EXHIBIT 2.1
STOCK AND REAL ESTATE PURCHASE AGREEMENT
THIS STOCK AND REAL ESTATE PURCHASE AGREEMENT (hereinafter sometimes
called the "Agreement") is made as of the 22nd day of June in the year 2001 by
and among AMERICAN LOCKER GROUP, INCORPORATED, a Delaware corporation
(hereinafter sometimes called the "Buyer"), of the one part, and XXXXX D'ADDIO,
an individual resident of Dallas County, Texas (hereinafter sometimes called the
"Stock Seller") and XXXXXXXXX D'ADDIO and XXXX D'ADDIO, husband and wife,
individual residents of Dallas County, Texas (hereinafter sometimes collectively
called the "Real Estate Sellers"), of the other part.
RECITALS
The Stock Seller desires to sell, and the Buyer desires to purchase,
all of the issued and outstanding shares (hereinafter sometimes called the
"Company Shares") of capital stock of B.L.L. Corporation, a Texas corporation
doing business as Security Manufacturing Corporation (hereinafter sometimes
called the "Company") and the Real Estate Sellers desire to sell, and the Buyer
desires to purchase, the certain piece or parcel of land located in Tarrant
County, Texas, as more particularly described in the Description of the Land set
forth in Exhibit "A" attached hereto and made a part hereof (hereinafter
sometimes called the "Land"), together with the building and other improvements
erected thereon (hereinafter sometimes collectively called the "Building") and
all appurtenances, subject to the title exceptions as more particularly
described in the Schedule of Title Exceptions set forth in Exhibit "B" attached
hereto and made a part hereof (hereinafter sometimes called the "Title
Exceptions"), for the consideration and on the terms set forth in this
Agreement.
AGREEMENT
The Buyer, the Stock Seller and Real Estate Sellers, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
SALE AND TRANSFER OF COMPANY SHARES AND REAL ESTATE; CLOSING
SECTION 1.1 COMPANY SHARES. Subject to the terms and conditions of this
Agreement, at the closing as defined in Section 1.4 hereof (hereinafter
sometimes called the "Closing"), the Stock Seller shall sell and transfer the
Company Shares to the Buyer and the Buyer shall purchase the Company Shares from
the Stock Seller.
SECTION 1.2 REAL ESTATE. Subject to the terms and conditions of this
Agreement, at the Closing, the Real Estate Sellers shall sell and transfer the
real estate as defined in Article II hereof (hereinafter sometimes called the
"Real Estate") to the Buyer and the Buyer shall purchase the Real Estate from
the Real Estate Sellers.
SECTION 1.3 PURCHASE PRICES.
(a) The purchase price for the Company Shares (hereinafter sometimes
called the "Share Purchase Price") shall consist of the sum of Nine Million, One
Hundred Thousand Dollars ($9,100,000) payable in accordance with the provisions
of Section 1.4 hereof.
(b) The purchase price for the Real Estate (hereinafter sometimes
called the "Real Estate Purchase Price") shall consist of Three Million Five
Hundred Thousand Dollars ($3,500,000) in cash. The Real Estate Purchase Price
shall be allocated for income tax, transfer tax and all other purposes to the
extent of Five Hundred Thousand Dollars ($500,000) to the Land and the remainder
thereof to the Building.
SECTION 1.4 PAYMENT OF SHARE PURCHASE PRICE. The Share Purchase Price
shall be payable by the Buyer in cash in four installments, the first of which
shall be payable at the closing referred to in Section 1.5 hereof (hereinafter
sometimes called the "Closing") in the amount of Eight Million, One Hundred
Forty Thousand Dollars ($8,140,000), the second of which shall be payable by the
first anniversary of the date of the Closing (hereinafter sometimes called the
"Closing Date"), in the amount of Three Hundred Twenty Thousand Dollars
($320,000), the third of which shall be payable by the second anniversary of the
Closing Date in the amount of Three Hundred Twenty Thousand Dollars ($320,000)
and the fourth of which shall be payable by the third anniversary of the Closing
Date in the amount of Three Hundred Twenty Thousand Dollars ($320,000). The
obligations of the Buyer to pay the second, third and fourth installments of the
Share Purchase Price shall be evidenced by a promissory note to the order of the
Stock Seller in the principal amount thereof, together with interest thereon at
the annual rate of six and one-half percent (6.5%), in substantially the form of
Exhibit "C" attached hereto and made a part hereof (hereinafter sometimes called
the "Promissory Note") which the Buyer shall deliver at the Closing.
SECTION 1.5 CLOSING. The Closing of the simultaneous purchase and sale
of the Company Shares and the Real Estate provided for in this Agreement shall
take place in the offices of Gardere Xxxxx Xxxxxx, LLP, counsel to the Stock
Seller and the Real Estate Sellers, 0000 Xxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx,
at ten o'clock a.m. (local time) on Friday, the 6th day of July, 2001, or at
such other time and place as the parties may agree. Subject to the provisions of
Article VII hereof, failure to consummate the purchase and sale of the Company
Shares and the Real Estate provided for in this Agreement on the date and time
and at the place determined pursuant to this Section 1.5 shall not result in the
termination of this Agreement and shall not relieve any party of any obligation
under this Agreement.
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SECTION 1.6 CLOSING OBLIGATIONS. At the Closing on the date thereof
(hereinafter sometimes called the "Closing Date"):
(a) Against performance by the Buyer of its obligations under this
Section 1.5, the Stock Seller and the Real Estate Sellers (hereinafter sometimes
collectively called the "Sellers") shall deliver to or for the Buyer:
(i) the certificate or certificates representing the Company
Shares, duly endorsed (or accompanied by duly executed stock powers)
by the Stock Seller for transfer to the Buyer;
(ii) the release in the form of Exhibit "D" attached hereto and
made a part hereof executed by the Sellers (hereinafter sometimes
called the "Sellers' Release");
(iii) the resignations of each of the directors and officers of
the Company, effective as of the Closing Date;
(iv) the consulting agreement in the form of Exhibit "E" attached
hereto and made a part hereof executed by Xxxxx D'Addio (hereinafter
sometimes called the "Xxxxx D'Addio Consulting Agreement");
(v) the consulting agreement in the form of Exhibit "F" attached
hereto and made a part hereof executed by Xxxxxxxxx D'Addio
(hereinafter sometimes called the "Xxxxxxxxx D'Addio Consulting
Agreement");
(vi) the sales representative agreement in the form of Exhibit
"G" attached hereto and made a part hereof executed by Xxxxx D'Addio
(hereinafter sometimes called the "Sales Representative Agreement");
(vii) the warranty deed executed and acknowledged by the Real
Estate Sellers in recordable form acceptable to the title insurance
company (hereinafter sometimes called the "Title Company") which will
issue to the Buyer hereunder a commitment to issue an owner's and a
mortgagee's title insurance policy in accordance with the provisions
of Section 6.1(d) hereof;
(viii) the federal income tax certification in the form of
Exhibit "H" attached hereto and made a part hereof executed under
penalty of perjury by the Real Estate Sellers; and
(ix) a certificate executed by the Sellers representing and
warranting to the Buyer that each of the representations and
warranties of Sellers in this Agreement was accurate in all respects
as of the date of this Agreement and is accurate in all respects as of
the Closing Date as if made on the Closing Date.
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(b) against performance by the Sellers of their obligations under this
Section 1.6, the Buyer shall deliver to or for the Sellers:
(i) the initial portion of the Share Purchase Price payable to
the Stock Seller in accordance with the provisions of Section 1.4
hereof;
(ii) the Promissory Note executed by the Buyer;
(iii) the cash portion of the Real Estate Purchase Price payable
to the Real Estate Sellers;
(iv) the Xxxxx D'Addio Consulting Agreement executed by the
Company and guaranteed by the Buyer;
(v) the Xxxxxxxxx D'Addio Consulting Agreement executed by the
Company and guaranteed by the Buyer;
(vi) the Sales Representative Agreement executed by the Company
and guaranteed by the Buyer; and
(vii) a certificate executed by the Buyer representing and
warranting to the Sellers that each of the representations and
warranties of the Buyer in this Agreement was accurate in all respects
as of date of this Agreement and is accurate in all respects as of the
Closing Date as if made on the Closing Date;
(c) Simultaneously, upon the Closing, the Real Estate Sellers shall
deliver to or for the Buyer their assignment of the lease of the Real Estate
between them as landlord and the Company as tenant (hereinafter sometimes called
the "Real Estate Lease") executed by the Real Estate Sellers and the Buyer shall
deliver to or for the Real Estate Sellers its assumption of the obligations of
the landlord thereunder, executed by the Buyer.
(d) Simultaneously, upon the Closing, the Stock Seller shall deliver to
the Company her termination of the line of credit and any other commitment
previously made by the Stock Seller to advance funds to or for the benefit of
the Company.
SECTION 1.7 APPORTIONMENT. All real estate taxes and assessments on the
Real Estate and water and sewer rentals therefor not paid by the Company under
the Real Estate Lease, together with rentals and other charges under the Real
Estate Lease, shall be apportioned between the Buyer, on the one hand, and the
Real Estate Sellers, on the other hand, as of the end of the Closing Date on a
PER DIEM basis. If bills for real estate taxes on the Real Estate have not been
issued as of the Closing, and if the amount of such taxes for the then current
tax fiscal year is not then known, the apportionment of real estate taxes shall
be made at the Closing on the basis of the prior year's real estate taxes,
subject, however, to adjustment following the Closing once such bills have been
issued. Any credit due to the Buyer pursuant to this Section 1.7 shall be
applied as a credit to the
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Real Estate Purchase Price hereunder; and any credit due to the Real Estate
Sellers pursuant to this Section 1.7 shall be paid by the Buyer to or for the
Real Estate Sellers at the Closing as an addition to the Real Estate Purchase
Price.
SECTION 1.8 TRANSFER TAXES AND OTHER COSTS. The Buyer shall pay at the
Closing any and all costs and expenses for the appraisal and the survey of the
Real Estate, as well as any mortgagee's policy of title insurance, as
contemplated by this Agreement. The Real Estate Sellers shall pay at the Closing
any and all costs and expenses for title examination and insurance (other than
any mortgagee's policy of title insurance), real estate transfer taxes,
recordation and documentary stamp and other fees incurred from, out of, or in
connection with the conveyance of the Real Estate, as contemplated by this
Agreement.
ARTICLE II
DEFINITIONS
For the purposes of this Agreement, the following terms have
the meanings specified or referred to in this Article II:
"Affiliate" means a Related Person with respect to a Person
other than an individual.
"APPLICABLE CONTRACT" means any Contract (a) under which the
Company has or may acquire any rights, (b) under which the Company has
or may become subject to any obligation or liability or (c) by which
the Company or any of the assets owned or used by it, including the
Real Estate, is or may become bound.
"BALANCE SHEET" means the balance sheet constituting part of
the financial statements of the Company as of October 31, 2000, and
referred to in Section 3.1(d) hereof.
"BEST EFFORTS" mean the efforts that a prudent Person desirous
of achieving a result would use in similar circumstances to ensure that
such result is achieved as expeditiously as possible.
"BREACH" means that a "Breach" of a representation, warranty,
covenant, obligation or other provision of this Agreement or any
instrument delivered pursuant to this Agreement will be deemed to have
occurred if there is or has been (a) any inaccuracy in or breach of, or
any failure to perform or comply with, such representation, warranty,
covenant, obligation or other provision, or (b) any claim (by any
Person) or other occurrence or circumstance that is or was inconsistent
with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence or circumstance.
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"BUILDING" means the building and other improvements erected
on the Land.
"BUYER" means American Locker Group, Incorporated, a Delaware
corporation, its successors and permitted assigns hereunder.
"CLOSING" means the term as defined in Section 1.5 hereof.
"CLOSING DATE" means the date and time as of which the Closing
actually takes place.
"COMPANY" means B.L.L. Corporation, a Texas corporation, its
successors and assigns.
"COMPANY SHARES" mean all the issued and outstanding shares of
capital stock of the Company referred to in the Recitals hereinabove.
"CONSENT" means any approval, consent, ratification, waiver or
other authorization (including any Governmental Authorization).
"CONSULTING AGREEMENTS" mean collectively, the Xxxxx D'Addio
Consulting Agreement and the Xxxxxxxxx D'Addio Consulting Agreement.
"CONTEMPLATED TRANSACTIONS" means all of the transactions
contemplated by this Agreement, including (a) the sale of the Company
Shares by the Stock Seller to the Buyer; (b) the sale of the Real
Estate by the Real Estate Sellers to the Buyer; (c) the execution,
delivery, and performance of the Consulting Agreements, the Sales
Representative Agreement, and the Promissory Note; (d) the performance
by the Buyer and the Sellers of their respective covenants and
obligations under this Agreement; and (e) the Buyer's acquisition and
ownership of the Company Shares and exercise of control over the
Company.
"CONTRACT" means any agreement, contract, obligation, promise,
or undertaking (whether written or oral and whether expressed or
implied) that is legally binding.
"DAMAGES" means the term as defined in Section 8.2 hereof.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule delivered
by the Sellers to the Buyer as of the date hereof.
"ENCUMBRANCE" means any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction of any kind, including
any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
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"ENVIRONMENT" means soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams,
ponds, drainage basins, and wetlands, ground waters, drinking water
supply, stream sediments, ambient air (including indoor air), plant and
animal life, and any other environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH AND SAFETY LIABILITIES" mean any cost,
damages, expense, liability, obligation, or other responsibility
arising from or under Environmental Law or Occupational Safety and
Health Law and consisting of or relating to (a) any environmental,
health, or safety matters or conditions (including on-site or off-site
contamination, occupational safety and health, and regulation of
chemical substances or products); (b) fines, penalties, judgments,
awards, settlements, legal or administrative proceedings, damages,
losses, claims, demands and response, investigative, remedial, or
inspection costs and expenses arising under Environmental Law or
Occupational Safety and Health Law; (c) financial responsibility under
Environmental Law or Occupational Safety and Health Law for clean-up
costs or corrective action, including any investigation, clean-up,
removal, containment, or other remediation or response action
(hereinafter sometimes called "Clean-up") required by applicable
Environmental Law or Occupational Safety and Health Law (whether or not
such Clean-up has been required or requested by any Governmental Body
or any other Person) and for any natural resource damages; or (d) any
other compliance, corrective, investigative, or remedial measures
required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action" include the
types of activities covered by the United States Comprehensive
Environmental Response, Compensation, and Liability Act.
"ENVIRONMENTAL LAW" means any Legal Requirement that requires
or relates to: (a) advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or other
prohibitions and of the commencement of activities, such as resource
extraction or construction, that could have significant impact on the
Environment; (b) preventing or reducing to acceptable levels the
release of pollutants or hazardous substances or materials into the
Environment; (c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged and used
so that they do not present unreasonable risks to human health or the
Environment when used or disposed of; (e) protecting resources,
species, or ecological amenities; (f) reducing to acceptable levels the
risks inherent in the transportation of hazardous substances,
pollutants, oil, or other potentially harmful substances; (g) cleaning
up pollutants that have been released, preventing the threat of
release, or paying the costs of such clean-up or prevention; or (h)
making responsible parties pay private parties or groups of them, for
damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for
injuries done to public assets.
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"ERISA" means the Employee Retirement Income Security Act of
1974 or any successor law, and regulations and rules issued pursuant to
that Act or any successor law.
"FACILITIES" mean any real property, leasehold, or other
interests currently or formerly owned by the Company and any buildings,
plants, structures, or equipment (including motor vehicles, tank cars,
and rolling stock) currently or formerly owned or operated by the
Company.
"GAAP" means generally accepted United States accounting
principles, applied on a basis consistent with the basis on which the
Balance Sheet and the other financial statements referred to in Section
3.1(d) were prepared.
"GOVERNMENTAL AUTHORIZATION" means any approval, consent,
license, permit, waiver, or other authorization issued, granted, given,
or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement.
"GOVERNMENTAL BODY" means any (a) nation, state, county, city,
town, village, district, or other jurisdiction of any nature; (b)
federal, state, local, municipal, foreign, or other government; (c)
governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, or entity and
any court or other tribunal); (d) multi-national organization or body;
or (e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"HAZARDOUS ACTIVITY" means the distribution, generation,
handling, importing, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use
(including any withdrawal or other use of groundwater) of Hazardous
Materials in, on, under, about, or from the Facilities, including the
Real Estate, or any part thereof into the Environment, and any other
act, business, operation, or thing that increases the danger, or risk
of danger, or poses an unreasonable risk of harm to persons or property
on or off the Facilities, including the Real Estate, or that may affect
the value of the Facilities, including the Real Estate, or the Company.
"HAZARDOUS MATERIALS" mean any waste or other substance that
is listed, defined, designated, or classified as, or otherwise
determined to be, hazardous, radioactive, or toxic or a pollutant or a
contaminant under or pursuant to any Environmental Law, including any
admixture or solution thereof, and specifically including petroleum and
all derivatives thereof or synthetic substitutes therefor and asbestos
or asbestos-containing materials.
"INDEMNIFIED PERSONS" mean the term as defined in Section 8.2
hereof.
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"INTELLECTUAL PROPERTY ASSETS" mean the term as defined in
Section 3.1(w) hereof.
"IRC" means the Internal Revenue Code of 1986 or any successor
law, and regulations issued by the IRS pursuant to the Internal Revenue
Code or any successor law.
"IRS" means the United States Internal Revenue Service or any
successor agency and, to the extent relevant, the United States
Department of the Treasury.
"XXXXX D'ADDIO CONSULTING AGREEMENT" means the Consulting
Agreement dated the Closing Date between the Company and Xxxxx D'Addio
in substantially the form set forth in Exhibit "E" hereto.
"KNOWLEDGE" means that an individual will be deemed to have
"Knowledge" of a particular fact or other matter if (a) such individual
is actually aware of such fact or other matter; or (b) a prudent
individual could be expected to discover or otherwise become aware of
such fact or other matter in the course of conducting a reasonably
comprehensive investigation conceiving the existence of such fact or
other matter. A Person (other than an individual) will be deemed to
have "Knowledge" of a particular fact or other matter if any individual
who is serving, or who has at any time served, as a director, officer,
partner, executor, or trustee of such Person (or in any similar
capacity) has, or at any time had, knowledge of such fact or other
matter.
"LAND" means the certain piece or parcel of land located in
Tarrant County, Texas, as more particularly described in the
Description of the Land set forth in Exhibit "A" hereto.
"LEGAL REQUIREMENT" means any federal, state, local,
municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle of common
law, regulation, statute, or treaty.
"OCCUPATIONAL SAFETY AND HEALTH LAW" means any Legal
Requirement designed to provide safe and healthful working conditions
and to reduce occupational safety and health hazards, and any program,
whether governmental or private (including those promulgated or
sponsored by industry associations and insurance companies), designed
to provide safe and healthful working conditions.
"ORDER" means any award, decision, injunction, judgment,
order, ruling, subpoena, or verdict entered, issued, made, or rendered
by any court, administrative agency, or other Governmental Body or by
any arbitrator.
"ORDINARY COURSE OF BUSINESS" means that an action taken by a
Person will be deemed to have been taken in the "Ordinary Course of
Business" only if:
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(a) such action is consistent with the past
practices of such Person and is taken in the ordinary course of the
normal day-to-day operations of such Person; (b) such action is not
required to be authorized by the board of directors of such Person (or
by any Person or group of Persons exercising similar authority); and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors
(or by any Person or group of Persons exercising similar authority), in
the ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such Person.
"ORGANIZATIONAL DOCUMENTS" mean, in the case of a corporation,
the articles or certificate of incorporation and the bylaws thereof and
any amendment to any of the foregoing.
"PERSON" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization, labor union, or other entity or Governmental Body.
"PLAN" means the term as defined in Section 3.1(n) hereof.
"PROCEEDING" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
"PROMISSORY NOTE" means the Promissory Note dated the Closing
Date issued by the Buyer to the Stock Seller in substantially the form
set forth in Exhibit "C" hereto.
"REAL ESTATE" means the Land, the Building and all
appurtenances.
"REAL ESTATE LEASE" means the Agreement dated May 1, 1995
between Xxxxx D'Addio, lessor, and Security Manufacturing Corporation,
lessee, as amended on October 1, 1996, and further amended on January
1, 2001.
"REAL ESTATE SELLERS" means Xxxxxxxxx D'Addio and Xxxx
D'Addio, husband and wife, as referred to on the first page hereof,
their successors and permitted assigns.
"RELATED PERSON" means with respect to a particular
individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's
Family;
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(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a
Material Interest; and
(d) any Person with respect to which such individual or one
or more members of such individual's Family serves as a director,
officer, partner, executor, or trustee (in a similar capacity);
and means with respect to a specified Person other than an
individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or
indirectly under common control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a
Material Interest;
(e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar
capacity); and
(f) any Related Person of any individual described in clause
(b) or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse and former
spouses, (iii) any other natural person who is related to the
individual or the individual's spouse within the second degree, and
(iv) any other natural person who resides with such individual, and (b)
"Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of
voting securities or other voting interests representing at least ten
percent (10%) of the outstanding voting power of a Person or equity
securities or other equity interests representing at least twenty-five
percent (25%) of the outstanding equity securities or equity interests
in a Person.
"RELEASE" means any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
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"REPRESENTATIVE" means, with respect to a particular Person,
any director, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants,
and financial advisors.
"SALES REPRESENTATIVE AGREEMENT" means the Sales
Representative Agreement dated the Closing Date between the Company and
Xxxxx D'Addio in substantially the form set forth in Exhibit "G"
hereto.
"XXXXXXXXX D'ADDIO CONSULTING AGREEMENT" means the Consulting
Agreement dated the Closing Date between the Company and Xxxxxxxxx
D'Addio in substantially the form set forth in Exhibit "F" hereto.
"SECURITIES ACT" means the Securities Act of 1933 or any
successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"SELLERS" mean, collectively, the Stock Seller and the Real
Estate Sellers.
"SELLERS' CLOSING DOCUMENTS" mean, collectively, the documents
to be delivered by the Sellers at the Closing in accordance with the
provisions of Section 1.6 hereof.
"SELLERS' RELEASE" means the Release dated the Closing Date by
the Sellers in substantially the form set forth in Exhibit "D" hereto.
"STOCK SELLER" means Xxxxx D'Addio, her successors and
permitted assigns.
"SUBSIDIARY" means with respect to any Person (hereinafter
sometimes called the "Owner"), any corporation or other Person of which
securities or other interests having the power to elect a majority of
that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business
and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a
contingency that has not occurred) are held by the Owner or one or more
of its Subsidiaries; when used without reference to a particular
Person, "Subsidiary" means a Subsidiary of the Company.
"TAX" means any tax (including any income tax, capital gains
tax, value-added tax, sales tax, property tax, gift tax or estate tax),
levy, assessment, tariff, duty (including any customs duty),
deficiency, or other fee, and any related charge or amount (including
any fine, penalty, interest, or addition to tax), imposed, assessed, or
collected by or under the authority of any Governmental Body or payable
pursuant to any tax-sharing agreement or any other Contract relating to
the sharing or payment of any such tax, levy, assessment, tariff, duty,
deficiency, or fee.
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"TAX RETURN" means any return (including any information
return), report, statement, schedule, notice, form, or other document
or information filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the
determination, assessment, collection, or payment of any tax or in
connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE" means a substantial likelihood of a
Release that may require action in order to prevent or mitigate damage
to the Environment that may result from such Release.
"THREATENED" means that a claim, Proceeding, dispute, action,
or other matter will be deemed to have been made (orally or in writing)
or any notice has been given (orally or in writing), or if any other
event has occurred or any other circumstances exist, that would lead a
prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
"TITLE COMPANY" means the title insurance company duly
licensed in the State of Texas to engage in the business of insuring
titles to real estate, designated by the Real Estate Sellers and
acceptable to the Buyer.
"TITLE EXCEPTIONS" means the title exceptions set forth in the
Schedule of Title Exceptions set forth in Exhibit "B" hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF SELLERS. The Sellers,
jointly and severally, represent and warrant to the Buyer as follows:
(a) ORGANIZATION AND GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Texas, the jurisdiction of its incorporation,
with full corporate power and authority to conduct it business as it is
now being conducted under the name of Security Manufacturing
Corporation, to own or use the properties and assets that it purports
to own or use, and to perform all its obligations under the Applicable
Contracts. The Company is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state and
other jurisdiction set forth in Part 3.1(a) of the Disclosure Schedule;
and there exists no other state or other jurisdiction in which either
the ownership or use of the properties owned or used by the Company or
the nature of the activities conducted by it requires such
qualification. The Sellers have delivered to the Buyer copies of the
Organizational Documents of the Company, as currently in effect.
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(b) AUTHORITY; NO CONFLICT.
(i) This Agreement constitutes the legal, valid, and
binding obligation of each of the Sellers, enforceable against
the Sellers in accordance with its terms. Upon the execution
and delivery by each of the Sellers of the Sellers' Closing
Documents, the Sellers' Closing Documents will constitute the
legal, valid and binding obligations of each of the Sellers,
enforceable against each of the Sellers who is a party thereto
in accordance with their respective terms. Each of the Sellers
has the absolute and unrestricted right, power, authority and
capacity to execute and deliver this Agreement and the
Sellers' Closing Documents to which he or she is a party and
to perform his or her obligations under this Agreement and the
Sellers' Closing Documents to which he or she is a party.
(ii) Except as set forth in Part 3.1(b)(ii) of the
Disclosure Schedule, neither the execution and delivery of
this Agreement nor the consummation or performance of any of
the Contemplated Transactions by the Sellers or the Company
will, directly or indirectly (with or without notice or lapse
of time):
(A) contravene, conflict with, or result in
a violation of any provision of the Organizational
Documents of the Company or any resolution adopted by
the board of directors or the stockholders of the
Company;
(B) contravene, conflict with, or result in
a violation of, or give any Governmental Body or
other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy
or obtain any relief under, any Legal Requirement or
any Order to which the Company or any of the Sellers,
or any of the assets owned or used by the Company,
including the Real Estate, may be subject;
(C) contravene, conflict with, or result in
a violation of any of the terms or requirements of,
or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the
Company or that otherwise relates to the business of,
or any of the assets owned or used by the Company,
including the Real Estate.
- 14 -
(D) cause the Company to become subject
to, or become liable for the payment of, any Tax;
(E) cause any of the assets owned by the
Company to be reassessed or revalued by any taxing
authority or other Governmental Body;
(F) contravene, conflict with, or result in
a violation or breach of any provision of, or give
any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify,
any Applicable Contract; or
(G) result in the imposition or creation of
any Encumbrance upon, or with respect to any of the
assets owned or used by the Company, including the
Real Estate.
Except as set forth in Part 3.1(b)(ii) of the Disclosure
Schedule, none of the Sellers or the Company is or will be
required to give any notice to or obtain any Consent from any
Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the
Contemplated Transactions.
(iii) The Stock Seller is acquiring the Promissory
Note for her own account, and not with a view to its
distribution within the meaning of Section 2(11) of the
Securities Act. The Stock Seller is an "accredited investor"
as such term is defined in Rule 501(a) under the Securities
Act.
(c) CAPITALIZATION. The authorized equity securities of the
Company consist of one hundred thousand (100,000) shares of common
stock, par value One Dollar ($1.00) per share, of which eleven thousand
(11,000) shares are issued and outstanding and constitute the Company
Shares. The Stock Seller is and will be on the Closing Date the record
and beneficial owner and holder of the Company Shares, free and clear
of all Encumbrances. Except as set forth in Part 3.1(c) of the
Disclosure Schedule, no legend or other reference to any purported
Encumbrance appears upon any certificate representing equity securities
of the Company. All of the outstanding equity securities of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable. Except for this Agreement, there are no Contracts
relating to the issuance, sale, or transfer of any equity securities or
other securities of the Company. None of the outstanding equity
securities or other securities of the Company was issued in violation
of the Securities Act or any other Legal Requirement. The Company does
not own, or does not have any Contract to acquire, any equity
securities or other securities of any Person or any direct or indirect
equity or ownership interest in any other business.
(d) FINANCIAL STATEMENTS. The Stock Seller has delivered to
the Buyer (a) audited balance sheets of the Company as of October 31 in
each of the years 1998 through 2000, and the related statements of
income, changes in
- 15 -
stockholders' equity, and cash flow for each of the fiscal years then
ended, together with the report thereon of Xxxxxx, Xxxxxx & Xxxx, LLP
and its predecessors, independent certified public accountants,
including in each case the notes thereto (collectively, "Financial
Statements"). The Financial Statements, including the notes, fairly
present the financial condition and the results of operations, changes
in stockholders' equity, and cash flow of the Company as at the
respective dates of and for the periods referred to in the Financial
Statements, all in accordance with GAAP; the Financial Statements
reflect the consistent application of such accounting principles
throughout the periods involved (except as disclosed in the notes to
such financial statements). No financial statements of any Person
other than the Company are required by GAAP to be included in the
financial statements of the Company, including the Financial
Statements.
(e) BOOKS AND RECORDS. The books of account, minute books,
stock record books, and other business records of the Company, all of
which have been made available to the Buyer, are complete and correct
and have been maintained in accordance with sound business practices,
including the maintenance of an adequate system of internal controls.
The minute books of the Company contain accurate and complete records
of all meetings held of, and corporate action taken by, the
stockholders, the Board of Directors, and committees of the Board
of Directors of the Company, and no meeting of any such stockholders,
Board of Directors, or committee has been held for which minutes have
not been prepared and are not contained in such minute books. At the
Closing, all of those books and records will be in the possession of
the Company.
(f) TITLE TO PROPERTIES; ENCUMBRANCES. Part 3.1(f) of the
Disclosure Schedule contains a complete and accurate list of all real
property, real property and other leaseholds, or other interests
therein owned by the Company, including the Real Estate. The Sellers
have delivered or made available to the Buyer copies of the deeds and
other instruments (as recorded) by which the Company or the Real Estate
Sellers acquired such real property and interests, and copies of all
title insurance policies, opinions, abstracts, and surveys in the
possession of the Sellers or the Company and relating to such property
or interests. The Company owns (with good and marketable title in the
case of real property) all the properties and assets (whether real,
personal, or mixed and whether tangible or intangible) that they
purport to own, including all of the properties and assets reflected in
the Balance Sheet (except for assets held under capitalized leases
disclosed in Part 3.1(f) of the Disclosure Schedule and personal
property including inventory sold since the date of the Balance Sheet
in the Ordinary Course of Business) and all of the properties and
assets purchased or otherwise acquired by the Company since the date
of the Balance Sheet (except for personal property acquired and sold
since the date of the Balance Sheet in the Ordinary Course of Business
and consistent with past practice, which subsequently purchased or
acquired properties and assets (other than inventory and short-term
investments) are listed in Part 3.1(f) of the Disclosure Schedule. All
material properties and assets reflected in the Balance Sheet are free
and clear of all Encumbrances and are not,
- 16 -
in the case of real property, subject to any rights of way, building
use restrictions, exceptions, variances, reservations, or limitations
of any nature, except, with respect to all such properties and assets,
(A) the security interest securing the specific liability or
obligation disclosed in Part 3.1(f) of the Disclosure Schedule, with
respect to which no default (or event that, with notice or lapse of
time or both, would constitute a default) exists, and (B) liens for
current taxes not yet due.
(g) TITLE TO THE REAL ESTATE; ENCUMBRANCES. The Real Estate
Sellers own (with good and marketable title) the Real Estate, free and
clear of all Encumbrances except for the Real Estate Lease, liens for
current taxes not yet due, the Title Exceptions and other zoning laws
and other land use restrictions that do not impair the present or
anticipated use of the Real Estate. The Real Estate is not subject to
any rights of way, building use restrictions, exceptions, variances,
reservations or limitations of any nature except as referred to in
this Section 3.1(g) or disclosed in Part 3.1(g) of the Disclosure
Schedule. All buildings, plants and structures constituting part of
the Real Estate, including the Building, lie wholly within the
boundaries of the Land constituting part of the Real Estate and do not
encroach upon the property of, or otherwise conflict with the property
rights of, any other Person.
(h) CONDITION AND SUFFICIENCY OF ASSETS. The Facilities of,
or currently used by, the Company, including the Building and any
other buildings, plants and structures constituting part of the Real
Estate, are structurally sound, are in good operating condition and
repair, and are adequate for the use to which they are being put; and
none of the Building or of such other Facilities of, or currently used
by, the Company is in need of maintenance or repairs except for
ordinary routine maintenance and repairs that are not material in
nature or cost. The Facilities of, or currently used by, the Company,
including the Building and any other buildings, plants and structures
constituting part of the Real Estate, are sufficient for the continued
conduct by the Company of its businesses after the Closing in
substantially the same manner as conducted prior to the Closing.
(i) ACCOUNTS RECEIVABLE. All accounts receivable of the
Company that are reflected on the Balance Sheet or on the accounting
records of the Company as of the Closing Date (hereinafter
collectively sometimes called the "Accounts Receivable" in this
Section 3.1(i)) represent or will represent valid obligations arising
from sales actually made or services actually performed in the
Ordinary Course of Business. Unless paid prior to the Closing Date,
the Accounts Receivable are or will be as of the Closing Date current
and collectible net of the reserves shown on the Balance Sheet or on
the accounting records of the Company as of the Closing Date (which
reserves are adequate and calculated consistent with past practice
and, in the case of the reserve as of the Closing Date, will not
represent a greater percentage as of the Closing Date than the reserve
reflected in the Balance Sheet represented of the Accounts Receivable
reflected therein and will not represent a material adverse change in
the composition of such Accounts Receivable in terms of aging).
Subject to such reserves, each of
- 17 -
the Accounts Receivable either has or will be collected in full,
without any set-off, within one hundred twenty (120) days after the
day on which it first becomes due and payable. There is no contest,
claim, or right of set-off, other than returns in the Ordinary Course
of Business, under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts
Receivable. Part 3.1(i) of the Disclosure Schedule contains a complete
and accurate list of all Accounts Receivable as of the date of the
Balance Sheet, which list sets forth the aging of such Accounts
Receivable.
(j) INVENTORY. All inventory of the Company, whether or
not reflected on the Balance Sheet, consists of a quality and quantity
usable and salable in the Ordinary Course of Business, except for
obsolete items and items of below-standard quality, all of which have
been written off or written down to net realizable value in the
Balance Sheet or on the accounting records of the Company as of the
Closing Date, as the case may be. All inventories not written off have
been priced at the lower of cost or net realizable value on an average
cost basis. The quantities of each item of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive, but
are reasonable in the present circumstances of the Company.
(k) NO UNDISCLOSED LIABILITIES. The Company has no liabilities
or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the Balance Sheet and
current liabilities incurred in the Ordinary Course of Business since
the date of the Balance Sheet.
(l) TAXES.
(i) The Company has filed or caused to be filed on a
timely basis all Tax Returns that are or were required to be
filed by or with respect to the Company pursuant to applicable
Legal Requirements. The Stock Seller has delivered to the
Buyer copies of, and Part 3.1(l) of the Disclosure Schedule
contains a complete and accurate list of, all such Tax Returns
(excluding payroll tax returns and sales tax returns) filed
since October 31, 1998. The Company has paid, or made
provision for the payment of, all Taxes that have or may have
become due pursuant to those Tax Returns or otherwise, or
pursuant to any assessment received by the Sellers or the
Company.
(ii) The United States federal and state income Tax
Returns of the Company subject to such Taxes are closed by the
applicable statute of limitations for all taxable years
through October 31, 1997. Part 3.1(l) of the Disclosure
Schedule contains a complete and accurate list of all audits
of all such Tax Returns, including a description of the nature
and outcome of each audit. All deficiencies proposed as a
result of such audits have been paid, reserved against, or
settled. Part 3.1(l)of the Disclosure
- 18 -
Schedule describes all adjustments to the United States
federal income Tax Returns filed by the Company for all
taxable years since October 31, 1990, and the resulting
deficiencies proposed by the IRS. None of the Sellers or the
Company has given or been requested to give waivers or
extensions (or is or would be subject to a waiver or
extension given by any other Person) of any statute of
limitations relating to the payment of Taxes of the Company
for which the Company may be liable.
(iii) The charges, accruals, and reserves with
respect to Taxes on the books of the Company are adequate
(determined in accordance with GAAP) and are at least equal to
the Company's liability for Taxes. There exists no proposed
tax assessment against the Company except as disclosed on the
Balance Sheet or in Part 3.1(l) of the Disclosure Schedule. No
consent to the application of Section 341(f)(2) of the IRC has
been filed with respect to any property or assets held,
acquired, or to be acquired by the Company. All Taxes that the
Company is or was required by Legal Requirements to withhold
or collect have been duly withheld or collected and, to the
extent required, have been paid to the proper Governmental
Body or other Person.
(iv) All Tax Returns filed by the Company are true,
correct and complete. There is no tax sharing agreement that
will require any payment by the Company after the date of this
Agreement. During the consistency period (as defined in
Section 338(h)(4) of the IRC with respect to the Sale of the
Company Shares to the Buyer) neither the Company nor any
target affiliate (as defined in Section 338(h)(6) of the IRC
with respect to the sale of the Company Shares to the Buyer)
has sold or will sell any property or assets to the Buyer or
to any member of the affiliated group (as defined in Section
338(h)(5) of the IRC) that includes the Buyer. Part 3.1(l) of
the Disclosure Schedule lists all such target affiliates.
(m) NO MATERIAL ADVERSE CHANGE. Since the date of the
Balance Sheet, there has not been any material adverse change in
the business, operations, properties, prospects, assets or
condition of the Company, including the Real Estate; and no event
has occurred or circumstance exists that may result in such a
material adverse change except, however, for a decline in sales
of the Company during the months of December, January and
February in the Ordinary Course of Business.
(n) EMPLOYEE BENEFITS.
(i) As used in this Section 3.1(n), the following
terms have the meanings set forth below:
- 19 -
"Company Other Benefit Obligation" means an Other
Benefit Obligation owed, adopted or followed by the
Company or an ERISA Affiliate of the Company.
"Company Plan" means all Plans of which the Company
or an ERISA Affiliate of the Company is or was a Plan
Sponsor, or to which the Company or an ERISA
Affiliate of the Company otherwise contributes or has
contributed, or in which the Company or an ERISA
Affiliate of the Company otherwise participates or
has participated. All references to Plans are to
Company Plans unless the context requires otherwise.
"Company VEBA" means a VEBA whose members include
employees of the Company or any ERISA Affiliate of
the Company.
"ERISA Affiliate" means, with respect to the Company,
any other Person that, together with the Company,
would be treated as a single employer under Section
414 of the IRC.
"Multi-Employer Plan" has the meaning given in
Section 3(37)(A) of ERISA.
"Other Benefit Obligations" means all obligations,
arrangements, or customary practices, whether or not
legally enforceable, to provide benefits, other than
salary, as compensation for services rendered, to
present or former directors, employees or agents,
other than obligations, arrangements, and practices
that are Plans. Other Benefit Obligations include
consulting agreements under which the compensation
paid does not depend upon the amount of service
rendered, sabbatical policies, severance payment
policies, and fringe benefits within the meaning of
Section 132 of the IRC.
"PBGC" means the Pension Benefit Guaranty
Corporation, or any successor thereto.
"Pension Plan" has the meaning given in Section
3(2)(A) of ERISA.
"Plan" has the meaning given in Section 3(3) of
ERISA.
"Plan Sponsor" has the meaning given in Section
3(16)(B) of ERISA.
"Qualified Plan" means any Plan that meets or
purports to meet the requirements of Section 401(a)
of the IRC.
- 20 -
"Title IV Plans" means all Pension Plans that are
subject to Title IV of ERISA, other than
Multi-Employer Plans.
"VEBA" means a voluntary employees beneficiary
association under Section 501(c)(9) of the IRC.
"Welfare Plan" has the meaning given in Section 3(1)
of ERISA.
(ii) Part 3.1(n) of the Disclosure Schedule contains
a complete and accurate list of all Company Plans, Company
Other Benefit Obligations, and Company VEBAs. None of the
Company Plans are defined benefit Pension Plans, Qualified
Plans, Title IV Plans or Multi-Employer Plans. Part 3.1(n) of
the Disclosure Schedule contains a complete and accurate list
of all ERISA Affiliates of the Company. There are no Plans of
which any such ERISA Affiliate is or was a Plan Sponsor, in
which any such ERISA Affiliate participates or has
participated, or to which any such ERISA Affiliate contributes
or has contributed. Part 3.1(n) of the Disclosure Schedule
sets forth a calculation of the liability of the Company for
post-retirement benefits other than pensions, made in
accordance with Financial Accounting Statement 106 of the
Financial Accounting Standards Board, regardless of whether
the Company is required by this Statement to disclose such
information. Part 3.1(n) of the Disclosure Schedule sets forth
the financial cost of all obligations owed under any Company
Plan or Company Other Benefit Obligation that is not subject
to the disclosure and reporting requirements of ERISA.
(iii) The Sellers have delivered to the Buyer (A) all
documents that set forth the terms of each Company Plan,
Company Other Benefit Obligation, or Company VEBA and of any
related trust, including all plan descriptions and summary
plan descriptions of Company Plans for which the Sellers or
the Company are required to prepare, file and distribute plan
descriptions and summary plan descriptions, and all summaries
and descriptions furnished to participants and beneficiaries
regarding Company Plans, Company Other Benefit Obligations,
and Company VEBAs for which a plan description or summary plan
description is not required; (B) all personnel, payroll and
employment manuals and policies; (C) all collective bargaining
agreements pursuant to which contributions have been made or
obligations incurred (including both pension and welfare
benefits) by the Company and the ERISA Affiliates of the
Company, and all collective bargaining agreements pursuant to
which contributions are being made or obligations are owed by
such entities; (D) a written description of any Company Plan
or Company Other Benefit Obligation that is not otherwise in
writing; (E) all registration statements filed with respect to
any Company Plan; (F) all insurance policies purchased by or
to provide benefit under any Company Plan; (G) all
- 21 -
all contracts with third party administrators, actuaries,
investment managers, consultants, and other independent
contractors that relate to any Company Plan, Company Other
Benefit Obligation, or Company VEBA; (H) all reports submitted
within the four (4) years preceding the date of this Agreement
by third party administrators, actuaries, investment managers,
consultants, or other independent contractors with respect to
any Company Plan, Company Other Benefit Obligations, or
Company VEBA; (I) all notifications to employees of their
rights under Sections 601 et seq. of ERISA and Section 4980B
of the IRC; (J) the Form 5500 filed in each of the most recent
three (3) plan years with respect to each Company Plan,
including all schedules thereto and the opinions of
independent accountants; (K) all notices that were given by
the Company or any ERISA Affiliate of the Company or any
Company Plan to the IRS, the PBGC, or any participant or
beneficiary, pursuant to statute, within four (4) years
preceding the date of this Agreement, including notices that
are expressly mentioned elsewhere in this Section 3.1(n); (L)
all notices that were given by the IRS, the PBGC, or the
United States Department of Labor to the Company, any ERISA
Affiliate of the Company or any Company Plan within the four
(4) years preceding the date of this Agreement; and (M) with
respect to Qualified Plans and VEBAs, the most recent
determination letter for each Plan of the Company that is a
Qualified Plan.
(iv) (A) The Company has performed all of its
obligations under all Company Plans, Company Other Benefit
Obligations, and Company VEBAs. The Company has made
appropriate entries in its financial records and statements
for all obligations and liabilities under such Plans, VEBAs
and Obligations that have accrued but are not due. (B) No
statement, either written or oral has been made by the Company
to any Person with regard to any Plan or Other Benefit
Obligation that was not in accordance with the Plan or Other
Benefit Obligation and that could have an adverse economic
consequence to the Company or to the Buyer; (C) the Company,
with respect to all Company Plans, Other Benefits Obligations,
and Company VEBAs, is, and each Company Plan, Company Other
Benefit Obligation, and Company VEBAs is, in full compliance
with ERISA, the IRC, and other applicable Laws, including the
provisions of such Laws expressly mentioned in this Section
3.1(n) and with any applicable collective bargaining
agreement. No transaction prohibited by Section 406 of ERISA
and no "prohibited transaction" under Section 4975(c) of the
IRC have occurred with respect to any Company Plan. None of
the Sellers or the Company has any liability to the IRS with
respect to any Plan, including any liability imposed by
Chapter 43 of the IRC. None of the Sellers or the Company has
any liability to the PBGC with respect to any Plan or has any
liability under Sections 502 or 4071 of ERISA. All filings
required by ERISA and the IRC as to each Plan have been timely
filed, and all notices and disclosures to participants
required
- 22 -
by either ERISA or the IRC have been timely provided. All
contributions and payments made or accrued with respect to all
Company Plans, Company Other Benefit Obligations, and Company
VEBAs are deductible under Sections 162 or 404 of the IRC. No
amount, or any asset of any Company Plan or Company VEBA, is
subject to tax as unrelated business taxable income. (D) Each
Company Plan can be terminated within thirty (30) days,
without payment of any additional contribution or amount
(other than normal administrative costs of termination) and
without the vesting or acceleration of any benefits promised
by such Plan. (E) Since the date of the Balance Sheet,
there has been no establishment or amendment of any Company
Plan, Company VEBA, or Company Other Benefit Obligation. (F)
No event has incurred or circumstance exists that could result
in a material increase in premium costs of Company Plans
and Company Other Benefit Obligations that are insured, or
a material increase in benefit costs of such Plans and
Obligations that are self-insured. (G) Other than claims
for benefits submitted by participants or beneficiaries,
no claim against, or legal proceeding involving, any Company
Plan, Company Other Benefit Obligation, or Company VEBA is
pending or, to the Sellers' Knowledge is Threatened. (H) No
Company Plan is a stock bonus, pension, or profit-sharing plan
within the meaning of Section 401(a) of the IRC. (I) No
Company Plan is a Qualified Plan. Each Company VEBA is exempt
from federal income tax. (J) The Company and each ERISA
Affiliate of the Company has met the minimum funding standard,
and has made all contributions required, under Section 302 or
ERISA and Section 402 of the IRC. (K) No Company Plan is
subject to Title IV of ERISA. (L) The Company has paid all
amounts due to the PBGC under Section 4007 of ERISA. (M)
Neither the Company nor any ERISA Affiliate of the Company has
ceased operations at any facility or has withdrawn from any
Title IV Plan in a manner that would subject any entity or the
Sellers to liability under Sections 4062(e), 4063, or 4064 of
ERISA. (N) Neither the Company nor any ERISA Affiliate of the
Company has filed a notice of intent to terminate any Plan or
has adopted any amendment to treat a Plan as terminated. The
PBGC has not instituted proceedings to treat any Company Plan
as terminated. No event has occurred or circumstance exists
that may constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a Trustee to
administer any, Company Plan. (0) No amendment has been made,
or is reasonably expected to be made, to any Plan that has
required or could require the provision of security under
Section 307 of ERISA or Section 401(a)(29) of the IRC. (P) No
accumulated funding deficiency, whether or not waived, exists
with respect to any Company Plan; no event has occurred or
circumstance exists that may result in an accumulated funding
deficiency as of the last day of the current plan year of any
such Plan. (Q) No reportable event (as defined in Section 4043
of ERISA and the regulations issued thereunder) has occurred.
(R) None of the Sellers or the Company has Knowledge of any
facts or circumstances that may give
- 23 -
rise to any liability of any of the Sellers, the Company or
the Buyer to the PBGC under Title IV of ERISA. (S) Neither the
Company nor any ERISA Affiliate of the Company has ever
established maintained or contributed to or otherwise
participated in, or had an obligation to maintain, contribute
to, or otherwise participate in, any Multi-Employer Plan. (T)
Neither the Company nor any ERISA Affiliate of the Company has
withdrawn from any Multi-Employer Plan with respect to which
there is any outstanding liability as of the date of this
Agreement. No event has occurred or circumstance exists that
presents a risk of the occurrence of any withdrawal from, or
the participation, termination, reorganization, or insolvency
of, any Multi-Employer Plan that could result in any liability
of either the Company or the Buyer to a Multi-Employer Plan.
(U) Neither the Company nor any ERISA Affiliate of the Company
has received notice from any Multi-Employer Plan that it is in
reorganization or is insolvent, that increased contributions
may be required to avoid a reduction in plan benefits or the
imposition of any excise tax, or that such Plan intends to
terminate or has terminated. (V) No Multi-Employer Plan to
which the Company or any ERISA Affiliate of the Company
contributes or has contributed is a party to any pending
merger or asset or liability transfer or is subject to any
proceeding brought by the PBGC. (W) Except to the extent
required under Section 601 et. seq. of ERISA and Section 4980B
of the IRC, the Company does not provide health or welfare
benefits for any retired or former employee or is obligated to
provide health or welfare benefits to any active employee
following such employee's retirement or other termination of
service. (X) The Company has the right to modify and terminate
benefits to retirees (other than pensions) with respect to
both retired and active employees. (Y) The Sellers and the
Company have complied with the provisions of Section 601 et
seq. of ERISA and Section 4980B of the IRC. (Z) No payment
that is owed or may become due to any director, officer,
employee or agent of the Company will be non-deductible to the
Company or subject to tax under Section 280G or Section 4999
of the IRC; nor will the Company be required to "gross up" or
otherwise compensate any such person because of the imposition
of any excise tax on a payment to such person. (AA) The
consummation of the Contemplated Transactions will not result
in the payment vesting, or acceleration of any benefit.
(o) COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS. (i) Except as set forth in Part 3.1(o) of the
Disclosure Schedule:
(A) The Company is, and at all times since October
31, 1998 has been, in full compliance with each Legal
Requirement that is or was applicable to it or to the conduct
or operation of its business or the ownership or use of any of
its assets, including the Real Estate;
- 24 -
(B) No event has occurred or circumstance exists that
(with or without notice or lapse of time) (x) may constitute
or result in a violation by the Company of, or a failure on
the part of the Company to comply with, any Legal Requirement,
or (y) may give rise to any obligation on the part of the
Company to undertake or bear all or any portion of the cost
of, any remedial action of any nature; and
(C) The Company has not received at any time since
October 31, 1998, any notice or other communication (whether
oral or written) from any Governmental Body or any other
Person regarding (x) any actual, alleged, possible or
potential violation of, or failure to comply with, any Legal
Requirement, or (z) any actual, alleged, possible, or
potential obligation on the part of the Company to undertake,
or to bear all or any portion of the cost of, any remedial
action of any nature.
(ii) Part 3.1(o) of the Disclosure Schedule contains a
complete and accurate list of each Governmental Authorization that is
held by the Company or that otherwise relates to the business of, or to
any of the assets owned or used by, the Company, including the Real
Estate. Each Governmental Authorization listed or required to be listed
in Part 3.1(o) of the Disclosure Schedule is valid and in full force
and effect. Except as set forth in Part 3.1(o) of the Disclosure
Schedule:
(A) The Company is, and at all times since October
31, 1998 has been, in full compliance with all of the terms
and requirements of each Governmental Authorization identified
as required to be identified in Part 3.1(p) of the Disclosure
Schedule;
(B) No event has occurred or circumstance exists that
may (with or without notice or lapse of time) (x) constitute
or result directly or indirectly in a violation of or failure
to comply with any term or requirement of any Governmental
Authorization listed or required to be listed in Part 3.1(o)
of the Disclosure Schedule or (y) result directly or
indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any
Governmental Authorization listed or required to be listed in
Part 3.1(o) of the Disclosure Schedule;
(C) The Company has not received at any time since
October 31, 1998 any notice or other communication (whether
oral or written) from any Governmental Body or any other
Person regarding (x) any actual, alleged, possible, or
potential violation of or failure to comply with any term or
requirement of any Governmental Authorization or (y) any
actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or
modification to any Governmental Authorization; and
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(D) All applications required to have been filed for
the renewal of the Governmental Authorizations listed or
required to be listed in Part 3.1(o) of the Disclosure
Schedule have been duly filed prior to the expiration of such
Governmental Authorizations on a timely basis with the
appropriate Governmental Bodies, and all other filings
required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.1(o)
of the Disclosure Schedule collectively constitute all of the
Governmental Authorizations necessary to permit the Company to
lawfully conduct and operate its business in the manner it
currently conducts and operates such business and to permit
the Company to own and use its assets, including the Real
Estate, in the manner in which it currently owns and uses such
assets.
(p) LEGAL PROCEEDINGS; ORDERS.
(i) There is no pending Proceeding (A) that has been
commenced by or against the Company or that otherwise relates
to or may affect the business of, or any of the assets owned
or used by, the Company, including the Real Estate; or (B)
that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any
of the Contemplated Transactions. To the Knowledge of the
Sellers and the Company (1) no such Proceeding has been
Threatened, and (2) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the
commencement of any such Proceeding.
(ii) There is no Order to which the Company or any of
the assets owned or used by the Company, including the Real
Estate, is subject; none of the Sellers is subject to any
Order that relates to the business of, or any of the assets,
including the Real Estate, owned or used by the Company; and
no officer, director, agent, or employee of the Company is
subject to any Order that prohibits such officer, director,
agent, or employee from engaging in or continuing any conduct,
activity, or practice relating to the business of the Company
or the Real Estate.
(iii) Neither the Company, nor any of the assets
owned or used by the Company, including the Real Estate, nor
the Sellers with respect to the Real Estate or the Company or
any of the other assets owned or used by the Company is or has
been subject to any Order.
(q) ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth
in Part 3.1(q) of the Disclosure Schedule, since the date of the
Balance Sheet, the Company has conducted its business only in the
Ordinary Course of Business and there has not been any (i) change in
the Company's authorized or issued capital
- 26 -
stock; grant of any stock option or right to purchase shares of capital
stock of the Company; issuance of any security convertible, into such
capital stock; grant of any registration rights; purchase, redemption,
retirement or other acquisition by the Company of any shares of any
such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock; (ii)
amendment to the Organizational Documents of the Company, (iii) payment
or increase by the Company of any bonuses, salaries, or other
compensation to any stockholder, director, officer, or employee or
entry into any employment, severance, or similar Contract with any
director, officer, or employee; (iv) adoption of, or increase in the
payments to or benefits under, any profit-sharing, bonus, deferred
compensation, savings, insurance, pension, retirement, or other
employee benefit plan for or with any employees of the Company; (v)
damage to or destruction or loss of any asset or property of the
Company, or the Real Estate, whether or not covered by insurance; (vi)
entry into, termination of, or receipt of notice of termination of (A)
any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (B) any Contract or
transaction involving a total remaining commitment by or to the Company
of at least Ten Thousand Dollars ($10,000); (vii) sale (other than
sales of inventory in the Ordinary Course of Business), lease, or other
disposition of any asset or property of the Company or the Real Estate,
or mortgage, pledge, or imposition of any lien or other encumbrance on
any asset or property of the Company or the Real Estate, including the
sale, lease, or other disposition of the Intellectual Property Assets;
(viii) cancellation or waiver of any claims or rights, including but
not limited to claims or rights of the Sellers or the Company with
respect to the Real Estate; (ix) change in the accounting methods used
by the Company; or (x) agreement, whether oral or written, by the
Sellers or the Company to do any of the foregoing; except, however, for
the Letter of Intent referred to in Section 9.8 hereof and this
Agreement.
(r) CONTRACTS; NO DEFAULTS.
(i) Part 3.1(r) of the Disclosure Schedule contains a
complete and accurate list, and the Sellers have delivered to
the Buyer true and complete copies of (A) each Applicable
Contract that involves performance of services or delivery of
goods or materials by the Company of an amount or value in
excess of Five Thousand Dollars ($5,000); (B) each Applicable
Contract that involves performance of services or delivery of
goods or materials to the Company of an amount or value in
excess of Five Thousand Dollars ($5,000); (C) each Applicable
Contract that was not entered into in the Ordinary Course of
Business and that involves expenditures or receipts of the
Company in excess of Five Thousand Dollars ($5,000); (D) each
lease, rental or occupancy agreement, license, installment and
conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any real or personal
property; (E) each licensing agreement or other Applicable
Contract with respect to
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patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former
employees, consultants, or contractors regarding the
appropriation or the nondisclosure of any of the Intellectual
Property Assets; (F) each collective bargaining agreement and
other Applicable Contract to or with any labor union or other
employee representative of a group of employees; (G) each
joint venture, partnership, and other Applicable Contract
(however named) involving a sharing of profits, losses, costs,
or liabilities by the Company with any other Person; (H) each
Applicable Contract containing covenants that in any way
purport to restrict the business activity of the Company or
any Affiliate of the Company, including the Sellers, to engage
in any line of business or to compete with any Person; (I)
each Applicable Contract providing for payments to or by any
Person based on sales, purchases, or profits, other than
direct payments for goods; (J) each power of attorney granted
by or for the Company that is currently effective and
outstanding; (K) each Applicable Contract entered into other
than in the Ordinary Course of Business that contains or
provides for an express undertaking by the Company to be
responsible for consequential damages; (L) each Applicable
Contract for capital expenditures in excess of Five Thousand
Dollars ($5,000); (M) each written warranty, guaranty, and
other similar undertaking with respect to contractual
performance extended by the Company other than in the Ordinary
Course of Business; and (N) each amendment, supplement, and
modification (whether oral or written) in respect of any of
the foregoing.
(ii) Except as set forth in Part 3.1(r) of the
Disclosure Schedule: (A) none of the Sellers (and no Related
Person of any of the Sellers) has or may acquire any rights
under, and none of the Sellers has or may become subject to
any obligation or liability under, any Contract that relates
to the business of, or any of the assets owned or used by the
Company, except, however, for the Real Estate; and (B) no
officer, director, agent, employee, consultant or contractor
of the Company is bound by any Contract that purports to limit
the ability of such officer, director, agent, employee,
consultant, or contractor to (1) engage in or continue any
conduct, activity, or practice relating to the business of the
Company or (2) assign to the Company or to any other Person
any rights to any invention, improvement or discovery.
(iii) Except as set forth in Part 3.1(r) of the
Disclosure Schedule, each Applicable Contract identified or
required to be identified in Part 3.1(r) of the Disclosure
Schedule is in full force and effect and is valid and
enforceable in accordance with its terms.
(iv) Except as set forth in Part 3.1(r) of the
Disclosure Schedule: (A) the Company is, and at all times
since November 1, 1998, has been, in full compliance with all
applicable terms and requirements of
- 28 -
each Applicable Contract under which the Company has or had
any obligation or liability or by which the Company or any of
the assets owned or used by the Company, including the Real
Estate, is or was bound; (B) each other Person that has or had
any obligation or liability under any Applicable Contract
under which the Company has or had any rights is, and at all
times since November 1, 1998, has been, in full compliance
with all applicable terms and requirements of such Contract;
(C) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict
with, or result in a violation or breach of, or give the
Company or other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any
Applicable Contract; and (D) the Company has not given to or
received from any other Person, at any time since October 31,
1998, any notice or other communication (whether oral or
written) regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any Applicable
Contract.
(v) There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material
amounts paid or payable to the Company under current or
completed Applicable Contracts with any Person, and no such
Person has made written demand for such renegotation.
(vi) The Applicable Contracts relating to the sale,
design, manufacture, or provision of products or services by
the Company have been entered into in the Ordinary Course of
Business and have been entered into without the commission of
any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would
be in violation of any Legal Requirement.
(vii) The Applicable Contracts not evidenced by any
writing contain no terms adverse to the Company and remain
terminable by the Company at will without penalty.
(s) INSURANCE.
(i) The Sellers have delivered to the Buyer: (A) true
and complete copies of all policies of insurance to which the
Company is a party or under which the Company, or any director
or officer of the Company, is or has been covered at any time
within the three (3) years preceding the date of this
Agreement; (B) true and complete copies of all policies of
insurance to which the Real Estate Sellers are a party with
respect to the Real Estate or under which the Real Estate
Sellers are or have been covered with respect to the Real
Estate at any time within the three (3) years preceding the
date of this Agreement; (C) true and
- 29 -
complete copies of all pending applications for policies of
insurance; and (D) any statement by the auditor of the
Company's Financial Statements with regard to the adequacy of
the Company's coverage or of the reserves for claims.
(ii) Part 3.1(s) of the Disclosure Schedule
describes: (A) any self-insurance arrangement by or affecting
the Company or the Real Estate, including any reserves
established thereunder; (B) any Applicable Contract or
arrangement, other than a policy of insurance, for the
transfer or sharing of any risk by the Company; and (C) all
obligations of the Company to third parties with respect to
insurance (including such obligations under leases and service
agreements) and identifies the policy under which such
coverage is provided.
(iii) Part 3.1(s) of the Disclosure Schedule sets
forth, by year, for the current policy year and each of the
three (3) preceding policy years: (A) a summary of the loss
experience under each policy; (B) a statement describing each
claim under an insurance policy (other than any health or
hospitalization policy maintained by the Company for the
benefit of any employee or his or her dependents) which sets
forth the name of the claimant; the description of the policy
by insurer, type of insurance, and period of coverage; and the
amount and a brief description of the claim; and (C) a
statement describing the loss experience for all claims that
were self-insured, including the number and aggregate cost of
such claims.
(iv) (A) All policies of insurance to which the
Company is a party or that provide coverage to the Real Estate
Sellers, with respect to the Real Estate, or to the Company,
or to any director or officer of the Company with respect to
the Company are valid, outstanding and enforceable, are issued
by an insurer that is financially sound and reputable; taken
together, provide adequate insurance coverage for the assets,
including the Real Estate, and the operations of the Company;
are sufficient for compliance with all Legal Requirements and
Applicable Contracts to which the Company is a party or by
which the Company is bound; will continue in full force and
effect following the consummation of the Contemplated
Transactions in accordance with their terms; and do not
provide for any retrospective premium adjustment or other
experienced-based liability on the part of the Company. (B)
Neither the Real Estate Sellers nor the Company has received
(1) any refusal of coverage or any notice that a defense will
be afforded with reservation of rights, or (2) any notice of
cancellation or any other indication that any insurance policy
is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to
perform its obligations thereunder. (C) The Real Estate
Sellers and the Company have paid all premiums due, and have
otherwise performed all of their respective obligations, under
each policy to which the Real Estate Sellers or the Company is
a party or that provides coverage to the Real Estate Sellers,
the Company or a director or officer of the Company. (D) The
Real Estate Sellers
- 30 -
and the Company have given notice to the insurer of all claims
that may be insured thereby.
(t) BANK AND BROKERAGE ACCOUNTS. Part 3.1(t) of the Disclosure
Schedule contains a complete and accurate list of all bank, savings
bank, stock and bond brokerage, investment and similar accounts
maintained by, for, or in the name of the Company, the name of each
officer, employee or other agent of the Company with signature or other
authority over such account and the name, address and telephone number
of any Person administering such account by or for such bank, savings
bank, stock and bond brokerage firm, investment company or other
organization with which the Company maintains such account. The Company
has no cash, cash equivalents, other securities or similar assets
except in such accounts.
(u) ENVIRONMENTAL MATTERS.
(i) Each of the Real Estate Sellers with respect to
the Real Estate and the Company is, and at all times
has been, in full compliance with, and has not been
and is not in violation of or liable under, any
Environmental Law. Neither any of the Sellers with
respect to the Real Estate nor the Company has any
basis to expect, nor has any of them or any other
Person for whose conduct they are or may be held to
be responsible received, any actual or Threatened
order, notice, or other communication from (A) any
Governmental Body or private citizen acting in the
public interest, or (B) the current or prior owner or
operator of any Facilities, including the Real
Estate, of any actual or potential violation or
failure to comply with any Environmental Law, or of
any actual or Threatened obligation to undertake or
bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the
Facilities, including the Real Estate, or any other
properties or assets (whether real, personal or
mixed) in which the Company has had any interest, or
with respect to any property or Facilities, including
the Real Estate, at or to which Hazardous Materials
were generated, manufactured, refined, transferred,
imported, used, or processed by the Company or any
other Person for whose conduct they are or may be
held responsible or from which Hazardous Materials
have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(ii) There are no pending or, to the
Knowledge of the Sellers and the Company, Threatened
claims, Encumbrances, or other restrictions of any
nature, resulting from any Environmental, Health, and
Safety Liabilities or arising under or pursuant to
any Environmental Law, with respect to or affecting
any
- 31 -
of the Facilities, including the Real Estate, or any
other properties and assets (whether real, personal
or mixed) in which the Company has or had an
interest.
(iii) None of the Sellers or the Company has
any basis to expect, nor has any of them or any other
Person for whose conduct they are nor may be held
responsible, received, any citation, directive,
inquiry, notice, Order, summons, waiving, or other
communication that relates to Hazardous Activity,
Hazardous Materials, or any alleged, actual, or
potential violation or failure to comply with any
Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of
any Environmental, Health and Safety Liabilities with
respect to any of the Facilities, including the Real
Estate, or any other properties or assets (whether
real, personal or mixed) in which the Company had an
interest, or with respect to any property or facility
to which Hazardous Materials generated, manufactured,
refined, transferred, imported, used or processed by
the Company, or any other Person for whose conduct
the Company is or may be held responsible, have been
transported, treated, stored, handled transferred,
disposed, recycled or received.
(iv) Neither any of the Sellers nor the
Company nor any other Person for whose conduct they
are or may be held responsible, has any
Environmental, Health and Safety Liabilities with
respect to the Facilities, including the Real Estate,
or with respect to any other properties and assets
(whether real, personal or mixed) in which the
Company (or any predecessor), has or had an interest,
or at any property geologically or hydrologically
adjoining the Facilities, including the Real Estate,
or any such other property or assets.
(v) There are no Hazardous Materials present
on or in the Environment at the Facilities, including
the Real Estate, or at any geologically or
hydrologically adjoining property, including any
Hazardous Materials contained in barrels above or
underground storage tanks, landfills, land deposits,
dumps, equipment (whether moveable or fixed) or other
containers, either temporary or permanent, and
deposited or located in land, water, sumps, or any
other part of the Facilities, including the Real
Estate, or such adjoining property, or incorporated
into any structure therein or thereon. None of the
Sellers, the Company, any other Person for whose
conduct they are or may be held responsible, or any
other Person has permitted or conducted, or is aware
of, any Hazardous Activity conducted with respect to
the Facilities,
- 32 -
including the Real Estate, or any other properties or
assets (whether real, personal, or mixed) in which
any of the Sellers or the Company has or had an
interest.
(vi) There has been no Release or, to the
Knowledge of the Sellers and the Company, Threat of
Release, of any Hazardous Materials at or from the
Facilities, including the Real Estate, or at any of
the other locations where any Hazardous Materials
were generated, manufactured, refined, transferred,
produced, imported, used or processed from or by the
Facilities, including the Real Estate, or from or by
any other properties and assets (whether real,
personal or mixed) in which the Company has or had an
interest or any geologically or hydrologically
adjoining property, whether by the Sellers, the
Company or any other Person.
(vii) The Sellers have delivered to the
Buyer true and complete copies and results of any
reports, studies, analyses, tests or monitoring
possessed or initiated by any of the Sellers or the
Company pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities,
including the Real Estate, or concerning compliance
by the Sellers, the Company, or any other Person for
whose conduct they are or may be held responsible,
with Environmental Laws.
(v) EMPLOYEES.
(i) Part 3.1(v) of the Disclosure Schedule
contains a complete and accurate list of the
following information for each employee or director
of the Company, including each employee on leave of
absence or layoff status; name of the employee; job
title; current compensation paid or payable and any
change in compensation since October 31, 2000;
vacation accrued for 2001 or thereafter; and service
credited for purposes of vesting and eligibility to
participate under the Company's pension, retirement,
profit-sharing, thrift-savings, deferred
compensation, stock bonus, stock option, cash
bonuses, employee stock ownership (including
investment credit or payroll stock ownership),
severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or
Employee Welfare Benefit Plan, or any other employee
benefit plan or any Plan for directors of the
Company.
(ii) No employee or director of the Company
is a party to, or is otherwise bound by, any
agreement or arrangement, including any
confidentiality, non-competition, or proprietary
rights agreement, between such employee or director
and any other
- 33 -
person that in any way adversely affects or will
affect (A) the performance of his or her duties as an
employee or director of the Company or (B) the
ability of the Company to conduct its business,
including any such confidentiality, non-competition
or proprietary rights agreement with the Sellers or
the Company by any such employee or director. To the
Sellers' Knowledge, no director, officer, or other
key employee of the Company other than the Sellers
intends to terminate his or her employment with the
Company.
(iii) Part 3.1(v) of the Disclosure Schedule
also contains a complete and accurate list of the
following information for each retired employee or
director of the Company or their dependents,
receiving benefits or scheduled to receive benefits
in the future; name of employee or director; pension
benefit; pension option election; retiree medical
insurance coverage, retiree life insurance coverage,
and other benefits.
(w) LABOR RELATIONS; COMPLIANCE. Since October 31, 1998, the
Company has not been or is a party to any collective bargaining or
other labor Contract. Since October 31, 1998, there has not been, there
is not presently pending or existing, and there is not Threatened (i)
any strike, slowdown, picketing, work stoppage, or employee grievance
process, (ii) any Proceeding against or affecting the Company or the
Real Estate relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National
Labor Relations Board, the Equal Employment Opportunity Commission, or
any comparable Governmental Body, organizational activity, or other
labor or employment dispute against or affecting the Company or its
premises, including the Real Estate or (iii) any application for
certification of a collective bargaining agent. No event has occurred
or circumstances exists that could provide the basis for any work
stoppage or other labor dispute. There is no lockout of any employees
by the Company, and no such action is contemplated by the Company. The
Company has complied in all respects with all Legal Requirements
relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closing. The Company is not
liable for the payment of any compensation, damages, taxes, fines,
penalties, or other amounts, however designated, for failure to comply
with any of the foregoing Legal Requirements.
(x) INTELLECTUAL PROPERTY.
(i) For the purposes of this Section 3.1 (x)
the term "Intellectual Property Assets" includes (A)
the name "B.L.L. Corporation," all fictitious
business names including "Security
- 34 -
Manufacturing Corporation," and
"Better-Locks-for-Less," trading names, registered
and unregistered trademarks, service marks, and
applications (collectively, "Marks"); (B) all
patents, patent applications, and inventions and
discoveries that may be patentable (collectively,
"Patents"); (C) all copyrights in both published
works and unpublished works (collectively,
"Copyrights"); and (D) all know-how, trade secrets,
confidential information, customer lists, software,
technical information, data, process technology,
plans, drawings and blue prints (collectively, "Trade
Secrets"); owned, used or licensed by the Company as
licensee or licensor.
(ii) Part 3.1(x) of the Disclosure Schedule
contains a complete and accurate list and summary
description, including any royalties paid or received
by the Company, of all Applicable Contracts relating
to the Intellectual Property Assets to which the
Company is a party or by which the Company is bound,
except for any license implied by the sale of a
product and perpetual, paid-up licenses for commonly
available "off the shelf" software programs under
which the Company is the licensee. There are no
outstanding and, to the Sellers' Knowledge,
Threatened disputes or disagreements with respect to
any such Contract.
(iii) (A) The Intellectual Property Assets
are all those necessary for the operation of the
Company's business and the Real Estate as they are
currently conducted. The Company is the owner of all
right, title and interest outright or as licensee in
and to each of the Intellectual Property Assets, free
and clear of all Encumbrances and other adverse
claims, and has the right to use without payment to a
third party all of the Intellectual Property Assets.
(B) Except as set forth in Part 3.1(x) of the
Disclosure Schedule, all former and current employees
of the Company have executed written Contracts with
the Company that assign to the Company all rights to
any inventions, improvements, discoveries or
information relating to the business of the Company
and the Real Estate. No employee of the Company has
entered into any Contract that restricts or limits in
any way the scope or type of work in which the
employee may be engaged or requires the employee to
transfer, assign, or disclose information concerning
his or her work to anyone other than the Company.
(iv) (A) Part 3.1(x) of the Disclosure
Schedule contains a complete and accurate list and
summary description of all Patents. The Company is
the owner of all right, title and interest outright
or as licensee in and to each of the Patents, free
and clear of all Encumbrances and other adverse
claims. (B) All of the issued Patents are currently
in compliance with formal legal requirements
- 35 -
(including payment of filing, examination, and
maintenance fees and proofs of working or use) are
valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due
within ninety (90) days after the Closing Date. (C)
No Patent has been or is now involved in any
interference, reissue, reexamination, or opposition
proceeding to the Sellers' Knowledge, there is no
potentially interfering patent or patent application
of any third party. (D) No Patent is infringed or, to
the Sellers' Knowledge, has been challenged or
threatened in any way. None of the products
manufactured and sold, nor any process or know-how
used, by the Company infringes or is alleged to
infringe any patent or other proprietary right of any
other Person. (E) All products made, used, or sold
under the Patents have been marked with the proper
patent notice.
(v) (A) Part 3.1(x) of the Disclosure
Schedule contains a complete and accurate list and
summary description of all Marks. The Company is the
owner of all right, title and interest in and to each
of the Marks, free and clear of all Encumbrances and
other adverse claims. (B) all Marks that have been
registered with the United States Patent and
Trademark Office are currently in compliance with all
formal legal requirements (including the timely
post-registration filing of affidavits of use and
incontestability and renewal applications), are valid
and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due
within ninety (90) days after the Closing Date. (C)
No Xxxx has been or is now involved in any
opposition, invalidation, or cancellation and, to
Sellers' Knowledge, no such action is Threatened with
respect to any of the Marks. (D) To the Sellers'
Knowledge, there is no potentially interfering
trademark or trademark application of any third
party. (E) No Xxxx is infringed or, to the Sellers'
Knowledge, has been challenged or threatened in any
way. None of the Marks used by the Company infringes
or is alleged to infringe any tradename, trademark,
or service xxxx of any third party. (F) All products
and materials containing a Xxxx xxxx the proper
federal registration notice where permitted by law.
(vi) (A) Part 3.1(x) of the Disclosure
Schedule contains a complete and accurate list and
summary description of all Copyrights. The Company is
the owner of all right, title, and interest in and to
each of Copyrights, free and clear of all
Encumbrances and other adverse claims. (B) All the
Copyrights have been registered and are currently in
compliance with formal legal requirements, are valid
and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due
within ninety (90) days after the Closing Date. (C)
No Copyright is
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infringed or, to the Sellers' Knowledge, has been
challenged or threatened in any way. None of the
subject matter of any of the Copyrights infringes or
is alleged to infringe any copyright of any third
party or is a derivative work based on the work of a
third party. (D) All works encompassed by the
Copyrights have been marked with the proper copyright
notice.
(vii) (A) With respect to each Trade Secret,
the documentation relating to such Trade Secret is
current, accurate, and sufficient in detail and
content to identify and explain it and to allow its
full and proper use without reliance on the knowledge
or memory of any individual. (B) The Sellers and the
Company have taken all reasonable precautions to
protect the secrecy, confidentiality, and value of
the Trade Secrets. (C) The Company has good title and
an absolute right to use the Trade Secrets. The Trade
Secrets are not part of the public knowledge or
literature, and to the Sellers' Knowledge, have not
been used, divulged, or appropriated either for the
benefit of any Person (other than the Company) or to
the detriment of the Company. No Trade Secret is
subject to any adverse claim or has been challenged
or threatened in any way.
(y) CERTAIN PAYMENTS. Except as set forth in Part 3.1(y) of
the Disclosure Schedule, since October 31, 1998, neither the Company
nor any director, officer, agent, or employee of the Company, including
the Sellers, or any other Person associated with or acting for or on
behalf of the Company or with respect to the Real Estate, has directly
or indirectly (i) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback or other payment to any Person, private or
public, regardless of form, whether in money, property, or services (A)
to obtain favorable treatment in securing business, (B) to pay for
favorable treatment for the business secured, (C) to obtain special
concessions or for special concessions already obtained, for or in
respect to the Company, any Affiliate of the Company or the Real
Estate, or (D) in violation of any Legal Requirement, or (ii)
established or maintained any fund or asset that has not been recorded
in the books and records of the Company.
(z) DISCLOSURE.
(i) No representation or warranty of the Sellers in
this Agreement and no statement in the Disclosure Schedule
omits to state a material fact necessary to make the
statements herein or therein, in light of the circumstances in
which they were made, not misleading. (ii) No notice given
pursuant to Section 4.5 will contain any untrue statement or
omit to state a material fail necessary to make the statements
therein or in this Agreement, in light of circumstances in
which they were made, not misleading. (iii) There is no fact
known to any of the Sellers that has specific application to
either the Sellers
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or the Company (other than general economic or industry
conditions) and that materially adversely affects, or, as far
as any of the Sellers can reasonably foresee, materially
threatens the assets, business, prospects, financial condition
or results of operations of the Company or the Real Estate
that has not been set forth in this Agreement or the
Disclosure Schedule.
(aa) RELATIONSHIP WITH RELATED PERSONS. None of the Sellers or
any Related Person of the Sellers or of the Company has, or since
October 31, 1998 has had, any interest in any property (whether real,
personal or mixed and whether tangible or intangible) used in or
pertaining to the Company's business, except, however, for the Real
Estate. None of the Sellers or any Related Person of the Sellers or of
the Company is, or since October 31, 1998 has owned (of record or as a
beneficial owner) an equity interest or any other financial or profit
interest in, a Person that has (i) had business dealings or a material
financial interest in any transaction with the Company or (ii) engaged
in competition with the Company with respect to any line of the
products or services of the Company (a "Competing Business") in any
market presently served by the Company. Except as set forth in Part
3.1(aa) of the Disclosure Schedule, none of the Sellers or any Related
Person of the Sellers or of the Company is a party to any Contract
with, or has any claim or right against the Company.
(bb) BROKERS OR FINDERS. The Sellers and their agents have
incurred no obligation or liability, contingent or otherwise, for
brokerage or finders fees or agents' commissions or other similar
payment in connection with this Agreement, including the Real Estate
and will indemnify and hold the Buyer harmless from any such payment
alleged to be due by or through the Sellers as a result of the action
of the Sellers or their agents.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents and warrants to the Sellers as follows:
(a) ORGANIZATION AND GOOD STANDING. The Buyer is a corporation
duly organized, validly existing, and in good standing under the laws
of the State of Delaware.
(b) AUTHORITY; NO CONFLICT.
(i) This Agreement constitutes the legal,
valid and binding obligation of the Buyer,
enforceable against the Buyer in accordance with its
terms. Upon the execution and delivery by the Buyer
hereunder of the Promissory Note, the Consulting
Agreements and the Sales Representative Agreement,
(A) the Promissory Note, the Consulting Agreements
and the Sales Representative Agreement will
constitute the legal, valid and binding obligations
of the Buyer, enforceable against the Buyer in
accordance with their respective terms. The Buyer has
the
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absolute and unrestricted right, power and authority
to execute and deliver this Agreement, the Promissory
Note, the Consulting Agreements and the Sales
Representative Agreement and to perform its
obligations under this Agreement, the Promissory
Note, the Consulting Agreements and the Sales
Representative Agreement.
(ii) Neither the execution and delivery of
this Agreement by the Buyer nor the consummation or
performance of any of the Contemplated Transactions
by the Buyer will give any Person the right to
prevent, delay, or otherwise interfere with any of
the Contemplated Transactions pursuant to (1) any
provision of the Buyer's Organizational Documents;
(2) any resolution adopted by the board of directors
or the stockholders of the Buyer; (3) any Legal
Requirement or Order to which the Buyer may be
subject; or (4) any Contract to which the Buyer is a
party or by which the Buyer may be bound. Except for
the Consent of Manufacturers & Traders Trust Company,
which Consent the Buyer shall obtain prior to the
Closing, the Buyer is not and will not be required to
obtain any Consent from any Person in connection with
the execution and delivery of this Agreement or the
consummation or performance of any of the
Contemplated Transactions.
(c) INVESTMENT INTENT. The Buyer is acquiring the Company
Shares for its own account, or the account of a Subsidiary of the
Buyer, and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act.
(d) CERTAIN PROCEEDINGS. There is no pending Proceeding that
has been commenced against the Buyer and that challenges, or may have
the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions. To the Buyer's
Knowledge, no such Proceeding has been Threatened.
(e) BROKERS OR FINDERS. The Buyer and its officers and agents
have incurred no obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar
payment in connection with this Agreement and will indemnify and hold
the Sellers harmless from any such payment alleged to be due by or
through the Buyer as a result of the action of the Buyer or its
officers or agents.
ARTICLE IV
COVENANTS OF THE SELLERS PRIOR TO CLOSING DATE
SECTION 4.1 ACCESS AND INVESTIGATION. Between the date of this
Agreement and the Closing Date, the Sellers will, and will cause the Company and
its
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Representatives to (a) afford the Buyer and its Representatives and prospective
lenders and their Representatives (collectively, the "Buyer's Advisors") full
and free access to the Company's personnel, properties, including the Real
Estate and subsurface testing, contracts, books and records and other documents
and data, (b) furnish to the Buyer and the Buyer's Advisors with copies of all
such contracts, books and records, and other existing documents and data as the
Buyer may reasonably request, and (c) furnish the Buyer and the Buyer's Advisors
with such additional financial, operating, and other data and information as the
Buyer may reasonably request.
SECTION 4.2 OPERATION OF THE BUSINESS OF THE COMPANY. Between the date
of this Agreement and the Closing Date, the Sellers will, and will cause the
Company to (a) conduct the business of the Company only in the Ordinary Course
of Business; (b) use their Best Efforts to preserve intact the current business
organization of the Company, keep available the services of the current
officers, employees, and agents of the Company, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents,
and others having business relationships with the Company; (c) confer with the
Buyer concerning operational matters of a material nature; and (d) otherwise
report periodically to the Buyer concerning the status of the business,
operations, and finances of the Company.
SECTION 4.3 NEGATIVE COVENANT. Except as otherwise permitted by this
Agreement, between the date of this Agreement and the Closing Date, the Sellers
will not, and will cause the Company not to, without the prior written consent
of the Buyer, take any affirmative action, or fail to take any reasonable action
within their or its control, as a result of which any of the changes or events
listed in Section 3.1(q) is likely to occur.
SECTION 4.4 REQUIRED APPROVALS. As promptly as practicable after the
date of this Agreement, the Sellers will, and will cause the Company to, make
all filings required by Legal Requirements to be made by them in order to
consummate the Contemplated Transactions. Between the date of this Agreement and
the Closing Date, the Sellers will, and will cause the Company to, (a) cooperate
with the Buyer with respect to all filings that the Buyer elects to make or is
required by Legal Requirements to make in connection with the Contemplated
Transactions and (b) cooperate with the Buyer in obtaining all consents
identified in Section 3.2(b) hereof.
SECTION 4.5 NOTIFICATION. Between the date of this Agreement and the
Closing Date, each of the Sellers will promptly notify the Buyer in writing if
such Seller or the Company becomes aware of any fact or condition that causes or
constitutes a Breach of any of the Sellers' representations and warranties as of
the date of this Agreement, or if such Seller or the Company becomes aware of
the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
Disclosure Schedule if the Disclosure Schedule were dated the date of the
occurrence or discovery of
- 40 -
any such fact or condition, the Sellers will promptly deliver to the Buyer a
supplement to the Disclosure Schedule specifying such change. During the same
period, each of the Sellers will promptly notify the Buyer of the occurrence of
any Breach of any covenant of the Sellers in this Article IV or of the
occurrence of any event that may make the satisfaction of the conditions in
Section 6.1 impossible or unlikely.
SECTION 4.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. The Sellers
will cause all indebtedness owed to the Company by either of the Sellers or any
Related Person of either of the Sellers to be paid in full prior to the Closing.
SECTION 4.7 CLEAN-UP OF CERTAIN HAZARDS. The Sellers will cause the
Company at its cost to remove from the Land constituting part of Real Estate and
dispose of in accordance with all Legal Requirements the pile of dirt and
contaminated soil as discussed in the environmental assessment of the Real
Estate referred to in Section 6.1(d) hereof and to furnish to or for the Buyer
prior to the Closing evidence reasonably satisfactory to the Buyer that such
dirt pile and contaminated soil have been removed from the Land.
SECTION 4.8 BYLAWS AND STOCK CERTIFICATES. The Sellers will cause the
Company to amend its Bylaws by the elimination of the provisions thereof
referred to in Part 3.1(b)(ii) and Part 3.1(c) of the Disclosure Schedule and to
remove the legend referring to any restriction on the transfer of capital stock
of the Company from any and all stock certificates evidencing the Company
Shares.
SECTION 4.9 NO NEGOTIATION. Until such time, if any, as this Agreement
is terminated pursuant to Article VIII hereof, the Sellers will not, and will
cause the Company and each of their Representatives not to, directly or
indirectly, solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any unsolicited inquiries or proposals from, any Person (other
than the Buyer) relating to any transaction involving the sale of the business
or assets (other than in the Ordinary Course of Business) of the Company or the
Real Estate, or any of the capital stock of the Company or any merger,
consolidation, business combination, or similar transaction involving the
Company.
SECTION 4.10 BEST EFFORTS. Between the date of this Agreement and the
Closing Date, the Sellers will use their Best Efforts to cause the conditions in
Sections 6.1 and 6.2 to be satisfied.
ARTICLE V
COVENANTS OF BUYER PRIOR TO CLOSING DATE
SECTION 5.1 APPROVALS OF GOVERNMENTAL BODIES. As promptly as
practicable after the date of this Agreement, the Buyer will, and will cause
each of its Related Persons to, make all filings required by Legal Requirements
to be made by them to consummate the Contemplated Transactions. Between the date
of this Agreement and
- 41 -
the Closing Date, the Buyer will, and will cause each of its Related Persons to,
cooperate with the Sellers with respect to all filings that the Sellers are
required by Legal Requirements to make in connection with the Contemplated
Transactions and cooperate with the Sellers in obtaining all consents identified
in Part 3.1(b) of the Disclosure Schedule; provided, however, that this
Agreement will not require the Buyer to dispose of or make any change in any
portion of its business or to incur any other burden to obtain a Governmental
Authorization.
SECTION 5.2 BEST EFFORTS. Between the date of this Agreement and the
Closing Date, the Buyer will use its Best Efforts to cause the conditions in
Sections 6.1 and 6.2 hereof to be satisfied.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE
SECTION 6.1 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION. The Buyer's
obligation to purchase the Seller's Shares and the Real Estate and to take the
other actions required to be taken by the Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Buyer, in whole or in part):
(a) ACCURACY OF REPRESENTATIONS. All of the Sellers'
representations and warranties in this Agreement (considered
collectively) and each of these representations and warranties
(considered individually), must have been accurate in all respects as
of the date of this Agreement, and must be accurate in all respects as
of the Closing Date as if made on the Closing Date, without giving
effect to any supplement to the Disclosure Schedule.
(b) SELLERS' PERFORMANCE. (i) All of the covenants and
obligations that the Sellers are required to perform or to comply with
pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been duly performed and complied with in all
material respects. (ii) Each document required to be delivered pursuant
to Section 1.6 hereof must have been delivered, and each of the other
covenants and obligations in Sections 4.4, 4.6, 4.7, 4.8, and 4.10
hereof must have been performed and complied with in all respects.
(c) CONSENTS. Each of the Consents identified in Part 3.1(b)
of the Disclosure Schedule and each Consent identified in Section 3.2
hereof must have been obtained and must be in full force and effect.
(d) ADDITIONAL DOCUMENTS. Each of the following documents must
have been delivered to the Buyer: (i) an opinion of Gardere Xxxxx
Xxxxxx, LLP, counsel to the Sellers, dated the Closing Date,
substantially to the effects set forth in Exhibit "I" attached hereto
and made a part hereof, (ii) a survey made by a
- 42 -
surveyor or engineer duly licensed as such in the State of Texas
reflecting the boundaries of the Land, the location of the Building and
any other improvements erected on the Land and the location of the
Title Exceptions, certified to, and in form accepted by, the Title
Company for the elimination of any general survey exception in any
owner's or mortgagee's policy of title insurance to be issued thereby,
(iii) a commitment from the Title Company to issue an owner's and a
mortgagee's policy of title insurance insuring the fee simple title of
the Buyer in the Real Estate without exception other than the Title
Exceptions upon the Closing, (iv) an appraisal of the Real Estate made
no earlier than November 1, 2000, by a member of the American Institute
of Appraisers appraising the fair market value of the Real Estate in an
amount no less than the Real Estate Purchase Price, (v) a Phase I
environmental assessment of the Real Estate, including the Building and
any other improvements erected on the Land, made by an environmental
engineer acceptable to the Buyer and disclosing no environmental
conditions other than those which the Sellers shall remedy prior to the
Closing, and (vi) such other documents as the Buyer may reasonably
request for the purpose of (1) enabling its counsel to provide the
opinion referred to in Section 6.2(d), (2) evidencing the accuracy of
any of the Sellers' representations and warranties, (3) evidencing the
performance by the Sellers, or the compliance by the Sellers with, any
covenant or obligation required to be performed or complied with by the
Sellers, or any of them, (4) evidencing the satisfaction of any
condition referred to in this Section 6.1 or (5) otherwise facilitating
the consummation or performance of any of the Contemplated
Transactions.
(e) NO PROCEEDINGS. Since the date of this Agreement, there
must not have been commenced or Threatened against the Buyer, or
against any Person affiliated with the Buyer, any Proceeding (i)
involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (ii) that may
have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
(f) NO CLAIM REGARDING OWNERSHIP OR PROCEEDS. There must not
have been made or Threatened by any Person any claim asserting that
such Person (i) is the holder or the beneficial owner of, or has the
right to acquire or to obtain beneficial ownership of, any stock of, or
any other voting, equity, or ownership interest in, the Company or the
Real Estate or (ii) is entitled to all or any portion of the Purchase
Price payable for the Company Shares or for the Real Estate.
(g) NO PROHIBITION. Neither the consummation nor the
performance of any of the Contemplated Transactions will directly or
indirectly (with or without notice or lapse of time), materially
contravene, or conflict with, or result in a material violation of, or
cause the Buyer or any Person affiliated with the Buyer to suffer any
material adverse consequence under, (i) any applicable Legal
Requirement or Order, or (ii) any Legal Requirement or Order that has
been published, introduced, or otherwise proposed by or before any
Governmental Body.
- 43 -
SECTION 6.2 CONDITIONS PRECEDENT TO SELLERS' OBLIGATION. The Sellers
obligations to sell the Company Shares and the Real Estate and to take the other
actions required to be taken by the Sellers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Sellers, in whole or in part):
(a) ACCURACY OF REPRESENTATIONS. All of the Buyer's
representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties
(considered individually) must have been accurate in all material
respects as of the date of this Agreement and must be accurate in all
respects as of the Closing Date as if made on the Closing Date.
(b) BUYER'S PERFORMANCE. (i) All of the covenants and
obligations that the Buyer is required to perform or to comply with
pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been performed and complied with in all
material respects. (ii) The Buyer must have delivered each of the
documents required to be delivered by the Buyer pursuant to Section 1.6
hereof and must have made the cash payments required to be made by the
Buyer pursuant to Section 1.6 hereof.
(c) CONSENTS. Each of the Consents identified in Part 3.1(b)
of the Disclosure Schedule must have been obtained and must be in full
force and effect.
(d) ADDITIONAL DOCUMENTS. The Buyer must have caused the
following documents to be delivered to the Sellers (i) an opinion of
the Law Offices of Xxxx X. Xxxxxxxx, LLC counsel to the Buyer, dated
the Closing Date, substantially to the effects set forth in Exhibit "J"
attached hereto and made a part hereof; and (ii) such other documents
as the Sellers may reasonably request for the purpose of (A) enabling
their counsel to provide the opinion referred to in Section 6.1(d)(i)
hereof, (B) evidencing the accuracy of any representation or warranty
of the Buyer, (C) evidencing the performance by the Buyer of, or the
compliance by the Buyer with, any covenant or obligation required to be
performed or complied with by the Buyer, (D) evidencing the
satisfaction of any condition referred to in this Section 6.2, or (E)
otherwise facilitating the consummation of any of the Contemplated
Transactions.
(e) NO INJUNCTION. There must not be in effect any Legal
Requirement or any injunction or other Order that (i) prohibits the
sale of the Company Shares or the Real Estate to the Buyer, and (ii)
has been adopted or issued or has otherwise become effective, since the
date of this Agreement.
- 44 -
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION EVENTS. This Agreement may, by notice given
prior to or at the Closing, be terminated:
(a) by either the Buyer or the Sellers if a material Breach of
any provision of this Agreement has been committed by the other party
and such Breach has not been waived; or
(b) (i) by the Buyer if any of the conditions in Section 6.1
hereof has not been satisfied as of the Closing Date or if satisfaction
of such a condition is or becomes impossible (other than through the
failure of the Buyer to comply with its obligations under this
Agreement) and the Buyer has not waived such a condition on or before
the Closing Date; or (ii) by the Sellers, if any of the conditions in
Section 6.2 hereof has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than
through the failure of the Sellers to comply with their obligations
under this Agreement) and the Sellers have not waived such condition on
or before the Closing Date; or
(c) by mutual consent of the Buyer and the Sellers; or
(d) by either the Buyer or the Sellers if the Closing has not
occurred (other than through the failure of the party seeking to
terminate this Agreement to comply fully with its obligations under
this Agreement) on or before the close of business Friday, the 6th day
of July, 2001, or such later date as the parties may agree upon.
SECTION 7.2 EFFECT OF TERMINATION. Each party's right of termination
under Section 7.1 hereof is in addition to any other rights it may have under
this Agreement or otherwise, and the exercise of a right of termination will not
be an election of remedies. If this Agreement is terminated pursuant to Section
7.1 hereof, all further obligations of the parties under this Agreement will
terminate, except, however, that the obligations in Sections 10.1 hereof will
survive; provided, however, that, if this Agreement is terminated by a party
because of the Breach of this Agreement by the other party or because one or
more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired.
- 45 -
ARTICLE VIII
INDEMNIFICATION; REMEDIES
SECTION 8.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE. All representations, warranties, covenants and obligations in this
Agreement, the Disclosure Schedule, the supplements to the Disclosure Schedule,
the certificate delivered pursuant to Section 1.6(a)(ix) hereof, and any other
Certificate or document delivered pursuant to this Agreement will survive the
Closing, subject, however, to the provisions of Section 8.5 hereof. The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty, covenant
or obligation. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right of indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants
and obligations.
SECTION 8.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS. The
Sellers, jointly and severally, will indemnify and hold harmless the Buyer, the
Company and their respective Representatives, stockholders, controlling persons,
and affiliates (collectively the Indemnified Persons") for, and will pay to the
Indemnified Persons, without duplication, the amount of, any loss, liability,
claim, damage (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by the
Sellers in this Agreement (without giving effect to any supplement to
the Disclosure Schedule), the Disclosure Schedule, the supplements to
the Disclosure Schedule, or any other certificate or document delivered
by the Sellers pursuant to this Agreement;
(b) any Breach of any representation or warranty made by the
Sellers in this Agreement as if such representation or warranty were
made on and as of the Closing Date without giving effect to any
supplement to the Disclosure Schedule, other than any such Breach that
is disclosed in a supplement to the Disclosure Schedule and is
expressly identified in the certificate delivered pursuant to Section
1.6(a)(ix) as having caused the condition specified in Section 6.1(a)
not to be satisfied.
(c) any Breach by any of the Sellers of any covenant or
obligation of the Sellers in this Agreement;
(d) any product shipped or manufactured by, or any services
provided by, the Company prior to the Closing Date;
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(e) any Environmental, Health, and Safety Liabilities arising
out of or relating to (i) (A) the ownership, operation, or condition at
any time on or prior to the Closing Date of the Facilities, including
the Real Estate, or any other properties and assets (whether real,
personal, or mixed, and whether tangible or intangible) in which the
Company has or had an interest, or (B) any Hazardous Materials or other
contaminants that were present on the Facilities, including the Real
Estate, or such other properties and assets at any time on or prior to
the Closing Date; or (ii) (A) any Hazardous Materials or other
contaminants, wherever located, that were, or were allegedly,
generated, transported, stored, treated, Released, or otherwise handled
by the Company or by any other Person for whose conduct the Company is
or may be held responsible at any time on or prior to the Closing Date,
or (C) any Hazardous Activities that were, or were allegedly, conducted
by the Company or by any other Person for whose conduct the Company is
or may be held responsible; or
(f) any bodily injury (including illness, disability, and
death and regardless of when any such bodily injury occurred, was
incurred, or manifested itself, personal injury, property damage
(including trespass, nuisance, wrongful eviction, and deprivation of
the use of real property), or other damage of or to any Person,
including any employee or former employee of the Company or any other
Person for whose conduct the Company or may be held responsible, in any
way arising from or alleged by arising from any Hazardous Activity
conducted or allegedly conducted with respect to the Facilities,
including the Real Estate, or the operation of the Company prior to the
Closing Date, or from Hazardous Material that was (i) present or
suspected to be present on or before the Closing Date on or at the
Facilities, including the Real Estate (or present or suspected to be
present on any other property, if such Hazardous Material emanated or
allegedly emanated from the Facilities, including the Real Estate on or
prior to the Closing Date) or (ii) Released or allegedly Released by
the Company or any other Person for whose conduct the Company is or may
be held responsible, at any time on or prior to the Closing Date.
(g) any matter disclosed in Part 3.1(q) of the Disclosure
Schedule; or
(h) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with any of
the Sellers or the Company (or any Person acting on their behalf) in
connection with any of the Contemplated Transactions.
The remedies provided in this Section 8.2 will not be exclusive of or limit any
other remedies that may be available to the Buyer or the other Indemnified
Persons.
SECTION 8.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. The Buyer
will indemnify and hold harmless the Sellers, and will pay to the Sellers,
without duplication, the amount of any Damages arising, directly or indirectly,
from or in
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connection with (a) any Breach of any representation or warranty made
by the Buyer in this Agreement or in any certificate delivered by the
Buyer pursuant to this Agreement, (b) any Breach by the Buyer of any
covenant or obligation of the Buyer in this Agreement, or (c) any claim
by any Person for brokerage or finders' fees or commissions or similar
payments based upon any agreement or understanding alleged to have been
made by such Person with the Buyer (or any Person acting on its
behalf), in connection with any of the Contemplated Transactions.
SECTION 8.4 TIME LIMITATIONS.
(a) If the Closing occurs, the Sellers will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, other than those in Sections 3.1(c), (f), (g), (l), (n), (o), (u), (v) and
(w), unless on or before the second anniversary of the Closing Date the Buyer
notifies the Sellers of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by the Buyer; a claim with respect to
Sections 3.1(l), (n), (o), (v) and (w) may be made at any time prior to the
expiration of the applicable statute of limitations; a claim with respect to
Sections 3.1(c), (f), (g) and (u) or a claim for indemnification or
reimbursement not based upon any representation or warranty or any covenant or
obligation to be performed and complied with prior to the Closing Date, may be
made at any time indefinitely; provided, however, that the Sellers will have no
such liability with respect to any representation or warranty in Section 3.1(o)
regarding any Legal Requirement other than the Legal Requirement of a
Governmental Body unless, on or before the second anniversary of the Closing
Date, the Buyer notifies the Sellers of a claim specifying the factual basis of
that claim in reasonable detail to the extent then known by the Buyer; and
provided, further, however, that the Sellers will have no such liability under
Section 8.2(d) for or under any product warranty made by the Company to any
customer with respect to any product shipped or manufactured by the Company
prior to the Closing Date unless, on or before the second anniversary of the
Closing Date, the Buyer notifies the Sellers of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by the Buyer.
(b) If the Closing occurs, the Buyer will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, unless on or before the second anniversary of the Closing Date the Sellers
notify the Buyer of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by the Sellers.
SECTION 8.5 LIMITATIONS ON AMOUNT.
(a) The Sellers will have no liability (for indemnification or
otherwise) with respect to the matters described in clause (a), clause (b),
clause (d) or, to the extent relating to any failure to perform or comply prior
to the Closing Date, clause (c) of Section 8.2 hereof until the total of all
Damages with respect to such matters exceed Thirty Thousand Dollars ($30,000);
provided, however, that, if the total of all Damages with respect to such
matters exceeds Thirty Thousand Dollars ($30,000) the Sellers will
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have liability for the entire amount thereof in excess of Ten Thousand Dollars
($10,000), subject, however, to the provisions of Section 8.5(b).
(b) The Sellers will have no liability (for indemnification or
otherwise) in excess of Nine Hundred Sixty Thousand Dollars ($960,000) in the
aggregate with respect to any representation or warranty, or covenant or
obligation to be performed or complied with prior to the Closing Date, other
than those in Sections 3.1(c), (f), (g), (l), (n), (o), (u), (v) and (w).
(c) Notwithstanding the foregoing in this Section 8.5,
nevertheless, this Section 8.5 will not apply to any Breach of any of the
Sellers' representations and warranties as to which any of the Sellers had
Knowledge at any time prior to the date on which such representation and
warranty is made or any intentional Breach by any of the Sellers of any covenant
or obligation; and the Sellers will be jointly and severally liable for all
Damages with respect to such Breaches.
SECTION 8.6 RIGHT OF SET-OFF. Upon notice to the Sellers specifying in
reasonable detail the basis for such set-off, the Buyer may set-off any amount
to which it may be entitled under this Article VIII against amounts otherwise
then payable under the Promissory Note; provided, however, that, if, following
such notice, the Sellers inform the Buyer of their preference that the Buyer
set-off such amount against amounts otherwise payable under the Consulting
Agreements, the Buyer may cause the Company to set-off such amount against the
amounts otherwise then payable under the Consulting Agreements, to the extent
thereof PRO RATA in proportion to the amounts otherwise then payable thereunder.
The exercise of such right of set-off by Buyer in good faith, whether or not
ultimately determined to be justified, will not constitute an event of default
under the Promissory Note or the Consulting Agreements. Neither the exercise of,
nor the failure to exercise, such right of set-off will constitute an election
of remedies or otherwise limit the Buyer in any manner in the enforcement of any
other remedies that may be available to it.
SECTION 8.7 PROCEDURE FOR INDEMNIFICATION - THIRD-PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party under
Sections 8.2 or 8.3 of notice of the commencement of any Proceeding
against it, such indemnified party will, if a claim is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim; but the failure
to notify the indemnifying party will not relieve the indemnifying
party of any liability that it may have to any indemnified party,
except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in Section 8.7(a) is brought
against an indemnified party and it gives notice to the indemnifying
party of the commencement of such Proceeding, the indemnifying party
will, unless the claim involves Taxes, be entitled to participate in
such Proceeding and, to the extent that
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it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that
joint representation would be inappropriate, or (ii) the indemnifying
party fails to provide reasonable assurance to the indemnified party of
its financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding), to assume the defense
of such Proceeding with counsel reasonably satisfactory to the
indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently
conducts such defense, be liable to the indemnified party under this
Article VIII for any fees of other counsel or any other expenses with
respect to the defense of such Proceeding, in each case subsequently
incurred by the indemnifying party in connection with the defense of
such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims
made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be
effected by the indemnifying party without the indemnified party's
consent, which consent shall not be unreasonably withheld or delayed,
unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect
on any other claims that may be made against the indemnified party, and
(B) the sole relief provided is monetary damages that are paid in full
by the indemnifying party; and (iii) the indemnified party will have no
liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying
party of the commencement of any Proceeding and the indemnifying party
does not, within ten (10) days after the indemnified party's notice is
given, give notice to the indemnified party of its election to assume
the defense of such Proceeding, the indemnifying party will be bound by
any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a
result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by
notice to the indemnifying party, assume the exclusive right to defend,
compromise, or settle such Proceeding; but the indemnifying party will
not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
(d) Notwithstanding the foregoing, if any Proceeding referred
to in Section 8.7(a) is brought against an indemnified party with
respect to a claim involving Taxes, the indemnified party will not only
give timely notice to the indemnifying party of the commencement of
such Proceeding but also apprise the indemnifying party from time to
time reasonably of, and consult with the indemnifying party about, the
conduct of such Proceeding.
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(e) The Sellers hereby consent to the non-exclusive
jurisdiction of any court in which a Proceeding is brought against any
Indemnified Person for purposes of any claim that an Indemnified Person
may have under this Agreement with respect to such Proceeding or the
matters alleged therein, and agree that process may be served on the
Sellers with respect to such a claim anywhere.
SECTION 8.8 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
SECTION 8.9 ENVIRONMENTAL MATTERS. Notwithstanding the provisions of
Section 8.7, the Buyer will be entitled to control any Clean-up, any related
Proceeding, and except as provided in the following sentence, any other
Proceeding, with respect to which indemnity may be sought under clause (e) or
clause (f) of Section 8.2. The procedure described in Section 8.7 will apply to
any claim solely for monetary damages relating to a matter covered by clause (e)
or clause (f) of Section 8.2.
SECTION 8.10 EXCLUSION FROM INDEMNIFICATION. Notwithstanding anything
contained in this Agreement to the contrary, (a) the Sellers will have no
liability or obligation to the Buyer for any Damages arising from, out of, or in
connection with the termination of the line of credit or commitment to advance
funds as provided under Section 1.6(d) hereof; (b) the Sellers will have no
liability or obligation to the Buyer for any Damages arising from, out of, or in
connection with the ownership, operation or condition of the Real Estate prior
to the time when the Real Estate Sellers acquired the Real Estate on August 29,
1990, unless, however, the Real Estate Sellers, or either one of them, has
Knowledge of such ownership, operation or condition, including any Hazardous
Materials or other contaminants; (c) the Sellers will have no liability or
obligation to the Buyer for any Damages with respect to any representation or
warranty under the warranty deed referred to in Section 1.6(a)(vii) or under
Section 3.1(g) to the extent that (i) the Real Estate Sellers will not have the
right to recover the amount thereof under any owner's policy of title insurance
issued thereto and (ii) the Buyer recovers the amount thereof under the owner's
policy of title insurance issued to the Buyer hereunder; and (d) the Sellers
will have no liability or obligation to the Buyer for any Damages covered by any
policy of insurance referred to in Part 3.1(s) of the Disclosure Schedule, to
the extent that after the Closing Date the Company recovers the amount thereof
under such policy.
ARTICLE IX
ARBITRATION
SECTION 9.1 ARBITRATION GENERALLY. Any controversy, claim or dispute
between the Buyer and the Sellers directly or indirectly concerning this
Agreement, or the subject matter hereof, including questions concerning the
scope and applicability of this Article IX, will be finally settled by
arbitration held in Dallas, Texas, in accordance with
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the Uniform Arbitration Act of the State of Texas, or any substitute or similar
statute of the State of Texas from time to time in effect, and the rules of
commercial arbitration then followed by the American Arbitration Association or
any successor to the functions thereof. The arbitrators will have the right and
authority to determine how their decision or determination as to each issue or
matter in dispute may be implemented or enforced. Any decision or award of the
arbitrators will be final and conclusive on the parties to this Agreement and
there will be no appeal therefrom other than for gross negligence or willful
misconduct.
SECTION 9.2 COMPULSION OF ARBITRATION. Each of the parties hereto
agrees that an action to compel arbitration pursuant to this Agreement may be
brought in any court of competent jurisdiction in accordance with the provisions
of Section 10.5 hereof. Application may also be made to such court for
confirmation of any decision or award of the arbitrators, for an order of
enforcement and for any other remedies which may be necessary to effectuate such
decision or award. All the parties hereto hereby consent to the jurisdiction of
the arbitrators and of such court and waive any objection to the jurisdiction of
such arbitrators and court.
SECTION 9.3 EXCEPTION TO ARBITRATION. Notwithstanding the foregoing in
this Article IX, nothing contained herein will require arbitration of any issue
arising under this Agreement for which injunctive relief or specific performance
is successfully sought by any party hereto.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel and accountants. The Sellers will cause the
Company not to incur any out-of-pocket expenses in connection with this
Agreement. In the event of termination of this Agreement, the obligation of each
party to pay its own expenses will be subject to any rights of such party
arising from a Breach of this Agreement by another party.
SECTION 10.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as the Buyer determines.
Unless consented to in writing by the Buyer in advance or required by Legal
Requirements, prior to the Closing, the Sellers shall, and shall cause the
Company to, keep this Agreement strictly confidential and may not make any
disclosure of this Agreement to any Person. The Sellers and the Buyer will
consult with each other concerning the means by which the Company's employees,
customers and suppliers and others having dealings with the Company will be
informed of the Contemplated Transactions; and the Buyer will have the right to
be present for any such communication.
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SECTION 10.3 TIME OF ESSENCE. With regard to all dates and time periods
set forth or referred to in this Agreement, time shall be of the essence.
SECTION 10.4 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt) provided
that a copy is mailed by registered mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and telecopier
numbers as a party may designate by notice to the other parties):
(a) If to the Sellers: Xxxxx D'Addio and Xxxxxxxxx D'Addio and
Xxxx D'Addio
c/o Xxxx X. Xxxxxxxx, Esq.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Facsimile No.: (000) 000-0000
with a copy to: Gardere Xxxxx Xxxxxx, LLP
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) If to the Buyer: American Locker Group, Incorporated
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx,
Chairman
Facsimile No.: (000) 000-0000
with a copy to: Law Offices of Xxxx X. Xxxxxxxx, LLC
Six PPG Place, Suite 1150
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
SECTION 10.5 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of Texas, County of Tarrant, or if it has or can acquire jurisdiction, in the
United States District Court for the Northern District of Texas; and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and
- 53 -
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere.
SECTION 10.6 FURTHER ASSURANCE. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
SECTION 10.7 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power or privilege; and no single or partial exercise of any such right,
power or privilege will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand as provided in this Agreement or the documents referred to
in this Agreement.
SECTION 10.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement
supersedes all prior agreements between or among the parties with respect to its
subject matter (including the Letter of Intent dated December 28, 2000 addressed
to Xxxxx D'Addio and Xxxxxxxxx D'Addio from American Locker Group, Incorporated)
and constitutes (along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between or among
the parties with respect to its subject matter. This Agreement may not be
amended except by a written agreement executed by the party to be charged with
the amendment.
SECTION 10.9 DISCLOSURE SCHEDULE.
(a) The disclosures in the Disclosure Schedule, and those in any
supplement thereto, must relate only to the representations and warranties in
the Section of the Agreement to which they expressly relate and not to any other
representation or warranty in this Agreement.
(b) In the event of any inconsistency between the statements in the
body of this Agreement and those in the Disclosure Schedule (other than an
exception expressly set forth as such in the Disclosure Schedule with respect to
a specifically identified representation or warranty), the statements in the
body of this Agreement will control.
- 54 -
SECTION 10.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. None
of the parties may assign any of its rights under this Agreement without the
prior consent of the other parties; except, however, that the Buyer may assign
any of its rights under this Agreement to any Subsidiary or Subsidiaries of the
Buyer. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement shall be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy or claim under or with respect to
this Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions shall be for the sole and exclusive benefit of the
parties to this Agreement and their successors and permitted assigns.
SECTION 10.11 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement shall remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part or degree
shall remain in full force and effect to the extent not held invalid or
unenforceable.
SECTION 10.12 ARTICLE AND SECTION HEADINGS; CONSTRUCTION. The headings
of the Articles and Sections in this Agreement are provided for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. All references to "Article" or "Section" or "Sections" refer to the
corresponding Article or Second or Sections of this Agreement. All words used in
this Agreement shall be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
shall not limit the preceding words or terms.
SECTION 10.13 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
SECTION 10.14 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original copy of this
Agreement and all of which, when taken together, shall be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
BUYER:
ATTEST: AMERICAN LOCKER GROUP,
INCORPORATED
/s/ XXX X. XXXXXXX By /s/ XXXXXX X. XXXXXXXXXX
--------------------------- ------------------------------------
Title: TREASURER Title: Chairman of the Board
[Corporate Seal]
WITNESS: SELLERS:
/s/ XXXXXXXX XXXXXX /s/ XXXXX D'ADDIO [Seal]
-------------------------- ---------------------------
XXXXX D'ADDIO
/s/ XXXXXXXX XXXXXX /s/ XXXXXXXXX D'ADDIO [Seal]
-------------------------- ---------------------------
XXXXXXXXX D'ADDIO
/s/ XXXXXXXX XXXXXX /s/ XXXX D'ADDIO [Seal]
-------------------------- ---------------------------
XXXX D'ADDIO
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Exhibits excluded as not required under SK Item 601