummation by the Company
of the transactions contemplated hereby.
4.6 Financial Statements. The Company has delivered to Buyer
true and complete copies of the Company's (i) audited consolidated balance
sheets and related audited consolidated statements of income, stockholder's
equity and comprehensive income, and cash flows at and for the fiscal years
ended December 31, 2001 and 2002, including the notes thereto (the "AUDITED
FINANCIAL STATEMENTS"), and (ii) unaudited consolidated balance sheet at June 30
2003 (the "INTERIM BALANCE SHEET") and the related unaudited consolidated
statements of income and cash flows for the six months ended June 30, 2003 (the
"INTERIM FINANCIAL STATEMENTS" and, together with the Audited Financial
Statements, the "FINANCIAL STATEMENTS"). The Company's audited consolidated
balance sheet at December 31, 2002 is referred to herein as the "BALANCE SHEET."
The Financial Statements (a) have been prepared based on the books and records
of the Company and the Subsidiary, in accordance with GAAP consistently applied
throughout the periods covered thereby, except, in the case of the Interim
Financial Statements, for normal year-end adjustments, the omission of footnote
disclosures required by GAAP and the omission of a statement of stockholder's
equity and comprehensive income, and (b) fairly reflect in all material respects
the financial position of the Company and the Subsidiary on a consolidated basis
as of the respective dates thereof and the results of operations, changes in
stockholders' equity and comprehensive income (in the case of the Audited
Financial Statements), and cash flows for the periods covered thereby.
4.7 Absence of Undisclosed Liabilities. There are no
liabilities or obligations of the Company or the Subsidiary, either accrued,
absolute, contingent or otherwise, other than those that (i) are disclosed or
reserved against on the Interim Balance Sheet or the Balance Sheet or the notes
thereto; (ii) are not required by GAAP to be reflected on the Interim Balance
Sheet or the Balance Sheet; or (iii) have been incurred in the ordinary course
of business since the date of the Interim Balance Sheet.
4.8 Real Property.
(a) Section 4.8 of the Disclosure Schedule sets forth
the address of all real property owned or leased by each of the Company and the
Subsidiary (the "PROPERTIES").
13
Each of the Company and the Subsidiary has good and valid title in fee simple to
all of the real property reflected on the Balance Sheet as owned by it and owns
all right, title and interest in all leasehold estates and other rights
purported to be granted to them by the leases and other agreements relating to
real property listed in Section 4.8 of the Disclosure Schedule, in each case
free and clear of any Encumbrance except for: (i) liens for current taxes,
assessments and governmental charges and levies which may be paid without
penalty, interest or other additional charge or which are being contested in
good faith by appropriate proceedings and are not material in amount or value in
relation to the value of the associated property and adequate reserves with
respect thereto are maintained on the books and records of the Company; (ii) any
zoning or other governmentally established restrictions or encumbrances; (iii)
materialmen's, mechanics', carriers', warehousemen's, landlords', workmen's,
repairmen's, or other like liens arising in the ordinary course of business and
which are not overdue for more than a period of 30 days or which are being
contested in good faith and by appropriate proceedings diligently conducted, if
adequate reserves with respect thereto are maintained in the books of the
Company; (iv) liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance, social
security and other like laws, or to secure the performance of construction
contracts, leases, statutory obligations, surety, appeal or performance bonds,
all to the extent incurred in the ordinary course of business; and (v) such
utility and municipal easements and restrictions, if any, as do not detract in
any material respect from the value of the property subject thereto and do not
materially interfere with the properties used in the ordinary conduct of the
Business as presently conducted (collectively, the "PERMITTED ENCUMBRANCES"). No
building or structure, to the extent of the premises owned or leased by the
Company or the Subsidiary, or any appurtenance thereto or equipment therein, or
the operation or maintenance thereof, violates in any material respect any
restrictive covenant or any Law (including without limitation any such Laws
relating to health, safety, subdivision and zoning). To the Knowledge of Seller,
no such building, structure or appurtenance encroaches on any property owned by
others. All governmental permits, approvals and licenses required in connection
with the operation and, in the case of the facilities owned by the Company or
the Subsidiary, ownership, of such real property and all improvements thereon
and the conduct of the Business on the date hereof have been duly obtained, are
in full force and effect and no proceedings are pending or, to the Knowledge of
Seller, threatened which could lead to a revocation or other impairment of any
thereof, except where the failure to hold such permits, approvals or licenses
would not be reasonably likely to have a Material Adverse Effect, and such
permits, approvals, and licenses shall not be affected by, or terminate or lapse
by reason of, the transactions contemplated by this Agreement. No condemnation
proceeding or special assessment is pending or, to the Knowledge of Seller,
threatened with respect to any real property identified in Section 4.8 of the
Disclosure Schedule. No tax certiorari or similar proceeding is pending or, to
the Knowledge of Seller, threatened with respect to any real property identified
in Section 4.8 of the Disclosure Schedule.
(b) To the Knowledge of Seller, there is no violation
of a condition or agreement contained in any covenant, easement or right-of-way
affecting any Property. To the Knowledge of Seller, the covenants, easements or
rights-of-way affecting the Properties do not impair in any material respect the
Company or the Subsidiary's ability to use any such Properties in the operation
of the Business as presently conducted. To the Knowledge of Seller, each of the
Company and the Subsidiary has access to public roads, streets or the like or
valid perpetual easements over private streets, roads or other private property
for such ingress to and
14
egress from the Properties, except as would not impair in any material respect
its ability to use any such Properties in the operation of the Business as
presently conducted.
(c) Neither the Company nor the Subsidiary has received
written notice (other than published notice not actually received) of any
pending or contemplated rezoning proceeding affecting the Properties.
(d) Seller has not received any notice from any utility
company or municipality of any fact or condition which could reasonably be
expected to result in the discontinuation of presently available sewer, water,
electric, gas, telephone or other utilities or services for the Properties.
(e) The improvements to, or which constitute a portion
of, the Properties are in satisfactory condition and repair, ordinary wear and
tear excepted, and to the Knowledge of Seller, there are no material defects in
the structural elements of such improvements.
(f) To the Knowledge of Seller, all material building
systems located on or which constitute a portion of the Properties, including
the plumbing, electrical, fire-life-safety and HVAC systems, are in satisfactory
operating condition, ordinary wear and tear excepted.
4.9 Personal Property. Each of the Company and the Subsidiary
has good and valid title to the personal property (including intellectual
property) owned by them, free and clear of all Encumbrances, except for any
Permitted Encumbrances. All leased personal property used in the Business is
used pursuant to valid, subsisting and enforceable leases, subleases, licenses
and other agreements binding upon the parties thereto in accordance with their
terms, except as would not have a Material Adverse Effect. The material
properties and assets owned or leased by the Company and the Subsidiary are in
the possession or under the control of the Company or the Subsidiary and are of
a condition, nature and quantity sufficient for the conduct of the Business as
of the date hereof.
4.10 Taxes. Notwithstanding anything herein to the contrary,
the Seller shall not be deemed to breach any representation or warranty made
with respect to AMCDE or AMCPA to the extent such breach or misrepresentation
does not adversely effect the Company or the Subsidiary.
(a) Each of AMCDE, AMCPA, Seller, the Company and the
Subsidiary have duly and timely (with due regard to valid extensions properly
secured) filed all material Tax Returns required to be filed by them prior to
the date of this Agreement. All such Tax Returns are correct and complete in all
material respects as filed or as validly amended thereafter. Each of AMCDE,
AMCPA, Seller, the Company and the Subsidiary have timely paid all Taxes
required to be paid in respect of the periods covered by such Tax Returns
(whether or not shown on any Tax Return) and has (or will have by the Closing
Date) adequately reserved for the payment of all material Taxes with respect to
periods ended on or before the Closing Date for which Tax Returns have not yet
been, but will be, FILED by them. To the Knowledge of Seller, there is no
proposed additional tax assessment against AMCDE, AMCPA or the Seller with
15
respect to the Company's operations, the Company or the Subsidiary. In addition,
each of AMCDE, AMCPA, Seller, the Company and the Subsidiary has withheld and
paid (or will have withheld and paid on or before the Closing Date) all Taxes
required to be withheld and paid (including federal, state and local
requirements) with respect to amounts paid or owing as of the Closing Date to
any employee, creditor, independent contractor or other third party. AMCPA has
been a "qualified S corporation" (as defined in the Code) for federal income tax
purposes and applicable state and local income tax purposes since January 1,
1998 and has filed all forms and taken all actions necessary to maintain such
status. Each of AMCDE, the Company and Seller has been a "qualified subchapter S
subsidiary" (as defined in Section 1361(b)(3)(B) of the Code) for federal income
tax purposes and all applicable state and local tax purposes since its taxable
year beginning January 1, 1998 and has filed all forms and taken all actions
necessary to maintain such status. To the extent that AMCDE, AMCPA OR Seller is
responsible for the payment of Taxes on the income of the Company on account of
the Company's status as a qualified subchapter S subsidiary, Seller warrants and
represents that AMCDE, AMCPA or Seller, as the case may be, has timely paid such
Taxes. Neither AMCDE, AMCPA, Seller, the Company, nor any of their respective
shareholders, has taken any action, will take any action, or omitted to take any
action, which action or omission could result in the loss of S corporation and
qualified subchapter S subsidiary status, as the case may be, for such periods
prior to and including the day of Closing.
(b) No Tax Return of either the Company or the
Subsidiary is the subject of a pending audit or other administrative or court
proceeding. Neither the Company nor the Subsidiary has granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any Tax for any open Tax year. Section 4.10(b) of the Disclosure
Schedule lists income tax returns filed by the Company or by the Subsidiary with
respect to which an assessment could be made against either the Company or the
Subsidiary. No federal, state, local or foreign taxing authority is asserting
or, to the Knowledge of Seller, threatening to assert against the Company or the
Subsidiary any deficiency or claim for Taxes or for failure to file a Tax
Return. No claim has been made, nor does Seller have Knowledge of any claim that
is pending, by an authority in any jurisdiction where the Company or the
Subsidiary does not file Tax Returns alleging that the Company or the Subsidiary
is or may be subject to taxation in that jurisdiction.
(c) All Tax deficiencies that have been assessed or
asserted in writing against either the Company or the Subsidiary have been fully
paid or finally settled or otherwise resolved, and there is no audit, Proceeding
or assessment pending against the Company or the Subsidiary in respect of any
Tax.
(d) Neither the Company nor the Subsidiary is required
to include in income any adjustment pursuant to Section 481 of the Internal
Revenue Code of 1986, as amended (the "CODE") (or similar provisions of other
law or regulation) by reason of a change in accounting method.
(e) There are no liens for Taxes (other than for
current Taxes not yet due and payable, property taxes which are not delinquent
or for other immaterial Taxes that are being contested in good faith) upon the
assets of the Company or the Subsidiary.
16
(f) Neither the Company nor the Subsidiary is a party
to or bound by any tax indemnity or tax sharing agreement or any "closing
agreement" with any taxing authority.
(g) Section 4.10(g) of the Disclosure Schedule lists
the states in which the Company (or AMCDE, AMCPA, or the Seller) files income
tax returns to report the Company's business operations and also lists those
states in which valid S corporation and qualified subchapter S subsidiary
elections exist.
(h) All of the issued and outstanding shares of capital
stock of Seller are owned by AMCDE. All of the issued and outstanding shares of
capital stock of AMCDE are owned by AMCPA.
4.11 Litigation. There are no actions, suits or proceedings
(arbitration or otherwise) against either the Company or the Subsidiary or their
directors, officers, shareholders or members in their capacities as such,
pending or, to the Knowledge of Seller, threatened, before any court or
governmental agency or instrumentality, or before an arbitrator of any kind and,
to the Knowledge of Seller, no governmental investigations involving or
affecting either the Company or the Subsidiary or their directors, officers,
shareholders or members in their capacities as such, are threatened or pending
(any of the foregoing, a "PROCEEDING"), except for any Proceeding that would not
be reasonably likely to exceed $50,000 individually (or $100,000 in the
aggregate) in costs, penalties and damages to such Person or Persons. Neither
the Company nor the Subsidiary is bound by any judgment, award, determination,
order, writ, injunction or decree of any court or federal, state, municipal or
governmental department or any commission, board, bureau, agency,
instrumentality, administrator or arbitrator compliance with which, or which if
not complied with, could be reasonably expected to materially affect the
Business. Nothing contained herein shall be deemed to raise any presumption that
the threshold for a Proceeding required to be disclosed pursuant to this Section
4.11 shall be deemed to be material for purposes of satisfying the condition set
forth in Section 7.2.
4.12 Labor Matters. There are no collective bargaining
agreements or similar agreements applicable to any Persons employed by the
Company or the Subsidiary, and each of the Company and the Subsidiary (i) have
complied in all material respects with all applicable federal, state, and local
legal requirements relating to its employees, arising from statutes relating to
wages, hours, collective bargaining, unemployment insurance, worker's
compensation, equal employment opportunity, age and disability discrimination
and the payment and withholding of Taxes and (ii) have complied with all
applicable federal, state and local legal requirements relating to its employees
arising from statutes relating to immigration and I-9 compliance. There is no
labor strike, organized dispute, stoppage or lockout actually pending or, to the
Knowledge of Seller, threatened against the Business, and since January 1, 2001,
there has not been any such action. To the Knowledge of Seller, there is no
organized slowdown actually pending or threatened against the Business, and
since January 1, 2001, there has not been any such action. Except as set forth
on Section 4.12 of the Disclosure Schedule, none of the employees of the Company
or the Subsidiary is represented by any labor organization, and, to the
Knowledge of Seller, since January 1, 2001, there have been no union organizing
activities among any of the employees of the Company or the Subsidiary.
17
4.13 Intellectual Property Rights.
(a) The Company and/or the Subsidiary own, license or
otherwise possess legally enforceable rights to use all Intellectual Property.
To the Knowledge of Seller, (i) no third party is infringing the Intellectual
Property, (ii) none of the Intellectual Property has been used, disclosed or
appropriated to the detriment of the Company or the Subsidiary for the benefit
of any other Person other than Seller; and (iii) no employee, independent
contractor or agent of Seller, the Company, or the Subsidiary has
misappropriated any trade secrets or other confidential information of any other
Person in the course of the performance of his or her duties as an employee,
independent contractor or agent of Seller, the Company, or the Subsidiary.
(b) Seller has no Knowledge, and has not received any
written communication alleging, that the Company or the Subsidiary has violated
any of the patents, licenses, trademarks, service marks, trade names,
copyrights, trade secrets or other proprietary rights of any Person or
challenging Seller's ownership or use of, or the validity or enforceability of,
any Intellectual Property. To the Knowledge of Seller, no third party is
infringing upon or violating any of the Intellectual Property owned by the
Company or the Subsidiary.
(c) Section 4.13(c) of the Disclosure Schedule sets
forth a true, complete and current list of all patents, patents pending,
trademark/service xxxx applications and registrations, copyright applications
and registrations and license agreements pertaining to the Intellectual
Property. All renewal fees, maintenance fees, and other fees in respect of the
Intellectual Property that have fallen due on or prior to the date of this
Agreement have been paid. No Intellectual Property is the subject of any final
refusal of registration. The consummation of the transactions contemplated
hereby will not alter or impair any Intellectual Property.
(d) Neither the Company nor the Subsidiary is under any
obligation to pay royalties or other payments in connection with any agreement,
nor is it restricted from assigning its rights respecting Intellectual Property,
nor will it otherwise be, as a result of the execution, delivery, or performance
of this Agreement, in breach of any agreement relating to the Intellectual
Property. Each of the Company and the Subsidiary is in compliance with all
license or other agreements pertaining to Intellectual Property.
(e) Except as set forth in Section 4.13(e) of the
Disclosure Schedule, to the Knowledge of Seller, no Person (except the Company
and/or the Subsidiary), including, without limitation, any present or former
employee, shareholder, officer or director of the Company or the Subsidiary, or
agent or outside contractor of the Company or the Subsidiary, holds any right,
title or interest, directly or indirectly, in whole or in part, in or to any
Intellectual Property. Other than as part of the Business, neither Seller nor,
to the Knowledge of Seller, any third party has used or currently uses any
Trademarks listed on Section 4.13(c) of the Disclosure Schedule or any other
trademark or service xxxx containing "Lehigh" in connection with goods or
services identical or similar to those provided in the Business.
(f) To the Knowledge of Seller, the Company and the
Subsidiary's transmission, reproduction, use, display or modification (including
framing and linking web site content) or other practices with respect to web,
infomercial or other marketing content
18
proprietary to any other Person do not infringe or violate any proprietary or
other right of any other Person and no claim relating to such infringement or
violation is pending, or, to the Knowledge of Seller, threatened.
(g) Each of the Company and the Subsidiary owns or has
the right to use all Software used in the Business.
(h) No unlicensed copies of any mass market Software
that is available in consumer retail stores or otherwise commercially available
and subject to "shrink-wrap" or "click-through" license agreements are installed
on any of the Company or the Subsidiary's computers or computer systems.
4.14 Contracts and Commitments. Section 4.14 of the Disclosure
Schedule hereto sets forth a complete and accurate list of:
(a) Each Contract (other than open purchase orders)
with, and a complete and correct list of, (a) the top five customers of the
Company (together with the Subsidiary) and the aggregate sales to such customers
(identifying the approximate percent of total sales derived from each such
customer), and (b) the top five (5) suppliers, by dollar volume of the Business
and the aggregate dollar volume of purchases (broken down by principal
categories) by the Business from such suppliers for such period, each for the
six-month period ended June 30, 2003 and the twelve-month period ended December
31, 2002.
(b) Each Contract (other than open sales orders) that
involved the performance of services for or the delivery of goods or materials
to the Company and/or the Subsidiary during the Company's most recently
completed fiscal year of amount or value in excess of $100,000 or pursuant to
which the Company or the Subsidiary is obligated to purchase future services,
goods or materials in an amount or value that is reasonably expected to exceed
$100,000;
(c) Each Contract that was not entered into in the
ordinary course of business that involves future expenditures or receipts in
excess of $100,000 to which the Company and/or the Subsidiary is a party;
(d) Each license or other Contract with respect to the
Intellectual Property to which the Company and/or the Subsidiary is a party
other than with respect to commercially available software;
(e) Each Contract relating to the borrowing of money or
a line of credit to which the Company and/or the Subsidiary is a party or
pursuant to which the Company and/or the Subsidiary has guaranteed any
indebtedness or obligation of any other Person;
(f) Each Contract with respect to environmental
remediation at any facility or property now or formerly owned by the Company
and/or the Subsidiary;
(g) Each representative, distribution, marketing or
sales agency Contract to which the Company and/or the Subsidiary is a party;
19
(h) Each Contract containing covenants limiting the
freedom of the Company and/or the Subsidiary to engage in any line of business
or to compete with any Person or covenants of another Person not to compete with
the Company or the Subsidiary;
(i) Each sole source supply Contract for the purchase
of any material, raw material, component or product that is otherwise not
generally available and that is used in the manufacture of any product of the
Business;
(j) Each guaranty and indemnity by the Company and/or
the Subsidiary to any Person in connection with the supply of components or raw
materials to the Business;
(k) All agreements with respect to the proposed
acquisition of any other entity, business, line of business or material amount
of assets;
(l) All employment, severance or change of control
agreements with employees of the Company or the Subsidiary and all consulting
agreements to which the Company or the Subsidiary is a party (other than
unwritten employment arrangements terminable at will without payment of any
contractual severance or other amount);
(m) Each agreement to which the Company or the
Subsidiary is a party or is otherwise bound with respect to the sharing of
profits, revenues, losses, costs or liabilities of any Person or entity, other
than those between the Company and the Subsidiary;
(n) All standard warranties made with respect to the
Business; and
(o) Any other Contract to which the Company or the
Subsidiary is a party that is material to the condition (financial or
otherwise), results of operations, assets, properties, liabilities and business
of the Company or the Subsidiary taken as a whole.
Neither the Company nor the Subsidiary is in breach or default
with respect to any of the above Contracts and, to the Knowledge of Seller, no
other party thereto is in breach or default with respect to any of the above
Contracts, except, in each case, for such breaches or defaults as would not be
reasonably likely to have a Material Adverse Effect, and no event has occurred
which, with due notice or lapse of time or both, would constitute such a
default. The Company has not received any written notice since January 1, 2002,
of any breach or default with respect to any of the above Contracts. Neither the
Company nor the Subsidiary is a party to any contract, agreement, binding bid,
binding proposal, or binding quotation with any Governmental Entity.
4.15 Existing Condition. Except as disclosed in Section 4.15
of the Disclosure Schedule, since the date of the Balance Sheet there has not
occurred (i) any Material Adverse Effect or any event, change or effect which is
reasonably likely to have a Material Adverse Effect; (ii) any damage to,
destruction or loss of any material asset of the Company or the Subsidiary not
covered by insurance; (iii) any change by the Company in its accounting
principles or policies; (iv) any material revaluation by the Company of any of
its or the Subsidiary's assets, including, without limitation, writing off or
writing down notes or accounts receivable or inventory, other than in the
ordinary course of business consistent with past
20
practice; (v) any increase in compensation outside of the ordinary course of
business payable to any stockholder, director, officer or employee or entry into
(or amendment of) any employment, severance or similar agreement with any
stockholder, director, officer or employee; (vi) waiver of any material right,
forbearance of any material debt or release of any material claim, except in
each case in the ordinary course of business; (vii) adoption of or change in any
Plan or labor policy; (viii) entry into, amendment, termination or receipt of
notice of termination of any agreement which is required to be disclosed in the
Disclosure Schedule, or any material transaction (including, without limitation,
any such relating to capital expenditures); (ix) sale (other than sales of
inventory in the ordinary course of business), assignment, conveyance, lease, or
other disposition of any material asset or property of the Company or the
Subsidiary or mortgage, pledge, or imposition of any lien or other encumbrance
on any material asset or property of the Company or the Subsidiary, except, in
each case, as permitted hereunder; (x) any capital expenditure in excess of
$50,000, or additions made to property, plant and equipment used in the
operations of the Business other than in the ordinary course of business; (xi)
any loss or received notice of potential loss of any material customers or of a
reduction in orders from any material customer; or (xii) any binding agreement
to do any of the foregoing by the Company or the Subsidiary.
4.16 Employee Benefit Plans
(a) Section 4.16 of the Disclosure Schedule contains a
complete list of all "employee benefit plans" as defined in Section 3(3) of
ERISA ("PLANS"), sponsored, maintained or contributed to, or required to be
contributed to, by the Company. All Plans required to be listed in Section 4.16
of the Disclosure Schedule have been administered in substantial compliance with
their terms and the applicable provisions of ERISA and the Code. With respect to
each Plan required to be listed in Section 4.16 of the Disclosure Schedule, (i)
each Plan which is intended to be qualified within the meaning of Section 401(a)
of the Code, including, but not limited to, the American Manufacturing
Corporation 401(k) Plan, is so qualified and is the subject of a favorable
determination letter as to its qualification, and nothing has occurred, whether
by action or failure to act, that could reasonably be expected to cause the loss
of such qualification; (ii) all contributions required under the terms of the
Plans or under applicable law have been made within the time required by law and
the terms of the Plans; (iii) there have been no "prohibited transactions" (as
described in Section 4975 of the Code or in Part 4 of Subtitle B of Title I of
ERISA) with respect to any Plan; (iv) no fiduciary of any such Plan has any
liability for breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any such Plan;
and (v) there are no inquiries, proceedings, claims or suits pending or
threatened by any governmental agency or authority or by any participant or
beneficiary against any of the Plans, the assets of any of the trusts under such
Plans or the Plan sponsor or the Plan administrator, or against any fiduciary of
any of such Plans with respect to the design or operation of the Plans, other
than routine claims for benefits.
(b) Neither the Company nor any entity required to be
aggregated with the Company under Section 414(b), (c), (m), or (o) of the Code
("ERISA AFFILIATE") contributes (or is obligated to contribute) to a
"multiemployer plan" as such term is defined in ERISA Section 3(37) and, during
the six-year period ending on the Closing Date, neither the Company nor any
ERISA Affiliate has contributed or been obligated to contribute to such a plan.
21
Neither the Company nor any ERISA Affiliate has incurred any withdrawal
liability as a result of a complete or partial withdrawal, as those terms are
defined in Part I of Subtitle E of Title IV of ERISA, from a multiemployer plan
that has not been satisfied in full. Neither the Company nor any ERISA Affiliate
has received any notification, or has any reason to believe that any
multiemployer plan to which any of them contributes or is obligated to
contribute is in reorganization, is insolvent, has been terminated, or may
reasonably be expected to be in reorganization, to be insolvent, or to be
terminated.
(c) There are no unsatisfied liabilities to
participants, the IRS, the United States Department of Labor ("DOL"), the
Pension Benefit Guaranty Corporation ("PBGC") or to any other person or entity
which have been incurred as a result of the termination of any Plan ever
maintained by the Company or any ERISA Affiliate. With respect to each Plan
maintained by the Company or any ERISA Affiliate which is subject to the minimum
funding requirements of Part 3 of Subtitle B of Title I of ERISA or subject to
Section 412 of the Code (i) there does not exist any "accumulated funding
deficiency" within the meaning of Section 302 of ERISA or Section 412 of the
Code and there has been no waived funding deficiency within the meaning of
Section 303 of ERISA or Section 412 of the Code; (ii) no "reportable event," as
defined in Section 4043 of ERISA for which notice has not been waived by the
regulations issued under such Section has occurred; (iii) all premiums to the
PBGC have been timely paid in full; and (iv) the Company and the Subsidiary have
not incurred, and the Company does not have any reason to expect that the
Company or the Subsidiary will incur, any liability to the Pension Benefit
Guaranty Corporation (other than with respect to premium payments not yet due)
or otherwise under Title IV of ERISA or under the Internal Revenue Code with
respect to any Plan.
(d) All reports and information required to be filed
with the DOL, IRS and PBGC or furnished to plan participants and their
beneficiaries with respect to each Plan required to be listed in Section 4.16 of
the Disclosure Schedule, including, but not limited to, any required Form 5500,
have been so filed and/or furnished and no material change has occurred with
respect to matters covered by the most recent Form 5500 since the date thereof.
Seller has delivered to Buyer, with respect to the Plans required to be listed
in Section 4.16 of the Disclosure Schedule, correct and complete copies of the
Plan documents and summary plan descriptions, the most recent determination
letter received from the Internal Revenue Service with respect to each Plan, the
most recent annual report (Form 5500, with all applicable attachments), and all
related trust agreements, insurance contracts and other funding arrangements
which implement each such Plan.
(e) The consummation of the transactions contemplated
herein will not, either alone or in combination with another event, (i) entitle
any employee or any current or former employee, officer, director, consultant or
agent of the Company to severance pay, unemployment compensation or any other
payment, or (ii) accelerate the time of payment or vesting of, or increase the
amount of, compensation or benefits due to any such individual.
(f) There has been no violation of the "continuation
coverage requirement" of "group health plans" as set forth in Section 4980B of
the Code and Part 6 of Subtitle B of Title I of ERISA (sometimes referred to as
"COBRA") with respect to any Plan maintained by the Company or any ERISA
Affiliate to which such continuation coverage
22
requirements apply. There has been no violation of the health insurance
obligations imposed by Section 9801 of the Code and Part 7 of Subtitle B of
Title I of ERISA with respect to any Plan to which such insurance obligations
apply. Neither the Company nor any ERISA Affiliate has contributed to a
nonconforming group health plan (as defined in Section 5000(c) of the Code) and
no ERISA Affiliate of the Company has incurred a tax under Section 5000(a) of
the Code which is or is reasonably expected to become a liability of the Company
or an ERISA Affiliate.
(g) Other than such continuation of benefit coverage
under group health plans as is required by applicable law, neither the Company
nor the Subsidiary maintains retiree life or retiree health plans providing for
continuing coverage for any employee or any beneficiary of an employee after the
employee's termination of employment.
(h) All employee benefits required under the
Subsidiary's agreement with the Union of Employees of Trade and Industry,
Particular and Similar de Yucatan have been provided substantially in accordance
with the terms of such agreement and the applicable provisions of Mexican law.
(i) For purposes of the representations set forth in
Section 4.16(a), in the second sentence of Section 4.16(c), and in the first
sentence of Section 4.16(d), the term "Plan" shall also include the Lehigh Sales
and Hourly Pension Plan as in effect prior to its merger into and with the
American Manufacturing Corporation and Subsidiaries Pension Plan.
(j) The Company has no unsatisfied liabilities with
respect to any employee benefit plan, as defined in Section 3(3) of ERISA, which
it has ever maintained or to which it has ever contributed other than with
respect to those Plans listed in Section 4.16 of the Disclosure Schedule.
4.17 Directors and Officers. Section 4.17 of the Disclosure
Schedule sets forth the names of all directors and officers of the Company.
4.18 Compliance with Laws. Each of the Company and the
Subsidiary is in compliance in all material respects with, and since January 1,
2002 has not received any written notice of any violation or delinquency with
respect to, any Laws applicable to the Business. Each of the Company and the
Subsidiary possesses all licenses, permits, registrations and government
approvals (collectively, "PERMITS") (other than Permits required under any
Environmental Law which are exclusively provided for in Section 4.19) which are
required in order for the Company and the Subsidiary to conduct the Business as
presently conducted, except for such Permits as to which the failure to possess
would not be reasonably likely to have a Material Adverse Effect. Each Permit is
valid and in full force and effect, and is not subject to any pending or, to the
Knowledge of Seller, threatened administrative or judicial proceeding to revoke,
cancel or declare such Permit invalid in any respect.
4.19 Environmental Compliance.
(a) The Company and the Subsidiary are in material
compliance with and have not received any written notice of any violation or
delinquency with respect to, any Law, or any agreement with, or any Permit or
order from, any governmental, regulatory or administrative authority, to which
the operation of the Business or any of its assets or personnel
23
is subject and which relates to the protection of the environment (indoors or
outdoors) or the regulation of Hazardous Materials including, without
limitation, any Environmental Laws. Neither the Company, the Subsidiary, nor any
of the Properties, has been made subject to any claim, judgment, decree, order,
arbitration award, deed restriction, permit condition, licensing restriction or
any other restriction of the operation of the Business by any federal, state or
local governmental, regulatory or administrative authority relating to
Environmental Laws which is reasonably likely to have a Material Adverse Effect.
Except as set forth on Section 4.19 of the Disclosure Schedule, the Company and
the Subsidiary have obtained all Permits required under Environmental Laws for
the conduct of the Business and such Permits are set forth on Section 4.19 of
the Disclosure Schedule. Without limiting the foregoing, Seller represents that
the compliance conditions described in the January 2003 Draft Environmental and
Environmental Health Compliance Evaluation of the Xxxxxx-Xxxxx facility located
at 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx, prepared by Xxxxxxxxx
Environmental Compliance Services, Inc. have been adequately addressed and that
any conditions of noncompliance have been corrected.
(b) There is no Environmental Claim pending or, to the
Knowledge of the Company or Seller, threatened against the Company, the
Subsidiary or the Properties. To Knowledge of Seller, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Hazardous Materials that could form the basis of any
Environmental Claim relating to the Business or against the Company or the
Subsidiary or the Properties.
(c) Neither the Company nor the Subsidiary use or, to
the Knowledge of Seller, has used, any Hazardous Materials on, at, beneath or
near any of the Properties or any surface waters or groundwaters thereon or
thereunder in violation of Environmental Laws. Neither the Company nor the
Subsidiary own or operate, and, to the Knowledge of Seller, have ever owned or
operated, an "underground storage tank" containing a "regulated substance," as
such term is defined in Subchapter IX of the Resource Conservation and Recovery
Act, 42 U.S.C. ss. 6991 et seq., or, own or operate, and, to the Knowledge of
Seller, have ever owned or operated, a surface impoundment, landfill, or gas or
oil well, PCB containing electrical equipment, urea formaldehyde containing
materials, or asbestos containing materials. Seller has delivered or otherwise
made available for inspection to Buyer or its agents true, complete and correct
copies of all current Phase I Environmental Site Assessments possessed or
initiated by or on behalf of Seller, the Company, or the Subsidiary pertaining
to Hazardous Materials on, at, beneath or near any of the Properties or any
surface waters or groundwaters thereon or thereunder, or any current reports,
studies or assessments regarding existing material noncompliance with or
liability under any Environmental Law.
(d) Neither the Company nor the Subsidiary have any
obligations under any agreement with any Person or pursuant to an order of a
Governmental Entity for conducting any site investigation or cleanup that would
be triggered by the execution of this Agreement or consummation of the
transactions contemplated by this Agreement. Neither the Company nor the
Subsidiary now or, to the Knowledge of Seller, in the past has treated, stored,
disposed of, arranged for or permitted the disposal of, transported, handled or
released any Hazardous Materials in violation of Environmental Laws or, to the
Knowledge of Seller, owned, occupied or operated any facility or property so as
to give rise to liabilities of the Company or the Subsidiary for response costs,
natural resource damages or attorneys fees pursuant to any
24
Environmental Law. Neither the Company nor the Subsidiary has, either expressly
or by operation of law, assumed or undertaken any liability or corrective,
investigatory or remedial obligation of any other Person relating to any
Environmental Law.
4.20 Transactions With Affiliates. Section 4.20 of the
Disclosure Schedule sets forth for each Person who is an Affiliate every
agreement, undertaking, understanding or compensation arrangement of any
Affiliate with the Company and/or the Subsidiary (other than normal employment
arrangements) and any interest of any Affiliate in any property, real, personal
or mixed, tangible or intangible, used in or pertaining to the Business. Since
January 1, 2002, to the Knowledge of Seller, none of the Affiliates (other than
SRTI), executive officers or directors of the Company or the Subsidiary has been
a director or executive officer of, or has had any direct or indirect interest
in (excluding the ownership of no more than 2% of the outstanding securities in
any publicly traded company), any firm, corporation, association or business
enterprise which during such period was one of the top fifteen customers of the
Company by dollar volume of sales or supplier of the Company satisfying the
requirements for disclosure set forth in Section 4.14(a).
4.21 Insurance. The Company and the Subsidiary maintain
insurance under various insurance policies, as set forth in Section 4.21(a) of
the Disclosure Schedule. Each of the Company and the Subsidiary has complied
with all terms and conditions of such policies, including premium payments, and
such policies are, to the Knowledge of Seller, valid and enforceable in
accordance with their terms. Neither the Company nor the Subsidiary has received
(i) any written notice of cancellation of any policy or binder of insurance
required to be identified in Section 4.21(a) of the Disclosure Schedule or
refusal of coverage thereunder; (ii) any written notice that any issuer of such
policy or binder has filed for protection under applicable bankruptcy or
insolvency laws or is otherwise in the process of liquidating or has been
liquidated; or (iii) any other indication that any such policy or binder may no
longer be in full force or effect or that the issuer of any such policy or
binder may be unwilling or unable to perform its obligations thereunder. There
is no claim pending by or on behalf of the Company or the Subsidiary against any
of the insurance carriers under any of such policies and, to the Knowledge of
Seller, there has been no actual or alleged occurrence of any kind which would
be reasonably likely to give rise to any such claim. The Company has not made
any claims under any such policy at any time since January 1, 2001, except as
set forth in Section 4.21(a) of the Disclosure Schedule.
4.22 Inventory. All inventory of the Company and the
Subsidiary used in the Business as set forth in the Financial Statements
consists of raw materials, work-in-process and finished goods of a quality and
quantity usable or salable in the ordinary course of the Business except for
obsolete and slow-moving items and items which are below standard quality which
have been written down to estimated net realizable value ("OBSOLETE INVENTORY").
The value at which inventories were reflected in the Financial Statements was
stated at the lower of cost or market, with cost determined using the last in -
first out (LIFO) inventory valuation principle, subject to provisions for or
omissions of Obsolete Inventory, all in accordance with GAAP, applied on a basis
consistent with that of the preceding fiscal year. All Inventory that is not in
transit is located only at the locations as set forth on Schedule 4.22 of the
Disclosure Schedule.
25
4.23 Accounts Receivable. All accounts receivable of the
Business as set forth in the Financial Statements are, and all accounts
receivable which have arisen or arise between the date of the Interim Financial
Statements and the Closing Date are and will be, genuine, valid, binding and
subsisting, having arisen or arising out of bona fide sales and deliveries of
products or the performance of services in the ordinary course of business
consistent with past practice and are subject to no defenses, counterclaims or
set-offs (other than in the ordinary course). The allowances for bad debts
reflected in the Financial Statements are reasonable, adequate and appropriate
based on the Company's prior experience and are in accordance with GAAP, applied
on a basis consistent with that of the preceding fiscal year.
4.24 Brokers. No Person acting on behalf of the Company or any
of its Affiliates or under the authority of any of the foregoing is or will be
entitled to any brokers' or finders' fee or any other commission or similar fee,
directly or indirectly, from any of such parties in connection with any of the
transactions contemplated by this Agreement, other than US Bancorp Xxxxx Xxxxxxx
Inc, whose fees and expenses will be paid in full by Seller at Closing.
4.25 Product Liability. There has not been any recall of any
product, substance or material produced, distributed or sold by or on behalf of
the Business (a "PRODUCT") since January 1, 2001. To the Knowledge of Seller, no
Product contains a design or manufacturing defect that would be reasonably
likely to have a Material Adverse Effect.
4.26 Absence of Certain Business Practices. To the Knowledge
of Seller, neither the Company, the Subsidiary, nor any of their respective
directors or executive officers, acting alone or together, has: (a) received,
directly or indirectly, any rebates, payments, commissions, promotional
allowances or any other economic benefits, regardless of their nature or type,
from any customer, supplier, trading company, shipping company, governmental
employee or other Person with whom the Company or the Subsidiary has done
business; or (b) directly or indirectly, given or agreed to give any gift or
similar benefit to any customer, supplier, trading company, shipping company,
governmental employee or other Person with whom the Company or the Subsidiary
has done business, except where (i) such actions have not subjected, or would
not reasonably be expected to subject the Company, the Subsidiary, or their
respective executive officers or directors to any fine or penalty in any
criminal or governmental litigation or proceeding, (ii) if not given in the
past, such actions would not reasonably be expected to have Material Adverse
Effect or (iii) if not continued in the future, such actions would not
reasonably be expected to have a Material Adverse Effect.
SECTION 5 - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller, as of the date of
this Agreement, that:
5.1 Incorporation and Good Standing. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite corporate power and authority to
conduct its business as presently conducted and to own and lease the properties
and assets used in connection therewith.
5.2 Power and Authorization. Buyer has all requisite corporate
power and authority to enter into and perform its obligations under this
Agreement and under any other
26
agreement, instrument or other document necessary to consummate the transactions
contemplated herein (the "BUYER CLOSING DOCUMENTS"). The execution, delivery and
performance by Buyer of this Agreement and the Buyer Closing Documents have been
duly authorized by all necessary corporate action. This Agreement has been duly
and validly executed and delivered by Buyer and constitutes the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms and, when executed and delivered as contemplated herein, each of the Buyer
Closing Documents shall constitute the legal, valid and binding obligations of
Buyer, enforceable against Buyer in accordance with its terms, in each case,
subject to applicable bankruptcy, insolvency and similar laws affecting the
enforceability of creditors' rights generally, general equitable principles, the
discretion of courts in granting equitable remedies and matters of public
policy.
5.3 Validity of Contemplated Transactions. Neither the
execution and delivery of this Agreement nor any other agreement, instrument or
other document necessary to consummate the transactions contemplated herein by
Buyer nor the consummation by Buyer of the transactions provided for herein or
therein will conflict with, violate, or result in a breach of or default under
any material contract or agreement to which Buyer is a party or by which it is
bound or any law, permit, license, order, judgment or decree applicable to Buyer
or any provision of the charter or bylaws of Buyer, except in each case, for
such violations, conflicts, breaches, defaults or losses as would not adversely
affect the Buyer's ability to consummate the transactions contemplated hereby.
5.4 Litigation. There is no pending action or Proceeding that
has been commenced or, to the knowledge of Buyer, threatened against Buyer that
may have the effect of preventing, delaying, or making illegal the transactions
contemplated herein.
5.5 Consents. Except for filings under the HSR Act and
consents from the Buyer's lenders (the "Bank Consents") or as set forth in
Section 5.5 of the Buyer Disclosure Schedule, no consent, authorization, waiver
by or filing with any governmental agency, administrative body or other third
party is required in connection with the execution or performance of this
Agreement by Buyer or the consummation by Buyer of the transactions contemplated
hereby, except for such consents, authorizations, waivers or filings, as to
which the failure to obtain would not adversely affect the Buyer's ability to
consummate the transactions contemplated hereby.
5.6 Sufficient Funds. Provided that Seller has satisfied (or
can demonstrate that it is capable of satisfying on or before the Closing Date)
all of the conditions set forth in Section 7 (other than the conditions, if any,
that have been waived in writing by Buyer), Buyer will have available to it
sufficient funds to pay the aggregate Purchase Price set forth in Section 2.1(a)
and will have obtained any required Bank Consents.
5.7 Investment Representations.
(a) Buyer is acquiring the Securities for its own
account for purposes of investment and not for the account of any other Person,
not for resale to any other Person, and not with a view to or in connection with
a sale or distribution of the Securities. Buyer has no
27
present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment for the disposition of the Securities by Buyer.
(b) Buyer understands that (i) the Securities have not
been registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), or the securities laws of any state or other jurisdiction, (ii) the
Securities may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act and under any applicable state or other
jurisdiction's respective securities laws, or an exemption therefrom, and that
without an effective registration statement covering the Securities or an
available exemption from registration under the aforementioned securities laws
(including, without limitation, the Securities Act), the Securities must be held
indefinitely and (iii) Seller does not have any obligation to register the
Securities.
(c) Buyer acknowledges that (i) Buyer has sufficient
knowledge and experience in finance and business matters that it is capable of
evaluating the risks and merits of its investment in the Securities and Buyer is
able financially to bear the risks thereof; and (ii) Buyer and its directors,
officers, employees, attorneys, accountants and advisors have been given the
opportunity to ask questions of the officers and management employees of the
Company and the Subsidiary concerning the terms and conditions of this Agreement
and the transactions contemplated herein, the purchase of the Securities, and
the Business. Buyer acknowledges that the representations and warranties
contained in this Agreement, as modified by the Disclosure Schedule, shall be
deemed to be the only representations and warranties made with respect to
Seller, the Company, the Subsidiary or the Business.
5.8 Issuance of Buyer Common Stock. If Buyer issues shares of
Buyer Common Stock on the Contingent Consideration Closing Date, such shares,
when so issued, will be validly issued by Buyer, fully paid and nonassessable
securities of Buyer, and issued in compliance with applicable federal and state
securities laws.
5.9 Brokers. No Person acting on behalf of Buyer or any of its
Affiliates or under the authority of any of the foregoing is or will be entitled
to any brokers' or finders' fee or any other commission or similar fee, directly
or indirectly, from any of such parties in connection with any of the
transactions contemplated by this Agreement.
SECTION 6 - COVENANTS OF THE PARTIES UNTIL CLOSING
6.1 Conduct of Business Pending Closing. Except as set forth
in Section 6.1 of the Disclosure Schedule or as otherwise expressly provided in
this Agreement, between the date hereof and the Closing, except as otherwise
agreed in writing by Buyer, the Company shall, and shall cause the Subsidiary to
operate their respective businesses only in the ordinary course consistent with
past practices and to use commercially reasonable efforts to preserve intact
their business organization and good will in all material respects, including
without limitation the good will and relationships of the Company and the
Subsidiary's customers, suppliers, employees and vendors, and shall also:
(a) maintain their respective existence, and discharge
debts, liabilities and obligations as they become due, and operate in the
ordinary course in a manner
28
consistent with past practice and in compliance in all material respects with
all applicable Laws, authorizations, and Contracts (including, without
limitation, those identified in the Disclosure Schedule);
(b) maintain their respective facilities and assets in
the same state of repair, order and condition as they were on the date hereof,
reasonable wear and tear excepted;
(c) maintain their respective books and records in
accordance with past practice, and use commercially reasonable efforts to
maintain in full force and effect all authorizations and all insurance policies
and binders;
(d) use commercially reasonable efforts to maintain
their respective relations and goodwill with the landlords, suppliers,
customers, employees and others having a business relationship with the Company
or the Subsidiary; and
(e) file, when due or required, subject to applicable
extensions, federal, state, foreign and other Tax Returns and other reports
required to be filed and pay when due all Taxes, assessments, fees and other
charges lawfully levied or assessed against them, unless the validity thereof is
contested in good faith and by appropriate proceedings diligently conducted.
6.2 Negative Covenants. Except as set forth in Section 6.2 of
the Disclosure Schedule or as otherwise expressly provided in this Agreement,
between the date hereof and the Closing, without the prior written consent of
Buyer, the Company shall not, and shall not allow the Subsidiary to:
(a) make any change in the Company's or the
Subsidiary's authorized or issued capital stock or other securities, grant any
option or other right to purchase securities of the Company or the Subsidiary,
issue or make any security convertible into capital stock, grant any
registration rights, or purchase, redeem, retire or make any other acquisition
of any shares of capital stock or other securities;
(b) amend the certificate or articles of incorporation
or bylaws (or equivalent governing documents) of the Company or the Subsidiary;
(c) fail to pay or discharge when due any material
liability or obligation of the Company or the Subsidiary;
(d) make, enter into, amend in any material respect,
renew, extend or terminate any agreement, commitment or transaction, including,
without limitation, any Contract set forth on Section 4.14 of the Disclosure
Schedule, other than in the ordinary course of business, consistent with past
practice and having a term or duration of less than one year;
(e) enter into any Contract with Seller or any
Affiliate of Seller;
(f) make any material change in the conduct of the
Business;
29
(g) make any sale, assignment, transfer, abandonment or
other conveyance of the assets of the Company or the Subsidiary or any part
thereof, except transactions pursuant to existing contracts set forth in the
Disclosure Schedule and dispositions of inventory or of worn-out or obsolete
equipment and machinery in the ordinary course of business consistent with past
practice;
(h) subject any of the assets of the Company or the
Subsidiary, or any part thereof, to any Encumbrance, other than such
Encumbrances as may arise in the ordinary course of business consistent with
past practice by operation of law and that will not, individually or in the
aggregate, interfere materially with the use, operation, enjoyment or
marketability of any of the assets of the Company or the Subsidiary;
(i) acquire any assets, raw materials or properties,
other than in the ordinary course of business consistent with past practice;
(j) enter into any new (or amend any existing) Plan or
employment, severance or consulting agreement, grant any general increase in the
compensation of officers or employees (including any such increase pursuant to
any Plan) or grant any increase in the compensation payable or to become payable
to any employee, except in accordance with pre-existing contractual provisions
or consistent with past practice;
(k) without notifying Buyer in writing at least five
(5) business days prior thereto, (A) make any change in any tax election or in
any accounting principle, method, estimate or practice (except for any such
change required by reason of a concurrent change in GAAP) or (B) except in the
ordinary course of business consistent with past practice, write down the value
of any inventory or write off as uncollectible any accounts receivable;
(l) settle, release or forgive any claim or litigation
or waive any right, in an amount greater than $50,000 or having a term or
duration of more than one year or other than in the ordinary course of business
and consistent with past practice;
(m) enter into any real property lease, sublease or
occupancy agreement or assign or sublet any existing real property lease,
sublease or occupancy agreement;
(n) make any distributions to Seller or its Affiliates
that in the good faith determination of Seller would reduce the Company's
Tangible Net Worth to below $42,000,000; provided, that, notwithstanding
anything herein to the contrary, Buyer's sole remedy for a breach of this
Section 6.2(n) shall be the purchase price adjustment described in Section
2.1(c) above; or
(o) agree or commit to do any of the foregoing.
6.3 Access. Buyer and its respective officers,
directors, attorneys, accountants and representatives, and the Buyer's lenders
and their officers, directors, attorneys, accountants and representatives, shall
be permitted to examine the property, books and records of the Company and the
Subsidiary, and such officers, directors, attorneys, accountants and
representatives shall be afforded reasonable access during normal business hours
to such property, books and records upon reasonable prior notice and Seller
shall furnish promptly to
30
Buyer all other information concerning the Business, its properties and its
personnel as Buyer may reasonably request, provided that no investigation or
receipt of information pursuant to this Section 6.3, or otherwise, shall qualify
any representation or warranty of Seller, the Company or the Subsidiary or the
conditions to the obligations of Buyer. Anything in this Section 6.3 or
elsewhere in this Agreement to the contrary notwithstanding, effective as of the
Closing, Buyer waives, and at Closing shall cause the Company and the Subsidiary
to waive, all rights that Buyer, the Company or the Subsidiary may have, if any,
to any notes, work product or communications within the attorney-client
privilege (collectively, the "ATTORNEY MATERIALS") to or from the Seller or any
of its Affiliates prepared or received by Drinker Xxxxxx & Xxxxx LLP in the
course of their representation of Seller and the Company in connection with and
relating to the transactions contemplated by this Agreement to the extent any
such right would arise as a result of Drinker Xxxxxx & Xxxxx LLP also having
been engaged by or receiving payments from the Company or the Subsidiary in
connection with such transactions; provided that such waivers shall be null and
void and of no effect with respect to Attorney Materials that are not protected
by the attorney-client privilege if it is asserted.
6.4 Consents. Prior to the Closing, Seller (i) shall, at its
cost and expense, and with the reasonable cooperation of Buyer, use its
commercially reasonable efforts to obtain all consents, permits, approvals of,
and exemptions by, any Governmental Entity or third party necessary or desirable
for the consummation of the transactions contemplated by this Agreement as set
forth in Section 6.4 of the Disclosure Schedule (the "MATERIAL CONSENTS") and
(ii) shall diligently assist and cooperate with Buyer in preparing and filing
all documents required to be submitted by Buyer to any Governmental Entity in
connection with such transactions and in obtaining any governmental consents,
waivers, authorizations or approvals which may be required to be obtained by
Buyer in connection with such transactions (which assistance and cooperation
shall include, without limitation, timely furnishing to Buyer all information
concerning Seller, the Company, or the Subsidiary that counsel to Buyer
determines is required to be included in such documents or would be helpful in
obtaining any such required consent, waiver, authorization or approval). Without
limiting the generality of the foregoing, in the event the landlord under that
certain lease listed as item (c)1 in Section 4.14 of the Disclosure Schedule
requires an additional security deposit in connection with the transactions
contemplated by this Agreement, as provided for in such lease, at the Closing
Buyer shall deposit such additional security deposit with such landlord to the
extent commercially reasonable.
6.5 HSR. Each of the parties hereto undertakes and agrees to
file as soon as practicable, and in any event within five business days after
the date of this Agreement, a Notification and Report Form under the HSR Act
with the United States Federal Trade Commission (the "FTC") and the United
States Department of Justice, Antitrust Division (the "ANTITRUST DIVISION"), and
to make any other competition filing or notifications required by any other
governmental authority as promptly as practicable. Each of the parties shall (i)
respond as promptly as practicable to any formal or informal inquiries received
from the FTC or the Antitrust Division for additional information or documentary
materials, and to all inquiries and requests received from any State Attorney
General or other governmental authority in connection with antitrust or
competition matters, (ii) take all commercially reasonable steps to seek early
termination of any applicable waiting period under the HSR Act or any similar
laws and to obtain all required approvals, and (iii) refrain from entering into
any agreement with the FTC or the Antitrust Division or any governmental
authority not to consummate or delay consummation
31
of or to give notice of consummation other than as required by law, of the
transactions contemplated by this Agreement, except with the prior written
consent of the other parties hereto (which shall not be unreasonably withheld or
delayed). Each of the parties or its counsel shall promptly notify the other
party or its counsel of any written or oral communication to that party or
counsel from the FTC, the Antitrust Division, any State Attorney General or any
other governmental authority and shall permit the other party or its counsel to
review in advance any proposed written communication to any of the foregoing.
Notwithstanding the foregoing or any other covenant herein contained, in
connection with the receipt of any necessary approvals under the HSR Act, none
of Buyer, Seller, the Company, or the Subsidiary shall be required to (i) divest
or hold separate or otherwise take or commit to take any action that limits
Buyer's freedom of action with respect of, or its ability to retain, the Company
or the Subsidiary or any material portions thereof or any of the businesses,
product lines, properties or assets of Buyer, the Company, or the Subsidiary,
without Buyer's prior written consent; or (ii) commence any litigation against
any entity in order to facilitate the consummation of any of the transactions
contemplated hereby.
6.6 INTENTIONALLY OMMITTED
6.7 No Solicitation.
(a) Seller and the Company shall not, directly or
indirectly, continue, initiate or participate in discussions or negotiations
with, or provide any nonpublic information to, any Person (other than Buyer and
its representatives in connection with the transactions contemplated by this
Agreement) concerning any sale of assets (other than in the ordinary course of
its business consistent with past practice) or shares of capital stock of the
Company or any merger, consolidation, recapitalization, liquidation or similar
transaction involving the Company (collectively, a "COMPANY ACQUISITION
TRANSACTION").
(b) Seller and the Company will promptly communicate to
Buyer the terms of any inquiry or proposal that it may receive after the date of
this Agreement in respect of a Company Acquisition Transaction. Any notification
under this Section 6.7 shall include the identity of the Person making such
proposal, the terms of such proposal and any other information with respect
thereto as Buyer may reasonably request.
(c) In the event of a breach of this Section 6.7 by
Seller or the Company, in addition to any other remedies available to Buyer,
Buyer shall be entitled to seek equitable remedies in a court of competent
jurisdiction, including the equitable remedy of specific performance with
respect to the transactions set forth in this Agreement, and shall be entitled
to such injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, as a court of competent jurisdiction
shall determine.
6.8 Assumption and Release of Real Estate Debt. At or prior to
the Closing, the Company shall assign and transfer to Seller (or such other
Person as Seller may designate) all of its right, title and interest (other than
any interest therein as a tenant pursuant to the Macungie Lease) in and to the
land, building and other structures, including all building systems and fixtures
(for the sake of clarity, the term fixtures does not include trade fixtures,
moveable office furniture and furnishings, signs, machinery and equipment),
located in Macungie, Lehigh
32
County, Pennsylvania, and used by the Company in the operation of the Business
(collectively, the "REAL ESTATE"), under and subject to all Encumbrances, and
subject to the assumption by Seller of, and the release of the Company from, the
Real Estate Debt. Seller (or such other Person as Seller may designate) shall
use commercially reasonable efforts to assume and obtain the complete and
irrevocable release of the Company from any and all obligations of the Company
under and in connection with the Real Estate Debt, including, without
limitation, documents evidencing the release of all liens or security interests
upon or in any of the assets of the Company.
6.9 Assumption and Release of Bank Debt. In connection with
either the assumption by 6.10 Seller (or such other Person as Seller may
designate) of the Bank Debt or the payoff of the Bank Debt in accordance with
Section 9.4, Seller shall use commercially reasonable efforts to obtain payoff
letters and other written documents evidencing the complete and irrevocable
release of the Company from any and all obligations under and in connection with
the Bank Debt including, without limitation, the release of all liens or
security interests upon or in any assets of the Company.
6.10 Landlord Waivers. Seller shall use commercially
reasonable efforts to obtain landlord waivers, in the form reasonably required
by Buyer's lenders, from the lessors that lease real property to the Company
located at 000 Xxxx Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx and at 0000 Xxxxxxx
Xxxx., Xxx Xxxxxxx, Xxxxxxxxxx. Seller shall provide a landlord waiver with
respect to the real property located at 0000 Xxxxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxxx.
SECTION 7 - CERTAIN CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Unless waived by Buyer, the obligation of Buyer to consummate
the transactions contemplated hereunder is subject to the fulfillment, prior to
or at the Closing, of each of the following conditions:
7.1 Deliveries at Closing. Seller shall have delivered, or
caused to be delivered, to Buyer all items required pursuant to Section 9.2.
7.2 Representations and Warranties. The representations and
warranties of Seller contained in this Agreement shall be true and correct in
all material respects at and as of the Closing Date as though such
representations and warranties were made at and as of the Closing Date (except
for representations and warranties (i) made as of a specified date, which shall
be true and correct in all material respects as of the specified date, and (ii)
containing a specific reference to a Material Adverse Effect or other
materiality qualification, which, giving effect to such specific reference or
qualification, shall be true and correct in all respects), and Buyer shall have
received a certificate dated the Closing Date to that effect, signed by the
chief executive officer or president of Seller.
7.3 Performance of Covenants. Seller and the Company shall
have performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by them at or prior to Closing, and
Buyer shall have received a certificate dated the Closing Date to that effect
signed by the chief executive officer or president of Seller.
33
7.4 Approvals. (a) All Material Consents shall have been
obtained in form and substance reasonably satisfactory to the Buyer and shall be
in full force and effect on the Closing Date, (b) all waiting periods applicable
under the HSR Act shall have expired or been terminated, and (c) any other
material governmental consent, authorization or filing requirement required for
Buyer to consummate the transactions contemplated by this Agreement shall have
been obtained or otherwise complied with.
7.5 Legal Matters. The Closing shall not violate any order or
decree of any court or governmental body of competent jurisdiction and no
Proceeding shall have been brought or threatened by any Person (other than Buyer
or an Affiliate of Buyer) which questions the validity or legality of this
Agreement or the transactions contemplated herein.
7.6 Assumption and Release of Real Estate Debt. Buyer shall
have received evidence reasonably satisfactory to it of the assumption by Seller
(or such other Person as Seller may designate) of, and the complete and
irrevocable release of the Company from, any and all obligations of the Company
under and in connection with the Real Estate Debt, including, without
limitation, the release of all liens or security interests upon or in any of the
assets of the Company.
7.7 Assumption and Release of Bank Debt. Buyer shall have
received evidence reasonably satisfactory to it of the assumption by Seller (or
such other Person as Seller may designate) of (or the payoff of the Bank Debt in
accordance with Section 9.4), and the complete and irrevocable release of the
Company from, any and all obligations under and in connection with the Bank Debt
including, without limitation, the release of all liens or security interests
upon or in any assets of the Company.
7.8 Termination of Stock Appreciation Rights Plan. Buyer shall
have received evidence reasonably satisfactory to it of the termination of the
Stock Appreciation Rights Plan.
7.9 No Material Adverse Effect. There shall not have occurred
any event or condition which has had, or could reasonably be expected to have, a
Material Adverse Effect.
SECTION 8 - CERTAIN CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
Unless waived by Seller, the obligation of Seller to
consummate the transactions contemplated hereunder is subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
8.1 Deliveries at Closing. Buyer shall have delivered, or
caused to be delivered, to Seller all items required pursuant to Section 9.3.
8.2 Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects at and as of the Closing Date as though such representations
and warranties were made at and as of the Closing Date (except for
representations and warranties (i) made as of a specified date, which shall be
true and correct in all material respects as of the specified date, and (ii)
containing a specific reference to a materiality qualification, which, giving
effect to such specific reference,
34
shall be true and correct in all respects), and Seller shall have received a
certificate dated the Closing Date to that effect, signed by an authorized
officer of Buyer.
8.3 Performance of Covenants. Buyer shall have performed or
complied with all agreements and covenants required by this Agreement to be
performed or complied with by it at or prior to Closing, and Seller shall have
received a certificate dated the Closing Date to that effect signed by an
authorized officer of Buyer.
8.4 Approvals. (a) All waiting periods applicable under the
HSR Act shall have expired or been terminated and (b) any other material
governmental consent, authorization or filing requirement for Seller to
consummate the transactions contemplated by this Agreement shall have been
obtained or otherwise complied with.
8.5 Legal Matters. The Closing shall not violate any order or
decree of any court or governmental body of competent jurisdiction and no
Proceeding shall have been brought or threatened by any Person (other than
Seller or an Affiliate of Seller) which questions the validity or legality of
this Agreement or the transactions contemplated herein.
SECTION 9 - CLOSING
9.1 Time and Place of Closing. The closing of the purchase and
sale of the Stock (the "CLOSING") pursuant to this Agreement shall take place at
the offices of Xxxx Xxxxxxx, P.C, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, commencing at 10:00 A.M., local time on August 28, 2003 or as soon
thereafter as the conditions to the Closing set forth in Section 7 and Section 8
shall have been satisfied or waived, or at such other date, time or place as may
be agreed to by Buyer and Seller (the "CLOSING DATE"). Subject to Section 10,
failure to consummate the Closing shall not result in the termination of this
Agreement or relieve any Person of any obligation hereunder.
9.2 Deliveries at the Closing by Seller. At the Closing, in
addition to the other actions contemplated elsewhere herein, Seller shall
deliver or cause to be delivered to Buyer:
(a) a stock certificate evidencing the Stock, free and
clear of Encumbrances, accompanied by a stock power duly executed in blank and
sufficient to convey to Buyer good and valid title to the Stock together with
all accrued benefits and rights attaching thereto;
(b) an agreement relating to the transfer of the
Subsidiary Interest (the "ASSIGNMENT AGREEMENT"), duly executed by AMCDE;
(c) a counterpart of a lease agreement relating to the
lease of the Real Estate in substantially the form of EXHIBIT B (the "MACUNGIE
LEASE"), duly executed by Seller;
(d) a counterpart of a non-compete agreement in
substantially the form of EXHIBIT C (the "NON-COMPETE AGREEMENT"), duly executed
by Samson Rope Technologies, Inc, a Pennsylvania corporation and an Affiliate of
Seller ("SRTI");
35
(e) a counterpart of a license agreement in
substantially the form of EXHIBIT D (the "SAMSON LICENSE"), duly executed by
SRTI;
(f) a counterpart of a supply agreement in
substantially the form of EXHIBIT E (the "SUPPLY AGREEMENT"), duly executed by
SRTI
(g) a counterpart of a registration rights agreement in
substantially the form of EXHIBIT F (the "REGISTRATION RIGHTS AGREEMENT"), duly
executed by Seller and the participants under the Stock Appreciation Rights
Plan;
(h) a counterpart of the Xxxxxx Employment Agreement,
duly executed by Xxxxxxxxx X. Xxxxxx;
(i) (1) a certificate of the secretary or an assistant
secretary of Seller and the Company certifying as of the Closing Date the
following: (A) copies, certified by the appropriate governmental authority as of
a date not more than 30 days prior to the Closing Date, of the articles of
incorporation of the Company and all amendments thereto, (B) copies of the
bylaws of the Company, as amended,, (C) copies of resolutions of the board of
directors of Seller and the Company authorizing the execution and delivery of
this Agreement and any other agreement, instrument or other document necessary
for Seller to consummate the transactions contemplated hereby and (D) the name,
title and incumbency of, and bearing the signatures of, the officers of Seller
and the Company authorized to execute and deliver this Agreement and any other
agreement, instrument or document necessary for Seller to consummate the
transactions contemplated hereby, (2) a certificate or certificates of the
secretary or an assistant secretary of the Subsidiary attaching the following,
each certified by a notary public: (A) copies of the articles of incorporation
of the Subsidiary and all amendments thereto, (B) copies of the current bylaws
of the Subsidiary, and (C) copies of the power of attorney of the officers of
the Subsidiary authorized to execute any agreement, instrument or other document
necessary to consummate the transactions contemplated hereby, (3) a certificate
or certificates of the secretary or an assistant secretary of AMCPA attaching
the following: (A) copies of resolutions of the board of directors of AMCPA
authorizing the execution and delivery of the Joinders and (B) the name, title
and incumbency of, and bearing the signatures of, the officers of AMCPA
authorized to execute and deliver the Joinders, and (4) a certificate or
certificates of the secretary or an assistant secretary of SRTI attaching the
following: (A) copies of resolutions of the board of directors of SRTI
authorizing the execution and delivery of the Samson License, the Supply
Agreement and the Non-Compete Agreement, and (B) the name, title and incumbency
of, and bearing the signatures of, the officers of SRTI authorized to execute
and deliver the Samson License, the Supply Agreement and the Non-Compete
Agreement;
(j) the certificate required as a condition to Buyer's
obligation to close under Sections 7.2 and 7.3 (the "SELLER CLOSING
CERTIFICATE");
(k) resignations of the directors and certain officers
of the Company and the Subsidiary as requested by Buyer effective as of the
Closing Date;
36
(l) a legal opinion from Drinker Xxxxxx & Xxxxx LLP,
counsel for each of Seller and AMCPA, dated as of the Closing, stating that such
opinion may be relied upon by Buyer's lenders and in form and substance
reasonably satisfactory to Buyer;
(m) a letter from Environmental Resources Management,
Inc. stating that Buyer may rely on its report dated June 2003 and addressed to
Seller and/or the Company as if such reports were addressed to Buyer, in form
and substance reasonably satisfactory to Buyer; and
(n) such other documents and instruments as the Buyer
may reasonably request.
9.3 Deliveries at the Closing by Buyer. At the Closing, in
addition to the other actions contemplated elsewhere herein, Buyer shall
deliver, or shall cause to be delivered, to Seller:
(a) the Purchase Price, by wire transfer in immediately
available funds or by certified or bank cashiers' check payable to the order of
Seller; provided, however, that if Seller has not elected to assume the Bank
Debt, the Purchase Price shall be paid in accordance with Section 9.4;
(b) a counterpart of the Macungie Lease, duly executed
by the Company;
(c) a counterpart of the Non-Compete Agreement, duly
executed by the Company;
(d) a counterpart of the Samson License, duly executed
by the Company;
(e) a counterpart of the Supply Agreement, duly
executed by the Company;
(f) a counterpart of the Xxxxxx Employment Agreement,
duly executed by the Company;
(g) a counterpart of the Registration Rights Agreement,
duly executed by Buyer;
(h) (1) a certificate of the secretary or an assistant
secretary of Buyer certifying as of the Closing Date the following: (A) copies
of resolutions of board of directors of Buyer authorizing the execution and
delivery of this Agreement and any other agreement, instrument or other document
necessary to consummate transactions contemplated hereby and (B) the name, title
and incumbency of, and bearing the signatures of, the officers of Buyer
authorized to execute and deliver this Agreement and any other agreement,
instrument or
37
document necessary to consummate the transactions contemplated hereby; and (2) a
certificate of the secretary or an assistant secretary of the Company certifying
as of the Closing Date the following: (A) copies of resolutions of board of
directors of the Company (as constituted immediately following the Closing)
authorizing the execution and delivery of the Macungie Lease, the Non-Compete
Agreement, the Samson License, the Supply Agreement and the Xxxxxx Employment
Agreement, and (B) the name, title and incumbency of, and bearing the signatures
of, the officers of the Company authorized to execute and deliver the Macungie
Lease, the Non-Compete Agreement, the Samson License, the Supply Agreement and
the Xxxxxx Employment Agreement;
(i) a legal opinion from Xxxx Xxxxxxx, PC, counsel for
Buyer, dated as of the Closing and in form and substance reasonably satisfactory
to Seller;
(j) the certificate required as a condition to Seller's
obligation to close under Sections 8.2 and 8.3 (the "BUYER CLOSING
CERTIFICATE"); and
(k) such other documents and instruments as the Seller
may reasonably request.
9.4 Payment of Bank Debt; Deemed Closing Order. If Seller has
not assumed the Bank Debt at or prior to the Closing, then, at Closing Seller
shall provide written payment instructions to Buyer, together with a payoff
letter from the Lenders (together, the "PAYMENT INSTRUCTIONS"), directing Buyer
to (i) pay a portion of the Purchase Price in an amount equal to the Bank Debt
(such amount, the "PAY-OFF AMOUNT") to such account or accounts of the Lenders
as Seller shall designate in the Payment Instructions, and (ii) pay the balance
of the Purchase Price to such account or accounts of Seller as Seller shall
designate in the Payment Instructions. In such event, the Closing shall be
deemed to have occurred in the following order: (i) the Pay-Off Amount shall be
deemed to have first been paid by Buyer to Seller; (ii) Seller shall be deemed
to have next remitted the Pay-Off Amount to the Lenders in order to satisfy the
Bank Debt; (iii) Buyer shall be deemed to have next paid the balance of the
Purchase Price to Seller; and (iv) Seller shall be deemed to have next delivered
the Stock and caused AMCDE to deliver the Subsidiary Interest to Buyer.
SECTION 10 - TERMINATION AND ABANDONMENT
10.1 Termination. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time prior to the
Closing:
(a) by Buyer or Seller if the Closing has not occurred
by September 30, 2003 (or October 15, 2003, if the conditions set forth in
Sections 7.4(c) and 8.4(b) have not been satisfied by September 30, 2003), but
in no event shall this Agreement be terminated pursuant to this Section 10.1(a)
if the Closing has not occurred as a result of any material breach of any
representation, warranty, agreement or covenant by the terminating party;
(b) by mutual written consent of Buyer and Seller;
(c) by Buyer, if there has been a material breach of
any representation, warranty, agreement or covenant of Seller or the Company
such that Section 7.2
38
or 7.3 will not be satisfied, provided that (i) any such breach has not been
waived by Buyer and (ii) Buyer shall have notified Seller in writing of such
breach and such breach has not been cured by the Company or Seller within 20
days after receipt of such notice (it being understood that in the case of a
breach of any representation or warranty that is so cured, such representation
or warranty shall be deemed to have been true and correct as of the date of this
Agreement);
(d) by Seller, if there has been a material breach of
any representation, warranty, agreement or covenant of Buyer such that Section
8.2 and 8.3 will not be satisfied, provided that (i) any such breach has not
been waived by Seller and (ii) Seller shall have notified Buyer in writing of
such breach and such breach has not been cured by the Buyer within 20 days after
receipt of such notice (it being understood that in the case of a breach of any
representation or warranty that is so cured, such representation or warranty
shall be deemed to have been true and correct as of the date of this Agreement).
10.2 Procedure for Termination. A party terminating this
Agreement pursuant to Section 10.1 shall give written notice thereof to each
other party hereto, whereupon this Agreement (other than this Section 10.2 and
Section 12.2 and Section 14 (excluding Section 14.3)) shall terminate and the
transactions contemplated herein shall be abandoned without further action by
any party and there shall be no liability on the part of any party; provided,
however, that if such termination is by Buyer or Seller pursuant to Section
10.1(c) or 10.1(d) and results from (i) the deliberate failure of any party to
fulfill a condition of performance of the obligations of the other party under
this Agreement, (ii) the failure of any party to perform a material covenant
under this Agreement, or (iii) the material breach by any party of any
representation or warranty contained in this Agreement, and, at the time of
termination the terminating party was not in breach of its obligations under
this Agreement such that the non-terminating party would have been entitled to
terminate this Agreement, such non-terminating party shall be liable for any
damages incurred or suffered by the other party as a result of such failure or
breach; and provided, further, that if Closing does not occur, no party may
bring any legal action, suit or Proceeding relating to any claimed breach or
violation of this Agreement, excluding a breach of Section 6.7 hereof, unless
such party has first terminated this Agreement in accordance with this Section
10.
SECTION 11 - INDEMNIFICATION
11.1 Indemnity.
(a) Subject to the limitations set forth in this Section 11, Seller shall
indemnify and hold harmless Buyer and its officers, directors, employees,
stockholders, representatives, agents, Affiliates, successors and assigns, from
and against any Loss or Losses sustained or required to be paid by any of such
indemnified parties resulting from (i) any misrepresentation or breach of any
representation or warranty made by Seller in this Agreement, the Seller Closing
Certificate, (ii) any breach of or failure to perform any covenant, agreement or
obligation of Seller (or, with respect to the period ending on the Closing Date,
the Company) contained in this Agreement or of AMCDE pursuant to the Assignment
Agreement, (iii) any liability of the Company or the Subsidiary for unpaid
federal or state income Taxes or unpaid foreign income Taxes relating to periods
prior to the Closing Date, (iv) any liability of the Company or the Subsidiary
under or in connection with (a) the Stock Appreciation Rights Plan
39
(for the avoidance of doubt, other than in connection with the matter listed as
Item (a)(iii) in Section 13(b) of the Disclosure Schedule), including without
limitation withholding taxes, (b) the Real Estate Debt, (c) the Bank Debt, (d)
any employee change-in-control payments arising as a result of the transactions
contemplated hereby, (e) the litigation described in Section 4.11(8) of the
Disclosure Schedule; provided that Seller's indemnification obligation with
respect to this clause (e) shall be limited to one-half of all Losses in excess
of $500,000 incurred by the Company and the Subsidiary as a result of such
litigation and (f) any liability arising due to the failure of the Seller or its
Affiliates to file any required Form 5500 for their fully insured medical plan.
(b) Subject to the limitations set forth in this
Section 11, Buyer shall indemnify and hold harmless Seller and its officers,
directors, employees, stockholders, members, representatives, agents, successors
and assigns from and against any Loss or Losses sustained or required to be paid
by any of such indemnified persons resulting from (i) any misrepresentation or
breach of any representation or warranty made by Buyer in this Agreement or the
Buyer Closing Certificate, or (ii) any breach of any covenant, agreement or
obligation of Buyer contained in this Agreement.
(c) In the event that any indemnified party is entitled
to indemnification with respect to any Loss or potential Loss arising from any
Proceeding, judicial or administrative, instituted by any third party (any such
third-party Proceeding being referred to as a "THIRD-PARTY CLAIM"), the
indemnified party shall give the indemnifying party prompt notice thereof
together with copies of all notices and documents (including court papers) in
the possession of the indemnified party relating to such Third-Party Claim. Any
failure or delay on the part of the indemnified party to give such notice shall
not affect whether an indemnifying party is liable hereunder except and to the
extent that the indemnifying party is prejudiced thereby. The indemnifying party
shall be entitled to control, contest and defend such Third-Party Claim;
provided that the indemnifying party provides evidence reasonably satisfactory
to the indemnified party that the indemnifying party has (and will continue to
have) adequate financial resources to pay the costs associated with defending
such Third-Party Claim. Within fifteen (15) days following the receipt of notice
by the indemnifying party of any Third-Party Claim and such additional
documentation or information relating to such Third-Party Claim in the
possession of the indemnified party that the indemnifying party requests, the
indemnifying party shall provide notice to the indemnified party of its election
to assume control of the defense of such Third- Party Claim in accordance with
the provisions of this Section 11.1. The indemnifying party shall conduct the
defense of such claim through counsel reasonably acceptable to the indemnified
party. So long as the indemnifying party is conducting the defense of the
Third-Party Claim in accordance with this Section 11.1, the indemnified party
shall be entitled, at its own cost and expense (which expense shall not
constitute a Loss unless counsel for the indemnified party advises in writing
that there is a conflict of interest, and only to the extent that such expenses
are reasonable) to participate in, but not control, such contest and defense and
to be represented by attorneys of its or their own choosing. In the event that
the indemnifying party (A) elects not to control, contest and defend such
Third-Party Claim, or (B) fails to notify the indemnified party within the
required time period of its election as provided in this Section 11.1, the
indemnified party may control, contest and defend such Third-Party Claim at the
cost and expense of the indemnifying party, provided that the indemnified party
shall defend the Third-Party Claim in good faith; and provided, further, that
the indemnifying party
40
may assume within a reasonable period of time under the circumstances its right
to control, contest and defend such Third-Party Claim upon providing written
notice thereof to the indemnified party, and thereafter the indemnifying party
shall not be liable for the fees and expenses of the indemnified party's counsel
(except for such reasonable fees and expenses as are incurred in the transition
of such defense to the indemnifying party). If the indemnifying party assumes
the defense of any Third-Party Claim, (a) no compromise or settlement of such
claims may be effected by the indemnifying party without the indemnified party's
consent (which consent shall not be unreasonably withheld) unless (i) there is
no finding or admission of any violation of Law and no effect on any other
claims that may be made against the indemnified party and (ii) the sole relief
provided is monetary damages that are paid in full by the indemnifying party;
and (b) the indemnified party will have no liability with respect to any
compromise or settlement of such claims effected without its consent.
Notwithstanding anything in this Section 11.1(c) to the contrary, with respect
to the Third-Party Claim specified in Section 11.1(a)(iv)(e), (1) Seller shall
not be permitted to control, contest and defend such claim, (2) Seller shall be
entitled, at its own cost and expense, to participate in the contest and defense
of such claim and to be represented by attorneys of its own choosing, and (3) no
compromise or settlement of such claim may be effected by the indemnified party
without Seller's consent (which consent shall not be unreasonably withheld)
unless such compromise or settlement results in Losses to the Company and the
Subsidiary of no more than $500,000. Each party shall cooperate and cause their
respective Affiliates to cooperate in the defense or prosecution of any
Third-Party Claim and shall furnish or cause to be furnished such records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials or appeals, as may be reasonably requested in connection
therewith.
(d) Seller's aggregate liability for all claims under
Section 11(a)(i) (other than claims with respect to any breach of any
representation or warranty contained in Sections 3.4, 4.3, 4.10, 4.13(h) or 4.24
(the "EXCLUDED SECTIONS")) shall not exceed a dollar amount equal to $30,000,000
(the "CAP"). Seller shall not be liable for any Losses arising under Section
11.1(a)(i) unless the aggregate amount of all Losses (other than Losses in
respect of any breach of any representation or warranty contained in the
Excluded Sections) for which Buyer is otherwise entitled to indemnification
pursuant to Section 11(a)(i) exceeds $1,000,000, in which case Seller shall be
liable only for Losses in excess of $1,000,000, subject to the limitations set
forth in the preceding sentence.
(e) Notwithstanding anything herein to the contrary,
any Loss otherwise indemnifiable hereunder shall be reduced by any amount
actually received in connection therewith under any such insurance or other
contract providing for insurance coverage or indemnification.
(f) If an indemnifying party makes any payment under
this Section 11 in respect of any Losses, such indemnifying party shall be
subrogated, to the extent of such payment, to the rights of the indemnified
party against any third party with respect to such Losses; provided, however,
that such indemnifying party shall not have any rights of subrogation with
respect to any other party hereto or any of their respective Affiliates or their
Affiliates' respective officers, directors, agents or employees.
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(g) Buyer and Seller agree to take and cause their
Affiliates (including, in the case of Buyer after the Closing has occurred, the
Company and the Subsidiary) to take commercially reasonable steps to mitigate
Losses upon the executive officers of Buyer, the Company or Seller, as
applicable, becoming aware of any event which would reasonably be expected to,
or does, give rise to any rights under this Section 11, including incurring
costs only to the extent commercially reasonable to remedy the breach which
gives rise to the Loss.
(h) No claim for indemnity for a breach of a particular
representation, warranty or covenant shall be made after the Closing if (i) such
claim is based on any fact, circumstance, occurrence or event occurring or
arising prior to Closing (whether or not also occurring or arising prior to the
date of this Agreement) and (ii) such fact, circumstance, occurrence or event
was disclosed in writing pursuant to the Seller Closing Certificate or the Buyer
Closing Certificate by the breaching party to the non-breaching party after the
date hereof and prior to or at the Closing, which writing described such fact,
circumstance, occurrence or event in reasonable detail.
11.2 Duration. The obligations of a party to indemnify and
hold harmless an indemnified party (i) pursuant to Sections 11.1(a)(i) and
11.1(b)(i) shall terminate when the applicable representation or warranty
terminates pursuant to Section 14.3, (ii) pursuant to Sections 11.1(a)(iii) and
11.1(a)(iv) shall terminate when any claim based thereon shall have been barred
by the relevant statute of limitations, and (iii) pursuant to Sections
11.1(a)(ii) and 11.1(b)(ii) shall not terminate but shall survive indefinitely;
provided, however, that as to clause (i) of this sentence, if a claim has been
asserted in accordance with the notice provisions of this Section 11 prior to
the termination of the applicable representation or warranty, but is unresolved
at the conclusion of such period, then such obligations to indemnify and hold
harmless shall continue beyond the termination of such period with respect to
such unresolved claim.
11.3 Exclusive Remedy. Buyer and Seller acknowledge and agree
that the foregoing indemnification provisions in this Section 11 shall be the
sole and exclusive rights and remedy of Buyer, Seller and the Company with
respect to the transactions contemplated by this Agreement including, without
limitation, with respect to (i) any misrepresentation, breach or default of or
under any of the representations, warranties, covenants and agreements contained
in this Agreement or (ii) any failure duly to perform or observe any term,
provision, covenant or agreement contained in this Agreement; provided, however,
that nothing set forth herein shall be deemed to limit any party's rights or
remedies in the event that the other party has committed fraud in connection
therewith; and provided further that nothing set forth herein shall be deemed to
limit the right of Buyer to seek equitable relief pursuant to Section 12.4(f).
Without limiting the generality of the preceding sentence, (i) no legal action
sounding in contribution, tort or strict liability may be maintained by any
party hereto, or any of their respective officers, directors, employees,
stockholders, representatives, agents, successors or assigns, against any other
party hereto with respect to any matter that is the subject of this Section 11
and (ii) Buyer, for itself and its officers, directors, employees, stockholders,
representatives, agents, successors and assigns, hereby waives any and all
statutory rights of contribution or indemnification that any of them might
otherwise be entitled to under any federal, state or local law, including,
without limitation, any legal action pursuant to any Environmental Law or any
similar rules of law embodied in the common law. . Notwithstanding anything to
the contrary contained in this
42
Agreement, Buyer and Seller acknowledge and agree that none of the
indemnification provisions in this Section 11 shall be applicable until after
the Closing.
SECTION 12 - CERTAIN ADDITIONAL COVENANTS
12.1 Tax Matters.
(a) Seller, AMCDE, AMCPA and their respective
shareholders shall be responsible for all federal, foreign, state and local
Taxes imposed with respect to the operations of Company (including any US or
foreign income tax returns due for Subsidiary) for any prior taxable years and
for the taxable year or period that begins before and ends on the Closing Date,
including any Taxes (including Transfer Taxes) imposed with respect to the
transactions contemplated herby, and shall prepare all Tax Returns required to
report and pay all such Taxes.
(b) Buyer shall be responsible for preparing and filing
any foreign Tax Return required for Subsidiary for the taxable year or period
beginning before and ending after the Closing Date. Taxes due on such Return
shall be allocated (i) to Seller for the period up to and including the Closing
Date and (ii) to Buyer for the period subsequent to the Closing Date. For
purposes of this Section 12(b), Taxes for the period up to and including the
Closing Date shall be determined on the basis of an interim closing of the books
as of the end of the Closing Date; provided, however, that in the case of any
Tax not based on income or receipts, such Seller's Taxes shall be equal to the
amount of such Taxes for the taxable year multiplied by a fraction, the
numerator of which shall be the number of dates from the beginning of the
taxable year through the Closing Date, and the denominator of which shall be the
number of days in the taxable year. Such Tax Return shall be prepared in
accordance with prior practice, and Buyer shall deliver a copy of the Tax Return
to Seller for its review and approval, which may not be unreasonably withheld,
not less than thirty (30) days prior to the date on which such Tax Return is due
to be filed. Seller shall pay to Buyer its share of any Taxes due within five
(5) days prior to their due date.
(c) The parties agree to use their respective
reasonable efforts to determine the amount of and the allocation of the total
consideration (Purchase Price and liabilities of the Company), as well as any
adjusted consideration after the Closing Date, to meet the requirements of IRC
Section 1060, which shall be allocated in the order of working capital, tangible
assets and intangible assets (including the Non-Compete Agreement). Each party
agrees to prepare and submit to the other party a draft copy of the Form 8594
required by IRC Section 1060 that it proposes to file at least 45 days before
the proposed filed date thereof and to jointly discuss and attempt to agree, in
good faith, with respect to the contents thereof. Each party shall provide to
the other party the final version of such Form and information after filing. Any
agreed determination and allocation of the total consideration shall be
conclusive and binding for all purposes, and each party will file all forms,
returns and other documents in a manner consistent with such allocation.
(d) After the Closing, Buyer and Seller shall furnish,
or cause to be furnished, to each other, upon request, as promptly as reasonably
practicable, such information and assistance relating to the Company (including
access to books and records) as is reasonably
43
necessary for the filing of all tax returns, the making of any election related
to Taxes, the preparation for any audit by any taxing authority and the
prosecution or defense of any claim, suit or proceeding relating to any tax
return. Without limiting the foregoing, Buyer shall furnish, or cause the
Company to furnish, to Seller within 90 days after the Closing Date such
information as is reasonably necessary for Seller to prepare and file tax
returns relating to periods ending on or prior to the Closing Date. Such
information shall be prepared in a manner consistent with the Company's past
practice.
(e) Each party hereto agrees (on such party's behalf
and on behalf of all employees, representatives or other agents of such party)
that, notwithstanding anything to the contrary, each other party hereto (and
each employee, representative or other agent of such other party) may disclose
to any and all persons, without limitation of any kind, the purported or claimed
Federal income tax treatment and tax structure of the transactions contemplated
herein and all materials of any kind (including opinions or other tax analyses)
that are provided to such other party relating to such tax treatment and tax
structure.
(f) If on the Closing Date, AMCPA is a qualified S
corporation and each of AMCDE, Seller and Company is a qualified subchapter S
subsidiary, neither Buyer, the Company, nor any of their Affiliates shall make
any election under Code Section 338 with respect to the transaction contemplated
by this Agreement. If, however, on the Closing Date (and without consideration
of the sale of Company's shares), one of the above conditions is not met,
thereby not affording to Buyer and Company the tax consequences outlined in IRC
Regulation Section 1.1361-5(b)(3), Example 9, Seller agrees to join with Buyer
in an election under IRC Section 338(h)(10) and the regulations thereunder in
order to provide a post-closing tax result to Buyer and Company identical to
that in Example 9.
(g) It is the intention of the parties that this
transaction is treated for federal and state tax purposes as an asset
acquisition and that certain of the representations and warranties contained in
Section 4.10 of the Disclosure Schedule are being made in furtherance of such
intended tax treatment.
(h) Notwithstanding anything to the contrary contained
herein, Buyer and Seller shall each be responsible for one-half of all of the
Transfer Taxes, together with any related fees, penalties and interest, incurred
in connection with or as a result of this transaction, this Agreement and all of
the transactions contemplated hereby.
44
12.2 Employee Benefits Matters.
(a) As of the Closing, the Company shall cease to be a
participating employer in all Plans sponsored by Seller or any of its
Affiliates.
(b)
(i) Subject to the conditions of 12.2 (b)(v),
Buyer shall cause the Company to become a participating employer effective as of
the Closing in a defined contribution savings plan qualified under sections
401(a) and 401(k) of the Code which is maintained by Buyer (the "BUYER'S SAVINGS
PLAN") a defined contribution plan qualified under Section 401(a) and 401(k) of
the Code. Upon compliance with the requirements of Section 12.2 (b)(v), Seller
shall direct the Trustee of the American Manufacturing Corporation 401(k) Plan
("AMC SAVINGS PLAN") a defined contribution plan qualified under Section 401(a)
and 401(k) of the Code to transfer to the Trust under the Buyer's Savings Plan
the account balance of each participant in the AMC Savings Plan who remains an
employee of the Company after the Closing Date and who are eligible to
participate in Buyer's Savings Plan (the "COMPANY PARTICIPANTS") and said
Trustee shall simultaneously transfer cash (or cash equivalents if determined
acceptable by Buyer's Savings Plan), equal to the liability for transferred
account balances, valued as of the valuation date under the AMC Savings Plan
coincident with or closest preceding to the date of the transfer; provided, that
any outstanding non-defaulted participant loans to Company Participants shall be
transferred in kind. Buyer and the Company shall cause the Buyer Savings Plan to
continue to administer the outstanding non-defaulted participant loans which are
transferred in kind in accordance with the amortization schedules to which they
are subject as of date of transfer. All Company participants, account balances
and loan provisions shall be subject to the rules, regulations, provisions and
procedures of the Buyer's Savings Plan effective as of the Closing
notwithstanding anything to the contrary herein. The transfer described herein
shall be pursuant to Internal Revenue Code ss. 414(1).
(ii) Except for any outstanding non-defaulted
loans, which will be transferred in kind, the transfer described in 12.2 (b)(i)
will be accomplished by the AMC Savings Plan converting affective Participants'
account balances into cash and wire transferring the aggregate cash amount to
the Buyer's Savings Plan. Upon receipt of the wire transfer, the cash will be
reinvested in accordance with procedures established by the administrator of the
Buyer's Savings Plan in accordance with its terms. Immediately after the
transfer, each Participant will have a balance in the Buyer's Savings Plan equal
to the account balance such Participant had in the AMC Savings Plan immediately
prior to the transfer. Each such Participant's total account balance in the
Buyer's Savings Plan immediately after the transfer will be 100% vested and
nonforfeitable.
(iii) In consideration of the transfer
contemplated in 12.2 (b)(i) hereunder and pending the transfer of account
balances to the Buyer's Savings Plan, the AMC Savings Plan will not default any
outstanding loan of any Participant whose account balance is expected to be
transferred to the Buyer's Savings Plan pursuant to 12.2 (b)(i).
45
(iv) The terms and conditions of Section 12.2
(b)(i)-(v) shall bind Seller and Buyer and their successors and their Savings
Plans and shall operate as if it were fully set forth within each of the Savings
Plans.
(v) The Company shall provide Seller with
written notice of the name and address of the Trustee and will exchange copies
of the most recent IRS favorable determination letters for each Savings Plan.
The Company and Seller shall cooperate in the filing by Seller of any IRS Forms
5310A required by the transfer of assets and liabilities described in this
Agreement. Anything contained in this Agreement to the contrary notwithstanding,
the transfer of assets and liabilities described in this Agreement shall not
take place until the 31st day following the filing of any required Forms 5310A.
In addition, the Company and Seller shall cooperate in (i) making all other
filings required under the Code or ERISA and any applicable securities laws,
(ii) implementing all appropriate communications with the participants, (iii)
transferring appropriate records, and (iv) taking all such other actions as may
be necessary and appropriate to implement the provisions of this Section 12.2 in
a timely manner. Each party and Savings Plan shall bear its own costs and
expenses in connection with administration and implementation of the transfer
and procedures in 12.2 (b)(i)(v).
(c) For the period from Closing through December 31,
2003, Buyer shall, or shall cause the Company to, continue to maintain the
policies providing the insured Company health plan benefits that are in effect
for such employees immediately prior to the Closing.
(d) Seller shall timely file, following Closing, any
notices or filings required to be made with the Pension Benefit Guarantee
Corporation.
46
12.3 Letters of Credit. Buyer shall, prior to or
contemporaneously with the Closing, provide replacement letters of credit to the
landlords under the leases listed in Section 4.14(c) of the Disclosure Schedule
(the "REPLACEMENT LETTERS OF CREDIT"). The Replacement Letters of Credit shall
not exceed the amounts set forth in Section 4.14(c) of the Disclosure Schedule
and shall contain such terms and conditions as are required by the terms of such
leases, and shall be issued by such financial institutions as are reasonably
acceptable to the landlords under such leases and Buyer's lenders.
12.4 General Confidentiality; Non-Competition,
Non-Solicitation; Non-Disparagement. 12.5 For the purposes of this Section
12.4, all references to Seller shall include AMCPA, and its Affiliates,
successors and assigns (other than SRTI and its successors and assigns).
(a) Seller acknowledges that Buyer would not enter into
this Agreement without the following assurances related to the confidential and
proprietary information with respect to the business and operations of the
Company and the Subsidiary and, accordingly, Seller agrees that Seller shall
not, without the prior written consent of Buyer, disclose, directly or
indirectly, to any Person or use, whether or not for Seller's own benefit, any
confidential or proprietary information with respect to the Company, the
Subsidiary or the Business, including (i) trade secrets, confidential or
proprietary designs, formulae, drawings, diagrams, techniques, research and
development, specifications, data, know-how, formats, marketing plans, business
plans, budgets, strategies, forecasts and client data; (ii) confidential or
proprietary information relating to Products; (iii) the names of customers and
contacts, the names of its vendors and suppliers, the cost of its materials and
labor, the prices obtained for services sold (including the methods used in
price determination, manufacturing and sales costs), lists or other written
records used in the Business, compensation paid to employees and consultants and
other terms of employment, confidential or proprietary production or operation
techniques or any other confidential or proprietary information of, about or
pertaining to the Business, and any other confidential or proprietary
information and material relating to any customer, vendor, licensor, licensee,
or other party transacting business with the Company or the Subsidiary as of the
date hereof; (iv) all confidential and proprietary records, files, memoranda,
reports, price lists, drawings, plans, sketches and other written and graphic
records, documents, equipment, and the like, relating to the Business as it is
currently conducted; and (v) any confidential or proprietary information or
trade secrets relating to the business or affairs of Buyer or any of its
Affiliates which Seller may acquire or develop in connection with or as a result
of the performance of the terms and conditions of this Agreement, excepting only
such information that (A) is requested or required to be disclosed by subpoena,
court order or other similar process or otherwise required by Law, provided that
Seller shall have used its reasonable best efforts to notify Buyer in time to
afford Buyer an opportunity to contest such process or order, or (B) as is
already known to the public or which may become known to the public without any
fault of Seller.
(b) Seller acknowledges that the agreements and
covenants contained in this Section 12.4 are essential to protect the value of
the Business being acquired by Buyer. Therefore, Seller agrees that during the
period commencing on the Closing Date and
47
ending on the fifth anniversary of the Closing Date (such period is hereinafter
referred to as the "RESTRICTED PERIOD"), Seller shall not, anywhere in the
United States of America, Mexico, or Canada, participate or engage, for itself
or through or on behalf of or in conjunction with any Person, whether as an
agent, consultant, shareholder, director, officer, member, manager, partner,
joint venturer, investor or in any other capacity, in the Non-Compete Activities
(as defined below); provided, however, that the foregoing shall not prohibit the
ownership by Seller of equity securities of a public company in an amount not to
exceed 2% of the issued and outstanding shares of such company. For purposes of
this Agreement, the "NON-COMPETE ACTIVITIES" means the Business.
(c) During such Restricted Period, Seller agrees that
it will not at any time or for any reason (i) solicit or divert any business or
clients or customers away from the Company or the Subsidiary; (ii) induce any
customers, clients, suppliers, agents or other Persons under contract or
otherwise associated or doing business with the Company or the Subsidiary, to
reduce or alter any such association or business with the Company or the
Subsidiary; (iii) hire any Person employed by the Company or the Subsidiary or
any Person who leaves the employ of the Company or the Subsidiary after the date
hereof (other than any such Person whose employment with the Company or the
Subsidiary has been terminated by the Company or the Subsidiary); and (iv)
solicit any person in the employment of the Company or the Subsidiary to (A)
terminate such employment, and/or (B) accept employment, or enter into any
consulting arrangement, with any Person other than Buyer or any of its
Affiliates.
(d) Except as necessary to enforce its rights
hereunder, Seller agrees not to (i) make or cause to be made, directly or
indirectly, any disparaging or derogatory statements which later become public
concerning the Company, the Subsidiary or their respective businesses, services,
reputations, or prospects, or its past or present officers, directors,
employees, attorneys, and agents or (ii) intentionally do or say anything to
damage any of the business, supplier, or customer relationships of the Company
or the Subsidiary nor in any way, directly or indirectly, assist any Person in
inducing or otherwise counseling, advising, encouraging, or soliciting any
Person to terminate or in any way diminish its relationship with the Company or
the Subsidiary.
(e) Except as necessary to enforce its rights hereunder
or otherwise in connection with its commercial activities or in the ordinary
course of its business, Seller agrees not to make or cause to be made, directly
or indirectly, any disparaging or derogatory statements which later become
public concerning Buyer or its Affiliates (other than the Company or the
Subsidiary) or their respective businesses, services, reputations, or prospects,
or its past or present officers, directors, employees, attorneys, and agents.
(f) Seller agrees that a monetary remedy for a breach
of the agreements set forth in Section 12.4 hereof will be inadequate and
impracticable and further agrees that such a breach would cause Buyer and its
Affiliates irreparable harm, and that Buyer and its Affiliates shall be entitled
to temporary and permanent injunctive relief without the necessity of proving
actual damages. In the event of such a breach, Seller agrees that Buyer and its
Affiliates shall be entitled to such injunctive relief, including temporary
restraining orders, preliminary injunctions and permanent injunctions, as a
court of competent jurisdiction shall determine.
48
(g) If Seller breaches the covenant set forth in
Section 12.4(b), the running of the Restricted Period described therein shall be
tolled for so long as such breach continues. If any provision of this Section
12.4 is invalid in part, it shall be curtailed, as to time, location or scope,
to the minimum extent required for its validity under the laws of the United
States or any applicable law and shall be binding and enforceable with respect
to Seller as so curtailed. In addition, if any party brings an action to enforce
Section 12.4 hereof or to obtain damages for a breach thereof, the prevailing
party in such action shall be entitled to recover from the non-prevailing party
all attorney's fees and expenses incurred by the prevailing party in such
action.
(h) If any provision of this Section 12.4 is
adjudicated to be invalid or unenforceable, the invalid or unenforceable
provisions shall be deemed amended (with respect only to the jurisdiction in
which such adjudication is made) in such manner as to render them enforceable
and to effectuate as nearly as possible the original intentions and agreement of
the parties.
12.5 Insurance Credits. Seller shall promptly cause to be paid
to the Company any credits or refunds related to prepaid premiums received by
Seller or its Affiliates in connection with the removal of the Company from the
insurance policies of Seller or its Affiliates.
12.6 Workers' Compensation Reimbursements. To the extent
Seller or any of its Affiliates pay any amounts in respect of deductibles
relating to the Company's workers' compensation insurance, the Company shall
reimburse Seller for such payments up to the amount of the accrual reserve for
workers' compensation claims on the Company's July 31, 2003 balance sheet.
SECTION 13 - DEFINITIONS
Whenever used in this Agreement, the following terms and
phrases shall have the following respective meanings:
"AFFILIATE" means, with respect to any Person, (i) each Person
that, directly or indirectly, owns or controls such Person, and (ii) each Person
that controls, is controlled by or is under common control with such Person or
any Affiliate of such Person. For the purpose of this definition, "control" of a
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise.
"BANK DEBT" means the outstanding obligations of the Company
under or in connection with that certain Credit Agreement dated December 20,
2000 by and among the Company, M&K Industries, Inc., the lending institutions
which are parties thereto and First Union National Bank, as agent, as amended by
the First Amendment to Credit and Security Agreement dated March 23, 2001.
"BUSINESS" means the business of the Company and the
Subsidiary as currently conducted, including, but not limited to, the design,
manufacture, marketing and sale of products
49
for the cordage, home storage and organization, workshop accessories, power tool
accessories, security screen doors and window guards, and ornamental fencing
markets.
"CONTRACT" means any contract, undertaking, agreement,
arrangement, commitment, indemnity, indenture, instrument, lease or
understanding, including any and all amendments, supplements, and modifications
thereto, to which the Company or the Subsidiary is legally bound.
"ENCUMBRANCE" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof and the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction and including any lien or charge
arising by statute or other laws, which secures the payment of a debt
(including, without limitation, any Tax) or the performance of an obligation.
"ENVIRONMENTAL CLAIM" shall mean any Proceeding or written
notice by any Person alleging potential liability arising out of, based on, or
resulting from (i) the release or disposal into, or the presence in the
environment, including, without limitation, the indoor environment, of any
Hazardous Materials by the Company or the Subsidiary at any location owned or
leased by the Company or the Subsidiary, or (ii) circumstances forming the basis
of any violation, or alleged violation, of any Environmental Laws by the Company
or the Subsidiary.
"ENVIRONMENTAL LAWS" shall mean all federal, state, local or
foreign laws, statutes, regulations, orders, ordinances, judgments or decrees
(i) related to releases or threatened releases of any Hazardous Materials in
soil, surface water, groundwater or air; or (ii) governing the use, treatment,
storage, disposal, transport, or handling of Hazardous Materials. Such
Environmental Laws shall include, but are not limited to, the Resource
Conservation and Recovery Act and the Comprehensive Environmental Response,
Compensation and Liability Act.
"ERISA " means the Employee Retirement Income Security Act of
1974, as amended, or a successor law, and the regulations and rules issued
pursuant to that act or to any successor law.
"GAAP" means generally accepted accounting principles in the
United States as in effect on the date hereof, applied on a basis that is
consistent with the past practices of the Company in connection with the
preparation of the Financial Statements.
"GOVERNMENTAL ENTITY" shall mean any domestic, international,
foreign, national, multinational, territorial, regional, state or local
governmental authority, quasi-governmental authority, instrumentality, court,
commission or tribunal or any regulatory, administrative or other agency, or any
political or other subdivision, department or branch of any of the foregoing.
"HAZARDOUS MATERIALS" shall mean any pollutant, toxic
substance, contaminant, hazardous waste, hazardous substance or extremely
hazardous material regulated under any
50
Environmental Laws, including, without limitation, petroleum or any refined
product or fraction thereof, asbestos, or polychlorinated biphenyls.
"INTELLECTUAL PROPERTY" shall mean all of the following used
in the Business: (i) United States and foreign trademarks, service marks, and
trademark and service xxxx registrations and applications, trade names, assumed
names, logos, designs indicating source and slogans, and all goodwill related to
the foregoing (collectively, "TRADEMARKS"); (ii) applications for patent and
patents pertaining to inventions, improvements, know-how, formula methodology,
research and development, business methods, processes, technology and Software
in any jurisdiction, including re-issues, continuations, divisions,
continuations-in-part, renewals or extensions (collectively, the "PATENTS");
(iii) trade secrets, including confidential information and the right in any
jurisdiction to limit the use or disclosure thereof; (iv) copyrights in
writings, designs, Software, mask works or other works, applications or
registrations in any jurisdiction for the foregoing, other original works of
authorship and all moral rights related thereto; (v) database rights; (vi)
Internet web sites, web pages, domain names and applications and registrations
pertaining thereto (the "DOMAIN NAMES") and all intellectual property used in
connection with or contained in all versions of Seller's web sites; (vii) all
rights under agreements relating to the foregoing; (viii) books and records
pertaining to the foregoing; and (ix) claims or causes of action arising out of
or related to past, present or future infringement or misappropriation of the
foregoing.
"XXXXXX EMPLOYMENT AGREEMENT" means the employment agreement
to be entered into between Company and Xxxxxxxxx X. Xxxxxx in the form attached
hereto as EXHIBIT A.
"KNOWLEDGE" or "KNOWLEDGE OF SELLER" means the actual
knowledge, without duty of inquiry, of Xxxxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx,
Xxxxxx X. Xxxx, Xxxx X. Xxxxxxxxx, Xx. or Xxxxxxx X. Xxxxx regarding a
particular matter.
"LAW" means any law (including without limitation the Foreign
Corrupt Practices Act), statute, regulation (including, without limitation,
zoning, land use and similar laws and regulations), Permit, license,
certificate, judgment, order, award or other decision or requirement of any
arbitrator, court, government or governmental agency or instrumentality
(domestic or foreign).
"LENDERS" means the financial institutions that are parties
to the Credit Agreement referred to in the definition of Bank Debt.
"LOSS" or "LOSSES" means all damages, losses, liabilities,
fines, penalties, costs and expenses (including settlement costs, court costs
and any reasonable legal expenses incurred in connection with defending any
actions but excluding indirect, punitive, special or exemplary damages and
unforeseen or other consequential damages) less the net Tax benefit, if any, to
be realized by the Person suffering such Loss (net of any Tax liability
resulting from the indemnification payment hereunder with respect to such Loss).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
the operations, properties or condition (financial or otherwise) of the Company
and the Subsidiary taken as a whole, except any such effect resulting from or
arising in connection with (i) changes in
51
economic, regulatory or political conditions generally, including acts of war or
terrorism, or (ii) economic or other conditions affecting the industry in which
the Company competes as a whole, including, without limitation, fluctuating
conditions resulting from the cyclicality of such industry, provided further,
that for purposes of determining whether any misrepresentations or breaches of
any warranty, covenant or other obligation under this Agreement has a Material
Adverse Effect, the effect of such misrepresentations and breaches shall be
aggregated.
"PERSON" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, Governmental
Entity, a business or other trust, a joint venture, any other business entity or
an unincorporated organization.
"REAL ESTATE DEBT" means all obligations of the Company under
or in connection with (i) the Variable Rate Demand Bonds, Series 1997, issued by
Seller (and subsequently assumed by the Company) in the original principal
amount of $9,000,000, and (ii) the Variable Rate Demand Revenue Bonds, Series
1997 (American Manufacturing Company, Inc. Project), issued by the Lehigh County
Industrial Development Authority in the original principal amount of $1,000,000,
in each case, to finance a portion of the costs of acquiring and constructing
the Real Estate, and including, in each case, the Company's obligations with
respect to the irrevocable, direct-pay letters of credit of Wachovia Bank,
National Association, securing the payment of such bonds.
"SOFTWARE" means any and all (i) computer programs, including
any and all software implementations of algorithms, models and methodologies,
whether in source code or object code form, and all off-the-shelf or
"shrink-wrap" software, (ii) databases, compilations, and any other electronic
data files, including any and all collections of data, whether machine readable
or otherwise, (iii) descriptions, flow-charts, technical and functional
specifications, and other work product used to design, plan, organize, develop,
test, troubleshoot and maintain any of the foregoing, (iv) without limitation to
the foregoing, the software technology supporting any functionality contained on
Seller's Internet site(s), and (v) all documentation, including technical,
end-user, training and troubleshooting manuals and materials, relating to any of
the foregoing.
"STOCK APPRECIATION RIGHTS PLAN" means the First Amended and
Restated Lehigh Consumer Products Corporation 1999 Phantom Stock and Stock
Appreciation Rights Plan and any awards of rights made thereunder or award
agreements entered into pursuant thereto.
"TANGIBLE NET WORTH" shall mean the consolidated tangible net
worth of the Company and the Subsidiary determined in accordance with GAAP, as
of the Closing Date immediately prior to the Closing, and after giving effect to
the adjustments set forth on Section 13(b) of the Disclosure Schedule, which
shall be calculated after the Closing Date.
"TAX" or "TAXES" means all federal, state local or foreign
taxes of any kind, including, without limitation, all net income, gross
receipts, ad valorem, value added, transfer, gains, franchise, profits,
inventory, net worth, capital stock, assets, sales, use, license, estimated,
withholding, payroll, premium, capital employment, social security, workers
compensation, unemployment, excise, severance, stamp, occupation and property
taxes, together with any
52
interest and penalties, fines, additions to tax or additional amounts imposed by
any taxing authority.
"TAX RETURN" means any return, report, declaration, statement,
extension, form or other documents or information filed with or submitted to, or
required to be filed with or submitted to, any governmental body in connection
with the determination, assessment, collection or payment of any Tax (including
all filings with respect to employment-related Taxes).
"TRANSFER TAXES" shall mean all sales (including bulk sales),
use, transfer, recording, ad valorem, privilege, documentary, gains, gross
receipts, registration, conveyance, excise, license, stamp, duties or similar
Taxes and fees.
SECTION 14 - MISCELLANEOUS
14.1 Construction. Within this Agreement and all other
documents required to consummate the transactions contemplated herein, the
singular shall include the plural and the plural shall include the singular, and
any gender shall include all other genders, all as the meaning and the context
of this Agreement shall require. Unless otherwise specified, references to
section numbers contained herein shall mean the applicable section of this
Agreement and references to exhibits and schedules shall mean the applicable
exhibits and schedules to this Agreement. The parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder and any successor statute or Law thereto,
unless the context requires otherwise.
14.2 [INTENTIONALLY OMMITTED]
14.3 Survival of Representations, Warranties and Covenants.
The representations and warranties contained in this Agreement shall survive the
Closing solely for the purposes of Sections 11.1(a) and 11.1(b) until March 15,
2005 and shall thereafter terminate, except that (i) the representations of
Seller contained in Section 4.10 (Taxes), Section 4.16 (Employee Benefit Plans),
and Section 4.19 (Environmental Compliance), shall survive the Closing until any
claim based thereon shall have been barred by the relevant statutes of
limitations, and (ii) the representations contained in Section 3.2 (Power and
Authorization), Section 3.4 (Ownership of the Securities), Section 4.2 (Power
and Authorization), Section 4.3 (Capitalization), Section 4.24 (Brokers),
Section 5.2 (Power and Authorization) and Section 5.8 (Issuance of Buyer Common
Stock) shall survive the Closing indefinitely. The covenants contained in this
Agreement shall survive the Closing indefinitely.
14.4 Further Assurances. Each party hereto shall use its
commercially reasonable efforts to comply with all requirements imposed hereby
on such party and to cause the transactions contemplated herein to be
consummated as contemplated herein and shall, from
53
time to time and without further consideration, either before or after the
Closing, execute such further instruments and take such other actions as any
other party hereto shall reasonably request in order to fulfill its obligations
under this Agreement and to effectuate the purposes of this Agreement and to
provide for the orderly and efficient transition to Buyer of the ownership of
the Securities. Each party shall promptly notify the other parties of any event
or circumstance known to such party that could prevent or delay the consummation
of the transactions contemplated herein or which would indicate a breach or
non-compliance with any of the terms, conditions, representations, warranties or
agreements of any of the parties to this Agreement.
14.5 Costs and Expenses. Except as otherwise expressly
provided herein, each party shall bear its own expenses in connection herewith;
provided, however, expenses of the Company or the Subsidiary incurred on or
prior to the Closing Date in connection herewith shall be borne by Seller.
Notwithstanding the foregoing, Buyer shall initially pay all fees payable in
connection with the filing required by the HSR Act; provided, however, that
Seller shall reimburse 50% of all such fees to Buyer at Closing.
14.6 Notices. All notices or other communications permitted or
required under this Agreement shall be in writing and shall be sufficiently
given if and when hand delivered to the Persons set forth below or if sent by
documented overnight delivery service or certified mail, postage prepaid, return
receipt requested, addressed as set forth below or to such other Person or
Persons and/or at such other address or addresses as shall be furnished in
writing by any party hereto to the others. Any such notice or communication
shall be deemed to have been given as of the date received, in the case of
personal delivery, or on the date shown on the receipt or confirmation therefor
in all other cases.
To Buyer (or the Company after Closing):
---------------------------------------
Jarden Corporation
000 Xxxxxxxx Xxxxx Xxxxxx
Xxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
With copies to:
Xxxx Xxxxxxx, P.C.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
54
To Seller:
---------
American Manufacturing Company, Inc.
000 Xxxxxx Xxxx
Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
Attn: President
With copies to:
The AMC Group, L.P.
000 Xxxxxx Xxxx
Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
Attn: General Counsel
and
Drinker Xxxxxx & Xxxxx LLP
Suite 300
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxxx III, Esq.
To the Company (prior to Closing):
----------------------------------
Lehigh Consumer Products Corporation
0000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attn: President
With copies to:
The AMC Group, L.P.
000 Xxxxxx Xxxx
Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
Attn: General Counsel
and
Drinker Xxxxxx & Xxxxx LLP
Suite 300
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxxx III, Esq.
55
14.7 Assignment and Benefit.
(a) This Agreement shall be binding upon and inure to
the benefit of the parties and their respective permitted successors and
permitted assigns. Neither this Agreement, nor any of the rights hereunder or
thereunder, may be assigned by any party, nor may any party delegate any
obligations hereunder or thereunder, without the written consent of the other
party hereto or thereto, provided, that (1) Buyer may assign its rights
hereunder to one or more of its Affiliates if Buyer delivers to Seller a written
instrument reasonably satisfactory to Seller pursuant to which Buyer agrees to
remain liable for all of its obligations under this Agreement and (2) following
the Closing Date, Seller may (i) assign its rights, but not its obligations,
hereunder to one or more of its Affiliates, and (ii) assign part of the
Contingent Consideration to employees of the Company pursuant to the management
incentive agreements to be entered into between Seller and certain employees of
the Company (collectively the "Permitted Assignees"). Any non-permitted
assignment or attempted assignment shall be void. In the event any party to this
Agreement or any of their successors or assigns consolidates with or merges into
any other Person and shall not be the surviving entity of such consolidation or
merger, or transfers all, or substantially all, of its assets, such party shall
make or cause to be made proper provision so that the successors and assigns of
such party shall assume the obligations of such party described herein.
(b) Except as otherwise provided in Sections 6.7 and
11, this Agreement shall not be construed as giving any Person, other than the
parties hereto and their permitted successors, heirs and assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any of
the provisions herein contained, this Agreement and all provisions and
conditions hereof being intended to be, and being, for the sole and exclusive
benefit of such parties, and permitted successors, heirs and assigns and for the
benefit of no other Person or entity.
14.8 Amendment, Modification and Waiver. The parties may amend
or modify this Agreement in any respect, provided that any such amendment or
modification shall be in writing and executed by all of the parties. The waiver
by a party of any breach of any provision of this Agreement shall not constitute
or operate as a waiver of any other breach of such provision or of any other
provision hereof, nor shall any failure to enforce any provision hereof operate
as a waiver of such provision or of any other provision hereof.
14.9 Governing Law; Consent to Jurisdiction. This Agreement is
made pursuant to, and shall be construed and enforced in accordance with, the
laws of the State of Delaware (and United States federal Law, to the extent
applicable), irrespective of the principal place of business, residence or
domicile of the parties hereto, and without giving effect to otherwise
applicable principles of conflicts of law. Any legal action, suit or Proceeding
arising out of or relating to this Agreement (other than in connection with the
dispute resolved by the Arbitrating Accountant pursuant to Sections 2.1(c) or
2.2(b)) shall be instituted in any federal court or in any state court in the
State of Delaware, and each party waives any objection which such party may now
or hereafter have to the laying of the venue of any such action, suit or
Proceeding, and irrevocably submits to the jurisdiction of any such court. Any
and all service of process and any other notice in any such action, suit or
Proceeding shall be effective against any
56
party if given as provided herein. Nothing herein contained shall be deemed to
affect the right of any party to serve process in any other manner permitted by
Law.
14.10 Section Headings and Defined Terms. The section headings
contained herein are for reference purposes only and shall not in any way affect
the meaning and interpretation of this Agreement. Except as otherwise indicated,
all agreements defined herein refer to the same as from time to time amended or
supplemented or the terms thereof waived or modified in accordance herewith and
therewith.
14.11 Severability. The invalidity or unenforceability of any
particular provision, or part of any provision, of this Agreement shall not
affect the other provisions or parts hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provisions or
parts were omitted.
14.12 Counterparts. This Agreement and the other documents
required to consummate the transactions contemplated herein may be executed in
one or more counterparts, each of which shall be deemed an original (including
facsimile signatures), and any Person may become a party hereto by executing a
counterpart hereof, but all of such counterparts together shall be deemed to be
one and the same instrument. The parties hereto may deliver this Agreement and
the other documents required to consummate the transactions contemplated herein
by telecopier machine/facsimile and each party shall be permitted to rely upon
the signatures so transmitted to the same extent and effect as if they were
original signatures.
14.13 Entire Agreement. This Agreement, together with the
Disclosure Schedule, the Confidentiality Agreement dated June 23, 2003 by and
between US Bancorp Xxxxx Xxxxxxx, on behalf of the Company, and Buyer, and the
schedules and certificates referred to herein or delivered pursuant hereto, but
not the exhibits, constitute the entire agreement between the parties hereto
with respect to the purchase and sale of the Securities and supersede all prior
agreements and understandings. The submission of a draft of this Agreement or
portions or summaries thereof does not constitute an offer to purchase or sell
the Securities, it being understood and agreed that neither Buyer, Seller nor
the Company shall be legally obligated with respect to such a purchase or sale
or to any other terms or conditions set forth in such draft or portion or
summary unless and until this Agreement has been duly executed and delivered by
all parties.
14.14 Retention of Counsel. In any dispute or proceeding
arising under or in connection with this Agreement, including, without
limitation, Sections 2.2 and 11.1, Seller shall have the right, at its election,
to retain the firm of Drinker Xxxxxx & Xxxxx LLP to represent it in such matter,
and Buyer, for itself and the Company and for its and the Company's successors
and assigns, hereby irrevocably waives and consents to any such representation
in any such matter and the communication by such counsel to Seller in connection
with any such representation of any fact known to such counsel arising by reason
of such counsel's prior representation of Seller or the Company. Buyer, for
itself and the Company and for its and the Company's successors and assigns,
hereby irrevocably acknowledges and agrees that all communications between
Seller and its counsel, including, without limitation, Drinker Xxxxxx & Xxxxx
LLP, made in connection with the negotiation, preparation, execution, delivery
and closing under, or any dispute or proceeding arising under or in connection
with, this Agreement which, immediately
57
prior to the Closing, would be deemed to be privileged communications of Seller
and its counsel and would not be subject to disclosure to Buyer in connection
with any process relating to a dispute arising under or in connection with, this
Agreement or otherwise, shall continue after the Closing to be communications
between Seller and such counsel and neither Buyer nor any Person purporting to
act on behalf of or through Buyer shall seek to obtain the same by any process
on the grounds that the privilege attaching to such communications belongs to
the Company and not Seller. Other than as explicitly set forth in this Section
14.14, the parties acknowledge that any attorney-client privilege attaching as a
result of legal counsel representing the Company prior to the Closing shall
survive the Closing and continue to be a privilege of the Company, and not
Seller, after the Closing.
[Remainder of Page Intentionally Left Blank]
58
IN WITNESS WHEREOF, each of the parties hereto has duly
executed this Agreement, under seal, all as of the date first above written.
American Manufacturing Company, Inc. Jarden Corporation
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxx Xxxxxx
--------------------------------- ---------------------------------
Name: Xxxxxx Xxxxxxx Name: Xxx Xxxxxx
Title President Title Vice President and Secretary
Lehigh Consumer Products Corporation
By: /s/ Xxxx Yagasky
---------------------------------
Name: Xxxx Yagasky
Title Vice President
Joinder Agreement
For value received, and to induce the Buyer to enter into this
Agreement, the undersigned, a Pennsylvania corporation ("Guarantor"), hereby
irrevocably and unconditionally guarantees to Buyer the full and prompt payment
when due of any and all obligations of Seller to Buyer pursuant to Section 11 of
this Agreement. Commencing as of the Closing Date, Guarantor hereby irrevocably
and unconditionally guarantees to Buyer the faithful, prompt and complete
compliance by Seller and its Affiliates of all their obligations pursuant to
this Agreement, including, but not limited to, the obligations set forth in
Section 12.4 hereof. The undertakings of Guarantor hereunder are independent of
the obligations of Seller, and a separate action or actions for payment, damages
or performance may be brought or prosecuted against Guarantor, whether or not an
action is brought against Seller, whether or not Seller is joined in any such
action or actions, and whether or not notice is given to Seller or demand is
made upon Seller. Buyer shall not be required to proceed first against Seller,
or any other person, or entity, before resorting to Guarantor for payment.
The provisions of Section 14 of the Agreement are hereby incorporated
by reference as if fully set forth herein. Notices to Seller made in accordance
with the terms of Section 14.6 shall be deemed to constitute notice to
Guarantor.
This Guaranty is binding upon Guarantor and its successors or assigns,
and shall inure to the benefit of the Buyer and its permitted successors or
assigns.
AMERICAN MANUFACTURING CORPORATION,
a Pennsylvania corporation
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
59
