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EXHIBIT 10.9
STOCK PURCHASE AGREEMENT
(XxXxxxxxx Corporation)
This STOCK PURCHASE AGREEMENT, made this 22 day of October, 1995 by and
among BEAVER ACQUISITION CORPORATION, a Delaware corporation ("Buyer"), and SHOP
VAC CORPORATION, a New Jersey corporation ("Shop Vac" or "Seller").
W I T N E S E T H:
WHEREAS, XxXxxxxxx Corporation, a Maryland corporation and wholly owned
subsidiary of Shop Vac ("XxXxxxxxx"), the subsidiaries of XxXxxxxxx (the
"XxXxxxxxx Subsidiaries") and Shop Vac and any corporation, either directly or
indirectly or through one or more intermediaries, that controls or is controlled
by or is under common control with Shop Vac other than XxXxxxxxx and the
XxXxxxxxx Subsidiaries (the "Shop Vac Affiliates") are engaged worldwide in the
business of developing, manufacturing, marketing, distributing and selling chain
saws, string trimmers, blowers (other than blowers as part of vacuum products
manufactured by Shop Vac or a Shop Vac Affiliate sold other than under a trade
xxxx of the XxXxxxxxx Business), hedge trimmers, lawn edgers, electric pressure
washers and other outdoor and lawn and garden equipment and accessories
(excluding the manufacture of electric motors or plastic molded products by Shop
Vac or the Shop Vac Affiliates or the distributor operations of Goblin Limited
(UK), Goblin Ireland Limited (Ireland), FAM Nederlands B.V. (Netherlands),
XxXxxxxxx Gmbh (Germany), XxXxxxxxx Espana S.A. (Spain), XxXxxxxxx Gesellschaft
m.b.h. (Austria), XxXxxxxxx Kft (Hungary), and Shop Vac of Canada Ltd (Canada)
or Shop Vac's French distribution operations (the "XxXxxxxxx Business"); and
WHEREAS, contemporaneously with or as soon as practicable after the
execution of this Agreement, all the Non-Owned XxXxxxxxx Assets (as defined in
Section 2.26 hereof) including without limitation those assets set forth on
Section 2.26(b) of the Disclosure Schedule hereto will be transferred from Shop
Vac or the Shop Vac Affiliates to XxXxxxxxx as a contribution to capital
pursuant to one or more Contribution and Transfer Agreements in the form of
Exhibit A attached hereto (each a "Contribution and Transfer Agreement") or a
xxxx of sale in respect of Non-Owned XxXxxxxxx Assets owned by XxXxxxxxx Ireland
Limited or Goblin Ireland Limited; and
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WHEREAS, Buyer desires to purchase and Seller desires to sell to Buyer
all right, title and interest of Seller in and to all of the stock of XxXxxxxxx
(the "XxXxxxxxx Stock"); and
WHEREAS, Buyer and Seller desire to enter into this Agreement to set
forth the terms and conditions on which the XxXxxxxxx Stock will be sold to
Buyer; and
WHEREAS, there are shares of capital stock or other ownership interests
in the XxXxxxxxx Subsidiaries not owned by XxXxxxxxx (such interests being
disclosed in Section 2.03 of the Disclosure Schedule), and persons owning such
stock or interests ("Nominating Shareholders") have agreed with Shop Vac to
enter into agreements in the form of Exhibit B attached hereto ("Nominating
Share Transfer Agreements") to transfer such stock or interests to Buyer or its
nominee in consideration of Buyer purchasing the XxXxxxxxx Stock pursuant to
this Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, the parties hereto hereby agree
as follows:
ARTICLE I
PURCHASE AND SALE; ASSUMPTION OF LIABILITIES
1.01. Purchase and Sale. Subject to the terms and conditions of this
Agreement, at the Closing (as defined in Section 1.03) Shop Vac shall sell,
transfer, convey, assign and deliver to Buyer and Buyer shall purchase, acquire
and accept from Shop Vac all of the issued and outstanding XxXxxxxxx Stock.
1.02. Consideration. Subject to the terms and conditions of this
Agreement, in reliance on the representations, warranties and agreements of the
Seller contained herein, and in consideration of the sale, assignment, transfer
and delivery of the XxXxxxxxx Stock, and the cancellation of all intercompany
indebtedness or obligations of XxXxxxxxx and the XxXxxxxxx Subsidiaries to Shop
Vac and the Shop Vac Affiliates other than the obligations of XxXxxxxxx Italy to
Goblin Ireland Limited for AquaVac Products, on the Closing Date Buyer shall pay
to Shop Vac in immediately available U.S. funds, the amount of Thirty Million
Dollars ($30,000,000.00) (the "Purchase Price"), plus the amount referred to in
Section 14.03 hereof.
1.03. Closing.
(a) The Closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the offices of Xxxxx Xxxx &
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Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx November 10, 1995 at
11:00 A.M., except that any party hereto may, by giving two business days'
written notice to all other parties hereto, defer the Closing to a date not
later than November 30, 1995 in order that such party may satisfy any of the
conditions required to be satisfied at or prior to the Closing (the date of the
Closing is hereinafter referred to as the "Closing Date").
(b) At the Closing:
(i) Shop Vac will deliver to Buyer certificates representing the shares
of XxXxxxxxx Stock, either properly endorsed for transfer in blank or
accompanied by stock powers duly endorsed in blank with any required transfer
stamps affixed thereto.
(ii) Shop Vac will deliver all other previously undelivered documents
required to be delivered by Shop Vac, XxXxxxxxx or the Shop Vac Affiliates to
Buyer at or prior to the Closing in connection with the transactions
contemplated by this Agreement, including (A) evidence satisfactory to Buyer's
counsel of cancellation by Shop Vac of any intercompany indebtedness of
XxXxxxxxx or the XxXxxxxxx Subsidiaries to Shop Vac and the Shop Vac Affiliates,
other than the obligations of XxXxxxxxx Italy to Goblin Ireland Limited for
Aquavac Products, (B) evidence satisfactory to Buyer's counsel of the transfer
to XxXxxxxxx of the Non-Owned XxXxxxxxx Assets (as defined in Section 2.26
hereof), (C) such consents, releases and other documents as are, in the opinion
of Buyer's counsel, necessary to release XxXxxxxxx and the XxXxxxxxx
Subsidiaries and any of the Assets of the XxXxxxxxx Business from any debt,
loan, security, or liability whatsoever in respect of the loan and collateral
security arrangements of Shop Vac and the Shop Vac Affiliates, and (D) evidence
satisfactory to Buyer's counsel of Shop Vac and the Shop Vac Affiliates
compliance with Section 4.04.
(iii) Buyer will deliver to Seller by wire transfer the consideration
referred to in Section 1.02 hereof.
(iv) Buyer will deliver all previously undelivered documents required
to be delivered by Buyer to the Seller at or prior to the Closing.
1.04. Additional Matters.
(a) At Closing, Buyer shall assume the obligations of Shop Vac to
Famopla Fabrica Portuguesa de Moldes Para Plastices, LBA ("Famopla") for
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molds for the manufacture of plastic parts for XxXxxxxxx products, in the
remaining amount outstanding of $164,420. Shop Vac shall cause title in all
molds being manufactured in respect of the XxXxxxxxx Business to pass directly
from Famopla to XxXxxxxxx Italy.
(b) At Closing and subject to the consent of the lessor thereof, the
automobile leases disclosed in Section 2.12 of the Disclosure Schedule pursuant
to which Shop Vac leases automobiles for XxXxxxxxx shall be assigned to
XxXxxxxxx and Buyer shall be responsible for all payments to the lessor.
(c) XxXxxxxxx Ireland assets identified as "Tool Re HSGL&R, Brake,
Chassio Etc." on Annex 1 to Section 2.26 of the Disclosure Schedule have 22,967
GB Pounds remaining due and payable to Oru Stampi and assets identified as
"Brake Latch, Bar Plate and Spanner" on Annex 1 to Section 2.26 of the
Disclosure Schedule have 6,116 GB Pounds remaining due and payable to
Wolverhampton Pressings. XxXxxxxxx Italy shall assume responsibility for payment
of the above mentioned outstanding amounts due with respect to these assets.
Shop Vac shall cause title in all assets being manufactured in respect of the
XxXxxxxxx Chainsaw Xxxx 2 to pass directly from the relevant manufacturer to
XxXxxxxxx Italy.
(d) At or prior to the Closing, Shop Vac of Canada, Ltd. shall assign
to XxXxxxxxx and XxXxxxxxx shall assume the Distributor Agreements of XxXxxxxxx
Canada (merged into Shop Vac of Canada) set forth on Annex 2 to Section 2.14 of
the Disclosure Schedule.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller represents and warrants to Buyer that:
2.01. Corporate Organization.
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and has full
corporate power and authority and all governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as it is now
being conducted and to own the properties and assets it now owns. Seller has
heretofore delivered to Buyer a true and complete copy of the Certificate of
Incorporation of Seller as currently in effect.
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(b) XxXxxxxxx is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and has full
corporate power and authority and all governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as it is now
being conducted and to own the properties and assets it now owns. XxXxxxxxx is
duly qualified to do business as a foreign corporation and is in good standing
in each United States jurisdiction where such qualification is necessary, except
in any jurisdiction where the failure to be so qualified would not have a
material adverse effect on the ability of XxXxxxxxx to carry on the XxXxxxxxx
Business. Seller has heretofore delivered to Buyer a true and complete copy of
the Certificate of Incorporation of XxXxxxxxx as currently in effect.
(c) Each XxXxxxxxx Subsidiary is identified, together with its country
of formation, in Section 2.03 of the Disclosure Schedule attached hereto (the
"Disclosure Schedule") and is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or formation and
has full corporate power and authority and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as it is now being conducted and to own the properties and assets it
now owns. Seller has heretofore delivered to Buyer a true and complete copy of
the Certificate of Incorporation (or similar document) of each XxXxxxxxx
Subsidiary as currently in effect.
2.02. Capitalization of XxXxxxxxx and the XxXxxxxxx Subsidiaries.
(a) As of the date of this Agreement:
(i) the authorized capital stock of XxXxxxxxx consists of
10,000 shares of common stock, of which 1,000 shares of common stock
are issued and outstanding;
(ii) the authorized capital stock of XxXxxxxxx Italiana, Srl
("XxXxxxxxx Italy") consists of 1,143,000,000 quotas, of which
1,143,000,000 quotas are issued and outstanding;
(iii) the authorized stock of Toplast, Srl ("Toplast")
consists of 90,000,000 quotas of which 90,000,000 quotas are issued and
outstanding; and
(iv) the issued and outstanding stock of XxXxxxxxx XX de CV
("XxXxxxxxx Mexico") consists of
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1000 shares of Series "B" stock, of which 1,000 shares are issued
and outstanding.
(b) All outstanding shares of capital stock or other ownership
interest of XxXxxxxxx or the XxXxxxxxx Subsidiaries have been duly
authorized and are fully paid and non-assessable. Except as set forth in
Section 2.02(a) hereof, there are no outstanding (i) shares of capital stock
or voting securities or other ownership interest of XxXxxxxxx or the
XxXxxxxxx Subsidiaries, (ii) securities of XxXxxxxxx or the XxXxxxxxx
Subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities or other ownership interest of XxXxxxxxx or the XxXxxxxxx
Subsidiaries, or (iii) options or other rights to acquire from XxXxxxxxx or
the XxXxxxxxx Subsidiaries, or other obligation of XxXxxxxxx or the
XxXxxxxxx Subsidiaries to issue, any capital stock, voting securities or
other ownership interest of or securities convertible into or exchangeable
for capital stock or voting securities or other ownership interest of
XxXxxxxxx or the XxXxxxxxx Subsidiaries (the items in clauses (i), (ii) and
(iii) being referred to collectively as the "XxXxxxxxx Securities"). There
are no outstanding obligations of XxXxxxxxx or the XxXxxxxxx Subsidiaries to
repurchase, redeem or otherwise acquire any XxXxxxxxx Securities.
2.03. Ownership.
(a) All of the issued and outstanding stock of XxXxxxxxx is
owned by Shop Vac; and
(b) All the issued and outstanding capital stock or ownership
interests of the XxXxxxxxx Subsidiaries as of the date hereof are owned as
set forth on Section 2.03 of the Disclosure Schedule,
in each case free and clear of all liens, options, encumbrances, limitations or
restrictions of any kind (including any restriction on the right to vote, sell
or otherwise dispose of such stock or ownership interest) except for the pledge
to First Union National Bank of North Carolina, as agent for certain lenders to
Shop Vac and its subsidiaries (the "Lenders' Agent") of 651 Series "B" shares of
XxXxxxxxx Mexico and 742,950,000 quotas of XxXxxxxxx Italy, and will transfer
and deliver to Buyer at the Closing valid title thereto, free and clear of any
such lien, option, encumbrance, limitation or restriction including the lien of
the Lenders' Agent referred to above.
2.04. Authorization; Enforceability. Seller has full corporate
power and authority to enter into this Agreement and Seller and the Shop Vac
Affiliates have full corporate power and authority to carry out the transactions
contemplated hereby. The
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Board of Directors and stockholders of Seller and of the Shop Vac Affiliates
have taken all action required by law, its Certificate of Incorporation or
By-Laws, or otherwise to be taken by them to authorize the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, and this Agreement is a valid and binding agreement of Seller
enforceable in accordance with its terms, except that such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefore may be brought. The stockholders of Seller have duly
approved Seller entering into this Agreement and carrying out the transactions
contemplated hereby.
2.05. No Violation. Neither the execution, delivery or performance of
this Agreement nor the consummation of the transactions contemplated hereby will
(i) violate any provision of the Certificate of Incorporation or By-Laws of the
Seller or of any Shop Vac Affiliate; (ii) violate any applicable law, rule,
regulation, judgment, injunction, order or decree by which Shop Vac or any of
the Shop Vac Affiliates is bound; or (iii) except as specified in Section 2.05
of the Disclosure Schedule, violate, or be in conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or cause the acceleration of the maturity of any debt
or obligation pursuant to, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of Shop
Vac, the Shop Vac Affiliates, XxXxxxxxx or the XxXxxxxxx Subsidiaries , or the
loss of any benefit relating to the XxXxxxxxx Business under, any agreement or
commitment to which Seller, XxXxxxxxx, the XxXxxxxxx Subsidiaries or the Shop
Vac Affiliates is a party or by it is bound, or to which their property is
subject.
2.06. Accounts Receivable. All accounts receivable of XxXxxxxxx and
each XxXxxxxxx Subsidiary will represent sales actually made in the ordinary
course of business consistent with historical practice. All accounts, notes
receivable and other receivables (other than receivables collected since August
31, 1995) reflected on the August 31, 1995 Financial Statements (as defined in
Section 2.28) are, and all accounts and notes receivable of XxXxxxxxx and the
XxXxxxxxx Subsidiaries at the Closing Date will be valid, genuine and, to
Seller's knowledge, fully collectible in the aggregate amount thereof, less any
reserves for doubtful accounts recorded on the August 31 Financial Statements.
All accounts, notes receivable and other receivables of XxXxxxxxx or the
XxXxxxxxx Subsidiaries at August 31, 1995 have been included in the August 31
Financial Statements.
2.07. Inventory. Except as set forth in Section 2.07 of the
Disclosure Schedule, the inventories set forth in the August 31 Financial
Statements (as defined in Section 2.28) were properly stated therein at the
lesser of cost or fair market value
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determined in accordance with generally accepted accounting principles
consistently maintained and applied by Seller. Since July 31, 1995, the
inventories related to the XxXxxxxxx Business have been maintained in the
ordinary course of business consistent with historical practice. Except for the
lien of the Lenders' Agent which is to be released at Closing, all such
inventories are owned free and clear of all liens, encumbrances or adverse
claims of any kind. All of the inventories recorded on the August 31 Financial
Statements (i) consist of, and all inventories related to the XxXxxxxxx Business
on the Closing Date will consist of, items of a quality usable or saleable in
the normal course of the XxXxxxxxx Business consistent with historical practice,
(ii) are free of any defect or deficiency and (iii) meet in all material
respects all required specifications of both XxXxxxxxx, its customers and
federal, state, foreign and local code standards, if applicable and are and will
be in quantities sufficient for the normal operation of the XxXxxxxxx Business
in accordance with historical practice.
2.08. Interim Operations. Since July 31, 1995, the XxXxxxxxx Business
has been conducted only in the ordinary and usual course consistent with past
practice and neither XxXxxxxxx nor the XxXxxxxxx Subsidiaries have incurred any
indebtedness nor entered into any purchase or sales commitments (other than
sales orders in the ordinary course of its business consistent with past
practices which are part of any open sales orders previously placed by customers
of the XxXxxxxxx Business) or any other contractual obligations in excess of
$100,000 not disclosed in Section 2.14 of the Disclosure Schedule, or pledged or
transferred any assets other than in the ordinary course of business. Except as
set forth in Section 2.08 of the Disclosure Schedule, since July 31, 1995 there
has not been:
(a) any event, occurrence, development or state of
circumstances or facts which has had or could reasonably be expected to have
a material adverse effect on the condition (financial or otherwise),
business, assets or results of operations of the XxXxxxxxx Business;
(b) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of
XxXxxxxxx or any XxXxxxxxx Subsidiary or any repurchase, redemption or other
acquisition by XxXxxxxxx or any XxXxxxxxx Subsidiary of any outstanding
shares of capital stock or other securities of, or other ownership interests
in, XxXxxxxxx or any XxXxxxxxx Subsidiary;
(c) [intentionally omitted];
(d) any amendment of any material term of any outstanding
security of XxXxxxxxx or any XxXxxxxxx Subsidiary;
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(e) any incurrence, assumption or guarantee by XxXxxxxxx or
any XxXxxxxxx Subsidiary of any indebtedness for borrowed money;
(f) any creation or assumption by XxXxxxxxx or any XxXxxxxxx
Subsidiary of any lien, option or encumbrance of any kind on any material
asset of the XxXxxxxxx Business except for those of a kind permitted under
Section 2.09, or that are created or assumed in the ordinary and usual
course of business consistent with historical practices;
(g) any making of any loan, advance or capital contributions
to or investment in any person;
(h) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of the XxXxxxxxx
Business which, individually or in the aggregate, has had or would
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), business assets, results of operations or
prospects of the XxXxxxxxx Business;
(i) any transaction or commitment made, or any contract or
agreement entered into, in respect of the XxXxxxxxx Business relating to its
assets or business (including the acquisition or disposition of any assets)
or any relinquishment by the XxXxxxxxx Business of any contract or other
right, in either case, material to the XxXxxxxxx Business other than
transactions and commitments in the ordinary course of business consistent
with historical practices;
(j) any change in any method of accounting or accounting
practice by XxXxxxxxx or any XxXxxxxxx Subsidiary;
(k) any (i) employment, deferred compensation, severance,
retirement or other similar agreement entered into with any director,
officer or employee of XxXxxxxxx or any XxXxxxxxx Subsidiary (or any
amendment to any such existing agreement), (ii) grant of any severance or
termination pay to any director, officer or employee of XxXxxxxxx or any
XxXxxxxxx Subsidiary or (iii) change in compensation or other benefits
payable to any director, officer or employee of XxXxxxxxx or any XxXxxxxxx
Subsidiary pursuant to any severance or retirement plans or policies
thereof;
(l) any departure in collection practices with respect to
accounts receivable, whether from Shop Vac and the Shop Vac Affiliates
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or any third party, from collection practices in the ordinary course of
business consistent with historically evidenced practice and standards;
(m) any departure in payment practices (both timing and
amount) with respect to accounts payable to any person, whether Shop Vac and
the Shop Vac Affiliates or any third party, from payment practice in the
ordinary course of business consistent with historically evidenced practice
and standards;
(n) any change in historical inventory management or
maintenance practices;
(o) any disposal of or permitting to lapse of any rights to
the use of any patent, trade xxxx, trade name or copyright, or any
disclosure to any person of any trade secret, formula, process or know-how
not theretofore a matter of public knowledge;
(p) any change in trade relations with Shop Vac and the Shop
Vac Affiliates from the ordinary course of business under terms consistent
with historical practice, particularly with respect to supply of goods or
services by Shop Vac and the Shop Vac Affiliates to XxXxxxxxx and the
XxXxxxxxx Subsidiaries and the distribution by Shop Vac and the Shop Vac
Affiliates of products of the XxXxxxxxx Business;
(q) any capital expenditure other than capital projects
currently under way which will be continued and paid for in the ordinary
course of business consistent with historical practice; or
(r) the production of any stock items above the quantities
needed to fill customer orders and replacement and repair needs.
2.09. Title to Properties; Encumbrances. (a) Except as set forth in
Section 2.09 of the Disclosure Schedule:
(i) each of XxXxxxxxx and the XxXxxxxxx Subsidiaries has good
and marketable indefeasible fee simple title to all the assets (whether
real, personal or tangible or intangible) relating to the XxXxxxxxx Business
including, without limitation, any molds used to manufacture plastic molded
parts for XxXxxxxxx products and any such plastic molded parts that have
been manufactured (and which as and at the Closing Date shall include the
Non-Owned XxXxxxxxx Assets) (the "Assets of the XxXxxxxxx Business") other
than those assets which are licensed to or leased or
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rented by XxXxxxxxx, a XxXxxxxxx Subsidiary, Shop Vac or a Shop Vac
Affiliate, and
(ii) as of the date of execution hereof, Shop Vac and the Shop
Vac Affiliates have good and marketable indefeasible fee simple title to all
of the Non-Owned XxXxxxxxx Assets (whether real, personal or tangible or
intangible) other than those Non-Owned XxXxxxxxx Assets which are licensed
to or leased or rented by Shop Vac or a Shop Vac Affiliate;
in each case free and clear of all liens and encumbrances, except (i) liens for
taxes, assessments, water and sewer charges, excises, license fees and all other
fees, special assessments and charges assessed or imposed by a public body which
are not yet due and payable; (ii) defects and irregularities in title not
materially adversely affecting such property or the use therefore; (iii)
publicly recorded easements to utility companies, municipalities or public
authorities for utility lines and facilities servicing any real property and not
materially adversely affecting such real property or the use thereof; and (iv)
zoning and land use and occupancy restrictions, provided that there has been no
violation of such restrictions; (v) such imperfections of title, easements and
encumbrances, if any, as are not substantial in character, amount or extent, and
do not materially detract from the value of such property or assets as now used,
or materially interfere with any present or material use of such property or
assets; and (vi) prior to the Closing, liens of the Lenders' Agent ((i) to (vi)
and the matters set forth on section 2.09 of the Disclosure Schedule,
collectively, "Permitted Liens").
(b) Section 2.09 of the Disclosure Schedule lists all real property
owned by XxXxxxxxx or the XxXxxxxxx Subsidiaries.
(c) There are no developments affecting any such property or assets
(whether real or personal) pending or threatened which might materially detract
from the value of such property or assets or materially interfere with any
present or intended use of any such property or assets.
(d) XxXxxxxxx currently has access to (i) public roads or valid
easements over private streets or private property for such ingress and egress
from and support of all such real property and (ii) water supply, storm and
sanitary sewer facilities, telephone, gas and electrical connections, fire
protection, drainage and other public utilities, as is necessary for the conduct
of the XxXxxxxxx Business.
(e) None of the material structures on such owned real properties
encroaches upon real property of another person, and no structures of any other
person substantially encroaches upon any of such real properties.
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2.10. Plant and Equipment. The plants, structures and
equipment owned or leased by XxXxxxxxx and the XxXxxxxxx Subsidiaries or in
respect of the XxXxxxxxx Business are structurally sound with no material
defects and are in good operating condition and repair and are adequate for the
uses to which they are being put. Except as set forth in Section 2.10 of the
Disclosure Schedule, neither Seller, the Shop Vac Affiliates, XxXxxxxxx nor any
XxXxxxxxx Subsidiary has received notification that it is in material default of
any applicable building, zoning, anti-pollution, health or other law, ordinance
or regulation in respect of its plants or structures or their operations related
to the XxXxxxxxx Business and, to the knowledge of the Seller, no such material
violation exists.
2.11. Patents, Trademarks, Trade Names, Etc. Except as set
forth in Section 2.11 of the Disclosure Schedule, XxXxxxxxx owns, or is licensed
or otherwise has the full and exclusive right to use, all patents, trademarks,
tradenames, copyrights, technology, know-how and processes used in or necessary
for the conduct of the XxXxxxxxx Business as currently conducted. Section 2.11
of the Disclosure Schedule contains a list of (i) all patents, trademarks, trade
names and copyrights used or proposed to be used in the XxXxxxxxx Business, all
applications therefore, and all licenses and other agreements relating thereto
and (ii) a list of all agreements relating to technology, know-how or processes
which XxXxxxxxx or any XxXxxxxxx Subsidiary is licensed or authorized to use by
others or which Shop Vac or any of the Shop Vac Affiliates are licensed or
authorized to use and use or propose to use or have used within two years prior
to the date hereof in the XxXxxxxxx Business (other than in connection with
electric motors, ground fault circuit interrupters and other parts or assemblies
supplied by Shop Vac or the Shop Vac Affiliates to XxXxxxxxx or the XxXxxxxxx
Subsidiaries). Except as set forth in Section 2.11 of the Disclosure Schedule,
no claims have been asserted by any person to the use of any of the patents,
trademarks, trade names, copyrights, technology, know-how or processes or
challenging or questioning the validity or effectiveness of any such license or
agreement set forth on Section 2.11 of the Disclosure Schedule which have not
been resolved, and the Seller does not know of any valid basis for any such
claim; and the use of such patents, trademarks, trade names, copyrights,
technology, know-how or processes by the XxXxxxxxx Business does not infringe on
the rights of any person and Seller has no knowledge of any continuing
infringement by any other person with respect thereto. None of the processes and
formulae, research and development results and other know-how relating to the
XxXxxxxxx Business, the value of which to Seller is contingent upon maintenance
of the confidentiality thereof, has been disclosed by Seller or any Shop Vac
Affiliate thereof to any person other than employees, representatives and agents
of Seller or the Shop Vac Affiliates involved in the XxXxxxxxx Business.
2.12. Leases. Section 2.12 of the Disclosure Schedule contains
an accurate list of all leases of real or personal property used in the
XxXxxxxxx Business Except as set forth in Section 2.12 of the Disclosure
Schedule: (i) all such leases are
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valid, binding and enforceable in accordance with their terms, and are in full
force and effect; (ii) there are no existing defaults thereunder; (iii) no event
of default has occurred which (whether with or without notice, lapse of time or
the happening or occurrence of any other event) would constitute a default
thereunder; and (iv) except for any consents required of lessors thereunder,
which are set forth on Section 2.12 of the Disclosure Schedule, no consents of
lessors are necessary to the consummation of the transactions contemplated by
this Agreement.
2.13. Taxes. (a) Except as set forth in Section 2.13 of the
Disclosure Schedule, each of XxXxxxxxx and the XxXxxxxxx Subsidiaries has timely
and correctly filed all tax reports and returns required to be filed by it (the
"Returns") and have timely paid all taxes and other charges due or claimed to be
due from it by federal, state, local or foreign taxing authorities (including,
without limitation, those due in respect of the properties, income, franchises,
licenses, sales or payrolls of any of them); and there are no tax liens upon any
property or assets of XxXxxxxxx or any XxXxxxxxx Subsidiary except liens for
current taxes not yet due.
(b) Except as set forth in Section 2.13 of the Disclosure
Schedule:
(i) All Returns filed with respect to tax years of
XxXxxxxxx and the XxXxxxxxx Subsidiaries through the tax year ended
December 31, 1991 have been examined and closed or are Returns with
respect to which the applicable period for assessment under the
applicable law, after giving effect to extensions or waivers, has
expired.
(ii) Neither XxXxxxxxx nor any XxXxxxxxx Subsidiary
has requested any extension of time within which to file any Return and
has not yet filed such Return.
(iii) Neither XxXxxxxxx nor any XxXxxxxxx Subsidiary
(or any member of any affiliated, consolidated, combined or unitary
group of which XxXxxxxxx or any XxXxxxxxx Subsidiary is or has been a
member) has granted any extension or waiver of the statute of
limitations period applicable to any Return, which period (after giving
effect to such extension or waiver) has not yet expired.
(iv) There is no claim, audit, action, suit,
proceeding, or investigation now pending or threatened against or with
respect to XxXxxxxxx, any XxXxxxxxx Subsidiary or Seller or any Shop
Vac Affiliate in respect of any tax or tax asset.
- 13 -
14
(v) There are no requests for rulings or
determinations in respect of any tax or tax asset pending between
XxXxxxxxx or any XxXxxxxxx Subsidiary or (in respect to any Assets of
the XxXxxxxxx Business) Shop Vac or any Shop Vac Affiliate and any
taxing authority.
(vi) Neither XxXxxxxxx nor any XxXxxxxxx Subsidiary
owns, nor are any of the Assets of the XxXxxxxxx Business comprised of,
now or as of the Closing Date, any interest in real property in the
State of New York or in any other jurisdiction in which a tax is
imposed on the transfer of a controlling interest in an entity that
owns any interest in real property.
(vii) Neither XxXxxxxxx nor any XxXxxxxxx Subsidiary
is currently under any contractual obligation to pay any tax of any
other person as a result of being a member of an affiliated,
consolidated, combined or unitary group or being a party to any tax
sharing or tax indemnity agreement or other arrangement whereby
liability of XxXxxxxxx or any XxXxxxxxx Subsidiary for the payment of
any such amounts was determined or taken into account with reference to
the liability of any other person for any tax period.
(c) Section 2.13 of the Disclosure Schedule contains a list of
all jurisdictions (whether domestic or foreign) to which, to Seller's
knowledge, any tax is properly payable by XxXxxxxxx or any XxXxxxxxx
Subsidiary for the current fiscal year.
2.14. Contracts and Commitments. Each agreement, commitment,
arrangement or plan disclosed or required to be disclosed pursuant to this
Section is a valid and binding agreement of XxXxxxxxx or a XxXxxxxxx Subsidiary
and is in full force and effect, and except as set forth in Section 2.14(a) of
the Disclosure Schedule neither XxXxxxxxx nor any XxXxxxxxx Subsidiary nor, to
the knowledge of Seller, any other party thereto, is in default or breach in any
material respect under the terms of any such agreement, contract, plan, lease,
arrangement or commitment. Section 2.14(b) of the Disclosure Schedule contains a
list of all open price commitments made to customers of the XxXxxxxxx Business
("Open Price Commitments"). Except as set forth in Section 2.14(c) of the
Disclosure Schedule neither XxXxxxxxx nor any XxXxxxxxx Subsidiary is party to
nor bound by nor is there in respect of the XxXxxxxxx Business:
(a) any agreements, contracts or commitments which are
material to its business, operations or prospects;
(b) any lease (whether of real or personal property) providing
for annual rentals of $10,000 or more;
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15
(c) any partnership, joint venture or other similar agreement
or arrangement;
(d) any agreement relating to the acquisition or disposition
of any business (whether by merger, sale of stock, sale or assets or
otherwise) entered into since May 30, 1990;
(e) any agreement relating to indebtedness for borrowed money
or the deferred purchase price of property (in either case whether
incurred, assumed, guaranteed or secured by any asset), except any such
agreement (i) with an aggregate outstanding principal amount not
exceeding $25,000 and which may be prepaid on not more than 30 days
notice without the payment of any penalty; and (ii) entered into
subsequent to the date of this agreement as permitted by Section
2.08(d);
(f) any license, franchise or similar agreement;
(g) any agency, dealer, sales representative, marketing or
similar agreement;
(h) any agreement that limits the freedom of XxXxxxxxx or the
XxXxxxxxx Subsidiaries to compete anywhere in the world in any line of
business or with any person or in any area or which would so limit
XxXxxxxxx or the XxXxxxxxx Subsidiaries after the Closing Date;
(i) any agreement with (i) Seller or any of the Shop Vac
Affiliates, (ii) any person directly or indirectly owning, controlling
or holding any securities of Seller or any of the Shop Vac Affiliates;
or (iii) any director or officer of Seller or any of the Shop Vac
Affiliates or any "associates" or members of the "immediate family" (as
such terms are respectively defined in Rule 12b-2 and Rule 16a-1 of the
0000 Xxx) of any such director or officer.
(j) any purchase contracts or commitments to purchase which
continue for a period of more than 12 months or are in excess of the
normal, ordinary and usual requirements of business or are in excess of
$100,000 in value.
(k) outstanding sales, distribution or other contracts,
commitments or proposals (whether as to price or otherwise) which
continue for a period of more than 12 months or are in excess of
$100,000 in value, or agreements, arrangements or understandings
- 15 -
16
(whether by way of discount, special terms or otherwise) relating to
any such contracts, commitments or proposals.
(l) all contracts, agreements, or commitments for employment
or personal services to which XxXxxxxxx or any XxXxxxxxx Subsidiary is
a party are terminable, without liability or expense, on 30 days' or
less notice, other than any severance or other payments required by
law.
2.15. Insurance. Section 2.15 of the Disclosure Schedule
contains an accurate and complete list of all policies of fire, liability,
workmen's compensation and other forms of insurance and fidelity bonds owned or
maintained covering the XxXxxxxxx Business. All such policies and bonds (or
others providing similar coverage) have been in effect since January 1, 1991,
and such policies and bonds are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date of the Closing
have been, or will be, paid prior to the Closing if and when due except as
disclosed on Section 2.15 of the Disclosure Schedule, and no notice of
cancellation or termination has been received with respect to any such policy.
There is no claim related to the XxXxxxxxx Business pending under any such
policies or bonds for which coverage has been questioned, denied or disputed by
the underwriters of such policies or bonds or in respect of which such
underwriters have reserved their rights. All policies (other than benefit
insurance) are on an occurrence basis except as noted on Section 2.15 of the
Disclosure Schedule. Such policies are sufficient for compliance with all
requirements of law and of all agreements to which XxXxxxxxx or any XxXxxxxxx
Subsidiary is a party, and are valid, outstanding and enforceable policies.
XxXxxxxxx has been placed as a co-insured on such policies in so far as they
relate to the XxXxxxxxx Business in respect of claims over events occurring
prior to the Closing Date.
2.16. Labor Difficulties. Except as set forth in Section 2.16
of the Disclosure Schedule:
(a) XxXxxxxxx and all XxXxxxxxx Subsidiaries are in material
compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages and
hours, and nondiscrimination in employment, and are not engaged in any
unfair labor practice;
(b) There is no unfair labor practice complaint against
XxXxxxxxx or any XxXxxxxxx Subsidiary pending before the National Labor
Relations Board;
(c) There is no labor strike, dispute, slowdown or stoppage
actually pending or threatened against or affecting XxXxxxxxx or any
XxXxxxxxx Subsidiary;
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17
(d) No representation question exists respecting the employees
of XxXxxxxxx or any XxXxxxxxx Subsidiary;
(e) No grievance which might have a material adverse effect on
XxXxxxxxx or any XxXxxxxxx Subsidiary or the conduct of its business
nor any arbitration proceeding arising out of or under collective
bargaining agreements is pending and, to Seller's knowledge, no claim
therefore exists; and
(f) There have not been at any time within the last three
years any work stoppages or strikes at the locations owned or leased by
XxXxxxxxx or the XxXxxxxxx Subsidiaries.
(g) Neither XxXxxxxxx nor any XxXxxxxxx Subsidiary has any
collective bargaining or union contracts or agreements; and
(h) Neither XxXxxxxxx nor any XxXxxxxxx Subsidiary is the
subject of any threatened or actual union petition activity,
organizational campaign or other union organizational activity.
2.17. Employee Benefit Matters.
(a) Definitions. The following terms, as used herein, have the
following meanings:
"Benefit Arrangement" means any bonus, deferred compensation,
severance, disability, salary continuation, death benefit, vacation,
hospitalization or other medical, life or other insurance, supplemental
unemployment benefit, profit sharing, retirement, stock purchase, stock
option or any other employee benefit plan (written or unwritten) that
(i) is not an Employee Plan, (ii) is entered into or maintained, as the
case may be, by Seller or any of the Shop Vac Affiliates and (iii)
covers any U.S. employee or former employee of XxXxxxxxx or any
XxXxxxxxx Subsidiary.
"Employee Plan" means any "employee benefit plan", as defined
in Section 3(3) of ERISA, that (i) is subject to any provision of
ERISA, (ii) is maintained, administered or contributed to by Seller or
any of its ERISA Affiliates and (iii) covers any employee or former
employee of XxXxxxxxx or any XxXxxxxxx Subsidiary.
- 17 -
18
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto and the rules and
regulations promulgated thereunder.
"ERISA Affiliate" of any entity means any other entity which,
together with such entity, would be treated as a single employer under
Section 414 of the Code.
"International Plan" means any bonus, deferred compensation,
severance, disability, salary continuation, death benefit, vacation,
hospitalization or other medical, life or other insurance, supplemental
unemployment benefit, profit sharing, retirement, stock purchase, stock
option or any other employee benefit plan (written or unwritten) that
(i) is not an Employee Plan or Benefit Arrangement, (ii) is entered
into, maintained, administered or contributed to, as the case may be,
by the Seller or any of its affiliates and (iii) covers any employee or
former employee of XxXxxxxxx or any of the XxXxxxxxx Subsidiaries.
"XxXxxxxxx Plan" means the Title IV Plan known as the
XxXxxxxxx Employees' Pension Plan.
"Multiemployer Plan" means each Employee Plan that is a
multiemployer plan, as defined in Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Title IV Plan" means an Employee Plan, other than any
Multiemployer Plan, subject to Title IV of ERISA.
(b) Section 2.17(b) of the Disclosure Schedule identifies each
Employee Plan. Seller has furnished to Buyer copies of the Employee
Plans (and, if applicable, related trust agreements) and all amendments
thereto and written interpretations thereof together with (i) the most
recent annual report prepared in connection with any Employee Plan
(Form 5500 including, if applicable, Schedule B thereto) and (ii) the
most recent actuarial valuation report prepared in connection with any
Employee Plan. Section 2.17(b) of the Disclosure Schedule identifies
each Employee Plan which is (i) a Title IV Plan or (ii) maintained in
connection with any trust described in Section 501(c)(9) of the Code.
No Employee Plan is a Multiemployer Plan. Seller has provided Buyer
with complete age, salary, service and related data as of January 1,
1995 for all employees and former employees covered under any Title IV
Plan.
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19
(c) As of January 1, 1995, the present value of all benefits
accrued under such Title IV Plan determined on a termination basis
using the assumptions established by the PBGC as in effect on such date
exceeded the fair market value of the assets of each Title IV Plan
(excluding for these purposes any accrued but unpaid contributions) by
$12,286,668. No Employee Plan is a plan described under Sections 4
(B)(5) or 401(a)(1) of ERISA.
(d) Seller has made the contributions to the XxXxxxxxx Plan on
the respective dates and in the respective amounts set forth on Section
2.17(d) of the Disclosure Schedule.
(e) Except as set forth in Section 2.17(e) of the Disclosure
Schedule:
(i) No "prohibited transaction", as defined in
Section 406 of ERISA or Section 4975 of the Code, has occurred
with respect to any Employee Plan or any other employee
benefit plan or arrangement maintained by XxXxxxxxx or any of
its ERISA Affiliates which is covered by Title I of ERISA,
excluding transactions effected pursuant to a statutory or
administrative exemption.
(ii) No "accumulated funding deficiency", as defined
in Section 412 of the Code, has been incurred with respect to
any Employee Plan subject to such Section 412, whether or not
waived. No "reportable event", within the meaning of Section
4043 of ERISA and regulations promulgated thereunder and no
event described in Section 4062 or 4063 of ERISA, has occurred
in connection with any Employee Plan.
(iii) Neither the Seller nor any ERISA Affiliated of
the Seller has (A) engaged in, or is a successor or parent
corporation to an entity that has engaged in, a transaction
described in Sections 4069 or 4212(c) of ERISA or (B)
incurred, or reasonably expects to incur prior to the Closing
Date, (aa) any liability under Title IV of ERISA arising in
connection with the termination of, or a complete or partial
withdrawal form, any plan covered or previously covered by
Title IV of ERISA or (bb) any liability under Section 412 or
Section 4971 of the Code that in either case could become a
liability of the Buyer or any of its ERISA
- 19 -
20
Affiliates after the Closing Date. No condition exists that
could constitute grounds for termination by the PBGC of any
employee benefit plan that is subject to Title IV of ERISA
that is maintained by XxXxxxxxx, any XxXxxxxxx Subsidiary or
any of their ERISA Affiliates. The assets of XxXxxxxxx and all
of the XxXxxxxxx Subsidiaries are not now, nor will they after
the passage of time be, subject to any lien imposed under Code
Section 412(n) by reason of a failure of any of the Seller,
the Shop Vac Affiliates, XxXxxxxxx or any XxXxxxxxx Subsidiary
to make timely installments or other payments required under
Code Section 412. Seller's "complete withdrawal" in 1993 from
the District 65 multiemployer pension plan will not cause
Buyer, XxXxxxxxx, any XxXxxxxxx Subsidiary or any of their
ERISA Affiliates to incur any withdrawal liability under Title
IV of ERISA.
(f) Each Employee Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date; each trust created under
any such Plan is exempt from tax under Section 501(a) of the Code and
has been so exempt during the period from creation to date. Seller has
provided Buyer with the most recent determination letter (or
application to obtain such determination letter) of the Internal
Revenue Service relating to each such Employee Plan. To Seller's
knowledge, each Employee Plan has been maintained in substantial
compliance with its terms and with the requirements prescribed by any
and all applicable statutes, orders, rules and regulations, including
but not limited to ERISA and the Code.
(g) Section 2.17(g) of the Disclosure Schedule identifies each
Benefit Arrangement. Seller has furnished to Buyer copies or
descriptions of each Benefit Arrangement. Each Benefit Arrangement has
been maintained in substantial compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders,
rules and regulations.
(b) Except as set forth in Section 2.17(h) of the Disclosure
Schedule, neither the Seller nor any of its ERISA Affiliates has any
current or projected liability in respect of post-employment or
post-retirement health or medical or life insurance benefits for
retired or former employees of the XxXxxxxxx or any of the XxXxxxxxx
Subsidiaries, except as required to avoid excise tax under Section
4980B of the Code. Section 11 of the letter agreement dated March 31,
1983
- 20 -
21
between XxXxxxxxx and Black and Xxxxxx continues to be in full force
and effect and neither XxXxxxxxx nor Black and Xxxxxx are in breach of
such agreement.
(i) There has been no amendment to, written interpretation of
or announcement (whether or nor written) by the Seller, XxXxxxxxx, any
XxXxxxxxx Subsidiary or any of their ERISA Affiliates relating to, or
change in employee participation or coverage under, any Employee Plan
or Benefit Arrangement that would increase materially the expense of
maintaining such Employee Plan or Benefit Arrangement above the level
of the expense incurred in respect thereof for the fiscal year ended
prior to the date hereof.
(j) There is no contract, agreement, plan or arrangement
covering any employee or former employee of XxXxxxxxx or any of the
XxXxxxxxx Subsidiaries that, individually or collectively, could give
rise to the payment of any amount that would not be deductible pursuant
to the terms of Section 280G of the Code as a result of the sale of
XxXxxxxxx Stock pursuant to this Agreement.
(k) No tax under Section 4980B of the Code has been incurred
in respect of any Employee Plan that is a group health plan, as defined
in Section 5000(b)(1) of the Code.
(l) Section 2.17(l) of the Disclosure Schedule identifies each
International Plan. To the extent available, Seller has furnished to
Buyer copies or descriptions of each International Plan (and, if
applicable, related trust agreements or funding vehicle documents) and
all amendments thereto and written interpretations thereof. Each
International Plan has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations (including any
special provisions relating to qualified plans where such Plan was
intended to so qualify) and has been maintained in good standing with
applicable regulatory authorities. There has been no amendment to,
written interpretation of or announcement (whether or not written) by
the Seller, XxXxxxxxx or any XxXxxxxxx Subsidiary relating to, or
change in employee participation or coverage under, any International
Plan that would increase materially the expense of maintaining such
International Plan above the level of expense incurred in respect
thereof for the most recent fiscal year ended prior to the date hereof.
- 21 -
22
2.18. Litigation. Except as set forth in Section 2.18 of the
Disclosure Schedule, there is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other regulatory or
administrative agency or commission pending or, to the best knowledge of Seller,
threatened against or involving (a) the XxXxxxxxx Business, XxXxxxxxx or any
XxXxxxxxx Subsidiary; or (b) Seller or any Shop Vac Affiliate which could have a
material adverse affect on Seller's ability, or the ability of any Shop Vac
Affiliate, to consummate the transactions contemplated by this Agreement.
2.19. No Condemnation or Expropriation. Neither the whole nor
any portion of the leaseholds or any other real property assets of the XxXxxxxxx
Business subject to any governmental decree or order to be sold or is being
condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefore, nor to the Seller's knowledge has any
such condemnation, expropriation or taking been proposed.
2.20. Consents and Approvals of Governmental Authorities.
Except as set forth on Schedule 2.20, no consent, approval or authorization of,
or declaration, filing or registration with, any governmental or regulatory
authority (including any foreign government or authority) is required in
connection with the execution, delivery and performance of this Agreement by
Seller; provided, however, that with respect to Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), Seller is relying on the
representation of Buyer in Section 3.05 hereof in making this representation.
2.21. Non-Governmental Consents. Except for the consent of
lenders to Shop Vac and its subsidiaries and as will be set forth in Section
2.21 and Section 2.12 (with respect to leases) of the Disclosure Schedule, no
consent of any non-governmental person will be necessary to the execution,
delivery and performance of this Agreement, including, without limitation,
consents from parties to loans, and material contracts, leases or other
agreements.
2.22. Compliance with Law. The operations of the XxXxxxxxx
Business have been conducted in material compliance with all applicable laws,
regulations and other requirements of all U.S. and foreign governmental
authorities, and of all states, municipalities and other political subdivisions
and agencies thereof, having jurisdiction over the XxXxxxxxx Business,
including, without limitation, all such laws, regulations and requirements
relating to antitrust, consumer protection, currency exchange, equal
opportunity, health, occupational safety, pension, securities and
trading-with-the-enemy matters. Except as set forth in Section 2.22 of the
Disclosure Schedule, neither XxXxxxxxx nor any XxXxxxxxx Subsidiary nor Seller
nor any Shop Vac Affiliate has received any notification in the 5 years to date
of any asserted present or past failure by
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23
the XxXxxxxxx Business to comply with such laws, rules or regulations that has
not been resolved favorably.
2.23. Environmental Protection. (a) Except as set forth in
Section 2.23 of the Disclosure Schedule, XxXxxxxxx and the XxXxxxxxx
Subsidiaries have obtained all Environmental Permits identified in clause (x) of
the definition of Environmental Permits in Section 2.23(e)(iv) are in material
compliance with all terms and conditions of such Environmental Permits, and are
also in material compliance with all Environmental Laws. All Environmental
Permits identified in clause (y) of the definition of Environmental Permits in
Section 2.23(e)(iv) have been obtained by Shop Vac and the Shop Vac Affiliates
and all Assets of the XxXxxxxxx Business are being operated in compliance with
terms of such Environmental Permits.
(b) Except as set forth in Section 2.23 of the Disclosure
Schedule:
(i) no notice, notification, demand, request for
information, citation, summons, complaint or order has been
issued, no complaint has been filed, no penalty has been
assessed and no investigation or review is pending, or to
Seller's knowledge, threatened by any governmental entity or
other Person with respect to any (A) alleged violation of any
Environmental Law or liability thereunder, (B) alleged failure
to have any Environmental Permit or (C) generation, treatment,
storage, recycling, transportation, disposal or Release of any
Hazardous Substance, in each case (x) by XxXxxxxxx or any
XxXxxxxxx Subsidiary or (y) relating to or arising in
connection with any Assets of the XxXxxxxxx Business;
(ii) no polychlorinated biphenyls, radioactive
material, urea formaldehyde, lead, asbestos,
asbestos-containing material or underground storage tank
(active or abandoned) is or has been present at any property
now or previously owned, leased or operated by XxXxxxxxx or
any XxXxxxxxx Subsidiary or as part of the XxXxxxxxx Business;
(iii) no Hazardous Substance has been Released (and
no notification of such Release has been filed or made) at, on
or under any property now or previously owned, leased or
operated by XxXxxxxxx or any XxXxxxxxx Subsidiary;
- 23 -
24
(iv) no property now or previously owned, leased or
operated by XxXxxxxxx or any XxXxxxxxx Subsidiary, nor any
property to which XxXxxxxxx or any XxXxxxxxx Subsidiary has,
directly or indirectly, transported or arranged for the
transportation of any Hazardous Substances nor any property to
which any Hazardous Substance resulting from the use of any
Assets of the XxXxxxxxx Business has been transported, is
listed or, to Seller's knowledge, proposed for listing, on the
National Priorities List promulgated pursuant to CERCLA, or
CERCLIS (as defined in CERCLA) or on any similar federal,
state or foreign list of sites requiring investigation or
clean-up;
(v) there are no Environmental Permits that are
nontransferable or require consent, notification or other
action to remain in full force and effect following the
consummation of the transactions contemplated hereby.
(c) There has been no environmental investigation, study,
audit, test, review or other analysis conducted of which Seller has
knowledge in relation to the current or prior business of XxXxxxxxx or
any property or facility now or previously owned or leased by XxXxxxxxx
or any XxXxxxxxx Subsidiary which has not been delivered to Buyer at
least five days prior to the date hereof.
(d) For purposes of this Section, the terms "XxXxxxxxx" and
"XxXxxxxxx Subsidiary" shall include any entity which is, in whole or
in part, a predecessor of XxXxxxxxx or any XxXxxxxxx Subsidiary.
(e) As used in this Agreement, the following terms have the
following meanings:
(i) "CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability act of 1980, as amended
from time to time and the regulations promulgated thereunder.
(ii) "Environmental Laws" means any and all federal,
state, local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees,
codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and
- 24 -
25
governmental restrictions, whether now or hereafter in effect,
relating to human health, the environment or to emissions,
discharges or releases of pollutants, contaminants, hazardous
or toxic materials or substances or wastes into the
environment, including without limitation ambient air, surface
water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants,
contaminants, hazardous or toxic materials or substances or
wastes or the clean-up or other remediation thereof.
(iii) "Environmental Liabilities" means any and all
liabilities of or relating to XxXxxxxxx and any XxXxxxxxx
Subsidiary (including any entity which is, in whole or in
part, a predecessor of XxXxxxxxx or any XxXxxxxxx Subsidiary)
or arising in connection with or in any way relating to any
Asset of the XxXxxxxxx Business, whether vested or unvested,
contingent or fixed, actual or potential, known or unknown,
which (i) arise under or relate to matters covered by
Environmental Laws (including without limitation any matters
disclosed or required to be disclosed in Section 2.23 of the
Disclosure Schedule hereto) and (ii) relate to actions
occurring or conditions existing on or prior to the Closing
Date.
(iv) "Environmental Permits" means all permits,
licenses, authorizations, certificates and approvals of
governmental authorities relating to or required by
Environmental Laws and necessary or proper for (x) the
business of XxXxxxxxx or any XxXxxxxxx Subsidiary as currently
conducted or (y) the operation of any Asset of the XxXxxxxxx
Business.
(v) "Hazardous Substances" means any toxic
radioactive, caustic or otherwise hazardous substance,
including petroleum, its derivative, by-products and other
hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics, including,
without limitation, any substance regulated under
Environmental Laws.
- 25 -
26
(vi) "Release" means any discharge, emission or
release, including a Release as defined in CERCLA at 42 U.S.C.
Section 9601(22). The term "Released" has a corresponding
meaning.
2.24. Brokers and Finders. With the exception of PaineWebber
Incorporated, financial advisor to Seller, and the Seller's obligations thereto,
neither Seller nor any respective officers, directors or employees has employed
any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated by
this Agreement.
2.25. Disclosure. No representations or warranties by Seller
in this Agreement (including the Disclosure Schedule) and no statement contained
in any document, certificate, or other writing furnished or to be furnished by
Seller to Buyer pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of material fact or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
2.26. Transfer of Non Owned XxXxxxxxx Assets. All assets that
are not owned by XxXxxxxxx or the XxXxxxxxx Subsidiaries as of the date of
execution hereof and that are used or held for use in connection with the
XxXxxxxxx Business or are necessary to operate the XxXxxxxxx Business in a
manner consistent with the way it has been operated during the immediately
preceding twelve (12) months but excluding those assets set forth in Section
2.26(a) of the Disclosure Schedule (the "Non Owned XxXxxxxxx Assets") (i) are
set forth on Section 2.26(b) of the Disclosure Schedule and (ii) will be
transferred to XxXxxxxxx or a XxXxxxxxx Subsidiary prior to the Closing under a
Contribution Agreement, free and clear of all liens and encumbrances except
Permitted Liens and to the Seller's knowledge there are no potential future
liens or encumbrances or, in the case of any property that is included in the
Non Owned XxXxxxxxx Assets that is leased, licensed or rented by Shop Vac or a
Shop Vac Affiliate, such property will be assigned, subleased or sublicensed to
XxXxxxxxx prior to Closing. Prior to the Closing Seller shall cooperate fully
with Buyer in determining whether all the Non Owned XxXxxxxxx Assets are
identified in Section 2.26(b) of the Disclosure Schedule. Buyer and Seller agree
that prior to Closing Seller shall make any necessary changes to Section 2.26(b)
of the Disclosure Schedule.
2.27. No Liabilities. Except for (j) liabilities or
obligations which are disclosed or reserved against in the August 31 Financial
Statements, (ii) liabilities or obligations incurred in the ordinary and usual
course of business consistent with past practice subsequent to August 31, 1995,
and (iii) liabilities or obligations disclosed in this Agreement or the
Disclosure Schedule or which by the terms of this Agreement are permitted to be
incurred after the date hereof, neither XxXxxxxxx nor the XxXxxxxxx
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Subsidiaries has any liabilities of any kind whatsoever whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could reasonably be
said to result in such a liability.
2.28. Financial Statements. The balance sheets of XxXxxxxxx
and the XxXxxxxxx Subsidiaries and the related statements of income, changes in
stockholders' equity and cash flow for the period then ended as of December 31,
1994 (the "December 31 Financial Statements") set forth in Section 2.28(a) of
the Disclosure Schedule and the balance sheet of the XxXxxxxxx Business as of
August 31, 1995 (the "August 31 Financial Statements") (collectively "the
Financial Statements") are set forth in Section 2.28(b) of the Disclosure
Schedule. The December 31, 1994 Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis (other than changes in classifications reflected on the December 31
Financial Statements) and present fairly the financial position of XxXxxxxxx and
its subsidiaries included therein as and at such date and the results of the
operations of XxXxxxxxx and the XxXxxxxxx Subsidiaries included therein for such
periods and fairly set forth the information purported to be shown therein. The
August 31 Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (other than changes
in classifications reflected on the August 31 Financial Statements or necessary
to include on a pro forma basis the Non Owned XxXxxxxxx Assets to be transferred
to XxXxxxxxx or a XxXxxxxxx Subsidiary pursuant hereto) and presents fairly the
financial position of the XxXxxxxxx Business at and as of such date and fairly
sets forth the information purported to be shown therein.
2.29. Products. Except as set forth in Section 2.29 of the
Disclosure Schedule, each of the products sold in connection with the XxXxxxxxx
Business since May 30, 1990, was at the time of sale, (a) in compliance in all
material respects with all applicable federal, state, local and foreign laws and
regulations of the jurisdiction where sold and (b) fit for the ordinary purposes
for which it was intended to be used and conformed in all material respects to
any promises or affirmations of fact made on the container or label for such
product or in connection with its sale. There is no design defect with respect
to any of such products, and each of such products contains adequate warnings,
presented in a reasonably prominent manner, in accordance with applicable laws,
rules and regulations and current industry practice with respect to its contents
and use.
2.30. Distributor Agreements. Except as set forth in Section
2.30 of the Disclosure Schedule, neither Seller, any Shop Vac Affiliate,
XxXxxxxxx nor any XxXxxxxxx Subsidiary has received notice of termination from
any distributor of XxXxxxxxx products, and to the best of Seller's knowledge, no
distributor of XxXxxxxxx products intends to exercise any right to terminate any
distributor agreement as a result of the transactions contemplated by this
Agreement or is otherwise involved in a dispute
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over the agreement. No distributor has notified Seller or any Shop Vac Affiliate
of any problem, notice of termination or intention to terminate by any dealer.
2.31. Shop Vac Guarantees. There are no guarantees by Shop Vac
or the Shop Vac Affiliates involving the XxXxxxxxx Business which involve any
covenants whatsoever other than covenants confined to the actual payment of
money under such guarantee.
2.32. Intercompany Accounts. The U.S. Intercompany Accounts
Receivable Statement set out in Section 2.32 of the Disclosure Schedule
accurately reflects the historical information contained therein, is prepared on
a consistent basis and is derived from the books and records of Seller. The
projections for the month of October reflected in such Statement for each of the
items "Cash Receipts", "Cash Disbursements" and the items included under
"Payments Made by SVC for XxXxxxxxx" fairly present and reflect Seller's best
reasonable estimate of each such item for the period from October 1 to October
31, 1995, calculated on a basis consistent with corresponding amounts for the
prior months reflected in the U.S. Intercompany Accounts Receivable Statement
and assuming that the XxXxxxxxx Business is conducted from October 1, 1995 to
the October 31, 1995 only in the ordinary and usual course of business
consistent with past practice and in accordance with the provisions of Section
2.08 and Article IX of this Agreement. The projections for the month of October
contained in the Balance Sheet of XxXxxxxxx Italy set out in Section 2.32 of the
Disclosure Schedule fairly present and reflect Seller's best reasonable estimate
of each such item for the period from October 1 to October 31, 1995, calculated
on a basis consistent with corresponding items for the prior months reflected in
such balance sheet and assuming that the business of XxXxxxxxx Italy is
conducted from October 1, 1995 to October 31, 1995 only in the ordinary and
usual course of business consistent with past practice and in accordance with
the provisions of Section 2.08 and Article IX of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
3.01. Corporate Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has heretofore delivered to Seller a true and complete copy of
the Certificate of Incorporation of Buyer as currently in effect.
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3.02. Capitalization and Ownership of Buyer.
(a) The authorized capital stock of Buyer consists of 100
shares of common stock, of which as of the date hereof 100 shares are
issued and outstanding;
(b) as of the date hereof, the issued and outstanding common
stock of Buyer is owned by DLJ Merchant Banking Partners, L.P.; and
(c) except for the Commitment Letter dated October 21, 1995
(the "Commitment Letter"), a true and correct copy of which has
heretofore been delivered to Seller, there are no outstanding options,
rights or agreements of any kind relating to the issuance, sale or
transfer of any capital stock or other equity securities of Buyer to
any other persons.
3.03. Authorization; Enforceability. Buyer has full corporate
power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The Board of Directors of Buyer has taken all
action required by law, its Certificate of Incorporation and By-Laws or
otherwise to authorize the execution and delivery of this Agreement and the
transactions contemplated hereby and no action by the stockholders of Buyer is
required, and this Agreement is a valid and binding agreement of Buyer
enforceable in accordance with its terms except that such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
3.04. No Violation. Neither the execution, delivery or
performance of this Agreement nor the consummation of the transactions
contemplated hereby, including the purchase of the XxXxxxxxx Stock by Buyer,
will (i) violate any provisions of the Certificate of Incorporation or By-Laws
of Buyer or any shareholder of Buyer; (ii) violate any applicable law, rule,
regulation, judgment, injunction, order or decree; or (iii) be in conflict with,
or constitute a default under, or cause the acceleration of the maturity of any
debt or obligation pursuant to, any agreement or commitment to which Buyer is a
party, including, without limitation, the Commitment Letters, or by which Buyer
is bound, or violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority by which Buyer or any
shareholder of Buyer is bound.
3.05. No Consents. No consent, approval or authorization of,
or declaration, filing or registration with, any governmental or regulatory
authority (including any foreign government or authority) or any other person
(other than the
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consent of Buyer's Board of Directors that has already been obtained) is
required in connection with the execution, delivery and performance of this
Agreement by Buyer and Buyer hereby represents and warrants to Seller that Buyer
is not subject to Section 7A of the Xxxxxxx Act, 15 U.S.C. Section 18(a), as
added by Section 201 of the HSR, and the rules promulgated thereunder, and is
therefore not required to file a Notification and Report Form under the HSR and
to observe the required waiting period before consummating the transactions
contemplated in this Agreement.
3.06. Litigation. There is no action, suit, inquiry,
proceeding or investigation by or before any court or governmental or other
regulatory or administrative agency or commission pending or, to the best
knowledge of Buyer, threatened against or involving Buyer or any affiliate,
proposed shareholder or organizer of Buyer which could have a material adverse
effect on Buyer's ability to consummate the transactions contemplated by this
Agreement.
3.07. Brokers and Finders. Except for services provided by
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation neither Buyer nor any of its
shareholders, officers, directors or employees have employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finders'
fees in connection with the transactions contemplated by this Agreement.
3.08. Financing. Buyer has, or will have, prior to Closing,
sufficient cash to enable it to fulfil its obligations under this Agreement and
to consummate the transactions contemplated hereunder.
ARTICLE IV
PRE-CLOSING COVENANTS OF SELLER
Seller hereby covenants and agrees with Buyer as follows:
4.01. Full Access. Seller shall, and shall cause the Shop Vac
Affiliates to, afford to Buyer, its counsel, accountants and other
representatives full access to the plants, offices, warehouses, properties,
books and records of Shop Vac, each Shop Vac Affiliate, XxXxxxxxx and each
XxXxxxxxx Subsidiary in order that Buyer may have full opportunity to make such
investigations as it shall desire to make of the affairs of XxXxxxxxx and the
XxXxxxxxx Subsidiaries and of Shop Vac and the Shop Vac Affiliates to the extent
relevant to potential liabilities of the XxXxxxxxx Business, XxXxxxxxx, the
XxXxxxxxx Subsidiaries and Buyer, and to the extent relevant to Buyer
identifying Assets of the XxXxxxxxx Business; and Shop Vac will cause its
officers and accountants to furnish such additional financial and operating data
and other information related to the XxXxxxxxx Business as Buyer shall from time
to time reasonably request; provided,
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31
however, that any such investigation shall be conducted in such a manner as not
to interfere unreasonably with the operation of the businesses of Shop Vac and
its subsidiaries, including XxXxxxxxx and the XxXxxxxxx Subsidiaries. Shop Vac
shall afford to Buyer, its counsel, accountants and other representatives full
access to the Non-Owned XxXxxxxxx Assets and to the books and records related to
the value of such Non-Owned XxXxxxxxx Assets and the use thereof in the
XxXxxxxxx Business. No such investigation by Buyer shall serve as a waiver or
otherwise affect any representation, warranty or agreement given or made by
Seller hereunder.
4.02. Consents of Lenders and Others. Shop Vac shall, and
shall cause each Shop Vac subsidiary to, use its best efforts to obtain at the
earliest practicable date and prior to the Closing all consents of lenders of
Shop Vac and its subsidiaries and other persons necessary to the consummation of
the transactions contemplated hereby. All such consents shall be in the form set
out in Exhibit H and in writing and copies thereof will be delivered to Buyer at
or prior to Closing.
4.03. Intercompany Accounts. At Closing, Shop Vac and its
subsidiaries shall with respect to all intercompany accounts for product payable
to XxXxxxxxx or the XxXxxxxxx Subsidiaries which are past due either pay each
such account in full or arrange for the orderly transfer of corresponding
inventory to XxXxxxxxx or such XxXxxxxxx Subsidiary (any such transfer being
subject to such inventory (i) consisting of items useable or saleable in the
normal course of the XxXxxxxxx Business consistent with historical practice,
(ii) being free of any defect or deficiency, (iii) meeting in all material
respects all required specifications of both XxXxxxxxx and its customers and
federal, state, foreign and local code standards, if applicable), (iv) being the
subject of an outstanding invoice to which the intercompany account payable
relates (or in substitute for such product, product of exactly the same product
description and quality as such product and providing any such substitution
shall be on terms and conditions and with such adjustments as Buyer may agree);
and (v) being delivered, at Seller's expense, in accordance with XxXxxxxxx'x
directions, including as to destination (Seller to provide 5 days prior written
notice to XxXxxxxxx of its decision to return any inventory hereunder).
4.04. Employee Benefit Plan Contributions. At or prior to the
Closing Date, Seller shall, or shall cause XxXxxxxxx to, contribute to the
XxXxxxxxx Plan an amount which, when added to the amounts contributed to such
plan in respect of 1995 as disclosed in Section 2.17(d) of the Disclosure
Schedule is not less than 84% of the amount required under section 412 of the
Code to be contributed to such Employee Plan for 1995. In furtherance of the
foregoing, Seller or XxXxxxxxx shall cause the actuaries for the XxXxxxxxx Plan
to finalize the actual valuation report for such Employee Plan for 1995.
4.05. Transfer of Non-Owned XxXxxxxxx Assets. (a)
Contemporaneously with the execution of this Agreement or as soon as practicable
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thereafter, but in any event prior to the Closing Date, Shop Vac shall, and
shall cause the Shop Vac Affiliates to, take all necessary action to transfer
the Non-Owned XxXxxxxxx Assets set forth in Section 2.26 of the Disclosure
Schedule to XxXxxxxxx.
(b) At or prior to the Closing, Shop Vac shall arrange for the
execution of Nominating Share Transfer Agreements by Nominating Shareholders of
XxXxxxxxx Italy and XxXxxxxxx Mexico.
4.06. Covenant to Satisfy Conditions. Seller and Shop Vac
Affiliates will use their respective best efforts to cause the conditions set
forth in Article VIII hereof to be satisfied, insofar as such matters are within
the control of any of them.
4.07. Insurance. (a) Seller and the Shop Vac Affiliates shall
use their respective best efforts to cause Buyer to be named, effective as of
the Closing Date, as an additional insured on Seller's or Shop Vac Affiliates'
general liability, automobile liability, property/boiler machinery and umbrella
policies covering operations of the XxXxxxxxx Business prior to the Closing
Date. Seller and the Shop Vac Affiliates shall use best efforts to cause Buyer
to be named, effective as of the Closing Date, as additional insured on Seller's
or the Shop Vac Affiliates workers' compensation and employer's liability
policies, if any, covering operations of XxXxxxxxx Business prior to the Closing
Date provided, however, that Shop Vac and the Shop Vac Affiliates shall not be
required to agree to any increased premium that may be required by the insurers.
(b) Seller and the Shop Vac Affiliates shall use their
respective best efforts to obtain the right of the Buyer from the insurers in
respect of policies referred to in Section 2.15 of this Agreement to report,
assert and prosecute claims against those insurers which provide coverage to the
XxXxxxxxx Business under the Seller's or Shop Vac Affiliates' insurance programs
provided, however that Shop Vac and the Shop Vac Affiliates shall not be
required to agree to any increased premium that may be required by the insurers.
This only applies to claims for which there is coverage for the XxXxxxxxx
Business in respect of occurrences prior to the Closing Date
4.08. Loan Documents. Shop Vac shall, and shall cause each
Shop Vac Affiliate to, prior to the Closing, execute and use their respective
best efforts to obtain Lender's consents to the releases of XxXxxxxxx, the
XxXxxxxxx Subsidiaries and all Assets of the XxXxxxxxx Business (including the
Non Owned XxXxxxxxx Assets) from any obligation to lenders to Shop Vac and its
affiliates and any security arrangements or collateral thereto.
4.09. Cash Management. Seller shall use its best efforts to
manage cash disbursements of the XxXxxxxxx Business made on behalf of XxXxxxxxx
from the date hereof to the Closing Date so as to ensure that the Net Monthly
Activity from October 1 to the Closing Date (calculated on a basis consistent
with the basis upon which the Net
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Monthly Activity for the month of January through September 31 were calculated
in Section 2.32 of the Disclosure Schedule) shall be $4,031,000. Seller shall be
responsible for and shall honor all checks which are issued by or on behalf of
XxXxxxxxx and its subsidiaries before Closing and which are presented for
payment after Closing.
4.10. Statement. (a) As promptly as practicable, but no later
than 10 business days after the Closing Date, Sellers shall prepare and deliver
to Buyer a Statement of the Intercompany Accounts Receivables Activity for the
period October 1 through to the Closing Date (the "U.S. Statement") prepared on
a basis consistent with Section 2.32 of the Disclosure Schedule. The Executive
Vice President of Seller shall certify that the Statement fairly reflects the
Net Monthly Activity for the period October 1, 1995 to the Closing Date
calculated on a basis consistent with Section 2.32 of the Disclosure Schedule
(the "Closing Period U.S. Activity Amount"). Following the Closing, Seller shall
give Buyer and any auditors of Buyer access at all reasonable times to the
properties, books, records and personnel of the Seller and the XxXxxxxxx
Business relating to periods prior to the Closing Date for purposes of reviewing
such statements. Buyer shall have 30 days following delivery to Buyer of such
statements during which to notify Seller of any dispute of any item contained in
the Statement, which notice shall set forth in reasonable detail the basis for
such dispute. If Buyer fails to notify Seller of any such dispute within such
30-day period, the Statement shall be deemed to be the Final Statement. In the
event that Buyer shall so notify Seller of any dispute, Buyer and Seller shall
cooperate in good faith to resolve such dispute as promptly as possible.
(b) If Buyer and Seller are unable to resolve any such dispute
within 15 days of Buyer's delivery of such notice, such dispute shall be
resolved by such independent accounting firm as the parties may agree, and such
determination shall be final and binding on the parties. If Seller and Buyer
cannot mutually agree on the identity of the independent accounting firm, Seller
and Buyer shall each submit to the other party's independent auditor the name of
a big six accounting firm which does not at the time and has not in the prior
two years provided services to Seller or Buyer, and an independent accounting
firm shall be selected by lot from these two firms by the independent auditors
of the two parties. Any expenses relating to the engagement of the independent
accounting firm shall be shared equally by Buyer and Seller. The independent
accounting firm shall be instructed to use every reasonable effort to perform
its services within 30 days of submission of the Statement to it and, in any
case, as promptly as practicable after such submission. The U.S. Statement, as
modified by resolution of any disputes by Buyers and Seller or by the
independent accounting firm, shall be the Final Statement.
(c) An amount being equal to the difference between $6,665,000
and the Closing Period U.S. Activity Amount reflected on the Final Statement
shall be the Net Intercompany Settlement Amount for the purposes of determining
the Monthly Credits referred to in Section 5(d) of the Co-Pack Agreement
refereed to in Section 8.07 hereof.
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4.11 Warehousing. Prior to closing Seller and Buyer shall
agree on mutually acceptable transitional arrangements for a period of 90 days
for:
(a) Shop Vac to continue to use that portion of the XxXxxxxxx
warehouse facility currently used by Seller at Tucson, Arizona rent-free to
store and distribute Shop Vac products; and
(b) XxXxxxxxx to use that portion of the Shop Vac of Canada
warehouse in Burlington, Canada currently used in respect of XxXxxxxxx products
from the Closing date rent-free to store and distribute XxXxxxxxx products.
Both Shop Vac and XxXxxxxxx shall move to new warehouse
facilities within 90 days following Closing.
4.12 Irish Supply Agreement. At or prior to Closing XxXxxxxxx
Ireland Limited ("XxXxxxxxx Ireland") and XxXxxxxxx Italy shall enter into a
Product Supply Agreement on terms reasonably satisfactory to XxXxxxxxx Italy
under which XxXxxxxxx shall supply certain string trimmers, other products and
parts to XxXxxxxxx Italy for a period of 2 years, at prices to be acceptable to
Buyer and Seller calculated using the same methodology as used for prices in the
Co-Pack Agreement referred to in Section 8.07 hereof except there shall be no
component of such prices for depreciation on assets (other than real estate)
related to the manufacture of such products. The Agreement shall provide that
XxXxxxxxx may terminate such agreement at any time on 90 days written notice, or
extend such agreement in respect of any products for an additional year on 90
days notice prior to expiration of the 2 years.
4.13 Component Supply Agreement. At or prior to Closing
XxXxxxxxx and Shop Vac and Felchar Manufacturing Corporation shall enter into a
Component Supply Agreement substantially in the same form as set out in Exhibit
F-2.
ARTICLE V
PRE-CLOSING COVENANTS OF BUYER
5.01. Covenant to Satisfy Conditions. Buyer will use its best
efforts to cause the conditions set forth in Article VII hereof to be satisfied,
insofar as such matters are within the control of Buyer.
ARTICLE VI
CONFIDENTIALITY AND PUBLICITY
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6.01. Confidentiality. (a) Each party hereto will hold and
will cause its consultants and advisors to hold in strict confidence, unless
compelled to disclose by judicial or administrative process or, in the opinion
of its counsel, by other requirements of law, all documents and information
concerning the other party (other than, with respect to Buyer's obligations
hereunder after the Closing Date, documents and information relating to the
XxXxxxxxx Business) furnished it by such other party or its representatives in
connection with the transactions contemplated by this Agreement (except to the
extent that such information can be shown to have been (i) in the public domain
through no fault of such party, or (ii) later lawfully acquired from other
sources by the party to which it was furnished), and each party will not release
or disclose such information to any other person, except its auditors,
attorneys, financial advisors, bankers and other consultants and advisors in
connection with this Agreement.
(b) After Closing, Seller and the Shop Vac Affiliates will
hold, and will use their best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning the XxXxxxxxx Business, except to the extent that such
information can be shown to have been (i) previously known on a nonconfidential
basis by Seller, (ii) in the public domain through no fault of Seller or (iii)
later lawfully acquired by Seller from sources other than those related to its
prior ownership of the XxXxxxxxx Business. The obligation of Seller and the Shop
Vac Affiliates to hold any such information in confidence shall be satisfied if
they exercise the same care with respect to such information as they would take
to preserve the confidentiality of their own similar information.
(c) If the transactions contemplated by this Agreement are not
consummated, such confidence shall be maintained except to the extent such
information comes into the public domain through no fault of the party required
to hold it in confidence, and such information shall not be used to the
detriment of, or in relation to any investment in, the other party and all such
documents (including copies thereof) shall be returned to the other party
immediately upon the written request of such other party. Each party shall be
deemed to have satisfied its obligation to hold confidential information
concerning or supplied by the other party if it exercises the same care as it
takes to preserve confidentiality for its own similar information.
(d) Each party agrees that it will cooperate with and make
available to the other party, and shall cause its affiliates, advisors,
consultants, employees, agents and representatives to cooperate with and make
available to the other party, during normal business hours, all books of account
and other financial records (including, without limitation, accountant's work
papers) pertaining to the XxXxxxxxx Business ("BOOKS AND RECORDS"), information
and employees (without substantial disruption of employment) retained and
remaining in existence after the Closing Date which are necessary or useful
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in connection with any inquiry relating to taxes or any audit, investigation or
dispute, any ligation or investigation or any other matter requiring any such
Books and Records, information or employees for any reasonable business purpose,
including for the purpose of any future financing (including by way of private
placement memorandum, registration statements, prospectus or otherwise). The
party requesting any such Books and Records, information or employees shall bear
all of the out-of-pocket costs and expenses (including, without limitation,
attorneys' fees, but excluding reimbursement for general overhead, salaries and
employee benefits) reasonably incurred in connection with providing such Books
and Records, information or employees. The Seller may require certain financial
information relating to the XxXxxxxxx Business for periods prior to the Closing
Date for the purpose of filing federal, state, local and foreign tax returns and
other governmental reports, and the Buyer agrees to furnish such information to
the Seller at the Seller's request and expense (on the same basis as in the
immediately preceding sentence).
6.02. Publicity. Except as required by law, the rules of any
stock exchange or any governmental authority, prior to the Closing Date no
public announcement or other publicity regarding the transactions referred to
herein shall be made by Buyer, Seller or any of the respective affiliates,
officers, directors, employees, representatives or agents, without the prior
written approval of both Buyer and Seller as to form, timing and manner of
distribution or publication; provided, however, that nothing in this Section
6.02 shall prevent such parties from disclosing this Agreement and discussing
such transactions with those persons whose approval, consent, agreement or
opinion, as the case may be, is required for consummation of this Agreement.
6.03. Notices of Certain Events. (a) Seller and Buyer shall
promptly notify the other party of:
(i) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any governmental
or regulatory agency or authority (U.S. or foreign) in connection with
the transactions contemplated by this Agreement; or
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to such party's knowledge threatened against,
relating to or involving or otherwise affecting the XxXxxxxxx Business
or such party that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section 2.18 in
the case of Seller or Section 3.06 in the case of Buyer, or that relate
to the consummation of the transactions contemplated by this Agreement;
and
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(b) Seller shall promptly notify Buyer of the damage or
destruction by fire or other casualty of any asset of the XxXxxxxxx
Business or part thereof or in the event that any asset of the
XxXxxxxxx Business or part thereof becomes the subject of any
proceeding or, to the knowledge of Seller, threatened proceeding for
the taking thereof or any part thereof or of any right relating thereto
by condemnation, eminent domain or other similar governmental action.
6.04. Noncompetition. (a) Seller agrees that for a period of
two full years from the Closing Date, neither it nor any of the Shop Vac
Affiliates shall:
(i) engage, either directly or indirectly, as a
principal or for its own account or solely or jointly with
others, or as stockholders in any corporation or joint stock
association, in any business that competes with the XxXxxxxxx
Business as it exists on the Closing Date worldwide; provided
that nothing herein shall prohibit the acquisition by Seller
or any of the Shop Vac Affiliates of a company having not more
than 10% of its sales (based on its latest financial
statements) attributable to any business that competes with
the current XxXxxxxxx Business and nothing shall prohibit Shop
Vac and the Shop Vac Affiliates from carrying on its non
XxXxxxxxx Business, including, without limitation, the
manufacture of electric motors, electric parts (including,
without limitation, ground fault circuit interrupters), molded
plastic parts or other parts or products manufactured by Shop
Vac or the Shop Vac Affiliates as part of their non-XxXxxxxxx
Business;
(ii) employ or solicit, or receive or accept the
performance of services by, any employee of XxXxxxxxx or the
XxXxxxxxx Subsidiaries; or
(iii) supply or assemble any products related to the
manufacture and sale of chain saws, string trimmers, blowers
(other than blowers as part of vacuum products manufactured by
Shop Vac or a Shop Vac Affiliate sold other than under a trade
xxxx of the XxXxxxxxx Business), hedge trimmers, lawn edgers,
electric pressure washers or other outdoor lawn and garden
equipment or accessories to any business anywhere in the world
that competes with the XxXxxxxxx Business as it exists on the
Closing Date; provided, however, that this covenant shall not
prohibit the
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supply by Shop Vac and its subsidiaries of electric motors,
electric parts (including, without limitation, ground fault
circuit interrupters) molded plastic parts, or other parts or
products manufactured by Shop Vac or the Shop Vac Affiliates
as part of their non XxXxxxxxx Business.
(b) If any provision contained in this Section shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Section, but this Section shall be construed as if such invalid, illegal
or unenforceable provision had never been contained herein. It is the intention
of the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this Section to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under such applicable law.
Seller acknowledges that Buyer would be irreparably harmed by any breach of this
Section and that there would be no adequate remedy at law or in damages to
compensate Buyer for any such breach. Seller agrees that Buyer shall be entitled
to injunctive relief requiring specific performance by Seller of this Section,
and Seller consents to the entry thereof with respect to any violation of this
covenant.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
Each and every obligation of Seller under this Agreement to be
performed on or before the Closing shall be subject to the satisfaction, on or
before the Closing, of each of the following conditions, unless waived in
writing by Seller:
7.01. Representations and Warranties True. The representations
and warranties of Buyer contained herein shall be in all material respects true,
complete and accurate as of the date when made and at and as of the Closing Date
as though such representations and warranties were made at and as of such date.
7.02. Performance. Buyer shall have performed and complied
with all agreements, obligations and conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing.
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7.03. Receipt of Consents. Seller shall have obtained all
consents of Seller's lenders and other consents set out in Sections 2.12, 2.20
and 2.21 of the Disclosure Schedule required for consummation of the
transactions contemplated hereby.
7.04. No Governmental Proceeding or Litigation. No suit,
action, investigation, inquiry or other proceeding by any governmental body or
other person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
7.05. No Injunction. On the Closing Date there shall be no
effective injunction, writ, preliminary restraining order or any order of any
nature issued by a court of competent jurisdiction directing that the
transactions provided for herein or any of them not be consummated as provided
or imposing any conditions on the Seller's business other than the XxXxxxxxx
Business in order to consummate the transactions contemplated hereby which
Seller deems unacceptable in its sole discretion.
7.06. Opinion of Counsel. Buyer shall have delivered to Seller
an opinion of counsel to Buyer dated as of the Closing Date, in form and
substance satisfactory to Seller, with respect to the matters set forth in
Exhibit C hereto.
7.07. Certificates. Buyer shall have furnished Seller with
such certificates of its officers and others to evidence compliance with the
conditions set forth in this Article VII as may be reasonably requested by
Seller.
7.08. Distributor Agreements. Shop Vac,the Shop Vac Affiliates
identified in Exhibit D-1 and XxXxxxxxx shall have entered into a distributor
agreement with respect to the European distribution of XxXxxxxxx products by
Shop Vac and such Shop Vac Affiliates in the forms set out in Exhibit D-2
attached hereto. Shop Vac and XxXxxxxxx Italy shall have entered into a
distributor agreement with respect to the Italian distribution of certain Shop
Vac products in the form set out in Exhibit D-3 attached hereto.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
Each and every obligation of Buyer under this Agreement to be
performed on or before the Closing shall be subject to the satisfaction, on or
before the Closing, of each of the following conditions, unless waived in
writing by Buyer:
8.01. Representations and Warranties True. The representations
and warranties of Seller contained herein shall be in all material respects
true, complete and
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accurate as of the date when made and at and as of the Closing Date as though
such representations and warranties were made at and as of such date.
8.02. Performance. Seller shall have performed and complied
with all agreements, obligations and conditions required by this Agreement to be
performed or complied with by them on or prior to the Closing.
8.03. Receipt of Consents. Seller shall have received all
consents of its lenders and other consents set out in Sections 2.12, 2.20 or
2.21 of the Disclosure Schedule as required for consummation of the transactions
contemplated hereby.
8.04. No Government Proceeding or Litigation. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
8.05. No Injunction. On the Closing Date there shall be no
effective injunction, writ, preliminary restraining order or any order of any
nature issued by a court of competent jurisdiction directing that the
transactions provided for herein or any of them not be consummated as so
provided or which restrains, prohibits, or otherwise interferes with the
effective operation or enjoyment by the Buyer of all or a material portion of
the XxXxxxxxx Business.
8.06. Opinion of Seller's Counsel. Seller shall have delivered
to Buyer an opinion of counsel to Seller dated as of the Closing Date, in form
and substance satisfactory to Buyer, with respect to the matters set forth in
Exhibit E hereto.
8.07. Supply Agreement(s) with Shop Vac. Shop Vac and the Shop
Vac Affiliates set out in Exhibit F-1 shall have executed and delivered to Buyer
the Co-Pack Agreement and the Component Supply Agreement in the forms set forth
in Exhibit F-2 hereto and the Irish Supply Agreement referred to in Section
4.12.
8.08. Certificates. Seller shall have furnished Buyer with
such certificates of its officers and others to evidence compliance with the
conditions set forth in this Article VIII as may be reasonably requested by
Buyer, including documents evidencing cancellation of indebtedness on
intercompany accounts.
8.09. No Material Adverse Change. Except as set forth in the
Disclosure Schedule, since July 31, 1995, there shall not have been any material
adverse change in the condition (financial or otherwise), business assets,
results of operations or prospects of the XxXxxxxxx Business.
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8.10. Distributor Agreements. Shop Vac, the Shop Vac
Affiliates identified in Exhibit D-1 and Buyer shall have entered into a
distributor agreement with respect to the European distribution of XxXxxxxxx
products by Shop Vac and such Shop Vac Affiliates in the form set out in Exhibit
D-2 attached hereto. Shop Vac and XxXxxxxxx Italy shall have entered into a
distributor agreement with respect to the Italian distribution of certain Shop
Vac products by XxXxxxxxx Italy in the form set out in Exhibit D-3 attached
hereto.
8.11. Nominating Shares of XxXxxxxxx Subsidiaries. All shares
or quotas of the XxXxxxxxx Subsidiaries not owned by Seller shall have been
transferred, assigned, conveyed and delivered to Buyer or Buyer's nominees, free
and clear of any and all liens, pledges or other encumbrances, pursuant to
Nominating Share Transfer Agreements in the form set out in Exhibit B.
8.12. Non-Owned XxXxxxxxx Assets. All of the Non-Owned
XxXxxxxxx Assets shall have been contributed or sold to XxXxxxxxx and XxXxxxxxx
Italy pursuant to the Contribution and Transfer Agreement or a xxxx of sale in a
form reasonably satisfactory to Buyer.
8.13. Loan Documents. Buyer shall be reasonably satisfied that
XxXxxxxxx, the XxXxxxxxx Subsidiaries and all Assets of the XxXxxxxxx Business
(including the Non-Owned XxXxxxxxx Assets) shall be released from any obligation
to lenders to Shop Vac and its affiliates and any security arrangements
collateral thereto.
8.14. Intercompany Balance Activity. The executive vice
president and chief financial officer of the Seller shall deliver a certificate
to Buyer (i) setting forth the Net Monthly Activity for the period October 1,
1995 to October 31, 1995 calculated on a basis consistent with Section 2.32 of
the Disclosure Schedule and setting forth such calculations, (ii) stating that
such officer has reviewed information as to cash disbursements made on behalf of
XxXxxxxxx and cash receipts for the period October 31, 1995 to the Closing Date,
product shipments and such other data concerning such period from October 31 to
Closing Date as such officer deems necessary or desirable for the purpose and
(iii) certifying that on the basis of such information and calculations, the Net
Intercompany Settlement Amount as of the Closing Date shall not be greater than
$3,250,000. Sellers independent auditors shall render to the Buyer an opinion
concurring with the conclusions reached by the executive vice president and
chief financial officer.
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ARTICLE IX
CONDUCT OF THE XXXXXXXXX BUSINESS PENDING THE CLOSING
Pending the Closing, and except as otherwise expressly
consented to or approved by Buyer in writing:
9.01. Regular Course of Business. Shop Vac shall cause the
XxXxxxxxx Business to be conducted only in the ordinary and usual course
consistent with past practice and in accordance with the obligations set forth
in Section 2.08 of this Agreement.
9.02. Amendments. No change or amendment shall be made in the
Certificate of Incorporation or By-laws of XxXxxxxxx or any XxXxxxxxx
Subsidiary.
9.03. Organization. Shop Vac shall use its best efforts to
preserve the corporate existence and business organization of XxXxxxxxx and the
XxXxxxxxx Subsidiaries intact, to keep available to Buyer key operating
employees of XxXxxxxxx and the XxXxxxxxx Subsidiaries, and to preserve for Buyer
the relationships with licensors, suppliers, distributors, customers and others
having business relations with XxXxxxxxx and the XxXxxxxxx Subsidiaries.
9.04. Certain Changes. Without limiting the generality of the
foregoing, Shop Vac will not, and will not permit XxXxxxxxx or any XxXxxxxxx
Subsidiary to:
(a) with respect to the XxXxxxxxx Business, acquire a material
amount of assets from any other person;
(b) sell, lease, license or otherwise dispose of any of the
assets of the XxXxxxxxx Business except (i) pursuant to existing
contracts or commitments, and (ii) in the ordinary course of business
consistent with historical practice;
(c) agree or commit to do any of the foregoing; or
(d) (i) take or agree or commit to take any action that would
make any representation and warranty of Seller hereunder inaccurate in
any material respect at, or as of any time prior to, the Closing Date
or (ii) omit or agree or commit to omit to take any action necessary to
prevent any such representation or warranty from being materially
inaccurate in any respect at any such time.
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9.05. Contracts and Commitments. The Seller will operate the
XxXxxxxxx Business in the ordinary course. The XxXxxxxxx Business will not,
among other things, incur any indebtedness nor enter into any purchase or sales
commitments (other than "Open Sales Commitments as described below) or any other
contractual obligations in excess of $100,000 or pledge or transfer any asset
without the prior approval of Buyer, which will not be unreasonably withheld.
Buyer shall respond to Seller's written request for such approval within 24
hours of receipt by Buyer of such written request for approval (or if such 24
hour period expires on a day that is not a business day, by the close of the
business day next following the date of receipt by Buyer of such request).
Notwithstanding the foregoing, XxXxxxxxx and the XxXxxxxxx Subsidiaries may in
the ordinary course of its business consistent with past practices enter into
any sales orders which are part of any Open Price Commitments previously made to
the customers of the XxXxxxxxx Business and which are set forth in Section
2.14(a) of the Disclosure Schedule.
9.06. Insurance; Maintenance of Property. Shop Vac shall, or
shall cause XxXxxxxxx and each XxXxxxxxx Subsidiary to, adequately insure all
property, real, personal and mixed, owned or leased by XxXxxxxxx or any
XxXxxxxxx Subsidiary, and all of the Non-Owned XxXxxxxxx Assets against all
ordinary and insurable risks; and all such property shall be used, operated,
maintained and repaired consistent with past practice.
9.07. Tax Matters.
(a) Shop Vac shall, or shall cause XxXxxxxxx and the XxXxxxxxx
Subsidiaries to, prepare and file all federal, state, local and foreign
tax returns and amendments thereto required to be filed with respect to
XxXxxxxxx and the XxXxxxxxx Subsidiaries prior to the Closing when due
in accordance with all applicable laws, and all such returns will
correctly reflect the facts regarding the income, business, assets,
operations, activities and status of XxXxxxxxx and the XxXxxxxxx
Subsidiaries, and any other information required to be shown therein.
(b) Neither XxXxxxxxx nor any XxXxxxxxx Subsidiary shall make
any payment of taxes to any person or any taxing authority, except for
such taxes as are due or payable or have been properly estimated in
accordance with applicable law as applied in a manner consistent with
past practice of Seller.
(c) Without the prior written consent of Buyer, neither Seller
nor XxXxxxxxx or any XxXxxxxxx Subsidiary shall, to the extent it may
affect or relate to XxXxxxxxx or any XxXxxxxxx Subsidiary, make or
change any tax election, change an annual tax accounting period, adopt
or
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change any method of tax accounting, file any amended return, enter
into any closing agreement, settle any tax claim or assessment,
surrender any right to claim a tax refund, consent to any extension or
waiver of the limitations period applicable to any tax claim or
assessment or take or omit to take any other action, if any such action
or omission would have the effect of increasing the tax liability or
reducing any tax asset of XxXxxxxxx, any XxXxxxxxx Subsidiary, Buyer or
any Affiliate of Buyer.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
10.01. Survival of Representations and Warranties. All
representations and warranties made by Seller in Article II hereof or elsewhere
pursuant hereto, or by Buyer in Article III hereof or elsewhere pursuant hereto,
shall survive the Closing hereunder and any investigation at any time made by or
on behalf of the other party for a period of two years following the Closing, or
in the case of Section 2.17(e), (f), (g), (h), (i) and (j) until expiration of
the applicable statutory period of limitation (giving effect to any waiver or
extension thereof), after which all representations and warranties made by the
parties herein or pursuant hereto shall expire. Covenants and agreements of the
parties to be performed after the Closing including, without limitation, those
set forth in this Article X, Articles VI, XI, XII and XIII, and Section 14.03
hereof, shall survive in accordance with their respective terms or, if no
survival period is specified, indefinitely, provided that the covenants and
agreements set forth in Section 10.03(c) and Section 10.03(d) shall survive for
a period of 7.5 years after the Closing Date. Notwithstanding this Section
10.01, any representation, warranty or covenant or agreement in respect of which
indemnity may be sought under this Agreement shall survive the time at which it
would otherwise terminate pursuant to this Section 10.01, if notice of the
inaccuracy or breach or claim giving rise to such right to indemnity shall have
been given to the party against whom such indemnity may be sought prior to such
time, but only to the extent of the inaccuracy or breach or claim asserted in
the notice.
10.02. Statements as Representations. All statements of fact
contained herein or in any certificate, schedule, list, exhibit, document or
other writing delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed representations and warranties within the
meaning of Section 10.01 hereof.
10.03. Agreement to Indemnify. Subject to the conditions and
provisions herein set forth, Seller hereby agrees from and after the Closing to
indemnify, defend and hold harmless Buyer and XxXxxxxxx and each parent or
subsidiary or affiliate of Buyer or XxXxxxxxx from and against all demands,
claims, actions or causes of action, assessments, losses, damages, liabilities,
costs and expenses (including with respect to
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Environmental Liabilities any costs of or associated with dismantling and
relocating the plating operations at the Lake Havasu facility, demolishing the
building or portions thereof in which such plating operations are located and
any interruption to such business caused by such dismantling, relocation or
demolition provided, Buyer shall use commercially reasonable efforts to minimize
the business interruption resulting therefrom), including, without limitation,
interest, penalties and attorney's fees and reasonable expenses of investigation
(including any investigation by engineers, environmental consultants and similar
technical personnel) ("Loss"), asserted against or imposed upon or incurred by
Buyer or any parent or subsidiary or affiliate of Buyer ("Claim") arising in
connection with or resulting from:
(a) the breach of any representation or warranty of Seller
contained in or made pursuant to this Agreement;
(b) any breach of any covenant or obligation of Seller
contained herein;
(c) any Environmental Liabilities, except however:
(i) Buyer shall be responsible for the first $1.25
million of liabilities (including costs and expenses) related
to compliance with the terms of the Consent Order effective
January 17, 1995 between the Arizona Department of
Environmental Quality and XxXxxxxxx relating to XxXxxxxxx'x
Lake Havasu facility ("Chromium Liabilities"); and
(ii) Buyer and Seller shall be responsible for the
next $1.25 million of Chromium Liabilities in equal portion;
(d) any workmen's compensation or product liability Claim
against or involving XxXxxxxxx that relates to any action, omission,
occurrence or circumstance arising prior to Closing, except to the
extent of accounts payable for workers compensation on the books of
XxXxxxxxx at July 31, 1995 and except however:
(i) Buyer shall be responsible for the first $1.1
million of such Loss; and
(ii) Buyer and Seller shall be responsible for the
next $1.75 million of such Loss in equal portion;
(e) any Claim asserted by a third party against XxXxxxxxx or
any XxXxxxxxx Subsidiary to the extent that any such claim is attributable to an
occurrence occurring prior to the Closing Date and since but not earlier than
January 1, 1991 and
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for which the XxXxxxxxx Business carried insurance, but only to the extent such
insurance actually provides coverage therefore prior to the Closing Date and
since but not earlier than January 1, 1991, provided, however, that Seller shall
not have any indemnification obligation pursuant to this paragraph (e) if the
Claim is not covered by the terms of the applicable insurance policy,
(f) the computer equipment lease pursuant to Lease Schedule 1
of the Lease Agreement No. LA-0476 with American Technologies Credit, Inc.,
including all costs, expenses and liabilities in connection with the litigation
in Orange County (California): American Technologies Credit, Inc. x. XxXxxxxxx
Corporation: Shop Vac Corporation et al.
(g) the District 65 Security Plan Pension Fund referred to in
Section 2.17(e) (iii) of this Agreement and any other employee benefit plan that
is not an employee benefit plan of XxXxxxxxx or XxXxxxxxx Subsidiaries; and
(h) the claim by Xx. Xxxxx X. Xxxxxx with respect to alleged
commissions and reimbursement for a leased vehicle, and all legal costs and
other expenses in relation thereto.
10.04. Procedure. In the event of any claim by Buyer (or any
parent, subsidiary or affiliate) under this Article X, Buyer shall promptly
notify Seller in writing of said claim, which notice shall set forth the basis
of the claim including, without limitation, reference to the specific
representation, warranty, or obligation alleged to have been breached) and, if
then determinable by Buyer, a reasonable estimate of the amount thereof (or, if
in Buyer's good faith opinion, no such reasonable estimate can then be made by
it, the maximum potential damages that, in Buyer's good faith opinion, might be
sustained in connection with such claim) provided that, except as otherwise
provided in Section 10.07, the failure to give such notice shall not relieve the
Seller from any liability under Section 10.03 except to the extent that Seller
has been materially prejudiced by such failure.
10.05. Conditions of Indemnification. The obligations and
liabilities of Seller under Section 10.03 hereof (other than in respect of a
claim by Buyer pursuant to Section 10.03(d), which shall be dealt with in
accordance with Section 10.09 hereof) with respect to claims for damages
resulting from the assertion of liability by third parties ("Claims"), shall be
subject to the following terms and conditions in addition to the limitation of
liability set forth in Section 10.07 hereof:
(a) Buyer will give Seller prompt written notice of any Claim
asserted against or imposed upon or incurred by Buyer or any affiliate,
parent or subsidiary of Buyer (other than any Claim occurring in
connection with or relating to (i) the Consent Order referred to in
Section
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10.03(c) hereof, or (ii) the leaking underground storage tank located
at XxXxxxxxx'x Lake Havasu facility, which shall in each case be dealt
with in accordance with the provisions of Section 10.04 hereof and not
this Section 10.05), and Seller will undertake at its own expense the
defense thereof by representatives the Buyer has consented to in
writing, such consent not to be unreasonably withheld.
(b) In the event that Seller, promptly and in any event within
two business days after written notice of any such Claim from Buyer,
fails to agree to conduct the defense of such Claim, Buyer or such
affiliate parent or subsidiary of Buyer will (upon further notice to
Seller) have the right to undertake the defense, compromise or
settlement of such Claim for the account of Seller, subject to the
right of Seller to assume the defense of such Claim at any time prior
to settlement, compromise or final determination thereof and in
connection therewith Seller shall reimburse Buyer promptly for all
out-of-pocket fees, expenses and losses and employee wages or salaries
for time incurred.
(c) Seller must receive the notice of claim required by
Section 10.05(a) within any applicable time period.
(d) Buyer may, at its own expense, retain such additional
attorneys as it may deem necessary, which attorneys will be permitted
by Seller and its attorneys to observe and/or participate in all
aspects of the defense of such action. Seller shall have the right,
after consultation with Buyer, to resolve and settle any such claims or
actions which result only in the payment of money damages by Seller and
which do not, in Buyer's reasonable determination, otherwise adversely
impact on the condition (financial or otherwise), business, assets or
results of operations of the XxXxxxxxx Business. Otherwise consent of
Buyer to such settlement or resolution shall be required, which consent
shall not be unreasonably withheld.
10.06. Remedies Cumulative. The remedies provided herein shall
be cumulative and shall not preclude Buyer from asserting any other rights or
seeking any other remedies against Seller or its respective successors or
assigns, except that no director, officer or shareholder of Shop Vac or its
subsidiaries shall have any personal liability to Buyer as a result of any
breach of any representation, warranty or covenant contained herein or made
pursuant hereto.
10.07. Limitation of Liability. Notwithstanding anything else
to the contrary in this Agreement, Seller shall not have any liability under
Section 10.03(a) and Section 10.03(b) until the aggregate amount of the
indemnification obligations of Seller
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pursuant to such Sections 10.03 (a) and (b) exceeds $250,000 and thereafter only
to the extent of such excess.
10.08. Indemnification by Buyer. Buyer hereby agrees, jointly
and severally with XxXxxxxxx, from and after the Closing to indemnify, defend
and hold harmless Seller and each Shop Vac Affiliate from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including, without limitation, interest,
penalties and attorney's fees and reasonable expenses of investigation, asserted
against or imposed upon or incurred by Seller or any Shop Vac Affiliate arising
in connection with or resulting from: (i) the breach of any representation,
warranty, covenant or obligation of Buyer contained in or made pursuant to this
Agreement, (ii) any liabilities arising from Buyer's ownership of XxXxxxxxx or
the XxXxxxxxx Subsidiaries or the operation of the XxXxxxxxx Business by Buyer,
XxXxxxxxx or the XxXxxxxxx Subsidiaries from and after the Closing, or (iii) any
liabilities of Shop Vac or any Shop Vac Affiliate to vendors (other than Shop
Vac or any Shop Vac Affiliates) under the guarantees set out in Section 10.08 of
the Disclosure Schedule given or made by Shop Vac or any Shop Vac Affiliate
prior to the Closing in respect of obligations of the XxXxxxxxx Business to pay
accounts payable to vendors in the ordinary course of business. The joint and
several obligation of XxXxxxxxx pursuant to this Section 10.08 shall be
evidenced by XxXxxxxxx'x execution and delivery of its joinder agreement set
forth on the signature page hereof.
10.09. In respect of a claim by Buyer pursuant to Section
10.03(d) hereof, Buyer shall conduct the defense of Claims, the costs and
expenses in relation to such defense shall fall within any such indemnity from
Seller. Buyer shall cooperate with representatives of Seller, at Seller's cost,
in providing reports on the status of such Claims and the defense thereof, and
in answering questions of Buyer in respect of Buyer's policies and procedures in
conducting such defense.
ARTICLE XI
CERTAIN TAX MATTERS AND INDEMNITY
11.01. Tax Definitions. The following terms, as used herein,
have the following meanings:
"Buyer Indemnitee" means Buyer, any of its Affiliates and,
effective upon the Closing, XxXxxxxxx and the XxXxxxxxx Subsidiaries.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Pre-Closing Tax Period" means any Tax period (or portion
thereof) ending on or before the close of business on the Closing Date.
"Section 338 Tax" means any Tax resulting from income, gain,
deduction, deferred gain or recapture of deductions or credits against
Tax resulting directly or indirectly from the Section 338(h)(10)
Election and as a consequence of Section 338 of the Code as applied by
any state or local or foreign jurisdiction.
"Section 338(h)(10) Election" is defined in Section 13.02.
"Tax" means (i) any tax imposed under Subtitle A of the Code
and any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, withholding on amounts paid to or by
XxXxxxxxx or any XxXxxxxxx Subsidiary, payroll, employment, excise,
severance, stamp, capital stock, occupation, property, environmental or
windfall profit tax, premium, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together
with any interest, penalty, addition to tax or additional amount
imposed by any governmental authority (a "Taxing Authority")
responsible for the imposition of any such tax (domestic or foreign),
(ii) liability of XxXxxxxxx or any XxXxxxxxx Subsidiary for the payment
of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group, or
being a party to any agreement or arrangement whereby liability of
XxXxxxxxx or any XxXxxxxxx Subsidiary for payment of such amounts was
determined or taken into account with reference to the liability of any
other person for any period during the Tax Indemnification Period, and
(iii) liability of XxXxxxxxx or any XxXxxxxxx Subsidiary for the
payment of any amounts as a result of being party to any Tax Sharing
Agreement or with respect to the payment of any amounts of the type
described in (i) or (ii) as a result of any express or implied
obligation to indemnify any other person.
"Tax Indemnification Period", means (i) with respect to any
Tax described in clause (i) of the definition of "Tax", any Pre-Closing
Tax Period of XxXxxxxxx or any XxXxxxxxx Subsidiary, (ii) with respect
to any Tax described in clause (ii) of the definition of "Tax", any
Pre-Closing Tax Period of XxXxxxxxx or any XxXxxxxxx Subsidiary and the
Tax year of any member of a group described in such clause (ii) which
includes (but does not end on) the Closing Date, and (iii) with respect
to any Tax described in clause (iii) of the definition of "Tax", the
survival period of the obligation under the applicable contract or
arrangement.
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"Tax Sharing Agreements" means all existing Tax sharing
agreements or arrangements (whether or not written) binding XxXxxxxxx
or any XxXxxxxxx Subsidiary and any agreements or arrangements which
afford any other person the benefit of any tax asset of XxXxxxxxx or
any XxXxxxxxx Subsidiary, afford XxXxxxxxx or any XxXxxxxxx Subsidiary
the benefit of any tax asset of any other person or require or permit
the transfer or assignment of income, revenues, receipts, or gains.
11.02. Termination of Existing Tax Sharing Agreements. Any and
all existing Tax Sharing Agreements shall be terminated as of Closing. After
Closing, neither XxXxxxxxx nor any XxXxxxxxx Subsidiary shall have any further
rights or liabilities thereunder.
11.03. Tax Indemnification.
(a) Seller hereby indemnifies each Buyer Indemnitee against
and agrees to hold each Buyer Indemnitee harmless from any (x) Tax of
XxXxxxxxx or any XxXxxxxxx Subsidiary related to the Tax
Indemnification Period except to the extent of accruals for Taxes
reflected on the August 31 Financial Statements or in the ordinary
course of business thereafter prior to Closing, (y) Section 338 Tax,
and (z) liabilities, costs, expenses (including, without limitation,
reasonable expenses of investigation and attorneys' fees and expenses),
losses, damages, assessments, settlements or judgments arising out of
or incident to the imposition, assessment or assertion of any Tax
described in (x) or (y), including those incurred in the contest in
good faith in appropriate proceedings relating to the imposition,
assessment or assertion of any such Tax, (the sum of (x), (y), and (z)
being referred to herein as a "Loss").
(b) For purposes of this Section, in the case of any Taxes
that are imposed on a periodic basis and are payable for a Tax period
that includes (but does not end on) the Closing Date, the portion of
such Tax related to the portion of such Tax period ending on and
including the Closing Date shall be deemed equal to the amount which
would be payable if the relevant Tax period ended on and included the
Closing Date. The portion of any credits relating to a Tax period that
begins before and ends after the Closing Date shall be determined as
though the relevant Tax period ended on and included the Closing Date.
All determinations necessary to give effect to the foregoing allocation
shall be made in a manner consistent with prior practice of XxXxxxxxx
and the XxXxxxxxx Subsidiaries.
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51
(c) Upon payment by any Buyer Indemnitee of any Loss, such
Buyer Indemnitee shall notify the Seller in writing of such Loss, and
Seller shall discharge its obligation to indemnify and Buyer Indemnitee
against such Loss by paying to Buyer an amount equal to the amount of
such Loss.
(d) Any payment pursuant to this Section 11.03 shall be made
not later than 30 days after receipt by Seller of written notice from
Buyer stating that any Loss has been paid by a Buyer Indemnitee and the
amount thereof and of the indemnity payment requested.
(e) Buyer agrees to give prompt notice to Seller of any Loss
or the assertion of any claim, or the commencement of any suit, action
or proceeding in respect of which indemnity may be sought hereunder
which Buyer deems to be within the ambit of this Section 11.03
(specifying with reasonable particularity the basis therefor) and will
give Seller such information with respect thereto as Seller may
reasonably request. Seller may, at its own expense, (i) participate in
and, (ii) except as provided in Section 11.03(f), upon notice to Buyer,
assume the defense of any such suit, action or proceeding (including
any Tax audit); provided that (i) Seller has provided security
reasonably acceptable to Buyer for payment of the amount in dispute,
(ii) Seller's counsel is reasonably satisfactory to Buyer, (iii) Seller
shall thereafter consult with Buyer upon Buyer's reasonable request for
such consultation from time to time with respect to such suit, action
or proceeding (including any Tax audit) and (iv) Seller shall not,
without Buyer's consent, agree to any settlement with respect to any
Tax if such settlement could adversely affect the Tax liability of
Buyer, any of its Affiliates or, upon the Closing, XxXxxxxxx or any
XxXxxxxxx Subsidiary. If Seller assumes such defense, (i) Buyer shall
have the right (but not the duty) to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel
employed by Seller and (ii) Seller shall not assert that the Loss, or
any portion thereof, with respect to which Buyer seeks indemnification
is not within the ambit of this Section 11.03. If Seller elects not to
assume such defense, Buyer may pay, compromise or contest the Tax at
issue. Seller shall be liable for the fees and expenses of counsel
employed by Buyer for any period during which Seller has not assumed
the defense thereof. Whether or not Seller chooses to defend or
prosecute any claim, all of the parties hereto shall cooperate in the
defense or prosecution thereof.
(f) Buyer shall control the defense of any claim that relates
to (i) Taxes described in Section 11.03(b) or (ii) any separate return
filed by XxXxxxxxx or any XxXxxxxxx Subsidiary after the Closing.
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52
(g) Seller shall not be liable under this Section 11.03 with
respect to any Tax resulting from a claim or demand the defense of
which Seller was not offered the opportunity to assume as provided
under Section 11.03(e) to the extent Seller's liability under this
Section is adversely affected as a result thereof. No investigation by
Buyer or any of its Affiliates at or prior to the Closing Date shall
relieve Seller of any liability hereunder.
(h) Any claim of any Buyer Indemnitee (other than Buyer) under
this Section may be made and enforced by Buyer on behalf of such Buyer
Indemnitee.
11.05. Survival. Notwithstanding anything in this Agreement to
the contrary, the provisions of this Article XI shall survive for the full
period of all applicable statues of limitations (giving effect to any waiver,
mitigation or extension thereof).
ARTICLE XII
TERMINATION AND ABANDONMENT
12.01. Methods of Termination. The transactions contemplated
herein may be terminated and/or abandoned at any time but not later than the
Closing:
(a) By mutual consent of the respective Boards of Directors of
Buyer and Seller; or
(b) By the Board of Directors of Buyer on or after December 1,
1995, or such later date as may be established pursuant to Section 1.03
hereof, if any of the conditions to Buyer's obligations provided for in
Article VIII of this Agreement shall not have been met or waived in
writing by Buyer prior to such date, unless such failure to satisfy the
condition is the result of a wilful breach by Buyer of its obligations
under this Agreement or the failure by Buyer to have cash necessary to
pay the consideration required hereunder; or
(c) By the Board of Directors of Seller on or after December
1, 1995, or such later date as may be established pursuant to Section
1.03 hereof, if any of the conditions to Seller's obligations provided
for in Article VII of this Agreement shall not have been met or waived
in writing by Seller prior to such date, unless such failure to satisfy
the
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53
condition is the result of a wilful breach by Seller of its obligations
under the Agreement.
12.02. Procedure Upon Termination. In the event of termination
and abandonment by the Board of Directors of Buyer or by the Board of Directors
of Seller, or both, pursuant to Section 12.01 hereof, written notice thereof
shall forthwith be given to the other party and the transactions contemplated by
this Agreement shall be terminated and/or abandoned, without further action by
Buyer or Seller. If the transactions contemplated by this Agreement are
terminated and/or abandoned as provided herein:
(a) Each party will redeliver or destroy all documents, work
papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or after
the execution hereof, to the party furnishing the same;
(b) All confidential information received by any party hereto
with respect to the business of any other party or its subsidiaries
shall be treated in accordance with Section 6.01 hereof; and
(c) No party hereto shall have any liability or further
obligation to any other party to this Agreement except as stated in
subparagraphs (a) and (b) of this Section 12.02.
ARTICLE XIII
POST-CLOSING COVENANTS
13.01. Further Assurances. After the Closing, Seller shall,
and shall cause the Shop Vac Affiliates to, from time to time, at the request of
Buyer execute and deliver such other instruments of conveyance and transfer and
take such other actions as Buyer may reasonably request, in order to more
effectively consummate the transactions contemplated hereby and to vest in Buyer
good and marketable title to the XxXxxxxxx Stock and the Assets of the XxXxxxxxx
Business (including, without limitation, assistance in the collection or
reduction to possession of any of such assets).
13.02. Filing of Returns: Tax Election.
(a) Seller shall include XxXxxxxxx in its consolidated federal
tax return and in any state or local tax return filed on a
consolidated, combined or unitary basis through the close of business
on the Closing Date.
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54
(b) Buyer shall make a timely election under Section 338(g) of
the Internal Revenue Code of 1986, as amended (the "Code") and Seller
and Buyer shall jointly make an election under Section 338(h)(10) of
the Code (and any corresponding elections under state or local tax law)
(collectively, a "Section 338(h)(10) Election") with respect to
XxXxxxxxx and any domestic XxXxxxxxx Subsidiaries.
(c) Seller and Buyer shall (i) take, and cooperate with each
other to take, all actions necessary and appropriate (including filing
such forms, returns, elections, schedules and other documents as may be
required) to effect and preserve a timely Section 338(h)(10) Election
in accordance with Section 338 of the Code and the applicable
regulations and from time to time thereafter, and (ii) Seller and Buyer
shall report the sale of the XxXxxxxxx Stock pursuant to this Agreement
consistent with the Section 338(h)(10) Election and shall take no
position contrary thereto or inconsistent therewith In any tax return,
any discussion with or proceeding before any taxing authority, or
otherwise.
(d) Allocations. As soon as practicable after the date hereof,
but in no event later than 90 days prior to the date for filing of the
consolidated Shop Vac return for 1995 (taking into account any
extensions), Buyer shall prepare for Seller's review a schedule setting
forth (i) the modified aggregate deemed sales price (the "MADSP") at
which XxXxxxxxx is deemed to have sold its assets for tax purposes as a
result of the Section 338(h)(10) Elections, (ii) the adjusted
grossed-up basis (the "AGUB") at which XxXxxxxxx is deemed to have
purchased its assets for tax purposes as a result of such elections,
and (iii) the allocation of MADSP and AGUB among the assets of
XxXxxxxxx (collectively, the "Proposed Initial Allocation"). The
Proposed Initial Allocation shall be determined In accordance with
Section 338 of the Code and the applicable regulations thereunder.
Unless Seller shall have objected in writing to the Proposed Initial
Allocation within 10 days of the receipt thereof, Seller will be deemed
to have agreed to the Proposed Initial Allocation, which shall become
the Initial Allocation. The Initial Allocation shall be set forth on a
statement (the "Initial Allocation Statement") signed by the president
or any vice president of Buyer and Seller. If any increase or decrease
in MADSP and/or AGUB occurs, the amount of such increase or decrease
and the allocation thereof among the assets of XxXxxxxxx (collectively,
the "Adjustment Allocation") shall be set forth on a statement (the
"Adjustment Allocation Statement") prepared by Buyer and delivered to
Seller. The Adjustment Allocation Statement shall be subject to the
consent of Seller. Buyer and Seller will, to the maximum extent
permitted under applicable law, (i) file, or cause to be filed, all
Returns
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55
in a manner consistent with the Initial Allocation and any Adjustment
Allocation and (ii) not take any action inconsistent therewith.
(e) Dispute Resolution. Any dispute regarding the Proposed
Initial Allocation, Initial Allocation or any Adjustment Allocation
shall be submitted for resolution to independent accountants of
nationally recognized standing reasonably satisfactory to Buyer and
Seller (the "Tax Dispute Accountants"). The decision of the Tax Dispute
Accountants shall be final, conclusive and binding on the parties. The
fees and expenses of the Tax Dispute Accountants in resolving a dispute
will be borne equally by Buyer and Seller except that the Tax Dispute
Accountants may, if justice requires, allocate such expenses and fees
in any other manner they may determine between the Buyer, on the one
hand, and Seller, on the other.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.01. Amendment and Modification. This Agreement may be
amended, modified and supplemented by written agreement of the respective Boards
of Directors of the Seller and Buyer, or by their respective officers authorized
by such Boards of Directors, at any time prior to the Closing with respect to
any of the terms contained herein.
14.02. Waiver of Compliance. Any failure of Seller, on the one
hand, or Buyer, on the other, to comply with any obligation, covenant, agreement
or condition herein may be expressly waived in writing by the President or
Executive Vice President or other authorized officer of Buyer or Seller,
respectively, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
14.03. Expenses; Transfer Taxes, Etc. Whether or not the
transactions contemplated by this Agreement shall be consummated, Buyer agrees
that all fees and expenses incurred by it in connection with this Agreement
shall be borne by it, including all fees of counsel, actuaries and accountants.
Buyer and Seller agree that all sales or transfer taxes and recording and filing
fees which may be payable in connection with the transactions contemplated by
this Agreement shall be shared equally by Buyer and Seller. If the transactions
contemplated by this Agreement are consummated Buyer shall, at Closing,
reimburse Seller for costs (including the reasonable fees and expenses of its
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56
lawyers, accountants and financial advisors, including Xxxxx Xxxxxx Incorporated
and including any sales or transfer taxes and recording or filing fees which
accrue to Seller pursuant to this Section 14.03) relating to the sale of
XxXxxxxxx and the XxXxxxxxx Business, in an aggregate amount not to exceed $1.85
million. If Seller is not reimbursed for costs in an amount equal to $1.85
million at Closing because the amount of all such costs is not available at
Closing, Seller may submit statements for reimbursement to Buyer within ninety
(90) days after Closing, and Buyer shall reimburse Seller within fifteen (15)
days of receipt thereof, but in no event shall Buyer's obligation to reimburse
Seller under this Section 14.03 exceed $1.85 million.
14.04. Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand or mailed, certified or
registered mail with postage prepaid, or by nationally recognized overnight
delivery service:
(a) If to Sellers, to:
W. Xxxx Xxxxxxx, Executive Vice President
Shop Vac Corporation
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
with a copy to:
Xxxxxx & Xxxxx
Xxx X. Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esquire
or to such other person or address as Seller shall furnish to Buyer in
writing.
(b) If to Buyer, to:
Beaver Acquisition Corporation
0000 X. XxXxxxxxx Xxxxx
X.X. Xxx 00000
Xxxxxx, XX 00000
Attention: Xxx Xxxxxxxx, President
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with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
and with a copy to:
DLJ Merchant Banking, Inc.
000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx M.v.D. Schloss
or to such other person or address as Buyer shall furnish to Sellers in
writing.
14.05. Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties.
14.06. Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the conflict of law rules of such State.
14.07. 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 instrument.
14.08. Headings: Negotiation. The headings of the Sections and
Articles of this Agreement are inserted for convenience only and shall not
constitute a part hereof or affect in any way the meaning or interpretation of
this Agreement. This Agreement is a product of negotiation by the parties and
its interpretation shall not be affected in any manner by the fact that counsel
to a party drafted this Agreement or any Schedule, Exhibit or document delivered
pursuant hereto.
14.09. Entire Agreement. This Agreement, including the
Exhibits hereto, the Disclosure Schedules and the other documents and
certificates delivered pursuant to the terms hereof, set forth the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and supersede all prior agreements,
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promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto.
14.10. No Third Party Beneficiaries. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give to any
person or corporation other than the parties hereto and their successors or
assigns, any rights or remedies under or by reason of this Agreement.
14.11. Bulk Sales Laws. Buyer and Seller each hereby waive
(and Seller shall procure waiver by the Shop Vac Affiliates of) compliance by
Seller and the Shop Vac Affiliates with the provisions of the "bulk sales",
"bulk transfer" or similar laws of any state. Seller agrees to indemnify and
hold Buyer harmless against any and all claims, losses, damages, liabilities,
costs and expenses incurred by Buyer or any of XxXxxxxxx or the XxXxxxxxx
Subsidiaries as a result of any failure to comply with any such "bulk sales",
"bulk transfer" or similar laws except to the extent that such claim, loss,
damage, liability, cost or expense is the result of the failure of XxXxxxxxx or
any XxXxxxxxx Subsidiaries to pay after the Closing its liabilities (including,
without limitation, tax liabilities) when due.
14.12. Right of Setoff. The parties hereto agree that Buyer or
its affiliates may, upon giving fifteen (15) days written notice of its
intention to do so, be entitled to set off any obligation to Seller or the Shop
Vac Affiliates contained in any agreement entered into pursuant to this
Agreement (including agreements described in Sections 8.07 and 8.10) in payment
of the obligations of Seller contained in Article X, Article XI, Article XIII
and Section 14.11 of this Agreement, but only to the extent of the amount
payable to Buyer by Seller under such Articles X, XI, XIII and Section 14.11 of
this Agreement. Any such setoff shall discharge the obligations of Seller to
indemnify or make payment pursuant to Article X hereof or elsewhere herein to
the extent, and in the amount of, such setoff. Nothing contained herein shall
constitute an admission of a breach of any representation, warranty, covenant or
obligation by Seller or a waiver of Seller's right to contest Buyer's claim with
respect thereto. Nothing herein contained shall constitute any waiver of setoff
rights either party may otherwise have at law.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
BEAVER ACQUISITION CORPORATION
By: /s/ Xxxxxxxx X. x. X. Xxxxxxx
-------------------------------
Xxxxxxxx X. x. X. Xxxxxxx,
President
SHOP VAC CORPORATION
By: /s/ W. Xxxx Xxxxxxx
-------------------------------
W. Xxxx Xxxxxxx,
Executive Vice President
JOINDER AGREEMENT
XxXxxxxxx Corporation, intending to be legally bound, hereby joins in this
Agreement for the purpose of agreeing to its joint and several indemnification
obligations to Shop Vac Corporation and the Shop Vac Affiliates from and after
the Closing as set forth in Section 10.08 hereof. XxXxxxxxx Corporation agrees
that any of the provisions of this Agreement other than Section 10.08 may be
amended or modified by written agreement of Seller and Buyer without the consent
of or notice to XxXxxxxxx Corporation.
XxXxxxxxx Corporation
By: /s/ W. Xxxx Xxxxxxx
-------------------------------
W. Xxxx Xxxxxxx,
Executive Vice President
60
AMENDMENT NO. 1 TO THE STOCK PURCHASE AGREEMENT
THIS AMENDMENT, dated as of November 1, 1995 is made to the Stock
Purchase Agreement "Stock Purchase Agreement" dated as of October 22, 1995
between Beaver Acquisition Corporation, a Delaware corporation ("Buyer") and
Shop Vac corporation, a New Jersey corporation ("Seller").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Seller and the Buyer for
themselves, their successors and assigns, hereby agrees as follows:
SECTION 1. The Stock Purchase Agreement is amended by:
(a) Modifying Section 1.02 of the Stock Purchase Agreement by adding
the following words at the end thereof:
", less any amount paid by Black Butte Ltd., a Cayman Island
corporation ("Black Butte"), to Seller pursuant to the Intellectual
Property Purchase Agreement (as defined in Section 4.14 hereof), and
also less any amount paid by XxXxxxxxx to XxXxxxxxx Ireland Ltd. in
respect of the Non Owned XxXxxxxxx Assets."
(b) Adding a new Section 4.14 to Article IV of the Stock Purchase
Agreement as follows:
"At Closing Seller shall (a) cause XxXxxxxxx to enter an
intellectual property purchase agreement pursuant to which XxXxxxxxx
shall transfer and assign to Black Butte all of its rights, title and
interest in all patents, copyrights, trademarks, trade names, service
marks, service names, technology, knowhow, processes, trade secrets,
inventions, proprietary data, formulas, research and development data,
corporate software programs and other intangible property that relate
to the XxXxxxxxx Business and any applications for the same, in each
case owned or licensed by XxXxxxxxx or any affiliate of XxXxxxxxx for a
consideration of $5,000,000 in cash payable to Seller (the
"Intellectual Property Purchase Agreement"), and (b) itself execute
Patent Assignments pursuant to which Shop Vac shall transfer and assign
to Black Butte all of its rights, title and interest in all patents
relating to pressure washers that are part of the XxXxxxxxx Business
("Patent Assignments")."
(c) Adding a new Section 7.09 and a new Section 8.15 to the
Stock Purchase Agreement both to provide as follows:
61
"XxXxxxxxx and Black Butte shall have entered into the
Intellectual Property Purchase Agreement and Shop Vac shall have executed the
Patent Assignments as contemplated under Section 4.14 hereof."
(d) Section 10.03(d)(i) of the Stock Purchase Agreement is hereby
amended by deleting it in its entirety and substituting the following new
Section 10.03(d)(i) therefore:
"(i) Buyer shall be responsible for the first $1.25 million of
such Loss; and"
(e) Section 2.12 of the Disclosure Schedule to the Stock Purchase
Agreement is hereby amended by deleting it in its entirety and substituting the
attached Schedule 2.12.
(f) Section 2.14 of the Disclosure Schedule to the Stock Purchase
Agreement is hereby amended by deleting it in its entirety and substituting the
attached Schedule 2.14.
(g) Section 2.26(b) of the Disclosure Schedule to the Stock
Purchase Agreement is hereby amended by deleting it in its entirety and
substituting the attached Schedule 2.26(b).
SECTION 2. Buyer and Seller shall co-operate in obtaining the consent of G.E.
Capital Fleet Services ("G.E. Capital") to the assignment of the vehicle leases
referred to in Section 2.12 hereof. Seller shall co-operate with Buyer to put in
place arrangements to ensure that Buyer receives the benefit of such leases.
Prior to the assignment, and so long as XxXxxxxxx has use of the leased
vehicles. XxXxxxxxx shall make all rental payments due under said lease with
respect to such vehicles directly to G.E. Capital. If the Consent of G.E.
Capital is not obtained within 30 days after the Closing, Shop-Vac shall have
the option, upon at least 10 business days notice to XxXxxxxxx, to terminate
said such leases at Shop-Vac's expense and to return the vehicles to G.E.
Capital.
SECTION 3. In all other respects the provisions of the Stock Purchase Agreement
are confirmed and, except as herein provided shall have full effect and form.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed all as of the day and year first above written.
BEAVER ACQUISITION CORPORATION
/s/ Xxxxx X. Xxxxxxx
---------------------------------
By: Xxxxx X. Xxxxxxx
Title: Secretary
SHOP VAC CORPORATION
/s/ W. Xxxx Xxxxxxx
---------------------------------
By: W. Xxxx Xxxxxxx
Title: Executive Vice President
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