EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
AMONG
ARMOR HOLDINGS, INC.,
a Delaware corporation
DEFENSE TECHNOLOGY CORPORATION OF AMERICA,
a Delaware corporation
ROBERT OLIVER AND SANDRA OLIVER
AND
DEFENSE TECHNOLOGY CORPORATION OF AMERICA,
a Wyoming corporation
Dated as of August 23, 1996
TABLE OF CONTENTS
Page
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ARTICLE I - Definitions.................................................... 2
ARTICLE II - Purchase of Assets; Consideration............................. 6
Section 2.1 Terms of the Purchase............................. 6
Section 2.2 The Closing....................................... 12
Section 2.3 Transactions at the Closing....................... 12
Section 2.4 Guarantee of the Seller's Obligations............. 14
Section 2.5 Right of Purchaser to Withhold
Future Payments............................... 15
ARTICLE III - Representations and Warranties of the
Seller, the Executive and the Stockholder.................... 17
Section 3.1 Organization...................................... 17
Section 3.2 Authorization; Enforceability..................... 17
Section 3.3 No Violation or Conflict.......................... 18
Section 3.4 Consents of Governmental Authorities
and Others...................................... 19
Section 3.5 Conduct of Business............................... 19
Section 3.6 Litigation........................................ 21
Section 3.7 Brokers........................................... 22
Section 3.8 Compliance........................................ 22
Section 3.9 Charter, Bylaws and Corporate Records............. 23
Section 3.10 Subsidiaries and Investments...................... 23
Section 3.11 Capitalization.................................... 23
Section 3.12 Rights, Warrants, Options......................... 24
Section 3.13 Financial Statements.............................. 25
Section 3.14 Absence of Undisclosed Liabilities................ 26
Section 3.15 Title to Securities............................... 26
Section 3.16 Title to and Condition of
Personal Property............................... 26
Section 3.17 Real Property..................................... 27
Section 3.18 Insurance......................................... 30
Section 3.19 Licenses.......................................... 31
Section 3.20 Proprietary Rights................................ 32
Section 3.21 Major Customers and Suppliers; Supplies........... 34
Section 3.22 Related Parties................................... 35
Section 3.23 List of Accounts.................................. 36
Section 3.24 Personnel......................................... 36
Section 3.25 Labor Relations................................... 37
Section 3.26 Employment Agreements and
Employee Benefit Plans.......................... 38
(a) Employment Agreements....................... 38
(b) Employee Benefit Plans...................... 38
Section 3.27 Tax Matters....................................... 40
Section 3.28 Material Agreements............................... 42
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Section 3.29 Guaranties........................................ 44
Section 3.30 Products.......................................... 45
Section 3.31 Environmental Matters............................. 45
Section 3.32 Certain Transfers................................. 47
Section 3.33 Non-Distributive Intent........................... 47
Section 3.34 Inventories....................................... 48
Section 3.35 Absence of Certain Business Practices............. 49
Section 3.36 Accounts and Notes Receivable..................... 50
Section 3.37 Disclosure........................................ 50
ARTICLE IV - Representations and Warranties of ABA
and the Purchaser............................................. 51
Section 4.1 Organization; Standing and Power.................. 51
Section 4.2 Authorization; Enforceability..................... 52
Section 4.3 Validity of ABA Common Stock...................... 52
Section 4.4 Brokers........................................... 52
Section 4.5 SEC Filings and Financial Statements.............. 53
Section 4.6 No Violation or Conflict.......................... 54
Section 4.7 Consents of Governmental Authorities
and Others...................................... 54
Section 4.8 Litigation........................................ 55
ARTICLE V - Additional Agreements.......................................... 55
Section 5.1 Survival.......................................... 55
Section 5.2 Investigation..................................... 56
Section 5.3 Indemnification................................... 56
(a) By Seller, the Executive and
the Stockholder............................... 56
(b) By ABA and the Purchaser...................... 58
(c) Indemnity Procedure........................... 58
(d) Escrow Provisions............................. 61
(e) Limitations................................... 64
Section 5.4 Seller to Change Name............................. 66
Section 5.5 Registration of ABA Common Stock.................. 66
Section 5.6 Preparation of Closing Date Balance Sheet......... 66
Section 5.7 Filing of Sales Tax Returns....................... 70
Section 5.8 Employee Stock Options............................ 70
ARTICLE VI - Conditions Precedent; Termination............................. 71
Section 6.1 Conditions Precedent to the Obligations
of ABA and the Purchaser........................ 71
(a) Representations and Warranties True........... 71
(b) Performance................................... 71
(c) No Adverse Change............................. 72
(d) Seller's, the Executive's and
Stockholder's Certificate..................... 72
(e) No Litigation................................. 73
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(f) Consents...................................... 74
(g) Opinion of Counsel............................ 74
(h) Certain Agreements............................ 74
(i) Completion of Due Diligence................... 74
(j) Closing Date Balance Sheet Amounts............ 75
(k) Collection of Certain Receivables............. 75
(l) Disposition of Airplane....................... 75
(m) Board Approval................................ 76
Section 6.2 Conditions Precedent to the Obligations
of Seller, the Executive and
the Stockholder................................. 76
(a) Representations and Warranties True........... 77
(b) Performance................................... 77
(d) Officers' Certificate......................... 78
(d) No Litigation................................. 78
Section 6.3 Best Efforts...................................... 78
Section 6.4 Termination....................................... 79
ARTICLE VII - Covenants.................................................... 81
Section 7.1 Interim Operations of the Company................. 81
Section 7.2 Access............................................ 84
Section 7.3 Confidentiality (through Closing Date)............ 85
Section 7.4 Notification...................................... 86
Section 7.5 Exclusivity....................................... 87
Section 7.6 Non-Competition................................... 88
Section 7.7 General Confidentiality........................... 90
Section 7.8 Continuing Obligations............................ 92
ARTICLE VIII - Miscellaneous............................................... 94
Section 8.1 Notices........................................... 94
Section 8.2 Entire Agreement.................................. 94
Section 8.3 Binding Effect.................................... 95
Section 8.4 Knowledge of the Parties.......................... 95
Section 8.5 Assignment........................................ 95
Section 8.6 Waiver and Amendment.............................. 96
Section 8.7 No Third Party Beneficiary........................ 97
Section 8.8 Severability...................................... 97
Section 8.9 Expenses.......................................... 97
Section 8.10 Headings.......................................... 98
Section 8.11 Counterparts...................................... 98
Section 8.12 Time of the Essence............................... 98
Section 8.13 Injunctive Relief................................. 98
Section 8.14 Remedies Cumulative............................... 99
Section 8.15 Governing Law; Jurisdiction....................... 99
Section 8.16 Participation of Parties..........................100
Section 8.17 Further Assurances................................100
Section 8.18 Publicity.........................................100
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LIST OF SCHEDULES
Schedule 1 Net Tangible Assets
Schedule 2.1(a)(1) Excluded Assets
Schedule 2.1(a)(2) Purchased Assets
Schedule 2.1(a)(ii) Assumed Liabilities
Schedule 2.1(a)(iii) Pricing of ABA Products
Schedule 2.1(c) Allocation of Purchase Price
Schedule 2.3 Liens, Encumbrances, Etc.
Schedule 3.1 Qualified Jurisdictions of Seller
Schedule 3.3 Instruments and Agreements
Schedule 3.4 Consents of Governmental Authorities and Others
Schedule 3.5 Conduct of Business
Schedule 3.6 Litigation
Schedule 3.10 Subsidiaries and Investments
Schedule 3.11 Capitalization
Schedule 3.12 Rights, Warrants, Options
Schedule 3.14 Undisclosed Liabilities
Schedule 3.15 Title to Securities
Schedule 3.16 Title to and Conditions of Personal Property
Schedule 3.17 Real Property
Schedule 3.18 Insurance
Schedule 3.19 Licenses
Schedule 3.20 Proprietary Rights
Schedule 3.21 Major Customers and Suppliers; Supplies
Schedule 3.22 Related Parties
Schedule 3.23 List of Accounts
Schedule 3.24 Personnel
Schedule 3.25 Labor Relations
Schedule 3.26(a) Employment, Consulting or Other Personal
Service Documents in Effect
Schedule 3.26(b) Employee Benefit Plans
Schedule 3.27 Tax Matters
Schedule 3.28 Material Agreements
Schedule 3.29 Guaranties
Schedule 3.30 Products
Schedule 3.31 Environmental Matters
Schedule 3.34 Inventories
Schedule 5.6 Closing Date Balance Sheet
Schedule 7.1 Interim Operations of the Company
LIST OF EXHIBITS
Exhibit A Guarantee Agreement
Exhibit B Lock-Up Agreement
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement, dated as of August 23, 1996, among
Armor Holdings, Inc., a Delaware corporation with offices at 191 Nassau Place
Road, Yulee, Florida 32097 ("ABA"); Defense Technology Corporation of America,
a Delaware corporation and a wholly-owned subsidiary of ABA with offices at 191
Nassau Place Road, Yulee, Florida 32097 (the "Purchaser"); Robert Oliver,
residing at 8101 S.W. 53rd Avenue, Miami, Florida 33143 (the "Executive");
Sandra Oliver, residing at 8101 S.W. 53rd Avenue, Miami, Florida 33143 (the
"Stockholder"); and Defense Technology Corporation of America, a Wyoming
corporation with offices at 2136 Oil Drive, Casper, Wyoming 82604 (the
"Seller").
W I T N E S S E T H :
WHEREAS, the Purchaser desires to acquire certain of the
properties and assets and the business and good will of the Seller in exchange
for cash, common stock, par value $.03 per share, of ABA ("ABA Common Stock"),
and the assumption by the Purchaser of certain obligations and liabilities of
the Seller as hereinafter provided, and the Seller desires to sell such assets
and effect such exchange.
NOW, THEREFORE, the parties hereto, in consideration of
the mutual promises contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby agree as follows:
ARTICLE I
Definitions
In addition to terms defined elsewhere in this Agreement, the
following terms when used in this Agreement shall have the meanings indicated
below:
"Affiliate" shall mean, with respect to any Person, any
Person that directly or indirectly controls, is controlled by or is under
common control with the Person in question.
"Agreement" shall mean this Asset Purchase Agreement,
together with all exhibits and schedules referred to herein.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commission" shall mean the Securities and Exchange
Commission.
"Common Stock" shall mean the common stock of ABA, par value
$.03 per share.
"DTC-Ohio" shall mean Def-Tec Corporation, an Ohio
corporation.
"Environmental Laws" shall mean the Resource Conservation
and Recovery Act, 42 Section 36901 et seq., as amended ("RCRA"),
the Comprehensive Environmental Response Cleanup and Liability Act,
42 Section 9601 et seq., as amended ("CERCLA"), the Clean Water
Act, 33 Section 1251 et seq., as amended ("CWA"), the Clean Air
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Act, 42 Section 7401 et seq., as amended ("CAA"), the Toxic Substances and
Control Act, 7 Section 136 et seq., as amended ("TSCA"), and the Hazardous
Materials Transportation Act 49 Section 1801 et seq., as amended, and the
federal, state and local laws, rules, regulations and programs promulgated
thereunder, together with any other similar federal, state and local laws,
rules, regulations and programs in effect regulating the environment.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Financial Statements" shall mean the unaudited balance sheet
of the Seller as at December 31, 1995 and the related statements of income,
cash flows and stockholders' equity for the fiscal year then ended (the "1995
Financial Statements"); and the audited balance sheets of the Seller as at
December 31, 1994 and December 31, 1993 and the related statements of income,
cash flows and stockholders' equity for the fiscal years then ended, in each
case including any related notes, each prepared in accordance with United
States generally accepted accounting principles, consistently applied with
prior periods.
"Guaranty" shall mean, as to any Person, all liabilities or
obligations of such Person in respect of any indebtedness or other obligations
of others guaranteed, directly or indirectly, in any manner by such Person, or
in effect guaranteed, directly or indirectly, by such Person through an
agreement, contingent or otherwise, to purchase such indebtedness or
obligation, or to
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purchase or sell property or services, primarily for the purpose of enabling
the debtor to make payment of such indebtedness or obligation or to assure the
owner of such indebtedness or obligation against loss, or to supply funds to or
in any manner invest in the debtor, or otherwise.
"Investments" shall mean, with respect to any Person, all
advances, loans or extensions of credit to any other Person, all purchases or
commitments to purchase any stock, bonds, notes, debentures or other securities
of any other Person, and any other investment in any other Person, including
partnerships or joint ventures (whether by capital contribution or otherwise)
or other similar arrangement (whether written or oral) with any Person,
including but not limited to arrangements in which (i) the Person shares
profits and losses, (ii) any such other Person has the right to obligate or
bind the Person to any third party, or (iii) the Person may be wholly or
partially liable for the debts or obligations of such partnership, joint
venture or other arrangement.
"Net Tangible Assets" shall mean the sum of the Purchased
Assets of the Seller as set forth in Schedule 2.1(a)(2) less the sum of the
Assumed Liabilities of the Seller as set forth in Schedule 2.1(a)(ii), in each
case valued in a manner provided in Section 5.6.
"Person" shall mean any natural person, corporation,
unincorporated organization, limited liability company,
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partnership, limited liability partnership, association, joint stock company,
joint venture, trust or government, or any agency or political subdivision of
any government, or any other entity.
"Recognized Environmental Condition" shall mean the presence
or likely presence of any Hazardous Substances or Petroleum Products (as such
terms are defined in CERCLA) on the real property or Leased Property owned or
leased, as the case may be, by the Seller under conditions that indicate an
existing release, a past release or a material threat of a release of any
Hazardous Substances or Petroleum Products into structures on the real property
or in the ground, groundwater or surface water of such real property. A
Recognized Environmental Condition does not include de minimis conditions that
do not present a material risk of harm to public health or the environment and
that would not be the subject of an enforcement action if brought to the
attention of appropriate agencies.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Subsidiary" of any Person shall mean any Person, whether or
not capitalized, in which such Person owns, directly or indirectly, an equity
interest of more than 50%, or which may effectively be controlled, directly or
indirectly, by such Person.
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ARTICLE II
Purchase of Assets; Consideration
Section 2.1 Terms of the Purchase
On the basis of the representations, warranties,
covenants, and agreements contained in this Agreement and subject to the terms
and conditions of this Agreement:
(a) The Seller shall sell, assign, transfer, and
convey as a going concern to the Purchaser at the Closing (as hereinafter
defined) all properties and assets of the Seller at the date of the Closing of
every kind and nature whatsoever (other than the assets listed on Schedule
2.1(a)(1) (the "Excluded Assets")), including the names, trademarks,
contractual rights, books and records (other than stock ledgers and stock
transfer books), customer lists, price lists, business, and good will of the
Seller, as more particularly set forth on Schedule 2.1(a)(2) (collectively, the
"Purchased Assets") pursuant to instruments of assignment and bills of sale
satisfactory to the Purchaser; and, in consideration therefor, the Purchaser
shall:
(i) Deliver at the Closing to the
Seller (A) $1,000,000 in immediately available funds
provided that the Net Tangible Assets of the Seller
acquired by the Purchaser are at least $1,550,000 as
set forth on the Seller's Closing Date Balance Sheet
(as defined in Section 5.6) subject to reduction, as
provided in Section 5.6; and (B) a certificate
registered in the Seller's name for that number of
unregistered shares of ABA Common Stock as will have
a value, as determined by the average closing price
of ABA's Common Stock on the American Stock Exchange
for the ten consecutive trading day period ending
two trading days prior to the Closing date, of
$2,000,000, subject to
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adjustment as set forth in Sections 2.5 and 5.6
hereof, to be held in escrow in accordance with the
terms hereof; and
(ii) Assume at the Closing only those
obligations and liabilities of the Seller as are set
forth on Schedule 2.1(a)(ii) (the "Assumed
Liabilities"). The Assumed Liabilities shall not
include, unless specifically included in Schedule
2.1(a)(ii), (A) any tax or other obligation or
liability arising out of or based upon the
transactions contemplated by this Agreement or
incurred by the Seller, the Executive or the
Stockholder by reason of the review and negotiation
of this Agreement; (B) any obligation or liability
under any contract, agreement, instrument, lease,
license, understanding, or arrangement which is
assigned by the Seller to the Purchaser (I) if
failure to obtain a required consent to assignment
by the Seller to the Purchaser deprives the
Purchaser of the enjoyment of any of the Seller's
rights thereunder, (II) if such contract, agreement,
instrument, lease, license, understanding, or
arrangement is not assigned by the Seller to the
Purchaser as a result of Section 2.1(e) or
otherwise, or (III) if a party is in default
thereunder; (C) $1,000,000 of liability, or such
greater amount as may then be outstanding, in
respect of the Seller's obligation to Key Bank of
Wyoming ("Key Bank") pursuant to that certain
Amended and Restated Line of Credit and Security
Agreement, dated March __, 1996, between Key Bank
and the Seller which represents the non-revolving
portion of such credit facility, and is secured by a
mortgage, in favor of Key Bank, on the Executive's
and the Stockholder's residence in Steamboat
Springs, Colorado; (D) any obligation or liability
arising out of or connected with, directly or
indirectly, the Excluded Assets; and (E) any
environmental, tax or other liabilities not
reflected as such in the Seller's audited Balance
Sheet as at December 31, 1995. Without limiting the
generality of the foregoing, any liabilities or
obligations, including but not limited to any
shipping and freight charges, customs duties, and
storage and warehouse costs arising out of or
connected with any inventory and products shipped by
the Seller to Syntech GMBH, shall be a liability and
obligation of the Seller and shall not constitute an
Assumed Liability; and
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(iii) In the event that the
international net sales by the Purchaser of the
products sold as of the date hereof by the Seller to
customers outside the United States of America, its
territories and possessions are equal to or greater
than (A) $3,000,000 for the consecutive 12-month
period ending on the first anniversary of the
Closing date, (B) $3,500,000 for the consecutive
12-month period ending on the second anniversary of
the Closing date, and (C) $4,000,000 for the
consecutive 12-month period ending on the third
anniversary of the Closing date, or alternatively,
such international net sales are greater than (C)
$6,500,000 for the consecutive two-year period
ending on the second anniversary of the Closing
date, or (D) $10,500,000 for the consecutive
three-year period ending on the third anniversary of
the Closing date, in each such case, as determined
in accordance with the Purchaser's and/or ABA's
audited financial statements for the year in
question, then the Purchaser shall deliver to the
Seller a certificate registered in the name of the
Seller for that number of unregistered shares of ABA
Common Stock as will have a value, as determined by
the average closing price of ABA's Common Stock on
the American Stock Exchange (or such other exchange
as such shares may then be trading) for the ten
consecutive trading day period ending two trading
days prior to the date of determination of such
international net sales by the Purchaser of such
products, of $333,333 with respect to the
consecutive 12-month period ending on the first
anniversary of the Closing date, $333,333 with
respect to the consecutive 12-month period ending on
the second anniversary of the Closing date and
$333,334 with respect to the consecutive 12-month
period ending on the third anniversary of the
Closing date, or alternatively, $666,666 with
respect to the consecutive two-year period ending on
the second anniversary of the Closing date, or
$1,000,000 with respect to the consecutive
three-year period ending on the third anniversary of
the Closing date. Pricing of the Purchaser's
products in connection with the determination of
such international net sales of such products shall
be agreed to in advance between the Purchaser and
Seller for each of the first three 12-month periods
following the Closing date. At the sole and absolute
discretion of the Purchaser, the amounts required to
be paid to the
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Seller under this Section 2.1(a)(iii) may be paid in
cash at the times and in the amounts specified in
this Section 2.1(a)(iii).
(b) Except as specifically set forth in Section
2.1(a)(ii), neither the Purchaser nor ABA shall assume or be responsible for
any obligation or liability of the Seller of any nature, whether accrued,
contingent, absolute or otherwise.
(c) The consideration paid by the Purchaser
shall be allocated among the Purchased Assets as set forth in Schedule 2.1(c),
and the parties hereto, as applicable, agree to file Internal Revenue Service
Form 8594 as set forth on Schedule 2.1(c) hereto. Such amounts represent the
fair market value of such assets arrived at in arms length negotiations by the
parties hereto, and the parties hereto agree that, for financial reporting and
tax purposes, they will not take any actions inconsistent therewith.
(d) With respect to any properties or assets
sold hereunder that cannot be physically delivered to the Purchaser because they
are in the possession of third parties or otherwise, the Seller, the Executive
and the Stockholder shall give irrevocable instructions to the party in
possession thereof, if such be the case, with copies to the Purchaser, that all
right, title, and interest therein have been vested in the Purchaser and that
the same are to be held for the Purchaser's exclusive use and benefit.
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(e) To the extent that the assignment by the
Seller to the Purchaser of any contract, agreement, instrument, lease, license,
understanding, or arrangement to be assigned to the Purchaser hereunder shall
require the consent of a party other than the Seller, the Executive or the
Stockholder which has not been obtained by the Closing and if ABA and the
Purchaser shall nevertheless elect to consummate the transactions contemplated
by this Agreement, this Agreement shall not constitute an agreement to assign
the same if an attempted assignment without such consent would constitute a
breach thereof unless the Purchaser before, at, or after the Closing elects in
a writing delivered to the Seller, specifically identifying such absent
consent, to waive such consent. Nothing in this Section 2.1(e) regarding such
non-assignment or such election shall limit any rights ABA or the Purchaser may
have against the Seller, the Executive or the Stockholder as a result of the
failure to obtain such consent.
(f) The Seller agrees that, from and after the
Closing date, the Purchaser shall have the right and authority to collect for
its own account the Receivables (as hereinafter defined), subject to the
provisions hereof, and to endorse with the name of the Seller all checks
received on account of the Receivables. The Seller agrees that it will within
one business day transfer, assign and deliver to the Purchaser all cash or
other property which it may receive with respect to any Receivable from and
after the date thereof, and pending any such receipt by Seller
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and delivery to the Purchaser of any such property, the Seller shall hold any
such property in trust for the benefit of the Purchaser. The Purchaser shall,
after the Closing date, use reasonable commercial efforts at the Purchaser's
expense to collect the Receivables of Seller incurred prior to the Closing date
but the Purchaser shall have no obligation to resort to legal action or other
third party collection methods. Seller hereby covenants that all such
Receivables shall have been collected within 90 days of the due date thereof.
Any amounts received from the account debtor of a Receivable shall be applied
as the Purchaser may determine, except for amounts which the debtor has
directed to be applied to a particular debt. To the extent that any Receivable
remains outstanding upon expiration of the 90-day period subsequent to the due
date thereof, as referred to above, the Purchaser shall give prompt notice of
the non-collectibility of such Receivable to the Seller, and the Seller shall
have the opportunity, during the ten-day period following the expiration of
such 90-day period, to consult with and advise the Purchaser with respect to
the manner in which such Receivable may be collected, it being understood by
the parties hereto that the Purchaser shall have the sole right to implement
any such collection methods and that neither the Seller nor the Executive shall
contact any account debtors in respect of such collection without the express
written consent of the Purchaser in each instance. Upon the expiration of such
ten-day period, the Purchaser shall have the right to set-off the amount of
11
such uncollected Receivable against the Escrow Fund, as more particularly
described in Section 5.3(d) hereof. Upon such set-off by the Purchaser, Seller
shall have the right to pursue the collection of outstanding Receivables for
its own account within a reasonable time before the applicable statute of
limitation for the collection of such funds has run; provided, that, Seller
shall confer with the Purchaser prior to taking such action and Seller agrees
to use its best efforts not to injure any customer relationships of the
Purchaser.
Section 2.2 The Closing
(a) The closing of the transactions contemplated
by this Agreement shall take place at the offices of Kane Kessler, P.C., 1350
Avenue of the Americas, New York, New York, at 10:00 A.M., New York time on
September 30, 1996, or such other date, time or place as the parties may agree.
The closing of the transactions contemplated by this Agreement is herein called
the "Closing."
(b) All proceedings to be taken and all
documents to be executed and delivered at the Closing shall be deemed to have
been taken, executed and delivered simultaneously unless otherwise expressly
stated, and no proceeding shall be deemed taken or documents deemed executed or
delivered until all have been taken, executed and delivered.
Section 2.3 Transactions at the Closing
The following transactions shall take place at the
Closing:
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(a) The Seller, the Executive and the
Stockholder shall deliver to the Purchaser all such warranty deeds in form for
recording, bills of sale, assignments, evidences of consent, and other
instruments or documents as in the opinion of counsel to the Purchaser may be
necessary or desirable to evidence or perfect the sale, assignment, transfer,
and conveyance of good and marketable title in fee simple absolute to all real
properties and of good title to all other properties and assets to be sold to
the Purchaser by the Seller hereunder, in each case free and clear of all liens,
mortgages, security interests, pledges, charges, and encumbrances (except such
as are listed in Schedule 2.3). Any costs and expenses incurred in connection
with the assignment and transfer of the Purchased Assets (including, but not
limited to, amounts required to be paid in order to obtain necessary consents
for such assignments and transfers) shall be borne by the Seller, except that
costs and expenses in connection with the transfer of real estate included in
the Purchased Assets and the filing of mortgages with respect thereto (including
transfer, filing, recording and mortgage taxes and fees) shall be allocated
between Seller and Purchaser in accordance with local custom where such real
estate is located. The Seller shall also deliver to the Purchaser all books and
records of the Seller (except stock ledgers and stock transfer books, which
shall always be available for inspection by ABA and the Purchaser); provided,
however, that the Seller and its officers, employees, attorneys, and agents
shall be
13
afforded access to its tax and accounting records relating to periods prior to
the Closing and shall be permitted to make extracts from and copies of such
records.
(b) The Purchaser shall deliver or cause to be
delivered to the Seller up to $1,000,000 in immediately available funds,
determined pursuant to Sections 2.1(a)(i) and 5.6, and to the Escrow Agent a
certificate registered in the Seller's name for unregistered shares of ABA
Common Stock, as set forth in Section 2.1(a)(i), with appropriate restrictive
legends thereon.
(c) The Purchaser shall deliver to the Seller an
instrument of assumption of the Assumed Liabilities, in form and
substance satisfactory to the Purchaser and the Seller.
Section 2.4 Guarantee of the Seller's Obligations
Without limiting such other rights as the Purchaser,
ABA, their Subsidiaries, and their respective officers, directors, controlling
persons, employees, attorneys, agents, and stockholders, in each case past,
present, or as they may exist at any time after the date of this Agreement (the
"Purchaser Parties"), may have, the Executive and the Stockholder hereby
guarantee, as more particularly set forth in the Guarantee Agreement,
substantially in the form of Exhibit A attached hereto, for the benefit of the
Purchaser Parties the obligations and liabilities of the Seller under this
Agreement, under any other document executed by the Seller or any Subsidiary of
Seller relating hereto or delivered to the Purchaser or ABA in connection
14
with the transactions contemplated hereby or thereby, or under any statement,
certificate, or other instrument delivered by or on behalf of the Seller or any
Subsidiary of Seller pursuant hereto or thereto or delivered to the Purchaser
or ABA in connection with the transactions contemplated hereby or thereby.
Section 2.5 Right of Purchaser to Withhold Future Payments
Without limiting such other rights as ABA or the
Purchaser may have, if, prior to the time all shares of ABA Common Stock are
delivered pursuant to Section 2.1(a)(i), the Purchaser has learned of a breach
of any representation, warranty, covenant, or agreement of the Seller, the
Executive or the Stockholder contained in this Agreement, the Purchaser, in the
exercise of its reasonable and good faith judgment, may by written notice to
the Seller deduct from the number of shares of ABA Common Stock otherwise
deliverable by the Purchaser at such time a number of such shares the value of
which is equal to the aggregate of (a) the amount necessary to cure or make
whole such breach, and (b) the amount of losses, deficiencies, damages, and
legal and other expenses (including legal fees and expenses of attorneys chosen
by ABA or the Purchaser) incurred or demonstrably in prospect of being incurred
by ABA or the Purchaser in connection with claims, suits, actions, proceedings
(formal or informal), investigations, judgments, or settlements as a result of,
or to remedy a situation or circumstance caused by, such breach; provided,
however, that prior to any such deduction, (x) the Purchaser shall give notice
to
15
the Seller of the claim for which the deduction is sought, and the Seller shall
have a period of 15 days in which to cure or otherwise remedy, to the
satisfaction of the Purchaser, any such claim, (y) during such 15-day period,
Seller and Purchaser shall hold good faith negotiations to resolve any dispute
with respect to such breach (however, such negotiations shall not extend such
15-day period), and (z) that prior to any such deduction, the Seller shall be
afforded the opportunity to pay to the Purchaser, in immediately available
funds, the amount of any such loss within 15 days of notice thereof. Shares of
ABA Common Stock shall be valued for purposes of this Section 2.5 as follows:
if shares of ABA Common Stock are traded on a national securities exchange, at
the average closing price per share during the ten consecutive trading day
period ending two trading days prior to the date of the Closing on the
principal securities exchange on which such shares are traded. In the event
Seller cures such breach to the satisfaction of Purchaser, in its sole
discretion, within 30 days following the last day of such 15-day period (time
being of the essence), Purchaser shall thereupon deposit with the Escrow Agent,
in the manner provided in Section 5.3(d), that number of shares of ABA Common
Stock withheld pursuant to this Section 2.5.
16
ARTICLE III
Representations and Warranties of the Seller,
the Executive and the Stockholder
In order to induce ABA and the Purchaser to enter into this
Agreement and to consummate the transactions contemplated hereby, the Seller,
the Executive and the Stockholder, jointly and severally, make the
representations and warranties set forth below to ABA and to the Purchaser.
Section 3.1 Organization
The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Wyoming. The
Seller is duly qualified to transact business as a foreign corporation in all
jurisdictions where the ownership or leasing of its properties or the conduct
of its business requires such qualification, except where the failure to be so
qualified would not have an adverse effect on the Seller. Each jurisdiction in
which the Seller is so qualified is listed on Schedule 3.1 hereto. The Seller
has the requisite power and authority to (a) own or lease and operate its
properties and (b) conduct its business as presently conducted.
Section 3.2 Authorization; Enforceability
Each of the Seller, the Executive and the
Stockholder has the corporate power and authority and/or the capacity, as the
case may be, to execute, deliver and perform this Agreement. This Agreement and
all other documents to be executed and delivered by the Seller, the Executive
and the Stockholder
17
pursuant to this Agreement have been and will be duly authorized, executed and
delivered and constitute the legal, valid and binding obligations of each of
the Seller, the Executive and the Stockholder, enforceable in accordance with
their respective terms, except to the extent that their enforcement is limited
by bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally and by general
principles of equity.
Section 3.3 No Violation or Conflict
The execution, delivery and performance of this
Agreement by each of the Seller, the Executive and the Stockholder and the
consummation by each of the Seller, the Executive and the Stockholder of the
transactions contemplated hereby: (a) do not violate or conflict with any
provision of law or regulation (whether federal, state or local), or any writ,
order or decree of any court or governmental or regulatory authority, or any
provision of the Seller's Certificate of Incorporation or Bylaws; and (b)
except as set forth on Schedule 3.3 hereto, do not, with or without the passage
of time or the giving of notice, or both, result in the breach of, or
constitute a default, cause the acceleration of performance or require any
consent under, or result in the creation of any lien, charge or encumbrance
upon any property or assets of the Seller, the Executive or the Stockholder
pursuant to any instrument or agreement to which any of the Seller, the
Executive or the Stockholder is a party or by which any of the Seller, the
18
Executive or the Stockholder or their respective properties may be bound or
affected, other than instruments or agreements as to which consent shall have
been obtained at or prior to the Closing (each of which instruments or
agreements is listed in Schedule 3.3 hereto).
Section 3.4 Consents of Governmental Authorities and
Others
Except as set forth on Schedule 3.4, no consent,
approval or authorization of, or registration, qualification or filing with,
any federal, state or local governmental or regulatory authority, or any other
Person, is required in connection with the execution, delivery or performance
of this Agreement by the Seller, the Executive and the Stockholder or the
consummation by the Seller, the Executive and the Stockholder of the
transactions contemplated hereby.
Section 3.5 Conduct of Business
Except as disclosed on Schedule 3.5 hereto, since
December 31, 1995, the Seller has conducted its businesses in the ordinary and
usual course and there has not occurred any material adverse change in the
condition (financial or otherwise), results of operations, properties, assets,
liabilities, business or prospects of the Seller. Without limiting the
generality of the foregoing, except as disclosed on Schedule 3.5, since
December 31, 1995, the Seller has not: (a) amended its Certificate of
Incorporation or Bylaws; (b) issued, sold or authorized for issuance or sale,
shares of any class of its securities (including,
19
but not limited to, by way of stock split or dividend) or any subscriptions,
options, warrants, rights or convertible securities or entered into any
agreements or commitments of any character obligating it to issue or sell any
such securities; (c) redeemed, purchased or otherwise acquired, directly or
indirectly, any shares of its capital stock or any option, warrant or other
right to purchase or acquire any such shares; (d) suffered any damage,
destruction or loss, whether or not covered by insurance, which has had or
could have an adverse effect on any of its properties, assets, business or
prospects that constitute the Purchased Assets; (e) granted or made any
mortgage or pledge or subjected itself or any of its properties or assets to
any lien, charge or encumbrance of any kind, except liens for taxes not
currently due; (f) made or committed to make any capital expenditures in excess
of $5,000; (g) become subject to any Guaranty; (h) granted any increase in the
compensation payable or to become payable to directors, officers, employees
(including, without limitation, any such increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment); (i) entered into any
agreement which would be a Material Agreement (as hereinafter defined), or
amended or terminated any existing Material Agreement or received notice of any
such amendment or termination; (j) experienced any strike, work stoppage or
slowdown; (k) received notice of any adverse change in its relationship with
any financial institution, customer or supplier with which it currently does
business, nor is it aware of
20
any circumstances that could reasonably lead to such a change, nor do the
Seller, the Executive or the Stockholder have any knowledge of any of the
foregoing; or (l) experienced any other event or condition of any character
which has had or could have a material adverse effect on the condition
(financial or otherwise), results of operations, assets, liabilities,
properties, business or prospects of the Seller, or on its employee, customer
or supplier relations. None of the Seller's Affiliates sell, market,
manufacture, distribute or otherwise deal with the products so sold, marketed,
manufactured or distributed by the Seller.
Section 3.6 Litigation
Except as set forth on Schedule 3.6, there are no
actions, suits, investigations, claims or proceedings ("Litigation") pending
or, to the knowledge of any of the Seller, the Executive or the Stockholder,
threatened before any court or by or before any governmental or regulatory
authority or arbitrator, (a) affecting the Seller (as plaintiff or defendant)
which could, individually or in the aggregate, have a material adverse effect
on the condition (financial or otherwise), results of operations, properties,
assets, liabilities, business or prospects of the Seller or (b) against the
Seller relating to the Purchased Assets or the transactions contemplated by
this Agreement and there exist no facts or circumstances known to Seller, the
Executive or the Stockholder creating any reasonable basis for the institution
of any such action, suit, investigation, claim or proceeding described
21
above. Schedule 3.6 sets forth a list of any Litigation commenced against the
Seller in the last five (5) years. Vantage Enterprises, Inc., doing business in
Ohio as Vanterprises, Inc., is not, and has not been, an Affiliate of the
Seller, Spotgallant Management Company, or any of their respective Affiliates.
Section 3.7 Brokers
Neither the Seller, the Executive nor the
Stockholder have employed any financial advisor, broker or finder, and none of
them has incurred or will incur any broker's, finder's, investment banking or
similar fees, commissions or expenses in connection with the transactions
contemplated by this Agreement.
Section 3.8 Compliance
The Seller is in material compliance with all
federal, state, local and foreign laws, ordinances, regulations, judgments,
rulings, orders and other requirements applicable to it including, without
limitation, those relating to (a) the development, manufacture, packaging,
distribution and marketing of products, (b) employment, safety and health, and
(c) building, zoning and land use. The Seller is not subject to any judicial,
governmental or administrative order, judgment or decree. Purchaser has been
furnished with true and correct copies of all reports of inspections of the
Seller's business and properties through the date hereof, under all applicable
federal, state, foreign and local laws and regulations, all of which are set
forth on Schedule 3.8 hereto.
22
Section 3.9 Charter, Bylaws and Corporate Records
A true and complete copy of (a) the Certificate of
Incorporation of the Seller, as amended and in effect on the date hereof, (b)
the Bylaws of the Seller, as amended and in effect on the date hereof, and (c)
the minute books of the Seller have been previously delivered to Purchaser.
Such minute books contain complete and accurate records of all meetings and
other corporate actions of the board of directors, committees of the board of
directors, incorporators and shareholders of the Seller from the date of its
incorporation to the date hereof.
Section 3.10 Subsidiaries and Investments
Except as described on Schedule 3.10, the Seller has
no Subsidiaries or Investments. On December 29, 1992 (the "Merger Date"), Nina
Navigation, S.A. ("Nina"), the sole shareholder of the Seller at that time,
merged with and into the Seller with the Seller as the surviving corporation of
such merger. Prior to the Merger Date, Nina sold all of the issued and
outstanding capital stock of DTC-Ohio, a wholly-owned subsidiary of Nina, to an
unrelated third party. From and after such sale, DTC-Ohio has not been an
Affiliate of the Seller or Nina, or their respective Affiliates.
Section 3.11 Capitalization
The authorized capital stock of the Seller consists
of an unlimited number of shares of common stock, no par value, of
which 4,500 shares are issued and outstanding, all registered in
23
the name of Sandra Oliver. All shares of the Seller's issued and outstanding
capital stock have been duly authorized, are validly issued and outstanding,
and are fully paid and nonassessable. No securities issued by the Seller from
the date of its incorporation to the date hereof were issued in violation of
any statutory or common law preemptive rights. There are no dividends which
have accrued or been declared but are unpaid on the capital stock of the
Seller. Except as set forth on Schedule 3.11 hereto, all taxes required to be
paid in connection with the issuance and any transfers of the Seller's capital
stock have been paid. All permits or authorizations required to be obtained
from or registrations required to be effected with any Person in connection
with any and all issuances of securities of the Seller from the date of the
Seller's incorporation to the date hereof have been obtained or effected and
all securities of the Seller have been issued and are held in accordance with
the provisions of all applicable securities or other laws. The Stockholder owns
all of the issued and outstanding capital stock of the Seller.
Section 3.12 Rights, Warrants, Options
There are no outstanding (a) securities or
instruments convertible into or exercisable for any of the capital stock or
other equity interests of the Seller; (b) options, warrants, subscriptions or
other rights to acquire capital stock or other equity interests of the Seller;
or (c) except as set forth on Schedule 3.12 hereto, commitments, agreements or
understandings of
24
any kind, including employee benefit arrangements, relating to the issuance or
repurchase by the Seller of any capital stock or other equity interests of the
Seller, any such securities or instruments convertible or exercisable for
securities or any such options, warrants or rights.
Section 3.13 Financial Statements
The Seller has previously delivered to Purchaser
true and complete copies of its Financial Statements. The Seller will provide
the audited 1995 Financial Statements with an unqualified opinion of its
regular firm of certified public accountants to the Purchaser by the Closing
date, which audited 1995 Financial Statements shall be identical to the
unaudited 1995 Financial Statements previously provided to the Purchaser. The
Financial Statements: (a) have been prepared in accordance with the books of
account and records of the Seller; (b) fairly present, and are true, correct
and complete statements in all respects of the Seller's financial condition and
the results of its operations at the dates and for the periods specified in
those statements; and (c) have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") consistently applied with
prior periods. Whenever in this Agreement an inconsistency would result between
the application of GAAP and reporting consistently with a prior period with
respect to the Seller, the provisions of GAAP shall govern.
25
Section 3.14 Absence of Undisclosed Liabilities
Other than as disclosed by the Financial Statements
dated December 31, 1995, or as set forth on Schedule 3.14 hereto, the Seller
does not have any direct or contingent liabilities, commitments or obligations
(other than nonmaterial liabilities, commitments or obligations incurred since
December 31, 1995, in the ordinary course of business to Persons who are not
Affiliates of the Seller, the Executive or the Stockholder) or any unrealized
or anticipated losses from any commitments of the Seller, and there is no basis
for assertion against the Seller of any such liability, commitment or
obligation.
Section 3.15 Title to Securities
The Stockholder is the record and beneficial owner
of the shares of capital stock of the Seller listed opposite its name on
Schedule 3.15, and, except as set forth on Schedule 3.15 hereto, such shares of
capital stock of the Seller are owned free and clear of any liens,
encumbrances, pledges, security interests and claims whatsoever, including,
without limitation, claims or rights under any voting trust agreements,
shareholder agreements or other agreements.
Section 3.16 Title to and Condition of Personal Property
The Seller has good and marketable title to each
item of equipment and other personal property, tangible and intangible,
included as an asset in the Financial Statements dated December 31, 1995 (other
than property disposed of in the ordinary
26
course of business since December 31, 1995 to Persons who are not Affiliates of
the Seller, the Executive or the Stockholder) and to each item of equipment and
other personal property, tangible and intangible, acquired since December 31,
1995, free and clear of any security interests, liens, claims, charges or
encumbrances whatsoever, except as set forth in Schedule 3.16 hereto or
specifically identified as such in the December 31, 1995 Financial Statements.
Except as set forth in Schedule 3.16, all tangible personal property owned by
the Seller or used by the Seller on the date hereof in the operation of its
business is in good operating condition and in a good state of maintenance and
repair, and is adequate for the business conducted and proposed to be conducted
by the Seller. Except for the Leases specifically identified in Schedule 3.17,
there are no assets owned by any third party which are used in the operation of
the business of the Seller, as presently conducted or proposed to be conducted.
Section 3.17 Real Property
The Seller does not own any fee simple interest in
real property other than as set forth on Schedule 3.17. The Seller does not
lease or sublease any real property other than as set forth on Schedule 3.17.
Schedule 3.17 sets forth the street address of each parcel of real property
leased or subleased by the Seller (the "Leased Property"). The Seller has
previously delivered to Purchaser a true and complete copy of all of the lease
and sublease agreements, as amended to date (the "Leases") relating
27
to the Leased Property. The Seller enjoys peaceful and undisturbed possession
of the Leased Property. All improvements located on the Leased Property are in
a state of good maintenance and repair and in a condition adequate and suitable
for the effective conduct therein of the business conducted and proposed to be
conducted by the Seller. No person other than the Seller has any right to use
or occupy any part of the Leased Property. The Leases are valid, binding and in
full force and effect, all rent and other sums and charges payable thereunder
are current, no notice of default or termination under any of the Leases is
outstanding, no termination event or condition or uncured default on the part
of the Seller or on the part of the landlord or sublandlord, as the case may
be, thereunder, exists under the Leases, and no event has occurred and, to the
Seller's knowledge, no condition exists which, with the giving of notice or the
lapse of time or both, would constitute such a default or termination event or
condition. In the event that any of the Leases is a sublease, the Seller, as
sublessee or sublessor, as the case may be, has obtained the required consent
of the prime landlord to such sublease, and such prime lease is in full force
and effect, there are no outstanding uncured notices of default or termination,
and no right of the Seller in any such sublease conflicts with such prime
lease. There are no subleases, licenses or other agreements granting to any
person other than the Seller any right to the possession, use, occupancy or
enjoyment of
28
the premises demised by the Leases. All of the premises are used
in the conduct of the Seller's business.
The heating, ventilation, air conditioning, plumbing
and electrical systems at the Leased Property will be in good working order and
repair on the Closing date. The Seller has not experienced any interruption in
the services provided to any of the premises within the last six (6) months. No
landlord under the Leases has any plans to make any alterations to any of the
Leased Property, the construction of which would interfere with the use of any
portion of the Leased Property. No landlord under the Leases has any plans to
make any alterations to any of the buildings in which Leased Property is
located, the costs of which alterations would be borne in any part by a tenant
under the applicable Lease.
All permits, licenses, franchises, approvals and
authorizations (collectively, the "Real Property Permits") of all governmental
authorities having jurisdiction over each Leased Property and from all
insurance companies and fire rating and other similar boards and organizations
(collectively, the "Insurance Organizations"), required or appropriate have
been issued to the Seller to enable each Leased Property to be lawfully
occupied and used for all of the purposes for which they are currently occupied
and used, have been lawfully issued and are, as of the date hereof, in full
force and effect. Neither the Seller, the Executive nor the Stockholder has
received or been informed by a third party of the receipt by it of any notice
from any governmental authority
29
having jurisdiction over any Leased Property or from any Insurance Organization
threatening a suspension, revocation, modification or cancellation of any Real
Property Permit or of any insurance policies and there is no basis for the
issuance of any such notice or the taking of any such action. Other than the
instruments of assignment contemplated hereby, and any required consents of
third parties as set forth on Schedule 3.17, Seller knows of no action required
by Seller, the Executive, the Stockholder or any other party in order for all
Real Property Permits and liability and casualty insurance policies required
under any of the Leases to become Real Property Permits and insurance policies
of Purchaser.
Neither Seller, the Executive nor the Stockholder
has received any notice nor have they any knowledge of any pending, threatened
or contemplated condemnation proceeding affecting any Leased Property or any
part thereof.
To the best of Seller's knowledge, there are no
liabilities (other than rent and other sums and charges regularly payable)
associated with any of the Leases including, without limitation, any liability
under any Environmental Law (as hereinafter defined) or regulation, which is or
which may become payable by Purchaser.
Section 3.18 Insurance
Schedule 3.18 sets forth a true and complete list of
all insurance policies providing insurance coverage of any nature
to the Seller. The Seller has previously made available to
30
Purchaser a true and complete copy of all of such insurance policies, as
amended to the date hereof. Such policies are sufficient for compliance by the
Seller with all requirements of law and all agreements to which the Seller is a
party or by which any of its assets are bound. All of such policies are in full
force and effect and are valid and enforceable in accordance with their terms,
and the Seller has complied with all terms and conditions of such policies,
including premium payments. None of the insurance carriers has indicated to the
Seller an intention to cancel any such policy. Except as set forth on Schedule
3.18, the Seller has no claim pending against any of the insurance carriers
under any of such policies with respect to any of the Purchased Assets or the
Assumed Liabilities, and to the best of Seller's, Executive's and Shareholder's
knowledge after due inquiry, there has been no actual or alleged occurrence of
any kind which may give rise to any such claim. All claims with respect to
product liability involving occurrences prior to the Closing date, whether
asserted prior to or subsequent to the Closing date, shall be the
responsibility and liability of Seller.
Section 3.19 Licenses
Schedule 3.19 lists all authorizations, consents,
approvals, franchises, licenses and permits required under applicable law or
regulation for the operation of the business of the Seller as presently
operated (the "Governmental Authorizations"). All Governmental Authorizations
have been duly
31
issued or obtained and are in full force and effect, and the Seller is in
compliance with the terms of all Governmental Authorizations. Neither the
Seller, the Executive nor the Stockholder has any knowledge of any facts which
could reasonably be expected to cause them to believe that the Governmental
Authorizations will not be renewed by the appropriate governmental authorities
in the ordinary course. Neither the execution, delivery nor performance of this
Agreement shall adversely affect the status of any of the Governmental
Authorizations, subject to obtaining necessary consents specifically identified
on Schedule 3.19 which Seller undertakes to obtain prior to Closing date.
Section 3.20 Proprietary Rights
Set forth on Schedule 3.20 is a list and description
of all foreign and domestic patents, patent rights, trademarks, service marks,
trade names, brands and copyrights (whether or not registered and, if
applicable, including pending applications for registration) owned, used or
controlled by the Seller (collectively, the "Rights"). Except as set forth on
Schedule 3.20: (a) the Seller is the sole and exclusive owner of all right,
title and interest in and to all of the Rights and in and to each invention,
software, trade secret, technology, product, composition, formula, method or
process used by the Seller (together with the Rights, collectively referred to
as the "Intangible Property"), and has the exclusive right to use and license
the same, free and clear of any claim or conflict with the
32
rights of others; (b) no royalties or fees (license or otherwise) are payable
by the Seller to any Person by reason of the ownership or use of any of the
Intangible Property; (c) there have been no claims made against the Seller
asserting the invalidity, abuse, misuse, or unenforceability of any of the
Intangible Property, and there are no reasonable grounds for any such claims;
(d) the Seller has not made any claim of any violation or infringement by
others of its rights in the Intangible Property, and has no knowledge of any
basis for the assertion of any such claims; (e) the Seller has not received any
written notice or other type of overt notice that it is in conflict with or
infringing upon the asserted rights of others in connection with the Intangible
Property and neither the use of the Intangible Property by the Seller, the
operation of its business, the manufacture of its products, nor any formula,
method, process, part or material employed by the Seller in connection
therewith, is infringing or has infringed upon any rights of others; (f) the
Intangible Property includes all rights necessary for the Seller to be legally
entitled to conduct its business as presently being conducted; (g) the
consummation of the transactions contemplated hereby will not alter or impair
any of the Intangible Property; (h) no interest of the Seller's rights to any
Intangible Property has been assigned, transferred, licensed or sublicensed by
the Seller to third parties; (i) to the extent that any item constituting part
of the Intangible Property has been registered with, filed in or issued by, as
the case may be, any governmental
33
or other regulatory authority, such registrations, filings or issuances are
listed on Schedule 3.20, and were duly made and remain in full force and
effect; (j) there is no act or failure to act by the Seller or any of its
directors, officers, employees, attorneys or authorized agents during the
prosecution or registration of, or any other proceeding relating to, any of the
Intangible Property or of any other fact which could render invalid or
unenforceable, or negate the right to any of the Intangible Property.
Section 3.21 Major Customers and Suppliers; Supplies
The Seller has provided Purchaser with a list of the
ten (10) largest customers (measured by dollar volume) of the Seller and all
suppliers of significant goods or services to the Seller for the period ended
December 31, 1995. Schedule 3.21 identifies those suppliers of significant
goods or services with respect to which alternative sources of supply are not
readily available on comparable terms and conditions. Except as indicated on
Schedule 3.21, all supplies and services necessary for the conduct of the
business of the Seller, as presently conducted, may be obtained from alternate
sources on terms and conditions comparable to those presently available to the
Seller, and no facts, circumstances or conditions exist which create a
reasonable basis for believing that the Purchaser will be unable to continue to
procure the supplies and services necessary to conduct the business conducted
by Seller on substantially the same terms and
34
conditions as such supplies and services are currently procured. There has not
been and to the best of Seller's knowledge there will not be any adverse change
in the relations of the Seller with their respective customers, suppliers,
contractors, licensors and lessors, as a result of the announcement or
consummation of the transactions contemplated by this Agreement and the Seller
has no knowledge that any of the Seller's major customers or suppliers has or
is contemplating terminating its relationship with the Seller. To the best of
Seller's knowledge, no major customer or supplier has experienced any type of
work stoppage or other adverse circumstances or conditions that may jeopardize
or adversely affect the Purchaser's future relationship with any major customer
or supplier. Except as set forth on Schedule 3.21, there are no pending
disputes or controversies between any major customer or supplier of the Seller,
and there exist no facts which to the best of Seller's knowledge in the future
would impair the relationship of the Purchaser with the Seller's major
customers or suppliers.
Section 3.22 Related Parties
Except as set forth on Schedule 3.22, none of the
Seller, nor any current or former (within the past five (5) years) director,
officer or employee of the Seller (individually a "Related Party" and
collectively the "Related Parties") or any Affiliate of any of the Seller or
any Related Party: (a) owns, directly or indirectly, any interest in any person
which is a competitor of the Seller, or of a supplier or customer of the
35
Seller; (b) owns, directly or indirectly, in whole or in part, any property,
asset or right, real, personal or mixed, tangible or intangible (including, but
not limited to, any of the Intangible Property) which is utilized in the
operation of the business of the Seller; or (c) has an interest in or is,
directly or indirectly, a party to any contract, agreement, lease or
arrangement pertaining or relating to the Seller, except for employment,
consulting or other personal service agreements that may be in effect and which
are listed on Schedule 3.26(a) hereto.
Section 3.23 List of Accounts
Set forth on Schedule 3.23 is: (a) the name and
address of each bank or other institution in which the Seller maintains an
account (cash, securities or other) or safe deposit box; (b) the name and
telephone number of the Seller's contact person at such bank or institution;
(c) the account number of the relevant account and a description of the type of
account; and (d) the signatories to each such account.
Section 3.24 Personnel
Schedule 3.24 contains the names, job descriptions
and annual salary rates and other compensation of all officers, directors,
consultants and employees (who are paid in excess of Twenty-Five Thousand
Dollars ($25,000.00) per annum by the Seller) of the Seller (including
compensation paid or payable by the Seller under the Seller Plans (as
hereinafter defined)). A list of all employee policies, employee manuals or
other written statements of
36
rules or policies as to working conditions, vacation and sick leave is set
forth on Schedule 3.24, a complete copy of each of which has been provided to
Purchaser.
Section 3.25 Labor Relations
There is no strike, work stoppage or slowdown or
labor disturbance pending or, to the best of the Seller's knowledge, threatened
that involves any employees of the Seller. The Seller is not a party to,
otherwise bound by or threatened with any labor or collective bargaining
agreement and there have been no attempts to organize a labor union or to seek
recognition as a collective bargaining unit by or with respect to any employees
of the Seller. Without limiting the generality of Section 3.6, except as
identified on Schedule 3.25, (a) (i) no unfair labor practice complaints have
been filed against the Seller with any governmental or regulatory agency, which
either the Seller, the Executive or the Stockholder has received notice, (ii)
the Seller has not received any notice or communication reflecting an intention
or threat to file any such complaint, and (iii) no Person has made any claim,
and there is no basis for any claim, against the Seller under any statute,
regulation or ordinance relating to discrimination with respect to employees or
employment practices, and (b) no claim is pending or to the best knowledge of
the Sellers threatened against the Seller in connection with the United States
Wage and Hour Law, the Americans with Disabilities Act, the Occupational Safety
and Health Act or similar law.
37
Section 3.26 Employment Agreements and Employee Benefit
Plans
(a) Employment Agreements. Except as set forth
on Schedule 3.26(a), there are no employment, consulting, severance or
indemnification arrangements, agreements or understandings between the Seller
and any officer, director, consultant or employee ("Employment Agreements"). The
Seller has previously delivered to Purchaser true and complete copies of all of
the Employment Agreements. Except as set forth in Schedule 3.26(a), the terms of
employment or engagement of all directors, officers, employees, agents,
consultants and professional advisers of the Seller are such that their
employment or engagement may be terminated upon not more than two weeks notice
given at any time without liability for payment of compensation or damages and
the Seller has not entered into any agreement or arrangement for the management
of its business or any part thereof other than with its directors or employees.
(b) Employee Benefit Plans. Except as set forth
on Schedule 3.26(b), the Seller has no pension, retirement, stock purchase,
stock bonus, stock ownership, stock option, profit sharing, savings, medical,
disability, hospitalization, insurance, deferred compensation, bonus, incentive,
welfare or any other employee benefit plan, policy, agreement, commitment,
arrangement or practice currently or previously maintained or contributed to by
the Seller for any of its directors, officers, consultants, employees or former
employees (the "Seller Plans"). The Seller has
38
previously made available to Purchaser (i) a true and complete copy of all of
the Seller Plans (or, if oral, an accurate written summary thereof); (ii) a
current summary plan description (plus summaries of any subsequent
modifications thereto) for each Seller Plan; (iii) the latest IRS determination
letter obtained with respect to any Seller Plan qualified under Section 401 or
501 of the Internal Revenue Code of 1986, as amended (the "Code"); and (iv)
Forms 5500 for the last three (3) plan years for each Seller Plan required to
file such form. Except as set forth on Schedule 3.26(b), none of the Seller
Plans are subject to ERISA and except as set forth on Schedule 3.26(b), the
Seller has not established, maintained, made or been required to make any
contributions to, or terminated, and has no liability with respect to, any
"employee benefit plan" within the meaning of ERISA. The Seller has not
incurred any liability to the Pension Benefit Guaranty Corporation (the "PBGC")
and no facts or circumstances exist which might give rise to any liability of
the Seller to the PBGC or which could reasonably be anticipated to result in
any claims being made against ABA, the Purchaser or the Seller by the PBGC. No
facts or circumstances exist which might give rise to any liability of any
Seller Plan to any other Person. The Seller has paid all amounts required under
applicable law and any Seller Plan to be paid as a contribution to any Seller
Plan through the date hereof. The Seller has set aside adequate reserves to
meet contributions which are not yet due under any Seller Plan. Neither the
Seller, the
39
Executive, the Stockholder nor any other Person has engaged in any transaction
with respect to any Seller Plan which would subject the Seller to any tax,
penalty or liability for prohibited transactions. No director, officer or
employee of the Seller, to the extent he is a fiduciary with respect to any
Seller Plan, has breached any of his responsibilities or obligations imposed
upon fiduciaries or which could result in any claim being made under, by or on
behalf of any Seller Plan. No Seller Plan provides post- employment medical,
health, or life insurance benefits for present or future retirees or present or
future terminated employees, except for continuation coverage provided pursuant
to the requirements of Section 4980B of the Code or Sections 601-608 of ERISA
or a similar state law.
Section 3.27 Tax Matters
The Seller has previously delivered to Purchaser
true, correct and complete copies of each of the federal, state and local
income tax returns filed by the Seller, its Subsidiaries and Affiliates for the
past five fiscal years through December 31, 1995. Except as provided on
Schedule 3.27: All tax returns and tax reports required to be filed with
respect to the business and assets of the Seller, its Subsidiaries and
Affiliates have been timely filed (or appropriate extensions have been
obtained) with the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed, all of the foregoing
as filed are true, correct and complete and, in all
40
respects, reflect accurately all liability for taxes of the Seller, its
Subsidiaries and Affiliates for the periods to which such returns relate, and
all amounts shown as owing thereon have been paid. All income, profits,
franchise, sales, use, value added, occupancy, property, excise, payroll, FICA,
FUTA and other taxes (including interest and penalties), if any, collectible or
payable by the Seller, its Subsidiaries or Affiliates or relating to or
chargeable against any of their respective assets, revenues or income through
December 31, 1995, and through the Closing date, were fully collected and paid
by such date or provided for by adequate reserves in the December 31, 1995
Financial Statements and all similar items due through the Closing date will
have been fully paid by that date or provided for by adequate reserves. Except
as set forth on Schedule 3.27, no taxation authority has sought to audit the
records of the Seller, its Subsidiaries or Affiliates for the purpose of
verifying or disputing any tax returns, reports or related information and
disclosures provided to such taxation authority. No claims or deficiencies have
been asserted against the Seller, its Subsidiaries or Affiliates with respect
to any taxes or other governmental charges or levies which have not been paid
or otherwise satisfied or for which accruals or reserves have not been made in
the December 31, 1995 Financial Statements, and to the best of Seller's
knowledge, there exists no reasonable basis for the making of any such claims,
all of which shall remain the responsibility of Seller whether or not
scheduled, unless
41
specifically assumed by Purchaser as part of the Assumed Liabilities set forth
on Schedule 2.1(a)(ii). The Seller, its Subsidiaries or Affiliates have not
waived any restrictions on assessment or collection of taxes or consented to
the extension of any statute of limitations relating to taxation.
Section 3.28 Material Agreements
(a) Schedule 3.28 sets forth a brief description
of all material written and oral contracts or agreements relating to the Seller
(except with respect to the Leases, which are set forth on Schedule 3.17, which
is hereby incorporated by reference into Schedule 3.28 and made a part
thereof), including without limitation any: (i) contract resulting in a
commitment or potential commitment for expenditure or other obligation or
potential obligation, or which provides for the receipt or potential receipt,
involving in excess of Fifteen Thousand Dollars ($15,000.00) in any instance,
or series of related contracts that in the aggregate give rise to rights or
obligations exceeding such amount; (ii) indenture, mortgage, promissory note,
loan agreement, guarantee or other agreement or commitment for the borrowing or
lending of money or encumbrance of assets involving more than Fifteen Thousand
Dollars ($15,000.00) in each instance; (iii) agreement which restricts the
Seller from engaging in any line of business or from competing with any other
Person; (iv) warranties made with respect to products manufactured, packaged,
distributed or sold by the Seller; or (v) any other contract, agreement,
42
instrument, arrangement or commitment that is material to the condition
(financial or otherwise), results of operation, assets, properties,
liabilities, business or prospects of the Seller (collectively, and together
with the Leases, Employment Agreements, Seller Plans and all other agreements
required to be disclosed on any Schedule to this Agreement, the "Material
Agreements"). The Seller has previously furnished to Purchaser true, complete
and correct copies of all written agreements, as amended, required to be listed
on Schedule 3.28. Purchaser does not assume any such agreement whether or not
listed on Schedule 3.28, and Seller acknowledges and agrees that all such
agreements and the obligations and liabilities of Seller thereunder shall
remain the responsibility of Seller, unless and to the extent expressly assumed
as an Assumed Liability set forth on Schedule 2.1 (a)(ii).
(b) Except as set forth on Schedule 3.28, none
of the Material Agreements was entered into outside the ordinary course of
business of the Seller, contains any unusual, onerous or burdensome provisions
that will impair or adversely effect in any way the operations of the Seller, or
is reasonably likely to be performed at a loss.
(c) The Material Agreements are each in full
force and effect and are the valid and legally binding obligations of the Seller
and the other parties thereto, enforceable in accordance with their respective
terms, subject only to bankruptcy, insolvency or similar laws affecting the
rights of creditors generally and to
43
general equitable principles. Neither the Seller, the Executive nor the
Stockholder has received notice of default by the Seller under any of the
Material Agreements and no event has occurred which, with the passage of time
or the giving of notice or both, would constitute a default by the Seller
thereunder. None of the other parties to any of the Material Agreements is in
default thereunder, nor has an event occurred which, with the passage of time
or the giving of notice or both would constitute a default by such other party
thereunder. Neither the Seller, the Executive nor the Stockholder has received
notice of the pending or threatened cancellation, revocation or termination of
any of the Material Agreements, nor are any of them aware of any facts or
circumstances which could reasonably be expected to lead to any such
cancellation, revocation or termination.
(d) Except as otherwise indicated on Schedule
3.28, the continuation, validity and effectiveness of the Material Agreements
under the current terms thereof will in no way be affected by the consummation
of the transactions contemplated by this Agreement.
Section 3.29 Guaranties
Except as set forth on Schedule 3.29, the Seller is
not a party to any Guaranty, and no Person is a party to any
Guaranty for the benefit of the Seller.
44
Section 3.30 Products
(a) Except as set forth on Schedule 3.30, there
exists no set of facts (i) which could furnish a basis for the recall,
withdrawal or suspension of any product, governmental license, approval or
consent of any governmental or regulatory agency with respect to any product
distributed or sold by the Seller (a "Product"), (ii) which could furnish a
basis for the recall, withdrawal or suspension by order of any state, federal
or foreign court of law of any Product, or (iii) which could have an adverse
effect on the continued operation of any facility of the Seller or which could
otherwise cause the Seller to recall, withdraw or suspend any such Product from
the market or to change the marketing classification of any such Product.
(b) True, correct and complete copies of all
correspondence received or sent by or on behalf of the Seller during the past
five (5) years, from or to any governmental regulatory agency have been
previously delivered to Purchaser.
Section 3.31 Environmental Matters
(a) Except as described on Schedule 3.31, the
Seller and its present and former Subsidiaries and Affiliates have complied in
all material respects with all applicable Environmental Laws; (ii) no
Recognized Environmental Condition exists on the real property and Leased
Property or improvements thereon owned or leased, as the case may be, by the
Seller except as set forth on Schedule 3.31 hereto, (iii) Seller has not
received any complaint,
45
notice, order or citation of any actual, threatened or alleged noncompliance by
the Seller, the Executive or the Stockholder with any of the Environmental
Laws; and (iv) there is no proceeding, suit or investigation pending or, to the
Seller's knowledge, threatened against any of the Seller, the Executive, or the
Stockholder with respect to any violation or alleged violation of any
Environmental Laws and there is no reasonable basis for the institution of any
such proceeding, suit or investigation.
(b) In the event that the Phase I Environmental
Assessment to be performed indicates that the real property and Leased Property
or the improvements thereon identified on Schedule 3.17 are not in compliance
in all material respects with the Environmental Laws or other applicable laws,
or that a Recognized Environmental Condition exists, Purchaser shall so notify
Seller in writing within 10 days after receipt of the results of the Phase I
Environmental Assessment. The Purchaser shall elect in writing within 10 days
of receipt of such notice to either (i) require the Seller to bring the real
property or Leased Property, as applicable, into compliance with applicable
laws or to otherwise reasonably correct the defect in a good and workmanlike
manner in compliance with applicable laws; provided, however, that if the cost
to Seller of remedying any such condition is reasonably expected to exceed
$25,000, the Seller shall have the option, in its sole discretion, to not
perform any such remedial acts upon giving the Purchaser written notice within
10 days of Seller's
46
receipt of Purchaser's notice, in which event, the Purchaser shall have the
option, in its sole discretion, to terminate this Agreement in accordance with
Section 6.4 hereof; or (ii) terminate this Agreement pursuant to Section 6.4 of
this Agreement. In the event that Seller elects to remedy any Recognized
Environmental Condition or other item identified by the Phase I Environmental
Assessment, Seller shall commence such action promptly, but in any event within
30 days of his election or within any such additional time upon which the
parties may mutually agree.
Section 3.32 Certain Transfers
The transfer of the Purchased Assets by the Seller
to Purchaser in accordance with the terms of this Agreement shall not
constitute a voidable preference or transfer in fraud by any creditor under
applicable federal or state insolvency law.
Section 3.33 Non-Distributive Intent
The Seller is acquiring the shares of ABA Common
Stock to be issued hereunder for its own account (and not for the account of
others) for investment and not with a view to the distribution thereof. The
Seller will not sell or otherwise dispose of such shares (whether pursuant to a
liquidating dividend or otherwise) without registration under the Securities
Act or an exemption therefrom, and the certificate or certificates representing
such shares may contain a legend to the foregoing effect. By virtue of its
position the Seller has access to the kind of financial and other information
about ABA as would be
47
contained in a registration statement filed under the Securities Act. The
Seller understands that it may not sell or otherwise dispose of such shares in
the absence of either a registration statement under the Securities Act or an
exemption from the registration provisions of the Securities Act.
Section 3.34 Inventories
Except as set forth on Schedule 3.34, the
inventories of the Seller (raw materials, work-in-process and finished goods)
shown on the balance sheet included in the December 31, 1995 Financial
Statements have been valued at the lower of cost or market, reduced by all
appropriate reserves for obsolescence, valuation and other appropriate matters.
Such inventory does not and will not include any items below standard quality,
damaged or spoiled, obsolete or of a quality or quantity not useable or
saleable in the ordinary course of the business of the Seller as currently
conducted, at normal margins, or any items whose expiration date has passed or
will pass within twelve months of the date hereof, or any excess inventory, the
value of which has not been fully written down or reserved against in the
Financial Statements. The Seller has and will continue to have through the
Closing date adequate quantities and types of inventory to enable it to conduct
its business as presently conducted and as anticipated to be conducted.
48
Section 3.35 Absence of Certain Business Practices
None of the Seller, the Executive, the Stockholder,
their respective Related Parties, any Affiliate of the Seller, the Executive,
the Stockholder or any Related Party, any agent of the Seller, any other Person
acting on behalf of or associated with the Seller or any individual related to
any of the foregoing Persons, acting alone or together, has: (a) received,
directly or indirectly, any rebates, payments, commissions, promotional
allowances or any other economic benefits, regardless of their nature or type,
from any customer, supplier, trading company, shipping company, governmental
employee or other Person with whom the Seller has done business directly or
indirectly; or (b) directly or indirectly, given or agreed to give any gift or
similar benefit to any customer, supplier, trading company, shipping company,
governmental employee or other Person who is or may be in a position to help or
hinder the business of the Seller (or assist the Seller in connection with any
actual or proposed transaction) which (i) may subject the Seller to any damage
or penalty in any civil, criminal or governmental litigation or proceeding,
(ii) if not given in the past, may have had an adverse effect on the assets,
business, operations or prospects of the Seller as reflected in the Financial
Statements or (iii) if not continued in the future, may adversely affect the
assets, business, operations or prospects of the Seller or subject the Seller
to suit or penalty in any private or governmental litigation or proceeding.
49
Section 3.36 Accounts and Notes Receivable
The Seller has delivered to Purchaser a true and
complete aged list of unpaid accounts and notes receivable owing to the Seller
as of ten business days prior to the Closing date, setting forth the due dates
thereof, that are a part of the Purchased Assets (the "Receivables"). All of
such Receivables constitute only bona fide, valid and binding claims arising in
the ordinary course of the Seller's business, subject to no valid counterclaims
or setoffs, at the aggregate recorded amount thereof subject to normal reserves
for doubtful accounts and normal discounts. All sales underlying such
Receivables are final sales, with no right of return, and except as set forth
on Schedule 3.36 attached hereto, were made under normal sales terms in the
ordinary course of business and all related warranties have been adequately
reserved. The Seller, the Executive and the Stockholder hereby agree to
guarantee to ABA and the Purchaser the collectibility of all such Receivables,
in accordance with the terms of a Guarantee Agreement to be entered into
substantially in the form of Exhibit A attached hereto. Such guarantee shall be
a guarantee of payment and not of collection.
Section 3.37 Disclosure
No representation or warranty of the Seller, the
Executive or the Stockholder contained in this Agreement, and no statement,
report, or certificate furnished by or on behalf of the Seller, the Executive
or the Stockholder to Purchaser or its agents
50
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading or omits or will omit to state a
material fact necessary in order to provide a prospective purchaser of the
Purchased Assets with full and proper information as to the business, financial
condition, assets, results of operation or prospects of the Seller and the
value of its properties.
ARTICLE IV
Representations and Warranties of ABA and the Purchaser
In order to induce the Seller, the Executive and the
Stockholder to enter into this Agreement and to consummate the transactions
contemplated hereby, ABA and the Purchaser make the representations and
warranties set forth below to the Seller, the Executive and the Stockholder.
Section 4.1 Organization; Standing and Power
Each of ABA and the Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. Each of ABA and the Purchaser is duly qualified to transact
business as a foreign corporation in all jurisdictions where the ownership or
leasing of its respective properties or the conduct of its respective
businesses requires such qualification, except where the failure to be so
qualified
51
would not have an adverse effect on the business, operations or properties of
ABA or the Purchaser, as the case may be. Each of ABA and the Purchaser has all
requisite right, power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
Section 4.2 Authorization; Enforceability
The execution, delivery and performance of this
Agreement by ABA and the Purchaser and the consummation by ABA and the
Purchaser of the transactions contemplated hereby have been duly authorized by
all requisite corporate action on the part of ABA and the Purchaser. This
Agreement has been duly executed and delivered by ABA and the Purchaser, and
constitutes the legal, valid and binding obligation of ABA and the Purchaser,
enforceable in accordance with its terms, except to the extent that its
enforcement is limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors' rights generally and by
general principles of equity.
Section 4.3 Validity of ABA Common Stock
The shares of ABA Common Stock to be delivered to
Seller pursuant to this Agreement, when issued in accordance with the terms and
provisions of this Agreement, will be validly authorized, validly issued, fully
paid and nonassessable.
Section 4.4 Brokers
Neither ABA nor the Purchaser has employed any
financial advisor, broker or finder and has not incurred and will
52
not incur any broker's, finder's, investment banking or similar fees,
commissions or expenses, in connection with the transactions contemplated by
this Agreement.
Section 4.5 SEC Filings and Financial Statements
ABA has heretofore made available to the Seller true
and complete copies of all reports, registration statements, definitive proxy
statements and other documents (in each case together with all amendments and
supplements thereto) filed by the Company with the Commission since September
20, 1993 (such reports, registration statements, definitive proxy statements
and other documents, together with any amendments and supplements thereto, are
sometimes collectively referred to as the "SEC Filings"). The SEC Filings
constitute all of the documents (other than preliminary materials) that ABA was
required to file with the Commission since such date. As of their respective
dates, each of the SEC Filings complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act, as
applicable, and the rules and regulations under each such Act. None of the SEC
Filings contained as of such date any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. When filed with the Commission, the financial
statements included in the SEC Filings complied as to form in all material
respects with the applicable rules and regulations of the Commission and were
53
prepared in accordance with GAAP (as in effect from time to time) applied on a
consistent basis (except as may be indicated therein or in the notes or
schedules thereto), and such financial statements fairly present in accordance
with GAAP in all material respects the financial position of ABA as at the
dates thereof and the results of its operations and its cash flows for the
periods then ended, subject, in the case of the unaudited interim financial
statements, to normal, recurring year-end audit adjustments and the absence of
footnotes.
Section 4.6 No Violation or Conflict
The execution, delivery and performance of this
Agreement by each of ABA and the Purchaser and the consummation by each of ABA
and the Purchaser of the transactions contemplated hereby do not violate or
conflict with any provision of ABA's or the Purchaser's Certificate of
Incorporation or Bylaws, and do not, with or without the passage of time or the
giving of notice, or both, result in the breach of, or constitute a default,
pursuant to any instrument or agreement to which either ABA or Purchaser is a
party.
Section 4.7 Consents of Governmental Authorities and
Others
Except as set forth on Schedule 4.7, no consent,
approval or authorization of, or registration, qualification or filing with,
any federal, state or local governmental or regulatory authority, or any other
Person, is required in connection with the execution, delivery or performance
of this Agreement by ABA or the
54
Purchaser or the consummation by ABA or the Purchaser of the transactions
contemplated hereby.
Section 4.8 Litigation
Except as set forth on Schedule 4.8, or as disclosed
in the SEC Filings, there are no actions, suits, investigations, claims or
proceedings ("Litigation") pending or, to the knowledge of ABA or the
Purchaser, threatened before any court or by or before any governmental or
regulatory authority or arbitrator, (a) affecting ABA or the Purchaser (as
plaintiff or defendant) which could, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), results of
operations, properties, assets, liabilities, business or prospects of ABA or
the Purchaser or (b) against ABA or the Purchaser relating to the transactions
contemplated by this Agreement and there exist no facts or circumstances known
to ABA or the Purchaser creating any reasonable basis for the institution of
any such action, suit, investigation, claim or proceeding described above.
ARTICLE V
Additional Agreements
Section 5.1 Survival
The representations, warranties, covenants and
agreements of ABA, the Purchaser, the Seller, the Executive and the Stockholder
set forth in this Agreement shall survive the Closing date; provided, however,
that the representations and warranties of
55
the Seller, the Executive and the Stockholder contained in Article III and the
representations and warranties of ABA and the Purchaser contained in Article IV
shall survive the Closing date until June 30, 1999; and provided, further, that
none of the limitations of the immediately preceding proviso shall apply with
respect to indemnification obligations of a party arising in connection with
the breach of any representation or warranty set forth in Sections 3.7, 3.11,
3.12, 3.15, 3.22, 3.27, 3.30, 3.31 or 3.35 of this Agreement, and none of such
limitations shall apply with respect to any action based upon intentional or
fraudulent actions, misrepresentations or breaches of any party.
Section 5.2 Investigation
The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made. All representations and warranties
contained herein or in any schedule, certificate, exhibit, list or other
document delivered pursuant hereto, shall be deemed to be representations and
warranties for purposes of this Agreement.
Section 5.3 Indemnification
(a) By Seller, the Executive and the
Stockholder. Subject to the limitations set forth in Sections 5.1 and 5.3(e),
the Seller, the Executive and the Stockholder agree, jointly and
56
severally, to indemnify and hold harmless ABA, the Purchaser and their
respective directors, officers, employees and agents from, against and in
respect of, the full amount of any and all liabilities, damages, claims,
deficiencies, fines, assessments, losses, taxes, penalties, interest, costs and
expenses, including, without limitation, reasonable fees and disbursements of
counsel and accountants, arising from, in connection with, or incident to (i)
any breach or violation of any of the representations, warranties, covenants or
agreements of any of the Seller, the Executive or the Stockholder contained in
this Agreement or any agreement referred to herein and delivered at or prior to
the Closing; (ii) any and all claims arising out of, relating to, resulting
from or caused (whether in whole or in part) by any transaction, event,
condition, occurrence or situation in any way relating to the Seller or the
conduct of its business arising or occurring on or prior to the Closing date
without regard to whether such claim exists on the Closing date or arises at
any time thereafter; (iii) any obligation or liability of the Seller of any
nature, whether accrued, contingent, absolute or otherwise, not assumed by ABA
or the Purchaser in accordance with this Agreement; (iv) any and all actions,
suits, proceedings, demands, assessments or judgments, costs and expenses
incidental to any of the foregoing; and (v) any obligation or liability of the
Seller or the Stockholder for any taxes attributable to or arising from the
57
ownership or sale or use of the Purchased Assets or the conduct of
any business by the Seller.
(b) By ABA and the Purchaser. Subject to the
limitations set forth in Sections 5.1 and 5.3(e), ABA and the Purchaser agree,
jointly and severally, to indemnify and hold harmless the Seller, the Executive
and the Stockholder from, against and in respect of, the full amount of any and
all liabilities, damages, claims, deficiencies, fines, assessments, losses,
taxes, penalties, interest, costs and expenses, including, without limitation,
reasonable fees and disbursements of counsel, arising from, in connection with,
or incident to (i) any breach or violation of any of the representations,
warranties, covenants or agreements of ABA or the Purchaser contained in this
Agreement or any agreement referred to herein and delivered at or prior to the
Closing; (ii) any of the Assumed Liabilities; and (iii) any and all actions,
suits, proceedings, demands, assessments or judgments, costs and expenses
incidental to any of the foregoing.
(c) Indemnity Procedure. A party or parties
hereto agreeing to be responsible for or to indemnify against any matter
pursuant to this Agreement is referred to herein as the "Indemnifying Party"
and the other party or parties claiming indemnity is referred to as the
"Indemnified Party".
An Indemnified Party under this Agreement
shall, with respect to claims asserted against such party by any third party,
give written notice to the Indemnifying Party of any
58
liability which might give rise to a claim for indemnity under this Agreement
within sixty (60) business days of the receipt of any written claim from any
such third party, but not later than twenty (20) days prior to the date any
answer or responsive pleading is due, and with respect to other matters for
which the Indemnified Party may seek indemnification, give prompt written
notice to the Indemnifying Party of any liability which might give rise to a
claim for indemnity; provided, however, that any failure to give such notice
will not waive any rights of the Indemnified Party except to the extent the
rights of the Indemnifying Party are materially prejudiced.
The Indemnifying Party shall have the right, at
its election, to take over the defense or settlement of such claim by giving
written notice to the Indemnified Party at least fifteen (15) days prior to the
time when an answer or other responsive pleading or notice with respect thereto
is required. If the Indemnifying Party makes such election, it may conduct the
defense of such claim through counsel of its choosing (subject to the
Indemnified Party's approval of such counsel, which approval shall not be
unreasonably withheld), shall be solely responsible for the expenses of such
defense and shall be bound by the results of its defense or settlement of the
claim. The Indemnifying Party shall not settle any such claim without prior
notice to and consultation with the Indemnified Party, and no such settlement
involving any equitable relief or which might have an adverse effect on the
59
Indemnified Party may be agreed to without the written consent of the
Indemnified Party (which consent shall not be unreasonably withheld). So long
as the Indemnifying Party is diligently contesting any such claim in good
faith, the Indemnified Party may pay or settle such claim only at its own
expense and the Indemnifying Party will not be responsible for the fees of
separate legal counsel to the Indemnified Party, unless the named parties to
any proceeding include both parties and representation of both parties by the
same counsel would be inappropriate. If the Indemnifying Party does not make
such election, or having made such election does not, in the reasonable opinion
of the Indemnified Party proceed diligently to defend such claim, then the
Indemnified Party may (after written notice to the Indemnifying Party), at the
expense of the Indemnifying Party, elect to take over the defense of and
proceed to handle such claim in its discretion and the Indemnifying Party shall
be bound by any defense or settlement that the Indemnified Party may make in
good faith with respect to such claim. In connection therewith, the
Indemnifying Party will fully cooperate with the Indemnified Party should the
Indemnified Party elect to take over the defense of any such claim.
The parties agree to cooperate in defending
such third party claims and the Indemnified Party shall provide such
cooperation and such access to its books, records and properties as the
Indemnifying Party shall reasonably request with respect to any matter for
which indemnification is sought
60
hereunder; and the parties hereto agree to cooperate with each other in order
to ensure the proper and adequate defense thereof.
With regard to claims of third parties for
which indemnification is payable hereunder, such indemnification shall be paid
by the Indemnifying Party upon the earlier to occur of: (i) the entry of a
judgment against the Indemnified Party and the expiration of any applicable
appeal period, or if earlier, five (5) days prior to the date that the judgment
creditor has the right to execute the judgment; (ii) the entry of an
unappealable judgment or final appellate decision against the Indemnified
Party; or (iii) a settlement of the claim. Notwithstanding the foregoing,
provided that there is no dispute as to the applicability of indemnification,
the reasonable legal fees and expenses of counsel to the Indemnified Party
shall be reimbursed on a current basis by the Indemnifying Party if such legal
fees and expenses are a liability of the Indemnifying Party. With regard to
other claims for which indemnification is payable hereunder, such
indemnification shall be paid promptly by the Indemnifying Party upon demand by
the Indemnified Party.
(d) Escrow Provisions. In order to secure the
obligations of the Seller, the Executive and the Stockholder hereunder, Seller
will deliver to NationsBank, N.A., as escrow agent, or if NationsBank, N.A. is
not then able to act as such, such other party as the Purchaser and the Seller
shall mutually agree upon (the "Escrow Agent") pursuant to an escrow agreement
to
61
be entered into by all the parties hereto and the Escrow Agent, in form and
substance reasonably acceptable to the parties hereto and the Escrow Agent (the
"Escrow Agreement"), the shares of ABA Common Stock received by Seller pursuant
to Section 2.1(a)(i) and (iii) hereof, together with any additional shares as
may be required by Section 5.6 hereof, one-half of which shares will be held in
escrow (the "Escrow Fund") until March 15, 1998, and the remainder of which
will be held in escrow until June 30, 1999 (each, a "Release Date"). Should any
claims be made while any shares are held in escrow, the same shall remain in
escrow until the final resolution of such claim, notwithstanding the passing of
March 15, 1998 or June 30, 1999, as the case may be. The Purchaser shall have
the right, in the exercise of its reasonable and good faith judgment, to
set-off and deduct from the Escrow Fund, upon written notice to the Escrow
Agent, that number of shares of ABA Common Stock having a value equal to the
amount of any losses for which Seller, the Executive or the Stockholder are
required to indemnify Purchaser pursuant to the provisions of Section 5.3(a)
above, including, but not limited to, by reason of Section 2.1(f) hereof;
provided, however, that prior to any such set-off, (x) the Purchaser shall give
notice to the Seller of the claim for which indemnity is sought, and the Seller
shall have a period of 15 days in which to cure or otherwise remedy, to the
satisfaction of the Purchaser, any such claim, and (y) during such 15 day
period, Seller and Purchaser shall hold good faith negotiations to resolve any
dispute with
62
respect to any such claim for indemnification (however, such negotiations shall
not extend such 15 day period); and (z) that prior to any such set-off, the
Seller shall be afforded the opportunity to pay to the Purchaser, in
immediately available funds, the amount of any such loss within 15 days of
notice thereof. For purpose of this Section 5.3(d), the value of the shares of
ABA Common Stock shall equal the average closing price of ABA's Common Stock on
the American Stock Exchange (or such other exchange as such shares may then be
listed) for the ten consecutive trading day period ending two trading days
prior to the date of determination. If the amount of deduction is subsequently
determined to be in excess of the amount which Purchaser is legally entitled to
deduct, Purchaser shall promptly return such funds in cash or ABA Common Stock,
as the case may be, to the Escrow Fund or if the Escrow Fund has terminated,
shall pay such difference to Seller after such final determination. ABA Common
Stock returned to the Escrow Fund shall be valued as set forth above. In the
event any shares of ABA Common Stock are sold at the request of the Seller
while held in the Escrow Fund, the proceeds of any such sale shall be remitted
to and held as part of the Escrow Fund until released in accordance with the
provisions of this Section. So long as there is no breach of any
representation, warranty, covenant or agreement by the Seller, the Executive or
the Stockholder under this Agreement or the other agreements contemplated
hereby, and subject to any rights in favor of third
63
parties that may be granted by the Seller, the Executive or the Stockholder,
the Seller shall be entitled to vote the shares of ABA Common Stock in the
Escrow Fund and to receive dividends thereon, when, as and if declared by the
Board of Directors of ABA.
(e) Limitations. The indemnification obligations
of the parties hereto pursuant to Sections 5.3(a) and (b) shall be subject to
the following limitations. No Indemnifying Party shall be required to indemnify
an Indemnified Party unless the aggregate of all claims of such Indemnified
Party has first reached $150,000 (the "Threshold Amount"), at which time only
claims of an Indemnified Party in excess of the Threshold Amount shall be
subject to the Indemnifying Party's indemnification obligations; provided,
however, that (v) the amount of Receivables that the Seller, the Executive and
the Stockholder have guaranteed as being collectible by the Purchaser shall not
be subject to the Threshold Amount, and any such Receivable that is not
collected by the Purchaser within the time periods herein set forth shall be an
indemnifiable claim, dollar for dollar, against the Seller, the Executive and
the Stockholder, regardless of whether the Threshold Amount has been reached;
(w) any claim asserted by Aardvark Tactical, Inc. against ABA or Purchaser
arising out of the letter agreement dated February 9, 1996 between Aardvark
Tactical, Inc. and Seller; (x) costs, expenses and/or damages in connection
with pending litigation of Vantage Enterprises, Inc. or any claim asserted by
Vantage Enterprises, Inc. or any affiliate thereof
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against ABA or Purchaser arising out of or in connection with the transactions
contemplated by this Agreement; (y) (1) any deductible amount against Seller's
product liability insurance policy with respect to any event occurring prior to
the Closing date; (2) costs, expenses and/or damages in connection with pending
litigation of Neuman U.S.A. or any claim asserted by Neuman U.S.A. or affiliate
thereof against ABA or Purchaser; (3) any claim asserted by Leslie Esterbrook
or an affiliate thereof against ABA or Purchaser; (4) any claim, including
penalties, asserted by the Department of Transportation or other governmental
authority against ABA or Purchaser arising out of or in connection with actions
of Seller taken prior to Closing date; and (5) all taxes (inclusive of any
interest and penalties) payable by Seller occurring prior to the Closing date,
known or unknown, contingent or otherwise, whether or not then due, asserted or
assessed against ABA or Purchaser; and (z) the Final Amount adjustment payments
described in Section 5.6 hereof, shall not be subject to the Threshold Amount,
and any such adjustment shall be due and payable, dollar for dollar, regardless
of whether the Threshold Amount has been reached. Notwithstanding the
foregoing, (i) the obligations of the Seller, the Executive and the
Stockholder, on the one hand, and of the Purchaser and ABA, on the other hand,
shall not exceed $4,750,000, and (ii) the limitations contained in this Section
5.3(e) shall not apply with respect to (A) any action based upon intentional or
fraudulent actions, misrepresentations or breaches
65
of any party, and (B) any liabilities arising out of a breach of Sections 3.6,
3.14, 3.27, 3.30, 3.31, 3.35 or 5.7 hereof.
Section 5.4 Seller to Change Name
On the Closing date, the Seller will file an
appropriate amendment to its Certificate of Incorporation to change its name to
XM Corporation, and shall not further change or amend its name or use any other
trade or fictitious name.
Section 5.5 Registration of ABA Common Stock
ABA will use its best efforts to include the shares
of ABA Common Stock issued to the Seller in a registration statement of ABA to
be filed with the Commission on or before December 15, 1997. One-half of the
shares of ABA Common Stock received by the Seller and/or the Stockholder, as
the case may be, pursuant to this Agreement shall be subject to a lock-up
agreement through March 15, 1998, and the remainder of such shares of ABA
Common Stock shall be subject to a lock-up agreement through June 30, 1999,
substantially in the form of Exhibit B attached hereto (the "Lock-Up
Agreement"), and shall also be held in escrow until March 15, 1998 and June 30,
1999, as applicable, and be available to satisfy the Seller's, the Executive's
and the Stockholder's obligations to ABA and the Purchaser.
Section 5.6 Preparation of Closing Date Balance Sheet
(a) At Closing, Seller shall provide Purchaser
with a schedule of Purchased Assets and Assumed Liabilities correct as of the
Closing date, prepared in accordance with GAAP (the "Closing
66
Date Balance Sheet") except that, with respect to those Receivables that the
Seller, the Executive and the Stockholder have guaranteed, the same shall be
stated at face value. Seller's Net Tangible Assets as of the date of Closing
shall be determined in accordance with GAAP. The Closing Date Balance Sheet
shall be accompanied by a certificate of the Executive, Chief Operating Officer
and Chief Financial Officer of Seller that such Closing Date Balance Sheet has
been prepared in accordance with GAAP. Prior to the date of Closing, the Seller
shall conduct a physical count of all of Seller's inventory and any other
physical assets as of the date as requested by the Purchaser. Such inventory
count shall be attended by the Purchaser and its accountants and other
representatives, and the Purchaser and its accountants and other
representatives shall be afforded access to the work papers and other records
of the Seller and its accountants in connection with such inventory count. The
results of such inventory count shall be used to determine the inventory value
as of the Closing in order to calculate the Net Tangible Assets included in the
Closing Date Balance Sheet.
(b) If the value of the Net Tangible Assets of
Seller, as set forth on the Closing Date Balance Sheet, is less than
$1,550,000, the purchase price and the funds to be paid at Closing by Purchaser
pursuant to Section 2.1(a)(i) shall be reduced dollar for dollar for the
difference. Subsequent to the Closing, but in no event later than seventy-five
(75) days thereafter, the Purchaser or its independent accountants shall
tentatively
67
determine the Net Tangible Assets of Seller as of the Closing and submit its
calculation to the Seller for review. The Seller shall be provided reasonable
access to the work papers and all other appropriate records of Purchaser or its
independent accountants used to arrive at such calculation. The Seller shall
accept or reject the calculation by written notice to the Purchaser within
thirty (30) days thereafter; failure to reject the calculation within such
period shall be deemed conclusive acceptance of the calculation. If Seller
disputes the calculation, the parties will attempt to resolve their differences
jointly and shall provide reasonable access to each other's appropriate
records, including, but not limited to, their respective work papers, but if no
resolution is reached within ten (10) business days, then the parties agree to
submit the disputed items to a Big 6 accounting firm, or such other arbiter, as
may be mutually agreed upon, for determination within thirty (30) business
days, which determination shall be conclusive for all purposes. Such mutually
agreed arbiter's sole assignment shall be to determine whether the Net Tangible
Asset value as of the Closing has been computed in accordance with the terms of
this Section 5.6. The cost of such mutually agreed arbiter's determination
shall be borne equally by the parties.
(c) If the final Net Tangible Asset value, as
determined above (the "Final Amount"), is less than $1,550,000, then the
purchase price shall be reduced dollar for dollar and
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Seller shall pay to the Purchaser, in immediately available funds, the
difference between $1,550,000 and the Final Amount within five (5) business
days, from such determination, provided, however, no reduction shall be made to
the purchase price to the extent that the reduction in the value of the Net
Tangible Assets on the Closing Date Balance Sheet is solely attributable to
expenses of Seller having been capitalized and included in the value of
Seller's inventory as set forth on such Closing Date Balance Sheet consistent
with the Seller's audited 1995 financial statements. In the event that such
payment is not timely made, then notwithstanding any other provision contained
herein (including, but not limited to, any notice period herein described), and
in addition to all other rights and remedies available to Purchaser and ABA at
law or equity, or pursuant to this Agreement, the Guarantee, or otherwise,
Purchaser shall have the absolute right to immediately withdraw from the Escrow
Fund for the Purchaser's own account such number of shares of ABA Common Stock
as will have a value (as determined in accordance with Section 2.1(a)(i)) equal
to 150% of the difference between $1,550,000 and the Final Amount, and such
adjustment shall be deemed a reduction to the purchase price set forth in
Section 2.1(a)(i). Such shares so removed from the Escrow Fund shall not be
subject to the terms and provisions of the Escrow Fund, and shall belong to the
Purchaser. The Threshold Amount shall not be applicable to the Final Amount
adjustment
69
payments hereinabove described, which shall be payable dollar for dollar as
herein provided.
(d) On the first anniversary date of the Closing,
Purchaser may sell, in which event Seller shall purchase, for cash, all unsold
inventory of Number 19 grenades included in the inventory as part of the
Purchased Assets. Payment shall be made simultaneously against delivery of such
grenades to Seller.
Section 5.7 Filing of Sales Tax Returns
The Seller shall file with all appropriate
authorities its final sales tax returns within thirty (30) days after the
Closing date. Any liabilities or obligations resulting therefrom, including,
without limitation, due to audits of said returns, shall be the liability and
obligation of the Seller, and the Purchaser shall have no obligation whatsoever
with respect thereto.
Section 5.8 Employee Stock Options
ABA hereby agrees to make available to those
employees of the Seller who become employees of the Purchaser or ABA, in the
sole discretion of ABA, options to purchase up to an aggregate of 100,000
shares of ABA Common Stock pursuant to ABA's 1996 Incentive Stock Option Plan.
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ARTICLE VI
Conditions Precedent; Termination
Section 6.1 Conditions Precedent to the Obligations of ABA
and the Purchaser
Each and every obligation of ABA and the Purchaser
to consummate the transactions described in this Agreement and any and all
liability of ABA and the Purchaser to the Seller, the Executive and the
Stockholder shall be subject to the fulfillment on or before the Closing date
of the following conditions precedent:
(a) Representations and Warranties True. Each
of the representations and warranties of the Seller, the Executive and the
Stockholder contained herein or in any certificate or other document delivered
pursuant to this Agreement or in connection with the transactions contemplated
hereby shall be true and correct in all material respects as of the Closing
date with the same force and effect as though made on and as of such date
(except for changes specifically permitted by this Agreement, including,
without limitation, Section 7.1 hereof).
(b) Performance. The Seller, the Executive and
the Stockholder shall have performed and complied in all material respects with
all of the agreements, covenants and obligations required under this Agreement
to be performed or complied with by them on or prior to the Closing date.
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(c) No Adverse Change. Except as expressly
permitted or contemplated by this Agreement, no event or condition shall have
occurred which has materially adversely affected or may materially adversely
affect in any respect the condition (financial or otherwise) of the Seller or
of the Seller's assets, liabilities (whether accrued, absolute, contingent or
otherwise), earnings, book value, business, operations or prospects.
(d) Seller's, the Executive's and Stockholder's
Certificate. The Seller, the Executive and the Stockholder shall have delivered
to Purchaser a certificate dated the Closing date, certifying that the
conditions specified in Section 6.1(a), (b) and (c) above have been fulfilled,
and that the Net Tangible Assets of Seller to be purchased by Purchaser as of
the Closing date determined in the manner provided in Section 5.6, are at least
$1,550,000; the Seller shall have delivered to Purchaser a certificate signed
by the Executive and the, Seller's Chief Operating Officer and Chief Financial
Officer certifying that the Financial Statements have been, and the Closing
Date Balance Sheet will be, prepared in accordance with the books of account
and records of the Seller, fairly present, and are true, correct and complete
statements in all respects of the Seller's financial condition as of their
respective dates, and have been prepared in accordance with GAAP, except that
the inventory valuation shall be
72
computed in accordance with Section 3.34, provided that any excess inventory of
Number 19 grenades shall be treated as provided in Section 5.6(d); and as to
such other matters as Purchaser may reasonably request.
(e) No Litigation. No litigation, arbitration
or other legal or administrative proceeding shall have been commenced, be
pending or threatened by or before any court, arbitration panel or governmental
authority or official, and no statute, rule or regulation of any foreign or
domestic, national or local government or agency thereof shall have been
enacted after the date of this Agreement, and no judicial or administrative
decision shall have been rendered which enjoins or prohibits, or seeks to
enjoin or prohibit, the consummation of all or any of the transactions
contemplated by this Agreement. The litigation entitled Vantage Enterprises,
Inc. v. Def-Tec Corporation, et al., pending in the Court of Common Pleas of
Ashtabula County, Ohio, shall be settled on or before Closing on substantially
the terms of the Settlement Agreement, per the draft furnished to Purchaser on
August 21, 1996. Seller acknowledges and agrees that the amount of such
settlement may be paid directly by Purchaser at Closing, which amount shall
thereupon be deducted from the cash portion of the purchase price payable
pursuant to Section 2.1(a)(i).
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(f) Consents. The Seller shall have obtained
all authorizations, consents, waivers and approvals and given all notices as
may be required or advisable to consummate the transactions contemplated by this
Agreement including, but not limited to, the consents, waivers and approvals of
Key Bank, Raytheon, Inc., and of any of the landlords to the Leased Property
which is required in accordance with the terms of the Leases, consents with
respect to any Material Agreement and notices to creditors of the Seller in
respect of bulk transfer laws, if applicable, or otherwise.
(g) Opinion of Counsel. An opinion letter from
Stuart Cordell, Esq. and/or counsel to the Seller, the Executive and the
Stockholder addressed to ABA and the Purchaser, in form and substance
satisfactory to ABA and the Purchaser, as to such matters as ABA and the
Purchaser may reasonably request, shall have been delivered to ABA and the
Purchaser at the Closing.
(h) Certain Agreements. The Executive, the
Stockholder and the Seller, as appropriate, shall have executed and delivered
the Guarantee Agreement, the Escrow Agreement, and the Lock-Up Agreement.
(i) Completion of Due Diligence. The Purchaser
shall have completed its due diligence investigation of the Seller
including, but not limited to, tax returns filed by Seller, any
74
Internal Revenue Service audit, Phase I environmental audits, any arrangements
with DTC-Ohio and Nina, title reports with respect to the Purchased Assets and,
Phase I Environmental Reviews, all to its sole and absolute satisfaction, on or
before the Closing.
(j) Closing Date Balance Sheet Amounts. The Net
Tangible Assets as of the Closing date shall not be less than $1,550,000. Any
reductions in the Assumed Liabilities from the date hereof through the Closing
date, arising through the negotiation of outstanding balances, shall accrue to
the benefit of the Purchaser and not be used as a reduction of the Assumed
Liabilities and a corresponding increase to Net Tangible Assets.
(k) Collection of Certain Receivables. All of
the Seller's Receivables from employees of the Seller shall have been collected
on or before the Closing date. All expense reimbursements or other liabilities
owed to employees of the Seller shall have been paid on or before the Closing
date.
(l) Disposition of Airplane. The airplane
listed on the Seller's balance sheet as of December 31, 1995 shall have been
disposed of, or arrangements shall have been made for its disposition, or
Seller shall retain the same; provided, however, that any such arrangement
shall be on terms that are satisfactory to the Purchaser in its sole
discretion and shall have been affected on or before September 20, 1996.
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(m) Board Approval. This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of ABA and the Purchaser.
(n) 1995 Financial Statements. Seller shall
have delivered to Purchaser 1995 Financial Statements, audited by Seller's
regular firm of certified public accountants with an unqualified opinion.
(o) Seller shall have filed all of its income
tax returns (federal, state and local) for all years ended prior to and on
December 31, 1995, irrespective of whether extensions for filing such returns
have been requested, and true copies thereof shall have been furnished to
Purchaser not less than five (5) business days prior to Closing.
(p) Definitive International Sales Agreement.
ABA and Purchaser on the one hand, and a company principally owned or
controlled by Executive on the other hand (provided Executive shall be
contractually obligated to personally render the services required), shall
have entered into the definitive International Sales Agreement.
Section 6.2 Conditions Precedent to the Obligations of
Seller, the Executive and the Stockholder
Each and every obligation of Seller, the Executive
and the Stockholder to consummate the transactions described in this Agreement
and any and all liability of Seller, the Executive
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and the Stockholder to ABA and the Purchaser shall be subject to the
fulfillment on or before the Closing date of the following conditions
precedent:
(a) Representations and Warranties True. Each of
the representations and warranties of ABA and the Purchaser contained herein or
in any certificate or other document delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby shall be true and correct
in all material respects as of the Closing date with the same force and effect
as though made on and as of such date.
(b) Performance. ABA and the Purchaser shall have
performed and complied in all material respects with all of the agreements,
covenants and obligations required under this Agreement to be performed or
complied with by them on or prior to the Closing date.
(c) No Material Adverse Change. Except as
expressly permitted or contemplated by this Agreement, no event or condition
shall have occurred which has materially adversely affected or may materially
adversely affect in any respect the condition (financial or otherwise) of ABA
or of ABA's assets, liabilities (whether accrued, absolute, contingent or
otherwise), earnings, book value, business, operations or prospects.
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(d) Officers' Certificate. Purchaser shall have
delivered to the Seller, the Executive and the Stockholder a certificate
addressed to Seller, the Executive and the Stockholder executed by Purchaser's
President and Chief Executive Officer, dated the Closing date, certifying that
the conditions specified in Sections 6.2(a), (b) and (c) above have been
fulfilled.
(d) No Litigation. No litigation, arbitration or
other legal or administrative proceeding shall have been commenced or be
pending by or before any court, arbitration panel or governmental authority or
official, and no statute, rule or regulation of any foreign or domestic,
national or local government or agency thereof shall have been enacted after
the date of this Agreement, and no judicial or administrative decision shall
have been rendered which enjoins or prohibits, or seeks to enjoin or prohibit,
the consummation of all or any of the transactions contemplated by this
Agreement.
Section 6.3 Best Efforts
Subject to the terms and conditions provided in this
Agreement, each of the parties shall use their respective best efforts in good
faith to take or cause to be taken as promptly as practicable all reasonable
actions that are within its power to cause to be fulfilled each of the
conditions precedent to its obligations or the obligations of the other parties
to consummate
78
the transactions contemplated by this Agreement that are dependent upon its
actions, including obtaining all necessary consents, authorizations, orders,
approvals and waivers. In furtherance of the foregoing, each of the Seller, the
Executive and the Stockholder shall use their respective best efforts to
negotiate a reduction of the Assumed Liabilities.
Section 6.4 Termination
This Agreement and the transactions contemplated
hereby may be terminated (i) at any time by the mutual consent of the parties
hereto; (ii) by Seller, the Executive and the Stockholder, jointly, or by ABA
and the Purchaser, jointly, if the Closing has not occurred on or prior to
September 30, 1996 (such date of termination being referred to herein as the
"Termination Date"), provided that the failure of the Closing to occur by the
Termination Date is not the result of the failure of the party seeking to
terminate this Agreement to perform or fulfill any of its obligations
hereunder; (iii) by Purchaser at any time at or prior to Closing in its sole
discretion if (1) any of the representations or warranties of the Seller, the
Executive or the Stockholder in this Agreement are not in all material respects
true, accurate and complete or if the Seller, the Executive or the Stockholder
breach in any material respect any covenant contained in this Agreement,
provided that such misrepresentation or breach
79
is not cured within ten (10) business days after notice thereof, but in any
event prior to the Termination Date or (2) any of the conditions precedent to
ABA's or the Purchaser's obligations to conduct the Closing have not been
satisfied by the date required thereof; (iv) by Seller, the Executive or the
Stockholder at any time at or prior to Closing in their sole discretion if (1)
any of the representations or warranties of ABA or the Purchaser in this
Agreement are not in all material respects true, accurate and complete or if
ABA or the Purchaser breaches in any material respect any covenant contained in
this Agreement, provided that such misrepresentation or breach is not cured
within ten (10) business days after notice thereof, but in any event prior to
the Termination Date or (2) any of the conditions precedent to Seller's, the
Executive's or the Stockholder's obligations to conduct the Closing have not
been satisfied by the date required thereof. If this Agreement is terminated
pursuant to this Section 6.4, written notice thereof shall promptly be given by
the party electing such termination to the other party and, subject to the
expiration of the cure periods provided in clauses (iii) and (iv) above, if
any, this Agreement shall terminate without further actions by the parties and
no party shall have any further obligations under this Agreement.
Notwithstanding the preceding sentence, the respective obligations of the
parties under Sections
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7.3, 7.5(b), 7.7, 8.9 and 8.15 shall survive the termination of this Agreement.
Notwithstanding anything to the contrary contained herein, if the termination
of this Agreement is a result of the willful misrepresentation, willful
inaccuracy or omission in a representation, willful breach of warranty, fraud
or any willful failure to perform or comply with any covenant or agreement
contained herein, the aggrieved party shall be entitled to recover from the
non-performing party all out-of-pocket expenses which such aggrieved party has
incurred and the termination of this Agreement shall not be deemed or construed
as limiting or denying any other legal or equitable right or remedy of such
party.
ARTICLE VII
Covenants
Section 7.1 Interim Operations of the Company
During the period from the date of this Agreement
to the Closing date, except with Purchaser's prior specific written consent or
as expressly contemplated by this Agreement, the Seller shall, and the
Executive and the Stockholder shall cause the Seller to operate its business
only in the ordinary and usual course and to preserve intact its business
organization and good will in all respects. Additionally, during the period
from the date of this Agreement to the Closing date, the Seller shall not, and
the
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Executive and the Stockholder shall cause the Seller not to, do any of the
following (unless expressly permitted in writing by Purchaser):
(i) amend its Certificate of Incorporation or
By-Laws;
(ii) issue, sell or authorize for issuance or
sale, shares of any class of its
securities (including, but not limited
to, by way of stock split or dividend) or
any subscriptions, options, warrants,
rights or convertible securities, or
enter into any agreements or commitments
of any character obligating it to issue
or sell any such securities;
(iii) redeem, purchase or otherwise
acquire, directly or indirectly,
any shares of its capital stock or
any option, warrant or other right
to purchase or acquire any such
shares;
(iv) declare or pay any dividend or other
distribution (whether in cash, stock or
other property) with respect to its
capital stock;
(v) voluntarily sell, transfer, surrender,
abandon or dispose of any of its assets
or property rights (tangible or
intangible), other than in the ordinary
course of business;
(vi) grant or make any mortgage or
pledge or subject itself or any of
its properties or assets to any
lien, charge or encumbrance of any
kind, except liens for taxes not
currently due;
(vii) create, incur or assume any liability or
indebtedness, except in the ordinary
course of business;
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(viii) make or commit to make any capital
expenditures exceeding in the aggregate
Five Thousand Dollars ($5,000.00);
(ix) become subject to any Guaranty;
(x) apply any of its assets to the direct or
indirect payment, discharge, satisfaction
or reduction of any amount payable
directly or indirectly to or for the
benefit of the Seller or any Affiliate of
the Seller or any Related Party or to the
prepayment of any such amounts, other
than compensation benefits, and expenses
payable in the ordinary course of
business to Seller and scheduled lease
payments under Leases listed on
Schedule 3.22;
(xi) grant any increase in the compensation
payable or to become payable to
directors, officers or employees
(including, without limitation, any such
increase pursuant to any bonus, pension,
profit-sharing or other plan or
commitment);
(xii) enter into any agreement which
would be a Material Agreement, or
amend or terminate any existing
Material Agreement, which is
outside the ordinary course of
business;
(xiii) alter the manner of keeping its books,
accounts or records, or change in any
manner the accounting practices therein
reflected;
(xiv) except as set forth on Schedule
7.1, enter into any commitment or
transaction other than in the
ordinary course of business
including, but not limited to, the
making of any loan to any Person;
(xv) do any act, or omit to do any act, or
permit to the extent within the Company's
or the Seller's control, any act or
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omission to act which would cause a
violation or breach of any of the
representations, warranties or covenants
of the Seller set forth in this
Agreement;
(xvi) take any action which has an
adverse effect on the condition
(financial or otherwise), results
of operations, assets, liabilities,
properties, business or prospects
of the Seller, or on employee,
customer or supplier relations;
(xvii) alter in any manner any of the
Seller's existing working capital
facilities including, but not
limited to, the Seller's working
capital facility with Key Bank;
(xviii) provide any sample or promotional
products of the Seller to any Person
without receiving appropriate amounts in
consideration therefor; or
(xix) agree, whether in writing or otherwise,
to do any of the foregoing.
Section 7.2 Access
The Executive and the Stockholder shall, and shall
cause the Seller to, afford to Purchaser and its agents and representatives,
access throughout the period prior to the Closing date to the properties,
books, records and contracts of the Seller, for the purpose of permitting
Purchaser to fully investigate and perform a due diligence review of the
Seller, its businesses, assets and properties, and financial condition,
provided that such access shall be granted during normal business hours in such
a manner as to not unreasonably interfere with the Seller's normal
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business operations. During such period the Seller shall furnish promptly to
Purchaser copies of (i) all correspondence received or sent by or on behalf of
the Seller from or to any governmental authority and (ii) all other information
and documents concerning its business, assets, liabilities, properties and
personnel as Purchaser may reasonably request.
Section 7.3 Confidentiality (through Closing Date)
Except as otherwise required in the performance of
obligations under this Agreement and except as otherwise required by law, any
non-public information received by a party or its advisors from the other party
shall be kept confidential and shall not be used or disclosed for any purpose
other than in furtherance of the transactions contemplated by this Agreement.
Purchaser shall not use (or permit to be used) through the Closing date any
confidential information in any manner to compete against the Seller, whether
with respect to corporate acquisitions, sales, financing, development,
management, investment, or otherwise. The obligation of confidentiality shall
not extend to information (a) which is or shall become generally available to
the public other than as a result of an unauthorized disclosure by a party to
this Agreement or a person to whom a party has provided such information, (b)
which was available to a party to this Agreement on a nonconfidential basis
prior to its disclosure by one party to the
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other pursuant to this Agreement or (c) which is disclosed by Purchaser in any
legal proceeding requiring any such disclosure. Upon termination of this
Agreement, each party shall promptly return any confidential information
received from the other party and, upon request, shall destroy any copies of
such information in its possession. The covenants of the parties contained in
this Section 7.3 shall survive any termination of this Agreement until the
earlier of (i) two (2) years from the date hereof, or (ii) the date when such
information becomes generally available to the public, but shall terminate at
the Closing, if it occurs, with respect to information concerning the Seller
that is in the possession of the Executive and the Stockholder. Notwithstanding
anything to the contrary contained herein, the foregoing shall in no way
prevent or limit ABA or the Purchaser in conducting its existing and
prospective businesses.
Section 7.4 Notification
Each party to this Agreement shall promptly notify
the other party in writing of the occurrence, or pending or threatened
occurrence, of any event that would constitute a breach or violation of this
Agreement by any party or that would cause any representation or warranty made
by the notifying party in this Agreement to be false or misleading in any
respect (including without limitation, any event or circumstance which would
have been
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required to be disclosed on any schedule to this Agreement had such event or
circumstance occurred or existed on or prior to the date of this Agreement).
Any such notification or inadvertent failure to give such notification shall
not limit or alter any of the representations, warranties or covenants of the
parties set forth in this Agreement nor any rights or remedies a party may have
with respect to a breach of any representation, warranty or covenant.
Section 7.5 Exclusivity
(a) The Seller agrees that unless this
Agreement has been terminated in accordance with Section 6.4 hereof, neither
the Seller, nor its Affiliates, representatives, employees or agents
(collectively, "Agents") will, commencing on the date of this Agreement and
continuing through September 30, 1996 (the "Exclusive Period"), directly or
indirectly, (i) solicit, encourage or negotiate any proposal (whether solicited
or unsolicited) for, or execute any agreement relating to, a sale of all or any
part of the Seller or its assets or a sale of any equity or debt security of
the Seller or any merger, consolidation, recapitalization or similar
transaction involving the Seller with any other party (any of the foregoing is
referred to as an "Acquisition Proposal"), (ii) provide any information
regarding the Seller to any third party for the purpose of soliciting,
encouraging or negotiating an Acquisition Proposal (it being understood that
nothing contained in
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clauses (i) or (ii) above shall restrict the Seller or any of its Agents from
providing information as required by legal process), or (iii) operate the
business of the Seller other than in the ordinary course of business without
prior notice to, and the prior written consent of, the Purchaser.
(b) In the event that the Seller does not
consummate the transactions contemplated by this Agreement as a result of the
Seller's breach of Section 7.5(a) hereof, the Seller shall be liable to ABA for
all costs and expenses actually incurred by ABA in pursuit of the transaction,
together with the payment of liquidated damages to ABA in the agreed upon
amount of $250,000.
Section 7.6 Non-Competition
The Seller, the Executive and the Stockholder
acknowledge that in order to assure Purchaser that Purchaser will retain the
value of the Purchased Assets, the Seller, the Executive and the Stockholder
agree, on the terms set forth in this Section 7.6, not to utilize their special
knowledge of the business of the Seller and their relationships with customers,
suppliers and others to compete with ABA, the Purchaser and their respective
Subsidiaries and Affiliates at the time in question. For a period of five (5)
years beginning on the Closing date, each of the Seller, the Executive and the
Stockholder and their respective Affiliates at the time of determination, shall
not engage or have
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an interest, anywhere in the United States of America or any other geographic
area where ABA or the Purchaser does business at the date hereof or in which
its products are marketed at the date hereof (in each case after giving effect
to the purchase of the Purchased Assets), alone or in association with others,
as principal, officer, agent, employee, director, partner, lender or
stockholder (except as an employee or consultant of Purchaser or any of its
Affiliates or as an owner of two percent (2%) or less of the stock of any
company listed on a national securities exchange or traded in the
over-the-counter market), or through the investment of capital, lending of
money or property, rendering of services or capital, or otherwise, in any
business competitive with or similar to that engaged in by ABA or the Purchaser
at the date hereof (in each case after giving effect to the purchase of the
Purchased Assets). During the same period, the Seller, the Executive, the
Stockholder and their then respective Affiliates shall not (except as an
employee or consultant of Purchaser or its Affiliates), and shall not permit
any of their respective employees, agents or others then under their control
to, directly or indirectly, on behalf of the Seller, the Executive and the
Stockholder or any other Person, (i) call upon, accept competitive business
from, or solicit the competitive business of any Person who is, or who had been
at any time during the preceding three (3)
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years, a customer or supplier of the Seller or any successor to the business of
the Seller or any such successor, or (ii) recruit or otherwise solicit or
induce any person who is an employee of, or otherwise engaged by, the Seller or
any successor to the business of the Seller to terminate his or her employment
or other relationship with the Seller or such successor, or hire any person who
has left the employ of Purchaser or any such successor during the preceding
three (3) years. The Seller, the Executive and the Stockholder shall not at any
time, directly or indirectly, use or purport to authorize any Person to use any
name, mark, logo, trade dress or other identifying words or images which are
the same as or similar to those used currently or in the past by the Seller in
connection with any product or service, whether or not such use would be in a
business competitive with that of the Seller, ABA or the Purchaser. The
Executive and the Stockholder acknowledge that compliance with the restrictions
set forth in this Section 7.6 will not prevent them from earning a livelihood.
As used herein, the phrase "competitive business" means any business
competitive with the type of business engaged in by the Seller, ABA, the
Purchaser or any of their Subsidiaries or Affiliates at the date hereof.
Section 7.7 General Confidentiality
The Seller, the Executive and the Stockholder
acknowledge that the Intangible Property and all other confidential
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or proprietary information with respect to the business and operations of the
Seller are valuable, special and unique assets of the Seller and are an
integral part of the Purchased Assets. The Seller, the Executive and the
Stockholder shall not, at any time after the Closing date, disclose, directly
or indirectly, to any Person, or use or purport to authorize any Person to use
any confidential or proprietary information with respect to the Seller, ABA, or
the Purchaser whether or not for the Executive's or the Stockholder's own
benefit, without the prior written consent of Purchaser or unless required by
law, including without limitation, information as to the financial condition,
results of operations, customers, suppliers, products, products under
development, inventions, sources, leads or methods of obtaining new products or
business, Intangible Property, pricing methods or formulas, cost of supplies,
marketing strategies or any other information relating to the Seller, ABA or
the Purchaser, which could reasonably be regarded as confidential. The Seller,
the Executive and the Stockholder acknowledge that Purchaser would not enter
into this Agreement without the assurance that all such confidential and
proprietary information will be used for the exclusive benefit of ABA and the
Purchaser.
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Section 7.8 Continuing Obligations
The restrictions set forth in Sections 7.6 and 7.7
are considered by the parties to be reasonable for the purposes of protecting
the value of the business and good will purchased by the Purchaser. ABA, the
Purchaser, the Seller, the Executive and the Stockholder acknowledge that ABA
and the Purchaser would be irreparably harmed and that monetary damages would
not provide an adequate remedy to ABA and the Purchaser in the event the
covenants contained in Sections 7.6 and 7.7 were not complied with in
accordance with their terms. Accordingly, Seller, the Executive and the
Stockholder agree that any breach or threatened breach by any of them of any
provision of Sections 7.6 or 7.7 shall entitle ABA and the Purchaser to
injunctive and other equitable relief to secure the enforcement of these
provisions, in addition to any other remedies (including damages) which may be
available to ABA and the Purchaser. If the Seller, the Executive or the
Stockholder breach the covenant set forth in Section 7.6, the running of the
five (5) year non-compete period described therein shall be tolled for so long
as such breach continues. It is the desire and intent of the parties that the
provisions of Sections 7.6 and 7.7 be enforced to the fullest extent
permissible under the laws and public policies of each jurisdiction in which
enforcement is sought. If any provisions of Sections 7.6 and 7.7 relating to
the
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time period, scope of activities or geographic area of restrictions is declared
by a court of competent jurisdiction to exceed the maximum permissible time
period, scope of activities or geographic area, as the case may be, the time
period, scope of activities or geographic area shall be reduced to the maximum
which such court deems enforceable. If any provisions of Section 7.6 or 7.7
other than those described in the preceding sentence are adjudicated to be
invalid or unenforceable, the invalid or unenforceable provisions shall be
deemed amended (with respect only to the jurisdiction in which such
adjudication is made) in such manner as to render them enforceable and to
effectuate as nearly as possible the original intentions and agreement of the
parties. In addition, if any party brings an action to enforce Sections 7.3,
7.6 or 7.7 hereof or to obtain damages for a breach thereof, such party shall
not be required to post bond, and the prevailing party in such action shall be
entitled to recover from the non-prevailing party all attorney's fees and
expenses incurred by the prevailing party in such action.
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ARTICLE VIII
Miscellaneous
Section 8.1 Notices
Any notice, demand, claim or other communication
under this Agreement shall be in writing and shall be deemed to have been given
upon the delivery, mailing or transmission thereof, as the case may be, if
delivered personally or sent by certified mail, return receipt requested,
postage prepaid, or sent by facsimile or prepaid overnight courier to the
parties at the addresses set forth herein (or at such other addresses as shall
be specified by the parties by like notice). A copy of any notices delivered to
ABA or the Purchaser shall also be sent to Kane Kessler, P.C., 1350 Avenue of
the Americas, New York, New York 10019, Attention: Robert L. Lawrence, Esq.,
Fax No. (212) 245-3009. A copy of any notices delivered to the Seller, the
Executive or the Stockholder shall also be sent to Kaufman & Cumberland, 1404
East 9th Street, Third Floor, Cleveland, Ohio 44114, Attention: Frank
Cumberland, Esq., Fax No. (216) 694-6890.
Section 8.2 Entire Agreement
This Agreement contains every obligation and
understanding between the parties relating to the subject matter
hereof and merges all prior discussions, negotiations and
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agreements, if any, between them, and none of the parties shall be bound by any
conditions, definitions, understandings, warranties or representations other
than as expressly provided or referred to herein; provided, however, that the
letter agreement, dated July 17, 1996, among ABA, the Seller, the Executive and
the Stockholder shall remain in full force and effect and shall be unaffected
by the execution of this Agreement.
Section 8.3 Binding Effect
This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, heirs,
personal representatives, legal representatives, and permitted assigns.
Section 8.4 Knowledge of the Parties
Where any representation or warranty contained in
this Agreement is expressly qualified by reference to the best knowledge or to
the knowledge of any of the parties hereto, each of the parties hereto
acknowledges and confirms that it has made due and diligent inquiry as to the
matters that are the subject of such representations and warranties.
Section 8.5 Assignment
This Agreement may not be assigned by any party
without the written consent of the other party, provided, that ABA
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and/or the Purchaser may assign this Agreement to an Affiliate of
ABA and/or the Purchaser.
Section 8.6 Waiver and Amendment
Any representation, warranty, covenant, term or
condition of this Agreement which may legally be waived, may be waived, or the
time of performance thereof extended, at any time by the party hereto entitled
to the benefit thereof, and any term, condition or covenant hereof (including,
without limitation, the period during which any condition is to be satisfied or
any obligation performed) may be amended by the parties thereto at any time.
Any such waiver, extension or amendment shall be evidenced by an instrument in
writing executed on behalf of the appropriate party by its President or any
Vice President or other person, who has been authorized by its Board of
Directors to execute waivers, extensions or amendments on its behalf. No waiver
by any party hereto, whether express or implied, of its rights under any
provision of this Agreement shall constitute a waiver of such party's rights
under such provisions at any other time or a waiver of such party's rights
under any other provision of this Agreement. No failure by any party thereof to
take any action against any breach of this Agreement or default by another
party shall constitute a waiver of the former party's right to enforce any
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provision of this Agreement or to take action against such breach or default or
any subsequent breach or default by such other party.
Section 8.7 No Third Party Beneficiary
Except for the provisions of Section 5.4, nothing
expressed or implied in this Agreement is intended, or shall be construed, to
confer upon or give any Person other than the parties hereto and their
respective heirs, personal representatives, legal representatives, successors
and permitted assigns, any rights or remedies under or by reason of this
Agreement.
Section 8.8 Severability
In the event that any one or more of the
provisions contained in this Agreement shall be declared invalid, void or
unenforceable, the remainder of the provisions of this Agreement shall remain
in full force and effect, and such invalid, void or unenforceable provision
shall be interpreted as closely as possible to the manner in which it was
written.
Section 8.9 Expenses
Each party agrees to pay, without right of
reimbursement from the other party, the costs incurred by it incident to the
performance of its obligations under this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, costs incident
to the preparation of this Agreement, and the fees and disbursements of
counsel,
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accountants and consultants employed by such party in connection
herewith.
Section 8.10 Headings
The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of any provisions of this Agreement.
Section 8.11 Counterparts
This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 8.12 Time of the Essence
Wherever time is specified for the doing or
performance of any act or the payment of any funds, time shall be
considered of the essence.
Section 8.13 Injunctive Relief
It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to equitable
relief including, without limitation, injunctive relief, specific performance
or other equitable remedies in addition to all other remedies provided
hereunder or available to the parties hereto at law or in equity.
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Section 8.14 Remedies Cumulative
No remedy made available by any of the provisions
of this Agreement is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity.
Section 8.15 Governing Law; Jurisdiction
This Agreement has been entered into and shall be
construed and enforced in accordance with the laws of the State of New York
without reference to the choice of law principles thereof. Any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement and the transactions contemplated hereby may be brought
against any of the parties in the courts of the State of New York, County of
New York, or, if it has or can acquire jurisdiction, in the United States
District Court for the Southern District of New York, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.
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Section 8.16 Participation of Parties
The parties hereto acknowledge that this Agreement
and all matters contemplated herein, have been negotiated among all parties
hereto and their respective legal counsel and that all such paries have
participated in the drafting and preparation of this Agreement from the
commencement of negotiations at all times through the execution hereof.
Section 8.17 Further Assurances
The parties hereto shall deliver any and all other
instruments or documents required to be delivered pursuant to, or necessary or
proper in order to give effect to, all of the terms and provisions of this
Agreement including, without limitation, all necessary instruments of
assignment and transfer and such other documents as may be necessary or
desirable to transfer ownership of the Purchased Assets.
Section 8.18 Publicity
No public announcement or other publicity
regarding this Agreement or the transactions contemplated hereby or thereby
shall be made prior to or after the date hereof without the prior written
consent of both ABA and the Seller as to form, content, timing and manner of
distribution. Notwithstanding the foregoing, nothing in this Agreement shall
preclude ABA or its Affiliates from making any public announcement or filing
required by federal or state securities laws or stock exchange rules.
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IN WITNESS WHEREOF, the parties hereto have each executed and
delivered this Agreement as of the day and year first above written.
SELLER:
DEFENSE TECHNOLOGY CORPORATION
OF AMERICA
By: /s/ Robert Oliver
Robert L. Oliver
CEO
EXECUTIVE:
/s/ Robert L. Oliver
Robert Oliver
STOCKHOLDER:
/s/ Sandra Oliver
Sandra Oliver
PURCHASER:
DEFENSE TECHNOLOGY CORPORATION
OF AMERICA
By: /s/ Jonathan M. Spiller
Jonathan M. Spiller
President and CEO
ARMOR HOLDINGS, INC.
By: /s/ Jonathan M. Spiller
Jonathan M. Spiller
President and CEO
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