Exhibit 2.2
STOCK PURCHASE AGREEMENT
BETWEEN
ALLIANT TECHSYSTEMS INC.
AND
ATK COMMERCIAL AMMUNITION COMPANY INC.
AND
MEADE INSTRUMENTS CORP.
AND
MTSC HOLDINGS, INC.
DATED
SEPTEMBER 14, 2002
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of September
14, 2002, is made and entered into by and between Alliant Techsystems Inc., a
Delaware corporation ("SELLER PARENT"), and ATK Commercial Ammunition Company
Inc., a Delaware corporation and an indirect wholly owned subsidiary of Seller
Parent ("SELLER"), on the one hand, and Meade Instruments Corp., a Delaware
corporation ("BUYER PARENT"), and MTSC Holdings, Inc., a California corporation
and a wholly owned subsidiary of Buyer Parent ("BUYER"), on the other.
WHEREAS, Seller, through its wholly owned subsidiary Simmons Outdoor
Corporation, a Delaware corporation ("Simmons"), is engaged in the manufacture,
marketing, sale, distribution and servicing of sports optics under such brand
names as Weaver, Simmons, and Redfield (the "BUSINESS");
WHEREAS, Seller desires to sell, transfer and assign to Buyer, and the
Buyer desires to purchase and acquire from Seller, on the terms and subject to
the conditions set forth in this Agreement, all of the issued and outstanding
shares of capital stock of Simmons;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements and the conditions set forth in this
Agreement, the parties agree as follows:
ARTICLE I
DEFINITIONS
In addition to terms that may be defined elsewhere herein, the following terms
shall have the respective meanings set forth below:
1.1 "Action" means any action, claim, arbitration, demand, proceeding,
grievance, subpoena, inquiry, audit, hearing, investigation, litigation
or suit, whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private,
commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Body or private arbitrator or mediator.
1.2 "Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common
control with, Buyer or Seller.
1.3 "Affiliated Group" means any affiliated group within the meaning of
Internal Revenue Code ss. 1504(a) or any similar group defined under a
similar provision of any state, local or foreign law.
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1.4 "Business" means the business of manufacturing, marketing, selling,
distributing and servicing sports optics under such brand names as
Weaver, Simmons, and Redfield and such other business as conducted by
Simmons immediately prior to the Closing Date (as defined below).
1.5 "Business Assets" means all properties, assets and rights of Simmons of
every kind and nature, tangible and intangible (including goodwill),
whether real, personal or mixed, whether accrued, contingent or
otherwise existing as of the Closing Date.
1.6 "Business Shares" means all of the issued and outstanding shares of
capital stock of Simmons.
1.7 "Buyer" means MTSC Holdings, Inc., a California corporation and wholly
owned subsidiary of Meade Instruments Corp., together with its
successors and permitted assigns.
1.8 "Buyer Parent" means Meade Instruments Corp., a Delaware corporation.
1.9 "Claim" means any legal claim, legal demand or Action.
1.10 "Closing Date" means the date on which all of the transactions
contemplated by this Agreement shall have taken place, as described in
section 2.4 of this Agreement.
1.11 "Closing Date Balance Sheet" means the audited balance sheet of Simmons
dated as of the Closing Date prepared in accordance with GAAP (as
defined below).
1.12 "Closing Date Net Working Capital Value" means the value of the net
working capital (inventory and accounts receivable less accounts
payable and other current liabilities) of the Business Assets as of the
Closing Date as reflected on the Closing Date Balance Sheet determined
in accordance with GAAP.
1.13 "Code" means the Internal Revenue Code of 1986, as amended, including
without limitation, any successor revenue code of the United States
federal government, together with the rules and regulations promulgated
thereunder.
1.14 "Employee" means any current or former or retired employee, consultant,
or director of Simmons.
1.15 "Employee Plan" means any plan, program, policy, practice, contract,
agreement or other arrangement providing for compensation, severance,
termination pay, retirement pay or benefits, pension, deferred
compensation, performance or incentive awards, profit sharing, bonus,
stock or stock-related awards (including, without limitation, stock
options and stock purchase arrangements), welfare benefits or fringe
benefits or perquisites (including, without limitation, relating to any
airplanes, automobiles, clubs, vacation, child care, parenting,
sabbatical, sick leave, medical, dental, hospitalization, life
insurance and other types of insurance), or other employee benefits or
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remuneration of any kind, whether written or unwritten or otherwise,
funded or unfunded, including without limitation, each "employee
benefit plan," within the meaning of Section 3(3) of ERISA which either
(1) is or has been maintained, contributed to, or required to be
contributed to, by Simmons, or (2) with respect to which Simmons has or
may have any liability or obligation.
1.16 "Employment Agreement" means each management, employment, severance,
consulting, retainer, relocation, repatriation, expatriation, visas,
work permit or other agreement, contract or understanding relating to
employment or compensation entered into by Simmons or with respect to
which Simmons has or may have any liability or obligation.
1.17 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, including without limitation, any successor employee
retirement income security law of the United States federal government,
together with the rules and regulations promulgated thereunder.
1.18 "ERISA Affiliate" means (1) any corporation which is a member of a
controlled group of corporations, within the meaning of Section 414(b)
of the Code and the regulations issued thereunder of which Seller,
Seller Parent or any subsidiary of Seller or Seller Parent (including,
without limitation, Simmons) is a member, (2) any trade or business
(whether or not incorporated) which is a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of
the Code and the regulations issued thereunder of which Seller, Seller
Parent or any subsidiary of Seller or Seller Parent (including, without
limitation, Simmons) is a member, (3) any member of an affiliated
service group within the meaning of Section 414(m) or (o) of the Code
and the regulations issued thereunder of which Seller, Seller Parent,
any subsidiary of Seller or Seller Parent (including, without
limitation, Simmons), or any corporation identified in clause (1) or
any trade or business described in clause (2) is a member (in each
case, a former ERISA Affiliate of Seller, Seller Parent or any
subsidiary of Seller or Seller Parent (including, without limitation,
Simmons) shall continue to be considered an ERISA Affiliate with
respect to any period such entity was an ERISA Affiliate of Seller,
Seller Parent or any subsidiary of Seller or Seller Parent (including,
without limitation, Simmons) with respect to liabilities arising after
such period for which Seller, Seller Parent or any subsidiary of Seller
or Seller Parent (including, without limitation, Simmons) could be
liable under the Code or ERISA).
1.19 "Environmental Law" means any Law or order relating to pollution,
contamination or protection of the Environment, including, without
limitation, the following statutes and all rules and regulations
relating thereto, all as amended from time to time: the Comprehensive
Environmental Response, Compensation and Liability Act as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
Sections 9601 et seq., the Resource Conservation and Recovery Act of
1976, 42 U.S.C. Section 6901 et seq., the Clean Air Act, 42 U.S.C.
Sections 7401 et seq., the Federal Water Pollution Control Act, 33
U.S.C. Sections 1251 et seq., the Toxic Substances Control Act, 15
U.S.C. Sections 2601 et seq., the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Sections 136 et seq. and similar state laws.
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1.20 "Environmental Permit" means any permit, license, certificate of
compliance, approval or other authorization required under applicable
Environmental Laws to conduct the Business and own or operate the
Business Assets, including, without limitation the Real Property.
1.21 "GAAP" means generally accepted accounting principles in the United
States, applied on a basis consistent with Seller's past policies,
principles and practices, provided that such past policies, principles
and practices are in accordance with generally accepted accounting
principles.
1.22 "Governmental Body" means any government or agency, administration,
department, commission, board, bureau or instrumentality or any body
thereof.
1.23 "Governmental License" means any permission, license, permit, consent,
registration, exemption, approval, authorization or qualification
formally issued in writing by a Governmental Body.
1.24 "Hazardous Materials" means (A) any dangerous, toxic or hazardous
pollutant, contaminant, chemical, waste, material or substance as
defined in or regulated or governed by any current Environmental Law,
including without limitation any pollutant, contaminant, chemical,
waste, material or substance that could reasonably be expected to
subject Seller or Simmons to any imposition of costs or liability under
any current Environmental Law, and (B) urea-formaldehyde,
polychlorinated biphenyls, asbestos or asbestos-containing materials,
petroleum and petroleum products.
1.25 "Initial Balance Sheet" means the balance sheet of Simmons as of March
31, 2002 prepared in accordance with GAAP as set forth on Schedule
2.3(a).
1.26 "Initial Net Working Capital Value" means the value of the net working
capital (inventory and accounts receivable less accounts payable and
other current liabilities) of the Business Assets as of March 31, 2002
as reflected on the Initial Balance Sheet.
1.27 "Intellectual Property" means all of the following, each as defined
herein: the Patents, Trademarks and Know How.
1.28 "Know-How" means all of the following to the extent they are used or
held by the Business: (1) quality assurance information, (2) design
documents, (3) specifications and performance criteria, (4) operating
instructions and maintenance manuals, (5) prototypes, models or samples
and (6) files relating to applications for Intellectual Property.
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1.29 "Knowledge of Seller" means knowledge of a particular fact or other
matter if (a) any individual who is serving as an officer of Seller or
key employee of Simmons ("Key Employee") as identified on Schedule 1.29
hereof is, or at any time was, actually aware of such fact or other
matter, or (b) such officer should be aware of such fact or other
matter in the course of conducting a reasonably diligent investigation
concerning the existence of such fact or other matter.
1.30 "Laws" means all applicable domestic and foreign laws (whether
statutory, common law, or otherwise), rules, regulations, orders,
ordinances, judgments, decrees, writs and injunctions of all
Governmental Bodies.
1.31 "Liabilities" means any and all Claims, causes of action, assessments,
losses, damages (compensatory, punitive or other), liabilities,
obligations, reimbursements, costs and expenses of any kind or nature,
actual, contingent, present or future, including, without limitation,
where applicable, interest, penalties and reasonable attorneys' and
experts' fees and expenses.
1.32 "Liens" means any lien, pledge, mortgage, security interest, charge,
voting trust, restriction on transfer, or other encumbrance.
1.33 "Material Adverse Effect" means any circumstance, change or effect that
is materially adverse to the business, assets, financial condition,
business prospects or results of operations of the Business taken as a
whole, but excluding the effects of changes that are generally
applicable to the industries and markets in which the Business
operates, changes in the United States or world financial markets or
general economic conditions, or effects arising out of this Agreement
or the transactions contemplated by this Agreement or a public
announcement related to this Agreement.
1.34 "Patents and Trademarks" means the patents and trademarks owned by
Simmons, together with all registrations or applications for
registration of any of the foregoing, set forth on Schedule 3.12.
1.35 "Permitted Liens" means:
(a) Liens arising by operation of law, such as mechanic's,
materialman's, landlord's, warehouseman's and carrier's liens
and other similar laws, securing obligations incurred in the
ordinary course of business which are not past due in
accordance with their terms or which are being contested in
good faith by appropriate proceedings and which do not
preclude delivery of the Purchased Assets to Buyer;
(b) Liens for current taxes, assessments or governmental charges
or levies not yet due or payable; and
(c) Liens or security interests that attach to any property by
operation of contractual obligation or law as a result of a
progress payment clause having been included in any contract.
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1.36 "Person" means any individual, corporation, Governmental Body,
association, partnership, limited liability company, or other entity.
1.37 "Purchase Price Adjustment" means the increase or decrease in the
Purchase Price (defined below) as set forth in Section 2.3(b) of this
Agreement.
1.38 "Real Property Lease" means that certain Lease Agreement, entered into
on March 26, 1992, between Realty Four and Simmons, together with all
addendums, modifications and amendments thereto.
1.39 "Related Agreements" means the Trademark License (Exhibit A), the
Transition Services Agreement (Exhibit B) and the Supply Agreement
(Exhibit C). The Related Agreements are a part of this Agreement.
1.40 "Seller" means ATK Commercial Ammunition Company Inc., a Delaware
corporation, together with its successors and permitted assigns.
1.41 "Seller Parent" means Alliant Techsystems Inc., a Delaware corporation.
1.42 "Simmons" means Simmons Outdoor Corporation, a Delaware corporation.
1.43 "Supply Agreement means that certain supply agreement between Buyer and
Seller pursuant to which Seller will agree to supply Buyer or its
Affiliates, and Buyer will agree to purchase from Seller or its
Affiliates, "Simmons," "Weaver" and "Redfield" rings, mounting systems
and bases, substantially in the form attached as Exhibit C.
1.44 "Taxes," except as otherwise limited herein, means the United States,
state, local, provincial and foreign income, payroll, withholding,
excise, value added, social security, sales, use, real and personal
property, occupancy, business and occupation, mercantile, capital
stock, franchise, profits, gross receipts, transfer, employment, wage,
severance, real estate, stamp, alternative or add-on minimum,
environmental, license, capital, intangible, services, premium, ad
valorem, windfall profits, import, custom, and any other taxes, fees,
duties, assessments or governmental charges of any kind whatsoever
(including interest, other additions to Taxes and penalties thereon and
including estimated taxes thereof).
1.45 "Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
1.46 "Trademark License" means the license of certain trademarks from
Simmons to Seller and Seller's Affiliates relating to the rings,
mounting systems, bases, lens caps, polar caps, targets, and certain
ammunition manufactured and sold under the "Simmons," "Weaver",
"Redfield" and "Grand Slam" brand names, substantially in the form
attached as Exhibit A.
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1.47 "Transition Services Agreement" means the transition services agreement
described in Section 6.1 of this Agreement, substantially in the form
attached as Exhibit B.
1.48 "$" means U.S. Dollar.
ARTICLE II
SALE OF SHARES; PURCHASE PRICE PROVISIONS
2.1 PURCHASE AND SALE OF BUSINESS SHARES.
-------------------------------------
On the terms and subject to the conditions of this Agreement, Seller
shall sell, transfer and assign to Buyer, and Buyer shall purchase and
acquire from Seller, all of Seller's right, title and interest in and
to the Business Shares.
2.2 PURCHASE PRICE; MANNER OF PAYMENT.
----------------------------------
As consideration for the Buyer's purchase of the Business Shares, on
the Closing Date, Buyer shall pay to Seller the sum of $18,000,000.00
(the "PURCHASE PRICE"), by wire transfer in immediately available funds
to an account designated by Seller. The Purchase Price shall be
adjusted in accordance with Section 2.3 of this Agreement.
2.3 PURCHASE PRICE ADJUSTMENT.
--------------------------
(a) Schedule 2.3(a) sets forth the Initial Balance Sheet,
including the Initial Net Working Capital Value calculated in
the manner described therein. As soon as practicable (but in
any event within sixty (60) days after the Closing Date),
Seller shall prepare or cause to be prepared and shall deliver
to Buyer the Closing Date Balance Sheet. The Closing Date
Balance Sheet shall set forth the Closing Date Net Working
Capital Value calculated in the same manner as was the Initial
Net Working Capital Value.
(b) If the Closing Date Net Working Capital Value exceeds the
Initial Net Working Capital Value, then the Purchase Price
shall be increased by an amount equal to the excess of the
Closing Date Net Working Capital Value over the Initial Net
Working Capital Value. If the Closing Date Net Working Capital
Value is less than the Initial Net Working Capital Value, then
the Purchase Price shall be decreased by an amount equal to
the excess of the Initial Net Working Capital Value over the
Closing Date Net Working Capital Value.
(c) If Buyer disagrees with Seller's determination of the Closing
Date Net Working Capital Value, then Buyer shall notify Seller
in writing of such disagreement within fifteen (15) business
days after Buyer receives the Closing Date Balance Sheet (the
"OBJECTION PERIOD"), setting forth in such notice in
reasonable detail the reasons for such disagreement and
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Buyer's calculation of the Closing Date Net Working Capital
Value. If Buyer fails to provide such written notice within
the Objection Period, then the determination of the Closing
Date Net Working Capital Value as set forth in the Closing
Date Balance Sheet will be final and binding. If Seller timely
receives such written notice, Buyer and Seller will attempt in
good faith to reach an agreement as to the matters in dispute.
If Buyer and Seller, notwithstanding such good faith effort,
fail to resolve all matters in dispute within ten (10)
business days thereafter, then Seller and Buyer agree to
jointly retain a nationally recognized accounting firm which
is independent of, and is not auditing the books and records
of, either of Seller or any of its Affiliates or Buyer or any
of its Affiliates (the "ACCOUNTING FIRM") to arbitrate the
dispute and render a decision regarding the Closing Date Net
Book Value within thirty (30) days of such retention, which
decision shall be final and binding. The Accounting Firm shall
conduct such arbitration by reviewing the Closing Date Balance
Sheet with the understanding that such Closing Date Balance
Sheet was prepared in accordance with GAAP. The Accounting
Firm's work shall be limited to resolving the matters that
Buyer raised in its notice of objection, and the Accounting
Firm's decision on such matter shall be final and binding and
not reviewable for error of any kind. Seller and Buyer shall
each bear their own costs and expenses of any such arbitration
and shall share equally the fees and expenses of the
Accounting Firm.
(d) Notwithstanding anything to the contrary in this Section 2.3,
Buyer acknowledges and agrees as to Seller's inventory
valuation and accounting methodologies used in connection with
the preparation of the Initial Balance Sheet. Neither the
valuation method nor the accounting therefore in the Seller's
books and records shall provide the basis of a valid objection
by Buyer to the Closing Date Net Working Capital Value. Any
purchase price adjustments related to Simmons inventory will
arise solely from issues not related to the inventory
valuation and accounting methodologies used to account for
such inventory.
(e) In connection with any Purchase Price Adjustment:
(i) in the event the Purchase Price is increased, Buyer
shall, within five (5) days after the later of the
expiration of the Objection Period or the date on
which any dispute regarding the Closing Date Net
Working Capital Value as provided in Section 2.3(b)
is finally resolved, pay to Seller by wire transfer
in immediately available funds an amount equal to the
Purchase Price Adjustment; or
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(ii) in the event the Purchase Price is decreased, Seller
shall, within five (5) days after the later of the
expiration of the Objection Period or the date on
which any dispute regarding the Closing Date Net
Working Capital Value as provided in Section 2.3(b)
is finally resolved, pay to Buyer, by wire transfer
in immediately available funds, an amount equal to
the Purchase Price Adjustment.
(iii) Any amounts paid pursuant to this section shall
include interest (calculated based on the actual
number of days elapsed in a year consisting of 365
days) from the sixtieth (60th) day following the
Closing Date to the date of such payment at 4.75% per
annum.
2.4 CLOSING.
--------
The closing of the transactions contemplated under this Agreement (the
"Closing") shall take place at the offices of Seller in Edina,
Minnesota, at a time to be agreed upon between Buyer and Seller (the
"Closing Date"), or such other time, date and place as the parties may
agree in writing, provided that all conditions to the Closing have been
satisfied or waived in writing. On the Closing Date, Seller shall
execute and deliver to Buyer, and the Buyer shall execute and deliver
to the Seller, the documents identified in Sections 8.8 and 9.5. The
Closing shall be effective at 5:00 p.m. Eastern time on the Closing
Date.
ARTICLE III
SELLER'S REPRESENTATIONS AND WARRANTIES
As of the date of this Agreement, Seller and Seller Parent represent and warrant
to and agree with Buyer as follows:
3.1 EXISTENCE, POWER, AUTHORIZATION AND QUALIFICATIONS OF SELLER AND SELLER
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PARENT.
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Seller, Seller Parent and Simmons are each corporations duly organized,
validly existing and in good standing under the laws of the State of
Delaware and each has the requisite corporate power and authority to
execute, deliver and perform this Agreement and the Related Agreements,
and to carry on its business as it is now being conducted, and is duly
qualified to do business and is in good standing in every jurisdiction
in which the business of each requires it to be so qualified. The
execution, delivery and performance by Seller and Seller Parent of this
Agreement and the Related Agreements have been duly authorized by all
necessary corporate action of Seller and Seller Parent, and this
Agreement has been, and the Related Agreements will be, duly executed
and delivered by Seller and Seller Parent and constitute or will
constitute valid and legally binding obligations of Seller and Seller
Parent enforceable against it in accordance with their terms, except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditors'
rights generally, and by general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or law),
including without limitation, possible unavailability of specific
performance, injunctive relief, or other equitable remedies.
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3.2 CAPITALIZATION.
(a) The authorized capital stock of Simmons consists solely of the
Business Shares, which are comprised solely of 1,000 shares of
common stock, par value $.01 per share, of which 1,000 shares
are issued and outstanding.
(b) Seller is the sole stockholder of Simmons. All of the Business
Shares are duly authorized, validly issued, fully paid,
nonassessable and are free of preemptive rights or any other
third party rights. All of the Business Shares have been
offered, sold and delivered by the issuer thereof in
compliance with applicable securities and corporate laws. None
of the Business Shares have been issued in violation of any
preemptive rights, rights of first refusal or similar rights.
(c) There are no options, warrants, calls, subscriptions,
convertible securities, rights (including preemptive rights),
commitments or agreements of any character to which Simmons is
a party or by which Simmons is bound obligating Simmons to
issue, exchange, transfer, sell, repurchase, redeem or
otherwise acquire any shares of its capital stock or
obligating Simmons to grant, extend, accelerate the vesting of
or enter into any such subscription, option, warrant, equity
security, call, right, commitment or agreement. There are no
outstanding or authorized stock appreciation, phantom stock,
profit participation or similar rights with respect to
Simmons. Except as contemplated by this Agreement, there are
no registration rights agreements, voting trusts, proxies or
other agreements or understandings to which Simmons is a party
or by which Simmons is bound with respect to any equity
security of any class of Simmons. The share register of
Simmons is current, complete and correct in all material
respects.
3.3 NON-CONTRAVENTION.
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Neither the execution and delivery by Seller and Seller Parent of this
Agreement, the Related Agreements and any other documents and
agreements contemplated by this Agreement, nor the consummation by
Seller and Simmons of the transactions contemplated by this Agreement,
will violate any provision of the certificate of incorporation and
bylaws of Seller or Simmons, or will violate any material Law,
judgment, decree, order, award, citation, policy, standard, official
interpretation, writ, injunction, regulation or rule of any court or
other Governmental Body.
3.4 GOVERNMENTAL BODIES; CONSENTS.
------------------------------
Neither Seller, Seller Parent nor Simmons is required to submit any
notice, report or other filing with any Governmental Body in connection
with its execution or delivery of this Agreement or the Related
Agreements or the consummation of the transactions contemplated hereby
or thereby. Except for the consents set forth in Schedule 3.4
(collectively, the "REQUIRED SELLER CONSENTS"), neither Seller, Seller
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Parent nor Simmons is required to obtain any consent, approval,
authorization, waiver, permit, grant, license, franchise, concession,
agreement, license or exemption (each, a "CONSENT") of any Governmental
Body or any Consent of any other party or person in connection with its
execution, delivery and performance of this Agreement or the Related
Agreements or the transactions contemplated hereby and thereby.
3.5 FINANCIAL STATEMENTS.
---------------------
(a) Seller has delivered to Buyer the unaudited consolidated
financial statements of the Business as of and for the periods
ended December 31, 2001 and 2000, and March 31, 2002 (the
"UNAUDITED BUSINESS FINANCIAL STATEMENTS"), including a
balance sheet, statements of income and a statement of cash
flows.
(b) The Unaudited Business Financial Statements are based upon the
information contained in the books and records of Seller and
Simmons and fairly present the financial condition of the
Business in accordance with GAAP as of the dates thereof and
results of operations for the periods referred to therein with
the exception of allocations from Simmons' parent corporation
for certain administrative services performed centrally such
as human resources, accounting, and information services and
to the extent that the Unaudited Business Financial Statements
have been modified to reflect inventory valuations. The
Unaudited Business Financial Statements have been prepared in
accordance with GAAP applicable to unaudited interim financial
statements (and thus may not contain all notes and may not
contain prior period comparative data which are required to be
prepared in accordance with GAAP), and reflect all adjustments
necessary to a fair statement of the results for the period(s)
presented (except for normally recurring year-end
adjustments).
3.6 ABSENCE OF UNDISCLOSED LIABILITIES.
-----------------------------------
There are no material liabilities or obligations of a nature required
by GAAP to be reflected on the Unaudited Business Financial Statements
or in the Knowledge of Seller (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due, and regardless
of when asserted) through the date hereof, except (a) as reflected or
reserved against in the Unaudited Business Financial Statements, (b)
current liabilities which have arisen after March 31, 2002 in the
ordinary course of business consistent with past practice, or (c) as
otherwise set forth in Schedule 3.6.
3.7 ABSENCE OF CERTAIN DEVELOPMENTS.
--------------------------------
Except as set forth in Schedule 3.7, and except for the solicitation
and negotiation of a transaction to dispose of the Business and the
transactions contemplated by this Agreement, since March 31, 2002
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through the date hereof, Simmons has conducted the Business only in the
ordinary course of business consistent with past practice and have not,
on behalf of, in connection with or relating to the Business or the
Business Assets:
(a) suffered or otherwise incurred or experienced any
Material Adverse Effect;
(b) sold, leased, transferred or assigned any material
assets, tangible or intangible, outside the ordinary
course of business;
(c) entered into any material agreement, contract, lease
or license outside the ordinary course of business;
(d) suffered any theft, damage, destruction or loss of or
to any property or properties owned or used by it,
whether or not covered by insurance, that would have,
individually or in the aggregate, a Material Adverse
Effect;
(e) made any material capital expenditure or commitment
outside the ordinary course of business;
(f) entered into or modified any employment, severance or
similar agreements or arrangements with or granted
any bonuses, salary or benefits increases, severance
or termination pay to any Key Employee outside the
ordinary course of business consistent with past
practice;
(g) adopted or amended any bonus, profit sharing,
compensation, stock option, pension, retirement,
deferred compensation, employment or other employee
benefit plan, trust, fund or group arrangement for
the benefit or welfare of any employees, officer,
director or affiliate;
(h) made any change in accounting principles or practices
from those utilized in the preparation of the
Unaudited Business Financial Statements;
(i) sold, pledged, encumbered or otherwise burdened the
Business Shares;
(j) taken any action or entered into any agreement not
described in subsections (a) through (i) above that
is material to the Business or Simmons; or
(k) agreed or committed, whether orally or in writing, to
do any of the foregoing.
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3.8 REAL PROPERTY.
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The real property described in the Real Property Lease, including all
buildings, structures, improvements, fixtures, systems and equipment
thereon and attached or appurtenant thereto, together with all rights
and easements appurtenant to and benefiting such real property (the
"REAL PROPERTY"), constitutes all of the real property used by Seller
(in connection with the Business) or by Simmons. Seller has delivered
to Buyer a complete and accurate copy of the Real Property Lease, which
lease has not been modified in any respect, except to the extent that
such modifications are disclosed by the copy delivered to Buyer. Except
as set forth in Schedule 3.8, with respect to the Real Property Lease:
(a) Simmons is the owner or holder of the leasehold estate or
interest in the Real Property that is the subject of the Real
Property Lease, free and clear of all Liens (other than
Permitted Liens);
(b) the Real Property Lease is legal, valid, binding, enforceable,
and in full force and effect in all material respects, except
as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors rights
generally;
(c) the Real Property Lease will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby, except as such enforcement may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting
enforcement of creditors rights generally;
(d) no party to the Real Property Lease is in breach or default,
and no event has occurred which, with notice or lapse of time,
would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(e) there are no disputes, oral agreements, or forbearance
programs in effect as to the Real Property Lease; (f) neither
Seller nor Simmons has assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold;
(g) all facilities leased thereunder have received all material
approvals of Governmental Bodies (including licenses and
permits) required in connection with the operation thereof as
currently used and have been operated and maintained in all
material respects in accordance with applicable laws, rules,
and regulations;
(h) all facilities leased thereunder are supplied with utilities
and other services necessary in all material respects for the
operation of such facilities as currently used; and
13
(i) neither Seller nor Simmons has received any notice from any
Governmental Body that such parcel is in violation of the
provisions of any legal requirement, including, without
limitation, any zoning, subdivision, environmental protection,
building, fire or health laws, rules or regulations.
3.9 ASSETS.
-------
(a) Except as set forth in Schedule 3.9(a), Simmons has good and
marketable title to, or a valid leasehold interest in, all of
the material tangible Business Assets, free and clear of all
Liens (other than Permitted Liens), except for assets and
properties disposed of in the ordinary course of business.
(b) The Business Assets comprise all assets required for the
continued conduct of the Business as it is now being conducted
by Seller and Simmons.
(c) The Business Assets are in all material respects adequate for
the purposes for which such assets are currently used or are
held for use. The Business Assets are in reasonably good
repair and operating condition (subject to normal wear and
tear) and there are no defects, facts or conditions affecting
the Business Assets which could, individually or in the
aggregate, interfere in any respect with the use, occupancy or
operation thereof as currently used, occupied or operated, or
their adequacy for such use except, in each case, as would not
have, individually or in the aggregate, a Material Adverse
Effect.
3.10 ACCOUNTS RECEIVABLE.
--------------------
The accounts and notes receivable of Simmons (including, without
limitation, the accounts receivable reflected on the Unaudited Business
Financial Statements which have not been collected prior to the Closing
Date) are valid receivables, are not subject to valid counterclaims or
setoffs (except for counterclaims or setoffs arising in the ordinary
course of business) and are collectible in accordance with their terms,
except (a) as otherwise described in Schedule 3.10, and (b) to the
extent of the bad debt reserve reflected on the Unaudited Business
Financial Statements.
3.11 INVENTORY.
----------
Subject to Section 2.3(d), all inventories of supplies, raw materials,
parts, finished goods, work-in-process, product prototypes and
developments, product labels, packaging materials and office and other
supplies of Simmons (the "INVENTORY") are of good and usable and, with
respect to finished products, saleable quality, except as set forth in
Schedule 3.11.
14
3.12 INTELLECTUAL PROPERTY.
----------------------
(a) Schedule 3.12(a) sets forth a correct and complete list and
summary description of all Patents and Trademarks.
(b) Except as set forth in Schedule 3.12(b), Simmons is the owner
of all right, title and interest in and to such Patents and
Trademarks, free and clear of all Liens except Permitted
Liens, and has the right to use such Patents and Trademarks
without payment to any third-party.
(c) Except as set forth in Schedule 3.12(c), the Intellectual
Property comprise all intellectual property owned or used or
held for use by Simmons in connection with, and constitute all
intellectual property necessary for the conduct of, the
Business as presently conducted.
(d) Except as set forth in Schedule 3.12(d): (i) all patents and
registrations identified in Schedule 3.12(a) are in force;
(ii) Seller has the right to bring actions for infringement or
unauthorized use of the Patents and Trademarks, and (iii) to
the Knowledge of Seller, no other Person is infringing upon or
has infringed upon the Intellectual Property at any time
during the five (5) years preceding the date hereof.
(e) Except as set forth in Schedule 3.12(e): (i) to the Knowledge
of Seller during the five (5) years before the date hereof, no
written or recorded claim has been made or asserted that
alleges that the products associated with the Business or
Intellectual Property infringe the intellectual property of
another Person; (ii) no intellectual property-related
litigation, arbitration or other proceeding is currently
pending with respect to the Business or Intellectual Property;
and (iii) to the Knowledge of Seller during the five (5) years
before the date of this Agreement, no written or recorded
claim has been made or asserted that challenges the validity
or ownership of any Intellectual Property.
3.13 TAX MATTERS.
------------
(a) Simmons has timely filed all material Tax Returns that it was
required to file. All such Tax Returns were correct and
complete in all material respects. All material Taxes owed by
Simmons (whether or not shown on any Tax Return) have been
timely and properly paid or are included in accrued
liabilities in full. Simmons is not currently the beneficiary
of any extension of time within which to file any Tax Return.
No material claim has ever been made in writing or otherwise
by an authority in a jurisdiction where Simmons does not file
Tax Returns that Simmons is or may be subject to taxation by
that jurisdiction which claim has not been resolved in full.
There are no material Liens on any of the Business Assets that
arose in connection with any failure (or alleged failure) to
pay any Tax, other than Permitted Liens.
15
(b) Simmons has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder or
other third party.
(c) No Governmental Body has threatened in writing or otherwise an
assessment of any additional material Taxes owed by Simmons
for any period for which Tax Returns have been filed. There is
no dispute or claim concerning any material Tax liability of
Simmons either claimed or raised by any Governmental Body in
writing or as to which Seller has Knowledge. Schedule 3.13(c)
lists all federal, state, local, and foreign income and
franchise Tax Returns filed with respect to Simmons and its
business or property for the most recent taxable period ended
on or before December 31, 2001, indicates those Tax Returns
that have been audited, and indicates those Tax Returns that
currently are the subject of audit. Seller has delivered to
Buyer correct and complete copies of all federal income Tax
Returns for the preceding three taxable years.
(d) Except as set forth in Schedule 3.13(d), Simmons has not
waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax
assessment or deficiency.
(e) Simmons has not filed a consent under Codess. 341(f)
concerning collapsible corporations. Simmons has not made any
payments, is not obligated to make any payments, nor is it a
party to any agreement that would obligate it to make any
payments that will not be deductible under Codess. 280G as a
result of any of the transactions contemplated by this
Agreement. Seller is a U.S. person within the meaning of
Section 7701(a)(30) of the Code. Simmons has disclosed on its
federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal
income Tax within the meaning of Codess. 6662. Simmons is not
a party to any Tax allocation or sharing agreement. Except as
disclosed on Schedule 3.13(d), Simmons has not been a member
of an Affiliated Group filing a consolidated federal income
Tax Return other than a group the common parent of which is
Seller's ultimate parent.
(f) The unpaid Taxes of Simmons did not, as of the date of the
Unaudited Business Financial Statements, exceed the reserve
for Tax Liability, if any, (rather than any reserve for
deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the
Unaudited Business Financial Statements (rather than in any
notes thereto).
(g) Simmons will not be required to include any material item of
income in, or exclude any material item of deduction from,
taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any (i) change in
method of accounting for a taxable period ending on or prior
to the Closing Date under Codess. 481(c) (or any corresponding
or similar provision of state, local or foreign income Tax
16
law); (ii) "closing agreement" as described in Codess. 7121
(or any corresponding or similar provision of state, local or
foreign income Tax law) executed on or prior to the Closing
Date; (iii) installment sale or open transaction disposition
made on or prior to the Closing Date; or (iv) prepaid amount
received on or prior to the Closing Date.
(h) The Affiliated Group in which Simmons is currently included
has timely filed all material income Tax Returns that it was
required to file for each taxable period during which Simmons
was a member of the group. All such Tax Returns were correct
and complete in all material respects. All material income
Taxes owed by the Affiliated Group in which Simmons is
currently included (whether or not shown on any Tax Return)
have been timely and properly paid for each taxable period
during which Simmons was a member of the group.
(i) No Governmental Body has threatened in writing, or otherwise,
an assessment of any additional material income Taxes against
the Affiliated Group in which Simmons is currently included
for any taxable period during which Simmons was a member of
the group. There is no dispute or claim concerning any
material income tax liability of the Affiliated Group in which
Simmons is currently included for any taxable period during
which Simmons was a member of the group either claimed or
raised by any Governmental Body in writing. Except as set
forth in Schedule 3.13(d), the Affiliated Group in which
Simmons is currently included has not waived any statute of
limitations in respect of any income Taxes or agreed to any
extension of time with respect to any income tax assessment or
deficiency for any taxable period during which Simmons was a
member of the group.
(j) Simmons has not been a party to any transaction that was
intended to qualify under Section 355 of the Code within the
two-year period prior to the Closing Date.
3.14 LITIGATION; ORDERS.
-------------------
(a) Except as set forth in Schedule 3.14(a) (which also identifies
the parties to and briefly describes the basis for each
pending or threatened Action), there is no pending or, to the
Knowledge of Seller, threatened Action that relates to or that
may affect in any manner the Business or the Business Assets;
and there is no pending or, to the Knowledge of Seller,
threatened Action that challenges or that may have the effect
of preventing, delaying, making illegal or otherwise
interfering with any of the transactions contemplated by this
Agreement or the Related Agreements. Seller has made available
to Buyer copies of all pleadings, correspondence and other
documents and materials relating to each Action described in
Schedule 3.14(a), and no Action listed or required to be
listed therein could have a Material Adverse Effect.
17
(b) No order or agreement related to litigation or the settlement
thereof is in effect that relates to or that may affect in any
material manner the Business or any of the Business Assets.
3.15 PRODUCTS.
---------
Seller has made available to Buyer access to copies of the standard
terms and conditions of sale for each of the products or services of
the Business (containing applicable guaranty, warranty and indemnity
provisions). Except as set forth in Schedule 3.15: (a) no product
manufactured, sold, leased or delivered by, or service rendered by or
on behalf of, Simmons in connection with the Business is subject to any
guaranty, warranty or other indemnity, express or implied, beyond such
standard terms and conditions; and (b) each product manufactured, sold,
leased or delivered by, or service rendered by or on behalf of, Simmons
in connection with the Business has been in conformity with all
applicable contractual commitments and all express and implied
warranties.
3.16 INSURANCE.
----------
Seller and Simmons maintain policies of fire and casualty, liability
and other forms of insurance with respect to the Business and the
Business Assets in such amounts, with such deductibles and against such
risks and losses as are, in the judgment of Seller and Simmons,
reasonable for the Business and the Business Assets. The material
insurance policies maintained by Seller and Simmons with respect to the
Business and the Business Assets are set forth in Schedule 3.16. All
such policies are in full force and effect, no invoiced premiums are
overdue for payment (other than retroactive or retrospective premium
adjustments that are not yet, but may be, required to be paid with
respect to any periods ending prior to the Closing Date, all of which
are to be paid by Seller), and no notice of cancellation or termination
has been received with respect to any such policy which has not been
replaced on substantially similar terms prior to the date of such
cancellation.
3.17 CONTRACTS AND COMMITMENTS.
--------------------------
(a) Schedule 3.17(a) lists the following agreements to which
Simmons is a party (collectively, the "Business Contracts"):
(i) any agreement for the lease of person property to or
from any Person providing for lease payments in
excess of $50,000 per year;
(ii) any agreement for the sale or purchase of raw
materials, commodities, supplies, products or other
personal property or for the furnishing or receipt of
services, the performance of which will extend over a
period of more than one year or involve consideration
in excess of $50,000;
(iii) any agreement concerning a partnership or joint
venture;
18
(iv) any agreement under which Simmons has created,
incurred, assumed or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation,
in excess of $50,000 or under which it has imposed a
Lien on any of its net assets, tangible or
intangible;
(v) any material agreement concerning confidentiality or
noncompetition; (vi) any material agreement with
Seller or Seller's Affiliates;
(vii) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance
or other material plan or arrangement for the benefit
of Simmons's current or former directors, officers
and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on
a full-time, part-time, consulting or other basis
providing annual compensation in excess of $50,000 or
providing material severance benefits;
(x) any agreement under which it has advanced or loaned
any amount to any of its directors, officers, and
employees outside the ordinary course of business;
(xi) any agreement under which the consequence of a
default or termination could have a Material Adverse
Effect; (xii) any agreement under which Simmons has
advanced or loaned any other Person amounts in the
aggregate in excess of $50,000; or (xiii) any other
agreement the performance of which involves
consideration in excess of $100,000.
(b) Subject to obtaining any requisite consents of third parties
(such consents being identified on Schedule 3.17(a) hereto),
the enforceability of the Business Contracts will not be
affected in any material manner by the execution and delivery
of this Agreement or the consummation of the transactions
contemplated hereby;
(c) Neither Simmons nor any other party, is in default under or in
violation of, nor, to the Knowledge of the Seller, is there
any basis for any valid claim of default under or violation
of, any Business Contract that could, individually or in the
aggregate, have a Material Adverse Effect;
19
(d) Subject to obtaining any requisite consents of third parties,
each Business Contract is in all material respects valid,
binding and in full force and effect and is enforceable by
Seller in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting the enforcement of creditors' rights generally
and by general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
law), including, without limitation, possible unavailability
of specific performance, injunctive relief or other equitable
remedies; and there have been no cancellations or threatened
cancellations thereof nor outstanding material disputes
thereunder.
3.18 BOOKS AND RECORDS.
------------------
Seller maintains the books, records and accounts of Simmons in all
material respects in accordance with good business practice and in
sufficient detail to reflect accurately and fairly the operations,
transactions and disposition of the assets, liabilities and equities
concerning Simmons and to prepare financial statements of Simmons in
accordance with GAAP.
3.19 BROKERS.
--------
Neither Seller nor any of its Affiliates has employed any broker, agent
or finder in connection with any transaction contemplated by this
Agreement.
3.20 EMPLOYEES; LABOR MATTERS.
-------------------------
(a) Schedule 3.20(a), contains a complete and accurate list of the
following information for each current employee of Simmons,
including each employee on leave of absence or layoff status
(each, a "Simmons Employees"): name; job title; date of hiring
or engagement; and current compensation paid or payable.
(b) Simmons has not violated the Worker Adjustment and Retraining
Notification Act (the "WARN ACT") or any similar state or
local Law.
(c) Except as set forth in Schedule 3.20(c), with respect to each
employee previously or presently employed by Simmons:
(i) no such person is bound by any contract, agreement,
understanding or other arrangement that purports to
limit his, her or its ability to engage in or
continue or perform any conduct, activity, duties or
practice relating to the Business or to assign to
Simmons or to any other person any rights to any
invention, improvement, or discovery;
(ii) Seller and Simmons have complied in all material
respects with all Laws relating to the employment of
labor, including provisions thereof relating to
wages, hours, equal opportunity, collective
bargaining and the payment of social security and
other Taxes;
20
(iii) Seller has no Knowledge of any pending material labor
relations problem relating to the Business, and, to
the Knowledge of Seller, the labor relations of the
Business are satisfactory;
(iv) there is no collective bargaining agreement to which
Simmons is a party, no collective bargaining
agreement is currently being negotiated or proposed
and, to the Knowledge of Seller, no person is making
any attempt or effort to form a labor union;
(v) there are no material workers' compensation claims
pending against Simmons and Seller has no Knowledge
of any facts that would give rise to such a claim;
and
(vi) Simmons is the exclusive owner of all Intellectual
Property developed by such persons and no such person
has any claim with respect to any Intellectual
Property.
3.21 EMPLOYEE BENEFIT PLANS.
-----------------------
(a) Schedule 3.21(a) contains an accurate and complete list of
each Employee Plan and each Employment Agreement. Neither
Simmons nor any ERISA Affiliate maintains, has in the past
maintained, contributes to, or has in the past been required
to contribute to any "multiemployer plan" within the meaning
of Section 3(37) of ERISA.
(b) To the extent required (either as a matter of law or to obtain
the intended tax treatment and tax benefits), all Employee
Plans comply in all material respects with the requirements of
ERISA, the Code and any other applicable law, except for
instances of non-compliance that would not have, individually
or in the aggregate, be material. With respect to the Employer
Plans, (i) all required contributions which are due have been
paid, (ii) there are no material actions, suits or claims
pending, other than routine uncontested claims for benefits,
and (iii) to the Knowledge of Seller, there have been no
prohibited transactions (as defined in ERISA Section 406 or
Code Section 4975) except for instances that would not be
material, individually or in the aggregate.
(c) Simmons has made available to Buyer true and complete copies
of (i) all documents embodying each Employee Plan and each
Employment Agreement including without limitation all
amendments thereto; (ii) the most recent available summary
plan description together with the summary(ies) of material
modifications thereto, if any, required under ERISA with
respect to each Employee Plan; (iii) the most recent Internal
Revenue Service determination letters for the pension and
401(k) plan in which Simmons Employees participate; (iv) a
written description of each Employee Plan and each Employment
21
Agreement that is not in writing; and (v) the most recent
annual report (Form Series 5500 and all schedules and
financial statements attached thereto), if any, required under
ERISA or the Code in connection with each pension or 401(k)
Employee Plan.
(d) To the Knowledge of Seller, Simmons has never represented,
promised or contracted (whether in oral or written form) to
any Employee (either individually or to Employees as a group)
or any other person that such Employee(s) or other person
would be provided with post-employment health, life insurance,
accident or other welfare or other types of benefits except to
the extent required by statute, except as described on
Schedule 3.21, and except to the extent that Simmons could
terminate such benefits at any time.
(e) Simmons and each Employee Plan is in material compliance with
the requirements of Code ss.ss. 4980B and 4975, Part 6 of
Title I and ss. 502(i) of ERISA, the Family Medical Leave Act
of 1933, the Health Insurance Portability and Accountability
Act of 1996, the Women's Health and Cancer Rights Act of 1998,
the Newborns' and Mothers' Health Protection Act of 1996, or
any amendment to each such act, or any similar provisions of
state law.
(f) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events)
constitute an event under any Employee Plan, Employment
Agreement, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase
in benefits or obligation to fund benefits with respect to any
Employee or with respect to which Simmons reasonably could
have any liability.
(g) Except as expressly contemplated herein, and except for
amendments to terminate participation in Seller Parent's plans
of plans in connection with the Closing of this transaction,
Simmons has no intent or commitment to establish, adopt, enter
into, or amend any Employee Plan or Employment Agreement.
3.22 AFFILIATE TRANSACTIONS.
-----------------------
Except as described in Schedule 3.22, and other than pursuant to this
Agreement, no officer, director or employee ("Insider") of Simmons has
any agreement with Seller or Simmons (other than normal employment
arrangements) or any interest in any property, real, personal or mixed,
tangible or intangible, used in or pertaining to the Business. To the
Knowledge of Seller, no Insider of Simmons has any direct or indirect
interest in any competitor, supplier or customer of Seller or Simmons
or in any person, firm or entity from whom or to whom Seller or Simmons
leases any property, or in any other person, firm or entity with whom
Seller or Simmons transacts business of any nature in any material
manner.
22
3.23 COMPLIANCE WITH LAWS, LICENSES.
-------------------------------
(a) Laws. Seller and, to the Knowledge of Seller, Simmons have
conducted the Business in compliance with all applicable Laws
except where the failure to be in such compliance would not,
individually or in the aggregate, have a Material Adverse
Effect.
(b) Governmental Licenses. Schedule 3.23(b) lists the Governmental
Licenses issued to or possessed by Seller or Simmons
concerning the Business. The Governmental Licenses set forth
in Schedule 3.22(b) comprise all of the Governmental Licenses
required to operate the Business as presently conducted by
Simmons. Seller has not received any written, or to the
Knowledge of Seller, other notification of any threatened
suspension or cancellation of any of the Governmental
Licenses. Each of the Governmental Licenses is valid and in
full force and effect and Seller has not received notice of
any claim or threat to revoke any of the Governmental Licenses
or to declare them invalid. Seller makes no representations or
warranties regarding Governmental Licenses that may be
required by Buyer.
3.24 ENVIRONMENTAL MATTERS.
----------------------
Except as set forth on Schedule 3.24:
(a) Simmons, in its operation of the Business, to the Knowledge of
Seller, is now, and at all times has been, in compliance with
all applicable Environmental Laws except where the failure to
be in compliance would not reasonably be expected to have a
Material Adverse Effect on the Business taken as a whole.
(b) Simmons has or has applied (and if applied for, is operating
as permitted during the application period) for all
Environmental Permits required for the operation of the
Business as presently conducted and, to the Knowledge of
Seller, there are now, and at all times there have been, no
violations, and no pending or threatened, investigations or
proceedings with respect to such Environmental Permits except
where the failure to have such Environmental Permits or where
the violation, investigation or proceeding relating thereto
would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(c) To the Knowledge of Seller, no written notice, notification,
demand, request for information, citation, summons, complaint
or order has been received by, is pending, or threatened by
any Person against Simmons nor has any material penalty been
assessed against Simmons for any alleged violation of any
Environmental Law or liability thereunder, other than where
such notice, notification, demand, request for information,
citation, summons, complaint or order has been fully resolved,
or where resolution would not, individually or in the
aggregate, reasonably be expected to have an Material Adverse
Effect.
23
(d) To the Knowledge of Seller, (i) no Hazardous Materials have
been buried, incinerated, deposited, stored, or released on or
under any part of the Real Property or at any off-site
disposal location, (ii) no Hazardous Materials, radon at
levels above natural background or pesticides are located on
or under the Real Property, and (iii) no aboveground or
underground storage tanks are located on or under the Real
Property or have been located on or under the Real Property
and then subsequently been removed or filled.
(e) Simmons is not potentially responsible for (i) any release of
Hazardous Materials, or (ii) any costs arising under or in
violation of Environmental Laws or Environmental Permits.
(f) The Real Property has not been listed under the U.S.
Environmental Protection Agency National Priorities List of
Hazardous Waste Sites, or any other similar list, schedule,
law, inventory or record of hazardous or solid waste sites
maintained by a governmental authority.
ARTICLE IV
BUYER'S REPRESENTATIONS AND WARRANTIES
As of the date of this Agreement, Buyer and Buyer Parent hereby represent and
warrant to and agree with Seller as follows:
4.1 EXISTENCE, POWER, AUTHORIZATION AND QUALIFICATIONS OF BUYER AND BUYER
---------------------------------------------------------------------
PARENT.
-------
Buyer and Buyer Parent are each corporations duly organized, validly
existing and in good standing under the laws of California and
Delaware, respectively, and each has the corporate power and authority
to execute, deliver and perform this Agreement, and the Related
Agreements to own all its properties and assets, and to carry on its
business as it is now being conducted, and each is duly qualified to do
business and is in good standing in every jurisdiction in which the
business of each requires it to be so qualified. Buyer and Buyer Parent
each has all requisite corporate power and authority to execute and
deliver this Agreement and consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and
the Related Agreements by Buyer and Buyer Parent have been duly
authorized by all necessary corporate action of Buyer and Buyer Parent,
and this Agreement has been, and the Related Agreements will be, duly
executed and delivered by Buyer and Buyer Parent and constitute or will
constitute valid and legally binding obligations of Buyer and Buyer
Parent enforceable against it in accordance with their terms, except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditors'
rights generally, and by general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or law),
including without limitation, possible unavailability of specific
performance, injunctive relief, or other equitable remedies.
24
4.2 NON-CONTRAVENTION.
------------------
Neither the execution and delivery by Buyer and Buyer Parent of this
Agreement, the Related Agreements and the other documents and
agreements contemplated hereby, and thereby, nor the consummation by
Buyer of the transactions contemplated hereby or thereby, will violate
any provision of the articles of incorporation, bylaws or any other
charter documents of Buyer, or will violate any Law or any judgment,
decree, order, award, citation, policy, standard, official
interpretation, writ, injunction, regulation or rule of any court or
other Governmental Body.
4.3 CONSENTS.
---------
Except for the consents that may be required to transfer certain of the
Contracts, no consent, approval, license, permit or authorization or
order of or with any court, or other Person is required in connection
with the execution and delivery of this Agreement by Buyer or Buyer
Parent or the consummation of the transactions contemplated herein.
4.4 BROKERS.
--------
Neither Buyer nor any of its Affiliates has employed any broker, agent
or finder in connection with any transaction contemplated by this
Agreement.
4.5 CLAIMS.
-------
There are no Claims pending, or to the knowledge of Buyer, threatened
against or affecting Buyer or its Affiliates in any court or before any
arbitration panel of any kind or before or by any Governmental Body
that questions the validity or legality of this Agreement or any
Related Agreement or any action taken or to be taken by the Buyer in
connection with this Agreement or any Related Agreement.
ARTICLE V
COVENANTS
5.1 CONDUCT PENDING CLOSING.
------------------------
Except to the extent consented to in writing by Buyer, Seller agrees
that pending the Closing, it shall conduct the Business only in the
ordinary course of business and consistent with past practices. Without
limiting the generality of the foregoing, from the date hereof to the
Closing, Seller shall not, without the written consent of Buyer:
25
(a) permit, allow or suffer any of its material assets (tangible
or intangible) included in the Business Assets to be subjected
to any Liens other than Permitted Liens, nor permit any Liens
to be foreclosed;
(b) sell, transfer or otherwise dispose of any of its assets or
other rights (tangible or intangible) included in the Business
Assets other than in the ordinary course of business
consistent with past practice;
(c) dispose of or permit to lapse any material right to the use of
any material Patents, Trademarks and Copyrights or disclose to
any person other than representatives of Buyer any proprietary
information or included in the Business Assets not a matter of
public knowledge;
(d) terminate or amend in any material respect any material
Business Contract;
(e) exercise any option to renew any material lease or any option
to purchase any material property included in the Business
Assets or permit any such option to expire without first
notifying Buyer of the option expiration date;
(f) omit to do any act, or permit any act or omission to act,
which would cause a material breach of any Business Contract,
or any material breach of any representation, warranty,
covenant or agreement made by Seller herein;
(g) fail to notify Buyer of any Claim which is threatened or
commenced against Simmons between the date of this Agreement
and the Closing Date which may have a Material Adverse Effect;
(h) materially increase or decrease the present list prices for
the products or related services sold by Simmons; and,
(j) agree, whether in writing or otherwise, to do any of the
foregoing.
5.2 PRESERVATION OF BUSINESS.
-------------------------
During the period beginning on the date hereof and ending on the
Closing Date, (a) the Seller, Seller Parent and Simmons will each use
its best efforts to preserve the Business and Business Assets and to
preserve the goodwill of customers, suppliers and others having
business relations with Simmons, (b) the Seller, Simmons and Buyer will
consult with each other concerning, and the Seller, Simmons and Buyer
each will cooperate to keep available to Buyer, the services of the
employees of Simmons, and (c) Simmons shall pay all accounts payable in
a timely manner in accordance with stated terms thereof.
5.3 ACCESS TO RECORDS AND PROPERTIES PRIOR TO THE CLOSING.
------------------------------------------------------
Between the date of this Agreement and the Closing Date, Seller shall
give to Buyer, its employees, consultants and its representatives
including, its attorneys and accountants, reasonable access to all
26
those premises, assets, books and records (excluding personnel files,
medical and Workers' Compensation files, and drug-free workplace
testing results), officers, employees, consultants, agents, accountants
and attorneys of Simmons and Seller necessary to consummate the
transactions contemplated by this Agreement, and to such financial and
operating data and other information which relate to Simmons as Buyer
shall from time to time reasonably request (excluding all legally
privileged or protected documents); provided, however, that such access
shall be granted in such manner as not to interfere unreasonably with
the normal operation of Simmons and Seller, as determined in Seller's
reasonable discretion. Buyer and its representatives will hold in
confidence all confidential information obtained from Seller or its
Affiliates, or their officers, agents, representatives or employees.
Buyer agrees that all confidential information obtained from Seller and
its Affiliates concerning businesses of Seller or any of its Affiliates
not concerning the Products or Purchased Assets shall be held in
confidence in accordance with the provisions of the Confidentiality
Agreement between Buyer and Seller dated June 21, 2002. In the event of
termination of this Agreement for any reason, if requested, Buyer and
its representatives and lenders will either destroy or return to Seller
all documents, work papers and other material (including all copies
made thereof) obtained from Seller or prepared by Buyer from
information given to or learned by Buyer at any time in connection with
the transactions contemplated by this Agreement and will keep
confidential and not use any such information so obtained unless such
information is (a) readily ascertainable from public or published
information or trade sources, (b) previously known by Buyer as
specifically shown in the books and records of the Buyer as they exist
at the time of receipt of such information, (c) received by the Buyer
from a third party not in privity with Seller who has a bona fide right
to disclose such information, or (d) disclosed pursuant to the written
permission of the Seller.
5.4 ACCESS TO RECORDS AND PERSONNEL AFTER THE CLOSING.
--------------------------------------------------
(a) The parties shall, and shall cause their Affiliates to, retain
the books, records, documents, instruments, accounts,
correspondence, writings, evidences of title and other papers
relating to the Business in their possession (the "Books and
Records") for the period of time set forth in their respective
records retention policies in effect on the Closing Date or
for such longer period as may be required by law or any
applicable court order.
(b) The parties and their Affiliates will allow each other
reasonable access to such Books and Records (excluding
personnel files, medical and Workers' Compensation files,
benefit plan claim files, and drug-free workplace testing
results), and to their personnel having knowledge of the
whereabouts and/or contents of such Books and Records, for
legitimate business reasons, including, without limitation,
the completion of all financial audits required of Buyer by
27
applicable securities regulations. Each party shall be
entitled to recover its reasonable out-of-pocket costs
(including, without limitation, reasonable copying costs)
incurred in providing such Books and Records and/or personnel
to the other party. The requesting party will hold in
confidence all information obtained from the disclosing party,
any of its officers, agents, representatives or employees
(collectively, the "Disclosing Party"), provided, however,
that the following shall not be deemed to be confidential
information for purposes of this Agreement: (i) information
which is or becomes generally available to the public other
than as a result of a disclosure by the Disclosing Party, (ii)
information which was already known to the receiving party on
a non-confidential basis prior to being furnished to the
receiving party by the Disclosing Party or (iii) information
which becomes available to the receiving party on a
non-confidential basis from a source other that the Disclosing
Party if such source was not subject to any prohibition
against transmitting the information to the receiving party.
5.5 EFFORTS; OBTAINING CONSENTS; GOVERNMENT FILINGS.
------------------------------------------------
(a) Subject to the terms and conditions of this Agreement, Seller
and Buyer each agrees to use commercially reasonable efforts
to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable, the
transactions contemplated by this Agreement and to cooperate
with the other in connection with the foregoing (i) to obtain
all necessary waivers, consents and approvals from other
parties to material Business Contracts and Governmental
Licenses, and (ii) to fulfill all conditions to this
Agreement. Seller and Buyer further covenant and agree, with
respect to a threatened or pending order or Law that would
adversely affect the ability of the parties hereto to
consummate the transfer of assets under this Agreement, to use
their respective best efforts to prevent the entry, enactment
or promulgation thereof, as the case may be (it being
understood that such efforts shall not include any requirement
of either party to expend material sums of money or grant any
material financial or other accommodation).
(b) The parties will cooperate with each other to the extent
necessary to make, as soon as practicable following the
execution of this Agreement, all filings required by any Law
or Governmental Body.
(c) Within one week after the Closing Date, Seller will file
assignments to Simmons or such other entity designated by
Buyer in the United States Patent and Trademark Office for
those United States trademarks listed in Schedule 3.12(a)
listed as recorded in the names of entities other than
Simmons. Within one week after the Closing Date, Seller will
have its foreign associate law firms initiate assignments to
Simmons in foreign patent and trademark offices for those
foreign trademarks listed in Schedule 3.12(a) as recorded in
the names of entities other than Simmons. Seller will pay for
assignment of such United States and foreign trademarks. In
all other respects, Buyer will prosecute and maintain all such
trademarks at its sole expense.
28
5.6 FURTHER ASSURANCES; COOPERATION.
--------------------------------
Subject to the terms and conditions of this Agreement, the parties to
this Agreement shall in good faith perform their obligations under this
Agreement and use their reasonable efforts to cause the transactions
contemplated by this Agreement to be carried out promptly in accordance
with the terms of this Agreement. Upon the execution of this Agreement
and thereafter, each party shall take such actions and execute and
deliver such documents as may be reasonably requested by the other
party hereto in order to effect the transactions contemplated by this
Agreement. The parties shall cooperate fully with each other and their
respective counsel and accountants or designees in connection with any
actions required to be taken as part of their respective obligations
under this Agreement.
5.7 EXPENSES.
---------
Except as otherwise specifically provided in this Agreement and Related
Agreements, each party shall bear its own expenses in connection with
and in performance of this Agreement and Related Agreements.
5.8 PUBLICITY.
----------
Prior to the Closing Date each party shall consult with and obtain the
consent of the other before issuing any press release or other public
announcement regarding the transactions contemplated by this Agreement,
unless, in the reasonable judgment of the party making the
announcement, such announcement is required to discharge its or its
Affiliates' legal obligations or to comply with any applicable
requirements of a securities exchange (in which case it shall use
reasonable efforts to consult with the other party before issuing the
announcement).
5.9 EMPLOYEE MATTERS.
-----------------
(a) Effective as of the Closing Date, Buyer agrees to provide
employment on an "at will" basis to each Simmons Employee on
commercially reasonable terms and conditions that are
generally comparable to similarly situated employees of Buyer.
Nothing in this Section 5.9(a) shall, however, obligate Buyer
or its Affiliates to provide continuing employment to any
Simmons Employee for any specific time period after the
Closing Date.
(b) As of and after the Closing Date, Buyer shall, but only to the
extent permitted by law and applicable tax qualification
requirements and subject to any generally applicable break in
service or similar rule and the approval of any insurance
carrier, third party provider or the like:
(i) give each Simmons Employee full credit for purposes
of eligibility to participate and vesting (but not
for the purpose of determining the accrual of
benefits) under any retirement, health, disability,
dental and life insurance plans, policies or
arrangements maintained by Buyer or its Affiliates
29
for the benefit of its employees generally for the
Simmons Employee's service with Seller (including
service with Blount International that Seller has
recognized under its benefit plans); excluding,
however, the vesting provisions of Buyer Parent's
Employee Stock Ownership Plan;
(ii) cover the Simmons Employees under a medical plan and
a dental plan of the Buyer or one of its Affiliates,
waive all limitations as to preexisting conditions
and waiting periods with respect to participation and
coverage requirements applicable to Simmons Employees
under such plans, and provide each Simmons Employee
with credit under each such plan for any co-payments
and deductibles paid under a corresponding welfare
plan of Simmons or Seller in the calendar year in
which the Closing Date occurs.
As of and after the Closing Date, Buyer shall be responsible
for all benefits under any Buyer employee welfare benefit
plans that arise from claims incurred by Simmons Employees on
and after the Closing Date. Seller's welfare benefit plans
will process all benefit claims incurred prior to the Closing
Date, including workers compensation claims, and Simmons will
pay its share of those claims. Seller shall maintain the long
term disability policy in effect at Simmons prior to the
Closing Date so that it covers any injuries, illnesses or
disabilities that occurred prior to the Closing Date. Seller
will retain all participants on continuation coverage as of
the day before the Closing Date and neither Buyer nor any
Affiliate of Buyer shall have any liability with respect to
such coverage. Notwithstanding any of the foregoing to the
contrary, none of the provisions contained in this Section
5.9(b) shall operate to duplicate any benefit provided to any
Simmons Employee or the funding of any such benefit, or
obligate Buyer or its Affiliates to employ, or offer
continuing employment to, any individual.
(c) Except as otherwise provided in this Section 5.9, for a period
of eighteen (18) months from the Closing Date, neither party
shall, without the other party's written consent, directly or
indirectly, employ or solicit for employment any person who is
(or, as to any Simmons Employee, who is or within the
preceding six (6) months was) employed by the other party
(including, without limitation, Seller or its Affiliates
soliciting employees of Simmons following the Closing Date),
whether or not any such person would breach an employment
contract in leaving such employment; provided, however, that
general solicitations of employment by means of newspapers,
periodical or trade publication advertisements or other
non-targeted solicitations by an employment bureau or other
intermediary not directed specifically at employees of the
other party shall not, in and of themselves, constitute a
violation of this provision.
(d) Seller and Buyer intend that the transactions contemplated by
this Agreement shall not constitute a severance of employment
of any Simmons Employee with Simmons prior to or upon
consummation of the transactions contemplated by this
Agreement. Nothing in this Section 5.9 shall constitute an
agreement or guaranty that any Simmons Employee shall be
entitled to remain for any specified period in the employment
of Simmons or of Seller or Buyer or any Affiliate of Buyer.
30
(e) Seller will retain each and every "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) that covers or has
in the past covered Simmons Employees. Simmons shall,
effective upon the Closing Date, terminate its participation
in any "employee pension benefit plan" (as defined in Section
3(2) of ERISA) and shall not, upon the Closing Date, maintain
any such plan (except that credit for service may be given at
the discretion of Seller Parent for the remainder of the month
of Closing). Simmons shall, effective upon the Closing Date,
terminate its participation in each Employee Plan that
provides, or reflects or represents any liability to provide
health, life insurance, accident or other welfare or other
types of benefits to any current or future Employees, their
spouses or dependants for any reason, except as may be
required by Codess. 4980B or required under applicable law.
Upon and following the Closing, Simmons shall not have any
obligation or liability (as to contributions or otherwise)
with respect to any Prior Pension Plan (as defined below) or
with respect to any post-employment health, life insurance,
accident or other welfare or other types of benefits except to
the extent required by statute or this Agreement, except for
the periods prior to Closing. For this purpose, "Prior Pension
Plan" means any "employee pension benefit plan" (as defined in
Section 3(2) of ERISA) which either (1) is or has been
maintained, contributed to, or required to be contributed to
by Simmons, (2) with respect to which Simmons currently has or
may have any liability or obligation, or (3) is or has been
maintained, contributed to, or required to be contributed to
by any ERISA Affiliate, or with respect to which any ERISA
Affiliate may have any obligation. To the extent permitted by
law, Buyer agrees to amend its 401(k) plan to the extent
necessary to accept rollovers of distributions from Seller's
401(k) plan. To the extent permitted by law, Buyer shall use
reasonable efforts to amend its 401(k) plan and establish
procedures with its 401(k) plan recordkeeper such that 401(k)
plan loans may be included in such rollovers.
(f) Simmons Employees unused earned and accrued vacation time will
remain on Simmons's books and Buyer will recognize those
vacation days for purposes of accruing future vacation under
its or its Affiliates' vacation policies for similarly
situated employees; provided, however, that Buyer shall not be
subject to any previous policies of Seller or Simmons with
respect to Simmons Employees vacation accrual rates. Any cap
on vacation accruals under Buyer's or any of its Affiliates'
vacation policies shall not limit the number of such vacation
days that are so recognized; provided that any additional
post-Closing vacation accruals by the Simmons Employees shall
(after giving effect to the number of days credited pursuant
to the preceding sentence) be subject to such limits. For
purposes of determining the Simmons Employees future level of
benefit accruals under the vacation policies of Buyer and its
Affiliates, the Simmons Employees shall receive credit for
their service with Seller and Blount.
31
(g) Effective as of Closing Date, Simmons will pay out to Simmons
Employees any earned value sharing payments or management
incentive payments on a pro-rated basis as of the Closing.
5.10 COOPERATION ON TAX MATTERS.
---------------------------
(a) Seller shall prepare and file (or cause to be prepared and
filed) all Tax Returns with respect to Simmons for all periods
ending on or prior to the Closing Date which are filed after
the Closing Date and shall timely pay all Taxes shown as due
on such Tax Returns. Seller shall permit Buyer to review and
comment on the portions of each such Tax Return described in
the preceding sentence relating to Simmons prior to filing.
(b) Buyer shall prepare or cause to be prepared and file or cause
to be filed any and all Tax Returns for Simmons for all
periods beginning before the Closing Date and ending after the
Closing Date. In the case of any taxable period that includes
(but does not end on) the Closing Date (a "STRADDLE PERIOD"),
Buyer shall prepare or cause to be prepared and file or cause
to be filed any such Tax Returns as required by applicable law
and in a manner consistent with past practices employed by
Seller with respect to such Tax Returns. Seller shall pay to
Buyer within fifteen (15) days after the date on which Taxes
are paid with respect to such periods an amount equal to the
portion of such Taxes which relates to the portion of such
taxable period ending on the Closing Date to the extent such
Taxes are not specifically reflected in the reserve for Tax
liabilities (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax
income) shown on the face of the Unaudited Business Financial
Statements. In order to apportion appropriately any Taxes
relating to any taxable year or period that includes the
Closing Date, the parties hereto shall, to the extent
permitted under applicable law, treat for all purposes the
Closing Date as the last day of the taxable year or period of
the Seller. In any case where applicable law does not permit
the parties to treat the Closing Date as the last day of the
taxable year or period, any portion of any such Tax that is
allocable to the portion of the period ending on the Closing
Date shall be:
(i) in the case of Taxes that are either (A) based upon
or related to income or receipts, or (B) imposed in
connection with any sale or other transfer or
assignment of property (real or personal, tangible or
intangible), deemed equal to the amount which would
be payable if the taxable year or period ended on the
Closing Date;
(ii) in the case of Taxes not described in subparagraph
(i) above that are imposed on a periodic basis and
measured by the level of any item, deemed to be the
amount of such Taxes for the entire relevant period
32
(or, in the case of such Taxes determined on an
arrears basis, the amount of such Taxes for the
immediate preceding period) multiplied by a fraction
the numerator of which is the number of calendar days
in the period ending on the Closing Date and the
denominator of which is the number of calendar days
in the entire relevant period; and
(iii) for purposes of determining such Taxes, exemptions,
relief, allowances or deductions that are calculated
on an annual basis shall be apportioned in the manner
specified in subparagraph (i) above. All
determinations necessary to give effect to the
foregoing allocations shall be made in a manner
consistent with prior practice of Simmons.
(c) Seller, on the one hand, and Buyer, on the other hand, shall
promptly notify the other parties upon receipt of any notice
of any Tax audit, assessment, claim or investigation (a "TAX
CLAIM") that involves the Tax liability of Simmons. The
failure promptly to give such notice shall not affect any
Indemnified Party's ability to seek indemnification hereunder
unless such failure has materially and adversely affected the
right of the Indemnifying Party to participate in and contest
the Tax Claim. With respect to any Tax Claim relating to Taxes
with respect solely to a tax period ending on or before the
Closing Date, Seller shall control all proceedings and may
make all decisions taken in connection with such Tax Claim.
(d) Buyer and Seller shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with
the filing of Tax Returns filed after the Closing Date and
with any audit, litigation, or other proceeding with respect
to Taxes; provided, however, that Buyer shall have final
authority with respect to any such proceeding other than those
described in Section 5.10(c). Such cooperation shall include
the retention and (upon the other party's request) the
provision of records and information which are relevant to any
such audit, litigation, or other proceeding and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material
provided under this Agreement. Notwithstanding the foregoing,
with respect to any audit, litigation, or other proceeding
relating to a Straddle Period, Buyer shall not enter into any
compromise or agree to settle any claim pursuant to such
proceeding without the written consent of Seller, which
consent shall not be unreasonably withheld. Seller and Buyer
agree (i) to retain all books and records with respect to tax
matters pertinent to Simmons relating to any taxable period
beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by Buyer
or Seller, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements
entered into with any taxing authority, and (ii) to give the
other party reasonable written notice prior to transferring,
destroying, or discarding any such books and records and, if
the other party so requests, Buyer or the Seller, as the case
may be, shall allow the other party to take possession of such
books and records.
33
(e) Buyer and Seller further agree, upon request, to use their
commercially reasonable efforts to obtain any certificate or
other document from any governmental authority or any other
person as may be necessary to mitigate, reduce, or eliminate
any Taxes that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
(f) All tax sharing agreements or similar agreements with respect
to or involving Simmons shall be terminated as of the Closing
Date and, after the Closing Date, Simmons shall not be bound
thereby or have any liability thereunder.
(g) At Buyer's option, Seller shall join with Buyer in making
joint elections under Codess. 338(h)(10) (and under any
similar provision of any state, local law and foreign law)
(collectively, the "SECTION 338(H)(10) ELECTION") with respect
to the purchase and sale of the stock of Simmons. Seller and
Buyer shall cooperate in good faith in drafting and making
final the Section 338(h)(10) Election and filings. Seller will
pay any Tax attributable to the making of the Section
338(h)(10) Election and will indemnify the Buyer and Simmons
against any costs or expenses arising out of failure to pay
such Tax. Buyer and Seller shall agree upon the allocation of
the "AGGREGATE DEEMED SALES PRICE" (as defined under
applicable Treasury Regulations) among the assets of Simmons.
Buyer and Seller shall use their respective best efforts to
agree upon such allocation no later than 180 days after the
Closing Date. Neither Buyer nor Seller (or any of their
respective affiliates) shall take any position on any Tax
Return or with any taxing authority that is inconsistent with
the allocation agreed upon by Buyer and the Seller. Buyer
shall prepare for filing all of the forms, information returns
and statements that may be required pursuant to Codess.
338(h)(10). Seller shall provide information that may be
required by the Buyer for the purpose of preparing such
returns, shall execute and file such returns as reasonably
requested by Buyer and shall file all other returns and tax
information on a basis that is consistent with the 338(h)(10)
Election and such returns.
(h) The amount of any refunds, credits or offsets of Taxes of
Simmons for any pre-Closing tax period shall be for the
account of Seller. The amount of any refunds, credits or
offsets of Taxes of Simmons for any taxable period beginning
after the Closing Date shall be for the account of Buyer. The
amount of any refunds, credit or offset of Taxes of Simmons
for any taxable period that begins before and ends after the
Closing Date shall be equitably apportioned between Seller and
Buyer. Each party shall forward, and shall cause its
affiliates to forward, to the party entitled to receive the
amount of a refund, credit or offset to Taxes pursuant to this
Section 5.10(h) the amount of such refund within 10 days after
such refund is received or such credit or offset is allowed or
applied against another tax liability, as the case may be.
34
(i) Seller and Buyer shall share equally all applicable
documentary, sales, use, stamp, registration and such other
Taxes, and all conveyance fees, recording charges and other
fees and charges (including any penalties and interest)
("TRANSFER TAXES") incurred in connection with consummation of
the transaction contemplated by this Agreement. For the
avoidance of doubt, Transfer Taxes shall not include any
income Taxes incurred as a result of the Section 338(h)(10)
Election contemplated by Section 5.10(g) of this Agreement.
5.11 LETTERS OF CREDIT AND GUARANTEES.
---------------------------------
Buyer shall, effective as of the Closing Date or as soon as
commercially practicable thereafter, cause the letters of credit,
guarantees and other credit enhancements given by Seller and its
Affiliates set forth on Schedule 5.11 hereof, to the extent they relate
to the Business or the Business Assets, to be replaced by letters of
credit, guarantees or other credit enhancements of Buyer and its
Affiliates so that Seller and its Affiliates shall have no further
obligation or liability thereunder. Buyer shall bear all expenses
arising after the Closing Date associated with such letters of credit,
guarantees and other credit enhancements given by Seller and its
Affiliates until replaced by Buyer.
5.12 SUPPLEMENTAL DISCLOSURE.
------------------------
Seller shall have the continuing obligation between the date of this
Agreement and the Closing Date to promptly supplement or amend the
schedules hereto with respect to any material matter hereafter arising
or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in
such schedules.
5.13 KNOWLEDGE OF BREACH.
--------------------
In the event that any employee, officer, director, representative or
agent of either Party, including, but not limited to, professional
advisors to either Party, becomes aware, on or before the Closing Date,
of any fact or circumstance which would entitle the other Party
("Claimant") to assert a claim or claims against the other Party
("Recipient") based, in whole or in part, upon the breach of any
representation, warranty, covenant or other agreement of Recipient
contained in this Agreement, Claimant shall, prior to the Closing Date,
advise Recipient in writing of such potential breach and Recipient
shall thereupon have the right to cure such breach within 30 days but
in no event later than Closing as may be extended, without liability to
Claimant or to any other party. Should Recipient fail to cure such
breach within 30 days, the Claimant may terminate this Agreement or
exercise its rights under the provisions of this Agreement, including,
without limitation those set forth in Article VII hereof.
35
5.14 DAMAGE OR DESTRUCTION.
----------------------
If any material assets included in the Business Assets shall be damaged
or destroyed by fire or other cause prior to the Closing Date, Seller
shall expeditiously notify Buyer and furnish to Buyer a written
statement of the amount of insurance, if any, payable on account
thereof. In the event of such damage or destruction, Buyer may elect
(a) to require that Seller use such insurance proceeds to restore or
replace such assets to the extent of such proceeds, (b) to renegotiate
the Purchase Price accordingly; or (c) in the event of material damage
or destruction to Business Assets, or the insurance proceeds are
insufficient to restore or replace such assets, to cancel, without
liability to Buyer or Seller, the transactions contemplated by this
Agreement.
5.15 EXCLUSIVE DEALING.
------------------
Prior to the termination of this Agreement, neither Seller nor any of
its Affiliates shall, directly or indirectly, conduct negotiations
with, or solicit, accept or approve any bids from, any firm, person,
corporation or other entity relating to the sale or transfer of the
Business Shares, Business or Simmons, including without limitation a
merger or sale of the assets of Simmons, or any investment in Simmons.
During such time period, Seller will not provide any information to
anyone with respect to any unsolicited inquiries, proposals or OFFERS.
ARTICLE VI
OTHER AGREEMENTS
6.1 TRANSITION SERVICES.
--------------------
On the Closing Date, Buyer and Seller shall enter into an agreement
(the "Transition Services Agreement"), mutually acceptable to both
parties, pursuant to which Seller shall agree to provide certain
facilities and services to Buyer for the ongoing operation of the
Business for a period not to exceed twelve (12) months after the
Closing Date, on the terms and conditions set forth in such Transition
Services Agreement.
6.2 RINGS, MOUNTING SYSTEMS, BASES AND AMMUNITION BUSINESS; TRADEMARK
-----------------------------------------------------------------
LICENSE.
--------
Buyer and Seller shall enter into the Trademark License pursuant to
which Buyer shall grant to Seller an exclusive perpetual, fully paid,
royalty-free license to use certain trademarks to design, manufacture,
market, sell, distribute and service (i) rings, mounting systems and
bases for use in the sporting optics business under the Simmons,
Redfield, Weaver and Grand Slam brand names, (ii) lens caps and polar
caps under the Weaver brand name, (iii) targets under the Redfield
brand name, and (iv) with respect to the "Grand Slam" trademark only,
in certain of the ammunition business. Seller's rights under the
36
Trademark License shall be exclusive even as to Buyer, except as
provided in the Trademark License. Effective upon the Closing, Seller
shall grant to Buyer the right to the first opportunity to purchase
Seller's business with respect to rings, mounting systems, bases, lens
caps and polar caps for sporting optics, if such business were ever to
become available by Seller, or the right to meet any other offer (the
details of which shall be provided to Buyer under a confidentiality
agreement) for such business. Buyer and Seller shall also enter into
the Supply Agreement.
ARTICLE VII
INDEMNIFICATION
7.1 SELLER PARENT'S AGREEMENT TO INDEMNIFY.
---------------------------------------
(a) Subject to the terms and conditions of this Article VII,
Seller Parent agrees to indemnify, defend and hold harmless
Buyer from and against all Liabilities suffered or incurred by
Buyer arising from, relating to or otherwise in respect of any
breach of this Agreement by Seller, Seller Parent or Simmons,
including, without limitation, (i) any representations or
warranties contained in Article III hereof, and (ii) any
breach by Seller or Seller Parent of any of its covenants in
Article V in this Agreement (collectively, "Buyer Claims").
(b) With respect to Section 7.1(a) above, no Buyer Claim shall be
asserted unless it is equal to or greater than $50,000 in
value. In calculating the amount of a Buyer Claim, no
individual claim of less than $25,000 shall be included and
the first $100,000 in the aggregate, of claims shall be
excluded from Buyer Claims. Likewise, with respect to
indemnification arising out of Section 7.1(a) above, in no
event shall the liability of Seller Parent exceed in the
aggregate an amount equal to 20% of the Purchase Price (as
adjusted pursuant to Section 2.3 hereof). Notwithstanding the
above, the forgoing limitations set forth in this Section
7.1(b) shall not apply to any Buyer Claim resulting from fraud
or any intentional misrepresentation by Seller, Simmons or
Seller Parent or failure by Seller, Simmons or Seller Parent
to perform its obligations under this Agreement or the Related
Agreements, including such failure by reason of an obstacle
intentionally created by Seller, Simmons or Seller Parent.
7.2 BUYER PARENT'S AGREEMENT TO INDEMNIFY.
--------------------------------------
(a) Subject to the terms and conditions of this Article VII,
Buyer Parent agrees to indemnify, defend and hold harmless
Seller from and against all Liabilities suffered or incurred
by Seller arising from, relating to or otherwise in respect
of any breach of this Agreement by Buyer or Buyer Parent,
including, without limitation, (i) any representations or
warranties contained in Article IV hereof, or (ii) any breach
by Buyer or Buyer Parent of any of its covenants in Article V
of this Agreement, or (iii) the operation of the Business
arising on or after the Closing Date (collectively, "Seller
Claims").
37
(b) With respect to Section 7.2(a) above, no Seller Claim shall be
asserted unless it is equal to or greater than $50,000 in
value. In calculating the amount of a Seller Claim, no
individual claim of less than $25,000 shall be included and
the first $100,000, in the aggregate, of claims shall be
excluded from Seller Claims. Likewise, with respect to
indemnification arising out of Section 7.2(a) above, in no
event shall the liability of Buyer Parent exceed in the
aggregate an amount equal to 20% of the Purchase Price (as
adjusted pursuant to Section 2.3 hereof). Notwithstanding the
above, the forgoing limitations set forth in this Section
7.2(b) shall not apply to any Seller Claim resulting from
fraud or any intentional misrepresentation by Buyer or Buyer
Parent or failure by Buyer or Buyer Parent to perform its
obligations under this Agreement or the Related Agreements,
including such failure by reason of an obstacle intentionally
created by Buyer or Buyer Parent.
7.3 PROCEDURES FOR RESOLUTION AND PAYMENT OF CLAIMS FOR INDEMNIFICATION.
--------------------------------------------------------------------
(a) Except as otherwise provided in this Agreement, in the event
(i) any third party or party hereto asserts a Claim with
respect to any matter as to which the indemnities in this
Agreement relate, the party against whom the Claim is asserted
(the "Indemnitee") shall give prompt written notice to the
other party (the "Indemnitor") in reasonable detail so that
the Indemnitor is or will be able to reasonably understand the
basis of the Claim; provided that the failure of the
Indemnitee to provide such notice shall not relieve the
Indemnitor of its obligations hereunder except to the extent
the Indemnitor is materially prejudiced thereby. Thereafter,
the Indemnitor shall have the right at its election to take
over the defense or settlement of the third party Claim at its
own expense by giving prompt notice to the Indemnitee;
provided that such notice includes an undertaking by
Indemnitor to hold the Indemnitee harmless from any expense or
liability arising from the Claim. If the Indemnitor does not
give such notice and does not proceed diligently so to defend
the third party Claim within 30 days after receipt of the
notice of the third party Claim, the Indemnitor shall be bound
by any defense or settlement that the Indemnitee may make as
to those Claims and shall reimburse the Indemnitee for its
Liabilities and expenses related to the defense or settlement
of the third party Claim. Subject to Indemnitor retaining
control of the Claim or settlement thereof, the Indemnitee
shall, at its option and expense, have the right to
participate in the defense of any such Claims defended by the
Indemnitor (except that Indemnitor shall not be responsible
for the fees and expenses of counsel to Indemnitee unless
agreed to in writing). The parties shall cooperate in
defending against any asserted third party Claims.
(b) Anything in this Section 7.3 to the contrary notwithstanding,
(i) if there is a reasonable probability that a third party
Claim may materially and adversely affect the Indemnitee other
than as a result of money damages or other money payments, the
Indemnitee shall have the right, at its own cost and expense,
to defend, compromise or settle such Claim; provided, however,
38
that if such Claim is settled without the Indemnitor's consent
(which consent shall not be unreasonably withheld or delayed),
the Indemnitee shall be deemed to have waived all rights
hereunder against the Indemnitor for money damages arising out
of such Claim, and (ii) the Indemnitor shall not, without the
written consent of the Indemnitee, settle or compromise any
Claim or consent to the entry of any judgment (A) which does
not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnitee a release from all
liability in respect to such Claim or (B) if such settlement,
compromise or consent involves the imposition of equitable
remedies or the imposition of any obligations on such
Indemnitee other than financial obligations for which such
Indemnitee will be fully indemnified hereunder.
7.4 EXCLUSIVE REMEDY.
-----------------
The indemnification provided in this Article shall be the sole and
exclusive post-Closing Date remedy available to the Parties hereto for
any claim under this Agreement (other than equitable relief if
available) for breaches of representations, warranties and covenants.
7.5 SURVIVAL PERIODS.
-----------------
All representations and warranties contained or made in, or in
connection with, this Agreement or in any Schedule, or any Collateral
Document delivered in connection herewith, shall survive for a period
of eighteen (18) months following the Closing Date; provided, however,
that (i) the representations and warranties contained in Section 3.1
(Existence, Power, Authorization and Qualifications of Seller), Section
3.2 (Capitalization), Section 3.13 (Tax Matters), and Section 3.19
(Brokers) shall survive until the expiration of the applicable statue
of limitations (the "Indemnity Period") and (ii) the representations
and warranties contained in Section 3.24 (Environmental Matters) shall
survive for a period of five years following the Closing Date. No claim
for indemnification based on a breach of a representation or warranty
may be asserted after the expiration of the applicable Indemnity
Period. Notwithstanding anything herein to the contrary, any
representation or warranty which is the subject of a claim which is
asserted in writing prior to the expiration of the Indemnity Period
shall survive with respect to such claim or any dispute with respect
thereto until the final resolution thereof.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE
OBLIGATION OF BUYER TO CLOSE
The obligation of Buyer to consummate its purchase of the Business Shares from
Seller under this Agreement is subject to the fulfillment, prior to or on the
Closing Date, of each of the following conditions precedent (any one or more of
which may be waived by Buyer in writing):
39
8.1 FULFILLMENT OF COVENANTS.
- --- -------------------------
Seller shall have performed and complied in all material respects with
all covenants, obligations and agreements required by this Agreement to
be performed or complied with by it at or prior to the Closing Date.
8.2 REPRESENTATION AND WARRANTIES.
------------------------------
The representations and warranties of Seller contained in this
Agreement shall be true and correct on the date when made and shall
also be true and correct on the Closing Date as if made on such date,
except for and changes expressly permitted by the terms of this
Agreement and except to the extent such representations and warranties
by their terms speak of an earlier date (in which case they shall have
been true and correct as of such earlier date).
8.3 NO CLAIMS.
----------
There shall not be threatened, instituted or pending any Claim by or
before any court or Governmental Body or other regulatory or
administrative agency or commission putting into effect, requesting or
looking toward an order, judgment or decree which (a) restrains,
prohibits, restricts or limits the consummation of the transactions
contemplated hereby, or (b) would have a Material Adverse Effect.
8.4 Between the date of this Agreement and the Closing Date, there shall
not have been any Material Adverse Effect.
8.5 Buyer's receipt of funding in an amount sufficient to pay the Purchase
Price on terms satisfactory to Meade in its sole and absolute
discretion.
8.6 The receipt by Buyer's Board of Directors of a written fairness opinion
from Buyer's financial advisors stating that the Purchase Price, or
consideration to be paid to Seller for the Business Shares, is fair,
from a financial point of view, to Buyer's stockholders.
8.7 The receipt by Buyer's Board of Directors of written assurances from
Buyer's independent public accountant, to the effect that such
accountant can satisfactorily complete, following the Closing, audits
of Simmons' financial records for the three most recently completed
fiscal years and prepare complete consolidated and consolidating
financial statements for Simmons prepared in accordance with generally
accepted accounting principles within the timeframes required by
applicable securities laws and regulations.
8.8 DOCUMENTS.
----------
Buyer, or as may be designated prior to Closing by Buyer, an Affiliate
or Affiliates of Buyer, shall receive executed copies of the following
documents from Seller on the Closing Date:
40
(a) a certificate representing the Business Shares duly endorsed
for transfer by Seller or accompanied by a duly executed stock
power;
(b) original releases of, or written authorizations from Seller's
creditors (or the relevant debtor's creditors) to release, all
Liens on the Business Assets (other than Permitted Liens);
(c) a certificate of Seller in form and substance reasonably
acceptable to Buyer, dated the Closing Date, stating that the
conditions precedent set forth in Sections 8.1, 8.2 and 8.4 of
this Agreement have been satisfied;
(d) a copy of the text of the resolutions adopted by the board of
directors of Seller authorizing the execution, delivery and
performance of this Agreement and the consummation of all of
the transactions contemplated by this Agreement; together with
a certificate or certificates executed on behalf of Seller by
their respective corporate secretaries certifying to Buyer
that each such copy is correct and complete, and that such
resolutions were duly adopted and have not been amended or
rescinded in any respect;
(e) resignations (effective as of the Closing Date) from all of
the directors of the Simmons and such officers of Simmons as
Buyer shall have requested prior to the Closing Date;
(f) a copy of the certificate or articles of incorporation of
Seller and Simmons, each duly certified as of a recent date by
the Secretary of State of Delaware;
(g) the minute books, stock transfer records and corporate seal
(if in existence) of Simmons and all other materials related
to its corporate administration;
(h) the Supply Agreement; and
(i) the Transition Services Agreement.
ARTICLE IX
CONDITIONS PRECEDENT TO THE
OBLIGATION OF SELLER TO CLOSE
The obligation of Seller to consummate the sale of the Business Shares to Buyer
under the terms of this Agreement is subject to the fulfillment, prior to or on
the Closing Date, of each of the following conditions precedent (any one or more
of which may be waived by Seller in writing).
41
9.1 FULFILLMENT OF COVENANTS.
-------------------------
Buyer shall have performed and complied in all material respects with
each of its covenants, obligations and agreements required by this
Agreement to be performed or complied with by it at or prior to the
Closing Date.
9.2 REPRESENTATION AND WARRANTIES.
------------------------------
The representations and warranties of Buyer contained in this Agreement
shall be true and correct when made and shall also be true and correct
on the Closing Date as if made on such date, except for any changes
expressly permitted by the terms of this agreement and except to the
extent such representations and warranties by their terms speak of an
earlier date (in which case they shall have been true and correct as of
such earlier date).
9.3 NO CLAIMS.
----------
There shall not be threatened, instituted or pending any Claim by or
before any court or Governmental Body or other regulatory or
administrative agency or commission putting into effect, requesting or
looking toward an order, judgment or decree which (a) restrains,
prohibits, restricts or limits the consummation of the transactions
contemplated hereby, or (b) would have a Material Adverse Effect.
9.4 PAYMENT OF PURCHASE PRICE.
--------------------------
The payment of the Purchase Price by Buyer by wire transfer in
immediately available funds to an account designated by Seller.
9.5 DOCUMENTS.
----------
Seller shall have received executed copies of the following documents
from Buyer, or as may be designated prior to Closing by Buyer, an
Affiliate or Affiliates of Buyer on the Closing Date:
(a) a certificate of Buyer in form and substance reasonably
acceptable to Seller, dated the Closing Date, stating that the
conditions precedent set forth in Sections 9.1and 9.2 of this
Agreement have been satisfied;
(b) a copy of the text of the resolutions adopted by the board of
directors of Buyer authorizing the execution, delivery and
performance of this Agreement and the consummation of all of
the transactions contemplated by this Agreement; along with a
certificate or certificates executed on behalf of Buyer by its
corporate secretary certifying to Seller that such copy is
correct and complete, and that such resolutions were duly
adopted and have not been amended or rescinded;
(c) the Trademark License;
(d) the Supply Agreement; and
42
(e) the Transition Services Agreement.
ARTICLE X
MISCELLANEOUS
10.1 REFORMATION AND SEVERABILITY.
-----------------------------
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term of
this Agreement, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement
a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and
enforceable consistent with the intentions of the parties, and the
legality, validity and enforceability of the remaining provisions shall
not in any way be affected or impaired.
10.2 NOTICES.
--------
All notices, demands and other communications to be given or delivered
under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered
or three business days after being mailed by first class U.S. mail,
return receipt requested, or when receipt is acknowledged, if sent by
facsimile, telecopy or other electronic transmission device. Notices,
demands and communications to Buyer and Seller will, unless another
address is specified in writing, be sent to the address indicated
below:
NOTICES TO SELLER:
ATK Commercial Ammunition Company Inc.
c/o Alliant Techsystems Inc.
5050 Lincoln Drive
Edina, Minnesota 55436
Attention: General Counsel
Facsimile: (952) 351-3027
NOTICES TO BUYER:
Meade Instruments Corporation
6001 Oak Canyon
Irvine, California 92618-5200
Attention: Legal Department
Facsimile: (949) 451-1460
WITH A COPY TO:
J. Jay Herron O'Melveny & Myers LLP
114 Pacifica, Suite 100 Irvine, CA
92618-3318
43
10.3 HEADINGS AND INTERPRETATIONS.
-----------------------------
The headings of Articles and Sections contained in this Agreement are
for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.
10.4 WAIVER.
-------
The failure of any party to insist, in any one or more instances, upon
performance of any of the terms, covenants or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any
right or claim granted or arising hereunder or of the future
performance of any such term, covenant, or condition, and such failure
shall in no way effect the validity of this Agreement or the rights and
obligations of the parties hereto. Additionally, no waiver of any
breach of this Agreement shall be a waiver of any subsequent breach.
10.5 BULK SALES ACT.
---------------
Buyer waives compliance by Seller with any bulk sales law which may be
applicable to the transactions contemplated by this Agreement;
provided, however that Seller agrees to indemnify Buyer and hold it
harmless from any loss, damage, liability, and expenses (including
reasonable legal fees) resulting from such noncompliance.
10.6 CHOICE OF LAW, JURISDICTION AND VENUE.
--------------------------------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT
OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF.
10.7 COUNTERPARTS.
-------------
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, and all of which together
shall constitute one and the same instrument notwithstanding that any
parties are not signatories to each counterpart.
10.8 ASSIGNABILITY AND BINDING EFFECT.
---------------------------------
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
This Agreement, together with the Related Agreements and the rights and
obligations hereunder may not be assigned by either party without the
express written consent of the other, which consent shall not be
44
unreasonably withheld. Nothing in this Section 10.8 shall operate or be
construed as a restriction on the assignability of any of the Business
Assets by Buyer after the Closing Date, and Seller hereby consents to
any such assignment of the Business Assets or any portion thereof
(including, without limitation, any and all Business Contracts or
licenses that comprise the Business Assets).
10.9 AMENDMENTS.
-----------
This Agreement may not be modified, amended or supplemented except by
an agreement in writing signed by each of the parties hereto.
10.10 THIRD PARTIES.
--------------
Nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any person other than the parties hereto and
their successors or permitted assigns, any rights or remedies under or
by reason of this Agreement.
10.11 NUMBER AND GENDER.
------------------
When the context so requires in this Agreement, words of gender shall
include either or both genders and the singular number shall include
the plural.
10.12 ENTIRE AGREEMENT.
-----------------
This Agreement, with the corporate guarantee, and the Related
Agreements together with the Schedules and Exhibits hereto and thereto,
shall constitute the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and shall supersede all
prior negotiations, understandings and agreements.
10.13 CONSTRUCTION.
-------------
The parties have participated jointly in the negotiation and drafting
of this Agreement. If 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 federal,
state, local, or foreign "law" shall be deemed also to refer to all
rules and regulations promulgated thereunder. The terms "including" is
not a limitation on that general statement and shall mean "including
without limitation." All references to Articles, Sections, Schedules
and Exhibits are to Articles, Sections, Schedules and Exhibits of this
Agreement.
10.14 EFFECTIVE DATE.
---------------
This Agreement shall become effective upon signature by both parties.
45
10.15 TERMINATION.
------------
This Agreement may be terminated at any time prior to the Closing Date:
(a) by the mutual written consent of Buyer and Seller;
(b) by Buyer, upon delivery of written notice to Seller if any of
the conditions to the Closing set forth in Article VIII shall
have become incapable of fulfillment and shall not have been
waived in writing by Buyer;
(c) by Seller, upon delivery of written notice to Buyer if any of
the conditions to the Closing set forth in Article IX have
become incapable of fulfillment and shall not have been waived
in writing by Seller; or
(d) by Buyer or Seller if the Closing Date shall not have occurred
by October 9, 2002.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.
SIGNATURE PAGE FOLLOWS.]
46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
ATK COMMERCIAL AMMUNITION
COMPANY INC.
By: /S/ Perri A. Hite
------------------------------------
Name: Perri A. Hite
------------------------------------
Title: Vice President and Secretary
------------------------------------
ALLIANT TECHSYSTEMS INC.
By: /S/ Eric S. Rangen
------------------------------------
Name: Eric S. Rangen
------------------------------------
Title: Vice President and Chief Financial Officer
------------------------------------
MTSC HOLDINGS, INC.
By: /S/ John C. Diebel
------------------------------------
Name: John C. Diebel
------------------------------------
Title: Chairman and Chief Executive Officer
------------------------------------
MEADE INSTRUMENTS CORP.
By: /S/ John C. Diebel
------------------------------------
Name: John C. Diebel
------------------------------------
Title: Chairman and Chief Executive Officer
------------------------------------
47
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Trademark License Agreement
Exhibit B Transition Services Agreement
Exhibit C Supply Agreement
Schedule 1.29 Key Employees
Schedule 2.3(a) Initial Balance Sheet
Schedule 3.4 Required Seller Consents
Schedule 3.6 Undisclosed Liabilities
Schedule 3.7 Non-ordinary or Unusual Course Developments
Schedule 3.8 Real Property Exceptions
Schedule 3.9(a) Assets Liens and Exceptions to Good and Marketable Title
Schedule 3.10 Accounts Receivable Exceptions
Schedule 3.11 Inventory Exceptions
Schedule 3.12(a) Summary of All Patents, Trademarks and Copyrights
Schedule 3.12(b) Exceptions to Ownership of Intellectual Property
Schedule 3.12(c) Exceptions to Intellectual Property
Schedule 3.12(d) Exceptions to Intellectual Property
Schedule 3.12(e) No Infringement Claims or Litigation
Schedule 3.13(c) Tax Returns
Schedule 3.13(d) Exceptions to Income Tax Return
Schedule 3.14 Threatened or Pending Litigation
Schedule 3.15 Warranty or Indemnity Provisions
Schedule 3.16 Schedule of Insurance
Schedule 3.17 Listing of Material Contracts
Schedule 3.20(a) Employee List
Schedule 3.20(c) Exceptions to Employee Issues
Schedule 3.21(a) Employee Benefit Plans
Schedule 3.22 Affiliate Transactions
Schedule 3.23(b) Governmental Licenses
Schedule 3.24 Environmental