UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) FEBRUARY 27, 1998
BACOU USA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-28040 05-0470688
(Commission File Number) (IRS Employer Identification No.)
10 THURBER BOULEVARD, SMITHFIELD, RI 02917
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 401-233-0333
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 27, 1998, Bacou USA Safety, Inc. ("Bacou Safety"), a
wholly-owned subsidiary of Bacou USA, Inc. ("Bacou"), consummated the following
transactions (collectively, the "Transactions"): (i) acquired substantially all
of the assets and assumed substantially all of the liabilities of Howard S.
Leight & Associates (d/b/a Howard Leight Industries, Inc.) ("Leight") pursuant
to an Asset Purchase Agreement with Leight dated as of December 31, 1997 and a
First Amendment to Asset Purchase Agreement dated as of February 27, 1998, (ii)
acquired all of the capital stock of Howard Leight de Mexico S.A. de C.V.
("Leight Mexico") (except for one share of capital stock which was purchased by
Bacou in order to satisfy a statutory requirement that Leight Mexico have two
stockholders) from Leight and Howard S. Leight ("H. Leight") pursuant to the
terms of a Stock Purchase Agreement dated February 27, 1998 by and among Bacou
Safety, Leight and H. Leight and (iii) acquired all of the capital stock of
Howard Leight (Europe) Limited ("Leight Europe") from H. Leight and John Dean
pursuant to a Stock Purchase Agreement dated as of February 27, 1998 among Bacou
Safety, Leight, H. Leight and John Dean.
Leight, together with Leight Mexico and Leight Europe design, manufacture
and sell a complete line of hearing protection products, including disposable
ear plugs, reusable ear plugs and ear muffs. Leight's principal business
location is in San Diego, California. Assets acquired include physical property,
intellectual property and working capital. Bacou intends to continue to use
acquired physical property for the manufacture of hearing protection products.
In February 1998, the Company entered into a Credit Line Agreement (the
"BNP Credit Line") with Banque Nationale de Paris ("BNP"). The BNP Credit Line
provides for borrowings in the amount of $110.0 million for the purpose of
financing the acquisition of Leight, bears interest at an annual rate equal to
three month LIBOR plus 0.3%, requires principal repayments in equal quarterly
installments over seven years, and requires interest payments quarterly. In
addition, the Company is required to pay quarterly a commitment fee equal to
0.2% per annum on the outstanding balance. As a one-time financing fee, the
Company paid BNP 0.08% or $88,000 plus documentary costs.
The Company paid cash consideration of $125.9 million in connection with
the closing of the Transactions, $5.9 million of which represented the
refinancing of Leight indebtedness. Funding of the cash consideration was
provided by the following: (i) an advance of $110 million under the BNP Credit
Line; (ii) an advance of $14.3 million under Bacou's revolving credit line
facility with Citizens Bank of Rhode Island; and (iii) the balance from Bacou's
cash balances.
Upon consummation of the Transactions, H. Leight entered into a consulting
agreement with Bacou and joined the Boards of Directors of Bacou and Bacou S.A.
H. Leight was the founder and sole stockholder of Leight. Bacou S.A. is a French
Societe Anonyme based in Valence, France and is the majority shareholder of
Bacou, currently holding approximately 71.7 percent of the issued and
outstanding shares of Bacou. Since 1993, Bacou S.A. has been the exclusive
distributor of Leight products in France. Total sales by Leight to Bacou S.A. in
1997 were less than two percent of the total sales of Leight in 1997.
<PAGE>
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired
To be filed by amendment within 60 days of the filing hereof pursuant
to Item 7 of Form 8-K
(b) Pro Forma Financial Information
To be filed by amendment within 60 days of the filing hereof pursuant
to Item 7 of Form 8-K
(c) Exhibits
See exhibit index annexed hereto
ITEM 601
EXHIBIT TABLE REFERENCE EXHIBIT TITLE
Exhibit 2(a) Asset Purchase Agreement dated
as of December 31, 1997 between
Bacou USA Safety, Inc. ("Bacou
Safety") and Howard S. Leight &
Associates, Inc. (d/b/a Howard
Leight Industries, Inc.) ("Leight")
Exhibit 2(b) Letter Agreement by and between
Howard S. Leight ("H. Leight") and
Bacou USA, Inc. ("Bacou")
Exhibit 2(c) Letter Agreement by and among H.
Leight, Bacou, S.A. and Engineering
Bacou S.A.
Exhibit 2(d) First Amendment to Asset Purchase
Agreement dated as of February 27,
1998
Exhibit 2(e) Stock Purchase Agreement dated as
of February 27, 1998 among Bacou
Safety, Leight, H. Leight and John
Dean pertaining to the acquisition
of the stock of Howard Leight
(Europe) Limited
Exhibit 2(f) Stock Purchase Agreement dated as
of February 27, 1998 among Bacou
Safety, Leight and H. Leight
pertaining to the acquisition of
the stock of Howard Leight de
Mexico S.A. de C.V.
Exhibit 10(a) Credit Line from Banque Nationale
de Paris dated February 19, 1998
("Credit Line")
Exhibit 10(b) Appendix 3 to Credit Line
Exhibit 99(a) Employment Agreement dated as of
February 27, 1998 between John Dean
and Bacou USA Safety, Inc.
Exhibit 99(b) Employment Agreement dated as of
February 27, 1998 between Robert
Hanover and Bacou USA Safety, Inc.
Exhibit 99(c) Employment Agreement dated as of
February 27, 1998 between Ken David
Meyers and Bacou USA Safety, Inc.
Exhibit 99(d) Employment Agreement dated as of
February 27, 1998 between Thomas A.
Wagner and Bacou USA Safety, Inc.
Exhibit 99(e) Consultant Agreement dated as of
February 27, 1998 between Howard S.
Leight and Bacou USA Safety, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
BACOU USA, INC.
Registrant
By:/S/ PHILIP B. BARR
----------------------------------
Philip B. Barr
Executive Vice President and
Chief Financial Officer
Dated: March 13, 1998
Exhibit 2(a)
ASSET PURCHASE AGREEMENT
Between
BACOU USA SAFETY, INC.,
a wholly-owned Subsidiary of Bacou USA, Inc.
and
HOWARD S. LEIGHT & ASSOCIATES, INC.
d/b/a Howard Leight Industries, Inc.
Dated as of December 31, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I - SALE AND PURCHASE OF THE ASSETS...................................1
1.1 ASSETS................................................................1
1.2 EXCLUDED ASSETS.......................................................3
1.3 FOREIGN ACQUISITIONS..................................................3
1.4 HEREOF, HEREIN, ETC...................................................4
1.5 COMPUTATION OF TIME PERIODS...........................................4
1.6 ACCOUNTING TERMS......................................................4
ARTICLE II - THE CLOSING......................................................4
2.1 PLACE AND DATE........................................................4
2.2 PURCHASE PRICE........................................................5
2.3 CONTINGENT PURCHASE PRICE.............................................5
2.4 ALLOCATION OF PURCHASE PRICE..........................................5
2.5 ASSUMPTION OF LIABILITIES.............................................6
2.6 EXCLUDED LIABILITIES..................................................6
2.7 CONSENT OF THIRD PARTIES..............................................7
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER........................8
3.1 ORGANIZATION..........................................................8
3.2 AUTHORIZED CAPITALIZATION; OUTSTANDING STOCK..........................8
3.3 SUBSIDIARIES..........................................................8
3.4 AUTHORITY; BINDING EFFECT.............................................8
3.5 NON-CONTRAVENTION.....................................................9
3.6 FINANCIAL STATEMENTS..................................................9
3.7 INTERIM CHANGES......................................................10
3.8 OWNED AND LEASED PROPERTY............................................12
3.9 ENVIRONMENTAL MATTERS................................................14
3.10 INTELLECTUAL PROPERTY RIGHTS........................................16
3.11 LITIGATION..........................................................17
3.12 TAXES...............................................................18
3.13 COMPLIANCE WITH APPLICABLE LAW......................................19
3.14 CONTRACTS...........................................................20
3.15 BENEFIT PLANS.......................................................21
3.16 TRANSACTIONS WITH AFFILIATES........................................23
3.17 INSURANCE...........................................................23
3.18 LABOR RELATIONS.....................................................24
3.19 LOCATION OF OFF SITE ASSETS.........................................24
3.20 INVENTORIES.........................................................24
3.21 CUSTOMERS...........................................................25
3.22 SUPPLIERS; RAW MATERIALS............................................25
3.23 ABSENCE OF CERTAIN BUSINESS PRACTICES...............................25
3.24 CONFIDENTIALITY.....................................................26
3.25 NO GUARANTEES.......................................................26
3.26 RECORDS.............................................................26
3.27 BROKERS, FINDERS, ETC...............................................26
3.28 BUSINESS DESCRIPTION................................................26
3.29 DISCLOSURE..........................................................26
3.30 FOREIGN SUBSIDIARIES................................................27
3.31 RECEIVABLES.........................................................27
3.32 AGENTS..............................................................27
3.33 WARRANTY AND PRODUCT LIABILITY CLAIMS...............................27
3.34 NO OTHER AGREEMENTS TO SELL.........................................28
3.35 COPIES OF DOCUMENTS.................................................28
3.36 OFFICERS, DIRECTORS AND KEY EMPLOYEES...............................28
3.37. YEAR 2000 COMPATIBILITY............................................28
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER.........................29
4.1 ORGANIZATION.........................................................29
4.2 AUTHORITY; BINDING EFFECT............................................29
4.3 BROKERS, FINDERS, ETC................................................29
4.4 FINANCING............................................................29
ARTICLE V - FURTHER AGREEMENTS OF THE COMPANY................................29
5.1 CONDUCT OF BUSINESS..................................................30
5.2 NO SOLICITATION......................................................31
5.3 ACCESS AND INFORMATION...............................................31
5.4 FINANCIAL STATEMENTS.................................................31
5.5 PUBLIC ANNOUNCEMENTS.................................................32
5.6 FURTHER ACTIONS......................................................32
5.7 FURTHER ASSURANCES...................................................32
5.8 LIABILITY FOR TRANSFER TAXES.........................................33
5.9 CERTIFICATES OF TAX AUTHORITIES......................................33
5.10 USE OF BUSINESS NAME................................................33
5.11 ENVIRONMENTAL ASSESSMENT............................................33
5.12 BANK ACCOUNTS.......................................................33
ARTICLE VI - FURTHER AGREEMENTS OF THE BUYER.................................34
6.1 PUBLIC ANNOUNCEMENTS.................................................34
6.2 FURTHER ACTIONS......................................................34
6.3 FURTHER ASSURANCES...................................................34
6.4 POST CLOSING PAYMENT.....................................................35
ARTICLE VII - FOREIGN ACQUISITION AGREEMENT; COOPERATION.....................35
7.1 FOREIGN ACQUISITION AGREEMENTS; FOREIGN CLOSINGS.....................35
7.2 COOPERATION..........................................................35
ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF EACH PARTY.......................36
8.1 HSR ACT NOTIFICATION.................................................36
8.2 NO INJUNCTION, ETC...................................................36
ARTICLE IX - CONDITIONS TO OBLIGATIONS OF THE BUYER..........................36
9.1 REPRESENTATIONS; PERFORMANCE, ETC....................................36
9.2 FOREIGN CLOSINGS.....................................................37
9.3 CONSENTS.............................................................37
9.4 NO MATERIAL ADVERSE EFFECT...........................................37
9.5 CONSULTING AND NON-COMPETITION AGREEMENTS............................37
9.6 SUBSEQUENT FINANCIAL STATEMENTS......................................37
9.7 OPINION OF COUNSEL...................................................37
9.8 CORPORATE PROCEEDINGS................................................38
9.9 U.S. TRANSFER DOCUMENTS..............................................38
9.10 ENVIRONMENTAL ASSESSMENT............................................38
9.11 TITLE POLICIES......................................................39
9.12 SURVEYS.............................................................39
9.13 CONSENTS AND ESTOPPELS..............................................39
9.14 FIRPTA CERTIFICATE..................................................40
9.15 OPTION TO PURCHASE ADJACENT LOT.....................................40
ARTICLE X - CONDITIONS TO OBLIGATIONS OF THE SELLER..........................40
10.1 REPRESENTATIONS, PERFORMANCE. ETC...................................40
10.2 ASSUMPTION AGREEMENT................................................41
10.3 OPINION OF COUNSEL..................................................41
10.4 CORPORATE PROCEEDINGS...............................................41
10.5 FOREIGN CLOSINGS....................................................41
10.6 CONSENTS AND APPROVALS..............................................41
10.7 COLLATERAL AGREEMENTS...............................................41
10.8 RECEIPT OF PURCHASE PRICE...........................................41
ARTICLE XI - EMPLOYEES AND EMPLOYEE BENEFIT PLANS............................41
11.1 EMPLOYMENT OF THE COMPANY'S EMPLOYEES...............................41
11.2 PENSION BENEFIT PLANS...............................................42
11.3 EMPLOYMENT TAXES....................................................42
ARTICLE XII - TERMINATION....................................................43
12.1 TERMINATION.........................................................43
12.2 EFFECT OF TERMINATION...............................................43
ARTICLE XIII - REMEDIES......................................................44
13.1 REMEDIES............................................................44
13.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.....................45
ARTICLE XIV - DEFINITIONS, MISCELLANEOUS.....................................45
14.1 DEFINITION OF CERTAIN TERMS.........................................45
ARTICLE XV - MISCELLANEOUS...................................................56
15.1 EXPENSES............................................................56
15.2 SEVERABILITY........................................................56
15.3 NOTICES.............................................................56
15.4 HEADINGS............................................................57
15.5 ENTIRE AGREEMENT....................................................58
15.6 COUNTERPARTS........................................................58
15.7 GOVERNING LAW, ETC..................................................58
15.8 BINDING EFFECT......................................................58
15.9 ASSIGNMENT..........................................................58
15.10 NO THIRD PARTY BENEFICIARIES.......................................58
15.11 AMENDMENT; WAIVERS, ETC............................................58
15.12 FOREIGN CURRENCIES.................................................59
15.13 BULK SALES COMPLIANCE..............................................59
15.14 ARBITRATION........................................................59
<PAGE>
SCHEDULES AND EXHIBITS
Schedule 1.2 Excluded Assets
Schedule 2.5(a) Liabilities and Obligations (Indebtedness)
Schedule 3.1 Organization
Schedule 3.2 Authorized Capitalization; Outstanding Stock
Schedule 3.3 Subsidiaries
Schedule 3.5 Non-Contravention
Schedule 3.6(a) Audited Financial Statements
Schedule 3.6(b) Interim Financial Statements
Schedule 3.6(c) Other Liabilities as of December 31, 1996
Schedule 3.7 Interim Changes
Schedule 3.8(a) Good Title
Schedule 3.8(b) Leases
Schedule 3.8(d) Owner Property
Schedule 3.8(e) Title Insurance Policies, Surveys, Flood Hazard
Schedule 3.8(g) Right of First Refusal
Schedule 3.9(a) Environmental Matters (Permits)
Schedule 3.9(b) Environmental Matters (No Violations)
Schedule 3.9(c) Environmental Matters (No Actions)
Schedule 3.9(d) Environmental Matters (Other)
Schedule 3.10(a) Intellectual Property Rights (Title)
Schedule 3.10(d) Intellectual Property Rights (Licensing Arrangements)
Schedule 3.10(e) Intellectual Property Rights (No Litigation)
Schedule 3.11 Litigation
Schedule 3.12(a) Taxes
Schedule 3.12(c) Taxes
Schedule 3.12(d) Taxes (Governmental Authority)
Schedule 3.12(f) Taxes (Litigation)
Schedule 3.13(b) Compliance with Applicable Law
Schedule 3.14(a) Contracts
Schedule 3.14(c) Contracts (Defaults)
Schedule 3.15 Benefit Plans
Schedule 3.15(f) Benefit Plans (Parachute Payment)
Schedule 3.15(g) Benefit Plans (Enhanced Benefit)
Schedule 3.16 Transactions with Affiliates
Schedule 3.17 Insurance
Schedule 3.18(a) Labor Relations
Schedule 3.18(b) Labor Relations
Schedule 3.19 Off-site Assets
Schedule 3.20 Inventories
Schedule 3.21 Customers
Schedule 3.22 Suppliers; Raw Materials
Schedule 3.23 Absence of Certain Business Practices
Schedule 3.24 Confidentiality
Schedule 3.25 Letters of Credit, etc.
Schedule 3.28 Business Description
Schedule 3.31 Receivables
Schedule 3.33(a) Warranty and Product Liability Claims
Schedule 3.33(b) Warranty and Product Liability Claims
Schedule 3.36 Officers; Directors and Key Employees
Schedule 14 Senior Management Employees; Excluded Employees
Exhibit A Form of Escrow Agreement
Exhibit B Form of Consulting and Non-Competition Agreement
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of December 31, 1997, between Bacou USA
Safety, Inc., a Delaware corporation (the "Buyer") and a wholly-owned subsidiary
of Bacou USA, Inc. ("Bacou"), and Howard S. Leight & Associates, Inc., a
California corporation ("Seller" or "Company"), d/b/a Howard Leight Industries,
Inc.
W I T N E S S E T H:
WHEREAS, Seller is in the business of manufacturing and marketing hearing
protection and other products in the United States and throughout the world,
directly and through domestic and foreign subsidiaries of Seller, identified on
Schedule 3.3 hereto, which Foreign Subsidiaries are to transfer Foreign Assets
(as such term and each other capitalized term used herein without definition is
defined in Article 14) to the Buyer (or another Buyer Party) pursuant to a
Foreign Acquisition Agreement (the "Subsidiaries" and together with Seller, the
"Sellers"); and
WHEREAS, the Buyer wishes to purchase or acquire (directly or indirectly
through subsidiaries) from Sellers and the Foreign Subsidiaries, and Sellers
wish to sell, assign and transfer to the Buyer, substantially all of the assets
and properties of Sellers, other than the Excluded Assets, held in connection
with, necessary for, or material to the business and operations of the Sellers
and the Buyer has agreed to assume (directly or indirectly through its
subsidiaries) the Assumed Liabilities, all for the purchase price and upon the
terms and subject to the conditions hereinafter set forth; and
WHEREAS, concurrently with or as promptly as practicable following the
execution and delivery of this Agreement, each of the Foreign Subsidiaries will
enter into a Foreign Acquisition Agreement and certain related agreements with
one or more of the Buyer Parties collectively providing for the purchase or
acquisition, directly or indirectly, of all of the Foreign Assets, for the
provision of certain transitional services and for certain other arrangements
between the Foreign Subsidiaries and one or more of the Buyer Parties;
NOW, THEREFORE, in consideration of the mutual covenants, representations
and warranties made herein, and of the mutual benefits to be derived hereby, the
parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF THE ASSETS
1.1 ASSETS. Subject to and upon the terms and conditions set forth in this
Agreement, at the respective Closings, the Sellers will sell, transfer, convey,
assign and deliver to the Buyer Parties, and the Buyer Parties will purchase or
acquire from the Sellers, all right, title and interest of the Sellers in and to
the properties, assets and rights of every nature, kind and description,
tangible and intangible (including goodwill), whether real, personal or mixed,
whether accrued, contingent or otherwise and whether now existing or hereinafter
acquired which are owned by the Sellers or its Affiliates and utilized in the
Operations (other than the Excluded Assets) as the same may exist on the Closing
Date (collectively, the "Assets"), including without limitation all those items
in the following categories:
(a) all machinery, equipment, furniture, furnishings,
automobiles, trucks, vehicles, tools, dies, molds and parts and
similar property (including, but not limited to, any of the
foregoing subject to any conditional sales or title retention
agreements in favor of any other Person);
(b) all inventories of raw materials, work in process,
finished products, goods, spare parts, replacement and component
parts, and office and other supplies (collectively, the
"Inventories"), including Inventories held at any location
controlled by any Seller and Inventories previously purchased and
in transit to any Seller at such locations;
(c) all rights in and to products sold or leased (including,
but not limited to, products hereafter returned or repossessed
and unpaid sellers' rights of recision, replevin, reclamation and
rights to stoppage in transit);
(d) all rights (including but not limited to any and all
Intellectual Property rights) in and to the products sold or
leased and in and to any products or other Intellectual Property
rights under research or development prior to or on the Closing
Date;
(e) all of the rights of the Sellers under all contracts,
arrangements, licenses, leases and other agreements, including,
without limitation, any right to receive payment for products
sold or services rendered, and to receive goods and services,
pursuant to such agreements and to assert claims and take other
rightful actions in respect of breaches, defaults and other
violations of such contracts, arrangements, licenses, leases and
other agreements and otherwise;
(f) all credits, prepaid expenses, deferred charges, advance
payments, security deposits and prepaid items;
(g) all notes and accounts receivable held by the Sellers
and all notes, bonds and other evidences of indebtedness of and
rights to receive payments from any Person held by the Sellers;
(h) all Intellectual Property and all rights thereunder or
in respect thereof, including, but not limited to, rights to sue
for and remedies against past, present and future infringements
thereof, and rights of priority and protection of interests
therein under the laws of any jurisdiction worldwide and all
tangible embodiments thereof (together with all Intellectual
Property rights included in the other clauses of this Section
1.1, the "Intellectual Property Assets");
(i) all books, records, manuals and other materials (in any
form or medium), including, without limitation, all records and
materials maintained at the headquarters of Seller, advertising
matter, catalogues, price lists, correspondence, mailing lists,
lists of customers, distribution lists, photographs, production
data, sales and promotional materials and records, purchasing
materials and records, personnel records, manufacturing and
quality control records and procedures, blueprints, research and
development files, records, data and laboratory books,
Intellectual Property disclosures, media materials and plates,
accounting records, sales order files and litigation files;
(j) to the extent their transfer is permitted by law, all
Governmental Approvals, including all applications therefor;
(k) all Real Property and all licenses, permits, approvals
and qualifications relating to any Real Property issued to any
Seller by any Governmental Authority;
(l) all rights to causes of action, lawsuits, judgment,
claims and demands of any nature available to or being pursued by
the Sellers with respect to the Business or the ownership, use,
function or value of any Asset, whether arising by way of
counterclaim or otherwise;
(m) all guarantees, warranties, indemnities and similar
rights in favor of the Sellers with respect to any Asset; and
(n) all assets of Howard Leight (Europe) Limited
Subject to the terms and conditions hereof and of the respective Foreign
Acquisition Agreements, at the respective Closings, the Assets shall be
transferred or otherwise conveyed to the Buyer Parties subject to all
liabilities, obligations, liens and encumbrances excepting the Excluded
Liabilities.
1.2 EXCLUDED ASSETS. The Sellers will retain and not transfer, and none of
the Buyer Parties will purchase or acquire, the assets listed on Schedule 1.2
(which will include Seller's German Subsidiary (collectively, the "Excluded
Assets"):
1.3 FOREIGN ACQUISITIONS. Subject to the terms and conditions hereof,
Seller will cause the respective Foreign Subsidiaries to, and the Buyer will or
will cause one or more of its subsidiaries to, enter into the various Foreign
Acquisition Agreements, providing for the sale, transfer, assignment or other
direct or indirect conveyance of the Foreign Assets to be transferred by the
respective Foreign Subsidiaries to one or more of the Buyer Parties. Each
Foreign Acquisition Agreement will be consistent with the provisions of this
Agreement, including, without limitation, Knowledge qualifications, but with
such variations as may be required to satisfy the requirements of local law, to
adapt such agreement to the particular circumstances confronted in each country
or to cover such additional matters as may be agreed upon by Seller and the
Buyer, in each case as may be negotiated in good faith by Seller and the Buyer.
Buyer may elect to purchase the stock of one or more of the Foreign
Subsidiaries. The representations and covenants on the part of the Sellers in
each Foreign Acquisition Agreement will not be more onerous to Sellers than
those which are provided in this Agreement with respect to the Domestic Assets
in any material respect.
1.4 HEREOF, HEREIN, ETC. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified herein, the term "or" has the inclusive meaning
represented by the term "and/or" and the term "including" is not limiting. All
references as to "Sections", "Subsections", "Articles", "Schedules" and
"Exhibits" shall be to Section, Subsections, Articles, Schedules and Exhibits,
respectively, of this Agreement unless otherwise specifically provided.
1.5 COMPUTATION OF TIME PERIODS. In the computation of periods of time from
a specified date to a later specified date, unless otherwise specified herein
the words "commencing on" mean "commencing on and including", the word "from"
means "from and including" and the words "to" and "until" each means "to but
excluding".
1.6 ACCOUNTING TERMS. Except as otherwise specifically provided
herein, all accounting terms shall be construed in accordance with GAAP. Except
as otherwise specifically provided herein, all financial statements required to
be delivered hereunder shall be prepared, and all accounting determinations and
calculations shall be made, in accordance with GAAP.
ARTICLE II
THE CLOSING
2.1 PLACE AND DATE. The closing of the sale and purchase of the Domestic
Assets (the "DOMESTIC CLOSING") shall take place within 10 business days
following receipt by Buyer of Seller's 1997 Financial Statements at 10:00 A.M.
local time (but in no event prior to February 27, 1998) at the offices of the
Seller; or such other time and place upon which the parties may agree. The day
on which the Closing actually occurs is herein sometimes referred to as the
"CLOSING DATE". The closings of the sale of the Foreign Assets (the "FOREIGN
CLOSINGS") shall also take place on the Closing Date or as soon as possible
thereafter subject to foreign approvals. Representatives of Buyer and Seller
will have a preliminary closing at least two days before the scheduled Closing
Date.
2.2 PURCHASE PRICE. On the terms and subject to the conditions set forth in
this Agreement and the Foreign Acquisition Agreements, the Buyer agrees to pay
or cause to be paid to Seller and to the Foreign Subsidiaries an aggregate of
U.S. One Hundred Twenty Million Dollars ($120,000,000) (the "PURCHASE PRICE")
and to assume or cause one of the Buyer Parties to assume the Assumed
Liabilities as provided in Section 2.5. The following portions of the Purchase
Price shall be payable at the respective Closings, in separate payments
determined in accordance with Section 2.4, as follows:
(a) By the wire transfer of U.S. One Hundred Eighteen
Million Dollars ($118,000,000) in immediately available funds to
such bank account or accounts as per written instructions of
Seller and the respective Foreign Subsidiaries, given to the
Buyer at least five days prior to the Closing; and
(b) By the wire transfer delivery of U.S. Two Million
Dollars ($2,000,000) in immediately available funds to the Escrow
Agent pursuant to the Escrow Agreement which will be in effect
for two years. Interest on Escrow Funds not subject to claims
shall be payable to Seller periodically. At the end of the first
year, $1,000,000 of the funds held by Escrow Agent less the
amount of claims, if any, made by Buyer under Section 13.1 of
this Agreement, shall be returned to Seller in accordance with
the Escrow Agreement.
2.3 CONTINGENT PURCHASE PRICE. In addition, if the world-wide consolidated
sales of Howard Leight hearing protection products by Buyer and its Affiliates,
for the calendar year 2000 exceed U.S. $80,959,000, Buyer shall pay Seller an
additional U.S. $2,000,000 on or before March 31, 2001. If such year 2000 sales
are in excess of $65,000,000 but less than $80,959,000, said contingent payment
shall be the product of $2,000,000 multiplied by a fraction, the numerator of
which shall be the amount of such excess, and the denominator of which shall be
15,959,000. If requested by Seller, Buyer will furnish to Seller its calculation
of such worldwide consolidated sales for calendar years 1998 (a partial year)
and 1999.
2.4 ALLOCATION OF PURCHASE PRICE.
(a) The parties agree to allocate the aggregate of the
Purchase Price and the Assumed Liabilities (collectively, the
"AGGREGATE PURCHASE PRICE"), among the respective portions of the
Operations grouped by country in accordance with an allocation
schedule to be prepared by the Buyer at its expense. Such
allocation schedule shall be prepared in accordance with section
1060 of the Code and shall be based on an appraisal or appraisals
conducted by an independent appraiser or appraisers chosen by the
Buyer. Notwithstanding the provisions of any Foreign Acquisition
Agreement, no Seller shall be entitled to receive from any Buyer
Party any amount in excess of the respective amounts set forth on
such allocation schedule on account of the sale to the Buyer
Parties of such Seller's Operations.
(b) The Aggregate Purchase Price allocated to the Domestic
Operations pursuant to Section 2.4(a) shall be allocated among
the Domestic Assets in accordance with an allocation schedule to
be prepared by the Buyer and approved by Seller which will not be
unreasonably withheld. Such allocation schedule shall be prepared
in accordance with section 1060 of the Code and shall be based on
the appraisal or appraisals provided for in Section 2.4(a). The
Aggregate Purchase Price allocated to the Foreign Operations in
each country pursuant to Section 2.4(a) shall be allocated among
the Foreign Assets in such country in accordance with an
allocation schedule to be prepared by the Buyer. Such allocation
schedule shall be prepared in accordance with the requirements of
the applicable tax law of such country and shall be based on the
appraisal or appraisals provided for in Section 2.4(a).
(c) In connection with the determination of the foregoing
appraisal or appraisals and allocation schedules, the parties
shall cooperate with each other and provide such information as
any of them shall reasonably request. The parties will each
report the federal, state and local and other Tax consequences of
the purchase and sale contemplated hereby (including the filing
of Internal Revenue Service Form 8594) in a manner consistent
with such allocation schedules.
(d) In no event shall the allocation change the Purchase
Price as provided in Section 2.2.
2.5 ASSUMPTION OF LIABILITIES.
(a) Subject to the terms and conditions set forth herein and in the
respective Foreign Acquisition Agreements, at the respective Closings the Buyer
Parties shall assume and agree to pay, honor and discharge when due all of the
liabilities of the Sellers and of Howard Leight (Europe) Limited relating to the
Operations unasserted and existing at or arising on or after the Closing Date,
including but not limited to Taxes other than Income Taxes (collectively, the
"ASSUMED LIABILITIES"), except that Buyer shall not assume nor shall the term
"ASSUMED LIABILITIES" include the "EXCLUDED LIABILITIES" as defined in Section
2.6 below.
(b) At the Domestic Closing, the Buyer shall, or shall cause one of the
Buyer Parties to, assume the Assumed Liabilities relating to the Domestic
Operations by executing and delivering an assumption agreement in a form
reasonably satisfactory to Seller (the "ASSUMPTION AGREEMENT"). At each Foreign
Subsidiary Closing, the respective Buyer Party purchasing or otherwise acquiring
Foreign Subsidiary Assets shall assume the related Foreign Subsidiary Assumed
Liabilities in accordance with the respective Foreign Acquisition Agreement.
2.6 EXCLUDED LIABILITIES.
Notwithstanding the provisions of Section 2.5 or any other provision hereof
or any Schedule or Exhibit hereto and regardless of any disclosure to the Buyer,
neither the Buyer nor any Buyer Party shall be obligated to assume or become
liable for any of the liabilities, obligations, debts, contracts or other
commitments of any of the Sellers of any kind whatsoever, known or unknown,
fixed or contingent, now existing or hereafter arising, which shall relate to:
(a) liabilities and obligations for federal, state, local, foreign or other
income taxes arising in connection with the Operations for periods ending on or
prior to the Closing Date or arising as a result of the transactions
contemplated by this Agreement and the Collateral Agreements, (b) liabilities
and obligations of which any of the Sellers had Knowledge, or relating to or
arising out of any facts or circumstances of which Sellers had Knowledge, (c)
liabilities and obligations arising out of or in connection with the purchase,
sale, lease, use, storage, maintenance of any of the assets described on
Schedule 2.6(c), (d) liabilities and obligations of or arising with respect to
Howard Leight Co. GmbH Optac OHG, Howard Leight GmbH, and Howard Leight
International, Inc., (e) liabilities and obligations in excess of those which
are reasonable in the context of the transactions contemplated hereby incurred
in connection with the preparation of this Agreement, the Collateral Agreements
and the consummation of the transactions contemplated hereby, including, but not
limited to, legal and accounting fees, (f) liabilities and obligations based
upon illegal conduct, (g) liabilities and obligations arising under any
agreement with employees as a result of the consummation of the transactions
contemplated by this Agreement and the Collateral Agreements, and (h) any
liabilities and obligations with respect to those employees of Seller listed in
Schedule 2.6(h).
2.7 CONSENT OF THIRD PARTIES.
Notwithstanding anything to the contrary in this Agreement, this Agreement
shall not constitute an agreement to assign or transfer any Governmental
Approval, instrument, contract, lease, permit or other agreement or arrangement
or any claim, right or benefit arising thereunder or resulting therefrom if an
assignment or transfer or an attempt to make such an assignment or transfer
without the consent of a third party would constitute a breach or violation
thereof or affect adversely the rights of the Buyer or Seller thereunder; and
any transfer or assignment to the Buyer by Seller of any interest under any such
instrument, contract, lease, permit or other agreement or arrangement that
requires the consent of a third party shall be made subject to such consent or
approval being obtained. In the event any such consent or approval is not
obtained on or prior to the Closing Date, Seller shall continue to use all
reasonable efforts to obtain any such approval or consent after the Closing Date
until such time as such consent or approval has been obtained, and Seller will
cooperate with the Buyer in any lawful and economically feasible arrangement to
provide that the Buyer shall receive the interest of any such instrument,
contract, lease or permit or other agreement or arrangement, including
performance by Seller, as the case may be, as agent, if economically feasible,
PROVIDED that the Buyer shall undertake to pay or satisfy the corresponding
liabilities for the enjoyment of such benefit to the extent the Buyer would have
been responsible therefor hereunder if such consent or approval had been
obtained. Nothing in this Section 2.7 shall be deemed a waiver by the Buyer of
its right to have received on or before the Closing an effective assignment of
all of the Assets nor shall this Section 2.7 be deemed to constitute an
agreement to exclude from the Assets any assets described under Section 1.1.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER.
The Seller hereby represents and warrants the following to Buyer, which
representations and warranties shall be true and correct as of the date hereof
and as of the Closing as if made on and as of the Closing:
3.1 ORGANIZATION. The Seller and each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its State or
Country of incorporation as set forth on SCHEDULE 3.1 and has the corporate
power and authority to own or lease its properties and carry on its business as
now being conducted. To the Knowledge of Sellers, each of the Seller and the
Subsidiaries is duly qualified to do business as a foreign corporation and is in
good standing in every jurisdiction in which the operation of its business
requires such qualification. The Seller has, prior to the execution and delivery
of this Agreement, made available to Buyer, certified copies of the Articles of
Incorporation and bylaws of the Seller and each Subsidiary, each as in effect on
the date hereof. The minute books, stock certificate books and stock transfer
ledgers of the Seller and each Subsidiary (collectively, the "Corporate Books"),
copies of which have been provided by the Seller to Buyer as provided in SECTION
3.35, are complete and correct and properly reflect all material transactions
involving the business and operations of the Seller and each Subsidiary,
provided that the representation in this sentence shall be qualified to the
Knowledge of Sellers, except with respect to said stock certificate books and
stock transfer ledgers.
3.2 AUTHORIZED CAPITALIZATION; OUTSTANDING STOCK. The authorized capital
stock of the Seller and each Subsidiary is set forth on SCHEDULE 3.2. SCHEDULE
3.2 sets forth the number and class of shares of capital stock of the Seller and
each Subsidiary that are issued and outstanding, the name of the legal and
beneficial holder thereof together with the certificate number and the number of
outstanding shares evidenced thereby and the percentage of the aggregate issued
and outstanding shares of such class of capital stock so held by such holder.
Such shares are owned beneficially and of record by such holders and each such
holder has good and valid title to such shares so owned by it/him/her free and
clear of all Liens. Such shares have been duly authorized, are validly issued
and are fully paid and non-assessable and free of preemptive rights and have not
been issued in violation of any securities laws. There are no outstanding
rights, warrants, options or agreements with respect to any class of capital
stock of the Seller or any Subsidiary.
3.3 SUBSIDIARIES. Except as set forth on SCHEDULE 3.3, the Seller has no
Subsidiaries. Neither the Seller or any Subsidiary is a party to any partnership
agreement or understanding or joint venture agreement or understanding.
3.4 AUTHORITY; BINDING EFFECT. Each of the Seller and the Subsidiaries has
full power, authority and capacity to execute and deliver this Agreement and the
Collateral Documents to which the Seller or such Subsidiary is a party and to
perform the transactions required of the Seller or such Subsidiary thereunder
and at the Closing. Each of this Agreement and the Collateral Documents to which
the Seller or any Subsidiary is a party has been duly authorized, executed and
delivered by the Seller or such Subsidiary, as the case may be, and constitutes
the legal, valid and binding obligations of the Seller or such Subsidiary, as
the case may be, enforceable against the Seller or such Seller, as the case may
be, in accordance with the terms and provisions thereof, subject to general
equity principles and to applicable bankruptcy, fraudulent transfer, insolvency,
reorganization, moratorium and other similar laws from time to time in effect
affecting the enforcement of creditors' rights generally (regardless of whether
such enforcement is considered in a proceeding in equity or at law).
3.5 NON-CONTRAVENTION. Except as set forth in Schedule 3.5, neither the
execution and delivery by the Seller or any Subsidiary of this Agreement or any
Collateral Agreement to which the Seller or such Subsidiary is a party nor the
consummation by the Seller or such Subsidiary of the transactions contemplated
thereby (a) will violate any provision of the Articles of Incorporation or
bylaws of the Seller or any Subsidiary, (b) to the Knowledge of Sellers will
violate or conflict with any applicable statute, law, ordinance, rule,
regulation, order, writ, injunction, award, judgment or decree applicable to the
Seller or any Subsidiary, (c) to the Knowledge of Sellers will conflict with or
constitute a violation of or a default (or an event which with notice or lapse
of time or both, would constitute a default) under, or will result in the
termination of, or accelerate performance required by, any contract to which the
Seller or any Subsidiary is a party or to which any of the assets or properties
of the Seller or any Subsidiary are subject, or (d) will result in the creation
of any Lien upon any of the capital stock, property or assets of the Seller or
any Subsidiary. Except for the HSR Approval, neither the execution or delivery
by the Seller or any Subsidiary of this Agreement or any Collateral Agreement to
which the Seller or such Subsidiary is a party nor the consummation of the
transactions contemplated thereby will require the consent, authorization or
approval of, or notice to or filing or registration with, any Person.
3.6 FINANCIAL STATEMENTS.
(a) The Audited Financial Statements (true, correct and complete copies of
which are attached hereto as SCHEDULE 3.6(A)) (i) have been, or when delivered
will be, prepared in accordance with GAAP, (ii) are, or when delivered will be,
true, accurate and complete, and (iii) fairly and accurately present or, when
delivered will fairly and accurately present, the properties, assets,
liabilities, financial positions and results of operations of the Seller and
each Subsidiary as of the respective dates and for the respective periods
covered thereby.
(b) The Interim Financial Statements (attached hereto as Schedule 3.6(b))
and the Subsequent Monthly Financial Statements delivered pursuant to Section
5.4 (i) are, or when delivered will be, true, accurate and complete, and (ii)
fairly and accurately present, or when delivered will fairly and accurately
present, the properties, assets, liabilities, financial positions and results of
operations of the Seller and each Subsidiary as of the respective dates and for
the respective periods covered thereby (subject to normal year-end adjustments).
(c) To the Knowledge of Sellers, as of December 31, 1996, neither the
Seller nor any Subsidiary had any liabilities or obligations (whether secured or
unsecured, accrued, absolute, contingent or otherwise) which, under GAAP, should
have been but which were not reflected or reserved against in the 1996 Financial
Statements. To the Knowledge of Sellers, since December 31, 1996 neither the
Seller nor any Subsidiary has incurred any liabilities or obligations (whether
secured or unsecured, accrued, absolute, contingent or otherwise), including,
without limitation, any items of litigation, except any such liabilities or
obligations (i) arising under and in compliance with the Contracts to which the
Seller or any Subsidiary is a party, (ii) incurred in the ordinary course of
business of the Seller or any Subsidiary, and (iii) such other liabilities or
obligations as are set forth in SCHEDULE 3.6(C).
(d) The accounting books and records of the Seller and each Subsidiary (i)
are accurate, correct and complete, (ii) are current in a manner consistent with
past practice, and (iii) have recorded therein all of the properties, assets and
liabilities of the Seller and each Subsidiary (except where the failure to so
record would not violate GAAP).
(e) The Seller will use its best efforts to deliver to the Buyer the 1997
Financial Statements on or before February 15, 1998. In connection with the end
of such fiscal year, each Seller will conduct its business in the ordinary
course and will not accelerate shipments or delay the purchase of goods or
services in an effort to increase operating earnings for such year. The balance
sheet included in the 1997 Financial Statements, on a combined basis with the
balance sheets for such period for Howard Leight de Mexico S.A. de C.V. and
Howard Leight (Europe) Ltd., shall reflect a combined net worth (excluding from
the computation of net worth for this purpose cash in excess of $1,000,000) of
at least US $10,716,000 and combined working capital (consisting of combined
current assets (excluding from such assets for this purpose cash in excess of
$1,000,000) less combined current liabilities) (the "1997 Working Capital") of
at least $5,495,000, including at least $1,000,000 in cash.
3.7 INTERIM CHANGES. Since December 31, 1996, the business of the Seller
and each Subsidiary has been operated in the ordinary course consistent with
prior practice and, except as set forth on SCHEDULE 3.7, neither the Seller nor
any Subsidiary has (nor has it authorized or proposed or entered into any
contract, agreement, commitment or arrangement to do any of the following):
(i) suffered any Material Adverse Effect;
(ii) incurred any obligation or liability, absolute, accrued
or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in
connection with the purchase of goods or services in the ordinary
course of business consistent with prior practice, none of which
liabilities, in any case or in the aggregate, could have a
Material Adverse Effect;
(iii) discharged or satisfied any Lien other than those then
required to be discharged or satisfied, or paid any obligation or
liability, absolute, accrued, contingent or otherwise, whether
due or to become due, other than current liabilities shown on the
Audited Balance Sheet and current liabilities incurred since the
date thereof in the ordinary course of business consistent with
prior practice;
(iv) mortgaged, pledged or subjected to Lien, any property,
business or assets, tangible or intangible, held in connection
with the Business;
(v) sold, transferred, leased to others or otherwise
disposed of any of the assets used in the Operations, except for
inventory sold in the ordinary course of business, or canceled or
compromised any debt or claim, or waived or released any right of
substantial value;
(vi) received any notice of termination of any contract,
lease or other agreement or suffered any damage, destruction or
loss (whether or not covered by insurance) which, in any case or
in the aggregate, has had a Material Adverse Effect;
(vii) transferred or granted any rights under, or entered
into any settlement regarding the breach or infringement of, any
Intellectual Property, or modified any existing rights with
respect thereto;
(viii) made any change in the rate of compensation,
commission, bonus or other direct or indirect remuneration
payable, or paid or agreed or orally promised to pay,
conditionally or otherwise, any bonus, incentive, retention or
other compensation, retirement, welfare, fringe or severance
benefit or vacation pay, to or in respect of any shareholder,
director, officer, employee, salesman, distributor or agent of
any Seller relating to the Business;
(ix) encountered any labor union organizing activity, had
any actual or threatened employee strikes, work stoppages,
slowdowns or lockouts, or had any material change in its
relations with its employees, agents, customers or suppliers;
(x) failed to replenish its inventories and supplies in a
normal and customary manner consistent with its prior practice
and prudent business practices prevailing in the industry, or
made any purchase commitment in excess of the normal, ordinary
and usual requirements of its business or at any price in excess
of the then current market price or upon terms and conditions
more onerous than those usual and customary in the industry, or
made any change in its selling, pricing, advertising, or
personnel practices inconsistent with its prior practice and
prudent business practices prevailing in the industry;
(xi) made any capital expenditures or capital additions or
improvements in excess of an aggregate of $100,000;
(xii) instituted, settled or agreed to settle any
litigation, action or proceeding before any court or governmental
body relating to the Business or the Assets other than in the
ordinary course of business consistent with past practices but
not in any case involving amounts in excess of $10,000;
(xiii) entered into any transactions, contract or commitment
other than in the ordinary course of business or paid or agreed
to pay any legal, accounting, brokerage, finder's fee, Taxes or
other expenses in connection with, or incurred any severance pay
obligations by reason of, this Agreement or the transactions
contemplated hereby; or
(xiv) taken any action or omitted to take any action that
would result in the occurrence of any of the foregoing.
3.8 OWNED AND LEASED PROPERTY.
(a) Except as disclosed in Schedule 3.8(a), the Sellers have good title to
all the Assets free and clear of any and all Liens other than Permitted Liens.
The Assets comprise all assets and services required for the continued conduct
of the Business by the Buyer as now being conducted. The Assets, taken as a
whole, constitute all the properties and assets relating to or used or held for
use in connection with the Business during the past twelve months (except
Inventory sold, cash disposed of, accounts receivable collected, prepaid
expenses realized, Contracts fully performed, properties or assets replaced by
equivalent or superior properties or assets, in each case in the ordinary course
of business, employees not hired by the Buyer, and the Excluded Assets). Except
for Excluded Assets, there are no assets or properties used in the operation of
the Business and owned by any Person other than the Sellers that will not be
leased or licensed to the Buyer under valid, current leases or license
arrangements. The Assets are in all material respects adequate for the purposes
for which such assets are currently used or are held for use, and are in
reasonably good repair and operating condition (subject to normal wear and tear)
and, to the Knowledge of the Sellers, there are no facts or conditions affecting
the Assets which could, individually or in the aggregate, interfere in any
material respect with the use, occupancy or operation thereof as currently used,
occupied or operated, or their adequacy for such use.
(b) All leases and subleases pursuant to which the Seller or any Subsidiary
(i) leases (whether as lessee or lessor) its Tangible Personal Property, or (ii)
leases or has leased any real property as lessor or lessee (the "Leased Real
Property") are set forth on SCHEDULE 3.8(B). Such leases and subleases (other
than the leases identified on SCHEDUlE 3.8(B) as no longer in effect) are in
good standing and are valid and binding against the Seller or such Subsidiary,
as the case may be, and, to the Knowledge of the Seller, the other parties
thereto in accordance with their respective terms, subject to general equity
principles and to applicable bankruptcy, fraudulent transfer, insolvency,
reorganization, moratorium and other similar laws from time to time in effect
affecting creditors' rights generally (whether considered in a proceeding in
equity or at law), and there is not under any of such leases or subleases any
existing default, event of default or event which with notice or lapse of time
or both would constitute a default, by the Seller or any Subsidiary or, to the
Knowledge of the Seller, any Person from or to whom the Seller or any Subsidiary
leases or subleases such Tangible Personal Property or Leased Real Property.
None of the rights of the Seller or any Subsidiary under any of such leases or
subleases is subject to termination or modification as the result of the
transactions contemplated by this Agreement or any Collateral Agreement.
(c) To the Knowledge of Sellers, all components of all buildings,
structures and other improvements included within the Properties (the
"Improvements"), including but not limited to the roofs and structural elements
thereof and the heating, ventilation, air conditioning, plumbing, electrical,
mechanical, sewer, waste water, storm water, waste treatment, paving and parking
equipment, systems and facilities included therein, are in compliance with all
laws, rules, regulations, ordinances and legal and insurance requirements and
are in good working order and repair (ordinary wear and tear excepted). To the
Knowledge of Sellers, all potable water and all gas, electrical, steam,
compressed air, telecommunication, and other similar systems serving or
necessary to serve all or any part of the Properties are installed and operating
and are sufficient to enable such Properties to continue to be used and operated
in the manner currently being used and operated and any associated charges have
been fully paid. To the Knowledge of Sellers, each such utility or other service
is provided by a public utility and enters the applicable Property from an
adjacent public street. To the Knowledge of Sellers, each Improvement has direct
access to a public street adjoining the Property on which such Improvement is
situated and no existing access-way crosses or encroaches upon any property or
property interest not owned by the Seller or a Subsidiary. To the Knowledge of
Sellers, no Improvement or portion thereof is dependent for its access,
operation or utility on any land, building or other improvement not included in
the Properties.
(d) All real property owned by the Seller or any Subsidiary on or prior to
the date hereof is set forth on Schedule 3.8(d) (the "Owned Real Property").
(e) To the Knowledge of Sellers, the Properties and the use thereof are
both in compliance with all applicable laws, by-laws, zoning or use ordinance,
rules, regulations and legal and insurance requirements (collectively, "Real
Property Laws"). To the Knowledge of Sellers, neither the Seller nor any
Subsidiary has received any work orders or notice of any defect in the
construction or state of repair of any of the Properties or notice of any
violation or claimed violation of any Real Property Law or of any changes or
proposed changes to Real Property Laws which will adversely affect the current
use of any of the Properties. To the Knowledge of Sellers, the Properties and
their continued use, occupancy and operation as currently used, occupied and
operated do not constitute a nonconforming use under any Real Property Law and
the continued existence, use, occupancy and operation of each Improvement, and
the right and ability to repair and/or rebuild such Improvement in the event of
casualty, is not dependent on any special permit, exception, approval or
variance. To the Knowledge of any Seller there is no pending or anticipated
change in any Real Property Law which would have an adverse effect upon the
ownership, alteration, use, occupancy or operation of any of the Properties or
any portion thereof, or upon the reconstruction of any Improvement in the event
of a casualty. No dispute currently exists with any Governmental Authority with
respect to any Real Property Law or the application thereof to any of the
Properties. There are no encroachments upon any of the Properties and the
Improvements situated upon such Properties do not encroach upon or violate any
rights or way, easements or the lands of others unless otherwise set forth in
the title insurance policy or survey attached hereto as Schedule 3.8(e). There
are no violations of law or rule with respect to water supply, sewage or waste
disposal facilities. No portion of any of the Properties has suffered any damage
by fire or other casualty which has not heretofore been completely repaired and
restored to its original condition. Except as set forth on Schedule 3.8(e), no
portion of any of the Properties is located in a special flood hazard area as
designated by federal governmental authorities nor is any portion of the
Properties subject to conservation authority regulation.
(f) To the Knowledge of Sellers, neither the Seller nor any Subsidiary has
received any notice of any special assessment or condemnation from a
Governmental Authority with respect to any of the Properties.
(g) Except as set forth on Schedule 3.8(g), neither the Seller nor any
Subsidiary owns, holds or is obligated under, or is a party to, any option,
right of first refusal or other contractual right to purchase, acquire, sell or
dispose of all or any part of the Properties or any interest therein. Except as
set forth on SCHEDULE 3.8(G) neither the Seller nor any Subsidiary is a lessor,
sublessor or grantor under any contract granting to another Person any right to
the possession, use, occupancy or enjoyment of all or any part of the Properties
or any interest therein.
3.9 ENVIRONMENTAL MATTERS.
(a) PERMITS. To the Knowledge of Sellers, all Environmental Permits are
identified in Schedule 3.9(a), and the Sellers currently hold, and at all times
have held, all such Environmental Permits necessary to the Business, and all
such Environmental Permits shall be validly transferred to the Buyer on the
Closing Date. No Seller has been notified by any relevant Governmental Authority
that any Environmental Permit will be modified, suspended, canceled or revoked,
or cannot be renewed in the ordinary course of business.
(b) NO VIOLATIONS. To the Knowledge of Sellers and their respective
Affiliates (other than family members), the Sellers and their Affiliates (other
than family members) have complied and are in compliance in all material
respects with all Environmental Permits and all applicable Environmental Laws
pertaining to the Real Property (and the use, ownership or transferability
thereof) and the Business. To the Knowledge of Sellers, no Person has alleged
any violation by any Seller and their respective Affiliates (other than family
members) of any Environmental Permits or any applicable Environmental Law
relating to the conduct of the Business or the use, ownership or transferability
of the Real Property.
(c) NO ACTIONS. Except as set forth in Schedule 3.9(c), to the Knowledge of
Sellers, none of the Sellers or any of their respective Affiliates (other than
family members) has caused or taken any action that has resulted or may result
in, or has been or is subject to, any liability or obligation relating to (i)
the environmental conditions on, under, or about any Real Property, the Assets
or other properties or assets owned, leased or used by the Sellers held for use
in connection with, necessary for the conduct of, or otherwise material to, the
Business, or (ii) the past or present use, management, handling, transport,
treatment, generation, storage or Release of any Hazardous Substances, except
for any such liabilities and obligations that, individually and in the
aggregate, are not material to the Business and have not had or resulted in, and
will not have or result in, a Material Adverse Effect.
(d) OTHER. Except as set forth in Schedule 3.9(d) and to the Knowledge of
Sellers:
(i) None of current or past operations, or any by-product
thereof, and none of the currently or formerly owned property or
assets of any Seller used in the Business, including without
limitation the Assets and the Real Property, is related to or
subject to any investigation or evaluation by any Governmental
Authority, as to whether any Remedial Action is needed to respond
to a Release or threatened Release of any Hazardous Substances.
(ii) No Seller is subject to any outstanding order,
judgment, injunction, decree or writ from, or contractual or
other obligation to or with, any Governmental Authority or other
Person in respect of which the Buyer may be required to incur any
Environmental Liabilities and Costs arising from the Release or
threatened Release of a Hazardous Substance.
(iii) None of the Real Property is, and no Seller nor any of
their respective Affiliates (other than family members) has
transported or arranged for transportation (directly or
indirectly) of any Hazardous Substances relating to the Assets or
the Real Property to any location that is, listed or proposed for
listing under CERCLA, or on any similar state list, or the
subject of federal, state or local enforcement actions or
investigations or Remedial Action.
(iv) No work, repair, construction or capital expenditure is
required or planned in respect of the Assets pursuant to or to
comply with any Environmental Law, nor have any of the Sellers
and their respective Affiliates (other than family members)
received any notice of any such requirement, except for such
work, repair, construction or capital expenditure as is not
material to the Business and is in the ordinary course of
business.
(e) FULL DISCLOSURE. To the Knowledge of Sellers, the Sellers have
disclosed and made available to the Buyer all information, including without
limitation all studies, analyses and test results, in the possession, custody or
control of any Seller and their respective Affiliates other than family members
relating to (i) the environmental conditions on, under or about the Real
Property, and (ii) Hazardous Substances used, managed, handled, transported,
treated, generated, stored or Released by any Seller or any other Person at any
time on any Real Property, or otherwise in connection with the use or operation
of the properties or assets used in or held for use in connection with the
Business.
(f) USTS. To the Knowledge of Sellers, there are no underground or
above-ground storage tanks (whether or not currently in use) located on or under
any real property currently owned, operated or leased by the Seller or any
Subsidiary, and no underground tank previously located on any real property
currently owned, operated or leased by the Seller or any Subsidiary has been
removed from that property.
(g) LITIGATION. Neither the Seller, any Subsidiary nor any of the currently
or formerly owned or operated property used by the Seller or any Subsidiary is
the subject of any pending or, to the Knowledge of the Seller, threatened
federal, state or local enforcement action, investigation, remedial action,
litigation, claim or notice by any Person under any Environmental Laws.
3.10 INTELLECTUAL PROPERTY RIGHTS.
(a) TITLE. Schedule 3.10(a) contains a complete and correct list of all
Intellectual Property that is owned by any Seller and primarily related to, used
in, held for use in connection with, or necessary for the conduct of, or
otherwise material to the Business (the "OWNED INTELLECTUAL PROPERTY") other
than (i) inventions, trade secrets, processes, formulas, compositions, designs
and confidential business and technical information and (ii) Intellectual
Property that is both not registered or subject to application for registration
and not material to the Business. The Sellers own or have the exclusive right to
use pursuant to license, sublicense, agreement or permission all Intellectual
Property Assets, free from any Liens (other than Permitted Liens) and free from
any requirement of any past, present or future royalty payments, license fees,
charges or other payments, or conditions or restrictions whatsoever. To the
Knowledge of Sellers, the Intellectual Property Assets comprise all of the
Intellectual Property necessary for the Buyer to conduct and operate the
Business as now being conducted by the Sellers.
(b) TRANSFER. At the Closing, Seller shall assign all rights Seller has
with respect to the Owned Intellectual Property and Buyer will then have a right
to use all other Intellectual Property Assets, free from any Liens (other than
Permitted Liens) and on the same terms and conditions as in effect prior to the
Closing. On or prior to the Closing Date, Seller shall have obtained the right
to transfer any Intellectual Property Assets to Buyer held by third parties.
Buyer will be responsible for recording fees.
(c) NO INFRINGEMENT. To the Knowledge of the Sellers, the conduct of the
Business does not infringe or otherwise conflict with any rights of any Person
in respect of any Intellectual Property. To the Knowledge of the Sellers, none
of the Intellectual Property Assets is being infringed or otherwise used or
available for use, by any other Person.
(d) LICENSING ARRANGEMENTS. Schedule 3.10(d) sets forth all agreements,
arrangements or laws (i) pursuant to which any Seller has licensed Intellectual
Property Assets to, or the use of Intellectual Property Assets is otherwise
permitted (through non-assertion, settlement or similar agreements or otherwise)
by, any other Person and (ii) pursuant to which any Seller has had Intellectual
Property licensed to it, or has otherwise been permitted to use Intellectual
Property (through non-assertion, settlement or similar agreements or otherwise).
All of the agreements or arrangements set forth on Schedule 3.10(d) (x) are in
full force and effect in accordance with their terms and no default exists
thereunder by any Seller, or to the Knowledge of any Seller by any other party
thereto, (y) are free and clear of all Liens, and (z) do not contain any change
in control or other terms or conditions that will become applicable or
inapplicable as a result of the consummation of the transactions contemplated by
this Agreement. The Seller has delivered to the Buyer true and complete copies
of all licenses and arrangements (including amendments) set forth on Schedule
3.10(d). All royalties, license fees, charges and other amounts payable by, on
behalf of, to, or for the account of, the Sellers in respect of any Intellectual
Property are disclosed in the Audited Financial Statements.
(e) NO INTELLECTUAL PROPERTY LITIGATION. Except as set forth in Schedule
3.10(e), no claim or demand of any Person has been made nor is there any
proceeding that is pending, or to the knowledge of the Sellers threatened which
(i) challenges the rights of the Sellers in respect of any Intellectual Property
Assets, (ii) asserts that any Seller is infringing or otherwise in conflict
with, or is, required to pay any royalty, license fee, charge or other amount
with regard to, any Intellectual Property, or (iii) claims that any default
exists under any agreement or arrangement listed on Schedule 3.10(d). Except as
set forth in Schedule 3.10(e), none of the Intellectual Property Assets is
subject to any outstanding order, ruling, decree, judgment or stipulation by or
with any court, arbitrator, or administrative agency, or has been the subject of
any litigation within the last five years, whether or not resolved in favor of
the Sellers.
(f) DUE REGISTRATION, ETC. To the Knowledge of Sellers, the Owned
Intellectual Property has been duly registered with, filed in or issued by, as
the case may be, the United States Patent and Trademark Office, United States
Copyright Office or such other filing offices, domestic or foreign, and to the
Knowledge of Sellers, the Sellers or their agents have taken such other actions,
to ensure full protection under any applicable laws or regulations, and such
registrations, filings, issuances and other actions remain in full force and
effect, in each case to the extent material to the Business.
(g) USE OF NAME AND MARK. There are, and immediately after the Closing will
be, no contractual restriction or limitations pursuant to any orders, decisions,
injunctions, judgments, awards or decrees of any Governmental Authority on the
Buyer's right to use the name and mark "Howard Leight" in the conduct of the
Business as presently carried on by the Sellers or as such Business may be
extended by the Buyer.
3.11 LITIGATION. Except as set forth on Schedule 3.11, there is no action,
claim, demand, suit, proceeding, arbitration, grievance, citation, summons,
subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or
otherwise, in law or in equity, pending or, to the Knowledge of Sellers,
threatened against or relating to any Seller in connection with the Assets or
the Business or against or relating to the transactions contemplated by this
Agreement. To the Knowledge of Sellers, except as set forth in such Schedule
3.11, no citations, fines or penalties have been asserted against any Seller
since December 31, 1993, under any Environmental Law or any foreign, federal,
state or local law relating to occupational health or safety.
No Seller is subject to any order, writ, injunction, judgment or decree. To
the Knowledge of Sellers, all notices required to have been given to any
insurance company insuring against any action, suit, order, award, judgment,
injunction, decree, claim or other proceeding in connection with the Assets or
any Seller have been timely and duly given and, no insurance company has
asserted, orally or in writing, that any such action, suit, order, award,
judgment, injunction, decree, claim or other proceeding is not covered by the
applicable policy relating thereto.
3.12 TAXES.
(a) For the purposes of this Section 3.12(a) only, the term "Taxes" shall
exclude Withholding Taxes and Income Taxes. To the Knowledge of Sellers, each of
the Sellers has (or by the Closing will have) duly and timely filed all Tax
Returns relating to the Business with respect to Taxes required to be filed on
or before the Closing Date. Except for Taxes set forth on Schedule 3.12(a),
which are being contested in good faith and by appropriate proceedings, the
following Taxes have (or by the Closing Date will have) been duly and timely
paid: (i) all Taxes shown to be due on the Tax Returns, (ii) all deficiencies
and assessments of Taxes of which notice has (or by the Closing Date will have)
been received by any Seller that are or may become payable by the Buyer or
another Buyer Party or chargeable as a lien upon the Business, and (iii) all
other Taxes due and payable on or before the Closing Date for which neither
filing of Tax Returns nor notice of deficiency or assessment is required, of
which any Seller has Knowledge that are or may become payable by the Buyer or
another Buyer Party or chargeable as a lien upon the Business.
(b) Each of the Sellers has (or by the Closing will have) duly and timely
filed all Tax Returns relating to the Business with respect to Income Taxes
required to be filed on or before the Closing Date ("Income Tax Returns"). The
following Income Taxes have (or by the Closing Date will have) been duly and
timely paid: (i) all Income Taxes shown to be due on the Income Tax Returns, and
(ii) all deficiencies and assessments of Income Taxes of which notice has (or by
the Closing Date will have) been received by any Seller.
(c) Except as set forth on Schedule 3.12(c), To the Knowledge of Sellers no
agreement or other document extending, or having the effect of extending, the
period of assessment or collection of any Taxes, Income Taxes, and no power of
attorney with respect to any such Taxes, has been filed with the IRS or any
other Governmental Authority.
(d) Except as set forth on Schedule 3.12(d), to the Knowledge of Sellers
(i) there are no Taxes asserted in writing by any Governmental Authority to be
due and (ii) no issue has been raised in writing by any Governmental Authority
in the course of any audit with respect to Taxes. Except as set forth on
Schedule 3.12(d), no Taxes are currently under audit by any Governmental
Authority. Except as set forth on Schedule 3.12(d), neither the IRS nor any
other Governmental Authority is now asserting or, to the best knowledge of any
Seller, threatening to assert against any Seller any deficiency or claim for
additional Taxes or any adjustment of Taxes that would, if paid by the Buyer,
have a Material Adverse Effect, and there is no reasonable basis for any such
assertion of which any Seller is or reasonably should be aware.
(e) No Buyer Party will be required to deduct and withhold any amount
pursuant to Section 1445(a) of the Code upon the transfer of the Business to
such Buyer Party.
(f) Except as set forth on Schedule 3.12(f), there is no litigation or
administrative appeal pending or, to the Knowledge of any Seller, threatened
against or relating to any Seller in connection with Taxes.
(g) To the Knowledge of Sellers, all Taxes required to be withheld by or on
behalf of the Sellers in connection with amounts paid or owing to any employee,
independent contractor, creditor or other party with respect to the Business
("WITHHOLDING TAXES") have been withheld, and such withheld taxes have either
been duly and timely paid to the proper Governmental Authorities or set aside in
accounts for such purpose.
3.13 COMPLIANCE WITH APPLICABLE LAW.
(a) To the Knowledge of Seller, the Seller and each Subsidiary has all
licenses, permits, approvals and other authorizations as are required or are
necessary in order to enable it to own and occupy its Properties and conduct its
business as currently conducted and each such license, permit, approval and
other authorization is in full force and effect or will be by the Closing Date
and no violations are or have been recorded in respect thereof and no proceeding
is pending or threatened to revoke or limit any such license, permit, approval
or other authorization. To the Knowledge of Sellers, neither the Seller nor any
Subsidiary has violated or failed to comply with any, and the operations of the
business of the Seller and each Subsidiary is in compliance with all, federal,
state, foreign and/or local laws, statutes, codes, orders, writs, injunctions,
judgments, awards, plans, decrees, ordinances, rules and regulations or any
other requirement of any Governmental Authority. Neither the Seller nor any
Subsidiary has received notice of any violation of, or liability or
responsibility under, any applicable federal, state, foreign, or local law,
statute, code, order, writ, injunction, judgment, awards, plan, ordinance,
decree, rule or regulation or any other requirement of any Governmental
Authority and neither the Seller nor any Subsidiary has received notice of any
threatened claim of such a violation, liability or responsibility (including any
investigations relating thereto).
(b) Schedule 3.13(b) sets forth all Contracts with any Governmental
Authority.
3.14 CONTRACTS.
(a) To the Knowledge of Sellers, Schedule 3.14(a) contains a complete and
correct list of all agreements, contracts, commitments and other instruments and
arrangements (whether written or oral) of the types described below (x) by which
any of the Assets are bound or affected or (y) to which any Seller is a party or
by which it is bound in connection with the Business or the Assets (the
"CONTRACTS"):
(i) leases, licenses, permits, franchises, insurance
policies, Governmental Approvals and other contracts concerning
or relating to the Real Property;
(ii) employment, consulting, agency, collective bargaining
or other similar contracts, agreements, and other instruments and
arrangements relating to or for the benefit of current, future or
former employees, officers, directors, sales representatives,
distributors, dealers, agents, independent contractors or
consultants;
(iii) loan agreements, indentures, letters of credit,
mortgages, security agreements, pledge agreements, deeds of
trust, bonds, notes, guarantees, and other agreements and
instruments relating to the borrowing of money or obtaining of or
extension of credit;
(iv) licenses, licensing arrangements and other contracts
providing in whole or in part for the use of, or limiting the use
of, any Intellectual Property;
(v) brokerage or finder's agreements;
(vi) joint venture, partnership and similar contracts
involving a sharing of profits or expenses (including but not
limited to joint research and development and joint marketing
contracts);
(vii) asset purchase agreements and other acquisition or
divestiture agreements, including but not limited to any
agreements relating to the sale, lease or disposal of any Assets
other than sales of inventory in the ordinary course of business)
or involving continuing indemnity or other obligations;
(viii) orders and other contracts for the purchase or sale
of materials, supplies, products or services arising other than
in the ordinary course of business consistent with past
practices;
(ix) contracts with respect to which the aggregate amount
that could reasonably expected to be paid or received thereunder
in the future exceeds $100,000 per annum or $200,000 in the
aggregate;
(x) sales agency, manufacturer's representative, marketing
or distributorship agreements;
(xi) contracts, agreements or arrangements with respect to
the representation of the Business in foreign countries;
(xii) master lease agreements providing for the leasing of
both (A) personal property primarily used in, or held for use
primarily in connection with, the Business and (B) other personal
property;
(xiii) contracts, agreements or commitments with any
employee, director, officer, stockholder or Affiliate of any
Seller; and
(xiv) any other contracts, agreements or commitments that
are material to the Business.
(b) To the Knowledge of Sellers, the Sellers have delivered to the Buyer
complete and correct copies of all written Contracts, together with all
amendments thereto, and accurate descriptions of all material terms of all oral
Contracts, set forth or required to be set forth in Schedule 3.14(a).
(c) All Contracts are in full force and effect and enforceable against each
party thereto. There does not exist under any Contract any event of default or
event or condition that, after notice or lapse of time or both, would constitute
a material violation, breach or event of default thereunder on the part of any
Seller or, to the best knowledge of any Seller, any other party thereto except
as set forth in Schedule 3.14(c) and except for such events or conditions that,
individually and in the aggregate, (i) has not had or resulted in, and will not
have or result in, a Material Adverse Effect and (ii) has not and will not
materially impair the ability of any Seller to perform their respective
obligations under the Foreign Acquisition Agreements and under the Collateral
Agreements. Except as set forth in Schedule 3.14(c), no consent of any third
party is required under any Contract as a result of or in connection with, and
the enforceability of any Contract will not be affected in any manner by, the
execution, delivery and performance of this Agreement, any of the Foreign
Acquisition Agreements or any of the Collateral Agreements or the consummation
of the transactions contemplated thereby.
3.15 BENEFIT PLANS.
(a) SCHEDULE 3.15 contains a list of all "employee pension benefit plans"
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), "employee welfare benefit plans" (as defined in
Section 3(1) of ERISA), employment, consulting, severance or similar contracts,
arrangements or policies and each agreement, commitment, plan, policy or
arrangement (written or oral) providing for severance benefits, insurance
coverage (including any self-insured arrangements), workers' compensation,
medical benefits, dental benefits, disability benefits, sick leave, cafeteria or
flexible spending, dependent care, supplemental unemployment benefits, vacation
benefits, retirement benefits, life, health, disability or accident benefits
(including, without limitation, any "voluntary employees' benefit association"
as defined in Section 501(c)(9) of the Code providing for the same or other
benefits), deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation rights, post-retirement benefits or other forms of incentive
compensation or benefits, social security and other employee fringe benefit
plans, domestic or foreign, entered into or maintained (or required to be
maintained under any governmental law or regulation), or contributed to, by
Seller, any Subsidiary or any other corporation, trade or business which is now,
or at the relevant times was, a member of a controlled group of corporations,
trades or businesses with the Seller or any Subsidiary, as defined in Sections
414(b) or (c) of the Code ("ERISA Affiliate") for the benefit of its employees
or former employees (all of the foregoing being herein called "Benefit Plans").
(b) The Seller has delivered to Buyer true and complete copies of all such
Benefit Plans (or a written description of any unwritten Benefit Plan), any
related trust agreements and insurance contracts, and all amendments thereto and
any written interpretations thereof together with, where applicable, (i) the
most recent summary plan description, (ii) the three most recent annual reports
(Form 5500 series, including all schedules thereto) prepared in connection with
any such Benefit Plan, and (iii) the three most recent actuarial valuation
reports prepared in connection with any such Benefit Plan.
(c) Each Benefit Plan that is intended to be qualified under Section 401(a)
of the Code has been so qualified and no event has occurred since the date of
such determination that would adversely affect such qualification; each trust
created under any such Benefit Plan is exempt from tax under Section 501(a) of
the Code and has been so exempt during the period from creation to date. The
Seller has provided Buyer with the most recent determination letters from the
Internal Revenue Service relating to such Benefit Plans and such determination
letter includes any new or modified requirements under the Tax Reform Act of
1986 and subsequent legislation enacted thereafter. Each Benefit Plan is and has
been administered in all respects in accordance with its terms, and ERISA, the
Code and any other applicable statute, order or governmental rule or regulation.
There are no investigations by any governmental authority, termination
proceedings or other claims (except claims for benefits payable in the normal
operation of the Benefit Plans), suits or proceedings pending, or to the
knowledge of the Seller, threatened or anticipated, against or involving any
Benefit Plan or asserting any rights or claims to benefits under Benefit Plan
that could give rise to any liability on the part of the Seller or any
Subsidiary.
(d) No Benefit Plan listed on SCHEDULE 3.15 is (i) a plan subject to the
minimum funding requirements of Title I of ERISA or Section 412 of the Code or
Title IV of ERISA or (ii) a "multiemployer plan"(within the meaning of Section
3(37) of ERISA.), (iii) a "multiple employer plan" within the meaning of Section
4063 or 4064 of ERISA. Neither the Seller nor any Subsidiary or ERISA Affiliate
has ever contributed to or had an obligation to contribute to any multiemployer
plan or multiple employer plan.
(e) With respect to any Benefit Plan which is an "employee benefit plan"
(as defined in Section 3(3) of ERISA), whether or not terminated, currently or
formally maintained or contributed to by the Seller, any Subsidiary or any ERISA
Affiliate, no liability currently exists and no event has occurred and no
condition exists, which could subject the Seller or any Subsidiary, directly or
indirectly (through an indemnification agreement or otherwise), to any
liability, including, without limitation, any liability for prohibited
transactions (as defined in Section 4975 of the Code or Section 406 of ERISA) or
breach of fiduciary duty under Title I of ERISA or any liability under Title IV
of ERISA (including, but not limited to, Section 409 or 502(i) of ERISA) or
Section 412, 4971, 4975 or 4980B of the Code. The Seller has not engaged in, or
is a successor or parent corporation to an entity that has engaged in, a
transaction described in Section 4069 of ERISA.
(f) Except as set forth on SCHEDULE 3.15(F), neither the Seller nor any
Subsidiary is a party to any contract, agreement, plan or arrangement covering
any employee or former employee that, individually or collectively could give
rise to the payment of, nor is the Seller or any Subsidiary otherwise required
or obligated to make any payment, that would constitute an "excess parachute
payment" within the meaning of Section 280G of the Code.
(g) Except as set forth in SCHEDULE 3.15(G), no Benefit Plan or other
agreement of the Seller or any Subsidiary entitles any employee or other person
to any bonus, retirement, severance, job security or similar benefit or any
enhanced benefit of such type solely as a result of the transactions
contemplated by this Agreement. Neither the Seller or any Subsidiary has
communicated to employees or other persons any additional Benefit Plan not set
forth in SCHEDULE 3.15(G) or any change in or termination of any existing
Benefit Plans.
3.16 TRANSACTIONS WITH AFFILIATES. Except as set forth in SCHEDULE 3.16,
neither the Seller nor any Subsidiary is a party to any contract, agreement or
other arrangement with any of its shareholders, officers, directors, employees
or Affiliates.
3.17 INSURANCE. To the Knowledge of Sellers, each insurance policy which is
currently in effect that insures the business, property (whether real or
personal), operations, employees, directors or officers of the Seller or any
Subsidiary is listed on SCHEDULE 3.17 (collectively, the "Insurance Policies")
and is in full force and effect, the premiums due thereunder have been paid as
they became due and payable and neither the Seller nor any Subsidiary has
received any notice of cancellation or termination in respect of any such policy
or is in default thereunder. To the Knowledge of Sellers, such policies are
sufficient for compliance with all requirements of law. SCHEDULE 3.17 sets forth
all claims made by any Seller under any Insurance Policy during the past three
years and to the Knowledge of the Seller there is no basis on which a claim
should or could be made under any such policy with respect to any Seller.
Neither the Seller nor any Subsidiary has received any notice from any of its
insurance carriers that any insurance premiums will be materially increased in
the future or that any insurance coverage listed on SCHEDULE 3.17 will not be
available in the future on substantially the same terms as now in effect.
3.18 LABOR RELATIONS.
(a) No work stoppage against the business of the Seller or any Subsidiary
is pending or, to the Knowledge of the Seller, is threatened. Neither the Seller
nor any Subsidiary is involved in or, to the Knowledge of the Seller, threatened
with any labor dispute, arbitration, lawsuit or administrative proceeding
relating to labor matters involving any of the employees of the Seller or any
Subsidiary with respect to their respective businesses. Other than those
described on SCHEDULE 3.18(A), there are no unwritten personnel policies, rules,
practices or procedures applicable to employees of the Seller or any Subsidiary,
and no employee of the Seller or any Subsidiary is on long-term disability
leave, extended absence leave or is receiving workers' compensation benefits.
(b) Except as set forth on SCHEDULE 3.18(B), neither the Seller nor any
Subsidiary:
(i) is liable for any accrued bonus compensation, vacation
pay, severance pay or arrears of wages except as reflected on the
Financial Statements;
(ii) is currently involved in or has had any activity or
proceedings by a labor union or representative thereof to
organize any of its employees and no such activity or proceeding
is or has been threatened against the Seller or any Subsidiary;
(iii) is subject to any pending or, to the Knowledge of the
Seller, threatened complaints or investigations involving the
Seller or any Subsidiary by any Person responsible for the
investigation and enforcement of any foreign, federal, state or
local labor, employment or discrimination laws, statutes, public
policies, orders, regulations, ordinances or other requirements
respecting any labor, employment and employment practices,
discrimination, terms and conditions of employment, or wages and
hours; or
(iv) is bound by or is party to any collective bargaining or
similar agreement.
3.19 LOCATION OF OFF SITE ASSETS. Except as set forth on Schedule 3.19, all
of the Tangible Personal Property owned or leased by the Seller or any
Subsidiary is located on the Properties owned or leased by the Seller or any
Subsidiary as of the date hereof.
3.20 INVENTORIES. All inventory of each of the Sellers has been and will be
acquired in the ordinary course of business and consistent with its prior
practice. All of the inventory of each of the Sellers is reflected in the
Financial Statements, has been, and as of the Closing will be valued at the
lower of cost (determined on a first-in first-out basis) or market value in
accordance with GAAP. Schedule 3.20 sets forth the standard inventory write-down
policy for the Sellers as reflected on and consistently applied with respect to
the Financial Statements. None of the Sellers is under any liability or
obligation with respect to the return or repurchase of any goods in the
possession of customers except for amounts which are not material and are
consistent with historical levels of returns and allowances.
3.21 CUSTOMERS. SCHEDULE 3.21 sets forth (a) the names and addresses of all
customers of each Seller that ordered goods and services from such Seller with
an aggregate value for each such customer of $100,000 or more during the
twelve-month period ended October 31, 1997 and (b) the amount for which each
such customer was invoiced during such period. To the Knowledge of Sellers, no
Seller has received any notice or has any reason to believe that any significant
customer of such Seller (i) has ceased, or will cease, to use the products,
goods or services of such Seller, (ii) has substantially reduced or will
substantially reduce, the use of products, goods or services of such Seller or
(iii) has sought, or is seeking, to reduce the price it will pay for products,
goods or services of such Seller, including in each case after the consummation
of the transactions contemplated hereby. To the Knowledge of the Sellers, no
customer described in clause (a) of the first sentence of this section has
otherwise threatened to take any action described in the preceding sentence as a
result of the consummation of the transactions contemplated by the Foreign
Acquisition Agreements and the Collateral Agreements.
3.22 SUPPLIERS; RAW MATERIALS. SCHEDULE 3.22 sets forth (a) the names and
addresses of all suppliers from which any Seller ordered raw materials,
supplies, merchandise and other goods and services with an aggregate purchase
price for each such supplier of $100,000 or more during the twelve-month period
ended October 31, 1997 and (b) the amount for which each such supplier invoiced
such Seller during such period. No Seller has received any notice or has any
reason to believe that there has been any material adverse change in the price
of such raw materials, supplies, merchandise or other goods or services, or that
any such supplier will not sell raw materials, supplies, merchandise and other
goods to the Buyer at any time after the Closing Date on terms and conditions
similar to those used in its current sales to such Seller, subject to general
and customary price increases. To the Knowledge of the Sellers, no supplier
described in clause (a) of the first sentence of this section has otherwise
threatened to take any action described in the preceding sentence as a result of
the consummation of the transactions contemplated by the Foreign Acquisition
Agreements and the Collateral Agreements.
3.23 ABSENCE OF CERTAIN BUSINESS PRACTICES. Except as set forth on Schedule
3.23, to the Knowledge of Sellers, none of the Sellers, any officer, employee or
agent of any Seller, or any other person acting on their behalf, has, directly
or indirectly, within the past five years given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other person
who is or may be in a position to help or hinder the Business (or assist any
Seller in connection with any actual or proposed transaction relating to the
Business) (i) which subjected or might have subjected any Seller to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
which if not given in the past, might have had a Material Adverse Effect, (iii)
which if not continued in the future, might have a Material Adverse Effect or
subject any Seller to suit or penalty in any private or governmental litigation
or proceeding, (iv) for any of the purposes described in Section 162(c) of the
Code or (v) for the purpose of establishing or maintaining any concealed fund or
concealed bank account.
3.24 CONFIDENTIALITY. Except as set forth on SCHEDULE 3.24, the Sellers
have taken all steps necessary to preserve the confidential nature of all
material confidential information (including, without limitation, any
proprietary information) with respect to the Business, including but not limited
to the manufacturing or marketing of any of the Sellers' products or services.
3.25 NO GUARANTEES. None of the obligations or liabilities of the Business
or of the Sellers incurred in connection with the operation of the Business is
guaranteed by or subject to a similar contingent obligation of any other Person.
No Seller has guaranteed or become subject to a similar contingent obligation in
respect of the obligations or liabilities of any other Person. Except as set
forth in Schedule 3.25, there are no outstanding letters of credit, surety bonds
or similar instruments of any Seller or any of its Affiliates in connection with
the Business or the Assets.
3.26 RECORDS. The books of account of the Sellers, insofar as they relate
to or affect the Business and the Assets, are sufficient to prepare the
Financial Statements in accordance with GAAP.
3.27 BROKERS, FINDERS, ETC. All negotiations relating to this Agreement,
the Foreign Acquisition Agreements, the Collateral Agreements, and the
transactions contemplated thereby, have been carried on without the
participation of any Person acting on behalf of any Seller or their respective
Affiliates in such manner as to give rise to any valid claim against the Buyer
or any of its subsidiaries for any brokerage or finder's commission, fee or
similar compensation, or for any bonus payable to any officer, director,
employee, agent or sales representative of or consultant to any Seller or their
respective Affiliates upon consummation of the transactions contemplated hereby
or thereby.
3.28 BUSINESS DESCRIPTION. SCHEDULE 3.28 attached hereto contains an
accurate and substantially complete summary description of Business and the
general development of such business during the past five years, including,
without limitation, (i) the percentage of total sales and revenues and income
attributable to each line of business for its last two fiscal years which
accounted for 10% or more of the Seller's consolidated total sales, and (ii) the
extent to which any Seller makes sales to or derives revenues or makes purchases
from sources located in foreign countries.
3.29 DISCLOSURE. No representation or warranty by the Company contained in
this Agreement nor any statement or certificate furnished or to be furnished by
or on behalf of any Seller to the Buyer or its representatives in connection
herewith or pursuant hereto contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact required to make
the statements contained herein or therein not misleading. To the Knowledge of
Sellers, there is no fact (other than matters of a general economic or political
nature which do not affect the Business uniquely) known to the Company that has
not been disclosed by the Company to the Buyer that might reasonably be expected
to have or result in a Material Adverse Effect.
3.30 FOREIGN SUBSIDIARIES. Any additional representations and warranties of
any Seller contained in each Foreign Acquisition Agreement will be true in all
material respects (a) at and as of the date of such Foreign Acquisition
Agreement and (b) at and as of the Closing Date thereunder with the same effect
as though made at and as of such Closing Date (except as affected by the
transactions contemplated thereby).
3.31 RECEIVABLES. All receivables of any Seller (including accounts
receivable, loans receivable and advances) which are reflected in the 1997
Financial Statements and outstanding as of the Closing Date, and all such
receivables which will have arisen since December 31, 1997, shall have arisen
only from bona fide transactions in the ordinary course of such Seller's
business and shall, to the knowledge of Seller be fully collectible when due in
the aggregate face amounts thereof except to the extent of the normal allowance
for doubtful accounts with respect to accounts receivable computed consistent
with Seller's prior practices as reflected on the 1996 Financial Statements.
3.32 AGENTS. Except for agents for service of process, patent attorneys and
customs brokers, neither the Seller nor any Subsidiary has designated or
appointed any Person to act for it or on its behalf pursuant to any power of
attorney or agency which is presently in effect.
3.33 WARRANTY AND PRODUCT LIABILITY CLAIMS.
(a) Except as disclosed on SCHEDULE 3.33, to the Knowledge of Sellers,
there are no warranties or guaranties under the laws under which the Sellers
operate, expressed or implied, written or oral with respect to any products
manufactured or sold or services rendered in connection with the Business, and
no claims are pending or asserted or, to the Knowledge of the Seller, threatened
that any product of the Seller or any Subsidiary was defective or caused any
injury or harm to any Person or property, including all such claims or
allegations relating to returns, express or implied warranty violations, failure
to warn or similar matters. To the Knowledge of each Company no Person has any
basis upon which to make any such claims. All pending or, to the Knowledge of
any Seller, threatened or asserted claims set forth on SCHEDULE 3.33(A) are
covered by insurance and are not subject to any deductibles other than the
amount of the deductible set forth opposite such claim on such Schedule. There
are no statements, citations or decisions by any Governmental Authority stating
that any product manufactured, marketed or distributed at any time by the Seller
or any Subsidiary is defective or unsafe or fails to meet any standards
promulgated by any such Governmental Authority. There have been no recalls with
respect to any product manufactured, marketed or distributed at any time by the
Seller or any Subsidiary and, to the Knowledge of any Seller, no such recall is
threatened.
(b) SCHEDULE 3.33(B) sets forth all incidents since January 1, 1995 that
have alleged to have been, or that, to the Knowledge of the Seller, could be
alleged to have been, caused by any product manufactured or sold by the Seller
or any Subsidiary or by any services rendered by the Seller or any Subsidiary,
regardless of whether a claim therefor has been asserted or threatened against
any Person.
3.34 NO OTHER AGREEMENTS TO SELL. Neither the Seller nor any Subsidiary is
a party to any agreement to sell all or a portion of any of the capital stock of
the Seller or any Subsidiary or any of its assets (other than the sale of
inventory in the ordinary course of business) to any Person other than Buyer.
3.35 COPIES OF DOCUMENTS. Seller has delivered or will deliver to Buyer and
its advisers on or before January 31, 1998, true, complete and correct copies of
all documents referred to in this ARTICLE III or in any Schedule attached
hereto.
3.36 OFFICERS, DIRECTORS AND KEY EMPLOYEES. To the Knowledge of Sellers,
SCHEDULE 3.36 sets forth the name and total compensation of each person who is
now an officer or director of the Seller or any Subsidiary or an employee,
consultant, agent or other representative of the Seller. Except as set forth on
SCHEDULE 3.36 and as contemplated hereby, none of such persons whose annual rate
of compensation (excluding bonuses and commissions) exceeds $50,000 currently
holding such a position has indicated that he or she will cancel or otherwise
terminate such person's relationship with the Seller or the applicable
Subsidiary. Except as disclosed on Schedule 3.36, the consummation of the
transactions contemplated by the Collateral Agreements will not increase any
liability or benefit right or accelerate any payment under any of the employment
arrangements with persons listed in SCHEDULE 3.36.
3.37. YEAR 2000 COMPATIBILITY. To the Knowledge of Seller, all of the
computer-based systems of each Seller have been upgraded as of the Date hereof
so that such systems operating and effectively processing data for dates on and
after January 1, 2000, including without limitation the processing, accepting,
calculating, storing and outputting of times or dates on or after such date and
any time periods determined or to be determined based on such times or dates.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants the following to the Company, which
representations and warranties shall be true and correct as of the date hereof
and as of the Closing as if made on and as of the Closing, and no specific
representation or warranty shall limit the generality or applicability of a more
general representation or warranty:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power and authority to carry on its business as now being conducted.
Buyer is duly qualified to do business as a foreign corporation and is in good
standing in every jurisdiction in which the operation of its business requires
such qualification, except for failures, if any, to be so qualified and in good
standing which would not have a Material Adverse Effect on it.
4.2 AUTHORITY; BINDING EFFECT. Buyer has full power, authority and capacity
to execute and deliver each of this Agreement and the Collateral Agreements to
which Buyer is a party and to perform the transactions required of Buyer
thereunder and at the Closing. Each of this Agreement and the Collateral
Agreements to which Buyer is a party has been duly authorized, executed and
delivered by Buyer and constitutes the legal, valid and binding obligations of
Buyer enforceable against Buyer in accordance with the terms and provisions
thereof, subject to general equity principles and to applicable bankruptcy,
fraudulent transfer, insolvency, reorganization, moratorium and other similar
laws from time to time in effect affecting the enforcement of creditors' rights
generally (regardless of whether such enforcement is considered in a proceeding
in equity or at law).
4.3 BROKERS, FINDERS, ETC. All negotiations relating to this Agreement and
the transactions contemplated hereby have been carried on without the
participation of any Person acting on behalf of the Buyer Parties in such manner
as to give rise to any valid claim against the Company for any brokerage or
finder's commission, fee or similar compensation.
4.4 FINANCING. To the Knowledge of Buyer, Buyer has the ability to obtain
financing adequate to consummate the transactions contemplated hereby and Buyer
will use its best efforts to deliver to Sellers a comfort letter from a
financial institution relating thereto on or before January 25, 1998 and a
commitment letter from a financial institution on or before February 10, 1998.
ARTICLE V
FURTHER AGREEMENTS OF THE COMPANY.
5.1 CONDUCT OF BUSINESS. From the date hereof to the Closing Date, except
as expressly permitted or required by this Agreement or as otherwise consented
to by the Buyer in writing, the Company will:
(a) carry on the Business in, and only in, the ordinary
course, in substantially the same manner as heretofore conducted
(e.g. not increase the extent of sales promotions and
incentives), and use all reasonable efforts to preserve intact
its present business organization, maintain its properties in
good operating condition and repair, keep available the services
of its present officers and significant employees, and preserve
its relationship with customers, suppliers and others having
business dealings with it, to the end that its goodwill and going
business shall be in all material respects unimpaired following
the Closing;
(b) pay accounts payable and other obligations of the
Business when they become due and payable in the ordinary course
of business consistent with prior practice;
(c) perform in all material respects all of its obligations
under all Contracts and other agreements and instruments relating
to or affecting the Business or the Assets, and comply in all
material respects with all Applicable Laws applicable to it, the
Assets or the Business;
(d) not enter into or assume any material agreement,
contract or instrument relating to the Business, or enter into or
permit any material amendment, supplement, waiver or other
modification in respect thereof;
(e) except as set forth on Schedule 5.1(e), not grant (or
commit to grant) any increase in the compensation (including
incentive or bonus compensation) of any employee employed in the
operation of the Business or institute, adopt or amend (or commit
to institute, adopt or amend) any compensation or benefit plan,
policy, program or arrangement or collective bargaining agreement
applicable to any such employee;
(f) make, declare or pay, after December 31, 1997, any
distributions, or dividends to shareholders of Seller except that
one cash distribution, if made prior to February 1, 1998, shall
be permitted in an aggregate amount not to exceed the amount of
cash reflected in the 1997 Working Capital in excess of
$1,000,000, provided, however, that: (i) the relative mix of
cash, inventory, accounts receivable, accounts payable and other
components of Working Capital at the Closing Date shall not
differ materially from such relative mix at December 31, 1997 and
(ii) the rate of capital expenditures, depreciation and repayment
of long-term indebtedness for the period ending on the Closing
Date shall not differ materially from such rates during 1997;
and.
(g) not take any action or omit to take any action, which
action or omission would result in a breach of any of the
representations and warranties set forth in Section 3.7.
5.2 NO SOLICITATION. During the term of this Agreement, none of the
Sellers, any of their Affiliates or any Person acting on their behalf shall (i)
solicit or encourage any inquiries or proposals for, or enter into any
discussions with respect to, the acquisition of any properties and assets held
for use in connection with, necessary for the conduct of, or otherwise material
to, the Business or (ii) furnish or cause to be furnished any non-public
information concerning the Business to any Person (other than the Buyer and its
agents and representatives), other than in the ordinary course of business or
pursuant to Applicable Law and after prior written notice to the Buyer. No
Seller shall sell, transfer or otherwise dispose of, grant any option or proxy
to any Person with respect to, create any Lien upon, or transfer any interest
in, any Asset, other than in the ordinary course of business and consistent with
this Agreement.
5.3 ACCESS AND INFORMATION.
(a) So long as this Agreement remains in effect and subject to the
provisions of the existing Confidentiality Agreement between Seller and Bacou,
each Seller will (and will cause each of their Affiliates and their and their
Affiliates' respective accountants, counsel, consultants, employees and agents)
give the Buyer, the Buyer's prospective lenders and investors, and their
respective accountants, counsel, consultants, employees and agents, full access
during normal business hours to, and furnish them with all documents, records,
work papers and information with respect to, all of such Person's properties,
assets, books, contracts, commitments, reports and records relating to the
Business, as the Buyer shall from time to time reasonably request. In addition,
the Sellers will permit the Buyer, the Buyer's prospective lenders and
investors, and their respective accountants, counsel, consultants, employees and
agents, reasonable access to such personnel of the Sellers during normal
business hours as may be necessary or useful to the Buyer, provided that access
shall have been approved by Seller, in its review of the properties, assets and
business affairs of the Business and the above-mentioned documents, records and
information. The Sellers will keep the Buyer generally informed as to the
affairs of the Business.
(b) The Company will, and will cause each other Seller to, transfer to the
Buyer at the Closing all books and records relating to the Business.
5.4 FINANCIAL STATEMENTS. Until the Closing, on or before the 21st day of
each month, the Sellers shall deliver to the Buyer unaudited consolidated
financial statements of the Business as at and for the monthly period ending the
last day of the preceding month (the "SUBSEQUENT MONTHLY FINANCIAL STATEMENTS"),
which shall include a balance sheet and statement of income, except that such
monthly financial statements for the month of December will only be available on
an informal basis until the delivery of the 1997 Financial Statements. At the
time that the Subsequent Monthly Financial Statements are delivered to the
Buyer, the Sellers shall by such delivery be deemed to have made the
representations and warranties to the Buyer with respect to such Subsequent
Monthly Financial Statements set forth in Section 5.4.
5.5 PUBLIC ANNOUNCEMENTS. Except as required by Applicable Law, the Sellers
shall not, and they shall not permit any Affiliate to, make any public
announcement in respect of this Agreement or the transactions contemplated
hereby without the prior written consent of the Buyer.
5.6 FURTHER ACTIONS.
(a) The Sellers agree to use all reasonable good faith efforts to take all
actions and to do all things necessary, proper or advisable to consummate the
transactions contemplated hereby by the Expected Closing Date.
(b) The Sellers will, as promptly as practicable, file or supply, or cause
to be filed or supplied, all applications, notifications and information
required to be filed or supplied by any of them pursuant to Applicable Law in
connection with the Foreign Acquisition Agreements, the Collateral Agreements,
the sale and transfer of the Assets pursuant to the Foreign Acquisition
Agreements and the consummation of the other transactions contemplated thereby,
including but not limited to filings pursuant to the HSR Act.
(c) The Sellers, as promptly as practicable, will use all reasonable
efforts to obtain, or cause to be obtained, all Consents (including, without
limitation, all Governmental Approvals and any Consents required under any
Contract) necessary to be obtained by any of them in order to consummate the
sale and transfer of the Assets pursuant to the Foreign Acquisition Agreements
and the consummation of the other transactions contemplated thereby.
(d) The Sellers will, and will cause each of their Affiliates to,
coordinate and cooperate with the Buyer in exchanging such information and
supplying such assistance as may be reasonably requested by the Buyer in
connection with the filings and other actions contemplated by Section 6.2.
(e) At all times prior to the Closing, the Sellers shall promptly notify
the Buyer in writing of any fact, condition, event or occurrence that will or
may result in the failure of any of the conditions contained in Article VIII and
IX to be satisfied, promptly upon either of them becoming aware of the same.
5.7 FURTHER ASSURANCES. Following the Closing, the Sellers shall, and shall
cause each of their Affiliates to, from time to time, execute and deliver such
additional instruments, documents, conveyances or assurances and take such other
actions as shall be necessary, or otherwise reasonably requested by the Buyer,
without expense to Sellers, to confirm and assure the rights and obligations
provided for in this Agreement, the Foreign Acquisition Agreements and in the
Collateral Agreements and render effective the consummation of the transactions
contemplated thereby.
5.8 LIABILITY FOR TRANSFER TAXES. The Buyer shall be responsible for the
timely payment of, and shall indemnify and hold harmless the Sellers against,
all sales (including, without limitation, bulk sales), use, value added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes and fees ("TRANSFERS TAXES"), arising
out of or in connection with or attributable to the transactions effected
pursuant to this Agreement, the Foreign Acquisition Agreements and the
Collateral Agreements. The Buyer shall prepare and either the Seller or Buyer
(as may be required by law) shall timely file all Tax Returns required to filed
in respect of Transfer Taxes. The Buyer's preparation of any such Tax Returns
shall be subject to the Company's approval, which approval shall not be withheld
unreasonably.
5.9 CERTIFICATES OF TAX AUTHORITIES. On or before the Closing Date, the
Seller shall use its best efforts to provide to the Buyer copies of certificates
from the appropriate taxing authority stating that no Taxes are due to any state
or other taxing authority for which the Buyer could have liability to withhold
or pay Taxes with respect to the transfer of the Assets or the Business,
PROVIDED that any failure to provide such certificates to the Buyer which is not
the fault of the Sellers shall not relieve the Buyer of its obligations to enter
into and complete the Closing.
5.10 USE OF BUSINESS NAME. After the Closing, no Seller will, directly or
indirectly, use or do business, or allow any Affiliate to use or due business,
or assist any third party in using or doing business, under the name and mark
"Howard Leight" (or any other name confusingly similar to such name and mark);
provided, however, Howard S. Leight may use this name in a business totally
unrelated to the safety or security business for so long as such business is
controlled by Howard S. Leight, provided that for the purposes of this Agreement
security shall not include any activity related to financings, insurance or
property management.
5.11 ENVIRONMENTAL ASSESSMENT. The Buyer may retain environmental
consultants, including Seller's environmental consultants, to conduct an
environmental assessment of the Real Property and the other assets, equipment
and facilities owned, leased, operated or used by the Sellers in the Business
(the "ENVIRONMENTAL ASSESSMENT"), to include physical inspections of the Real
Property and such assets, equipment and facilities, review of all relevant
records in the possession or custody or under the control of any Seller, review
of relevant governmental agency records and contact with governmental agency
personnel, conduct of sampling activities and any other investigatory activities
of a scope satisfactory to the Buyer. The costs of the Environmental Assessment
shall be borne by the Buyer.
5.12 BANK ACCOUNTS. At least two weeks prior to the Closing the Company
shall deliver to Buyer a list of setting forth all banks and other financial
institutions with which the Company or any Subsidiary maintains an account or a
safe deposit box, showing the account numbers of all such accounts and the names
of the persons authorized as signatories thereon or to act or deal in connection
therewith. The Company and each Subsidiary shall cooperate with Buyer and
execute all necessary documentation to effect fully any changes desired, as of
the Closing, by Buyer in the persons authorized as signatories thereon or to act
or deal in connection therewith.
ARTICLE VI
FURTHER AGREEMENTS OF THE BUYER
6.1 PUBLIC ANNOUNCEMENTS. Prior to the Closing, except as required by
Applicable Law, the Buyer shall not, and shall not permit its Affiliates to,
make any public announcement in respect of this Agreement or the transactions
contemplated hereby without the prior written consent of the Company.
6.2 FURTHER ACTIONS.
(a) The Buyer agrees to use all reasonable good faith efforts to take all
actions and to do all things necessary, proper or advisable to consummate the
transactions contemplated hereby by the Expected Closing Date.
(b) The Buyer will, as promptly as practicable, file or supply, or cause to
be filed or supplied, all applications, notifications and information required
to be filed or supplied by the Buyer Parties pursuant to Applicable Law in
connection with this Agreement, the Foreign Acquisition Agreements, the
Collateral Agreements, the Buyer Parties' acquisition of the Assets pursuant to
this Agreement the Foreign Acquisition Agreements and the consummation of the
other transactions contemplated thereby, including but not limited to filings
pursuant to the HSR Act.
(c) The Buyer will coordinate and cooperate with the Sellers in exchanging
such information and supplying such reasonable assistance as may be reasonably
requested by the Sellers in connection with the filings and other actions
contemplated by Section 5.6.
(d) At all times prior to the Closing, the Buyer shall promptly notify the
Company in writing of any fact, condition, event or occurrence that will or may
result in the failure of any of the conditions contained in Articles VIII and X
to be satisfied, promptly upon becoming aware of the same.
6.3 FURTHER ASSURANCES. Following the Closing, the Buyer shall, and shall
cause its Affiliates to, from time to time, execute and deliver such additional
instruments, documents, conveyances or assurances and take such other actions as
shall be necessary, or otherwise reasonably requested by the Sellers, to confirm
and assure the rights and obligations provided for in this Agreement the Foreign
Acquisition Agreements and in the Collateral Agreements and render effective the
consummation of the transactions contemplated thereby.
6.4 POST CLOSING PAYMENT. As soon as possible following the Closing, Seller
shall furnish to Buyer its internally prepared financial statements which shall
be for the period commencing January 1, 1998 and ending on the Closing Date (the
"Short Period"), prepared in accordance with GAAP applied on a consistent basis,
which financial statements shall be prepared without giving effect to the sale
of the assets to, and the assumption of the Assumed Liabilities by Buyer, which
financial statements shall include the assets, liabilities and results of
operations of Seller, Howard Leight de Mexico S.A. de C.V. and Howard Leight
(Europe) Ltd. on a combined basis and which financial statements shall be
subject to approval by Buyer, which approval shall not be unreasonably withheld.
Buyer will pay to the Seller the amount of the net income of Seller for the
Short Period reflected on such financial statements. In the event that Buyer and
Seller disagree about the amount to be paid by Buyer to Seller pursuant to this
Section 6.4, the parties shall follow the dispute resolution process specified
in the Escrow Agreement.
ARTICLE VII
FOREIGN ACQUISITION AGREEMENTS; COOPERATION.
7.1 FOREIGN ACQUISITION AGREEMENTS; FOREIGN CLOSINGS. Subject to the terms
and conditions hereof and of the respective Foreign Acquisition Agreements, the
Seller will, and will cause each other Seller to, and the Buyer will, and will
cause each other Buyer Party to, perform all of its agreements and obligations
under, and use all commercially reasonable efforts to consummate the
transactions contemplated by, each Foreign Acquisition Agreement and each other
Collateral Agreement to which it is now or hereafter a party, in each case by
the Closing Date. It is the intention of the parties to this Agreement,
notwithstanding the provisions of any Foreign Acquisition Agreement, that no
purchase and sale contemplated by any Foreign Acquisition Agreement shall be
consummated earlier than simultaneously with the Domestic Closing. Accordingly,
each of the parties hereto will take such action as may be necessary to ensure
that no Closing under any Foreign Acquisition Agreement occurs prior to the
Domestic Closing. The representations and covenants on the part of the Sellers
in each Foreign Acquisition Agreement will not be more onerous to Sellers than
those which are provided in this Agreement with respect to the Domestic Assets
in any material respect.
7.2 COOPERATION. Each party shall provide the other with such cooperation
as may reasonably be requested, at the expense of the requesting party (unless
the requesting party is to be indemnified with respect thereto, in which case
such cooperation shall be given at the expense of the indemnifying party), in
connection with the post-Closing matters contemplated by this Agreement,
including, without limitation, the defense of any claims whether existing on the
Closing Date or arising thereafter out of, or relating to, an occurrence or
event happening before, on or after the Closing Date, including without
limitation, by making available all books and records relating thereto and
employees having knowledge of the matters in controversy; PROVIDED, HOWEVER,
Buyer and Seller shall only be required to make available their employees to a
reasonable extent.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF EACH PARTY
The obligations of the parties to consummate the transactions contemplated
hereby shall be subject to the fulfillment on or prior to the Closing Date of
the following conditions:
8.1 HSR ACT NOTIFICATION. In respect of the notifications of the Buyer and
the Company pursuant to the HSR Act, the applicable waiting period and any
extensions thereof shall have expired or been terminated.
8.2 NO INJUNCTION, ETC. Consummation of the transactions contemplated
hereby shall not have been restrained, enjoined or otherwise prohibited by any
Applicable Law, including any order, injunction, decree or judgment of any court
or other Governmental Authority. No court or other Governmental Authority shall
have determined any Applicable Law to make illegal the consummation of the
transactions contemplated hereby or by the Foreign Acquisition Agreements or the
Collateral Agreements, and no proceeding with respect to the application of any
such Applicable Law to such effect shall be pending.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer to consummate the transactions contemplated
hereby shall be subject to the fulfillment (or waiver by the Buyer) on or prior
to the Closing Date of the following additional conditions, which the Company
agrees to use reasonable good faith efforts to cause to be fulfilled:
9.1 REPRESENTATIONS; PERFORMANCE, ETC. The representations and warranties
of the Sellers contained in this Agreement and in the Collateral Agreements (i)
shall be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) at and as of the date hereof, and (ii) shall be repeated and
shall be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) on and as of the Closing Date. Each Seller shall have duly
performed and complied in all material respects with all agreements and
conditions required under this Agreement and each of the Collateral Agreements
to be performed or complied with by it prior to or on the Closing Date. Each
Seller shall have delivered to the Buyer a certificate, dated the Closing Date
and signed by its duly authorized officers, to the foregoing effect.
9.2 FOREIGN CLOSINGS. The conditions to the obligations of the Buyer
Parties to consummate the transactions contemplated by the Foreign Acquisition
Agreements shall have been fulfilled (or waived by the Buyer) and the respective
Sellers and the respective Buyer Parties shall have, concurrently with the
Domestic Closing, consummated the transactions contemplated by the Foreign
Acquisition Agreements.
9.3 CONSENTS. The Company shall have obtained and shall have delivered to
the Buyer copies of (i) all Governmental Approvals required to be obtained by
the Company in connection with the execution and delivery of the Foreign
Acquisition Agreements and the Collateral Agreements and the consummation of the
transactions contemplated hereby or thereby and (ii) all Consents (including,
without limitation, all Consents required under any Contract) necessary to be
obtained in order to consummate the sale and transfer of the Assets pursuant to
the Foreign Acquisition Agreements and the consummation of the other
transactions contemplated thereby and by the Collateral Agreements, unless the
failure to obtain such Consent would not, individually or in the aggregate, have
a Material Adverse Effect.
9.4 NO MATERIAL ADVERSE EFFECT. Except as set forth in Schedule 3.11, no
event, occurrence, fact, condition, change, development or effect shall have
occurred, exist or come to exist since September 30, 1997, that, individually or
in the aggregate, has constituted or resulted in, or could reasonably be
expected to constitute or result in, a Material Adverse Effect.
9.5 CONSULTING AND NON-COMPETITION AGREEMENTS. Howard S. Leight shall have
entered into a Consulting and Non-Competition Agreement, in the form attached
hereto as Exhibit B, pursuant to which such Person agrees not, to engage, either
directly or indirectly, in any business competitive with the Business anywhere
in the world for a period of five years.
9.6 SUBSEQUENT FINANCIAL STATEMENTS. The Buyer shall have received the
Subsequent Monthly Financial Statements. The Subsequent Monthly Financial
Statements shall (a) contain no liabilities different in kind or in scope from
the liabilities set forth in the Audited Balance Sheet, (b) confirm and be
consistent with the information concerning the Business (including the projected
results of operations) previously provided to the Buyer by the Sellers prior to
the date hereof and (c) otherwise be satisfactory to the Buyer. The 1997
Financial Statements shall reflect consolidated earnings before interest and
taxes of at least $10,500,000 and consolidated net worth of at least
$10,716,000, such consolidated numbers to also include the results of United
Kingdom operations in 1997.
9.7 OPINION OF COUNSEL. The Buyer shall have received an opinion, addressed
to it and dated the Closing Date, from counsel to the Company, who shall be
reasonably acceptable to Buyer in substance and form reasonably satisfactory to
the Buyer.
9.8 CORPORATE PROCEEDINGS. All corporate and other proceedings of the
Sellers in connection with the Foreign Acquisition Agreements and the Collateral
Agreements and the transactions contemplated thereby, and all documents and
instruments incident thereto, shall be reasonably satisfactory in substance and
form to the Buyer and its counsel, and the Buyer and its counsel shall have
received all such documents and instruments, or copies thereof, certified if
requested, as may be reasonably requested.
9.9 U.S. TRANSFER DOCUMENTS. The Company shall have delivered to the Buyer
at the Closing all documents, certificates and agreements necessary to transfer
to the Buyer good and marketable title to the Domestic Assets, free and clear of
any and all Liens thereon, other than Permitted Liens, including without
limitation:
(a) a bill of sale, assignment and general conveyance, in
form and substance reasonably satisfactory to the Buyer, dated
the Closing Date, with respect to the Domestic Assets (other than
any Domestic Asset to be transferred pursuant to any of the
instruments referred to in any other clause of this Section 9.9);
(b) assignments of all Contracts, Intellectual Property and
any other agreements and instruments constituting Domestic
Assets, dated the Closing Date, assigning to the Buyer all of the
Company's right, title and interest therein and thereto, with any
required Consent endorsed thereon;
(c) a general warranty deed, or its equivalent in the
jurisdiction where the property is located, dated as of the
Closing Date, with respect to each parcel of Owned Real Property
reasonably satisfactory to Buyer, together with any necessary
transfer declarations or other filings;
(d) an assignment of lease, dated as of the Closing Date,
with respect to each Lease in form reasonably satisfactory to
Buyer, together with any necessary transfer declarations or other
filings; and
(e) certificates of title to all motor vehicles included in
the Domestic Assets to be transferred to the Buyer hereunder,
duly endorsed for transfer to the Buyer as of the Closing Date.
9.10 ENVIRONMENTAL ASSESSMENT. Any Environmental Assessment or report
obtained at Buyer's expense shall be in form and substance satisfactory to the
Buyer and each of the financial institutions and investors providing financing
to the Buyer in connection with the acquisition of the Assets and the
consummation of the other transactions contemplated by this Agreement.
9.11 TITLE POLICIES. The Buyer shall have received at Buyer's expense from
a nationally recognized title insurance company (the "TITLE COMPANY")
satisfactory to the Buyer (a) a fee owner's title insurance policy issued to the
Buyer, and a mortgagee's policy issued to one or more lenders designated by the
Buyer, with respect to each Designated Property that is an Owned Real Property,
and (b) a leasehold title insurance policy issued to the Buyer, and a
mortgagee's policy issued to one or more lenders designated by the Buyer, with
respect to each Designated Property that is a Leased Real Property, in each case
in form and substance satisfactory to the Buyer and the Buyer's lenders,
together with endorsements reasonably requested by the Buyer, including, without
limitation, access, zoning, comprehensive, nonimputation and contiguity
endorsements, in an amount determined by the Buyer, insuring the Buyer and the
Buyer's lenders and issued as of the Closing Date by the Title Company, showing
the Buyer or one of the other Buyer Parties to have a fee simple title to each
Designated Property that is an Owned Real Property, and a valid leasehold estate
in each Designated Property that is a Leased Real Property, in each case subject
only to Permitted Liens. The Company shall have delivered to the Title Company
any affidavits or indemnities required by the Title Company in connection with
the delivery of the owner's title policies, leasehold title policies and any
mortgagee title policies issued to the Buyer's lenders.
9.12 SURVEYS. The Buyer shall have received at Buyer's expense a survey of
each Designated Property, dated within 30 days of the Closing Date, prepared by
a certified or registered surveyor reasonably acceptable to the Buyer and the
Title Company and certified to the Buyer, the Title Company and the Buyer's
lenders, in form and substance satisfactory to the Buyer, the Title Company and
the Buyer's lenders, complying with the current Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys and (a) setting forth an accurate
description of each parcel of Designated Property, (b) locating all
improvements, Liens (setting forth the recording information of any recorded
instruments), setback lines, alleys, streets and roads, (c) showing any
encroachments upon or by any improvements on the Designated Property, and (d)
showing all dedicated public streets providing access to the Designated Property
and the municipal address of any improvements located on the Designated
Property.
9.13 CONSENTS AND ESTOPPELS. The Buyer shall have received consents from
the lessor of each Lease listed on Schedule 3.8(b) to the assignment of such
Lease to the Buyer and consents from the lessor of each Lease listed on Schedule
9.13 to the mortgaging of the tenant's interest under such Lease to the Buyer's
lenders but no such lessor shall be required to subordinate its interest in such
lease. The Buyer shall also have received estoppel certificates addressed to the
Buyer and the Buyer's lenders from the lessor of each Lease, dated within 30
days of the Closing Date, identifying the Lease documents and any amendments
thereto, stating that the Lease is in full force and effect and, to the best
knowledge of the lessor, that the tenant is not in default under the Lease and
no event has occurred that, with notice or lapse of time or both, would
constitute a default by the tenant under the Lease and containing any other
information reasonably requested by the Buyer or the Buyer's lenders. The rental
payment under the Kentucky lease shall have been reduced to fair market rental
(including a CPI formula if it is customary in the marketplace and reflected in
the calculation of such fair market rental), provided that monthly rental at the
commencement of any term shall not be less than the last months' rent prior to
the commencement of such option term based on comparable rentals for a five year
term, and such lease shall be revised to contain customary lease terms with
respect to structural repairs and two five year renewal options at fair market
rentals, provided that the monthly rental at the commencement of any option term
shall not be less than the last months' rent prior to the commencement of such
option term.
9.14 FIRPTA CERTIFICATE. The Buyer shall have received a certificate of the
Company, dated the Closing Date and sworn to under penalty of perjury, setting
forth the name, address and federal tax identification number of the Company and
stating that the Company is not a "foreign person" within the meaning of Section
1445 of the Code, such certificate to be in the form set forth in the Treasury
Regulations thereunder.
9.15 OPTION TO PURCHASE ADJACENT LOT. Howard S. Leight shall have entered
into an agreement with Buyer, granting Buyer an option to acquire that certain
parcel of land owned by Howard S. Leight adjacent to Seller's San Diego facility
during the three year period ending December 15, 2002 for a fair market price
(but not less than $750,000) to be determined by appraisals if the parties do
not agree, Buyer will cooperate with Howard S. Leight in arranging for a like
kind exchange. Buyer will also have sixty (60) day right of refusal if Howard S.
Leight decides to sell or transfer the property at any time. If exercise of this
option would have a materially adverse tax consequence to Mr. Leight (other than
normal capital gain or income taxes), Buyer will cooperate with Mr. Leight in
attempting to mitigate such adverse tax consequences.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF THE SELLER
The obligation of the Seller to consummate the transactions contemplated
hereby shall be subject to the fulfillment (or waiver by the Seller), on or
prior to the Closing Date, of the following additional conditions, which the
Buyer agrees to use reasonable good faith efforts to cause to be fulfilled.
10.1 REPRESENTATIONS, PERFORMANCE. ETC. The representations and warranties
of the Buyer Parties contained in this Agreement and in the Collateral
Agreements (i) shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in all
material respects (in the case of any representation or warranty without any
materiality qualification) at and as of the date hereof and (ii) shall be
repeated and shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in all
material respects (in the case of any representation or warranty without any
materiality qualification) on and as of the Closing Date with the same effect as
though made at and as of such time. Each Buyer Party shall have duly performed
and complied in all material respects with all agreements and conditions
required under this Agreement and each of the Collateral Agreements to be
performed or complied with by it prior to or on the Closing Date. Each Buyer
Party shall have delivered to the Company a certificate, dated the Closing Date
and signed by its duly authorized officer, to the foregoing effect.
10.2 ASSUMPTION AGREEMENT. The Company shall have received from the Buyer
the Assumption Agreement.
10.3 OPINION OF COUNSEL. The Company shall have received an opinion,
addressed to it and dated the Closing Date, of Edwards & Angell, special counsel
for the Buyer, in form and substance reasonably satisfactory to the Company.
10.4 CORPORATE PROCEEDINGS. All corporate proceedings of each Buyer Party
in connection with the Foreign Acquisition Agreements and the Collateral
Agreements and the transactions contemplated thereby, and all documents and
instruments incident thereto, shall be reasonably satisfactory in substance and
form to the Company, and its counsel, and the Company and its counsel shall have
received all such documents and instruments, or copies thereof, certified if
requested, as may be reasonably requested.
10.5 FOREIGN CLOSINGS. The conditions to the obligations of the Sellers to
consummate the transactions contemplated by the Foreign Acquisition Agreements
shall have been fulfilled (or waived by the Sellers) and the respective Sellers
and the respective Buyer Parties shall have, concurrently with the Domestic
Closing, consummated the transactions contemplated by the Foreign Acquisition
Agreements.
10.6 CONSENTS AND APPROVALS. The Sellers shall have obtained all
Governmental Approvals necessary to consummate the transactions contemplated
hereby.
10.7 COLLATERAL AGREEMENTS. The Buyer shall have entered into each of the
Collateral Agreements to which it is a party.
10.8 RECEIPT OF PURCHASE PRICE. Seller and Escrow Agent shall have received
the payment of the Purchase Price as described in Section
2.2.
ARTICLE XI
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
11.1 EMPLOYMENT OF THE COMPANY'S EMPLOYEES.
(a) The Seller will, and will cause each other Seller to, use all
reasonable efforts to cause its employees to make available their employment
services to the Buyer Parties. For a period of two years from the Closing Date,
the Seller will not, and will not permit any of its Affiliates to, solicit,
offer to employ or retain the services of or otherwise interfere with the
relationship of any Buyer Party with any Person employed by or otherwise engaged
to perform services for any Buyer Party in connection with the operation of the
Business.
(b) Effective as of the Closing Date, Buyer shall offer employment to all
employees who are employed by the Sellers at the same wage or salary levels
(other than executive employees and the Excluded Employees), as applicable, and
with employee benefits that are substantially equivalent to those now
applicable. Those employees who accept such offers of employment effective as of
the Closing Date shall be referred to herein as the "TRANSFERRED EMPLOYEES".
Effective as of the Closing Date, the Buyer shall assume all liabilities of the
Sellers in respect of the Transferred Employees, except as provided in Section
2.6. Nothing in this Article XI or in this Agreement shall be construed to in
any way limit or restrict the ability or authority of the Buyer or any of its
Affiliates to terminate the employment of any employee or to change the benefit
afforded to any employee at any time.
11.2 PENSION BENEFIT PLANS.
Effective as of the Closing Date, the Buyer shall assume the defined
contribution plan of Seller.
11.3 EMPLOYMENT TAXES.
(a) The Company will, and the Buyer will and will cause the other Buyer
Parties to, (i) treat the Buyer Parties as a "successor employer" and the
Company as a "predecessor," within the meaning of sections 3121(a)(1) and
3306(b)(1) of the Code, with respect to Transferred Employees who are employed
by the Buyer Parties for purposes of Taxes imposed under the United States
Federal Unemployment Tax Act ("FUTA") or the United States Federal Insurance
Contributions Act ("FICA") and (ii) cooperate with each other to avoid, to the
extent possible, the filing of more than one IRS Form W-2 with respect to each
such Transferred Employee for the calendar year within which the Closing Date
occurs.
(b) At the request of the Buyer with respect to any particular applicable
Tax law relating to employment, unemployment insurance, social security,
disability, workers' compensation, payroll, health care or other similar Tax
other than Taxes imposed under FICA and FUTA, the Company will, and will cause
the other Sellers (if applicable) to, and the Buyer will and will cause the
other Buyer Parties (if applicable) to, (i) treat the Buyer Parties as a
successor employer and the Company or the other Sellers (if applicable) as a
predecessor employer, within the meaning of the relevant provisions of such Tax
law, with respect to Transferred Employees who are employed by the Buyer (or, if
applicable, the other Buyer Parties) and (ii) cooperate with each other to
avoid, to the extent possible, the filing of more than one individual
information reporting form pursuant to each such Tax law with respect to each
such Transferred Employee for the calendar year within which the Closing Date
occurs.
(c) Buyer and the Buyer Parties shall be responsible for any employment
taxes payable to Transferred Employees with respect to their employment after
the Closing Date.
ARTICLE XII
TERMINATION
12.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by the written agreement of the Buyer and the Company;
(b) by the Buyer by written notice to Seller following
thirty days notice and opportunity to cure or such fewer days as
may be left prior to March 31, 1998 following Buyer's Receipt of
Notice of such matter if (i) the representations and warranties
of Seller shall not have been true and correct in all respects
(in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the
case of any representation or warranty without any materiality
qualification) as of the date when made or (ii) if any of the
conditions set forth in Article IX shall not have been, or if it
becomes apparent that any of such conditions will not be,
fulfilled by 5:00 p.m. San Diego time on March 31, 1998, unless
such failure shall be due to the failure of the Buyer to perform
or comply with any of the covenants, agreements or conditions
hereof to be performed or complied with by it prior to the
Closing; or
(c) by Seller by written notice to the Buyer following
thirty days notice and opportunity to cure or such fewer days as
may be left prior to March 31, 1998 following Seller's Receipt of
Notice of such matter if (i) the representations and warranties
of the Buyer shall not have been true and correct in all respects
(in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the
case of any representation or warranty without any materiality
qualification) as of the date when made or (ii) if any of the
conditions set forth in Article X shall not have been, or if it
becomes apparent that any of such conditions will not be,
fulfilled by 5:00 p.m. San Diego time on March 31, 1998, unless
such failure shall be due to the failure of Seller to perform or
comply with any of the covenants, agreements or conditions hereof
to be performed or complied with by it prior to the Closing.
12.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to the provisions of Section 12.1, this Agreement shall
become void and have no effect, without any liability to any Person in respect
hereof or of the transactions contemplated hereby on the part of any party
hereto, or any of its directors, officers, employees, agents, consultants,
representatives, advisers, stockholders or Affiliates, except as specified in
Section 15.1 and except for any liability resulting from such party's breach of
this Agreement.
ARTICLE XIII
REMEDIES
13.1 REMEDIES
(a) BY SELLER. Seller covenants and agrees to defend, indemnify and hold
harmless the Buyer, its officers, directors, employees, agents, advisers,
representatives and Affiliates (collectively, the "BUYER INDEMNITIES") from and
against, and pay or reimburse the Buyer Indemnitees for, any and all claims,
liabilities, obligations, losses, fines, costs, royalties, proceedings,
deficiencies or damages (whether absolute, accrued, conditional or otherwise and
whether or not resulting from third party claims), including out-of-pocket
expenses and reasonable attorneys' and accountants' fees incurred in the
investigation or defense of any of the same or in asserting any of their
respective rights hereunder (collectively, "Losses"), resulting from or arising
out of:
(i) any material breach of any representation or warranty
made by any Seller herein or under any Collateral Agreement or in
connection herewith or therewith;
(ii) any failure of any Seller to perform any covenant or
agreement made or contained herein or in any Collateral Agreement
or fulfill any other obligation in respect hereof or of any
Collateral Agreement; and
(iii) any Excluded Liabilities or Excluded Assets;
provided, however, Buyer shall only be entitled to payment or reimbursement by
Seller of Losses pursuant to this Section 13.1(a) if the aggregate amount of all
Losses is at least $50,000, in which event Buyer shall be entitled to payment of
all Losses, and provided further, however, except with respect to Losses
incurred by any Buyer Indemnitee relating to or arising out of Excluded
Liabilities, as to which there is no limitation ("Excluded Losses"), Seller
shall not be required to make payments pursuant to this Section 13.1(a) to the
extent the aggregate of all amounts paid to Buyer Indemnitees, excluding
payments for Excluded Losses, shall exceed the sum of $2,000,000 reduced by any
amounts previously paid to Seller from the Escrow Account.
(b) BY THE BUYER. The Buyer covenants and agrees to defend, indemnify and
hold harmless Seller and its officers, directors, employees, agents, advisers,
representatives and Affiliates (collectively, the "SELLER INDEMNITIES") from and
against, and pay or reimburse Seller Indemnities for, any and all Losses
resulting from or arising out of:
(i) any material breach of any representation or warranty by
any Buyer Party made or contained herein in any Collateral
Agreement or in connection herewith or therewith; or
(ii) any failure of any Buyer Party to perform any covenant
or agreement made or contained herein or in any Collateral
Agreement or fulfill any other obligation in respect hereof or of
any Collateral Agreement; and
(iii) the Assumed Liabilities;
provided, however, Seller shall only be entitled to payment or
reimbursement by Buyer of Losses pursuant to this Section 13.1(a) if the
aggregate amount of all Losses is at least $50,000, in which event Seller shall
be entitled to payment of all Losses.
13.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. The representations
and warranties contained in this Agreement shall survive the execution and
delivery of this Agreement, any examination by or on behalf of the parties
hereto and the completion of the transactions contemplated herein, but only to
the extent specified below:
(a) except as set forth in clauses (b) and (c) below, the
representations and warranties contained in Articles III and IV
shall survive for a period of two years following the Closing
Date.
(b) the representations and warranties contained in Sections
3.1, 3.4, 4.1 and 4.2 shall survive without limitation; and
(c) the representations and warranties of Seller contained
in Section 3.12 shall survive as to any Tax covered by such
representations and warranties for so long as any statute of
limitations for such Tax remains open, in whole or in part,
including with out limitation by reason of waiver of such statute
of limitations.
ARTICLE XIV
DEFINITIONS, MISCELLANEOUS
14.1 DEFINITION OF CERTAIN TERMS. The terms defined in this Section 14.1,
whenever used in this Agreement (including in the Schedules), shall have the
respective meanings indicated below for all purposes of this Agreement. All
references herein to a Section, Article or Schedule are to a Section, Article or
Schedule of or to this Agreement, unless otherwise indicated.
ACT: the Securities Act of 1933, as amended.
FOREIGN ACQUISITION AGREEMENTS: this Agreement and the Foreign Acquisition
Agreements.
AFFILIATE: means, as to any Person (the "First Person"), any other Person
that is a Family Member of the First Person or that, directly or indirectly,
controls, is under common control with or is controlled by, the First Person,
including, without limitation, all directors, officers and shareholders of the
First Person. "Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a Person, whether
through the ownership of voting securities, by contract or credit arrangement,
as trustee or executor, or otherwise.
AGGREGATE PURCHASE PRICE: as defined in Section 2.4.
AGREEMENT: this Asset Purchase Agreement, including the Schedules hereto.
APPLICABLE LAW: all applicable provisions of all (i) constitutions,
treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Authority, (ii) Governmental
Approvals and (iii) orders, decisions, injunctions, judgments, awards and
decrees of or agreements with any Governmental Authority.
ASSETS: as defined in Section 1.1.
ASSUMED LIABILITIES: as defined in Section 2.5.
ASSUMPTION AGREEMENT: as defined in Section 2.5(b).
AUDITED BALANCE SHEET: the balance sheet contained in the 1996 Financial
Statements.
AUDITED FINANCIAL STATEMENTS: each of the 1994, 1995, 1996 and 1997
Financial Statements.
BUSINESS: the business acquired or to be acquired by the Buyer and the
Buyer Parties pursuant to this Agreement, consisting of the Assets, and the
Assumed Liabilities, but not including the Excluded Assets.
BUSINESS DAY: shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in the State of California are authorized or required
to close.
BUYER: as defined in the first paragraph of this Agreement.
BUYER INDEMNITIES: as defined in Section 13.1(a).
BUYER PARTY: each of the Buyer and each of its direct or indirect
subsidiaries to be parties to the Foreign Acquisition Agreements.
BUYER'S ACCOUNTANTS: KPMG Peat Marwick.
CERCLA: the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C.ss.9601 ET SEQ.
CLOSINGS: the Domestic Closing and the Foreign Closings.
CLOSING DATE: as defined in Section 2.1.
C&L: means Coopers & Lybrand L.L.P.
CODE: the Internal Revenue Code of 1986, as amended.
COLLATERAL AGREEMENTS: the Escrow Agreement, the Foreign Acquisition
Agreements, the Consulting and Non-Competition Agreement and the Employment
Agreements.
COMPANY: another term for Seller.
CONSENT: any consent, approval, authorization, waiver, permit, grant,
franchise, concession, agreement, license, exemption or order of, registration,
certificate, declaration or filing with, or report or notice to, any Person,
including but not limited to any Governmental Authority.
CONSULTING AND NON-COMPETITION AGREEMENT: as defined in Section 9.5.
CONTRACT: as defined in Section 3.14.
CORPORATE BOOKS: as defined in SECTION 3.1.
DAMAGES: has the meaning set forth in SECTION 7.1(A).
DESIGNATED PROPERTIES: the Real Property listed on Schedule 8.1(a).
$ or DOLLARS: lawful money of the United States.
DOMESTIC ASSETS: the Assets other than the Foreign Assets, including
without limitation, all Intellectual Property of the Sellers.
DOMESTIC CLOSING: as defined in Section 2.1.
DOMESTIC OPERATIONS: the Operations of the Business conducted in the United
States by Seller or one of its Subsidiaries.
EMPLOYMENT AGREEMENT: the Employment Agreements to be entered into between
Buyer and each of John Dean, Robert Hanover, Ken D. Meyers and Thomas Wagoner
substantially in the form delivered to the Seller's management on December 5,
1997.
ENVIRONMENTAL ASSESSMENT: as defined in Section 5.11.
ENVIRONMENTAL LAWS: all Applicable Laws relating to the protection of the
environment, to human health and safety, or to any emission, discharge,
generation, processing, storage, holding, abatement, existence, Release,
threatened Release or transportation of any Hazardous Substances, including,
without limitation, (i) CERCLA, the Resource Conservation and Recovery Act, and
the Occupational Safety and Health Act, (ii) all other requirements pertaining
to reporting, licensing, permitting, investigation or remediation of emissions,
discharges, releases or threatened releases of Hazardous Materials into the air,
surface water, groundwater or land, or relating to the manufacture, processing,
distribution, use, sale, treatment, receipt, storage, disposal, transport or
handling of Hazardous Substances, and (iii) all other requirements pertaining to
the protection of the health and safety of employees or the public.
ENVIRONMENTAL LIABILITIES AND COSTS: all Losses, whether direct or
indirect, known or unknown, current or potential, past, present or future,
imposed by, under or pursuant to Environmental Laws, including, without
limitation, all Losses related to Remedial Actions, and all fees, disbursements
and expenses of counsel, experts, personnel and consultants based on, arising
out of or otherwise in respect of: (i) the ownership or operation of the
Business, Real Property or Other Leases or any other real properties, assets,
equipment or facilities, by any Seller, or any of their predecessors or
Affiliates; (ii) the environmental conditions existing on the Closing Date on,
under, above, or about any Real Property or property subject to Other Leases or
any other real properties, assets, equipment or facilities currently or
previously owned, leased or operated by the any Seller, or any of their
predecessors or Affiliates; and (iii) expenditures necessary to cause any Real
Property or any aspect of the Business to be in compliance with any and all
requirements of Environmental Laws as of the Closing Date, including, without
limitation, all Environmental Permits issued under or pursuant to such
Environmental Laws, and reasonably necessary to make full economic use of any
Real Property.
ENVIRONMENTAL PERMITS: any federal, state and local permit, license,
registration, consent, order, administrative consent order, certificate,
approval or other authorization with respect to the any Seller necessary for the
conduct of the Business as currently conducted or previously conducted under any
Environmental Law.
ERISA: the Employee Retirement Income Security Act of 1974, as amended.
ESCROW ACCOUNT: as defined in the Escrow Agreement.
ESCROW AGENT: as defined in the Escrow Agreement.
ESCROW AGREEMENT: that certain Escrow Agreement in substantially the form
of Exhibit A hereto, dated as of the Closing Date, by and between Seller, Buyer
and Sanwa Bank (or other bank of equal stature approved by Buyer, which approval
will not unreasonably be withheld), in its capacity as escrow agent, as the same
may be amended, supplemented, restated or otherwise modified, in each case from
time to time and whether in whole or in part.
EXCLUDED ASSETS: as defined in Section 1.2.
EXCLUDED EMPLOYEES: as listed on Schedule 14(a).
EXCLUDED LIABILITIES: as defined in Section 2.6.
FAMILY MEMBER: as to any Person, such Person's spouse, child (including a
stepchild or an adopted child), grandchildren and any trust for the exclusive
benefit of any one or more of them and a Person controlled at all times by such
Person and beneficially owned by such Person and any one or more of them.
FINANCIAL STATEMENTS: each of the financial statements required to be
provided by Section 3.6.
FOREIGN ACQUISITION AGREEMENT: an asset or stock purchase agreement
relating to a Foreign Operation.
FOREIGN ASSETS: those Assets which are owned or leased or held for use by
or in connection with any Foreign Operation, but not including any Intellectual
Property, all of which constitute Domestic Assets.
FOREIGN CLOSING: as defined in Section 2.1.
FOREIGN OPERATION: any Operation of the Business conducted by a Foreign
Subsidiary.
FOREIGN SUBSIDIARIES: as defined in the first WHEREAS clause of this
Agreement.
GAAP: generally accepted accounting principles as in effect in the United
States applied on a consistent basis.
GERMAN SUBSIDIARY: Howard Leight & Co. GmbH, Optac OHG.
GOVERNMENTAL APPROVAL: any Consent of, with or to any Governmental
Authority.
GOVERNMENTAL AUTHORITY: any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including, without limitation, any government authority, agency, department,
board, commission or instrumentality of the United States, any State of the
United States or any political subdivision thereof, and any tribunal or
arbitrator(s) of competent jurisdiction, and any self-regulatory organization.
HAZARDOUS SUBSTANCES: any substance that: (i) is or contains asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum or
petroleum-derived substances or wastes, radon gas or related materials (ii)
requires investigation, removal or remediation under any Environmental Law, or
is defined, listed or identified as a "hazardous waste," "hazardous material" or
"hazardous substance" thereunder, or (iii) is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous and is regulated by any Governmental Authority or Environmental Law.
HSR APPROVAL: means the expiration or early termination of the waiting
period (including extensions thereof) and the waiver or withdrawal of any
objections, if applicable, under the HSR Act.
HSR ACT: the Hart-Scott-Rodino Anti-trust Improvements Act of 1976, as
amended.
IMPROVEMENTS: has the meaning set forth in SECTION 3.8(C).
INCOME TAX OR INCOME TAXES: any federal, state, local, foreign or other
income tax (including all interest and penalties thereon and additions thereto
whether disputed or not).
INDEBTEDNESS: all obligations, contingent (to the extent required to be
reflected in financial statements prepared in accordance with GAAP) and
otherwise, which in accordance with GAAP should be classified on the obligor's
balance sheet as liabilities, including without limitation, in any event and
whether or not so classified: (i) all debt and similar monetary obligations,
whether direct or indirect; (ii) all liabilities secured by any mortgage,
pledge, security interest, lien, charge or other encumbrance existing on
property owned or acquired subject thereto, whether or not the liability secured
thereby shall have been assumed; (iii) all guarantees, endorsements and other
contingent obligations whether direct or indirect in respect of Indebtedness or
performance of others, including any obligation to supply funds to or in any
manner to invest in, directly or indirectly, the debtor, to purchase
Indebtedness, or to assure the owner of Indebtedness against loss, through an
agreement to purchase goods, supplies or services for the purpose of enabling
the debtor to make payment of the Indebtedness held by such owner or otherwise,
and (iv) obligations to reimburse issuers of any letters of credit.
INDEMNIFIED PARTY: as defined in Section 8.2(d).
INDEMNIFYING PARTY: as defined in Section 8.2(d).
INTERIM FINANCIAL STATEMENTS: the consolidated unaudited balance sheet of
the Seller for the nine month period ending on September 30, 1997 and the
related consolidated unaudited statements of earnings, and stockholders' equity,
including the supporting schedules thereto, of the Seller and each Subsidiary
for such period, certified by the Chief Financial Officer of the Seller as
having been prepared in accordance with GAAP and fairly presenting the financial
position, assets and liabilities of the Seller and each Subsidiary as at such
date and the results of operations of the Seller and each Subsidiary for the
nine months then ended (subject to normal year-end adjustments).
INSURANCE POLICIES: as defined in SECTION 3.17.
INTELLECTUAL PROPERTY: any and all United States and foreign: (a) patents
(including design patents, industrial designs and utility models) and patent
applications (including docketed patent disclosures awaiting filing, reissues,
divisions, continuations-in-part and extensions), patent disclosures awaiting
filing determination, inventions and improvements thereto; (b) trademarks,
service marks, trade names, trade dress, logos, business and product names,
slogans, and registrations and applications for registration thereof (provided
that the name "Howard Leight" shall be limited to uses and applications relating
to safety and security products); (c) copyrights (including software) and
registrations thereof; (d) inventions, processes, designs, formulae, trade
secrets, know-how, industrial models, confidential and technical information,
manufacturing, engineering and technical drawings, product specifications and
confidential business information; (e) mask work and other semiconductor chip
rights and registrations thereof; (f) intellectual property rights similar to
any of the foregoing; (g) copies and tangible embodiments thereof (in whatever
form or medium, including electronic media).
INTELLECTUAL PROPERTY ASSETS: as defined in Section 1.1(h).
INTERIM PERIOD: as defined in Section 4.3.
INVENTORY NOTICE DATE: as defined in SECTION 5.17.
INVENTORIES: as defined in Section 1.1(b).
IRS: the Internal Revenue Service.
KNOWLEDGE: Any of the Sellers shall be deemed to have knowledge if any
officer, director, shareholder or Senior Management Employee (a "Knowledge
Individual") of such Seller shall be deemed to have Knowledge as defined in the
following sentence. A Knowledge Individual will be deemed to have Knowledge of a
particular fact or other matter if: (a) such individual is actually aware of
such fact or other matter; or (b) such individual received written notice
thereof; or (c) such individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of the performance of
his or her duties in a reasonable manner and only if such fact or matter comes
within the customary purview of such duties.
LEASED REAL PROPERTY: as described in SECTION 3.8(B).
LEASED REAL PROPERTY: means all interests leased pursuant to the Leases.
LEASES: means the real property leases, subleases, licenses and occupancy
agreements pursuant to which any Seller is the lessee, sublessee, licensee or
occupant.
LIEN: any mortgage, pledge, hypothecation, right of others, claim, security
interest, encumbrance, lease, sublease, license, occupancy agreement, adverse
claim or interest, easement, covenant, encroachment, burden, title defect, title
retention agreement, voting trust agreement, interest, equity, option, lien,
right of first refusal, charge or other restrictions or limitations of any
nature whatsoever, including but not limited to such as may arise under any
Contracts.
LOSSES: as defined in Section 13.1.
MATERIAL ADVERSE CHANGE: a change that has a Material Adverse Effect.
MATERIAL ADVERSE EFFECT: with respect to any Person, any event, occurrence,
fact, condition, change or effect that is or series of effects that are, in the
aggregate, materially adverse, determined in accordance with past and ongoing
Sellers' business practices, to the business, operations, prospects, results of
operations, condition (financial or otherwise), properties (including intangible
properties), assets (including intangible assets) or liabilities of such Person.
MAXIMUM AMOUNT: as defined in SECTION 7.1(C).
MULTIEMPLOYER PLAN: as defined in Section 3.15(d).
OPERATIONS: each portion of the Business conducted by Seller or any of the
Subsidiaries or their Affiliates.
OWNED INTELLECTUAL PROPERTY: as defined in Section 3.10(a).
OWNED REAL PROPERTY: as defined in SECTION 3.8(D).
OWNED REAL PROPERTY: the real property owned by any Seller, together with
all other structures, facilities, improvements, fixtures, systems, equipment and
items of property presently or hereafter located thereon attached or appurtenant
thereto or owned by any Seller and located on Leased Real Property and all
easements, licenses, rights and appurtenances relating to the foregoing other
than owned real property included in Excluded Assets.
PERMITTED LIENS: (i) Liens reserved against in the Audited Balance Sheet,
to the extent so reserved, (ii) Liens for Taxes not yet due and payable or which
are being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on Seller's books in accordance
with GAAP, or (iii) Liens that, individually and in the aggregate, do not and
would not materially detract from the value of any of the property or assets of
the Business or materially interfere with the use thereof as currently used or
contemplated to be used or otherwise.
PERSON: any natural person, firm, partnership, association, corporation,
company, trust, business trust, Governmental Authority or other entity.
PLAN OR BENEFIT PLAN: as defined in Section 3.15.
PROPERTY OR PROPERTIES: collectively, the Owned Real Property and the
Leased Real Property.
PURCHASE PRICE: as defined in Section 2.2.
REAL PROPERTY: the Owned Real Property and the Leased Real Property.
REAL PROPERTY LAWS: as defined in Section 3.8(e).
RELATED PERSONS: as defined in Section 11.1.
RELEASE: any releasing, disposing, discharging, injecting, spilling,
leaking, leaching, pumping, dumping, emitting, escaping, emptying, seeping,
dispersal, migration, transporting, placing and the like, including without
limitation, the moving of any materials through, into or upon, any land, soil,
surface water, ground water or air, or otherwise entering into the environment.
REMEDIAL ACTION: all actions required to (i) clean up, remove, treat or in
any other way remediate any Hazardous Substances; (ii) prevent the release of
Hazardous Substances so that they do not migrate or endanger or threaten to
endanger public health or welfare or the environment; or (iii) perform studies,
investigations and care related to any such Hazardous Substances.
SELLER: as defined in the first paragraph of this Agreement.
SELLER INDEMNITEES: as defined in Section 13.1(b).
SELLERS: as defined in the first WHEREAS clause of this Agreement.
SELLER'S ACCOUNTANTS: Coopers & Lybrand L.L.P.
SENIOR MANAGEMENT EMPLOYEE: any employee of any of the Sellers who is
listed on Schedule 14 (b).
SUBSEQUENT MONTHLY FINANCIAL STATEMENTS: as defined in Section 5.4.
SUBSIDIARY: each corporation or other Person in which Seller owns or
controls, directly or indirectly, capital stock or other equity interests
representing at least 50% of the outstanding voting stock or other equity
interests.
TANGIBLE PERSONAL PROPERTY: furniture, fixtures, equipment, machinery,
vehicles, supplies, inventories, materials, apparatus, tools, implements,
appliances and other tangible personal property of every kind and description.
TAX: any federal, state, provincial, local, foreign or other income,
estimated income, alternative minimum, accumulated earnings, personal holding
company, franchise, capital stock, net worth, capital, profits, deemed profits,
windfall profits, gross receipts, value added, license, sales, use, goods and
services, excise, customs duties, transfer, conveyance, mortgage, registration,
stamp, documentary, recording, premium, severance, environmental, real property,
personal property, ad valorem, intangibles, rent, occupancy, license,
occupational, employment, unemployment insurance, social security, disability,
workers' compensation, payroll, health care, withholding, estimated or other
similar tax, duty, tariff, levy, fee or other governmental charge or assessment
or deficiencies thereof (including all interest and penalties thereon and
additions thereto whether disputed or not).
TAX RETURN: any return, report, declaration, form, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
TRANSACTION EXPENSES: as defined in Section 15.1.
TRANSFERRED EMPLOYEES: as defined in Section 11.1.
TRANSFER TAXES: as defined in Section 5.8.
TREASURY REGULATIONS: the regulations prescribed pursuant to the Code.
WITHHOLDING TAXES: as defined in Section 3.12(a).
1994, 1995 AND 1996 FINANCIAL STATEMENTS: the consolidated audited balance
sheet of the Seller for its fiscal years commencing in January and ending on
December 31, 1994, 1995 and 1996, respectively and the related audited
statements of earnings, stockholders' equity and changes in financial position,
including the footnotes thereto, of the Seller and each Subsidiary for such
period, certified by C&L as having been prepared in accordance with GAAP and
fairly presenting the financial position, assets and liabilities of the Seller
and each Subsidiary as at such date and the results of operations of the Seller
and each Subsidiary for such period.
1997 FINANCIAL STATEMENTS: the consolidated audited balance sheet of the
Seller for its fiscal year commencing on January 1, 1997 and ending on December
31, 1997 and the related audited statements of earnings, stockholders' equity
and changes in financial position, including the footnotes thereto, of the
Seller and each Subsidiary for such period, certified by C&L as having been
prepared in accordance with GAAP and fairly presenting the financial position,
assets and liabilities of the Seller and each Subsidiary as at such date and the
results of operations of the Seller and each Subsidiary for such period, which
financial statements will be delivered by Seller to Buyer on or before February
15, 1998.
1997 WORKING CAPITAL: as defined in Section 3.6(e)
ARTICLE XV
MISCELLANEOUS
15.1 EXPENSES. Except as otherwise specifically provided in this Agreement
and the Collateral Agreements, Seller, on the one hand, and the Buyer, on the
other hand, shall bear their respective expenses, costs and fees (including
attorneys, auditors' and financing commitment fees) in connection with the
transactions contemplated hereby, including the preparation, execution and
delivery of this Agreement and compliance herewith (the "TRANSACTION EXPENSES"),
whether or not the transactions contemplated hereby shall be consummated.
15.2 SEVERABILITY. If any provision of this Agreement, including any
phrase, sentence, clause, Section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
15.3 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or
delivery or (d) sent by telecopy or telegram.
(i) if to the Buyer to,
Bacou USA, Inc.
10 Thurber Boulevard
Smithfield, RI 02917
Attn: Philip B. Barr, Jr.
with a copy to:
Richard M.C. Glenn, III
Edwards & Angell
2700 Hospital Trust Tower
Providence, RI 02903
(ii) if to the Company,
Howard Leight Industries, Inc.
7828 Waterville Road
San Diego, CA 92173
Attn: John Dean, CEO and Bob Hanover, CFO
with a copy to:
Murray D. Fischer, Esq.
433 N. Camden Drive
Suite 888
Beverly Hills, CA 90210
or, in each case, at such other address as may be specified in writing to
the other parties hereto.
All such notices, requests, demands, waivers and other communications shall
be deemed to have been received (w) if by personal delivery on the day after
such delivery, (x) if by certified or registered mail, on the seventh business
day after the mailing thereof, (y) if by next-day or overnight mail or delivery,
on the day delivered, (z) if by telecopy or telegram, on the next day following
the day on which such telecopy or telegram was sent, provided that a copy is
also sent by certified or registered mail.
15.4 HEADINGS. The headings contained in this Agreement are for purposes of
convenience only and shall not affect the meaning or interpretation of this
Agreement.
15.5 ENTIRE AGREEMENT. This Agreement (including the Schedules hereto) and
the Collateral Agreements (when executed and delivered) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof.
15.6 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original and all of which shall together
constitute one and the same instrument.
15.7 GOVERNING LAW, ETC. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the internal laws of the
State of California, without giving effect to the conflict of laws rules
thereof.
15.8 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
15.9 ASSIGNMENT. This Agreement shall not be assignable or otherwise
transferable by any party hereto without the prior written consent of the other
party hereto, PROVIDED that the Buyer may assign this Agreement to any
Subsidiary of the Buyer or to any lender to the Buyer or any Subsidiary or
Affiliate thereof as security for obligations to such lender in respect of the
financing arrangements entered into in connection with the transactions
contemplated hereby and any refinancings, extensions, refundings or renewals
thereof, PROVIDED, FURTHER, that no assignment to any such lender shall in any
way affect the Buyer's obligations or liabilities under this Agreement.
15.10 NO THIRD PARTY BENEFICIARIES. Except as provided in Article XIII with
respect to indemnification of Indemnified Parties hereunder, nothing in this
Agreement shall confer any rights upon any person or entity other than the
parties hereto and their respective heirs, successors and permitted assigns.
15.11 AMENDMENT; WAIVERS, ETC. No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies that any party may otherwise have at
law or in equity. The rights and remedies of any party based upon, arising out
of or otherwise in respect of any inaccuracy or breach of any representation,
warranty, covenant or agreement or failure to fulfill any condition shall in no
way be limited by the fact that the act, omission, occurrence or other state of
facts upon which any claim of any such inaccuracy or breach is based may also be
the subject matter of any other representation, warranty, covenant or agreement
as to which there is no inaccuracy or breach. The representations and warranties
of Seller shall not be affected or deemed waived by reason of any investigation
made by or on behalf of the Buyer (including but not limited to by any of its
advisors, consultants or representatives) or by reason of the fact that the
Buyer or any of such advisors, consultants or representatives knew or should
have known that any such representation or warranty is or might be inaccurate.
15.12 FOREIGN CURRENCIES. Unless otherwise stated, all dollars specified in
the Foreign Acquisition Agreements and the Collateral Agreements shall be in
U.S. dollars. All foreign currency shall be converted to U.S. dollar equivalents
determined on the basis of the exchange rates published in The Wall Street
Journal on the date three days prior to the relevant Closing (or, if The Wall
Street Journal is not published on such date, the next preceding date on which
it is published).
15.13 BULK SALES COMPLIANCE. Buyer hereby waives compliance by Sellers with
the provisions of the Bulk Sales Law of any state, and Seller warrants and
agreed to pay and discharge when due all claims of creditors which could be
asserted against Buyer or any Buyer Party by reason of such noncompliance to the
extent that such liabilities are Excluded Liabilities, as defined in Section
2.6.
15.14 ARBITRATION. The parties shall make every effort to settle all
disputes arising in connection with this Agreement amicably by negotiations held
in good faith. Failing such amicable settlement, all disputes shall be settled
by one (1) arbitrator (selected by the Company and Buyer) by binding arbitration
in accordance with the laws of California and the rules, regulations and
procedures of the American Arbitration Association ("AAA") except with respect
to the selection of the arbitrator which shall be as provided in this SECTION
15.14. The Company and Buyer agree to appoint the arbitrator within thirty (30)
days of receipt of a notice delivered in accordance with SECTION 15.14 from the
other party setting forth a description of the claim and dispute and requesting
that the arbitrator be appointed. If the parties fail to select an arbitrator
within such thirty (30) day period, either party hereto may instruct the AAA to
appoint an arbitrator. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The site of the arbitration
shall be San Diego, California. The arbitrators shall award reimbursement of
attorneys' fees and other costs of arbitration to the prevailing party, in such
manner as the arbitrators shall deem appropriate. In addition, the losing party
shall reimburse the prevailing party for attorneys' fees and disbursements and
court costs incurred by the prevailing party in successfully seeking any
preliminary equitable relief or judicially enforcing any arbitration award.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
BACOU USA SAFETY, INC.
By:/s/ Philippe Bacou
--------------------------------------------
Name: Philippe Bacou
Title: Chairman
By:/s/ Walter Stepan
--------------------------------------------
Name: Walter Stepan
Title: Chairman, President and CEO
By:/s/ Philip B. Barr, Jr.
--------------------------------------------
Name: Philip B. Barr, Jr.
Title: Executive Vice-President and CFO
HOWARD S. LEIGHT & ASSOCIATES, INC.
By:/s/ Howard S. Leight
--------------------------------------------
Name: Howard S. Leight
Title: President
By:/s/ John Dean
--------------------------------------------
Name: John Dean
Title: Executive Vice-President and CEO
At the Closing of the transactions
contemplated by this Agreement, the
undersigned agrees to enter into a
Consulting Agreement with the Buyer in
the form attached hereto as Exhibit B:
/s/ Howard S. Leight
- ----------------------------------
Howard S. Leight, individually
Exhibit 2(b)
January 12, 1998
Mr. Howard S. Leight
Howard Leight Industries, Inc.
7828 Waterville Road
San Diego, CA 92173
Dear Howard:
Reference is made to that certain Asset Purchase Agreement between Bacou
USA Safety, Inc. and Howard S. Leight & Associates, Inc. dated as of December
31, 1997 (the "Agreement").
In connection with our negotiation of the Agreement, we have discussed
certain additional matters which this letter agreement shall memorialize. First,
this will confirm that the Board of Directors of Bacou USA, Inc. shall vote to
make you a director of Bacou USA, Inc. effective upon the Closing. As a director
of Bacou USA, Inc., you will be entitled to compensation and benefits at the
same rates and amounts applicable generally to outside directors of Bacou USA,
Inc. As with all directors of Bacou USA, Inc., you will be subject to
re-election annually and your continued election to the Board of Directors will
be determined by a vote of its shareholders in their discretion.
In connection with your Consulting Agreement, you will be granted options
to purchase up to 50,000 shares of common stock, $.001 par value, of Bacou USA,
Inc. at a price of $17.00 per share and such option shall remain exercisable for
a period of ten years from the date of grant, which shall be the Closing Date
under the Agreement.
Finally, we understand that you recently formed a new company named Howard
Leight Enterprises, Inc. ("HLE") which will manufacture polyurethane
pre-polymer, the raw material used in the production of foam earplugs by Howard
S. Leight & Associates, Inc. ("HLI") and currently purchased from Hampshire
Chemicals. This will confirm that Bacou USA Safety, Inc. will enter into a
Supply Agreement with HLE pursuant to which Bacou USA Safety, Inc. agrees to
purchase its requirements for polyurethane pre-polymer from HLE for a period of
five years provided that the quality and price of such raw material are
equivalent to that which is then used by HLI and available from third party
suppliers.
If this letter accurately reflects our mutual understandings of all of the
additional agreements between Bacou USA, Inc. and Howard S. Leight other than
the Agreement and the Collateral Agreements, please sign this letter in the
space indicated below.
Very truly yours,
BACOU USA, INC.
By: /s/ Walter Stepan
--------------------------------
Walter Stepan
By: /s/ Philip B. Barr, Jr.
--------------------------------
Philip B. Barr, Jr.
Accepted and Agreed:
/s/ Howard S. Leight
-------------------------
Howard S. Leight
Exhibit 2(c)
January 12, 1998
Mr. Howard S. Leight
Howard Leight Industries, Inc.
7828 Waterville Road
San Diego, CA 92173
Dear Howard:
Reference is made to that certain Asset Purchase Agreement between Bacou
USA Safety, Inc. and Howard S. Leight & Associates, Inc. dated as of December
31, 1997 (the "Agreement").
In connection with the negotiation and execution of the Agreement, we
reached certain additional agreements with respect to your future relationship
with Bacou, S.A. This letter is intended to memorialize those agreements.
As discussed, Bacou, S.A. will cause you to be elected as a member of the
Board of Directors of Bacou USA, Inc. for at least five years, provided that
Bacou, S.A. maintains its majority ownership interest in Bacou USA, Inc.
Further, this will confirm that, in my capacity as Chairman,
President and CEO of Bacou Engineering, S.A., I will vote for your election to
the Board of Directors of Bacou, S.A. and cause you to be so elected for at
least five years, provided that I maintain voting control over the selection of
directors of Bacou, S.A.
While serving as a director of Bacou, S.A., you will be entitled to receive
compensation and benefits at the same levels available to other directors of
Bacou, S.A., including the grant of stock options at such times, in such amounts
and at such prices as granted from time to time to the directors of Bacou, S.A.
If this letter accurately reflects our mutual understandings, please sign
this letter in the space indicated below.
Very truly yours,
BACOU, S.A.
By:/s/ Philippe Bacou
--------------------------------------------
Philippe Bacou
Chairman, President and CEO
BACOU ENGINEERING, S.A.
By:/s/ Philippe Bacou
--------------------------------------------
Philippe Bacou
Chairman, President and CEO
Accepted and agreed:
/s/ Howard S. Leight
- -------------------------------
Howard S. Leight
Exhibit 2(d)
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement, dated as of February 27,
1998, is by and between Bacou USA Safety, Inc., a Delaware corporation (the
"Buyer") and Howard S. Leight & Associates, Inc., a California corporation
("Seller" or "Company"), d/b/a Howard Leight Industries. Except as otherwise
defined herein, capitalized terms used in the Asset Purchase Agreement (defined
below) shall have the same meaning herein as defined in the Asset Purchase
Agreement.
Recitals
Buyer and Seller are parties to that certain Asset Purchase Agreement,
dated as of December 31, 1997, pursuant to which the Buyer is purchasing from
the Seller the Assets and assuming the Assumed Liabilities (the "Asset Purchase
Agreement"); and
As contemplated by the Asset Purchase Agreement, Buyer or its Affiliates
are entering into Foreign Acquisition Agreements with respect to Howard Leight
(Europe) Limited and Howard Leight de Mexico S.A. de C.V.; and
The Closing of the transactions contemplated by the Asset Purchase
Agreement and the Collateral Agreements is occurring on the date hereof; and
Buyer and Seller desire to make certain modifications to the Asset
Purchase Agreement as hereinafter provided.
Agreements
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. Section 2.2 of the Asset Purchase Agreement is hereby deleted in its
entirety and replaced with the following:
2.2 Purchase Price. On the terms and subject to the conditions set
forth in this Agreement and the Foreign Acquisition Agreements, the
Buyer agrees to pay or cause to be paid to Seller and to the
stockholders of the Foreign Subsidiaries an aggregate of U.S. One
Hundred Twenty-Five Million Nine Hundred Thirty-Eight Thousand Six
Hundred Nineteen and 61/100 Dollars ($125,938,619.61) (the "Purchase
Price") and to assume or cause one of the Buyer Parties to assume the
Assumed Liabilities as provided in Section 2.5. The following portions
of the Purchase Price shall be payable at the respective Closings, in
separate payments determined in accordance with Section 2.4, as
follows:
(a) By the wire transfer of U.S. One Hundred Twenty-Three Million
Nine Hundred Thirty-Eight Thousand Six Hundred Nineteen and 61/100
Dollars ($123,938,619.61) in immediately available funds to such bank
account or accounts as per written instructions of Seller and the
stockholders of the respective Foreign Subsidiaries, less:
(i) $10,973 (the U.S. Dollar equivalent of Mexican PS
94,111), being the estimated amount of accrued and unpaid income tax
liabilities of Howard Leight de Mexico S.A. de C.V. (the "Mexican
Subsidiary") with respect to the period from January 1, 1998 through
to the Closing Date;
(ii) $6,289 (the U.S. Dollar equivalent of Mexican Ps
53,924) being the amount of accrued and unpaid income taxes of the
Mexican Subsidiary reflected on its December 31, 1997 Balance Sheet;
(iii) $39,084.32 (the U.S. Dollar equivalent of 335,200 Ps)
being the amount of Mexican withholding tax to be paid by Buyer to
Mexican tax authorities (20% of Purchase Price of shares) of the
Mexican Subsidiary;
(iv) $39,084.32 being the purchase paid to Howard S. Leight
for his shares of Howard Leight de Mexico S.A. de C.V., after
deducting $9,771.08 for his portion of the Mexican withholding taxes;
(v) $439,297 being the U.S. Dollar equivalent of the
December 31, 1997 Net Worth of Howard Leight (Europe) Ltd. (the "UK
Subsidiary"), which amount shall be paid 95%, $417,332.15, to Howard
S. Leight, and 5% $21,964.85, to John Dean as the Selling Stockholders
of the UK Subsidiary;
(vi) $11,900 (the U.S. Dollar equivalent of (pound) 7,167),
being the estimated amount of accrued and unpaid income tax
liabilities of the UK Subsidiary with respect to the period from
January 1, 1998 through to the Closing Date; and
(vii) $70,860 (the U.S. Dollar equivalent of (pound) 43,000)
being the amount of accrued and unpaid income taxes of the UK
Subsidiary reflected on its December 31, 1997 Balance Sheet.
(b) By the wire transfer delivery of U.S. Two Million Dollars
($2,000,000) in immediately available funds to the Escrow Agent
pursuant to the Escrow Agreement which will be in effect for two
years. Interest on Escrow Funds not subject to claims shall be payable
to Seller periodically. At the end of the first year, $1,000,000 of
the funds held by Escrow Agent less the amount of claims, if any, made
by Buyer under Section 13.1 of this Agreement, shall be returned to
Seller in accordance with the Escrow Agreement.
2. Section 2.5(a) of the Asset Purchase Agreement is hereby amended by
adding the following additional sentence at the end of the paragraph:
Notwithstanding the foregoing, the Buyer Parties are not assuming
and the Assumed Liabilities shall not include, any liabilities or
obligations with respect to the California Statewide Communities
Development Authority Weekly Adjustable/Fixed Rate Industrial
Development Revenue Bonds, Series 1995B (Howard S. Leight &
Associates, Inc. Project) (the "Bonds"). In order to facilitate the
release of Liens held by Sanwa Bank California on its assets as
indirect security for the Bonds, Seller has entered into a Repayment
and Lien Release Agreement dated as of February 26, 1998 with Buyer
and said Bank, and, notwithstanding anything to the contrary contained
herein, said Agreement shall govern as to the payment and receipt of
all amounts described therein.
3. Clause (b) of Section 2.6 of the Asset Purchase Agreement (Excluded
Liabilities) is hereby deleted in its entirety and replaced with the following
new subsection:
(b) liabilities and obligations relating to or arising out of any
facts or circumstances of which any of the Sellers had Knowledge,
which should have been but were not disclosed in any applicable
provision of the Agreement, the Collateral Agreements or the
Schedules.
4. Clause (d) of Section 2.6 of the Asset Purchase Agreement is hereby
amended by inserting the following companies following the reference to "Howard
Leight GmbH": "Point Zero, Howard Leight, LLC, Howard Leight International,
Inc., Howard Leight Enterprises, Inc., dba Howard Leight Medical, Howard Leight
Enterprises S. de R.L. de C.v., Howard Leight Europe, Inc., Howard Leight
Atlantic, Inc."
5. The following new or amended Schedules, attached hereto as Exhibit A,
are hereby delivered in accordance with the Asset Purchase Agreement and shall
supersede the Schedules bearing the same number which were delivered and
approved at the time of the execution of the Asset Purchase Agreement:
Schedule 1.2 - Excluded Assets.
Schedule 2.6(c) - Excluded Liabilities.
Schedule 3.2 - Outstanding Stock.
Schedule 3.3 - Foreign Subsidiaries.
Schedule 3.6(b) - Interim Financial Statements.
Schedule 3.7 - Interim Changes.
Schedule 3.9(b) - Violations.
Schedule 3.10(a) - Intellectual Property Rights (Title).
Schedule 3.10(c) - Intellectual Property Rights (No Litigation).
Schedule 3.11(c) - Litigation.
Schedule 3.12(f) - Taxes (Litigation).
Schedule 3.14(a) - Contracts.
Schedule 3.15 - Benefit Plans.
Schedule 3.18(a) - Labor Relations.
Schedule 3.33(b) - Product Warranty Claims.
Schedule 3.36 - Officers, Directors and Key Employees.
Schedule 14(b) - Senior Management Employees.
6. It is acknowledged that Buyer has agreed with Seller to acquire all of
the outstanding shares of the Mexican and UK Subsidiaries and, therefore, to the
extent any Excluded Liabilities exist or are suffered or incurred in the future
by either of such Companies, Seller will fully protect and hold Buyer and such
companies harmless from and against all Losses relating to or arising with
respect to such Excluded Liabilities. Seller agrees that amounts payable to
Buyer or the UK and Mexican Subsidiaries pursuant to this paragraph 6 shall be
deemed to be Excluded Liabilities. Without limiting the foregoing, it is
expressly agreed that if any Income Taxes are assessed or become payable by the
Mexican or the UK Subsidiaries with respect to periods ending on or before the
Closing Date in excess of the amount deducted with respect thereto in Paragraph
3 above, such taxes shall be deemed Excluded Liabilities. Conversely, Buyer
agrees to promptly remit to Seller, by no later than January 1, 1999, the
amount, if any, by which the amounts deducted for accrued and unpaid income tax
liabilities in paragraph 3 above, exceed the actual amount of such liabilities.
Should Seller owe any unpaid income tax liabilities of which it is obligated to
pay, such sum shall be remitted from the Escrow Account to Buyer
contemporaneously with the final disbursement of funds from the Escrow Account.
7. Schedule 3.28 of the Asset Purchase Agreement is hereby deleted in its
entirety.
8. Except as modified by this Amendment, the Asset Purchase Agreement is
hereby ratified and confirmed to be in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first above written.
BACOU USA SAFETY, INC.
By: /s/ Walter Stepan
-------------------------------------------
Name: Walter Stepan
Title: Chairman, President and CEO
By: /s/ Philip B. Barr, Jr.
-------------------------------------------
Name: Philip B. Barr, Jr.
Title: Vice Chairman, Treasurer and
Secretary
HOWARD S. LEIGHT & ASSOCIATES, INC.
/s/ Howard S. Leight
-------------------------------------------
Name: Howard S. Leight
Title: President
By: /s/ John Dean
-------------------------------------------
Name: John Dean
Title: Executive Vice-President and CEO
Exhibit 2(e)
UNITED KINGDOM ACQUISITION AGREEMENT
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of February 27, 1998, by and among Bacou
USA Safety, Inc., a Delaware corporation ("Buyer"), HOWARD S. LEIGHT &
ASSOCIATES, INC. (d/b/a Howard Leight Industries), a California corporation
having a place of business at 7828 Waterville Road, San Diego, California 92173
(the "Company"), and Howard S. Leight, a resident of Malibu, California and John
Dean, a resident of Rancho Santa Fe, California (the "Selling Stockholders").
Capitalized terms used in this Agreement but not otherwise defined shall have
the same meaning herein as defined in the Asset Purchase Agreement (as defined
below).
Recitals
Buyer and the Company have entered into an Asset Purchase Agreement dated
as of December 31, 1997, as amended (the "Asset Purchase Agreement"), which
provides for the execution and delivery of certain "Foreign Acquisition
Agreements" of which this Agreement is one; and
Under the terms of the Asset Purchase Agreement, Buyer has requested that
all of the capital stock of Howard Leight (Europe) Limited be sold to Buyer, all
upon the terms hereinafter set forth; and
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Sale of Shares at Net Worth Value. The Selling Stockholders hereby sell
and transfer to Buyer ownership of that number of the 100 Ordinary shares (the
"Purchased Shares"), having a stated value of (pound)l each, of Howard Leight
(Europe) Limited (the "UK Subsidiary") set forth opposite their respective
signatures set forth below, who in turn accepts them and agrees to pay $439,297
(the "UK Purchase Price") (such payment being an amount equal to (pound)266,580
based on the conversion ratio reported in the U.S. edition of the Wall Street
Journal on February 25, 1998 and being the Stockholders Equity of the UK
Subsidiary as of December 31, 1997) a total being allocated among the Selling
Stockholders pro rata in proportion to their ownership of the Purchased Shares.
2. Delivery of Share Certificates. The parties acknowledge the delivery to
the Buyer of the certificates representing the Purchased Shares duly endorsed on
the back as required under law. Company covenants and agrees to deliver to
Buyer, at the time of execution hereof or as soon as reasonably practicable
thereafter, all original documents pertaining to the Company (deeds, corporate
books, registrations, certificates, authorizations and other documents) that it
or the Selling Stockholders may have in their possession, as well as the items
set forth in Schedule I attached hereto, unless delivery of the items set forth
in Schedule is waived by Buyer.
3. Notice from Company to UK Subsidiary. By virtue of the sale which takes
place through this contract, Company and Selling Stockholders promise to notify
counsel for the UK Subsidiary of the transfer of the Purchased Shares to the
Buyer so that the same are recorded in the books of the UK Subsidiary.
4. Express Transfer of Corporate and Economic Rights from Company to Buyer.
As of the date of this Agreement, each of the Company and the Selling
Stockholders transfers to Buyer each and every right to which Company and the
Selling Stockholders, respectively, may be entitled to, as the former owners of
the Purchased Shares, so that the rights are now held by the Buyer.
5. Representations and Warranties. Company hereby represents and warrants
the following to Buyer:
(a) That each of the representations and warranties of the Company set
forth in Article III of the Asset Purchase Agreement is hereby made with respect
to the UK Subsidiary and its assets, liabilities and business, and is hereby
ratified, confirmed and restated by the Company with respect to the assets,
liabilities and business of the UK Subsidiary unless the context shall require
otherwise, and is true and correct in all material respects as of the date
hereof. The Company further ratifies, confirms and restates its indemnification
obligations pursuant to Section 13.1(a) of the Asset Purchase Agreement.
(b) The Selling Stockholders are the lawful owners of all of the issued and
outstanding shares of the UK Subsidiary, free and clear of all liens,
encumbrances, restrictions and claims of every kind. The Selling Stockholders
have full legal right, power and authority to enter into this Agreement and to
sell, transfer and convey to Buyer the Purchased Shares pursuant to this
Agreement. The delivery to the Buyer of the Purchased Shares pursuant to the
provisions of this Agreement will transfer to the Buyer valid title thereto,
free and clear of all liens, encumbrances, restrictions and claims of every
kind.
6. Management of the Company. In accordance with the By-laws and the
Corporate Book of the UK Subsidiary, the management of such company is the
responsibility of a Board of Directors. On the date hereof, Company will cause
Messrs. Howard S. Leight and John J. Dean to submit their irrevocable
resignation to their positions of President, Secretary and Treasurer,
respectively, of the Board of Directors of the UK Subsidiary, which documents
are attached hereto as Exhibits Al and A2.
7. Obligations of Buyer and Company. Each of the Buyer and Company hereby
acknowledge and agree that it shall have the rights and obligations with respect
to the UK Subsidiary that it has received or assumed under the Asset Purchase
Agreement.
8. Rights of Assignment. None of the parties may assign this Agreement or
its rights hereunder. Nothing contained in this Agreement shall constitute Buyer
on the one hand, or Company and/or Selling Stockholders on the other hand, as
the partner, agent or representative of each other.
9. Notices. Any notices to be given by any party hereto shall be given in
accordance with the provisions of Section 15.3 of the Asset Purchase Agreement.
10. Governing Law. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the internal laws of
England, without giving effect to the conflict of laws rules thereof.
IN WITNESS HEREOF, each party has caused this instrument to be executed in
its name and behalf by its duly authorized officer, effective as of the date
first written above.
COMPANY:
HOWARD S. LEIGHT &
ASSOCIATES, INC.
By: /s/ John Dean
----------------------------------------
Name: John Dean
Title: Chief Executive Officer
Ownership of Purchased Shares SELLING STOCKHOLDERS:
95 Shares /s/ Howard S. Leight
----------------------------------------
Howard S. Leight
5 Shares /s/ John Dean
----------------------------------------
John Dean
BUYER:
BACOU USA SAFETY, INC.
/s/ Walter Stepan
----------------------------------------
Walter Stepan
Chairman, President and
Chief Executive Officer
/s/ Philip B. Barr, Jr.
----------------------------------------
Philip B. Barr, Jr.
Vice Chairman, Secretary and
Treasurer
Exhibit 2(f)
MEXICAN FOREIGN ACQUISITION AGREEMENT
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of February 27, 1998, by and among Bacou
USA Safety, Inc., a Delaware corporation ("Buyer"), HOWARD S. LEIGHT &
ASSOCIATES, INC. (d/b/a Howard Leight Industries), a California corporation
having a place of business at 7828 Waterville Road, San Diego, California 92173
(the "Seller"), and Howard S. Leight, a resident of 6000 Cavalleri Road, Malibu,
California 90265 (the "Selling Stockholder"). Capitalized terms used in this
Agreement but not otherwise defined shall have the same meaning herein as
defined in the Asset Purchase Agreement (as defined below).
Recitals
Buyer and Seller have entered into an Asset Purchase dated as December 31,
1997, as amended (the "Asset Purchase Agreement"), which provides for the
execution and delivery of certain "Foreign Acquisition Agreements" of which this
Agreement is one; and
Under the terms of the Asset Purchase Agreement, Buyer has requested that
all of the capital stock of Howard Leight de Mexico S.A. de C.V. be sold to
Buyer, all upon the terms hereinafter set forth; and
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Sale of Shares at Net Worth Value. The Seller and Selling Stockholder
hereby sell and transfer ownership of that number of a total of 600 shares of
Series Common, 10,000 shares of Variable Series A and 265,000 shares of Variable
Series B capital stock, par value of 10 Mexican cents each (the "Purchased
Shares") of Howard Leight de Mexico S.A. de C.V. (the "Mexican Subsidiary") set
forth opposite their respective signatures set forth below, to Buyer, who in
turn accepts them and agrees to pay therefor the sum of US $195,421.60 (the US
Dollar equivalent of 1,676,000 Ps based on the exchange rate published by The
Wall Street Journal (.1166) at the close of business on February 24, 1998) (such
amount being the Stockholders Equity of the Mexican Subsidiary as of December
31, 1997); except that one share of said Series Common stock shall be sold and
transferred to Bacou USA, Inc., a Delaware corporation ("Bacou USA"), in order
that there be two stockholders of the Mexican Subsidiary.
2. Delivery of Share Certificates. The parties acknowledge the delivery to
the Buyer of the certificates representing the Purchased Shares duly endorsed on
the back as required under law. Seller covenants and agrees to deliver to Buyer,
at the time of execution hereof, all original documents pertaining to the
Company (deeds, corporate books, registrations, certificates, authorizations and
other documents) that it may have in its possession.
3. Notice from Seller to Mexican Subsidiary. By virtue of the sale which
takes place through this contract, Seller and Selling Stockholder promise to
notify counsel for the Mexican Subsidiary of the transfer of the Purchased
Shares to the Buyer and Bacou USA so that the same are recorded in the
Shareholders Registry Book of the Mexican Subsidiary.
4. Express Transfer of Corporate and Economic Rights from Seller to Buyer.
As of the date of this Agreement, each of Seller and the Selling Stockholder
transfers to Buyer and Bacou USA each and every right to which Seller and the
Selling Stockholder may be entitled to, as the former owners of the Purchased
Shares, so that the rights are now held by the Buyer and Bacou USA, and hereby
waives any right of refusal or similar right they may have to acquire any of the
Purchased Shares. Buyer and Bacou USA acknowledge the rights and obligations
acquired by virtue of its acceptance of the Purchased Shares as set forth above,
and are willing to act as substitute shareholders of the Mexican Subsidiary.
5. Tax Withholding. The parties agree that in accordance with Article 151
of the Federal Income Tax Law, Buyer will carry out any and all withholding
procedures required under law to the extent of twenty percent (20%) of the
stated Mexican Peso value of the foregoing transaction (335,200 Ps).
6. Representations and Warranties. Seller hereby represents and warrants
the following to Buyer:
(a) That each of the representations and warranties of the Company set
forth in Article III of the Asset Purchase Agreement (i) is hereby made with
respect to the Mexican Subsidiary and its assets, liabilities and business, and
is hereby ratified, confirmed and restated by the Seller with respect to the
assets, liabilities and business of the Mexican Subsidiary unless the context
shall require otherwise, and (ii) is true and correct in all material respects
as of the date hereof. The Seller further ratifies, confirms and restates its
indemnification obligations pursuant to Section 13.1(a) of the Asset Purchase
Agreement.
(b) The Seller and the Selling Stockholder are the lawful owners of
all of the issued and outstanding shares of the Mexican Subsidiary, free and
clear of all liens, encumbrances, restrictions and claims of every kind. Each of
the Seller and the Selling Stockholder has full legal right, power and authority
to enter into this Agreement and to sell, transfer and convey to Buyer and Bacou
USA the Purchased Shares pursuant to this Agreement. The delivery to the Buyer
and Bacou USA of the Purchased Shares pursuant to the provisions of this
Agreement will transfer to the Buyer and Bacou USA valid title thereto, free and
clear of all liens, encumbrances, restrictions and claims of every kind.
7. Obligations of Buyer and Seller. Each of the Buyer and Seller hereby
acknowledges and agrees that it shall have the rights and obligations with
respect to the Mexican Subsidiary that it has received or assumed under the
Asset Purchase Agreement.
8. Management of the Company. In accordance with the By-laws and the
Corporate Book of the Mexican Subsidiary, the management of such company is the
responsibility of a Board of Directors. On the date hereof, Seller will cause
Messrs. Howard S. Leight, John J. Dean and William Bugarini to submit their
irrevocable resignation to their positions of President, Secretary and
Treasurer, respectively, of the Board of Directors of the Mexican Subsidiary,
which documents are attached hereto as Exhibits A1 through A3.
9. Rights of Assignment. None of the parties may assign this Agreement or
its rights hereunder. Nothing contained in this Agreement shall constitute Buyer
on the one hand, or Seller and/or Selling Stockholder on the other hand, as the
partner, agent or representative of each other.
10. Notices. Any notices to be given by any party hereto shall be given in
accordance with the provisions of Section 15.3 of the Asset Purchase Agreement.
11. Governing Law. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the internal laws of the
State of California, United States, without giving effect to the conflict of
laws rules thereof.
IN WITNESS WHEREOF, each party has caused this instrument to be executed in
its name and behalf by its duly authorized officer, effective as of the date
first written above.
SELLER:
Ownership of Purchased Shares HOWARD S. LEIGHT &
Common Series Series A Series B ASSOCIATES, INC.
450 9,983 196,267
By: /s/ John Dean
---------------------------------
Title: Chief Executive Officer
SELLING STOCKHOLDER:
150 17 68,733
--- ----- -------
/s/ Howard S. Leight
--------------------------------
Howard S. Leight
Total: 450 10,000 265,000
=== ====== =======
BUYER:
BACOU USA SAFETY, INC.
By: /s/ Walter Stepan
---------------------------------
Walter Stepan
Chairman, President and
Chief Executive Officer
By: /s/ Philip B. Barr, Jr.
---------------------------------
Philip B. Barr, Jr.
Vice Chairman, Secretary
and Treasurer
BACOU USA, INC.
By: /s/ Walter Stepan
---------------------------------
Walter Stepan
Chairman, President and
Chief Executive Officer
By: /s/ Philip B. Barr, Jr.
---------------------------------
Philip B. Barr, Jr.
Executive Vice President
and Chief Financial
Officer
Exhibit 10(a)
CREDIT LINE
The present Credit Line ("Credit Line") is signed in RHODE ISLAND on 19 February
1998, between
BANQUE NATIONALE DE PARIS, a public limited company (societe anonyme) under
French law with a capital of FF 4,822,605,450, whose registered offices are
located at 16 boulevard des Italiens - 75009 Paris, entered on the Paris
Corporate Register under number B 662 042 449,
represented by Mr. Jean LOMBARD, Directeur du Departement Entreprises du Groupe
d'Agences de DROME-ARDECHE,
referred to hereinafter as 'BNP' or 'BANK'
AND
BACOU USA INC., a corporation organized and existing under the law of Delaware
with its principal office at 10 Thurber Boulevard, Smithfield, RI 02917 USA,
represented by Mr. Walter STEPAN, Vice-Chairman, President and CEO, and Mr.
Philip B. BARR Jr., Executive Vice-President and Chief Financial Officer,
referred to hereinafter as 'BACOU USA' or 'Borrower'
PREAMBLE
Under the terms of negotiations carried out between BACOU USA and BNP, BNP
declared that it is prepared, to grant BACOU USA a credit line of USD
110,000,000 (hundred ten million American dollars) under the terms and
conditions set forth below.
IN WITNESS WHEREOF, IT IS AGREED AND DECIDED AS FOLLOWS BETWEEN THE PARTIES TO
THE PRESENT
ARTICLE I - AMOUNT OF THE CREDIT LINE
BNP grants BACOU USA a credit line (referred to hereinafter as the 'Credit
Line') for an amount of USD 110,000,000 (hundred ten million American dollars).
ARTICLE II - OBJECT OF THE CREDIT LINE
The object of the Credit Line is the financing of the acquisition of the
operating assets of Howard Leight Industries of San Diego, California, USA by
BACOU USA.
ARTICLE III - TERM OF THE CREDIT LINE
The Credit Line is granted for a term of seven years starting from the drawing
date as defined in Article V hereafter.
ARTICLE IV - REPAYMENT
The Credit Line shall be repaid quarterly as from the drawing date in
twenty-seven installments of USD 3,928,600 (Three million nine hundred
twenty-eight thousand six hundred American dollars) and a final installment of
USD 3,927,800 (Three million nine hundred twenty seven thousand eight hundred
American dollars).
At all events, the Credit Line shall be repaid in full no later than the last
banking day of the term defined in Article III above.
A banking day is defined for the needs of the present agreement as a business
day. A business day is a day on which dealings in USD are carried on in the
Paris Interbank Market, in London and in New York, and BNP is open for domestic
and foreign exchange business in Paris and wherever applicable, in financial
centers required to be open to permit dealings in connection with this
agreement.
ARTICLE V - TERMS AND CONDITIONS OF DRAWING
The Credit Line shall be drawable fully in one time during a period of twenty
days following the date of signature of the present Agreement, with a prior
notice of two banking days, through the debit of a special account constituting
a simple book statement that will have no legal effects attached to the current
account and which be opened for this purpose on the books of the BNP VALENCE
agency.
The drawing date means in the present Agreement the date of the debit of such
special account.
Such prior notice shall reach BNP no later than 10:00 a.m. (London time) in
accordance with the form fixed in Appendix 1 to the present agreement.
ARTICLE VI - FINANCIAL TERMS AND CONDITIONS
Interest period shall be three months, calculated as from the drawing date.
BACOU USA shall due and pay interest to BNP on the last banking day of each such
periods of three months.
a) Rate of interest:
Interest shall be calculated on the exact number of days of the period
considered based on 360 days per year at the LIBOR rate (London Interbank
Offered Rate) of the USD considered for a period of three months, calculated
under the aegis of the British Bankers Association and published by Telerate -
page 3750/3740 or by any other page that might be substituted for it - at 11:00
a.m. (London time), two working days prior to the drawing date or the beginning
of an interest period, increased by 0.30% per year.
The rate shall be revised at each interest period.
BNP shall notify BACOU USA of the interest rate applicable to each three months
interest period.
b) Interest on arrears:
All sums (including any cost or expenses) not paid on their normal or early due
date shall bear interest ipso jure from the day of the said due date included to
the day of its full payment excluded at the interest rate applicable as defined
above, increased by 1% per year.
Interest shall be capitalized if it is due for a full year in application of
Article 1154 of the Civil Code. These provisions do not apply as the granting of
a delay in payment.
c) Impossibility of determining the rate of interest:
If determination of a rate of interest has become impossible following certain
events, BNP shall notify BACOU USA thereof and the parties shall enter into
negotiation. If an agreement in view of reaching a solution is not reached
within thirty days of the said notification, BACOU USA shall repay the Credit
Line in capital, interest, expenses, incidental expenses and possible costs, it
being understood that the applicable rate of interest shall be BNP's cost of
financing, increased by 1% per year.
d) Unavailability of USD:
If BNP should observe, either on the occasion of the drawing or on the occasion
of a new interest period, that the USD currency is unavailable, it shall advise
BACOU USA thereof as rapidly as possible.
BACOU USA and BNP shall consult in order to select a replacement currency.
Failing agreement within 24 hours of the notice sent to BACOU USA by fax, the
Credit Line is considered cancelled ipso jure, and BACOU USA shall repay and pay
in FRF or in the single European currency the capital, interest, expenses,
commissions and incidental expenses and any possible costs caused to BNP by the
unavailability of the currency used.
The amount in FRF or in the single European currency being repaid and paid shall
be determined in accordance with the most recent quotation of the USD against
the FRF or the single European currency.
e) Commitment fee:
0.20% per year payable quarterly in advance and calculated starting from the
drawing date.
It shall be calculated on the basis of a year of 360 days and payable in USD.
f) Flat fee:
0.08% payable on the drawing date.
g) BACOU USA shall pay a sum of FRF 75.000 Hors Taxes for file costs on the
drawing date.
ARTICLE VII - CONDITIONS PRECEDENT
No drawing will be made before payment by BACOU USA of all sums, fees and
expenses which could be due on the date of such drawing pursuant to this
Agreement and receipt by BNP in a form and substance satisfactory to it of the
following documents:
a) a certified copy of all corporate documents of BACOU USA and of the Guarantor
required to authorize the execution of this Agreement and the Guarantee and to
empower their representatives for this purpose;
b) duly authenticated specimen signatures of each of the empowered
representatives of BACOU USA and of the Guarantor;
c) a certified copy of the constitutive documents of BACOU USA;
d) the Guarantee and evidence it has been duly executed and is in full force and
effect;
e) an opinion of a legal counsel from the State of Rhode Island in the terms of
the Appendix 2 acceptable to BNP and confirming that the representations of
BACOU USA made in Article VIII are true.
ARTICLE VIII - REPRESENTATIONS AND WARRANTIES
BACOU USA represents and warrants to BNP that:
- -- (i) it is a corporation duly organized, validly existing and in good standing
under the laws of the State of Rhode Island;
- -- (ii) the execution and performance of this Agreement do not contravene any
provision of law or regulation to which BACOU USA is subject;
- -- (iii) it has obtained all necessary consents, licenses or authorizations for
the execution and performance of this Agreement and especially it has been
authorized to acquire and transfer on maturity the necessary currencies for
payment of all sums due under this Agreement;
- -- (iv) its capital stock is held of 71.70% by the Guarantor;
- -- (v) no tax, registration fee, stamp or similar duty, nor any deposit or any
registration is required in connection with this Agreement or for validity of
the same;
- -- (vi) no proceedings are underway or, to the knowledge of BACOU USA, are about
to be instituted to prevent or forbid signature or performance of the Credit
Line, or which might have a significant unfavorable effect on the capacity of
BACOU USA to perform its obligations under the present Credit Line;
- -- (vii) no action is underway for the purposes of liquidation, dissolution or
any other similar procedure with regard to BACOU USA;
- -- (viii) there exists no fact that is likely to constitute a Case of Default;
- -- (ix) the choice of French law and the competence of the French courts
provided for in Article XIV below are legitimately binding on BACOU USA and
shall be validly acknowledged by the courts of the State of Rhode Island and the
Federal Courts of the United States of America, and consequently any or all
judgments handed down by the French Courts shall be exequatured and enforceable
in United States of America.
The representations and warranties contained in the present article shall be
considered renewed by BACOU USA at the time of request for drawing.
ARTICLE IX - COVENANTS BY BACOU USA
So long as it is a debtor or may remain a debtor pursuant to the Credit Line,
BACOU USA undertakes:
- -- to hand over to BNP all accounting documents and data that BNP might request;
- -- to immediately inform BNP of all facts that might significantly lessen its
assets or significantly increase the volume of its commitments;
- -- to immediately inform BNP of all facts or circumstances that are likely to
constitute or become one of the cases mentioned in the Article CASES OF DEFAULT;
- -- to assume the financial consequences of changes in parity which might
intervene up to the time of full repayment of the Credit Line.
ARTICLE X - NEGATIVE COVENANTS BY BACOU USA
Until payment in full of all of BACOU's USA obligations to BNP under this
Agreement, BACOU USA covenants and agrees as follows:
1 -- Limitation on Borrowing
BACOU USA shall not incur, create, assume or permit to exist any Debt or
liability on account of deposits or advances or any indebtedness or liability
for borrowed money, or any indebtedness or liability evidenced by any notes,
bonds, debentures or similar obligations, including leases, except (a) Debt to
BNP, (b) Debt existing as of the date of the closing of Credit Line and approved
in writing by BNP including USD. 15,000,000 to CITIZENS BANK OF RI to complete
the financing of the HOWARD LEIGHT INDUSTRIES transaction and up to a total of
USD. 31,000,000 to CITIZENS BANK OF RI under its line of credit to BACOU USA,
(c) Debt pertaining to any capitalized lease obligations provided such Debt when
combined with all other capitalized lease obligation does not exceed in the
aggregate One Million Dollars per annum, (d) Debt the terms and conditions of
which have been approved in writing by BNP and which Debt is subordinated, if
required by BNP, to the prior payment of all amounts due under the Credit Line,
and (e) trade obligations incurred by BACOU USA in the ordinary course of
business.
2 -- Limitation on Encumbrances
BACOU USA shall not create, incur, make, assume, or suffer to exist, after the
date hereof, any assignment, mortgage, pledge, security interest, lien or other
encumbrance of or upon any of its properties or assets, whether now owned or
hereafter acquired, to any party other than BNP, exception (a) liens for taxes
not delinquent or being contested in good faith by appropriate proceedings
diligently pressed and as to which there have been set aside on its books
adequate reserves; (b) encumbrances existing as of the date hereof, disclosed in
writing to BNP and approved by BNP in writing; (c) liens imposed by operation of
law, such as warehouseman's or mechanic's liens, incurred by BACOU USA in good
faith and in the ordinary course of business; and (d) liens securing Debt
permitted under the 1 [ Limitation on Borrowing ].
ARTICLE XI - CASES OF DEFAULT
The following constitutes a Case of Default once it occurs and whatever the
reason, be it attributable to BACOU USA or not:
- -- non-payment at its due date of an amount due in principal, interest,
commission, expenses or incidental expenses by BACOU USA in performance of the
Credit Line, should it not be remedied within five days following the request
made by BNP in this sense to BACOU USA;
- -- non-compliance by BACOU USA with another commitment or covenant under the
terms of the Credit Line;
- -- any representation by BACOU USA contained in Article VIII of the Credit Line
or subsequently renewed proving to be inaccurate;
- -- any debt of BACOU USA or the GUARANTOR under another contract becoming
repayable or callable prior to its normal due date following a foreclosure of
the date for payment opposed due to default;
- -- any measure taken with regard to BACOU USA or the GUARANTOR for out-of-court
settlement, court-ordered re-organization, court-order redress or court-ordered
liquidation or any other analogous measure or proceedings, with the exception of
cases of liquidation or dissolution or BACOU USA the terms and conditions of
which have been approved by BNP;
- -- significative change, in the opinion of BNP, in the shareholding of BACOU
USA, including nationalization of BACOU USA;
- -- the occurrence of an unlawful act for BACOU USA in performing any one of its
obligations under the Credit Line;
- -- the occurrence of any decision or event in United States of America or in
another country through which the payments are made, that constitutes or could
constitute an obstacle to payment by BACOU USA of any amount due to BNP under
the present Credit Line, including decisions on foreign exchange control or
embargo;
- -- the Guarantee specified in Article XVI ceases to be valid or becomes
unenforceable for any reason whatsoever.
At the time of the occurrence of any one of the Cases of Default, BNP shall be
entitled to pronounce immediate early repayment and payment of all sums under
the Credit Line.
ARTICLE XII - ELECTION OF DOMICILE
For performance of the present agreement and of its consequences, domicile is
elected:
- -- for BACOU USA, at its principal office address, 10 Thurber Boulevard,
Smithfield, RI, 02917 USA.
- -- for BNP, at its VALENCE agency, address 1 Boulevard Bancel, 26000 VALENCE,
FRANCE, Fax 04.75.79.43.09.
ARTICLE XIII - NEW CIRCUMSTANCES
1 The provisions of the Credit Line have been fixed in accordance with the
economic and financial conditions, both national and international, and with the
legal, fiscal, monetary and professional conditions in force at the time of the
signature of the Credit Line in France and abroad.
2 In the event of modification to the said conditions or facts or to their
interpretation by any competent authority, or for any other reason, resulting
particularly in new charges or in additional costs for BNP subsequent in
particular:
(a) to new requirements in the area of reserve requirements, quantitative
regulations on credit, institution or increase in coefficients for liquidities,
equity capital or other requirements relating to all or part of the assets or
commitments (including off-balance-sheet commitments), or;
(b) to a modification in exchange regulations or in the applicable tax system;
BACOU USA undertakes to compensate BNP in full for the additional charges and
costs that might be imposed on it.
Notification by BNP justifying in any form whatsoever the said charges and costs
shall be final and binding, barring error proved by BACOU USA.
In such a case, however, BACOU USA shall also have the option of making early
payment of the Credit Line in full.
ARTICLE XIV - APPLICABLE LAW AND COMPETENT JURISDICTION
The present Credit Line Agreement is governed by French law.
In the event of dispute, BACOU USA and BNP shall consult in view of an
out-of-court settlement. In the failure to reach such a settlement, all
litigation relative inter alia to the validity, interpretation or performance of
the Credit Line shall be submitted to the exclusive competence of the French
courts.
ARTICLE XV - MISCELLANEOUS PROVISIONS
1 -- Expenses, taxes and duties.
BACOU USA shall bear all expenses, duties, commissions, interest or other levies
pertaining to the present Credit Line or those that might be the sequel or
consequence thereof.
In particular, BACOU USA shall cover BNP for all of its expenses and outlays,
legal fees included, made in connection with the performance of the Credit Line
and with the implementation of BNP's rights under the Credit Line upon
presentation of supporting documents.
If, through the application of a law, an international agreement or a regulation
of any kind, BACOU USA is required to carry out a withholding on payments to be
made pursuant to the present agreement, it shall pay BNP an additional amount
such that, following deduction of the tax, BNP shall receive the full amounts
due that it would have received if the withholding had not existed.
2 -- Effective Global Rate ( [Taux Effectif Global] under French law).
The effective global rate is calculated below on the date of 1998/02/11 for USD
and for a period of three months.
It is specified that, on the basis of the three-month LIBOR rate for the USD
(5.6250% at the date of 1998/02/11), taking into account fees, expenses and
margin, and on the basis of use for 360 days, full use of the said Credit Line
as of the date of 1998/02/11 would come to an effective global rate of 6.1532%.
3 -- Payments.
All obligations of payment under the Credit Line, (except expenses specified at
g) of the Article VI payable in French Francs) shall be paid in full by BACOU
USA by means of payments in USD to the BNP at its address referred to in Article
[ ELECTION OF DOMICILE ].
All payments by BACOU USA under this Agreement shall be made without set off or
counter claims.
BACOU USA shall not be entitled to subordinate such payments to any condition or
exception.
BACOU USA hereby authorizes BNP, at its convenience, to debit its account in USD
n(degree) 140 003/52 held on the BNP's books, for the said payments on the date
upon which the said payments are payable for their amount in USD.
4 -- Voluntary prepayment. No new drawings.
BACOU USA shall be entitled to prepay in full or partially without penalty the
Credit Line, but only on the date of the repayment of an installment
hereinabove, subject to the receipt by BNP of a prior written notice at least
one month before the expected prepayment date.
Once repaid or prepaid, BACOU USA shall not be permitted to redraw any sum under
the Credit Line.
ARTICLE XVI - GUARANTEE
The BACOU's USA payment obligations hereunder shall be guaranteed by BACOU SA
herein called [ the Guarantor ] a French company, whose registered office is
at VALENCE (26000-France), 168 Avenue des Aureats, entered on the Valence
Corporate Register under number B 348 982 307, in the terms of the Appendix 3
hereto.
Signed in RHODE ISLAND, on 19th February 1998
In two true copies
BACOU USA INC Banque Nationale de Paris
Read and agreed
By: /s/ Walter Stepan By: /s/ Jean Lombard
- ------------------------------- -----------------------------------
/s/ Philip B. Barr, Jr.
- ------------------------------
Exhibit 10(b)
[Bacou, S.A. Letterhead]
February 13, 1998 Banque Nationale de Paris
1, boulevard Bancel
26000 Valence
ATTN: M. Lombard
Re: Acquisition of HOWARD LEIGHT INDUSTRIES
Dear Sirs:
We make reference to the credit of $110,000,000 (One Hundred and Ten
Million Dollars) for the period of seven (7) years, reimbursable in 27 quarterly
payments of $3,928,600 (Three Million Nine Hundred and Twenty Eight Thousand and
Six Hundred Dollars) minimum and a final payment of $3,927,800 (Three Million
Nine Hundred and Twenty Seven Thousand and Eight Hundred Dollars) at the rate of
LIBOR USD 3 months + 0.30 + 0.20% commission, as solicited by our related
entity, BACOU USA Incorporated, whose place of incorporation is in the United
States: 10 Thurber Boulevard, Smithfield, Rhode Island 02917-1896.
We declare that we are completely aware of this request and we have noted
that this credit would be granted to BACOU USA Incorporated in consideration of
the relationships which unite us with it and of the fact that we have always
made our best efforts so that no establishment of credit undergo any losses as a
result of operations with the corporations in our group.
We commit ourselves, therefore, by this letter, to retain directly or
indirectly majority control of BACOU USA Incorporated as long as the latter will
owe you any sum whatsoever pursuant to the above-referenced credit.
We will similarly strive to permit BACOU USA Incorporated to have at its
disposition the financial means which will be necessary to it to live up to its
obligations.
We ask you, gentlemen, to accept this expression of our best wishes.
PH. BACOU
Exhibit 99(a)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 27th day of February, 1998, by and between
John Dean, P. 0. Box 9510, Rancho Santa Fe, CA 92067 ("Executive") and Bacou USA
Safety, Inc., a corporation organized under the laws of Delaware (the
"Company").
W I T N E S S E T H:
WHEREAS, on this date the Company has acquired substantially all of the
assets and liabilities of Howard S. Leight & Associates, Inc., d/b/a/ Howard
Leight Industries ("Seller") and, until the closing of that transaction (the
"Transaction"), Executive served as Chief Executive Officer of Seller; and
WHEREAS, Company wishes to secure the services of Executive as President
and Chief Operating Officer of Company with duties to be defined and as
President of the Howard Leight division of the Company for the period provided
in this Agreement; and
WHEREAS, Executive is willing to enter into this Agreement for such period
and on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
Company and Executive hereby agree as follows:
1. Employment. During the period of employment set forth in Section 2 of
this Agreement, Company shall employ Executive, and Executive shall serve as
President and Chief Operating Officer of the Company. Executive agrees to
faithfully perform the duties assigned to him to the best of his ability, comply
with the written Policies and Procedures of Bacou USA, Inc. as then applicable
to its subsidiaries and, except for vacations and periods of temporary illness,
to devote his, full time and attention to the business of Company. Ancillary
employment such as writing, teaching or lecturing, as well as the acceptance of
honorific titles may be undertaken by the Executive only with the approval of
the Chief Executive Officer of Bacou USA, Inc. or his designee (together
referred to as the "CEO"). Executive also agrees that he will not engage in any
other business activities without the prior approval of the CEO. Executive may
only serve as an officer, director, trustee or committee member, or in any
similar position, of a reasonable number (maximum two) of trade associations and
religious, charitable, educational, civic or other nonbusiness organizations,
subject to the approval of the CEO. The Executive represents and warrants to
Company that he is now under no contract or agreement nor will he execute any
contract or agreement that will in any manner interfere, conflict with or
prevent him from performing his duties under the terms and conditions of this
Agreement, recognizing that his performance hereunder will require the devotion
of his full time and attention during and beyond regular business hours during
the Term (as hereinafter defined), including extensive travel. Nothing in this
Agreement shall be construed as prohibiting Executive from owning an interest in
Howard Leight Enterprises or serving as a director of that corporation.
2. Period of Employment. This Agreement shall become effective upon the
closing of the Transaction and continue until December 31, 1999 (the "Initial
Term"). On December 31, 1999, and at the end of each year thereafter, the period
of employment shall be automatically extended, without further action by either
party, for successive one-year periods (each a "Renewal Term") unless at least
one year prior to the end of the Initial Term or any Renewal Term either party
shall have served written notice on the other of its election to allow this
Agreement to terminate at the end of such Term. The Initial Term and any Renewal
Terms are hereinafter sometimes collectively referred to as the "Term."
If either party notifies the other party that it shall not extend the
period of employment, Company may, at its option, decide that the Executive
shall utilize any unused vacation and/or take a leave-of-absence for part or all
of the remaining time of his employment, subject to payment by the Company
pursuant to Section 4(h) hereof.
3. Termination. The period of employment shall be terminated upon the first
to occur of the following:
(i) The expiration of the period of employment pursuant to Section 2
of this Agreement.
(ii) The Executive's death.
(iii)The Executive becoming permanently disabled. Permanent disability
shall mean physical or mental incapacity of a nature which
prevents Executive from performing his duties under this
Agreement for a period of more than six months in any twelve
month period.
(iv) The Executive's employment being terminated by Company for cause.
Termination for cause shall mean any one or more of the
following: (a) termination by action of the Board of Directors of
Company because of the willful failure of Executive to perform
his duties and obligations under this Agreement; or (b) failure
to execute in a reasonable and responsible manner the written
policies and procedures of Company; or (c) gross negligence in
the performance of his duties under this Agreement; or (d) the
commission by Executive of a felony which the Company reasonably
determines would materially adversely affect the Company or the
conduct of its business.
4. Compensation and Benefits.
(a) The Executive shall receive regular compensation (the "Base Salary") at
the initial rate of Four Hundred Thousand Dollars ($400,000.00) per annum for
the Initial Term. The Base Salary shall be payable in arrears less the usual
payroll deductions at the same times and in the same manner as salaries paid to
other employees of the Company. After the Initial Term, the Base Salary shall be
reviewed annually for possible increase including participation in any wage
increases applicable generally to salaried employees of the Company.
(b) In addition to the Base Salary, the Executive shall be entitled to
receive annual incentive compensation payments ("Incentive Compensation") at
such times and in such amounts as may be determined pursuant to a written plan
in effect for each year of the term. There is attached to this Agreement a copy
of such Bonus Plan as applicable for fiscal years 1998 and 1999. The maximum
possible Incentive Compensation payable per annum under this Agreement shall not
exceed 125% of the amount of Base Salary paid by Company to Executive in the
fiscal year for which such Incentive Compensation is determined. Executive
acknowledges that, by agreeing to participate in the Bonus Plan for subsidiaries
of Bacou USA, Inc., he thereby waives any rights to participate in any other
incentive compensation plan of the Company.
(c) Incentive Compensation shall be paid by Company for the prior fiscal
year within ten (10) days after a decision is made by the Board of Directors of
Bacou USA, Inc. as to the amount of such Incentive Compensation, but in any
event no later than the earlier of the annual meeting of the Board of Directors
or March 31.
(d) The Executive shall be entitled to participate in any stock option plan
which Bacou USA, Inc. may adopt for Company at levels to be determined by the
Board of Directors of Bacou USA, Inc. in their sole discretion.
(e) In connection with the execution of this Agreement as a signing bonus
and subject to the execution of the Stock Option Notice and Agreement attached
hereto as Exhibit A, Executive shall receive $200,000 upon execution of this
Agreement and be granted options to purchase 15,000 shares of common stock of
Bacou USA, Inc. at a per share price equal to the closing price on the trading
day immediately preceding the effective date of this Agreement.
(f) The Executive shall be entitled to participate in all savings, thrift,
retirement or pension, short-term and long-term disability, health and accident,
Blue Cross/Blue Shield, Major Medical or other hospitalization, holiday,
vacation, and other fringe benefit programs generally available to executives of
Company in accordance with and subject to the terms and conditions of such
programs.
(g) In addition, the Executive shall be entitled to receive the following
benefits:
(i) The Executive shall have the use of a company car, subject to the
written Automobile Policy of Bacou USA, Inc.; provided, however,
that for any period of time Executive elects to continue using
his own automobile, the Company shall pay him a car allowance of
$650 per month plus the costs of gas, maintenance, repairs and
insurance.
(ii) The Executive shall be entitled to vacation pursuant to the
written Bacou USA, Inc. Executive Vacation Policy. Vacation days
will be taken at a time convenient for both the Executive and
Company. To the extent the Executive does not take all vacation
days the remaining days will be carried forward for an unlimited
period or be paid to the Executive at the level of his Base
Salary valid for the fiscal year in which vacation days are not
taken.
(iii)When traveling on Company business, the Executive will be
provided first class airfare on domestic trips; business class
airfare will be provided on international trips.
(iv) The Executive is authorized to incur reasonable expenses in
connection with and for the promotion of the business of Company,
including expenses for meals and lodging (regular hotel room, no
suites), entertainment, and similar items as required from time
to time by the Executive's duties. Company shall reimburse the
Executive for all such expenses upon the presentation of an
account therefor, together with appropriate supporting
documentation.
(h) In the event that either (a) during the term of this Agreement the
Executive is discharged by the Company for reasons other than those set forth in
clauses (a), (c) or (d) of Section 3(iv) hereof or (b) the Company elects not to
renew this Agreement pursuant to Section 2 of this Agreement, then the Company
agrees to pay the Executive a severance payment equal to twelve (12) months of
direct salary and benefits, payable at normal payroll intervals during the
severance period, plus Incentive Compensation equal to the amount of Incentive
Compensation paid by the Company to Executive for the prior fiscal year. In the
event that the Executive elects not to renew this Agreement pursuant to Section
2 of this Agreement, then the Company agrees to pay the Executive a severance
payment equal to twelve (12) months of direct salary and benefits, payable at
normal payroll intervals during the severance period.
5. Limitations on Authority. Except as otherwise provided herein, approval
by the CEO must be obtained prior to the Executive taking any of the following
actions on behalf of the Company or any of its affiliates:
(a) Acquisition or disposition of real property or any rights
deriving therefrom, or changing title in any such real property.
(b) Making unplanned capital expenditures or any commitment therefore
in an amount greater than $7,500 for any individual expenditure
and $75,000 in the aggregate in any fiscal year;
(c) Borrowing or guaranteeing any borrowings from or on behalf of any
party, or altering the terms of any loan agreements for such
borrowings except for any such loans or borrowings as shall be
agreed upon by the Board of Directors of Bacou USA, Inc.;
(d) Hiring or terminating executive personnel with annual salary in
excess of $70,000;
(e) Granting retirement benefits or other non-earned income to any
individual which is not available to all employees;
(f) Modification of any qualified plan or other benefit plan, e.g.,
health insurance;
(g) Acquiring the assets or shares of another Company or partnership;
(h) Acquiring or disposing of the assets or shares of the Company, or
selling any fixed asset of the Company below book value;
(i) Entering into or terminating any employment, consulting, or other
service agreements of any kind or nature with a monthly financial
obligation in excess of U.S. $5,000 for more than six (6) months;
(j) Making basic changes in the administration, organization,
production, and distribution of Company or any of its affiliates,
as well as closing or curtailing the functions of Company or any
of its affiliates;
(k) Filing or settling any lawsuit;
(1) Making cash or non-cash corporate contributions above the
annually budgeted amount;
(m) With respect to orders for large quantities of goods which do not
ordinarily have fast inventory turns, making commitments to
deliver goods which would result in extraordinary risks or
expenditures;
(n) Entering into any transaction on behalf of Company or its
affiliates which is not in the usual course of its business;
(o) Adoption or modification of the annual budget.
Notwithstanding the foregoing, approval is not required for any action
provided for in the approved and applicable annual budget or annual plan of
Company. In addition, should the CEO be unavailable, if an emergency arises
which requires the Executive to take immediate action in which approval as set
forth in this Section would otherwise be required, the Executive is no longer
bound by the limitations described above and is authorized to make a decision in
the best interests of Company. The Executive will immediately inform the CEO in
writing of any such decisions made by him.
6. Non-Disclosure of Information. It is understood that the business of
Company and its affiliates is of a confidential nature. During the period of the
Executive's employment with Company, the Executive may have received and/or may
secure confidential information concerning Company or any of Company's
affiliates or subsidiaries which, if known to competitors thereof, would damage
Company or its said affiliates or subsidiaries. The Executive agrees that during
and after the term of this Agreement he will not (except as authorized by
Company or in the proper performance of his duties or except as ordered by a
court or other body of competent jurisdiction or as otherwise required by law),
directly or indirectly, divulge, disclose or appropriate to his own use, or to
the use of any third party, any secret, proprietary or confidential information
or knowledge obtained by him during the term hereof concerning such confidential
matters of Company or its subsidiaries or affiliates, including, but not limited
to, information pertaining to trade secrets, systems, manuals, confidential
reports, methods, processes, designs, equipment lists, operating procedures,
equipment and methods used and preferred by Company's customers. Upon
termination of this Agreement, the Executive shall promptly deliver to Company
all materials of a secret or confidential nature relating to the business of
Company or any of its subsidiaries or affiliates which are, directly or
indirectly, in the possession or under the control of the Executive. The
provisions of this paragraph shall continue to apply after the Executive ceases
to be employed by Company for a period of three (3) years except in respect of
any information or knowledge disclosed to the public, other than through an
unauthorized disclosure by the Executive.
7. Trade Secrets. The Executive covenants that he shall, while employed by
Company, assign, transfer, and set over to Company or its designee all right,
title and interest in and to all trade secrets, secret processes, inventions,
improvements, patents, patent applications, trademarks, trademark applications,
copyrights, copyright registrations, discoveries and/or other developments
(hereinafter "Inventions") which he may, thereafter, alone or in conjunction
with others, during or outside normal working hours, conceive, make, acquire or
suggest at any time which relate to the products, processes, work, research, or
other activities of Company or any of its subsidiaries or affiliates. Any and
all Inventions which are of a proprietary nature and which the Executive may
conceive, may acquire or suggest, either alone or in conjunction with others,
during his employment with Company (whether during or outside normal working
hours) relating to or in any way pertaining to or connected with Company's
business, shall be the sole and exclusive property of Company or its designee
and the Executive, whenever requested to do so by Company, shall, without
further compensation or consideration properly execute any and all applications,
assignments or other documents which Company or its designee shall deem
necessary in order to apply for and obtain Letters Patent of the United States
and/or comparable rights afforded by foreign countries for the Inventions, or in
order to assign and convey to Company or its designee the sole and exclusive
right, title and interest in and to the Inventions. This obligation shall
continue beyond the termination of this Agreement with respect to Inventions
conceived or made by the Executive during the term of his employment by Company,
and shall be binding upon his assigns, executors, administrators, and other
legal representatives.
8. Non-Competition. (a) During the term of this Agreement or any renewal
thereof and, at Company's option for a period of up to one year thereafter,
should the Executive's contract be terminated or not be renewed, the Executive
agrees that he will not within the geographical area of the United States,
engage, either directly or indirectly, individually or as an owner, partner,
joint venturer, employee, officer, director, stockholder, consultant,
independent contractor or lender of or to any corporation, holding Company or
other business entity which is in a business similar to that of Company or any
of its affiliates. In the event that Company chooses to exercise its option to
prevent the Executive from competing with Company following termination or
non-renewal of his employment, Company shall notify the Executive in writing
within two (2) weeks following his last day of employment or within two (2)
weeks of notice by Company of its decision that the Executive shall take a
leave-of-absence, in either case specifying the period of up to one year
following termination, resignation, or non-renewal of employment during which
such competitive activity shall be prohibited. In the event Company exercises
its option, Company shall continue to pay Executive his Base Salary at the rate
applicable at the time of termination, resignation or non-renewal for the period
during which the Executive is prohibited from competition with Company, plus an
amount equal to the Incentive Compensation paid to him for the prior fiscal
year, pro-rated for the period during which the Executive is prohibited from
competition with the Company (if less than a full year); provided, however, that
the Company shall not be obligated to make any such payments (and shall be
entitled to a refund of any payments actually made) to the extent that Executive
violates his obligation of non-competition or invalidates such obligations
through legal action; and provided further, however, that any amounts paid to
Executive pursuant to Section 4(h) hereof shall be credited against (i.e.,
reduce on a dollar for dollar basis) any amounts payable by the Company pursuant
to this Section 8. Notwithstanding the. foregoing, the Executive (as
hereinbefore described in Section 2(d)) may own five (5%) percent of the
securities of any business in competition with the business of Company or any of
its affiliates, which securities are regularly traded on a public exchange,
provided that any such ownership shall not result in the Executive becoming a
record or beneficial owner at any time of more than five (5%) percent of equity
securities of said business entity.
(b) The Executive shall not during the term of his Employment under this
Agreement or any renewal thereof, and for a period of one (1) year thereafter,
solicit or arrange to have any other person or entity solicit any person who was
employed by the Company or any of its affiliated companies having an annual
compensation of at least U.S. $50,000 per annum for other employment or
otherwise induce such employees to terminate their employment with the Company
or such affiliates.
(c) If any provision of this Section is held to be unenforceable because of
the scope, duration or area of its applicability or otherwise, the legal entity
making that determination will have the power to modify the scope, duration or
area, or all of them, and the provision will then apply in its modified form.
9. Property. All letters, memoranda, documents, business notes (including
all copies thereof) and other information contained on any other computer media
including computer disks and hard drives of the Executive in any manner relating
to the duties of Executive under this agreement are the property of Company.
10. Notices. Any notices or other communications required to be given
pursuant to this Agreement shall be in writing and shall be deemed given: (i)
upon delivery, if by hand; (ii) three (3) business days after mailing, if sent
by registered or certified mail, postage prepaid, return receipt requested;
(iii) one (1) business day after mailing, if sent via overnight courier; or (iv)
upon transmission, if sent by telex or facsimile except that if such notice or
other communication is received by telex or facsimile after 5:00 p.m. on a
business day at the place of receipt, it shall be effective as of the following
business day. All notices and other communications hereunder shall be given as
follows:
(a) If to the Company, to it at:
Bacou USA Safety, Inc.
10 Thurber Boulevard
Smithfield, RI 02917
Attention: Chief Executive Officer
Telephone No.: 401-233-0333
Fax No.: 401-232-2230
(b) If to the Executive, to him at:
P.0. Box 9510
Rancho Santa Fe, CA 92067,
Tel. No.: 619-794-4613
Any party may change its address for receiving notice or add persons to receive
copies of notices by written notice given to the other names above in the manner
provided above.
11. Full and Complete Agreement; Amendment. This Agreement constitutes the
full and complete understanding and agreement of the parties and supersedes all
prior understandings and agreements, whether written or oral, express or
implied, pertaining in any manner to the employment of Executive. This Agreement
may be modified only by a written instrument executed by both parties.
12. Construction. This Agreement shall be construed under the laws of the
State of California without reference to its conflicts of laws provisions.
13. Arbitration. Notwithstanding the fact that the parties shall be
entitled to equitable relief in order to enforce certain provisions hereunder
(e.g., temporary restraining orders or injunctive relief), any dispute,
controversy or claim arising out of or relating to this Agreement, or the breach
hereof, shall be settled by arbitration in accordance with the "Commercial
Arbitration Rules" of the American Arbitration Association in effect on the date
of this Agreement, except as varied below. The site of any such arbitration
shall be Los Angeles, California and any award shall be deemed to be a Los
Angeles, California award. There shall be a single arbitrator who shall be
admitted to practice law in California with no less than ten (10) years
experience in the handling of commercial or corporate matters or disputes. The
arbitrator shall render a written decision stating his reasons therefor, and
shall render an award within six (6) months of the request for arbitration, and
such award shall be final and binding upon both parties. Judgment upon the award
rendered by the arbitrator may be entered in any court of competent jurisdiction
in any state of the United States or country or application may be made to such
court for a judicial acceptance of the award and an enforcement, as the law of
such jurisdiction may require or allow. The substantive law to be applied to any
case determined pursuant to this Section 13 is that of State of California. The
expense of arbitration shall be borne by the respective parties except to the
extent that the arbitrators shall determine that the entire expense shall be
borne by a single party.
14. Binding Nature. This Agreement shall be binding upon and shall inure to
the benefit of the parties and their respective heirs, personal representatives,
successors and assigns.
IN WITNESS WHEREOF, Company and the Executive have duly executed this
Agreement as of the day and year first written above.
BACOU USA SAFETY, INC.
By: /s/ Walter Stepan
- -------------------------------------
Name: Walter Stepan
Title: Chairman, President and
Chief Executive Officer
By: /s/ Philip B. Barr, Jr.
- -------------------------------------
Name: Philip B. Barr, Jr.
Title: Vice Chairman, Secretary and
Treasurer
EXECUTIVE:
/s/ John Dean
- -------------------------------------
John Dean
Exhibit 99(b)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 27th day of February, 1998, by and between
Robert Hanover, 550 Marina Avenue, Coronado, CA 92118 ("Executive") and Bacou
USA Safety, Inc., a corporation organized under the laws of Delaware (the
"Company").
W I T N E S S E T H :
WHEREAS, on this date the Company has acquired substantially all of the
assets and liabilities of Howard S. Leight & Associates, Inc., d/b/a/ Howard
Leight Industries ("Seller") and, until the closing of that transaction (the
"Transaction"), Executive served as Vice President Finance and Administration
and Chief Financial Officer of Seller; and
WHEREAS, Company wishes to secure the services of Executive as Vice
President - Finance and Administration of Company's Howard Leight Industries
Division for the period provided in this Agreement; and
WHEREAS, Executive is willing to enter into this Agreement for such period
and on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
Company and Executive hereby agree as follows:
1. Employment. During the period of employment set forth in Section 2 of
this Agreement, Company shall employ Executive, and Executive shall serve as
Vice President - Finance and Administration of the Howard Leight Industries
Division of Company. Executive agrees to faithfully perform the duties assigned
to him to the best of his ability, comply with the written Policies and
Procedures of Bacou USA, Inc. as then applicable to its subsidiaries and, except
for vacations and periods of temporary illness, to devote his full time and
attention to the business of Company. Ancillary employment such as writing,
teaching or lecturing, as well as the acceptance of honorific titles may be
undertaken by the Executive only with the approval of the Chief Executive
Officer of Bacou USA, Inc. or his designee (together referred to as the "CEO").
Executive also agrees that he will not engage in any other business activities
without the prior approval of the CEO. Executive may only serve as an officer,
director, trustee or committee member, or in any similar position, of a
reasonable number (maximum two) of trade associations and religious, charitable,
educational, civic or other non-business organizations, subject to the approval
of the CEO. The Executive represents and warrants to Company that he is now
under no contract or agreement nor will he execute any contract or agreement
that will in any manner interfere, conflict with or prevent him from performing
his duties under the terms and conditions of this Agreement, recognizing that
his performance hereunder will require the devotion of his full time and
attention during and beyond regular business hours during the Term (as
hereinafter defined), including extensive travel. Nothing in this Agreement
shall be construed as prohibiting Executive from owning an interest in Howard
Leight Enterprises or serving as a director of that corporation.
2. Period of Employment. This Agreement shall become effective upon the
closing of the Transaction and continue until December 31, 1999 (the "Initial
Term"). On December 31, 1999, and at the end of each year thereafter, the period
of employment shall be automatically extended, without further action by either
party, for successive one-year periods (each a "Renewal Term") unless at least
six months prior to the end of the Initial Term or any Renewal Term either party
shall have served written notice on the other of its election to allow this
Agreement to terminate at the end of such Term. The Initial Term and any Renewal
Terms are hereinafter sometimes collectively referred to as the "Term."
If either party notifies the other party that it shall not extend the
period of employment, Company may, at its option, decide that the Executive
shall utilize any unused vacation and/or take a leave-of-absence for part or all
of the remaining time of his employment, continuing to receive all compensation
as if actively working.
3. Termination. The period of employment shall be terminated upon the first
to occur of the following:
(i) The expiration of the period of employment pursuant to Section 2
of this Agreement.
(ii) The Executive's death.
(iii)The Executive becoming permanently disabled. Permanent
disability shall mean physical or mental incapacity of a nature
which prevents Executive from performing his duties under this
Agreement for a period of more than six months in any twelve
month period.
(iv) The Executive's employment being terminated by Company for cause.
Termination for cause shall mean termination by action of the
Board of Directors of Company because of the willful failure of
Executive to perform his duties and obligations under this
Agreement or failure to execute in a reasonable and responsible
manner the written policies and procedures of Company or gross
negligence in the performance of his duties under this Agreement
or the commission by Executive of a felony which the Company
reasonably determines would adversely affect the Company or the
conduct of its business.
4. Compensation and Benefits.
(a) The Executive shall receive regular compensation (the "Base Salary") at
the initial rate per annum of One Hundred Twenty-Five Thousand Dollars
($125,000.00) for the Initial Term. The Base Salary shall be payable in arrears
less the usual payroll deductions at the same times and in the same manner as
salaries paid to other employees of the Company. The Base Salary shall be
reviewed annually during each January of the Term for possible increase
including participation in any wage increases applicable generally to salaried
employees of the Company; provided, however, that the Base Salary shall increase
by a minimum of five percent (5%) in January 1999.
(b) In addition to the Base Salary, the Executive shall be entitled to
receive annual incentive compensation payments ("Incentive Compensation") at
such times and in such amounts as may be determined pursuant to the Bonus Plan
for Executives of subsidiaries of Bacou USA, Inc., as in effect for the
applicable year and applied with regard to the operating results of the Howard
Leight Industries division of the Company. There is attached to this Agreement a
copy of such Bonus Plan as applicable for fiscal years 1998 and 1999. The
maximum possible Incentive Compensation payable per annum under this Agreement
shall not exceed sixty percent (60%) of the amount of Base Salary paid to
Executive in the fiscal year for which such Incentive Compensation is
determined. Executive acknowledges that, by agreeing to participate in the Bonus
Plan for subsidiaries of Bacou USA, Inc., he thereby waives any rights to
participate in any other incentive compensation plan of the Company.
(c) Incentive Compensation shall be paid by Company for the prior fiscal
year within ten (10) days after a decision is made by the Board of Directors of
Bacou USA, Inc. as to the amount of such Incentive Compensation, but in any
event no later than the earlier of the annual meeting of the Board of Directors
or March 31.
(d) The Executive shall be entitled to participate in any stock option plan
which Bacou USA, Inc. may adopt for Company at levels to be determined by the
Board of Directors of Bacou USA, Inc. in their sole discretion.
(e) In connection with the execution of this Agreement as a signing bonus
and subject to the execution of the Stock Option Notice and Agreement attached
hereto as Exhibit A, Executive shall receive $200,000 upon execution of this
Agreement and be granted option to purchase 5,000 shares of common stock of
Bacou USA, Inc. at $17 per share.
(f) The Executive shall be entitled to participate in all savings,
retirement or pension, short term and long term disability, health and accident,
Blue Cross/Blue Shield, Major Medical or other hospitalization, holiday,
vacation, and other fringe benefit programs generally available to executives of
Company in accordance with and subject to the terms and conditions of such
programs.
(g) In addition, the Executive shall be entitled to receive the following
benefits:
(i) The Executive shall have the use of a company car, subject to the
written Automobile Policy of Bacou USA, Inc.; provided, however,
that for any period of time Executive elects to continue using
his own automobile, the Company shall pay him a car allowance of
$550 per month plus the costs of gas, maintenance, repairs and
insurance.
(ii) The Executive shall be entitled to vacation pursuant to the
written Bacou USA, Inc. Executive Vacation Policy. Vacation days
will be taken at a time convenient for both the Executive and
Company. To the extent the Executive does not take all vacation
days the remaining days will be carried forward for an unlimited
period or be paid to the Executive at the level of his Base
Salary valid for the fiscal year in which vacation days are not
taken.
(iii)When traveling on Company business, the Executive will be
provided coach-class airfare on domestic trips; business class
airfare will be provided on international trips.
(iv) The Executive is authorized to incur reasonable expenses in
connection with and for the promotion of the business of Company,
including expenses for meals and lodging (regular hotel room, no
suites), entertainment, and similar items as required from time
to time by the Executive's duties. Company shall reimburse the
Executive for all such expenses upon the presentation of an
account therefor, together with appropriate supporting
documentation.
5. Limitations on Authority. Except as otherwise provided herein, approval
by the CEO must be obtained prior to the Executive taking any of the following
actions on behalf of the Company or any of its affiliates:
(a) Acquisition or disposition of real property or any rights
deriving therefrom, or changing title in any such real property.
(b) Making unplanned capital expenditures or any commitment
therefore;
(c) Borrowing or guaranteeing any borrowings from or on behalf of any
party, or altering the terms of any loan agreements for such
borrowings except for any such loans or borrowings as shall be
agreed upon by the Board of Directors of Bacou USA, Inc.;
(d) Hiring or terminating executive personnel;
(e) Granting retirement benefits or other non-earned income to any
individual which is not available to all employees;
(f) Modification of any qualified plan or other benefit plan, e.g.,
health insurance;
(g) Acquiring the assets or shares of another Company or partnership;
(h) Acquiring or disposing of the assets or shares of the Company, or
selling any fixed asset of the Company below book value;
(i) Entering into or terminating any employment, consulting, or other
service agreements of any kind or nature with a monthly financial
obligation in excess of U.S. $3,000 for more than six (6) months;
(j) Making basic changes in the administration, organization,
production, and distribution of Company or any of its affiliates,
as well as closing or curtailing the functions of Company or any
of its affiliates;
(k) Filing or settling any lawsuit;
(1) Entering into any transaction on behalf of Company or its
affiliates which is not in the usual course of its business;
(m) Adoption or modification of the annual budget.
Notwithstanding the foregoing, approval is not required for any action
provided for in the approved and applicable annual budget or annual plan of
Company. In addition, should the CEO be unavailable, if an emergency arises
which requires the Executive to take immediate action in which approval as set
forth in this Section would otherwise be required, the Executive is no longer
bound by the limitations described above and is authorized to make a decision in
the best interests of Company. The Executive will immediately inform the CEO in
writing of any such decisions made by him.
6. Non-Disclosure of Information. It is understood that the business of
Company and its affiliates is of a confidential nature. During the period of the
Executive's employment with Company, the Executive may have received and/or may
secure confidential information concerning Company or any of Company's
affiliates or subsidiaries which, if known to competitors thereof, would damage
Company or its said affiliates or subsidiaries. The Executive agrees that during
and after the term of this Agreement he will not (except as authorized by
Company or in the proper performance of his duties or except as ordered by a
court or other body of competent jurisdiction or as otherwise required by law),
directly or indirectly, divulge, disclose or appropriate to his own use, or to
the use of any third party, any secret, proprietary or confidential information
or knowledge obtained by him during the term hereof concerning such confidential
matters of Company or its subsidiaries or affiliates, including, but not limited
to, information pertaining to trade secrets, systems, manuals, confidential
reports, methods, processes, designs, equipment lists, operating procedures,
equipment and methods used and preferred by Company's customers. Upon
termination of this Agreement, the Executive shall promptly deliver to Company
all materials of a secret or confidential nature relating to the business of
Company or any of its subsidiaries or affiliates which are, directly or
indirectly, in the possession or under the control of the Executive. The
provisions of this paragraph shall continue to apply after the Executive ceases
to be employed by Company for a period of three (3) years except in respect of
any information or knowledge disclosed to the public, other than through an
unauthorized disclosure by the Executive.
7. Trade Secrets. The Executive covenants that he shall, while employed by
Company, assign, transfer, and set over to Company or its designee all right,
title and interest in and to all trade secrets, secret processes, inventions,
improvements, patents, patent applications, trademarks, trademark applications,
copyrights, copyright registrations, discoveries and/or other developments
(hereinafter "Inventions") which he may, thereafter, alone or in conjunction
with others, during or outside normal working hours, conceive, make, acquire or
suggest at any time which relate to the products, processes, work, research, or
other activities of Company or any of its subsidiaries or affiliates. Any and
all Inventions which are of a proprietary nature and which the Executive may
conceive, may acquire or suggest, either alone or in conjunction with others,
during his employment with Company (whether during or outside normal working
hours) relating to or in any way pertaining to or connected with Company's
business, shall be the sole and exclusive property of Company or its designee
and the Executive, whenever requested to do so by Company, shall, without
further compensation or consideration properly execute any and all applications,
assignments or other documents which Company or its designee shall deem
necessary in order to apply for and obtain Letters Patent of the United States
and/or comparable rights afforded by foreign countries for the Inventions, or in
order to assign and convey to Company or its designee the sole and exclusive
right, title and interest in and to the Inventions. This obligation shall
continue beyond the termination of this Agreement with respect to Inventions
conceived or made by the Executive during the term of his employment by Company,
and shall be binding upon his assigns, executors, administrators, and other
legal representatives.
8. Non-Competition. (a) During the term of this Agreement or any renewal
thereof and, at Company's option for a period of up to one year thereafter,
should the Executive's contract be terminated or not be renewed, the Executive
agrees that he will not within the geographical area of the United States,
engage, either directly or indirectly, individually or as an owner, partner,
joint venturer, employee, officer, director, stockholder, consultant,
independent contractor or lender of or to any corporation, holding Company or
other business entity which is in a business similar to that of Company or any
of its affiliates. In the event that Company chooses to exercise its option to
prevent the Executive from competing with Company following termination or
non-renewal of his employment, Company shall notify the Executive in writing
within two (2) weeks following his last day of employment or within two (2)
weeks of notice by Company of its decision that the Executive shall take a
leave-of-absence, in either case specifying the period of up to one year
following termination, resignation, or non-renewal of employment during which
such competitive activity shall be prohibited. In the event Company exercises
its option, Company shall continue to pay Executive his Base Salary at the rate
applicable at the time of termination, resignation or non-renewal for the period
during which the Executive is prohibited from competition with Company, plus an
amount equal to the Incentive Compensation paid to him for the prior fiscal
year, pro-rated for the period during which the Executive is prohibited from
competition with the Company (if less than a full year); provided, however, that
the Company shall not be obligated to make any such payments (and shall be
entitled to a refund of any payments actually made) to the extent that Executive
violates his obligation of non-competition or invalidates such obligation
through legal action. Notwithstanding the foregoing, the Executive (as
hereinbefore described in Section 2(d)) may own five (5%) percent of the
securities of any business in competition with the business of Company or any of
its affiliates, which securities are regularly traded on a public exchange,
provided that any such ownership shall not result in the Executive becoming a
record or beneficial owner at any time of more than five (5%) percent of equity
securities of said business entity.
(b) The Executive shall not during the term of his Employment under this
Agreement or any renewal thereof, and for a period of one (1) year thereafter,
solicit or arrange to have any other person or entity solicit any person who was
employed by the Company or any of its affiliated companies having an annual
compensation of at least U.S. $50,000 per annum for other employment or
otherwise induce such employees to terminate their employment with the Company
or such affiliates.
(c) If any provision of this Section is held to be unenforceable because of
the scope, duration or area of its applicability or otherwise, the legal entity
making that determination will have the power to modify the scope, duration or
area, or all of them, and the provision will then apply in its modified form.
9. Property. All letters, memoranda, documents, business notes (including
all copies thereof) and other information contained on any other computer media
including computer disks' and hard drives of the Executive in any manner
relating to the duties of Executive under this agreement are the property of
Company.
10. Notices. Any notices or other communications required to be given
pursuant to this Agreement shall be in writing and shall be deemed given: (1)
upon delivery, if by hand; (ii) three (3) business days after mailing, if sent
by registered or certified mail, postage prepaid, return receipt requested;
(iii) one (1) business day after mailing, if sent via overnight courier; or (iv)
upon transmission, if sent by telex or facsimile except that if such notice or
other communication is received by telex or facsimile after 5:00 p.m. on a
business day at the place of receipt, it shall be effective as of the following
business day. All notices and other communications hereunder shall be given as
follows:
(a) If to the Company, to it at:
Bacou USA Safety, Inc.
10 Thurber Boulevard
Smithfield, RI 02917
Attention: Chief Executive Officer
Telephone No.: 401-233-0333
Fax No.: 401-232-2230
(b) If to the Executive, to him at:
550 Marina Avenue
Coronado, CA 92118
Tel. No.: 619-522-0925
Any party may change its address for receiving notice or add persons to receive
copies of notices by written notice given to the other names above in the manner
provided above.
11. Full and Complete Agreement; Amendment. This Agreement constitutes the
full and complete understanding and agreement of the parties and supersedes all
prior understandings and agreements, whether written or oral, express or
implied, pertaining in any manner to the employment of Executive. This Agreement
may be modified only by a written instrument executed by both parties.
12. Construction. This Agreement shall be construed under the laws of the
State of California without reference to its conflicts of laws provisions.
13. Arbitration. Notwithstanding the fact that the parties shall be
entitled to equitable relief in order to enforce certain provisions hereunder
(e.g., temporary restraining orders or injunctive relief), any dispute,
controversy or claim arising out of or relating to this Agreement, or the breach
hereof, shall be settled by arbitration in accordance with the "Commercial
Arbitration Rules" of the American Arbitration Association in effect on the date
of this Agreement, except as varied below. The site of any such arbitration
shall be Los Angeles, California and any award shall be deemed to be a Los
Angeles, California award. There shall be a single arbitrator who shall be
admitted to practice law in California, with no less than ten (10) years
experience in the handling of commercial or corporate matters or disputes. The
arbitrator shall render a written decision stating his reasons therefor, and
shall render an award within six (6) months of the request for arbitration, and
such award shall be final and binding upon both parties. Judgment upon the award
rendered by the arbitrator may be entered in any court of competent jurisdiction
in any state of the United States or country or application may be made to such
court for a judicial acceptance of the award and an enforcement, as the law of
such jurisdiction may require or allow. The substantive law to be applied to any
case determined pursuant to this Section 13 is that of the State of California.
The expense of arbitration shall be borne by the respective parties except to
the extent that the arbitrators shall determine that the entire expense shall be
borne by a single party.
14. Binding Nature. This Agreement shall be binding upon and shall inure to
the benefit of the parties and their respective heirs, personal representatives,
successors and assigns.
IN WITNESS WHEREOF, Company and the Executive have duly executed this
Agreement as of the day and year first written above.
BACOU USA SAFETY, INC.
By: /s/ Walter Stepan
- -----------------------------------
Name: Walter Stepan
Title: Chairman, President and
Chief Executive Officer
By: /s/ Philip B. Barr, Jr.
- -----------------------------------
Name: Philip B. Barr, Jr.
Title: Vice Chairman, Secretary and
Treasurer
EXECUTIVE:
/s/ Robert Hanover
- -----------------------------------
Robert Hanover
Exhibit 99(c)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 27th day of February, 1998, by and between
Ken David Meyers, 508 Montera Court, Chula Vista, CA 91910 ("Executive") and
Bacou USA Safety, Inc., a corporation organized under the laws of Delaware (the
"Company").
W I T N E S S E T H :
WHEREAS, on this date the Company has acquired substantially all of the
assets and liabilities of Howard S. Leight & Associates, Inc., d/b/a/ Howard
Leight Industries ("Seller") and, until the closing of that transaction (the
"Transaction"), Executive served as Vice President - Operations of Seller; and
WHEREAS, Company wishes to secure the services of Executive as Vice
President - Operations of Company's Howard Leight Industries Division for the
period provided in this Agreement; and
WHEREAS, Executive is willing to enter into this Agreement for such period
and on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
Company and Executive hereby agree as follows:
1. Employment. During the period of employment set forth in Section 2 of
this Agreement, Company shall employ Executive, and Executive shall serve as
Vice President - Operations of the Howard Leight Industries Division of Company.
Executive agrees to faithfully perform the duties assigned to him to the best of
his ability, comply with the written Policies and Procedures of Bacou USA, Inc.
as then applicable to its subsidiaries and, except for vacations and periods of
temporary illness, to devote his full time and attention to the business of
Company. Ancillary employment such as writing, teaching or lecturing, as well as
the acceptance of honorific titles may be undertaken by the Executive only with
the approval of the Chief Executive Officer of Bacou USA, Inc. or his designee
(together referred to as the "CEO"). Executive also agrees that he will not
engage in any other business activities without the prior approval of the CEO.
Executive may only serve as an officer, director, trustee or committee member,
or in any similar position, of a reasonable number (maximum two) of trade
associations and religious, charitable, educational, civic or other non-business
organizations, subject to the approval of the CEO. The Executive represents and
warrants to Company that he is now under no contract or agreement nor will he
execute any contract or agreement that will in any manner interfere, conflict
with or prevent him from performing his duties under the terms and conditions of
this Agreement, recognizing that his performance hereunder will require the
devotion of his full time and attention during and beyond regular business hours
during the Term (as hereinafter defined), including extensive travel. Nothing in
this Agreement shall be construed as prohibiting Executive from owning an
interest in Howard Leight Enterprises or serving as a director of that
corporation.
2. Period of Employment. This Agreement shall become effective upon the
closing of the Transaction and continue until December 31, 1999 (the "Initial
Term"). On December 31, 1999, and at the end of each year thereafter, the period
of employment shall be automatically extended, without further action by either
party, for successive one-year periods (each a "Renewal Term") unless at least
six months prior to the end of the Initial Term or any Renewal Term either party
shall have served written notice on the other of its election to allow this
Agreement to terminate at the end of such Term. The Initial Term and any Renewal
Terms are hereinafter sometimes collectively referred to as the "Term."
If either party notifies the other party that it shall not extend the
period of employment, Company may, at its option, decide that the Executive
shall utilize any unused vacation and/or take a leave-of-absence for part or all
of the remaining time of his employment, continuing to receive all compensation
as if actively working.
3. Termination. The period of employment shall be terminated upon the first
to occur of the following:
(i) The expiration of the period of employment pursuant to Section 2
of this Agreement.
(ii) The Executive's death.
(iii)The Executive becoming permanently disabled. Permanent
disability shall mean physical or mental incapacity of a nature
which prevents Executive from performing his duties under this
Agreement for a period of more than six months in any twelve
month period.
(iv) The Executive's employment being terminated by Company for cause.
Termination for cause shall mean termination by action of the
Board of Directors of Company because of the willful failure of
Executive to perform his duties and obligations under this
Agreement or failure to execute in a reasonable and responsible
manner the written policies and procedures of Company or gross
negligence in the performance of his duties under this Agreement
or the commission by Executive of a felony which the Company
reasonably determines would adversely affect the Company or the
Conduct of its business.
4. Compensation and Benefits.
(a) The Executive shall receive regular compensation (the "Base
Salary") at the initial rate per annum of One Hundred Twenty-Five Thousand
Dollars ($125,000.00) for the Initial Term. The Base Salary shall be payable in
arrears less the usual payroll deductions at the same times and in the same
manner as salaries paid to other employees of the Company. The Base Salary shall
be reviewed annually during each January of the Term for possible increase
including participation in any wage increases applicable generally to salaried
employees of the Company; provided, however, that the Base Salary shall increase
by a minimum of five percent (5%) in January 1999.
(b) In addition to the Base Salary, the Executive shall be entitled to
receive annual incentive compensation payments ("Incentive Compensation") at
such times and in such amounts as may be determined pursuant to the Bonus Plan
for Executives of subsidiaries of Bacou USA, Inc., as in effect for the
applicable year and applied with regard to the operating results of the Howard
Leight Industries division of the Company. There is attached to this Agreement a
copy of such Bonus Plan as applicable for fiscal years 1998 and 1999. The
maximum possible Incentive Compensation payable per annum under this Agreement
shall not exceed sixty percent (60%) of the amount of Base Salary paid to
Executive in the fiscal year for which such Incentive Compensation is
determined. Executive acknowledges that, by agreeing to participate in the Bonus
Plan for subsidiaries of Bacou USA, Inc., he thereby waives any rights to
participate in any other incentive compensation plan of the Company.
(c) Incentive Compensation shall be paid by Company for the prior
fiscal year within ten (10) days after a decision is made by the Board of
Directors of Bacou USA, Inc. as to the amount of such Incentive Compensation,
but in any event no later than the earlier of the annual meeting of the Board of
Directors or March 31.
(d) The Executive shall be entitled to participate in any stock option
plan which Bacou USA, Inc. may adopt for Company at levels to be determined by
the Board of Directors of Bacou USA, Inc. in their sole discretion.
(e) In connection with the execution of this Agreement as a signing
bonus and subject to the execution of the Stock Option Notice and Agreement
attached hereto as Exhibit A, Executive shall receive $200,000 on execution of
this Agreement and be granted options to purchase 5,000 shares of common stock
of Bacou USA, Inc. at $17 per share.
(f) The Executive shall be entitled to participate in all savings,
thrift, retirement or pension, short term and long term disability, health and
accident, Blue Cross/Blue Shield, Major Medical or other hospitalization,
holiday, vacation, and other fringe benefit programs generally available to
executives of Company in accordance with and subject to the terms and conditions
of such programs.
(g) In addition, the Executive shall be entitled to receive the
following benefits:
(i) The Executive shall have the use of a company car, subject
to the written Automobile Policy of Bacou USA, Inc.;
provided, however, that for any period of time Executive
elects to continue using his own automobile, the Company
shall pay him a car allowance of $550 per month plus the
costs of gas, maintenance, repairs and insurance.
(ii) The Executive shall be entitled to vacation pursuant to the
written Bacou USA, Inc. Executive Vacation Policy. Vacation
days will be taken at a time convenient for both the
Executive and Company. To the extent the Executive does not
take all vacation days the remaining days will be carried
forward for an unlimited period or be paid to the Executive
at the level of his Base Salary valid for the fiscal year in
which vacation days are not taken.
(iii)When traveling on Company business, the Executive will be
provided coach-class airfare on domestic trips; business
class airfare will be provided on international trips.
(iv) The Executive is authorized to incur reasonable expenses in
connection with and for the promotion of the business of
Company, including expenses for meals and lodging (regular
hotel room, no suites), entertainment, and similar items as
required from time to time by the Executive's duties.
Company shall reimburse the Executive for all such expenses
upon the presentation of an account therefor, together with
appropriate supporting documentation.
5. Limitations on Authority. Except as otherwise provided herein, approval
by the CEO must be obtained prior to the Executive taking any of the following
actions on behalf of the Company or any of its affiliates:
(a) Acquisition or disposition of real property or any rights deriving
therefrom, or changing title in any such real property;
(b) Making unplanned capital expenditures or any commitment therefore;
(c) Borrowing or guaranteeing any borrowings from or on behalf of any
party, or altering the terms of any loan agreements for such borrowings
except for any such loans or borrowings as shall be agreed upon by the
Board of Directors of Bacou USA, Inc.;
(d) Hiring or terminating executive personnel;
(e) Granting retirement benefits or other non-earned income to any
individual which is not available to all employees;
(f) Modification of any qualified plan or other benefit plan, e.g.,
health insurance;
(g) Acquiring the assets or shares of another Company or partnership;
(h) Acquiring or disposing of the assets or shares of the Company, or
selling any fixed asset of the Company below book value;
(i) Entering into or terminating any employment, consulting, or other
service agreements of any kind or nature with a monthly financial
obligation in excess of U.S. $3,000 for more than six (6) months;
(j) Making basic changes in the administration, organization,
production, and distribution of Company or any of its affiliates, as well
as closing or curtailing the functions of Company or any of its affiliates;
(k) Filing or settling any lawsuit;
(l) Entering into any transaction on behalf of Company or its
affiliates which is not in the usual course of its business;
(m) Adoption or modification of the annual budget.
Notwithstanding the foregoing, approval is not required for any action
provided for in the approved and applicable annual budget or annual plan of
Company. In addition, should the CEO be unavailable, if an emergency arises
which requires the Executive to take immediate action in which approval as set
forth in this, Section would otherwise be required, the Executive is no longer
bound by the limitations described above and is authorized to make a decision in
the best interests of Company. The Executive will immediately inform the CEO in
writing of any such decisions made by him.
6. Non-Disclosure of Information. It is understood that the business of
Company and its affiliates is of a confidential nature. During the period of the
Executive's employment with Company, the Executive may have received and/or may
secure confidential information concerning Company or any of Company's
affiliates or subsidiaries which, if known to competitors thereof, would damage
Company or its said affiliates or subsidiaries. The Executive agrees that during
and after the term of this Agreement he will not (except as authorized by
Company or in the proper performance of his duties or except as ordered by a
court or other body of competent jurisdiction or as otherwise required by law),
directly or indirectly, divulge, disclose or appropriate to his own use, or to
the use of any third party, any secret, proprietary or confidential information
or knowledge obtained by him during the term hereof concerning such confidential
matters of Company or its subsidiaries or affiliates, including, but not limited
to, information pertaining to trade secrets, systems, manuals, confidential
reports, methods, processes, designs, equipment lists, operating procedures,
equipment and methods used and preferred by Company's customers. Upon
termination of this Agreement, the Executive shall promptly deliver to Company
all materials of a secret or confidential nature relating to the business of
Company or any of its subsidiaries or affiliates which are, directly or
indirectly, in the possession or under the control of the Executive. The
provisions of this paragraph shall continue to apply after the Executive ceases
to be employed by Company for a period of three (3) years except in respect of
any information or knowledge disclosed to the public, other than through an
unauthorized disclosure by the Executive.
7. Trade Secrets. The Executive covenants that he shall, while employed by
Company, assign, transfer, and set over to Company or its designee all right,
title and interest in and to all trade secrets, secret processes, inventions,
improvements, patents, patent applications, trademarks, trademark applications,
copyrights, copyright registrations, discoveries and/or other developments
(hereinafter "Inventions") which he may, thereafter, alone or in conjunction
with others, during or outside normal working hours, conceive, make, acquire or
suggest at any time which relate to the products, processes, work, research, or
other activities of Company or any of its subsidiaries or affiliates. Any and
all Inventions which are of a proprietary nature and which the Executive may
conceive, may acquire or suggest, either alone or in conjunction with others,
during his employment with Company (whether during or outside normal working
hours) relating to or in any way pertaining to or connected with Company's
business, shall be the sole and exclusive property of Company or its designee
and the Executive, whenever requested to do so by Company, shall, without
further compensation or consideration properly execute any and all applications,
assignments or other documents which Company or its designee shall deem
necessary in order to apply for and obtain Letters Patent of the United States
and/or comparable rights afforded by foreign countries for the Inventions, or in
order to assign and convey to Company or its designee the sole and exclusive
right, title and interest in and to the Inventions. This obligation shall
continue beyond the termination of this Agreement with respect to Inventions
conceived or made by the Executive during the term of his employment by Company,
and shall be binding upon his assigns, executors, administrators, and other
legal representatives.
8. Non-Competition. (a) During the term of this Agreement or any renewal
thereof and, at Company's option for a period of up to one year thereafter,
should the Executive's contract be terminated or not be renewed, the Executive
agrees that he will not within the geographical area of the United States,
engage, either directly or indirectly, individually or as an owner, partner,
joint venturer, employee, officer, director, stockholder, consultant,
independent contractor or lender of or to any corporation, holding Company or
other business entity which is in a business similar to that of Company or any
of its affiliates. In the event that Company chooses to exercise its option to
prevent the Executive from competing with Company following termination or
non-renewal of his employment, Company shall notify the Executive in writing
within two (2) weeks following his last day of employment or within two (2)
weeks of notice by Company of its decision that the Executive shall take a
leave-of-absence, in either case specifying the period of up to one year
following termination, resignation, or non-renewal of employment during which
such competitive activity shall be prohibited. In the event Company exercises
its option, Company shall continue to pay Executive his Base Salary at the rate
applicable at the time of termination, resignation or non-renewal for the period
during which the Executive is prohibited from competition with Company, plus an
amount equal to the Incentive Compensation paid to him for the prior fiscal
year, pro-rated for the period during which the Executive is prohibited from
competition with the Company (if less than a full year); provided, however, that
the Company shall not be obligated to make any such payments (and shall be
entitled to a refund of any payments actually made) to the extent that Executive
violates his obligation of non-competition or invalidates such obligation
through legal action. Notwithstanding the foregoing, the Executive (as
hereinbefore described in Section 2(d)) may own five (5%) percent of the
securities of any business in competition with the business of Company or any of
its affiliates, which securities are regularly traded on a public exchange,
provided that any such ownership shall not result in the Executive becoming a
record or beneficial owner at any time of more than five (5%) percent of equity
securities of said business entity.
(b) The Executive shall not during the term of his Employment under this
Agreement or any renewal thereof, and for a period of one (1) year thereafter,
solicit or arrange to have any other person or entity solicit any person who was
employed by the Company or any of its affiliated companies having an annual
compensation of at least U.S. $50,000 per annum for other employment or
otherwise induce such employees to terminate their employment with the Company
or such affiliates.
(c) If any provision of this Section is held to be unenforceable because of
the scope, duration or area of its applicability or otherwise, the legal entity
making that determination will have the power to modify the scope, duration or
area, or all of them, and the provision will then apply in its modified form.
9. Property. All letters, memoranda, documents, business notes (including
all copies thereof) and other information contained on any other computer media
including computer disks and hard drives of the Executive in any manner relating
to the duties of Executive under this agreement are the property of Company.
10. Notices. Any notices or other communications required to be given
pursuant to this Agreement shall be in writing and shall be deemed given: (i)
upon delivery, if by hand; (ii) three (3) business days after mailing, if sent
by registered or certified mail, postage prepaid, return receipt requested;
(iii) one (1) business day after mailing, if sent via overnight courier; or (iv)
upon transmission, if sent by telex or facsimile except that if such notice or
other communication is received by telex or facsimile after 5:00 p.m. on a
business day at the place of receipt, it shall be effective as of the following
business day. All notices and other communications hereunder shall be given as
follows:
(a) If to the Company, to it at:
Bacou USA Safety, Inc.
10 Thurber Boulevard
Smithfield, RI 02917
Attention: Chief Executive Officer
Telephone No.: 401-233-0333
Fax No.: 401-232-2230
(b) If to the Executive, to him at:
508 Montera Court
Chula Vista, CA 91910
Telephone No.: 619-421-2737
Any party may change its address for receiving notice or add persons to receive
copies of notices by written notice given to the other names above in the manner
provided above.
11. Full and Complete Agreement; Amendment. This Agreement constitutes the
full and complete understanding and agreement of the parties and supersedes all
prior understandings and agreements, whether written or oral, express or
implied, pertaining in any manner to the employment of Executive. This Agreement
may be modified only by a written instrument executed by both parties.
12. Construction. This Agreement shall be construed under the laws of the
State of California without reference to its conflicts of laws provisions.
13. Arbitration. Notwithstanding the fact that the parties shall be
entitled to equitable relief in order to enforce certain provisions hereunder
(e.g., temporary restraining orders or injunctive relief), any dispute,
controversy or claim arising out of or relating to this Agreement, or the breach
hereof, shall be settled by arbitration in accordance with the "Commercial
Arbitration Rules" of the American Arbitration Association in effect on the date
of this Agreement, except as varied below. The site of any such arbitration
shall be Los Angeles, California and any award shall be deemed to be a Los
Angeles, California award. There shall be a single arbitrator who shall be
admitted to practice law in California, with no less than ten (10) years
experience in the handling of commercial or corporate matters or disputes. The
arbitrator shall render a written decision stating his reasons therefor, and
shall render an award within six (6) months of the request for arbitration, and
such award shall be final and binding upon both parties. Judgment upon the award
rendered by the arbitrator may be entered in any court of competent jurisdiction
in any state of the United States or country or application may be made to such
court for a judicial acceptance of the award and an enforcement, as the law of
such jurisdiction may require or allow. The substantive law to be applied to any
case determined pursuant to this Section 13 is that of State of California. The
expense of arbitration shall be borne by the respective parties except to the
extent that the arbitrators shall determine that the entire expense shall be
borne by a single party.
14. Binding Nature. This Agreement shall be binding upon and shall inure to
the benefit of the parties and their respective heirs, personal representatives,
successors and assigns.
IN WITNESS WHEREOF, Company and the Executive have duly executed this
Agreement as of the day and year first written above.
BACOU USA SAFETY, INC.
By: /s/ Walter Stepan
- -----------------------------------
Name: Walter Stepan
Title: Chairman, President and
Chief Executive Officer
By: /s/ Philip B. Barr, Jr.
- -----------------------------------
Name: Philip B. Barr, Jr.
Title: Vice Chairman, Secretary and
Treasurer
EXECUTIVE:
/s/ Ken David Meyers
- -----------------------------------
Ken David Meyers
Exhibit 99(d)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 27th day of February, 1998, by and between
Thomas A. Wagner, 1371 Harbour Town Place, Chula Vista, CA 91915 ("Executive")
and Bacou USA Safety, Inc., a corporation organized under the laws of Delaware
(the "Company").
W I T N E S S E T H:
WHEREAS, on this date the Company has acquired substantially all of the
assets and liabilities of Howard S. Leight & Associates, Inc., d/b/a/ Howard
Leight Industries ("Seller") and, until the closing of that transaction (the
"Transaction"), Executive served as Vice President -Manufacturing and
Distribution of Seller; and
WHEREAS, Company wishes to secure the services of Executive as Vice
President -Manufacturing and Distribution of Company's Howard Leight Industries
Division for the period provided in this Agreement; and
WHEREAS, Executive is willing to enter into this Agreement for such period
and on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
Company and Executive hereby agree as follows:
1. Employment. During the period of employment set forth in Section 2 of
this Agreement, Company shall employ Executive, and Executive shall serve as
Vice President -Manufacturing and Distribution of the Howard Leight Industries
Division of Company. Executive agrees to faithfully perform the duties assigned
to him to the best of his ability, comply with the written Policies and
Procedures of Bacou USA, Inc. as then applicable to its subsidiaries and, except
for vacations and periods of temporary illness, to devote his full time and
attention to the business of Company. Ancillary employment such as writing,
teaching or lecturing, as well as the acceptance of honorific titles may be
undertaken by. the Executive only with the approval of the Chief Executive
Officer of Bacou USA, Inc. or his designee (together referred to as the "CEO").
Executive also agrees that he will not engage in any other business activities
without the prior approval of the CEO. Executive may only serve as an officer,
director, trustee or committee member, or in any similar position, of a
reasonable number (maximum two) of trade associations and religious, charitable,
educational, civic or other non-business organizations, subject to the approval
of the CEO. The Executive represents and wan-ants to Company that he is now
under no contract or agreement nor will he execute any contract or agreement
that will in any manner interfere, conflict with or prevent him from performing
his duties under the terms and conditions of this Agreement, recognizing that
his performance hereunder will require the devotion of his full time and
attention during and beyond regular business hours during the Term (as
hereinafter defined), including extensive travel.
2. Period of Employment. This Agreement shall become effective upon the
closing of the Transaction and continue until December 31, 1999 (the "Initial
Term"). On December 31, 1999, and at the end of each year thereafter, the period
of employment shall be automatically extended, without further action by either
party, for successive one-year periods (each a "Renewal Term") unless at least
six months prior to the end of the Initial Term or any Renewal Term either party
shall have served written notice on the other of its election to allow this
Agreement to terminate at the end of such Term. The Initial Term and any Renewal
Terms are hereinafter sometimes collectively referred to as the "Term."
If either party notifies the other party that it shall not extend the
period of employment, Company may, at its option, decide that the Executive
shall utilize any unused vacation and/or take a leave-of-absence for part or all
of the remaining time of his employment, continuing to receive all compensation
as if actively working.
3. Termination. The period of employment shall be terminated upon the first
to occur of the following:
(i) The expiration of the period of employment pursuant to Section 2
of this Agreement.
(ii) The Executive's death.
(iii)The Executive becoming permanently disabled. Permanent
disability shall mean physical or mental incapacity of a nature
which prevents Executive from performing his duties under this
Agreement for a period of more than six months in any twelve
month period.
(iv) The Executive's employment being terminated by Company for cause.
Termination for cause shall mean termination by action of the
Board of Directors of Company because of the willful failure of
Executive to perform his duties and obligations under this
Agreement or failure to execute in a reasonable and responsible
manner the written policies and procedures of Company or gross
negligence in the performance of his duties under this Agreement
or the commission by Executive of a felony which the Company
reasonably determines would affect the Company or the conduct of
its business.
4. Compensation and Benefits.
(a) The Executive shall receive regular compensation (the "Base Salary") at
the initial rate per annum of One Hundred Ten Thousand Dollars ($110,000.00) for
the Initial Term. The Base Salary shall be payable in arrears less the usual
payroll deductions at the same times and in the same manner as salaries paid to
other employees of the Company. The Base Salary shall be reviewed annually
during each January of the Term for possible increase including participation in
any wage increases applicable generally to salaried employees of the Company.
(b) In addition to the Base Salary, the Executive shall be entitled to
receive annual incentive compensation payments ("Incentive Compensation") at
such times and in such amounts as may be determined pursuant to the Bonus Plan
for Executives of subsidiaries of Bacou USA, Inc., as in effect for the
applicable year and applied with regard to the operating results of the Howard
Leight Industries division of the Company. There is attached to this Agreement a
copy of such Bonus Plan as applicable for fiscal years 1998 and 1999. The
maximum possible Incentive Compensation payable per annum under this Agreement
shall not exceed sixty percent (60%) of the amount of Base Salary paid to
Executive in the fiscal year for which such Incentive Compensation is
determined. Executive acknowledges that, by agreeing to participate in the Bonus
Plan for subsidiaries of Bacou USA, Inc., he thereby waives any rights to
participate in any other incentive compensation plan of the Company.
(c) Incentive Compensation shall be paid by Company for the prior fiscal
year within ten (10) days after a decision is made by the Board of Directors of
Bacou USA, Inc. as to the amount of such Incentive Compensation, but in any
event no later than the earlier of the annual meeting of the Board of Directors
or March 31.
(d) The Executive shall be entitled to participate in any stock option plan
which Bacou USA, Inc. may adopt for Company at levels to be determined by the
Board of Directors of Bacou USA, Inc. in their sole discretion.
(e) In connection with the execution of this Agreement and subject to the
execution of the Stock Option Notice and Agreement attached hereto as Exhibit A,
Executive shall be granted options to purchase 5,000 shares of common stock of
Bacou USA, Inc. at $17 per share.
(f) The Executive shall be entitled to participate in all savings,
retirement and long term or pension, short term and long term disability, health
and accident, Blue Cross/Blue Shield, Major Medical or other hospitalization,
holiday, vacation, and other fringe benefit programs generally available to
executives of Company in accordance with and subject to the terms and conditions
of such programs.
(g) In addition, the Executive shall be entitled to receive the following
benefits:
(i) The Executive shall have the use of a company car, subject to the
written Automobile Policy of Bacou USA, Inc.; provided, however,
that for any period of time Executive elects to continue using
his own automobile, the Company shall pay him a car allowance of
$550 per month plus the costs of gas, maintenance, repairs and
insurance.
(ii) The Executive shall be entitled to vacation pursuant to the
written Bacou USA, Inc. Executive Vacation Policy. Vacation days
will be taken at a time convenient for both the Executive and
Company. To the extent the Executive does not take all vacation
days the remaining days will be carried forward for an unlimited
period or be paid to the Executive at the level of his Base
Salary valid for the fiscal year in which vacation days are not
taken.
(iii)When traveling on Company business, the Executive will be
provided coach-class airfare on domestic trips; business class
airfare will be provided on international trips.
(iv) The Executive is authorized to incur reasonable expenses in
connection with and for the promotion of the business of Company,
including expenses for meals and lodging (regular hotel room, no
suites), entertainment, and similar items as required from time
to time by the Executive's duties. Company shall reimburse the
Executive for all such expenses upon the presentation of an
account therefor, together with appropriate supporting
documentation.
5. Limitations on Authority. Except as otherwise provided herein, approval
by the CEO must be obtained prior to the Executive taking any of the following
actions on behalf of the Company or any of its affiliates:
(a) Acquisition or disposition of real property or any rights
deriving therefrom, or changing title in any such real property.
(b) Making unplanned capital expenditures or any commitment
therefore;
(c) Borrowing or guaranteeing any borrowings from or on behalf of any
party, or altering the terms of any loan agreements for such
borrowings except for any such loans or borrowings as shall be
agreed upon by the Board of Directors of Bacou USA, Inc.;
(d) Hiring or terminating executive personnel;
(e) Granting retirement benefits or other non-earned income to any
individual which is not available to all employees;
(f) Modification of any qualified plan or other benefit plan, e.g.,
health insurance;
(g) Acquiring the assets or shares of another Company or partnership;
(h) Acquiring or disposing of the assets or shares of the Company, or
selling any fixed asset of the Company below book value;
(i) Entering into or terminating any employment, consulting, or other
service agreements of any kind or nature with a monthly financial
obligation in excess of U.S. $3,000 for more than six (6) months;
(j) Making basic changes in the administration, organization,
production, and distribution of Company or any of its affiliates,
as well as closing or curtailing the functions of Company or any
of its affiliates;
(k) Filing or settling any lawsuit;
(1) Entering into any action on behalf of Company or its affiliates
which is not in the usual course of its business;
(m) Adoption or modification of the annual budget.
Notwithstanding the foregoing, approval is not required for any action
provided for in the approved and applicable annual budget or annual plan of
Company. In addition, should the CEO be unavailable, if an emergency arises
which requires the Executive to take immediate action in which approval as set
forth in this Section would otherwise be required, the Executive is no longer
bound by the limitations described above and is authorized to make a decision in
the best interests of Company. The Executive will immediately inform the CEO in
writing of any such decisions made by him.
6. Non-Disclosure of Information. It is understood that the business of
Company and its affiliates is of a confidential nature. During the period of the
Executive's employment with Company, the Executive may have received and/or may
secure confidential information concerning Company or any of Company's
affiliates or subsidiaries which, if known to competitors thereof, would damage
Company or its said affiliates or subsidiaries. The Executive agrees that during
and after the term of this Agreement he will not (except as authorized by
Company or in the proper performance of his duties or except as ordered by a
court or other body of competent jurisdiction or as otherwise required by law),
directly or indirectly, divulge, disclose or appropriate to his own use, or to
the use of any third party, any secret, proprietary or confidential information
or knowledge obtained by him during the term hereof concerning such confidential
matters of Company or its subsidiaries or affiliates, including, but not limited
to, information pertaining to trade secrets, systems, manuals, confidential
reports, methods, processes, designs, equipment lists, operating procedures,
equipment and methods used and preferred by Company's customers. Upon
termination of this Agreement, the Executive shall promptly deliver to Company
all materials of a secret or confidential nature relating to the business of
Company or any of its subsidiaries or affiliates which are, directly or
indirectly, in the possession or under the control of the Executive. The
provisions of this paragraph shall continue to apply after the Executive ceases
to be employed by Company for a period of three (3) years except in respect of
any information or knowledge disclosed to the public, other than through an
unauthorized disclosure by the Executive.
7. Trade Secrets. The Executive covenants that he shall, while employed by
Company, assign, transfer, and set over to Company or its designee all right,
title and interest in and to all trade secrets, secret processes, inventions,
improvements, patents, patent applications, trademarks, trademark applications,
copyrights, copyright registrations, discoveries and/or other developments
(hereinafter "Inventions") which he may, thereafter, alone or in conjunction
with others, during or outside normal working hours, conceive, make, acquire or
suggest at any time which relate to the products, processes, work, research, or
other activities of Company or any of its subsidiaries or affiliates. Any and
all Inventions which are of a proprietary nature and which the Executive may
conceive, may acquire or suggest, either alone or in conjunction with others,
during his employment with Company (whether during or outside normal working
hours) relating to or in any way pertaining to or connected with Company's
business, shall be the sole and exclusive property of Company or its designee
and the Executive, whenever requested to do so by Company, shall, without
further compensation or consideration properly execute any and all applications,
assignments or other documents which Company or its designee shall deem
necessary in order to apply for and obtain Letters Patent of the United States
and/or comparable rights afforded by foreign countries for the Inventions, or in
order to assign and convey to Company or its designee the sole and exclusive
right, title and interest in and to the Inventions. This obligation shall
continue beyond the termination of this Agreement with respect to Inventions
conceived or made by the Executive during the term of his employment by Company,
and shall be binding upon his assigns, executors, administrators, and other
legal representatives.
8. Non-Competition. (a) During the term of this Agreement or any renewal
thereof and, at Company's option for a period of up to one year thereafter,
should the Executive's contract be terminated or not be renewed, the Executive
agrees that he will not within the geographical area of the United States,
engage, either directly or indirectly, individually or as an owner, partner,
joint venturer, employee, officer, director, stockholder, consultant,
independent contractor or lender of or to any corporation, holding Company or
other business entity which is in a business similar to that of Company or any
of its affiliates. In the event that Company chooses to exercise its option to
prevent the Executive from competing with Company following termination or
non-renewal of his employment, Company shall notify the Executive in writing
within two (2) weeks following his last day of employment or within two (2)
weeks of notice by Company of its decision that the Executive shall take a
leave-of-absence, in either case specifying the period of up to one year
following termination, resignation, or non-renewal of employment during which
such competitive activity shall be prohibited. In the event Company exercises
its option, Company shall continue to pay Executive his Base Salary at the rate
applicable at the time of termination, resignation or non-renewal for the period
during which the Executive is prohibited from competition with Company plus an
amount equal to the Incentive Compensation paid to him for the prior fiscal
year, prorated for the period during which the Executive is prohibited from
competition with the Company (if less than a full year); provided, however, that
the Company shall not be obligated to make any such payments (and shall be
entitled to a refund of any payments actually made) to the extent that Executive
violates his obligation of non-competition or invalidates such obligation
through legal action. Notwithstanding the foregoing, the Executive (as
hereinbefore described in Section 2(d)) may own five (5%) percent of the
securities of any business in competition with the business of Company or any of
its affiliates, which securities are regularly traded on a public exchange,
provided that any such ownership shall not result in the Executive becoming a
record or beneficial owner at any time of more than five (5%) percent of equity
securities of said business entity.
(b) The Executive shall not during the term of his Employment under this
Agreement or any renewal thereof, and for a period of one (1) year thereafter,
solicit or arrange to have any other person or entity solicit any person who was
employed by the Company or any of its affiliated companies having an annual
compensation of at least U.S. $50,000 per annum for other employment or
otherwise induce such employees to terminate their employment with the Company
or such affiliates.
(c) If any provision of this Section is held to be unenforceable because of
the scope, duration or area of its applicability or otherwise, the legal entity
making that determination will have the power to modify the scope, duration or
area, or all of them, and the provision will then apply in its modified form.
9. Property. All letters, memoranda, documents, business notes (including
all copies thereof) and other information contained on any other computer media
including computer disks and hard drives of the Executive in any manner relating
to the duties of Executive under this agreement are the property of Company.
10. Notices. Any notices or other communications required to be given
pursuant to this Agreement shall be in writing and shall be deemed given: (i)
upon delivery, if by hand; (ii) three (3) business days after mailing, if sent
by registered or certified mail, postage prepaid, return receipt requested;
(iii) one (1) business day after mailing, if sent via overnight courier; or (iv)
upon transmission, if sent by telex or facsimile except that if such notice or
other communication is received by telex or facsimile after 5:00 p.m. on a
business day at the place of receipt, it shall be effective as of the following
business day. All notices and other communications hereunder shall be given as
follows:
(a) If to the Company, to it at:
Bacou USA Safety, Inc.
10 Thurber Boulevard
Smithfield, RI 02917
Attention: Chief Executive Officer
Telephone No.: 401-233-0333
Fax No.: 401-232-2230
(b) If to the Executive, to him at:
1371 Harbour Town Place
Chula Vista, CA 91915
619-421-5681
Any party may change its address for receiving notice or add persons to
receive copies of notices by written notice given to the other names above in
the manner provided above.
11. Full and Complete Agreement; Amendment. This Agreement constitutes the
full and complete understanding and agreement of the parties and supersedes all
prior understandings and agreements, whether written or oral, express or
implied, pertaining in any manner to the employment of Executive. This Agreement
may be modified only by a written instrument executed by both parties.
12. Construction. This Agreement shall be construed under the laws of the
State of California without reference to its conflicts of laws provisions.
13. Arbitration. Notwithstanding the fact that the parties shall be
entitled to equitable relief in order to enforce certain provisions hereunder
(e.g., temporary restraining orders or injunctive relief), any dispute,
controversy or claim arising out of or relating to this Agreement, or the breach
hereof, shall be settled by arbitration in accordance with the "Commercial
Arbitration Rules" of the American Arbitration Association in effect on the date
of this Agreement, except as varied below. The site of any such arbitration
shall be Los Angeles, California and any award shall be deemed to be a Los
Angeles, California award. There shall be a single arbitrator who shall be
admitted to practice law in California, with no less than ten (10) years
experience in the handling of commercial or corporate matters or disputes. The
arbitrator shall render a written decision stating his reasons therefor, and
shall render an award within six (6) months of the request for arbitration, and
such award shall be final and binding upon both parties. Judgment upon the award
rendered by the arbitrator may be entered in any court of competent jurisdiction
in any state of the United States or country or application may be made to such
court for a judicial acceptance of the award and an enforcement, as the law of
such jurisdiction may require or allow. The substantive law to be applied to any
case determined pursuant to this Section 13 is that of State of California. The
expense of arbitration shall be borne by the respective parties except to the
extent that the arbitrators shall determine that the entire expense shall be
borne by a single party.
14. Binding Nature. This Agreement shall be binding upon and shall inure to
the benefit of the parties and their respective heirs, personal representatives,
successors and assigns.
IN WITNESS WHEREOF, Company and the Executive have duly executed this
Agreement as of the day and year first written above.
BACOU USA SAFETY, INC.
By /s/ Walter Stepan
--------------------------
Name: Walter Stepan
Title: Chairman, President and
Chief Executive Officer
By /s/ Philip B. Barr, Jr.
--------------------------
Name: Philip B. Barr, Jr.
Title: Vice Chairman, Secretary and
Treasurer
EXECUTIVE:
/s/ Thomas A. Wagner
- --------------------------
Thomas A. Wagner
Exhibit 99(e)
CONSULTING AGREEMENT
CONSULTING AGREEMENT ("Agreement") made as of the 27th day of February,
1998, between Bacou USA Safety, Inc., a Delaware corporation, (the "Company")
and Howard S. Leight, an individual residing at 6000 Cavalleri Road, Malibu,
California 90265 ("Consultant"). As used in this Agreement, capitalized terms
not otherwise defined shall have the same meaning herein as provided in the
Asset Purchase Agreement (defined below).
W I T N E S S E T H:
WHEREAS, the Company is a wholly-owned subsidiary of Bacou USA, Inc.
("Bacou"); and
WHEREAS, pursuant to an Asset Purchase Agreement dated as of December 31,
1997 ("Asset Purchase Agreement") with Howard S. Leight & Associates, Inc., a
California corporation ("Seller"), Company has purchased substantially all of
the assets and business of the Seller (the "Acquisition"); and
WHEREAS, Consultant is the founder, Chairman and principal stockholder of
the Seller; and
WHEREAS, the Seller was in the business of developing, manufacturing and
selling hearing protection devices ("Business") and the Company, by virtue of
the Acquisition, is now engaged in the Business; and
WHEREAS, Consultant is experienced and knowledgeable in the process of the
development, manufacture and marketing of hearing protection devices (the
"Consulting Field"); and
WHEREAS, Consultant desires to consult with the Company and it is a
condition to the Closing of the Acquisition that Consultant enter into this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. ENGAGEMENT. Upon the terms and conditions contained in this Agreement,
the Company hereby retains Consultant, and Consultant hereby accepts the
engagement, and agrees to perform Consulting Services (as defined below) for the
Company in the Consulting Field.
2. CONSULTING SERVICES; DIRECTOR NOMINATION. (a) During the term of this
Agreement, as defined in section 5 below (the "Term"), at the request of the
Company, Consultant shall give to the Company the benefit of Consultant's skill
and advice in the Consulting Field as the Consultant may offer to the Company or
as the Company may from time to time reasonably request which services may be
rendered over the telephone and the Consultant shall annually attend and assist
the Company in its marketing efforts for the duration of each of the National
Safety Congress, the National Hygiene Congress and one major international trade
show designated by the Company (the "Consulting Services").
(b) Each year during the Term of this Agreement, the Directors of Bacou
then serving on the nominating committee shall nominate the Consultant to serve
as a member of Bacou's Board of Directors.
(c) For so long as Consultant is providing Consulting Services under this
Agreement he may utilize his existing offices at Seller's San Diego facility.
3. CONSULTING FEES; BACOU OPTIONS. (a) Consultant's fees for all Consulting
Services rendered under this Agreement during the Term shall be paid at the
annual rate of $200,000, payable in equal monthly installments of $16,667 in
arrears.
(b) In addition, Company shall make contingent payments to Consultant in
accordance with the following provisions:
(i) Within sixty (60) days following the end of each
calendar quarter, Company shall pay to Consultant in cash an
amount equal to four percent (4%) of the Net Sales (as
defined below) of any New Product (as defined below) with
respect to such calendar quarter (a "Royalty Payment"),
provided that no Royalty Payments shall become due hereunder
for any New Product until the cumulative Net Sales of such
New Product shall exceed $3,000,000, whereupon all accrued
and unpaid Royalty Payments from the date of first sale for
such New Product shall become due and payable. Royalty
Payments with respect to each New Product shall continue
until the expiration of the US patent relating to such New
Product;
(ii) As used in this Agreement, the following terms
shall have the meanings set forth below:
(A) "Net Sales" shall mean the gross invoice
amount received from customers for any New Product sold
by the Company and its affiliates throughout the world,
less cash and quantity discounts and allowances, taxes,
freight charges and returns as calculated by the
Company's accounting personnel.
(B) "New Product" shall mean each and every new
product relating to the Business developed and marketed
by the Company,
(x) which is patented by the Company or for
which a patent application is submitted in good
faith, or
(y) for which a patent could be obtained but
which the Company determined not to file in order
to protect its trade secret,
and is either principally derived from ideas conveyed by Consultant to the
Company during the Term of the development of which was initiated principally by
Consultant during the Term; PROVIDED, HOWEVER, that the product "Multi-Max Dual
Earplug (patent pending)", shall be deemed a New Product for purposes of this
Section 3.
(iii) As soon as may be practicable after the last day
of each calendar quarter, but not later than sixty (60) days
following the end of such calendar quarter, Company will
deliver to Consultant a statement setting forth in
reasonable detail its calculation of the Net Sales of the
New Products for such calendar quarter, and the amount of
any Royalty Payment to be paid to Consultant. If within
thirty (30) days after the delivery of such statement
Consultant has not given written notice to Company disputing
such statement and indicating the basis of such dispute,
that statement shall be deemed correct for all purposes. In
the event Consultant gives Company such notice of dispute
within such thirty (30) day period, Consultant and Company
shall use their best efforts to settle the dispute within
thirty (30) days after the giving of such notice.
(iv) Consultant shall have the right on a quarterly
basis and at his expense to have his accounting
representative audit the cost calculation of Royalty
Payments. If the result of such audit reveals more than a
five percent (5%) underpayment of Royalty Payments from any
quarterly period, the Company shall reimburse the Consultant
for the cost of such audit as well as pay consultant any
deficiency which is owed.
(c) Effective upon the Closing Date, immediately following the due
execution of this Agreement, Bacou shall grant to Consultant the option to
purchase an aggregate of 50,000 shares of the common stock, $.001 par value, of
Bacou at a price of $17.00 per share. The option shall commence on the date of
this Agreement and shall continue for 10 years from the date of this Agreement,
unless earlier terminated by Consultant. Consultant shall execute and agrees to
be bound by the terms set forth in Bacou's standard form of Stock Option
Agreement, a copy of which is attached hereto.
4. EXPENSES. The Company shall arrange and pay for all reasonable travel
and other expenses (including first-class airfare for national and international
travel) incurred by Consultant at the Company's request in connection with his
attendance at the trade shows (described in Section 2) at the Company's request
upon presentation of expense statements, vouchers, and other supporting
documentation in such form and containing such information as the Company may
from time to time request.
5. TERM. The term of Consultant's engagement to perform Consulting Services
(the "Term") shall commence on the date of this Agreement, and shall continue
for a period of five years, unless extended by mutual agreement by the parties
hereto. Royalty Payments payable pursuant to Section 3(b) shall not terminate as
a result of the expiration of the term of this Agreement.
6. INDEPENDENT CONTRACTOR. In the performance of the Consulting Services,
Consultant shall be deemed to be, and shall be, an independent contractor, and
not a joint venturer, partner, employee or agent with or of the Company. Without
limiting the generality of the foregoing, neither the Company nor Consultant
shall have the power to bind the other, contractually or otherwise; Consultant
shall be entitled only to the compensation and reimbursement set forth in
sections 3 and 4 of this Agreement and not to any other so-called "fringe
benefits" and Consultant shall be solely responsible for any and all state and
federal taxes, withholding, FICA, FUTA, worker's compensation, or other payments
due in respect of the compensation paid to Consultant by the Company.
7. ASSIGNMENT. This Agreement shall bind and inure to the benefit of only
Consultant, the Company and the Company's successors and assigns, and the
Consultant's legal representatives, estate or intestate distributees. The
Company may assign its rights and obligations under this Agreement, in the
Company's sole discretion, by giving Consultant written notice of such
assignment. Consultant may not assign any of Consultant's rights or delegate any
of Consultant's obligations under this Agreement without the express prior
written consent of the Company.
8. CONFIDENTIAL INFORMATION.
(a) Consultant shall, both prior to and after termination of this
Agreement, maintain in confidence and not use the Proprietary Information
relating to the Business, as defined below. Maintaining the Proprietary
Information in confidence shall include refraining from disclosing Proprietary
Information to any third party, and refraining from using the Proprietary
Information for the account of Consultant or of any other person or business
entity. Consultant agrees not to make any copies of the Proprietary Information
and promptly upon request, whether during or after the Term, to return to the
Company any and all documentary, machine-readable or other tangible elements or
evidence of the Proprietary Information and any copies of the same that may be
in Consultant's possession or under Consultant's control.
(b) "Proprietary Information" includes any writing, drawing, logo, computer
program, computer database, manual, trade name, trademark, service mark or other
material registered or otherwise protected or protectable under state, federal,
or foreign patent, trademark, copyright, or similar laws; any trade or business
secrets of the Company or its affiliates and any technical or business materials
that are treated by the Company or its affiliates as confidential or
proprietary, including, but not limited to, information concerning: customer
lists, salaries and fees paid by the Company or its affiliates, general business
operations, research and development, ideas, discoveries, inventions and
improvements, manufacturing processes, costs, profits, sales, marketing
strategies, distribution procedures and agreements, methods of doing business,
servicing clients, customer relations, and of costing and making charge for
services and products, business forms developed by or for the Company or its
affiliates, form and content of bids, proposals and contracts, the Company's
internal reporting methods, technical and Company data, documentation and
drawings, all whether in writing, oral or machine-readable form, software
programs and databases, however embodied, diagnostic techniques, and information
obtained by or given to the Company or its affiliates about or belonging to its
customers, potential customers or others.
9. RIGHTS TO INVENTIONS.
(a) Consultant agrees to disclose to the Company all works, ideas and
inventions relating to the Business, whether or not subject to patent or
copyright protection, made, conceived or actually or constructively reduced to
practice by Consultant during the Term or prior thereto, whether solely or
jointly with others, or which refer to or are suggested by or grow out of
Consultant's performance of the Consulting Services or from any information
obtained by Consultant in discussions and meetings with employees of the Company
or any of its affiliates.
(b) Consultant further hereby assigns and agrees to assign said works,
ideas and inventions to the Company relating to the Business and shall, at the
Company's expense, assist the Company in every possible way to protect such
ideas and inventions, including but not limited to signing patent and/or
copyright applications, oaths and assignments in favor of the Company relating
to such works, ideas and inventions both in the United States and in any and all
foreign countries.
(c) Consultant agrees that all contractual rights, works, ideas,
inventions, documents and data developed in connection with performance of the
Consulting Services in the Consulting Field shall become and remain the
exclusive property of the Company and the Company shall have the right to use
them for any purpose without any additional compensation to Consultant.
10. NON-COMPETITION. (a) During the Term of this Agreement, and thereafter
as long as the Company is making Royalty Payments under Section 3(b) at the rate
of $300,000 per quarter, the Consultant agrees that he will not anywhere in the
world engage, either directly or indirectly, individually or as an owner,
partner, joint venturer, employee, officer, director, stockholder, consultant,
independent contractor or lender of or to any corporation, holding company or
other business entity which is in or competes with the Business. Notwithstanding
the foregoing, the Consultant may own five (5%) percent of the securities of any
business in competition with the Business which securities are regularly traded
on a public exchange, provided that any such ownership shall not result in the
Consultant becoming a record or beneficial owner at any time of more than five
(5%) percent of equity securities of said business entity.
(b) The Consultant shall not during the Term of this Agreement employ and
for five years thereafter, retain or arrange to have any other person or entity
employ or retain any person who was employed by Company or any of its affiliated
companies having an annual compensation of at least U.S. $50,000 per annum
during the Term of this Agreement unless approved by the Company in writing,
which approval will not be unreasonably withheld.
(c) If any provision of this Section is held to be unenforceable because of
the scope, duration or area of its applicability or otherwise, the legal entity
making that determination will have the power to modify the scope, duration or
area, or all of them, and the provision will then apply in its modified form.
11. TERMINATION. (a) This Agreement shall terminate upon expiration of the
Term, except (i) that the Company shall continue to be obligated to make Royalty
Payments thereafter if required under Section 3(b) and Consultant shall remain
subject thereafter to the provisions of Section 10 for so long as the Company is
making Royalty Payments under Section 3(b) at the rate of at least $300,000 per
quarter. In addition, following such termination the Consultant shall be
obligated to comply with any nondisclosure obligations applicable to Consultant
under law or under this Agreement, including without limitation those in
sections 8 and 9 above, and to return all of the Company's property, including,
without limitation, any proprietary or confidential information of the Company
or of third parties obtained by Consultant from the Company and property
described in section 9 above.
(b) Consultant may terminate this Agreement following thirty (30) days
written notice of a material default in the performance of the Company's
obligations under this Agreement, provided that such default has not been cured
during such thirty (30) day period, in which event the Company shall remain
liable to make Royalty Payments pursuant to Section 3(b).
12. NO CONFLICTS. Consultant represents and warrants to the Company that
performance of Consultant's obligations under this Agreement does not and will
not violate any written or oral contract, agreement, or court order by which
Consultant is bound and Consultant covenants not to create such a violation
during the Term of this Agreement including, without limitation, such violation
created by using any information belonging to any third party, that would be
characterized as Proprietary Information if such information belonged to the
Company.
13. SEVERABILITY. Should any provision of this Agreement be held by a court
of competent jurisdiction to be unenforceable, or enforceable only if modified,
such holding shall not affect the validity of the remainder of this Agreement,
which shall continue to be binding upon the parties hereto. The parties further
agree that any such court is expressly authorized to modify any such
unenforceable provision of this Agreement in lieu of severing the unenforceable
provisions from this Agreement in its entirety, whether by rewriting the
offending provision, adding additional language to this Agreement or making such
other modifications as the court deems warranted to carry out the agreement of
the parties. The parties expressly agree that this Agreement as so modified by
the court shall be binding upon and enforceable against each of them.
14. ARBITRATION. Notwithstanding the fact that the parties shall be
entitled to equitable relief in order to enforce certain provisions hereunder
(e.g., temporary restraining orders or injunctive relief), any dispute,
controversy or claim arising out of or relating to this Agreement, or the breach
hereof, shall be settled by arbitration in accordance with the "Commercial
Arbitration Rules" of the American Arbitration Association in effect on the date
of this Agreement, except as varied below. The site of any such arbitration
shall be Los Angeles, California and any award shall be deemed to be a Los
Angeles, California award. There shall be a single arbitrator who shall be
admitted to practice law in California, with no less than ten (10) years
experience in the handling of commercial or corporate matters or disputes. The
arbitrator shall render a written decision stating his reasons therefor, and
shall render an award within six (6) months of the request for arbitration, and
such award shall be final and binding upon both parties. Judgment upon the award
rendered by the arbitrator may be entered in any court of competent jurisdiction
in any state of the United States or country or application may be made to such
court for a judicial acceptance of the award and an enforcement, as the law of
such jurisdiction may require or allow. The substantive law to be applied to any
case determined pursuant to this Section 13 is that of the State of California.
The expense of arbitration shall be borne by the respective parties except to
the extent that the arbitrators shall determine that the entire expense shall be
borne by a single party.
15. GENERAL PROVISIONS.
(a) Waiver of any provision of this agreement, in whole or in part, in any
one instance shall not constitute a waiver of any other provision in the same
instance, nor any waiver of the same provision in another instance, but each
provision shall continue in full force and effect with respect to any other
then-existing or subsequent breach.
(b) Any notice required or permitted under this agreement shall be given in
writing by delivery in hand or by postage prepaid, registered or certified mail,
return receipt requested to the parties at their respective addresses specified
in the Asset Purchase Agreement, or at such other address for a party as that
party may specify by notice. Notice shall be effective upon receipt.
(c) This agreement: (i) may be executed in any number of counterparts, each
of which, when executed by both parties to this agreement shall be deemed to be
an original, and all of which counterparts together shall constitute one and the
same instrument; (ii) shall be governed by and construed under the laws of the
State of California applicable to contracts made, accepted, and performed wholly
within California, without application of principles of conflicts of laws; (iii)
constitutes the entire agreement of the parties with respect to its subject
matter, superseding all prior oral and written communications, proposals,
negotiations, representations, understandings, courses of dealing, agreements,
contracts, and the like between the parties in such respect; (iv) may be
amended, modified, or terminated, and any right under this agreement may be
waived in whole or in part, only by a writing signed by both parties; (v)
contains headings only for convenience, which headings do not form part, and
shall not be used in construction, of this agreement; (vi) shall bind and inure
to the benefit of the parties and their respective legal representatives,
successors and permitted assigns; and (vii) is not intended to inure to the
benefit of any third-party beneficiaries.
(d) The obligations imposed by this agreement are unique. Breach of any of
such obligations would injure the parties to this agreement; such injury is
likely to be difficult to measure; and monetary damages, even if ascertainable,
are likely to be inadequate compensation for such injury. Therefore, the parties
to this agreement acknowledge and agree that protection of the respective
interests in this agreement would require equitable relief, including specific
performance and injunctive relief, in addition to any other remedy or remedies
that the parties may have at law or under this agreement, including, without
limitation, entitlement to reimbursement by the breaching party or parties of
the legal fees and expenses of the injured party or parties prevailing in any
such suit.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
BACOU USA SAFETY, INC.
By: /s/ Walter Stepan
---------------------------------
Name: Walter Stepan
Title: Chairman, President and
Chief Executive Officer
By: /s/ Philip B. Barr, Jr.
---------------------------------
Name: Philip B. Barr, Jr.
Title: Vice Chairman, Secretary and Treasurer
/s/ Howard S. Leight
-------------------------------------
Howard S. Leight
Acknowledged and Agreed solely with respect to
Section 2(b) and 3(c):
BACOU USA, INC.
By: /s/ Walter Stepan
----------------------------------
Name: Walter Stepan
Title: Vice Chairman, President and
Chief Executive Officer
By: /s/ Philip B. Barr, Jr.
----------------------------------
Name: Philip B. Barr, Jr.
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
