Exhibit 2.1
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STOCK PURCHASE AGREEMENT
by and among
▇▇▇▇▇▇▇ CORPORATION
(the Buyer),
▇▇▇▇▇ ▇▇▇▇▇▇,
as trustee of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ Children's Trust,
and not individually, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, individually
(the BBI Sellers),
the individuals and entities named therein as
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ SELLERS
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as
SELLER REPRESENTATIVE
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dated as of February 4, 1998
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
No.
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1. PURCHASE AND SALE OF STOCK.......................... 2
1.1 Purchase and Sale.............................. 2
1.2 Delivery of Purchase Price and Escrowed Funds.. 2
2. CLOSING............................................. 3
2.1 Time and Place................................. 3
2.2 Transactions at Closing........................ 3
3. ADJUSTMENTS TO PURCHASE PRICE....................... 4
3.1 Delivery of Initial Closing Balance Sheet...... 4
3.2 Adjustments at Closing......................... 5
3.3 Final Closing Balance Sheet and Tax Returns.... 5
3.4 Determination of Closing Assets and Liabilities 6
3.5 Calculation and Payment of Adjustment.......... 7
4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS....... 8
4.1 Organization; Authority........................ 8
4.2 Subsidiaries; Capitalization of Subsidiaries... 8
4.3 Capitalization................................. 9
4.4 Non-Contravention.............................. 9
4.5 Governmental Consents; Transferability of
Licenses, Etc. ................................ 9
4.6 Financial Statements........................... 10
4.7 Absence of Certain Changes..................... 10
4.8 Litigation, Etc. .............................. 11
4.9 Conformity to Law.............................. 11
4.10 Title to Property, Real Property Leases, etc. . 11
4.11 Real Property; Safety, Zoning and
Environmental Matters.......................... 12
4.12 Insurance...................................... 14
4.13 Contracts...................................... 14
4.14 Employment of Officers, Employees.............. 16
4.15 Employee Benefit Plans......................... 16
4.16 Labor Relations................................ 18
4.17 Potential Conflicts of Interest................ 19
4.18 Trademarks, Patents, Etc. ..................... 19
4.19 Suppliers and Customers........................ 19
4.20 Accounts Receivable............................ 20
4.21 No Undisclosed Liabilities..................... 20
4.22 Conduct of Business............................ 20
4.23 Taxes.......................................... 20
4.24 Indebtedness................................... 21
4.25 Bank Accounts, Signing Authority, Powers of
Attorney....................................... 21
4.26 Inventory...................................... 22
4.27 Minute Books................................... 22
4.28 Broker......................................... 22
4.29 Accounts Payable............................... 22
4.30 Disclosure..................................... 22
4.31 Foreign Corrupt Practices Act.................. 22
4A. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF
THE INDIVIDUAL SELLERS............................ 22
4A.1 Rights to Sell Outstanding Shares, Approvals;
Binding Effects............................. 22
4A.2 Title to Stock, Liens, etc. ................... 23
5. REPRESENTATIONS AND WARRANTIES OF THE
BBI SELLERS...................................... 23
5.1 Organization; Authority........................ 23
5.2 Rights to Sell Outstanding Shares, Approvals;
Binding Effect.............................. 23
5.3 Subsidiaries................................... 23
5.4 Capitalization................................. 24
5.5 Title to Stock, Liens, etc. ................... 24
5.6 Non-Contravention.............................. 24
5.7 Governmental Consents; Transferability of
Licenses, Etc. ................................ 24
5.8 Financial Statements........................... 24
5.9 Absence of Certain Changes..................... 25
5.10 Litigation, Etc. .............................. 25
5.11 Conformity to Law.............................. 25
5.12 Title to Property, Real Property Leases, etc. . 25
5.13 Real Property; Safety, Zoning and Environmental
Matters........................................ 25
5.14 Insurance...................................... 27
5.15 Contracts...................................... 27
5.16 Employment of Officers, Employees.............. 28
5.17 Employee Benefit Plans......................... 28
5.18 Labor Relations................................ 28
5.19 Potential Conflicts of Interest................ 28
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5.20 Trademarks, Patents, Etc. ...................... 29
5.21 Suppliers and Customers......................... 29
5.22 Accounts Receivable............................. 29
5.23 No Undisclosed Liabilities...................... 29
5.24 Conduct of Business............................. 29
5.25 Taxes........................................... 29
5.26 Indebtedness.................................... 30
5.27 Bank Accounts, Signing Authority, Powers of
Attorney........................................ 30
5.28 Minute Books.................................... 30
5.29 Broker.......................................... 30
5.30 Disclosure...................................... 30
5.31 Foreign Corrupt Practices Act................... 30
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER.......... 30
6.1 Organization of Buyer; Authority................ 30
6.2 Corporate Approval; Binding Effect.............. 31
6.3 Non-Contravention............................... 31
6.4 Governmental Consents........................... 31
6.5 Brokers......................................... 31
6.6 Purchase Price.................................. 31
6.7 Disclosure...................................... 31
7. COVENANTS OF THE SELLERS PENDING CLOSING............. 32
7.1 Full Access..................................... 32
7.2 Carry on in Regular Course...................... 32
7.3 No General Increases............................ 32
7.4 No Dividends, Issuances, Repurchases, etc. ..... 32
7.5 Contracts and Commitments....................... 32
7.6 Purchase and Sale of Capital Assets............. 33
7.7 Insurance....................................... 33
7.8 Preservation of Organization.................... 33
7.9 No Default...................................... 33
7.10 Compliance with Laws............................ 33
7.11 Advice of Change................................ 33
7.12 No Shopping..................................... 33
7.13 Consents of Third Parties....................... 33
7.14 Satisfaction of Conditions Precedent............ 34
7.15 HSR Act......................................... 34
7.16 Cooperation..................................... 34
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7A. COVENANTS OF THE BBI SELLERS PENDING CLOSING......... 34
7A.1 Full Access.................................... 34
7A.2 Carry on in Regular Course..................... 34
7A.3 No Increases................................... 35
7A.4 No Dividends, Issuances, Repurchases, etc. .... 35
7A.5 Contracts and Commitments...................... 35
7A.6 Purchase and Sale of Capital Assets............ 35
7A.7 Insurance...................................... 35
7A.8 Preservation of Organization................... 35
7A.9 No Default..................................... 35
7A.10 Compliance with Laws........................... 35
7A.11 Advice of Change............................... 35
7A.12 No Shopping.................................... 35
7A.13 Consents of Third Parties...................... 35
7A.14 Satisfaction of Conditions Precedent........... 36
7A.15 Cooperation.................................... 36
8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.......... 36
8.1 Representations and Warranties True at Closing.. 36
8.2 Compliance with Agreement....................... 36
8.3 No Material Change.............................. 36
8.4 Sellers' Certificate............................ 37
8.5 Opinion of Counsel.............................. 37
8.6 Approvals....................................... 37
8.7 No Litigation................................... 37
8.8 Non-Competition Agreements...................... 37
8.9 Escrow Agreement................................ 37
8.10 Resignations of Directors and Officers.......... 38
8.11 Environmental Reports........................... 38
8.12 Indebtedness.................................... 38
8.13 Consent of Lenders.............................. 38
8.14 Consents of Third Parties....................... 38
8.15 Release......................................... 38
8.16 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Guarantee........................ 38
8.17 HSR Act......................................... 38
8.18 Proceedings and Documents Satisfactory.......... 39
9. CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS..... 39
9.1 Representations and Warranties True at Closing.. 39
9.2 Compliance with Agreement....................... 39
9.3 Closing Certificate............................. 39
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9.4 Approvals....................................... 39
9.5 No Litigation................................... 39
9.6 Escrow Agreement................................ 39
9.7 HSR Act......................................... 40
9.8 Proceedings and Documents Satisfactory.......... 40
10. CONFIDENTIAL INFORMATION............................. 40
11. DEFINITIONS.......................................... 40
12. INDEMNIFICATION...................................... 42
12.1 Indemnity of Sellers............................ 42
12.2 Indemnity by the BBI Sellers.................... 43
12.3 Indemnity by the Buyer.......................... 44
12.4 Claims.......................................... 44
12.5 Method and Manner of Paying Claims.............. 46
12.6 Limitations on Indemnification.................. 47
12.7 Disputes........................................ 48
13. TERMINATION.......................................... 49
14. GENERAL.............................................. 49
14.1 Survival of Representations and Warranties..... 49
14.2 Expenses....................................... 49
14.3 Notices........................................ 50
14.4 Entire Agreement............................... 51
14.5 Governing Law.................................. 51
14.6 Sections and Section Headings.................. 51
14.7 Assigns........................................ 51
14.8 Severability................................... 52
14.9 Further Assurances............................. 52
14.10 No Implied Rights or Remedies.................. 52
14.11 Counterparts................................... 52
14.12 Satisfaction of Conditions Precedent........... 52
14.13 Public Statements or Releases.................. 52
14.14 Seller Representative.......................... 52
Schedules:
Schedule 1 Stock Ownership and Allocation of Cash Purchase Price
Schedule 2 Allocation of Adjustment Amount Payment
Schedule 2.2(d) Non-Competition
Schedule 3 Percentage of Indemnity Cap
Schedule 4.3 Capitalization
Schedule 4.5 Governmental consents; Permits
Schedule 4.6 Financial Statements
Schedule 4.7 Absence of Certain Changes
Schedule 4.8 Litigation
Schedule 4.10(a) Title of Property
Schedule 4.10(b) Capital Assets
Schedule 4.10(c) Real Property Leases
Schedule 4.11 Safety, Zoning and Environmental Matters
Schedule 4.12 Insurance
Schedule 4.13 Contracts
Schedule 4.14 Employment of Officers, Employees
Schedule 4.15(a) Employee Benefit Plans
Schedule 4.15(d) Liabilities Under Employee Benefit Plans
Schedule 4.16 Labor Relations
Schedule 4.18 Intellectual Property
Schedule 4.19 Suppliers and Customers
Schedule 4.21 Undisclosed Liabilities
Schedule 4.23 Taxes
Schedule 4.24 Indebtedness
Schedule 4.25 Bank Accounts, Signing Authority, Power of Attorney
Schedule 5.4 BBI Capitalization
Schedule 5.8 BBI Financial Statements
Schedule 5.9 BBI Absence of Certain Changes
Schedule 5.12 BBI Real Property
Schedule 5.13 BBI Safety, Zoning and Environmental Matters
Schedule 5.14 BBI Insurance
Schedule 5.15 BBI Contracts
Schedule 5.23 BBI Undisclosed Liabilities
Schedule 5.25 BBI Taxes
Schedule 5.27 BBI Bank Accounts, Signing Authority, Power of Attorney
Schedule 6.4 Governmental Consents
Schedule 7A.4 BBI Dividends, Issuances, Repurchases
Exhibits:
Exhibit A-1 Form of Escrow Agreement
Exhibit A-2 Form of Escrow Agreement (▇▇▇▇▇▇ ▇▇▇▇▇)
Exhibit B Form on Non-Competition Agreement
Exhibit C Form of Non-Competition Agreement and Release
Exhibit D Form of Guaranty
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of the fourth
day of February, 1998, is by and among (i) ▇▇▇▇▇▇▇ Corporation, a
Massachusetts corporation (the "Buyer") and wholly-owned subsidiary of High
Voltage Engineering Corporation, a Massachusetts corporation ("HVE"), (ii)
▇▇▇▇▇ ▇▇▇▇▇▇, as trustee of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ Children's Trust, dated
August 1, 1986 (the "▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust") and not individually, and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ individually (collectively, the "BBI Sellers") and (iii) ▇▇▇▇▇▇▇
▇▇▇▇▇▇, XP54 - I LTD., a Texas limited partnership, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, Plomin-I, Ltd., a Texas limited partnership, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Sellers" and, collectively with the BBI Sellers,
the "Sellers"), and (iv) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, in his capacity as Seller
Representative (the "Seller Representative").
WHEREAS, the BBI Sellers are the owners of all of the issued and
outstanding shares of Common Stock, $1.00 par value per share, of ▇▇▇▇▇▇
▇▇▇▇, Inc. (the "BBI Stock"), an Illinois corporation ("BBI"), which owns
48,000 shares, representing 48% of the issued and outstanding shares, of the
Common Stock, no par value (the "▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock") of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Instrument Corporation, an Illinois corporation (the "Company"), which owns
all of the issued and outstanding shares of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Instruments
(Barbados) Inc., a Barbados corporation (the "Barbados Subsidiary") and 999
of the 1,000 issued and outstanding shares of the capital stock of TTS
Mexican Holding Company, Inc., an Illinois corporation (the "Illinois
Subsidiary"), which owns 999 of the 1,000 issued and outstanding shares of
the capital stock of Instrumentos ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ de Mexico, S.A. de C.V., a
Mexican corporation (the "Mexican Subsidiary" and, together with the Barbados
Subsidiary and the Illinois Subsidiary, the "Subsidiaries");
WHEREAS, the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Sellers are the owners of 52,000 shares
representing the remaining 52% of the issued and outstanding shares of the
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock;
WHEREAS, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ is the owner of 1 share of capital stock of the
Illinois Subsidiary and 1 share of capital stock of the Mexican Subsidiary
(the "▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock");
WHEREAS, the BBI Sellers desire to sell the BBI Stock to the Buyer and
the Buyer desires to purchase the BBI Stock from the BBI Sellers, upon the
terms and subject to the conditions contained in this Agreement;
WHEREAS, the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Sellers desire to sell the shares of ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Stock owned by them, representing 52% of the outstanding shares of
capital stock of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, to the Buyer and the Buyer desires to
purchase such shares of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock, upon the terms and subject to
the conditions contained in this Agreement; and
WHEREAS, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ desires to sell the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock to the
Buyer or its designee and the Buyer desires to purchase the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Stock from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, on behalf of itself or its designee, upon the
terms and subject to the conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the parties hereto agree as follows:
1. PURCHASE AND SALE OF STOCK.
1.1. Purchase and Sale. Subject to the terms and conditions set forth
in this Agreement, at the Closing referred to in Section 2 of this Agreement:
(a) each of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Sellers agrees to sell to the Buyer, and the
Buyer agrees to purchase from such Seller, all of the outstanding shares of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock owned by such Seller as set forth opposite such Seller's
name on Schedule 1 hereto in exchange for the payment of that portion of the
Purchase Price as described below; (b) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ agrees to sell to the
Buyer or its designee, and the Buyer agrees to purchase from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
on behalf of itself or its designee, all of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock in
exchange for the payment of $100; and (c) each of the BBI Sellers agrees to
sell to the Buyer, and the Buyer agrees to purchase from such Seller, all of
the outstanding shares of BBI Stock owned by such BBI Seller as set forth on
Schedule 1 in exchange for the payment of that portion of the Purchase Price
as described below.
1.2. Delivery of Purchase Price and Escrowed Funds. At the Closing,
the Buyer shall pay to the Sellers, as the aggregate purchase price for the
BBI Stock, the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock and the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock (together,
the "Stock"), the amount of $25,000,000, as adjusted pursuant to Sections 3.2
and 3.5 (the "Purchase Price"), minus the amount of the Escrowed Funds (as
defined below) and any amounts paid to third parties in accordance with
Section 2.2(b) below. At the Closing, the Buyer shall deliver $2,000,000 of
the Purchase Price (the "Escrowed Funds") into two escrow accounts with a
bank or trust company mutually approved by the Buyer and the Sellers (the
"Escrow Agent"), pursuant to escrow agreements in the form of Exhibits A-1
and A-2 hereto, with such changes as may be reasonably required by the Escrow
Agent (the "Escrow Agreements"). $1,570,000 of the Escrowed Funds will be
placed into escrow to secure the obligations of the Sellers other than ▇▇▇▇▇▇
▇▇▇▇▇ under this Agreement, and $430,000 of the Escrowed Funds will be placed
into escrow to secure the obligations of ▇▇▇▇▇▇ ▇▇▇▇▇ as a Seller under this
Agreement (the "▇▇▇▇▇ Escrow"). That portion of the Cash Purchase Price (as
defined below) payable for the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Shares shall be $100, and the
portion of the remainder of the Cash Purchase Price payable to each Seller
for such Seller's ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock or BBI Stock shall be based on the
percentage ownership, whether direct or indirect, of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock
attributable to such Seller, as set forth on Schedule 1 hereto.
2
2. CLOSING.
2.1. Time and Place. The closing of the sale and purchase of the Stock
(the "Closing") shall be held at the offices of ▇▇▇▇▇ & ▇▇▇▇▇, 140 South
Dearborn Street, 14th Floor, Chicago, Illinois, or by mail or facsimile, at
10:00 a.m. on a mutually acceptable date not later than five (5) business
days after the receipt by the Buyer and Sellers of notice of the expiration
of any ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act waiting period or, if early termination of such
waiting period is granted, not later than ten (10) business days after the
receipt by the Buyer and Sellers of such notice, or at such other time or at
such other place as the Buyer and the Sellers may agree, subject to the
satisfaction of all closing conditions. The date on which the Closing is
actually held hereunder is sometimes referred to herein as the "Closing Date."
2.2. Transactions at Closing. At the Closing, provided that all of the
conditions precedent in Sections 8 and 9 have been fulfilled or waived by the
Buyer or the Sellers, as the case may be, and in addition to any other
instruments or documents referred to herein:
(a) The ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Sellers shall deliver to the Buyer or its
designee, free and clear of any lien, claim or encumbrance, certificates
representing all of the issued and outstanding shares of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Stock held by such persons, duly endorsed in blank or with duly executed
stock powers attached. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall deliver to the Buyer or its
designee, free and clear of any lien, claim or encumbrance, certificates
representing the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock, duly endorsed in blank or with duly
executed stock powers attached. The BBI Sellers shall deliver to the Buyer
or its designee, free and clear of any lien, claim or encumbrance, all of the
issued and outstanding shares of the BBI Stock, duly endorsed in blank or
with duly executed stock powers attached.
(b) The Buyer shall, on behalf of the Sellers, deliver the Escrowed
Funds to the Escrow Agent referred to in Section 1.2 hereof, and disburse the
following amounts at the direction of the Sellers in payment of the remainder of
that portion of the Purchase Price that is to be paid at the Closing:
(i) The Buyer shall (i) repay the amount of the Company
Indebtedness outstanding as of, or accruable up to, the Closing Date,
including all principal and any accrued and unpaid interest thereon and any
repayment penalties or premium associated with such repayment, provided
that as a condition precedent to such payment the Buyer has received
pay-off letters or other evidence of the amounts necessary to discharge all
obligations of the Company under the Loan Agreement, in form reasonably
satisfactory to the Buyer, no later than three business days prior to the
Closing Date, and (ii) pay to Deloitte & Touche LLP, the Sellers'
accountants, ▇▇▇▇▇ & ▇▇▇▇▇, the Sellers' counsel (other than ▇▇▇▇▇▇ ▇▇▇▇▇),
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LTD., counsel to ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
Abogados, the Company's counsel, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Capital (the
"Broker"), and any other third parties to whom the Company or the Sellers
have any obligation with respect to the transactions contemplated hereby,
3
their respective professional fees accrued or incurred up to and including
the Closing Date, provided that as a condition precedent to such payment
each of such persons has delivered a final statement of fees to the Buyer
no later than three business days prior to the Closing Date, which
statements shall have been reviewed and approved by each of the Sellers
with notice of such approval having been delivered to the Buyer
concurrently with such statements, and shall each contain an acknowledgment
that the fees of such persons incurred with respect to the Company and BBI
and the transactions contemplated hereby (other than as set forth in
Section 3.3 below) are the sole responsibility of the Sellers, and that the
Buyer and HVE shall have no liability therefor, and any amounts paid
pursuant to this paragraph (b) shall be subtracted from the Purchase Price;
(ii) The Buyer shall deliver $100 to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ by certified
or bank check as the purchase price for the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock; and
(iii) The Buyer shall deliver that portion of the Purchase
Price for the Stock (the "Cash Purchase Price") that remains after the
Buyer pays the Escrowed Funds to the Escrow Agent and makes the payments
specified in paragraphs (i) and (ii) above and the Initial Adjustments (as
defined in Section 3.2) have been applied, to the Sellers (or such persons
as they may have designated in writing to the Buyer prior to the Closing)
by certified or bank check or by wire transfer of immediately available
funds, with the portion of such Cash Purchase Price payable to each Seller
determined based on the percentage ownership, whether direct or indirect,
of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock attributable to such Seller indicated on
Schedule 1.
(c) If requested by the Buyer not less than three (3) days prior to
the Closing, the Sellers shall deliver to the Buyer pay-off letters and lien
discharges (or agreements therefor) from any other person to whom the Company or
any Subsidiary owes any Indebtedness (as defined in Section 11).
(d) The Buyer and the Sellers listed on Schedule 2.2(d) hereto shall
execute and deliver a Non-Competition Agreement (as defined in Section 8.8).
3. ADJUSTMENTS TO PURCHASE PRICE.
3.1. Delivery of Initial Closing Balance Sheet. Each of the Sellers and
the Buyer agree that the Purchase Price has been established with respect to the
Company's audited balance sheet dated as of April 30, 1997 (the "Audited Balance
Sheet"), a copy of which is attached as Schedule 3.1A hereto. No less than
three business days prior to the Closing, the Sellers shall have prepared and
delivered to the Buyer (a) an unaudited consolidated balance sheet of the
Company and the Subsidiaries as of the close of business on January 31, 1998
(the "Calculation Date"), prepared in accordance with generally accepted
accounting principles applied on a basis consistent with the Audited Balance
Sheet (as defined in Section 4.8) except for year-end adjustments and the
absence of
4
footnotes (the "Initial Closing Balance Sheet"), and (b) a certificate of each
of the Chairman, President and Chief Financial Officer of the Company certifying
(A) that the Initial Closing Balance Sheet was prepared on the basis described
in clause (a) above, (B) the amount of the Defined Assets (as defined in
Section 11) of the Company and the Subsidiaries as of the Calculation Date, (C)
the amount of the Defined Liabilities (as defined in Section 11) of the Company
and the Subsidiaries as of the Calculation Date, (D) the amount of the Excluded
Liabilities (as defined in Section 11) of the Company and the Subsidiaries as of
the Calculation Date, (E) the amount of the Net Assets (as defined in Section
11) of the Company and the Subsidiaries as of the Calculation Date, (F) the
amount of accrued federal, state and foreign tax liability estimated by Deloitte
& Touche LLP through and including the Calculation Date, and (G) the amount of
the insurance receivable asset estimated by Deloitte & Touche LLP as of the
Calculation Date.
3.2. Adjustments at Closing. The following adjustments shall be made to
the Purchase Price at the Closing (the "Initial Adjustments"):
(a) if the amount of the Net Assets determined from the Initial Closing
Balance Sheet is less than $7,644,973, then the Purchase Price shall be reduced
by the amount by which $7,644,973 exceeds such Net Assets, provided, that if the
amount of the Net Assets determined from the initial Closing Balance Sheet is
greater than $7,644,973, there shall be no adjustment pursuant to this paragraph
(a); and
(b) the Purchase Price shall also be reduced by the amount of the Excluded
Liabilities.
3.3. Final Closing Balance Sheet and Tax Returns.
(a) Immediately after the Closing, the Sellers and the Buyer shall engage
Deloitte & Touche LLP to prepare and deliver to the Buyer and the Seller
Representative, no later than 120 days after the Closing Date, an audited
consolidated balance sheet of the Company and the Subsidiaries as of the close
of business on the Closing Date immediately prior to giving effect to the
Closing, prepared in accordance with generally accepted accounting principles
applied on a basis consistent with the Audited Balance Sheet (the "Audited
Closing Balance Sheet"), including an opinion stating that such Audited Closing
Balance Sheet is in conformity with generally accepted accounting principles.
The fees and expenses of Deloitte & Touche LLP incurred in connection with the
preparation of the Final Balance Sheet shall be split equally by the Buyer and
the Sellers, with the Sellers' portion to be paid out of the Escrowed Funds.
(b) Within 120 days after the Closing Date, the Buyer shall, and shall
cause the Company and each of the Subsidiaries to use their respective best
efforts to, file a tax return (a "Tax Return") for taxable periods (or a portion
thereof) ending on or prior to the Closing Date in respect of federal and state
and Mexican and Barbados income tax for the most recent fiscal year (or portion
thereof) and request a refund (a "Refund") of any
5
amounts previously paid by the Company and each of the Subsidiaries for such
taxable periods (or a portions thereof) in excess of their respective tax
liabilities for such periods, provided, however, that no Tax Returns need be
filed for any interim periods to the extent that a tax receivable asset with
respect to such jurisdiction for such interim period is not reflected on the
Audited Closing Balance Sheet.
(c) In the event that the Company or any of the Subsidiaries are entitled
to Refunds with respect to any of the Tax Returns, the Company or such
Subsidiary shall deposit into escrow with the Escrow Agent (with 78.5% of such
amount to be added to the Escrowed Funds held with respect to the obligations of
the Sellers other than ▇▇▇▇▇▇ ▇▇▇▇▇ under this Agreement, and 21.5% of such
amount to be added to the ▇▇▇▇▇ Escrow) the amount of any such Refunds actually
received.
3.4. Determination of Closing Assets and Liabilities. Within fifteen (15)
days after receipt of the Audited Closing Balance Sheet, the Buyer shall notify
the Seller Representative and ▇▇▇▇▇▇ ▇▇▇▇▇ in writing of the Buyer's agreement
or disagreement with the Audited Closing Balance Sheet. If the Buyer does not
give the Seller Representative and ▇▇▇▇▇▇ ▇▇▇▇▇ written notice of its election
to dispute the Audited Closing Balance Sheet within such time period, such
balance sheet shall constitute the "Final Balance Sheet" for purposes of this
Agreement. If the Buyer disputes any aspect of the Audited Closing Balance
Sheet in writing in a timely fashion, then the Buyer shall have the right
(either with or without its independent accountants), at the Buyer's expense, to
review and test the Audited Closing Balance Sheet. The Buyer (either with or
without its independent accountants) shall complete its review and test within
fifteen (15) days after the date the Buyer delivers notice of its intention to
dispute the Audited Closing Balance Sheet to the Seller Representative and
▇▇▇▇▇▇ ▇▇▇▇▇. If the Buyer, after such review and test, still disagrees with
the Audited Closing Balance Sheet, and the Seller Representative and ▇▇▇▇▇▇
▇▇▇▇▇ do not accept the Buyer's proposed alternative calculations of the amounts
set forth on the Audited Closing Balance Sheet and the parties are otherwise
unable to resolve their differences within such above-referenced time periods,
then the Seller Representative, ▇▇▇▇▇▇ ▇▇▇▇▇ and the Buyer shall engage Ernst &
Young LLP (the "Independent Accounting Firm") to resolve any disputed items (the
"Remaining Disputed Items"). The Independent Accounting Firm shall conduct its
own review and test of the Audited Closing Balance Sheet and the Remaining
Disputed Items and thereafter determine the final amounts of each of the
Remaining Disputed Items, each as of the Closing Date, and the Audited Closing
Balance Sheet shall be appropriately adjusted, if necessary, to produce the
Final Closing Balance Sheet. In the event that any of the Remaining Disputed
Items include the amount of any of the Excluded Liabilities or the valuation of
inventory or the associated levels of excess obsolete inventory, the Independent
Accounting Firm shall base its review and determination on a consistent
application of the Company's accounting policies in accordance with generally
accepted accounting principles as reflected in the preparation of the Audited
Balance Sheet, in lieu of any accounting policies that may be employed by the
Buyer. The Buyer and each of the Sellers agree that they shall be bound by the
determination of the Independent Accounting Firm and that the Audited Closing
Balance Sheet, after any such adjustments,
6
shall constitute the Final Balance Sheet for purposes of this Agreement. The
fees and expenses of the Independent Accounting Firm shall be split equally by
the Sellers and the Buyer; provided that the portion of any such fees and
expenses attributable to the Sellers shall be paid from, and reduce the amount
of, the Escrowed Funds as provided in the Escrow Agreements.
3.5. Calculation and Payment of Adjustment.
(a) Upon the determination pursuant to Section 3.4 of the Final Closing
Balance Sheet, either by the agreement of the parties or by the Independent
Accounting Firm, the Purchase Price shall be recalculated pursuant to the
formulae for adjustments contained in Section 3.2 using the amounts of the
Defined Assets, Defined Liabilities and Excluded Liabilities set forth on the
Final Closing Balance Sheet in lieu of the Defined Assets, the Defined
Liabilities and the Excluded Liabilities, as appropriate, set forth on the
Initial Closing Balance Sheet. If the Purchase Price as adjusted pursuant to
this Section 3.5 (the "Final Adjustment") is greater than the Purchase Price as
adjusted pursuant to the Initial Adjustments, the Buyer shall pay the difference
to the Sellers pro rata based on the respective percentages of ownership,
whether direct or indirect, of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock attributable to such
Sellers as set forth on Schedule 1. If the Purchase Price as adjusted pursuant
to the Final Adjustment is lower than the Purchase Price as adjusted pursuant to
the Initial Adjustments, the Sellers shall, severally and not jointly, pay the
difference (the "Adjustment Amount") to the Buyer pro rata based on the
respective percentages of ownership, whether direct or indirect, attributable to
such Sellers of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock as set forth on Schedule 2 hereto. Any
such payment to the Buyer shall be made as follows:
(i) if the Adjustment Amount is less than $200,000, then the
Adjustment Amount shall be paid to the Buyer from the Escrowed Funds and
the amount by which $200,000 exceeds the Adjustment Amount shall be paid to
the Sellers out of the Escrowed Funds pro rata based on the respective
percentages of ownership, whether direct or indirect, of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Stock attributable to such Sellers as set forth on Schedule 1; and
(ii) if the Adjustment Amount is greater than $200,000, then $200,000
shall be paid to the Buyer out of the Escrowed Funds and the amount by
which the Adjustment Amount exceeds $200,000 shall be paid by the Sellers
pro rata based on the respective percentages of ownership, whether direct
or indirect, of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock attributable to such Sellers as
set forth on Schedule 2 to the Buyer; in cash or same day funds within ten
(10) days after the determination of the Final Adjustment pursuant to this
Section 3.5, provided, that any such payment by one or more of the Sellers
may, at the sole option of the Buyer, at any time, be paid out of the
Escrowed Funds in accordance with the terms and provisions of the Escrow
Agreements.
7
(b) Payment by the Buyer of the amounts set forth in Section 2.2(b)
through (f) and any Adjustment Amount to which the Sellers may become due
pursuant to this Section 3.5 shall satisfy the obligations of the Buyer to
deliver the Purchase Price for the Stock.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the Sellers,
jointly and severally, represents and warrants to the Buyer as follows:
4.1. Organization; Authority. Each of the Company and the Illinois
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Illinois. The Mexican Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Chihuhua, Mexico. The Barbados Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of Barbados.
Each of the Company and the Subsidiaries is duly qualified and in good standing
as a foreign corporation in all jurisdictions, both within and outside of the
United States, in which the character of the properties owned or leased or the
nature of the activities conducted by it makes such qualification necessary.
The Sellers have delivered to the Buyer complete and correct copies of each of
the Company's and the Illinois Subsidiary's Articles of Incorporation and
By-Laws and all amendments thereto, the Mexican Subsidiary's Documents of
Incorporation and By-Laws and all amendments thereto, and the Barbados
Subsidiary's corporate organization documents and all amendments thereto. Each
of the Company and the Subsidiaries has all requisite power and authority to own
or lease and operate its properties and to carry on its business as such
business is now conducted, both within and outside of the United States. The
Mexican Subsidiary is a corporation operating in Mexico under the Mexican Decree
for the Operation and Promotion of the Export Maquiladora Industry with full
right, power and authority to exist and operate its business as presently
conducted pursuant to and in accordance with Mexican law, and the consummation
of the transactions contemplated hereby shall not interfere with or adversely
affect such right, power and authority. To the knowledge of the Sellers, the
Barbados Subsidiary has full right, power and authority to exist and operate its
business as presently conducted pursuant to and in accordance with the law of
Barbados, and the consummation of the transactions contemplated hereby shall not
interfere with or adversely affect such right, power and authority.
4.2. Subsidiaries; Capitalization of Subsidiaries. The entire authorized
capital stock of the Illinois Subsidiary consists of 100,000 shares of common
stock, no par value per share (the "Illinois Subsidiary Stock"), of which 1,000
shares are issued and outstanding on the date hereof and are owned of record and
beneficially as follows: (a) 999 shares by the Company; and (b) 1 share by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇. The entire authorized capital stock of the Mexican Subsidiary
consists of 1,000 shares of common stock (the "Mexican Subsidiary Stock"), par
value 50 pesos Mexican currency per share, all of which are issued and
outstanding on the date hereof and are owned of record in accordance with the
shareholders' registry book of the Mexican Subsidiary and beneficially as
follows: (a) 999 shares by the Illinois Subsidiary; and (b) 1 share by ▇▇▇▇▇▇▇
▇▇▇▇▇▇. The entire authorized capital stock of the Barbados Subsidiary consists
8
of an unlimited number of shares of common stock (the "Barbados Subsidiary
Stock" and, collectively with the Illinois Subsidiary Stock and the Mexican
Subsidiary Stock, the "Subsidiary Stock"), of which 1,000 shares are issued and
outstanding on the date hereof and are owned of record and beneficially by the
Company. Except for its ownership of the Subsidiaries, the Company does not
have any direct or indirect subsidiaries (as defined in Section 11) and does not
own or hold of record and/or beneficially any shares of any class of capital
stock of any corporations. Except for the ownership by the Illinois Subsidiary
of shares of the Mexican Subsidiary as provided herein, none of the Subsidiaries
has any subsidiaries (as defined in Section 11) or owns or hold of record and/or
beneficially any shares of any class of capital stock of any corporations.
Neither the Company nor any of the Subsidiaries owns any legal and/or beneficial
interests in any partnerships, business trusts, limited liability companies,
joint ventures, any other unincorporated trade or business enterprises or in any
other person or entity.
4.3. Capitalization. The authorized capital of the Company consists of
1,000,000 shares of common stock, no par value, 100,000 shares of which are
issued and outstanding on the date hereof. All of the shares of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Stock are owned of record and beneficially by BBI and the Sellers as set forth
on Schedule 1 hereto. All of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock will be sold by the
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Sellers to the Buyer and all of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock will be
sold by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to the Buyer or its designee pursuant to the transactions
contemplated by this Agreement. All of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock and the
Subsidiary Stock is validly issued and outstanding, fully paid and
non-assessable. Except as set forth on Schedule 4.3 hereto, there are no
commitments for the purchase or sale of, and no options, warrants or other
rights to subscribe for or purchase, any securities of the Company or the
Subsidiaries.
4.4. Non-Contravention. The execution and delivery of this Agreement, the
Escrow Agreement and the Non-Competition Agreement, if any, to which each such
Seller is a party and the consummation by the Sellers of the transactions
contemplated hereby and thereby will not (a) violate or conflict with any
provision of the Articles of Incorporation or By-Laws of each of the Company and
the Illinois Subsidiary or of the Documents of Incorporation and By-Laws of the
Mexican Subsidiary or, to the Sellers' knowledge, the Barbados Subsidiary, each
as amended to date; or (b) constitute a violation of, or be in conflict with, or
constitute or create a default under, or result in the creation or imposition of
any encumbrance upon any property of the Company or the Subsidiaries pursuant to
(i) any agreement or instrument to which either the Company or the Subsidiaries
is a party or by which any of the properties of the Company or the Subsidiaries
are bound, or (ii) any statute, judgment, decree, order, regulation or rule of
any court or governmental or regulatory authority within or outside of the
United States.
4.5. Governmental Consents; Transferability of Licenses, Etc. Except as
set forth on Schedule 4.5, no consent, approval or authorization of, or
registration, qualification or filing with, any governmental agency or authority
is required for the execution and delivery by the Sellers of this Agreement, the
Escrow Agreement or the Non-Competition Agreement, if any, to which such Seller
is a party or for the consummation by the Sellers
9
of the transactions contemplated hereby or thereby. The Company or the
Subsidiaries has and maintains, and the permits listed on Schedule 4.5 hereto
include, all licenses, permits and other authorizations from all governmental
authorities (collectively, the "Permits") as are necessary or desirable for the
conduct of the Company's and the Subsidiaries' businesses. True and complete
copies of such Permits have previously been delivered to the Buyer.
4.6. Financial Statements. The Sellers have delivered the following
financial statements (the "Financial Statements") to the Buyer, and there are
attached as Schedule 4.6 hereto: (a) the audited consolidated balance sheets of
the Company as of April 30, 1995, April 30, 1996 and April 30, 1997 (such
balance sheet as of April 30, 1997 being referred to herein as the "Audited
Balance Sheet"), and the related audited consolidated statements of income,
retained earnings and cash flows of the Company for each of the fiscal years
then ended and (b) the unaudited consolidated balance sheet of the Company as of
December 31, 1997 and the related unaudited consolidated statements of income,
retained earnings and cash flows of the Company for the month then ended
(collectively, the "Interim Financials"). Each of the Financial Statements are
true and correct and have been prepared in accordance with generally accepted
accounting principles (subject, in the case of the Interim Financials, to the
absence of footnotes and to year-end audit adjustments); each of such balance
sheets fairly and accurately presents the financial condition of the Company on
a consolidated basis as of its respective date; and such statements of income,
retained earnings and cash flows fairly and accurately present the results of
operations for the periods covered thereby.
4.7. Absence of Certain Changes. Except as set forth on Schedule 4.7,
since April 30, 1997, each of the Company and the Subsidiaries has carried on
their respective businesses only in the ordinary course, and there has not been
(a) any change in the assets, liabilities, sales, income or business of the
Company or any of the Subsidiaries or in their relationships with suppliers,
customers or lessors, other than such changes which were both in the ordinary
course of business and have not been, either in any case or in the aggregate,
materially adverse; (b) any acquisition or disposition by the Company or any of
the Subsidiaries of any asset or property other than in the ordinary course of
business; (c) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting, either in any case or in the
aggregate, the property or business of the Company or any of the Subsidiaries;
(d) any declaration, setting aside or payment of any dividend or any other
distributions in respect of the Stock or the Subsidiary Stock; (e) any issuance
of any shares of the capital stock of the Company or any of the Subsidiaries or
any direct or indirect redemption, purchase or other acquisition of any of the
Stock or the Subsidiary Stock; (f) any increase in the compensation, pension or
other benefits payable or to become payable by the Company or any of the
Subsidiaries to any officers or employees, other than as necessitated as a
result of any change in the Mexican minimum wage standards, or any bonus
payments or arrangements made to or with any of them (other than pursuant to the
terms of any existing written agreement or plan of which the Buyer has been
supplied complete and correct copies of); or any change in the personnel other
than changes which were both in the ordinary course of business
10
and have not been, either in any case or in the aggregate, materially adverse;
(g) any forgiveness or cancellation of any debt or claim by the Company or any
of the Subsidiaries or any waiver of any right of material value other than
compromises of accounts receivable in the ordinary course of business; (h) any
entry by the Company or any of the Subsidiaries into any transaction other than
in the ordinary course of business; (i) any incurrence by the Company either of
or the Subsidiaries of any obligations, commitments or liabilities, whether
absolute, accrued, contingent or otherwise (including, without limitation,
liabilities as guarantor or otherwise with respect to obligations of others),
other than obligations and liabilities incurred in the ordinary course of
business; (j) any mortgage, pledge, lien, lease, security interest or other
charge or encumbrance on any of the assets, tangible or intangible, of the
Company or any of the Subsidiaries; or (k) any discharge or satisfaction by the
Company or any of the Subsidiaries of any lien or encumbrance or payment by the
Company or any of the Subsidiaries of any obligation or liability (fixed or
contingent) other than (A) current liabilities included in the Audited Balance
Sheet and (B) current liabilities incurred since the date of the Audited Balance
Sheet in the ordinary course of business.
4.8. Litigation, Etc. Except as set forth on Schedule 4.8 hereto, no
action, suit, proceeding or investigation is pending or, to the knowledge of the
Sellers, threatened against the Company or any of the Subsidiaries (nor is there
any basis therefor known to any of the Sellers).
4.9. Conformity to Law. To the Sellers' knowledge, each of the Company
and the Subsidiaries has complied with, and is in compliance with (a) all laws,
statutes, governmental regulations and all judicial or administrative tribunal
orders, judgments, writs, injunctions, decrees or similar commands applicable to
the Company or applicable Subsidiary, as the case may be, or any of their
properties (including, without limitation, any labor, environmental,
occupational health, zoning or other law, regulation or ordinance), both within
and outside of the United States, and (b) all unwaived terms and provisions of
all contracts, agreements and indentures to which the Company or any of the
Subsidiaries is a party, or by which the Company or any of the Subsidiaries or
any of their respective properties is subject. Neither the Company nor any of
the Subsidiaries has committed, been charged with, or, to the knowledge of the
Sellers, been under investigation with respect to, nor, to the knowledge of the
Sellers, does there exist, any violation of any provision of any federal, state,
local or foreign law or administrative regulation in respect of the Company or
the Subsidiaries or any of their properties.
4.10. Title to Property, Real Property Leases, etc. Except as set forth
on Schedule 4.10(a) hereto, each of the Company and the Subsidiaries has good
and marketable title to all of their respective properties and assets,
including, without limitation, all those reflected in the Audited Balance Sheet
(except for properties or assets sold or otherwise disposed of in the ordinary
course of business since the date of the Audited Balance Sheet), all free and
clear of all liens, pledges, charges, security interests, encumbrances or title
retention agreements of any kind or nature. All such properties and assets are
adequate and sufficient to carry on their respective businesses as presently
11
conducted. Schedule 4.10(b) hereto sets forth a complete and correct list of
all capital assets of the Company and the Subsidiaries having a book or fair
market value in excess of $1,000. There are no material defects in any such
capital assets, as to title, not described on Schedule 4.10(b). Neither the
Company nor any of the Subsidiaries has ever owned any real property.
Schedule 4.10(c) hereto sets forth a complete and correct description of all
leases of real property (the "Real Property") to which the Company or the
Subsidiaries is a party. Complete and correct copies of all such leases have
been delivered to the Buyer. Each such lease is valid and in full force and
effect and, to the knowledge of the Sellers, no event or condition exists which
constitutes, or after notice or lapse of time or both would constitute, a
default thereunder. None of the leasehold interests of the Company or the
Subsidiaries are subject to any lien or other encumbrance, and each of the
Company and the Subsidiaries, as applicable, is in quiet possession of the
properties covered by such leases. None of the Sellers, the Company or the
Subsidiaries have received any notice that either the whole or any portion of
the Real Property is to be condemned, requisitioned or otherwise taken by any
public authority.
4.11. Real Property; Safety, Zoning and Environmental Matters.
(a) None of the plants, offices or properties in or on which the Company
or the Subsidiaries carries on its business nor the activities carried on
therein are in violation of any United States or foreign zoning, health or
safety law or regulation, including, without limitation, the Occupational Safety
and Health Act of 1970, as amended, and similar Mexican or Barbados law, if any.
(b) Except as set forth on Schedule 4.11:
(i) none of the Company, the Subsidiaries and, to the Sellers'
knowledge, any operator of any real property presently or formerly owned,
leased or operated by the Company or the Subsidiaries is in violation or
alleged violation of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without
limitation those arising under the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("▇▇▇▇"), the Federal Water Pollution Control
Act, the Solid Waste Disposal Act, as amended, the Federal Clean Water Act,
the Federal Clean Air Act, the Toxic Substances Control Act, any state or
local statute, regulation, ordinance, order or decree relating to health,
safety or the environment or, to the knowledge of the Sellers, any similar
laws or regulations of Mexico or Barbados (hereinafter "Environmental
Laws");
(ii) none of the Sellers, the Company or any of the Subsidiaries has
received notice from any third party, including without limitation any
federal, state, local, Mexican or Barbados governmental authority, (A) that
the Company or any of the Subsidiaries or any predecessor in interest to
the Company or any of the
12
Subsidiaries has been identified by the United States Environmental
Protection Agency ("EPA") or similar Mexican authority or agency as a
potentially responsible party under CERCLA with respect to a site listed on
the National Priorities List, 40 C.F.R. Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇ (1986) or any
similar Mexican laws or regulations; (B) that any hazardous waste, as
defined by 42 U.S.C. Section 6903(5), any hazardous substance as defined by
42 U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42
U.S.C. Section 9601(33) or any toxic substance, oil or hazardous material
or other chemical or substance regulated by any Environmental Laws or
similar Mexican laws or Barbados laws or regulations ("Hazardous
Substances") which the Company, any of the Subsidiaries or any predecessor
in interest to the Company or any of the Subsidiaries has generated,
transported or disposed of or that any such materials disposed of by the
Company, any Subsidiary or any predecessor in interest has been found at
any site at which a federal, state, local, Mexican or Barbados agency or
other third party has conducted or has ordered that the Company or any
predecessor in interest conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law or similar Mexican law or
Barbados law or regulation; or (C) that the Company, any of the
Subsidiaries or any predecessor in interest to the Company or any of the
Subsidiaries is or shall be a named party to any claim, action, cause of
action, complaint, (contingent or otherwise) legal or administrative
proceeding arising out of any third party's incurrence of costs, expenses,
losses or damages of any kind whatsoever in connection with the release of
Hazardous Substances or other similar substances;
(iii) (A) no portion of any real property presently or formerly
owned, leased or operated by the Company or any of the Subsidiaries has
been used by the Company or any of the Subsidiaries, or to the knowledge of
the Sellers, any other person, for the handling, manufacturing, processing,
storage or disposal of Hazardous Substances except in accordance with
applicable Environmental Laws; and, to the knowledge of the Sellers, no
underground tank or other underground storage receptacle for Hazardous
Substances is located on such properties; (B) in the course of any
activities conducted by the Company or any of the Subsidiaries or, to the
knowledge of the Sellers, operators of any real property presently or
formerly leased or operated by the Company or any of the Subsidiaries, no
Hazardous Substances have been generated or are being used on such
properties except in accordance with applicable Environmental Laws; (C) to
the knowledge of the Sellers, all real properties presently or formerly
leased or operated by the Company or any of the Subsidiaries are free from
groundwater, surface water, soil, sediment and air contamination, and such
properties do not contain asbestos in any form, urea formaldehyde foam
insulation, transformers or other equipment containing polychlorinated
biphenyls or any other chemical, material or substance, exposure to which
is prohibited, limited or regulated by any Environmental Law, or which
poses a hazard to the health and safety of the occupants of such properties
or those adjacent thereto; (D) to the knowledge of the Sellers, there have
been no releases (i.e., any past or present releasing, spilling, leaking,
pumping, pouring,
13
emitting, emptying, discharging, injecting, escaping, disposing or dumping)
or threatened releases of Hazardous Substances on, upon, into or from any
real property presently or formerly leased or operated by the Company or
any of the Subsidiaries except in accordance with applicable Environmental
Laws; (E) to the knowledge of the Sellers, there have been no releases on,
upon, from or into any real property in the vicinity of any real property
presently or formerly leased or operated by the Company or the Subsidiaries
which, through soil or groundwater contamination, may have come to be
located on such real property; and (F) in addition, any Hazardous
Substances that have been generated on any real property presently or
formerly leased or operated by the Company or the Subsidiaries have been
transported offsite only by carriers having identification numbers issued
by the EPA or as authorized under applicable Mexican laws or, to the
knowledge of the Sellers, applicable Barbados laws and regulations and, to
the Sellers' knowledge, have been treated or disposed of only by treatment
or disposal facilities maintaining valid permits as required under
applicable Environmental Laws, which transporters and facilities, to the
best of the Sellers' knowledge, have been and are operating in compliance
with such permits and applicable Environmental Laws; and
(iv) no real property presently or formerly leased or operated by
the Company or the Subsidiaries is or shall be subject to any applicable
environmental cleanup responsibility law or environmental restrictive
transfer law or regulation, by virtue of the transactions set forth herein
and contemplated hereby.
(d) Attached as part of Schedule 4.11 is a list of all documents,
reports, site assessments, data, communications or other materials, in the
possession of the Company, any of the Subsidiaries or any of the Sellers or to
which, to the knowledge of the Sellers, any of them has access, which contain
any material information with respect to potential environmental liabilities
associated with any real property presently or formerly leased or operated by
the Company or any of the Subsidiaries and relating to compliance with
Environmental Laws or the environmental condition of such properties and
adjacent properties. The Sellers have furnished to the Buyer complete and
accurate copies of all of the documents, reports, site assessments, data,
communications and other materials listed on Schedule 4.11 hereto.
4.12. Insurance. Schedule 4.12 hereto lists all policies of fire,
liability, workmen's compensation, life, property and casualty and other
insurance owned or held by the Company or the Subsidiaries. All such policies
(a) are in full force and effect, (b) are sufficient for compliance by the
Company and the Subsidiaries with all written agreements to which the Company or
the Subsidiaries is a party and, to the Sellers' knowledge, all applicable
requirements of law and (c) provide that they will remain in full force and
effect through the respective dates set forth in such Schedule and (d) will not
in any way be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. Neither the Company nor any of the Subsidiaries
is in default with
14
respect to its obligations under any of such insurance policies and has not
received any notification of cancellation of any such insurance policies.
4.13. Contracts. Schedule 4.13 sets forth a complete and accurate list of
all contracts to which the Company or any of the Subsidiaries is a party or by
or to which it or any of the Company's or any of the Subsidiaries' assets or
properties is bound or subject, except (a) contracts entered into in the
ordinary course of business after the date hereof and prior to the Closing,
which will be identified to the Buyer in writing prior to the Closing, (b)
contracts terminable (without any surviving obligation) by the Company upon 30
days' notice or less without the payment of any termination fee or penalty, (c)
contracts that will not result in (i) the payment by the Company of more than
$50,000, or (ii) the receipt by the Company of payment of more than $50,000,
over their respective terms (other than any contracts requiring that the Company
or any of the Subsidiaries indemnify any person), and (d) contracts listed in
other Schedules hereto. As used in this Section 4.13, the word "contract" means
and includes every agreement or understanding of any kind, written or oral,
which is legally enforceable by or against the Company or any of the
Subsidiaries, and specifically includes (a) contracts and other agreements with
any current or former officer, director, employee, consultant or shareholder or
any partnership, corporation, joint venture or any other entity in which any
such person has an interest; (b) agreements with any labor union or association
representing any employee; (c) contracts and other agreements for the provision
of services by the Company or any of the Subsidiaries; (d) bonds or other
security agreements provided by any party in connection with the business of the
Company or any of the Subsidiaries; (e) contracts and other agreements for the
sale of any of the Company's or any of the Subsidiaries' assets or properties
other than in the ordinary course of business or for the grant to any person of
any preferential rights to purchase any of the Company's or any of the
Subsidiaries' assets or properties; (f) joint venture agreements relating to the
assets, properties or business of the Company or any of the Subsidiaries or by
or to which it or the Subsidiaries or any of its or the Subsidiaries' assets or
properties are bound or subject; (g) contracts or other agreements under which
the Company or any of the Subsidiaries agrees to indemnify any party, to share
tax liability of any party, or to refrain from competing with any party; (h) any
contracts or other agreements with regard to Indebtedness; or (i) any other
contract or other agreement whether or not made in the ordinary course of
business. The Sellers have delivered to the Buyer true, correct and complete
copies of all such contracts, together with all modifications and supplements
thereto. Each of the contracts listed on Schedule 4.13 hereto or any of the
other Schedules hereto is in full force and effect, neither the Company nor any
of the Subsidiaries is in breach of any of the provisions of any such contract,
nor, to the knowledge of any of the Sellers, is any other party to any such
contract in default thereunder, nor does any event or condition exist which with
notice or the passage of time or both would constitute a default thereunder. To
the knowledge of the Sellers, each of the Company and each Subsidiary has in all
material respects performed all obligations required to be performed by it to
date under each such contract. No approval or consent of any person is needed
in order that the contracts listed on Schedule 4.13 and other Schedules hereto
continue in full force and effect following
15
the consummation of the transactions contemplated by this Agreement, and no such
contract includes any provision the effect of which may be to enlarge or
accelerate any obligations of the Company or any of the Subsidiaries thereunder
or give additional rights to any other party thereto or will in any other way be
affected by, or terminate or lapse by reason of, the transactions contemplated
by this Agreement.
4.14. Employment of Officers, Employees. Schedule 4.14 sets forth the
name and current annual salary and other compensation payable by each of the
Company and the applicable Subsidiary to each exempt non-hourly employee whose
current total annual compensation or estimated compensation from the Company
and/or the applicable Subsidiaries (including but not limited to wages, salary,
commissions, normal bonus, profit sharing, deferred compensation and other extra
compensation) is $10,000 or more.
4.15. Employee Benefit Plans. (a) Except for the arrangements set forth
on Schedule 4.15(a), neither the Company nor the Subsidiaries now maintains or
contributes to, and has not in the current or preceding six (6) calendar years
maintained or contributed to, any pension, profit-sharing, deferred
compensation, bonus, stock option, share appreciation right, severance, group or
individual health, dental, medical, life insurance, survivor benefit, or similar
plan, policy or arrangement, whether formal or informal, for the benefit of any
director, officer, consultant or employee, whether active or terminated, of the
Company or the Subsidiaries. Each of the arrangements set forth on Schedule
4.15(a) is hereinafter referred to as an "Employee Benefit Plan", except that
any such arrangement which is a multi-employer plan shall be treated as an
Employee Benefit Plan only for purposes of Sections 4.15(d)(iv), (vi) and (viii)
and 4.15(g) below.
(b) Except as set forth on Schedule 4.15(d) hereto, the Sellers have
heretofore delivered to Buyer true, correct and complete copies of each Employee
Benefit Plan of the Company and the Subsidiaries, and with respect to each such
Plan (i) any associated trust, custodial, insurance or service agreements, (ii)
any annual report, actuarial report, or disclosure materials (including
specifically any summary plan descriptions) submitted to any governmental agency
or distributed to participants or beneficiaries thereunder in the current or any
of the six (6) preceding calendar years and (iii) the most recently received IRS
determination letters and any governmental advisory opinions or rulings.
(c) Except as set forth on Schedule 4.15(d) hereto, each Employee Benefit
Plan is and has heretofore been maintained and operated in compliance with the
terms of such Plan and with the requirements prescribed (whether as a matter of
substantive law or as necessary to secure favorable tax treatment) by any and
all statutes, governmental or court orders, or governmental rules or regulations
in effect from time to time, including but not limited to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Internal
Revenue Code of 1986, as amended ("Code") and applicable to such Plan and any
similar Mexican or Barbados laws or regulations. Except as set forth on
Schedule 4.15(d) hereto, each Employee Benefit Plan which is intended to qualify
under Section 401(a) of the Code has been determined to be so qualified by the
IRS and nothing has
16
occurred since the date of the last such determination which has resulted or is
likely to result in the revocation of such determination.
(d) Except as set forth on Schedule 4.15(d),
(i) there is no pending or, to the Sellers' knowledge, threatened
legal action, proceeding or investigation, other than routine claims for
benefits, concerning any Employee Benefit Plan or any fiduciary or service
provider thereof and, to the best knowledge of the Sellers and the Company,
there is no basis for any such legal action or proceeding;
(ii) no liability (contingent or otherwise) to the Pension Benefit
Guaranty Corporation ("PBGC") or any multi-employer plan has been incurred
by the Company or the Subsidiaries or any affiliate thereof (other than
insurance premiums satisfied in due course);
(iii) no reportable event, or event or condition which presents a
material risk of termination by the PBGC, has occurred with respect to any
Employee Benefit Plan, or any retirement plan of an affiliate of the
Company, which is subject to Title IV of ERISA;
(iv) no Employee Benefit Plan nor any party in interest with respect
thereof, has engaged in a prohibited transaction which could subject the
Company or the Subsidiaries directly or indirectly to liability under
Section 409 or 502(i) of ERISA or Section 4975 of the Code;
(v) no communication, report or disclosure has been made which, at
the time made, did not accurately reflect the terms and operations of any
Employee Benefit Plan;
(vi) no Employee Benefit Plan provides welfare benefits subsequent to
termination of employment to employees or their beneficiaries (except to
the extent required by applicable state insurance laws and Title I, Part 6
of ERISA);
(vii) no benefits due under any Employee Benefit Plan have been
forfeited subject to the possibility of reinstatement (which possibility
would still exist at or after Closing); and
(viii) neither the Company nor the Subsidiaries has undertaken to
maintain any Employee Benefit Plan for any period of time and each such
Plan is terminable at the sole discretion of the sponsor thereof, subject
only to such constraints as may be imposed by applicable law.
(e) With respect to each Employee Benefit Plan for which a separate fund
of assets is or is required to be maintained, full payment has been made of all
amounts that
17
the Company or the Subsidiaries is required, under the terms of each such Plan,
to have paid as contributions to that Plan as of the end of the most recently
ended plan year of that Plan, and no accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or not waived,
exists with respect to any such Plan. The current value of the assets of each
such Employee Benefit Plan, as of the end of the most recently ended plan year
of that Plan, exceeded the current value of all accrued benefits under that
Plan.
(f) The execution of this Agreement and the consummation of the
transactions contemplated hereby, in and of themselves, will not result in any
payment (whether of severance pay or otherwise) becoming due from any Employee
Benefit Plan to any current or former director, officer, consultant or employee
of the Company or the Subsidiaries or result in the vesting, acceleration of
payment or increases in the amount of any benefit payable to or in respect of
any such current or former director, officer, consultant or employee.
(g) No Employee Benefit Plan is a multi-employer plan.
(h) For purposes of this Section 4.15, "multi-employer plan", "party in
interest", "current value", "accrued benefit", "reportable event" and "benefit
liability" have the same meaning assigned such terms under Sections 3, 4043(b)
or 4001(a) of ERISA, and "affiliate" means any entity which under Section 414 of
the Code is treated as a single employer with the Company or the Subsidiaries.
4.16. Labor Relations. To the knowledge of the Sellers, each of the
Company and each Subsidiary is in compliance with all applicable U.S., state and
foreign laws respecting employment and employment practices, terms and
conditions of employment, wages and hours and nondiscrimination in employment.
The Company and the Subsidiaries have not engaged in any unfair labor practice.
There is no charge pending or, to the Sellers' knowledge, threatened against the
Company or any of the Subsidiaries alleging unlawful discrimination in
employment practices before any court or agency and there is no charge of or
proceeding with regard to any unfair labor practice against the Company or any
of the Subsidiaries pending before the National Labor Relations Board or a
similar Mexican or Barbados authority or body. There is no labor strike,
dispute, slow-down or work stoppage actually pending or, to the Sellers'
knowledge, threatened against or involving the Company or any of the
Subsidiaries. To the Sellers' knowledge, no one has petitioned within the last
five (5) years, and no one is now petitioning, for union representation of any
of the Company's or any of the Subsidiaries' employees. No grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is pending against the Company or any of the Subsidiaries and no claim
therefor has been asserted. None of the employees of the Company or any of the
Subsidiaries is covered by any collective bargaining agreement, and no
collective bargaining agreement is currently being negotiated by the Company or
any of the Subsidiaries. Except as fully described on Schedule 4.16 hereto,
neither the Company nor
18
any of the Subsidiaries has experienced any work stoppage during the last three
(3) years due to any disputes with any employee of the Company or any of the
Subsidiaries.
4.17. Potential Conflicts of Interest. No officer, director or
stockholder of the Company or any of the Subsidiaries (a) owns, directly or
indirectly, any interest in (excepting not more than 1% stock holdings for
investment purposes in securities of publicly held and traded companies) or is
an officer, director, employee or consultant of any Person which is a
competitor, lessor, lessee, customer or supplier of the Company or any of the
Subsidiaries; (b) owns, directly or indirectly, in whole or in part, any
tangible or intangible property which the Company or any of the Subsidiaries are
using or the use of which is necessary for the business of the Company or any of
the Subsidiaries; or (c) has any cause of action or other claim whatsoever
against, or owes any amount to, the Company or any of the Subsidiaries, except
for claims in the ordinary course of business, such as for accrued vacation pay,
accrued benefits under Employee Benefit Plans and similar matters and
agreements.
4.18. Trademarks, Patents, Etc. Schedule 4.18 hereto sets forth a
complete and accurate list of (a) all patents, trademarks, trade names and
copyrights registered in the name of the Company or any of the Subsidiaries or
used or proposed to be used by the Company or any of the Subsidiaries, all
applications therefor, and all licenses (as licensee or licensor) and other
agreements relating thereto, and (b) all written agreements relating to other
technology, know-how and processes which the Company or any of the Subsidiaries
is licensed or authorized by others to use or which the Company or any of the
Subsidiaries has licensed or authorized for use by others. Except as set forth
on Schedule 4.18, the Company and the Subsidiaries own or have the sole and
exclusive right to use all patents, trademarks, trade names and copyrights, and
has the right without restrictions to use all technology, know-how and
processes, used or necessary for the ordinary course of business of their
respective businesses as presently conducted or proposed to be conducted, and
the consummation of the transactions contemplated hereby will not alter or
impair any such right. No claims have been asserted, and no claims are pending,
by any person regarding the use of any such patents, trademarks, trade names,
copyrights, technology, know-how or processes, or challenging or questioning the
validity or effectiveness of any license or agreement, and there is no basis for
such claim. To the knowledge of the Sellers, the use by the Company or any of
the Subsidiaries of such patents, trademarks, trade names, copyrights,
technology, know-how or processes in the ordinary course of business does not
infringe on the rights of any person.
4.19. Suppliers and Customers. Schedule 4.19 hereto sets forth the ten
(10) largest suppliers and ten (10) largest customers of each of the Company and
each Subsidiary as of the date hereof. The relationships of the Company and
each Subsidiary with such suppliers and customers are good commercial working
relationships and, except as set forth on Schedule 4.19, the Sellers are not
aware, and have no reason to believe, that any supplier or customer of material
importance to the Company or any of the Subsidiaries has canceled or otherwise
terminated, or threatened to cancel or otherwise to terminate, its relationship
with the Company or any of the Subsidiaries or has during the
19
last twelve (12) months decreased materially, or threatened to decrease or limit
materially, its services, supplies or materials for use by the Company or any of
the Subsidiaries or its usage or purchase of the services or products of the
Company or any of the Subsidiaries except for normal cyclical changes related to
customers' businesses. None of the Sellers has any knowledge that any such
supplier or customer intends to cancel or otherwise substantially modify its
relationship with the Company or any of the Subsidiaries or to decrease
materially or limit such customer's services, supplies or materials to the
Company or any of the Subsidiaries, or such customer's usage or purchase of the
Company's or the Subsidiaries' services or products, and to the knowledge of the
Sellers, the consummation of the transactions contemplated hereby will not
adversely affect the relationship of the Buyer or the Company with any such
supplier or customer.
4.20. Accounts Receivable. All accounts and notes receivable reflected on
the Audited Balance Sheet, and all accounts and notes receivable arising
subsequent to the date of such Audited Balance Sheet, have arisen in the
ordinary course of business, represent valid obligations owing to the Company or
the applicable Subsidiary and have been collected or, subject to the reserves
set forth on the Final Closing Balance Sheet, are collectible in the aggregate
recorded amounts thereof in accordance with their terms. In addition, all
accounts and notes receivable arising subsequent to the date of the Audited
Balance Sheet, if collected, have been collected in the ordinary course of
business and without any unusual discounts.
4.21. No Undisclosed Liabilities. Except to the extent (a) reflected or
reserved against in the Audited Balance Sheet, (b) incurred in the ordinary
course of business after the date of the Audited Balance Sheet and either
discharged prior to Closing or adequately reserved against on the Final Closing
Balance Sheet or (c) described on Schedule 4.21 hereto, neither the Company nor
any of the Subsidiaries has liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise (including without limitation as
guarantor or otherwise with respect to obligations of others), other than
performance obligations with respect to the Company's contracts that would not
be required to be reflected or reserved against on a balance sheet prepared in
accordance with generally accepted accounting principles or in the footnotes
thereto.
4.22. Conduct of Business. Since December 23, 1997, the Company and the
Subsidiaries has conducted its business in compliance with the provisions of
Section 7 hereof, as if each of those provisions applied to the conduct of such
businesses at all times since such date.
4.23. Taxes. Each of the Company and each Subsidiary has timely and duly
filed with the appropriate government agencies, whether within or outside of the
United States, all of the income, sales, use, employment and other tax returns
and reports required to be filed by it, each such tax return and report has been
prepared in compliance with all applicable laws and regulations and all such tax
returns were true and correct at the time made in all material respects. No
waiver of any statute of limitations relating to taxes has been executed or
given by the Company. All taxes, assessments, fees and other
20
governmental charges upon the Company or any of the Subsidiaries or upon any of
their respective properties, assets, revenues, income and franchises which are
owed by the Company or any of the Subsidiaries with respect to the period ending
on or before the Closing Date have been paid, other than those currently payable
without penalty or interest reflected on the Final Closing Balance Sheet.
Except as set forth on Schedule 4.23, neither the Company nor any of the
Subsidiaries is currently under audit by the IRS (as defined in Section 11) or
any similar Mexican or Barbados authority or body, and no tax return of the
Company or the Subsidiaries is currently under audit by any other taxing
authority. Neither the IRS nor any other taxing authority is now asserting or,
to the Sellers' knowledge, threatening to assert nor have such authorities ever
asserted or threatened to assert against the Company or any of the Subsidiaries
any deficiency or claim for additional taxes or interest thereon or penalties in
connection therewith or any adjustment that would have an adverse effect on the
Company or any of the Subsidiaries. Neither the Company nor any of the
Subsidiaries has consented to extend the time in which any Tax may be assessed
or collected by any taxing authority. Except as set forth on Schedule 4.23
hereto, neither the Company nor any of the Subsidiaries has requested or been
granted an extension of the time for filing any tax return to a date on or after
the Closing Date. Neither the Company nor any of the Subsidiaries has ever been
a member of any Affiliated Group, or filed or been included in a combined,
consolidated, or unitary tax return. Neither the Company nor any of the
Subsidiaries is a party to or bound by any tax sharing or allocation agreement
and has any current or potential contractual obligation to indemnify any other
person with respect to the payment of any taxes. Each of the Company and each
Subsidiary has withheld and paid all Taxes required to have been withheld and
paid by it in connection with amounts paid or owing to any employee, creditor,
independent contractor, or other person.
4.24. Indebtedness. Except for the obligations of Company under the Loan
Agreement or that Indebtedness described on Schedule 4.24 hereto, neither the
Company nor any of the Subsidiaries has any Indebtedness outstanding at the date
hereof. Neither the Company nor any of the Subsidiaries is in default with
respect to any outstanding Indebtedness or any instrument relating thereto and
no such Indebtedness or any instrument or agreement relating thereto purports to
limit the issuance of any securities by the Company or any of the Subsidiaries
or the operation of the business of the Company or any of the Subsidiaries.
Complete and correct copies of all instruments (including all amendments,
supplements, waivers and consents) relating to any Indebtedness of the Company
or the Subsidiaries have been furnished to the Buyer.
4.25. Bank Accounts, Signing Authority, Powers of Attorney. Except as set
forth on Schedule 4.25 hereto, neither the Company nor any of the Subsidiaries
has any account or safe deposit box in any bank and no Person has any power,
whether singly or jointly, to sign any checks on behalf of the Company or any of
the Subsidiaries to withdraw any money or other property from any bank,
brokerage or other account of the Company or any of the Subsidiaries or to act
under any power of attorney granted by the Company or any of the Subsidiaries at
any time for any purpose. Schedule 4.25 also sets forth the
21
names of all persons authorized to borrow money or sign notes on behalf of the
Company and any of the Subsidiaries.
4.26. Inventory. The inventory and supplies of the Company and the
Subsidiaries are adequate for their respective present needs, and, except as
reflected on the Final Closing Balance Sheet, are in usable and saleable
condition in the ordinary course of business as currently conducted.
4.27. Minute Books. The minute books and corporate records of the Company
and the Subsidiaries made available to the Buyer for inspection accurately
record therein all actions taken by the Company's and the applicable
Subsidiary's Board of Directors and shareholders.
4.28. Broker. Except for the Broker, none of the Sellers has retained,
utilized or been represented by any broker, agent, finder or intermediary in
connection with the negotiation or consummation of the transactions contemplated
by this Agreement.
4.29. Accounts Payable. All accounts payable reflected on the Audited
Balance Sheet, and all accounts payable arising subsequent to the date of such
Audited Balance Sheet, have arisen in the ordinary course of business, represent
valid obligations of the Company or the Subsidiaries and have been paid, will be
paid and/or are obligated to be paid on payment terms that are consistent on
average with the Company's payment terms for the period included in the
Company's fiscal year ended April 30, 1997.
4.30. Disclosure. No representation or warranty by any of the Sellers in
this Agreement or in any schedule or certificate delivered or to be delivered to
the Buyer pursuant hereto or in connection with the consummation of the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading. The Sellers have not withheld any information from the Buyer
relating to any fact which materially adversely affects, or will materially
adversely affect, the business or condition (financial or other) of the Company
or the ability of the Sellers to perform this Agreement or any of the
transactions contemplated hereby.
4.31. Foreign Corrupt Practices Act. Each of the Company and the
Subsidiaries have not taken any action which would cause it to be in violation
of the Foreign Corrupt Practices Act of 1977, as amended, or any rules and
regulations thereunder. To the Sellers' knowledge, there is not now, and there
has never been, any employment by the Company or the Subsidiaries of, or
beneficial ownership in the Company or the Subsidiaries by, any governmental or
political official in any country in the world.
4A. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE INDIVIDUAL SELLERS.
Each of the Sellers severally and not jointly represents and warrants to the
Buyer as follows:
22
4A.1. Rights to Sell Outstanding Shares, Approvals; Binding Effect. Such
Seller has all requisite power and full legal right to enter into this
Agreement, the Escrow Agreement and the Non-Competition Agreement and Guaranty,
if any, to which it is a party, to perform all of such Seller's agreements and
obligations hereunder and thereunder, each in accordance with its respective
terms and to sell to the Buyer all of the outstanding shares of Stock owned by
such Seller. Each of this Agreement, the Escrow Agreement and the
Non-Competition Agreement and Guaranty, if any, to which such Seller is a party
has been duly executed and delivered by such Seller and constitutes the legal,
valid and binding obligation of such Seller enforceable against such Seller in
accordance with its terms.
4A.2. Title to Stock, Liens, etc. Such Seller has, and as of the
consummation of the Closing the Buyer will have, sole record and beneficial
ownership of all of the Stock and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock, if any, described as
being owned by such Seller on Schedule 1, free and clear of any mortgage, lien,
pledge, charge, security interest, encumbrance, title retention agreement,
option, equity or other adverse claim thereto.
5. REPRESENTATIONS AND WARRANTIES OF THE BBI SELLERS. The BBI Sellers
represent and warrant to the Buyer as follows:
5.1. Organization; Authority. BBI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois.
BBI is duly qualified and in good standing as a foreign corporation in all
jurisdictions, both within and outside of the United States, in which the
character of the properties owned or leased or the nature of the activities
conducted by it makes such qualification necessary. The BBI Sellers have
delivered to the Buyer complete and correct copies of each of BBI's Articles of
Incorporation and By-Laws and all amendments thereto. BBI had and has all
requisite power and authority to own or lease and operate its properties and to
carry on its business as such business is now conducted, both within and outside
of the United States. Since prior to December 31, 1996, BBI has conducted no
operations other than the holding of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock.
5.2. Rights to Sell Outstanding Shares, Approvals; Binding Effect. Each
BBI Seller has all requisite power and full legal right to enter into this
Agreement and the Escrow Agreement, to perform all of such BBI Seller's
agreements and obligations hereunder and thereunder, each in accordance with its
respective terms and to sell to the Buyer all of the outstanding shares of BBI
Stock owned by such BBI Seller. Each of this Agreement and the Escrow Agreement
has been duly executed and delivered by such BBI Seller and constitutes the
legal, valid and binding obligation of such BBI Seller enforceable against such
BBI Seller in accordance with its terms.
5.3. Subsidiaries. BBI has no subsidiaries. BBI does not own any legal
and/or beneficial interests in any corporations, partnerships, business trusts,
limited liability
23
companies, joint ventures, any other unincorporated trade or business
enterprises or in any other person or entity, except for 48,000 shares of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock.
5.4. Capitalization. The authorized capital of BBI consists of 10,000
shares of common stock, no par value per share; 1,000 shares of which are issued
and outstanding on the date hereof. All of the shares of BBI Stock are owned of
record and beneficially by the BBI Sellers as set forth on Schedule 1 hereto.
All of the BBI Stock will be sold by the BBI Sellers to the Buyer pursuant to
the transactions contemplated by this Agreement. All of the BBI Stock is
validly issued and outstanding, fully paid and non-assessable. Except as set
forth on Schedule 5.4 hereto, there are no commitments for the purchase or sale
of, and no options, warrants or other rights to subscribe for or purchase, any
securities of BBI.
5.5. Title to Stock, Liens, etc. Except for the pledge by BBI of the
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock which it owns to LaSalle National Bank in connection with
the Loan Agreement, which pledge shall be discharged concurrent with the
consummation of the Closing, the BBI Sellers have, and as of the consummation of
the Closing the Buyer will have, sole record and beneficial ownership of all of
the BBI Stock free and clear of any mortgage, lien, pledge, charge, security
interest, encumbrance, title retention agreement, option, equity or other
adverse claim thereto.
5.6. Non-Contravention. The execution and delivery of this Agreement and
the Escrow Agreement and the consummation by the BBI Sellers of the transactions
contemplated hereby and thereby will not (a) violate or conflict with any
provision of the Articles of Incorporation or By-Laws of BBI; or (b) constitute
a violation of, or be in conflict with, or constitute or create a default under,
or result in the creation or imposition of any encumbrance upon any property of
BBI pursuant to (i) any agreement or instrument to which BBI is a party or by
which any of the properties of BBI are bound, or (ii) any statute, judgment,
decree, order, regulation or rule of any court or governmental or regulatory
authority within or outside of the United States.
5.7. Governmental Consents; Transferability of Licenses, Etc. Except as
set forth on Schedule 5.7 hereto, no Permits are required for the execution and
delivery by the BBI Sellers of this Agreement or the Escrow Agreement or for the
consummation by the BBI Sellers of the transactions contemplated hereby or
thereby. BBI has and maintains, and the Permits listed on Schedule 5.7 include,
all licenses, permits and other authorizations from all governmental authorities
as are necessary or desirable for the conduct of BBI's businesses. True and
complete copies of such Permits have previously been delivered to the Buyer.
5.8. Financial Statements. The BBI Sellers have delivered the following
financial statements (the "BBI Financial Statements") to the Buyer, and there
are attached as Schedule 5.8 hereto: the unaudited balance sheets of BBI as of
June 30, 1995, June 30, 1996 and June 30, 1997 and the related unaudited
statements of income, retained earnings and cash flows of BBI for each of the
fiscal years then ended. Each of the BBI Financial Statements is true
24
and correct and has been compiled and prepared on a basis consistent with prior
periods; each of such balance sheets fairly and accurately presents the
financial condition of BBI as of its respective date; and such statements of
income, retained earnings and cash flows fairly and accurately present the
results of operations for the periods covered thereby.
5.9. Absence of Certain Changes. Except as set forth on Schedule 5.9,
since June 30, 1997, BBI has carried on no business other than its holding of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock, and there has not been any change in the assets,
liabilities, sales, income or business of BBI.
5.10. Litigation, Etc. No action, suit, proceeding or investigation is
pending or threatened against BBI (nor is there any basis therefor known to any
of the BBI Sellers).
5.11. Conformity to Law. BBI has complied with, and is in compliance with
(a) all laws, statutes, governmental regulations and all judicial or
administrative tribunal orders, judgments, writs, injunctions, decrees or
similar commands applicable to it, or any of its properties (including, without
limitation, any labor, environmental, occupational health, zoning or other law,
regulation or ordinance), both within and outside of the United States, and (b)
all unwaived terms and provisions of all contracts, agreements and indentures to
which it is a party, or by which it or any of its properties is subject. BBI
has not committed, been charged with, or been under investigation with respect
to, nor does there exist, any violation of any provision of any federal, state,
local or foreign law or administrative regulation in respect of BBI or any of
its properties.
5.12. Title to Property, Real Property Leases, etc. BBI has no property
or assets whatsoever except for 48,000 shares of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock to which
it has good and marketable title, free and clear of all liens, pledges, charges,
security interests, encumbrances or title retention agreements of any kind or
nature except for the pledge described in Section 5.5. Except as set forth on
Schedule 5.12, BBI has not ever owned any real property and does not lease any
real property.
5.13. Real Property; Safety, Zoning and Environmental Matters.
(a) None of the plants, offices or properties in or on which BBI
carries on its business nor the activities carried on therein are in violation
of any United States or foreign zoning, health or safety law or regulation,
including, without limitation, the Occupational Safety and Health Act of 1970,
as amended.
(b) Except as set forth on Schedule 5.13:
(i) Neither BBI nor, to the knowledge of the BBI Sellers, any
other operator of any real property presently or formerly owned, leased or
operated by BBI is in violation or alleged violation of any judgment,
decree, order, law,
25
license, rule or regulation pertaining to environmental matters, including
without limitation those arising under any Environmental Laws;
(ii) none of the BBI Sellers has received notice from any third
party, including without limitation any federal, state or local
governmental authority, (A) that BBI or any predecessor in interest to BBI
has been identified by the EPA as a potentially responsible party under
CERCLA with respect to a site listed on the National Priorities List, 40
C.F.R. Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇ (1986); (B) that any hazardous waste, as defined
by 42 U.S.C. Section 6903(5), any hazardous substance as defined by 42
U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42
U.S.C. Section 9601(33) or Hazardous Substances which BBI or any
predecessor in interest to BBI has generated, transported or disposed of or
that any such materials disposed of by BBI or any predecessor in interest
has been found at any site at which a federal, state or local agency or
other third party has conducted or has ordered that BBI or any predecessor
in interest conduct a remedial investigation, removal or other response
action pursuant to any Environmental Law; or (C) that BBI or any
predecessor in interest to BBI is or shall be a named party to any claim,
action, cause of action, complaint, (contingent or otherwise) legal or
administrative proceeding arising out of any third party's incurrence of
costs, expenses, losses or damages of any kind whatsoever in connection
with the release of Hazardous Substances or other similar substances;
(iii) (A) no portion of any real property presently or
formerly owned, leased or operated by BBI has been used by BBI, or to the
knowledge of the BBI Sellers, any other person, for the handling,
manufacturing, processing, storage or disposal of Hazardous Substances
except in accordance with applicable Environmental Laws; and, to the
knowledge of the BBI Sellers, no underground tank or other underground
storage receptacle for Hazardous Substances is located on such properties;
(B) in the course of any activities conducted by BBI or other operators of
any real property presently or formerly owned, leased or operated by BBI,
no Hazardous Substances have been generated or used on such properties
except in accordance with applicable Environmental Laws; (C) to the
knowledge of the BBI Sellers, all real properties presently or formerly
owned, leased or operated by BBI are free from groundwater, surface water,
soil, sediment and air contamination, and such properties do not contain
asbestos in any form, urea formaldehyde foam insulation, transformers or
other equipment containing polychlorinated biphenyls or any other chemical,
material or substance, exposure to which is prohibited, limited or
regulated by any Environmental Law, or which poses a hazard to the health
and safety of the occupants of such properties or those adjacent thereto;
(D) to the knowledge of the BBI Sellers, there have been no releases (i.e.,
any past or present releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, disposing or dumping)
or threatened releases of Hazardous Substances on, upon, into or from any
real property presently or formerly owned, leased or operated by BBI except
in accordance with applicable Environmental Laws; (E) to the knowledge of
the BBI
26
Sellers, there have been no releases on, upon, from or into any real
property in the vicinity of any real property presently or formerly owned,
leased or operated by BBI which, through soil or groundwater contamination,
may have come to be located on such real property; and (F) in addition, any
Hazardous Substances that have been generated on any real property
presently or formerly owned, leased or operated by BBI have been
transported offsite, to the knowledge of the BBI Sellers, only by carriers
having identification numbers issued by the EPA and, to the BBI Sellers'
knowledge, and have been treated or disposed of only by treatment or
disposal facilities maintaining valid permits as required under applicable
Environmental Laws, which transporters and facilities, to the knowledge of
the Sellers, have been and are operating in compliance with such permits
and applicable Environmental Laws; and
(iv) no real property presently or formerly owned, leased or
operated by BBI is or shall be subject to any applicable environmental
cleanup responsibility law or environmental restrictive transfer law or
regulation, by virtue of the transactions set forth herein and contemplated
hereby.
(d) Except for the reports attached as part of Schedule 5.13 there
are no documents, reports, site assessments, data, communications or other
materials, in the possession of BBI or any of the BBI Sellers or to which any of
them has access or knowledge, which contain any material information with
respect to potential environmental liabilities associated with any real property
presently or formerly owned, leased or operated by BBI and relating to
compliance with Environmental Laws or the environmental condition of such
properties and adjacent properties. The BBI Sellers have furnished to the Buyer
complete and accurate copies of all of the documents, reports, site assessments,
data, communications and other materials listed on Schedule 5.13 hereto.
5.14. Insurance. Schedule 5.14 hereto lists all policies of fire,
liability, workmen's compensation, life, property and casualty and other
insurance, if any, owned or held by BBI. All such policies (a) are in full
force and effect, (b) are sufficient for compliance by BBI with all written
agreements to which BBI is a party and, to the BBI Sellers' knowledge, all
applicable requirements of law and (c) provide that they will remain in full
force and effect through the respective dates set forth in such Schedule and (d)
will not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. BBI is not in default with respect
to its obligations under any of such insurance policies and has not received any
notification of cancellation of any such insurance policies.
5.15. Contracts. Schedule 5.15 sets forth a complete and accurate list of
all contracts to which BBI is a party or by or to which it or any of its assets
or properties is bound or subject. As used in this Section 4.15, the word
"contract" means and includes every agreement or understanding of any kind,
written or oral, which is legally enforceable by or against BBI, and
specifically includes (a) contracts and other agreements with any current or
former officer, director, employee, consultant or shareholder or any
27
partnership, corporation, joint venture or any other entity in which any such
person has an interest; (b) agreements with any labor union or association
representing any employee; (c) contracts and other agreements for the provision
of services by BBI; (d) bonds or other security agreements provided by any party
in connection with the business of BBI; (e) contracts and other agreements for
the sale of any of BBI's assets or properties other than in the ordinary course
of business or for the grant to any person of any preferential rights to
purchase any of BBI's assets or properties; (f) joint venture agreements
relating to the assets, properties or business of BBI or by or to which it or
any of its assets or properties are bound or subject; (g) contracts or other
agreements under which BBI agrees to indemnify any party, to share tax liability
of any party, or to refrain from competing with any party; (h) any contracts or
other agreements with regard to Indebtedness; or (i) any other contract or other
agreement whether or not made in the ordinary course of business. The BBI
Sellers have delivered to the Buyer true, correct and complete copies of all
such contracts, together with all modifications and supplements thereto. Each
of the contracts listed on Schedule 5.15 hereto is in full force and effect, BBI
is not in breach of any of the provisions of any such contract, nor is any other
party to any such contract in default thereunder, nor does any event or
condition exist which with notice or the passage of time or both would
constitute a default thereunder. BBI has in all material respects performed all
obligations required to be performed by it to date under each such contract. No
approval or consent of any person is needed in order that the contracts listed
on Schedule 5.15 continue in full force and effect following the consummation of
the transactions contemplated by this Agreement, and no such contract includes
any provision the effect of which may be to enlarge or accelerate any
obligations of BBI thereunder or give additional rights to any other party
thereto or will in any other way be affected by, or terminate or lapse by reason
of, the transactions contemplated by this Agreement.
5.16. Employment of Officers, Employees. BBI currently has no employees,
and has never had any employees.
5.17. Employee Benefit Plans. BBI does not now maintain or contribute to,
and has not in the current or preceding six (6) calendar years maintained or
contributed to, any pension, profit-sharing, deferred compensation, bonus, stock
option, share appreciation right, severance, group or individual health, dental,
medical, life insurance, survivor benefit, or similar plan, policy or
arrangement, whether formal or informal, for the benefit of any director,
officer, consultant or employee, whether active or terminated, of BBI, the
Company or the Subsidiaries.
5.18. Labor Relations. BBI currently has no labor unions, and has never
had any labor unions.
5.19. Potential Conflicts of Interest. No officer, director or
stockholder of BBI: (a) owns, directly or indirectly, any interest in (excepting
not more than 1% stock holdings for investment purposes in securities of
publicly held and traded companies) or is an officer, director, employee or
consultant of any Person which is a competitor, lessor,
28
lessee, customer or supplier of BBI or the Company; (b) owns, directly or
indirectly, in whole or in part, any tangible or intangible property which BBI
or the Company is using or the use of which is necessary for the business of
BBI; or (c) has any cause of action or other claim whatsoever against, or owes
any amount to, BBI or the Company, except for claims in the ordinary course of
business.
5.20. Trademarks, Patents, Etc. BBI does not currently own or license any
intellectual property.
5.21. Suppliers and Customers. BBI does not currently have any suppliers
or customers.
5.22. Accounts Receivable. BBI has no accounts or notes receivable, and
has never had any accounts or notes receivable.
5.23. No Undisclosed Liabilities. Except as set forth on Schedule 5.23
hereto, and other than the pledge described in Section 5.5 BBI has no
liabilities or obligations of any nature, whether accrued, absolute, contingent
or otherwise (including without limitation as guarantor or otherwise with
respect to obligations of others) and will have no liabilities or obligations of
any nature on the Closing Date.
5.24. Conduct of Business. Since December 23, 1997, BBI has conducted its
business in compliance with the provisions of Section 7 hereof, as if each of
those provisions applied to the conduct of such business at all times since such
date.
5.25. Taxes. Except as set forth on Schedule 5.25, BBI has timely and
duly filed with the appropriate government agencies, whether within or outside
of the United States, all of the income, sales, use, employment and other tax
returns and reports required to be filed by it, each such tax return and report
has been prepared in compliance with all applicable laws and regulations and all
such tax returns were true and correct at the time made in all material
respects. No waiver of any statute of limitations relating to taxes has been
executed or given by BBI. All taxes, assessments, fees and other governmental
charges upon BBI or upon its properties, assets, revenues, income and franchises
which are owed by BBI with respect to the period ending on or before the Closing
Date have been paid. No federal or foreign tax return of BBI is currently under
audit by the IRS (as defined in Section 11), and no other tax return of BBI is
currently under audit by any other taxing authority. Neither the IRS nor any
other taxing authority is now asserting or, to the knowledge of the BBI Sellers,
threatening to assert nor have such authorities ever asserted or threatened to
assert against BBI any deficiency or claim for additional taxes or interest
thereon or penalties in connection therewith or any adjustment that would have
an adverse effect on BBI. Except as set forth on Schedule 5.25, BBI has not
consented to extend the time in which any Tax may be assessed or collected by
any taxing authority. BBI has not requested or been granted an extension of the
time for filing any tax return to a date on or after the Closing Date. BBI has
never been a member of any Affiliated Group, or filed or been included in a
combined, consolidated, or unitary tax return. BBI
29
is not a party to or bound by any tax sharing or allocation agreement and has no
current or potential contractual obligation to indemnify any other person with
respect to the payment of any taxes. BBI has withheld and paid all Taxes
required to have been withheld and paid by it in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other person.
5.26. Indebtedness. BBI has no Indebtedness outstanding at the date
hereof and will have no Indebtedness outstanding on the Closing Date.
5.27. Bank Accounts, Signing Authority, Powers of Attorney. Except as set
forth on Schedule 5.27, BBI has no account or safe deposit box in any bank and
no Person has any power, whether singly or jointly, to sign any checks on behalf
of BBI to withdraw any money or other property from any bank, brokerage or other
account of BBI or to act under any power of attorney granted by BBI at any time
for any purpose. Schedule 5.27 also sets forth the names of all persons
authorized to borrow money or sign notes on behalf of BBI.
5.28. Minute Books. The minute books and corporate records of BBI made
available to the Buyer for inspection accurately record therein all actions
taken by BBI Board of Directors and shareholders.
5.29. Broker. Except for the Broker, none of the BBI Sellers has
retained, utilized or been represented by any broker, agent, finder or
intermediary in connection with the negotiation or consummation of the
transactions contemplated by this Agreement.
5.30. Disclosure. No representation or warranty by any of the BBI Sellers
in this Agreement or in any schedule or certificate delivered or to be delivered
to the Buyer pursuant hereto or in connection with the consummation of the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading. The BBI Sellers have not withheld any information from the Buyer
relating to any fact which materially adversely affects or will materially
adversely affect, the business or condition (financial or other) of BBI or the
ability of the BBI Sellers to perform this Agreement or any of the transactions
contemplated hereby.
5.31. Foreign Corrupt Practices Act. BBI has not taken any action which
would cause it to be in violation of the Foreign Corrupt Practices Act of 1977,
as amended, or any rules and regulations thereunder. There is not now, and
there has never been, any employment by BBI of, or beneficial ownership in BBI
by, any governmental or political official in any country in the world.
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to each of the Sellers as follows:
30
6.1. Organization of Buyer; Authority. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. The Buyer has all requisite power and authority
to execute and deliver this Agreement, the Escrow Agreement and each of the
Non-Competition Agreements and to carry out all of the actions required of it
pursuant to the terms hereof and thereof.
6.2. Corporate Approval; Binding Effect. The Buyer has obtained all
necessary authorizations and approvals from its Board of Directors and
stockholders required for the execution and delivery of this Agreement, the
Escrow Agreement and the Non-Competition Agreements and the consummation of the
transactions contemplated hereby and thereby. Each of this Agreement, the
Escrow Agreement and the Non-Competition Agreements has been duly executed and
delivered by the Buyer and constitutes the legal, valid and binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms, except
as enforceability thereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors' rights generally
or by general principles of equity.
6.3. Non-Contravention. The execution and delivery by the Buyer of this
Agreement, the Escrow Agreement and the Non-Competition Agreements and the
consummation by the Buyer of the transactions contemplated hereby and thereby
will not (a) violate or conflict with any provisions of the Articles of
Organization or By-Laws of the Buyer, each as amended to date; or (b) constitute
a violation of, or be in conflict with, constitute or create a default under, or
result in the creation or imposition of any lien upon any property of the Buyer
pursuant to (i) any agreement or instrument to which the Buyer is a party or by
which the Buyer or any of its properties is bound or to which the Buyer or any
of its properties is subject, or (ii) any statute, judgment, decree, order,
regulation or rule of any court or governmental authority to which the Buyer is
subject.
6.4. Governmental Consents. Except as set forth in Schedule 6.4 hereto,
no consent, approval or authorization of, or registration, qualification or
filing with, any governmental agency or authority is required for the execution
and delivery by the Buyer of this Agreement, the Escrow Agreement or the
Non-Competition Agreements or for the consummation by the Buyer of the
transactions contemplated hereby or thereby.
6.5. Brokers. The Buyer has not retained, utilized or been represented by
any broker, agent, finder or other intermediary in connection with the
negotiation or consummation of the transactions contemplated by this Agreement.
6.6. Purchase Price. On the Closing Date, the Buyer shall have
sufficient cash on hand, or available pursuant to existing lending arrangements,
to make any payments that may be required to be made on such date pursuant to
Section 2.2.
6.7. Disclosure. No representation or warranty by Buyer in this Agreement
or in any schedule or certificate delivered or to be delivered to the Sellers
hereto or in connection with the consummation of the transactions contemplated
hereby contains or
31
will contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated herein or necessary to make the
statements contained therein not misleading.
7. COVENANTS OF THE SELLERS PENDING CLOSING. Each of the Sellers, jointly
and severally, covenants and agrees that, from and after the date of this
Agreement and until the Closing, except as otherwise specifically consented to
or approved by the Buyer in writing:
7.1. Full Access. The Sellers shall cause the Company and the
Subsidiaries to afford to the Buyer and its authorized representatives full
access during normal business hours to all properties, books, records, contracts
and documents of the Company and the Subsidiaries and a full opportunity to make
such reasonable investigations as they shall desire to make of the Company, and
the Sellers shall furnish or cause to be furnished to the Buyer and its
authorized representatives all such information with respect to the affairs and
businesses of the Company and the Subsidiaries as the Buyer may reasonably
request.
7.2. Carry on in Regular Course. The Sellers shall cause the Company and
the Subsidiaries to maintain their owned and leased properties in good operating
condition and repair, and to make all necessary renewals, additions and
replacements thereto, and to carry on their business diligently and
substantially in the same manner as heretofore and not make or institute any
changes of management or accounting practices other than those in the ordinary
course of business.
7.3. No General Increases. Except as may be necessary to maintain
compensation in excess of Mexican minimum wage standards, the Sellers shall not
permit the Company or any of the Subsidiaries to grant any general or uniform
increase in the rates of pay of employees of the Company or any of the
Subsidiaries, nor grant any general or uniform increase in the benefits under
any bonus or pension plan or other contract or commitment to, for or with any
such employees; neither the Company nor any of the Subsidiaries shall increase
the compensation payable or to become payable to officers, key salaried
employees or agents, or increase any bonus, insurance, pension or other benefit
plan, payment or arrangement made to, for or with any such officers, key
salaried employees or agents; and none of the Company nor any of the
Subsidiaries shall make any material changes in its personnel.
7.4. No Dividends, Issuances, Repurchases, etc. The Sellers shall not
permit the Company or the Subsidiaries to declare or pay any dividends (whether
in cash, shares of stock or otherwise) on, or make any other distribution in
respect of, any shares of their capital stock, or issue, purchase, redeem or
acquire for value any shares of their capital stock.
7.5. Contracts and Commitments. The Sellers shall not permit the Company
or the Subsidiaries to enter into any contract or commitment which will result
in the payment (either to or from such entity) of more than $50,000 over its
term or engage in any
32
transaction not in the usual and ordinary course of business and consistent with
the business practices of the Company and the Subsidiaries.
7.6. Purchase and Sale of Capital Assets. Except for any capital
expenditures approved by the Company prior to the date hereof and described in
management reports, copies of which have been provided to the Buyer, the Sellers
shall not permit the Company or the Subsidiaries to purchase or sell or
otherwise dispose of any capital asset with a market value in excess of $5,000,
or of capital assets of market value aggregating in excess of $50,000 without
the prior written consent of the Buyer, and in no event shall purchase, sell or
otherwise dispose of any capital asset other than in the ordinary course of
business.
7.7. Insurance. The Sellers shall cause the Company and the Subsidiaries
to maintain the insurance coverage described on Schedule 4.14 through and
including the Closing Date.
7.8. Preservation of Organization. The Sellers shall cause each of the
Company and the Subsidiaries to use its best efforts to preserve its business
organization intact, to keep available to the Buyer the present key officers and
employees of the Company and the Subsidiaries and to preserve for the Buyer the
present relationships of the Company's and the Subsidiaries' suppliers and
customers and others having business relations with the Company and or the
Subsidiaries.
7.9. No Default. The Sellers shall not permit the Company or the
Subsidiaries to do any act or omit to do any act, or permit any act or omission
to act, which will cause a material breach of any contract, commitment or
obligation of the Company or the Subsidiaries.
7.10. Compliance with Laws. The Sellers shall cause each of the Company
and the Subsidiaries to comply with all laws, regulations and orders, both
within and outside the United States, applicable with respect to its business.
7.11. Advice of Change. The Sellers will promptly advise the Buyer in
writing of any material adverse change in the business, condition, operations,
prospects or assets of the Company or the Subsidiaries.
7.12. No Shopping. The Sellers shall not, and shall not permit the
Company or the Subsidiaries, or any agent thereof, to, directly or indirectly,
initiate discussions, negotiate for, solicit, entertain or respond to overtures
of offers from, provide any information to or enter into any agreement with
respect or in relation to the sale of the Stock or any substantial portion of
the assets of the Company or the Subsidiaries or any merger or other business
combination of the Company and the Subsidiaries. The Sellers and the Company
will promptly advise the Buyer in writing of any indication of interest in a
potential acquisition received from any third party.
33
7.13. Consents of Third Parties. The Sellers will employ their best
efforts to secure, before the Closing Date, the consent, in form and substance
satisfactory to the Buyer and the Buyer's counsel, to the consummation of the
transactions contemplated by this Agreement by each party to any contract,
commitment or obligation of the Company or the Subsidiaries, under which such
transactions would constitute a default, would accelerate obligations of the
Company or the Subsidiaries or would permit cancellation of any such contract.
7.14. Satisfaction of Conditions Precedent. The Sellers will use their
best efforts to cause the satisfaction of the conditions precedent contained
herein.
7.15. HSR Act. As promptly as practicable, and in no event later than the
eighth business day following the execution and delivery of this Agreement by
the parties, the Sellers and the Buyer shall each prepare and file any required
notification and report form under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), in connection with the transactions
contemplated hereby, provided that all necessary information has been exchanged
by the parties hereto. The Sellers and the Buyer shall request early
termination of the waiting period thereunder; and the Sellers and the Buyer
shall respond with reasonable diligence and dispatch to any request for
additional information made in response to such filings.
7.16. Cooperation. The Company, each Subsidiary and the Sellers shall
use their respective best efforts to facilitate the conduct of the environmental
reviews referred to in Section 8.11, including with respect to facilitating the
acquisition of any consents required from any lessor of any of the Real Property
to perform sampling of the soil at any locations deemed necessary by the Buyer
or any of the persons engaged to deliver the reports referred to in
Section 8.11.
7A. COVENANTS OF THE BBI SELLERS PENDING CLOSING. Each of the BBI
Sellers, jointly and severally, covenants and agrees that, from and after the
date of this Agreement and until the Closing, except as otherwise specifically
consented to or approved by the Buyer in writing:
7A.1. Full Access. The BBI Sellers shall cause BBI to afford to the Buyer
and its authorized representatives full access during normal business hours to
all properties, books, records, contracts and documents of BBI and a full
opportunity to make such reasonable investigations as they shall desire to make
of BBI, and the BBI Sellers shall furnish or cause to be furnished to the Buyer
and its authorized representatives all such information with respect to the
affairs and businesses of BBI as the Buyer may reasonably request.
7A.2. Carry on in Regular Course. The BBI Sellers shall cause BBI to
maintain any owned and leased properties in good operating condition and repair,
and to make all necessary renewals, additions and replacements thereto, and to
carry on its business
34
diligently and substantially in the same manner as heretofore and not make or
institute any changes of management or accounting practices other than those in
the ordinary course of business.
7A.3. No Increases. The BBI Sellers shall not permit BBI to hire any
employees.
7A.4. No Dividends, Issuances, Repurchases, etc. Except as set forth on
Schedule 7A.4 hereto, the BBI Sellers shall not permit BBI to declare or pay any
dividends (whether in cash, shares of stock or otherwise) on, or make any other
distribution in respect of, any shares of their capital stock, or issue,
purchase, redeem or acquire for value any shares of their capital stock.
7A.5. Contracts and Commitments. The BBI Sellers shall not permit BBI to
enter into any contract or commitment.
7A.6. Purchase and Sale of Capital Assets. The BBI Sellers shall not
permit BBI to purchase or sell or otherwise dispose of any capital asset without
the prior written consent of the Buyer.
7A.7. Insurance. The BBI Sellers shall cause BBI to maintain the
insurance coverage described on Schedule 5.14, if any, through and including the
Closing Date.
7A.8. Preservation of Organization. The BBI Sellers shall cause BBI to
use its best efforts to preserve its business organization intact.
7A.9. No Default. The BBI Sellers shall not permit BBI to do any act or
omit to do any act, or permit any act or omission to act, which will cause a
material breach of any contract, commitment or obligation of BBI.
7A.10. Compliance with Laws. The BBI Sellers shall cause BBI to comply
with all laws, regulations and orders, both within and outside the United
States, applicable with respect to its business.
7A.11. Advice of Change. The BBI Sellers will promptly advise the Buyer
in writing of any material adverse change in the business, condition,
operations, prospects or assets of BBI.
7A.12. No Shopping. The BBI Sellers shall not, and shall not permit BBI,
or any agent thereof, to, directly or indirectly, initiate discussions,
negotiate for, solicit, entertain or respond to overtures of offers from,
provide any information to or enter into any agreement with respect or in
relation to the sale of the BBI Stock or any substantial portion of the assets
of BBI or any merger or other business combination of BBI. The BBI Sellers will
promptly advise the Buyer in writing of any indication of interest in a
potential acquisition received from any third party.
35
7A.13. Consents of Third Parties. The BBI Sellers will employ their best
efforts to secure, before the Closing Date, the consent, in form and substance
satisfactory to the Buyer and the Buyer's counsel, to the consummation of the
transactions contemplated by this Agreement by each party to any contract,
commitment or obligation of BBI under which such transactions would constitute a
default, would accelerate obligations of BBI or would permit cancellation of any
such contract.
7A.14. Satisfaction of Conditions Precedent. The BBI Sellers will use
their best efforts to cause the satisfaction of the conditions precedent
contained herein.
7A.15. Cooperation. BBI and the BBI Sellers shall use their respective
best efforts to facilitate the conduct of the environmental reviews referred to
in Section 8.11, including with respect to facilitating the acquisition of any
consents required from any lessor of any of the Real Property to perform
sampling of the soil at any locations deemed necessary by the Buyer or any of
the persons engaged to deliver the reports referred to in Section 8.11.
8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligation of the
Buyer to consummate the Closing shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions (to the extent noncompliance
is not waived in writing by the Buyer):
8.1. Representations and Warranties True at Closing. The representations
and warranties made by the Sellers in or pursuant to this Agreement shall be
true and correct at and as of the Closing Date with the same effect as though
such representations and warranties had been made or given at and as of the
Closing Date.
8.2. Compliance with Agreement. The Sellers shall have performed and
complied with all of their obligations under this Agreement to be performed or
complied with by them on or prior to the Closing Date.
8.3. No Material Change. There shall not have been or, to the Sellers'
knowledge, threatened to be, any material damage to or loss or destruction of
any properties or assets owned or leased by BBI, the Company or any of the
Subsidiaries (whether or not covered by insurance) or any material adverse
change in the condition (financial or otherwise), operations, business or assets
of BBI, the Company or any of the Subsidiaries or imposition of any laws, rules
or regulations which would materially adversely affect the condition (financial
or otherwise), operations, business or assets of the Company and the
Subsidiaries, taken as a whole, since April 30, 1997. For the purposes of this
Section 8.3, "materiality" shall be defined, with respect to the Company and the
Subsidiaries, taken as a whole, as being reasonably likely to have an impact on,
or in an amount equal to, or exceeding at least 10% of the assets of the Company
and the Subsidiaries, taken as a whole, or at least 5% of the net income of the
Company and the
36
Subsidiaries, taken as a whole, in each case as of and for the Company's fiscal
year ended April 30, 1997.
8.4. Sellers' Certificate. Each of the Sellers shall have delivered to
the Buyer in writing, at and as of the Closing, a certificate duly executed by
such Seller, in form and substance satisfactory to the Buyer and the Buyer's
counsel, certifying that the conditions in each of Section 8.1 (as it relates to
the representations and warranties made by such Seller in or pursuant to this
Agreement) and 8.2 (as it related to the obligations of such Seller under this
Agreement) have been satisfied.
8.5. Opinion of Counsel. ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Abogados, special counsel to
the Sellers and the Company shall have delivered to the Buyer a written opinion
in form reasonably satisfactory to the Buyer, addressed to the Buyer and dated
the Closing Date, stating that:
(i) The Mexican Subsidiary has and maintains all Permits as are
necessary or desirable for the conduct of its business, and the
consummation of the transactions contemplated hereby shall not adversely
affect or otherwise modify any such Permits; and
(ii) No consent, approval or authorization of, or registration,
qualification or filing with, any Mexican governmental agency or authority
is required for the execution and delivery by the Sellers of this Agreement
or for the consummation by the Sellers of the transactions contemplated
hereby.
8.6. Approvals. All corporate and other approvals and consents required
to be obtained by the Sellers, BBI, the Company or any Subsidiary in connection
with the transactions contemplated by this Agreement and the form and substance
of all certificates and other documents delivered hereunder shall have been
obtained and shall be reasonably satisfactory in form and substance to the Buyer
and its counsel.
8.7. No Litigation. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement and no action, suit or proceeding
shall be pending or threatened before any court or administrative body (a) in
which it will be or is sought to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby, or (b) in connection with any claim for damages in excess
of $50,000 against the Company.
8.8. Non-Competition Agreements. Each of the Sellers listed on
Schedule 2.2(d) shall have executed and delivered to the Buyer a non-competition
and non-solicitation agreement in the form of Exhibit B hereto (the
"Non-Competition Agreements"), and each of such Non-Competition Agreements shall
be in full force and effect.
8.9. Escrow Agreement. The Sellers (other than ▇▇▇▇▇▇ ▇▇▇▇▇) and the
Escrow Agent shall have executed and delivered to the Buyer an Escrow Agreement
in the form of
37
Exhibit A-1, and such Escrow Agreement shall be in full force and effect.
▇▇▇▇▇▇ ▇▇▇▇▇ and the Escrow Agent shall have executed and delivered to the Buyer
an Escrow Agreement in the form of Exhibit A-2, and such Escrow Agreement shall
be in full force and effect.
8.10. Resignations of Directors and Officers. All of the directors and
officers of the Company, each of the Subsidiaries and BBI who shall have been
requested to do so by the Buyer shall have resigned their positions with the
Company each of the Subsidiaries and BBI, on or prior to the Closing Date and
prior thereto shall have executed such appropriate documents with respect to the
transfer or establishment of bank accounts, signing authority, etc., as the
Buyer shall have reasonably requested.
8.11. Environmental Reports. The Buyer shall have not received prior to
the earlier of (i) the Closing Date or (ii) March 20, 1998, any report or
reports (including soil sampling), of an environmental engineering firm or firms
selected by the Buyer in the exercise of its sole discretion, that describe (i)
any non-compliance of any or all of the Real Property (and any adjoining
property or other property formerly owned or leased by the Company or BBI) with
any applicable Environmental Laws, and (ii) any liability of the Company or BBI
under any Environmental Laws, including without limitation the absence of any
spills or releases of any oil or Hazardous Substance on such property.
8.12. Indebtedness. The Sellers shall have caused LaSalle National Bank
to deliver a pay-off letter and forms of lien discharges, each in form
reasonably satisfactory to the Buyer, with respect to the obligations of the
Company under the Loan Agreement.
8.13. Consent of Lenders. Each of the Buyer and HVE shall have obtained
all consents and approvals from its lenders and noteholders as are or may be
necessary to the consummation of the transactions contemplated by this
Agreement.
8.14. Consents of Third Parties. The Sellers will have obtained the
consent, in form and substance satisfactory to the Buyer and the Buyer's
counsel, to the consummation of the transactions contemplated by this Agreement
by each party to any contract, commitment or other obligation of BBI, the
Company or the Subsidiaries under which such transactions would constitute a
default, would accelerate obligations of BBI, the Company or the Subsidiaries or
the Buyer or would permit cancellation of any such contract.
8.15. Release. The Buyer shall have received an executed Non-Competition
Agreement and Release from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in the form attached as Exhibit C
hereto (the "▇▇▇▇▇▇▇ Non-Competition Agreement and Release").
8.16. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Guarantee. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and XP54-1 Limited shall
execute and deliver a Guarantee of certain of the other Sellers' indemnification
obligations in the form attached as Exhibit D hereto (the "▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Guaranty").
38
8.17. HSR Act. Any applicable waiting periods under the HSR Act shall
have expired or early termination of such periods shall have been granted by all
requisite governmental authorities.
8.18. Company Indebtedness. The Company Indebtedness shall have been
repaid prior to the Closing or at the Closing pursuant to the provisions of
Section 2.2(b).
8.19. Proceedings and Documents Satisfactory. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to the Buyer in connection with the
transactions contemplated by this Agreement shall be satisfactory in all
reasonable respects to the Buyer and the Buyer's counsel, and the Buyer shall
have received the originals or certified or other copies of all such records and
documents as the Buyer may reasonably request.
9. CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS. The obligation of
the Sellers to consummate the Closing (including the obligation of ▇▇▇▇▇▇▇
▇▇▇▇▇▇ to sell the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ stock to the Buyer) shall be subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(to the extent noncompliance is not waived in writing by the Sellers):
9.1. Representations and Warranties True at Closing. The representations
and warranties made by the Buyer in this Agreement shall be true and correct at
and as of the Closing Date with the same effect as though such representations
and warranties had been made or given at and as of the Closing Date.
9.2. Compliance with Agreement. The Buyer shall have performed and
complied with all of its obligations under this Agreement that are to be
performed or complied with by it at or prior to the Closing.
9.3. Closing Certificate. The Buyer shall have delivered to the Company
in writing, at and as of the Closing, a certificate duly executed by each of the
President and Treasurer of the Buyer, in form and substance satisfactory to the
Company and the Company's counsel, to the effect that the conditions in each of
Sections 9.1 and 9.2 have been satisfied.
9.4. Approvals. All corporate and other approvals required to be obtained
by the Buyer or HVE in connection with the transactions contemplated by this
Agreement and the form and substance of all certificates and other documents
delivered hereunder shall have been obtained and shall be reasonably
satisfactory to the Sellers and their counsel.
9.5. No Litigation. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement and no action, suit or proceeding
shall be pending or threatened before any court or administrative body in which
it will be or is sought to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
39
9.6. Escrow Agreement. The Buyer and the Escrow Agent shall have executed
and delivered the Escrow Agreement, and the Escrow Agreement shall be in full
force and effect.
9.7. HSR Act. Any applicable waiting periods under the HSR Act shall have
expired or early termination of such periods shall have been granted by all
requisite governmental authorities.
9.8. Proceedings and Documents Satisfactory. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to the Sellers in connection with the
transactions contemplated by this Agreement shall be satisfactory in all
reasonable respects to the Sellers and their counsel, and the Sellers shall have
received the originals or certified or other copies of all such records and
documents as the Sellers may reasonably request.
10. CONFIDENTIAL INFORMATION. Any and all information disclosed by the
Buyer to any of the Sellers or BBI, the Company or the Subsidiaries or by any of
the Sellers or the Company to the Buyer as a result of the negotiations leading
to the execution of this Agreement, or in furtherance thereof, whether before or
after the date hereof, which information was not already known to the Sellers,
BBI, the Company or the Subsidiaries or to the Buyer, as the case may be, shall
remain confidential to each of the Sellers, BBI, the Company, the Subsidiaries
and the Buyer, as the case may be, and their respective employees and agents
until the Closing Date. If the Closing does not take place for any reason, each
of the Sellers and the Buyer agrees not to further divulge or disclose or use
for its benefit or purposes any such information at any time in the future
unless it has otherwise become public. The information intended to be protected
hereby shall include, but not be limited to, financial information, customers,
sales representatives, methods of doing business, processes, know-how, trade
secrets, product and proposed product designs and specifications, plans,
forecasts, proposals, contracts and anything else having an economic or
pecuniary benefit to the Buyer, BBI, the Company, the Subsidiaries or any of the
Sellers, respectively.
11. DEFINITIONS. As used herein the following terms not otherwise defined
have the following respective meanings:
"Company Indebtedness" All payment obligations of the Company under the
Loan Agreement and any related documents, including all principal and unpaid
interest thereon.
"Defined Assets": As of any date, the total assets of the Company and the
Subsidiaries on a consolidated basis, including cash and cash equivalents, trade
accounts receivable (net of allowances for doubtful accounts), inventories,
prepayments, property, plant and equipment net of any accumulated depreciation
(including machinery and equipment, molds, tools and dies, office equipment,
leasehold improvements and construction in process), and any and all other
assets as may appear on or are accounted
40
for as assets on the Audited Balance Sheet (as defined in Section 4.8),
excluding any Tax receivables or other tax assets (including deferred tax
assets). For purposes of this Agreement, the amount of any of the Defined
Assets shall be determined in a manner consistent with the determination of the
amount of such assets for purposes of the preparation of the Audited Balance
Sheet.
"Defined Liabilities": As of any date, any and all liabilities of the
Company and the Subsidiaries on a consolidated basis, except for Excluded
Liabilities, Company Indebtedness and deferred tax liabilities. For purposes of
this Agreement, the amount of any of the Defined Liabilities as of any date
shall be determined in a manner consistent with the determination of the amount
of such liabilities for purposes of the preparation of the Audited Balance
Sheet.
"Excluded Liabilities": As of any date, any federal taxes payable,
state taxes payable, Mexican federal income taxes payable, property taxes
payable, and any other accrued liabilities with respect to federal, state and
foreign taxes for any period through the Closing Date, excluding any deferred
tax liabilities. For purposes of this Agreement, the amount of any of the
Excluded Liabilities as of any date shall be determined in a manner
consistent with the determination of the amount of such liabilities for
purposes of the preparation of the Audited Balance Sheet.
"Indebtedness": As applied to any Person (as defined in this Section 11),
(a) all indebtedness of such Person for borrowed money, whether current or
funded, or secured or unsecured, (b) all indebtedness of such Person for the
deferred purchase price of property or services represented by a note or other
security, (c) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (d) all indebtedness of such Person secured by a
purchase money mortgage or other lien to secure all or part of the purchase
price of property subject to such mortgage or lien, (e) all obligations under
leases which shall have been or must be, in accordance with generally accepted
accounting principles, recorded as capital leases in respect of which such
Person is liable as lessee, (f) any liability of such Person in respect of
banker's acceptances or letters of credit, and (g) all indebtedness referred to
in clause (a), (b), (c), (d), (e) or (f) above which is directly or indirectly
guaranteed by such Person or which such Person has agreed (contingently or
otherwise) to purchase or otherwise acquire or in respect of which it has
otherwise assured a creditor against loss.
"IRS": The United States Internal Revenue Service.
"Loan Agreement" the Loan Agreement, dated as of January 22, 1996, between
the Company and LaSalle National Bank.
"Net Assets": As of any date, the amount of the Defined Assets minus the
amount of the Defined Liabilities.
41
"Person" or "person": A corporation, an association, a partnership, a
limited liability company, an organization, a business, an individual, a
government or political subdivision thereof or a governmental agency.
"state": Any state or commonwealth of the United States of America; the
District of Columbia; the Commonwealth of Puerto Rico; and any other dependency,
possession or territory of the United States of America.
"subsidiaries": With respect to any Person, any corporation a majority (by
number of votes) of the outstanding shares of any class or classes of which
shall at the time be owned by such Person or by a subsidiary of such Person, if
the holders of the shares of such class or classes (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof, even
though the right so to vote has been suspended by the happening of such a
contingency, or (b) are at the time entitled, as such holders, to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, whether or not the right so to vote exists by
reason of the happening of a contingency.
"Tax" or "Taxes" means any U.S, Mexican, Barbados, state, local, or foreign
income, gross receipts, franchise, estimated, alternative minimum, add-on
minimum, sales, use, transfer, registration, value added, excise, severance,
stamp, occupation, premium, windfall profit, customs, duties, real property,
personal property, capital stock, intangibles, social security, unemployment,
disability, payroll, license, employee, or other tax or levy, of any kind
whatsoever, including any interest, penalties, or additions to tax in respect of
the foregoing.
12. INDEMNIFICATION.
12.1. Indemnity by the Sellers. Subject to the overall limitations,
minimum amounts and time limitations set forth in Section 12.6, each of the
Sellers, severally and not jointly, agree to indemnify and hold the Buyer, the
Company and the Subsidiaries (and their respective directors, officers,
employees and affiliates) harmless from and with respect to any and all claims,
liabilities, losses, damages, costs and expenses, including without limitation
the fees and disbursements of counsel (collectively, the "Losses"), after
subtracting any insurance proceeds actually received by the Buyer with respect
to a particular Loss, related to or arising, directly or indirectly, out of:
(i) any failure or any breach by any Seller of any representation or
warranty, covenant, obligation or undertaking made by such Seller (other
than pursuant to Sections 5.1 through 5.31 of this Agreement) in this
Agreement, any Schedule or Exhibit hereto, or any other statement,
certificate or other instrument delivered pursuant hereto;
42
(ii) any actual or alleged tax liability of the Company or any of the
Subsidiaries in respect of any period through the Closing Date, including
any fees of professionals incurred in preparing returns for such periods,
or in assisting in responding to any audits of tax returns filed with
respect to any such period, to the extent such liability is not adequately
reflected or reserved against on the Final Closing Balance Sheet;
(iii) any actual or alleged liability for death or injury to
person or property, to the extent not covered by insurance, as a result of
any actual or alleged defect in any product sold or manufactured by the
Company or any of the Subsidiaries on or prior to the Closing Date but only
to the extent that the liability with respect thereto exceeds the reserve
therefor on the Final Closing Balance Sheet; provided, however, that the
Buyer shall first assert any claims it may have with respect to such
product for a reasonable period of time and to a reasonable extent against
any manufacturer of products sold by the Company (if not manufactured by
the Company) and that the Sellers shall be subrogated to the rights of the
Buyer with respect to any such claim;
(iv) any contractual product warranty claims arising out of defects in
any product shipped by the Company on or prior to the Closing Date but only
to the extent that the liability with respect thereto exceeds the reserve
therefor on the Final Closing Balance Sheet;
(v) any actual or alleged liability for violation of any
Environmental Law by the Company, any of the Subsidiaries or any of the
Sellers prior to the Closing Date, including any expenses or Losses
incurred in remediation of such violations or penalties assessed with
respect to such violations, but only to the extent that the liability with
respect thereto exceeds the reserve therefor on the Final Closing Balance
Sheet; or
(vi) any liability of the Company, any of the Subsidiaries or any of
the Sellers with respect to the professional and other fees and expenses
incurred by the Company, any of the Subsidiaries or any of the Sellers
(other than the BBI Sellers) (including but not limited to the fees and
expenses of ▇▇▇▇▇ & Haber, Martin, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LTD., Deloitte &
Touche LLP, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Abogados, and the Broker) incurred in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, or any other expenses
required to be borne by the Sellers pursuant to Sections 3.3, 3.4 and 14.2.
12.2. Indemnity by the BBI Sellers. In addition to the indemnification
obligations assumed by the BBI Sellers pursuant to Section 12.1, each of the BBI
Sellers, jointly and severally, agrees to indemnify and hold the Buyer, BBI, the
Company and the Subsidiaries (and their respective directors, officers,
employees and affiliates) harmless, without
43
limitation, from and with respect to any Losses related to or arising, directly
or indirectly, out of:
(i) any breach by the BBI Sellers of any of the representations and
warranties made by the BBI Sellers in Sections 5.1 through 5.31 of this
Agreement;
(ii) any actual or alleged tax liability of BBI in respect of any
period through the Closing Date, including any fees of professionals
incurred in preparing returns for such periods, or in assisting in
responding to any audits of tax returns filed with respect to any such
period;
(iii) any actual or alleged violation of any Environmental Law
prior to the Closing Date by BBI, any of the BBI Sellers, or any other
owner or operator of property owned, leased or operated by BBI on or prior
to the Closing Date, including any expenses or Losses incurred in
remediation of such violations or penalties assessed with respect to such
violations; or
(iv) any other liability of BBI arising on or prior to, or existing
on, the Closing Date, or arising in connection with or as a result of any
events occurring prior to, or facts in existence prior to or on, the
Closing Date.
12.3. Indemnity by the Buyer. The Buyer agrees to indemnify and hold the
Sellers (and their respective directors, officers, employees, affiliates, heirs
and personal representative) harmless from and with respect to any and all
Losses related to or arising, directly or indirectly, out of:
(i) any failure or any breach by the Buyer of any representation or
warranty, covenant, obligation or undertaking made by the Buyer in this
Agreement, any Schedule or Exhibit hereto, or any other statement,
certificate or other instrument delivered pursuant hereto;
(ii) any actual or alleged tax liability of the Company, BBI or any of
the Subsidiaries in respect of any period after the Closing Date;
(iii) any actual or alleged liability for death or injury to
person or property, to the extent not covered by insurance, as a result of
any actual or alleged defect in any product sold or manufactured by the
Company or any of the Subsidiaries after the Closing Date;
(iv) any contractual product warranty claims arising out of defects in
any product shipped by the Company or any of its Subsidiaries after the
Closing Date; and
44
(v) any liabilities arising out of the operations of the business of
the Company after the Closing (except to the extent such liabilities arise
out of liabilities described in Section 12.1 (i) through (vii) or 12.2(i)
through (iv)).
12.4. Claims.
(a) Notice. Any party seeking indemnification hereunder (the "Indemnified
Party") shall promptly notify all other parties hereto from which it has an
indemnification obligation (the "Indemnifying Parties") of any action, suit,
proceeding, demand or breach (a "Claim") with respect to which the Indemnified
Party claims indemnification hereunder, provided that failure of the Indemnified
Party to give such notice shall not relieve any Indemnifying Party of its
obligations under this Section 12 except to the extent, if at all, that such
Indemnifying Party shall have been prejudiced thereby.
(b) Third Party Claims. If such Claim relates to any action, suit,
proceeding or demand instituted against an Indemnified Party by a third party (a
"Third Party Claim"), the Indemnifying Parties shall be entitled to participate
in the defense of such Third Party Claim after receipt of notice of such claim
from such Indemnified Party. Within thirty (30) days after receipt of notice of
a particular matter from the Indemnified Parties, the Indemnifying Parties may
assume the defense of such Third Party Claim, and engage counsel of its
choosing, in which case the Indemnifying Parties shall have the authority to
negotiate, compromise and settle such Third Party Claim, if and only if the
following conditions are satisfied:
(i) the Indemnifying Parties shall have confirmed in writing
that it is obligated hereunder to indemnify the Indemnified Party with
respect to such Third Party Claim; and
(ii) the Indemnified Party shall not have given the Indemnifying
Parties written notice that it has determined, in the exercise of its
reasonable discretion, that matters of corporate or management policy or a
conflict of interest (including but not limited to the fact that such Third
Party Claim is in an amount in excess of that portion of the Indemnity Cap
that may be available to satisfy such Third Party Claim) make separate
representation by the Indemnified Party's own counsel advisable, provided,
that if the Indemnified Party elects to assume the defense of a Third Party
Claim pursuant to this paragraph (b)(ii) for reasons other than that such
Third Party Claim is in an amount in excess of that portion of the
Indemnity Cap that may be available to satisfy such Third Party Claim, the
Indemnified Party shall pay the fees and expenses of its own counsel
incurred in connection with such defense and such fees and expenses shall
not constitute Losses of such Indemnified Party with respect to such Third
Party Claim.
(c) Each Indemnifying Party agrees, unless it timely assumes the defense
of any Claim hereunder, to pay the Indemnified Party's costs of defending any
Third Party Claim,
45
including, without limitation, attorneys' and paralegal fees, accountants' fees,
witness fees and court costs, promptly after written demand therefore is given
by the Indemnified party to the Indemnifying Party.
(d) The Indemnified Party shall retain the right to employ its own counsel
and to participate in the defense of any Third Party Claim, the defense of which
has been assumed by the Indemnifying Party pursuant hereto, but the Indemnified
Party shall bear and shall be solely responsible for its own costs and expenses
in connection with such participation.
(e) If any Indemnifying Party undertakes the defense of any Third Party
Claim, then so long as such Indemnifying Party, in good faith, is continuously
contesting or defending the Third Party Claim: (A) the Indemnified Party shall
not admit any liability with respect thereto, or settle, compromise, pay or
discharge the Third Party Claim without the prior written consent of all
Indemnifying Parties or their representative; (B) the Indemnified Party shall
provide the Indemnifying Parties with reasonable cooperation in the contest or
defense of the Third Party Claim; (C) the Indemnified Party shall accept any
settlement of the Third Party Claim, provided such settlement requires only the
payment of money by the Indemnifying Parties (without such payment exceeding the
amount of the Indemnity Cap available therefor) and does not require the
assumption of any restrictions, entrance into any agreement, the making of any
admissions, or the taking of any other actions by the Indemnified Parties, and
adequate arrangements for the payment of such Third Party Claim, to the
Indemnified Party's reasonable satisfaction, are made by Indemnifying Party; and
(D) Indemnifying Parties will provide the Indemnified Party with all information
regarding the contest or defense of the Claim and allow counsel for the
Indemnified Party to monitor, at the Indemnified Party's sole expense, all
proceedings in connection with the Claim.
(f) Neither any Indemnifying Party nor any Indemnified Party may admit any
liability with respect to any Third Party Claim or settle, compromise, pay or
discharge the same without the prior written consent of all other parties if
such settlement, compromise, payment or discharge could in any way expose such
other party to the payment of funds which are not subject to a claim of
reimbursement or indemnification from the settling, compromising or paying
party.
12.5. Method and Manner of Paying Claims. (a) In the event of any
Claims under this Section 12, the claimant shall advise the party or parties who
are required to provide indemnification therefor in writing of the amount and
circumstances surrounding such claim. With respect to liquidated claims, if
within thirty days the other party has not contested such claim in writing, the
other party will pay the full amount thereof within ten days after the
expiration of such period. Any amount owed by an Indemnifying Party hereunder
with respect to any Claim may be set-off by the Indemnified Party against any
amounts owed by the Indemnified Party to any Indemnifying Party.
46
(b) In the event of any claims pursuant to Section 12.1, the Buyer
shall be required to proceed first against the Escrowed Funds, if any, in
accordance with the terms of both Escrow Agreement until such funds have all
been released. In the event of any claims pursuant to Section 12.2, the Buyer
shall be permitted, in the exercise of its sole discretion, to proceed first
against the Escrowed Funds, provided, that in no event shall the Buyer be
required to proceed against the Escrowed Funds.
12.6. Limitations on Indemnification.
(a) No Indemnifying Party shall be required to indemnify an Indemnified
Party under Section 12.1 or 12.3 except to the extent that the aggregate amount
of Losses for which the Indemnified Party is otherwise entitled to
indemnification pursuant to such section exceeds $100,000, whereupon the
Indemnified Party shall be entitled to be paid each dollar of Losses in excess
of $100,000, subject to the limitations on maximum amount of recovery set forth
in Section 12.6(b); provided, that Losses related to or arising directly or
indirectly out of any inaccuracies in any representation or warranty made by any
of the Sellers in Sections 4, 4.5, 4.12, 4.17, 4.25, 4.30, 4A.1 or 4A.2 or
payable with respect to claims for indemnification made with respect to Sections
12.1(ii) through (vi) hereof (collectively, "Unlimited Claims") shall be
indemnified in their entirety by the Sellers and shall not be subject to the
limitations set forth in this Section 12.6(a).
(b) The aggregate Losses payable by an Indemnifying Party pursuant to
Section 12.1 and Section 12.3 with respect to all claims (including Unlimited
Claims) shall not exceed $5,000,000, including the Escrowed Funds (the
"Indemnity Cap"). No Seller, if such Seller is an Indemnifying Party pursuant
to Section 12.1, shall be liable for any Losses pursuant to Section 12.1 that
exceed the percentage of the Indemnity Cap set forth next to such Seller's name
on Schedule 3 hereto provided, however, that, subject to their respective
obligations under the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Guaranty, the maximum collective liability
of XP54-I Limited, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, as Trustee for the ▇▇▇▇▇▇▇
▇▇▇▇▇▇'▇ Children's Trust, dated August 1, 1986, under Sections 12.1 and 12.2
shall not exceed the percentage of the Indemnity Cap set forth for any of such
parties on Schedule 3, and the maximum collective liability of ▇▇▇▇▇▇ ▇▇▇▇▇▇ and
Plomin-I Limited under Section 12.1 shall not exceed the percentage of the
Indemnity Cap set forth for either of such parties on Schedule 3.
(c) No Indemnifying Party shall be liable for any Losses pursuant to
Section 12.1 or Section 12.2 unless a written claim for indemnification in
accordance with Section 12.5 is given by the Indemnified Party to the
Indemnifying Party with respect thereto within one (1) year after the Closing,
except that this time limitation shall not apply to any Losses related to or
arising directly or indirectly out of any Unlimited Claims, as to which in each
case the applicable statute of limitations shall apply.
(d) Buyer agrees that the amount of any Loss for which it claims indemnity
under Sections 12.1 and 12.2 shall be reduced by the present value (discounted
at the Buyer's cost-
47
of-capital) at the time of calculation of any income tax savings actually
realizable by the Buyer on account of such Loss, but after giving effect to any
potential income tax liability with respect to the indemnity payments to be made
by the Sellers, all as reasonably determined by the Buyer, provided, that to the
extent the amount of any claims has been reduced on account of this paragraph
(d) because of an anticipated income tax saving not finally realized by the
Buyer, whether on account of disallowance of a deduction after an Internal
Revenue Service audit or for any other reason, Buyer shall be entitled to claim
the amount of such reduction from the Sellers pursuant to this Section 12.6(d),
subject to the Indemnity Cap, whether or not any period within which claims
under Section 12.1 or 12.2 must be made has expired.
(e) None of the limitations set forth in this Section 12.6 shall apply to
the indemnification obligations of the BBI Sellers pursuant to Section 12.2.
12.7. Disputes.
(a) In the event that any Indemnifying Party contests any Claims made
pursuant to Sections 12.1, 12.2 or 12.3 of this Agreement within ten (10) days
of receipt of notice of such Claim, each of the Indemnifying Party and the
Indemnified Party shall endeavor to meet to resolve such dispute by negotiation
for a period of thirty (30) days from the date of delivery of notice of such
dispute. In the event that any Indemnifying Party does not deliver notice of
dispute of such Claim within such ten (10) day period, such Claim shall be
deemed to be finally determined.
(b) In the event that the Indemnifying Party and the Indemnified Party are
unable to resolve any such dispute within the thirty day period set forth in
paragraph (a), such dispute shall be settled by arbitration in Boston,
Massachusetts before a panel of three arbitrators (with one designated by each
of the Indemnified Party, on the one hand, and the Indemnifying Parties on the
other hand, and the third arbitrator designated by the first two) pursuant to
the rules of the American Arbitration Association. Arbitration may be commenced
with respect to any Claim at any time after the end of the thirty day period set
forth in paragraph (a) by an Indemnifying Party giving written notice to each
Indemnified Party that such dispute has been referred to arbitration under this
Section 12.7 The arbitrators shall be selected as prescribed above, but if they
do not so agree within 30 days after the date of the notice referred to above,
the selection shall be made pursuant to the rules from the panels of arbitrators
maintained by such Association. Any award or other decision rendered by the
arbitrators with respect to the Claim that is the subject of the dispute shall
be conclusive and binding upon the parties hereto, and the amount of such Claim
shall be deemed to have been finally determined; provided, however, that any
such award or other determination shall be accompanied by a written opinion of
the arbitrators giving the reasons for the award or determination. This
provision for arbitration with respect to Claims shall be specifically
enforceable by the parties and the decision of the arbitrators in accordance
herewith shall be final and binding and there shall be no right of appeal
therefrom. Each party shall pay its own expenses of arbitration and the
expenses of the arbitrators shall be equally shared;
48
provided, however, that if in the opinion of the arbitrators any claim for
indemnification or any defense or objection thereto was unreasonable, the
arbitrators may assess, as part of the award or determination, all or any part
of the arbitration expenses of the other party (including reasonable attorneys'
fees) and of the arbitrators against the party raising such unreasonable claim,
defense or objection.
(c) To the extent that arbitration with respect to a Claim hereunder may
not be legally permitted hereunder and the parties to any such dispute may not
at the time of such dispute or claim mutually agree to submit such dispute to
arbitration, any party may commence a civil action in a court of appropriate
jurisdiction to solve disputes or claims hereunder. Nothing contained in this
Section 12.7 shall prevent the parties from settling any dispute or claim by
mutual agreement at any time.
(d) Neither party shall be precluded hereby from seeking, from the courts
of any jurisdiction, provisional or equitable remedies of a type not available
in arbitration, including without limitation, temporary restraining orders and
preliminary or permanent injunctions, nor shall the pursuit of such provisional
or equitable relief constitute a waiver or modification of such party's right
and obligation to arbitrate any related or unrelated dispute with respect to a
Claim hereunder which is otherwise subject to arbitration under this Agreement,
unless such waiver is expressed in writing and signed by such party. In the
event any person not a party to this Agreement shall commence any interpleader
or similar action which either directly or indirectly raises issues which are
subject to arbitration hereunder, the parties hereto shall seek a stay of such
proceedings pending arbitration in accordance with this Section 12.7.
(e) In the event of any Third Party Claim where the Indemnifying Party
does not assume the defense of such Third Party Claim, nothing in this
Section 12.7 shall prevent the Indemnified Party from impleading any
Indemnifying Party or otherwise joining any Indemnifying Party to any litigation
relating to such Third Party Claim.
13. TERMINATION. This Agreement may be terminated upon the mutual written
consent of each of the parties hereto.
14. GENERAL.
14.1. Survival of Representations and Warranties. The representations
and warranties of the parties hereto contained in this Agreement or otherwise
made in writing in connection with the transactions contemplated hereby (in each
case except as affected by the transactions contemplated by this Agreement)
shall be deemed material and, notwithstanding any investigation by the Buyer,
shall be deemed to have been relied on by the Buyer and shall survive the
Closing, and the consummation of the transactions contemplated hereby. Each
representation and warranty made by any of the Sellers or the Buyer in this
Agreement shall expire on the last day, if any, that Claims for breaches of such
representation or warranty may be made pursuant to Section 12.6 hereof, except
that any such representation or warranty that has been made the subject of a
Claim prior to
49
such expiration date shall survive with respect to such Claim until the final
resolution of such Claim pursuant to Section 12.
14.2. Expenses. The Sellers shall pay all transfer and sales taxes
payable in connection with the sale of the Stock. Except as specifically
provided herein, all expenses of the preparation, execution and consummation of
this Agreement and of the transactions contemplated hereby, including without
limitation attorneys', accountants' and outside advisers' fees and
disbursements, shall be borne by the party incurring such expenses, provided,
that (i) the Sellers shall be fully responsible for the brokerage fees and
expenses of the Broker, (ii) that the BBI Sellers shall be responsible for any
fees and expenses incurred by the Buyer (including any filing fees and the
reasonable fees and expenses of counsel) in connection with any filing the Buyer
deems it necessary to make under the HSR Act in connection with the acquisition
of the BBI Stock, and (iii) that ▇▇▇▇▇▇ ▇▇▇▇▇ shall be responsible for the fees
and expenses of the Escrow Agent with respect to the ▇▇▇▇▇ Escrow.
14.3. Notices. All notices, demands and other communications hereunder
shall be in writing or by written telecommunication, and shall be deemed to have
been duly given if delivered personally or if mailed by certified mail, return
receipt requested, postage prepaid, or if sent by overnight courier, or sent by
written telecommunication, as follows:
If to any or all of the Sellers other than ▇▇▇▇▇▇ ▇▇▇▇▇, to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy sent contemporaneously to:
▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to ▇▇▇▇▇▇ ▇▇▇▇▇, to:
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Instrument Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
50
with a copy sent contemporaneously to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LTD.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Buyer, to:
▇▇▇▇▇▇▇ Corporation
c/o High Voltage Engineering Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
with a copy sent contemporaneously to:
▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Any such notice shall be effective (a) if delivered personally, when
received, (b) if sent by overnight courier, when receipted for, (c) if mailed,
five (5) days after being mailed as described above, and (d) if sent by written
telecommunication, when dispatched.
14.4. Entire Agreement. This Agreement contains the entire understanding
of the parties, supersedes all prior agreements and understandings relating to
the subject matter hereof and shall not be amended except by a written
instrument hereafter signed by all of the parties hereto.
14.5. Governing Law. The validity and construction of this Agreement
shall be governed and construed and enforced in accordance with the internal
laws (and not the choice-of-law rules) of the State of Delaware.
14.6. Sections and Section Headings. The headings of sections and
subsections are for reference only and shall not limit or control the meaning
thereof.
14.7. Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns. Neither this Agreement nor the obligations of any party
hereunder shall be assignable or transferable by such party without the prior
written consent of the other party hereto; provided, however, that nothing
contained in this Section 14.7 shall prevent the Buyer, without the consent of
the Sellers, (a) from transferring or assigning this Agreement or its
51
rights or obligations hereunder to another entity controlling, under the control
of, or under common control with the Buyer or (b) from assigning all or part of
its rights or obligations hereunder by way of collateral assignment to any bank
or financing institution providing financing for the acquisition contemplated
hereby, but no such transfer or assignment made pursuant to clauses (a) or (b)
shall relieve the Buyer of its obligation under this Agreement.
14.8. Severability. In the event that any covenant, condition, or other
provision herein contained is held to be invalid, void, or illegal by any court
of competent jurisdiction, the same shall be deemed to be severable from the
remainder of this Agreement and shall in no way affect, impair, or invalidate
any other covenant, condition, or other provision contained herein.
14.9. Further Assurances. The parties agree to take such reasonable steps
and execute such other and further documents as may be necessary or appropriate
to cause the terms and conditions contained herein to be carried into effect.
14.10. No Implied Rights or Remedies. Except as otherwise expressly
provided herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or to give any person, firm or corporation, other than
the Sellers and the Buyer and their respective shareholders, if any, any rights
or remedies under or by reason of this Agreement.
14.11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.12. Satisfaction of Conditions Precedent. Each of the Sellers and the
Buyer will use its best efforts to cause the satisfaction of the conditions
precedent contained in this Agreement; provided, however, that nothing contained
in this Section 14.12 shall obligate either party hereto to waive any right or
condition under this Agreement.
14.13. Public Statements or Releases. Each of the parties hereto agrees
that prior to the consummation of the Closing no party to this Agreement will
make, issue or release any public announcement, statement or acknowledgment of
the existence of, or reveal the status of, this Agreement or the transactions
provided for herein, without first obtaining the consent of the other party
hereto. Nothing contained in this Section 14.13 shall prevent either party from
making such disclosures as such party may consider necessary to satisfy such
party's legal or contractual obligations.
14.14. Seller Representative. By the execution and delivery of this
Agreement, each of the Sellers other than ▇▇▇▇▇▇ ▇▇▇▇▇ hereby irrevocably
constitute and appoint ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as the true and lawful agent and
attorney-in-fact (the "Seller Representative") of such Sellers with full power
of substitution to act in the name, place and stead of such Sellers with respect
to the transfer of the Stock owned by such Sellers to
52
the Buyer in accordance with the terms and provisions of this Agreement, and to
act on behalf of such Sellers in any litigation or arbitration involving this
Agreement, do or refrain from doing all such further acts and things, and
execute all such documents as the Seller Representative shall deem necessary or
appropriate in connection with the transactions contemplated by this Agreement,
including, without limitation, the power:
(i) to act for such Sellers with regard to matters pertaining to
indemnification referred to in this Agreement, including the power to
compromise any Claim on behalf of such Sellers and to transact matters of
litigation;
(ii) to execute and deliver the Escrow Agreement and all other
ancillary agreements, certificates and documents that the Seller
Representative deems necessary or appropriate in connection with the
consummation of the transactions contemplated by this Agreement;
(iii)to receive funds and give receipts for funds in accordance
with the terms of the Escrow Agreement;
(iv) to do or refrain from doing any further act or deed on behalf of
such Sellers that the Seller Representative deems necessary or appropriate
in his sole discretion relating to the subject matter of this Agreement as
fully and completely as such Sellers could do if personally present; and
(v) to receive service of process in connection with any Claims under
this Agreement.
If ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ dies or otherwise becomes incapacitated and unable to
serve as Seller Representative, ▇▇▇▇▇▇ ▇▇▇▇▇▇ shall serve as the new Seller
Representative. The appointment of the Seller Representative shall be deemed
coupled with an interest and shall be irrevocable, and the Buyer and any other
Person may conclusively and absolutely rely, without inquiry, upon any action of
the Seller Representative in all matters referred to herein. All payments and
notices made or delivered by the Buyer to the Seller Representative for the
benefit of the Sellers other than ▇▇▇▇▇▇ ▇▇▇▇▇ shall discharge in full all
liabilities and obligations of the Buyer to such Sellers with respect thereto.
The Sellers (other than ▇▇▇▇▇▇ ▇▇▇▇▇) hereby confirm all that the Seller
Representative shall do or cause to be done by virtue of his appointment as the
Seller Representative of such Sellers. The Seller Representative shall act for
such Sellers on all of the matters set forth in this Agreement in the manner the
Seller Representative believes to be in the best interest of such Sellers as a
group and consistent with the obligations under this Agreement, but the Seller
Representative shall not be responsible to any Seller for any loss or damages
that such Seller may suffer by the performance of his duties under this
Agreement, other than loss or damage arising from willful violation of the law
or gross negligence in the performance of his or her duties under this
Agreement.
53
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed and delivered as a sealed
instrument as of the date and year first above written.
BUYER:
▇▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title:
SELLERS:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ CHILDREN'S TRUST
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
PLOMIN-I Ltd., a Texas limited
partnership
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title:
XP54 - I LTD., a Texas limited
partnership
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: General Partner
54
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
SELLER REPRESENTATIVE:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
55