EXHIBIT 10.1
================================================================================
AGREEMENT AND PLAN OF MERGER
by and among
Thor Industries, Inc.,
Thor Acquisition Corp.,
Damon Corporation
and
Certain Parties listed on the
Signature Pages attached hereto
August 29, 2003
================================================================================
Table of Contents
Page
ARTICLE I THE MERGER...........................................................1
Section 1.01 The Merger..............................................1
Section 1.02 Effective Time..........................................2
Section 1.03 Effects of the Merger...................................2
Section 1.04 Articles of Incorporation and By-laws...................2
Section 1.05 Directors...............................................2
Section 1.06 Officers................................................3
Section 1.07 Cancellation and Conversion of the Capital Stock and
Stock Options of the Company and Acquisition
Subsidiary..............................................3
Section 1.08 Exchange Procedure; Payment.............................3
ARTICLE II MERGER CONSIDERATION; ADJUSTMENT; ESCROW............................4
Section 2.01 Merger Consideration; Adjustment........................4
Section 2.02 Escrow..................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE SHAREHOLDERS..................................................8
Section 3.01 Organization; Good Standing.............................8
Section 3.02 Capitalization; Title to Shares.........................9
Section 3.03 Subsidiaries...........................................10
Section 3.04 Authority Relative to this Agreement...................10
Section 3.05 Consents and Approvals; No Violations..................10
Section 3.06 Financial Statements...................................11
Section 3.07 Absence of Undisclosed Liabilities.....................11
Section 3.08 Absence of Certain Changes or Events...................11
Section 3.09 Company Agreements.....................................12
Section 3.10 Real Property..........................................13
Section 3.11 Machinery and Equipment................................14
Section 3.12 Inventories............................................15
Section 3.13 Accounts Receivable....................................15
Section 3.14 Intellectual Property Rights...........................15
Section 3.15 Licenses...............................................16
Section 3.16 Title to Assets........................................16
Section 3.17 Corporate Minute Books; Bank Accounts..................16
Section 3.18 Taxes..................................................17
Section 3.19 Employees; Benefit Plans...............................19
Section 3.20 Insurance..............................................22
Section 3.21 Litigation.............................................22
Section 3.22 Compliance with Laws...................................23
Section 3.23 NHTSA; Other Safety Standards..........................23
Section 3.24 Product Liability; Product Recalls.....................23
Section 3.25 Warranties.............................................24
Section 3.26 Dealer Network; Rebates and Refunds....................24
Section 3.27 Environmental Matters..................................24
Section 3.28 Disclosure.............................................27
ARTICLE III.A REPRESENTATIONS AND WARRANTIES OF THE HOLDERS...................27
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND
ACQUISITION SUBSIDIARY............................................29
Section 4.01 Organization; Good Standing............................29
Section 4.02 Authority Relative to this Agreement...................29
Section 4.03 Consents and Approvals; No Violations..................30
Section 4.04 Capitalization of Acquisition Subsidiary...............30
ARTICLE V CONDUCT AND TRANSACTIONS PRIOR TO CLOSING...........................31
Section 5.01 Conduct of Business....................................31
Section 5.02 Certain Changes or Events..............................31
Section 5.03 Access to Information..................................32
Section 5.04 Non-Solicitation.......................................32
Section 5.05 Additional Agreements..................................32
Section 5.06 Communications with Agencies...........................33
Section 5.07 Public Disclosure......................................33
Section 5.08 Supplements to and Amendments of the Disclosure
Schedule...............................................33
Section 5.09 Tax Matters............................................34
Section 5.10 Excluded Assets Transactions...........................34
ARTICLE V.A CERTAIN AGREEMENTS AMONG THE PARTIES following the closing........34
ARTICLE VI CONDITIONS TO CLOSING..............................................37
Section 6.01 Conditions to Obligations of Parent and
Acquisition Subsidiary.................................37
Section 6.02 Conditions to Obligations of the Company and
the Holders............................................38
ARTICLE VII CLOSING...........................................................39
Section 7.01 Closing Date...........................................39
Section 7.02 Deliveries by the Company and the Holders..............40
Section 7.03 Deliveries by Parent and Acquisition Subsidiary........40
ARTICLE VIII SURVIVAL; INDEMNIFICATION.......................................41
Section 8.01 Survival Past Closing..................................41
Section 8.02 Indemnification by the Holders.........................41
Section 8.03 Indemnification by Parent and Acquisition Subsidiary...42
Section 8.04 Limitation on Indemnification..........................42
Section 8.05 Exclusive Remedy.......................................43
Section 8.06 Indemnification Procedures.............................43
ARTICLE IX TERMINATION OF AGREEMENT..........................................45
Section 9.01 Events of Termination..................................45
Section 9.02 Effect of Termination..................................45
ARTICLE X FINDER'S FEES......................................................46
ARTICLE XI NOTICES............................................................46
ARTICLE XII MISCELLANEOUS.....................................................48
Section 12.01 Expenses...............................................48
Section 12.02 Entire Agreement.......................................49
Section 12.03 Amendments and Waivers.................................49
Section 12.04 Successors and Assigns.................................49
Section 12.05 Governing Law..........................................49
Section 12.06 Severability...........................................49
Section 12.07 No Third-Party Beneficiaries...........................50
Section 12.08 Attorneys' Fees........................................50
Section 12.09 Remedies...............................................50
Section 12.10 Captions...............................................50
Section 12.11 Counterparts...........................................50
Section 12.12 Certain References.....................................50
Section 12.13 Interpretation.........................................50
Section 12.14 Consent to Jurisdiction and Service of Process.........51
Section 12.15 Holder Representative..................................51
Section 12.16 Knowledge..............................................51
Section 12.17 Material Adverse Effect................................52
Section 12.18 Defined Terms..........................................52
EXHIBITS
EXHIBIT 1.02(a) Forms of Articles of Merger
EXHIBIT 2.02 Form of Escrow Agreement
EXHIBIT 6.01(d) Form of Opinion of Counsel for the Company
EXHIBIT 6.01(n)(i) Form of Real Property Lease (Northport Office)
EXHIBIT 6.01(n)(ii) Form of Real Property Lease (Plant 9)
EXHIBIT 6.01(n)(iii) Form of Real Property Lease (Plants 8 &12)
EXHIBIT 6.01(o) Form of Option to Purchase Leased Real Property
EXHIBIT 6.02(d) Form of Opinion of Counsel for Parent and
Acquisition Subsidiary
EXHIBIT 7.02(c) Form of Non-Competition Agreement
EXHIBIT 7.02(d) Form of Holder Release
AGREEMENT AND PLAN OF MERGER
Agreement AND plan of merger dated as of August 29, 2003 (this
"Agreement") by and among Thor Industries, Inc., a Delaware corporation
("Parent"), Thor Acquisition Corp., a Delaware corporation ("Acquisition
Subsidiary"), Damon Corporation, an Indiana corporation (the "Company"), the
holders of Company Common Stock (as defined below) whose names are listed at the
foot of this Agreement (the "Shareholders"), the holders of the Company Stock
Options (as defined below) whose names are listed at the foot of this Agreement
(the "Optionholders" and together with the Shareholders, the "Holders") and
Xxxxxx X. Xxxxxxxx, as representative of the Holders (the "Holder
Representative").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is engaged in the business (the "Business")
of manufacturing and marketing recreational vehicles, consisting of Class A
motor coaches and recreational park trailers (together, the "Products");
WHEREAS, the Company desires to merge with Acquisition Subsidiary
and Acquisition Subsidiary desires to merge with the Company, upon the terms and
subject to the conditions set forth herein, whereby (i) each issued and
outstanding share of voting common stock, no par value, of the Company (the
"Company Common Stock") will be converted into cash and (ii) each issued and
outstanding option to purchase shares of Company Common Stock (a "Company Stock
Option") will be canceled and the holders thereof will receive cash as
hereinafter described; and
WHEREAS, the Shareholders own, and will own immediately prior to
the Closing (as defined below), of record and beneficially, all of the Company
Common Stock, and the Optionholders own, and will own immediately prior to the
Closing, of record and beneficially, all of the Company Stock Options, and have
agreed to cause the Company to enter into this Agreement and consummate the
transactions contemplated hereby, and, in their capacity as Shareholders and
Optionholders, to enter into this Agreement and consummate the transactions
contemplated hereby.
NOW THEREFORE, in consideration of the promises and the mutual
agreements, covenants, representations and warranties herein contained, the
parties hereto agree as follows:
Article I
THE MERGER
Section 1.01 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL") and the Indiana Business Corporation Law (the "IBCL"), at the
Effective Time (as defined below) Acquisition Subsidiary will be merged with and
into the Company, Acquisition Subsidiary's separate corporate existence will
cease, and the Company will continue as the surviving corporation and as a
wholly-owned subsidiary of Parent (the "Merger"). The Company as the surviving
corporation after the Merger is sometimes referred to herein as the "Surviving
Corporation".
Section 1.02 Effective Time. The parties shall prepare, execute and deliver
articles of merger and/or other appropriate documents in substantially the
form(s) annexed hereto as Exhibit 1.02(a) (in any such case, the "Articles of
Merger") in accordance with the relevant provisions of the IBCL and the DGCL and
file same with the Secretary of State of the State of Indiana and the Secretary
of State of the State of Delaware, respectively. The Merger shall become
effective upon the filing of the Articles of Merger with the Secretary of State
of the State of Indiana or at such subsequent time or date as Parent and the
Company shall agree and specify in the Articles of Merger. The time at which the
Merger becomes effective is referred to in this Agreement as the "Effective
Time".
Section 1.03 Effects of the Merger. At and after the Effective Time, the
Surviving Corporation shall succeed to and possess, without further act or deed,
all of the estate, rights, privileges, powers and franchises, both public and
private, and all of the property, real, personal, and mixed, of the Company and
Acquisition Subsidiary; all debts due to the Company and Acquisition Subsidiary
shall be vested in the Surviving Corporation; all claims, demands, property,
rights, privileges, powers and franchises and every other interest of the
Company and Acquisition Subsidiary shall be as effectively the property of the
Surviving Corporation as they were of the Company and Acquisition Subsidiary,
respectively; the title to any real estate vested by deed or otherwise in the
Company and Acquisition Subsidiary shall not revert or be in any way impaired by
reason of the Merger, but shall be vested in the Surviving Corporation; all
rights of creditors and all liens upon any property of the Company and
Acquisition Subsidiary shall be preserved unimpaired, limited in lien to the
property affected by such lien at the Effective Time of the Merger; and all
debts, liabilities, and duties of the Company and Acquisition Subsidiary shall
thenceforth attach to the Surviving Corporation and may be enforced against it
to the same extent as if such debts, liabilities and duties had been incurred or
contracted by it.
Section 1.04 Articles of Incorporation and By-laws.
(a) The Articles of Incorporation, as amended, of the Company, as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The By-laws of the Company as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
Section 1.05 Directors. The directors of Acquisition Subsidiary immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 1.06 Officers. The officers of the Acquisition Subsidiary immediately
prior to the Effective Time shall be the officers of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 1.07 Cancellation and Conversion of the Capital Stock and Stock Options
of the Company and Acquisition Subsidiary. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
capital stock of the Company, Parent or Acquisition Subsidiary:
(a) Capital Stock of Acquisition Subsidiary. Each issued and
outstanding share of common stock of Acquisition Subsidiary shall be converted
into and shall become one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share of Company Common Stock
that is owned by the Company as treasury stock immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist and no consideration shall be delivered in exchange therefor.
(c) Cancellation of the Company Stock Options. Immediately prior to
the Effective Time, each issued and outstanding Company Stock Option, whether or
not then exercisable or vested, shall become fully exercisable and vested. At
the Effective Time, each Company Stock Option which is then issued and
outstanding shall be canceled and in consideration of such cancellation, Parent
shall pay to the holders of the Company Stock Options the amounts described in
Section 2.01(b)(ii). No payment shall be made with respect to any Company Stock
Option having an exercise price greater than the Merger Consideration Per Common
Share (as defined below).
(d) Conversion of the Company Common Stock. All of the shares of the
Company Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares to be canceled in accordance with Section 1.07(b)) shall
be converted, on a per share basis, into the right to receive the amounts
described in Section 2.01(b)(iii).
Section 1.08 Exchange Procedure; Payment.
(a) Exchange Procedure. At the Effective Time all shares of Company
Common Stock shall no longer be outstanding and shall automatically be canceled
and shall cease to exist, and each holder of a certificate that immediately
prior to the Effective Time represented any such shares (a "Certificate") shall
cease to have any rights with respect thereto, except the right to receive its
allocable share of the Merger Consideration in accordance with Sections 2.01 and
2.02. Upon surrender of a Certificate for cancellation, the Shareholder shall be
entitled to receive in exchange therefor the amount of cash into which the
shares formerly represented by such Certificate shall have been converted
pursuant to Section 1.07(d) and the Certificate so surrendered shall forthwith
be canceled.
(b) No Further Ownership Rights in Company Common Stock. All cash paid
upon the surrender of a Certificate in accordance with the terms of this Article
I shall be deemed to have been paid in full satisfaction of all rights
pertaining to the shares of Company Common Stock formerly represented by such
Certificate.
(c) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed, Parent shall pay in
respect of such lost, stolen or destroyed Certificate the applicable Merger
Consideration.
(d) Withholding Rights. Parent and Acquisition Subsidiary shall be
entitled to deduct and withhold from the Merger Consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock or of
Company Stock Options such amounts as Parent or Acquisition Subsidiary are
required to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986 as, amended (the "Code") or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld and
paid over to the appropriate taxing authority by Parent or Acquisition
Subsidiary such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock or any Company Stock Options in respect of which such deduction and
withholding was made by Parent or Acquisition Subsidiary.
Article II
MERGER CONSIDERATION; ADJUSTMENT; ESCROW
Section 2.01 Merger Consideration; Adjustment.
(a) (i) Determination of Merger Consideration. The total amount of
consideration to be paid by Parent or Acquisition Subsidiary in the aggregate
for (i) all of the shares of Company Common Stock, (ii) in respect of all
Company Stock Options and (iii) on account of the Company Expense Payments
pursuant to Section 12.01(b) shall be an amount equal to the sum of (A) the
Company's shareholders' equity as reflected on the Audited Closing Balance
Sheet, plus (B) Thirteen Million Five Hundred Thousand dollars ($13,500,000)
(the "Merger Consideration").
(ii) Estimated Merger Consideration. For purposes of determining
the amount of the Merger Consideration to be paid on the Closing Date (as
defined below), the estimated Merger Consideration (the "Estimated Merger
Consideration") shall be determined in the same manner as the Merger
Consideration is to be determined, except that the Estimated Merger
Consideration shall be based upon the unaudited balance sheet of the Company as
of August 31, 2003 (the "Estimated Closing Balance Sheet"), which shall be
delivered to Parent not later than three (3) business days prior to the Closing.
(b) Payment of the Estimated Merger Consideration. On the Closing Date the
Estimated Merger Consideration shall be paid as follows:
(i) an amount equal to the Company Expense Payments (as defined
below) shall be paid in the manner set forth in Section 12.01(b);
(ii) to the holders of the Company Stock Options, an amount in
respect thereof equal to the product of (A) the excess of
the Merger Consideration Per Common Share (as defined below)
over the exercise price thereof, if any, and (B) the number
of shares of Company Common Stock subject thereto (such
payment to be net of taxes required by law to be withheld
with respect thereto). For purposes hereof, the "Merger
Consideration Per Common Share" shall mean the quotient
obtained by dividing (A) the sum of (x) the Merger
Consideration (as adjusted pursuant to Section 2.01(c) less
the amounts paid pursuant to clause (i) above, and (y) the
aggregate exercise price of all Company Stock Options vested
and exercisable immediately prior to the Effective Time, by
(B) the sum of (x) the number of shares of Company Common
Stock issued and outstanding immediately prior to the
Effective Time, and (y) the number of shares of Company
Common Stock issuable upon exercise of the Company Stock
Options prior to the Effective Time, assuming the full
vesting and exercise of such Company Stock Options; and
(iii) to the holders of Company Common Stock on a per share
basis, the excess of (A) the Merger Consideration (as adjusted pursuant to
Section 2.01(c)) over (B) the aggregate of the portion of the Merger
Consideration payable pursuant to clauses (i) and (ii) of this Section 2.01(b).
All payments shall be paid on the Closing Date by wire transfer of immediately
available funds to an account or accounts designated by the Holder
Representative not later than two (2) business days prior to the Closing Date.
(c) Adjustment of the Merger Consideration. In order to conclusively
determine the Merger Consideration as of the Closing Date, Parent, with the
cooperation of the Shareholders, will cause a balance sheet of the Company as of
the Closing Date (the "Closing Balance Sheet") to be prepared as promptly as
practicable following the Closing Date and Parent will engage Deloitte & Touche
LLP ("D&T") to audit the Closing Balance Sheet (as audited, the "Audited Closing
Balance Sheet"). The Audited Closing Balance Sheet shall be prepared based upon
the Company's books and records in accordance with generally accepted accounting
principles, applied on a consistent basis ("GAAP"), with the adjustment provided
for in Section 12.01(c) and (i) the Audited Closing Balance Sheet shall contain
an aggregate accrual of Four Million Dollars ($4,000,000) for the following
items: (A) warranty, which shall include future warranty cost and product
liability cost, if any, incurred with respect to discontinued operations
included in Excluded Assets (B) vacation accrual, (C) show costs and promotions,
(D) bad debts, (E) incurred but not reported product liability and (F)
repurchase loss reserve, (ii) the depreciation of leasehold improvements shall
be calculated on a basis that is consistent with the Company's past practices,
(iii) no adjustment shall be made to the carrying value of inventory solely as a
result of the methodology used by the Company to account for cash discounts or
chassis rebates, (iv) only inventory (other than parts and services inventory)
which is not reasonably anticipated to be used in the ordinary course of
business in the two years following the Closing shall be deemed slow moving and
shall be written down to realizable value, and (v) the Audited Closing Balance
Sheet will not include the Excluded Assets or the consideration for the sale by
the Company of the Excluded Assets provided for in Section 5.10, or the amount
of the cash dividend distributed to the Shareholders pursuant to Section 5.10.
For purposes of this Agreement, "Excluded Assets" shall mean the assets, rights
and properties set forth on Schedule 2.01(c) attached hereto, including any
proceeds from the sale thereof.
(d) The parties hereto shall use their reasonable best efforts to
cause D&T to complete and deliver the Audited Closing Balance Sheet to Parent
and the Holder Representative within sixty (60) days after D&T's receipt of the
Closing Balance Sheet. The parties hereto shall cooperate with D&T in connection
with such audit and shall provide D&T with all books, records and other papers
necessary for such purpose.
(i) The Audited Closing Balance Sheet shall be final and binding
on the parties hereto, unless within thirty 30) days after
receipt thereof the Holder Representative shall give Parent
a notice of objection (an "Objection Notice"). The Objection
Notice shall specify each item the Holders object to in the
Audited Closing Balance Sheet, together with a calculation
of each disputed amount and shall include all supporting
calculations and data used in that determination. Any item
in the Audited Closing Balance Sheet that is not objected to
in the Objection Notice shall be deemed agreed and shall be
final and binding on the parties hereto.
(ii) In the event an Objection Notice is given, Parent and the
Holder Representative, together with D&T and the Company's
independent certified public accountants, Xxxxx, Xxxxxx and
Company LLC ("C&C"), shall meet in an effort to resolve any
objection and arrive at a final determination. If Parent and
the Holder Representative are unable to arrive at a final
determination within ten (10) days after an Objection Notice
is given, the matter shall be submitted for final
determination to a firm of independent certified public
accountants upon which the Holder Representative and Parent
mutually agree (the "Independent Firm"). The Independent
Firm shall make a final determination in writing as to all
matters in dispute within thirty (30) days after its
appointment, and such determination shall be final and
binding on the parties hereto.
(iii)Parent shall pay any fees owing to D&T in connection with
this Section 2.01(c) and the Holders shall pay any fees
owing to C&C in connection with this Section 2.01(c). Any
fees owing to the Independent Firm in connection with this
Section 2.01(c) shall be paid in direct proportion to the
amounts of the disputed items that are lost by the Holders
or Parent, as the case may be.
(e) Method of Adjustment. In the event that the Merger Consideration
as finally determined pursuant to Section 2.01(c) is greater than the Estimated
Merger Consideration as determined pursuant to Section 2.01(a)(ii), Parent shall
pay such difference in cash to the Holders, on a pro rata basis, based on the
respective portion of the Estimated Merger Consideration that each Holder
received pursuant to Section 2.01(b). In the event that the Merger Consideration
as finally determined pursuant to Section 2.01(c) is less than the Estimated
Merger Consideration as determined pursuant to Section 2.01(a)(ii), such
difference shall be withdrawn from the Escrowed Funds and delivered to Parent in
accordance with Section 2.02.
(f) Shareholders' Equity. For purposes of determining the Company's
shareholders' equity, the Audited Closing Balance Sheet shall have accrued or
reserved thereon each of the items specified in this Agreement as being required
to be accrued or reserved on the Audited Closing Balance Sheet, in the
respective amounts specified herein and, further, all such accruals and reserves
shall be determined as if the Audited Closing Balance Sheet were a year-end
balance sheet of the Company.
Section 2.02 Escrow. Notwithstanding anything to the contrary contained in this
Article II, on the Closing Date a portion of the Merger Consideration equal to
the sum of Three Million Five Hundred Thousand Dollars ($3,500,000) (the
"Escrowed Funds") will be deposited into an interest bearing escrow account, to
be held by 1st Source Bank (the "Escrow Agent") pursuant to an Escrow Agreement
to be entered into on the Closing Date among Parent, the Surviving Corporation,
the Holders, the Holder Representative and the Escrow Agent in substantially the
form annexed hereto as Exhibit 2.02 (the "Escrow Agreement"). The Escrowed Funds
will secure (x) any adjustments to the Merger Consideration as provided for in
Section 2.01(c) and (y) the Holders' indemnification obligations under Article
VIII of this Agreement. The Escrowed Funds will be withdrawn or released as
follows:
(i) upon the final determination of the Merger Consideration in
accordance with Section 2.01(c), if Parent is entitled to
receive any cash in connection with an adjustment of the
Merger Consideration, such amount shall be withdrawn from
the Escrowed Funds in accordance with Section 2.01(d) and
paid to Parent, within five (5) days after such final
determination;
(ii) following the withdrawal, if any, of Escrowed Funds as
provided in clause (i) above, a portion of the Escrowed
Funds will be released to the Holders such that the sum of
One Million Seven Hundred Fifty Thousand Dollars
($1,750,000) will remain as Escrowed Funds; provided,
however, that if less than $1,750,000 shall remain after the
withdrawal as provided in clause (i) above, the Holders,
within five (5) days after such withdrawal, shall deposit
such additional cash as needed to cause the Escrowed Funds
to be $1,750,000 (such deposit to be made by the Holders,
pro rata, based on the respective portion of the Merger
Consideration that each Holder is entitled to receive
pursuant to Section 2.01(b)); and
(iii)the remaining Escrowed Funds (including any interest earned
thereon), if any, will be released to the Holders on the
first (1st) anniversary of the Closing Date; provided,
however, that if prior to such first (1st) anniversary
Parent or the Surviving Corporation gives notice of a claim
or claims for indemnification pursuant to Article VIII of
this Agreement, then: (A) if any such claim is resolved
prior to such first (1st) anniversary, by judicial
determination or otherwise, any sums due Parent or the
Surviving Corporation shall be withdrawn from the Escrowed
Funds and paid to Parent or the Surviving Corporation within
five (5) days after such resolution or (B) if any such claim
is not resolved prior to such first (1st) anniversary, the
amount of such claim, plus the reasonably estimated amount
of legal fees and disbursements to be incurred in connection
therewith, shall be retained as Escrowed Funds until such
claim is resolved.
Any Escrowed Funds released to the Holders shall be paid to the Holders, pro
rata, based on the respective portion of the Merger Consideration that each
Holder is entitled to receive pursuant to Section 2.01(b).
Article III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS
Except as set forth on the disclosure schedule, with specific
reference to the Section or subsection of this Agreement to which the
information stated in such disclosure relates (the "Company Disclosure
Schedule"), the Company and the Shareholders hereby represent, warrant and
agree, as of the date of this Agreement and as of the Closing Date, as follows,
each of which representations, warranties and agreements shall be deemed to be
independently material and to have been relied upon by Parent:
Section 3.01 Organization; Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Indiana, has full power and authority, corporate and other, to own and operate
its property (including the operation of leased property) and to carry on the
Business as it is now being conducted and is duly qualified or licensed as a
foreign corporation to do business and is in good standing in each jurisdiction
(all of which other jurisdictions, if any, are listed on Schedule 3.01) in which
the character of the property owned or the nature of the business transacted by
it makes such qualification or licensing necessary, except that if the Company
is not so qualified in any such jurisdiction, it can become qualified without
any Material Adverse Effect (as defined below). True and complete copies of the
Company's Articles of Incorporation and By-laws (including all amendments
thereto), as in effect on the date hereof, have been delivered or made
available, to Parent and Acquisition Subsidiary.
Section 3.02 Capitalization; Title to Shares.
(a) The Company's authorized capital stock consists solely of 200,000
shares of Company Common Stock. As of the date hereof, (i) 71,321 shares of
Company Common Stock are issued and outstanding, (ii) 575 shares of Company
Common Stock are reserved for issuance under the Company's 1998 Stock Option
Plan and (iii) 575 Company Stock Options are issued and outstanding. All
outstanding shares of Company Common Stock are and will on the Closing Date be
validly issued, fully paid and non-assessable. The Shareholders own, of record
and beneficially, all of the Company Common Stock as of the date hereof and will
own the same, of record and beneficially, immediately prior to the Closing. The
Optionholders own, of record and beneficially, all of the issued and outstanding
Company Stock Options and will own the same, of record and beneficially,
immediately prior to the Closing.
(b) Schedule 3.02(b) is a true and complete list as of the date
hereof, and as of the Closing Date, of all issued and outstanding shares of the
Company Common Stock and the names and number of shares owned by each of the
holders thereof. Each Shareholder owns of record the number of shares of Company
Common Stock set forth next to such Shareholder's name on Schedule 3.02(b).
(c) Schedule 3.02(c) is a true and complete list, as of the date
hereof, and as of the Closing Date, of all issued and outstanding Company Stock
Options, the number of shares subject to each such Company Stock Option, the
grant dates and exercise prices thereof and the names of the holders thereof.
Each Optionholder owns of record the Company Stock Options set forth next to
such Optionholder's name on Schedule 3.02(c).
(d) Except as set forth on Schedule 3.02(c), there are no outstanding
subscriptions, options, rights, warrants or other commitments entitling any
person to purchase or otherwise subscribe for or acquire any shares of capital
stock of the Company or any security convertible into or exchangeable for shares
of capital stock of the Company, nor is there presently outstanding any security
convertible into or exchangeable for shares of capital stock of the Company, nor
has the Company or any Shareholder entered into any agreement with respect to
any of the foregoing. The Company has no obligation to repurchase, redeem or
otherwise acquire any shares of capital stock of or other equity or voting
interests in, the Company. There are no irrevocable proxies and no voting
agreements to which the Company or any Shareholder is a party with respect to
any shares of the capital stock or other voting securities of the Company.
Section 3.03 Subsidiaries. The Company does not have, nor has the Company ever
had, any subsidiaries and the Company does not own, nor has the Company ever
owned, directly or indirectly, any capital stock of or other equity or voting
interests in, any corporation, partnership, limited liability company, joint
venture, association or other entity.
Section 3.04 Authority Relative to this Agreement. The Company has the full
legal right, power and capacity and all authority and approval required by law
to enter into this Agreement and the documents and instruments to be executed
and delivered by it pursuant hereto and to perform fully its obligations
hereunder and thereunder. The execution, delivery and performance by the Company
of this Agreement and the documents and instruments to be executed and delivered
by it pursuant hereto have been duly authorized by all requisite corporate
action (including all action required of the Company's Board of Directors and
the Shareholders) and no other corporate proceedings on the part of the Company
are necessary to approve this Agreement or the documents and instruments to be
executed and delivered by it pursuant hereto, or to consummate the transactions
contemplated hereby or thereby. This Agreement and the documents and instruments
to be executed and delivered pursuant hereto are and will be duly executed and
delivered by the Company and are and will be the legal, valid and binding
obligations of the Company, enforceable against it in accordance with their
terms.
Section 3.05 Consents and Approvals; No Violations.
(a) Except for applicable requirements of the Securities Act of 1933,
as amended (the "Securities Act"), state Blue Sky laws and the filing of the
Articles of Merger as required by the IBCL and the DGCL, no filing or
registration with and no permit, authorization, consent or approval of, any
public body or authority, including courts of competent jurisdiction, domestic
or foreign ("Governmental Entity"), is necessary for the consummation by the
Company of the transactions contemplated by this Agreement.
(b) Neither the execution and delivery of this Agreement or the
documents and instruments to be executed and delivered pursuant hereto by the
Company nor the consummation by the Company of the transactions contemplated
hereby or thereby, nor compliance by the Company with any of the provisions
hereof or thereof, will (i) conflict with or result in any breach of any
provision of the Company's Articles of Incorporation, as amended, or By-laws,
(ii) result in a violation or breach of or constitute (with or without due
notice or lapse of time or both) a default or give rise to any right of
termination, cancellation or acceleration of or loss of a material benefit under
or result in the creation of any Lien (except for Permitted Liens (as defined
below)) in or upon any of the properties or assets of the Company under or give
rise to any increased, additional, accelerated or guaranteed rights or
entitlements under or require any consent, approval or notice under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
contract, guarantee, agreement, lease or other instrument or obligation to which
the Company is a party or by which it or any of its properties or assets may be
bound or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any of its properties or assets, except
in the case of (ii) or (iii) for violations, breaches or defaults which would
not, individually or in the aggregate, have a Material Adverse Effect and which
would not prevent or materially delay the consummation of the transactions
contemplated hereby. For purposes of this Agreement "Lien" means pledges,
mortgages, security interests, claims, charges and other encumbrances of any
kind or nature whatsoever and the term "Permitted Liens" shall mean Liens for
taxes, assessments or governmental charges or landlords', mechanics',
materialmen's, supplier's or similar Liens, in each case that are not
delinquent, which are being contested in good faith and which are not,
individually or in the aggregate, material.
Section 3.06 Financial Statements. Schedule 3.06 contains (a) the balance sheet
of the Company as of September 30, 2002, 2001 and 2000, respectively and the
related statements of income, shareholders' equity and cash flow for the fiscal
years then ended, together with the notes thereto, audited by C&C (the "Audited
Statements") and (b) the internally prepared unaudited balance sheet of the
Company as of July 26, 2003 and the related internally prepared unaudited
statements of income, shareholders' equity and cash flow for the period from
September 30, 2002 then ended (the "Unaudited Statements"). Except as set forth
on Schedule 3.06, all such statements (collectively, the "Financial Statements")
have been prepared in conformity with GAAP applied on a consistent basis
throughout the periods involved and fairly present in all material respects the
financial position of the Company as of the dates indicated and the results of
the Company's operations for the periods then ended (subject, in the case of the
Unaudited Statements, to normal and recurring year-end audit adjustments, none
of which, individually or in the aggregate, are expected to be material and the
absence of footnotes otherwise required under GAAP). The Financial Statements
reflect an accrual for Indiana real estate taxes at least equal to the amount of
such taxes as have been paid in the previous applicable fiscal period.
Section 3.07 Absence of Undisclosed Liabilities. Except as and to the extent
reflected or reserved against in the 2002 Audited Statements or as set forth on
Schedule 3.07, the Company had no liabilities or obligations that are required
to be recorded in accordance with GAAP, as of the date thereof (other than
obligations of continued performance under the Company's Agreements (as defined
below) and other than commitments and arrangements incident to the normal
conduct of business that are not required to be disclosed on Schedule 3.09(a),
known or unknown, secured or unsecured (whether accrued, absolute, contingent or
otherwise), including, without limitation, tax liabilities due or to become due.
Except as and to the extent reflected or reserved against in the Unaudited
Statements, the Company has incurred no liabilities or obligations since
September 30, 2002 other than current liabilities incurred in the ordinary
course of business consistent with past practice or in connection with the
transactions contemplated hereby.
Section 3.08 Absence of Certain Changes or Events. Since September 30, 2002, the
Company has conducted its business only in the ordinary course consistent with
past practice and there has not occurred any event or condition which has or may
reasonably be expected to have a Material Adverse Effect and, without limiting
the generality of the foregoing, the Company has not (a) incurred any obligation
or liability, secured or unsecured (whether accrued, absolute, contingent or
otherwise), whether due or to become due, except current liabilities in the
ordinary course of business consistent with past practice or those reflected on
the Unaudited Statements, (b) discharged or satisfied any Lien (except for
Permitted Liens) or paid any obligation or liability, except current liabilities
becoming due in the ordinary course of business consistent with past practice,
(c) mortgaged, pledged or subjected to a Lien (except for Permitted Liens) any
of the Company's properties or assets, (d) sold, transferred, licensed or
otherwise disposed of any of the Company's properties or assets other than in
the ordinary course of business consistent with past practice, (e) increased the
compensation payable or to become payable by it to any of its directors,
officers, salaried employees or agents whose total compensation for services
rendered after any such increase is more than $20,000, except as provided by an
agreement either written or oral, the terms of which have been disclosed on
Schedule 3.08, or made any bonus, percentage of compensation or other like
benefit accruing to or for the credit of any such directors, officers,
employees, consultants or agents of the Company, except in accordance with a
Company Benefit Plan (as defined below), (f) terminated or received any notice
of termination of any material contract, license, lease, trademark, patent,
patent application, copyright or trade name protection or other agreement, (g)
suffered any damage, destruction or loss (whether or not covered by insurance)
adversely affecting the Company's properties or assets which has or may
reasonably be expected to have a Material Adverse Effect, (h) suffered any
taking or seizure of all or any part of the Company's properties or assets by
condemnation or eminent domain, (i) experienced any material change in its
relations with its vendors, suppliers, lenders, dealers, distributors,
customers, employees, consultants or agents which has or may reasonably be
expected to have a Material Adverse Effect, (j) acquired any capital stock or
other securities of any corporation or any interest in any business enterprise
or otherwise made any loan or advance to or investment in any person, firm or
corporation (other than advances to employees in the ordinary course of business
consistent with past practice), (k) made any capital expenditures or capital
additions exceeding $20,000 singly or $100,000 in the aggregate, (1) except as
set forth on Schedule 3.08, instituted, settled or agreed to settle any
litigation, action or proceeding before any court or governmental body affecting
its financial condition, its property or its business operations involving a
claim in excess of $5,000, (m) made any purchase commitment in excess of normal
ordinary and usual requirements or made any material change in its selling,
pricing or personnel practices other than in the ordinary course of business
consistent with past practice, (n) made any change in accounting principles or
methods or in the manner of keeping books, accounts and records of the Company
which is, or may be, inconsistent with the principles or methodology by which
the Financial Statements have been prepared, (o) entered into any contract,
agreement, lease or other arrangement or transaction or taken any other action,
except in the ordinary course of business consistent with past practice, (p)
except as set forth on Schedule 3.08, changed the authorized capital stock of
the Company, redeemed any capital stock of the Company, issued, sold or
otherwise disposed of any capital stock of the Company or any option to acquire
capital stock of the Company or any securities convertible into or exchangeable
for capital stock of the Company, entered into any agreements creating funded
indebtedness of the Company other than as reflected in Note 4 of the Audited
Statements, (q) made any declaration, setting aside or payment of any dividend
or any other distribution (whether in cash, stock or property) in respect of its
capital stock (other than dividends described on Schedule 3.08 paid to the
Shareholders in connection with their respective tax obligations due to the
Company's status as an S Corporation ("S Corp. Dividends")) and as contemplated
by Section 5.10 or (r) entered into any agreement or made any commitment to do
any of the things described in the preceding subsections (a) through (q) of this
Section 3.08.
Section 3.09 Company Agreements.
(a) Except as set forth on Schedule 3.09(a), the Company is not a
party to, nor are any of the Company's assets bound by, any executory agreements
(including dealer and distributor agreements), purchase orders (other than
purchase commitments for raw materials and supplies in the ordinary course of
business), bailment agreements, equipment leases, commitments, contracts,
employment agreements, repurchase or floorplan financing agreements, warranties,
guarantees, understandings or other agreements (i) which involve or may involve
the payment of more than $50,000, (ii) which are of a duration in excess of
twelve (12) months from the date of execution thereof, (iii) to which any
shareholder, officer, director or employee of the Company or any member of such
person's immediate family, or any business entity in which such person is a
partner, investor, officer or director is a party in any capacity, (iv) which
contain a covenant restricting the ability of the Company (or which, following
the Closing, could restrict the ability of Parent or any of its subsidiaries
(including the Surviving Corporation) to compete in any business or in any
geographic area or to employ or solicit the employment of any persons or
requiring the Company to maintain the confidentiality of any information, (v)
which relate to any indebtedness (which term shall include capital leases and
operating leases) of the Company that is outstanding or may be incurred or any
guarantees of or by the Company of indebtedness of any other person or (vi)
which create or evidence a Lien upon any of the Company's assets or properties
(such agreements, together with any Real Property Leases (as defined below) set
forth on Schedule 3.10(b), being referred to herein collectively as the
"Company's Agreements"). True and complete copies of each of the Company's
Agreements (including all amendments thereto) have been delivered to Parent and
Acquisition Subsidiary. Each of the Company's Agreements is in full force and
effect, is between the Company and the counterparty named on Schedule 3.09(a),
has an expiration date as set forth on Schedule 3.09(a), has not been amended or
modified except as set forth on Schedule 3.09(a) and constitutes the entire
agreement between the parties thereto with respect to the subject matter
thereof. Except as set forth on Schedule 3.09(a), the Company is not, and to the
knowledge of the Company no other party to any Company Agreement is, in default
thereunder, nor does the Company have knowledge of any fact or circumstance with
respect to any of the Company's Agreements which upon notice or lapse of time
could give rise to a default thereunder.
(b) Other than purchase commitments for raw materials and supplies in
the ordinary course of business, the Company is neither a party to, nor is bound
by, any purchase order which involves or may involve the payment of more than
$10,000 to any single vendor or supplier.
Section 3.10 Real Property.
(a) Schedule 3.10(a) lists all real property interests owned by the
Company (the "Owned Real Property") and any contract for the purchase or sale of
real property to which the Company is a party or is bound. The Company has good
and marketable fee simple title to the Owned Real Property, subject only to
those exceptions to title identified on Schedule 3.10(a). Each parcel of Owned
Real Property and all improvements, located thereon (i) complies in all material
respects with all covenants, conditions and restrictions affecting such
property, either recorded or of which the Company has knowledge, (ii) is not
presently occupied or used by any party other than its owner, (iii) is not
subject to any option to purchase or lease, right of first refusal to purchase
or lease, reversionary interest or other instrument or Lien, whether recorded or
unrecorded, which would prohibit or require the consent or waiver of another
party to the transactions contemplated hereby or any subsequent sale or lease of
the property and (iv) is not subject to any mortgage, deed of trust or other
Lien securing debt which will not be entirely released and satisfied at the
Closing. There are no taxes currently levied against the Owned Real Property
which are due and payable and have not been paid. No party has provided goods or
services to or in connection with the Owned Real Property which will result in
any mechanic's, materialmens', supplier's or other Lien as a result of the
wrongful failure to pay for the same prior to Closing. The Company has made
available to Parent accurate and complete copies of all title insurance
policies, surveys and other documents and records relating to the Owned Real
Property that such parties have requested to the extent that such material was
actually in the possession of the Company.
(b) The real property leases listed on Schedule 3.10(b) (the "Real
Property Leases") constitute all leases, subleases or licenses of real property
(the "Leased Real Property" and together with the Owned Real Property, the "Real
Property"), whether written or oral, to which the Company is a party or is bound
(including any leases with respect to the Leased Real Property owned by one or
more of the Holders or any affiliates of the Holders). True and correct copies
of each of the written Real Property Leases (including all amendments thereto)
have been delivered to Parent and Acquisition Subsidiary. Schedule 3.10(b)
identifies each Real Property Lease by the premises covered thereby, the date of
the lease and all amendments and supplements thereto, the name of the landlord
thereunder and the term of the lease, including the expiration date thereof. The
Company has valid and enforceable leasehold interests in the Leased Real
Property, free and clear of all Liens (other than Permitted Liens). Each Real
Property Lease affords the Company peaceful and undisturbed possession of the
Leased Real Property covered thereby and there exists no event of default or
event, occurrence, condition or act (including the transactions contemplated by
this Agreement) on the part of the Company or, to the knowledge of the Company,
on the part of the lessor thereunder which, with the giving of notice, the lapse
of time or the happening of any further event or condition, would become a
material default under such Real Property Lease, give rise to a right in the
lessor to terminate the Real Property Lease or change any of the material terms
thereof or render the lessee liable to incur any expenditure under such Real
Property Lease. The monthly rental rates payable by the Company under each Real
Property Lease do not exceed the fair market monthly rental rates charged by
lessors for similarly situated properties within the respective real estate
market of such Real Property Lease. In the event any such Real Property Lease
requires the lessee to exercise, on or before the date hereof, an option to
renew in order to continue the term thereof, the Company properly exercised such
option to renew.
(c) The Real Property is the only real property necessary or required
in connection with the operation of the Business as it is now being conducted.
To the knowledge of the Company, the Real Property and improvements thereon may
lawfully be used in connection with the Business. Except to the extent that such
non-compliance would not have a Material Adverse Effect, the Real Property and
improvements are in compliance with all applicable laws, rules, regulations and
ordinances of all Governmental Entities including, but not limited to, zoning,
building, health, safety and Environmental Laws and the Company has not received
any notices of violations with respect thereto.
Section 3.11 Machinery and Equipment. All machinery, equipment and other
tangible assets, including, but not limited to, computer equipment, of the
Company necessary and utilized in the operation of the Business are in good
operating condition and in a state of good repair sufficient for the conduct of
normal operations without the necessity of any known capital expenditure in
excess of $15,000. The Company's assets and properties (including leased assets
and properties, if any) are adequate to enable the Company to conduct the
Business as now being conducted. The Company does not have any commitment or
plan to make any capital expenditure in excess of $15,000.
Section 3.12 Inventories. The inventories of the Company consist of raw
materials, work in process and finished goods of a quality and quantity usable
or salable in the normal course of the Business, except for any (a) slow moving
or obsolete inventory (in each case as determined pursuant to Section
2.01(c)(iii) and (iv)) or (b) inventory of below-standard quality, all of which
inventory is immaterial or has been written off or written down to realizable
value. The valuation at which the inventories of the Company are carried
reflects the normal inventory valuation policy of the Company (applied in
accordance with GAAP) which states that inventory at the lower of cost
(first-in-first-out-method) or market and the Company's regular costing
standards with respect to work in process and finished goods inventory.
Section 3.13 Accounts Receivable. The accounts receivable of the Company result
from and will result from bona fide sales made by the Company in the ordinary
course of business consistent with past practice and have been collected or will
be collectible in the ordinary course after provision for doubtful accounts and
other reserves required by GAAP. The accounts receivable of the Company that
will be recorded on the Audited Closing Balance Sheet will be collectible in the
ordinary course after provision for doubtful accounts and other reserves
required by GAAP as set forth thereon. To the Company's knowledge, the amounts
due or to become due, in respect of such accounts receivable are not in dispute
and there are no and will not be any setoffs or counterclaims asserted against
any of the accounts receivable of the Company.
Section 3.14 Intellectual Property Rights. Attached hereto as Schedule 3.14 is a
true and complete list of all Intellectual Property Rights (as defined below)
used or held for use by the Company in connection with the Business, other than
computer software programs which are generally sold in consumer retail stores.
The Company shall disclose any patent application in which the Company has any
interest to Parent and Acquisition Subsidiary on a separate confidential list.
The Company owns or is validly licensed or otherwise has the right to use, all
Intellectual Property Rights used or held for use by the Company and all
goodwill associated therewith on or with respect to the Products in the same
manner in which any such Intellectual Property Right have been or are now being
used. The Company has not infringed upon, misappropriated or otherwise violated
any Intellectual Property Right or other proprietary information of any other
person. There is no claim, demand or proceeding pending or, to the knowledge of
the Company, threatened, that pertains to or challenges the right of the Company
to use any of the Intellectual Property Rights identified on Schedule 3.14
(including any claim that the Company must license or refrain from using any
Intellectual Property Rights or other proprietary information of any other
person). The Company has not granted any license or other right and has no
obligation to grant any license or other right with respect thereto. To the
knowledge of the Company, no other person has infringed upon, misappropriated or
otherwise violated any Intellectual Property Right of the Company. Without
limiting the generality of the foregoing, the Company is the licensee under
fully paid, enforceable licenses that govern its use of software in which any
third party has Intellectual Property Rights. Each of such licenses remains in
full force and effect. The Company has not breached any such license in any
material respect, and the Company has paid all amounts that have heretofore
become due and payable in respect of such licenses. As used in this Agreement,
"Intellectual Property Rights" means, collectively, with respect to the U.S.,
Canada, Great Britain and Japan, any and all now known or hereafter known
tangible and intangible: (i) rights associated with works of authorship
including copyrights, moral rights and mask-works, (ii) trademark and trade name
rights and similar rights, (iii) trade secret rights, (iv) patent rights,
designs, algorithms, computer programs, methods of doing business, other
proprietary ideas, designs, concepts, techniques, inventions, discoveries and
improvements, whether or not patentable and other industrial property rights,
(v) all other intellectual and industrial property rights of every kind and
nature and however designated, whether arising by operation of law, contract,
license or otherwise, (vi) all registrations, initial applications, renewals,
extensions, continuations, continuations-in-part, divisions or reissues thereof
now or hereafter existing, made or in force (including any rights in any of the
foregoing), (vii) Internet websites, rights in domain names, computer programs
and software and (viii) any other service xxxx, design, logo, trade secret,
know-how, customer list or financial, business, marketing or other information,
material or industrial property of a party or any of its affiliates.
Section 3.15 Licenses. The Company possesses all patents, franchises, permits,
licenses, certificates and consents required from any Governmental Entity or any
other person necessary to enable the Company to carry on the Business as now
conducted and to own and operate its properties (including leased property) as
now owned and operated (collectively, "Licenses"), except for those licenses
that are not, individually or in the aggregate material to the operation of the
Business. Each of the Licenses will remain in full force and effect following
consummation of the transactions contemplated by this Agreement. Schedule 3.15
sets forth a true and complete list of all such Licenses.
Section 3.16 Title to Assets. Except as set forth on Schedule 3.16, all of the
Company's assets and properties and all assets and properties necessary or
required in connection with the operation of the Business will, on the Closing
Date, be owned by the Company, free and clear of all Liens whatsoever (except
Permitted Liens) and the consummation of the transactions contemplated by this
Agreement will not give rise to any Lien on such assets or properties. With
respect to leased Real Property, the Company holds and on the Closing Date will
hold, a valid leasehold interest in and to the Real Property Leases, in each
case free and clear of all Liens whatsoever (except Permitted Liens). There are
not and on the Closing Date there will not be, any outstanding agreements,
options, commitments or rights with, to or in any third party to acquire or use
any of the Company's assets or properties.
Section 3.17 Corporate Minute Books; Bank Accounts.
(a) The minute books of the Company contain complete and accurate
records of all meetings which were required to be convened and other corporate
actions of its shareholders and directors and committees of directors (if any)
which were required to be taken, in each case pursuant to the Company's Articles
of Incorporation, as amended, the Indiana Business Corporation Law, as amended,
and/or any agreements to which the Company is a party. True and complete copies
of the minute books have been delivered or made available to, Parent.
(b) Schedule 3.17(b) contains a complete and correct list of all bank
accounts and safe deposit boxes of the Company and persons authorized to sign or
otherwise act with respect thereto as of the date hereof and a complete and
correct list of all persons holding a general or special power of attorney
granted by the Company and a complete and correct copy thereof.
Section 3.18 Taxes.
(a) The Company has made a valid election pursuant to section
1362(a)(1) of the Code, pursuant to which the persons who were shareholders of
the Company on the date of that election have made valid consents pursuant to
Section 1362(a)(2) of the Code, effective not later than the first taxable year
of the Company (and any predecessor company) commencing February 5, 1988 (the
"First S Corp. Year"), to be treated as an "S Corporation" within the meaning of
sections 1361 and 1362 of the Code and the Company and its shareholders have
made a similarly effective election and consents under the comparable provisions
of the laws of the State of Indiana (the "S Corp. State") effective not later
than the First S Corp. Year. For the First S Corp. Year and all subsequent
taxable years of the Company, the Company at all times qualified as an S
Corporation and incurred no liability for federal income tax (including under
Sections 1374 and 1375 of the Code) and no liability for any tax of the S Corp.
State based on income.
(b) The Company (i) has filed all federal, state and local tax returns
required by law in the legally prescribed time and manner and such returns are
true and complete in all material respects, (ii) has timely paid all taxes shown
as due on such returns and all taxes otherwise due and the Unaudited Statements
adequately provided in accordance with GAAP for all taxes payable by the Company
(in addition to any reserve for deferred taxes established to reflect timing
differences between book and tax income) for all taxable periods and portions
thereof or, with respect to the period in which the Closing occurs, such taxes
(excluding those taxes resulting from or attributable to the transactions
contemplated by this Agreement) will be accrued through the Closing Date on the
Audited Closing Balance Sheet, (iii) has made all payments required by any
governmental program of workers social security or unemployment compensation,
(iv) has withheld and, to the extent due, paid over to the appropriate
Governmental Entity all amounts required by law to be withheld from the wages or
salaries of employees, (v) is not liable for any arrears of wages or any taxes
or penalties for failure to comply with any of the foregoing and (vi) has paid
or will pay over to the appropriate Governmental Entity all sales or use taxes
referable to the Company's operations due as of the Closing Date and has made or
will make provisions for payment of all such taxes accrued as of such date, but
not yet due. There are no claims pending or, to the knowledge of the Company,
threatened against the Company for past due taxes. The Company has not requested
any extension of the time within which to file any tax return in respect of any
taxable year which has not since been filed, and no outstanding waivers or
comparable consents regarding the application of the statute of limitations with
respect to any taxes or tax returns has been given by or on behalf of the
Company. True and complete copies of all Federal and State income tax returns of
the Company have been delivered to Parent.
(c) No deficiencies for any taxes have been proposed, asserted or
assessed against the Company that are not adequately reflected in the Financial
Statements or that will not be adequately reflected in the Audited Closing
Balance Sheet (excluding those taxes resulting from or attributable to the
transactions contemplated by this Agreement) and no requests for waivers of the
time to assess any such taxes have been granted or are pending. There is no
audit, examination, deficiency or refund litigation pending with respect to
taxes and during the past three years no taxing authority has given written
notice of the intent to commence any such examination, audit or refund
litigation and which such examination, audit or refund litigation has not yet
ended. None of the assets or properties of the Company is subject to any tax
lien, other than any such liens for taxes which are not due and payable, which
may thereafter be paid without penalty or the validity of which are being
contested in good faith by appropriate proceedings and for which adequate
provisions are being maintained in accordance with GAAP.
(d) No claim has been made in writing by a taxing authority in a
jurisdiction where the Company does not file tax returns to the effect that the
Company is or may be subject to taxation by that jurisdiction.
(e) The Company has not been a member of an affiliated, consolidated,
combined or unitary group for tax purposes or made any election or participated
in any arrangement whereby any tax liability or any tax asset of the Company was
determined or taken into account for tax purposes with reference to or in
conjunction with any tax liability or any tax asset of any other person.
(f) The Company is not a party to any tax sharing agreement or to any
other agreement or arrangement, as a result of which liability of the Company to
any taxing authority is determined or taken into account with reference to the
activities of any other person and the Company is not currently under any
obligation to pay any amounts as a result of having been a party to such an
agreement or arrangement, regardless of whether such tax is imposed on the
Company.
(g) The Company will not be required to include any item of income, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any (i) change
made prior to the Closing Date in method of accounting for a taxable period
ending on or prior to the Closing Date, (ii) "closing agreement" as described in
Section 7121 of the Code (or corresponding or similar provision of stock, local
or foreign income Tax law) executed prior to the Closing Date, (iii) installment
sale or open transaction disposition made on or prior to the Closing Date or
(iv) prepaid amount received on or prior to the Closing Date.
(h) The Company has not, in the past 10 years, (i) acquired assets
from another corporation in a transaction in which the Company's adjusted tax
basis for the acquired assets was determined, in whole or in part, by reference
to the adjusted tax basis of the acquired assets (or any other property) in the
hands of the transferor or (ii) acquired the stock of any corporation which is a
qualified subchapter S subsidiary under the Code.
(i) As used in this Agreement, "taxes" shall include all (x) domestic
and foreign (whether national, federal, state, provincial, local or otherwise)
income, franchise, real and personal property, sales, excise, employment,
payroll, social security, value-added, ad valorem, transfer, withholding and
other taxes, including taxes based on or measured by gross receipts, profits,
sales, use or occupation, tariffs, levies, impositions, assessments or
governmental charges of any nature whatsoever, including any interest, penalties
or additions with respect to any of the foregoing and (y) liability for the
payment of any amounts as a result of being party to any tax sharing agreement
or as a result of any express or implied obligation to indemnify any other
person with respect to the payment of any amounts of the types described in
clause (x) or (y). As used in this Agreement, "tax return" shall mean any
report, return, document, declaration or other information or filing required to
be supplied to any taxing authority or jurisdiction with respect to taxes,
including information returns, any documents with respect to or accompanying
payments of estimated taxes or with respect to or accompanying requests for the
extension of time in which to file any such report, return, document,
declaration or other information.
Section 3.19 Employees; Benefit Plans.
(a) Employees. Attached hereto as Schedule 3.19(a) is a true and
complete list of the names and current salary rates of all present directors,
officers and salaried employees of the Company whose total current annual
compensation is $30,000 or more, together with a summary showing the salaries,
bonuses, additional compensation and other like benefits, if any, paid or
payable to such persons for the fiscal year ending September 30, 2002 and that
are expected to be paid or payable to such persons for the fiscal year ended
September 30, 2003. Except as set forth on Schedule 3.19(a), all salaries,
bonuses, additional compensation and other like benefits, including vacation, of
all past and present employees of the Company shall be properly accrued and
reserved on the Audited Closing Balance Sheet in accordance with GAAP. To the
knowledge of the Company, no officer or "Key Employee" (which means, as used
herein, any salaried employee whose annual compensation is $50,000 or more) of
the Company intends to terminate his or her employment with the Company nor does
the Company have any present intention to terminate the employment of any
officer or such Key Employee, whether as a result of the consummation of the
transactions contemplated hereby or otherwise. The Company (i) has correctly
categorized all employees as either employees or independent contractors for
federal tax purposes and is in compliance in all material respects with all
applicable federal, state and local laws, rules and regulations (domestic and
foreign) respecting their employment, employment practices, labor, terms and
conditions of employment and wages and hours, in each case, with respect to
employees, (ii) is not liable for any payment to any trust or other fund or to
any governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits for employees and (iii)
has provided employees with the benefits to which they are entitled pursuant to
the terms of all Company Benefit Plans (as defined below).
(b) Employment, Severance and Stay Bonus Agreements. Except as set
forth on Schedule 3.19(b), the Company is not, nor will it be on the Closing
Date, a party to or bound by (i) any contract with any present or former
director, officer, employee or consultant of the Company, (ii) any employment,
termination, severance or stay bonus agreement, (iii) any agreement with any
director, officer, employee or consultant of the Company (A) the benefits of
which are contingent or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company of the nature of any of the
transactions contemplated by this Agreement, (B) providing any term of
employment or compensation guarantee or (C) providing severance benefits or
other benefits after the termination of employment or service of such officer or
employee or (iv) any agreement or plan, including any stock option plan or stock
purchase plan, any of the benefits of which will be increased or the vesting or
other realization of the benefits of which will be accelerated, by the
occurrence of the transactions contemplated by this Agreement or the value of
any of the benefits of which will be calculated on the basis of the transactions
contemplated by this Agreement. The Company has not made or become obligated to
make or will, as a result of any event connected with the transactions
contemplated hereby, make or become obligated to make, any "excess parachute
payment" as defined in Section 280G of the Code (without regard to subsection
(b)(4) thereof). Any amount that could be received (whether in cash, property or
vesting of property) as a result of the transaction contemplated by this
Agreement (or their termination of service incidental to such transaction) by
any officer, director, employee or independent contractor of the Company who is
a "disqualified individual" (as defined in proposed Treasury Regulation Section
1.280G-1), under any employment arrangement or Company Benefit Plan (as defined
below) would not be characterized as an "excess parachute payment" as defined in
Section 280G of the Code.
(c) Benefit Plans. Schedule 3.19(c) contains a true and complete list
of all bonus, profit-sharing, stock purchase, stock option, equity based,
pension, retirement, health, welfare, severance pay, change in control,
employment or any other current or deferred remuneration or compensation plan,
arrangement or practice of any kind and other fringe benefits, including,
without limitation, all "employee benefit plans" (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), all
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA) and all
"employee pension benefit plans" (as defined in Section 3(2) of ERISA)
(collectively, "Company Benefit Plans") maintained or contributed to by the
Company or any person or entity that, together with the Company, is treated as a
single employer (a "Commonly Controlled Entity") under Section 414(b), (c), (m)
or (o) of the Code, for the benefit of any current or former directors,
officers, employees or consultants of the Company. Except as described on
Schedule 3.19(c), the Company has no Company Benefit Plan currently in existence
which is subject to the requirements of ERISA. With respect to each Company
Benefit Plan:
(i) The Company has provided or made available to Parent, true
and complete copies of (A) each Company Benefit Plan (or, in
the case of any unwritten Company Benefit Plans,
descriptions thereof), (B) the most recent annual report on
Form 5500 required to be filed with the IRS with respect to
each Company Benefit Plan (if any such report was required),
(C) the most recent summary plan description for each
Company Benefit Plan for which such summary plan description
is required and (D) each trust agreement and group annuity
contract relating to any Company Benefit Plan. Each Company
Benefit Plan has been administered in accordance with its
terms. The Company and all the Company Benefit Plans are in
compliance in all material respects with all applicable
provisions of ERISA and the Code and all other applicable
law. The Company has timely filed all required documents and
reports, including IRS Form 5500, for each such Company
Benefit Plan with all applicable governmental authorities
and has timely furnished all required documents to the
participants or beneficiaries of each such Company Benefit
Plan. No individuals have been improperly excluded from
participating in any Company Benefit Plan;
(ii) Neither the Company nor any Commonly Controlled Entity has
ever maintained, contributed to or been obligated to
contribute to any Company Benefit Plan that is subject to
Title IV of ERISA or Section 412 of the Code;
(iii)With respect to any Company Benefit Plan that is an
employee welfare benefit plan, there are no understandings,
agreements or undertakings, written or oral, that would
prevent any such plan (including any such plan covering
retirees or other former employees) from being amended or
terminated without liability to the Company on or at any
time after the Effective Time;
(iv) Except as set forth on Schedule 3.19(c), each Company
Benefit Plan that is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA and that is
intended to be qualified under Section 401(a) of the Code,
has received a favorable determination letter from the IRS
and there are not any circumstances which could result in
revocation of any such favorable determination letter. There
is no pending or, to the knowledge of the Company,
threatened litigation relating to any of the Company Benefit
Plans. The Company has not engaged in a transaction with
respect to any Company Benefit Plan that, assuming the
taxable period of such transaction expired as of the date
hereof, could subject the Company to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i)
of ERISA;
(v) All contributions made or required to be made under the
terms of any Company Benefit Plan for any period since
January 1, 2002 are set forth on Schedule 3.19(c) and all
such contributions have been timely made or have been
reflected on the Financial Statements or, with respect to
the period in which the Closing occurs, will be accrued
through the Closing Date on the Audited Closing Balance
Sheet;
(vi) The Company has no obligations for retiree health and life
benefits under any Company Benefit Plan nor has the Company
ever represented, promised or contracted (whether in oral or
written form) to any employee(s) that such employee(s) would
be provided with retiree health or life benefits.
(d) Collective Bargaining Agreements. None of the Company's employees
is covered by a collective bargaining agreement and there is no union or other
organization seeking or claiming to represent any such employees. There is no
labor dispute, strike, work stoppage or lockout or, to the knowledge of the
Company, threat thereof, by or with respect to any employee of the Company.
Section 3.20 Insurance. Attached hereto as Schedule 3.20 is a true and complete
list of all insurance policies in force with respect to the Company's assets and
the Business of the Company, identifying the type of coverage, the coverage
limit, the term thereof and the annual premiums payable thereon. To the
knowledge of the Company, all such policies are adequate to insure the risks
covered thereby. The Company is not, nor will it be on the Closing Date, in
default in any respect under any such policy and the Company shall continue such
policies in force and effect through the Closing Date.
Section 3.21 Litigation. Schedule 3.21 sets forth each legal action, suit,
arbitration or other legal or administrative proceeding or investigation before
any Governmental Entity pending or, to the knowledge of the Company, threatened,
to which the Company or any Holder is a party that (a) affects the Company, the
Business or any of the Company's properties or assets, (b) questions the
validity of this Agreement or any other documents or instruments to be executed
and delivered by the Company or any of the Holders pursuant hereto or the right
of the Company or any of the Holders to enter into this Agreement or any such
other documents or instruments or to consummate the transactions contemplated
hereby or thereby or (c) if adversely determined, would be likely to have a
material adverse effect on the ability of the Company or any of the Holders to
perform their respective obligations under this Agreement or any such other
documents or instruments. To the knowledge of the Company, except as set forth
on Schedule 3.21, there is no fact or facts existing which could be reasonably
expected to result in, nor is there any basis for, any such action, suit,
arbitration or other proceeding or investigation. Schedule 3.21 identifies, with
respect to each action, suit, arbitration or other proceeding or investigation
set forth thereon, the parties thereto, the nature of the claim, the status
thereof, the court or other tribunal in which such claim is being heard and
whether such claim is fully covered by insurance. The Financial Statements
include and the Audited Closing Balance Sheet will include, an adequate reserve,
determined in accordance with GAAP, for all liability or potential liability
resulting or arising from any action, suit, arbitration or other proceeding or
investigation listed on Schedule 3.21. The Company is not a party to or subject
to any order, writ, injunction, decree, judgment or other restriction of any
Governmental Entity which has or could be reasonably likely to have a Material
Adverse Effect or could be reasonably likely to prevent or materially delay the
Company's ability to enter into this Agreement or any other documents or
instruments to be executed and delivered pursuant hereto or consummate the
transactions contemplated hereby or thereby.
Section 3.22 Compliance with Laws. The Company has complied with, is in
compliance with and has not received notice of any violation of, any and all
applicable laws, rules, regulations and ordinances regulating or relating to the
Business, including but not limited to those relating to the employment of labor
(including labor who are not U.S. citizens), the establishment and maintenance
of working conditions for labor, employee safety, environmental and conservation
matters, the manufacture, sale and distribution of the Products, the North
American Free Trade Agreement, as amended, and the establishment and maintenance
of the Company's relationships with suppliers and customers, except to the
extent such non-compliance would not have a Material Adverse Effect.
Section 3.23 NHTSA; Other Safety Standards. The Company has not received any
notices or other correspondence from the National Highway Traffic Safety
Administration ("NHTSA") relating to the Products. To the knowledge of the
Company, the Company has complied with all NHTSA requirements, including but not
limited to Federal Motor Vehicle Safety Standards, in effect from time to time
in connection with the manufacture of the Products. To the knowledge of the
Company, all of the Products are and have been, at the time of sale, in
compliance with all other safety standards, including, but not limited to, all
standards of the Recreational Vehicle Industry Association and the Canadian
Standards Association, those imposed on the Business by statute, rule or
regulation of any Governmental Entity or industry association and the Company
has not received notice of any such infractions or been required to undertake
any remedial measures in response thereto.
Section 3.24 Product Liability; Product Recalls.
(a) To the knowledge of the Company, all of the Products that the
Company has manufactured and sold have been merchantable, free from defects in
material and workmanship and suitable for the purpose for which they were sold.
The Products have not been subject to any product recall (including any safety
or NHTSA-related recall) or service bulletin and, to the knowledge of the
Company, there is no fact or facts existing which may reasonably be expected to
result in any such recall or service bulletin. Except as set forth on Schedule
3.24(a), there is no legal action, suit, arbitration or other legal or
administrative proceeding or investigation before any Governmental Entity,
pending or, to the knowledge of the Company, threatened, involving any product
liability, product recall or otherwise involving any Products. To the knowledge
of the Company, except as disclosed on Schedule 3.24(a), there is no fact or
facts existing which could be reasonably expected to result in, nor is there any
basis for, any such action, suit, arbitration or other proceeding or
investigation.
(b) The Company has insurance against loss or damage arising out of
product liability, true and complete copies of which have been delivered to
Parent. Such insurance covers all incidents of loss which have occurred prior to
the date hereof or which may occur resulting from the Products sold prior to the
Closing. All incidents of damage claims paid by the Company or by its insurance
carrier in the two (2) year period preceding the date of this Agreement are
described on Schedule 3.24(b). The Financial Statements include, except as set
forth on Schedule 3.24(b), and the Audited Closing Balance Sheet will include,
an adequate reserve (or shall otherwise reflect an appropriate accrual),
determined in accordance with GAAP, for all liability or potential liability
resulting or arising from any product recall that has been initiated or breach
of warranty claims that have been asserted or that are reasonably likely to be
initiated or asserted, in connection with Products manufactured and sold by the
Company, including the matters set forth on Schedule 3.24(b), in each case, as
of the date of such Financial Statements or Audited Closing Balance Sheet, as
the case may be.
Section 3.25 Warranties. There are no oral or written warranties on the Products
manufactured or sold by the Company, whether express or implied, other than as
set forth and described on Schedule 3.25 and any implied warranties that may be
imposed by operation of law. Warranty costs relating to products produced by
discontinued operations included in the Excluded Assets did not exceed $69,005
during the period from September 30, 2003 through July 26, 2003 and, to the
knowledge of the Company, no more than 266 such units remain eligible for
warranty under the warranty agreements covering such units.
Section 3.26 Dealer Network; Rebates and Refunds.
(a) The Company has provided Parent and Acquisition Subsidiary with a
true and complete list of the Company's top thirty (30) dealers in terms of the
Company's sales, together with the sales made thereto, for the annual periods
October 1, 2000 through September 30, 2002 and for the period October 1, 2002
through the date of this Agreement. True and complete copies of all dealer
agreements have been delivered to Parent. To the knowledge of the Company, there
has been no adverse change in the Company's relationship with any of the top
thirty (30) dealers, nor, to the knowledge of the Company, has indicated to the
Company that it does not intend to continue to carry the Products, nor has there
been any adverse change in the Company's relationship with any such dealers.
(b) The Company has disclosed to Parent (i) all significant refunds,
rebates, discounts and return policies or practices that the Company has engaged
in with respect to persons supplying goods and services to the Company and (ii)
all annual programs relating to refunds, rebates, discounts and return policies
or practices that the Company has engaged in with respect to furnishing the
Products to others in connection with the Business.
Section 3.27 Environmental Matters.
(a) Permits and Authorizations. The Company possesses, and at all
times has possessed, all Environmental Permits (as defined below) necessary to
conduct the Business and related operations.
(b) Compliance. The Company is, and at all time has been, in
compliance with all applicable Environmental Laws (as defined below) and all
Environmental Permits other than minor infractions which, individually or in the
aggregate, will not require the expenditure of more than a nominal amount by the
Company for compliance with respect thereto, remediation thereof or other
liability therefor and the Company has not received any (i) oral or written
communication from any Governmental Entity or other person that alleges that the
Company has violated or is liable under any Environmental Law or Environmental
Permit or (ii) written request for information pursuant to Section 104(e) of the
U.S. Comprehensive Environmental Response, Compensation and Liability Act or
similar state statute concerning the disposal of Hazardous Materials (as defined
below). The Company does not have knowledge of any past events, conditions,
circumstances, activities, practices, incidents, actions or plans of the Company
which may cause noncompliance with all applicable Environmental Laws and all
Environmental Permits or which may give rise to any liability for any claim,
action, suit, proceeding, hearing or investigation, based on or related to the
disposal, storage, handling, manufacture, processing, distribution, use,
treatment or transportation or the emission, discharge, release or threatened
release into the environment by the Company of any Hazardous Materials, other
than minor infractions which, individually or in the aggregate, will not require
the expenditure of more than a nominal amount by the Company for compliance with
respect thereto, remediation thereof or other liability therefor. The Company
has reported, to the extent required by all applicable Environmental Laws, all
past and present sites owned or operated by the Company where Hazardous
Materials have been treated, stored, disposed of or otherwise handled. The
Company has not generated, treated, stored, processed, distributed, used,
transported, disposed of or otherwise handled Hazardous Materials, except in
compliance with all applicable Environmental Laws, other than minor infractions
which, individually or in the aggregate, will not require the expenditure of
more than a nominal amount by the Company for compliance with respect thereto,
remediation thereof or other liability therefor.
(c) Environmental Claims. There are no Environmental Claims (as
defined below) (i) pending or, to the knowledge of the Company, threatened
against the Company or (ii) to the knowledge of the Company, pending or
threatened against any person whose liability for any Environmental Claim the
Company has retained or assumed, either contractually or by operation of law.
The Company has not contractually retained or assumed any liabilities or
obligations that would be expected to provide the basis for any Environmental
Claim. There are not any, nor have there been any, Environmental Claims pending
or, to the knowledge of the Company, threatened against the Company by any
landlord or third party pursuant to any of the Real Property Leases, nor, to the
knowledge of the Company, is there currently or has there been previously, any
basis therefor. There is no on-site or off-site location to which the Company
has transported or disposed of Hazardous Materials or arranged for the
transportation or disposal of Hazardous Materials which is the subject of any
enforcement action or any other investigation by any Governmental Entity which
could lead to any claim against the Company for any clean-up cost, remedial
work, damage to natural resources, property damage or personal injury,
including, but not limited to, any claim under any applicable Environmental Law
and there is no on-site or off-site location to which the Company has
transported or disposed of Hazardous Materials or arranged for the
transportation or disposal of Hazardous Materials which could become the subject
of any enforcement action by any Governmental Entity or any Environmental Claim
which could lead to any liability of the Company for any clean-up cost, remedial
work, damage to natural resources, property damage or personal injury.
(d) Releases. To the knowledge of the Company, there has been no
Release (as defined below) of any Hazardous Materials at, from, in, to, under or
on any property currently or previously owned or operated by the Company, other
than in compliance with applicable Environmental Laws or the terms of any
applicable permit (and no such property is contaminated by any such substance)
that could reasonably be expected to form the basis of any Environmental Claim.
(e) Recognized Environmental Conditions. None of the following exists
at any property or facility owned or operated by the Company: (i) under or
above-ground storage tanks, (ii) asbestos containing material in any form or
condition, (iii) materials or equipment containing polychlorinated biphenyls
("PCBs") or (iv) landfills, surface impoundments or disposal areas or any
Release of any Hazardous Materials. The Company has provided copies (or, if not
available, accurate written summaries) of all environmental investigations,
studies, audits, reviews and other analyses conducted by or on behalf, or which
otherwise are in the possession, of the Company respecting any facility site or
other property previously or presently owned or operated by the Company.
(f) Definitions.
(i) "Environmental Claims" means any and all, regulatory or
judicial actions orders, decrees, suits, demand letters,
directives, claims, liens, investigations, proceedings or
notices of noncompliance or violation by any Governmental
Entity or other person alleging potential responsibility or
liability including potential responsibility or liability
for costs of enforcement, investigation, cleanup,
governmental response, removal or remediation, for natural
resources damages, property damage, personal injuries or
penalties or for contribution, indemnification, cost
recovery, compensation or injunctive relief arising out of,
based on or related to (A) the presence, Release or
threatened Release of or exposure to, any Hazardous
Materials at any location, whether or not owned, operated,
leased or managed by the Company or any of its subsidiaries
or (B) circumstances forming the basis of any violation or
alleged violation of any Environmental Law or Environmental
Permit.
(ii) "Environmental Laws" means all domestic or foreign (whether
national, federal, state, local, provincial or otherwise)
laws, judgments or binding agreements issued, promulgated or
entered into by or with any Governmental Entity relating to
pollution or protection of the environment (including
ambient air, surface water, groundwater, soils or subsurface
strata) or the protection of human health as it relates to
the environment, including without limitation laws and
regulations relating to Releases or threatened Releases of
Hazardous Materials, or otherwise relating to the
generation, manufacture, processing, distribution, use,
treatment, storage, transport, emission, disposal, handling
of or exposure to Hazardous Materials.
(iii)"Environmental Permits" means all permits, licenses,
registrations and other authorizations required under
applicable Environmental Laws.
(iv) "Hazardous Materials" means all hazardous, toxic, explosive
or radioactive substances, wastes pollutants or
contaminants, including petroleum or petroleum fractions,
asbestos or asbestos-containing material, PCBs or
PCB-containing materials or equipment, radon gas, infectious
or medical wastes, mold and all other substances or wastes
of any nature regulated pursuant to any Environmental Law.
(v) "Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge,
dispersal, leaching or migration into the environment
(including ambient air, surface water, groundwater, land
surface or subsurface strata) or within any building,
structure, facility or fixture.
Section 3.28 Disclosure. Neither this Agreement, the Company Disclosure Schedule
nor any Exhibit hereto, nor any certificate, or document required to be
delivered to Parent and Acquisition Subsidiary, by the Company and the Holders
pursuant to Section 7.02 contain, as of the date thereof, any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances in which they are
made, not false or misleading.
ARTICLE III.A
REPRESENTATIONS AND WARRANTIES OF THE HOLDERS
Except as set forth on the Company Disclosure Schedule, with specific
reference to the section or subsection of this Agreement to which the
information stated in such disclosure relates, each Holder, severally, not
jointly, represents and warrants and agrees, as of the date of this Agreement
and as of the Closing Date, as follows, each of which representations,
warranties and agreements shall be deemed to be independently material and to
have been relied upon by Parent and Acquisition Subsidiary:
SECTION 3.01A Organization; Good Standing. In the event that such Holder is not
an individual, such Holder is duly organized or formed, validly existing and in
good standing under the laws of the jurisdiction of its organization or
formation.
SECTION 3.02A Title.
(a) Such Shareholder owns, of record and beneficially, as of the date
hereof and will own, of record and beneficially, immediately prior to the
Closing, the number of shares of Company Common Stock as are set forth next to
such Shareholder's name on Schedule 3.02(a) free and clear of all Liens and the
consummation of the transactions contemplated by this Agreement will not give
rise to any Liens thereon.
(b) Such Optionholder owns, of record and beneficially, as of the date
hereof, and will own, of record and beneficially, immediately prior to the
Closing, the Company Stock Options as are set forth next to such Optionholder's
name on Schedule 3.02(b) free and clear of all Liens and the consummation of the
transactions contemplated by this Agreement will not give rise to any Liens
thereon.
(c) Except as set forth on Schedule 3.02(b), there are no rights or
other commitments entitling any person to purchase or acquire any shares of
capital stock of the Company held by such Holder or any security convertible
into or exchangeable for shares of capital stock of the Company held by such
Holder, nor has such Holder entered into any agreement with respect to any of
the foregoing. There are no irrevocable proxies and no voting agreements to
which such Holder is a party with respect to any shares of the capital stock or
other voting securities of the Company held by such Holder.
SECTION 3.03A Authority Relative to this Agreement. Such Holder has the full
legal right, power and capacity and all authority and approval required by law
to enter into this Agreement and the documents and instruments to be executed
and delivered by him pursuant hereto and to perform fully such Holder's
obligations hereunder and thereunder. In the event that such Holder is not an
individual, the execution, delivery and performance by such Holder of this
Agreement and the documents and instruments to be executed and delivered by such
Holder pursuant hereto have been duly authorized by all necessary corporate or
other action. This Agreement and the documents and instruments to be executed
and delivered pursuant hereto are and will be duly executed and delivered by
such Holder and are and will be the legal, valid and binding obligations of such
Holder enforceable against such Holder in accordance with their terms.
SECTION 3.04A Consents and Approvals; No Violations.
(a) Except for applicable requirements of the Securities Act, state
Blue Sky laws and the filing of the Articles of Merger as required by the IBCL
and the DGCL, no filing or registration with and no permit, authorization,
consent or approval of, any Governmental Entity is necessary for the
consummation by such Holder of the transactions contemplated by this Agreement.
(b) Neither the execution and delivery of this Agreement or the
documents and instruments to be executed and delivered pursuant hereto by such
Holder, nor the consummation by such Holder of the transactions contemplated
hereby or thereby, nor compliance by such Holder with any of the provisions
hereof or thereof will (i) conflict with or result in any breach of any
provision of the Company's Articles of Incorporation, as amended, or By-laws or,
in the case that such Holder is not an individual, such Holder's organizational
documents, (ii) result in a violation or breach of or constitute (with or
without due notice or lapse of time or both) a default or give rise to any right
of termination, cancellation or acceleration of or loss of a material benefit
under or result in the creation of any Lien (except for Permitted Liens) or give
rise to any increased, additional, accelerated or guaranteed rights or
entitlements under or require any consent, approval or notice under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement, lease or other instrument or obligation to which such
Holder is a party or by which such Holder or any of its properties or assets may
be bound or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to such Holder or any of its properties or assets.
SECTION 3.05A Litigation. There is no legal action, suit, arbitration or other
legal or administrative proceeding or investigation before any Governmental
Entity pending or, to the knowledge of such Holder, threatened, to which such
Holder is a party that (a) questions the validity of this Agreement or any other
documents or instruments to be executed and delivered by the Company or such
Holder pursuant hereto or the right of such Holder to enter into this Agreement
or any such other documents or instruments or to consummate the transactions
contemplated hereby or thereby or (b) if adversely determined, would be likely
to have a material adverse effect on the ability of the Company or such Holder
to perform his respective obligations under this Agreement or any such other
documents or instruments. To the knowledge of such Holder, there is no fact or
facts existing which are reasonably expected to result in, nor is there any
basis for, any such action, suit, arbitration or other proceeding or
investigation. Such Holder is not a party to or subject to any order, writ,
injunction, decree, judgment or other restriction of any Governmental Entity
which is reasonably likely to prevent or materially delay such Holder's ability
to enter into this Agreement or any other documents or instruments to be
executed and delivered pursuant hereto or consummate the transactions
contemplated hereby or thereby.
SECTION 3.06A Related Party Transactions. Except as set forth on Schedule 3.06A,
none of such Holder, if such Holder is an individual, or any member of such
Holder's immediate family or any business entity in which such Holder is a
partner, investor, director or officer, is a party to any contract, agreement,
lease or other arrangement or transaction to which the Company or any of the
Company's assets or properties are bound.
Article IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUBSIDIARY
Parent and Acquisition Subsidiary hereby represent, warrant and agree,
as follows, each of which representations, warranties and agreements shall be
deemed to be independently material and to have been relied upon by the Company
and the Holders:
Section 4.01 Organization; Good Standing. Each of Parent and Acquisition
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
Section 4.02 Authority Relative to this Agreement. Each of Parent and
Acquisition Subsidiary has the full legal right and power and all authority and
approval required by law to enter into this Agreement and the documents and
instruments to be executed and delivered by them pursuant hereto and to perform
fully its respective obligations hereunder and thereunder. The execution,
delivery and performance by Parent and Acquisition Subsidiary of this Agreement
and the documents and instruments to be executed and delivered by them pursuant
hereto have been duly authorized by all necessary corporate action. This
Agreement and the documents and instruments to be executed and delivered
pursuant hereto by Parent or Acquisition Subsidiary are and will be the legal,
valid and binding obligations of Parent and Acquisition Subsidiary enforceable
against them in accordance with their terms.
Section 4.03 Consents and Approvals; No Violations.
(a) Except for applicable requirements of the Securities Act, state
Blue Sky laws and the filing of the Articles of Merger as required by the IBCL
and the DGCL, no filing or registration with and no permit, authorization,
consent or approval of, any Governmental Entity is necessary for the
consummation by Parent or Acquisition Subsidiary of the transactions
contemplated by this Agreement.
(b) Neither the execution and delivery of this Agreement or the
documents and instruments to be executed and delivered pursuant hereto by Parent
or Acquisition Subsidiary nor the consummation by Parent or Acquisition
Subsidiary of the transactions contemplated hereby or thereby, nor compliance by
Parent or Acquisition Subsidiary with any of the provisions hereof or thereof,
will (i) conflict with or result in any breach of any provision of the
respective Certificates of Incorporation or By-laws of Parent or Acquisition
Subsidiary, (ii) result in a violation or breach of or constitute (with or
without due notice or lapse of time or both) a default or give rise to any right
of termination, cancellation or acceleration of or loss of a material benefit
under or result in the creation of any Lien in or upon any of the properties or
assets of Parent or Acquisition Subsidiary under or give rise to any increased,
additional, accelerated or guaranteed rights or entitlements under or require
any consent, approval or notice under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract, agreement,
lease or other instrument or obligation to which Parent or Acquisition
Subsidiary is a party or by which either of them or any of their properties or
assets may be bound or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Parent or Acquisition Subsidiary or
any of their properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults which would not, in the aggregate, have a
material adverse effect and which would not prevent or materially delay or have
a material adverse effect on the consummation of the transactions contemplated
hereby.
Section 4.04 Capitalization of Acquisition Subsidiary. The authorized capital
stock of Acquisition Subsidiary consists of 100 shares of common stock, par
value $.0001 per share, all of which, as of the date hereof, are issued and
outstanding and are held by Parent. All of the outstanding shares of Acquisition
Subsidiary's common stock have been duly authorized and validly issued, and are
fully paid and nonassessable.
Article V
conduct and Transactions Prior to Closing
Section 5.01 Conduct of Business. Between the date hereof and the Closing Date,
the Company shall and the Holders shall cause the Company to, conduct the
Business and operations of the Company in accordance with past practice and in
the ordinary course of business, maintain the Company's current business
organization and goodwill, use its commercially reasonable efforts to continue
to retain the services of the Company's present officers, employees and
consultants and preserve the Company's relationship with vendors, suppliers,
dealers, distributors, customers and others having business dealings with the
Company and neither the Company nor any of the Holders shall enter into any
transaction or perform any act which would constitute a breach of their
respective representations, warranties, covenants and agreements contained
herein.
Section 5.02 Certain Changes or Events. Between the date hereof and the Closing
Date, except as specifically provided herein or with the prior written consent
of Parent and Acquisition Subsidiary, none of the Company or the Holders shall
and none of the Holders shall cause the Company to, (a) take any action to
further amend the Company's Articles of Incorporation or amend the Company's
By-Laws, (b) issue, sell or otherwise dispose of any of the Company's authorized
but unissued capital stock, redeem any issued and outstanding capital stock of
the Company or issue any option to acquire capital stock of the Company or any
securities convertible into or exchangeable for capital stock of the Company,
(c) declare or pay any dividend or make any other distribution in cash or
property on the Company's capital stock (other than S Corp. Dividends set forth
on Schedule 5.02), (d) merge or consolidate the Company with or into any
corporation, partnership, limited liability company or other business
organization, (e) make or allow the Company to become liable for any wage or
salary increase, bonus, profit-sharing or incentive payment to any of its
officers, directors, employees or shareholders or otherwise establish, sponsor
or amend any Company Benefit Plan except as required by law or pursuant to any
agreement or Company Benefit Plan disclosed on Schedule 3.19(c), (f) sell or
otherwise dispose of or encumber any of the Company's properties or assets other
than in sales or dispositions in the ordinary course of business consistent with
past practice or in connection with normal repairs, renewals and replacements,
(g) modify, amend or cancel any of the Company's existing leases or enter into
any commitments, contracts, agreements, leases, warranties, guarantees or
understandings other than in the ordinary course of business consistent with
past practice, (h) fail to operate the Business in the customary manner and in
the ordinary and regular course of business consistent with past practice and to
maintain in good condition the Company's business premises, plant, fixtures,
furniture and equipment, reasonable wear and tear excepted, (i) cancel or
compromise any debt or claim related to the Company's assets, other than in the
ordinary course of business consistent with past practice, (j) waive or release
any rights of value relating to the Company's assets, other than in the ordinary
course of business consistent with past practice, (k) transfer or grant any
rights in, under or with respect to Intellectual Property Rights other than in
the ordinary course of business consistent with past practice, (1) enter into
any employment contract with any officer or employee or make any loan to or
enter into any transaction of any other nature with any of the Company's
officers or employees, (m) enter into any transaction, contract or commitment
with respect to its assets, other than in the ordinary course of business
consistent with past practice (other than as contemplated by Section 5.10), (n)
suffer any casualty loss or damage (whether or not such loss or damage shall
have been covered by insurance) which affects its ability to conduct its
business or affects the value of its assets as carried on its books, (o) suffer
any adverse change in its financial condition or results of operations or in its
assets, (p) take any other action which might adversely affect the interests of
Parent and Acquisition Subsidiary hereunder or diminish the value of the Company
as a going concern, (q) alter the manner of keeping the Company's books,
accounts or records or the accounting practices therein reflected, including any
change in the costing standards reflected in the Unaudited Statements, (r) enter
into any contract, agreement, lease or other arrangement or transaction with the
Company or any of the Holders or any affiliate thereof, (s) modify any bonus
incentive program for dealers that sell any or both of the Products or the
warranty program related to any of the Products, (t) modify any refund, rebate,
discount or return policies or practices in a manner that is not consistent with
the Company's ordinary course of business or (u) enter into any contract,
agreement or commitment with respect to or propose or authorize, any of the
actions described in the foregoing clauses (a) through (t).
Section 5.03 Access to Information. Between the date hereof and the Closing
Date, the Company shall afford Parent and its representatives access, during
normal business hours, to all of the Company's business operations, properties,
books, files and records, to cooperate in the examination thereof and to furnish
Parent with all information with respect to the business and affairs of the
Company as Parent may reasonably request. Parent and its representatives shall
have the right to discuss the affairs of the Company with the directors,
officers, employees, consultants, advisors and agents of the Company. No such
examination, however, shall constitute a waiver or relinquishment by either
Parent or Acquisition Subsidiary of its right to rely upon the Company's and the
Holders' representations, warranties, covenants and agreements as made herein or
pursuant hereto. All information furnished to Parent pursuant to this Section
5.03 shall be subject, as applicable, to the provisions of the Confidentiality
Agreement dated as of January 23, 2003 between the Company and Parent.
Section 5.04 Non-Solicitation. Between the date hereof and the Closing Date,
neither the Company nor any of the Holders will and neither will permit any of
its officers, directors, affiliates, agents or representatives (as the case may
be) to, directly or indirectly, (i) solicit, initiate, encourage, conduct or
engage in any discussions or enter into any agreement or understanding, with any
other person or entity relating to a merger, business combination,
recapitalization or similar corporate event involving the Company or relating to
the sale of any of the capital stock of the Company or any material portion of
the assets of the Company or (ii) disclose any nonpublic information relating to
the Company or afford access to the properties, books or records of the Company,
to any other person or entity that may be considering any such transaction.
Section 5.05 Additional Agreements. Between the date hereof and the Closing
Date, subject to the terms and conditions herein provided, each of the parties
hereto agrees to use its reasonable best efforts to take promptly or cause to be
taken, all actions and to do promptly or cause to be done promptly, all things
necessary, proper or advisable under applicable laws to consummate and make
effective the transactions contemplated by this Agreement and to satisfy all of
the conditions to the Closing to be satisfied by such party, including using its
reasonable best efforts to obtain all necessary actions or non-actions,
extensions, waivers, consents and approvals from all applicable Governmental
Entities and third parties and effecting all necessary registrations and
filings. Each Holder shall vote such Holder's securities of the Company at any
general or special meeting of the shareholders of the Company or pursuant to a
written consent in lieu thereof, to the extent required by applicable law or
contract or arrangement, to approve the Merger and the consummation of the
transactions contemplated hereby. Each of the parties hereto agrees not to take
any action or fail to take any action that would be likely to cause any
representation or warranty contained in this Agreement to cease to be true or
accurate or that would be reasonably likely to prevent the performance of any
covenant or the satisfaction of any condition contained in this Agreement.
Nothing contained in this Agreement shall be construed to require Parent to (i)
divest or commit to divest any assets or business of Parent, any subsidiary of
Parent or the Company or (ii) make or commit to make any change to the manner in
which the business of Parent or any subsidiary of Parent or the Company or to
the relationship between Parent, any subsidiary of Parent or the Company and any
vendor, supplier, lender, dealer, distributor or customer.
Section 5.06 Communications with Agencies. Between the date hereof and the
Closing Date, the Company will promptly transmit to Parent copies of any
communications with NHTSA and any other federal or state regulatory agencies
received after the date hereof which relate to the Business.
Section 5.07 Public Disclosure. Between the date hereof and the Closing Date, no
party to this Agreement shall make or cause to be made any press release or
similar public announcement or communication in any form with respect to this
Agreement or the transactions contemplated hereby, without the consent of the
other parties, except if Parent, based on the advice of its counsel, reasonably
believes that such disclosure is required to comply with requirements of
applicable law or the rules of the New York Stock Exchange.
Section 5.08 Supplements to and Amendments of the Disclosure Schedule. Between
the date hereof and the Closing Date, the Company and the Shareholders, with
respect to the representations and warranties set forth in Article III and each
Holder, with respect to the representations and warranties set forth in Article
III.A, agree that they shall promptly supplement or amend, as the case may be,
the Company Disclosure Schedule with respect to any matter, condition or
occurrence arising after the date hereof which, if existing or occurring as of
the date of this Agreement, would have been required to be set forth or
described in the Company Disclosure Schedule; provided, however, Parent and
Acquisition Subsidiary shall have the right to refuse to waive any failure of
the Company or the Holders to satisfy the condition set forth in Section 6.01(b)
as a result of any supplement or amendment of the Company Disclosure Schedule
pursuant to this Section 5.08. To the extent that Parent and Acquisition
Subsidiary shall waive such failure to satisfy the condition set forth as
Section 6.01(b), any such supplement to or amendment of the Company Disclosure
Schedule with respect to any matter, condition or occurrence arising after the
date hereof shall be considered part of the Company Disclosure Schedule and, as
such, Parent and Acquisition Subsidiary shall not make any claim for
indemnification based on such supplements or amendments pursuant to Article VIII
hereof. Any supplement or amendment of the Company Disclosure Schedule with
respect to any matter, condition or occurrence existing or occurring as of the
date of this Agreement that should have been, but was not, set forth or
described in the Company Disclosure Schedule, shall not affect the rights of
Parent and Acquisition Subsidiary under Section 9.01(d) or (e) or Section 9.02.
Section 5.09 Tax Matters.
(a) Between the date hereof and the Closing Date, the Company and the
Shareholders shall not revoke the Company's election to be taxed as a S
Corporation within the meaning of Sections 1361 and 1362 of the Code (and
corresponding elections under state law). The Shareholders shall not take or
allow any action (other than the sale of the Company's stock pursuant to this
Agreement) that would result in the termination of the Company's status as a
validly electing S Corporation within the meaning of Sections 1361 and 1362 of
the Code (and corresponding elections under state law). (b) Between the date
hereof and the Closing Date, without the prior written consent of Parent, the
Company shall not file any amended tax return, enter into any closing agreement,
settle any tax claim or assessment relating to the Company, surrender any right
to claim a refund of taxes, consent to any extension or waiver of the limitation
period applicable to any tax claim or assessment relating to the Company or any
of its subsidiaries, or take any other similar action relating to the filing of
any tax return or the payment of any tax, if such election, adoption, change,
amendment, agreement, settlement, surrender, consent or other action would have
the effect of increasing the tax liability of the Company for any period ending
after the Closing Date or decreasing any tax attribute of the Company existing
on the Closing Date. Section 5.10 Excluded Assets Transactions. Prior to the
Closing Date, the Company and the Holders shall have entered into the
transactions set forth on Schedule 5.10 (collectively, the "Excluded Assets
Transactions").
Article V.A
CERTAIN AGREEMENTS AMONG THE PARTIES FOLLOWING THE CLOSING
SECTION 5.01.A Section 338(h)(10) Tax Election
(a) At Parent's option, the Company and each of the Holders shall join
with Parent in making an election under Section 338(h)(10) of the Code (and any
corresponding election under state or local tax law) with respect to Merger
(collectively, a "Section 338(h)(10) Election"). The Holders shall include any
income, gain, loss, deduction, or other tax item resulting from the Section
338(h)(10) Election on their tax returns to the extent required by applicable
law. The Holders shall also pay any Tax imposed on the Company attributable to
the making of the Section 338(h)(10) Election and the related deemed sale of
assets, including (i) any Tax imposed under section 1374 of the Code, (ii) any
Tax imposed under U.S. Treasury Regulations Section 1.338(h)(10)-1(d) or (iii)
any Tax imposed on the Company's gain, and the Holders shall indemnify Parent,
Acquisition Subsidiary and the Surviving Corporation against any Losses arising
out of any failure to pay any such Taxes; provided, however, that Parent shall
pay an amount equal to the additional state taxes, if any, for which the Holders
may be liable solely as a result of the Section 338(h)(10) Election (the "State
Tax Adjustment"). For tax purposes, the parties hereto agree to treat and to
report the State Tax Adjustment as additional Merger Consideration paid by
Parent to the Holders.
(b) If a Section 338(h)(10) Election is made pursuant to Section
5.01A(a), Parent, the Company, and the Holders agree that the Merger
Consideration and the liabilities of the Company (plus other relevant items)
initially will be allocated to the assets of the Company for all purposes
(including Tax and financial accounting) as shown on the allocation schedule set
forth on Schedule 5.01.A(b). Parent may amend Schedule 5.01.A(b) from time to
time (i) to account for (y) adjustments, if any, to the Merger Consideration or
(z) distributions, if any, of Escrowed Funds to the Holders, or (ii) to reflect
differences, if any, between the asset allocation for Tax purposes and the asset
allocation for financial accounting purposes; provided that Schedule 5.01A(b)
shall not be amended in any manner that adversely effects the Holders. Parent,
the Company, and the Holders shall file all tax returns (including amended
returns and claims for refund) and information reports in a manner consistent
with Schedule 5.01(A)(b), which shall be set forth on U.S. federal tax Form 8883
that is provided to the Holder Representative pursuant to Sections 5.06.A(a) and
5.06.A(c).
SECTION 5.02.A Certain Deductions. If a Section 338 (h)(10) Election is not made
pursuant to Section 5.01A(a), the parties agree to make an election under
Section 1362(e)(3) of the Code.
SECTION 5.03A Transfer of Excluded Assets.
(a) Xxxxxx X. Xxxxxxxx shall, or shall cause one of his affiliates to,
within a reasonable time after the Closing, obtain any necessary third party
consents to the transfer of, and shall take title to, and the Company shall
transfer title to, the Purchased Excluded Assets free and clear of any liens or
encumbrances created by the Company or its affiliates after the Closing.
(b) As soon practicable after January 15, 2004, but not later than
January 30, 2004, the Company shall file the appropriate forms as soon as
practicable to obtain the refund of the Company's S Corporation tax deposit, and
shall promptly remit the amount refunded from the Company's S Corporation tax
deposit to Xxxxxx X. Xxxxxxxx who has purchased the Company's S Corporation tax
deposit pursuant to Section 5.10. The Company shall cooperate with the Holder
Representative in any dispute or issues with the Internal Revenue Service
regarding the refund of the Company's S Corporation tax deposit.
SECTION 5.04.A Books and Records. Following the Closing Date, Parent shall
maintain such books and records of the Company as have been delivered to it by
the Company and the Shareholders until the time for the taking of any federal
tax audit of the Company for its fiscal year 2003 shall have expired and shall
provide the Shareholders and their representatives reasonable access thereto in
order to enable the Shareholders to (a) prepare their tax returns and (b)
perform any other acts reasonably related to their former interest in the
Company.
SECTION 5.05.A Tax Cooperation. The Holder Representative and the Parent shall
each (and the Parent after Closing shall cause the Company to): (a) cooperate in
the preparation of any tax returns of the Company which the other is responsible
for preparing and filing, (b) cooperate fully in preparing for any audits of, or
disputes with the Internal Revenue Service or the appropriate foreign, state or
local taxing authorities (each, a "Taxing Authority") regarding, any Tax
liability of the Company, (c) make available to any Taxing Authority, as
reasonably requested, all information, records, and documents relating to any
Tax, (d) provide timely notice to the other in writing of any written notice
received concerning any pending or threatened audits or assessments relating to
any Tax liability of the Company and (e) furnish the other with copies of all
correspondence received from any Taxing Authority in connection with any audit
or information request with respect to any Tax liability of the Company. In
addition, Parent and the Holder Representative agree to retain or cause to be
retained all books and records pertinent to the Company until all applicable
periods for assessment under applicable law (giving effect to any and all
extensions or waivers) have expired, and to abide by or cause the abidance with
all record retention agreements entered into with any Taxing Authority. Parent
agrees to cause the Company to give the Holder Representative reasonable notice
prior to transferring, discarding or destroying any such books and records
relating to Tax matters, and if the Holder Representative so requests, Parent
agrees to cause the Company to allow the Holder Representative to inspect and
copy all or any portion of such books and records at the Holder Representative's
expense.
SECTION 5.06.A Tax Forms. If a Section 338(h)(10) Election is made pursuant to
Section 5.01A(a):
(a) Parent shall prepare all federal tax forms, including U.S. federal
tax Forms 8023 and 8883, and comparable state and local tax forms that may be
required to effect a valid Section 338(h)(10) Election for federal and
comparable state and local tax purposes ("Section 338(h)(10) Election Forms").
As soon as practicable after the Closing Date, but not later than December 15,
2003, the Parent shall furnish the Holder Representative with a copy of the
Section 338(h)(10) Election Forms.
(b) As soon as practicable, but not later than 30 days, after the
receipt of U.S. federal tax Form 8023 (and comparable state and local tax forms)
(the "Election Forms") from Parent, the Holder Representative shall furnish
Parent with the Election Forms signed by each Shareholder. Parent shall file the
Election Forms within the applicable time period.
(c) As soon as practicable, but not later than 30 days, after the date
of (i) any adjustment to the Merger Consideration or (ii) any distribution of
Escrowed Funds to the Holders, Parent shall furnish the Holder Representative
with a copy of the appropriate amended Section 338(h)(10) Election Forms,
including an amended U.S. federal tax Form 8883.
(d) Parent shall work together with the Holder Representative to
address any comments the Holder Representative may have to the Section
338(h)(10) Election Forms; provided however, subject to the restrictions set
forth in Section 5.01(A)(b)(ii), Parent shall not be obligated to modify such
forms in accordance with any such comments.
Article VI
Conditions to Closing
Section 6.01 Conditions to Obligations of Parent and Acquisition Subsidiary. The
obligations of Parent and Acquisition Subsidiary to close the transactions
contemplated by this Agreement are subject to the prior fulfillment of each of
the following conditions; provided, however, that Parent and Acquisition
Subsidiary may waive in writing any one or more of such conditions:
(a) Performance of Obligations. The Company and the Holders shall have
complied with and performed all the terms, covenants and conditions of this
Agreement required to be complied with and performed by them on or prior to the
Closing Date and shall have made all of the deliveries required to have been
made hereunder by them on or prior to the Closing Date.
(b) Representations and Warranties. All of the representations and
warranties made by the Company, the Shareholders and the Holders contained in
this Agreement shall be true and correct, in all material respects, on the
Closing Date, as if made on the Closing Date.
(c) Consents. All necessary governmental approvals and consents of
third parties to the transactions contemplated by this Agreement (including, but
not limited to, the consents of third parties specified on Schedule 6.01(c))
shall have been obtained.
(d) Legal Opinion. The Company shall have furnished Parent with a
favorable opinion, dated the Closing Date, of Xxxxxx & Xxxxxxxxx, counsel for
the Company, addressed to Parent, substantially in the form annexed hereto as
Exhibit 6.01(d).
(e) Closing Certificates. The Company shall have furnished Parent and
Acquisition Subsidiary with a certificate, dated as of the Closing Date and
executed by the President of the Company, certifying that each of the conditions
set forth in Sections 6.01(a), (b) (other than with respect to the
representations and warranties made by the Holders), (i) and (j) has been
satisfied.
(f) Resolutions. The Company and the Holders shall have delivered to
Parent and Acquisition Subsidiary the resolutions of the Company's Board of
Directors and Shareholders authorizing the execution, delivery and performance
of this Agreement and the documents and instruments to be executed and delivered
by the Company pursuant hereto and the transactions contemplated hereby and
thereby, certified by the Secretary of the Company and dated the Closing Date.
(g) Legal Matters. All legal matters in connection with this Agreement
and the Closing hereunder shall be approved by Akin Gump Xxxxxxx Xxxxx & Xxxx
LLP, counsel for Parent, and there shall have been furnished to such counsel by
the Company and the Holders such corporate and other records and information as
it may reasonably have requested for such purpose.
(h) Prepayment of Indebtedness; Liens. Parent shall be satisfied or
shall have received assurances reasonably satisfactory to it that all of the
Company's indebtedness is prepayable without any penalty to the Company and
Parent shall have received from the secured parties listed on Schedule 6.01(h)
such documentation necessary for the termination of the Liens specified on
Schedule 6.01(h).
(i) No Material Adverse Change. The absence of any material adverse
change in the business, assets, liabilities, operations, prospects, properties
or condition, financial or otherwise, of the Company.
(j) Legal Restraints, Proceedings. The absence of (i) any injunction
order or decree issued by any court of competent jurisdiction or other legal
restraint or prohibition that has the effect of preventing the consummation of
the transactions contemplated by this Agreement and (ii) any pending or
threatened claims or legal proceedings as of the Closing Date which would, if
adversely determined, have a material adverse effect on the transactions
contemplated hereby.
(k) Director and Officer Resignations. Parent and Acquisition
Subsidiary shall have received resignations, effective as of the Closing Date in
form and substance satisfactory to Parent and Acquisition Subsidiary, of all the
officers and directors of the Company.
(l) Appraisal Rights. The holders of not more than 2% of the
outstanding shares of Company Common Stock shall have demanded appraisal of
their shares in accordance with the IBCL.
(m) Excluded Assets Transactions. The Company and the Holders shall
have consummated the Excluded Asset Transactions.
(n) Leases for Leased Real Property. The real property leases in
substantially the forms set forth on Exhibits 6.01(n)(1)-(3) shall have been
executed and delivered by the respective parties thereto.
(o) Options to Purchase. The options to purchase certain Leased Real
Property in substantially the forms set forth on Exhibit 6.01(o) shall have been
executed and delivered by the parties thereto.
Section 6.02 Conditions to Obligations of the Company and the Holders. The
obligations of the Company and the Holders to close the transactions
contemplated by this Agreement are subject to the prior fulfillment of each of
the following conditions; provided, however, that the Company and the Holders
may waive in writing any one or more of such conditions:
(a) Performance of Obligations. Parent and Acquisition Subsidiary
shall each have complied with and performed all the terms, covenants and
conditions of this Agreement required to be complied with and performed by each
on or prior to the Closing Date and shall have made all of the deliveries
required to have been made hereunder by them on or prior to the Closing Date.
(b) Representations and Warranties. All of the representations and
warranties made by Parent and Acquisition Subsidiary contained in this Agreement
shall be true and correct in all material respects on the Closing Date, as if
made on the Closing Date.
(c) Consents. All necessary governmental approvals and consents of
third parties to the transactions contemplated by this Agreement shall have been
obtained.
(d) Legal Opinion. Parent and Acquisition Subsidiary shall have
furnished the Company and the Holders with a favorable opinion, dated the
Closing Date, of Akin Gump Xxxxxxx Xxxxx & Xxxx LLP, counsel for Parent and
Acquisition Subsidiary, addressed to Company and the Holders, substantially in
the form annexed hereto as Exhibit 6.02(d).
(e) Closing Certificate. Parent and Acquisition Subsidiary shall have
furnished the Company with a certificate, dated as of the Closing Date and
executed by the President of Parent and Acquisition Subsidiary, respectively,
certifying that each of the conditions set forth in Sections 6.02(a) and (b) has
been satisfied.
(f) Resolutions. Parent and Acquisition Subsidiary shall have
delivered to the Company resolutions of their respective Board of Directors
authorizing the execution, delivery and performance by them of this Agreement
and the documents and instruments to be executed and delivered by Parent and
Acquisition Subsidiary pursuant hereto and the transactions contemplated hereby
and thereby, each certified by the Secretary of Parent and Acquisition
Subsidiary, respectively, and dated the Closing Date.
(g) Legal Matters. All legal matters in connection with this Agreement
and the Closing hereunder shall be approved by Xxxxxx & Xxxxxxxxx, counsel for
the Company and the Holders, and there shall have been furnished to such counsel
by Parent and Acquisition Subsidiary such corporate and other records and
information as they may reasonably have requested for such purposes.
(h) Legal Restraints, Proceedings. The absence of (i) any injunction,
order or decree issued by any court of competent jurisdiction or other legal
restraint or prohibition that has the effect of preventing the consummation of
the transactions contemplated hereby and (ii) any pending or threatened claims
or legal proceedings as of the Closing Date which would, if adversely
determined, have a material adverse effect on the transactions contemplated
hereby.
Article VII
Closing
Section 7.01 Closing Date. Upon the terms and subject to the conditions set
forth in this Agreement, the closing of the Merger (the "Closing") shall take
place at 11:00 a.m., New York time, on the business day after the satisfaction
or waiver of the conditions set forth in Article VI (other than those that by
their terms cannot be satisfied until the time of Closing), at the offices of
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
or at such other time, date or place agreed to in writing by Parent and the
Company. The date on which the Closing actually occurs is referred to herein as
the "Closing Date".
Section 7.02 Deliveries by the Company and the Holders. At the Closing, the
Company and the Holders shall deliver to Parent and Acquisition Subsidiary:
(a) The Articles of Merger, duly executed by the Company;
(b) The Escrow Agreement, duly executed by the Holder Representative
and the Escrow Agent;
(c) A non-competition agreement, substantially in the form attached
hereto as Exhibit 7.02(c), duly executed by each of Xxxxxx X. Xxxxxxxx, Xxxx
Xxxxx, Xxx Xxxxxx and Xxxxx Xxxxx;
(d) A release, substantially in the form of Exhibit 7.02(d) attached
hereto, duly executed by each of the Holders (collectively, the "Holders
Releases"); and
(e) All other documents required pursuant to this Agreement, all in
form and substance satisfactory to counsel for Parent and Acquisition
Subsidiary, as well as any further documentation or instruments as Parent,
Acquisition Subsidiary or their counsel may reasonably require to effectuate the
terms of this Agreement.
Section 7.03 Deliveries by Parent and Acquisition Subsidiary. At the Closing,
Parent and Acquisition Subsidiary shall deliver to the Holders:
(a) The Articles of Merger, duly executed by Acquisition Subsidiary;
(b) The Estimated Merger Consideration, as contemplated by Section
2.01; provided, however, that the Escrowed Funds shall be deducted from the
Estimated Merger Consideration and delivered to the Escrow Agent in accordance
with Section 2.03;
(c) The Escrow Agreement, duly executed by Parent, the Surviving
Corporation and the Escrow Agent; and
(d) All other documents required pursuant to this Agreement, all in
form and substance satisfactory to counsel for the Company and the Holders, as
well as any further documentation or instruments as the Company, the Holders or
their counsel may reasonably request to effectuate the terms of this Agreement.
Section 7.04 Further Assurances. The Holders, the Holder Representative and
Parent each agree, and Parent shall cause the Surviving Corporation to agree,
that at any time or from time to time after the Closing Date that upon request
of the other party or parties, the Holders, Holder Representative, Parent or the
Surviving Corporation, as the case may be, will execute, acknowledge and deliver
such other and further instruments and take such other action or actions as the
requesting party may reasonably request in order to effectuate the terms of this
Agreement and the documents and instruments contemplated hereby.
Article VIII
SURVIVAL; INDEMNIFICATION
Section 8.01 Survival Past Closing. Any investigation or examination by Parent
of the business, properties or affairs of the Company or the Holders shall not
affect the representations and warranties of the Company and the Holders herein
contained and the respective representations and warranties of the parties
herein contained shall survive the Closing for a period of one (1) year
(referred to herein as "General Representations"), with the exception of (i)
representations and warranties of the Company and the Shareholders with respect
to taxes as set forth in Section 3.18 (referred to herein as the "Special
Representation"), which shall survive the Closing for the applicable statute of
limitations and (ii) representations and warranties of each Holder as set forth
in Article III.A hereof (referred to herein as "Personal Representations"),
which shall survive indefinitely.
Section 8.02 Indemnification by the Holders. The Holders shall indemnify, defend
and hold Parent, Acquisition Subsidiary, the Surviving Corporation and their
respective officers, directors, employees, agents, subsidiaries and affiliates
harmless from and against any and all liabilities, losses, damages, claims,
fines, penalties, costs and expenses, including, without limitation, reasonable
attorneys' and accounting fees (collectively, "Losses") incurred by Parent
Acquisition Subsidiary, the Surviving Corporation or any of their respective
officers, directors, employees, agents, subsidiaries or affiliates, arising out
of or resulting from (i) any breach of any representation or warranty made by
the Company or the Holders contained in this Agreement or in the Company
Disclosure Schedule, (ii) the nonperformance of any covenant or obligation to be
performed by the Company or the Holders under this Agreement and/or (iii) any
matters described on Annex 8.02 (the "Additional Matters"); provided, however,
that (x) no Holder shall be required to indemnify for any Losses in excess of
the portion of the Merger Consideration received by such Holder, except for
Losses arising out of or resulting from the breach of such Holder's Personal
Representations, which shall not be limited and (y) no Holder shall be required
to indemnify for any Losses arising out of or resulting from the breach of any
other Holder's Personal Representations, (z) Losses shall be reduced by any Tax
Benefit (or net insurance proceeds after deducting any costs of collection)
received by Parent or the Surviving Corporation in connection with the claims
giving rise to indemnification hereunder and (aa) Losses shall be net of any
reserves provided for in the Audited Closing Balance Sheet; provided, however
for items described in Section 2.01(c) the specific reserve for each such item
shall be as set forth on Schedule 8.02 . The obligations of the Holders pursuant
to this Article VIII shall be joint and several, to the extent of the Escrowed
Funds and otherwise shall be several among the Holders as provided in Section
8.04. Notwithstanding the foregoing, if any claim for indemnification is
asserted by Parent and/or the Surviving Corporation against the Holders and the
Parent and/or the Surviving Corporation is covered by an insurance policy for
such Losses, Parent and/or the Surviving Corporation shall use their
commercially reasonable efforts to seek indemnification under the applicable
insurance policy or policies; provided, however, Parent and/or the Surviving
Corporation shall not be obligated to commence any legal proceedings against any
insurance provider for indemnification hereunder. Parent and/or the Surviving
Corporation shall give the Holder Representative notice of their intention to
seek indemnification for such Losses from applicable insurance policies and,
provided such notice is delivered in a timely manner, such notice shall also
constitute notice for purposes of Sections 2.02(iii) and 8.06 and Section 2(b)
of the Escrow Agreement. In the event that Parent and/or the Surviving
Corporation are unable to collect sufficient insurance proceeds to be fully
indemnified for their respective Losses, Parent and/or the Surviving Corporation
shall be entitled to receive indemnification pursuant to this Article VIII and
pursuant to the terms of the Escrow Agreement, and shall, as promptly as
practicable, assign to the Holder Representative, without recourse, their
respective claims for the uncollected Losses against the insurance provider or
providers.
For purposes of this Agreement, "Tax Benefit" shall mean (i) an actual
reduction in taxes payable, (ii) an actual refund of taxes previously paid, or
(iii) the present value of any future refund, future credit, reduction in future
taxes payable as a result of an increased net operating loss or other future
reduction in an otherwise required tax payment, including in each such case any
interest paid (or in the case of a future refund, payable) thereon. The present
value of the amounts described in clause (iii) of the preceding sentence shall
be computed (A) using the tax rate applicable to the highest level of income
with respect to such tax under the applicable tax law on the date prescribed for
payment of the indemnity payment (taking into account, if applicable, the
character of the income which is reduced by the loss or similar item) and
assuming sufficient income in all applicable tax periods to use such benefit,
and (B) using as a discount rate the interest rate on such date imposed on
corporate deficiencies paid within thirty (30) days of a notice of proposed
deficiency under Section 6621(a) of the Code.
Section 8.03 Indemnification by Parent and Acquisition Subsidiary. Parent and
Acquisition Subsidiary shall jointly and severally indemnify, defend and hold
the Holders and their respective affiliates harmless from and against any and
all Losses incurred by any of the Holders or their affiliates arising out of or
resulting from (i) any breach of any representation or warranty made by Parent
or Acquisition Subsidiary contained in this Agreement and/or (ii) the
nonperformance of any covenant or obligation to be performed by Parent or
Acquisition Subsidiary under this Agreement; provided, however, Losses shall be
reduced by any Tax Benefit (or net insurance proceeds after deducting any costs
of collection) received by Holders in connection with the claims giving rise to
indemnification hereunder.
Section 8.04 Limitation on Indemnification. Neither the Holders pursuant to
Section 8.02 nor Parent, Acquisition Subsidiary or the Surviving Corporation
pursuant to Section 8.03 shall be obligated to indemnify the other against any
Losses until Parent, Acquisition Subsidiary and the Surviving Corporation, on
one hand, or the Holders, on the other hand, have incurred aggregate Losses in
excess of Five Hundred Thousand Dollars ($500,000) (the "Basket"), except that
the Basket shall not be applicable to claims for indemnification against the
Holders for breaches of Special Representation, Personal Representations or
Additional Matters, in which case Parent, Acquisition Subsidiary or the
Surviving Corporation shall be entitled to receive the full amount of their
Losses. At such time as the aggregate Losses (including Losses arising out of or
resulting from Special Representation, Personal Representations or Additional
Matters) incurred by Parent, Acquisition Subsidiary or the Surviving
Corporation, on one hand, or Losses incurred by the Holders, on the other hand,
shall exceed the Basket, such party shall be entitled to receive the full amount
of its Losses and not only that portion which is in excess of the Basket.
Section 8.05 Exclusive Remedy. The withdrawal of Escrowed Funds (including any
undistributed interest earned thereon), as provided in Section 2.02, will be the
exclusive source of satisfaction for monetary Losses subject to indemnification
by the Holders pursuant to this Article VIII, except for Losses arising out of
or resulting from breaches of Special Representation or Personal
Representations. Subject to the provisions of Section 8.02, (a) Losses arising
out of or resulting from breaches of Personal Representations may, in the sole
discretion of Parent, Acquisition Subsidiary and the Surviving Corporation, be
satisfied from any source including, but not limited to, the Escrowed Funds, (b)
losses arising out of or resulting from breaches of Special Representation shall
be paid, first, from the Escrowed Funds and, thereafter, from any source,
provided, however, that the maximum amount of all monetary Losses subject to
indemnification by the Holders pursuant to this Article VIII arising out of or
resulting from General Representations, Special Representation and Additional
Matters (but not Personal Representations) shall not exceed Three Million Five
Hundred Thousand Dollars ($3,500,000) (inclusive of the One Million Seven
Hundred Fifty Thousand Dollars ($1,750,000) deposited as Escrowed Funds, after
giving effect to any withdrawal or release of Escrowed Funds pursuant to
Sections 2.02), and (c) any liability for Losses arising out of or resulting
from breaches of Special Representation or Additional Matters from sources other
than Escrowed Funds shall be several among the Holders, pro rata, based on the
respective portion of the Merger Consideration received by each such Holder
under Section 2.02(b)(ii). From and after the Closing Date, the provisions of
this Article VIII shall be the sole and exclusive remedy for monetary damages
arising out of or resulting from the breach of any representations or warranties
made pursuant to Articles III, III.A or IV of this Agreement, absent fraud or
intentional misrepresentation.
Section 8.06 Indemnification Procedures.
(a) If Parent, Acquisition Subsidiary or the Surviving Corporation, on
the one hand, or the Holders, on the other hand, shall receive notice of any
matter which such party or any of its officers, directors, subsidiaries,
employees, agents, subsidiaries or affiliates (any of the foregoing, an
"Indemnitee"), has determined has given or, with respect to any matters, is
reasonably likely to result in, a right of indemnification under this Agreement,
the Indemnitee shall promptly give the indemnifying party (the "Indemnitor")
written notice of such claim, stating the amount of the Losses, if known and
method of computation thereof, all with reasonable particularity and including
documentary proof, if available and containing a reference to the provisions of
this Agreement in respect of which such right of indemnification is claimed or
arises; provided, however, that failure to so notify the Indemnitor shall not
relieve the Indemnitor from any liability which it may have on account of the
claim, except to the extent the Indemnitor shall have been prejudiced by such
failure.
(b) If an Indemnitee shall receive notice of any claim or proceeding
initiated by a third party which is or may be subject to indemnification (each,
a "Third Party Claim"), the Indemnitee shall promptly give the Indemnitor
written notice of such Third Party Claim; provided, however, that failure to so
notify the Indemnitor shall not relieve the Indemnitor from any liability which
it may have on account of the Third Party Claim, except to the extent the
Indemnitor shall have been prejudiced by such failure. In such event the
Indemnitee shall permit the Indemnitor, at its option, to participate in the
defense of such Third Party Claim by counsel of its own choice and at its own
expense. If, however, the Indemnitor acknowledges in writing its obligation to
indemnify the Indemnitee hereunder against all Losses that may result from such
Third Party Claim and the Indemnitee is reasonably satisfied that the Indemnitor
has sufficient funds available (whether Escrowed Funds or otherwise) to pay any
Losses resulting from such Third Party Claim, then the Indemnitor shall be
entitled, at its option, to assume and control the defense of such claim by
counsel of its own choice and at its own expense, provided that the Indemnitor
and its counsel shall proceed with diligence and good faith with respect
thereto. Notwithstanding the foregoing, the Indemnitee shall have the right to
employ separate counsel in any Third Party Claim and the fees and expenses of
such counsel shall be at the expense of such Indemnitor if (i) the Indemnitor
has failed to promptly assume the defense and employ counsel or (ii) the named
parties to any such Third Party Claim (including any impleaded parties) include
such Indemnitee and any Indemnitor and such Indemnitee shall have been advised
by its counsel that there is a conflict of interest between the Indemnitor and
such Indemnitee with respect to such Third Party Claim or with respect to any
legal defense which may be available; provided, however, that the Indemnitor
shall not in such event be responsible hereunder for the fees and expenses of
more than one firm of separate counsel in connection with any claim or
proceeding.
(c) In the event the Indemnitor exercises its right to undertake the
defense of any Third Party Claim, the Indemnitee shall cooperate with the
Indemnitor in such defense and make available to the Indemnitor witnesses,
pertinent records, materials and information in its possession or under its
control relating thereto as are reasonably requested by the Indemnitor.
Similarly, in the event the Indemnitee is, directly or indirectly, conducting
the defense against any Third Party Claim, the Indemnitor shall cooperate with
the Indemnitee in such defense and make available to the Indemnitee witnesses,
pertinent records, materials and information in its possession or under its
control relating thereto as are reasonably requested by the Indemnitee. No Third
Party Claim may be settled by the Indemnitor without the written consent of the
Indemnitee, which consent shall not be unreasonably withheld or delayed;
provided, however, that the Indemnitor may settle such Third Party Claim without
the consent of the Indemnitee so long as the settlement (x) includes an
unconditional release of the Indemnitee, in form and substance reasonably
satisfactory to the Indemnitee, from the third party claimant, (y) does not
impose any liabilities or obligations on the Indemnitee and (z) with respect to
any non-monetary provision of any settlement of a claim in which Parent,
Acquisition Subsidiary or the Surviving Corporation is the Indemnitee, does not
impose conditions upon the Indemnitee which, in the Indemnitee's good faith
judgment, could have a material adverse effect on the business, operations,
assets, properties or prospects of the Indemnitee. No Third Party Claim which is
being defended in good faith by the Indemnitee alone or jointly with the
Indemnitor, shall be settled by the Indemnitee without the written consent of
the Indemnitor, which consent shall not be unreasonably withheld; provided,
however, that the Indemnitee may settle such claim without the consent of the
Indemnitor so long as the settlement (x) includes an unconditional release of
the Indemnitor, in form and substance reasonably satisfactory to the Indemnitor,
from the claim by the Indemnitee and the third party claimant and (y) does not
impose any liabilities or obligations on the Indemnitor.
Article IX
TERMINATION OF AGREEMENT
Section 9.01 Events of Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, at any time prior to the
Closing Date:
(a) by the mutual consent of Parent and the Holder Representative;
(b) by either Parent or Acquisition Subsidiary, if the Company or any
of the Holders breaches any of their respective representations, warranties,
covenants or agreements contained in this Agreement;
(c) by the Holder Representative, if
Parent or Acquisition Subsidiary breaches any of their respective
representations, warranties, covenants or agreements contained in this
Agreement;
(d) by either Parent or Acquisition Subsidiary, on the one hand, or
the Holder Representative, on the other hand, if any of the conditions to such
party's obligations to close the transactions contemplated by this Agreement is
not satisfied (or waived in writing by such party) on or prior to September 29,
2003 (the "Outside Date"); provided, however, that if any of such conditions is
not satisfied as a result of the breach by any party of its representations,
warranties, covenants or agreements contained in this Agreement, then the party
responsible for such breach shall not have the right to terminate this Agreement
pursuant to this clause (d);
(e) by either Parent or Acquisition Subsidiary, on the one hand, or
the Holder Representative, on the other hand, if the Closing has not occurred on
or prior to the Outside Date (as same may be extended); provided, however, that
if the Closing has not occurred on or prior to the Outside Date as a result of
the breach by any party of its representations, warranties, covenants or
agreements contained in this Agreement, then the party responsible for such
breach shall not have the right to terminate this Agreement pursuant to this
clause (e); or
(f) by either Parent or Acquisition Subsidiary, on the one hand, or
the Holder Representative, on the other hand, if any of the following shall
occur: (i) any suspension or limitation of trading in securities generally on
the New York Stock Exchange lasting for more than twenty-four (24) hours or (ii)
any banking moratorium declared by U.S. Federal or New York authorities.
Section 9.02 Effect of Termination. In the event that either party shall elect
to terminate this Agreement pursuant to any provision contained herein expressly
giving such party the right to terminate this Agreement, this Agreement shall
forthwith terminate and have no further effect and neither party shall have any
further obligation or liability (except with respect to those provisions hereof
which expressly survive any termination of this Agreement). Notwithstanding the
foregoing, the termination of this Agreement pursuant to any provision hereof
shall not relieve any party of any liability for a breach of any representation
or warranty or the nonperformance of any covenant or obligation hereunder and
any such termination shall not be deemed to be a waiver of any available remedy
for any such breach or nonperformance.
Article X
FINDER'S FEES
The Company and the Holders, on the one hand and Parent, on the other
hand, represent and warrant to each other that they respectively have had no
dealings with any finder, broker, financial advisor or investment banker in
connection with the transactions contemplated by this Agreement, other than
NatCity Investments, Inc. ("NatCity"), which has been engaged pursuant to a
separate agreement between the Company and NatCity and whose compensation will
be paid by the Company and the Holders in accordance with Section 12.01(b). The
Holders will indemnify and hold Parent harmless from and against any and all
liabilities (including but not limited to reasonable attorneys' fees) to which
it or the Company may be subjected by reason of (i) any compensation or amounts
due or to become due to NatCity or (ii) any other finder's, broker's, financial
advisor's, investment banker's or similar fee or commission with respect to the
transactions contemplated by this Agreement to the extent such fee is
attributable to any action undertaken by the Holders or the Company; provided,
however, any liabilities arising out of or resulting from the foregoing may, in
the sole discretion of Parent, be satisfied from any source including, but not
limited to, the Escrowed Funds; and provided, further, that the liability of the
Holders for such liabilities from the Escrowed Funds shall be joint and several
and otherwise shall be several among the Holders, pro rata, based on the
respective portion of the Merger Consideration received by each such Holder
pursuant to Section 2.01(b). Parent and Acquisition Subsidiary shall jointly and
severally indemnify and hold the Holders harmless from and against any and all
liabilities (including but not limited to reasonable attorneys' fees) to which
any of them may be subjected by reason of any finder's, broker's, financial
advisor's, investment banker's or similar fee or commission with respect to the
transactions contemplated by this Agreement to the extent such fee is
attributable to any action undertaken by Parent or Acquisition Subsidiary. The
provisions of this Article X shall survive any termination of this Agreement.
Article XI
NOTICES
Any notice required or permitted to be given by any party under this
Agreement shall be given in writing and shall be deemed effectively given upon
personal delivery to the party to be notified, on the next business day after
delivery to a nationally recognized overnight courier service, when sent by
confirmed facsimile if sent during normal business hours of the recipient, if
not, then on the next business day or five days after deposit with the United
States Post Office, by registered or certified mail, postage prepaid and
addressed to the party to be notified at the address or facsimile number
indicated below for such party or at such other address as such party may
designate upon written notice to the other parties (except that notice of change
of address shall be deemed given upon receipt).
(a) In the case of Parent or Acquisition Subsidiary:
Thor Industries, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxx Xxxxxx, Xxxx 00000
Attn: President
Facsimile: 000-000-0000
Telephone: 000-000-0000
With a copy to:
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Xxxxxx X. Xxxxxxxxx
Facsimile: 000-000-0000
Telephone: 000-000-0000
(b) In the case of the Company:
Damon Corporation
c/o Lindon Investments, Inc.
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Facsimile: 000-000-0000
Telephone: 000-000-0000
With a copy to:
Xxxxxx & Xxxxxxxxx
000 X. Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Facsimile: 000-000-0000
Telephone: 000-000-0000
(c) In the case of the Holders, to the Holder Representative:
Xxxxxx X. Xxxxxxxx
c/o Lindon Investments, Inc.
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
With a copy to:
Xxxxxx & Xxxxxxxxx
000 X. Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Facsimile: 000-000-0000
Telephone: 000-000-0000
Article XII
MISCELLANEOUS
Section 12.01 Expenses.
(a) Irrespective of whether the Closing is effected and except as
otherwise expressly provided herein, Parent and Acquisition Subsidiary shall pay
all costs and expenses that they incur and the Holders shall pay all costs and
expenses that the Company or the Holders incur, including, but not limited to,
legal, accounting, financial advisory and investment banking fees and expenses,
with respect to the negotiation and execution of this Agreement and any other
documents or instruments to be executed and delivered pursuant hereto and the
performance of any covenants to be performed by such party and satisfaction of
any conditions to be satisfied by such party which are contained herein or
therein. The provisions of this Section 12.01 shall survive any termination of
this Agreement.
(b) Notwithstanding Section 12.01(a), upon the Closing, Parent and
Acquisition Subsidiary shall pay, on behalf of the Company and the Holders, (i)
all fees and expenses incurred by the Company and the Holders described in
Section 12.01(a) above, directly to the Company's and Holder's counsel,
investment banker and accountants, as the case may be, as set forth in a
disbursement instruction letter to be delivered by the Company to Parent no
later than two (2) business days prior to the Closing Date and (ii) any fees
payable on or before the Closing Date by the Holders to the Escrow Agent
pursuant to the Escrow Agreement. Not later than two (2) business days prior to
the Closing Date, the Holder Representative shall cause (x) Xxxxxx & Xxxxxxxxx,
counsel to the Company and the Holders, to deliver a letter to Parent indicating
the final amount of legal fees owed it through that date with wire payment
instructions, (y) NatCity, the investment banker for the Company, to deliver a
letter to Parent indicating the final amount of investment banking fees owed to
it with wire payment instructions, (z) C&C to deliver a letter to Parent
indicating the accounting fees owed to it and (aa) Xxxx Xxxxxxxx, a consultant
to the Company, to deliver a letter to Parent indicating the final amount of
fees owed to him with wire payment instructions. All payments by Parent or
Acquisition Subsidiary of fees and expenses pursuant to this Section 12.01(b)
are referred to herein collectively as "Company Expense Payments".
(c) In the event that any costs or expenses of the Company or the
Holders are not paid by the Holders pursuant to Section 12.01(a) or by Parent or
Acquisition Subsidiary pursuant to Section 12.01(b) and, instead, are payable by
the Company (or the Surviving Corporation) following the Closing, such costs and
expenses shall be accrued and reserved on the Estimated Closing Balance Sheet
and the Audited Closing Balance Sheet for purposes of Section 2.01.
Section 12.02 Entire Agreement. This Agreement, together with the Company
Disclosure Schedule and Exhibits hereto and the documents and instruments to be
executed and delivered pursuant hereto, constitute the entire understanding and
agreement by and among the parties hereto with respect to the subject matter
hereof and supersedes all prior negotiations, agreements and understandings
among such parties with respect to the subject matter hereof.
Section 12.03 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only by
an instrument in writing and signed by the party against whom such amendment or
waiver is sought to be enforced; provided, however, that any such amendment or
waiver signed by the Holder Representative shall be binding on all of the
Holders as provided in Section 12.15. The waiver by any party hereto of a breach
of any provision of this Agreement shall not operate or be construed as a
further or continuing waiver of such breach or as a waiver of any other or
subsequent breach. No failure on the part of any party hereto, to exercise and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power or
remedy by any party hereto, preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.
Section 12.04 Successors and Assigns. Acquisition Subsidiary shall have the
right to assign this Agreement and its rights and obligations hereunder to any
wholly-owned subsidiary of Parent. Except as provided in the preceding sentence,
neither this Agreement nor any rights hereunder may be assigned by any party
without the prior written consent of the other parties hereto. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 12.05 Governing Law. This Agreement, including the validity hereof and
the rights and obligations of the parties hereunder and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the domestic substantive laws of the State of
New York without giving effect to any choice of law or conflicts of law
provision or rule that would cause the application of the domestic substantive
laws of any other jurisdiction.
Section 12.06 Severability. If any provision of this Agreement, as applied to
any part or to any circumstance, shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of such provision in a ny other circumstances or the
validity or enforceability of this Agreement.
Section 12.07 No Third-Party Beneficiaries. Nothing in this Agreement, express
or implied, shall create or confer on any person other than the parties or their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities, except as expressly provided herein.
Section 12.08 Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement or any other document or
instrument to be executed or delivered pursuant hereto, the prevailing party
shall be entitled to reasonable attorneys' fees, costs and disbursements in
addition to any other relief to which such party may be entitled.
Section 12.09 Remedies. In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by any party
hereto, the party or parties entitled to the benefit of such covenants or
agreements may, except as may otherwise be expressly provided in this Agreement,
proceed to protect and enforce their rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Agreement. The rights, powers and
remedies of the parties under this Agreement are cumulative and not exclusive of
any other right, power or remedy which such parties may have under any other
agreement or law. No single or partial assertion or exercise of any right, power
or remedy of a party hereunder shall preclude any other or further assertion or
exercise thereof. From and after the Closing Date, the provisions contained in
Article VIII herein shall be the sole and exclusive remedy for monetary damages
arising out of or resulting from the breach of any representations or warranties
made pursuant to Articles III, III.A or IV of this Agreement, absent fraud or
intentional misrepresentation.
Section 12.10 Captions. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
Section 12.11 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
Section 12.12 Certain References. Whenever the context may require, any pronoun
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa. The terms "herein", "hereof" or "hereunder" or
similar terms as used in this Agreement refer to this entire Agreement and not
to the particular provision in which the term is used. Unless otherwise stated,
all references herein to Articles, Sections, subsections or other provisions are
references to Articles, Sections, subsections or other provisions of this
Agreement. All references to the term "business day" shall mean any day on which
banking institutions in New York or Indiana are not required or permitted to be
closed.
Section 12.13 Interpretation. This Agreement shall be construed reasonably to
carry out its intent without presumption against or in favor of either party.
Section 12.14 Consent to Jurisdiction and Service of Process. Each Holder, for
itself, its personal representatives, legatees, heirs and assigns, hereby
consents to the personal jurisdiction of the courts of the County and State of
New York and of the United States District Court for the Southern District of
New York, each as may have competent jurisdiction, with respect to any dispute
or controversy arising under or in connection with this Agreement and agrees
that process issued out of any such court or in accordance with the rules of
practice of such court may be served by mail or other form of substituted
service to the Holder Representative, as provided by Section 12.15, at the
addresses and with copies as provided in Article XI and that any actions therein
may be consolidated in a single action. Each Holder also agrees not to bring any
dispute or controversy arising under or in connection with this Agreement in any
other court. Each Holder waives any defense of inconvenient forum to the
maintenance of any dispute or controversy so brought and waives any bond, surety
or other security that may be required of any other party hereto with respect
such dispute or controversy. Nothing contained herein shall be deemed to prevent
Parent from effecting service of process upon any Holder in any other manner
permitted by law or from commencing any action in any court having competent
jurisdiction.
Section 12.15 Holder Representative. Each of the Holders hereby designates and
appoints the Holder Representative to perform all such acts as are required,
authorized or contemplated by this Agreement and the Escrow Agreement to be
performed by the Holders (including, without limitation, the execution and
delivery of any waivers, consents, approvals, extensions, amendments and other
agreements, the giving and receipt of notices, the resolution of disputes and
any matters or proceedings referred to in Article VIII hereof) and hereby
acknowledges that the Holder Representative shall be the only person authorized
to take any action so required, authorized or contemplated by this Agreement and
the Escrow Agreement by any Holder. Each Holder further designates and appoints
the Holder Representative as it agent for service of process with respect to any
disputes regarding or arising out of this Agreement or any transaction
contemplated hereby. Each Holder acknowledges that the foregoing appointments
and designations shall be coupled with an interest and shall survive the death
or incapacity of such Holder and that the Holder Representative shall not be
liable for any such action taken in good faith. Each Holder hereby authorizes
the other parties hereto to disregard any notice delivered or other action taken
by any Holder pursuant to this Agreement and/or the Escrow Agreement except for
the Holder Representative. The other parties hereto are and will be entitled to
rely on any action so taken or any notice given by the Holder Representative and
are and will be entitled and authorized to give notices only to the Holder
Representative for any notice contemplated by this Agreement to be given to any
Holder.
Section 12.16 Knowledge. As used in this Agreement, the term "knowledge" or
words of similar import means, with respect to (i) the Company, the actual
knowledge of each of Xxxxxx X. Xxxxxxxx, Xxxx Xxxxx, Xxx Xxxxxx and Xxxxx Xxxxx,
(ii) Parent and Acquisition Subsidiary, the actual knowledge of Parent's
Chairman, Vice Chairman and Chief Financial Officer and (iii) each Holder, the
actual knowledge of such Holder, in each case after due and reasonable inquiry,
which, in the case of clauses (i) and (ii) above, shall consist of due and
reasonable inquiry of those officers and Holders of the Company or of those
officers of Parent and Acquisition Subsidiary, as the case may be, who would
normally be expected to have knowledge of the truth or completeness of the
representation or warranty in question.
Section 12.17 Material Adverse Effect. As used in this Agreement, the term
"Material Adverse Effect" means, with respect to the Company, any breach of a
representation or warranty hereunder or a covenant to be performed by the
Company or the Holders the effect of which may be to (x) impede or impair the
operation of the Business in the ordinary course consistent with past practice
or (y) cause the Company (or the Surviving Corporation) to pay or become liable
to pay more than $10,000 to remedy any single such event, violation, breach,
default or termination (as the case may be) or more than $25,000 in the
aggregate for all such events, violations, breaches, or defaults or terminations
(as the case may be).
Section 12.18 Defined Terms. The following terms used in this Agreement shall
have the meanings set forth in the corresponding Articles, Sections or
subsections of this Agreement:
"Acquisition Subsidiary" Heading Paragraph
"Agreement" Heading Paragraph
"Audited Closing Balance Sheet" Section 2.02(c)(ii)
"Audited Statements" Section 3.06
"Basket" Section 10.04
"Business" Whereas Clause 1
"C&C" Section 2.01(c)(iii)
"Certificate" Section 1.08(a)
"Certificate of Merger" Section 1.02
"Closing" Section 7.01
"Closing Date" Section 7.01
"Closing Balance Sheet" Section 2.02(c)(i)
"Code" Section 1.08(a)
"Commonly Controlled Entity" Section 3.19(c)
"Company" Heading Paragraph
"Company's Agreements" Section 3.09
"Company Benefit Plans" Section 3.19(c)
"Company Common Stock" Whereas Clause 2
"Company Disclosure Schedule" Article III
"Company Expense Payments" Section 12.01(b)
"Company Stock Options" Whereas Clause 2
"Consideration Per Common Share" Section 2.02(b)(ii)
"D&T" Section 2.02(c)(ii)
"DGCL" Section 1.01
"Effective Time" Section 1.02
"Election Forms" Section 5.06A(b)
"Environmental Claims" Section 3.27(f)(i)
"Environmental Laws" Section 3.27(f)(ii)
"Environmental Permits" Section 3.27(f)(iii)
"ERISA" Section 3.19(c)
"Escrow Agent" Section 2.02
"Escrow Agreement" Section 2.02
"Escrowed Funds" Section 2.02
"Estimated Closing Balance Sheet" Section 2.01(a)(ii)
"Estimated Merger Consideration" Section 2.01(a)(ii)
"Excluded Assets" Section 2.01(c)
"Excluded Assets Transactions" Section 5.10
"Financial Statements" Section 3.06
"First S Corp. Year" Section 3.18(a)
"GAAP" Section 2.01(c)(i)
"General Representations" Section 8.01
"Governmental Entity" Section 3.05(a)
"Hazardous Materials" Section 3.27(f)(iv)
"Holders" Heading Paragraph
"Holder Releases" Section 7.02(d)
"Holder Representative" Heading Paragraph
"IBCL" Section 1.01
"Indemnitee" Section 8.04
"Indemnitor" Section 8.04
"Independent Firm" Section 2.01(c)(iv)
"Intellectual Property Rights" Section 3.14
"IRS" Section 3.18(b)
"Key Employee" Section 3.19(a)
"Leased Real Property" Section 3.10(b)
"Licenses" Section 3.15
"Lien" Section 3.02(b)
"Losses" Section 8.02
"Merger" Section 1.01
"Merger Consideration" Section 2.01(a)(i)
"Merger Consideration Per Common Share" Section 2.01(b)(ii)
"NatCity" Article X
"NHTSA" Section 3.23
"Objection Notice" Section 2.01(c)(iii)
"Open Purchase Orders" Section 3.09(b)
"Optionholders" Heading Paragraph
"Outside Date" Section 9.01(d)
"Owned Real Property" Section 3.10(a)
"Parent" Heading Paragraph
"PCBs" Section 3.27(e)
"Permitted Liens" Section 3.05(b)
"Personal Representations" Section 8.01
"Products" Whereas Clause 1
"Purchased Excluded Assets" Section 5.10
"Real Property" Section 3.10(b)
"Real Property Leases" Section 3.10(b)
"Release" Section 3.27(f)(v)
"S Corp. Dividends" Section 3.08(q)
"S Corp. State" Section 3.18(a)
"S Corporation" Section 3.18(a)
"SEC" Section 5.06
"Section 338(h)(10) Election" Section 5.01A(a)
"Section 338(h)(10) Election Forms" Section 5.06A(a)
"Securities Act" Section 3.05(a)
"Shareholders" Heading Paragraph
"Special Representation" Section 8.01
"Surviving Corporation" Section 1.01
"State Tax Adjustment" Section 5.01A(a)
"Tax Benefit" Section 2.01(e)
"tax return" Section 3.18(i)
"taxes" Section 3.18(i)
"Taxing Authority" Section 5.05A
"Third Party Claim" Section 8.04(b)
"Unaudited Statements" Section 3.06
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PARENT: THOR INDUSTRIES, INC.
By: /s/ Xxxx X. X. Xxxxxxxx
------------------------------------
Name: Xxxx X.X. Xxxxxxxx
Title: Chairman, President and Chief
Executive Officer
ACQUISITION SUBSIDIARY THOR ACQUISITION CORP.
By: /s/ Xxxx X. X. Xxxxxxxx
------------------------------------
Name: Xxxx X.X. Xxxxxxxx
Title: President
COMPANY: DAMON CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxx Xxxxxx
------------------------------------
Xxx Xxxxxx
/s/ Xxxx Xxxxx
------------------------------------
Xxxx Xxxxx
/s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx
/s/ Xxxxxx Xxxxxx
------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx
/s/ Xxxx Xxxxxxxx
------------------------------------
Xxxx Xxxxxxxx
/s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
/s/ Xxxx Xxxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxxx
Xxxxxx X. and Xxxxx X. Xxxxxxxxx
Revocable Living Trust
dated November 15, 2000
/s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Trustee
/s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx
/s/ Xxxxx Xxxxxxxxx
------------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxxx Xxxxxx
------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxx Xxxx
------------------------------------
Xxxxx Xxxx
/s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
------------------------------------
Xxxxxx Xxxxxx
OPTION HOLDERS: /s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx
The undersigned hereby acknowledges his appointment as the Holder
Representative and his willingness to fulfill the duties of the Holder
Representative as contemplated by this Agreement.
HOLDER REPRESENTATIVE
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxx