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Exhibit 2.2
STOCK PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into effective August 1, 1997,
by and among ▇▇▇▇▇▇▇ Holding Company, Inc., a Delaware corporation ("Buyer"),
▇▇▇▇▇▇▇▇▇ Manufacturing Company, an Oregon corporation ("Company") and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, a resident of Portland, Oregon ("Seller").
WHEREAS, the Company presently has authorized five thousand (5,000)
common shares of stock, ten dollars ($10.00) par value (the "Common Shares"),
and one hundred fifty (150) preferred shares of stock, one hundred dollars
($100.00) par value (the "Preferred Shares");
WHEREAS, the Company presently has issued and outstanding no (000)
Preferred Shares and six hundred ninety-seven (697) Common Shares, referred to
herein as the "Shares," all of which are issued to and owned by Seller, and
WHEREAS, said Shares are the only issued and outstanding capital stock
of the Company; and
WHEREAS, Buyer desires to purchase from Seller and Seller desires to
sell to Buyer all of the Shares owned by Seller on the terms and subject to the
conditions set forth herein.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
SECTION 1.0. PURCHASE OF SHARES.
1.1 PURCHASE OF SHARES. Subject to the terms and conditions set
forth herein, at the Closing (as defined below) Seller will sell all of the
Shares to Buyer and Buyer will purchase all of the Shares, said Shares
constituting one hundred percent (100%) of all of the issued and outstanding
capital stock of the Company as of the Closing.
1.2 PURCHASE PRICE. Buyer will pay to Seller the sum of
US$9,000,000 ("Purchase Price"), in the form of cash or cash equivalent,
allocated as provided in Section 1.4, infra.
1.3 ADJUSTMENTS TO PURCHASE PRICE. Within a reasonable period of
time after Closing, the parties will reasonably agree on Closing Financial
Statements (hereinafter defined). The Purchase Price will be reduced,
dollar-for-dollar, to the extent that Net Worth as represented in the Closing
Financial Statements is less than $3,531,747.30, as represented in June 1997
Financial Statements (hereinafter defined).
1.4 PAYMENT OF PURCHASE PRICE. The Purchase Price will be paid at
Closing, allocable as follows:
(i) the sum of US$8,125,000 in consideration of the
Stock; and
(ii) the sum of US$875,000 in consideration of a certain
Noncompetition Agreement to be executed and delivered at Closing.
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Section 2.0. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER. As a
material inducement to Buyer to enter into this Agreement and to purchase the
Shares, Seller and the Company, jointly and severally, represent and warrant
that:
2.1 ORGANIZATION AND CORPORATE POWER. The Company is a corporation
duly incorporated and validly existing under the laws of Oregon, and the Company
is qualified to do business in every jurisdiction in which its ownership of
property or conduct of business requires it to qualify. The Company has all
requisite corporate power and authority and all material licenses, permits, and
authorizations necessary to own and operate its properties and to carry on its
business as now conducted. The copies of the Company's charter documents and
bylaws have been furnished to Buyers counsel reflect all amendments made thereto
at any time prior to the date of this Agreement and are correct and complete.
2.2 CAPITAL STOCK AND RELATED MATTERS. The authorized capital
stock and issued and outstanding stock of the Company are as set forth in the
first and second recitals respectively, above. All of the Shares are owned,
beneficially and of record, by Seller and no other stock of the Company is
issued and outstanding. The Company does not have outstanding and has not
agreed, orally or in writing, to issue any stock or securities convertible or
exchangeable for any shares of its stock, nor does it have outstanding nor has
it agreed, orally or in writing, to issue any options or rights to purchase or
otherwise acquire its stock. The Company is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its stock. The Company has not violated any applicable securities laws
or regulations in connection with the offer or sale of its securities other than
violations that have been, or will before the Closing have been, corrected by
post-issuance filings. All of the outstanding shares of the Company's capital
stock are validly issued, fully paid, and nonassessable. Seller has, and upon
purchase thereof, pursuant to the terms of this Agreement Buyer will have, good
and marketable title to the shares, free and clear of all security interests,
liens, encumbrances, or other restrictions or claims, subject only to
restrictions as to marketability imposed by securities laws. Assuming that the
representations in Section 3.6 are true and correct, neither Seller nor the
Company have violated or will violate any applicable securities laws in
connection with the offer or sale of the Shares to Buyer hereunder.
2.3 SUBSIDIARIES. Except as set forth in SCHEDULE 2.3, the Company
does not own or hold any rights to acquire any shares of stock or any other
security or interest in any other corporation or entity.
2.4 CONDUCT OF BUSINESS; LIABILITIES. Except as set forth in
SCHEDULE 2.4, the Company is not in default under, and no condition exists that
with notice or lapse of time would constitute a default of the Company under (i)
any mortgage, loan agreement, evidence of indebtedness, or other instrument
evidencing borrowed money to which the Company is a party or by which the
Company or the properties of the Company are bound or (ii) any judgment, order,
or injunction of any court, arbitrator, or governmental agency that would
reasonably be expected to affect materially and adversely the business,
financial condition, or results of operations of the Company taken as a whole.
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2.5 FINANCIAL STATEMENTS. The unaudited (but independent CPA
reviewed) 1995/1996 balance sheet, income statement and cash flow statement of
the Company as of December 31, 1996, in the form attached to this Agreement as
EXHIBIT 2.5(A) (collectively the "1995/1996 Financial Statements"), fairly
present the financial position of the Company as at December 31, 1996, and have
been prepared in accordance with generally accepted accounting principles,
consistently applied, and in a manner consistent with prior financial statements
of the Company. The unaudited and unreviewed balance and income statement of the
Company as at June 30, 1997, and for the month then ended, in the form attached
hereto as EXHIBIT 2.5(B) ("June, 1997 Financial Statements"), fairly present the
financial position of the Company as at June 30, 1997 and the results of
operations for the one month then ended and have been prepared in accordance
with generally accepted accounting principles consistently applied and in a
manner substantially consistent with the 1995/1996 Financial Statements, except
for differences resulting from normally occurring audit adjustments, including,
but not limited to, income tax and tax accrual adjustments, or as noted in the
June, 1997 Financial Statements or the notes thereto. Except as contemplated by
or permitted under this Agreement, there are no adjustments that would be
required on review of the June, 1997 Financial Statements that would,
individually or in the aggregate, have a material negative effect upon the
Company's reported financial condition.
2.6 NO UNDISCLOSED LIABILITIES. Except for (i) trade liabilities
and trade obligations incurred in the ordinary course of business since June 30,
1997 ("Statement Date"), and (ii) liabilities or obligations described in
SCHEDULE 2.6, neither the Company nor any of the property of the Company is
subject to any material liability or obligation that was required to be included
or adequately reserved against in the June, 1997 Financial Statements or
described in the notes thereto and was not so included, reserved against, or
described. Neither the Company nor Seller has any knowledge of any basis for any
liability of Company, contingent or otherwise, not reflected in the June, 1997
financial Statements or described in the notes thereto.
2.7 ABSENCE OF CERTAIN CHANGES. Except as contemplated or
permitted by this Agreement or as described in SCHEDULE 2.7, since the Statement
Date there has not been:
2.7.1 Any material adverse change in the business,
financial condition, operations, or assets of the Company;
2.7.2 Any damage, destruction, or loss, whether covered by
insurance or not materially adversely affecting the properties or business of
the Company;
2.7.3 Any sale or transfer by the Company of any tangible
or intangible asset other than in the ordinary course or business, any mortgage
or pledge or the creation of any security interest, lien, or encumbrance on any
such asset, or any lease of property, including equipment, other than tax liens
with respect to taxes not yet due and contract rights of customers in inventory;
2.7.4 Any declaration, setting aside, or payment of a
distribution in respect of or the redemption or other repurchase by the Company
of any stock of the Company;
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2.7.5 Any material transaction not in the ordinary course
of business of the Company;
2.7.6 The lapse of any material trademark, assumed name,
trade name, service ▇▇▇▇, copyright, or license or any application with respect
to the foregoing;
2.7.7 The grant of any increase in the compensation of
officers or employees (including any such increase pursuant to any bonus,
pension, profit-sharing, or other plan) other than customary increases on a
periodic basis or required by agreement or understanding in the ordinary course
of business and in accordance with past practice;
2.7.8 The discharge or satisfaction of any material lien or
encumbrance or the payment of any material liability other than current
liabilities in the ordinary course of business;
2.7.9 The making of any material loan, advance, or guaranty
to or for the benefit of any person except the creation of accounts receivable
in the ordinary course of business; or
2.7.10 An agreement to do any of the foregoing.
2.8 TITLE AND RELATED MATTERS. Except as set forth in SCHEDULE
2.8, the Company has good and marketable title to all of its property, real and
personal, and other assets included in the June, 1997 Financial Statements
(except properties and assets sold or otherwise disposed of subsequent to the
Statement Date in the ordinary course of business or as contemplated in this
Agreement), free and clear of all security interests, mortgages, liens, pledges,
charges, claims, or encumbrances of any kind or character, except (i) statutory
liens for property taxes not yet delinquent or payable subsequent to the date of
this Agreement and statutory or common law liens securing the payment or
performance of any obligation of the Company, the payment or performance of
which is not delinquent, or that is payable without interest or penalty
subsequent to the date on which this representation is given, or the validity of
which is being contested in good faith by the Company, (ii) the rights of
customers of the Company with respect to inventory under orders or contracts
entered into by the Company in the ordinary course of business; (iii) claims,
easements, liens, and other encumbrances of record pursuant to filings under
real property recording statutes; and (iv) as described in the Unaudited
Statements or the notes thereto.
2.9 LITIGATION. Except as set forth in SCHEDULE 2.9, there are no
material actions, suits, proceedings, orders, investigations, or claims pending
or, to the best of Seller's and the Company's knowledge, overtly threatened
against the Company or any property of either, at law or in equity, or before or
by any governmental department, commission, board, bureau, agency, or
instrumentality; the Company is not subject to any arbitration proceedings under
collective bargaining agreements or otherwise or, to the best of Seller's and
the Company's knowledge, any governmental investigations or inquiries; and, to
the best knowledge of Seller's and the directors and responsible officers of the
Company, there is no basis for any of the foregoing.
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2.10 TAX MATTERS. Except as set forth on SCHEDULE 2.10, (i) the
Company has prepared in a substantially correct manner and has filed all
federal, provincial, local, and foreign tax returns and reports heretofore
required to be filed by them and have paid all taxes shown as due thereon; and
(ii) no taxing authority has asserted any deficiency in the payment of any tax
or informed the Company that it intends to assert any such deficiency or to make
any audit or other investigation of the Company for the purpose of determining
whether such a deficiency should be asserted against the Company.
2.11 COMPLIANCE WITH LAWS. To the best of Seller's knowledge, the
Company is, in the conduct of its business, in compliance with all laws,
statutes, ordinances, regulations, orders, judgments, or decrees applicable to
them, the enforcement of which, if the Company were not in compliance therewith,
would have a materially adverse effect on the business of the Company, taken as
a whole. Neither Seller nor the Company has received any notice of any asserted
present or past failure by the Company to comply with such laws, statutes,
ordinances, regulations, orders, judgments, or decrees.
2.12 NO BROKERS. There are no claims for brokerage commissions,
finders' fees, or similar compensation in connection with the purchase based on
any arrangement or agreement binding upon any of the parties hereto.
2.13 INSURANCE. SCHEDULE 2.13 contains a list of each insurance
policy maintained by the Company with respect to its properties, assets, and
businesses, and each such policy is in full force and effect. The Company is not
in material default with respect to its obligations under any such policy
maintained by it. Neither Seller nor the Company has been notified of the
cancellation of any of the insurance policies listed on SCHEDULE 2.13 or of any
material increase in the premiums to be charged for such insurance policies.
2.14 EMPLOYEES AND LABOR RELATIONS MATTERS. Except as set forth in
SCHEDULE 2.14 or as provided in this Agreement:
2.14.1 Neither Seller nor the Company is aware that any
executive or key employee of the Company or any group of employees of the
Company has any plans to terminate employment with the Company,
2.14.2 To the best of Seller's knowledge, the Company has
complied in all material respects with all labor and employment laws, including
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining, nondiscrimination, and the payment of employment and employee
related taxes and other taxes;
2.14.3 There is no unfair labor practice charge, complaint,
or other action against the Company pending or, to Seller's and the Company's
best knowledge, threatened, and the Company is not subject to any order to
bargain by the government;
2.14.4 To Seller's and the Company's best knowledge, there
is no movement among employees to organize, or gain union representation for,
Company's employees;
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2.14.5 No grievance that might have a material adverse
effect on the Company and no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and, to the best knowledge of Seller
and the directors and responsible officers of the Company, no basis exists for
any such grievance or arbitration proceeding; and
2.14.6 To the best knowledge of Seller and the directors and
responsible officers of the Company, no employee of the Company is subject to
any noncompetition, nondisclosure, confidentiality, employment, consulting, or
similar agreements with persons other than the Company relating to the present
business activities of the Company except as disclosed in item 8 of Exhibit 2.18
hereto.
2.15 DISCLOSURE. To the best knowledge of Seller, neither this
Agreement nor any of the schedules, attachments, written statements, documents,
certificates, or other items prepared or supplied to Buyer by or on behalf of
the Company or Seller with respect to this purchase contain any untrue statement
of a material fact or omit a material fact necessary to make each statement
contained herein or therein not misleading. Neither Seller nor any responsible
officer or director has intentionally concealed any fact known by such person to
have a material adverse effect upon the Company's existing or expected financial
condition, operating results, assets, customer relations, employee relations, or
business prospects taken as a whole.
2.16 POWER OF ATTORNEY. Except as set forth in SCHEDULE 2.16, no
material power of attorney or similar authorization given by the Company is
presently in effect.
2.17 ACCOUNTS RECEIVABLE. To the best of Seller's and Company's
knowledge, all accounts receivable of the Company reflected in the June, 1997
Financial Statements represent bona fide sales actually made, and collectible,
in the ordinary course of business.
2.18 AGREEMENTS AND COMMITMENTS. SCHEDULE 2.18 contains a complete
and accurate list of each agreement, contract, instrument, and commitment
(including license agreements) to which the Company is a party that provides for
payments in excess of $10,000 per year or whose term is in excess of one year
and is not cancelable upon thirty (30) or fewer days' notice without any
liability, penalty, or premium, other than a nominal cancellation fee or charge
("Third Party Agreements"). Except as otherwise set forth in SCHEDULE 2.18,
2.18.1 The Company has no collective bargaining or union
contracts agreement in effect or being negotiated;
2.18.2 There is no labor strike, dispute, request for
representation, slowdown, or stoppage pending or, to Seller's and the Company's
best knowledge, threatened against the Company;
2.18.3 The Company is not in material default under any
Third Party Agreements, nor, to Seller's and the Company's best knowledge, does
there exist any event that,
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with notice or the passage of time or both, would constitute a material default
or event of default by the Company under any Third Party Agreements;
2.18.4 There is no pension or benefit fund which is less
than fully funded as required by government regulation and all applicable plan
provisions; and,
2.18.5 No third party consent is required in connection with
the sale of the Shares by Seller to Buyer.
2.19 PERSONAL PROPERTY. Without material exception, SCHEDULE 2.19
contains lists of all tangible personal property and assets owned or held by the
Company and used or useful in the conduct of the business of the Company. Except
as set forth in SCHEDULE 2.19, the Company owns and has good title to such
properties and none of such properties is subject to any security interest,
mortgage, pledge, conditional sales agreement or other lien or encumbrance
(except for liens for current taxes, assessments, charges, or other governmental
levies not yet due and payable). The Company has delivered to Buyer copies of
all leases and other agreements relating to property described in SCHEDULE 2.19
(including any and all amendments and other modifications to such leases and
other agreements) all of which are valid and binding, and the Company is not in
material default under any such leases or agreements. Except as set forth in
SCHEDULE 2.19 and to the best of Seller's knowledge, all material properties
listed therein are in good operating condition and repair (ordinary wear and
tear excepted), are performing satisfactorily, and are available for immediate
use in the conduct of the Business and operations of the Company. To the best of
Seller's knowledge, all such tangible personal property is in compliance in all
material respects with all applicable statutes, ordinances, rules, and
regulations. The properties listed in SCHEDULE 2.19 include substantially all
such properties necessary to conduct the business and operations of the Company
as now conducted.
2.20 REAL PROPERTY. SCHEDULE 2.20 contains a list of all real
property currently owned or leased by the Company and used or useful in the
conduct of the business operations of the Company. Except as set forth in
SCHEDULE 2.20, the Company has good and marketable fee simple title, insurable
at standard rates, to all of the real property listed as owned in SCHEDULE 2.20
free and clear of all liens, mortgages, pledges, covenants, easements,
restrictions, leases, charges, and other claims and encumbrances of any nature
whatsoever, and without reservation or exclusion of any mineral, timber, or
other rights or interests, except liens for real estate taxes, assessments,
charges, or other governmental levies not yet due and payable and except for
easements, rights of way, and restrictions of record. Seller has delivered to
Buyer copies of all leases listed in SCHEDULE 2.20 (including any and all
amendments and other modifications of such leases), which leases are valid and
binding. To the best of Seller's knowledge, the Company is not in material
default under any such leases. To the best of Seller's knowledge, all property
listed in SCHEDULE 2.20 (including improvements thereon) is in satisfactory
condition and repair consistent with its present use and is available for
immediate use in the conduct of the business of the company. Except as set forth
in SCHEDULE 2.20 and to the best of Seller's knowledge, none of the property
listed in SCHEDULE 2.20 or subject to leases listed in SCHEDULE 2.20 violates in
any material respect any applicable building, zoning or environmental code or
regulation of any governmental authority having jurisdiction. The
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property and leases described in SCHEDULE 2.20 include all such property or
property interests necessary to conduct the business and operations of the
Company as they are presently conducted.
2.21 PERSONNEL. SCHEDULE 2.21 sets forth a true and complete list
of:
2.21.1. The names, title, and current salaries of all
officers of the Company;
2.21.2 The names of all directors of the Company;
2.213 The wage rates (or ranges, if applicable) for each
class of exempt and nonexempt, salaried and hourly employees of the Company;
2.21.4 All scheduled or contemplated increases in
compensation or bonuses; and
2.21.5 All scheduled or contemplated employee promotions,
demotions, hirings, firings or disciplining.
2.22 PATENTS, TRADEMARKS, TRADE NAMES, ETC. SCHEDULE 2.22 contains
an accurate and complete list of all patents, trademarks, tradenames, service
marks, and copyrights, and all applications therefor, presently owned or held
subject to license by the Company and, to the Company's best knowledge, the use
thereof by the Company does not materially infringe on any, patents, trademarks,
or copyrights or any other rights of any person. To Seller's and the Company's
best knowledge, the Company has not operated and is not operating its business
in a manner that infringes the proprietary rights of any other person in any
patents, trademarks, trade names, service marks, copyrights, or confidential
information. Except as set forth in SCHEDULE 2.22, the Company has not received
any written notice of any infringement or unlawful use of such property.
2.23 BENEFIT PLANS AND RELATED MATTERS. SCHEDULE 2.23 sets forth a
description of all "Employee Welfare Benefit Plans" and "Employee Pension
Benefit Plans" existing on the date hereof that are or have been maintained or
contributed to by the Company. Except as listed on SCHEDULE 2.23, the Company
does not maintain any retirement or deferred compensation plan, savings,
incentive, stock option or stock purchase plan, unemployment compensation plan,
vacation pay, severance pay, bonus or benefit arrangement, insurance or
hospitalization program or any other fringe benefit arrangement for any
employee, consultant or agent of the Company, whether pursuant to contract,
arrangement, custom or informal understanding, for which the Company may have
any ongoing material liability after Closing. The Company does not maintain nor
has it ever contributed to any Multiemployer Plan. There have been no unlawful
transactions or actions with respect to any Employee Pension Benefit Plan or
Employee Welfare Benefit Plan maintained by the Company as to which the Company
has been party. As to any employee pension benefit plan listed on SCHEDULE 2.23,
there have been no events required to be reported to the government.
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2.24 ENVIRONMENTAL MATTERS. To the best of Company's and Seller's
knowledge, there exist no environmental conditions upon any real property
described in Schedule 2.20 which violate any local, state or federal government,
environmental or health code, ordinance, statute, order, notice or law; nor is
there any environmental condition which requires that notice be given to any
government entity pursuant to any such local, state or code, ordinance, statute,
order, notice or law.
2.25 REPRESENTATIONS TRUE, ACCURATE AND COMPLETE. All
representations and warranties made herein by Company and Seller are true,
accurate and complete in all material respects. Each of Company and Seller
agrees to notify Purchaser immediately in writing in the event it/he learns any
information required to make all representations and warranties of Company and
Seller herein true, accurate and complete in all material respects at all times
subsequent hereto.
SECTION 3.0. REPRESENTATIONS AND WARRANTIES OF BUYER. As a material
inducement to Seller to enter into this Agreement and to sell the Shares, Buyer
hereby represents and warrants to Seller as follows:
3.1 ORGANIZATION; POWER. Buyer is a corporation duly incorporated
and validly existing under the laws of Delaware, and has all requisite corporate
power and authority to enter into this Agreement and perform its obligations
hereunder.
3.2 AUTHORIZATION; CONSENTS. The execution, delivery, and
performance by Buyer of this Agreement and all other agreements contemplated
hereby to which Buyer is a party have been duly and validly authorized by all
necessary corporate action of Buyer, and this Agreement and each such other
agreement, when executed and delivered by the parties thereto, will constitute
the legal, valid, and binding obligation of Buyer enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, and similar statutes affecting creditors' rights
generally and judicial limits on equitable remedies. Buyer is required to obtain
the written consent of its secured institutional lenders in connection with the
acquisition of the Shares.
3.3 NO CONFLICT WITH OTHER INSTRUMENTS OR AGREEMENTS. The
execution, delivery, and performance by Buyer of this Agreement and all other
agreements contemplated hereby to which Buyer is a party will not result in a
breach or violation of, or constitute a default under, its Articles of
Incorporation or Bylaws or any material agreement to which Buyer is a party or
by which Buyer is bound.
3.4 GOVERNMENTAL AUTHORITIES. Except as set forth in SCHEDULE 3.4,
(i) Buyer is not required to submit any notice, report, or other filing with any
governmental or regulatory authority in connection with the execution and
delivery by buyer of this Agreement and the consummation of the purchase and
(ii) no consent, approval, or authorization of any governmental or regulatory
authority is required to be obtained by Buyer or any affiliate in connection
with Buyer's execution, delivery, and performance of this Agreement and the
consummation of this purchase.
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3.5 LITIGATION. There are no actions, suits, proceedings, or
governmental investigations or inquiries pending or, to the knowledge of Buyer,
threatened against Buyer or its properties, assets, operations, or businesses
that might delay, prevent, or hinder the consummation of this purchase.
3.6 INVESTMENT REPRESENTATIONS
3.6.1 Buyer is acquiring the Shares for its own account for
purposes of investment and without expectation, desire, or need for resale and
not with the view toward distribution, resale, subdivision, or fractionalization
of the Shares.
3.6.2 During the course of the negotiation of this
Agreement, Buyer has reviewed all information provided to it by the Company and
has had the opportunity to ask questions of and receive answers from
representatives of the Company concerning the Company, the securities offered
and sold hereby, and this purchase, and to obtain certain additional information
requested by Buyer.
3.63 Buyer understands that no public market now exists
for the Shares and that it is uncertain that a public market will ever exist for
the Shares.
3.7 BROKERAGE. There are no claims for brokerage commissions,
finders' fees, or similar compensation in connection with this purchase based on
any arrangement or agreement entered into by Buyer and binding upon any of the
parties hereto.
SECTION 4.0. CONDUCT OF THE COMPANY'S BUSINESS PENDING THE CLOSING.
From the date hereof until the Closing, and except as otherwise consented to or
approved by Buyer, Seller and the Company covenant and agree with Buyer as
follows:
4.1 REGULAR COURSE OF BUSINESS. The Company will operate its
business in accordance with the reasonable judgment of its management diligently
and in good faith, consistent with past management practices, and the Company
will continue to use its reasonable efforts to keep available the services of
present officers and employees (other than planned retirements) and to preserve
its present relationships with persons having business dealings with it. The
Company will not conduct any transactions outside the ordinary course of
business without the prior written consent of Purchaser.
4.2 DISTRIBUTIONS. The Company will not declare, pay, or set aside
for payment any dividend or other distribution in respect of its capital stock.
Nor will the Company repurchase any of its capital stock.
4.3 CAPITAL CHANGES. The Company will not issue any shares of its
stock, or issue or sell any securities convertible into, or exchangeable for, or
options, warrants to purchase, or rights to subscribe to, any shares of its
stock or subdivide or in any way reclassify any shares of its capital stock, or
repurchase reacquire, cancel, or redeem any such shares.
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4.4 ASSETS. The assets, property, and rights now owned by the
Company will be used, preserved, and maintained, as far as practicable, in the
ordinary course of business, to the same extent and in the same condition as
said assets, property, and rights are on the date of this Agreement, and no
unusual or novel methods of manufacture, purchase, sale, management, or
operation of said properties or business or accumulation or valuation of
inventory will be made or instituted. Without the prior consent of Buyer, the
Company will not encumber any of its assets or make any commitments relating to
such assets, property, or business, except in the ordinary course of its
business.
4.5 INSURANCE. The Company will keep or cause to be kept in effect
and undiminished the insurance now in effect on its various properties and
assets, and will purchase such additional insurance, at Buyer's cost, as Buyer
may request.
4.6 EMPLOYEES. The Company will not grant to any employee any
promotion, any increase in compensation, or any bonus or other award other than
promotions, increases, or awards that are regularly scheduled in the ordinary
course of business or contemplated on the date of this Agreement or that are, in
the reasonable judgment of management of the Company, in the Company's best
interest.
4.7 NO VIOLATION. The Company will comply in all material respects
with all statutes, laws, ordinances, rules, and regulations applicable to it in
the ordinary course of business.
4.8 PUBLIC ANNOUNCEMENTS. No press release or other announcement
to the employees, customers, or suppliers of the Company related to this
Agreement or this purchase will be issued without the joint approval of the
parties, unless required by law, in which case Buyer and Seller will consult
with each other regarding the announcement.
SECTION 5.0. COVENANTS OF THE COMPANY AND SELLER. Company and Seller
covenant and agree with Buyer as follows:
5.1 SATISFACTION OF CONDITIONS. The Company will use reasonable
efforts to obtain as promptly as practicable the satisfaction of the conditions
to Closing set forth in Section 7 and any necessary consents or waivers under or
amendments to agreements by which the Company is bound.
5.2 SUPPLEMENTS TO SCHEDULES. From time to time prior to the
Closing, Seller and the Company will promptly supplement or amend the schedules
with respect to any matter hereafter arising that, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
described in any schedule and will promptly notify Buyer of any breach by either
of them that either of them discovers of any representation, warranty, or
covenant contained in this Agreement. No supplement or amendment of any schedule
made pursuant to this section will be deemed to cure any breach of any
representation of or warranty made in this Agreement unless Buyer specifically
agrees thereto in writing; provided, however, that if this purchase is closed,
Buyer will be deemed to have waived its rights with respect to any breach of a
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representation, warranty, or covenant or an supplement to any schedule of which
it shall have been notified pursuant to this Section 5.2.
5.3 NO SOLICITATION. Until the Closing or termination pursuant to
Section 10 of this Agreement, neither Seller nor the Company, nor any of their
respective directors, officers, employees, or agents shall, directly or
indirectly, encourage, solicit, initiate, or enter into any discussions or
negotiations concerning any disposition of any of the capital stock or all or
substantially all of the assets of the Company (other than pursuant to this
Agreement), or any proposal therefor, or furnish or cause to be furnished any
information concerning the Company to any party in connection with any
transaction involving the acquisition of the capital stock or assets of the
Company by any person other than Buyer. Seller or the Company will promptly
inform Buyer of any inquiry (including the terms thereof and the person making
such inquiry) received by any responsible officer or director of the Company or
Seller after the date hereof and believed by such person to be a bona fide,
serious inquiry relating to any such proposal.
5.4 ACTION AFTER THE CLOSING. Upon the reasonable request of any
party hereto after the Closing, any other party will take all action and will
execute all documents and instruments necessary or desirable to consummate and
give effect to this purchase. These include, by way of illustration and not by
way of limitation, the following:
5.4.1 Various conditions relating to filing, payment, and
collecting of refunds relating to taxes;
5.4.2 Provisions relating to delivery of Corporate books
and records; and
5.43 Provisions relating to treatment of confidential
proprietary information obtained in the acquisition process.
5.5 INDEMNIFICATION. Seller shall satisfy, indemnify, hold
harmless and defend Company and Buyer from and against any and all liabilities,
claims, costs, actions or expenses, including reasonable attorneys' fees,
accrued, in connection with or arising out of:
5.5.1 any condition existing, or liability, action or event
occurring, prior to the Closing Date to the extent that such liability,
condition, action or event has not been disclosed in this Agreement or in any of
the exhibits hereto;
5.5.2 any breach by Seller of any covenant to be performed
by Seller pursuant to this Agreement;
5.5.3 any misrepresentation made by Seller or Company in
this Agreement;
5.5.4 any violation of any environmental and/or tax code,
ordinance, regulation or law, and/or of any provision of state or federal law
dealing with employment benefits or unlawful discrimination, existing, accruing,
occurring or arising prior to the Closing Date,
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including without limitation, costs, fines, penalties, interest assessments and
expenses relating to remediation and bringing company into full compliance with
such governmental requirements;
5.5.5 the termination of employment of any employees by
Company with cause within three (3) months after the Closing, including without
limitation, the incurring of costs and expenses, and the providing of previously
unfunded or unaccrued benefits, relating to employment severance and/or
redundancy; and
5.5.6 The liabilities identified in sections 5.5.1 through
5.5.5, above, shall be the "Indemnified Liabilities."
5.6 ACTIONS OF COMPANY AND SELLER. Neither Company nor Seller
shall take any actions subsequent to the date hereof, the effect of which would
be to make untrue, inaccurate or incomplete any of the warranties or
representations of Company or Seller herein made.
SECTION 6.0. COVENANTS OF BUYER.
Buyer will use its best efforts to cause the conditions set forth in
Section 8 to be satisfied.
SECTION 7.0. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER. Each and
every obligation of Buyer under this Agreement is subject to the satisfaction,
at or before the Closing, of each of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. Each of the
representations and warranties made by the Company herein will be true and
correct in all material respects as of the Closing with the same effect as
though made at that time except for changes contemplated, permitted, or required
by this Agreement; Seller and tile Company will have performed and complied with
all agreements, covenants, and conditions required by this Agreement to be
performed and complied with by them prior to the Closing; and Buyer will have
received, at the Closing, a certificate of the Company and Seller, signed by the
President and the Chief Financial Officer of the Company and Seller, stating
that each of the representations and warranties made by the Company herein is
true and correct in all material respects as of the Closing except for changes
contemplated, permitted, or required by this Agreement and that Seller and the
Company have performed and complied with all agreements, covenants, and
conditions required by this Agreement to be performed and complied with by them
prior to the Closing.
7.2 LITIGATION. No material action, suit, or proceeding before any
court, governmental or regulatory authority will have been commenced and be
continuing, and no investigation by any governmental or regulatory authority
will have been commenced and be continuing, and no action, investigation, suit,
or proceeding will be threatened at the time of Closing, against Seller, the
Company, or Buyer or any of their affiliates, associates, officers, or
directors, seeking to restrain, prevent, or change this purchase, questioning
the validity or legality of this purchase, or seeking damages in connection with
this purchase.
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7.3 LEGAL OPINION. Buyer will have received an opinion of Miller,
Nash, Wiener, Hager & ▇▇▇▇▇▇▇ of Portland, Oregon, in form and content
reasonably acceptable to Buyer and its legal counsel.
7.4 MATERIAL CHANGE. From the date of this Agreement to the
Closing, the Company shall not have suffered any material adverse change
(whether or not such change is referred to or described in any supplement to any
exhibit or schedule to this Agreement) in its business prospects, financial
condition, working capital, assets, liabilities (absolute, accrued, contingent,
or otherwise), or operations.
7.5 CORPORATE ACTION. Seller will have furnished to Buyer:
7.5.1 The corporate charter and all amendments thereto and
restatements thereof of the Company certified by the official having custody
over corporate records in the jurisdiction of incorporation of the corporation
in question;
7.5.2 The current bylaws and minutes of all meetings and
consents of shareholders and directors of the Company;
7.5.3 Each certificate of qualification to do business as a
foreign corporation of the Company;
7.5.4 All stock transaction records of the Company, and
7.5.5 A certificate of the Secretary or Assistant Secretary
of the Company as to the accuracy, currency, and completeness of each of the
above documents, the incumbency and signatures of officers of the Company, the
absence of any amendment to the charter documents of the Company, and the
absence of any proceeding for dissolution or liquidation of the Company.
SECTION 8.0. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY AND
SELLER. Each and every obligation of Seller and the Company under this Agreement
is subject to the satisfaction, at or before the Closing, of each of the
following conditions:
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. Each of the
representations and warranties made by Buyer herein will be true and correct in
all material respects as of the Closing with the same effect as though made at
that time except for changes contemplated, permitted, or required by this
Agreement; Buyer will have performed and complied with all agreements,
covenants, and conditions required by this Agreement to be performed and
complied with by it prior to the Closing; and Seller will have received, at the
Closing, a certificate of Buyer, signed by the President and the Chief Financial
Officer of Buyer, stating that each of the representations and warranties made
by Buyer herein is true and correct in all material respects as of the Closing
except for changes contemplated, permitted, or required by this Agreement and
that Buyer has performed and complied with all agreements, covenants, and
conditions required by this Agreement to be performed and complied with by it
prior to the Closing.
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8.2 NO PROCEEDING OR LITIGATION. No action, suit, or proceeding
before any court (other than suits seeking monetary damages only and in the
aggregate sum of less than $10,000) and any governmental or regulatory authority
will have been commenced and be continuing, and no investigation by any
governmental or regulatory authority will have been commenced and be continuing,
and no action, investigation, suit, or proceeding will be threatened at the time
of Closing, against Seller, the Company, or Buyer or any of their affiliates,
associates, officers, or directors, seeking to restrain, prevent, or change this
purchase, questioning the validity or legality of this purchase, or seeking
damages in connection with this purchase.
8.3 CORPORATE ACTION. Buyer will have furnished to Seller a copy,
certified by the Secretary of an Assistant Secretary of Buyer, of the
resolutions of Buyer authorizing the execution, delivery, and performance of
this Agreement.
8.4 LEGAL OPINION. Seller will have received an opinion of ▇▇▇▇▇
▇. ▇▇▇▇▇▇, Wellesley Law Associates of Wellesley, Massachusetts, in form and
content reasonably acceptable to Seller and his legal counsel.
SECTION 9.0. CLOSING.
9.1 TIME, PLACE, AND MANNER OF CLOSING. Unless this Agreement has
been terminated and this purchase has been abandoned pursuant to the provisions
of Section 10, the closing ("Closing") will be held at the offices of Company at
Portland, Oregon, or such other place as the parties may agree, as soon as
practicable after the satisfaction of the various conditions precedent to the
Closing set forth herein. At the Closing the parties to this Agreement will
exchange certificates, and other instruments and documents in order to determine
whether the terms and conditions of this Agreement have been satisfied. Upon the
determination of each party that its conditions to consummate this purchase have
been satisfied or waived, Seller shall deliver to Buyer the certificate(s)
evidencing the Shares, duly endorsed for transfer, and Buyer shall deliver to
Seller that portion of the Purchase Price required to be delivered at the
Closing. After the Closing, Seller will execute, deliver, and acknowledge all
such further instruments of transfer and conveyance and will perform all such
other acts as Buyer may reasonably request to effectively transfer the Shares.
9.2 CONSUMMATION OF CLOSING. All acts, deliveries, and
confirmations comprising the Closing regardless of chronological sequence shall
be deemed to occur contemporaneously and simultaneously upon the occurrence of
the last act, delivery, or confirmation of the Closing and none of such acts,
deliveries, or confirmations shall be effective unless and until the last of the
same shall have occurred. The time of the Closing has been scheduled to
correspond with the close of business at the principal office of the Company
and, regardless of when the last act, delivery, or confirmation of the Closing
shall take place, the transfer of the Shares shall be deemed to occur as of the
close of business at the principal office of the Company on the date of the
Closing.
SECTION 10.0. TERMINATION.
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10.1 TERMINATION FOR CAUSE. If, pursuant to the provisions of
Section 7 or 8 of this Agreement, Seller or Buyer is not obligated at the
Closing to consummate this Agreement, then the party who is not so obligated may
terminate this Agreement.
10.2 TERMINATION WITHOUT CAUSE. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and abandoned at any
time without further obligation or liability on the part of any party in favor
of any other by mutual consent of Buyer and Seller.
10.3 TERMINATION PROCEDURE. Any party having the right to terminate
this Agreement due to a failure of a condition precedent contained in Sections 7
or 8 hereto may terminate this Agreement by delivering to the other party
written notice of termination, and thereupon, this Agreement will be terminated
without obligation or liability of any party.
SECTION 11.0. MISCELLANEOUS PROVISIONS.
11.1 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified, or supplemented only by a written agreement
signed by Buyer and Seller.
11.2 WAIVER OF COMPLIANCE; CONSENTS
11.2.1 Any failure of any party to comply with any
obligation, covenant, agreement, or condition herein may be waived, but only in
writing by the party entitled to the performance of such obligation, covenant,
or agreement or who has the benefit of such condition, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement, or condition will not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
11.2.2 Whenever this Agreement requires or permits consent
by or on behalf of any party hereto, such consent will be given in a manner
consistent with the requirements for a waiver of compliance as set forth above.
11.3 NOTICES. All notices, requests, demands, and other
communications required or permitted hereunder will be in writing and will be
deemed to have been duly given when delivered by hand or two days after being
mailed by certified or registered mail, return receipt requested, with postage
prepaid:
If to Buyer,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
▇▇▇▇▇▇▇ Holding Company, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
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with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Wellesley Law Associates
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, M 02181
or to such other person or address as Buyer furnishes to Seller pursuant to the
above.
If to Seller:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
c/o Armstrong Manufacturing Company
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Miller, Nash, Wiener, Hager & ▇▇▇▇▇▇▇
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other person or address as Seller furnishes to Buyer pursuant to the
above.
Notices to the Company shall be care of Seller prior to the Closing
Date and care of Buyer after the Closing Date.
11.4 TITLES AND CAPTIONS. All section titles or captions contained
in this Agreement are for convenience only and shall not be deemed part of the
context nor effect the interpretation of this Agreement.
11.5 ENTIRE AGREEMENT. This Agreement contains the entire
understanding between and among the parties and supersedes any prior
understandings and agreements among them respecting the subject matter of this
Agreement.
11.6 AGREEMENT BINDING. This Agreement shall be binding upon the
heirs, executors, administrators, successors and assigns of the parties hereto.
11.7 ATTORNEY FEES. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in any
appeal therefrom, it is agreed that the prevailing party shall be entitled to
reimbursement of all related reasonable costs and expenses, as well as
reasonable attorneys' fees to be fixed by the arbitrator, trial court, and/or
appellate court, as the case may be.
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11.8 COMPUTATION OF TIME. In computing any period of time pursuant
to this Agreement, the day of the act, event or default from which the
designated period of time begins to run shall be included, unless it is a
Saturday, Sunday, or a legal holiday, in which event the period shall begin to
run on the next day which is not a Saturday, Sunday, or legal holiday, in which
event the period shall run until the end of the next day thereafter which is not
a Saturday, Sunday, or legal holiday.
11.9 PRONOUNS AND PLURAL. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular, or plural
as the identity of the person or persons may require.
11.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the state of Oregon.
11.11 ARBITRATION. If at any time during the term of this Agreement
any dispute, difference, or disagreement shall arise upon or in respect of the
Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed upon
by the parties, or if no single arbiter can be agreed upon, three arbiters shall
be selected in accordance with the guidelines of the American Arbitration
Association, and such dispute, difference, or disagreement shall be settled by
binding arbitration. Judgment upon the award rendered by the arbiter(s) may be
entered in any court having jurisdiction thereof.
11.12 PRESUMPTION. This Agreement or any section thereof shall not
be construed against any party due to the fact that said Agreement or any
section thereof was drafted by said party.
11.13 FURTHER ACTION. The parties hereto shall execute and deliver
all documents, provide all information and take or forbear from all such action
as may be necessary or appropriate to achieve the purposes of the Agreement.
11.14 PARTIES IN INTEREST. Nothing herein shall be construed to be
to the benefit of any third party, nor is it intended that any provision shall
be for the benefit of any third party.
11.15 SAVINGS CLAUSE. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
Dated: August 6, 1997
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▇▇▇▇▇▇▇ Holding Company, Inc. ▇▇▇▇▇▇▇▇▇ Manufacturing Co.
a Delaware corporation as Buyer an Oregon corporation as Company
By: By:
--------------------------- ------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
----------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Individually as Seller
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EXHIBIT & SCHEDULE LISTS
EXHIBIT Description
------- -----------
2.5(A) Company 1995/1996 Financial Statements
2.5(B) Company June 1997 Financial Statements
1.3 Company Closing Financial Statements
SCHEDULE Description
-------- -----------
2.3 Subsidiaries
2.4 Exceptions to Section 2.4's representation of no default on
other contracts
2.6 Omissions/Exceptions to Events in the Financial Statements
2.7 Material Adverse Changes Since Financial Statement Dates
2.8 Exceptions to Company's marketable title to its property
2.9 Exceptions to Section 2.9 representation of no lawsuits
against Company
2.10 Exceptions to Section 2.10 representation of all taxes paid
and reported
2.13 List of insurance policies
2.14 Exceptions to Section 2.14 representations regarding employees
and labor matters
2.16 Exceptions to Section 2.16 representations regarding powers of
attorney
2.18 List of Company's contracts
2.19 List of all personal property
2.20 List of all real property
2.21 Officer, director, & employee info
2.22 List of intellectual property
2.23 Description of all "Employee Welfare Benefit Plans" and
"Employee Pension Benefit Plans"
3.4 Exceptions to Section 3.4's representation regarding effects
of the Agreement on other contracts, laws, etc.
