EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
by and among
WINSLOEW FURNITURE, INC.
and
XXXXXXX X. XXXXXX; XXXX X. XXXXXXXX; XXXXXX X. XXXXXXXX;
XXXXXXX X. XXXXXXXXX, NOT INDIVIDUALLY BUT AS GUARDIAN FOR
XXXXX X. XXXXXXXXX; XXXXXXX X. XXXXXXXXX, NOT INDIVIDUALLY
BUT AS GUARDIAN FOR XXXXX X. XXXXXXXXX; XXXXXXX X.
XXXXXXXXX, NOT INDIVIDUALLY BUT AS GUARDIAN FOR XXXX X.
XXXXXXXXX; XXXXX X. XXXXXXXX AND XXXXXX X. XXXXXXXX, NOT
INDIVIDUALLY BUT AS GUARDIANS FOR XXXXXXXXXXX X. XXXXXXXX;
XXXXX X. XXXXXXXX AND XXXXXX X. XXXXXXXX, NOT INDIVIDUALLY
BUT AS GUARDIANS FOR XXXXXXX X. XXXXXXXX; XXXXXX X. XXXXXX
AND XXXXX X. XXXXXX, NOT INDIVIDUALLY BUT AS GUARDIANS FOR
XXXXXXX X. XXXXXX; XXXXXX X. XXXXXX AND XXXXX X. XXXXXX, NOT
INDIVIDUALLY BUT AS GUARDIANS FOR XXXXXX X. XXXXXX; XXXXXX
X. XXXXXX AND XXXXX X. XXXXXX, NOT INDIVIDUALLY BUT AS
GUARDIANS FOR XXXXXXXXX X. XXXXXX; XXXXXXX XXXXXXXX AND XXXX
XXXXXXXX, NOT INDIVIDUALLY BUT AS CONSERVATORS FOR XXXXXXX
X. XXXXXXXX; XXXXXXX XXXXXXXX AND XXXX XXXXXXXX, NOT
INDIVIDUALLY BUT AS CONSERVATORS FOR XXXXXX X. XXXXXXXX;
XXXXXXX XXXXXXXX AND XXXX XXXXXXXX, NOT INDIVIDUALLY BUT AS
CONSERVATORS FOR XXXX X. XXXXXXXX; XXXXXXX X. XXXXXXXX, NOT
INDIVIDUALLY BUT AS GUARDIAN FOR XXXX X. XXXXXXXX; XXXXXXXXX
XXXXXX XXXXXX; XXXXXXXX XXXXXX XXXXXX; XXXXX X. XXXXXXXX;
XXXXXX X. XXXXXXXX; XXXX X. XXXXXXXX; XXXXXX X. XXXXXXXX;
XXXXXXX X. XXXXXXXX; XXXXX X. XXXXXXXX; XXXXX X. XXXXXXXX,
the stockholders of Wabash Valley Manufacturing, Inc.
and
WABASH VALLEY MANUFACTURING, INC.
dated as of March 31, 2000
TABLE OF CONTENTS
Page
1. Definitions and Interpretation 1
(a) Definitions 1
(b) Additional Defined Terms 9
(c) Interpretation 10
2. Purchase and Sale of Shares; Satisfaction of Funded
Indebtedness; Closing 10
(a) Basic Transaction 10
(b) Purchase Price 10
(c) Payment at Closing 10
(d) Funded Indebtedness 11
(e) The Closing 11
(f) Deliveries at the Closing 12
(g) Transfer Taxes 13
(h) Net Working Capital Adjustment 13
(i) Distribution to Sellers Prior to Closing. 15
3A. Representations and Warranties of the Sellers as to
Seller Matters 16
(a) Capacity 16
(b) Binding Obligation 16
(c) Noncontravention 16
(d) Litigation 16
(e) Ownership of Company Common Stock 17
(f) Brokers Fees 17
3B. Representations and Warranties of the Sellers and
Company With Respect to the Company 17
(a) Organization/Power and Authority to Conduct Business 17
(b) Noncontravention 17
(c) Brokers Fees 18
(d) Capitalization 18
(e) Financial Statements 18
(f) Absence of Certain Developments 18
(g) Undisclosed Liabilities 20
(h) Legal Compliance 21
(i) Company Permits 21
(j) Tax Matters 21
(k) Certain Business Relationships with the Company 22
(l) Title to Tangible Assets Other than Real Property
Interests 23
(m) Real Property 23
(n) Intellectual Property 24
(o) Material Contracts 24
(p) Powers of Attorney 25
(q) Insurance 25
(r) Litigation 25
(s) Labor Relations 25
(t) Employee Benefits 25
(u) Environmental, Health and Safety Matters 27
(v) Customers and Suppliers 28
(w) Inventory 28
(x) Accounts Receivable 28
(y) List of Accounts 28
(z) Product Warranty 28
(aa) Product Liability 29
(bb) Year 2000 Compliance 29
(cc) Repayment of Seller Loans 29
(dd) Trustee of 401(k) Plan 29
(ee) Employee List. 29
(ff) Medical, Dental, and Workers' Compensation Claims 29
(gg) Pre-paid Advertising. 29
(hh) EPCRA Filings 30
4. Representations and Warranties of the Purchaser 30
(a) Organization 30
(b) Authorization of Transaction; Binding Obligation 30
(c) Noncontravention 30
(d) Brokers Fees 30
(e) Acquisition of Shares for Investment 30
5. Pre-Closing Covenants 31
(a) General 31
(b) Notices and Consents 31
(c) Operation of Business 31
(d) Preservation of Business 31
(e) Full Access 31
(f) Notice of Developments 31
6. Post-Closing Covenants 32
(a) General 32
(b) Transition 32
(c) Litigation Support 32
(d) Noncompetition 32
(e) Non-Solicitation 33
(f) Confidentiality 33
(g) Section 338(h)(10) Election; Certain Tax Matters 34
(h) Certain Employee Matters 35
7. Remedies for Breaches of This Agreement 36
(a) Survival of Representations and Warranties 36
(b) Indemnification 36
(c) Effect of Knowledge of Breach; Determination of
Losses; Treatment of Indemnification Payments 38
(d) Enforcement of Escrow Agreement 39
(e) No Contribution from Company 39
(f) Assignment by Purchaser 39
(g) Exclusive Remedy 39
8. No Shop 39
9. Conditions to Obligation to Close 39
(a) Conditions to Obligation of the Purchaser 39
(b) Conditions to Obligation of the Sellers 41
10. Additional Agreements 41
(a) Sellers? Guarantee of Accounts Receivable 41
(b) Litigation 43
Computer Software Licenses 43
Environmental Matters 43
Product Returns 43
Product Liability Insurance 43
Medical and Dental Reserves 44
NLRB Proceeding 44
Zinc 44
Union Organization 44
11. Termination 45
(a) Termination of Agreement 45
(b) Effect of Termination 45
12. Miscellaneous 46
(a) No Third-Party Beneficiaries 46
(b) Entire Agreement 46
(c) Succession and Assignment 46
(d) Counterparts 46
(e) Headings 46
(f) Notices 46
(g) Governing Law; Jurisdiction 47
(h) Amendments and Waivers 48
(i) Arbitration 48
(j) Equitable Remedies 48
(k) Waiver of Jury Trial 49
(l) Prevailing Parties 49
(m) Severability 49
(n) Expenses 49
(o) Construction 49
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made
this 31 day of March, 2000, by and among WINSLOEW
FURNITURE, INC., a Florida corporation (the "Purchaser"),
WABASH VALLEY MANUFACTURING, INC., an Indiana Corporation
(the "Company"), and the following selling shareholders,
XXXXXXX X. XXXXXX; XXXX X. XXXXXXXX; XXXXXX X. XXXXXXXX;
XXXXXXX X. XXXXXXXXX, NOT INDIVIDUALLY BUT AS GUARDIAN FOR
XXXXX X. XXXXXXXXX; XXXXXXX X. XXXXXXXXX, NOT INDIVIDUALLY
BUT AS GUARDIAN FOR XXXXX X. XXXXXXXXX; XXXXXXX X.
XXXXXXXXX, NOT INDIVIDUALLY BUT AS GUARDIAN FOR XXXX X.
XXXXXXXXX; XXXXX X. XXXXXXXX AND XXXXXX X. XXXXXXXX, NOT
INDIVIDUALLY BUT AS GUARDIANS FOR XXXXXXXXXXX X. XXXXXXXX;
XXXXX X. XXXXXXXX AND XXXXXX X. XXXXXXXX, NOT INDIVIDUALLY
BUT AS GUARDIANS FOR XXXXXXX X. XXXXXXXX; XXXXXX X. XXXXXX
AND XXXXX X. XXXXXX, NOT INDIVIDUALLY BUT AS GUARDIANS FOR
XXXXXXX X. XXXXXX; XXXXXX X. XXXXXX AND XXXXX X. XXXXXX, NOT
INDIVIDUALLY BUT AS GUARDIANS FOR XXXXXX X. XXXXXX; XXXXXX
X. XXXXXX AND XXXXX X. XXXXXX, NOT INDIVIDUALLY BUT AS
GUARDIANS FOR XXXXXXXXX X. XXXXXX; XXXXXXX XXXXXXXX AND XXXX
XXXXXXXX, NOT INDIVIDUALLY BUT AS CONSERVATORS FOR XXXXXXX
X. XXXXXXXX; XXXXXXX XXXXXXXX AND XXXX XXXXXXXX, NOT
INDIVIDUALLY BUT AS CONSERVATORS FOR XXXXXX X. XXXXXXXX;
XXXXXXX XXXXXXXX AND XXXX XXXXXXXX, NOT INDIVIDUALLY BUT AS
CONSERVATORS FOR XXXX X. XXXXXXXX; XXXXXXX X. XXXXXXXX, NOT
INDIVIDUALLY BUT AS GUARDIAN FOR XXXX X. XXXXXXXX; XXXXXXXXX
XXXXXX XXXXXX; XXXXXXXX XXXXXX XXXXXX; XXXXX X. XXXXXXXX;
XXXXXX X. XXXXXXXX; XXXX X. XXXXXXXX; XXXXXX X. XXXXXXXX;
XXXXXXX X. XXXXXXXX; XXXXX X. XXXXXXXX; XXXXX X. XXXXXXXX
(each individually, a "Seller" and collectively, the
"Sellers"). The Purchaser, the Company, and the Sellers are
each referred to in this Agreement as a "Party" and
collectively as the "Parties."
The Sellers directly own all of the outstanding capital
stock of the Company.
This Agreement contemplates a transaction in which the
Purchaser will purchase from the Sellers, and the Sellers
will sell to the Purchaser, all of the outstanding capital
stock of the Company.
NOW, THEREFORE, in consideration of the premises and the
mutual promises herein made, and in consideration of the
representations, warranties and covenants herein contained,
the Parties agree as follows.
1. Definitions and Interpretation.
(a) Definitions. As used in this Agreement, the following
terms have the meaning specified or referred to below:
"Accounts Receivable" means all of the Company's accounts,
instruments, drafts, acceptances and other forms of
receivables and all rights earned under the Company's
contracts to sell goods or render services.
"Accrued Commissions" means accrued commissions payable by
the Company calculated in accordance with GAAP applied on a
basis consistent with the preparation of the Financial
Statements.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the
meaning of section1504 of the Code.
"Authority" means any federal, state, local or foreign
governmental regulatory agency, commission, bureau,
authority, court or arbitration tribunal.
"Available Cash" means all Cash held by the Company as of
midnight on the day before the Closing Date less (i) an
amount of Cash necessary to cover outstanding checks (which
are not otherwise stale) which have been mailed or otherwise
delivered by the Company but which have not cleared.
"Business Day" means a day which is not a Saturday, Sunday,
or a legal holiday on which banking institutions in the
State of Indiana are authorized to be closed.
"Business of the Company" means the manufacturing and
distribution of site amenities including, but not limited
to, furniture and fixtures, and any other business in which
the Company is currently involved.
"Cash" means cash and cash equivalents (including marketable
securities and short term investments) calculated in
accordance with GAAP applied on a basis consistent with the
preparation of the Financial Statements.
"Changes in Accounting Principles" includes all changes in
accounting principles, policies, practices, procedures or
methodologies with respect to financial statements, their
classification or their display, as well as all changes in
practices, methods, conventions or assumptions (unless
required by objective changes in underlying events) utilized
in making accounting estimates.
"Charter and bylaws" respectively, mean with respect to any
corporation, those instruments that, among other things, (i)
define its existence, as filed or recorded with the
applicable Authority, including such corporation's Articles
or Certificate of Incorporation, and (ii) otherwise govern
its internal affairs, in each case as amended, supplemented,
or restated.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Common Stock" means the Common Stock, no par value,
of the Company.
"Confidential Information" means data and information
relating to the business of the Company (which does not rise
to the level of a Trade Secret) and which has value to the
Company and is not generally known to its competitors.
Confidential Information does not include any data or
information that (i) has been voluntarily disclosed to the
public by the Company, (ii) has been independently developed
and disclosed by others, (iii) otherwise enters the public
domain through lawful means.
"Contribution and Agency Agreement" means the Contribution
and Agency Agreement by and among the Sellers dated as of
March 31, 2000, attached as Exhibit A.
"Disclosure Schedule" means the Disclosure Schedule
accompanying this Agreement. Any matters disclosed in such
Disclosure Schedule shall be deemed to qualify each and
every representation and warranty of the Sellers in this
Agreement to which such matters are relevant.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA section3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA section3(1).
"Employment Agreements" means the Employment Agreements to
be entered into between the Company and, Xxxxx X. Xxxxxxxx
and Xxxxxxx X. Xxxxxxxx, respectively, at Closing
substantially in the form of Exhibit B hereto.
"Environmental, Health and Safety Requirements" means all
federal, state, local, regional and foreign statutes,
regulations and ordinances concerning workplace health and
safety and pollution or protection of the environment,
including all those relating to the presence, use,
production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control
or cleanup of any hazardous materials, substances or wastes.
"Environmental Claim" means any written notice or claim by
any person or any Authority alleging potential liability
(including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or
penalties) arising out of, based on or resulting from (i)
the presence, release or threatened release into the
environment, of any Material of Environmental Concern at any
location, whether or not owned, leased or operated by the
Company, or (ii) any violation, or alleged violation, of any
Environmental, Health and Safety Requirement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means any Person that would be aggregated
with the Company under section414(b), (c), (m) or (o) of the
Code.
"Escrow Agreement" means the Escrow Agreement, in the form
of Exhibit C hereto, to be entered into on the Closing Date
by the Purchaser, the Sellers and the Escrow Agent.
"Escrow Agent" has the meaning set forth in Paragraph
2(c)(ii) below.
"Escrow Funds" has the meaning set forth in Paragraph
2(c)(ii) below.
"Funded Indebtedness" means, with respect to any Person
(without duplication), the aggregate amount (including the
current portions thereof) of (i) all indebtedness of such
Person for money borrowed from others, (ii) all obligations
of such Person evidenced by notes, bonds, debentures or
other similar instruments, (iii) all obligations, contingent
or otherwise, of such Person for the deferred purchase price
of assets, property or services other than trade payables
incurred in the ordinary course of business, (iv) all
indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of
default are limited to the repossession or sale of such
property), (v) all obligations of such Person as lessee
under leases that have been, in accordance with GAAP,
recorded as capital leases, (vi) all obligations, contingent
or otherwise, of such Person to purchase, redeem, retire,
defease or otherwise acquire for value any capital stock of
such Person or any warrants, rights or options to acquire
such capital stock, valued, in the case of redeemable
preferred stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid
dividends, (vii) all indebtedness or obligations of others
of the type described in clauses (i) through (vi) above
guaranteed, directly or indirectly, in any manner by such
Person, or in effect guaranteed, directly or indirectly, in
any manner by such Person, through an agreement, contingent
or otherwise, to supply funds to, or in any other manner
invest in, the debtor, or to purchase indebtedness, or to
purchase and pay for property if not delivered or to pay for
services if not performed, primarily for the purpose of
enabling the debtor to make payment of the indebtedness or
to assure the owners of the indebtedness against loss, but
excluding endorsements of checks and other instruments in
the ordinary course, (viii) all indebtedness or obligations
of the type described in clauses (i) through (vi) above
secured by (or for which the holder or obligee thereof has
an existing right, contingent or otherwise, to be secured
by) any Lien upon property owned by such Person, even though
such Person has not in any manner become liable for the
payment of such indebtedness or obligations and (ix)
interest expense accrued but unpaid, and all fees and
prepayment premiums, on or relating to any of the foregoing,
however, Funded Indebtedness shall in any event exclude
trade accounts payable and accrued expenses of the type
reflected in the Financial Statements.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"IRS" means the Internal Revenue Service.
"Information Technology" means computer software, computer
firmware, computer hardware (in each case whether general or
specific purpose) and other similar or related items of
automated, computerized or software systems that are used or
relied upon by any Person in the conduct of such Person's
trade or business.
"Intellectual Property" means (i) all national and
multinational patents and patent applications and statutory
invention registrations, (ii) all trademarks, service marks,
trade dress, logos, trade names, Internet domain names and
corporate names, and all related national and multinational
registrations, applications and renewals, together with all
goodwill associated therewith (including all translations,
adaptations, derivations and combinations of the foregoing),
(iii) all copyrights and copyrightable works and all related
national and multinational registrations, applications and
renewals, (iv) all Trade Secrets and Confidential
Information, including inventions (whether reduced to
practice or not and whether patentable or not), ideas,
compositions, know-how, manufacturing and production
processes and techniques, research and development
information, drawings, specifications, designs, plans,
proposals, technical data, business and marketing plans, and
customer and supplier lists and related information) and (v)
all computer software and related source codes,
specifications and data (including data, data bases and
documentation).
"Inventory" means all of the inventories of the Company,
including raw materials, work in progress, finished goods,
packaging goods and other like items.
"Knowledge" means with respect to the Sellers, the actual
knowledge of any one or more members of the Sellers' Agent
Committee that such representation or warranty is not true
and correct to the same extent as provided in the applicable
representation and warranty, after reasonable investigations
and inquiries of the officers and responsible employees of
the Company, and (ii) with respect to the Purchaser, the
actual knowledge of Xxxxx Xxxxxx, Xxxxxxx X. Xxxxxxxxx, Xx.,
Xxxx X. Xxxxxxxx, or Xxxxxxx X. Xxxx that such
representation or warranty is not true and correct to the
same extent as provided in the applicable representation and
warranty.
"Lien" means any mortgage, pledge, lien, encumbrance, charge
or other security interest, whether or not related to the
extension of credit or the borrowing of money.
"Loss" or "Losses" means all damages, dues, penalties,
fines, reasonable amounts paid in settlement, Taxes, costs,
obligations, losses, expenses, and fees (including court
costs and reasonable attorneys' fees and expenses),
including, as the context may require, any of the foregoing
which arise out of or in connection with any actions, suits,
proceedings, hearings, third party investigations, charges,
complaints, claims, demands, injunctions, judgments, orders,
decrees or rulings.
"Material Adverse Change" or "Material Adverse Effect" means
any change or effect that is materially adverse to the
business, assets, financial condition or results of
operations of the Company.
"Material Contract" means any contract or agreement whether
written or oral to which the Company is a party, or by which
the Company or any of its assets is bound, and which (a)
relates to Funded Indebtedness or is a letter of credit,
pledge, bond or similar arrangement running to the account
of or for the benefit of the Company, (b) relates to the
purchase, maintenance or acquisition of, or sale or
furnishing of, materials, supplies, merchandise, machinery,
equipment, parts or any other property or services
(excluding any such contract made in the Ordinary Course of
Business and which is expected to be fully performed within
90 days of the date hereof or which involves revenues or
expenditures of less than $50,000), (c) is a collective
bargaining agreement, (d) obligates the Company not to
compete with any business, or which otherwise restrains or
prevents the Company from carrying on any lawful business or
which restricts the right of the Company to use or disclose
any information in its possession (excluding in each case
customary restrictive covenants contained in agreements
entered into in the Ordinary Course of Business), (e)
relates to (i) employment, compensation, severance, or
consulting between the Company and any of its officers or
directors, or (ii) between the Company and any other
employees or consultants of the Company who are entitled to
compensation thereunder in excess of $35,000 per annum, (f)
is a lease or sublease of real property, or a lease,
sublease or other title retention agreement or conditional
sales agreement involving annual payments in excess of
$25,000 individually or $100,000 in the aggregate for any
machinery, equipment, vehicle or other tangible personal
property (whether the Company is a lessor or lessee), (g) is
a contract for capital expenditures or the acquisition or
construction of fixed assets for or in respect of any real
property involving payments to be made after the date hereof
in excess of $50,000, (h) is a contract granting any Person
a Lien on any of the assets of the Company, in whole or in
part (other than Permitted Liens), (i) is a contract by
which the Company retains any manufacturer's
representatives, broker or other sales agent, distributor or
representative or through which the Company is appointed or
authorized as a sales agent, distributor or representative,
(j) is a joint venture or partnership contract or a limited
liability company operating agreement with any Seller, or
with any Affiliate of any Seller, (k) is (i) an agreement
for the storage, transportation, treatment and disposal of
any materials subject to regulation under any Environmental
Health and Safety Requirements, or (ii) a contract for
storage, transportation or similar services with carriers or
warehousemen (excluding any such contract entered into in
the Ordinary Course of Business and involving aggregate
annual expenditures not exceeding $50,000), (l) is an
agreement or arrangement with any Affiliate of any Seller,
or (m) any other agreement (or group of related agreements)
the performance of the executory portion of which involves
consideration in excess of $50,000 or which cannot be
terminated by the Company upon 90 days notice.
"Materials of Environmental Concern" means chemicals,
pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum and petroleum products in
each case with respect to which liability or standards of
conduct are imposed pursuant to any Environmental, Health
and Safety Requirements.
"Most Recent Balance Sheet" means the balance sheet
contained within the Most Recent Financial Statements.
"Multiemployer Plan" has the meaning set forth in ERISA
section3(37).
"Net Working Capital at Closing" means the total current
assets of the Company, including Cash (other than Available
Cash), Accounts Receivable (including any 90 and Over
Accounts Receivable described in section10[b]), Inventory
(valued as described in section 3B(w) of this Agreement and
section 3B(w) Disclosure Schedule), prepaid expenses, and
deposits minus the total current liabilities of the Company
(which current liabilities shall include (i) accounts
payable-trade and accrued expenses [including Accrued
Commissions], (ii) a reserve for unpaid medical and dental
claims submitted to the Company but unpaid as of Closing,
and (iii) any accrual for vacation and holidays carried
over from calendar year 1999, but shall exclude (a) the
current portion of any Funded Indebtedness, and (b) any
reserves or accruals for medical or dental claims or accrued
vacation and holidays other than those described above), in
each case determined as of the open of business on the
Closing Date and by reference to the amounts set forth on
the face (but not the notes) of the Closing Balance Sheet,
subject to the provisions of this definition and after
giving effect to the transactions contemplated in
sections 2(c) and 2(d) below. With respect to any calculation
of Net Working Capital at Closing, except as expressly
provided in this Agreement, no Change in Accounting
Principles will be made from those utilized in preparing the
Financial Statements including with respect to the nature of
accounts, in determining the level of reserves or in
determining the level of accruals.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including
with respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under
ERISA.
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure
proceeding shall have been commenced: (i) Liens set forth in
the Disclosure Schedule or noted in the Financial
Statements, (ii) Liens for Taxes not yet due and payable and
for which adequate reserves are maintained on the financial
statements of the Company as of the Closing Date in
accordance with GAAP, (iii) pledges or deposits to secure
obligations under workers or unemployment compensation Laws
or similar legislation or to secure public or statutory
obligations, (iv) mechanic's, materialman's, supplier's,
vendor's or similar Liens arising in the Ordinary Course of
Business securing amounts which are not overdue and for
which adequate reserves are maintained on the financial
statements of the Company as of the Closing Date in
accordance with GAAP and (v) deposits to secure the
performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a
like nature incurred in the Ordinary Course of Business.
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated
organization or a governmental entity (or any department,
agency or political subdivision thereof).
"Phase I Site Assessments" means the Phase I Site
Assessments, Projects 80Z2202 and 80Z2203 prepared by
Envirocorp, Inc., dated February, 2000.
"Restricted Area" means (i) the State of Indiana, and (ii)
each of the other states, territories and possessions of the
United States and each of the other countries and
territories of the World in which the Company conducts or
has conducted the Business of the Company during the five
years preceding the Closing Date .
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Sellers' Agent Committee" shall mean those Sellers
authorized to act as the agent of the Sellers individually
and collectively under and pursuant to the terms of the
Contribution and Agency Agreement.
"Subscription and Shareholders' Agreement" means the
Subscription and Shareholders' Agreement to be entered into
among Purchaser, Xxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxxx
in the form of Exhibit D hereto.
"Subsidiary" when used with respect to any Person means any
other Person, whether incorporated or unincorporated, of
which (i) more than 50% of the securities or other ownership
interests or (ii) securities or other interests having by
their terms ordinary voting power to elect more than 50% of
the board of directors or others performing similar
functions with respect to such corporation or other
organization, is directly owned or controlled by such Person
or by any one or more of its Subsidiaries.
"Taxes" means all federal, state, local and foreign taxes
(including income or profits taxes, premium taxes, excise
taxes, sales taxes, use taxes, gross receipts taxes,
franchise taxes, ad valorem taxes, severance taxes, capital
levy taxes, transfer taxes, value added taxes, employment
and payroll-related taxes, property taxes, business license
taxes, occupation taxes, import duties and other
governmental charges and assessments), of any kind
whatsoever, including interest, additions to tax and
penalties with respect thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim
for refund or information return or statement relating to
Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"Trade Secrets" means information relating to the Company,
without regard to form, including technical or nontechnical
data, formulas, patterns, compilations, programs, devices,
methods, techniques, drawings, processes, financial data,
financial plans, product plans or lists of actual or
potential customers or suppliers which is not commonly known
by or available to the public and which (a) derives economic
value, actual or potential, from not being known to, and not
being readily ascertainable by proper means by, other
persons who can obtain economic value from its disclosure or
use, and (b) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy.
"Transaction Documents" means this Agreement and the
Employment Agreement(s), Escrow Agreement, Contribution and
Agency Agreement, Subscription and Shareholders' Agreement,
and Purchase Price Calculation Certificate.
"Year 2000 Compliant" means, with respect to the Company's
Information Technology, that (i) the information technology
is designed to be used prior to, during and after the
calendar year 2000 A.D., (ii) the Information Technology
used during each such time period will accurately receive,
provide and process date/time data (including calculating,
comparing and sequencing) from, into and between the 20th
and 21st centuries, including the years 1999 and 2000 and
leap-year calculations and (iii) the Information Technology
will not malfunction, cease to function or provide invalid
or incorrect results as a result of date/time data, in each
case to the extent that Information Technology of third
parties, used in combination with the Company's Information
Technology, properly exchanges date/time data with the
Company's Information Technology.
(b) Additional Defined Terms. As used in this Agreement,
the following terms have the meanings specified in the
Sections referred to below:
Term Section
AAA 12(i)
Accountant 2(h)(ii)
Agreement Preamble
Closing 2(e)
Closing Balance Sheet 2(h)(i)
Closing Date 2(e)
Company Recitals
Company Permits 3B(i)
Defense Counsel 7(b)(iv)
Defense Notice 7(b)(iv)
Employee Benefit Plan 3B(t)
Financial Statements 3B(e)
WinsLoew Recitals
Indemnified Parties 7(b)(iv)
Indemnifying Parties 7(b)(iv)
Real Property 3B(m)
Most Recent Financial Statements 3B(e)
Most Recent Fiscal Month End 3B(e)
Most Recent Fiscal Year End 3B(e)
Net Working Capital at Closing 2(h)(i)
Objection Notice 2(h)(ii)
Party(ies) Preamble
Pre-Closing Tax Periods 6(g)(i)
Property 3B(m)
Purchase Price 2(b)
Purchase Price Calculation Certificate 2(c)(i)
Purchaser Preamble
Rules 12(i)
Section 338(h)(10) Election 6(g)(i)
S Corporation Tax Period 3B(j)(iv)
Shares 2(a)
Sellers Preamble
Seller Transaction Expenses 2(c)(i)
Third Party Claim 7(b)(iv)
(c) Interpretation. As used in this Agreement, the word
"including" means without limitation, the word "or" is not
exclusive and the words" herein", "hereof", "hereby"," hereto" and
"hereunder" refer to this Agreement as a whole. Unless the
context otherwise requires, references herein: (i) to
Articles, Sections, Exhibits and Schedules (including the
Disclosure Schedule) mean the Articles and Sections of and
the Exhibits and Schedules attached to this Agreement; (ii)
to an agreement, instrument or document means such
agreement, instrument or document as amended, supplemented
and modified from time to time to the extent permitted by
the provisions thereof and by this Agreement; and (iii) to a
statute means such statute as amended from time to time and
includes any successor legislation thereto. The Schedules
(including the Disclosure Schedule) and Exhibits referred to
herein shall be construed with and as an integral part of
this Agreement to the same extent as if they were set forth
verbatim herein. Titles to Articles and headings of
Sections are inserted for convenience of reference only and
shall not be deemed a part of or to affect the meaning or
interpretation of this Agreement.
2. Purchase and Sale of Shares; Satisfaction of Funded
Indebtedness; Closing.
(a) Basic Transaction. Pursuant to discussions and
negotiations between the Purchaser and various groups of
Sellers holding, respectively, majority and minority
interests in the Company, said groups collectively owning
all of the outstanding stock of the Company, and on and
subject to the terms and conditions of this Agreement, the
Purchaser agrees to purchase from the Sellers, and the
Sellers agree to sell to the Purchaser, free and clear of
all restrictions on transfer (other than restrictions under
the Securities Act and state securities laws), liens, claims
and demands, all of the shares of Common Stock owned by the
Sellers (the "Shares") as set forth in section3B(d) of the
Disclosure Schedule hereto for the consideration specified
below in this section 2.
(b) Purchase Price. Purchaser has agreed to pay Sellers,
comprising groups holding majority and minority interests
respectively in the Company, aggregate purchase price for
all of the Shares (the "Purchase Price") in the amount of
(i) $35,500,000.00 plus Available Cash, if any, minus (ii)
the amount of the Company's Funded Indebtedness as of the
open of business on the Closing Date. The Purchase Price
payable to the Sellers at Closing is subject to adjustment
as set forth in section 2(h). The Purchase Price shall be
allocated among the Sellers comprising groups holding
majority and minority interests respectively, in the Company
in accordance with the applicable percentages reflected in
section 3B(d) of the Disclosure Schedule.
(c) Payment at Closing. On the Closing Date, the Purchaser
shall make payment of the Purchase Price as follows:
(i) The Purchase Price, minus (A) $1,500,000.00 to be
deposited as the Escrow Funds pursuant to section2(c)(ii)
below, and minus (B) $500,000.00 to be paid to the Sellers'
Agent Committee as the Fees and Expenses Fund pursuant to
section 2(c)(iii) below, shall be paid to the Sellers, by
wire transfer of immediately available funds, to an account
or accounts designated in writing by the Sellers' Agent
Committee prior to the Closing, against delivery by the
Sellers to the Purchaser of a stock certificate or
certificates representing all of the Shares, duly endorsed
in blank or accompanied by duly executed assignment
documents, sufficient in form and substance to convey to the
Purchaser good title to such Shares, free and clear of all
restrictions on transfer (other than restrictions under the
Securities Act and state securities laws), liens, claims and
demands. It shall be the responsibility of the Sellers'
Agent Committee to distribute the proceeds from said account
or accounts in accordance with instructions from the
Sellers. The Sellers' Agent Committee may direct the
Purchaser to deliver a portion of the Purchase Price to
certain third parties, including without limitation McDonald
Investments Inc., and Bose XxXxxxxx & Xxxxx LLP for fees,
expenses, costs or other obligations of the Sellers arising
out of or in connection with the transactions contemplated
in this Agreement (the "Seller Transaction Expenses"). The
amount so delivered shall be withheld from the Purchase
Price payable at Closing in accordance with such written
directions of the Sellers' Agent Committee. At the Closing,
the Sellers' Agent Committee shall deliver to the Purchaser
a certificate (the "Purchase Price Calculation
Certificate"), in the form of Exhibit E hereto, setting
forth (i) the amount of all Funded Indebtedness of the
Company outstanding immediately prior to the Closing and
(ii) the amount of Seller Transaction Expenses (if any).
(ii) The sum of $1,500,000.00 (the "Escrow Funds") to
SunTrust Bank, Atlanta, as escrow agent (the "Escrow Agent")
pursuant to the terms of the Escrow Agreement. As provided
in the Escrow Agreement, the Escrow Funds shall be held in
an account (the "Escrow Account") to provide indemnification
to the Purchaser and the Company as provided in section 7
hereof.
(iii) The sum of $500,000.00 (the "Fees and Expenses Fund")
to an account designated by the Sellers' Agent Committee by
wire transfer pursuant to the Contribution and Agency
Agreement.
Funded Indebtedness. On the Closing Date, concurrently with
the Closing, the Purchaser and/or the Company (as determined
by the Purchaser) shall deliver to the holders of Funded
Indebtedness an amount sufficient to repay all Funded
Indebtedness outstanding immediately prior to the Closing,
with the result that immediately following the Closing there
will be no further obligations of the Company, monetary or
otherwise, with respect to any Funded Indebtedness
outstanding immediately prior to the Closing. Prior to the
Closing Date, the Sellers will provide the Purchaser with
customary pay-off letters from all holders of Funded
Indebtedness outstanding immediately prior to the Closing,
and make arrangements reasonably satisfactory to the
Purchaser for such holders to provide to the Purchaser
recordable form mortgage and lien releases, canceled notes,
trademark and patent assignments (if applicable) and other
documents reasonably requested by the Purchaser
simultaneously with the Closing. If the Purchaser directs
the Company to pay any of the Company's funded indebtedness,
it shall provide the Company with sufficient funds to do so.
The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the
offices of Bose, XxXxxxxx & Xxxxx LLP, 135 N. Pennsylvania
Street, 0000 Xxxxx Xxxxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxx
00000 (or at such other location as the Parties may agree or
by the execution and delivery of the closing documents by a
courier agreed to by the Parties), on the 31st day of March,
2000, or such other date as the Sellers and the Purchaser
may mutually determine (the "Closing Date"), but no later
than April 7, 2000, and shall be effective for all purposes
of this Agreement as of 12:01 a.m., Central Standard Time,
on the Closing Date. Except as otherwise provided herein,
all proceedings to be taken and all documents to be executed
at the Closing shall be deemed to have been taken, delivered
and executed simultaneously, and no proceeding shall be
deemed taken nor documents deemed executed or delivered
until all have been taken, delivered and executed.
(f) Deliveries at the Closing. At the Closing:
(i) Xxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxxx and the
Company shall execute and deliver their respective
Employment Agreement;
(ii) The Purchaser, Xxxxx X. Xxxxxxxx and Xxxxxxx X.
Xxxxxxxx shall execute and deliver the Subscription and
Shareholders' Agreement;
(iii) The Sellers shall execute and deliver the Contribution
and Agency Agreement;
(iv) The Sellers' Agent Committee shall deliver to the
Purchaser (A) a certificate issued by the Secretary of State
of the State of Indiana and each state (if any) in which the
Company is qualified as a foreign entity, as of a date
reasonably acceptable to the Purchaser, as to the existence
(or, as applicable) of the Company in such states, and (B) a
tax clearance certificate from the State of Indiana, if and
to the extent available, as of a date reasonably acceptable
to the Purchaser;
(v) The Sellers shall deliver to the Purchaser (A) a copy
of the Company's Charter, as amended to date, certified as
of the recent date by the Secretary of State of the State of
Indiana, and (B) all minute books, stock transfer books,
blank stock certificates and corporate seals of the Company;
(vi) The Sellers shall deliver to the Purchaser a
certificate of the Secretary of the Company, dated the
Closing Date, in form and substance reasonably satisfactory
to the Purchaser, as to (A) the Charter of the Company and
no amendments thereto since a specified date, (B) the bylaws
of the Company, (C) the resolutions of the directors of the
Company authorizing the execution and performance by the
Company of this Agreement and the transactions contemplated
thereby and (D) incumbency and signatures of the officers of
the Company executing this Agreement and any other
agreement, instrument or document executed by the Company in
connection with this Agreement;
(vii) The Purchaser shall deliver to the Sellers a
certificate issued by the Secretary of State of the State of
Florida, as of a date reasonably acceptable to the Sellers,
as to the good standing (or non-dissolution, as applicable)
of the Purchaser in such state;
(viii) The Purchaser shall deliver to the Sellers a
copy of the Purchaser's Charter, as amended to date,
certified as of the recent date by the Secretary of State of
the State of Florida;
(ix) The Purchaser shall deliver to the Sellers a
certificate of the Secretary of the Purchaser, dated the
Closing Date, in form and substance reasonably satisfactory
to the Sellers, as to (A) the Charter of the Purchaser and
no amendments thereto since a specified date; (B) the bylaws
of the Purchaser; (C) the resolutions of the directors of
the Purchaser authorizing the execution and performance of
this Agreement and the transactions contemplated hereby; and
(C) incumbency and signatures of the officers of the
Purchaser executing this Agreement and any other agreement,
instrument or document executed by the Purchaser in
connection herewith;
(x) The Sellers shall deliver to the Purchaser the
resignations of all of the directors of the Company, which
resignations shall be effective as of the Closing;
(xi) The Sellers shall deliver to the Purchaser the various
certificates and documents referred to in section 9(a) below, and
(xii) The Purchaser shall deliver to the Sellers the various
certificates and documents referred to insection 9(b) below.
(xiii) The Purchaser shall deliver the Purchase Price
to the Sellers and the Escrow Agent in accordance with section 2(c)
above;
(xiv) The Sellers shall deliver to the Purchaser an opinion
letter from Sellers' attorney in the form of Exhibit F
hereto; and
(xv) The Purchaser shall deliver to the Sellers an opinion
letter from Purchaser's attorney in the form of Exhibit G
hereto.
(g) Transfer Taxes. The Sellers, jointly and severally,
shall be responsible for the payment of all transfer,
documentary, sales, use, stamp, registration and other such
Taxes and fees (including any penalties and interest), if
any, which may be payable with respect to the transactions
contemplated by this Agreement. The Sellers will, at their
own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other such
Taxes and fees and, if required by applicable law, the
Purchaser will, and will cause the Company to, join in the
execution of any such Tax Returns and other documentation.
(h) Net Working Capital Adjustment.
(i) As promptly as practicable, but in no event later than
30 days after the Closing Date, the Purchaser shall prepare
and deliver to the Sellers' Agent Committee a balance sheet
of the Company as of the open of business on the Closing
Date prepared in accordance with GAAP with no Change in
Accounting Principles from those utilized in preparing the
Financial Statements including with respect to the nature of
accounting in determining the level of reserves or in
determining the level of accruals (the "Closing Balance
Sheet"), together with a schedule setting forth in
reasonable detail the Purchaser's good faith calculation of
the Net Working Capital at Closing.
(ii) The Purchaser and its accountants shall permit the
Sellers' Agent Committee and its representatives to have
full access to the books, records and other documents
(including work papers) pertaining to or used in connection
with preparation of the Closing Balance Sheet and the
Purchaser's calculation of the Net Working Capital at
Closing and provide the Sellers' Agent Committee and their
representatives with copies thereof (as reasonably requested
by the Sellers' Agent Committee). If the Sellers' Agent
Committee disagrees with the Purchaser's calculation of the
Net Working Capital at Closing as set forth on the schedule
attached to the Closing Balance Sheet or with any other
aspect of the Closing Balance Sheet for any purpose under
this Agreement, the Sellers' Agent Committee shall notify
the Purchaser in writing of such disagreement (the
"Objection Notice") (such Objection Notice setting forth the
basis for such disagreement in reasonable detail) within 15
Business Days after the Purchaser's delivery of the Closing
Balance Sheet to the Sellers' Agent Committee. The
Purchaser and the Sellers' Agent Committee thereafter shall
negotiate in good faith to resolve any such disagreements
with respect to the computation of the Net Working Capital
at Closing or any other aspect of the Closing Balance Sheet.
If the Purchaser and the Sellers' Agent Committee are unable
to resolve any such disagreements within 15 Business Days
after the delivery of the Objection Notice to the Purchaser
by the Sellers' Agent Committee, the Purchaser and the
Sellers' Agent Committee shall submit the dispute to a so-
called "big five" public accounting firm (or a successor
thereto) jointly selected by the Purchaser and the Sellers'
Agent Committee (the "Accountant") for resolution; and at
the time of such submission, the Purchaser and the Sellers'
Agent Committee shall each disclose to the other any
professional relationships by and between the Sellers and
the Purchasers and its shareholders, directors, and
officers, and any such "big five" accounting firms during
the three (3) year period immediately prior to Closing. If
the Purchaser and the Sellers are unable to agree upon the
Accountant, the Accountant shall be a so-called "big five"
accounting firm (or a successor thereto) selected by lot
(after the Purchaser and the Sellers each exclude one such
accounting firm). The Purchaser and the Sellers agree to
release the Accountant from any and all claims or
liabilities for any services performed by the Accountant in
resolving any dispute concerning the computation of Net
Working Capital at Closing.
(iii) The Purchaser and the Sellers' Agent Committee shall
use their respective best efforts to cause the Accountant
to resolve all disagreements with respect to the Net Working
Capital at Closing or otherwise with respect to the Closing
Balance Sheet as soon as practicable, but in any event shall
direct the Accountant to render a determination within 30
days of its retention. The Accountant shall consider only
those items and amounts in the Closing Balance Sheet which
are identified in the Objection Notice as being items which
the Purchaser and the Sellers' Agent Committee are unable to
resolve. In resolving any disputed item, the Accountant may
not assign a value to any item greater than the greatest
value for such item claimed by either party or less than the
smallest value for such item claimed by either party. The
Accountant's determination shall be based solely on
presentations by the Purchaser and the Sellers' Agent
Committee (i.e., not on independent review), and on the
definition of Net Working Capital included herein. The
determination of the Accountant shall be conclusive and
binding upon the Sellers and the Purchaser and constitute
the Net Working Capital at Closing for purposes of this
Agreement.
(iv) The Accountant shall determine the allocation of its
costs and expenses in resolving any disputes relating to the
determination of Net Working Capital at Closing or any other
aspect of the Closing Balance Sheet based upon the
percentage which the portion of the contested amount not
awarded to the Purchaser, on the one hand, or the Sellers,
on the other hand, bears to the amount actually contested by
such Parties. For example, if the Sellers claim the Net
Working Capital at Closing is $1,000 less than the amount
determined by the Purchaser, and the Purchaser contests only
$500 of the amount claimed by the Sellers, and if the
Accountant ultimately resolves the dispute by awarding the
Sellers $300 of the $500 contested, then the costs and
expenses of arbitration will be allocated 60% (i.e., 300 /
500) to the Purchaser and 40% (i.e., 200 / 500) to the
Sellers.
(v) Upon the final determination of the Net Working
Capital at Closing:
(A) if Net Working Capital at Closing is greater than
$6,600,000.00, the Purchaser shall pay the amount of any
such excess to the Sellers no later than three Business Days
after the final determination of Net Working Capital at
Closing, by wire transfer of immediately available funds to
an account or accounts designated by the Sellers' Agent
Committee in writing;
(B) if Net Working Capital at Closing is less
than 6,500,000.00, the Sellers, jointly and severally, shall
pay the amount of any such deficiency to the Purchaser no
later than three Business Days after the final determination
of Net Working Capital at Closing, by wire transfer of
immediately available funds to an account designated by the
Purchaser in writing; and
(C) if Net Working Capital at Closing is less than or
equal to $6,600,000.00 and greater than or equal to
$6,500,000.00, no adjustment shall be made to the Purchase
Price.
All payments made pursuant to this 2(h)(v) shall be treated
by all Parties as adjustments to the Purchase Price.
(i) Distribution to Sellers Prior to Closing. On or before
Closing, the Company may distribute to the Sellers, without
affecting the Purchase Price payable under this Agreement,
dividends equal to the sum of (a) the estimated state and
federal income tax required to be paid by the Sellers on the
Company's net income for fiscal year 1999, and (b) the
estimated state and federal income tax required to be paid
by the Sellers on the Company's net income for the portion
of fiscal year 2000 prior to Closing, calculated in each
case using the highest state and federal tax rates for such
year for ordinary income of individuals. Any such dividends
payable to Xxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxx, and
Xxxxxxx Xxxxxx, respectively, shall include transfer by the
Company to each such individual, as applicable, of any
vehicle owned by the Company and used by such Seller; and
life insurance policies on the life of such Seller
maintained by the Company. In the event that the value of
any distributions of such vehicles and life insurance
policies to any of Xxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxx,
or Xxxxxxx Xxxxxx shall exceed the allocable portion of the
tax dividend payable to such person, then the aggregate
dividends payable to the Shareholders of the Company shall
be increased to the extent that the dividend payable to such
individuals shall at a minimum equal the value of the life
insurance policies and vehicles distributed to such person.
3A. Representations and Warranties of the Sellers as to
Seller Matters. Each Seller, severally and not jointly,
represents and warrants to the Purchaser, as of the date of
this Agreement and as of the Closing Date, as follows:
(a) Capacity. Such Seller has full capacity to execute
and deliver this Agreement and the other Transaction
Documents to which he or she is a party and to perform his
or her obligations hereunder and thereunder.
(b) Binding Obligation. This Agreement constitutes, and
the other Transaction Documents to which such Seller is a
party, when executed and delivered, will constitute the
valid and legally binding obligations of such Seller
enforceable in accordance with the terms hereof and thereof,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization and other similar laws affecting
creditors' rights generally and by general principles of
equity, regardless of whether asserted in a proceeding in
equity or at law.
(c) Noncontravention. Neither the execution and the
delivery of this Agreement by such Seller nor the execution
and delivery of the other Transaction Documents to which
such Seller is a party, nor the consummation of the
transactions contemplated hereby or thereby, will (i)
violate any statute, regulation or rule of any Authority to
which such Seller is subject (except for violations which
would not have a Material Adverse Effect or prevent or
materially delay the consummation of the transactions
contemplated hereby), (ii) violate any injunction, judgment,
order, decree or ruling of any Authority to which such
Seller is subject or (iii) conflict with, result in a breach
of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice under any agreement,
contract, lease, license or instrument to which such Seller
is a party or by which such Seller is bound or to which any
of such Seller's assets is subject. Except as set forth
under 3A(c) of the Disclosure Schedule, such Seller is not
required to give any notice to, make any filing with, or
obtain any authorization, consent or approval of any
Authority in order for such Seller to consummate the
transactions contemplated by this Agreement or this
Agreement or the other Transaction Documents to which such
Seller is a party. With respect to any such disclosures
listed in 3A(c) of the Disclosure Schedule, the Seller
shall, prior to the Closing Date, perform all acts necessary
to consummate the transactions contemplated by this
Agreement or the other Transaction Documents to which such
Seller is a party.
(d) Litigation. There are no actions, suits, claims or
proceedings pending or threatened against or involving such
Seller or any of his or her assets or properties by or
before any Authority that question the validity of this
Agreement or seek to prohibit, enjoin or otherwise challenge
the consummation of the transactions contemplated hereby.
There are no outstanding orders, judgments, injunctions,
stipulations, awards or decrees of any Authority against
such Seller or any of his or her assets or properties which
prohibit or enjoin the consummation of the transactions
contemplated hereby.
(e) Ownership of Company Common Stock. Each Seller holds
of record and owns beneficially the number and percentage of
the Shares set forth in the Disclosure Schedule and has good
title to said number and percentage of the Shares, free and
clear of any restrictions on transfer (other than
restrictions under the Securities Act and state securities
laws), liens, claims, and demands. Such Seller is not a
party to any option, warrant, purchase right, or other
contract or commitment that could require the Seller to
sell, transfer, or otherwise dispose of any capital stock of
the Company (other than pursuant to this Agreement). Such
Seller is not a party to any voting trusts, proxies, or
other agreements or understandings with respect to the
voting of any capital stock of the Company.
(f) Brokers Fees. Neither such Seller nor any Person
acting on his or her behalf has engaged any broker, finder
or intermediary other than McDonald Investments Inc. for or
on account of the transactions contemplated by this
Agreement as a result of which any of the Purchaser or the
Company will have any legal responsibility. The Sellers
collectively will pay any fees and expenses due and owing
McDonald Investments Inc. in connection with the
transactions described in this Agreement out of the portion
of the Purchase Price payable at Closing under 2(c)(i).
3B. Representations and Warranties of the Sellers and
Company With Respect to the Company. The Sellers jointly
and severally and the Company represent and warrant to the
Purchaser, as of the date of this Agreement and as of the
Closing Date, as follows:
(a) Organization/Power and Authority to Conduct Business.
The Company is a corporation duly organized, validly
existing, and in good standing under the laws of Indiana.
The Company is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such
qualification would not have a Material Adverse Effect.
Section 3B(a) of the Disclosure Schedule sets forth a list
of each jurisdiction in which the Company is licensed or
qualified to do business as a foreign corporation. The
Company has full corporate power and authority to carry on
the businesses in which it is engaged and to own and use the
properties owned and used by it. The Company does not have
any Subsidiary, and does not own, directly or indirectly,
any capital stock or other equity interests in any
corporation, partnership or other entity.
(b) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any
statute, regulation or rule of any Authority to which the
Company is subject (except for violations which would not
have a Material Adverse Effect or prevent or materially
delay the consummation of the transactions contemplated
hereby), (ii) violate any injunction, judgment, order,
decree or ruling of any Authority to which the Company is
subject or any provision of the Charter or bylaws of the
Company or (iii) except as set forth under section 3B(b) of
the Disclosure Schedule, conflict with, result in a breach
of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice under any agreement,
contract, lease, license or instrument to which the Company
is a party or by which it is bound or to which any of its
assets is subject. Except as set forth under section 3B(b)
of the Disclosure Schedule, the Company is not required to
give any notice to, make any filing with, or obtain any
authorization, consent or approval of any Authority in order
for the Company to consummate the transactions contemplated
by this Agreement or the other Transaction Documents to
which it is a party. With respect to any such disclosures
listed in section 3B(b) of the Disclosure Schedule, the
Company shall, prior to the Closing Date, perform all acts
necessary to consummate the transactions contemplated by
this Agreement or the other Transaction Documents to which
such Company is a party.
(c) Brokers Fees. Neither the Company nor any Person
acting on the Company's behalf has paid or become obligated
to pay any fee or commission to any broker, finder or
intermediary other than McDonald Investments Inc. for or on
account of the transactions contemplated by this Agreement.
The Sellers collectively will pay any and all fees and
expenses due and owing to McDonald Investments Inc. in
connection with the transactions described in this Agreement
out of the portion of the Purchase Price payable at Closing
under section 2(c)(i).
(d) Capitalization. The Common Stock constitutes the
Company's only authorized class of capital stock. Section
3B(d) of the Disclosure Schedule sets forth for the Company
(i) the number of shares of authorized Common Stock and (ii)
the number of issued and outstanding shares of Common
Stock, the names of the holders of record thereof, and the
number of shares held by each such holder. All of the
issued and outstanding shares of capital stock of the
Company have been duly authorized, are validly issued, fully
paid and nonassessable and were not issued in violation of
the preemptive rights of any Person or any agreement or law
by which the Company at the time of issuance was bound.
There are no outstanding or authorized subscriptions,
warrants, options or, except for this Agreement, other
agreements or rights of any kind to purchase or otherwise
receive or be issued, or securities or obligations of any
kind convertible into, any shares of capital stock or any
other security of the Company; there are no dividends which
have accrued or been declared but are unpaid on the capital
stock of the Company; and are no outstanding or authorized
stock appreciation, phantom stock or similar rights with
respect to the Company.
(e) Financial Statements. Set forth in section 3B(e) of
the Disclosure Schedule are the following financial
statements (collectively the "Financial Statements"): (i)
audited balance sheets and statements of income and
statements of shareholders equity and cash flows as of and
for the fiscal year ended December 31, 1999 (the "Most
Recent Fiscal Year End") for the Company; and (ii) unaudited
balance sheet and statement of income and statement of cash
flows (the "Most Recent Financial Statements") as of and for
each of the two periods ended February 5, 2000 and March 4,
2000 (the "Most Recent Fiscal Month End") for the Company.
The Financial Statements (including the notes thereto) have
been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby and
present fairly the financial condition of the Company as of
such dates and the results of operations of the Company for
such periods; provided, however, that the Most Recent
Financial Statements are subject to normal year-end
adjustments (which will not be material, individually or in
the aggregate) and lack footnotes and other presentation
items; further provided that the Financial Statements do not
include accruals for vacation and holiday expense, unpaid
medical or dental expenses, or product returns; and provided
further that certain Inventory is valued as described in
section 3B(w) of the Disclosure Schedule.
(f) Absence of Certain Developments. Except as otherwise
contemplated by this Agreement or as set forth in section
3B(f) of the Disclosure Schedule, since the Most Recent
Fiscal Month End, the Company has conducted its business
only in the Ordinary Course of Business and there has not
been any Material Adverse Change with respect to the
Company. Without limiting the generality of the foregoing,
since that date, except as set forth in the Disclosure
Schedule, the Company has not:
(i) borrowed any amount or incurred any liabilities,
except liabilities incurred in the Ordinary Course of
Business (none of which results from, arises out of, relates
to, is in the nature of or was caused by any breach of
contract, breach of warranty, tort, infringement or
violation of law by the Company or any Seller);
(ii) mortgaged, pledged or subjected to any Lien any of its
assets, except for Permitted Liens, or entered into any
conditional sale or other title retention agreement with
respect to any property or asset;
(iii) sold, assigned or transferred any of its tangible
assets, except for sales of Inventory in the Ordinary Course
of Business;
(iv) sold, assigned or otherwise transferred, or abandoned,
any Intellectual Property right or any claim for
infringement thereon;
(v) suffered any extraordinary losses involving more than
$25,000 in the aggregate or canceled, compromised, waived or
released any right or claim (or series of related rights and
claims) outside the Ordinary Course of Business or involving
more than $50,000 in the aggregate;
(vi) made any capital expenditures or commitments therefor
in excess of
$10,000 individually or $50,000 in the aggregate;
(vii) entered into any material agreement, contract, lease
or license outside the Ordinary Course of Business;
(viii) suffered any theft, damage, destruction or
casualty loss in excess of
$50,000 in the aggregate, individually or in the aggregate,
to its property, whether or not covered by insurance;
(ix) entered into any agreement with any labor union or
association representing any employee, or made any wage or
salary increase or bonus, or increase in any other direct or
indirect compensation, for or to any of its officers or
directors (or, other than in the Ordinary Course of
Business, other employees), or otherwise made any material
change in employment terms for any of its directors,
officers and employees;
(x) made any Change in Accounting Principles;
(xi) made any increase in or established any bonus,
insurance, deferred compensation, pension, retirement,
profit-sharing, stock option (including the granting of
stock options, stock appreciation rights, performance awards
or restricted stock awards or the amendment of any existing
stock options, stock appreciation rights, performance awards
or restricted stock awards), stock purchase or other
employee benefit plan or agreement or arrangement or
modified or obligated itself to modify or announced its
intention to modify, the Company's personnel policies and
practices in any material respect;
(xii) made any payment (including any dividends or other
distributions with respect to the Common Stock) to the
Sellers or any Affiliate of the Sellers (other than
compensation otherwise payable in the Ordinary Course of
Business) or forgiven any indebtedness due or owing from the
Sellers or any Affiliate of the Sellers to the Company;
(xiii) reclassified, combined, split, subdivided or
redeemed or otherwise repurchased any capital stock of the
Company, or created, authorized, issued, sold, delivered,
pledged or encumbered any additional capital stock (whether
authorized but unissued or held in treasury) or other
securities equivalent to or exchangeable for capital stock,
or granted or otherwise issued any options, warrants or
other rights with respect thereto;
(xiv) acquired or agreed to acquire by merging or
consolidating with, or by purchasing any portion of the
capital stock, partnership interests or assets of, or by any
other manner, any business or any corporation, partnership,
limited liability company, association or other business
organization or division thereof;
(xv) made any loan or advance (whether in cash or other
property), or made any investment in or capital contribution
to, or extended any credit to, any Person, except (i) short-
term investments pursuant to customary cash management
policies, and (ii) advances to employees made in the
Ordinary Course of Business;
(xvi) made any write-down of the value of Inventory or
written off as uncollectible any Account Receivable except
for write-downs and write-offs in the Ordinary Course of
Business consistent with past practices, none of which would
reasonably be expected to result in a Material Adverse
Change;
(xvii) (A) except in the Ordinary Course of Business
liquidated Inventory or accepted product returns, (B)
accelerated receivables, or (C) delayed payables;
(xvii) made or pledged to make any charitable
contribution; or
(xviii) committed to do any of the foregoing.
(g) Undisclosed Liabilities. The Company does not have any
material liability (whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to
become due, including any liability for Taxes) and there is
no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand
against the Company giving rise to any such liability,
except for (i) liabilities set forth on the Financial
Statements or in any notes thereto (but only to the extent
such notes quantify any such liabilities), (ii) executory
liabilities under agreements, contracts, leases, licenses
and other arrangements entered into in the Ordinary Course
of Business to which the Company or any of its assets may be
bound (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach thereof
or violation of law), (iii) liabilities and other matters
reflected in the Disclosure Schedule, and (iv) liabilities
which have arisen in the Ordinary Course of Business since
the Most Recent Fiscal Month End (none of which results
from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort,
infringement or violation of law by the Company or the
Sellers). Section 3B(g) of the Disclosure Schedule sets
forth as of the Most Recent Fiscal Month End a true and
correct listing of the indebtedness of the Company described
in clauses (i), (ii) and (iii) of the definition of Funded
Indebtedness.
(h) Legal Compliance. Except as set forth in section
3B(h) of the Disclosure Schedule, the Company is in
compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of all Authorities, except
where the failure to comply would not have a Material
Adverse Effect or prevent or materially delay the
consummation of the transactions contemplated hereby.
Except as set forth in section 3B(h) of the Disclosure
Schedule, since December 31, 1994, the Company has not
received any written communication from any Authority that
alleges that the Company is not in compliance with any
foreign, federal, state or local laws, rules or regulations.
(i) Company Permits. The Company holds all permits,
licenses, variances, exemptions, orders and approvals of all
Authorities necessary for the lawful conduct of its business
(the "Company Permits"). The Company is in compliance with
the terms of the Company Permits, except where the failure
to comply would not have a Material Adverse Effect. Section
3B(i) of the Disclosure Schedule sets forth a list of the
Company Permits.
(j) Tax Matters.
(i) The Company has filed or will before Closing shall
have filed all Tax Returns required to have been filed, has
paid all Taxes that are due to be paid pursuant to such
returns (whether or not shown as due thereon) or pursuant to
any assessment that has become payable, and has set up a
reserve for the payment of all Taxes not yet due and payable
that adequately covers all periods through the date hereof.
All such Tax Returns are and will be complete and accurate
in all material respects and disclose all Taxes required to
be paid by the Company for the periods covered thereby.
Except as set forth in section 3B(j) of the Disclosure
Schedule:
(A) there is no action, suit, investigation, audit, claim
or assessment pending, or to Sellers' Knowledge proposed or
threatened against the Company with respect to Taxes;
(B) the federal income tax returns of the Company have not
been examined by and settled with the IRS;
(C) the Company has not waived or been requested to waive
any statute of limitations in respect of Taxes and there is
no agreement or other document extending, or having the
effect of extending, the period of assessment or collection
of any Taxes;
(D) there are no Liens for Taxes upon any of the assets of
the Company except liens relating to Taxes not delinquent.
All monies the Company is required by applicable law to
collect or withhold from the employees of the Company for
income Taxes, social security and other payroll Taxes, or
from independent contractors, shareholders or other third
parties, have been collected or withheld, and either paid to
the respective governmental agencies, set aside in accounts
for such purpose, or accrued, reserved against and entered
upon the applicable books and financial statements of the
Company;
(E) the Company has not, during the five-year period
ending on the Closing Date, been a personal holding company
within the meaning of section 541 of the Code; and
(F) the Company has never filed or been included in any
combined or consolidated Tax return with any other person or
been a member of an Affiliated Group filing a consolidated
federal income Tax Return; the Company does not otherwise
have liability for the Tax of any other Person under
Treasury Regulations section 1.1502-6 (or any comparable
provisions of state, local or foreign Tax law) and the
Company is not a party to or bound by any tax sharing
agreement, tax indemnity obligation or similar agreement
with respect to Taxes (including any advance pricing
agreement, closing agreement or other agreement relating to
Taxes with any taxing Authority) and is not otherwise
responsible by contract or law (including theories of
successor or transferee liability) or otherwise, for the
Taxes of any other Person.
(ii) As a result of the transactions contemplated by this
Agreement, the Company will not be obligated to make a
payment to an individual that would be a "parachute payment"
to a "disqualified individual" as those terms are defined
in section 280G of the Code, without regard to whether such
payment is reasonable compensation for personal services
performed or to be performed in the future.
(iii) The Company has not filed a consent undersection341(f)
of the Code or any comparable provision of a state statute.
(iv) For all tax periods up to and including the effective
time of the Closing (collectively, the "S Corporation Tax
Period"), the Company has elected (with the consent of all
of its shareholders), in compliance with all applicable
legal requirements, to be taxed under Subchapter S of the
Code and corresponding provisions under any applicable state
and local laws, and such elections are in effect for the
Company. No action has been taken by the Company or any
shareholder of the Company that may result in the revocation
of any such elections (other than by reason of the
transactions described herein) and, with respect to the S
Corporation Tax Period, the Company has no liability,
absolute or contingent, for the payment of any income Taxes
under the Code or under the laws of such states or
localities which afford tax treatment similar to that under
Subchapter S of the Code. Except as set forth
insection3B(j) of the Disclosure Schedule, (A) the Company
has no "Subchapter C earnings and profits" as defined
insection1362(d) of the Code and (B) the Company has no "net
unrealized built-in gain" as such term is defined in section
1374(d)(1) and 1374(d)(8) of the Code.
(k) Certain Business Relationships with the Company.
Except as set forth insection3B(k) of the Disclosure
Schedule and except for normal advances to employees
consistent with past practice, payment of compensation for
employment to employees consistent with past practice, and
participation in Employee Benefit Plans by employees, since
December 31, 1996 the Company has not purchased, acquired or
leased any property or services from, or sold, transferred
or leased any property or services to, or loaned or advanced
any money to, or borrowed any money from, or entered into or
been subject to any management, consulting or similar
agreement with (i) any officer, director or shareholder of
the Company, or (ii) any of their respective Affiliates.
Except as set forth insection3B(k) of the Disclosure
Schedule, no Affiliate of the Company is indebted to the
Company for money borrowed or other loans or advances, and
the Company is not indebted to any such Affiliate for money
borrowed or other loans or advances.
(l) Title to Tangible Assets Other than Real Property
Interests. Except as set forth in section 3B(l) of the
Disclosure Schedule, the Company has good and valid title
to, or a valid leasehold interest in, all the tangible
assets (other than real property or interests in real
property) used or useful in the conduct of the Company's
business, except Inventory sold since the date hereof in the
Ordinary Course of Business, free and clear of any Liens
other than Permitted Liens. The machinery and equipment
used regularly in the conduct of the Business of the Company
are in the aggregate in good operating condition and repair
(subject to normal wear and tear, to periodic downtime and
repair, and to periodic replacement, in each case in light
of the age of such machinery and equipment), and subject to
the foregoing are suitable for the purposes for which they
are presently used. Except for interests and rights in
property pursuant to any lease, license or other agreement
described in section 3B(l) of the Disclosure Schedule or
pursuant to any lease, license or other agreement not
required to be described in section 3B(l) of the Disclosure
Schedule and except for property supplied by any customer or
supplier in connection with the purchase or sale of products
or services from or to such customer or supplier in the
Ordinary Course of Business, there is no tangible personal
property owned by any third party which is used by the
Company in the operation of its business. Section 3B(l) of the
Disclosure Schedule lists all machinery, equipment,
vehicles, furniture and other tangible personal property of
any kind and description having a present value in excess of
$10,000.00 (other than Inventory) owned or leased by the
Company. Notwithstanding any provision of this Agreement to
the contrary, the Purchaser acknowledges that certain art
work, wall displays, plaques and other objects of
sentimental value (none of which, individually or in the
aggregate, is material to the operation of the Company's
business and none which will be listed as an asset of the
Company on the Closing Balance Sheet) located at the
Company's premises (a list of which is set forth
under section 3B(l) of the Disclosure Schedule) is, and shall
remain, the personal property of the Sellers.
(m) Real Property. All real property and improvements
thereto and interests in real property and improvements
thereto that are owned or leased by the Company are
referred to herein collectively as the "Real Property" or
"Properties", and individually as a "Property". Section 3B(m)
of the Disclosure Schedule identifies all Real Property.
Except as set forth on section 3B(m) of the Disclosure
Schedule, the Company has good and valid title to, or a
valid leasehold interest in, all Real Property in each case
free and clear of any Liens, easements, covenants, rights-
of-way and other similar restrictions, except (i) Permitted
Liens and (ii) easements, covenants, rights-of-way and other
similar restrictions of record. There are no pending
condemnation, expropriation, eminent domain or similar
proceedings affecting all or any portion of such Properties
and no such proceedings are contemplated. There are no
leases, subleases, licenses, concessions or other
agreements, written or oral, granting to any party or
parties the right of use or occupancy of any portion of any
Property. The Company enjoys peaceful and undisturbed
possession of the Real Property. Except as set forth
on section 3B(m) of the Disclosure Schedule or otherwise in
the Disclosure Schedule, the Real Property is in compliance
with all applicable local, state and federal laws including,
but not limited to, environmental laws, zoning and land use
laws, building codes, safety codes, fire codes, OSHA laws,
and the Americans with Disabilities Act.
(n) Intellectual Property.
(i) Section 3B(n)(i) of the Disclosure Schedule identifies each
pending patent application and each registered item of
Intellectual Property owned or used by the Company, and each
written license agreement (excluding off-the-shelf or
"shrink-wrap" software license agreements) pursuant to which
the Company has granted to any third party, or received from
any third party a grant of, any rights in any of the
Intellectual Property owned or used by the Company. Except
as set forth in this Agreement or the Disclosure Schedule,
the Company owns, or possesses adequate and enforceable
licenses or rights (free of Liens other than Permitted
Liens) to use all Intellectual Property currently used by
the Company, or necessary to permit the Company to conduct
its business as now conducted.
(ii) Except as set forth insection 3B(n)(ii) of the
Disclosure Schedule, with respect to each item identified
insection3B(n)(i) of the Disclosure Schedule:
(A) the Company possesses all right, title and interest
thereto, free and clear of any Lien (other than Permitted
Liens), license or other restriction;
(B) such item is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge;
(C) no action, suit, proceeding, hearing, investigation,
written claim or written demand is pending or is threatened
which challenges the legality, validity, enforceability, use
or ownership of the item;
(D) neither the Company nor any other party to any license
agreement is in breach or default and no event has occurred
which with notice or lapse of time would constitute a breach
or default or permit termination, modification or
acceleration thereunder;
(E) no party to any license agreement has repudiated any
material provision thereof;
(F) no claims are pending or threatened that the Company
is infringing on or otherwise violating the rights of any
person with regard to any such item; and
(G) no person is infringing on or otherwise violating any
right of the Company with respect to such item.
(o) Material Contracts. Section 3B(o) of the Disclosure
Schedule lists the Material Contracts to which the Company
is a party. The Company has made available to the Purchaser
a correct and complete copy of each Material Contract listed
in section3B(o) of the Disclosure Schedule. With respect to
each such Material Contract, except as disclosed in
section 3B(o) of the Disclosure Schedule, (A) the Material
Contract is legal, valid, binding, enforceable and in full
force and effect; (B) except as disclosed in section 3B(o) of
the Disclosure Schedule neither the Company nor any other
party is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or
acceleration, under the Material Contract; (C) no party has
repudiated any provision of the Material Contract, (D) there
are no disputes or forbearance programs in effect with
respect to the Material Contract.
(p) Powers of Attorney. There are no outstanding powers
of attorney executed on behalf of the Company.
(q) Insurance. Section 3B(q) of the Disclosure Schedule
describes each insurance policy maintained by the Company.
All of such insurance policies are in full force and effect
and the Company is not in default with respect to its
obligations under any of such insurance policies. Such
policies are sufficient for compliance with all requirements
of law and Material Contracts to which the Company is a
party. Since the respective dates of such policies, no
notice of cancellation or non-renewal with respect to any
such policy has been received by the Company. section 3B(q)
of the Disclosure Schedule sets forth a list of all pending
claims with respect to all such policies.
(r) Litigation. Section 3B(r) of the Disclosure Schedule
sets forth each instance in which the Company (i) is subject
to any outstanding injunction, judgment, order, decree or
ruling or (ii) is a party or is to the Sellers' Knowledge
threatened to be made a party, to any action, suit,
proceeding, hearing or investigation of, in or before any
Authority.
(s) Labor Relations. The Company is not and has never been
a party to a collective bargaining agreement. Except as set
forth in section 3B(s) of the Disclosure Schedule, (i) since
December 31, 1995, the Company has not been involved in or
threatened with any strike, slowdown or work stoppage, (ii)
since December 31, 1995, the Company has not been involved
in or threatened with any unfair labor practice charge,
arbitration, suit or administrative proceeding relating to
labor matters involving its employees, (iii) there are no
actions, proceedings or claims pending or threatened against
the Company under any laws relating to employment, including
any provisions thereof relating to wages, hours, collective
bargaining, withholding or the payment of social security or
other Taxes, and (iv) the Company has complied with the
provisions of the Immigration Reform and Control Act of 1986
with respect to all of its employees hired after November 6,
1986 by verifying their employment eligibility and having
them complete Form I-9.
(t) Employee Benefits. Section3B(t) of the Disclosure
Schedule sets forth (a) all of the current Employee Pension
Benefit Plans, Employee Welfare Benefit Plans and all other
employee benefit, fringe benefit plans and programs
maintained or contributed to by the Company or any ERISA
Affiliate with respect to current or former employees of the
Company (the "Employee Benefit Plans").
(i) With respect to each Employee Benefit Plan and except
as disclosed in section 3B(i) of the Disclosure Schedule:
(A) each such Employee Benefit Plan (and each related
trust, insurance contract or fund) complies in form and in
operation in all material respects with the applicable
requirements of ERISA, the Code and other applicable laws
(including all reporting and disclosure requirements), and
has been operated in all material respects in accordance
with its terms;
(B) all contributions (including all employer
contributions and employee salary reduction contributions,
if any) which are due have been paid to each such Employee
Benefit Plan which is an Employee Pension Benefit Plan, and
there are no accumulated funding deficiencies with respect
to any such Employee Pension Benefit Plan;
(C) each such Employee Benefit Plan which is an Employee
Pension Benefit Plan intended to so qualify under
section 401(a) of the Code so qualifies and has received a
favorable determination letter from the IRS as to its
qualification under section401(a) of the Code;
(D) no "prohibited transaction" (as such term is defined
in section 406 of ERISA or section 4975 of the Code) has
occurred with respect to any such Employee Benefit Plan
which is an Employee Pension Benefit Plan (or its related
trust) which could subject the Company or any officer,
director or employee of the Company, to any Tax or penalty
imposed under section 4975 of the Code or liability under
section 406 of ERISA;
(E) the Company has delivered to the Purchaser correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received
from the IRS, the most recent Form 5500 Annual Report and
all accompanying schedules, the most recent actuarial
valuation (if any), and all related trust agreements,
insurance contracts and other funding arrangements which
implement each such Employee Benefit Plan;
(F) no such Employee Benefit Plan which is an Employee
Pension Benefit Plan has been completely or partially
terminated or has been the subject of a "reportable event"
(as defined in section 4043 of ERISA) as to which notices
would be required to be filed with the PBGC. No proceeding
by the PBGC to terminate any such Employee Pension Benefit
Plan (other than a Multiemployer Plan) has been instituted;
(G) the Company has not incurred, and will not incur as a
result of any existing condition or the transactions
contemplated by this Agreement, any liability to the PBGC
(except for required premium payments, if any), or otherwise
under Title IV of ERISA (including any withdrawal liability)
or under the Code with respect to any such Employee Benefit
Plan which is an Employee Pension Benefit Plan and, as of
the Closing Date, the assets of each such Employee Pension
Benefit Plan are at least equal in value to the present
value of accrued benefits of the plan, based on actuarial
methods, tables and assumptions satisfactory to the
Purchaser; and
(H) no action, suit, proceeding, hearing or investigation
with respect to the administration or the investment of
assets of any such Employee Benefit Plan (other than routine
claims for benefits) is pending or to the Sellers' Knowledge
threatened.
(ii) The Company does not contribute to any Multiemployer
Plan or have any liability (including withdrawal liability)
under any Multiemployer Plan.
(iii) The Company does not have any obligation to provide
health or other welfare benefits to former, retired or
terminated employees, except as specifically required under
section 4980B of the Code. With respect to all of its past
and present employees, the Company has complied in all
material respects with the notice and continuation
requirements of Part 6 of Subtitle B of Title I of ERISA and
of section 4980B of the Code.
(iv) The Company has no liability for or relating to any
Employee Benefit Plan or arrangement sponsored, maintained
or contributed to by an ERISA Affiliate.
(v) The consummation of the transactions contemplated by
this Agreement will not entitle any individual to any
severance pay, and will not accelerate the time of payment
or vesting, or increase the amount of any compensation due
to any individual, and will not be the direct or indirect
cause of any amount payable under any Employee Benefit Plan
being classified as an "excess parachute payment" under
section 280G of the Code.
(u) Environmental, Health and Safety Matters. Except as
disclosed in section 3B(u) of the Disclosure Schedule or in
the Phase I Site Assessments:
(i) The Company has not disposed of or released any
substance, arranged for the disposal of any substance,
knowingly exposed any employee or other individual to any
substance or condition, or owned or operated its businesses
or any property or facility so as to give rise to any
liability or corrective or remedial obligation of the
Company under any Environmental, Health and Safety
Requirement.
(ii) The Company is in compliance with all Environmental
Health and Safety Requirements, except where the failure to
comply would not have a Material Adverse Effect, and the
Company has not, since December 31, 1995, received any
written communication from any Authority that alleges that
the Company is not in such compliance.
(iii) There is no Environmental Claim pending or threatened
or recently filed against the Company, nor is there any
Environmental Claim against any Person whose liability for
any Environmental Claim the Company has retained or assumed
contractually.
(iv) No underground storage tanks, friable and damaged
asbestos-containing materials, or pcb-containing equipment
or fluids are present on any Property, nor have any said
items been removed from any Property.
(v) No real property presently or heretofore owned or
operated by the Company is currently listed on the National
Priorities List or the Comprehensive Environmental Response,
Compensation and Liability Information System, both
promulgated under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or on
any analogous state list.
(vii) No off-site location at which the Company has disposed
or arranged for the disposal of any waste is listed on the
National Priorities List or on any analogous state list.
(v) Customers and Suppliers. Section 3B(v) of the
Disclosure Schedule contains a complete and accurate list of
the names of the 20 largest (by volume) customers and the 20
largest (by volume) suppliers of the Company for the fiscal
year ended December 31, 1999. The Company maintains good
relations with each of such customers and suppliers and,
except as set forth in section 3B(v) of the Disclosure
Schedule, since the Most Recent Fiscal Year End no event has
to the Sellers' Knowledge occurred that would materially
adversely affect the Company's relations with any such
customers or supplier. Except as set forth in section3B(v)
of the Disclosure Schedule, since the Most Recent Fiscal
Year End, no customer which accounted for more than five
percent (5%) of the Company's aggregate sales revenues
during the last twelve months has canceled, terminated (or
made any threat to the Company to cancel or terminate), or
materially decreased its usage of the Company's services or
products.
(w) Inventory. Except as disclosed in section 3B(w) of
the Disclosure Schedule, the Inventory of the Company is
merchantable and fit for the purpose for which it was
procured or manufactured and none of such Inventory is slow-
moving, obsolete, damaged or defective. Except as disclosed
in section 3B(w) of the Disclosure Schedule, the Inventory
of the Company is valued at the lower of cost (on a first-
in-first-out basis) or market in accordance with GAAP on a
basis consistent with prior periods.
(x) Accounts Receivable. Except as disclosed in
section 3B(x) of the Disclosure Schedule, all of the Accounts
Receivable of the Company are properly reflected on its
books and records and arose from bona fide transactions in
the Ordinary Course of Business, and are valid receivables
subject to no setoffs or counterclaims. The reserve for bad
debts set forth on the face of the Financial Statements
(rather than in any notes thereto) has been determined in
accordance with GAAP on a basis consistent with the past
custom and practice of the Company.
(y) List of Accounts. Section 3B(y) of the Disclosure
Schedule sets forth a list of all bank and securities
accounts, and all safe deposit boxes, maintained by the
Company and a listing of the persons authorized to draw
thereon or make withdrawals therefrom or, in the case of
safe deposit boxes, with access thereto.
(z) Product Warranty. Except as disclosed in section
3B(z) of the Disclosure Schedule, the products manufactured,
sold, and delivered by the Company have in the aggregate
conformed in all material respects with all applicable
contractual commitments and all express and implied
warranties, and the Company has no material liability
(whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether
due or to become due) for replacement thereof or other
damages in connection therewith. Substantially all of the
products manufactured, sold, and delivered by the Company
are subject to standard terms and conditions of sale,
subject to variations applicable to specific customer
requirements. Any obligations of the Sellers to indemnify
the Purchaser under this Section in connection with product
returns shall be in accordance with section 10(e).
(aa) Product Liability. The Company has no material
liabilities (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and
whether due or to become due) arising out of any injury to
individuals or property as a result of the ownership,
possession, or use of any product manufactured, sold or
delivered by the Company prior to the Closing (the "Pre-
Closing Product Liabilities"). section3B(aa) of the
Disclosure Schedule sets forth a true and correct list and
brief description of all product liability claims that have
been filed against the Company since December 31, 1993.
(bb) Year 2000 Compliance. The Company has undertaken an
assessment of its Information Technology and such
Information Technology is Year 2000 Compliant.
(cc) Repayment of Seller Loans. The Sellers have satisfied
in full all loans due and owing from them to the Company, if
any, together with all interest accrued thereon.
(dd) Trustee of 401(k) Plan. Unless the Purchaser requests
in writing prior to closing the resignation of Xxxxx X.
Xxxxxxxx as trustee under the Company's 401(k) Plan, Xxxxx
X. Xxxxxxxx shall remain as trustee under the Company's
401(k) Plan after closing until the Purchaser or the Company
directs otherwise.
(ee) Employee List. The Company has no employees other
than those listed in section3B(ee) of the Disclosure
Schedule. section 3B(ee) of the Disclosure Schedule sets
forth a true and correct list of all employees of the
Company, their dates of hire, accrued vacation and sick
leave, and salaries or hourly wage rates, and identifies any
and all inactive employees who are off work due to workers?
compensation leave, family medical leave, leave of absence,
or who are not actively employed for any other reason.
(ff) Medical, Dental, and Workers? Compensation Claims.
The Company has no medical claims, dental claims or worker's
compensation claims resulting from treatment, injuries,
conditions or illnesses arising prior to the Closing (Pre-
Closing Claims), other than those listed in section3B(ff) of
the Disclosure Schedule, which are in dispute, have
otherwise not been paid in full or which are not covered by
insurance for which premiums have already been paid by the
Company.
(gg) Pre-paid Advertising. All of the pre-paid advertising
expenses of the Company are properly reflected on its books
and records and arose from bona fide transactions in the
Ordinary Course of Business. The accrual of the pre-paid
advertising expenses set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) has
been determined in accordance with GAAP on a basis
consistent with the past custom and practice of the Company.
(hh) EPCRA Filings. Except as set forth on section 3B(hh)
of the Disclosure Schedule, the Company is in compliance
with the Emergency Planning and Community Right to Know Act
("EPCRA"), 42 U.S.C. section 11001 et seq.
4. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants to the Sellers as follows:
(a) Organization. The Purchaser is a corporation duly
organized, validly existing, and in good standing under the
laws of Florida.
(b) Authorization of Transaction; Binding Obligation. The
Purchaser has full corporate power and authority to execute
and deliver this Agreement and the other Transaction
Documents to which it is a party and to perform its
obligations hereunder and thereunder. This Agreement
constitutes , and such other Transaction Documents, when
executed and delivered, will constitute the valid and
legally binding obligations of the Purchaser, enforceable in
accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization and other similar laws affecting creditors?
rights generally and by general principles of equity,
regardless of whether asserted in a proceeding in equity or
at law.
(c) Noncontravention. Neither the execution and the
delivery of this Agreement or the other Transaction
Documents to which either the Purchaser is a party, nor the
consummation of the transactions contemplated hereby or
thereby, will (i) violate any statute, regulation or rule of
any Authority to which the Purchaser is subject (except for
violations which would not have a Material Adverse Effect or
prevent or materially delay the consummation of the
transactions contemplated hereby), (ii) violate any
injunction, judgment, order, decree or ruling of any
Authority to which the Purchaser is subject or any provision
of its Charter or bylaws or other organizational document,
as the case may be, or (iii) except as set forth in
section4(c) of the Disclosure Schedule conflict with, result
in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any
notice under any agreement, contract, lease, license or
instrument to which the Purchaser is a party or by it is
bound or to which any of its assets is subject. Except as
disclosed in section 4(c) of the Disclosure Schedule, the
Purchaser is not required give any notice to, make any
filing with, or obtain any authorization, consent or
approval of any Authority in order for it to consummate the
transactions contemplated by this Agreement or the other
Transaction Documents to which it is a party.
Notwithstanding the foregoing, in order to purchase the
Shares herein, the Purchaser is required to obtain consent
from its lender under a credit agreement between Purchaser
and its lender. With respect to any such disclosures listed
in section 4(c) of the Disclosure Schedule, the Purchaser
shall, prior to the Closing Date, perform all acts necessary
to consummate the transactions contemplated by this
Agreement or the other Transaction Documents to which such
Purchaser is a party.
(d) Brokers Fees. Neither the Purchaser nor any Person
acting on the Purchaser's behalf has engaged any broker,
finder or intermediary for or on account of the transactions
contemplated by this Agreement as a result of which the
Company (unless the Closing shall occur) or the Sellers will
have any legal responsibility.
(e) Acquisition of Shares for Investment. The Purchaser
is an "accredited investor" as defined by Rule 501 under the
Securities Act. The Shares to be purchased by the Purchaser
pursuant to this Agreement are being acquired for investment
only and not with a view to any public distribution thereof,
and the Purchaser will not offer to sell or otherwise
dispose of the Shares so acquired by it in violation of any
of the registration requirements of the Securities Act or
any comparable state laws.
5. Pre-Closing Covenants. The Parties agree as follows
with respect to the period between the execution of this
Agreement and the Closing:
(a) General. Each of the Parties will use commercially
reasonable efforts to take all action and to do all things
necessary, proper or advisable in order to consummate and
make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in section 9 below).
(b) Notices and Consents. Each of the Parties will give
any notices to, make any filings with, and use commercially
reasonable efforts to obtain any authorizations, consents
and approvals of governments and governmental agencies in
connection with consummation of the transactions
contemplated by this Agreement. Without limiting the
generality of the foregoing, each of the Parties will file
any Notification and Report Forms and related material that
such Party may be required to file with the Federal Trade
Commission and the Antitrust Division of the United States
Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, will
use commercially reasonable efforts to obtain a waiver from
the applicable waiting period, and will make any further
filings pursuant thereto that may be necessary, proper or
advisable in connection therewith.
(c) Operation of Business. Without the prior consent of
the Purchaser or except as otherwise contemplated by this
Agreement, the Company will not engage in any practice, take
any action, or enter into any transaction of the sort
described in section 3B(f) above. In addition, each of the
Company will continue to conduct its business in the
Ordinary Course of Business and will not (i) except in the
Ordinary Course of Business liquidate Inventory or accept
product returns, (ii) accelerate receivables, (iii) delay
payables, or (iv) change in any material respect either the
Company's practices in connection with the payment of
payables in respect of raw materials purchases.
(d) Preservation of Business. The Company will use
commercially reasonable efforts to maintain its business and
properties, including its present operations, physical
facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers and employees.
(e) Full Access. The Company will permit representatives
of the Purchaser to have full access at all reasonable
times, and in a manner so as not to interfere with the
normal business operations of the Company, to the premises,
properties, personnel, books, records (including tax
records), contracts and documents of or pertaining to the
Company. The Purchaser reaffirms its obligations under the
Confidentiality Agreement.
(f) Notice of Developments. Each Party will promptly give
notice to the other Party(ies) of its, his or her discovery
of any material adverse development which, had such
development been in existence on the date hereof, would
constitute a breach of the representations and warranties
contained in section3A and 3B (in the case of a Seller) or
section4 (in the case of the Purchaser). No disclosure by
any Party pursuant to this section5(f) shall be deemed to
amend or supplement the Disclosure Schedules or to prevent
or cure any misrepresentation or breach of warranty.
6. Post-Closing Covenants. The Parties agree as follows
with respect to the period following the Closing:
(a) General. In the event that at any time after the
Closing any further action is necessary to carry out the
purposes of this Agreement, each of the Parties will take
such further action (including the execution and delivery of
such further instruments and documents) as any other Party
may reasonably request, all at the sole cost and expense of
the requesting Party; provided, however, that the taking of
any action necessary to execute or deliver to the Purchaser
any stock powers and such other instruments of transfer as
may be necessary to transfer ownership of the Shares by the
Sellers shall be borne by the Sellers, jointly and
severally.
(b) Transition. The Sellers will not take any action
that is designed or intended to have the effect of
discouraging any lessor, licensor, customer, supplier or
other business associate of the Company from maintaining the
same business relationships with the Company after the
Closing as it maintained with the Company prior to the
Closing.
(c) Litigation Support. In the event and for so long as
any Party actively is contesting or defending against any
action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand in connection with (i) any
transaction contemplated under this Agreement, or (ii) any
fact, situation, circumstance, status, condition, activity,
practice, occurrence, event, incident, action, failure to
act, or transaction on or prior to the Closing Date
involving the Company, each of the Parties will cooperate
with the contesting or defending Party and its, his or her
counsel in the contest or defense, all at the sole cost and
expense of the contesting or defending Party (except to the
extent that the contesting or defending party is entitled to
indemnification therefor under this Agreement).
(d) Noncompetition.
(i) In order to induce the Purchaser to enter into this
Agreement, each Seller expressly covenants and agrees that,
for a period of five (5) years from and after the Closing
Date, such Seller will not, directly or indirectly, engage
in or have any interest in any sole proprietorship,
partnership, corporation, limited liability company or
business or any other Person (other than the Purchaser or
any of its Subsidiaries), whether as an employee, officer,
director, partner, agent, security holder, consultant or
otherwise, that directly or indirectly is engaged in the
Business of the Company in the Restricted Area; provided,
however, that nothing herein shall be deemed to prevent the
Seller from acquiring through market purchases and owning,
solely as an investment, less than five percent in the
aggregate of the equity securities of any class of any
issuer whose shares are registered under section 12(b) or
section 12(g) of the Securities Exchange Act, and are listed
or admitted for trading on any United States national
securities exchange or are quoted on the National
Association of Securities Dealers Automated Quotations
System, or any similar system of automated dissemination of
quotations of securities prices in common use, so long as
neither of them is a member of any "control group" (within
the meaning of the rules and regulations of the United
States Securities and Exchange Commission) of any such
issuer.
(ii) Each Seller acknowledges and agrees that the covenants
provided for in this section 6(d) are reasonable and
necessary in terms of time, area and line of business to
protect the Purchaser's legitimate business interests as a
buyer of the Common Stock and in protecting the Company's
Trade Secrets. Each Seller further acknowledges and agrees
that such covenants are reasonable and necessary in terms of
time, area and line of business to protect the Purchaser's
other legitimate business interests, which include its
interests in protecting the Company's (i) valuable
confidential business information, (ii) substantial
relationships with customers throughout the Restricted Area
and (iii) customer goodwill associated with the Company's
ongoing business. The Sellers expressly authorize the
enforcement of the covenants provided for in this
section6(d) by (A) the Purchaser and its Subsidiaries, (B)
the Purchaser's permitted assigns and (C) the Company and
any successors to the Company's business. The covenants
provided for in this section6(d) shall be construed as a
separate and independent covenant for each of the separate
states, territories and possessions included in the
Restricted Area and, with respect to the State of Indiana,
for each of the separate counties of that state. To the
extent that the covenant provided for in this section6(d)
may later be deemed by a court to be too broad to be
enforced with respect to its duration or with respect to any
particular activity or geographic area, the court making
such determination shall have the power to reduce the
duration or scope of the provision, and to add or delete
specific words or phrases to or from the provision. The
provision as modified shall then be enforced.
(e) Non-Solicitation of Employees, Agents and Independent
Contractors. In order to induce the Purchaser to enter into
this Agreement, each Seller expressly covenants and agrees
that for a period of five (5) years from and after the
Closing Date, such Seller will not, directly or indirectly,
(i) solicit for employment or employ or engage as an agent
or independent contractor (or attempt to solicit for
employment or employ or engage as an agent or independent
contractor), for himself or herself or on behalf of any sole
proprietorship, partnership, corporation, limited liability
company or business or any other Person (other than the
Purchaser or any of its Subsidiaries), any employee of the
Company or any Person who was an employee, agent or
independent contractor of the Company at any time during the
two (2) year period preceding the later of (x) the date
hereof and (y) the date of such solicitation, employment or
attempted solicitation or employment, or (ii) encourage any
such employee to leave his or her employment with the
Company or (iii) encourage any such agent or independent
contractor to terminate his, her or its engagement with the
Company. The covenants provided for in this section 6(e)
shall be construed as a separate and independent covenant
for each of the separate states, territories and possessions
included in the Restricted Area and, with respect to the
State of Indiana, for each of the separate counties of that
state. To the extent that the covenant provided for in this
section6(e) may later be deemed by a court to be too broad
to be enforced with respect to its duration or with respect
to any particular activity or geographic area, the court
making such determination shall have the power to reduce the
duration or scope of the provision, and to add or delete
specific words or phrases to or from the provision. The
provision as modified shall then be enforced.
(f) Confidentiality. In order to induce the Purchaser to
enter into this Agreement, each Seller expressly covenants
and agrees that from and after the Closing Date, no such
Seller nor any of his or her Affiliates (to the extent any
such Affiliate has received Confidential Information or
Trade Secrets) will disclose, divulge, furnish or make
accessible to anyone (other than the Purchaser or any of its
Affiliates or representatives) any Confidential Information
or Trade Secrets, or in any way use any Confidential
Information or Trade Secrets in the conduct of any business;
provided, however, that nothing in this section 6(f) will
prohibit the disclosure of any Confidential Information or
Trade Secrets (i) which is or are required to be disclosed
by the Seller or any such Affiliate in connection with any
court action or any proceeding before any Authority, (ii) in
connection with the enforcement of any of the rights of the
Seller hereunder, or (iii) in connection with the defense by
the Seller of any claim asserted against him or her
hereunder; provided, however, that in the case of a
disclosure contemplated by clause (i), no disclosure shall
be made until the Seller shall give notice to the Purchaser
of the intention to disclose such Confidential Information
or Trade Secrets so that the Purchaser may contest the need
for disclosure, and the Seller will cooperate (and will
cause his or her Affiliates and their respective
representatives to cooperate) with the Purchaser in
connection with any such proceeding. Notwithstanding any
provision of this Agreement which may be to the contrary (x)
the Sellers shall be entitled to use Confidential
Information consisting of databases of contacts and
customers for personal purposes which do not constitute
competition with the Company, including community and
charitable affairs, (y) the foregoing provisions restricting
the use of Confidential Information shall survive the
Closing for a period of five years, and (z) the foregoing
provisions restricting the use of Trade Secrets shall
survive the Closing for the applicable statute of
limitations period under the Indiana Uniform Trade Secrets
Act
(g) Section 338(h)(10) Election; Certain Tax Matters.
(i) The Sellers will join with the Purchaser in making an
election under section 338(h)(10) of the Code and Treasury
Regulations section 1.338(h)(10)-1(d) (and any corresponding
elections under any applicable state and local laws)
(collectively, a "Section 338(h)(10) Election") with respect to the
purchase and sale of the Shares hereunder. The Sellers,
jointly and severally, will be liable for all Taxes of the
Company for all periods ending prior to the open of business
on the Closing Date ("Pre-Closing Tax Periods") (including
all Taxes attributable to the making of the
section 338(h)(10) election, as the result of the recognition
of any built-in gain pursuant to the provisions of
section 1374 of the Code, or the "recapture" of previously
deducted items), and the Sellers, jointly and severally,
will indemnify the Purchaser and the Company from and
against any Losses arising out of any failure to pay such
Tax.
(ii) The income of the Company will be apportioned to the
period up to the open of business on the Closing Date and
the period from and after the open of business on the
Closing Date in accordance with the provisions of
section 1362(e)(6)(D) of the Code by closing the books of the
Company as of the close of business on the last calendar day
immediately preceding the Closing Date. Taxes (such as
property Taxes) that are imposed on a periodic basis shall
be allocated on a per diem basis. The Sellers will be
responsible for preparing and filing all income Tax Returns
of the Company relating to all Pre-Closing Tax Periods.
After the Closing has occurred, the Purchaser will provide,
or cause to be provided, to the Sellers, without charge, any
information that may reasonably be requested by the Sellers
in connection with the preparation of any Tax Returns
relating to Pre-Closing Tax Periods. The Sellers will allow
the Purchaser an opportunity to review and comment on such
Tax Returns (including any amended Tax Returns.) The
Sellers will take no new positions on the Tax Returns of the
Company that relate to Pre-Closing Tax Periods that would
adversely affect the Company after the Closing Date.
(iii) Section 6(g)(iii) of the Disclosure Schedule sets forth
an allocation of the Modified "adjusted Deemed Sales Price",
as defined in Treasury Regulations section 1.338(h)(10)-1(f),
among the assets of the Company (the "Allocation Schedule").
Under the Allocation Schedule, $500,000.00 shall be
allocated as consideration for the Sellers' agreement not to
compete. Within 30 days after the Closing Date, the Sellers
and the Purchaser shall exchange completed and executed
copies of IRS Form 8023 (or other applicable form), required
schedules thereto, and any similar forms required by any
state or local Tax Authority. If any changes are required to
these forms as a result of information which is first
available after the Closing Date, the Sellers and the
Purchaser will in good faith use commercially reasonable
efforts to promptly agree on such changes. The Purchaser and
the Sellers each agree to file all Tax Returns in accordance
with the Allocation Schedule.
(iv) The Purchaser and the Sellers shall cooperate fully,
as and to the extent reasonably requested by the other
Party, in connection with the filing of Tax Returns pursuant
to this section 6(g) and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall
include the retention and (upon the other Party's request)
the provision of records and information which are
reasonably relevant to any such audit, litigation or other
proceeding, and making employees available on a mutually
convenient basis to provide additional information and
explanation of any material provided hereunder. The Sellers
shall, and the Purchaser shall cause the Company (A) to
retain all books and records with respect to Tax matters
pertinent to the Company relating to Pre-Closing Tax Periods
until the expiration of the statute of limitations (and, to
the extent notified by the Purchaser or the Sellers, any
extensions thereof) of the respective taxable periods, and
to abide by all record retention agreements entered into
with any Tax Authority, and (B) to give the other Party
reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other
Party so requests, the Purchaser or the Sellers, as the case
may be, shall allow the other Party to take possession of
such books and records.
(v) Notwithstanding anything contained in section 7(b)(iv)
below or elsewhere in this Agreement to the contrary (but
subject to the provisions of paragraphs (ii), (iii) and (iv)
of this section 6(g)), the Sellers shall have the right to
(a) control any audit or proceeding by any taxing Authority,
(B) initiate any claim for refund, (C) file any amended
return, (D) contest, defend against, resolve and settle any
assessment, notice of deficiency or other adjustment or
proposed adjustment of Taxes or (E) otherwise resolve any
issues relating to Losses which the Purchaser or the Company
shall incur as a result of any breach of the Sellers'
covenants in section 2(g) above, this section 6(g) or the
Sellers' representations and warranties in section 3B(j)
above and as to which the Purchaser are entitled to
indemnification from the Sellers pursuant to this Agreement
("Tax Losses"); provided, however, that the Sellers shall
consult with the Purchaser in contesting any such
assessment, notice of deficiency or other adjustment or
proposed adjustment of Taxes and shall, in good faith,
consider any reasonable advice from the Purchaser with
respect to any such contest.
(h) Certain Employee Matters. The Purchaser shall (i) give
the employees of the Company who continue immediately after
the Closing Date as an employee of the Company full credit
for purposes of eligibility and vesting under any employee
benefits plans or arrangements maintained by the Purchaser
for such employees' service with the Company to the same
extent recognized by the Company immediately prior to the
Closing, and (ii) through the second anniversary of the
Closing Date, offer to employees of the Company who continue
immediately after the Closing Date as an employee of the
Company levels of compensation and benefits that are no less
favorable than those offered by the Company (including but
not limited to the Profit Sharing Plan described in
section3B[t] of the Disclosure Schedule) for the period
immediately before the Closing; provided, that the Purchaser
may replace or cause the Company to replace the 401(k) plan
with a new 401(k) plan on terms that are no less favorable
than those offered by the Company immediately prior to
Closing. Notwithstanding anything contained in this
section 6(h) to the contrary, this section 6(h) shall in no
way create any type of employment contract for any employee
of the Company or alter in any way the "employment at will"
status of such employee.
7. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. The
representations and warranties of the Sellers contained in
section 3 above and of the Purchaser contained in section 4
above shall survive the Closing and continue in full force
and effect subsequent to Closing, subject to the limitation
periods provided in section 7(b). Any claim for which any
Party shall have given proper notice in accordance with the
terms of this Agreement on or prior to the expiration of the
applicable limitation periods under section 7(b) shall
survive until such claim is resolved pursuant to the terms
of this Agreement. To preserve any claim for breach of any
such representation or warranty, the Party claiming a breach
shall be obligated to notify the party claimed to be in
breach in writing of any such breach, or facts that can
reasonably be expected to give rise to such breach, before
termination of the applicable limitation period under
section 7(b) in respect of such representation or warranty;
otherwise, such Party's claim for breach shall be forever
barred.
(b) Indemnification.
(i) Subject to section 7(a) above and the conditions and
limitations set forth in this section 7(b), subsequent to the
Closing Date the Sellers shall, jointly and severally,
indemnify, defend and hold harmless the Purchaser from,
against and in respect of any Losses which the Purchaser
shall suffer, sustain or become subject to by virtue of or
which arise out of, or result from any breach of the
representations and warranties of the Sellers set forth in
section 3B above.
(ii) Subject to section 7(a) above and the conditions and
limitations set forth in this section 7(b), subsequent to the
Closing Date each Seller shall, severally and not jointly,
indemnify, defend and hold harmless the Purchaser and the
Company from, against and in respect of any Losses which the
Purchaser or the Company shall suffer, sustain or become
subject to by virtue of or which arise out of, or result
from, any breach of the representations and warranties of
the Seller set forth in section3A above and any breach by
the Seller of his or her covenants and agreements set forth
in this Agreement; provided, however, that such
indemnification obligations of the Sellers with respect to
the covenants contained in section 2(g) and 6(g) above shall
be joint and several.
(iii) Subject to section 7(a) above and the conditions
set forth in this section 7(b), subsequent to the Closing
Date the Purchaser shall indemnify, defend and hold harmless
the Sellers and their respective estates, heirs, personal
representatives or successors from, against and in respect
of any Losses which the Sellers shall suffer, sustain or
become subject to by virtue of or which arise out of, or
result from, any breach by the Purchaser of its
representations, warranties covenants and agreements set
forth in this Agreement.
(iv) Promptly after the assertion by any third party of any
claim, demand or notice (a "Third Party Claim") against any
Person or Persons entitled to indemnification under this
section 7(b) (the "Indemnified Parties") that results or may
result in the incurrence by such Indemnified Parties of any
Losses for which such Indemnified Parties would be entitled
to indemnification pursuant to this Agreement, such
Indemnified Parties shall promptly notify the parties from
whom such indemnification could be sought (the "Indemnifying
Parties") of such Third Party Claim. Thereupon, the
Indemnifying Parties shall have the right, upon written
notice (the "Defense Notice") to the Indemnified Parties
within 30 days after receipt by the Indemnifying Parties of
notice of the Third Party Claim (or sooner if such claim so
requires) to conduct, at their own expense, the defense
against the Third Party Claim in their own names or, if
necessary, in the names of the Indemnified Parties. The
Defense Notice shall specify the counsel the Indemnifying
Parties shall appoint to defend such Third Party Claim (the
"Defense Counsel") and the Indemnified Parties shall have
the right to approve the Defense Counsel, which approval
shall not be unreasonably withheld. In the event the
Indemnified Parties and the Indemnifying Parties cannot
agree on such counsel within 10 days after the Defense
Notice is given, then the Indemnifying Parties shall propose
an alternate Defense Counsel, which shall be subject again
to the Indemnified Parties' approval which approval shall
not be unreasonably withheld. Any Indemnified Party shall
have the right to employ separate counsel in any such Third
Party Claim and/or to participate in the defense thereof,
but the fees and expenses of such counsel shall not be
included as part of any Losses incurred by the Indemnified
Party unless (A) the Indemnifying Parties shall have failed
to give the Defense Notice within the prescribed period, (B)
such Indemnified Party shall have received an opinion of
counsel, reasonably acceptable to the Indemnifying Parties,
to the effect that the interests of the Indemnified Party
and the Indemnifying Parties with respect to the Third Party
Claim are sufficiently adverse to prohibit the
representation by the same counsel of both parties under
applicable ethical rules, or (C) the employment of such
counsel at the expense of the Indemnifying Parties has been
specifically authorized by the Indemnifying Parties. The
Party or Parties conducting the defense of any Third Party
Claim shall keep the other Parties apprized of all
significant developments and shall not enter into any
settlement, compromise or consent to judgment with respect
to such Third Party Claim unless the Company and the Sellers
consent, such consent not to be unreasonably withheld.
(v) Any amounts payable by the Sellers, or any of them,
under this section 7(b) shall first be satisfied by resort to
the Escrow Funds and, only after the Escrow Funds have been
exhausted or distributed in accordance with the Escrow
Agreement shall the Sellers be obligated to make any further
payment under this section 7(b).
(vi) No indemnification will be required under this
section 7 unless the person claiming the right to be
indemnified gives notice to the person from which it is
claiming indemnification of the facts the claimant thinks
are the basis for such indemnification within 18 months
subsequent to the Closing Date, with the exception that
there shall be no time limitation on claims arising out of
environmental matters under section 10(d) and section 10(i)
and claims for breach of the representations and warranties
of the Sellers contained in section 3A.
(vii) Except as otherwise stated in this Agreement, no
party will be required to indemnify another party unless and
only to the extent that the aggregate amount of the agreed
to or adjudicated indemnification claims against such party
shall exceed the deductible amount of $25,000; provided,
that the foregoing limitation will not apply to payments
pursuant to section 2. Any reserves or deductible amounts
taken into account in determining any indemnification
obligations of the Sellers under this Agreement, including
without limitation any such provision in section10, shall be
in addition to the deductible amount provided in this
section 7(b)(vii).
(viii) Notwithstanding any other provision of this
Agreement, the Sellers shall, in the aggregate have no
liability to make indemnification payments under this
Agreement in excess of $1,500,000.00, except for Losses
arising out of environmental matters under section 10(d) and
section 10(i) and the NLRB proceeding under section 10(h),
which Losses shall not be subject to any monetary limit.
(c) Effect of Knowledge of Breach; Determination of
Losses; Treatment of Indemnification Payments.
(i) The Purchaser and the Company, on the one hand, and
the Sellers, on the other hand, shall not be entitled to
indemnification with respect to a breach of any
representation or warranty made by the other Party(ies)
under this Agreement if such Party(ies) can prove by a
preponderance of the evidence that such other Party(ies) had
actual knowledge at any time on or prior to the Closing Date
of the events or conditions constituting or resulting in
such breach of such representation or warranty.
(ii) The amount of any Losses subject to
indemnification under sections 7(b)(i) and (ii) above shall
be calculated net of any amounts which have been previously
recovered by the Purchaser or the Company under insurance
policies or other collateral sources. In the event any such
amounts recovered or recoverable under insurance policies or
other collateral sources are not received before any claim
for indemnification is paid pursuant to this section 7(b),
then the Purchaser or the Company shall pursue such
insurance policies or collateral sources with reasonable
diligence (unless the Purchaser or the Company shall notify
the Sellers that they have elected not to pursue such
insurance policies or collateral sources, in which case,
notwithstanding any provision of this Agreement to the
contrary, neither the Purchaser nor the Company shall be
entitled to indemnification with respect to such Losses),
and in the event they receive any recovery, the amount of
such recovery shall be applied first, to reimburse the
Purchaser and the Company for their out-of-pocket expenses
(including reasonable attorneys' fees) expended in pursuing
such recovery, second, to refund any indemnification
payments made by the Sellers which would not have been so
paid had such recovery been obtained prior to such payment,
and third, any excess to the Purchaser. In addition, all
Losses subject to indemnification hereunder shall be
calculated net of any tax benefits which have been actually
realized by the Purchaser or the Company as a result thereof
plus the net present value (using a discount factor of 8.5%
per annum and assuming the income tax rates then in effect
for any given period remain unchanged) of tax benefits which
are reasonably probable of realization by the Purchaser or
the Company in subsequent tax years.
(iii) All indemnification payments under this section7
shall be deemed adjustments to the Purchase Price.
(d) Enforcement of Escrow Agreement. Notwithstanding any
other provisions contained herein, the costs of enforcement
of the Escrow Agreement by the Purchaser or either Seller
shall not constitute Losses hereunder. Rather, such costs
and expenses shall be considered "Litigation Expenses"
within the meaning of the Escrow Agreement and, therefore,
paid in accordance with the terms of the Escrow Agreement.
(e) No Contribution from Company. Each Seller hereby
waives any rights to seek or obtain indemnification or
contribution from the Company for Losses pursuant to
section 7 or the Escrow Agreement as a result of any breach
by the Company of any representation, warranty or covenant
(other than covenants to be performed by the Company after
the Closing) contained in this Agreement.
(f) Assignment by Purchaser. Provided that the Closing
shall occur, the Purchaser hereby assigns and transfers to
the Company, effective as of the Closing, all benefits of
the Purchaser pursuant to sections 6 and 7 above.
(g) Exclusive Remedy. The remedies provided in this
section7 constitute the sole and exclusive remedies for
recoveries against another party in connection with the
transactions described in this Agreement.
8. No Shop. From the date of this Agreement until the
earlier of (i) the Closing Date, or (ii) the termination of
this Agreement, the Company shall not, and the Sellers shall
cause the Company and their respective officers, directors,
employees and other agents not to, directly or indirectly,
take any action to solicit, initiate or encourage any offer
or proposal or indication of interest in a merger,
consolidation or other business combination involving any
equity interest in, or a substantial portion of the assets
of the Company, other than in connection with the
transactions contemplated by this Agreement. The Company
and the Sellers shall immediately advise the Purchaser of
the terms of any written offer, proposal or indication of
interest that they receive or otherwise become aware of.
9. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Purchaser. The
obligation of the Purchaser to consummate the transactions
to be performed by it in connection with the Closing is
subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
section 3 above that are qualified as to their materiality
shall be true and correct and any such representations and
warranties that are not so qualified shall be true and
correct in all material respects at and as of the Closing
Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement);
(ii) the Sellers and the Company shall have performed and
complied with all of their respective covenants hereunder in
all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order,
decree, ruling or charge in effect preventing consummation
of any of the transactions contemplated by this Agreement,
and no action, suit, claim or proceeding shall be pending
before any Authority which seeks to prohibit or enjoin the
consummation of the transactions contemplated by this
Agreement;
(iv) each of the Sellers (or the Sellers' Representative
acting on their behalf) shall have delivered to the
Purchaser a certificate to the effect that the conditions
specified above in sections 9(a)(i) and (ii), as they pertain
to such Seller, have been satisfied in all respects;
(v) the Sellers shall have delivered to the Purchaser a
certificate to the effect that the conditions specified
above in sections 9(a)(i) and (ii) have been satisfied in all
respects;
(vi) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired
or otherwise been terminated;
(vii) all of the directors and officers of the Company
designated by the Purchaser prior to the Closing shall have
delivered duly signed resignations effective at the time of
the Closing (or the Sellers or the Company shall have taken
such other action as is necessary to ensure that such
persons are not directors or officers of the Company at the
time of the Closing);
(viii) Xxxxx Xxxxxxxx and Xxxxxxx Xxxxxxxx shall have
executed and delivered to the Purchaser their respective
Employment Agreements;
(ix) there shall be no payables or receivables between the
Sellers and the Company or between Affiliates of the Sellers
and the Company;
(x) the Purchaser shall have obtained consent
of its lender for financing of the purchase of the Shares;
and
(xi) the Sellers shall have delivered to Purchaser an
Opinion Letter from the Sellers' attorney in the form of
Exhibit F.
The Purchaser may waive any condition specified in this
section 9(a) if it executes a writing so stating at or prior
to the Closing.
(b) Conditions to Obligation of the Sellers. The
obligation of the Sellers to consummate the transactions to
be performed by them in connection with the Closing is
subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
section4 above shall be true and correct in all material
respects at and as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date
of this Agreement);
(ii) the Purchaser shall have performed and complied with
all of its covenants hereunder in all material respects
through the Closing;
(iii) there shall not be any injunction, judgment, order,
decree, ruling or charge in effect preventing consummation
of any of the transactions contemplated by this Agreement,
and no action, suit, claim or proceeding shall be pending
before any Authority which seeks to prohibit or enjoin the
consummation of the transactions contemplated by this
Agreement;
(iv) the Purchaser shall have delivered to the Sellers'
Representative a certificate to the effect that each of the
conditions specified above in sections 9(b)(i) and (ii) has
been satisfied in all respects;
(v) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired
or otherwise been terminated;
(vi) the Purchaser shall have executed and delivered the
Employment Agreements to Xxxxx X. Xxxxxxxx and Xxxxxxx
Xxxxxxxx; and
(vii) the Purchaser shall have delivered to Sellers an
Opinion Letter from the Purchaser's attorney in the form of
Exhibit G.
The Sellers' Agents Committee may waive any condition
specified in this section9(b) if it executes a writing so
stating at or prior to the Closing.
10. Additional Agreements.
(a) Sellers' Guarantee of Accounts Receivable.
(i) With respect to accounts receivable on the Closing
Balance Sheet which as of the Closing are 90 days or over
from the invoice date thereof (the "90 and Over Accounts
Receivable"), the Sellers guarantee the collectibility of
the 90 and Over Accounts Receivable in full minus any
remaining reserve for bad debts included in the Closing
Balance Sheet.
(ii) The Purchaser agrees to use efforts consistent with
the Company's past custom and practice to cause the Company
to collect all 90 and Over Accounts Receivable, but shall
not be obligated to resort to litigation. Any sums payable
by account debtors on account of any accounts receivable of
such account debtors shall be credited to the earliest
invoices of the Company to such account debtors, unless
specifically directed otherwise by the account debtor.
Subject to the foregoing, to the extent any 90 and Over
Accounts Receivable existing at the Closing are unpaid for a
period of 60 days after the Closing, the Purchaser shall
send written notice to the Sellers' Representative
indicating the specific account debtors, the amount of the
unpaid invoices representing 90 and Over Accounts Receivable
to each such account debtor and the total of all such unpaid
90 and Over Accounts Receivable. The Sellers shall pay the
Purchaser the amount of all such unpaid 90 and Over Accounts
Receivable minus any remaining reserve for bad debts
included in the Closing Balance Sheet within 30 days of the
receipt of any notice pursuant to this section 10(b)(ii) on
the condition that the Purchaser shall simultaneously cause
the Company to assign such unpaid 90 and Over Accounts
Receivable (the "Assigned Receivables") to the Sellers'
Agent Committee. Such assignment shall include the right to
xxx as an assignee of the Company. In the event that after
such assignment the Company receives any payment on the
Assigned Receivables, the Purchaser shall cause the Company
to promptly remit such amount to the Sellers' Agent
Committee. Thereafter, the Sellers' Agent Committee, as
owner of the Assigned Receivables, may take any action the
Sellers' Agent Committee deems necessary to collect the
Assigned Receivables and any collections shall be the
property of the Sellers. The Purchaser agrees to cooperate
and shall cause the Company to cooperate with the Sellers'
Agent Committee in any action the Sellers' Agent Committee
wishes to take to collect the Assigned Receivables
consistent with the Company's past custom and practice . In
the event the Purchaser does not want to assign any Account
Receivable to the Sellers' Agent Committee because it does
not want the Sellers' Agent Committee to initiate collection
action thereon, the Sellers shall be relieved of any
liability under this section10(a) with respect to such 90
and Over Accounts Receivable.
(iii) In the event any 90 and Over Accounts Receivable is
subject to a valid dispute by the account debtor and/or the
Purchaser wishes to grant a discount on any 90 and Over
Accounts Receivable, the Purchaser shall send written notice
or notices to the Sellers' Agent Committee indicating the
specific account debtors and the amount of the dispute or
discount. The Purchaser shall consult with the Sellers'
Agent Committee with respect to the resolution of any
dispute and/or the amount of any discount and shall not
settle any such dispute or grant any discount without the
consent of the Sellers' Representative, which consent shall
not be unreasonably withheld. Where consent is given to the
settlement of any dispute and/or the granting of any
discount, the Sellers shall pay the Purchaser the difference
between the original amount of the 90 and Over Accounts
Receivable and the amount actually received by the Purchaser
after settlement or discount, with payment to be made within
30 days after the settlement or granting of the discount.
Where consent is withheld by the Sellers' Representative,
the Purchaser may either assign the 90 and Over Accounts
Receivable, or settle the dispute or grant the discount at
its own expense and the Sellers shall be relieved of any
liability under this section 10(a) with respect to such 90
and Over Accounts Receivable.
(b) Litigation. Notwithstanding the disclosures made by
the Sellers in section 3B(r) of the Disclosure Schedule, the
Sellers shall be responsible for and shall pay the Purchaser
the full amount of all Losses resulting from the matters
described in section 3B(r) of the Disclosure Schedule which
are not covered by insurance, subject to the provisions of
section7. Such litigation shall be considered to be a
"Third Party Claim" and shall be handled in accordance with
the provisions of section 7(b)(iv) of this Agreement.
(c) Computer Software Licenses. Notwithstanding the
disclosures made by the Sellers in section3B(i) of the
Disclosure Schedule, the Sellers shall perform all acts
necessary to cause the Company to obtain all required
computer software licenses and/or network licenses (the
"Licenses") for computer software and/or networks currently
owned or operated by the Company necessary to bring the
Company into compliance with all licensing requirements. In
the event that all necessary licenses have not been obtained
as of Closing, the Sellers shall be responsible for any and
all Losses incurred by the Company after Closing related to
the Company's non-compliance with said licensing
requirements including, but not limited to, the payment of
any audit fees, fines, license fees, user fees, network
fees, installation fees, service charges, etc. Said Losses
shall be paid out of the Escrow Funds without regard to the
$25,000.00 deductible under section 7(b)(vii). Said Losses
shall be subject to the cap under section 7(b)(viii).
(d) Environmental Matters. Notwithstanding the
disclosures made by the Sellers in section3B(u) of the
Disclosure Schedule, the Sellers shall be responsible for
payment of any and all Losses relating to any Environmental
Claim arising out of the ownership or operation of the
Company prior to the Closing Date. Said Losses shall be
paid out of the Escrow Funds subject to the deductible under
section 7(b)(vii). Said Losses shall not be subject to the
cap under section 7(b)(viii) and any excess over the Escrow
Funds shall be the joint and several liability of the
Sellers.
(e) Product Returns. Notwithstanding the disclosures
made by the Sellers in section 3B(z) of the Disclosure
Schedule, in the event within 18 months subsequent to
Closing (i) customers of the Company return any defective or
non-conforming merchandise sold prior to Closing, (ii) the
Company is required to provide any customers with a credit
against their accounts receivable within such 18-month
period as a result of the receipt of defective or non-
conforming merchandise sold prior to Closing, or (iii) any
product warranty claims are brought with respect to
merchandise sold prior to Closing which are not covered by
insurance, the Sellers shall be required to pay the
Purchaser the amount equal to the sum of (A) the
difference between the original sales price of the returned
merchandise and the resale price thereof, (B) re-work costs
and shipping costs (net of any recoveries from shippers),
and (C) the cost of any returned merchandise which was sold
prior to Closing and which is not resold by the Company less
the amount of $150,000.00 deducted from the sum of (A)
through (C) above. Such amount, if any, shall be paid out
of the Escrow Funds subject to the cap under
section 7(b)(viii) and to the $25,000.00 deductible under
section 7(b)(vii).
(f) Product Liability Insurance. Notwithstanding the
disclosures made by the Sellers in section 3B(aa) of the
Disclosure Schedule, the Sellers shall cause the Company to
have a product liability insurance tail policy in effect as
of the Closing Date insuring the Company against any and all
Pre-Closing Product Liabilities as defined under
section 3B(aa) with respect to injuries to property or
persons occurring subsequent to Closing with the same policy
limits as currently exist per occurrence and in the
aggregate. The Sellers shall be responsible for paying the
premiums on said insurance policy and shall maintain said
insurance coverage for the Pre-Closing Liabilities until the
fifth (5th) anniversary of the Closing Date.
Medical and Dental Reserves. Notwithstanding the
disclosures made by the Sellers in section 3B(ff) of the
Disclosure Schedule, to the extent that the medical and
dental reserves for medical and dental claims submitted but
not paid as of Closing, as provided in the definition of
"Net Working Capital at Closing" in section1 above, are
exhausted prior to the administration and payment of all of
the Pre-Closing Claims as defined under section 3B(ff), the
Sellers shall be responsible to the Purchaser and the
Company for the costs of the administration and payment of
said Pre-Closing Claims. Said costs shall be paid from the
Escrow Funds subject to the deductible under
section 7(b)(vii) and the cap under section 7(b)(viii), and
must be submitted within 18 months of the Closing Date. In
the event that the medical and dental reserves are not
exhausted within ninety days of the Closing Date, then the
remaining reserves shall be disbursed to the Sellers in
accordance with the instructions of the Sellers' Agent
Committee, but the Sellers shall be responsible to the
Purchaser and the Company for the costs of administration
and payment of any remaining unpaid Pre-Closing Claims,
which shall be paid out of the Escrow Funds subject to the
deductible under section 7(b)(vii) and the cap under
section 7(b)(viii), and must be submitted within 18 months of
the Closing Date. Any such obligations of the Sellers under
this section 10(g) shall be reduced to extent of any
available insurance coverage.
(h) NLRB Proceeding. Notwithstanding the disclosures
made by the Sellers in section 3B(s) of the Disclosure
Schedule, the Sellers shall be responsible for and shall pay
the Purchaser the full amount of all expenses and costs,
including legal fees, incurred by the Company directly in
connection with the NLRB proceeding listed on said
Disclosure Schedule. Any such Losses shall first be paid
out of the Escrow Funds without regard to the deductible
under section 7(b)(vii). Said expenses and costs shall not
be subject to the cap under section 7(b)(viii) and any excess
over the Escrow Funds shall be the joint and several
liability of the Sellers.
(1) Zinc. Notwithstanding the disclosures made by the
Sellers in section 3B(u) of the Disclosure Schedule, the
Seller shall be responsible for payment of any capital
expenditures to the extent required to bring the Company
into compliance with any and all environmental or health
laws relating to the levels of zinc in the Company's
discharge into the sewage system of the Town of Silver Lake,
and any Losses resulting from noncompliance with said laws,
without regard to the deductible under section 7(b)(vii). Any
such capital expenditures shall first be paid out of the
Escrow Funds. Said capital expenditures and Losses shall
not be subject to the cap under section 7(b)(viii) and any
excess over the Escrow Funds shall be the joint and several
liability of the Sellers. The Sellers shall have the
reasonable discretion to determine and implement the most
cost-effective approach to bringing the Company's facilities
into compliance with environmental and health laws relating
to levels of zinc, subject to consultation with Purchaser.
(j) Union Organization. Notwithstanding the disclosures
made by the Sellers in section 3B(s) of the Disclosure
Schedule, the Sellers shall be responsible for and shall pay
up to $100,000.00 for the Company's cost of representing
the Company and/or Purchaser after closing in connection
with any union organization effort at the Company's Silver
Lake, Indiana facility, including any organizational
proceedings which are initiated by filing of a
representation petition by the union, which cost is incurred
within the first six months subsequent to the Closing Date.
Said costs shall be paid out of the Escrow Funds without
regard to the deductible under section 7(b)(vii). The
Seller's Agent Committee shall have the right to select
counsel to defend the Company.
11. Termination.
(a) Termination of Agreement. Certain of the Parties may
terminate this Agreement as provided below:
(i) the Purchaser and the Sellers' Agent Committee may
terminate this Agreement by mutual written consent at any
time prior to the Closing;
(ii) the Purchaser may terminate this Agreement by giving
written notice to the Sellers' Agent Committee at any time
prior to the Closing in the event the Company has within the
previous 10 Business Days given the Purchaser any notice
pursuant to section 5(f) above;
(iii) the Purchaser may terminate this Agreement by giving
written notice to the Sellers' Agent Committee at any time
prior to the Closing (A) in the event that the Sellers or
the Company have breached any representation, warranty or
covenant contained in this Agreement in any material
respect, the Purchaser has notified the Sellers' Agent
Committee of the breach, and the breach has continued
without cure for a period of 30 days after the notice of
breach or (B) if the Closing shall not have occurred on or
before April 7, 2000, by reason of the failure of any
condition precedent under section 9(a) hereof (unless the
failure results primarily from the Purchaser breaching any
representation, warranty or covenant contained in the
Agreement); and
(iv) the Sellers' Agent Committee may terminate this
Agreement by giving written notice to the Purchaser at any
time prior to the Closing (A) in the event the Purchaser has
breached any material representation, warranty or covenant
contained in this Agreement in any material respect, the
Sellers' Agent Committee has notified the Purchaser of the
breach, and the breach has continued without cure for a
period of 30 days after the notice of breach or (B) if the
Closing shall not have occurred on or before April 7, 2000,
by reason of the failure of any condition precedent under
section 9(b) hereof (unless the failure results primarily
from the Sellers or the Company breaching any
representation, warranty or covenant contained in this
Agreement).
(b) Effect of Termination. If any Party terminates this
Agreement pursuant to section 11(a) above, all rights and
obligations of the Parties hereunder shall terminate without
any liability of any Party to any other Party (except for
any liability of any Party then in breach); provided,
however, that the confidentiality provisions contained in
this Agreement shall survive the termination of this
Agreement.
12. Miscellaneous.
(a) No Third-Party Beneficiaries. This Agreement shall
not confer any rights or remedies upon any Person other than
the Parties and their respective successors and permitted
assigns.
(b) Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire
agreement among the Parties and supersedes any prior
understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in
any way to the subject matter hereof.
(c) Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted
assigns. No Party may assign either this Agreement or any
of its rights, interests or obligations hereunder without
the prior written approval of the other Parties; provided,
however, that, unless expressly prohibited hereunder, (i)
any or all of the rights and interests of the Purchaser
hereunder may be assigned to any purchaser of substantially
all of the assets of Purchaser, (ii) any or all of the
rights and interests of the Purchaser hereunder may be
assigned as a matter of law to the surviving entity in any
merger of the Purchaser, and (iii) any or all of the rights
and interests of the Purchaser hereunder may be assigned as
collateral security to any lender or lenders (including any
agent for any such lender or lenders) providing financing to
the Purchaser in connection with the transactions
contemplated hereby, or to any assignee or assignees of any
such lender, lenders or agent (it being understood that in
any or all of the cases described in clauses (i), (ii) and
(iii) above the Purchaser nonetheless shall remain
responsible for the performance of all of its obligations
hereunder).
(d) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and
the same instrument.
(e) Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(f) Notices. All notices, requests, demands, claims and
other communications hereunder will be in writing. Any
notice, request, demand, claim or other communication
hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified
mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to Seller(s):
Xxxxx X. Xxxxxxxx
000 XXX X-00 Xxxx
Xxxxxxxx, Xxxxxxx 00000
With copies to (which shall not constitute notice to the
Sellers):
Xxxxxxx X. Xxxxx, Esq.
Bose, XxXxxxxx & Xxxxx, LLP
0000 Xxxxx Xxxxxxx Xxxxx
000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
If to the Purchaser:
WinsLoew Furniture, Inc.
Attention: Xxxxx Xxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim or
other communication hereunder to the intended recipient at
the address set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail or electronic mail), but no
such notice, request, demand, claim or other communication
shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands,
claims and other communications hereunder are to be
delivered by giving the other Parties notice in the manner
herein set forth.
(g) Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the internal
laws of the State of Indiana (i.e., without giving effect to
any choice or conflict of law provision or rule (whether of
the State of Indiana or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other
than the State of Indiana) Subject to the last sentence of
this section 12(g), each of the Parties hereby (i)
irrevocably submits to the exclusive jurisdiction of any
state or federal court sitting in Xxxxxx County, Indiana in
any action, suit or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the
action or proceeding may be heard and determined in any such
court, (ii) waives, and agrees not to assert in any such
suit, action or proceeding, any claim that (A) such Party is
not personally subject to the jurisdiction of such court or
of any other court to which proceedings in such court may be
appealed, (B) such suit, action or proceeding is brought in
an inconvenient forum or (C) the venue of such suit, action
or proceeding is improper, (iii) expressly waives any
requirement for the posting of a bond by the party bringing
such suit, action or proceeding and (iv) consents to process
being served in any such suit, action or proceeding by
mailing, certified mail, return receipt requested, a copy
thereof to such party at the address in effect for notices
hereunder, and agrees that such services shall constitute
good and sufficient service of process and notice thereof.
Nothing in this Agreement shall affect or limit any right
to serve process in any other manner permitted by law or
shall be construed to prevent the Purchaser or the Company
from bringing and pursuing, or in any way limit, the right
of the Purchaser or the Company to bring or pursue, any
action arising out of or in connection with section?6(d),
(e) or (f) in any jurisdiction where any Seller is subject
to personal jurisdiction and venue is proper.
(h) Amendments and Waivers. No amendment of any provision
of this Agreement shall be valid unless the same shall be in
writing and signed by the Purchaser and the Sellers. No
waiver by any Party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any
rights arising by virtue of any prior or subsequent such
occurrence.
(i) Arbitration. If the Parties should have a material
dispute arising out of or relating to this Agreement or the
Parties' respective rights and duties (other than a dispute
in connection with the determination of the Net Working
Capital at Closing, which shall be resolved in accordance
with section 2(h) above), then the Parties will resolve such
dispute in the following manner: (i) any Party may at any
time deliver to the others a written dispute notice setting
forth a brief description of the issue for which such notice
initiates the dispute resolution mechanism contemplated by
this section 12(i); (ii) during the 45 day period following
the delivery of the notice described in clause (i) above,
appropriate representatives of the various Parties will meet
and seek to resolve the disputed issue through negotiation,
(iii) if representatives of the Parties are unable to
resolve the disputed issue through negotiation, then within
30 days after the period described in clause (ii) above, the
Parties will refer the issue (to the exclusion of a court of
law) to final and binding arbitration in Xxxxxx County,
Indiana in accordance with the then existing rules (the
"Rules") of the American Arbitration Association ("AAA"),
and judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof;
provided, however, that the law applicable to any
controversy shall be the law of the State of Indiana,
regardless of principles of conflicts of laws. In any
arbitration pursuant to this Agreement, (A) discovery shall
be allowed and governed by the Indiana Rules of Civil
Procedure and (B) the award or decision shall be rendered by
an arbitrator appointed by Purchaser and the Sellers. In
the event of failure of Purchaser and the Sellers to agree
within 60 days after the commencement of the arbitration
proceeding upon the appointment of the arbitrator, the
arbitrator shall be appointed by the AAA in accordance with
the Rules. Upon the selection of the arbitrator, an award or
decision shall be rendered within no more than 45 days.
Notwithstanding the foregoing, the request by any Party for
preliminary or permanent injunctive relief, whether
prohibitive or mandatory, shall not be subject to
arbitration and may be adjudicated in any jurisdiction
where any Seller is subject to personal jurisdiction and
where venue is proper.
(j) Equitable Remedies. Each Seller acknowledges and
agrees that the Purchaser and the Company would not have an
adequate remedy at law in the event any of the provisions of
sections 6(d), (e) and (f) of this Agreement are not
performed in accordance with their specific terms or are
breached. Accordingly, each Seller agrees that the Purchaser
and the Company shall be entitled to an injunction or
injunctions to prevent breaches of any provision of any of
section?6(d), (e) and (f) and to enforce specifically the
terms and provisions thereof in any action instituted in any
court of competent jurisdiction. The obligations of the
Sellers under sections 6(d), (e) and (f) of this Agreement
shall constitute covenants that are independent from any
obligations that are or in the future may be owing to the
Sellers by the Purchaser or the Company and, accordingly,
shall be enforceable by the Purchaser and the Company
notwithstanding any breach or alleged breach by the
Purchaser or the Company of any obligation to the Sellers.
(k) Waiver of Jury Trial. EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT SUCH PARTY MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL
BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING HEREUNDER.
(l) Prevailing Parties. In the event of any litigation
with regard to this Agreement, the prevailing Party or
Parties shall be entitled to receive from the nonprevailing
Party or Parties and the nonprevailing Party or Parties
shall pay all reasonable fees and expenses of counsel for
the prevailing Party or Parties.
(m) Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
(n) Expenses. Except as provided herein, each Party
shall pay all costs and expenses incident to its, his or her
negotiation and preparation of this Agreement and to such
Party's performance and compliance with all agreements and
conditions contained herein its, his or her part to be
performed or complied with, including the fees, expenses and
disbursements of such Party's counsel and accountants and
other advisors (provided that at any time after Closing, the
Purchaser may cause the Company to reimburse the Purchaser
or any of its Affiliates for any such costs or expenses
incurred by it or its Affiliates). Notwithstanding the
foregoing, the Purchaser shall pay all filing fees payable
by the Parties in connection with the filing by the Parties
pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976. The Purchaser acknowledges and agrees that the
Company has borne certain of the costs and expenses of the
Sellers (including their legal fees and expenses) in
connection with this Agreement and the transactions
contemplated hereby. Neither the Purchaser nor the Company
will have any liability for any such costs or expenses of
the Sellers after the Closing.
(o) Construction. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of
the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local or foreign
statute or law shall be deemed also to refer to all rules
and regulations promulgated thereunder, unless the context
requires otherwise. The specification of any dollar amount
in the representations and warranties or otherwise in this
Agreement or in the Disclosure Schedule is not intended and
shall not be deemed to be an admission or acknowledgment of
the materiality of such amounts or items, nor shall the same
be used in any dispute or controversy between the parties to
determine whether any obligation, item or matter (whether or
not described herein or included in any schedule) is or is
not material for purposes of this Agreement.
SIGNATURES APPEAR ON THE FOLLOWING PAGES
IN WITNESS WHEREOF, the Parties hereto have executed this
Stock Purchase Agreement as of the date first above written.
WINSLOEW FURNITURE, INC.
By:___________________________________
Its:___________________________________
WABASH VALLEY MANUFACTURING, INC.
By:___________________________________
Its:___________________________________
Xxxxxxx X. Xxxxxx
Xxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
_____________________________________
Xxxxxxx X. Xxxxxxxxx, not individually but as Guardian for
Xxxxx X. Xxxxxxxxx
_____________________________________
Xxxxxxx X. Xxxxxxxxx, not individually but as Guardian for
Xxxxx X. Xxxxxxxxx
_____________________________________
Xxxxxxx X. Xxxxxxxxx, not individually but as Guardian for
Xxxx X. Xxxxxxxxx
_____________________________________
Xxxxx X. Xxxxxxxx, not individually but as Guardian for
Xxxxxxxxxxx X. Xxxxxxxx
_____________________________________
Xxxxxx X. Xxxxxxxx, not individually but as Guardian for
Xxxxxxxxxxx X. Xxxxxxxx
_____________________________________
Xxxxx X. Xxxxxxxx, not individually but as Guardian for
Xxxxxxx X. Xxxxxxxx
_____________________________________
Xxxxxx X. Xxxxxxxx, not individually but as Guardian for
Xxxxxxx X. Xxxxxxxx
_____________________________________
Xxxxxx X. Xxxxxx, not individually but as Guardian for
Xxxxxxx X. Xxxxxx
_____________________________________
Xxxxx X. Xxxxxx, not individually but as Guardian for
Xxxxxxx X. Xxxxxx
_____________________________________
Xxxxxx X. Xxxxxx, not individually but as Guardian for
Xxxxxx X. Xxxxxx
_____________________________________
Xxxxx X. Xxxxxx, not individually but as Guardian for Xxxxxx
X. Xxxxxx
_____________________________________
Xxxxxx X. Xxxxxx, not individually but as
Guardian for Xxxxxxxxx X. Xxxxxx
_____________________________________
Xxxxx X. Xxxxxx, not individually but as Guardian for
Xxxxxxxxx X. Xxxxxx
_____________________________________
Xxxxxxx Xxxxxxxx, not individually but as Conservator for
Xxxxxxx X. Xxxxxxxx
_____________________________________
Xxxx Xxxxxxxx, not individually but as
Conservator for Xxxxxxx X. Xxxxxxxx
_____________________________________
Xxxxxxx Xxxxxxxx, not individually but as
Conservator for Xxxxxx X. Xxxxxxxx
_____________________________________
Xxxx Xxxxxxxx, not individually but as
Conservator for Xxxxxx X. Xxxxxxxx
_____________________________________
Xxxxxxx Xxxxxxxx, not individually but as
Conservator for Xxxx X. Xxxxxxxx
_____________________________________
Xxxx Xxxxxxxx, not individually but as
Conservator for Xxxx X. Xxxxxxxx
_____________________________________
Xxxxxxxxx Xxxxxx Xxxxxx
_____________________________________
Xxxxxxxx Xxxxxx Xxxxxx
_____________________________________
Xxxxx X. Xxxxxxxx
_____________________________________
Xxxxxx X. Xxxxxxxx
_____________________________________
Xxxx X. Xxxxxxxx
_____________________________________
Xxxxxx X.Xxxxxxxx
_____________________________________
Xxxxxxx X. Xxxxxxxx
_____________________________________
Xxxxx X. Xxxxxxxx
_____________________________________
Xxxxx X. Xxxxxxxx
_____________________________________
Xxxxxxx X. Xxxxxxxx, not individually but as
Guardian for Xxxx X. Xxxxxxxx
