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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
AMONG
GOSHEN RUBBER COMPANIES, INC.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
AND THE OTHER SHAREHOLDERS IDENTIFIED IN SCHEDULE A,
-------------------
AND
▇▇▇▇'▇ INTERNATIONAL, INC.
OCTOBER 20, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I
SALE OF SHARES
1.1 Transfer of the Shares by the Shareholders..........................................1
1.2 Purchase of the Shares by Buyer.....................................................1
1.3 Payment for the Shares..............................................................2
1.4 Determination of the Closing Payment Amount and Deferred Purchase Price.............2
1.5 Final Determination of Purchase Price...............................................3
1.6 Interest on and Payment of Deferred Purchase Price..................................3
1.7 The Closing.........................................................................4
1.8 Further Assurances..................................................................4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS
2.1 Capital Stock.......................................................................5
2.2 Subsidiaries and Investments........................................................5
2.3 Corporate Organization; Etc.........................................................6
2.4 Authorization, Etc.; No Violation...................................................6
2.5 Consents; No Violation of Agreements................................................6
2.6 Books and Records...................................................................7
2.7 Bank Accounts and Powers of Attorney................................................7
2.8 Financial Statements................................................................7
2.9 Title to Properties; Encumbrances...................................................7
2.10 Real Property.......................................................................8
2.11 Absence of Certain Changes..........................................................8
2.12 Trade Accounts and Other Receivables................................................9
2.13 Leases..............................................................................9
2.14 Property, Plant and Equipment......................................................10
2.15 Patents, Trademarks, Trade Names, Etc..............................................10
2.16 Contracts, Commitments and Bid Proposals...........................................11
2.17 Customers and Suppliers............................................................12
2.18 Labor Difficulties.................................................................13
2.19 Personnel..........................................................................13
2.20 Employee Benefit Plans.............................................................13
2.21 Litigation.........................................................................16
2.22 Compliance with Law................................................................17
2.23 Permits............................................................................17
2.24 Dividends and Other Distributions..................................................17
2.25 Liabilities........................................................................17
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2.26 Taxes..............................................................................17
2.27 Insurance..........................................................................18
2.28 Environmental Laws and Regulations.................................................18
2.29 Absence of Certain Payments........................................................19
2.30 Insider Interests..................................................................19
2.31 Brokers and Finders................................................................20
2.32 Inventory..........................................................................20
2.33 Year 2000 Compliance...............................................................20
2.34 Disclosure.........................................................................20
2.35 Product Warranties and Product Returns.............................................21
2.36 Product Liability..................................................................21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS RELATING TO THE SHARES
3.1 Ownership..........................................................................21
3.2 Title..............................................................................21
3.3 Right to Transfer..................................................................21
3.4 All Shares.........................................................................21
3.5 Binding Agreement..................................................................21
3.6 Conflicts..........................................................................22
3.7 Brokers and Finders................................................................22
3.8 Power of Attorney and Custody Agreement............................................22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Corporate Organization; Etc........................................................22
4.2 Authorization; Etc.................................................................22
4.3 No Violation.......................................................................23
4.4 Brokers and Finders................................................................23
4.5 Purchase Entirely for Own Account..................................................23
4.6 Investment Experience..............................................................23
4.7 Accredited Investor................................................................23
4.8 Restricted Securities..............................................................23
4.9 Insurance Requirements.............................................................23
ARTICLE V
COVENANTS WITH RESPECT TO CONDUCT OF BUSINESS OF THE COMPANY PRIOR TO CLOSING
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5.1 Access.............................................................................24
5.2 Material Adverse Changes; Interim Financial Statements.............................24
5.3 Conduct of Business................................................................25
5.4 Notification of Certain Matters....................................................26
5.5 Permits and Approvals..............................................................26
5.6 Preservation of Business Prior to the Closing Date.................................27
5.7 Certain Filings....................................................................27
ARTICLE VI
INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES
6.1 Indemnification of Buyer...........................................................27
6.2 Article III Indemnification........................................................28
6.3 Appointment of Representative......................................................28
6.4 Offset Against Deferred Purchase Price.............................................29
6.5 Indemnification of Shareholders....................................................29
6.6 Procedure for Third-Party Claims...................................................29
6.7 Survival...........................................................................31
6.8 Notice by the Shareholders.........................................................32
6.9 Not Exclusive Remedy...............................................................32
6.10 Indemnification Limitations........................................................32
6.11 Payment of Indemnity Claims........................................................33
6.12 Arbitration........................................................................34
ARTICLE VII
NONDISCLOSURE OF PROPRIETARY DATA
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 General Conditions; No Orders; Legal Proceedings...................................35
8.2 Conditions to Obligations of Buyer.................................................35
8.3 Conditions to Obligations of the Company...........................................37
ARTICLE IX
TERMINATION OF OBLIGATIONS; SURVIVAL
9.1 Termination of Agreement...........................................................37
9.2 Effect of Termination..............................................................38
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ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Amendment and Modifications........................................................38
10.2 Waiver of Compliance...............................................................38
10.3 Expenses...........................................................................38
10.4 Transfer Taxes.....................................................................38
10.5 Good Faith Efforts; Further Assurances.............................................38
10.6 Remedies; Waiver...................................................................39
10.7 Notices............................................................................39
10.8 Assignment.........................................................................40
10.9 Publicity..........................................................................40
10.10 Governing Law......................................................................40
10.11 Counterparts.......................................................................40
10.12 Headings...........................................................................40
10.13 Entire Agreement...................................................................40
10.14 Third Parties......................................................................40
10.15 Attorneys' Fees....................................................................41
10.16 Specific Performance...............................................................41
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of October 20, 1999, between ▇▇▇▇'▇ International, Inc., a
Delaware corporation ("Buyer"), and Goshen Rubber Companies, Inc., an Indiana
corporation (the "Company"), and each of the shareholders of the Company listed
on Schedule A hereto (individually a "Shareholder," and collectively the
"Shareholders").
W I T N E S S E T H:
WHEREAS, the Shareholders own all of the issued and outstanding
shares of Class A common stock, $5.00 par value per share, of the Company (the
"Class A Common Shares"), all of the issued and outstanding shares of Class B
common stock, $5.00 par value per share, of the Company (the "Class B Common
Shares," and together with the Class A Common Shares, the "Common Shares") and
all of the issued and outstanding shares of Class C preferred stock, $100 par
value per share, of the Company (the "Preferred Shares," and together with the
Common Shares, the "Shares"); and
WHEREAS, the Shares owned by the Shareholders represent all of
the issued and outstanding capital stock of the Company; and
WHEREAS, the Shareholders desire to sell, and Buyer desires to
buy, the Shares for the consideration described herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
SALE OF SHARES
1.1 TRANSFER OF THE SHARES BY THE SHAREHOLDERS. Subject to the
terms and conditions of this Agreement, and in reliance upon the
representations, warranties and agreements herein contained, each Shareholder
shall sell to Buyer all of the Shares owned by such Shareholder and shall
deliver the certificates evidencing the Shares owned by such Shareholder to
Buyer on the Closing Date (as defined in Section 1.7). The certificates
evidencing the Shares shall be properly endorsed for transfer to, or accompanied
by a duly executed stock power in favor of, Buyer or its nominee and otherwise
in a form acceptable for transfer on the books of the Company.
1.2 PURCHASE OF THE SHARES BY BUYER. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations,
warranties and agreements herein contained, Buyer shall acquire the Shares from
the Shareholders on the Closing Date. The aggregate consideration payable for
all of the Shares is an amount equal to the Net Worth (as defined below) of the
Company as of the Closing Date (as defined below) plus $24.0 million (the
"Purchase Price"). "Net Worth" means the book value of the Company's assets less
its liabilities as reflected in the Closing Balance Sheet (as defined in Section
1.5) as determined in conformity with generally accepted accounting principles
consistently applied ("GAAP"); provided, that for
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calculation of the purchase price for the Shares the Company shall not be
required to reduce the Net Worth for the following items (except to the extent
of normal amortization of such items in the ordinary course of business up to
June 30, 1999 and for the period between June 30, 1999 and the Closing Date)
regardless of whether Net Worth is required to be so reduced by GAAP, as of the
Closing Date: (a) any unamortized balance of capitalized loan and credit
facility costs relating to the current and prior credit facilities of the
Company reflected on the Balance Sheet (as defined in Section 2.8) as of the
Balance Sheet Date; (b) any capitalized software costs reflected on the Balance
Sheet as of the Balance Sheet Date; (c) capitalized leased property under lease
obligations with respect to the Company's South Carolina leased facility
reflected on the Balance Sheet as of the Balance Sheet Date; (d) any adjustments
to the book value of the leased assets reflected on the Balance Sheet as of the
Balance Sheet Date leased from Amplicon, Inc. under that certain Lease Agreement
dated October 28, 1994, as amended March 23, 1995, as a result of the
termination of that lease; and (e) any adjustments to the accounts receivable
reflected in the Balance Sheet as of the Balance Sheet Date or the reserves
therefor based on the account receivable and note receivable in the aggregate
amount of $631,000 from Advanced Performance Technology, Inc. All costs,
expenses and fees of the Company (or to be paid by the Company) related to the
transactions contemplated by this Agreement incurred prior to the Closing shall
have been expensed as of the Closing Date, and the effect of such expensing
shall be reflected in the Closing Balance Sheet.
1.3 PAYMENT FOR THE SHARES.
In full consideration of the purchase by Buyer of the Shares,
Buyer shall make the following payments:
(a) Buyer shall pay to Shareholder' Agent (as defined in Section
1.5), for the account of the Shareholders, at the Closing (as defined in Section
1.7) the Closing Payment Amount (as defined in Section 1.4) by wire transfer of
immediately available funds to a custodial account (the "Account") to be
designated by the Shareholders' Agent in writing not later than three business
days prior to the Closing.
(b) In the event that the Purchase Price (as finally determined)
is greater than the Closing Payment Amount, then the Deferred Purchase Price (as
defined in Section 1.4) shall be increased by such difference. In the event that
the Purchase Price (as finally determined) is less than the Closing Payment
Amount, then the Deferred Purchase Price (as defined in Section 1.4) shall be
reduced by such difference.
1.4 DETERMINATION OF THE CLOSING PAYMENT AMOUNT AND DEFERRED
PURCHASE Price. At least five business days prior to the Closing Date, the
Company shall submit to Buyer a calculation setting forth the estimated closing
payment amount (the "Estimated Closing Payment Amount"), together with
supporting documents used by the Company in calculating the Estimated Closing
Payment Amount and such other documents reasonably requested by Buyer to support
the calculation. The Estimated Closing Payment Amount shall be an amount equal
to the estimated Net Worth of the Company as of the Closing Date plus Nineteen
Million Five Hundred Thousand Dollars ($19,500,000), but in no event shall the
Estimated Closing Payment Amount exceed Forty-Two Million Dollars ($42,000,000).
Unless Buyer shall object at least one day prior to the Closing Date in writing
to the Estimated Closing Payment Amount, the payments contemplated by Section
1.3(a) to be made on the Closing Date shall be based on the Estimated Closing
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Payment Amount, and the same shall hereafter be referred to as the "Closing
Payment Amount." The difference between the Purchase Price and the Closing
Payment Amount shall be deferred and paid in accordance with Section 1.6 below
(the "Deferred Purchase Price").
1.5 FINAL DETERMINATION OF PURCHASE PRICE. As soon as practicable
following the Closing Date but in any event not more than 90 days after the
Closing Date, Buyer or its representative shall prepare a balance sheet of the
Company, dated the Closing Date (the "Closing Balance Sheet"), and statements of
income and retained earnings covering the period from July 1, 1999 to the
Closing Date (the "Closing Date Financial Statements"). The Closing Date
Financial Statements shall be prepared in conformity with GAAP. Based upon the
Closing Date Financial Statements, Buyer shall prepare a statement (the
"Purchase Price Statement") setting forth the calculation of the Purchase Price
and the Deferred Purchase Price and deliver the Purchase Price Statement to
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in his capacity as representative of each of and for the
accounts of the Shareholders (the "Shareholders' Agent"). Shareholders' Agent
will then have fifteen (15) business days from the date of receipt of the
Purchase Price Statement to object to any items or calculations on the Purchase
Price Statement. If Shareholders' Agent does not object to the Purchase Price
Statement within such 15-day period, such Purchase Price Statement shall be
deemed final and conclusive with respect to the determination of the Purchase
Price and the Deferred Purchase Price and shall be binding on all parties
hereto, including all Shareholders, for such purpose. In the event that
Shareholders' Agent objects to any item or calculation on the Purchase Price
Statement and such objection cannot be resolved by the parties hereto within
twenty business days following such objection, such objection shall be resolved
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (the "Arbitrating Accountant"), who shall resolve all
such objections as soon as practicable and make any necessary changes or
revisions to the Purchase Price Statement. In resolving such objections, the
Arbitrating Accountant shall determined whether the Purchase Price Statement was
prepared in accordance with this Agreement and whether the Closing Date
Financial Statements upon which the Purchase Price Statement was based were
prepared in conformity with GAAP. Within five days of completion, the
Arbitrating Accountant shall deliver the Purchase Price Statement to Buyer and
Shareholders' Agent. The Purchase Price Statement as finalized by the
Arbitrating Accountant shall be deemed final and conclusive with respect to the
determination of the Purchase Price and the Deferred Purchase Price and shall be
binding on all the parties hereto, including all Shareholders, for such
purposes. The fees and expenses of the Arbitrating Accountant in resolving all
such objections shall be borne one-half by Buyer, on the one hand, and one-half
by the Shareholders on the other hand, and such one-half may be deducted by
Buyer pro rata based on the percentage interests in the Company from the
Deferred Purchase Price remaining payable to all Shareholders.
1.6 INTEREST ON AND PAYMENT OF DEFERRED PURCHASE PRICE.
(a) Subject to the provisions of Section 6.4, Buyer shall pay
interest on the amount of any then outstanding Deferred Purchase Price from and
after the Closing Date until paid in full at a rate of 5.5% per annum, payable
semi-annually, in arrears on January 1 and July 1 of each year, with the first
payment due on January 1, 2000. Interest payments due on a Saturday, Sunday or
national holiday, shall be deemed timely paid if paid on the next succeeding
business day after such Saturday, Sunday or national holiday. Interest shall be
payable to the
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Shareholders' Agent, for the account of the Shareholders, who shall be
responsible for allocating and distributing interest payments to the
Shareholders. Any late interest payment or late repayment of any outstanding
Deferred Purchase Price shall accrue interest at the rate of 9% per annum
commencing the day after the due date for such payment.
(b) Subject to the indemnification limits set forth in Section
6.10, Buyer shall be entitled to offset permanently against the Deferred
Purchase Price amounts that have been (i) consented to by the Shareholders'
Agent or (ii) finally determined in accordance with the procedures set forth in
Article VI with respect to indemnification claims payable by the Shareholders
("Offset Amounts"), and from and after the date of any such offset that Offset
Amount shall no longer constitute a portion of the Deferred Purchase Price.
(c) On January 1, 2003, Buyer shall pay to the Shareholders'
Agent, for the account of the Shareholders, a portion of the Deferred Purchase
Price equal to the Deferred Purchase Price plus any accrued but unpaid interest
thereon less the sum of (i) Offset Amounts finally determined on or prior to
January 1, 2003, (ii) the amount of any asserted, but unresolved claims, against
the Deferred Purchase Price, asserted on or prior to January 1, 2003 and (iii)
Three Million Dollars ($3,000,000). The Shareholders' Agent, or a designee
thereof, shall be responsible for allocating and distributing the payment of a
portion of the Deferred Purchase Price to the Shareholders.
(d) On the fifth anniversary of the Closing Date, Buyer shall pay
to the Shareholders' Agent, for the account of the Shareholders, the balance of
the Deferred Purchase Price plus any accrued but unpaid interest thereon, not
previously paid or distributed to the Shareholders' Agent less any Offset
Amounts not previously offset against the Deferred Purchase Price less the
amount of any asserted, but unresolved claims, against the Deferred Purchase
Price, asserted on or prior to fifth anniversary of the Closing Date. The amount
of the Deferred Purchase Price then subject to a pending claim for
indemnification shall be distributed in the manner described in Section 6.4(b).
1.7 THE CLOSING. The consummation of the sale and purchase of the
Shares referred to in Section 1.1 (the "Closing") shall take place at 10:00
a.m., local time, on the later of (i) five business days after satisfaction or
waiver of the conditions to closing set forth in Article VIII and (ii) December
17, 1999 at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other time and date as the parties
hereto shall by written instrument designate. Such time and date are herein
referred to as the "Closing Date."
1.8 FURTHER ASSURANCES. From time to time after the Closing Date,
the Shareholders shall, at the request of Buyer but without further
consideration, execute and deliver such other and further instruments of sale,
assignment, transfer and conveyance and take such other and further action as
Buyer may reasonably request in order to vest in Buyer or its assigns and put
Buyer or its assigns in possession of the Shares and to carry out and implement
the transactions contemplated herein.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
The Company has delivered to Buyer at least five days before
execution of this Agreement by Buyer, a disclosure schedule (the "Disclosure
Schedule") containing information about the Company and its subsidiaries and
identifying certain documents relating to the Company and its subsidiaries. The
word "subsidiary" when used with respect to any party means any corporation or
other organization, whether incorporated or unincorporated, of which such party
or any other subsidiary of such party is a general partner or of which at least
a majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporations or other organizations is
directly or indirectly owned or controlled by such party or by any one or more
of the subsidiaries. All references to the Company in this Article II shall be
deemed to include the subsidiaries of the Company unless the context otherwise
requires.
As used in this Article II, "to the Company's and the
Shareholders' knowledge" refers to matters within the actual knowledge of
Shareholders other than ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and matters within the actual
knowledge of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, after ▇▇. ▇▇▇▇▇▇▇ makes reasonable inquiry of
the Company's employees having primary responsibility for the matters that are
the subject of the representation or warranty being made and ▇▇. ▇▇▇▇▇▇▇
thereafter reviews any records identified by such employees (provided, that such
employee has made due inquiry) as affecting the validity of the representation
or warranty. The liability of any Shareholder for a breach of any of the
representations and warranties set forth below shall be governed by the
provisions of Article VI.
The Company and each of the Shareholders (other than Ducks
Unlimited, Inc., University of Notre Dame, St. John's Church and Menonite
Foundation, Inc. (collectively, the "Charitable Shareholders")), jointly and
severally, represent and warrant to Buyer as follows:
2.1 CAPITAL STOCK. The Company has an authorized capitalization
consisting of 15,000 shares of Class A common stock, $5.00 par value per share,
of which 10,513 shares are issued and outstanding, 90,000 shares of Class B
common stock, $5.00 par value per share, of which 71,247 shares are issued and
outstanding, and 15,000 shares of Class C preferred stock, $100 par value per
share, of which 14,496 shares are issued and outstanding. All such outstanding
shares have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in Section 2.1 of the Disclosure Schedule,
there are no outstanding options, warrants, rights, calls, commitments,
conversion rights, rights of exchange, plans or other agreements of any
character providing for the purchase, issuance or sale of any shares of capital
stock of the Company, other than as contemplated by this Agreement. Any equity
securities of the Company that were issued and reacquired by the Company were so
reacquired in compliance with all applicable laws, and the Company has no
outstanding obligation or liability with respect thereto.
2.2 SUBSIDIARIES AND INVESTMENTS. Except as set forth in Section
2.2 of the Disclosure Schedule, the Company does not own, directly or
indirectly, any capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust,
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joint venture or other entity. Section 2.2 of the Disclosure Schedule sets forth
each subsidiary of the Company, the authorized capitalization of such
subsidiary, the Company's ownership interest therein, and, to the knowledge of
the Company, the ownership interests of any other security holders of such
subsidiary.
2.3 CORPORATE ORGANIZATION; ETC. The Company is a corporation
duly organized and validly existing under the laws of the State of Indiana. The
Company has full corporate power and authority to carry on its business as it is
now being conducted and to own the properties and assets it now owns. The
Company is duly qualified to do business and is in good standing, if applicable,
in each jurisdiction in which the Company's facilities, leased properties and
nature of the business conducted by it requires it to be qualified except where
the failure to do so would not have a material adverse effect on the Company.
Section 2.3 of the Disclosure Schedule correctly lists the current directors and
officers of the Company. Each subsidiary of the Company is a corporation duly
organized, validly existing and, if applicable, in good standing under the
respective laws of its jurisdiction of organization. Each subsidiary of the
Company has full corporate power and authority to carry on the respective
business of such subsidiary as it is now being conducted and to own the
properties and assets it now owns. Each subsidiary is duly qualified to do
business and is in good standing, if applicable, in those jurisdictions listed
in Section 2.3 of the Disclosure Schedule. Such jurisdictions are the only
jurisdictions in which the character or location of the properties owned or
leased by such subsidiary or the nature of the business conducted by such
subsidiary makes such qualification necessary other than for those jurisdictions
where the failure to do so would not have a material adverse effect on the
Company. Section 2.3 of the Disclosure Schedule correctly lists the current
directors and officers of each subsidiary.
2.4 AUTHORIZATION, ETC.; NO VIOLATION. The Company has full
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The Company has taken all action required by
law, its Articles of Incorporation and Bylaws or otherwise to authorize the
execution and delivery of this Agreement and the transactions contemplated
hereby, and this Agreement is a valid and binding agreement of the Company
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights in general and except that the availability of equitable remedies,
including specific performance, is subject to the discretion of the court before
which any proceeding therefor may be brought. The Board of Directors of the
Company has approved this Agreement and such approval has not been rescinded or
modified since the date of such approval.
Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby shall violate any
provisions of the Articles of Incorporation or Bylaws of the Company or any
subsidiary, or violate in any material respect any statute or law or any
judgment, decree, order, regulation or rule of any court or governmental
authority.
2.5 CONSENTS; NO VIOLATION OF AGREEMENTS. Except as set forth in
Section 2.5 of the Disclosure Schedule, no consent of any person is necessary
for the consummation of the transactions contemplated hereby, including, without
limitation, consents from parties to loans, Leases (as defined in Section 2.13),
Licenses (as defined in Section 2.15),
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Contracts (as defined in Section 2.16) or other agreements of the Company or any
subsidiary, but excluding purchase orders from the Company's customers, and
consents from governmental agencies, whether federal, state or local, and
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the transactions contemplated hereby will directly or
indirectly (with or without notice or lapse of time) contravene, conflict with,
or result in a material violation or material breach of any provision of, or
give any person the right to declare a material default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel, terminate
or modify, any loans, Leases, Licenses, Contracts or other agreements of the
Company or any subsidiary.
2.6 BOOKS AND RECORDS. The minute books of the Company and each
subsidiary, as previously made available to Buyer and its representatives,
contain (a) true, correct and complete copies of the Company's or such
subsidiary's charter documents, as the case may be, and (b) records, accurate in
all material respects, of all meetings of, and corporate actions (including
actions by written consent) taken by, the shareholders and the Board of
Directors and all committees thereof of the Company or such subsidiary.
2.7 BANK ACCOUNTS AND POWERS OF ATTORNEY. Set forth in Section
2.7 of the Disclosure Schedule is an accurate and complete list showing (a) the
name and address of each bank at which the Company or any subsidiary has an
account or safe deposit box, the number of any such account or any such safe
deposit box, and (b) the names of all persons, if any, holding powers of
attorney from the Company or any subsidiary.
2.8 FINANCIAL STATEMENTS. The Company has heretofore furnished
Buyer with the audited consolidated balance sheets of the Company dated as of
June 30, 1997, 1998 and 1999 and the related consolidated statements of income
or operations and retained earnings and statements of cash flows for the years
then ended. The audited consolidated balance sheet of the Company as of June 30,
1999 shall hereinafter be referred to as the "Balance Sheet." Such financial
statements, including the notes thereto, except as indicated therein, have been
prepared in accordance with GAAP.
The Balance Sheet fairly presents, in accordance with GAAP, the
consolidated financial position of the Company at June 30, 1999 (the "Balance
Sheet Date") and, except as indicated therein, reflects all material claims
against and all debts and liabilities of the Company, fixed or contingent, as at
the Balance Sheet Date, and the related statement of income, shareholders'
equity and cash flows fairly present, in accordance with GAAP, the consolidated
results of operations and cash flows of the Company for the year then ended. The
audited balance sheets of the Company dated at June 30, 1997 and 1998 fairly
present, in accordance with GAAP, the consolidated financial position of the
Company at the respective dates thereof and, except as indicated therein,
reflect all material claims, individually and in the aggregate, against and all
debts and liabilities of the Company, fixed or contingent, as at the respective
dates thereof, and the related consolidated statements of income or operations
and retained earnings and cash flows fairly present, in accordance with GAAP,
the results of operations and cash flows of the Company for the years then
ended.
2.9 TITLE TO PROPERTIES; ENCUMBRANCES. Except as set forth in
Section 2.5 above and Section 2.9 of the Disclosure Schedule and except for
properties and assets reflected
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in the Balance Sheet or acquired since the Balance Sheet Date or that have been
sold or otherwise disposed of in the ordinary course of business, each of the
Company and its subsidiaries has good, valid and marketable title to (a) all of
its properties and assets (real and personal, tangible and intangible),
including, without limitation, all of the properties and assets reflected in the
Balance Sheet, except as indicated in the notes thereto, and (b) all of the
properties and assets purchased by the Company or any subsidiary since the
Balance Sheet Date; in each case subject to no encumbrance, lien charge or other
restriction of any kind or character except (i) statutory liens not yet
delinquent; (ii) liens for taxes not yet delinquent or the validity of which are
being contested in good faith by appropriate actions, (iii) liens granted to a
seller to secure all or a portion of the purchase price for an asset or (iv)
liens that do not individually or in the aggregate materially impair the use or
proposed use of the asset or property or materially detract from the value of
the asset or property to which they relate.
2.10 REAL PROPERTY. Except as set forth in Section 2.10(a) of the
Disclosure Schedule, neither the Company nor any subsidiary owns any real
property or any interest therein. Except as set forth in Section 2.10(b) of the
Disclosure Schedule, there are no leases, subleases, licenses, concessions or
other agreements, written or oral, granting to any party or parties other than
the Company or any subsidiary the right of use or occupancy of any portion of
any parcel of real property owned or leased by the Company or any of its
subsidiaries ("Real Property"). Except as set forth in Section 2.10(c) of the
Disclosure Schedule, each parcel of Real Property is zoned for use in the manner
in which the facility is currently being used, and as such the Company's or such
subsidiary's operation of its business thereon is permitted within such use.
Except as set forth in Section 2.10(d) of the Disclosure Schedule, there are no
pending or, to the Company's or the Shareholders' knowledge, threatened
proceedings relating to the zoning for the Real Property. Except as set forth in
Section 2.10(e) of the Disclosure Schedule, there are no outstanding options or
rights of first refusal to purchase the Real Property or any portion thereof or
interest therein. Except as set forth in Section 2.10(f) of the Disclosure
Schedule, there are no parties other than the Company or a subsidiary in
possession of the Real Property. The Real Property is supplied with utilities
and other services necessary and adequate for the operation of the Real Property
as currently operated by the Company or its subsidiary. Except as set forth in
Section 2.10(g) of the Disclosure Schedule, the Real Property, including,
without limitation, the foundations, roofs, floors, plumbing, heating, air
conditioning and electrical systems thereof, are in good operating condition and
repair, ordinary wear and tear excepted.
2.11 ABSENCE OF CERTAIN CHANGES. Except as and to the extent set
forth in Section 2.11 of the Disclosure Schedule, since the Balance Sheet Date,
the Company (including its subsidiaries) has not:
(a) conducted its business other than in the usual and ordinary
manner and in the ordinary course of business, including making all regularly
scheduled payments and commitments (e.g., payroll, taxes, rent and lease
payments) coming due through the Closing Date;
(b) suffered any material adverse change in its working capital,
financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business or operations;
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(c) written down the value of any inventory in an aggregate
amount of $100,000 or more;
(d) waived any claims or rights of the Company of substantial
value;
(e) sold, transferred or otherwise disposed of any of the
Company's properties or assets (real, personal or mixed, tangible or intangible)
with a value of $25,000 or more except in the ordinary course of business and
consistent with past practice;
(f) disposed of or disclosed to any person other than
representatives of Buyer any trade secret, formula, process or know-how of the
Company not theretofore a matter of public knowledge, the disclosure of which
would have a material adverse affect on the business, operations, assets or
financial condition of the Company;
(g) granted any general increase in the compensation of the
Company's employees (including any such increase pursuant to any bonus, pension,
profit sharing or other plan or commitment) or any increase in the compensation
payable or to become payable to any employee of the Company other than increases
reasonable in amount and in the ordinary course of business;
(h) made any change in any method of accounting or accounting
practice that would have a material adverse effect on the assets or operations
of the Company;
(i) to the Company's and the Shareholders' knowledge, replaced
any customer-owned molds or Company/subsidiary-owned molds with new molds at the
expense of the Company or any subsidiary, or given any incentives to customers
by sharing or agreeing to share in the cost of constructing a mold; or
(j) agreed, whether in writing or otherwise, to take any action
described in this Section 2.11.
2.12 TRADE ACCOUNTS AND OTHER RECEIVABLES. All accounts
receivable and other receivables due or recorded in the records and books of
account of the Company as being due to the Company as at the Balance Sheet Date
(less the amount of any allowances or reserves therefor made in the records and
books of account of the Company) were actually made in the ordinary course of
business and shall (subject to the amount of any allowances or reserves therefor
made in the records and books of account of the Company) be good and collectible
in full in the ordinary course of business. The Company has delivered to the
Buyer a complete and accurate aging list of all receivables of the Company and
its subsidiaries as of June 30, 1999.
2.13 LEASES. Section 2.13 of the Disclosure Schedule contains a
true, correct and complete list of each equipment and Real Property lease to
which the Company or any subsidiary is a party (the "Leases"). The Company has
delivered to Buyer a true, correct and complete copy of each Lease, including
all modifications and amendments and all material notices relating thereto. The
Leases are valid, binding and enforceable in accordance with their terms (except
to the extent that enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting the enforcement
of creditors' rights in general and except that the availability of equitable
remedies, including specific
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performance, is subject to the discretion of the court before which any
proceeding therefor may be brought), and are in full force and effect; there are
no existing material defaults by the Company or any subsidiary or, to the
Company's and Shareholder's knowledge, any material defaults by the lessors
thereunder; no event of default has occurred that (whether with or without
notice, lapse of time or the happening or occurrence of any other event) would
constitute a material default thereunder; neither the Company or any subsidiary
is in violation of, nor, to the knowledge of the Company and the Shareholders,
the lessor is not in violation of, any of the terms or conditions of any such
Lease in any material respect; no notice has been given, or received by the
Company or any subsidiary under any Lease alleging a material default by the
lessor or the Company or any subsidiary, as the case may be, of any such Lease.
2.14 PROPERTY, PLANT AND EQUIPMENT. The tangible assets and
equipment of the Company and its subsidiaries are in good operating condition
and repair and are adequate for the uses to which they are being put; and none
of such assets or equipment is in need of maintenance, repairs or replacements
that are material in nature except for (a) ordinary, routine maintenance,
repairs and replacements and (b) other repairs as of the Closing Date that do
not exceed $50,000 in the aggregate. The Company has delivered to Buyer a
complete and accurate copy of the Company's depreciation schedule for the
Company, which includes a list of all of the Company's property, plant and
equipment as of the Balance Sheet Date and as reflected on the Balance Sheet.
2.15 PATENTS, TRADEMARKS, TRADE NAMES, ETC. Section 2.15 of the
Disclosure Schedule lists:
(a) all patents held by the Company and its subsidiaries and all
pending patent applications by the Company or any subsidiary, including for each
such patent the serial or patent number, country, filing and expiration date and
title;
(b) all registered trademarks of the Company or any of its
subsidiaries, and all pending applications for registration by the Company or
any of its subsidiaries of trademarks, including for each such trademark, the
registration or application number, country, filing and expiration date;
(c) all registered copyrights of the Company or any of its
subsidiaries and all applications by the Company or any of its subsidiaries for
registration of copyrights, including the registration number, country and
filing and expiration date of each such copyright;
(d) all licenses by the Company or any of its subsidiaries to any
person or entity of any of the rights identified in subparagraphs (a) through
(c) above; and
(e) all licenses by any other person or entity to the Company or
any of its subsidiaries of any patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights or
processes of any other person or entity.
Each license identified in Section 2.15 of the Disclosure
Schedule pursuant to subparagraphs (d) and (e) above (each a "License") is a
valid and binding obligation of the Company or the subsidiary thereto,
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency,
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moratorium or other laws affecting the enforcement of creditors' rights in
general and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought. With respect to each License, there is no
material default (or event that with the giving of notice or passage of time
would constitute a material default) by the Company or subsidiary thereto or, to
the knowledge of the Company and the Shareholders, the other party thereto. The
Company has not received any notice (and the Company and the Shareholders do not
have knowledge) of claims asserted by any person to use any patents, trademarks,
service marks, trade names, copyrights, technology, know-how or processes
licensed by or to the Company or challenging or questioning the validity or
effectiveness of any License.
The Company and its subsidiaries have good and valid title to, or
otherwise possess adequate rights to use, all patents, trademarks, trade names,
copyrights, inventions, trade secrets, software licenses and other proprietary
information necessary to permit the Company and its subsidiaries to conduct the
business and operations of the Company and its subsidiaries in substantially the
same manner as it had been conducted prior to the date hereof.
Neither the Company nor any of its subsidiaries has, nor, to the
Company's and the Shareholders' knowledge, have any of them been alleged to
have, infringed upon any patent, trademark, trade name or copyright or
misappropriated or misused any invention, trade secret or other proprietary
information entitled to legal protection.
2.16 CONTRACTS, COMMITMENTS AND BID PROPOSALS.
(a) Except as listed in Section 2.16 of the Disclosure Schedule,
the Company and its subsidiaries do not have and are not bound by:
(i) any agreement, contract or commitment that involves
or could involve in excess of $50,000 (or $25,000
if not entered into in the ordinary course of
business) or that has an unexpired term in excess
of four years, excluding specifically in both
instances (A) purchase orders from the Company's
customers and (B) contracts for the purchase by the
Company of raw materials;
(ii) any contracts, except for those contracts that can
be terminated upon 90 days' or less notice, for the
purchase by the Company of raw materials that
involve annual purchases of more than $200,000 or
which extend beyond December 31, 2003;
(iii) any agreement, contract or instrument that grants a
power of attorney, agency or similar authority to
another person or entity;
(iv) any loan or advance to, investment in, guaranty or
other contingent liability in respect of any
indebtedness or obligation of, any individual,
partnership, joint venture, corporation, limited
liability company, trust, unincorporated
organization, government or other entity or any
agreement, contract or commitment relating to the
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making of any such loan, advance, investment,
guaranty or other contingent liability;
(v) any agreement, contract or commitment relating to
the employment of any person by the Company or any
subsidiary, or any bonus, deferred compensation,
pension, severance, profit sharing, stock option,
employee stock purchase, retirement or other
employee benefit plan;
(vi) any management service, consulting, sales
representative, distributor or similar type of
contract;
(vii) any confidentiality, nondisclosure or similar
agreement entered into outside the ordinary course
of business, except for agreements which by their
terms prohibit the disclosure of the existence of
such agreement;
(viii) any agreement, contract or commitment limiting the
freedom of the Company or any subsidiary to engage
in any line of business or compete with any person
or entity; or
(ix) any contract, agreement or employee benefit plan
that contains a provision providing for increased
benefits or payments, or accelerated payments or
benefits, upon a change of control of the Company,
including, without, limitation any change of
control based on the transactions contemplated by
this Agreement.
(b) Each contract, agreement and commitment listed in Section
2.16 of the Disclosure Schedule (each a "Contract") is valid and binding on the
Company or subsidiary in accordance with its terms and in full force and effect,
and, except as set forth in Section 2.16 of the Disclosure Schedule, there
exists no material default, event, occurrence, condition or act (including the
purchase of the Shares hereunder) that, with the giving of notice, the lapse of
time or the happening of any other event or condition, would become a material
default thereunder. The Company or its subsidiary has performed all of the terms
or conditions of the Contracts (or any contract, agreement or commitment
required to be set forth in Section 2.18 of the Disclosure Schedule) in all
material respects, and all of the covenants to be performed by any other party
thereto have been materially performed. The Company has heretofore delivered to
Buyer a true, correct, accurate and complete copy of the Contracts.
2.17 CUSTOMERS AND SUPPLIERS. Section 2.17 of the Disclosure
Schedule contains a complete and accurate list of (i) the 10 largest customers
of the Company and its subsidiaries in terms of revenues during each of the
Company's last two fiscal years, showing the approximate total sales to each
such customer during each period; and (ii) the 10 largest suppliers of the
Company and its subsidiaries in terms of purchases during each of the Company's
last two fiscal years, showing the approximate total purchases from each such
supplier during such periods. Except as set forth in Section 2.17 of the
Disclosure Schedule, since the Balance Sheet Date, to the Company's and the
Shareholders' knowledge, there has
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been no material adverse change in the business relationship of the Company or
any of its subsidiaries with any customer or supplier listed on Schedule 2.17.
2.18 LABOR DIFFICULTIES. Except as set forth in Section 2.18 of
the Disclosure Schedule, (a) the Company and its subsidiaries are in material
compliance with all federal, state or other applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and are not engaged in any unfair labor practice as defined in
the National Labor Relations Act; (b) there is no labor strike, dispute,
slowdown or stoppage actually pending or, to the Company's and the Shareholders'
knowledge, threatened against the Company or any of its subsidiaries; (c) none
of the Company's or any subsidiaries' employees is covered by a collective
bargaining agreement or is a member of a union, and no representation question
exists respecting the employees of the Company or any subsidiary; (d) there
exists no basis for the assessment of unpaid wages with respect to employees of
the Company or any subsidiary; (e) there has not been any material adverse
change in relations with employees of the Company or any of its subsidiaries as
a result of the announcement, if any, of the transactions contemplated by this
Agreement; and (f) since the Balance Sheet Date, no officer or key employee of
the Company or any of its subsidiaries has resigned, and to the knowledge of the
Company and the Shareholders, no officer or key employee of the Company or any
of its subsidiaries has indicated that he or she intends to resign.
2.19 PERSONNEL. Section 2.19 of the Disclosure Schedule sets
forth a true and complete list of:
(a) the name and current salary of all exempt employees of the
Company and its subsidiaries as of June 30, 1999, who receive salaries in excess
of $50,000 per year; and
(b) the name and compensation arrangements of any other employees
of the Company and its subsidiaries not listed in Section 2.19 of the Disclosure
Schedule pursuant to subparagraph (a) above, who receive salaries or base
compensation in excess of $50,000 per year.
2.20 EMPLOYEE BENEFIT PLANS.
(a) Employee Benefit Plans, Collective Bargaining and Employee
Agreements, and Similar Arrangements.
(i) Section 2.20(a)(i) of the Disclosure Schedule lists
all employee benefit plans and employment or severance agreements or
other similar arrangements to which the Company or any of its
subsidiaries is or during the last five years has been a party or by
which it is or during the last five years has been bound, legally or
otherwise, including, without limitation, (A) any profit-sharing,
deferred compensation, bonus, stock option, stock purchase, pension,
retainer, consulting, retirement, severance, welfare or incentive plan,
agreement or arrangement, (B) any plan, agreement or arrangement
providing for "fringe benefits" or perquisites to employees, officers,
directors or agents, including, but not limited to, benefits relating to
Company automobiles, clubs, vacation, child care, parenting, sabbatical,
sick leave, medical, dental, hospitalization, life insurance and other
types of insurance, (C) any employment agreement, or (D) any other
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"employee benefit plan" (within the meaning of Section 3(3) of ERISA)
(collectively, the "Plans").
(ii) The Company has delivered to Buyer true and complete
copies of all documents and summary plan descriptions with respect to
the Plans, or summary descriptions of any Plans not otherwise in
writing.
(iii) Except as set forth in section 2.20(a)(iii) of the
Disclosure Schedule, there are no negotiations, demands or proposals
that are pending or, to the Company's and the Shareholders' knowledge,
have been made which concern matters now covered, or that would be
covered, by plans, agreements or arrangements of the type described in
this Section 2.20(a).
(iv) Except as set forth in Section 2.20(a)(iv) of the
Disclosure Schedule, the Company is in material compliance with the
applicable provisions of ERISA (as amended through the date of this
Agreement), the regulations and published authorities thereunder, and
all other laws applicable with respect to all the Plans. The Company has
performed all of its material obligations under all the Plans. There is
no action, suit, inquiry, proceeding or investigation by or before any
court or governmental or other regulatory or administrative agency or
commission ("Actions") (other than routine claims for benefits) pending
or, to the Company's and Shareholders' knowledge, threatened against the
Plans or their assets, or arising out of the Plans, and all of the Plans
have been operated in material compliance with their terms. No facts, to
the Company's or Shareholders' knowledge, exist that could give rise to
any such Actions.
(v) Subject to the collective bargaining agreements listed
in Section 2.18 of the Disclosure Schedule and except as otherwise
specified in such Plan, and except as specified in Section 2.20(a)(v) of
the Disclosure Schedule, each of the Plans can be terminated by the
Company within a period of 30 days following the Closing Date, without
payment of any additional compensation or amount or the additional
vesting or acceleration of any such benefits.
(vi) All obligations of the Company under each of the
Plans (x) that are due prior to the Closing Date have been paid or shall
be paid prior to the Closing Date, and (y) that have accrued prior to
the Closing Date have been or shall be paid prior to the Closing Date or
properly accrued on the Company's balance sheet.
(vii) Except as set forth in Section 2.20(a)(vii) of the
Disclosure Schedule, no employee, consultant or agent of the Company is
entitled to any severance, parachute or other form of payment or benefit
from the Company or its successors or assigns arising or becoming due as
a result of the consummation of the transactions contemplated by this
Agreement.
(b) Qualified Plans. Except as set forth in Section 2.20(b) of
the Disclosure Schedule, no Plan is a stock bonus, pension or profit-sharing
plan within the meaning of Section 401(a) of the Internal Revenue Code of 1986,
as amended (the "Code). Each Plan which is intended to qualify under Section
401(a) of the Code is so qualified.
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(c) Title IV Plans. Except as set forth in Section 2.20(c) of the
Disclosure Schedule, no Plan is a plan subject to Title IV of ERISA.
(d) Multiemployer Plans. Except as set forth in Section 2.20(d)
of the Disclosure Schedule, no Plan is a "multiemployer plan" (within the
meaning of Section 3(37) of ERISA) (a "Multiemployer Plan").
(e) Health Plans. All group health plans of the Company have been
operated in material compliance with the group health plan continuation coverage
requirements of the Code to the extent such requirements are applicable. Except
as set forth in Section 2.20(e) of the Disclosure Schedule and except to the
extent required under Section 4980B of the Code, no Plan provides health or
welfare benefits (through the purchase of insurance or otherwise) for any
retired or former employee of the Company or any of its ERISA Affiliates (as
such term is defined below).
(f) Fines and Penalties. Except as set forth in Section 2.20(f)
of the Disclosure Schedule, there has been no act or omission by the Company, or
any of its ERISA Affiliates, that has given rise to or may give rise to fines,
penalties, taxes or related charges under Section 502(c), (i) or (l) or Section
4071 of ERISA or Chapter 43 of the Code.
(g) Pension Plans. As of the most recent valuation date for any
Pension Plan (as such term is defined below), there was no unfunded benefit
liability (as defined in Section 4001(a)(18) of ERISA), individually or in the
aggregate for all Pension Plans (excluding for purposes of such computation any
Pension Plans with respect to which assets exceed benefit liabilities). "Pension
Plan" means any Plan, other than a Multiemployer Plan, which is subject to
Section 412 of the Code or Section 302 of ERISA.
(h) Multiemployer Plans. As of the most recent valuation date for
each Multiemployer Plan for which the actuarial report is available, there was,
based on information available pursuant to Section 4221(e) of ERISA, no
potential liability of the Company or any of its ERISA Affiliates for a complete
withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of
ERISA).
(i) Other Events. None of the following events has occurred, nor
can any of the following events reasonably be expected to occur:
(i) a "reportable event" within the meaning of Section
4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice
to the Pension Benefit Guaranty Corporation has been waived by
regulation);
(ii) the failure to meet the minimum funding standard of
Section 412 of the Code with respect to any Pension Plan (whether or not
waived in accordance with Section 412(d) of the Code), the failure to
make by its due date a required installment under Section 412(m) of the
Code with respect to any Pension Plan, or the failure to make any
required contribution to a Multiemployer Plan;
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(iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to
terminate such plan in a distress termination described in Section
4041(c) of ERISA;
(iv) the withdrawal by the Company or any of its ERISA
Affiliates from any Pension Plan with two or more contributing sponsors
or the termination of any such Pension Plan resulting in liability
pursuant to Sections 4063 or 4064 of ERISA;
(v) the institution by the Pension Benefit Guaranty
Corporation of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which might constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan;
(vi) the imposition of liability on the Company or any of
its ERISA Affiliates pursuant to Sections 4062(e) or 4069 of ERISA or by
reason of the application of Section 4212(c) of ERISA;
(vii) the withdrawal of the Company or any of its ERISA
Affiliates in a complete or partial withdrawal (within the meaning of
Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is
any potential liability therefor, or the receipt by the Company or any
of its ERISA Affiliates of notice from any Multiemployer Plan that it is
in reorganization or insolvency pursuant to Sections 4241 or 4245 of
ERISA, or that it intends to terminate or has terminated under Sections
4041A or 4042 of ERISA;
(viii) receipt from the IRS of notice of the failure of
any Pension Plan (or any other Plan intended to be qualified under
Section 401(a) of the Code) to qualify under Section 401(a) of the Code,
or the failure of any trust forming part of any Pension Plan to qualify
for exemption from taxation under Section 501(a) of the Code; or
(ix) the imposition of a lien pursuant to Sections
401(a)(29) or 412(n) of the Code or pursuant to ERISA with respect to
any Pension Plan.
"ERISA Affiliate" means (i) any corporation which is a member of a
controlled group of corporations within the meaning of Section 414(b) of the
Code of which the Company is a member; (ii) any trade or business (whether or
not incorporated) which is a member of a group of trades or businesses under
common control within the meaning of Section 414(c) of the Code of which the
Company is a member; and (iii) any member of an affiliated service group within
the meaning of Section 414(m) or (o) of the Code of which the Company, any
corporation described in clause (i) above or any trade, or business described in
clause (ii) above is a member. Any former ERISA Affiliate of the Company shall
continue to be considered an ERISA Affiliate within the meaning of this
definition with respect to the period such entity was an ERISA Affiliate of the
Company and with respect to liabilities arising after such period for which the
Company could be liable under the Code or ERISA.
2.21 LITIGATION. Except as set forth in Section 2.21 of the
Disclosure Schedule, there is no Action pending or, to the Company's and the
Shareholders' knowledge, threatened
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against the Company or any subsidiary, or which questions or challenges the
validity of this Agreement or any action taken or to be taken by the Company
pursuant to this Agreement or in connection with the transactions contemplated
hereby; nor, to the Company's or Shareholders' knowledge, is there any valid
basis for any such Action. Except as set forth in Section 2.21 of the Disclosure
Schedule, neither the Company nor any subsidiary is subject to any judgment,
order or decree entered in any lawsuit or proceeding. Except as set forth in
Section 2.21 of the Disclosure Schedule, there is no matter as to which the
Company or any of its subsidiaries has received any notice, claim or assertion,
or, to the knowledge of the Company and the Shareholders, which otherwise has
been threatened or initiated, against any director, officer, employee, agent or
representative of the Company, any of its subsidiaries or any other person, in
connection with which any such person has any right to be indemnified by the
Company or any of its subsidiaries under this Agreement or otherwise. 2.22
COMPLIANCE WITH LAW. The business and the other operations of the Company and
its subsidiaries have been conducted in material compliance with all applicable
laws, regulations, rules and other requirements of all national governmental
authorities, and of all states, municipalities and other political subdivisions
and agencies thereof, having jurisdiction over the Company or any of its
subsidiaries. Except as set forth in Section 2.22 of the Disclosure Schedule,
neither the Company nor any of its subsidiaries has received any notification of
any asserted present or past failure by the Company or any of its subsidiaries
to comply with such laws, rules or regulations.
2.23 PERMITS. The Company and its subsidiaries hold all material
permits, licenses, accreditations, approvals and authorizations ("Permits") that
are required by any governmental entity and that are necessary to permit it to
conduct the business as now conducted, and all such Permits are valid and are in
full force and effect. The consummation of the transactions contemplated hereby
shall not cause the termination or revocation of any of the Permits. To the
knowledge of the Company and the Shareholders and except as set forth in Section
2.23 of the Disclosure Schedule, no suspension, cancellation or termination of
any of such Permits is threatened or imminent which suspension, cancellation or
termination could reasonably be expected to have a material adverse effect on
the business of the Company.
2.24 DIVIDENDS AND OTHER DISTRIBUTIONS. There has been no
dividend or other distribution of assets by the Company whether consisting of
money, property or any other thing of value, declared, issued or paid to or for
the benefit of any Shareholder subsequent to the Balance Sheet Date, except for
payment of regular periodic dividends on the Class C preferred stock of the
Company.
2.25 LIABILITIES. The Company (on a consolidated basis) has no
outstanding material claims, liabilities or indebtedness of any nature, whether
accrued, absolute, contingent or otherwise, and whether due, or to become due,
except liabilities (a) set forth in the Balance Sheet or referred to in the
notes thereto, (b) incurred subsequent to the Balance Sheet Date in the ordinary
course of business not involving borrowings by the Company or (c) set forth in
Section 2.25 of the Disclosure Schedule.
2.26 TAXES. Except as set forth in Section 2.26 of the Disclosure
Schedule, the Company has filed or caused to be filed, all federal, state, local
and foreign tax returns and tax
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reports that are required to be filed by, or with respect to, the Company and
its subsidiaries. All federal, state, local and foreign income, profits,
franchise, sales, use, occupancy, excise, property and other taxes and
assessments (including interest and penalties) payable by, or due from, the
Company have been fully paid or adequately disclosed and fully provided for in
the books and financial statements of the Company. The federal income tax
liability of the Company has been finally determined or the statute of
limitations has expired for all fiscal years to and including the fiscal year
ended June 30, 1995. Except as set forth in Section 2.26 of the Disclosure
Schedule, to the Company's and the Shareholders' knowledge, no examination of
any tax return of the Company is currently in progress nor has the Company been
notified by any governmental agency of such agency's intention to review or
audit any tax return of the Company or any portion or item thereof. To the
extent required to do so, the Company has disclosed in its federal income tax
returns all issues that could give rise to a penalty for substantial
understatement of tax within the meaning of Section 6662 of the Code. Except as
set forth in Section 2.26 of the Disclosure Schedule, there are no outstanding
agreements or waivers extending the statutory period of limitation applicable to
any tax return of the Company. The state income tax liability of the Company and
each subsidiary has been finally determined or the statute of limitations has
expired for all fiscal years to and including the fiscal years identified in
Section 2.26 of the Disclosure Schedule.
2.27 INSURANCE. Set forth in Section 2.27 of the Disclosure
Schedule is a complete list of insurance policies (the "Policies") that the
Company and its subsidiaries maintain with respect to the business or the
operations, properties or employees of the Company and its subsidiaries. The
Company has paid all premiums due under the Policies and in good faith believes
the Policies are in full force and effect and are free from any right of
termination on the part of the insurance carriers. The Policies are in amounts
deemed adequate by the Company.
2.28 ENVIRONMENTAL LAWS AND REGULATIONS. Section 2.28 of the
Disclosure Schedule contains information relating to the following items:
(a) the nature and quantities of any Hazardous Materials (as
defined below) generated, transported or disposed of by the Company during the
past three years (other than raw material awaiting manufacturing,
work-in-process or finished goods and through the sale of products in the
ordinary course of business), together with a description of the location of
each such activity; and
(b) a summary of the nature and quantities of any Hazardous
Materials that to the Company's and Shareholders' knowledge have been disposed
of by the Company or any subsidiary or found by the Company or any subsidiary at
any site or facility owned, leased or operated presently or at any previous time
by the Company (other than raw material awaiting manufacturing, work-in-process
or finished goods and through the sale of products in the ordinary course of
business).
Except as set forth in Section 2.28 of the Disclosure Schedule,
the Company is in compliance in all material respects with all applicable
federal, state and local laws and regulations relating to product registration,
pollution control and environmental contamination including, but not limited to,
all laws and regulations governing the generation, use, collection,
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discharge or disposal of Hazardous Materials and all laws and regulations with
regard to recordkeeping, notification and reporting requirements respecting
Hazardous Materials (collectively, "Environmental Laws"). Except as set forth in
Section 2.28 of the Disclosure Schedule, to the Company's and the Shareholders'
knowledge, the Company has not been alleged to be in violation of, and has not
been subject to any administrative or judicial proceeding pursuant to, any
Environmental Laws either now or any time during the past three years. Except as
set forth in Section 2.28 of the Disclosure Schedule, to the Company's and
Shareholders' knowledge, there are no facts or circumstances which could form
the basis for the assertion of any Claim (as defined below) against the Company
relating to environmental practices asserted under CERCLA (as defined below) or
RCRA (as defined below), or any other federal, state or local environmental
statute.
For purposes of this Section 2.28, the following terms have the
following meanings:
(A) "Hazardous Materials" means materials defined as "hazardous
substances" or "hazardous wastes" in (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601-9657,
and any amendments thereto ("CERCLA"), (ii) the Resource Conservation and
Recovery Act, 42 U.S.C. Sections 6901-6987 and any amendments thereto ("RCRA")
and (iii) any similar federal, state or local environmental statute; and
(B) "Claim" means any and all claims, demands, causes of action,
suits, proceedings, administrative proceedings, losses, judgments, decrees,
debts, damages, liabilities, court costs, attorneys' fees and any other expenses
incurred, assessed or sustained by or against the Company.
2.29 ABSENCE OF CERTAIN PAYMENTS. In connection with the business
and operations of the Company, the Shareholders have not, and to the
Shareholders' knowledge, neither the Company nor any of its directors, officers,
agents, employees or other person acting on behalf of the Company has used any
corporate or other funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or others or established or maintained any unlawful or
unrecorded funds. With respect to the business and operations of the Company,
neither the Company nor any director, officer, agent, employee or other person
acting on behalf of the Company has accepted or received any unlawful
contributions, payments, gifts or expenditures.
2.30 INSIDER INTERESTS. Except as set forth in Section 2.30 of
the Disclosure Schedule, no officer of the Company or, to the knowledge of the
Company and the Shareholders, no employee of the Company has any material
interest in any property, real or personal, tangible or intangible, of the
Company, is indebted or otherwise obligated to the Company, has any contractual
relationship with the Company or, to the Company's and Shareholders' knowledge,
is an officer, director, employee or consultant of a competitor of the Company.
The Company is not indebted or otherwise obligated to any such person, except
for amounts due under normal arrangements as to salary or reimbursement of
ordinary business expenses not unusual in amount or significance and except for
the leases described in Section 2.30 of the Disclosure Schedule. Except as set
forth in Section 2.30 of the Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement shall not (either alone, or upon the
occurrence of
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any act or event, or with the lapse of time, or both) result in any benefit or
payment (severance or other) arising or becoming due from the Company or the
successor or assign of any thereof to any employee or director.
2.31 BROKERS AND FINDERS. Except as set forth in Section 2.33 of
the Disclosure Schedule, neither the Company nor any of its officers, directors
or employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
2.32 INVENTORY. Except as set forth in Section 2.32 of the
Disclosure Schedule, all inventories carried by the Company and its subsidiaries
as of the Balance Sheet Date are carried at the lower of cost or market with
cost determined using the last-in first-out method consistent with generally
accepted accounting principles. The Company has adequate obsolescence reserves
to cover inventory items that have a market value lower than cost. Except to the
extent of inventory reserves reflected in the Balance Sheet, the items included
in said inventories are normal items of inventory carried by the Company and its
subsidiaries, and are current, suitable and merchantable at customary prices for
the filling of orders in the normal course of business, and are not obsolete,
damaged, defective or slow moving, except for any allowances or reserves
established by the Company therefor.
2.33 YEAR 2000 COMPLIANCE. The Company and its subsidiaries have
reviewed the areas within their business and operations which could be adversely
affected by, and have developed or are developing programs to address on a
timely basis, the risk that certain computer applications used by the Company
and its subsidiaries (or any of their material suppliers or vendors) may be
unable to recognize and perform properly date-sensitive functions involving
dates prior to and after December 31, 1999. Except as disclosed in Section 2.33
of the Disclosure Schedule, assuming that any third party input data is Year
2000 Compliant (as defined below) and any third party systems with which the
Company's systems interact are Year 2000 Compliant, the Company has taken, or
has developed plans to take prior to year end, reasonable steps which are, or
will be, required to make the material computer hardware and software systems of
the Company and its subsidiaries, on or before December 31, 1999, Year 2000
Compliant. For this purpose, "Year 2000 Compliant" means that the Company's and
its subsidiaries' hardware and software systems will: (i) recognize and perform
properly date-sensitive functions involving dates prior to and after December
31, 1999, including accepting input, providing output and performing other
date-sensitive functions in whole or in part; (ii) operate accurately without
interruption on and in respect of any and all dates prior to and after December
31, 1999, without any change in performance; (iii) respond to and process
two-digit input without creating any ambiguity as to the century and (iv) store
and provide date input information without creating any ambiguity as to the
century.
2.34 DISCLOSURE. None of this Agreement, the financial statements
of the Company described in Section 2.8 (the "Financial Statements"), any
Schedule, Exhibit or certificate attached hereto or delivered in accordance with
the terms hereof contains any untrue statement of material fact, or omits any
statement of material fact necessary in order to make the statements contained
herein or therein not misleading.
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2.35 PRODUCT WARRANTIES AND PRODUCT RETURNS. The Company has
provided to Buyer true, correct and complete copies of all written warranties on
products manufactured by the Company. The Company previously has provided Buyer
with a true, correct and complete schedule of all available computer-generated
schedules of product returns or warranty claims to the Company since January 1,
1999, which have with respect to any individual product exceeded $50,000. Except
as set forth in Section 2.35 of the Disclosure Schedule, none of the products
sold by the Company within the past three years has been, is currently, or, to
the Company's and the Shareholders' knowledge, is threatened to be, the subject
of a product recall.
2.36 PRODUCT LIABILITY. Except as set forth in Section 2.36 of
the Disclosure Schedule, the Company is not as of the date hereof, nor has been
at any time during the past five years, a party to any action, suit, proceeding,
hearing or governmental investigation arising out of any injury to persons or
damage to property as the result of the ownership, possession or use of any of
the products manufactured by the Company or its subsidiaries or any product
substantially similar to the inventory manufactured or sold by the Company
during the past five years.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDERS RELATING TO THE SHARES
Each Shareholder severally, but not jointly, represents and
warrants to Buyer, with respect to the Shares being sold and transferred to
Buyer hereunder, as follows:
3.1 OWNERSHIP. Such Shareholder is, and at the Closing Date will
be, the record and beneficial owner of the number of Shares set forth opposite
such Shareholder's name on Schedule A hereto.
3.2 TITLE. Such Shareholder now has, and at the Closing Date will
have, good and marketable title to the Shares to be sold by such Shareholder
hereunder, free and clear of all adverse claims, options, liens, security
interests, restrictions and other encumbrances.
3.3 RIGHT TO TRANSFER. Such Shareholder now has, and at the
Closing Date will have, full legal right and power to transfer and deliver to
Buyer the Shares to be transferred to Buyer by such Shareholder, and Buyer shall
receive good and marketable title thereto, free and clear of all adverse claims,
options, liens, security interests, restrictions and other encumbrances.
3.4 ALL SHARES. The Shares to be transferred by such Shareholder
to Buyer represent the entire ownership interest of such Shareholder in the
capital stock of the Company, and such Shareholder has no other options,
warrants, rights, calls, commitments, conversion rights, rights of exchange,
plans or other agreements of any character providing for the purchase by such
Shareholder of any shares of capital stock of the Company.
3.5 BINDING AGREEMENT. This Agreement has been executed and
delivered by or on behalf of such Shareholder, and this Agreement is a valid and
binding obligation of such Shareholder enforceable in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium of other laws affecting the
enforcement of creditors' rights in general and except that the availability of
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equitable remedies, including specific performance, is subject to the discretion
of the court before which any proceeding therefor may be brought.
3.6 CONFLICTS. Such Shareholder is not subject to, or a party to,
any mortgage, lien, lease, license, permit, agreement, contract, instrument,
law, rule, ordinance, regulation, order, judgment or decree, or any other
restriction of any kind or character, which would prevent consummation of the
transactions contemplated by this Agreement or compliance by such Shareholder
with the terms, conditions and provisions hereof. No consent of any person or
entity is necessary for the consummation of the transactions contemplated hereby
by such Shareholder.
3.7 BROKERS AND FINDERS. Except as set forth in Section 3.7 of
the Disclosure Schedule, such Shareholder has not employed any broker or finder
or incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated by this Agreement.
3.8 POWER OF ATTORNEY AND CUSTODY AGREEMENT Such Shareholder has
duly authorized (if applicable), executed and delivered, in the form heretofore
provided to Buyer, a Power of Attorney and Custody Agreement (the "Custody
Agreement"), with National City Bank, as custodian (the "Custodian"), and
appointing Shareholders Agent as attorney-in-fact; the Custody Agreement
constitutes a valid and binding agreement of such Shareholder, enforceable in
accordance with its terms, except as enforcement thereof may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting the enforcement of creditors' rights in general and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought; the Shareholders Agent, acting alone, is authorized to execute and
deliver this Agreement and to duly endorse (in blank or otherwise) the
certificate or certificates representing the Shares being sold by such
Shareholder hereunder or stock power or powers with respect thereto, to accept
payment therefor, and to otherwise act on behalf of such Shareholder in
connection with this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company as follows:
4.1 CORPORATE ORGANIZATION; ETC. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
4.2 AUTHORIZATION; ETC. Buyer has full corporate power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby. Buyer has taken all action required by law, its Certificate
of Incorporation and Bylaws or otherwise to authorize the execution and delivery
of this Agreement and the transactions contemplated hereby, and this Agreement
is a legally valid and binding agreement of Buyer enforceable in accordance with
its terms, except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights in general and except that the availability of
equitable remedies, including
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specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
4.3 NO VIOLATION. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby shall
violate any provisions of the Certificate of Incorporation or Bylaws of Buyer or
violate, or be in conflict with, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or cause the acceleration of the maturity of any
debt or obligation pursuant to, any agreement or commitment to which Buyer is a
party or by which Buyer is bound, or violate any statute or law or any judgment,
decree, order, regulation or rule of any court or governmental authority.
4.4 BROKERS AND FINDERS. Neither Buyer nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement.
4.5 PURCHASE ENTIRELY FOR OWN ACCOUNT. Buyer is acquiring the
Shares for investment for Buyer's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and Buyer has
no present intention of selling, granting any participation in, or otherwise
distributing the same.
4.6 INVESTMENT EXPERIENCE. Buyer acknowledges that it is able to
fend for itself, can bear the economic risk of its investment in the Shares and
has such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Shares.
4.7 ACCREDITED INVESTOR. Buyer is an "accredited investor" within
the meaning of Securities and Exchange Commission Rule 501 of Regulation D, as
presently in effect.
4.8 RESTRICTED SECURITIES. Buyer understands that the Shares it
is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from affiliates of the
Company in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act of 1933, as amended (the "Act"), only in
certain limited circumstances. In this connection, Buyer represents that it is
familiar with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
4.9 INSURANCE REQUIREMENTS. Buyer covenants and agrees that,
following the Closing Date and throughout the period for which Shareholders have
any indemnification obligation under the representations and warranties set
forth in Article II, Buyer shall maintain for the benefit of the Company, or
shall cause the Company to maintain employment practices liability ("EPL")
insurance coverage, products liability insurance coverage and product recall
insurance coverage in amounts substantially the same as the coverage amounts
maintained by the Company as of the Closing Date. Notwithstanding the
immediately preceding sentence, Buyer shall not be obligated to maintain such
coverage (a) if the annual premiums payable by Buyer for
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any such coverage exceeds 175% of the annual premiums paid by the Company for
such coverage at the time of its most recent renewal of such coverage occurring
on or before the Closing Date or (b) at any time when claims that have been and
that could be made under the representations and warranties that are the subject
of such insurance coverage have expired in accordance with the terms of this
Agreement.
ARTICLE V
COVENANTS WITH RESPECT TO CONDUCT OF BUSINESS
OF THE COMPANY PRIOR TO CLOSING
5.1 ACCESS. The Company shall authorize and permit Buyer and its
representatives, including Buyer's independent accountants and counsel, from the
date hereof to the Closing Date, to have reasonable access during normal
business hours, following reasonable notice by Buyer to the Company's designee,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and in such manner as shall not unreasonably interfere with
the conduct of the business of the Company, to all of the Company's properties,
books, records, operating instructions and procedures, tax returns and all other
information with respect to the business of the Company as Buyer may from time
to time request, and to make copies of such books, records and other documents
and to discuss the business of the Company with such third persons, including,
without limitation, the Company's directors, officers, employees, accountants,
counsel, suppliers, customers and creditors, as Buyer considers necessary or
appropriate for the purposes of familiarizing itself with the business of the
Company, obtaining any necessary approvals of or permits for the transactions
contemplated by this Agreement and conducting an evaluation of the organization
and business of the Company. Subject to the foregoing, before Buyer discusses
the business of the Company with or contacts any third person about the
Company's business or operations, including, without limitation, the Company's
directors, officers, employees, suppliers, customers and creditors, Buyer shall
notify ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, who shall make appropriate arrangements for
facilitating the discussions requested by Buyer. Subject to the requirements of
law or judicial process, from the date hereof to the Closing Date, Buyer shall
hold in confidence, and shall use its good faith efforts to cause its agents to
hold in confidence, all such non-public information obtained by it or its agents
pursuant to such access. Buyer hereby acknowledges the existence of the certain
confidentiality agreement, dated May 4, 1999, and agrees that such
confidentiality agreement shall notwithstanding Section 10.14, continue in
effect.
5.2 MATERIAL ADVERSE CHANGES; INTERIM FINANCIAL STATEMENTS.
(a) From the date hereof to the Closing Date, the Company and the
Shareholders shall promptly notify Buyer of any event of which the Company or
any Shareholder obtains knowledge that has had or might reasonably be expected
to have a material adverse effect on the business of the Company or which if
known as of the date hereof would have been required to be disclosed to Buyer.
(b) From the date hereof to the Closing Date, the Company shall
furnish to Buyer (i) as soon as available, copies of all reports, renewals,
filings, certificates, statements and other documents filed with any
governmental entity; (ii) monthly and quarterly unaudited balance sheets,
statements of operations and cash flow for the Company; and (iii) such other
reports theretofore prepared by the Company as Buyer may reasonably request
relating to the
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Company. Each of the financial statements delivered pursuant to this Section
5.2(b) shall be prepared in accordance with GAAP, subject to year-end
adjustments and any other adjustments described therein and the absence of
complete footnotes thereto. Each of the financial statements delivered pursuant
to this Section 5.2(b) shall be accompanied by a certificate of the chief
financial officer of the Company to the effect that such financial statements
present fairly the financial position and results of operations and cash flows
of the Company for the periods covered and reflect all adjustments (which
consist only of normal recurring adjustments not material in amount) necessary
for a fair presentation in accordance with GAAP.
5.3 CONDUCT OF BUSINESS. From and after the date hereof, the
Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ agree to confer with Buyer, as promptly as
practicable, prior to the Company taking any material actions or making any
material management decisions with respect to the conduct of the Company's
business and plans with respect thereto. Without limiting the generality of the
foregoing, from the date hereof to the Closing Date, the Company shall not
without the prior written consent of Buyer, which may not be unreasonably
withheld:
(a) conduct its business except in the ordinary course consistent
with prudent industry practice; or
(b) except in accordance with the terms, terminate, renew or
renegotiate any material contract (which for purposes of this clause (b) shall
be any contract involving the expenditure of more than $100,000, or which by its
terms extends for a period of more than one year) or default in any of its
obligations under any material contract or enter in to any new material
contract; provided, that with respect to any material contract entered into in
the ordinary course of business, Buyer shall not unreasonably withhold its
consent thereto; or
(c) terminate or fail to renew any existing insurance coverage;
or
(d) terminate or fail to renew or preserve any permits, or take
any action that would jeopardize the continuance of its material supplier or
customer relationships; or
(e) incur or agree to incur any obligation or liability (absolute
or contingent) that individually calls for payment by the Company of more than
$500,000 in the aggregate, including, without limitation, additional borrowings
under any credit facility; or
(f) make any loan, guaranty or other extension of credit, or
enter into any commitment to make any loan, guaranty or other extension of
credit, to or for the benefit of any director, officer, employee, shareholder or
any of their respective associates or affiliates; or
(g) grant any general or uniform increase in the rates of pay or
benefits to officers, directors or employees (or a class thereof) or any
material increase in salary or benefits of any officer, director, employee or
agent or pay any bonus to any person, or enter into any employment or severance
agreement with any officer, director or employee; or
(h) sell, transfer, mortgage, encumber or otherwise dispose of
any assets or any liabilities, except (i) for dispositions of property not
material in amount, (ii) in the ordinary course of business or (iii) as
contemplated by this Agreement; or
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(i) issue, sell, redeem or acquire for value, or agree to do so,
any debt obligations or equity securities of the Company; or
(j) declare, issue, make or pay any dividend or other
distribution of assets, whether consisting of money, or the personal property,
real property or other thing of value, to the Shareholders, or split, combine,
dividend, distribute or reclassify any shares of its equity securities, other
than regular periodic dividends on the Preferred Shares; or
(k) change or amend its charter documents or bylaws; or
(l) make any capital expenditures or commitments with respect
thereto aggregating more than $50,000, other than those capital expenditures
approved by the Company's Board of Directors at its meeting held on September
22, 1999; or
(m) make any material investment, by purchase, contributions to
capital, property transfers, or otherwise, in any other person; or
(n) dispose of or permit to lapse any rights to the use of any
intangible property or dispose of or disclose any intangible property not a
matter of public knowledge; or
(o) compromise or otherwise settle any claims, or adjust any
assertion or claim of a deficiency in taxes (or interest thereon or penalties in
connection therewith), in any case, before furnishing a copy to Buyer and
affording Buyer an opportunity to consult with respect thereto; or make any tax
election or change any method or period of accounting; or
(p) introduce any new method of management or operation in
respect of the business of the Company; or
(q) agree to or make any commitment to take any action prohibited
by this Section 5.3 or to take or omit to take any other action that is
reasonably likely to have a material adverse effect on the financial condition
or operations of the Company.
5.4 NOTIFICATION OF CERTAIN MATTERS. The Company and the
Shareholders shall give prompt notice to Buyer, and Buyer shall give prompt
notice to the Company, of (i) the occurrence, or failure to occur, of any event
that would be likely to cause any representation or warranty contained in this
Agreement and made by the Company, the Shareholders or Buyer to be untrue or
inaccurate in any material respect at any time from the date of this Agreement
to the Closing Date and (ii) any failure of Buyer or the Company, as the case
may be, to comply with or satisfy, in any material respect, any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement.
5.5 PERMITS AND APPROVALS.
(a) Buyer and the Company and the Shareholders each agree to
cooperate and use their good faith efforts to obtain (and shall immediately
prepare all registrations, filings and applications, requests and notices
preliminary to all) approvals and permits that may be necessary or that may be
reasonably requested by any of them to consummate the transactions contemplated
by this Agreement.
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(b) To the extent that the approval of a third party with respect
to any contract is required in connection with the transactions contemplated by
this Agreement, the Company and the Shareholders shall use its or his or her
good faith efforts to obtain such approval prior to the Closing Date and in the
event that any such approval is not obtained (but without limitation on Buyer's
rights under Section 8.2), the Company and the Shareholders shall reasonably
cooperate with Buyer in its efforts to obtain any such approval following the
Closing Date.
5.6 PRESERVATION OF BUSINESS PRIOR TO THE CLOSING DATE. During
the period beginning on the date hereof and ending on the Closing Date, (a) the
Company and each of the Shareholders shall use his, her or its good faith
efforts to preserve the business of the Company and to preserve the goodwill of
customers, suppliers and others having business relations with the Company and
(b) the Company and Buyer shall consult with each other concerning, and the
Company shall cooperate to keep available to Buyer, the services of the officers
and employees of the Company that Buyer may wish to have the Company retain.
Nothing in this Section 5.6 shall obligate Buyer or the Company after the
Closing to retain or offer employment to any officer or employee of the Company.
5.7 CERTAIN FILINGS. The Company, the Shareholders and Buyer will
make any and all filings required to be made on their respective parts under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended. The Company,
the Shareholders and Buyer shall furnish each other such necessary information
and reasonable assistance as the other may reasonably request in connection with
its preparation of necessary filings or submissions under the provisions of such
law. The Company, the Shareholders and Buyer will supply each other with copies
of all correspondence, filings or communications, including file memoranda
evidencing telephonic conferences, with representatives of any governmental
entity or member of its staff, with respect to the transactions contemplated by
this Agreement and any related or contemplated transactions.
ARTICLE VI
INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS
AND WARRANTIES
6.1 INDEMNIFICATION OF BUYER. Each Shareholder (except the
Charitable Shareholders) severally but not jointly and subject to (i) the
percentage limitations set forth on Schedule 6.1 hereto and (ii) the
indemnification limitations set forth in Section 6.10, covenants and agrees to
indemnify and hold harmless Buyer and its respective directors, officers,
employees, affiliates, agents, representatives and assigns and the Company (in
the event the Closing occurs and only to the extent applicable) ("Buyer
Indemnified Parties") from and against any and all losses suffered or incurred
by any Buyer Indemnified Party as a result of, or based upon or arising from:
(a) any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by such Shareholder
(other than the representations, warranties, covenants or agreements contained
in Article III hereof which are the subject of Section 6.2 hereof) or the
Company in or pursuant to this Agreement;
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(b) any actual or threatened Action arising out of or resulting
from the conduct by the Company of its business or operations on or before the
Closing Date, including, but not limited to, any Action by a current or former
employee of the Company and the facts upon which such Action is based occurred
prior to the Closing Date, including Actions alleging wrongful discharge,
employment discrimination and wage and hour violations;
(c) any tax liability of the Company or any subsidiary for any
tax period ending on or prior to the Closing Date to the extent not reserved or
provided for on the Closing Balance Sheet;
(d) any violation by the Company of any Environmental Law on or
prior to the Closing Date or the existence of any violation of Environmental Law
relating to the operations of the Company on or prior to the Closing Date,
including, without limitation, any necessary costs incurred subsequent to the
Closing Date to correct or bring into compliance with Environmental Laws the
operations of the Company; provided that upon discovery by an officer of the
Company of such violation the Company promptly notifies the Buyer in writing of
the violation and takes reasonable steps to address the issue;
(e) any environmental condition existing on or prior to the
Closing Date at any Real Property currently or formerly owned, leased or
operated by the Company to the extent attributable to the operations of the
Company, or with respect to owned Real Property, attributable to the operations
of prior owners of such Real Property, including, without limitation, Hazardous
Materials contamination which continues to occur subsequent to the Closing Date
as a result of or relating to an environmental condition existing as of the
Closing Date; provided, that upon discovery by an officer of the Company of such
condition the Company promptly notifies Buyer in writing of the condition and
takes reasonable steps to address the situation and avoid exacerbating the
condition; or
(f) the off-site transportation, disposal or treatment of any
Hazardous Materials by the Company on or prior to the Closing Date.
6.2 ARTICLE III INDEMNIFICATION. Each Shareholder, including each
Charitable Shareholder, severally but not jointly covenants and agrees to
indemnify and hold harmless Buyer Indemnified Parties from and against any and
all losses suffered or incurred by any Buyer Indemnified Party as a result of,
or based upon or arising from any inaccuracy in or breach or nonperformance of
any of the representations, warranties, covenants or agreements made by such
Shareholder in Article III hereof.
6.3 APPOINTMENT OF REPRESENTATIVE. Each Shareholder hereby
appoints the Shareholders Agent as the representative (the "Representative") of
the Shareholders for purposes of this Article VI, and the review, resolution and
settlement of any claims asserted by Buyer against the Shareholders under this
Agreement ("Indemnity Claims"). Buyer shall be entitled to deal with, and rely
on the authority of, the Representative to act on behalf of the Shareholders,
until Buyer has received written notice from a majority in interest of the
Shareholders designating a successor representative.
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6.4 OFFSET AGAINST DEFERRED PURCHASE PRICE.
(a) If any matter as to which Buyer has asserted in good faith a
claim hereunder is pending or unresolved at the time any Deferred Purchase Price
payment is due hereunder from Buyer, Buyer shall have the right, in addition to
other rights and remedies it may have, to withhold from such payment an amount
equal to the amount of the claim until such matters are resolved. If it is
finally determined that such claims are covered by this Article and as a result
a Buyer Indemnified Party is entitled to indemnification hereunder, subject to
the indemnification limitations set forth in Section 6.10, the amount of such
claim may be permanently offset against the amount of the Deferred Purchase
Price and the remainder of the amount withheld, if any, shall be delivered to
the Shareholders Agent for the account of the Shareholders together with
interest on such remainder for the actual number of days such payment was
withheld at a rate per annum of 5.5%. If it is finally determined that such
claim is not covered by this Article and a Buyer Indemnified Party is not
entitled to indemnification hereunder, Buyer shall thereafter make immediate
payment of the amount of the claim withheld to the Shareholders Agent for the
account of the Shareholders and pay interest on the amount of such claim for the
actual number of days such payment was withheld beyond its due date at a rate
per annum equal to 5.5%. To the extent that Buyer makes an interest payment or
payments to the Shareholders after the date of an Indemnity Claim but prior to
final determination of such Indemnity Claim, and such Indemnity Claim is finally
determined to be payable to Buyer, then Buyer shall be entitled to reduce the
amount of any future interest payments due on the Deferred Purchase Price by the
amount of interest paid with respect to the Indemnity Claim amount during the
time period that the Indemnity Claim was pending.
(b) On the fifth anniversary of the Closing Date, the remaining
amount of any Deferred Purchase Price not previously distributed less any
amounts reserved for pending unresolved Indemnity Claims or to pay expenses
shall be distributed to the Shareholders Agent, for the account of the
Shareholders. To the extent that there is pending any unresolved Indemnity Claim
upon the expiration of the fifth anniversary of the Closing Date, the portion of
the Deferred Purchase Price reserved with respect to such Indemnity Claim less
amounts used to satisfy such Indemnity Claim shall be distributed to the
Shareholders Agent, for the account of the Shareholders, upon final settlement
or resolution of each such pending Indemnity Claim.
6.5 INDEMNIFICATION OF SHAREHOLDERS.
Buyer covenants and agrees to indemnify and hold harmless each
Shareholder and his, her or its respective directors, officers, employees,
affiliates, agents, representatives and assigns ("Shareholder Indemnified
Parties") from and against any and all losses suffered by any Shareholder
Indemnified Party as a result of, or based upon or arising from any inaccuracy
in or breach or nonperformance of any of the representations, warranties,
covenants or agreements made by Buyer in or pursuant to this Agreement.
6.6 PROCEDURE FOR THIRD-PARTY CLAIMS.
(a) Notice. Any party seeking indemnification with respect to any
loss shall give notice to the party required to provide indemnity hereunder (the
"Indemnifying Party").
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(b) Defense. In the event any person or entity not a party to
this Agreement shall make a demand or claim, file or threaten to file or
continue any lawsuit, which demand, claim or lawsuit may result in liability to
an Indemnified Party in respect of matters embraced by the indemnity under this
Agreement, or in the event that a potential loss, damage or expense comes to the
attention of any party in respect of matters embraced by the indemnity under
this Agreement, then the party receiving notice or aware of such event shall
promptly notify the other party or parties of the demand, claim or lawsuit.
Within ten days after notice by the Indemnified Party (the "Notice") to an
Indemnifying Party of such demand, claim or lawsuit, except as provided in the
next sentence, the Indemnifying Party shall have the option, at its sole cost
and expense, to retain counsel for the Indemnified Party, to defend any such
demand, claim or lawsuit, provided that counsel who shall conduct the defense of
such demand, claim or lawsuit shall be approved by the Indemnified Party whose
approval shall not unreasonably be withheld. The Indemnified Party shall have
the right, at its own expense, to participate in the defense of any suit, action
or proceeding brought against it with respect to which indemnification may be
sought hereunder; provided, however, if (a) the named parties to any such
proceeding (including any impleaded parties) include both the Indemnifying Party
and the Indemnified Party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them (other than differing interests associated with an Indemnifying Party's
obligation to indemnify), or (b) the employment of counsel by such Indemnified
Party has been authorized in writing by the Indemnifying Party, or (c) the
Indemnifying Party has not in fact employed counsel to assume the defense of
such action within a reasonable time; then, the Indemnified Party shall have the
right to retain its own counsel at the sole cost and expense of the Indemnifying
Party, which costs and expenses shall be paid by the Indemnifying Party on a
current basis. No Indemnifying Party, in the defense of any such demand, claim
or lawsuit, shall consent to entry of any judgment or enter into any settlement
without the consent of the Indemnified Party; provided, however, that if a firm
written offer is made by the third party to settle any claim, which involves
only the payment of cash (United States dollars) and the claimant provides to
the Indemnified Party a general release in a form reasonably acceptable to the
Indemnified Party from all liability, and the Indemnifying Party proposes to
accept (and pay in full the amount of ) such settlement but the Indemnified
Party refuses to consent to such settlement, then: (i) the Indemnifying Party
shall be excused from, and the Indemnified Party shall be solely responsible
for, all further defense costs related to such third-party claim; (ii) the
maximum reimbursement amount relating to such third-party claim shall be the
amount of the proposed settlement (plus any defense costs not paid by the
Indemnifying Party prior to the rejection of the settlement) if the amount
thereafter recovered from the Indemnified Party on such claim is greater that
the amount of the proposed settlement; and; (iii) the Indemnified Party shall
pay all attorneys' fees and legal costs and expenses incurred after rejection of
such settlement, but if the amount thereafter recovered by such third party from
the Indemnified Party is more than ten percent less than the amount of the
proposed settlement, the Indemnified Party shall also be entitled to
reimbursement for such attorneys' fees and legal costs and expenses up to a
maximum amount equal to the difference between the amount of the proposed
settlement and the amount recovered by the third party from the Indemnified
Party. In the event that the Indemnifying Party shall fail to respond within ten
days after receipt of the Notice, the Indemnified Party may retain counsel and
conduct the defense of such demand, claim or lawsuit, as it may in its sole
discretion deem proper, at the sole cost and expense of the Indemnifying Party,
which costs and expenses shall be paid by the Indemnifying Party on a
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current basis. Except as explicitly provided in this Section 6.6(b), failure to
provide Notice shall not limit the rights of such party to indemnification.
(c) Certain Limitations. Notwithstanding Section 6.6(b), in the
event that any demand, claim or lawsuit for which indemnification is payable
hereunder relates with respect to any Shareholder or the Company to a criminal
investigation, quasi criminal investigation, governmental or regulatory claim,
civil claim involving allegations of criminal conduct or a matter in which the
licensure of Buyer or the Company could be jeopardized, Buyer shall have the
sole right to retain counsel to represent it or the Company in such matter and
such Shareholder shall pay the fees and expenses of such counsel on a current
basis, and Buyer shall have the right to conduct and control the defense,
compromise or settlement of any such indemnifiable claim if Buyer chooses to do
so, on behalf of and for the account and risk of such Shareholder who shall be
bound by the result so obtained.
(d) Waiver of Subrogation and Other Rights. Except as otherwise
provided in this Agreement, Buyer shall not be required to proceed against any
particular Indemnifying Party for indemnification or otherwise in respect of any
losses before enforcing its rights hereunder against any other Indemnifying
Party, and each Shareholder expressly waives all rights such Shareholder may
have, now or in the future, under any statute, at common law, or at law or in
equity, or otherwise, to compel Buyer to proceed against any Indemnifying Party
in respect of any losses before proceeding against, or as a condition to
proceeding against, any other Indemnifying Party.
6.7 SURVIVAL. This Article VI shall survive any termination of
this Agreement. The Shareholders' indemnification obligations under this
Agreement shall survive the Closing, and the representations and warranties
shall remain in effect until the 18-month anniversary of the Closing Date,
except that (a) the representations and warranties set forth in Section 2.28
regarding environmental compliance shall survive until expiration of the
applicable statute of limitations, (b) the representations and warranties set
forth in Section 2.26 regarding tax matters shall survive until the expiration
of the applicable statute of limitations for the assessment of taxes with
respect to the relevant tax period, (c) the representations and warranties set
forth in Section 2.1 regarding the capitalization of the Company shall survive
without limitation and (d) the representations and warranties of the
Shareholders set forth in Article III shall survive without limitation. The
rights to indemnification set forth in this Agreement based on the
representations, warranties, covenants and obligations set forth herein shall
not be affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation. Any matter as to which a claim has been
asserted by notice to the other party received prior to expiration of the
applicable indemnification period that is pending or unresolved at the end of
any applicable period shall continue to be covered by this Article VI
notwithstanding any applicable statute of limitations (which the parties hereby
waive) until such matter is finally terminated or otherwise resolved by the
parties or by a court of competent jurisdiction and any amounts payable
hereunder are finally determined and paid.
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6.8 NOTICE BY THE SHAREHOLDERS. Each Shareholder agrees to notify
Buyer of any liabilities, claims or misrepresentations, breaches or other
matters covered by this Article VI upon discovery or receipt of notice thereof
(other than from Buyer), whether before or after the Closing.
6.9 NOT EXCLUSIVE REMEDY. This Article VI shall not be deemed to
preclude or otherwise limit in any way the exercise of any other rights or
pursuit of other remedies for the breach of this Agreement or with respect to
any misrepresentation.
6.10 INDEMNIFICATION LIMITATIONS. Notwithstanding any other
provision of this Agreement:
(a) The aggregate dollar amount of all payments the Shareholders
shall be obligated to make pursuant to this Article VI shall not exceed
$7,500,000, except for claims arising under Article III and claims based on the
fraud of the Company or any Shareholder for which there shall be no limit;
provided, that in no event shall a Charitable Shareholder be liable for any
representations or warranties or fraud, except for those representations and
warranties made by such Charitable Shareholder in Article III. The Shareholders'
indemnification obligations under this Agreement shall not apply to the first
$300,000, in the aggregate, of claims asserted by Buyer that are determined to
be Offset Amounts (as defined in Section 1.6(b)), except for claims arising
under Article III and claims based on fraud of the Company or any Shareholder
(e.g., Buyer is responsible for the first $300,000 and the Shareholders (other
than the Charitable Shareholders) for the balance of the claims for which the
shareholders have an indemnification obligation to Buyer up to $7,500,000).
(b) The Shareholders shall not have any indemnification
obligation:
(i) subject to Section 6.10(c) below, with respect to a
claim for indemnification for which there is a title insurance policy in
effect to the extent of any insurance proceeds actually received by the
Buyer Indemnified Party under such policy;
(ii) subject to Section 6.10(c) below, to the extent of
any insurance proceeds actually received by such Buyer Indemnified Party
in connection with the facts or events giving rise to such
indemnification claim;
(iii) in connection with any claim for indemnification
based upon a claim, assessment or deficiency for any tax which arises
from adjustments having the effect only of shifting income, credits or
deductions from one fiscal period to another to the extent of any
offsetting tax reduction for another period; provided, that the
applicable statute of limitations or period during which Buyer or the
Company is entitled to seek a refund for such other tax period has not
expired; or
(iv) to the extent that any indemnification claim is a
"Loss" (as such term is defined in Section 8.2 of that certain Stock
Purchase Agreement dated as of August 31, 1999, pursuant to which the
Company purchased all of the shares of stock of Waukesha Rubber Company
("Waukesha Agreement"), whether or not "Sellers" (as defined in the
Waukesha Agreement) have an indemnification obligation to the Company.
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(c) Buyer shall use commercially reasonable efforts in pursuing
claims under insurance policies, including insurance policies maintained by
Buyer or the Company from and after the Closing Date and insurance policies
maintained by the Company prior to the Closing Date, which may result in
proceeds that would reduce the indemnification obligations of the Shareholders
under Section 6.10(b)(i) and (ii) above; provided that such commercially
reasonable efforts shall not require the initiation of litigation by Buyer or
the Company against an insurer which has denied coverage for a claim. In the
event that an insurer denies coverage for a claim, Buyer shall so notify the
Representative, and the Shareholders, acting through the Representative, shall
have the right to cause the Company to continue to seek recovery from the
insurer for such claim, including through litigation against the insurer,
provided, that in such event all costs and expenses in connection with such
proceedings less any amount actually recovered from the insurer with respect to
such claim shall be considered an indemnifiable claim for which Buyer shall be
entitled to be indemnified hereunder. To the extent that there is a pending
claim for insurance reimbursement with respect to a claim for indemnification,
such indemnification claim shall be deemed to be a pending, but unresolved claim
within the meaning of this Article VI until the insurance recovery, if any, is
finally determined.
(d) The aggregate dollar amount of all payments Buyer shall be
obligated to make pursuant to this Article VI shall not exceed $7,500,000.
6.11 PAYMENT OF INDEMNITY CLAIMS
(a) At any time and from time to time, any party may give to any
other party one or more notices (each an "Indemnity Claims Notice") containing
the applicable information set forth in subsection (b) below and stating that,
pursuant to this Agreement, such party is asserting against the other party an
Indemnity claim (as defined in Section 6.3). In the case of any Indemnity Claim,
the amount of which is not reasonably ascertainable at the time the Indemnity
Claims Notice relating to such Indemnity Claim is given, the claiming party
agrees to give written notice to the other party of the estimated amount of such
Indemnity Claim after such amount becomes reasonably ascertainable. If the
recipient of an Indemnity Claims Notice fails to object to the Indemnity Claims
Notice, by providing written notice of objection (an "Objection") to the party
asserting the Indemnity Claim with fifteen (15) days of receipt of the Indemnity
Claims Notice, such recipient shall be deemed to have accepted such Indemnity
Claims Notice. Such acceptance shall be referred to as an "Acceptance" herein.
(b) An Indemnity Claims Notice given pursuant to this Section
6.11 shall set forth the nature and details of such Indemnity Claim, the Section
or Sections of this Agreement pursuant to which the Indemnity Claim is made, the
estimated amount thereof if reasonably ascertainable (or a statement that the
amount thereof is not then reasonably ascertainable) and whether such Indemnity
Claim arises from the assertion of liability by a third party.
(c) Within three (3) business days following an Acceptance or
receipt of a notice of Determination (as defined below), the recipient of an
Indemnity Claims Notice shall pay to the party asserting the Indemnity Claim the
amount set forth in the Indemnity Claims Notice in the case of the an
Acceptance, or in the Determination (as defined below)(if any). Without limiting
any of the other provisions of this Section 6.11, if Buyer is the party
asserting the Indemnity Claim, subject to the indemnification limitations set
forth in Section 6.10, Buyer
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must first offset any claimed amount against the Deferred Purchase Price in
accordance with Section 6.4, with all claims arising on or before January 1,
2003, being first asserted against the portion of the Deferred Purchase Price
payable on January 1, 2003.
(d) For purposes of this Agreement, a "Determination" shall mean
(i) a written compromise or settlement signed by the party asserting the
Indemnity Claim and the party against which the Indemnity Claim is asserted (or
in the case of the Shareholders, the Representative) or (ii) a binding
arbitration award or judgment of a court of competent jurisdiction in the United
States of America (the time for appeal having expired and no appeal having been
perfected) which resolves and Indemnity Claim.
6.12 ARBITRATION. All claims, disputes and other matters in
question arising out of, or relating to, this Agreement or the performance
hereof, including, without limitation, Indemnity Claims, shall be submitted to,
and determined by, arbitration if good faith negotiations among the parties
hereto, if any, does not resolve such claim, dispute or other matter. Such
arbitration shall proceed in accordance with the then-current rules for
arbitration established by Judicial Arbitration Mediation Services,
Inc./ENDISPUTE ("JAMS"), unless the parties hereto mutually agree otherwise, and
pursuant to the following procedures:
(a) Buyer on the one hand and the Representative on the other
hand shall each appoint an arbitrator from the JAMS panel of retired judges, and
those party-appointed arbitrators shall appoint a third arbitrator from the JAMS
panel of retired judges within ten (10) days. If the party-appointed arbitrators
fail to appoint a third arbitrator within the ten (10) days, such third
arbitrator shall be appointed by JAMS in accordance with its rules.
(b) Reasonable discovery shall be allowed in arbitration.
(c) All proceedings before the arbitrators shall be held in
Denver, Colorado. The governing law shall be as specified in Section 10.10.
(d) The award rendered by the arbitrators shall be final and
binding, and judgment may be entered in accordance with applicable law and in
any court having jurisdiction thereof.
(e) The award rendered by the arbitrators shall include (i) a
provision that the prevailing party in such arbitration recover its costs
relating to the arbitration and reasonable attorneys' fees from the other party,
(ii) the amount of such costs and fees, and (iii) an order that the losing party
pay the fees and expenses of the arbitrators.
(f) The arbitrator shall by the agreement of the parties
expressly be prohibited from awarding punitive damages in connection with any
claim being resolved by arbitration hereunder.
ARTICLE VII
NONDISCLOSURE OF PROPRIETARY DATA
After the Closing, none of the Shareholders nor any of their
respective representatives shall, at any time, make use of, divulge or otherwise
disclose, directly or
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indirectly, any trade secret or other proprietary data (including, but not
limited to, any customer list, record or financial information) concerning the
business or policies of the Company that such Shareholders or any
representatives of such Shareholders may have learned as a shareholder,
employee, officer or director of the Company. In addition, none of the
Shareholders nor any of their respective representatives shall make use of,
divulge or otherwise disclose, directly or indirectly, to persons other than
Buyer, any confidential information concerning the business or policies of the
Company which may have been learned in any such capacity.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 GENERAL CONDITIONS; NO ORDERS; LEGAL PROCEEDINGS. The
obligations of the parties to effect the Closing shall be subject to the
following conditions unless waived in writing by all parties: No law or order
shall have been enacted, entered, issued, promulgated or enforced by any
governmental entity, nor shall any Action have been instituted and remain
pending or, to the best knowledge of the Company, have been threatened and
remain so by any governmental entity at what would otherwise be the Closing
Date, which prohibits or restricts or would (if successful) prohibit or restrict
the transactions contemplated by this Agreement or which would not permit the
business of the Company as presently conducted to continue unimpaired following
the Closing Date. The applicable waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act
shall have expired or been early terminated. No governmental entity shall have
notified any party to this Agreement that consummation of the transactions
contemplated by this Agreement would constitute a violation of any laws of any
jurisdiction or that it intends to commence proceedings to restrain or prohibit
such transactions or force divestiture or rescission, unless such governmental
entity shall have withdrawn such notice and abandoned any such proceedings prior
to the time which otherwise would have been the Closing Date.
8.2 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer
to effect the Closing shall be subject to the following conditions except to the
extent waived in writing by Buyer:
(a) Representations and Warranties and Covenants of the Company.
The representations and warranties of the Company and the Shareholders contained
in this Agreement shall be true at the Closing Date in all material respects
with the same effect as though made at such time; the Company and the
Shareholders shall have in all material respects performed all obligations and
complied with all covenants and conditions required by this Agreement to be
performed or complied with by them at or prior to the Closing Date, and the
Company and the Shareholders shall each have delivered to Buyer, certificates in
form and substance satisfactory to Buyer, dated the Closing Date to such effect.
(b) No Material Adverse Change. There shall not have been any
material adverse change in the business of the Company subsequent to the date of
this Agreement.
(c) Opinion of Counsel. Buyer shall receive at the Closing from
▇▇▇▇▇ & ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, counsel to the Company,
opinions dated as of the Closing Date, in form and substance substantially as
set forth in Exhibit A.
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(d) Consents. The Company shall have obtained and provided to
Buyer all approvals listed in Section 2.6 of the Disclosure Schedule, each in
form and substance reasonably satisfactory to Buyer.
(e) Resignation of Directors and Officers. The directors of the
Company and each subsidiary shall have submitted their resignations in writing
to the Company or each such subsidiary, as the case may be. Such resignations of
directors (in such capacity) shall be effective as of the Closing Date.
(f) Due Diligence. Buyer shall not, in the course of its ongoing
business investigation, have discovered information not previously disclosed by
the Company as part of the Disclosure Schedule, which is inconsistent with
material information disclosed to Buyer prior to the date hereof or which may,
in the reasonable judgment of Buyer, have a materially adverse effect on the
business of the Company.
(g) Employment and Noncompetition Agreement. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
shall have executed and delivered to the Company an employment agreement with
the Company, dated as of the Closing Date, in a form acceptable to Buyer (the
"Employment Agreement"). ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have executed and delivered to
the Buyer a Noncompetition Agreement, dated the Closing Date, in the form of
Exhibit B.
(h) Lease Amendments. The Company shall have entered into (or
caused its wholly owned subsidiary to have entered into) an amended lease for
the real property and facilities located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, between GNC Corporation and WPJ Realty, Inc., dated December 1,
1998 (the "South Carolina Lease") and an amended lease for the real property and
facilities located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, between ▇▇▇▇▇▇▇
Realty Co. and Goshen Rubber Co, Inc., dated July 1, 1998 (the "Indiana Lease"),
that provide for the option to purchase by the Company at the end of the
respective current lease terms of the property, plant and equipment currently
leased under each of the respective leases. The purchase price under the
purchase option for the South Carolina Lease shall not exceed $100,000 and the
purchase price under the purchase option for the Indiana Lease shall not exceed
$200,000. The amended leases and related purchase options shall in each case be
in a form approved by Buyer.
(i) Redemption of Fleet Warrant. The Company shall have redeemed
and cancelled concurrent with the Closing that certain Common Stock Purchase
Warrant dated July 20, 1999 issued to Fleet Capital Corporation ("Fleet
Capital").
(j) Repayment of Credit Facility. Fleet Capital shall have agreed
concurrently with the Closing to the repayment of all amounts outstanding under
the Loan and Security Agreement, dated July 20, 1999, between the Company and
Fleet Capital, and to releases of the liens and mortgages of Fleet Capital on
the assets of the Company and its subsidiaries, concurrently with such
repayment.
(k) Releases. The Company shall have delivered unconditional
releases of the Company from each of the persons or entities listed in Section
2.31 of the Disclosure Schedule, such releases to include provisions terminating
any continuing engagement of such person or
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entity by the Company, and terminating any rights of such person or entity to
receive a fee in connection with any financing activity or transaction involving
the Company occurring after the closing date, such release to be in a form
reasonably acceptable to Buyer.
(l) Estimated Closing Payment Amount. Buyer shall not have
objected to the calculation of the Estimated Closing Payment Amount or the
parties shall have otherwise agreed on such amount.
(m) Minimum Net Worth. The Net Worth (determined in the manner
described in Section 1.2) of the Company shall not be less than $22.0 million as
of November 30, 1999, and the Company shall have delivered to Buyer at the
closing a certificate signed by the Chief Executive Officer and the Chief
Financial Officer of the Company, dated the Closing Date, certifying that the
Net Worth of the Company as of such date is not less than $22.0 million.
8.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of
the Company to effect the Closing shall be subject to the following conditions,
except to the extent waived in writing by the Company:
(a) Representations and Warranties of Buyer. The representations
and warranties of Buyer herein contained shall be true at the Closing Date in
all material respects with the same effect as though made at such time; Buyer
shall in all material respects have performed all obligations and complied with
all covenants and conditions required by this Agreement to be performed or
complied with by it at or prior to the Closing Date.
(b) Closing Certificate. Buyer shall have delivered to the
Company certificates of Buyer in form and substance satisfactory to the Company,
dated the Closing Date and signed by duly authorized corporate officers of
Buyer, to the effect described in Section 8.3(a).
(c) Opinion of Counsel. The Shareholders shall receive at the
Closing from O'Melveny & ▇▇▇▇▇ LLP, counsel to Buyer, an opinion dated the
Closing Date, in form and substance substantially as set forth in Exhibit C.
(d) Employment Agreement. Buyer shall have delivered the
Employment Agreement, and consented to the signing of such agreement by the
Company.
ARTICLE IX
TERMINATION OF OBLIGATIONS; SURVIVAL
9.1 Termination of Agreement. Anything herein to the contrary
notwithstanding, this Agreement and the transactions contemplated by this
Agreement shall terminate if the Closing does not occur on or before the close
of business on November 30, 1999 unless extended by mutual consent in writing of
Buyer and the Company and may otherwise be terminated at any time before the
Closing as follows and in no other manner:
(a) Mutual Consent. By mutual consent in writing of the parties.
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(b) Conditions to Buyer's Performance Not Met. By Buyer by
written notice to the Company if any event occurs which would render impossible
the satisfaction of one or more conditions set forth in Section 8.2 to the
obligations of Buyer to consummate the transactions contemplated by this
Agreement.
(c) Conditions to the Company's Performance Not Met. By the
Company by written notice to Buyer if any event occurs which would render
impossible the satisfaction of the conditions set forth in Section 8.3 to the
obligations of the Company to consummate the transactions contemplated by this
Agreement.
(d) Inaccurate Information. By Buyer if any material information
(whether or not in writing) delivered by or on behalf of the Company to Buyer is
inaccurate or incomplete in any material respect.
9.2 EFFECT OF TERMINATION. In the event this Agreement is
terminated pursuant to Section 9.1, all further obligations of the parties under
this Agreement shall terminate without further liability of any party to
another; provided that the obligations of the parties contained in Section 10.3
shall survive any such termination. A termination under Section 9.1(b) or (c)
shall not relieve any party of any liability for a breach of, or for any
misrepresentation under this Agreement, or be deemed to constitute a waiver of
any available remedy (including specific performance if available) for any such
breach or misrepresentation.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 AMENDMENT AND MODIFICATIONS. Subject to applicable law, this
Agreement may be amended, modified and supplemented only by written agreement
between the parties which states that it is intended to be a modification of
this Agreement.
10.2 WAIVER OF COMPLIANCE. Any failure of the Company or the
Shareholders, on the one hand, or Buyer, on the other, to comply with any
obligation, covenant, agreement or condition herein may be expressly waived in
writing by the other party, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
10.3 EXPENSES. The parties agree that all fees and expenses
incurred by them in connection with this Agreement and the transaction
contemplated hereby shall be borne by the party incurring such fees and
expenses, including, without limitation, all fees of counsel, actuaries and
accountants.
10.4 TRANSFER TAXES. The Shareholders shall be responsible for
and shall pay all taxes levied or to be levied with respect to the sale of the
Shares.
10.5 GOOD FAITH EFFORTS; FURTHER ASSURANCES. Each party shall use
its good faith efforts to cause all conditions to its and the other parties
obligations hereunder to be timely satisfied and to perform and fulfill all
obligations on its part to be performed and fulfilled under this Agreement, to
the end that the transactions contemplated by this Agreement shall be effected
substantially in accordance with its terms as reasonably practicable. The
parties shall cooperate
38
44
with each other in such actions and in securing requisite approvals. Each party
shall execute and deliver both before and after the Closing such further
certificates, agreements and other documents and take such other actions as the
other party may reasonably request to consummate or implement the transactions
contemplated hereby or to evidence such events or matters.
10.6 REMEDIES; WAIVER. To the maximum extent permitted by law,
all rights and remedies existing under this Agreement are cumulative to and not
exclusive of, any rights or remedies otherwise available under applicable law.
No failure on the part of any party to exercise or delay in exercising any right
hereunder shall be deemed a waiver thereof, nor shall any single or partial
exercise preclude any further or other exercise of such or any other right.
10.7 NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand or mailed, certified or
registered mail with postage prepaid:
(a) if to the Company or the Shareholders, to:
Goshen Rubber Companies, Inc.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as representative
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copies to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; and
Yoder, Ainlay, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
or to such other person or address as the Company or the Shareholders shall
furnish to Buyer in writing;
(b) if to Buyer to:
▇▇▇▇'▇ International, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
39
45
O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or to such other person or address as Buyer shall furnish to the Company in
writing.
10.8 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other party.
10.9 PUBLICITY. None of the Company, any Shareholder or Buyer
shall make or issue, or cause to be made or issued, any announcement or written
statement concerning this Agreement or the transactions contemplated hereby for
dissemination to the general public without the prior consent of the other
parties. This provision shall not apply, however, to any announcement or written
statement required to be made by law or the regulations of any federal or state
governmental agency, except that the party required to make such announcement
shall, whenever practicable, consult with the other party concerning the timing
and content of such announcement before such announcement is made.
10.10 GOVERNING LAW. This Agreement and the legal relations among
the parties hereto shall be governed by and construed in accordance with the
laws of the State of Indiana, as applied to contracts entered into and to be
wholly performed within such State, except with regard to the internal affairs
of corporations not incorporated in Indiana (which internal affairs shall be
governed by the law of the state or other jurisdiction of incorporation).
10.11 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
10.12 HEADINGS. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
10.13 ENTIRE AGREEMENT. This Agreement, including the Exhibits
and Schedules hereto, the Disclosure Schedule and the other documents and
certificates delivered pursuant to the terms hereof, set forth the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and supersede all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any party hereto.
10.14 THIRD PARTIES. Except as specifically set forth or referred
to herein, nothing herein expressed or implied is intended or shall be construed
to confer upon or give to
40
46
any person or corporation other than the parties hereto and their successors or
assigns, any rights or remedies under or by reason of this Agreement.
10.15 ATTORNEYS' FEES. In the event of any Action by any party
for the breach of or for any misrepresentation under this Agreement or any
Action by any party to collect any obligation hereunder, including any
participation in bankruptcy proceedings to enforce a right or claim against a
party in such proceedings, the prevailing party shall be entitled to reasonable
attorney's fees, costs and expenses incurred in such Action. Attorneys' fees
incurred in enforcing any judgement in respect of this Agreement are recoverable
as a separate item. The preceding sentence is intended to be severable from the
other provisions of this Agreement and to survive any judgment and, to the
maximum extent permitted by law, shall not be deemed merged into such judgment.
10.16 SPECIFIC PERFORMANCE. The Shareholders and the Buyer each
acknowledge that, in view of the uniqueness of the business of the Company
represented by the Shares and the transactions contemplated by this Agreement,
each party would not have an adequate remedy at law for money damages in the
event that this Agreement has not been performed in accordance with its terms,
and therefore agrees that the other party shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled, at law or in equity.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
41
47
IN WITNESS WHEREOF, the parties hereto have caused this Stock
Purchase Agreement to be duly executed, all as of the day and year first above
written.
GOSHEN RUBBER COMPANIES, INC.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Title: Chief Executive Officer
Attest:
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Title: Secretary
▇▇▇▇'▇ INTERNATIONAL, INC.
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Chairman of the Board and Chief Executive Officer
Attest:
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President - Finance and Chief Financial Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in his individual capacity,
and on behalf of each of the Shareholders, in
his capacity as Shareholders' Agent and
Attorney-in-Fact
42
48
SCHEDULE A
TO
STOCK PURCHASE AGREEMENT
NAME AND ADDRESS NO. OF COMMON NO. OF PREFERRED ALLOCATION OF
OF SHAREHOLDER SHARES OWNED SHARES OWNED PURCHASE PRICE
-------------- ------------ ------------ --------------
(Based on Common Only)
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 11,988B - 14.6624%
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Flying J Company, LLP 260A - 10.1993
19558 Rio Verde 8,079B
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 9,613A - 29.2050
19558 Rio Verde 14,265B
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ - ▇.▇▇▇▇
▇▇▇▇▇▇▇ Family Limited Partnership 7,622B
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
The Mennonite Foundation 2,089B - 2.5550
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Yoder, Ainlay, ▇▇▇▇▇ & Buckingham
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - 4,832 -0-
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 4,737B 4,832 5.7938
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Custodian 365B .4464
under the Uniform Gifts to
Minors Act
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 6,579B 483 8.0467
▇▇
#▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ 2,601B 481 3.1813
#▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 3,166B 967 3.8723
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 130A 967 4.1585
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇,▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ 130A 967 3.6265
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇,▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇) 130A 967 3.8907
1259 Cerro Gordo 3,051B
▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇
University of Notre Dame 400B - .4892
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
St. John's Church 150B - .1835
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ducks Unlimited 50B - .0612
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------- ----------- -----------
Totals 10,513A 14,496 100%+
71,247B
2
50
SCHEDULE 6.1
ALLOCATION OF INDEMNIFICATION RESPONSIBILITIES
SHAREHOLDER NAME % OF INDEMNIFICATION
---------------- --------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 15.1611%
Flying J. Company, LLP 10.5462
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 30.1982
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Family Partnership 9.9556
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ -0-
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 5.9908
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Custodian under the Uniform Gifts to Minors Act .4616
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 8.3204
▇▇▇▇ ▇. ▇▇▇▇▇▇ 3.2894
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 4.0040
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 4.2999
▇▇▇▇ ▇. ▇▇▇▇▇▇ 3.7498
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇) 4.0230
--------
100.0000%
Schedule 6.1
51
AMENDMENT NO. 1
TO
STOCK PURCHASE AGREEMENT
This AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT (this "Amendment") is
dated as of December 17, 1999, among ▇▇▇▇'▇ INTERNATIONAL, INC., a Delaware
corporation ("Buyer"), GOSHEN RUBBER COMPANIES, INC., an Indiana corporation
(the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and each of the other
shareholders of the Company listed on the signature pages hereto (collectively
with ▇▇▇▇▇▇▇, the "Existing Shareholders") and Berkshire Taconic Community
Foundation, Inc. (the "New Shareholder," and together with the Existing
Shareholders, the "Shareholders").
WHEREAS, the parties (other than the New Shareholder) previously entered
into that certain Stock Purchase Agreement, dated October 20, 1999 (the
"Original Stock Purchase Agreement") pursuant to which Buyer agreed to purchase
all of the outstanding capital stock of the Company and the Company would become
a wholly owned subsidiary of Buyer; and
WHEREAS, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, one of the Existing Shareholders, desires to
transfer certain of the Shares owned by her to the New Shareholder, and to have
the New Shareholder become a party to, and be bound by, the Original Stock
Purchase Agreement; and
WHEREAS, in connection with the transfer of the Shares to the New
Shareholder, the New Shareholder has agreed to become a party to, and to be
bound by, all of the terms and provisions of the Original Stock Purchase
Agreement, and the amendments thereof set forth herein, by the execution and
delivery of this Amendment; and
WHEREAS, the parties desire to amend the Original Stock Purchase
Agreement to provide for the delivery of a promissory note for a portion of the
purchase price otherwise payable at the Closing; and
WHEREAS, Buyer has consented to the payment of cash bonuses to ▇▇▇▇▇
▇▇▇▇▇ in an amount not to exceed $112,000 and to ▇▇▇ ▇▇▇▇▇▇▇▇ in an amount not
to exceed $75,000, and in connection with such bonus payments has agreed that
the purchase price for the Shares need not be reduced by the amount of any such
payments, net of the Company's expected effective tax rate for the tax period
July 1, 1999 through December 31, 1999; and
WHEREAS, the parties desire to provide a clean cut-off date for
financial, accounting and tax purposes by providing that the results of
operations through December 31, 1999 will be for the account of the
Shareholders; and
52
WHEREAS, the parties desire to amend the method of determining the final
purchase price under the Original Stock Purchase Agreement to use a balance
sheet date of December 31, 1999 for purposes of calculating the final purchase
price; and
WHEREAS, the parties desire to amend certain other provisions of the
Original Stock Purchase Agreement as set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which the parties hereby acknowledge, the parties agree as follows:
1. The Existing Shareholders to the Original Stock Purchase Agreement
hereby consent to the transfer of 490 Shares by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to the New
Shareholder, and to the New Shareholder becoming a party to the Original Stock
Purchase Agreement.
2. The New Shareholder hereby becomes a party to, and agrees to be bound
by, the Original Stock Purchase Agreement, as amended herein, including for such
purposes making all of the representations, warranties and covenants to and for
the benefit of Buyer set forth therein.
3. The parties acknowledge and agree that the New Shareholder shall be
deemed for all purposes to be a Charitable Shareholder within the meaning of the
third paragraph of Article II of the Original Stock Purchase Agreement. The
Existing Shareholders acknowledge and agree that Schedule 6.1 to the Original
Stock Purchase Agreement shall not be changed or amended as a result of the
transfer of Shares to the New Shareholder.
4. The parties agree that Schedule A to the Original Stock Purchase
Agreement is hereby amended and restated in its entirety as attached to this
Amendment.
5. Section 1.2 of the Original Stock Purchase Agreement is hereby
amended and restated to read in its entirety as follows:
"1.2 PURCHASE OF THE SHARES BY BUYER. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations,
warranties and agreements herein contained, Buyer shall acquire the
Shares from the Shareholders on the Closing Date. The aggregate
consideration payable for all of the Shares is an amount equal to the
Net Worth (as defined below) of the Company as of December 31, 1999 plus
the sum of (i) $24.0 million and (ii) the adjustments set forth in this
Section, if any, and in Section 1.5(c) below (the "Purchase Price").
"Net Worth" means the book value of the Company's assets less its
liabilities as reflected in the Year-End Balance Sheet (as defined in
Section 1.5) as determined in conformity with generally accepted
accounting principles consistently applied ("GAAP"); provided, that for
calculation of the purchase price for the Shares the Company shall not
be required to reduce the Net Worth for the following items (except to
the extent of normal amortization of
2
53
such items in the ordinary course of business up to June 30, 1999 and
for the period between July 1, 1999 and December 31, 1999) regardless of
whether Net Worth is required to be so reduced by GAAP, as of December
31, 1999: (a) any unamortized balance of capitalized loan and credit
facility costs relating to the current and prior credit facilities of
the Company reflected on the Balance Sheet (as defined in Section 2.8)
as of the Balance Sheet Date; (b) any capitalized software costs
reflected on the Balance Sheet as of the Balance Sheet Date; (c)
capitalized leased property under lease obligations with respect to the
Company's South Carolina leased facility reflected on the Balance Sheet
as of the Balance Sheet Date; (d) any adjustments to the book value of
the leased assets reflected on the Balance Sheet as of the Balance Sheet
Date leased from Amplicon, Inc. under that certain Lease Agreement dated
October 28, 1994, as amended March 23, 1995, as a result of the
termination of that lease; and (e) any adjustments to the accounts
receivable reflected in the Balance Sheet as of the Balance Sheet Date
or the reserves therefor based on the account receivable and note
receivable in the aggregate amount of $631,000 from Advanced Performance
Technology, Inc. All costs, expenses and fees of the Company (or to be
paid by the Company) related to the transactions contemplated by this
Agreement incurred prior to the Closing shall have been expensed as of
the Closing Date, and the effect of such expensing shall be reflected in
the Year-End Balance Sheet."
6. Section 1.3 of the Original Stock Purchase Agreement is hereby
amended and restated to read in its entirety as follows:
"1.3 PAYMENT FOR SHARES.
In full consideration of the purchase by Buyer of the Shares,
Buyer shall make the following payments:
(a) Buyer shall pay to Shareholders' Agent (as defined in Section
1.5) at the Closing (as defined in Section 1.7) the Closing Payment
Amount (as defined in Section 1.4) by delivery of (i) the Promissory
Note, for the account of the Shareholders (as defined in Section 1.3(b)
below), and (ii) payment of the balance of the Closing Payment Amount,
for the account of the Shareholders, by wire transfer of immediately
available funds to a custodial account (the "Account") to be designated
by the Shareholders' Agent in writing not later than three business days
prior to the Closing.
(b) Buyer shall deliver to Shareholders' Agent, for the account
of the Shareholders, at the Closing a promissory note of Buyer payable
to the Shareholders' Agent for the account of the Shareholders in the
principal amount of $6.2 million, such promissory note to be due and
payable on January 3, 2000 and to otherwise be in the form of Exhibit D
hereto (the "Promissory Note").
3
54
(c) Buyer shall pay the Deferred Purchase Price (as defined in
Section 1.4) in accordance with the provisions of Section 1.6 below."
7. Section 1.4 of the Original Stock Purchase Agreement is hereby
amended and restated in its entirety as follows:
"1.4. DETERMINATION OF THE CLOSING PAYMENT AMOUNT AND DEFERRED
PURCHASE PRICE.
At least five business days prior to the Closing Date, the
Company shall submit to Buyer a calculation setting forth the estimated
closing payment amount (the "Estimated Closing Payment Amount"),
together with supporting documents used by the Company in calculating
the Estimated Closing Payment Amount and such other documents reasonably
requested by Buyer to support the calculation. The Estimated Closing
Payment Amount shall be an amount equal to the estimated Net Worth of
the Company as of December 31, 1999 plus (i) Nineteen Million Five
Hundred Thousand Dollars ($19,500,000) and (ii) good faith estimates of
the adjustments specified in Section 1.5(c) hereof (other than with
respect to Section 1.5(c)(iv) for which no estimate shall be made), but
in no event shall the Estimated Closing Payment Amount exceed Forty-Two
Million Dollars ($42,000,000). Unless Buyer shall object at least one
day prior to the Closing Date in writing to the Estimated Closing
Payment Amount, the payments contemplated by Sections 1.3(a) and 1.3(b)
to be made on the Closing Date shall be based on the Estimated Closing
Payment Amount, and the same shall hereafter be referred to as the
"Closing Payment Amount." The difference between the Purchase Price and
the Closing Payment Amount shall be deferred and paid in accordance with
Section 1.6 below (the "Deferred Purchase Price").
8. Section 1.5 of the Original Stock Purchase Agreement is hereby
amended and restated in its entirety as follows:
"1.5 FINAL DETERMINATION OF PURCHASE PRICE.
(a) As soon as practicable following the Closing Date but in any
event not more than 90 days after the Closing Date, Buyer or its
representative shall prepare a balance sheet of the Company, dated
December 31, 1999 (the "Year-End Balance Sheet"), and statements of
income and retained earnings covering the period from July 1, 1999
through December 31, 1999 (the "Year-End Financial Statements"). Buyer
or its representative shall also prepare a consolidated statement of
income or operations for the period from December 1, 1999 through
December 31, 1999 (the "December Statement of Operations"). The Year-End
Financial Statements and the December Statement of Operations each shall
be prepared in conformity with GAAP, subject to the adjustments set
forth in Section 1.2.
4
55
(b) The parties expect that the December Statement of Operations
will include some extraordinary items which the Shareholders have agreed
to bear for their own account. The December Statement of Operations
shall be adjusted in the manner described on Schedule B-1 hereto
(collectively, the "December Adjustments") for the purpose of
approximating the true operating results of the Company in December
1999. The December Statement of Operations as adjusted by the December
Adjustments shall be referred to as the "Adjusted December Statement of
Operations."
(c) The Purchase Price as set forth in Section 1.2 shall be
adjusted as follows: (i) if the Adjusted December Statement of
Operations shows an aftertax loss, fifty-five percent (55%) of the
aftertax loss shall be added to the Purchase Price; (ii) if the Adjusted
December Statement of Operations shows aftertax income, fifty-five
percent (55%) of the aftertax income shall be deducted from the Purchase
Price; (iii) the amount of special cash bonuses, net of the Company's
expected 38% effective tax rate for the tax period July 1, 1999 through
December 31, 1999, paid by the Company on or about the Closing Date to
▇▇▇▇▇ ▇▇▇▇▇ in an amount not to exceed $112,000 and to ▇▇▇ ▇▇▇▇▇▇▇▇ in
an amount not to exceed $75,000 shall be added to the Purchase Price;
and (iv) if Buyer establishes any special reserves on the books of the
Company as of December 31, 1999 related to the acquisition of the
Company by Buyer, the amount of any such reserves, net of the related
tax effect, shall be added to the Purchase Price. Exhibit B-2 hereto
sets forth the calculation of the Purchase Price, as so finally
adjusted.
(d) The parties hereto acknowledge and agree that while any
special reserves recorded by Buyer, net of the related tax effect,
recorded on the books of the Company as of December 31, 1999 related to
the acquisition of the Company by Buyer shall be added back to the
Purchase Price, it is not the intention of the parties that doing so
shall in any way diminish or alter the indemnification obligations of
the Shareholders specified in this Agreement with respect to, among
other things, any inaccuracy in or breach or nonperformance of any of
the representations, warranties, covenants or agreements made by such
shareholder in or pursuant to this Agreement.
(e) Based upon the Year-End Financial Statements and the Adjusted
December Statement of Operations, Buyer shall prepare a statement (the
"Purchase Price Statement") setting forth the calculation of the
Purchase Price and the Deferred Purchase Price and deliver the Purchase
Price Statement to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in his capacity as representative
of each of and for the accounts of the Shareholders (the "Shareholders'
Agent"). Shareholders' Agent will then have fifteen (15) business days
from the date of receipt of the Purchase Price Statement to object to
any items or calculations on the Purchase Price Statement. If
Shareholders' Agent does not object to the Purchase Price Statement
within such 15-day period, such Purchase Price Statement shall be
5
56
deemed final and conclusive with respect to the determination of the
Purchase Price and the Deferred Purchase Price and shall be binding on
all parties hereto, including all Shareholders, for such purpose. In the
event that Shareholders' Agent objects to any item or calculation on the
Purchase Price Statement and such objection cannot be resolved by the
parties hereto within twenty business days following such objection,
such objection shall be resolved by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (the
"Arbitrating Accountant"), who shall resolve all such objections as soon
as practicable and make any necessary changes or revisions to the
Purchase Price Statement. In resolving such objections, the Arbitrating
Accountant shall determined whether the Purchase Price Statement was
prepared in accordance with this Agreement and whether the Year-End
Financial Statements upon which the Purchase Price Statement was based
were prepared in conformity with GAAP, subject to the adjustments set
forth in Section 1.2. Within five days of completion, the Arbitrating
Accountant shall deliver the Purchase Price Statement to Buyer and
Shareholders' Agent. The Purchase Price Statement as finalized by the
Arbitrating Accountant shall be deemed final and conclusive with respect
to the determination of the Purchase Price and the Deferred Purchase
Price and shall be binding on all the parties hereto, including all
Shareholders, for such purposes. The fees and expenses of the
Arbitrating Accountant in resolving all such objections shall be borne
one-half by Buyer, on the one hand, and one-half by the Shareholders on
the other hand, and such one-half may be deducted by Buyer pro rata
based on the percentage interests in the Company from the Deferred
Purchase Price remaining payable to all Shareholders."
9. Section 6.1 (c) of the Original Stock Purchase Agreement is hereby
amended to read in its entirety as follows:
"(c) any tax liability of the Company or any subsidiary for any
tax period ending on or prior to December 31, 1999 to the extent not
reserved or provided for on the Year-End Balance Sheet;"
10. Section 9.1 of the Original Stock Purchase Agreement is hereby
modified by deleting the date "November 30, 1999" in the first sentence of such
section and replacing such date with the date "December 31, 1999."
11. A new Section 10.17 is hereby added to the Original Stock Purchase
Agreement which reads in its entirety as follows:
"10.17. December 1999 Results. The Shareholders and Buyer agree
that the results of operations of the Company up to and including
December 31, 1999 shall be for the account of the Shareholders."
12. All terms used in this Amendment without definition shall have the
meanings given those terms in the Original Stock Purchase Agreement.
6
57
13. Except as expressly modified herein, the Original Stock Purchase
Agreement shall remain in full force and effect in accordance with its original
terms.
14. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
15. This Amendment shall be governed by the laws of the State of
Indiana.
7
58
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed on the date first written above.
GOSHEN RUBBER COMPANIES, INC.,
an Indiana corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
▇▇▇▇'▇ INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President - Finance - And
Chief Financial Officer
NEW SHAREHOLDER
Berkshire Taconic Community Foundation, Inc.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Flying J. Company, LLP
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Partner
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Family
Limited Partnership
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Title: Partner
The Mennonite Foundation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇/ /s/ ▇▇▇▇▇▇ ▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇/▇▇▇▇▇▇ ▇▇▇▇
Title: Asst. Secretary/Asst. Treasurer
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as custodian
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
S-2
60
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (GRANT)
------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇)
University of Notre Dame
By: /s/ E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, C.S.C.
------------------------------------------
Name: E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, C.S.C.
Title: Executive Vice President
St. ▇▇▇▇ the Evangelist Catholic Church
By: /s/ ▇▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Pastor
Ducks Unlimited
By: /s/ ▇▇▇▇▇▇▇ ▇. CASE
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Case
Title: National Director of Development
S-3
61
SCHEDULE A
TO
STOCK PURCHASE AGREEMENT
NAME AND ADDRESS NO. OF COMMON NO. OF PREFERRED ALLOCATION OF
OF SHAREHOLDER SHARES OWNED SHARES OWNED PURCHASE PRICE
-------------- ------------ ------------ --------------
(Based on Common Only)
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 11,988B - 14.6624%
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Flying J Company, LLP 260A - 10.1993
19558 Rio Verde 8,079B
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 9,613A - 29.2050
19558 Rio Verde 14,265B
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ - ▇.▇▇▇▇
▇▇▇▇▇▇▇ Family Limited Partnership 7,622B
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
The Mennonite Foundation ▇/▇ ▇▇▇▇▇▇ ▇,▇▇▇▇ - ▇.▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇ Yoder, Ainlay, ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - 4,832 -0-
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 4,737B 4,832 5.7938
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Custodian for 18B .0220
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ under the
Indiana Uniform Transfers to Minors
Act ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A-2
62
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Custodian for 128B .1565
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ under the
Indiana Uniform Transfers to
Minors Act
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Custodian for ▇▇▇▇ .▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ under the
Indiana Uniform Transfers to
Minors Act
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 6,089B 483 7.4474
#▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ 2,601B 481 3.1813
#▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 3,166B 967 3.8723
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 130A 967 4.1585
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇,▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ 130A 967 3.6265
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇,▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇) 130A 967 3.8907
1259 Cerro Gordo 3,051B
▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇
University of Notre Dame 400B - .4892
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇-▇
▇▇
▇▇. ▇▇▇▇ the Evangelist Catholic 150B - .1835
Church
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ducks Unlimited 50B - .0612
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Berkshire Taconic Community 490B .5993
Foundation, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------- ----------- -----------
Totals 10,513A 14,496 100%
71,247B
▇-▇
▇▇
▇▇▇▇▇▇▇▇ ▇-▇
TO
STOCK PURCHASE AGREEMENT
ADJUSTED DECEMBER STATEMENT OF OPERATIONS
Goshen Adjusted Operating Results
December - 1999
Revenues
Less Cost of Sales
Gross Profit
Less SG&A Costs
Operating Profit
Less Interest Cost on Goshen debt
(Interest from December 1 through the Closing Date shall be at the Fleet
Financial rate; interest for the balance of the month shall be charged at
Buyer's bank rate on all amounts borrowed by Goshen from Buyer beginning with
the Closing Date and ending December 31, 1999, including amounts borrowed to
repay the Fleet Financial debt at the Closing)
Regular Pretax Income
Special Adjustments to December's Results
Add Back Goshen Transaction Costs
Add Back Goshen Special Reserves, if any
Add Back Special Executive Bonuses
Add Back ▇▇▇▇'▇ Special Reserves, if any
Adjusted Pretax Income for December
Less Tax Provision
Adjusted December Operating Results
▇-▇
▇▇
▇▇▇▇▇▇▇▇ ▇-▇
TO
STOCK PURCHASE AGREEMENT
ADJUSTMENTS TO DETERMINE FINAL PURCHASE PRICE
Net Worth of Goshen at December 31, 1999
Adjust for Goshen's December 1999's Adjusted Operating Results
Plus 55% of December's Adjusted Aftertax Operating Loss; or
Minus 55% of December's Adjusted Aftertax Operating Income
Plus Specified Special Bonuses in Year-End Financial Statements
▇▇▇▇▇ (not to exceed $112,000)
▇▇▇▇▇▇▇▇ (not to exceed $75,000)
Minus 38% Tax Provision for Specified Special Bonuses
Plus Buyer's Special Acquisition Reserves in Year-End Balance Sheet, if any
Minus 38% Tax Provision for Buyer's Special Acquisition Reserves, if any
Plus $24.0 Million Premium
Final Purchase Price
A-2
66
EXHIBIT D
FORM OF PROMISSORY NOTE
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇'▇ INTERNATIONAL, INC., a
Delaware corporation ("Borrower"), hereby promises to pay to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
as Shareholders' Agent, for the account of the Shareholders ("Shareholders'
Agent"), by wire transfer of immediately available funds to the custodial
account designated by the Shareholders' Agent in Section 1.2 of that certain
Stock Purchase Agreement dated October 20, 1999, as amended by Amendment No. 1
dated December 17, 1999, by and among Borrower, Goshen Rubber Companies, Inc.
and the shareholders of Goshen Rubber Companies, Inc., in lawful money of the
United States of America, the principal sum of Six Million Two Hundred Thousand
Dollars ($6,200,000), together with interest on the unpaid principal balance of
this Note from the date hereof until paid in full at a rate of interest equal to
6.75% per annum , but in no event at a rate higher than the maximum permitted by
law. Payments of principal and accrued but unpaid interest are to be made at
maturity. This Note shall mature and be due and payable in full on January 3,
2000.
It shall be an event of default (i) if Borrower fails to make any
payment under this Note within three (3) days following the due date thereof or
(ii) if Borrower becomes insolvent or makes an assignment for the benefit of
creditors. Upon the occurrence of an event of default the entire unpaid amount
of principal and accrued interest hereunder may be declared by Shareholders'
Agent to be immediately due and payable , interest on such entire amount
accruing thereafter at the interest rate set forth above.
This Note may not be prepaid, in part or in full by Borrower at any
time.
The undersigned hereby waives presentment, notice of nonpayment or
dishonor, protest, notice of protest, demand and all other notices in connection
with the delivery, acceptance, performance, default or enforcement of this Note.
The holder hereof shall not be deemed, by any act of omission or commission, to
have waived any of its rights or remedies hereunder unless such waiver is in
writing and signed by such holder and then only to the extent specifically set
forth in writing. A waiver with reference to one event shall not be construed as
continuing or as a bar to or waiver of any right or remedy as to a subsequent
event. No delay or omission of the holder hereof to exercise any right, whether
before or after a default hereunder, shall impair any such right or shall be
construed to be a waiver of any right or default, and the acceptance at any time
by the holder hereof of any past due amounts shall not be deemed to be a waiver
of the right to require prompt payment when due of any other amounts then or
thereafter due and payable. The undersigned promises to pay costs of collection,
including attorneys' fees, whether or not suit is filed, upon the nonperformance
by the undersigned of any duty or obligation arising out of or in connection
with this Note.
D-1
67
Time is of the essence hereof. Upon the occurrence of any event of
default hereunder, the holder hereof may exercise all rights and remedies
provided for herein and by law including, but not limited to, the right to
enforce immediate payment in full of this Note.
The remedies of the holder hereof as provided herein or at law or in
equity, shall be cumulative and concurrent, and may be pursued singly,
successively, or together at the sole discretion of the holder hereof, and may
be exercised as often as occasion therefore shall occur; and the failure to
exercise any such right or remedy shall in no event be construed as a waiver or
release thereof.
The undersigned waives to the full extent permitted by applicable law
the benefit of any laws or rules of court now or hereafter in effect relating to
exemption, appraisement or stay of execution.
Whenever used, the words "undersigned" and "Shareholders' Agent" shall
be deemed to include the respective successors and assigns of each.
This Note has been delivered to and accepted by Shareholders' Agent in
Indianapolis, Indiana. This Note shall be governed and construed in accordance
with and pursuant to the laws of the State of Indiana.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, has duly executed this Note the day and year first above written.
▇▇▇▇'▇ INTERNATIONAL, INC.
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President - Finance and
Chief Financial Officer
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Assistant General Counsel and
Secretary
D-2