<PAGE 1>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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
GERBER SCIENTIFIC, INC.
-----------------------------------
(Exact name of Registrant as
specified in its charter)
CONNECTICUT 1-5865 06-0640743
------------------------------ ------------ --------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or File No.) Identification No.)
organization)
83 Gerber Road West, South Windsor, Connecticut 06074
- -------------------------------------------------- ---------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area (860) 644-1551
code: ---------------
Not applicable
-----------------------
(Former name or former address, if changes since last report)
<PAGE 2>
Item 2. Acquisition or Disposition of Assets.
On February 27, 1998, Gerber Scientific, Inc. ("Gerber" or
the "Company"), through its wholly owned subsidiary Gerber
Optical, Inc., ("Gerber Optical"), and Coburn Optical
Industries, Inc. ("Coburn") entered into a stock purchase
agreement (the "Purchase Agreement") and consummated the
transactions contemplated by that agreement ("the
Exchange").
Pursuant to the Purchase Agreement, Coburn delivered to the
Company 1,000 of its par value $1.00 per share ordinary
shares, ("Ordinary Shares"), representing 100 percent of the
outstanding shares of Coburn, in exchange for $41,300,000 in
cash delivered to the shareholders by Gerber. Gerber
delivered to two shareholders, together representing 80
percent of Coburn's outstanding shares, $19,000,000 in cash,
which was the aggregate amount owed by Coburn to these
shareholders. This debt was represented by a subordinated
Promissory Note dated March 9, 1992. Gerber also delivered
to a third party commercial bank approximately $2,450,000 in
cash, which was the aggregate amount owed by Coburn at the
time of the Exchange. The cash that was paid to the Coburn
shareholders and the third party commercial bank was funded
by Gerber approximately 50 percent from available working
capital and 50 percent from a line of credit facility from a
major commercial bank made in the ordinary course of
business.
Coburn is a leading manufacturer and international
distributor of a broad range of ophthalmic lens processing
equipment and related supplies used in the production of
eyeglass lenses. Assets acquired by the Company included a
plant located in Muskogee, Oklahoma as well as equipment and
physical property used by Coburn prior to the acquisition to
manufacture its products. The Company intends on continuing
to use these assets for that purpose.
The above description of the Exchange is qualified in its
entirety by reference to the Purchase Agreement dated as of
February 27, 1998, by and among Gerber Optical, Inc. and
Coburn Optical Industries, Inc. and The Other Parties Hereto
and the press release, dated March 2, 1998, which are
attached as Exhibit 2 and Exhibit 99.1, respectively, and
incorporated by reference.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro forma Financial Information. Not applicable.
(c) Exhibits.
See Exhibit Index on the last page of this Current
Report of Form 8-K, which is incorporated by reference.
<PAGE 3>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
GERBER SCIENTIFIC, INC.
------------------------
(Registrant)
Date: March 9, 1998 By: / s / Gary K. Bennett
------------------ ---------------------------------
Gary K. Bennett
Senior Vice President, Finance
and Principal Accounting Officer
<PAGE 4>
EXHIBIT INDEX
Exhibit Index
Number Exhibit Page
- ------------- ------- ----
2 Stock Purchase Agreement among
Gerber Optical, Inc., Coburn Optical
Industries, Inc. and The Other
Parties Hereto, dated as of
February 27, 1998.*
99.1 Text of Press Release, dated
March 2, 1998.*
*Filed herewith.
<PAGE 5>
EXHIBIT 2
EXECUTION COPY
STOCK PURCHASE AGREEMENT
among
GERBER OPTICAL, INC.,
COBURN OPTICAL INDUSTRIES, INC.
and
THE OTHER PARTIES HERETO
Dated as of February 27, 1998
TABLE OF CONTENTS
Page
ARTICLE I
Purchase and Sale of the Shares
SECTION 1.01 Purchase and Sale of the Shares 1
SECTION 1.01 Closing 1
SECTION 1.01 Certain Payments to and by
the Stockholders 3
ARTICLE II
Representations and Warranties
SECTION 2.01 Representations and Warranties
of the Company 3
SECTION 2.02 Representations and Warranties
of the Stockholders 30
SECTION 2.03 Representations and Warranties
of Gerber 31
ARTICLE III
Additional Agreements
SECTION 3.01 Fees and Expenses 33
SECTION 3.02 Public Announcements 33
SECTION 3.03 Non-Competition 33
SECTION 3.04 Environmental Claims 35
ARTICLE IV
Indemnification
SECTION 4.01 Indemnification by the Stockholders 35
SECTION 4.02 Indemnification by Gerber 36
SECTION 4.03 Losses Net of Insurance, etc. 36
SECTION 4.04 Procedures Relating to Indemnification
for Third Party Claims 37
SECTION 4.05 Other Claims 38
ARTICLE V
Additional Agreements
SECTION 5.01 Cooperation 39
SECTION 5.02 Refunds and Credits 39
SECTION 5.03 Transfer Taxes 40
SECTION 5.04 PIRPTA Certificate 40
ARTICLE VI
General Provisions
SECTION 6.01 Survival of covenatns, Representations
And Warranties 40
SECTION 6.02 Notices 40
SECTION 6.03 Definitions 41
SECTION 6.04 Interpretation 42
SECTION 6.05 Amendment 42
SECTION 6.06 Counterparts 42
SECTION 6.07 Severability 42
SECTION 6.08 Entire Agreement; No Third-Party
Beneficiaries 42
SECTION 6.09 Governing Law 42
SECTION 6.10 Assignment 42
SECTION 6.11 Attorney Fees 43
EXHIBITS
Form of Opinion of Rudnick & Wolfe
STOCK PURCHASE AGREEMENT dated as of February 27,
1998 (the "Agreement"), among GERBER OPTICAL,
INC., a Connecticut corporation ("Gerber"), COBURN
OPTICAL INDUSTRIES, INC., a Delaware corporation
(the "Company"), and the stockholders of the
Company listed on the signature pages hereto
(collectively, the "Stockholders").
Upon the terms and subject to the conditions set forth
herein, Gerber desires to purchase from the Stockholders, and the
Stockholders desire to sell to Gerber, all of the issued and
outstanding shares of common stock, par value $1.00 per share, of
the Company (the "Shares").
NOW, THEREFORE, in consideration of the represen
tations, warranties, covenants and agreements contained in this
Agreement, the parties hereto agree as follows:
ARTICLE I
Purchase and Sale of the Shares
SECTION 1.01. Purchase and Sale of the Shares. On the
terms and subject to the conditions set forth in this Agreement,
the Stockholders are selling, assigning, transferring and
conveying to Gerber, and Gerber is purchasing from the
Stockholders, the Shares for an aggregate purchase price (the
"Purchase Price") of $41,300,000.
SECTION 1.02. Closing. (a) The closing of the
purchase and sale of the Shares (the "Closing") is taking place
at the offices of Rudnick & Wolfe, 203 North LaSalle Street,
Chicago, IL 60601 on February 27, 1998 (the "Closing Date").
(b) At the Closing:
(i) the Stockholders are delivering to Gerber stock
certificates representing all of the Shares, in each case
duly endorsed in blank or accompanied by duly executed stock
powers duly endorsed in blank in proper form for transfer,
with appropriate transfer stamps, if any, affixed;
(ii) the Stockholders are delivering to Gerber an
opinion dated the Closing Date of Rudnick & Wolfe, special
counsel to the Company and the Stockholders, in the form of
Exhibit A;
(iii) Gerber is delivering to the Stockholders, by wire
transfer of immediately available funds to the bank account
or accounts designated in writing by the Stockholders, an
amount equal to the Purchase Price;
(iv) Gerber is delivering to (x) Robert S. Jepson,
Jr., by wire transfer of immediately available funds to a
bank account designated in writing by Robert S. Jepson, Jr.,
an amount equal to the lesser of $16,200,000 and the
aggregate amount of the indebtedness owed by the Company to
Robert S. Jepson, Jr. represented by the Subordinated
Promissory Note dated March 9, 1992, together with all
accrued but unpaid interest thereon, and (y) to Alice A.
Jepson, by wire transfer of immediately available funds to a
bank account designated in writing by Alice A. Jepson, an
amount equal to the lesser of $2,800,000 and the aggregate
amount of the indebtedness owed by the Company to Alice A.
Jepson represented by the Subordinated Promissory Note dated
March 9, 1992, together with all accrued but unpaid interest
thereon ((x) and (y) being referred to herein collectively
as the "Stockholder Indebtedness"); and Robert S. Jepson,
Jr. and Alice A. Jepson are delivering to Gerber all
appropriate payoff letters, affidavits of lost notes and
such other documents as Gerber has reasonably requested to
evidence the satisfaction of the Stockholder Indebtedness;
and
(v) the Company is delivering to Gerber a letter from
each member of the board of directors of the Company setting
forth such member's resignation from the board of directors
of the Company effective as of the Closing.
SECTION 1.03. Certain Payments to and by the
Stockholders. Any cash payment to be made to the Stockholders
shall be allocated among them in accordance with the payment
amount set forth opposite the name of such Stockholder on
Schedule 1.03.
ARTICLE II
Representations and Warranties
SECTION 2.01. Representations and Warranties of the
Company. The Company represents and warrants to Gerber as
follows:
(a) Organization, Standing and Corporate Power. Each
of the Company and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized, which jurisdiction
is set forth on Schedule 2.01(a), and has the requisite corporate
power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to
enable it to own, lease or otherwise hold its properties and
assets and to conduct its businesses as currently conducted.
Each of the Company and each of its subsidiaries is duly
qualified or licensed to do business and is in good standing to
do business as a foreign corporation in each jurisdiction in
which the nature or conduct of its business or the ownership,
leasing or holding of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in the
aggregate) would not (x) have a material adverse effect on the
business, assets, condition (financial or otherwise) or results
of operations of the Company and its subsidiaries taken as a
whole, (y) impair the ability of the Company or any of the
Stockholders to perform its obligations under this Agreement or
(z) prevent the consummation of any of the transactions
contemplated by this Agreement (a "Material Adverse Effect"). A
list of the jurisdictions in which the Company and its
subsidiaries are so qualified or licensed is set forth in
Schedule 2.01(a). Neither the Company nor any of its
subsidiaries is subject to, bound by or a party to any contract,
agreement or other instrument, or subject to any charter or other
corporate restriction, which has or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect.
The Company has prior to the execution of this Agree
ment made available to Gerber for inspection and review true and
complete copies of (i) the Certificate of Incorporation and
By-laws, each as amended to date, of the Company and (ii) the
comparable governing instruments, each as amended to date, of
each of its subsidiaries. The stock certificates and transfer
books and the minute books of the Company and each of its subsidi
aries (which have been made available for inspection by Gerber
prior to the date hereof) are true and complete.
(b) Subsidiaries; Equity Interests.
(i) Schedule 2.01(b) lists each subsidiary of the Company.
Schedule 2.01(b) sets forth for each such subsidiary the amount
of its authorized capital stock, the amount of its outstanding
capital stock and the record and beneficial owners of its
outstanding capital stock. All outstanding shares of capital
stock of each subsidiary of the Company are duly authorized,
validly issued, fully paid and nonassessable. Except as set
forth in Schedule 2.01(b), there are no shares of capital stock
or other equity securities of any subsidiary of the Company out
standing. Except as set forth on Schedule 2.01(b), none of the
shares of capital stock of any subsidiary of the Company have
been issued in violation of, or are subject to, any purchase
option, call, right of first refusal, preemptive, subscription or
similar rights under any provision of applicable law, the
Certificate of Incorporation or By-laws or the comparable
governing instruments of any of the subsidiaries of the Company,
any contract, agreement or instrument to which the Company or any
of its subsidiaries is subject, bound or a party or otherwise.
There are no outstanding warrants, options, rights, "phantom"
stock rights, agreements, convertible or exchangeable securities
or other commitments (other than this Agreement) (A) pursuant to
which any of the subsidiaries of the Company is or may become
obligated to issue, sell, purchase, return or redeem any shares
of capital stock or other securities of such subsidiaries or
(B) that give any person the right to receive any benefits or
rights similar to any rights enjoyed by or accruing to the
holders of shares of capital stock of any of the subsidiaries of
the Company. Except as set forth in Schedule 2.01(b), there are
no equity securities of any of the subsidiaries of the Company
reserved for issuance for any purpose.
(ii) Except as set forth in Schedule 2.01(b), the
Company has good and valid title, directly or through one or more
wholly owned subsidiaries, to all the outstanding shares of
capital stock of each of its subsidiaries, free and clear of any
liens, claims, encumbrances, security interests, options, charges
and restrictions of any kind. Except as set forth in
Schedule 2.01(b), there are no outstanding bonds, debentures,
notes or other indebtedness having the right to vote on any
matters on which stockholders of the subsidiaries of the Company
may vote. Except for the subsidiaries of the Company and as set
forth in Schedule 2.01(b), the Company does not directly or
indirectly own any capital stock of or other equity interests in
any corporation, partnership or other person and neither the
Company nor any of its subsidiaries is a member of or participant
in any partnership, joint venture or similar person.
(c) Capital Structure. The authorized capital stock of the
Company consists of 3,000 shares of common stock, par value $1.00
per share, of which 1,000 shares of Company common stock are
issued and outstanding and 20 shares of Company common stock are
held by the Company in its treasury. Except as set forth in the
immediately preceding sentence, no shares of capital stock or
other equity or voting securities of the Company are issued,
reserved for issuance or outstanding. All outstanding shares of
capital stock of the Company are duly authorized, validly issued,
fully paid and nonassessable. None of the shares of capital
stock of the Company have been issued in violation of, or are
subject to, any purchase option, call, right of first refusal,
preemptive, subscription or similar rights under any provision of
applicable law, the Certificate of Incorporation or By-laws of
the Company, any contract, agreement or instrument to which the
Company or any of its subsidiaries is subject, bound or a party
or otherwise. There are no outstanding warrants, options,
rights, "phantom" stock rights, agreements, convertible or
exchangeable securities or other commitments (other than this
Agreement) (i) pursuant to which the Company or any of its
subsidiaries is or may become obligated to issue, sell, purchase,
return or redeem any shares of capital stock or other securities
or (ii) that give any person the right to receive any benefits or
rights similar to any rights enjoyed by or accruing to the
holders of shares of capital stock of the Company.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by
this Agreement have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has
been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. The execution
and delivery of this Agreement do not, and the consummation of
the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of
any pledge, claim, option, lien, charge, encumbrance, restriction
or security interest of any kind or nature whatsoever (a "Lien")
upon any of the properties or assets of the Company or any of its
subsidiaries under, (i) the Certificate of Incorporation or
By-laws of the Company or the comparable governing instruments of
any of its subsidiaries, (ii) except as set forth on
Schedule 2.01(d), any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument,
contract, deed of trust, commitment, permit, concession,
franchise, license or arrangement to which the Company or any of
its subsidiaries is a party or by which any of their respective
properties or assets are bound or (iii) subject to the
governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of
its subsidiaries or any of their respective properties or assets.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any Federal, state or local
government or any court, administrative agency or commission or
other governmental authority or agency, domestic or foreign,
including, without limitation, the European Community (a
"Governmental Entity"), is required to be made or obtained by or
with respect to the Company or any of its subsidiaries in connec
tion with the execution, delivery and performance of this
Agreement by the Company or any of the Stockholders or the
consummation by the Company or any of the Stockholders of the
transactions contemplated by this Agreement or the conduct by the
Company and its subsidiaries of their businesses following the
Closing as conducted on the date hereof, except for (i) the
filing of a premerger notification and report form by the Company
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and (ii) such other consents,
approvals, orders, authorizations, registrations, declarations
and filings as are set forth on Schedule 2.01(d).
(e) Financial Statements; Undisclosed Liabilities.
(i) Schedule 2.01(e) sets forth the audited consolidated balance
sheet of the Company and its subsidiaries as of December 31, 1997
(the "Balance Sheet") and December 31, 1996, and the audited
consolidated statements of operations, stockholders' deficit and
cash flows of the Company and its subsidiaries for each of the
three years ended December 31, 1997, together with the notes to
such financial statements (the financial statements described
above, together with the notes to such financial statements,
collectively, the "Financial Statements"). The Financial
Statements have been prepared in conformity with GAAP
consistently applied (except in each case as described in the
notes thereto) and on that basis fairly present the consolidated
financial condition and results of operations of the Company and
its subsidiaries as of the respective dates thereof and for the
respective periods indicated.
(ii) The Company and its subsidiaries do not have any
material liabilities or obligations of any nature (whether
accrued, absolute, contingent, unasserted or otherwise) which, in
conformity with GAAP, are of a type and nature which require that
such liabilities or obligations be disclosed, reflected or
reserved against in the Balance Sheet and the notes thereto
except (A) as disclosed, reflected or reserved against in the
Balance Sheet and the notes thereto, (B) for items set forth in
Schedule 2.01(e) and (C) for liabilities and obligations incurred
in the ordinary course of business consistent with past practice
since the date of the Balance Sheet.
(f) Taxes. (i) For purposes of this Agreement,
(A) "Tax" or "Taxes" shall mean all Federal, state, county,
local, municipal, foreign and other taxes, assessments, duties or
similar charges of any kind whatsoever, including all corporate
franchise, income, sales, use, ad valorem, receipts, value added,
profits, license, withholding, payroll, employment, excise,
premium, property, customs, net worth, capital gains, transfer,
stamp, documentary, social security, payroll, environmental,
alternative minimum, occupation, recapture and other taxes, and
including all interest, penalties and additions imposed with
respect to such amounts; (B) "Taxing Authority" shall mean any
domestic, foreign, Federal, national, state, county or municipal
or other local government, any subdivision, agency, commission or
authority thereof, or any quasi-governmental body exercising any
taxing authority or any other authority exercising tax regulatory
authority; (C) "pre-Closing Tax Period" shall mean all taxable
periods ending on or before the Closing Date and the portion
ending on the Closing Date of any taxable period that includes
(but does not end on) such day; and (D) "Code" shall mean the
Internal Revenue Code of 1986, as amended.
(ii) Except as set forth in Schedule 2.01(f), (A) the
Company and each of its subsidiaries, and any affiliated group,
within the meaning of Section 1504 of the Code, of which the
Company or any of its subsidiaries is or has been a member, has
filed or caused to be filed in a timely manner (within any
applicable extension periods) all material Tax returns, reports
and forms required to be filed by the Code or by applicable
state, local or foreign tax laws, (B) all Taxes shown to be due
on such returns, reports and forms and all other material Taxes
for which the Company or any of its subsidiaries is or might
otherwise be liable have been timely paid in full or will be
timely paid in full by the due date thereof and the Balance Sheet
reflects an adequate reserve for all Taxes payable by the Company
and its subsidiaries for all taxable periods and portions thereof
through the date of the Balance Sheet, and (C) no material Liens
for Taxes have been filed and, to the knowledge of the Company,
no material claims are being asserted in writing with respect to
any Taxes.
(iii) The Federal consolidated income tax returns in
which the Company and/or any of its subsidiaries have joined have
been examined by and settled with the Internal Revenue Service
for all taxable years through the year ended December 31, 1995.
The relevant statute of limitations is closed with respect to the
Federal, foreign and material state and local Tax returns,
reports and forms of the Company and each of its subsidiaries,
and any affiliated group, within the meaning of Section 1054 of
the Code, of which the Company or any of its subsidiaries is or
has been a member, for all years through 1993. The Company has
made available to Gerber documents setting forth the dates of the
most recent audits or examinations of the Company or any of its
subsidiaries, or any affiliated group, within the meaning of
Section 1504 of the Code, of which the Company or any of its
subsidiaries is or has been a member, by any Taxing Authority
with respect to Federal, foreign and material state and local
Taxes for all taxable periods for which the statute of
limitations has not yet expired. All deficiencies resulting from
such audits or examinations have either been paid or adequately
provided for. Except as set forth in Schedule 2.01(f), no
material Tax returns, reports or forms of the Company or any of
its subsidiaries, or any affiliated group, within the meaning of
Section 1504 of the Code, of which the Company or any of its
subsidiaries is or has been a member, is under audit or
examination by any Taxing Authority, and no written or unwritten
notice of such an audit or examination has been received by the
Company or any of its subsidiaries. No material issues relating
to Taxes were raised by the relevant Taxing Authority during any
presently pending audit or examination, and no material issues
relating to Taxes were raised by the relevant Taxing Authority in
any completed audit or examination that can reasonably be
expected to recur in a later taxable period.
(iv) Except as set forth in Schedule 2.01(f),
(A) neither the Company nor any of its affiliates has made with
respect to the Company or any of its subsidiaries, or any
property held by the Company or any of its subsidiaries, any
consent under Section 341 of the Code, (B) no property of the
Company or any of its subsidiaries is "tax exempt use property"
within the meaning of Section 168(h) of the Code, (C) neither the
Company nor any of its subsidiaries is a party to any lease made
pursuant to Section 168(f)(8) of the Internal Revenue Code of
1954 and (D) none of the assets of the Company or any of its
subsidiaries is subject to a lease under Section 7701(h) of the
Code (or any predecessor version thereof).
(v) Except as set forth in Schedule 2.01(f), there are
no outstanding agreements or waivers extending the statutory
period of limitation applicable to any material Tax returns
required to be filed with respect to the Company or any of its
subsidiaries, no power of attorney with respect to Taxes has been
executed or filed with any Taxing Authority by or on behalf of
the Company or any of its subsidiaries and neither the Company
nor any of its subsidiaries, nor any affiliated group, within the
meaning of Section 1504 of the Code, of which the Company or any
of its subsidiaries is or has been a member, has requested any
extension of time within which to file any material Tax return,
which return has not yet been filed.
(vi) Neither the Company nor any of its subsidiaries
is a real property holding company within the meaning of
Section 897 of the Code.
(vii) Neither the Company nor any of the Stockholders
is a "foreign person" within the meaning of Section 1445 of the
Code.
(viii) Neither the Company nor any of its subsidiaries
shall be required to include in a taxable period ending after the
Closing Date taxable income attributable to income that
economically accrued in a prior taxable period but was not
recognized in any prior taxable period as a result of the
installment method of accounting, the long-term contract method
of accounting, the cash method of accounting or Section 481 of
the Code or comparable provisions of state, local or foreign Tax
law, or for any other reason.
(ix) Neither the Company nor any of its subsidiaries
is party to or bound by any tax sharing agreement, tax indemnity
obligation or similar agreement, arrangement or practice with
respect to Taxes (including any advance pricing agreement,
closing agreement or other agreement relating to Taxes with any
Taxing Authority).
(x) The Company and each of its subsidiaries have
complied in all respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to
Sections 1441, 1442, 3121 and 3402 of the Code or similar
provisions under any state, local or foreign laws) and have,
within the time and the manner prescribed by law, withheld from
and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over under applicable laws.
(xi) The Company has delivered to Gerber or made
available to Gerber for inspection (A) complete and correct
copies of all material Tax returns, reports and forms of the
Company and each of its subsidiaries, and any affiliated group,
within the meaning of Section 1504 of the Code, of which the
Company or any of its subsidiaries is or has been a member (but,
in the case of any such affiliated group, only the portions of
such Returns relating to the Company or any of its subsidiaries)
relating to Taxes for all taxable periods for which the
applicable statute of limitations has not yet expired and
(B) complete and correct copies of all private letter rulings,
revenue agent reports, information document requests, notices of
proposed deficiencies, deficiency notices, protests, petitions,
closing agreements, settlement agreements, pending ruling
requests, and any similar documents, submitted by, received by or
agreed to by or on behalf of the Company or any of its
subsidiaries, or, to the extent related to the income, business,
assets, operations, activities or status of the Company or any of
its subsidiaries, submitted by, received by or agreed to by or on
behalf of any affiliated group, within the meaning of
Section 1504 of the Code, of which the Company or any of its
subsidiaries is or has been a member, and relating to Taxes for
all taxable periods for which the statute of limitations has not
yet expired.
(xii) The Stockholders and the Company have authorized
access to Gerber to copies of the workpapers of the outside
auditors of the Company and each of its subsidiaries with respect
to the components of the accrual for deferred Taxes reflected on
the Balance Sheet.
(xiii) Schedule 2.01(f) lists (A) each jurisdiction in
which the Company or any of its subsidiaries joins or has joined
for any taxable period in the filing of any consolidated,
combined for unitary Tax return, report or form, and (B) the
common parent corporation and the other individual members of the
consolidated, combined or unitary group filing such Tax return,
report or form.
(xiv) Schedule 2.01(f) lists each state, county,
local, municipal or foreign jurisdiction in which the Company or
any of its subsidiaries files, is required to file or has been
required to file a Tax return, report or form relating to state
and local income, franchise, license, excise, net worth,
property, litter and sales and use Taxes or is or has been liable
for any Taxes on a "nexus" basis at any time for any taxable
period.
(g) Assets Other than Real Property Interests. The
Company or one of its subsidiaries has good and valid title to
all assets reflected on the Balance Sheet or thereafter acquired,
except those sold or otherwise disposed of since the date of the
Balance Sheet in the ordinary course of business consistent with
past practice, in each case free and clear of all Liens except
(i) such as are set forth in Schedule 2.01(g), (ii) mechanics',
carriers', workmen's, repairmen's or other like Liens arising or
incurred in the ordinary course of business, Liens arising under
original purchase price conditional sales contracts and equipment
leases with third parties entered into in the ordinary course of
business and Liens for Taxes which are not due and payable or
which may thereafter be paid without penalty, (iii) Liens which
secure indebtedness for borrowed money that is reflected as a
liability on the Balance Sheet and the existence of which is
indicated in the notes thereto and (iv) other imperfections of
title or encumbrances, if any, which do not, individually or in
the aggregate, materially impair the continued use and operation
of the assets to which they relate in the businesses of the
Company and its subsidiaries as presently conducted (Liens
described in clauses (ii), (iii) and (iv) above are hereinafter
referred to collectively as "Permitted Liens"). All the material
tangible personal property of the Company and its subsidiaries
has been maintained in accordance with the past practice of the
Company and its subsidiaries. All leased personal property of
the Company and its subsidiaries is in all material respects in
the condition as at the Closing Date required of such property by
the terms of the lease applicable thereto as at the Closing Date.
This Section 2.01(g) does not relate to real property or
interests in real property, such items being the subject of
Section 2.01(h).
(h) Title to Real Property. Schedule 2.01(h)(i) sets
forth a complete list of all real property and interests in real
property owned in fee by the Company or any of its subsidiaries
(individually, an "Owned Property" and collectively "Owned
Properties"). Schedule 2.01(h)(ii) sets forth a complete list of
all real property and interests in real property leased by the
Company or any of its subsidiaries (individually, a "Leased
Property" and collectively "Leased Properties") and identifies
the underlying lease for each Leased Property. An Owned
Property or Leased Property is sometimes referred to herein,
individually, as a "Company Property" and, collectively, as
"Company Properties". Attached as part of Schedule 2.01(h)(i) is
a listing of title exceptions (the "Recorded Encumbrances") taken
from Section 2 of Schedule B of current title commitments
numbered 98020105, 98020108 and 7712869-D1 issued by Chicago
Title Insurance Company ("CTIC") (or its subsidiary), and
underwritten by CTIC, reporting title matters of record to each
Owned Property located in the United States. To the knowledge of
the Company, except for the Recorded Encumbrances and the matters
set forth below, there are no encumbrances or other matters that
affect title to the Owned Properties. The Company, or one of its
subsidiaries, has valid fee title to all Owned Properties located
in the United States subject only to (i) the Recorded
Encumbrances; (ii) matters which would be shown by a current
accurate survey or readily determined by a physical inspection
made prior to Closing; (iii) zoning, building and other similar
restrictions; (iv) mechanic's liens incurred in the ordinary
course of business and utility easements; and (v) leases,
subleases, and similar agreements set forth in Schedule 2.01(j),
none of which matters or restrictions referred to in items (i),
(ii), (iii), (iv) or (v), individually or in the aggregate, will
materially impair or adversely affect the Company's right to
continue to use the Owned Properties located in the United
States, or the Company's right to continue to use such Owned
Properties in the conduct of the business currently conducted by
the Company thereat. With respect to the Leased Properties
identified on Schedule 2.01(h)(ii), and except as set forth
thereon, each Leased Property is occupied by the Company or one
of its subsidiaries under a valid and existing lease; no lessor
under any such lease has notified the Company that it is in
default under said lease; the Company has no knowledge that it is
in violation of any of said leases; to the knowledge of the
Company, each of the Company and its subsidiaries has complied in
all material respects with the terms of all leases to which it is
a party and under which it is in occupancy; each of the Company
and its subsidiaries enjoys peaceful and undisturbed possession
under all such leases; and, to the knowledge of the Company,
there are no encumbrances or other matters that affect the
Company's and its subsidiaries leasehold interests in and to the
Leased Properties other than, as applicable, (x) Recorded
Encumbrances and (y) matters affecting the landlords' interests
in the Leased Properties (to the extent the Company's and its
subsidiaries leasehold interests under the Leases are subject
thereto). The Company has received no notice except as set forth
in Schedule 2.01(h)(i) or Schedule 2.01(h)(ii) that the current
use by the Company and its subsidiaries of the plants, offices
and other facilities located on the Company Properties violates
any local zoning or similar land use or government regulations in
any material respect. No condemnation of any material portion of
any Company Property has occurred, and neither the Company nor
any of its subsidiaries has received any notice related to any
future or proposed condemnation of any material portion of any
Company Property.
(i) Intellectual Property. (i) Schedule 2.01(i) sets
forth a true and complete list of all patents, trademarks
(registered or unregistered), trade names, service marks and
copyrights and applications therefor and other material
intellectual property and proprietary rights, whether or not
subject to statutory registration or protection (collectively,
"Intellectual Property"), owned, used, filed by or licensed to
the Company or one of its subsidiaries. With respect to
registered trademarks, Schedule 2.01(i) sets forth a list of all
jurisdictions in which such trademarks are registered or applied
for and all registration and application numbers. Except as set
forth in Schedule 2.01(i), the Company or one of its subsidiaries
owns, and the Company and its subsidiaries have the right to use,
execute, reproduce, display, perform, modify, enhance,
distribute, prepare derivative works of and sublicense, without
payment to any other person, all Intellectual Property set forth
in Schedule 2.01(i) and the consummation of the transactions
contemplated hereby will not conflict with, alter or impair any
such rights. The Company and each of its subsidiaries have all
rights to Intellectual Property as are necessary in connection
with the business of the Company and such subsidiary as presently
conducted.
(ii) Except as set forth on Schedule 2.01(i), neither
the Company nor any of its subsidiaries has granted any options,
licenses or agreements of any kind relating to Intellectual
Property listed in Schedule 2.01(i) or the marketing or
distribution thereof. Neither the Company nor any of its
subsidiaries is bound by or a party to any options, licenses or
agreements of any kind relating to the Intellectual Property of
any other person, except as set forth in Schedule 2.01(i) and
except for license agreements relating to computer software
licensed to the Company or any of its subsidiaries in the
ordinary course of business. Subject to the rights of third
parties set forth in Schedule 2.01(i), all Intellectual Property
listed in Schedule 2.01(i) is free and clear of the claims of
others and of all Liens. To the knowledge of the Company, the
conduct of the businesses of the Company and its subsidiaries as
presently conducted does not violate, conflict with or infringe
the Intellectual Property of any other person. Except as set
forth in Schedule 2.01(i), (A) no claims are pending or, to the
knowledge of the Company, threatened, against the Company or any
of its subsidiaries by any person with respect to the ownership,
validity, enforceability, effectiveness or use of any
Intellectual Property and (B) since March 3, 1992, the Company
and its subsidiaries have not received any written communications
alleging that the Company or any of its subsidiaries has violated
any rights relating to Intellectual Property of any person.
(iii) Intellectual Property listed in Schedule 2.01(i)
that is material to the operation of the business and for which
confidentiality is significant and material to the Company is
listed on Schedule 2.01(i)(iii) and has been maintained in
confidence in accordance with protection procedures customarily
used in the industries of the Company and its subsidiaries to
protect rights of like importance. All former and current
members of management and key personnel of the Company or any of
its subsidiaries, including all former and current employees,
agents, consultants and independent contractors who have
contributed to or participated in the conception and development
of software or other Intellectual Property listed in
Schedule 2.01(i) (collectively, "Personnel"), have executed and
delivered to the Company or such subsidiary a proprietary
information agreement restricting such person's right to disclose
proprietary information of the Company, the subsidiaries of the
Company and their respective clients. All former and current
Personnel either (A) have been party to a "work-for-hire"
arrangement or agreement with the Company, in accordance with
applicable Federal and state law, that has accorded the Company
or any of its subsidiaries full, effective, exclusive and
original ownership of all tangible and intangible property
thereby arising or (B) have executed appropriate instruments of
assignment in favor of the Company or one of its subsidiaries as
assignee that have conveyed to the Company or such subsidiary
full, effective and exclusive ownership of all tangible and
intangible property thereby arising. To the knowledge of the
Company, no former or current Personnel have any claim against
the Company or any of its subsidiaries in connection with such
person's involvement in the conception and development of any
Intellectual Property and no such claim has been asserted or is
threatened. None of the current officers and employees of the
Company or any of its subsidiaries have any patents issued or
applications pending for any device, process, design or invention
of any kind now used or needed by the Company or any of its
subsidiaries in the furtherance of its business operations, which
patents or applications have not been assigned to the Company or
one of its subsidiaries, with such assignment duly recorded in
the United States Patent Office.
(j) Contracts. Except as set forth in
Schedule 2.01(j), neither the Company nor any of its subsidiaries
is a party to or bound by any:
(i) employment agreement or employment contract
that has an aggregate future liability in excess of $150,000
and is not terminable by the Company or one of its
subsidiaries by notice of not more than 60 days for a cost
of less than $50,000;
(ii) employee collective bargaining agreement or
other contract with any labor union;
(iii) covenant of the Company or any of its
subsidiaries not to compete or other covenant of the Company
or any of its subsidiaries restricting the development,
manufacture, marketing or distribution of the products and
services of the Company or any of its subsidiaries that
materially impairs the operation of the businesses of the
Company and its subsidiaries as presently conducted;
(iv) agreement, contract or other arrangement with
(A) any Stockholder or any of their respective affiliates
(other than the Company or any of its subsidiaries) or
(B) any current or former officer, director or employee of
the Company or any of its subsidiaries or any affiliate of
any Stockholder (other than employment agreements or
contracts covered by clause (i) above);
(v) lease, sublease or similar agreement with any
person (other than the Company or any of its subsidiaries)
under which the Company or any of its subsidiaries is a
lessor or sublessor of, or makes available for use to any
person (other than the Company or any of its subsidiaries),
(A) any Company Property or (B) any portion of any premises
otherwise occupied by the Company or any of its
subsidiaries;
(vi) lease or similar agreement with any person
(other than the Company or any of its subsidiaries) under
which (A) the Company or any of its subsidiaries is lessee
of, or holds or uses, any machinery, equipment, vehicle or
other tangible personal property owned by any person or
(B) the Company or any of its subsidiaries is a lessor or
sublessor of, or makes available for use by any person, any
tangible personal property owned or leased by the Company or
any of its subsidiaries, in any such case respecting (A) or
(B) above, which has an aggregate future liability or
receivable, as the case may be, in excess of $150,000 and is
not terminable by the Company or one of its subsidiaries by
notice of not more than 60 days for a cost of less than
$50,000;
(vii) (A) agreement, contract or other arrangement
for the future purchase of materials, supplies or equipment
(other than purchase contracts and orders for inventory in
the ordinary course of business consistent with past
practice), (B) management, service, consulting or other
similar type of agreement or (C) advertising agreement or
arrangement, in any such case respecting (A), (B) or (C)
above, which has an aggregate future liability to any person
(other than the Company or one of its subsidiaries) in
excess of $150,000 for any one agreement, contract or
arrangement and is not terminable by the Company or one of
its subsidiaries by notice of not more than 60 days for a
cost of less than $50,000;
(viii) material license, option or other agreement
relating in whole or in part to the Intellectual Property
set forth in Schedule 2.01(i) (including any license or
other agreement under which the Company or any of its
subsidiaries is licensee or licensor of any such
Intellectual Property) or to trade secrets, confidential
information or proprietary rights and processes of the
Company, any of its subsidiaries or any other person;
(ix) agreement, contract or other instrument under
which the Company or any of its subsidiaries has borrowed
any money from, or issued any note, bond, debenture or other
evidence of indebtedness to, any person (other than the
Company or any of its subsidiaries) or any other note, bond,
debenture or other evidence of indebtedness issued to any
person (other than the Company or any of its subsidiaries);
(x) agreement, contract or other instrument (including
so-called take-or-pay or keep well agreements) under which
(A) any person (including the Company or any of its
subsidiaries) has directly or indirectly guaranteed indebted
ness, liabilities or obligations of the Company or any of
its subsidiaries or (B) the Company or any of its
subsidiaries has directly or indirectly guaranteed
indebtedness, liabilities or obligations of any person (in
each case other than endorsements for the purpose of
collection in the ordinary course of business);
(xi) agreement, contract or other instrument under
which the Company or any of its subsidiaries has, directly
or indirectly, made any advance, loan, extension of credit
or capital contribution to, or other investment in, any
person (other than the Company or any of its subsidiaries);
(xii) mortgage, pledge, security agreement, deed of
trust or other instrument granting a Lien upon any Company
Property, which Lien is set forth in Schedule 2.01(g) or
2.01(h);
(xiii) agreement, contract or other instrument pro
viding for indemnification of any person with respect to
material liabilities relating to any current or former
business of the Company, any of its subsidiaries or any
predecessor person; or
(xiv) other agreement, contract, lease, license,
commitment, instrument or arrangement to which the Company
or any of its subsidiaries is a party or by or to which it
or any of its assets or business is bound or subject which
has an aggregate future liability to any person (other than
the Company or any of its subsidiaries) in excess of
$200,000 and is not terminable by the Company or one of its
subsidiaries by notice of not more than 60 days for a cost
of less than $100,000.
Except as set forth in Schedule 2.01(j), all agreements, con
tracts, leases, licenses, commitments, instruments or
arrangements of the Company or any of its subsidiaries listed in
the Schedules hereto (collectively, the "Contracts") are valid,
binding and in full force and effect and are enforceable by the
Company or its relevant subsidiary in accordance with its terms
subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws relating
to or affecting creditors' rights generally from time to time in
effect and to general principles of equity (including, without
limitation, concepts of materiality, reasonableness, good faith
and fair dealing), regardless of whether considered in a
proceeding in equity or at law. Except as set forth in
Schedule 2.01(j), the Company and its subsidiaries have performed
all material obligations required to be performed by them to date
under the Contracts and they are not (with or without the lapse
of time or the giving of notice, or both) in breach or default in
any material respect thereunder and, to the knowledge of the
Company, no other party to any of the Contracts is (with or
without the lapse of time or the giving of notice, or both) in
breach or default in any material respect thereunder.
(k) Litigation. Schedule 2.01(k) sets forth a list of
all pending lawsuits or claims, with respect to which the Company
or any of its subsidiaries has been contacted in writing by
counsel for the plaintiff or claimant, against or affecting the
Company or any of its subsidiaries or any of their respective
properties, assets, operations or businesses and which (i) relate
to or involve more than $50,000, (ii) seek any material
injunctive relief or (iii) may give rise to any legal restraint
on or prohibition against the transactions contemplated by this
Agreement. Except as set forth in Schedule 2.01(k), none of the
lawsuits or claims listed in Schedule 2.01(k) as to which there
is at least a reasonable possibility of adverse determination
would have, if so determined, individually or in the aggregate, a
Material Adverse Effect. To the knowledge of the Company, except
as set forth in Schedule 2.01(k), neither the Company nor any of
its subsidiaries is a party or subject to or in default under any
material judgment, order, injunction or decree of any Governmen
tal Entity or arbitration tribunal applicable to it or any of its
respective properties, assets, operations or businesses. Except
as set forth in Schedule 2.01(k), there is no lawsuit or claim by
the Company or any of its subsidiaries pending, or which the
Company or any of its subsidiaries has retained counsel to
assert, against any other person. Except as set forth in
Schedule 2.01(k), to the knowledge of the Company, there is no
pending or threatened investigation of the Company or any of its
subsidiaries by any Governmental Entity.
(l) Insurance. The Company and its subsidiaries
maintain policies of fire and casualty, liability and other forms
of insurance in such amounts, with such deductibles and against
such risks and losses as are, in the Company's judgment,
reasonable for the business and assets of the Company and its
subsidiaries. The insurance policies maintained with respect to
the Company and its subsidiaries and their respective assets,
properties, operations and businesses are listed in
Schedule 2.01(l). All such policies are in full force and
effect, all premiums due and payable thereon have been paid, and
no notice of cancelation or termination has been received with
respect to any such policy which has not been replaced on
substantially similar terms prior to the date of such
cancelation. To the knowledge of the Company, the activities and
operations of the Company and its subsidiaries have been
conducted in a manner so as to conform in all material respects
to all applicable provisions of such insurance policies.
(m) Benefit Plans. (i) Schedule 2.01(m) contains a
list and brief description of all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "Pension Plans"), "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA), bonus, stock
option, stock purchase, deferred compensation plans or
arrangements and other employee fringe benefit plans (all the
foregoing being herein called "Benefit Plans") maintained, or
contributed to, by the Company or its subsidiaries for the
benefit of any officers or employees of the Company or its
subsidiaries. None of the Benefit Plans is subject to Title IV
of ERISA or the minimum funding standards of Section 412 of the
Code and Section 302 of ERISA, and neither the Company nor any of
its subsidiaries has ever maintained such a plan. The Company
has made available to Gerber for inspection and review true,
complete and correct copies of (A) each Benefit Plan (or, in the
case of any unwritten Benefit Plans, descriptions thereof),
(B) the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Benefit Plan (if
any such report was required), (C) the most recent summary plan
description for each Benefit Plan for which such a summary plan
description is required and (D) each trust agreement and group
annuity contract relating to any Benefit Plan.
(ii) Each Benefit Plan has been administered in all
material respects in accordance with its terms. The Company and
all the Benefit Plans are in compliance in all material respects
with the applicable provisions of ERISA and the Code. Except as
set forth in Schedule 2.01(m), all material reports, returns and
similar documents with respect to the Benefit Plans required to
be filed with any Governmental Entity or distributed to any
Benefit Plan participant have been duly and timely filed or
distributed. Except as set forth in Schedule 2.01(m), there are
no lawsuits, actions, termination proceedings or other
proceedings pending, or, to the knowledge of the Company,
threatened against or involving any Benefit Plan and, to the
knowledge of the Company, there are no investigations by any
Governmental Entity or other claims (except claims for benefits
payable in the normal operation of the Benefit Plans) pending or
threatened against or involving any Benefit Plan or asserting any
rights to benefits under any Benefit Plan. Except as set forth
in Schedule 2.01(m), none of the lawsuits, actions, proceedings,
investigations and claims listed in Schedule 2.01(m) as to which
there is at least a reasonable possibility of adverse
determination, would have, if so determined, individually or in
the aggregate, a Material Adverse Effect.
(iii) Except as set forth in Schedule 2.01(m), all
contributions to, and payments from, the Benefit Plans that may
have been required to be made in accordance with the Benefit
Plans have been timely made.
(iv) Except as set forth in Schedule 2.01(m), all
Pension Plans have been the subject of determination letters from
the Internal Revenue Service to the effect that such Pension
Plans are qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, and no
such determination letter has been revoked nor, to the knowledge
of the Company, has revocation been threatened, nor has any such
Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect that
would adversely affect its qualification or materially increase
its cost.
(v) No "prohibited transaction" (as defined in
Section 4975 of the Code or Section 406 of ERISA) has occurred
that involves the assets of any Benefit Plan and that could
subject the Company or any of its subsidiaries or any of their
employees, or, to the knowledge of the Company, a trustee,
administrator or other fiduciary of any trusts created under any
Benefit Plan to the tax or penalty on prohibited transactions
imposed by Section 4975 of ERISA or the sanctions imposed under
Title I of ERISA. To the knowledge of the Company, neither the
Company nor any trustee, administrator or other fiduciary of any
Benefit Plan nor any agent of any of the foregoing has engaged in
any transaction or acted or failed to act in a manner that could
subject the Company or any of its subsidiaries to any liability
for breach of fiduciary duty under ERISA or any other applicable
law, except for such transactions, actions and failures that,
individually or in the aggregate, would not have a Material
Adverse Effect.
(vi) At no time within the five years preceding the
Closing Date has the Company or any of its subsidiaries
contributed to or been required to contribute to any "multi
employer plan" (as defined in Section 4001(a)(3) of ERISA) for
the benefit of any officers or employees of the Company and its
subsidiaries.
(vii) With respect to any Benefit Plan that is an
employee welfare benefit plan, except as disclosed in
Schedule 2.01(m), (A) no such Benefit Plan is unfunded or funded
through a welfare benefits fund, as such term is defined in
Section 419(e) of the Code, (B) each such Benefit Plan that is a
group health plan, as such term is defined in Section 5000(b)(1)
of the Code, complies in all material respects with the
applicable requirements of Section 4980B(f) of the Code and
(C) each such Benefit Plan (including any such plan covering
retirees or other former employees) may be amended or terminated
without material liability to the Company on or at any time after
the Closing Date.
(viii) Except as set forth in Schedule 2.01(m),
neither the Company nor its subsidiaries has any current or
projected liability or contingent obligation in respect of
medical or other benefits for retired or former employees of the
Company, its subsidiaries or any predecessor person.
(ix) Except as set forth in Schedule 2.01(m), no
employee or former employee of the Company or any of its
subsidiaries will become entitled to any bonus, retirement,
severance, job security or similar benefit, any enhanced benefit
or any accelerated vesting solely as a result of the transactions
contemplated hereby and no amount payable or benefit provided to
any current or former employee of the Company or any of its
subsidiaries will fail to be deductible by reason of Section 280G
of the Code.
(n) Absence of Changes or Events. Except as set forth
in Schedule 2.01(n), since the date of the Balance Sheet, there
has not been any material adverse change in the business, assets,
condition (financial or otherwise) or results of operations of
the Company and its subsidiaries, taken as a whole. Except as
set forth in Schedule 2.01(n), since the date of the Balance
Sheet, the Company has conducted its businesses, and caused its
subsidiaries' businesses to be conducted, in the ordinary course
and in substantially the same manner as previously conducted and
has made all reasonable efforts consistent with past practices to
preserve the Company's and its subsidiaries' relationships with
customers, suppliers and others with whom the Company or any such
subsidiary deals and which are material or significant to the
business of the Company and its subsidiaries, taken as a whole.
In addition, except as set forth in Schedule 2.01(n), since the
date of the Balance Sheet to the date hereof, neither the Company
nor any of its subsidiaries has:
(i) (x) declared, set aside or paid any dividends on,
or made any other distributions (whether in cash, stock or
property) in respect of, any of its capital stock, other
than dividends and distributions by a direct or indirect
wholly owned subsidiary of the Company to its parent,
(y) split, combined or reclassified any of its capital stock
or issued or authorized the issuance of any other securities
in respect of, in lieu of or in substitution for shares of
its capital stock, or (z) purchased, redeemed or otherwise
acquired any shares of capital stock of the Company or any
of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or
other securities;
(ii) issued, delivered, sold, granted, pledged or
otherwise encumbered any shares of its capital stock, any
other equity or voting securities or any securities
convertible into, or any rights, warrants or options to
acquire, any such shares, equity or voting securities or
convertible securities;
(iii) amended its Certificate of Incorporation, By-laws
or other comparable governing instruments;
(iv) acquired or agreed to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion
of the assets of, or by any other manner, any business or
any corporation, partnership, joint venture, association or
other business organization or division thereof or (y) any
assets that are material, individually or in the aggregate,
to the Company and its subsidiaries taken as a whole, except
purchases of inventory in the ordinary course of business
consistent with past practice;
(v) sold, leased, licensed, mortgaged or otherwise
encumbered or subjected to any Lien or otherwise disposed of
any of its properties or assets, except sales of inventory
and the disposition of other properties or assets in the
ordinary course of business consistent with past practice;
(vi) (y) incurred any indebtedness for borrowed money
or guaranteed any such indebtedness of another person,
issued or sold any debt securities or warrants or other
rights to acquire any debt securities of the Company or any
of its subsidiaries, guaranteed any debt securities of
another person, entered into any "keep well" or other
agreement to maintain any financial statement condition of
another person or entered into any arrangement having the
economic effect of any of the foregoing, except for short-
term borrowings incurred in the ordinary course of business
consistent with past practice, or (z) made any loans,
advances or capital contributions to, or investments in, any
other person, other than to the Company or any direct or
indirect wholly owned subsidiary of the Company;
(vii) made or agreed to make any new capital expendi
ture or expenditures which, individually, is in excess of
$50,000 or, in the aggregate, are in excess of $100,000;
(viii) made any material Tax election or settled or
compromised any Tax liability;
(ix) paid, discharged or satisfied any claims, liabili
ties or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course
of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved
against in, or contemplated by, the Balance Sheet (or the
notes thereto) or incurred since the date of the Balance
Sheet in the ordinary course of business consistent with
past practice, or waived the material benefits of, or agreed
to modify in any material manner, any confidentiality,
standstill or similar agreement to which the Company or any
of its subsidiaries is a party;
(x) granted to any employee, officer or director of the
Company or any of its subsidiaries whose annual base
compensation exceeds $75,000 any increase in compensation
other than increases which are in the ordinary course of
business and consistent with past practice, (ii) granted to
any employee, officer or director of the Company or any of
its subsidiaries any increase in severance or termination
pay, (iii) entered into any employment, consulting,
indemnification, severance or termination agreement with any
such employee, officer or director, (iv) established,
adopted, entered into or amended in any material respect any
collective bargaining agreement or Benefit Plan or (v) taken
any action to accelerate any rights or benefits, or made any
material determinations not in the ordinary course of
business consistent with past practice, under any collective
bargaining agreement or Benefit Plan;
(xi) made any change in accounting methods, principles
or practices except insofar as may have been required by a
change in GAAP;
(xii) engaged in any forward selling or acceleration of
customer orders or contracts, any deferral in paying
payables, any deferral in making capital expenditures or any
delay in any capital projects, any grant of any discount to
customers other than in the ordinary course of business
consistent with past practice or any other changes intended
to increase the current income and cash collection of the
Company or any of its subsidiaries prior to the Closing Date
by accelerating revenue that would otherwise be collected
after the Closing Date or deferring payment that would
otherwise be expected to be made prior to the Closing Date;
(xiii) authorized any of, or committed or agreed to
take any of, the foregoing actions.
(o) Compliance with Applicable Laws. (i) Except as
set forth in Schedule 2.01(o), the Company and its subsidiaries
are (and since March 3, 1992 have been) in compliance in all
material respects with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Entity
("Applicable Laws"), including those relating to occupational
health and safety, except for instances of noncompliance that,
individually or in the aggregate, would not have a Material
Adverse Effect. Except as set forth in Schedule 2.01(o), neither
the Company nor any of its subsidiaries has received any written
communication during the past two years from a Governmental
Entity that alleges that the Company or any of its subsidiaries
is not in compliance in any material respect with any Applicable
Laws, except for instances of noncompliance that, individually or
in the aggregate, would not have a Material Adverse Effect. This
Section 2.01(o)(i) does not relate to matters with respect to
Taxes or to environmental matters, which are the subject of
Section 2.01(o)(ii).
(ii) The Company has provided Gerber with certain
environmental reports relating to the facilities and operations
of the Company and its subsidiaries which are identified in
Schedule 2.01(o) (the "Environmental Reports"). Except as set
forth in Schedule 2.01(o), (A) since March 3, 1992, neither the
Company nor its subsidiaries have received any oral or written
communication from a Governmental Entity that alleges that the
Company or any of its subsidiaries is not in compliance in any
material respect with any Environmental Laws, (B) the Company and
its subsidiaries hold, and are in compliance with, all permits,
licenses and governmental authorizations required for the Company
and its subsidiaries to conduct their respective businesses under
the Environmental Laws, and are in compliance with all
Environmental Laws, (C) the Company after inquiry has no
knowledge of any environmental reports other than those set forth
in Schedule 2.01(o) and (D) the Company and its subsidiaries have
not entered into or agreed to any court decree or order and are
not subject to any judgment, decree or order relating to
compliance with any Environmental Law or to investigation or
cleanup of Contaminants (as hereinafter defined) under any
Environmental Law. Neither the Company nor any of its
subsidiaries has any contingent liabilities in respect of its
business in connection with any Contaminant that, individually or
in the aggregate, would have a Material Adverse Effect. Except
as set forth in Schedule 2.01(o), there are no aboveground or
underground storage tanks on any Company Property. As used in
this Agreement, the term "Environmental Laws" means any and all
applicable treaties, laws, regulations, enforceable requirements,
binding determinations, orders, decrees, judgments, injunctions,
permits, approvals, authorizations, licenses, variances,
permissions, notices or binding agreements issued, promulgated or
entered into by any Governmental Entity, relating to the
environment, preservation or reclamation of natural resources, or
to the management, Release (as hereinafter defined) or threatened
Release of Contaminants or noxious odor, including the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. 9601 et seq., the
Federal Water Pollution Control Act, as amended by the Clean
Water Act of 1977, 33 U.S.C. 1251 et seq. Clean Air Act of
1970, as amended, 42 U.S.C. 7401 et seq., the Toxic Substances
Control Act of 1976, 15 U.S.C. 2601 et seq., the Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. 651 et
seq., the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. 11001 et seq., the Safe Drinking Water Act of
1974, as amended, 42 U.S.C. 300(f) et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. 1801 et seq., and any
similar or implementing state or local law, and all amendments or
regulations promulgated thereunder. As used in this Agreement,
the term "Contaminants" means those substances that are regulated
by, or form the basis of, liability under any Environmental Law,
including asbestos, polychlorinated biphenyls, Hazardous
Materials, pollutants and solid wastes. As used in this
Agreement, the term "Hazardous Materials" means all explosive or
regulated radioactive materials or substances, hazardous or toxic
substances, wastes or chemicals, petroleum (including crude oil
or any fraction thereof) or petroleum distillates, asbestos or
asbestos containing materials, and all other materials or
chemicals regulated pursuant to any Environmental Law, including
materials listed in 49 C.F.R. 172.101 and materials defined as
hazardous pursuant to Section 101(14) of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended. As used in this Agreement, the term "Release" means
any spill, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching, emanation or migration
of any Contaminant in, into, onto, or through the environment
(including ambient air, surface water, ground water, soils, land
surface, subsurface strata, workplace, or structure).
(p) Employee and Labor Matters. Except as set forth
in Schedule 2.01(p), (i) there is, and during the past two years
there has been, no labor strike, work stoppage or lockout
pending, or, to the knowledge of the Company, threatened, against
or affecting the Company or any of its subsidiaries; (ii) to the
knowledge of the Company, no union organizational campaign is in
progress with respect to the employees of the Company or any of
its subsidiaries and no question concerning representation exists
respecting such employees; (iii) neither the Company nor any of
its subsidiaries is engaged in any unfair labor practice;
(iv) there is no unfair labor practice charge or complaint
against the Company or any of its subsidiaries pending, or, to
the knowledge of the Company, threatened, before the National
Labor Relations Board; (v) there are no pending, or, to the
knowledge of the Company, threatened, union grievances against
the Company or any of its subsidiaries as to which there is a
reasonable possibility of adverse determination and that, if so
determined, individually or in the aggregate, would have a
Material Adverse Effect; (vi) there are no pending, or, to the
knowledge of the Company, threatened, charges against the
Company, any of its subsidiaries or any current or former
employee of the Company or any of its subsidiaries before the
Equal Employment Opportunity Commission or any state or local
agency responsible for the prevention of unlawful employment
practices; and (vii) neither the Company nor any of its
subsidiaries has received written notice during the past two
years of the intent of any Governmental Entity responsible for
the enforcement of labor or employment laws to conduct an
investigation of or affecting the Company or any of its
subsidiaries and, to the knowledge of the Company, no such
investigation is in progress.
(q) Customer Accounts Receivable; Inventories.
(i) All customer accounts receivable of the Company and its
subsidiaries, whether reflected on the Balance Sheet or
subsequently created, have arisen from bona fide transactions in
the ordinary course of business. To the knowledge of the
Company, all such customer accounts receivable are good and
collectible at the aggregate recorded amounts thereof, net of any
applicable reserves for doubtful accounts reflected on the
Balance Sheet. The Company and its subsidiaries have good and
marketable title to their respective accounts receivable, free
and clear of all Liens, except as set forth in Schedule 2.01(q).
Since the date of the Balance Sheet, there have not been any
write-offs as uncollectible of any notes or accounts receivable
of the Company or its subsidiaries, except for write-offs in the
ordinary course of business and consistent with past practice
which have not had, either individually or in the aggregate, a
Material Adverse Effect.
(ii) The inventories of the Company and its subsidi
aries, whether reflected on the Balance Sheet or subsequently
acquired, are generally of a quality and quantity usable and
salable at customary gross margins and with customary markdowns
consistent in all material respects with past practice in the
ordinary course of business. The inventories of the Company and
its subsidiaries are reflected on the Balance Sheet and in their
respective books and records in accordance with GAAP applied on a
basis consistent with past practice (except as described in the
notes to the Balance Sheet). Except as set forth in
Schedule 2.01(q), since the date of the Balance Sheet, there have
not been any write-downs of the value of, or establishment of any
reserves against, any inventory, except for write-downs and
reserves in the ordinary course of business and consistent with
past practice which have not had, either individually or in the
aggregate, a Material Adverse Effect.
(r) Licenses; Permits. Schedule 2.01(r) sets forth a
true and complete list of all material licenses, permits and
authorizations issued or granted to the Company or any of its
subsidiaries by any Governmental Entities which are necessary for
the conduct of the business of the Company and its subsidiaries.
Except as set forth in Schedule 2.01(r), all such licenses,
permits and authorizations are validly held by the Company or its
relevant subsidiary, the Company and its subsidiaries have
complied in all material respects with all terms and conditions
thereof and the same will not be subject to suspension,
modification, revocation or nonrenewal as a result of the
execution and delivery of this Agreement or the consummation of
the transactions contemplated by this Agreement. All such
licenses, permits and authorizations which are held in the name
of any employee, officer, director, stockholder, agent or
otherwise on behalf of the Company or its subsidiaries shall be
deemed included under this warranty.
(s) Accounts; Safe Deposit Boxes; Powers of Attorney;
Officers and Directors. Schedule 2.01(s) sets forth (i) a true
and correct list of all bank and savings accounts, certificates
of deposit and safe deposit boxes of the Company and its
subsidiaries and those persons authorized to sign thereon,
(ii) true and correct copies of all corporate borrowing,
depository and transfer resolutions of the Company and its
subsidiaries and those persons entitled to act thereunder,
(iii) a true and correct list of all powers of attorney granted
by the Company and its subsidiaries and those persons authorized
to act thereunder and (iv) a true and correct list of all
officers and directors of the Company and its subsidiaries.
(t) Transactions with Affiliates. Except as set forth
in Schedule 2.01(t), and except with respect to the continued
informal collection and remittance arrangement between the
Company and Coburn Financial Corporation, none of the agreements,
contracts or other arrangements set forth in Schedule 2.01(j)
between the Company or any of its subsidiaries, on the one hand,
and any Stockholder or any of their respective affiliates (other
than the Company or any of its subsidiaries), on the other hand,
will continue in effect subsequent to the Closing. The Company
has, or has caused its subsidiaries to, terminate all contracts
or other arrangements (other than (a) employment agreements
referred to in Section 2.01(j)(i) and (b) the Stockholder
Indebtedness, which is being satisfied at Closing pursuant to
Section 1.02(b)(iii)) between the Company or any of its
subsidiaries on the one hand, and any Stockholder or any of their
respective affiliates (other than the Company or any of its
subsidiaries) on the other hand, without further liability to the
Company or any of its subsidiaries. Except as set forth in
Schedule 2.01(t), and except with respect to the continued
informal collection and remittance arrangement between the
Company and Coburn Financial Corporation, after the Closing none
of the Stockholders or any of their respective affiliates will
have any interest in any property (real or personal, tangible or
intangible) or contract used in or pertaining to the business of
the Company or its subsidiaries. Except as set forth in
Schedule 2.01(t), none of the Stockholders or their respective
affiliates has any direct or indirect ownership interest in any
person (other than any of the Company's subsidiaries) in which
the Company or any of its subsidiaries has any direct or indirect
ownership interest or with which the Company or any of its
subsidiaries competes or has a business relationship other than
Coburn Financial Corporation. Except as set forth in Sched
ule 2.01(t), none of the Stockholders nor their respective
affiliates provides any material services to the Company or any
of its subsidiaries.
(u) Corporate Name. Except as set forth in
Schedule 2.01(u), the Company and its subsidiaries (i) have the
exclusive right to use their respective names as the name of a
corporation in any jurisdiction in which the Company or such
subsidiary does business and (ii) have not received any notice of
conflict since March 3, 1992 with respect to the rights of others
regarding the corporate names of the Company and its
subsidiaries. Except as set forth in Schedule 2.01(u), no person
is presently authorized by the Company or any of its subsidiaries
to use the name of the Company or any of its subsidiaries. The
Company has provided to Gerber prior to the execution of this
Agreement copies of any documents in the possession of the
Company or any of its subsidiaries granting any authorizations of
the type referred to in the previous sentence.
(v) Effect of Transaction. Except as set forth in
Schedule 2.01(v), no creditor, employee, client, customer or
other person having a material business relationship with the
Company or any of its subsidiaries has informed the Company or
any of its subsidiaries or any of the Stockholders in writing
that such person intends to change such relationship because of
the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, which change,
individually or in the aggregate with other such changes, would
have a Material Adverse Effect.
(w) Disclosure. No representation or warranty of the
Company contained in this Agreement, and no statement contained
in any document, certificate or Schedule furnished or to be
furnished by or on behalf of the Company to Gerber or any of its
representatives pursuant to this Agreement, contains any untrue
statement of a material fact, or omits to state any material fact
necessary, in light of the circumstances under which it was made,
in order to make the statements herein or therein not misleading
or necessary in order to fully and fairly provide the information
required to be provided in any such document, certificate or
Schedule.
(x) State Takeover Statutes. To the knowledge of the
Company, no state takeover statute or similar statute or
regulation applies or purports to apply to the purchase and sale
of the Shares, this Agreement or any of the transactions
contemplated by this Agreement.
(y) Brokers. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
(z) Third Party Consents. Except as set forth on
Schedule 2.01(z), all consents or waivers required to be obtained
from third parties in connection with the execution, delivery and
performance of this Agreement or the consummation of the
transactions contemplated by this Agreement have been obtained
where the failure to obtain such consents or waivers would have a
Material Adverse Effect or in any way challenge or interfere with
Gerber's ability to acquire, hold or exercise full rights of
ownership of the Shares.
SECTION 2.02. Representations and Warranties of the
Stockholders. Each of the Stockholders represents and warrants,
severally and not jointly, to Gerber as follows:
(a) Title to the Shares. Such Stockholder is the
owner of record and beneficially of, and has good and valid title
to, the Shares set forth opposite its name on Schedule 2.02(a),
in each case free and clear of all Liens. Other than this
Agreement, no Shares held by such person (or held beneficially by
such person) are subject to any Lien or voting trust agreement or
other contract, agreement, arrangement, commitment or
understanding, including any such agreement, arrangement,
commitment or understanding restricting or otherwise relating to
the voting, dividend rights or disposition of such shares.
(b) Authority; Noncontravention. Such Stockholder has
the requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by such
Stockholder and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary
trust action on the part of such Stockholder. This Agreement has
been duly executed and delivered by such Stockholder and con
stitutes a legal, valid and binding obligation of such
Stockholder, enforceable against it in accordance with its terms.
(c) Capital Structure. The authorized capital stock
of the Company consists of 3,000 shares of common stock, par
value $1.00 per share, of which 1,000 shares of Company common
stock are issued and outstanding and 20 shares of Company common
stock are held by the Company in its treasury. Except as set
forth in the immediately preceding sentence, no shares of capital
stock or other equity or voting securities of the Company are
issued, reserved for issuance or outstanding. There are no
outstanding warrants, options, rights, "phantom" stock rights,
agreements, convertible or exchangeable securities or other
commitments (other than this Agreement) (i) pursuant to which the
Company or any of its subsidiaries is or may become obligated to
issue, sell, purchase, return or redeem any shares of capital
stock or other securities or (ii) that give any person the right
to receive any benefits or rights similar to any rights enjoyed
by or accruing to the holders of shares of capital stock of the
Company.
(d) Brokers. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of such Stockholder.
SECTION 2.03. Representations and Warranties of
Gerber. Gerber represents and warrants to the Stockholders and
the Company as follows:
(a) Organization, Standing and Corporate Power.
Gerber is a corporation duly organized, validly existing and in
good standing under the laws of the State of Connecticut. Gerber
is duly qualified or licensed to do business and is in good
standing to do business as a foreign corporation in each
jurisdiction in which the nature or conduct of its business or
the ownership, leasing or holding of its properties makes such
qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not impair the ability
of Gerber to perform its obligations under this Agreement.
(b) Authority; Noncontravention. Gerber has all
requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on
the part of Gerber. This Agreement has been duly executed and
delivered by Gerber and constitutes a valid and binding
obligation of Gerber, enforceable against Gerber in accordance
with its terms. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated by
this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of,
or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancelation or
acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the
properties or assets of Gerber under, (i) the Certificate of
Incorporation or By-laws of Gerber, (ii) any loan or credit agree
ment, note, bond, mortgage, indenture, deed of trust, lease,
contract, commitment or other agreement, or any permit,
concession, franchise, license to which Gerber is a party or by
which any of its properties or assets are bound, (iii) subject to
the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Gerber or any of its
properties or assets, other than, in the case of clause (ii), any
such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not impair the ability of
Gerber to perform its obligations under this Agreement. No
consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any Governmental Entity
is required to be made or obtained by or with respect to Gerber
in connection with the execution, delivery and performance of
this Agreement or the consummation by Gerber of any of the
transactions contemplated by this Agreement, except for (i) the
filing of a premerger notification and report form under the HSR
Act, (ii) the filing with the Securities and Exchange Commission
(the "SEC") of such reports under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be required in
connection with this Agreement and the transactions contemplated
by this Agreement, (iii) such other consents, approvals,
licenses, permits, orders, authorizations, registrations,
declarations and filings as may be required (x) under the laws of
any foreign country in which the Company or any of its
subsidiaries conducts any business or owns any property or
assets, (y) under the "takeover" laws of various states or (z)
solely by reason of the participation of the Company or any
Stockholder (as opposed to any other third party) in the
transactions contemplated by this Agreement.
(c) Brokers. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Gerber.
ARTICLE III
Additional Agreements
SECTION 3.01. Fees and Expenses. All fees and
expenses incurred in connection with the purchase and sale of the
Shares, this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or
expenses, except that all such fees and expenses incurred by the
Company or any of its subsidiaries shall be paid by the
Stockholders.
SECTION 3.02. Public Announcements. Gerber, on the
one hand, and the Company and the Stockholders, on the other
hand, will consult with each other before issuing, and provide
each other the opportunity to review and comment upon, any press
release or other public statements with respect to the
transactions contemplated by this Agreement and shall not issue
any such press release or make any such public statement prior to
such consultation, except as may be required by applicable law,
court process or by obligations pursuant to any listing agreement
with any national securities exchange.
SECTION 3.03. Non-Competition. For a period of
three years from the Closing, each Stockholder agrees that it
shall not, and shall cause each of its respective affiliates not
to, directly or indirectly:
(i) engage, directly or indirectly, in activities or
businesses within the United States of America or in any
other country in which the Company or any of its
subsidiaries regularly conducts business which are
substantially in competition with the Company and its
subsidiaries ("Competitive Activities"), including,
(A) selling goods or services of the type sold by the
Company or any of its subsidiaries as of the Closing;
(B) soliciting any customer or prospective customer of the
Company or any of its subsidiaries to purchase any goods or
services of the type sold by the Company or any of its
subsidiaries as of the Closing, from anyone other than the
Company and its subsidiaries; and (C) assisting any person
in any way to do, or attempt to do, anything prohibited
above;
(ii) perform any action, activity or course of conduct
which is reasonably foreseeable to be substantially
detrimental to the Company's and its subsidiaries'
businesses as conducted as of the Closing or business
reputation ("Detrimental Activities"), including
(A) soliciting, recruiting or hiring any employees of the
Company or any of its subsidiaries or persons who have
worked for the Company or any of its subsidiaries within the
90 days prior to the Closing Date; (B) soliciting or
encouraging any employee of the Company or any of its
subsidiaries to leave the employment of the Company or any
of its subsidiaries and (C) disclosing or furnishing to
anyone any confidential information relating to the Company
and its subsidiaries or otherwise using such confidential
information for its own benefit or the benefit of any other
person except to the extent that such confidential
information (x) is legally compelled (by deposition,
interrogatory, request for documents, subpoena, civil
investigative demand or similar process) to be disclosed or
furnished or (y) is generally available to and known by the
public (other than as a result of a disclosure directly or
indirectly by a Stockholder).
Notwithstanding anything to the contrary contained in
this Section 3.03, Gerber hereby agrees that the foregoing
covenant shall not be deemed breached as a result of (i) the
ownership by any Stockholder or any affiliate of such Stockholder
of: (x) less than an aggregate of 5% of any class of stock of a
person engaged, directly or indirectly, in Competitive
Activities; provided that such stock is listed on a national
securities exchange or is quoted on the National Market System of
NASDAQ; (y) less than 10% in value of any instrument of indebted
ness of a person engaged, directly or indirectly, in Competitive
Activities; or (z) a person which engages, directly or
indirectly, in Competitive Activities if such Competitive
Activities account for less than 10% of such person's
consolidated annual revenues; and (ii) the activities of any
Stockholder in his or her capacity as an officer, director or
employee of the Company or any of its subsidiaries.
SECTION 3.04. Environmental Claims. (a) Anything in
this Agreement to the contrary notwithstanding, except in
connection with a claim of fraud, Gerber shall not at any time,
and shall not at any time permit either the Company or any of its
subsidiaries or affiliates to, assert any claim, cause of action
or action for recovery against any Stockholder relating to,
arising from or in connection with (i) contamination or alleged
contamination of any property owned or operated by the Company or
any of its subsidiaries prior to or after the date hereof; or
(ii) any storage, transportation or disposal of any Hazardous
Materials prior to or after the date hereof by the Company or any
of its subsidiaries, or any of their respective agents or
independent contractors including, without limitation, as to
(i) and (ii) above, any claims for the costs of investigation or
cleanup of property and any claims for wrongful death, injury or
damage to health or property damage (collectively the
"Environmental Claims").
(b) Anything in this Agreement to the contrary
notwithstanding, in the event any Environmental Claims shall be
directly asserted against the Stockholders by any third party
which is unaffiliated with Gerber, the Company, any of its
subsidiaries or affiliates, including any governmental agency,
after the date hereof, the Stockholders shall not at any time
assert a claim for recovery against Gerber, the Company or any of
its subsidiaries or affiliates with respect thereto.
ARTICLE IV
Indemnification
SECTION 4.01. Indemnification by the Stockholders.
Each Stockholder shall indemnify and defend Gerber and its
affiliates (including after the Closing the Company and its
subsidiaries) and each of their respective officers, directors,
employees, stockholders, agents and representatives and hold them
harmless from any loss, liability, claim, damage or expense
(including reasonable legal fees and expenses) suffered or
incurred by any such indemnified party to the extent arising
from, relating to or otherwise in respect of (a) any breach of
any representation or warranty of such Stockholder contained in
this Agreement and (b) any breach of any covenant of such
Stockholder contained in this Agreement.
SECTION 4.02. Indemnification by Gerber. Gerber shall
indemnify and defend the Stockholders, and each of them, and
their respective affiliates and each of their respective agents
and representatives against and hold them harmless from any loss,
liability, claim, damage or expense (including reasonable legal
fees and expenses) suffered or incurred by any such indemnified
party to the extent arising from, relating to or otherwise in
respect of a) any breach of any representation or warranty of
Gerber contained in this Agreement or (b) any breach of any
covenant of Gerber contained in this Agreement.
SECTION 4.03. Losses Net of Insurance, etc. The
amount of any loss, liability, claim, damage or expense for which
indemnification is provided under this Article IV shall be net of
any amounts recovered by the indemnified party under insurance
policies with respect to such loss, liability, claim, damage or
expense (collectively, a "Loss") and shall be (i) increased to
take account of any net Tax cost incurred by the indemnified
party arising from the receipt of indemnity payments hereunder
(grossed up for such increase) and (ii) reduced to take account
of any net Tax benefit realized by the indemnified party arising
from the incurrence or payment of any such Loss. In computing
the amount of any such Tax cost or Tax benefit, the indemnified
party shall be deemed to recognize all other items of income,
gain, loss, deduction or credit before recognizing any item
arising from the receipt of any indemnity payment hereunder or
the incurrence or payment of any indemnified Loss. Any
indemnification payment under this Agreement shall be treated as
an adjustment to the aggregate Purchase Price for Tax purposes,
unless a final determination (which shall include the execution
of a Form 870-AD or successor form) with respect to the
indemnified party or any of its affiliates causes any such
payment not to be treated as an adjustment to the aggregate
Purchase Price for United States Federal income Tax purposes.
SECTION 4.04. Procedures Relating to Indemnification
for Third Party Claims. In order for a party (the "indemnified
party") to be entitled to any indemnification provided for under
this Agreement in respect of, arising out of or involving a claim
or demand made by any person against the indemnified party (a
"Third Party Claim"), such indemnified party must notify the
indemnifying party in writing, and in reasonable detail, of the
Third Party Claim within 20 business days after receipt by such
indemnified party of written notice of the Third Party Claim;
provided, however, that failure to give such notification shall
not affect the indemnification provided hereunder except to the
extent the indemnifying party demonstrates that it has been
materially prejudiced as a result of such failure. Thereafter,
the indemnified party shall deliver to the indemnifying party,
promptly after the indemnified party's receipt thereof, copies of
all notices and documents (including court papers) received by
the indemnified party relating to the Third Party Claim and not
otherwise addressed to the indemnifying party.
If a Third Party Claim is made against an indemnified
party, the indemnifying party shall be entitled to participate in
the defense thereof and, if it so chooses and acknowledges its
obligation to indemnify the indemnified party therefor, to assume
the defense thereof with counsel selected by the indemnifying
party; provided that such counsel is not reasonably objected to
by the indemnified party. Should the indemnifying party so elect
to assume the defense of a Third Party Claim, the indemnifying
party shall not be liable to the indemnified party for legal
expenses subsequently incurred by the indemnified party in
connection with the defense thereof. If the indemnifying party
assumes such defense, the indemnified party shall have the right
to participate in the defense thereof and to employ counsel, at
its own expense, separate from the counsel employed by the
indemnifying party, it being understood that the indemnifying
party shall control such defense. The indemnifying party shall
be liable for the fees and expenses of counsel employed by the
indemnified party for any period during which the indemnifying
party has failed to assume the defense thereof, other than the
period preceding the indemnifying party's receipt of the written
notice of Third Party Claim.
If the indemnifying party so elects to assume the
defense of any Third Party Claim, the indemnified parties shall
cooperate with the indemnifying party in the defense or prose
cution thereof. Such cooperation shall include the retention and
(upon the indemnifying party's request) the provision to the
indemnifying party of records and information which are
reasonably relevant to such Third Party Claim, and making
employees available on a mutually convenient basis and at the
indemnifying party's expense to provide additional information
and explanation of any material provided hereunder. If the
indemnifying party shall have assumed the defense of a Third
Party Claim, the indemnified party shall not admit any liability
with respect to, or settle, compromise or discharge, such Third
Party Claim without the indemnified party's prior written consent
(which consent shall not be unreasonably withheld) and, in the
event the indemnified party shall breach or default upon its
obligation to refrain from admitting liability or settling,
compromising or discharging such Third Party Claim, as aforesaid,
and if the indemnifying party is not in breach or otherwise in
default of its obligations with respect to such Third Party
Claim, then the indemnifying party, without notice or any other
action required, shall be deemed immediately released and
discharged from any obligation for indemnification that it has or
may have hereunder with respect to such Third Party Claim. If
the indemnifying party shall have assumed the defense of a Third
Party Claim, the indemnified party shall agree to any settlement,
compromise or discharge of a Third Party Claim which the
indemnifying party may recommend and which by its terms obligates
the indemnifying party to pay the full amount of the liability in
connection with such Third Party Claim under such settlement,
compromise or discharge, which releases the indemnifying party
completely in connection with such Third Party Claim and which
would not otherwise adversely affect the indemnified party.
Notwithstanding the foregoing, the indemnifying party
shall not be entitled to assume the defense of any Third Party
Claim (and shall be liable for the reasonable fees and expenses
of counsel incurred by the indemnified party in defending such
Third Party Claim) if the Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than
money damages against the indemnified party which the indemnified
party reasonably determines, after conferring with its outside
counsel, cannot be separated from any related claim for money
damages. If such equitable relief or other relief portion of the
Third Party Claim can be so separated from that for money
damages, the indemnifying party shall be entitled to assume the
defense of the portion relating to money damages.
SECTION 4.05. Other Claims. In the event any
indemnified party should have a claim against any indemnifying
party under Section 4.01 or 4.02 that does not involve a Third
Party Claim being asserted against or sought to be collected from
such indemnified party, the indemnified party shall deliver
notice of such claim with reasonable promptness to the
indemnifying party. The failure by any indemnified party so to
notify the indemnifying party shall not relieve the indemnifying
party from any liability which it may have to such indemnified
party under Section 4.01 or 4.02, except to the extent that the
indemnifying party demonstrates that it has been materially
prejudiced by such failure. If the indemnifying party does not
notify the indemnified party within 21 calendar days following
its receipt of such notice that the indemnifying party disputes
its liability to the indemnified party under Section 4.01 or
4.02, such claim specified by the indemnified party in such
notice shall be conclusively deemed a liability of the
indemnifying party under Section 4.01 or 4.02 and the
indemnifying party shall pay the amount of such liability to the
indemnified party on demand or, in the case of any notice in
which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or
such portion thereof) becomes finally determined. If the
indemnifying party has timely disputed its liability with respect
to such claim, as provided above, the indemnifying party and the
indemnified party shall proceed in good faith to negotiate a
resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an
appropriate court of competent jurisdiction.
ARTICLE V
Tax Matters
SECTION 5.01. Cooperation. The Stockholders, the
Company, each of the Company's subsidiaries and Gerber shall
reasonably cooperate, and shall cause their respective
affiliates, officers, employees, agents, auditors and
representatives reasonably to cooperate, in preparing and filing
all returns, reports and forms relating to Taxes, including
maintaining and making available to each other all records
necessary in connection with Taxes and in resolving all disputes
and audits with respect to all taxable periods relating to Taxes
and in any other matter relating to Taxes.
SECTION 5.02. Refunds and Credits. Any refunds or
credits of Taxes of the Company or any of its subsidiaries for
any taxable period, whether ending before, on or after the
Closing Date, shall be for the account of the Company.
SECTION 5.03. Transfer Taxes. All transfer,
documentary, sales, use, registration and other such Taxes
(including all applicable real estate transfer or gains Taxes)
and related fees (including any penalties, interest and additions
to Tax) incurred in connection with this Agreement and the
transactions contemplated hereby (other than stock transfer
Taxes) shall be paid by the Company, and the Stockholders and
Gerber shall cooperate in timely making all filings, returns,
reports and forms as may be required to comply with the
provisions of such Tax laws. The Stockholders shall pay any
stock transfer Taxes due as a result of the purchase and sale of
the Shares.
SECTION 5.04. FIRPTA Certificate. The Stockholders
shall deliver to Gerber at the Closing a certificate in form and
substance satisfactory to Gerber, duly executed and acknowledged,
certifying all facts necessary to exempt the transactions
contemplated hereby from withholding pursuant to the provisions
of the Foreign Investment in Real Property Tax Act.
ARTICLE VI
General Provisions
SECTION 6.01. Survival of Covenants, Representations
and Warranties. All covenants of the parties set forth in this
Agreement shall survive the Closing. The representations and
warranties set forth in Sections 2.02 and 2.03 shall survive the
Closing and the representations and warranties set forth in
Section 2.01 shall not survive the Closing.
SECTION 6.02. Notices. All notices, requests, claims,
demands and other communications under this Agreement shall be in
writing and shall be deemed given if delivered personally or sent
by overnight courier (providing proof of delivery) to the parties
at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Gerber, to
Gerber Optical, Inc.
55 Gerber Road East
South Windsor, CT 06074
Attention of: Shawn Harrington
with a copy to:
Gerber Scientific, Inc.
83 Gerber Road West
South Windsor, CT 06074
Attention of: General Counsel
(b) if to a Stockholder, to the address set forth for
such Stockholder on the signature pages hereto
with a copy to:
Rudnick & Wolfe
Suite 1800
203 North LaSalle Street
Chicago, IL 60601-1293
Attention of: Stephen A. Landsman, Esq.
SECTION 6.03. Definitions. For purposes of this
Agreement:
(a) an "affiliate" of any person means another person
that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person;
(b) "person" means an individual, corporation,
partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other
entity; and
(c) a "subsidiary" of any person means another person,
an amount of the voting securities or other voting ownership
interests of which sufficient to elect at least a majority
of its Board of Directors or other governing body (or, if
there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly
by such first person or, in the case of a partnership, of
which such first person is a general partner.
The Allocable Percentages set forth on the signature
pages hereto are merely to represent the percentage of the
outstanding shares of Company common stock owned by each
Stockholder and shall not have any effect for purposes of this
Agreement.
SECTION 6.04. Interpretation. When a reference is
made in this Agreement to a Section, Exhibit or Schedule, such
reference shall be to a Section of, or an Exhibit or Schedule to,
this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation".
SECTION 6.05. Amendment. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each of the parties.
SECTION 6.06. Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the
parties and delivered to the other parties.
SECTION 6.07. Severability. If any provision of this
Agreement (or any portion thereof) or the application of any such
provision (or any portion thereof) to any person or circumstance
shall be held invalid, illegal or unenforceable in any respect by
a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof (or
the remaining portion thereof) or the application of such
provision to any other persons or circumstances.
SECTION 6.08. Entire Agreement; No Third-Party
Beneficiaries. This Agreement and the Confidential Disclosure
Agreement dated October 27, 1997 between Gerber Scientific, Inc.
("Parent") and the Company (a) constitute the entire agreement,
and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject
matter of this Agreement and (b) are not intended to confer upon
any person other than the parties any rights or remedies.
SECTION 6.09. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
SECTION 6.10. Assignment. Neither this Agreement nor
any of the rights, interests or obligations under this Agreement
shall be assigned, in whole or in part, by any of the parties
without the prior written consent of the other parties, except
that Gerber may assign, in its sole discretion, any of or all its
rights, interests and obligations under this Agreement to Parent
or to any direct or indirect wholly owned subsidiary of Parent,
but no such assignment shall relieve Gerber of any of its
obligations under this Agreement. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their
respective successors and assigns.
SECTION 6.11. Attorney Fees. A party in breach of
this Agreement shall, on demand, indemnify and hold harmless the
other parties for and against all reasonable out-of-pocket
expenses, including legal fees, incurred by such other parties by
reason of the enforcement and protection of its rights under this
Agreement. The payment of such expenses is in addition to any
other relief to which such other party may be entitled.
IN WITNESS WHEREOF, Gerber, the Company and each of the
Stockholders have caused this Agreement to be signed by their
respective officers thereunto duly authorized, or have signed
this Agreement, as applicable, all as of the date first written
above.
GERBER OPTICAL, INC.,
by
__________________________
Name:
Title:
COBURN OPTICAL INDUSTRIES, INC.,
by
__________________________
Name:
Title:
ALLOCABLE PERCENTAGE STOCKHOLDERS
- -------------------- ------------
29% ROBERT S. JEPSON, JR. AND ALICE
A. JEPSON
Address:
Robert S. Jepson, Jr.
Alice A. Jepson
- ---------------------------------------------------------------------
25% RSJ III TRUST
Address:
by: Stephen A. Landsman,
Trustee
- -------------------------------------------------------------------
25% JSJ TRUST
Address:
by: Stephen A. Landsman,
Trustee
- --------------------------------------------------------------------
7% JOHN BLOCHA
Address:
John Blocha
- --------------------------------------------------------------------
5% ROBERT J. PASCO
Address:
Robert J. Pasco
- --------------------------------------------------------------------
2% THOMAS WALDEN
Address:
Thomas Walden
- --------------------------------------------------------------------
2% DENNIS GEORGE
Address:
Dennis George
- --------------------------------------------------------------------
1% WILLIAM M. KEARNS, JR.
Address:
William M. Kearns, Jr.
- ---------------------------------------------------------------------
2% JOHN HANCOCK
Address:
John Hancock
- ---------------------------------------------------------------------
2% DARYL FARR
Address:
Daryl Farr
- ---------------------------------------------------------------------
<PAGE 6>
EXHIBIT 99.1
Contact: Gary K. Bennett For Immediate Release
(860) 648-8004 March 2, 1998
Gerber Scientific, Inc. Subsidiary Acquires
Coburn Optical Industries, Inc.
Creates Leading Supplier to Ophthalmic Industry
South Windsor, CT - Gerber Scientific, Inc. (NYSE: GRB) today
said that through a wholly owned subsidiary it has purchased
Coburn Optical Industries, Inc. ("Coburn"), a leading
manufacturer and international distributor of a broad range of
ophthalmic lens processing equipment and related supplies used in
the production of eyeglass lenses.
Privately-held Coburn was acquired for approximately $63 million
in cash, which included repayment of $21.5 million of Coburn's
outstanding debt. In Coburn's most recent year ended December
31, 1997, it had sales of approximately $74 million. Coburn will
be combined with the Company's Gerber Optical, Inc. subsidiary, a
manufacturer and marketer of computer-integrated optical
manufacturing systems. For Gerber Optical's fiscal year ending
April 30, 1998, it is expected to have sales in the range of $40
million. The Company expects that the acquisition will be
accretive to its earnings per share for the fiscal year beginning
May 1, 1998.
"The combination of Coburn with Gerber Optical will be a
significant step in strengthening Gerber Scientific, Inc.'s
position as the leading provider of processing solutions to the
worldwide ophthalmic industry," said George M. Gentile, Chairman
and Chief Executive Officer of Gerber Scientific, Inc. "Gerber
Optical is experiencing exceptional growth and has emerged as a
core business that we intend to grow even further. Combined with
Coburn, this business on an annualized basis would represent more
than 20 percent of our total sales."
Both Gerber Optical and Coburn market to independent wholesale
eyeglass processing laboratories, "super-optical" retail stores
with on-site processing facilities, retail chains with central
processing laboratories, and independent optometrists,
ophthalmologists, and opticians. The Company noted that in
addition to acquiring new products, a well-known brand, and a
significant consumables and spare parts business, Gerber Optical
will gain through Coburn a strong direct worldwide distribution
network that will be extremely valuable in growing the combined
companies' sales. Coburn, headquartered in Oklahoma, distributes
its products through operations in Canada, Holland, the United
Kingdom, Singapore, and Australia.
Michael J. Cheshire, President and Chief Operating Officer of
Gerber Scientific, Inc., stated, "This combination of leading
companies is an important event for the ophthalmic industry. We
now have the critical mass and worldwide distribution network
needed to satisfy new processing requirements that are arising
from the rapid emergence of plastic lenses as the eyeglass
material of choice in international markets. From a global
perspective, Gerber Scientific, Inc. will be in a strong position
to meet the needs of any lens processing operation."
The new company will be known as Gerber Coburn. Shawn M.
Harrington, the President and Chief Operating Officer of Gerber
Optical, will serve as President and Chief Operating Officer of
the combined company. John Blocha, formerly the President of
Coburn, will serve as Chairman. The transaction is not subject
to further regulatory approvals.
Gerber Scientific, Inc. (http://www.gerberscientific.com),
headquartered in South Windsor, Connecticut, is an international
supplier of automated manufacturing systems for a variety of
industries including apparel, signmaking, optical, commercial
printing, electronics, aerospace, and automotive.
In addition to the historical information contained herein, there
are matters discussed which are considered to be "forward-looking
statements." The Private Securities Litigation Reform Act of
1995 provides a "safe harbor" for forward-looking statements.
These forward-looking statements involve risks and uncertainties,
including, but not limited to, economic, competitive,
governmental, and technological factors affecting the Company's
operations, markets, products, and services, that could
significantly affect results in the future.
