EXHIBIT 10.1
EXECUTION CONVERSION
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is executed on May 1, 2008,
by and among Lindsay Manufacturing Co., a Delaware corporation ("Parent"), LM
Acquisition Corp., a California corporation and a wholly-owned subsidiary of
Parent ("Merger Sub"), Barrier Systems, Inc., a California corporation
("Barrier"), and QMB Payment Co., a California limited liability company ("QMB
Payment Co." or "Shareholder Representative"). Parent, Merger Sub, Barrier and
Shareholder Representative are referred to collectively herein as the "Parties,"
and each is sometimes referred to herein as a "Party."
RECITALS
A. The Boards of Directors of Barrier, Parent and Merger Sub believe it is in
the best interests of their respective corporations and the shareholders of
their respective corporations that Barrier and Merger Sub combine into a single
corporation through the statutory merger of Merger Sub with and into Barrier
(the "Merger") and, in furtherance thereof, have approved the Merger.
B. By virtue of the Merger, all of the issued and outstanding shares of
Barrier's capital stock shall be converted into the right to receive cash as
determined herein.
C. Barrier, Parent and Merger Sub desire to make certain representations,
warranties, covenants and other agreements in connection with the Merger.
D. Shareholder Representative is willing to act on behalf of the shareholders of
Barrier in determining and settling any indemnification claims that may be made
by Parent hereunder and as otherwise provided herein.
E. Effective prior to the Closing Date and in connection with the Merger,
Barrier intends to distribute (the "QMB Distribution") to the Shareholders in
proportion to the Barrier Shares held by each Shareholder immediately prior to
the Effective Time 100% of the membership interests (as divided into,
represented by and known as voting Common Shares) of QMB Payment Co., LLC, a
wholly-owned subsidiary of Barrier formed for the purpose of holding certain
ancillary assets of Barrier which are described in Exhibit A attached hereto,
and which the Parties, including Parent, desire be excluded from the assets of
Barrier prior to the Closing (the "QMB Payment Assets") and to serve as
Shareholder Representative.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree as follows.
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. For purposes of this Agreement, any undefined
terms herein shall have the following meanings:
"Adjustment Escrow Account" shall have the meaning set forth in
Section 2.7(a) below.
"Agreement of Merger" shall mean the Agreement of Merger substantially
in the form of Exhibit B attached hereto.
"Aggregate Consideration" shall mean the sum of $35,000,000, less the
sum of (i) the Payoff Debt, (ii) the Retained Debt, (iii) the Holdback Amount,
(iv) the Price Adjustment Holdback Amount, (v) an amount equal to the
Transaction Costs, and (vi) an amount equal to the Per Share Closing
Consideration multiplied by the number of Dissenting Shares.
"Acquisition Proposal" shall have the meaning set forth in Section
5.7(a) below.
"Barrier" shall have the meaning set forth in the preamble above.
"Barrier Disclosure Schedule" shall have the meaning set forth in
Section 4.1 below.
"Barrier Common Stock" shall have the meaning set forth in Section 2.3
below.
"Barrier Financial Statements" shall have the meaning set forth in
Section 4.1 below.
"Barrier Option" and "Barrier Options" shall have the meanings set
forth in Section 2.4 below.
"Barrier Shares" shall have the meaning set forth in Section 2.3
below.
"Barrier's Adjusted Net Assets" shall mean the difference between (i)
"Total Assets" minus "Cash," (ii) "Total Liabilities" minus "Notes
Payable--Current Portion" minus "Lines of Credit" minus "Notes Payable--Long
Term," where each of foregoing capitalized terms refers to the amount of the
corresponding line item, calculated in accordance with GAAP, as reflected on a
balance sheet of Barrier and its consolidated Subsidiaries prepared on a basis
consistent with the Most Recent Balance Sheet. For illustrative purposes only,
Barrier's Adjusted Net Assets on the Most Recent Balance Sheet were (i)
$16,778,662.86 (Total Assets) minus $810,830.22 (Cash) less (ii) $9,587,975.35
(Total Liabilities) minus $1,200,183.36 (Notes Payable--Current Portion) minus
$2,600,000 (Lines of Credit) minus $623,163.98 (Notes Payable--Long Term), which
equals $10,803,204.63. For the sake of clarity, the Parties acknowledge and
agree that, for purposes of calculating Closing Adjusted Net Assets, Barrier's
Adjusted Net Assets shall exclude the QMB Payment Assets.
"Business Day" shall mean any day that is not a Saturday, Sunday or
other day on which banks are required or authorized by Law to be closed in
California.
"Canadian Companies" shall mean QMB Investments Inc., QMB Barrier
Systems, Inc. and Barrier QMB Canada Inc.
"Closing" shall have the meaning set forth in Section 3.1 below.
"Closing Adjusted Net Assets" shall mean Barrier's Adjusted Net Assets
as of the date of the Closing Balance Sheet and as reflected thereon.
"Closing Balance Sheet" shall have the meaning set forth in Section
2.7(b) below.
"Closing Cash Amount" shall mean, without duplication, the sum of (a)
the amount of all cash and time deposits and certificates of deposit with
original maturities of three
months or less of Barrier as of the close of business on the Business Day
preceding the Closing Date (after subtracting therefrom the amount of all checks
of Barrier outstanding as of the close of business on the Business Day preceding
the Closing Date), (b) the amount of all checks and wire and electronic
transfers paid to the order of Barrier and received on or before the Business
Day preceding the Closing Date by a bank having a deposit account of Barrier,
and (c) the amount of all blank fully negotiable travelers checks owned by, and
in the physical possession of, Barrier as of the close of business on the
Business Day preceding the Closing Date (net of all amounts payable by Barrier
in connection with the acquisition of such travelers checks).
"Closing Date" shall have the meaning set forth in Section 3.1 below.
"Code" shall mean the Internal Revenue Code of 1986, as amended and in
effect.
"Comerica Loan Documents" shall mean (i) that certain Loan and
Security Agreement, dated as of July 7, 2003, as amended, by and between Barrier
and Comerica Bank, (ii) that certain Variable Rate-Fixed Installment Note, dated
as of October 24, 2005, by Barrier in favor in Comerica Bank, and (iii) all
agreements and documents entered into in connection with the foregoing,
including, without limitation, that certain Variable Rate-Fixed Installment
Note, dated as of February 27, 2004, by Barrier in favor of Comerica Bank.
"Companies" shall mean Barrier and Safe Technologies.
"Contracts" shall have the meaning set forth in Section 4.1(n) below.
"Damages" shall mean all losses, liabilities, costs, expenses,
judgments, assessments, penalties, damages, deficiencies, suits, actions,
claims, proceedings, demands and causes of action, including but not limited to
reasonable attorney's fees, court costs, and related expenses.
"Dissenting Shares" shall have the meaning set forth in Section 2.8
below.
"Effective Time" shall have the meaning set forth in Section 3.2
below.
"Environmental, Health, and Safety Requirements" shall have the
meaning set forth in Section 4.1(s) below.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" shall mean the Person selected by the Parties to act as
escrow agent under the Escrow Agreement.
"Escrow Agreement" shall mean the escrow agreement among Parent,
Shareholder Representative and the Escrow Agent, substantially in the form
attached hereto as Exhibit C.
"Final Closing Balance Sheet" shall have the meaning set forth in
Section 2.7(b) below.
"Fully Diluted Number" shall mean the aggregate number of Barrier
Shares and shares of Barrier Common Stock subject to Barrier Options immediately
prior to the Effective Time.
"GAAP" shall mean United States generally accepted principles of
accounting, consistently applied.
"Governmental Authority" shall mean any foreign, international,
multinational, national, federal, state, provincial, regional, local or
municipal court or other governmental, administrative or regulatory authority,
agency or body exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any applicable Law.
"Holdback Amount" shall mean an amount equal to $3,500,000.
"Indemnifiable Loss" shall have the meaning set forth in Section 8.7
below.
"Indemnified Party" shall have the meaning set forth in Section 8.4(a)
below.
"Indemnifying Party" shall have the meaning set forth in Section
8.4(a) below.
"Indemnity Escrow Account" shall have the meaning set forth in Section
2.6 below.
"Indemnity Payment" shall have the meaning set forth in Section 8.7
below.
"Insurance Policies" shall have the meaning set forth in Section 4.1
(t) below.
"Intellectual Property" shall mean (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto and all patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (b) all
trademarks, service marks, trade dress, logos, trade names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (c) all copyrightable works,
all copyrights and all applications, registrations and renewals in connection
therewith, (d) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals), (e) all computer
software (including source code, executable code, data, databases and related
documentation), and (f) all copies and tangible embodiments thereof (in whatever
form or medium).
"Knowledge," when used below with respect to Barrier, shall mean
actual knowledge after reasonable investigation of the following officers or
employees of Barrier: Owen Denman and Chris Sanders.
"Laws" shall mean any and all foreign, international, multinational,
national, federal, state, territorial, provincial, regional, tribal, local,
municipal and other administrative laws (including common law), statutes, codes,
orders, rules and regulations, constitutions and treaties enacted, promulgated
or issued by and put into effect by a Governmental Authority.
"Leased Real Property" shall have the meaning set forth in Section
4.1(1) below.
"Liability" shall mean and include any liability, obligation,
indebtedness, claim, loss, damage, deficiency (including deferred income Tax),
cost, expense, guaranty or responsibility, absolute, accrued, contingent or
otherwise, and whether due or to become due.
"License" shall mean any registration, license, permit, authorization,
and other consents or approvals of any Governmental Authority.
"Lien" shall mean any lien, attachment, pledge, mortgage, charge,
encumbrance, adverse right, claim or security interest of any nature whatsoever.
"Material Adverse Effect" shall have the meaning set forth in Section
4.1(a) below.
"Merger" shall have the meaning set forth in Recital A above.
"Merger Sub" shall have the meaning set forth in the preamble above.
"Most Recent Balance Sheet" shall have the meaning set forth in
Section 4.1(o) below.
"Notice of Claim" shall have the meaning set forth in Section 8.4(a)
below. "Optionee" and "Optionees" shall mean the holder(s) of Barrier Options.
"Option Spread" shall have the meaning set forth in Section 2.4 below.
"Order" shall mean any order, injunction, judgment, decree, ruling,
writ, assessment or arbitration award.
"Ordinary Course of Business" shall mean the ordinary course of
business of the Companies consistent with their past custom and practice
(including with respect to quantity, frequency and amount).
"Owned Real Property" shall have the meaning set forth in Section
4.1(k) below.
"Parent" shall have the meaning set forth in the preamble above.
"Parties" and "Party" shall have the meanings set forth in the
preamble above.
"Payoff Debt" shall mean all Liabilities of the Companies for borrowed
money, including principal, interest, fees and other amounts payable with
respect thereto, under the Comerica Loan Documents.
"Per Share Closing Consideration" shall mean the amount equal to the
sum of (i) the Aggregate Consideration (calculated as though there are no
Dissenting Shares), divided by the Fully Diluted Number, (ii) $948,000, divided
by the Fully Diluted Number.
"Percentage Interest" shall mean, with respect to any Shareholder or
Optionee, the quotient of (i) the sum of (A) the number of Barrier Shares held
by such Shareholder immediately prior to the Effective Time and (B) the number
of shares of Barrier Common Stock subject to Barrier Options held by such
Optionee immediately prior to the Effective Time, divided by (ii) the Fully
Diluted Number, as such Percentage Interest is set forth on Exhibit D, which
Exhibit shall be updated by Barrier as of the Closing to reflect the exercise of
any employee options to purchase Barrier Common Stock and to exclude any
Dissenting Shares from both (i) and (ii) above.
"Person" shall mean an individual, partnership, corporation, limited
liability company, association, joint stock company, trust, joint venture,
unincorporated association or any other business entity or Governmental
Authority.
"Price Adjustment" shall have the meaning set forth in Section 2.7(b)
below.
"Price Adjustment Holdback Amount" shall mean an amount equal to
$1,000,000.
"QMB Distribution" shall have the meaning set forth in Recital E
above.
"QMB Payment Assets" shall have the meaning set forth in Recital E
above.
"QMB Payment Co." shall have the meaning set forth in the preamble
above.
"QMB Sale" shall mean the sale by Barrier of 100% of its equity
interests in each of the Canadian Companies, which sale was consummated on March
31, 2006.
"Real Property" shall have the meaning set forth in Section 4.1(k)
below.
"Real Property Leases" shall have the meaning set forth in Section
4.1(k) below.
"Requisite Shareholder Approval" shall have the meaning set forth in
Section 5.3(a).
"Retained Debt" shall mean all Liabilities of the Companies for
borrowed money, including principal, interest, fees and other amounts payable
with respect thereto, and all capitalized lease Liabilities of the Companies,
other than Payoff Debt, as estimated as of the Closing by Barrier in a
certificate delivered to Parent, with reasonable supporting documentation, no
less than two (2) Business Days prior to the Closing Date.
"Safe Technologies" shall mean Safe Technologies, Inc., a California
corporation.
"Securities Act" shall have the meaning set forth in Section 4.1(e)
below.
"Shareholders" shall have the meaning set forth in Section 2.3 below.
"Shareholder Representative" shall have the meaning set forth in the
preamble above.
"Subsidiary" shall mean, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity,
whether incorporated or unincorporated, of which at least a majority of the
capital stock or other equity interests having by their terms voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such corporation, limited liability company,
partnership, association or other business entity is directly or indirectly
beneficially owned or controlled by such Person. The term "Subsidiary" shall
include all Subsidiaries of any Subsidiary.
"Surviving Corporation" shall have the meaning set forth in Section
2.1 below.
"Target Adjusted Net Assets" shall mean Barriers Adjusted Net Assets
in an amount equal to $9,500,000.
"Tax" shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add on minimum, estimated, or other
tax or other fiscal charges of any kind whatsoever, including without limitation
any interest, penalty, or addition thereto, whether disputed or not and
including any obligations to indemnify or otherwise assume or succeed to the Tax
Liability of any other Person.
"Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including without
limitation any schedule or attachment thereto, and any amendment thereof. When
used in connection with Tax Returns, the
term "delivered" includes physical delivery as well as making available for
examination and copying.
"Tennessee Real Property" means that certain real property located at
1066 Prosser Lane, Leoma, Tennessee.
"Threshold" shall have the meaning set forth in Section 8.2 below.
"Transaction Costs" shall mean all unpaid costs incurred by Barrier in
connection with the Merger, including, without limitation, the fees and expenses
to be paid to The Spartan Group LLC, Collette Erickson Farmer & ONeill LLP, and
Armanino McKenna LLP, as estimated as of the Closing by Barrier in a certificate
delivered to Parent, with reasonable supporting documentation, no less than two
(2) Business Days prior to the Closing Date.
"Unaffiliated Firm" shall have the meaning set forth in Section 2.7(c)
below.
ARTICLE II
DESCRIPTION OF TRANSACTION
SECTION 2.01. Merger. Effective as of the Effective Time, Merger Sub shall
be merged with and into Barrier in accordance with the terms of this Agreement
and the provisions of the California Corporations Code. Barrier shall be the
corporation surviving the Merger (the "Surviving Corporation"), and the separate
existence of Merger Sub shall cease as of the Effective Time. The Articles of
Incorporation of Barrier in effect immediately prior to the Effective Time shall
be the Articles of Incorporation of the Surviving Corporation following the
Effective Time. The Bylaws of Merger Sub in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation following the
Effective Time. The directors and officers of Merger Sub in office immediately
prior to the Effective Time of the Merger shall become the directors and
officers of the Surviving Corporation as of the Effective Time. The effect of
the Merger shall be as provided by applicable provisions of the California
Corporations Code.
SECTION 2.02. Conversion of Merger Sub Shares. Effective as of the
Effective Time, each share of capital stock of Merger Sub issued and outstanding
immediately prior thereto shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into and become one fully paid
and non-assessable share of the common stock of the Surviving Corporation.
SECTION 2.03. Conversion of Barriers Shares. Effective as of the Effective
Time, each share of common stock of Barrier ("Barrier Common Stock") issued and
outstanding immediately prior to the Effective Time (each, a "Barrier Share"
and, collectively, the "Barrier Shares") shall, by virtue of the Merger and
without any action on the part of the shareholders of Barrier ("Shareholders"),
subject to Section 2.5, be canceled and converted into the right to receive the
following:
(a) The Per Share Closing Consideration in cash payable at the
Effective Time.
(b) A portion of the Holdback Amount, if, when and to the extent such
amount becomes payable in accordance with Section 2.6.
(c) A portion of the Price Adjustment Holdback Amount and the amount
equal to the positive difference, if any, between Closing Adjusted Net Assets,
as reflected on the Final Closing Balance Sheet, and Target Adjusted Net Assets,
in each case if, when and to the extent such amounts become payable in
accordance with Section 2.7.
All of the Barrier Shares, when so converted, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist.
SECTION 2.04. Stock Options. Effective as of the Effective Time, each
employee option to purchase Barrier Common Stock outstanding immediately prior
to the Effective Time (each a "Barrier Option" and, collectively, the "Barrier
Options") shall be cancelled and cashed-out in accordance with the following
terms, which shall be reflected in cash-out agreements entered into between
Barrier and each Optionee prior to the Closing:
(a) The holder of each Barrier Option shall be paid in respect
therefor, out of the Aggregate Consideration, within 10 days of the Effective
Time, an amount equal to the Option Spread (as defined below) for such Barrier
Option multiplied by the number of shares of Barrier Common Stock subject to
such Barrier Option.
(b) The holder of each Barrier Option shall be entitled to be paid a
portion of the Holdback Amount, the Price Adjustment Holdback Amount and the
amount equal to the positive difference, if any, between Closing Adjusted Net
Assets, as reflected on the Final Closing Balance Sheet, and Target Adjusted Net
Assets in respect of each Barrier Option in the amounts set forth in Sections
2.6 and 2.7 below, in each case if, when and to the extent such amounts become
payable in accordance with such Sections.
(c) For purposes hereof, with respect to any Barrier Option, the term
"Option Spread" shall mean an amount equal to the difference between the Per
Share Closing Consideration and the exercise price per share under such Barrier
Option.
SECTION 2.05. Delivery and Payment. On the Closing Date, the Parties shall
undertake the following:
(a) Barrier shall cause to be delivered to Parent all share
certificates representing Barrier Shares (except for share certificates in
respect of Dissenting Shares), all agreements pertaining to Barrier Options, and
written agreements between Barrier and each Optionee, substantially in the form
attached hereto as Exhibit E, pursuant to which each Optionee agrees to accept
in exchange for its Barrier Options consideration in accordance with Section 2.4
above (which Barrier Options upon such exchange shall be cancelled and retired
without further obligation to any Person). In the event that any Shareholder no
longer has in his, her or its possession any of such certificates, such holder
shall, in lieu of surrendering such certificates, deliver to Barrier an
Affidavit of Lost Certificate and Agreement to Indemnify in form reasonably
satisfactory to Parent. It shall be a condition to Parent's obligations under
Section 2.5(b) that the foregoing be delivered to Parent and that each such
surrendered certificate be properly endorsed or otherwise in proper form for
transfer.
(b) Parent shall deliver (i) an amount equal to the Payoff Debt,
payable by wire transfer to the applicable lender(s) thereunder, (ii) the
Aggregate Consideration, payable by
wire transfer to the Escrow Agent, (iii) the Holdback Amount, payable to the
Escrow Agent in accordance with Section 2.6, (iv) the Price Adjustment Holdback
Amount, payable to the Escrow Agent in accordance with Section 2.7(a), and (v)
an amount equal to the Transaction Costs, payable to the Escrow Agent for
distribution in accordance with instructions from the Shareholder
Representative. The Aggregate Consideration shall be held by the Escrow Agent
until the Effective Time and then shall be distributed by the Escrow Agent, on
behalf of the Shareholder Representative, (1) to each Shareholder and Optionee,
the Per Share Closing Consideration for each Barrier Share (other than
Dissenting Shares) and the Option Spread, net of any employee withholding
amounts required to be withheld from such amount under applicable law, for each
share of Barrier Common Stock subject to a Barrier Option held by such
Shareholder or Optionee immediately prior to the Effective Time, in each case as
set forth in Section 4.1(b) of the Barrier Disclosure Schedule, which Section
shall be updated by Barrier as of the Closing to reflect the exercise of any
employee options to purchase Barrier Common Stock and any Dissenting Shares, and
(ii) to Barrier (for remittance to the proper Tax authorities), the aggregate
amount of employee withholding amounts withheld pursuant to the preceding clause
(i). Subject to Section 2.9 below, neither Parent nor Merger Sub shall have any
liability to Barrier or to any Shareholder or Optionee or other Person after the
foregoing amounts are paid to the Escrow Agent, including, without limitation,
any liability with respect to the distribution thereof by the Escrow Agent.
SECTION 2.06. Holdback Amount. On the Closing Date, Parent shall deliver
the Holdback Amount to the Escrow Agent by wire transfer of immediately
available U.S. Dollars to a bank account designated by the Escrow Agent in
writing at least two days prior to the Closing Date (the "Indemnity Escrow
Account"), to be held by the Escrow Agent pursuant to this Section 2.6 and the
Escrow Agreement. On the date eighteen (18) months after the Effective Time,
after any offsets against the Holdback Amount pursuant to Article VIII or
Section 2.7(e), any funds remaining in the Indemnity Escrow Account, including
proceeds of investment thereof, in excess of $1,750,000, shall be paid by the
Escrow Agent (i) to the Shareholders and the Optionees in accordance with their
respective Percentage Interests, net, in the case of Optionees, of any employee
withholding amounts required to be withheld from such payments under applicable
law, and (ii) to Barrier (for remittance to the proper Tax authorities), the
aggregate amount of employee withholding amounts withheld pursuant to the
preceding clause (i). On the date three (3) years after the Effective Time,
after any offsets against the Holdback Amount pursuant to Article VIII or
Section 2.7(e), any funds remaining in the Indemnity Escrow Account, including
proceeds of investment thereof, shall be paid by the Escrow Agent (i) to the
Shareholders and the Optionees in accordance with their respective Percentage
Interests, net, in the case of Optionees, of any employee withholding amounts
required to be withheld from such payments under applicable law, and (ii) to
Barrier (for remittance to the proper Tax authorities) the aggregate amount of
employee withholding amounts withheld pursuant to the preceding clause (i).
SECTION 2.07. Post-Closing Price Adjustment.
(a) Price Adjustment Holdback Amount. On the Closing Date, Parent
shall deliver the Price Adjustment Holdback Amount to the Escrow Agent by wire
transfer of immediately available U.S. Dollars to a bank account designated by
the Escrow Agent in writing
at least two days prior to the Closing Date (the "Adjustment Escrow Account"),
to beheld by the Escrow Agent pursuant to this Section 2.7 and the Escrow
Agreement.
(b) Determination of Adjustment. The Aggregate Consideration shall be
adjusted dollar for dollar following the Closing Date by the net amount by which
the Target Adjusted Net Assets are greater or lesser than the Closing Adjusted
Net Assets. The net amount by which the Closing Adjusted Net Assets are greater
or lesser than the Target Adjusted Net Assets is hereinafter referred to as the
"Price Adjustment." The Price Adjustment shall be determined from a Closing Date
balance sheet (the "Closing Balance Sheet") prepared as of 12:01 a.m. on the
Closing Date by Parent on a basis consistent with the Most Recent Balance Sheet
except as provided on Schedule 2.7(b). Parent shall furnish the Closing Balance
Sheet to Shareholder Representative not more than forty-five (45) calendar days
after the Closing Date. Parent shall give representatives of Shareholder
Representative reasonable access during normal business hours to the premises of
the Surviving Corporation and to its books and records for purposes of enabling
Shareholder Representative to verify the Closing Balance Sheet and the Price
Adjustment, and shall cause appropriate representatives of Parent and the
Surviving Corporation to give reasonable assistance to Shareholder
Representative and its representatives, at no cost to Shareholder Representative
or the Shareholders, in the verification of the Closing Balance Sheet and the
Price Adjustment.
(c) Disputes. Unless Shareholder Representative notifies Parent in
writing that it disagrees with the Closing Balance Sheet or the Price Adjustment
(which writing shall contain a statement setting forth in reasonable detail the
reasons for such disagreement) within thirty (30) calendar days after receipt
thereof, the Closing Balance Sheet and the Price Adjustment shall be conclusive
and binding on all Parties. If Shareholder Representative notifies Parent in
writing of its disagreement with the Closing Balance Sheet or the Price
Adjustment within such 30-day period, then Shareholder Representative and Parent
shall attempt to resolve their differences with respect thereto within fifteen
(15) calendar days after the date of Shareholder Representative's written notice
of disagreement. The Closing Balance Sheet will be deemed to be the final,
binding and conclusive Closing Balance Sheet (the "Final Closing Balance Sheet")
for all purposes on the 3lst calendar day after delivery thereof by Parent
unless Shareholder Representative shall have delivered to Parent a notice of
disagreement prior to such date. If Shareholder Representative delivers a
written notice of disagreement and any disputes regarding the Closing Balance
Sheet or the Price Adjustment are not resolved within the 15-day resolution
period discussed above, the unresolved disputes shall be submitted to and
resolved by an accounting firm of national standing mutually acceptable to the
Parties (the "Unaffiliated Firm").
(d) Unaffiliated Firm. In connection with such engagement, Shareholder
Representative and Parent will each execute, if requested by the Unaffiliated
Firm, a reasonable engagement letter including customary indemnities. The
Unaffiliated Firm will have thirty (30) calendar days to review the Closing
Balance Sheet, the notice of disagreement, any response by Parent to the notice
of disagreement, and such other books and records as the Unaffiliated Firm may
deem appropriate. Within such 30-day period, the Unaffiliated Firm will furnish
simultaneously to Parent and Shareholder Representative its written
determination with respect to the Closing Balance Sheet. The determination made
by the Unaffiliated Firm shall be conclusive and binding upon the Parties and
the Closing Balance Sheet, with such changes as
determined by the Unaffiliated Firm, shall be deemed the Final Closing Balance
Sheet upon delivery by the Unaffiliated Firm. Parent shall pay fifty percent
(50%) of the fees and expenses of the Unaffiliated Firm and the Shareholders
shall pay the other fifty percent (50%) of the fees and expenses of the
Unaffiliated Firm; provided, however, that the portion of such fees and expenses
of the Unaffiliated Firm to be paid by the Shareholders will instead be paid by
Parent and serve as a reduction in the Closing Adjusted Net Assets on the Final
Closing Balance Sheet.
(e) Payment of Adjustment. If the Closing Adjusted Net Assets, as
reflected on the Final Closing Balance Sheet (after any reduction pursuant to
the last sentence of Section 2.7(d)), shall be greater than the Target Adjusted
Net Assets, then (i) the Escrow Agent shall disburse the Price Adjustment
Holdback Amount (A) to the Shareholders and the Optionees in accordance with
their respective Percentage Interests, net, in the case of Optionees, of any
employee withholding amounts required to be withheld from such disbursements
under applicable law, and (B) to Barrier (for remittance to proper Tax
authorities) the aggregate amount of employee withholding amounts withheld
pursuant to the preceding clause (A), and (ii) Parent shall pay to Shareholder
Representative, by wire transfer of immediately available U.S. Dollars to a bank
account designated by Shareholder Representative in writing within two (2)
Business Days of the determination of the Price Adjustment, an amount equal to
the difference between Closing Adjusted Net Assets, as reflected on the Final
Closing Balance Sheet, and Target Adjusted Net Assets. Shareholder
Representative shall distribute such amount (i) to the Shareholders and the
Optionees in accordance with their respective Percentage Interests, net, in the
case of Optionees, of any employee withholding amounts required to be withheld
from such distributions under applicable law (as determined by Parent and/or
Barrier, which determination shall be given in writing by Parent and/or Barrier
to Shareholder Representative on or before the date that payment is made to
Shareholder Representative pursuant to the preceding sentence), and (ii) to
Barrier (for remittance to the proper Tax authorities), the aggregate amount of
employee withholding amounts withheld pursuant to the preceding clause (i).
Subject to Section 2.9 below, neither Parent nor Merger Sub shall have any
liability to any Shareholder or Optionee after Parent pays to Shareholder
Representative any amount required to be paid by Parent under this Section
2.7(e), including, without limitation, any liability with respect to such
distribution by Shareholder Representative. If the Closing Adjusted Net Assets,
as reflected on the Final Closing Balance Sheet (after any reduction pursuant to
the last sentence of Section 2.7(d)), shall be less than the Target Adjusted Net
Assets on the Final Closing Balance Sheet, then Escrow Agent shall disburse to
Parent from the Adjustment Escrow Account an amount equal to the difference
between Target Adjusted Net Assets and Closing Adjusted Net Assets, as reflected
on the Final Closing Balance Sheet. The Escrow Agent shall then distribute any
funds remaining in the Adjustment Escrow Account (i) to the Shareholders and the
Optionees in accordance with their respective Percentage Interests, net, in the
case of Optionees, of any employee withholding amounts required to be withheld
from such distributions under applicable law, and (ii) to Barrier (for
remittance to proper Tax authorities) the aggregate amount of employee
withholding amounts withheld pursuant to the preceding clause (i). In the event
that the difference between Target Adjusted Net Assets and Closing Adjusted Net
Assets, as reflected on the Final Closing Balance Sheet (after any reduction
pursuant to the last sentence of Section 2.7(d)), exceeds the Price Adjustment
Holdback Amount, the Escrow Agent will distribute to Parent an amount equal to
such excess from the Indemnity Escrow Account. Payment by Parent pursuant to
this Section 2.7(e) shall be made not more than five (5) Business Days after the
date that the Final Closing Balance Sheet became final.
Distribution from the Indemnity Escrow Account pursuant to the preceding
sentence shall be made by the Escrow Agent as soon as reasonably practicable
following notice to the Escrow Agent in accordance with the Escrow Agreement. In
no event shall the Shareholders or the Optionees be required to pay any amount
under this Section 2.7 in excess of the sum of the Price Adjustment Holdback
Amount and the Holdback Amount.
SECTION 2.08. Dissenting Shares. Each Barrier Share held by a Shareholder
who has demanded his, her or its right to an appraisal of his, her or its
Barrier Shares in accordance with Sections 1300 through 1313 of the California
Corporations Code and who has not effectively withdrawn or lost his, her or its
right to such appraisal (Dissenting Shares") shall not be converted into or
represent the right to receive the consideration represented by such shares of
Barrier Common Stock pursuant to Sections 2.3 through 2.7 above, but the holder
thereof shall be entitled only to such rights as are granted by Sections 1300
through 1313 of the California Corporations Code.
SECTION 2.09. Remittance of Withheld Amounts. Barrier shall, and Parent
shall cause Barrier to, remit to the proper Tax authorities when due all
employee withholding amounts disbursed or paid to Barrier in accordance with
Section 2.5(b), 2.6 or 2.7(e) above.
SECTION 2.10. Closing of Stock Transfer Books and Books and Records. The
stock transfer books of Barrier shall be closed at the close of business on the
Business Day immediately preceding the Closing Date. The books and records of
Barrier shall be closed at 12:01 a.m. on the Closing Date.
ARTICLE III
CLOSING
SECTION 3.01. Time and Place of Closing. The closing under this Agreement
(herein called the "Closing") shall take place at a place and on a date to be
agreed by Parent, Merger Sub and Barrier, which date shall be as soon as
practicable but in no event no later than the fourth (4th) Business Day
following the later of satisfaction of all conditions to Closing as set forth in
Article VI hereof (other than conditions with respect to actions the Parties
will take at the Closing itself or at other times specified herein), or at such
other place or date as may be mutually agreeable to Parent, Merger Sub and
Barrier (the date on which Closing occurs being herein called the "Closing
Date"). All transactions at the Closing shall be deemed to take place
simultaneously and no transaction shall be deemed to have been completed and no
document or certificate shall be deemed to have been delivered until all
transactions are completed and all documents delivered, at which time the
Closing shall be deemed to have occurred at 12:01 a.m. on the Closing Date.
SECTION 3.02. Consummation of the Merger. On the date of the Closing (or on
such other date as Parent, Merger Sub and Barrier may agree), the Parties will
cause the Merger to be consummated by executing and filing with the California
Secretary of State the Agreement of Merger in accordance with Sections 1101 and
1103 of the California Corporations Code. The Merger shall become effective at
the date and time the Agreement of Merger is filed with the California Secretary
of State (the "Effective Time").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties by Barrier. Barrier represents
and warrants to Parent and Merger Sub that the statements contained in this
Section 4.1 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 4.1), except as set forth in the disclosure schedule
accompanying this Agreement (the "Barrier Disclosure Schedule"). The Barrier
Disclosure Schedule will be arranged in sections corresponding to the lettered
Sections contained in this Section 4.1.
(a) Organization, qualification, and Corporate Power. Each Company is
a corporation duly organized, validly existing, and in good standing under the
Laws of the State of California. Each Company is duly licensed or qualified to
conduct business and is in good standing under the Laws of each jurisdiction
where the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
and in good standing would not have, individually or in the aggregate, a
material adverse effect on the business, operations, results of operations,
financial condition or assets of the Companies, taken as a whole, or on the
ability of the Parties to consummate the transactions contemplated hereby (a
"Material Adverse Effect"). Each Company has full corporate power and authority
to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it. Barrier has delivered to Parent true and
complete copies of the articles of incorporation and bylaws of each Company.
(b) Capitalization. The entire authorized capital stock of Barrier
consists of (i) 5,000,000 shares of Barrier Common Stock, of which 922,384
shares are issued and outstanding and 79,000 shares have been authorized and
reserved for issuance upon the exercise of Barrier Options, and (ii) 1,000,000
shares of preferred stock, none of which are issued and outstanding. All of the
Barrier Shares have been duly authorized and are validly issued, fully paid,
nonassessable and free of preemptive or similar rights. Set forth on Section
4.1(b) of the Barrier Disclosure Schedule is a true and complete list of: the
name and address of each Shareholder and Optionee, the number of Barrier Shares
held by such Person and the number and exercise price of Barrier Options held by
such Person. Other than as set forth on Section 4.1(b) of the Barrier Disclosure
Schedule, there are no issued and outstanding shares of capital stock of Barrier
and there are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights or other contracts or
commitments to issue, sell or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation or similar rights with respect to Barrier.
Except as set forth in Section 4.1(b) of the Barrier Disclosure Schedule, as of
the date of this Agreement, no Shareholder is party to any agreement regarding
the holding, voting, or transfer of Barrier Shares. As of the Closing, no
Shareholder will be party to any such agreement.
(c) Subsidiaries, Equity Interests. As of the date of this Agreement,
Barrier has no Subsidiaries other than Safe Technologies and QMB Payment Co. As
of the Closing
Date, Barrier will have no Subsidiaries other than Safe Technologies. The entire
authorized capital stock of Safe Technologies consists of 100,000 shares of
common stock, of which 20,000 shares are issued mid outstanding. Barrier owns
all of the issued and outstanding shares of capital stock of Safe Technologies,
free and clean of any Liens (other than, as of the date of this Agreement, a
Lien granted to Comerica Bank under the Comerica Loan Documents), and all of
such shares are duly authorized and validly issued, fully paid, nonassessable
and free of preemptive or similar rights. Safe Technologies is not bound by any
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts or commitments to
issue, sell or otherwise cause to become outstanding any of its capital stock.
Except for the Subsidiaries listed above, the Companies do not own, directly or
indirectly, any equity, debt or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity debt or similar interest in,
any Person. There are no corporations, partnerships, limited liability
companies, associations or joint ventures through which the business of the
Companies is conducted. Neither Company is a partner with any other Person, or
is subject to any obligation, contingent or otherwise, to provide funds to or
make an investment (in the form of a loan, capital contribution or otherwise) in
any Person.
(d) Authorization of Transaction. Barrier has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and each agreement or document contemplated hereby to which Barrier is
a party, to perform its obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby, subject to obtaining the
Requisite Shareholder Approval prior to consummation of the Merger. The
execution, delivery and performance by Barrier of this Agreement and each
agreement or document contemplated hereby to which Barrier is a party, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by Barrier's Board of Directors and, except for obtaining the
Requisite Shareholder Approval, no other corporate action is necessary on the
part of Barrier. This Agreement and each agreement or document contemplated
hereby to which Barrier is a party has been duly executed and delivered by
Barrier and constitutes the valid and legally binding obligation of Barrier,
enforceable in accordance with its terms.
(e) Noncontravention. Neither the execution and the delivery of this
Agreement or any agreement or document contemplated hereby to which Barrier is a
party, nor the consummation of the transactions contemplated hereby or thereby,
will (i) violate any Law, Order or other restriction of any Governmental
Authority to which the Companies or any of their assets are subject or any
provision of the articles of incorporation or bylaws of either Company or (ii)
conflict with, result in a breach of, constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, result
in the acceleration of, create in any Person the right to accelerate, terminate,
modify, or cancel, or require any notice under any material agreement, contract,
lease, License, instrument, or other arrangement to which either Company is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Lien upon any of its assets). Other than in
connection with the provisions of the California Corporations Code, the
Securities Act of 1933, as amended (the "Securities Act") and state securities
laws or as set forth in Section 4.1(e) of the Barrier Disclosure Schedule,
neither Company needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Authority or of any
non-governmental
Person in order for the Parties to consummate the transactions contemplated by
this Agreement or any agreement or document contemplated hereby.
(f) Financial Statements. Barrier has delivered to Parent true and
complete copies of: (i) the unaudited balance sheet of Barrier and its
consolidated Subsidiaries as of March 31, 2006 (the "Most Recent Balance Sheet")
and the unaudited statements of earnings and cash flows for Barrier and its
consolidated Subsidiaries for the three-month period ended March 31, 2006, and
(ii) the audited balance sheet of Barrier and its consolidated Subsidiaries as
of December 31, 2003, 2004 and 2005, and the audited statements of earnings and
cash flows for the same years ((i) and (ii), collectively, the "Barrier
Financial Statements"). Each of the Barrier Financial Statements has been
prepared in accordance with GAAP (except as may be indicated therein or in the
notes thereto, or for year end adjustments), fairly presents the financial
condition, results of operations and cash flows of Barrier and its consolidated
Subsidiaries at the dates and for the period indicated, and are consistent with
the books and records of Barrier and its consolidated Subsidiaries, which books
and records accurately and fairly reflect, in reasonable detail, the
transactions and the assets and liabilities of Barrier and its consolidated
Subsidiaries; provided, however, that the interim statements are subject to
normal year-end adjustments. Except for any reserve for doubtful accounts
reflected in the Most Recent Balance Sheet, all accounts receivable reflected in
the Most Recent Balance Sheet, and all accounts receivable that have arisen
since the date thereof (except receivables that have been collected since such
date), are valid and enforceable claims, constitute bona fide accounts
receivable resulting from the sale of goods and services in the Ordinary Course
of Business and are not subject to any valid defenses, offsets or allowances of
any kind.
(g) Events Subsequent to Date of Most Recent Balance Sheet. Since
December 31, 2005, there has not been any Material Adverse Effect. Except as set
forth in Section 4.1(g) of the Barrier Disclosure Schedule, since December 31,
2005, neither Company has taken, or failed to take, any action that would have
constituted a breach of Section 5.4 had the covenants therein applied since that
date.
(h) Undisclosed Liabilities. Neither Company has any Liability
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any Liability for Taxes, except for
(i) Liabilities set forth in the Most Recent Balance Sheet, (ii) Liabilities
which have arisen after the date of the Most Recent Balance Sheet in the
Ordinary Course of Business (none of which results from, arises out of, relates
to or was caused by any breach of contract, breach of warranty, tort,
infringement or violation of Law), and (iii) Liabilities set forth in Section
4.1(h) of the Barrier Disclosure Schedule. As of the Closing, neither Company
will have any Liability for the operations of, or otherwise arising from,
related to or caused by, QMB Payment Co. or the Canadian Companies before, on or
after the Closing Date.
(i) Brokers' Fees. Except for amounts payable to The Spartan Group
LLC, Barrier has no liability or obligation to pay any fees or commissions to
any broker, finder or agent with respect to the transactions contemplated by
this Agreement.
(j) Tax Matters.
(i) Barrier is an S corporation within the meaning of Sections
1361 and 1362 of the Code and has been an S corporation continuously since
January 1, 1990. Safe Technologies is a qualified subchapter S subsidiary
within the meaning of Section 1361(b)(3)(B) of the Code and has been a
qualified subchapter S subsidiary continuously at all times during its
existence. The Companies have filed all of their Tax Returns in a manner
consistent with such classifications.
(ii) Each Company has accurately prepared and duly filed or
caused to be filed on a timely basis all Tax Returns that it was required
to file on or prior to the Closing Date. All such Tax Returns are true and
complete in all material respects. All Taxes owed by the Companies in
respect of taxable periods of the Companies ending on or before the Closing
Date (whether or not shown on the Tax Returns) (i) if due and payable, have
been timely paid, (ii) if not yet due and payable, have an adequate reserve
established therefor in accordance with GAAP, or (iii) are being contested
in good faith by the Companies pursuant to appropriate proceedings which
are being diligently pursued, and an adequate reserve therefor has been
established in accordance with GAAP. No claim or inquiry with respect to
any Taxes has ever been made or would reasonably be expected to be made by
any authority in a jurisdiction where the Companies did not file Tax
Returns for any period ending on or before the Closing Date that either
Company is or may be subject to taxation by that jurisdiction. There are no
Liens on any of the assets of the Companies that arise from, are in
connection with or relate to any failure (or alleged failure) to pay any
Tax. Barrier has no Knowledge of any basis for the assertion of any claims
attributable to Taxes which, if adversely determined, would result in any
such Lien.
(iii) Neither Company has filed a consolidated return or has ever
been a member of an "affiliated group" within the meaning of Section
1504(a) (1) of the Code (or any similar group defined under a similar
provision of state, local or foreign Law). Neither Company has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock intended to qualify for nontaxable treatment under
Section 355 of the Code (A) at any time during the two-year period ending
immediately prior to the date of this Agreement or (B) in a distribution
that could otherwise constitute part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the transactions contemplated by this Agreement. Neither
Company is a party to or bound by any Tax sharing agreement, Tax indemnity
obligation or similar agreement, arrangement or practice with respect to
any income Tax or any other material Tax (including any advance pricing
arrangement, closing agreement or other agreement with any Governmental
Authority relating to any Tax). Neither Company may be held liable for, or
be required to make any contribution with respect to, the material Tax
liability of any other Person by reason of Treasury Regulation section
1.1502-6 or any comparable provision of state, local or foreign law.
(iv) Barrier has delivered to Parent true and complete copies of
the income, franchise, excise, sales, use, property and employment Tax
Returns filed by the Companies with any Governmental Authority since
January 1, 2001, together with all
information document requests, closing agreements, settlement agreements,
examination reports and statements of deficiencies assessed, proposed in
writing to be assessed against, or agreed to by the Companies.
(v) Without limiting the generality of the foregoing, except as
set forth in Section 4.1(j) of the Barrier Disclosure Schedule, the
Companies have withheld or collected and duly paid all Taxes required to
have been withheld or collected and paid in connection with payments to
foreign Persons, sales and use Tax obligations with respect to any and all
states, amounts paid or owing to any employee, independent contractor,
creditor, shareholder or other Person. No Person providing services to the
Companies who, for any taxable year or taxable period for which the
applicable statute of limitations has not yet expired, was or is being
treated by the Companies as an independent contractor for Tax purposes, was
or is required to have been classified as an employee for Tax purposes.
(vi) The Companies' Tax Returns are not being currently audited
or examined by any Governmental Authority, nor have any deficiencies for
any Tax been asserted against either Company. Section 4.1 of the Barrier
Disclosure Schedule contains a true and complete list of all audits of Tax
Returns of the Companies for the past four (4) years, including a
reasonably detailed description of the status, nature and, if completed,
outcome of each audit. No Tax Return relating to either Company is
currently under audit or examination, and no written or unwritten notice of
such an audit or examination has been received by either Company. All
deficiencies proposed as a result of any completed audits have been paid or
settled, or are set forth in the books of the Companies.
(vii) There are no outstanding agreements or waivers extending
the statute of limitations applicable to any Taxes for which the Companies
may be liable. The Companies are not currently the beneficiary of any
extension of time within which to file any Tax Return. No power of attorney
is currently in effect with respect to any Tax of either Company.
(k) Properties. The only real property owned by the Companies (the
"Owned Real Property") or leased or subleased by the Companies as lessor or
lessee (the "Leased Real Property," and together with the Owned Real Property,
the "Real Property") is described in Section 4.1(k) of the Barrier Disclosure
Schedule and each such lease or sublease in respect of the Leased Real Property
(including the material terms of any oral Real Property Lease) is described
thereon (the "Real Property Leases"). The Companies have good, full and
marketable title in fee simple in and to the Owned Real Property, valid
leasehold interests in and to the Leased Real Property, and good, full and
marketable title or valid leasehold interests, as the case may be, in all
personal properties and assets that are material to the business of either
Company (except real or personal property leases terminated, or personal
property sold or otherwise disposed of, in the Ordinary Course of Business or
due to obsolescence since the date of the Most Recent Balance Sheet), in each
case free and clear of all Liens, except for (A) Liens described in Section
4.1(k) of the Barrier Disclosure Schedule (which shall not, in the case of the
Owned Real Property, include any monetary Lien in effect as of the Closing
Date), (B) with respect to the Owned Real Property, Liens (other than monetary
Liens in effect as of the Closing
Date, including without limitation, Liens for Taxes, supplemental Taxes or
assessments due or payable and Liens under the Comerica Loan Documents)
described in that certain Preliminary Report of First American Title Insurance
Company, dated as of February 28, 2006, regarding Owned Real Property located at
180 River Road, Rio Vista, California, (C) Liens for Taxes not yet due and (D)
the rights of any lessor under any lease to which either Company is a party.
Neither Company has leased, subleased or otherwise granted to any Person the
right to use or occupy the Owned Real Property or any portion thereof, and there
are no outstanding options, rights of first offer or rights of first refusal to
purchase the Owned Real Property or any portion thereof. The Companies have,
with respect to the Real Property, received all material approvals of
Governmental Authorities (including Licenses) required in connection with the
operation thereof and each has been operated and maintained in accordance with
applicable Laws, including zoning ordinances and the like.
(i) Barrier has delivered to Parent true and complete copies of
the Real Property Leases, as amended to date. With respect to the Real
Property Leases: (A) The Real Property Leases are each legal, valid,
binding, enforceable and in full force and effect; (B) the Real Property
Leases will continue to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the Merger; (C) neither
Company nor, to the Knowledge of Barrier, any other party to any of the
Real Property Leases is in breach or default, and, to the Knowledge of
Barrier, no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification or
acceleration thereunder; (D) no party to any of the Real Property Leases
has repudiated any provision thereof; (E) there are no disputes, oral
agreements or forbearance programs in effect as to any of the Real Property
Leases and neither Company's possession and quiet enjoyment under such Real
Property Leases has been disturbed; and (F) none of the Companies has
assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered
any interest in any such leasehold or subleasehold.
(ii) All of the Companies' equipment, inventory and other items
of tangible property and assets are in good operating condition and repair,
subject to normal wear and maintenance, consist of a quality, quantity and
condition usable or saleable in the Ordinary Course of Business and conform
to all applicable Laws relating to their construction, use and operation in
all material respects.
(iii) Each building or improvement on any of the Real Property is
in good condition and working order (reasonable wear and tear excepted) and
suitable for the operation of the business currently being conducted at
such Real Property. The real property improvements at the Real Property,
and the current use and operation thereof, are in compliance in all
material respects with and are authorized by applicable covenants of record
and applicable Law, including, without limitation, zoning and other land
use regulations. Neither Company has received any notice that any
Governmental Authority considers any of the Real Property, or the
improvements thereat, to violate any such regulations. There are no
proceedings of any Governmental Authority pending or, to the Knowledge of
Barrier, threatened, with respect to the Real Property that could adversely
affect use or operation of any portion of the Real Property.
(l) Intellectual Property. Section 4.1(1) of the Barrier Disclosure
Schedule contains a true and complete list of all Intellectual Property rights
which are owned by the Companies, or in which the Companies have any interest,
or which are used or, to Barriers Knowledge, have been used in connection with,
or which relate to, the Companies' businesses (whether or not presently used in
connection therewith), and of any pending applications for registration of any
Intellectual Property rights by the Companies. Except as set forth in such
Section, the Companies own and have the sole and exclusive right to use all of
the Intellectual Property rights and all other Intellectual Property used in
their business and such items are not subject to any Liens. Except as set forth
in such Section, (i) no Person other than the Companies has any rights or
interests in or to any of the foregoing, and the Companies pay no royalty to
anyone with respect thereto; (ii) to Barrier's Knowledge, the Companies have not
infringed, and none of the products the Companies manufacture or sell, or any
Intellectual Property the Companies employ in the manufacture of any product, or
any service the Companies render, or the marketing or use by the Companies of
any such product or service, infringes, any Intellectual Property right of any
Person; and (iii) in the past five (5) years, neither Company has received any
written claim of infringement with respect to any Intellectual Property used by
the Companies. Except as set forth in such Section, Barrier has no Knowledge
that any Person is infringing any Intellectual Property right of the Companies.
The Companies own, or are licensed or otherwise have the right to use, all
Intellectual Property used in or necessary for the conduct of their respective
businesses as presently being conducted free and clear of any Liens, and the
consummation of the transactions contemplated hereby will not impair any of such
rights. All registered patents, trademarks, service marks, copyrights and domain
names held by the Companies are in full force and effect, and to the Knowledge
of Barrier, there is no pending opposition, interference or cancellation or
other proceeding before any court or registration authority in any jurisdictions
against such registrations. The Companies have taken all necessary and
reasonable action to maintain and protect each item of Intellectual Property
they own or use.
(m) Inventory. The inventory of the Companies consists of raw
materials and supplies, manufactured and purchased parts, goods in process, and
finished goods, all of which is merchantable and fit for the purpose for which
it was procured or manufactured, and none of which is obsolete, damaged or
defective, subject only to the reserve for inventory write-down on the Most
Recent Balance Sheet as such reserve may be adjusted for the passage of time in
the Ordinary Course of Business.
(n) Contracts. Section 4.1(n) of the Barrier Disclosure Schedule lists
all contracts and agreements (which written or oral) to which either Company is
a party, and (i) the performance of which involves consideration in excess of
$50,000, (ii) which involved in the past two (2) years or may involve in the
future the disposition or acquisition of assets or equity interests not in the
Ordinary Course of Business; (iii) which provides for the employment or
compensation of any current director, manager, officer, employee or consultant
of either Company; (iv) which constitutes indebtedness of either Company; (v)
which forms partnership or joint venture entities; (vi) which limits or
restricts the ability of Parent, its affiliates or the Companies to enter into
or engage in any market or line of business; (vii) which is a requirements, take
or pay or similar contract; (viii) which contains earn-out provisions or other
contingent payment obligations of either Company reasonably expected to exceed
$50,000; or (ix) which grants customers of either Company "most favored nations"
pricing (collectively, the "Contracts"). Barrier has delivered to Parent a true
and complete copy of each of the Contracts.
All of the Contracts are in full force and effect and the Company that is party
thereto is not in breach thereof or default thereunder and no condition exists
that, with notice or lapse of time or both, would constitute a default by such
Company or, to the Knowledge of Barrier, any other party to such Contracts.
(o) Litigation. Except as set forth in Section 4.1(o) of the Barrier
Disclosure Schedule, (i) neither Company nor any of its assets is subject to any
outstanding Orders, and (ii) there is no action, suit, proceeding, hearing,
arbitration or investigation pending or, to the Knowledge of Barrier, threatened
against either Company.
(p) Compliance with Laws. Each Company is in material compliance with,
and, to Barrier's Knowledge, has at all times in the past three (3) years been
in material compliance with, all applicable Laws, Orders and Licenses, and
neither Company has received notice in the past five (5) years of any violations
thereof. Each Company possesses all Licenses necessary to carry on its business
in the manner presently conducted and such Licenses, a true and complete list of
which is set forth in Section ____(p) of the Barrier Disclosure Schedule, are in
full force and effect. Neither Company nor any of its officers or agents has
made any illegal or improper payments to, or provided any illegal or improper
benefit or inducement for, any governmental official, supplier, customer or
other Person in an attempt to influence such Person to take or refrain from
taking any action relating to either Company.
(q) Employee Matters. Barrier has delivered to Parent a true and
complete list of the names of all employees of the Companies, the rates of
annual, or, where appropriate, hourly, compensation payable to each such
employee, the bonus paid to each such employee in 2005 and eligible vacation due
to each such employee. Each employee of the Companies is at will except as
otherwise noted in Section 4.1(q) of the Barrier Disclosure Schedule. Neither
Company is a party to or obligated under any collective bargaining agreements,
and no written demand has been made for recognition by a labor organization. To
Barrier's Knowledge, no union organizing activities are taking place with
respect to any employees of the Companies. There is no pending or, to the
Knowledge of Barrier, threatened strike or work stoppage by employees of the
Companies. There are no pending unfair labor practice charges, grievances or
complaints filed or, to the knowledge of Barrier, threatened to be filed with
any Governmental Authority based on employment or termination of employment of
any individual by the Companies. Except as set forth in Section 4.1(q) of the
Barrier Disclosure Schedule, the consummation of the transactions contemplated
by this Agreement or any agreement or document contemplated hereby will not
result in any contractual or legal obligation of the Companies to make any
severance, sale award, "golden parachute," change of control or other payment to
directors, officers, employees, or other Persons.
(r) Employee Benefits. Section 4.1(r) of the Barrier Disclosure
Schedule lists each employee benefit plan within the meaning of Section 3(3) of
ERISA, or any other material employee benefit plan, program or arrangement, that
the Companies maintain or to which either Company contributes or has any
obligation to contribute (each, an "Employee Benefit Plan"). Barrier has
delivered to Parent true and complete copies of the plan documents and summary
plan descriptions, the most recent determination letter received from the
Internal Revenue Service, the most recent annual report (Form 5500), and all
related trust agreements, insurance contracts and other funding arrangements
that implement each Employee Benefit Plan.
(i) Each Employee Benefit Plan (and each related trust, insurance
contract, or fund) has been maintained, funded and administered in
accordance with the terms of such Employee Benefit Plan and complies in
form and in operation in all respects with the applicable requirements of
ERISA, the Code and any other applicable Laws.
(ii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been made to
each Employee Benefit Plan which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA. All premiums or other payments
which are due have been paid with respect to each Employee Benefit Plan
which is an "employee welfare benefit plan" within the meaning of Section
3(1) of ERISA. The Liabilities accrued under each Employee Benefit Plan are
reflected on the Most Recent Balance Sheet.
(iii) Each Employee Benefit Plan which is intended to meet the
requirements of a "qualified plan" under Code Section 401(a) has received a
determination letter from the Internal Revenue Service to the effect that
it meets the requirements of Section 401(a) of the Code and, to the
Knowledge of Barrier, no event has occurred after the date of such
determination that would adversely affect such determination.
(iv) None of the Companies has ever maintained or contributed to
an Employee Benefit Plan which constitutes a "defined benefit plan" within
the meaning of Section 34 of ERISA. No asset of the Companies is subject to
any Lien under ERISA or the Code.
(v) Neither Company nor any fiduciary, trustee, or administrator
of any Employee Benefit Plan has engaged in a "prohibited transaction" as
defined in Section 4975 of the Code or a "prohibited transaction" as
defined in Section 406 of ERISA that could reasonably be expected to
subject either Company to any material Tax imposed by Section 4975 of the
Code or any material penalty imposed by Section 502 of ERISA. To the
Knowledge of Barrier, there is no current matter, including, without
limitation, any matter involving the administration and operation of the
Employee Benefit Plans, which could reasonably be expected to result in any
Employee Benefit Plan being deemed to be not in full compliance with the
pertinent provisions of any applicable Law. There are no pending or, to the
Knowledge of Barrier, threatened actions, suits or proceedings (other than
routine claims for benefits) by, on behalf of or against any Employee
Benefit Plan or any trust related thereto, and Barrier has no Knowledge of
any basis for such an action, suit, hearing, arbitration or investigation.
(s) Environmental, Health, and Safety Matters. Each Company, and each
of its predecessors, has been and is in compliance with all Laws and Licenses
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any substances,
wastes or hazardous materials, as such requirements are enacted and in effect on
or prior to the Closing Date (collectively, "Environmental, Health, and Safety
Requirements"). Each Company possesses all
Licenses necessary to carry on its business in the manner presently conducted
under Environmental, Health and Safety Requirements, and such Licenses, a true
and complete list of which is set forth in Section 4.1(s) of the Barrier
Disclosure Schedule, are in full force and effect. Neither Company has received
any written notice, written report or other written information regarding any
actual or alleged violation of Environmental, Health, and Safety Requirements,
or any Liabilities or potential Liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory, remedial or
corrective obligations, relating to the Companies or their present or former
facilities arising under Environmental, Health, and Safety Requirements. To the
Knowledge of Barrier, none of the following exists at any property or facility
owned or operated by the Companies: (i) underground storage tanks, (ii)
asbestos-containing materials, (iii) material or equipment containing
polychlorinated biphenyls, or (iv) landfills, surface impoundments or disposal
areas. Neither Company nor any agent, employee or representative of either
Company, or, to the Knowledge of Barrier, any predecessor or tenant of either
Company, has used, installed, generated, produced, stored or released on, in, or
about the Real Property or the Tennessee Real Property or transported to or from
the Real Property or the Tennessee Real Property any hazardous materials,
including any hazardous or toxic substance, material, or waste which is
regulated under Environmental, Health, and Safety Requirements, in material
breach or violation of Environmental, Health, and Safety Requirements.
(t) Insurance. Section 4.1(t) of the Barrier Disclosure Schedule sets
forth a true and complete list of all insurance policies of the Companies
covering the Companies, any of their assets or any of their directors or
officers (in their capacities as such) (collectively, the "Insurance Policies").
During the past three (3) years, neither Company has been denied insurance for
any reason with respect to any material insurance policy for which it applied.
No notice of cancellation or termination of any Insurance Policy has been
received by either Company with respect to any such policy, all premiums due and
payable with respect thereto have been paid, each such policy is full force and
effect, and no claim is currently pending under any such policy reasonably
expected to exceed $25,000. Neither Company is in material breach of or default
under any Insurance Policy, and, to the Knowledge of Barrier, no event has
occurred which, with notice or lapse of time, would constitute such a breach of
or default under, or permit termination, modification or acceleration under,
such policy.
(u) Related Party Transactions. Except for ownership of the Barrier
Shares and Barrier Options, and except as disclosed in Section 4.1(u) of the
Barrier Disclosure Schedule, no Shareholder, or any director, officer or
employee of either Company, or any member of his or her immediate family or any
other of its, his or her affiliates, (i) is or was during the past three (3)
years party to, (ii) owns or has a five percent (5%) or more ownership interest
in any Person that is or was during the last three (3) years a party to, or
(iii) owns or has a five percent (5%) or more ownership interest in any property
which is or was during the last three (3) years the subject of, any material
contract, agreement or understanding, business arrangement or relationship with
either Company.
(v) Minute Books. The minute books and corporate records of each
Company contain true and complete copies of the minutes of all formal Board of
Directors, director committee and shareholders' meetings of such Company, and of
all written consents executed in
lieu of the holding of a meeting, and fairly and accurately reflect all material
actions of such Company's Boards of Directors and shareholders.
SECTION 4.02. Representations and Warranties of Parent and Merger Sub. Each
of Parent and Merger Sub represents and warrants to Barrier that the statements
contained in this Section 4.2 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 4.2).
(a) Organization. Each of Parent and Merger Sub is a corporation duly
organized, validly existing, and in good standing under the Laws of the
jurisdiction of its incorporation.
(b) Authorization of Transaction. Each of Parent and Merger Sub has
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and each agreement or document contemplated
hereby to which Parent or Merger Sub is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
or thereby. The execution, delivery and performance by Parent and Merger Sub of
this Agreement and each agreement or document contemplated hereby to which
Parent or Merger Sub is a party, as applicable, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by
Parent's and Merger Sub's Boards of Directors and no other corporate action is
necessary on the part of Parent or Merger Sub. This Agreement and each agreement
contemplated hereby or thereby to which Parent or Merger Sub is party, has been
duly executed and delivered by Parent or Merger Sub, as applicable, and
constitutes the valid and legally binding obligation of Parent and Merger Sub,
as applicable, enforceable in accordance with its terms.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement or any agreement or document contemplated hereby to which Parent or
Merger Sub is a party, nor the consummation of the transactions contemplated
hereby or thereby, will (i) violate any Law, Order or other restriction of any
Governmental Authority to which either Parent or Merger Sub is subject or any
provision of the charter or bylaws of either Parent or Merger Sub or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any Person the right to accelerate, terminate,
modify, or cancel, or require any notice under any material agreement, contract,
lease, License, instrument, or other arrangement to which either Parent or
Merger Sub is a party or by which it is bound or to which any of its assets is
subject. Other than in connection with the provisions of the California
Corporations Code, the Securities Act and state securities laws, neither Parent
nor Merger Sub needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Authority or of any
non-governmental Person in order for the Parties to consummate the transactions
contemplated by this Agreement or any agreement or document contemplated hereby.
(d) Brokers' Fees. Except for amounts payable to Myers Capital
Partners, neither Parent nor Merger Sub has any liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement or any agreement or document
contemplated hereby.
(e) Financial Capability. Parent has, and will have as of the Closing
Date and the Effective Time, the financial capability to perform its obligations
under this Agreement.
ARTICLE V
COVENANTS TO BE PERFORMED PRIOR TO THE CLOSING DATE
SECTION 5.01. General. From and after the date hereof through and including
the Closing Date or the earlier termination of this Agreement, each of the
Parties will use its best efforts to take all action and to do all things
necessary in order to consummate and make effective the transactions
contemplated by this Agreement and any agreement or document contemplated hereby
(including satisfaction, but not waiver, of the closing conditions set forth in
Article VI).
SECTION 5.02. Notices and Consents. Barrier will give any notices, and will
use its best efforts to obtain any authorizations, consents and approvals set
forth in Section 4.1(e) of the Barrier Disclosure Schedule.
SECTION 5.03. Regulatory Matters and Approvals. Each of the Parties will
give any notices to, make any filings with, and use its best efforts to obtain
any authorizations, consents, and approvals of Governmental Authorities in
connection with the Merger. Without limiting the generality of the foregoing,
Barrier will seek the approval of its shareholders of this Agreement and the
Merger as required by California Corporations Code Sections 1200 through 1203
(the "Requisite Shareholder Approval"), as soon as reasonably practicable
following the date of execution of this Agreement by delivering to each
Shareholder a solicitation by written consent, together with a disclosure
document, each of which shall be in a form reasonably satisfactory to Parent and
Merger Sub.
SECTION 5.04. Operation of Business. From and after the date hereof through
and including the Closing Date or the earlier termination of this Agreement,
Barrier will use, and will cause Safe Technologies to use, its best efforts to
keep intact its goodwill, keep available the services of its employees, and
maintain good relationships with others having business or financial
relationships with it. From and after the date hereof through and including the
Closing Date or the earlier termination of this Agreement, Barrier will not
engage in, and will cause Safe Technologies not to engage in, any practice, take
any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, except as set forth
in Section 4.1(g) of the Barrier Disclosure Schedule or with the written consent
of Parent, Barrier will not, and will cause Safe Technologies not to:
(a) Authorize or effect any change in its articles of incorporation or
bylaws.
(b) Grant any options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights or other rights to purchase or obtain any of
its capital stock or other equity interests; issue, sell, or otherwise dispose
of any of its capital stock (except upon the conversion or exercise of options,
warrants, and other rights outstanding as of the date hereof); or grant any
stock appreciation, phantom stock, profit participation or similar rights.
(c) Redeem, repurchase, or otherwise acquire any of its capital stock.
(d) Declare, set aside, or pay any dividend or distribution with
respect to its capital stock (whether in cash or in kind), other than (i) cash
distributions to Barrier's shareholders in the minimum amount necessary to allow
them to pay federal and state income Taxes (including estimated Taxes) arising
from them being shareholders in Barrier, as determined pursuant to Section 1366
of the Code and corresponding provisions of applicable state Law, (ii) the
Closing Cash Amount, and (iii) the QMB Distribution.
(e) Issue any note, bond, or other debt security or create, incur,
assume, or guarantee any indebtedness for borrowed money or capitalized lease
obligation outside the Ordinary Course of Business.
(f) Impose or allow to be imposed any Lien upon any of its assets.
(g) Make any capital investment in, make any loan to, or acquire the
securities or assets of any other Person.
(h) Sell, assign, transfer or otherwise convey any assets of the
Companies other than sales of inventory in the Ordinary Course of Business.
(i) Make any capital expenditure for additions to property, plant,
equipment or intangible property in an aggregate amount in excess of $50,000,
except as shown on the Most Recent Balance Sheet.
(j) Terminate or amend any Contract, License or Real Property Lease
outside the Ordinary Course of Business.
(k) Make any change in employment terms for any of its directors,
officers, and employees outside the Ordinary Course of Business or materially
increase the compensation of any of its directors, officers or employees or
materially change, or announce any material changes, to Employee Benefits Plan;
provided that, on the Closing Date, immediately prior to the Effective Time,
Barrier shall pay to those employees of Barrier listed on Schedule 5.4 bonuses
in the amounts set forth on such Schedule.
(l) Make any change in any method of accounting or accounting practice
or in any Tax procedures or elections.
(m) Commit to any of the foregoing.
SECTION 5.05. Full Access. From and after the date hereof through and
including the Closing Date or the earlier termination of this Agreement, Barrier
will permit representatives of Parent to have full access, at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of Barrier, to all premises, properties, personnel, books, records
(including Tax records), contracts, and documents of or pertaining to the
Companies. Until the Closing, Parent and Merger Sub will treat and hold as
confidential any information it receives from Barrier in the course of the
reviews contemplated hereby and will not use any of such information except in
connection with this Agreement. If this Agreement is terminated for any reason
whatsoever, Parent agrees to return to Barrier all tangible embodiments (and all
copies)
thereof which are in its possession and that the provisions of this Section 5.5
shall survive termination.
SECTION 5.06. Notice of Developments. Each Party will give prompt written
notice to the others of any material adverse development causing a breach of any
of its own representations and warranties in Article IV. No disclosure by any
Party pursuant to this Section 5.6, however, shall be deemed to amend or
supplement the Barrier Disclosure Schedule or to prevent or cure any breach of
any representation, warranty or covenant.
SECTION 5.07. Exclusivity.
(a) From and after the date hereof through and including the Closing
Date or the earlier termination of this Agreement, the Companies will not
solicit, initiate, or encourage the submission of any proposal or offer from any
Person relating to the acquisition of all or substantially all of the capital
stock or assets of either Company, including any acquisition structured as a
merger, consolidation, or share exchange (an "Acquisition Proposal"), and will
cease negotiations with respect to any Acquisition Proposals. Notwithstanding
the foregoing, Barrier and its directors and officers will remain free to
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing to the extent Barrier's Board of Directors concludes in good faith,
after having taken into account the advice of its outside legal counsel, that
the fiduciary duties of the directors or officers, as applicable, to the
shareholders of Barrier require them to do so; provided, that, the directors and
officers shall not take any of the foregoing actions without having given at
least three (3) Business Days' advance written notice to Parent. In addition, if
any director or officer receives an Acquisition Proposal, Barrier shall promptly
inform Parent in writing of the material terms of such proposal and the identity
of the Person (or group) making it.
(b) It is understood that any violation of the restrictions set forth
in this Section 5.7 by any director or officer of the Companies or by any
investment banker, financial adviser, attorney, accountant, or other
representative of the Companies shall be deemed to be a breach of this Section
5.7 by the Companies.
(c) In the event that an Acquisition Proposal shall have been made
known to Barrier or shall have been made directly to its shareholders generally
or any Person shall have announced an intention (whether or not conditional) to
make an Acquisition Proposal, and thereafter this Agreement is terminated by
Barrier for any reason and an Acquisition Proposal is consummated within
eighteen (18) months of such termination, then Barrier shall pay to Parent, upon
the consummation of such Acquisition Proposal, a termination fee equal to
$1,000,000 in cash; provided that this Section 5.7(c) shall not apply if this
Agreement is terminated pursuant to Section 7.1(d) following a vote of the
Shareholders to approve this Agreement and the Merger in which each director of
Barrier who is a Shareholder votes his or her Barrier Shares (and any Barrier
Shares owned by entities controlled by such director) in favor of this Agreement
and the Merger but the Requisite Shareholder Approval is not obtained.
SECTION 5.08. Insurance and Indemnification.
(a) Parent will provide each individual who served as a director or
officer of Barrier at any time prior to the Effective Time with liability
insurance for a period of six (6) years after the Effective Time no less
favorable in coverage and amount than any applicable insurance in effect
immediately prior to the Effective Time.
(b) Parent will not take any action to cause the exculpatory or
indemnification provisions in the articles of incorporation or bylaws of the
Surviving Corporation or of Safe Technologies to be any less favorable to any
individual who served as a director or officer of Barrier at any time prior to
the Effective Time than were the comparable provisions in the articles of
incorporation and bylaws of Barrier or Safe Technologies, as applicable, as in
effect immediately prior to the Effective Time.
SECTION 5.09. QMB Payment Co. Barrier will effect the QMB Distribution
prior to the Closing Date pursuant to documentation reasonably satisfactory to
Parent. The QMB Distribution will be effective at least one (1) day prior to the
Closing Date, and, following the QMB Distribution, Barrier will own no equity
interest in QMB Payment Co. Prior to the QMB Distribution, Barrier will cause
QMB Payment Co. to own only the QMB Payment Assets pursuant to documentation
reasonably satisfactory to Parent.
SECTION 5.10. Tax Matters. If at any time following the Closing there shall
be a final determination by the U.S. Tax Court, District Court or Court of
Claims, or if the Shareholder Representative shall agree to any final
determination by the Internal Revenue Service, that Barrier was not an S
corporation within the meaning of Section 1361 of the Code at any time between
January 1, 1990 and the Closing, each Shareholder shall be obligated to use his,
her or its reasonable efforts and to cooperate with the Surviving Corporation
and its designees in attempting to obtain from the appropriate Tax authorities
any Tax refunds that may be available to such Shareholder as a result of any
difference in pre-Closing Tax liability to that Shareholder resulting from
Barrier having been a C corporation rather than an S Corporation; provided,
however, that if any Governmental Authority raises the validity of Barrier's
pre-Closing S corporation status during any audit or examination regarding
Barrier, each Shareholder shall promptly file protective claims for such Tax
refunds along with any other documents or filings that Surviving Corporation may
prepare in order to preserve each Shareholder's right to claim such Tax refunds.
Promptly upon receipt of any such Tax refunds, each such Shareholder shall remit
all such Tax refunds (including, for avoidance of doubt, all interest thereon)
to the Surviving Corporation to offset the increase in the Surviving
Corporation's Tax liability resulting from Barrier having been a C corporation
rather than an S corporation. A Shareholder's reasonable efforts pursuant to
this Section 5.10, aside from promptly remitting any such Tax refunds to the
Surviving Corporation, shall be limited to signing and filing appropriate
applications for Tax refunds and any other filings or documents that are
necessary to claim such Tax refunds, in each case prepared by the Surviving
Corporation, providing information concerning the Shareholder that the Surviving
Corporation may reasonably request in preparing any such protective claims or
applications for Tax refunds, authorizing the Surviving Company to participate
in any negotiations or proceedings necessary to obtain such Tax refunds, and
obtaining the approval of the Surviving Corporation (not to be unreasonably
withheld) before entering into any settlement or closing agreement that may
affect the availability of such Tax
refunds. All reasonable expenses arising in connection with the obligations of
the Shareholders and the Shareholder Representative under this Section 5.10
shall be paid by the Surviving Corporation. The Shareholder Representative shall
use reasonable efforts to ensure each Shareholder's compliance with this Section
5.10. For avoidance of doubt, any costs and expenses incurred by the Surviving
Corporation pursuant to this Section 5.10 shall constitute Damages subject to
the indemnification provision of Section 8.2(d) below.
ARTICLE VI
CONDITIONS TO OBLIGATION TO CLOSE
SECTION 6.01. Conditions to Obligation of Parent and Merger Sub. The
obligation of each of Parent and Merger Sub to consummate the transactions to be
performed by it in connection with the Closing is subject to satisfaction of
each of the following conditions (all or any of which may be waived by Parent
and Merger Sub in a writing so stating at or prior to the Closing):
(a) This Agreement and the Merger shall have received the Requisite
Shareholder Approval, and, if Shareholders holding less than one-hundred percent
(100%) of the Barrier Shares shall have so approved of this Agreement and the
Merger, then thirty (30) days shall have elapsed from the date notice of the
Requisite Shareholder Approval is sent to the Shareholders, during which 30-day
period Shareholders holding not more than ten percent (10%) of the Barrier
Shares shall have demanded their respective rights to an appraisal of their
Barrier Shares in accordance with Sections 1300 through 1313 of the California
Corporations Code (exclusive of any such Shareholders who have effectively
withdrawn or lost their respective rights to such appraisal).
(b) The representations and warranties of Barrier set forth in Section
4.1 above shall be true and correct in all material respects as of the Closing
Date (other than representations and warranties qualified as to materiality or
Material Adverse Effect, which shall be true and correct in all respects as of
the Closing Date).
(c) Barrier shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing.
(d) There shall not be any Law or Order in effect preventing
consummation of any of the transactions contemplated by this Agreement or any
agreement or document contemplated hereby and no Person shall have instituted
any action, suit or proceeding that, if adversely determined, could reasonably
be expected to have a Material Adverse Effect.
(e) Barrier shall have delivered to Parent and Merger Sub a
certificate to the effect that each of the conditions specified above in
Sections 5.1(a) through 5.1(c) is satisfied in all respects.
(f) The Parties shall have received all other authorizations,
consents, and approvals referred to in Sections 5.2 and 5.3.
(g) Parent and Merger Sub shall have received from counsel to Barrier
an opinion in form and substance as set forth in Exhibit F attached hereto,
addressed to Parent and Merger Sub, and dated as of the Closing Date.
(h) Owen Denman, Arthur Korfin and Chris Sanders each shall have
executed and delivered an Employment Agreement in form reasonably acceptable to
Parent concurrently with the execution of this Agreement, and each such
Employment Agreement shall be in full force and effect. Neither Barrier nor any
Shareholder shall have any liability if this Agreement is terminated solely by
reason of failure of this condition to be satisfied.
(i) Owen Denman, John W. Duckett, Arthur Korfin, William G. Reed and
Chris Sanders each shall have executed and delivered a Non-Competition and
Confidentiality Agreement in form reasonably acceptable to Parent concurrently
with the execution of this Agreement, and such Non-Competition and
Confidentiality Agreements shall be in full force and effect. Neither Barrier
nor any Shareholder shall have any liability if this Agreement is terminated
solely by reason of failure of this condition to be satisfied.
(j) Parent, Shareholder Representative and the Escrow Agent shall have
executed and delivered the Escrow Agreement.
(k) That certain employment agreement, dated as of June 1, 1988,
between Barrier and John Duckett, and all of John Duckett's rights under that
certain Memorandum, dated February 17, 2004, from Chris Sanders to John Duckett
and Owen Denman regarding incentive compensation, shall have been terminated,
effective at or prior to the Closing, and all Liabilities thereunder shall have
been released, pursuant to documentation reasonably satisfactory to Parent.
(l) At least two (2) Business Days prior to the Closing Date, Parent
and Merger Sub shall have received a payoff letter and Lien release, in a form
reasonably satisfactory to Parent, from each applicable lender with respect to
the Payoff Debt.
(m) Barrier shall have delivered to Parent evidence, reasonably
satisfactory to Parent, of the full and final satisfaction, at or prior to the
Closing, of any and all Liabilities under deferred compensation arrangements
between Barrier and Arthur Korfin, and the release by Arthur Korfin of all
Liabilities with respect thereto.
(n) Barrier shall have delivered to Parent an acknowledgment by Diane
Denman, in form reasonably satisfactory to Parent, that she transferred the
10,001 shares of common stock of Safe Technologies owned by her to Barrier
pursuant to that certain Stock Purchase Agreement, dated as of January 1, 2000,
by and between Barrier and Owen S. Denman, and that she owns no capital stock in
Safe Technologies.
(o) Barrier shall have delivered to Parent evidence, reasonably
satisfactory to Parent, of the termination, effective at or prior to Closing, of
all agreements regarding the holding, voting, or transfer of Barrier Shares to
which any Shareholder is a party.
(p) Barrier shall have delivered to Parent a release of Barrier, in
form reasonably satisfactory to Parent, from each bonus recipient indicated on
Schedule 5.4 as giving a release, effective upon receipt of the applicable bonus
set forth on such Schedule.
(q) Parent and Merger Sub shall have received the resignations,
effective immediately following the Closing, of each director of Safe
Technologies.
(r) Barrier shall have delivered to Parent evidence, reasonably
satisfactory to Parent, that the QMB Distribution has been effected at least one
(1) day prior to the Closing Date.
(s) Barrier shall have delivered to Parent the deliveries set forth in
Section 2.5(a).
(t) All actions to be taken by Barrier in connection with consummation
of the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Parent and Merger Sub.
SECTION 6.02. Conditions to Obligation of Barrier. The obligation of
Barrier to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of each of the following conditions (all
or any of which may be waived by Barrier in a writing so stating at or prior to
the Closing):
(a) This Agreement and the Merger shall have received the Requisite
Shareholder Approval.
(b) The representations and warranties of Parent and Merger Sub set
forth in Section 3.2 shall be true and correct in all material respects as of
the Closing Date (other than representations and warranties qualified as to
materiality, which shall be true and correct in all respects as of the Closing
Date).
(c) Each of Parent and Merger Sub shall have performed and complied
with all of its covenants hereunder in all material respects through the
Closing.
(d) There shall not be any Law or Order in effect preventing
consummation of any of the transactions contemplated by this Agreement or any
agreement or document contemplated hereby.
(e) Parent and Merger Sub shall have delivered to Barrier a
certificate to the effect that each of the conditions specified above in
Sections 6.2(b) through 6.2(c) is satisfied in all respects.
(f) Barrier shall have received from counsel to Parent and Merger Sub
an opinion in form and substance as set forth in Exhibit G attached hereto,
addressed to Barrier, and dated as of the Closing Date.
(g) Parent, Shareholder Representative and the Escrow Agent shall have
executed and delivered the Escrow Agreement.
(h) All actions to be taken by Parent and Merger Sub in connection
with consummation of the transactions contemplated hereby and all certificates,
opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Barrier.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination of Agreement. Any of the Parties may terminate
this Agreement as provided below:
(a) The Parties may terminate this Agreement by mutual written consent
at any time prior to the Effective Time.
(b) Parent and Merger Sub may terminate this Agreement by giving
written notice to Barrier at any time prior to the Effective Time (i) in the
event Barrier has breached any representation, warranty, or covenant contained
in this Agreement in any material respect (or in the case of any representation,
warranty or covenant qualified by materiality or Material Adverse Effect, in any
respect), Parent or Merger Sub has notified Barrier of the breach, and the
breach has continued without cure for a period of thirty (30) days after the
notice of breach or (ii) if the Closing shall not have occurred on or before
June 30, 2006, by reason of the failure of any condition precedent under Section
6.1 (unless the failure results primarily from Parent or Merger Sub breaching
any representation, warranty, or covenant contained in this Agreement).
(c) Barrier may terminate this Agreement by giving written notice to
Parent and Merger Sub at any time prior to the Effective Time (i) in the event
Parent or Merger Sub has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect (or in the case of
any representation, warranty or covenant qualified by materiality, in any
respect), Barrier has notified Parent and Merger Sub of the breach, and the
breach has continued without cure for a period of thirty (30) days after the
notice of breach or (ii) if the Closing shall not have occurred on or before
June 30, 2006, by reason of the failure of any condition precedent under Section
6.2 (unless the failure results primarily from Barrier breaching any
representation, warranty, or covenant contained in this Agreement).
(d) Any Party may terminate this Agreement by giving written notice to
the other Parties if this Agreement and the Merger fail to receive the Requisite
Shareholder Approval by no later than May 31, 2006.
SECTION 7.02. Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7.1 above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in Section 5.5 shall survive any such
termination.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Survival of Representations and Warranties. Each of the
representations and warranties made by the Parties hereto shall survive the
Closing and the consummation of the transactions contemplated hereby for a
period of eighteen (18) months following the Effective
Time; provided, however, that the representations and warranties in Section
4.1(b), 4.1(c), 4.1(d), 4.1(__), 4.1(s) and 4.2(b) shall the survive the Closing
and the consummation of the transactions contemplated hereby for a period of
three (3) years following the Effective Time. Each of the covenants and
agreements made by the Parties hereto shall survive the Closing and the
consummation of the transactions contemplated hereby until said Party has fully
performed said covenant and/or agreement in accordance with the terms hereof.
SECTION 8.02. Indemnification of Parent. From and after the Closing, the
Shareholders and the Optionees shall indemnify and hold harmless Parent and its
affiliates, successors and assigns, and the respective officers, directors,
managers, employees and agents of each of the foregoing, from and against any
and all Damages actually incurred thereby or caused thereto based on, arising
out of, or resulting from, or alleged by a third party to be based on or to have
arisen out of or resulted from: (a) any breach of any of the representations or
warranties made by Barrier in this Agreement or any exhibit, schedule,
certificate, instrument, or other document pursuant to this Agreement (without
giving effect to any materiality or Material Adverse Effect qualifier therein or
any supplement to the Barrier Disclosure Schedule); (b) any breach or violation
of, or failure to fully perform, any covenant, agreement or obligation of
Barrier in this Agreement or any exhibit, schedule, certificate, instrument, or
other document pursuant to this Agreement; (c) failure to pay any Transaction
Costs as and when due; (d) any Liabilities for Taxes relating to taxable periods
of the Companies ending on or before the Closing Date, and with respect to
taxable periods beginning before the Closing Date and ending after the Closing
Date, for Taxes imposed on the Companies which are allocable to the portion of
such period ending on the Closing Date (including, without limitation,
Liabilities disclosed in Section 4.1(h) of the Barrier Disclosure Schedule), but
only to the extent any such Liabilities for Taxes are in excess of any reserves
or accruals established with respect thereto on the face of the Final Closing
Balance Sheet; (e) any Liabilities related to, arising out of or associated with
the QMB Sale, the Canadian Companies, QMB Payment Co. or operation of the
Canadian Companies and QMB Payment Co. prior to, on and after the Closing Date;
(f) any Liabilities related to, arising out of or associated with grants or
attempts to grant options to purchase capital stock of Barrier without due
authority or otherwise not in compliance with Barrier's Articles of
Incorporation or Bylaws or applicable Law, including, without limitation, any
claims by the recipients or intended recipients of such options; (g) any
Liabilities related to, arising out of or associated with deferred compensation
arrangements between Barrier and Arthur Korfin and any payments by Barrier
pursuant thereto; (h) any Liabilities related to, arising out of or associated
with that certain lease, dated December 29, 1937, by and between California
Packing Corporation, as lessor, and Amerada Petroleum Corporation, as lessee;
and (i) any Liabilities related to, arising out of or associated with failures
to file notices under Section 25102(0 of the California Corporations Code, if
any, in connection with the issuance of capital stock of either Company.
Notwithstanding the foregoing, (x) no indemnification shall be payable by the
Shareholders under clause (a) of this Section 8.2 (except with respect to any
breach of any representation or warranty in Section 4.1(j) or 4.1(s)) until the
total of all such claims for indemnification exceed $100,000 (the "Threshold"),
in which event Parent shall only be entitled to recover the Damages in excess of
the Threshold, (y) the aggregate liability for indemnification obligations
payable under this Section 8.2 shall not exceed the Holdback Amount and shall be
payable solely out of the Indemnity Escrow Account, and (z) no indemnification
shall be payable by the Shareholders with respect to any claim under clause (a)
of the Section 8.2 unless the Shareholder Representative is notified of such
claim prior to the expiration of the applicable representation or
warranty in accordance with Section 8.1. As security for the performance by the
Shareholders of their indemnification obligations under this Section 8.2, the
Holdback Amount shall be deposited into the Indemnity Escrow Account to be held
and distributed in accordance with this Agreement and the Escrow Agreement.
SECTION 8.03. Indemnification by Parent. From and after the Closing, Parent
shall indemnify and hold harmless the Shareholders from and against any and all
Damages incurred thereby or caused thereto, based on, arising out of, resulting
from or relating to, or alleged by a third party to be based on or to have
arisen out of or resulted from: (a) any breach of any of the representations or
warranties made by Parent or Merger Sub in this Agreement or any exhibit,
schedule, certificate, instrument, or other document pursuant to this Agreement
(without giving effect to any materiality qualifier therein); (b) any breach or
violation of or failure to fully perform any covenant, agreement or obligation
of Parent in this Agreement; and (c) the operation of the business of the
Companies from and after the Closing Date. Notwithstanding the foregoing, (x) no
indemnification shall be payable by Parent under clause (a) of this Section 8.3
until the total of all such claims for indemnification exceed $100,000 (the
"Threshold"), in which event the Shareholders shall only be entitled to recover
the Damages in excess of the Threshold, (y) the aggregate liability for
indemnification obligations payable under clauses (a) and (b) of this Section
8.3 shall not exceed $3,500,000, and (z) no indemnification shall be payable by
Parent with respect to any claim under clause (a) of this Section 8.3 unless
Parent is notified of such claim prior to the expiration of the applicable
representation or warranty in accordance with Section 8.1.
SECTION 8.04. Indemnification Procedures.
(a) Promptly upon obtaining knowledge of any claim, event, statement
of facts or demand which has given rise to, or could reasonably give rise to, a
claim for indemnification hereunder, said party seeking indemnification (an
"Indemnified Party") shall give written notice of such claim or demand ("Notice
of Claim") to the party from which indemnification is sought (the "Indemnifying
Party") setting forth the amount of the claim. The Indemnified Party shall
furnish to the Indemnifying Party in reasonable detail, such information as it
may have with respect to such indemnification claim (including copies of any
summons, complaint or other pleading which may have been served on it and any
written claim, demand, invoice, billing or other document evidencing or
asserting the same). No failure or delay by the Indemnified Party in the
performance of the foregoing shall reduce or otherwise affect the obligation of
the Indemnifying Party to indemnify and hold the Indemnified Party harmless,
except to the extent that such failure or delay shall have adversely affected
the Indemnifying Party's ability to defend against, settle or satisfy any
Damages for which the Indemnified Party is entitled to indemnification
hereunder.
(b) Promptly after receipt of notice of any claim by a third party
which might give rise to indemnification hereunder, the Indemnified Party shall
notify the Indemnifying Party in writing specifying in reasonable detail the
nature and amount of the claim. The Indemnifying Party shall be entitled to
assume and have the sole control of the defense and settlement of such action or
claim; provided, however, that:
(i) the Indemnified Party shall be entitled to participate in the
defense of such claim and, in connection therewith, to employ counsel at
its own expense; and
(ii) without the prior written consent of the Indemnified Party,
which consent shall not be unreasonably withheld, the Indemnifying Party
shall not consent to the entry of any judgment or enter into any settlement
that requires any action by the Indemnified Party other than the payment of
money. In the event that (A) the Indemnifying Party elects to accept a
settlement offer from a third party for any such claim, which settlement
only requires the payment of money, and (B) the Indemnified Party elects
not to accept the settlement proposal, then the indemnification obligations
of the Indemnifying Party hereunder shall be limited to the settlement
amount so offered and the Indemnified Party shall be responsible for the
continued defense of said action or claim.
(c) In the event the Indemnifying Party elects to assume control of
the defense of any such action in accordance with the foregoing provisions, (i)
the Indemnifying Party shall not be liable to the Indemnified Party for any
legal fees, costs and expenses incurred by the Indemnified Party in connection
with the defense thereof after the date on which the Indemnifying Party notifies
the Indemnified Party of such election, and (ii) the Indemnified Party shall
fully cooperate with the Indemnifying Party in such defense. If the Indemnifying
Party does not assume control of the defense of such claim in accordance with
the foregoing provisions, the Indemnified Party shall have the right to defend
such claim, in which case the Indemnifying Party shall pay all reasonable costs
and expenses of such defense regardless of the outcome of such action. The
Indemnified Party shall conduct such defense in good faith and shall have the
right to settle the matter with the prior written consent of the Indemnifying
Party which consent shall not be unreasonably withheld.
(d) Except for third-party claims being defended in good faith, the
Indemnifying Party shall satisfy its obligations hereunder within thirty (30)
days after the Date of the Notice of Claim except as otherwise contemplated by
the Escrow Agreement.
SECTION 8.05. Shareholder Representative. Shareholder Representative shall,
by virtue of the Closing, be the only Person authorized and empowered to act for
and on behalf of the Shareholders, and Parent shall be entitled to transact with
only the Shareholder Representative, in connection with the indemnity provisions
of this Article VIII and with respect to all matters relating to the
Shareholders under this Agreement and the Escrow Agreement, including the
payment of the Per Share Closing Consideration on behalf of Barrier, the
determination of the Price Adjustment under Section 2.7, the Tax provisions of
Section 5.10, the notice provisions of this Agreement and the Escrow Agreement
and such other matters as are reasonably necessary for the consummation of the
transactions contemplated by this Agreement or the Escrow Agreement and the
agreements and documents contemplated hereby or thereby including, without
limitation, to act as the representative of the Shareholders to review and
authorize all setoffs, claims and other payments authorized or directed by this
Agreement or the Escrow Agreement and dispute or question the accuracy thereof,
to compromise on their behalf with Parent any claims asserted hereunder or
thereunder and to authorize payments to be made with respect thereto and to take
such further actions as are authorized in this Agreement or the Escrow
Agreement. Upon the filing of a certificate of dissolution of the Shareholder
Representative with
the Secretary of State of the State of California or upon the resignation of the
Shareholder Representative (or upon the dissolution, resignation, death or
incapacity of a successor Shareholder Representative), a successor Shareholder
Representative shall be elected within thirty (30) days by the vote of holders
of a majority of Barrier Shares; provided that if no successor Shareholder
Representative shall be elected in such 30-day period, John W. Duckett shall
become the successor Shareholder Representative. If the Shareholder
Representative applies for or consents to the appointment of a receiver, files a
voluntary petition for bankruptcy, makes a general assignment for the benefit of
creditors, or makes a written admission of inability to pay debts when they
become due, or an order, judgment or decree is entered by any court of competent
jurisdiction (or on the application of a creditor) adjudicating the Shareholder
Representative bankrupt or insolvent or approving a petition of reorganization
of the Shareholder Representative or appointing a receiver, trustee or
liquidator of the Shareholder Representative or all or a substantial part of its
assets, John W. Duckett shall become the successor Shareholder Representative.
The Shareholder Representative shall not be liable to Shareholders or Parent or
any other Person with respect to any action taken or omitted to be taken by the
Shareholder Representative under or in connection with this Agreement unless
such action or omission results from or arises out of fraud, gross negligence,
willful misconduct or bad faith on the part of the Shareholder Representative.
Parent shall be entitled to rely on such authorization and treat such
Shareholder Representative as the duly authorized agent of the Shareholders. The
Shareholders shall be deemed to confirm such authority if Barrier shall obtain
the Requisite Shareholder Approval.
SECTION 8.06. Reduction for Insurance. The amount which an Indemnifying
Party is required to pay to, for or on behalf of an Indemnified Party pursuant
to this Article VIII shall be reduced (including, without limitation,
retroactively) by any insurance proceeds actually recovered by or on behalf of
such Indemnified Party in reduction of the related indemnifiable loss (the
"Indemnifiable Loss"). An amount required to be paid, as so reduced, is
hereinafter sometimes called an "Indemnity Payment." If an Indemnified Party
shall have received or shall have had paid on its behalf an Indemnity Payment in
respect of an Indemnifiable Loss and shall subsequently receive, directly or
indirectly, insurance proceeds in respect of such Indemnifiable Loss, then the
Indemnified Party shall pay to the Indemnifying Party or Indemnifying Parties
the amount of such insurance proceeds or, if less, the amount of the Indemnity
Payment. Any amount required to be paid by Parent pursuant to this Section 8.6
shall be paid to the Shareholder Representative. Parent shall have no liability
to any Shareholder or Optionee after such amount is paid to the Shareholder
Representative, including, without limitation, any liability with respect to the
distribution of such amount by the Shareholder Representative to the applicable
Indemnifying Parties.
SECTION 8.07. Exclusive Remedies. The Parties hereto hereby acknowledge and
agree that, except as otherwise specifically provided in this Agreement, the
indemnification rights of the parties under this Article VIII represent the sole
and exclusive remedy that the parties hereto have with respect to the breach of
any covenant, representation or warranty under this Agreement on the part of any
Party hereto.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement without the prior written approval of the other Parties;
provided, however, that Parent may make public disclosures relating to the
subject matter of this Agreement in Current Reports on Form 8-K filed with the
Securities and Exchange Commission; and provided, further, that any Party may
make any other public disclosure it believes in good faith is required by
applicable Law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its best
efforts to advise the other Party prior to making the disclosure).
SECTION 9.02. Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
SECTION 9.03. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties.
SECTION 9.04. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
SECTION 9.05. Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.06. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
Business Days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Barrier: Barrier Systems, Inc.
180 River Road
Rio Vista, CA 94571
Attention: President
Fax No.: (707) 374-6801
Copy to: Collette Erickson Farmer & ONeill LLP
235 Pine Street, Suite 1300
San Francisco, CA 94104
Attention: John J. ONeill, Esq.
Fax No.: (415) 788-4646
If to Shareholder Representative: QMB Payment Co., LLC
4901 Numaga Pass
Carson City, NV 89703
Attention: John W. Duckett, Manager
Fax No.: (775) 883-6733
Copy to: Collette Erickson Farmer & ONeill LLP
235 Pine Street, Suite 1300
San Francisco, CA 94104
Attention: John J. ONeill, Esq.
Fax No.: (415) 788-4646
If to Parent or Merger Sub: Lindsay Manufacturing Co.
2707 N. 108th Street, Suite #102
Omaha, NE 68164
Attention: President
Fax No.: (402) 829-6836
Copy to: Munger, Tolles & Olson LLP
355 S. Grand Ave., 35th Floor
Los Angeles, CA 90071
Attention: Robert K. Johnson
Brett J. Rodda
Fax No.: (213) 687-3702
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
SECTION 9.07. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic Laws of the State of California
without giving effect to any choice or conflict of law provision or rule
(whether of the State of California or any other jurisdiction) that would cause
the application of the Laws of any jurisdiction other than the State of
California.
SECTION 9.08. Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to shareholder approval will be subject
to the restrictions contained in the California Corporations Code. No amendment
of any provision of this Agreement shall be valid unless the same shall be in
writing and signed by all of the Parties. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty
or covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
SECTION 9.09. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
SECTION 9.10. Expenses. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the agreements and documents contemplated hereby and the
transactions contemplated hereby and thereby.
SECTION 9.11. Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any Law shall be deemed also
to refer to all rules and regulations promulgated thereunder, unless the context
otherwise requires. The word "including" shall mean including without
limitation.
SECTION 9.12. Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date
first above written:
Barrier: Parent:
Barrier Systems, Inc.
By: /s/ Owen S Denman
-----------------------------------
Title: President and Chief Executive
Officer
--------------------------------
Lindsay Manufacturing Co.
By: /s/ Richard W. Parod
-----------------------------------
Title: President and Chief Executive
Officer
--------------------------------
Merger Sub:
LM Acquisition Corporation
By: /s/ Richard W. Parod
-----------------------------------
Title: President
--------------------------------
Shareholder Representative:
QMB Payment Co., LLC
By: /s/ John Duckett
-----------------------------------
Title: Manager
--------------------------------