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As Of Filer Filing For·On·As Docs:Size Issuer Agent 6/26/01 WD 40 Co S-3 4:360K Merrill Corp/FA |
Document/Exhibit Description Pages Size
1: S-3 Registration Statement for Securities Offered HTML 122K
Pursuant to a Transaction
2: EX-2.0 Plan of Acquisition, Reorganization, Arrangement, HTML 289K
Liquidation or Succession
3: EX-5.0 Opinion re: Legality HTML 9K
4: EX-23.1 Consent of Experts or Counsel HTML 8K
| Page | (sequential) | | | (alphabetic) | Top | |
|---|---|---|---|---|---|
| 1 | 1st Page - Filing Submission | ||||
| " | Stock Purchase Agreement | ||||
| " | Exhibit 1.5 | ||||
| " | Exhibit 10.2.6 | ||||
| " | Exhibit 10.3.4 | ||||
| " | QuickLinks | ||||
| Prepared by MERRILL CORPORATION |
Exhibit 2.0
THIS STOCK PURCHASE AGREEMENT, made as of the 26th day of March, 2001 by and among WD-40 Company, a Delaware corporation ("Buyer"), HPD Holdings Corp. and its wholly-owned subsidiary HPD Laboratories, Inc., Delaware corporations (collectively referred to as "Company"), and the Persons listed on the attached Schedule (each a Shareholder and collectively the Majority Shareholder on behalf of themselves individually and all other shareholders, collectively the "Shareholders").
BACKGROUND RECITALS:
A. Shareholders own 100% of the issued and outstanding shares of capital stock of Company, the number of such shares owned by each of the Shareholders is set forth opposite the names of the respective Shareholders on Schedule 3.1;
B. Buyer desires to acquire all of the issued and outstanding capital stock of Company held by the Shareholders in exchange for cash and shares of voting common stock of Buyer on the terms and conditions hereinafter set forth.
C. Company is engaged in the business of developing and marketing a range of household cleaners and related products (the "Business").
D. A glossary of defined terms appears in Section 23 of this Agreement, and reference is made to that Section for the definitions of capitalized terms used herein which are not defined elsewhere;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Acquisition of Stock. On the Closing Date (as hereinafter defined), the Shareholders shall convey, transfer and assign, upon the terms and conditions herein set forth, to Buyer, free and clear of all liens, security interests, pledges, claims and encumbrances of every kind, nature and description, and Buyer shall accept from the Shareholders, all but not less than all of the outstanding capital stock of Company in exchange for a total consideration of Sixty Eight Million Three Hundred Seventy Six Thousand and 00/100 Dollars ($68,376,000.00) which sum is equal to the annual net sales of Company excluding private label sales, determined in accordance with U.S. Generally Accepted Accounting Principles, for the 12 month period from January 30, 2000 through January 26, 2001. The Purchase Price, Sixty Eight Million Three Hundred Seventy Six Thousand and 00/100 Dollars ($68,376,000.00) shall be adjusted and paid as follows:
1.1 The parties acknowledge that the Company has issued and outstanding 328.7356 shares of preferred stock in the principal amount as of the date of this agreement of $3,287,356. All such preferred stock shall be purchased for the outstanding principal amount plus dividends accrued to the date of payment out of purchase proceeds.
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1.2 The following obligations of the Company together with accrued interest, if any, thereon computed to the date of the pay-off, shall be retired out of the purchase proceeds.
| Senior Term Loan A (as of 3/31/01 after 3/31/01 payment) | $4,719,000 | |
| Senior Term Loan B (as of 3/31/01 after 3/31/01 payment) | $11,261,000 | |
| Revolver (principal balance changes daily, as of 3/08/01) | $2,900,000 | |
| Senior Subordinated Note (as of 3/08/01) | $12,000,000 | |
| Debentures (principal balance as of 3/31/00, 12% interest) | $5,000,000 | |
| Severance and Bonus Payments | to be determined | |
| Transaction Costs of Shareholders | to be determined |
1.3 The Purchase Price shall be adjusted at Closing on a dollar for dollar basis for the sum of Seven Hundred Fifty Thousand Dollars ($750,000) representing the agreed upon market value of the Equipment which will be sold to Buyer or a designee of Buyer on the Closing Date.
1.4 (a) The Purchase Price shall be adjusted upward or downward by an amount equal to any difference between the Company's Net Book Value as of January 26, 2001 of $36,029,000 and the Closing Net Book Value (as determined below). The parties acknowledge and agree that Schedule 1.4 sets forth the balance sheet items and methodology utilized in computing Net Book Value and a comparison of the Net Book Value as of November 24, 2000 and the Net Book Value as of January 26, 2001. The Purchase Price adjustment shall be determined by the following procedure:
Step 1
The Closing Net Book Value shall be determined by making the following adjustments to the Net Book Value computed as of the Closing Date (the same methodology will be utilized in computing Net Book Value as of the Closing Date as used in computing the Net Book Values set forth in Schedule 1.4):
The sum so determined shall be the "Closing Net Book Value."
Step 2
Not less than three (3) days prior to the Closing Date, the Company shall prepare and deliver to the Buyer the Closing Net Book Value computation, dated as of the Closing Date, setting forth the Closing Net Book Value determined in accordance with above and comparing such Closing Net Book value to the Net Book Value as of January 26, 2001 of $36,029,000 ("Closing Net Book Value Computation"). The Closing Net Book Value Computation so delivered to the Buyer is subject to the Buyer's review and reasonable approval.
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Step 3
The difference between the Net Book Value as of January 26, 2001 of $36,029,000 and the Closing Net Book Value shall be determined ("Adjustment Amount").
Step 4
If the Closing Net Book Value is greater than the Net Book Value as of January 26, 2001 of $36,029,000, Buyer shall pay on the Closing Date the Adjustment Amount to the Shareholders in cash as additional Purchase Price. If the Closing Net Book Value is less than the Net Book Value as of January 26, 2001 of $36,029,000 the Adjustment Amount shall be deducted by Buyer from the Purchase Price to be paid at Closing.
1.5 The Purchase Price shall be payable in cash. However, at Buyer's option, upon written notice to the Shareholders not less than seven (7) days prior to Closing, a portion of the Purchase Price up to Five Million Dollars ($5,000,000) may be paid in the form of that number of shares of Common Stock of Buyer (hereinafter the "Buyer Stock") valued at the average of the closing prices of WD-40 Company's stock on the NASDAQ stock market for the five (5) trading days prior to and ending on the day prior to Closing (the "Buyer Stock Valuation Price"). Such shares shall be delivered at the Closing (as hereinafter defined) to the Shareholders in accordance with their respective interests in the Company as set forth on Schedule 3.1(b) subject to the retention provided for in Section 12. Buyer Stock shall be subject to restrictions on resale as may be required by the U.S. Securities and Exchange Commission and, additionally those restrictions as are set forth in the Registration Rights Agreement attached hereto as Exhibit 1.5, including a limitation on resale such that not more than one-third of such stock received by any Shareholder may be sold on the open market in any 30 day period. Buyer agrees to cause to be filed with the SEC an application to register the Buyer Stock used as a portion of the Purchase Price as soon as practicable following the Closing Date. In the event Buyer shall not have received an effective registration within ninety (90) days from the Closing, then Buyer must re-purchase the Buyer Stock from Shareholders at a purchase price equal to the greater of (i) the closing price of the Buyer Stock on the ninetieth (90th) day following the Closing Date or (ii) the Buyer Stock Valuation Price (adjusted for capital changes such as stock splits, if any, subsequent to the Closing). Payment of the Purchase Price shall be subject to security retention as provided for in Section 12 of this Agreement. Notwithstanding the foregoing, provided that Buyer has acted diligently to prepare and file the required registration statement within sixty (60) days following the Closing, the deadline for the effectiveness of said registration statement shall be extended for a period of thirty (30) days provided that Buyer continues at all times following the filing of the registration statement to act diligently in response to SEC comments and requests for additional information.
2. Representations and Warranties of Company. As material inducement to Buyer to enter into this Agreement and to close hereunder, Company hereby makes the following representations and warranties to Buyer:
2.1 Due Organization; Capitalization and Articles, Bylaws and Records.
Company are corporations duly organized, validly existing and in good standing under the laws of the State of Delaware and has the full corporate power and authority to own its properties, carry on its business as it is now being conducted and perform its obligations under all Contracts, and is duly qualified to do business as a foreign corporation in the jurisdictions specified in Schedule 2.1, which constitutes all the jurisdictions in which such qualification is required, except where such failure to qualify would not have a material adverse effect on the conduct of the Company's business or financial condition. The authorized capital stock of the Company consists of One Hundred Thousand (100,000) shares of common stock, $.01 par value per share, of which Nine Hundred Seventy (970) shares are outstanding and, except as set forth on Schedule 2.1, owned by the Shareholders, free and clear of all
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liens, encumbrances, security agreements, options, claims, charges and restrictions, all of which outstanding shares are validly issued, fully paid and non-assessable. Except as set forth in Schedule 2.1there are no shares of Company's capital stock held in its treasury. Except as set forth in Schedule 2.1, there are no options, warrants, rights, shareholder agreements or other instruments or agreements outstanding giving any person the right to acquire any shares of capital stock of Company [or any subsidiary of Company], nor are there any commitments to issue or execute any such options, warrants, rights, shareholder agreements or other instruments or agreements. Except as set forth in Schedule 2.1, there are no outstanding stock appreciation rights or similar rights measured with respect to any of Company's [or any Company subsidiary's] capital stock, nor are there any instruments, or agreements giving anyone the right to acquire any such rights. The minute books and stock records of Company and its subsidiaries are complete and accurate and all signatures included therein are the genuine signatures of the persons indicated as signing. True, correct and complete copies of Company's [and each subsidiary's] minute books and stock records, including Company's and each subsidiary's articles of incorporation and bylaws and all amendments to both, have been delivered to or made available for inspection by the Buyer. Company is not in material default under or in material violation of any provision of its articles of incorporation or its bylaws. The books of account, stock records, minute books and other records of the Company are, in all material respects, accurate, up-to-date and complete, and have been, maintained in accordance with sound and prudent business practices.
2.2 Authority; Binding Nature of Agreements.
The Company has the absolute and unrestricted right, power and authority to enter into and to perform its obligations under this Agreement and all other agreements, certificates and instruments contemplated to be executed and delivered by the Company in connection with this Agreement, ("Agreement") and the execution, delivery and performance by the Company of this Agreement and such other agreements, certificates and instruments have been duly authorized by all necessary action on the part of the Company and its shareholders, board of directors and officers. Each of this Agreement and such other agreements, certificates and instruments constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy and other similar laws affecting creditors rights.
2.3 Non Contravention; Consents.
Except as disclosed on Schedule 2.3, neither the execution nor delivery of any of this Agreement, nor the consummation or performance of any of the transactions contemplated hereby, will, directly or indirectly (with or without notice or lapse of time):
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Except as disclosed on Schedule 2.3, the Company was not, is or will not be required to make any filing with or give any notice to, or to obtain any Consent from, any Person in connection with the execution and delivery of the Agreement or the consummation or performance of any of the transactions contemplated hereby which filing notice or Consent has not already been sent or obtained as the case may be.
2.4 Subsidiaries and Joint Ventures.
Except as disclosed on Schedule 2.4, there is no corporation or other entity in which Company owns, directly or indirectly, a controlling interest or a majority of the outstanding shares or other equity interest issued by such corporation or entity, nor does Company own any other capital stock, security, partnership interest or other interest of any kind, either direct or indirect, in any corporation, partnership, joint venture, association or other entity. Schedule 2.4 states the jurisdiction of incorporation of each such subsidiary and the jurisdictions in which it is qualified to do business as a foreign corporation or entity. Each such subsidiary is qualified in all jurisdictions in which such qualification is required except where such failure to qualify would not have a material adverse effect on the conduct of the Company's business or on the Company's financial condition.
2.5 Financial Statements.
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2.6 Liabilities; Major Suppliers.
2.7 Absence of Changes.
Except as set forth in Schedule 2.7 since January 26, 2001:
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2.8 Real Estate Leases.
2.9 Title to Assets.
Except as set forth in Schedule 2.9, the Company owns, free and clear of Encumbrances:
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2.10 Receivables; Major Customers.
2.11 Equipment, etc.
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2.12 Products and Inventories.
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2.13 Sufficiency of the Assets.
As of the Closing Date, the properties and assets owned or leased by the Company will constitute all the properties and assets currently used, and since January 26, 2001 have been used, by the Company in its business, except for dispositions made in the Ordinary Course of Business, and are sufficient for the operation of its business on a basis consistent with past practices.
2.14 Tax Matters.
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the Company, has not been, and will not be, required to include any adjustment in taxable income for any tax period (or portion thereof) pursuant to Section 481 or 263A of the Code or any comparable provision under state or foreign Tax laws as a result of transactions or events occurring, or accounting methods employed, prior to the Closing.
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2.15 Contracts.
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2.16 Proprietary Assets.
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2.17 Proceedings; Orders.
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2.18 Employee and Labor Matters.
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2.19 Benefit Plans; ERISA. (The statements made in this Section 2.19 are made to the Knowledge of the Company).
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There is no Person that (by reason of common control or otherwise) is or has at any time been treated together with the Company as a single employer within the meaning of Section 414 of the Code.
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each Employee Benefit Plan maintained by the Company has at all times complied and been operated and administered in compliance with, all applicable reporting, disclosure and other requirements of ERISA and the Code and all other applicable Legal Requirements; except where such failure to comply would not have a material adverse effect on the Company's business or financial condition. The Company has never incurred any Liability to the Internal Revenue Service nor any other Governmental Body with respect to any Employee Benefit Plan maintained by the Company; and no event has occurred, and no condition or circumstance exists, that likely would (with or without notice or lapse of time) give rise directly or indirectly to any such Liability (other than routine Liabilities incurred in the Ordinary Course of Business). Neither the Company nor any Person that is or was an administrator or fiduciary of any Employee Benefit Plan maintained by the Company (or that acts or has acted as a Shareholder of the Company or any such administrator or fiduciary) has engaged in any transaction or has otherwise acted or failed to act in a manner that has subjected or likely would subject the Company to any Liability for a material breach of any fiduciary duty or any other duty. There are no Proceedings or claims (other than routine claims for benefits in the ordinary course) pending, or threatened, and neither any Shareholder nor the Company has Knowledge of any facts which would give rise to any such Proceedings or claims (other than routine claims for benefits in the Ordinary Course of Business).
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2.20 Insurance.
Schedule 2.20 also identifies (a) each pending application for insurance that has been submitted by or on behalf of the Company, and (b) each self-insurance or risk-sharing arrangement affecting the Company or any of its assets. The Company has delivered or made available to the Buyer accurate and complete copies of all of the insurance policies identified in Schedule 2.20 (including all renewals thereof and endorsements thereto) and all of the pending applications identified in Schedule 2.20.
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2.21 Related Party Transactions.
Except as set forth in Schedule 2.21 and except for those transactions that are contemplated by this Agreement:
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2.22 Sale of Products.
2.23 Bank Accounts.
Schedule 2.23 accurately sets forth, with respect to each account maintained by or for the benefit of the Company at any bank or other financial institution:
There are no safe deposit boxes or similar arrangements maintained by or for the benefit of the Company. Except as set forth in Schedule 2.23, the Company has no general or special powers of attorney outstanding (whether as grantor or grantee thereof).
2.24 Compliance with Legal Requirements.
Except as set forth in Schedule 2.24:
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2.25 Environmental Matters.
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2.26 Brokers.
No broker or finder has acted for the Company in connection with this Agreement or the transactions contemplated hereby, and no broker or finder is entitled to any brokerage or finder's or similar fees or other commissions in respect of such transactions based in any way on agreements, arrangements or understandings made by or on behalf of the Company.
2.27 [Intentionally omitted]
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2.28 Full Disclosure.
Any provision herein applicable to Company that is qualified by the term "material", "materially" or a term of similar meaning shall be deemed to refer to Company and its Subsidiaries taken as a whole, and shall not apply to any such entity on an individual or separate basis. Information that must be described in more than one Schedule shall not be deemed disclosed in a particular Schedule unless it is disclosed in such Schedule, either expressly or by a specific incorporation by reference to the relevant portion of another Schedule. Disclosure of information in a Schedule shall not be deemed to establish that such disclosure is required.
3. Representations and Warranties of the Shareholders. As material inducement to Buyer to enter into this Agreement and to close hereunder, each Shareholder makes the following representations and warranties to Buyer:
3.1 Ownership of Capital Stock of Company. The Shareholder owns the number of shares of common stock of Company set forth opposite such Shareholder's name on Schedule 3.1. Except as set forth in Schedule 3.1, the Shareholder has good, marketable and unencumbered title to such shares, free and clear of all liens, security interests, pledges, claims, options and rights of others (collectively, "Stock Rights"). There are no restrictions on the Shareholder's right to transfer such shares to Buyer pursuant to this Agreement. Between the date hereof and Closing, no transfer of record ownership of, or beneficial interest in, any of such shares will be made and no Stock Rights with respect to any such shares will be created.
3.2 Authorization; Valid and Binding Agreement. The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate or entity action by each Shareholder that is a corporation or other entity and each such Shareholder is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. This Agreement and the documents contemplated hereby have been, or will be when executed and delivered at or prior to the Closing, duly executed and delivered by the Shareholder and constitute, or will constitute when executed and delivered, the legal, valid and binding obligations of the Shareholder, enforceable against the Shareholder in accordance with their terms, except as the enforceability hereof or thereof may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally and by general principles of equity, whether considered in a proceeding at law or in equity. No approval of any governmental body or governmental agency is required to consummate the transactions contemplated hereby, except any approvals heretofore obtained.
3.3 Agreement Not in Breach of Other Instruments Affecting the Shareholder. The execution and delivery of this Agreement, the consummation of the transactions provided for herein, and the fulfillment of the terms hereof by the Shareholder do not and will not, with or without the giving of notice, the lapse of time, or both, result in the breach of any of the terms and provisions of, or constitute a default under, or conflict with, any agreement or other instrument (including without
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limitation, Company's articles of incorporation and bylaws) by which such Shareholder is bound, any judgment, decree, order, or award of any court, governmental body, or arbitrator, or any applicable law, rule or regulation.
3.4 Brokers. No broker or finder has acted for the Shareholder in connection with this Agreement or the transactions contemplated hereby, and no broker or finder is entitled to any brokerage or finders fee or similar fees or other commissions in respect of such transactions based in any way on agreements, arrangements, or understandings made by or on behalf of such Shareholder.
4. Representations and Warranties of Buyer. As material inducement to Company and the Shareholders to enter into this Agreement, Buyer makes the following representations and warranties to Company and the Shareholders:
4.1 Corporate Status and Authority; Outstanding Stock. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has the corporate power to acquire the stock to be acquired hereunder. Buyer has, and will continue to have at all times until Closing hereunder, a sufficient number of authorized but unissued shares of Common Stock of the Buyer to be able to issue all of the shares of Buyer Stock which are to be issued hereunder. The execution, delivery and performance of this Agreement by Buyer have been duly authorized by all necessary corporate action on the part of Buyer, and this Agreement constitutes the valid and binding obligation of Buyer, enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally and by general principles of equity, whether considered in a proceeding at law or in equity.
4.2 Status of Buyer Stock. The shares of Buyer Stock, when issued pursuant to the terms of this Agreement, will be duly authorized, validly issued and outstanding, fully paid and non-assessable.
4.3 Agreement Not in Breach of Other Instruments Affecting Buyer. The execution and delivery of this Agreement and the consummation of the transactions provided for herein by Buyer do not and will not, with or without the giving of notice, the lapse of time or both, result in the breach of any of the terms and provisions of, or constitute a default under, or conflict with, or cause any acceleration of any obligation of Buyer under, any agreement, indenture or other instrument by which Buyer is bound, Buyer's articles of incorporation or bylaws, any judgment, decree, order or award of any court, governmental body, or arbitrator, or any applicable law, rule or regulation.
4.4 Financial Statements. The financial statements of Buyer as of August 31, 2000, and the fiscal year then ended, audited by PricewaterhouseCoopers LLP, have been prepared in accordance with generally accepted accounting principles and fairly and accurately present the financial condition of Buyer as of such date. Since such date, there has been no material adverse change in the financial condition of Buyer.
4.5 Buyer's SEC Filings. Neither Buyer's Report on Form 10-K for the year ended August 31, 2000 nor any other document filed by Buyer with the Securities and Exchange Commission ("SEC") since August 31, 2000, contained a misstatement of a material fact or failed to state a material fact required to be stated therein or necessary to make the statements made therein not misleading as of the date such filing was made.
4.6 Purchase for Investment. Buyer is acquiring the shares of Company stock for its own investment and not with a view to distribution or resale. Buyer agrees that the shares of the Company may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act or any applicable state securities laws,
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except pursuant to an exemption from such registration under the Securities Act and such state securities laws.
4.7 Governmental Consents. Other than filings required by the HSR Act, Buyer is and will not be required to make any filing with or give any notice to, or obtain any Consent from, any Person in connection with the execution and delivery of the Agreement or the consummation or performance of any of the transactions contemplated hereby.
4.8 Brokers. Except for Shoreline Partners, LLC, no broker or finder has acted for Buyer in connection with this Agreement or the transactions contemplated hereby, and no broker or finder is entitled to any brokerage or finder's or similar fees or other commissions in respect of such transactions based in any way on agreements, arrangements or understandings made by or on behalf of Buyer. Buyer shall be solely responsible for the payment of any and all fees to Shoreline Partners, LLC.
4.9 Full Disclosure.
4.10 Financing. Buyer has sufficient cash and/or available credit facilities to pay the purchase price and any adjustments thereto and to make all other necessary payments of fees and expenses in connection with the transactions contemplated by this Agreement..
4.11. Due Diligence. As of the date of this Agreement, Buyer has completed all due diligence and other investigations of the Company which Buyer may require in order to finalize the transactions contemplated by this Agreement.
5. Continuation and Survival of Representations and Warranties. All representations and warranties, including information disclosed in Schedules, made in this Agreement shall continue to be true and correct at and as of the Closing Date and at all times between the signing of this Agreement and the Closing Date, as if made at each of such times; provided, however, that at Closing the Shareholders may deliver to Buyer modifications of Schedules 2.1 through 2.27 and Schedules 3.1 through 3.3 to reflect changes thereto arising in the ordinary course of their respective Business since the date hereof, provided further that none of such changes, either individually or in the aggregate, is materially adverse to the Business or financial condition of Company or the Shareholders or arises from any occurrences or circumstances which would constitute a violation of Section 7 hereof. If any party hereto shall learn of a representation or warranty being or becoming untrue at or prior to Closing, such party shall promptly give notice thereof to all of the other parties hereto. All representations and warranties contained herein shall survive the consummation of the transactions provided for in this Agreement as more particularly described in Section 11; shall continue in full force and effect; and shall provide the basis for the remedies set forth herein or otherwise available to the non-breaching party as more particularly described in Section 11. Each representation and warranty contained herein is independent of all other representations and warranties contained herein (whether or not covering an identical or a related subject matter) and must be independently and separately complied with and satisfied. Exceptions or qualifications to any representations or warranties contained herein shall not be construed as exceptions or qualifications to any other warranty or representation.
6. Buyer's Inspection Rights. Company shall give to Buyer and its designated employees or representatives reasonable access, upon reasonable prior notice and during normal business hours and in a manner so as not to interfere with the normal business operations of the Company, to all of the properties and assets of Company, to Company's stock books, and to all of Company's documents, books and records relating to its current and past operations and Business. Company shall permit such
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employees and representatives to make copies of Company's written materials and to interview and question Company's employees. Buyer will treat all such information and data obtained by Buyer as confidential and will not reveal any data and/or information supplied by Company except to its management, counsel, accountants, insurance representatives, investment bankers and like agents, for purposes solely relating to the evaluation and consummation of the transactions contemplated by this Agreement, and in the event the transactions contemplated by this Agreement are not consummated, such data and information, including all copies and tangible embodiments thereof, will not be used by Buyer and will be returned to Company.
7. Conduct of the Business of Company Pending Closing. Between the date hereof and the Closing hereunder, Company shall and Shareholders shall cause the Company to:
7.1 not take or suffer or permit any action which would render untrue, in any material respect, any of the representations or warranties of Company herein contained, and not omit to take any action, the omission of which would render untrue, in any material respect, any such representation or warranty;
7.2 conduct its Business in a good and diligent manner in the ordinary and usual course;
7.3 not enter into any contract, agreement, commitment or arrangement with any party, other than contracts for the sale of merchandise or services and contracts for the purchase of materials, services and supplies in the ordinary and usual course of its Business, and not amend, modify or terminate any Contract without the prior written consent of Buyer;
7.4 use its best efforts to preserve its Business organization intact, to keep available the services of its employees and to preserve its relationships with customers, suppliers and others with whom it deals;
7.5 not reveal, orally or in writing, to any party, other than Buyer and Buyer's authorized agents, any of the procedures and practices followed by it in the conduct of its Business or any technology used in the processing, evaluation or manufacture of any of its products or rendering its services;
7.6 maintain in full force and effect all of the insurance policies listed on Schedule 2.20 and make no change in any insurance coverage without the prior written consent of Buyer;
7.7 keep the premises occupied by it and all of its equipment and other tangible personal property in good order and repair, reasonable wear and tear excepted, and perform all necessary repairs and maintenance;
7.8 continue to maintain all of its usual Business books and records in accordance with its past practices;
7.9 not amend its articles of incorporation or bylaws;
7.10 not declare or make any dividend or other payment on or with respect to its capital stock, redeem or otherwise acquire any shares of its capital stock or issue any capital stock or any option, warrant or right relating thereto except to the extent required under agreements in effect as of the date of this Agreement;
7.11 not waive any right or cancel any claim except to the extent required under agreements in effect as of the date of this Agreement;
7.12 not increase the compensation or rate of compensation payable to any of its employees except to the extent required under agreements in effect as of the date of this Agreement;
7.13 maintain its corporate existence and not merge or consolidate with any other entity;
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7.14 comply with all provisions of any Contract applicable to it and all applicable laws, rules and regulations;
7.15 not make any capital expenditure exceeding Fifty Thousand Dollars ($50,000.00) as to any individual expenditure or series of related expenditures, and not exceeding Two Hundred and Fifty Thousand Dollars ($250,000.00) in the aggregate that are not covered by Company's current budget; and
7.16 use its best efforts to obtain any necessary third party consents and take other actions in order to consummate the transactions contemplated by this Agreement.
8. Conditions Precedent to Buyer's Obligation to Close. The following shall be conditions precedent to the obligation of Buyer to close hereunder, any of which may be waived in whole or in part by Buyer:
8.1 Each of the representations and warranties of Company and the Shareholders contained in this Agreement is now and, except as to those expressly limited to the date hereof or some other specific date, at all times after the date of this Agreement to and including the time of Closing shall be, true and correct individually and collectively in all material respects, provided that any references to materiality in any representation and warranty shall be disregarded for purposes of this provision.
8.2 Each of the agreements, covenants and undertakings of Company and the Shareholders contained in this Agreement, except for those calling for performance after Closing, will have been fully performed and complied with both individually and collectively in all material respects at or before Closing.
8.3 No litigation, governmental actions or other proceeding involving or potentially involving a liability, obligation or loss on the part of Company of Three Million Dollars ($3,000,000) or more, in the aggregate, or which by reason of the nature of the relief sought might have a reasonable likelihood of having a material adverse effect on Company's Business or financial condition, shall be threatened or commenced against Company with respect to any matter; no litigation, governmental action or other proceeding shall be threatened or commenced against Company or any Shareholder with respect to the consummation of the transactions provided for herein; and neither Company nor any Shareholder has any knowledge of any basis for such litigation, governmental action or proceeding.
8.4 All indebtedness owing to Company by any director, officer, employee or Shareholder of Company will be paid in full at or prior to Closing.
8.5 All actions, proceedings, instruments and documents required to enable Company and the Shareholders to perform this Agreement or matters incident thereto (other than matters for which Buyer is responsible under the terms of this Agreement), and all other legal matters not relating to a default by Buyer of its obligations hereunder, shall have been duly taken, satisfied, executed or delivered, as the case may be, to the reasonable satisfaction of Buyer.
8.6 All documents required to be delivered by the Shareholders at or prior to Closing shall have been delivered or shall be tendered at the time and place of Closing.
8.7 Final receipt and approval within three (3) days thereof of all of the Schedules to be attached hereto.
8.8 [Intentionally left blank]
8.9 All filings with, approvals by, and consents of third parties required to be made or received by or on the part of the Buyer for the consummation of the transaction contemplated hereby in the manner herein provided, shall have been made or obtained. This shall include
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appropriate filings pursuant to the Hart-Scott-Rodino Anti-trust Improvements Act of 1976, as amended ("HSR Act"). Any applicable waiting period under the HSR Act (and any extension thereof) shall have expired or been terminated. All parties to the Agreement agree to cooperate reasonably with respect to the filing of the necessary applications, and to proceed with such filings as soon as reasonably possible following the execution hereof.
8.10 [Intentionally left blank]
8.11 All options and warrants shall have been exercised and Buyer shall have received 100% of the issued and outstanding capital stock of Company.
9. Conditions Precedent to Company's and the Shareholders' Obligation to Close. The following shall be conditions precedent to the obligation of Company and the Shareholders to close hereunder, any of which may be waived in whole or in part by Company and the Shareholders:
9.1 Each of the representations and warranties of Buyer contained in this Agreement is now and, except as to those expressly limited to the date hereof or some other specified date, at all times after the date of this Agreement to and including the time of Closing shall be, true and correct individually and collectively in all material respects, provided that any references to materiality in any representation or warranty shall be disregarded for purposes of this provision.
9.2 Each of the agreements, covenants and undertakings of Buyer contained in this Agreement, except for those calling for performance after Closing, will have been fully performed and complied with both individually and collectively in all material respects at or before Closing.
9.3 No litigation, governmental actions or other proceeding involving or potentially involving a liability, obligation or loss on the part of the Buyer Three Million Dollars ($3,000,000) or more, in the aggregate, or which by reason of the nature of the relief sought have a reasonable likelihood of having a material adverse effect on the Buyer's Business or financial condition, shall be threatened or commenced against Buyer with respect to any matter; no litigation, governmental action or other proceeding shall be threatened or commenced against Buyer with respect to the consummation of the transactions provided for herein; and Buyer has any knowledge of any basis for such litigation, governmental action or proceeding.
9.4 All actions, proceedings, instruments and documents required to enable Buyer to perform this Agreement or matters incident thereto (other than matters for which Company and/or Shareholders are responsible under the terms of this Agreement), and all other legal matters not relating to a default by Company or the Shareholders of their obligations hereunder, shall have been duly taken, satisfied, executed or delivered, as the case may be, to the reasonable satisfaction of Company and the Shareholders.
9.5 All documents reasonably requested to be delivered by Buyer at or prior to Closing relating to Buyer's existence and the authority of Buyer to execute deliver and perform this Agreement all in form and substance reasonably satisfactory to the Shareholders and the Company shall have been delivered or shall be tendered at the time and place of Closing.
9.6 All filings with, approvals by, and consents of third parties required to be made or received by or on the part of the Buyer for the consummation of the transaction contemplated hereby in the manner herein provided, shall have been made or obtained. This shall include appropriate filings pursuant to the HSR Act. Any applicable waiting period under the HSR Act (and any extension thereof) shall have expired or been terminated. All parties to the Acquisition Agreement agree to cooperate reasonably with respect to the filing of the necessary applications, and to proceed with such filings as soon as reasonably possible following the execution hereof. Buyer shall bear the cost of the HSR filing.
10. Closing.
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10.1 Closing Date. The closing of the transactions provided for in this Agreement (herein sometimes called the "Closing") shall take place at 10:00a.m on April 23, 2001, or such other place and time as shall be agreed to between the President of Buyer and the Shareholders' Agent. The date and time of Closing is sometimes herein called the "Closing Date".
10.2 Deliveries by the Shareholders and Company at Closing. At Closing, the Shareholders and Company will deliver or cause to be delivered to Buyer the following:
10.2.1 certificates for all of the outstanding shares of common stock of Company, endorsed by the Shareholders in blank, or with stock transfer powers executed by the Shareholders in blank attached, and with all required transfer tax stamps, if any, affixed;
10.2.2 certificate of the President or a Vice-President of Company and the Shareholders, dated as of the Closing Date, confirming (a) the truth and correctness of all of the representations and warranties of Company and the Shareholders contained herein as of the Closing Date and as of all times between the date hereof and the Closing Date, subject to the provisions of Section 5 hereof, and (b) that all agreements and covenants of Company and the Shareholders specified herein have been complied with in all material respects;
10.2.3 the certificate of the Secretary or an Assistant Secretary of Company, dated the Closing Date, that the necessary corporate action by the board of directors of Company has been taken to authorize the consummation by Company of the transactions provided for herein;
10.2.4 the signed resignations of all directors and all officers of Company and each of its Subsidiaries dated and effective as of the Closing Date;
10.2.5 the stock books and records, corporate minute books (containing the originals of all minutes and resolutions ever adopted or consented to or agreed to by the shareholders, directors or any committee of directors of Company) and the corporate seal of Company;
10.2.6 the favorable legal opinion of Bathgate, Wegener, & Wolf, P.C., counsel for the Shareholders and Company, dated the Closing Date, in substantially the form set forth in Exhibit 10.2.6 attached hereto;
10.2.7 a "good standing" certificate for Company and each Subsidiary and a certified copy of the articles of incorporation and all amendments thereto issued by the Department of State of Delaware and dated as of a date within twenty-one (21) days prior to the Closing Date;
10.2.8 [Intentionally left blank]
10.2.9 [Intentionally left blank]
10.2.10 a Certification by each Shareholder pursuant to the Foreign Investment Real Property Tax Act, in form mutually acceptable to the parties;
10.2.11 certificates for 328.7356 shares of preferred stock of Company, endorsed by the holders in blank, or with stock transfer powers executed by the holders in blank attached, and with all required transfer tax stamps, if any, affixed;
10.2.12 evidence of satisfaction of Company indebtedness referred to in Section 1.2;
10.2.13 Registration Rights Agreement in substantially the form of Exhibit 1.5, signed by all Shareholders;
10.2.14 Bill of sale for the Equipment signed by the Company.
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10.3.1 certificates for all of the outstanding shares of validly issued, fully paid and non-assessable Buyer Stock registered in the names of the Shareholders in accordance with their respective interests as set forth on Schedule 3.1(b), together with the balance of the cash portion of the Purchase Price, in the form of a cashier's check, certified funds or wire transfer, at Buyer's option.
10.3.2 the certificate of the President or a Vice-President of Buyer, dated the Closing Date, confirming (a) the truth and correctness of all of the representations and warranties of Buyer contained herein as of the Closing Date and as of all times between the date hereof and the Closing Date and (b) that all agreements and covenants of the Buyer specified herein have been complied with.;
10.3.3 the certificate of the Secretary or an Assistant Secretary of Buyer, dated the Closing Date, that the necessary corporate action by the Board of Directors of Buyer has been taken to authorize the consummation by Buyer of the transactions provided for herein;
10.3.4 the favorable legal opinion of Gordon & Rees LLP, counsel for Buyer, dated the Closing Date, in substantially the form set forth in Exhibit 10.3.4 attached hereto; and
10.3.5 Registration Rights Agreement in substantially the form of Exhibit 1.5 signed by Buyer.
10.3.6 A good standing certificate for Buyer and a certified copy of the Articles of Incorporation and all amendments thereto issued by the Department of the State of Delaware and dated as of a date of a date within twenty-one (21) days prior to the Closing Date.
11. Indemnification and Related Matters
11.1 Survival. All representations, warranties, covenants and agreements set forth in this Agreement or in any Schedule or Exhibit hereto shall survive the Closing and the consummation of the transactions contemplated hereby and shall not be affected by any examination made for or on behalf of Buyer, the knowledge of any of its officers, directors, stockholders, employees or agents, or the acceptance of any certificate or opinion.
Notwithstanding the foregoing, no Party shall be entitled to recover for any Loss pursuant to this Section unless written notice of a claim thereof is delivered to the other Party prior to the Applicable Limitation Date. For purposes of this Agreement, the term "Applicable Limitation Date," shall be the second anniversary of the Closing; provided that the Applicable Limitation Date with respect to any Loss arising from or related to a breach of the representations and set forth in Section 2.14 (Taxes), the Applicable Limitation Date shall be the expiration of the statute of limitations applicable to the Loss which is giving rise to the claim for indemnification (including any extensions thereto to the extent that such statute of limitations may be tolled.
11.2 Indemnification.
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Company or Shareholder in this Agreement, or (ii) any actual claim, debt, liability, obligation, loss, fine, penalty, damage or diminution in value suffered by Company or incurred by Company to any party, incurred prior to Closing hereunder or arising from any matter or thing occurring prior to Closing hereunder, including but not limited to claims made by governmental authorities for taxes or otherwise, except for (a) liabilities expressly disclosed in this Agreement, including the Schedules attached hereto (excepting however the cost of remediation of ground water contamination or other liability associated with any Environmental Laws as disclosed on Schedule 2.25 with respect to the Manufacturing Facility), and (b) liabilities incurred between the date of this Agreement and the Closing Date, the incurrence of which is not in violation of the provisions of this Agreement; and (iv) any and all actions, suits, proceedings, demands, assessments, judgments, reasonable attorneys' fees, costs, expenses and interest incident to any of the foregoing.
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both the Indemnifying Party and the Indemnified Party or (C) upon petition by the Indemnified Party, the appropriate court rules that the Indemnifying Party failed or is failing to vigorously prosecute or defend the claim giving rise to such indemnification; and
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11.3 Limitations on Indemnity. The following limitations shall apply to each Indemnifying Party's indemnification obligations under Section 11:
11.4 Payment of Losses. Losses for which Buyer is entitled to indemnity under Section 11 of this Agreement shall be satisfied solely out of the Buyer Stock retained pursuant to Section 12 hereof, valued at the Buyer Stock Valuation Price, adjusted for capital changes such as stock splits, if any, subsequent to the Closing.
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12. Security Retention Procedures.
12.1 Buyer shall retain that portion of the Buyer Stock, valued at the Buyer Stock Valuation Price (adjusted for capital changes such as stock splits, if any, subsequent to the Closing) as represents Three Million Dollars ($3,000,000.00) of the Purchase Price as sole security for the satisfaction of Losses, if any, pursuant to Section 11 of this Agreement. Such retention shall be pro-rata, based upon the Shareholder interests reflected on Schedule 3.1(b).
12.2 Provided, (i) Company or Shareholders have not received written notice in accordance with Section 11.2(c) of a claim or claims which taken together are in excess of the $175,000 limitation referred to in Section 11.3(a) and, (ii) there are no unpaid claims which in the aggregate are not in excess of the $175,000 limitation referred to in Section 11.3(a) by Buyer against the Company or Shareholders pursuant the obligations of the Company and Shareholders pursuant to this Agreement, including but not limited to the obligations of the Company and Shareholders to indemnify Buyer pursuant to Section 11 of this Agreement, Buyer shall release one-third of the retained Buyer Stock to Shareholders one (1) year after the Closing Date. The remaining retained Buyer Stock shall be released to Shareholders two (2) years after the Closing Date, provided no claims in excess of the $175,000 limitation referred to in Section 11.3(a) remain then outstanding. If any such claims in excess of the $175,000 limitation referred to in Section 11.3(a) are unpaid on the date on which such release is to be made, Buyer shall release to Shareholders such shares representing the specified amount to be released, less the reasonably estimated amount of any such claim.
13. Securities Laws Compliance Procedures.
13.1 Knowledge Respecting Buyer. Each Shareholder represents and acknowledges that (a) he or she is a sophisticated investor with knowledge and experience in business and financial matters, knows, or has had the opportunity to acquire, all information concerning the business, affairs, financial condition and prospects of Buyer which he or she deems relevant to make a fully informed decision regarding the consummation of the transactions contemplated hereby and is able to bear the economic risk and lack of liquidity inherent in holding the Buyer Stock and (b) he or she has been supplied with copies of all Forms 10-K, 10-Q and 8-K, and all proxy statements, filed by Buyer within the two (2)-year period immediately preceding the date of this Agreement. Without limiting the foregoing, each Shareholder understands and acknowledges that neither Buyer nor anyone acting on its behalf has made any representations or warranties other than those contained herein respecting Buyer or the future conduct of Buyer's business or of Company's business, and no Shareholder has relied upon any representations or warranties other than those contained herein in the belief that they were made on behalf of Buyer.
13.2 Status of Shares to be Issued. Each Shareholder agrees, acknowledges and confirms that he or she has been advised and understands as follows:
13.2.1 Shareholder is acquiring the shares of Buyer Stock to be issued to him or her for his or her own account and without a view to any distribution or resale thereof, other than a distribution or resale which, may be made without violating the registration provisions of the Securities Act of 1933, as amended (the "1933 Act") or any applicable blue sky laws. Shareholder acknowledges that the shares of Buyer Stock are as of the Closing Date "restricted securities" within the meaning of Rule 144 under the 1933 Act and have not been as of the Closing Date registered under the 1933 Act or any state securities laws and thereafter must be held until they are registered by Buyer, at Buyer's sole cost, under the 1933 Act and certain state securities acts or an exemption from such registration is available. Shareholder and Buyer acknowledge that Buyer will, as soon as practicable following the execution of this Agreement by all parties, register the stock for resale under the 1933 Act in accordance with the terms of the Registration Rights Agreement. In the event Buyer has not
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obtained an Effective Registration within ninety (90) days following Closing, Shareholder shall have the right to cause Buyer to re-purchase the stock not held pursuant to Section 12 at the greater of (i) the closing price of the stock on the ninetieth (90th) day following the Closing Date or (ii) the Buyer Stock Valuation Price (adjusted for capital changes such as stock splits, if any, subsequent to the Closing). Notwithstanding the foregoing, provided that Buyer has acted diligently to prepare and file the required registration statement within sixty (60) days following the Closing of the Purchase Agreement, the deadline for the effectiveness of said registration statement shall be extended for a period of thirty (30) days provided that Buyer continues at all times following the filing of the registration statement to act diligently in response to SEC comments and requests for additional information. Buyer shall be obligated to obtain an Effective Registration of the Buyer Stock held pursuant to Section 12 on the date that any such Buyer Stock is to be released to Shareholder and in the event Buyer has not obtained an Effective Registration on any such release date, Buyer must re-purchase the stock at the greater of the (i) Buyer Stock Valuation Price (adjusted for capital changes such as stock splits, if any, subsequent to the Closing) or (ii) the closing price for the stock as of the date of its release to Shareholder.
13.2.2 There shall be endorsed on the certificates evidencing the shares of Buyer Stock delivered at Closing a legend substantially similar to the following:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND ARE "RESTRICTED SECURITIES" AS DEFINED BY RULE 144 UNDER THE 1933 ACT. THE SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT REGISTERING THE SHARES UNDER THE 1933 ACT AND THE SECURITIES LAWS OF ANY STATE REQUIRING SUCH REGISTRATION, OR IN LIEU THEREOF, AN OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY TO THE ISSUER OF THE SHARES, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACTS".
13.2.3 Except under certain limited circumstances, the above restrictions on the transfer of the shares of Buyer Stock will also apply to any and all shares of capital stock or other securities issued or otherwise acquired with respect to such shares, including, without limitation, shares and securities issued or acquired as a result of any stock dividend, stock split or exchange or any distribution of shares or securities pursuant to any corporate reorganization, reclassification or similar event.
14. Further Assurances. Buyer and the Shareholders agree to execute and deliver all such other instruments and take all such other action as any party may reasonably request from time to time, before or after Closing and without payment of further consideration, in order to effectuate the transactions provided for herein. The parties shall cooperate fully with each other and with their respective counsel and accountants in connection with any steps required to be taken as part of their respective obligations under this Agreement, including, without limitation, the preparation of financial statements and tax returns.
15. [Intentionally left blank]
16. Designation of Agent. Within five days following the execution of this Agreement, the Shareholders shall irrevocably appoint a Shareholder's attorney-in-fact and agent (sometimes in this Agreement referred to as the "Shareholders' Agent") to take any action and to execute any documents on such Shareholder's behalf with respect to this Agreement and the transactions provided for herein, including but not limited to the making and execution of any amendments to this Agreement, the giving and receipt of any notices pursuant hereto, the execution of any and all documents required to
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be executed in order to complete Closing hereunder, the acceptance of service of process in connection with any claim related to this Agreement and the compromise or settlement of any and all disputes which may hereafter arise pursuant to any provision of this Agreement or any matter or thing growing out of this Agreement or the transactions provided for herein. Such appointment shall, to the fullest extent permitted by law, survive the death or incompetency of any Shareholder. In the event of the incompetency, incapacity, bankruptcy, death or resignation of the Shareholders' Agent, the Shareholders shall appoint a successor to serve in such capacity and shall give Buyer written notice of such appointment. Such appointment of a successor shall be irrevocable.
17. Indemnity Against Brokerage Commissions and Finder's Fees. Buyer and each Shareholder hereby represents and warrants that there is no person or entity entitled to receive from Buyer or such Shareholder any brokerage commission or finder's fee in connection with this Agreement or the transactions provided for herein, with the exception of Shoreline Partners, LLC, and each hereby indemnifies and agrees to save the other parties hereto harmless from and against any claim for brokerage commission or finder's fee based on any retention or alleged retention of a broker or finder by such party.
18. Employees. Shareholders agree that they shall be responsible for payment or accrual of all employee wages, salaries, accrued vacation, existing disability or medical claims not covered by insurance, and any and all other benefits and related costs relating or accrued with respect to its employees prior to the Closing Date. Company and Shareholders shall be responsible for termination and payment of all severance benefits of all employees of the Company that will not become employees of Buyer and/or Buyer's designee as the purchaser or lessee of the Manufacturing Facility following the Closing Date. It is understood that Buyer and/or Buyer's designee as the purchaser or lessee of the Manufacturing Facility may enter into employment contracts with certain designated employees, and may hire as "at will employees" certain other individuals currently employed by Company (collectively referred to as "Retained Employees"). In connection with the hiring of the Retained Employees, Buyer will endeavor to obtain from such employees a release of any claim for severance resulting from prior agreements or understandings with Company. To the extent the release of such claims cannot be obtained or are otherwise not effective, Shareholders shall make any necessary payments required for the release of such claims or discharge of such liabilities prior to the Closing. Other employment costs associated with Retained Employees shall be the responsibility of Buyer. With regard to any employee entitled to continue medical insurance coverage under COBRA, Buyer agrees that it will either (i) at its cost, continue the Company's existing medical plan or (ii) provide medical coverage for such employees under Buyer's medical plan.
19. Announcements. The form and substance of any announcements relating to this transaction shall, before dissemination, be subject to the review of both Buyer and Shareholders. Each agrees not to disclose such information or act upon same in violation of the applicable securities laws.
20. Customer Contact. Buyer agrees that it will not unilaterally contact the customers, creditors or shareholders of Company without the prior written consent of Company. Company shall likewise refrain from any such contact with the customers, creditors or shareholders of Buyer without Buyer's prior written consent.
21. [Intentionally Left Blank]
22. Professional Fees and Costs. Each party to this Acquisition agreement shall bear its own expenses relating to this transaction, including, but not limited to, legal fees, accounting fees, finder's fees and the like, as well as all of such parties costs incurred.
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23. Defined Terms. The following terms used in this Agreement shall have the meanings indicated below, unless the context otherwise indicates:
"Acquisition Transaction" means a transaction outside the Ordinary Course of Business resulting in the sale, pledge or other disposal of the Company's assets or capital stock.
"Affiliate" means any person, firm or corporation which directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Person specified.
"Business" shall have the meaning given in the recital to this Agreement.
"Buyer" shall have the meaning given in the heading of this Agreement.
"Buyer's Representatives" means the officers, employees, counsel, accountants, financial advisors, consultants and other representatives of the Buyer.
"Buyer Stock" shall have the meaning given in Section 1 of this Agreement.
"Buyer Stock Valuation Price" shall have the meaning given in Section 1.5 of this Agreement.
"Closing" shall have the meaning given in Section 10.1 of this Agreement.
"Closing Date" shall have the meaning given in Section 10.1 of this Agreement.
"Closing Net Book Value" shall have the meaning given in Section 1.4 of this Agreement.
"Company" shall have the meaning given in the heading of this Agreement.
"Common Stock of the Buyer" means the Buyer's common stock, par value $.001 per share, as constituted on the date hereof, and any stock into which such common stock shall have been changed or any stock resulting from any reclassification of such common stock.
"Consent" means such Person's permission, approval, agreement, or other consent.
"Contract" means any agreement, lease, license, evidence of indebtedness, mortgage, indenture, security agreement or other contract that is material to the conduct of the Company's Business or its financial condition.
"Current Employee Benefit Plan" means any Plan (whether or not such Plan currently exists as of the date of this Agreement) (i) established by the Company, (ii) to which the Company contributes or is obligated to contribute as of the date of this Agreement, (iii) under which any current or former employee, officer or director of the Company (or any beneficiary of such current or former employee, officer or director) is covered, is eligible for coverage or has any rights by reason of services performed for the Company, or (iv) under which the Company has any obligation or liability. (See also "Employee Benefit Plan", "Past Employee Benefit Plan" and "Plan".
"Debentures" shall mean collectively the Company's (i) 6-Year 12 Percent PIK Subordinated Debentures dated April 25, 2000 and any additional debentures issued for the payment of interest thereon, and (ii) 6-Year 12 Percent PIK Convertible Subordinated Debenture dated March 17, 2000 and any additional debentures issued for the payment of interest thereon.
"Effective Registration" means the filing of a Registration Statement under the Securities Exchange Act of 1933 that has been declared effective by the Securities Exchange Commission or otherwise becomes effective under the 1933 Act pursuant to the rules and regulations adopted pursuant thereto.
"Employee Benefit Plan" means any Plan, whether or not such Plan currently exists as of the date of this Agreement, (i) established by the Company, (ii) to which the Company contributes or has contributed or to which the Company is or was obligated to contribute, (iii) under which any current or former employee, officer or director of the Company (or any beneficiary of such current
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or former employee, officer or director) is or was covered, is or was eligible for coverage or has or had any rights by reason of services performed for the Company, or (iv) under which the Company has or had any obligation or liability. (See also "Current Employee Benefit Plan", "Past Employee Benefit Plan", and "Plan")
"Encumbrance" means any lien, charge, pledge, security, interest, encumbrance, restriction or claim that is material to the conduct of the Company's business or the financial condition of the Company.
"Environmental Laws" means all foreign, federal, state and local laws, statutes, regulations, rules, ordinances, codes, plans, injunctions, judgments, orders, decrees, rulings and charges thereunder relating to pollution or protection of the environment or human health and safety, including, without limitation, the Comprehensive Environmental Response, Compensation and liability Act of 1980, the Resource Conservation and Recovery Act of 1976 and the Occupational Safety and Health Act of 1970, each as amended and/or superceded at any time and from time to time, and further, without limitation, all laws relating to Releases or threatened Releases of Hazardous Substances into the indoor or outdoor environment (including, without limitation, ambient air, surface water, groundwater, land, surface and subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, release, transport or handling of Hazardous Substances and all laws and regulations with regard to record keeping, notification, disclosure and reporting requirements respecting Hazardous Substances and all laws relating to endangered or threatened species of fish, wildlife and biota and the management or use of natural resources.
"Equipment" shall mean all the equipment utilized in connection with the Manufacturing Facility.
"FASB" means Financial Accounting Standards Board.
"GAAP" means U.S. Generally Accepted Accounting Principles.
"Governmental Authorization" means any license, permit, certificate of authority, authorization, approval, registration, franchise or other similar consent granted or issued by any Governmental Body.
"Governmental Body" means any court, tribunal, arbitration panel, board, authority, agency, commission, department, or other instrumentality of the United States or any other country or any domestic or foreign state, county, city, or other political subdivision.
"Hazardous Material" means (i) any petrochemical or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls, and radon gas; (ii) any chemicals, materials or substances defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "restricted hazardous materials," "extremely hazardous substances," "toxic substances," "contaminants" or "pollutants" or words of similar meaning and regulatory effect; or (iii) any other chemical, material or substance, exposure to which is prohibited, limited, or regulated by any applicable Environmental Law.
"Knowledge" means: (a) if such Person is an individual, the actual knowledge of such Person; and (b) is such Person is a corporate entity, the actual knowledge of the principal officers of such Person. In determining actual knowledge, no Person shall be required to conduct an independent investigation unless such Person is under an affirmative obligation to do so pursuant to the terms of this Agreement.
"Leased Property" means the premises located on the fifteenth (15th) floor of an office building located at 379 Thornall Street, Edison, New Jersey.
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"Legal Requirement" means any law, statute, rule, regulation, ordinance or other promulgated edict having the effect of law in the United States or any other country or any domestic or foreign state, county, city or other political subdivision or of any Governmental Body.
"Liability" means any material indebtedness, obligation, or other liabilities of a Person (whether absolute, accrued, contingent, fixed or otherwise, or whether due or to become due).
"Loss" shall have the same meaning as set forth in Section 11.
"Majority Shareholder" the holders of more than two-thirds (66.66%) percent of the outstanding common sock of HPD Holdings Corp.
"Manufacturing Facility" shall mean the Company's manufacturing facility in Memphis, including all related real estate, as describe in Section 1.3.
"NASDAQ" means National Association of Securities Dealers Automated Quotations.
"Net Book Value" means total assets (excluding deferred financing net) less total liabilities (excluding interest bearing debt, original issue discount, net and accrued interest). An example of Net Book Value is set forth in Schedule 1.4.
"Order" means any writ, judgment, decree, injunction or similar order of any Governmental Body.
"Ordinary Course of Business" means the transaction of business consistent with the past custom or practice of the referenced Person.
"Past Employee Benefit Plan" means any Plan, not currently in existence as of the date of this Agreement, (i) established by the Company, (ii) to which the Company has contributed or to which the Company was obligated to contribute, (iii) under which any current or former employee, officer or director of the Company (or any beneficiary of such current or former employee, officer or director) was covered, was eligible for coverage or had any rights by reason of services performed for the Company, or (iv) under which the Company had any obligation or liability. (See also "Current Employee Benefit Plan", "Employee Benefit Plan", and "Plan")
"Person" means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization or government or department or agent thereof.
"Plan" means any bonus, incentive compensation, deferred compensation, pension, profit sharing, retirement, stock purchase, stock option, stock ownership, stock appreciation rights, phantom stock, leave of absence, layoff, vacation, day or dependent care, legal services, cafeteria, life, health, accident, disability, worker's compensation or other insurance, severance, separation or other employee benefit plan, practice, policy or arrangement of any kind, whether written or oral, including, but not limited to, any "employee benefit plan" within the meaning of Section 3(3) of ERISA.
"Proceeding" means any action, hearing, investigation, inquest, or inquiry (whether conducted by or before a court, administrative agency, hearing officer, arbitrator, legislative body, or any other person authorized by law) in which, pursuant to law, testimony can be compelled to be given.
"Proprietary Asset" means: (i) registered and unregistered trademarks, service marks, slogans, trade names, logos and trade dress; (ii) patents, patent applications and invention disclosures; (iii) registered and unregistered copyrights, including, but not limited to, copyrights in software and databases; (iv) software programs and databases; (v) unpatented or unpatentable (whether or not reduced to practice) methods, devices, technology, trade secrets, proprietary information and know-how; and all copies and tangible embodiments of any and all of the foregoing, in whatever form or medium.
"Real Properties" means the Leased Property and the Manufacturing Facility.
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"1933 Act" shall mean the Securities Act of 1933, as amended.
"Registration Right Agreement" shall mean that agreement described in Section 1.5.
"SEC" shall mean the Securities and Exchange Commission.
"Shareholders" shall have the meaning given in the heading of this Agreement.
"Shareholders' Agent" shall have the meaning given in Section 16 of this Agreement.
"Stock Rights" shall have the meaning given in Section 3.1 of this Agreement.
"Subsidiary" means any other Person in whom the referenced Person, directly or indirectly through Subsidiaries or otherwise, beneficially owns more than fifty percent (50%) or either the equity interests in, or voting control of such, such other Person.
"Tax" or "Taxes" means any Federal, state, local and foreign taxes, charges, duties, fees, imposts, levies or other assessments, including, without limitation, all net income, gross income, sales, use, franchise, profits, service, gross receipts, capital, ad valorem, value added, transfer, inventory, capital stock, license, registration, environmental, social security, unemployment, severance, stamp, recording, occupation, withholding, payroll, employment, excise or property taxes and estimated taxes, assessments or charges of any kind whatsoever together with interest and any penalties, fines, duties, fees, levies, additions to tax or additional amounts with respect thereto.
"Tax Return" means the form on which the referenced Person reports its liability with respect to a Tax.
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24.1 This Agreement may be terminated at any time prior to the Closing Date:
24.1.1 by the written agreement of Buyer and Shareholders;
24.1.2 by either Company or Buyer by written notice to the other parties if the transactions contemplated hereby shall not have been consummated pursuant hereto by 5:00 p.m. EST on April 30, 2001, unless such date shall be extended by the mutual written consent of Company and Buyer, provided that no party may give such notice if its breach of this Agreement has precluded the consummation of this Agreement;
24.1.3 by Buyer by written notice to the other parties if (i) the representations and warranties of Company and the Shareholders shall not have been true and correct in all respects (in the case of a representation or warranty containing a materiality qualification) or in all material respects (in the case of a representation or warranty without a materiality qualification) as of the date when made, or (ii) any of the conditions set forth in Section 8 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by 5:00 p.m. EST on May 31, 2001, unless such failure shall be due to the failure of Buyer to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; or
24.1.4 by Shareholders by written notice to the other parties if (i) the representations and warranties of Buyer shall not have been true and correct in all respects (in the case of a representation or warranty containing a materiality qualification) or in all material respects (in the case of a representation or warranty without a materiality qualification) as of the date when made, or (ii) if any of the conditions set forth in Section 9 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by 5:00 p.m. EST on May 31, 2001 unless such failure shall be due to the failure of Company or the Shareholders to perform or comply with any of the covenants, agreements or conditions to be performed or complied with by them prior to the Closing.
In the event of the termination of this Agreement pursuant to Section 24, this Agreement shall become void, without any liability to any party in respect hereof or of the transactions contemplated hereby on the part of any party hereto, or any of its directors, officers, employees, agents, consultants, representatives, advisers, stockholders or Affiliates, except as specified in this Agreement and except for any liability resulting from such party's breach of this Agreement.
25. Manufacturing Facility Sale. Company and Shareholders agree to cooperate with Buyer in connection with Buyer's efforts to sell all or a portion of Company's ownership interest in the Manufacturing Facility, such sale to occur contemporaneously with the Closing.
26. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed by registered or certified mail (return
44
receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
| If to Buyer: | ||
WD-40 Company 1061 Cudahy Place P.O. Box 80607 San Diego, CA 92138-0607 Attn: Garry O. Ridge |
||
With a copy to: |
Gordon & Rees LLP 750 B Street, Suite 1800 San Diego, CA 92101 Attn: John B. Sidell Tel: (619) 232-1800 Fax: (619) 238-0087 |
|
If to Company and Shareholders: |
||
MCG Global, LLC One Morningside Drive North Suite 200 Westport, CT 06880 Attn: Vincent A. Wasik Tel: (203) 226-7664 Fax: (203) 226-8011 |
||
With a copy to: |
Bathgate, Wegener, & Wolf One Airport Road Lakewood, N.J. 08701 Attn: Jan L. Wouters, Esq. Tel. (732)-363-0666 Fax. (732)-363-9864 |
|
27. Amendment. This Acquisition Agreement may be amended, modified, or supplemented only by written agreement of the parties hereto.
28. Waiver of Compliance. Any failure of a party to comply with any obligation, covenant, agreement, or condition herein may be waived by the other parties; provided however, that any such waiver may be made only by a specific written instrument signed by each party granting such waiver. Such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement, or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
29. Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of Delaware.
45
30. Counterparts. This Acquisition Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
31. Specific Performance. Each of the parties acknowledges that money damages would not be a sufficient remedy for any breach of this Acquisition Agreement by Company or Shareholders and that irreparable harm would result to Buyer if this Acquisition Agreement were not specifically enforced. Therefore, the rights and obligations of the Company and Shareholders under this Acquisition Agreement shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith. Buyer's right to specific performance shall be in addition to all other legal or equitable remedies available to Buyer.
32. Entire Agreement. This Acquisition Agreement, including the exhibits, schedules, and other documents and instruments referred to herein, embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Acquisition Agreement supersedes all prior agreements and understanding between the parties with respect to such subject matter.
33. Severability. If any provision of the Acquisition Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal, or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision of this Acquisition Agreement; provided, however that no such severance shall be effective if it would materially change the economic benefits of the Acquisition Agreement to any party.
34. Exhibits, Schedules. All exhibits and schedules attached hereto are incorporated herein and made a part hereof as if set forth in full.
46
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
| Shareholders |
HPD Holdings Corp and its wholly owned Subsidiary HPD Laboratories, Inc. |
|||
By |
Richard A, Kassar, Office of the President |
|||
By |
Jan L. Wouters, Assistant Secretary |
|||
WD-40 Company |
||||
By |
Garry O. Ridge, President |
|||
By |
John B. Sidell, Assistant Secretary |
|||
47
EXHIBIT 1.5
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is made as of April , 2001, by and among WD-40 Company, a Delaware corporation (the "Company"), and the Persons listed on the attached Schedule (each a Shareholder and collectively the Majority Shareholder on behalf of themselves individually and all other shareholders, collectively the "Shareholders").
RECITALS
A. The Shareholders and the Company are parties to a Stock Purchase Agreement dated March 26, 2001 (the "Purchase Agreement").
B. The obligations of the Company and the Shareholders under the Purchase Agreement are conditioned, among other things, upon the execution and delivery of this Agreement by the Shareholders and the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.
"Buyer Stock" shall mean the Common Stock to be delivered to or held for the Shareholders pursuant to the Purchase Agreement.
"Holder" shall mean (i) any Shareholder holding Registrable Securities, and (ii) any person holding Registrable Securities to whom the rights under this Agreement have been transferred in accordance with Section 2.8.
"Registrable Securities" means the Buyer Stock and any Common Stock of the Company issued or issuable in respect of the Buyer Stock upon any stock split, stock dividend, recapitalization or similar event, or any Common Stock otherwise issuable with respect to the Buyer Stock; provided, however, that shares of Buyer Stock or other securities shall only be treated as Registrable Securities if and so long as they have not been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction or otherwise transferred in a private transaction not required to be.
The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise stated below, incurred by the Company in complying with Section 2.1 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company) and the reasonable fees and disbursements of one counsel for all Holders.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling commissions and other underwriting expenses and stock transfer taxes applicable to the securities registered by the
Holders and, except as set forth under "Registration Expenses," all fees and disbursements of counsel for any Holder.
2. Registration.
2.1 Required Registration. The Company shall, immediately following the Closing of the Purchase Agreement, effect the registration, qualification or compliance of the Buyer Stock (including, without limitation, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as would permit or facilitate the sale and distribution of all of such Registrable Securities;
provided, however, that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 2.1:
(a) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;
(b) As to shares of Buyer Stock retained pursuant to the provisions of Section 12 of the Purchase Agreement provided that such shares shall be covered by an effective registration, qualification or compliance no later than the date called for the release of such shares to the Shareholders pursuant to Section 12.2 of the Purchase Agreement; or
(c) Subject to the provisions of Section 2.10, prior to July , 2001 (90 days following the Closing of the Purchase Agreement).
2.2 Limitations on Subsequent Registration Rights. From and after the Closing Date (as defined in the Purchase Agreement), the Company shall not enter into any agreement granting any holder or prospective holder of any securities of the Company registration rights with respect to such securities without the written consent of the holders of a majority of the Registrable Securities then outstanding, unless (i) such other registration rights are subordinate to the registration rights granted to the Holders hereunder, and (ii) the holders of such rights are subject to market standoff obligations no more favorable to such persons than those contained herein.
2.3 Expenses of Registration. All Registration Expenses incurred in connection with registrations pursuant to Section 2.1 shall be borne by the Company. Unless otherwise stated, all Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the Holders of such securities pro rata on the basis of the number of shares so registered.
2.4 Registration Procedures. In the case of each registration, qualification or compliance effected by the Company pursuant to this Agreement, the Company will keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration statement and such amendments and supplements thereto as may be necessary or appropriate with respect to such securities and use its best efforts to cause such registration statement to become and remain effective until the distribution described in the registration statement has been completed, but not to exceed three (3) years from the Closing of the Purchase Agreement;
(b) Furnish to the Holders and to any underwriters retained by the Holders of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such Holders and underwriters may reasonably request in order to facilitate the public offering of such securities;
(c) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be
reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;
(d) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriters of such offering provided that the Company's reasonable expenses in connection with the performance of such obligations shall be Selling Expenses; and
(e) Notify each Holder of Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.
2.5 Indemnification.
(a) The Company will indemnify each Holder of Registrable Securities included in a registration pursuant to this Agreement, each of its officers and directors and partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act, the Securities Exchange Act of 1934, state securities law or any rule or regulation promulgated under the such laws applicable to the Company in connection with any such registration, qualification or compliance. The Company will reimburse each such Holder, each of its officers, directors and partners and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by any Holder, controlling person or underwriter and stated to be specifically for use therein; provided, however, that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any such untrue statement, alleged untrue statement, omission or alleged omission made in a preliminary prospectus on file with the Commission at the time the registration statement becomes effective or the amended prospectus filed with the Commission pursuant to Rule 424(b) (the "Final Prospectus"), such indemnity agreement shall not inure to the benefit of any underwriter, if a copy of the Final Prospectus was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act, and if the Final Prospectus would have cured the defect giving rise to the loss, liability, claim or damage.
(b) Each Holder, severally and not jointly, will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers, each underwriter,
if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other such Holder, each of its officers, directors and partners and each person controlling such Holder within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, partners, persons, underwriters or control persons for any legal or any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein. Notwithstanding the foregoing, the liability of each Holder under this Section 2.5(b) shall be limited in an amount equal to the net proceeds of the shares sold by such Holder; and provided further that the indemnity agreement provided in this section shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld. Furthermore, no Holder shall be required to indemnify any person against any liability arising from (i) any untrue or misleading statement or omission contained in any preliminary prospectus if such deficiency is corrected in the final prospectus; or (ii) out of the failure of any person to deliver a prospectus as required by the Securities Act.
(c) Each party entitled to indemnification under this Section 2.5 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld). The Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2.5 unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action, in which case the Indemnifying Party shall be relieved of its obligations under this Section 2.5 to the extent of such prejudice, and provided further that the Indemnifying Party shall not assume the defense for matters as to which representation of both the Indemnifying Party and the Indemnified Party by the same counsel would be inappropriate due to actual or potential differing interests between them, but shall instead in such event pay the fees and costs of separate counsel for the Indemnified Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.
2.6 Information by Holder. The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders, the Registrable Securities held by them and the distribution proposed by such Holder or Holders as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Agreement.
2.7 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Securities Exchange Act of 1934, as amended;
(b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Securities Exchange Act of 1934, as amended (at any time after it has become subject to such reporting requirements); and
(c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 and of the Securities Act and the Securities Exchange Act of 1934, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as the Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing the Holder to sell any such securities without registration.
2.8 Transfer of Registration Rights. The rights to cause the Company to register Registrable Securities granted Shareholders under Section 2.1 may be assigned to a transferee or assignee in connection with any transfer or assignment of Registrable Securities by the Shareholder, provided that the securities may only be assigned to (i) any affiliated entity or constituent entity or retired entity of a Shareholder, or (ii) an officer, director, member or shareholder or a subsidiary, parent or affiliated entity of a Shareholder, or (iii) a family member or trust for the benefit of an Shareholder who is an individual, provided written notice thereof is promptly given to the Company and the transferee agrees to be bound by the provisions of this Agreement.
2.9 Termination of Registration Rights. The rights granted pursuant to this Section 2 shall terminate as to any Holder upon the earliest to occur of: (i) such Holder can sell all of its Registrable Securities pursuant to Rule 144(k) promulgated under the Securities Act; (ii) such Holder can sell all of its Registrable Securities pursuant to Rule 144 promulgated under the Securities Act in any ninety (90) day period; (iii) three (3) years following the Closing of the Purchase Agreement.
2.10 Default. In the event the Company fails to cause the registration, qualification or compliance of the Buyer Stock to become effective on of before July , 2001, (ninety (90) days following the Closing of the Purchase Agreement), or on or before the date called for the release of retained shares held pursuant to the provisions of Section 12 of the Purchase Agreement, each Holder shall have the right to require the Company to purchase all Registrable Securities then held outright by the Holder, including any shares then to be released pursuant to said Section 12, in accordance with the provisions of Sections 1.5 and 13.2.1 of the Purchase Agreement. Notwithstanding the foregoing, provided that the Company has acted diligently to prepare and file the required registration statement within sixty (60) days following the Closing of the Purchase Agreement, the deadline for the effectiveness of said registration statement shall be extended for a period of thirty (30) days provided that the Company continues at all times following the filing of the registration statement to act diligently in response to SEC comments and requests for additional information.
3. Standoff Agreement. Each Shareholder and Holder agrees not to sell, make any short sale of, loan, grant any option for the purchase of or otherwise dispose of securities of the Company representing more than one-third (1/3) of the aggregate number of shares allocated to such Shareholder as set forth on the attached Schedule within any period of thirty (30) consecutive days following the effective date of such registration. The Shareholders and Holders agree that the Company may instruct
its transfer agent to place stop-transfer notations in its records to enforce the provisions of this Section 3. Notwithstanding the foregoing, no Shareholder shall be prohibited from selling any shares if all of the shares subject to immediate sale by such Shareholder may be sold pursuant to Rule 144 in any ninety (90) period.
4. Amendment. Any provision of this Agreement may be amended or the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Majority Shareholder. Any amendment or waiver effected in accordance with this Section 4 shall be binding upon each Shareholder and each Holder of Registrable Securities at the time outstanding, each future holder of all such securities, and the Company.
5. Governing Law. This Agreement and the legal relations between the parties arising hereunder shall be governed by and interpreted in accordance with the substantive laws of the State of Delaware. The parties hereto agree to submit to the jurisdiction of the federal and state courts of the State of Delaware with respect to the breach or interpretation of this Agreement or the enforcement of any and all rights, duties, liabilities, obligations, powers and other relations between the parties arising under this Agreement.
6. Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties regarding the matters set forth herein. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
7. Notices, Etc. All notices and other communications required or permitted hereunder shall be in writing and shall be deemed effectively given upon personal delivery to the party to be notified or twenty-four (24) hours after confirmed transmission of a facsimile addressed (a) if to a Shareholder, at such Shareholder's address as set forth on the signature pages hereto, or at such other address as such Shareholder shall have furnished to the Company in writing in accordance with this Section 7, (b) if to any other holder of Buyer Stock, at such address as such holder shall have furnished the Company in writing in accordance with this Section 7, or, until any such holder so furnishes an address to the Company, then to and at the address of the last holder thereof who has so furnished an address to the Company, or (c) if to the Company, at its principal office.
8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
| WD-40 COMPANY | ||||
By |
Garry O. Ridge, President |
|||
By |
John B. Sidell, Assistant Secretary |
|||
Shareholders |
||||
April , 2001
WD-40
Company
1061 Cudahy Place
San Diego, CA 92110
Dear WD-40 Company:
We have acted as counsel to HPD Holdings Corp, a Delaware corporation ("Holdings"), its wholly-owned subsidiary HPD Laboratories, Inc., a Delaware corporation ("Labs") (Holdings and Labs collectively referred to as the "Company"), and the owners of the capital stock of Holdings (the "Shareholders") in connection with the Stock Purchase Agreement dated as of March , 2001 (the "Stock Purchase Agreement") by and between Company, Shareholders, and you as the Buyer named therein, and the transactions contemplated thereby, and render this opinion to you pursuant to Section 10.2.6 of the Stock Purchase Agreement. Capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Stock Purchase Agreement.
In rendering the opinions expressed below, we have examined (a) the Stock Purchase Agreement and (b) such corporate records of Company and such other documents, as we have deemed necessary as a basis for the opinions expressed below. In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with the authentic original documents of all documents submitted to us as copies. We have also relied upon management to provide us with copies of all relevant documents and have not made an independent investigation to ascertain that we have in fact been provided with all documents that would be necessary for us to rely upon in rendering this opinion. When relevant facts were not independently established, we have relied upon certificates of government officials and of Company and their officers and upon representations and warranties made in or pursuant to the Stock Purchase Agreement.
In rendering the opinions expressed below, we have assumed (other than as to the Shareholders and the Company) that all of the documents referred to in this opinion have been duly authorized by, have been duly executed and delivered by, and constitute legal, valid, binding and enforceable obligations of, all of the parties to such documents, that all signatories to such documents have been duly authorized and that all such parties are duly organized and validly existing and have the power and authority (corporate or other) to execute, deliver and perform, in accordance with such documents.
Based upon and subject to the foregoing, and having considered such questions of law as deemed necessary as a basis for the opinions expressed below, we are of the opinion that:
moratorium, fraudulent conveyance or other similar laws or judicial interpretations relating to or affecting the rights of creditors generally, and (b) as the enforceability of the Stock Purchase Agreement is subject to the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), including without limitation (i) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (ii) concepts of materiality, reasonableness, good faith and fair dealing.
The foregoing opinions are limited to matters involving the General Corporation Law of the State of Delaware and we do not express any opinion as the laws of any other jurisdiction.
At the request of our clients, this opinion is being provided and may be relied upon by you pursuant to Section 10.2.6 of the Stock Purchase Agreement, and this opinion may not be relied upon by any other Person or for any purpose other than in connection with the transactions contemplated by the Stock Purchase Agreement without, in each instance, our prior written consent.
Very truly yours,
BATHGATE, WEGENER & WOLF, P.C.
Gordon & Rees LLP Letterhead
April , 2001
,
Shareholders' Agent
HPD Holdings Corp.
379 Thornall Street, 15th Floor
Edison, N.J. 08837
Ladies and Gentlemen:
I am General Counsel to WD-40 Company ("WD-40"), a corporation organized and existing under the laws of the State of Delaware, and in such capacity have counseled WD-40 in connection with the preparation, authorization, execution and delivery of, and consummation of the transactions contemplated by, the Stock Purchase Agreement (the "Agreement") dated March 26, 2001, between HPD Holdings Corp. and its wholly-owned subsidiary HPD Laboratories, Inc., Delaware corporations, the shareholders of all of the outstanding shares of HPD Holdings Corp., and WD-40. Terms defined in the Agreement and not otherwise defined herein are used herein with the meanings as so defined in the Agreement.
In so acting, I am familiar with or have examined originals or copies, certified or otherwise identified to my satisfaction, of such corporate records, agreements, documents and other instruments, and of certificates of comparable documents of public officials and of Officers and representatives of WD-40, and have made such inquiries of such Officers and representatives as I deemed relevant and necessary as the basis for the opinions hereinafter set forth.
As to all questions of fact material to this opinion which have not been independently established, I have relied upon my own personal knowledge or upon certificates or other comparable documents of Officers and representatives of WD-40, and have examined the representations and warranties of WD-40 contained in the Agreement and have relied upon the relevant facts stated therein.
To the extent that my opinion is qualified as being based upon my knowledge, I have not undertaken any special inquiry.
Based on the foregoing, and subject to the qualifications stated herein, it is my opinion that:
This opinion is solely for the benefit of the shareholders of HPD Holdings Corp. as set forth in the Agreement and is not to be quoted, in whole or in part, or otherwise referred to, nor is to be filed with any governmental agency or other person without my prior written consent.
This opinion is rendered as of the date hereof, and I undertake no obligation to advise you of any changes in applicable law or any other matters that may come to my attention after the date hereof.
Very truly yours,
Gordon & Rees, LLP
John B. Sidell
| This ‘S-3’ Filing | Date | Other Filings | ||
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| Filed on: | 6/26/01 | |||
| 5/31/01 | 10-Q | |||
| 4/30/01 | 8-K, 8-K/A | |||
| 4/23/01 | ||||
| 3/31/01 | ||||
| 3/26/01 | ||||
| 1/27/01 | ||||
| 1/26/01 | ||||
| 11/24/00 | ||||
| 8/31/00 | 10-K405 | |||
| 4/25/00 | ||||
| 4/1/00 | ||||
| 3/31/00 | ||||
| 3/17/00 | ||||
| 1/30/00 | ||||
| 12/31/99 | ||||
| 3/31/99 | ||||
| List all Filings | ||||