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STOCK PURCHASE AGREEMENT
BY AND AMONG
THE SHAREHOLDERS OF
ASSOCIATED AMERICAN INDUSTRIES, INC.
(collectively "Seller")
AND
STANDEX INTERNATIONAL CORPORATION
("Buyer")
January 9, 2007
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
1
ARTICLE 2
SALE AND TRANSFER OF SHARES; CLOSING
10
2.1
Shares.
10
2.2
Purchase Price.
10
2.3
Payment.
10
2.4
Closing.
13
2.5
Closing Obligations.
14
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
14
3.1
Organization and Good Standing.
14
3.2
Authority; No Conflict.
14
3.3
Capitalization.
15
3.4
Financial Statements.
16
3.5
Books and Records.
16
3.6
Title to Properties; Encumbrances.
16
3.7
Condition of Assets.
17
3.8
No Undisclosed Liabilities.
17
3.9
Taxes.
18
3.10
No Material Adverse Change.
18
3.11
Employee Benefits.
19
3.12
Compliance with Legal Requirements; Governmental
Authorizations.
19
3.13
Legal Proceedings; Orders.
20
3.14
Absence of Certain Changes and Events.
21
3.15
Applicable Contracts; No Defaults.
22
3.16
Insurance.
24
3.17
Environmental Matters.
24
3.18
Employees.
25
3.19
Labor Relations; Compliance.
26
3.20
Intellectual Property.
26
3.21
Brokers or Finders.
27
3.22
Product Warranty.
27
3.23
Product Liability.
27
3.24
Customers.
28
3.25
Trade Secrets and Proprietary Information.
28
3.26
Personal Property Leases.
28
3.27
Related Party Interests.
28
3.28
Delivery of Documents.
28
3.29
Truth of Representations and Warranties.
28
3.30
Books and Records.
29
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
29
4.1
Organization and Good Standing.
29
4.2
Authority; No Conflict.
29
4.3
Investment Intent.
29
4.4
Certain Proceedings.
29
4.5
Available Funds.
29
4.6
Brokers or Finders.
29
ARTICLE 5
COVENANTS OF SELLERS PRIOR TO CLOSING DATE
30
5.1
Access and Investigation.
30
5.2
Operation of the Businesses of the Company.
30
5.3
Negative Covenant.
31
5.4
Required Approvals.
31
5.5
Notification.
31
5.6
Best Efforts.
31
ARTICLE 6
COVENANTS OF BUYER PRIOR TO CLOSING DATE
31
6.1
Required Approvals.
31
6.2
Best Efforts.
32
6.3
Disputes with Group Customers.
32
ARTICLE 7
CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE
32
7.1
Accuracy of Representations.
32
7.2
Sellers' Performance.
32
7.3
Opinion Letter.
33
7.4
Resignations.
33
7.5
Escrow Agreement
33
7.6
Good Standing Certificate.
33
7.7
Other Documents.
33
7.8
No Claim Regarding Stock Ownership or Sale Proceeds.
33
7.9
Employment Agreements.
33
7.10
Mutual Release.
33
ARTICLE 8
CONDITIONS PRECEDENT TO SELLERS’ OBLIGATION TO CLOSE
34
8.1
Accuracy of Representations.
34
8.2
Buyer's Performance.
34
8.3
No Injunction.
34
8.4
Opinion Letter.
34
8.5
Escrow Agreement.
35
8.6
Employment Agreements.
35
8.7
Mutual Release.
35
ARTICLE 9
TERMINATION
35
9.1
Termination Events.
35
9.2
Effect of Termination.
36
ARTICLE 10
INDEMNIFICATION; REMEDIES
36
10.1
Survival.
36
10.2
Indemnification and Payment of Damages by Sellers.
36
10.3
Indemnification and Payment of Damages by Buyer.
37
10.4
Time Limitations.
37
10.5
Limitations on Amount.
38
10.6
Procedure for Indemnification—Third Party Claims.
38
10.7
Procedure for Indemnification – Other Claims.
39
10.8
Exclusive Representations and Warranties.
39
10.9
Credits, Etc.
39
10.10
Exclusive Remedy.
40
10.11
Limitation on Damages.
40
10.12
Independent Investigation.
40
10.13
Subrogation.
41
ARTICLE 11
ADDITIONAL COVENANTS AND AGREEMENTS
41
11.1
Termination of Certain Insurance.
41
11.2
Preservation of Books and Records.
42
11.3
Indemnification of Directors and Officers.
42
11.4
Sellers’ Representatives.
43
11.5
Environmental Matters.
44
11.6
Tax Matters.
46
11.7
Emerson Lawsuit Payments.
48
If any amount is collected by APW pursuant to the Emerson
Lawsuit, Buyer shall cause APW to make the payments described in
Schedule 11.7. 48
11.8
Right of First Refusal.
48
ARTICLE 12
GENERAL PROVISIONS
49
12.1
Expenses.
49
12.2
Public Announcements.
49
12.3
Confidentiality.
50
12.4
Non-Competition.
50
12.5
Notices.
51
12.6
Jurisdiction; Service of Process.
51
12.7
Further Assurances.
52
12.8
Waiver.
52
12.9
Entire Agreement and Modification.
52
12.10
Assignments, Successors, and No Third-Party Rights.
52
12.11
Severability.
53
12.12
Section Headings, Construction.
53
12.13
Schedules.
53
12.14
Offset.
53
12.15
Time of Essence.
54
12.16
Governing Law.
54
12.17
Counterparts.
54
12.18
Limited Liability of Certain Sellers.
54
EXHIBITS
Exhibit A:
Form of Escrow Agreement
Exhibit B:
Form of Mutual Release
SCHEDULES
Schedule 1:
Policies and Procedures to Compute Final Adjusted EBITDA
Schedule 2:
Policies and Procedures to Compute Final Net Asset Value
Schedule 2.1:
Shareholders
Schedule 2.3(a)(ii):
Outstanding Debt
Schedule 3.1:
Organization and Foreign Qualification
Schedule 3.2:
Authority; No Conflict
Schedule 3.3:
Authorized Capitalization
Schedule 3.6:
Facilities
Schedule 3.9:
Taxes
Schedule 3.11:
Employee Benefits
Schedule 3.12:
Compliance with Legal Requirements; Governmental
Authorizations
Schedule 3.13:
Legal Proceedings; Orders
Schedule 3.14:
Absence of Certain Changes and Events
Schedule 3.15:
Applicable Contracts; No Defaults
Schedule 3.16:
Insurance
Schedule 3.17:
Environmental Matters
Schedule 3.18:
Employees
Schedule 3.19:
Labor Relations; Compliance
Schedule 3.20:
Intellectual Property
Schedule 3.22:
Product Warranties
Schedule 3.23:
Product Liability
Schedule 3.24:
Customers
Schedule 3.27:
Related Party Interests
Schedule 11.7:
Emerson Lawsuit Payments
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE
AGREEMENT ( this " Agreement "), made as of
January 9, 2007, is between Standex International
Corporation, a Delaware corporation (" Buyer "), having
executive offices at 6 Manor Parkway, Salem, New Hampshire 03079,
and all of the shareholders, as listed on the signature page of
this Agreement (collectively, the " Sellers "), of
Associated American Industries, Inc., a Texas corporation with an
address of 729 Third Avenue, Dallas, Texas 75226 (the "
Company ").
WHEREAS , Sellers desire to sell, and Buyer desires to
purchase, all of the issued and outstanding shares (the "
Shares ") of the capital stock of the Company for the
consideration and on the terms set forth in this Agreement.
The parties, intending to be legally bound, agree as
follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1:
"Applicable Contract" shall have the meaning set out in
Section 3.15.
" Applicable Tax Rate" means the blended, enacted federal
and state income tax (including Texas franchise tax and margin tax)
rate then applicable on a separate legal entity basis with respect
to, as applicable, (a) the money to be received by or allocated to
the applicable Group Member, or (b) the deductible expense to be
incurred by or allocated to the applicable Group Member.
"APW" means American Permanent Ware Company, a Delaware
corporation and Company Subsidiary.
"Bakers Pride" means Bakers Pride Oven Co., Inc., a
Delaware corporation and Company Subsidiary.
"Benefit Obligations" means all obligations,
arrangements, or customary practices to provide benefits, other
than salary, as compensation for services rendered, to present or
former directors, employees, or agents, other than obligations,
arrangements, and practices that are Plans.
"Best Efforts" means the commercially reasonable efforts
that a prudent Person desirous of achieving a result would use in
similar circumstances to ensure that such result is achieved as
expeditiously as reasonably possible; provided, however ,
that an obligation to use Best Efforts under this Agreement does
not require the Person subject to that obligation to take actions
that would reasonably be expected to result in an adverse change in
the benefits to such Person arising out of this Agreement and the
Contemplated Transactions or that would reasonably be expected to
have an adverse effect on such Person.
"Bevles" means Bevles Company Incorporated, a California
corporation and Company Subsidiary.
"Breach" means an inaccuracy in or breach of, or any
failure to perform or comply with, any representation, warranty,
covenant, obligation, or other provision of this Agreement, the
Schedules to this Agreement, any supplements to the Schedules, or
any instrument delivered pursuant to this Agreement.
"Business Day" means any day, other than Saturday and
Sunday, on which federally-insured commercial banks in Dallas,
Texas are generally open for business and capable of sending and
receiving wire transfers.
"Businesses" means the design, manufacture, marketing,
and sale of food service equipment products including ovens,
broilers, countertop ranges, toasters, warmers, hot foodwells,
holding drawers and cabinets, grills, roast and hold ovens, racks,
proofers, and heat holding cabinets merchandisers through the
Company Subsidiaries.
"Buyer" shall have the meaning set out in the first
paragraph of this Agreement.
"Chino Lease" means the lease between Bevles, as lessee,
and Edison Avenue Properties, LLC, as lessor, dated January 21,
1992, as amended on April 24, 2002, for the facility located at
5270 Edison Avenue, Chino, California.
"Chino Sublease" shall mean the sublease between Bevles,
as sublessor, and Richwood Corporation, as sublessee, dated May 9,
2003, as amended, relating to the real property that is the subject
of the Chino Lease.
"Closing" shall have the meaning set out in Section
2.4.
"Closing Date" means the 12:01 a.m. on the day on which
the Closing actually takes place.
"Closing Date Purchase Price" means (a) Eighty-Five
Million Dollars ($85,000,000), minus (b) the Effective Time
Withdrawal Liability, minus (c) the Effective Time Chino Lease
Liability, plus (d) all of the Group’s cash, cash equivalents
and all marketable securities and other investments on hand as of
the Closing Date (determined in accordance with GAAP but excluding
any payment by the Company of the change in control payment owed to
Donald C. Wall on or prior to the Effective Time), if any, minus
(e) the difference between the Target Net Asset Value and the
Estimated Net Asset Value (if the Target Net Asset Value is the
greater of such amounts), plus (f) the difference between the
Estimated Net Asset Value and the Target Net Asset Value (if the
Estimated Net Asset Value is the greater of such amounts), less (g)
an amount equal to the change in control payment owed by the
Company to Donald C. Wall, multiplied by one (1) minus the
Applicable Tax Rate.
"Company" shall have the meaning set out in the first
paragraph of this Agreement.
"Company Benefit Obligation" means a Benefit Obligation
owed, adopted, or followed by the Company.
"Company Plan" means all Plans of which the Company is a
Plan Sponsor or to which the Company otherwise contributes.
"Company Subsidiaries" means American Wyott Corporation,
a Delaware corporation, Bevles, Bakers Pride, and APW, and
"Company Subsidiary" means any single Company
Subsidiary.
"Consent" means any approval, consent, ratification,
waiver, or other authorization.
"Contemplated Transactions" means all of the transactions
contemplated by this Agreement, including:
(i)
the sale of the Shares by Sellers to Buyer;
(ii)
the performance by Buyer and Sellers of their respective
covenants and obligations under this Agreement; and
(iii)
Buyer's acquisition and ownership of the Shares and exercise of
control over the Company.
"Contract" means any agreement, contract, obligation,
promise, or undertaking (whether written or oral) that is legally
binding.
"Copyrights" means all copyrights in both published works
and unpublished works.
"Damages" shall have the meaning set forth in Section
10.2.
"Effective Time" means 11:59 p.m., Dallas, Texas time, on
December 31, 2006.
"Effective Time Chino Lease Liability" means the
remaining amount payable as of the Effective Time to the lessor
under the Chino Lease, which amount shall be One Hundred One
Thousand Eight Hundred Eighty-One Dollars and Forty Cents
($101,881.40).
"Effective Time Withdrawal Liability" means the remaining
amount payable as of the Effective Time in connection with the
withdrawal of Bakers Pride Oven Company, Inc. from the United Food
and Commercial Workers Local 888 Pension Plan, which amount shall
be Eight Hundred Ninety Thousand Six Hundred Forty Six Dollars and
Five Cents ($890,646.05).
"Emerson Lawsuit" means the litigation matter captioned
American Permanent Ware Company v. Emerson Electric Co., D/B/A
Chromalox, et. al. and Emerson Electric Co. D/B/A Chromalox,
Appellant v. American Permanent Ware Co.
"Encumbrance" means any charge, claim, community property
interest, equitable interest, lien, pledge, security interest, or
restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any attribute of
ownership.
"Environment" means soil, air, land surface or subsurface
strata, groundwater, drinking water supply, and any other
environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities" means any
cost, damages, liability, or obligation arising from or under
Environmental Law or Occupational Safety and Health Law and
consisting of or relating to:
(i)
any environmental, health, or safety matters or conditions;
and
(ii)
fines, penalties, judgments, awards, legal or administrative
proceedings, assessments, expenses, costs, damages, and losses,
arising under any Environmental Law or Occupational Safety and
Health Law.
"Environmental Law" means any Legal Requirement that
requires:
(i)
advising appropriate authorities, employees, and the public of
intended or actual releases of Hazardous Materials, violations of
discharge limits, or other prohibitions and of the commencements of
activities, such as resource extraction or construction, that could
have significant impact on the Environment;
(ii)
preventing or reducing to acceptable levels the release of
Hazardous Materials into the Environment;
(iii)
reducing the quantities, preventing the release, or minimizing
the hazardous characteristics of wastes that are generated;
(iv)
assuring that products do not present unreasonable risks to
human health or the Environment when used or disposed of;
(v)
the cleaning up of Hazardous Materials that have been released,
preventing the Threat of Release, or paying the costs of such
cleanup or prevention;
(vi)
the treatment, storage, disposal, generation and transportation
of industrial, toxic or Hazardous Materials;
(vii)
the prevention of any release or Threat of Release into the
Environment of Hazardous Materials;
(viii)
the protection of wildlife, marine sanctuaries and wetlands,
including without limitation all endangered and threatened
species;
(ix)
the closure or removal of underground and other storage tanks or
vessels, abandoned, disposed or discarded barrels, containers and
other closed receptacles; and
(x)
any procedures relating to the manufacture, processing, use,
distribution, treatment, storage, disposal, transportation or
handling of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act
of 1974 or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.
"Escrow Agent" means the escrow agent under the Escrow
Agreement.
"Escrow Agreement" means an agreement to be entered into
by and among Buyer, Sellers’ Representatives, and Wells Fargo
Bank, National Association on or before the Closing Date, in
substantially the form attached hereto as Exhibit A, or such other
form as Sellers and Buyer shall reasonably agree.
"Escrow Amount" means $8,500,000.
"Escrow Fund" means the funds held by the Escrow Agent
pursuant to the Escrow Agreement, as adjusted from time to time by
any disbursements in accordance with this Agreement and the Escrow
Agreement, and interest and other income of investments
thereof.
"Estimated Net Asset Value" means the estimated dollar
amount of the Net Asset Value as of December 31, 2006, determined
in accordance the policies and procedures used to determine the
Final Net Asset Value and as described in Schedule 2.
"Excluded Assets" shall have the meaning set out in
Section 2.2.
"Facilities" means the manufacturing and warehousing
facilities located in Dallas, Texas; Cheyenne, Wyoming; and New
Rochelle, New York that are owned by the Group.
"Final Adjusted EBITDA" shall have the meaning set forth
in Section 2.3(d) and shall be determined in accordance with the
policies and procedures described in Schedule 1.
"Final Closing Financial Statements" shall have the
meaning set forth in Section 2.3.
"Final Net Asset Value" shall have the meaning set forth
in Section 2.3(d) and shall be determined in accordance with the
policies and procedures described in Schedule 2.
"GAAP" means generally accepted United States
accounting principles, applied on a basis consistent with the basis
on which the Company’s financial statements have been
prepared.
"Governmental Authorization" means any Consent, license
or permit issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body.
"Governmental Body" means any:
(i)
federal, state, local, county, municipal, foreign, or other
government; or
(ii)
governmental authority of any nature (including any governmental
agency, branch, department, official representative, or entity and
any court or other tribunal).
"Group" means the Company and Company Subsidiaries,
collectively.
"Group Member" means the Company and each of the Company
Subsidiaries, individually.
"Hazardous Activity" means the distribution, generation,
handling, importing, management, manufacturing, processing,
production, refinement, Release, storage, transfer, transportation,
treatment, or use (including any withdrawal or other use of
groundwater) by any Group Member of Hazardous Materials in, on,
under, about, or from the Facilities.
"Hazardous Materials" means any waste or other substance
that is listed, defined, designated, or classified as hazardous,
radioactive, toxic, or a pollutant under or pursuant to any
Environmental Law and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor and asbestos
or asbestos containing materials.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
"Interim Balance Sheet" shall
have meaning set out in Section 3.4.
"IRC" means the Internal Revenue Code of 1986, as
amended.
"Knowledge" means, with respect to an individual, that
such individual is actually aware of the fact or other matter in
issue. A Person other than an individual will be deemed to
have "Knowledge" of a particular fact or other matter if any
individual who is serving as a director, officer, partner,
executor, or trustee of such Person or in any similar capacity is
actually aware of such fact or other matter.
"Legal Requirement" means any federal, state, local,
municipal, or other administrative order, constitution, law,
ordinance, regulation, or statute applicable and relevant to the
Company, the Contemplated Transactions and/or this Agreement.
"Litigation Expenses" means any and all costs, expenses
and fees (including all attorneys, consultants and other advisory
fees) incurred in connection with any Proceeding or other
dispute.
"Marks" means all legal names, all fictional business
names, trading names, registered and unregistered trademarks,
service marks, and registrations and applications for registration
of any of the foregoing.
"Material Adverse Change" means a material adverse effect
on the business, financial condition or results of operation of the
Group taken as a whole, but excluding any effect resulting from (i)
the announcement or pendency of the Contemplated Transactions,
including the loss of customers or suppliers or cancellations or
delays of orders placed with the Group, (ii) conditions
affecting the industry in which the Group operates, general
business or economic conditions or financial markets, (iii)
compliance by the Group with the terms of, or the taking of any
action contemplated by, this Agreement, (iv) changes in any Legal
Requirement applicable to the Group, and (v) changes by the Group
in its accounting methods, principles of practice, as required by
applicable Legal Requirements or GAAP. For the purposes of this
definition "Material Adverse Change" shall be deemed to occur
whenever the affect of the change in question would exceed Four
Hundred Thousand Dollars ($400,000) individually or in the
aggregate.
"McGladrey" shall have the meaning set out in Section
2.3(d).
"McGladrey Certificate" shall have the meaning set out in
Section 2.3(d).
"Multi-Employer Plan" has the meaning given in ERISA
§ 3(37)(A).
"Non-Compete Period" shall have meaning set out in
Section 12.4.
"Occupational Safety and Health Law" means any Legal
Requirement designed to provide safe and healthful working
conditions and to reduce occupational safety and health hazards,
and any program designed to provide safe and healthful working
conditions.
"Order" means any award, decision, injunction, judgment,
order, or ruling entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body.
"Ordinary Course of Business" means any action taken by a
Person if such action is consistent with the past practices of such
Person and in the ordinary course of the normal day-to-day
operations of such Person.
"Organizational Documents" means (a) the articles or
certificate of incorporation and the bylaws of a corporation;
(b) the partnership agreement and any statement of partnership
of a general partnership; (c) the limited partnership
agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or
filed in connection with the creation, formation, or organization
of a Person; and (e) any amendment to any of the
foregoing.
"Outstanding Debt" means all of the Group’s (i) all
long-term (including the current portion thereof) and short-term
indebtedness for borrowed money, and any accrued interest thereon,
and (ii) all indebtedness for capital leases, but specifically
excluding the Withdrawal Liability.
"Patents" means all patents, patent applications, and
inventions and discoveries that may be patentable.
"Pension Plan" has the meaning given in ERISA §
3(2)(A).
"Person" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization, or other entity.
"Plans" has the meaning given in ERISA § 3(3) and as
defined in Section 3.11.
"Plan Sponsor" has the meaning given in ERISA §
3(16)(B).
"Proceeding" means any action, audit, arbitration,
hearing, investigation, litigation, or suit (whether civil,
criminal, administrative, or investigative) commenced, brought,
conducted, Threatened, or heard by or before, or otherwise
involving, any Governmental Body or any other Person claiming
damages.
"Purchase Price" shall have the meaning set out in
Section 2.2.
"Qualified Plan" means any Plan that meets or purports to
meet the requirements of IRC § 401(a).
"Related Person" means, with respect to a particular
individual:
(i)
each other member of such individual's Family; or
(ii)
any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family.
With respect to a specified Person other than an individual:
(i)
any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common
control with such specified Person; or
(ii)
any Person that holds a Material Interest in such specified
Person.
For purposes of this definition, (a) the " Family " of an
individual includes (i) the individual, (ii) the individual's
spouse, and (iii) any other natural person who is related to the
individual or the individual's spouse within the second degree, and
(b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of voting securities or other voting
interests representing at least 25% of the outstanding voting power
of a Person or equity securities or other equity interests
representing at least 25% of the outstanding equity securities or
equity interests in a Person.
"Release" means any spilling, leaking, emitting,
discharging, depositing, escaping, leaching, dumping, or other
releasing into the Environment, whether intentional or
unintentional.
"Representative" means, with respect to a particular
Person, any director, officer, employee, agent, consultant,
advisor, or other representative of such Person, including legal
counsel, accountants, and financial advisors.
"Schedules" means the schedules, and supplements to the
schedules, delivered by Sellers to Buyer pursuant to Section 5.5
concurrently with or subsequent to the execution and delivery of
this Agreement.
"Securities Act" means the Securities Act of 1933 or any
successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"Sellers" shall have the meaning
set out in the first paragraph of this Agreement.
"Sellers’ Representatives" shall have the meaning
set out in Section 11.4.
"Shares" shall have the meaning set out in the Recitals
of this Agreement.
"Target Net Asset Value" means Fourteen Million Five
Hundred Thousand Dollars ($14,500,000).
"Taxes" means all federal, state, local, foreign and
other income, sales, use, ad valorem, transfer property, gross
receipts, excise, withholding, social security, unemployment and
employment, occupation, disability, severance, use, service,
license, payroll, franchise, transfer, alternative and add-on
minimum tax, estimated, stamp, capital stock, environmental,
windfall profits tax, custom, import, duty, value added, premium,
registration and recording taxes or other taxes, fees, assessments
or charges of any kind, together with any interest, fines, any
penalties, or additions with respect thereto, and the term "Tax"
means any one of the foregoing Taxes imposed by the United States
or any state, local or foreign government or subdivision or agency
thereof, whether computed on a separate, consolidated, unitary,
combined or any other basis which is a liability of any Group
Member for any period occurring prior to the Effective Time, as
determined pursuant to Section 11.6(b).
"Tax Return" means any return (including any information
return), report, (including abandoned property reports) statement,
schedule, or other document or information and any amendments
thereto filed with any Governmental Body in connection with the
determination, assessment, collection, or payment of any Tax or in
connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any
Tax.
"Threat of Release" means a substantial likelihood of a
Release that may require action in order to prevent or mitigate
damage to the Environment that may result from such Release.
"Threatened" means a claim, Proceeding, or dispute, if
any demand or statement has been made in writing or any notice has
been given in writing that would lead a prudent Person to conclude
that such a claim, Proceeding, or dispute is likely to be asserted,
commenced, taken, or otherwise pursued in the future.
"Trade Secrets" means all know-how, trade secrets,
confidential information, customer lists, software, technical
information, data, process technology, plans, drawings, and
blueprints.
"Withdrawal Liability" means the liability incurred by
Bakers Pride as a result of its withdrawal from the United Food and
Commercial Workers Local 888 Pension Plan in 2004.
ARTICLE 2
SALE AND TRANSFER OF
SHARES; CLOSING
2.1
Shares.
Subject to the terms and conditions of this Agreement, at the
Closing, each Seller will sell and transfer all of such
Seller’s right, title and interest in and to the Shares
indicated next to such Seller’s name on Schedule 2.1, such
sale to be evidenced by delivery of original certificates
evidencing all of the Shares of the Company owned by such Seller,
duly endorsed in blank or accompanied by duly executed stock
assignments in blank, in proper form, for transfer to Buyer, free
and clear, in each case, of all liens, security interests and other
encumbrances, and Buyer agrees to purchase such Shares from each
such Seller.
2.2
Purchase Price.
The total gross aggregate purchase price (the " Purchase
Price ") for the Shares will be an amount equal to the Closing
Date Purchase Price, as adjusted pursuant to Sections 2.3(b)
through (g). At the Closing, the life insurance policies
described in Section 11.1, and the season tickets to the Dallas
Cowboys and the related bonds (collectively, the " Excluded
Assets ") shall be excluded from the Contemplated Transactions
and distributed to Sellers prior to the Closing Date.
2.3
Payment.
The Purchase Price shall be paid by Buyer to Sellers’
Representatives on behalf of each Seller, by wire transfer of
immediately available funds to an account designated by each
respective payee, as follows:
(a)
Closing Date Purchase Price . The Closing Date
Purchase Price shall be payable in cash at the Closing by wire
transfer of immediately available funds, as follows:
(i)
the Escrow Amount shall be paid to the Escrow Agent to be held
in accordance with the terms of the Escrow Agreement;
(ii)
the entire payoff amount due and payable to those financial
institutions who hold evidence of Outstanding Debt, as more
specifically described in Schedule 2.3(a)(ii), shall be paid to
such institutions; and
(iii)
the balance shall be paid to Sellers’ Representatives.
(b)
Payment of Adjustment for Change in Final Net Asset Value
. Within three (3) Business Days of the determination of the
Final Closing Financial Statements, (1) if the Final Net Asset
Value is less than the Estimated Final Net Asset Value, Sellers
shall pay the difference to Buyer by wire transfer of immediately
available funds to an account designated by Buyer, and (2) if
the Final Net Asset Value is more than the Estimated Final Net
Asset Value, Buyer shall pay the difference to the Sellers’
Representatives by wire transfer of immediately available funds to
an account designated by Sellers’ Representatives.
(c)
Payment of Adjustment for Final Adjusted EBITDA .
Within three (3) Business Days of determination of the Final
Closing Financial Statements, if the Final Adjusted EBITDA is less
than Nine Million Five Hundred Dollars ($9,500,000), Sellers shall
pay to Buyer by wire transfer of immediately available funds to an
account designated by Buyer an amount equal to (i) 9.66, multiplied
by (ii) such difference.
(d)
Determination of Final Net Asset Value and Final Adjusted
EBITDA .
(i)
Within ninety (90) days following the Closing Date, Sellers
shall, at Sellers’ sole cost and expense (to the extent not
accrued and included in the determination of Final Net Asset
Value), cause McGladrey & Pullen LLP (" McGladrey ") to
deliver to Buyer and Sellers audited financial statements for the
Company as of the Effective Time (the " Final Closing Financial
Statements ") and a certificate stating the Final Adjusted
EBITDA and the Final Net Asset Value as of the Effective Time
prepared pursuant to the policies and procedures described in
Schedules 1 and 2 (the " McGladrey Certificate "). The
Final Closing Financial Statements shall be prepared in accordance
with GAAP, applied on a basis consistent with the methodology used
in prior periods and shall fairly present the financial condition
of the Company, and shall reflect the results of the physical
inventory at the Facilities located in Dallas, Texas and New
Rochelle, New York, and the perpetual inventory used for the
Cheyenne, Wyoming Facility. Sellers shall cause McGladrey to
afford Buyer and Sellers reasonable access to the data and
information on which the Final Closing Financial Statement and the
McGladrey Certificate are premised. Buyer shall have the
Final Closing Financial Statements and the McGladrey Certificate
reviewed, at Buyer's sole cost and expense, by Deloitte &
Touche LLP.
(ii)
Provided Buyer takes into consideration and applies the policies
and procedures described in Schedules 1 and 2, if Buyer disagrees
with the Final Closing Financial Statements or the determinations
in the McGladrey Certificate, Buyer shall within thirty (30) days
following receipt of the Final Closing Financial Statements and the
McGladrey Certificate, notify Sellers’ Representatives as to
Buyer’s specific objection or objections; provided, however,
Buyer shall not be permitted make any objection or objections
unless the aggregate amount in controversy arising out of all such
objections is in excess of fifty thousand dollars ($50,000). Buyer
and Sellers’ Representatives shall use their Best Efforts to
resolve these objections within forty-five (45) days following the
receipt of the Final Closing Financial Statements and the McGladrey
Certificate. If Buyer and Sellers’ Representatives do
not reach a final resolution within such forty-five (45) day
period, they shall submit the disputed matter to binding
arbitration by the Dallas, Texas office of Grant Thornton (or,
should Grant Thornton fail to so serve, any other nationally
recognized independent accounting firm approved by Buyer and
Sellers’
Representatives). Buyer and Sellers shall share equally in
the cost of such arbitration. The arbitration will concern,
and the arbitrator will consider, only those items and amounts in
dispute between Buyer and Sellers’ Representatives and may
not assign or value any item greater than the greatest value for
such item claimed by Buyer or Sellers’ Representatives, or
less than the smallest value for such item claimed by Buyer or
Sellers’ Representatives. The arbitrator's
determination will be based solely on written presentations by
Buyer and Sellers’ Representatives, and the arbitrator shall
not be permitted (absent mutual written agreement of Buyer and
Sellers’ Representatives to the contrary) to make any
independent inquiry. Absent mutual written agreement of Buyer
and Sellers’ Representatives, or order of the arbitrator,
neither Buyer nor Sellers’ Representatives shall be permitted
to conduct discovery in the manner of a dispute being litigated in
a court of competent jurisdiction. Such prohibition shall
include without limitation the taking of depositions; the service
of written interrogatories, requests for production of documents or
requests for admission; and the testimony of live witnesses.
The determination of the arbitrator shall be binding and
conclusive on the parties as to the items and amounts presented.
The amount of Final Net Asset Value and Final Adjusted
EBITDA, as finally determined pursuant to this Section 2.3(d), are
referred to herein as the " Final Net Asset Value " and the
" Final Adjusted EBITDA ," respectively.
(e)
Emerson Lawsuit . Within three (3) Business Days of
APW collecting any judgment in the Emerson Lawsuit, Buyer shall pay
to Sellers’ Representatives, as additional Purchase Price, an
amount equal to (i) the amount, if any, so collected by APW, minus
all Litigation Expenses related to the Emerson Lawsuit incurred by
APW after the Effective Time and not reimbursed by Sellers, minus
the payments made pursuant to Section 11.7, multiplied by (ii) one
(1) minus the Applicable Tax Rate (to be determined after taking
into consideration any applicable federal or state tax loss
carryforwards). Sellers’ Representatives shall make all
decisions and control the proceedings relating to the Emerson
Lawsuit, and Buyer shall, and shall cause APW, to cooperate with
Sellers’ Representatives and do everything reasonably deemed
necessary or appropriate by Sellers’ Representatives in
connection with collecting the judgment awarded in the Emerson
Lawsuit. If, for any reason, within one hundred eighty (180)
days of the date that a final, non-appealable decision in the
Emerson Lawsuit has been rendered, the amount of the judgment
collected, if any, is insufficient to reimburse APW for the
Litigation Expenses incurred after the Effective Time, Sellers
shall pay to Buyer an amount equal to (i) the amount of such
Litigation Expenses, multiplied by (ii) one (1) minus the
Applicable Tax Rate, and such payment shall be deemed a reduction
in the Purchase Price.
(f)
Multiemployer Pension Plan Withdrawal Liability .
Within three (3) Business Days of the date the
Withdrawal Liability has been completely paid, Buyer shall pay to
Sellers’ Representatives, as additional Purchase Price, an
amount equal to the difference, if any, between (i) the Effective
Time Withdrawal Liability, minus
all Litigation Expenses related to the resolution of the amount
payable by Bakers Pride in connection with the Withdrawal Liability
incurred by Bakers Pride after the Effective Time and not
reimbursed by Sellers, and (ii) the amount actually paid by Bakers
Pride in connection with the Withdrawal Liability.
Sellers’ Representatives shall make all decisions and
control the proceedings relating to the Withdrawal Liability, and
Buyer shall, and shall cause Bakers Pride, to cooperate with
Sellers’ Representatives and do everything reasonably deemed
necessary or appropriate by Sellers’ Representatives in
connection with reducing the amount payable in respect of the
Withdrawal Liability. If, for any reason, at the time the
Withdrawal Liability is paid, the difference between the Effective
Time Withdrawal Liability and the Withdrawal Liability is
insufficient to reimburse Bakers Pride for the Litigation Expenses
incurred after the Effective Time, Sellers shall pay to Buyer an
amount equal to (i) the amount of such Litigation Expenses,
multiplied by (ii) one (1) minus the Applicable Tax Rate, and such
payment shall be deemed a reduction in the Purchase Price.
Notwithstanding anything contained in this Agreement to the
contrary, Sellers, jointly and severally, shall indemnify and hold
Buyer harmless against any and all costs, claims, liabilities,
expenses, actions and proceedings arising on and after the Closing
Date with respect to any increases in demands, assessments or
payments from the first dollar arising out of, directly or
indirectly, or in connection with the Withdrawal Liability.
This indemnification shall survive until full and final
resolution and satisfaction of the Withdrawal Liability.
(g)
The Chino Sublease . Within three (3) Business Days
of the date that the amount due and payable pursuant to the
Section 2.3(g) can be finally determined, but in any event on or
before June 5, 2007, Buyer shall pay to Sellers’
Representatives, as additional Purchase Price, an amount equal to
(i) the Effective Time Chino Lease Liability, minus the amount
actually paid by Bevles under the Chino Lease, plus the amount
actually paid to Bevles under the Chino Sublease, minus all
Litigation Expenses related to collecting the amounts due and
payable to Bevles under the Chino Sublease incurred by Bevles after
the Effective Time and not reimbursed by Sellers, multiplied by
(ii) one (1) minus the Applicable Tax Rate (to be determined after
taking into consideration any applicable federal or state tax loss
carryforwards).
2.4
Closing.
The closing of the purchase and sale (the "Closing") provided
for in this Agreement will take place at the offices of Gardere
Wynne Sewell LLP at 1601 Elm Street, 3000 Thanksgiving Tower,
Dallas, Texas 75201 at 10:00 a.m. (local time) on the date first
above written. Subject to Section 9, failure to consummate
the purchase and sale provided for in this Agreement on the date
and time and at the place determined pursuant to this Section 2.4
will not result in the termination of this Agreement and will not
relieve any party of any obligation under this Agreement.
2.5
Closing Obligations.
At the Closing:
(a)
Sellers’ Representatives will deliver to Buyer:
(i)
certificates representing all of the issued and outstanding
Shares of the Company, duly endorsed (or accompanied by duly
executed stock powers) by the applicable Sellers for transfer to
Buyer; and
(ii)
such other instruments or documents in form and substance as may
be reasonably necessary and satisfactory to Buyer to consummate the
Contemplated Transactions and to comply with the terms of this
Agreement.
(b)
Buyer will deliver to Sellers’ Representatives the Closing
Date Purchase Price.
ARTICLE 3
REPRESENTATIONS AND
WARRANTIES OF SELLERS
Each Seller, jointly and severally, represents and warrants to
Buyer as follows:
3.1
Organization and Good Standing.
Schedule 3.1 contains a complete and accurate list of the
respective jurisdictions of incorporation of each Group Member and
each other jurisdiction in which each Group Member is authorized to
do business. Each Group Member is a corporation duly
organized, validly existing, and in good standing under the laws of
its respective jurisdiction of incorporation, with full corporate
power and authority to conduct its respective business as it is now
being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under
Applicable Contracts. Each Group Member is duly qualified to
do business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such
qualification, except where the failure to be so qualified or be in
good standing would not have a Material Adverse Change.
3.2
Authority; No Conflict.
(a)
This Agreement constitutes the legal, valid, and binding
obligation of Sellers, enforceable against Sellers in accordance
with its terms. Sellers have the absolute and unrestricted
right, power, authority, and capacity to execute and deliver this
Agreement and to perform their obligations under this Agreement.
The foregoing representations and warranties, however, are
limited to the extent that the enforceability of this Agreement may
be limited by:
(i)
bankruptcy, insolvency, reorganization, liquidation, moratorium,
receivership, fraudulent conveyance or other similar laws affecting
the enforcement of creditors' rights and remedies generally;
and
(ii)
judicial limitations on the enforcement of the remedy of
specific performance and injunctive and other forms of equitable
relief.
(b)
Except as set forth in Schedule 3.2, neither the execution and
delivery of this Agreement nor the consummation or performance of
any of the Contemplated Transactions will:
(i)
contravene, conflict with, or result in a violation of
(A) any provision of the Organizational Documents of any Group
Member, or (B) any resolution adopted by the board of
directors or the stockholders of any Group Member;
(ii)
give any Governmental Body the right to challenge any of the
Contemplated Transactions (to Sellers’ Knowledge) or to
exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which any Group Member or any Seller
may be subject;
(iii)
contravene or result in a violation or breach of any provision
of, or give any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any Applicable Contract; or
(iv)
result in the imposition or creation of any Encumbrance upon or
any of the assets owned by any Group Member.
(c)
Except as set forth in Schedule 3.2, no Seller or Group Member
is or will be required to give any notice to or obtain any material
Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of
the Contemplated Transactions.
3.3
Capitalization.
(a)
The authorized equity securities of the Company is set forth on
Schedule 3.3(a). Sellers will be on the Closing Date the
record owners of their respective Shares, free and clear of all
Encumbrances. All of the outstanding equity securities and
other securities of Company are owned of record by Sellers.
All of the outstanding equity securities of the Company have
been duly authorized and validly issued and are fully paid and
non-assessable. There are no Contracts relating to the
issuance, sale, or transfer by the Company of any equity securities
or other securities of the Company. There are no outstanding
or authorized options, warrants, rights, agreements or commitments
to which either the Company or any of Sellers is a party or which
are binding upon the Company providing for the issuance,
disposition or acquisition of any of its capital stock. There
are no outstanding or authorized stock appreciation, phantom stock
or
similar rights with respect to the Company. There are no
agreements, voting trusts, proxies, or understandings with respect
to the voting, or registration under the Securities Act, of any
Shares. All of the issued and outstanding Shares were issued
in compliance with applicable federal and state securities
laws.
(b)
The authorized equity securities of each Company Subsidiary is
set forth on Schedule 3.3(b). The Company owns all of the
outstanding shares of capital stock of each Company Subsidiary.
3.4
Financial Statements.
Sellers have delivered to Buyer (a) audited financial statements
of the Company for the fiscal years 2004 and 2005, including the
balance sheets as of such dates and the related audited
consolidated statements of income and cash flow for each of the
fiscal years then ended, including the notes thereto, (b) an
unaudited, consolidated balance sheet of the Company as of August
31, 2006 (the " Interim Balance Sheet ") and the related
unaudited, consolidated statements of income and cash flow for the
eight months then ended, and (c) unaudited consolidated statements
of income and cash flow for the periods ending after August 31,
2006 through the Effective Time. Such financial statements
and notes fairly present the financial condition and the results of
operations and cash flow of the Company as at the respective dates
of and for the periods referred to in such financial statements,
all in accordance with GAAP, subject, in the case of interim
financial statements, to normal recurring year-end adjustments and
the absence of notes. The financial statements referred to in
this Section 3.4 reflect the consistent application of such
accounting principles throughout the periods involved, except as
disclosed in the notes thereto.
3.5
Books and Records.
The books of account, minute books, stock record books, and
other records of each Group Member are complete and correct in all
material respects and have been maintained in accordance with
commercially reasonable business practices. The minute books
of each Group Member contain materially accurate and complete
records of all meetings held of, and corporate action taken by, the
stockholders, the Boards of Directors, and committees of the Boards
of Directors of such Group Member.
3.6
Title to Properties; Encumbrances.
Schedule 3.6 contains a complete and accurate list of all
Facilities. Each Group Member owns (with good, marketable and
insurable title in fee simple in the case of real property, subject
only to the matters permitted by the following sentence) all the
properties and assets (whether real, personal, or mixed and whether
tangible or intangible) located in the Facilities (except as set
forth in Schedule 3.6) and reflected as owned in the books and
records of the Group Members, including all of the properties and
assets reflected in the Interim Balance Sheet, except for
properties and assets (i) purchased or otherwise acquired by the
Group Members since the date of the Interim Balance Sheet and (ii)
sold since the date of the Interim Balance Sheet in the Ordinary
Course of Business and consistent with past practice. All
material properties and assets reflected in the Interim Balance
Sheet will be free and clear of all Encumbrances as of the
Closing and are not, in the case of the Facilities, subject to
any rights of way, building use restrictions, exceptions,
easements, variances, reservations, or limitations of any nature
except (a) mortgages or security interests shown on the
Interim Balance Sheet as securing specified liabilities or
obligations, with respect to which no default or event that, with
notice or lapse of time or both, would constitute a default,
exists, (b) mortgages or security interests incurred in
connection with the purchase of property or assets after the date
of the Interim Balance Sheet (such mortgages and security interests
being limited to the property or assets so acquired), with respect
to which no default or event that, with notice or lapse of time or
both, would constitute a default, exists, (c) liens for
current taxes not yet due, (d) with respect to the Facilities,
minor imperfections of title, if any, none of which is substantial
in amount, materially detracts from the value or impairs the use of
the Facilities, or impairs the operations of the Group Members, and
zoning laws and other land use restrictions that do not impair the
present use of the property subject thereto, (e) as set forth in
the existing title insurance policies as updated
by Abstractor's Certificates or Continuations of Title (as
applicable) or commitments and ALTA or boundary surveys,
in each case delivered by Sellers to Buyer immediately prior to the
Closing, and (f) as set forth in the existing title insurance
policies as updated by Abstractor's Certificates or
Continuations of Title (as applicable) or commitments and
ALTA or boundary surveys, in each case delivered by Sellers to
Buyer after the Closing, unless any document so delivered discloses
an Encumbrance that would have a Material Adverse Change. To
Sellers’ Knowledge, there have been no violations of any
restrictive covenants filed of record with respect to the
Group’s Wyoming Facility, except any such violations that
would not have a Material Adverse Change.
Neither the whole nor any portion of any of the Facilities has
been condemned, requisitioned or otherwise taken by any public
authority since January 1, 2006, and no notice of any such
condemnation, requisition or taking has been received by any Group
Member.
To Sellers’ Knowledge, the current use and operation of
the Facilities is in compliance in all material requests with all
applicable laws (other than Environmental Laws which are separately
addressed in Section 3.17), including without limitation laws
relating to parking, zoning and land use, and public and private
covenants and restrictions. The Group Members have not
received written notice of non-compliance with any applicable laws
that has not been cured, except to the extent any such
non-compliance would not have an Material Adverse Change.
3.7
Condition of Assets.
The buildings, plants, structures, machinery, tools, dies,
furniture, fixtures and equipment of the Company are structurally
sound and are in good and serviceable operating condition and
repair, ordinary wear and tear excepted. None of such
buildings, plants, structures, machinery, tools, dies, furniture,
fixtures or equipment is in need of maintenance or repairs except
for ordinary, routine maintenance and repairs that are not material
in nature or cost. All such buildings, plants, structures,
machinery, tools, dies, furniture, fixtures and equipment are
sufficient to carry on the business of each Group Member as it is
currently conducted.
3.8
No Undisclosed Liabilities.
The Company has no material liabilities or obligations of any
nature (whether Threatened, known or unknown and whether absolute,
accrued, contingent, or otherwise) that are required to
be reflected in the Company’s financial statements except
for (a) liabilities or obligations reflected or reserved against in
the Interim Balance Sheet, (b) current liabilities incurred since
the Interim Balance Sheet in the Ordinary Course of Business since
the date thereof and which are comparable in type and amount to
liabilities for prior periods, and (c) liabilities reflected in the
Final Closing Financial Statements.
3.9
Taxes.
(a)
Except as set forth in Schedule 3.9(a), each Group Member has
filed on a timely basis all Tax Returns that are or were required
to be filed by or with respect to it, pursuant to applicable Legal
Requirements. All such Tax Returns were true, complete and
correct in all material respects. The Group Members have paid
all Taxes due and payable and made provision for the payment of all
Taxes for which any Group Member has received an assessment but
that are not yet due and payable.
(b)
Schedule 3.9(b) contains a complete and accurate list of all
audits of all such Tax Returns, including a reasonably detailed
description of the nature and outcome of each audit. There
have been no deficiencies proposed as a result of such
audits. No Group Member has given or been requested to give
waivers or extensions (or is or would be subject to a waiver or
extension given by any other Person) of any statute of limitations
relating to the payment of Taxes of the Group or for which any
Group Member may be liable.
(c)
All Tax amounts required to be withheld by any Group Member, and
the portion of any such taxes to be paid by any Group Member to any
Governmental Body, have been collected or withheld and either paid
to the appropriate Governmental Body or set aside in accounts for
such purpose or reserved against or made adequate provision for in
the financial statements of the responsible Group Member.
(d)
All foreign, state and local jurisdictions where any Group
Member has filed Tax Returns for 2005 are set forth in Schedule
3.9(d). No Group Member has received any claim from any
Governmental Body in any jurisdiction that such Group Member is or
may be subject to taxation by such jurisdiction.
(e)
The Company is not a party to any Tax allocation or sharing
agreement and no Group Member has any liability for Taxes of any
other Person (other than another Group Member) and is not otherwise
liable or obligated to indemnify any Person (other than another
Group Member) with respect to any Taxes.
3.10
No Material Adverse Change.
Since August 31, 2006, the Company has not suffered any Material
Adverse Change, nor has there been any Threatened Material Adverse
Change.
3.11
Employee Benefits.
Schedule 3.11 contains a complete and accurate list of all
Company Plans and other Benefit Obligations of the Company and
identifies as such all Company Plans that are defined benefit
Pension Plans, Qualified Plans, or Multi-Employer Plans
(collectively for the purposes of this Section 3.11, the "
Plans "). The Company has performed in all material
respects all of its obligations under all Company Plans and other
Benefit Obligations of the Company. The Company has made
appropriate entries in its financial records and statements for all
material obligations and liabilities under such Company Plans and
other Benefit Obligations that have accrued but are not due; and
the Company, with respect to all Company Plans and other Benefits
Obligations of the Company, and each Company Plan and other Benefit
Obligation of the Company, is in compliance in all material
respects with ERISA, the IRC, and other applicable laws including
the provisions of such laws expressly mentioned in this Section
3.11, and with any applicable collective bargaining agreement.
The Company has complied with all provisions, rules,
regulations and legislation relating to funding requirements for
the Company Plans. No past service funding liabilities exist
under the Company Plans. The current value of all accrued
benefits under each of the Company Plans did not, as of the latest
valuation date, exceed the then current value of the assets of the
Company Plans allocable to such accrued benefits based upon the
actuarial methods and assumptions used for the Company Plans.
All Company Plans have been duly authorized by the Board of
Directors of the Company. No termination or partial
termination has occurred with respect to the Company Plans that has
resulted in any material liability. There are no pending or
Threatened audits or investigations by any Governmental Body with
respect to any Company Plan.
Copies of each Company Plan, any amendments thereto and any
trust agreement and contracts or insurance policies relating to
such Company Plan have been delivered to Buyer. Copies of the
documentation and material correspondence directly related to the
Company Plans have been delivered to Buyer.
Sellers represent and warrant that no Group Member, other than
the Company, has sponsored, maintained or contributed at any time
during the preceding five years to any plan, program, fund or
arrangement that constitutes a defined benefit Pension Plan, a
Qualified Plan or a Multi-Employer Plan.
Neither Sellers nor any Group Member has made any promises of
welfare benefit plans, within the meaning of Section 3(1) of ERISA
that provides for continuing benefits or coverage for any former
employees or retirees of any of the Group Members including but not
limited to retiree medical benefits.
3.12
Compliance with Legal Requirements; Governmental
Authorizations.
Except as set forth in Schedule 3.12 or as would not have a
Material Adverse Change:
(a)
each Group Member is in full compliance with each Legal
Requirement that is or was applicable to it or to the conduct or
operation of its business or the ownership or use of any of its
assets;
(b)
no event has occurred or circumstance exists that constitutes or
results in a violation or Threatened violation by any Group Member
of, or a failure on the part of a Group Member to comply with, any
Legal Requirement ;
(c)
no Group Member has received, at any time since January 1, 2001,
any written notice or other communication from any Governmental
Body regarding (A) any actual, alleged, possible, or potential
violation of, or failure to comply with, any Legal Requirement, or
(B) any actual, alleged, possible, or potential obligation on the
part of any Group Member to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature except as
disclosed on Schedule 3.12; and
(d)
Schedule 3.12 contains a complete and accurate list of each
Governmental Authorization that is held by each Group Member.
Unless by its terms it is non-transferable, each such
Governmental Authorization shall remain in full force and effect
after the Closing Date.
To the Knowledge of Sellers, the Governmental Authorizations
listed in Schedule 3.12 collectively constitute all of the material
Governmental Authorizations necessary to permit each Group Member
to lawfully conduct and operate its business in the manner it
currently conducts and operates such business and to permit the
Group Member to own and use its assets in the manner in which its
currently owns and uses such assets.
Notwithstanding anything to the contrary set forth in this
Section 3.12, none of the representations and warranties set forth
in this Section 3.12 is intended or shall be construed to apply to
any matter relating to Environmental Laws, Occupational Safety and
Health Laws or any laws relating to employment practices, which
matters are addressed in Sections 3.17 and 3.18, respectively.
3.13
Legal Proceedings; Orders.
(a)
Except as set forth in Schedules 3.13 and 3.17, there is no
pending or Threatened Proceeding:
(i)
that has been commenced by or against any Group Member; or
(ii)
that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
(b)
Except as set forth in Schedule 3.13:
(i)
there is no Order to which any Group Member, or any of the
assets owned by any Group Member, is subject; and
(ii)
no Seller is subject to any Order that relates to the business
of, or any of the assets owned or used by, any Group Member.
3.14
Absence of Certain Changes and Events.
Except as set forth in Schedule 3.14 or as otherwise
specifically contemplated by this Agreement, since the date of the
Interim Balance Sheet, each Group Member has conducted its business
only in the Ordinary Course of Business and there has not been
any:
(a)
change in the Company's authorized or issued capital stock,
grant of any stock option or right to purchase shares of capital
stock of the Company; issuance of any security convertible into
such capital stock, grant of any registration rights, grant of
options, warrants or stock awards, purchase, redemption,
retirement, or other acquisition by the Company of any shares of
any such capital stock, or declaration or payment of any dividend
or other distribution or payment in respect of shares of capital
stock;
(b)
amendment to the Organizational Documents of the Company;
(c)
except in the Ordinary Course of Business, payment or increase
by the Company of any bonuses, salaries, loans, perquisites,
severance arrangements or other compensation to any stockholder,
director, officer, or employee or entry into any employment,
severance, or similar Contract with any director, officer, or
employee;
(d)
adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for
or with any employees of the Company;
(e)
damage to or destruction or loss of any asset or property of any
Group Member, whether or not covered by insurance, which would
cause a Material Adverse Change to the properties, assets, business
or financial condition of the Group;
(f)
except in the Ordinary Course of Business, entry into,
termination of, or receipt of notice of termination of (i) any
license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any Contract or
transaction involving a total remaining commitment by or to a Group
Member of at least $50,000 or a term in excess of twelve (12)
months;
(g)
material change in the accounting methods or principles or
practices used by the Company;
(h)
payment of long term debt except as in accordance with the
normal scheduled maturities for any long term debt;
(i)
grant or making of any mortgage or pledge or subject itself or
any of its properties or assets (tangible or intangible) to any
claim, lien, charge or encumbrance of any kind (absolute or
contingent), except liens for Taxes not currently due;
(j)
making of any commitment or incurring of any liability, through
negotiations or otherwise, to any labor organization which could
have a Material Adverse Change;
(k)
increase or establishment of any reserve for Taxes or other
liabilities on its books or otherwise provide therefor, except for
Taxes or other liabilities relating to the Ordinary Course of
Business of the Company since the date of the Interim Balance
Sheet; or write up or down the value of inventory or determine as
collectable any notes or accounts receivable that were previously
considered to be uncollectible, except for write-ups or write-downs
in accordance with GAAP in the Ordinary Course of Business
consistent with past practice;
(l)
making or authorizing of any capital expenditure in excess of
$100,000 for any individual commitment, except as may be necessary
for ordinary repair, maintenance or replacement;
(m)
entry into any contract, except in the Ordinary Course of
Business, for the sale of goods or the performance of services for
or by the Company that is not terminable upon sixty (60) days
notice or less; entry into any contract continuing for a period of
more than three months from its date that is not terminable upon
sixty (60) days notice or less; entry into any agreement or
instrument, except in the Ordinary Course of Business, relating to
the borrowing or lending of money or extension of credit, guarantee
or indemnitee of any Person with respect to any obligation for
borrowed money or otherwise, excluding endorsements made for
collection; or making or permitting to be made any amendment,
modification, cancellation or termination of any material contract,
agreement, lease, license, finance agreement or written evidence of
indebtedness, except for the renewal of lines of credit in place as
of the date hereof, in an amount and on terms consistent with past
practice of the Company; or
(n)
taking of any action that would cause any of the representations
contained herein to be untrue.
3.15
Applicable Contracts; No Defaults.
(a)
Schedule 3.15(a) contains a complete and accurate list of the
following executory Contracts to which any Group Member is a party
(each, an " Applicable Contract "):
(i)
each Contract that involves performance of services or delivery
of goods or materials by the Group of an amount or value in excess
of $100,000;
(ii)
each Contract that involves performance of services or delivery
of goods or materials to the Group of an amount or value in excess
of $100,000;
(iii)
each Contract that was not entered into in the Ordinary Course
of Business and that involves expenditures by or receipts of the
Group in excess of $50,000;
(iv)
each Contract that involves the furnishing of goods or services
which cannot be cancelled, without penalty, on sixty (60) days or
less notice and which affects the ownership of, leasing of, title
to, use of, or any leasehold or other interest in, any real or
personal property (except personal property leases and installment
and conditional sales agreements having a value per item or
aggregate payments of less than $50,000 and with terms of less than
one year);
(v)
each Contract containing covenants that in any way purport to
restrict the business activity of any Group Member or limit the
freedom of any Group Member to engage in any line of business or to
compete with any Person;
(vi)
each Contract for capital expenditures in excess of
$100,000;
(vii)
each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by the
Group other than in the Ordinary Course of Business;
(viii)
each Contract guaranteeing any indebtedness obligation or
liability of a Person other than a Group Member;
(ix)
each Contract involving a joint venture, partnership or other
cooperative arrangement or any other agreement involving a sharing
of profits;
(x)
each Contract which contains any provisions requiring any Group
Member to indemnify any other Person other than in the Ordinary
Course of Business;
(xi)
except in the Ordinary Course of Business, each Contract
obligating the Group to sell or deliver any product or service at a
price which does not cover the cost (including labor, materials and
production overhead) plus the Group’s customary profit margin
associated therewith;
(xii)
each Contract concerning confidentiality or non-competition,
other than in the Ordinary Course of Business; and
(xiii)
each amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.
The Company has provided true and correct copies of all
Applicable Contracts to Buyer. No notice of material
default arising under any Applicable Contract has been delivered to
or by the Group. Except as set forth in Schedule 3.15, the
transfer of the Shares contemplated by this Agreement will not
result in any default, penalty or modifications to any such
Applicable Contract.
(b)
Each Applicable Contract is a legal, valid and binding
obligation of the Group and, to Sellers’ Knowledge, each
other party thereto, enforceable against each such party thereto in
accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ rights generally and
subject to general principles of equity.
(c)
Except as set forth in Schedule 3.15(c):
(i)
each Group Member is in compliance with all applicable terms and
requirements of each Applicable Contract under which it has or had
any obligation or liability, except where such non-compliance would
not have a Material Adverse Change; and
(ii)
each Group Member has not given to or received from any other
Person any notice or other communication regarding any actual,
Threatened or alleged violation or breach of, or default under, any
Applicable Contract.
3.16
Insurance.
The Company has delivered to Buyer true and complete copies of
all policies of insurance to which any Group Member is a party.
Schedule 3.16 describes any self-insurance arrangement by or
affecting the Group, including any reserves established thereunder.
Except as set forth on Schedule 3.16:
(a)
All policies to which any Group Member is a party:
(i)
to Sellers’ Knowledge, are valid, outstanding, and
enforceable and shall so remain through the Closing Date (except to
the extent any such policy expires and is renewed in the Ordinary
Course of Business);
(ii)
to Sellers’ Knowledge, are sufficient for compliance with
all Legal Requirements and Contracts to which any Group Member is a
party; and
(iii)
do not provide for any retrospective premium adjustment or other
experienced-based liability on the part of the Group Members.
(b)
The Group has paid all premiums due, and has otherwise performed
all of its obligations, under each policy to which any Group Member
is a party or that provides coverage to the Group or director
thereof, and no event has occurred which, with notice or the lapse
of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policies.
3.17
Environmental Matters.
Except as set forth in Schedule 3.17:
(a)
There are no pending or, to the Knowledge of Sellers, Threatened
claims resulting from any Environmental, Health, and Safety
Liabilities or arising under or pursuant to any Environmental Law,
with respect to or affecting any of the Facilities or the
Group.
(b)
Each Group Member is in compliance in all material respects with
all present interpretations of, or enforcement policies applicable
to, Environmental Laws and Occupational Safety and Health Laws.
(c)
At no time did any Group Member release on, upon, adjacent to,
or into any of the Facilities, substances in violation of
Environmental Laws or Occupational Safety and Health Laws or which
would cause a Material Adverse Change in the Facilities or the
financial operations of the Group.
(d)
Each Group Member has in full force and effect all Governmental
Authorizations required by all applicable Environmental Laws for
the operation of its respective business and is in material
compliance with the terms and conditions of such Governmental
Authorizations.
(e)
No Group Member is subject to any decree, order, writ, judgment
or injunction issued pursuant to, and to the Sellers' Knowledge, is
not the subject of any pending or Threatened investigation under
any, applicable Environmental Laws.
(f)
To Sellers’ Knowledge, there has been no Hazardous
Activity at any of the Facilities (except in material compliance
with or which have been remediated in material compliance with
applicable Environmental Laws at any of the Facilities).
(g)
Buyer has been provided with, in the course of due diligence
inquiry, full and accurate disclosure of all material known or
Threatened Environmental, Health and Safety Liabilities, and full
and accurate documentation regarding the Group’s policies,
procedures and operations in connection with Environmental
Laws.
3.18
Employees.
Schedule 3.18 contains (a) a complete and accurate list, as of
December 18, 2006, of the name, job title (to the extent
applicable), and current rate of compensation for each Group
employee, officer and director, and (b) a list of each such
employee/officer who has entered into a contract for employment or
a confidentiality/assignment of inventions agreement with any Group
Member, a copy of which has been provided to Buyer. Except as
set forth in Schedule 3.18, to Sellers’ Knowledge, no
employee with annual compensation in excess of seventy-five
thousand dollars ($75,000) or group of at least five (5)
employees has any plans to terminate employment with the Group.
There are no controversies pending or, to the Knowledge of
Sellers, Threatened controversies involving any employee with
annual compensation in excess of seventy-five thousand dollars
($75,000) or any group of at least five (5) employees of the Group.
Each Group Member is in compliance in all material requests
with all applicable federal, state and municipal Occupational
Safety and Health Laws concerning or affecting employees of the
Group.
Except as set forth on Schedule 3.18, no Group Member has been
since January 1, 2004, or is, subject to any adverse rulings,
findings or determinations of unlawful employment practices or
violations of other related statutes, and Sellers have not received
any written notice of any pending or Threatened investigation,
Proceeding, labor dispute or litigation relating to any unlawful
employment practice claim or claims or violations of other related
statutes, executive orders or administrative determinations or
regulations.
3.19
Labor Relations; Compliance.
Except as set forth on Schedule 3.19, no Group Member is a party
to any collective bargaining Contract. Since January 1, 2004,
there has not been, there is not presently pending or existing, and
to Sellers' Knowledge there is not Threatened, (a) any strike,
slowdown, picketing, work stoppage, or employee grievance process,
(b) any Proceeding against or affecting the Group relating to the
alleged violation of any Legal Requirement pertaining to labor
relations or employment matters, including any charge or complaint
filed by an employee or union with the National Labor Relations
Board or the Equal Employment Opportunity Commission, or (c) any
application for certification of a collective bargaining agent.
There is no lockout of any employees by the Group, and no
such action is contemplated by the Group.
3.20
Intellectual Property.
(a)
Patents.
(i)
Schedule 3.20(a) contains a complete and accurate list of all
Patents owned by each Group Member. Except for licenses
granted in the Applicable Contracts, each Group Member is the owner
of all right, title, and interest in and to each of its Patents,
free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims.
(ii)
All of the issued Patents owned by the Group are currently in
compliance with formal legal requirements (including payment of
filing, examination, and maintenance fees and proofs of working or
use) and are valid and enforceable.
(iii)
No Patent owned by the Group has been or is now involved in any
interference, reissue, reexamination, or opposition proceeding.
(iv)
To Sellers' Knowledge, no Patent owned by the Group is infringed
or has been challenged or Threatened in any way.
(b)
Marks.
(i)
Schedule 3.20(b) contains a complete and accurate list and
summary description of all Marks used by each Group Member.
Except for licenses granted in the Applicable Contracts, each
Group Member is the owner of all right, title, and interest in and
to each of its Marks, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse
claims.
(ii)
All Marks owned by the Group that have been registered with the
United States Patent and Trademark Office are currently in
compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and incontestability
and renewal applications) and are valid and enforceable.
(iii)
No Mark owned by the Group has been or is now involved in any
opposition, invalidation, or cancellation Proceeding and, to
Sellers' Knowledge, no such action is Threatened with the respect
to any of such Marks.
(iv)
To Sellers' Knowledge, there is no trademark or trademark
application of any third party that potentially interferes with any
Mark of the Group.
(v)
To Sellers' Knowledge, no Mark owned by the Group is infringed
or has been challenged or Threatened in any way.
(c)
Copyrights. No Group Member has any registered
Copyrights.
(d)
Royalties. The Company does not pay any royalty to any
Person in connection with the property described in this Section
3.20.
3.21
Brokers or Finders.
Sellers and their agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with
this Agreement other than in connection with an agreement with
Houlihan Lokey Howard & Zukin. Any payments to Houlihan
Lokey Howard & Zukin after the Effective Time shall be paid by
Sellers.
3.22
Product Warranty.
Schedule 3.22 hereto contains an accurate and complete statement
of all written warranties, warranty policies, service, subscription
and maintenance agreements of the Group. To Sellers’
Knowledge, there are no material warranty liabilities or recalls of
the Group’s products, and no claims for service, repair,
replacement, refund, recall or claims for other product-related
remedies that are pending, or are reasonably anticipated to be
presented with respect to the Group’s products.
3.23
Product Liability.
Schedule 3.23 contains a complete and accurate list and summary
description of all liabilities, claims or obligations, absolute or
(to Sellers’ Knowledge) contingent, pending or (to
Sellers’ Knowledge) Threatened or otherwise arising from or
alleged to arise from any actual or alleged injury to persons or
property as a result of the ownership, possession or use of any
product assembled or sold by the Group prior to the Effective Time,
including but not limited to any claims arising from or alleged to
arise from any actual or alleged exposure to asbestos and/or
asbestos containing materials. All such claims are fully
covered by product liability insurance subject to applicable
deductibles and available limits of coverage or if not are noted on
Schedule 3.23. To Sellers’ Knowledge, there are no
recalls, Threatened or pending, and no report has been filed or
required to have been filed with respect to any products of the
Group under any applicable statute or regulation.
3.24
Customers.
None of the customers of the Group identified on Schedule 3.24
has provided written notice to Sellers of its intention to
terminate its relationship with the Group or to substantially
reduce the amount of business it provides to the Group, and Sellers
do not have any Knowledge of any such intention unless identified
on Schedule 3.24.
3.25
Trade Secrets and Proprietary Information.
To Sellers’ Knowledge no use of the Trade Secrets owned by
the Company violates any trade secret rights of any other
Person.
3.26
Personal Property Leases.
There are no leases of personal property used by the Group
involving annual payments in excess of Twenty-Five Thousand Dollars
($25,000).
3.27
Related Party Interests.
Except as disclosed on Schedule 3.27, no Person in which any of
the Sellers has a direct or indirect interest or investment:
(a)
has any cause of action or other claim whatsoever against or
owes any amount to, or is owed any amount by any Group Member in
excess of $50,000;
(b)
has any interest in or owns any property or right used in the
conduct of the business of the Group;
(c)
is a party to any Contract with any Group Member;
(d)
received from or furnished to any Group Member any goods or
services other than employment services (with or without
consideration) since the date of the Interim Balance Sheet; or
(e)
owns, directly or indirectly, any debt, equity or other interest
or investments in any corporation, firm or other entity which is a
competitor, lessor, lessee, customer, supplier or advertiser of the
Group.
3.28
Delivery of Documents.
Complete copies of all notices and other instruments and
documents, including all amendments, supplements and modifications
thereto, listed in the Schedules to this Agreement have been
delivered to Buyer.
3.29
Truth of Representations and Warranties.
No representation or warranty by Sellers in this Agreement or in
the Schedules contains or will contain an untrue statement of fact
necessary to make the statements and facts contained therein not
misleading.
3.30
Books and Records.
All accounting books, ledgers, records, minute books, share
certificate books and corporate seals, where applicable, of the
Group and all other records of or concerning the Group are located
at the business premises of one or more of the Group Members.
ARTICLE 4
REPRESENTATIONS AND
WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1
Organization and Good Standing.
Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware.
4.2
Authority; No Conflict.
This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with
its terms. Buyer has the absolute and unrestricted right,
power, and authority to execute and deliver this Agreement and the
other agreements contemplated hereby and to perform its obligations
under this Agreement and such other agreements. Except with
regard to satisfying the HSR Act, Buyer is not and will not be
required to obtain any Consent from any Person in connection with
the execution and delivery of this Agreement or the other
agreements contemplated hereby or the consummation or performance
of any of the Contemplated Transactions.
4.3
Investment Intent.
Buyer is acquiring the Shares for its own account and not with a
view to their distribution within the meaning of Section 2(11) of
the Securities Act.
4.4
Certain Proceedings.
There is no pending Proceeding against Buyer and that
challenges, or may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Buyer's Knowledge, no such Proceeding has
been Threatened.
4.5
Available Funds.
Buyer has, or will have as of the Closing Date, sufficient funds
to perform all of its obligations under this Agreement, including,
without limitation, to make the payments required hereunder.
4.6
Brokers or Finders.
Buyer and its officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in
connection with this Agreement and will indemnify and hold
Sellers harmless from any such payment alleged to be due by or
through Buyer as a result of the action of Buyer or its officers or
agents.
ARTICLE 5
COVENANTS OF SELLERS PRIOR
TO CLOSING DATE
5.1
Access and Investigation.
Between the date of this Agreement and the Closing Date, Sellers
will, and will cause the Company and its Representatives to: (a)
afford Buyer and its Representatives and prospective lenders and
their Representatives (collectively, " Buyer's Advisors ")
reasonable access to the Company's properties, contracts, books and
records, and other documents and data, and will permit Buyer to
contact any third party from whom information is sought relevant to
the Contemplated Transactions; (b) furnish Buyer and Buyer's
Advisors with full and complete copies of all such contracts, books
and records, and other existing documents and data as Buyer may
reasonably request; (c) furnish Buyer and Buyer's Advisors with
such additional financial, operating, and other data and
information as Buyer may reasonably request; and (d) facilitate
Buyer’s due diligence visits with certain primary vendors and
customers of the Company as specifically provided for herein.
Notwithstanding the foregoing, any contact with employees,
vendors, and customers of the Group shall be made only with
Sellers’ prior approval and after all other due diligence has
been completed by Buyer and all other relevant materials issues
have been agreed to and concluded between the parties.
BUYER SHALL PROTECT, DEFEND, INDEMNIFY AND HOLD THE GROUP
MEMBERS AND THEIR AFFILIATES HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS AND LOSSES CAUSED DIRECTLY OR INDIRECTLY BY THE ACTS OR
OMISSIONS OF BUYER OR BUYER’S REPRESENTATIVES IN CONNECTION
WITH ANY DUE DILIGENCE CONDUCTED PURSUANT TO OR IN CONNECTION WITH
THIS AGREEMENT, INCLUDING ANY SITE VISITS AND ENVIRONMENTAL
SAMPLING. Buyer shall comply fully with all rules,
regulations, policies and instructions issued by the Group while
upon, entering or leaving any Group Member’s property,
including any insurance requirements that the Group may impose on
contractors authorized to perform work on any property owned or
operated by the Group. Buyer shall not unreasonably interfere
with the day-to-day operations of the business of the Group.
5.2
Operation of the Businesses of the Company.
Between the date of this Agreement and the Closing Date, Sellers
will, and will cause the Company to, use their Best Efforts to (a)
conduct business only in the Ordinary Course of Business, (b)
confer with Buyer concerning operational matters of a material
nature, and (c) otherwise report regularly and periodically to
Buyer concerning the status of the business, operations, and
finances of the Company.
5.3
Negative Covenant.
Except as otherwise expressly permitted by this Agreement,
between the date of this Agreement and the Closing Date, Sellers
will not, and will cause the Company not to, without the prior
consent of Buyer, take any affirmative action, or fail to take any
reasonable action within their or its control, as a result of which
any of the changes or events listed in Section 3.14 is likely to
occur.
5.4
Required Approvals.
As promptly as practicable after the date of this Agreement to
the extent not already done, Sellers will, and will cause the
Company to, make all filings required by Legal Requirements to be
made by them in order to consummate the Contemplated
Transactions.
5.5
Notification.
Between the date of this Agreement and the Closing Date, each
Seller will promptly notify Buyer in writing if such Seller becomes
aware of any fact or condition that causes or constitutes a Breach
or potential Breach of any of Sellers' representations and
warranties set forth in this Agreement, or if such Seller becomes
aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by
this Agreement) cause or constitute a Breach or potential Breach of
any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of
such fact or condition. Should any such fact or condition require
any change in the Schedules if the Schedules were dated the date of
the occurrence or discovery of any such fact or condition, Sellers
will promptly deliver to Buyer a supplement to the Schedules
specifying such change. During the same period, each Seller
will promptly notify Buyer of the occurrence of any Breach or
potential Breach of any covenant of Sellers in this Section 5 or of
the occurrence of any event that may make the satisfaction of the
conditions in Article 7 impossible or reasonably unlikely.
5.6
Best Efforts.
Between the date of this Agreement and the Closing Date, Sellers
will use their Best Efforts to cause the conditions in Article 7
and Section 8.4 to be satisfied.
ARTICLE 6
COVENANTS OF BUYER PRIOR TO
CLOSING DATE
6.1
Required Approvals.
As promptly as practicable after the date of this Agreement to
the extent not already done, Buyer will, and will cause each of its
Related Persons to, make all filings required by Legal Requirements
to be made by them in order to consummate the Contemplated
Transactions.
6.2
Best Efforts.
Except as set forth in the proviso to Section 6.1, between the
date of this Agreement and the Closing Date, Buyer will use its
Best Efforts to cause the conditions in Section 7.2(c) and Article
8 to be satisfied.
6.3
Disputes with Group Customers.
If and to the extent Buyer elects to contact any customer of any
Group Member as permitted by the terms of this Agreement, Buyer
shall only do so after confirming in writing to Sellers’
Representatives that Buyer has never asserted any claim against, or
otherwise been engaged in any dispute of any nature with, such
customer.
ARTICLE 7
CONDITIONS PRECEDENT TO
BUYER’S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other
actions required to be taken by Buyer at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Buyer, in whole
or in part):
7.1
Accuracy of Representations.
The representations and warranties of Sellers contained in this
Agreement shall be true and correct on and as of the Closing Date,
with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except to the extent
that any such representation or warranty is stated to be made as of
a specified date, in which case, such representation and warranty
shall be true and correct as of such specified date), except that
any inaccuracies in such representations and warranties will be
disregarded if the circumstances giving rise to such inaccuracies
do not, individually or in the aggregate, constitute, and could not
reasonably be expected to constitute, a Material Adverse Change,
and except that the representations and warranties shall not be
deemed to be untrue or incorrect by virtue of the transfer by the
Company to Sellers of the Excluded Assets.
7.2
Sellers' Performance.
(a)
All of the covenants and obligations that Sellers are required
to perform or to comply with pursuant to this Agreement at or prior
to the Closing (considered collectively), and each of such
covenants and obligations (considered individually), must have been
duly performed and complied with in all material respects.
(b)
Each document required to be delivered pursuant to Section
2.5(a) and this Article 7 must have been delivered.
(c)
No Proceeding shall be pending or Threatened by or before any
Governmental Body wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of
the Contemplated Transactions, (ii)
cause any of the Contemplated Transactions to be rescinded
following consummation or (iii) affect adversely the right of the
Buyer to own, operate or control any of the assets and operations
of the Company following the Contemplated Transactions, and no such
judgment, order, decree, stipulation or injunction shall be in
effect.
7.3
Opinion Letter.
Buyer shall have received opinions of various counsel to
Sellers, in form and substance satisfactory to Buyer.
7.4
Resignations.
Buyer shall have received in writing prior to or at the Closing
the resignations, effective as of the Closing Date, of each
director and officer of the Company other than Hylton L. Jonas and
Donald C. Wall.
7.5
Escrow Agreement
Sellers and the Escrow Agent shall have executed and delivered
to Buyer the Escrow Agreement.
7.6
Good Standing Certificate.
Buyer shall have received certificates certifying that each
Group Member is in good standing under all laws of the state of its
incorporation.
7.7
Other Documents.
Sellers shall have executed and delivered to Buyer such other
documents as counsel for Buyer shall reasonably request to carry
out the purposes of this Agreement.
7.8
No Claim Regarding Stock Ownership or Sale Proceeds.
There must not have been made or Threatened by any Person any
claim asserting that such Person (a) is the holder or the
beneficial owner of, or has the right to acquire or to obtain
beneficial ownership of, any stock of, or any other voting, equity,
or ownership interest in, the Company, or (b) is entitled to
all or any portion of the Purchase Price.
7.9
Employment Agreements.
Each of Hylton L. Jonas, Brian Rosenbloom, and Howard Kraines
shall have executed and delivered to Buyer an employment agreement
relating to services to be provided by him to the Group
Members.
7.10
Mutual Release.
Each of Hylton L. Jonas, Brian Rosenbloom, Lawrence L.
Rosenbloom, Howard Kraines, Reuben Rosenbloom, and each Seller
shall have executed and delivered to the Group a Mutual Release in
substantially the form attached hereto as Exhibit B.
ARTICLE 8
CONDITIONS PRECEDENT TO
SELLERS’ OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other
actions required to be taken by Sellers at the Closing is subject
to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Sellers, in
whole or in part):
8.1
Accuracy of Representations.
The representations and warranties of Buyer contained in this
Agreement shall be true and correct on and as of the Closing Date,
with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except to the extent
that any such representation or warranty is stated to be made as of
a specified date, in which case, such representation and warranty
shall be true and correct as of such specified date), except that
any inaccuracies in such representations and warranties will be
disregarded if such inaccuracies do not, and could not have
reasonably be expected to, have a material adverse effect on
Buyer’s business, financial condition, or results of
operation or Buyer’s ability to consummate the Contemplated
Transactions.
8.2
Buyer's Performance.
(a)
All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of such covenants
and obligations (considered individually), must have been performed
and complied with in all material respects.
(b)
Each document required to be delivered pursuant to this Article
8 must have been delivered.
(c)
Buyer must have satisfied its obligations pursuant to Section
2.3(a).
8.3
No Injunction.
No Proceeding shall be pending or Threatened by or before any
Governmental Body wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of
the Contemplated Transactions or (ii) cause any of the Contemplated
Transactions to be rescinded following consummation, and no such
judgment, order, decree, stipulation or injunction shall be in
effect.
8.4
Opinion Letter.
Sellers shall have received from counsel to Buyer an opinion of
counsel to Buyer, substantially in form and substance satisfactory
to Sellers.
8.5
Escrow Agreement.
Buyer and the Escrow Agent shall have executed and delivered to
Sellers the Escrow Agreement.
8.6
Employment Agreements.
Buyer shall have executed and delivered an employment agreement
relating to the services to be provided to the Group Members by
each of Hylton L. Jonas, Brian Rosenbloom, and Howard Kraines.
8.7
Mutual Release.
Buyer shall have caused the Group to have executed and delivered
to each of Hylton L. Jonas, Brian Rosenbloom, Lawrence L.
Rosenbloom, Howard Kraines, Reuben Rosenbloom, and each Seller a
Mutual Release in substantially the form attached hereto as Exhibit
B.
ARTICLE 9
TERMINATION
9.1
Termination Events.
This Agreement may, by notice given prior to the Closing, be
terminated:
(a)
by Buyer if there is a Breach of any representation or warranty
of Sellers in Article 3 of this Agreement such that the conditions
set forth in Section 7.1 would not be satisfied as of the time of
said Breach, provided that if such Breach is curable, then Buyer
may not terminate this Agreement under this Section 9.1(a) for
thirty (30) days after it has given written notice to Sellers
of such Breach, provided that Sellers continue to exercise their
Best Efforts to cure such Breach (it being understood that Buyer
may not terminate this Agreement under this Section 9.1(a) if such
Breach is cured during such thirty (30) day period);
(b)
by Sellers if there is a Breach of any representation or
warranty of Buyer in Article 4 of this Agreement such that the
conditions set forth in Section 8.1 would not be satisfied as of
the time of said Breach, provided that if such Breach is curable,
then Sellers may not terminate this Agreement under this Section
9.1(b) for thirty (30) days after giving written notice to Buyer of
such Breach, provided that Buyer continues to exercise its Best
Efforts to cure such Breach (it being understood that Sellers may
not terminate this Agreement under this Section 9.1(b) if such
Breach is cured during such thirty (30) day period);
(c)
by Buyer if any of the conditions in Sections 7.2, 7.3, 7.4,
7.5, 7.6, 7.8, 7.9 or 7.10 has not been satisfied as of the Closing
Date or if satisfaction of such a condition is or becomes
impossible or commercially impracticable (other than through the
failure of Buyer to comply with its obligations under this
Agreement) and Buyer has not waived such condition on or before the
Closing Date;
(d)
by Sellers, if any of the conditions in Sections 8.2, 8.3, 8.4,
8.5, 8.6, or 8.7 has not been satisfied of the Closing Date or if
satisfaction of such a condition is or becomes impossible or
commercially impracticable (other than through the failure of
Sellers to comply with their obligations under this Agreement) and
Sellers have not waived such condition on or before the Closing
Date; or
(e)
by mutual agreement in writing of Buyer and Sellers.
9.2
Effect of Termination.
Each party's right of termination under Section 9.1 is in
addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be
an election of remedies.
ARTICLE 10
INDEMNIFICATION;
REMEDIES
10.1
Survival.
All representations, warranties, covenants, and obligations in
this Agreement, the Schedules, the certificates delivered pursuant
to Sections 2.5(a)(ii) and 2.5(b)(ii), and any other certificate or
document delivered pursuant to this Agreement will survive the
Closing.
10.2
Indemnification and Payment of Damages by Sellers.
Subject to the other provisions of this Article 10, Sellers,
jointly and severally, will indemnify and hold harmless Buyer, the
Company, and their respective
Representatives, stockholders, controlling persons, and affiliates
for, and will pay to them the amount of, any loss, liability,
damage, deficiency, penalty, cost, assessment or reasonable expense
(including without limitation reasonable attorneys' fees) whether
or not involving a third-party claim (collectively, "Damages"),
arising from or in connection with:
(a)
any Breach of any representation or warranty made by Sellers in
this Agreement, or the Schedules;
(b)
any Breach by Sellers of any covenant or obligation of Sellers
in this Agreement;
(c)
subject to the terms and conditions set forth in Section 11.5,
the acts or omissions of any Group Member or any Seller, or any
Person acting on any Group Member’s or Seller’s behalf,
and occurring on or before the Closing Date in connection with any
Hazardous Activity in, on, under or migrating (or having migrated)
from any of the Facilities regardless of whether such matter has
been disclosed to Buyer in a Schedule; and
(d)
the acts or omissions of any Group Member or any Seller, or any
Person acting on any Group Member’s or Seller’s behalf,
and occurring on or before the Closing Date in connection with any
employment practices matter (including but not
limited to matters pending before the EEOC, a state agency or in
litigation) and regardless of whether such matter has been
disclosed to Buyer in the Schedules.
10.3
Indemnification and Payment of Damages by Buyer.
Subject to the other provisions of this Article 10, Buyer will
indemnify and hold harmless Sellers for, and will pay to Sellers
the amount of, any Damages, arising from or in connection with:
(a)
any Breach of any representation or warranty made by Buyer in
this Agreement;
(b)
subject to the terms and conditions set forth in Section 11.5,
the acts or omissions of Buyer, or any Person acting on
Buyer’s behalf, and occurring after the Closing Date in
connection with any Hazardous Activity in, on, under or migrating
(or having migrated) from any of the Facilities; and
(c)
any Breach by Buyer of any covenant or obligation of Buyer in
this Agreement.
10.4
Time Limitations.
Notwithstanding Section 10.1, Buyer will have no liability (for
indemnification or otherwise) with respect to any representation or
warranty, or any covenant or obligation to be performed and
complied with prior to the Closing Date, unless Sellers notify
Buyer of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Sellers prior to the
second (2 nd ) anniversary of the Closing Date.
Notwithstanding Section 10.1, Sellers will have no liability
(for indemnification or otherwise) with respect to any
representation or warranty, or any covenant or obligation to be
performed and complied with hereunder, unless Buyer notifies
Sellers of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Buyer prior to the
dates specified below:
(a)
A claim in respect of the representations and warranties set
forth in Sections 3.2(a) (Authority; No Conflict), 3.3
(Capitalization), 11.4(b) (Sellers' Representatives) or a claim in
respect of fraud, can be asserted indefinitely;
(b)
A claim in respect of the representations and warranties set
forth in Section 3.9 (Taxes) must be asserted prior to the
expiration of the respective limitation periods contained in the
IRC, or applicable state revenue code or statute, respectively, and
any other legislation affecting Taxes;
(c)
A claim in respect of the representation and warranties
set forth in 3.17 (Environmental Matters) or pursuant to Section
10.2(c) or Section 11.5 must be asserted prior to the seventh (7
th ) anniversary of the Closing Date;
(d)
A claim in respect of the representation and warranties set
forth in 3.19(b) (Labor Relations; Compliance) or pursuant to
Section 10.2(d) must be asserted prior to the third (3
rd ) anniversary of the Closing Date, except that a
claim in respect of Debra L. Babic v. Bakers Pride, SDHR
Case No.10114359, EEOC Charge No. 16GA700232; and any litigation
that might arise out of or in connection with a claim filed by
James Hilliard against Bakers Pride with the State Division of
Human Rights, State of New York, must be asserted prior to the
fifth (5 th ) anniversary of the Closing Date;
(e)
A claim in respect of the representation and warranties set
forth in Section 3.7 (Condition of Assets) must be asserted prior
to expiration of 120 days after the Closing Date; and
(f)
A claim in respect of all representation and warranties not
listed in Sections 10.4(a) through (e) must be asserted prior to
the second (2 nd ) anniversary of the Closing Date.
10.5
Limitations on Amount.
Except as otherwise provided in Section 11.5, Sellers will have
no liability (for indemnification or otherwise) with respect to the
matters described in Section 10.2(a), (b) and (d) until the total
of all Damages with respect to such matters exceeds Four Hundred
Thousand Dollars ($400,000), and then only for the amount by which
such Damages exceed Four Hundred Thousand Dollars ($400,000).
Notwithstanding the foregoing, Sellers will have no liability
(for indemnification or otherwise) with respect to the matters
described in Section 10.4(e) until the total of all Damages with
respect to such matters exceeds Two Hundred Fifty Thousand Dollars
($250,000), and only the amount by which such Damages exceed Two
Hundred Fifty Thousand Dollars ($250,000). The maximum
liability of Sellers in aggregate under this Article 10 and Section
11.5 for any and all Damages, regardless of when suffered, shall be
Twenty-Five Million Dollars ($25,000,000); provided, however, that
(a) the maximum liability of Sellers pursuant to Sections 10.2(a)
arising out of Section 3.17, 10.2(c) and 11.5 relating to the
Group’s Facility located in New York, other than with respect
to third party personal claims for personal injury or property
damage, shall be Ten Million Dollars ($10,000,000), all of which
shall be counted against the maximum liability of Twenty-Five
Million Dollars ($25,000,000), and (b) no restriction shall apply
in cases of fraud or intentional misrepresentation by any of
Sellers.
10.6
Procedure for Indemnification—Third Party
Claims.
(a)
Promptly after receipt by an indemnified party of notice of the
commencement or Threatened commencement of any Proceeding against
it, such indemnified party will, if a claim is to be made against
an indemnifying party under this Article 10 or Section 11.5, give
notice to the indemnifying party of the commencement or reasonably
anticipated commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of
any liability that it may have to any indemnified party, except to
the extent that the indemnifying party demonstrates that the
defense of such action is actually prejudiced by the indemnified
party's failure to give such notice.
(b)
If any Proceeding referred to in Section 10.6(a) is brought
against an indemnified party and notice is given to the
indemnifying party of the commencement or Threatened commencement
of such Proceeding, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes,
to assume the defense of such Proceeding utilizing Representatives
reasonably
acceptable to the indemnified party, and, after notice from the
indemnifying party to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will
not, as long as it diligently, in good faith and using its Best
Efforts conducts such defense, be liable to the indemnified party
under this Article 10 or Section 11.5 for any fees of other counsel
or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified
party in connection with the defense of such Proceeding. If
the indemnifying party assumes the defense of a Proceeding, no
compromise or settlement of such claims may be effected by the
indemnifying party without the indemnified party's consent (which
shall not be unreasonably withheld, conditioned or delayed) unless
the sole relief provided is monetary damages that are paid in full
by the indemnifying party and the settlement thereof imposes no
liability or obligation on, and includes a complete release from
liability of, the indemnified party or unless the amount in
controversy is less than Twenty Thousand Dollars ($20,000).
If notice is given to an indemnifying party of the
commencement or Threatened commencement of any Proceeding and the
indemnifying party does not, within thirty (30) days after the
indemnified party's notice is given, give notice to the indemnified
party of its election to assume the defense of such Proceeding,
subject to the provisions of this Article 10, the indemnifying
party will be bound by any reasonable determination made in such
Proceeding or any reasonable compromise or settlement effected by
the indemnified party, and will be liable for all reasonable
expenses, fees or costs incurred by the indemnified party, whether
in connection with the defense of the Proceeding or in any legal or
equitable proceeding brought by the indemnified party against the
indemnifying party to enforce this Article 10.
10.7
Procedure for Indemnification – Other Claims.
A claim for indemnification for any matter not involving a
third-party claim may be asserted by notice to the party from whom
indemnification is sought.
10.8
Exclusive Representations and Warranties.
Buyer acknowledges that no Seller has made to Buyer any
representation or warranty, express or implied, other than as
expressly made in Section 3 (including the Schedules).
Without limiting the generality of the foregoing, and
notwithstanding any otherwise express representations and
warranties made in Section 3 (including the Schedules), Sellers
make no representation or warranty to Buyer with respect to (a) any
projections, estimates or budgets of future revenues, expenses or
expenditures and future results of operations heretofore delivered
to or made available to Buyer; or (b) any other information or
documents made available to Buyer or its Representatives with
respect to Sellers, except as expressly covered by a representation
or warranty contained in Section 3 (including the Schedules).
10.9
Credits, Etc.
Notwithstanding anything contained herein to the contrary, in no
event shall Buyer or any other indemnified Person be entitled to
recover against the Escrow Fund or Sellers with respect to any
claim for which any Group Member is entitled to indemnification
under the provisions of any Contract or other right, until such
time as all remedies available to such Group Member under such
Contract or other right, as provided therein, have been exhausted.
Standex shall recover the insurance proceeds under all
applicable insurance policies prior to being entitled to recover
Damages from or against Sellers hereunder, and any such recovery
shall be net of all such insurance proceeds. In determining
any Damages payable from the Escrow Fund or otherwise by Sellers to
Buyer under this Agreement, Sellers shall be entitled to a credit
or offset against such Damages in an amount equal to the value of
any documented net tax benefit realized (by reason of a deduction,
basis adjustment, credit or otherwise), or any insurance benefit
realized or realizable by Buyer in connection with the Damage which
forms the basis of an indemnity claim hereunder (including without
limitation all insurance proceeds arising out of the insurance
described in Section 11.5). Furthermore, Buyer shall not be
entitled to any recovery under this Article 10 if and to the extent
an adjustment to the Purchase Price has previously been made with
respect to such matter. No Seller shall be obligated to pay
any amount arising out of Sellers’ indemnification
obligations pursuant to this Article 10 or Section 11.5 unless and
until the Escrow Fund shall be completely depleted.
10.10
Exclusive Remedy.
The right of Buyer and Sellers to indemnification pursuant to
Sections 10.2 and 10.3, and the rights pursuant to Section 11.5,
shall be the sole and exclusive right and remedy exercisable under
this Agreement regardless of the legal theory advanced in support
of such claims; provided, however, that this Section 10.10 shall
not apply in cases of fraud and intentional misrepresentation.
10.11
Limitation on Damages.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT,
IN NO EVENT SHALL ANY PARTY BE LIABLE UNDER THIS AGREEMENT OR
OTHERWISE FOR ANY EXEMPLARY, PUNITIVE, REMOTE, SPECULATIVE,
CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES OR LOSS OF PROFITS,
AND NO CLAIM SHALL BE MADE OR AWARDED AGAINST THE ESCROW FUND, OR
AGAINST ANY PARTY, FOR ANY SUCH DAMAGES OR LOSS OF PROFITS.
10.12
Independent Investigation.
In making the decision to enter into this Agreement and
consummate the Contemplated Transactions, Buyer has relied upon its
own independent due diligence investigations and inspection of the
assets of the Group Members, and on the representations,
warranties, covenants and undertakings of Sellers in this
Agreement. Notwithstanding anything contained herein to the
contrary, in no event shall Buyer or any the other Indemnified
Persons be entitled to assert a claim or recover under this Article
10 with respect to a breach by the Sellers of any representation,
warranty, covenant or agreement if Buyer had Knowledge thereof at
or before Closing solely arising out of any information provided to
Buyer in writing.
BUYER ACKNOWLEDGES THAT BY VIRTUE OF BUYER’S
ACQUISITION OF THE SHARES, BUYER IS ACQUIRING THE ASSETS AND
BUSINESSES OWNED BY THE
GROUP MEMBERS IN THEIR "AS IS, WHERE IS" CONDITION AND STATE
OF REPAIR, AND WIT
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