SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
DATE OF REPORT: MARCH 31, 1997
(Date of earliest event reported)
______________________________
MITY-LITE, INC.
(Exact name of registrant as specified in its charter)
UTAH 0-23898 87-0448892
(State or other (Commission file (I.R.S. employer
jurisdiction of number) identification no.)
incorporation or
organization)
1301 West 400 North
Orem, Utah 84057
(Address of principal executive offices)
(801) 224-0589
(Registrant's telephone number, including area code)
______________________________
Item 2. Acquisition or Disposition of Assets.
A. The DO Group Minority Interest Acquisition. On March
31, 1997, Mity-Lite, Inc., a Utah corporation (the "Registrant")
closed the transaction contemplated in the Contribution Agreement
dated March 24, 1997 (the "Contribution Agreement") and certain
other related transactions all of which are described in more
detail below (collectively, the "Transaction"). In connection
with the Transaction, the Registrant acquired 1,260.090 shares of
common stock (the "Shares") of DO Group, Inc., a Delaware
corporation ("DO Group") from certain shareholders of DO Group
(the "Acquisition"). The Registrant's acquisition of the Shares
represents 49.9% of DO Group's issued and outstanding capital
stock. Registrant acquired the Shares from (i) Xaio, Inc., a
Delaware corporation, (ii) Ellman Equities, Inc., an Arizona
corporation, (iii) Key Equity Capital Corporation, an Ohio
corporation, (iv) National City Capital Corporation, a Delaware
corporation, and (v) Cardinal Development Capital Fund I, an Ohio
corporation. The purchase price for the Shares consisted of cash
in the aggregate amount of $750,000 and was determined through
arms-length negotiations by and among the parties. Funds from
the Company's general working capital were used to fund the
purchase.
B. Post Transaction Ownership and Related Transactions.
Following the Acquisition, DO Group's issued and outstanding
common stock is owned (i) 49.9% by the Registrant and (ii) 50.1%
collectively by ChiCol Group, Inc., an Ohio corporation
("ChiCol") and Sican II Corp., a Delaware corporation ("Sican
II"). ChiCol's issued and outstanding common stock (the "ChiCol
Common Stock") is owned by three shareholders; David Kebrdle,
Mary M. Kebrdle and Martha S. Federico (collectively, the
"Majority Shareholders"). Sican II's issued and outstanding
common stock (the "Sican II Common Stock") is owned by ChiCol and
the Estate of Chester E. Dekko ("Dekko"). Other parties to the
Contribution Agreement include; Dennis Kebrdle and Domenic
Federico (collectively, the "DO Group Officers"); Sican Corp., a
Delaware corporation ("Sican"), DO Group Holding, Inc., a Utah
corporation ("Holding"), together with DO Group, ChiCol and Sican
II, the "DO Group Parties"; and the Majority Shareholders, the DO
Group Officers, the DO Group Parties and the Registrant are
referred to hereinafter as the "Parties."
The Registrant and the Majority Shareholders caused Holding
to be formed for the purpose of holding (i) all of the ChiCol
Common Stock contributed by the Majority Shareholders and (ii)
the Sican II Common Stock contributed by Dekko (collectively, the
"Majority Shares"). In exchange for the contribution, pursuant
to the Contribution Agreement, of all of the Majority Shares to
Holding by the Majority Shareholders, the Parties caused Holding
to issue the Majority Shareholders all of the Class A common
stock of Holding (the "Class A Common Stock"). Such Class A
Common Stock is, subject to certain conditions and restrictions
and in accordance with Holding's Articles of Incorporation,
convertible into 115,000 shares of restricted common stock of the
Registrant (the "Mity-Lite Common Stock"). In exchange for the
Registrant's agreement (i) to issue Mity-Lite Common Stock upon
conversion of the Class A Common Stock; (ii) to provide up to
$1,000,000 of term debt financing to Sican, a subsidiary of DO
Group and (iii) to issue certain stock options to the DO Group
Officers, the Parties caused Holding to issue to Registrant all
of the authorized shares of Class B common stock of Holding (the
"Class B Common Stock").
If all the holders of the Class A Common Stock (the "Class A
Holders") elect to convert the Class A Common Stock into the
Mity-Lite Common Stock, the Registrant will own 100% of the
outstanding capital stock of Holding. However, if Registrant
exercises its rights under a certain Put Agreement dated March
24, 1997 requiring any or all of the DO Group Parties to acquire
the Shares from Registrant, then the rights of the Class A
Holders to convert their Class A Common Stock into Mity-Lite
Common Stock will terminate. Holding owns all of the ChiCol
Common Stock, and owns all of the Sican II Common Stock formerly
held by Dekko. The remainder of the Sican II Common Stock is
owned by ChiCol. ChiCol and Sican II, together own 50.1% of DO
Group and the Registrant owns the other 49.9% of DO Group. DO
Group owns 100% of the capital stock of Sican.
Registrant, as part of the Transaction, provided term
financing to Sican in the amount of $1,000,000 at 10.00% per
annum, interest payable quarterly maturing on March 24, 2000,
pursuant to a Term Loan Agreement and a Term Note (the "Loan").
Registrant funded the loan amount out of its general working
capital.
The foregoing description of the Acquisition and the related
Transaction is qualified in its entirety by reference to the
Contribution Agreement, the Stock Purchase Agreements and related
documents, which are attached hereto as Exhibits 2.1 through 2.8,
and are incorporated herein in their entirety by this reference.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements of Business Acquired. It is
impracticable for the Registrant to file herewith the required
historical financial statements of the business acquired as
described above in Item 2. Such financial statements will be
filed as soon as practicable, but not later than 60 days after
the date on which this Form 8-K is required to be filed.
(b) Pro Forma Financial Information. It is impracticable for
the Registrant to file herewith the required pro forma financial
information relative to the acquisition described in Item 2
above. Such pro forma financial information will be filed as
soon as practicable, but not later than 60 days after the date on
which this Form 8-K is required to be filed.
(c) Exhibits. See Index to Exhibits incorporated herein in its
entirety by this reference.
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 thereunto duly authorized.
MITY-LITE, INC.
(Registrant)
By: /s/ Bradley T Nielson
Bradley T Nielson
Date: April 14, 1997 Its: Chief Financial Officer
INDEX TO EXHIBITS
2.1 Contribution Agreement dated as of March 24, 1997 by and
among Estate of Chester E. Dekko, David Kebrdle, Dennis and
Mary M. Kebrdle, Domenic and Martha S. Federico, ChiCol
Group, Inc., DO Group, Inc., Sican Corp., Sican II Corp.,
DO Group Holding, Inc. and Mity-Lite, Inc.
2.2 Stock Purchase Agreement dated as of March 13, 1997 between
Mity-Lite, Inc. and Xaio, Inc.
2.3 Stock Purchase Agreement dated as of March 13, 1997 between
Mity-Lite, Inc. and Ellman Equities, Inc.
2.4 Stock Purchase Agreement dated as of March 13, 1997 between
Mity-Lite, Inc. and Key Equity Capital Corporation.
2.5 Stock Purchase Agreement dated as of March 13, 1997 between
Mity-Lite, Inc. and National City Capital Corporation.
2.6 Stock Purchase Agreement dated as of March 13, 1997 between
Mity-Lite, Inc. and Cardinal Development Capital Fund I.
2.7 Term Loan Agreement dated as of March 24, 1997 between
Mity-Lite, Inc. and Sican Corp.
2.8 Put Agreement dated as March 24, 1997 by and among Mity-
Lite, Inc. and Dennis Kebrdle, David Kebrdle, Domenic
Federico, ChiCol Group, Inc., Sican II Corp., and DO Group,
Inc.
CONTRIBUTION AGREEMENT
AS OF MARCH 24, 1997
BY AND AMONG
Estate of Chester E. Dekko,
David Kebrdle,
Dennis and Mary M. Kebrdle,
Domenic and Martha S. Federico,
ChiCol Group, Inc.,
DO Group, Inc.,
Sican Corp.,
Sican II Corp.,
DO Group Holding, Inc. and
Mity-Lite, Inc.
TABLE OF CONTENTS
Page
1. DEFINITIONS...........................................................2
2. AGREEMENT TO CAPITALIZE HOLDING.......................................7
2.1 Agreement of the Majority Shareholders.......................7
2.2 Agreement of Mity-Lite.......................................7
2.3 Agreement of Holding.........................................8
2.4 The Closing..................................................8
2.5 Deliveries at the Closing....................................8
3. REPRESENTATIONS AND WARRANTIES CONCERNING
THE TRANSACTION.......................................................9
3.1 Representations and Warranties Regarding the
Majority Shareholders........................................9
3.2 Representations and Warranties Regarding the
DO Group Parties............................................10
3.3 Representations and Warranties Regarding the DO
Group Officers..............................................12
3.4 Representations and Warranties of Mity-Lite.................12
4. REPRESENTATIONS AND WARRANTIES REGARDING THE DO GROUP
PARTIES..............................................................14
4.1 Organization, Qualification, and Corporate Power............14
4.2 Capitalization of ChiCol....................................15
4.3 Assets of ChiCol............................................15
4.4 Capitalization of Sican Corp................................15
4.5 Assets of Sican Corp........................................16
4.6 Capitalization of Sican II..................................16
4.7 Assets of Sican II..........................................16
4.8 Capitalization of DO Group..................................16
4.9 Subsidiaries................................................17
4.10 Financial Statements........................................17
4.11 Title to Assets.............................................18
4.12 Events Subsequent to Most Recent Fiscal Year End............18
4.13 Undisclosed Liabilities.....................................20
4.14 Legal Compliance............................................20
4.15 Tax Matters.................................................20
4.16 Real Property...............................................22
4.17 Intellectual Property.......................................24
4.18 Tangible Assets.............................................26
4.19 Inventory...................................................26
4.20 Contracts...................................................26
4.21 Notes and Accounts Receivable...............................28
4.22 Powers of Attorney..........................................28
4.23 Insurance...................................................28
4.24 Litigation..................................................28
4.25 Product Warranty............................................29
4.26 Product Liability...........................................29
4.27 Employees...................................................29
4.28 Employee Benefits...........................................29
4.29 Guaranties..................................................31
4.30 Environmental, Health, and Safety Matters...................31
4.31 Certain Business Relationships with DO Group and Its
Subsidiaries................................................33
4.32 Disclosure..................................................33
5. PRE-CLOSING COVENANTS................................................33
5.1 General.....................................................33
5.2 Notices and Consents........................................34
5.3 Operation of Business.......................................34
5.4 Preservation of Business....................................34
5.5 Full Access.................................................34
5.6 Notice of Developments......................................34
5.7 Exclusivity.................................................34
5.8 Spin-Off of ChiCol Equities, Inc............................35
6. POST-CLOSING COVENANTS...............................................35
6.1 General.....................................................35
6.2 Litigation Support..........................................35
6.3 Transition..................................................35
6.4 Confidentiality.............................................35
6.5 Covenant Not to Compete.....................................35
6.6 Mity-Lite Common Stock......................................36
6.7 Amendments to Articles of Inc. and Bylaws; Issuance of
Authorized Shares...........................................36
7. CONDITIONS TO OBLIGATION TO CLOSE....................................37
7.1 Conditions to Obligation of Mity-Lite.......................37
7.2 Conditions to Obligation of the Majority Shareholders,
the DO Group Officers and the DO Group Parties..............39
8. REMEDIES FOR BREACHES OF THIS AGREEMENT..............................41
8.1 Survival of Representations and Warranties..................41
8.2 Mity-Lite Remedy............................................41
8.3 DO Group Parties' Remedy....................................41
9. TERMINATION..........................................................42
9.1 Termination of Agreement....................................42
9.2 Effect of Termination.......................................42
10. MISCELLANEOUS........................................................42
10.1 Nature of Certain Obligations...............................42
10.2 Press Releases and Public Announcements.....................42
10.3 No Third-Party Beneficiaries................................43
10.4 Entire Agreement............................................43
10.5 Succession and Assignment...................................43
10.6 Counterparts................................................43
10.7 Headings....................................................43
10.8 Notices.....................................................43
10.9 Governing Law...............................................45
10.10 Amendments and Waivers......................................45
10.11 Severability................................................45
10.12 Expenses....................................................46
10.13 Construction................................................46
10.14 Incorporation of Recitals, Exhibits, and Schedules..........46
10.15 Specific Performance........................................46
10.16 Submission to Jurisdiction..................................46
10.17 Attorneys' Fees.............................................47
EXHIBITS:
Exhibit A DO Group Shareholder Agreement
Exhibit B Escrow Agreement
Exhibit C Holding Shareholder Agreement
Exhibit D Option Plan
Exhibit E List of Options
Exhibit F Put Agreement
Exhibit G Registration Rights Agreement
Exhibit H Majority Shareholders
Exhibit I Financial Statements
Exhibit J Investment Representation Letters
Exhibit K Provisions for DO Group Parties' Certificates of
Incorporation
Disclosure
Schedule Exceptions to Representations and Warranties
Concerning the DO Group Parties
CONTRIBUTION AGREEMENT
This Contribution Agreement (the "Agreement") is entered into as of
March 24, 1997, by and among (i) the Estate of Chester E. Dekko ("Dekko"), David
Kebrdle, Mary M. Kebrdle and Martha S. Federico (collectively referred to as the
"Majority Shareholders"), (ii) Dennis Kebrdle and Domenic Federico (together
with David Kebrdle, the "DO Group Officers"), (iii) ChiCol Group, Inc., an Ohio
corporation ("ChiCol"), Sican II Corp. a Delaware corporation ("Sican II"),
Sican Corp., a Delaware corporation ("Sican"), DO Group Holding, Inc., a Utah
corporation ("Holding"), DO Group, Inc., a Delaware corporation, on behalf of
itself and its Subsidiaries ("DO Group" and together with Sican, ChiCol, Sican
II, and Holding, the "DO Group Parties") and (iv) Mity-Lite, Inc., a Utah
corporation ("Mity-Lite"). The Majority Shareholders, the DO Group Officers, the
DO Group Parties and Mity-Lite are referred to hereinafter as the "Parties."
RECITALS:
WHEREAS, David Kebrdle, Mary M. Kebrdle, Martha S. Federico own all of
the issued and outstanding shares of common stock, no par value, of ChiCol (the
"ChiCol Common Stock");
WHEREAS, Dekko and ChiCol own all of the issued and outstanding shares
of common stock, no par value, of Sican II (the "Sican II Common Stock");
WHEREAS, ChiCol and Sican II own 50.1% of the issued and outstanding
shares of common stock, no par value, of DO Group (the "DO Group Common Stock");
WHEREAS, Mity-Lite will purchase the remaining 49.9% of the DO Group
Common Stock from certain third party shareholders of DO Group, effective as of
the Closing Date (defined hereafter) of this Agreement (the "Minority Share
Purchase");
WHEREAS, the Majority Shareholders and Mity-Lite have caused Holding to
be formed for the purpose of holding (i) all of the ChiCol Common Stock and (ii)
the Sican II Common held by Dekko (collectively the "Majority Shares");
WHEREAS, in exchange for the contribution of all of the Majority Shares
to Holding by the Majority Shareholders, the Parties desire to have Holding
issue to the Majority Shareholders all of the authorized shares of Class A
common stock, $.01 par value per share, of Holding (the "Class A Common Stock")
to the Majority Shareholders, which Class A Common Stock shall, upon certain
conditions, be convertible into 115,000 shares of restricted common stock, $.01
par value per share, of Mity-Lite (the "Mity-Lite Common Stock");
WHEREAS, in exchange for Mity-Lite's agreement (i) to issue the
Mity-Lite Common Stock upon conversion of the Class A Common Stock; (ii) to
provide up to $1,000,000 of term financing to DO Group and/or its Subsidiaries
and (iii) to issue certain stock options to the DO Group Officers, the Parties
desire to have Holding issue to Mity-Lite all of the authorized shares of Class
B common stock, $.01 par value per share, of Holding (the "Class B Common
Stock");
WHEREAS, the Majority Shareholders and Mity-Lite desire to enter into a
shareholder agreement governing certain aspects of their relationship,
including, but not limited to, certain corporate governance issues affecting
Holding and restrictions on transfer of the Class A Common Stock;
WHEREAS, ChiCol, Sican II and Mity-Lite desire to enter into a
shareholder agreement governing certain aspects of their relationship,
including, but not limited to, certain corporate governance issues affecting DO
Group and restrictions on transfer of the DO Group Common Stock; and
WHEREAS, ChiCol plans to spin-off ChiCol Equities, Inc., its
wholly-owned subsidiary, prior to the Closing (as defined below) of the
transactions contemplated herein;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. DEFINITIONS.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504(a) or any similar group defined under a similar provision of
applicable state, local or foreign law.
"Agreement" has the meaning set forth in the preface above.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"ChiCol" has the meaning set forth in the preface above.
"ChiCol Common Stock" has the meaning set forth in the Recitals above.
"ChiCol Equities" has the meaning set forth in the Recitals above.
"ChiCol Equities Common Stock" has the meaning set forth in Section
4.4.
"Class A Common Stock" has the meaning set forth in the Recitals above.
"Class B Common Stock" has the meaning set forth in the Recitals above.
"Closing" has the meaning set forth in Section 2.4 below.
"Closing Date" has the meaning set forth in Section 2.4 below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses, assets, Intellectual Property or affairs of DO Group and its
Subsidiaries that is not already generally available to the public.
"Controlled Group of Corporations" has the meaning set forth in Code
Section 1563.
"Dekko" has the meaning set forth in the preface above.
"Disclosure Schedule" has the meaning set forth in Section 3.1 below.
"DO Group" has the meaning set forth in the preface above.
"DO Group Common Stock" has the meaning set forth in the Recitals
above.
"DO Group Officers" has the meaning set forth in the preface above.
"DO Group Parties" has the meaning set forth in the preface above.
"DO Group Shareholder Agreement" means the Shareholder Agreement dated
as of the Closing Date among ChiCol, Sican II and Mity-Lite in substantially the
form attached hereto as Exhibit A.
"Employee Benefit Plan" means any (a) nonqualified, deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified, defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified, defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law
relating to public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation, each in effect on or
prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agreement" shall mean the escrow agreement between the Majority
Shareholders and Mity-Lite dated as of the Closing Date in substantially the
form attached hereto as Exhibit B.
"Escrow Account" shall mean the escrow account to be established at
Closing with the Escrow Agent and administered as provided in the Escrow
Agreement.
"Escrow Agent" means U. S. Bank Trust Company or another institution
jointly agreeable to Mity-Lite and the Majority Shareholders.
"Extremely Hazardous Substance" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statements" has the meaning set forth in Section 4.10 below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Holding" has the meaning set forth in the preface above.
"Holding Shareholder Agreement" means the Shareholder Agreement dated
as of the Closing Date among the Majority Shareholders and Mity-Lite in
substantially the form attached hereto as Exhibit C.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists and information, pricing and cost information, and
financial business and marketing data plans and proposals), (f) all computer
software (including data and related documentation), (g) all other intellectual
property rights, and (h) all copies and tangible embodiments thereof (in
whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Loan" shall mean the term loan of up to $1,000,000 made by Mity-Lite
to DO Group and/or its Subsidiaries pursuant to the Loan Documents.
"Loan Documents" shall mean the Loan Agreement, Term Note, Security
Agreement, Mortgage and related documentation dated as of the Closing Date
between Mity-Lite and DO Group.
"Majority Shareholders" has the meaning set forth in the preface above.
"Majority Shares" has the meaning set forth in the Recitals above.
"Minority Share Purchase" means the purchase by Mity-Lite of 49.9% of
the DO Group Common Stock pursuant to the Stock Purchase Agreements dated on or
about the date of this Agreement between Mity-Lite and each of the shareholders
of DO Group other than ChiCol and Sican II.
"Mity-Lite" has the meaning set forth in the preface above.
"Mity-Lite Common Stock" has the meaning set forth in the Recitals
above.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in 4.10
below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
4.10 below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4.10
below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Option Plan" means the Option Plan of Mity-Lite in substantially the
form attached hereto as Exhibit D.
"Options" means the Option issued to the DO Group Officers pursuant to
the Option Plan in the amounts set forth on Exhibit E attached hereto.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" or "Parties" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA Section 406
and Code Section 4975.
"Put Agreement" means the Put Agreement dated as of the Closing Date
among Mity-Lite, certain of the DO Group Parties and the DO Group Officers in
substantially the form attached hereto as Exhibit F.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Closing Date in substantially the form attached as Exhibit G.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Representing Parties" has the meaning set forth in Section 4.
"Securities Act" means the Securities Act of 1933, as amended.
"Shareholder Agreements" means the Holding Shareholder Agreement and
the DO Group Shareholder Agreement.
"Sican" has the meaning set forth in the preface above.
"Sican II" has the meaning set forth in the preface above.
"Sican II Common Stock" has the meaning set forth in the Recital above.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
claim, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens not yet due and payable, (b) liens for Taxes
not yet due and payable, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money.
"Subsidiary" and "Subsidiaries" means any corporation, partnership,
joint venture, limited liability company, association, or other entity with
respect to which a specified Person (or a Subsidiary thereof) has the power to
direct or cause the direction of the affairs or management of another Person
whether through the ownership of voting securities, as trustee, by contract or
otherwise, including, ownership of a majority of the common stock or the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
2. AGREEMENT TO CAPITALIZE HOLDING.
2.1 Agreement of the Majority Shareholders. On and subject to the terms
and conditions of this Agreement, the Majority Shareholders agree to transfer
and deliver at the Closing the Majority Shares to Holding in exchange for the
issuance of the Class A Common Stock to the Majority Shareholders in proportion
to their respective holdings in the Majority Shares as set forth on Exhibit H.
2.2 Agreement of Mity-Lite. On and subject to the terms and conditions
of this Agreement, and in consideration for the issuance of the Class B Common
Stock to Mity-Lite by Holding, at the Closing, Mity-Lite agrees to (i) the
issuance of the Class A Common Stock to the Majority Shareholders by Holding,
(ii) fund the Loan and (iii) issue the Options.
2.3 Agreement of Holding. On and subject to the terms and conditions of
this Agreement, Holding agrees to (i) issue the Class A Common Stock to the
Majority Shareholders in exchange for contribution of the Majority Shares to
Holding and (ii) issue the Class B Common Stock to Mity-Lite.
2.4 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of LeBoeuf, Lamb,
Greene & MacRae, L.L.P. in Salt Lake City, Utah, commencing at 9:00 a.m. local
time on the second business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Parties may mutually determine (the "Closing Date").
2.5 Deliveries at the Closing.
2.5.1 At the Closing, the Majority Shareholders will deliver (i) to
Mity- Lite, the various certificates, instruments, and documents referred to in
Section 7.1 below, (ii) to Holding, stock certificates representing all of the
Majority Shares, endorsed in blank or accompanied by duly executed assignment
documents and (iii) to the Escrow Agent, the certificates representing all of
the Class A Common Stock accompanied by a blank stock power separate from
certificate.
2.5.2 At the Closing, Mity-Lite will (i) deliver (x) to each of the DO
Group Parties the various certificates, instruments and documents referred to in
Section 7.2 below and (y) Options to the DO Group Officers and (ii) fund the
Loan by wire transfer or other immediately available funds.
2.5.3 At the Closing, Holding will deliver (i) to Mity-Lite (x) the
various certificates, instruments and documents referred to in Sections 7.1 and
7.2 below and (y) certificates representing the Class B Common Stock and (ii) to
the Majority Shareholders, certificates representing the Class A Common Stock.
2.5.4 At the Closing, the other DO Group Parties will deliver (i) to
Mity- Lite (x) the various certificates, instruments and documents referred to
in Section 7.1 below and (y) the Loan Documents and (ii) to the Escrow Agent,
certificates representing all of the DO Group Common Stock owned by ChiCol and
Sican II accompanied by a blank stock power separate from certificate.
2.5.5 At the Closing, the DO Group Officers will deliver the various
certificates, instruments and documents referred to in Section 7.1 below.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
3.1 Representations and Warranties Regarding the Majority Shareholders.
Each of the Majority Shareholders jointly and severally represents and warrants
to Mity-Lite that the statements contained in this Section 3.1 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3.1), except
as set forth in Section 3.1 of the Disclosure Schedule attached hereto (the
"Disclosure Schedule"). For all purposes of this Agreement, nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein, however, unless the Disclosure Schedule
identifies the exception with particularity and describes the relevant facts.
The Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in Sections 3 and 4.
3.1.1 Authorization of Transaction. Each of the Majority Shareholders
has all necessary legal capacity, power and authority to execute and deliver
this Agreement and to perform his, her or its obligations hereunder and
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Majority Shareholders, the performance by the Majority
Shareholders of their obligations hereunder and the consummation by the Majority
Shareholders of the transactions contemplated hereby have been duly authorized
by all requisite action by the Majority Shareholders, and, if applicable, their
executors, trustees, beneficiaries or legal representatives. This Agreement has
been duly executed and delivered by the Majority Shareholders, and this
Agreement constitutes a legal, valid and binding obligation of the Majority
Shareholders, enforceable in accordance with its terms. None of the Majority
Shareholders is required to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any third party, government,
governmental agency or court in order to consummate the transactions
contemplated by this Agreement.
3.1.2 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate or conflict with any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any Majority Shareholder is
subject or any provision of the charter, bylaws, will or trust of any Majority
Shareholder or (b) conflict with, result in a breach of, constitute a default
(or event which with the giving of notice or the lapse of time, or both, would
become a default) under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, require any notice or
consent, or result in the creation of any Security Interest on any of the
capital stock, assets or properties of any Majority Shareholder under any
agreement, contract, lease, license, franchise, permit, indenture, mortgage,
instrument, or other arrangement to which any Majority Shareholder is a party or
by which it is bound or to which any of its assets is subject or affected.
3.1.3 Broker's Fees. No Majority Shareholder has any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which Holding,
the DO Group Parties or Mity- Lite could become liable or obligated.
3.1.4 Investment. Each Majority Shareholder (a) understands that the
Class A Common Stock and the Mity-Lite Common Stock have not been, and will not
be, registered under the Securities Act, or under any state securities laws, and
is being, and will be, offered and sold in reliance upon federal and state
exemptions for transactions not involving any public offering, (b) is acquiring
the Class A Common Stock (and upon conversion, the Mity-Lite Common Stock)
solely for its own account for investment purposes, and not with a view to the
distribution thereof, (c) is an Accredited Investor, (d) has received certain
information concerning Holding and Mity-Lite and has had the opportunity to
obtain additional information as desired in order to evaluate the merits and the
risks inherent in holding the Class A Common Stock and the Mity-Lite Common
Stock, and (e) is able to bear the economic risk and lack of liquidity inherent
in holding Class A Common Stock and the Mity-Lite Common Stock.
3.1.5 Company Shares. Each Majority Shareholder holds of record and
owns beneficially the number of Majority Shares set forth next to his, her or
its name in Sections 4.2 and 4.6 of the Disclosure Schedule, free and clear of
any restrictions on transfer (other than any restrictions under the Securities
Act and state securities laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, puts, calls and
demands. The Majority Shares constitute all of the issued and outstanding shares
of capital stock of ChiCol and all of the issued and outstanding shares of
capital stock of Sican II (other than the Sican II Common Stock held of record
and owned beneficially by ChiCol). No Majority Shareholder is a party to any
option, warrant, purchase right, calls, puts or other contract or commitment
that could require such Majority Shareholder to sell, buy, transfer, or
otherwise dispose of any capital stock of any of the DO Group Parties (other
than this Agreement, the Shareholder Agreements and the Put Agreement). No
Majority Shareholder is a party to any voting trust, proxy, or other agreement
or understanding with respect to the voting of any capital stock of the DO Group
Parties (other than the Shareholder Agreements).
3.2 Representations and Warranties Regarding the DO Group Parties. Each
of the DO Group Officers and the DO Group Parties jointly and severally
represents and warrants to Mity-Lite that the statements contained in this
Section 3.2 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3.2), except as set forth in Section 3.2 of the
Disclosure Schedule.
3.2.1 Organization of the DO Group Parties. Each of the DO Group
Parties is a corporation, duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation.
3.2.2 Authorization of Transaction. Each of the DO Group Parties has
all necessary power and authority (including full corporate power and authority)
to execute and deliver this Agreement and to perform its obligations hereunder
and consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by the DO Group Parties, the performance by the DO Group
Parties of their obligations hereunder and the consummation by the DO Group
Parties of the transactions contemplated hereby have been duly authorized by all
requisite action by the DO Group Parties, their directors and shareholders. This
Agreement has been duly executed and delivered by the DO Group Parties, and this
Agreement constitutes a legal, valid and binding obligation of the DO Group
Parties, enforceable in accordance with its terms. None of the DO Group Parties
is required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement other than
filings required by Regulation D promulgated under the Securities Act.
3.2.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate or conflict with any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any DO Group Party is subject
or any provision of the charter or bylaws of any DO Group Party or (b) conflict
with, result in a breach of, constitute a default (or event which with the
giving of notice or the lapse of time, or both, would become a default) under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, require any notice or consent, or result in the
creation of any Security Interest on any of the capital stock, assets or
properties of any DO Group Party under any agreement, contract, lease, license,
franchise, permit, indenture, mortgage, instrument, or other arrangement to
which any DO Group Party is a party or by which it is bound or to which any of
its assets is subject or affected.
3.2.4 Broker's Fees. No DO Group Party has any Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which any of the DO Group
Parties or Mity-Lite could become liable or obligated.
3.2.5 DO Group Shares. Each of ChiCol and Sican II holds of record and
owns beneficially the number of shares of DO Group Common Stock set forth next
to its name in Section 4.8 of the Disclosure Schedule, free and clear of any
restrictions on transfer (other than any restrictions under the Securities Act
and state securities laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, puts, calls and
demands. No DO Group Party is a party to any option, warrant, purchase right,
calls, puts or other contract or commitment that could require such DO Group
Party to sell, buy, transfer, or otherwise dispose of any capital stock of any
DO Group Party (other than this Agreement, the Shareholder Agreements and the
Put Agreement). No DO Group Party is a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any capital stock
of any DO Group Party (other than the Shareholder Agreements).
3.3 Representations and Warranties Regarding the DO Group Officers.
Each of the DO Group Officers jointly and severally represents and warrants to
Mity-Lite that the statements contained in this Section 3.3 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3.3), except
as set forth in Section 3.3 of the Disclosure Schedule.
3.3.1 Authorization of Transaction. Each of the DO Group Officers has
all necessary legal capacity, power and authority to execute and deliver this
Agreement and to perform his obligations hereunder and consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the DO Group Officers, the performance by the DO Group Officers of their
obligations hereunder and the consummation by the DO Group Officers of the
transactions contemplated hereby have been duly authorized by all requisite
action by the DO Group Officers. This Agreement has been duly executed and
delivered by the DO Group Officers, and this Agreement constitutes a legal,
valid and binding obligation of the DO Group Officers, enforceable in accordance
with its terms. None of the DO Group Officers is required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
third party, government, governmental agency or court in order to consummate the
transactions contemplated by this Agreement.
3.3.2 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate or conflict with any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any DO Group Officers is
subject or (b) conflict with, result in a breach of, constitute a default (or
event which with the giving of notice or the lapse of time, or both, would
become a default) under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, require any notice or
consent, or result in the creation of any Security Interest on any of the
capital stock, assets or properties of any DO Group Officers under any
agreement, contract, lease, license, franchise, permit, indenture, mortgage,
instrument, or other arrangement to which any DO Group Officers is a party or by
which it is bound or to which any of its assets is subject or affected.
3.3.3 Broker's Fees. No DO Group Officer has any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which Holding,
the DO Group Parties or Mity-Lite could become liable or obligated.
3.4 Representations and Warranties of Mity-Lite. Mity-Lite represents
and warrants to the other Parties hereto that the statements contained in this
Section 3.4 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3.4), except as set forth in Section 3.4 of the
Disclosure Schedule.
3.4.1 Organization of Mity-Lite. Mity-Lite is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Utah.
3.4.2 Authorization of Transaction. Mity-Lite has all necessary power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder and consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Mity-Lite, the performance by Mity-Lite of its obligations
hereunder and the consummation by Mity-Lite of the transactions contemplated
hereby have been duly authorized by all requisite action by Mity-Lite and its
directors. This Agreement has been duly executed and delivered by Mity-Lite, and
this Agreement constitutes a legal, valid and binding obligation of Mity-Lite,
enforceable in accordance with its terms. Mity-Lite is not required to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement other than filings required by
Regulation D promulgated under the Securities Act.
3.4.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate or conflict with any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Mity-Lite is subject or any
provision of the charter or bylaws of Mity-Lite or (b) conflict with, result in
a breach of, constitute a default (or event which with the giving of notice or
the lapse of time, or both, would become a default) under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, require any notice or consent, or result in the creation of any
Security Interest on any of the capital stock, assets or properties of Mity-Lite
under any agreement, contract, lease, license, franchise, permit, indenture,
mortgage, instrument, or other arrangement to which Mity-Lite is a party or by
which it is bound or to which any of its assets are subject or affected.
3.4.4 Broker's Fees. Mity-Lite has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which any DO Group Party could
become liable or obligated.
3.4.5 Investment. Mity-Lite (a) understands that the Class B Common
Stock has not been, and will not be, registered under the Securities Act, or
under any state securities laws, and is being, and will be, offered and sold in
reliance upon federal and state exemptions for transactions not involving any
public offering, (b) is acquiring the Class B Common Stock solely for its own
account for investment purposes, and not with a view to the distribution
thereof, (c) is an Accredited Investor, (d) has received certain information
concerning Holding and has had the opportunity to obtain additional information
as desired in order to evaluate the merits and the risks inherent in holding the
Class B Common Stock, and (e) is able to bear the economic risk and lack of
liquidity inherent in holding Class B Common Stock.
3.4.6 Disclosure. Prior to the date hereof Mity-Lite has timely filed
all reports and other documents required to be filed by it under the Securities
Exchange Act. After the date hereof, Mity-Lite will timely file all reports and
other documents required to be filed by it under the Securities Exchange Act.
Such reports and other documents, as of their respective dates, did not and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.4.7 Capitalization. As of the date of this Agreement, the Mity-Lite
authorized capital stock consists of (i) 10,000,000 shares of Mity-Lite Common
Stock, of which 3,161,359 shares are issued and outstanding and up to 592,050
shares are reserved for issuance pursuant to various stock option plans of
Mity-Lite and (ii) 3,000,000 shares of preferred stock, $.10 par value, of which
no shares are issued and outstanding. There are no statutory or contractual
preemptive rights or first rights of refusal with respect to the issuance of the
Mity-Lite Common Stock upon conversion of the Class A Common Stock.
3.4.8 Validity of Stock. The Mity-Lite Common Stock issuable upon
conversion of the Class A Common Stock will be duly authorized, validly issued,
nonassessable and free and clear of all liens, charges, claims and encumbrances.
4. REPRESENTATIONS AND WARRANTIES REGARDING THE DO GROUP PARTIES. The
DO Group Officers and the DO Group Parties (the "Representing Parties") jointly
and severally represent and warrant to Mity-Lite that the statements contained
in this Section 4 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 4), except as set forth in Section 4 of the Disclosure
Schedule.
4.1 Organization, Qualification, and Corporate Power. Each of the DO
Group Parties is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation. Each of the DO
Group Parties is duly licensed and qualified to conduct business and is in good
standing under the laws of each jurisdiction in which the operation of its
business or the ownership or leasing of its properties makes such licensing or
qualification necessary and all such jurisdictions are listed on Section 4.1 of
the Disclosure Schedule. Each of the DO Group Parties has all necessary
corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which it is engaged and in which it
presently proposes to engage and to own and use the properties owned and used by
it. All of the foregoing licenses, permits, and authorizations are in full force
and effect and none of the Representing Parties has received any notice of any
event, inquiry, investigation or proceeding that could result in the suspension,
revocation or limitation of any such licenses, permits or authorizations and to
the best Knowledge of the Representing Parties, there is no sustainable Basis
for any such suspension, revocation or limitation. Section 4.1 of the Disclosure
Schedule lists the directors and officers of each of the DO Group Parties. The
DO Group Parties have delivered to Mity-Lite correct and complete copies of the
charter, bylaws, minute books (containing the records of all meetings of the
shareholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of each of
the DO Group Parties (as amended to date). The minute books, the stock
certificate books, and the stock record books of each of the DO Group Parties
are correct and complete. None of the DO Group Parties is in default under or in
violation of any provision of its charter or bylaws. All corporate actions taken
by the DO Group Parties have been duly authorized or ratified.
4.2 Capitalization of ChiCol. The entire authorized capital stock of
ChiCol consists of 750 shares of ChiCol Common Stock of which 300 Shares are
issued and outstanding and no shares are held in treasury. All 300 of the issued
and outstanding shares of ChiCol Common Stock have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record by the
respective Parties set forth in Section 4.2 of the Disclosure Schedule. There
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, calls, puts or other
contracts or commitments that could require ChiCol to acquire or to issue, sell,
dispose of or otherwise cause to become outstanding, any of its capital stock,
or any securities or obligations convertible into or exchangeable for its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to ChiCol.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of the capital stock of ChiCol.
4.3 Assets of ChiCol. Prior to and following the Closing, ChiCol will
have no assets other than DO Group Common Stock. ChiCol has not conducted prior
to the Closing, and will not conduct following the Closing, any business other
than holding the DO Group Common Stock. ChiCol does not control directly or
indirectly or have any direct or indirect equity ownership in any Person other
than DO Group and Sican II.
4.4 Capitalization of Sican Corp. The entire authorized capital stock
of Sican Corp. consists of 3,000 shares of common stock, no par value ("Sican
Corp. Common Stock") of which 1,850 shares are issued and outstanding and no
shares are held in treasury. All 1,850 of the issued and outstanding shares of
Sican Corp. Common Stock have been duly authorized, are validly issued, fully
paid, and nonassessable, and are held of record by DO Group. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, calls, puts or other contracts or
commitments that could require Sican Corp. to acquire or to issue, sell, dispose
of or otherwise cause to become outstanding, any of its capital stock, or any
securities or obligations convertible into or exchangeable for its capital
stock. There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to Sican Corp. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of Sican Corp.
4.5 Assets of Sican Corp. The assets of Sican Corp. are reflected in
the financial statements of Sican Corp. included in Exhibit I. Sican Corp. does
not control directly or indirectly or have any direct or indirect equity
ownership in any Person other than as noted in the Disclosure Schedule. Prospect
Street Company, Inc. and Kivett Drive Company, Inc. have no assets, liabilities
(fixed or contingent) and conduct no business.
4.6 Capitalization of Sican II. The entire authorized capital stock of
Sican II consists of 3,000 shares of Sican II Common Stock, of which 1,000
shares are issued and outstanding and no Shares are held in treasury. All of the
issued and outstanding shares are held in sued and outstanding shares of Sican
II Common Stock have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record by the respective Parties set forth in
Section 4.6 of the Disclosure Schedule. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, calls, puts or other contracts or commitments that could
require Sican II to acquire or to issue, sell, dispose of or otherwise cause to
become outstanding, any of its capital stock, or any securities or obligations
convertible into or exchangeable for its capital stock. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to Sican II. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of the capital
stock of Sican II.
4.7 Assets of Sican II. Prior to and following the Closing, Sican II
will have no assets other than the DO Group Common Stock. Sican II has not
conducted prior to the Closing, and will not conduct following the Closing, any
business other than holding the DO Group Common Stock. Sican II does not control
directly or indirectly or have any direct or indirect equity ownership in any
Person other than DO Group.
4.8 Capitalization of DO Group. The entire authorized capital stock of
DO Group consists of 3,000 shares of DO Group Common Stock, of which 2,525.242
shares are issued and outstanding and no shares are held in treasury, and 2,000
authorized shares of Preferred Stock, of which 0 shares are issued and
outstanding and no shares are held in treasury. All of the issued and
outstanding shares of DO Group Common Stock have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record by the
Person and in the amounts set forth in Section 4.8 of the Disclosure Schedule.
There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, calls, puts or other
contracts or commitments that could require DO Group to acquire or to issue,
sell, dispose of or otherwise cause to become outstanding, any of its capital
stock, or any securities or obligations convertible into or exchangeable for its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to DO Group.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of the capital stock of DO Group. Following the Minority
Share Purchase, the DO Group Common Stock held of record and owned beneficially
by ChiCol and Sican II will constitute all of the DO Group Common Stock not held
of record and owned beneficially by Mity-Lite.
4.9 Subsidiaries. Section 4.9 of the Disclosure Schedule sets forth for
each Subsidiary of DO Group (i) its name and jurisdiction of incorporation, (ii)
the number of shares of authorized capital stock of each class of its capital
stock, (iii) the number of issued and outstanding shares of each class of its
capital stock and (iv) the number of shares of its capital stock held in
treasury. All of the issued and outstanding shares of capital stock of each
Subsidiary of DO Group have been duly authorized and are validly issued, fully
paid, and nonassessable. DO Group holds of record and owns beneficially all of
the outstanding shares of each Subsidiary of DO Group, free and clear of any
restrictions on transfer (other than restrictions under the Securities Act and
state securities laws), Taxes, Security Interests, options, warrants, purchase
rights, calls, puts, contracts, commitments, equities, claims, and demands.
There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, calls, puts or other
contracts or commitments that could require any of DO Group and its Subsidiaries
to acquire, or to issue, sell, transfer, dispose of or otherwise cause to become
outstanding any of its own capital stock. There are no outstanding stock
appreciation, phantom stock, profit participation, or similar rights with
respect to any Subsidiary of DO Group. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of any capital
stock of any Subsidiary of DO Group. None of DO Group and its Subsidiaries
controls directly or indirectly or has any direct or indirect equity ownership
in any Person which is not a Subsidiary of DO Group.
4.10 Financial Statements. Attached hereto as Exhibit I are the
following financial statements (collectively the "Financial Statements"): (a)(i)
audited consolidated and unaudited consolidating balance sheets and statements
of income, changes in shareholders' equity, and cash flow as of and for the
fiscal years ended December 31, 1993 and December 31, 1994, (ii) unaudited
consolidated and consolidating balance sheets and statements of income, changes
in shareholders' equity, and cash flow as of and for the fiscal years ended
December 31, 1995 and December 31, 1996 (the "Most Recent Fiscal Year End"); and
(iii) unaudited consolidated and consolidating balance sheets and statements of
income, changes in shareholders' equity, and cash flow (the "Most Recent
Financial Statements") as of and for the one (1) month ended January 31, 1997
(the "Most Recent Fiscal Month End") for DO Group and its Subsidiaries, (b)
financial statements for ChiCol included as part of their federal income tax
returns for the years 1993, 1994 and 1995 and (c) financial statements for Sican
II included as part of its federal income tax returns for the years 1993, 1994
and 1995. The Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of the DO Group
Parties covered thereby as of such dates and the results of operations of the DO
Group Parties covered thereby for such periods, are correct and complete, and
are consistent with the books and records of the DO Group Parties covered
thereby (which books and records are correct and complete); provided, however,
that the Most Recent Financial Statements are subject to normal year-end
adjustments (which will not be material individually or in the aggregate) and
lack footnotes and other presentation.
4.11 Title to Assets. Except as set forth in Section 4.11 of the
Disclosure Schedule, the DO Group Parties have good and marketable title to, or
a valid leasehold interest in, the properties and assets used by them, located
on their premises, or shown on the Most Recent Balance Sheet or acquired after
the date thereof, free and clear of all Security Interests, except for
properties and assets disposed of in the Ordinary Course of Business since the
date of the Most Recent Balance Sheet.
4.12 Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
assets, Liabilities, business, financial condition, operations, results of
operations, or future prospects of any of the DO Group Parties. Without limiting
the generality of the foregoing, since that date, except as set forth in Section
4.12 of the Disclosure Schedule:
4.12.1 None of the DO Group Parties has sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for fair
consideration in the Ordinary Course of Business;
4.12.2 None of the DO Group Parties has entered into any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) either involving more than $25,000 or outside the Ordinary Course
of Business;
4.12.3 No party (including any of the DO Group Parties) has
accelerated, terminated, modified, or canceled any agreement, contract, lease,
or license (or series of related agreements, contracts, leases, and licenses)
involving more than $25,000 to which any of the DO Group Parties is a party or
by which any of them is bound;
4.12.4 None of the DO Group Parties has imposed or permitted to be
imposed any Security Interest upon any of its assets, tangible or intangible, or
discharged or otherwise obtained the release of any Security Interest or
otherwise discharged any Liability, other than current liabilities reflected on
the Financial Statements and current liabilities incurred in the Ordinary Course
of Business since the Most Recent Financial Statements;
4.12.5 None of the DO Group Parties has made any capital expenditure
(or series of related capital expenditures) either involving more than $25,000
or outside the Ordinary Course of Business;
4.12.6 None of the DO Group Parties has made any capital investment in,
any loan to, or any acquisition of the securities or assets of, any other Person
(or series of related capital investments, loans, and acquisitions);
4.12.7 None of the DO Group Parties has issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation, other than in the case of DO
Group and its Subsidiaries those not involving more than $25,000 singly or
$100,000 in the aggregate;
4.12.8 Except as set forth on the applicable DO Group Parties' aging
reports, none of the DO Group Parties has materially delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary Course of
Business;
4.12.9 None of the DO Group Parties has canceled, compromised, waived,
or released any right or claim (or series of related rights and claims) either
involving more than $25,000 or outside the Ordinary Course of Business;
4.12.10 None of the DO Group Parties has granted any license or
sublicense of any rights under or with respect to any Intellectual Property,
disclosed any confidential information with respect to any Intellectual Property
or permitted to lapse or abandoned any Intellectual Property;
4.12.11 Except as provided herein, there has been no change made or
authorized in the charter or bylaws of any of the DO Group Parties;
4.12.12 None of the DO Group Parties has issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
4.12.13 None of the DO Group Parties has declared, set aside, or paid
any dividend or made any distribution with respect to its capital stock (whether
in cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
4.12.14 None of the DO Group Parties has experienced any damage,
destruction, or loss (whether or not covered by insurance) to its property;
4.12.15 None of the DO Group Parties has made any loan to, or entered
into any other transaction with, any of its directors, officers, and employees;
4.12.16 None of the DO Group Parties has entered into any written
employment contract or modified the terms of any existing such contract or
agreement;
4.12.17 None of the DO Group Parties has granted any material increase
in the base compensation of any of its directors, officers, and employees;
4.12.18 None of the DO Group Parties has adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, pension, retirement, insurance
(including hospitalization or life), severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and employees (or
taken any such action with respect to any other Employee Benefit Plan);
4.12.19 None of the DO Group Parties has made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
4.12.20 There has not been any other occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of Business
involving any of the DO Group Parties; and
4.12.21 None of the DO Group Parties has committed to any of the
foregoing.
4.13 Undisclosed Liabilities. To the best of the Representing Parties'
Knowledge, none of the DO Group Parties has any Liability (and there is no Basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against any of them giving rise to any
Liability), except for (a) Liabilities set forth on the face of the Most Recent
Balance Sheet, including the notes thereto and (b) Liabilities which have arisen
after the Most Recent Fiscal Month End in the Ordinary Course of Business (none
of which results from, arises out of, relates to, is in the nature of, or was
caused by any material breach of contract, breach of warranty, tort,
infringement, or violation of law).
4.14 Legal Compliance. Each of DO Group, its Subsidiaries, and their
respective predecessors and Affiliates has complied in all material respects
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply.
4.15 Tax Matters. The representations and warranties set forth in this
Section 4.15 are made solely to the best of Representing Parties' Knowledge.
4.15.1 Each of the DO Group Parties has filed all Tax Returns that it
was required to file. All such Tax Returns were correct and complete in all
respects. All Taxes owed by any of the DO Group Parties have been paid. None of
the DO Group Parties currently is the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by an authority
in a jurisdiction where any of the DO Group Parties does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of any of the DO Group Parties that
arose in connection with any failure (or alleged failure) to pay any Tax.
4.15.2 Each of the DO Group Parties has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, shareholder, or other third
party.
4.15.3 No DO Group Party or director or officer (or employee
responsible for Tax matters) of any of the DO Group Parties expects that any
authority will assess any additional Taxes for any period for which Tax Returns
have been filed. There is no dispute or claim concerning any Tax Liability of
any of the DO Group Parties either (a) claimed or raised by any authority in
writing or (b) as to which any of the DO Group Parties and the directors and
officers (and employees responsible for Tax matters) of the DO Group Parties has
Knowledge based upon personal contact with any agent of such authority. The DO
Group Parties have delivered to Mity-Lite correct and complete copies of all
federal income Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by any of the DO Group Parties since December 31,
1993.
4.15.4 None of the DO Group Parties has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
4.15.5 None of the DO Group Parties has filed a consent under Code
Section 341(f) concerning collapsible corporations. None of the DO Group Parties
has made any payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Section 280G. None of the DO
Group Parties has been a United States real property holding corporation within
the meaning of Code Section 897(c)(2) during the applicable period specified in
Code Section 897(c)(1)(A)(ii). Each of the DO Group Parties has disclosed on its
federal income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Code
Section 6662. None of the DO Group Parties is or has been a party to any Tax
allocation or sharing agreement. None of the DO Group Parties (a) has been a
member of an Affiliated Group filing a consolidated federal income Tax Return
(other than a group the common parent of which was DO Group) or (b) has any
Liability for the Taxes of any other Person.
4.15.6 The reserve for Tax Liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the Most Recent Balance Sheet (including any notes thereto)
reasonably reflects the unpaid and deferred tax liabilities of the DO Group
Parties.
4.15.7 No "ownership shift" within the meaning of the regulations
promulgated under Code Section 382 has occurred with respect to the DO Group
Parties within the three years prior to the Closing Date.
4.16 Real Property.
4.16.1 Section 4.16 of the Disclosure Schedule lists and describes
briefly all real property that any of the DO Group Parties owns. With respect to
each such parcel of owned real property, except as set forth in Section 4.16 of
the Disclosure Schedule:
4.16.2 The identified owner has good and marketable title to the parcel
of real property, free and clear of any Security Interest, easement, covenant,
or other restriction, except for installments of special assessments not yet
delinquent and recorded easements, covenants, and other restrictions which do
not impair the current use, occupancy, or value, or the marketability of title,
of the property subject thereto;
4.16.3 To the best of the Representing Parties' Knowledge, there are no
pending or threatened condemnation proceedings, lawsuits, or administrative
actions relating to the marketability of the property or other matters affecting
adversely the current use, occupancy, or value thereof;
4.16.4 To the best of the Representing Parties' Knowledge, the legal
description for the parcel contained in the deed thereof describes such parcel
fully and adequately, the buildings and improvements are located within the
boundary lines of the described parcels of land, are not in violation of
applicable setback requirements, zoning laws, and ordinances (and none of the
properties or buildings or improvements thereon are subject to "permitted
non-conforming use" or "permitted non-conforming structure" classifications),
and do not encroach on any easement or right of way which may burden the land,
and the land does not serve any adjoining property for any purpose inconsistent
with the use of the land, and the property is not located within any flood plain
or subject to any similar type restriction for which any permits or licenses
necessary to the use thereof have not been obtained;
4.16.5 All facilities have received all approvals of governmental
authorities (including licenses and permits) required in connection with the
ownership or operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations in all material
respects;
4.16.6 There are no leases, subleases, licenses, concessions, or other
agreements, written or oral, granting to any party or parties the right of use
or occupancy of any portion of the parcel of real property;
4.16.7 There are no outstanding options or rights of first refusal to
purchase the parcel of real property, or any portion thereof or interest
therein;
4.16.8 There are no parties (other than the DO Group Parties) in
possession of the parcel of real property, other than tenants under any leases
disclosed in Section 4.16 of the Disclosure Schedule who are in possession of
space to which they are entitled;
4.16.9 All facilities located on the parcel of real property are
supplied with utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary sewer, and
storm sewer, all of which services are adequate in accordance with all
applicable laws, ordinances, rules, and regulations and are provided via public
roads or via permanent, irrevocable, appurtenant easements benefitting the
parcel of real property; and
4.16.10 Each parcel of real property abuts on and has direct vehicular
access to a public road, or has access to a public road via a permanent,
irrevocable, appurtenant easement benefitting the parcel of real property, and
access to the property is provided by paved public right-of-way with adequate
curb cuts available.
4.16.11 Section 4.16 of the Disclosure Schedule lists and describes
briefly all real property leased or subleased to any of the DO Group Parties.
The DO Group Parties have delivered to Mity-Lite correct and complete copies of
the leases and subleases listed in Section 4.16 of the Disclosure Schedule (as
amended to date). With respect to each lease and sublease listed in Section 4.16
of the Disclosure Schedule:
4.16.11.1 The lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
4.16.11.2 The lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby;
4.16.11.3 No party to the lease or sublease is in breach or default,
and no event has occurred which, with notice or lapse of time, would constitute
a breach or default or permit termination, modification, or acceleration
thereunder;
4.16.11.4 No party to the lease or sublease has repudiated any
provision thereof;
4.16.11.5 There are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
4.16.11.6 To the best of the Representing Parties' Knowledge, with
respect to each sublease, the representations and warranties set forth in
subsections 4.16.11.1 through 4.16.11.5 above are true and correct with respect
to the underlying lease;
4.16.11.7 None of the DO Group Parties has assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
4.16.11.8 All facilities leased or subleased thereunder have received
all approvals of governmental authorities (including licenses and permits)
required in connection with the operation thereof and have been operated and
maintained in accordance with applicable laws, rules, and regulations;
4.16.11.9 All facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of said
facilities; and
4.17 Intellectual Property.
4.17.1 Either DO Group or its Subsidiaries owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of the businesses of DO Group and its
Subsidiaries as presently conducted and as presently proposed to be conducted.
Each item of Intellectual Property owned or used by any of DO Group and its
Subsidiaries immediately prior to the Closing hereunder will be owned or
available for use by DO Group or the Subsidiary on identical terms and
conditions immediately subsequent to the Closing hereunder. Each of DO Group and
its Subsidiaries has taken all necessary action to maintain and protect each
item of Intellectual Property that it owns or uses.
4.17.2 To the best of the Representing Parties' Knowledge, none of the
DO Group Parties has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties, and none of the DO Group Parties and the directors and officers (and
employees with responsibility for Intellectual Property matters) of the DO Group
Parties has ever received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or violation
(including any claim that any of the DO Group Parties must license or refrain
from using any Intellectual Property rights of any third party). To the best of
the Representing Parties' Knowledge, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of any of DO Group and its Subsidiaries.
4.17.3 Section 4.17 of the Disclosure Schedule identifies each patent
or registration which has been issued to any of the DO Group Parties with
respect to any of its Intellectual Property, identifies each pending patent
application or application for registration which any of the DO Group Parties
has made with respect to any of its Intellectual Property, and identifies each
license, agreement, or other permission which any of the DO Group Parties has
granted to any third party with respect to any of its Intellectual Property
(together with any exceptions). The DO Group Parties have delivered to Mity-Lite
correct and complete copies of all such patents, registrations, applications,
licenses, agreements, and permissions (as amended to date) and have made
available to Mity-Lite correct and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of each such
item. Section 4.17 of the Disclosure Schedule also identifies each trade name or
unregistered trademark used by any of the DO Group Parties in connection with
any of its businesses. To the best of the Representing Parties' Knowledge, with
respect to each such item of Intellectual Property required to be identified in
Section 4.17 of the Disclosure Schedule:
4.17.3.1 The DO Group Parties possess all right, title, and interest in
and to the item, free and clear of any Security Interest, license, or other
restriction;
4.17.3.2 The item is not subject to any outstanding injunction,
judgment, Security Interest, order, decree, ruling, or charge;
4.17.3.3 No action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened which challenges the
legality, validity, enforceability, use, or ownership of the item; and
4.17.3.4 None of the DO Group Parties has ever agreed to indemnify any
Person for or against any interference, infringement, misappropriation, or other
conflict with respect to the item.
4.17.4 Section 4.17 of the Disclosure Schedule identifies each item of
Intellectual Property that any third party owns and that any of the DO Group
Parties uses pursuant to license, sublicense, agreement, or permission. The DO
Group Parties have delivered to Mity- Lite correct and complete copies of all
such licenses, sublicenses, agreements, and permissions (as amended to date).
With respect to each such item of Intellectual Property required to be
identified in Section 4.17 of the Disclosure Schedule:
4.17.4.1 The license, sublicense, agreement, or permission covering the
item is legal, valid, binding, enforceable, and in full force and effect;
4.17.4.2 The license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby;
4.17.4.3 No party to the license, sublicense, agreement, or permission
is in breach or default, and no event has occurred which with notice or lapse of
time would constitute a breach or default or permit termination, modification,
or acceleration thereunder;
4.17.4.4 No party to the license, sublicense, agreement, or permission
has repudiated any provision thereof;
4.17.4.5 To the best of the Representing Parties' Knowledge, with
respect to each sublicense, the representations and warranties set forth in
Sections 4.17.4.1 through 4.17.4.4 above are true and correct with respect to
the underlying license;
4.17.4.6 Underlying item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge;
4.17.4.7 No action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened which challenges the
legality, validity, or enforceability of the underlying item of Intellectual
Property; and
4.17.4.8 None of the DO Group Parties has granted any sublicense or
similar right with respect to the license, sublicense, agreement, or permission.
4.17.5 None of the DO Group Parties will interfere with, infringe upon,
misappropriate, or otherwise come into conflict with, any Intellectual Property
rights of third parties as a result of the continued operation of its businesses
as presently conducted and as presently proposed to be conducted.
4.17.6 None of the DO Group Parties and the directors and officers (and
employees with responsibility for Intellectual Property matters) of the DO Group
Parties has any Knowledge of any new products, inventions, procedures, or
methods of manufacturing or processing that any competitors or other third
parties have developed which reasonably could be expected to supersede or make
obsolete any product or process of any of DO Group and its Subsidiaries.
4.18 Tangible Assets. The DO Group Parties own or lease all buildings,
machinery, equipment, and other tangible assets necessary for the conduct of
their businesses as presently conducted and as presently proposed to be
conducted. Except as set forth in Section 4.18 of the Disclosure Schedule, each
such tangible asset is free from any Security Interest, has been maintained in
accordance with normal industry practice (subject to normal wear and tear), and
is suitable for the purposes for which it presently is used and presently is
proposed to be used.
4.19 Inventory. The inventory of DO Group and its Subsidiaries consists
of raw materials and supplies, manufactured and purchased parts, goods in
process, and finished goods, all of which is merchantable and fit for the
purpose for which it was procured or manufactured, and none of which is
slow-moving, obsolete, damaged, or defective, subject only to the reserve for
inventory write down set forth in the Most Recent Balance Sheet (including any
notes thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of DO Group and its Subsidiaries.
4.20 Contracts. Section 4.20 of the Disclosure Schedule lists all
material contracts and other agreements to which any of the DO Group Parties is
a party including the following:
4.20.1 Any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in excess
of $25,000 per annum;
4.20.2 Any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance of which
will extend over a period of more than one year, result in a loss to any of the
DO Group Parties, or involve consideration in excess of $75,000;
4.20.3 Any agreement concerning a partnership or joint venture;
4.20.4 Any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed (or may create, incur, assume or
guarantee) any indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $25,000 or under which it has imposed a Security
Interest on any of its assets, tangible or intangible;
4.20.5 Any agreement concerning confidentiality or noncompetition;
4.20.6 Any agreement with any of the DO Group Parties and their
Affiliates.
4.20.7 Any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of its current or former directors, officers, and employees;
4.20.8 Any collective bargaining agreement;
4.20.9 Any written agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of $20,000 or providing severance benefits;
4.20.10 Any agreement under which it has advanced or loaned any amount
to any of its directors, officers, and employees;
4.20.11 Any agreement under which the consequences of a default or
termination could have a material adverse effect on the business, financial
condition, operations, results of operations, or future prospects of any of the
DO Group Parties; or
4.20.12 Any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $25,000 or not entered
into in the Ordinary Course of Business.
The DO Group Parties have delivered to Mity-Lite a correct and complete copy of
each written agreement listed in Section 4.20 of the Disclosure Schedule (as
amended to date) and a written summary setting forth the terms and conditions of
each material oral agreement referred to in Section 4.20 of the Disclosure
Schedule. With respect to each such agreement: (a) the agreement is legal,
valid, binding, enforceable, and in full force and effect; (b) the agreement
will continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby; (c) no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (d) no party has repudiated any provision of the agreement. No
unfilled customer order or commitment obligating DO Group and its Subsidiaries
is in excess of normal requirements, nor are prices provided therein in excess
of current market prices for the products or services to be provided thereunder.
No customer of the DO Group Parties has indicated within the past year that it
will stop, or decrease the rate of, buying materials, products, or services from
them.
4.21 Notes and Accounts Receivable. To the best of the Representing
Parties' Knowledge, all notes and accounts receivable of the DO Group Parties
are reflected properly on their books and records, are valid receivables subject
to no setoffs or counterclaims, are current and collectible, and will be
collected in accordance with their terms at their recorded amounts, subject only
to the reserve for bad debts set forth on the face of the Most Recent Balance
Sheet (including any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the DO Group
Parties.
4.22 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of any of the DO Group Parties.
4.23 Insurance. The DO Group Parties have previously made available to
Mity- Lite copies of all policies of, and binders evidencing, life, fire,
workmen's compensation, product liability, general liability and other forms of
insurance owned or maintained by the DO Group Parties. Such policies are in full
force and effect and none of the DO Group Parties is in default under any of
such policies to such an extent that any such default, would or could have a
material adverse effect on the financial condition of any of the DO Group
Parties. Such policies provide insurance coverage (i) adequate to comply with
all requirements of law and (ii) which the DO Group Parties have deemed adequate
and sufficient for its purposes.
4.24 Litigation. Section 4.24 of the Disclosure Schedule sets forth
each instance in which any of the DO Group Parties (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party or, to the Knowledge of any of the DO Group Parties and the directors and
officers (and employees with responsibility for litigation matters) of the DO
Group Parties, is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in Section 4.24 the Disclosure Schedule could result in
any material adverse change in the business, financial condition, operations,
results of operations, or future prospects of any of the DO Group Parties. None
of the DO Group Parties and the directors and officers (and employees with
responsibility for litigation matters) of the DO Group Parties has any Basis to
believe that any such action, suit, proceeding, hearing, or investigation may be
brought or threatened against any of the DO Group Parties.
4.25 Product Warranty. To the best of the Representing Parties'
Knowledge, each product manufactured, sold, leased, or delivered by any of the
DO Group Parties has been in conformity with all applicable contractual
commitments and all express and implied warranties, and none of the DO Group
Parties has any Liability (and there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any Liability) for replacement or
repair thereof or other damages in connection therewith, subject only to the
reserve for product warranty claims set forth on the face of the Most Recent
Balance Sheet (including the notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of the
DO Group Parties. No product manufactured, sold, leased, or delivered by any of
the DO Group Parties is subject to any guaranty, warranty, or other indemnity
beyond the applicable standard terms and conditions of sale or lease. Section
4.25 of the Disclosure Schedule includes copies of the standard terms and
conditions of sale or lease for each of the DO Group Parties (containing
applicable guaranty, warranty, and indemnity provisions).
4.26 Product Liability. To the best of the Representing Parties'
Knowledge, none of the DO Group Parties has any Liability (and there is no Basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against any of them giving rise to any
Liability) arising out of any injury to persons or property as a result of the
ownership, possession, or use of any product manufactured, sold, leased, or
delivered by any of the DO Group Parties.
4.27 Employees. To the best of the Representing Parties' Knowledge, no
executive, key employee, or group of employees has any plans to terminate
employment with any of the DO Group Parties. None of the DO Group Parties
experienced any material strikes, grievances, claims of unfair labor practices,
or other collective bargaining disputes. To the best of the Representing
Parties' Knowledge, none of the DO Group Parties has committed any unfair labor
practice. None of the DO Group Parties and the directors and officers (and
employees with responsibility for employment matters) of the DO Group Parties
has any Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of any
of the DO Group Parties.
4.28 Employee Benefits.
4.28.1 Section 4.28 of the Disclosure Schedule lists each Employee
Benefit Plan that any of the DO Group Parties maintains or to which any of the
DO Group Parties contributes.
4.28.2 Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all respects
with the applicable requirements of ERISA, the Code, and other applicable laws.
4.28.3 All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan Descriptions)
have been filed or distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and
of Code have been met with respect to each such Employee Benefit Plan which is
an Employee Welfare Benefit Plan.
4.28.4 All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to each
such Employee Benefit Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing Date which are not
yet due have been paid to each such Employee Pension Benefit Plan or accrued in
accordance with the past custom and practice of the DO Group Parties. All
premiums or other payments for all periods ending on or before the Closing Date
have been paid with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
4.28.5 Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan" under Code Section
401(a) and has received, within the last two years, a favorable determination
letter from the Internal Revenue Service.
4.28.6 The market value of assets under each such Employee Benefit Plan
which is an Employee Pension Benefit Plan (other than any Multiemployer Plan)
equals or exceeds the present value of all vested and nonvested Liabilities
thereunder determined in accordance with PBGC methods, factors, and assumptions
applicable to an Employee Pension Benefit Plan terminating on the date for
determination.
4.28.7 The DO Group Parties have delivered to Mity-Lite correct and
complete copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each such Employee
Benefit Plan.
4.28.8 With respect to each Employee Benefit Plan that any of the DO
Group Parties and the Controlled Group of Corporations which includes the DO
Group Parties maintains or ever has maintained or to which any of them
contributes, ever has contributed, or ever has been required to contribute:
4.28.8.1 No such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been completely or
partially terminated or been the subject of a Reportable Event as to which
notices would be required to be filed with the PBGC. No proceeding by the PBGC
to terminate any such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or, to the Knowledge of any of the DO
Group Parties and the directors and officers (and employees with responsibility
for employee benefits matters) of the DO Group Parties, threatened.
4.28.8.2 There have been no Prohibited Transactions with respect to any
such Employee Benefit Plan. No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any such Employee Benefit Plan. No
action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or, to the Knowledge of any
of the DO Group Parties and the directors and officers (and employees with
responsibility for employee benefits matters) of the DO Group Parties,
threatened. None of the DO Group Parties and the directors and officers (and
employees with responsibility for employee benefits matters) of the DO Group
Parties has any Knowledge of any Basis for any such action, suit, proceeding,
hearing, or investigation.
4.28.9 None of the DO Group Parties has incurred, and none of the DO
Group Parties and the directors and officers (and employees with responsibility
for employee benefits matters) of the DO Group Parties has any Basis to expect
that any of the DO Group Parties will incur, any Liability to the PBGC (other
than PBGC premium payments) or otherwise under Title IV of ERISA (including any
withdrawal Liability) or under the Code with respect to any such Employee
Benefit Plan which is an Employee Pension Benefit Plan.
4.28.10 None of the DO Group Parties and the other members of the
Controlled Group of Corporations that includes any of the DO Group Parties
contributes to, ever has contributed to, or ever has been required to contribute
to any Multiemployer Plan or has any Liability (including withdrawal Liability)
under any Multiemployer Plan.
4.28.11 None of the DO Group Parties maintains or ever has maintained
or contributes, ever has contributed, or ever has been required to contribute to
any Employee Welfare Benefit Plan providing medical, health, accident or life
insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Code Section 4980B).
4.29 Guaranties. None of the DO Group Parties is a guarantor or
otherwise is liable for any Liability or obligation (including indebtedness) of
any other Person.
4.30 Environmental, Health, and Safety Matters.
4.30.1 To the best of the Representing Parties' Knowledge, each of the
DO Group Parties, and their Affiliates has complied and is in compliance in all
material respects with all Environmental, Health, and Safety Requirements.
Without limiting the foregoing, to the best of the Representing Parties'
Knowledge, neither the DO Group Parties nor its Subsidiaries has any Liability
(and there is no Basis related to the past or present operations, properties, or
facilities of DO Group, its Subsidiaries, and their respective Affiliates for
any present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand against the DO Group Parties giving rise to any
Liability) under any Environmental, Health and Safety Requirements, including
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act of 1976, the Federal Water Pollution
Control Act of 1972, the Clean Air Act of 1970, the Safe Drinking Water Act of
1974, the Toxic Substances Control Act of 1976, the Refuse Act of 1989, or the
Emergency Planning and Community Right-to-Know Act of 1986, the Solid Waste
Disposal Act, or the Occupational Safety and Health Act (each as amended).
4.30.2 To the best of the Representing Parties' Knowledge, none of the
DO Group Parties has any Liability (and none of the DO Group Parties and their
respective Affiliates has handled, treated, stored, released or disposed of any
substance, arranged for the disposal of any substance, regulated by any such
Environmental, Health and Safety Requirements, or owned or operated any property
or facility in any manner that could form the basis for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim or
demand (under the common law or pursuant to any existing statute) against the DO
Group Parties giving rise to any Liability) for response costs, corrective
action costs, natural resources damage, damage to any site, location, or body of
water (surface or subsurface) or for illness or personal injury.
4.30.3 To the best of the Representing Parties' Knowledge, all
properties and equipment used in the business of the DO Group Parties have been
free of asbestos PCB's, methylene chloride, trichloroethylene,
transdichloroethylene, dioxins, dibenzofurans, and Extremely Hazardous
Substances.
4.30.4 To the best of the Representing Parties' Knowledge, all product
labeling of the DO Group Parties has been in conformity with applicable laws
(including rules and regulation thereunder).
4.30.5 To the best of the Representing Parties' Knowledge, without
limiting the generality of the foregoing, each of DO Group Parties and their
respective Affiliates has obtained and is in material compliance with, all
permits, licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements for the occupation of its
facilities and the operation of its business. A list of all such material
permits, licenses and other authorizations is set forth on Section 4.30 of the
Disclosure Schedule.
4.30.6 None of the DO Group Parties nor their respective Affiliates has
received any written or oral notice, report or other information regarding any
actual or alleged violation of Environmental, Health, and Safety Requirements,
or any liabilities or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory, remedial or
corrective obligations, relating to any of them or their facilities arising
under Environmental, Health, and Safety Requirements.
4.30.7 To the best of the Representing Parties' Knowledge, none of the
following exists at any property or facility owned or operated by the DO Group
Parties: (a) underground storage tanks or (b) landfills, surface impoundments,
or disposal areas.
4.30.8 None of the DO Group Parties nor any of their respective
Affiliates has expressly assumed or undertaken any liability, including without
limitation any obligation for corrective or remedial action, of any other Person
relating to Environmental, Health, and Safety Requirements.
4.30.9 To the best of the Representing Parties' Knowledge, no facts,
events or conditions relating to the past or present facilities, properties or
operations of any of the DO Group Parties or any of their respective
predecessors or Affiliates will prevent, hinder or limit continued compliance
with Environmental, Health, and Safety Requirements, give rise to any
investigatory, remedial or corrective obligations pursuant to Environmental,
Health, and Safety Requirements, or give rise to any other Liabilities pursuant
to Environmental, Health, and Safety Requirements.
4.30.10 To the best of the Representing Parties' Knowledge, no
pollutant, contaminant, or chemical, industrial, hazardous, or toxic material or
waste ever has been buried, stored, spilled, leaked, discharged, emitted, or
released on any real property that the DO Group Parties owns or ever has owned
or that the DO Group Parties leases or operates or ever has leased or operated.
4.31 Certain Business Relationships with DO Group and Its Subsidiaries.
Except as set forth in Section 4.31 of the Disclosure Schedule, none of the
Majority Shareholders, the DO Group Officers, the DO Group Parties and their
Affiliates (other than DO Group and its Subsidiaries) has been involved in any
business arrangement or relationship (other than as an employee of a
shareholders) with any of DO Group and its Subsidiaries within the past twelve
(12) months, and none of the Majority Shareholders, the DO Group Officers, the
DO Group Parties and their Affiliates (other than DO Group and its Subsidiaries)
owns any asset, tangible or intangible, which is used in the business of any of
DO Group and its Subsidiaries.
4.32 Disclosure. There are no facts pertaining to the DO Group Parties
that are reasonably likely to have a material adverse effect on any of the DO
Group Parties that have not been disclosed in this Agreement. The
representations and warranties contained in this Section 4 do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements and information contained in this Section 4 not
misleading.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing:
5.1 General. Each of the Parties will use its best efforts to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 7 below).
5.2 Notices and Consents. The Majority Shareholders, the DO Group
Officers and the DO Group Parties will cause each of the DO Group Parties to
give any notices to third parties, and will cause each of the DO Group Parties
to use its best efforts to obtain any third party consents, that Mity-Lite may
request in connection with the matters referred to in Section 4 above. Each of
the Parties will (and the Majority Shareholders, the DO Group Officers and the
DO Group Parties will cause each of the DO Group Parties to) give any notices
to, make any filings with, and use its best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in Section 3 above.
5.3 Operation of Business. The Majority Shareholders, the DO Group
Officers and the DO Group Parties will not cause or permit any of the DO Group
Parties to engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, the Majority Shareholders, the DO Group Officers
and the DO Group Parties will not cause or permit any of the DO Group Parties to
(i) declare, set aside, or pay any dividend or make any distribution with
respect to its capital stock or redeem, purchase, or otherwise acquire any of
its capital stock, (ii) otherwise engage in any practice, take any action, or
enter into any transaction of the sort described in Section 4.12 above.
5.4 Preservation of Business. The Majority Shareholders, the DO Group
Officers and the DO Group Parties will cause each of the DO Group Parties to
keep its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees.
5.5 Full Access. Each of the Majority Shareholders, the DO Group
Officers and the DO Group Parties will permit, and will cause each of the DO
Group Parties to permit, representatives of Mity-Lite to have full access to all
premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to each of the DO Group Parties.
5.6 Notice of Developments. The DO Group Officers and DO Group Parties
will give prompt written notice to Mity-Lite of any development causing a breach
of any of the representations and warranties in Section 4 above. Each Party will
give prompt written notice to the others of any development causing a breach of
any of its own representations and warranties in Section 3 above. No disclosure
by any Party pursuant to this Section 5.6, however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
5.7 Exclusivity. None of the Majority Shareholders, the DO Group
Officers and DO Group Parties will (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities, or any substantial portion of
the assets, of any of the DO Group Parties (including any acquisition structured
as a merger, consolidation, or share exchange) or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. None of the DO Group
Parties will vote their Company Shares in favor of any such acquisition
structured as a merger, consolidation, or share exchange. The DO Group Parties
will notify Mity- Lite immediately if any Person makes any proposal, offer,
inquiry, or contact with respect to any of the foregoing.
5.8 Spin-off of ChiCol Equities, Inc. Prior to the Closing, ChiCol
shall spin- off ChiCol Equities, Inc. to the shareholders of ChiCol and ChiCol
Equities, Inc. shall no longer be a subsidiary of ChiCol and ChiCol shall not be
liable for any liabilities of or claims against ChiCol Equities, Inc.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing:
6.1 General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party may reasonably
request, all at the sole cost and expense of the requesting Party.
6.2 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving any of the DO Group Parties, each of the other
Parties will cooperate with it and its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party.
6.3 Transition. None of the Majority Shareholders, the DO Group
Officers or the DO Group Parties will take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, employees or other business associate of any of the DO Group Parties
from maintaining the same business relationships with the DO Group Parties after
the Closing as it maintained with the DO Group Parties prior to the Closing.
6.4 Confidentiality. Each of the Majority Shareholders, the DO Group
Officers and the DO Group Parties will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to Mity-Lite or
destroy, at the request and option of Mity-Lite, all tangible embodiments (and
all copies) of the Confidential Information which are in its possession. In the
event that any of the DO Group Parties is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, that DO Group Party will notify Mity-Lite
promptly of the request or requirement so that Mity-Lite may seek an appropriate
protective order or waive compliance with the provisions of this Section 6.4.
If, in the absence of a protective order or the receipt of a waiver hereunder,
any of the DO Group Parties is, on the advice of counsel, compelled to disclose
any Confidential Information to any tribunal or else stand liable for contempt,
that DO Group Party may disclose the Confidential Information to the tribunal;
provided, however, that the disclosing DO Group Party shall use its best efforts
to obtain, at the request of Mity-Lite, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Mity-Lite shall designate. The foregoing
provisions shall not apply to any Confidential Information which is generally
available to the public immediately prior to the time of disclosure.
6.5 Covenant Not to Compete. For a period of five years from and after
the Closing Date, none of the Majority Shareholders or the DO Group Parties will
engage (as an owner, partner, affiliate or otherwise) directly or indirectly in
any business that any of the DO Group Parties conducts as of the Closing Date in
any geographic area in which any of the DO Group Parties conducts that business,
provided, however, an owner of less than 1% of the outstanding stock of any
publicly-traded corporation shall not be deemed to engage in any of its
businesses solely by reason thereof. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this Section 6.5
is invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
6.6 Mity-Lite Common Stock. Mity-Lite agrees that the 115,000 shares of
Mity-Lite Common Stock issuable upon conversion of the Class A Common Stock
shall be proportionately adjusted to reflect any stock split, stock dividend or
recapitalization of Mity-Lite. Mity-Lite covenants to maintain sufficient
authorized capital stock to issue the Mity-Lite Common Stock upon conversion.
6.7 Amendments to Articles of Incorporation and Bylaws; Issuance of
Authorized Shares. Within two (2) weeks following the Closing Date, the Majority
Shareholders and the DO Group Parties and DO Group Officers shall cause the
charters and Bylaws of ChiCol Group, Inc., Sican II Corp., DO Group, Inc. and
Sican Corp. to be amended as provided in Exhibit K. This covenant as well as all
covenants set forth in this Section 6 shall survive the Closing Date.
7. CONDITIONS TO OBLIGATION TO CLOSE.
7.1 Conditions to Obligation of Mity-Lite. The obligation of Mity-Lite
to consummate the transactions contemplated by this Agreement shall be subject
to the fulfillment, at or prior to Closing, of each of the following conditions,
any of which may be waived by Mity- Lite; provided, however, Mity-Lite's
election to proceed with the Closing of the transaction contemplated herein
shall not be deemed a waiver of any breach of any representation, warranty or
covenant herein, whether or not known to Mity-Lite or existing on the Closing
Date:
7.1.1 The representations and warranties of the Majority Shareholders,
the DO Group Officers and the DO Group Parties contained in this Agreement shall
have been true and correct as of the date as of which they were deemed to have
been made and shall be true and correct in all material respects at and as of
the Closing Date;
7.1.2 The Majority Shareholders, the DO Group Officers and the DO Group
Parties shall have performed and complied with all of their covenants hereunder
in all material respects through the Closing Date;
7.1.3 The Majority Shareholders, the DO Group Officers and the DO Group
Parties shall have procured all of the third party consents specified in Section
5.2;
7.1.4 No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (a)
prevent consummation of any of the transactions contemplated by this Agreement,
(b) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (c) affect adversely the right of Mity-Lite to own the
Class B Common Stock, or (d) affect adversely the right of any of the DO Group
Parties to own its assets and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
7.1.5 Each of the Majority Shareholders, the DO Group Officers and the
DO Group Parties shall have delivered to Mity-Lite a certificate to the effect
that each of the conditions specified above in Sections 7.1.1 - 7.1.4 is
satisfied in all respects;
7.1.6 The Parties shall have received all other authorizations,
consents, and approvals of governments and governmental agencies referred to in
Sections 3 and 4.
7.1.7 The relevant parties shall have entered into and delivered the
Escrow Agreement, the Loan Documents, the Shareholders Agreements, the
Investment Representation Letter substantially in the form of Exhibit J attached
hereto and the Put Agreement and the same shall be in full force and effect;
7.1.8 Mity-Lite shall have received from counsel to the Majority
Shareholders, the DO Group Officers and the DO Group Parties, an opinion of
counsel in form and substance reasonably acceptable to Mity-Lite, addressed to
Mity-Lite, and dated as of the Closing Date;
7.1.9 Mity-Lite shall have received the resignations, effective as of
the Closing, of each director and officer of the DO Group Parties identified by
Mity-Lite in writing at least five business days prior to the Closing;
7.1.10 All actions to be taken by the DO Group Parties in connection
with consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to Mity-Lite;
7.1.11 Mity-Lite shall have received a copy of (i) the charter for each
of the DO Group Parties, certified by the secretary of state of the state of its
organization, as of a date not earlier than ten (10) business days prior to the
Closing Date and (ii) the by-laws of each of the DO Group Parties, certified by
the secretary of each such entity as of the Closing Date;
7.1.12 Mity-Lite shall have received a copy of the minute books and
stock register of the DO Group Parties, certified as correct by their respective
secretaries as of the Closing Date;
7.1.13 Mity-Lite shall have received good standing certificates for the
DO Group Parties from the secretaries of state of (i) the jurisdiction in which
each such entity is incorporated and (ii) each other jurisdiction listed in
Section 4.1 of the Disclosure Schedule, each dated as of a date not earlier than
ten (10) business days prior to the Closing Date;
7.1.14 Mity-Lite shall have received a true and correct copy of the
resolutions of (i) the board of directors of the DO Group Parties and (ii) the
executor or trustee of Dekko, evidencing their authorization of the execution
and delivery of this Agreement and the other agreements to be executed by the DO
Group Parties and the Majority Shareholders and the consummation of the
transactions contemplated hereby and thereby;
7.1.15 No event or events shall have occurred which, individually, or
in the aggregate have a material adverse effect on the business of any of the DO
Group Parties.
7.1.16 Mity-Lite shall have had a full opportunity to complete its due
diligence review of the DO Group Parties including a review of all documents,
records, and other information and visits to or inspections of any location
where the DO Group Parties' business is conducted and the results of such review
shall have been satisfactory to Mity-Lite in its sole discretion;
7.1.17 The Majority Shareholders, the DO Group Officers and the DO
Group Parties shall have terminated any affiliated party transaction described
in Sections 4.20.6 and 4.31 of the Disclosure Schedule and delivered to
Mity-Lite evidence thereof reasonably acceptable to Mity-Lite;
7.1.18 The board of directors of Mity-Lite shall have approved the
Agreement and the transactions contemplated hereby;
7.1.19 Mity-Lite shall have acquired all shares of DO Group Common
Stock not held by ChiCol and Sican II on terms satisfactory to Mity-Lite;
7.1.20 Dennis Kebrdle, David Kebrdle and Domenic Federico shall have
entered into employment agreements with DO Group for a term of one year from the
Closing Date, the terms of each such agreement to be satisfactory to Mity-Lite;
7.1.21 Holding shall have delivered to Mity-Lite a certificate for all
of the shares of the Class B Common Stock;
7.1.22 The Majority Shareholders shall have delivered to Holding the
Majority Shares, free and clear of all Security Interest or restrictions other
than restrictions under state and federal securities laws, endorsed in blank or
accompanied by duly executed assignment documents and certificates for such
shares shall have been issued in the name of Holding;
7.1.23 Certificates for (i) all of the shares of the Class A Common
Stock and the DO Group Common Stock owned by ChiCol and Sican II shall have been
delivered to the Escrow Agent subject to the terms of the Escrow Agreement;
7.1.24 The Certificates of Incorporation of the DO Group Parties shall
have been amended to state as provided in Exhibit K attached hereto;
7.1.25 The Second Amended and Restated Stockholders Agreement dated
April 2, 1993 among the shareholders of DO Group shall have been terminated; and
7.1.26 DO Group and/or its Subsidiaries shall have closed on the
refinancing of their debt with LaSalle National Bank on terms acceptable to
Mity-Lite.
7.1.27 ChiCol shall have completed the spin-off of ChiCol Equities,
Inc. to the shareholders of ChiCol.
7.2 Conditions to Obligation of the Majority Shareholders, the DO Group
Officers and the DO Group Parties. The obligation of the Majority Shareholders,
the DO Group Officers and the DO Group Parties to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, at or prior
to Closing, of each of the following conditions, any of which may be waived by
the Majority Shareholders, the DO Group Officers and the DO Group Parties, as
applicable:
7.2.1 The representations and warranties of Mity-Lite contained in this
Agreement shall have been true and correct as of the date as of which they were
deemed to have been made and shall be true and correct in all material respects
at and as of the Closing Date;
7.2.2 Mity-Lite shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing Date;
7.2.3 No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (a)
prevent consummation of any of the transactions contemplated by this Agreement,
(b) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, or (c) affect adversely the right of Majority
Shareholders to own the Class A Common Stock (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect);
7.2.4 Mity-Lite shall have delivered to the Majority Shareholders, the
DO Group Officers and the DO Group Parties a certificate to the effect that each
of the conditions specified above in Sections 7.2.1 - 7.2.3 is satisfied in all
respects;
7.2.5 The Parties shall have received all other authorizations,
consents, and approvals of governments and governmental agencies referred to in
Sections 3 and 4;
7.2.6 The relevant parties shall have entered into and delivered the
Options and the Registration Rights Agreement and the same shall be in full
force and effect;
7.2.7 The Majority Shareholders, the DO Group Officers and the DO Group
Parties shall have received from counsel to Mity-Lite an opinion of counsel in
form and substance reasonably acceptable to such Parties, addressed to the DO
Group Parties, and dated as of the Closing Date;
7.2.8 The Majority Shareholders, the DO Group Officers and the DO Group
Parties shall have received a copy of (i) the Articles of Incorporation for
Mity-Lite, certified by the Department of Commerce of the State of Utah, as of a
date not earlier than ten (10) business days prior to the Closing Date and (ii)
the by-laws of Mity-Lite, certified by the secretary of Mity-Lite as of the
Closing Date;
7.2.9 The Majority Shareholders, the DO Group Officers and the DO Group
Parties shall have received good standing certificates for Mity-Lite from the
Secretary of State of the State of Utah dated as of a date not earlier than ten
(10) business days prior to the Closing Date; and
7.2.10 The Majority Shareholders, the DO Group Officers and the DO
Group shall have received a true and correct copy of the resolutions of the
board of directors of Mity-Lite evidencing its authorization of the execution
and delivery of this Agreement and the other agreements to be executed by
Mity-Lite and the consummation of the transactions contemplated hereby and
thereby.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
8.1 Survival of Representations and Warranties. The representations and
warranties of the Parties contained in Sections 3 of this Agreement shall
survive the Closing (even if the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect until the earlier of (i) the expiration of the applicable
statutes of limitations or (ii) the Put Agreement granted to Mity-Lite in
connection with the transactions contemplated herein is exercised by Mity-Lite
and the transactions contemplated in the Put Agreement are consummated. The
representations and warranties of the Parties contained in Section 4 of this
Agreement shall survive the Closing (even if the damaged Party knew or had
reason to know of any misrepresentation or breach of warranty at the time of
Closing) and continue in full force and effect until the earlier of (i) the date
three years and forty-five days from the date hereof and (ii) the date Mity-Lite
exercises its right to put its shares of DO Group Common Stock pursuant to the
terms of the Put Agreement and the transactions contemplated in the Put
Agreement are consummated. All covenants of the Parties shall survive
indefinitely after the Closing Date except as otherwise set forth herein.
Notwithstanding any other provision of this Agreement to the contrary, from and
after the Closing Date, the Majority Shareholders hereby waive any and all
claims and causes of action against the DO Group Parties arising before or after
the date of this Agreement (including claims for breach of this Agreement) other
than claims as a holder of the Class A Common Stock.
8.2 Mity-Lite Remedy. Mity-Lite's sole remedy for breach of any
representation, warranty or covenant (i) contained in Section 4 or 5 of this
Agreement or (ii) contained in Section 3 of this Agreement which breach in
either case is discovered by Mity-Lite prior to three years from the date of
this Agreement, by the Majority Shareholders, the DO Group Officers or the DO
Group Parties shall be the right to put Mity-Lite's shares of DO Group Common
Stock pursuant to the Put Agreement.
8.3 DO Group Parties' Remedy. The sole remedy of the Majority
Shareholders, the DO Group Officers and the DO Group Parties for breach of any
representation, warranty or covenant (i) contained in Section 4 or 5 of this
Agreement or (ii) contained in Section 3 of this Agreement which breach is
discovered by such Parties prior to three years from the dates of this
Agreement, by Mity-Lite shall be the right to not convert the Class A Common
Stock.
9. TERMINATION.
9.1 Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
9.1.1 Mity-Lite and the Majority Shareholders may terminate this
Agreement by mutual written consent at any time prior to the Closing;
9.1.2 Mity-Lite may terminate this Agreement by giving written notice
to the DO Group Officers on or before the thirtieth (30th) day following the
date of this Agreement if Mity-Lite is not satisfied with the results of its
continuing business, legal, environmental, and accounting due diligence
regarding the DO Group Parties;
9.1.3 Mity-Lite may terminate this Agreement by giving written notice
to the DO Group Officers at any time prior to the Closing (a) in the event any
of the DO Group Parties has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect or (b) if the
Closing shall not have occurred on or before March 31, 1997, by reason of the
failure of any condition precedent under Section 7.1 hereof (unless the failure
results primarily from Mity-Lite itself breaching any representation, warranty,
or covenant contained in this Agreement); and
9.1.4 The DO Group Officers may terminate this Agreement by giving
written notice to Mity-Lite at any time prior to the Closing (a) in the event
Mity-Lite has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, any of the DO Group
Officers has notified Mity-Lite of the breach, and the breach has continued
without cure for a period of thirty (30) days after the notice of breach or (b)
if the Closing shall not have occurred on or before March 31, 1997 by reason of
the failure of any condition precedent under Section 7.2 hereof (unless the
failure results primarily from any of the Parties other than Mity-Lite breaching
any representation, warranty, or covenant contained in this Agreement).
9.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Section 9.1 above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
10. MISCELLANEOUS.
10.1 Nature of Certain Obligations. The representations, warranties,
and covenants of the DO Group Officers and DO Group Parties in this Agreement
are joint and several obligations.
10.2 Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of
Mity-Lite and the DO Group Officers; provided, however, that any Party may make
any public disclosure it believes in good faith is required by applicable law or
any listing or trading agreement concerning its publicly-traded securities (in
which case the disclosing Party will use its reasonable best efforts to advise
the other Parties prior to making the disclosure).
10.3 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
10.4 Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
10.5 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of Mity-Lite and the Majority Shareholders; provided, however, that
Mity-Lite may (i) assign any or all of its rights and interests hereunder to one
or more of its Affiliates and (ii) designate one or more of its Affiliates to
perform its obligations hereunder (in any or all of which cases Mity-Lite
nonetheless shall remain liable and responsible for the performance of all of
its obligations hereunder).
10.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
10.7 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.8 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given two days after being
sent by registered or certified mail, return receipt requested, postage prepaid,
and addressed to the intended recipient as set forth below:
If to the DO Group Parties:
DO Group, Inc.
2400 Sterling Avenue
Elkhart, Indiana 46516
Attention: Domenic Federico
Telephone: (219) 293-0621
Facsimile: (219) 294-6176
If to the Majority Shareholders or the DO Group Officers:
Estate of Charles E. Dekko
1208 Lakeside Drive
Kendallville, Indiana 46755
Attention: Linda Speakman
Telephone: (219) 347-1278
Facsimile: (219) 347-7103
David Kebrdle
2400 Sterling Avenue
Elkhart, Indiana 46516
Telephone: (219) 293-0621
Facsimile: (219) 294-6176
Dennis and Mary M. Kebrdle
2400 Sterling Avenue
Elkhart, Indiana 46516
Telephone: (219) 293-0621
Facsimile: (219) 294-6176
Domenic and Martha S. Federico
2400 Sterling Avenue
Elkhart, Indiana 46516
Telephone: (219) 293-0621
Facsimile: (219) 294-6176
If to Mity-Lite:
1301 West 400 North
Orem, Utah 84057
Attention: Bradley T Nielson
Telephone: (801) 224-0589
Facsimile: (801) 224-6191
With a copy to:
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
1000 Kearns Building
136 South Main Street
Salt Lake City, Utah 84101
Attention: Nolan S. Taylor, Esq.
Telephone: (801) 320-6700
Facsimile: (801) 359-8256
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
10.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Utah without giving effect
to any choice or conflict of law provision or rule (whether of the State of Utah
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Utah.
10.10 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
of the Parties hereto. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
10.11 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
10.12 Expenses. Each of the Parties, DO Group, and its Subsidiaries
will bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby.
10.13 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
10.14 Incorporation of Recitals, Exhibits, and Schedules. The Recitals,
Exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
10.15 Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 10.16
below), in addition to any other remedy to which they may be entitled, at law or
in equity.
10.16 Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Salt Lake City, Utah, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Any
Party may make service on any other Party by sending or delivering a copy of the
process to the Party to be served at the address and in the manner provided for
the giving of notices in Section 10.8 above. Each Party agrees that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by law or at
equity.
10.17 Attorneys' Fees. If any party to this Agreement brings
an action to enforce its rights under this Agreement the prevailing party shall
be entitled to recover its costs and expenses including, without limitation,
reasonable attorneys' fees incurred in connection with such action, including
any appeal of such action.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
ESTATE OF CHESTER E. DEKKO
By: /s/ Linda L. Speakman
Title: Co-Executrix
/s/David Kebrdle
David Kebrdle
/s/Mary M. Kerbdle
Mary M. Kebrdle
/s/Martha S. Federico
Martha S. Federico
/s/ Dennis Kebrdle
Dennis Kebrdle
/s/ Domenic Federico
Domenic Federico
MITY-LITE, INC.
By: /s/ Gregory L. Wilson
Title: President
CHICOL GROUP, INC.
By: /s/ Dennis Kebrdle
Title: Chairman
SICAN II CORP.
By: /s/ Dennis Kebrdle
Title: Chairman
DO GROUP HOLDING, INC.
By: /s/ Dennis Kebrdle
Title: Chairman
DO GROUP, INC.
By: /s/ Dennis Kebrdle
Title: Chairman
SICAN CORP.
By: /s/ Dennis Kebrdle
Title: Chairman
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
March 13, 1997, by and between Mity-Lite, Inc., a Utah corporation, (the
"Purchaser") and Xaio, Inc., a Delaware corporation (the "Seller"). The
Purchaser and the Seller are referred to hereinafter collectively as the
"Parties." The Seller owns 934.342 shares (the "Shares") of common stock (the
"Common Stock") of DO Group, Inc., a Delaware corporation (the "Company"). This
Agreement contemplates transactions in which the Purchaser will purchase from
the Seller, and the Seller will sell to the Purchaser, all of the Shares for
cash.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, the Parties agree as follows:
1. PURCHASE AND SALE OF THE SHARES.
1.1 Basic Transactions. On and subject to the terms and conditions of
this Agreement, the Purchaser agrees to purchase from the Seller, and the Seller
agrees to sell to the Purchaser, all of the Shares for in cash payable (i)
$556,100 payable in cash by wire transfer or delivery of other immediately
available funds at the Closing and (ii) payment of the outstanding principal
balance of a promissory note payable by the Company to Seller in the original
principal amount of $250,000 (the "Note"), for an aggregate purchase price of
$806,100. Payment by Purchaser of the outstanding principal balance of the Note
in the amount of $250,000 shall constitute payment in full and complete
satisfaction of all amounts owing under the Note.
1.2 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of LeBoeuf, Lamb,
Greene & MacRae, L.L.P. in Salt Lake City, Utah, commencing at 9:00 a.m. local
time on the second business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Purchaser and the Seller may mutually determine (the "Closing Date").
1.3 Deliveries at the Closing. At the Closing, (a) the Seller will
deliver to the Purchaser the certificate referred to in Section 6.1.1 below, the
Note endorsed for transfer to Mity-Lite, Inc. and the stock certificate(s)
representing all of the Shares, endorsed in blank or accompanied by duly
executed assignment documents, and (b) the Purchaser will deliver the Purchase
Price to the Seller.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Purchaser that the statements contained in this Section 2
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 2 ).
2.1 Organization of Seller. The Seller is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation or organization.
2.2 Authorization of Transactions. The Seller has all necessary power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Seller and the consummation by the Seller of the transactions
contemplated hereby have been duly authorized by all requisite action by the
Seller, and, if applicable, its directors, members, partners and shareholders.
This Agreement has been duly executed and delivered by the Seller, and this
Agreement constitutes a legal, valid and binding obligation of the Seller,
enforceable in accordance with its terms. The Seller is not required to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any third party or governmental agency in order to consummate the
transactions contemplated by this Agreement.
2.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate or conflict with any law, judgment, order, or other restriction of
any government or court to which the Seller is subject or, if the Seller is a
corporation, any provision of its charter or bylaws or (b) conflict with, result
in a breach of, constitute a default under, or result in the creation of, any
lien, encumbrance, or claim on any of the assets or properties of the Seller
under any agreement, permit, or other arrangement by which the Seller is bound
or to which any of its assets is subject or affected, other than the Second
Amended and Restated Stockholders Agreement dated April 2, 1993 (the
"Stockholders Agreement"), the provisions of which have been waived.
2.4 Brokers' Fees. The Seller has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Purchaser could become
liable or obligated.
2.5 Company Shares and Note. The Seller holds of record and owns
beneficially (i) the Note and (ii) the number of shares of Common Stock set
forth above, free and clear of any restrictions on transfer (other than any
restrictions under the federal and state securities laws), taxes, mortgages,
pledges, encumbrances, claims, options, warrants, purchase rights, contracts,
commitments, puts, calls and demands. The Seller is not a party to any option,
warrant, purchase right, call, put or other contract or commitment that could
require the Seller to sell, buy, transfer, or otherwise dispose of any capital
stock of the Company (other than this Agreement and the Stockholders Agreement).
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY AND ITS
SUBSIDIARY. The Seller represents and warrants to the Purchaser that, to the
Seller's knowledge, without investigation on the part of the Seller, the
statements contained in this Section 3 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 3).
3.1 Authorization, Qualification, and Corporate Power. Each of the
Company and its subsidiary, Sican Corporation (the "Subsidiary"), has all
necessary corporate power and authority and currently holds all licenses,
permits, and authorizations necessary to carry on the businesses in which it is
engaged and to own and use the properties owned and used by it. Neither the
Company nor its Subsidiary is in material violation of any provision of its
charter or bylaws. All material corporate actions taken by the Company and its
Subsidiary have been duly authorized or ratified.
3.2 Capitalization. The entire authorized capital stock of the Company
consists of 3,000 shares of Common Stock, of which 2,525.242 shares of Common
Stock are issued and outstanding and no shares of Common Stock are held in
treasury. All of the issued and outstanding capital stock of the Company and its
Subsidiary has been duly authorized, is validly issued, fully paid, and
nonassessable and held by such persons and in such amounts as shown on the books
of the Company. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, calls,
puts or other contracts or commitments that could require the Company or its
Subsidiary to acquire or to issue, sell, dispose of or otherwise cause to become
outstanding, any of its capital stock or any securities or obligations
convertible into or exchangeable for its capital stock. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of the capital stock of the Company or its Subsidiary. The Company holds
of record and owns beneficially all of the outstanding shares of the Subsidiary,
free and clear of any restrictions on transfer (other than restrictions under
federal and state securities laws), taxes, mortgages, pledges, liens,
encumbrances, claims, security interests, options, warrants, purchase rights,
calls, puts, contracts, commitments, equities, claims, and demands. Neither the
Company nor its Subsidiary controls directly or indirectly any partnership,
corporation, limited liability company, association, or joint venture except the
Subsidiary.
3.3 Brokers' Fees. Neither the Company nor its Subsidiary has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
3.4 Financial Statements. All financial statements of the Company and
its Subsidiary present fairly the assets, liabilities and financial condition of
the Company and its Subsidiary and the results of operations of the Company and
its Subsidiary.
3.5 Recent Events. Since December 1, 1997, (a) there has not been any
material adverse change in the assets, liabilities, business, financial
condition, operations, results of operations, or future prospects of the Company
and its Subsidiary; (b) neither the Company nor its Subsidiary has entered into
any material agreement outside the ordinary course of business and (c) there has
not been any event, incident, action, failure to act, or transaction outside the
ordinary course of business involving the Company and its Subsidiary which could
have a material adverse effect on the Company or its Subsidiary. Since January
1, 1996, neither the Company nor its Subsidiary has issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock.
3.6 Legal Compliance. Each of the Company, its Subsidiary, and their
respective predecessors and affiliates has complied with all laws applicable to
them in all material respects.
3.7 Certain Business Relationships with the Company and Its Subsidiary.
None of the Seller and its affiliates has been involved in any business
arrangement or relationship with the Company and its Subsidiary within the past
twelve (12) months, and none of the Seller and its affiliates owns any asset,
tangible or intangible, which is used in the business of the Company and its
Subsidiary, other than the Note and their relationship as directors of the
Company.
4. FURTHER ASSURANCES. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party may request.
5. CONFIDENTIALITY. The Seller will not disclose except to the
Purchaser any confidential information of the Company and its Subsidiary,
including any trade secrets, research and development, manufacturing and
production processes, technical data, customer and supplier lists and
information, pricing and cost information, and financial business and marketing
data plans and shall deliver promptly to the Purchaser or destroy, at the
request and option of the Purchaser, all tangible embodiments (and all copies)
of such confidential information which are in its possession.
6. CONDITIONS TO OBLIGATION TO CLOSE.
6.1 Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to Closing, of each of the following
conditions, any of which may be waived by the Purchaser; provided, however, the
Purchaser's election to proceed with the Closing of the transactions
contemplated herein shall not be deemed a waiver of any breach of any
representation, warranty or covenant herein, whether or not known to the
Purchaser or existing on the Closing Date;
6.1.1 the representations and warranties of the Seller contained in
this Agreement shall have been true and correct as of the date as of which they
were deemed to have been made and shall be true and correct in all material
respects at and as of the Closing Date and the Seller shall have delivered to
the Purchaser a certificate to that effect;
6.1.2 simultaneous with the Closing, the Purchaser shall have
consummated the transactions contemplated by the Contribution Agreement among
the Company, certain shareholders of the Company, and the Purchaser providing
for the funding of a newly formed holding company for the Company on terms
satisfactory to the Purchaser;
6.1.3 the Purchaser shall have had a full opportunity to complete its
due diligence review of the Company and its Subsidiary and the results of such
review shall have been satisfactory to the Purchaser in its sole discretion; and
6.1.4 the Seller shall have delivered to the Purchaser the Note and
certificate(s) for all of the Shares, free and clear of any mortgage, pledge,
lien, encumbrance, claim, or other security interest or restrictions other than
restrictions under state and federal securities laws, endorsed in blank or
accompanied by duly executed assignment documents.
6.2 Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject only to the Seller having received the Purchase Price.
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Seller shall survive the Closing
hereunder. From and after the Closing Date, the Seller, on behalf of its
directors, officers, employees, agents and affiliates, hereby waives any and all
claims and causes of action against the Company and its Subsidiary in any way
related to facts arising before the Closing Date other than claims of directors
for indemnification for actions by the Company against such directors. The
Purchaser agrees that it will not cause the Company to bring any action against
the Seller, its directors, officers, employees, agents and affiliates, in any
way related to facts arising before the Closing Date related to any of Seller's
officers' or directors' service as a director of the Company. Nothing herein
shall prohibit the Purchaser from bringing claims against the Seller based upon
breaches of the Seller's representations and warranties herein.
8. TERMINATION. The Purchaser may terminate this Agreement by giving
written notice to the Seller (a) on or before thirty (30) days following the
date of this Agreement if the Purchaser is not satisfied with the results of its
due diligence regarding the Company and its Subsidiary, (b) in the event the
Seller has breached any representation, warranty, or covenant contained in this
Agreement in any material respect or (c) if the Closing shall not have occurred
on or before April 1, 1997. The Seller may terminate this Agreement by giving
written notice to the Purchaser if the Closing shall not have occurred on or
before April 1, 1997.
9. MISCELLANEOUS.
9.1 Press Releases and Public Announcements. The Seller shall not issue
any press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior written approval of the
Purchaser.
9.2 Entire Agreement; Counterparts. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements, or representations by or
among the Parties, written or oral, to the extent they related in any way to the
subject matter hereof. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
9.3 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns.
9.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Utah without giving effect to
any choice or conflict of law provision or rule (whether of the State of Utah or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Utah.
9.5 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and the Seller. No waiver by any Party of any default or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default or breach of warranty.
9.6 Expenses. The Seller agrees that neither the Company nor its
Subsidiary has borne or will bear any of the Seller's costs and expenses
(including any of its legal fees and expenses) in connection with this Agreement
or any of the transactions contemplated hereby.
9.7 Construction; Severability. No presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" shall mean including
without limitation. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
9.8 Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which they may be
entitled, at law or in equity.
9.9 Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Salt Lake City, Utah, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Any
Party may make service on any other Party by sending or delivering a copy of the
process to the Party to be served at the address set forth above.
9.10 Attorneys' Fees. If any party to this Agreement brings an action
to enforce its rights under this Agreement the prevailing party shall be
entitled to recover its costs and expenses including, without limitation,
reasonable attorneys' fees incurred in connection with such action, including
any appeal of such action.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
MITY-LITE, INC.
By: /s/ Gregory L. Wilson
Title: President
XAIO, INC.
By: /s/ Felix Gaehwaler
Title: President
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
March 13, 1997, by and between Mity-Lite, Inc., a Utah corporation, (the
"Purchaser") and Ellman Equities, Inc. an Arizona corporation (the "Seller").
The Purchaser and the Seller are referred to hereinafter collectively as the
"Parties." The Seller owns 75.758 shares (the "Shares") of common stock (the
"Common Stock") of DO Group, Inc., a Delaware corporation (the "Company"). This
Agreement contemplates transactions in which the Purchaser will purchase from
the Seller, and the Seller will sell to the Purchaser, all of the Shares for
cash.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, the Parties agree as follows:
1. PURCHASE AND SALE OF THE SHARES.
1.1 Basic Transactions. On and subject to the terms and conditions of
this Agreement, the Purchaser agrees to purchase from the Seller, and the Seller
agrees to sell to the Purchaser, all of the Shares for $45,100 (the "Purchase
Price") in cash payable by wire transfer or delivery of other immediately
available funds at the Closing.
1.2 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of LeBoeuf, Lamb,
Greene & MacRae, L.L.P. in Salt Lake City, Utah, commencing at 9:00 a.m. local
time on the second business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Purchaser and the Seller may mutually determine (the "Closing Date").
1.3 Deliveries at the Closing. At the Closing, (a) the Seller will
deliver to the Purchaser the certificate referred to in Section 6.1.1 below and
the stock certificate(s) representing all of the Shares, endorsed in blank or
accompanied by duly executed assignment documents, and (b) the Purchaser will
deliver the Purchase Price to the Seller via wire transfer to Seller's account
as per separate wire instructions.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Purchaser that the statements contained in this Section 2
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 2 ).
2.1 Organization of Seller. The Seller is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation or organization.
2.2 Authorization of Transactions. The Seller has all necessary power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Seller and the consummation by the Seller of the transactions
contemplated hereby have been duly authorized by all requisite action by the
Seller, and, if applicable, its directors, members, partners and shareholders.
This Agreement has been duly executed and delivered by the Seller, and this
Agreement constitutes a legal, valid and binding obligation of the Seller,
enforceable in accordance with its terms. The Seller is not required to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any third party or governmental agency in order to consummate the
transactions contemplated by this Agreement.
2.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate or conflict with any law, judgment, order, or other restriction of
any government or court to which the Seller is subject or, if the Seller is a
corporation, any provision of its charter or bylaws or (b) conflict with, result
in a breach of, constitute a default under, or result in the creation of, any
lien, encumbrance, or claim on any of the assets or properties of the Seller
under any agreement, permit, or other arrangement by which the Seller is bound
or to which any of its assets is subject or affected, other than the Second
Amended and Restated Stockholders Agreement dated April 2, 1993 (the
"Stockholders Agreement"), the provisions of which have been waived.
2.4 Brokers' Fees. The Seller has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Purchaser could become
liable or obligated.
2.5 Company Shares. The Seller holds of record and owns beneficially
the number of shares of Common Stock set forth above, free and clear of any
restrictions on transfer (other than any restrictions under the federal and
state securities laws), taxes, mortgages, pledges, encumbrances, claims,
options, warrants, purchase rights, contracts, commitments, puts, calls and
demands. The Seller is not a party to any option, warrant, purchase right, call,
put or other contract or commitment that could require the Seller to sell, buy,
transfer, or otherwise dispose of any capital stock of the Company (other than
this Agreement and the Stockholders Agreement).
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY AND ITS
SUBSIDIARY. The Seller represents and warrants to the Purchaser that, to the
best of the Seller's knowledge, without investigation on the part of the Seller,
the statements contained in this Section 3 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 3). Purchaser represents and
warrants that Purchaser has no knowledge of any facts or circumstances regarding
the Company that would cause Seller to be in breach of any of its
representations or warranties contained in this Agreement.
3.1 Authorization, Qualification, and Corporate Power. Each of the
Company and its subsidiary, Sican Corporation (the "Subsidiary"), has all
necessary corporate power and authority and currently holds all licenses,
permits, and authorizations necessary to carry on the businesses in which it is
engaged and to own and use the properties owned and used by it. Neither the
Company nor its Subsidiary is in material violation of any provision of its
charter or bylaws. All material corporate actions taken by the Company and its
Subsidiary have been duly authorized or ratified.
3.2 Capitalization. The entire authorized capital stock of the Company
consists of 3,000 shares of Common Stock, of which 2,525.252 shares of Common
Stock are issued and outstanding and no shares of Common Stock are held in
treasury. All of the issued and outstanding capital stock of the Company and its
Subsidiary has been duly authorized, is validly issued, fully paid, and
nonassessable and held by such persons and in such amounts as shown on the books
of the Company. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, calls,
puts or other contracts or commitments that could require the Company or its
Subsidiary to acquire or to issue, sell, dispose of or otherwise cause to become
outstanding, any of its capital stock or any securities or obligations
convertible into or exchangeable for its capital stock. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of the capital stock of the Company or its Subsidiary. The Company holds
of record and owns beneficially all of the outstanding shares of the Subsidiary,
free and clear of any restrictions on transfer (other than restrictions under
federal and state securities laws), taxes, mortgages, pledges, liens,
encumbrances, claims, security interests, options, warrants, purchase rights,
calls, puts, contracts, commitments, equities, claims, and demands. Neither the
Company nor its Subsidiary controls directly or indirectly any partnership,
corporation, limited liability company, association, or joint venture except the
Subsidiary.
3.3 Brokers' Fees. Neither the Company nor its Subsidiary has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
3.4 Financial Statements. All financial statements of the Company and
its Subsidiary present fairly the assets, liabilities and financial condition of
the Company and its Subsidiary and the results of operations of the Company and
its Subsidiary.
3.5 Recent Events. Since December 1, 1997, (a) there has not been any
material adverse change in the assets, liabilities, business, financial
condition, operations, results of operations, or future prospects of the Company
and its Subsidiary; (b) neither the Company nor its Subsidiary has entered into
any material agreement outside the ordinary course of business and (c) there has
not been any event, incident, action, failure to act, or transaction outside the
ordinary course of business involving the Company and its Subsidiary which could
have a material adverse effect on the Company or its Subsidiary. Since January
1, 1996, neither the Company nor its Subsidiary has issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock.
3.6 Legal Compliance. Each of the Company, its Subsidiary, and their
respective predecessors and affiliates has complied with all laws applicable to
them in all material respects.
3.7 Certain Business Relationships with the Company and Its Subsidiary.
None of the Seller and its affiliates has been involved in any business
arrangement or relationship with the Company and its Subsidiary within the past
twelve (12) months, and none of the Seller and its affiliates owns any asset,
tangible or intangible, which is used in the business of the Company and its
Subsidiary, other than their relationship as directors of the Company.
4. FURTHER ASSURANCES. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party may reasonably request.
5. CONFIDENTIALITY. The Seller will not disclose except to the
Purchaser any confidential information of the Company and its Subsidiary,
including any trade secrets, research and development, manufacturing and
production processes, technical data, customer and supplier lists and
information, pricing and cost information, and financial business and marketing
data plans and shall deliver promptly to the Purchaser or destroy, at the
request and option of the Purchaser, all tangible embodiments (and all copies)
of such confidential information which are in its possession, except copies that
are necessary to be kept for Seller's' records.
6. CONDITIONS TO OBLIGATION TO CLOSE.
6.1 Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to Closing, of each of the following
conditions, any of which may be waived by the Purchaser; provided, however, the
Purchaser's election to proceed with the Closing of the transactions
contemplated herein shall not be deemed a waiver of any breach of any
representation, warranty or covenant herein, whether or not known to the
Purchaser or existing on the Closing Date;
6.1.1 the representations and warranties of the Seller contained in
this Agreement shall have been true and correct as of the date as of which they
were deemed to have been made and shall be true and correct in all material
respects at and as of the Closing Date and the Seller shall have delivered to
the Purchaser a certificate to that effect;
6.1.2 simultaneous with the Closing, the Purchaser shall have
consummated the transactions contemplated by the Contribution Agreement among
the Company, certain shareholders of the Company, and the Purchaser providing
for the funding of a newly formed holding company for the Company on terms
satisfactory to the Purchaser;
6.1.3 the Purchaser shall have had a full opportunity to complete its
due diligence review of the Company and its Subsidiary and the results of such
review shall have been satisfactory to the Purchaser in its sole discretion; and
6.1.4 the Seller shall have delivered to the Purchaser certificate(s)
for all of the Shares, free and clear of any mortgage, pledge, lien,
encumbrance, claim, or other security interest or restrictions other than
restrictions under state and federal securities laws, endorsed in blank or
accompanied by duly executed assignment documents.
6.2 Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject only to the Seller having received the Purchase Price.
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Seller shall survive the Closing
hereunder. From and after the Closing Date, the Seller, on behalf of its
directors, officers, employees, agents and affiliates, hereby waives any and all
claims and causes of action against the Company and its Subsidiary in any way
related to facts arising before the Closing Date other than claims of directors
for indemnification for actions by the Company against such directors. The
Purchaser agrees that it will not cause the Company to bring any action against
the Seller, its directors, officers, employees, agents and affiliates, in any
way related to facts arising before the Closing Date related to any of Seller's
officers' or directors' service as a director of the Company. Nothing herein
shall prohibit the Purchaser from bringing claims against the Seller based upon
breaches of the Seller's representations and warranties herein.
8. TERMINATION. The Purchaser may terminate this Agreement by giving
written notice to the Seller (a) on or before thirty (30) days following the
date of this Agreement if the Purchaser is not satisfied with the results of its
due diligence regarding the Company and its Subsidiary, (b) in the event the
Seller has breached any representation, warranty, or covenant contained in this
Agreement in any material respect or (c) if the Closing shall not have occurred
on or before April 1, 1997. The Seller may terminate this Agreement by giving
written notice to the Purchaser if the Closing shall not have occurred on or
before April 1, 1997.
9. MISCELLANEOUS.
9.1 Press Releases and Public Announcements. The Seller shall not issue
any press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior written approval of the
Purchaser.
9.2 Entire Agreement; Counterparts. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements, or representations by or
among the Parties, written or oral, to the extent they related in any way to the
subject matter hereof. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
9.3 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns.
9.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Utah without giving effect to
any choice or conflict of law provision or rule (whether of the State of Utah or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Utah.
9.5 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and the Seller. No waiver by any Party of any default or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default or breach of warranty.
9.6 Expenses. The Seller agrees that neither the Company nor its
Subsidiary has borne or will bear any of the Seller's costs and expenses
(including any of its legal fees and expenses) in connection with this Agreement
or any of the transactions contemplated hereby.
9.7 Construction; Severability. No presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" shall mean including
without limitation. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
9.8 Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which they may be
entitled, at law or in equity.
9.9 Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Salt Lake City, Utah, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Any
Party may make service on any other Party by sending or delivering a copy of the
process to the Party to be served at the address set forth above.
9.10 Attorneys' Fees. If any party to this Agreement brings an action
to enforce its rights under this Agreement the prevailing party shall be
entitled to recover its costs and expenses including, without limitation,
reasonable attorneys' fees incurred in connection with such action, including
any appeal of such action.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
MITY-LITE, INC.
By: /s/ Gregory L. Wilson
Title: President
ELLMAN EQUITIES, INC.
By: /s/ Robert P. Kaufman
Title: Senior Vice President and
General Counsel
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
March 13, 1997, by and between Mity-Lite, Inc., a Utah corporation, (the
"Purchaser") and Key Equity Capital Corporation, an Ohio corporation (the
"Seller"). The Purchaser and the Seller are referred to hereinafter collectively
as the "Parties." The Seller owns 83.33 shares (the "Shares") of common stock
(the "Common Stock") of DO Group, Inc., a Delaware corporation (the "Company").
This Agreement contemplates transactions in which the Purchaser will purchase
from the Seller, and the Seller will sell to the Purchaser, all of the Shares
for cash.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, the Parties agree as follows:
1. PURCHASE AND SALE OF THE SHARES
1.1 Basic Transactions. On and subject to the terms and conditions of
this Agreement, the Purchaser agrees to purchase from the Seller, and the Seller
agrees to sell to the Purchaser, all of the Shares for $49,600 (the "Purchase
Price") in cash payable by wire transfer or delivery of other immediately
available funds at the Closing.
1.2 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of LeBoeuf, Lamb,
Greene & MacRae, L.L.P. in Salt Lake City, Utah, commencing at 9:00 a.m. local
time on the second business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Purchaser and the Seller may mutually determine (the "Closing Date").
1.3 Deliveries at the Closing. At the Closing, (a) the Seller will
deliver to the Purchaser the certificate referred to in Section 5.1.1 below and
the stock certificate(s) representing all of the Shares, endorsed in blank or
accompanied by duly executed assignment documents, and (b) the Purchaser will
deliver the Purchase Price to the Seller.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Purchaser that the statements contained in this Section 2
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 2 ).
2.1 Organization of Seller. The Seller is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation or organization.
2.2 Authorization of Transactions. The Seller has all necessary power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Seller and the consummation by the Seller of the transactions
contemplated hereby have been duly authorized by all requisite action by the
Seller, and, if applicable, its directors, members, partners and shareholders.
This Agreement has been duly executed and delivered by the Seller, and this
Agreement constitutes a legal, valid and binding obligation of the Seller,
enforceable in accordance with its terms. The Seller is not required to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any third party or governmental agency in order to consummate the
transactions contemplated by this Agreement.
2.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate or conflict with any law, judgment, order, or other restriction of
any government or court to which the Seller is subject or, if the Seller is a
corporation, any provision of its charter or bylaws or (b) conflict with, result
in a breach of, constitute a default under, or result in the creation of, any
lien, encumbrance, or claim on any of the assets or properties of the Seller
under any agreement, permit, or other arrangement by which the Seller is bound
or to which any of its assets is subject or affected, other than the Second
Amended and Restated Stockholders Agreement dated April 2, 1993 (the
"Stockholders Agreement"), the provisions of which have been waived.
2.4 Brokers' Fees. The Seller has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Purchaser could become
liable or obligated.
2.5 Company Shares. The Seller holds of record and owns beneficially
the number of shares of Common Stock set forth above, free and clear of any
restrictions on transfer (other than any restrictions under the federal and
state securities laws), taxes, mortgages, pledges, encumbrances, claims,
options, warrants, purchase rights, contracts, commitments, puts, calls and
demands. The Seller is not a party to any option, warrant, purchase right, call,
put or other contract or commitment that could require the Seller to sell, buy,
transfer, or otherwise dispose of any capital stock of the Company (other than
this Agreement and the Stockholders Agreement).
3. FURTHER ASSURANCES. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party may request.
4. CONFIDENTIALITY. The Seller will not disclose except to the
Purchaser any confidential information of the Company and its Subsidiary,
including any trade secrets, research and development, manufacturing and
production processes, technical data, customer and supplier lists and
information, pricing and cost information, and financial business and marketing
data plans and shall deliver promptly to the Purchaser or destroy, at the
request and option of the Purchaser, all tangible embodiments (and all copies)
of such confidential information which are in its possession.
5. CONDITIONS TO OBLIGATION TO CLOSE.
5.1 Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to Closing, of each of the following
conditions, any of which may be waived by the Purchaser; provided, however, the
Purchaser's election to proceed with the Closing of the transactions
contemplated herein shall not be deemed a waiver of any breach of any
representation, warranty or covenant herein, whether or not known to the
Purchaser or existing on the Closing Date;
5.1.1 the representations and warranties of the Seller contained in
this Agreement shall have been true and correct as of the date as of which they
were deemed to have been made and shall be true and correct in all material
respects at and as of the Closing Date and the Seller shall have delivered to
the Purchaser a certificate to that effect;
5.1.2 simultaneous with the Closing, the Purchaser shall have
consummated the transactions contemplated by the Contribution Agreement among
the Company, certain shareholders of the Company, and the Purchaser providing
for the funding of a newly formed holding company for the Company on terms
satisfactory to the Purchaser;
5.1.3 the Purchaser shall have had a full opportunity to complete its
due diligence review of the Company and its Subsidiary and the results of such
review shall have been satisfactory to the Purchaser in its sole discretion; and
5.1.4 the Seller shall have delivered to the Purchaser certificate(s)
for all of the Shares, free and clear of any mortgage, pledge, lien,
encumbrance, claim, or other security interest or restrictions other than
restrictions under state and federal securities laws, endorsed in blank or
accompanied by duly executed assignment documents.
5.2 Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject only to the Seller having received the Purchase Price.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Seller shall survive the Closing hereunder
for a period of five (5) years. From and after the Closing Date, the Seller, on
behalf of its directors, officers, employees, agents and affiliates, hereby
waives any and all claims and causes of action against the Company and its
Subsidiary in any way related to facts arising before the Closing Date.
7. TERMINATION. The Purchaser may terminate this Agreement by giving
written notice to the Seller (a) on or before thirty (30) days following the
date of this Agreement if the Purchaser is not satisfied with the results of its
due diligence regarding the Company and its Subsidiary, (b) in the event the
Seller has breached any representation, warranty, or covenant contained in this
Agreement in any material respect or (c) if the Closing shall not have occurred
on or before April 1, 1997. The Seller may terminate this Agreement by giving
written notice to the Purchaser if the Closing shall not have occurred on or
before April 1, 1997.
8. MISCELLANEOUS.
8.1 Press Releases and Public Announcements. The Seller shall not issue
any press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior written approval of the
Purchaser.
8.2 Entire Agreement; Counterparts. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements, or representations by or
among the Parties, written or oral, to the extent they related in any way to the
subject matter hereof. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
8.3 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns.
8.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Utah without giving effect to
any choice or conflict of law provision or rule (whether of the State of Utah or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Utah.
8.5 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and the Seller. No waiver by any Party of any default or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default or breach of warranty.
8.6 Expenses. The Seller agrees that neither the Company nor its
Subsidiary has borne or will bear any of the Seller's costs and expenses
(including any of its legal fees and expenses) in connection with this Agreement
or any of the transactions contemplated hereby.
8.7 Construction; Severability. No presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" shall mean including
without limitation. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
8.8 Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which they may be
entitled, at law or in equity.
8.9 Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Salt Lake City, Utah, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Any
Party may make service on any other Party by sending or delivering a copy of the
process to the Party to be served at the address set forth above.
8.10 Attorneys' Fees. If any party to this Agreement brings an action
to enforce its rights under this Agreement the prevailing party shall be
entitled to recover its costs and expenses including, without limitation,
reasonable attorneys' fees incurred in connection with such action, including
any appeal of such action.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
MITY-LITE, INC.
By: /s/ Gregory L. Wilson
Title: President
KEY EQUITY CAPITAL CORPORATION
By: /s/ James P. Marra, Jr.
Title: General Partner
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
March 13, 1997, by and between Mity-Lite, Inc., a Utah corporation, (the
"Purchaser") and, National City Capital Corporation, a Delaware corporation,
(the "Seller"). The Purchaser and the Seller are referred to hereinafter
collectively as the "Parties." The Seller owns 83.33 shares (the "Shares") of
common stock (the "Common Stock") of DO Group, Inc., a Delaware corporation (the
"Company"). This Agreement contemplates transactions in which the Purchaser will
purchase from the Seller, and the Seller will sell to the Purchaser, all of the
Shares for cash.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, the Parties agree as follows:
1. PURCHASE AND SALE OF THE SHARES.
1.1 Basic Transactions. On and subject to the terms and conditions of
this Agreement, the Purchaser agrees to purchase from the Seller, and the Seller
agrees to sell to the Purchaser, all of the Shares for $49,600 (the "Purchase
Price") in cash payable by wire transfer or delivery of other immediately
available funds at the Closing.
1.2 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of LeBoeuf, Lamb,
Greene & MacRae, L.L.P. in Salt Lake City, Utah, commencing at 9:00 a.m. local
time on the second business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Purchaser and the Seller may mutually determine (the "Closing Date").
1.3 Deliveries at the Closing. At the Closing, (a) the Seller will
deliver to the Purchaser the certificate referred to in Section 5.1.1 below and
the stock certificate(s) representing all of the Shares, endorsed in blank or
accompanied by duly executed assignment documents, and (b) the Purchaser will
deliver the Purchase Price to the Seller.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Purchaser that the statements contained in this Section 2
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 2 ).
2.1 Organization of Seller. The Seller is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation or organization.
2.2 Authorization of Transactions. The Seller has all necessary power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Seller and the consummation by the Seller of the transactions
contemplated hereby have been duly authorized by all requisite action by the
Seller, and, if applicable, its directors, members, partners and shareholders.
This Agreement has been duly executed and delivered by the Seller, and this
Agreement constitutes a legal, valid and binding obligation of the Seller,
enforceable in accordance with its terms. The Seller is not required to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any third party or governmental agency in order to consummate the
transactions contemplated by this Agreement.
2.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate or conflict with any law, judgment, order, or other restriction of
any government or court to which the Seller is subject or, if the Seller is a
corporation, any provision of its charter or bylaws or (b) conflict with, result
in a breach of, constitute a default under, or result in the creation of, any
lien, encumbrance, or claim on any of the assets or properties of the Seller
under any agreement, permit, or other arrangement by which the Seller is bound
or to which any of its assets is subject or affected, other than the Second
Amended and Restated Stockholders Agreement dated April 2, 1993 (the
"Stockholders Agreement"), the provisions of which have been waived.
2.4 Brokers' Fees. The Seller has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Purchaser could become
liable or obligated.
2.5 Company Shares. The Seller holds of record and owns beneficially
the number of shares of Common Stock set forth above, free and clear of any
restrictions on transfer (other than any restrictions under the federal and
state securities laws), taxes, mortgages, pledges, encumbrances, claims,
options, warrants, purchase rights, contracts, commitments, puts, calls and
demands. The Seller is not a party to any option, warrant, purchase right, call,
put or other contract or commitment that could require the Seller to sell, buy,
transfer, or otherwise dispose of any capital stock of the Company (other than
this Agreement and the Stockholders Agreement).
3. FURTHER ASSURANCES. In case at any time after the Closing any
further action is necessary to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party may reasonably
request.
4. CONFIDENTIALITY. The Seller will not disclose except to the
Purchaser any confidential information of the Company and its Subsidiary,
including any trade secrets, research and development, manufacturing and
production processes, technical data, customer and supplier lists and
information, pricing and cost information, and financial business and marketing
data plans and shall deliver promptly to the Purchaser or destroy, at the
request of the Purchaser or at the option of the Seller, all tangible
embodiments (and all copies) of such confidential information which are in its
possession.
5. CONDITIONS TO OBLIGATION TO CLOSE.
5.1 Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to Closing, of each of the following
conditions, any of which may be waived by the Purchaser; provided, however, the
Purchaser's election to proceed with the Closing of the transactions
contemplated herein shall not be deemed a waiver of any breach of any
representation, warranty or covenant herein, whether or not known to the
Purchaser or existing on the Closing Date;
5.1.1 the representations and warranties of the Seller contained in
this Agreement shall have been true and correct as of the date as of which they
were deemed to have been made and shall be true and correct in all material
respects at and as of the Closing Date and the Seller shall have delivered to
the Purchaser a certificate to that effect;
5.1.2 simultaneous with the Closing, the Purchaser shall have
consummated the transactions contemplated by the Contribution Agreement among
the Company, certain shareholders of the Company, and the Purchaser providing
for the funding of a newly formed holding company for the Company on terms
satisfactory to the Purchaser;
5.1.3 the Purchaser shall have had a full opportunity to complete its
due diligence review of the Company and its Subsidiary and the results of such
review shall have been satisfactory to the Purchaser in its sole discretion; and
5.1.4 the Seller shall have delivered to the Purchaser certificate(s)
for all of the Shares, free and clear of any mortgage, pledge, lien,
encumbrance, claim, or other security interest or restrictions other than
restrictions under state and federal securities laws, endorsed in blank or
accompanied by duly executed assignment documents.
5.2 Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject only to the Seller having received the Purchase Price.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Seller shall survive the Closing hereunder
for a period of two (2) years, provided that the representations and warranties
contained in Section 2.5 shall survive until the end of the applicable statute
of limitations. From and after the Closing Date, the Seller, on behalf of its
directors, officers, employees, agents and affiliates, hereby waives any and all
claims and causes of action against the Company and its Subsidiary in any way
related to facts arising before the Closing Date.
7. TERMINATION. The Purchaser may terminate this Agreement by giving
written notice to the Seller (a) on or before thirty (30) days following the
date of this Agreement if the Purchaser is not satisfied with the results of its
due diligence regarding the Company and its Subsidiary, (b) in the event the
Seller has breached any representation, warranty, or covenant contained in this
Agreement in any material respect or (c) if the Closing shall not have occurred
on or before April 1, 1997. The Seller may terminate this Agreement by giving
written notice to the Purchaser if the Closing shall not have occurred on or
before April 1, 1997.
8. MISCELLANEOUS.
8.1 Press Releases and Public Announcements. The Seller shall not issue
any press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior written approval of the
Purchaser.
8.2 Entire Agreement; Counterparts. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements, or representations by or
among the Parties, written or oral, to the extent they related in any way to the
subject matter hereof. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
8.3 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns.
8.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Utah without giving effect to
any choice or conflict of law provision or rule (whether of the State of Utah or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Utah.
8.5 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and the Seller. No waiver by any Party of any default or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default or breach of warranty.
8.6 Expenses. The Seller agrees that neither the Company nor its
Subsidiary has borne or will bear any of the Seller's costs and expenses
(including any of its legal fees and expenses) in connection with this Agreement
or any of the transactions contemplated hereby.
8.7 Construction; Severability. No presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" shall mean including
without limitation. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
8.8 Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which they may be
entitled, at law or in equity.
8.9 Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Salt Lake City, Utah, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Any
Party may make service on any other Party by sending or delivering a copy of the
process to the Party to be served at the address set forth above.
8.10 Attorneys' Fees. If any party to this Agreement brings an action
to enforce its rights under this Agreement the prevailing party shall be
entitled to recover its costs and expenses including, without limitation,
reasonable attorneys' fees incurred in connection with such action, including
any appeal of such action.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
MITY-LITE, INC.
By: /s/ Gregory L. Wilson
Title: President
NATIONAL CITY CAPITAL CORPORATION
By: /s/ Todd McQuaig
Title: Vice President
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
March 13, 1997, by and between Mity-Lite, Inc., a Utah corporation, (the
"Purchaser") and Cardinal Development Capital Fund I, an Ohio corporation (the
"Seller"). The Purchaser and the Seller are referred to hereinafter collectively
as the "Parties." The Seller owns 83.33 shares (the "Shares") of common stock
(the "Common Stock") of DO Group, Inc., a Delaware corporation (the "Company").
This Agreement contemplates transactions in which the Purchaser will purchase
from the Seller, and the Seller will sell to the Purchaser, all of the Shares
for cash.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, the Parties agree as follows:
1. PURCHASE AND SALE OF THE SHARES.
1.1 Basic Transactions. On and subject to the terms and conditions of
this Agreement, the Purchaser agrees to purchase from the Seller, and the Seller
agrees to sell to the Purchaser, all of the Shares for $49,600 (the "Purchase
Price") in cash payable by wire transfer or delivery of other immediately
available funds at the Closing.
1.2 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of LeBoeuf, Lamb,
Greene & MacRae, L.L.P. in Salt Lake City, Utah, commencing at 9:00 a.m. local
time on the second business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Purchaser and the Seller may mutually determine (the "Closing Date").
1.3 Deliveries at the Closing. At the Closing, (a) the Seller will
deliver to the Purchaser the certificate referred to in Section 5.1.1 below and
the stock certificate(s) representing all of the Shares, endorsed in blank or
accompanied by duly executed assignment documents, and (b) the Purchaser will
deliver the Purchase Price to the Seller.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Purchaser that the statements contained in this Section 2
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 2 ).
2.1 Organization of Seller. The Seller is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation or organization.
2.2 Authorization of Transactions. The Seller has all necessary power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Seller and the consummation by the Seller of the transactions
contemplated hereby have been duly authorized by all requisite action by the
Seller, and, if applicable, its directors, members, partners and shareholders.
This Agreement has been duly executed and delivered by the Seller, and this
Agreement constitutes a legal, valid and binding obligation of the Seller,
enforceable in accordance with its terms. The Seller is not required to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any third party or governmental agency in order to consummate the
transactions contemplated by this Agreement.
2.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate or conflict with any law, judgment, order, or other restriction of
any government or court to which the Seller is subject or, if the Seller is a
corporation, any provision of its charter or bylaws or (b) conflict with, result
in a breach of, constitute a default under, or result in the creation of, any
lien, encumbrance, or claim on any of the assets or properties of the Seller
under any agreement, permit, or other arrangement by which the Seller is bound
or to which any of its assets is subject or affected, other than the Second
Amended and Restated Stockholders Agreement dated April 2, 1993 (the
"Stockholders Agreement"), the provisions of which have been waived.
2.4 Brokers' Fees. The Seller has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Purchaser could become
liable or obligated.
2.5 Company Shares. The Seller holds of record and owns beneficially
the number of shares of Common Stock set forth above, free and clear of any
restrictions on transfer (other than any restrictions under the federal and
state securities laws), taxes, mortgages, pledges, encumbrances, claims,
options, warrants, purchase rights, contracts, commitments, puts, calls and
demands. The Seller is not a party to any option, warrant, purchase right, call,
put or other contract or commitment that could require the Seller to sell, buy,
transfer, or otherwise dispose of any capital stock of the Company (other than
this Agreement and the Stockholders Agreement).
3. FURTHER ASSURANCES. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party may request.
4. CONFIDENTIALITY. The Seller will not disclose except to the
Purchaser any confidential information of the Company and its Subsidiary,
including any trade secrets, research and development, manufacturing and
production processes, technical data, customer and supplier lists and
information, pricing and cost information, and financial business and marketing
data plans and shall deliver promptly to the Purchaser or destroy, at the
request and option of the Purchaser, all tangible embodiments (and all copies)
of such confidential information which are in its possession.
5. CONDITIONS TO OBLIGATION TO CLOSE.
5.1 Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to Closing, of each of the following
conditions, any of which may be waived by the Purchaser; provided, however, the
Purchaser's election to proceed with the Closing of the transactions
contemplated herein shall not be deemed a waiver of any breach of any
representation, warranty or covenant herein, whether or not known to the
Purchaser or existing on the Closing Date;
5.1.1 the representations and warranties of the Seller contained in
this Agreement shall have been true and correct as of the date as of which they
were deemed to have been made and shall be true and correct in all material
respects at and as of the Closing Date and the Seller shall have delivered to
the Purchaser a certificate to that effect;
5.1.2 simultaneous with the Closing, the Purchaser shall have
consummated the transactions contemplated by the Contribution Agreement among
the Company, certain shareholders of the Company, and the Purchaser providing
for the funding of a newly formed holding company for the Company on terms
satisfactory to the Purchaser;
5.1.3 the Purchaser shall have had a full opportunity to complete its
due diligence review of the Company and its Subsidiary and the results of such
review shall have been satisfactory to the Purchaser in its sole discretion; and
5.1.4 the Seller shall have delivered to the Purchaser certificate(s)
for all of the Shares, free and clear of any mortgage, pledge, lien,
encumbrance, claim, or other security interest or restrictions other than
restrictions under state and federal securities laws, endorsed in blank or
accompanied by duly executed assignment documents.
5.2 Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject only to the Seller having received the Purchase Price.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Seller shall survive the Closing
hereunder. From and after the Closing Date, the Seller, on behalf of its
directors, officers, employees, agents and affiliates, hereby waives any and all
claims and causes of action against the Company and its Subsidiary in any way
related to facts arising before the Closing Date.
7. TERMINATION. The Purchaser may terminate this Agreement by giving
written notice to the Seller (a) on or before thirty (30) days following the
date of this Agreement if the Purchaser is not satisfied with the results of its
due diligence regarding the Company and its Subsidiary, (b) in the event the
Seller has breached any representation, warranty, or covenant contained in this
Agreement in any material respect or (c) if the Closing shall not have occurred
on or before April 1, 1997. The Seller may terminate this Agreement by giving
written notice to the Purchaser if the Closing shall not have occurred on or
before April 1, 1997.
8. MISCELLANEOUS.
8.1 Press Releases and Public Announcements. The Seller shall not issue
any press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior written approval of the
Purchaser.
8.2 Entire Agreement; Counterparts. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements, or representations by or
among the Parties, written or oral, to the extent they related in any way to the
subject matter hereof. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
8.3 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns.
8.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Utah without giving effect to
any choice or conflict of law provision or rule (whether of the State of Utah or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Utah.
8.5 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and the Seller. No waiver by any Party of any default or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default or breach of warranty.
8.6 Expenses. The Seller agrees that neither the Company nor its
Subsidiary has borne or will bear any of the Seller's costs and expenses
(including any of its legal fees and expenses) in connection with this Agreement
or any of the transactions contemplated hereby.
8.7 Construction; Severability. No presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" shall mean including
without limitation. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
8.8 Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which they may be
entitled, at law or in equity.
8.9 Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Salt Lake City, Utah, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Any
Party may make service on any other Party by sending or delivering a copy of the
process to the Party to be served at the address set forth above.
8.10 Attorneys' Fees. If any party to this Agreement brings an action
to enforce its rights under this Agreement the prevailing party shall be
entitled to recover its costs and expenses including, without limitation,
reasonable attorneys' fees incurred in connection with such action, including
any appeal of such action.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
MITY-LITE, INC.
By: /s/ Gregory L. Wilson
Title: President
CARDINAL DEVELOPMENT
CAPITAL FUND, I
By: /s/ Daniel A. Fronk
Title: President
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT is made and entered as of March 24, 1997, between
Sican Corp., a Delaware corporation ("Borrower"), whose address for purposes of
notice hereunder is 2400 Sterling Avenue, Elkhart, Indiana 46516 and whose
facsimile number is (219) 294-6176, and Mity-Lite, Inc., a Utah corporation
("Lender"), whose address for purposes of notice hereunder is 1301 West 400
North, Orem, Utah 84057.
FOR AND IN CONSIDERATION of the promises and mutual covenants herein
contained, Borrower and Lender agree as follows:
1.0 Background. Lender has agreed to make a term loan in the amount of
$1,000,000 to Borrower (the "Term Loan") for use in payment of Borrower's
operating expenses in the ordinary course of Borrower's business. Borrower
and Lender have entered into this Agreement to set forth the terms and
conditions of the Term Loan.
2.0 Definitions. Unless otherwise defined elsewhere in this Agreement,
capitalized terms when used in this Agreement will have the following
meanings:
2.1 "Accounts" will mean any right to payment for goods sold or
leased or for services rendered by Borrower which is not evidenced by
an instrument or chattel paper whether or not it has been earned by
performance.
2.2 "Borrower" will have the meaning assigned to such term in the
introductory paragraph of this Agreement.
2.3 "Business Day" means any day which is neither a Saturday,
Sunday nor a legal holiday on which banks are authorized or required
to be closed in Utah.
2.4 "Chattel Paper" will mean any writing or writings which
evidence both a monetary obligation and a security interest in or a
lease of specific goods in favor of Borrower.
2.5 "Closing Date" will mean March 24, 1997.
2.6 "Collateral" will mean collectively, the Real Property and
the Personal Property.
2.7 "Current Liabilities" will mean all Indebtedness that at any
date at which the amount thereof will be determined should be
classified as current liabilities, but in any event, including (a) all
Indebtedness, whether secured or unsecured, payable on demand or
maturing not more than one year after such date without any option on
the part of the obligor to extend or renew beyond such year, including
periodic or installment payments on any Funded Debt required to be
made within not more than one year after such date, and all
liabilities, contingent or otherwise, for or on account of any Current
Liabilities of any other person, and (b) accruals for federal and
other taxes based on or measured by income, except deferred income
taxes.
2.8 "Default" will mean any breach of any term, covenant or
condition of, or obligation under, this Agreement, or the occurrence
of any of the events described in Section 8.1 of this Agreement which,
but for the giving of notice or the passage of time, or both, would
constitute an Event of Default.
2.9 "Documents" will mean any document of title, including any
bill of lading, dock warrant, dock receipt, warehouse receipt or order
for the delivery of goods, and any other document that, in the regular
course of Borrower's business or financing, is treated adequately
evidencing that Borrower is entitled to receive, hold and dispose of
the document and the goods that it covers.
2.10 "Equipment" will mean goods of any nature that are used or
bought for use or consumption primarily in the conduct of Borrower's
business and not held for sale or lease, or goods that are not
included in Inventory.
2.11 "ERISA" will mean the Employment Retirement Income Security
Act of 1974, as amended from time to time, and rules and regulations
promulgated thereunder.
2.12 "Event of Default" will mean any breach of any term,
covenant or condition of, or obligation under, this Agreement, or the
occurrence of any of the events described in Section 8.1 of this
Agreement, and the giving of notice or the passage of any applicable
grace or cure period, or both, as provided in such Section or as
otherwise provided in this Agreement.
2.13 "Financing Statements" will mean any financing statements
filed or recorded by Borrower evidencing Lender's security interest in
the Collateral, together with any continuations and amendments
thereto, in form and substance satisfactory to Lender.
2.14 "Funded Debt" will mean all Indebtedness not included within
the definition of Current Liabilities at the date as of which the
amount thereof is to be determined or that by its terms is payable
more than one year from the date of its creation.
2.15 "GAAP" will mean those principles and practices of the
accounting profession conforming to the standards of the American
Institute of Certified Public Accountants. All accounting terms not
specifically defined herein will be construed in accordance with GAAP.
2.16 "General Intangibles" will mean any personal property owned
by Borrower (including things in action) other than Equipment,
Inventory, Accounts, Chattel Paper, Documents, Instruments and money.
General Intangibles will include Borrower's interest in any
trademarks, trade names, copyrights, patents, patent applications and
other intellectual property rights and licenses and rights in any
thereof.
2.17 "Indebtedness" will mean all obligations, contingent and
otherwise, that in accordance with GAAP consistently applied should be
classified upon Borrower's balance sheet as liabilities, but in any
event including taxes, liabilities in respect of unfunded vested
benefits under any Plan covered by Title IV of ERISA, liabilities
secured by any mortgage, pledge or lien existing on real or personal
property owned or acquired by Borrower, all other Current Liabilities
and Funded Debt and all guaranties, endorsements (other than
endorsements for collection or deposit in the ordinary course of
business or in connection with the sale in the ordinary course of
business of Accounts pursuant to recognized customer credit
arrangements), and other contingent obligations with regard to
Indebtedness of others.
2.18 "Instruments" will mean any negotiable instrument,
certificated security or any other writing that evidences Borrower's
right to the payment of money and is not itself a security agreement
or a lease and is of a type that, in the ordinary course of business,
is transferred by delivery with any necessary endorsement or
assignment.
2.19 "Inventory" will mean all goods now owned or hereafter
acquired by Borrower and held for sale or lease in Borrower's business
or furnished or to be furnished under contracts of service, or raw
materials, work in process or materials used or consumed in Borrower's
business.
2.20 "Lender" will have the meaning assigned to such term in the
introductory paragraph of this Agreement.
2.21 "Loan Documents" will mean this Agreement, the Term Note,
the Security Agreement, the Mortgages, the Financing Statements, and
all other documents, instruments, certificates and affidavits
evidencing, securing or governing the Term Loan.
2.22 "Maturity Date" will mean March 24, 2000.
2.23 "Mortgages" will mean the Mortgage, Security Agreement and
Fixture Filings given by Borrower to Lender dated the Closing Date
encumbering the Real Property as a lien and security interest
secondary only to the Senior Debt to secure the Term Note, in form and
substance satisfactory to Lender.
2.24 "Personal Property" will mean the Accounts, Chattel Paper,
Documents, Equipment, General Intangibles, Instruments and Inventory,
and any products, proceeds, renewals, additions, substitutions or
replacements thereof.
2.25 "Plan" will mean any plan defined in Section 4021(a) of
ERISA in respect of which Borrower is an "employer" or a "substantial
employer" as such terms are defined in Section 3(5) and 40041(a)(2),
respectively, of ERISA.
2.26 "Real Property" will mean that certain real property located
in the State of Arkansas as more particularly described on attached
Exhibit A-1, together with all improvements and fixtures located
thereon, and all rents and leases related thereto, and all tenements,
hereditaments, appurtenances, easements and servitudes associated
therewith.
2.27 "Reportable Event" will mean any of the events set forth in
Section 4043(b) of ERISA.
2.28 "Security Agreement" will mean the Security Agreement
between Borrower and Lender dated the Closing Date pursuant to which
Borrower grants to Lender a priority security interest in the Personal
Property secondary in priority only to the Senior Debt as security for
the Term Note, in form and substance satisfactory to Lender.
2.29 "Senior Debt" will mean the indebtedness of Borrower to
Senior Lender in the original principal amount of $ 6,000,000.00 as
evidenced by the Senior Loan Documents.
2.30 "Senior Lender" will mean LaSalle National Bank, its
successors and assigns, as the owner and holder of the Senior Debt.
2.31 "Senior Loan Documents" will mean the promissory note, the
loan agreement and any security documents given by Borrower in favor
of Senior Lender.
2.32 "State" means each state in which the Collateral is located.
2.33 "Tangible Net Worth" will mean the excess of total assets
over total liabilities, with total assets and total liabilities each
to be determined in accordance with GAAP consistently applied. Without
limiting the generality of the foregoing, the determination of total
assets will exclude (A) all assets that would be classified as
intangibles under GAAP, including, without limitation, goodwill
(whether representing the excess of cost over book value of assets
acquired or otherwise), organizational expenses, trademarks, trade
names, copyrights, patents, patent applications and licenses and
rights in any thereof, (B) additions to net worth arising from
re-evaluation of fixed assets.
2.34 "Term Loan" will have the meaning assigned to such term in
Section 1.0 of this Agreement.
3.0 Purpose, Amount and Terms of Loan. Subject to the terms and
conditions of this Agreement, Lender agrees to make the Term Loan to
Borrower in the principal amount of $1,000,000.00. Borrower intends to use
the proceeds of the Term Loan for payment of Borrower's operating costs and
expenses incurred in the ordinary course of Borrower's business and for
payment, by Lender on behalf of Borrower at Closing to Xaio, Inc. of the
amount of $250,000, and will not use the proceeds of the Term Loan for any
other purpose without Lender's express written consent, which may be
granted or withheld in Lender's sole discretion. The Term Loan and the
obligation of Borrower to repay the same will be evidenced by the Term
Note. Borrower will pay interest accrued on the Term Note quarterly,
commencing on the 1st day of April, 1997, and continuing on the 1st day of
January, April, July and October of each calendar year thereafter. The
entire principal amount of the Term Note, together with accrued and unpaid
interest, will be due and payable in full on the Maturity Date. Interest on
the principal balance of the Term Note will accrue on the basis of a 360
day year, at a rate of 10.00% per annum. Borrower will give Lender a valid
lien and security interest in the Collateral secondary only to the Senior
Debt as security for the payment of the Term Note and Borrower's
performance of its obligations under this Agreement. Proceeds of the Term
Loan will be disbursed on the Closing Date.
4.0 Conditions of Lending. Lender's obligation to lend hereunder is
subject to the following conditions precedent:
4.1 Loan Documents and Supporting Materials. Before Lender will
be obligated to make the Term Loan hereunder, Lender will have
received in form and content satisfactory to counsel for Lender:
(a) Evidence of the due organization, valid legal existence
and good standing of Borrower as a Delaware corporation, and the
current authority of Borrower to transact business in each state
in which the Collateral is located;
(b) A certificate of the resolutions of the Board of
Directors of Borrower authorizing the execution and delivery of
this Agreement, the borrowing hereunder and the execution and
delivery of the Loan Documents;
(c) An extended coverage title insurance policy issued by a
title insurance company reasonably acceptable to Lender insuring
Lender's mortgagee interest in the Real Property subject only to
the Senior Loan Documents and those other matters as may be
expressly approved by Lender;
(d) A current boundary survey of the Real Property prepared
by a surveyor licensed in the State in which the Real Property is
located and reasonably acceptable to Lender, certified to Lender
and to the title insurance company as true and correct and
meeting or exceeding the minimum technical standards for land
surveys as established in the State in which the Real Property is
located;
(e) A current UCC-11 search for the state in which Borrower
maintains its executive offices and principal place of business,
and in each State in which any Collateral is located, evidencing
that no person, other than Senior Lender or Lender, has a
perfected security interest in that portion of the Collateral a
security interest in which may be perfected by filing;
(f) The executed Loan Documents;
(g) Such Financing Statements and other instruments as
Lender deems necessary to perfect Lender's security interest in
the Collateral;
(h) At Lender's option, a legal opinion provided by an
attorney licensed in each State in which any Collateral is
located and in the State of Illinois, retained by Borrower and
acceptable to Lender, addressing such matters as Lender
reasonably may require, including, without limitation, the
following:
(i) the due organization, valid legal existence and
good standing of Borrower as a Delaware corporation, and the
current authority of Borrower to transact business in each
State in which the Collateral is located;
(ii) the due authorization, execution, validity,
binding effect and enforceability of the Loan Documents in
accordance with their terms;
(iii) the Collateral and its use by Borrower comply
with applicable requirements of all governmental authorities
having jurisdiction over the Collateral (the foregoing
opinion may be given to the actual knowledge of opining
counsel and based on a certification of such matters given
by Borrower to opining counsel) ;
(iv) all amounts paid and to be paid by Borrower as
interest under the Loan Documents constitute lawful interest
under the laws of the state the laws of which govern such
Loan Documents; and
(v) the existence of, or the non-existence of, any
requirement for any consent of any governmental authority in
connection with the execution, delivery or performance of
the Loan Documents by Borrower; and
(i) Such other documents as Lender or counsel for
Lender reasonably may request.
4.2 Covenants and Representations. Before Lender will be
obligated to make the Term Loan hereunder: (a) no Default or Event of
Default will exist or be continuing, (b) the representations and
warranties of Borrower as set forth in Section 5.0 below will be true
on and as of the Closing Date, with the same force and effect as if
made on and as of such date; (c) Borrower will be in compliance with
all of the covenants as set forth in Section 6.0 and Section 7.0
below; and (d) all legal matters incident to the transactions hereby
contemplated will be satisfactory to Lender.
5.0 Representations and Warranties of Borrower. Borrower represents
and warrants to Lender that:
5.1 Borrower. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, and Borrower
has the corporate power and authority to own its property and to carry
on its business as now being conducted and is duly qualified to do
business in every jurisdiction where such qualification is necessary.
Borrower has the corporate power to execute and perform this
Agreement, to borrow hereunder, to give Lender a mortgage or security
interest in the Collateral and to execute and deliver the Loan
Documents; to do so will not violate any law, Borrower's articles of
incorporation or bylaws or any other agreement or instrument by which
Borrower or any of its properties is bound or to which Borrower is a
party, including without limitation, the Senior Loan Documents, nor
result in the imposition of any lien upon any of the property or
assets of Borrower other than the lien in favor of Lender or Senior
Lender in the Collateral. The making and performance by Borrower of
this Agreement, the borrowing by Borrower hereunder, the creation of
Lender's security interest in the Collateral and Borrower's execution
and delivery of the Loan Documents have been duly authorized by all
necessary corporate action, and all consents, approvals,
authorizations and other orders of regulatory bodies required to have
been obtained therefor have been obtained.
5.2 Title to Collateral. Borrower has good and marketable title
to the Collateral, free and clear of any liens, charges, encumbrances,
security interests and adverse claims whatsoever except those in favor
of the Senior Lender or the Lender or as described on attached Exhibit
B.
5.3 No Litigation. There is no litigation or proceeding pending,
nor to the knowledge of Borrower, threatened, against Borrower which
would reasonably be expected to have a material adverse effect on
Borrower's business, except as disclosed to Lender in writing prior to
the Closing Date.
5.4 Financial Information. The financial statements and reports
of Borrower as delivered to Lender fairly reflect the financial
condition of Borrower as of the date thereof and for the periods
stated, and no material adverse change in the financial condition, the
business or operations of Borrower has occurred between the date
thereof and the date hereof. All financial statements and reports were
prepared in accordance with GAAP consistently applied.
5.5 No Other Indebtedness. Other than the Senior Indebtedness,
Borrower has no material Indebtedness except that disclosed in the
financial statements and reports referred to in Section 5.4 above as
delivered by Borrower to Lender prior to the Closing Date, other than
material Indebtedness incurred since the date of such financial
statement or report in the ordinary course of business.
5.6 No Guaranties. Borrower has made no investments in, advances
to or guaranties of the Indebtedness of any corporation, individual or
other equity except those disclosed in the financial statements and
reports referred to in Section 5.4 above as delivered by Borrower to
Lender prior to the Closing Date.
5.7 Tax Returns. Borrower has filed all required federal, state
and local tax returns as they have become due and has paid all taxes
due thereunder, except any such taxes which are being contested in
good faith and has provided complete and correct copies of such tax
returns to Lender for the last 3 fiscal years of Borrower.
5.8 Regulation U. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying "margin
stock" (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of the Term
Loan will be used, directly or indirectly, to purchase or carry any
margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
5.9 ERISA. Borrower is in compliance in all material respects
with all applicable provisions of ERISA, no Reportable Event has
occurred and is continuing with respect to any Plan, and Borrower has
not incurred any liability to the Pension Benefit Guaranty Corporation
under Section 4062 of ERISA.
5.10 Place of Business. Borrower's executive offices and
principal place of business is located at the address of Borrower set
forth in the introductory paragraph of this Agreement (subject to any
change only upon not less than 30 days prior written notice to Lender
of any proposed change).
6.0 Affirmative Covenants of Borrower. Until all of the amounts
owed to Lender by Borrower have been paid in full, Borrower will:
6.1 Financial Statements. Furnish to Lender within 45 days after
each fiscal year-end of Borrower, a copy of the audited financial
statement of Borrower for the fiscal year of Borrower just ended,
prepared and certified by independent certified public accountants
reasonably satisfactory to Lender in accordance with GAAP consistently
applied, and otherwise in a form acceptable to Lender.
6.2 Monthly Interim Financial Statements. Furnish to Lender not
later than 15 days after the end of each calendar month an interim
financial statement of Borrower for the calendar month just ended,
prepared internally and certified as true and correct by the president
of Borrower, and otherwise in a form acceptable to Lender.
6.3 Monthly Accounts Aging Report. Furnish to Lender not later
than 15 days after the end of each calendar month for the calendar
month just ended a report of Accounts aging, showing each Account and
aging of such Account over 30, 60 and 90 day periods.
6.4 Tax Returns. Furnish to Lender not later than 15 days after
filing, all federal, state and local tax returns and filings of
Borrower.
6.5 Other Financial Information. Furnish to Lender such other
financial information as Lender reasonably may request from time to
time in writing, including but not limited to financial information of
affiliates of Borrower.
6.6 ERISA Reports. Furnish to Lender copies of all reports and
notices that Borrower files under ERISA with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor, or which Borrower receives from any of the
foregoing, promptly after the filing or receipt thereof.
6.7 Minimum Corporate Net Worth. Maintain at all times a Tangible
Net Worth of not less than $_______________, measured as of Borrower's
fiscal year-end using GAAP consistently applied.
6.8 Debt to Net Worth Ratio. Maintain at all times a ratio of
total Indebtedness of Borrower to Tangible Net Worth of Borrower of
not greater than ____ to 1.0, measured as of Borrower's fiscal
year-end using GAAP consistently applied.
6.9 Compliance with Laws. Comply with all statutes and
governmental rules and regulations, including, without limitation,
ERISA, regulations relating to protection of the environment, and
other regulations relating to the ownership, leasing, sale, use or
operation of the Collateral or the business of Borrower, and pay when
due all taxes, assessments, governmental charges, claims for labor,
supplies, rent and other obligations that, if unpaid, might become a
lien against the Collateral, except liabilities being contested in
good faith and against which, if requested by Lender, Borrower will
set up reasonable reserves satisfactory to Lender.
6.10 Insurance. Procure and maintain the following insurance:
(a) Insurance against all risk of direct physical loss or
damage to the Real Property, the Equipment and the Inventory, in
amounts not less than the full replacement cost thereof, if the
same are actually replaced, or actual cash value (replacement
cost minus depreciation) if the same are not replaced.
(b) General public liability insurance against claims for
bodily injury, death or property damage occurring on, in, or
about the Real Property, or in connection with the manufacture,
sale, distribution or use of Inventory, with combined single
limit coverage of not less than $_________.
(c) Workers' compensation insurance covering all persons
employed in connection with the operations of Borrower, or in
lieu of such workers' compensation insurance, a program of
self-insurance complying with the rules, regulations and
requirements of the appropriate agency of each state in which
Borrower maintains operations.
The foregoing policy or policies of insurance will be written by companies
of recognized financial standing which are rated A-1 or better by Standard
& Poors corporation or A-3 or better by Moody's Investor Service with asset
size rating of "X" or better by Best's Rating Service. The insurance (i)
will be for a term of not less than 6 months, (ii) will be in amounts
sufficient at all times to satisfy any coinsurance requirements thereof,
and (iii) will (except for the workers' compensation insurance referred to
in subparagraph (c) above) name Borrower as insured, and will recite
Lender's interest as mortgagee in standard non-contributory mortgagee
clauses.
If said insurance or any part thereof expires, is withdrawn, becomes void
by breach of any condition thereof by Borrower, or becomes void or unsafe
by reason of the failure or impairment of the capital of any insurer, or if
for any other reasonable cause said insurance becomes unsatisfactory to
Lender, Borrower will promptly obtain new or additional insurance
satisfactory to Lender. Borrower will provide Lender with a copy of all
such insurance policies.
Each insurance policy referred to above will provide that it may not be
cancelled or modified to change the risk or coverages insured except after
30 days prior notice to Lender. Borrower will promptly pay all premiums for
the insurance required by this Section 6.10, will renew or replace each
policy at least 30 days prior to the expiration of such policy, and will
deliver to Lender such renewal certificate within 10 days following
inception. Borrower will provide Lender with reasonable proof of payment of
such premiums promptly following Borrower's payment of such premiums.
6.11 Corporate Existence; Maintenance of Property. Maintain
Borrower's corporate existence and maintain Borrower's properties,
including all Real Property, in good operating condition, ordinary
wear and tear excepted.
6.12 Maintenance of Corporate Records; Access to Facilities. Keep
books and records reflecting Borrower's financial condition in
accordance with GAAP consistently applied, and permit any person
designated by Lender to visit and inspect Borrower's property, to
examine and photocopy Borrower's corporate and financial books and
records and to discuss Borrower's affairs, finances and accounts with,
and to be advised as to the same by, Borrower's officers, all at such
reasonable times and intervals as Lender may reasonably request.
6.13 Notice of Default. Give to Lender prompt written notice of
the occurrence of any failure of performance or event of default, or
of the occurrence of any event that with due notice or lapse of time
would constitute a failure of performance or an event of default,
under the terms of this Agreement or any other material agreement or
contract to which Borrower is a party or by which Borrower is bound
and of any acceleration of indebtedness caused thereby.
6.14 Notice of Proceedings. Give to Lender prompt written notice
of Borrower's's becoming a party to any litigation or proceeding that
if decided adversely to Borrower would have a material effect on the
financial condition or business of Borrower.
6.15 Documentary Stamp/Intangible Taxes. Pay any documentary,
transfer, mortgage or recording tax assessed or the cost of any stamps
required to be affixed to any documents in connection with the Loan
Documents or the Collateral, by state or federal governments.
6.16 Financing Statements. Execute and deliver to Lender in form
and substance satisfactory to Lender such Financing Statements and
such other instruments as Lender may from time to time consider
reasonably necessary to create, perfect, preserve and maintain in full
force and effect Lender's security interest in the Collateral and to
give public notice thereof; and Lender, at the expense of Borrower,
may cause such statements and assurances to be recorded and
re-recorded, filed and re-filed, at such times and places as may be
required or permitted by law to create, perfect, preserve and maintain
such security interest and public notice thereof.
6.17 Further Assurances. Upon the reasonable request of Lender,
execute, acknowledge and deliver such further instruments and do such
further acts as may be necessary, desirable or proper to carry out
more effectively the purpose of this Agreement and to subject to
Lender's security interest any property intended by the terms hereof
to be covered thereby and any renewals, additions, substitutions,
replacements or betterments thereto.
6.18 Expenses of Collection. Pay or reimburse Lender for all
reasonable attorneys' fees, costs and expenses paid or incurred by
Lender, whether incurred with respect to collection, trial, appeal,
enforcement of any judgement, bankruptcy or insolvency proceedings or
any subsequent proceedings or appeals from any order or judgement
entered therein, or otherwise, in any action, proceeding or dispute of
any kind in which Lender is made a party or appears as party plaintiff
or defendant, affecting the Loan Documents, Borrower or the
Collateral, including but not limited to the foreclosure or other
enforcement of Lender's security interest, any action to protect the
security thereof or any proceeding in probate, reorganization or
bankruptcy; and any such amounts paid or incurred by Lender will be
added to the amounts owed Lender under the Note, will bear interest at
the Default Rate stated in the Note from date of payment and will be
secured by Lender's security interest in the Collateral.
6.19 Place of Business. Maintain its executive offices and
principal place of business at the address of Borrower set forth in
the introductory paragraph of this Agreement, unless Borrower provides
written notice to Lender of a change in Borrower's executive offices
or principal place of business at lease 30 days prior to any proposed
change.
6.20 Environmental Indemnity. Comply, and cause each of its
Subsidiaries to comply, with the requirements of all federal, state
and local environmental and health laws and regulations the
non-compliance with which could materially adversely affect the
operations, condition (financial or otherwise), business, assets or
prospects of the Borrower or such Subsidiary or the ability of the
Borrower or such Subsidiary to perform its obligations under any Loan
Document, (ii) provide to the Lender all documentation in connection
with such compliance that the Lender may reasonably request and (iii)
defend, indemnify and hold harmless, the Lender and its employees,
agents, officers and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs or expenses
(including, without limitation, attorney and consultant fees,
investigation and laboratory fees, court costs and litigation and
expenses) arising out of (A) the presence, disposal, release or
threatened release of any hazardous materials on any property at any
time owned or occupied by the Borrower or any of its Subsidiaries (or
its respective predecessors in interest or title), (B) any personal
injury (including wrongful death) or property.
7.0 Negative Covenants of Borrower. Until all of the Indebtedness
owed to Lender by Borrower under the Term Note has been paid in full,
Borrower will not:
7.1 Limit on Corporate Borrowing. Borrow or permit the borrowing
by Borrower of any Indebtedness, other than the Term Loan and the
Senior Debt, in excess of $__________ (except trade credit) without
the prior written consent of Lender, which consent may be granted or
withheld in Lender's sole and absolute discretion.
7.2 Sale of Assets. Sell, lease, convey, pledge, grant a security
interest in, or otherwise dispose of any of Borrower's's property or
assets, including but not limited to the Collateral, except in the
ordinary course of business, other than to Lender or Senior Lender.
7.3 Dissolution or Liquidation. Suffer or permit Borrower's
dissolution or liquidation, either in whole or in part, or conveyance
of any of its stock, or redeem, purchase, retire or otherwise acquire,
directly or indirectly, any shares of its own stock, or issue any
additional shares of its own stock.
7.4 Merger or Reorganization. Become a party to a merger,
consolidation or other reorganization with any other corporation or
entity (including a de facto merger by which all or substantially all
of the property or assets of another company are acquired).
7.5 Disposition of Accounts. Pledge, discount or sell any of the
Accounts Receivable other than pursuant to the Security Agreement or
under the Senior Loan Documents.
7.6 No Dividends or Distributions. Not disburse funds in the form
of dividends, distributions, excessive rents, excessive (in Lender's
judgement) management fees, excessive (in Lender's judgment) officer's
compensation, or any other non "arms length" expense incurred in the
normal course of business, without the prior written consent of
Lender, which consent may be granted or withheld in Lender's sole and
absolute discretion.
8.0 Default by Borrower and Remedies of Lender.
8.1 Events of Default. Occurrence of any one or more of the
following events will constitute a Default, and if the same is
continuing beyond any applicable grace or cure period provided below
will constitute an Event of Default:
(a) Payment. If Borrower fails to pay any amount due under
the Term Note or any other Loan Document when due.
(b) Covenants. If Borrower fails to perform or observe any
term, covenant or agreement (other than a covenant of payment)
contained in any Loan Document on its part to be performed or
observed, and such failure shall remain uncured for 15 days after
written notice thereof shall have been given by Lender to
Borrower.
(c) Representations and Warranties. If any representation or
warranty made by Borrower (or any of its officers) under or in
connection with any Loan Document shall be or become incorrect or
untrue, or shall prove to have been incorrect or misleading in
any material respect when made.
(d) Default under other Indebtedness. If a material default
occurs under the Senior Loan Documents, or any other
Indebtedness, and is continuing beyond any applicable grace or
cure period.
(e) Involuntary Bankruptcy or Receivership. If an
involuntary case or proceeding under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect shall
be commenced against Borrower, and such case or proceeding shall
not be dismissed in 60 days; or a court shall enter a decree, or
a court or regulatory authority having jurisdiction over Borrower
shall enter an order, appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator,
supervisor, rehabilitator (or similar official) of Borrower or
for any substantial part of its property, or ordering the
winding-up, supervision or liquidation of its affairs and such
order shall not have been vacated or discharged or stayed or
bonded pending appeal with sixty (60) days after the entry
thereof.
(f) Voluntary Bankruptcy or Receivership. If Borrower shall
commence a voluntary case or proceeding under any applicable
bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an
involuntary case or proceeding under any such law, or shall
consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator,
conservator, supervisor, rehabilitator (or other similar
official) of Borrower or for any substantial part of its
property, or shall make any general assignment for the benefit of
creditors, or shall fail generally to pay its indebtedness
generally as the same becomes due, or shall take any corporate
action in furtherance of any of the foregoing.
(g) Judgments. If any judgments or order for the payment of
money which impairs substantially the ability of Borrower to
perform its obligations under the Loan Documents (exclusive of
amounts covered by insurance) shall be rendered against the
Borrower and such judgment or order shall not have been vacated
or discharged or stayed or bonded pending appeal within sixty
(60) days after the entry thereof.
(h) Transfers or Further Encumbrances. With the exception of
the Senior Lender, if Borrower sells, conveys, transfers,
mortgages, pledges, or grants a security interest in, any of the
Collateral, voluntarily or otherwise (other than in the ordinary
course of Borrower's business), without the prior written consent
of Lender, which consent may be granted or withheld in Lender's
absolute discretion.
(i) Failure of Loan Documents. If any material provision of
the Loan Documents for any reason ceases to be valid and binding
on Borrower, or Borrower shall so state in writing.
(j) Failure of Security. If the Mortgages or the Security
Agreement for any reason ceases to constitute a valid and (with
appropriate filings) perfected mortgage or security interest in
any of the Collateral secondary only to the Senior Debt.
(k) Levy Against Collateral. If the estate or interest of
Borrower in any of the Collateral is levied upon or attached in
any proceeding and such estate or interest is about to be sold or
transferred, or such process is continuing for more than 15 days
after such levy or attachment.
(l) Notices. If Borrower fails to give to Lender any notice
required under this Agreement.
8.2 Remedies. If any Event of Default occurs as provided in
Section 8.1 above, then Lender will, at the option of Lender, have the
right to exercise any or all of the remedies provided for in the Loan
Documents, and such other remedies as may be available to Lender at
law or in equity. The rights of Lender under the Loan Documents will
be separate, distinct, and cumulative of other powers and rights
herein granted and of all other rights which Lender may have in law or
equity, and none of them will be in exclusion of any other. No act of
Lender will be construed as an election to proceed under any
particular provision of this Agreement or the other Loan Documents to
the exclusion of any other provisions, or an election of remedies to
the bar of any other remedy allowed in law or equity. Borrower will
pay the reasonable attorneys' fees and other legal expenses incurred
by Lender in connection with such default or recourse against all
Collateral.
9.0 Indemnification. Borrower hereby releases Lender and agrees to
hold Lender harmless from any and all claims, damages, loss, cost or
expense (including, without limitation, reasonable attorneys' fees and
costs) arising out of or in connection with the Collateral, the Loan
Documents or Borrower's failure to pay or perform its obligations under the
Loan Documents, except for claims arising solely out of Lender's acts or
omissions to act with respect thereto if such acts or omissions are
determined by final judicial or administrative action to constitute gross
negligence or wilful misconduct.
10. Miscellaneous.
10.1 No Waiver; Rights Cumulative. No failure or delay by Lender
to exercise any right, power or privilege hereunder will operate as a
waiver of any such right, power or privilege or preclude any other or
future exercise thereof, and no failure by Lender to insist upon
strict performance by Borrower of any of the terms and provisions of
this Agreement or the other Loan Documents will operate as a waiver of
any of the terms or provisions thereof, and Lender will have the right
thereafter to insist upon strict performance by Borrower of any and
all of them. The rights and remedies herein provided are cumulative
and not exclusive of any other rights or remedies provided by law or
equity.
10.2 Governing Law; Jurisdiction and Venue. The rights and
obligations of Borrower and Lender with respect to this Agreement and
the Term Note shall be governed by, and construed in accordance with,
the laws of the State of Utah, and the rights and obligations of
Borrower and Lender with respect to any other Loan Documents shall be
governed by, and construed in accordance with, the laws of the State
in which the Collateral is located. Any suit, action or proceeding may
be brought against Borrower under the Loan Documents in the courts of
the State in which the Collateral is located or in the courts of the
County of Salt Lake, State of Utah, or the United States District
Court for the Federal District of Utah, as Lender in its sole
discretion may elect, and Borrower hereby accepts the nonexclusive
jurisdiction of those courts for the purpose of any suit, action, or
proceeding. In addition, Borrower hereby irrevocably waives, to the
fullest extent permitted by law, any objection which Borrower may now
or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to the Loan Documents or any
judgment entered by any court in respect of any part thereof, and
hereby further irrevocably waives any claim that any suit, action or
proceeding brought in the jurisdiction selected by Lender has been
brought in an inconvenient forum. Borrower irrevocably agrees that any
pleadings or service of process may be had on Borrower by mailing to
Borrower at the address set forth in the introductory paragraph of
this Agreement by certified or registered mail and such mailing shall
be effective for all purposes, including the establishment of personal
jurisdiction of the court in any such action.
10.3 Amendments, Etc. No amendment, modification, release,
termination or waiver of any provision of this Agreement or the other
Loan Documents shall be effective unless the same shall be in writing
and signed by Lender and Borrower and then such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given.
10.4 Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns, except Borrower shall not have the
right to assign its rights hereunder or any interest herein without
the prior written consent of Lender.
10.5 Severability. Any provision of this Agreement or the other
Loan Documents which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating
the remainder of such provision or the remaining provisions hereof or
thereof or affecting the validity or enforceability of such provision
in any other jurisdiction. This Agreement may be executed in two or
more counterparts, and by the different parties on separate
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument,
and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
10.6 Headings. Section headings used in this Agreement are for
convenience only and shall not affect the construction of this
Agreement.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, and by the different parties on separate counterparts,
each of which shall be deemed an original, but all such counterparts
shall together constitute one and the same instrument, and it shall
not be necessary in making proof of this Agreement to produce or
account for more than one such counterpart.
10.8 Survival of Representations and Warranties. The warranties,
representations, covenants and agreements set forth in this Agreement
and in the other Loan Documents will survive the making of the Term
Loan and the execution and delivery of the Term Note, and will
continue in full force and effect until all Indebtedness of Borrower
to Lender will have been paid in full.
10.9 No Representations or Warranties by Lender. By accepting or
approving anything required to be observed, performed, fulfilled or
given to Lender pursuant to this Agreement or the other Loan
Documents, including (but not limited to) any officer's certificate,
balance sheet, statement of income, profit and loss or other financial
statement, Lender will not be deemed to have warranted or represented
the sufficiency, legality, effectiveness or legal effect of the same,
or of any term, provision or condition thereof, and such acceptance or
approval thereof will not be or constitute any warranty or
representation with respect to Lender.
10.10 Notices. All notices, demands, requests and other
communications required under this Agreement and the other Loan
Documents will be in writing and will be deemed to have been properly
given (a) when deposited in the United States mail and sent by United
States first class mail, postage prepaid, addressed to the party for
whom it is intended at its address set forth in the introductory
paragraph of this Agreement, or (b) when transmitted by facsimile to
the party for whom it is intended at its facsimile number set forth in
the introductory paragraph of this Agreement. Either party may
designate a change of address by written notice to the other, given at
least 10 days before such change of address is to become effective.
10.11 Usury. Anything in this Agreement or the Loan Documents to
the contrary notwithstanding, if from any circumstances whatever
fulfillment of any provision of any of the foregoing documents or
agreements at the time performance of said provision will be due will
involve transcending the limit of validity prescribed by the
applicable state usury law as preempted and prescribed from time to
time by the laws of the United States of America or any rule or
regulation of any department or agency thereof, then, ipso facto the
obligation to be fulfilled will be reduced to the limit of such
validity so that in no event will exaction be possible under any of
the aforesaid documents or agreements in excess of the limit of such
validity, but such obligations will be fulfilled to the limit of such
validity, and if under any circumstances whatsoever interest in excess
of the limit of such validity will have been paid by Borrower in
connection with the Term Note, such excess will be applied by Lender
to the unpaid principal balance of Term Note, as the case may be, or
refunded to Borrower, the manner of handling such excess to be at
Lender's election, and in case any such excess interest has accrued,
Lender will eliminate such excess interest so that under no
circumstances will interest on the Term Loan exceed the maximum rate
allowed by applicable law as preempted and prescribed from time to
time by the laws of the United States of America or any rule or
regulation of any department or agency thereof.
10.12 Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR LENDER
TO MAKE THE TERM LOAN, BORROWER AND LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER OF THEM MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING OUT OF,
UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE INDEBTEDNESS OF
BORROWER TO LENDER THEREUNDER, OR WITH RESPECT TO ANY CLAIMS OR
DEFENSES ALLEGED TO ARISE OUT OF THE COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY TO THE LOAN DOCUMENTS. THIS PROVISION IS NEGOTIATED BY THE
PARTIES AND IS SUBJECT TO NO EXCEPTIONS.
[Remainder of Page Left Intentionally Blank]
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to
be executed the day and year first above written.
BORROWER:
SICAN CORP.
By: /s/ David Kebrdle
Name: David Kebrdle
Its: President
LENDER:
MITY-LITE, INC.
By: /s/ Gregory L. Wilson
Name: Gregory L. Wilson
Its: President
[Signature Page to Term Loan Agreement]
Exhibit A-1: Legal Description of Arkansas Real Property
Exhibit A-2: Legal Description of Indiana Real Property
Exhibit B: Schedule of Prior Interests in Collateral
PUT AGREEMENT
This Put Agreement (the "Agreement"), dated as of March 24, 1997, is made
by and among (i) Mity-Lite, Inc., a Utah corporation ("Mity-Lite") and (ii)
Dennis Kebrdle, David Kebrdle, Domenic Federico, ChiCol Group, Inc., an Ohio
corporation, Sican II Corp., a Delaware corporation and DO Group, Inc., a
Delaware corporation (together, the "DO Group Parties").
RECITALS:
WHEREAS, Mity-Lite has purchased 49.9% of the issued and outstanding shares
(the "Minority Shares") of common stock, no par value (the "DO Group Common
Stock"), of DO Group, Inc., a Delaware corporation ("DO Group"), from certain
shareholders of DO Group, effective as of the date of this Agreement (the
"Minority Share Purchase") for an aggregate purchase price of $750,000 (the
"Purchase Price");
WHEREAS, the DO Group Parties have direct or indirect interests in and/or
are employed by DO Group; and
WHEREAS, in exchange for Mity-Lite's agreement (i) to provide up to
$1,000,000 of term financing to DO Group and/or its subsidiaries as evidenced by
the Term Loan Agreement executed concurrently herewith and related documents
(the "Loan Documents") and (ii) to grant stock options to certain of the DO
Group Parties, the DO Group Parties have agreed to grant the put rights
described herein to Mity-Lite.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereby agree as follows:
1. PUT RIGHT. At any time from and after the date hereof until three years
and 75 days after the date hereof, Mity-Lite shall have the right to require any
or all of the DO Group Parties, and the DO Group Parties hereby agree, jointly
and severally, to acquire the Minority Shares from Mity-Lite for the
consideration determined in accordance with paragraph 2 (the "Put Right").
Mity-Lite may exercise its Put Right at any time by providing written notice
(the "Put Notice") to each of the DO Group Parties as provided in paragraph 6.
The foregoing notwithstanding, the Put Right shall expire upon the conversion of
all of the Class A common stock of DO Group Holding, Inc. into shares of common
stock of Mity-Lite. Mity-Lite will also provide a copy of the Put Notice to the
Estate of Chester E. Dekko as provided in Section 6.
2. PUT PRICE.
a. Upon the exercise of the Put Right prior to three years and 45
days from the date of this Agreement, the DO Group Parties shall pay
to Mity-Lite cash (the "Put Price") in an amount equal to the Purchase
Price, plus (i) clearly identifiable costs of Mity-Lite associated
with acquiring the Minority Shares (the "Costs") and (ii) accrued
interest at the rate of ten percent (10%) per annum on the Purchase
Price and Costs from the date of this Agreement to the date of payment
of the Put Price.
b. Upon the exercise of the Put Right after three years and 45
days, but up to and including three years and 75 days from the date of
this Agreement, the DO Group Parties shall pay to Mity-Lite the Put
Price in an amount equal to the greater of:
(i) the Put Price set forth in subparagraph a. above; or
(ii) the market value of the Minority Shares, determined by
multiplying
A. the combined after tax net income of DO Group and
its subsidiaries for the twelve full months ending on the
last full calendar month preceding the date of the Put
Notice (the "Notice Date") calculated in accordance with
generally accepted accounting principles
times
B. the average published P/E ratio of Mity- Lite common
stock for the last ten trading days of the last full
calendar month preceding the Notice Date
times
C. Mity-Lite's percentage ownership of the issued and
outstanding DO Group Common Stock as of the Notice Date.
The calculation of the Put Price in accordance with this Section 2 shall be
made by Mity-Lite in good faith and such determinations shall be final and
binding on the parties hereto.
3. PAYMENT. The Put Price shall be payable by the DO Group Parties to
Mity-Lite in cash within sixty (60) days following the Notice Date by wire
transfer or other immediately available funds. Upon confirmation of receipt of
the Put Price, Mity-Lite shall tender to the DO Group Parties certificate(s)
representing the Minority Shares, duly endorsed in blank or accompanied by other
valid evidence of transfer, free and clear of all liens, encumbrances, claims
and restrictions arising following the Minority Share Purchase as a result of
any action or failure to act on the part of Mity-Lite (other than restrictions
under federal and state securities laws).
4. SECURITY. The payment of the Put Price shall be secured by (i) the
Corporate Guaranty and the Stock Pledge Agreement executed in connection with
this Put Agreement and (ii) the shares of Class A Common Stock of DO Group
Holding, Inc., shares of Common Stock of DO Group, Inc. and Sican Corp.
deposited in escrow pursuant to the Escrow Agreement of even date herewith among
U. S. Bank Trust Company, Mity-Lite and certain of the DO Group Parties.
5. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah, without regard to its conflicts
of laws principles.
6. NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given when delivered
personally or when sent by facsimile or by registered or certified mail or by
private courier addressed as follows:
if to Mity-Lite, to:
Gregory L. Wilson
Mity-Lite, Inc.
1301 West 400 North
Orem, UT 84057
Telephone: (800) 327-1692
(801) 224-0589
Facsimile: (801) 224-6191
with copies to:
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
1000 Kearns Building
136 South Main Street
Salt Lake City, UT 84101
Attention: Nolan S. Taylor, Esq.
Telephone: (801) 320-6700
Facsimile: (801) 359-8256
if to the DO Group Parties, to:
Domenic Federico
2400 Sterling Avenue
Elkhart, IN 46516
Telephone: (219) 293-0621
Facsimile: (219) 294-6176
David Kebrdle
2400 Sterling Avenue
Elkhart, IN 46516
Telephone: (219) 293-0621
Facsimile: (219) 294-6176
Dennis Kebrdle
2400 Sterling Avenue
Elkhart, IN 46516
Telephone: (219) 293-0621
Facsimile: (219) 294-6176
ChiCol Group, Inc.
2400 Sterling Avenue
Elkhart, IN 46516
Attention: Domenic Federico
Telephone: (219) 293-0621
Facsimile: (219) 294-6176
Sican II
2400 Sterling Avenue
Elkhart, IN 46516
Attention: Domenic Federico
Telephone: (219) 293-0621
Facsimile: (219) 294-6176
DO Group, Inc.
2400 Sterling Avenue
Elkhart, IN 46516
Attention: Domenic Federico
Telephone: (219) 293-0621
Facsimile: (219) 294-6176
if to Dekko, to:
Estate of Chester E. Dekko
1208 Lakeside Drive
Kendallville, IN 46755
Attention: Linda Speckman
Telephone: (219) 347-1278
Facsimile: (219) 347-7103
or to such other address as such party may indicate by a notice delivered
to the other parties hereto.
7. SUCCESSORS AND ASSIGNS. The rights and obligations of each party under
this Agreement shall not be assignable by such party hereto except that
Mity-Lite may assign its rights and/or obligations to any affiliate of
Mity-Lite. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors, heirs and assigns. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon any person or entity other than the parties and authorized successors and
assigns hereunder, any right, remedy or claim under or by reason of this
Agreement.
8. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire
understanding of the parties hereto with regard to the subject matter contained
herein, and supersedes all prior agreements, understandings or intents between
or among any of the parties hereto. The parties hereto, by mutual agreement in
writing signed by all parties hereto, may amend, modify and supplement this
Agreement.
9. WAIVERS. Any term or provision of this Agreement may be waived, or the
time for its performance may be extended or shortened, by the party or parties
entitled to the benefit thereof. Mity-Lite may grant any such waiver to any one
or more of the DO Group Parties without affecting the liability of the other DO
Group Parties under this Agreement. The failure of any party hereto to enforce
at any time any provision of this Agreement shall not be construed to be a
waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
10. EXPENSES. Each party hereto will pay all costs and expenses incident to
its compliance with all agreements and conditions contained herein on its part
to be performed or complied with, including the fees, expenses and disbursements
of its counsel and accountants. In the event of a breach of this Agreement by
any party hereto, the breaching party shall pay all nonbreaching parties any
costs or fees, including attorneys' and accountants' fees, incurred as a result
of such breach or in connection with any arbitration brought under Section 12
hereof or the enforcement of any arbitration award hereunder.
11. PARTIAL INVALIDITY. Whenever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision or provisions had never been contained herein
unless the deletion of such provision or provisions would result in such a
material change as to cause completion of the transactions contemplated hereby
to be unreasonable.
12. ARBITRATION. The parties agree that, upon written demand by any of the
parties, any dispute or claim regarding the Put Price or any other matter
hereunder shall be settled by binding arbitration. The arbitration proceeding
shall be conducted in Salt Lake City, Utah under the Commercial Arbitration
Rules of the American Arbitration Association in effect at the time a written
demand for arbitration is made by a panel of three arbitrators selected by the
American Arbitration Association. A decision and award of the panel of
arbitrators made under said rules shall be made within twenty (20) days of the
conclusion of the arbitration hearing and shall be conclusive, final and binding
on all parties, their heirs, executors, administrators, successors and assigns
and enforceable against the parties.
13. EXECUTION IN COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be considered an original instrument, but
all of which shall be considered one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Put Agreement to be
executed the day and year first above written.
MITY-LITE, INC.
By: /s/ Gregory L. Wilson
Its: President
/s/ Dennis Kebrdle
Dennis Kebrdle
/s/ David Kebrdle
David Kebrdle
/s/ Domenic Federico
Domenic Federico
CHICOL GROUP, INC.
By: /s/ Dennis Kebrdle
Its: Chairman
SICAN II CORP.
By: /s/ Dennis Kebrdle
Its: Dennis Kebrdle
DO GROUP, INC.
By: /s/ Dennis Kebrdle
Its: Dennis Kebrdle
