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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
concerning the stock of
H. H. CUTLER COMPANY
by and among
V.F. CORPORATION
as Buyer
and
THE SHAREHOLDERS OF
H. H. CUTLER COMPANY
as Sellers
October 12, 1993
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TABLE OF CONTENTS
Page
----
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 SALE AND PURCHASE OF STOCK . . . . . . . . . . . . . . . . 1
Section 1.1. Agreement to Sell and Purchase Stock . . . . . . . 1
Section 1.2. Purchase Price; Payment . . . . . . . . . . . . . . 1
Section 1.3. Bank Deposit . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . 2
Section 2.1. Disclosure Schedule . . . . . . . . . . . . . . . . 2
Section 2.2. Organization and Standing of the Company . . . . . . 2
Section 2.3. Capitalization of the Company . . . . . . . . . . . 2
Section 2.4. Subsidiaries of the Company; Other Ventures . . . . 3
Section 2.5. Organization and Standing of the Subsidiaries . . . 3
Section 2.6. Capitalization of the Subsidiaries . . . . . . . . 3
Section 2.7. Ownership of the Stock and the Subsidiaries'
Stock . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.8. Authorization and Enforceability . . . . . . . . . 4
Section 2.9. Financial Statements . . . . . . . . . . . . . . . 4
Section 2.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.11. Absence of Undisclosed Liabilities . . . . . . . . 5
Section 2.12. Absence of Certain Changes or Events . . . . . . . . 6
Section 2.13. Employees; Benefit Plans . . . . . . . . . . . . . 7
Section 2.14. Owned and Leased Real Property . . . . . . . . . . 8
Section 2.15. Owned and Leased Personal Property . . . . . . . . 8
Section 2.16. Intangible Property . . . . . . . . . . . . . . . . 8
Section 2.17. Litigation . . . . . . . . . . . . . . . . . . . . 9
Section 2.18. Contracts . . . . . . . . . . . . . . . . . . . . . 9
Section 2.19. Insurance . . . . . . . . . . . . . . . . . . . . . 10
Section 2.20. Bank Accounts . . . . . . . . . . . . . . . . . . . 10
Section 2.21. Permits and Licenses; Compliance with Law and Other
Regulations . . . . . . . . . . . . . . . . . . . . 10
Section 2.22. Customers and Suppliers . . . . . . . . . . . . . . 10
Section 2.23. Brokers' Fees . . . . . . . . . . . . . . . . . . . 10
Section 2.24. Environmental Compliance . . . . . . . . . . . . . 11
Section 2.25. Financial Projections . . . . . . . . . . . . . . . 12
Section 2.26. Full Disclosure . . . . . . . . . . . . . . . . . . 12
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ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . 12
Section 3.1. Organization and Standing of Buyer . . . . . . . . . 12
Section 3.2. Authorization and Enforceability . . . . . . . . . . 12
Section 3.3. Brokers' Fees . . . . . . . . . . . . . . . . . . . . 13
Section 3.4. Investment Intent . . . . . . . . . . . . . . . . . . 13
Section 3.5. Full Disclosure . . . . . . . . . . . . . . . . . . . 13
ARTICLE 4 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.1. Closing . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.2. Obligations of Sellers . . . . . . . . . . . . . . . 13
Section 4.3. Obligations of Buyer . . . . . . . . . . . . . . . . 14
Section 4.4. Further Documents or Necessary Action . . . . . . . . . 14
ARTICLE 5 COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . 14
Section 5.1. Conduct of Business Pending the Closing . . . . . . . . 14
Section 5.2. Access By Buyer; Confidentiality . . . . . . . . . . 15
Section 5.3. Notice of Breach or Failure of Condition . . . . . . . 15
Section 5.4. Best Efforts . . . . . . . . . . . . . . . . . . . . 15
Section 5.5. Certain Compensation and Contract Buy-Outs. . . . . . . 15
Section 5.6. Non-Competition Agreements . . . . . . . . . . . . . . 16
Section 5.7. Life Insurance Policies; Automobiles . . . . . . . . . 16
ARTICLE 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER . . . . . . . . 17
Section 6.1. Representations and Warranties True at Closing . . . 17
Section 6.2. Performance . . . . . . . . . . . . . . . . . . . . . 17
Section 6.3. No Adverse Changes . . . . . . . . . . . . . . . . . 17
Section 6.4. Litigation . . . . . . . . . . . . . . . . . . . . . 17
Section 6.5. Necessary Consents . . . . . . . . . . . . . . . . . 17
Section 6.6. Certificate . . . . . . . . . . . . . . . . . . . . . 18
Section 6.7. Opinion of Counsel . . . . . . . . . . . . . . . . . 18
Section 6.8. Removal of Title Objections . . . . . . . . . . . . . 18
Section 6.9. Consents . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.10. Termination of Employment Contracts . . . . . . . . . 18
Section 6.11. Employment/Non-Competition Agreements . . . . . . . . 18
Section 6.12. Closing Date Interest-Bearing Indebtedness. . . . . . . 19
ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS . . . . . . . . 19
Section 7.1. Representations and Warranties True at Closing . . . 19
Section 7.2. Performance . . . . . . . . . . . . . . . . . . . . . 19
Section 7.3. Necessary Consents . . . . . . . . . . . . . . . . . 19
Section 7.4. Certificate . . . . . . . . . . . . . . . . . . . . . 19
Section 7.5. Opinion of Counsel . . . . . . . . . . . . . . . . . 20
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Section 7.6. Employment Agreement . . . . . . . . . . . . . . . . 20
Section 7.7. Receipt of Payments . . . . . . . . . . . . . . . . . 20
ARTICLE 8 INDEMNIFICATION AND RELATED MATTERS . . . . . . . . . . . . . 20
Section 8.1. Survival of Representations and Warranties. . . . . . . 20
Section 8.2. Indemnification by Sellers . . . . . . . . . . . . . 20
Section 8.3. Indemnification by Buyer . . . . . . . . . . . . . . 22
Section 8.4. Third Party Claims . . . . . . . . . . . . . . . . . 23
ARTICLE 9 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 9.1. Termination by Mutual Consent . . . . . . . . . . . . 24
Section 9.2. Termination Upon Breach or Default . . . . . . . . . 24
Section 9.3. Termination Based Upon Failure of Conditions . . . . . 24
Section 9.4. Final Expiration . . . . . . . . . . . . . . . . . . 24
ARTICLE 10 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 11 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 11.1. Entire Agreement . . . . . . . . . . . . . . . . . . 27
Section 11.2. Binding Effect; Benefits; Assignment . . . . . . . . . 27
Section 11.3. Construction . . . . . . . . . . . . . . . . . . . . 27
Section 11.4. Amendment and Waiver . . . . . . . . . . . . . . . . 27
Section 11.5. Governing Law . . . . . . . . . . . . . . . . . . . 27
Section 11.6. Public Disclosure . . . . . . . . . . . . . . . . . 28
Section 11.7. Notices . . . . . . . . . . . . . . . . . . . . . . 28
Section 11.8. Counterparts . . . . . . . . . . . . . . . . . . . . 29
Section 11.9. Expenses . . . . . . . . . . . . . . . . . . . . . . 29
EXHIBITS
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Exhibit A - Allocation of Purchase Price
DISCLOSURE SCHEDULES
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Schedule 1 - Organization and Standing of the Company
Schedule 2 - Organization and Standing of the Subsidiaries
Schedule 3 - Authorization and Enforceability
Schedule 4 - Financial Statements
Schedule 5 - Taxes
Schedule 6 - Absence of Certain Changes or Events
Schedule 7 - Employees; Benefit Plans
Schedule 8 - Owned and Leased Real Property
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Schedule 9 - Owned and Leased Personal Property
Schedule 10 - Intangible Property
Schedule 11 - Litigation
Schedule 12 - Contracts
Schedule 13 - Insurance
Schedule 14 - Bank Accounts
Schedule 15 - Permits and Licenses; Compliance with Law and Other Regulations
Schedule 16 - Customers and Suppliers
Schedule 17 - Environmental Compliance
Schedule 18 - Financial Projections
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 12th day
of October, 1993, by and among V.F. CORPORATION, a Pennsylvania corporation
("Buyer"), and each of the shareholders of H. H. Cutler Company, a Michigan
corporation, as identified on Exhibit A to this Agreement (collectively,
"Sellers").
PREAMBLE
Sellers own collectively, beneficially and of record, all of the issued
and outstanding shares of capital stock of H. H. Cutler Company, a Michigan
corporation (the "Company"). Buyer desires to purchase from Sellers, and
Sellers desire to sell to Buyer, all of the issued and outstanding shares of
capital stock of the Company in accordance with the terms and subject to the
conditions set forth in this Agreement.
ACCORDINGLY, THE PARTIES AGREE AS FOLLOWS:
ARTICLE 1
SALE AND PURCHASE OF STOCK
Section 1.1. Agreement to Sell and Purchase Stock. On the terms and
subject to the conditions of this Agreement, Sellers agree to sell to Buyer and
Buyer agrees to purchase from Sellers all of the outstanding shares of capital
stock of the Company, which consist of one hundred ninety-six thousand eight
hundred (196,800) shares of common stock, One Dollar ($1) par value per share,
ninety-eight thousand four hundred (98,400) shares of voting preferred stock,
Ten Dollars ($10) par value per share, and four hundred ninety-two thousand
(492,000) shares of non-voting preferred stock, Ten Dollars ($10) par value per
share (collectively, the "Stock").
Section 1.2. Purchase Price; Payment. The purchase price to be paid by
Buyer to Sellers for the Stock shall be One Hundred and Three Million Four
Hundred Fifty Thousand Dollars ($103,450,000), plus the Income (as defined in
Section 1.3 below) (the "Purchase Price") and shall be paid at Closing by wire
transfer of immediately available funds. The Purchase Price shall be allocated
among Sellers as set forth on Exhibit A. In addition, Buyer will assume up to
Thirty Million Dollars ($30,000,000) in interest-bearing indebtedness, plus any
additional funded indebtedness incurred by the Company to enable it to discharge
its obligations set forth in Sections 5.5 and 5.6 below, and Buyer shall
contribute to the Company at the Closing additional paid-in capital or otherwise
make resources available to the Company sufficient to enable the Company to
discharge on the Closing Date such additional indebtedness and to enable the
Company to discharge its obligations under Sections 5.5 and 5.6 below to the
extent not discharged prior to the Closing Date.
Section 1.3. Bank Deposit. Upon the execution of this Agreement by
Buyer, Buyer shall deposit into escrow with a bank selected by it the sum of
Forty Million Dollars ($40,000,000), which amount shall be invested in bank
certificates of deposit, short-term obligations of the United
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States Government or any other similar legal investment provided that it is
promptly convertible into cash. All interest or income earned thereon
("Income") shall be paid to Sellers by Buyer on the Closing Date as part of the
Purchase Price. Sellers shall only receive the Income upon the Closing of the
transactions contemplated by this Agreement. If the transactions contemplated
by this Agreement are not consummated, Buyer shall be entitled to terminate the
referenced escrow account and receive the Income (without limiting any other
rights which Sellers may have under this Agreement).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent and warrant to Buyer as follows:
Section 2.1. Disclosure Schedule. Sellers have delivered or caused to be
delivered to Buyer, prior to the execution of this Agreement, disclosure
schedules and documents relating thereto, which include the numbered schedules
specifically referred to in this Agreement and which are attached hereto
(collectively, the "Disclosure Schedule"). The information contained in the
Disclosure Schedule is complete and accurate in all material respects and all
documents that are attached to the Disclosure Schedule are complete and accurate
copies of the genuine original documents they purport to represent as in effect
on the date hereof. Capitalized terms used in the Disclosure Schedule and not
otherwise defined therein have the meanings ascribed such terms in this
Agreement.
Section 2.2. Organization and Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Michigan. The Company has all requisite corporate power and
authority to own, lease and operate the properties now owned or leased by it and
to carry on its business as presently conducted. The Company is duly qualified
to do business as a foreign corporation in each of the jurisdictions identified
on Schedule 1 of the Disclosure Schedule, and to the best of Sellers' knowledge
the Company is not required to qualify to do business in any other jurisdiction,
except where the failure to so qualify has not had and would not reasonably be
expected to have an effect on the business of the Company or any of its
Subsidiaries that is or is reasonably likely to be materially adverse to the
business, operations, properties (including intangible properties), prospects,
condition (financial or otherwise), assets or liabilities of the Company and its
Subsidiaries taken as a whole (a "Material Adverse Effect"). A certified copy
of the Company's Articles of Incorporation and Bylaws are attached to Schedule 1
of the Disclosure Schedule.
Section 2.3. Capitalization of the Company. The duly authorized capital
stock of the Company consists of two hundred thousand (200,000) shares of common
stock, One Dollar ($1) par value per share, one hundred thousand (100,000)
shares of voting preferred stock, Ten Dollars ($10) par value per share, and
five hundred thousand (500,000) shares of non-voting preferred stock, Ten
Dollars ($10) par value per share, of which only the Stock is issued and
outstanding.
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There are no other classes or series of capital stock of the Company. The Stock
is duly and validly authorized and issued, fully paid and nonassessable and has
not been issued in violation of any Law or any charter or other provision
regarding pre-emptive, anti-dilution or similar rights of shareholders. There
are no outstanding subscriptions, options, rights, warrants, puts, calls or
other agreements or commitments of any type (a) obligating any Seller or the
Company to issue, sell or transfer any shares of capital stock of the Company,
any securities convertible into shares of capital stock of the Company, or any
other rights to acquire capital stock of the Company; (b) obligating any Seller
or the Company to grant, offer or enter into any of the foregoing; or (c) except
as disclosed on Schedule 1 of the Disclosure Schedule, relating to the voting or
control of any shares of capital stock of the Company.
Section 2.4. Subsidiaries of the Company; Other Ventures. Each business
entity in which the Company owns a fifty percent (50%) or greater equity
interest (a "Subsidiary") is identified on Schedule 2 of the Disclosure
Schedule. Except as disclosed on Schedule 2 of the Disclosure Schedule, the
Company does not currently have any ownership interest in any other business
entity and is not a member of any partnership or joint venture. Neither the
Company, any Subsidiary nor any Seller has the ability, individually or
collectively, to either (a) elect a majority of the Board of Directors of any
entity in which the Company owns less than fifty percent (50%) equity interest
(a "Non-Subsidiary") or (b) control, through ownership, contract or otherwise,
the management of the business or operations of any Non-Subsidiary other than as
disclosed on Schedule 2.
Section 2.5. Organization and Standing of the Subsidiaries. Each
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, as identified
on Schedule 2 of the Disclosure Schedule. Each Subsidiary has all requisite
corporate power and authority to own, lease and operate the properties now owned
or leased by it and to carry on its business as presently conducted. Each
Subsidiary is duly qualified to do business as a foreign corporation in each of
the jurisdictions identified on Schedule 2 of the Disclosure Schedule, and
except as disclosed on Schedule 2 of the Disclosure Schedule, the Subsidiaries
are not required to qualify to do business in any other jurisdiction, except
where the failure to so qualify has not had and would not reasonably be expected
to have a Material Adverse Effect. A certified copy of each Subsidiaries'
document of incorporation and Bylaws are attached to Schedule 2 of the
Disclosure Schedule.
Section 2.6. Capitalization of the Subsidiaries. The duly authorized
capital stock of each Subsidiary and the number of shares of capital stock
issued and outstanding for each Subsidiary is set forth on Schedule 2 of the
Disclosure Schedule (the "Subsidiaries' Stock"). There are no other classes or
series of shares of capital stock of the Subsidiaries. The Subsidiaries' Stock
is duly and validly authorized and issued, fully paid and nonassessable and has
not been issued in violation of any Law or any charter or other provision
regarding preemptive, anti-dilution or similar rights of shareholders. There
are no outstanding subscriptions, options, rights, warrants, puts, calls,
registration or other agreements or commitments of any type (a) obligating the
Company or any Subsidiary to issue, sell or transfer any shares of capital stock
of any Subsidiary, any securities convertible into shares of capital stock of
any Subsidiary, or any other rights to acquire shares of
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capital stock of any Subsidiary; (b) obligating the Company or any Subsidiary to
grant, offer or enter into any of the foregoing; or (c) except as disclosed on
Schedule 2 of the Disclosure Schedule, relating to the voting or control of any
shares of capital stock of any Subsidiary owned by the Company.
Section 2.7. Ownership of the Stock and the Subsidiaries' Stock.
(a) Sellers own collectively, beneficially and of record, and have
valid title to all of the Stock, free and clear of any and all transfer
restrictions, Liens, rights of third parties or other adverse claims of any
nature whatsoever (collectively, "Restrictions"). The number and class of
shares of Stock owned by each Seller is set forth on Exhibit A to this
Agreement.
(b) The Company owns, beneficially and of record, and has valid title
to all of the Subsidiaries' Stock reflected as owned by it on Schedule 2 of
the Disclosure Schedule, free and clear of all Restrictions.
Section 2.8. Authorization and Enforceability. Each Seller has the full
and unrestricted legal right, power and authority to enter into this Agreement
and the Related Documents to which he, she or it is a party, to carry out the
transactions contemplated hereby and thereby, to perform the obligations
hereunder and thereunder, and to sell, assign, transfer and deliver the Stock to
Buyer free and clear of all Restrictions. All necessary and appropriate action
has been taken by Sellers with respect to the execution and delivery of this
Agreement and each of the Related Documents and the performance of their
respective obligations hereunder and thereunder. Except with respect to
expiration of the Hart-Scott-Rodino waiting period, no authorization, consent or
approval of, or filing with, any third party or Governmental Authority is
necessary for the consummation by Sellers of the transactions contemplated by
this Agreement or any Related Document. The execution and delivery of this
Agreement and the Related Documents and the consummation of the contemplated
transactions by Sellers will not (a) result in the breach of any of the terms or
conditions of or constitute a default under the Articles of Incorporation or the
By-Laws of the Company, (b) violate any Law or any order, writ, injunction or
decree of any Governmental Authority, (c) except as disclosed on Schedule 3 of
the Disclosure Schedule, conflict with or constitute a default under any
agreement or commitment that is binding upon any Seller or the Company, which
conflict or default would have a Material Adverse Effect, or (d) except as
disclosed on Schedule 3 of the Disclosure Schedule, result in the acceleration
of any indebtedness of the Company. This Agreement constitutes a valid and
binding obligation of Sellers, enforceable against each of them in accordance
with its terms.
Section 2.9. Financial Statements. Copies of the audited consolidated
financial statements for the Company and its Subsidiaries as of and for the
fiscal years ended December 31, 1992, 1991 and 1990 are attached to Schedule 4
of the Disclosure Schedule (collectively, the "Audited Financial Statements").
The Audited Financial Statements are accompanied by the opinion of Deloitte &
Touche to the effect that such financial statements present fairly, in all
material respects, the financial position of the Company and its Subsidiaries as
of the dates indicated and the
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results of their operations and cash flows for the periods then ended in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis (except as otherwise stated in the Audited Financial
Statements, including the related notes). Also attached to Schedule 4 of the
Disclosure Schedule are copies of the consolidated balance sheet and income
statement of the Company and its Subsidiaries as of and for the 8-month period
ended August 31, 1993, prepared internally by the Company (the "Interim
Financial Statements"). The Interim Financial Statements have been prepared in
accordance with the Company's standard accounting practices with respect to
interim financial statements which conform to the practices employed in
preparing the Audited Financial Statements except as described on Schedule 4 of
the Disclosure Schedule. For purposes of this Agreement, the Audited Financial
Statements and the Interim Financial Statements shall be deemed to include any
notes and schedules thereto.
Section 2.10. Taxes. Except as disclosed on Schedule 5 of the Disclosure
Schedule, all (a) federal, state, local or foreign tax returns (collectively,
the "Returns") required to be filed with respect to the properties, assets,
operations, income, net worth and franchises of the Company or any Subsidiary
have been timely filed or appropriate extensions have been obtained and such
Returns are true, correct and complete; (b) taxes and governmental charges,
including, without limitation, any interest and penalties (collectively,
"Taxes") due pursuant to such Returns have been paid or adequate provision
therefor has been made on the Audited Financial Statements or Interim Financial
Statements; and (c) federal, state, local and foreign withholdings required with
respect to the business of the Company or any Subsidiary have been withheld and
timely paid over to the appropriate Governmental Authority. The federal income
tax returns of the Company and each Subsidiary of the Company (including any
consolidated income tax returns of any affiliated group of which the Company or
any such Subsidiary may have been a member) have been audited by the Internal
Revenue Service (or closed by applicable statutes of limitation) and all
liabilities in respect thereof have been finally determined for all taxable
years prior to and including the taxable year ended December 31, 1990. Schedule
5 of the Disclosure Schedule sets forth for each subsequent taxable year the
current status of any examination being conducted by the Internal Revenue
Service or any other taxing authority relating to the Company or any such
Subsidiary. Notwithstanding the foregoing, no representation or warranty is
made with respect to the Company's entitlement to any claimed tax refund or the
amount of any claimed tax refund which the Company may ultimately receive.
Except as disclosed on Schedule 5 of the Disclosure Schedule, there are no
outstanding agreements or waivers extending the statutory period of limitation
concerning any tax liability of the Company or any Subsidiary, no examination of
any Return of the Company or any Subsidiary is currently in progress and no
Governmental Authority has, within the last three (3) years, notified the
Company, any Subsidiary or Sellers of any tax claim, investigation or
proceeding.
Section 2.11. Absence of Undisclosed Liabilities. Neither the Company
nor any Subsidiary has any liabilities, whether currently due, accrued,
contingent or otherwise (collectively, "Liabilities") of a nature required under
GAAP to be booked on financial statements (other than as disclosed on Schedule 4
of the Disclosure Schedule with respect to the differences between the Interim
Financial Statements and the Audited Financial Statements with regard to the
recording of liabilities or in Schedule 6 of the Disclosure Schedule with
respect to Heavy Hitters, Inc.) and except for the following:
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(a) Liabilities fully and adequately reflected or reserved against in the
Audited Financial Statements or Interim Financial Statements or relating to
the transactions contemplated by this Agreement; or
(b) Liabilities incurred in the ordinary course of business since
December 31, 1992 which individually or in the aggregate have not had and
would not reasonably be expected to have a Material Adverse Effect.
Section 2.12. Absence of Certain Changes or Events. Except as disclosed
on Schedule 6 of the Disclosure Schedule, since August 31, 1993:
(a) other than economic conditions affecting the Company, its Subsidiaries
and their competitors generally, there has been no material adverse change or
development in the business of the Company and its Subsidiaries taken as a
whole;
(b) the Company and its Subsidiaries have each been operating in the
ordinary course and there has been no material change in accounting methods,
principles or practices used by the Company or any Subsidiary;
(c) neither the Company nor any Subsidiary has incurred any material
indebtedness for borrowed money or been delinquent in the payment of any
material indebtedness (excluding intercompany indebtedness), except to the
extent the same was being contested in good faith;
(d) neither the Company nor any Subsidiary has sold, transferred or
subjected to any Lien, any tangible or intangible asset material to the
operation of its business, other than inventory in the ordinary and normal
course and miscellaneous items of machinery, equipment and other assets no
longer necessary to the operation of its business;
(e) there has been no substantial damage, destruction or loss to any
material asset of the Company or any Subsidiary necessary to the operation of
its business (whether or not covered by insurance);
(f) the Company has not (i) declared or made any payment or distribution
of property or cash on or with respect to the Stock, or purchased or redeemed
any shares of its capital stock, or (ii) made any loans to any of its
officers, directors or shareholders, or any Affiliate thereof (excluding
intercompany loans);
(g) the Company and its Subsidiaries have not increased the rate or terms
of compensation payable or to become payable by the Company or its
Subsidiaries to its directors, officers or key employees, except increases
occurring in the ordinary course of business in accordance with their
customary practices (which shall include normal periodic performance reviews
and related compensation and benefit increases);
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(h) there has been no revaluation by the Company or any of its
Subsidiaries of any of their assets, including, without limitation, writing
down the value of inventory or writing off notes or accounts receivables
other than in the ordinary course of business; and
(i) there has been no authorization, approval, agreement or commitment to
do any of the foregoing.
Section 2.13. Employees; Benefit Plans.
(a) The Company and its Subsidiaries (collectively) currently employ a
total of approximately 3,400 full-time employees and 150 part-time employees.
Schedule 7 of the Disclosure Schedule sets forth a list of the names,
addresses and total compensation of all directors and officers of the Company
and each Subsidiary, and each other employee of the Company or any Subsidiary
who, as of December 31, 1992, received or accrued (or on an annualized basis
would receive or accrue) total compensation of One Hundred Thousand Dollars
($100,000) or more in respect of the current fiscal year.
(b) Schedule 7 of the Disclosure Schedule identifies all "employee benefit
plans" (as such term is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and programs, including,
without limitation, any pension plans, health and welfare plans, life,
disability, medical, dental or hospitalization insurance plans, sick-leave,
vacation accrual or holiday plans, bonus, savings, profit-sharing or other
similar benefit plans, deferred compensation, stock option, stock ownership
and stock purchase plans covering employees or former employees of the
Company or the Subsidiaries. Except as disclosed on Schedule 7 of the
Disclosure Schedule, to the best of Sellers' knowledge each such plan or
program has been operated substantially in accordance with its terms and, to
the extent applicable, ERISA and the Internal Revenue Code of 1986, as
amended (the "Code"). Neither the Company nor any Subsidiary sponsors or
contributes to, nor have they ever sponsored or been required to contribute
to, any "multiemployer plan" as such term is defined in Section 3(37) of
ERISA.
(c) Except as disclosed on Schedule 7 of the Disclosure Schedule, neither
the Company nor any Subsidiary has any written Contracts or, to the best of
Sellers' knowledge, oral Contracts, including any employment, management,
agency or consulting Contracts, with respect to any of its current or retired
employees.
(d) Neither the Company nor, except as disclosed on Schedule 7 of the
Disclosure Schedule, any Subsidiary is a party to any collective bargaining
agreement and there are no union organizational activities or efforts to
effect a representation election pending or, to the best of Sellers'
knowledge, threatened.
(e) To the best of Sellers' knowledge, the Company and its Subsidiaries
have complied in all material respects with all applicable Laws relating to
the employment of labor, including the provisions thereof relating to
benefits required to be provided under
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Part 6 of Subtitle B of Title I of ERISA or Section 4980B(f) of the Code
(collectively, "COBRA"), wages, hours, working conditions, employee benefit
plans and the payment of withholding and social security taxes.
Section 2.14. Owned and Leased Real Property. Descriptions of all real
property in which the Company or any Subsidiary holds any interest (including a
leasehold interest) (the "Real Property") are included in Schedule 8 of the
Disclosure Schedule. The Company or the applicable Subsidiary has good and
marketable title to all Real Property reflected on Schedule 8 of the Disclosure
Schedule as owned by it, owned free and clear of all Liens except for Liens of
record. All leases, subleases and other agreements under which the Company or
any Subsidiary is the lessee of any Real Property material to the operation of
its business (a) are in full force and effect and (b) grant the leasehold
estates they purport to grant, free and clear of all Liens except for Liens of
record. Neither the Company nor any Subsidiary is in default under any of the
foregoing leases and, to the best of Sellers' knowledge, no other party thereto
is in default under any such lease, except in either instance for defaults which
have not had and would not reasonably be expected to have a Material Adverse
Effect.
Section 2.15. Owned and Leased Personal Property. Schedule 9 of the
Disclosure Schedule identifies all material personal property (the "Personal
Property") owned by the Company or its Subsidiaries having a current book value
in excess of Two Hundred Fifty Thousand Dollars ($250,000), all of which is
owned free and clear of all Liens except for Liens of record. Except as
identified on Schedule 9 of the Disclosure Schedule, neither the Company nor any
Subsidiary is a party to any personal property lease with lease payments during
the remaining term of the lease in excess of One Hundred Thousand Dollars
($100,000). All leases, subleases and other agreements under which the Company
or any Subsidiary is the lessee of any Personal Property material to the
operation of its business are in full force and effect. Neither the Company nor
any Subsidiary is in default under any of the foregoing leases and, to the best
of Sellers' knowledge, no other party thereto is in default under any such
lease, except in either instance for defaults which have not had and would not
reasonably be expected to have a Material Adverse Effect. To the best of
Sellers' knowledge, the Personal Property material to the operation of the
business of the Company and its Subsidiaries is in reasonably good operating
condition, reasonable wear and tear excepted.
Section 2.16. Intangible Property. Schedule 10 of the Disclosure
Schedule sets forth a complete list or description of all patents, trademarks,
trade names, service marks, service names, copyrights and applications therefor
(collectively "Intangible Property") owned by or licensed to the Company or its
Subsidiaries. Except as disclosed on Schedule 10 of the Disclosure Schedule, to
the best of Sellers' knowledge neither the Company nor its Subsidiaries have
infringed, misappropriated or misused any Intangible Property owned by another
nor is any other person infringing, misappropriating, or misusing any Intangible
Property owned by the Company or its Subsidiaries. Except as disclosed on
Schedule 10 of the Disclosure Schedule, the Company has not granted, or
obligated itself to grant, any outstanding licenses or other rights in or to any
of the Intangible Property owned by or licensed to the Company or its
Subsidiaries.
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Section 2.17. Litigation. Except as disclosed on Schedule 11 of the
Disclosure Schedule, there is no claim, suit, investigation, action, inquiry,
review or proceeding pending or, to the best of Sellers' knowledge, threatened
against the Company or any Subsidiary which (a) affects the validity of this
Agreement or any of the Related Documents or which could prevent or delay the
transactions contemplated hereunder or (b) could reasonably be expected to have
a Material Adverse Effect. Except as disclosed on Schedule 11 of the Disclosure
Schedule, neither the Company nor any Subsidiary is subject to any judicial
injunction or mandate or any administrative order.
Section 2.18. Contracts. Schedule 12 of the Disclosure Schedule sets
forth all existing contracts, agreements, understandings, franchises,
commitments, production or distribution agreements, agency or sales agreements,
purchase or sales orders, leases, licenses, mortgages, notes, bonds, indentures,
loans or other instruments which are material to the business with the Company
and its Subsidiaries taken as a whole and which are not terminable by the
Company or a Subsidiary (as applicable) without liability, premium or penalty on
one hundred eighty (180) days' notice or less (collectively, the "Contracts"):
(a) calling for aggregate payments by the Company or its Subsidiaries of
more than One Hundred Thousand Dollars ($100,000);
(b) providing for the future purchase by the Company or a Subsidiary of
any materials, equipment, services or supplies continuing for a period of
more than twelve (12) months from the date of such Contract (including any
renewal period) at a price materially in excess of current market prices or
normal operating requirements of the Company or its Subsidiaries;
(c) involving any of the following: (i) any borrowings of money or
guarantees, (ii) Contracts entered into other than in the ordinary course of
business and providing for indemnification or responsibility for the
obligations or losses of any Person; or (iii) Contracts with any shareholder,
director or other Affiliate of the Company or any Subsidiary (other than
Contracts between the Company and a Subsidiary);
(d) containing covenants limiting the freedom of the Company or any
Subsidiary to compete in any line of business or with any person or in any
geographical area; or
(e) relating to the acquisition by the Company or any Subsidiary of the
capital stock of any other person, firm or corporation or granting the
Company or any Subsidiary an option to purchase of any asset, tangible or
intangible, of any other person, firm or corporation.
To the best of Sellers' knowledge, all Contracts set forth on Schedule 12 of the
Disclosure Schedule are in full force and effect and constitute legal, valid and
binding obligations of the Company or a Subsidiary (as applicable). Except as
specifically disclosed on Schedule 12 of the Disclosure Schedule, neither the
Company, its Subsidiaries nor, to the best of Sellers' knowledge, any other
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party is in default under any Contract listed on Schedule 12 of the Disclosure
Schedule, except for technical or immaterial defaults which have not had and
would not reasonably be expected to have a Material Adverse Effect.
Section 2.19. Insurance. Schedule 13 of the Disclosure Schedule contains
a list of all policies of liability, environmental, crime, fidelity, life, fire,
workers' compensation, health, director and officer liability and all other
forms of insurance currently owned or held by the Company or a Subsidiary, and
identifies for each such policy, to the extent such information is reasonably
available to the Company, the underwriter, policy number, coverage type,
premium, expiration date and deductible. All of the insurance policies listed
on Schedule 13 of the Disclosure Schedule are outstanding and in full force and
effect and all premiums with respect to such policies are currently paid.
Section 2.20. Bank Accounts. Schedule 14 of the Disclosure Schedule
contains a list of all bank accounts maintained by, or for the benefit of, the
Company or its Subsidiaries.
Section 2.21. Permits and Licenses: Compliance with Law and Other
Regulations. All permits, licenses, operating certificates, orders and
approvals of any Governmental Authority necessary for the operation of the
business of the Company or its Subsidiaries as presently conducted are in full
force and effect, except where the failure to obtain such permits, licenses or
approvals has not and would not reasonably be expected to have a Material
Adverse Effect. Sellers make no representation with respect to, and shall not
be responsible for, any failure of the Company or its Subsidiaries to have any
required permits, licenses, operating certificates, orders or approvals for any
period following the Closing Date, and Buyer shall be solely responsible
therefor. Except as disclosed on Schedule 15 of the Disclosure Schedule, the
Company and each of its Subsidiaries is (a) in compliance with all applicable
Laws relating to its properties, assets and business, except where the failure
to comply has not had and would not reasonably be expected to have a Material
Adverse Effect and (b) not presently subject to, nor, to the best of Sellers'
knowledge has it been threatened with, any material fine, penalty, liability or
disability as the result of a failure to comply with any such Law.
Section 2.22. Customers and Suppliers. Set forth on Schedule 16 of the
Disclosure Schedule is a list of the ten (10) largest customers and suppliers of
the Company and its Subsidiaries (collectively) based on the dollar volume of
sales or purchases for fiscal year 1992. No such customer or supplier has
terminated or, to the best of Sellers' knowledge, is presently threatening to
terminate its relationship with the Company or its Subsidiaries.
Section 2.23. Brokers' Fees. No broker, finder or other person or entity
acting in a similar capacity has participated on behalf of Sellers or the
Company in connection with the transactions contemplated by this Agreement,
except for Kurt Salmon Associates, Inc. ("KSA"), whose fees, together with
expenses of professionals advising Sellers, shall be paid as set forth in
Section 11.9. Except for such obligations to KSA, neither Sellers, the Company
nor its Subsidiaries have incurred any liability for brokers' fees, finders'
fees, agents' commissions or other similar forms of compensation in connection
with this Agreement or the transactions contemplated hereby.
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Section 2.24. Environmental Compliance. To the best of Sellers'
knowledge, except as set forth in Schedule 17 of the Disclosure Schedule, or in
the Phase I Surveys (the "Phase I Surveys") prepared by the Company's
environmental consultants and included as part of Schedule 17 of the Disclosure
Schedule (herein collectively called the "Environmental Disclosures"), the
Company and its Subsidiaries are currently and at all times in the past have
operated in material compliance with all applicable federal, state, local and
foreign laws, rules and regulations relating to environmental protection and
conservation, and the Company and its Subsidiaries have not received any
notification of any asserted present or past failure to so comply with such
laws, rules or regulations which has not been resolved or complied with in all
material respects. To the best of Sellers' knowledge, except as set forth in
the Environmental Disclosures, the Company and its Subsidiaries have obtained
and are in material compliance with all permits, licenses and other
authorizations required under federal, state, local or foreign laws relating to
pollution or protection of the environmental, including laws relating to the
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous substances, materials or wastes into ambient air,
surface water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transportation, or
handling of pollutants, contaminants or hazardous substances, materials or
wastes (collectively, "Environmental Requirements"). There are no pending
applications for any such permits, licenses or authorizations. No lien has
attached to and, to the best of Sellers' knowledge, no basis exists for the
attachment of a lien pursuant to Environmental Requirements to any revenues or
any Real or Personal Property owned by the Company or its Subsidiaries. To the
best of Sellers' knowledge, except as set forth in the Environmental
Disclosures, the Company and its Subsidiaries have taken all actions required
under applicable federal, state, local or foreign laws, rules or regulations to
register, test, replace or remove any underground storage tanks. Except as set
forth in the Environmental Disclosures, Sellers do not have knowledge of any
circumstances which may interfere with or prevent continued compliance, or which
may give rise to any liability, or otherwise form a basis of any claim under
Environmental Requirements relating to the operation of the Company and its
Subsidiaries. Except as set forth in the Environmental Disclosures, Sellers do
not know of any material violations of any environmental laws in connection with
the disposal of any pollutants, contaminant, or hazardous substances, material
or waste. To the best of Sellers' knowledge, except as set forth in the
Environmental Disclosures, the Company and its Subsidiaries currently are not
producing, using, storing, handling, transporting or disposing of (nor has it
done so in the past), in connection with the operation of the business of the
Company or any Subsidiary at the Real Property, any hazardous substance,
hazardous material or hazardous waste in violation of Environmental
Requirements, nor to the best of Sellers' knowledge, have any such substances,
materials or wastes been dumped, buried or otherwise disposed of or stored on
the Real Property owned or leased by the Company or its Subsidiaries or on any
other site owned by a third party if such substances, materials or wastes were
generated by the Company or its Subsidiaries, in violation of Environmental
Requirements. Neither the Company nor its Subsidiaries have been identified as
a "potentially responsible party" under CERCLA (as hereinafter defined) or any
similar state law. To the best of Sellers' knowledge, except as set forth in
the Environmental Disclosures, there is not present any hazardous waste,
hazardous substance or hazardous material in, on or under any part of the soil
at any of the Real Property of the Company or its Subsidiaries or in, on or
under the adjacent properties as a result, in each case, of the business or
operations of the Company or its Subsidiaries,
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including without limitation, the soils, surface waters and groundwater in, on
or under any part of such properties, which would require any response action to
be taken pursuant to any federal or state law. To the best of Sellers'
knowledge, except as set forth in the Environmental Disclosures, there are no
underground tanks for the storage of oil, gasoline, the by-products thereof or
any hazardous substance, materials or wastes on the Real Property of the Company
or its Subsidiaries. For the purpose of this Section, "hazardous substances,"
"hazardous materials," and "hazardous wastes" refer to such terms as used in the
Comprehensive Environmental Response Compensation and Liability Act, as amended
("CERCLA"), and regulations thereunder; the Resource Conservation and Recovery
Act; and applicable state, foreign and local laws pertaining to environmental
regulations.
Section 2.25. Financial Projections. The consolidated Operating Income
of the Company and its Subsidiaries for the eleven (11) month period ending
November 30, 1993 (determined on the same basis as the Interim Financial
Statements) shall be no less than Seventeen Million Eight Hundred Eighty-Six
Thousand Dollars ($17,886,000) (excluding any potential adjustments relating to
LIFO and the Company's investment in Heavy Hitters, Inc. and excluding any
expense paid or accruals made relating to payments provided for or contemplated
by Sections 5.5 and 5.6 of this Agreement or incurred in connection with the
transactions contemplated hereby), which represents 90% of forecasted Operating
Income for such period as set forth on Schedule 18 of the Disclosure Schedule.
Normal bonuses to be paid by the Company in accordance with past practice,
including those payable to Hal C. Smith, Richard F. Cutler and William F.
Cutler, and normal professional expenses which have been actually paid,
excluding those relating to the transactions contemplated by this Agreement,
shall be accrued for on the same basis as the Interim Financial Statements.
Section 2.26. Full Disclosure. To the best of Sellers' knowledge, no
representation or warranty by any Seller in this Agreement and no statement
contained in any Disclosure Schedule to this Agreement contains any untrue
statement of a material fact, or omits to state a material fact necessary to
make the statements contained therein, in light of the circumstances in which
they are made, not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
Section 3.1. Organization and Standing of Buyer. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania.
Section 3.2. Authorization and Enforceability. Buyer has all requisite
corporate power and authority to enter into this Agreement and the Related
Documents to which it is a party
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and to carry out the transactions contemplated hereby and thereby and to perform
its obligations hereunder and thereunder. All necessary and appropriate action
has been taken by Buyer with respect to the execution and delivery of this
Agreement and each of the Related Documents and the performance of its
obligations hereunder and thereunder. Except with respect to expiration of the
Hart-Scott-Rodino waiting period, no authorization, consent or approval of, or
filing with, any third party or Governmental Authority is necessary for the
consummation by Buyer of the transactions contemplated by this Agreement or any
Related Document. The execution and delivery of this Agreement and the Related
Documents and the consummation of the contemplated transactions by Buyer will
not (a) result in the breach of any of the terms or conditions of, or constitute
a default under, the Articles of Incorporation or the By-Laws of Buyer or
(b) violate any Law or any order, writ, injunction or decree of any Governmental
Authority. This Agreement and any Related Documents to which Buyer is a party
constitute valid and binding obligations of Buyer enforceable against Buyer in
accordance with their respective terms.
Section 3.3. Brokers' Fees. Buyer has not incurred any liability for
brokers' fees, finders' fees, agents' commissions or other similar forms of
compensation in connection with this Agreement or the transactions contemplated
hereby, except for fees payable to Goldman, Sachs & Co. which shall be paid by
Buyer.
Section 3.4. Investment Intent. Buyer is aware that the Stock is not
registered under the Securities Act of 1933, as amended, or under any state
securities Law. Buyer is acquiring the Stock for investment only, for its own
account and not with a view to resale in connection with any distribution of
such securities, except in compliance with the Securities Act of 1933, as
amended, and all other applicable Laws.
Section 3.5. Full Disclosure. No representation or warranty by Buyer in
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained therein, in
light of the circumstances in which they are made, not misleading.
ARTICLE 4
CLOSING
Section 4.1. Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place in the offices of Warner,
Norcross & Judd, 900 Old Kent Building, 111 Lyon Street, N.W., Grand Rapids,
Michigan, at 10 a.m. local time on January 3, 1994 (or January 4, 1994 if
January 3, 1994 is a legal bank holiday), or at such other date, place or time
as the parties may agree (the "Closing Date").
Section 4.2. Obligations of Sellers. At the Closing, Sellers shall
deliver to Buyer:
(a) certificates representing all of the Stock duly endorsed in blank or
accompanied by irrevocable stock powers duly endorsed in blank, in either
case with
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signatures guaranteed, and sufficient to transfer to Buyer good and
marketable title to all of such Stock, free and clear of any Restrictions;
(b) all books of account, corporate seals, minute books, stock records and
other records pertaining to the Company and its Subsidiaries; and
(c) such other documents as may be described in Article 6 of this
Agreement.
Section 4.3. Obligations of Buyer. At the Closing, Buyer shall deliver
to Sellers:
(a) the Purchase Price; and
(b) such other documents as may be described in Article 7 of this
Agreement.
Section 4.4. Further Documents or Necessary Action. Buyer and Sellers
each agree to take all such further actions on or after the Closing Date as may
be necessary, desirable or appropriate in order to confirm or effectuate the
transactions contemplated by this Agreement.
ARTICLE 5
COVENANTS AND AGREEMENTS
Sellers covenant to and agree with Buyer, and Buyer covenants to and
agrees with Sellers, as follows:
Section 5.1. Conduct of Business Pending the Closing. During the period
from the date of this Agreement to the Closing Date, Sellers shall use their
respective best efforts to cause the Company and its Subsidiaries to conduct
their respective business operations in the ordinary and usual course and to
maintain their records and books of account in a manner consistent with prior
periods. Sellers shall, without purporting to make any commitment on behalf of
Buyer, exercise their respective reasonable efforts to preserve intact the
present business organization and personnel of the Company and its Subsidiaries
and the present goodwill of the Company and its Subsidiaries with persons having
business dealings with them. Prior to the Closing, the Company will engage in
negotiations on a new labor contract with respect to its Subsidiary, Jog Togs
Limited (the existing labor contract will expire by its terms prior to the
Closing Date). Sellers shall cause the Company to advise and consult with Buyer
in connection with these labor contract negotiations. Sellers further covenant
and agree that, from the date of this Agreement to the Closing Date, they shall
not, without the written consent of Buyer:
(a) enter into any negotiations, discussions or agreements
contemplating or respecting the acquisition of the Company or any
Subsidiary or any material asset thereof (other than in the ordinary
course of business), whether through a sale of
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Stock, a merger or consolidation, the sale of all or substantially all of
the assets of the Company or any Subsidiary, any type of recapitalization
or otherwise;
(b) take any action which would interfere with or prevent performance
of this Agreement; or
(c) engage in any activity or enter into any transaction which would be
inconsistent in any respect with any of the representations, warranties or
covenants set forth in this Agreement, as if such representations,
warranties and covenants were made at a time subsequent to such activity
or transaction and all references to the date of this Agreement were
deemed to be such later date.
Section 5.2. Access By Buyer; Confidentiality. During the period from
the date of this Agreement to the Closing Date, Sellers shall cause Buyer and
its agents and representatives to be given access to the buildings, offices,
records and files of the Company and its Subsidiaries; provided that such access
shall not unreasonably interfere with the normal operations and employee
relationships of the Company or its Subsidiaries. In particular, and without
limiting the foregoing, Buyer's environmental consultants (ERM-Southeast, Inc.
or others) shall be given access to the Company's premises to conduct such
additional tests or surveys as Buyer may reasonably request; provided, however,
that Buyer shall not perform any soil or groundwater tests without the Company's
written consent, which will not be withheld without reasonable basis. All
information provided to or learned by Buyer as a result of such access or
otherwise in connection with the transactions contemplated by this Agreement
shall be held in confidence pursuant to the terms of that certain
Confidentiality Agreement dated July 2, 1993, which shall remain in full force
and effect and the terms of which shall be deemed incorporated herein.
Section 5.3. Notice of Breach or Failure of Condition. Sellers and Buyer
agree to give prompt notice to the other of the occurrence of any event or the
failure of any event to occur that might preclude or interfere with the timely
satisfaction of any condition precedent to the obligations of Sellers or Buyer
under this Agreement.
Section 5.4. Best Efforts. Sellers and Buyer shall use their respective
best efforts to obtain all consents or approvals necessary to bring about the
satisfaction of the conditions required to be performed, fulfilled or complied
with by them pursuant to this Agreement and to take or cause to be taken all
action, and to do or cause to be done all things, necessary, proper or advisable
under applicable Laws to consummate and make effective the transactions
contemplated by this Agreement as expeditiously as practicable. Without
limiting the generality of the foregoing, Sellers and Buyer shall file the
Premerger Notification and Report Form under Hart-Scott-Rodino within five (5)
business days of the execution of this Agreement.
Section 5.5. Certain Compensation and Contract Buy-Outs.
(a) On or before the Closing, Hal C. Smith shall terminate his Restated
Employment Agreement with the Company dated as of May 12, 1992, and shall
execute a
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release in form and substance reasonably satisfactory to Buyer releasing the
Company from all further liability thereunder, except that the Company shall
pay Mr. Smith the bonus to which he is entitled under such Employment
Agreement with respect to the 1993 calendar year as provided in such
Employment Agreement (payable in March, 1994). In consideration of
Mr. Smith's release of future rights and benefits under such Employment
Agreement, and in recognition of Mr. Smith's substantial contribution to, and
extraordinary efforts on behalf of, the Company, the Company shall pay
Mr. Smith in cash at or before the Closing the sum of Fourteen Million Seven
Hundred Fifty Thousand Dollars ($14,750,000).
(b) On or before the Closing, each of Richard F. Cutler and William F.
Cutler shall terminate their Restated Employment Agreements with the Company,
each originally dated as of October 9, 1980, and shall execute releases in
form and substance reasonably satisfactory to Buyer releasing the Company
from all further liability thereunder, except that the Company shall pay each
of Richard F. Cutler and William F. Cutler in cash at or before the Closing
Date the bonuses to which they are entitled ($300,000 each) with respect to
the 1993 calendar year. In consideration of their releases of future rights
and benefits under their respective Restated Employment Agreements, and in
recognition of their substantial contribution to, and extraordinary efforts
on behalf of, the Company, the Company shall pay each of Richard F. Cutler
and William F. Cutler in cash at or before Closing the sum of One Million
Four Hundred Thousand Dollars ($1,400,000).
Section 5.6. Non-Competition Agreements. To induce Buyers to enter into
this Agreement and to help protect and preserve the business and goodwill of the
Company to be acquired by Buyer, on or before the Closing Date the Company shall
enter into certain non-competition agreements in form and substance reasonably
acceptable to Buyer, as follows:
(a) The Company shall enter into a non-competition agreement with Hal C.
Smith pursuant to which Mr. Smith agrees not to compete with the Company,
directly or indirectly, while Mr. Smith remains employed by the Company and
for a period of five (5) years thereafter. In consideration of Hal C.
Smith's non-competition agreement, he shall receive in cash at or before the
Closing the sum of Five Million Dollars ($5,000,000).
(b) The Company shall also enter into a non-competition agreement with
each of Richard F. Cutler and William F. Cutler pursuant to which each agrees
not to compete with the Company, directly or indirectly, for a period of five
(5) years following the Closing Date. In consideration of such non-
competition agreements, each of Richard F. Cutler and William F. Cutler shall
receive in cash at or before the Closing the sum of Two Million Dollars
($2,000,000).
Section 5.7. Life Insurance Policies; Automobiles. The Company currently
holds life insurance policies on Richard F. Cutler and William F. Cutler. Each
of such individuals have the option, exercisable for a period of sixty (60) days
from the Closing Date, to purchase their life insurance policies from the
Company for the cash surrender value thereof (net of related policy loans,
interest accrued and premiums refundable), payable in cash. In addition, each
of Richard F.
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Cutler and William F. Cutler shall have the option, exercisable for a period of
sixty (60) days from the Closing Date, to purchase the Company automobile
currently used by them at the Company's book value at the time of purchase.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
All obligations of Buyer under this Agreement are subject to the
satisfaction by Sellers at or before the Closing of all of the following
conditions, except to the extent expressly waived in writing by Buyer:
Section 6.1. Representations and Warranties True at Closing. The
representations and warranties of Sellers contained in this Agreement shall have
been true and correct in all material respects when made and shall be true and
correct in all material respects on the Closing Date as though such
representations and warranties were made again on the Closing Date.
Section 6.2. Performance. Sellers shall have performed and complied in
all material respects, and shall have caused the Company and the Subsidiaries,
as the case may be, to have performed and complied, in all material respects,
with all agreements and conditions required by this Agreement to be performed or
complied with by any of them prior to or at the Closing.
Section 6.3. No Adverse Changes. Except as contemplated by this
Agreement, there shall have been no material adverse change in the condition,
business or operations, financial or otherwise, of the Company and its
Subsidiaries taken as a whole from the date of this Agreement to the Closing
Date.
Section 6.4. Litigation. On the Closing Date, there shall not be any
pending or threatened litigation in any court or any proceedings by or before
any Governmental Authority with a view to seek, or in which it is sought, to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement or in which it is sought to obtain divestiture, rescission or damages
in connection with the transactions contemplated by this Agreement and no
investigation by any Governmental Authority shall be pending which might result
in any such litigation or other proceeding.
Section 6.5. Necessary Consents. All statutory requirements for the
valid consummation by Buyer of the transactions contemplated by this Agreement
(including, without limitation, the expiration of any Hart-Scott-Rodino waiting
period or any extensions thereof) shall have been fulfilled and all required
authorizations, consents or approvals by any Governmental Authority which are
required for the consummation of the transactions contemplated by this Agreement
shall have been received and shall be in full force and effect.
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Section 6.6. Certificate. Sellers shall have delivered to Buyer a
certificate, dated as of the Closing Date, of the Sellers and the Company's
President and Chief Executive Officer to the effect that the conditions set
forth in Sections 6.1, 6.2, 6.3 and 6.4 have been satisfied.
Section 6.7. Opinion of Counsel. Sellers shall have delivered to Buyer
an opinion of Warner, Norcross & Judd, counsel for Sellers, the Company and the
Subsidiaries, in form and substance reasonably acceptable to Buyer.
Section 6.8. Removal of Title Objections. Within five (5) days after the
date hereof, Buyer shall order at its expense a title binder or commitment from
a title insurance company satisfactory to Buyer that regularly does business in
the place where the subject property is located (the "Title Company"), and a
survey from a surveyor selected by Buyer, for each parcel of the Real Property
owned by the Company or its Subsidiaries. Each title binder shall consist of a
current title report and a commitment (or a commitment that includes a title
report) to issue an owner's title insurance policy to Buyer. In addition, Buyer
shall at its expense obtain a UCC-1 search on the Personal Property owned or
leased by the Company or its Subsidiaries. In the event a title report, survey
or UCC-1 search shows the property covered thereby to be subject to any lien,
easement, covenant, condition, restriction, encroachment, Restriction or other
title objection as could, within reason, materially and adversely affecting the
use and value of that property by Buyer as permitted by applicable zoning and
building regulations as the case may be, Buyer shall provide Sellers with
written notice specifying the unacceptable title matter(s) and enclosing a copy
of the title binder, survey or search. If Buyer does not provide this notice by
November 15, 1993, it will be conclusively presumed that Buyer has approved all
of the matters shown on the title binder, survey or search. If by November 15,
1993, Sellers receive notice of unacceptable title objections and if by December
15, 1993 Sellers do not agree to cause such title objections to be removed or
over insured by Closing at Sellers' expense, or to extend the aforesaid cut-off
date to a later date, then Buyer shall have the right to terminate this
Agreement.
Section 6.9. Consents. Sellers shall have provided written consents to
the acquisition of the Stock by Buyer from each Licensor or Lessor (other than
Warner Bros. and Atlanta Centennial Olympic Properties) identified on Schedule
3 of the Disclosure Schedule (to the extent so requested by Buyer) in form and
substance reasonably acceptable to Buyer.
Section 6.10. Termination of Employment Contracts. Hal C. Smith,
Richard F. Cutler and William F. Cutler shall have terminated their employment
and/or retirement agreements with the Company (as provided in Section 5.5
above), and executed releases in form and substance reasonably satisfactory to
Buyer.
Section 6.11. Employment/Non-Competition Agreements. The Company on or
before the Closing Date shall have entered into an employment agreement and
non-competition agreement with Hal C. Smith, an employment agreement with Bruce
Krebs, Regina (Silverman) Gore and Fred Rozell, and any other employee of the
Company or its Subsidiaries reasonably designated by Buyer, and a non-
competition agreement with each of Richard F. Cutler and William F. Cutler,
each of which is satisfactory in form and substance to Buyer in its reasonable
-18-
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judgment. Sellers shall have approved all payments which would constitute
"parachute payments" with respect to a "disqualified individual" as those terms
are used in Section 280G of the Code, as amended, in accordance with the
provisions of Section 280G(b)(5)(B) of the Code and the regulations thereunder.
Section 6.12. Closing Date Interest-Bearing Indebtedness. The aggregate
interest-bearing indebtedness of the Company and its Subsidiaries as of the
Closing Date shall not exceed the sum of (a) Thirty Million Dollars
($30,000,000) plus (b) such additional indebtedness as may be incurred by the
Company to enable it to discharge its obligations set forth in Sections 5.5 and
5.6 above. If for any reason this condition is not satisfied, Sellers shall
have the option of paying off any interest-bearing indebtedness in excess of
such permitted amount at the Closing Date to cure such failure.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
All obligations of Sellers under this Agreement are subject to the
satisfaction by Buyer at or before the Closing of all of the following
conditions, except to the extent expressly waived in writing by Sellers:
Section 7.1. Representations and Warranties True at Closing. The
representations and warranties of Buyer contained in this Agreement shall have
been true and correct in all material respects when made and shall be true and
correct in all material respects on the Closing Date as though such
representations and warranties were made again on the Closing Date.
Section 7.2. Performance. Buyer shall have performed and complied, in
all material respects, with all agreements and conditions required by this
Agreement to be performed or complied with by Buyer prior to or at the Closing.
Section 7.3. Necessary Consents. All statutory requirements for the
valid consummation by Sellers of the transactions contemplated by this Agreement
(including, without limitation, the expiration of any Hart-Scott-Rodino waiting
period or any extensions thereof) shall have been fulfilled and all required
authorizations, consents or approvals by any Governmental Authority which are
required for the consummation of the transactions contemplated by this Agreement
shall have been received and shall be in full force and effect.
Section 7.4. Certificate. Buyer shall have delivered to Sellers a
certificate, dated as of the Closing Date, to the effect that the conditions set
forth in Sections 7.1 and 7.2 have been satisfied.
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Section 7.5. Opinion of Counsel. Buyer shall have delivered to Sellers
an opinion of Clark, Ladner, Forenbaugh & Young, counsel for Buyers, in form and
substance reasonably acceptable to Sellers.
Section 7.6. Employment Agreement. The Company on or before the Closing
Date shall have entered into an employment agreement with Hal C. Smith which is
satisfactory to him in his reasonable judgment.
Section 7.7. Receipt of Payments. Each of Hal C. Smith, Richard F.
Cutler and William F. Cutler shall have received, on or before the Closing Date,
the amounts payable to them as set forth in Sections 5.5 and 5.6 above.
ARTICLE 8
INDEMNIFICATION AND RELATED MATTERS
Section 8.1. Survival of Representations and Warranties. The
representations and warranties contained in this Agreement, the Schedules and
Exhibits hereto and any agreement, document, instrument or certificate delivered
hereunder shall survive the Closing and shall continue in effect for a period of
one (1) year from the Closing Date, at which time they shall expire. No claim
for a breach of a representation or warranty may be made after termination of
such survival period. This Article 8 constitutes the sole and exclusive remedy
of Buyer and Sellers with respect to any subject matters addressed herein, and
Buyer and each Seller hereby waive and release the other from any and all claims
and other causes of action, including without limitation claims for
contribution, relating to any such subject matter. The making of a claim for
indemnification under this Article 8 (a "Claim") shall toll the running of the
limitation period with respect to such claim. For purposes of the preceding
sentence, a claim shall be deemed made upon the commencement of an independent
judicial proceeding with respect to such matter or receipt by Seller of a
written notice of claim for indemnification setting forth in detail the factual
and contractual bases for the claim.
Section 8.2. Indemnification by Sellers.
(a) Obligation to Indemnify. Each Seller agrees to indemnify Buyer
against and hold it harmless from:
(i) all Liability, loss, damage or deficiency resulting from or
arising out of any inaccuracy in or breach of any representation or
warranty by such Seller in this Agreement, in any Related Document to
which such Seller was a signatory or in any other agreement or document
delivered by or on behalf of such Seller in connection with the
transactions contemplated by this Agreement;
-20-
26
(ii) all Liability, loss, damage or deficiency resulting from or
arising out of any breach or nonperformance of any covenant or obligation
made or incurred by such Seller in this Agreement, in any Related Document
to which such Seller was a signatory or in any other agreement or document
delivered by or on behalf of such Seller in connection with the
transactions contemplated by this Agreement; and
(iii) any and all reasonable costs and expenses (including reasonable
legal and accounting fees) related to any of the foregoing. In the event
that Buyer makes a Claim which is determined by a court of competent
jurisdiction to be without reasonable basis in law or fact, Buyer shall
bear all reasonable costs and expenses (including court costs and
reasonable legal and accounting fees), incurred by Sellers in
investigating and defending against such Claim.
(b) Limitations on Indemnification. The indemnification of Buyer provided
under this Section 8.2 shall be limited in certain respects as follows:
(i) Sellers shall not be liable to Buyer for Claims until the
aggregate amount of Claims exceed One Million Dollars ($1,000,000) (the
"Threshold Amount"). Upon reaching such amount Sellers shall be liable to
Buyer for all Claims in excess of the Threshold Amount up to an aggregate
amount of Twenty Million Dollars ($20,000,000) (the "Maximum Amount").
Under no circumstances shall Sellers be liable to Buyer for any amount in
excess of the Maximum Amount provided, however, that no Maximum Amount
shall be applicable with respect to a breach of Section 2.7(a) above;
(ii) Sellers shall not be required to indemnify and hold Buyer
harmless with respect to any Claim for a breach of Sellers'
representations and warranties contained in Article 2 above if Sellers can
prove that the basic underlying facts giving rise to such Claim were known
by or disclosed to Buyer's officers or employees substantively involved in
the transactions contemplated by this Agreement (primarily Messrs.
Gerard G. Johnson, Frank Pickard, David Reklau and Robert K. Shearer) or
were disclosed in writing to Buyer's representatives or advisors prior to
or at the Closing;
(iii) To the extent that insurance or "pass-through" warranty coverage
from a manufacturer or other recovery or reimbursement from a third party
is available to Buyer or the Company or its Subsidiaries to cover any item
for which indemnification may be sought hereunder, Buyer shall exhaust all
available remedies or causes of action to recover the amount of its Claim
as may be available from such other party and shall only seek
indemnification against Sellers in the event that it fails to obtain such
coverage or reimbursement or if such coverage or reimbursement is
insufficient to satisfy the Claim (and in the latter instance shall only
seek indemnity for the amount of such deficiency). To the extent Sellers
indemnify Buyer on any Claim referred to in the previous sentence, Buyer
shall assign to Sellers, to the
-21-
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fullest extent allowable, its claim against such insurance, warranty
coverage or third-party claim, or in the event assignment is not
permissible, Sellers shall be allowed to pursue such claim in the name of
Buyer, the Company or its Subsidiaries at Sellers' expense. Sellers shall
be entitled to retain all recoveries made as a result of any such action.
Buyer shall make the Company's books and records relating to such claim
available to Sellers and make the Company's employees available for
interviews and similar matters to assist Sellers in prosecuting such
claim; and
(iv) In computing the amount of any indemnification to which Buyer may
be entitled under this Article 8 by virtue of a breach of Section 2.9, if
the amount of any liabilities has been understated or unrecorded, on the
one hand, but on the other hand the amount of any other liabilities has
been overstated or any assets understated, only the net effect (benefits
or detriment as the same are determined in accordance with GAAP) of such
errors shall be taken into account. Any amounts recoverable by Buyer from
Sellers under this Article 8 shall be net of tax effects (benefits or
detriments) incurred by Buyer. To the extent the benefit is incurred or
detriment is suffered subsequent to any recovery pursuant to this
Article 8, there shall be a corresponding adjustment between the parties
without regard to the time limitations imposed under this Article.
Section 8.3. Indemnification by Buyer. Buyer shall indemnify Sellers
against and hold them harmless from:
(a) all Liability, loss, damage or deficiency resulting from or arising
out of any inaccuracy in or breach of any representation or warranty by Buyer
in this Agreement in any Related Document or in any other agreement or
document delivered by or on behalf of Buyer in connection with the
transactions contemplated by this Agreement;
(b) all Liability, loss, damage or deficiency resulting from or arising
out of any breach or nonperformance of any covenant or obligation made or
incurred by Buyer in this Agreement, in any Related Document, or in any other
agreement or document delivered by or on behalf of Buyer in connection with
the transactions contemplated by this Agreement;
(c) all Liability, loss, damage or deficiency arising out of or relating
to the operation of the business from and after the Closing Date; and
(d) any and all reasonable costs and expenses (including reasonable legal
and accounting fees) related to any of the foregoing. In the event that
Sellers make a Claim which is determined by a court of competent jurisdiction
to be without reasonable basis in law or fact, Sellers shall bear all
reasonable costs and expenses (including court costs and reasonable legal and
accounting fees), incurred by Buyer in investigating and defending against
such Claim.
-22-
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Section 8.4. Third Party Claims. If any action, suit, investigation or
proceeding (including without limitation negotiations with federal, state, local
or foreign tax authorities) shall be threatened or commenced by a third party in
respect of which a party (an "Indemnified Party") may make a Claim hereunder,
the Indemnified Party shall notify the party obligated to indemnify such party
hereunder (the "Indemnifying Party") to that effect with reasonable promptness
(so as to not prejudice such party's rights) after the commencement or
threatened commencement of such action, suit, investigation or proceeding, and
the Indemnifying Party shall have the opportunity to defend against such action,
suit, investigation or proceeding (or, if the action, suit, investigation or
proceeding involves to a significant extent matters beyond the scope of the
indemnity agreement contained herein, those claims that are covered hereby)
subject to the limitations set forth below. If the lndemnifying Party elects to
defend against any action, suit, investigation or proceeding (or, as described
in the preceding parenthetical, one or more claims relating thereto), the
Indemnifying Party shall notify the Indemnified Party to that effect with
reasonable promptness. In such case, the Indemnified Party shall have the right
to employ its own counsel and participate in the defense of such matter, but the
fees and expenses of counsel shall be at the expense of the Indemnified Party
unless the employment of such counsel at the expense of the Indemnifying Party
shall have been authorized in writing by the Indemnifying Party. Any party
granted the right to direct the defense of a threatened or actual suit,
investigation or proceeding hereunder shall: (i) keep the other fully informed
of material developments in the action, suit, investigation or proceeding at all
stages thereof; (ii) promptly submit to the other copies of all pleadings,
responsive pleadings, motions and other similar legal documents and papers
received in connection with the action, suit, investigation or proceeding; (iii)
permit the other and its counsel, to the extent practicable, to confer on the
conduct of the defense of the action, suit, investigation or proceeding; and
(iv) to the extent practicable, permit the other and its counsel an opportunity
to review all legal papers to be submitted prior to their submission. The
parties shall make available to each other and each other's counsel and
accountants all of its or their books and records relating to the action, suit,
investigation or proceeding, and each party shall render to the other such
assistance as may be reasonably required in order to insure the proper and
adequate defense of the action, suit, investigation or proceeding. The parties
shall use their respective good faith efforts to avoid the waiver of any
privilege of either party. The assumption of the defense of any matter by an
Indemnifying Party shall not constitute an admission of responsibility to
indemnify or in any manner impair or restrict such party's rights to later seek
to be reimbursed its costs and expenses if indemnification under this Agreement
with respect to such matter was not required. An Indemnifying Party may elect
to assume the defense of a matter at any time during the pendency of such
matter, even if initially such party did not elect to assume such defense, so
long as such assumption at such later time would not prejudice the rights of the
Indemnified Party. No settlement of a matter by the Indemnified Party shall be
binding on an Indemnifying Party for purposes of such party's indemnification
obligations hereunder.
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ARTICLE 9
TERMINATION
Section 9.1. Termination by Mutual Consent. At any time on or prior to
the Closing Date, this Agreement may be terminated by the mutually written
consent of Sellers and Buyer without liability on the part of Sellers or Buyer.
Section 9.2. Termination Upon Breach or Default. If Sellers or Buyer
shall materially default in the observance or in the due and timely performance
of any of the covenants contained in this Agreement, or if there shall have been
a material breach by either party of any of the representations or warranties
set forth in this Agreement, the other party may, upon written notice
and a reasonably opportunity to cure, terminate this Agreement, without
prejudice to its or their rights and remedies available under law, including the
right to recover expenses, costs and other damages.
Section 9.3. Termination Based Upon Failure of Conditions. If any of the
conditions of this Agreement to be complied with or performed by a party on or
before the Closing Date shall not have been complied with or performed in all
material respects by such date and such noncompliance or nonperformance shall
not have been waived in writing by the other party, the party to whom the
benefit of such condition runs may, upon written notice, terminate this
Agreement, without prejudice to its or their rights and remedies available under
law, including the right to recover expenses, costs and other damages.
Section 9.4. Final Expiration. This Agreement shall automatically expire
if the Closing does not occur on or before January 31, 1994, or such later date
as the Parties may mutually agree (the "Final Expiration Date").
ARTICLE 10
DEFINITIONS
When used in this Agreement, the following terms in all of their tenses
and cases shall have the meanings assigned to them below or elsewhere in this
Agreement as indicated below:
"Affiliate" of any Person means any person directly or indirectly
controlling, controlled by, or under common control with, any such Person and
any officer, director or controlling person of such Person.
"Agreement" is defined in the initial paragraph hereof.
"Audited Financial Statements" is defined in Section 2.9.
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"Buyer" is defined in the initial paragraph hereof.
"COBRA" is defined in Section 2.13(e).
"Claim" is defined in Section 8.1.
"Closing" and "Closing Date" are defined in Section 4.1.
"Code" is defined in Section 2.13(b).
"Company" is defined in the Preamble of this Agreement.
"Contracts" is defined in Section 2.18.
"Disclosure Schedule" is defined in Section 2.1.
"ERISA" is defined in Section 2.13(b).
"Environmental Disclosures" is defined in Section 2.24.
"Environmental Requirements" is defined in Section 2.24.
"GAAP" is defined in Section 2.9.
"Governmental Authority" means any foreign, federal, state, regional or
local authority, agency, body, court or instrumentality, regulatory or
otherwise, which, in whole or in part, was formed by or operates under the
auspices of any foreign, federal, state, regional or local government.
"Hart-Scott-Rodino" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Income" is defined in Section 1.3.
"Intangible Property" is defined in Section 2.16.
"Interim Financial Statements" is defined in Section 2.9.
"Indemnified Party" is defined in Section 8.4.
"Indemnifying Party" is defined in Section 8.4.
"Law" means any common law and any federal, state, regional, local or
foreign law, rule, statute, ordinance, rule, order or regulation.
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"Liabilities" is defined in Section 2.11.
"Lien" means any lien, charge, covenant, condition, easement, adverse
claim, demand, encumbrance, security interest, option, pledge, or any other
title defect, easement or restriction of any kind.
"Material Adverse Effect" is defined in Section 2.2.
"Maximum Amount" is defined in Section 8.2(b)(i).
"Non-Subsidiary" is defined in Section 2.4.
"Person" means any individual, corporation, partnership, association or
any other entity or organization.
"Personal Property" is defined in Section 2.15.
"Phase I Surveys" is defined in Section 2.24.
"Purchase Price" is defined in Section 1.2.
"Real Property" is defined in Section 2.14.
"Related Documents" means this Agreement, the Employment and Non-
Competition Agreement, and each document or instrument executed in connection
with the consummation of the transactions contemplated herein.
"Restrictions" is defined in Section 2.7.
"Returns" is defined in Section 2.10.
"Sellers" is defined in the initial paragraph of this Agreement.
"Stock" is defined in Section 1.1.
"Subsidiary" is defined in Section 2.4.
"Subsidiaries' Stock" is defined in Section 2.6.
"Taxes" is defined in Section 2.10.
"Threshold Amount" is defined in Section 8.2(b)(i).
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"Title Company" is defined in Section 6.8.
"To the best of Sellers' knowledge" or other references to the knowledge
of Sellers means the actual knowledge of any Seller.
ARTICLE 11
GENERAL
Section 11.1. Entire Agreement. This Agreement, and the exhibits and
schedules hereto (including the Disclosure Schedule), and the agreements
specifically referred to herein set forth the entire agreement and understanding
of Sellers and Buyer in respect of the transactions contemplated hereby and
supersede all prior agreements, arrangements and understandings relating to the
subject matter hereof. No representation, promise, inducement or statement of
intention has been made by Sellers or Buyer that is not embodied in this
Agreement or in the documents specifically referred to herein and neither
Sellers nor Buyer shall be bound by or liable for any alleged representation,
promise, inducement or statement of intention not so set forth.
Section 11.2. Binding Effect; Benefits; Assignment. All of the terms of
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by and against Sellers and their respective heirs and personal representatives,
and Buyer and its successors and authorized assigns. Nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies under or by reason of this Agreement except as expressly indicated
herein. Neither Sellers nor Buyer shall assign any of their respective rights
or obligations under this Agreement to any other person, firm or corporation
without the prior written consent of the other party, except that Buyer may
assign its rights and obligations under this Agreement to a direct or indirect
wholly-owned subsidiary of Buyer, although Buyer shall remain fully responsible
for all of its obligations under this Agreement.
Section 11.3. Construction. The headings of the sections and paragraphs
of this Agreement have been inserted for convenience of reference only and shall
in no way restrict or otherwise modify any of the terms or provisions hereof.
The language used in this Agreement shall be deemed to be the language chosen by
the parties to this Agreement to express their mutual intent, and no rule of
strict construction shall be applied against any party.
Section 11.4. Amendment and Waiver. This Agreement may be amended,
modified, superseded or canceled and any of the terms, covenants,
representations, warranties or conditions hereof may be waived only by a written
instrument executed by Sellers and Buyer or, in the case of a waiver, by or on
behalf of the party waiving compliance.
Section 11.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania as
applicable to contracts made and to be performed in Pennsylvania, without regard
to conflict of laws principles.
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Section 11.6. Public Disclosure. Except as required by Law, neither
Buyer nor Sellers shall make any public disclosure of the existence or terms of
this Agreement or the transactions contemplated hereby without the prior written
consent of the other party, which consent shall not be unreasonably withheld. In
the event that Sellers or Buyer determines that the disclosure of the existence
or terms of this Agreement is required by Law, such party shall so notify the
other party and shall provide to the other party a copy of any such public
disclosure prior to releasing the same.
Section 11.7. Notices. All notices, requests, demands and other
communications to be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed to have been duly given if delivered or mailed first
class, postage prepaid:
(a) If to Sellers:
To the addresses set forth in Exhibit A to this Agreement. with a copy
to:
Warner, Norcross & Judd
900 Old Kent Building
III Lyon Street, N.W.
Grand Rapids, Michigan 49503-2489
Telephone: (616) 459-6121
Fax: (616) 459-2611
Attention: Tracy T. Larsen, Esq.
(b) If to Buyer:
V.F. Corporation
1047 North Park Road
Wyomissing, Pennsylvania 19610
Telephone: (215) 208-5242
Fax: (215) 275-9371
Attention: Mr. Frank C. Pickard
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with a copy to:
Clark Ladner Fortenbaugh & Young
One Commerce Square, 22nd Floor
2005 Market Street
Philadelphia, Pennsylvania 19103
Telephone: (215) 241-1825
Fax: (215) 241-1857
Attention: Aloysius T. Lawn, IV, Esq.
Either party may change its address by prior written notice to the other party.
Section 11.8. Counterparts. This Agreement may be executed in
counterparts, each of which when so executed shall be deemed to be an original
and such counterparts shall together constitute one and the same instrument.
Section 11.9. Expenses. Each party shall pay their own respective
expenses, costs and fees incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and each of the Related
Documents and the consummation of the transactions contemplated hereby;
provided, however, since the transaction will result in benefits and
improvements to the Company's business from associating with Buyer, the Company
shall pay the fees of the Company's legal, accounting and other professional
advisors, including without limitation the fees of Kurt Salmon Associates, Inc.,
up to an aggregate of Two Million Five Hundred Thousand Dollars ($2,500,000).
The Sellers shall pay any amounts in excess of Two Million Five Hundred Thousand
Dollars ($2,500,000).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
V.F. CORPORATION
By /S/ LAWRENCE R. PUGH
----------------------------------
Its Chairman
------------------------------
"Buyer"
WILLIAM F. CUTLER REVOCABLE TRUST
By /s/ WILLIAM F. CUTLER
----------------------------------
William F. Cutler
Its Trustee
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RICHARD F. CUTLER REVOCABLE TRUST
By /s/ RICHARD F. CUTLER
--------------------------------
Richard F. Cutler
Its Trustee
HAL C. SMITH TRUST
By /s/ HAL C. SMITH
--------------------------------
Hal C. Smith
Its Trustee
BEVERLY J. CUTLER REVOCABLE TRUST
By /s/ WILLIAM F. CUTLER
--------------------------------
William F. Cutler
Its Co-Trustee
And By /s/ WILLIAM F. CUTLER, JR.
--------------------------------
William F. Cutler, Jr.
Its Co-Trustee
MARIAN V. CUTLER REVOCABLE TRUST
By /s/ MARIAN V. CUTLER
--------------------------------
Marian V. Cutler
Its Trustee
/s/ RICHARD C. CUTLER
-----------------------------------
Richard C. Cutler
/s/ CURTIS A. CUTLER
-----------------------------------
Curtis A. Cutler
/s/ CAROL A. WINDEMULLER
-----------------------------------
Carol A. Windemuller
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/s/ BRIAN S. CUTLER
-----------------------------------
Brian S. Cutler
/s/ WILLIAM F. CUTLER, JR.
-----------------------------------
William F. Cutler, Jr.
/s/ BARRY F. CUTLER
-----------------------------------
Barry F. Cutler
/s/ BARBARA M. CUTLER LARSON
-----------------------------------
Barbara M. Cutler (Larson)
"Sellers"
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EXHIBIT A
ALLOCATION OF PURCHASE PRICE
Non-Voting
Shareholders Voting Preferred Preferred Common
------------ ---------------- --------- ------
William F. Cutler $491,000 $167,500 None
Revocable Trust
2735 Boston, S.E.
Grand Rapids, MI
49506
Richard F. Cutler $491,000 $542,500 None
Revocable Trust
8340 Wallinwood
Springs, Jenison,
MI 49428
Hal C. Smith Trust $2,000 $385,000 12.678%
2793 Hickorywood
Lane, S.E.
Grand Rapids, MI
49546
Beverly J. Cutler None $600,000 None
Revocable Trust
2735 Boston, S.E.
Grand Rapids, MI
49506
Marian V. Cutler None $600,000 None
Revocable Trust
8340 Wallinwood
Springs, Jenison,
MI 49428
Richard C. Cutler None $375,000 14.554%
2324 Riverside Dr.,
N.E.
Grand Rapids, MI
49505
38
Curtis A. Cutler None $375,000 14.554%
2315 Oakwood, N.E.
Grand Rapids, MI
49505
Carol A. Windermuller None $375,000 14.554%
2900 Rush Creek, S.W.
Byron Center, MI
49315
Brian S. Cutler None $375,000 10.915%
2661 Elmwood, N.E.
Grand Rapids, MI
49505
William F. Cutler, Jr. None $375,000 10.915%
9219 10 Mile Rd., N.E.
Rockford, MI 49341
Barry F. Cutler None $375,000 10.915%
11737 Garnsey
Grand Haven, MI
49417
Barbara M. Cutler None $375,000 10.915%
Larson
0-12635 14th Avenue
Grand Rapids, MI
49504