Exhibit 10.1
Confidential treatment is being requested for bracketed material which has
been filed separately with the Securities and Exchange Commission.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is effective
as of 12:01 a.m. on July 1, 1998 (the "Effective Date"), by and among The
Triumph Group Operations, Inc., a Delaware corporation ("Buyer") and a wholly
owned subsidiary of Triumph Group, Inc., a Delaware corporation ("TGI"), Nu-Tech
Industries Holding Company, a Missouri corporation (the "Company"), Xxxxxxx X.
Xxxxxx and Xxxxx X. Xxxxxx (together, the "Newells" or the "Stockholders"), and,
for the limited purposes set forth herein, TGI.
RECITALS:
The Company is engaged in the business of: (a) producing
complex structural components for the commercial and military aircraft markets;
(b) machining precision parts from aluminum extrusions; and (c) high speed
machining precision parts from hard alloys using a proprietary process
(collectively, the "Business").
The Stockholders desire to sell, and Buyer desires to
purchase, all of the issued and outstanding shares of Common Stock, par value
$.01 per share, of the Company (the "Shares") for the consideration and on the
terms set forth in this Agreement.
IN CONSIDERATION of the mutual covenants, agreements,
representations and warranties set forth herein, and in reliance thereon, Buyer,
the Company, the Stockholders and TGI agree as follows:
SECTION
1. DEFINITIONS
Capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed to them in Schedule 1 to this Agreement.
SECTION 2. THE PROPOSED TRANSACTION
2.1 Sale and Transfer of Shares. Subject to the terms and
conditions of this Agreement, at the Closing, the Stockholders will sell and
transfer the Shares to Buyer and Buyer will purchase the Shares from the
Stockholders. In reliance on the representations, warranties and covenants
contained herein, in consideration of the sale and transfer of the Shares, Buyer
agrees to pay and deliver to the Stockholders on the Closing Date the Purchase
Price as set forth in Section 2.02, subject to adjustment pursuant to Section
2.03, to be distributed among the Stockholders, pro rata based on their
percentage ownership of the Shares on the Closing Date (each, a "Pro Rata
Share").
2.2 Purchase Price. The Purchase Price ("Purchase Price")
shall consist of the following, in the aggregate:
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Confidential treatment is being requested for bracketed material which has
been filed separately with the Securities and Exchange Commission
(a) $ [ ] (together with interest thereon at the
rate of [ ] percent ([ ]%) per annum from the Effective Date to, but
excluding, the Closing Date), as adjusted pursuant to Section 2.03 (the "Cash
Consideration"); provided, however, that either Stockholder (an "Electing
Stockholder") may request to receive, pursuant to a written notice to Buyer
no later than ten Business Days (as defined herein) prior to the Closing
Date, in lieu of such Electing Stockholder's Pro Rata Share of the Cash
Consideration, shares of TGI Common Stock, par value $.001 per share ("TGI
Stock"), equal to all or part of such Electing Stockholder's Pro Rata Share
of the Cash Consideration, based on the average closing price of TGI Stock on
the New York Stock Exchange Composite Transaction tape (the "Closing Price")
for the ten trading days immediately prior to the Closing Date on which the
New York Stock Exchange was open for business (each, a "Business Day");
provided further however, that TGI shall not, in any event, be obligated to
issue to the Stockholders, in the aggregate, under this Agreement and the
Purchase Agreement among Buyer and the Newells effective as of 12:01 a.m. on
the 1st day of July, 1998 (the "Purchase Agreement") more than [ ] shares
of TGI Stock. In the event that TGI would be requested, in connection with
this Agreement and the Purchase Agreement to issue more than [ ] shares
of TGI Stock, each Electing Stockholder's share of such TGI Stock shall be
payable as follows: (a) shares of TGI Stock in an amount obtained by
multiplying [ ] by a fraction, the numerator of which is the number of
shares of TGI Stock requested by such Electing Stockholder under this
Agreement and the Purchase Agreement and the denominator of which is the
number of shares of TGI Stock requested by all Electing Stockholders under
this Agreement and the Purchase Agreement, and (b) the remainder in cash.
Any Electing Stockholder shall execute a Stockholder
Questionnaire and Representation Letter in the Form of Exhibit A.
(b) $ [ ] (together with interest thereon at the
rate of [ ] percent ([ ] %) per annum from the Effective Date to, but
excluding, the date of disbursement, the "Escrow Fund") to be held by Buyer
in a separate escrow account (the "Escrow Account") for the benefit of the
Stockholders in accordance with this Section 2.02(b). Upon receipt by Xxxxxxx
X. Xxxxxx ("Stockholder Representative") of a written notice from Buyer that
the Escrow Fund or a portion thereof is to be retained by Buyer, the
Stockholder Representative shall have thirty (30) days from delivery of such
notice to notify Buyer in writing that it disputes Buyer's notice. If
Stockholder Representative fails to provide such notice, then the amount of
the Escrow Fund requested by Buyer shall be removed from the Escrow Account
and paid to Buyer. If Stockholder Representative timely notifies Buyer that
it disputes Buyer's notice, then Buyer shall (i) pay to the Stockholders by
wire transfer of immediately available funds of each Stockholder's Pro Rata
Share of any undisputed amount to each Stockholder's bank account designated
by such Stockholder and (ii) hold such disputed amount of the Escrow Fund
until the dispute is finally resolved in accordance with the provisions of
Section 14.06 hereof.
The Escrow Fund shall be payable to the Stockholders on the
one year anniversary of the Closing Date; provided that, no indemnification is
then sought by the Buyer from the Stockholders pursuant to Section 11 or 12 of
this Agreement, in which case, that portion of the
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Escrow Fund not required to support any indemnification then sought by the Buyer
shall be payable to the Stockholders on the one year anniversary of the Closing
Date, and any remaining portion of the Escrow Fund will be promptly distributed
to the Stockholders following the final determination of any indemnification
claims by Buyer under Sections 11 and 12 of this Agreement.
2.3 Adjustments to the Purchase Price.
(a) The Purchase Price to be paid at Closing shall be
decreased by one dollar for each dollar that the Estimated Effective Date Net
Book Value is less than the Bid Net Book Value, and shall be increased by one
dollar for each dollar that such Estimated Effective Date Net Book Value is
greater than the Bid Net Book Value.
(b) The Purchase Price shall be then further
decreased by one dollar for each dollar that the Final Effective Date Net Book
Value is less than the Estimated Effective Date Net Book Value, and shall be
further increased by one dollar for each dollar that such Final Effective Date
Net Book Value is greater than the Estimated Effective Date Net Book Value.
Since the close of business on the Effective Date, the Company will operate its
Business for the benefit of the Buyer and, accordingly, the Company and the
Stockholders shall not declare any dividends with respect to the Company's cash
or cash equivalents or otherwise remove any cash or cash equivalents from the
Company after the Effective Date.
(c) Prior to the Closing, the Stockholders shall
deliver to Buyer the Estimated Effective Date Balance Sheet. Closing of the
transactions contemplated by this Agreement shall constitute the parties'
agreement as to the Estimated Effective Date Net Book Value reflected therein
except as such Estimated Effective Date Net Book Value may be adjusted as
provided in this Section 2.03. Within 90 days of the Closing Date, Buyer shall
deliver to the Stockholders: the Final Effective Date Balance Sheet dated as of
the Effective Date; a calculation of the Final Effective Date Net Book Value and
any adjustment to the Purchase Price required under subsection (b). Subject to
subsection (d) below, if the Final Effective Date Net Book Value is less than
the Estimated Effective Date Net Book Value, the Stockholders shall each pay
such Stockholder's Pro Rata Share of such difference to Buyer in accordance with
the terms of subsection (e) below. Subject to subsection (d) below, if the Final
Effective Date Net Book Value is greater than the Estimated Effective Date Net
Book Value, Buyer shall pay to each Stockholder such Stockholder's Pro Rata
Share of such difference in accordance with the terms of subsection (e) below.
(d) In the event that the Stockholders dispute the
calculation of the Final Effective Date Net Book Value, the Stockholders shall
notify Buyer in writing of such dispute and the basis therefor within ten days
of the Stockholders' receipt of the Final Effective Date Balance Sheet and the
parties shall attempt to resolve such dispute within the 30 days succeeding the
date of such notice. In the event the parties are unable to resolve such dispute
within such period, the Stockholders shall reduce to writing those matters of
disagreement and the parties shall (i) retain as arbitrator such independent
accounting firm as may be mutually agreed upon by Buyer and the Stockholders to
review such matters and (ii) request such arbitrator to act as promptly as
practicable
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in accordance with rules to be established by Buyer, the Stockholders and such
arbitrator to resolve all such disputed matters. The parties shall be required
to make payment as described in subsection (c) above of any amounts not disputed
at the time of or prior to commencement of any arbitration; provided however,
the obligation of the parties to pay any amount disputed shall be deferred
pending receipt of the arbitrator's decision with respect to such disputed
amount. The decision of the arbitrator shall be issued in writing to Buyer and
the Stockholders and the Final Effective Date Balance Sheet shall be deemed
adjusted to reflect the arbitrator's decision. The arbitrator's decision shall
be final, non-appealable and binding on Buyer and the Stockholders, and the fees
and expenses of the arbitrator shall be paid one-half by Buyer and one-half by
the Stockholders, with each Stockholder paying his or its Pro Rata Share of such
amount. If the arbitrator determines that the Final Effective Date Net Book
Value is different than the Estimated Effective Net Book Value, Buyer or the
Stockholders, as the case may be, shall pay any such difference within ten days
after receipt of the arbitrator's determination.
(e) In the event Buyer is required pursuant to either
subsection (c) or (d) above to pay any sum to the Stockholders, such sum shall
be paid in cash within, as applicable, 12 days following the Stockholders'
receipt of the Final Effective Date Balance Sheet or ten days following the
arbitrator's decision, by wire transfer of immediately available funds of each
Stockholder's Pro Rata Share of such sum to each Stockholder's bank account
designated for payment of the Purchase Price pursuant to Section 2.01(a). In the
event the Stockholders are required pursuant to either subsection (c) or (d)
above to pay any sum to Buyer, each Stockholder shall pay his or its Pro Rata
Share of such sum within ten days following the later of the Stockholders'
receipt of the Final Effective Date Balance Sheet or the arbitrator's decision,
as the case may be, by wire transfer of immediately available funds to Buyer's
bank account as designated by notice to the Stockholders at the time of delivery
of the Final Effective Date Balance Sheet; provided that, if Buyer does not
receive such amount, or any portion thereof, within such ten day period, Buyer
shall be entitled to withdraw such unpaid amount from the Escrow Account.
SECTION 3. CLOSING
The Closing of the transactions contemplated by this Agreement
shall take place at 8:00 a.m. at the offices of Xxxxx, Xxxx & Fingersh, counsel
to the Company, on the later of (a) July 16, 1998 and (b) the fifth Business Day
following the date when all of the conditions to the Closing specified in
Sections 9 and 10 have been satisfied or waived, or such other date as the
parties may mutually agree to in writing, but in no event later than July 31,
1998.
SECTION 4. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE STOCKHOLDERS
The Company and the Stockholders, jointly and severally,
represent and warrant to Buyer as follows:
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4.1 Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Missouri, with full corporate power and authority to carry on
the Business as presently conducted by it, and the Company is qualified to do
business in the states listed in Schedule 4.01, which constitute all of the
states where the failure to be so qualified would adversely affect the condition
(financial or otherwise), properties, assets or operations of the Business. The
Company has delivered to Buyer copies, true and correct as of the date hereof,
of its Articles of Incorporation, duly certified by the Secretary of State of
the State of Missouri, and of its By-laws, duly certified by its Secretary, and
certificates or other evidence of good standing in each state listed in Schedule
4.01.
4.2 Capitalization. The authorized equity securities of the
Company consist of 1,000,000 shares of Common Stock, $.01 par value per share
("Common Stock"), of which 80,000 shares of Common Stock are currently issued
and outstanding, which, in the aggregate, constitute the Shares. Except as set
forth on Schedule 4.02, the Stockholders are the record and beneficial owners
and holders of all of the Shares, free and clear of any restrictions on transfer
(other than restrictions under the federal and state securities laws), Taxes or
Liens; provided however, that any such restrictions on transfer, Taxes or Liens
shall be removed prior to the Closing Date. None of the outstanding equity
securities or other securities of the Company was issued in violation of the
Securities Act of 1933, as amended, or any other legal requirement. All of the
Shares have been duly authorized and are validly issued, fully paid and
nonassessable. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights or
other contracts or commitments that could require the Company or any of its
Subsidiaries to sell, transfer or otherwise dispose of any capital stock of the
Company or that could require the Company to issue, sell or otherwise cause to
become outstanding any of its own capital stock. There are no outstanding stock
appreciation, phantom stock, profit participation or similar rights with respect
to the Shares. There are no voting trusts, proxies or other agreements or
understandings with respect to the voting of any capital stock of the Company.
4.3 Subsidiaries. Schedule 4.03 sets forth for each
Subsidiary: (a) its name and jurisdiction of incorporation; (b) the number of
shares of authorized capital stock of each class of its capital stock; (c) the
number of issued and outstanding shares of each class of its capital stock, the
names of the holders thereof and the number of shares held by each such holder;
(d) the number of shares of its capital stock held in treasury and (e) the names
and addresses of its directors and officers. Each Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Subsidiary is duly authorized to conduct
its business and is in good standing in each state listed opposite its name in
Schedule 4.03, which constitute all of the states where the failure to be so
qualified would adversely affect the condition (financial or otherwise),
properties, assets or operations of the Business. Each Subsidiary has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. All of the issued and
outstanding shares of capital stock of each Subsidiary have been duly authorized
and are validly issued, fully paid and nonassessable. The Company holds of
record and owns beneficially all of the outstanding shares of each Subsidiary,
free and clear of any restrictions on transfer (other than restrictions under
the federal and state securities laws), Taxes or Liens. There are no outstanding
or authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights or other contracts or commitments that could
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require the Company or any of its Subsidiaries to sell, transfer or otherwise
dispose of any capital stock of any of its Subsidiaries or that could require
any Subsidiary to issue, sell or otherwise cause to become outstanding any of
its own capital stock. There are no outstanding stock appreciation, phantom
stock, profit participation or similar rights with respect to any capital stock
or other securities of any Subsidiary. There are no voting trusts, proxies or
other agreements or understandings with respect to the voting of any capital
stock of any Subsidiary. Except as noted in Schedule 4.03, neither the Company
nor any of its Subsidiaries controls directly or indirectly or has any direct or
indirect equity participation in any corporation, partnership, trust or other
business association which is not a Subsidiary.
4.4 Names. The Company has not conducted the Business under
any name other than the names set forth in Schedule 4.04.
. 4.5 Certain Business Relationships. Except as noted in
Schedule 4.05, neither of the Stockholders, nor any Affiliate of the Company,
has been involved in any business arrangement, contract or relationship with the
Company or the Business (other than as a stockholder, director, officer or
employee), and neither of the Stockholders, nor any Affiliate of the Company,
owns any asset, tangible or intangible, which is used in the Business.
4.6 Authority. Each of the Company and the Stockholders has
full power and, as applicable, authority to execute and deliver this Agreement
and other documents delivered or to be delivered pursuant hereto, to perform all
the terms and conditions hereof and thereof to be performed by him or it, and to
consummate the transactions contemplated hereby and thereby. This Agreement and
other documents delivered or to be delivered by the Company and the Stockholders
in connection with this Agreement have been, as applicable, duly authorized and
approved by all necessary and proper corporate action (including all necessary
shareholder action) and constitute, and will constitute, the valid and binding
obligations of the Company and such Stockholders enforceable against them in
accordance with their respective terms.
4.7 No Violation. Except as noted in Schedule 4.07, the
execution and delivery by the Company and the Stockholders of this Agreement and
other documents delivered or to be delivered pursuant hereto by them and the
performance by them hereunder or thereunder, and the consummation of the
transactions contemplated hereby or thereby, will not violate, conflict with,
result in the breach of, or accelerate the performance required by any of the
terms, conditions or provisions of the Articles of Incorporation or Bylaws of
the Company or any covenant, agreement or understanding to which the Company or
the Stockholders is a party or any order, ruling, decree, judgment, arbitration
award or stipulation to which the Company or any such Stockholder is subject, or
constitute a default thereunder or result in the creation or imposition of any
Lien upon any of the Assets or the Shares, or allow any Person to accelerate any
debt owed by the Company or any such Stockholder or secured by any Asset or the
Shares, or allow any Person to interfere with Buyer's full use and enjoyment of
any of the Assets and operation of the Business.
4.8 Consents and Approvals of Governmental Authorities and
Others. Except as noted in Schedule 4.08, no approval or authorization of,
filing or registration with, or notification to, any Governmental Authority is
required in connection with the execution and delivery of this
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Agreement by the Company and the Stockholders or the performance of its
obligations hereunder or the consummation of the transactions contemplated
hereby. Except as noted in Schedule 4.08, no consent, approval or authorization
of any Person is required in connection with the execution or delivery of this
Agreement by the Company and the Stockholders or the performance by the Company
and such Stockholders of any other obligation under this Agreement, except where
the failure to obtain such consent, approval or authorization would not cause a
material adverse effect to the Business (financial condition or otherwise).
4.9 Financial Statements; Books and Records.
(a) The Company has delivered to Buyer a consolidated
balance sheet of the Company as of September 30, 1997, and consolidated
statements of income, changes in stockholders' equity and cash flow for the year
ended September 30, 1997 and for the period December 29, 1995 to September 30,
1996, together with the report of Ernst & Young LLP with respect thereto, and a
consolidated balance sheet of the Company as of April 30, 1998, which is
unaudited, copies of which are attached hereto as Schedule 4.09(a). These
Financial Statements other than the unaudited statements of income and unaudited
balance sheets have been prepared in accordance with GAAP consistently applied
(except that the unaudited statements of income and balance sheet do not contain
the notes thereto necessary to be in accordance with GAAP) throughout the
periods involved, are complete and correct in all respects and present fairly
the Company's consolidated financial condition as of the dates thereof and
results of its operations for such periods subject, in the case of unaudited
statements of income and balance sheets, normal recurring and year-end
adjustments.
(b) The Company has no liabilities or obligations
relating to the Business, except those liabilities and obligations incurred in
the ordinary course of business consistent with past practice since the Bid
Balance Sheet Date.
(c) All Books and Records are complete and correct
with respect to all information and time periods covered thereby. All of the
Books and Records have been prepared and maintained, where applicable, in
conformity with GAAP and in compliance with applicable laws, regulations and
other requirements.
4.10 Events Subsequent to Bid Balance Sheet Date. Except as
set forth in Schedule 4.10, there has not been, since the Bid Balance Sheet
Date, any adverse change in the condition (financial or other), properties,
assets or liabilities of the Company or the Business.
Without limiting the generality of the foregoing, since the
Bid Balance Sheet Date:
(a) the Company has not sold, leased, transferred or
assigned any of its assets, tangible or intangible, other than for a fair
consideration in the ordinary course of business;
(b) the Company has not entered into any Material
Contract, Lease or license (or series of related Contracts, Leases and licenses)
either involving more than $50,000 or outside the ordinary course of business;
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(c) no party (including the Company), has
accelerated, terminated, modified or canceled any Material Contract, Lease,
agreement or license (or series of related Contracts, Leases, agreements and
licenses) to which the Company is a party or by which it is bound other than
Open Orders modified in the ordinary course of business;
(d) the Company has not imposed or suffered any Lien
upon any of its assets, tangible or intangible;
(e) the Company has not made any capital expenditure
(or series of related capital expenditures) either involving more than $25,000
or outside the ordinary course of business;
(f) the Company has not made any capital investment
in, any loan to, or any acquisition of the securities or assets of, any other
Person (or series of related capital investments, loans and acquisitions) either
involving more than $25,000 or outside the ordinary course of business;
(g) the Company has not issued any note, bond or
other debt security or created, incurred, assumed or guaranteed any indebtedness
for borrowed money or capitalized lease obligation in excess of $25,000;
(h) the Company has not delayed or postponed the
payment of accounts payable and other liabilities or obligations outside the
ordinary course of business;
(i) the Company has not canceled, compromised, waived
or released any right or claim (or series of related rights and claims);
(j) the Company has not issued, sold or otherwise
disposed of any of its capital stock or the capital stock of any Subsidiary, or
granted any options, warrants or other rights to purchase or obtain (including
upon conversion, exchange or exercise) any of its capital stock or the capital
stock of any Subsidiary;
(k) the Company has not declared, set aside or paid
any dividend or made any distribution with respect to its capital stock (whether
in cash or in kind) or redeemed, purchased or otherwise acquired, or become
obligated to redeem, purchase or otherwise acquire, any of its capital stock;
(l) the Company has not experienced any material
damage, destruction or loss (whether or not covered by insurance) to its
property;
(m) the Company has not made any loan to, or entered
into any other transaction with, any of its directors, officers, employees or
Affiliates outside the ordinary course of business;
(n) the Company has not entered into any written
employment contract or collective bargaining agreement, or modified the terms of
any existing written contract or agreement;
9
(o) the Company has not granted any increase in the
base compensation of any of its directors and officers and employees;
(p) the Company has not adopted, amended, modified or
terminated any bonus, profit-sharing, incentive, severance or other plan,
contract or commitment for the benefit of any of its directors, officers or
employees (or taken any such action with respect to any other employee benefit
plan);
(q) the Company has not made any other change in
employment terms for any of its directors, officers and employees;
(r) the Company has not made or pledged to make any
charitable or other capital contribution in excess of $15,000 in the aggregate;
(s) the Company has not taken any action or failed to
take any action which would result in a material adverse change, occurrence,
event, incident, action, failure to act or transaction outside the ordinary
course of business involving the Company or the Business; and
(t) the Company has not committed to do or perform
any of the foregoing.
4.11 Accounts Receivable. Schedule 4.11 contains a true and
complete list of all Accounts Receivable at the Effective Date. All of the
Accounts Receivable arose in bona fide transactions and are good and collectible
in full at the recorded amounts thereof in the Books and Records in the ordinary
course of business without resort to legal proceedings, net of an aggregate
amount equal to reserves for doubtful accounts and xxxx-back items, as reflected
in the Bid Balance Sheet.
4.12 Inventory. Schedule 4.12 contains a true and complete
list of all Inventory as of the most recent practicable date. The Inventory
consists of items which are merchantable and fit for the purposes intended and
the quantity thereof is at levels appropriate and adequate for Buyer to conduct
the Business following the Closing Date. The Inventory is carried in the Books
and Records at an amount that is not in excess of the lower of its cost or its
current fair market value and is saleable at prices at least equal to the value
thereof in the Books and Records.
4.13 Tangible Purchased Assets.
(a) Schedule 4.13(a) contains a true and complete
list of all Equipment and Real Property, respectively, owned by the Company at
the Effective Date. Except as noted in Schedule 4.13(a), on the Closing Date,
the Company shall have good and marketable title to, and all right, title and
interest in, all Equipment, Real Property and other Tangible Assets, real and
personal, owned by it and the Company will own all such Equipment, Real Property
and other Tangible Assets free and clear of all Liens (other than those
liabilities listed on the Bid Balance Sheet).
(b) Schedule 4.13(b) sets forth a list of all Leased
Real Property, Equipment and other Tangible Assets leased by the Company and the
Leases pursuant to which such
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Tangible Assets are leased at the Effective Date. Except as noted in Schedule
4.13(b), all Leases relating to Leased Real Property, Equipment or other
Tangible Assets, real or personal, leased by the Company are valid and
enforceable by the Company in accordance with their respective terms. There is
not, under any Lease relating to Leased Real Property, Equipment or other
Tangible Asset, any existing default by the Company or, to the Company's
knowledge, any existing default by any other party thereto, or any circumstance
known to the Company that could give rise to a default by the Company or any
other party to such Lease. All commissions payable by the Company under or with
respect to any such Leases have been paid.
(c) Except as noted in Schedule 4.13(c), the uses to
which the Tangible Assets are put are not subject to any restriction or
condition and conform in all respects to zoning, subdivision and/or planning
regulations, fire and safety regulations and all other regulations or
requirements of the relevant federal, state or local authorities and to all
statutes or laws governing such assets or the use thereof and are not temporary
uses. All of the Tangible Assets may be used for the purposes of the Business.
All certificates of occupancy and necessary consents of Governmental Authorities
or other Persons to such existing uses have been obtained. The Company has not
received notice of violation of any such regulation, ordinance or other law,
order or requirement from any court or Governmental Authority, or of taking by
eminent domain or condemnation proceeding.
(d) Except as set forth on Schedule 4.13(d), all the
Tangible Assets of the Company necessary for the Company to carry on the
Business as presently conducted are in good operating order and condition
subject to ordinary wear and tear and are suitable for their intended uses.
(e) The Tangible Assets include all tangible real and
personal property necessary to permit the Company to carry on the Business
following the Closing Date in substantially the same manner as the Business is
currently conducted.
4.14 Intellectual Property. Schedule 4.14 contains a true and
complete list of all Intellectual Property, Technical Information and Computer
Software Assets necessary to carry on the Business as currently conducted or as
currently proposed to be conducted. The Company requires no rights under any
patent, trade secret or other proprietary information or computer software
license which the Company does not have or does not have the lawful right to use
in order to conduct the Business as currently conducted. Except as noted in
Schedule 4.14, all patents, copyrights (where such registration is permitted or
required by applicable law), trademarks, tradenames and service marks included
in the Intellectual Property are registered to or owned by or licensed to the
Company, are valid and enforceable (or, in the case of any unregistered or
unpatented rights, may be freely used by the Company) or pending (in the case of
patents), and all annuities, if any, are fully paid. The Company has not
infringed and is not infringing, nor has the Company contributed to or is
contributing to the infringement of, any valid patents, copyrights, trademarks,
tradenames or service marks of any third party in its conduct of the Business.
There are no pending or, to the Company's knowledge, threatened actions against
the Company for infringement of any such patents, copyrights, trademarks,
tradenames or service marks. None of the patents or patent applications included
in the Intellectual Property is involved in a reissue, reexamination,
interference,
11
opposition or similar proceeding, and, to the Company's knowledge, there is no
threat that any such proceeding will be declared or commenced. The Company is
not using, without authorization, any trade or other business secret, know-how
or technical information of any other Person in the conduct of the Business. All
licenses permitting the Company to use any Intellectual Property, Technical
Information or Computer Software Assets are in full force and effect and the
terms of such licenses do not provide that they may be terminated or restricted
as a result of the execution of this Agreement or the consummation of the
transactions contemplated herein.
4.15 No Prior Sale or Licensing of Assets. Except as noted in
Schedule 4.15, the Company is not a party to any license with respect to, and
has not made any sale, pledge or other transfer of, and has not granted any
rights or options to purchase or acquire, all or any part of the Assets, other
than, with respect to Inventory and scrap materials, in the ordinary course of
business.
4.16 Tax Matters.
(a) Except as noted in Schedule 4.16, the Company has
duly and timely filed all returns for Taxes required to be filed by it or for
which it may be held responsible under applicable law, and has paid all Taxes
due and payable by it or with respect to which a taxing or collection authority
has issued a proposed or final assessment or made any similar claim.
(b) To the Company's knowledge, there is no dispute
or claim concerning any Taxes of the Company either (i) claimed or raised by any
Governmental Authority in writing or (ii) as to which any of the directors,
officers or representatives of the Company have knowledge based upon personal
contact with any agent of such Governmental Authority. To the Company's
knowledge, no returns for Taxes of the Company are currently under audit or
examination by any Governmental Authority.
(c) The Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to an assessment or deficiency for Taxes.
4.17 Contracts.
(a) Schedule 4.17(a) sets forth true and complete
list of all Material Contracts at the Effective Date. The Material Contracts
constitute all contracts material to the conduct of the Business as presently
conducted. All Material Contracts are valid, binding and in full force and
effect, and neither the Company nor, to the Company's knowledge, any other party
to any Material Contract is in default thereunder. The Business is in compliance
with all applicable cost accounting standards (CAS) requirements with respect to
any Material Contracts with the United States or any agency thereof, except for
such noncompliance that would not (i) result in the United States or any agency
thereof having the right to terminate or otherwise cease performance of such
Material Contracts; (ii) result in the United States or any agency thereof
having the right or ability to bar the Company from engaging in any future
business arrangements with the United States or any agency thereof; or (iii)
have an adverse effect on the operations, financial condition, assets,
liabilities or prospects of the Business or the Assets taken as a whole.
12
(b) None of the Material Contracts contains any
provision providing for the termination of the Material Contract or giving any
party thereto the right to terminate such Material Contract by reason of the
sale of a majority of the Shares of the Company, and except as set forth in
Schedule 4.17(b), none of the terms of any Material Contract will be altered by
reason of the execution of this Agreement or the consummation of the
transactions contemplated herein.
4.18 Open Orders. Schedule 4.18 set forth a true and complete
list of all Open Orders at the Effective Date. All Open Orders are valid,
binding and in full force and effect and neither the Company nor the other party
thereto is in default thereunder. None of the Open Orders contains any provision
providing for the termination of the Open Order or giving any party thereto the
right to terminate the Open Order by reason of the sale of a majority of the
Shares of the Company, and none of the terms of any Open Order are required to
be altered by reason of the execution of this Agreement or the consummation of
the transactions contemplated herein. The Seller has no obligation to make any
payments to representatives or any other Person on or with respect to Open
Orders.
4.19 Permits. Schedule 4.19 sets forth a true and complete list
of all Permits (other than Environmental Permits) required or useful in the
conduct of the Business. All Permits are in full force and effect and, to the
Company's knowledge, no suspension or cancellation of any have been threatened.
No Permits or parts thereof are subject to loss by reason of dormancy or
non-use. No claims have been made by any Governmental Authority or any Person
relating to the Permits and, to the Company's knowledge, no such claim is
contemplated by any Governmental Authority or other Person, nor does any basis
therefor exist. Except as noted in Schedule 4.19, no Permit will be terminated
or require the consent of the issuer to continue in effect as a result of the
sale of a majority of the Shares of the Company.
4.20 Computer Hardware and Software; Embedded Controls
(a) Schedule 4.20(a) sets forth a list of all (i)
Hardware, (ii) Software, (iii) Databases and (iv) Embedded Controls used by the
Company in the operation and management of the Business (including, without
limitation, those related to the Business' facilities, equipment, manufacturing
processes, quality control activities, accounting and bookkeeping records,
recordkeeping activities and products sold to, and/or services rendered to,
customers).
(b) Except as noted in Schedule 4.20(b), the Company
is not aware of any operating problems, including, but not limited to, Year 2000
Problems, presently encountered or likely to be encountered in the future in the
use and operation of Hardware, Software, Databases and Embedded Controls.
(c) Except as noted in Schedule 4.20(c), the Company
has not (i) received notice from any supplier, customer, vendor or other entity
with which the Company has a relationship, or otherwise become aware of, Year
2000 Problems anticipated by such suppliers, customers, vendors or other
entities, or requiring the Company to undertake actions outside the ordinary
course of business to assist such suppliers, customers, vendors or other
entities in dealing with Year 2000 Problems, either of which could have a
material adverse effect on the Business; or
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(ii) been advised by its employees, independent public accountants or other
consultants or advisors or its banks or other financial intermediaries of any
problems it should anticipate or expenditures it is likely to incur relating
thereto.
4.21 Depositary Accounts, Etc. Schedule 4.21 sets forth a true
and complete list of (a) all banks, trust companies, savings and loan
associations, and brokerage or other firms which have issued bank guarantees,
bills of exchange, letters of credit or banker's acceptances for the account of
the Company, (b) each such institution in which the Company has a depository or
other account or a safe deposit box and the names of all persons authorized to
draw thereon, to have access thereto or to authorize transactions therein, (c)
the names of all persons, if any, holding powers of attorney from the Company
and a summary statement of the terms thereof, and (d) all credit card and
similar accounts on which the Company may be liable and the names of the persons
holding such cards or authorized to use such accounts.
4.22 Insurance. Schedule 4.22 sets forth a true and complete
list of all insurance policies held by or on behalf of the Company as of the
date hereof and of all public liability insurance policies held by or on behalf
of the Company for the past two years, copies of which have been supplied to
Buyer. Such policies are sufficient in all respects for compliance by the
Company with all requirements of law and with the requirements of all of the
Contracts, and, except as noted on Schedule 4.22, the Company has not received
any notice of actual or proposed cancellation or of reduction in coverage of, or
of any increase in premium under, such policies of insurance.
4.23 Compliance with Laws; Litigation. The Company has been,
and is operating the Business in compliance with the requirements of all
federal, state and local laws, regulations, judgments, injunctions, decrees,
court orders and administrative orders regarding such operations. Except as
noted in Schedule 4.23, the Company is not engaged in, or a party to, or, to the
Company's knowledge, threatened with, any legal action, suit, investigation or
other proceeding by or before any court, arbitrator or administrative agency,
and the Company is not aware of any basis for any such action, investigation or
proceeding. There are no outstanding orders, rulings, decrees, judgments,
stipulations or proceedings to which the Company is a party or by which the
Company is bound, by or with any court, arbitrator or administrative agency.
4.24 Warranties; Product Liability.
All goods and products manufactured or repaired by
the Company in the Business were manufactured or repaired, as the case may be,
in compliance with all contractual requirements, all applicable federal and
state laws, rules and regulations and applicable underwriters and industry
standards and codes, if any, except for such noncompliance as would not have an
adverse effect on the value or use of such goods and products or the adequacy of
such repairs. Except as noted in Schedule 4.24, there is not presently any
action, suit, proceeding, claim or investigation pending or, to the Company's
knowledge, threatened against the Company for Product Liabilities or otherwise
relating to the safety or fitness or quality of the goods or products
manufactured or repaired by the Company.
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4.25 Absence of Sensitive Payments. The Company has not made
any contributions, payments or gifts to or for the private use of any
governmental official, governmental employee or governmental agent in any amount
where either the payment or the purpose in making such contribution, payment or
gift is illegal under the laws of the United States or any other jurisdiction;
the Company has not established or maintained any unrecorded fund or asset for
any purpose or made any false or artificial entries on its books; and the
Company has not made any payments to any Person with the intention or
understanding that any part of such payment was to be used for any purpose other
than that described in the document supporting the payment.
4.26 Environmental Matters.
(a) Except as noted in Schedule 4.26(a), the Company
has conducted all activities of the Business in compliance with, and all
properties owned, leased or operated by the Company in connection with the
Business comply with, all Environmental Laws. Except as noted in Schedule
4.26(a), the Company is not aware of any facts, events or conditions relating to
the facilities, properties or operations of the Business which would prevent,
hinder or limit continued compliance with any Environmental Laws.
(b) Schedule 4.26(b) sets forth a true and complete
list of the Environmental Permits which have been obtained by the Company.
Except as noted in Schedule 4.26(b), all Environmental Permits are in full force
and effect and are not subject to any appeals or further proceedings or to any
unsatisfied conditions. No modification, suspension, rescission, relocation or
cancellation of any Environmental Permit is pending or, to the Company's
knowledge, threatened, and no Environmental Permit will be canceled or
withdrawn, or otherwise adversely affected by the sale of a majority of the
Shares of the Company. Except as noted in Schedule 4.26(b), the Company has made
or caused to have been made all notifications and done all other things
necessary to ensure that, following the consummation of the transactions
contemplated by this Agreement, all currently effective Environmental Permits
shall remain in full force and effect or shall be reissued or amended to permit
Buyer to operate the Business.
(c) Except as noted in Schedule 4.26(c), to the
Company's knowledge, no Contamination is present or has emanated from or at any
property now or previously owned, leased or operated by the Company in
connection with the Business. Except as noted in Schedule 4.26(c), no property
now owned, leased or operated by the Company in connection with the Business is
subject to an Environmental Lien. Except as identified in Schedule 4.26(c), the
Company has not incurred costs or liabilities, and has not been ordered to
investigate, remediate or otherwise respond to a potential environmental threat
of Contamination in connection with the Business.
(d) Except as noted in Schedule 4.26(d):
(a) the Company has not, in connection with
the Business, received (A) a request for information from any Governmental
Authority with respect to any discharge or removal of any Hazardous Substance,
or (B) other notice that it has been identified in any litigation,
administrative proceeding or investigation as a responsible party or a
potentially
15
responsible party for any liability under any Environmental Law or in connection
with any Hazardous Substance.
(b) the Company has not filed any notice
under any federal, state or local law, regulation or order reporting a release
of Hazardous Substances in connection with the Business or any property owned,
leased or operated by the Business; and
(c) the Company has not entered into any
negotiations or agreements with any Person relating to any response action or
other cleanup or remediation of any Hazardous Substance.
(e) Except as noted in Schedule 4.26(e), to the
Company's knowledge, no portion of any property owned, leased or operated by the
Company contains any of the following:
(a) polychlorinated biphenyls or substances
containing polychlorinated biphenyls;
(b) asbestos or materials containing
asbestos;
(c) urea formaldehyde foam insulation;
(d) radon gas or the presence of the
radioactive decay products of radon in excess of an air concentration of four
picocuries/liter; or
(e) tanks presently or formerly used for the
storage of any Hazardous Substance or any other liquid or gas above or below
ground.
(f) Except as noted in Schedule 4.26(f), no portion
of any property owned, leased or operated by the Company constitutes any of the
following:
(a) a wetland or other "water of the United
States" for purposes of Section 404 of the Federal Clean Water Act, or any
similar area regulated under any applicable state law; (b) a floodplain or other
flood hazard area;
(b) a floodplain or other flood hazard area;
(c) a portion of the coastal zone for
purposes of the Federal Coastal Zone Management Act; or
(d) any other area, development of which is
specifically restricted under applicable law by reason of its physical
characteristics or prior use.
(g) Except as noted in Schedule 4.26(g), the Company
has not, in connection with the Business, expressly assumed or undertaken any
liability or corrective or response action obligation of any other Person
relating to Environmental Laws.
16
(h) Except as noted in Schedule 4.26(h), the Company
is not aware of any costs (other than costs incurred in the ordinary course of
business consistent with past practices) that the Company expects the Business
will be likely to incur to achieve or maintain compliance with Environmental
Laws or to respond to Contamination.
4.27 Benefit Plans and Employment Arrangements.
(a) Schedule 4.27(a) sets forth a true and correct
list of (i) the name, title, calendar year 1997 compensation, current base
salary and specific bonus plans or arrangement for each present employee of the
Business; (ii) each collective bargaining, union or other employee organization
agreements; (iii) each employment, advisory and consulting agreement; (iv) each
employee confidentiality or other agreement protecting proprietary processes,
formulae or information; (v) each corporation or other trade or business which
is an ERISA Affiliate; and (vi) each Plan. Schedule 4.27(a) identifies as such
all Plans, if any, which are (i) defined benefit pension plans; (ii) severance,
continuation pay, termination pay, pension or deferred compensation arrangements
(including but not limited to any such arrangements contained in an employment,
advisory or consulting agreement), other than pension plans qualified or
intended to be qualified under Section 401(a) of the Code; and (iii)
Multiemployer Plans.
(b) With respect to each Plan, the Company delivered
to Buyer true, correct and complete copies of all current written documents
setting forth the terms and conditions of such Plan (or a written summary of
such terms in the case of an unwritten Plan) and, in the case of each Plan
subject to ERISA, copies of the plan document, the most current summary plan
description and any modifications thereto, the most recently filed Internal
Revenue Service Form 5500 (including attachments) and the most recent actuarial
valuation and report, as applicable, and other material related documents of
such Plan such as insurance contracts.
(c) The acquisition by Buyer of the Shares by Buyer
will not, directly or indirectly, give rise to any withdrawal liability or
potential withdrawal liability on the part of Buyer with respect to any
Multiemployer Plan in which the Company or an ERISA Affiliate participates or to
which the Company or an ERISA Affiliate has or has had any obligation to
contribute for the benefit of any such employees. Except as noted in Schedule
4.27(c), the Company has no unfulfilled obligation to contribute to any
Multiemployer Plan or collectively bargained welfare plan. Neither the Company
nor any ERISA Affiliate has incurred any liability which arises from either a
complete or partial withdrawal (as defined in Section 4203 or 4205 of ERISA,
respectively) from any Multiemployer Plan that has not been discharged and
neither the Company nor any ERISA Affiliate has incurred a decline in
contributions to a Multiemployer Plan such that, if the current rate of
contributions continues, a 70% or greater decline in contributions will occur
within the next three plan years.
(d) Neither the Company nor any ERISA Affiliate
maintains or contributes to, or has ever maintained or had an obligation to
contribute to, a Plan subject to Title IV of ERISA or the minimum funding
requirements under Section 412 of the Code. There does not exist any condition,
there has not occurred any event, and there has not been any omission, with
respect to the sponsorship, funding or administration of any employee benefit
plan, which has or could result in a
17
Lien upon or claim with respect to any of the Assets, or Buyer's being liable
for any contribution, withdrawal liability, benefit, claim, settlement, Tax,
penalty or payment of any nature except liabilities for benefit claims and
funding obligations payable in the ordinary course of business. All
contributions required to be made under the terms of any Plan have been timely
made in accordance with applicable law, including without limitation , Labor
Reg. Section 2510.3-102.
(e) Except as noted in Schedule 4.27(e), each group
health plan that provides health coverage to any present or former employee of
the Business has operated in material compliance with all requirements of
Sections 601 through 608 of ERISA and either Section 162(i)(2) and (k) of the
Code and the regulations promulgated thereunder (for years prior to 1989) or
Section 4980B of the Code and the regulations promulgated under former Section
162(i)(2) and (u) of the Code (for years after 1988), relating to the
continuation of coverage under certain circumstances in which coverage would
otherwise cease ("COBRA"). Schedule 4.27(e) sets forth a true and complete list
of all current employees, and former employees since January 1, 1995, of the
Business and their respective beneficiaries who are receiving or who are
eligible to elect to receive such continuation coverage under such group health
plans pursuant to such provisions of ERISA and the Code.
(f) Each Plan has at all times been administered in
material compliance with its terms, all applicable provisions of ERISA
(including the "fiduciary responsibility" and "prohibited transaction" rules
thereof), the Code and other applicable laws, and each Plan intended to be a
qualified plan under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service which has not been
revoked. All applicable requirements under ERISA or the Code as to the filing of
reports, documents and notices regarding the Plans with the Department of Labor
and the Internal Revenue Service and the furnishing of such reports, documents
or notices on a timely basis to participants and beneficiaries on or prior to
the date hereof have been complied with in all material respects. There are no
active suits, governmental investigations or proceedings pending or threatened
against or concerning any Plan or against any fiduciary thereof respecting the
fiduciary's duties to the Plan or any trust under the Plan. There is no action
or claim (other than routine claims for benefits made in the ordinary course of
Plan administration) pending or threatened against or with respect to any Plan.
(g) Except as noted in Schedule 4.27(g), the Company
has not carried on discussions regarding organization with any labor union and
there has not been any strike, work stoppage, labor dispute or other labor
trouble relating to employees of the Business, and, to the Company's knowledge,
there are no significant threats of work stoppage or labor trouble by employees
of the Business.
(h) None of the Plans that are welfare benefit plans
within the meaning of Section 3(1) of ERISA provide for benefits or coverage for
any former or retired employee or their beneficiaries, except to the extent
required by COBRA. There is no VEBA maintained with respect to any such welfare
plan.
(i) All insurance premiums have been paid in full,
subject only to normal retrospective adjustments in the ordinary course, with
regard to the Plans for plan or contract years ending on or before the Closing
Date. With respect to periods from the close of the most recent plan
18
or contract year through the Closing Date with respect to the Plans, all
insurance premiums due or payable through the Closing Date have been or will be
paid in full, and no such premium is overdue or in a grace period for late
payment.
(j) All expenses and liability relating to all of the
Plans have been, and will on the Closing Date be, fully and properly accrued on
the Company's books and records and disclosed in accordance with generally
accepted accounting principles and in Plan financial statements.
(k) Any fidelity bond required to be obtained by the
Company under ERISA with respect to any Plan has been obtained and is in full
force and effect.
(l) The execution of this Agreement by the Company
and the consummation of the transactions contemplated hereunder will not, except
as set forth in Schedule 4.27(l), result in any obligation or liability to any
Plan, or to any employee or former employee of the Company.
4.28 Obligations to Pay Fees. Except as noted in Schedule
4.28, none of the Company or the Stockholders has any liability or obligation to
pay any fees or commissions to any investment banker, broker, finder or agent
with respect to the transactions contemplated by this Agreement for which Buyer
could become liable or obligated. None of the Subsidiaries has any liability or
obligation to pay any fees or commissions to any investment banker, broker,
finder or agent with respect to the transactions contemplated by this Agreement.
4.29 Completeness of Disclosure. The representations and
warranties contained in this Section 4 and in the Schedules delivered pursuant
hereto do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements and information
contained in this Section 4 and such Schedules, in light of the circumstances
under which they were made, not misleading.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER AND TGI
Buyer and TGI, each hereby represent and warrant to the
Company and the Stockholders as follows:
5.1 Organization, Good Standing, and Corporate Authority. Each
of Buyer and TGI is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has full corporate
power and authority to execute this Agreement and the other documents delivered
or to be delivered pursuant hereto, to perform all the terms and conditions
hereof and thereof to be performed by it, and to consummate the transactions
contemplated hereby and thereby. This Agreement and the other documents
delivered or to be delivered by Buyer and TGI in connection with this Agreement
have been duly authorized and approved by all necessary and proper corporate
action and constitute, and will constitute, the valid
19
and binding obligations of Buyer and TGI, enforceable against Buyer and TGI in
accordance with their respective terms.
5.2 No Violation. Neither the execution and delivery by Buyer
and TGI of this Agreement or the other documents delivered or to be delivered
pursuant hereto by Buyer and TGI and the performance by Buyer and TGI hereunder
or thereunder, nor the consummation of the transactions contemplated hereby or
thereby, will violate, conflict with, result in the breach of, or accelerate the
performance required by any of the terms, conditions or provisions of the
Certificate of Incorporation or Bylaws of Buyer or TGI, as the case may be, or
any covenant, agreement or understanding to which Buyer or TGI is a party or any
order, ruling, decree, judgment, arbitration award or stipulation to which Buyer
or TGI is subject, or constitute a default thereunder.
5.3 Consents and Approvals of Governmental Authorities and
Others. Except as noted in Schedule 5.03, no approval or authorization of,
filing or registration with, or notification to, any Governmental Authority is
required in connection with the execution and delivery of this Agreement by
Buyer or TGI or the performance of their respective obligations hereunder or the
consummation of the transactions contemplated hereby. Except as noted in
Schedule 5.03, no consent, approval or authorization of any Person is required
in connection with the execution or delivery of this Agreement by Buyer and TGI
, the purchase by Buyer of the Shares, or the performance by Buyer or TGI of any
other obligation under this Agreement.
5.4 Obligation to Pay Certain Fees. Neither Buyer, TGI nor any
of their respective officers, directors, employees or Affiliates has agreed to
pay any fees or commissions to any investment banker, broker, finder or agent
with respect to the transactions contemplated by this Agreement for which the
Company or the Stockholders could become liable or obligated.
5.5 Litigation. There are no actions, suits or proceedings
pending, or, threatened, by any Person or Governmental Authority challenging the
legality, validity or propriety of the transactions contemplated by this
Agreement.
5.6 Investment Intent. Buyer is acquiring the Shares for its
own account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act of 1933, as amended.
5.7 Completeness of Disclosure. The representations and
warranties contained in this Section 5 and in the Schedules delivered pursuant
to this Section 5 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 5 and such Schedules, in light of the
circumstances under which they were made, not misleading.
SECTION 6. COVENANTS OF THE COMPANY AND THE STOCKHOLDERS
20
Between the execution hereof and the Closing Date, the Company
and the Stockholders shall, and such Stockholders shall cause the Company, to do
the following:
6.1 Employees. Upon notice to and consent of the Company, the
Buyer may discuss the possibility of continued employment with current employees
of the Business, and the Company shall not unreasonably interfere with or impede
the Buyer's right to do so, either directly or indirectly.
6.2 Access to Offices, Officers, Accountants, Etc. Upon notice
to and consent of the Company, the Company will afford to, and will cause its
Affiliates to afford to, the officers and authorized representatives of Buyer
(including without limitation, attorneys, accountants, surveyors, building
inspectors, engineers, environmental consultants, insurance brokers, financial
advisors and bankers) access to the offices, officers, properties, Books and
Records of the Company and the Business, and to the attorneys, accountants and
other representatives of the Company and its Affiliates and with any and all
Persons Buyer deems appropriate, subject in each instance upon notice to and
consent of the Company, in order to enable it to consummate the transactions
contemplated hereby, and will furnish Buyer with such additional financial and
operating data and other information as to the Business and the Assets as Buyer
may from time to time reasonably request. Upon notice to and consent of the
Company, the Company will cooperate with Buyer as may be reasonably necessary to
facilitate Buyer's contacting vendors, dealers, customers and such other Persons
as Buyer and its representatives may desire to contact in connection with
Buyer's investigation of the Business.
6.3 Cooperation in Buyer's Environmental Investigation. In
connection with Buyer's Environmental Investigation the Company will:
(a) comply fully and completely with any request for
information made by Buyer or its agents in connection with any such
investigation;
(b) assist Buyer or its agents to obtain any records
pertaining to the Company or to properties owned, leased or operated by the
Company in connection with such an investigation; and
(c) accord Buyer and its agents access to all areas
of the properties owned or operated by the Company in connection with any such
investigation; provided however, Buyer shall be responsible for repairing, at
its sole cost and expense, any permanent damage or material diminution in the
fair value of such properties resulting from Buyer's Environmental
Investigation.
6.4 Approvals; Consents. The Company will: (a) promptly file
the notification required of it under the HSR Act relating to the purchase and
sale contemplated by this Agreement with the United States Department of Justice
and the Federal Trade Commission; (b) promptly respond to inquiries from the
United States Department of Justice and the Federal Trade Commission in
connection with such notification; (c) if requested by Buyer, request early
21
termination of the waiting period under the HSR Act; and (d) use its best
efforts, and cooperate with Buyer in its efforts, to obtain the consents of all
other parties to all Contracts, Open Orders, Permits, Environmental Permits and
other rights of the Company, which require the consent of such parties for the
consummation of the transactions contemplated hereby.
6.5 Environmental Obligations.
(a) The Company will provide Buyer with reasonable advance
notice of any activities the Company proposes to take to correct any
violations of the Environmental Laws relating to the Business, or to address
any Contamination present at or emanating from any Real Property, Leased Real
Property or other real property operated by the Company in connection with
the Business, and attributable to any actions on or affecting any Real
Property, Leased Real Property or other property operated by the Company in
connection with the Business. The Company shall undertake any such activities
in a manner which minimizes any interference with the Buyer's use or
enjoyment of or operations on the property following the Closing Date.
(b) The Company will keep Buyer reasonably informed of the
initiation, progress and completion of any corrective or response action the
Company undertakes in compliance with subsection (a) above. The Company will
provide to Buyer copies of all documents and correspondence submitted to and
received from third parties, including Governmental Authorities, in
connection therewith.
6.6 Preservation of Business Organization. The Company will
conduct the Business in the ordinary course, in a manner consistent with
applicable federal, state and local regulations, and use its best efforts to
preserve the Company's business relationships intact and to preserve the
goodwill of the Company with its suppliers, customers and others having
business relations with it.
6.7 Approval of Certain Transactions. Except as specifically
contemplated by this Agreement, without the prior written consent of Buyer,
the Company will not, at any time between the Effective Date and the Closing
Date, in the conduct of the Business:
(a) incur or agree to incur any liability or obligation or
enter into any agreement or transaction that cannot be canceled upon not more
than 30 days notice other than in the ordinary course of the Company's
operation of the Business and consistent with past practice;
(b) (i) mortgage, pledge or otherwise encumber or convey
any similar interest in, any Assets or (ii) except in the ordinary course of
the Company's operation of the Business and consistent with past practice,
sell, lease or convey any interest in any Assets;
(c) declare or pay any dividends or distribute cash or
securities to its Stockholders, make any direct or indirect redemption,
purchase or other acquisition of any of its capital structure, or issue any
additional shares of its capital stock or permit any transfer, assignment,
pledge or other alienation or encumbrance of any Shares;
22
(d) make any capital expenditures in excess of $25,000 in
the aggregate;
(e) conduct the Business other than in the ordinary course;
(f) waive or release any rights with respect to the Assets
or the Business other than in the ordinary course of the Company's operation
of the Business and consistent with past practice;
(g) change its methods of accounting;
(h) adopt or modify or pay any bonus, pension, profit
sharing or other compensation plan or enter into or modify any Contract of,
or terms and conditions of, employment other than: (i) offering and employing
persons pursuant to at-will employment relationships and terminating
employees in accordance with the exercise of prudent business judgment and
the Company's policies and practices; and (ii) as set forth on Schedule 6.07;
or
(i) take any other action (A) which would result in an
adverse change in the condition (financial or other), of the Company, the
Business or the Assets or (B) which, if taken prior to the date hereof, would
constitute a breach of any representation or warranty contained in Section 4
of this Agreement.
6.8 Exclusive Dealing. Between the Effective Date and the
Closing Date, neither the Company nor the Stockholders will:
(a) solicit or initiate discussions or engage in
negotiations with any Person other than Buyer (whether or not such
discussions are initiated by the Company or the Stockholders), with respect
to the possible acquisition of the Company, the Business, the Shares or the
Assets by such Person (whether by merger, purchase of capital stock, purchase
of assets, consolidation or otherwise);
(b) provide any information with respect to the Company,
the Business, the Shares or the Assets to any Person other than Buyer
relating to the possible acquisition of the Company, the Business, the Shares
or the Assets by such Person (whether by merger, purchase of capital stock,
purchase of assets, consolidation or otherwise) other than Buyer, its agents,
representatives, and advisors who have or need to know such information for
the purposes of this transaction, and the Company and the Stockholders; or
(c) enter into a transaction with any Person other than
Buyer concerning the possible acquisition of the Company, the Business, the
Shares or the Assets by such Person (whether by merger, purchase of capital
stock, purchase of assets, consolidation or otherwise).
6.9 Update Schedules. Prior to the Closing Date, the Company
and the Stockholders shall disclose to Buyer any information contained in the
representations and warranties of the Company and such Stockholders contained
in Section 4 or in the Schedules
23
delivered pursuant thereto which is no longer true or complete. Any such
disclosures shall not be deemed to modify, amend or supplement such
representations and warranties unless otherwise agreed in writing by Buyer.
6.10 Further Assurances. From time to time after the Closing,
at Buyer's request and without further consideration, the Stockholders will
execute and deliver such other and further instruments of conveyance,
assignment and transfer, and take such other action as Buyer may reasonably
request for the more effective conveyance, transfer and enjoyment of the
Shares.
6.11 Tax Returns. Buyer will cause the Company to prepare and
file the United States federal and state income tax returns of the Company
for the taxable periods ending on or prior to the Effective Date. Buyer shall
provide the Stockholders an opportunity to review and approve of all such tax
returns of the Company, which approval may not be unreasonably withheld. If
the Stockholders should withhold such approval, they shall notify Buyer
within ten Business Days of receipt of such tax returns of their disapproval
or otherwise waive their right to challenge the tax returns. The parties
shall then use reasonable efforts to resolve such disagreement. If the
parties remain unable to resolve such disagreement within ten Business Days
of notice of disagreement from the Stockholders to Buyer, Buyer, shall retain
a "Big Six" national accounting firm, other than Ernst & Young LLP (the "Tax
Arbitrator"), to determine whether the tax returns were prepared in
accordance with prudent tax practices. If the Tax Arbitrator determines that
such tax returns were prepared in accordance with prudent tax practices, then
the tax returns shall be filed with the respective governmental agency in the
manner prepared by Buyer, and the Stockholders shall be responsible for all
costs incurred by the Tax Arbitrator in resolving the dispute. If the Tax
Arbitrator determines that such tax returns were not prepared in accordance
with prudent tax practices, then the tax returns shall be filed in the manner
directed by the Tax Arbitrator, and Buyer shall be responsible for all costs
incurred by the Tax Arbitrator in resolving the dispute.
SECTION 7. COVENANTS OF BUYER
7.1 Confidentiality. If the transactions provided for herein
are not consummated, unless otherwise required by law, Buyer and its
officers, agents and representatives will hold in strict confidence all
information obtained from the Company and its officers, agents or
representatives, and the Stockholders in accordance with the terms and
conditions of the Confidentiality Agreement dated May 20, 1998 between TGI
and Heartland Consultants, L.C. for the benefit of the Company.
7.2 Approvals; Consents. The Buyer will: (a) promptly file the
notification required of it under the HSR Act relating to the purchase and
sale contemplated by this Agreement with the United States Department of
Justice and the Federal Trade Commission; (b) promptly respond to inquiries
from the United States Department of Justice and the Federal Trade Commission
in connection with such notification and (c) cooperate with the Company and
the Stockholders in obtaining all necessary consents and approvals to
consummate the transactions
24
contemplated hereby. Buyer shall not be required to pay any fees or make any
other payments in connection with this paragraph except for the applicable fee
for the HSR filing referred to in (a) hereof, which fee shall be at Buyer's
expense.
7.3 Employees. TGI hereby agrees to consider those persons
listed on Schedule 7.03 as "Employees" eligible to participate in TGI's 1996
Stock Option Plan. Further, Buyer and TGI agree that for a period of not less
than 60 days after the closing, Buyer shall not engage in a "plant closing"
or "mass layoff" at the Company's facilities as such terms are defined in the
Worker Adjustment and Retraining Notification Act, 29 U.S.C. Section 2101, et
seq., and regulations issued thereunder, 20 C.F.R. 639.
7.4 Purchase Price. Buyer shall have sufficient immediately
available funds at Closing to pay to the Stockholders the Purchase Price set
forth in Section 2.02.
7.5 Further Assurances. From time to time after the Closing,
at Stockholders' request and without further consideration, the Buyer, and to
the extent necessary, TGI, will execute and deliver such other and further
instruments necessary for the proper conveyance, assignment and transfer of
the Shares.
SECTION 8. NON-COMPETITION
In order to induce Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, each of the Stockholders
hereby covenants as follows, which covenants shall be in addition and without
prejudice to any other noncompetition, nonsolicitation and/or similar
covenants to which the Stockholders may be subject from time to time,
including without limitation, those set forth in any employment agreement
between Buyer and either Stockholder:
8.1 Restriction of Management and Investment. For a period of
seven years after the Closing Date (which applicable period shall
automatically be extended with respect to either Stockholder by a period of
time equal to any period in which such Stockholder is in breach of any
obligations under this Section 8, including any such extension, the
"Restricted Period"), no Stockholder shall engage, directly or indirectly
(except as a stockholder, director, officer, and/or employee of Buyer), as a
proprietor, equityholder, investor (except as an investor holding not more
than 3% of the outstanding capital stock or other securities of a publicly
held company), lender, partner, director, officer, employee, consultant, or
representative, or in any other capacity, in the Business.
The Stockholders shall receive no further consideration in
connection with the non-competition covenant contained in this Section 8.
8.2 Restriction on Solicitation of Employees. During the
Restricted Period, no Stockholder shall directly or indirectly recruit,
solicit, induce, or attempt to induce any of the employees or independent
contractors of Buyer or any of its Affiliates to terminate their
25
employment or contractual relationship with Buyer or any such Affiliate; and
none of them shall assist any other Person to do so, or be a proprietor,
equityholder, investor (except as an investor holding not more than 3% of the
capital stock or other securities of a publicly held company), lender,
partner, director, officer, employee, consultant, or representative of any
Person who does or attempts to do so; provided however, a Stockholder shall
not in any event be prohibited from employing personnel of the Buyer who
respond to any such Stockholder's or affiliated company's general
solicitations of employment through general advertisements.
8.3 Restrictions on Solicitations of Customers. During the
Restricted Period, no Stockholder shall directly or indirectly solicit,
divert, take away, or attempt to divert or take away, from Buyer or any of
its Affiliates any of the business or patronage of any of their respective
customers, clients, accounts, vendors, or suppliers, and no Stockholder shall
assist any other Person to do so, or be a proprietor, equityholder, investor
(except as an investor holding not more than 3% of the capital stock or other
securities of a publicly held company), lender, partner, director, officer,
employee, consultant, or representative of any Person who does or attempts to
do so.
8.4 Equitable Relief. Each Stockholder hereby acknowledges
that any breach by him of his obligations under this Section 8 would cause
substantial and irreparable damage to Buyer and its Affiliates; and that
money damages would be an inadequate remedy therefor, and accordingly,
acknowledges and agrees that each Buyer or any Affiliate shall be entitled to
an injunction, specific performance, and/or other equitable relief to prevent
the breach of such obligations (in addition to all other rights and remedies
to which such party may be entitled in respect of any such breach).
8.5 Enforceability. In the event that a court of competent
jurisdiction determines that any of the provisions of this Section 8 would be
unenforceable as written because they cover too extensive a geographic area,
too broad a range of activities, or too long a period of time, or otherwise,
then such provisions shall automatically be modified to cover the maximum
geographic area, range of activities, and period of time as may be
enforceable, and in addition, such court or arbitrators are hereby expressly
authorized so to modify this Agreement and to enforce it as so modified. No
invalidity or enforceability of any section of this Agreement or any portion
thereof shall affect the validity or enforceability of any other section or
of the remainder of such section.
8.6 Termination of Employment. Notwithstanding any other
provision of this Section 8, the provisions of this Section 8 shall not
apply, and shall be of no further force and effect with respect to Xxxxxxx X.
Xxxxxx or Xxxxx X. Xxxxxx in the event that either is terminated from
employment without Cause or resigns from employment for Good Reason as those
terms are defined in their respective employment agreements; provided,
however, that the non-competition provisions of the respective employment
agreements of Xxxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx shall continue to apply
in accordance with their terms, and provided further, however, that the
26
termination of either Xxxxxxx X. Xxxxxx'x or Xxxxx X. Xxxxxx'x employment
shall not affect the applicability of this Section 8.06 to the other Xxxxxx.
SECTION 9. CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF BUYER
The obligation of Buyer to acquire the Shares and pay the
Purchase Price is subject to the satisfaction or waiver in writing by the
Buyer, on or prior to the Closing Date, of each of the following express
conditions precedent:
9.1 Corporate Action. All corporate and other actions
necessary to authorize and effectuate the consummation of the transactions
contemplated hereby by the Company shall have been duly taken prior to the
Closing, and the Company shall have delivered to Buyer a certificate of a
duly authorized officer of the Company to that effect.
9.2 Representations and Warranties. The representations and
warranties of the Company and the Stockholders made in or pursuant to this
Agreement (without giving any effect to the modifications to the Schedules
contemplated in Section 6.09) shall be true and correct in all material
respects on and as of the Closing Date with the same effect as though all
such representations and warranties had been made on and as of such date
(except for representations and warranties that expressly relate to a
specified date, which need be true and correct only as of the specified
date), and there shall have been delivered to Buyer certificates to that
effect, dated the Closing Date, signed by a duly authorized officer of the
Company and by each Stockholder.
9.3 Performance of Obligations. Each and all of the covenants
and agreements of the Company and the Stockholders to be performed or
complied with pursuant to this Agreement on or prior to the Closing Date
shall have been duly performed and complied with in all material respects or
duly waived and there shall have been delivered to Buyer a certificate to
that effect, dated the Closing Date, signed by a duly authorized officer of
the Company and each Stockholder.
9.4 Due Diligence Investigation. The results of those
components of Buyer's due diligence investigation specifically identified on
Schedule 9.04 attached hereto.
9.5 Delivery of Documents. In addition to those documents
required by Sections 9.01, 9.02 and 9.03, each of the following documents
shall have been delivered to Buyer:
(a) an opinion of Xxxxx, Xxxx & Fingersh, counsel to the
Company, dated the Closing Date, in a form reasonably satisfactory to Buyer;
(b) employment agreements executed by each of the Newells,
in the form of Exhibit B;
27
(c) the certificates for the Shares;
(d) the pay-off statements and UCC-3 termination
statements and/or mortgage satisfaction pieces releasing and terminating any
liens and security interests on the Assets and the Shares identified on
Schedule 9.05 attached hereto; and
(e) such other documents as Buyer may reasonably request
for the purpose of facilitating the consummation or performance of any of the
transactions contemplated by this Agreement.
9.6 Required Consents. The Company shall have obtained all
material consents and approvals of all Persons and all Governmental
Authorities required for the transactions contemplated hereby, and all
waiting periods specified by law (including any extensions thereof) the
expiration of which is necessary for the consummation of such transactions
(including, without limitation, the waiting period under the HSR Act) shall
have expired or been otherwise terminated.
9.7 Litigation. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby and there shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any court or governmental agency or
other regulatory or administrative agency or commission: (a) challenging any
of the transactions contemplated by this Agreement; (b) seeking material
monetary relief by reason of the consummation of such transactions; or (c)
which would have a material adverse effect on the Assets or the Business
following the Closing Date.
9.8 Governmental Action; Damage to Property. There shall not
have occurred any (a) seizure by any Governmental Authority of all or a
portion of the Assets, or (b) material damage, destruction or other
impairment of or to all or a portion of the Assets including, without
limitation, damage, destruction or other impairment caused by theft, fire,
any casualty or the negligence of any Person, including the Company and the
Stockholders.
9.9 No Adverse Change. There have been no material adverse
changes to the consolidated financial condition of the Company or the
Business.
SECTION 10. CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF THE STOCKHOLDERS
The obligation of the Stockholders to sell the Shares hereunder
is subject to the satisfaction, or waiver in writing by the Stockholders on
or prior to the Closing Date, of each of the following express conditions
precedent:
10.1 Corporate Action. All corporate and other actions
necessary to authorize and effectuate the consummation of the transactions
contemplated hereby by Buyer shall have been
28
duly taken prior to the Closing, and Buyer shall have delivered to the
Stockholders a certificate of a duly authorized officer of Buyer to that
effect. The Board of Directors of TGI shall have approved the authorization
and consummation of the transaction no later than July 7, 1998.
10.2 Representations and Warranties. The representations and
warranties of Buyer made in or pursuant to this Agreement shall be true and
correct on and as of the Closing Date in all material respects with the same
effect as though all such representations and warranties had been made on and
as of such date and there shall have been delivered to the Stockholders a
certificate to that effect, dated the Closing Date, signed by a duly
authorized officer of Buyer.
10.3 Performance of Obligations. Each and all of the covenants
and agreements of Buyer to be performed or complied with pursuant to this
Agreement on or prior to the Closing Date shall have been duly performed or
complied in all material respects with or duly waived and there shall have
delivered to the Stockholders a certificate to such effect, dated the Closing
Date, signed by a duly authorized officer of Buyer.
10.4 Delivery of Documents. In addition to those documents
required by Sections 10.01, 10.02 and 10.03, each of the following documents
shall have been delivered to the Stockholders:
(a) employment agreements with each of the Newells, in the
form of Exhibit B; and
(b) opinion of counsel of TGI in a form reasonably
satisfactory to the Company.
10.5 Litigation. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby, and there shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any court or governmental agency or
other regulatory or administrative agency or commission: (a) challenging any
of the transactions contemplated by this Agreement or (b) seeking monetary
relief by reason of the consummation of such transactions.
10.6 Required Consents. Buyer shall have obtained all consents
necessary for the transaction, including those under the HSR Act or, as
applicable, the termination of the waiting period under the HSR Act.
10.7 Release of Guarantees. The Stockholders shall have been
released as guarantors under the guarantees listed on Schedule 10.07.
29
SECTION 11. SURVIVAL OF REPRESENTATIONS,
WARRANTIES AND COVENANTS
All representations and warranties made by the Company, either
Stockholder or Buyer as to any fact or condition existing on or before the
Closing Date in this Agreement, in any exhibit, schedule or in any
certificate delivered pursuant hereto shall survive the Closing for a period
of two years, except the representations and warranties in Section 4.16,
which shall survive the Closing for the applicable statute of limitations
period, in Section 4.20, which shall survive the Closing for a period of
three years, and in Section 4.26, which shall survive for a period of seven
years; provided, that there shall be no termination of any such
representation or warranty as to which a good faith claim has been asserted
in writing prior to the termination of any such survival period. All such
representations and warranties shall be unaffected by any investigation made
by or on behalf of Buyer, the Company or either Stockholder or by any
knowledge obtained as a result thereof or otherwise.
SECTION 12. INDEMNIFICATION
12.1 Indemnity by the Company and the Stockholders. The
Stockholders, jointly and severally (except as provided in this Section 12.01
below), shall defend, indemnify and hold Buyer, its officers, directors,
employees, Subsidiaries and Affiliates harmless from and against all Losses
arising out of or resulting from:
(a) any breach of the representations and warranties made
by the Company or the Stockholders in this Agreement or the failure of such
representations and warranties to be true and correct;
(b) any failure by the Company or the Stockholders to
carry out, perform, satisfy and discharge any of his or its covenants,
agreements, undertakings, liabilities or obligations under this Agreement or
under any of the documents delivered by the Company or the Stockholders
pursuant to this Agreement;
(c) any infringement of any patent, trademark, copyright
and/or unfair competition rights arising out of the Company's, its
Subsidiaries' or customers' use of any Intellectual Property, Technical
Information or Computer Software Assets, or the manufacture, use or sale by
the Company, its Subsidiaries or customers of any products or services
incorporating or reflecting any Intellectual Property or Technical
Information;
(d) any failure by the Company to comply with or have
complied with any Environmental Laws, or from any Contamination resulting
from the Company's operation of the Business or present at, threatening or
emanating from any property which the Business has owned, leased or operated
and attributable in any way to actions occurring or conditions existing prior
to the Closing Date, including, but not limited to Contamination described in
Schedule 4.26(c);
30
Confidential treatment is being requested for bracketed material which has
been filed separately with the Securities and Exchange Commission.
(e) any failure of any Software, Hardware, Database,
Embedded Control or Product owned, used or manufactured by the Company to be
Year 2000 Complaint;
(f) any Product Liabilities;
(g) Taxes of the Company or the Stockholders attributable
to taxable periods ending on or before the Closing Date and any Taxes imposed
by any Governmental Authority upon an audit of any taxable period ending on
or before the Closing Date;
(h) any claims (other than a claim addressed in clauses
(d), (e) and (g) above) asserted by third parties against Buyer relating to
the ownership, occupation and/or operation of the Business, the Assets or any
other property occupied by the Company in connection with the Business prior
to the Closing Date; and
(i) any suit, action or other proceeding brought by any
Person or Government Authority (other than any suit, action or other
proceeding addressed in clauses (d), (e) and (g) above) asserting any of the
matters referred to in this Section 12.01;
provided, however, (except with respect to any suit, action or other
proceeding addressed in clause (g) above to which this provision shall not
apply), the Stockholders shall have no liability (for indemnification or
otherwise) to Buyer until the total of all Losses with respect to the matters
in this Section 12 exceeds $ [ ], and then only for the amount by which
such Losses exceed $[ ]; provided, however, that notwithstanding any
other provision of this Section 12.01, that each of the following
Stockholder's liability shall not exceed the following amounts: Xxxxxxx X.
Xxxxxx: $[ ]; and Xxxxx X. Xxxxxx: $[ ]. In no event shall the
Stockholders be liable, in the aggregate (subject always to the monetary
limits specified in the preceding sentence), for any amounts in excess of (x)
$[ ] during the period commencing on the Effective Date and ending two
years thereafter, and (y) for any amounts in excess of $[ ] (less the
amount of any liabilities from Losses incurred by such Stockholders pursuant
to clause (x) above) during the period commencing two years after the
Effective Date and ending on the applicable termination date of
indemnification as set forth in Section 12.04. Any amounts dispersed from the
Escrow Fund to Buyer on account of any Losses incurred by Buyer pursuant to
this Section 12.01 shall be applied toward the maximum indemnity obligations
of the Stockholders for Losses under this Section 12.01.
12.2 Indemnity by Buyer. Buyer will indemnify and hold the
Stockholders harmless from and against all Losses arising out of or resulting
from:
(a) any breach of any representations and warranties made
by the Buyer in or pursuant to this Agreement or the failure of such
representations and warranties to be true and correct;
(b) any failure by Buyer to carry out, perform, satisfy
and discharge any of its respective covenants, agreements, undertakings,
liabilities or obligations under this Agreement or any of the documents and
materials delivered by Buyer pursuant to this Agreement;
31
(c) any claims asserted by third parties against the
Company or either Stockholder relating to the ownership, occupation or operation
of the Business or the Assets by Buyer after the Closing Date; and
(d) any suit, action, or other proceeding brought by
any Person or Governmental Authority asserting any of the matters referred to in
this Section 12.02.
12.3 Notice of Claim. The indemnified party shall promptly
notify the indemnifying party in writing in reasonable detail of any claim,
demand, action or proceeding for which indemnification will be sought under this
Section 12; provided, however, that until the earlier of the first anniversary
of the Closing and the disbursement of the Escrow Fund by the Buyer, the parties
hereto shall pursue any such claims exclusively among Buyer and the Stockholders
in accordance with the terms of Section 2.02(b), which Escrow Fund, to the
extent of any amount paid to Buyer pursuant to Section 12.01, shall be applied
toward the maximum indemnity obligation of the Stockholders for Losses under
Section 12.01. If such claim, demand, action or proceeding is a third party
claim, demand, action or proceeding (a "Third Party Claim"), the indemnifying
party will have the right at its expense to assume the defense thereof using
counsel reasonably acceptable to the indemnified party. The indemnified party
shall have the right to participate, at its own expense, with respect to any
such Third Party Claim. In connection with any such Third Party Claim, the
parties shall cooperate with each other and provide each other with access to
relevant books and records in their possession. No such Third Party Claim shall
be settled without the prior written consent of the indemnified party. If a firm
written agreement is made by, or with the approval of the indemnifying party to
settle any such Third Party Claim and the indemnified party unreasonably refuses
to consent to such settlement, then: (a) the indemnifying party shall be excused
from, and the indemnified party shall be solely responsible for, all further
defense of such Third Party Claim; (b) the maximum liability of the indemnifying
party relating to such Third Party Claim shall be the amount of the proposed
settlement if the amount thereafter recovered from the indemnified party on such
Third Party Claim is greater than the amount of the proposed settlement; and (c)
the indemnified party shall pay all attorneys' fees and legal costs and expenses
incurred after rejection of such settlement by the indemnified party.
12.04 Termination of Indemnification.
(a) The right of Buyer to be indemnified under this
Section 12 shall survive:
(i) as to matters described in Sections
12.01(a), 12.01(b), 12.01(c), 12.01(f), 12.01(h) and 12.01(i), until the second
anniversary of the Closing Date;
(ii) as to matters described in Sections
12.01(g), until the termination of the applicable statute of limitations
(including any waivers or extensions thereof agreed to by Buyer);
32
(iii) as to matters described in Section
12.01(e), until the third anniversary of the Closing Date; and
(iv) as to matters relating to Environmental
matters in Section 12.01(d), until the seventh anniversary of the Closing Date.
(b) The right of the Company and the Stockholders to
be indemnified under this Section 12 shall survive until the second anniversary
of the Closing Date.
(c) Notwithstanding subsections (a) and (b) hereof:
(i) any indemnity claim based on fraudulent
misrepresentations or fraudulent material omission or fraudulent breach of
warranty shall survive without any time limitations; and
(ii) any good faith indemnity claim based on
any matter which has been described in a notice to an indemnifying party
pursuant to Section 12.03 of this Agreement prior to the expiration of the
applicable time limitation set forth in subsections (a) and (b) above shall
survive until the claim is finally resolved.
12.05 Recovery. The right to indemnification of either party
hereunder shall be limited to the amount of the actual damages sustained by the
indemnified party net of any insurance proceeds payable to or for the benefit of
such indemnified party. If any indemnified party receives such a recovery after
receipt of payment, with respect to all Losses, then the amount of such recovery
or benefit (but not exceeding the amount of such Losses), net of reasonable
expenses incurred in obtaining the recovery or benefit shall be paid to the
indemnifying party.
12.06 Set Off. Buyer may and is hereby authorized at any time
and from time to time to set off and apply against any sum which is due and
payable to either Stockholder by Buyer under this Section 12 any sum, liability
or other obligation which may be owed to Buyer by either Stockholder under this
Agreement, pending final determination of such matters. The rights under this
Section 12.06 are in addition to any other rights and remedies which Buyer may
otherwise have.
12.07 Exclusive Remedy. The parties' rights to indemnification
under this Section 12 with respect to any Losses shall be their sole and
exclusive remedy with respect to Losses, and neither party shall be entitled to
pursue, and each hereby expressly waives, any and all rights that may otherwise
be available either at law or in equity with respect thereto.
33
SECTION 13. TERMINATION AND AMENDMENT
34
13.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by mutual written agreement of the Buyer and the
Company;
(b) by Buyer if at any time it reasonably
determines that the conditions precedent to its obligations hereunder in Section
9 hereof will not be satisfied prior to July 31, 1998;
(c) by the Company and the Stockholders if at
any time they reasonably determine that the conditions precedent to their
obligations hereunder in Section 10 hereof will not be satisfied prior to July
31, 1998;
(d) by Buyer if the transactions contemplated
hereby have not been consummated, through no fault or failure of the Buyer, on
or before July 31, 1998; or
(e) by the Company and the Stockholders if such
transactions have not been consummated, through no fault or failure of the
Company and the Stockholders on or before July 31, 1998.
13.2 Effect of Termination. If either Buyer or the Company
and the Stockholders terminate this Agreement pursuant to Section 13.01, this
Agreement, except for the provisions of Sections 7.01, 14.01, 14.03, 14.04,
14.05 and 14.06 shall become void and have no effect. Notwithstanding the
foregoing, nothing in this Section 13.02 shall relieve any party to this
Agreement for breach of any provision of this Agreement. If it is judicially
determined that termination of this Agreement was the result of any
intentional breach of this Agreement, then, in addition to other remedies at
law or in equity for breach of this Agreement, the party so found to have
intentionally breached this Agreement shall indemnify and hold harmless the
other for their respective costs, fees and expenses of counsel, accountants,
financial advisors or other experts and advisors as well as fees and expenses
incident to negotiation, preparation and execution of this Agreement and
related documentation.
13.3 Amendment. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Buyer, the Company and the Stockholders. No waiver by any party of any
default, misrepresentation or breach of a warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation or breach of a warranty or covenant
hereunder or affect in any way any rights arising by virtue of any default,
misrepresentation or breach prior or subsequent to such occurrence.
35
SECTION 14. GENERAL
14.1 Costs and Expenses. The Company and Buyer shall each
pay, without right of reimbursement from the other, all costs incurred by it
incident to the preparation, execution and delivery of this Agreement and the
performance of its obligations hereunder, whether or not the transactions
contemplated by this Agreement shall be consummated, including, without
limitation, fees and disbursements of legal counsel, accountants, and
consultants employed by the respective parties hereto in connection with the
transactions contemplated by this Agreement; provided however, that any such
costs attributable to the Company and unpaid as of the Effective Date shall
be properly accrued on the Estimated Effective Date Balance Sheet.
14.2 Parties in Interest; Assignment.
(a) This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns. Except as otherwise expressly provided in this Agreement,
this Agreement is not made for the benefit of any Person not a party hereto, and
nothing in this Agreement will be construed as giving any Person, other than the
parties hereto and their respective successors and permitted assigns, any right,
remedy or claim under or in respect of this Agreement, or any provision hereof.
(b) This Agreement shall not be assigned by Buyer,
the Company or the Stockholders without the prior written consent of the
Buyer, the Company and the Stockholders; provided, that Buyer shall have the
right to assign all or any portion of its rights and obligations under this
Agreement to an Affiliate of Buyer without consent of the other parties. Any
such assignment shall not release Buyer from its obligations herein.
14.3 Confidentiality. Each party to this Agreement shall
maintain in strict confidence the negotiation or existence of this Agreement,
the identity of the parties hereto and any nonpublic information concerning
the other parties or their Subsidiaries or Affiliates provided to or
discovered by any of them or their respective representatives and shall not
disclose any of the above information to anyone other than: (a) those people
directly involved in the investigation and negotiations pertaining to the
transactions contemplated by this Agreement, including without limitation,
attorneys, accountants and similar representatives; and (b) such Persons or
Governmental Authorities whose consents or approvals may be necessary or to
whom notice needs to be given to permit consummation of the transactions
contemplated hereby.
14.4 Public Statements. Neither party to this Agreement shall,
without the prior written consent of the other parties hereto, make or cause to
be made any press release or other public statement or announcement that
directly or indirectly discloses the transactions contemplated by this
Agreement; provided, however, that Buyer and the Company may make any public
disclosure which it is advised by independent counsel it is required to make by
applicable law or any listing or trading agreement concerning its publicly
traded securities, only after notice and a reasonable opportunity to review is
given to the other party.
36
14.5 Choice of Law. This Agreement shall be governed by,
construed, interpreted and the rights of the parties determined in accordance
with the laws, including equitable principles but without regard to principles
of conflict of laws, of the State of Delaware.
14.6 Mediation. In the event of a dispute arising out of or
related to this Agreement (other than with respect to the determination of the
Final Effective Date Net Book Value), the parties shall, prior to initiating
litigation, first submit the dispute to non-binding mediation under the
commercial mediation rules of the American Arbitration Association at its St.
Louis, Missouri offices. The parties hereby acknowledge and agree that such
mediation shall be deemed to be in the nature of settlement discussions and that
neither the fact that such discussions took place, nor any statement or conduct
of any participant in such discussions shall be admissible into evidence in any
subsequent litigation or in any arbitration or other dispute resolution
proceeding involving the parties. It is further understood and agreed that any
disclosure in any form, including oral, by any Person participating in such
mediation shall not operate as a waiver of any privilege, including work product
or attorney-client privilege, applicable to the subject matter thereof.
14.7 Notices. Any notice, request, consent, waiver or other
communication required or permitted to be given hereunder shall be effective
only if in writing and shall be deemed sufficiently given only if delivered in
person or sent by telecopy, by a nationally-recognized overnight courier or by
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Company:
Nu-Tech Industries Holding Company
0000 Xxxx 000xx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxxx III, Esquire
Xxxxx, Xxxx & Fingersh
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
If to the Stockholders:
Xxxxxxx X. Xxxxxx
0000 Xxxxxx
Xxxxxxx, XX 00000
37
Xxxxx X. Xxxxxx
0000 Xxxxxxxx
Xxxxxxx, XX 00000
with a copy to:
Xxxxxxx X. Xxxxxxxx III, Esquire
Xxxxx, Rice & Fingersh
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX
Fax: (000) 000-0000
If to Buyer:
The Triumph Group Operations, Inc.
Four Glenhardie Corporate Center
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000
Attention: President
Fax: (000) 000-0000
38
with a copy to:
Xxxxxxx X. Xxxxxxxxxxx, Esquire
Vice President and General Counsel
Triumph Group, Inc.
Four Glenhardie Corporate Center
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000
Fax: (000) 000-0000
or to such other Person or address as either such party may have specified in a
notice duly given by the sender as provided herein. Such notice or communication
shall be deemed to have been given as of the date so personally delivered, on
the Business Day following delivery by sender to such an overnight courier,
three Business Days after mailing or when receipt is confirmed if delivered by
telecopy.
14.8 Entire Agreement. This Agreement (including the
Schedules and Exhibits attached hereto) and the documents referred to herein
as having been entered into by all of the parties hereto, or delivered by a
party hereto to another party hereto, constitute the entire agreement and
understanding of the parties relating to the subject matter hereof and
supersede all prior and contemporaneous agreements and understandings,
representations and warranties, whether oral or written, relating to the
subject matter hereof (other than the Confidentiality Agreement, dated May
20, 1998, between TGI and Heartland Consultants, L.C. for the benefit of the
Company).
14.9 Cumulative Remedies. The rights and remedies provided
in this Agreement are cumulative and are not exclusive of any rights or
remedies a party may otherwise have at law or in equity.
14.10 Waiver. Any failure of the Company, the Stockholders
or Buyer to comply with any obligation, covenant, agreement or condition
contained herein may be expressly waived in writing by Buyer in the case of any
such failure by the Company or the Stockholders, or by the Company and the
Stockholders, in the case of any such failure by Buyer, but such waiver or
failure to insist upon strict compliance shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 14.10.
14.11 Severability. The unenforceability or invalidity of
any Section or subsection or provision of this Agreement shall not affect the
enforceability or validity of the balance of this Agreement. If any provision
of this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only as broad as is enforceable.
39
14.12 Headings. The headings of the Sections and
subsections contained in this Agreement are for reference purposes only and
shall not in any way affect the meaning, interpretation, enforceability or
validity of this Agreement.
14.13 Counterparts. This Agreement may be executed in any
number of counterparts, each of which so executed will be deemed to be an
original, but all of which together will constitute one and the same agreement.
14.14 Facsimiles. Any facsimile signature of any party
hereto or to any other agreement executed in connection herewith shall
constitute a legal, valid and binding execution hereof by such party.
14.15 Construction. The Company, the Stockholders and the
Buyer hereby agree that any rule of law or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against
the party that drafted it has no application and is expressly waived. Within
this Agreement, 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. Section, Exhibit
and Schedule references contained in this Agreement refer to those contained
in or attached to this Agreement unless otherwise specified.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
BUYER:
THE TRIUMPH GROUP OPERATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Vice President
COMPANY:
NU-TECH INDUSTRIES HOLDINGS COMPANY
By:/s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
40
STOCKHOLDERS:
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
With respect to Sections 2.02(a),
2.03(a), 2.03(b), 5.01, 5.02, 5.03,
5.04, 5.05, 5.06, 5.07, 7.03 and
7.05 hereof:
TRIUMPH GROUP, INC.
By:/s/ Xxxxxxx X. Xxxxxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Vice President
41
Schedule 1 - Definitions
"Accounts Receivable" means all accounts and notes receivable
of the Company arising from the Business, including intercompany receivables
for products shipped or sold by the Business to the Company or an Affiliate of
the Company.
"Affiliate" means with respect to any Person, any Person who
controls, is controlled by, or is under common control with, the designated
entity. Ownership, directly or indirectly, of 20% or more of the voting stock
or other equity interest of a Person shall be deemed to constitute control.
"Assets" means all of the assets, properties and rights of
every kind and description, real, personal and mixed, tangible and intangible,
wherever situated.
"Bid Balance Sheet" means the consolidated balance sheet of
the Company at April 30, 1998 and included in the Financial Statements attached
to this Agreement in Schedule 4.09(a).
"Bid Balance Sheet Date" means April 30, 1998.
"Bid Net Book Value" means the Assets minus depreciation of
such Assets minus the amount of the liabilities (to the extent properly
reflected on a balance sheet prepared in accordance with GAAP) all as set forth
on the Bid Balance Sheet.
"Books and Records" means all books of account and other
financial records of the Company relating to the Business.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended.
"Change in Control" shall be deemed to have occurred if any
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended) becomes the "beneficial owner"
(as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) of securities of TGI or the Company ("Voting Securities")
representing more than forty percent (40%) of the total aggregate voting
power of TGI's or the Company's then outstanding securities entitled to vote
generally in the election of directors, and such person or group owns more
aggregate voting power of TGI's or the Company's then outstanding securities
entitled to vote generally in the election of directors than any other
person; provided however, that a "Change in Control" shall not be deemed to
have occurred (1) with respect to TGI, if Citicorp Venture Capital, Ltd., or
any Affiliate thereof shall own, either directly or indirectly, more than 40%
of TGI's then outstanding Voting Securities or securities convertible into
such Voting Securities and (2) with respect to the Company, if an Affiliate
of TGI shall own,
42
either directly or indirectly, more than 40% of the Company's then
outstanding Voting Securities or securities convertible into such Voting
Securities.
"Closing" means the act or acts by which the transactions
contemplated by the Agreement are accomplished.
"Closing Date" means the date on which the Closing occurs.
Unless the parties otherwise agree, any references to "after the Closing Date"
means any time after the normal close of business of the Company on the Closing
Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" as used herein, unless the context requires
otherwise, shall include its Subsidiaries.
"Computer Software Assets" means all Software, data rights,
documentation and associated license, escrow, support and maintenance agreements
used in the conduct of the Business.
"Contamination" means the uncontained presence of Hazardous
Substances at any property, or arising from any property, which may require
remediation or otherwise give rise to liability under any applicable law.
"Contracts" means all contracts, orders for spare parts,
distribution agreements, service agreements, development agreements,
consulting agreements, guarantees, commitments, instruments and other
agreements.
"Database" means all data and other information recorded,
stored, transmitted and retrieved in electronic form by a system or any
component, whether located on any component or components of a system or
archived in storage media of a type employed or used in conjunction with any
component or system.
"Embedded Control" means any microprocessor, microcontrol,
smart instrumentation or other sensor, driver, monitor, robotic or other
device controlling a semiconductor, memory circuit, BIOS, PROM or other
microchip which performs some electronic or computer logic function.
"Environmental Investigation" means the investigation
commissioned by Buyer of the Company's compliance with the Environmental
Laws, the presence of Hazardous Substances or other toxic or hazardous
materials on properties owned, leased or operated by the Company and the uses
and condition of disposal sites for waste generated in connection with the
operations of the Company.
43
"Environmental Laws" means all environmental or health and
safety statutes, ordinances, regulations, orders, directives, decrees,
permits, governmental approvals, contractual requirements and requirements of
common law concerning (i) activities relating to the Business, (ii) the
Assets or any other properties or assets owned, leased or operated by or in
connection with the Business, (iii) repairs or construction of any
improvements, (iv) handling of any materials, (v) discharges into the air,
soil, surface, water or ground water and (vi) storage, treatment or disposal
of any waste at or connected with any activity at such properties.
"Environmental Lien" means any lien against the property
held by the United States under CERCLA, or any lien held by any other
Governmental Authority under any other Environmental Law.
"Equipment" means all machinery, equipment, leasehold
improvements, owned trucks, owned automobiles, office furniture, office
equipment, computing and telecommunications equipment (including the software
loaded on such equipment), including leased equipment if the lease agreement
relating thereto is a Lease; existing patterns, dies, jigs, fixtures,
tooling, test equipment and working models.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means a member of a "controlled group" of
organizations within the meaning of Section 414(b), (c), (m) or (o) of the Code.
"Estimated Effective Date Balance Sheet" means the special
purpose balance sheet at the Effective Date prepared by the Stockholders prior
to the Closing in accordance with Section 2.03(c) of this Agreement.
"Estimated Effective Date Net Book Value" means the Assets
minus depreciation of such Assets as of the Bid Balance Sheet Date, minus the
amount of the liabilities (to the extent properly reflected on a balance sheet
prepared in accordance with GAAP), as reflected on the Estimated Effective Date
Balance Sheet.
"Final Effective Date Balance Sheet" means the special
purpose balance sheet prepared by Buyer dated as of the Effective Date
following the Closing and delivered to the Stockholders pursuant to Section
2.03(c) of this Agreement or as subsequently adjusted by the arbitrator
pursuant to Section 2.03(d).
"Final Effective Date Net Book Value" means the Assets,
minus the amount of the liabilities (to the extent properly reflected on a
balance sheet prepared in accordance with GAAP), as reflected on the Final
Effective Date Balance Sheet (whether as delivered by Buyer to the
Stockholders pursuant to Section 2.03(c) or as subsequently adjusted by the
arbitrator pursuant to Section 2.03(d)).
44
"Financial Statements" means the financial statements of the
Company delivered to Buyer pursuant to Section 4.09(a) and included in Schedule
4.09(a).
"GAAP" means generally accepted accounting principles as
established from time to time by the Financial Accounting Standards Board,
consistently applied.
"Governmental Authority" means the government of the United
States, any state or political subdivision thereof, any foreign country and
any entity exercising executive, legislative, regulatory or administrative
functions of or pertaining to government.
"Hardware" means all mainframes, mid-range computers, personal
computers, notebooks, servers, switches, printers, modems, drives, peripherals
and any component of any of the foregoing.
"Hazardous Substances" means "hazardous substances" or
"pollutants or contaminants" as defined pursuant to CERCLA, "regulated
substances" within the meaning of Subtitle I of the Resource Conservation and
Liability Act, as amended, hazardous substances as defined under any
applicable state or local Environmental Laws, petroleum or petroleum
products, and any other substance considered toxic, hazardous or a potential
threat to human health or the environment under any applicable Environmental
Law, the presence of which has resulted or may result in (i) an Environmental
Lien, (ii) a party incurring costs or liabilities, or (iii) a party being
ordered or directed to investigate, remediate or otherwise respond to a
potential environmental threat posed by such substances.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Intellectual Property" means all unpatented inventions,
invention disclosures, multinational invention registrations, patents and
patent applications (including, but not limited to, all reissues, divisions,
continuations, continuations-in-part, extensions and re-examinations) and all
rights therein provided by law, multinational treaties or conventions; all
publications and copyrights; all trade secrets, know-how, formulas, and all
common law and registered trademarks, trademark registrations, applications
for trademark registrations, tradenames, or any derivation thereof, trade
dress, brand names, service marks and logos, whether owned or licensed.
"Inventory" means all raw materials inventory,
work-in-process inventory, finished goods inventory and spare parts
inventory, together with all manufacturing supplies and boxing, labeling and
other shipping materials and, to the extent permitted by law, an assignment
of all related manufacturer or fabricator warranties, guarantees and
indemnities.
"knowledge," "known to us" or "aware of" or "awareness" of
the Company, as used throughout this Agreement, shall mean the actual
knowledge, without inquiry, of Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx,
Xxxxxxxxxxx X. Xxxxxxxx (the Company's Treasurer) and Xxx Xxxxxxxx (the
Company's plant manager).
45
"Leased Real Property" means parcels of land, together with
all rights, interests and appurtenances therein or thereto, and the buildings,
structures, installations, fixtures and other improvements thereon.
"Leases" means leases of Equipment and other tangible personal
property, leases of Leased Real Property and other leases of Tangible Assets or
intangible personal property, in each case whether classified as a capital or
operating lease for accounting purposes.
"Liens" means all mortgages, liens, pledges, charges, security
interests, title retention or security agreements, claims, restrictions, leases,
options, rights of first offer or first refusal, confidentiality or secrecy
agreements, noncompetition agreements, defects in title and other encumbrances.
"Losses" means all claims, damages, losses, liabilities, costs
and expenses (including attorneys' fees and disbursements and any other legal
costs) suffered or incurred by a party.
"Material Contracts" means any Contract or series of related
Contracts which involve the expenditure by the Company of more than $25,000 to
perform its obligations thereunder or to obtain the benefit thereof or which is
otherwise material to the operation of the Business or the use and enjoyment of
Assets.
"Multiemployer Plan" means a "multiemployer plan" within the
meaning of Section 3(37(A)) of ERISA.
"Open Orders" means all open orders for goods and services
with customers of the Company arising from the Business, together with related
purchase orders, contracts, subcontracts and accounts receivable and credit
support associated therewith.
"Permits" means all governmental permits, licenses,
registrations, orders and approvals.
"Person" shall mean an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, limited liability company or any other entity of whatever nature.
"Plan" means any welfare plan as defined by ERISA, any
pension plan as defined by Section 3(2) of ERISA, any other retirement,
severance, continuation pay, termination pay, bonus, stock bonus, deferred
compensation, insurance, vacation, personal leave, tuition reimbursement,
dependent care assistance, cafeteria plan or other plan, policy or
arrangement providing employee benefits (whether or not described in ERISA)
maintained by the Company or an ERISA Affiliate of the Company to which the
Company or any ERISA Affiliate contributes or is obligated to contribute for
the benefit of one or more employees of the Company.
46
"Product Liability" means liabilities and obligations for
property damage, death or personal injury (whether suffered or discovered
prior to or after the Closing Date) arising from, caused by or attributable
to, products manufactured, sold or distributed, or services performed or
rendered by the Company or the Company's agents prior to the Closing Date.
"Quality Control Systems" means all certifications,
ratings, listings and similar benefits from any product or quality control
certification organization and all systems and manuals related thereto.
"Real Property" means all parcels of land, together with
all rights, interests and appurtenances therein or thereto, and the
buildings, structures, installations, fixtures and other improvements thereon.
"Software" means all software owned, developed, licensed or
used, including (i) all modifications, enhancements, fixes, updates,
upgrades, bypasses and workarounds, (ii) the source code and object code for
any of the foregoing and (iii) all operating systems, bridgeware, firmware,
middleware and utilities.
"Subsidiary" means a corporation in which the Company or any
Subsidiary of the Company owns a majority of the common stock or has the power
to elect a majority of the directors.
"Tangible Assets" means all tangible properties and assets,
whether real or personal and whether owned or leased, included in the Assets.
"Taxes" mean all income or profits taxes (including, but
not limited to, federal income taxes and state income taxes), estimated
taxes, payroll and employee withholding taxes, unemployment insurance, social
security taxes, sales and use taxes, duties, ad valorem taxes, value added
taxes, excise taxes, capital stock or franchise taxes, gross receipts taxes,
business license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, recordation fees, transfer taxes, workers'
compensation, Pension Benefit Guaranty Corporation premiums and other
governmental charges and other obligations of the same or of a similar nature
to any of the foregoing (including any interest or penalties relating to any
of the foregoing), which a corporation or other entity may be required to
pay, withhold or collect, imposed by any federal, territorial, state, local,
or foreign government or any agency or political subdivision of any such
government;
"Technical Information" means all customer, dealer and
supplier lists; serial number records; engineering, manufacturing, design,
installation and other technical drawings, specifications and calculations;
manufacturing and production processes and techniques; research and
development information; operating, maintenance and repair manuals and
instruction books; cost and estimating information, cost records, vendor data
and other business records (including without limitation, sales histories);
sales inquiries; consultant's reports; bills of material, test data and
selected test material samples; advertising and promotional literature,
including reproducible
47
masters and all other commercial, sales, marketing, and technical data
(including, but not limited to, data stored electronically or on other
format, together with rights under any third party licenses necessary to use
such data).
"Warranty Claim" means a claim for the repair or
replacement of products manufactured by the Business under unexpired
warranties or for credits or price adjustments for such products, as a result
of their failure to perform in accordance with the warranties made in
connection with their sale.
"Year 2000 Compliant" means, as applied to any Software,
Hardware, Databases, Embedded Controls or Products, that each Component or
Product (i) is designed (or has been modified) to be used prior to or after
January 1, 2000; (ii) will operate without error arising from the creation,
recognition, acceptance, calculation, display, storage, retrieval, accessing,
comparison, sorting, manipulation, processing or other use of dates or
date-based, date-dependent or date-related data, including but not limited to
century recognition, day-of-the-year recognition, leap years, date values and
interfaces of date functionalities; and (iii) will not be adversely affected
by the advent of the year 2000, the advent of the twenty-first century or the
transition of the twentieth century through the year 2000 and into the
twenty-first century.
"Year 2000 Problem" means the possible inability of an
electronic device or computer hardware or software system or program to
operate after December 31, 1999, in substantially the same manner as it
operates on or prior to the date hereof.
48
EXHIBIT A
Subscription Agreement
TRIUMPH GROUP, INC.
SUBSCRIPTION AGREEMENT
THE SECURITIES ACQUIRED PURSUANT TO THIS SUBSCRIPTION AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("1933 ACT") IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS, NOR HAVE THE
SECURITIES BEEN REGISTERED WITH ANY STATE SECURITIES COMMISSION. IT IS
UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITIES UNLESS THE
PURCHASER INTENDS TO ACQUIRE THE SECURITIES FOR PURPOSES OF INVESTMENT RATHER
THAN RESALE. THE REPRESENTATIONS MADE HEREIN WILL BE RELIED UPON BY TRIUMPH
GROUP, INC. IN COMPLYING WITH ITS OBLIGATIONS UNDER APPLICABLE SECURITIES
LAWS.
1. The undersigned hereby tenders this Subscription Agreement to Triumph Group,
Inc., a Delaware corporation (hereinafter the "Corporation") for __________
shares of common stock, $.001 par value per share, of the Corporation (the
"Stock"), in exchange for __________ shares of Nu-Tech Industries Holding
Company, a Missouri corporation. The shares of _____________ are tendered with
this subscription. The undersigned acknowledges that this subscription shall not
become effective until it has been properly executed by the undersigned and
accepted by the Corporation.
2. The undersigned acknowledges that there are various substantial risks
attendant to the Corporation's business. The undersigned has considered the
risks associated with such an investment. No representations or warranties have
been made concerning the success of the business or the potential profit on an
investment in the Corporation.
3. The undersigned acknowledges the illiquidity of the Stock. The undersigned
acknowledges that an investment in the Stock is speculative and involves a risk
of loss of the entire investment and no assurance can be given of any income
from such investment. The undersigned further acknowledges that, due to the fact
that the Stock will not be registered under the 1933 Act, or state securities
laws, transfers of the Stock have been significantly limited. Therefore, the
undersigned should not expect to be able to transfer his/its Stock. The
undersigned acknowledges that he/it must bear the economic risk of the
investment for an indefinite period of time and can afford a complete loss of
the investment and the undersigned acknowledges that the Stock cannot be
transferred without registration or available exemption from registration under
applicable securities laws. Furthermore, the undersigned understands that the
share certificate will bear an appropriate legend restricting the sale,
hypothecation or other transfer of said Stock, and the transfer records of the
Corporation will contain appropriate notations of such transfer restrictions.
4. The undersigned warrants and represents to the Corporation that he/it is
purchasing the herein subscribed for Stock for investment purposes, solely for
his/its own account and not for fractionalization or with a view toward
distribution and has no contract, agreement, arrangement or undertaking with any
person to sell, transfer or pledge the Stock. The Stock will be issued only in
the name of the undersigned.
5. The undersigned, if a natural person, further represents and warrants to the
Corporation that he is twenty-one (21) years of age or older and that his
primary residence is the same as shown below. The undersigned was contacted in
the state where he resides regarding the potential investment in the Stock, and
the Stock will be delivered in such state.
6. The undersigned warrants and represents that he/it is an "accredited
investor" as defined in Regulation D promulgated under the 1933 Act or a
sophisticated investor for the following reason(s) (check as applicable):
[ ] The undersigned is a natural person whose individual net worth or
joint net worth with his spouse at the time of purchase exceeds
$1,000,000.
49
[ ] The undersigned is a natural person whose individual income for each
of the past two years and reasonably expected income for the current
year exceeds $200,000 or whose joint income with his spouse for such
periods exceeds $300,000.
[ ] The undersigned is a trust, corporation or partnership with total
assets in excess of $5,000,000 and was not formed for the specific
purpose of acquiring the Stock. The person directing investment
decisions for the trust has completed the Purchaser Questionnaire
attached hereto as an Exhibit.
[ ] The undersigned is a partnership, corporation or trust the beneficial
owners of which are all accredited investors as defined herein.
[ ] The undersigned is a sophisticated investor who is able to bear the
risks of investment in the Corporation and who, either alone or
together with his/its purchaser representatives, is capable of
determining the merits and risks of investment in the Corporation. As
evidence of the foregoing, the undersigned has completed a Purchaser
Questionnaire in the form attached hereto, the contents of which are
hereby certified to be correct. The undersigned further represents that
it meets the definition of a "sophisticated investor" as defined by its
state of residence.
7. The undersigned warrants and represents that he/it has such knowledge and
experience in financial and business matters that he/it is capable of evaluating
the merits and risks of an investment in the Corporation, and that the
undersigned is able to bear the economic risks of the investment for an
indefinite period of time and at the present time could afford a complete loss
of such investment.
8. The undersigned further represents, warrants and agrees to indemnify the
Corporation and hold the Corporation harmless from and against any and all
liabilities, damages, costs or expenses incurred on account of or arising out
of: (i) any inaccuracies in his/its declarations, representations and warranties
herein or in the Purchaser Questionnaire; (ii) the disposition of any Stock
which he/it will receive, contrary to his/its foregoing declarations,
representations and warranties or in violation of the 1933 Act or any other
applicable law, and (iii) any action, suit or proceeding based upon the claim
that said declarations, representations and warranties were inaccurate or
misleading, or were otherwise cause for obtaining damages or redress from the
Corporation or the disposition of any of the Stock or any part thereof.
9. This Subscription Agreement shall be binding upon the undersigned, and
his/its heirs, personal representatives, successors assigns, shall survive the
purchase of the Stock and shall be governed in accordance with the laws of
[Pennsylvania] without regard to the conflict of law principles thereof.
10. As used herein, singular masculine pronouns shall refer to the plural number
and feminine or neuter genders as required by the identity of the undersigned.
TO RESIDENTS OF ALL STATES:
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
If the undersigned is a natural person who is an accredited investor as that
term is defined by Securities and Exchange Commission Rule 501(a) by virtue of
the undersigned's net worth or joint net worth with spouse or income or joint
income with spouse or if the undersigned is an individual or entity which is
purchasing $150,000 or more of these securities, the undersigned represents that
the amount of the undersigned's investment in these securities, including
mandatory assessments, does not exceed 10% of the undersigned's net worth or
joint net worth with spouse.
50
[Signature Page For Individual]
DATED this ___ day of __________, 1998.
----------------------------------------
(Signature)
----------------------------------------
(Name - Please Print)
----------------------------------------
(Primary Place of Residence)
----------------------------------------
(City, State and ZIP Code)
----------------------------------------
(Telephone Number - Residence)
----------------------------------------
(Telephone Number - Business)
----------------------------------------
(Social Security or Taxpayer I.D. No.)
ACCEPTED this ____ day of __________, .
TRIUMPH GROUP, INC.
By
-----------------------------------
Name:
Title:
51
[Signature Page For Corporation or Other Entity]
DATED this ___ day of __________, 1998.
----------------------------------------
(Name of Entity)
By:
----------------------------------------
(Signature of Authorized Person)
----------------------------------------
(Name and Title - Please Print)
----------------------------------------
(Business Address)
----------------------------------------
(City, State and ZIP Code)
----------------------------------------
(Telephone Number)
----------------------------------------
(Taxpayer I.D. No.)
ACCEPTED this ____ day of __________, .
TRIUMPH GROUP, INC.
By
-----------------------------------
Name:
Title:
52
PURCHASER QUESTIONNAIRE
(Individual)
The purpose of this Questionnaire is to assure that each investor will meet the
standards imposed by certain exemptions from registration under the Securities
Act of 1933, as amended, and all applicable state laws.
If the response to any item is "none" or "not applicable," please so indicate.
Where multiple choices are offered, select and check only the most applicable
one.
YOUR RESPONSES WILL BE KEPT STRICTLY CONFIDENTIAL. However, by signing this
document, you agree that Triumph Group, Inc. (the "Corporation") may present the
Questionnaire to such private and/or governmental entities as it deems
appropriate, if called upon to do so, in order to establish the availability
under applicable state and federal law of an exemption from registration.
PLEASE PRINT
Name(s) _______________________________________________________________________
1 I am [ ] am not [ ] being advised on the merits of this offering by a
Purchaser Representative (investment advisor).
2 For the past two years, and during the years or months indicated, I
have maintained my principal residence in the following state or states
or country:
3 I presently maintain a house or apartment, other than my principal
residence, in the state of:
(i) I pay state income taxes in the state of:________________________
(ii) I hold a driver's license in the state of: ______________________
(iii) I am registered to vote in the state of: ________________________
5 My present age is:
Under 21[ ], 21-30[ ], 31-40[ ], 41-50[ ], 51-60[ ], over 60[ ].
6 Financial information:
a. In filing federal income tax returns, my filing status is:
___ Married individual filing joint return;
___ Head of household;
___ Unmarried individual;
___ Married individual filing separate return.
b. My aggregate income from all sources for the last two calendar
years was (check one);
[ ] $200,000-$300,000
[ ] above $300,000.
c. Approximately _____ percent of my income as shown above was
derived from sources other than salary.
d. I expect that my income from all sources for the present year
will be (check one):
[ ] $200,000-$300,000
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[ ] above $300,000.
e. I expect that _____ percent of my income as shown above will be
derived from sources other than salary.
f. My approximate present net worth (including the net worth of my
spouse but excluding home, furnishings and automobiles) is:
[ ] over $1,000,000
g. Approximately _____ percent of my net worth as shown above is
investments in marketable securities (stocks, bonds, debentures,
etc.).
h. Approximately _____ percent of my net worth is readily
convertible into cash.
i. The source of funds that I have used to make this investment
is:____________________.
7 a. I have held the following principal positions of employment
during the last ten years, or since graduation from college,
whichever is shorter:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
b. The following is a brief summary of my educational background,
including years of matriculation and degrees obtained:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
8 Investment experience:
a. I have previously invested in non-marketable securities.
[ ] Yes
[ ] No
b. The principal investments from which I have derived the
experience indicated in Paragraph a., including names of
companies and amounts invested, are:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
c. Other activities, business ventures in which I have had
investment experience include:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
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d. The following additional information regarding prior investment
activities, business ventures, etc., may also be of help to the
Corporation in determining whether my knowledge and experience in
financial and business matters are sufficient to enable me to
evaluate the merits and risks of this investment:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
e. I have been advised by my own investment counselors, accountants,
etc., other than representatives of the Corporation, concerning
the suitability of this investment for me:
[ ] Yes
[ ] No
9 I understand that no aspect of the activities of the Corporation can be
guaranteed and that substantial risks are involved in various aspects
of this investment:
[ ] Yes
[ ] No
10 I understand that I may examine the original documentation of the
Corporation and its affairs before investing as well as after; and to
the extent that I have not done so, it was my choice:
[ ] Yes
[ ] No
11 My date and place of birth is: ______________________________________
12 The following is a description of all material relationships between
the undersigned and/or his purchaser representative and the
Corporation, its officers, directors or any of their affiliates:
(indicate none if appropriate):
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
13 Have you ever been convicted in a criminal proceeding and, if so, give
the dates, nature of conviction, location of court and penalty imposed
or other disposition of the case:
[ ] Yes
[ ] No
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
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To the best of my information and belief, the above information supplied by me
is true and correct in all respects.
Date:_________________________, 1998.
________________________________
(Signature of Offeree)
________________________________
(Please Print Name)
56
PURCHASER QUESTIONNAIRE
(Corporation and Other Entities)
This Questionnaire is addressed to corporations and other entities which
contemplate receiving the Stock. The Questionnaire should be completed by the
person having power to make investment decisions for the entity (hereinafter the
"Business Manager").
The purpose of this Questionnaire is to assure that each investor will meet the
standards imposed by certain exemptions from registration under the Securities
Act of 1933, as amended, and all applicable state laws.
If the response to any item is "none" or "not applicable," please so indicate.
Where multiple choices are offered, select and check only the most applicable
one.
YOUR RESPONSES WILL BE KEPT STRICTLY CONFIDENTIAL. However, by signing this
document, you agree that Triumph Group, Inc. (the "Corporation") may present the
Questionnaire to such private and/or governmental entities as it deems
appropriate, if called upon to do so, in order to establish the availability
under applicable state and federal law of an exemption from registration.
PLEASE PRINT
1. IDENTIFICATION
Full Legal Name: ___________________________________________________________
Form of Entity (corporation, partnership, etc.): ___________________________
____________________________________________________________________________
Formed Under the Laws of the State of: _____________________________________
Date Formed: _____________________. If a corporation, partnership, or trust,
attach a copy of agreement creating entity.
Do you believe that you, as the Business Manager, have sufficient knowledge
and experience in financial and business matters so that you are capable of
evaluating the merits and risks of the investment under consideration:
[ ] Yes
[ ] No
Have you, as the Business Manager, previously purchased securities that were
sold in reliance on the private offering exemption from registration under the
Securities Act of 1933, as amended?
[ ] Yes
[ ] No
Please indicate, in detail, the nature and extent of your training or
practical experience in financial, business or tax matters:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
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2. FINANCIAL INFORMATION
Please complete the following banking information:
Name of Primary Bank: ______________________________________________________
Address: ___________________________________________________________________
Telephone Number: __________________________________________________________
Bank Officer: ______________________________________________________________
Please attach the Entity's most current financial statement.
3. BACKGROUND
How do you or the investing entity know of the Corporation? If you have a
pre-existing personal or business relationship with any of the officers,
directors or promoters of the Corporation, please give detailed information
concerning the duration and nature of that relationship. Please exclude from
your answers discussion of your relationship as a shareholder unless you
exercise control over the Corporation as a shareholder:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
Have you ever been convicted in a criminal proceeding and, if so, give the
dates, nature of conviction, location of court and penalty imposed or other
disposition of the case:
[ ] Yes
[ ] No
4. PREVIOUS RELATIONSHIP
The entity or I have, previous to this investment and excluding the
relationship of shareholders, engaged the financial services of or otherwise
established a relationship with the Corporation or with an individual known by
me to be now acting as a representative of the Corporation:
[ ] Yes
[ ] No
5. INVESTMENT ADVICE
The entity or I have been advised by my own investment counselors,
accountants, etc. other than representatives of the Corporation concerning the
suitability of this investment:
[ ] Yes
[ ] No
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6. SUBSTANTIAL RISKS
I understand that no aspect of the activities of the Corporation can be
guaranteed and that substantial risks are involved in various aspects of this
investment:
[ ] Yes
[ ] No
7. EXAMINATION OF DOCUMENTS
I understand that I may examine the original documentation of the Corporation
and its affairs before investing as well as after; and to the extent that I
have not done so, it was my choice:
[ ] Yes
[ ] No
8. SOPHISTICATED INVESTOR
The undersigned has the economic ability to make the proposed investment and
the sophistication to understand the risks entailed in this investment.
[ ] Yes
[ ] No
To the best of my information and belief, the above information supplied by me
is true and correct in all respects.
Dated this _____ day of ____________, 1998.
__________________________________
By _______________________________
Name:
Title:
59
EXHIBIT B
Employment Agreements
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