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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report: SEPTEMBER 8, 2006
(Date of earliest event reported)
IDEX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-10235 36-3555336
(State of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
630 DUNDEE ROAD
NORTHBROOK, ILLINOIS 60062
(Address of principal executive offices, including zip code)
(847) 498-7070
(Registrant's telephone number, including area code)
Check the appropriate box if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 - Material Definitive Agreement.
On September 8, 2006, IDEX Corporation entered into a definitive agreement to
acquire Banjo Corporation, a leader in special purpose, severe duty pumps,
valves, fittings and systems which serve both OEM and after-market applications
in agricultural and industrial liquid handling for a purchase price of
$182,500,000. This transaction is subject to regulatory approval and is expected
to close in early October 2006.
A copy of the definitive agreement has been filed as Exhibit 10.1 to the Current
Report on Form 8K and is hereby incorporated by reference.
Item 9.01 - Financial Statements and Exhibits.
(c) Exhibits
10.1 Stock Purchase Agreement dated September 8, 2006
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IDEX CORPORATION
By: /s/ Dominic A. Romeo
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Dominic A. Romeo
Vice President and Chief Financial
Officer
September 14, 2006
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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10.1 Stock Purchase Agreement dated September 8, 2006
Execution Copy
STOCK PURCHASE AGREEMENT
(BANJO CORPORATION)
STOCK PURCHASE AGREEMENT, dated as of September 8, 2006 (this
"Agreement"), between each of the shareholders of Banjo Corporation listed on
the signature page hereto (each a "Seller" and, collectively, "Sellers"), Banjo
Corporation, an Indiana corporation (the "Company"), and IDEX Corporation, a
Delaware corporation ("Buyer").
RECITALS
A. Sellers collectively own 20,844 shares of the Common Stock, without
par value (the "Common Stock"), of the Company, representing, in the aggregate,
100% of the issued and outstanding shares of capital stock of the Company
(collectively, the "Shares").
B. Each Seller desires to sell, transfer and assign to Buyer all of
the Shares owned by such Seller, and Buyer desires to purchase all of the Shares
from Sellers, upon the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES; CLOSING;
POST-CLOSING ADJUSTMENT
1.1 SALE AND PURCHASE OF SHARES.
Upon the terms and subject to the conditions set forth in this
Agreement, each Seller shall sell, transfer, assign and deliver to Buyer, and
Buyer shall purchase and accept from each Seller, effective on the Closing Date
(as hereinafter defined), all of the Shares owned by such Seller, at an
aggregate purchase price for all Shares of $182,500,000 (the "Purchase Price"),
subject to adjustment at and after the Closing as set forth in Section 1.3
below.
1.2 CLOSING.
Upon the terms and subject to the conditions set forth in this
Agreement, the closing of the sale and purchase of the Shares (the "Closing")
shall take place (i) at the offices of Baker & Daniels LLP, 600 East 96th
Street, Indianapolis, Indiana, at 9:00 A.M., Indianapolis time, on the third
business day on which the last to be satisfied or waived of the conditions set
forth in Article VII hereof shall have been satisfied or waived in accordance
with this Agreement, or (ii) at such other place and time and/or on such other
date as the parties hereto
may mutually agree. Provided that the Closing actually occurs on or before
October 3, 2006, the Closing shall be effective as of the opening of business on
October 1, 2006, which shall be the "Closing Date." If the Closing occurs after
October 3, 2006, the date and time at which the Closing actually occurs shall be
hereinafter called the "Closing Date". At the Closing:
(a) Buyer shall deliver to each Seller the aggregate Purchase Price
for such Seller's Shares, as adjusted pursuant to Section 1.3(a) below,
less such Seller's pro rata share of the Escrow Amount referred to in
subsection (b) below (based on the proportion that such Seller's Shares
bears to the aggregate number of Shares), by wire transfer of immediately
available funds in such amount to an account for Sellers to be designated
in writing prior to the Closing by Seller Representative (as hereinafter
defined).
(b) Buyer shall deposit the amount of $6,000,000 (the "Escrow Amount")
in escrow pursuant to the Escrow Agreement (as hereinafter defined).
(c) Each Seller shall deliver to Buyer the certificate or certificates
representing such Seller's Shares, duly endorsed in blank or accompanied by
a stock power or powers duly executed in blank, in proper form for
transfer.
(d) Sellers and Buyer shall deliver to each other such other
documents, certificates, instruments and writings required to be delivered
pursuant to Article VII hereof or otherwise required pursuant to this
Agreement.
(e) Sellers shall pay any sales, use, transfer, excise, stamp or other
similar taxes imposed by reason of the transfer of the Shares pursuant to
this Agreement and any deficiency, interest or penalty with respect to such
taxes.
1.3 CLOSING DATE BALANCE SHEET ADJUSTMENT.
(a) At the Closing, Sellers shall cause the President or the Chief
Financial Officer of the Company in good faith to prepare and deliver to
Buyer a certificate (the "Closing Certificate") containing a pro forma
estimate of the Adjusted Working Capital (as hereinafter defined) of the
Company as of the Closing Date and the resulting adjustment to the Purchase
Price pursuant to the procedures described in Section 1.3(b) below (the
"Initial Purchase Price Closing Adjustment"), which shall be subject to
limited procedures of inquiry by Buyer and Buyer's independent accountants
("Buyer's Accountants") as to reasonableness. The Closing shall proceed,
and the payments required to be made at the Closing pursuant to Section 1.2
shall be determined on the basis of the Closing Certificate and the Initial
Purchase Price Closing Adjustment.
(b) The Initial Purchase Price Closing Adjustment shall be determined
as follows:
(i) If Adjusted Working Capital, as reflected on the Closing
Certificate, is greater than $11,952,336, the Initial Purchase Price
Closing Adjustment will be, and the Purchase Price will be increased
by,
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the amount by which Adjusted Working Capital is greater than
$11,952,336.
(ii) If Adjusted Working Capital, as reflected on the Closing
Certificate, is less than $11,952,336, the Initial Purchase Price
Closing Adjustment will be, and the Purchase Price will be decreased
by, the amount by which Adjusted Working Capital is less than
$11,952,336.
(c) For purposes of this Agreement, "Adjusted Working Capital"
means the remainder of (i) total current assets (exclusive of cash and cash
equivalents, which shall be distributed to Sellers at or prior to the
Closing Date and inclusive of the Company's deposit under Section 444 of
the Code (as hereinafter defined)), minus (ii) total current liabilities
(exclusive of any notes or other debt obligations payable to any Seller,
which shall be settled at or prior to the Closing), in each case as of the
opening of business on the Closing Date and calculated and presented on a
basis consistent with the Company's audited financial statements for the
year ended September 30, 2005.
(d) As promptly as practicable (but in any event within 30 days)
after the Closing, Sellers shall cause the Company's current independent
accountants (the "Company's Accountants") to prepare without audit and
deliver to Buyer a balance sheet of the Company as of the opening of
business on the Closing Date (the "Preliminary Closing Date Balance
Sheet"), which shall be prepared and presented on a basis consistent with
the Company's audited financial statements for the year ended September 30,
2005. Upon receipt of the Preliminary Closing Date Balance Sheet, Buyer and
Buyer's Accountants shall be permitted during the succeeding 30-day period
to have reasonable access during normal business hours to the Company's
Accountants and to the work papers and other documents prepared or
information used in the preparation of the Preliminary Closing Date Balance
Sheet. At or prior to the end of such 30-day period, Buyer shall either
inform the Seller Representative in writing that the Preliminary Closing
Date Balance Sheet is acceptable or object to it in writing setting forth a
specific description of Buyer's objections. If Buyer objects to the
Preliminary Closing Date Balance Sheet as provided above, Buyer and Sellers
shall attempt to resolve any such objections within 20 days after the
Seller Representative's receipt of such written objections. If Buyer and
Sellers are unable to resolve the disputed matters within such 20-day
period, they shall jointly select and engage Pricewaterhouse Coopers LLP as
a third firm of independent accountants (the "Third Accountants") to
resolve the disputes and to make any adjustments to the Preliminary Closing
Date Balance Sheet. Buyer, Sellers, Buyer's Accountants and the Company's
Accountants each shall make readily available to the Third Accountants all
relevant books, records, work papers and personnel reasonably requested by
the Third Accountants. The Third Accountants' resolution of the disputes
and its adjustments, if any, to the Preliminary Closing Date Balance Sheet
shall be limited to the matters in dispute between Sellers and Buyer and
shall be conclusive and binding upon the parties. The final Closing Date
Balance Sheet, in the form either accepted by Buyer or resolved and
adjusted (if adjusted) by the Third Accountants, as the case may be, is
herein called the "Closing Date Balance Sheet" for all purposes of this
Agreement. The fees and expenses of the Third Accountants, if any, shall be
paid equally by Buyer, on the one hand, and Sellers on the other hand.
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(e) Within two business days after the final determination of the
Closing Date Balance Sheet as provided for in subsection (d) above, Buyer
or Sellers, as applicable, shall make payment to the other by wire transfer
of immediately available funds, as follows:
(i) If Adjusted Working Capital as reflected on the Closing
Date Balance Sheet is greater than Adjusted Working Capital as
reflected on the Closing Certificate, then Buyer shall pay the amount
of such difference by wire transfer of immediately available funds to
an account for Sellers to be designated in writing by the Seller
Representative.
(ii) If Adjusted Working Capital as reflected on the Closing
Date Balance Sheet is less than Adjusted Working Capital as reflected
on the Closing Certificate, then the parties shall instruct the escrow
agent under the Escrow Agreement to distribute the amount of such
difference to Buyer from escrow.
(f) Any amount paid by either party pursuant to this Section 1.3
shall be deemed for all purposes to be an upward or downward, as
applicable, adjustment of the Purchase Price.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally (except with respect to Sections 2.1
and 2.4(b), which are several and not joint representations), hereby represent
and warrant to Buyer as follows:
2.1 AUTHORITY OF EACH SELLER.
Each Seller severally represents and warrants to Buyer that:
(a) Such Seller has all requisite power and authority to execute
and deliver this Agreement, to perform his, her or its obligations
hereunder and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by such Seller and
constitutes the valid and binding obligation of such Seller, enforceable
against such Seller in accordance with its terms.
(b) The execution and delivery of this Agreement by such Seller
do not, and the performance of this Agreement by such Seller and the
consummation of the transactions contemplated hereby will not, (i) conflict
with or violate any United States federal, state, local or foreign law,
statute, ordinance, rule, regulation, order, judgment or decree applicable
to such Seller or by or to which any of his, her or its properties or
assets is bound or subject or (ii) result in any breach of, or constitute a
default (or an event that with notice or lapse of time or both would
constitute a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or require payment
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under, or result in the creation of any lien, encumbrance, security
interest, mortgage, pledge, claim, option or restriction of any kind
whatsoever (collectively "Liens") on any of the Shares pursuant to, any
agreement, lease, license, contract, note, mortgage, indenture, arrangement
or other obligation (collectively, "Contracts") to which such Seller is a
party or by which he, she or it is bound.
(c) Other than the filings required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the
execution and delivery of this Agreement by such Seller do not, and the
performance by such Seller of this Agreement and the consummation of the
transactions contemplated hereby will not, require such Seller to obtain
any consent, approval, authorization or permit of, or to make any filing
with or notification to, any court, administrative agency or commission or
other governmental entity, authority or instrumentality, whether foreign or
domestic (a "Governmental Entity") or any third party.
2.2 ORGANIZATION AND QUALIFICATION OF THE COMPANY.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Indiana and has all requisite power
and authority to own, lease and operate its properties and assets and to carry
on its business as now being conducted. The Company is duly qualified to do
business and in good standing in each jurisdiction in which the nature of its
business or the ownership, lease or operation of its assets makes such
qualification necessary, except for such failures to so qualify or be in such
good standing that, alone or in the aggregate, are not reasonably likely to have
a material adverse effect on the business, prospects, assets, properties,
financial condition or results of operations of the Company (a "Material Adverse
Effect"). Sellers have made available to Buyer a complete and correct copy of
the Company's articles of incorporation and bylaws, each as amended to date. The
Company's articles of incorporation and bylaws so delivered are in full force
and effect.
2.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Section 2.3(a) of the Disclosure
Schedule delivered by Seller to Buyer concurrently herewith (the
"Disclosure Schedule"), the execution and delivery of this Agreement by
Sellers and the Company do not, and the performance of this Agreement by
Sellers and the Company and the consummation of the transactions
contemplated hereby will not, (i) conflict with or violate the articles of
incorporation or bylaws of the Company, (ii) conflict with or violate any
federal, state, local or foreign law, statute, ordinance, rule, regulation,
order, judgment or decree applicable to the Company or by or to which any
of its properties or assets is bound or subject or (iii) result in any
breach of, or constitute a default (or an event that with notice or lapse
of time or both would constitute a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or
require payment under, or result in the creation of any Liens on any of the
properties or assets of the Company pursuant to, any Contract to which the
Company is a party or by which it is bound.
(b) Other than the filings required under the HSR Act, and except
as set forth in Section 2.3(b) of the Disclosure Schedule, the execution
and delivery of this Agreement by Sellers do not, and the performance by
Sellers of this Agreement and the
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consummation of the transactions contemplated hereby will not, require the
Company to obtain any consent, approval, authorization or permit of, or to
make any filing with or notification to any Governmental Entity or any
third party.
2.4 CAPITALIZATION OF THE COMPANY; SUBSIDIARIES AND INVESTMENTS.
(a) The authorized capital stock of the Company consists of
50,000 shares of Common Stock, of which 20,844 shares are issued and
outstanding. The outstanding shares of Common Stock are owned beneficially
and of record solely by Sellers in the respective amounts set forth in
Section 2.4(a) of the Disclosure Schedule. Each of the issued and
outstanding Shares has been duly authorized and validly issued and is fully
paid and nonassessable. Except as set forth in Section 2.4(a) of the
Disclosure Schedule, no shares of capital stock of the Company are reserved
for future issuance pursuant to outstanding stock options, warrants,
convertible securities or other rights or for any other purpose, and there
are no preemptive rights nor any outstanding subscriptions, options,
warrants, rights, convertible securities or other agreements or commitments
of any character relating to the issued or unissued capital stock or other
securities of the Company.
(b) Each Seller severally represents and warrants to Buyer that
such Seller owns all right, title and interest in and to all of such
Seller's Shares, free and clear of all Liens. Upon the sale of such Shares
to Buyer pursuant to this Agreement, all right, title and interest in and
to all of such Shares, free and clear of all Liens, will pass to Buyer at
the Closing.
(c) The Company has no subsidiaries and does not directly or
indirectly control (within the meaning of the Securities Exchange Act of
1934, as amended) any other entity or other person and, except for any
marketable securities reflected on the Company Financial Statements (as
hereinafter defined), the Company owns no investment or other interest in
any other entity or person.
2.5 COMPANY FINANCIAL STATEMENTS.
(a) Sellers have previously delivered to Buyer (i) the Company's
audited financial statements for the years ended September 30, 2005, 2004
and 2003, and (ii) its unaudited financial statements for the nine-month
period ended June 30, 2006 (collectively, the "Company Financial
Statements"). Each of the Company Financial Statements has been prepared
in accordance with United States generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved and
fairly presents in all material respects the financial position of the
Company at the respective dates indicated therein and the results of
operations of the Company for the periods set forth therein (except, in the
case of unaudited interim statements, for routine year-end audit
adjustments and the absence of footnotes).
(b) Except as reflected or reserved for in the June 30, 2006
balance sheet included in the Company Financial Statements or as set forth
in Section 2.5(b) of the Disclosure Schedule, the Company is not subject to
any liability or obligation (whether direct or indirect, accrued, fixed,
contingent or otherwise), other than
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immaterial current liabilities and obligations incurred since such date in
the ordinary and usual course of business consistent with past practice
(none of which results from, arises out of or relates to any breach of
contract, breach of contractual warranty, tort, infringement or violation
of law).
2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as reflected in the Company Financial Statements or set forth
in Section 2.6 of the Disclosure Schedule, since June 30, 2006, (a) the Company
has conducted its business only in the ordinary and usual course of business
consistent with past practice; (b) the Company has not made any change in any
accounting policies or the application thereof; (c) there has not occurred any
event that would have required the consent of Buyer pursuant to Section 4.2
hereof, if this Agreement had been in effect on such date; and (d) there has not
occurred any change in the business, prospects, properties, assets, financial
condition or results of operations of the Company that, alone or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect
(other than any such change resulting from changes in general economic or
business conditions).
2.7 OWNERSHIP AND CONDITION OF ASSETS.
(a) Except as set forth in Section 2.7(a) of the Disclosure
Schedule, the Company owns or has the right to use all of the assets,
whether real, personal or mixed, tangible or intangible, necessary for the
continued operation of its business and has good and marketable title to or
a valid leasehold interest in all of such assets, free and clear of all
Liens, except for (i) Liens set forth in Section 2.7(a) of the Disclosure
Schedule, (ii) Liens for taxes, assessments, or other governmental charges
or levies that are not yet due or payable or that are being contested in
good faith by appropriate proceedings, (iii) statutory Liens of landlords
and Liens of carriers, warehousemen, mechanics, materialmen, repairmen and
other Liens imposed by statute the payable obligation for which is
reflected in the Closing Date Balance Sheet and used in calculating the
Adjusted Working Capital, (iv) Liens incurred or deposits made in
connection with worker's compensation, unemployment insurance or other
types of social security; and (v) Permitted Liens with respect to the Real
Property (as such terms are defined in Section 2.8 below).
(b) Except as set forth in Section 2.7(b) of the Disclosure
Schedule, the buildings, machinery, equipment and other material tangible
assets of the Company are in all material respects structurally sound, in
good operating condition and repair (subject to ordinary wear and tear and
routine maintenance in the ordinary course of business) and adequate for
the uses to which they are being put in the Company's business.
(c) Except as set forth in Section 2.7(c) of the Disclosure
Schedule, (i) all of the personal or mixed property used by the Company in
the operation of its business is located at the Real Property, (ii) none of
the Company's inventory is on consignment, (iii) the inventory as reflected
in the Company Financial Statements has been valued in a manner consistent
with past practices and procedures (including, without limitation, the
method of computing overhead and other indirect expenses to be applied to
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inventory) and in accordance with GAAP and (iv) all inventory located at
the Real Property is owned by the Company and is not held by the Company
(on consignment or otherwise) for or on behalf of any other person. All of
the inventory of the Company, except to the extent reflected by any
inventory reserve in the Company Financial Statements or as will otherwise
be written off or written down on the Closing Date Balance Sheet and used
in calculating the Adjusted Working Capital, is usable and saleable in the
ordinary course of business.
2.8 STATUS OF OWNED REAL PROPERTY.
(a) As used in this Agreement, the term "Real Property" means all
land and all buildings, structures and improvements thereon, owned by the
Company, together with all rights, privileges, interests, easements,
hereditaments and appurtenances thereunto in any way incident, appertaining
or belonging thereto. The Company has obtained commitments for owner's
policies of title insurance covering the Real Property (the "Title
Commitments"), copies of which have been delivered to Buyer. Sellers have
no knowledge of any defect in title to any of the Real Property, other than
those recorded easements, restrictions and other Liens set forth as
exceptions in the Title Commitments (collectively, "Permitted Liens").
(b) Except as set forth in the surveys of the Real Property which
have been delivered to Buyer or as otherwise do not materially interfere
with the present use, ownership or marketability of the Real Property, the
Real Property (i) complies with all health, building, fire, safety and
other applicable codes, ordinances and requirements (including those of the
U.S. Mine Safety and Health Administration), (ii) is in compliance with all
applicable zoning requirements and the use of such property is a permitted
or legally established use under applicable zoning requirements, (iii) is
not subject to any condemnation or eminent domain proceeding, (iv) is
assessed separately from all other adjacent land for the purposes of real
estate taxes (and the Company has obtained a separate tax lot with a
separate tax assessment for each of such properties) and is not part of a
larger tract of land owned by any other person and is not otherwise
included under any unity of title or similar covenant with other lands and
(v) is accessible through public or private easements or rights-of-way
abutting or crossing the Real Property.
2.9 MATERIAL CONTRACTS.
Section 2.9 of the Disclosure Schedule lists (a) each Contract other
than any Contract which either (i) involves future payments to or by the Company
during any twelve-month period of $10,000 or less or (ii) may be terminated by
the Company, in its sole discretion, without payment of a penalty or premium, at
any time upon notice of 30 days or less, (b) each lease, loan agreement,
promissory note, letter of credit, security agreement and other financing
document and each other Contract (or group of related Contracts) under which the
Company has created, incurred or assumed any indebtedness, liability or other
obligation or imposed a Lien on any of its assets, (c) each confidentiality or
non-competition agreement (other than confidentiality agreements with the
Company's current employees entered into in the ordinary course of business),
(d) each agreement with any affiliate or associate of the Company, (e) each
agreement relating to any Employee Plan (as hereinafter defined) or Benefit
Arrangement (as hereinafter defined), (f) each employment, consulting,
distributor, sales
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representative or dealer agreement, (g) each license or royalty agreement, (h)
each agreement providing for indemnification by the Company other than
indemnification agreements contained in standard terms and conditions of sale
and (i) each agreement (or group of related Contracts) for the lease of real
property or personal property (whether or not capitalized under GAAP) providing
for lease payments in excess of $10,000 per year, to which the Company is a
party or by which its properties or assets are bound (collectively, the
"Material Contracts"'). Except as set forth in Section 2.9 of the Disclosure
Schedule, each of the Material Contracts is a valid, binding and enforceable
obligation of the Company and, to the knowledge of Sellers, each other party
thereto, in accordance with its terms, and there is not any existing default or
any event which, with or without notice or lapse of time or both, would
constitute a default under any of the Material Contracts by the Company or, to
the knowledge of Sellers, by any other party thereto.
2.10 RELATED PARTY ARRANGEMENTS.
Except as set forth in Section 2.10 of the Disclosure Schedule,
neither any Seller nor any current or former director, officer or employee of
the Company, or any affiliate or associate of any Seller or any such director,
officer or employee, is a party to any Contract or other commitment to which the
Company is a party or by which any of its properties or assets is bound, or has
a material interest in any Contract or any of the assets or properties owned by,
used in or pertaining to the business of the Company.
2.11 INSURANCE.
Section 2.11 of the Disclosure Schedule lists all liability, fire,
casualty, fidelity, workers' compensation and other insurance policies currently
held by or on behalf of the Company. Such policies are in amounts deemed to be
adequate by the Company's management, all premiums with respect thereto are
currently paid, such policies are in full force and effect and the Company has
not received any notice that any such policy will not be renewed.
2.12 INTELLECTUAL PROPERTY.
(a) Section 2.12 of the Disclosure Schedule lists all patents,
copyrights, trademarks, service marks, trade names, trade dress, licenses,
any registrations and applications for registrations therefor and all other
intellectual property rights of the Company (collectively, the
"Intellectual Property") that are patented, registered or otherwise the
subject of any filing with any Governmental Entity (other than charter
documents, qualifications to do business and other similar documents filed
with the secretaries of state or similar officials of any jurisdiction).
Except as set forth in Section 2.12 of the Disclosure Schedule, (i) the
Company owns all right, title and interest in and to all Intellectual
Property that is material to the conduct of its business, (ii) the use and
registration of the Intellectual Property by the Company in the operation
of its business, as presently conducted and as contemplated to be
conducted, do not interfere with, infringe upon or misappropriate any
rights of any other person and, to the knowledge of Sellers, are not being
infringed by any other person and (iii) there is no claim, action, suit or
other proceeding pending or, to the knowledge of Sellers, threatened, by or
against the Company regarding the ownership of, or rights to sell or use,
any of the Intellectual Property.
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(b) Section 2.12 of the Disclosure Schedule identifies each item
of Intellectual Property that any third party owns and that the Company
uses pursuant to license, sublicense or other agreement, except for
off-the-shelf computer software subject to shrinkwrap or clickwrap
licenses. Sellers have delivered to Buyer correct and complete copies of
all such licenses, sublicenses and other agreements (as amended to date).
Except as set forth in Section 2.12 of the Disclosure Schedule, with
respect to each item of Intellectual Property required to be identified in
Section 2.12 of the Disclosure Schedule: (i) the license, sublicense or
other agreement covering the item is enforceable, (ii) following the
Closing, the license, sublicense or other agreement will continue to be
enforceable on substantially similar terms and conditions, (iii) neither
the Company nor, to the knowledge of Sellers, any other party to the
license, sublicense or other agreement is in material breach or default,
and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit early termination, modification or
acceleration thereunder, (iv) neither the Company nor, to the knowledge of
Sellers, any other party to the license, sublicense or other agreement has
repudiated any provision thereof, (v) the underlying item of Intellectual
Property is not subject to any outstanding injunction, judgment, order,
decree, ruling or charge, (vi) no claim, action, suit or other proceeding
is pending or, to the knowledge of Sellers, threatened which challenges the
legality, validity, enforceability or use of the underlying item of
Intellectual Property and (vii) the Company has not granted any sublicense
or similar right with respect to the license, sublicense or other
agreement.
2.13 PERMITS; COMPLIANCE WITH LAW.
The Company possesses all licenses, permits and other authorizations
from Governmental Entities required by applicable provisions of laws,
ordinances, rules and regulations (collectively, "Permits"), necessary for the
operation of its business as it exists on the date hereof. Except as set forth
in Section 2.13 of the Disclosure Schedule, (a) the Company is in compliance in
all material respects with the terms and conditions of such Permits and all
laws, rules, regulations and orders applicable to the Company or its business
and (b) the Company has not received any notification that either the Company or
any of its business practices are in violation of any Permit or any such law,
rule, regulation or order.
2.14 ABSENCE OF LITIGATION.
Except as set forth in Section 2.14 of the Disclosure Schedule, (a)
there is no claim, action, suit, other proceeding or investigation of any kind,
at law or in equity, by or before any Governmental Entity pending or, to the
knowledge of Sellers, threatened against the Company or its assets or properties
and (b) the Company is not a party or subject to or in default under any
judgment, order, decree or settlement agreement that imposes restrictions on the
Company with respect to its business operations.
2.15 TAXES.
(a) As used in this Agreement:
(i) "Audit" means any audit, assessment of Taxes,
examination or other proceeding by the IRS or any other Governmental
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Entity responsible for the administration of any Taxes, proceeding or
appeal of such proceeding relating to Taxes.
(ii) "Code" means the Internal Revenue Code of 1986, as
amended.
(iii) "IRS" means the Internal Revenue Service of the United
States.
(iv) "Taxes" means all federal, state, local and foreign
taxes, assessments, charges, duties and fees or similar charges of any
kind whatsoever (whether imposed directly or through withholding),
including, without limitation, all net income, gross income, gross
receipts, excise, property, sales, use (or any similar taxes),
transfer, franchise, payroll, withholding, social security,
employment, environmental business license fees, or other taxes,
including any interest, penalties and additions imposed with respect
to such amounts, in each case with respect to the income, operations
or assets of the Company.
(v) "Tax Returns" means all federal, state, local and
foreign tax returns filed or required to be filed in connection with
the determination, assessment or collection of any Tax.
(b) Except as set forth in Section 2.15 of the Disclosure
Schedule, all Tax Returns required to be filed on or prior to the date
hereof by the Company have been duly and timely filed and all Taxes shown
to be due and payable thereon have been duly paid on a timely basis, except
for any Taxes the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings.
(c) Except as set forth in Section 2.15 of the Disclosure
Schedule, (i) no Tax Return is currently under Audit by any taxing
authority and no notice of any such Audit has been received, and (ii) no
deficiencies for any Taxes have been proposed, asserted or assessed by any
taxing authority with respect to any liabilities for Taxes which have not
been fully paid or finally settled.
(d) The Company has complied with all withholding Tax
requirements and procedures and, in the case of social security,
unemployment, employee payroll and withholding Taxes, the Company has
withheld amounts from its employees and has filed all Tax Returns regarding
employee income Tax withholding and social security, unemployment Taxes and
all other payroll Taxes in compliance in all material respects with
applicable Tax withholding provisions and has made all required remittances
in respect of such amounts withheld.
(e) The Company is not a party to any tax sharing agreement or
other Contract providing for the allocation or apportionment of any
liability for Taxes, payments of Taxes or Tax benefits or refunds.
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(f) (c) Since August 1, 1999, the Company has been a validly
electing S corporation within the meaning of Sections 1361 and 1362 of the
Code and the Company will be an S corporation up to and including the
Closing Date.
2.16 BENEFIT PLANS.
(a) As used in this Agreement:
(i) "Employee Plans" means any pension, retirement,
profit-sharing, deferred compensation, stock purchase, stock option,
bonus or other incentive plan, any program, arrangement, agreement or
understanding relating to or otherwise affecting the delivery of
medical, dental or other health benefits to employees of the Company,
any life insurance, accident, disability, workers' compensation,
severance or separation plan, or any other employee benefit plan,
including, without limitation, any Plan, and, with respect to all of
the above, to which the Company (or any ERISA Affiliate (as
hereinafter defined) on behalf of the Company) contributes or is a
party or is bound or under which it may have liability and under which
employees of the Company are eligible to participate or derive a
benefit.
(ii) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, or any successor statute.
(iii) "ERISA Affiliate" means any person that is under
common control with the Company, within the meaning of Section 4001(b)
of ERISA or 414(b), (c), (m) or (o) of the Code.
(iv) "Plan" means any employee benefit plan (as defined in
Section 3(3) of ERISA), sponsored, maintained, contributed to or
required to be contributed to by the Company or any ERISA Affiliate on
behalf of the employees of the Company.
(b) Section 2.16 of the Disclosure Schedule lists of all of the
Employee Plans. Seller has delivered or has caused to be delivered to Buyer
true and complete copies of (i) the Employee Plans (including amendments,
related trust agreements, custodial agreements, insurance contracts,
investment contracts and other funding arrangements, if any, and adoption
agreements, if any), (ii) if any, material employee communications by the
plan administrator of any Employee Plan (including, but not limited to,
summary plan descriptions and summaries of material modifications, as
defined under ERISA) and (iii) the three most recent annual reports (e.g.,
the complete Form 5500 series) prepared in connection with each Employee
Plan (if any such report was required), including all attachments
(including without limitation the audited financial statements, if any).
(c) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company relating to, or change
in
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employee participation or coverage under any Employee Plan that would
increase materially the expense of maintaining such Employee Plan above the
level of expense incurred in respect of such Employee Plan for the most
recently ended plan year with respect to Employee Plans.
(d) Each Employee Plan has been maintained in compliance with its
terms and the requirements prescribed by any and all statutes, orders,
rules and regulations, including but not limited to, ERISA and the Code,
which are applicable to such Employee Plan.
(e) Each Employee Plan which is a pension benefit plan within the
meaning of ERISA Section 3(2) (a "Pension Plan") has been determined to be
"qualified" within the meaning of Section 401(a) of the Code, and has been
qualified during the period from the date of its adoption to the date of
this Agreement, and each trust created thereunder has been determined to be
tax-exempt under Section 501(a) of the Code. Seller has delivered or caused
to be delivered to Buyer the latest determination letters of the Internal
Revenue Service issued to the Company.
(f) There are no pending or, to the knowledge of Sellers,
threatened (i) claims, action, suits or other proceedings by any employees,
former employees or plan participants or the beneficiaries, spouses or
Representatives of any of them, other than ordinary and usual claims for
benefits by participants or beneficiaries, or (ii) actions, suits,
investigations or other proceedings by any federal, state, local or other
governmental agency or authority, of or against any Employee Plan, the
assets held thereunder, the trustee of any such assets, or the Company
relating to any of the Employee Plans.
(g) The Company has not engaged (i) in any transaction or acted
or failed to act in a manner that violates the fiduciary requirements of
Section 404 of ERISA, or (ii) in any prohibited transaction, within the
meaning of ERISA Section 406 and Section 4975 of the Code, with respect to
any Employee Plans, and will not so engage, act or fail to act prior to the
Closing, except those prohibited transactions that are exempted by statute,
regulation, or administrative action.
(h) The Company has made all required contributions under each
Pension Plan on a timely basis or, if not yet due, adequate accruals
therefore have been provided for in the financial statements.
(i) Neither the Company nor any ERISA Affiliate has, within the
past six years, maintained, adopted or established, contributed or been
required to contribute to, or otherwise participate in or been required to
participate in, nor will they become obligated to do so through the
Closing, any "multiemployer plan" (as defined in Section 3(37) of ERISA).
(j) As of the date of this Agreement and in the preceding six
years neither the Company nor any ERISA Affiliate maintains or had
maintained a Pension Plan which is covered by Title IV of ERISA or subject
to the minimum funding requirements of Section 412 of the Code.
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(k) No Employee Plan provides benefits, including without
limitation, any severance or other post employment benefit, salary
continuation, termination, death, disability, or health or medical benefits
(whether or not insured), life insurance or similar benefit with respect to
current or former employees (or their spouses or dependents) of the Company
beyond their retirement or other termination of service other than (i)
coverage mandated by applicable law, (ii) death, disability or retirement
benefits under any Pension Plan, or (iii) benefits, the full cost of which
is borne by the current or former employee (or his or her beneficiary).
(l) The Company has complied with, and satisfied, the
requirements of COBRA with respect to each Employee Plan that is subject to
the requirements of COBRA. Each Employee Plan which is a group health plan,
within the meaning of Section 9832(a) of the Code, has complied with and
satisfied the applicable requirements of Sections 9801 and 9802 of the
Code. Each Employee Plan that is a health plan within the meaning of
Section 1171(5) of Part C, Title XI of the Social Security Act, has
complied with and satisfied the applicable requirements of Part C, Title XI
of the Social Security Act and the regulations applicable thereto.
(m) Section 2.16(m) of the Disclosure Schedule contains a list
identifying each employment, severance or similar contract, arrangement or
policy and each plan or arrangement providing for insurance coverage
(including, without limitation, any self-insured arrangements), workers'
compensation, disability benefits, supplemental employment benefits,
vacation benefits, retirement benefits, deferred compensation, bonuses,
profit-sharing, stock options, stock appreciation rights or other forms of
incentive compensation or post-retirement compensation or benefit which (i)
is not an Employee Plan, (ii) has been entered into or maintained, as the
case may be, by the Company and (directly or indirectly) any employee or
former employee of the Company and (iii) still represents an outstanding
liability or potential liability to the Company as of the date of this
Agreement. Such contracts, plans and arrangements are hereinafter referred
to collectively as the "Benefit Arrangements." True and complete copies or
descriptions of the Benefit Arrangements have been delivered to Buyer. Each
Benefit Arrangement has been maintained in substantial compliance with the
requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Benefit Arrangements.
(n) There is no contract, agreement, plan or arrangement covering
any employee or former employee of the Company that, individually or in
aggregate, could give rise to the payment by the Company, directly or
indirectly, of any amount that would not be deductible pursuant to the
terms of Section 280G of the Code.
2.17 LABOR MATTERS.
(a) The Company is not a party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules
or practices agreed to with any labor organization. No union or labor
organization claims to represent the Company's employees and Sellers have
no knowledge of any current union organizing activities among the Company's
employees. There is no labor strike, dispute,
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slowdown, stoppage or lockout actually pending or, to Sellers' knowledge,
threatened against or directly affecting the Company.
(b) The Company is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours of work and occupational safety and health,
including, without limitation, laws respecting employment discrimination,
except, in each case, for such failures to be in compliance or such
violations that, alone or in the aggregate, have not had and are not
reasonably likely to have a Material Adverse Effect. Except as set forth in
Section 2.17 of the Disclosure Schedule, there are no claims, actions,
suits or other proceedings pending or, to the knowledge of Sellers,
threatened against the Company by or on behalf of any present or former
employee of the Company alleging breach of any law or regulation governing
employment or the termination thereof or other discriminatory, wrongful or
tortious conduct in connection with the employment relationship. The
Company has not received any notice of the intent of any Governmental
Entity responsible for the enforcement of labor or employment laws to
conduct an investigation of the Company and no such investigation is in
progress.
(c) The Company is not delinquent in payments to any employees
for any wages, salaries, commissions, bonuses or other direct compensation
for any services performed by them to the date hereof.
(d) The Company has on file a valid Form I 9 for each employee
hired by the Company or any predecessor of the Company on or after November
7, 1986 and for each employee where employment terminated after July 1,
1998. Except as set forth on Section 2.17 of the Disclosure Schedule, all
employees of the Company employed in the U.S. are (i) United States
citizens, or lawful permanent residents of the United States, (ii) aliens
whose right to work in the United States is unrestricted, (iii) aliens who
have valid, unexpired work authorization issued by the Attorney General of
the United States (Immigration and Naturalization Service) or (iv) aliens
who have been continually employed by the Company since November 6, 1986 or
the applicable date of hire. Except as set forth on Section 2.17 of the
Disclosure Schedule, the Company has not been the subject of an immigration
compliance or employment visit from, nor has the Company been assessed any
fine or penalty by, or been the subject of any order or directive of, the
United States Department of Labor or the Attorney General of the United
States (Immigration and Naturalization Service).
2.18 ENVIRONMENTAL MATTERS.
(a) As used in this Agreement:
(i) "Environmental Laws" means all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into the
environment including, without limitation, those related to Hazardous
Materials, air emissions and discharges to waste or public systems.
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(ii) "Hazardous Materials" means all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to
the environment or health or safety, the removal of which may be
required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be regulated, restricted, prohibited or penalized by
any applicable law (including, without limitation, asbestos, urea
formaldehyde foam insulation and polychlorinated biphenyls).
(b) Except as set forth in Section 2.18 of the Disclosure
Schedule, the Company has not stored, released or disposed of any Hazardous
Materials on the Real Property or elsewhere in a manner contrary to any
Environmental Laws.
(c) Except as set forth in Section 2.18 of the Disclosure
Schedule, there are no (i) enforcement, clean-up, removal, mitigation or
other governmental or regulatory actions pending or, to the knowledge of
Sellers, threatened against the Company pursuant to any Environmental Laws
concerning or dealing with any Real Property or any other location or the
business of the Company, (ii) claims made or, to the knowledge of Sellers,
threatened by any third party against the Company relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from
any Hazardous Materials, or (iii) occurrences or conditions at the Real
Property or elsewhere which are reasonably likely to give rise to any such
governmental or regulatory action or third-party claim.
(d) Except as set forth in Section 2.18 of the Disclosure
Schedule, the Real Property is in compliance with applicable Environmental
Laws.
(e) Neither the Company nor any predecessor of the Company has
ever incorporated any Hazardous Materials or parts containing any Hazardous
Materials in any of its products.
2.19 BROKERS.
No broker, finder or investment banker, including any director,
officer, employee, affiliate or associate of Seller, the Company or any of their
affiliates, is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based on
arrangements made by or on behalf of any Seller or the Company, except for
Robert E. Baird & Co. (who has been retained solely be Sellers and shall be
compensated solely by Sellers).
2.20 SUPPLIERS AND CUSTOMERS.
Section 2.20 of the Disclosure Schedule contains a list of the ten
(10) largest suppliers and ten (10) largest customers of the Company (by dollar
volume of purchases or sales by the Company) for the fiscal year ending
September 30, 2005. Except as set forth in Section 2.20 of the Disclosure
Schedule, none of the suppliers or customers set forth in Section 2.20 of the
Disclosure Schedule has informed the Company that it intends to terminate its
relationship
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with the Company, and Sellers are not aware of any such supplier or customer
that intends to terminate such relationship or of any material problem or
dispute with any such supplier or customer. Except as set forth on Section 2.20
of the Disclosure Schedule, Sellers believe that the Company has good business
relationships with each such supplier and customer.
2.21 PRODUCT WARRANTY.
Except as set forth in Section 2.14 of the Disclosure Schedule and
except for any reserve for product warranty claims set forth on the Closing Date
Balance Sheet and used in calculating the Adjusted Working Capital, the Company
has no liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) for replacement or repair of products
manufactured, sold or leased by the Company prior to the Closing Date or for any
other damages in connection with the manufacture, sale or lease of any product,
including, without limitation, any liability arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased, or delivered by the Company prior to the
Closing Date. The Company has made available to Buyer copies of the standard
terms and conditions of sale or lease for the Company (containing applicable
guaranty, warranty, and indemnity provisions). Except as set forth in those
standard terms and conditions or as set forth in Section 2.21 of the Disclosure
Schedule, no product manufactured, sold, leased, or delivered by the Company is
subject to any guaranty, warranty, or other indemnity.
2.22 MATERIAL MISSTATEMENTS OR OMISSIONS.
None of the representations and warranties by Sellers in this
Agreement contains any untrue statement of a material fact, or omits to state
any material fact necessary to make the statements or facts contained therein
not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to each Seller as follows:
3.1 ORGANIZATION AND AUTHORITY.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has all requisite power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Buyer, the performance of this Agreement by
Buyer and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Buyer and no
other proceeding on the part of Buyer is necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Buyer and constitutes the valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
3.2 NO CONFLICT; REQUIRED CONSENTS AND APPROVALS.
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(a) The execution and delivery of this Agreement by Buyer do not,
and the performance of this Agreement by Buyer and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate the
certificate of incorporation or bylaws of Buyer, (ii) conflict with or
violate any federal, state, local or foreign law, statute, ordinance, rule,
regulation, order, judgment or decree applicable to Buyer or by or to which
any of its properties or assets is bound or subject or (iii) result in any
breach of, or constitute a default (or an event that with notice or lapse
of time or both would constitute a default) under, any Contracts to which
Buyer is a party or by which any of its properties or assets is bound,
except, in the case of clause (ii) or (iii) above, for such conflicts,
violations, breaches or defaults that, alone or in the aggregate, are not
reasonably likely to prevent, materially delay or materially burden the
transactions contemplated by this Agreement.
(b) Other than the filings required under the HSR Act, the
execution and delivery of this Agreement by Buyer do not, and the
performance by Buyer of this Agreement and the consummation of the
transactions contemplated hereby will not, require Buyer to obtain any
consent, approval, authorization or permit of, or to make any filing with
or notification to, any court, administrative agency or commission or other
Governmental Entity, or any third party, the failure to obtain or make any
or all of which is reasonably likely to prevent, materially delay or
materially burden the transactions contemplated by this Agreement.
3.3 ACQUISITION OF THE SHARES FOR INVESTMENT.
Buyer is acquiring the Shares for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof; provided, however, that the right of Buyer to dispose of
its property and assets as and when it deems appropriate shall at all times be
within its control.
3.4 AVAILABILITY OF FUNDS.
Buyer has, or at the Closing will have, the funds necessary to
purchase the Shares and consummate the transactions contemplated by this
Agreement at the Closing upon the terms and conditions set forth herein.
3.5 BROKERS.
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Buyer or any of its affiliates.
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ARTICLE IV
COVENANTS
4.1 CONDUCT OF BUSINESS.
From and after the date hereof and pending the Closing, unless Buyer
shall otherwise consent in writing, Sellers shall cause the Company to (a)
operate the business of the Company only in the ordinary and usual course of
business consistent with past practice; (b) maintain the Company's properties,
machinery and equipment in satisfactory operating condition and repair; (c)
maintain all existing policies of insurance (or comparable policies) in full
force and effect; (d) use all commercially reasonable efforts to preserve the
business organization of the Company intact; (e) use all commercially reasonable
efforts to keep available the services of the present officers and key employees
of the Company; and (f) use all commercially reasonable efforts to preserve the
Company's existing relationships with suppliers, distributors, customers and
others having business relations with the Company such that its business will
not be materially impaired. Sellers shall cause the Company's management to
confer with Buyer on a regular basis to keep it informed with respect to
operational matters of a material nature and to report the general status of the
ongoing operations of the Company.
4.2 FORBEARANCES.
Between the date hereof and the Closing, unless Buyer shall otherwise
consent in writing, Sellers shall not nor shall they cause or permit the Company
to:
(a) (i) amend its articles of incorporation or bylaws; (ii)
split, combine or reclassify the outstanding Shares; or (iii) declare, set
aside or pay any dividend payable with respect to the Shares; provided,
that the Company may distribute cash and cash equivalents to Sellers at the
discretion of the Company's Board of Directors;
(b) (i) issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of its capital stock of any class; (ii) transfer, lease, license,
sell, mortgage, pledge, dispose of or encumber any material assets or incur
or modify any material indebtedness or other liability other than in the
ordinary and usual course of business; (iii) acquire directly or indirectly
by redemption or otherwise any shares of the capital stock of the Company
or (iv) authorize, make or commit to make capital expenditures in excess of
$50,000 in the aggregate, or make any acquisition of, or investment in, any
material assets or any stock or other securities of any other person;
(c) incur any indebtedness for borrowed money, except for working
capital financing in the ordinary and usual course of business consistent
with past practice;
(d) grant any severance or termination pay to, or enter into any
employment or severance agreement with either (i) any director or officer
of the Company or (ii) any other employee of the Company other than in the
ordinary and usual course of business; and Seller shall not permit the
Company to establish, adopt, enter
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into, make any new grants or awards under or amend, any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees of the
Company (other than contributions in the ordinary and usual course of
business under Employee Plans currently in effect on the date hereof);
(e) settle or compromise any material claims or litigation or,
except in the ordinary and usual course of business, modify, amend or
terminate any of its material Contracts or waive, release or assign any
material rights or claims;
(f) (i) grant any increase in compensation in excess of five
percent (5%) to any officer or employee whose compensation (base salary
plus bonus) for the fiscal year of the Company ended on September 30, 2005
exceeded $75,000 or (ii) enter into, or amend in any material respect, any
Employee Plan;
(g) (i) grant any special conditions with respect to any account
receivable other than in the ordinary course of business (e.g., extended
terms), (ii) fail to pay any material account payable on a timely basis in
the ordinary course of business consistent with past practice, (iii)
purchase inventory in excess of supplies necessary in the ordinary course
of business and consistent with past practice, (iv) ship inventory or take
any other action designed or having the effect of accelerating or deferring
the generation of accounts receivable in a manner inconsistent with past
practice or (v) start up or acquire any new business or product line which
is not similar to or directly complementary to any existing business or
product line;
(h) enter into any settlement with respect to any claim, action,
suit, other proceeding or investigation of any kind against or relating to
the Company, or any of its officers, directors, employees, or properties,
assets or business;
(i) take any action which would cause, or voluntarily fail to
take any action the failure of which would cause, any representation or
warranty of Sellers contained in this Agreement to be breached or untrue in
any material respect;
(j) make any change in any accounting policies or the application
thereof except as required by GAAP and disclosed to Buyer; or
(k) enter into any agreement to do any of the foregoing.
4.3 ACCESS; CONFIDENTIALITY.
(a) Sellers shall cause the Company to provide Buyer and its
employees, accountants, consultants, legal counsel, agents and other
authorized representatives reasonable access during regular business hours
and upon reasonable notice to the assets, properties, contracts,
commitments, books and records of the Company for the purpose of making
such investigations concerning the affairs of the Company as Buyer may
reasonably desire, and Sellers shall, and shall cause the Company to,
furnish Buyer such information as Buyer may from time to time reasonably
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require with respect to the Company and its affairs. Sellers shall cause
the officers and employees of the Company to assist Buyer in making any
such investigation and shall cause the counsel, accountants, consultants
and other non-employee representatives of Sellers and the Company to be
reasonably available to Buyer for such purposes.
(b) Pending the Closing, all information and documents obtained
by Buyer and its representatives pursuant to this Section shall be subject
to the terms and conditions of the letter agreement, dated April 12, 2006
(the "Confidentiality Agreement") executed by Buyer with respect to the
Company.
4.4 NO ACQUISITION PROPOSALS.
Sellers shall not, and shall cause the Company and its directors,
officers, employees and representatives (including, without limitation, any
investment banker, attorney or accountant) not to, directly or indirectly,
initiate or solicit any inquiries or the making of any proposal with respect to
a merger, consolidation or similar transaction involving, or any purchase of all
or any significant portion of the assets of, or any equity interest (including,
without limitation, the Shares) in, the Company (an "Acquisition Proposal") or
engage in any negotiations concerning, or provide any information or data to, or
have any discussions with, any person relating to any Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement any Acquisition
Proposal. Sellers shall immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any persons conducted
heretofore with respect to any of the foregoing.
4.5 APPROPRIATE ACTION; CONSENTS; FILINGS.
From and after the date hereof, each of the parties hereto shall use
its commercially reasonable efforts to (a) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable under applicable law or otherwise to satisfy the conditions to the
Closing to be satisfied by it and to consummate and make effective the
transactions contemplated by this Agreement, (b) obtain from any Governmental
Entities or third parties any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by any party hereto in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and (c) make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement required under any applicable United States federal,
state, local or foreign law; provided, that the parties hereto shall cooperate
with each other in connection with the making of all such filings, including
providing copies of all such documents to the non-filing parties and their
respective advisors prior to filing and, if requested, to accept all reasonable
additions, deletions or changes suggested in connection therewith.
4.6 BENEFITS.
During the one-year period after the Closing Date, Buyer shall, or
shall cause the Company to, provide the employees of the Company with employee
benefit plans that, in the aggregate, are substantially comparable to those
currently provided by the Company to its employees; provided, however, that this
Section 4.6 shall not be deemed to create any obligation on the part of Buyer to
continue the employment of any such employee for any period following
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the Closing Date. With respect to such employee benefit plans in which the
employees of the Company may become eligible to participate during the one year
period after the Closing Date, Buyer shall, or shall cause the Company to, (i)
waive, to the extent permitted under the applicable plans or related policies of
insurance and to the extent such person and conditions were covered under the
Company employee benefit plans as of the Closing Date, all limitations as to
pre-existing conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Company employees,
(ii) provide each Company employee with credit towards any applicable deductible
or out-of-pocket requirements and (iii) provide each Company employee with
credit for all service with the Company; provided, however, that in no event
shall the Company employees be entitled to any credit to the extent that it
would result in a duplication of benefits with respect to the same period of
service. Buyer shall credit each Company employee with any accrued but unused
vacation time to which such employee is entitled at the Closing Date. Nothing in
this Section shall confer upon any employee of the Company any rights or
remedies, including any right to employment, or continued employment for any
specified period, of any nature whatsoever under or by reason of the Agreement.
4.7 PUBLIC ANNOUNCEMENTS.
The initial public announcement regarding this Agreement or the
transactions contemplated hereby shall be a joint press release. Thereafter, the
parties shall consult with each other in issuing any press releases or otherwise
making public statements with respect to the transactions contemplated hereby,
except as otherwise required by law.
4.8 TERMINATION OF RELATED PERSON ARRANGEMENTS.
All agreements and other arrangements, whether oral or written, with
any affiliate or associate of the Company or any Seller which is disclosed
pursuant to Section 2.10, shall be terminated effective on or prior to the
Closing Date, except to the extent the continuation thereof is specifically
consented to by Buyer in writing.
4.9 SATISFACTION OF INDEBTEDNESS.
At or prior to the Closing, Sellers shall cause the Company to pay, or
cause to be paid, its indebtedness for borrowed money and its other
indebtedness, liabilities and obligations of a type required under GAAP to be
reflected on the Closing Date Balance Sheet except to the extent reflected in
the Closing Date Balance Sheet and used in calculating the Adjusted Working
Capital.
4.10 NON-COMPETITION.
Each Seller agrees that, beginning on the Closing Date and continuing
until the fifth (5th) anniversary of the Closing Date, he, she or it shall not,
directly or indirectly, for their own account or as agent, employee, officer,
director, trustee, consultant, partner, stockholder or equity owner of any
corporation or any other entity (except that they may own securities
constituting less than three percent (3%) of any class of securities of a public
company), or member of any firm or otherwise, engage or attempt to engage in the
activities which the Company is presently conducting or pursuing, including,
without limitation, the design and
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manufacturing of liquid handling products, including valves, fittings, pumps,
couplings, strainer/filters, systems and accessories (the "Business") anywhere
in the world where the Company conducts the Business.
4.11 NON-SOLICITATION.
Each Seller agrees that, beginning on the Closing Date and continuing
until the fifth (5th) anniversary of the Closing Date, he, she or it shall not,
directly or indirectly, for his, her or its own account or as agent, employee,
officer, director, trustee, consultant, partner, stockholder or equity owner of
any corporation or any other entity (a) employ or solicit the employment of any
person who was employed by the Company at the Closing Date, except that Sellers
shall be free to employ or solicit the employment of any such person whose
employment with the Company has terminated for any reason (without any
interference from Sellers thereof) and, unless Buyer shall otherwise consent in
writing, who has not been employed by the Company for at least six (6) months,
(b) canvass or solicit business in competition with the Business from any person
or entity who during the six (6) month period preceding the Closing Date shall
have been a customer of the Company, (c) willfully dissuade or discourage any
person or entity from using, employing or conducting business with the Company
or (d) intentionally disrupt or interfere with, or seek to disrupt or interfere
with, the business or contractual relationship between the Company and any
supplier who during the six-month period preceding the Closing Date shall have
supplied components, materials or services to the Company.
4.12 CONFIDENTIALITY.
Sellers have had access to, and have gained knowledge with respect to
the Business, including without limitation trade secrets, financial results and
information, processes and techniques, technical production and cost data,
methods of doing business and information concerning customers and suppliers,
and other valuable and confidential information relating to the Business (the
"Confidential Information"). Sellers acknowledge that unauthorized disclosure or
misuse of the Confidential Information, whether before or after the Closing,
will cause irreparable damage to the Company and Buyer subsequent to the
Closing. The parties also agree that covenants by Sellers not to make
unauthorized disclosures of the Confidential Information are essential to the
growth and stability of the business of the Company and Buyer. Accordingly, each
Seller agrees that he, she or it will not use or disclose any Confidential
Information obtained in the course of his, her or its past connection with the
Business, other than information generally available to the public through
sources other than Sellers, except in connection with the performance of his or
her obligations, if any, as an employee of the Company.
4.13 EQUITABLE REMEDIES/REASONABLENESS OF LIMITATIONS.
Each Seller acknowledges that (a) a remedy at law for his, her or its
failure to comply with the covenants contained in Sections 4.4, 4.10, 4.11 and
4.12 may be inadequate and (b) in the event of any such failure, Buyer shall be
entitled to seek and obtain from a court having jurisdiction specific
performance, an injunction, a restraining order or any other equitable relief in
order to enforce any such provision. The right to obtain such equitable relief
shall be in addition to any other remedy to which Buyer is entitled under
applicable law (including, but not limited to, monetary damages). Each Seller
represents and warrants that he, she or it has had an opportunity to consult
with counsel regarding this Agreement, has fully and completely reviewed
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this Agreement with such counsel and fully understands the contents hereof. Each
Seller agrees that the territorial, time and other limitations contained in this
Agreement are reasonable and properly required for the adequate protection of
the business and affairs of Buyer, and in the event that any one or more of such
territorial, time or other limitations is found to be unreasonable by a court of
competent jurisdiction, each Seller agrees to submit to the reduction of said
territorial, time or other limitations to such an area, period or otherwise as
the court may determine to be reasonable. In the event that any limitation under
this Agreement is found to be unreasonable or otherwise invalid in any
jurisdiction, in whole or in part, each Seller acknowledges and agrees that such
limitation shall remain and be valid in all other jurisdictions.
4.14 USE OF CORPORATE NAME OR TRADE NAME.
After the Closing, Sellers will not use or refer to the name "Banjo"
or any trade name included within the Intellectual Property, or any derivative
or variation thereof or any name similar thereto except in connection with the
performance of their obligations, if any, as officers or employees of the
Company.
4.15 LIABILITY INSURANCE.
Sellers shall purchase and maintain tail coverages for the existing
liability insurance coverages of the Company for a period of two (2) years after
the Closing. At the Closing, Buyer shall pay, or shall reimburse Sellers for,
twenty-five percent (25%) of the cost of such tail coverages.
4.16 NOTIFICATION OF CERTAIN MATTERS.
Sellers shall give prompt written notice to Buyer of (a) any fact or
circumstance, or any occurrence or failure to occur of any event of which
Sellers have knowledge, which fact, circumstance, occurrence or failure causes
or, with notice or the lapse of time, would cause any representation or warranty
of Sellers contained in this Agreement to be breached or untrue or inaccurate in
any respect any time from the date of this Agreement to the Closing and (b) any
failure of Sellers to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by Sellers under this Agreement.
ARTICLE V
TAX MATTERS
5.1 AUDITS, ETC.
Each party hereto agrees to promptly notify the other party upon
receipt of notice of any Audit of the Company for any taxable year or period
ending prior to or including the Closing Date, and agree to furnish or cause to
be furnished to each other, upon request, as promptly as practicable, such
information (including access to books and records) and assistance relating to
the Company as is reasonably necessary for the preparation and filing of any Tax
Return, for the preparation for any Audit, and for the prosecution or defense of
any claim, action, suit or other proceeding relating to any proposed adjustment
of Taxes. The parties shall cooperate with each other in the conduct of any
Audit and each shall execute and deliver such
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powers of attorney and other documents as are necessary to carry out the intent
of this Section; provided, that notwithstanding anything herein or in Article VI
to the contrary, Buyer, in good faith consultation with the Seller
Representative, shall have the right to control and direct the manner and the
resolution of any Audit involving the Company.
5.2 OTHER TAX MATTERS
(a) Tax Periods Ending on or Before the Closing Date. Sellers
shall prepare or cause to be prepared and shall file or cause to be filed
all Tax Returns for the Company for all periods ending on or prior to the
Closing Date that are filed after the Closing Date. Sellers shall provide a
copy of such Tax Returns and copies of the work papers and other documents
prepared or information used in the preparation of such Tax Returns for
Buyer's review at least fifteen (15) days prior to the date for filing such
Tax Returns. To the extent permitted by applicable law, Sellers shall
include any income, gain, loss, deduction or other tax items for such
periods on their Tax Returns in a manner consistent with the Schedule K-1s
furnished by the Company to Sellers for such periods. Sellers shall
reimburse Buyer for any income Tax liability with respect to such periods
within fifteen (15) days after payment by Buyer or the Company of such
income Tax liability to the extent such income Tax liability is not
reflected in the Closing Date Balance Sheet and used in calculating the
Adjusted Working Capital.
(b) Tax Periods Beginning Before and Ending After the Closing
Date. Buyer shall prepare or cause to be prepared and shall file or cause
to be filed any Tax Returns of the Company for Tax periods that begin
before the Closing Date and end after the Closing Date. Buyer shall provide
a copy of such Tax Returns for Sellers' review at least fifteen (15) days
prior to the date for filing such Tax Returns. Sellers shall pay to Buyer
within fifteen (15) days after the date on which Taxes are paid with
respect to such periods an amount equal to the portion of such Taxes which
relates to the portion of such Tax period ending on the Closing Date, to
the extent such Taxes are not reflected in the Closing Date Balance Sheet
and used in calculating the Adjusted Working Capital. For purposes of this
Section 5.2, in the case of any Taxes that are imposed on a periodic basis
and are payable for a Tax period that includes (but does not end on) the
Closing Date, the portion of such Tax which relates to the portion of such
Tax period ending on the Closing Date shall (i) in the case of any Taxes
other than Taxes based upon or related to income, receipts, wages, capital
expenditures, or expenses, be deemed to be the amount of such Tax for the
entire Tax period multiplied by a fraction the numerator of which is the
number of days in the portion of the Tax period that ends on the Closing
Date and the denominator of which is the number of days in the entire Tax
period, and (ii) in the case of any Tax based upon or related to income,
receipts, wages, capital expenditures, or expenses, be deemed equal to the
amount which would be payable if the relevant Tax period ended on the
Closing Date. Any credits relating to a Tax period that begins before and
ends after the Closing Date shall be taken into account as though the
relevant Tax period ended on the Closing Date.
(c) Cooperation In Connection With Tax Matters. Buyer, Sellers
and the Company shall cooperate fully, as and to the extent reasonably
requested by the other parties, in connection with the filing of Tax
Returns pursuant to this Section 5.2 and any audit, claim, action, suit or
other proceeding with respect to Taxes. Such cooperation
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shall include the retention and (upon another party's request) the
provision of records and information that are reasonably relevant to any
such audit, claim, action, suit or other proceeding and making employees
available on a mutually convenient basis to provide additional information
and explanation of any material provided hereunder. Sellers and Buyer agree
to, and agree to cause the Company to (i) retain all books and records with
respect to Tax matters pertinent to the Company relating to any Tax period
beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or Seller, any extensions
thereof) of the respective Tax periods, and to abide by all record
retention agreements entered into with any Tax authority, and (ii) give the
other parties reasonable written notice prior to transferring, destroying,
or discarding any such books and records. Buyer and Sellers further agree,
upon request, to use their best efforts to obtain any certificate or other
document from any Governmental Entity or any other person as may be
necessary to mitigate, reduce, or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions
contemplated under this Agreement).
ARTICLE VI
INDEMNIFICATION
6.1 GENERALLY.
(a) Each Seller, severally and not jointly, shall defend,
indemnify and hold Buyer and its affiliates, the directors, officers and
employees of Buyer and its affiliates, harmless from, against and in
respect of any liability, loss, damage, claim, cost or expense (including,
without limitation, expenses of investigation and defense and reasonable
fees and disbursements of counsel; collectively, "Losses"), incurred by
Buyer and arising out of or based upon any breach by such Seller of its
representations and warranties set forth in Section 2.1 or Section 2.4(b)
hereof.
(b) Sellers, jointly and severally, shall defend, indemnify and
hold Buyer and its affiliates, and the directors, officers and employees of
Buyer and its affiliates, harmless from, against and in respect of any
Losses incurred by Buyer and arising out of or based upon any breach by
Sellers of their representations and warranties set forth in Article II
hereof (except those set forth in Section 2.1 and Section 2.4(b) hereof).
(c) Sellers, jointly and severally, shall defend, indemnify and
hold Buyer and its affiliates, the directors, officers and employees of
Buyer and its affiliates, harmless from, against and in respect of the
following:
(i) any and all Losses suffered or incurred by any of them
(before or after the Closing) by reason of the nonfulfillment of any
covenant or agreement by Sellers contained in this Agreement;
(ii) any and all Losses suffered or incurred by any of them
by reason of any demands, claims, inquiries, arbitration or lawsuits
by any former shareholder or other equity owner of the Company, or any
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such shareholder's or other equity owner's personal representative or
any other person making a claim based on a relationship with any other
shareholder or other equity owner of the Company;
(iii) any and all Losses suffered or incurred by any of them
arising from any indebtedness, liability or obligation of the Company
on the Closing Date of a type required under GAAP to be reflected on
the Closing Date Balance Sheet or any indebtedness for borrowed money
incurred by the Company on or after the Closing Date but before the
Closing, except to the extent reflected in the Closing Date Balance
Sheet and used in calculating the Adjusted Working Capital; and
(iv) any and all Losses suffered or incurred by any of them
attributable to (A) any of the matters disclosed in Section 2.14 of
the Disclosure Schedule or (B) with respect to the importing or
exporting of goods to or from the United States, any failure of the
Company before the Closing to have obtained any Permits, or to have
complied with the terms and conditions of any Permits or laws, rules,
regulations or orders, applicable to the Company or its business.
6.2 TAX INDEMNIFICATION.
(a) Sellers, jointly and severally, shall defend, indemnify and
hold Buyer and the Company harmless from, against and with respect to any
and all Taxes that may be imposed upon or assessed against the Company or
Buyer or the assets of the Company (A) based on income attributable to any
period ending on or prior to the Closing Date (including, without
limitation, any tax imposed by reason of the transactions contemplated by
this Agreement), (B) based on operations of the Company on or prior to the
Closing Date or (C) arising by reason of any breach by Sellers of any of
the representations contained in Section 2.15, and shall be responsible for
any liability for any federal, state, local or foreign income, business and
occupation or similar Taxes owing by the Company to any Governmental Entity
attributable to the operations and activities of, or otherwise incurred by
or existing with respect to, the Company for any period ending on or prior
to the Closing Date, except, in each case, to the extent fully reflected on
the Closing Date Balance Sheet and used in calculating the Adjusted Working
Capital.
(b) Any claim for indemnity under this Section 6.2 may be made at
any time prior to sixty (60) days after the expiration of the applicable
tax statute of limitations with respect to the relevant taxable period
(including all periods of extension, whether automatic or permissive).
6.3 CERTAIN LIMITATIONS.
(a) The indemnification obligations of Sellers under Section
6.1(b) shall not apply to the first $1,000,000, in the aggregate, of Losses
referred to therein, except to the extent that such Losses may be incurred
by virtue of or result from fraud or intentional misrepresentation.
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(b) The indemnification obligations of Sellers under Sections
6.1(b) shall not exceed $10,000,000 in the aggregate, and the
indemnification obligations of each Seller under this Article VI shall not
exceed the aggregate Purchase Price received by such Seller for his, her or
its Shares; provided however, that the foregoing limitations shall not
apply to any Losses resulting from a breach of the representations and
warranties contained in Section 2.4 (Capitalization of the Company;
Subsidiaries and Investments) or Section 2.7(a) (Ownership and Condition of
Assets) or that that may be incurred by virtue of or result from fraud or
intentional misrepresentation.
(c) All representations and warranties of Sellers contained in
this Agreement shall survive the Closing for a period of eighteen (18)
months (the "Claims Period"): except that (A) the representations and
warranties in Section 2.4 (Capitalization of the Company; Subsidiaries and
Investments) and Section 2.7(a) (Ownership and Condition of Assets) shall
survive the Closing indefinitely and (B) the representations and warranties
in Section 2.18 (Environmental Matters) and Section 2.15 (Taxes) shall
survive the Closing for a period of six (6) years from the date Sellers
file the last tax return described in Section 5.2(a). Any claim made by
Buyer with respect to the representations and warranties of Sellers
contained in this Agreement must be initiated by Buyer during the Claims
Period, except that any claim with respect to the representations and
warranties in Section 2.18 (Environmental Matters) or in Section 2.15
(Taxes) must be initiated within six (6) years following the filing by
Sellers of the last tax return required to be filed pursuant to Section
5.2(a) of this Agreement and there shall be no time limit on when claims
may be initiated with respect to the representations and warranties in
Section 2.4 (Capitalization of the Company; Subsidiaries and Investments)
and Section 2.7(a) (Ownership and Condition of Assets). All of the
representations and warranties of Sellers contained in this Agreement shall
in no respect be limited or diminished by any past or future inspection,
investigation, examination or possession on the part of Buyer or its
representatives or any notice pursuant to Section 4.16. All covenants and
agreements made by Sellers contained in this Agreement (including, without
limitation, the obligation of Sellers to convey the Shares to Buyer free
and clear of any Lien and the indemnification obligations of Sellers set
forth in this Article VI) shall survive the Closing Date until fully
performed or discharged.
(d) The amount of any Loss subject to indemnification by Sellers
hereunder shall be reduced by the amount of any insurance proceeds received
by Buyer or the Company in respect of such Loss (net of retrospective
premium payment or prospective premium increases).
6.4 DEFENSE OF CLAIMS.
(a) As used in this Section 6.4, any party seeking
indemnification pursuant to this Article VI is referred to as an
"Indemnified Party" and any party from whom indemnification is sought
pursuant to this Article VI is referred to as an "Indemnifying Party." An
Indemnified Party which proposes to assert the right to be indemnified
under this Article VI shall submit a written demand for indemnification to
the Indemnifying Party as promptly as practicable after its discovery of
grounds for indemnification hereunder, setting forth in summary form the
facts as then known which form the basis for the claim for indemnification;
provided, however, that the failure to
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give such notice will not affect such claim of indemnification except to
the extent of actual prejudice to the Indemnifying Party. With respect to
claims based on actions by third parties, an Indemnified Party shall,
within fifteen (15) days after the receipt of notice of the commencement of
any claim, action, suit or other proceeding against it in respect of which
a claim for indemnification is to be made against an Indemnifying Party,
notify the Indemnifying Party in writing of the commencement of such claim,
action, suit or other proceeding, enclosing a copy of all papers served;
provided, however, that the failure to so notify the Indemnifying Party of
any such claim, action, suit or other proceeding shall not relieve the
Indemnifying Party from any liability which it may have to the Indemnified
Party, except to the extent that the Indemnifying Party is prejudiced
thereby. Thereafter, the Indemnified Party shall deliver to the
Indemnifying Party, within fifteen (15) days after receipt by the
Indemnified Party, copies of all further notices relating to such claim.
(b) With respect to claims based on actions by third parties,
Sellers may, at their option, upon providing to Buyer written
acknowledgment of their obligation to indemnify each Indemnified Party for
all Losses arising with respect to such claim pursuant to this Article VI,
assume the defense of such claim with counsel reasonably satisfactory to
Buyer, at the sole cost and expense of Sellers unless (i) such claim seeks
an order, injunction or other equitable relief against Buyer or the
Company, (ii) Buyer shall have reasonably concluded that there is a
conflict of interest between Sellers, on the one hand, and Buyer or the
Company, on the other hand, in the defense of such claim or (iii) the
amount of potential exposure with respect to such claim exceeds the amounts
remaining with the escrow agent pursuant to the Escrow Agreement (A) minus
the amount of all prior claims delivered to the escrow agent by Buyer which
remain unresolved and (B) plus the amount of any bond or other security
reasonably satisfactory to Buyer posted by Seller Representative upon the
assumption of such defense. After any assumption of the defense of any
claim by Sellers, Sellers shall not be liable to Buyer for any legal
expenses thereafter incurred by Buyer in connection with the defense
thereof other than reasonable costs of investigation and any costs incurred
in the course of such defense. In any such event, whether or not Sellers do
so assume the defense thereof, Sellers and Buyer shall cooperate in the
defense thereof and shall furnish such records and information and attend
at such proceedings as may be reasonably requested in connection herewith.
Subject to Section 6.4(c) below, unless Seller Representative unreasonably
withholds such consent Sellers shall have no indemnification obligations
with respect to any claim or demand that is settled by Buyer without the
prior written consent of the Seller Representative (which consent shall not
be unreasonably withheld).
(c) In the event that Buyer proposes to settle any third party
claim by any person other than a Governmental Entity, then Buyer shall give
the Seller Representative ten (10) business days' prior written notice of
such proposed settlement, together with a description of such claim and the
principal terms of the proposed settlement in reasonable detail. During
such ten (10) business day period, Buyer shall provide to the Seller
Representative any additional information requested by the Seller
Representative that he reasonably deems necessary to make a determination
whether to accept or reject such proposed settlement. The Seller
Representative shall notify Buyer prior to the end of such ten (10)
business day period as to whether Sellers accept or reject
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such proposed settlement; provided, however, that notwithstanding anything
to the contrary contained in this Article VI, if Sellers reject the
proposed settlement, Sellers shall at the time of such rejection
acknowledge their obligation to indemnify Buyer for all Losses arising with
respect to such claim pursuant to this Article VI and shall at such time
also post a performance bond, letter of credit or other similar security in
each case reasonably satisfactory to Buyer in an amount which equals, the
excess of (i) the amount by which the amount claimed pursuant to such third
party claim or, if greater, the potential liability arising out of such
third party claim (in the good faith judgment of the Indemnified Party),
exceeds the proposed settlement amount over (ii) the amount, if any,
remaining with the escrow agent pursuant to the Escrow Agreement (A) minus
the amount of all prior claims delivered to the escrow agent by Buyer which
remain unresolved and (B) plus the amount of any bond or other security
previously posted by Sellers upon any assumption of the defense of such
claim by Sellers pursuant to Section 6.4(b) above.
(d) In the event that any claim for indemnification is made with
respect to any third party claim pursuant to this Article VI, (A) the party
assuming primary responsibility for the defense of such claim shall at all
times keep the other party reasonably informed as to the status of such
claim and (B) the party not primarily responsible for the defense of such
claim shall cooperate folly with the other party in connection with such
defense.
6.5 EXCLUSIVE REMEDY.
The rights of indemnification of Buyer under this Article VI shall be
the sole and exclusive remedy available to Buyer and its affiliates, and the
directors, officers and employees of Buyer and its affiliates, for any Losses
incurred by any of them after the Closing as a result of any breach by any
Seller of its representations, warranties, covenants and agreements set forth in
this Agreement or otherwise in connection with the transactions contemplated
hereby except for fraud or intentional misrepresentation; provided, however,
that this Section 6.5, shall not preclude or limit Buyer from the exercise of
all available equitable remedies in the event of any breach by any Seller of its
covenants to be performed after the Closing Date.
6.6 ESCROW AGREEMENT.
All Losses incurred by Buyer that are subject to indemnification
hereunder shall be payable first from the funds being held in escrow pursuant to
the Escrow Agreement, to the extent of such funds, as provided for in the Escrow
Agreement.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO OBLIGATIONS OF BUYER.
The obligations of Buyer to consummate the transactions contemplated
hereby are subject to the satisfaction at or prior to the Closing of the
following conditions, any or all of
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which may be waived, in whole or in part, to the extent permitted by applicable
law, in a written instrument executed and delivered by Buyer:
(a) Representations and Warranties. Each of the representations
and warranties of each Seller contained in this Agreement shall be true in
all material respects at and as of the Closing, as though made at and as of
the Closing.
(b) Agreements and Covenants. Each Seller shall have performed or
complied with all agreements and covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing.
(c) Certificate. Buyer shall have received a certificate signed
by each Seller to the effect set forth in Sections 7.1(a) and (b).
(d) Consents and Approvals. The waiting period under the HSR Act
shall have expired or been terminated; all other filings required to be
made prior to the Closing by the Company with, and all consents, approvals
and authorizations required to be obtained by the Company from, any
Governmental Entities in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
shall have been made or obtained (as the case may be); and the Company
shall have obtained the necessary consents to consummation of the
transactions contemplated hereby of the persons set forth in Sections
2.3(b) of the Disclosure Schedule, in each case on terms and conditions
reasonably satisfactory to Buyer.
(e) No Order. No claim, action, suit or other proceeding by or
before any Governmental Entity shall have been instituted, and no
Governmental Entity, including any federal or state court of competent
jurisdiction, shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, executive order, judgment, decree,
injunction or other order (whether temporary, preliminary or permanent),
which, in either case, is in effect and which has the effect of making the
transactions contemplated by this Agreement illegal, or otherwise restrains
consummation of the transactions contemplated hereby (collectively, an
"Order").
(f) Employment Agreements. Each of Michael Bowman and Mark Gillen
and shall have entered into an Employment Agreement with Buyer (the
"Employment Agreements") in substantially in the form attached hereto as
Exhibit 7.1(f).
(g) Escrow Agreement. Sellers and Buyer shall have executed and
delivered an Escrow Agreement (the "Escrow Agreement") in substantially in
the form attached hereto as Exhibit 7.1(g).
(h) Proceedings and Documents. All legal details and corporate
and other proceedings in connection with the transactions contemplated by
this Agreement and all documents and instruments incident thereto shall be
reasonably satisfactory to Buyer and its counsel, and Buyer and its counsel
shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
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(i) Legal Opinion. Buyer shall have received the opinion of Baker
& Daniels, counsel to the Company and Sellers, in substantially the form
attached hereto as Exhibit 7.1(i) and otherwise in form and substance
reasonably satisfactory to Buyer.
(j) No Material Adverse Change. Since June 30, 2006, there shall
not have occurred any change in the business, prospects, properties,
assets, financial condition or results of operations of the Company that,
alone or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect (other than any such change resulting from changes
in general economic or business conditions).
7.2 CONDITIONS TO OBLIGATIONS OF SELLERS.
The obligations of each Seller to consummate the transactions
contemplated hereby are subject to the satisfaction at or prior to the Closing
of the following conditions, any or all of which may be waived, in whole or in
part, to the extent permitted by applicable law, in a written instrument
executed and delivered by the Seller Representative:
(a) Representations and Warranties. Each of the representations
and warranties of Buyer contained in this Agreement shall be true in all
material respects at and as of the Closing, as though made at and as of the
Closing.
(b) Agreements and Covenants. Buyer shall have performed or
complied with all agreements and covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing.
(c) Officer's Certificate. Sellers shall have received a
certificate signed by a duly authorized officer of Buyer to the effect set
forth in Sections 7.2(a) and (b).
(d) Consents and Approvals. The waiting period under the HSR Act
shall have expired or been terminated; and all other filings required to be
made prior to the Closing by Buyer with, and all consents, approvals and
authorizations required to be obtained by Buyer from, any Governmental
Entities in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, shall have
been made or obtained (as the case may be).
(e) No Order. There shall be no Order.
(f) Other Agreements. Buyer shall have executed and delivered the
Escrow Agreement and the Employment Agreements, in substantially in the
forms attached as Exhibits to this Agreement.
(g) Proceedings and Documents. All legal details and corporate
and other proceedings in connection with the transactions contemplated by
this Agreement and all documents and instruments incident thereto shall be
reasonably satisfactory to Buyer and its counsel, and Buyer and its counsel
shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
ARTICLE VIII
-32-
TERMINATION
8.1 TERMINATION.
This Agreement may be terminated and the transactions contemplated
hereby abandoned at any time prior to the Closing:
(a) by mutual written consent of those Sellers then owning a
majority of the Shares (the "Majority Sellers") on the one hand, and Buyer
on the other hand;
(b) by the Majority Sellers, on the one hand, or Buyer on the
other hand, if the Closing shall not have occurred on or before October 31,
2006 (or, if the Closing has not then occurred because the waiting period
under the HSR Act shall not have expired or been terminated, on or before
November 30, 2006), or such later date to which the Majority Sellers and
Buyer agree in writing, for any reason other than a breach of this
Agreement by the terminating party;
(c) by Buyer, if there shall have been any material breach by
Sellers of their representations, warranties, covenants and agreements set
forth herein, which breach (i) has, in the reasonable judgment of Buyer,
rendered impossible the satisfaction of any of the conditions set forth in
Section 7.1 hereof and (ii) has not been remedied within 15 days after
Buyer delivers written notice of such breach to the Seller Representative
(any such written notice to refer specifically to this Section 8.1(c) and
to describe such breach in reasonable detail); or
(d) by the Majority Sellers, if there shall have been any
material breach by Buyer of any of its representations, warranties,
covenants and agreements set forth herein, which breach (i) has, in the
reasonable judgment of the Majority Sellers, rendered impossible the
satisfaction of any of the conditions set forth in Section 7.2 hereof and
(ii) has not been remedied within 15 days after the Seller Representative
delivers written notice of such breach to Buyer (any such written notice to
refer specifically to this Section 8.1(d) and to describe such breach in
reasonable detail).
8.2 PROCEDURE AND EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement pursuant to
this Article VIII, the terminating party shall forthwith give written
notice thereof to the other party and this Agreement shall terminate, and
the transactions contemplated hereby shall be abandoned, without further
action by either of the parties hereto.
(b) If this Agreement is terminated as provided herein, neither
party hereto shall have any liability or further obligation hereunder to
the other party, except as provided in Section 9.2 and except that nothing
herein shall relieve any party from liability for any breach of this
Agreement.
ARTICLE IX
MISCELLANEOUS AND GENERAL
-33-
9.1 PAYMENT OF EXPENSES.
Whether or not the transactions contemplated by this Agreement are
consummated, each party hereto shall pay its own expenses incident to preparing
for, entering into and carrying out this Agreement and the transactions
contemplated hereby; provided, however, that the Company shall pay the
reasonable legal fees and expenses of a single law firm and a single firm of
independent accountants to represent the Company and the Sellers in connection
with the transactions contemplated hereby for services performed at or before
the Closing and an accrual for all such fees and expenses shall be included on
the Preliminary Closing Date Balance Sheet and the Closing Date Balance Sheet.
9.2 SURVIVAL.
The representations and warranties of Sellers set forth in Article II
of this Agreement shall survive the Closing as set forth in Article VI hereof.
The agreements of the parties contained in Articles I, IV, V, VI and this
Article IX shall survive the Closing until the expiration of the respective
periods specified therein or, if none is specified, indefinitely. The agreements
of the parties contained in Sections 4.3(b), 8.2 and this Article IX shall
survive any termination of this Agreement. All other representations,
warranties, covenants and agreements in this Agreement shall not survive the
Closing or termination of this Agreement.
9.3 ENTIRE AGREEMENT; ASSIGNMENT; ETC.
This Agreement (including the Disclosure Schedule) and the
Confidentiality Agreement constitute the entire agreement, and supersede all
other agreements, understandings, representations and warranties, both written
and oral, among the parties with respect to the subject matter hereof, and shall
not be assignable by operation of law or otherwise and is not intended to create
any obligations to, or rights in respect of, any persons other than the parties
hereto.
9.4 CAPTIONS.
The Article, Section and paragraph captions herein are for convenience
of reference only, do not constitute part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions hereof.
9.5 SEVERABILITY.
If any term or other provision of this Agreement, or any portion
thereof, is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms and provisions of this Agreement, or remaining
portion thereof, shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any such term or other provision, or any portion thereof, is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are consummated to the fullest extent possible.
-34-
9.6 MODIFICATION OR AMENDMENT.
The parties hereto may modify or amend this Agreement at any time,
only by a written instrument duly executed and delivered by each party hereto.
9.7 NOTICES.
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given (i) on the date
delivered, if delivered personally, (ii) on the fifth business day after being
mailed by registered or certified mail (postage prepaid, return receipt
requested), in each case, to the parties at the following addresses, or (iii) on
the date sent and confirmed by electronic transmission to the facsimile number
specified below (or at such other address or facsimile number for a party as
shall be specified by notice given in accordance with this Section):
(a) If to any Seller, to:
Jack K. Canine, as Seller Representative
Michael Bowman, as Seller Representative
150 Banjo Drive
Crawfordsville, Indiana 47933
Facsimile No.: (765) 362-0744
with a copy to:
Baker & Daniels LLP
600 East 96th Street
Suite 600
Indianapolis, IN 46240
Attention: J. Jeffrey Brown
Facsimile No.: (317) 569-4800
(b) If to Buyer, to:
IDEX Corporation
630 Dundee Road, Suite 400
Northbrook, Illinois 60062
Attention: Frank J. Notaro
Daniel J. Salliotte
Facsimile No.: (847) 498-9123
with a copy to:
Hodgson Russ LLP
One M&T Plaza, Suite 2000
Buffalo, New York 14203
Attention: John P. Amershadian
Richard F. Campbell
-35-
Brad A. Birmingham
Facsimile No.: (716) 849-0349
No provision of this Agreement, including this Section, shall be
deemed to constitute consent to the manner and address for service of process in
connection with any legal proceeding (including such arising out of or in
connection with this Agreement), which service shall be effected as required by
applicable law.
9.8 FAILURE OR DELAY NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of any party hereto in the exercise of
any right hereunder shall impair such right or be construed to be a waiver of,
or acquiescence in, any breach of any representation, warranty, covenant or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive of,
any rights or remedies otherwise available. Any waiver of a breach of any of the
provisions of this Agreement shall not be deemed a waiver of any other provision
of this Agreement.
9.9 DEFINITION OF "KNOWLEDGE."
As used in this Agreement the terms "know," "known," "knowledge" and
similar terms shall mean, with reference to Sellers, the actual knowledge of
Jack C. Canine, Michael Bowman, Cindy Sowder, Deb Gillen, Mark Gillen or Vince
Bezdicek, in each case after due inquiry of the employees of the Company who
have managerial responsibility for the matter in question.
9.10 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the law of the State of New York, without regard to the conflicts of laws
principles thereof.
9.11 COUNTERPARTS.
This Agreement may be executed in the original or by telecopy in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall constitute one and the same instrument.
9.12 WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY CLAIM, SUIT, ACTION OR OTHER PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
9.13 APPOINTMENT OF SELLER REPRESENTATIVE.
(a) Powers of Attorney. Each Seller irrevocably constitutes and
appoints each of Jack K. Canine and Michael Bowman, with either fully able
to act as such alone, (each the "Seller Representative") as such Seller's
true and lawful agent, proxy and attorney-in-fact and agent and authorizes
the Seller Representative acting for
-36-
such Seller and in such Seller's name, place and stead, in any and all
capacities to do and perform every act and thing required or permitted to
be done in connection with the transactions contemplated by this Agreement
and the Escrow Agreement, as fully to all intents and purposes as such
Person might or could do in person, including, without limitation, to (i)
consummate the transactions contemplated herein, and in the event of such
consummation, to receive payment on behalf of such Seller for the Shares,
(ii) pay such Seller's expenses (whether incurred on or after the date
hereof) incurred in connection with the performance of this Agreement and
the Escrow Agreement, it being understood that such expenses shall be
allocated among the Sellers based upon each Seller's proportionate
shareholdings, (iii) disburse any funds received hereunder to such Seller
and each other Seller, (iv) execute and deliver the Escrow Agreement and
any other Contracts contemplated herein and any certificates or other
documents required hereunder, including delivery of any stock certificates
representing the Shares, (v) execute and deliver on behalf of such Seller
any amendment hereto or to any of the documents described in clause (iv) of
this Section 9.13(a), (vi) take all other actions to be taken by or on
behalf of such Seller in connection herewith, (vii) negotiate, settle,
compromise and otherwise handle, pay or accept any amounts pursuant to this
Agreement or pursuant to any of the documents described in clause (iv) of
this Section 9.13(a), (viii) to negotiate, settle, compromise and otherwise
handle all claims for indemnification made by Buyer pursuant to this
Agreement and (ix) do each and every act and exercise any and all rights
which such Seller or the Sellers (collectively) are permitted or required
to do or exercise under this Agreement. Each Seller grants unto said
attorney-in-fact and agent full power and authority to do and perform each
and every act and thing necessary or desirable to be done in connection
with the transactions contemplated by this Agreement, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that the Seller Representative may lawfully do
or cause to be done by virtue hereof. Each Seller will, by executing this
Agreement agree that such agency, proxy and power of attorney are coupled
with an interest, and are therefore irrevocable without the consent of the
Seller Representative and shall survive the death, incapacity, or
bankruptcy of such Seller. Each Seller acknowledges and agrees that upon
execution of this Agreement, any delivery by the Seller Representative of
any waiver, amendment, agreement, opinion, certificate or other documents
executed by the Seller Representative or any decisions made by the Seller
Representative pursuant to this Section 9.13, such Seller shall be bound by
such documents or decision as fully as if such Seller had executed and
delivered such documents or made such decisions.
(b) No Fiduciary Relationship. The Seller Representative shall
not have by reason of this Agreement a fiduciary relationship in respect of
any Seller, except in respect of amounts received on behalf of such Seller.
The Seller Representative shall not be liable to any Seller for any action
taken or omitted by him or any agent employed by him hereunder or under any
other document or agreement in connection therewith, except that the Seller
Representative shall not be relieved of any liability imposed by law for
gross negligence or willful misconduct. The Seller Representative shall not
be liable to Sellers for any apportionment or distribution of payments made
by the Seller Representative in good faith, and if any such apportionment
or distribution is subsequently determined to have been made in error the
sole recourse of any Seller to whom payment was due, but not made, shall be
to recover from other Sellers any
-37-
payment in excess of the amount to which they are determined to have been
entitled. The Seller Representative shall not be required to make any
inquiry concerning either the performance of observance of any of the
terms, provisions or conditions of this Agreement.
(c) Replacement of the Seller Representative. Upon the death,
disability or incapacity of the initial Seller Representative appointed
pursuant to Section 9.13(a) above, each Seller acknowledges and agrees the
Majority Sellers shall promptly appoint a replacement Seller Representative
hereunder within ten (10) days. In the event that the Seller Representative
resigns for any reason, the Majority Sellers shall promptly appoint another
representative to fill such vacancy. Any substituted representative shall
be deemed the Seller Representative for all purposes of this Agreement and
the documents executed in connection with this Agreement.
(d) Actions of the Seller Representative; Liability of the Seller
Representative. Each Seller agrees that Buyer shall be entitled to rely on
any action taken by the Seller Representative, on behalf of Sellers,
pursuant to this Agreement (each, an "Authorized Action"), and that each
Authorized Action shall be binding on each Seller as fully as if such
Seller had taken such Authorized Action. Buyer agrees that the Seller
Representative shall have no liability to Buyer for any Authorized Action,
except to the extent that such Authorized Action is found by a final order
of a court of competent jurisdiction to have constituted fraud or willful
misconduct. Sellers jointly and severally agree to pay, and to indemnify
and hold harmless Buyer from and against any losses which they may suffer,
sustain, or become subject to, as the result of any claim by any Person
that an Authorized Action is not binding on, or enforceable against,
Sellers. In addition, Sellers hereby release and discharge Buyer from and
against any liability arising out of or in connection with the Seller
Representative's failure to distribute any amounts received by the Seller
Representative on Sellers' behalf to Sellers.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURES APPEAR ON FOLLOWING PAGE]
-38-
IN WITNESS WHEREOF, this Stock Purchase Agreement has been duly
executed and delivered by the duly authorized officers of each of the parties
hereto as of the date first written above.
"SELLERS":
----------------------------------------
Jack K. Canine
----------------------------------------
Michael Bowman
----------------------------------------
Michael Bowman, as Trustee of the
Cynthia Dawn Sowder Irrevocable Trust
dated December 21, 1990
----------------------------------------
Michael Bowman, as Trustee of the Marcia
Jill Parker Irrevocable Trust dated
December 21, 1990
----------------------------------------
Michael Bowman, as Trustee of the Debora
Lynn Gillen Irrevocable Trust dated
December 21, 1990
----------------------------------------
Cindy Sowder
----------------------------------------
Deb Gillen
----------------------------------------
Jill Parker
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]
-39-
----------------------------------------
Ken Sowder
----------------------------------------
Kevin Parker
----------------------------------------
Courtney Sowder, as Trustee of the
Courtney Sowder Irrevocable Trust
February 23, 2005
----------------------------------------
Cody Sowder, as Trustee of the Cody
Sowder Irrevocable Trust February 23,
2005
----------------------------------------
Marcia Jill Parker, as Trustee of the
Parker Children IRR Trust F/B/O Megan
Parker dated October 9, 2002
----------------------------------------
Kevin Dewayne Parker, as Trustee of the
Parker Children IRR Trust F/B/O Megan
Parker dated October 9, 2002
----------------------------------------
Marcia Jill Parker, as Trustee of the
Parker Children IRR Trust F/B/O Abigale
Parker dated October 9, 2002
----------------------------------------
Kevin Dewayne Parker, as Trustee of the
Parker Children IRR Trust F/B/O Abigale
Parker dated October 9, 2002
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]
-40-
----------------------------------------
Debora Lynn Gillen, as Trustee of the
Gillen Children Trust dated July 24,
1998 and amended July 1, 1999
----------------------------------------
Mark Gillen, as Trustee of the Gillen
Children Trust dated July 24, 1998 and
amended July 1, 1999
----------------------------------------
Jack K. Canine, U/A Banjo Qualified
Marital Share (Elected) Trust dated
March 4, 1997
----------------------------------------
Michael D. Bowman, U/A Banjo Qualified
Marital Share (Elected) Trust dated
March 4, 1997
----------------------------------------
Jack K. Canine, U/A Banjo Qualified
Marital Share (Non-Elected) Trust dated
March 4, 1997
----------------------------------------
Michael D. Bowman, U/A Banjo Qualified
Marital Share (Non-Elected) Trust dated
March 4, 1997
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]
-41-
BANJO CORPORATION
By
-------------------------------------
Michael Bowman
President
IDEX CORPORATION
By
-------------------------------------
Frank J. Notaro
Vice President
-42-
LIST OF SECTIONS OF
THE DISCLOSURE SCHEDULE
SECTIONS TO DISCLOSURE SCHEDULE
2.3 No Conflict; Required Filings and Consents
2.4(a) Capitalization of the Company
2.5 Company Financial Statements
2.6 Absence of Certain Changes or Events
2.7 Ownership and Condition of Assets
2.9 Material Contracts
2.10 Related Party Arrangements
2.11 Insurance
2.12 Intellectual Property
2.13 Permits; Compliance with Law
2.14 Absence of Litigation
2.15 Taxes
2.16 Benefit Plans
2.17 Labor Matters
2.18 Environmental Matters
2.20 Suppliers and Customers
2.21 Product Warranty
INTRODUCTION
These Schedules are delivered pursuant to the Stock Purchase Agreement
(the "Agreement"), dated September 8, 2006, between each of the shareholders of
Banjo Corporation listed on the signature page of the Agreement (each a "Seller"
and, collectively, "Sellers"), and IDEX Corporation, a Delaware corporation
("Buyer"). Capitalized terms used in these Schedules and not otherwise defined
herein have the meanings given to such terms in the Agreement.
The sections of these Schedules are qualified in their entirety by
reference to specific provisions of the Agreement, and are not intended to
constitute, and shall not be construed as constituting, representations or
warranties of any Seller except to the extent expressly provided in the
Agreement.
Matters reflected in these Schedules are not necessarily limited to
matters required by the Agreement to be reflected herein. Such additional
matters are set forth for information purposes only, and do not imply that other
matters of a similar nature are also included herein.
Any headings and subheadings included in these Schedules are for
convenience of reference only and shall not have the effect of amending or
changing the express description thereof as set forth in the Agreement.
Neither the specification of any dollar amount in the representations
and warranties contained in the Agreement, nor the inclusion of any specific
item in this Disclosure Schedule, is intended to imply that such amount or
higher or lower amounts, or the items so included or other items not included,
are or are not material.
Any cross-reference to another Schedule shall include a reference to
any attachments to such cross-referenced Schedule.
SECTION 2.3
NO CONFLICT; REQUIRED FILINGS AND CONSENTS
None.
SECTION 2.4(A)
CAPITALIZATION OF THE COMPANY
SHARES OWNERSHIP
OWNED %
SHAREHOLDER @ 9/30/05 @ 9/30/05
- ----------- --------- ---------
Jack K. Canine 1,948 9.3456%
Michael Bowman 1,828 8.7699%
Michael Bowman, as Trustee of the
Cynthia Dawn Sowder Irrevocable Trust
dated December 21, 1990(1) 1,240 5.9490%
Michael Bowman, as Trustee of the
Marcia Jill Parker Irrevocable Trust
dated December 21, 1990(1) 1,240 5.9490%
Michael Bowman, as Trustee of the
Debra Lynn Gillen Irrevocable Trust
dated December 21, 1990(1) 1,240 5.9490%
Cindy Sowder 2,151 10.3195%
Deb Gillen 2,189 10.5018%
Jill Parker 2,190 10.5066%
Ken Sowder 497 2.3844%
Kevin Parker 559 2.6818%
Courtney Sowder, as Trustee of the
Courtney Sowder Irrevocable Trust(2) 559 2.6818%
Cody Sowder, as Trustee of the
Cody Sowder Irrevocable Trust(2) 559 2.6818%
Marcia Jill Parker and Kevin DeWayne
Parker, as Trustees of the Parker
Children IRR Trust f/b/o Megan
Parker(1) 559 2.6818%
Marcia Jill Parker and Kevin
DeWayne Parker, as Trustees of the
Parker Children IRR Trust f/b/o
Abigale Parker(1) 430 2.0629%
Debra Lynn Gillen and Mark Gillen, as
Trustee of the Gillen Children Trust
dated July 24, 1998 (as amended July
1, 1999(2) 715 3.4302%
Marie Canine - Qualified Elected(3) 351 1.6839%
Marie Canine - Qualified Non-Elected(3) 2,589 12.4208%
------ --------
TOTALS 20,844 100.0000%
====== ========
(1) Electing Small Business Trust (ESBT)
(2) Grantor Trust
(3) Qualified Subchapter S Trust (QSST)
SECTION 2.5
COMPANY FINANCIAL STATEMENTS
None.
SECTION 2.6
ABSENCE OF CERTAIN CHANGES OR EVENTS
1. As of August 31, 2006, Jack Canine has paid off his loan (plus interest)
from the Company in the amount of $1,909,478.19.
2. As of August 31, 2006, Deb Gillen has paid the Company $285,530.00 for her
split-dollar life insurance policy.
3. As of August 31, 2006, Jill Parker has paid the Company $287,464.00 for her
split-dollar life insurance policy.
4. As of August 31, 2006, Cindy Sowder has paid the Company $262,220.19 for
her split-dollar life insurance policy.
5. As of August 31, 2006, Michael Bowman purchased a parcel of land and small
building from the Company in the amount of $155,000.
SECTION 2.7
OWNERSHIP AND CONDITION OF ASSETS
(a) None.
(b) None.
(c) None.
SECTION 2.9
MATERIAL CONTRACTS
1) Plan Supervisor Agreement, dated February 1, 2006, between Unified Group
Services, Inc. and the company
2) See Section 2.11, 2.12 and 2.16 of these Disclosure Schedules.
3) Commercial Card Classic Agreement, dated December 18, 2003, between bank
One, NA and the Company.
4) Standard uniform Rental Service Agreement, dated January 1, 2006 between
Cintas and the Company.
5) Facility Services Rental Service Agreement, dated January 17, 2006, between
Cintas and the Company.
6) All purchase orders between the Company and its vendors create an
obligation of payment.
SECTION 2.10
RELATED PARTY ARRANGEMENTS
None.
SECTION 2.11
INSURANCE
YEAR POLICY TYPE CARRIER LIMITS
---- ----------- ------- ------
2005/06 General Liability Lexington 1,000,000 Occurrence
2,000,000 Aggregate
25,000 Deductible per Occurrence
Property St. Paul/Travelers 24,057,298 Blanket Building
Blanket Contents
5,000 Deductible
200,000 Transit Limit
2,500 Deductible
1,800,000 Business Income and Extra
Expense
100,000 Utility Services
Automobile St. Paul/Travelers 1,000,000 Liability
5,000 Medical Payments
1,000,000 Uninsured/Under Insured
Motorist
500 Ded. Comprehensive
500 Ded. Collision
Work Comp Zenith 500,000 Bi-Accident
500,000 Bi-Disease -- Policy Limit
500,000 Bi-Disease -- Employee
3,500,000 IN-Payroll
281,257 IN-Payroll
814,000 IN-Payroll
1,400 IN-Payroll
145,000 MN-Payroll 1.17 Experience
Mod
Crime St. Paul/Travelers 50,000 Employee Dishonesty
Int'l Liability Ace USA 1,000,000 Limit
Umbrella Lexington 3,000,000 Limit
10,000 Retention
SECTION 2.11 CONTINUED
YEAR POLICY TYPE CARRIER LIMITS
---- ----------- ------- ------
2004/05 General Liability Lexington 1,000,000 Occurrence
2,000,000 Aggregate
25,000 Deductible per Occurrence
Property St. Paul/Travelers 22,648,920 Blanket Building
Blanket Contents
5,000 Deductible
200,000 Transit Limit
2,500 Deductible
1,800,000 Business Income and Extra
Expense
100,000 Utility Services
Automobile St. Paul/Travelers 1,000,000 Liability
5,000 Medical Payments
1,000,000 Uninsured/Under Insured
Motorist
500 Ded. Comprehensive
500 Ded. Collision
Work Comp Old Republic 500,000 Bi-Accident
500,000 Bi-Disease -- Policy
Limit
500,000 Bi-Disease -- Employee
3,157,164 IN-Payroll
267,864 IN-Payroll
653,465 IN-Payroll
1,400 IN-Payroll
1.20 Experience Mod
Crime St. Paul/Travelers 50,000 Employee Dishonesty
Int'l Liability Travelers 1,000,000 Limit
Umbrella Lexington 3,000,000 Limit
10,000 Retention
SECTION 2.12
INTELLECTUAL PROPERTY
COUNTRY NUMBER ISSUE DATE TITLE FILING NO FILING DATE STATUS
- ------- ------ ---------- ----- --------- ----------- ------
U.S. 6971633 12/6/2005 Rotatable Seal For Ball Valve 10/272192 15-Oct-2002 Small entity, Next fee due
12/2009
Canada Not yet issued Rotatable Seal For Ball Valve 2434333 3-Jul-2003 Active, Next fee due 07/2007
Europe Not yet issued Rotatable Seal For Ball Valve 030023269 14-Oct-2003 Active, Designating:
AT BE BG CH CY CZ
DE DK EE ES FI FR GB
GR HU IE IT LI LU
MC NL PT RO SE SI SK TR
U.S. 6945273 9/20/2005 Dry Break Coupling Assembly 10/957168 30-Sep-2004 Active, Next fee due 09/2009
Canada Not yet issued Dry Disconnect 2483523 10/1/2004 Active, Next fee due 10/2007
Europe Not yet issued Dry Disconnect 40396070/ 10/1/2004 Active, Designating:
Publication AT BE BG CH CY CZ
No. 1521029 DE DK EE ES FI FR
GB GR HU IE IT LI LU
U.S. 6732878 5/11/2004 Venting Lid Apparatus for Tank 09/804823 13-Mar-2001 Active, Next fee due 05/2008
Opening
U.S. 5988699 11/23/1999 Tank Fitting Facilitating Fluid 08/010404 21-Jan-1998 Active, 8th year fee due
Drainage 11/2007
U.S. 5673896 10/7/1997 Reduced Length Bolted Ball Valve 08/531010 20-Sep-1995 Active, 12th year fee due
10/2009
Canada 2158675 5/11/1999 Reduced Length Bolted Ball Valve 2158675 20-Sep-1995 Active, Next fee due 09/2007
U.S. 5595217 1/21/1997 Dry Break Coupling 08/435795 5-May-1995 Active, Next fee due
01/22/2009
COUNTRY NUMBER ISSUE DATE TITLE FILING NO FILING DATE STATUS
- ------- ------ ---------- ----- --------- ----------- ------
Assembly with Cam
Australia 705707 5/27/1999 Dry Break Coupling Assemby with 960056730 2-May-1996 Active, Next Fee due 5/2007
Cam
Canada Dry Break Coupling Assemby with 2217968 2-May-1996 Not issued yet, Next fee
Cam due 05/2007
Europe 870149 9/15/2004 Dry Break Coupling Assemby with 960913908 2-May-1996 No longer viable
Cam
Belgium 870149 9/15/2004 Dry Break Coupling Assemby with 960913908 2-May-1996 Active, Next Fee due 5/2007
Cam
Germany 69633403 9/15/2004 Dry Break Coupling Assemby with 960913908 2-May-1996 Active, Next Fee due 5/2007
Cam
Denmark 870149 9/15/2004 Dry Break Coupling Assemby with 960913908 2-May-1996 Active, Next Fee due 5/2007
Cam
France 870149 9/15/2004 Dry Break Coupling Assemby with 960913908 2-May-1996 Active, Next Fee due 5/2007
Cam
United Kingdom 870149 9/15/2004 Dry Break Coupling Assemby with 960913908 2-May-1996 Active, Next Fee due 5/2007
Cam
Italy 870149 9/15/2004 Dry Break Coupling Assemby with 960913908 2-May-1996 Active, Next Fee due 5/2007
Cam
Netherlands 870149 9/15/2004 Dry Break Coupling Assemby with 960913908 2-May-1996 Active, Next Fee due 5/2007
Cam
Sweden 870149 9/15/2004 Dry Break Coupling Assemby with 960913908 2-May-1996 Active, Next Fee due 5/2007
Cam
PCT N/A Dry Break Coupling Assemby with US96/06177 5/2/1996 No longer viable
Cam
U.S. 5445187 8/29/1995 Condensate Traps 08/260826 16-Jun-1994 Patent lapsed for failure
to pay maintenance
fee in 2004; Assigned to
Spirax-Sarco Ltd;
U.S. Not yet issued Method and Apparatus for Not 1-Sep-2006 Pending
Coupling a Removable Fluid assigned
Conduit to an Existing Fluid yet
Conduit
Country Number Issue Date Mark Filing No Filing Date Goods and Class Description
- ------- ------ ---------- ---- --------- ----------- ---------------------------
U.S. 3067434 3/14/2006 BANJO and Design 78/358666 28-Jan-2004 IC 007. US 013 019 021 023 031 034 035.
G & S: Pumps, namely, electric pumps,
centrifugal pumps, hydraulic pumps and
component parts therefore, for
commercial, industrial and agricultural
use. FIRST USE: 19740100. FIRST USE IN
COMMERCE: 19740100
U.S. 3070113 3/21/2006 BANJO (Word mark) 78/358653 28-Jan-2004 IC 006. US 002 012 013 014 023 025 050.
G & S: Liquid handling products primarily
made of metal for commercial, industrial
and agricultural use, namely, manually
operated valves for regulating the flow
of liquid through hoses or pipes,
couplings and dry-disconnect couplings
for joining lengths of hose or pipe for
transporting liquids, pipe and hose
fittings, clamps and barbs for use on
hoses or pipes transporting liquids,
manifolds for use in making multiple
connections for use with hoses and pipes
transporting liquids, tank fittings and
tank flanges for use with tanks used for
storing and transporting liquids. FIRST
USE: 19750600. FIRST USE IN COMMERCE:
19750600
U.S. 2073166 6/24/1997 DRY CAM (Word mark) 74/734415 25-Sep-1995 IC 006. US 002 012 013 014 023
025 050. G & S: dry disconnect couplings,
primarily of metal, for joining lengths
of hose or pipe. FIRST USE: 19930923.
FIRST USE IN COMMERCE: 19930923
U.S. 1055438 1/4/1977 BANJO & Design ** 73/066262 17-Oct-1975 IC 007. US 023. G & S: CENTRIFUGAL PUMPS
AND PARTS THEREFOR. FIRST USE: 19740115.
FIRST USE IN COMMERCE: 19740115 THIS MARK
IS IN THE NAME OF TERRA-PRODUCTS, INC.
** Banjo & Design
(BANJO LOGO)
SECTION 2.13
PERMITS; COMPLIANCE WITH LAW
None.
SECTION 2.14
ABSENCE OF LITIGATION
1. Valve litigation involving the following parties:
John Dale Stoll (Plaintiff)
The Company (Defendant)
Univar USA, Inc. (Defendant)
Clawson Container Company (Defendant)
Royal Indemnity (Intervener)
IMI Cornelius (Third Party)
2. Litigation involving the following parties:
Paul Owens (Plaintiff)
Clawson Container Company (Defendant and Third Party Plaintiff)
The Company (Third Party Defendant)
Pavco, Inc. (Third Party Defendant)
Pandora Manufacturing, LLC (Third Party Defendant)
Fibre Drum Sales, Inc. (Third Party Defendant)
SECTION 2.15
TAXES
None.
SECTION 2.16
BENEFIT PLANS
1. Employee Health Plans
a. Value Plan
b. Premium Plan
2. Flexible Spending Account
3. Banjo Corporation Employees 401(k) Plan and Profit Sharing Plan
4. Employee Bonus Plan
5. Management Discretionary Bonuses
SECTION 2.17
LABOR MATTERS
None.
SECTION 2.18
ENVIRONMENTAL MATTERS
None.
SECTION 2.20
SUPPLIERS AND CUSTOMERS
Top 10 Customers as of April 17, 2006
1. Schaben Industries, Customer # 1-00962000
2. Wylie Spray Center, Customer # 1-01165509
3. John Deere Des Moines Works, Customer # 1-00614500
4. IBC North America - 5750, Customer # 1-00550000
5. Dultmeier Sales, Customer # 1-00320500
6. Mauser USA Inc, Customer # 1-00539200
7. Heartland Agri Supply, Customer # 1-00517500
8. Southern Marketing, Customer # 1-01010500
9. Big W Sales, Customer # 1-00125500
10. National Container, Customer # 1-00756600
Top Suppliers as of June 13, 2006 (as named in the Vendor Payment Listing from
10/01/04 - 9/30/05, dated 6/13/2006)
1. Edward D. Jones
2. Fiberfil Engineered Plastics Inc.
3. Pin-Teca Products
4. Briggs & Stratton Corp.
5. Miscellaneous Vendors
6. Power Equipment CO/Elite Creations
7. REX Engineering Corp.
8. UPS
9. Western Consolidated Tech.
10. Northern Apex Corp.
SECTION 2.21
PRODUCT WARRANTY
None.
EXHIBIT 7.1(f)
EMPLOYMENT AGREEMENTS
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of October ___, 2006, is between BANJO
CORPORATION, an Indiana corporation (the "Company") and MICHAEL D. BOWMAN, an
individual residing at 7207 Windridge Way, Brownsburg, IN 46112 (the
"Executive").
INTRODUCTORY STATEMENT.
The Executive has been serving as President of the Company. Pursuant
to a Stock Purchase Agreement (the "Purchase Agreement") dated as of [September
___, 2006] between IDEX Corporation ("IDEX") and the shareholders of the
Company, the Company is becoming a direct or indirect wholly-owned subsidiary of
IDEX. From and after the date of this Agreement, the Company will conduct the
Business (as defined in Section 10). It is intended that this Agreement will be
dated and become effective as of and only upon the closing of the transactions
contemplated by the Purchase Agreement. As inducements to enter into this
Agreement, Executive receives additional compensation, including but not limited
to that provided in Sections 3(b), 3(c) and 15(c), and the Company receives
additional rights, including but not limited to those provided in Sections 7
through 14, and the Executive and the Company acknowledge that IDEX and its
Affiliates are intended to be third party beneficiaries of certain rights under
this Agreement, including, but not limited to, those provided in Section 7
through 14. Therefore, in consideration of the mutual covenants and agreements
contained in this Agreement, the Company and the Executive agree as follows:
1. EMPLOYMENT; TERM.
Subject to the terms and conditions set forth in this Agreement, the
Company hereby agrees to employ the Executive, and the Executive hereby accepts
such employment, for the period beginning on the date of this Agreement and
continuing for a period of four (4) years (the "Initial Term"), subject to
earlier termination of the Executive's employment as provided in this Agreement.
Upon the expiration of the Initial Term, the term of this Agreement shall be
renewed automatically for successive additional one-year periods (each such
renewal period being referred to as an "Extended Term") unless either the
Company or the Executive delivers written notice to the other party that it does
not intend to renew this Agreement, at least 30 days prior to the end of the
Initial Term or an Extended Term, as the case may be (the "Non-Renewal Notice").
In the event that either the Company or the Executive delivers a Non-Renewal
Notice, this Agreement shall terminate upon the expiration of the then-current
Initial Term or Extended Term, as the case may be. As used herein, the "term" of
this Agreement shall include the Initial Term and each Extended Term, if any.
2. DUTIES.
(a) The Executive shall serve as the chief executive officer of the Company
and, subject to the supervision and authority of the Board of Directors, shall
have the powers and perform the duties of supervision and management which
ordinarily appertain to the office of
-2-
President of a corporation and as the Board of Directors of the Company shall
from time to time reasonably direct commensurate with the Executive's position.
The Company and the Executive agree that, during the term of Executive's
employment, the Executive shall serve as President and as a member of the Board
of Directors of the Company and Executive will report to the Board of Directors
of the Company. The Executive agrees to perform Executive's duties and discharge
Executive's responsibilities in a faithful manner and to the best of Executive's
ability and to use all reasonable efforts to promote the interests of the
Company and its Business. The Executive further agrees that, during the term of
Executive's employment, Executive will devote substantially all of Executive's
skill, knowledge and business time and attention to the performance of
Executive's duties under this Agreement; provided however, that to the extent it
does not materially interfere with the Executive's performance of, or ability to
perform, any of Executive's duties and obligations under this Agreement, it
shall not be a violation of this Agreement for the Executive to (i) serve on any
other corporate, civic or charitable boards or committees, if and to the extent
approved in advance by the Board of Directors of the Company and (ii) manage
personal investments.
(b) The Executive represents and warrants that Executive is entering into
this Agreement voluntarily and that Executive's employment hereunder and
compliance by Executive with the terms of this Agreement will not conflict with
or result in the breach of any agreement to which Executive is a party or by
which Executive is bound.
3. COMPENSATION.
(a) During the term of the Executive's employment under this Agreement, the
Executive shall receive an annual base salary of $200,000, payable in accordance
with the regular payroll practices of the local business unit. Such annual base
salary will be subject to review and possible increase (but not decrease) by the
Company on or about each anniversary of the date of this Agreement. Any and all
increases in the level of the base salary as provided for in the preceding
sentence shall become the level of the base salary for the remainder of the term
until there is a further increase in the base salary as provided for herein.
(b) During the term of the Executive's employment under this Agreement, the
Executive shall be entitled to annual bonus payments in accordance with IDEX's
Management Incentive Compensation Plan applicable to the officers of its
subsidiaries, as such Plan is administered and from time to time modified by
IDEX in its sole discretion. The annual bonus would be targeted to be 45% of the
Executive's base salary at targeted levels of operation and would otherwise be
based upon the criteria set forth in the IDEX Management Incentive Compensation
Plan. Any annual bonus for calendar year 2006 will be prorated based on the
partial year between the date of this Agreement and December 31, 2006.
-3-
(c) As of the effective date of this Agreement, IDEX and Executive shall
enter into a Restricted Stock Award (in the form attached hereto as Exhibit A)
with respect to 16,000 shares of the IDEX's common stock. Commencing not later
than 2007, the Executive will be annually considered for long-term incentive
awards.
(d) The Company shall deduct or withhold from all salary payments, and from
all other payments made to the Executive pursuant to this Agreement, all amounts
which may be required to be deducted or withheld under any applicable Social
Security contribution, income tax withholding or other similar law now in effect
or which may become effective during the term of this Agreement.
4. OTHER BENEFITS AND TERMS.
During the term of the Executive's employment under this Agreement,
the Executive shall be entitled to the following other benefits and terms:
(a) The Company shall provide to the Executive, and the Executive shall be
entitled to participate in, any health and medical benefit plans, any pension,
profit sharing and retirement plans, and any insurance policies or programs from
time to time offered to employees of comparable status to the Executive who are
employed by the Company. These plans, policies and programs are subject to
change at the sole discretion of the Company, provided that such plans, policies
and programs, in the aggregate, will be no less valuable than those offered by
the Company as of the date of this Agreement.
(b) The Executive shall be entitled to any other fringe benefit from time
to time offered to employees of comparable status to the Executive who are
employed by the Company (including, but not limited to, the use of an automobile
to the extent so offered to such employees). Such fringe benefits are subject to
change at the sole discretion of the Company, provided that such fringe
benefits, in the aggregate, will be no less valuable than those offered by the
Company as of the date of this Agreement.
5. VACATIONS.
The Executive shall be entitled to four (4) weeks of paid vacation
each year. All such vacations shall be taken at such times as shall be agreed
upon by the Board of Directors of the Company and Executive. Vacation time may
not be carried over to the subsequent calendar year without prior approval of
the Board of Directors of the Company.
-4-
6. REIMBURSEMENT FOR EXPENSES.
The Company shall reimburse the Executive for expenses which the
Executive may from time to time reasonably incur on behalf of the Company in the
performance of his responsibilities and duties under this Agreement; provided
however, that the Executive shall be required to account to the Company for such
expenses in the manner prescribed by the Company.
7. NON-COMPETITION.
In consideration of the compensation and other benefits to be paid to
the Executive under this Agreement and to induce the Company to consummate the
transactions contemplated by the Purchase Agreement, the Executive agrees that,
beginning on the date of this Agreement and continuing until the Covenant
Expiration Date (as defined in Section 10), Executive shall not, directly or
indirectly, for Executive's own account or as agent, employee, officer,
director, trustee, consultant, partner, stockholder or equity owner of any
corporation or any other entity (except that Executive may own securities
constituting less than three percent (3%) of any class of securities of a public
company), or member of any firm or otherwise, engage or attempt to engage, in
the Restricted Territory (as defined in Section 10), in the Business or any
other business activity which is competitive with the business conducted by the
Company at the Reference Date (as defined in Section 10).
8. NON-SOLICITATION.
In consideration of the compensation and other benefits to be paid to
the Executive under this Agreement and to induce IDEX and the Company to
consummate the transactions contemplated by the Purchase Agreement, the
Executive agrees that, beginning on the date of this Agreement and continuing
until the Covenant Expiration Date (as defined in Section 10), Executive shall
not, directly or indirectly, for Executive's own account or as agent, employee,
officer, director, trustee, consultant, partner, stockholder or equity owner of
any corporation or any other entity (a) employ or solicit the employment of any
person who is employed by the Company or any Affiliate at the Reference Date or
at any time during the six-month period preceding the Reference Date, except
that the Executive shall be free to employ or solicit the employment of any such
person whose employment with the Company or any Affiliate has terminated for any
reason (without any interference from the Executive) and who has not been
employed by the Company or any Affiliate for at least six (6) months, (b)
canvass or solicit business in competition with the Business or any other
business conducted by the Company at the Reference Date from any person or
entity who during the six (6) month period preceding the Reference Date shall
have been a customer of the Company or from any person or entity which the
Executive has reason to believe might in the future become a customer of the
Company as a result of marketing efforts, contacts or other facts and
circumstances of which the Executive is aware, (c) willfully dissuade or
discourage any person or entity from using,
-5-
employing or conducting business with the Company or any Affiliate or (d)
intentionally disrupt or interfere with, or seek to disrupt or interfere with,
the business or contractual relationship between the Company or any Affiliate
and any supplier who during the six-month period preceding the Reference Date
shall have supplied components, materials or services to the Company or any
Affiliate.
9. COMPANY EMPLOYMENT.
The restrictions imposed by Sections 7, 8 and 11 through 13 hereof
shall not in any manner be construed to prohibit, directly or indirectly, the
Executive from serving as an employee or consultant of the Company or any
Affiliate.
10. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings given them below:
(a) "Affiliate" shall mean (i) any entity now or hereafter directly or
indirectly owned or controlled by the Company and (ii) any entity now or
hereafter directly or indirectly owned or controlled by IDEX.
(b) "Business" shall mean all activities which the Company, is presently
conducting or pursuing, including, without limitation, the design and
manufacturing of liquid handling products, including valves, fittings, pumps,
couplings, strainer/filters, systems and accessories.
(c) "Covenant Expiration Date" shall mean the date which is the later of
(i) five (5) years after the date of this Agreement or (ii) two (2) years after
the Termination Date (as defined in this Section 10).
(d) "Reference Date" shall mean (i) for purposes of applying the covenants
set forth in Sections 7 and 8 at any time prior to the Termination Date, the
then current date, or (ii) for purposes of applying the covenants set forth in
Sections 7 and 8 at any time on or after the Termination Date, the Termination
Date.
(e) "Restricted Territory" shall mean anywhere in the world where the
Company conducts or plans to conduct the Business or any other business
activity, as the case may be, at the Reference Date.
(f) "Termination Date" shall mean the date of termination of the
Executive's employment with the Company; provided however that the Executive's
employment shall not be deemed to have terminated so long as the Executive
continues to be employed or engaged as an employee or consultant of the Company
or any Affiliate, even if such employment or
-6-
engagement continues after the expiration of the term of this Agreement, whether
pursuant to this Agreement or otherwise.
11. CONFIDENTIAL INFORMATION.
The Executive, in the performance of Executive's duties hereunder,
shall take reasonable precautions to safeguard the confidential nature of all
confidential information of or belonging to the Company or any Affiliate and
shall take any other precautions with respect thereto which the Company or any
Affiliate, in its sole discretion, may reasonably request in writing; provided
that the Executive shall have the right to use and disclose the confidential
information as reasonably required for the performance of Executive's duties on
behalf of the Company or any Affiliate and in furtherance of the Company's best
interests or to effect compliance with any law, rule, regulation or order
applicable to the Executive or the Company or in response to any legally
enforceable subpoena or other legal process. For purposes of this Agreement,
"confidential information" shall mean all information which is not generally
available to the public and which the Company or any Affiliate treats as
confidential pertaining to the business, assets and operations of the Business
or otherwise pertaining to the business, assets and operations of the Company or
any Affiliate, including without limitation trade secrets, technology, financial
results and information, processes and techniques, information as to customers,
customer lists and suppliers, sales and marketing information, technical
production, pricing and cost data, information as to business methods, practices
and strategies, and other valuable and confidential information, and all
documents, electronic records and other tangible items relating to or containing
any such information.
12. PERSONAL PROPERTY.
The Executive agrees that the Company or its Affiliates shall own all
right, title and interest in and to all information, including without
limitation, all confidential information, which the Executive receives,
conceives, or develops, either alone or with others, during the term of
Executive's employment hereunder and which relates to the business of the
Company or its Affiliates. Without limiting the generality of the foregoing, all
notes, notebooks, memoranda, working papers, graphs, charts, pictures, data,
drawings, documents and all other items containing or relating in any way to any
such information made, compiled or obtained by the Executive, and all copies
thereof, together with all rights associated with ownership of such items (such
as copyright, patent, trade secret and other proprietary rights) shall become
the property of the Company or its Affiliates, when so made, compiled or
obtained, whether or not delivered to the Company or its Affiliates, and shall
be held by the Executive in trust for the Company or its Affiliates and shall be
delivered to the Company or its Affiliates upon request and, in any event, upon
termination of the Executive's employment hereunder.
-7-
13. DEVELOPMENTS.
In consideration of the compensation and other benefits to be paid to
the Executive under this Agreement and to induce the Company and IDEX to
consummate the transactions contemplated by the Purchase Agreement, the
Executive agrees as follows:
(a) The Executive agrees to immediately communicate to the Company and IDEX
a full and complete disclosure of each Development (as defined in subsection (d)
below) conceived, made, or otherwise developed by the Executive during the term
of Executive's employment hereunder, whether solely or jointly with others, and
whether or not while actually engaged in performing work for the Company or its
Affiliates.
(b) The Executive agrees to assign and transfer, and does hereby assign and
transfer, to the Company or its Affiliates, without any separate remuneration or
compensation, his entire right, title and interest in and to all Developments
and any United States and foreign patent, copyright and any other proprietary
rights in and with respect to all such Developments, conceived, made or
otherwise developed by the Executive during the term of employment hereunder,
whether a full or partial interest, and whether or not while engaged in
performing work for the Company or its Affiliates. The Executive understands and
agrees that the Company will determine, in its sole and absolute discretion,
whether an application for a copyright, patent or other proprietary right
registration will be filed on the Executive's Development and whether any such
application will be abandoned prior to issuance of a patent, copyright or other
proprietary right registration.
(c) The Executive shall, at the Company's expense, take such action,
including, but not limited to, execution, acknowledgment, delivery and
assistance in preparation of documentation, as may reasonably be requested by
the Company or its Affiliates for the implementation or continuing performance
of subsection 13(b) of this Agreement. Without limiting the generality of the
foregoing, the Executive shall execute, acknowledge, deliver and assist in
preparing such instruments of conveyance, patent or copyright application, or
assignment or further assurance, as the Company or its Affiliates may reasonably
request, to evidence, transfer, vest and confirm the right, title and interest
transferred or granted or to be transferred or granted to the Company or its
Affiliates under subsection 13(b) of this Agreement. The Executive shall not
contest the validity of any patent, copyright or other proprietary right, either
United States or foreign, which is transferred, conveyed, granted, vested or
otherwise assigned to the Company or its Affiliates to which the Executive made
any contribution or in which the Executive participated in any way, and shall
not assist any other party in any way to contest the validity of such patent,
copyright, or proprietary right.
(d) "Developments" means (i) any invention, discovery, concept or idea,
whether or not patentable, (ii) any writing, drawing, design or other creative
expression, whether or not
-8-
copyright or trademark applications are filed thereon, (iii) any computer
program, discovery, idea, device, process, design, development, improvement,
conception, concept, application, technique or know-how or (iv) any other
invention, whether patentable or copyrightable, and whether or not reduced to
practice, and, with respect to all of items (i) through (iv) of this subsection
(d), that (A) results from or is suggested by any work performed by the
Executive for the Company or its Affiliates and relates to or is within the
scope of the business, research or development activities of the Company or its
Affiliates and (B) is made or discovered during the time of the Executive's
employment with the Company or its Affiliates, or within six (6) months after
the termination of such employment, and under the Executive's direction or
supervision, whether or not it is made or discovered alone or jointly with
others, and whether or not it is conceived, made or discovered during normal
working hours, using the assets, facilities or resources of the Company or its
Affiliates, or on the premises of the Company or its Affiliates. Developments
shall include, but not be limited to, articles, processes, methods, formulas,
systems, computer source codes and techniques as well as improvements thereof
and know-how related thereto. All Developments are the property of the Company
or its Affiliates.
NOTICE OF RIGHTS - THIS AGREEMENT AFFECTS YOUR RIGHTS TO OWNERSHIP OF
INVENTIONS MADE BY YOU. YOU MAY HAVE RIGHTS PURSUANT TO STATE LAW.
THIS AGREEMENT DOES NOT APPLY TO AN INVENTION FOR WHICH NO EQUIPMENT,
SUPPLIES, FACILITIES OR TRADE SECRET INFORMATION OF THE COMPANY WAS
USED AND WHICH WAS DEVELOPED ENTIRELY ON YOUR OWN TIME UNLESS (A) THE
INVENTION RELATES (I) TO THE BUSINESS OF THE COMPANY OR (II) TO THE
COMPANY'S ACTUAL OR DEMONSTRATABLY ANTICIPATED RESEARCH OR
DEVELOPMENT, OR (B) THE INVENTION RESULTS FROM WORK PERFORMED BY YOU
FOR THE COMPANY.
14. EQUITABLE REMEDIES.
The Executive represents and warrants that Executive has had an
opportunity to consult with Executive's attorney regarding this Agreement, has
thoroughly and completely reviewed this Agreement with that attorney, and fully
understands the contents hereof. Furthermore, the Executive acknowledges that
(a) a remedy at law for Executive's failure to comply with Sections 7 through 13
of this Agreement may be inadequate and (b) in the event of the Executive's
failure to comply with Sections 7 through 13 of this Agreement, the Company
shall be entitled to seek and obtain from a court having jurisdiction specific
performance, an injunction, a restraining order or any other equitable relief in
order to enforce any such provision.
-9-
The right to obtain such equitable relief shall be in addition to any other
remedy to which the Company is entitled under applicable law (including, but not
limited to, monetary damages).
15. TERMINATION.
(a) This Agreement and the Executive's employment hereunder shall
automatically terminate upon the death or permanent disability of the Executive.
Permanent disability shall mean that the Executive is unable to substantially
perform Executive's duties under this Agreement for a continuous period of six
(6) months or for an aggregate of nine (9) months during any twelve (12) month
period, as determined by a physician selected by the Company (the "Disability
Determination Date") and reasonably satisfactory to the Executive (or if
Executive is unable to act, Executive's spouse or eldest child). The Executive
will cooperate in any physical examination conducted pursuant to this paragraph.
The foregoing is subject to the duty of the Company to provide reasonable
accommodation under the Americans with Disabilities Act. Upon the Executive's
death, all of Executive's (i) accrued but unpaid base salary and bonus, and (ii)
other benefits (but not including bonus) accrued as of the date of death, shall
immediately be payable to the Executive's estate. Upon Executive's permanent
disability, the Executive shall receive (i) all accrued but unpaid base salary
and bonus and (ii) other benefits (but not including bonus) accrued as of the
Disability Determination Date.
(b) The Company may, at its sole option, terminate the Executive's
employment for cause upon written notice to the Executive. For purposes of this
Agreement, "cause" shall mean (i) a breach of any of the covenants contained in
Sections 7 through 13 of this Agreement, (ii) a material breach of or
substantial failure to perform any other obligation of the Executive under this
Agreement, provided, however, that if such breach or failure is a curable breach
or failure, such breach or failure was not cured within 30 days after written
notice was provided to the Executive, (iii) the conviction of the Executive for
a felony, (iv) a breach of any policy of the Company provided to the Executive
in writing, provided, however, that if such breach is a curable breach, such
breach was not cured within 10 days after written notice was provided to the
Executive, (v) recklessness or willful misconduct of the Executive in the
performance of Executive's duties, (vi) failure to implement IDEX corporate
procedures or directives provided to the Executive in writing, provided,
however, that if such failure is a curable failure, such failure was not cured
within 10 days after written notice was provided to the Executive, as determined
by Company in its reasonable discretion, or (vii) any fraudulent or dishonest
act by the Executive with respect to the Company. In the event that the
Executive's employment pursuant to this Agreement is terminated for cause, the
Executive shall receive no salary or other benefits pursuant to this Agreement
other than accrued but unpaid base salary through the date of termination.
(c) In the event that (i) the Executive's employment pursuant to this
Agreement is terminated by the Company other than (A) for cause, or (B) by
reason of expiration of the term
-10-
of this Agreement whether by reason of delivery of a Non-Renewal Notice or
otherwise, or (ii) if the Executive terminates his employment for good reason,
as hereinafter defined, the Executive will receive all accrued but unpaid base
salary and benefits (but not including bonus) through the date of termination
and will continue to receive payments of base salary pursuant to Section 3(a) of
this Agreement for the period of (X) 18 months if the termination of employment
occurs within 24 months from the date of this Agreement or (Y) 12 months if the
termination of employment occurs after 24 months from the date of this
Agreement. For purposes of this Agreement, "good reason" shall mean (i) material
reduction in the Executive's compensation, (ii) material demotion or reduction
in responsibilities or authority from that existing on the date of this
Agreement or the assignment to the Executive of duties or responsibilities that
are substantially inconsistent with his position as President of the Company,
(iii) the Company relocates the Executive's principal office more than 50 miles
from its location as of the date of this Agreement, or (iv) a material breach of
or substantial failure to perform any other obligation of the Company or IDEX
under this Agreement if such breach or failure, if curable, is not cured within
30 days after written notice is provided to the Company and IDEX. The Executive
shall not be required to mitigate the amount of any payment the Company becomes
obligated to make in connection with this subsection (c), by seeking other
employment or otherwise.
(d) In the event that the Executive's employment pursuant to this Agreement
is terminated as a result of the voluntary termination by the Executive other
than for good reason, the Executive shall receive no salary or other benefits
pursuant to this Agreement other than accrued but unpaid base salary through the
date of termination.
(e) In the event that this Agreement is not renewed and the Executive's
employment expires at the end of the term of this Agreement or is terminated by
the Company after the term of this Agreement other than for cause, the Company
shall pay to Executive upon such termination the amount provided for under the
Company's then existing severance policy.
16. FAILURE, DELAY OR WAIVER.
No course of action or failure to act by the Company or the Executive
shall constitute a waiver by such party of any right or remedy under this
Agreement, and no waiver by either party of any right or remedy under this
Agreement shall be effective unless made in writing.
-11-
17. SEVERABILITY.
Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be enforceable under applicable law. However,
if any provision of this Agreement shall be deemed unenforceable under
applicable law by a court having jurisdiction, such provision shall be
unenforceable only to the extent necessary to make it enforceable without
invalidating the remainder thereof or any of the remaining provisions of this
Agreement. Without limiting the foregoing, the Executive acknowledges and agrees
that, if any part of the covenants contained in Sections 7 through 13 is deemed
to be overbroad or void as against public policy, such invalid portion shall be
severable from such covenants and, upon such event, the Executive requests that
such covenant be reformed ("blue-pencilled") to permit the Company and the
Affiliates to obtain the maximum permissible benefit from such covenants.
18. NOTICE.
All written communications to a party required hereunder shall be in
writing and (a) delivered in person (to be effective when so delivered), (b)
mailed by registered or certified mail, return receipt requested (to be
effective four days after the date it is deposited in the U.S. Mail), (c)
deposited with a reputable overnight courier service (to be effective two
business days after the delivery to such courier service), or (d) sent by
facsimile transmission (to be effective upon receipt by the sender of electronic
confirmation of delivery of the facsimile), with confirmation sent by way of one
of the above methods, to the party at the address given below for such party (or
to such other address as such party shall designate in a writing complying with
this Section 18, delivered to the other party):
If to the Company:
Banjo Corporation
c/o IDEX Corporation
630 Dundee Road, Suite 400
Northbrook, Illinois 60062
Attn: Lawrence D. Kingsley
Frank J. Notaro, Esq.
Telephone: (847) 498-7070
Telecopier: (847) 498-9123
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With a copy to:
Hodgson Russ LLP
One M & T Plaza, Suite 2000
Buffalo, New York 14203
Attn: Richard F. Campbell, Esq.
John P. Amershadian, Esq.
Brad A. Birmingham, Esq.
Telephone: (716) 856-4000
Telecopier: (716) 849-0349
If to the Executive:
Michael D. Bowman
7207 Windridge Way
Brownsburg, IN 46112
19. CONSENT TO JURISDICTION AND VENUE.
Each of the Company and the Executive hereby (a) consents to the
jurisdiction of the United States District Court for the Southern District of
Indiana or, if such court does not have jurisdiction over such matter, the
applicable Superior Court, Montgomery County, State of Indiana, and (b)
irrevocably agrees that all actions or proceedings arising out of or relating to
this Agreement shall be litigated in such court. Each of the Company and the
Executive accepts for itself or himself and in connection with their properties,
generally and unconditionally, the exclusive jurisdiction and venue of the
aforesaid courts and waives any defense of forum nonconveniens or any similar
defense, and irrevocably agrees to be bound by any non-appealable judgment
rendered thereby in connection with this Agreement.
20. MISCELLANEOUS.
This Agreement (a) may not be amended, modified or terminated orally
or by any course of conduct pursued by the Company or the Executive, but may be
amended, modified or terminated only by a written agreement duly executed by the
Company and the Executive, (b) is binding upon and inures to the benefit of the
Company and the Executive and each of their respective heirs, representatives,
successors and assignees, except that the Executive may not assign any of
Executive's rights or obligations pursuant to this Agreement, (c) if assigned by
the Company, will be enforceable by the Executive against such assignee, (d)
constitutes the entire agreement between the Company and the Executive with
respect to the subject matter of this Agreement, and supersedes all oral and
written proposals, representations, understandings and
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agreements previously made or existing with respect to such subject matter, and
(e) shall be governed by, and interpreted and construed in accordance with, the
laws of the State of Indiana, without regard to principles of conflicts of law.
The Company shall require any Successor (as defined below), by
agreement in form and substance reasonably satisfactory to the Executive, to
expressly and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement at or prior to the time a person becomes a Successor shall be a
material breach of this Agreement and shall entitle the Executive to terminate
his employment for good reason pursuant to Section 15(c) hereof. For purposes of
this Agreement, "Successor" means any entity or other person that succeeds to
substantially all of the Company's business or assets, directly or indirectly,
by merger or consolidation, by purchase of all or substantially all of its
assets, or otherwise. For purposes of this Agreement, the "Company" means the
Company as hereinabove defined and any Successor as contemplated by this
paragraph.
21. THIS AGREEMENT CONTROLS.
In the event of any conflict between the provisions of this Agreement
and the provisions of the IDEX Corporation Code of Business Conduct and Ethics,
the IDEX Corporation Corporate Governance Guidelines, and the IDEX Corporation
Executive Inventions and Proprietary Information Agreement executed by the
Employee simultaneously with this Agreement, the provisions of this Agreement
shall control.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
COMPANY: BANJO CORPORATION
----------------------------------------
By:
------------------------------------
Its:
-----------------------------------
EXECUTIVE: ----------------------------------------
Michael D. Bowman
EXHIBIT A
IDEX CORPORATION
RESTRICTED STOCK AWARD AGREEMENT
NAME: ____________________________ PLAN: IDEX CORPORATION INCENTIVE AWARD PLAN
ADDRESS: _________________________
TAXPAYER GRANT: ________ SHARES OF COMMON STOCK (THE
IDENTIFICATION NUMBER: ___________ "RESTRICTED STOCK")
SIGNATURE: _______________________ GRANT DATE: _______________________________
Effective on the Grant Date you have been granted the Restricted Stock, in
accordance with the provisions of the IDEX Corporation Incentive Award Plan (the
"Plan") and subject to the restrictions, terms and conditions set forth herein.
25% of the shares of Restricted Stock will vest and no longer be subject to the
restrictions of this Agreement on the first anniversary of the Grant Date, and
25% shall vest and no longer be subject to the restrictions of this Agreement on
the date of each anniversary thereafter, with full vesting on the fourth
anniversary of the Grant Date.
In the event of the termination of your employment or service for any reason,
whether such termination is occasioned by you, by the Company or any of its
Subsidiaries, with or without cause or by mutual agreement ("Termination of
Service"), your right to receive and/or vest in Restricted Stock under the Plan,
if any, will terminate effective as of the earlier of: (i) the date that you
give or are provided with written notice of Termination of Service, or (ii) if
you are an employee of the Company or any of its Subsidiaries, the date that you
are no longer actively employed and physically present on the premises of the
Company or any of its Subsidiaries, regardless of any notice period or period of
pay in lieu of such notice required under any applicable statute or the common
law (each, the "Notice Period"). For greater clarity, you have no rights to
receive and/or vest in Restricted Stock during the Notice Period.
Notwithstanding the foregoing, this Award shall be fully vested upon your
Termination of Service by reason of death, Disability, or upon a Change in
Control of the Company.
This award is not transferable except by will or the laws of descent and
distribution.
The Company will cause to be issued one or more stock certificates, registered
in your name, evidencing the Restricted Stock of your Restricted Stock Award.
Each such certificate will bear the following legend:
The shares of stock represented by this certificate are subject to
forfeiture and the transferability of this certificate and the shares
of stock represented hereby are subject to the restrictions, terms and
conditions (including restrictions against transfer) contained in the
IDEX Corporation Incentive Award Plan and a Restricted Stock Award
Agreement dated [the Grant Date], entered into between the registered
owner of such shares and IDEX Corporation. A copy of the Agreement is
on file in
RS-4yRatable DRAFT 08-31-2006
the office of the Secretary of IDEX Corporation, Suite 400, 630 Dundee
Road, Northbrook, Illinois 60062.
Each such certificate, together with stock powers duly executed in blank related
to such Restricted Stock, will be deposited with the Secretary of the Company or
a custodian designated by the Secretary. The Secretary or custodian will issue a
receipt to you evidencing the certificates held that are registered in your
name. Until such certificates have been issued and registered in your name, you
will not be deemed for any purpose to be, or have rights as, a Company
shareholder by virtue of this award. After such time, you will receive all
dividends paid on and will be entitled to vote the Restricted Stock. Following
the vesting of any of your Restricted Stock, the Company will cause to be issued
and delivered to you certificates evidencing such Restricted Stock, free of the
legend provided above.
The Company has the authority to deduct or withhold, or require you to remit to
the Company, an amount sufficient to satisfy applicable federal, state, local
and foreign taxes arising from this Restricted Stock Award. You may satisfy your
tax obligation, in whole or in part, by either: (i) electing to have the Company
withhold shares of your Restricted Stock otherwise to be delivered with a fair
market value equal to the minimum amount of the tax withholding obligation; or
(ii) surrendering to the Company previously owned Restricted Stock with a fair
market value equal to the minimum amount of the tax withholding obligation. If
you are subject to United Kingdom income tax and/or national insurance
contributions, the Company or any Subsidiary may withhold or collect any income
tax and national insurance contributions: (i) by deduction from salary or any
other payment payable to you at any time on or after the day an income tax
charge arises in respect of a Restricted Stock Award; (ii) directly from you by
payment of cleared funds; or (iii) by arranging for the sale of some of the
shares of Restricted Stock to which you are entitled.
You acknowledge and consent to the collection, use, processing and transfer of
personal data as described in this paragraph. The Company, its affiliates and
your employer hold certain personal information, including your name, home
address and telephone number, date of birth, social security number or other
employee tax identification number, salary, nationality, job title, any shares
of stock awarded, cancelled, purchased, vested, unvested or outstanding in your
favor, for the purpose of managing and administering the Plan ("Data"). The
Company and its affiliates will transfer Data to any third parties assisting the
Company in the implementation, administration and management of the Plan. These
recipients may be located in the European Economic Area, or elsewhere such as
the United States. You authorize them to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing your participation in the Plan,
including any requisite transfer of such Data as may be required for the
administration of the Plan and/or the subsequent holding of shares of stock on
your behalf to a broker or other third party with whom you may elect to deposit
any shares of stock acquired pursuant to the Plan. You may, at any time, review
Data, require any necessary amendments to it or withdraw the consent herein in
writing by contacting the Company; however, withdrawing the consent may affect
your ability to participate in the Plan.
Your participation in the Plan is voluntary. The value of the Restricted Stock
Award is an extraordinary item of compensation outside the scope of your
employment contract, if any. As such, the Restricted Stock Award is not part of
normal or expected compensation for purposes of calculating any severance,
resignation, redundancy, end of service payments, bonuses, long-service awards,
pensions or retirement benefits or similar payments unless specifically and
otherwise provided. Rather, the awarding of Restricted Stock under the Plan
represents a mere investment opportunity.
RS-4yRatable DRAFT 08-31-2006
This Restricted Stock Award is granted under and governed by the terms and
conditions of the Plan. You acknowledge and agree that the Plan is discretionary
in nature and may be amended, cancelled, or terminated by the Company, in its
sole discretion, at any time. The grant of a Restricted Stock Award under the
Plan is a one-time benefit and does not create any contractual or other right to
receive an award of Restricted Stock or benefits in lieu of Restricted Stock in
the future. Future awards of Restricted Stock, if any, will be at the sole
discretion of the Company, including, but not limited to, the timing of the
award, the number of shares, vesting provisions, and the exercise price. The
Plan has been introduced voluntarily by the Company and in accordance with the
provisions of the Plan may be terminated by the Company at any time. By
execution of this Agreement, you consent to the provisions of the Plan and this
Agreement. Defined terms used herein shall have the meaning set forth in the
Plan, unless otherwise defined herein.
COMPANY:
IDEX CORPORATION
- ------------------------------------
By: Frank J. Notaro
Vice President - General Counsel
and Secretary
RS-4yRatable DRAFT 08-31-2006
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of ___________, 2006, is between BANJO
CORPORATION, an Indiana corporation (the "Company") and MARK E. GILLEN, an
individual residing at 12 Shannon Road, Zionsville, IN 46077 (the "Executive").
INTRODUCTORY STATEMENT.
The Executive has been serving as Head of Manufacturing and
Engineering of the Company. Pursuant to a Stock Purchase Agreement (the
"Purchase Agreement") dated as of [September __, 2006] between IDEX Corporation
("IDEX") and the shareholders of the Company, the Company is becoming a direct
or indirect wholly-owned subsidiary of IDEX. From and after the date of this
Agreement, the Company will conduct the Business (as defined in Section 10). It
is intended that this Agreement will be dated and become effective as of and
only upon the closing of the transactions contemplated by the Purchase
Agreement. As inducements to enter into this Agreement, Executive receives
additional compensation, including but not limited to that provided in Sections
3(b), 3(c) and 15(c), and the Company receives additional rights, including but
not limited to those provided in Sections 7 through 14, and the Executive and
the Company acknowledge that IDEX and its Affiliates are intended to be third
party beneficiaries of certain rights under this Agreement, including, but not
limited to, those provided in Section 7 through 14. Therefore, in consideration
of the mutual covenants and agreements contained in this Agreement, the Company
and the Executive agree as follows:
1. EMPLOYMENT; TERM.
Subject to the terms and conditions set forth in this Agreement, the
Company hereby agrees to employ the Executive, and the Executive hereby accepts
such employment, for the period beginning on the date of this Agreement and
continuing for a period of four (4) years (the "Initial Term") subject to
earlier termination of the Executive's employment as provided in this Agreement.
Upon the expiration of the Initial Term, the term of this Agreement shall be
renewed automatically for successive additional one-year periods (each such
renewal period being referred to as an "Extended Term") unless either the
Company or the Executive delivers written notice to the other party that it does
not intend to renew this Agreement, at least 30 days prior to the end of the
Initial Term or an Extended Term, as the case may be (the "Non-Renewal Notice").
In the event that either the Company or the Executive delivers a Non-Renewal
Notice, this Agreement shall terminate upon the expiration of the then-current
Initial Term or Extended Term, as the case may be. As used herein, the "term" of
this Agreement shall include the Initial Term and each Extended Term, if any.
2. DUTIES.
(a) The Executive shall serve as the Vice President of the Company and,
subject to the supervision and authority of the Board of Directors, shall have
the powers and perform the
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duties of supervision and management which ordinarily appertain to the office of
Vice President of a corporation and as the President and Board of Directors of
the Company shall from time to time reasonably direct commensurate with the
Executive's position. The Company and the Executive agree that, during the term
of Executive's employment, the Executive shall serve as Vice President and
Executive will report to the President of the Company. The Executive agrees to
perform Executive's duties and discharge Executive's responsibilities in a
faithful manner and to the best of Executive's ability and to use all reasonable
efforts to promote the interests of the Company and its Business. The Executive
further agrees that, during the term of Executive's employment, Executive will
devote substantially all of Executive's skill, knowledge and business time and
attention to the performance of Executive's duties under this Agreement;
provided however, that to the extent it does not materially interfere with the
Executive's performance of, or ability to perform, any of Executive's duties and
obligations under this Agreement, it shall not be a violation of this Agreement
for the Executive to (i) serve on any other corporate, civic or charitable
boards or committees, if and to the extent approved in advance by the Board of
Directors of the Company and (ii) manage personal investments.
(b) The Executive represents and warrants that Executive is entering into
this Agreement voluntarily and that Executive's employment hereunder and
compliance by Executive with the terms of this Agreement will not conflict with
or result in the breach of any agreement to which Executive is a party or by
which Executive is bound.
3. COMPENSATION.
(a) During the term of the Executive's employment under this Agreement, the
Executive shall receive an annual base salary of $170,000, payable in accordance
with the regular payroll practices of the local business unit. Such annual base
salary will be subject to review and possible increase (but not decrease) by the
Company on or about each anniversary of the date of this Agreement. Any and all
increases in the level of the base salary as provided for in the preceding
sentence shall become the level of the base salary for the remainder of the term
until there is a further increase in the base salary as provided for herein.
(b) During the term of the Executive's employment under this Agreement, the
Executive shall be entitled to annual bonus payments in accordance with IDEX's
Management Incentive Compensation Plan applicable to the officers of its
subsidiaries, as such Plan is administered and from time to time modified by
IDEX in its sole discretion. The annual bonus would be targeted to be 34% of the
Executive's base salary at targeted levels of operation and would otherwise be
based upon the criteria set forth in the IDEX Management Incentive Compensation
Plan. Any annual bonus for calendar year 2006 will be prorated based on the
partial year between the date of this Agreement and December 31, 2006.
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(c) As of the effective date of this Agreement, IDEX and Executive shall
enter into a Restricted Stock Award (in the form attached hereto as Exhibit A)
with respect to 13,000 shares of the IDEX's common stock. Commencing not later
than 2007, the Executive will be annually considered for long-term incentive
awards.
(d) The Company shall deduct or withhold from all salary payments, and from
all other payments made to the Executive pursuant to this Agreement, all amounts
which may be required to be deducted or withheld under any applicable Social
Security contribution, income tax withholding or other similar law now in effect
or which may become effective during the term of this Agreement.
4. OTHER BENEFITS AND TERMS.
During the term of the Executive's employment under this Agreement,
the Executive shall be entitled to the following other benefits and terms:
(a) The Company shall provide to the Executive, and the Executive shall be
entitled to participate in, any health and medical benefit plans, any pension,
profit sharing and retirement plans, and any insurance policies or programs from
time to time offered to employees of comparable status to the Executive who are
employed by the Company. These plans, policies and programs are subject to
change at the sole discretion of the Company, provided that such plans, policies
and programs, in the aggregate, will be no less valuable than those offered by
the Company as of the date of this Agreement.
(b) The Executive shall be entitled to any other fringe benefit from time
to time offered to employees of comparable status to the Executive who are
employed by the Company (including, but not limited to, the use of an automobile
to the extent so offered to such employees). Such fringe benefits are subject to
change at the sole discretion of the Company, provided that such fringe
benefits, in the aggregate, will be no less valuable than those offered by the
Company as of the date of this Agreement.
5. VACATIONS.
The Executive shall be entitled to four (4) weeks of paid vacation
each year. All such vacations shall be taken at such times as shall be agreed
upon by the Board of Directors of the Company and Executive. Vacation time may
not be carried over to the subsequent calendar year without prior approval of
the Board of Directors of the Company.
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6. REIMBURSEMENT FOR EXPENSES.
The Company shall reimburse the Executive for expenses which the
Executive may from time to time reasonably incur on behalf of the Company in the
performance of his responsibilities and duties under this Agreement; provided
however, that the Executive shall be required to account to the Company for such
expenses in the manner prescribed by the Company.
7. NON-COMPETITION.
In consideration of the compensation and other benefits to be paid to
the Executive under this Agreement and to induce the Company to consummate the
transactions contemplated by the Purchase Agreement, the Executive agrees that,
beginning on the date of this Agreement and continuing until the Covenant
Expiration Date (as defined in Section 10), Executive shall not, directly or
indirectly, for Executive's own account or as agent, employee, officer,
director, trustee, consultant, partner, stockholder or equity owner of any
corporation or any other entity (except that Executive may own securities
constituting less than three percent (3%) of any class of securities of a public
company), or member of any firm or otherwise, engage or attempt to engage, in
the Restricted Territory (as defined in Section 10), in the Business or any
other business activity which is competitive with the business conducted by the
Company at the Reference Date (as defined in Section 10).
8. NON-SOLICITATION.
In consideration of the compensation and other benefits to be paid to
the Executive under this Agreement and to induce IDEX and the Company to
consummate the transactions contemplated by the Purchase Agreement, the
Executive agrees that, beginning on the date of this Agreement and continuing
until the Covenant Expiration Date (as defined in Section 10), Executive shall
not, directly or indirectly, for Executive's own account or as agent, employee,
officer, director, trustee, consultant, partner, stockholder or equity owner of
any corporation or any other entity (a) employ or solicit the employment of any
person who is employed by the Company or any Affiliate at the Reference Date or
at any time during the six-month period preceding the Reference Date, except
that the Executive shall be free to employ or solicit the employment of any such
person whose employment with the Company or any Affiliate has terminated for any
reason (without any interference from the Executive) and who has not been
employed by the Company or any Affiliate for at least six (6) months, (b)
canvass or solicit business in competition with the Business or any other
business conducted by the Company at the Reference Date from any person or
entity who during the six (6) month period preceding the Reference Date shall
have been a customer of the Company or from any person or entity which the
Executive has reason to believe might in the future become a customer of the
Company as a result of marketing efforts, contacts or other facts and
circumstances of which the Executive is aware, (c) willfully dissuade or
discourage any person or entity from using,
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employing or conducting business with the Company or any Affiliate or (d)
intentionally disrupt or interfere with, or seek to disrupt or interfere with,
the business or contractual relationship between the Company or any Affiliate
and any supplier who during the six-month period preceding the Reference Date
shall have supplied components, materials or services to the Company or any
Affiliate.
9. COMPANY EMPLOYMENT.
The restrictions imposed by Sections 7, 8 and 11 through 13 hereof
shall not in any manner be construed to prohibit, directly or indirectly, the
Executive from serving as an employee or consultant of the Company or any
Affiliate.
10. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings given them below:
(a) "Affiliate" shall mean (i) any entity now or hereafter directly or
indirectly owned or controlled by the Company and (ii) any entity now or
hereafter directly or indirectly owned or controlled by IDEX.
(b) "Business" shall mean all activities which the Company, is presently
conducting or pursuing, including, without limitation, the design and
manufacturing of liquid handling products, including valves, fittings, pumps,
couplings, strainer/filters, systems and accessories.
(c) "Covenant Expiration Date" shall mean the date which is the later of
(i) five (5) years after the date of this Agreement or (ii) two (2) years after
the Termination Date (as defined in this Section 10).
(d) "Reference Date" shall mean (i) for purposes of applying the covenants
set forth in Sections 7 and 8 at any time prior to the Termination Date, the
then current date, or (ii) for purposes of applying the covenants set forth in
Sections 7 and 8 at any time on or after the Termination Date, the Termination
Date.
(e) "Restricted Territory" shall mean anywhere in the world where the
Company conducts or plans to conduct the Business or any other business
activity, as the case may be, at the Reference Date.
(f) "Termination Date" shall mean the date of termination of the
Executive's employment with the Company; provided however that the Executive's
employment shall not be deemed to have terminated so long as the Executive
continues to be employed or engaged as an employee or consultant of the Company
or any Affiliate, even if such employment or
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engagement continues after the expiration of the term of this Agreement, whether
pursuant to this Agreement or otherwise.
11. CONFIDENTIAL INFORMATION.
The Executive, in the performance of Executive's duties hereunder,
shall take reasonable precautions to safeguard the confidential nature of all
confidential information of or belonging to the Company or any Affiliate and
shall take any other precautions with respect thereto which the Company or any
Affiliate, in its sole discretion, may reasonably request in writing; provided
that the Executive shall have the right to use and disclose the confidential
information as reasonably required for the performance of Executive's duties on
behalf of the Company or any Affiliate and in furtherance of the Company's best
interests or to effect compliance with any law, rule, regulation or order
applicable to the Executive or the Company or in response to any legally
enforceable subpoena or other legal process. For purposes of this Agreement,
"confidential information" shall mean all information which is not generally
available to the public and which the Company or any Affiliate treats as
confidential pertaining to the business, assets and operations of the Business
or otherwise pertaining to the business, assets and operations of the Company or
any Affiliate, including without limitation trade secrets, technology, financial
results and information, processes and techniques, information as to customers,
customer lists and suppliers, sales and marketing information, technical
production, pricing and cost data, information as to business methods, practices
and strategies, and other valuable and confidential information, and all
documents, electronic records and other tangible items relating to or containing
any such information.
12. PERSONAL PROPERTY.
The Executive agrees that the Company or its Affiliates shall own all
right, title and interest in and to all information, including without
limitation, all confidential information, which the Executive receives,
conceives, or develops, either alone or with others, during the term of
Executive's employment hereunder and which relates to the business of the
Company or its Affiliates. Without limiting the generality of the foregoing, all
notes, notebooks, memoranda, working papers, graphs, charts, pictures, data,
drawings, documents and all other items containing or relating in any way to any
such information made, compiled or obtained by the Executive, and all copies
thereof, together with all rights associated with ownership of such items (such
as copyright, patent, trade secret and other proprietary rights) shall become
the property of the Company or its Affiliates, when so made, compiled or
obtained, whether or not delivered to the Company or its Affiliates, and shall
be held by the Executive in trust for the Company or its Affiliates and shall be
delivered to the Company or its Affiliates upon request and, in any event, upon
termination of the Executive's employment hereunder.
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13. DEVELOPMENTS.
In consideration of the compensation and other benefits to be paid to
the Executive under this Agreement and to induce the Company and IDEX to
consummate the transactions contemplated by the Purchase Agreement, the
Executive agrees as follows:
(a) The Executive agrees to immediately communicate to the Company and IDEX
a full and complete disclosure of each Development (as defined in subsection (d)
below) conceived, made, or otherwise developed by the Executive during the term
of Executive's employment hereunder, whether solely or jointly with others, and
whether or not while actually engaged in performing work for the Company or its
Affiliates.
(b) The Executive agrees to assign and transfer, and does hereby assign and
transfer, to the Company or its Affiliates, without any separate remuneration or
compensation, his entire right, title and interest in and to all Developments
and any United States and foreign patent, copyright and any other proprietary
rights in and with respect to all such Developments, conceived, made or
otherwise developed by the Executive during the term of employment hereunder,
whether a full or partial interest, and whether or not while engaged in
performing work for the Company or its Affiliates. The Executive understands and
agrees that the Company will determine, in its sole and absolute discretion,
whether an application for a copyright, patent or other proprietary right
registration will be filed on the Executive's Development and whether any such
application will be abandoned prior to issuance of a patent, copyright or other
proprietary right registration.
(c) The Executive shall, at the Company's expense, take such action,
including, but not limited to, execution, acknowledgment, delivery and
assistance in preparation of documentation, as may reasonably be requested by
the Company or its Affiliates for the implementation or continuing performance
of subsection 13(b) of this Agreement. Without limiting the generality of the
foregoing, the Executive shall execute, acknowledge, deliver and assist in
preparing such instruments of conveyance, patent or copyright application, or
assignment or further assurance, as the Company or its Affiliates may reasonably
request, to evidence, transfer, vest and confirm the right, title and interest
transferred or granted or to be transferred or granted to the Company or its
Affiliates under subsection 13(b) of this Agreement. The Executive shall not
contest the validity of any patent, copyright or other proprietary right, either
United States or foreign, which is transferred, conveyed, granted, vested or
otherwise assigned to the Company or its Affiliates to which the Executive made
any contribution or in which the Executive participated in any way, and shall
not assist any other party in any way to contest the validity of such patent,
copyright, or proprietary right.
(d) "Developments" means (i) any invention, discovery, concept or idea,
whether or not patentable, (ii) any writing, drawing, design or other creative
expression, whether or not
-8-
copyright or trademark applications are filed thereon, (iii) any computer
program, discovery, idea, device, process, design, development, improvement,
conception, concept, application, technique or know-how or (iv) any other
invention, whether patentable or copyrightable, and whether or not reduced to
practice, and, with respect to all of items (i) through (iv) of this subsection
(d), that (A) results from or is suggested by any work performed by the
Executive for the Company or its Affiliates and relates to or is within the
scope of the business, research or development activities of the Company or its
Affiliates and (B) is made or discovered during the time of the Executive's
employment with the Company or its Affiliates, or within six (6) months after
the termination of such employment, and under the Executive's direction or
supervision, whether or not it is made or discovered alone or jointly with
others, and whether or not it is conceived, made or discovered during normal
working hours, using the assets, facilities or resources of the Company or its
Affiliates, or on the premises of the Company or its Affiliates. Developments
shall include, but not be limited to, articles, processes, methods, formulas,
systems, computer source codes and techniques as well as improvements thereof
and know-how related thereto. All Developments are the property of the Company
or its Affiliates.
NOTICE OF RIGHTS - THIS AGREEMENT AFFECTS YOUR RIGHTS TO OWNERSHIP OF
INVENTIONS MADE BY YOU. YOU MAY HAVE RIGHTS PURSUANT TO STATE LAW.
THIS AGREEMENT DOES NOT APPLY TO AN INVENTION FOR WHICH NO EQUIPMENT,
SUPPLIES, FACILITIES OR TRADE SECRET INFORMATION OF THE COMPANY WAS
USED AND WHICH WAS DEVELOPED ENTIRELY ON YOUR OWN TIME UNLESS (A) THE
INVENTION RELATES (I) TO THE BUSINESS OF THE COMPANY OR (II) TO THE
COMPANY'S ACTUAL OR DEMONSTRATABLY ANTICIPATED RESEARCH OR
DEVELOPMENT, OR (B) THE INVENTION RESULTS FROM WORK PERFORMED BY YOU
FOR THE COMPANY.
14. EQUITABLE REMEDIES.
The Executive represents and warrants that Executive has had an
opportunity to consult with Executive's attorney regarding this Agreement, has
thoroughly and completely reviewed this Agreement with that attorney, and fully
understands the contents hereof. Furthermore, the Executive acknowledges that
(a) a remedy at law for Executive's failure to comply with Sections 7 through 13
of this Agreement may be inadequate and (b) in the event of the Executive's
failure to comply with Sections 7 through 13 of this Agreement, the Company
shall be entitled to seek and obtain from a court having jurisdiction specific
performance, an injunction, a restraining order or any other equitable relief in
order to enforce any such provision.
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The right to obtain such equitable relief shall be in addition to any other
remedy to which the Company is entitled under applicable law (including, but not
limited to, monetary damages).
15. TERMINATION.
(a) This Agreement and the Executive's employment hereunder shall
automatically terminate upon the death or permanent disability of the Executive.
Permanent disability shall mean that the Executive is unable to substantially
perform Executive's duties under this Agreement for a continuous period of six
(6) months or for an aggregate of nine (9) months during any twelve (12) month
period, as determined by a physician selected by the Company (the "Disability
Determination Date") and reasonably satisfactory to the Executive (or if
Executive is unable to act, Executive's spouse or eldest child). The Executive
will cooperate in any physical examination conducted pursuant to this paragraph.
The foregoing is subject to the duty of the Company to provide reasonable
accommodation under the Americans with Disabilities Act. Upon the Executive's
death, all of Executive's (i) accrued but unpaid base salary and bonus, and (ii)
other benefits (but not including bonus) accrued as of the date of death, shall
immediately be payable to the Executive's estate. Upon Executive's permanent
disability, the Executive shall receive (i) all accrued but unpaid base salary
and bonus and (ii) other benefits (but not including bonus) accrued as of the
Disability Determination Date.
(b) The Company may, at its sole option, terminate the Executive's
employment for cause upon written notice to the Executive. For purposes of this
Agreement, "cause" shall mean (i) a breach of any of the covenants contained in
Sections 7 through 13 of this Agreement, (ii) a material breach of or
substantial failure to perform any other obligation of the Executive under this
Agreement, provided, however, that if such breach or failure is a curable breach
or failure, such breach or failure was not cured within 30 days after written
notice was provided to the Executive, (iii) the conviction of the Executive for
a felony, (iv) a breach of any policy of the Company provided to the Executive
in writing, provided, however, that if such breach is a curable breach, such
breach was not cured within 10 days after written notice was provided to the
Executive, (v) recklessness or willful misconduct of the Executive in the
performance of Executive's duties, (vi) failure to implement IDEX corporate
procedures or directives provided to the Executive in writing, provided,
however, that if such failure is a curable failure, such failure was not cured
within 10 days after written notice was provided to the Executive, as determined
by Company in its reasonable discretion, or (vii) any fraudulent or dishonest
act by the Executive with respect to the Company. In the event that the
Executive's employment pursuant to this Agreement is terminated for cause, the
Executive shall receive no salary or other benefits pursuant to this Agreement
other than accrued but unpaid base salary through the date of termination.
(c) In the event that (i) the Executive's employment pursuant to this
Agreement is terminated by the Company other than (A) for cause, or (B) by
reason of expiration of the term
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of this Agreement whether by reason of delivery of a Non-Renewal Notice or
otherwise, or (ii) if the Executive terminates his employment for good reason,
as hereinafter defined, the Executive will receive all accrued but unpaid base
salary and benefits (but not including bonus) through the date of termination
and will continue to receive payments of base salary pursuant to Section 3(a) of
this Agreement for the period of (X) 18 months if the termination of employment
occurs within 24 months from the date of this Agreement or (Y) 12 months if the
termination of employment occurs after 24 months from the date of this
Agreement. For purposes of this Agreement, "good reason" shall mean (i) material
reduction in the Executive's compensation, (ii) material demotion or reduction
in responsibilities or authority from that existing on the date of this
Agreement or the assignment to the Executive of duties or responsibilities that
are substantially inconsistent with his position as Vice President of the
Company, (iii) the Company relocates the Executive's principal office more than
50 miles from its location as of the date of this Agreement, or (iv) a material
breach of or substantial failure to perform any other obligation of the Company
or IDEX under this Agreement if such breach or failure, if curable, is not cured
within 30 days after written notice is provided to the Company and IDEX. The
Executive shall not be required to mitigate the amount of any payment the
Company becomes obligated to make in connection with this subsection (c), by
seeking other employment or otherwise.
(d) In the event that the Executive's employment pursuant to this Agreement
is terminated as a result of the voluntary termination by the Executive other
than for good reason, the Executive shall receive no salary or other benefits
pursuant to this Agreement other than accrued but unpaid base salary through the
date of termination.
(e) In the event that this Agreement is not renewed and the Executive's
employment expires at the end of the term of this Agreement or is terminated by
the Company after the term of this Agreement other than for cause, the Company
shall pay to Executive upon such termination the amount provided for under the
Company's then existing severance policy.
16. FAILURE, DELAY OR WAIVER.
No course of action or failure to act by the Company or the Executive
shall constitute a waiver by such party of any right or remedy under this
Agreement, and no waiver by either party of any right or remedy under this
Agreement shall be effective unless made in writing.
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17. SEVERABILITY.
Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be enforceable under applicable law. However,
if any provision of this Agreement shall be deemed unenforceable under
applicable law by a court having jurisdiction, such provision shall be
unenforceable only to the extent necessary to make it enforceable without
invalidating the remainder thereof or any of the remaining provisions of this
Agreement. Without limiting the foregoing, the Executive acknowledges and agrees
that, if any part of the covenants contained in Sections 7 through 13 is deemed
to be overbroad or void as against public policy, such invalid portion shall be
severable from such covenants and, upon such event, the Executive requests that
such covenant be reformed ("blue-pencilled") to permit the Company and the
Affiliates to obtain the maximum permissible benefit from such covenants.
18. NOTICE.
All written communications to a party required hereunder shall be in
writing and (a) delivered in person (to be effective when so delivered), (b)
mailed by registered or certified mail, return receipt requested (to be
effective four days after the date it is deposited in the U.S. Mail), (c)
deposited with a reputable overnight courier service (to be effective two
business days after the delivery to such courier service), or (d) sent by
facsimile transmission (to be effective upon receipt by the sender of electronic
confirmation of delivery of the facsimile), with confirmation sent by way of one
of the above methods, to the party at the address given below for such party (or
to such other address as such party shall designate in a writing complying with
this Section 18, delivered to the other party):
If to the Company:
Banjo Corporation
c/o IDEX Corporation
630 Dundee Road, Suite 400
Northbrook, Illinois 60062
Attn: Lawrence D. Kingsley
Frank J. Notaro, Esq.
Telephone: (847) 498-7070
Telecopier: (847) 498-9123
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With a copy to:
Hodgson Russ LLP
One M & T Plaza, Suite 2000
Buffalo, New York 14203
Attn: Richard F. Campbell, Esq.
John P. Amershadian, Esq.
Brad A. Birmingham, Esq.
Telephone: (716) 856-4000
Telecopier: (716) 849-0349
If to the Executive:
Mark E. Gillen
12 Shannon Road
Zionsville, IN 46077
19. CONSENT TO JURISDICTION AND VENUE.
Each of the Company and the Executive hereby (a) consents to the
jurisdiction of the United States District Court for the Southern District of
Indiana or, if such court does not have jurisdiction over such matter, the
applicable Superior Court, Montgomery County, State of Indiana, and (b)
irrevocably agrees that all actions or proceedings arising out of or relating to
this Agreement shall be litigated in such court. Each of the Company and the
Executive accepts for itself or himself and in connection with their properties,
generally and unconditionally, the exclusive jurisdiction and venue of the
aforesaid courts and waives any defense of forum nonconveniens or any similar
defense, and irrevocably agrees to be bound by any non-appealable judgment
rendered thereby in connection with this Agreement.
20. MISCELLANEOUS.
This Agreement (a) may not be amended, modified or terminated orally
or by any course of conduct pursued by the Company or the Executive, but may be
amended, modified or terminated only by a written agreement duly executed by the
Company and the Executive, (b) is binding upon and inures to the benefit of the
Company and the Executive and each of their respective heirs, representatives,
successors and assignees, except that the Executive may not assign any of
Executive's rights or obligations pursuant to this Agreement, (c) if assigned by
the Company, will be enforceable by the Executive against such assignee, (d)
constitutes the entire agreement between the Company and the Executive with
respect to the subject matter of this Agreement, and supersedes all oral and
written proposals, representations, understandings and
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agreements previously made or existing with respect to such subject matter, and
(e) shall be governed by, and interpreted and construed in accordance with, the
laws of the State of Indiana, without regard to principles of conflicts of law.
The Company shall require any Successor (as defined below), by
agreement in form and substance reasonably satisfactory to the Executive, to
expressly and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement at or prior to the time a person becomes a Successor shall be a
material breach of this Agreement and shall entitle the Executive to terminate
his employment for good reason pursuant to Section 15(c) hereof. For purposes of
this Agreement, "Successor" means any entity or other person that succeeds to
substantially all of the Company's business or assets, directly or indirectly,
by merger or consolidation, by purchase of all or substantially all of its
assets, or otherwise. For purposes of this Agreement, the "Company" means the
Company as hereinabove defined and any Successor as contemplated by this
paragraph.
21. THIS AGREEMENT CONTROLS.
In the event of any conflict between the provisions of this Agreement
and the provisions of the IDEX Corporation Code of Business Conduct and Ethics,
the IDEX Corporation Corporate Governance Guidelines, and the IDEX Corporation
Executive Inventions and Proprietary Information Agreement executed by the
Employee simultaneously with this Agreement, the provisions of this Agreement
shall control.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
COMPANY: BANJO CORPORATION
----------------------------------------
By:
------------------------------------
Its:
-----------------------------------
EXECUTIVE: ----------------------------------------
Mark E. Gillen
EXHIBIT A
IDEX CORPORATION
RESTRICTED STOCK AWARD AGREEMENT
NAME: ____________________________ PLAN: IDEX CORPORATION INCENTIVE AWARD PLAN
ADDRESS: _________________________
TAXPAYER GRANT: ________ SHARES OF COMMON STOCK (THE
IDENTIFICATION NUMBER: ___________ "RESTRICTED STOCK")
SIGNATURE: _______________________ GRANT DATE: ______________________
Effective on the Grant Date you have been granted the Restricted Stock, in
accordance with the provisions of the IDEX Corporation Incentive Award Plan (the
"Plan") and subject to the restrictions, terms and conditions set forth herein.
25% of the shares of Restricted Stock will vest and no longer be subject to the
restrictions of this Agreement on the first anniversary of the Grant Date, and
25% shall vest and no longer be subject to the restrictions of this Agreement on
the date of each anniversary thereafter, with full vesting on the fourth
anniversary of the Grant Date.
In the event of the termination of your employment or service for any reason,
whether such termination is occasioned by you, by the Company or any of its
Subsidiaries, with or without cause or by mutual agreement ("Termination of
Service"), your right to receive and/or vest in Restricted Stock under the Plan,
if any, will terminate effective as of the earlier of: (i) the date that you
give or are provided with written notice of Termination of Service, or (ii) if
you are an employee of the Company or any of its Subsidiaries, the date that you
are no longer actively employed and physically present on the premises of the
Company or any of its Subsidiaries, regardless of any notice period or period of
pay in lieu of such notice required under any applicable statute or the common
law (each, the "Notice Period"). For greater clarity, you have no rights to
receive and/or vest in Restricted Stock during the Notice Period.
Notwithstanding the foregoing, this Award shall be fully vested upon your
Termination of Service by reason of death, Disability, or upon a Change in
Control of the Company.
This award is not transferable except by will or the laws of descent and
distribution.
The Company will cause to be issued one or more stock certificates, registered
in your name, evidencing the Restricted Stock of your Restricted Stock Award.
Each such certificate will bear the following legend:
The shares of stock represented by this certificate are subject to
forfeiture and the transferability of this certificate and the shares
of stock represented hereby are subject to the restrictions, terms and
conditions (including restrictions against transfer) contained in the
IDEX Corporation Incentive Award Plan and a Restricted Stock Award
Agreement dated [the Grant Date], entered into between the registered
owner of such shares and IDEX Corporation. A copy of the Agreement is
on file in
RS-4yRatable DRAFT 08-31-2006
the office of the Secretary of IDEX Corporation, Suite 400, 630 Dundee
Road, Northbrook, Illinois 60062.
Each such certificate, together with stock powers duly executed in blank related
to such Restricted Stock, will be deposited with the Secretary of the Company or
a custodian designated by the Secretary. The Secretary or custodian will issue a
receipt to you evidencing the certificates held that are registered in your
name. Until such certificates have been issued and registered in your name, you
will not be deemed for any purpose to be, or have rights as, a Company
shareholder by virtue of this award. After such time, you will receive all
dividends paid on and will be entitled to vote the Restricted Stock. Following
the vesting of any of your Restricted Stock, the Company will cause to be issued
and delivered to you certificates evidencing such Restricted Stock, free of the
legend provided above.
The Company has the authority to deduct or withhold, or require you to remit to
the Company, an amount sufficient to satisfy applicable federal, state, local
and foreign taxes arising from this Restricted Stock Award. You may satisfy your
tax obligation, in whole or in part, by either: (i) electing to have the Company
withhold shares of your Restricted Stock otherwise to be delivered with a fair
market value equal to the minimum amount of the tax withholding obligation; or
(ii) surrendering to the Company previously owned Restricted Stock with a fair
market value equal to the minimum amount of the tax withholding obligation. If
you are subject to United Kingdom income tax and/or national insurance
contributions, the Company or any Subsidiary may withhold or collect any income
tax and national insurance contributions: (i) by deduction from salary or any
other payment payable to you at any time on or after the day an income tax
charge arises in respect of a Restricted Stock Award; (ii) directly from you by
payment of cleared funds; or (iii) by arranging for the sale of some of the
shares of Restricted Stock to which you are entitled.
You acknowledge and consent to the collection, use, processing and transfer of
personal data as described in this paragraph. The Company, its affiliates and
your employer hold certain personal information, including your name, home
address and telephone number, date of birth, social security number or other
employee tax identification number, salary, nationality, job title, any shares
of stock awarded, cancelled, purchased, vested, unvested or outstanding in your
favor, for the purpose of managing and administering the Plan ("Data"). The
Company and its affiliates will transfer Data to any third parties assisting the
Company in the implementation, administration and management of the Plan. These
recipients may be located in the European Economic Area, or elsewhere such as
the United States. You authorize them to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing your participation in the Plan,
including any requisite transfer of such Data as may be required for the
administration of the Plan and/or the subsequent holding of shares of stock on
your behalf to a broker or other third party with whom you may elect to deposit
any shares of stock acquired pursuant to the Plan. You may, at any time, review
Data, require any necessary amendments to it or withdraw the consent herein in
writing by contacting the Company; however, withdrawing the consent may affect
your ability to participate in the Plan.
Your participation in the Plan is voluntary. The value of the Restricted Stock
Award is an extraordinary item of compensation outside the scope of your
employment contract, if any. As such, the Restricted Stock Award is not part of
normal or expected compensation for purposes of calculating any severance,
resignation, redundancy, end of service payments, bonuses, long-service awards,
pensions or retirement benefits or similar payments unless specifically and
otherwise provided. Rather, the awarding of Restricted Stock under the Plan
represents a mere investment opportunity.
RS-4yRatable DRAFT 08-31-2006
This Restricted Stock Award is granted under and governed by the terms and
conditions of the Plan. You acknowledge and agree that the Plan is
discretionary in nature and may be amended, cancelled, or terminated by the
Company, in its sole discretion, at any time. The grant of a Restricted Stock
Award under the Plan is a one-time benefit and does not create any contractual
or other right to receive an award of Restricted Stock or benefits in lieu of
Restricted Stock in the future. Future awards of Restricted Stock, if any, will
be at the sole discretion of the Company, including, but not limited to, the
tuning of the award, the number of shares, vesting provisions, and the exercise
price. The Plan has been introduced voluntarily by the Company and in accordance
with the provisions of the Plan may be terminated by the Company at any time. By
execution of this Agreement, you consent to the provisions of the Plan and this
Agreement. Defined terms used herein shall have the meaning set forth in the
Plan, unless otherwise defined herein.
COMPANY:
IDEX CORPORATION
- -------------------------------------
By: Frank J. Notaro
Vice President - General Counsel
and Secretary
RS-4yRatable DRAFT 08-31-2006
EXHIBIT 7.1 (G)
ESCROW AGREEMENT
ESCROW AGREEMENT
THIS AGREEMENT, dated as of October ___, 2006 is among IDEX
CORPORATION, a Delaware corporation with a mailing address of 630 Dundee Road,
Suite 400, Northbrook, Illinois 60062 ("IDEX"); and JACK K. CANINE, an
individual residing at ____________, as agent and attorney-in-fact for Sellers
(as defined in the Purchase Agreement (as defined below)) (the "Sellers'
Representative"); and WELLS FARGO BANK, N.A., with a principal place of business
at Sixth and Marquette, Minneapolis, Minnesota (the "Escrow Agent").
RECITALS:
A. IDEX and Sellers have entered into a Stock Purchase Agreement dated
September ___, 2006 (the "Purchase Agreement") pursuant to which IDEX has agreed
to purchase all of the shares of Banjo Corporation.
B. Pursuant to the Purchase Agreement, certain funds are required to
be deposited from time to time with the Escrow Agent to be held and released by
the Escrow Agent in accordance with the terms and conditions of the Purchase
Agreement and of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, the parties hereto agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Escrow Account" shall mean Account No. _______________
established and maintained at the Escrow Agent's principal place of
business for the purpose of receiving and holding all Escrow Funds in
accordance with this Agreement.
(ii) "Escrow Deposit" shall mean the $6,000,000 to be delivered
by IDEX to the Escrow Agent on the date of this Agreement pursuant to
Section 2 of this Agreement.
(iii) "Escrow Funds" shall mean the Escrow Deposits and any
Investment Income.
(iv) "Interim Escrow Release Date" shall mean the business day
following the date the final Closing Date Balance Sheet adjustment
payments are made pursuant to Section 1.3(e) of the Purchase
Agreement.
(v) "Investment Income" shall mean all income which may from time
to time be earned from the investment of the Escrow Funds.
(vi) "Principals" shall mean IDEX and Sellers' Representative.
(b) Each capitalized term which is used in this Agreement but not
defined in this Agreement shall have the meaning given it in the Purchase
Agreement. Notwithstanding the foregoing, or any contrary provisions of
this Agreement, it is understood that the Escrow Agent is not a party to
and has neither received nor read, nor does Escrow Agent consent to, any
provisions of the Purchase Agreement. References in this Agreement to the
Purchase Agreement are for reference by the Principals and Sellers only,
and the parties agree that the Escrow Agent shall not be responsible for
compliance with any provisions of the Purchase Agreement or any agreement
other than this Agreement.
2. Establishment of Escrow Account. On the date of this Agreement, the
Escrow Agent shall establish the Escrow Account to hold the Escrow Funds. On the
date of this Agreement, IDEX shall deliver the initial $6,000,000 Escrow Deposit
to the Escrow Agent by wire transfer. The Escrow Agent shall accept the Escrow
Deposit and shall hold and release the Escrow Funds in accordance with the terms
and conditions of this Agreement.
3. Investments. Unless otherwise directed in writing by IDEX and Sellers'
Representative, the Escrow Funds shall be invested in (a) money market funds
having the highest rating possible from both Standard & Poors Ratings Group and
Moody's Investor Services or similar investment options offered by the Escrow
Agent as agreed to by IDEX and Sellers' Representative, (b) U.S. Dollar
denominated, direct, noncallable, full-faith-and-credit obligations of the
federal government of the United States of America, (c) certificates of deposit,
banker's acceptances or time deposits having maturities of ninety (90) days or
less from the date of acquisition and issued by a United States commercial bank
which has unsecured senior debt securities or letters of credit rated at least
P-1 by Moody's Investors Service, Inc. or A-1 by Standard & Poor's Corporation,
or (d) commercial paper or securities with maturities of 90 days or less from
the date of IDEX rated at least P-1 by Moody's Investors Service, Inc. and A-1
by Standard & Poor's Corporation (or, with respect to clauses (c) and (d) above,
if neither of such rating agencies is then providing ratings, the equivalent
thereof by another investor service of comparable national recognition selected
by Sellers and reasonably acceptable to IDEX), as directed by Sellers'
Representative. It is agreed among the parties that the Escrow Funds will
initially be deposited in the Fund identified on the attached Exhibit E. All
Investment Income shall become part of the Escrow Funds. Sellers' Representative
will provide the Escrow Agent with a W-9 or W-8 IRS tax form for each Seller on
the date of this Agreement. Sellers shall be liable for all taxes attributable
to the Investment Income that is distributed to them hereunder. Unless
prohibited by law, the Escrow Agent shall report to the IRS all such Investment
Income as being taxable to Sellers. Unless required by law, the Escrow Agent
shall not report to the IRS any Investment Income as being taxable to IDEX,
unless such Investment Income is distributed to IDEX. If the Escrow Agent is
required by law to report any of the Investment Income that has not been
distributed to IDEX as being taxable to IDEX, the Escrow Agent shall be required
to distribute Escrow Funds to IDEX in an amount equal to IDEX's tax liability
arising from such Investment Income within thirty (30) days of IDEX notifying
the Escrow Agent of the amount of such tax liability. If the distribution of
this tax amount is considered additional taxable income to IDEX, the Escrow
Agent shall be required to distribute additional Escrow Funds to IDEX as gross
up payments to put IDEX in the same after-tax position as if the distribution of
such tax
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amounts were not taxable income to IDEX. A statement of citizenship will be
provided if requested by the Escrow Agent.
4. Release of Escrow Funds. Except as otherwise provided in this Agreement,
no portion of the Escrow Funds shall be released unless and until any of the
following conditions shall have occurred:
(a) (i) In the event that IDEX determines that IDEX is entitled to a
payment pursuant to Section 1.3(e)(ii) of the Purchase Agreement or
indemnification under Article VI of the Purchase Agreement against
Sellers, IDEX shall deliver to the Escrow Agent a written notice
signed by IDEX in the form attached hereto as Exhibit A ("IDEX
Indemnification Notice") specifically directing that the Escrow Agent
release from the Escrow Account and deliver to IDEX Escrow Funds in an
amount equal to the payment claimed pursuant to Section 1.3(e)(ii) of
the Purchase Agreement or pursuant to the Loss claimed pursuant to
Article VI of the Purchase Agreement (the "Claimed Loss"). If the
Escrow Agent shall not have received from Sellers' Representative,
within thirty (30) days after the date that the IDEX Indemnification
Notice is received by the Escrow Agent, a written notice signed by
Sellers' Representative in the form attached hereto as Exhibit B
("Sellers' Indemnification Objection Notice"), the Escrow Agent shall
release from the Escrow Account and deliver to IDEX Escrow Funds in an
amount equal to the Claimed Loss. IDEX covenants that an IDEX
Indemnification Notice shall be given simultaneously to Sellers'
Representative and to the Escrow Agent and Sellers' Representative
covenants that a Sellers' Indemnification Objection Notice shall be
given simultaneously to IDEX and to the Escrow Agent, in each case as
provided for in Section 10 of this Agreement. Notwithstanding anything
to the contrary contained in this Agreement, in the event that a
Sellers' Indemnification Objection Notice is delivered to the Escrow
Agent in accordance with this Agreement, the Escrow Funds shall not be
released by the Escrow Agent except in accordance with another
subsection of this Section 4 or as provided elsewhere in this
Agreement.
(ii) If the Escrow Agent shall have received a Sellers'
Indemnification Objection Notice from Sellers' Representative within
thirty (30) days after the date that the IDEX Indemnification Notice
is received by the Escrow Agent, the Escrow Agent shall continue to
hold the Claimed Loss in the Escrow Account until receipt of either
(A) joint written instructions from IDEX and Sellers' Representative
reasonably satisfactory to Escrow Agent; or (B) a final order,
judgment or decree of a court of competent jurisdiction, provided the
Escrow Agent received a certified copy of such order, judgment or
decree, accompanied by an opinion of counsel to the effect that such
order, judgment or decree represents a final adjudication of the
rights of the parties by a court of competent jurisdiction and that
the time for appeal from such order, judgment or decree has expired
without an appeal having been filed. Any balance of the Claimed Loss
not covered by (A) or (B) shall be held and/or released by the Escrow
Agent as if such IDEX Indemnification Notice had never been given.
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(b) On or promptly after the first day of each calendar quarter, the
Escrow Agent shall release from the Escrow Account and distribute to
Sellers all Investment Income in the Escrow Account; provided, however,
that the Escrow Agent shall not so release any Escrow Funds except to the
extent that after such release there shall be at least (i) $6,000,000
remaining in the Escrow Account, if such release is before the release of
Escrow Funds pursuant to Section 4(c) of this Agreement or (ii) $5,000,000
remaining in the Escrow Account, if such release is after the release of
Escrow Funds pursuant to Section 4(c) of this Agreement.
(c) On the Interim Escrow Release Date, or as soon thereafter as the
Escrow Agent is notified of such date by both IDEX and Sellers'
Representative, the Escrow Agent shall release from the Escrow Account and
distribute to Sellers all Escrow Funds in excess of $5,000,000.
(d) On April __, 2008, (i) Sellers' Representative shall deliver to
the Escrow Agent a written notice signed by Sellers' Representative in the
form of Exhibit C ("Sellers' Distribution Notice") notifying the Escrow
Agent of the portion of the Escrow Funds which Sellers believe is subject
to claim by IDEX and requesting delivery of the balance of the Escrow Funds
(the "Sellers' Distribution Amount") to Sellers as described in the
Sellers' Distribution Notice and (ii) IDEX shall deliver to the Escrow
Agent a written notice signed by IDEX in the form of Exhibit D ("IDEX
Distribution Notice") notifying the Escrow Agent of the portion of the
Escrow Funds which IDEX believes are subject to claim by IDEX and
acknowledging Sellers' entitlement to the balance of the Escrow Funds (the
"IDEX Distribution Amount"). Promptly after the later receipt of the
Sellers' Distribution Notice or the IDEX Distribution Notice, the Escrow
Agent shall release from the Escrow Account and deliver to Sellers Escrow
Funds in an amount equal to the lesser of the Sellers' Distribution Amount
and the IDEX Distribution Amount. If the Escrow Agent shall not have
received from IDEX within thirty (30) days after the date that the Sellers'
Distribution Notice is received by the Escrow Agent, an IDEX Distribution
Notice, then the Escrow Agent shall release from the Escrow Account and
deliver to Sellers Escrow Funds in an amount equal to the Sellers'
Distribution Amount. The parties agree that a Sellers' Distribution Notice
must be given simultaneously to IDEX as well as to the Escrow Agent and an
IDEX Distribution Notice must be given simultaneously to Sellers'
Representative as well as the Escrow Agent, in each case as provided in
Section 10 of this Agreement.
(e) If at any time, a written notice signed by IDEX and Sellers'
Representative is delivered to the Escrow Agent specifically directing
delivery of all or any portion of the Escrow Funds to IDEX or Sellers, then
the Escrow Agent shall release from the Escrow Account and deliver to IDEX
or Sellers, as the case may be, the Escrow Funds in accordance with such
notice.
(f) Unless otherwise directed by written notice signed by Sellers'
Representative, all amounts to be distributed to Sellers pursuant to this
Agreement shall be distributed to a single account designated by Sellers'
Representative, and Sellers' Representative shall bear all responsibility
for distributing such amount to each Seller in
-4-
accordance with his, her, or its pre-closing pro rata interest in Banjo
Corporation as set forth on Exhibit F.
5. Compliance with Court Orders. If any property subject to this Agreement
shall be at any time attached, garnished or levied upon under any court order or
in case the payment, assignment, transfer, conveyance or delivery of any such
property shall be stayed or enjoined by any court order, or in case any order,
writ, judgment or decree shall be made or entered by any court affecting such
property or any part thereof, then in any of such events the Escrow Agent is
authorized, in its sole discretion, to rely upon and comply with any such order,
writ, judgment or decree which the Escrow Agent is advised by legal counsel of
its own choosing (including internal counsel) is binding; and if the Escrow
Agent complies with any such order, writ, judgment or decree the Escrow Agent
shall not be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance even though such order, writ, judgment
or decree may be subsequently reversed, modified, annulled, set aside or
vacated. The Escrow Agent shall promptly forward to IDEX and Sellers'
Representative by one of the methods described in Section 10 copies of all legal
documents served on or otherwise received by the Escrow Agent relating to any of
the proceedings described in this Section 5.
6. Proof of Conditions for Release. The Escrow Agent may refuse to release
any part of the Escrow Funds under Section 4 of this Agreement unless it has
been fully satisfied that each written notice referred to in Section 4 contains
the genuine signature of a Principal or the Principals. Nothing herein shall
require the Escrow Agent to establish the genuineness of any signature but,
instead, the Escrow Agent may in good faith rely upon any signature appearing to
be that of a Principal as being genuine and/or duly authorized, in the absence
of actual knowledge to the contrary. Notwithstanding anything to the contrary in
this Agreement, the Escrow Agent shall act upon receipt of the documents in the
forms attached hereto as Exhibits A through D and shall have no responsibility
for verifying any of the contents thereof.
7. Term. This Agreement shall remain in effect until one of the following
conditions occurs:
(a) The Principals shall have jointly given 30 days' advance written
notice of the cancellation of the designation of the Escrow Agent to act
and serve in such capacity, which notice shall contain directions to the
Escrow Agent for delivery of the Escrow Funds;
(b) The Escrow Agent shall have resigned upon 30 days' advance written
notice to the Principals;
(c) There shall have been full compliance with the terms of this
Agreement and the release of all of the Escrow Funds; or
(d) A court of competent jurisdiction shall have issued a final order
or judgment ordering the termination of this Agreement, and all appeals of
such order or judgment shall have been exhausted or all periods in which to
take an appeal shall have expired without an appeal being taken.
-5-
In the event that the Escrow Agent resigns pursuant to subsection (b)
of this Section and the Principals fail to agree on a successor escrow agent
within the 30-day notice period, the Escrow Agent shall deposit the Escrow Funds
into the registry of an appropriate court and request judicial determination of
the rights between the Principals, by interpleader or other appropriate action,
and the Principals hereby jointly and severally agree to indemnify and hold the
Escrow Agent harmless from and against any damages or losses in connection
therewith including, but not limited to attorneys' fees and court costs at all
trial and appellate levels. Upon termination of the duties of Escrow Agent as
set forth in subsection (a) or (b) of this Section, the Escrow Agent shall
deliver the Escrow Funds to the newly appointed escrow agent designated by the
Principals (or shall otherwise dispose of the Escrow Funds as instructed by the
Principals in writing), and the Escrow Agent shall not otherwise have the right
to withhold the Escrow Funds from the newly appointed escrow agent.
8. Escrow Agent Fees. The Escrow Agent shall be entitled to compensation
for services in accordance with the fee schedule attached hereto as Schedule A.
Without limiting the provisions of Schedule A, Escrow Agent shall be entitled to
reimbursement for all reasonable out-of-pocket expenses incurred by it. Such
expenses may include the compensation and expenses of the Escrow Agent's
counsel, including the allocated costs of internal counsel. Such expenses shall
include the cost of legal review of this Agreement, which fees shall be billed
at the closing of the funding of this Agreement. All such fees, costs, expenses
and attorneys' fees shall be paid directly from the Investment Income and, to
the extent the Investment Income is insufficient, shall be borne equally by IDEX
and Sellers. If the Escrow Agent's fees, costs, expenses or attorneys' fees
provided for herein are not promptly paid, Escrow Agent shall have the right to
reimbursement from the Escrow Funds.
9. Liability and Indemnification of Escrow Agent. IDEX and Sellers hereby
agree that the duties of the Escrow Agent are purely ministerial in nature and
shall be expressly limited to the safekeeping of the Escrow Funds and the
disposition of the same in accordance with the terms of this Agreement. IDEX and
Sellers hereby agree, jointly and severally, to indemnify the Escrow Agent and
hold it harmless from and against any and all claims, liabilities, damages,
costs, penalties, losses, actions, suits or proceedings at law or in equity, or
any other expenses, fees or charges of any character or nature, which the Escrow
Agent may incur or with which it may be threatened, directly or indirectly,
arising from or in any way connected with this Agreement or which may result
from the Escrow Agent's following of instructions from either or both of the
Principals in accordance with the terms and conditions of this Agreement, and in
connection therewith, to indemnify the Escrow Agent against any and all
expenses, including attorneys' fees (including the allocated cost of internal
counsel) and the cost of defending any action, suit or proceeding or resisting
any claim, whether or not litigation is instituted, but nothing herein shall be
construed to so indemnify the Escrow Agent to the extent that it is determined
that the Escrow Agent has acted in a grossly negligent or intentionally wrongful
manner. In no event shall the Escrow Agent be liable, directly or indirectly,
for any special or consequential damages, even if the Escrow Agent has been
advised of the possibility of such damages. The Escrow Agent shall have the
right, but not the obligation, to consult with counsel or other such
professionals of choice and shall not be liable for action taken or omitted to
be taken by Escrow Agent in accordance with the advice of such counsel or other
such professionals. The Escrow Agent may in all cases pay such compensation to
such counsel and
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shall be entitled to reimbursement as set forth in Section 8 for all such
compensation paid. The Escrow Agent may perform its duties through its
agents, attorneys, custodians or nominees. The provisions of this Section
shall survive the termination of this Agreement.
10. Notices. Unless otherwise provided in this Agreement, any agreement,
notice, request, instruction or other communication to be given hereunder by any
party to the other shall be in writing and (a) delivered personally (such
delivered notice to be effective on the date it is received), (b) mailed by
certified mail, postage prepaid (such mailed notice to be effective three (3)
business days after the date it is mailed), (c) deposited with a reputable
overnight courier service (such couriered notice to be effective one (1)
business day after the date it is received) or (d) sent by facsimile
transmission (such facsimile notice to be effective on the date that
confirmation of such facsimile transmission is received if received before 5:00
p.m. eastern time or on the next business day if received after 5:00 p.m.), with
a confirmation sent by way of one of the above methods, as follows:
If to IDEX, addressed to:
IDEX Corporation
630 Dundee Road, Suite 400
Northbrook, Illinois 60062
Attn: Frank J. Notaro, Esq.
Telephone: (847) 498-7070
Telecopier: (847) 498-9123
With a copy to:
Hodgson Russ LLP
Attn: Richard F. Campbell, Esq.
John P. Amershadian, Esq.
Brad A. Birmingham, Esq.
One M & T Plaza, Suite 2000
Buffalo, New York 14203
Telephone: (716) 856-4000
Telecopier: (716) 849-0349
If to Sellers or Sellers' Representative addressed to:
Jack K. Canine
______________________________
______________________________
______________________________
-7-
With a copy to:
Baker & Daniels LLP
Attn: J. Jeffrey Brown, Esq.
Kathryn E.Wiley
600 East 96th Street Suite 600
Indianapolis, IN 46240
Telephone: (317)569-9600
Telecopier: (317)569-4800
If to Escrow Agent addressed to:
Wells Fargo Bank, N.A.
Sixth and Marquette
MAC N9303-110
Minneapolis, MN 55479
Attn: Kimberly Burton
Telephone: (612) 667-3252
Telecopier: (612) 667-2160
Notwithstanding the foregoing, notices to the Escrow Agent shall be in writing
and shall not be deemed to be given until actually received by its trust
department employee or officer who administers this Escrow Agreement. Whenever
under the terms hereof the time for a giving notice or performing an act falls
upon a Saturday, Sunday legal federal holiday or legal holiday in the state of
the recipient, such time shall be extended to the next business day.
11. Cumulative Rights. No right, power or remedy conferred upon the Escrow
Agent by this Agreement is exclusive of any other right, power or remedy, but
each and every such right, power or remedy shall be cumulative and concurrent
and shall be in addition to any other right, power or remedy the Escrow Agent
may have under this Agreement or now or hereafter existing at law, in equity or
by statute, and the exercise of one right, power or remedy by the Escrow Agent
shall not be construed or considered as a waiver of any other right, power or
remedy.
12. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. The headings herein are for
convenience only and shall not be of substantive effect. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective legal representatives, heirs, successors and assignees. This
Agreement (and, as between the Principals, the Purchase Agreement) constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior negotiations, understandings and writings (or any part
thereof) whether oral or written between any of the parties relating to the
subject matter of this Agreement. In the event the Principals disagree as to
their respective rights and obligations under this Agreement and resolve the
disagreement through legal proceedings, the prevailing Principal shall be
entitled to receive from the other Principals its court costs and reasonable
legal and accounting fees incurred in connection with such legal proceedings.
-8-
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument. Any party may execute
this Agreement by facsimile signature and the other party shall be entitled to
rely on such facsimile signature as evidence that this Agreement has been duly
executed by such party. Any party executing this Agreement by facsimile
signature shall immediately forward to the other party an original signature
page by overnight mail.
14. Disagreements. If any disagreement or dispute arises between the
Principals concerning the meaning or validity of any provision hereunder or
concerning any other matter relating to this Agreement, the Escrow Agent:
(a) shall be under no obligation to act, except under process or order
of court, or until it has been adequately indemnified and held harmless to
its full satisfaction, and shall sustain no liability for its failure to
act pending such process, court order or indemnification; and
(b) may, in its sole and absolute discretion, interplead that portion
of Escrow Funds it then holds with any court of competent jurisdiction, and
name the Principals as parties in such interpleader action. Upon filing the
interpleader action, the Escrow Agent shall be relieved of all liability as
to the Escrow Funds and shall be entitled to recover from the Principals
its reasonable attorneys' fees and other costs incurred in commencing and
maintaining such action. In no event shall the institution of such
interpleader action impair the rights of the Escrow Agent described
elsewhere in this Agreement.
The Principals further agree to pursue any redress or recourse in connection
with such a disagreement or dispute, without making the Escrow Agent a party to
same to the extent possible.
15. Merger or Consolidation. Any corporation or association into which the
Escrow Agent may be converted or merged, or with which it may be consolidated,
or to which it may sell or transfer all or substantially all of its corporate
trust business and assets as a whole or substantially as a whole, or any
corporation or association resulting from any such conversion, sale, merger,
consolidation or transfer to which the Escrow Agent is a party, shall be and
become the successor Escrow Agent under this Agreement and shall have and
succeed to the rights, powers, duties, immunities and privileges as its
predecessor, without the execution or filing of any instrument or paper or the
performance any further act.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURES FOLLOW.]
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the date first above written.
IDEX CORPORATION
By:
------------------------------------
Name: Frank J. Notaro
Title: Vice President
SELLERS
----------------------------------------
Jack K. Canine, as Sellers'
Representative
WELLS FARGO BANK, N.A.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-10-
Schedule A
Escrow Agent Fees
See attached.
S-1
ESCROW FEE SCHEDULE
IDEX CORPORATION/BANJO CORPORATION
[THIS IS STILL BEING CONFIRMED.]
ACCEPTANCE FEE: $500.00
The Acceptance fee includes review of all related documents and accepting the
appointment of Escrow Agent on behalf of Wells Fargo Bank Minnesota, N.A. The
fee also includes setting up the required account(s) and accounting records,
document filing, and coordinating the receipt of funds for deposit to the Escrow
Account. The Acceptance Fee is due at time of funding.
ADMINISTRATION FEE: $1,500.00
The Administration Fee includes providing all routine and standard fiduciary
services of an Escrow Agent. The fee includes administering the escrow account,
performing investment transactions, processing cash transactions (including
wires and check processing), monitoring claim notices pursuant to the Agreement;
disbursing funds in accordance with the Agreement (note pricing considerations
below), and mailing trust account statements to applicable parties. The fee is
payable annually in advance at the time of funding (and is not pro-rated).
WELLS FARGO'S BID IS BASED ON THE FOLLOWING ASSUMPTIONS:
- Term of escrow account: 18 months;
- Number of escrow funds/accounts to be established: One (1);
- Number of deposits to escrow account: One (1);
- Funds to be invested in _________ Fund as indicated on Exhibit E;
- Tax reporting, if required, will be billed at $15.00 per report.
OUT-OF POCKET EXPENSES:
All out-of-pocket expenses will be billed in addition to the above, such as fees
for overnight delivery expenses, services of outside accounting firms, required
publication costs, and/or travel expenses of bank officer (if required) to
attend closing outside of Minneapolis/St. Paul, Minnesota area.
FEE SCHEDULE IS SUBJECT TO ANNUAL REVIEW AND ADJUSTMENT.
EXHIBIT A
IDEX Indemnification Notice
____________, _____
Wells Fargo Bank, N.A.
Sixth and Marquette
MAC N9303-110
Minneapolis, MN 55479
Ladies/Gentlemen:
Re: Escrow Agreement, dated as of October ____, 2006 (the "Escrow
Agreement"), by and among IDEX Corporation, Jack K. Canine,
as Sellers' Representative, and Wells Fargo Bank, N.A.,
as Escrow Agent
All capitalized terms used but not defined in this Notice shall
have the meanings given them in the Escrow Agreement.
Pursuant to Section 4(a) of the Escrow Agreement, IDEX in good
faith hereby notifies the Escrow Agent of a Loss in the amount of
$_______________ and requests delivery of $_______________ to IDEX for payment
pursuant to Section 1.3(e)(ii) of the Purchase Agreement or indemnification
pursuant to Article VI of the Purchase Agreement.
IDEX hereby certifies to the Escrow Agent that a copy of this
Notice has been sent to Sellers' Representative in accordance with Section 10 of
the Escrow Agreement.
IDEX CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Copy to: Sellers' Representative
Baker & Daniels LLP
EXHIBIT B
Sellers' Indemnification Objection Notice
____________, _____
Wells Fargo Bank, N.A.
Sixth and Marquette
MAC N9303-110
Minneapolis, MN 55479
Ladies/Gentlemen:
Re: Escrow Agreement, dated as of October ____, 2006 (the "Escrow
Agreement"), by and among IDEX Corporation, Jack K. Canine,
as Sellers' Representative, and Wells Fargo Bank, N.A.,
as Escrow Agent
All capitalized terms used but not defined in this Notice shall
have the meanings given them in the Escrow Agreement.
The undersigned hereby notifies the Escrow Agent that Sellers'
Representative, on behalf of Sellers, in good faith objects to delivery of
$_______________ to IDEX as requested by IDEX Corporation in the IDEX
Indemnification Notice dated _______________.
Sellers' Representative hereby certifies to the Escrow Agent that
a copy of this Notice has been sent to IDEX in accordance with Section 10 of the
Escrow Agreement.
----------------------------------------
Jack K. Canine, as Sellers'
Representative
Copy to: IDEX Corporation
Hodgson Russ LLP
EXHIBIT C
Sellers' Distribution Notice
____________, _____
Wells Fargo Bank MN,N.A.
Sixth and Marquette
MAC N9303-110
Minneapolis, MN 55479
Ladies/Gentlemen:
Re: Escrow Agreement, dated as of October ____, 2006 (the "Escrow
Agreement"), by and among IDEX Corporation, Jack K. Canine,
as Sellers' Representative, and Wells Fargo Bank, N.A.,
as Escrow Agent
All capitalized terms used but not defined in this Notice shall
have the meanings given them in the Escrow Agreement.
Pursuant to Section 4(d) of the Escrow Agreement, Sellers'
Representative in good faith hereby notifies the Escrow Agent that the amount of
$___________ is subject to claim for payment pursuant to Section 1.3(e)(ii) of
the Purchase Agreement or indemnification by IDEX pursuant to Article VI of the
Purchase Agreement and requests delivery of the balance of the Escrow Funds to
Sellers.
Sellers' Representative hereby certifies to the Escrow Agent that
a copy of this Notice has been sent to IDEX in accordance with Section 10 of the
Escrow Agreement.
----------------------------------------
Jack K. Canine, Sellers'
Representative
Copy to: IDEX Corporation
Hodgson Russ LLP
EXHIBIT D
IDEX Distribution Notice
___________________, _____
Wells Fargo Bank MN, N.A.
Sixth and Marquette
MAC N9303-110
Minneapolis, MN 55479
Ladies/Gentlemen:
Re: Escrow Agreement, dated as of October __, 2006 (the "Escrow
Agreement"), by and among IDEX Corporation, Jack K. Canine, as
Sellers' Representative, and Wells Fargo Bank, N.A., as Escrow
Agent
All capitalized terms used but not defined in this Notice shall have
the meanings given them in the Escrow Agreement.
Pursuant to Section 4(d) of the Escrow Agreement, IDEX in good faith
hereby notifies the Escrow Agent that the amount of $__________ is subject to
claim for payment pursuant to Section 1.3(e)(ii) of the Purchase Agreement or
indemnification by IDEX pursuant to Article VI of the Purchase Agreement and
acknowledges Sellers' entitlement to delivery of the balance of the Escrow
Funds.
IDEX hereby certifies to the Escrow Agent that a copy of this Notice
has been sent to Sellers' Representative in accordance with Section 10 of the
Escrow Agreement.
IDEX CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Copy to: Sellers' Representative
Baker & Daniels
EXHIBIT E
AGENCY AND CUSTODY ACCOUNT DIRECTION FOR CASH BALANCES
Direction to use Wells Fargo Advantage Funds for Cash Balances for the following
account(s):
Account Name: IDEX Corp/Banjo Corporation
Account Number(s): _________ and all subaccounts thereof
You are hereby directed to invest, as indicated below or as we shall direct
further from time to time, all cash in the Account in the following money market
portfolio of Wells Fargo Advantage Funds (the "Fund") or another permitted
investment of my choice (Check One):
______ Wells Fargo Advantage Funds, 100% Treasury Money Market Fund
______ Wells Fargo Advantage Funds, Government Money Market Fund
______ Wells Fargo Advantage Funds, Cash Investment Money Market Fund
______ Wells Fargo Advantage Funds, Prime Investment Money Market Fund
______ Wells Fargo Advantage Funds, Treasury Plus Money Market Fund
We acknowledge that we have received, at our request, and reviewed the Fund's
prospectus and have determined that the Fund is an appropriate investment for
the Account. Each Fund's prospectus can be downloaded from the Wells Fargo
website at:
Prospectus: http://www.wellsfargoadvantagefunds.com/wfweb/wf/funds/
reports_serv.jsp
Rates: httpy/www.wellsfargoadvantagefunds.com/wfweb/wf/funds/performance/
dailyquarterly_serv.jsp
We understand from reading the Fund's prospectus that Wells Fargo Funds
Management, LLC, ("Wells Fargo Bank"), a wholly-owned subsidiary of Wells Fargo
& Company, provides investment advisory and other administrative services for
the Wells Fargo Advantage Funds. Other affiliates of Wells Fargo & Company
provide sub-advisory and other services for the Funds. Boston Financial Data
Services serves as transfer agent for the Funds. The Funds are distributed by
Stephens Inc., Member NYSE/SIPC. Wells Fargo & Company and its affiliates are
not affiliated with Stephens Inc. We also understand that Wells Fargo & Company
will be paid, and its bank affiliates may be paid, fees for services to the
Funds and that those fees may include Processing Organization fees as described
in the Fund's prospectus.
We understand that you will not exclude amounts invested in the Fund from
Account assets subject to fees under the Account agreement between us.
We understand that investments in the Fund are not obligations of, or endorsed
or guaranteed by, Wells Fargo Bank or its affiliates and are not insured by the
Federal Deposit Insurance Corporation.
-2-
We acknowledge that we have full power to direct investments of the Account.
We understand that we may change this direction at any time and that it shall
continue in effect until revoked or modified by both of us by written notice to
you.
We understand that if we choose to communicate this investment direction solely
via facsimile, then the investment direction will be understood to be
enforceable and binding.
IDEX CORPORATION
By:
------------------------------------
Name: Frank J. Notaro
Title: Vice President
----------------------------------------
Jack K. Canine, Sellers' Representative
-3-
EXHIBIT F
[Attach schedule of Sellers' Interests In Banjo Corporation]
EXHIBIT 7.1(I)
__________________, 2006
IDEX Corporation
630 Dundee Road, Suite 400
Northbrook, IL 60062
Re: Stock Purchase Agreement, dated as of September 8, 2006
Ladies and Gentlemen:
We have acted as counsel to Banjo Corporation, an Indiana corporation (the
"Company"), and its shareholders (the "Sellers"), in connection with the Stock
Purchase Agreement, dated as of September 8, 2006 (the "Agreement"), among the
Sellers, the Company and you, as Buyer, relating to the purchase by Buyer of all
of the outstanding shares of Common Stock of The Company. This opinion is being
delivered to you at the request of Sellers and the Company pursuant to Section
7.l(i) of the Agreement. Capitalized terms used herein but not otherwise
defined herein have the meanings given to them in the Agreement.
In connection with this opinion, we have examined the Agreement and the Escrow
Agreement as referred to therein and such corporate records, certificates and
other documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion. Upon the basis of such
examination, we advise you that, in our opinion:
(1) The Company is a corporation duly organized and validly existing
under the laws of the State of Indiana, and has all requisite power and
authority to own, lease and operate its properties and assets and to carry
on its business as now being conducted, to execute and deliver the
Agreement, to perform its obligations thereunder and to consummate the
transactions contemplated thereby.
(2) The execution and delivery of the Agreement by the Company, the
performance of the Agreement by the Company and the consummation of the
transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of the Company and no other
proceeding on the part of the Company is necessary to authorize the
Agreement or to consummate the transactions contemplated thereby.
(3) The execution and delivery of the Agreement by the Company do not,
and the performance of the Agreement by the Company and the consummation of
the transactions contemplated thereby will not, (a) (i) conflict with or
violate the articles of incorporation or bylaws, in each case as amended or
restated, of the Company, (b) conflict with or violate any United States
federal, state, local or foreign law, statute, ordinance, rule, regulation,
order, judgment or decree applicable to the Company or by or to which any
of its properties or assets is bound or subject or (iii) to our knowledge,
result
in any breach of, or constitute a default (or an event that with notice or
lapse of time or both would constitute a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or
require payment under, or result in the creation of any Lien on any of the
Shares pursuant to, any Contract to which the Company is a party or by
which any of its properties or assets is bound or (b) require the Company
to obtain any consent, approval, authorization or permit of, or to make any
filing with or notification to, any Governmental Entity or, to our
knowledge, any third party, in each case which has not been obtained or
made.
(4) The Agreement has been duly executed and delivered by the Company
and constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles; provided, however, that we express
no opinion as to the enforceability of Section 9.12 of the Agreement.
(5) Each of the Agreement and the Escrow Agreement has been duly
executed and delivered by each Seller that is a party thereto and
constitutes the valid and binding obligation of each Seller, enforceable
against such Seller in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles; provided, however, that we express no
opinion as to the enforceability of Section 9.12 of the Agreement.
(6) The authorized capital stock of the Company consists of 50,000
shares of Common Stock. Based solely on the stock transfer records of the
Company, 20,844 shares of Common Stock are issued and outstanding owned of
record solely by the Sellers in the respective amounts set forth in Section
2.4(a) of the Disclosure Schedule. To our knowledge and except as set forth
in Section 2.4(a) of the Disclosure Schedule, no shares of Common Stock are
reserved for future issuance pursuant to outstanding stock options,
warrants, convertible securities or other agreements or commitments of any
character relating to the issued or unissued capital stock or other
securities of the Company.
We also confirm to you that, to our knowledge, except as set forth in Section
2.14 of the Disclosure Schedule, (i) there is no claim, action, suit, proceeding
or investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), by or before any Governmental Entity
pending or, to the knowledge of Sellers, threatened against the Company or its
assets or properties, and (ii) the Company is not a party or subject to or in
default under any judgment, order, decree or settlement agreement that imposes
restrictions on the Company with respect to its business operations.
With your approval, for purposes of this opinion we have relied as to certain
matters on information obtained from public officials, officers of the Company
and other sources believed by us to be responsible, and we have assumed that
each of the Agreement and the Escrow Agreement is a valid and binding obligation
of each party thereto other than the Company and
Banjo - Opinion of Seller_s Counsel (September 2006)(5)
-2-
the Sellers and that the signatures on all documents examined by us are genuine,
assumptions which we have not independently verified.
We express no opinion herein as to any matters governed by any laws other than
the federal laws of the United States, the laws of the State of Indiana and the
laws of the State of New York.
This opinion is furnished to you solely for your benefit in connection with the
transactions contemplated by the Agreement and may not, without our prior
written consent, be furnished to or relied upon for any purpose by any other
person.
Very truly yours,
- -------------------------------------
Banjo - Opinion of Seller_s Counsel (September 2006)(5)
-3-
