_________________________________________________________________
_________________________________________________________________
PURCHASE AGREEMENT
BY AND AMONG
GIBRALTAR STEEL CORPORATION OF NEW YORK,
AND
THE PERSONS LISTED ON THE SCHEDULE
OF SHAREHOLDERS ATTACHED HERETO
AND
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.,
AS THE SHAREHOLDERS' REPRESENTATIVE
Dated as of January 31, 1997
_________________________________________________________________
_________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS 1
ARTICLE 2 PURCHASE AND SALE OF SHARES
Section 2.1 Sale of Shares 7
Section 2.2 Purchase Price. . . . . . . . . . . . . . 7
Section 2.3 Closing; Effective Time . . . . . . . . . 7
Section 2.4 Closing Documentation 7
Section 2.5 Escrow 9
Section 2.6 Post-Closing Purchase Price Adjustment. . 9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS
Section 3.1 Organization 10
Section 3.2 Authorization; Enforceability 11
Section 3.3 Authority; No Violation 11
Section 3.4 Capital Structure of the Company 12
Section 3.5 Title to Shares 12
Section 3.6 Certificate of Incorporation and By-Laws. 12
Section 3.7 Subsidiaries; Investments . . . . . . . . 13
Section 3.8 Financial Statements. . . . . . . . . . . 13
Section 3.9 Net Worth . . . . . . . . . . . . . . . . 14
Section 3.10 Absence of Undisclosed Liabilities. . . . 14
Section 3.11 Inventory; Prepaid Items . . . . . . . . 14
Section 3.12 Operations of the Company . . . . . . . . 15
Section 3.13 Taxes . . . . . . . . . . . . . . . . . . 17
Section 3.14 Employee Benefit Plans. . . . . . . . . . 18
Section 3.15 Employees; Labor Relations. . . . . . . . 20
Section 3.16 Licenses and Permits. . . . . . . . . . . 21
Section 3.17 Compliance with Law . . . . . . . . . . . 22
Section 3.18 Actions and Proceedings . . . . . . . . . 22
Section 3.19 Real Property Leases. . . . . . . . . . . 22
Section 3.20 Real Property . . . . . . . . . . . . . . 23
Section 3.21 Accounts Receivable . . . . . . . . . . . 24
Section 3.22 Intellectual Property . . . . . . . . . . 25
Section 3.23 Tangible Property . . . . . . . . . . . . 26
Section 3.24 Title to Assets; All Necessary Assets . . 26
Section 3.25 Material Contracts. . . . . . . . . . . . 26
Section 3.26 Customers and Suppliers . . . . . . . . . 27
Section 3.27 Insurance . . . . . . . . . . . . . . . . 27
Section 3.28 Warranties. . . . . . . . . . . . . . . . 28
Section 3.29 Books and Records . . . . . . . . . . . . 28
Section 3.30 Affiliate Transactions. . . . . . . . . . 28
Section 3.31 ▇▇▇▇▇, ▇▇▇▇▇▇▇ and Proxies. . . . . . . . 28
Section 3.32 (Intentionally Omitted) . . . . . . . . . 29
Section 3.33 Brokerage 30
Section 3.34 Disclosure. . . . . . . . . . . . . . . . 31
Section 3.35 Representations and Warranties on Closing
Date 31
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 4.1 Organization 31
Section 4.2 Authorization; Enforceability 31
Section 4.3 Authority; No Violation 32
Section 4.4 Consents and Approvals 32
Section 4.5 Purchase for Investment . . . . . . . . . 32
Section 4.6 Actions and Proceedings . . . . . . . . . 32
Section 4.7 Representations and Warranties on Closing
Date 32
ARTICLE 5 COVENANTS OF THE SHAREHOLDERS
Section 5.1 Due Diligence Cooperation 33
Section 5.2 Conduct of Business Prior to the Closing 33
Section 5.3 Preservation of Business 34
Section 5.4 Standstill 35
Section 5.5 Confidential Information 35
Section 5.6 Non-Competition 35
Section 5.7 Further Assurances 36
Section 5.8 Cooperation in Third-Party Litigation 36
Section 5.9 Injunctive Relief 37
Section 5.10 Supplements to Schedules 37
Section 5.11 Termination of ESOP 37
ARTICLE 6 COVENANTS OF THE PURCHASER
Section 6.1 Representations and Warranties 38
Section 6.2 Cooperation in Third-Party Litigation 38
Section 6.3 Non-Solicitation of Employees 38
Section 6.4 Injunctive Relief 38
Section 6.5 Procurement of Life Insurance 39
ARTICLE 7 ADDITIONAL COVENANTS
Section 7.1 Expenses; Brokers 39
Section 7.2 Record Retention 39
Section 7.3 Public Announcements 39
Section 7.4 Certain Taxes 40
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATION OF
THE PURCHASER
Section 8.1 Representations and Covenants 40
Section 8.2 Consents, Filings; Etc. 40
Section 8.3 Third-Party Consents 41
Section 8.4 Certificates. . . . . . . . . . . . . . . 41
Section 8.5 Litigation. . . . . . . . . . . . . . . . 41
Section 8.6 Delivery of Stock Certificates; Transfer
Taxes . . . . . . . . . . . . . . . . . . 41
Section 8.7 Termination of ESOP 42
Section 8.8 No Material Adverse Change. . . . . . . . 42
Section 8.9 Retention of Key Management Personnel . . 42
Section 8.10 Opinion of Counsel. . . . . . . . . . . . 42
Section 8.11 Resignations 42
Section 8.12 Escrow Agreement 42
Section 8.13 Condo Lease 42
Section 8.14 Termination of Executive Insurance Agreement 42
Section 8.15 Life Insurance Cash Surrender Value Statement 43
Section 8.16 Bank Pay-Off Statements 43
Section 8.17 Payment of Notes and Advances 43
Section 8.18 ESOP Termination 43
Section 8.19 Amendments to Equipment Leases 43
ARTICLE 9 CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE SHAREHOLDERS
Section 9.1 Representations and Covenants 44
Section 9.2 Consents, Filings; Etc. 44
Section 9.3 Certificates. . . . . . . . . . . . . . . 44
Section 9.4 Litigation. . . . . . . . . . . . . . . . 45
Section 9.5 Opinion of Counsel. . . . . . . . . . . . 45
Section 9.6 Escrow Agreement 45
ARTICLE 10 SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 10.1 Shareholders' Indemnity 45
Section 10.2 Purchaser's Indemnity 46
Section 10.3 Indemnification Procedure 47
Section 10.4 Survival 48
Section 10.5 Maximum Indemnification 49
ARTICLE 11 MISCELLANEOUS
Section 11.1 Termination 49
Section 11.2 Notices 50
Section 11.3 Headings 51
Section 11.4 Entire Agreement 51
Section 11.5 Severability 51
Section 11.6 Waiver 52
Section 11.7 Binding Effect; Assignment 52
Section 11.8 No Third-Party Beneficiaries 52
Section 11.9 Counterparts 52
Section 11.10 Governing Law . . . . . . . . . . . . . . 52
Section 11.11 Arbitration . . . . . . . . . . . . . . . 52
Section 11.12 Appointment of Shareholders'
Representative. . . . . . . . . . . . . . 52
LIST OF SCHEDULES
2.2 Allocation of Purchase Price among the Shareholders
2.4 Wire Instructions
2.6 Closing Balance Sheet Accounting Principles
3.1 Foreign Qualifications of the Company
3.3 Governmental Consents and Approvals of the Shareholders
3.4 Stock Ownership
3.5 Encumbrances on Shares
3.7 Foreign Qualifications of Subsidiaries
3.8 Financial Statements; Variances from GAAP;
Intercompany Transactions
3.10 Undisclosed Liabilities
3.12 Certain Changes or Events in Operations
3.14 Employee Benefit Plans
3.15 Employees; Labor Matters
3.16 Licenses and Permits
3.17 Compliance with Law
3.18 Actions and Proceedings
3.19 Real Property Leases
3.20 Encumbrances on Real Properties
3.21 Non-Bona Fide Accounts Receivables
3.22 Intellectual Property
3.23 Tangible Property
3.24 Encumbrances on Assets
3.25 Contracts
3.26 Sole Suppliers
3.27 Insurance
3.28 Warranties
3.30 Affiliate Transactions
3.31 Accounts
3.33 Brokerage Agreements
8.15 Life Insurance with Cash Surrender Values
LIST OF EXHIBITS
Exhibit A Financial Statements
Exhibit B ESOP Termination Agreement
PURCHASE AGREEMENT
PURCHASE AGREEMENT (this "Agreement") dated as of January 31, 1997,
among GIBRALTAR STEEL CORPORATION OF NEW YORK, a New York corporation (the
"Purchaser"), THE PERSONS OR ENTITIES LISTED IN THE SCHEDULE OF
SHAREHOLDERS ANNEXED HERETO (collectively, the "Shareholders" and each,
individually, a "Shareholder") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., as the
Shareholders' Representative.
WHEREAS, the Shareholders are the beneficial and record owners of
252,021.7891 shares of common stock, $.10 par value per share (the
"Shares"), of the Southeastern Metals Manufacturing Company, Inc., a
Florida company (the "Company), which Shares constitute all of the issued
and outstanding shares of capital stock of the Company; and
WHEREAS, the Shareholders desire to sell to the Purchaser, and the
Purchaser desires to purchase from the Shareholders, the Shares in order to
transfer to the Purchaser full and complete ownership of the Company, in
exchange for payment of the Purchase Price (as hereinafter defined) and
upon the other terms and conditions as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
The following additional defined terms shall have the following
meanings when used in this Agreement:
"Accounts Receivable" shall have the meaning set forth in Section
3.21.
"Acquired Consolidated Net Worth" shall have the meaning set forth in
Section 2.6(c).
"Affiliate(s) shall mean, with respect to any person or entity, any
other entity controlling, controlled by or under common control with such
person or entity, where "control" means the possession, directly or
indirectly, of the power to direct the management and policies of a person
or entity, whether through the ownership of voting securities, contract or
otherwise.
"Affiliated Group" means an affiliated group as defined in Section
1504 of the Code (or any analogous combined, consolidated or unitary group
under state, local or foreign income tax law) of which the Company is or
has been a member.
"Books and Records" shall have the meaning set forth in Section 3.29.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, and any regulations promulgated
thereunder.
"Closing" and "Closing Date" shall have the meanings set forth in
Section 2.3.
"Closing Balance Sheet" shall mean the unaudited consolidated balance
sheet of the Company, as of the Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder.
"Competitive Business" means any business engaged in the design,
development, manufacture, merchandising, distribution or sale of any
products or services designed, developed, merchandised, distributed or sold
by the Company or any Subsidiary prior to the Closing Date or during the
six (6) year period commencing on the Closing Date and ending on the sixth
anniversary thereof.
"Consolidated Net Worth" shall mean, as of any given date, the amount
of the consolidated assets of the Company and the Subsidiaries, less the
amount of the consolidated liabilities of the Company and the Subsidiaries,
calculated in accordance with generally accepted accounting principles
applied in a manner consistent with the preparation of the Financial
Statements, except to the extent provided otherwise by the terms of this
Agreement.
"Contracts" shall have the meaning set forth in Section 3.25.
"Environmental Laws" means all applicable federal, state, local and
foreign statutes, regulations, ordinances and similar provisions having the
force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning
public health and safety, worker health and safety, and pollution or
protection of the environment, including, without limitation, all those
relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or
cleanup of any hazardous materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls,
noise or radiation, each as amended and as now or hereafter in effect.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any regulations promulgated thereunder.
"Escrow Agent" shall mean that person or entity as shall be mutually
designated by the Purchaser and the Shareholders' Representative.
"Escrow Agreement" shall mean the escrow agreement to be executed
among the Purchaser, the Shareholders' Representative and the Escrow Agent
in form and substance as shall be acceptable to the parties thereto.
"Escrow Amount" shall mean the sum of $2,500,000.
"ESOP" shall mean the Employee Stock Ownership Plan and Trust of
Southeastern Metals Manufacturing Company, Inc.
"Established Consolidated Net Worth" shall mean the sum of
$11,000,000.
"Excess Net Worth" shall mean the difference, if any, between the
Acquired Consolidated Net Worth and the Established Consolidated Net Worth.
"Financial Statements" shall have the meaning set forth in Section
3.8.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"Indemnified Party" shall mean, with respect to any Loss(es), the
party seeking indemnification hereunder.
"Indemnifying Party" shall mean, with respect to any Loss(es), the
party from whom indemnification is being sought hereunder.
"Independent Accountants" shall have the meaning set forth in Section
2.6(c).
"Intellectual Property" shall mean all patents, trademarks, service
marks, logos, trade dress, trade names and corporate names and all of the
goodwill of the business associated therewith; all copyrights; all
registrations, applications and renewals for any of the foregoing; all
inventions; all intellectual trade secrets, confidential information,
formulae, compositions, manufacturing and production processes and
techniques, research information, drawings, specifications, designs, plans,
technical and computer data, mask works, documentation and software, and
all other intellectual property.
"IRS" means the Internal Revenue Service of the United States of
America.
"Key Management" shall have the meaning set forth in Section 8.9.
"Labor Agreements" shall have the meaning set forth in Section 3.15.
"Leased Real Property" shall mean the real properties leased or
subleased by the Company or any of the Subsidiaries as set forth in
Schedule 3.19.
"Licenses and Permits" shall have the meaning set forth in Section
3.16.
"Loss(es)" shall mean any and all costs and expenses including, but
not limited to, reasonable attorneys' fees (whether or not incurred in an
action or proceeding between the Indemnifying Party and the Indemnified
Party or an action between the Indemnified Party and a third party or
otherwise), damages and losses actually incurred by the Indemnified Party
net of any tax adjustments, benefits, savings or reductions received by the
Indemnified Party and net of any insurance proceeds the Indemnified Party
has received by virtue of such Loss(es).
"Material Adverse Effect" shall mean a material adverse effect on the
properties, business, financial condition or results of operations of the
Company and the Subsidiaries, taken as a whole.
"Non-Compete Period" shall mean the six (6) year period commencing on
the Closing Date and ending on the sixth anniversary thereof.
"Notice of Claim" shall have the meaning set forth in Section 10.3.
"Owned Real Property" shall mean the real property owned by the
Company commonly known as ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, as
more fully described in Schedule 3.20.
"Permitted Liens" shall mean:
(a) liens resulting from taxes not yet due and payable;
(b) imperfections in title, if any, not material in amount and
which, individually or in the aggregate, do not interfere with the
ordinary conduct of the business or operations of the Company or the
Subsidiaries or materially detract from the use or value of their
assets; and
(c) the liens and encumbrances set forth in Schedules 3.20 and
3.24.
"Plan(s)" shall have the meaning set forth in Section 3.14.
"Prime Rate" shall mean the prime commercial lending rate of interest
publicly announced by The Chase Manhattan Bank, N.A. from time to time at
its head office. The Prime Rate shall change concurrently with any
publicly announced changes in such interest rate.
"Purchase Price" shall have the meaning set forth in Section 2.2.
"Purchaser Ancillary Documents" shall have the meaning set forth in
Section 4.2.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, and any regulations promulgated thereunder.
"Real Properties" shall mean the Owned Real Property and the real
property subject to the Real Property Leases.
"Real Property Leases" shall have the meaning set forth in Section
3.19.
"Regulated Substances" shall mean any material, substance, product or
waste that is hazardous or toxic or that is regulated by, or that may form
the basis of liability under, any Environmental Law, including, but not
limited to, pollutants, contaminants and chemical and industrial materials
and wastes.
"Seller Ancillary Documents" shall have the meaning set forth in
Section 3.2.
"Shareholders' Knowledge", "to the knowledge of the Shareholders" or
any phrase of similar import shall mean and be limited to the actual
knowledge of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇.
"Shareholders' Representative" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. or,
upon his death or in the event he is unable or unwilling to so serve,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"Structures" shall mean the facilities, improvements and other
structures located on the Real Properties.
"Subsidiary(ies)" shall mean Southeastern Metals Manufacturing of
South Florida, Inc., a Florida corporation, Southeastern Metals Roofing,
Inc., a Florida corporation, Southeastern Metals Manufacturing of
Tennessee, Inc., a Florida corporation, DOT Metal Products, Inc., a Florida
corporation and Bass Rentals, Inc., a Florida corporation.
"Tangible Property" shall have the meaning set forth in Section 3.23.
"Taxes" shall mean any federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales,
use, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental,
customs, duties, real property, personal property, capital stock, social
security, unemployment, disability, payroll, license, employee or other
withholding, or other tax, of any kind whatsoever, including any interest,
penalties or additions to tax or additional amounts in respect of the
foregoing; and
"Tax Returns" shall mean returns, declarations, reports, claims for
refund, information returns or other documents (including any related or
supporting schedules or statements of information) filed or required to be
filed in connection with the determination, assessment or collection of
Taxes of any party of the administration of any laws, regulations or
administrative requirements relating to any Taxes.
"Termination Date" shall mean the date, if any, upon which this
Agreement is terminated pursuant to the provisions of Section 11.1.
"Title Insurance Policies" shall mean, for each parcel of the Real
Properties, the A.L.T.A. owners title insurance policy (or endorsements to
existing policies), in form and substance satisfactory to the Purchaser, to
be issued to the Purchaser at the Purchaser's cost and expense by a title
insurance company reasonably satisfactory to the Purchaser, in such amount
as the Purchaser reasonably determines to be the fair market value insuring
marketable title in fee simple in such parcel, as of the Closing subject
only to Permitted Liens. Each such Title Policy will be dated as of the
date of closing and will contain such coverages and endorsements as are
satisfactory to the Purchaser.
ARTICLE 2
PURCHASE AND SALE
OF SHARES
2.1 Sale of Shares. On the terms and subject to the conditions set
forth in this Agreement, at the Closing the Shareholders shall sell,
transfer, assign and deliver to the Purchaser the Shares, free and clear of
all liens and encumbrances of any kind or nature whatsoever and the
Purchaser shall purchase the Shares from the Shareholders, it being
understood that such sale and purchase shall be sufficient to vest in the
Purchaser sole and exclusive title to the Shares and, as a result thereof,
full and complete ownership of the assets, liabilities and current business
of the Company.
2.2 Purchase Price. The purchase price (the "Purchase Price") to be
paid by the Purchaser to the Shareholders for the Shares shall be the
aggregate sum of $25,000,000. Schedule 2.2 sets forth the portion of the
Purchase Price to be paid to each of the Shareholders. The Purchase Price
shall be subject to adjustment after the Closing as provided in Section
2.6.
2.3 Closing; Effective Time. Unless this Agreement shall have been
terminated pursuant to the provisions of Section 11.1, and subject to
Articles 8 and 9, the closing of the sale and purchase of the Shares (the
"Closing") shall take place at the offices of Holbrook, Akel, Cold, ▇▇▇▇▇▇▇
& ▇▇▇, P.A., One Independent Drive, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, at
10:00 a.m., local time, on January 31, 1997, or at such other place, date
and time as the parties hereto may agree. The date on which the Closing
shall occur is referred to herein as the "Closing Date." Notwithstanding
the foregoing, the effective time of the closing of the sale and purchase
of the Shares pursuant to this Agreement shall be deemed to have occurred
at 12:01 a.m., local time, on February 1, 1997.
2.4 Closing Documentation. At the Closing,
(a) the Shareholders will deliver to the Purchaser:
(i) certificates evidencing the Shares, which shall be
properly endorsed for transfer to the Purchaser or accompanied by
duly executed stock powers, in either case executed in favor of
the Purchaser or its nominee as the Purchaser may direct prior to
the Closing, and otherwise in a form acceptable for transfer on
the books of the Company, with all necessary and appropriate
stock transfer tax stamps affixed thereto;
(ii) the executed certificate required by Section
8.1(c);
(iii) the executed consents and approvals required by
Sections 8.2 and 8.3;
(iv) the executed certificates required by Section
8.4;
(v) the opinion of counsel to the Shareholders
required by Section 8.10;
(vi) the signed resignations required by Section 8.11;
(vii) the executed Escrow Agreement required by
Section 8.12;
(viii) all of the Books and Records and corporate
seals of the Company and the Subsidiaries; and
(ix) such other documents as are required by Article 8
hereof or as the Purchaser may reasonably request.
(b) the Purchaser will deliver to the Shareholders:
(i) the sum of $22,500,000, representing ninety
percent (90%) of the Purchase Price, by wire transfer of same day
funds credited to the account(s) set forth in Schedule 2.4
annexed hereto;
(ii) the executed certificate required by Section
9.1(c);
(iii) the executed consents and approvals required by
Section 9.2;
(iv) the executed certificates required by Section
9.3;
(v) the opinion of counsel to the Purchaser required
by Section 9.5;
(vi) the executed Escrow Agreement required by Section
9.6; and
(vii) such other documents as are required by Article
9 hereof or as the Shareholders may reasonably request.
(c) The Shareholders shall pay any stock transfer and other
taxes required to be paid in connection with the sale, transfer and
delivery to the Purchaser of any or all of the Shares.
2.5 Escrow. At the Closing, the Purchaser will deposit, in
immediately available funds, the Escrow Amount with the Escrow Agent to be
held as security for the payment in part of the Shareholders'
indemnification obligations under this Agreement pursuant to the terms and
provisions of the Escrow Agreement.
2.6 Post-Closing Purchase Price Adjustment. The Purchase Price shall
be subject to adjustment after the Closing in accordance with the following
procedure:
(a) Promptly after the Closing Date, the Shareholders will
prepare and present to the Purchaser the Closing Balance Sheet. The
Closing Balance Sheet shall be prepared in accordance with generally
accepted accounting principles, applied in a manner consistent with
the preparation of the Financial Statements except the Closing Balance
Sheet shall reflect or not reflect, as the case may be, the accounting
principles and items set forth in Schedule 2.6. The Closing Balance
Sheet shall be delivered to the Purchaser no later than sixty (60)
days after the Closing Date.
(b) The Purchaser shall have the right to review the work
papers of the Shareholders utilized in preparing the Closing Balance
Sheet. The Closing Balance Sheet shall be binding on the Purchaser
unless the Purchaser presents to the Shareholders' Representative
within sixty (60) days after the Purchaser's receipt of the Closing
Balance Sheet written notice of disagreement specifying in reasonable
detail the nature and extent of the disagreement.
(c) If the Purchaser and the Shareholders are unable to resolve
any disagreement with respect to the Closing Balance Sheet within
forty-five (45) days after the Shareholders' Representative receives a
timely notice of disagreement, the disagreement shall be referred for
final determination to such independent accountants as shall be
mutually agreed upon by the Purchaser and the Shareholders'
Representative (such accounting firm is referred to herein as the
"Independent Accountants"). The Closing Balance Sheet shall be deemed
to be binding on the Purchaser and the Shareholders upon:
(i) the failure of the Purchaser to deliver to the
Shareholders' Representative a notice of disagreement within
forty-five (45) days of its receipt of the Closing Balance Sheet
prepared by the Shareholders;
(ii) resolution of any disagreement by mutual
agreement of the parties; or
(iii) notification by the Independent Accountants of
their final determination of the Closing Balance Sheet. If the
Consolidated Net Worth reflected in the Closing Balance Sheet, as
finally determined (the "Acquired Consolidated Net Worth"), is
less than the Established Consolidated Net Worth, the Purchase
Price shall be reduced on a dollar-for-dollar basis by such
difference. The amount of any reduction in the Purchase Price
shall be paid by the Shareholders to the Purchaser within five
(5) business days following the determination of the amount
thereof, by wire transfer of same day funds credited to the
account of the Purchaser as provided by the Purchaser to the
Shareholders' Representative in writing. No adjustment to the
Purchase Price shall be made if the Acquired Consolidated Net
Worth equals or exceeds the Established Consolidated Net Worth.
Any payment pursuant to this Section 2.6(c) shall be accompanied
by accrued interest from the Closing Date to the date of payment
at the Prime Rate.
(d) The fees and disbursements of the Independent Accountants
shall be borne by the Company, but only to the extent that such fees
and disbursements are less than the Excess Net Worth. If such fees
and disbursements are in excess of the Excess Net Worth, they shall be
borne equally, one-half (1/2) by the Purchaser and one-half (1/2) by
the Shareholders to the extent of such excess.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each of the Shareholders, jointly and severally, represent and warrant
to the Purchaser as follows:
3.1. Organization. Except as set forth in Schedule 3.1, the Company
and each of the Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and
has all requisite corporate power and authority to own or lease its assets
and to operate and carry on its business as presently conducted. The
Company and each Subsidiary is duly qualified as a foreign entity to do
business, and is in good standing in each jurisdiction where the failure to
be so qualified would have a material adverse effect on the Company and the
Subsidiaries, taken as a whole. Schedule 3.1
sets forth a list of those jurisdictions in which the Company is qualified
or in good standing as a foreign corporation.
3.2 Authorization; Enforceability. Each of the Shareholders has full
power and authority to enter into this Agreement and each of the other
documents and instruments to be executed and delivered by them, as the case
may be, pursuant to this Agreement (the "Seller Ancillary Documents") and
to consummate the transactions contemplated hereby and thereby. The
Company has taken all action as and in the manner required by law, its
certificate of incorporation, by-laws and organization documents, or
otherwise to authorize the execution, delivery and performance of the
Seller Ancillary Documents. This Agreement is, and when executed and
delivered the Seller Ancillary Documents will be, the valid and binding
obligation of the Company and the Shareholders, enforceable against the
Company and the Shareholders, as the case may be, in accordance with their
respective terms.
3.3 Authority; No Violation. Except for the requirements of the HSR
Act and as further set forth in Schedule 3.3, neither the execution and
delivery of this Agreement, the Seller Ancillary Documents, the sale of the
Shares nor the consummation of the transactions contemplated by this
Agreement or the Seller Ancillary Documents do and, on the Closing Date,
will:
(a) conflict with or result in any breach of any of the
provisions of;
(b) constitute a default under;
(c) result in a violation of;
(d) give any third party or governmental authority the right to
terminate or to accelerate any obligation under;
(e) result in the creation of any lien, security interest,
charge or other encumbrance (other than Permitted Liens) upon the
Shares or the assets of the Company or any of the Subsidiaries under;
or
(f) require any authorization, consent, approval, exemption or
other action by or notice to or filing with any court or other
governmental body;
under, the provisions of the certificate of incorporation or by-laws of the
Company or any of the Subsidiaries or any indenture, mortgage, lease, loan
agreement or other agreement or instrument to which the Company or any of
the Subsidiaries is bound or affected, or any law, statute, rule or
regulation or any
judgment, decree, or order to which the Company or any of the Subsidiaries
is subject.
3.4 Capital Structure of the Company. The authorized capital stock
of the Company consists of 500,000 shares of common stock, $.10 par value
per share, of which 252,021.7891 shares, constituting the Shares, are
issued and outstanding. The Shares are owned beneficially and of record by
the respective Shareholders set forth in Schedule 3.4. Except as set forth
in Schedule 3.4, all of the Shares have been duly authorized, are validly
issued, fully paid and non-assessable, are not subject to, nor were they
issued in violation of, any preemptive or similar rights with respect
thereto. There are no outstanding or authorized options, warrants, rights,
contracts, calls, puts, rights to subscribe, conversion rights, exchange
rights or other agreements or commitments to which the Company or any of
the Shareholders is a party, or which are binding upon the Company or any
of the Shareholders, providing for the issuance, disposition or acquisition
of any of the Company's capital stock or the conversion into or exchange
for shares of capital stock or indebtedness of the Company or other
securities convertible into or exchangeable for shares of capital stock of
the Company. There are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to the Company. There are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any of the Shares.
3.5 Title to Shares.
(a) Except as set forth in Schedule 3.5, each of the
Shareholders own their respective Shares beneficially and of record,
have good and marketable title to their respective Shares, free and
clear of any lien, mortgage, claim, charge, security interest,
encumbrance or other restriction or limitation affecting such
Shareholder's ability to transfer title to the Shares to the
Purchaser, and none of the Shares are subject to any voting trust,
proxy or other contract, agreement, arrangement, commitment or
understanding relating thereto.
(b) Upon delivery of and payment for the Shares as herein
provided, the Purchaser will acquire good and marketable title to the
Shares, free and clear of any lien, mortgage, claim, charge, security
interest, encumbrance or other restriction or limitation whatsoever.
3.6 Certificate of Incorporation and By-Laws. The Shareholders have
heretofore delivered to the Purchaser true and complete copies of the
certificate of incorporation and by-laws of the Company and the
Subsidiaries as in effect on the date hereof and including all amendments
thereto and restatements thereof. Neither the Company nor any of the
Subsidiaries are in violation of any provision of their respective
certificates of incorporation or by-laws, as amended and restated.
3.7 Subsidiaries; Investments.
(a) Schedule 3.7 correctly sets forth the name of each
Subsidiary, the jurisdiction of its incorporation and the beneficial
and record holder of all of the outstanding capital stock of such
Subsidiary. Except as set forth in Schedule 3.7, each Subsidiary is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, possesses all
requisite corporate power and authority to own or lease its assets and
to operate and carry on its business as presently conducted and is
duly qualified as a foreign entity to do business, and is in good
standing in each jurisdiction where the failure to be so qualified
would have a material adverse effect on the Company and the
Subsidiaries, taken as a whole. Schedule 3.7 sets forth a list of
those jurisdictions in which the Subsidiaries are qualified or in good
standing as a foreign corporation.
(b) All of the outstanding shares of capital stock of each
Subsidiary have been duly authorized, are validly issued, fully paid
and non-assessable, are not subject to, nor were they issued in
violation of, any preemptive or similar rights with respect thereto.
There are no outstanding or authorized options, warrants, rights,
contracts, calls, puts, rights to subscribe, conversion rights,
exchange rights or other agreements or commitments to which any
Subsidiary is a party, or which is binding upon any Subsidiary,
providing for the issuance, disposition or acquisition of any capital
stock of any Subsidiary or the conversion into or exchange for shares
of capital stock or indebtedness of any Subsidiary or other securities
convertible into or exchangeable for shares of capital stock of any
Subsidiary. There are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to any
Subsidiary. There are no outstanding contractual obligations of any
Subsidiary to repurchase, redeem or otherwise acquire any shares of
its capital stock.
(c) Neither the Company nor any Subsidiary owns or holds the
right to acquire any shares of stock or any other security or interest in
any other corporation, partnership, joint venture, limited liability
company or other entity.
3.8 Financial Statements.
(a) Annexed hereto as Exhibit A is a true and complete copy of:
(i) the audited consolidated financial statements of
the Company and the Subsidiaries for the years ended November 30,
1994, 1995 and 1996; and
(ii) the unaudited consolidated financial statements
of the Company and the Subsidiaries for the month ending December
31, 1996 (such annual and monthly statements being hereinafter
referred to collectively as the "Financial Statements"). Except
as set forth in Schedule 3.8, the Financial Statements have been
derived from the books and records of the Company and the
Subsidiaries, have been prepared in accordance with generally
accepted accounting principles consistently followed throughout
the periods covered by such statements, and, at the balance sheet
dates and for the periods of the income statements, present
fairly, in all material respects, the assets, liabilities,
financial position and results of operations of the Company and
Subsidiaries. All intercompany sales (which shall include
transactions between the Company, any of the Subsidiaries and/or
any other Affiliates of any of the Shareholders) included in the
Financial Statements are separately stated therein or on Schedule
3.8.
(b) Except as set forth in Schedule 3.8, since November 30,
1996, there has not been any change in the business, properties,
financial condition or results of operations of the Company or any of
the Subsidiaries, other than changes in the ordinary course of
business.
3.9 Net Worth. As of November 30, 1996, the Consolidated Net Worth
of the Company was not less than $11,000,000, and on and as of the Closing
Date, the Consolidated Net Worth of the Company will not be less than
$11,000,000.
3.10 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 3.10, neither the Company nor any Subsidiary has as of the date
hereof, or will have as of the Closing Date, any liability or obligation,
contingent or otherwise, other than
(a) liabilities or obligations reflected in the Financial
Statements; and
(b) those trade payables incurred since November 30, 1996 in
the ordinary course of business, consistent in type and amount with
its past practice and experience.
3.11 Inventory; Prepaid Items.
(a) All inventories of raw materials, supplies, work in progress
and finished goods shown as assets on the Financial Statements are of
good, usable and merchantable quality and do not include obsolete or
discontinued items, except as already reflected, reserved or otherwise
disclosed in the Financial Statements. All such finished goods are
saleable as current inventories in the ordinary course of business,
except as already reflected, reserved or otherwise disclosed in the
Financial Statements.
(b) The prepaid items and intangibles shown as assets on the
Financial Statements are stated therein at proper values in accordance
with generally accepted accounting principles applied consistently
with past practices of the Company and the Subsidiaries, as
applicable.
3.12 Operations of the Company. Except as set forth in Schedule 3.12
or as expressly contemplated by this Agreement, from November 30, 1996
through the date hereof and through the Closing Date, neither the Company
nor any of the Subsidiaries has or will have:
(a) amended its certificate of incorporation or by-laws or
merged with or into or consolidated with any other person or entity,
subdivided or in any way reclassified any shares of its capital stock
or changed or agreed to change in any manner the rights of its
outstanding capital stock or the character of its business;
(b) issued, sold, purchased or redeemed, or issued options or
rights to subscribe to, or entered into any contracts or commitments
to issue, sell, purchase or redeem any shares of its capital stock or
securities convertible into or exchangeable for any shares of its
capital stock;
(c) except as described in Schedule 3.14, entered into,
renegotiated or amended any employment agreement or collective
bargaining agreement or adopted, entered into, amended or terminated
any Plan;
(d) declared or paid any dividends or declared or made any
distributions of any kind to its shareholders, or made any direct or
indirect redemption, retirement, purchase or other acquisition of any
shares of its capital stock;
(e) made any material change in its accounting methods or
practices or its accounting practices or policies, or in its manner of
keeping its books, records or accounts;
(f) changed any of its warranty or other material business
policies other than in the ordinary course of business;
(g) granted any increase in wages, salary, bonus, or any other
direct or indirect compensation or benefits, to or for any of its
officers, directors, employees, consultants or agents or any accrual
for or commitment or agreement to make or pay the same, other than in
the ordinary course of business consistent with prior practice and, in
the case of employees, in connection with an annual or other periodic
regular review;
(h) made any loan or advance to (i) any of its shareholders,
officers, directors, consultants, agents or other representatives
(other than expense advances made in the ordinary course of business)
or (ii) its employees in an aggregate amount in excess of $25,000, or
made any other loan or advance other than in the ordinary course of
business;
(i) except as described in Schedule 3.14, made any payment or
commitment to pay any severance or termination pay to any of its
officers, directors, employees, consultants, agents or other
representatives, other than payments or commitments to employees made
in the ordinary course of business;
(j) made any capital expenditures or commitments in excess of
$50,000 in any one case or $200,000 in the aggregate;
(k) except in the ordinary course of business, incurred or
assumed any debt, obligation or liability material to the Company;
(l) except for inventory and equipment acquired in the ordinary
course of business, made any material acquisition of all or any part
of the assets, properties, capital stock or business of any other
person or entity;
(m) sold, leased, assigned or transferred (including, without
limitation, transfers to shareholders, directors, officers or
employees) any tangible or intangible assets, except in the ordinary
course of business consistent with past practice, or cancelled without
fair consideration any debts or claims owing to or held by it;
(n) suffered any damage, destruction or casualty loss to its
tangible assets in excess of $25,000, whether or not covered by
insurance;
(o) conducted its business (including, without limitation,
control of inventory, pricing, rebate practices, incurrence of capital
expenditures, credit practices and maintenance and repair of assets)
other than in the ordinary course as heretofore conducted; or
(p) agreed to take any action, taken any action or omitted to
take any action that would result in the occurrence of any of the
foregoing.
3.13 Taxes.
(a) The Company, each of the Subsidiaries and each Affiliated
Group have filed all Tax Returns due to be filed on or prior to the
Closing Date (or have filed valid extensions with respect to such Tax
Returns) which they are required to file under applicable laws and
regulations; all such Tax Returns are complete and correct and have
been prepared in compliance with all applicable laws and regulations,
the Company, each of the Subsidiaries and each Affiliated Group have
paid all Taxes due and owing by them (whether or not such Taxes are
required to be shown on a Tax Return) and have withheld and paid over
to the appropriate taxing authority all Taxes which they are required
to withhold from amounts paid or owing to any employee, equityholder,
creditor or other third party; neither the Company, any of the
Subsidiaries nor any Affiliated Group has waived any statute of
limitations with respect to any Taxes or agreed to any extension of
time with respect to any Tax assessment or deficiency; the Company and
the Subsidiaries have not incurred any liability for Taxes other than
in the ordinary course of business; the assessment of any additional
Taxes for periods for which Tax Returns have been filed by the
Company, each of the Subsidiaries and each Affiliated Group shall not
exceed the recorded liability therefor on the most recent audited
consolidated balance sheet of the Company (excluding any amount
recorded which is attributable solely to timing differences between
book and Tax income); no foreign, federal, state or local tax audits
or administrative or judicial proceedings are pending or being
conducted with respect to the Company, any Subsidiary or any
Affiliated Group, no information related to Tax matters has been
requested by any foreign, federal, state or local taxing authority and
no written notice indicating an intent to open an audit or other
review has been received by the Company or any Subsidiary from any
foreign, federal, state or local taxing authority.
(b) Neither the Company nor any of the Subsidiaries is liable
for the Taxes of another entity that is not a Subsidiary of the
Company. Neither the Company nor any of the Subsidiaries is a party
to any tax sharing agreement.
(c) No claim has ever been made by a taxing authority in a
jurisdiction where the Company or any Subsidiary does not file Tax
Returns that the Company or such Subsidiary is or may be subject to
Taxes assessed by such jurisdiction.
(d) There are no liens for Taxes (other than for current Taxes
not yet due and payable) upon the assets of the Company or any
Subsidiary.
3.14 Employee Benefit Plans.
(a) Schedule 3.14 annexed hereto sets forth an accurate list of
each:
(i) "employee benefit plan" (as such term is defined
in Section 3(3) of ERISA) at any time contributed to, maintained
or sponsored by the Company or any Subsidiary, or by which the
Company or any Subsidiary has any liability; and
(ii) each other retirement, savings, thrift, deferred
compensation, severance, stock ownership, stock purchase, stock
option, performance, bonus, vacation or holiday pay, travel,
fringe benefit, hospitalization or other medical, disability,
life or other insurance, and any other welfare benefit policy,
trust, understanding or arrangement of any kind, whether written
or oral, contributed to, maintained or sponsored by the Company
or any Subsidiary for the benefit of any present or former
employee, officer or director of the Company or any Subsidiary,
or with respect to which the Company or any Subsidiary has any
liability. The items listed in Schedule 3.14 are referred to
herein individually as a "Plan" and collectively as the "Plans."
(b) The Shareholders have previously delivered to the
Purchaser:
(i) true, correct and complete copies of all Plan
documents or agreements which have been adopted or executed by
the Company or any Subsidiary to set forth the terms of any Plan;
(ii) where applicable, true, correct and complete
copies of any trusts or other funding arrangements maintained
with respect to any Plan;
(iii) where applicable, the two most recent Form 5500,
as filed with the IRS, together with all attachments thereto,
relating to the Plans;
(iv) where applicable, the most recent IRS letters
received with respect to each such Plan;
(v) in the case of any Plan subject to Title IV of
ERISA, the most recent actuarial and financial reports; and
(vi) all other relevant documents requested by the
Purchaser.
(c) None of the Plans is a multi-employer plan (within the
meaning of Sections 3(37) and 4001(a)(3) of ERISA) or a single
employer pension plan (within the meaning of Section 4001(a)(15) of
ERISA) for which the Company or any Subsidiary could incur liability
under Section 4063 or 4064 of ERISA. Each of the Plans is subject
solely to the laws of the United States.
(d) Each of the Plans is now and always has been maintained,
funded and administered in compliance with respective terms and the
requirements of all applicable laws, including, without limitation,
ERISA and the Code, and all persons who participate in the operation
of such Plans and all Plan fiduciaries (within the meaning of Section
3(21) of ERISA) have always acted in accordance with the provisions of
all applicable laws, including ERISA and the Code. Each of the
Company and the Subsidiaries has performed all obligations required to
be performed by them under, are not in default under or in violation
of, and have no knowledge of any default or violation by any party to,
any Plan. All contributions, reserves or premium payments required to
be made to any Plan have been made as of the date hereof. No legal
action, suit or claim is pending or, to the knowledge of the
Shareholders, threatened with respect to any Plan (other than claims
for benefits in the ordinary course) and no fact or event exists that
could give rise to any such action, suit or claim.
(e) Each Plan which is intended to be qualified under Section
401(a) of the Code or Section 401(k) of the Code has been determined
by the IRS to be so qualified and each trust established in connection
with any Plan which is intended to be exempt from Federal income
taxation under Section 501(a) of the Code has been determined by the
IRS to be so exempt, and no fact or event has occurred since the date
of such determination by the IRS to adversely affect the qualified
status of any such Plan or the exempt status of any such trust.
(f) There has been no prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Code) with respect to
any Plan. Neither the Company nor any Subsidiary has incurred any
liability under Title IV of ERISA and no fact or event exists which
could reasonably give rise to any such liability. Except as disclosed
on Schedule 3.14, no complete or partial termination has occurred
within the five (5) years preceding the date hereof with respect to
any Plan. No reportable event (within the meaning of Section 4043 of
ERISA) has occurred or, to the knowledge of the Shareholders, is
expected to occur with respect to any Plan subject to Title IV of
ERISA. No Plan has incurred an accumulated funding deficiency (within
the meaning of Section 302 of ERISA or Section 412 of the Code),
whether or not waived, as of the most recently ended plan year of such
Plan. None of the assets of the Company or any Subsidiary is the
subject of any lien arising under Section 302(f) of ERISA or Section
412(n) of the Code.
(g) Except as set forth in Schedule 3.14:
(i) the Company and the Subsidiaries have complied
with the health care continuation requirements of Part 6 of Title
I of ERISA; and
(ii) the Company and the Subsidiaries have no
obligations under any Plan or otherwise to provide health
benefits to former employees of the Company or any Subsidiary or
any other person, except as specifically required by Part 6 of
Title I of ERISA.
3.15 Employees; Labor Relations.
(a) Schedule 3.15 hereto sets forth:
(i) an accurate and complete payroll list of the names
and current salaries of the employees of the Company and the
Subsidiaries;
(ii) an accurate and complete list of the names and
current salaries, if any, of the directors and officers of the
Company and the Subsidiaries; and
(iii) any employment agreements, collective bargaining
agreements, and material written personnel policies of the
Company and the Subsidiaries (collectively, "Labor Agreements").
In addition, to the extent any employees of the Company or any of
the Subsidiaries are on leaves of absence, Schedule 3.15 shall
indicate the nature of each such leave of absence and each such
employee's anticipated date of return to active employment.
(b) Except as specified on Schedule 3.15, as it relates to the
Company or any Subsidiary:
(i) there is no unfair labor practice charge or
complaint against the Company or any Subsidiary relating to
employees who worked for the Company or any Subsidiary pending
or, to the knowledge of the Shareholders, threatened before the
National Labor Relations Board;
(ii) there has not occurred, nor to the knowledge of
the Shareholders has there been threatened, a labor strike,
request for representation, slowdown, work stoppage or lockout
and there is currently no labor strike, dispute, request or
representations, slowdown, work stoppage or lockout against or
affecting the Company or any Subsidiary;
(iii) there is no representation claim or petition
pending before the National Labor Relations Board and no question
concerning representation is presently being raised or, to the
knowledge of the Shareholders, is threatened respecting the
employees of the Company or any Subsidiary;
(iv) no grievance or arbitration proceeding arising
out of or under any Labor Agreement is pending, and no such
claims with respect thereto, to the knowledge of the
Shareholders, are threatened or exist;
(v) no charges with respect to or relating to the
Company or any Subsidiary are pending before the Equal Employment
Opportunity Commission or any state, local or foreign agency
responsible for the prevention of unlawful employment practices;
and
(vi) neither the Company nor any Subsidiary has
received notice of the intention of any Federal, state, local or
foreign agency responsible for the enforcement of labor or
employment laws to conduct an investigation of or relating to the
Company or any Subsidiary.
3.16 Licenses and Permits. Set forth in Schedule 3.16 is a true and
complete list of all licenses, permits, certificates, approvals and other
authorizations of foreign, federal, state and local governments or
authorities or other similar rights owned, possessed or used by the Company
and the Subsidiaries in the conduct of their respective business and the
ownership and the use of their respective assets (collectively, "Licenses
and Permits"). Except as set forth in Schedule 3.16, Licenses and Permits
are all of the licenses, permits, approvals and other governmental
authorizations presently required to permit the Company and the
Subsidiaries to operate their respective business in the manner in which it
presently is conducted. Each of the Company and the Subsidiaries has
complied with the terms, conditions and requirements of each of the
Licenses and Permits.
3.17 Compliance with Law.
(a) Except as set forth in Schedule 3.17 the Company, the
Subsidiaries, and their respective officers, directors, agents and
employees have at all times complied with all Federal, state, local
and foreign laws, statutes, codes, ordinances, rules and regulations
and all orders, decrees and consents of all governmental and
administrative entities which affect the business, business practices
or assets of the Company and the Subsidiaries. Except as set forth in
Schedule 3.17, no notice of any claim, suit, action or inquiry has
been issued and served upon or delivered to the Company or any
Subsidiary, and no investigation or review is pending or, to the
knowledge of the Shareholders, threatened by any governmental entity
with respect to any alleged violation by the Company or any Subsidiary
of any law, statute, code, ordinance, rule or regulation of any
governmental entity or any order, decree or consent of any
governmental or administrative entity.
(b) Neither the Company nor any Subsidiary has agreed to give,
nor, to the knowledge of the Sellers, given in the past, any money,
gift or similar benefit (other than incidental gifts of articles of
nominal value) to any actual or potential customer, supplier,
governmental employee or any person or entity in a position to assist
or hinder the Company or any Subsidiary in connection with any actual
or proposed transaction concerning its business.
3.18 Actions and Proceedings. Except as set forth in Schedule 3.18,
there are no actions, suits or claims or legal proceedings (judicial,
governmental or arbitral), outstanding orders, judgments, injunctions,
awards or decrees of any court, regulatory body or arbitration tribunal,
investigations (whether or not the defense thereof or liabilities in
respect thereof are covered by insurance) pending or, to the knowledge of
the Shareholders, threatened against or affecting the Company, the
Subsidiaries or any of their respective properties, assets, operations or
businesses which seek to prevent the consummation of the transactions
contemplated by this Agreement or the Seller Ancillary Documents, and none
of the listed litigations, investigations or other proceedings would, if
adversely decided, insofar as reasonably can be foreseen, have or will
result in a Material Adverse Effect or will have an adverse effect upon the
transactions contemplated by this Agreement or the Seller Ancillary
Documents.
3.19 Real Property Leases. Schedule 3.19 sets forth a true and
correct list of all of the leases and subleases (the "Real Property
Leases") and each leased and subleased parcel of real property in which the
Company or any of the Subsidiaries have a leasehold or subleasehold
interest and the names of each general manager of the operations of the
Company and the Subsidiaries located on each such leased or subleased
parcel (the "General Managers"). The Company or a Subsidiary, as the case
may be, has a valid and existing leasehold or subleasehold interest under
each of the Real Property Leases. The Company has delivered to the
Purchaser complete and accurate copies of each of the Real Property Leases
and all amendments thereto. With respect to each of the Real Property
Leases:
(a) to the knowledge of the Shareholders and the General
Managers, the Real Property Leases are legal, valid, binding and in
full force and effect;
(b) the Real Property Leases will continue to be legal, valid,
binding, enforceable and in full force and effect on identical terms
following the Closing;
(c) neither the Company or any Subsidiary nor, to the knowledge
of the Shareholders, any other party to the Real Property Leases is in
breach or default, and no event has occurred which, with notice or the
passage of time, would constitute such a breach or default or permit
termination, modification or acceleration under the Real Property
Lease;
(d) no party to the Real Property Leases has repudiated any
provision thereof;
(e) there are no disputes, oral agreements or forbearance
programs in effect as to the Real Property Leases; and
(f) the Real Property Leases have not been modified in any
respect, except to the extent that such modifications are disclosed in
documents delivered to the Purchaser.
3.20 Real Property.
(a) The Company owns good and marketable title to the Owned Real
Property in fee simple, free and clear of all mortgages, liens,
charges, claims, restrictions, pledges, security interests,
impositions, covenants, conditions, rights of way, easements and other
encumbrances (whether or not of record) other than as disclosed in
Schedule 3.20, disclosed in the Title Insurance Policy or Permitted
Liens.
(b) Except as set forth in Schedule 3.20, there are no parties
other than the Company and the Subsidiaries in possession of the Real
Properties or any portion thereof, and there are no leases, subleases,
licenses, concessions or other agreements, written or oral, granting
to any party or parties the right of use or occupancy of any of the
Real Properties or any portion thereof. There are no outstanding
options or rights of first refusal to purchase the Owned Real Property
or any portion thereof or interest therein.
(c) To the knowledge of the Shareholders and the General
Managers, all of the Structures and all of the structural, mechanical
and other physical systems thereof, are free from any material defect
and are in reasonable operating condition and repair and are useable
in the ordinary course of business.
(d) The Real Properties and the Structures used by the Company
and the Subsidiaries are supplied with utilities adequate for the use
and operation of the business of the Company and the Subsidiaries in
the manner conducted by the Company and the Subsidiaries as of the
Closing Date, including, without limitation, gas, electricity, water,
telephone, sanitary sewer and stormwater management.
(e) There are no proceedings in eminent domain or other
proceedings pending or, to the knowledge of the Shareholders,
threatened, affecting any portion of the Real Properties or any means
of ingress or egress thereto.
(f) The Real Properties and the Structures and the present uses
and operations thereof comply with all zoning laws and ordinances and
all deed or other title covenants or restrictions applicable thereto
and neither the Company nor any Subsidiary has received any notice of
any violation thereof.
(g) Except for the Real Properties, there is no real property
leased or owned by the Company or any of the Subsidiaries or used by the
Company or any of the Subsidiaries in the conduct of their respective
business. Schedule 3.20 sets forth a true and accurate list of all real
property, other than the Real Properties, that has been previously owned,
leased or used by the Company or any of the Subsidiaries in the conduct of
their respective business.
3.21 Accounts Receivable. Except as set forth in Schedule 3.21, all
trade receivables and account receivables reflected in the Financial
Statements or incurred in the ordinary course of business by the Company
and the Subsidiaries subsequent to November 30, 1996 ("Accounts
Receivable") arose from bona fide transactions in the ordinary course of
business of the Company and the Subsidiaries, have not been discounted,
have not been subject to the assertion of any counterclaim or right of set-
off with respect thereto and, subject to the bad debt reserve as set forth
in the Closing Balance Sheet, are collectible in full on or before November
30, 1997. Unless any such payment provides otherwise, any payment received
on account of an Account Receivable shall be applied to the oldest invoice
first.
3.22 Intellectual Property.
(a) Schedule 3.22 contains a complete and accurate list and a
general description of all of Intellectual Property owned or used by
the Company or any of the Subsidiaries. Except as set forth in
Schedule 3.22:
(i) the Company or the Subsidiaries own and possess
all right, title and interest in and to, or has a valid and
enforceable written license to use, all of the Intellectual
Property necessary for the operation of their respective business
as presently conducted;
(ii) neither the Company nor any of the Subsidiaries
is in breach of any license or other grant of rights with respect
to Intellectual Property;
(iii) no claim by any third party contesting the
validity, enforceability, use or ownership of any Intellectual
Property owned or used by the Company or any of the Subsidiaries
has been made or is currently outstanding;
(iv) neither the Company nor any of the Subsidiaries
has received any information as to any infringement or
misappropriation by, or conflict with any third party with
respect to the Intellectual Property owned or used by the Company
or any of the Subsidiaries, nor has the Company or any of the
Subsidiaries received any claims alleging infringement or
misappropriation, or other conflict with, any Intellectual
Property of any third party;
(v) neither the Company nor any of the Subsidiaries
has infringed, misappropriated or otherwise conflicted with any
Intellectual Property of any third party, nor will the continued
conduct of the business of the Company or any of the Subsidiaries
as currently conducted or as proposed to be conducted infringe,
misappropriate or otherwise conflict with the Intellectual
Property of any third party; and
(vi) all of the Intellectual Property owned or used by
the Company or any of the Subsidiaries immediately prior to the
Closing will be owned or available for use by the Company and the
Subsidiaries on identical terms and conditions immediately
subsequent to the Closing.
(b) the Intellectual Property comprises all of the proprietary
or intellectual property rights by the operation of the Company and
the Subsidiaries in the operation of their respective business as
currently conducted. The Company and the Subsidiaries have taken all
necessary actions to maintain and protect the Intellectual Property
which they own and use and will continue to maintain and protect the
Intellectual Property prior to the Closing so as to not adversely
affect the validity or enforceability of the Intellectual Property.
Notwithstanding the foregoing, the Company has not registered any
intellectual property with any governmental agency. To the knowledge
of the Company or any of the Shareholders, the owners of any
Intellectual Property licensed to the Company or the Subsidiaries have
taken all necessary actions to maintain and protect the Intellectual
Property which are subject to such licenses.
3.23 Tangible Property. Schedule 3.23 sets forth a list and
description as of November 30, 1996 of all machinery, equipment, inventory,
vehicles, working stock, structures, fixtures and other tangible personal
property ("Tangible Property") material to the business of the Company or
any of the Subsidiaries which is treated by the Company or any of the
Subsidiaries as depreciable property not normally sold or disposed of in
the ordinary course of business.
3.24 Title to Assets; All Necessary Assets. Each of the Company and
the Subsidiaries has good and valid title to all of their respective
assets, free and clear of any lien, mortgage, claim, charge, security
interest, encumbrance or other restriction or limitation, except as set
forth in Schedule 3.24 or Permitted Liens. Except as set forth in Schedule
3.24, the assets included in the Financial Statements comprise all of the
material assets and properties used by the Company and the Subsidiaries in,
and necessary to, the conduct of their respective business as presently
conducted.
3.25 Material Contracts.
(a) Schedule 3.25 sets forth a true and complete list of all of
the contracts, personal property leases, licenses, agreements,
indentures, bonds, mortgages, franchise agreements and commitments
(the "Contracts"), written or oral, to which the Company or any
Subsidiary is a party or by or to which the Company, any Subsidiary or
their respective assets or properties are bound or affected as of the
Closing Date, which involve the payment or receipt by the Company or
any Subsidiary of more than $25,000 per year, except that with respect
to Contracts for the purchase by the Company or any Subsidiary of raw
materials, Schedule 3.25 need only include Contracts which involve the
payment of $100,000 or more.
(b) Each of the Contracts is valid and in full force and effect
as to the Company and/or the Subsidiaries, as applicable, and, to the
knowledge of the Shareholders, the other parties thereto, and no
default by the Company or any Subsidiary, as applicable, or, to the
knowledge of the Shareholders, by the other parties thereto, nor any
event which, with notice or passage of time, or both, would constitute
a material default, exists. Neither the Company nor any Subsidiary
has received any notice that any person or entity intends to cancel
any of the Contracts.
3.26 Customers and Suppliers. Neither the Company nor any Subsidiary
is engaged in any material disputes with any of its customers or suppliers,
and, to the knowledge of the Shareholders, no customer or supplier is
considering termination, non-renewal or any adverse modification of its
arrangements with the Company or any Subsidiary. Neither the Company nor
any Subsidiary has entered into any agreement or commitment with customers
or suppliers, except in the ordinary course of business, consistent with
past practice. Except as set forth in Schedule 3.26 none of the suppliers
to the Company or any Subsidiary is the sole source of supply.
3.27 Insurance.
(a) Schedule 3.27 sets forth for the Company and the
Subsidiaries a complete list and brief description (specifying the
insurer and the policy number) of all policies of insurance maintained
by the Company or any Subsidiary, including policies of life, fire,
theft, casualty, product liability, workmen's compensation, business
interruption, employee fidelity and other casualty and liability
insurance, indicating the type of coverage, name of insured, the
insurer, the expiration date of each policy, the amount of coverage
and whether on an "occurrence" or "claims made" basis.
(b) All such policies:
(i) are with insurance companies reasonably believed
by the Company to be financially sound and reputable and are in
full force and effect;
(ii) are sufficient for compliance with all material
requirements of law and of all applicable material agreements to
which the Company or any Subsidiary is a party; and
(iii) are valid, outstanding and enforceable policies
with all premiums with respect thereto covering all periods up to
and including the Closing Date having been paid.
Complete and correct copies of such policies have been
delivered to the Purchaser.
(c) The Shareholders shall use their best efforts to maintain,
or cause the Company and the Subsidiaries to maintain, in full force
and effect all such policies of insurance or comparable insurance
coverage through the Closing Date and for a period of not less than
thirty (30) days thereafter. Except as set forth on Schedule 3.27,
since November 30, 1996:
(i) neither the Company nor any Subsidiary has been
denied any insurance coverage which it has requested;
(ii) there is no default which would lead to the
cancellation of any such policy or binder for non-payment
thereunder;
(iii) there are no outstanding unpaid claims under any
such policy; and
(iv) neither the Company nor any Subsidiary has
received notice from any of its insurance carriers of any
surcharge or refusal to cover any insurance risk. Schedule 3.27
also contains a list of all open claims that have been made
against any such policy.
3.28 Warranties. Schedule 3.28 sets forth a true and complete
description of all warranties and other guarantees provided to any customer
of the Company or any Subsidiary in respect of products sold or services
performed.
3.29 Books and Records. The books of account, minute books, stock
record books and other records of the Company and the Subsidiaries (the
"Books and Records") are complete and correct in all material respects and
have been maintained in accordance with sound business practices. All
transactions related to the business of the Company and the Subsidiaries
have been reflected in the Books and Records.
3.30 Affiliate Transactions. Except as set forth in Schedule 3.30, no
officer, director, employee or shareholder of the Company or any
Subsidiary, or member of the immediate family of any such person, or any
entity in which any such person or any member of the immediate family of
any such person is an officer, director, trustee, partner or beneficial or
record holder of more than 5% of the outstanding capital stock thereof, is
a party to any transaction with the Company or any Subsidiary.
3.31 Banks, Brokers and Proxies. Schedule 3.31 sets forth:
(a) the name of each bank, trust company, securities or other
broker or other financial institution with which the Company or any
Subsidiary has an account, credit line or safe deposit box or vault,
or otherwise maintains relations;
(b) the name of each person authorized by the Company or any
Subsidiary to draw thereon or to have access to any safe deposit box
or vault;
(c) the purpose of each such account, safe deposit box or vault;
and
(d) the names of all persons authorized by proxy, powers of
attorney or other instruments to act on behalf of the Company or any
Subsidiary in matters concerning its business or affairs.
All such accounts, credit lines, safe deposit boxes and vaults are
maintained by the Company and the Subsidiaries for normal business
purposes, and no such proxies, powers of attorney or other like instruments
are irrevocable.
3.32 (Intentionally Omitted)
3.33 Brokerage. Except as set forth in Schedule 3.33, there are no
claims for brokerage commissions, finders' fees, investment bankers' fees
or similar compensation in connection with the transactions contemplated by
this Agreement based on any contract, commitment or arrangement made by or
on behalf of the Company or any of the Subsidiaries.
3.34 Disclosure. All documents and other papers delivered by or on
behalf of the Shareholders or the Company in connection with this Agreement
and the transactions contemplated hereunder are accurate, complete and
authentic in all material respects. Neither this Agreement, any of the
Seller Ancillary Documents, any of the Schedules, attachments or exhibits
hereto, nor any writing delivered by the Company, any Subsidiary or the
Shareholders in connection with the transactions contemplated hereby,
contain any untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or thereunder in the
light of the circumstances in which they were made not false or misleading.
3.35 Representations and Warranties on Closing Date. The
representations and warranties contained in this Article 3 and all
information delivered in any Schedule, attachment or exhibit hereto are
true and correct on the date hereof and will be true and complete on and as
of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date,
except to the extent that the Company or the Shareholders has advised the
Purchaser otherwise in writing prior to the Closing.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Shareholders that:
4.1 Organization. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of New York and has
all requisite corporate power and authority to own or lease its assets and
to operate and carry on its business as presently conducted. The Purchaser
is duly qualified as a foreign entity to do business, and is in good
standing in each jurisdiction in which the nature of its business or its
assets requires it to be qualified.
4.2 Authorization; Enforceability. The Purchaser has full corporate
power and authority to enter into this Agreement and each of the other
documents and instruments to be executed and delivered by it pursuant to
this Agreement (the "Purchaser Ancillary Documents") and to carry out the
transactions contemplated hereunder. The Purchaser has taken all action as
and in the manner required by law, its organization documents and its by-
laws or otherwise to authorize the execution, delivery and performance of
this Agreement and the Purchaser Ancillary Documents. This Agreement is,
and when executed and delivered the Purchaser Ancillary Documents will be,
the valid and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms.
4.3 Authority; No Violation.
(a) Neither the execution and delivery of this Agreement, the
Purchaser Ancillary Documents, the purchase of the Shares nor the
consummation of the transactions contemplated hereunder do and, on the
Closing Date, will:
(i) violate or conflict with any provision of the
charter or by-laws of the Purchaser or any material statute,
code, ordinance, rule, regulation, judgment, order, writ, decree
or injunction applicable to the Purchaser; or
(ii) violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which,
with or without due notice or lapse of time, or both, would
constitute a default) under, any contract or agreement of the
Purchaser.
4.4 Consents and Approvals. Except for (i) the requirements of the
HSR Act, no permit, consent, approval or authorization of, or declaration,
filing or registration with, any governmental authority is necessary in
connection with the execution and delivery by the Purchaser of this
Agreement, the Purchaser Ancillary Documents or the consummation by the
Purchaser of the transactions contemplated hereunder.
4.5 Purchase for Investment. The Purchaser is purchasing the Shares
for investment and not for resale or distribution. The Shares will not be
sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of in violation of any applicable securities laws or regulations.
4.6 Actions and Proceedings. There are no actions, suits,
proceedings or governmental investigations or inquiries pending or, to the
knowledge of the Purchaser, threatened against the Purchaser or any of its
Affiliates or their respective properties, assets, operations or businesses
seeking to prevent the consummation of the transactions contemplated by
this Agreement or the Purchaser Ancillary Documents.
4.7 Representations and Warranties on Closing Date. The
representations and warranties contained in this Article 4 shall be true
and complete on and as of the Closing Date with the same force and effect
as though such representations and warranties had been made on and as of
the Closing Date.
ARTICLE 5
COVENANTS OF THE SHAREHOLDERS
From and after the date hereof, the Shareholders (other than the
ESOP), jointly and severally, covenant and agree that:
5.1 Due Diligence Cooperation. The Shareholders shall, and shall
cause the Company and each of the Subsidiaries to, make available for
inspection by the Purchaser and its lenders and their respective counsel,
accountants and other representatives, during normal business hours,
corporate records, books of accounts, contracts and all other documents
requested by the Purchaser relating to the Company, the Subsidiaries and
the Gramling Property. The Shareholders shall cause the Company's
managerial and supervisory employees, counsel and auditors to provide, and
shall permit the Purchaser, its lenders and their respective counsel,
accountants and other representatives, full and complete access to the
plants and properties of the Company and the Subsidiaries, upon reasonable
advance notice to the Shareholders, in order to permit the Purchaser and
such representatives to make such inspection and examination of the
business and affairs of the Company and the Subsidiaries as they shall
desire to make. The Shareholders shall further cause managerial and
supervisory employees, counsel and regular independent certified public
accountants of the Shareholders, the Company and the Subsidiaries to be
available upon reasonable notice to answer questions of the Purchaser, its
lenders or their respective representatives concerning the business and
affairs of the Company and the Subsidiaries, and shall further cause them
to make available all such additional information, books and records and
financial and operating data as the Purchaser may from time to time
reasonably request. The Purchaser agrees that access pursuant to this
Section 5.1 shall be done in a reasonable manner, so as to minimize the
disruption of the business or operations of the Company.
5.2 Conduct of Business Prior to the Closing. During the period
commencing on the date hereof and continuing until the Closing, the
Shareholders will cause the Company and the Subsidiaries not to (except as
contemplated by this Agreement or to the extent that the Purchaser shall
otherwise consent in writing):
(a) take any action that would cause any of the representations
and warranties of the Shareholders contained in Section 3.12 hereof to
be untrue as of the Closing Date;
(b) conduct its business (including, without limitation, its
cash management practices, the collection of receivables, payment of
payables and incurrence of capital expenditures) only in the usual and
ordinary course of business in accordance with past custom and
practice and keep its organization and properties intact (including
its present business operations, physical facilities, working
conditions and employees and its present relationships with lessors
and licensors);
(c) maintain its physical facilities and equipment in good
operating condition and repair (ordinary wear and tear excepted),
maintain insurance reasonably comparable to that in effect on the date
hereof, maintain inventory, supplies and spare parts at customary
operating levels consistent with past practices, replace in accordance
with past practice any inoperable, worn out or obsolete assets with
assets of comparable quality and, in the event of a casualty, loss or
damage to any of the assets prior to the Closing Date for which the
Company or any Subsidiary is insured, either repair or replace such
assets or, if Purchaser agrees, transfer the proceeds of such
insurance to Purchaser;
(d) maintain its books, accounts and records in accordance with
past custom and practice as used in the preparation of the Financial
Statements;
(e) maintain in full force and effect the existence of all
Intellectual Property;
(f) encourage the employees of the Company and the Subsidiaries
to continue their employment with the Company and the Subsidiaries, as
the case may be, both before and after the Closing;
(g) comply with all legal requirements and contractual
obligations applicable to the operations and business of the Company
and the Subsidiaries and pay all applicable Taxes; and
(h) promptly inform ▇▇▇▇▇ in writing of any variances from the
representations and warranties contained in Article 3 hereof or any
breach of any covenant hereunder by the Company, any Subsidiary or any
Shareholder.
5.3 Preservation of Business. During the period commencing on the
date hereof and continuing until the Closing, the Shareholders will use,
and will cause the Company and each of the Subsidiaries to use, their best
efforts to keep intact the business organization and reputation of the
Company and each of the Subsidiaries and to preserve for the Purchaser the
goodwill of suppliers, customers, distributors, sales representatives,
employees and others having business relations with the Company or any of
the Subsidiaries. The Shareholders will promptly notify the Purchaser of
any Material Adverse Effect.
5.4 Standstill. During the period commencing on the date hereof and
until the earlier of the Termination Date or the Closing Date, each of the
Shareholders will not, and will cause the Company and the Subsidiaries and
their respective directors, officers, employees, representatives, financial
or legal advisors, agents or other representatives not to make, solicit,
assist, or encourage the initiation of any inquiries or proposals or
participate in any discussions or negotiations with any party or furnish
any confidential information to any party (other than the Purchaser and its
agents and employees) concerning the direct or indirect acquisition of the
Shares or any portion of the assets, properties or business of the Company,
any Subsidiary or the Gramling Property, other than dispositions of assets
in the ordinary course of business.
5.5 Confidential Information. From and after the Closing, each of
the Shareholders agrees that he will not, nor will he permit any Affiliates
to make use of, divulge or disclose to any third party (other than the
Purchaser or any agent or employee of the Purchaser) any information of a
proprietary, secret or confidential nature related to the Company or any
Subsidiary.
5.6 Non-Competition.
(a) During the Non-Compete Period, each of the Shareholders
agrees that he will not, and will cause each of his Affiliates not to,
for any reason whatsoever, directly or indirectly, either individually
or as an owner, partner, officer, director, lender or otherwise,
engage in any Competitive Business anywhere in the United States. The
ownership by any of the Shareholders of up to 5% of any class of
securities of any company which has a class of securities registered
under Section 12 of the Securities Exchange Act of 1934, as amended,
shall not constitute a breach of this covenant.
(b) During the Non-Compete Period, each Shareholder shall not
and shall not permit any of his Affiliates to: (i) induce or attempt
to induce any employee of the Purchaser, the Company or any Subsidiary
to leave the employ of the Purchaser, the Company or any Subsidiary,
or in any way interfere with the relationship between Purchaser, the
Company or any Subsidiary, or in any way interfere with the
relationship between the Purchaser, the Company or any Subsidiary and
any employee thereof; (ii) hire directly or indirectly any person who
was an employee of the Purchaser, the Company or any Subsidiary within
one (1) year prior to the time such employee was hired by such entity;
or (iii) induce or attempt to induce any customer, supplier, licensee
or other business relation of the Purchaser, the Company or any
Subsidiary to cease doing business with the Purchaser, the Company or
any Subsidiary or in any way interfere with the relationship between
any such customer, supplier, licensee or business relation of the
Purchaser, the Company or any Subsidiary.
(c) Notwithstanding anything in this Section 5.6 to the
contrary, if at any time, in any judicial proceeding, any of the
restrictions stated in this Section 5.6 are found by a final order of
a court of competent jurisdiction to be unreasonable or otherwise
unenforceable under circumstances then existing, the Shareholders and
the Purchaser agree that the period, scope or geographical area, as
the case may be, shall be reduced to the extent necessary to enable
the court to enforce the restrictions to the extent such provisions
are allowable under law, giving effect to the agreement and intent of
the parties that the restrictions contained herein shall be effective
to the fullest extent permissible. In the event of an alleged breach
or violation by any Shareholder of any of the provisions of this
Section 5.6, the Non-Compete Period will be tolled for such
Shareholder until such alleged breach or violation is resolved. The
Shareholders agree that the restrictions contained in this Section 5.6
are reasonable in all respects.
5.7 Further Assurances. Subject to the terms and conditions herein
provided, each of the Shareholders agrees to use his best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement and the Seller Ancillary Documents as expeditiously as
practicable. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, the
Seller Ancillary Documents or the Purchaser Ancillary Documents, each of
the Shareholders agrees to take all such necessary action including,
without limitation, the execution and delivery of such further instruments
and documents as may be reasonably requested by the Purchaser to complete
or perfect the transactions contemplated hereby or thereby.
5.8 Cooperation in Third-Party Litigation. After the Closing Date,
each of the Shareholders agrees to provide such cooperation as the
Purchaser or its counsel may reasonably request in connection with:
(a) any proceedings related to the Company and/or the Gramling
Property which are hereafter pending or threatened and to which the
Company, any of the Subsidiaries, the Gramling Property, the Purchaser
and/or any Affiliate of any of them is a party, and
(b) any proceedings for which the Shareholders are entitled to
indemnification from the Purchaser under Section 10.2. Such
cooperation shall include, but not be limited to, making any of the
Shareholders available upon the reasonable request and at the expense
of the Purchaser or its counsel to consult with and assist the
Purchaser and its counsel in connection with any such proceedings and
to prepare for and testify in any such proceedings, including
depositions, trials and arbitration proceedings.
5.9 Injunctive Relief. The parties acknowledge and agree that
damages in the event of a breach of any of the provisions of Sections 5.4,
5.5, 5.6 or 5.7 would be difficult, if not impossible, to ascertain and it
is therefore agreed that the Purchaser, in addition to and without limiting
any other remedy or right it may have, shall have the right to an
injunction or
other equitable relief in any court of competent jurisdiction enjoining any
such breach.
5.10 Supplements to Schedules. From time to time prior to the Closing
Date, the Shareholders shall promptly supplement any Schedules referred to
in this Agreement with respect to any matter arising after the execution of
this Agreement, which, if existing or occurring at or prior to the date of
this Agreement, would have been required to have been set forth by the
Shareholders in a Schedule pursuant to this Agreement. Notwithstanding the
foregoing, for purposes of the Purchaser's right to terminate this
Agreement pursuant to Section 11.1(a), the Schedules to this Agreement
delivered by the Shareholders shall be deemed to include only such
information as is contained therein on the date of this Agreement and shall
be deemed to exclude any information contained in any supplement thereto.
5.11 Termination of ESOP. The Shareholders covenant and agree to (i)
use their best efforts to cause ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ to continue to serve as the trustees of the ESOP after the
Closing, (ii) cause the trustees of the ESOP to take all actions necessary
to terminate the ESOP as of December 1, 1996 and (iii) to cause the
trustees of the ESOP to retain the proceeds of the sale of the Shares
payable to the ESOP hereunder until such time as the ESOP is terminated and
the Company receives a favorable determination letter from the Internal
Revenue Service that the termination of the ESOP does not affect its
qualification.
ARTICLE 6
COVENANTS OF THE PURCHASER
From and after the date hereof, the Purchaser hereby covenants and
agrees that:
6.1 Representations and Warranties. The Purchaser will not take any
action which would cause any of the representations and warranties made by
it in this Agreement to be untrue as of the Closing Date.
6.2 Cooperation in Third-Party Litigation. After the Closing Date,
the Purchaser agrees to provide such cooperation as any Shareholder or its
counsel may reasonably request in connection with:
(a) any proceedings relating to the Company and/or the
Gramling Property which are hereafter pending or threatened and to which
such Shareholder is a party; and
(b) any proceedings for which the Purchaser is entitled to
indemnification from such Shareholder under Section 10.1 hereof.
Such cooperation shall include, but not be limited to, making employees of
the Purchaser available upon the reasonable request and at the expense of
such Shareholder or its counsel to consult with and assist such Shareholder
and its counsel regarding any such proceedings and to prepare for and
testify in connection with any such proceedings, including depositions,
trials and arbitration proceedings.
6.3 Non-Solicitation of Employees. In the event of the termination
of this Agreement, for a period of three (3) years after the Termination
Date, the Purchaser agrees that it will not, and will cause each of its
subsidiaries not to, for any reason whatsoever, directly or indirectly,
solicit for employment, hire, encourage or entice away from the Company or
from its Affiliates (or attempt to do so) any officer or employee of the
Company who at the time of such solicitation or hire, or within twelve (12)
months prior thereto, was an employee of the Company.
6.4 Injunctive Relief. The parties acknowledge and agree that
damages in the event of a breach of the provisions of Section 6.3 would be
difficult, if not impossible, to ascertain and it is therefore agreed that
the Company, in addition to and without limiting any other remedy or right
it may have, shall have the right to an injunction or other equitable
relief in any court of competent jurisdiction enjoining any such breach.
6.5 Procurement of Life Insurance. The Company agrees to provide to
each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ a term life
insurance policy insuring his or her life in the face amount of $250,000
during the term of his or her employment with the Company. Until such time
as such policy(ies) are obtained, or in the event that such policy(ies)
cannot be obtained, the Company agrees to provide death benefits to the
proposed recipient of such policy(ies) comparable to those provided in his
or her Executive Income Agreement with the Company dated August 1, 1983.
ARTICLE 7
ADDITIONAL COVENANTS
7.1 Expenses; Brokers. Except as otherwise provided herein, each
party to this Agreement shall pay its own expenses in connection with the
preparation of this Agreement and the consummation of the transactions
contemplated hereunder, including the fees of any attorneys, accountants or
others engaged by such party.
7.2 Record Retention. The Purchaser shall cause the Company to
retain the Books and Records and, unless otherwise consented to in writing
by the Shareholders' Representative, the Purchaser shall not, for a period
of at least three (3) years or, in the case of tax records, six (6) years
after the Closing Date, destroy or otherwise dispose of the Books and
Records. During the period the Books and Records are required to be
preserved and kept by the Purchaser pursuant to the foregoing provisions,
duly authorized representatives of the Shareholders shall, upon reasonable
prior notice, have access thereto during normal business hours to examine,
inspect and copy the Books and Records.
7.3 Public Announcements. During the period from the date of this
Agreement to the Closing Date, no party hereto shall make any press release
or public announcement, including announcements by any party hereto for
general reception by or dissemination to the employees, agents, customers
or suppliers of the Company or the Subsidiaries, with respect to the
transactions contemplated hereby without the prior consent of the other
parties; provided, however, that each party may make any disclosure or
announcement which such party, in the opinion of its counsel, is obligated
to make pursuant to applicable law, in which case if possible such party
shall consult with the other parties prior to making such disclosure or
announcements. At the Purchaser's request, the Shareholders shall provide
reasonable access to the employees of the Company and the Subsidiaries to
permit the Purchaser to introduce themselves and explain any transitional
procedures or otherwise in order to facilitate the transfer of the Company
to the Purchaser.
7.4 Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by the
Shareholders when due, and the Shareholders will, at their own expense,
file all necessary Tax Returns and other documentation with respect to all
such transfer, documentary, sales, use, stamp, registration and other Taxes
and fees, and, if required by applicable law, the Purchaser will, and will
cause its Affiliates to, join in the execution of any such Tax Returns and
other documentation.
ARTICLE 8
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER
Each and every obligation of the Purchaser under this Agreement to be
performed on or before the Closing Date shall be subject to the
satisfaction or fulfillment on or before the Closing Date of each of the
following conditions, any one or more of which may be waived by the
Purchaser:
8.1 Representations and Covenants.
(a) The representations and warranties of the Shareholders
contained in this Agreement, in the Schedules hereto, in the Seller
Ancillary Documents and in all certificates and other documents
delivered by or on behalf of the Shareholders, shall be true and
complete as of the date when made and on and as of the Closing Date
with the same force and effect as though made on and as of the Closing
Date, except for such changes as are contemplated herein.
(b) The Shareholders shall have performed and complied in all
material respects with all covenants, agreements and obligations
required by this Agreement and the Seller Ancillary Documents to be
performed or complied with by the Shareholders, as the case may be, on
or prior to the Closing Date.
(c) The Shareholders' Representative shall have delivered to
the Purchaser a certificate, dated the Closing Date to the effect of
the matters in clauses (a) and (b) above.
8.2 Consents, Filings; Etc. All consents, approvals, authorizations,
filings and registrations required to be made under applicable law in
connection with the transactions contemplated by this Agreement and the
Seller Ancillary Documents shall have been made and shall be in full force
and effect, the waiting period under the HSR Act shall have expired and no
conditions to the transactions contemplated by this Agreement shall have
been imposed or proposed by any Federal, state, local or foreign
governmental agency.
8.3 Third-Party Consents. All consents and approvals from parties to
contracts or other agreements with the Company that are required in
connection with the consummation of the transactions contemplated by this
Agreement and the Seller Ancillary Documents or the performance by the
Shareholders of their obligations under this Agreement or the Seller
Ancillary Documents shall have been obtained, which consents and approvals
shall not have resulted in any Material Adverse Effect on the terms or
conditions of all such contracts and agreements as the same shall be in
effect on or after the Closing.
8.4 Certificates. The Shareholders shall have furnished the
Purchaser with a certificate, executed by the applicable Secretary of
State, as to
(a) the good standing of each of the Company and the Subsidiaries
in their respective states of incorporation and
(b) the authority or qualification of each of the Company and the
Subsidiaries to conduct business as a foreign corporation in each
state where they are so authorized or qualified.
8.5 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or
instituted or threatened by any governmental or regulatory body seeking to
restrain, modify, prevent or otherwise which may adversely affect the
consummation of the transactions contemplated by this Agreement, the Seller
Ancillary Documents or the Purchaser Ancillary Documents, or to seek
damages or a discovery order in connection with such transactions, or that
has or may have, in the reasonable opinion of the Purchaser, a Material
Adverse Effect.
8.6 Delivery of Stock Certificates; Transfer Taxes. As contemplated
in Section 2.4, the Shareholders shall have:
(a) delivered to the Purchaser stock certificates representing
all of the Shares duly endorsed in blank or accompanied by stock
powers duly executed in blank, in proper form for transfer of the
Shares to the Purchaser; and
(b) paid, or caused to be paid, all stock transfer and other
taxes required to be paid in connection with the sale and delivery to
the Purchaser of the Shares, and caused all necessary and appropriate
stock transfer tax stamps to be affixed to the certificate or
certificates representing the Shares so sold and delivered.
8.7 Termination of ESOP. The Board of Directors of the Company shall
have authorized the termination of the ESOP, effective December 1, 1996.
8.8 No Material Adverse Change. The Purchaser's "due diligence"
investigation of the Company and the Subsidiaries shall not have revealed
any information with respect to the Company, any of the Subsidiaries or the
Gramling Property that, in the reasonable opinion of the Purchaser, has had
or resulted in, or would reasonably be expected to have or result in, a
Material Adverse Effect, and no event or condition shall exist or have
occurred since the date of this Agreement that, individually or in the
aggregate, has had or resulted in, or would reasonably be expected to have
or result in, a Material Adverse Effect.
8.9. Retention of Key Management Personnel. The Purchaser shall have
received assurances satisfactory to the Purchaser from each of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and the general
manager of each of the business locations of the Company and the
Subsidiaries (the "Key Management") with respect to the continued
employment of each of the Key Management by the Company after the Closing
Date.
8.10 Opinion of Counsel. The Purchaser shall have received the
opinion of ▇▇▇▇▇▇▇▇, Akel, Cold, ▇▇▇▇▇▇▇ & ▇▇▇, P.A., counsel to the
Company and the Shareholders, dated the date of the Closing, addressed to
the Purchaser, in form and substance reasonably satisfactory to the
Purchaser.
8.11 Resignations. The Purchaser shall have received the written
resignations, effective as of the Closing, of each of the officers and
directors of the Company and the Subsidiaries whom the Purchaser shall have
specified in writing prior to the Closing.
8.12 Escrow Agreement. The Shareholders' Representative shall have
entered into the Escrow Agreement with the Purchaser and the Escrow Agent.
8.13 Condo Lease. The Purchaser and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall have
entered into a lease of the condominium located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ on terms satisfactory to the Purchaser.
8.14 Termination of Executive Income Agreements. The Purchaser shall
have received evidence satisfactory to the Purchaser that (a) the Executive
Income Agreements dated August 1, 1983 by and between the Company and each
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ have been terminated on or prior
to the Closing Date and (b) all sums due by the Company or other
liabilities of the Company arising under such agreements have been released
or otherwise paid in full.
8.15 Life Insurance Cash Surrender Value Statement. The
Shareholders shall have provided evidence satisfactory to the Purchaser
that the Purchaser can surrender each of the insurance policies owned by
the Company and listed on Schedule 8.15 hereto, copies of which shall have
been provided to the Purchaser, for their respective cash surrender values,
at any time without limitation or restriction. Schedule 8.15 shall also
contain a list of the cash surrender value of each policy on and as of
December 31, 1996 and any premiums or other payments made with respect to
such policies after December 31, 1996. At Closing, or as soon thereafter
as practical, the Shareholders shall have the right to purchase such
policies from the Company for the cash surrender value thereof.
8.16 Bank Pay-Off Statements. The Shareholders shall have provided to
the Purchaser a pay-off statement from Metlife Corporation and from
Southtrust Bank of Alabama N.A., indicating the total amount due and owing
to such institutions by the Company on and as of the Closing Date.
8.17 Payment of Notes and Advances. The Shareholders shall have
provided evidence satisfactory to the Purchaser that all notes receivable
from, and\or cash advances to, any Shareholder from the Company or any
Subsidiary shall have been repaid.
8.18 ESOP Termination Agreement. The Purchaser, the Company and each
of the trustees of the ESOP shall have entered into the ESOP Termination
Agreement in the form attached hereto as Exhibit B.
8.19 Amendments to Equipment Leases. The Purchaser shall have
received executed amendments to the three (3) equipment leases by and
between the Company or the Subsidiaries and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ dated July
1, 1994, April 1, 1995 and July 1, 1995, in form satisfactory to the
Purchaser.
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SHAREHOLDERS
Each and every obligation of the Shareholders under this Agreement to
be performed on or before the Closing Date shall be subject to the
satisfaction or fulfillment on or before the Closing Date of each of the
following conditions, any one or more of which may be waived by the
Shareholders:
9.1 Representations and Covenants.
(a) The representations and warranties of the Purchaser
contained in this Agreement, in the Schedules hereto and in all
certificates and other documents delivered by or on behalf of the
Purchaser, shall be true and complete as of the date when made and on
and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date, except for such changes as are
contemplated herein.
(b) The Purchaser shall have performed and complied in all
material respects with all covenants, agreements and obligations
required by this Agreement and the Purchaser Ancillary Documents to be
performed or complied with by the Purchaser on or prior to the Closing
Date.
(c) The Purchaser shall have delivered to the Shareholders a
certificate, dated the Closing Date to the effect of the matters in
clauses (a) and (b) above.
9.2 Consents, Filings; Etc. All consents, approvals, authorizations,
filings and registrations required to be made under applicable law in
connection with the transactions contemplated by this Agreement and the
Purchaser Ancillary Documents shall have been made and shall be in full
force and effect, the waiting period under the HSR Act shall have expired
and no conditions to the transactions contemplated by this Agreement shall
have been imposed or proposed by any Federal, state, local or foreign
governmental agency.
9.3 Certificates. The Purchaser shall have furnished the
Shareholders with the following certificates:
(a) Good Standing Certificate. Certificates, executed by the
applicable Secretary of State, as to:
(i) the good standing of the Purchaser in the state of
New York; and
(ii) the authority or qualification of the Purchaser
to conduct business as a foreign corporation in each state where
it is so authorized or qualified.
(b) Secretary's Certificate. A certificate from the Secretary
of the Purchaser attaching copies of its certificate of incorporation,
by-laws, and resolutions authorizing the execution, delivery and
performance of this Agreement and the taking of all action required
hereunder or in connection herewith.
(c) Incumbency Certificate. A certificate of the Secretary of
the Purchaser certifying the incumbency of its officers and their
genuine signatures, with a cross certification of such Secretary's
incumbency and genuine signature.
9.4 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or
instituted or threatened by any governmental or regulatory body seeking to
restrain, modify, prevent or otherwise which may adversely affect the
consummation of the transactions contemplated by this Agreement, the Seller
Ancillary Documents or the Purchaser Ancillary Documents, or to seek
damages or a discovery order in connection with such transactions.
9.5 Opinion of Counsel. The Shareholders shall have received the
opinion of Lippes, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the
Purchaser, dated the date of the Closing, addressed to the Shareholders, in
form and substance reasonably satisfactory to the Shareholders.
9.6 Escrow Agreement. The Purchaser shall have entered into the
Escrow Agreement with the Shareholders' Representative and the Escrow
Agent.
ARTICLE 10
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
10.1 Shareholders' Indemnity.
(a) Indemnification. After the Closing Date, each of the
Shareholders, jointly and severally, covenants and agrees to indemnify
and hold harmless the Purchaser from and against any and all Loss(es)
which arise out of, relates to or results from:
(i) the inaccuracy or breach by any of the
Shareholders of any representation or warranty contained in this
Agreement;
(ii) any breach by any of the Shareholders of any
covenant or obligation contained in this Agreement or in any
certificate, agreement or instrument delivered to the Purchaser
in connection with the consummation of the transactions
contemplated hereunder;
(iii) any net amounts due in respect of all Taxes
imposed with respect to any taxable period of the Company and/or
any Subsidiary ending on or prior to the Closing Date, including
any Taxes asserted against the Company and/or any Subsidiary by
reason of its or their inclusion in any consolidated, combined
or unitary tax return and, with respect to any taxable period
including the Closing Date but ending after the Closing Date, any
net amount due in respect of any Taxes that would have been
imposed on the Company and/or any Subsidiary if such period ended
on the Closing Date; or
(iv) any violation of any Environmental Law by the
Company or any of the Subsidiaries for periods prior to the
Closing.
The Shareholders shall reimburse the Purchaser for any Loss(es)
to which this Section 10.1 relates only if a Notice of Claim is given
within the period of survival of the applicable representation, warranty or
covenant as described in Section 10.4 below.
(b) General Indemnification Threshold. The Purchaser shall not
be entitled to indemnification under Sections 10.1(a)(i), (a)(ii) and
(a)(iii) hereunder until such time as a single Loss or an aggregate of
two (2) or more Losses exceeds the Excess Net Worth. No threshold
shall apply with respect to indemnification under Section 10.1(a)(iv).
10.2 Purchaser's Indemnity.
(a) After the Closing Date, the Purchaser covenants and agrees
to indemnify and hold harmless the Shareholders from and against any
Loss(es) sustained, incurred, paid or required to be paid by the
Shareholders which arises out of, relates to or results from:
(i) the inaccuracy or breach by the Purchaser of any
representation or warranty contained in this Agreement;
(ii) any breach by the Purchaser of any covenant or
obligation contained in this Agreement or in any certificate,
agreement or instrument delivered to the Shareholders in
connection with the consummation of the transactions contemplated
hereunder; or
(iii) any net amounts due in respect of all Taxes
imposed with respect to any taxable period of the Company
commencing after the Closing Date, including any Taxes asserted
against the Company by reason of its inclusion in any
consolidated, combined or unitary Tax Return.
The Purchaser shall reimburse the Shareholders for any Loss(es)
to which this Section 10.2 relates only if a Notice of Claim is given
within the period of survival of the applicable representation, warranty or
covenant as described in Section 10.4 below.
(b) General Indemnification Threshold. The Shareholders shall
not be entitled to indemnification hereunder until such time as a
single Loss or an aggregate of two (2) or more Losses exceeds Twenty
Five Thousand Dollars ($25,000), at which time the Shareholders shall
be entitled to indemnification for all Losses sustained, incurred,
paid or required to be paid by the Shareholders in excess of Twenty
Five Thousand Dollars ($25,000).
10.3 Indemnification Procedure.
(a) Notice. An Indemnified Party shall use its best efforts to
give prompt written notice (a "Notice of Claim") to the Indemnifying
Party of any claim or event known to it which does or may give rise to
a claim by the Indemnified Party against the Indemnifying Party based
on this Agreement, stating the nature and basis of said claim or event
and the amount thereof, to the extent known.
(b) Defense of Claims or Actions.
(i) In the event any claim, suit or proceeding is made
or brought by a third party, the Indemnified Party shall deliver
a Notice of Claim and a copy of the claim, process and all legal
pleadings with respect thereto to the Indemnifying Party within
ten (l0) days of being served with such claim, process or legal
pleading. Such deliveries shall not be a condition precedent to
any liability of the Indemnifying Party under this Agreement.
(ii) The Indemnifying Party shall have the right to
assume the defense of any such claim or action, including the
right to bring claims against third parties. If the Indemnifying
Party wishes to assume the defense of such claim or action, such
assumption shall be evidenced by delivery of written notice by
the Indemnifying Party to the Indemnified Party delivered within
five (5) days of the Indemnifying Party's receipt of the Notice
of Claim. After delivery of such notice, the Indemnifying Party
shall engage independent legal counsel of reputable standing
selected by it to assume the defense and may contest, pay, settle
or compromise any such claim or action on such terms and
conditions as the Indemnifying Party may determine. If the
Indemnifying Party assumes the defense of any such claim, action,
suit or proceeding, the Indemnified Party shall have the right to
employ their own counsel, at their own expense; provided,
however, that if the Indemnified Party shall have reasonably
concluded and specifically notified the Indemnifying Party either
that there may be specific defenses available to it which are
different from or additional to those available to the
Indemnifying Party or that such claim, action, suit or proceeding
involves or could result in a Material Adverse Effect with
respect to matters beyond the scope of the indemnity provided
hereunder, then the counsel representing them, to the extent made
necessary by such defenses, shall have the right to direct such
defenses of such claim, action, suit or proceeding in its behalf.
(iii) In the event that the Indemnifying Party shall
not agree in writing to assume the defense of such claim or
action, the Indemnified Party may engage independent legal
counsel of reputable standing selected by them to assume the
defense and may contest, pay, settle or compromise any such claim
or action on such terms and conditions as the Indemnified Party
may determine; provided, however, that the Indemnified Party
shall not settle or compromise any claim or action without the
prior consent of the Indemnifying Party if the Indemnifying Party
acknowledges in writing its liability for any Loss(es) incurred
or required to be paid in respect of such claim or action.
(iv) The Indemnified Party and the Indemnifying Party
shall cooperate in good faith in connection with such defense and
all such parties shall have the right to employ their own
counsel, but, except as provided above, the fees and expenses of
their counsel shall be at their own expense. The Indemnified
Party or the Indemnifying Party, as the case may be, shall be
kept fully informed of such claim, action, suit or proceeding at
all stages thereof whether or not they are represented by their
own counsel. The Indemnifying Party shall be subrogated to any
and all defenses, claims and set-offs which the Indemnified Party
asserted or could have asserted against the third party making a
claim. The Indemnified Party shall execute and deliver to the
Indemnifying Party such documents as may be reasonably necessary
to establish by way of subrogation the ability and right of the
Indemnifying Party to assert such defenses, claims and set-offs.
10.4 Survival. The representations and warranties made by the parties
in this Agreement, the Seller Ancillary Documents, the Purchaser Ancillary
Documents and in any other certificates, agreements and documents delivered
in connection herewith shall survive the Closing under this Agreement for a
period of two (2) years, except as follows:
(a) the representations and warranties made by the Shareholders
in Sections 3.13 and 3.14 shall survive the Closing for the applicable
statutory period of limitations with respect to any liabilities
covered thereby;
(b) the representations and warranties made by the Shareholders
in Sections 3.2, 3.5 and 3.24 shall survive the Closing without
limitation; and
(c) the representations and warranties made by the Shareholders
in Section 3.32 shall survive the Closing for a period of fifteen (15)
years.
All covenants of the parties that are to be performed after
Closing shall continue in effect and expire in accordance with their
respective terms.
10.5 Maximum Indemnification. Notwithstanding the foregoing, no claim
for indemnification of Loss(es) (whether in an action for indemnification
or otherwise) (except with respect to indemnification pursuant to Section
10.1(a)(iv)) may be made hereunder by the Purchaser against the
Shareholders, or the Shareholders against the Purchaser, as the case may
be, to the extent the aggregate Loss(es) paid or asserted (and, if
asserted, paid at any time thereafter) during said period by the
Shareholders to the Purchaser, or the Purchaser to the Shareholders, as the
case may be, exceed the sum of $25,000,000. Notwithstanding any other
provision in this Agreement, with respect to indemnification by the
Shareholders to the Purchaser under Section 10.1(a)(iv), claims for
indemnification shall be made only to the extent the aggregate Losses paid
or asserted (and if asserted, paid at any time thereafter) do not exceed
the sum of $500,000.00. Once the aggregate claims so asserted (and if
asserted, paid at any time thereafter) exceed $500,000.00 Shareholders
shall have no indemnification obligation to Purchaser under Section
10.1(a)(iv). In addition, notwithstanding anything contained in this
Agreement, in no event shall the ESOP be liable for more than 77.9% of any
claim for indemnification under this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Termination.
(a) Subject to the provisions of Section 11.1(b), this Agreement,
by written notice given at any time at or prior to the Closing in the
manner provided in Section 11.2, may be terminated or abandoned:
(i) by mutual written consent of the Shareholders and
the Purchaser;
(ii) by any of the Shareholders if any of the
conditions provided for in Article 9 shall not have been
satisfied on or before February 28, 1997, or such later date as
may be agreed upon by all of the parties hereto;
(iii) by the Purchaser if any of the conditions
provided for in Article 8 shall not have been satisfied on or
before February 28, 1997, or such later date as may be agreed
upon by all of the parties hereto; or
(iv) by either the Shareholders or the Purchaser if
there shall has been entered a final, non-appealable restraining
order or injunction restraining or prohibiting the sale of the
Shares.
(b) In the event this Agreement is terminated pursuant to
Section 11.1(a), all further obligations of the parties hereunder
shall terminate on and as of the Termination Date; provided, however,
that if this Agreement is so terminated by one party because one or
more conditions to such party's obligations hereunder is not satisfied
as a result of the other party's:
(i) willful failure to comply with its obligations
under any provision of this Agreement; or
(ii) willful breach of a representation or warranty,
the terminating party's right to pursue all legal remedies for
breach of contract and damages shall survive such termination and
the Termination Date unimpaired.
11.2 Notices. All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be in writing
and shall be deemed to have been duly given if (a) delivered personally,
(b) mailed, certified or registered mail (return receipt requested) with
postage prepaid, (c) sent by next day or overnight mail or courier or (d)
sent by facsimile or telegram, addressed as follows:
If to the Purchaser, a single notice addressed to:
GIBRALTAR STEEL CORPORATION OF NEW YORK
c\o Gibraltar Steel Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
P.O. Box 2028
Buffalo, New York 14219-0228
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executive Vice President-Finance
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Lippes, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
700 Guaranty Building
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Shareholder, a single notice addressed to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., as Shareholders' Representative
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇, Cold, ▇▇▇▇▇▇▇ & ▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section.
All such notices, requests, demands and other communications shall be
deemed to have been received (w) if delivered personally, on the day
delivered, (x) if mailed registered or certified mail (return receipt
requested), on the next business day following the day on which the written
receipt of such mail is signed, (y) if sent by next day or overnight mail
or courier, on the day delivered and (z) if sent by facsimile or telegram,
on the next business day following the day on which such facsimile or
telegram was sent, provided that, on the day on which such facsimile or
telegram is sent, a copy is also sent by registered or certified mail
(return receipt requested) or next day or overnight mail or courier.
11.3 Headings. The headings contained in this Agreement are intended
solely for convenience and shall not affect the rights of the parties to
this Agreement.
11.4 Entire Agreement. This Agreement, including the Schedules,
Exhibits and attachments hereto and documents and certificates delivered
pursuant hereto, is intended by the parties to and does constitute the
entire agreement of the parties with respect to the transactions
contemplated by this Agreement. This Agreement supersedes any and all
prior understandings, written or oral, between the parties, and this
Agreement may not be amended, modified or waived orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, modification or waiver is sought.
11.5 Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement
to the fullest extent possible. In any event, all other provisions of this
Agreement shall be deemed valid and enforceable to the fullest extent
possible.
11.6 Waiver. Waiver of any term or condition of this Agreement by any
party hereto shall only be effective if in writing and shall not be
construed as a waiver of any subsequent breach or failure of the same term
or condition or any other term or condition of this Agreement.
11.7 Binding Effect; 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 (whether voluntarily, involuntarily, by
operation of law or otherwise) by any of the parties hereto without the
prior written consent of the other parties; provided, however, that the
Purchaser may assign this Agreement, in whole or in any part, and from time
to time, to a wholly owned, direct or indirect, subsidiary of the
Purchaser, but any such assignment shall not relieve the Purchaser of its
obligations hereunder.
11.8 No Third-Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person or entity that is not a party to this
Agreement except as expressly provided hereunder.
11.9 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures to each counterpart
were upon a single instrument, and all such counterparts together shall be
deemed an original of this Agreement.
11.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, applicable
to agreements made and to be performed entirely within such State, without
regard to the conflict of laws principles thereof.
11.11 Arbitration. Except as otherwise provided herein, all disputes
(other than for injunctive relief) arising in connection with this
Agreement shall be finally settled under the Rules of the American
Arbitration Association. Unless the parties to such dispute agree
otherwise in writing, any such arbitration shall be
conducted in Jacksonville, Florida and the results of such arbitration
shall be final and binding on the parties.
11.12 Appointment of Shareholders' Representative.
(a) By the Shareholders' execution of this Agreement, the
Shareholders' Representative is hereby designated by each of the
Shareholders to serve as the representative of the Shareholders with
respect to the matters expressly set forth in this Agreement to be
performed by the Shareholders' Representative.
(b) Each of the Shareholders, by their execution of this
Agreement, hereby irrevocably appoints the Shareholders'
Representative as the agent, proxy and attorney-in-fact for such
Shareholder for all purposes of this Agreement, including, without
limitation, full power and authority on such Shareholders' behalf
(i) to consummate the transactions contemplated
herein, and in the event of such consummation, to receive and
disburse payments, as the case may be, on behalf of such
Shareholder for the Company Stock;
(ii) to pay such Shareholder's expenses (whether
incurred on or after the date hereof) incurred in connection with
the negotiation and performance of this Agreement, it being
understood that such expenses shall be allocated among the
Shareholders pro rata based on the Shareholders' pro rata shares;
(iii) to disburse any funds received hereunder to such
Shareholder and each other Shareholder;
(iv) to execute and deliver any certificates required
hereunder, including delivery of any stock certificates
representing the Shares;
(v) to execute and deliver on behalf of such
Shareholder any amendment hereto; provided, that such amendment
does not treat any Shareholder disproportionately relative to any
of the other Shareholders;
(vi) to take all other actions to be taken by or on
behalf of such Shareholder in connection herewith;
(vii) to negotiate, settle, compromise and otherwise
handle all claims of the Purchaser pursuant to Section 2.6
hereof;
(viii) to pay or accept any amounts pursuant to
Article 2 hereof;
(ix) to negotiate, settle, compromise and otherwise
handle all claims for indemnification made by the Purchaser
pursuant to Article 10 hereof; and
(x) to do each and every act and exercise any and all
rights which such Shareholder or the Shareholders are permitted
or required to do or exercise under this Agreement. Each of the
Shareholders agree that such agency and proxy are coupled with an
interest, and are therefore irrevocable without the consent of
the Shareholders' Representative
(c) Neither the Shareholders' Representative nor any agent
employed by him shall incur any liability to any Shareholder relating
to the performance of his duties hereunder, except for fraud or bad
faith.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
GIBRALTAR STEEL CORPORATION OF NEW YORK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executive Vice
President and Chief Financial Officer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ REVOCABLE LIVING TRUST
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. GRAT
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ GRAT
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
D.G. Trustee, Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. GRAT No. 2
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ GRAT No. 2
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ GRAT No. 2
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. GRAT No. 3
By: /s/ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ GRAT No. 3
By: /s/ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ GRAT No.3
By: /s/ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. GRAT No. 4
By: /s/ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ GRAT No. 4
By: /s/ H. ▇▇▇▇ ▇▇▇▇▇▇▇▇
H. ▇▇▇▇ ▇▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ GRAT No. 4
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇, Trustee
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇., AS TENANTS BY THE
ENTIRETY
EMPLOYEE STOCK OWNERSHIP PLAN AND
TRUST OF SOUTHEASTERN METALS
MANUFACTURING COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Trustee
DNG (1997) LIMITED PARTNERSHIP
By:
General Partner
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., AS
SHAREHOLDERS' REPRESENTATIVE
SCHEDULE OF SHAREHOLDERS
Certificate # Shareholder(s) No. of Shares
30 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 1,612.0000
53 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Trustee
of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Revocable Trust 15,685.0000
194 ▇. ▇. ▇▇▇▇▇▇▇ as Trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. GRAT 1,350.0000
195 ▇. ▇. ▇▇▇▇▇▇▇ as Trustee of the
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ GRAT 1,350.0000
196 ▇. ▇. ▇▇▇▇▇▇▇ as Trustee of the
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ GRAT 1,350.0000
197 ▇. ▇. ▇▇▇▇▇▇▇ as Trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. GRAT No. 2 1,350.0000
198 ▇. ▇. ▇▇▇▇▇▇▇ as Trustee of the
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ GRAT No. 2 1,350.0000
199 ▇. ▇. ▇▇▇▇▇▇▇ as Trustee of the
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ GRAT No. 2 1,350.0000
203 ▇. ▇▇▇▇ ▇▇▇▇▇▇▇, as Trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. GRAT No. 3 1,350.0000
204 ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, as Trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. GRAT No. 4 1,350.0000
205 ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, as Trustee of the
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ GRAT No. 3 1,350.0000
206 ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, as Trustee of the
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ GRAT No. 4 1,350.0000
207 ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, as Trustee of the
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ GRAT No. 3 1,350.0000
208 ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, as Trustee of the
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ GRAT No. 4 1,350.0000
209 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as Tenants
by the Entirety 4,779.1900
210 The Employee Stock Ownership Plan
and Trust of Southeastern Metals
Manufacturing Company, Inc. 196,318.8241
212 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 130.7760
214 DNG (1997) Limited Partnership 17,123.0400
216 DNG (1997) Limited Partnership 172.9600
TOTAL SHARES 252,021.7891