EXHIBIT 2.01
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STOCK PURCHASE AGREEMENT
ACQUISITION OF THE STOCK
OF
SIMCO INDUSTRIES, INC.
BY
UFP TECHNOLOGIES, INC.
DATED: January 14, 2000
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE 1. PURCHASE AND SALE OF STOCK............................................................................1
1.1 Purchase of the Company Shares......................................................................1
1.2 Included Assets and Liabilities.....................................................................2
1.3 Net Asset Value Adjustment..........................................................................3
1.4 Accounts Receivable and Inventory Adjustment........................................................5
1.5 Earnout.............................................................................................5
1.6 Time and Place of Closing...........................................................................7
1.7 Delivery of the Company Shares......................................................................7
1.8 Further Assurances..................................................................................8
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND STOCKHOLDERS........................................8
2.1 Organization and Qualification of the Company.......................................................8
2.2 Capitalization of the Company; Title to Stock.......................................................8
2.3 Subsidiaries........................................................................................9
2.4 Authorization of Transaction........................................................................9
ARTICLE 2A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................10
2A.1 Present Compliance with Obligations and Laws.......................................................10
2A.2 No Conflict of Transaction With Obligations and Laws...............................................10
2A.3 Financial Statements...............................................................................11
2A.4 Absence of Undisclosed Liabilities.................................................................11
2A.5 Absence of Certain Changes.........................................................................11
2A.6 Conduct of Business................................................................................13
2A.7 Payment of Taxes...................................................................................13
2A.8 Title to Properties; Liens; Condition of Properties................................................14
2A.9 Intentionally Omitted..............................................................................15
2A.10 Intentionally Omitted..............................................................................15
2A.11 Intellectual Property Rights.......................................................................15
2A.12 Contracts and Commitments..........................................................................16
2.A.13 Labor and Employee Relations.......................................................................18
2.A.14 ERISA and Employee Benefits........................................................................19
2A.15 Environmental Matters..............................................................................21
2A.16 Governmental Authorizations........................................................................23
▇▇.▇▇ ▇▇▇▇▇▇▇▇ or Other Claims...........................................................................23
2A.18 Litigation.........................................................................................24
2A.19 Borrowings and Guarantees..........................................................................24
2A.20 Financial Service Relations and Powers of Attorney.................................................24
2A.21 Insurance..........................................................................................24
2A.22 Minute Books.......................................................................................25
2A.23 Finder's Fee.......................................................................................25
2A.24 Transactions with Interested Persons...............................................................25
2A.25 Absence of Sensitive Payments......................................................................25
2A.26 Year 2000 Compliance...............................................................................26
2A.27 Copies of Documents................................................................................26
2A.28 Disclosure of Material Information.................................................................27
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2A.29 Disclosure Generally...............................................................................27
2A.30 Disclaimer of Other Representations and Warranties.................................................27
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................27
3.1 Organization of Buyer..............................................................................27
3.2 Authorization of Transaction.......................................................................27
3.3 No Conflict of Transaction with Obligations and Laws...............................................28
3.4 Finder's Fee.......................................................................................28
3.5 No Distribution....................................................................................28
ARTICLE 4. COVENANTS OF THE COMPANY AND STOCKHOLDERS............................................................28
4.1 Conduct of Business................................................................................28
4.2 Access to Information..............................................................................30
4.3 Governmental Permits and Approvals; Consents.......................................................31
4.4 Assignment of Contracts............................................................................31
4.5 Maintenance of Government Authorizations...........................................................31
4.6 Collection of Receivables..........................................................................31
4.7 Risk of Loss.......................................................................................31
4.8 Employee Compensation..............................................................................32
4.9 Breach of Representations and Warranties...........................................................32
4.10 Consummation of Agreement..........................................................................32
4.11 Exclusivity........................................................................................32
4.12 Employee Benefits..................................................................................33
ARTICLE 5. CONDITIONS TO BUYER'S OBLIGATION OF THE BUYER.........................................................33
5.1 Due Diligence Review...............................................................................33
5.2 Excluded Liabilities...............................................................................34
5.3 Representations; Warranties; Covenants.............................................................34
5.4 Resignations of Officers and Directors.............................................................34
5.5 Releases...........................................................................................34
5.6 Opinion of Sellers' Counsel........................................................................34
5.7 Noncompetition Agreements..........................................................................34
5.8 FIRPTA Certificate.................................................................................35
5.9 Escrow Agreement...................................................................................35
5.10 Real Property Leases...............................................................................35
5.11 Absence of Certain Litigation......................................................................35
5.12 No Bankruptcy......................................................................................35
5.13 No Material Adverse Change.........................................................................35
5.14 Finders Fee........................................................................................36
5.15 Employee Benefits..................................................................................36
ARTICLE 6. CONDITIONS TO OBLIGATIONS OF THE STOCKHOLDERS........................................................36
6.1 Representations; Warranties; Covenants.............................................................36
6.2 Opinion of Buyer's Counsel.........................................................................36
ARTICLE 7. INDEMNIFICATION......................................................................................36
7.1 Definitions........................................................................................36
7.2 Indemnification by Stockholders....................................................................37
7.3 Indemnification by Buyer...........................................................................40
7.4 Defense of Third Party Actions.....................................................................40
7.5 Miscellaneous......................................................................................41
7.6 Payment of Indemnification.........................................................................41
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ARTICLE 8. TERMINATION OF AGREEMENT.............................................................................42
8.1 Termination........................................................................................42
8.2 Effect of Termination..............................................................................42
8.3 Right to Proceed...................................................................................42
ARTICLE 9. MISCELLANEOUS........................................................................................42
9.1 Survival of Warranties.............................................................................42
9.2 Fees and Expenses..................................................................................43
9.3 Notices............................................................................................43
9.4 Publicity and Disclosures..........................................................................44
9.5 Confidentiality....................................................................................44
9.6 Time Period........................................................................................44
9.7 Entire Agreement...................................................................................44
9.8 Severability.......................................................................................45
9.9 Assignability......................................................................................45
9.10 Amendment..........................................................................................45
9.11 Governing Law; Venue...............................................................................45
9.12 Remedies...........................................................................................45
9.13 Counterparts.......................................................................................46
9.14 Effect of Table of Contents and Headings...........................................................46
9.15 Guaranty...........................................................................................46
List of Schedules and Exhibits......................................................ERROR! BOOKMARK NOT DEFINED.
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STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT
AGREEMENT entered into as of the 14th day of January, 2000, among UFP
Technologies, Inc., a Delaware corporation, with its principal place of business
in Georgetown, Massachusetts ("Buyer"), Simco Industries, Inc., a Michigan
corporation, with its principal place of business in Roseville, Michigan (the
"Company") and ▇▇▇▇▇ ▇▇▇▇▇, Trustee UTA dated December 18, 1978, ▇▇▇▇▇ ▇. ▇▇▇▇▇,
Trustee under Revocable Living Trust Agreement of ▇▇▇▇▇ ▇. ▇▇▇▇▇ dated March 20,
1995 and ▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee under Revocable Living Trust Agreement dated
April 25, 1995, being all of the stockholders of the Company (collectively, the
"Stockholders"), and ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, individually as guarantors
of the obligations of the Stockholders hereunder (collectively, the
"Guarantors").
RECITALS:
WHEREAS, the Stockholders collectively own all of the issued and
outstanding shares of capital stock of the Company (the "Company Shares"), and
are willing to sell the Company Shares to Buyer; and
WHEREAS, Buyer wishes to acquire all of the outstanding capital stock
of the Company; and
WHEREAS, the Guarantors are the Trustees and beneficiaries of certain
of the Stockholders;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, in order to consummate said sale,
the parties hereto agree as follows:
ARTICLE 1. PURCHASE AND SALE OF STOCK.
1.1 PURCHASE OF THE COMPANY SHARES. Subject to the provisions of this
Agreement, each of the Stockholders agrees to sell, and Buyer agrees to
purchase, at the Closing (as defined in Section 1.6 hereof), all of the Company
Shares owned by them for an aggregate purchase price of (a) Six Million Three
Hundred Seventy Thousand Dollars ($6,370,000) in cash, subject to adjustment as
provided in Sections 1.3 and 1.4 hereof (the "Cash Portion"), and (b) the
amount, if any, payable pursuant to Section 1.5 hereof (the "Earnout")
(collectively, the "Purchase Price"), as provided below. The Company Shares
constitute, and will constitute at the Closing, one hundred percent (100%) of
the issued and outstanding capital stock of the Company. Each Stockholder owns,
and will own at the Closing, that number of the Company Shares set forth on
EXHIBIT A hereto next to such Stockholder's name, and shall receive that share
of the Cash Portion beside such Stockholder's name on said Exhibit, subject to
pro rata adjustment as hereinafter provided, against delivery of such
Stockholder's Company Shares, as provided herein. The Purchase Price shall be
delivered by Buyer as follows:
(a) the sum of Four Hundred Fifty Thousand Dollars ($450,000) of the
Cash Portion (the "Escrow Fund") shall be paid at the Closing to The Chase
Manhattan Bank, or such other
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mutually agreeable institution, as escrow agent ("Escrow Agent"), under and
subject to the terms of the Escrow Agreement to be entered into pursuant to
Section 5.9 hereof (the "Escrow Agreement") and shall be deducted pro rata over
the amount of the Cash Portion each Stockholder is entitled to receive as set
forth on EXHIBIT A hereto;
(b) the sum of Five Million Two Hundred Sixty Thousand Dollars
($5,260,000) of the Cash Portion, after pro rata reduction or increase by the
amount of the reduction or increase, if any, to the Purchase Price pursuant to
Section 1.3(b) hereof, shall be paid at the Closing to the Stockholders pro rata
based on the amount of the Cash Portion each Stockholder is entitled to receive
as set forth on EXHIBIT A hereto (the "Initial Cash Payment");
(c) the sum of Six Hundred Sixty Thousand Dollars ($660,000) of the
Cash Portion, after pro rata reduction or increase by the amount of the
reduction or increase, if any, to such amount pursuant to Section 1.3(c) hereof,
shall be paid as provided in said Section 1.3 to the Stockholders pro rata based
on the amount of the Cash Portion each Stockholder is entitled to receive as set
forth on EXHIBIT A hereto (the "Additional Cash Payment"); and
(d) the Earnout shall be paid to the Stockholders pro rata based on the
amount of the Cash Portion each Stockholder is entitled to receive as set forth
on EXHIBIT A hereto, at such times and in such amounts as contemplated by and
described in Section 1.5 hereof.
The amounts payable pursuant to paragraphs (a), (b) and (c) above shall
be paid in cash by certified or bank check or by wire transfer of immediately
available funds to the Stockholders as provided above unless otherwise
instructed in writing by the Stockholder(s) entitled to receive any such amounts
at least three (3) business days prior to the Closing. To the extent the amounts
specified in paragraphs (b) and (c) above are to be made by wire transfer of
funds, the Stockholders shall specify the account(s) into which such funds are
to be wired in writing at least three (3) business days prior to the Closing.
1.2 INCLUDED ASSETS AND LIABILITIES.
(a) At the Closing, the assets of the Company and Simco Automotive
Trim, Inc., a wholly owned subsidiary of the Company ("Subsidiary"), on a
consolidated basis, shall include all of the assets reflected on the Base
Balance Sheet (as defined in Section 2A.3 hereof), as such assets may fluctuate
in the ordinary and normal course of business prior to Closing, and, if not
reflected on the Base Balance Sheet, all of the issued and outstanding capital
stock of Subsidiary.
(b) On or before the Closing, the Stockholders shall assume or satisfy
in full prior to or out of the Cash Portion payable to the Stockholders at
Closing, all liabilities of the Company and Subsidiary existing on the Closing
Date (and shall secure the release of all related liens and encumbrances) other
than the following liabilities reflected on the Base Balance Sheet, as such
liabilities may fluctuate in the ordinary and normal course of business prior to
Closing (the "Permitted Liabilities"):
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Note Payable to Buyer $ 262,500
Capital Leases, current $ 168,394
Capital Leases, long term $ 521,084
Accounts Payable $ 3,470,752
Accrued Liabilities $ 180,786
Deferred Liabilities $ 70,550
After the Closing, the Company and Subsidiary shall be responsible for
payment of all liabilities arising from the acts or omissions of the Company or
Subsidiary after the Closing.
1.3 NET ASSET VALUE ADJUSTMENT.
(a) In the event the net asset value of the Company and Subsidiary, on
a consolidated basis (the "Closing Net Asset Value") at and as of the close of
business on January 31, 2000, is less than $3,126,000 (after taking into account
the cost of the financial audit as provided in paragraph (d) below) (the "Base
Net Asset Value"), as shown on the Closing Balance Sheet referred to in
paragraph (c) below and prepared in accordance with paragraphs (c) and (d)
below, the Cash Portion shall be reduced dollar for dollar by the amount by
which the Base Net Asset Value exceeds the Closing Net Asset Value. In the event
the Closing Net Asset Value exceeds the Base Net Asset Value, the Cash Portion
to be paid to Stockholders at the Closing shall be increased dollar for dollar
by the amount by which the Closing Net Asset Value exceeds the Base Net Asset
Value. A preliminary adjustment shall be made as provided in paragraph (b) below
at the Closing.
(b) The Company shall deliver to Buyer at the Closing a balance sheet
of the Company and Subsidiary, on a consolidated basis, together with a
calculation of the Closing Net Asset Value for the period ended November 30,
1999 (the "Preliminary Closing Net Asset Value") and the preliminary adjustment,
if any, of the Cash Portion to be paid to Stockholders at the Closing pursuant
to paragraph (a) above. If the Preliminary Closing Net Asset Value determined
pursuant to the foregoing exceeds the Base Net Asset Value, Buyer shall pay to
Stockholders at the Closing the amount of such excess pro rata based on the Cash
Portion each Stockholder is entitled to receive as set forth on EXHIBIT A hereto
or, if the Preliminary Closing Net Asset Value is less than the Base Net Asset
Value, Buyer shall pay to Stockholders at the Closing the Cash Portion less the
amount of such deficiency pro rata based on the Cash Portion each Stockholder is
entitled to receive as set forth on EXHIBIT A hereto.
(c) On or before February 29, 2000, Buyer shall prepare and deliver to
Stockholders a balance sheet (the "Closing Balance Sheet") of the Company and
Subsidiary, on a consolidated basis, together with a calculation of the Closing
Net Asset Value at and as of the close of business on January 31, 2000 (the
"Final Closing Net Asset Value"). If the Stockholders do not object to the Final
Closing Net Asset Value on or before 12:00 p.m. EDT on March 15, 2000, the
Stockholders shall be deemed to have accepted Buyer's determination of the Final
Closing Net Asset Value and, to the extent the Final Closing Net Asset Value
exceeds the Preliminary Closing Net Asset Value, Buyer shall pay to the
Stockholders an amount equal to the Additional Cash Payment plus the amount of
such excess, pro rata based on the Cash Portion each
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Stockholder is entitled to receive as set forth on EXHIBIT A hereto, or to the
extent the Final Closing Net Asset Value is less than the Preliminary Closing
Net Asset Value, Buyer shall pay to the Stockholders an amount equal to the
Additional Cash Payment less the amount of such deficiency pro rata based on the
Cash Portion each Stockholder is entitled to receive as set forth on EXHIBIT A
hereto. To the extent the amount of any such deficiency exceeds the amount of
the Additional Cash Payment, the Stockholders shall pay such amount to Buyer in
accordance with paragraph (e) below or, at the election of Buyer, Buyer shall
have the right, but not the obligation, to recover such amount out of the Escrow
Fund. If the Stockholders object to the Buyer's calculation of the Final Closing
Net Asset Value, they shall notify Buyer, in writing, on or before March 15,
2000 and, following receipt of timely written notice, Buyer shall withhold the
Additional Cash Payment until agreement is reached. The Stockholders (and/or
their agent for the purpose) shall be entitled to reasonable access to the books
and records of the Company and Subsidiary, at reasonable times, for the purpose
of evaluating the Closing Balance Sheet. If Buyer and Stockholders fail to reach
agreement within ten (10) business days thereafter, Buyer and Stockholders shall
submit such disagreement for resolution to arbitration in accordance with the
rules of the American Arbitration Association, Commercial Arbitration Division,
in Detroit, Michigan. The decision of the arbitrator shall be final, binding and
non-appealable. The nonprevailing party in arbitration will be liable for the
costs of the arbitration, including without limitation, all costs, expenses and
attorneys fees incurred by the prevailing party in the arbitration, including
all fees charged by the arbitrator.
(d) For purposes of this Section 1.3, the term "net asset value" shall
mean the book value of all tangible assets and accounts receivables and patents,
organization costs and start-up costs equal to approximately $92,000, appearing
on the balance sheet of the Company and Subsidiary, on a consolidated, basis,
less the book value of all Permitted Liabilities, and shall not reflect as a
liability the cost of the financial audit of the Company and Subsidiary
undertaken in connection with the transactions contemplated by this Agreement.
In addition, "net asset value" shall not include charges for general Corporate
Allocation (as defined in Section 1.5(b) hereof) made by Buyer since the Closing
but, rather, for purposes of determining "net asset value" the Company and
Subsidiary shall be deemed to have continued to own and operate their respective
businesses and operations consistent with their respective practices during the
three (3) full calendar months immediately preceding the Closing (i.e. interest
expense shall be determined based on the average interest expense experienced by
the Company and Subsidiary over such period). The Closing Balance Sheet shall
fairly present the assets, liabilities and Closing Net Asset Value of the
Company and Subsidiary as of the close of business on January 31, 2000,
determined, except as provided in this paragraph (d), in accordance with
generally accepted accounting principals, practices and methods ("GAAP").
(e) If any amount is required to be paid under this Section 1.3 (i.e.
it has not been disputed by Stockholders in accordance with the provisions of
this Section 1.3) after March 15, 2000, such amount shall be paid together with
interest from March 15, 2000 through the date of payment, at the annual rate of
8.5%. If any portion of such amount payable by Stockholders is not paid within
thirty (30) days after becoming due, Buyer may set off any amount to which it is
determined to be entitled under this Section 1.3 or otherwise against amounts
otherwise payable by it to any one or more of the Stockholders. The provisions
of this Section 1.3 shall not be
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subject to any of the procedural or other restrictions contained in the
indemnification provisions of Article 7 hereof.
1.4 ACCOUNTS RECEIVABLE AND INVENTORY ADJUSTMENT.
(a) Any accounts receivable of the Company and Subsidiary included in
the purchase and sale contemplated hereby which are not collected through
Buyer's normal means of collection without requiring engagement of a collection
agent or legal process, within 120 days after the Closing shall be deemed
uncollectable (the "Uncollectable Receivables"). Buyer shall notify in writing
the Stockholders and the Escrow Agent under the Escrow Agreement of the
aggregate face value of the Uncollectable Receivables and, upon receipt of such
notice, the Escrow Agent shall deduct from the initial installment to be
released from the Escrow Fund and remit to Buyer such sum, together with the
Allocable Interest Amount thereon (as defined in the Escrow Agreement). Upon
receipt of such amount, Buyer shall assign to the Stockholders all of the
Uncollectable Receivables.
(b) Any of the inventory of the Company and Subsidiary which exists on
January 31, 2000 which has not been sold within 150 days of January 31, 2000
shall be deemed obsolete (the "Obsolete Inventory"), except for the "product
line" inventory, which shall not be deemed Obsolete Inventory unless not sold
within 330 days of the Closing. A physical inventory shall be conducted by Buyer
or its representatives at which the Stockholders may be present as of January
31, 2000. The results of such physical inventory shall be attached hereto as
SCHEDULE 1.4 and shall set forth the inventory deemed to exist as of the
Closing, including an itemization of the "product line" inventory. Buyer shall
notify in writing the Stockholders and the Escrow Agent of the aggregate value
consistent with the valuation method used in connection with the preparation of
the Base Balance Sheet of the Obsolete Inventory and, upon receipt of such
notice, the Escrow Agent shall deduct such amount (less any accrual for Obsolete
Inventory reflected on the Closing Balance Sheet and taken into account in the
calculation of the Final Closing Net Asset Value) from the initial installment
to be released from the Escrow Fund and remit such sum to Buyer. Upon receipt of
such amount, Buyer shall assign to the Stockholders all of the "product line"
inventory which constitutes Obsolete Inventory.
(c) The provisions of this Section 1.4 shall not be subject to any of
the procedural or other restrictions contained in the indemnification provisions
of Article 7 hereof, including without limitation, the Basket (as defined in
said Article).
1.5 EARNOUT.
(a) In the event that EBITDA (as defined and calculated pursuant to
paragraph (b) below) of the Company and Subsidiary, on a consolidated basis as
adjusted as described in paragraph (c) below (the "Adjusted EBITDA") for each of
the twelve (12) month periods set forth below (each an "Earnout Period") exceeds
the minimum EBITDA for the applicable Earnout Period as set forth below (the
"Target EBITDA"), Buyer shall pay the Stockholders the difference between the
Adjusted EBITDA and the Target EBITDA for such Earnout Period (each an "Earnout
Payment") pro rata based on the amount of the Cash Portion each Stockholder was
entitled to receive at Closing as set forth on EXHIBIT A hereto. The amount of
the Earnout
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Payment during the first Earnout Period shall not exceed $800,000 and during the
second Earnout Period shall not exceed $700,000.
12-MONTHS ENDING TARGET EBITDA
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6/30/2000 $2,100,000
6/30/2001 $2,760,000
(b) For purposes hereof "EBITDA" shall mean net income as determined by
Buyer in accordance with GAAP, excluding, without duplication, (i) interest
income and expenses, (ii) provisions for taxes based on income, (iii)
depreciation expenses, (iv) amortization expenses, (v) the cumulative effect of
any changes in accounting principles, (vi) extraordinary gains or losses, (vii)
any losses (as defined in Article 7 hereof) for which Buyer has been indemnified
and recovered from Stockholders, (and (viii) Corporate Allocation charges. For
purposes hereof, "Corporate Allocation" charges shall mean only nonexclusive
corporate overhead expenses for accounting, including reporting and auditing,
human resources management, general corporate management (excluding executive
compensation for officers of the Company or Subsidiary), general legal fees
(excluding costs of litigation initiated by or for the Company or Subsidiary and
contract review costs), benefit administration costs (excluding costs of welfare
and pension benefits), and insurance administration costs. Any expense incurred
exclusively by or for the benefit of the Company or Subsidiary, including
without limitation, legal fees as described above, accounting fees for services
requested by the Company or Subsidiary to comply with customer or vendor
requirements, insurance expenses (including workers compensation, medical,
dental, disability, life, vehicle fleet, equipment floater and transit and fire
insurance), trade show expenses and marketing expenses shall be charged to and
paid by the Company and Subsidiary. Further, for purposes of calculating EBITDA,
corporate engineers who provide services to the Company or Subsidiary shall be
charged to the Company and Subsidiary at Buyer's reasonable inter-company rates.
(c) In determining Adjusted EBITDA, with respect to any business which
is referred by Buyer to the Company or Subsidiary, including the three Visteon
Automotive Systems door inserts programs known as CW170, CT120 and D186, a
referral fee equal to 10% of sales generated by such business shall be charged
to the Company and Subsidiary and deducted from Adjusted EBITDA; provided that
the referral fee shall not in any instance exceed the net margin on the referred
business.
(d) Within 120 days after the end of each of the Earnout Periods, Buyer
shall notify Stockholders in writing of the Adjusted EBITDA for the applicable
Earnout Period and shall provide supporting work papers. Adjusted EBITDA shall
be determined in accordance with GAAP subject to paragraph (c) above. If
Stockholders do not agree with Buyer's determination of Adjusted EBITDA for
either Earnout Period, Stockholders shall notify Buyer in writing within 30 days
of receipt thereof and Buyer and Stockholders shall use reasonable efforts to
resolve such dispute. Stockholders (and/or their representatives for the
purpose) shall have reasonable access to the books and records of the Company
and Subsidiary for the purpose of determining the accuracy of the calculation of
Adjusted EBITDA. Any dispute between such parties relating
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to the required Earnout Payment shall be resolved in accordance with the
arbitration provisions set forth in Section 1.3 above.
(e) During the period from and after the Closing until June 30, 2001
(the "Relevant Period"):
(i) Neither Buyer, any Subsidiary, nor affiliate of Buyer will
take any actions that are intentionally primarily motivated for the purpose of
materially adversely affecting the Earnout; provided, however, that nothing in
this Agreement shall require Buyer to take any action that Buyer determines, in
its sole discretion, is not in the best interests of Buyer, the Company or
Subsidiary, or which would otherwise constitute a breach of fiduciary duties of
the Board of directors of Buyer, or to conduct its business or the business of
the Company or Subsidiary contrary to its business plan or proper corporate
governance.
(ii) Buyer shall provide Stockholders with quarterly financial
statements of the Company and Subsidiary within thirty (30) days of the end of
each quarter, which financial statements shall include a balance sheet and
statement of income, each in form normally prepared by Buyer in the ordinary
course of business and Buyer shall answer Stockholder's reasonable questions
related thereto.
(iii) In the event of the sale of all of the capital stock or
substantially all of the assets of the Company, as a condition to such sale, the
purchaser thereof shall assume all of the obligations of Buyer under this
Section 1.5.
1.6 TIME AND PLACE OF CLOSING. The closing of the purchase and sale
provided for in this Agreement (herein called the "Closing") shall be held
simultaneously with the execution of this Agreement at the offices of Brown,
Rudnick, Freed & Gesmer, P.C., One Financial Center, Boston, Massachusetts, at
10:00 a.m., on January 7, 2000, or at such other place, date or time as may be
fixed by mutual agreement of the parties (the "Closing Date").
1.7 DELIVERY OF THE COMPANY SHARES. At the Closing, Stockholders shall
deliver or cause to be delivered to Buyer, among other things:
(a) certificates for all the Company Shares owned by each Stockholder,
stock powers attached duly executed in blank, with all signatures notarized or,
at the election of Buyer, guaranteed;
(b) such other documents as may be required to effect a valid transfer
of the Company Shares by Stockholder, free and clear of any and all Encumbrances
(as defined in Section 2.6 hereof) under Article 8 of the Uniform Commercial
Code of the State of Michigan or otherwise;
(c) general releases by all of the stockholders of the Company and
Subsidiary, in their capacities as such, and in their capacities as officers and
directors to the extent they hold such positions with the Company or Subsidiary,
of any liability of the Company or Subsidiary to them, or any claim that they
may have against the Company or Subsidiary; and
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(d) such other documents as may be required elsewhere in this Agreement
or may be reasonably requested by counsel to Buyer.
1.8 FURTHER ASSURANCES. Stockholders from time to time after the
Closing, at the request of Buyer and without further consideration, shall
execute and deliver further instruments of transfer and assignment (in addition
to those delivered under Section 1.7) and take such other action as Buyer may
reasonably require to more effectively transfer the Company Shares to the Buyer.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND STOCKHOLDERS
The Company and each of the Stockholders (other than ▇▇▇▇ ▇▇▇▇▇▇, as
Trustee), jointly and severally, hereby represents and warrants to Buyer as
follows:
2.1 ORGANIZATION AND QUALIFICATION OF THE COMPANY. Each of the Company
and Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Michigan, with full power and authority
to own or lease its properties and to conduct its business in the manner and in
the places where such properties are owned or leased or such business is
conducted by it. The copies of the Company's and Subsidiary's Certificates of
Incorporation (or equivalent document), as amended to date ("Charter"),
certified by the Secretary of State of the State of Michigan, and of the
Company's and Subsidiary's bylaws as amended to date, certified by the Company's
and Subsidiary's secretaries, are attached as SCHEDULE 2.1 hereto and are
complete and correct. Each of the Company and Subsidiary is duly qualified to do
business as a foreign corporation in each of the jurisdictions listed on said
SCHEDULE 2.1 and neither is required to be qualified in any other jurisdiction.
2.2 CAPITALIZATION OF THE COMPANY; TITLE TO STOCK.
(a) The authorized capital stock of the Company consists of 5,000
shares of common stock, $10.00 par value, of which 750 shares are validly issued
and outstanding and are held beneficially and of record by the Stockholders as
set forth hereto on EXHIBIT A attached hereto. The issuance of all of such
issued and outstanding shares was duly authorized and all such shares are fully
paid and nonassessable, were issued in compliance with applicable Federal and
state securities laws, and were not issued in violation of any person's
preemptive rights. There are no shares of capital stock of the Company reserved
for any purpose. Except as set forth on SCHEDULE 2.2, there are no (i)
outstanding or authorized subscriptions, warrants, options or other rights
granted by the Company or any Stockholder to purchase or acquire, or preemptive
rights with respect to the issuance or sale of, the capital stock of the
Company, or which obligate or may obligate the Company to issue any additional
shares of its capital stock or any securities convertible into or evidencing the
right to subscribe for any shares of its capital stock, (ii) other securities of
the Company directly or indirectly convertible into or exchangeable for shares
of capital stock of the Company, (iii) agreements relating to the voting of the
Company's capital stock, (iv) restrictions on the transferability of the
Company's capital stock (by agreement, charter, statute or otherwise), or (v)
other agreements among the Stockholders or any other person relating to the
Company Shares. No "phantom" stock, stock appreciation rights or
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STOCK PURCHASE AGREEMENT
-8-
agreements or similar rights or agreements exist which are intended to confer on
any person rights similar to any rights accruing to owners of the Company
Shares.
(b) Each Stockholder is the record and beneficial owner of the number
and type of the Company Shares set forth next to his name on EXHIBIT A hereto
and is in possession of the certificates evidencing such ownership. Except as
set forth on said EXHIBIT A, no Stockholder owns of record or beneficially any
other shares of capital stock of the Company, or any rights, options, or
warrants with respect thereto. The Company Shares to be delivered by
Stockholders to Buyer pursuant to this Agreement will be, when delivered, duly
authorized, validly issued, fully paid and nonassessable, and will be free and
clear of all Encumbrances under Article 8 of the Uniform Commercial Code of the
State of Michigan or otherwise.
2.3 SUBSIDIARIES.
(a) Except for Simco Automotive Trim, Inc., the Company does not own,
directly or indirectly, any capital stock of any corporation and has no
subsidiaries. Except as set forth on SCHEDULE 2.3, the Company does not own any
securities issued by any other business organization or governmental authority.
The Company is not a partner or participant in any joint venture or partnership
of any kind.
(b) The authorized capital stock of Subsidiary consists of 50,000
shares of common stock, $1.00 par value, of which 1,000 shares are validly
issued and outstanding, fully paid and nonassessable and were issued in
compliance with all Federal and applicable state securities laws and are owned
beneficially and of record by the Company. There are no shares of capital stock
of Subsidiary reserved for any purpose. Except as set forth on SCHEDULE 2.3,
there are no (i) outstanding or authorized subscriptions, warrants, options or
other rights granted by the Company or Subsidiary to purchase or acquire, or
preemptive rights with respect to the issuance or sale of, the capital stock of
Subsidiary, or which obligate or may obligate Subsidiary to issue any additional
shares of its capital stock or any securities convertible into or evidencing the
right to subscribe for any shares of its capital stock, (ii) other securities of
Subsidiary directly or indirectly convertible into or exchangeable for shares of
capital stock of Subsidiary, (iii) agreements relating to the voting of
Subsidiary's capital stock, (iv) restrictions on the transferability of
Subsidiary's capital stock (by agreement, charter, statute or otherwise), or (v)
other agreements among the Company or any other person relating to the capital
stock of Subsidiary. No "phantom" stock, stock appreciation rights or agreements
or similar rights or agreements exist which are intended to confer on any person
rights similar to any rights accruing to owners of capital stock of Subsidiary.
2.4 AUTHORIZATION OF TRANSACTION. The Company has the full power and
authority to execute, deliver and perform this Agreement and the other
agreements to be executed and delivered pursuant to this Agreement and to which
the Company is a party (the "Ancillary Agreements"); to perform its obligations
hereunder and thereunder, and to carry out the transactions contemplated hereby
and thereby. Each of the Stockholders has the unrestricted and absolute power,
authority and capacity to execute and deliver this Agreement and the Ancillary
Agreements to which such Stockholder is a party and to perform such
Stockholder's obligations
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STOCK PURCHASE AGREEMENT
-9-
hereunder and thereunder, and to carry out the transactions contemplated hereby
and thereby. All necessary action, corporate or otherwise, has been taken by
each Stockholder and the Company to authorize the execution, delivery and
performance of this Agreement and each of the Ancillary Agreements and the
transactions contemplated hereby and thereby. The Agreement has been, and each
Ancillary Agreement will be at the Closing, duly executed and delivered by the
Company and each Stockholder and the Agreement is, or upon the Closing will be,
the legal, valid and binding obligation of the Company and each Stockholder,
enforceable against the Company and each Stockholder in accordance with its
terms.
ARTICLE 2A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2A.1 PRESENT COMPLIANCE WITH OBLIGATIONS AND LAWS. Except as set forth
on SCHEDULE 2A.1, neither the Company nor Subsidiary is: (a) in violation of its
Charter or bylaws; (b) in material default in the performance of or material
breach of (with or without the passage of time or the giving of notice) any
obligation, agreement or contract to which it is a party or by which it or any
of its assets are bound; or (c) in violation of any court order, judgment,
administrative or judicial order, writ, decree, stipulation, arbitration, award
or injunction (collectively, "Court Orders"); (d) in material violation of any
license, permit, order, franchise agreement, concession, grant, authorization,
consent or approval (collectively, "Government Authorizations") that is held by
the Company or Subsidiary applicable to it or its business or assets; or (e) in
violation of any material statute, law, ordinance, rule or regulation applicable
to its business or assets (collectively, "Laws").
2A.2 NO CONFLICT OF TRANSACTION WITH OBLIGATIONS AND LAWS. Except as
set forth on SCHEDULE 2A.2, neither the execution, delivery and performance of
this Agreement, nor the performance of the transactions contemplated hereby,
will: (i) constitute a breach or violation of any provision of the Charter or
bylaws of the Company or Subsidiary, or any resolutions adopted by the board of
directors of the Company or Subsidiary; (ii) require any consent, approval or
authorization of or declaration, filing or registration with any person,
including any Government Authorizations; (iii) constitute (with or without the
passage of time or giving of notice) a default under or breach of any agreement,
instrument or obligation to which the Company or Subsidiary is a party or by
which they or any of their respective assets are bound or give any person the
right to accelerate any indebtedness or terminate, modify or cancel any right;
(iv) result in the creation of any lien, option (including right of first
refusal or first offer), encumbrance, charge, restriction, mortgage, pledge,
security interest, title exception, conditional sale agreement, restriction,
claim or charge of any kind or character (each an "Encumbrance") upon any of the
properties or assets of the Company or Subsidiary; (v) contravene, conflict
with, or result in the violation of any Court Order or Law, or give any
governmental authority, whether foreign, federal, state, local or other
political subdivision or agency of any of the foregoing (each a "Government
Authority"), or any other person, the right to exercise any remedy or obtain any
relief under any Court Order or Law, to which the Company or Subsidiary is
subject or by which the properties or assets of the Company or Subsidiary are
bound; or (vi) contravene, conflict with or result in the violation of any of
the terms and requirements of, or give any Governmental Authority the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Government
Authorization.
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STOCK PURCHASE AGREEMENT
-10-
2A.3 FINANCIAL STATEMENTS.
(a) Attached as SCHEDULE 2A.3(a) hereto are the following financial
statements (the "Financial Statements") of the Company and Subsidiary, audited
or unaudited and consolidated or unconsolidated, as indicated, all of which
statements are complete and correct and fairly present the financial position of
the Company and Subsidiary on the date of such statements and the results of
their respective operations on the applicable basis for the periods covered
thereby, and except as set forth on Schedule 2A.3(a) such Financial Statements
have been prepared in accordance with GAAP consistently applied throughout the
periods involved and prior periods:
- Balance sheets, income statements, statements of
changes in stockholders equity and statements of cash
flow at and as of the twelve (12) months ended June
30, 1999, 1998 and 1997.
- Balance sheets, income statements, statements of
changes in stockholders equity and statements of cash
flow at and as of the four (4) months ended October
31, 1999.
The balance sheet dated October 31, 1999 (the "Base Balance Sheet
Date") in the above-referenced financial statements is hereinafter referred to
as the "Base Balance Sheet".
(b) The books of account of the Company and Subsidiary for all years
fairly reflect the financial position of the Company and Subsidiary in all
material respects, and have been maintained on a consistent basis. All auditor's
letters to management of the Company and Subsidiary for all years and other
significant correspondence from or to such auditors during such period, if any,
are attached as SCHEDULE 2A.3(b) hereto.
2A.4 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Company nor
Subsidiary has any liabilities of any nature, whether accrued, absolute,
contingent or otherwise (including without limitation liabilities as guarantor
or otherwise with respect to obligations of others, or liabilities for taxes due
or then accrued or to become due), except: (a) liabilities stated or adequately
reserved against on the Base Balance Sheet; (b) liabilities incurred since the
Base Balance Sheet Date in the ordinary course of business consistent with past
practices and liabilities; and (c) liabilities disclosed in SCHEDULE 2A.4
hereto.
2A.5 ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE 2A.5
hereto, since the Base Balance Sheet Date there has not been:
(a) any amendment to the charter or bylaws of the Company or
Subsidiary.
(b) any change in the properties, assets, liabilities, business,
operations financial condition, including working capital, earnings, reserves,
properties, assets, liabilities, business or operations, of the Company which
change, by itself or in conjunction with all other such changes, whether or not
arising in the ordinary and normal course of business, has been materially
adverse with respect to the Company;
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STOCK PURCHASE AGREEMENT
-11-
(c) any contingent liability incurred by the Company or Subsidiary as
guarantor or otherwise with respect to the obligations of others or any other
contingent or fixed obligations or liabilities incurred by the Company or
Subsidiary;
(d) any obligation or liability incurred by the Company or Subsidiary
other than obligations and liabilities incurred in the ordinary and normal
course of business consistent with past practice (none of which is a claim for
breach of contract, breach of duty, breach of warranty, tort or infringement of
an intellectual property right);
(e) any Encumbrance placed on any of the properties of the Company or
Subsidiary which remains in existence on the date hereof;
(f) any sale or other disposition, or any agreement or other
arrangements for the sale or other disposition, of any of the properties or
assets of the Company or Subsidiary other than the sale of inventory in the
ordinary and normal course of business;
(g) any capital expenditure, lease or commitment or agreement to lease
in excess of $10,000 with respect to any individual item or $25,000 with respect
to all such items;
(h) any write-downs of the value of any inventory (including
write-downs by reason of shrinkage or ▇▇▇▇-down or write-off) as uncollectable
or any notes or accounts receivable, except for write-downs or write-offs that
are in the aggregate less than $25,000 in the ordinary and normal course of
business;
(i) any damage, destruction or loss, whether or not covered by
insurance, affecting the material properties, assets or business of the Company
or Subsidiary;
(j) any declaration, setting aside or payment of any dividend on, or
the making of any other distribution in respect of, the capital stock of the
Company or Subsidiary, including distributions on account of any income tax
liabilities except for normal and ordinary base salary payments to Stockholders;
any direct or indirect redemption, purchase or other acquisition by the Company
or Subsidiary of its capital stock, or any issuance of any securities of the
Company or Subsidiary or any payment made to or for the personal account or
benefit any of the Stockholders;
(k) any entrance into any employment contract, or consulting agreement
or variation in any employment arrangement or benefits; or any change in the
compensation payable or to become payable by the Company or Subsidiary to any of
its officers, employees or agents or in any bonus, pension or profit sharing
payment, enhancement or arrangement made to or with any such officers, employees
or agents;
(l) any change with respect to the business organization, management,
or supervisory personnel of the Company or Subsidiary;
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STOCK PURCHASE AGREEMENT
-12-
(m) any payment or discharge of a material lien, claim, obligation or
liability of the Company or Subsidiary which was not shown on the Base Balance
Sheet or incurred in the ordinary and normal course of business thereafter;
(n) any obligation or liability incurred by the Company or Subsidiary
to any of its officers, directors or shareholders, or any loans or advances made
by the Company or Subsidiary to any of its officers, directors or shareholders,
except normal compensation, benefits and expense allowances payable to officers;
(o) any change in any method of accounting or accounting practice,
whether or not such change was permitted by GAAP;
(p) any payment of any Federal, state or local income taxes on behalf
of the Company, Subsidiary or Stockholders; or
(q) any agreement, whether in writing or otherwise, to take any action
described in this Section 2A.5.
2A.6 CONDUCT OF BUSINESS. Since the Base Balance Sheet Date, each of
the Company and Subsidiary has conducted its business only in the ordinary and
normal course, in substantially the same manner as operated prior to such date
and in accordance with the plans and ongoing business disclosed by the Company
to Buyer prior to such date, and has not changed any current or disclosed method
or introduced any new method of management or operations.
2A.7 PAYMENT OF TAXES. Each of the Company and Subsidiary has duly and
timely filed all federal, state, local, and foreign government income, excise,
gross receipts or franchise tax returns, real estate and personal property tax
returns, sales and use tax returns, employee tax and contribution returns, and
all other tax returns, reports and declarations, including valid extensions
therefor, or estimated taxes required to be filed by it, with respect to all
applicable taxes ("Tax Returns") of every kind, character or description, and
imposed by any government or quasi-governmental authority (domestic or foreign),
and any interest or fines, and any and all penalties or additions relating to
such taxes, charges, fees, levies or other assessments ("Taxes"). All of the Tax
Returns are complete and correct including with respect to all stated gains and
losses. Copies of the Company's and Subsidiary's Federal and state Tax Returns
for the past five (5) years are attached to SCHEDULE 2A.7. All Taxes shown to be
due on each Tax Return have been paid or are being contested in good faith by
the Company or Subsidiary (which contest is being diligently pursued and is
described on SCHEDULE 2A.7). With respect to all other Taxes for which no return
is required, or which have not yet accrued or otherwise become due, adequate
provision has been made in the pertinent Financial Statements and are and will
be reflected in Deferred Liabilities. All Taxes and other assessments and levies
which the Company or Subsidiary are required to withhold or collect have been
withheld or collected and paid over or will be paid over to proper governmental
authorities as required. The income tax returns of the Company and Subsidiary
have never been audited by the Internal Revenue Service or the Michigan Tax
Board except as disclosed on SCHEDULE 2A.7. Neither the Company nor Subsidiary
is aware of any intention on the part of any governmental agency, to examine any
of
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STOCK PURCHASE AGREEMENT
-13-
the Tax Returns. No deficiencies have been asserted or assessments made against
the Company or Subsidiary, nor is the Internal Revenue Service or any other
taxing authority now asserting or, to the knowledge of the Company, Subsidiary
or Stockholders without inquiry, threatening to assert against the Company or
Subsidiary any deficiency or claim for additional taxes or interest thereon or
penalties in connection therewith. Neither the Company nor Subsidiary has
extended the time for the filing of any Tax Return or the assessment of
deficiencies or waived any statute of limitations for any year, which extension
or waiver is still in effect. The provisions for taxes reflected in the
Financial Statements are adequate to cover any tax liabilities of the Company
and Subsidiary in respect of its businesses, properties and operations during
the periods covered by said Financial Statements and all prior periods. All
transfer, excise and other taxes payable to any jurisdiction by reason of the
surrender of the Company Shares pursuant to this Agreement shall be paid or
provided by Stockholders after the Closing out of the consideration payable by
Buyer to Stockholders hereunder.
2A.8 TITLE TO PROPERTIES; LIENS; CONDITION OF PROPERTIES.
(a) Neither the Company nor Subsidiary owns any real property. Set
forth on SCHEDULE 2A.8(a) hereto is a listing of (i) all leases under which the
Company or Subsidiary leases real property, together with the name and address
of the landlord and the basic lease terms (the "Real Property Leases"), (ii) a
complete list of the machinery, equipment and other personal property with an
original cost in excess of $5,000 used or owned by the Company or Subsidiary as
of the date hereof, and (iii) all leases under which the Company or Subsidiary
leases any equipment, machinery or other personal property. The Company and
Subsidiary have delivered to Buyer true, correct and complete copies of all
leases, subleases, rental agreements, contracts of sale, tenancies or licenses
related to any of the real or personal property identified on SCHEDULE 2A.8(a).
Also set forth on SCHEDULE 2.A8(a) is a list of all locations where any of the
personal property or the Company's or Subsidiary's inventory (other than goods
in transit in the ordinary course of business) are located. The real and
personal property identified on such Schedule includes all properties and assets
(whether real, personal or mixed, tangible or intangible or properties or assets
with an original cost less than $5,000) reflected in the Base Balance Sheet or
purchased by the Company or Subsidiary since the Base Balance Sheet Date (except
for such properties or assets sold since the Base Balance Sheet Date in the
ordinary course of business), and includes all property and assets used or
required for use in the Company's or Subsidiary's business, except for property
not required to be disclosed on such Schedule.
(b) Except as specifically disclosed in SCHEDULE 2A.8(b) or in the Base
Balance Sheet, the Company and Subsidiary have good and marketable title to all
their owned personal property, including property described in SCHEDULE 2A.8(b),
free and clear of all Encumbrances and each of its respective leases is valid,
binding and enforceable in accordance with its terms against the parties
thereto, is subsisting, and (subject to obtaining required consents, all of
which are listed on SCHEDULE 2A.2(b)), is fully assignable by the Company or
Subsidiary, and no default by the Company or Subsidiary exists thereunder, or to
the knowledge of the Company or Subsidiary or the Stockholders, by any other
party, and the Company and Subsidiary are in compliance in all material
respects, with all terms and conditions of such agreements.
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STOCK PURCHASE AGREEMENT
-14-
(c) Except as otherwise specified in SCHEDULE 2A.8(c) hereto, all
machinery and equipment used by the Company are in, working order and repair,
normal wear and tear excepted, are adequate for the uses to which they are put,
have been well maintained in accordance with industry standards, and conform, in
all material respects, with all applicable ordinances, regulations and zoning,
safety or other laws and neither the Company, Subsidiary nor the Stockholders
know of any pending or threatened change of any such ordinance, regulation or
zoning, safety or other laws, and there is no pending or, to the knowledge of
the Company, Subsidiary and the Stockholders, threatened condemnation of any
such property.
2A.9 INTENTIONALLY OMITTED.
2A.10 INTENTIONALLY OMITTED.
2A.11 INTELLECTUAL PROPERTY RIGHTS.
(a) For purposes of this Section 2A.11, "Intellectual Property" means
all patents, patent applications, trade marks (whether registered or
unregistered) or service marks, trade ▇▇▇▇ or service ▇▇▇▇ applications, trade
names, copyrights, licenses and computer software, owned or used by the Company.
(b) All rights of ownership of, or material licenses to use,
Intellectual Property held by the Company or Subsidiary are listed on SCHEDULE
2A.11(b). There are no Intellectual Property rights other than those set forth
on SCHEDULE 2A.11(b), necessary to or regularly used in, the conduct of the
business of the Company or Subsidiary as presently conducted or presently in the
process of development.
(c) Except as set forth on SCHEDULE 2A.11(c), all rights to
Intellectual Property required to be listed in SCHEDULE 2A.11(b):
(i) have been duly registered, filed in, or issued by, the
United States Patent Office, United States Register of Copyrights, or the
corresponding offices of other countries identified on said schedule;
(ii) have been properly maintained and renewed in accordance
with all applicable laws and regulations in the United States and such foreign
countries; and
(iii) in the case of patents or patent applications, have been
duly assigned to the Company or Subsidiary and such assignment(s) have been
recorded in the appropriate government offices.
(d) No proceedings to which the Company or Subsidiary is a party have
been commenced which (i) challenge the rights of the Company or Subsidiary in
respect of the Intellectual Property listed on SCHEDULE 2A.11(d), or (ii) charge
the Company or Subsidiary with infringement of any other person's rights in
Intellectual Property and, to the knowledge of the Company or Subsidiary or
Stockholders, no such proceeding is threatened to be filed. To the
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STOCK PURCHASE AGREEMENT
-15-
knowledge of the Company, Subsidiary and the Stockholder, none of the rights in
Intellectual Property listed on SCHEDULE 2A.11(d) is being infringed by any
other person.
(e) Except as set forth on SCHEDULE 2A.11(e), no director, officer or
employee of the Company or Subsidiary owns, directly or indirectly, in whole or
in part, any Intellectual Property right which the Company or Subsidiary has
used, is presently using, or the use of which is reasonably necessary to its
business as now conducted or presently contemplated to be conducted.
(f) Except as set forth on SCHEDULE 2A.11(f), in addition to the
Intellectual Property described above, each of the Company and Subsidiary has
the right to use, free and clear of any claims or rights of others, except
claims or rights described in SCHEDULE 2A.11(f), all trade secrets, customer
lists, and manufacturing and other secret processes and technologies
(collectively "Trade Secrets") required for or used in the manufacture or
marketing of all products formerly or presently produced by the Company or
Subsidiary, including products licensed from others. The Company and Subsidiary
have disclosed to Buyer all material written documentation relating to its Trade
Secrets and has adopted measures adequate to protect its Trade Secrets. To the
knowledge of the Company, Subsidiary and the Stockholders, neither the Company
nor Subsidiary is using or in any way making use of any Trade Secrets of any
third party, including without limitation, a former employer of any present or
past employee of the Company or Subsidiary.
2A.12 CONTRACTS AND COMMITMENTS.
(a) Except for contracts, commitments, plans, agreements and licenses
described in SCHEDULE 2A.12(a) hereto, neither the Company nor Subsidiary is a
party to or subject to any contract, agreement or commitment (written or oral):
(i) for the purchase of any commodity, material, equipment or
asset (except for purchase orders in the ordinary course of business or
contracts involving payments of less than $5,000 each);
(ii) creating any obligations of the Company or Subsidiary
after the Base Balance Sheet Date which call for payments of more than $10,000
during any month for agreements without a fixed term or more than $50,000 over
the term of the agreement for agreements with a fixed term;
(iii) providing for the purchase of all or substantially all
of its requirements of a particular product from a supplier;
(iv) which by its terms does not terminate or is not
terminable without premium or penalty by the Company (or its successor or
assign) or Subsidiary upon ninety (90) days notice;
(v) for the sale or lease of its products not made in the
ordinary course of business;
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STOCK PURCHASE AGREEMENT
-16-
(vi) with any sales agent or distributor of products of the
Company or Subsidiary;
(vii) containing covenants limiting the freedom of the Company
or Subsidiary to compete in any line of business or with any person or entity;
(viii) for a license or franchise (as licensor or licensee or
franchisor or franchisee);
(ix) involving any arrangement or obligation with respect to
the return of inventory or merchandise other than on account of a defect in
condition, or failure to conform to the applicable contract;
(x) with the United States government;
(xi) which contains covenants as to noncompetition,
nondisclosure, nonsolicitation or confidentiality restricting or for the benefit
of the Company or Subsidiary; or
(xii) which is material to the assets or business of the
Company or Subsidiary.
(b) Except as set forth on SCHEDULE 2A.12(b), each of the contracts,
agreements and licenses to which the Company or Subsidiary is a party, including
those listed on SCHEDULE 2A.12(b) (each a "Contract") is valid, binding and
enforceable against the Company or Subsidiary and, to the knowledge of the
Company, Subsidiary or Stockholders, against the other parties thereto; the
Company is in compliance, in all material respects with all terms and conditions
of each Contract; and, neither the Company nor Subsidiary has given nor received
notice of any alleged violation of or default under any such Contract.
(c) Since June 30, 1999, neither the Company nor Subsidiary has
experienced any termination, cancellation, limitation or modification or change
in any business relationship with any material supplier or customer, nor has the
Company or Subsidiary received notice or otherwise have knowledge that any
customer or supplier intends to cease, or materially reduce or change the terms
of, doing business with the Company or to terminate any agreement with the
Company or Subsidiary where such action has had or would have a material adverse
effect on the business of the Company or Subsidiary. SCHEDULE 2A.12(c) lists
every material customer or supplier of the Company and Subsidiary and the amount
of business with that customer. For purposes hereof, a supplier is material if
during fiscal 1997, 1998 and 1999, it accounted for more than five percent (5%)
by value of the orders of the Company or Subsidiary, respectively, for purchase
of all its raw materials and other products essential to its manufacturing
processes for such year. A customer is material if it accounted for more than
five percent (5%) by value of the orders of the Company or Subsidiary,
respectively, in fiscal 1997, 1998 or 1999.
(d) The total backlog of the Company and Subsidiary, respectively,
(including all accepted and unfulfilled sales orders) is not materially less
than the backlog amount set forth on SCHEDULE 2A.12(d), and the aggregate of
all outstanding purchase orders issued by the
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STOCK PURCHASE AGREEMENT
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Company and Subsidiary, respectively (including all contracts or commitments for
the purchase by the Company and Subsidiary, respectively, of materials or other
supplies) is not materially more than the purchase order amount set forth on
such SCHEDULE 2A.12(d). All such sales and purchase commitments were made in the
ordinary course of business. All open customer orders are listed on SCHEDULE
2A.12(d).
2.A.13 LABOR AND EMPLOYEE RELATIONS
(a) Except as shown on SCHEDULE 2A.13 hereto, there are no currently
effective consulting or employment agreements or other material agreements with
individual consultants or employees to which the Company or Subsidiary is a
party. Complete and accurate copies of all such written agreements are attached
to SCHEDULE 2A.13. Also shown on SCHEDULE 2A.13 are the name and rate of
compensation (including all bonus compensation and name of employer) of each
officer, employee or agent of the Company and Subsidiary.
(b) None of the employees of the Company or Subsidiary is covered by
any collective bargaining agreement with any trade or labor union, employees'
association or similar association. There are no representation elections,
arbitration proceedings, labor strikes, slowdowns or stoppages, or claims of
discrimination or unfair labor practices pending, or, to the knowledge of the
Company, Subsidiary or Stockholders, threatened, with respect to the employees
of the Company or Subsidiary nor has the Company or Subsidiary experienced any
work stoppage or other material labor difficulty during the five (5) years
immediately preceding the date of this Agreement.
(c) Each of the Company and Subsidiary has complied in all respects
with all applicable laws, rules and regulations relating to the employment of
labor, including without limitation those relating to wages, hours, unfair labor
practices, discrimination, and payment of social security and similar taxes.
There are no complaints against the Company or Subsidiary pending or, to the
knowledge of the Company, Subsidiary or Stockholder, threatened before the
National Labor Relations Board or any similar state or local labor agencies, or
before the Equal Employment Opportunity Commission or any similar state or local
agency, by or on behalf of any employee or former employee of the Company or
Subsidiary.
(d) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not trigger any
severance pay obligation under any contract or at law or any notice requirement
under any federal or state plant closing law.
(e) The Company has provided to Buyer a complete description of all
employment policies under which the Company or Subsidiary has operated or which
have been communicated to its employees.
(f) Each of the Company and Subsidiary has paid in full (or made
provisions for payment in full) to its employees, agents and contractors all
wages, salaries, commissions, bonuses and other direct compensation for all
services performed by them through the date hereof and on the Closing Date will
have paid in full all such amounts through the Closing Date.
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STOCK PURCHASE AGREEMENT
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Neither the Company nor Subsidiary has and neither of them will have on the
Closing Date, any contingent liability for sick leave, vacation time, holiday
pay, severance pay or similar items not set forth on the Base Balance Sheet.
(g) There has not been any citation, fine or penalty imposed or
asserted against the Company or Subsidiary under any law or regulation relating
to employment, immigration or occupational safety matters.
2.A.14 ERISA AND EMPLOYEE BENEFITS
(a) SCHEDULE 2A.14(a) sets forth a brief description of every plan,
arrangement or policy, written or oral, relating to employees of the Company or
of any member of a controlled group or affiliated service group (as defined in
Internal Revenue Code Section 414(b), (c), (m) and (o)) which includes the
Company (an "Affiliate"), which is:
(i) an employee benefit plan within the meaning of Section 3
of the Employment Retirement Income Security Act of 1977, as amended ("ERISA");
or
(ii) a multiemployer plan within the meaning of Section 3(37)
or 4001(a)(3) of ERISA; or
(iii) a compensation, stock purchase, stock option, stock
bonus, stock appreciation, severance, health, welfare, life, disability or other
benefit plan, fund, program, arrangement or practice which is not covered by
clause (i) or (ii) above (including policies related to vacation pay, holiday
time, moving expense reimbursement programs, sick leave and salary reduction
agreements, charge-in-control agreements, and severance agreements).
(Hereinafter, "ERISA Benefit Plan" refers to plans or arrangements
under clauses (i) and (ii) above and "Benefit Plan" refers to plans or
arrangements under clauses (i) - (iii) above.)
(b) There are no agreements or commitments of the Company, Subsidiary
or any Affiliate, whether or not legally binding, to create any additional
Benefit Plan not listed on SCHEDULE 2A.14(a). Except as set forth on SCHEDULE
2A.14(b), there have been no multiemployer plans or defined benefit pension
plans covering employees of the Company, Subsidiary or an Affiliate within the
last ten (10) years.
(c) With respect to each Benefit Plan, the Company has furnished to
Buyer complete and accurate copies of each Benefit Plan described in SCHEDULE
2A.14(a), including all amendments thereto. With respect to each ERISA Benefit
Plan, the Company has also furnished the three most recent Form 5500s and the
most recent Internal Revenue Service determination letter (if any), plan
actuarial report, summary plan description, summary annual report and employee
manual, as well as summaries of material modifications, material employee
communications, and all reports of the Benefit Plan required by ERISA and the
regulations thereunder. The Company has also furnished Buyer copies of any
insurance contracts or trust agreements through which any ERISA Benefit Plan is
funded, any custodial or investment contracts relating to assets or benefits
under the Benefit Plan, any contracts relating to record
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STOCK PURCHASE AGREEMENT
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keeping or administration for the Benefit Plan, and notice of any material
adverse change occurring with respect to any Benefit Plan since the date of the
most recently completed and filed annual report.
(d) Neither the Company nor Subsidiary has any ERISA Defined Benefit
Plan which constitutes a pension plan within the meaning of Section 3(35) of
ERISA.
(e) Except as set forth on SCHEDULE 2A.14(E), with respect to each
Benefit Plan:
(i) each Benefit Plan complies currently and has complied in
the past, as to form and operation, with the provisions of all applicable
Federal and state laws, such as ERISA and the Internal Revenue Code, including
without limitation all requirements regarding discrimination, disclosure, and
continuation coverage (under Section 4980B of the Code); and no nonexempt
"prohibited transaction" (as defined in Section 4975 of the Code or enumerated
in Section 406(a) or (b) of ERISA) has occurred;
(ii) all required government filings, reports, and notices
have been properly and timely made, and all such filings and employee
disclosures required to be made within thirty (30) days after Closing that are
based in whole or in part upon the period prior to the Closing shall have been
prepared and delivered to Buyer on or before the Closing;
(iii) no such Benefit Plan is currently under audit or
investigation by any governmental agency or body;
(iv) there are no actions, suits or claims (other than routine
claims for benefits) pending or threatened against any of the Benefit Plans or
against the assets of any Benefit Plan;
(v) all premiums due in connection with the Benefit Plan,
including without limitation premiums due the PBGC and premiums for life and
health insurance and annuity contracts, have been paid in full when due and,
except as specifically disclosed on Schedule 2A.14, there are no such premiums
that are attributable to any period of time before the Closing that will not
have been paid on or before the Closing;
(vi) all reports and filings made pursuant to ERISA, including
without limitation all form 5500 and attachments, summary annual reports, and
participant reports, and any other documents reasonably necessary to enable
Buyer to perform its responsibilities with respect to any employee program
subsequent to the Closing, are and shall be available at the offices of the
Company on and immediately after the Closing;
(vii) except as required by COBRA (Section 4980B of the
Internal Revenue Code) or the Family Medical Leave Act, no Benefit Plan provides
health or other welfare benefits to retirees, former employees, or their
dependents.
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STOCK PURCHASE AGREEMENT
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(f) Except as required by COBRA or the Family Medical Leave Act,
neither the Company, Subsidiary nor any Affiliate has made any promises or
incurred any obligation to provide any health or other welfare benefits to any
retirees, former employees, or their dependents.
(g) The execution and delivery of this Agreement by the Company and the
consummation of the transactions contemplated hereunder:
(i) do not constitute a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code;
(ii) will not result in any obligation or liability of the
Buyer, the Company or Subsidiary to any employee of the Company or any Affiliate
or to the PBGC in respect of any Benefit Plan.
2A.15 ENVIRONMENTAL MATTERS
(a) Except as disclosed in SCHEDULE 2A.15(a) hereto, any and all oil,
petroleum products, chemicals, waste oil, hazardous waste, hazardous substances,
toxic substances or hazardous materials (hereafter, "Hazardous Materials") used
or generated by the Company or Subsidiary have always been and are being
generated, used, stored, treated and disposed on and at any of the properties or
facilities owned or leased by the Company or Subsidiary, or, to the knowledge of
the Company, Subsidiary and Stockholders, any predecessors-in-interest of the
Company or Subsidiary (for the purposes of this Section, a "Site") in compliance
in all material respects with all applicable Laws, Court Orders, Government
Authorizations, including those related to the protection of public health,
worker safety, the environment or the management of pollution or Hazardous
Materials (collectively "Environmental Laws") and each of the Company and
Subsidiary is in compliance with all Environmental Laws. For purposes of this
Agreement, "Environmental Laws" include the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Resource Conservation
and Recovery Act ("RCRA"), the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Emergency Planning and Community Right-to-Know Act
of 1986, the Hazardous Materials Transportation Act, the Federal Water Pollution
Control Act, the corresponding state and local statutes, ordinances and
amendments or successor legislation to such acts, the common law and any similar
laws, rules, or regulations.
(b) Except as set forth on SCHEDULE 2A.15(b) hereto, neither the
Company nor Subsidiary has received or become subject to any claim, notice,
complaint, Court Order, administrative order or request for information from any
Government Authority or private party (i) alleging violation of, or asserting
any exceedence or noncompliance with any Environmental Law, by it, (ii)
asserting potential liability, (iii) requesting information, or (iv) requesting
investigation or clean-up of any Site under any Environmental Law.
(c) Except as disclosed in SCHEDULE 2A.15(c), no Hazardous
Materials used or generated by the Company, Subsidiary or, to the knowledge of
the Company, Subsidiary and the Stockholders, any predecessors-in-interest to
the Company or Subsidiary, have ever been, are
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STOCK PURCHASE AGREEMENT
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being, or are intended to be released, discharged, disposed, placed, leaked, or
otherwise caused to become located in the air, soil or water in, under or upon a
Site or any land adjacent thereto. The Company has provided Buyer with copies of
all notices filed pursuant to any Environmental Law.
(d) Except as disclosed in SCHEDULE 2A.15(d), no Hazardous Materials
have ever been shipped by or for the Company or Subsidiary, or, to the knowledge
of the Company, Subsidiary and Stockholders, any predecessor-in-interest to the
Company or Subsidiary, to other sites or facilities for treatment, storage or
disposal, neither the Company nor Subsidiary has received any notice that any
sites or facilities to which any such wastes have been shipped or sent to are
subject to or threatened to become subject to any governmental response action
or clean up order. The Company has provided Buyer with copies of all manifests,
bills of lading and other receipts or evidence documenting disposal or recycling
of Hazardous Materials and sales receipts of the process by-products relating to
operations of the Company and Subsidiary.
(e) Except as set forth on SCHEDULE 2A.15(e) neither the Company,
Subsidiary, nor, to the knowledge of the Company, Subsidiary and Stockholders,
any predecessor-in-interest to the Company or Subsidiary has treated, stored for
more than ninety (90) days, disposed of or recycled any Hazardous Materials on
any Site nor has anyone else, treated, stored for more than ninety (90) days,
disposed of or recycled any of the foregoing on any Site.
(f) Except as disclosed in SCHEDULE 2A.15(f) hereto, Hazardous
Materials have been collected, managed, recycled, shipped and disposed by the
Company or Subsidiary in all material respects in accordance with all
Environmental Laws.
(g) All underground tanks and other storage facilities for Hazardous
Materials located at any Site are disclosed in SCHEDULE 2A.15(g) hereto and, to
the knowledge of the Company, Subsidiary and the Stockholders, no other
underground tanks or other storage facilities for Hazardous Materials have been
located on a Site and copies of all notifications made to Federal, state or
local authorities pursuant to Environmental Laws relating to underground storage
tanks have been provided to Buyer. As of the date hereof, none of such tanks and
other underground storage facilities are in violation of any Environmental Law,
in any respect.
(h) Except as disclosed in SCHEDULE 2A.15(h) hereto, all ▇▇▇▇▇, water
discharges and other water diversions and all air emission sources on any Site
are properly registered and/or permitted under, and copies of such permits have
been provided to Buyer and do not violate any, applicable law in any material
respect.
(i) Except as set forth on SCHEDULE 2A.15(i), there are no
asbestos-containing materials, capacitors, transformers or other equipment or
fixtures containing PCBs located at any Site.
(j) Neither the Company nor Subsidiary produces, purchases or uses in
its products, or purchases or uses any material, part, component or subassembly
incorporated into its
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STOCK PURCHASE AGREEMENT
-22-
products, containing any chemical or other material to which state packaging
and/or disclosure laws apply except as set forth on SCHEDULE 2A.15(j).
(k) There are no Encumbrances under Environmental Laws on any Site or
any assets of the Company or Subsidiary and no government actions have been
taken or are in process which could subject any Site or any such assets to such
encumbrances, and neither the Company nor Subsidiary would be required to place
any notice or restriction relating to Hazardous Materials at any Site in any
deed to such property except as set forth on SCHEDULE 2A.15(k).
(l) the Company has made available to Buyer all environmental audits,
assessments or studies within the possession of the Company or Subsidiary with
respect to the Company's and Subsidiary's facilities or any Site and the results
of sampling and analysis of any asbestos, air, soil, or water, including ground
and surface water, undertaken with respect to its facilities or any Site.
(m) Except as disclosed on SCHEDULE 2A.15(m) hereto, each of the
Company and Subsidiary is in compliance with all Federal and state worker safety
laws and requirements, including, but not limited to requirements under the
Occupational Safety and Health Act.
2A.16 GOVERNMENTAL AUTHORIZATIONS. Each of the Company and Subsidiary
holds all Government Authorizations which are required to permit it to conduct
its business as presently conducted. All such Government Authorizations are
listed on SCHEDULE 2A.16 hereto, together with the applicable expiration date,
and are now, and will be after the Closing, valid and in full force and effect,
and Buyer shall have full benefit of the same. Neither the Company nor
Subsidiary has received any notification of any present failure (or past and
unremedied failure) by it to obtain any such Authorization, approval or
franchise, and no proceeding is pending, or to the knowledge of the Company,
Subsidiary and Stockholders threatened, seeking the revocation or limitation of
any Government Authorization.
▇▇.▇▇ ▇▇▇▇▇▇▇▇ OR OTHER CLAIMS.
(a) Except as set forth on SCHEDULE 2A.17, neither the Company,
Subsidiary nor Stockholders knows of, or has reason to know of, any existing or
threatened claims, or any facts upon which a claim could be based, against the
Company or Subsidiary for services or merchandise that are defective or fail to
meet any product warranties. No claim has been asserted against the Company or
Subsidiary for renegotiation or price redetermination of any business
transaction, and neither the Company, Subsidiary nor Stockholder has any
knowledge of any facts upon which any such claim could be based.
(b) All products that were designed, manufactured or sold by the
Company or Subsidiary complied with agreed product specifications and, in all
material respects, applicable contracts, Laws and standards (whether the
Company, Subsidiary, customer, government or industry) and there are no defects
in such products. SCHEDULE 2A.17 sets forth a summary of the Company's and
Subsidiary's experience with returns of products sold by the Company and
Subsidiary for fiscal years 1997, 1998 and 1999 and for the portion of the
current fiscal year
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STOCK PURCHASE AGREEMENT
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(including claims or notices that products may or will be returned, whether by
reason of alleged overshipments, defective merchandise or otherwise).
2A.18 LITIGATION. Except for matters described in SCHEDULE 2A.18
hereto, there is no action, suit, claim, proceeding, investigation or
arbitration proceeding pending (or, to the knowledge of the Company, Subsidiary
or Stockholders), threatened against or otherwise involving the Company,
Subsidiary or any of the Company Shares or any of the officers, directors,
former officers or directors, employees, shareholders or agents of the Company
or Subsidiary (in their capacities as such) and there are no outstanding Court
Orders to which the Company or Subsidiary is a party or by which any of their
respective assets are bound. Neither the Company, Subsidiary nor any Stockholder
has any reason to believe that any such action, suit, proceeding, investigation
or arbitration proceeding may be brought against the Company or Subsidiary.
2A.19 BORROWINGS AND GUARANTEES. Except as shown on SCHEDULE 2A.19
hereto, there are no agreements or undertakings pursuant to which the Company or
Subsidiary (a) is borrowing or is entitled to borrow any money, (b) is lending
or has committed itself to lend any money, or (c) is a guarantor or surety with
respect to the obligations of any person. Complete and accurate copies of all
such written agreements have been delivered to Buyer and are attached to
SCHEDULE 2A.19.
2A.20 FINANCIAL SERVICE RELATIONS AND POWERS OF ATTORNEY. All of the
arrangements which the Company or Subsidiary has with any bank depository
institution or other financial services entity, whether or not in the Company's
or Subsidiary's name, are completely and accurately described on SCHEDULE 2A.20
hereto, indicating with respect to each of such arrangements the type of
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the current balance as of the date reported, banking
institution and person or persons authorized in respect thereof. Neither the
Company nor Subsidiary has any outstanding power of attorney.
2A.21 INSURANCE.
(a) Each of the Company and Subsidiary maintains (i) insurance on all
of its respective property (including leased or owned) real or personal property
that insures against loss or damage by fire or other casualty (including
extended coverage) and (ii) insurance against liabilities, claims and risks of a
nature and in such amounts that are normal and customary in this industry.
SCHEDULE 2A.21(a) contains a complete and correct list of all policies of
insurance maintained by the Company and Subsidiary (including insurance
providing benefits for employees) in effect on the date hereof, together with
complete and correct information with respect to the premiums, coverages,
insurers, expiration dates, and deductibles in respect of such policies. Such
policies are (1) sufficient to enable the Company and Subsidiary to comply, in
all material respects, with all requirements of Law and all agreements to which
they are subject, (2) will remain in full force and effect through the
respective expiration dates of such policies without the payment of additional
premiums, and (3) will not be adversely affected by, or terminate or lapse by
reason of, the transactions contemplated by this Agreement.
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STOCK PURCHASE AGREEMENT
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(b) Except for amounts deductible under the policies of insurance
described on SCHEDULE 2A.21(a) or with respect to risks assumed as a
self-insurer and described on such Schedule, neither the Company nor Subsidiary
is, nor has the Company or Subsidiary at any time been, subject to any liability
as a self-insurer of the business or assets of the Company or Subsidiary that is
reasonably likely to have a material adverse effect on the Company or
Subsidiary.
(c) Except as set forth on SCHEDULE 2A.21(c), there are no claims
pending under any of said policies, or disputes with insurers, and all premiums
due and payable thereunder have been paid, and all such policies are in full
force and effect in accordance with their respective terms. No notice of
cancellation or termination has been received with respect to any such policy.
(d) Except as forth on SCHEDULE 2A.21(d), neither the Company nor
Subsidiary has any current or prior insurance policy which remains subject to
retrospective adjustment of the premiums payable thereunder.
2A.22 MINUTE BOOKS. The minute books and stock records of the Company
and Subsidiary accurately record all action taken by the shareholders, board of
directors and committees thereof of the Company and Subsidiary and all issuances
and transfers of capital stock of the Company and Subsidiary. Complete and
accurate copies of all minute books and stock records of the Company and
Subsidiary have been delivered to or made available for inspection by Buyer.
2A.23 FINDER'S FEE. Except for the fee payable to W. Y. ▇▇▇▇▇▇▇▇ &
Company, for which the Stockholders shall be solely responsible, neither the
Company, Subsidiary nor Stockholders has incurred or become liable for any
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
2A.24 TRANSACTIONS WITH INTERESTED PERSONS. Except as set forth on
SCHEDULE 2A.24, no officer, supervisory employee, director or stockholder of the
Company or Subsidiary or their respective spouses or children, (a) owns,
directly or indirectly, on an individual or joint basis, any interest in, or
serves as an officer or director of, any customer, competitor or supplier of the
Company or Subsidiary or any, or any organization which has a material contract
or arrangement with the Company or Subsidiary, or (b) has any contract or
agreement (written or oral) with the Company or Subsidiary (other than disclosed
employment agreements).
2A.25 ABSENCE OF SENSITIVE PAYMENTS. Neither the Company, Subsidiary
nor any of the Company's or Subsidiary's directors, officers, agents,
stockholders or employees, on behalf of any of them has, with respect to the
Company or Subsidiary:
(a) made or agreed to make any contributions, payments or gifts of
funds or property to any governmental official, employee or agent where either
the payment or the purpose of such contribution, payment or gift was or is
illegal under the laws of the United States, any state thereof, or any other
jurisdiction (foreign or domestic);
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STOCK PURCHASE AGREEMENT
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(b) established or maintained any unrecorded fund or asset for any
purpose, or has made any false or artificial entries on any of its books or
records for any reason; or
(c) made or agreed to make any contribution or expenditure, or has
reimbursed any political gift or contribution or expenditure made by any other
person to candidates for public office, whether federal, state or local (foreign
or domestic) where such contributions were or would be a violation of applicable
law.
2A.26 YEAR 2000 COMPLIANCE. Except as set forth on SCHEDULE 2A.26, all
hardware, software and embedded systems used by the Company and Subsidiary,
including any hardware, software and embedded systems used in connection with
the product and service development, operations and production, financial
operations, office and administration operations, human resources functions, and
legal and audit functions (the "Systems") are designed to be used prior to,
during, and after the calendar year 2000 ("Year 2000"). The Systems operate and
will operate during each such time periods without material error relating to
date data. In making the foregoing representations, the Company and Subsidiary
may rely on certificates of compliance received from vendors, copies of which
are attached to SCHEDULE 2A.26 with respect to Systems supplied by such vendors.
Specifically:
(i) the Systems will not provide invalid or incorrect results
as a result of date data, specifically including date data which represents or
references different centuries or more than one century;
(ii) the Systems have been designed to ensure Year 2000
compatibility, including date data century recognition, calculations which
accommodate same century and multicentury formulas and date values, and date
data interface values that reflect the century;
(iii) the Systems are designed to be used prior to, during and
after the Year 2000, and the Systems will operate during each such time period
without error relating to date data specifically including any error relating
to, or the product of, date data which represents or references different
centuries;
(iv) the date rollovers will not cause erroneous processing;
(v) manipulation of date data will be free of error over the
range of dates that the Systems are expected to handle;
(vi) explicit century values will be correctly stored and
passed across all applicable interfaces (including user interfaces); and
(vii) all leap year values will be correctly calculated and
processed across all applicable interfaces (including user interfaces).
2A.27 COPIES OF DOCUMENTS. Complete and correct copies of any
underlying documents listed or described in this Article 2 or any Schedules
delivered pursuant to this
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STOCK PURCHASE AGREEMENT
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Article, together with all amendments, renewals and modifications related
thereto have been delivered to Buyer.
2A.28 DISCLOSURE OF MATERIAL INFORMATION. Neither this Agreement nor
any exhibit hereto or certificate issued pursuant hereto contains any untrue
statement of a material fact, or omits to state a material fact necessary to
make the statements herein or therein not misleading, relating to the business
or affairs of the Company or Subsidiary. There is no fact which adversely
affects, or may in the future (so far as now can be reasonably foreseen)
materially adversely affect, the business, condition (financial or otherwise) or
prospects of the Company or Subsidiary which has not been specifically disclosed
herein.
2A.29 DISCLOSURE GENERALLY. If and to the extent any disclosure is
required to be made on more than one Schedule to this Agreement, such disclosure
shall be deemed to be made on all Schedules on which it is required to be
disclosed solely to the extent the disclosure is made on a Schedule to the
Agreement and it is reasonable apparent on its face that such disclosure applies
to each other applicable Schedule. Notwithstanding the foregoing, the Company
and Subsidiary shall use their best efforts to make appropriate cross references
on each Schedule to which such disclosure applies, indicating the reason for
such disclosure. The inclusion of any information on any Schedule, in and of
itself, shall not be deemed to be an admission or acknowledgement by the
Company, Subsidiary or the Stockholders that such information is material to or
outside the ordinary course of business of the Company or Subsidiary.
2A.30 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Except as
expressly set forth in this Agreement, neither the Company, Subsidiary nor
Stockholders makes any representation, warranty or warranty, express or implied,
at law in equity, in respect of the Company or Subsidiary or any of their
respective assets, liabilities, or operations, including with respect to
merchantability or fitness for any particular use or purpose in respect of any
of the Company's or Subsidiary's assets, and any such representations or
warranties are hereby expressly disclaimed. Buyer is acquiring the Company
Shares, and by virtue of such acquisition, the assets of the Company and the
Subsidiary on an "as-is, where-is" basis, subject to the representations and
warranties contained herein.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to the Company and Shareholders as
follows:
3.1 ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full power to own or lease its properties and to conduct its business in
the manner and in the places where such properties are owned or leased or such
business is conducted by it.
3.2 AUTHORIZATION OF TRANSACTION. Buyer has the full power and
authority to execute, deliver and perform this Agreement and to carry out the
transactions contemplated hereby. All necessary action, corporate or otherwise,
has been taken by Buyer to authorize the execution, delivery and performance of
this Agreement and the agreements contemplated hereby and the same is the valid
and binding obligation of Buyer enforceable in accordance with its terms.
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STOCK PURCHASE AGREEMENT
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3.3 NO CONFLICT OF TRANSACTION WITH OBLIGATIONS AND LAWS. Neither the
execution, delivery and performance of this Agreement or any of the agreements
contemplated hereby, nor the performance of the transactions contemplated
hereby, will: (i) constitute a breach or violation of the Buyer's Charter or
bylaws; (ii) conflict with or constitute (with or without the passage of time or
the giving of notice) a breach of, or default under any material agreement,
instrument or obligation to which Buyer is a party or by which it or its assets
are bound which would materially affect the performance by Buyer of its
obligations under this Agreement; (iii) result in a violation of any Law or
Court Order applicable to Buyer.
3.4 FINDER'S FEE. Buyer has not incurred or become liable for any
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
3.5 NO DISTRIBUTION. Buyer is not purchasing the Company Shares with a
current view to distribution thereof and such Company Shares are being purchased
for investment purposes only.
ARTICLE 4. COVENANTS OF THE COMPANY AND STOCKHOLDERS.
The obligation of Buyer to consummate this Agreement and the
transactions contemplated hereby are subject to the condition that on or before
the Closing the actions required by this Article 4 will have been accomplished:
4.1 CONDUCT OF BUSINESS. Except as set forth on SCHEDULE 4.1 attached
hereto, between the date of this Agreement and the Closing, each of the Company
and Subsidiary will do the following unless Buyer shall otherwise consent in
writing:
(a) conduct their respective businesses only in the ordinary course of
business consistent with past practice and refrain from changing or introducing
any method of management or operations except in the ordinary and normal course
of business and consistent with prior practices;
(b) except with respect to the sale of inventory in the ordinary and
normal course of business, refrain from making any purchase, sale or disposition
of any asset or property other than in the ordinary course of business, from
purchasing any capital asset costing more than $10,000 and from mortgaging,
pledging, subjecting to a lien or otherwise encumbering any of its properties or
assets;
(c) refrain from incurring any contingent liability as a guarantor or
otherwise with respect to the obligations of others, and from incurring any
other contingent or fixed obligations or liabilities except those that are usual
and normal in the ordinary course of business;
(d) refrain from entering into any material agreement or amending or
terminating any material contract, agreement or license to which it is a party
or waiving or releasing any material right or claim (except for purchase orders
for new materials entered into in the ordinary course of business in amounts not
to exceed $5,000;
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STOCK PURCHASE AGREEMENT
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(e) maintain its equipment and other assets in good working condition
and repair according to the standards that it maintained to the date of this
Agreement, subject only to ordinary wear and tear;
(f) refrain from making any change or incurring any obligation to make
a change in its Charter or bylaws or its authorized or issued capital stock or
any other of its securities, including warrants and options;
(g) refrain from declaring, setting aside or paying any dividend or
making any other distribution in respect of capital stock, or making any direct
or indirect redemption, purchase or other acquisition of capital stock, of the
Company;
(h) refrain from entering into any employment contract or making any
change in the compensation payable or to become payable to any of its officers,
employees or agents;
(i) refrain from instituting, terminating, changing or making any
representations, either oral or written, to increase or change any Benefit Plan
or adopting any new employee benefit plan or program;
(j) withhold or remit with respect to all employees all employment
taxes;
(k) refrain from making any change in accounting methods or practices;
(l) refrain from prepaying any loans from its stockholders, officers or
directors (if any) or making any change in its borrowing arrangements;
(m) refrain from merging, consolidating or reorganizing with, or
acquiring, any entity;
(n) refrain from agreeing to any audit assessment by any taxing
authority or filing any Federal or state income or franchise tax return or
amendment thereto, unless copies of such Tax Returns have been delivered to the
Buyer for its review and approval prior to filing or from revoking any tax
election or making any agreement or settlement with any taxing authority;
(o) use its best efforts to prevent any change with respect to its
banking arrangements;
(p) use its best efforts to keep intact its business organization, to
keep available its present officers, agents and employees and to preserve the
goodwill of all suppliers, customers and others having business relations with
it;
(q) have in effect and maintain at all times all insurance of the kind,
in the amount and with the insurers set forth in SCHEDULE 2A.21 or equivalent
insurance with any substitute insurers approved by Buyer;
(r) perform all of its obligations under all contracts and other
agreements relating to the Company or Subsidiary, including the discharge of all
accounts payable of the
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STOCK PURCHASE AGREEMENT
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Company and Subsidiary according to the terms and conditions of all invoices
therefore, except when the amount thereof is being contested in good faith, by
appropriate proceedings and with adequate reserves therefore being set aside on
the books of the Company or Subsidiary;
(s) maintain true, correct and complete books of accounts and records
relating to the business of the Company and Subsidiary;
(t) comply in all material respects with all Laws applicable to the
conduct of the Company's and Subsidiary's business or its properties or assets;
(u) promptly upon its knowledge thereof, advise Buyer in writing of the
termination or resignation of any key employee and the circumstances therefore;
(v) refrain from entering into any contract or commitment providing for
payments in excess of $25,000 in any fiscal year, except in the ordinary course
of business after consultation with Buyer;
(w) pay all taxes, assessments, governmental charges or levies imposed
upon it or its income, profits or assets, or otherwise required to be paid by
it, nor fail to pay when due any liability or charge that if, unpaid, might
become an Encumbrance upon any of the Company's or Subsidiary's assets;
(x) promptly upon its knowledge thereof, advise Buyer in writing of (i)
any material adverse change in the financial condition or operations of the
business of the Company or Subsidiary; (ii) any event, condition or circumstance
occurring from the date hereof until the Closing Date that would constitute a
violation or breach of any representation, warranty, covenant, agreement or
provision contained in this Agreement (provided, however, that such disclosure
shall not be deemed to cure any violation or breach of any such representation,
warranty, covenant, agreement or provision), or (iii) any event, occurrence,
transaction or other item that would have been or required to have been
disclosed on any Schedule, delivered hereunder, had such event, occurrence,
transaction or item existed on the date hereof; and
(y) not take or permit to be taken any action that is represented or
warranted in Section 2A.5 not to have been taken since the Base Balance Sheet
Date unless inconsistent with the provisions of this Section 4.1.
4.2 ACCESS TO INFORMATION. From and after the date hereof, at
reasonable times and upon reasonable notice to the Company and Subsidiary, Buyer
shall be entitled, through its employees, advisors and representatives, to make
such investigation of the assets, properties, facilities, personnel, business
and operations of the Company and Subsidiary and the business of the Company and
Subsidiary and, to make such examination of the books, records and financial
condition of the Company and Subsidiary and the business of the Company and
Subsidiary, as Buyer reasonably requests. No investigation by Buyer shall
diminish, obviate or constitute a waiver of, the enforcement of any of the
representations, warranties, covenants or agreements of the Company or
Stockholders under this Agreement or any of the Ancillary Agreements. The
Company and Stockholders shall furnish the representatives of Buyer with all
information and
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STOCK PURCHASE AGREEMENT
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copies of documents concerning the affairs of the business of the Company and
Subsidiary as such representatives may reasonably request and shall cause the
appropriate officers, employees, consultants, agents, accountants and attorneys
of the Company, Subsidiary and Stockholders to cooperate fully with such
representatives in connection with such review and examination and shall make
full disclosure to Buyer of all material facts affecting the financial condition
and business operations of the Company and Subsidiary; provided, however, that
such review and examination shall be requested and conducted by Buyer at such
reasonable times and under such reasonable conditions as the Company may impose
in order to minimize disruption to the Company's and Subsidiary's operations and
personnel, and to maintain reasonable levels of confidentiality with respect to
the transactions contemplated by this Agreement..
4.3 GOVERNMENTAL PERMITS AND APPROVALS; CONSENTS. The Company,
Subsidiary and Stockholders shall use their best efforts (with the reasonable
assistance of Buyer to the extent required to obtain such approvals) to obtain
promptly (i) all permits and approvals from any governmental or regulatory body
required to be obtained by the Company or Subsidiary for the lawful consummation
of the Closing, (ii) the consents set forth or required to be set forth on
SCHEDULE 2A.2 and (iii) appropriate estoppel representation letters in form and
substance reasonably satisfactory to Buyer from the lessors under the Real
Property Leases.
4.4 ASSIGNMENT OF CONTRACTS. To the extent that the sale of the Company
Shares constitute an assignment under the terms of any contracts to which the
Company or Subsidiary is a party (including the leases for real property) or
Governmental Authorizations which requires the consent of another party, the
Company, Subsidiary and Stockholders agree to use their best efforts (with the
reasonable assistance of the Buyer to the extent necessary to obtain such
consents) to obtain the consent of such other party to an assignment in all
cases in which consent is required.
4.5 MAINTENANCE OF GOVERNMENT AUTHORIZATIONS. Stockholders shall at all
times prior to the Closing Date cause the Company or Subsidiary to preserve and
maintain each of the Government Authorizations free and clear of all
Encumbrances. Stockholders shall not take any action or permit the Company or
Subsidiary to take any action which would cause any governmental or regulatory
body to institute proceedings regarding any of the Government Authorizations or
take any other action which would result in the Company or Subsidiary being in
noncompliance in any material respect with the requirements of any governmental
or regulatory body having jurisdiction thereof.
4.6 COLLECTION OF RECEIVABLES. Between the date hereof and the Closing
Date, the Company and Subsidiary will continue to use practices consistent with
past practices in collection procedures in order to collect their receivables.
4.7 RISK OF LOSS. Legal title and risk of loss with respect to the
assets of the Company and the Company Shares shall not pass to Buyer until the
Company Shares are transferred at Closing. Prior to the Closing Date, if any of
the assets of the Company or Subsidiary are destroyed or damages by fire or
other casualty, Buyer may, at its option, if the amount of such destruction or
damage is in excess of $100,000, terminate this Agreement. In the
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STOCK PURCHASE AGREEMENT
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event that Buyer elects not to terminate this Agreement, the amount of any
insurance proceeds shall not be taken into account in connection with the
determination of any adjustment to the Purchase Price.
4.8 EMPLOYEE COMPENSATION. Stockholders agree to cause the Company and
Subsidiary to discharge when due all compensation and benefits to any employee
under all pay and compensation practices applicable to the business of the
Company or Subsidiary and under any employment agreements payable in the
ordinary course of business, except to the extent otherwise reflected on the
Closing Balance Sheet.
4.9 BREACH OF REPRESENTATIONS AND WARRANTIES. Promptly upon the
occurrence of, or promptly upon the Company, Subsidiary or any Stockholder
becoming aware of the impending or threatened occurrence of, any event which
would cause or constitute a breach, or would have caused or constituted a breach
had such event occurred or been known to the Company, Subsidiary or any
Stockholder prior to the date hereof, of any of the representations and
warranties of the Company, Subsidiary and Stockholders contained in or referred
to in this Agreement, such person shall give detailed written notice thereof to
Buyer and the Company, Subsidiary and Stockholders shall use their best efforts
to prevent or promptly remedy the same.
4.10 CONSUMMATION OF AGREEMENT. Each Stockholder shall use his best
efforts to perform and fulfill, and to cause the Company and Subsidiary to
perform and fulfill, all conditions and obligations on their part to be
performed and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be fully carried out. To this end, each of
the Company, Subsidiary and each Stockholder will obtain all necessary
authorizations or approvals including, from the stockholders and Board of
Directors of the Company. From the date hereof until the termination of this
Agreement, neither the Company, Subsidiary nor any Stockholder will discuss or
negotiate with any other party, or entertain or consider any inquiries or
proposals received from any other party, concerning the possible disposition of
the Company's and Subsidiary' business, assets or capital stock.
4.11 EXCLUSIVITY. Between the date of this Agreement and the Closing
Date, neither the Company, Subsidiary or any Stockholder, nor any agent,
officer, director, trustee or representative of any of the foregoing will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Closing Date or the termination of this Agreement in
accordance with its terms, directly or indirectly:
(i) Solicit, encourage or initiate the submission of proposals
or offers from any person or,
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person other than Buyer
or its authorized agents relating to
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STOCK PURCHASE AGREEMENT
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(iv) any acquisition or purchase of all or a material amount
of the assets, business or operations of, or any equity interest in, the Company
or its Subsidiary or any merger, consolidation or other business combination
involving the Company or Subsidiary.
4.12 EMPLOYEE BENEFITS. Prior to the Closing, the Board of Directors of
the Company and/or Subsidiary, as appropriate, will (i) vote to terminate their
Section 401(k) plan ("Plan") effective one day prior to the Closing, and (ii)
amend the Plan to provide that all Participants in the Plan are fully vested in
their account balances pursuant to Internal Revenue Code (the "Code") Section
411(d)(3). After the Closing, the Company and/or Subsidiary, as appropriate,
will authorize the distribution of assets to participants in accordance with
Plan provisions, ERISA, and qualification requirements of the Code. Participants
will be permitted to make direct rollovers of their Plan balances (including
loans) to the 401(k) plan of Buyer in which they participate. However, no
distribution of assets will occur, except with respect to employees who
discontinue employment with the Company, Subsidiary (or Buyer), prior to the
issuance by the Internal Revenue Service of a ruling that the distribution of
assets from the terminated Plan is in accordance with Section 401(k)(10) of the
Code, taking into account the fact that participants of the Plan will
immediately be eligible for participation in a defined contribution plan of the
Company, Subsidiary or Buyer. In the event that such a ruling is not obtained,
Company or Buyer will either (i) maintain the Plan on a "frozen" basis, or (ii)
merge the Plan into a Code qualified employee retirement plan sponsored by
Buyer.
ARTICLE 5. CONDITIONS TO BUYER'S OBLIGATION OF THE BUYER.
The obligation of the Buyer to consummate this Agreement and the
transactions contemplated hereby are subject to the condition that on or before
the Closing, the following actions required by this Article 5 will have been
accomplished:
5.1 DUE DILIGENCE REVIEW. Buyer shall have completed a review of the
assets and business of the Company and Subsidiary which is satisfactory to the
Buyer in its sole discretion in all respects. Such review shall include a review
of all of the financial files and records of the Company and Subsidiary,
including, without limitation, review of the financial budget of the Company and
Subsidiary for fiscal year 2000 and strategic plans for the next two fiscal
years of the Company and Subsidiary, the business and legal records and files of
the Company and Subsidiary, including customer files, correspondence, invoices,
licenses and permits, full access to the Company's and Subsidiary's physical
properties and appropriate personnel of the Company and Subsidiary, and all
patents and written materials related to the Company's and Subsidiary's trade
secrets and proprietary systems, all of which shall be made available pursuant
to Section 4.2 of this Agreement. In addition, the Company, Subsidiary and
Stockholders shall make available to Buyer all environmental files and records
and Buyer shall have the opportunity to conduct a so-called "Phase I" study of
each of the Company's and Subsidiary's facilities, and at the option of Buyer,
in its sole discretion, to undertake one or more "Phase II" studies at one or
more of the Company's and Subsidiary's facilities. The results of the "Phase I"
and "Phase II" studies shall be satisfactory to Buyer in its sole discretion in
all respects. The Company, Subsidiary and Stockholders shall make available the
appropriate personnel necessary to allow Buyer and Buyer's representative to
conduct such studies.
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STOCK PURCHASE AGREEMENT
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5.2 EXCLUDED LIABILITIES. At or prior to the Closing, Stockholders
shall have assumed or satisfied in full all liabilities of the Company and
Subsidiary other than the Permitted Liabilities and any related Encumbrances on
the assets or business of the Company shall have been released.
5.3 REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the representations
and warranties of the Company and Stockholders contained in Article 2 hereof
shall be true and correct in all material respects, to the extent such
representation or warranty does not already contain a materiality limitation,
and shall be true and correct in all respects in all other circumstances, as
though made on and as of the Closing Date and the Company and the Stockholders
shall, on or before the Closing have performed all of their obligations
hereunder which by the terms hereof are to be performed by them on or before the
Closing. Stockholders shall have delivered to Buyer a certificate of themselves
and the Company dated as of the Closing to the foregoing effect.
5.4 RESIGNATIONS OF OFFICERS AND DIRECTORS. The Company shall have
delivered to Buyer, at least five (5) business days prior to Closing, a complete
and correct list of all of the officers and directors of the Company and
Subsidiary and Buyer shall have received the written resignations of such of the
officers, directors of the Company and Subsidiary as Buyer shall have
designated, which resignations will be effective no later than the Closing.
5.5 RELEASES. Buyer shall have received from each of the officers,
directors and stockholders of the Company and Subsidiary the release
contemplated by Section 1.7 hereof in the form of EXHIBIT B hereto.
5.6 OPINION OF STOCKHOLDERS' COUNSEL.
(a) At the Closing, Buyer shall have received from ▇▇▇▇▇, ▇▇▇▇▇ and
▇▇▇▇▇ and from Kotz, Sangster, ▇▇▇▇▇▇▇ and ▇▇▇▇, P.C., counsel(s) for
Stockholders, the Company and Subsidiary, one or more opinions dated as of the
Closing, containing the opinions set forth as EXHIBIT C hereto.
(b) In rendering the foregoing opinion such counsel may, state their
opinions on specific matters of fact to the best of their knowledge and, to the
extent they deem such reliance proper, may rely on (i) certificates of public
officials, (ii) certificates, in form and substance satisfactory to Buyer and
its counsel, of officers of the Company or Subsidiary, and (iii) an opinion or
opinions of other counsel satisfactory to Buyer and its counsel, which opinions
are in form and substance satisfactory to Buyer and its counsel. In the event
such counsel for Stockholders relies upon any such certificate or opinion, a
counterpart of each thereof shall be delivered to Buyer and its counsel.
5.7 NONCOMPETITION AGREEMENTS. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇▇▇ shall have executed and delivered to Buyer the Noncompetition
and Proprietary Information Agreement having substantially the terms of EXHIBITS
D1 through D-4 attached hereto (the "Noncompetition Agreements").
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STOCK PURCHASE AGREEMENT
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5.8 FIRPTA CERTIFICATE. At the Closing each of the Stockholders and the
Company shall have delivered to Buyer certificates which satisfy the
requirements of the regulations under Section 1445 of the Internal Revenue Code
of 1986, as amended.
5.9 ESCROW AGREEMENT. The Escrow Agent and each of the Stockholders
shall have executed and delivered to Buyer the Escrow Agreement in the form of
EXHIBIT E attached hereto pursuant to which Escrow Fund shall be deposited in
escrow to secure payment of indemnification payable to Buyer hereunder.
5.10 REAL PROPERTY LEASES. Buyer shall have received a Consent to
Assignment of Lease and Landlord's Estoppel from each of the landlords under the
Real Property Leases on terms satisfactory to Buyer.
5.11 ABSENCE OF CERTAIN LITIGATION. There shall not be any (a)
injunction, restraining order or order of any nature issued by any court of
competent jurisdiction which directs that this Agreement or any material
transaction contemplated hereby shall not be consummated as herein provided, (b)
suit, action or other proceeding by any federal, state, local or foreign
government (or any agency thereof) pending before any court or governmental
agency, or threatened to be filed or initiated, wherein such complainant seeks
the restraint or prohibition of the consummation of any material transaction
contemplated by this Agreement or asserts the illegality thereof or (c) suit,
action or other proceeding by a private party pending before any court or
governmental agency, or threatened to be filed or initiated, which in the
reasonable opinion of counsel for Buyer is likely to result in the restraint or
prohibition of the consummation of any material transaction contemplated hereby
or the obtaining of an amount in payment (or indemnification) of material
damages from or other material relief against any of the parties or against any
directors or officers of Buyer, in connection with the consummation of any
material transaction contemplated hereby.
5.12 NO BANKRUPTCY. Neither the Company nor Subsidiary shall (i) have
commenced a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or substantially all of its property, or have consented
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
have made a general assignment for the benefit of its creditors, or (ii) have an
involuntary case or other proceeding commenced against it seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereinafter in effect or
seeking the appointing of a trustee, receiver, liquidator, custodian or similar
official of it or substantially all of its property or (iii) have an attachment
placed on all or a significant portion of its assets.
5.13 NO MATERIAL ADVERSE CHANGE. There shall not have been any material
adverse change to the assets, business, operations or condition (financial or
otherwise) of the Company or Subsidiary since the Base Balance Sheet Date.
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STOCK PURCHASE AGREEMENT
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5.14 FINDERS FEE. Stockholders shall have paid the fee to W.Y. ▇▇▇▇▇▇▇▇
& Company described in Section 2A.22 out of the consideration received from
Buyer at the Closing.
5.15 EMPLOYEE BENEFITS. Buyer will offer its employee benefit plans to
former employees of the Company who are employed by Buyer after the Closing.
Furthermore, Buyer (i) shall grant credit for service with the Company, for
eligibility and vesting purposes, to former employees of the Company who are
employed by Buyer after the Closing, and (ii) accept the transfer of rollovers
(including loans) from Buyer's 401(k) Plan upon the issuance of an IRS
Determination Letter on Termination. Following the Closing, Buyer will file an
application for determination letter request with the IRS. When Buyer receives a
favorable determination letter from IRS, distributions from the Company's plan
will be permitted.
ARTICLE 6. CONDITIONS TO OBLIGATIONS OF THE STOCKHOLDERS.
The obligations of the Stockholders to consummate this Agreement and
the transactions contemplated hereby are subject to the condition that on or
before the Closing the following actions required by this Article 6 will have
been accomplished:
6.1 REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the representations
and warranties of Buyer contained in Article 2 hereof shall be true and correct
as though made on and as of the Closing Date and Buyer shall, on or before the
Closing have performed all of its obligations hereunder which by the terms
hereof are to be performed by it on or before the Closing. Buyer shall have
delivered to the Company and Stockholders a certificate of Buyer dated as of the
Closing to the foregoing effect.
6.2 OPINION OF BUYER'S COUNSEL.
(a) At the Closing, the Stockholders and the Company shall have
received from Brown, Rudnick, Freed & Gesmer, P.C., counsel for Buyer, an
opinion dated as of the Closing, substantially in the form of EXHIBIT F.
(b) In rendering said opinion, such counsel may state their opinions on
specific matters of fact to the best of their knowledge and, to the extent they
deem such reliance proper, may rely on (i) certificates of public officials,
(ii) certificates, in form and substance satisfactory to Stockholders and their
counsel, of officers of Buyer, and (iii) an opinion or opinions in form and
substance satisfactory to Stockholders and their counsel, of other counsel
satisfactory to Stockholders and their counsel. In the event such counsel for
Buyer rely upon any such certificate or opinion, a counterpart of each thereof
shall be delivered to Stockholders and their counsel.
ARTICLE 7. INDEMNIFICATION.
7.1 DEFINITIONS For purposes of this Article 7:
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STOCK PURCHASE AGREEMENT
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"Losses" means all losses, damages (including, without limitation,
punitive and consequential damages), fines, penalties, liabilities, payments and
obligations, and all expenses related thereto. Losses shall include any
reasonable legal fees and costs incurred by any of the Indemnified Persons
subsequent to the Closing in defense of or in connection with any alleged or
asserted liability, payment or obligation, whether or not any liability or
payment, obligation or judgment is ultimately imposed against the Indemnified
Persons and whether or not the Indemnified Persons are made or become parties to
any such action.
"Buyer's Indemnified Persons" means the Buyer, its parent, subsidiary
and affiliated corporations, their respective directors, officers, employees,
stockholders and agents, the Company and Subsidiary after the Closing, and any
person serving as a director, officer, employee or agent of the Company and
Subsidiary at Buyer's request after the Closing.
"Indemnified Person" means any person entitled to be indemnified under
this Article 7.
"Indemnifying Person" means any person obligated to indemnify another
person under this Article 7.
"Stockholders' Indemnified Persons" means each of the Stockholders.
"Third Party Action" means any written assertion of a claim, or the
commencement of any action, suit, or proceeding, by a third party as to which
any person believes it may be an Indemnified Person hereunder.
7.2 INDEMNIFICATION BY STOCKHOLDERS.
(a) Subject to the limitations in paragraph (b) below, prior to the
Closing the Company and each of the Stockholders, jointly and severally, and
after the Closing, each of the Stockholders (other than ▇▇▇▇ ▇▇▇▇▇▇), jointly
and severally, agrees to defend, indemnify and hold harmless Buyer's Indemnified
Persons from and against all Losses directly or indirectly incurred by or sought
to be imposed upon any of them:
(i) resulting from or arising out of any breach of any of the
representations or warranties (other than those in Sections 2.1, 2.2, 2.3, 2A.4,
2A.7 and, solely to the extent relating to title, Section 2A.8) made by the
Company, Stockholders or any of them in or pursuant to this Agreement or in any
agreement, document or instrument executed and delivered pursuant hereto or in
connection with the Closing; provided that, for the purpose of this Section 7.2,
any qualification of such representations and warranties by reference to the
materiality of matters stated therein, and any limitations of such
representations and warranties as being "to the knowledge of" or "known to" or
words of similar effect, shall be disregarded in determining any inaccuracy,
untruth, incompleteness or breach thereof;
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STOCK PURCHASE AGREEMENT
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(ii) resulting from or arising out of any breach of any of the
representations or warranties made by the Stockholders pursuant to Sections 2.1,
2.2, 2.3, 2A.4, 2A.7 and, solely to the extent related to title, Section 2A.8;
(iii) resulting from or arising out of any breach of any
covenant or agreement made by the Company or Stockholders or any of them in or
pursuant to this Agreement;
(iv) in respect of any liability or obligation of the Company
or Subsidiary which any Stockholder has expressly assumed or for which any
Stockholder has expressly agreed to be responsible, including pursuant to
Section 5.2 hereof;
(v) resulting from or arising out of any liability, payment or
obligation arising out of any litigation or similar matter required to be
described on SCHEDULE 2A.18, except to the extent of reserves with respect
thereto on the Base Balance Sheet;
(vi) resulting from or arising out of the intentional
misrepresentation or breach of warranty of the Company, Subsidiary or any
Stockholder or any intentional failure of the Company, Subsidiary or any
Stockholder to perform or comply with any covenant or agreement of the Company
or any Stockholder, respectively;
(vii) resulting from or arising out of any liability, payment
or obligation in respect of any taxes owing by the Company, Subsidiary,
Stockholders or Buyer, as successor to the Company or Subsidiary, of any kind or
description (including interest and penalties with respect thereto) for all
periods, or portions thereof, up to an including the Closing Date, except to the
extent of reserves with respect thereto on the Base Balance Sheet;
(viii) resulting from or arising out of any third party
action, whether by a governmental authority or other third party for damages,
including fines or penalties, or clean-up costs or other compliance costs under
any Environmental Law or from the violation of any Environmental Law arising out
of the operations of the Company or Subsidiary on or before the Closing Date;
(ix) resulting from or arising out of any Benefit Plan based
on facts or circumstances existing on or prior to, or acts or omissions
occurring on or prior to the Closing Date;
(x) resulting from or arising out of the power-attorney dated
________, 2000, granted by ▇▇▇▇ ▇. ▇▇▇▇▇▇, individually and as Trustee under
Revocable Living Trust Agreement dated April 25, 1995, to ▇▇▇▇▇ ▇▇▇▇▇ for
purposes of executing this Agreement and the agreements and documents
contemplated hereby; or
(xi) resulting from or arising out of any Third Party Action
(including a binding arbitration or an audit by any taxing authority), that it
is instituted or threatened against any of Buyer's Indemnified Persons.
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STOCK PURCHASE AGREEMENT
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(b) The right to indemnification under paragraph (a) is subject to the
following limitations:
(i) The Company and Stockholders shall have no liability under
paragraph (a) unless one or more of the Buyer's Indemnified Persons gives
written notice to the Company, if prior to Closing, or the Stockholders (other
than ▇▇▇▇ ▇▇▇▇▇▇, if after the Closing), asserting a claim for Losses, including
reasonably detailed facts and circumstances pertaining thereto, before the
expiration of the period set forth below:
(A) for claims under clauses (i), (v), (ix) and
(xi) (insofar as a claim under clause (xi)
relates to any matter included under clause
(i), (v) or (ix)) of paragraph (a) above, a
period of twenty-four (24) months from the
Closing Date;
(B) for claims under clauses (ii), (iii), (iv),
(vi), (vii), (viii) and (xi) (insofar as a
claim under clause (xi) relates to any
matter included under clause (ii), (iii),
(iv), (vi), (vii) or (viii)) of paragraph
(a) above, for so long as any claim may be
made in respect of such matters under any
applicable statute of limitations, as it may
be extended.
(C) for claims under clause (x) and (xi)
(insofar as a claim under clause (xi)
relates to any matter included under clause
(x)) of paragraph (e) above, without limit
as to time;
except that, for any claim based upon a covenant or undertaking which by its
terms is to be performed after the Closing, then the period above shall commence
on the date when such covenant or agreement should have been performed.
(c) Indemnification for claims under paragraph (a)(i) and (xi) (insofar
as a claim relates to any matter included under clause (a)(i)) shall be payable
the Stockholders (other than ▇▇▇▇ ▇▇▇▇▇▇) only if and at such time as the
aggregate amount of all Losses hereunder by Buyer's Indemnified Persons shall
exceed Seventy-Five Thousand Dollars ($75,000) (the "Basket"), at which point
the Stockholders (other than ▇▇▇▇ ▇▇▇▇▇▇) shall be responsible for all Losses,
including the Basket. The Stockholders' aggregate liability for indemnification
under paragraph (a) above shall not exceed the Purchase Price.
(d) The gross amount with respect to indemnification for which the
Stockholders may be liable to a Buyer's Indemnified Person pursuant to this
Article 7 shall be reduced by any insurance proceeds actually recovered by or on
behalf of the Indemnified Person on account of the indemnifiable loss.
(e) Notwithstanding anything contained herein to the contrary,
indemnification for claims under clause (a)(x) and (xi) (insofar as a claim
relates to any matter
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included under clause (a)(x)) shall not be subject to any of the procedural,
dollar, time or other limitations contained herein.
7.3 INDEMNIFICATION BY BUYER.
(a) Subject to the limitations in paragraph (b) below, from and after
the Closing Date, Buyer shall indemnify and hold harmless Stockholders'
Indemnified Persons from any and all Losses directly or indirectly incurred by
or sought to be imposed upon them:
(i) resulting from or arising out of any breach of any of the
representations or warranties made by Buyer, in or pursuant to this Agreement or
in any agreement, document or instrument executed and delivered pursuant hereto
or in connection with the Closing;
(ii) resulting from or arising out of any breach of any
covenant or agreement made by Buyer in or pursuant to this Agreement; or
(iii) resulting from or arising out of Buyer's fraud.
(b) Buyer shall have no liability under paragraph (a) above unless a
Stockholders' Indemnified Person gives written notice to Buyer asserting a claim
for Losses, including reasonably detailed facts and circumstances pertaining
thereto before twenty-four (24) months from the Closing Date.
7.4 DEFENSE OF THIRD PARTY ACTIONS.
(a) Promptly after receipt of notice of any Third Party Action, any
person who believes he, she or it may be an Indemnified Person will give notice
to the potential Indemnifying Person of such action. The omission to give such
notice to the Indemnifying Person will not relieve the Indemnifying Person of
any liability hereunder unless it was prejudiced thereby, nor will it relieve it
of any liability which it may have other than under this Article 7.
(b) Upon receipt of a notice of a Third Party Action, the Indemnifying
Person shall have the right, at its option and at its own expense, to
participate in and be present at the defense of such Third Party Action, but not
to control the defense, negotiation or settlement thereof, which control shall
remain with the Indemnified Person, unless the Indemnifying Person makes the
election provided in paragraph (c) below.
(c) By written notice within forty-five (45) days after receipt of a
notice of a Third Party Action, an Indemnifying Person may elect to assume
control of the defense, negotiation and settlement thereof, with counsel
reasonably satisfactory to the Indemnified Person; provided, however, that the
Indemnifying Person agrees (i) to promptly indemnify the Indemnified Person for
its expenses to date, and (ii) to hold the Indemnified Person harmless from and
against any and all Losses caused by or arising out of any settlement of the
Third Party Action approved by the Indemnifying Person or any judgment in
connection with that Third
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STOCK PURCHASE AGREEMENT
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Party Action. The Indemnifying Persons shall not in the defense of the Third
Party Action enter into any settlement which does not include as a term thereof
the giving by the third party claimant of an unconditional release of the
Indemnified Person, or consent to entry of any judgment except with the consent
of the Indemnified Person.
(d) Upon assumption of control of the defense of a Third Party Action
under paragraph (c) above, the Indemnifying Person will not be liable to the
Indemnified Person hereunder for any legal or other expenses subsequently
incurred in connection with the defense of the Third Party Action, other than
reasonable expenses of investigation.
(e) If the Indemnifying Person does not elect to control the defense of
a Third Party Action under paragraph (c), the Indemnifying Person shall promptly
reimburse the Indemnified Person for expenses incurred by the Indemnified Person
in connection with defense of such Third Party Action, as and when the same
shall be incurred by the Indemnified Person.
(f) Any person who has not assumed control of the defense of any Third
Party Action shall have the duty to cooperate with the party which assumed such
defense.
7.5 MISCELLANEOUS.
(a) Buyer's Indemnified Persons shall be entitled to indemnification
under Section 7.2(a) and Stockholders' Indemnified Persons shall be entitled to
indemnification under Section 7.3(a), regardless of whether the matter giving
rise to the applicable liability, payment, obligation or expense may have been
previously disclosed to any such person unless expressly disclosed on each
particular Schedule requiring such disclosure.
(b) If any Loss is recoverable under more than one provision hereof,
the Indemnified Person shall be entitled to assert a claim for such Loss until
the expiration of the longest period of time within which to assert a claim for
Loss under any of the provisions which are applicable.
(c) Buyer may, at its option, recover any undisputed amount owing by
the Company or the Stockholders for indemnification hereunder by setoff against
any amounts that may otherwise be due from the Buyer, the Company or Subsidiary
to the Stockholders, or any of them, whether hereunder or otherwise; provided
that Buyer shall not be required to recover such claims in such manner and may
proceed against the Indemnified Party at any time or times for recovery of
indemnification claims. In the event any claim for indemnification is being
disputed by the Stockholders, Buyer may withhold payment of any amounts that may
otherwise be due from Buyer, the Company or Subsidiary to the Stockholders or
any of them; provided Buyer shall pay such amount into a mutually agreeable
escrow account pending resolution of such dispute.
7.6 PAYMENT OF INDEMNIFICATION. Amounts determined to be payable for
indemnification under this Article 7 shall be paid or otherwise satisfied by the
Indemnifying Persons within thirty (30) days after notice thereof is given by
the Indemnified Person. Any amount which may become due and payable to any of
the Buyer's Indemnified Persons under Section 7.2(a) shall
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STOCK PURCHASE AGREEMENT
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first be paid or otherwise satisfied out of the Escrow Fund until the same has
been exhausted. Any claims in excess of the Escrow Fund may be satisfied by
whatever remedy is available at law or equity.
ARTICLE 8. TERMINATION OF AGREEMENT.
8.1 TERMINATION. At any time prior to the Closing, this Agreement may
be terminated (a) by mutual consent of the parties, (b) by either side if there
has been a material misrepresentation, breach of warranty or breach of covenant
by the other side in its representations, warranties and covenants set forth
herein, (c) by Buyer if the conditions stated in Article 5 have not been
satisfied at or prior to the Closing, (d) by Stockholders if the conditions
stated in Article 6 have not been satisfied at or prior to the Closing, or (e)
if the Closing shall not have occurred and the transactions contemplated hereby
consummated by January 31, 2000, provided that the right to terminate under this
clause (e) shall not be available to any parties whose breach has been the cause
of such failure to close.
8.2 EFFECT OF TERMINATION. If this Agreement shall be terminated as
above provided, all obligations of the parties hereunder shall terminate but any
breaching party shall remain liable to a nonbreaching party for its damages and,
if Stockholders terminate this Agreement for any reason other than due to a
breach by Buyer of Section 6.1 or Buyer's request for a purchase price reduction
as a result of Buyer's due diligence review, Stockholder shall also pay to
Buyer, in addition to such damages, $50,000 in cash as reimbursement, in part,
for Buyer's expenses incurred in connection with this Agreement and the
transactions contemplated hereby. In the event that this Agreement is so
terminated, each party will return all papers, documents, financial statements
and other data furnished to it by or with respect to each other party to such
other party (including any copies thereof made by the first party).
Notwithstanding such termination, the provisions of Article 7 and Sections 9.2,
9.4, 9.5 and 9.11 shall survive the termination of this Agreement.
8.3 RIGHT TO PROCEED. Anything in this Agreement to the contrary
notwithstanding, if any of the conditions specified in Article 5 hereof have not
been satisfied, Buyer shall have the right to proceed with the transactions
contemplated hereby without waiving its rights hereunder and have all
obligations, undertakings, agreements and other provisions of this Agreement
specifically performed by the Company and Stockholders and Buyer shall have the
right to obtain and order such specific performance in any of the Courts in the
United States or any state or political subdivision thereof. If any of the
conditions specified in Article 6 hereof have not been satisfied, Stockholders
shall have the right to proceed with the transactions contemplated hereby
without waiving its rights hereunder.
ARTICLE 9. MISCELLANEOUS.
9.1 SURVIVAL OF WARRANTIES. All representations, warranties,
agreements, covenants and obligations herein or in any schedule, certificate or
financial statement delivered by any party to another party incident to the
transactions contemplated hereby are material, shall be deemed to have been
relied upon by the other party and shall survive the Closing for the applicable
periods set forth in Article 9 and shall be further actionable subject to the
limitations set forth therein,
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STOCK PURCHASE AGREEMENT
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regardless of any investigation and shall not merge in the performance of any
obligation by either party hereto.
9.2 FEES AND EXPENSES. Each of the parties will bear its own expenses
in connection with the negotiation and the consummation of the transactions
contemplated by this Agreement, (including legal and accounting fees) and no
expenses of the Stockholders, the Company or Subsidiary relating in any way to
the purchase and sale of stock hereunder shall be included in any account of the
Company or Subsidiary as of the Closing or shall be charged to or paid by Buyer
with the exception of the cost of the audited financial statements required to
be prepared and delivered pursuant to this Agreement.
9.3 NOTICES. All notices, requests, demands and other communications
required or permitted to be given (i) hereunder by any party hereto shall be in
writing and shall be deemed to have been duly given when received if delivered
personally, or (ii) on the business day following the business day sent if sent
by prepaid domestically recognized overnight receipted courier if sent
domestically, or (iii) when receipt telephonically acknowledged if sent by
telecopier transmission on a business day or, if not a business day, on the next
following business day, or (v) when answered back if sent by telex, if on a
business day, or if not a business day, or the next following business day, to
the parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
If to the Stockholders or, prior to the Closing, to the Company, to:
▇▇. ▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇ ▇▇▇-▇▇▇▇
Fax:
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Tel: ▇▇▇ ▇▇▇-▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
If to the Buyer, to:
UFP Technologies, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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STOCK PURCHASE AGREEMENT
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Tel: ▇▇▇ ▇▇▇-▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
with a copy to:
Brown, Rudnick, Freed & Gesmer, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and in any case at such other address as the addressee shall have
specified by written notice. All periods of notice shall be measured from the
date of delivery thereof.
9.4 PUBLICITY AND DISCLOSURES. Except as may be otherwise required for
compliance by Buyer with applicable stock exchange rules or securities laws,
neither Buyer nor the Company, Subsidiary nor Stockholders nor any of their
respective agents or representatives shall issue nor approve any news release or
other public announcement concerning this Agreement (or any schedules or
exhibits hereto) prior to the Closing without the prior written approval of the
other. Subsequent to the Closing, Buyer may issue any news release, public
announcement or published information or documents it deem necessary or
desirable.
9.5 CONFIDENTIALITY. The parties agree that they will keep confidential
and not disclose or divulge any confidential, proprietary or secret information
which they may obtain from the Company, Subsidiary or Buyer in connection with
the transactions contemplated herein, or pursuant to inspection rights granted
hereunder, or reveal the financial or other terms and conditions of this
Agreement unless such information is or hereafter becomes public information
through means other than a default hereof by such party or is required to be
disclosed by applicable law, including applicable securities laws or stock
exchange rules or regulations. The obligations of this Section 8.5 shall survive
any termination of this Agreement.
9.6 TIME PERIOD. The parties acknowledge that time is of the essence
with respect to the fulfillment of the respective obligations of the parties
hereto and the Closing of the Transaction as contemplated by this Agreement.
9.7 ENTIRE AGREEMENT. This Agreement (including all exhibits or
schedules appended to this Agreement and all documents delivered pursuant to or
referred to in this Agreement, all of which are hereby incorporated herein by
reference) constitutes the entire agreement between the parties, and all
promises, representations, understandings, warranties and agreements with
reference to the subject matter hereof and inducements to the making of this
Agreement relied upon by any party hereto, have been expressed herein or in the
documents incorporated herein by reference.
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STOCK PURCHASE AGREEMENT
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9.8 SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision hereof.
9.9 ASSIGNABILITY. This Agreement may not be assigned otherwise than by
operation of law (a) by Buyer without the prior written consent of Stockholders
or (b) by Stockholders without the prior written consent of Buyer. However, any
or all rights of Buyer to receive performance (but not the obligations of Buyer
to Stockholders hereunder) and rights to assert claims against Stockholders in
respect of breaches of representations, warranties or covenants of the Company
or of the Stockholders hereunder, may be assigned by Buyer to (i) any direct or
indirect subsidiary, parent or other affiliate of Buyer, or (ii) any person or
entity extending credit to Buyer to finance the purchase price, but any assignee
of such rights under clause (i) or clause (ii) shall take such rights subject to
any defenses, counterclaims and rights of setoff to which Sellers might be
entitled under this Agreement. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and permitted
assigns.
9.10 AMENDMENT. This Agreement may be amended only by a written
agreement executed by Buyer and the Stockholders.
9.11 GOVERNING LAW; VENUE.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts (other than the choice of law
principles thereof), except that any representations and warranties with respect
to real and tangible property shall be governed by and construed in accordance
with the laws of the jurisdiction where such property is situated if other than
in the Commonwealth of Massachusetts.
(b) Any claim, action, suit or other proceeding initiated by any of the
Stockholders' Indemnified Persons against Buyer or by any of the Buyer's
Indemnified Persons against the Company or any Stockholder, under or in
connection with this Agreement may be asserted, brought, prosecuted and
maintained in the Superior Court for __________ County, State of Michigan or the
United States District Court for the ________ District, and each of Buyer, the
Company and the Stockholders hereby waive any and all rights to object to the
laying of venue in any such court and to any right to claim that any such court
may be an inconvenient forum.
9.12 REMEDIES. The parties hereto acknowledge that the remedy at law
for any breach of the obligations undertaken by the parties hereto is and will
be insufficient and inadequate and that the parties hereto shall be entitled to
equitable relief, in addition to remedies at law. In the event of any action to
enforce the provisions of this Agreement, Stockholders shall waive the defense
that there is an adequate remedy at law. Stockholders acknowledge that the
Company Shares are unique and cannot be obtained on the open market. Without
limiting any remedies Buyer may otherwise have hereunder or under applicable
law, in the event Stockholders refuse to perform their obligations under this
Agreement, Buyer shall have, in addition to any other rights at law or equity,
the right to specific performance.
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STOCK PURCHASE AGREEMENT
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9.13 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.
9.14 EFFECT OF TABLE OF CONTENTS AND HEADINGS. Any table of contents,
title of an article or section heading herein contained is for convenience of
reference only and shall not affect the meaning of construction of any of the
provisions hereof.
9.15 Guaranty. EACH OF THE GUARANTORS HEREBY UNCONDITIONALLY GUARANTEES
ALL OF THE OBLIGATIONS OF THE COMPANY AND THE STOCKHOLDERS CONTAINED HEREIN,
INCLUDING WITHOUT LIMITATION THE OBLIGATIONS CONTAINED IN ARTICLE 7 HEREOF, AND
SUCH GUARANTY SHALL BE PRIMARY, ABSOLUTE, UNCONDITIONAL AND CONTINUING.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as an instrument under seal in multiple counterparts as of the date set
forth above by their duly authorized representatives.
THE COMPANY:
SIMCO INDUSTRIES, INC.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
BUYER:
UFP TECHNOLOGIES, INC.
By: /S/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
STOCKHOLDERS
/S/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Trustee UTA dated
December 18, 1978, FBO ▇▇▇▇▇
▇▇▇▇▇, as amended
/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee under
Revocable Living Trust Agreement of
▇▇▇▇▇ ▇. ▇▇▇▇▇ dated March 20, 1995
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▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee under Revocable
Living Trust Agreement of ▇▇▇▇ ▇. ▇▇▇▇▇▇
dated April 25, 1995
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Attorney-in-fact
GUARANTORS
/S/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, individually
/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, individually
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