AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BACOU USA, INC.,
ISH TRANSACTION, INC.,
BIOSYSTEMS, INC.
AND
THE SHAREHOLDERS OF BIOSYSTEMS, INC.
Dated as of September 30, 1997
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS.......................................................1
SECTION 1.1 Definitions....................................................1
SECTION 1.2 Hereof, Herein, etc...........................................11
SECTION 1.3 Computation of Time Periods...................................11
SECTION 1.4 Accounting Terms..............................................11
ARTICLE II - THE MERGER; EFFECTIVE TIME.....................................11
SECTION 2.1 The Merger....................................................11
SECTION 2.2 Effective Time................................................11
ARTICLE III - ARTICLES OF INCORPORATION AND BY-LAWS OF THE
SURVIVING CORPORATION........................................................12
SECTION 3.1 Articles of Incorporation and Bylaws..........................12
ARTICLE IV - DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION............12
SECTION 4.1 Directors.....................................................12
ARTICLE V - CANCELLATION OF SHARES IN THE MERGER............................12
SECTION 5.1 Cancellation..................................................12
ARTICLE VI - CONVERSION OF SHARES; NO DISSENTING SHARES.....................13
SECTION 6.1 Conversion of Shares..........................................13
SECTION 6.2 Payment for Shares............................................13
ARTICLE VII - CLOSING........................................................13
SECTION 7.1 Time and Place of Closing.....................................13
SECTION 7.2 Purchase Price................................................14
SECTION 7.3 Closing.......................................................15
SECTION 7.4 Delivery of 1997 Financial Statements;
Payment of Purchase Price.....................................15
SECTION 7.5 Earnout.......................................................16
SECTION 7.6 Payment of Earnout............................................18
SECTION 7.7 Shares Not Registered.........................................19
SECTION 7.8 Reduction of Amounts Paid to CII..............................19
ARTICLE VIII - REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS................20
SECTION 8.1 Organization..................................................20
SECTION 8.2 Authorized Capitalization; Outstanding Stock..................20
SECTION 8.3 Subsidiaries..................................................20
SECTION 8.4 Authority; Binding Effect.....................................21
SECTION 8.5 Non-Contravention.............................................21
SECTION 8.6 Financial Statements..........................................21
SECTION 8.7 Interim Changes..............................................22
.
SECTION 8.8 Owned and Leased Property.....................................25
SECTION 8.9 Environmental Matters.........................................26
SECTION 8.10 Intellectual Property Rights.................................28
SECTION 8.11 Litigation...................................................29
SECTION 8.12 Tax Matters..................................................30
SECTION 8.13 Compliance with Applicable Law...............................32
SECTION 8.14 Contracts....................................................32
SECTION 8.15 Employee Benefit Plans.......................................32
SECTION 8.16 Transactions with Affiliates.................................35
SECTION 8.17 Insurance....................................................35
SECTION 8.18 Labor Relations..............................................35
SECTION 8.19 Location of Off Site Assets..................................35
SECTION 8.20 Inventory....................................................36
SECTION 8.21 Accounts Receivable..........................................36
SECTION 8.22 Agents.......................................................36
SECTION 8.23 Warranty and Product Liability Claims........................37
SECTION 8.24 No Brokers...................................................37
SECTION 8.25 No Other Agreements to Sell..................................37
SECTION 8.26 Disclosure...................................................37
SECTION 8.27 Material Adverse Effect......................................37
SECTION 8.28 Copies of Documents..........................................37
SECTION 8.29 Purchase for Investment......................................38
SECTION 8.30 Loans........................................................39
SECTION 8.31 Dissenting Shareholders......................................39
ARTICLE IX - REPRESENTATIONS AND WARRANTIES OF BUYER.........................39
SECTION 9.1 Organization..................................................39
SECTION 9.2 Authority; Binding Effect.....................................40
SECTION 9.3 Authorized Capitalization; Outstanding Stock..................40
SECTION 9.4 Non-Contravention.............................................40
SECTION 9.5 Securities Filing.............................................41
SECTION 9.6 Rule 144 Holding Period.......................................41
ARTICLE X - FURTHER AGREEMENTS OF THE PARTIES................................41
SECTION 10.1 Environmental Report........................................41
SECTION 10.2 Maintenance of Corporate Existence...........................41
SECTION 10.3 Filings; Other Action........................................41
SECTION 10.4 Access to Information........................................42
SECTION 10.5 Publicity....................................................42
SECTION 10.6 Bank Accounts................................................42
SECTION 10.7 No Solicitation of Transactions..............................43
SECTION 10.8 Taxes and Fees...............................................43
SECTION 10.9 Delivery of Corporate Books, Budgets.........................43
SECTION 10.10 Cooperation.................................................43
SECTION 10.11 Access to Books and Records.................................43
SECTION 10.12 Non-Competition by Certain Shareholders.....................44
SECTION 10.13 Schedule Disclosures........................................46
SECTION 10.14 Collection of Receivables...................................46
SECTION 10.15 Corporate Opportunities.....................................47
SECTION 10.16 Operation of the Company Prior to January 1, 2001...........47
SECTION 10.17 Termination of Lease........................................51
SECTION 10.18 Insurance...................................................52
SECTION 10.19 Release.....................................................52
ARTICLE XI - CONDITIONS TO CLOSING...........................................52
SECTION 11.1 Conditions to Obligations of Shareholders....................52
SECTION 11.2 Conditions to Obligations of Buyer...........................54
ARTICLE XII - INDEMNIFICATION................................................56
SECTION 12.1 Indemnification..............................................57
SECTION 12.2 Remedies Exclusive...........................................59
ARTICLE XIII - TERMINATION...................................................59
SECTION 13.1 Termination..................................................59
SECTION 13.2 Specific Performance........................................60
ARTICLE XIV - SHAREHOLDERS' REPRESENTATIVE...................................60
SECTION 14.1 Shareholders' Representative.................................60
ARTICLE XV - GENERAL.........................................................60
SECTION 15.1 Amendment and Waiver.........................................60
SECTION 15.2 Notices......................................................61
SECTION 15.3 Counterparts.................................................62
SECTION 15.4 Parties in Interest..........................................62
SECTION 15.5 Entire Agreement.............................................62
SECTION 15.6 Applicable Law...............................................62
SECTION 15.7 Headings.....................................................62
SECTION 15.8 Third Parties................................................62
SECTION 15.9 Offset Rights................................................62
SECTION 15.10 Survival of Representations Etc.............................63
SECTION 15.11 Jurisdiction; Agents for Service of Process.................63
SECTION 15.12 Dispute Resolution..........................................63
SCHEDULES AND EXHIBITS
Schedule 1 List of Shareholders
Schedule 1.1 Officers, Directors, Shareholders and Key
Management Employees of the Company
Schedule 8.1 Organization
Schedule 8.2 Authorized Capitalization, Outstanding Stock
Schedule 8.6 Financial Statements
Schedule 8.7 Interim Changes
Schedule 8.8(a) Owned and Leased Property
Schedule 8.8(b) Owned and Leased Property
Schedule 8.8(d) Owned and Leased Property
Schedule 8.8(g) Owned and Leased Property
Schedule 8.9(c) Environmental Matters
Schedule 8.9(i) Environmental Matters
Schedule 8.10(a) Intellectual Property Rights
Schedule 8.10(b) Intellectual Property Rights
Schedule 8.10(e) Intellectual Property Rights
Schedule 8.11 Litigation
Schedule 8.13 Compliance with Applicable Law
Schedule 8.14 Contracts
Schedule 8.15 Employee Benefit Plans
Schedule 8.16 Transactions with Affiliates
Schedule 8.17 Insurance
Schedule 8.18(b) Labor Relations
Schedule 8.19 Location of Off-Site Assets
Schedule 8.20 Inventory
Schedule 8.21 Accounts Receivable
Schedule 8.23 Agents
Schedule 8.23(b) Agents
Schedule 10.16(c) Operation of the Company Prior to January 1, 2001
Schedule 10.16(g) Operation of the Company Prior to January 1, 2001
Schedule 11.2(f) Conditions to Obligations of Buyer
Exhibit A Articles of Merger
Exhibit B Merger Certificate
Exhibit C Form of Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Exhibit D Form of Opinion of Arent, Fox, Kintner, ▇▇▇▇▇▇▇ & ▇▇▇▇
This Agreement and Plan of Merger is made and entered into as of the 30th
day of September, 1997 by and among Bacou USA, Inc., a Delaware corporation
("Buyer"), ISH Transaction, Inc., a Delaware corporation and a wholly-owned
subsidiary of Buyer ("Merger Sub"), Biosystems, Inc., a Pennsylvania corporation
(the "Company"), and each of the individuals identified on Schedule 1 attached
hereto and made a part hereof (collectively, the "Shareholders" and
individually, a "Shareholder") (as amended, modified or supplemented, in each
case from time to time and whether in whole or in part, this "Agreement").
RECITALS:
WHEREAS, Buyer desires to acquire the business operated by the Company
through the merger of Merger Sub with and into the Company with the Company as
the surviving corporation of such merger;
WHEREAS, pursuant to such merger each share of "Biosystems Common Stock"
(as hereinafter defined) issued and outstanding immediately prior to the
"Effective Time" (as hereinafter defined) will be converted into the right to
receive shares of "Bacou Common Stock" (as hereinafter defined) in accordance
with the terms hereof;
WHEREAS, the parties hereto intend such merger to constitute a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"); and
WHEREAS, immediately prior to the Effective Time all of the issued and
outstanding capital stock of the Company was held legally and beneficially by
the Shareholders;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS.
1.1 Definitions. Capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings set forth below:
"Act" means the Securities Act of 1933, as amended.
"Affiliate" means, as to any Person (the "First Person"), any other Person
that is a Family Member of the First Person or that, directly or indirectly,
controls, is under common control with or is controlled by, the First Person,
including, without limitation, all directors, officers and shareholders of the
First Person. For purposes of this definition, "control" (including the terms
"controlled by" and "under common control with") as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
"Articles of Merger" has the meaning set forth in Section 2.2.
"Bacou Common Stock" shall mean the authorized common stock, par value
$0.001 per share, of Buyer.
"Biosystems Common Stock" shall mean the authorized common stock, par value
$0.01 per share, of the Company.
"Budgets" has the meaning set forth in Section 8.7(xxix).
"▇▇▇▇" means ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
"BusinessDay" means any day other than Saturday, Sunday, a federal holiday
or other day on which commercial banks are required or permitted to close by
law.
"Buyer Indemnitee" and "Buyer Indemnitees" has the meaning set forth in
Section 12.1(a).
"CERCLA" has the meaning set forth in the definition of "Environmental
Laws".
"CII" means Connecticut Innovations, Incorporated, a Connecticut
corporation.
"CII Agreement" means that certain Agreement, dated as of the date hereof,
by and among the Company, the Shareholders, CII and the Buyer which Agreement
shall be in form and substance satisfactory to the Buyer.
"Cleanup" means all actions required to: (i) clean-up, remove, treat or
remediate Hazardous Substances in the Environment; (ii) prevent the Release of
Hazardous Substances so that they do not migrate, endanger or threaten to
endanger public health or welfare of the Environment; (iii) perform pre-remedial
studies and investigations and post-remedial monitoring and care; or (iv)
respond to any government requests for information, documents or studies in any
way relating to cleanup, removal, treatment or rededication or potential
cleanup, removal, treatment or remediation of a Release or Hazardous Substances
in the Environment.
"Closing" has the meaning set forth in Section 7.1.
"Closing Date" has the meaning set forth in Section 7.1.
"Closing Price" means the arithmetic average of the closing price for
trading in shares of Bacou Common Stock on NNM under the symbol "BACU" on each
of the twenty (20) days on which the Bacou Common Stock traded preceding the
Closing Date.
"Code" has the meaning set forth in the recitals to this Agreement.
"Company" has the meaning set forth in the recitals to this Agreement.
"Company Business" has the meaning set forth in Section 10.12(a).
"Contract" means (a) each written employment agreement to which the Company
is a party and any other agreement to which the Company is a party that is
related to severance or change in control benefits, immediate or deferred
compensation, bonuses, pensions, retirement payments, profit sharing, stock
bonuses, equity opportunities, insurance, hospitalization, medical expenses,
death benefits or any similar employee benefits applicable to employees or
categories of employees of the Company; (b) each capital construction contract
to which the Company is a party requiring payment over the remainder of the term
in excess of $10,000; (c) each agreement, document or instrument to which the
Company is a party relating to the borrowing of money by the Company; (d) each
guarantee issued by or for the benefit of the Company; (e) each mortgage,
security agreement or other collateral arrangement securing indebtedness of the
Company to any Person; (f) each contract to which the Company is a party with a
supplier not terminable within ninety (90) days and requiring annual payments or
payments over the remainder of its term in excess of $10,000; (g) each written
or verbal contract to which the Company is a party with a customer involving
payments of more than $100,000; (h) each lease of tangible personal property to
which the Company is a party requiring annual payment in excess of $5,000; (i)
each real property lease to which the Company is a party; (j) each service or
consulting agreement to which the Company is a party involving payments of more
than $5,000 per annum; (k) each collective bargaining agreement to which the
Company is a party; (l) each licensing agreement to which the Company is a party
(except off-the-shelf software licensing agreements); (m) each contract to which
the Company is a party requiring any consents or approvals in connection with
the transactions contemplated by the terms of any Purchase Document; (n) each
tax revenue or expense sharing agreement to which the Company is a party; (o)
each management or operating agreement to which the Company is a party; (p) each
contract between the Company, on the one hand, and either (i) an Affiliate of
the Company, or (ii) any shareholder, officer, director or employee of the
Company, on the other hand; (q) each hedging, interest rate, currency rate or
other currency related or similar agreement to which the Company is a party; and
(r) each agreement or commitment to which the Company is a party or by which it
is bound and not entered into in the ordinary course of business; in each case
including all amendments, modifications and supplements thereto.
"Corporate Books" has the meaning set forth in Section 8.1.
"Damages" has the meaning set forth in Section 12.1(a).
"DGCL" means the Delaware General Corporation Law.
"Earnout Amount" has the meaning set forth in Section 7.5.
"Earnout Base Amount" has the meaning set forth in Section 7.5.
"Earnout Price" means the arithmetic average of the closing price for
trading in shares of Bacou Common Stock in the public market in which such
shares then trade on each of the twenty (20) days on which the Bacou Common
Stock traded preceding January 1, 2001.
"EBIT" means, for any accounting period, the Income From Operations of the
Company calculated in accordance with GAAP.
"Effective Time" has the meaning set forth in Section 2.2.
"Employment Agreement" means those certain Employment Agreements, dated as
of the Closing Date, between the Company and each of ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as amended from time to time.
"Environment" means soil, surface waters, groundwater, land, stream
sediments, surface or subsurface strata, ambient air and any environmental
medium, whether indoors or outdoors.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any Person alleging potential
liability for investigatory costs, Cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or penalties
arising out of, based on or resulting from (a) the presence, or Release into the
Environment, of any Hazardous Substance at any location, whether or not owned or
operated by the Company, or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all environmental, health or safety-related
laws, regulations, by-laws, rules, ordinances, judicial or administrative
decrees or decisions, orders or requirements applicable to the Company relating
to the physical or environmental condition or use of their respective
properties, their respective businesses or pollution or protection of human
health or the Environment, including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act, 42 U.S.C., Section 9601,
et seq., as amended ("CERCLA"), the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq., as amended, the Clean Air Act, 42 U.S.C. Section
7401 et seq., as amended, the Clean Water Act, 33 U.S.C Section 1251, et seq.,
the Toxic Substance Control Act, 15 U.S.C Section 2601 et seq., the Occupational
Safety and Health Act, laws relating to Releases or threatened Releases of
Hazardous Substances into the Environment or otherwise relating to the
manufacture, generation, processing, distribution, use, treatment, storage,
abatement, existence, holding, Release, transport or handling of Hazardous
Substances, and all laws and regulations with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Substances.
"Environmental Liabilities" has the meaning set forth in Section 8.9(k).
"Escrow Account" has the meaning set forth in the Escrow Agreement.
"Escrow Agent" has the meaning set forth in the Escrow Agreement.
"Escrow Agreement" means that certain Escrow Agreement, dated as of the
Closing Date, by and among each Shareholder, Buyer and Citizens Trust Company,
in its capacity as escrow agent, as the same may be amended, supplemented,
restated or otherwise modified, in each case from time to time and whether in
whole or in part.
"Escrow Notice" has the meaning set forth in Section 12.1(e).
"Estimated Purchase Price" has the meaning set forth in Section 7.2(b).
"Excess Tax Distributions" shall mean the amount by which any dividend or
other distributions to the Shareholders during the period from October 1, 1996
through September 30, 1997 shall exceed the lesser of 40% of the taxable income
of the Company for FYE 97 or 1.2 Million Dollars.
"Family Member" means as to any Person, such Person's spouse, child
(including a stepchild or an adopted child), grandchildren and any trust for the
exclusive benefit of any one or more of them and a Person controlled at all
times by such Person and beneficially owned by such Person and any one or more
of them.
"Financial Statements" means, collectively, the 1994 Financial Statements,
the 1995 Financial Statements and the 1996 Financial Statements.
"FYE 96" means the fiscal year of the Company commencing on October 1, 1995
and ending on September 30, 1996.
"FYE 97" means the fiscal year of the Company commencing October 1, 1996
and ending on September 30, 1997.
"FYE 97 Disclosure Materials" means, collectively, the 1997 Financial
Statements and the calculation of FYE 97 EBIT.
"FYE 97 EBIT" means the Income from Operations of the Company for FYE 97
calculated in a manner consistent with historical accounting practices as
reflected on the Company's Statement of Income included within the 1996
Financial Statements. This term is defined without reference to the definition
of the term "EBIT".
"FYE 97 Net Worth" has the meaning set forth in Section 7.4(a).
"FYE 99" means the fiscal year of the Company commencing on January 1, 1999
and ending on December 31, 1999.
"FYE 00" means the fiscal year of the Company commencing on January 1, 2000
and ending on December 31, 2000.
"FYE 00 Disclosure Materials" means, collectively, the 2000 Financial
Statements and the calculation of FYE 00 EBIT.
"FYE 00 EBIT" means the EBIT of the Company for FYE 00, adjusted as
follows:
(1) excluding extraordinary items;
(2) substituting an inventory valuation method consistent with the method
used in calculating FYE 97 EBIT;
(3) substituting the amounts of depreciation and amortization which would
have resulted from the use of the rates and useful lives applicable under the
methods used by the Company prior to the Closing Date without reflecting any
increase in any of the foregoing items to reflect the transactions contemplated
by this Agreement (including, without limitation, goodwill), provided that the
amounts of depreciation and amortization used to calculate FYE 00 EBIT shall be
not less than the amounts of depreciation and amortization used in calculating
FYE 97 EBIT;
(4) substituting for the costs and expenses of any financing or other
leases (including all capitalized leases) the expenses of the ownership of such
assets using depreciation methods and lives used by the Company prior to the
Closing Date;
(5) making such adjustments as necessary to be consistent with the
provisions of Sections 10.16 and 10.18;
(6) bonuses paid to each of the three mostly highly paid executives of the
Company shall not exceed thirty-five percent (35%) of such executive's base
compensation and bonuses paid to each other executive of the Company shall not
exceed fifteen percent (15%) of such executive's base compensation; and
(7) for each item identified on the Schedule provided pursuant to Section
7.4(a) and not adjusted in the foregoing paragraphs (1) - (6), substituting an
amount calculated using methods consistent with those applicable for FYE 97
EBIT.
The term "FYE 00 EBIT" is defined with reference to EBIT as adjusted in
this definition.
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"Governmental Entity" means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government.
"Hazardous Substance" means any pollutant, contaminant, toxic substance,
hazardous waste, hazardous material, or hazardous substance, or any oil,
petroleum or petroleum product, each as defined in any Environmental Laws.
"HM&J" shall mean ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Anti-Trust Improvements Act of 1976,
as amended.
"HSR Approval" means the expiration or early termination of the waiting
period (including extensions thereof) and the waiver or withdrawal of any
objections, if applicable, under the HSR Act.
"Initial Purchase Price" has the meaning set forth in Section 7.2(a).
"Insurance Policies" has the meaning set forth in Section 8.17.
"Intellectual Property Rights" means all right, title and interest of the
Company in and to all licenses (other than licenses with respect to the
Company's use of off-the-shelf software programs), trademarks, tradenames,
service marks, patents, copyrights, processes of every kind and description,
manufacturing and technical know-how and information, production and technical
data, computer data, printouts and software, trade names, trade secrets and
similar properties (including, without limitation, all registrations, renewals
or applications for registration or renewal of any of them, in each case whether
completed, pending or in the process of preparation), and all licenses, royalty
agreements, permits and authorizations with respect to any of the foregoing, in
the United States or anywhere else in the world, now or previously used,
acquired or developed by or for the Company, together with the goodwill of the
Company's business associated with the foregoing except for such Intellectual
Property Rights which are not material to or necessary for the manufacture or
sale of any product currently offered for sale by the Company.
"Knowledge" -- an individual will be deemed to have Knowledge of a
particular fact or other matter if: (a) such individual is actually aware of
such fact or other matter; or (b) such individual received written notice
thereof; or (c) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such fact or
other matter. A Person will be deemed to have Knowledge of a particular fact or
other matter if any individual who is serving, or who has at any time during the
12-month period preceding the date hereof served, as a director, officer,
partner, executor, or trustee of such Person (or in any similar capacity) has,
or at any time had, Knowledge of such fact or other matter.
"Knowledge of the Company" means the Knowledge of the Company or any
officer, director, shareholder or key management employee of the Company listed
in Schedule 1.1.
"KPMG" means KPMG Peat Marwick LLP.
"Leased Real Property" has the meaning set forth in Section 8.8(b).
"Lien" means any claim, charge, easement, encumbrance, lease, covenant,
security interest, mortgage, lien, option, pledge, right of others, or
restriction (whether on voting, sale, transfer, disposition, use or otherwise),
whether imposed by agreement, understanding, law, equity or otherwise.
"Losses" has the meaning set forth in Section 8.9(k).
"Material Adverse Change" means a change that has a Material Adverse
Effect.
"Material Adverse Effect" means, with respect to any Person, any effect
that is, or series of related effects that are, in the aggregate, materially
adverse to the business, assets, properties, condition (financial or otherwise)
or prospects of such Person.
"Maximum Amount" has the meaning set forth in Section 12.1(b).
"Minimum Net Worth" means $4,000,000 less, if FYE 97 EBIT is less than
$3 million, 60% of such deficiency.
"Merger" has the meaning set forth in Section 2.1.
"Merger Sub" has the meaning set forth in the introductory paragraph to
this Agreement.
"Merger Sub Common Stock" has the meaning set forth in Section 9.3.
"Newgate Termination Agreement" means that certain Termination Technology
Transfer Agreement, dated as of the date hereof, between the Company and Newgate
Technologies, Inc., a Delaware corporation, in form and substance satisfactory
to the Buyer.
"NNM" means The Nasdaq National Market of the Nasdaq Stock Market.
"Non-Accredited Shareholder" has the meaning set forth in Section 8.29.
"Owned Real Property" has the meaning set forth in Section 8.8(d).
"Ownership Percentage" has the meaning set forth in Schedule 8.2.
"Parent" means Bacou S.A., a French societe anonyme.
"PBCL" has the meaning set forth in Section 2.2.
"Permit" means any environmental permit, license, approval, consent or
authorization issued by a federal, state or local Governmental Entity.
"Person" means an individual, sole proprietorship, corporation, societe
anonyme partnership, limited liability company, joint venture, trust,
unincorporated organization, mutual company, joint stock company, estate, union,
employee organization, bank, trust company, land trust, business trust or other
organization, or a Governmental Entity.
"Property" or "Properties" means, collectively, the Owned Real Property and
the Leased Real Property.
"Purchase Documents" means this Agreement, the Escrow Agreement, the
Registration Rights Agreement and the Employment Agreements.
"Purchase Price" shall consist of two elements, as follows: (a) the Initial
Purchase Price, and (b) the Earnout Amount. The Initial Purchase Price shall be
paid by deposit of the Estimated Purchase Price in escrow at Closing, subject to
the post-Closing adjustment set forth in Section 7.4(f).
"Purchased Earnings" has the meaning set forth in Section 7.5.
"Receivables Amount" has the meaning set forth in Section 8.21.
"Receivables Notice Date" has the meaning set forth in Section 10.14(b).
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of the Closing Date, by and among the Buyer and the
Shareholders, as amended from time to time.
"Release" means a "Release" as defined in any Environmental Laws,
including, but not limited to, any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping into the Environment in violation of any Environmental
Laws.
"Restricted Period" has the meaning set forth in Section 10.12(a)(i).
"Restrictive Covenants" has the meaning set forth in Section 10.12(b).
"Shareholders' Representative" has the meaning set forth in Section 14.1.
"Shareholders" has the meaning set forth in the introductory paragraph to
this Agreement.
"Shares" has the meaning set forth in Section 7.2(a).
"Specified Shareholder" has the meaning set forth in Section 10.12(a).
"Subsidiary" means (a) any Person in an unbroken chain of Persons beginning
with the Company if each of the Persons other than the last Person in the
unbroken chain, then owns equity securities possessing 50% or more of the total
combined voting power of all classes of equity securities in one of the other
Persons in such chain, (b) any partnership in which the Company or a Subsidiary
of the Company is a general partner, and (c) any partnership in which the
Company or a Subsidiary of the Company possesses or is entitled to a 50% or
greater interest in the total capital or total income of such partnership.
"Surviving Corporation" has the meaning set forth in Section 2.1.
"Tangible Personal Property" means furniture, fixtures, equipment,
machinery, vehicles, supplies, inventories, materials, apparatus, tools,
implements, appliances and other tangible personal property of every kind and
description.
"Tax Distributions" means distributions to the Shareholders for the payment
of taxes on the current earnings of the Company.
"Tax Return" has the meaning set forth in Section 8.12(t).
"Taxes" means any federal, state, local, domestic, foreign, national,
international or other tax, duty, tariff, levy, impost, fee or assessment,
including, without limitation, value added, ad valorem, income, estimated
income, business, corporation, gross receipts, profits, deemed profits,
franchise, capital stock, employees' income withholding, back-up withholding,
social security, unemployment, disability, real property, personal property,
license, sales, use, excise, transfer, customs, payroll, withholdings,
employment, occupation and other taxes or governmental duties, fees or charges,
including any interest, penalties or additions on or to the foregoing.
"Threshold" has the meaning set forth in Section 12.1(b).
"1994 Financial Statements" means the balance sheet of the Company for its
fiscal year commencing on October 1, 1993 and ending on September 30, 1994 and
the related statements of income and cash flows for such period, reviewed by
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
"1995 Financial Statements" means the balance sheet of the Company for its
fiscal year commencing on October 1, 1994 and ending on September 30, 1995 and
the related statements of income and cash flows for such period, reviewed by
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
"1996 Financial Statements" means the balance sheet of the Company for its
fiscal year commencing on October 1, 1995 and ending on September 30, 1996 and
the related statements of income and cash flows for such period, reviewed by
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
"1997 Financial Statements" has the meaning set forth in Section 7.4(a).
"2000 Financial Statements" has the meaning set forth in Section 7.6(a).
1.2 Hereof, Herein, etc. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified herein, the term "or" has the inclusive meaning
represented by the term "and/or" and the term "including" is not limiting. All
references as to "Sections", "Subsections", "Articles", "Schedules" and
"Exhibits" shall be to Section, Subsections, Articles, Schedules and Exhibits,
respectively, of this Agreement unless otherwise specifically provided.
1.3 Computation of Time Periods. In the computation of periods of time from
a specified date to a later specified date, unless otherwise specified herein
the words "commencing on" mean "commencing on and including", the word "from"
means "from and including" and the words "to" and "until" each means "to but
excluding".
1.4 Accounting Terms. Except as otherwise specifically provided herein, all
accounting terms shall be construed in accordance with GAAP. Except as otherwise
specifically provided herein, all financial statements required to be delivered
hereunder shall be prepared, and all accounting determinations and calculations
shall be made, in accordance with GAAP.
ARTICLE II
THE MERGER; EFFECTIVE TIME.
2.1 The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time Merger Sub shall be merged with and into the Company and the
separate corporate existence of Merger Sub shall thereupon cease (the "Merger").
The Company shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation") and shall continue to be
governed by the laws of the Commonwealth of Pennsylvania, and the separate
corporate existence of the Company with all its rights, privileges, powers,
immunities, purposes and franchises shall continue unaffected by the Merger.
2.2 Effective Time. If all the conditions set forth in Article X shall have
been fulfilled or waived in accordance herewith and this Agreement shall not
have been terminated in accordance with Article XII, the Merger shall be
consummated by filing with the Department of State of the Commonwealth of
Pennsylvania a Plan of Merger together with Articles of Merger substantially in
the form of Exhibit A (collectively, the "Articles of Merger") in accordance
with Sections 1922 and 1927 of the Business Corporation Law of 1988 of the
Commonwealth of Pennsylvania, as amended (the "PBCL"), and by filing with the
Secretary of State of the State of Delaware a Certificate of Merger
substantially in the form of Exhibit B (the "Merger Certificate") in accordance
with Section 252(c) of the DGCL (the time of the later of such filings being the
"Effective Time").
ARTICLE III
ARTICLES OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
3.1 Articles of Incorporation and Bylaws. The Merger Certificate shall
provide that at the Effective Time (a) the Articles of Incorporation of the
Surviving Corporation as in effect immediately prior to the Effective Time shall
be the Articles of Incorporation of the Surviving Corporation; and (b) the
bylaws of the Company in effect immediately prior to the Effective Time shall be
amended as of the Effective Time so as to contain the provisions, and only the
provisions, contained in the bylaws of Merger Sub immediately prior to the
Effective Time, in each case until duly amended in accordance with applicable
law.
ARTICLE IV
DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION
4.1 Directors. The persons who are directors and officers of Merger Sub
immediately prior to the Effective Time shall, from and after the Effective
Time, be and become directors and officers (as the case may be) of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Articles of Incorporation and bylaws. In
addition, ▇▇▇▇ shall be designated as a director and President of the Surviving
Corporation from and after the Effective Time, subject to the conditions of his
employment agreement, until a successor has been duly elected or appointed and
qualified or until his earlier death, resignation or removal in accordance with
the Surviving Corporation's Articles of Incorporation and bylaws.
ARTICLE V
CANCELLATION OF SHARES IN THE MERGER
5.1 Cancellation.
(a) Each share of capital stock of the Company held in the treasury of the
Company immediately prior to the Effective Time shall be canceled and retired
and shall cease to exist.
(b) After the Effective Time, there will be no transfers, or registration
thereof, on the stock transfer books of the Company or the Surviving Corporation
of the shares of Biosystems Common Stock. Upon the effectiveness of the Merger,
all shares of Biosystems Common Stock, by virtue of the Merger and without any
action on the part of the holders thereof, shall no longer be outstanding and
shall be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall thereafter cease to have any
rights with respect to such shares, except the right of holders to receive the
Purchase Price.
ARTICLE VI
CONVERSION OF SHARES; NO DISSENTING SHARES.
6.1 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of the Buyer, Merger Sub, the Company or any
Shareholder:
(a) The shares of Merger Sub Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into one share of
common stock, par value $0.01 per share, of the Surviving Corporation. Such
newly issued share shall thereafter constitute all of the issued and outstanding
capital stock of the Surviving Corporation.
(b) Until surrendered in accordance with Section 6.2, each stock
certificate which immediately prior to the Effective Time represented shares of
Biosystems Common Stock (each a "Certificate") shall represent for all purposes
(except as may otherwise be required by law with respect to rights of dissenting
stockholders) only the right to receive a portion of the Purchase Price as
provided in Article VII.
6.2 Payment for Shares. From and after the Effective Time, upon surrender
to the Surviving Corporation of either (i) a Certificate, duly endorsed in blank
or accompanied by a duly executed stock power, or (ii) an affidavit of lost
certificate in a form reasonably satisfactory to Buyer (which shall include
appropriate indemnification provisions), the holder of such Certificate or
shares of Bacou Common Stock evidenced by such affidavit shall be entitled to
receive in exchange therefor solely the shares of Bacou Common Stock (or, in the
case of a holder that would otherwise receive fractional shares of Bacou Common
Stock, cash) as provided for in Article VII.
ARTICLE VII
CLOSING.
7.1 Time and Place of Closing. The consummation of the transactions
contemplated hereby (the "Closing") shall take place on September 30, 1997 or on
such later date not later than October 31, 1997 (as selected by Buyer upon 5
days prior written notice to the Company), or at such other time as is mutually
agreed upon, in writing, by the Company and Buyer (the "Closing Date") at the
offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ or at such other place as is mutually agreed upon by the Company and
Buyer. Each party hereto agrees to use its best efforts to cause the Closing to
be consummated.
7.2 Purchase Price.
(a) Subject to all of the terms and conditions set forth herein and in
reliance on the representations and warranties of each Shareholder and Buyer set
forth herein, the Shareholders and Buyer agree that Buyer shall become the sole
shareholder of the Company and the Shareholders shall be entitled to the
Purchase Price. The "Initial Purchase Price" shall mean an aggregate number of
shares of Bacou Common Stock which has a value (which value shall be determined
as the product of such aggregate number of shares of Bacou Common Stock and the
Closing Price) equal to five times FYE 97 EBIT, less (i) the Excess Tax
Distributions, if any; (ii) the sum of (collectively, the "Payments") (A) any
payments made by the Company pursuant to Section 8 of the CII Agreement, (B) any
payments that are the responsibility of the Shareholders or the Shareholders'
Representative pursuant to the terms of any Purchase Document but are paid by
the Company; and (C) the $120,000 bonus payable to ▇▇▇▇▇▇ ▇▇▇▇ by the Company on
or about the Closing Date; and (iii) the amount (if any) by which Minimum Net
Worth exceeds the sum of (A) the Payments, and (B) FYE 97 Net Worth. The
Payments shall not be deemed to constitute an expense for purposes of
determining FYE 97 EBIT. Except as provided in Section 7.5 and the immediately
succeeding sentence, the Purchase Price shall be paid by Buyer to Shareholders
as a whole number of shares of Bacou Common Stock. If the number of shares of
Bacou Common Stock to be paid by Buyer to any Shareholder is not a whole number,
the value of any fractional portion of a share of Bacou Common Stock shall be
paid in cash at the value used to compute the number of shares of Bacou Common
Stock to be paid. The Initial Purchase Price shall be paid as set forth in
Section 7.4(f) and pursuant to the terms of the Escrow Agreement.
(b) Buyer and Shareholders acknowledge that it will not be possible to
determine FYE 97 EBIT until after the Closing. Accordingly, at the Closing,
Buyer shall deliver Eight Hundred Fifty Thousand (850,000) shares of Bacou
Common Stock to the Escrow Agent as the estimated purchase price for the Shares
(the "Estimated Purchase Price"), such shares to be held in accordance with the
terms of this Agreement and the Escrow Agreement. The Estimated Purchase Price
is based upon the agreed closing assumptions that (i) the Company will achieve
$2,700,000 of FYE 97 EBIT for its fiscal year ending September 30, 1997; (ii) a
multiple of five times FYE 97 EBIT is applied, resulting in an assumed closing
value of $13,500,000 for the Shares; (iii) the Closing Price is $16; and (iv)
after taking into account the Tax Distributions for the Company's fiscal year
ending on September 30, 1997, FYE 97 Net Worth is at least equal to $4,000,000.
Based on the foregoing calculation of the Estimated Purchase Price the parties
hereto understand that the shares of Bacou Common Stock delivered to the Escrow
Agent at Closing include 6,250 shares of Bacou Common Stock in excess of the
number of such shares that may be required to be issued to pay the Estimated
Purchase Price.
7.3 Closing.
(a) At the Closing, the Company shall deliver to Buyer the closing
documents described in Section 11.2.
(b) At the Closing, Buyer shall, or shall cause Merger Sub to, deliver to:
(i) Escrow Agent, Eight Hundred Fifty Thousand (850,000) shares of
Bacou Common Stock constituting the Estimated Purchase Price; and
(ii) the Company, the closing documents described in Section 11.1.
7.4 Delivery of 1997 Financial Statements; Payment of Purchase Price.
(a) Within sixty (60) days after the Closing Date the Shareholders, at
their expense, shall cause HM&J to prepare and deliver to the Buyer audited
financial statements for the fiscal year of the Company ending on September 30,
1997 prepared in accordance with GAAP which shall contain the unqualified
opinion of HM&J (except with respect to adjustments that would be required to
present the opening balance sheet in conformity with GAAP) (such financial
statements, as adopted pursuant to Section 7.4(b), (c) or (d), as the case may
be, the "1997 Financial Statements"). The balance sheet included in such
financial statements shall identify "Stockholders' Equity" at the close of such
period ("FYE 97 Net Worth"). The Shareholders, at their expense, shall also
cause HM&J to prepare and deliver to the Buyer with the 1997 Financial
Statements a calculation of FYE 97 EBIT, including a Schedule setting forth the
differences between FYE 97 EBIT and EBIT for FYE 97 based on the income
statement included in the 1997 Financial Statements. The reason for requiring
such Schedule is to provide additional information which may be required for the
calculation of FYE 00 EBIT.
(b) Buyer shall complete its review of the FYE 97 Disclosure Materials
within sixty (60) days after its receipt thereof. If Buyer agrees with the FYE
97 Disclosure Materials, or if Buyer does not object to the same within such
sixty (60) day period, then the FYE 97 Disclosure Materials and the FYE 97 EBIT
and FYE 97 Net Worth reflected therein shall be deemed final and adopted by
Shareholders and Buyer.
(c) If Buyer believes that any amendment should be made to the FYE 97
Disclosure Materials Buyer shall give Shareholders' Representative written
notice of such proposed amendments, and the reasons therefor, within the same
sixty (60) day period. If Shareholders' Representative agrees with the proposed
amendments, these shall be made and the FYE 97 Disclosure Materials, as amended,
will be deemed final and adopted by Shareholders and Buyer. If any proposed
amendments are disputed by Shareholders' Representative, the parties shall
negotiate in good faith to resolve all disputed amendments.
(d) If, after a period of thirty (30) days following the date on which
Buyer has given Shareholders' Representative written notice of any proposed
amendments to the FYE 97 Disclosure Materials, any such amendments still remain
disputed, then the disputed items shall be referred to an independent auditor,
who shall be one of Coopers & ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or Deloitte & Touche, to
be mutually agreed between Shareholders' Representative and Buyer or selected by
an arbitrator selected by the Shareholders' Representative and Buyer pursuant to
the provisions of Section 15.12. The independent auditor shall function as an
arbitrator whose decision shall be final and binding on the parties. The
independent auditor shall render a written decision which shall be based upon
proper compliance with this Section 7.4. The fees and expenses of the
independent auditor shall be split equally by the parties, unless the
independent auditor shall determine that a party has acted in bad faith with
respect to any claim or defense, in which case the party which has been
determined to have acted in bad faith shall be obligated to pay all of the fees
and expenses.
(e) Buyer shall cause the Company to provide to HM&J and, if applicable, to
such independent auditor or arbitrator all necessary cooperation and access to
its records, premises, personnel and auditors for the foregoing purposes.
(f) No later than ten (10) days after the FYE 97 Disclosure Materials have
been adopted, as provided in Section 7.4(b), (c) or (d), as the case may be,
Buyer shall instruct Escrow Agent to release a portion of the shares of Bacou
Common Stock then held in escrow pursuant to the Escrow Agreement as follows:
(i) to Shareholders' Representative, for the benefit of the Shareholders, a
number of shares of Bacou Common Stock equal in value (determined on the basis
of the Closing Price) to the excess of the Initial Purchase Price over
$3,000,000, and (ii) to Buyer, a number of shares of Bacou Common Stock equal in
value (determined on the basis of the Closing Price) to the excess (if any) of
the Estimated Purchase Price over the Initial Purchase Price. The Escrow Agent
shall retain a number of shares of Bacou Common Stock equal in value (determined
on the basis of the Closing Price) to $3,000,000 as security for the performance
of the indemnification obligations of the Shareholders as set forth in Article
XII, the unused balance of which shall be released to Shareholders'
Representative, for the benefit of the Shareholders, as provided in the Escrow
Agreement. The number of shares of Bacou Common Stock held in the Escrow Account
shall be adjusted as soon as practicable following the Closing to reflect the
Initial Purchase Price. If the Initial Purchase Price requires more than 850,000
shares of Bacou Common Stock to be paid, then the additional number of shares of
Bacou Common Stock will be added to the Escrow Account for distribution as
aforesaid and if the Initial Purchase Price requires less than 850,000 shares of
Bacou Common Stock to be paid by Buyer then the excess will be returned to
Buyer.
7.5 Earnout. In addition to the Initial Purchase Price, Buyer shall pay to
the Shareholders an earnout amount (the "Earnout Amount") on the amount (if any)
by which FYE 00 EBIT exceeds 133.1% of FYE 97 EBIT. The dollar value of the
Earnout Amount shall be calculated in steps as follows:
(a) The amount of the purchased earnings shall be determined as the
product of FYE 97 EBIT and 1.331 (the "Purchased Earnings").
(b) The earnout base amount shall be the amount (if any) by which FYE
00 EBIT exceeds Purchased Earnings (the "Earnout Base Amount");
and
(c) The dollar value of the Earnout Amount shall be determined by the
formula set forth on the line which corresponds to the actual
Earnout Base Amount in the following table:
Earnout Base Amount Dollar Value of Earnout Amount
0 or negative amount $0
$1 - 500,000 $5,000,000
$500,001 - 2,000,000 Ten times Earnout Base Amount
$2,000,001 - 3,000,000 Greater of $20,000,000 or 9 times Earnout Base Amount
$3,000,001 - 4,000,000 Greater of $27,000,000 or 8 times Earnout Base Amount
$4,000,001 - 5,000,000 Greater of $32,000,000 or 7 times Earnout Base Amount
greater than $5,000,000 Greater of $35,000,000 or 6 times Earnout Base Amount
The dollar value of the Earnout Amount shall be payable by
delivery by Buyer to Shareholders, as provided in Section 7.6, of
an aggregate number of shares of Bacou Common Stock equal to the
dollar value of the Earnout Amount divided by the Earnout Price;
provided, however, Shareholders may elect at their option to
receive up to $12,000,000, in the aggregate, of the Earnout
Amount in cash; and provided further that notwithstanding
anything set forth herein to the contrary but subject to the
following sentence, if the sum of the number of shares of Bacou
Common Stock (x) issued to the Shareholders pursuant to Section
7.4(f) plus (y) issued to the Shareholders pursuant to the Escrow
Agreement, plus (z) to be issued to the Shareholders and CII in
order to satisfy Buyer's obligation with respect to the dollar
value of the Earnout Amount, is greater than twenty percent (20%)
of the number of shares of Bacou Common Stock issued and
outstanding on the Closing Date, then Buyer, at its option (and
subject to the Shareholders right to receive up to $12,000,000,
in the aggregate, of the Earnout Amount in cash), may satisfy
such obligation by paying the dollar value of the Earnout Amount
(i) in cash, (ii) in a combination of (A) shares of Bacou Common
Stock in an aggregate amount less than twenty percent (20%) of
the number of shares of Bacou Common Stock issued and outstanding
on the Closing Date, and (B) cash, or (iii) provided Buyer has
obtained the prior approval and consent of its shareholders, in
shares of Bacou Common Stock. If Buyer elects to pay the
Shareholders and CII all or any part of the dollar value of the
Earnout Amount in cash (not including the $12,000,000 which may
be elected by the Shareholders), Buyer shall (i) pay at least
that portion of the dollar value of the Earnout Amount that is
equal to twenty percent (20%) of the number of shares of Bacou
Common Stock issued and outstanding on the Closing Date in shares
of Bacou Common Stock; and (ii) indemnify each such Shareholder
for any income tax liability such Shareholder may incur as a
result of such cash payment and that such Shareholder would not
have incurred had such payment been made in the form of shares of
Bacou Common Stock.
(d) In order to minimize the chance of misunderstandings arising as
to the appropriate method of calculating FYE 00 EBIT for purposes
of the Earnout, the Buyer shall submit a calculation thereof to
▇▇▇▇ (with a copy to Arent, Fox, Kintner, ▇▇▇▇▇▇▇ & ▇▇▇▇) on a
quarterly basis, within 45 days following the end of each
calendar quarter or 90 days following the end of each fiscal
year, commencing with the fiscal year ending September 30, 1997.
If ▇▇▇▇ shall dispute any part of any such FYE 00 EBIT
calculation, he shall notify Buyer in writing within 45 days
following his receipt thereof. Any disagreement shall be resolved
by negotiation or, if ▇▇▇▇ and the Company are unable to reach
agreement within 30 days following Buyer's receipt of any such
notice of dispute from ▇▇▇▇, the items in dispute shall be
submitted to arbitration for final and binding resolution
pursuant to Section 15.12. The Shareholders' Representative shall
be precluded from objecting to the manner in which FYE 00 EBIT is
calculated if it has been calculated in a manner consistent with
prior quarterly EBIT calculations, either as presented by the
Buyer or, if disputed by ▇▇▇▇, in the manner in which any such
disputes shall have been resolved.
7.66 Payment of Earnout.
(a) On or before April 15, 2001, the Company shall prepare and deliver to
Shareholders, at its own expense, its financial statements for the period
commencing on January 1, 2000 and ending on December 31, 2000 (such financial
statements, as adopted pursuant to Section 7.6(b), (c) or (d), as the case may
be, the "2000 Financial Statements"). The 2000 Financial Statements shall have
been prepared in accordance with GAAP. The Company shall also deliver to
Shareholders at the same time its calculation of FYE 00 EBIT which shall be
derived from the income statement contained in the 2000 Financial Statements;
such FYE 00 EBIT shall be calculated in accordance with the provisions of this
Agreement.
(b) Shareholders shall complete their review of the FYE 00 Disclosure
Materials within sixty (60) days after their receipt thereof. If Shareholders
agree with the FYE 00 Disclosure Materials, or if Shareholders do not object to
the same within such sixty (60) day period, then the FYE 00 Disclosure Materials
and the FYE 00 EBIT reflected therein shall be deemed final and adopted by
Shareholders and Buyer.
(c) If Shareholders believe that any amendment should be made to the FYE 00
Disclosure Materials Shareholders' Representative shall give Buyer written
notice of such proposed amendments, and the reasons therefor, within the same
sixty (60) day period. If Buyer agrees with the proposed amendments, these shall
be made and the ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, as amended, will be deemed final
and adopted by Shareholders and Buyer. If any proposed amendments are disputed
by Buyer, the parties shall negotiate in good faith to resolve all disputed
amendments.
(d) If, after a period of thirty (30) days following the date on which
Shareholders have given written notice of any proposed amendments to the FYE 00
Disclosure Materials, any such amendments still remain disputed, then the
disputed items shall be referred to an independent auditor, who shall be one of
Coopers & ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or Deloitte & Touche, to be mutually agreed
between Shareholders' Representative and Buyer or selected by an arbitrator
selected by the Shareholders' Representative and Buyer pursuant to the
provisions of Section 15.12. The independent auditor shall function as an
arbitrator whose decision shall be final and binding on the parties. The
independent auditor shall render a written decision which shall be based upon
proper compliance with this Section 7.6. The fees and expenses of the
independent auditor shall be split equally by the parties, unless the
independent auditor shall determine that a party has acted in bad faith with
respect to any claim or defense, in which case the party which has been
determined to have acted in bad faith shall be obligated to pay all of the fees
and expenses.
(e) Buyer shall cause the Company to provide to such independent auditor or
arbitrators all necessary cooperation and access to its records, premises,
personnel and auditors in order to resolve promptly any dispute as referred to
in Section 7.6(d) above.
(f) No later than ten (10) days after the FYE 00 Disclosure Materials have
been adopted, as provided in Section 7.6(b), (c) or (d), as the case may be,
Buyer shall deliver to Shareholders' Representative, for the benefit of the
Shareholders, shares of Bacou Common Stock (subject to the Shareholders' right
to receive cash in lieu thereof as provided in Section 7.5) having an aggregate
value (computed as set forth in Section 7.5) equal to the dollar value of the
Earnout Amount.
7.77 Shares Not Registered. It is expressly understood and agreed by the
parties hereto that the shares of Bacou Common Stock to be paid by Buyer to any
Shareholder pursuant to this Article VII or pursuant to the Escrow Agreement are
not registered under the Act.
7.88 Reduction of Amounts Paid to CII. Notwithstanding anything set forth
herein to the contrary, to the extent Buyer is obligated to make a payment to
CII pursuant to the CII Agreement, the Shareholders' right to receive all or any
part of the Earnout Amount shall be reduced, pro rata, by an aggregate amount
equal to such payment to CII.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS.
Each Shareholder hereby jointly and severally represents and warrants the
following to Buyer, which representations and warranties shall be true and
correct as of the date hereof and as of the Closing as if made on and as of the
Closing, it being understood and agreed that no specific representation or
warranty shall limit the generality or applicability of a more general
representation or warranty:
8.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation as
set forth opposite its name on Schedule 8.1 and has the corporate power and
authority to own or lease its properties and carry on its business as now being
conducted. The Company is duly qualified to do business as a foreign corporation
and is in good standing in every jurisdiction in which the operation of its
business requires such qualification, except for failures, if any, to be so
qualified and in good standing which would not have a Material Adverse Effect on
the Company. The Shareholders have, prior to the execution and delivery of this
Agreement, made available to Buyer, certified copies of the Articles of
Incorporation and bylaws of the Company, each as in effect on the date hereof.
The minute books, stock certificate books and stock transfer ledgers of the
Company (collectively, the "Corporate Books"), copies of which have been
provided by the Shareholders to Buyer as provided in Section 10.9, are complete
and correct and properly reflect all material transactions involving the
business and operations of the Company.
8.2 Authorized Capitalization; Outstanding Stock. The authorized capital
stock of the Company is set forth on Schedule 8.2. Schedule 8.2 sets forth the
number and class of shares of capital stock of the Company that are issued and
outstanding (the "Shares"), the name of the legal and beneficial holder thereof
together with the certificate number and the number of outstanding shares
evidenced thereby and the percentage of the aggregate issued and outstanding
shares of such class of capital stock so held by such holder (such percentage,
the "Ownership Percentage"). Such shares are owned beneficially and of record by
such holders and each such holder has good and valid title to such shares so
owned by it/him/her free and clear of all Liens. Such shares have been duly
authorized, are validly issued and are fully paid and non-assessable and free of
preemptive rights and have not been issued in violation of any securities laws.
Except as set forth on Schedule 8.2, there are no outstanding rights, warrants,
options or agreements with respect to any class of capital stock of the Company.
8.3 Subsidiaries. The Company has no Subsidiaries. The Company is not a
party to any partnership agreement or understanding or joint venture agreement
or understanding.
8.4 Authority; Binding Effect. Each of the Company and the Shareholders has
full power, authority and capacity to execute and deliver each Purchase Document
to which the Company or such Shareholder is a party and to perform the
transactions required of the Company or such Shareholder thereunder and at the
Closing. Each Purchase Document to which the Company or any Shareholder is a
party has been duly authorized, executed and delivered by the Company or such
Shareholder, as the case may be, and constitutes the legal, valid and binding
obligations of the Company or such Shareholder, as the case may be, enforceable
against the Company or such Shareholder, as the case may be, in accordance with
the terms and provisions thereof, subject to general equity principles and to
applicable bankruptcy, fraudulent transfer, insolvency, reorganization,
moratorium and other similar laws from time to time in effect affecting the
enforcement of creditors' rights generally (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
8.5 Non-Contravention. Neither the execution and delivery by the Company or
any Shareholder of any Purchase Document to which the Company or such
Shareholder is a party nor the consummation by the Company or such Shareholder
of the transactions contemplated thereby (a) will violate any provision of the
Articles of Incorporation or bylaws of the Company, (b) will violate or conflict
with any applicable statute, law, ordinance, rule, regulation, order, judgment
or decree applicable to the Company or any Shareholder, (c) will conflict with
or constitute a violation of or a default (or an event which with notice or
lapse of time or both, would constitute a default) under, or will result in the
termination of, or accelerate performance required by, any contract to which the
Company or any Shareholder is a party or to which any of the assets or
properties of the Company or any Shareholder are subject, or (d) will result in
the creation of any Lien upon any of the capital stock of the Company or upon
any of the property or assets of the Company, except, in the case of (c), any
such conflict, violation or default that could not have a Material Adverse
Effect on the Company. Except for the consent and approval of the Merger and the
Purchase Documents, and the transactions contemplated thereby, by the
Shareholders and by the Board of Directors of the Company, which have already
been obtained, and the HSR Approval, neither the execution or delivery by the
Company or any Shareholder of any Purchase Document to which the Company or such
Shareholder is a party nor the consummation of the transactions contemplated
thereby will require the consent, authorization or approval of, or notice to or
filing or registration with, any Person.
8.6 The Financial Statements. The Financial Statements (true, correct and
complete copies of which are attached hereto as Schedule A to Schedule 8.6), are
(a) true, accurate and in all material respects complete; and (b) fairly and in
all material respects accurately present the properties, assets, liabilities,
financial positions and results of operations of the Company as of the
respective dates and for the respective periods covered thereby.
As of September 30, 1996, the Company did not have any liabilities or
obligations (whether secured or unsecured, accrued, absolute, contingent or
otherwise) which, under GAAP, should have been but which were not reflected or
reserved against in the 1996 Financial Statements. Since September 30, 1996 the
Company has not incurred any liabilities or obligations (whether secured or
unsecured, accrued, absolute, contingent or otherwise), including, without
limitation, any items of litigation, except any such liabilities or obligations
(i) arising under and in compliance with the Contracts to which the Company is a
party, (ii) incurred in the ordinary course of business of the Company, and
(iii) such other liabilities or obligations as shall be set forth in Schedule
8.6.
8.7 Interim Changes. Since October 1, 1996, the business of the Company has
been operated in the ordinary course and, except as set forth on Schedule 8.7,
the Company has not (nor has it authorized or proposed or entered into any
contract, agreement, commitment or arrangement to do any of the following):
(i) incurred or become subject to, or agreed to incur or become
subject to, any liability (whether secured or unsecured, accrued, absolute,
contingent or otherwise), except (a) any such liabilities incurred in the
ordinary course of its business, consistent with past practice, and (b)
loans to employees, officers, directors or Affiliates of the Company made
in the ordinary course of business but not exceeding $1,000 in the
aggregate outstanding at any time;
(ii) except with respect to the transactions contemplated by this
Agreement, entered into (A) any transaction, contract or commitment outside
the ordinary course of business, or (B) any commitment not terminable by
the Company in less than thirty (30) days;
(iii) experienced any work stoppage with respect to the business of
the Company or obtained Knowledge of the Company of any threatened or
anticipated work stoppage;
(iv) experienced any Material Adverse Change in its business or
customer relations;
(v) granted any general pay increases to its employees, officers or
directors or changed the rate of compensation, commission, bonus or other
remuneration payable to any of its employees, directors, officers, agents
or shareholders with the exception of increases not exceeding 3% to any
such Person made in the ordinary course of business consistent with past
practices;
(vi) sustained any damage or loss to its business or properties in
excess of $10,000 in the aggregate (whether or not covered by insurance);
(vii) paid, canceled, waived or discharged any Lien other than in the
ordinary course of business;
(viii) instituted or settled any litigation, action or proceeding
relating to its business;
(ix) entered into any lease, whether as lessor or lessee, for real
property or incurred any obligation to enter into any such lease or
purchased any real property;
(x) changed its investment practices, actuarial practices,
underwriting standards or retention policies, claims, payment and
processing practices, policies regarding intercompany transactions or other
policies or practices affecting its assets, liabilities or business;
(xi) made any direct or indirect redemption, purchase or other
acquisition of any of its capital stock; or split, combined or reclassified
any of its capital stock or issued any other security in respect of or in
substitution therefor; or repurchased, redeemed or otherwise acquired any
of its shares of capital stock;
(xii) canceled, amended or established any Employee Plan or made any
payments or distributions under any Employee Plan;
(xiii) issued, delivered, pledged, encumbered, sold or purchased any
shares of its capital stock or securities convertible into, or rights,
warrants or options to acquire, any shares of its capital stock or other
convertible securities of the Company;
(xiv) acquired or agreed to acquire by merging or consolidating with,
or by purchasing any material portion of the capital stock or assets of, or
by any other manner, any business, corporation, partnership, association or
other business organization, or any division thereof;
(xv) amended, canceled or terminated (other than by its terms) or
waived any provision of any Contract to which it is a party which required,
requires or is anticipated to require payments in excess of $5,000 in the
aggregate, in any twelve-month period;
(xvi) granted a Lien;
(xvii) entered into any employment compensation or other agreement
with any of its officers, directors, shareholders, Affiliates, employees or
agents (other than in connection with the hiring of new employees in the
ordinary course of business at an annual compensation not in excess of
$50,000 for any person) or terminated the employment of any of its
employees (other than in the ordinary course of business) or officers;
(xviii) canceled or compromised any of its claims or liabilities other
than in the ordinary course of business or paid, canceled, waived or
discharged any Lien other than in the ordinary course of business;
(xix) amended the Articles of Incorporation or bylaws of the Company;
(xx) received any notice of default under any Contract;
(xxi) disposed of or permitted the lapse of any Intellectual Property
Rights;
(xxii) sold any marketable securities other than in the ordinary
course of business; or
(xxiii) disposed of or changed its assets other than in the ordinary
course of business;
(xxiv) made any material changes in its methods of operation;
(xxv) made any capital commitments or expenditures in excess of
$100,000 in the aggregate;
(xxvi) paid or declared any dividends or issued or purchased any
capital stock or rights relating thereto except Tax Distributions with
respect to the Company's fiscal year ending on September 30, 1997; provided
that such Tax Distributions shall not exceed One Million Two Hundred
Thousand Dollars ($1,200,000) in the aggregate;
(xxvii) entered into any employment contracts not terminable at will
by the Company;
(xxviii) made any material changes in its financial structure or
accounting practices;
(xxix) failed to pay or make any bonus, incentive, contingent or other
payments or expenditures which are consistent with historical practices or
planned pursuant to the capital and operating budgets of the Company for
its fiscal year ending September 30, 1997 (the "Budgets") or required by
agreements in place at June 30, 1997 except the amount of any bonus payable
to ▇▇▇▇ for such fiscal year which he may waive; or
(xxx) otherwise suffered a Material Adverse Change.
8.8 Owned and Leased Property.
(a) Except as set forth in Schedule 8.8(a), the Company has good and
marketable title to its owned Tangible Personal Property free and clear of
all Liens except Liens for current Taxes and assessments not yet delinquent
or being contested in good faith by appropriate proceedings.
(b) All leases and subleases pursuant to which the Company (i) leases
(whether as lessee or lessor) its Tangible Personal Property, or (ii)
leases or has leased any real property as lessor or lessee (the "Leased
Real Property") are set forth on Schedule 8.8(b). Such leases and subleases
(other than the leases identified on Schedule 8.8(b) as no longer in
effect) are in good standing and are valid and binding against the Company,
and to the Knowledge of the Company the other parties thereto, in
accordance with their respective terms, subject to general equity
principles and to applicable bankruptcy, fraudulent transfer, insolvency,
reorganization, moratorium and other similar laws from time to time in
effect affecting creditors' rights generally (whether considered in a
proceeding in equity or at law), and there is not, under any of such leases
or subleases any existing default, event of default or event which with
notice or lapse of time or both would constitute a default, by the Company
or, to the Knowledge of the Company, any Person from or to whom the Company
leases or subleases such Tangible Personal Property or Leased Real
Property. None of the rights of the Company under any of such leases or
subleases is subject to termination or modification as the result of the
transactions contemplated by any Purchase Document.
(c) All buildings, machinery, equipment, fixtures, rolling stock and
tools (including, without limitation, all replacement parts therefor to the
extent such parts exist), used or useful in the business of the Company,
whether owned or leased by the Company, have been properly maintained and
are in good operating condition (except for ordinary wear and tear), and
are capable of being used in the business of the Company, without present
need for repair or replacement except in the ordinary course of business
except for such failures which would not have a Material Adverse Effect on
the Company.
(d) All real property owned by the Company on or prior to the date
hereof is set forth on Schedule 8.8(d) (the "Owned Real Property").
(e) To the Knowledge of the Company, there are no encroachments upon
any of the Properties and the improvements situated upon such Properties do
not encroach upon or violate any rights or way, easements or the lands of
others. The use of such Properties by the Company and the conduct of the
business of the Company on such Properties does not violate any law, rule,
regulation or zoning or use ordinance of any governmental body or authority
applicable to such Properties and, in connection with such use and conduct,
there are no violations of law or rule with respect to water supply, sewage
or waste disposal facilities.
(f) The Company has not received any notice of any special assessment
or condemnation from a Governmental Entity with respect to any of the
Properties.
(g) All molds utilized in the business of the Company: (i) except as
set forth on Schedule 8.8(g), are owned by the Company free of all liens
and encumbrances; and (ii) to the extent that any of the molds are not
located at the offices of the Company, they are located at the sites and
currently possessed by the Persons listed in Schedule 8.8(g); and (iii)
prior to the Closing Date, the Shareholders shall deliver to Buyer a
bailment agreement substantially in the form listed in Schedule 8.8(g) from
each such Person currently possessing any of the Company's molds affirming
the Company's ownership of the molds free of all Liens.
8.9 Environmental Matters.
(a) All permits, licenses, registrations, consents, orders,
certificates, approvals and other authorizations (each an "Environmental
Permit") which are required under Environmental Laws for the conduct of the
Company's business or the operation of any property owned, leased or
occupied by the Company which are required to be obtained or applied for by
the Company have been so obtained or applied for.
(b) The Company has not failed to comply with any Environmental Laws
or any Environmental Permit and the Company has not been notified by any
Governmental Entity, and to the Knowledge of the Company, there are no
facts indicating, that any Environmental Permit will be modified,
suspended, canceled or revoked or cannot be renewed in the ordinary course
of business.
(c) Except as disclosed in Schedule 8.9(c), no Hazardous Substance is
presently or has been in the past generated, stored, handled, treated,
transported to or from or disposed of on any property currently or formerly
owned by the Company, or operated or leased by the Company (during the
period of such operation or lease), and to the Knowledge of the Company, no
property currently or formerly owned, operated or leased by the Company has
been used by others, including but not limited to prior owners, lessees and
operators, for the generation, storage, handling, treatment, transportation
or disposal of any Hazardous Substance. The Company has not generated,
disposed of, transported or arranged for the transportation (directly or
indirectly) of any Hazardous Substances to any location that is listed or,
to the Knowledge of the Company, proposed for listing on the National
Properties List or the CERCLA Information System under CERCLA, or under any
similar state, local or foreign list, or where there has been a Release or
suspected Release of a Hazardous Substance. To the Knowledge of the
Company, no part of any property owned, operated or leased by the Company
ever was used as (i) a gasoline service station or for the purpose of
selling, dispensing, storing, transferring or handling petroleum or
petroleum products, or (ii) as a dry-cleaning establishment.
(d) The Company has not received any notice or order from any Person
advising it that it is responsible for or potentially responsible for
Cleanup or remediation of any Hazardous Substances and the Company has not
entered into any agreements concerning such Cleanup. No work, repair,
construction or capital expenditure is planned or required in respect of
the assets of the Company pursuant to or to comply with any Environmental
Law, nor has the Company received any notice of any such requirement.
(e) There is no Environmental Claim pending or, to the Knowledge of
the Company, threatened against the Company or pending or, to the Knowledge
of the Company, threatened against any other Person whose liability for any
Environmental Claim the Company has or may have retained or assumed either
contractually or by operation of law. No real property currently or
formerly owned by the Company, or operated or leased by the Company (during
the period of such operation or lease) has been impacted by any Release or
threatened Release of any Hazardous Substance and no condition exists which
may result in a claim, right of action, or recovery by any Person under any
Environmental Law.
(f) There are no past or present (or to the Knowledge of the Company,
future) actions, activities, circumstances, conditions, events or incidents
(including, without limitation, the Release or presence of any Hazardous
Substance) which could form the basis of any Environmental Claim against
the Company or against any other Person whose liability for any
Environmental Claim the Company has or may have retained or assumed either
contractually or by operation of law.
(g) The Shareholders have delivered or otherwise made available for
inspection to Buyer true, accurate and complete copies and results of any
reports, studies, analyses, tests or monitoring possessed or initiated by
the Company pertaining to Hazardous Substances in, on, beneath or adjacent
to any property or regarding compliance by the Company with applicable
Environmental Laws.
(h) No transfers of permits or other governmental authorizations under
Environmental Laws, and no additional permits or other governmental
authorizations under Environmental Laws, will be required to permit Buyer
to conduct the business of the Company in full compliance with all
applicable Environmental Laws immediately following the Closing, as
conducted by the Company immediately prior to the Closing.
(i) Except as set forth on Schedule 8.9(i), to the Knowledge of the
Company, there are no underground or above-ground storage tanks (whether or
not currently in use) located on or under any real property currently
owned, operated or leased by the Company, and no underground tank
previously located on any real property currently owned, operated or leased
by the Company has been removed from that property.
(j) None of the Property is located in a special flood hazard area.
(k) The Company is not subject to any outstanding order, judgment,
injunction, decree or writ from, or contractual obligation to or with, any
Governmental Entity or other Person in respect of which the Company may be
required to incur any out-of-pocket expenses or attorneys' or accountants'
fees (collectively, "Losses"), whether direct or indirect, known or
unknown, current or potential, past, present or future, imposed by, under
or pursuant to Environmental Laws, including, without limitation, all
Losses related to any remedial action, and all fees, disbursements and
expenses of counsel, experts, personnel and consultants based on, arising
out of or otherwise in respect of: (i) the ownership or operation of the
business of the Company, or any property, assets, equipment or facilities,
owned or leased by the Company; (ii) the environmental conditions existing
on the Closing Date on, under or above the properties, assets, equipment or
facilities currently or previously owned, leased or operated by the Company
or any of the Company's predecessors or Affiliates; and (iii) expenditures
necessary to cause any property or any aspect of the Company to be in
compliance with any and all requirements of Environmental Laws as of the
Closing Date including, without limitation, all Environmental Permits
issued under or pursuant to such Environmental Laws (collectively
"Environmental Liabilities") and costs arising from the Release or
threatened Release of a Hazardous Substance.
(l) Neither the Company nor any of the currently or formerly owned or
operated property used by the Company is the subject of any pending or, to
the Knowledge of the Company, threatened federal, state or local
enforcement action, investigation, remedial action, litigation, claim or
notice by any Person under any Environmental Laws.
8.10 Intellectual Property Rights.
(a) Schedule 8.10(a) lists: (i) all registered Intellectual Property
Rights, together with applications therefor that are pending or in the
process of preparation; (ii) all licenses (other than licenses with respect
to the Company's use of off-the-shelf software programs) and other
agreements allowing the Company to use the Intellectual Property Rights;
(iii) all unregistered Intellectual Property Rights which are material to
the business of the Company; and (iv) all royalty agreements relating to
any Intellectual Property Rights and to which the Company is a party.
(b) The Company is the sole and exclusive owner of the Intellectual
Property Rights listed on Schedule 8.10(a), free and clear of any claims or
Liens other than such claims and Liens existing on the date hereof in favor
of Fleet National Bank of Connecticut and royalties payable under
agreements set forth on Schedule 8.10(b). The Company has the means, rights
and information (including, without limitation, Intellectual Property
Rights) required to manufacture, process, sell, offer for sale and use the
items and perform the services as presently being manufactured, processed,
offered for sale, sold, used or performed by it, including, without
limitation, the means, rights and information (including, without
limitation, Intellectual Property Rights) required to manufacture, process,
offer for sale, sell and use all such items and perform all such services
without incurring any liability for license fees, royalties or other
payments or any claims of infringement of any intellectual property rights
of any other Person except as set forth on Schedule 8.10(a).
(c) None of the Intellectual Property Rights infringes upon the rights
of any third party nor does any use by any third party of (i) the Posicheck
patent, or (ii) to the Knowledge of the Company, any of the other
Intellectual Property Rights, infringe upon any of the rights of the
Company therein, and there are no claims pending or threatened in
connection with any such infringement with respect to any of the
Intellectual Property Rights.
(d) The Company has not received any notice that any of its processes
or products infringe upon any intellectual property rights of any third
party.
(e) Except as listed on Schedule 8.10(e), the Company does not pay any
royalty to any Person with respect to any of the Intellectual Property
Rights or any of the expertise relating thereto, nor does the Company
receive royalties with respect thereto. The Company has not licensed or
sublicensed any of the Intellectual Property Rights to any Person except as
set forth on Schedule 8.10(e). The Company has not received any notice
which would prevent or materially hinder it from using anywhere in the
world any of its Intellectual Property Rights.
(f) All registration fees with respect to the Intellectual Property
Rights have been paid and the Company has not taken any action or failed to
take any action that would impair any of its right, title or interest in
any of the Intellectual Property Rights.
(g) The execution and delivery of the Purchase Documents and
performance thereunder will not result in the loss or impairment of any of
the Intellectual Property Rights.
8.11 Litigation. Except as set forth in Schedule 8.11, there are no
actions, suits or proceedings by or before any court or Governmental Entity
pending or, to the Knowledge of the Company, threatened by or against the
Company or involving or affecting the business of the Company or any of its
respective assets. The Company is not subject to any order, writ, injunction,
judgment or decree.
8.12 Tax Matters.
(a) All Tax Returns of the Company which are required to be filed have
been duly and timely filed with the appropriate Governmental Entities. All
such Tax Returns are true, correct and complete in all material respects.
(b) All Taxes shown as due and owing on such Tax Returns have been
fully and timely paid. With respect to any period for which Tax Returns of
the Company have not been filed as of the Closing, or for which Taxes are
not yet due or owing as of the Closing, the Company has made adequate
provisions therefor in accordance with GAAP. The Shareholders have
delivered to Buyer true and complete copies of all federal, state, foreign
and local income Tax Returns of the Company filed by or with respect to the
Company or with respect to the income or operations of the Company for the
years ending on or after September 30, 1992.
(c) There is no action, suit, proceeding, audit, investigation or
claim now pending or, to the Knowledge of the Company, threatened,
regarding any Taxes or any Tax Return of the Company. No examination of any
Tax Return of the Company is currently in progress. Beginning with the
Company's taxable year ending on September 30, 1981, Shareholders and the
Company have filed all federal, state, foreign and local income tax returns
reporting income and operations of the Company based on the status of the
Company as an "S" corporation within the meaning of Section 1361 of the
Code.
(d) Neither the Company nor any predecessor corporation has been a
member of an affiliated group of corporations for federal income tax
purposes.
(e) The Company made a valid election effective as of the date of its
formation to be treated as an "S" corporation within the meaning of Section
1361 of the Code and any analogous state and local law requirements for
federal, state and local purposes. Such election has been in full force and
effect for all taxable years beginning with the Company's existence and
shall remain in full force and effect through the Closing Date.
(f) None of the Company's assets contain built-in gain (as defined in
Section 1374 of the Code) which would subject the Company to tax under
Section 1374 of the Code.
(g) There are no tax sharing agreements or arrangements to which the
Company is now or ever has been a party. The Company is not liable for
Taxes pursuant to Treasury Regulation 1.1502-6.
(h) There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any return of the Company for
any period with respect to any Tax.
(i) The Company has not requested any extension of time within which
to file any tax return, which tax return has not since been filed.
(j) Except for powers of attorney granted to the Company's
accountants, Ernst & Young and HM&J, no power of attorney has been granted
by the Company with respect to any matter relating to Taxes which is
currently in force.
(k) Each of the Shareholders is a resident of the United States of
America.
(l) There are no Liens for Taxes on the assets of the Company other
than for current Taxes not yet due and payable.
(m) The Company has complied (and until the Closing Date will comply)
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code) and have, within the time
and in the manner prescribed by law, withheld from employee wages and paid
over to the proper governmental authorities all amounts required to be so
withheld and paid over under all applicable laws.
(n) No property of the Company is property that is or will be required
to be treated as being owned by another Person pursuant to the provisions
of Section 168(f)(8) of the Code (as in effect prior to amendment by Tax
Reform Act of 1986) or is "tax exempt use property" within the meaning of
Section 168 of the Code.
(o) The Company is not required to include in income any adjustments
pursuant to Section 481(a) of the Code by reason of a voluntary change in
accounting method initiated by the Company and, to the Knowledge of the
Company, no such adjustment or change in accounting method has been
proposed by any taxing authority.
(p) The Company has not consented to the application of Section
341(f)(2) of the Code (or any comparable state income tax provision).
(q) The Company is not and has not been a United States real property
holding company (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(r) All transactions which could give rise to a "substantial
understatement" of federal income tax (within the meaning of former Section
6661 of the Code or Section 6662 of the Code) were adequately disclosed on
the tax returns of the Company as required by such Sections of the Code.
(s) The Company is not a party to any contract, arrangement or
agreement that would result, separately or in the aggregate, in the payment
of any "excess parachute payments" within the meaning of Section 280G of
the Code.
(t) For purposes of this section, the term "Tax Return" means all tax
returns, reports, estimates, information returns, schedules, workpapers and
statements required to be filed with any Governmental Entity with respect
to Taxes.
8.13 Compliance with Applicable Law. (a) The Company has all licenses,
permits, approvals and other authorizations as are required and necessary in
order to enable it to own and conduct its business as currently conducted. The
Company has not, since October 1, 1992, violated or failed to comply with any,
and the operations of the business of the Company is in compliance with all,
federal, state, foreign and/or local laws, statutes, codes, orders, plans,
decrees, ordinances, rules and regulations. Except as set forth in
Schedule 8.13, the Company has not received notice of any violation of, or
liability or responsibility under, any applicable federal, state, foreign, or
local law, statute, code, order, plan, ordinance, decree, rule or regulation
which could have a Material Adverse Effect and, since October 1, 1992 the
Company has not received notice of any threatened claim of such a violation,
liability or responsibility (including any investigations relating thereto).
(b) Without limiting anything set forth in Section 8.13(a), the Company has
received all licenses, permits, approvals and authorizations necessary for the
commercial sale of products utilizing the Posicheck patent.
8.14 Contracts. Schedule 8.14 lists each Contract. All Contracts are in
full force and effect and are valid and binding on the Company, and to the
Knowledge of the Company, on other parties thereto, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws now or
hereafter in effect relating to or affecting the enforcement of creditors'
rights generally and subject to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity). Neither the
Company nor, to the Knowledge of the Company, any other Person is in default
under, nor has the Company or, to the Knowledge of the Company, any other Person
waived any material rights under, any of the Contracts. A true and complete copy
of each written Contract has been delivered to Buyer.
8.15 Employee Benefit Plans.
(a) Definitions. The following terms, when used in this Section 8.15, shall
have the following meanings:
"Benefit Arrangement" shall mean any employment, consulting, severance or
other similar contract, arrangement or policy and each plan, arrangement
(written or oral), program, agreement or commitment providing for insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, life, health, disability or accident benefits (including,
without limitation, any "voluntary employees' beneficiary association" as
defined in Section 501(c)(9) of the Code providing for the same or other
benefits) or for deferred compensation, profit-sharing bonuses, stock options,
stock appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance, compensation or benefits which (A) is
not a Welfare Plan, Pension Plan or Multiemployer Plan, (B) is entered into,
maintained, contributed to or required to be contributed to, as the case may be,
by the Company or any ERISA Affiliate, and (C) covers any employee or former
employee of the Company.
"Employee Plans" shall mean all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any corporation or business which is now, or
at the relevant times was, a member of a controlled group of corporations or
trades or businesses with the Company, as defined in Sections 414(b) or (c) of
the Code.
"Multiemployer Plan" shall mean any "multiemployer plan," as defined in
Section 4001(a)(3) of ERISA, which the Company or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to.
"Pension Plan" shall mean any "employee pension benefit plan," as defined
in Section 3(2) of ERISA (other than a Multiemployer Plan), which the Company or
any ERISA Affiliate maintains, administers, or contributes to or is required to
contribute to.
"Welfare Plan" shall mean any "employee welfare benefit plan," as defined
in Section 3(1) of ERISA, which the Company or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to.
(b) Disclosure: Delivery of Copies of Relevant Documents and Other
Information. Schedule 8.15 sets forth a complete list of Employee Plans that
cover employees of the Company. The Shareholders have delivered to Buyer true
and complete copies of each of the following documents: (i) each Welfare Plan
and Pension Plan (and, if applicable, related trust agreements) and all
amendments thereto, all written interpretations thereof and written descriptions
thereof which have been distributed to the employees of the Company and all
annuity contracts or other funding instruments pertaining to each Welfare Plan
and Pension Plan, (ii) each Benefit Arrangement including written descriptions
thereof which have been distributed to the employees of the Company and a
description of any such Benefit Arrangement which is not in writing, (iii) the
most recent determination letter issued by the Internal Revenue Service with
respect to each Pension Plan, and (iv) for the three most recent plan years,
Annual Reports on Form 5500 Series required to be filed with any governmental
agency for each Pension Plan and Welfare Plan. For purposes of this paragraph
(b), Multiemployer Plans, Pension Plans and Welfare Plans shall only include
those plans that cover any employee or former employee (or beneficiary of either
of the foregoing) of the Company.
(c) (i) Pension Plans. No Pension Plan is subject to the minimum funding
requirements of Title I of ERISA or Section 412 of the Code or Title IV of
ERISA. Each Pension Plan, each related trust agreement, annuity contract or
other funding instrument is qualified and tax-exempt under the provisions of
Code Section 401(a) and 501(a) and has been so qualified during the period from
its adoption to date. No lien imposed under the Code or ERISA exists or is
likely to exist on account of any Pension Plan.
(ii) Employee Plans. No Employee Plan provides benefits, including,
without limitation, death or medical benefits (whether or not insured), with
respect to current or former employees of the Company after retirement or other
termination of service (other than (i) coverage mandated by applicable law
including, without limitation, health benefit continuation rights under federal
and state law, (ii) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA, (iii) deferred
compensation benefits accrued as liabilities on the books of the Company or any
ERISA Affiliate, or (iv) benefits, the full cost of which is borne by the
current or former employee (or his or her beneficiary)). No amounts payable
under the Employee Plans or any other agreement or arrangement to which the
Company is a party will, as a result of the transaction contemplated hereby,
fail to be deductible for federal income tax purposes by virtue of Section 280G
of the Code.
(iii) Multiemployer Plans. Neither the Company nor any ERISA Affiliate
contributes to, or within the past six years has been obligated to contribute
to, any Multiemployer Plan.
(iv) Compliance with Law. Each Welfare Plan which is a "group health
plan," as defined in Section 607(1) of ERISA, has been operated, in all material
respects, in compliance with provisions of Part 6 of Title I of ERISA and
Section 4980B of the Code at all times.
(v) Benefit Arrangements. Each Benefit Arrangement which covers
employees of the Company has been maintained, in all material respects, in
compliance with its terms and, in all material respects, with the applicable
requirements of the Code or ERISA.
(vi) Fiduciary Duties and Prohibited Transactions. Neither the Company
nor any plan fiduciary of any Welfare Plan, Pension Plan or Benefit Arrangement
which covers or has covered employees or former employees of the Company or any
ERISA Affiliate, has engaged in (a) any transaction in violation of Sections 404
or 406 of ERISA, or (b) any "prohibited transaction," as defined in Section 4975
of the Code, for which no exemption exists under Section 408 of ERISA or Section
4975(c)(2) or (d) of the Code.
(vii) No Liability. The Company has not taken any action, nor has any
event occurred, that has resulted or will likely result in liability under Title
IV of ERISA, including, but not limited to, withdrawal liability with respect to
any Multiemployer Plan, which liability will become a liability of Buyer. All
Employee Plans are fully paid up or fully funded or adequate provision for all
liabilities or obligations of the Company in respect of or relating to any
period or portion thereof on or before the Closing Date have been made in the
Financial Statements.
8.16 Transactions with Affiliates. Except as set forth in Schedule 8.16,
the Company is not a party to any contract, agreement or other arrangement with
any of its shareholders, officers, directors, employees or Affiliates.
8.17 Insurance. Each insurance policy currently in effect that insures the
business, property (whether real or personal), operations, employees or officers
of the Company is listed on Schedule 8.17 (collectively, the "Insurance
Policies") and is in full force and effect, the premiums due thereunder have
been paid as they became due and payable and the Company has not received any
notice of cancellation or termination in respect of any such policy or is in
default thereunder. Such policies are sufficient for compliance with all
requirements of law. Schedule 8.17 sets forth all outstanding claims under any
Insurance Policy.
8.18 Labor Relations. (a) No work stoppage against the business of the
Company is pending or, to the Knowledge of the Company, is threatened. The
Company is not involved in or, to the Knowledge of the Company, threatened with
any labor dispute, arbitration, lawsuit or administrative proceeding relating to
labor matters involving any of the employees of the Company with respect to its
business (excluding workers' compensation claims which, in the aggregate, would
not have a Material Adverse Effect on the Company). Except as set forth on
Schedule 8.16, there are no outstanding loans or advances to any officer,
director, employee or shareholder of the Company.
(b) Except as set forth on Schedule 8.18(b), the Company:
(i) is not liable for any accrued bonus compensation, vacation pay,
severance pay or arrears of wages except as reflected on the Financial
Statements;
(ii) is not currently involved in or in the past 3 years has not had
any activity or proceedings by a labor union or representative thereof to
organize any of its employees and no such activity or proceeding is, or in
the past 3 years, has been, threatened against the Company; and
(iii) is not subject to any pending or, to the Knowledge of the
Company, threatened complaints or investigations involving the Company by
any Person responsible for the investigation and enforcement of any
foreign, federal, state or local labor, employment or discrimination laws,
statutes, public policies, orders, regulations, ordinances or other
requirements respecting any labor, employment and employment practices,
discrimination, terms and conditions of employment, or wages and hours.
8.19 Location of Off Site Assets. Except as set forth on Schedule 8.19 and
except for goods in transit and financial assets, none of the tangible assets of
the Company is located on any real property other than the Properties owned or
leased by the Company as of the date hereof.
8.20 Inventory. All inventory of the Company has been and will be acquired
in the ordinary course of business and consistent with its prior practice.
Except as shown on Schedule 8.20, all of the inventory (including raw materials,
work-in-process, finished goods, and all packing, packaging and instructional
materials for the same) of the Company is reflected in the Financial Statements,
or was acquired thereafter and is, and as of the Closing will be, in good
condition, not obsolete, defective or subject to any material backlog, and is
and will be usable or saleable in the usual and ordinary course of business
within its normal inventory "turn" experience and is valued (a) for purposes of
such inventory reflected in the Financial Statements, on a basis consistent with
past practices, and (b) as of the Closing, at the lower of cost (determined on a
first-in first-out basis) or market value. For purposes of the immediately
preceding sentence, "obsolete inventory" shall mean any inventory of the Company
(other than inventory of replacement parts) (a) which has not sold within the
six-month period preceding the date hereof, or (b) for which there was a supply
of greater than six months' inventory "turn" as measured by sales of the Company
in the six month period preceding the date hereof. The Company is not under any
liability or obligation with respect to the return or repurchase of any goods in
the possession of customers except for amounts which are not material and are
consistent with historical levels of returns and allowances.
8.21 Accounts Receivable. Schedule 8.21 lists (i) all of the accounts
receivable of the Company in excess of $10,000 written off since September 30,
1996 or against which a specific reserve has been provided, and (ii) each
account receivable of the Company not arising in the ordinary course of its
business. Schedule 8.21 sets forth a list of all accounts receivable of the
Company in excess of $10,000 with an invoice date prior to September 30, 1996
that have not been paid on or prior to August 31, 1997. In the event any
accounts receivable of the Company reflected on the 1997 Financial Statements
are not collected on or prior to the sixth month anniversary of the Closing
Date, Buyer shall have the right to cause the Escrow Agent to deliver to Buyer
from the Escrow Account (in accordance with the procedures set forth in Section
12.1(e)) shares of Bacou Common Stock having an aggregate value (determined on
the basis of the Closing Price) equal to the aggregate amount of such
uncollected accounts receivable minus an amount equal to the specific reserves,
if any, therefor set forth in the 1997 Financial Statements subject, however, to
Shareholders right to pay to Buyer cash in an amount equal to the Receivables
Amount as provided in Section 12.1(e). For purposes hereof, the term
"Receivables Amount" means the aggregate amount of such uncollected accounts
receivable minus an amount equal to (i) the reserves, if any, for doubtful
accounts set forth in the balance sheet included in the 1997 Financial
Statements, and (ii) the aggregate value of any inventory returned to the
Company with respect to any uncollected accounts receivable (valued as set forth
in Section 8.20).
8.22 Agents. Except for agents for service of process and customs brokers
and except as provided in Section 8.12(j), the Company has not designated or
appointed any Person to act for it or on its behalf pursuant to any power of
attorney or agency which is presently in effect.
8.23 Warranty and Product Liability Claims. (a) Except as disclosed on
Schedule 8.23, the Company has not made any express warranties or guaranties
with respect to any products manufactured or sold or services rendered in the
operation of its business, and no claims are pending or asserted or, to the
Knowledge of the Company, threatened that any product of the Company was
defective or caused any injury or harm to any person or property, including all
such claims or allegations relating to returns, express or implied warranty
violations, failure to warn or similar matters. To the Knowledge of the Company
no Person has any basis upon which to make any such claims. All pending, or, to
the Knowledge of the Company, threatened or asserted claims set forth on
Schedule 8.23 are covered by insurance and are not subject to any deductibles
other than the amount of the deductible set forth opposite such claim on such
Schedule. With respect to a breach of this Section 8.23(a), all claims of the
Buyer shall be net of any specific warranty reserve set forth on the balance
sheet included in the 1997 Financial Statements.
(b) Schedule 8.23(b) sets forth all accidents since October 1, 1992
that have alleged to have been, or that, to the Knowledge of the Company, could
be alleged to have been, caused by any product manufactured or sold by the
Company or by any services rendered by the Company, regardless of whether a
claim therefor has been asserted or threatened against any Person.
8.24 No Brokers. Neither any Shareholder nor the Company has employed any
broker, finder, advisor or intermediary in connection with the transactions
contemplated hereby which would be entitled to a broker's, finder's or similar
fee or commission in connection therewith or upon the consummation thereof.
8.25 No Other Agreements to Sell. Neither any Shareholder nor the Company
is a party to any agreement to sell all or a portion of any of the capital stock
of the Company or any of its respective assets (other than the sale of inventory
in the ordinary course of business) to any Person other than Buyer.
8.26 Disclosure. No statement contained in any Purchase Document or in any
agreement, document or instrument executed in connection therewith or in any
certificate or schedule relating thereto or delivered in connection therewith,
whether heretofore furnished to Buyer or hereafter required to be furnished to
Buyer, contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the statements contained
therein not misleading.
8.27 Material Adverse Effect. No Material Adverse Effect with respect to
the Company has occurred since September 30, 1996; except as otherwise disclosed
in this Agreement or any Schedule hereto.
8.28 Copies of Documents. The shareholders have caused to be delivered to
the Buyer and its advisers, true, complete and correct copies of all documents
referred to in this Article VIII or in any Schedule attached hereto.
8.29 Purchase for Investment. (a) With respect to any shares of Bacou
Common Stock that any Shareholder may receive pursuant to the terms of this
Agreement (i) such Shareholder (other than ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ (each a
"Non-Accredited Shareholder")) is an "Accredited Investor" (as defined under
Rule 501(a) of Regulation D of the Act), (ii) such Shareholder will acquire such
shares for investment for its/his/her own account and not with a view to, or for
sale in connection with, any distribution or public offering thereof, (iii) such
Shareholder will not resell, pledge, assign or otherwise dispose of such shares
unless they are subsequently registered under the Act and applicable securities
laws of certain states or an exemption from such registration is available, (iv)
such Shareholder (either alone or together with its/his/her advisors) has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of any investment in such shares
and is capable of bearing the economic risks of any such investment, and (v) no
commission or other remuneration was paid, directly or indirectly, for
soliciting any investment in such shares.
(b) With respect to the shares of Bacou Common Stock that any
Non-Accredited Shareholder may receive pursuant to the terms of this Agreement,
such Non-Accredited Shareholder hereby acknowledges and agrees that (i) such
shares will be acquired by such Non-Accredited Shareholder for his own account
as an investment and not with a view to, or for sale in connection with, any
distribution or public offering thereof, (ii) such Non-Accredited Shareholder
has consulted with such financial and legal advisers as he has deemed necessary
so as to be capable of evaluating the merits and risks of any investment in such
shares and is capable of bearing the economic risks of any such investment,
(iii) the Buyer has made available to such Non-Accredited Shareholder, during
the course of this transaction, the opportunity to ask questions of and receive
answers from representatives of the Buyer concerning the terms and conditions of
such shares and to obtain any additional information relating to the financial
condition and business of the Buyer, to the extent that such representatives
possessed such information or could acquire it without unreasonable effort or
expense, (iv) no commission or other remuneration was paid, directly or
indirectly, for soliciting any investment in such shares, and (v) such
Non-Accredited Shareholder will not resell, pledge, assign or otherwise dispose
of such shares unless they are subsequently registered under the Act and
applicable securities laws of certain states or an exemption from such
registration is available.
(c) It is understood and agreed that the shares of Bacou Common Stock to be
issued by the Buyer to the Shareholders pursuant to the terms of this Agreement
will be issued without their registration under the Act and, therefore, such
shares cannot be resold, pledged, assigned or otherwise disposed of unless they
are subsequently registered under the Act or unless an exemption from such
registration is available. If Buyer receives an unqualified legal opinion from
Arent, Fox, Kintner, ▇▇▇▇▇▇▇ & ▇▇▇▇ specifying and stating that such an
exemption from registration is available with respect to the sale, pledge,
assignment or other disposition of all or any part of such shares, the Buyer
shall consent to such sale, pledge, assignment or other disposition of such
shares.
(d) Upon the issuance of the shares of Bacou Common Stock to the
Shareholders pursuant to the terms of this Agreement, the certificate or
certificates representing ownership of such shares shall bear the following
legend on the reverse side thereof:
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities act. No registration or transfer of such shares will be
made on the books of the Corporation unless such transfer is made in
connection with an effective registration statement under the Act or
pursuant to an exemption from the registration requirements of the
Act.
(e) Each Shareholder ackowledges and agrees that the shares of Bacou Common
Stock to be issued to such Shareholder pursuant to the terms of this Agreement
have not been registered under the Act by reason of their contemplated issuance
in a transaction exempt from the registration and prospectus delivery
requirements of the Act pursuant to Section 4(2) thereof and the provisions of
Rule 506 of Regulation D promulgated thereunder and that the reliance of Buyer
upon such exemptions is predicated in part upon this Section.
8.30 Loans. Except as set forth on Schedule 8.7 there are no loans
outstanding to employees, officers, directors or Affiliates of the Company.
8.31 Dissenting Shareholders. None of the Shareholders is entitled to any
appraisal rights under the PBCL.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF BUYER
Each of Buyer and Merger Sub hereby jointly and severally represents and
warrants the following to each Shareholder, which representations and warranties
shall be true and correct as of the date hereof and as of the Closing as if made
on and as of the Closing, and no specific representation or warranty shall limit
the generality or applicability of a more general representation or warranty:
9.1 Organization. Each of Buyer and Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to carry on its business as
now being conducted. Each of Buyer and Merger Sub is duly qualified to do
business as a foreign corporation and is in good standing in every jurisdiction
in which the operation of its business requires such qualification, except for
failures, if any, to be so qualified and in good standing which would not have a
Material Adverse Effect on it. Each of Buyer and Merger Sub has, prior to the
Closing, made available to the Company a copy of its Certificate of
Incorporation and bylaws, each as in effect on the Closing.
9.2 Authority; Binding Effect. Each of the Buyer and Merger Sub has full
power, authority and capacity to execute and deliver each Purchase Document to
which Buyer or Merger Sub is a party and to perform the transactions required of
the Company or Merger Sub thereunder and at the Closing. Each Purchase Document
to which the Buyer or Merger Sub is a party has been duly authorized, executed
and delivered by the Buyer or Merger Sub, as the case may be, and constitutes
the legal, valid and binding obligations of the Buyer or Merger Sub, as the case
may be, enforceable against the Buyer or Merger Sub, as the case may be, in
accordance with the terms and provisions thereof, subject to general equity
principles and to applicable bankruptcy, fraudulent transfer, insolvency,
reorganization, moratorium and other similar laws from time to time in effect
affecting the enforcement of creditors' rights generally (regardless of whether
such enforcement is considered in a proceeding in equity or at law).
9.3 Authorized Capitalization; Outstanding Stock. The authorized capital
stock of Buyer consists of 25,000,000 shares of Bacou Common Stock of which, as
of August 31, 1997, approximately 17,350,000 shares were issued and outstanding.
The shares of Bacou Common Stock to be issued in connection with the Merger,
when issued to the Shareholders in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable. Buyer shall list such
shares on the NASDAQ National Market System no later than sixty (60) days after
the Closing Date.
9.4 Non-Contravention. Neither the execution and delivery by the Buyer or
Merger Sub of any Purchase Document to which the Buyer or Merger Sub is a party
nor the consummation by the Buyer or Merger Sub of the transactions contemplated
thereby (a) will violate any provision of the Articles of Incorporation or
bylaws of the Buyer or Merger Sub, (b) will violate or conflict with any
applicable statute, law, ordinance, rule, regulation, order, judgment or decree
applicable to the Buyer or Merger Sub in such a way as to cause a Material
Adverse Effect, (c) will conflict with or constitute a violation of or a default
(or an event which with notice or lapse of time or both, would constitute a
default) under, or will result in the termination of, or accelerate performance
required by, any contract to which the Buyer or Merger Sub is a party or to
which any of the assets or properties of the Buyer or Merger Sub are subject, or
(d) will result in the creation of any Lien upon any of the capital stock of the
Buyer or Merger Sub or upon any of the property or assets of the Buyer or Merger
Sub. Except for the consent and approval of the Merger and the Purchase
Documents, and the transactions contemplated thereby, by the Board of Directors
of the Buyer and the HSR Approval, neither the execution or delivery by the
Buyer or Merger Sub of any Purchase Document to which the Buyer or Merger Sub is
a party nor the consummation of the transactions contemplated thereby will
require the consent, authorization or approval of, or notice to or filing or
registration with, any Person.
9.5 Securities Filings. Buyer's Annual Reports on Form 10-K for the year
ended December 31, 1996 (the "Buyer 1996 10-K") in the form (including exhibits)
filed with the Securities and Exchange Commission (the "SEC") as amended and
supplemented by all filings with the SEC since that date, including Forms 10-Q
and 8-K, do not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading. Each of the consolidated balance sheets incorporated by
reference into such 10-K report or in any such filings (including the related
notes and schedules) fairly presents the financial position of the entities to
which it relates as of its date and each of the consolidated statements of
income and retained earnings and of changes in financial position incorporated
by reference into such 10-K report or subsequent filings (including any related
notes and schedules) fairly presents the results of operations, retained
earnings and changes in financial position, as the case may be, of the entities
to which it relates for the period set forth therein, in each case in accordance
with generally accepted accounting principles consistently applied during the
periods involved. Since December 31, 1996 to the date of this Agreement there
has not been any Material Adverse Change in the financial condition or results
of operations of Buyer and its subsidiaries considered as a whole.
9.6 Rule 144 Holding Period. If, with respect to the shares of Bacou Common
Stock issued to the Shareholders pursuant to the terms hereof, Buyer receives an
unqualified legal opinion from Arent, Fox, Kintner, ▇▇▇▇▇▇▇ & ▇▇▇▇ that the
Shareholders have complied with the applicable holding period under Rule 144
promulgated under the Securities and Exchange Act of 1934, Buyer shall
acknowledge and agree to such compliance.
ARTICLE X
FURTHER AGREEMENTS OF THE PARTIES.
10.1 Environmental Report. On or before the Closing Date, the Shareholders
shall cause to be furnished to Buyer a Phase I environmental site assessment
report with respect to the Company's real property located in Middletown,
Connecticut satisfactory to Buyer in its sole discretion which assessment shall
be performed at the expense of the Shareholders by a reputable environmental
engineering firm satisfactory to Buyer in its sole discretion.
10.2 Maintenance of Corporate Existence. The Shareholders shall cause the
Company (i) to maintain its corporate existence in its jurisdiction of
incorporation, and (ii) to be in good standing in its jurisdiction of
incorporation and in such other States in which the conduct of its business or
the maintenance of its assets requires it to be in good standing.
10.3 Filings; Other Action.
(a) The Shareholders shall cause the Company to and Buyer shall (i) use all
best efforts to cooperate with one another in (A) determining which filings or
registrations are required to be made prior to the Closing Date with, and which
consents, approvals, permits or authorizations are required to be obtained prior
to the Closing Date from, any Governmental Entity in connection with the
execution and delivery of each Purchase Document and the consummation of the
transactions contemplated thereby, and (B) timely make all such filings and
registration and timely seek all such consents, approvals, permits or
authorizations; and (ii) use all reasonable efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things necessary,
proper or appropriate to consummate and make effective the transactions
contemplated by each Purchase Document.
(b) Buyer and the Company each acknowledge that it filed, on or before
September 5, 1997, Premerger Notification and Report Forms with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice.
10.4 Access to Information. The Shareholders shall, and shall cause the
officers and employees of the Company to, afford Buyer and its representatives
complete access at all reasonable times to the properties, books and records of
the Company. Any information disclosed in connection therewith shall be governed
by that certain Confidentiality Agreement entered into by and between the Buyer
and the Company dated as of May 22, 1997.
10.5 Publicity. Neither Buyer nor any Shareholder shall, nor shall the
Buyer permit the Company to, issue a press release or make any announcement
concerning the transactions contemplated by this Agreement, except (i) as may be
agreed upon by Buyer and any Shareholder, or (ii) as Buyer shall be required
under applicable securities laws. Buyer agrees that in any press release
regarding the occurrence of this transaction and the consideration received or
to be received by the Shareholders thereunder Buyer shall only disclose the
aggregate consideration received or to be received by the Shareholders and not
the specific consideration received or to be received by any particular
Shareholder. Shareholders' Representative shall be given a reasonable
opportunity (subject to the Buyer's time and filing requirements) to comment on
any press release and any filing with the Securities and Exchange Commission on
Form 8-K to be made by the Buyer (in each case, to the extent it relates
specifically to this transaction); provided, however, it is expressly understood
and agreed that the Buyer shall have no obligation to include any of such
comments in such press release or Form 8-K.
10.6 Bank Accounts. At least two weeks prior to the Closing the
Shareholders shall deliver to Buyer a list setting forth all banks and other
financial institutions with which the Company maintains an account or a safe
deposit box, showing the account numbers of all such accounts and the names of
the persons authorized as signatories thereon or to act or deal in connection
therewith. The Shareholders shall cause the Company to cooperate with Buyer and
to execute all necessary documentation to effect fully any changes desired, as
of the Closing, by Buyer in the persons authorized as signatories thereon or to
act or deal in connection therewith.
10.7 No Solicitation of Transactions. From the date hereof through the
Closing Date, the Shareholders will not, nor will they permit the Company to,
directly or indirectly, solicit, initiate or continue any discussions or
negotiations with, or encourage or respond to any inquiries or proposals by, or
participate in any negotiations with, or provide any information to, or
otherwise cooperate in any other way with, any Person or group of Persons (other
than Buyer and its representatives) relating to any acquisition or purchase of
any assets of, or any equity interest in, the Company or any merger,
consolidation or business combination with the Company.
10.8 Taxes and Fees. The Shareholders shall pay all sales, use, transfer,
real estate transfer, registration, excise and other similar Taxes and fees
(including stamps duties) resulting from the consummation of the transactions
contemplated hereby. The Shareholders shall also be responsible for all income
and/or capital gains tax assessed or payable in connection with the consummation
of the transactions contemplated hereby. The Shareholders shall pay all fees,
costs and expenses incurred by or for the account of any Shareholder or the
Company in connection with the negotiation, execution and delivery of the
Purchase Documents and the consummation of the transactions contemplated thereby
and to the extent any of such payments are paid by the Company on behalf of the
Shareholders, an amount equal to such payments shall be deducted from the
Initial Purchase Price.
10.9 Delivery of Corporate Books, Budgets. On or before September 12, 1997,
the Shareholders shall deliver to Buyer (a) a complete and accurate copy of the
Corporate Books and the Budgets.
10.10 Cooperation. Each party shall provide the other with such cooperation
as may reasonably be requested, at the expense of the requesting party (unless
the requesting party is to be indemnified with respect thereto, in which case
such cooperation shall be given at the expense of the indemnifying party), in
connection with the post-Closing matters contemplated by this Agreement,
including, without limitation, the defense of any claims whether existing on the
Closing Date or arising thereafter out of, or relating to, an occurrence or
event happening before, on or after the Closing Date, including, without
limitation, by making available all books and records relating thereto and all
employees having Knowledge of the matters in controversy; provided, however,
Buyer shall not be required to make available employees of the Company for more
than one day unless (i) Shareholders shall compensate the employer of such
employee for such time and reimburse all travel and other related costs, and
(ii) such time shall not unreasonably inconvenience such employer, in the sole
and reasonable judgment of such employer.
10.11 Access to Books and Records. Each party shall make available to the
other such books and records of the Company in its possession and, in the case
of the Buyer, in the possession of the Company, as may be required by the other
party in connection with any legal, regulatory or administrative proceeding
including tax audit or investigation and in connection with any covenant,
indemnity or other agreement contained herein. Such books and records will be
open for inspection upon reasonable notice during regular business hours.
10.12 Non-Competition by Certain Shareholders.
(a) Each of ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ (the "Specified Shareholders")
acknowledges that (i) the Company is engaged in the business of manufacturing
and marketing gas detection and monitoring devices and instrumentation for the
calibration and testing of respiratory equipment (the "Company Business"); (ii)
he is one of the limited number of Persons who has developed and/or managed the
Company Business; (iii) the Company Business is conducted throughout the United
States and the world; (iv) his work for, or ownership of, the Company has given
him and will continue to give him trade secrets of and confidential information
concerning the Company; (v) the agreements and covenants contained in this
Section 10.12 are essential to protect the business and goodwill of the Company;
(vi) Buyer would not purchase the Shares but for such agreements and covenants;
and (vii) as a result of Buyer's purchase of his Shares, he has means to support
himself and his dependents other than by engaging in the Company Business and
the provisions of this Section 10.12 will not impair such ability. Accordingly,
each Specified Shareholder covenants and agrees, with respect to himself, as
follows:
(i) For a period of three (3) years following the Closing (the
"Restricted Period"), such Specified Shareholder shall not, directly or
indirectly, (i) engage in the Company Business for such Specified
Shareholder's own account; (ii) enter the employ of, or, except as agreed
to in writing by Buyer and such Specified Shareholder, render any services
to, any Person engaged in such activities; or (iii) become interested in
any such Person in any capacity, including, without limitation, as an
individual, partner, shareholder, officer, director, principal, agent,
trustee or consultant; provided, however, such Specified Shareholder may
own, directly or indirectly, solely as an investment, securities of any
Person traded on any national securities exchange if such Specified
Shareholder is not a controlling Person of, or a member of a group which
controls, such Person and does not, directly or indirectly, own 5.0% or
more of any class of securities of such Person.
(ii) Such Specified Shareholder promises and agrees that during the
Restricted Period and thereafter, such Specified Shareholder will not
disclose to any Person not employed by the Company, and that such Specified
Shareholder will not use for the benefit of himself/herself or others, any
confidential information of the Company obtained by him/her while in the
employ of the Company or otherwise, including, without limitation,
"know-how," trade secrets, customer lists, details of client or consultant
contracts, pricing policies, financial data, operational methods, marketing
and sales information, marketing plans or strategies, product development
techniques or plans, business acquisition plans, new Personnel acquisition
plans and other Personnel data, methods of manufacture, technical
processes, designs and design projects, inventions and research projects,
and other proprietary information of the Company; provided, however, that
this provision shall not preclude such Specified Shareholder from use or
disclosure of information known generally to the public (other than
information known generally to the public as a result of a violation of
this Section 10.12 by a Specified Shareholder), from use or disclosure of
information acquired by such Specified Shareholder outside of his/her
affiliation with the Company, from disclosure required by law or court
order, or from disclosure appropriate and in the ordinary course of
carrying out his/her duties as an employee of the Company.
(iii) All memoranda, notes, lists, records and other documents or
papers (and all copies thereof), including such items stored in computer
memories, on microfiche or by any other means, made or compiled by or on
behalf of such Specified Shareholder, or made available to such Specified
Shareholder relating to the Company Business, are and shall be the property
of the Company and shall be delivered to the Company promptly after the
Closing or at any other time on request. Such Specified Shareholder agrees
that any inventions, discoveries, improvements, ideas, concepts or original
works of authorship relating directly or indirectly to the Company Business
including, without limitation, computer apparatus, programs and
manufacturing techniques, whether or not protectable by patent or
copyright, that have been originated, developed or reduced to practice by
such Specified Shareholder alone or jointly with others during such
Specified Shareholder's employment with the Company shall be the property
of and belong exclusively to the Company. Such Specified Shareholder shall
promptly and fully disclose to the Company the origination or development
by such Specified Shareholder of any such material and shall provide the
Company with any information that it may reasonably request about such
material.
(iv) During the Restricted Period such Specified Shareholder shall
not, directly or indirectly, solicit or induce any employee or former
employee of the Company or encourage any such employee or former employee
to leave such employment.
(b) If any Specified Shareholder breaches, or threatens to commit a breach
of, any of the provisions of Section 10.12 (the "Restrictive Covenants"), Buyer
and the Company shall have the following rights and remedies against the
breaching Specified Shareholder (and not against the non-breaching Specified
Shareholder), each of which rights and remedies shall be independent of the
others and severally enforceable, and each of which is in addition to, and not
in lieu of, any other rights and remedies available to Buyer and the Company
under law or in equity:
(i) The right and remedy to have the Restrictive Covenants
specifically enforced, notwithstanding anything to the contrary set forth
herein, by any court of competent jurisdiction, it being agreed that any
breach or threatened breach of the Restrictive Covenants would cause
irreparable injury to Buyer and the Company and that money damages would
not provide an adequate remedy to Buyer and the Company.
(ii) The right and remedy to require such Specified Shareholder to
account for and pay over to Buyer or the Company, as the case may be, all
compensation, profits, monies, accruals, increments or other benefits
derived or received by such Specified Shareholder as the result of any
transactions constituting a breach of the Restrictive Covenants.
(c) Each Specified Shareholder acknowledges and agrees that the Restrictive
Covenants are reasonable and valid in geographical and temporal scope and in all
other respects. If any court determines that any of the Restrictive Covenants,
or any part thereof, is invalid or unenforceable, the remainder of the
Restrictive Covenants shall not thereby be affected and shall be given full
effect, without regard to the invalid portions.
(d) If any court determines that any of the Restrictive Covenants or any
part thereof is unenforceable because of the duration or geographic scope of
such provision, such court shall have the power to reduce the duration or scope
of such provision, as the case may be, and, in its reduced form, such provision
shall then be enforceable.
(e) Notwithstanding anything to the contrary set forth herein, Buyer and
the Specified Shareholders intend to and hereby confer jurisdiction to enforce
the Restrictive Covenants upon the courts of any jurisdiction within the
geographical scope of such Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of Buyer and the
Specified Shareholders that such determination not bar or in any way affect the
Company's right to the relief provided above in the courts of any other
jurisdiction within the geographical scope of such Restrictive Covenants, as to
breaches of such Restrictive Covenants in such other respective jurisdictions,
such Restrictive Covenants as they relate to each jurisdiction being, for this
purpose, severable into diverse and independent covenants.
10.13 Schedule Disclosures. Although a particular Schedule reference is
indicated, disclosure with respect to one Schedule shall be deemed disclosure
under each other Schedule to this Agreement, where information in such other
Schedule is specifically referenced, or where the relevance to such other
Schedule is manifest on the face of such disclosure.
10.14 Collection of Receivables.
(a) After the Closing Date, Buyer shall cause the Company to use its
reasonable efforts, consistent with prior business practices of the Company, to
collect all accounts receivable reflected in the 1997 Financial Statements. With
respect to any payments on accounts receivable reflected in the 1997 Financial
Statements, Buyer shall apply such payments in the order of the oldest invoice
first unless the customer shall have rejected the goods covered thereby, or
shall have otherwise disputed the invoice to which a payment must be applied.
Buyer shall give the Shareholders reasonable access to the books and records of
the Company to verify any accounts receivable with respect to which any claim
under Section 10.14(b) is made.
(b) Thirty (30) days after the date by which all accounts receivable are to
be collected as specified in Section 8.21 Buyer shall notify the Shareholders
(the date on which such notice is mailed, the "Receivables Notice Date") of all
accounts receivable described in Section 8.21 which remain uncollected and Buyer
shall have the right to cause the Escrow Agent to deliver to Buyer from the
Escrow Account (in accordance with the procedures set forth in Section 12.1(e))
shares of Bacou Common Stock having an aggregate value (determined on the basis
of the Closing Price) equal to the Receivables Amount subject, however, to
Shareholders right to pay to Buyer cash in an amount equal to the Receivables
Amount as provided in Section 12.1(e). Each account receivable for which Buyer
claims indemnification and which remains uncollected as of the Receivables
Notice Date shall be assigned to Shareholders' Representative, for the benefit
of the Shareholders, if the Shareholders' Representative shall so request. Buyer
agrees to use reasonable efforts to collect each account receivable for which
Buyer has claimed reimbursement from the Escrow Agent or with respect to which
Shareholders have reimbursed Buyer in cash as provided in Section 12.1(e), but
Buyer shall not be required to initiate any legal proceedings or incur any
out-of-pocket expenses or legal fees in connection therewith. If Buyer
subsequently collects any receivable for which Buyer has been reimbursed (as
provided in the immediately preceding sentence), Buyer shall remit amounts so
collected to the Shareholders' Representative, for the benefit of the
Shareholders, to the extent Buyer has been reimbursed (as provided in the
immediately preceding sentence) for such receivable. Notwithstanding anything
set forth herein to the contrary, no Shareholder shall be entitled to an
assignment of, or the proceeds of, any account receivable charged against the
specific reserves therefor set forth in the 1997 Financial Statements.
10.15 Corporate Opportunities. So long as Section 7 of the Registration
Rights Agreement is in effect, Buyer shall (a) comply with the terms of that
certain Corporate Opportunities Agreement, dated January 1, 1996, between Parent
and Buyer, and (b) maintain an Oversight Committee of the Board of Directors of
Buyer which shall be composed of at least two independent directors who shall
review and approve the fairness of all transactions between Parent and Buyer
except those occurring in the ordinary course of Buyer's business.
10.16 Operation of the Company Prior to January 1, 2001. Each Shareholder
and the Buyer acknowledge that the Earnout is an integral part of this
transaction with the goal that both the Shareholders and Buyer will derive
significant financial benefits if, over the three year period ending December
31, 2000, the EBIT of the Company increases. Shareholders make no representation
that EBIT will so increase. Accordingly, the Shareholders and the Buyer have
mutual interests to increase the Company's EBIT between the Closing and January
1, 2001; provided, however, that the Shareholders require assurances that Buyer
will not shift the Company's EBIT to other members of Buyer's consolidated group
of companies in a manner that would artificially prejudice the computation of
EBIT during the fiscal years ending December 31, 1998, 1999 and 2000; and
provided further that Buyer requires adequate opportunity to exercise its rights
of ownership and control over the Company from and after the Closing. In order
to provide each Shareholder and Buyer assurances, each Shareholder and Buyer
have reached the following agreements concerning the conduct of the Company's
business from the Closing through December 31, 2000 and concerning the manner of
computing FYE 00 EBIT:
(a) ▇▇▇▇'▇ Management of the Company. Subject to ▇▇▇▇'▇ resignation, death
or disability and to the terms of that certain Employment Agreement, dated as of
the Closing Date, between the Company and ▇▇▇▇ ("▇▇▇▇'▇ Employment Agreement"),
Buyer shall cause ▇▇▇▇ to be elected the President and a Director of the Company
from the Closing until December 31, 2000. During ▇▇▇▇'▇ service as President of
the Company, he shall have the right to manage the business and affairs of the
Company, subject to the following limitations: (i) the ultimate control and
responsibility of the Company's Board of Directors under applicable law; (ii)
the policies, procedures and limitations on authority which apply generally to
Buyer's operating subsidiaries; (iii) the limitations of authority contained in
▇▇▇▇'▇ Employment Agreement; and (iv) the provisions of this Agreement including
but not limited to this Section 10.16. All references to ▇▇▇▇ in this Section
10.16 shall mean and be a reference to ▇▇▇▇ so long as he is President of the
Company.
(b) Annual Budgets. Effective upon the Closing, the Company shall change
its fiscal year to a calendar year and participate in Buyer's annual budgeting
process. The Company, in consultation with ▇▇▇▇, shall propose an operating
budget and a capital expenditure budget for each fiscal year not later than
September 30 of the prior fiscal year. ▇▇▇▇ shall meet with members of
management of Buyer to discuss and refine the budgets. Upon approval by Buyer's
management, the budgets of the Company shall be subject to approval by the
Boards of Directors of the Company and Buyer. The specific requirements and
limitations on the budgets are provided below.
(1) Operating Budgets. The Company shall adopt annual operating
budgets which meet the following requirements: (A) set forth reasonable and
appropriate levels of sales, costs and expenses in each fiscal year and
represent the Company's best estimates consistent with prior experience;
(B) in the case of research and development and other discretionary
expenditures, do not materially deviate from past practice in a manner
which would affect the Earnout; and (C) contain management fees or fees for
services where such fees are implemented in connection with changes to the
sales, marketing, general and administration functions of the Company in
accordance with this Agreement. The Company shall use its best efforts to
perform according to its budget in each fiscal year, including but not
limited to the achievement of sales targets, incurrence of reasonable and
appropriate expenditures for research and development, and consistency in
the timing of expenses incurred and products shipped, especially in fiscal
years 1999 and 2000 so that the Earnout is not artificially affected.
(2) Capital Expenditure Budgets. The Company shall adopt annual
capital expenditure budgets which meet the following requirements: (A) set
forth reasonable and appropriate levels of expenditure consistent with the
mutual intent of Buyer and each Shareholder to increase the sales volume
and EBIT of the Company; and (B) divide the expenditures in two levels of
priority and the following three categories: (I) continuing the operation
of the business as currently operated; (II) growth of sales and/or cost
reduction; and (III) comfort. The Buyer shall cause the Company's capital
expenditure budget to be adopted to the extent of all expenditures required
for continued operation of the business as currently operated and those
other proposed expenditures that are reasonably expected to produce
additional EBIT sufficient to cover the applicable cost of capital (at the
prime rate in the case of borrowed funds and at three percentage points
below the prime rate in the case of undistributed profits).
(c) Working Capital. Buyer shall provide the Company working capital for
the reasonable needs of the business pursuant to the Buyer's policy on
intercompany loans and dividends, a copy of which is attached hereto as Schedule
10.16(c). The amount of intercompany loans available to the Company at the prime
rate shall not be less than Two Million Dollars ($2,000,000) plus the amount of
any dividends distributed to Buyer prior to January 1, 2001.
(d) Domestic Sales - General. Buyer and each Shareholder acknowledge that
Buyer is in the process of studying the costs and benefits of combining the
sales forces of all of its operating subsidiaries into a single sales force for
the United States domestic market. If Buyer determines that the sales force of
the Company should be combined with the sales forces of any one or more of the
Buyer's other operating subsidiaries, whether now owned or hereafter acquired,
then for purposes of computing the Earnout, the Company's selling expenses for
domestic sales shall be equal to the product of the Company's sales for Fiscal
Year 2000 and the Company's 1997 Percentage Sales Cost. For purposes of this
Agreement, the Company's 1997 Percentage Sales Cost shall be a percentage equal
to the following: (x) the selling expenses of the Company for Fiscal Year 1997,
divided by (y) the total sales of the Company for Fiscal Year 1997. For purposes
of this Section 10.16(d), the total selling expenses of the Company shall
include only the direct and indirect costs of its sales force (salaries,
benefits, bonuses, commissions and related expenses including travel and
entertainment expenses). Buyer and each Shareholder acknowledge and agree that
Buyer intends to proceed with such study as soon as possible following the
Closing and to pursue the resulting strategy on a timetable to be determined by
Buyer.
(e) American Export Market. Buyer and each Shareholder acknowledge and
agree that Buyer intends to and shall, as soon as practicable after the Closing
and with a target date of January 1, 1998, divest from the sales force of the
Company all responsibility for export sales to Canada, Mexico, Central America
and South America (the "American Export Market"). Such sales shall be handled by
a sales force maintained by Buyer or one or more of its subsidiaries for the
specific purpose of selling the products of Buyer and its subsidiaries to the
American Export Market. The Company shall bear a proportionate share of the
total costs of Buyer's sales efforts in the American Export Market, which share
shall be determined as the product of (x) the total sales costs of Buyer for its
efforts in the American Export Market, which Buyer shall record, compute and
maintain as separate records subject to review by ▇▇▇▇, and (y) a fraction
having as a numerator the sales volume of the Company in the American Export
Market for FYE 00 and having as a denominator the total sales volume of Buyer
and all of its subsidiaries in the American Export Market for FYE 00. For
purposes of this Section 10.16(e), the total sales costs of Buyer for its
efforts in the American Export Market shall include only the direct and indirect
costs of the sales force in the American Export Market (salaries, benefits,
bonuses, commissions and related expenses including travel and entertainment
expenses); marketing expenses (including advertising, product literature,
product certification, translations of instructions, product literature and
advertising) for the Company's products shall be borne by the Company and shall
be treated as expenses of the Company when computing EBIT.
(f) World Export Market. Buyer and each Shareholder acknowledge and agree
that Buyer intends to and shall, as soon as practicable after the Closing and
with a target date of January 1, 1998, cause the Company to establish, maintain
and pay the costs of an export department to support export sales efforts to
markets other than the United States Market and the American Export Market (the
"World Export Market"). Buyer shall use its best efforts to introduce the
Company's products to Bacou S.A. and its affiliates, as well as other
international distributors of safety products, for the purpose of increasing
sales of the Company's products in the World Export Market. The costs of the
Company's sales and marketing efforts relating to the World Export Market shall
be borne by the Company and shall be treated as expenses of the Company when
computing EBIT.
(g) General, Administrative, Sales and Marketing Functions. From the
Closing to December 31, 2000, Buyer shall have the right to change, move,
consolidate or eliminate any general, administrative sales and/or marketing
function of the Company (which shall not include pricing of products,
engineering, research and development, product development, manufacturing or
quality control but which shall include all other functions of the Company),
subject to the effects on computation of FYE 00 EBIT set forth in this Section
10.16. Such changes will include, but not be limited to, the implementation of
policies and procedures generally applicable to all subsidiaries of Buyer. Buyer
will notify ▇▇▇▇ of any such change prior to its implementation, which notice
shall describe in reasonable detail both the change, its expected effect on the
Company's revenues, costs, expenses and capital expenditures and, in the case of
a change which would subject the Company to fees, expenses or other costs
payable to Buyer or an Affiliate of Buyer, the manner of computing such amounts
in future, e.g. in the case of centralization of financial functions within
Buyer, payment of a management fee based upon volume of transactions, percentage
of sales or other method. ▇▇▇▇ shall have the right to object to the cost
consequence of any such change provided that he must do so in writing within
thirty (30) days after Buyer's notice as provided in the preceding sentence and
provided further that if ▇▇▇▇ objects, the sole alternative to the method of
computing the cost of the affected function shall be the application of a
percentage of FYE 00 sales equal to the percentage such costs represented of FYE
97 sales of the Company, determined by reference to the 1997 Financial
Statements and supporting workpapers. The amount of such costs appearing on the
books of account of the Company for the eleven months ended August 31, 1997, are
set forth on Schedule 10.16(g) which shall be finalized for FYE 97 as soon as
practicable following the Closing. If ▇▇▇▇ does not so object, then the
Company's costs for the affected function shall be determined as provided in the
Company's notice to ▇▇▇▇.
(h) General Protective Provisions. From and after the Closing Date up to
and including December 31, 2000, unless otherwise agreed to in writing by ▇▇▇▇,
Buyer shall:
(1) not cause or permit the Company to (A) sell all or substantially
all of its assets, (B) sell or transfer or otherwise dispose of any asset that
is necessary or required in connection with the production of income, (C) merge
or consolidate with any Person other than Merger Sub or with and into a shell
corporation wholly-owned by Buyer, (D) liquidate or dissolve, (E) purchase all
or substantially all of the assets or capital stock of any Person, (F) purchase
any division or line of products from any Person, (G) add new products or lines
of products inconsistent with the Company's strategic plans in effect prior to
consummation of the transactions contemplated herein or engage in any business
or activities or operations or provide any services which were not being
conducted or provided as of December 31, 1996, or (H) add any Subsidiary;
(2) not, and shall cause any Subsidiary of Buyer not to, compete
anywhere in the world with the Company business after December 31, 1997; except
for the acquisition of any competitive business which ▇▇▇▇ has had the
opportunity to purchase, merge or otherwise add to the Company as an exception
to Clause (1) of this Section 10.16(h) but has rejected;
(3) cause all transactions between Buyer and Affiliates of Buyer, on
the one hand, and the Company, on the other hand, to be conducted on an arm's
length basis on terms and conditions at least as favorable to the Company as the
Company could obtain from Persons who were not Buyer or Affiliates of Buyer;
(4) permit ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and their respective agents,
attorneys and accountants to have reasonable access to all books and records of
the Company;
(5) cause the Company to maintain accounting books and records which
will provide the information necessary for the calculation of FYE 97 EBIT and
FYE 00 EBIT; or
(6) Without the consent of Shareholders' Representative, not
materially alter, modify or change the Company's research and development
program or the funds devoted to such program.
(i) Shipment of Products. Neither the Company nor ▇▇▇▇ shall take the
following actions: (i) accelerate, delay, hinder or prevent the shipping of
products, the providing of services or the incurrence of expenses during the
last four months of FYE 99 in any manner which is not consistent with the
Company's operations for FYE 96 and earlier, or (ii) accelerate, delay, hinder
or prevent the shipping of any products, the providing of any services or the
incurrence of expenses at any time during FYE 00;
(k) General Undertakings Concerning Effect of Operations on EBIT. Buyer
acknowledges and agrees that it will not take any action with respect to the
Company that has as its purpose or likely result the artificial reduction of FYE
00 EBIT. Each Shareholder acknowledges and agrees that he will not cause, suffer
or permit ▇▇▇▇ to take any action with respect to the Company that has as its
purpose or likely result the artificial increase of FYE 00 EBIT.
10.17 Termination of Lease. On or before September 30, 1997, ▇▇▇▇ and the
Company shall have terminated that certain oral lease between the Company and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ relating to the real property located at Pistol Shop Road,
Rockfall, Connecticut and leased by the Company and shall have moved all assets
of the Company located at such location to the Company's offices located at ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. ▇▇▇▇ further agrees that the
Company shall not make, and shall have no obligation to make, any payments under
such lease in respect of periods after September 30, 1997.
10.18 Insurance. Following the Closing Date and for so long as the
Shareholders shall have any indemnification obligations hereunder for claims
covered thereby, the Buyer shall cause the Company to maintain insurance
coverage of a type similar to, and in amounts at least equal to, that presently
maintained by the Company (other than any deductibles therefor) with such
insurance carriers as the Buyer may select. For purposes of determining FYE 00
EBIT (a) the parties hereto shall assume that all insurance deductibles are the
same as those in effect immediately prior to the Closing, and (b) insurance
expense for FYE 00 shall be the same as reflected in the calculation of FYE 97
EBIT.
10.19 Release. Each Shareholder hereby releases and discharges the Company
of and from all debts, demands, actions, causes of actions, suits, contracts,
agreements, damages and any and all claims, demands and liabilities whatsoever
of every name and nature, whether known or unknown, suspected or unsuspected,
both in law and equity (each a "Claim"), which such Shareholder now has or ever
had from the beginning of the world to and including the Closing Date against
the Company except (a) the obligations of the Company set forth in the Purchase
Documents, and (b) the obligations, if any, of the Company to any Shareholder
for accrued and unpaid compensation through the Closing Date. Each Shareholder
hereby irrevocably covenants to refrain from, directly or indirectly, asserting
any Claim, or commencing, instituting or causing to be commenced any proceeding
of any kind, against the Company based upon any matter purported to be released
hereby.
ARTICLE XI
CONDITIONS TO CLOSING.
11.1 Conditions to Obligations of Shareholders. The obligations of each
Shareholder to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to the Closing, of each of the
following further conditions, unless Shareholders, in their sole discretion,
shall waive such fulfillment:
(a) Representations and Warranties. Each of the representations and
warranties of Buyer and Merger Sub contained in this Agreement shall be
true and correct as of the Closing Date, and Shareholders' Representative
shall have received from an authorized executive officer of Buyer and
Merger Sub a certificate, dated as of the Closing Date, to such effect.
(b) Covenants. All covenants contained in this Agreement to be
complied with by Buyer or Merger Sub on or before the Closing shall have
been complied with in all material respects, and Shareholders'
Representative shall have received from an authorized executive officer of
Buyer and Merger Sub a certificate, dated as of the Closing Date, to such
effect.
(c) Opinion of Buyer's Counsel. Shareholders' Representative shall
have received an opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to Buyer and Merger
Sub, dated as of the Closing Date, in the form attached hereto as Exhibit C
and made a part hereof.
(d) No Litigation. No suit, action or other proceeding shall be
pending or threatened before any court or Governmental Entity as of the
Closing Date seeking to restrain, prohibit or to obtain damages or other
relief in connection with, or as a consequence of, any Purchase Document or
the consummation of the transactions contemplated thereby, and the
Shareholders' Representative shall have received from an authorized
executive officer of Buyer and Merger Sub a certificate, dated as of the
Closing Date, to such effect.
(e) Secretary's Certificate. Shareholders' Representative shall have
received from each of Buyer and Merger Sub a certificate executed by its
Secretary or Assistant Secretary certifying (i) copies of resolutions duly
adopted by its Board of Directors authorizing the execution and delivery by
Buyer or Merger Sub, as the case may be, of each Purchase Document to which
it is a party and the performance by it of the transactions contemplated
thereby, and that such resolutions have not been amended or rescinded and
are in full force and effect as of the Closing Date, (ii) the bylaws of
Buyer or Merger Sub, as the case may be, to be true and complete as of the
Closing Date, (iii) the name, title and signature of the officers of Buyer
or Merger Sub, as the case may be, authorized to execute and deliver each
Purchase Document to which it is a party, and (iv) that there has been no
amendment to the Certificate of Incorporation of Buyer or Merger Sub, as
the case may be, approved by its Board of Directors or stockholders or
filed with the Secretary of State of the State of Delaware since February
26, 1996, in the case of Buyer and since May 27, 1997 in the case of Merger
Sub.
(f) Charter Documents. Shareholders' Representative shall have
received from each of Buyer and Merger Sub a copy of its Certificate of
Incorporation certified by the Secretary of State of the State of Delaware
as of a date no earlier than thirty (30) days prior to the Closing Date.
(g) HSR Approval. The HSR Approval shall have been obtained.
(h) Purchase Documents. Buyer and Merger Sub (to the extent they are a
party thereto) shall have executed and delivered to Shareholders'
Representative this Agreement, the Escrow Agreement and the Registration
Rights Agreement.
The agreements, certificates, documents, other evidence of compliance and
opinion described in this Section 11.1 shall be in form and substance
satisfactory to the Shareholders' Representative in his sole discretion and
shall, except as otherwise provided, be delivered to the Shareholders'
Representative at the Closing.
11.2 Conditions to Obligations of Buyer. The obligations of Buyer and
Merger Sub to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to the Closing, of each of the
following further conditions, unless Buyer, in its sole discretion, shall waive
such fulfillment:
(a) Representations and Warranties. Each of the representations and
warranties of each Shareholder contained in each Purchase Document to which
such Shareholder is a party shall be true and correct as of the Closing
Date as if such representations and warranties were made as of the Closing
Date and Buyer shall have received from such Shareholder a certificate,
dated as of the Closing Date, to such effect; provided however, that if
there is an event occurring subsequent to the execution of this Agreement
which is outside the control of the Shareholders or the Company, but which
makes a particular representation of the Shareholders untrue, and the
Shareholders notify the Buyer of such event prior to the Closing, Buyer
shall have the option of either terminating this Agreement pursuant to
Section 13.1(c) or proceeding with the Closing in which event the
Shareholders shall not be liable for any Damages resulting from such event.
(b) Covenants. All covenants contained herein or in any other Purchase
Document to be complied with by any Shareholder on or before the Closing
shall have been complied with and Buyer shall have received from such
Shareholder a certificate, dated as of the Closing Date, to such effect.
(c) Opinion of Counsel. Buyer shall have received an opinion of Arent,
Fox, Kintner, ▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to each Shareholder and the Company,
dated as of the Closing Date, in the form attached hereto as Exhibit D and
made a part hereof.
(d) No Litigation. No suit, action or other proceeding shall be
pending or threatened before any court or Governmental Entity as of the
Closing Date seeking to restrain, prohibit or to obtain damages or other
relief in connection with, or as a consequence of, any Purchase Document or
the consummation of the transactions contemplated thereby, and Buyer shall
have received from each Shareholder a certificate, dated as of the Closing
Date, to such effect.
(e) Charter Documents. The Shareholders shall have delivered to Buyer
a copy of the Articles of Incorporation of the Company certified by the
Secretary of State of its State of incorporation, in each case as of a date
no earlier than thirty (30) days prior to the Closing Date.
(f) Certificate of Good Standing. The Shareholders shall have
delivered to Buyer a certificate issued by the applicable authority set
forth on Schedule 11.2(f), dated as of a date no earlier than thirty (30)
days prior to the Closing Date, evidencing the good standing of the Company
in the States specified on Schedule 11.2(f).
(g) Financials. The Shareholders shall have delivered to Buyer a copy
of the Financial Statements.
(h) Escrow Agreement. Each Shareholder and Escrow Agent shall have
executed and delivered to Buyer the Escrow Agreement.
(i) Stock Certificates. The Shareholders shall have delivered to Buyer
the Certificates or Affidavits as provided in Section 6.2.
(j) Bank Accounts. The Shareholders shall have delivered to Buyer the
list required by Section 10.6.
(k) Resignations. The Shareholders shall have delivered to Buyer
resignation letters executed by each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ as directors of the Company.
(l) Purchase Documents. Each Shareholder shall have executed and
delivered to Buyer each Purchase Document to which it/he/she is a party.
(m) Consents. All consents, approvals and authorization of, and
notices to and filings and registrations with, any Person that may be
required to be made or obtained in connection with the transactions
contemplated by any Purchase Document (including, without limitation, all
filings and notices required pursuant to the HSR Act) shall have been made
or obtained, and Buyer shall have received from each Shareholder a
certificate, dated as of the Closing Date, to such effect.
(n) Due Diligence. Buyer shall have satisfactorily completed (as
determined by Buyer in its sole discretion) its business, legal, accounting
and tax due diligence with respect to the Company. This condition expires
on September 30, 1997 except that the Buyer shall have 10 days from the
date of Buyer's receipt of the environmental reports referenced in Section
10.1 for the purpose of reviewing such documents.
(o) Minute Books, etc. Shareholders shall have timely delivered to
Buyer the Corporate Books and Budgets as contemplated by Section 10.9.
(p) Supply Contract. Shareholders shall have delivered to Buyer a copy
of that certain Agreement for Purchase of Gas Sensors, dated September 15,
1997, executed and delivered by each of the Company and City Technology
Ltd., a private limited company incorporated in England.
(q) Material Adverse Effect. No Material Adverse Effect shall have
occurred since September 30, 1996.
(r) Secretary's Certificate. The Buyer shall have received from the
Company a certificate executed by its Secretary or Assistant Secretary
certifying (i) copies of resolutions duly adopted by its Board of Directors
authorizing the execution and delivery by it of each Purchase Document to
which it is a party and the performance by it of the transactions
contemplated thereby, and that such resolutions have not been amended or
rescinded and are in full force and effect as of the Closing Date, (ii)
copies of resolutions duly adopted by the Shareholders regarding the Merger
and the transactions contemplated by the Purchase Documents and the
consummation thereof and that such resolutions have not been amended or
rescinded and are in full force and effect as of the Closing Date,
(iii) the bylaws of the Company to be true and complete as of the Closing
Date, (iv) the name, title and signature of the officers of the Company
authorized to execute and deliver each Purchase Document to which it is a
party, and (v) that there has been no amendment to the Articles of
Incorporation of the Company, approved by its Board of Directors or
stockholders or filed with the Department of State of the Commonwealth of
Pennsylvania since March 25, 1985.
(s) Investor Questionnaires. Each Shareholder shall have delivered to
the Buyer an Investor Questionnaire completed and executed by such
Shareholder.
(t) Indemnification. Shareholders shall have delivered to Buyer a
Lease Termination and Indemnification Agreement executed by the lessor of
that certain real property located at Pistol Shop Road, Rockfall,
Connecticut and leased by the Company.
(u) CII Agreement. Shareholders shall have delivered to Buyer a copy
of the CII Agreement duly executed by each party thereto.
(v) Newgate Termination Agreement. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have
delivered to the Buyer the Employment Agreement to which he is a party
executed by him and an executed copy of the Newgate Termination Agreement.
The agreements, certificates, documents, other evidence of compliance and
opinion described in this Section 11.2 shall be in form and substance
satisfactory to Buyer in its sole discretion and shall, except as otherwise
provided, be delivered to Buyer at the Closing.
ARTICLE XII
INDEMNIFICATION.
12.1 Indemnification. (a) The Shareholders hereby severally and not jointly
in accordance with their Ownership Percentage agree to indemnify and hold
harmless Buyer and its Affiliates and their respective successors, assigns,
shareholders, officers, directors, employees and agents (collectively, "Buyer
Indemnitees" and individually a "Buyer Indemnitee") from and against and in
respect of any liability, actions, suits, proceedings, demands, assessments,
judgments, loss, claim, damages, costs and expenses, including, without
limitation, reasonable attorneys' and experts' fees and costs of investigation
and analysis, incurred by such Buyer Indemnitee (collectively, "Damages") with
respect to (i) a breach of any representation or warranty of any Shareholder set
forth in any Purchase Document or non-fulfillment of any agreement on the part
of the Company (to the extent such agreement must be performed by the Company on
or prior to the Closing) or any Shareholder under the terms thereof; (ii) any
product liability claims which relate to products shipped by the Company on or
prior to the Closing Date to the extent not paid by insurance and net of any
specific reserves therefor set forth in the 1997 Financial Statements and net of
any insurance deductibles with respect thereto; or (iii) Environmental Claims.
In addition, each Shareholder agrees to indemnify and hold harmless the Buyer
Indemnitees from and against all Damages incurred with respect to the
non-performance of any covenant of such Shareholder set forth in any Purchase
Document and with respect to any breach of any representation or warranty
relating to the ownership of good and valid title free and clear of all Liens of
such Shareholder's shares.
(b) Anything contained in this Agreement to the contrary notwithstanding,
no Shareholder shall be personally liable to any Buyer Indemnitee for any
Damages for any amounts for which any such Buyer Indemnitee is otherwise
entitled to indemnification pursuant to this Agreement until the aggregate
amount for which all Buyer Indemnitees are entitled to indemnification under
this Agreement exceeds $25,000 (the "Threshold") at which time the Shareholders
shall be liable for all such Damages (including without limitation, the first
$25,000 Dollars of such Damages) up to and including a maximum aggregate amount
equal to Three Million Dollars ($3,000,000) (the "Maximum Amount").
(c) The indemnification obligations of the Shareholders as provided in this
Agreement shall only be with respect to indemnification claims made by Buyer
within three (3) years after the Closing; provided, however, the indemnification
obligations of the Shareholders with respect to Damages relating to:
(i) fraud (which is intentional) or intentional misrepresentation;
(ii) a breach of Section 8.9 (Environmental Matters); or
(iii) a breach of Section 8.12 (Taxes);
(A) shall survive until thirty (30) days after the expiration of the applicable
statute of limitations (including any extensions thereof); (B) except with
respect to the immediately preceding clause (ii), shall not be subject to the
Threshold requirements set forth in Section 12.1(c) and shall not be included in
any computation to determine whether the Threshold has been reached; and (C)
except with respect to the immediately preceding clause (ii), shall not be
subject to the Maximum Amount limitation and shall not be included in any
computation to determine whether the Maximum Amount has been reached but shall
be limited to a maximum aggregate amount equal to the Purchase Price. Without
limiting Buyer's rights and remedies hereunder (including, without limitation,
Buyer's right to proceed directly against any Shareholder), all or any part of
the indemnification obligations of any Shareholder hereunder may, at the sole
election of Buyer, to the extent that such indemnification obligations have not
been previously paid in full by one or more of the Shareholders as provided in
Section 12.1(e), be paid by causing the Escrow Agent to deliver to Buyer from
the Escrow Account (in accordance with the procedures set forth in Section
12.1(e)) shares of Bacou Common Stock having an aggregate value (determined on
the basis of the Closing Price) equal to such obligation.
(d) The applicable Buyer Indemnitee shall give written notice to the
Shareholders of any claim or commencement of any action, suit or proceeding in
respect of which indemnity may be sought hereunder and will give the
Shareholders such information with respect thereto as the Shareholders may
reasonably request. Such notice shall be given within sixty (60) days of the
date on which such Buyer Indemnitee received notice of such claim, action, suit
or proceeding; provided that failure to give such notice shall not relieve the
Shareholders of any liability hereunder except to the extent the Shareholders
have suffered actual damage thereby. Where the Shareholders acknowledge in
writing the Shareholders indemnity obligation with respect to any Damages, the
Shareholders shall have the right to undertake, at their expense, by counsel
chosen by the Shareholders, who is reasonably acceptable to such Buyer
Indemnitee, the defense of any such action, suit or proceeding involving a third
party. In such event, such Buyer Indemnitee shall have the right to employ its
own counsel in any such action, but the fees and expenses of such counsel shall
be at the sole expense of such Buyer Indemnitee unless (i) the employment of
counsel by such Buyer Indemnitee has been authorized by the prior written
consent of the Shareholders, (ii) such Buyer Indemnitee and its counsel have
reasonably concluded that there may be legal defenses available to such Buyer
Indemnitee not available to the Shareholders (in which case the Shareholders
shall not have the right to direct the defense of such action on behalf of such
Buyer Indemnitee), or (iii) the Shareholders have not in fact employed counsel
to assume the defense of such action within a reasonable time after receiving
notice of the commencement of such action, in each of which cases the reasonable
fees and expenses of counsel will be at the expense of the Shareholders, and the
Shareholders shall reimburse such Buyer Indemnitee, or pay such fees and
expenses as they are incurred. Whether or not the Shareholders choose to defend
or prosecute any claim involving a third party, all the parties hereto shall
cooperate, in good faith, in the defense or prosecution thereof and shall
furnish such books, records, financial information and other information, and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested in connection therewith.
(e) With respect to any Damages for which Buyer is entitled to
indemnification pursuant to this Agreement (including, without limitation,
Sections 8.21 and 10.14) and that are to be satisfied from shares of Bacou
Common Stock held in the Escrow Account, Buyer shall deliver to Shareholders
notice of such claim for Damages (each of the foregoing documents, an "Escrow
Notice"). If within thirty (30) days after Shareholders' receipt of an Escrow
Notice the Shareholders have not paid such claim (regardless of the reason for
such non-payment) in cash, Buyer may, in its sole discretion, demand that
Shareholders execute and deliver to the Escrow Agent, and Shareholders shall
execute and deliver to the Escrow Agent, a certificate, in the form attached to
the Escrow Agreement as Exhibit B thereto, instructing the Escrow Agent to
deliver to Buyer such shares of Bacou Common Stock (valued on the basis of the
Closing Price). The right to pay cash as provided in the immediately preceding
sentence may be exercised by any Shareholder on an individual basis.
(f) In no event shall FYE 00 EBIT be reduced by losses incurred by the
Company in FYE 00 to the extent Buyer has received payment for Damages hereunder
resulting from a claim asserted in writing by Buyer relating to such losses.
Buyer agrees that it shall not intentionally delay in making a claim for Damages
that has fully matured in order to reduce FYE 00 EBIT.
12.2 Remedies Exclusive. Except in the event of fraud, or intentional
misrepresentation, the remedies provided in this Article XII shall be the
exclusive remedies of the parties hereto from and after the Closing in
connection with any breach of a representation or warranty, or non-performance,
partial or total, of any covenant or agreement contained herein. The provisions
of this Article XII shall apply to claims for indemnification asserted as
between the parties hereto as well as to third-party claims.
ARTICLE XIII
TERMINATION.
13.1 Termination. Subject to the provisions of Section 13.2, this Agreement
may be terminated by written notice given by Buyer or the Shareholders to the
other:
(a) by the mutual consent of Buyer and the Shareholders;
(b) by either Buyer or the Shareholders if the Closing has not occurred on
or before 12:00 Midnight (Eastern daylight time) on October 31, 1997; provided,
however, that the right to terminate this Agreement under this clause (b) shall
not be available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Closing to
have occurred on or before such date;
(c) by Buyer in the event of a breach by the Company or any Shareholder of
any provision of this Agreement; or
(d) by the Shareholders in the event of a breach by Buyer or Merger Sub of
any provision of this Agreement following 20 Business Days' notice to Buyer and
opportunity to cure.
Nothing set forth in this Section 13.1 shall relieve any party of any liability
for a breach of this Agreement.
13.2 Specific Performance. The obligations of the Shareholders, Buyer and
Merger Sub under this Agreement are unique. If either the Shareholders, Buyer or
Merger Sub should default in their respective obligations under this Agreement,
the Shareholders, Buyer and Merger Sub acknowledge that it would be extremely
impracticable to measure the resulting damages. Accordingly, the Shareholders,
Buyer and Merger Sub may, in addition to any other available rights or remedies,
▇▇▇ in equity for specific performance, and hereby expressly waive the defense
that a remedy in damages will be adequate.
ARTICLE XIV
SHAREHOLDERS' REPRESENTATIVE.
14.1 Shareholders' Representative. The Shareholders hereby authorize and
direct ▇▇▇▇ to act as "Shareholders' Representative" and to make any and all
decisions to be made and to take or omit to take any and all actions which may
be made or be taken by the Shareholders under this Agreement and the Escrow
Agreement, including, without limitation, executing the Escrow Agreement and
closing certificates on behalf of the Shareholders, receiving distributions
thereunder and making disbursements thereunder, and making, compromising or
paying claims for indemnification as contemplated by Article XII. The
Shareholders further authorize ▇▇▇▇, in his capacity as Shareholders'
Representative, to receive all notices on their behalf under the Registration
Rights Agreement. All out-of-pocket expenses incurred by the Shareholders'
Representative in acting on behalf of the Shareholders with respect to such
matters shall be shared among all Shareholders in proportion to their Ownership
Percentages to the extent that the amount of such expenses are not fully
recovered from the Buyer. In the event of the death or disability of ▇▇▇▇, the
Shareholders shall elect a successor by the holders of a majority of the
Ownership Percentages.
ARTICLE XV
GENERAL.
15.1 Amendment and Waiver. No amendment of any provision of this Agreement
shall in any event be effective, unless the same shall be in writing and signed
by the parties hereto. Any failure of any party to comply with any obligation,
agreement or condition hereunder may only be waived in writing by the other
party but such waiver shall not operate as a waiver of, or estoppel with respect
to, any subsequent or other failure. No failure by any party to take any action
against any breach of this Agreement or default by the other party shall
constitute a waiver of such party's right to enforce any provision hereof or to
take any such action.
15.2 Notices. Any notices or other communications required to be given
pursuant to this Agreement shall be in writing and shall be deemed given: (i)
upon delivery, if by hand; (ii) three (3) Business Days after mailing, if sent
by registered or certified mail, postage prepaid, return receipt requested;
(iii) one (1) Business Day after mailing, if sent via overnight courier; or (iv)
upon transmission, if sent by telex or facsimile except that if such notice or
other communication is received by telex or facsimile after 5:00 p.m. on a
Business Day at the place of receipt, it shall be effective as of the following
Business Day. All notices and other communications hereunder shall be given as
follows:
(a) If to Buyer, to it at:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇, III, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to any Shareholder to:
▇. ▇. ▇▇▇▇, ▇▇., Shareholders' Representative
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇, ▇▇.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Arent, Fox, Kintner, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address for receiving notice by written notice given to
the other names above in the manner provided above.
15.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
15.4 Parties in Interest. This Agreement shall bind and inure to the
benefit of the parties named herein and their respective heirs, successors and
assigns. This Agreement shall not be assignable by any party without the prior
written consent of the other party. Any attempted assignment of this Agreement
in breach of this provision shall be void and of no effect.
15.5 Entire Agreement. This Agreement, together with the exhibits and
schedules attached hereto and the other Purchase Documents, contains the entire
agreement and understanding of the parties hereto with respect to the matters
herein set forth, and all prior negotiations and understandings relating to the
subject matter of the Purchase Documents are merged therein and are superseded
and canceled by the Purchase Documents. This Agreement may not be modified
except in writing, signed by both of the parties hereto.
15.6 Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws of the State of Delaware, without
giving effect to the principles of conflicts of laws thereof.
15.7 Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect any way the meaning or
interpretation of this Agreement.
15.8 Third Parties. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person or entity other than the
parties hereto and their affiliates, successors or assigns, any rights or
remedies under or by reason of this agreement.
15.9 Offset Rights. Each Shareholder hereby agrees that Buyer is hereby
authorized at any time and from time to time to set off against any amounts
owing to any Shareholder by Buyer at such time under any Purchase Document or
any other agreement, document or instrument executed in connection herewith or
therewith any amounts owing to Buyer by any Shareholder at such time as
determined pursuant to a final arbitration decision rendered pursuant to Section
15.12.
15.10 Survival of Representations Etc. (a) The representations and
warranties of each Shareholder and Buyer contained herein shall survive the
consummation of the transactions contemplated hereby and the Closing. All such
representations and warranties shall survive until the expiration of the
third-year anniversary of the Closing; provided, however, that the
representations and warranties in Sections 8.9 (Environmental Matters) and 8.12
(Taxes) shall survive until 30 days following the expiration of the applicable
statute of limitations (including any extensions thereof). The termination of
the representations and warranties as provided herein shall not affect the
rights of a party hereto in respect of any claim made by such party in a writing
received by the other party hereto prior to the expiration of the applicable
survival period provided herein.
(b) All covenants and agreements respectively made by the Sellers and
Buyer in the Purchase Documents will survive the consummation of the
transactions contemplated hereby and the Closing, and will remain in full force
and effect thereafter, until the expiration of the terms or periods respectively
specified therein or (in the case of covenants and agreements that have no such
specified term or period), indefinitely; provided, however, that any claim for
nonfulfillment of or failure to perform a covenant or agreement may be asserted
at any time after, and may be pursued beyond, the expiration of such covenant or
agreement, until such claim is resolved by final, nonappealable judgment or
arbitration decision or by settlement.
15.11 Jurisdiction; Agents for Service of Process. Any judicial proceeding
brought against any of the parties to this Agreement on any dispute arising out
of this Agreement or any matter related hereto may be brought in the federal
courts of Providence, Rhode Island, and, by execution and delivery of this
Agreement, each of the parties to this Agreement accepts the non-exclusive
jurisdiction of such courts and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement. Each Shareholder hereby
irrevocably appoints Shareholders' Representative as agent to receive on such
Shareholder's behalf service of process in any proceeding in the Federal
District Court in Providence, Rhode Island.
15.12 Dispute Resolution. Any controversy, dispute or claim arising out of
or relating to this Agreement or the breach thereof shall be settled by one (1)
arbitrator (selected by the Shareholders' Representative and Buyer) by binding
arbitration in accordance with the laws of Rhode Island and the rules,
regulations and procedures of the American Arbitration Association ("AAA")
except with respect to the selection of the arbitrator which shall be as
provided in this Section 15.12. Shareholders' Representative and Buyer agree to
appoint the arbitrator within thirty (30) days of receipt of a notice delivered
in accordance with Section 15.2 from the other party setting forth a description
of the controversy or claim and requesting that the arbitrator be appointed. If
the parties fail to select an arbitrator within such thirty (30) day period,
either party hereto may instruct the AAA to appoint an arbitrator. Judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The site of the arbitration shall be Providence, Rhode
Island. The arbitrators shall award reimbursement of attorneys' fees and other
costs of arbitration to the prevailing party, in such manner as the arbitrators
shall deem appropriate. In addition, the losing party shall reimburse the
prevailing party for attorneys' fees and disbursements and court costs incurred
by the prevailing party in successfully seeking any preliminary equitable relief
or judicially enforcing any arbitration award.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
or on behalf of each of the parties hereto as of the date first above written.
COMPANY:
BIOSYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: President
BUYER:
BACOU USA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice Chairman, President and CEO
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: Executive Vice President and CFO
MERGER SUB:
ISH TRANSACTION, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chairman
SHAREHOLDERS:
/s/ ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
COMMON STOCK VOTING TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, in her capacity as Trustee
under that certain Common Stock Voting Trust
Agreement, dated December 22, 1994, by and
between ▇▇▇▇, as grantor thereunder, and such
Trustee, as in effect on the date hereof.
