SALE AND PURCHASE AGREEMENT
BY AND AMONG
SIGMA-XXXXXXX CORPORATION
SIGMA-XXXXXXX CO.
SIGMA-XXXXXXX CANADA LTD.
SIGMA-XXXXXXX COMPANY LTD.
SIGMA-XXXXXXX CHEMIE GmbH
(SELLERS)
AND
XXXXXX INDUSTRIES, INC.
CBL ACQUISITION CORP
XXXXXX TECHNOLOGIES COMPANY
(BUYER)
RELATING TO
THE B-LINE BUSINESS
March 27, 2000
TABLE OF CONTENTS
ARTICLE ONE: TRANSACTIONS TO TAKE PLACE AT CLOSING 2
1.1 Purchase and Sale of Stock and Assets 2
1.2 Assumed Liabilities and Obligations 4
1.3 Excluded Assets. 5
ARTICLE TWO: PURCHASE PRICE AND ALLOCATION 6
2.1 Purchase Price and Preliminary Purchase Price 6
2.2 Adjusted Purchase Price 6
2.3 Adjusted Consolidated Valuation. 7
2.3.1 Sellers' Statement 7
2.3.2 Buyer's Review 7
2.3.3 Sellers' Review 8
2.3.4 Conference 8
2.3.5 Arbitrator 8
2.3.6 Final Amount 10
2.4 Settlement of the Adjusted Purchase Price 10
2.5 Section 338(h)(10) and Allocation 11
ARTICLE THREE: CONDITIONS TO CLOSING 11
3.1 Conditions Precedent to Obligations of Sellers 11
3.1.1 Representations and Warranties of Buyer 12
3.1.2 Representations and Warranties of Sellers 12
3.1.2 Delivery of Closing Documents 12
3.1.4 Performance of Agreement 12
3.1.4 Purchase Price 13
3.1.5 No Governmental Orders, etc. 13
3.1.6 Licenses and Permits. 13
3.1.7 Xxxx-Xxxxx-Xxxxxx 13
3.2 Conditions Precedent to Obligations of Buyer 13
3.2.1 Sellers' Representations and Warranties 14
3.2.2 Delivery of Closing Documents 14
3.2.3 Performance of Agreement. 14
3.2.4 No Governmental Orders, etc. 14
3.2.5 Permits. 15
3.2.6 Xxxx-Xxxxx-Xxxxxx. 15
3.2.7 Third-Party Consents 15
3.2.8 Leased Properties 15
ARTICLE FOUR: CLOSING 15
4.1 The Closing 16
4.2 Sellers' Obligations at Closing 16
4.3 Buyer's Obligations at Closing 17
ARTICLE FIVE: REPRESENTATIONS AND WARRANTIES 18
5.1 Materiality and Sellers' Knowledge 18
5.2 Representations and Warranties by Sellers 18
5.2.1 Corporate Authority, Non-contravention and
Ownership. 19
5.2.2 Capital Stock. 21
5.2.3 Financial Data 22
5.2.4 Absence of Certain Changes 23
5.2.5 Compliance with Law and Permits 26
5.2.6 Litigation, Product Claims and Related
Matters 27
5.2.7 Title to Personal Property - Owned. 29
5.2.8 Personal Property - Leased 29
5.2.9 Real Property - Owned 30
5.2.10 Real Property - Leased. 32
5.2.11 Patents, Trademarks and Other Intellectual
Property 33
5.2.12 Taxes. 35
5.2.13 Contracts 37
5.2.14 Labor Relations. 39
5.2.15 Compliance with ERISA 39
5.2.16 Accounts Receivable 40
5.2.17 Inventory 41
5.2.18 Environmental Matters 41
5.2.19 Transactions with Affiliated Persons 43
5.2.20 Stock Record and Minute Books 44
5.2.21 Sufficiency of Assets 44
5.2.22 No Undisclosed Liabilities 44
5.2.23 No Broker. 45
5.2.24 Scope of Representation 45
5.2.25 Insurance Policies 46
5.3 Representations and Warranties of Buyer 46
5.3.1 Corporate Authority and Non-Contravention 46
5.3.2 Litigation Concerning Agreement 47
5.3.3 No Broker. 48
5.3.4 Financing. 48
5.3.5 Buyer's Knowledge. 48
ARTICLE SIX: PARTICULAR COVENANTS OF SELLER AND BUYER 49
6.1 Covenants of Sellers 49
6.1.1 Interim Operation of the B-Line Business 50
6.1.2 Access to Records Prior to Closing 51
6.1.3 Notices and Consents 51
6.1.4 Exclusivity 52
6.1.5 Covenant Not to Compete 52
6.1.6 Non-Solicitation 53
6.1.7 Transition 53
6.1.8 Intercompany Accounts and Agreements 53
6.1.9 Further Assurances 54
6.2 Covenants of Buyer 54
6.2.1 Further Assurances 54
6.2.2 No Reliance 54
6.3 Mutual Covenants of the Parties 55
6.3.1 Best Efforts and Cooperation 55
6.3.2 Communications 55
6.3.3 Access to Records and Employees Subsequent
to Closing. 56
6.3.4 Failure of Conditions; Waiver 57
6.3.5 Insurance 58
6.3.6 Amounts Received for Accounts Receivable 58
6.3.7 Xxxx-Xxxxx-Xxxxxx Act Approvals. 58
6.3.8 Tax Matters. 59
ARTICLE SEVEN: EMPLOYEES AND EMPLOYEE MATTERS 62
7.1 Treatment of Employees-General 62
7.2 Welfare Benefits 63
7.3 Buyer's Assumption of Liability 65
7.4 Plant Closing Law 66
7.5 Security Value Plan 66
7.6 401(k) Plan 66
ARTICLE EIGHT: INDEMNIFICATION 67
8.1 Indemnification by Buyer 67
8.2 Indemnification by Sellers 68
8.3 Indemnification Procedures 70
8.4 Computation of Claims 71
8.5 Term of Indemnification 71
8.6 Sole Basis For Claims 72
ARTICLE NINE: MISCELLANEOUS 72
9.1 Expenses. 72
9.2 Scope of Liability and Available Remedies. 72
9.2.1 Joint and Several Liability 72
9.2.2 Joint and Several Liability 73
9.2.3 Certain Damages Waived 73
9.3 Arbitration 73
9.3.1 Conference 73
9.3.2 General 74
9.3.3 Appointment of Tribunal 74
9.3.4 Final and Binding 74
9.3.5 Award. 75
9.3.6 Cost of Proceedings 75
9.3.7 Agents 75
9.4 Notices 76
9.5 Captions 77
9.6 Successors and Assigns; Other Parties 77
9.7 Entire Agreement 78
9.8 Construction 78
9.9 Time of Essence 79
9.10 Termination 79
9.11 Counterparts 80
9.13 Modification; Waiver 80
9.14 Severability 81
GLOSSARY INDEX OF DEFINED TERMS 83
LIST OF SCHEDULES 85
SALE AND PURCHASE AGREEMENT
THIS SALE AND PURCHASE AGREEMENT ("Agreement") is made
and entered into this 27th day of March, 2000, by and among Sigma-
Xxxxxxx Corporation, a Delaware corporation ("SIAL" ), Sigma-
Xxxxxxx Co., an Illinois corporation ("SAC"), Sigma-Xxxxxxx
Canada Ltd., a corporation organized under the laws of Canada
("Sigma Canada"), Sigma-Xxxxxxx Company Ltd., a corporation
organized under the laws of the United Kingdom ("Sigma UK" ), and
Sigma-Xxxxxxx Chemie GmbH, a corporation organized under the laws
of Germany ("Sigma Germany" and together with SIAL, SAC, Sigma
Canada and Sigma UK "Sellers"), and Xxxxxx Industries, Inc. an
Ohio corporation ("Xxxxxx"), CBL Acquisition Corp., a Delaware
corporation ("CBL") and Xxxxxx Technologies Company, a Delaware
Corporation ("CTC") (Xxxxxx, CBL, CTC and any other affiliate(s)
of Xxxxxx thereof to be designated, collectively "Buyer"). Each
of Sellers and Buyer are referred to hereinafter individually as
a "Party" and collectively as the "Parties."
WHEREAS, Sellers, among other things, are currently and
have been engaged in the business of the design, manufacture and
sale of metal components for strut, cable tray, pipe support and
telecommunications systems and electrical enclosures (which
business is referred to herein as the "B-Line Business"),
directly and/or indirectly through certain subsidiaries;
WHEREAS, Buyer desires to purchase from Sellers, and
Sellers desire to sell to Buyer, all of the stock of SIAL's
subsidiaries B-Line and B-Line Manufacturing, which are engaged
entirely in the B-Line Business, and the other assets relating to
the B-Line Business and to assume certain liabilities relating to
the B-Line Business on the following terms and conditions;
NOW, THEREFORE, in consideration of the premises and
the mutual promises hereinafter expressed, it is agreed as
follows:
ARTICLE ONE: TRANSACTIONS TO TAKE PLACE AT CLOSING
1.1 Purchase and Sale of Stock and Assets. Subject to the
terms and conditions hereof, at Closing (as herein defined),
effective as of the Effective Time (as herein defined), in
exchange for the Adjusted Purchase Price (as herein defined):
(a) SIAL shall sell and deliver to the Buyer and the
Buyer shall purchase and accept from SIAL all of its right, title
and interest in and to all of the issued and outstanding capital
stock (the "B-Line Stock") of B-Line Systems, Inc., an Illinois
corporation ("B-Line"); and
(b) SAC shall sell to the Buyer and the Buyer shall
purchase from SAC all of SAC's right, title and interest to all
of the issued and outstanding capital stock (the "Manufacturing
Stock") of B-Line Systems Manufacturing, Inc., a Delaware
corporation ("B-Line Manufacturing"); and
(c) SAC shall sell to the Buyer and the Buyer shall
purchase from SAC all of SAC's right, title and interest to all
of its assets used exclusively in connection with the B-Line
Business, including without limitation those assets described on
Schedule 1.1(c) hereto (the "SAC B-Line Business Assets"); and
(d) Sigma Canada shall sell to the Buyer and the Buyer
shall purchase from Sigma Canada all of Sigma Canada's right,
title and interest to all of its assets used exclusively in
connection with the B-Line Business, which consist of inventory,
accounts receivable, cantilever racking and two Dell computers
(the "Canada B-Line Business Assets"); and
(e) Sigma UK shall sell to the Buyer and the Buyer
shall purchase from Sigma UK all of Sigma UK's right, title and
interest to all of its assets used exclusively in connection with
the B-Line Business, which consist of inventory, accounts
receivable and three motor vehicles (the "UK B-Line Business
Assets"); and
(f) Sigma Germany shall sell to the Buyer and the
Buyer shall purchase from Sigma Germany all of Sigma Germany's
right, title and interest to all of its assets used exclusively
in connection with the B-Line Business, which consist of
inventory and accounts receivable (the "Germany B-Line Business
Assets").
(g) Sellers shall sell to CTC and CTC shall purchase
from Sellers all of Sellers' right, title and interest to all of
their Intangibles (as defined below) used exclusively in
connection with the B-Line Business.
No later than ten days prior to Closing, Xxxxxx on behalf of
Buyer shall specify in writing to SIAL on behalf of Sellers
whether the transfers specified in clauses (a) through (f) of
this Section 1.1 shall be made to CBL or any other designated
affiliate(s) of Xxxxxx (in which case such other affiliate(s)
shall become parties to and bound by this Agreement and shall be
deemed to be included within the definition of Buyer hereunder).
Together, the B-Line Stock, the Manufacturing Stock, the SAC B-
Line Business Assets, the Canada B-Line Business Assets, the UK B-
Line Business Assets and the Germany B-Line Assets are the
"Assets." Notwithstanding the foregoing, the assets identified
in Section 1.3 shall not be transferred and are hereinafter
referred to as the "Excluded Assets."
1.2 Assumed Liabilities and Obligations. On the terms
and subject to the conditions hereof, at Closing, effective as of
the Effective Time, Buyer shall assume, and thereafter shall pay
and fully satisfy all liabilities and obligations (including,
without limitation, any contract, obligation or liability
described more particularly in Sections 5.2.13, 7.2 and 7.3 and
any liability with respect to products manufactured or sold by
the B-Line Business prior to the Effective Time, and any
attorneys' and experts' fees and expenses related thereto)
arising out of or resulting from Sellers' ownership (directly
and/or through subsidiaries) or operation of the B-Line Business
prior to the Effective Time and Buyer's ownership or operation of
the B-Line Business after the Effective Time (the "Assumed
Liabilities"), pursuant to a general assignment and assumption of
liabilities substantially in the form of Exhibit A hereto.
Notwithstanding the foregoing, Assumed Liabilities will not
include the following (collectively, the "Excluded Liabilities"):
(a) any Taxes as a result of the Section
338(h)(10) Election which are assumed by Sellers pursuant to the
last sentence of Section 6.3.8(h) of this Agreement;
(b) any Income Taxes (as defined below) arising
out of the operation of the B-Line Business through the Effective
Time;
(c) any intercompany accounts payable of the B-
Line Business existing at any time prior to Closing (all of which
shall be cancelled prior to Closing);
(d) any liability for product warranty or product
liability claims asserted, or to Sellers' knowledge threatened,
prior to the Effective Time with respect to products sold by the
B-Line Business prior to the Effective Time ("Pre-Closing Product
Claims" ) in excess of the reserve or accrual therefor reflected
on the Adjusted Consolidated Valuation;
(e) any workers' compensation liability related
to Occurrences (hereinafter defined) prior to the Effective Time,
except to the extent accrued in the Adjusted Consolidated
Valuation;
(f) any indebtedness for borrowed money for which
any of the Operating Companies (as hereinafter defined) is
liable, contingently or otherwise, as obligor, guarantor, or
otherwise, or in respect of which any of the Operating Companies
otherwise assures a creditor against loss, on or before the
Effective Time ("Long Term Debt" ) except as set forth on
Schedule 1.2(f) hereto; or
(g) any liabilities or obligations for which any
of Sellers is responsible under any other provision hereof (and
without waiver of any obligations of Sellers under the Transition
Services Agreement), including without limitation any obligations
and liabilities retained or assumed by Sellers pursuant to
Articles Seven, Eight and Nine, subject in each case to any
conditions or limitations applicable thereto.
1.3 Excluded Assets. The Parties agree, any provision
hereof to the contrary notwithstanding, that the Assets shall not
include any of the following assets, and SIAL shall have the
right, at or prior to the Closing, to have: (a) all cash in the
Business, (b) any Income Tax (hereinafter defined) accounts,
including deferred tax assets and any refunds relating to Income
Tax receivables of the B-Line Business relating to periods before
the Closing, which assets shall be distributed to SIAL or
retained by any of the Sellers, (c) the shares of Sigma-Xxxxxxx
Holding Ltd. (UK), B-Line Systems Limited (UK), Xxxxx X. Xxxxx
Co., Inc. or KL Acquisition Corp. (or any other, dormant legal
entities affiliated with any of Sellers), or (d) any intercompany
accounts receivable of the B-Line Business existing at any time
prior to Closing between the B-Line Business and any of the
Sellers.
ARTICLE TWO: PURCHASE PRICE AND ALLOCATION
2.1 Purchase Price and Preliminary Purchase Price.
The purchase price for the Assets shall be the Adjusted Purchase
Price. At the Closing, Buyer shall pay to SIAL on behalf of all
Sellers $425,000,000 (the "Preliminary Purchase Price").
Following Closing, the Adjusted Purchase Price shall be
determined and paid as provided in Sections 2.2 and 2.3.
2.2 Adjusted Purchase Price. The adjusted purchase
price to be determined and settled as provided herein (the
"Adjusted Purchase Price") shall be equal to the Preliminary
Purchase Price plus or minus the amount, if any, by which the
Adjusted Consolidated Valuation is greater or less than the
Preliminary Consolidated Valuation. For purposes of this
calculation, "Preliminary Consolidated Valuation" shall be
$138,640,000 (consisting of the consolidated net book value of
the Assets (other than the B-Line Stock and the Manufacturing
Stock), the Assumed Liabilities and the assets and liabilities of
B-Line and B-Line Manufacturing as derived from the Audited
Financial Statements (hereinafter defined) in accordance with
Section 5.2.3 hereof, all as of December 31, 1999 as adjusted as
provided in Schedule 2.2(a), as shown on Schedule 2.2(b) hereto.
"Adjusted Consolidated Valuation" shall equal the consolidated
net book value of the Assets (other than the B-Line Stock and the
Manufacturing Stock), the Assumed Liabilities and the assets and
liabilities of B-Line and B-Line Manufacturing, all as of the
Closing Date in accordance with Section 2.3.1 hereof.
2.3 Adjusted Consolidated Valuation.
2.3.1 Sellers' Statement. Sellers shall
prepare and deliver to Buyer within 60 days after the Closing
Date a statement of the Adjusted Consolidated Valuation. Such
statement shall be prepared using the same accounting principles
and practices that were used in preparing the Audited Financial
Statements and the Preliminary Consolidated Valuation and shall
be adjusted in accordance with Schedule 2.2(a).
2.3.2 Buyer's Review. In the event that
Buyer, in good faith, disagrees with any determinations made by
Sellers and reflected in the statement of Adjusted Consolidated
Valuation delivered pursuant to Section 2.3.1, and such
disagreement in Buyer's view affects the Adjusted Purchase Price,
each specific item of disagreement and proposed adjustment shall
be set forth in writing and delivered to SIAL on behalf of all
Sellers within 60 days from receipt of the statement of Adjusted
Consolidated Valuation ("Buyer's Letter" ). If Buyer does not
submit Buyer's Letter within such 60-day period, Sellers'
statement of the Adjusted Consolidated Valuation delivered
pursuant to Section 2.3.1 will become final.
2.3.3 Sellers' Review. Sellers will then have
30 days following receipt of the Buyer's Letter, if any, to
review Buyer's proposed adjustments. Within the 30-day period,
Sellers shall notify Xxxxxx on behalf of Buyer in writing of
Sellers' position with respect to each of Buyer's proposed
adjustments ("Sellers' Letter" ). If Sellers do not submit
Sellers' Letter within such 30-day period, the Sellers' statement
of Adjusted Consolidated Valuation delivered pursuant to Section
2.3.1 as adjusted by Buyer's Letter will become final.
2.3.4 Conference. Within 30 days after the
response from Sellers pursuant to Section 2.3.3 above, the
Parties shall confer and endeavor to mutually resolve the
adjustments, if any, which are in dispute. If Sellers and Buyer
do not agree upon an Adjusted Purchase Price within such 30-day
period (the end of such 30 day period being hereinafter referred
to as the "Arbitration Deadline"), such dispute shall be resolved
in accordance with the procedures set out in Section 2.3.5 below.
2.3.5 Arbitrator. If the Parties cannot
mutually resolve any disputes involving Buyer's proposed
adjustments by the Arbitration Deadline, the Parties shall
jointly engage the St. Louis office of the accounting firm of
PricewaterhouseCoopers (the "Accounting Arbitrator" ), to act as
arbitrator. The Accounting Arbitrator shall be furnished with a
copy of the Agreement, the Preliminary Consolidated Valuation,
Sellers' statement of Adjusted Consolidated Valuation delivered
pursuant to Section 2.3.1, Buyer's Letter, Sellers' Letter, the
Buyer's proposed treatment of the items in dispute (the "Buyer's
Proposal", which may but need not be the same as set out in the
Buyer's Letter), the Seller's proposed treatment of the items in
dispute (the "Sellers' Proposal", which may but need not be the
same as set out in the Sellers' Letter), and any other relevant
correspondence between the Parties. The Accounting Arbitrator
must, within 30 days from the date such documents are furnished,
complete its review and render a written report setting forth its
conclusion with respect to each of Buyer's proposed adjustments
which were unresolved between the Parties. The Accounting
Arbitrator shall be granted access to the books and records of
the B-Line Business as well as the working papers or other
documents which either Party or its accountants may have which
relate to the Preliminary Consolidated Valuation and any other
documents or information which the Accounting Arbitrator may deem
appropriate. The Accounting Arbitrator's review shall be limited
to the purpose of determining whether, in respect of each
disputed adjustment, the Buyer's Proposal or the Sellers'
Proposal is more nearly in accordance with the terms of this
Agreement. The Parties shall have the right to submit written
materials to the Accounting Arbitrator in accordance with
procedures to be set forth in the engagement letter between the
Parties and the Accounting Arbitrator. In arriving at its
determination, the Accounting Arbitrator must select for each
adjustment either the Buyer's Proposal or the Sellers' Proposal
with respect to each disputed adjustment. The decision by the
Accounting Arbitrator shall be in writing and delivered to both
Buyer and Sellers. The Parties agree that the Accounting
Arbitrator is the exclusive person to make all interpretations
necessary (including interpretations or constructions of this
Agreement) to support its determinations. The Accounting
Arbitrator's decision shall be conclusive and binding upon the
Parties and may be entered and enforced in any court of competent
jurisdiction. The Parties agree to submit to the jurisdiction of
any such court for the enforcement of such award or decision.
Buyer on one hand and Sellers on the other hand shall each pay
50% of the fees and expenses of the Accounting Arbitrator.
2.3.6 Final Amount. Sellers' statement of
Adjusted Consolidated Valuation delivered pursuant to Section
2.3.1 will be modified by any adjustments proposed by Buyer to
which Sellers did not object in Sellers' Letter, any other
adjustments agreed by the Parties pursuant to Section 2.3.4 and
by the determination of the Accounting Arbitrator pursuant to
Section 2.3.5 and will become the final determination of the
Adjusted Consolidated Valuation.
2.4 Settlement of the Adjusted Purchase Price.
Settlement of the Adjusted Purchase Price ("Settlement") shall
occur within five (5) business days after the determination of
the Adjusted Consolidated Valuation becomes final, whether by
expiration of the time period within which Buyer may object,
agreement of the Parties or issuance of a determination by the
Accounting Arbitrator. On Settlement, the difference between the
Preliminary Purchase Price and the Adjusted Purchase Price, plus
accrued interest on such difference from the Closing Date to (but
not including) the date of payment at a rate per annum (on the
basis of a 365-day year) equal to the sum of the Federal Funds
rate, being the offered rate therefor in the "Money Rates" table
of The Wall Street Journal, published on the Closing Date plus 50
basis points , shall be paid by the appropriate Party to the
other Party. Such payment shall be by wire transfer of
immediately available funds to an account specified by the
receiving Party.
2.5 Section 338(h)(10) and Allocation.
(a) Sellers and Buyer shall timely file a joint
election pursuant to Section 338(h)(10) (a "Section 338(h)(10)
Election") of the Internal Revenue Code of 1986, as amended (the
"Code") (and any comparable election under state, local, or
foreign law) with respect to the sale of the B-Line Stock and the
Manufacturing Stock (together, the "Shares" ) and shall timely
file such forms and take such other actions as are necessary to
effectuate such election in accordance with said Section
338(h)(10).
(b) Prior to Closing, SIAL and Buyer shall
negotiate in good faith an allocation of the Preliminary Purchase
Price among the assets of the B-Line Business in accordance with
Sections 1060 and 338 of the Code. Within 30 days following the
Settlement, SIAL and Buyer shall negotiate in good faith an
allocation of any difference resulting from the Adjusted Purchase
Price among the assets of the B-Line Business in accordance with
Sections 1060 and 338 of the Code. If SIAL and Buyer are not
able to agree, the allocated amounts shall be determined in
accordance with the provisions set out in Section 9.3. The
Parties will prepare and file their respective tax returns and
all other required filings based on such allocation and shall
take no positions contrary thereto.
ARTICLE THREE: CONDITIONS TO CLOSING
3.1 Conditions Precedent to Obligations of Sellers.
The obligations of Sellers to consummate the transactions
contemplated by this Agreement shall be subject to the
satisfaction at or prior to Closing of each of the following
conditions (any one or more of which may be waived in whole or in
part by Sellers):
3.1.1 Representations and Warranties of Buyer.
The representations and warranties made by Buyer hereunder shall
be true and correct in all material respects at the date hereof
and, except for changes expressly contemplated by this Agreement,
at Closing as though such representations and warranties had been
made at Closing.
3.1.2 Representations and Warranties of
Sellers. The representations and warranties made by Sellers
hereunder shall be true and correct in all material respects at
Closing, provided that this condition 3.1.2 shall not apply to
any breach of such representations and warranties which results
from either (a) changes expressly contemplated by this Agreement
or (b) any breach by Sellers of their covenants and obligations
hereunder.
3.1.3 Delivery of Closing Documents. Buyer
shall have delivered to or caused to be delivered to Sellers the
documents which Buyer is required to deliver to Sellers at
Closing pursuant to this Agreement in form and substance
reasonably satisfactory to Sellers.
3.1.4 Performance of Agreement. Buyer shall
have duly performed in all material respects all agreements and
covenants required to be performed by Buyer at or prior to
Closing pursuant to this Agreement.
3.1.4 Purchase Price. There shall have been
delivered to SIAL by Buyer payment of the Preliminary Purchase
Price as provided in Section 4.3(a).
3.1.5 No Governmental Orders, etc. No
statute, rule, regulation or order of any court or Authority (as
hereinafter defined) shall have been entered into after the date
hereof which restrains or prohibits or would cause the rescission
after Closing of the transactions contemplated hereby or which
would limit or adversely affect the ability of Sellers to sell
the B-Line Business, and no suit, action, proceeding or
investigation by any Authority or any other party shall be
pending which seeks a material amount of damages against Sellers
or an affiliate of Sellers by reason of the consummation of the
transactions contemplated by this Agreement and the Ancillary
Agreements.
3.1.6 Licenses and Permits. All governmental
licenses and permits, the granting of which is necessary for the
consummation of the transactions contemplated hereby shall have
been obtained.
3.1.7 Xxxx-Xxxxx-Xxxxxx. All filing and
waiting period requirements of the HSR Act (as defined below) and
any other applicable law relating to consummation of the
transactions provided for herein shall have been duly complied
with.
3.2 Conditions Precedent to Obligations of Buyer. The
obligations of Buyer to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction at or
prior to Closing of each of the following conditions (any one or
more of which may be waived in whole or in part by Buyer):
3.2.1 Sellers' Representations and Warranties.
The representations and warranties made by Sellers hereunder
shall be true and correct in all material respects at the date
hereof and at Closing as though such representations and
warranties had been made at both the date hereof and the Closing
Date, except for changes (a) expressly contemplated by or
permitted under this Agreement (including without limitation as
permitted by the terms of or consented to or approved by Buyer
pursuant to Section 6.1.1), or (b) as may result from or arise
out of the unreasonable failure or refusal of Buyer to consent to
or approve an action proposed by Sellers pursuant to
Section 6.1.1.
3.2.2 Delivery of Closing Documents. Sellers
shall have delivered or caused to be delivered to Buyer the
documents which Sellers are required to deliver to Buyer at
Closing pursuant to this Agreement in form and substance
reasonably satisfactory to Buyer.
3.2.3 Performance of Agreement. Sellers shall
have duly performed or caused to be performed in all material
respects all agreements and covenants required to be performed by
Sellers at or prior to Closing pursuant to this Agreement.
3.2.4 No Governmental Orders, etc. No
statute, rule, regulation or order of any court or Authority
shall have been entered into after the date hereof which
restrains or prohibits or would cause the rescission after
Closing of the transactions contemplated hereby or which would
limit or adversely affect the ability of Buyer to acquire the B-
Line Business, and no suit, action, proceeding or investigation
by any Authority or any other party shall be pending which seeks
a material amount of damages against Buyer or an affiliate of
Buyer by reason of the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements.
3.2.5 Permits. All Permits (as defined below)
necessary for the consummation of the transactions contemplated
hereby, or for preventing the termination of any right, privilege
or license relating to the B-Line Business which is material to
it, upon the consummation of the transactions contemplated
hereby, shall have been obtained prior to, and maintained
through, Closing, and are transferable to Buyer.
3.2.6 Xxxx-Xxxxx-Xxxxxx. All filing and
waiting period requirements of the HSR Act and any other
applicable Law (defined below) or Authority (defined below)
relating to consummation of the transactions provided for herein
shall have been duly complied with.
3.2.7 Third-Party Consents. All notices to
and consents, authorizations and approvals by third parties
specified in Section 6.1.3 shall have been procured by Sellers.
3.2.8 Leased Properties. Assignments to Buyer
in form and substance reasonably satisfactory to Buyer shall have
been procured by Sellers, along with any required consents
thereto, from the respective lessors of the real properties
identified in Schedule 3.2.8.
ARTICLE FOUR: CLOSING
4.1 The Closing. The consummation of the sale and
purchase of the Assets as contemplated by this Agreement
("Closing") shall take place at the offices of Xxxxx Xxxx LLP, in
St. Louis, Missouri, on May 1, 2000, at 9:00 A.M. (Central time),
or, if any of the conditions to Closing are not satisfied or
waived as of that date and time, on the first business day of the
month following the month in which all such conditions are
satisfied or waived at 9:00 A.M., unless a different date or time
for Closing is agreed upon by the Parties (the date of Closing
ultimately determined in accordance with this paragraph is
referred to herein as the "Closing Date"). The effective time of
the Closing (the "Effective Time") is midnight of the day
immediately preceding the Closing Date.
4.2 Sellers' Obligations at Closing . At Closing,
Sellers shall deliver to Buyer the following:
(a) Certificates of each of the Sellers dated the
Closing Date and signed by a duly authorized officer of such
Seller which evidence the due authorization, execution and
delivery of this Agreement and the Ancillary Agreements (as
hereinafter defined) by Sellers and certifying without
qualification that the conditions set forth in Section 3.2.1 and
3.2.3 have been fulfilled in all material respects.
(b) A general assignment and assumption of
liabilities, in substantially the form attached hereto as
Exhibit A, duly executed by SAC, Sigma Canada, Sigma UK and Sigma
Germany ("General Assignment and Assumption").
(c) Bills of sale, in substantially the forms
attached hereto as Exhibit B, duly executed by, respectively,
SAC, Sigma Canada, Sigma UK and Sigma Germany (collectively, the
"Xxxx of Sale"), general warranty deeds for the Owned Properties
(as defined in Section 5.2.9 ) owned by SAC subject to the
exceptions to title provided for in Section 5.2.9 and Schedule
5.2.9 and such other instruments of sale, transfer, conveyance
and assignment as Buyer may reasonably request.
(d) A receipt for the Preliminary Purchase Price.
(e) Certificates evidencing all of the issued and
outstanding Shares, accompanied by duly executed stock powers in
favor of Buyer.
(f) The resignations of the directors and
officers of B-Line and B-Line Manufacturing who are employees of
SIAL or SAC effective as of Closing.
(g) A transition services agreement providing for
services, at Sellers' cost (including an overhead allocation), in
substantially the form attached hereto as Exhibit C ("Transition
Services Agreement").
(h) Certificates of good standing for B-Line and
B-Line Manufacturing issued by the Secretary of State of each of
their respective states of incorporation and dated not more than
ten (10) business days before the Closing Date.
(i) The stock books, stock ledgers, minute books
and corporate seals for B-Line and B-Line Manufacturing.
4.3 Buyer's Obligations at Closing. At the Closing,
Buyer shall deliver or cause to be delivered to Sellers the
following:
(a) The Preliminary Purchase Price by bank wire
transfer in federal or other immediately available U.S. dollar
funds to the account(s) specified on Schedule 4.3 hereto.
(b) A Certificate of Buyer dated the Closing Date
signed by a duly authorized officer of Buyer which evidences due
authorization, execution and delivery of this Agreement and the
Ancillary Agreements by Buyer and certifies without qualification
that the conditions set forth in Sections 3.1.1 and 3.1.3 have
been fulfilled in all material respects.
(c) A General Assignment and Assumption, in
substantially the form attached hereto as Exhibit A, duly
executed by Buyer.
(d) A Transition Services Agreement, in
substantially the form attached hereto as Exhibit C.
ARTICLE FIVE: REPRESENTATIONS AND WARRANTIES
5.1 Materiality and Sellers' Knowledge. References to
Sellers', Seller's, SIAL's, SAC's, Sigma Canada's, Sigma UK's or
Sigma Germany's "knowledge" in this Agreement are to the actual
knowledge of persons identified on Schedule 5.1 hereto.
References to "material", "materiality" or "material adverse
effect" in this Agreement with respect to the B-Line Business are
to the B-Line Business as a whole.
5.2 Representations and Warranties by Sellers. The
following representations and warranties are made jointly and
severally by the Sellers solely with respect to the B-Line
Business and are correct and complete as of the date hereof and
will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 5.2, but except
for (a) changes expressly contemplated by or permitted under this
agreement (including without limitation as permitted by the terms
of or consented to or approved by Buyer pursuant to Section 6.1.1
and (b) as may result from or arise out of the unreasonable
failure or refusal of Buyer to consent to or approve an action
proposed by Sellers pursuant to Section 6.6.1), except as set
forth in the attached schedules referenced in this Section 5.2
(and its subsections):
5.2.1 Corporate Authority, Non-contravention
and Ownership.
(a) SIAL is a corporation duly organized, validly
existing and in good standing under the laws of Delaware. SAC is
a corporation duly organized, validly existing and in good
standing under the laws of Illinois. B-Line is a corporation
duly organized, validly existing and in good standing under the
laws of Illinois, and is duly qualified and in good standing in
each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so
qualified would not have a material adverse effect. B-Line
Manufacturing is a corporation duly organized, validly existing
and in good standing under the laws of Delaware, and is duly
qualified and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary,
except where the failure to be so qualified would not have a
material adverse effect. Sigma Canada is a corporation duly
organized, validly existing and in good standing under the laws
of Canada. Sigma UK is a corporation duly organized, validly
existing and in good standing under the laws of the United
Kingdom. Sigma Germany is a corporation duly organized, validly
existing and in good standing under the laws of Germany.
(b) SAC (with respect to the portion of the B-
Line Business owned by SAC), Sigma Canada (with respect to the
portion of the B-Line Business owned by Sigma Canada), Sigma UK
(with respect to the portion of the B-Line Business owned by
Sigma UK), Sigma Germany (with respect to the portion of the B-
Line Business owned by Sigma Germany), B-Line and B-Line
Manufacturing (together with their respective subsidiaries, if
any, but excluding any such subsidiaries listed in Section 1.3,
the "Operating Companies") have full corporate power and
authority to own, lease and operate their properties and to
conduct the operations of the B-Line Business as it is currently
conducted.
(c) Each of Sellers have full corporate power and
authority to execute, deliver and perform this Agreement and, as
applicable, the Xxxx of Sale and the General Assignment and
Assumption (the latter two documents being referred to
collectively as, the "Ancillary Agreements") and to consummate
the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Ancillary
Agreements have been duly authorized by all necessary corporate
action on the part of Sellers, as applicable, and no further
approval of the board of directors or stockholders of any Seller
is necessary for the execution hereof or thereof or consummation
of the transactions contemplated hereby or thereby.
(d) This Agreement and the Ancillary Agreements
have been duly executed and delivered by Sellers, as applicable,
and constitute valid, legally binding, and enforceable
obligations of Sellers, as applicable, subject, in the case of
enforceability, to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and to principles of
equity regarding the availability of equitable remedies.
(e) The execution and delivery of this Agreement
and, as applicable, the Ancillary Agreements by Sellers, as
applicable, and consummation by Sellers of the transactions
contemplated hereby and thereby: do not (i) violate or conflict
with any provision of the Articles or Certificate of
Incorporation or Bylaws (or their equivalents for Sellers
incorporated outside the United States) of Sellers, as
applicable, (ii) result in a material breach of, constitute a
default under, give rise to any right of termination,
modification or acceleration of, or require any notice under, any
contract, lease, license, Permits or other agreement to which any
Seller (as applicable) is a party or to which any of the Assets
is subject (or result in imposition of a Lien (as hereinafter
defined) thereon), or (iii) violate in any material respect any
Law to which any of Sellers, as applicable, is a party or by
which any of the property included in the B-Line Business is
bound or subject.
5.2.2 Capital Stock.
(a) SIAL is the record and beneficial owner of
the B-Line Stock. SAC is the record and beneficial owner of the
Manufacturing Stock. Sellers will deliver or cause to be
delivered to the Buyer at Closing good and marketable title to
the Shares, free and clear of all Liens.
(b) The authorized capital stock of B-Line
consists solely of 30,000 shares of common stock, $1 par value,
of which the 500 shares of B-Line Stock are the only shares
issued and outstanding. The B-Line Stock is duly authorized and
validly issued and is fully paid and non-assessable. Except for
Buyer's rights hereunder, (i) there are outstanding no other
securities of B-Line and no rights or options to acquire
securities of B-Line, and (ii) neither Sellers nor B-Line is
subject to any obligation to issue, deliver, redeem, or otherwise
acquire or retire or sell the B-Line Stock or any other
securities of B-Line.
(c) The authorized capital stock of B-Line
Manufacturing consists solely of 30,000 shares of common stock,
$1 par value, of which the 500 shares of Manufacturing Stock are
the only shares issued and outstanding. The Manufacturing Stock
is duly authorized and validly issued and is fully paid and non-
assessable. Except for Buyer's rights hereunder, (i) there are
outstanding no other securities of B-Line Manufacturing and no
rights or options to acquire securities of the B-Line
Manufacturing, and (ii) neither Sellers nor B-Line Manufacturing
is subject to any obligation to issue, deliver, redeem, or
otherwise acquire or retire or sell the Manufacturing Stock or
any other securities of B-Line Manufacturing.
(d) B-Line and B-Line Manufacturing have no
subsidiaries and they do not own (directly or indirectly) any
capital stock or other equity securities of any corporation or
any direct or indirect equity interest in any business, trust or
joint venture, except as set forth on Schedule 5.2.2(d).
5.2.3 Financial Data. Attached hereto as
Schedule 5.2.3(a) is a Combined Balance Sheet for the B-Line
Business as of February 29, 2000 and Combined Statements of
Operations for the B-Line Business for the two month period ended
February 29, 2000 ("Unaudited Financial Statements"). Also
attached hereto as Schedule 5.2.3(b) are a Combined Balance Sheet
of the B-Line Business as of December 31, 1999, 1998 and 1997,
Combined Statements of Operations for the B-Line Business for the
years ended December 31, 1999, 1998 and 1997, Combined Statements
of Parent Company Investment for the years ended December 31,
1999, 1998 and 1997, and Combined Statements of Cash Flows for
the years ended December 31, 1999, 1998 and 1997 (the "Audited
Financial Statements" and together with the Unaudited Financial
Statements, the "Financial Statements"). The opinion of Xxxxxx
Xxxxxxxx LLP with respect to the Audited Financial Statements is
also included in Schedule 5.2.3(b). The Financial Statements
have been derived from Sellers' and the Operating Companies'
accounting records, have been prepared in accordance with United
States generally accepted accounting principles ("GAAP" )
consistently applied to the B-Line Business, and fairly present
the financial position and results of operations of the B-Line
Business as of the respective dates thereof or period covered
thereby (subject, in the case of the Unaudited Financial
Statements, to year-end adjustments and the lack of footnotes).
5.2.4 Absence of Certain Changes. Other than
as disclosed on Schedule 5.2.4, to Sellers' knowledge, since
December 31, 1999, there has been no material adverse change in
the Assets or Assumed Liabilities or the B-Line Business, its
financial condition, operations or results of operations, except
as may result from economic developments generally. Without
limiting the generality of the foregoing, Sellers further
represent and warrant that, except as specifically set forth in
lettered subsections of Schedule 5.2.4 corresponding to the
lettered subsections below, since December 31, 1999:
(a) none of the Operating Companies has sold, leased,
transferred or assigned any of its material assets, tangible or
intangible, other than in the ordinary course of business;
(b) none of the Operating Companies has entered into any
agreement, contract, lease or license (or series of related
agreements, contracts, leases and licenses) either (i) involving
more than $50,000 or (ii) outside the ordinary course of business
and which is material;
(c) no party (including any of the Operating Companies) has
accelerated, terminated, modified or canceled any agreement,
contract, lease or license (or series of related agreements,
contracts, leases and licenses) involving more than $50,000 to
which any of the Operating Companies is a party or by which any
of them is bound;
(d) none of the Operating Companies has imposed any Lien
upon any of its assets, tangible or intangible, other than in the
ordinary course of business;
(e) none of the Operating Companies has made any capital
expenditure (or series of related capital expenditures) either
involving more than $200,000 or outside the ordinary course of
business;
(f) none of the Operating Companies has made any capital
investment in, any loan to, or any acquisition of the securities
or assets (other than purchases of raw materials, components and
supplies in the ordinary course of business) of, any other person
or entity (or series of related capital investments, loans and
acquisitions) either (i) involving more than $50,000 or (ii)
outside the ordinary course of business and which is material;
(g) none of the Operating Companies has issued any note,
bond or other debt security or created, incurred, assumed or guaranteed
any indebtedness for borrowed money or capitalized lease
obligation either involving more than $25,000 singly or $50,000
in the aggregate;
(h) none of the Operating Companies has intentionally
delayed or postponed the payment of accounts payable and other liabilities
or obligations outside the ordinary course of business;
(i) none of the Operating Companies has canceled,
compromised, waived or released any right or claim (or series of related
rights and claims) either (i) involving more than $50,000 or (ii)
outside the ordinary course of business and which is material;
(j) none of the Operating Companies has granted any
license or sublicense of any rights under or with respect to any Intangibles
(hereinafter defined) other than in the ordinary course of
business;
(k) there has been no change made or authorized in the
articles of incorporation or bylaws of either B-Line or B-Line Manufacturing;
(l) neither B-Line nor B-Line Manufacturing has issued, sold,
or otherwise disposed of, any of its capital stock, or granted any
options, warrants or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its
capital stock;
(m) neither B-Line nor B-Line Manufacturing has declared, set
aside or paid any dividend or made any distribution with respect
to its capital stock in kind or redeemed, purchased or otherwise
acquired any of its capital stock;
(n) none of the Operating Companies has experienced any
material damage, destruction or loss (whether or not covered by insurance)
to its property;
(o) none of the Operating Companies has made any loan to, or
entered into any other transaction with, any of its directors,
officers, and employees outside the ordinary course of business;
(p) none of the Operating Companies has entered into any
employment contract or collective bargaining agreement, written
or oral, or except as allowed by any other clause of this Section
5.2.4 modified the terms of any existing such contract or
agreement;
(q) none of the Operating Companies has granted any increase
in the base or other compensation of any of its directors, officers
and employees outside the ordinary course of business;
(r) none of the Operating Companies has adopted, amended,
modified or terminated any bonus, profit-sharing, incentive,
severance, or other plan, contract or commitment for the benefit
of any of its directors, officers and employees (or taken any
such action with respect to any other employee benefit plan);
(s) none of the Operating Companies has made any other change
in employment terms for any of its directors, officers and employees
outside the ordinary course of business;
(t) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the
ordinary course of business involving any of the Operating
Companies except as may result from economic developments
generally; and
(u) none of Sellers has committed to any of the foregoing.
For purposes of each of clauses (a), (b), (f) and (i) of
this Section 5.2.4, the term "material" shall mean not in excess
of $50,000 in the aggregate.
5.2.5 Compliance with Law and Permits. Except
as set forth on Schedule 5.2.5, to Sellers' knowledge, the B-Line
Business has been operated in compliance in all material respects
with all applicable constitutions, statutes, laws, judgments,
orders, decrees, ordinances, rules, regulations, arbitration
awards, directives, and agreements (collectively, "Laws") that
are imposed or issued or enforced by, or entered into with, any
foreign, United States, supranational (including the European
Union), national, federal, state, provincial, county or local,
judicial, regulatory or governmental authority, association,
corporation, agency, bureau, body, instrumentality or commission
or subdivision of any thereof exercising any regulatory,
supervisory, taxing, importing, exporting or other governmental
function (any and all an "Authority") and with all permits,
licenses, authorizations, approvals or consents that are granted
or approved by any Authority ("Permits"). The Operating
Companies have all material Permits necessary to operate the B-
Line Business. No proceeding is pending against any Seller, or to
Sellers' knowledge threatened, to modify, suspend, revoke or
otherwise limit any of such Permits and to Sellers' knowledge no
administrative or governmental actions have been taken or
threatened in connection with the expiration or renewal of such
Permits or alleging any material failure to comply with Laws in
connection with the B-Line Business or the Assets.
5.2.6 Litigation, Product Claims and Related
Matters. (a) Except as set forth on Schedule 5.2.6(a), there are
no asserted claims, actions, suits or legal proceedings pending
or, to Sellers' knowledge, threatened, and to Sellers' knowledge
there are no investigations pending or threatened, against
Sellers or the Operating Companies which involves more than
$100,000 or which will adversely affect the ability of Sellers to
consummate the transactions contemplated by this Agreement, nor
are Sellers or the Operating Companies subject to any outstanding
order, rule, decree or judgment of any court or governmental
agency of competent jurisdiction, which will adversely affect the
B-Line Business or the Assets.
(b) To Sellers' knowledge, each product
manufactured, sold, leased or delivered by any of the Operating
Companies has been in conformity in all material respects with
all applicable contractual commitments and all express and
implied warranties, and none of the Operating Companies has any
material liability or obligation (and to Sellers' knowledge there
is no valid basis for any present or future Claim or Third Party
Action (defined below) against any of them giving rise to any
such liability or obligation) for replacement or repair thereof
or other damages in connection therewith, in excess of the
reserve for product warranty or liability claims reflected in the
most recent balance sheet (rather than in any notes thereto) in
the Audited Financial Statements as adjusted through the
Effective Time in accordance with the past custom and practice of
the Operating Companies. No product manufactured, sold, leased
or delivered by any of the Operating Companies is subject to any
guaranty, warranty or other indemnity which differs materially
from the applicable standard terms and conditions of sale or
lease. Schedule 5.2.6(b) includes copies of the standard terms
and conditions of sale or lease for each of the Operating
Companies (containing applicable guaranty, warranty and indemnity
provisions).
(c) None of the Operating Companies has any
material liability or obligation, including Environmental
Liabilities (defined below), (and to Sellers' knowledge there is
no valid basis for any present or future Claim or Third Party
Action against any of them giving rise to any such liability or
obligation, including Environmental Liabilities) 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 any of the Operating Companies in excess
of any reserve therefor reflected in the most recent balance
sheet (rather than in the notes thereto) in the Audited Financial
Statements through the Effective Time in accordance with past
custom and practice of the Operating Companies. The term
"Environmental Liabilities" means any liability or obligation
relating exclusively to the B-Line Business (a) arising under any
Environmental Law (defined below), or (b) involving any Release
of or exposure to any Hazardous Substance (defined below)
including liability for damage or harm to the Environment
(defined below) or to a person as a result of such exposure,
whether such liability or obligation is to one or more private
parties or any Authority, in either case (whether under (a) or
(b) above) including any related fees and expenses of attorneys
and experts, and whether arising out of or related to on-site or
off-site matters.
5.2.7 Title to Personal Property - Owned.
Except (a) as set forth on Schedule 5.2.7, (b) for Liens (as
defined below) reflected in the Preliminary Consolidated
Valuation, and (c) for Permitted Liens (as defined below) each of
the Operating Companies has good and marketable title to the
material personal property owned by each of them respectively and
used solely in relation to the B-Line Business, free and clear of
all mortgages, liens, claims, encumbrances, security interests,
charges, pledges, preferential purchase rights, options, warrants
or other restrictions or adverse claims of whatever nature
(collectively, "Liens"), and, good and marketable title to such
personal property (other than that owned by B-Line and B-Line
Manufacturing), free and clear of all Liens, except as provided
above, shall pass to Buyer at Closing.
5.2.8 Personal Property - Leased. All leases
of any material personal property used solely in the B-Line
Business of which any of the Operating Companies is a lessee are
in full force and effect, all rental payments due under such
leases have been paid and there exist no material defaults by any
of the Operating Companies under the terms of such leases, and,
except as set forth on Schedule 5.2.8, the consummation of the
transactions contemplated by this Agreement will not create any
such default with respect to such leases or result in the lessor
having the right to terminate or alter the operative provisions
of any such leases.
5.2.9 Real Property - Owned. Set forth on
Schedule 5.2.9 is all the real property owned by SAC or B-Line.
Other than as set forth on Schedule 5.2.9, the Operating
Companies do not own any real property or any right or obligation
to acquire any interest in any parcel of real property in
connection with the B-Line Business. Except (a) as set forth on
Schedule 5.2.9, (b) for Liens reflected in the Preliminary
Consolidated Valuation, and (c) for Permitted Liens (as defined
below), SAC or B-Line has good and marketable title to the real
property set forth on Schedule 5.2.9 (the "Owned Properties" ),
free and clear of all Liens; and good and marketable title to the
scheduled real property owned by SAC, free and clear of all
Liens, except as provided above, shall pass to Buyer at Closing.
The term "Permitted Liens" shall mean (a) liens for current taxes
or assessments due but not yet payable, (b) servitudes,
easements, restrictions, rights-of-way, encroachments and other
similar rights in real property or any interest therein that have
been filed as part of an official or public record, provided the
same are not of such nature as to materially interfere with the
use or occupancy, or materially impair the value, or
marketability of title, of the property subject thereto and (c)
liens that constitute mechanic's, carrier's, workers' or similar
liens arising in the ordinary course of business in connection
with obligations that are not yet overdue or delinquent. Sellers
further represent and warrant concerning the Owned Properties
that:
(i) there are no parties other than the
record owner or an affiliate thereof in possession of any of the
Owned Properties;
(ii) there are no pending, or to Sellers'
knowledge threatened, condemnation, eminent domain or similar
proceedings relating thereto;
(iii) Sellers have made available to Buyer a
legal description for each such parcel that describes such parcel
adequately;
(iv) to Sellers' knowledge, all buildings and
improvements are located within the boundary lines of the
described parcels of land and the Owned Properties and buildings
and improvements thereon are not in violation in any material
respect of any Laws, including any building code requirements and
Environmental Laws;
(v) to the extent required for their current
use, each property abuts on and has direct vehicular access to a
public road, or has access to a public road via a permanent,
irrevocable, appurtenant easement benefiting the parcel,
maintained at public expense;
(vi) to the extent required for their current
use, all the properties are served by drainage, water,
electricity and gas services, all of which are connected to
public mains, and to Sellers' knowledge there is no imminent or
likely interruption of such utility service;
(vii) there are no outstanding disputes,
notices or complaints which materially adversely affect or to
Sellers' knowledge are likely to materially adversely affect the
use of the Owned Properties for the purposes for which they are
now used; and
(viii) to Sellers' knowledge there are no
material structural or other defects in or affecting the
buildings and structures on the Owned Properties.
The foregoing are intended to constitute
"covenants of warranty" as such terms are used in existing title
insurance policies on the Owned Properties.
5.2.10 Real Property - Leased. Set forth on
Schedule 5.2.10 is a list of each lease, identifying the property
which is subject thereto, under which each of the Operating
Companies is the lessee of any real property used exclusively in
the B-Line Business. The Sellers have made available to the
Buyer a true, correct and complete copy of each lease identified
on Schedule 5.2.10. The premises or property described in said
leases are presently occupied or used by an Operating Company as
lessee in conformity in all material respects with applicable Law
and the terms of such leases. Except as set forth on Schedule
5.2.10, all rental payments due under the leases set forth on
Schedule 5.2.10 have been paid and there exists no material
default under their respective leases and, to the Sellers'
knowledge, no event has occurred which with notice or lapse of
time would constitute a material breach or default, or permit
termination, modification or acceleration, thereunder. Except as
set forth on Schedule 5.2.10 and for Permitted Liens, each
respective Operating Company has all right, title and interest of
the lessee under the terms of said leases, free of all Liens and
all such leases are and will continue to be valid and in full
force and effect through the Closing Date and in full force and
effect on identical terms following the consummation of the
transactions contemplated herein. The Operating Companies have
not at any time assigned or otherwise disposed of any leasehold
interest which has a continuing liability (contingent or
otherwise) for payment of rent and/or for any other material
liability. None of the Operating Companies is a guarantor of or
surety for any obligations under any lease or under any agreement
relating to the assignment of any lease. Together with the Owned
Properties, the leased properties on Schedule 5.2.10 comprise all
the properties and premises owned, leased or used in the B-Line
Business.
5.2.11 Patents, Trademarks and Other
Intellectual Property. (a) Schedule 5.2.11(a) lists all patented
or registered Intangibles (defined below), all written licenses
and other agreements relating thereto and all written agreements,
licensing or otherwise, authorizing others to use material
technology, know-how or processes used in or belonging to the B-
Line Business (collectively, the "Scheduled Intangibles"). The
"Intangibles", including the Scheduled Intangibles, comprise all
intellectual property used or held in the B-Line Business as
presently conducted other than intellectual property licensed in
the ordinary course of business pursuant to standard form
commercial license agreements (such as non-custom software).
"Intangibles" means (i) all inventions, improvements, designs,
patents, patent applications, patent disclosures, and all
extensions, reissues, continuations, revisions and reexaminations
thereof; (ii) trade dress, logos, trade names and corporate
names, (including all internet and intranet name(s), addresses,
icon(s) and other designation(s) identifying the B-Line Business
on a computer network such as the world wide web but not
including any such designations of affiliates of the B-Line
Business), together with all translations, adaptations,
derivations and combinations thereof and including all goodwill
associated therewith, and all applications, registrations and
renewals in connection therewith; (iii) all copyrightable works
and all copyright applications, registrations and renewals in
connection therewith; (iv) all trade secrets and confidential
business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings and
specifications); and (v) all computer software, rights in
databases (including data and related documentation) all other
proprietary rights; and all copies and tangible embodiments
thereof (in whatever form or medium) but does not include items
licensed in the ordinary course of business pursuant to standard
form commercial license agreements (such as non-custom software).
(b) Except as set forth on Schedule 5.2.11(b),
the Operating Companies own or hold valid license rights to, all
material Intangibles free and clear of all Liens, licenses,
injunctions or judgments.
(c) Each material item of Intangibles will be
owned or available for use by the B-Line Business on identical
terms and conditions immediately subsequent to the Closing
hereunder.
(d) To Sellers' knowledge, none of the Operating
Companies has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with, any rights of third parties
in or to the Intangibles in any material respect and none of the
Operating Companies has any plans to do so. None of Sellers has
within three years prior to the Closing Date received any charge,
complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation
(including any Claim that any of the Operating Companies must
license or refrain from using any rights of any third party in or
to the Intangibles) in any material respect, that is unresolved.
(e) To the knowledge of Sellers, no third party
has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any of the Operating Company's rights in
or to the Intangibles.
(f) With respect to each item of Scheduled
Intangibles that any third party owns and that any of the
Operating Companies uses pursuant to license, sublicense,
agreement or permission, Sellers made available to Buyer correct
and complete copies of all such licenses, sublicenses, agreements
and permissions (as amended to date) and such agreements (other
than those held by B-Line or B-Line Manufacturing) are fully
transferable to Buyer.
(g) With respect to each material item of
Intangibles that any third party owns and that any of the
Operating Companies uses pursuant to license, sublicense,
agreement or permission; (i) to Sellers' knowledge the license,
sublicense, agreement or permission covering the item is legal,
valid, binding, enforceable and in full force and effect; (ii)
none of the Operating Companies, and to Sellers' knowledge no
party to the license, sublicense, agreement or permission, is in
material breach or default, and to Sellers' knowledge no event
has occurred which with notice or lapse of time would constitute
a material breach or default or permit termination, modification,
or acceleration thereunder; and (iii) none of the Operating
Companies has granted any sublicense or similar right with
respect to the license, sublicense, agreement or permission.
5.2.12 Taxes. Except as set forth on
Schedule 5.2.12:
(a) all Income Taxes and all Other Taxes (as
defined below) of the Sellers with respect to the B-Line Business
not assumed by Buyer hereunder for all periods ending on or prior
to the Effective Time (whether or not shown on a Tax return or
other rendition of Taxes (defined below)) have been or will be
paid by Sellers and will not result in the imposition of any
further assessment or any Lien on any of the Assets which would
affect the value thereof or title thereto. Further, with respect
to Other Taxes relating to periods before the Effective Time for
which no return or payment will be due prior to the Effective
Time, adequate provision has been made in the most recent balance
sheet of the Financial Statements (and will be made in the
Adjusted Consolidated Valuation) for all liabilities arising
thereunder.
(b) B-Line and B-Line Manufacturing and the
other Operating Companies and their predecessors (i) have filed
or caused to be filed with the appropriate Authority all Income
Tax and Other Tax returns which have been required to be filed
prior to the date of this Agreement (taking into account any
extensions of the time for filing such Income and other Tax
returns) and (ii) have paid in full all Taxes due and payable,
except to the extent such liabilities are reflected in the
Preliminary or Adjusted Consolidated Valuation as current
liabilities, as applicable. No unresolved claim has been made in
any jurisdiction where Tax returns related to the B-Line Business
are not filed that such Tax returns must be filed. All Tax
returns filed or caused to be filed by B-Line and B-Line
Manufacturing and the other Operating Companies and their
predecessors are correct and complete in all material respects.
(c) The Operating Companies have complied with
all Laws relating to the withholding of Taxes with respect to the
B-Line Business and the payment thereof and have timely and
properly withheld from employees, independent contractors,
creditors, shareholders and third parties, and paid over to the
proper Authority(ies), all amounts required to be withheld and
paid over under applicable Law.
(d) Neither B-Line nor B-Line Manufacturing nor
the Operating Companies has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect
to any Tax assessment or deficiency.
(e) For purposes of this Agreement, "Income
Taxes" shall mean all foreign and United States national,
federal, state, provincial and local taxes upon the income of the
Sellers or the Operating Companies in relation to the B-Line
Business, including any interest, penalties or additions to tax
that may become payable in respect thereof, arising before the
Effective Time. Income Taxes shall not include payroll and
employee withholding taxes, value added, unemployment insurance,
social security, sales and use taxes, excise taxes, franchise
taxes, gross receipts taxes, occupation taxes, real and personal
property taxes, stamp taxes, transfer taxes, workers compensation
and all other foreign, United States federal, state, local or
other taxes of any nature whatsoever (including any interest,
penalties or additions to tax that may become payable in respect
thereof, collectively "Other Taxes"). "Tax" and "Taxes" shall
mean both Income Taxes and Other Taxes.
5.2.13 Contracts. Schedules 5.2.4, 5.2.8,
5.2.10, 5.2.11, 5.2.13 and 7.3(b), set forth all contracts,
agreements, indentures, guarantees, notes, letters of credit and
loan or credit agreements to which any of the Operating Companies
in connection with the B-Line Business is a party or by which any
of the Assets are bound or subject and which:
(a) involve payments still to be made by or to
the Operating Companies in connection with the B-Line Business of
amounts which exceed $50,000 in any year;
(b) were entered into not in the ordinary course
of business and exceed $50,000 in the aggregate;
(c) concern a partnership, trust or joint
venture;
(d) concern confidentiality or noncompetition;
(e) provide for the creation, assumption or
guarantee of any indebtedness for borrowed money or any
capitalized lease obligation involving more than $50,000 or
imposition of a Lien other than a Permitted Lien) on any of the
Assets;
(f) are material intercompany agreements among
the Operating Companies, Sellers or their affiliates or any of
them;
(g) are profit sharing, stock option, stock
purchase, stock appreciation, deferred compensation, severance or
other plans or arrangements for the benefit of its current or
former directors, officers and employees (other than as covered
by Section 5.2.15).;
(h) are for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $50,000 or providing severance
benefits;
(i) are related to any credit facility, letter of
credit, payment or performance bond, or other surety
relationship;
(j) are material to the B-Line Business and
require consent of the other party thereto in connection with the
transactions contemplated under this Agreement (collectively, the
"Scheduled Contracts"). All such Scheduled Contracts are in full
force and effect and are binding obligations of the Operating
Companies and, to Sellers' knowledge, of the other parties
thereto, and the Operating Companies, and, to Sellers' knowledge,
the other parties, have in all material respects performed all
obligations required to be performed by them and are not
materially in default thereunder.
5.2.14 Labor Relations. Except as set forth on
Schedule 5.2.14, (i) the Operating Companies are not a party to
any collective bargaining agreement pertaining to the B-Line
Business, and no collective bargaining agreement with respect to
any employees employed solely in connection with the B-Line
Business is currently being negotiated by the Operating
Companies; and (ii) there has been no work stoppage or any other
material labor difficulty during the ten years immediately
preceding the date of this Agreement in relation to the B-Line
Business.
5.2.15 Compliance with ERISA.
(a) Schedule 5.2.15(a) sets forth each "employee
benefit plan" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"))
which Sellers and the Operating Companies maintain or contribute
to with respect to employees employed in relation to the B-Line
Business (the "Plans"). Each Plan, to the extent applicable, is
identified on Schedule 5.2.15(a) as one or more of the following:
an "employee pension plan" (as defined in Section 3(2) of ERISA);
a plan subject to Title IV of ERISA, Section 302 of ERISA or
Section 412 of the Internal Revenue Code of 1986, as amended, and
applicable Treasury regulations thereunder; a "multiemployer
plan" (as defined in Section 4001(a)(3) of ERISA); and an
"employee welfare plan" (as defined in Section 3(2) of ERISA).
(b) Each Plan complies with the applicable
requirements of Law, and no claims or actions by the Internal
Revenue Service, the Pension Benefit Guaranty Corporation
("PBGC"), the Department of Labor, any participant or beneficiary
or any other person currently are pending, or to Sellers'
knowledge are threatened, with respect to any Plan, other than
claims for benefits in the ordinary course.
(c) There has been delivered to Buyer with
respect to each Plan correct and complete copies of:
(i) the annual report, if required under
ERISA;
(ii) the Summary Plan Description, together
with each Summary of Material Modifications, required under
ERISA, and, unless the Plan is embodied entirely in an
insurance policy, a true and complete copy of the Plan; and
(iii) if the Plan is funded through a
trust or any third-party funding vehicle (other than an
insurance policy or with respect to any multi-employer
plan), the trust or other funding agreement and the latest
financial statements thereof.
5.2.16 Accounts Receivable. The accounts
receivable of the B-Line Business reflected in the Preliminary
Consolidated Valuation arose in the ordinary course of business
and are reflected therein and in the Financial Statements in
accordance with GAAP consistently applied to the B-Line
Business. To the Sellers' knowledge, such accounts receivable
are valid receivables, current and collectible, and not subject
to any valid counterclaim, set-off, defense or Lien except to the
extent of any reserves in respect thereof reflected in the
Preliminary Consolidated Valuation.
5.2.17 Inventory. Except as set forth on
Schedule 5.2.17 or to the extent of any reserve reflected in the
Preliminary Consolidated Valuation, all physical inventories of
the B-Line Business held by the Operating Companies at any
location, consisting of raw materials, work in process, finished
goods and manufactured and purchased parts and supplies, (a) are
valued at lower of cost or market (first-in, first-out), and
(b) are merchantable in the ordinary course of business.
5.2.18 Environmental Matters. Except as set
forth on Schedule 5.2.18:
(a) B-Line and B-Line Manufacturing, and the
other Operating Companies in their operation of the B-Line
Business are and to Sellers' knowledge their respective
predecessors have been in compliance in all material respects
with all applicable Environmental Laws (as defined below), and
there have been no Releases (as defined below) of any material
amount of Hazardous Substances by the Operating Companies.
(b) The following terms shall have the following
meanings wherever used in this Agreement:
(i) "Environment" means the environment,
air, land, water (wherever located and in whatever form), fauna,
flora and other natural resources and any building or structure.
(ii) "Environmental Laws" mean all applicable
foreign and United States national, federal, state, provincial,
municipal and local Laws relating to pollution or protection of
the Environment, including all Laws relating to the manufacture,
processing, distribution, generation, use, ownership, presence,
collection, treatment, storage, disposal, transport or handling,
recovery, recycling, removal, Release or threatened Release of
any Hazardous Substances (as defined below), or regarding
exposure to, monitoring or assessment of, or remediation
(including operation and maintenance) of, any Hazardous
Substance, or record-keeping, notification or reporting
requirements respecting any Hazardous Substance, or the on-site
or off-site contamination or pollution of the Environment, or
air, soil or water quality, or air or water emissions, or public
or employee health and safety or community right-to-know,
including without limitation the following U.S. federal laws:
the National Environmental Policy Act, 42 U.S.C. Section 4321 et
seq.; the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act and the Hazardous and Solid Waste
Amendments Act of 1984, 42 U.S.C. Section 6901 et seq.; the
Federal Water Pollution Control Act, as amended by the Clean
Water Act of 1977, 33 U.S.C. Section 1251 et seq.; the Safe
Drinking Water Act, 42 U.S.C. Section 300f et seq.; the Clean
Air Act, as amended by the Clean Air Act Amendments of 1990, 42
U.S.C. Section 7401 et seq.; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; the Federal Insecticide, Fungicide
and Rodenticide Act, 7 U.S.C. Section 136 et seq.; the Hazard
Communication Standard, 29 C.F.R. Section 1910.1200; the
Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Section 11001 et seq.; the Hazardous Material
Transportation Act, 49 U.S.C. Section; 1801 et seq. and any
analogous foreign, state or local statutes and the regulations
promulgated pursuant thereto in each case, as such laws, statutes
and regulations are in effect on the date of this Agreement.
(iv) "Hazardous Substances" mean any element,
compound, chemical mixture, contaminant, pollutant material,
waste or other substance which is defined as hazardous or toxic
under, regulated by, any Environmental Law or the Release of
which is prohibited or restricted under any Environmental Law or
which is known to pose a threat to health, safety or the
environment, or is petroleum or any fraction thereof, asbestos,
asbestos-containing material ("ACM"), methylene chloride,
trichloroethylene, or 1,2-dichloroethylene, a radioactive
substance, polychlorinated biphenyl, dibenzofuran or dioxin.
(v) "Release" and "Released" mean the
accidental or intentional, knowing or unknowing, spilling,
leaking, discharging, pumping, pouring, emitting, leaching,
escaping, depositing, adding, placing, emptying, dumping,
releasing, burying, injecting, abandoning, migrating of any
Hazardous Substance into the Environment.
(c) To Sellers' knowledge, the Operating
Companies have or have applied for all Permits required under
Environmental Laws for the operation of the B-Line Business as
presently conducted (the "Environmental Permits") and there are
no material violations, and no pending, or to Sellers' knowledge
threatened, material investigations or proceedings with respect
to such Environmental Permits.
5.2.19 Transactions with Affiliated Persons.
Except for employment arrangements disclosed on Schedule 5.2.13
or 5.2.15(a) and except as set forth on Schedule 5.2.19, to
Sellers' knowledge, no officer, director or employee of the
Operating Companies nor any relative of any such officer,
director or employee, is a party to or has an interest (including
to Sellers' knowledge material equity interests in third
parties), directly or indirectly, in any contract or commitment
to which the Operating Companies in connection with the B-Line
Business is a party or by which any of the Assets are or may be
bound or subject, or has any interest (including to Sellers'
knowledge material equity interests in third parties), directly
or indirectly, in any personal property, tangible or intangible,
owned by the Operating Companies and used in the B-Line Business.
5.2.20 Stock Record and Minute Books. The
stock record books and minute books of B-Line and B-Line
Manufacturing are true and correct. Complete copies of the
articles or certificate of incorporation and bylaws and all
amendments thereto currently in effect of B-Line and B-Line
Manufacturing have been previously provided to Buyer.
5.2.21 Sufficiency of Assets. Except as set
forth on Schedule 5.2.21, the Assets constitute all of the assets
that are used in the operation of the B-Line Business in the same
manner as such business is conducted as of the date hereof.
5.2.22 No Undisclosed Liabilities. None of the
Operating Companies has any material liability or obligation, and
to Sellers' knowledge there is no valid basis for any present or
future Third Party Action against any of them giving rise to any
such material liability or obligation, except for (i) liabilities
or obligations reflected in the most recent balance sheet
(including in any notes thereto) in the Audited Financial
Statements, (ii) liabilities or obligations which have arisen
after December 31, 1999 in the ordinary course of business of the
B-Line Business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by, any material
breach of contract, breach of warranty, tort, infringement or
violation of Law) and (iii) liabilities or obligations scheduled
pursuant to any of the provisions of Section 5.2 or which are not
required to be so scheduled because of any limitation or
threshold applicable thereto.
5.2.23 No Broker. Except for Xxxxxxx, Xxxxx &
Co. (whose fees shall be paid by Sellers), Sellers have not
retained a broker or finder in connection with the transactions
contemplated herein so as to give rise to any valid claim against
Buyer for a finder's fee, brokerage commission or similar
payment.
5.2.24 Scope of Representation. (a)
NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT, IT IS THE
EXPLICIT INTENT OF EACH PARTY HERETO THAT SELLERS ARE MAKING NO
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, BEYOND
THOSE EXPRESSLY GIVEN IN THIS AGREEMENT, INCLUDING ANY IMPLIED
WARRANTY OR REPRESENTATION AS TO CONDITION, MERCHANTABILITY,
FITNESS FOR A SPECIFIC PURPOSE OR SUITABILITY AS TO ANY OF THE
ASSETS AND IT IS UNDERSTOOD THAT, EXCEPT AS EXPRESSLY WARRANTED
IN THIS AGREEMENT (AND FOR THE AVOIDANCE OF DOUBT WITHOUT WAIVER
OR LIMITATION OF ANY REPRESENTATION OR WARRANTY EXPRESSLY SET
FORTH IN THIS AGREEMENT CONCERNING INVENTORY), BUYER TAKES THE
ASSETS AS IS AND WHERE IS.
(b) The inclusion of any item on any Schedule to
this Agreement shall not be construed as an indication that such
item is material in any respect or as establishing a standard or
indication of materiality.
5.2.25 Insurance Policies.
(a) Schedule 5.2.25 ("Current B-Line Insurance")
includes all insurance policies with respect to the B-Line
Business or the Assets to which any of the Operating Companies is
as of the date hereof a party, a named insured or otherwise the
beneficiary of coverage.
(b) Schedule 5.2.25 sets forth with respect to
each insurance policy (including policies providing property,
casualty, liability and workers' compensation coverage and bond
and surety arrangements) (i) the name of the insurer, the name of
the policyholder, and the name of each covered insured, and (ii)
the policy number and the period of coverage.
5.3 Representations and Warranties of Buyer. Each
Buyer jointly and severally represents and warrants to Sellers as
follows, which representations and warranties are correct and
complete as of the date hereof, and will be correct and complete
as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement
throughout this Section 5.3):
5.3.1 Corporate Authority and Non-
Contravention.
(a) Each of Xxxxxx, CBL and CTC is a corporation
duly organized, validly existing and in good standing under the
laws of the States of Ohio, Delaware and Delaware, respectively.
(b) Buyer has full corporate power and authority
to execute, deliver and perform this Agreement and the applicable
Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and, as applicable, the Ancillary
Agreements have been duly authorized by all necessary corporate
action on the part of Buyer and no stockholder approval or
further approval of the board of directors of Buyer is necessary
for the execution hereof or thereof or the consummation of the
transactions contemplated hereby and thereby.
(c) This Agreement and, as applicable, the
Ancillary Agreements, have been duly executed and delivered by
Buyer and constitute valid, legally binding and enforceable
obligations of Buyer, subject, in the case of enforceability, to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to principles of equity regarding
the availability of equitable remedies.
(d) The execution and delivery of this Agreement
and, as applicable, the Ancillary Agreements, by Buyer and
consummation by Buyer of the transactions contemplated hereby and
thereby: do not (i) violate or conflict with any provision of the
Articles or Certificate of Incorporation or Bylaws of Buyer, (ii)
result in a breach of, constitute a default under, give rise to
any right of termination, modification or acceleration of, or
require any notice under, any material contract or agreement to
which Buyer is a party, or (iii) violate any material Law,
regulation, order, arbitration, award, judgment or decree to
which Buyer is a party or by which it is bound.
5.3.2 Litigation Concerning Agreement. There
are no actions, suits or proceedings pending or, to Buyer's
knowledge, threatened against Buyer which will affect Buyer's
ability to consummate the transactions contemplated by this
Agreement.
5.3.3 No Broker. Buyer has not retained a
broker or finder in connection with the transactions contemplated
herein or by the Ancillary Agreements so as to give rise to any
valid claim against Sellers for a finder's fee, brokerage
commission or similar payment.
5.3.4 Financing. Buyer will have on the
Closing Date and at Settlement, respectively, sufficient funds
immediately available to pay the Preliminary Purchase Price and
the Adjusted Purchase Price, if any, as provided herein.
5.3.5 Buyer's Knowledge. The persons set out
on Schedule 5.3.5 hereto do not know, after reasonable inquiry,
of any breach by Sellers of any representation or warranty in
Section 5.2 of this Agreement as of the date hereof.
ARTICLE SIX: PARTICULAR COVENANTS OF
SELLERS AND BUYER
6.1 Covenants of Sellers. Sellers hereby covenant and
agree:
6.1.1 Interim Operation of the B-Line
Business. From the date of this Agreement to the Closing, except
as otherwise expressly contemplated by this Agreement or the
Ancillary Agreements, disclosed on Schedule 6.1.1 or consented to
or approved by Buyer in writing, which consent or approval shall
not be unreasonably withheld, (a) Sellers shall and shall cause
the Operating Companies to operate the B-Line Business in the
ordinary and usual course, consistent with past practice;
(b) Sellers shall promptly advise Buyer in writing of any adverse
change in the Assets or Assumed Liabilities which is material to
the B-Line Business (which notice shall not amend or supplement
any Schedule or prevent or cure any misrepresentation, breach of
warranty or breach of covenant); (c) Sellers shall not grant or
cause to be granted to any employee employed solely in relation
to the B-Line Business any increase in compensation in any form,
or any severance or termination pay, or make any loan to or enter
into any employment agreement with any employee, other than
increases in compensation to employees in accordance with past
practices as to timing and amount or increases as may be required
by collective bargaining agreements previously negotiated;
(d) the Operating Companies shall not engage in any practice,
take any action, or enter into any transaction outside the
ordinary course of business the primary purpose or effect of
which will be to generate or preserve cash; (e) neither B-Line
nor B-Line Manufacturing shall declare, set aside or pay any
dividend or make any distribution in kind with respect to its
capital stock or redeem, purchase or otherwise acquire any of its
capital stock, except as expressly permitted herein;
(f) each of the Operating Companies shall use its
reasonable best efforts to keep its business and properties
substantially intact, including its present operations, physical
facilities, working conditions, and relationships with lessors,
licensors, suppliers, customers, and employees; and
(g) Sellers shall not agree to take any action,
engage in any practice or enter into any transaction which is of
the sort described in Section 5.2.4 (using for the purpose of
determining whether this clause (g) requires consent a threshold
of $250,000 rather than any other threshold set out therein) or
which would violate the foregoing clauses (a) and (c) through
(g).
6.1.2 Access to Records Prior to Closing.
From the date of this Agreement to the Closing, Sellers shall
afford or cause to be afforded to the officers, attorneys,
accountants and other authorized representatives of Buyer
displaying appropriate credentials reasonable access during
normal business hours to any and all of the premises, properties,
contracts, books, records and data of or relating to the B-Line
Business, provided that (a) such investigation shall not
unreasonably interfere with the operation of the B-Line Business
or Sellers' other business, (b) such access shall be only with
reasonable prior notice to Sellers, (c) the providing of such
information will not cause any of the Sellers or any affiliate of
any of the Sellers to be in violation of Law, or bona fide
preexisting (as of the date hereof) agreement, and (d) no
information subject to a requirement of bona fide confidentiality
on the part of any of the Sellers or any affiliate of Sellers
shall be provided to Buyer except in a manner which complies with
such requirement.
6.1.3 Notices and Consents. Prior to Closing,
Sellers will cause each of the Operating Companies to give any
notices to third parties, and will cause each of the Operating
Companies to use its reasonable best efforts to obtain any third-
party consents, that Buyer may request in connection with the
matters referred to in Section 5.2.1 above. Each of the Parties
will (and Sellers will cause each of the Operating Companies to)
give any notices to, make any filings with, and use its
reasonable best efforts to obtain any authorizations, consents
and approvals of, Authorities in connection with the matters
referred to in Section 5.2.1 and 5.3.1 above.
6.1.4 Exclusivity. From the date of this
Agreement to the Closing, none of Sellers will (and Sellers will
not cause or permit any of their affiliates) to solicit, initiate
or encourage the submission of any proposal or offer from any
person or entity relating to the acquisition of the B-Line
Business, or participate in any discussions or negotiations
relating to the sale solely of the B-Line Business.
6.1.5 Covenant Not to Compete. For a period
of five (5) years from and after the Effective Time, none of
Sellers will (and Sellers will cause their affiliates not to)
engage directly or indirectly in any business that competes with
the B-Line Business as and where conducted by any of the
Operating Companies as of the date hereof or the Effective Time;
provided, however, that ownership of less than 1% of the
outstanding stock of any publicly traded corporation shall not be
deemed to engage solely by reason thereof in any of its
businesses. If the final judgment of an arbitrator or court of
competent jurisdiction declares that any term or provision of
this Section 6.1.5 is invalid or unenforceable, the Parties agree
that the arbitrator or court making the determination of
invalidity or unenforceability shall have the power to reduce the
scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified. The
provisions of this Section 6.1.5 shall not prevent Sellers and
their affiliates from acquiring an entity or business of which a
business which so competes represents less than 10% of the
revenue, provided that such competing business is promptly
divested.
6.1.6 Non-Solicitation. For two (2) years
from and after the Effective Time, Sellers shall not (and Sellers
shall cause their affiliates not to) directly or indirectly
solicit for employment or employ the employees of the B-Line
Business without the prior written consent of Buyer. The
provisions of this Section 6.1.6 shall not apply to (a) general
solicitations of employment (such as newspaper solicitations) not
directed specifically at the employees of the B-Line Business or
(b) employing personnel hired as a result of such advertisements
or unsolicited applications.
6.1.7 Transition. None of Sellers will
knowingly take any action that is designed or intended to have
the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of any of the Operating
Companies from maintaining the same business relationships with
the Operating Companies after the Closing as it maintained with
the Operating Companies prior to the Closing. Each of Sellers
will refer all customer inquiries relating to the B-Line Business
to Buyer from and after the Closing (subject to the Transition
Services Agreement).
6.1.8 Intercompany Accounts and Agreements.
Prior to the Closing, Sellers shall cancel all intercompany
accounts and agreements, except those agreements set forth on
Schedule 6.1.8, between the B-Line Business on one side and any
of Sellers on the other side.
6.1.9 Further Assurances. After the Closing,
Sellers shall deliver or cause to be delivered to Buyer such
other instruments and information as Buyer may reasonably request
in order effectively to convey to and vest in Buyer good and
marketable title to the Assets and to do all such further acts
and things as may be reasonably required to carry out the
transactions contemplated hereunder.
6.2 Covenants of Buyer. Buyer hereby covenants and
agrees:
6.2.1 Further Assurances. After the Closing,
Buyer will deliver to Sellers such other instruments and
information as Sellers may reasonably request in order to
evidence and confirm Buyer's assumption of the Assumed
Liabilities and to do all such further acts and things as may be
reasonably required to carry out the transactions contemplated
hereunder, subject to applicable Law. Sellers acknowledge that
Buyer will be entitled to possession of all documents, books and
records (including Other Tax records), agreements and financial
data relating exclusively to the B-Line Business, B-Line and B-
Line Manufacturing.
6.2.2 No Reliance. The purchase of the B-Line
Business and the consummation of the transactions contemplated
hereunder by Buyer are not done in reliance by Buyer or its
affiliates or agents upon any warranty or representation or
covenant by, or information from or on behalf of Sellers or any
affiliate of Sellers of any sort, oral or written, except the
warranties and representations and covenants specifically set
forth in this Agreement.
6.3 Mutual Covenants of the Parties. The Parties each
hereby covenant and agree with each other:
6.3.1 Best Efforts and Cooperation. The
Parties shall each use their best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things
reasonably necessary, proper or advisable, and to cooperate with
each other as is reasonably required for such purpose, to
consummate and make effective the transactions contemplated by
this Agreement, provided that nothing in this Agreement shall
obligate either Sellers or Buyer to waive any conditions to its
obligation to effect the Closing. In case at any time after the
Closing any further action is reasonably necessary or desirable
to carry out the purposes of this Agreement, the proper officers
or directors of Sellers or Buyer, as the case may be, shall take
all such reasonably necessary or desirable actions. Without
limiting the generality of the foregoing, if a required consent
is not obtained with respect to the assignment or transfer of any
material Permit, contract or Lease, Sellers and Buyer shall
cooperate in entering into any reasonable arrangement which will
provide Buyer with the rights and benefits (subject to the
obligations) thereof, including if permissible and reasonable a
Seller acting as agent on behalf of Buyer at Buyer's expense.
6.3.2 Communications. Any communications,
notices to or discussions with customers or suppliers of the B-
Line Business, press releases, public announcements or other
publicity proposed to be released or permitted by any Party
hereto concerning this Agreement or the transactions hereby or
thereby contemplated shall be, insofar as practicable and lawful,
subject to prior review by and, except as required by Law or a
Party's listing or trading agreement concerning its publicly-
traded securities, written approval of Xxxxxx and SIAL.
6.3.3 Access to Records and Employees
Subsequent to Closing.
(a) For a period of five years following the
Closing, or for such longer periods as may be required by Law,
any Authority or ongoing litigation with respect to any Third
Party Action in connection with (i) any transaction contemplated
under this Agreement or (ii) any fact, event, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or
transaction (collectively, "Occurrence" ) prior to the Effective
Time involving any of the Operating Companies, Sellers and Buyer
shall retain or cause to be retained all material business
records (including without limitation all material records used
or useful in the preparation of Tax returns) relating solely to
the operation, prior to the Effective Time, of the B-Line
Business. Sellers and Buyer shall provide or cause to be
provided duly authorized representatives of the other (the
"Requesting Party") displaying appropriate credentials and
subject to appropriate assurances of confidentiality reasonable
access to all such business records for bona fide business
reasons at any time during regular business hours for a period of
five years after the Closing Date or such later time as is
required for retention of such business records, and subject to
the requirements of applicable laws, regulations or agreements,
the Requesting Party may make abstracts from, or make copies of,
any such business records as it may deem desirable, at its own
expense. In connection with any review of such business records,
Sellers or Buyer shall provide to such duly authorized
representatives of the Requesting Party: (A) access to and the
testimony of (to the extent of their reasonable best efforts)
employees who are familiar with such business records and who can
assist such representatives, at the Requesting Party's own
expense, in locating, explaining or otherwise reviewing such
business records; and (B) permission to use copying facilities,
clerical services and telephones at the Requesting Party's
expense. Neither Sellers on the one hand, nor Buyer on the
other, shall destroy any material business records related solely
to the B-Line Business without first giving the other prior
written notice thereof and 90 days thereafter either to consent
to such destruction or to take possession of such records.
Notwithstanding the foregoing, nothing in this Section 6.3.3
shall be construed so as to waive any right to recover under
Article Eight any expenses related to the foregoing or so as to
require any Party to take any action which shall result in a
breach or waiver of any applicable attorney-client or similar
privilege.
(b) If, in connection with any litigation,
arbitration, audit or settlement proceedings or negotiations with
respect to the operation of the B-Line Business the Requesting
Party shall require the assistance of employees employed in
connection with the B-Line Business, the appropriate other Party
shall make available such employees as are reasonably required,
and the Requesting Party shall pay such other Party's
out-of-pocket costs incurred in connection with such assistance
by such employees.
6.3.4 Failure of Conditions; Waiver. . If
Buyer accepts a certificate under Section 4.2(a) containing one
or more qualifications to the certification that the conditions
set forth in Section 3.2.1 have been fulfilled, and in the event
that Buyer nevertheless consummates the transactions contemplated
hereby, Buyer shall be deemed to have waived such condition of
Closing but shall not have waived any claims based upon matters
identified in such qualification(s). If Sellers accept a
certificate under Section 4.3(b) containing one or more
qualifications to the certification that the conditions set forth
in Section 3.1.1 have been fulfilled, and in the event that
Sellers nevertheless consummate the transactions contemplated
hereby, Sellers shall be deemed to have waived such condition of
Closing but shall not have waived any claims based upon matters
identified in such qualification(s).
6.3.5 Insurance. Sellers shall use their
reasonable efforts to maintain continuously from the date hereof
through the Effective Time the insurance coverage presently in
force with respect to the B-Line Business and the Assets.
6.3.6 Amounts Received for Accounts
Receivable. After the Closing any amounts received by Sellers
which relate to accounts receivable of the B-Line Business
(except to the extent constituting Excluded Assets) shall be
promptly forwarded to Buyer.
6.3.7 Xxxx-Xxxxx-Xxxxxx Act Approvals. The
Parties shall make their respective filings under the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended ("HSR Act")
as soon as practicable, but in no event later than five days
after the date hereof, shall request early termination of any
waiting periods thereunder, and shall promptly make any further
filings pursuant thereto or which may be necessary to consummate
the transactions contemplated herein; provided, however, that
nothing in this Section 6.3.7 shall obligate either Sellers or
Buyer to waive any conditions to their respective obligations to
effect the Closing. The Parties also agree promptly to prepare
and make such other filings and provide such information to each
other or to any Authority as may be necessary, or, in the
reasonable opinion of the Parties or their counsel, advisable to
permit the consummation of the transactions contemplated hereby.
6.3.8 Tax Matters.
(a) For purposes of this Section, the following terms
have the following meanings:
(i) "Seller Group" means, with respect to U.S.
federal Income Taxes, the affiliated group of corporations (as
defined in Section 1504(a) of the Code) of which SIAL is the
parent and, with respect to state or local Income Taxes, the
consolidated, combined or unitary group of which any of
Sellers or any of its affiliates is a member.
(ii) "Tax Asset" means any net operating loss,
net capital loss, investment tax credit, foreign tax credit,
charitable deduction, claim for refund or any other credit or
tax attribute which could reduce Income Taxes (including,
without limitation, deductions and credits related to
alternative minimum Income Taxes) or Other Taxes, provided,
however, that such term shall not include the Tax basis of the
Shares.
(b) Sellers will prepare and file, or cause to be
prepared and filed, all federal, state and foreign Income Tax
returns for the Operating Companies required to be filed with the
appropriate United States, state, and foreign governmental
entities for any taxable period that ends on or before the
Effective Time (the "Pre-Closing Tax Period"). Sellers will
prepare and, if required to do so by applicable law, deliver to
Buyer for signing and filing any state Income Tax returns of each
of B-Line and B-Line Manufacturing with respect to any Pre-
Closing Tax Period (including any short period) that have not
been filed prior to the Closing Date. Buyer shall have an
opportunity to review, but shall not unreasonably refuse to sign
and file such state Income Tax returns. In the event Buyer
disagrees with any such return as prepared by Sellers, Buyer
shall promptly notify Sellers, and the parties shall resolve such
disagreements in the manner set forth in Section 9.3. Sellers
will make all payments owing with respect to any such Tax returns
to the extent not reflected in the Adjusted Consolidated
Valuation.
(c) Except as provided in Section 6.3.8(b), Buyer will
prepare and file, or cause to be prepared and filed, all Income
Tax returns for B-Line and B-Line Manufacturing that are required
to be filed with the appropriate United States, state, and
foreign governmental entities for all periods as to which such
Income Tax returns are due after the Effective Time. Buyer will
pay, or caused to be paid, all Income Taxes required to be paid
with respect to such Income Tax returns.
(d) In order to assist Sellers in the preparation of
all Income Tax returns that Sellers are required to prepare
pursuant to this Agreement, Buyer will prepare, or cause B-Line
and B-Line Manufacturing to prepare, and deliver to Sellers,
within 90 days following the relevant taxable period, standard
Federal and state Income Tax return data gathering packages
relating to such companies. In addition to providing such
packages, Buyer will promptly provide, or cause to be provided,
to Sellers such other information as Sellers may reasonably
request (including access to books, records and personnel) in
order for the operations of B-Line and B-Line Manufacturing to be
properly reported in such Income Tax returns, for the preparation
for any Income Tax audit or for the prosecution or defense of any
claims, suit or proceeding relating to Income Taxes.
(e) Sellers shall provide such information as
reasonably requested by Buyer to enable Buyer to fulfill its
obligations for payment of Other Taxes accrued for periods before
the Effective Time. Sellers further agree to provide any
reasonable assistance requested by Buyer with respect to any
audits or examinations of returns for taxable periods prior to
the Effective Time.
(f) Buyer covenants that it will not cause or permit B-
Line or B-Line Manufacturing or any affiliate of Buyer to amend
any Income Tax or Other Tax return or take any Income Tax or
Other Tax position on any Income Tax or Other Tax return, take
any action, omit to take any action or enter into any transaction
that results in any increased Income Tax or Other Tax liability
or reduction of any Tax Asset of SIAL or the Seller Group in
respect of any Pre-Closing Tax Period.
(g) If, with respect to an Income Tax or Other Tax
return required to be filed by B-Line or B-Line Manufacturing,
Sellers reasonably determine that B-Line or B-Line Manufacturing
is entitled to file a claim for refund or an amended Income Tax
or Other Tax return with respect to a Pre-Closing Tax Period,
Buyer shall, upon Sellers' reasonable request, cause B-Line or B-
Line Manufacturing to file all such claims or amended Income Tax
or Other Tax returns at Sellers' expense. Buyer shall use its
reasonable best efforts to secure claims for refunds pending as
of the Closing Date. Buyer shall promptly pay or shall cause
prompt payment to be made to Sellers of all refunds of Income
Taxes or Other Taxes and interest thereon received by, or
credited against the Income Tax or Other Tax liability or
interest thereon that would otherwise have been payable but for a
credit being elected, of Buyer, any affiliate of Buyer, or B-Line
or B-Line Manufacturing attributable to Income Taxes or Other
Taxes paid by Sellers, B-Line or B-Line Manufacturing or any
affiliate of Sellers with respect to any Pre-Closing Tax Period.
(h) Buyer shall be solely liable for and shall pay all
applicable sales, transfer, use, stamp, conveyance, value added,
real property transfer, recording, stock transfer and other
similar Taxes, if any, together with all recording or filing
fees, notarial fees and other similar costs of Closing, that may
be imposed upon, or payable, collectible or incurred in
connection with any deemed sale of assets pursuant to any Section
338(h)(10) Election (including an election pursuant to Section
338(g) of the Code or a purported Section 338(h)(10) Election
that is determined to be invalid or ineffective) or otherwise as
a result of the transfer of the Assets ("Transfer Taxes").
Notwithstanding the foregoing, Sellers shall include in its
federal consolidated Income Tax return or separate state Income
Tax return the income attributable to the deemed sale of assets
pursuant to any Section 338(h)(10) Election or equivalent
election under state law and any income Tax liability resulting
therefrom.
ARTICLE SEVEN: EMPLOYEES AND EMPLOYEE MATTERS
7.1 Treatment of Employees-General. (a) At the
Closing, Buyer shall, and shall be deemed to, offer immediate or
continuing employment (so that no period of unemployment occurs)
to all hourly and salaried employees of the Operating Companies
employed immediately prior to Closing in relation to the B-Line
Business who are listed on Schedule 7.1(a) as updated through
Closing, including to account for changes between the effective
date of such schedule and the date of this Agreement and between
the date of this Agreement and the Effective Time, including
without limitation disabled and laid off personnel and personnel
on leave ("Current Employees"), in each case in the same
employment status (for example, without limitation, temporary
leave, part time or temporary employment), and with the same
hours, pay and other terms and conditions of employment, as exist
at Closing. Such employees who accept such offer are referred to
hereinafter collectively as "Employees" and individually as an
"Employee."
(b) Buyer agrees to provide to the Employees benefits
not less favorable in the aggregate to the benefits currently
provided to other similarly classified employees of Buyer, except
as required by the terms of any written employment contract or
agreement with such Employee. Any benefit plans or programs
provided by Buyer shall give full credit for each participant's
years of service with the Operating Companies prior to the
Effective Time for all purposes (other than for the accrual of
benefits) for which such service was recognized under the Plans
set forth on Schedule 5.2.15(a), including, but not limited to,
recognition of service for eligibility, vesting, eligibility to
participate and eligibility for disability and early retirement
benefits.
7.2 Welfare Benefits. (a) As of and after the
Effective Time, Buyer shall be responsible for all benefits
arising from claims of Employees under employee welfare benefit
plans applicable to Employees of the B-Line Business with respect
to claims incurred on or after the Closing Date. Buyer shall
provide benefits to eligible employees pursuant to this
Section 7.2 notwithstanding any waiting periods or pre-existing
condition restrictions which may be contained in any of Buyer's
applicable welfare benefit plans or programs which are applicable
to any of the Employees following the Effective Time. Sellers
shall use their reasonable best efforts to assist in
establishing, at Buyer's cost, transition arrangements which
allow Buyer to continue to provide welfare benefits which are
self-insured. Upon request, Sellers will allow Buyer to install
its Cyborg payroll and human resources software at the B-Line
Business prior to the Closing Date, and such software shall
remain the property of Buyer.
(b) Sellers shall retain all liability and be
responsible for retiree welfare benefits to be provided to
current retirees of the B-Line Business and to Current Employees
(as of the later of the date benefits commence under the Sigma-
Xxxxxxx Corporation Retirement Security Value Plan or the date
the Current Employee ceases employment with Buyer or any
affiliate of Buyer or member of its controlling group) who have
met the age and service eligibility requirements as of the
Effective Time. Current Employees who have not met the age and
service eligibility requirements as of the Effective Time shall
not be eligible for retiree welfare benefits from Seller, and
Buyer shall assume and be solely responsible for any retiree
welfare benefits to which such Current Employees may be entitled
after the Effective Time and shall indemnify and hold Sellers
harmless with respect thereto.
7.3 Buyer's Assumption of Liability. As of and after
the Effective Time,
(a) (i) Buyer shall recognize each collective
bargaining representative of the Current Employees, and shall
assume any and all liabilities, responsibilities and obligations
of Sellers under collective bargaining agreements set forth on
Schedule 5.2.14 with respect to the B-Line Business and (ii)
Buyer shall recognize all periods of employment of each Employee
prior to the Effective Time with the Operating Companies
(individually or in sum) for all purposes including, without
limitation, calculating vacation pay, severance benefits and as
relevant to the benefits described in Section 7.2 hereof, as if
such Employee had been so employed by Buyer.
(b) Buyer shall assume the liabilities and
obligations of the Operating Companies with respect to the
agreements listed on Schedule 7.3(b) except (and only except) if
a Current Employee receives severance pay pursuant to such an
agreement because he or she reasonably judges that a "Permitted
Executive Resignation" has occurred as provided in paragraph b(i)
or (ii) of the definition of such term contained in Section 2 of
such Agreements but that notwithstanding such reasonable judgment
none of the changes enumerated in such paragraphs b(i) or (ii)
has, in fact, occurred, in which event Sellers shall be
responsible for such severance pay. Buyer shall promptly notify
SIAL in writing in the event any Current Employee claims such a
Permitted Executive Resignation has occurred and in the event
Buyer claims that it would not be responsible for such severance
pay because the conditions of the preceding sentence have been
satisfied. Buyer shall not pay such severance pay without SIAL's
prior written consent (which shall not be unreasonably withheld)
or unless required to do so by court order. Sellers shall retain
and be responsible for any other liabilities and obligations of
the Operating Companies for severance pay or other separation
benefits to which any Current Employee may be or become entitled
up to the Effective Time. Buyers shall assume and be responsible
for any severance pay or other separation benefits to which any
Current Employee may be or become entitled following the
Effective Time.
7.4 Plant Closing Law. Set forth on Schedule 7.4 is
the number of employees of the Operating Companies in connection
with the B-Line Business whose employment has been terminated
during the six-month period prior to the date of this Agreement,
and the location of their employment at the time of termination.
Buyer acknowledges that such actions may affect Buyer's
subsequent labor and employment decisions regarding layoffs,
terminations and closings with respect to the B-Line Business.
Buyer shall bear all responsibility for any liability or
obligation under the Workers' Assistance and Retraining
Notification Act ("WARN") in connection with the B-Line Business
arising from any action by Buyer (whether or not considered in
connection with the activity specified on Schedule 7.4) after the
Closing.
7.5 Security Value Plan. As of the Effective Time,
Sellers shall amend the Sigma-Xxxxxxx Corporation Retirement
Security Value Plan to fully vest all benefits accrued by
Employees. Sellers shall retain all liabilities associated with
benefits accrued under the Sigma-Xxxxxxx Corporation Retirement
Security Value Plan.
7.6 401(k) Plan. As of the Effective Time, Sellers
shall amend the Sigma-Xxxxxxx 401(k) Retirement Savings Plan to
fully vest all account balances of Employees in the Sigma-Xxxxxxx
401(k) Retirement Savings Plan. Sellers shall retain all
liabilities associated with benefits accrued by and payable to
Employees under the Sigma-Xxxxxxx 401(k) Retirement Savings Plan.
ARTICLE EIGHT: INDEMNIFICATION
8.1 Indemnification by Buyer. From and after the
Closing Date, Buyer shall defend, indemnify and hold harmless
Sellers, affiliates and shareholders of Sellers and their
employees, officers, directors and agents from and against any
and all claims, losses, demands, causes of action, suits, orders,
decrees, judgments, debts, liabilities and expenses, including
but not limited to court costs, arbitration costs and reasonable
attorneys' and experts' fees and expenses in any venue, forum or
tribunal, domestic or foreign, (collectively, a "Claim")
resulting from (a) any failure of Buyer promptly to carry out,
perform, satisfy and discharge any of its covenants, agreements,
undertakings or obligations under this Agreement or any Ancillary
Agreement, including, without limitation, any liability under
WARN or any similar state statute or regulation relating to
layoffs, terminations or closings, (b) subject to Section 6.3.4,
any breach of any representation or warranty by Buyer contained
herein or in any certificate delivered at the Closing in respect
thereof, (c) Buyer's ownership and operation of the Assets and B-
Line Business after the Effective Time or (d) the Assumed
Liabilities. For the avoidance of doubt, however, Buyer shall
assume and be responsible for Pre-Closing Product Claims, but
only to the extent of the reserve or accrual therefor reflected
on the Adjusted Consolidated Valuation (any further or greater
liability or obligation for Pre-Closing Product Claims being
retained by Sellers).
8.2 Indemnification by Sellers. From and after the
Closing Date, Sellers shall defend, indemnify and hold harmless
Buyer, affiliates and shareholders of Buyer and their respective
employees, officers, directors, agents and permitted transferees
from and against any and all Claims resulting from or arising out
of:
(a) any failure of Sellers promptly to carry out,
perform, satisfy and discharge any of their covenants,
agreements, undertakings, or obligations under this Agreement;
(b) subject to Section 6.3.4, any breach of any
representation or warranty of Sellers contained herein, or in any
certificate delivered at the Closing in respect thereof;
(c) any liability or obligation of Sellers which
is not an Assumed Liability;
(d) any liability of B-Line or B-Line
Manufacturing or the other Operating Companies for the unpaid
Taxes of any other person or entity under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local or foreign
Law), as a transferee or successor, by contract, or otherwise for
any Taxable period ending on or before the Effective Time;
(e) any of the following matters, notwithstanding
any disclosure made to Buyer, but except to the extent of a
reserve or accrual therefor reflected on the final Adjusted
Consolidated Valuation:
(i) Pre-Closing Product Claims (to the
extent not assumed by Buyer pursuant to Section 1.2 above);
(ii) workers' compensation claims arising
from any Occurrences prior to the Effective Time;
(iii) the payment of any retention pay or
bonus to any Current Employee agreed to by or on behalf of
Sellers prior to the Effective Time by reason of the sale
and purchase of the B-Line Business contemplated in this
Agreement (but excluding any obligations to provide
severance pay assumed by Buyer pursuant to the terms of this
Agreement including without limitation Section 7.3 hereof);
or
(iv) the assertion of any Claim relating to
any of Sellers' liability for Income Taxes owed by any of
Sellers for any taxable period ending on or before the
Closing Date except for Taxes assumed by Buyer pursuant to
Section 6.3.8(g); and
(v) any Environmental Liabilities arising
out of Occurrences prior to the Effective Time, except (A)
excluding any remediation or other corrective action which
is not required by Environmental Law, and (B) to the extent
that any such Environmental Liability is increased as a
result of any Occurrence following the Effective Time.
(f) the foregoing notwithstanding, however,
Sellers shall not be required to indemnify Buyer or any other
person or entity hereunder in regard to clause (b) (and such
clause only) of this Section 8.2 unless and until the aggregate
amount of all Claims pursuant to such clause (b) of this Section
8.2 exceeds $5,000,000 (the "Basket"), and then only for the
amount of such Claims in excess of the Basket, and further
provided that Sellers shall not be required to indemnify Buyer or
any other person or entity hereunder pursuant to clause (b) of
this Section 8.2 in the aggregate in an amount greater than 50%
of the Adjusted Purchase Price (the "Cap"). The ability of Buyer
to seek indemnity pursuant to clause (b) of this Section 8.2
shall not preclude Buyer from asserting its claim (on a first
dollar basis) pursuant to any other applicable clauses of this
Section 8.2. Buyer, or any other person or entity hereunder
shall not be entitled to indemnity under clause (b) of this
Section 8.2 to the extent any liability or loss which is the
subject of such claim is reserved or accrued on the Adjusted
Consolidated Evaluation.
8.3 Indemnification Procedures. Promptly after
acquiring knowledge of any Claim against which a party entitled
to indemnification hereunder (the "Indemnified Party") may seek
indemnification against the other party (the "Indemnifying
Party") pursuant to this Article Eight, the Indemnified Party
shall give written notice thereof to the Indemnifying Party;
provided, however, that failure to provide such notice will not
relieve the Indemnifying Party of any liability that it may have
to the Indemnified Party under this Agreement unless and to the
extent the Indemnifying Party is prejudiced as a result of such
failure (and in such event, the Indemnifying Party shall be
relieved of liability only to the extent of such prejudice). To
the extent that the Claim consists of or relates to a claim, suit
or action by a third party (including an Authority)(a "Third
Party Action"), so long. as the Indemnifying Party is actively
and diligently conducting itself in accordance with these
provisions the Indemnifying Party shall be entitled to assume
control of the defense of the Third Party Action with counsel and
experts reasonably satisfactory to such Indemnified Party;
provided however, that (x) the Indemnified Party shall at its own
expense be entitled to participate in the defense of such Third
Party Action and to employ separate counsel and experts and (y)
without the written consent of the Indemnified Party (which shall
not be unreasonably withheld), the Indemnifying Party shall not
consent to the entry of any judgment or enter into any settlement
that (a) does not include as an unconditional term thereof the
giving by the claimant or plaintiff to each Indemnified Party of
a release from all liability in respect of such Third Party
Action or (b) involves injunctive relief. After written notice
by the Indemnifying Party to the Indemnified Party of its
election to assume control of the defense of any such Third Party
Action, the Indemnifying Party shall not be liable to such
Indemnified Party hereunder for any legal expenses subsequently
incurred by such Indemnified Party in connection with the defense
thereof.
8.4 Computation of Claims. All computations of Claims
and the amount of indemnification to which any indemnified person
is entitled under this Article Eight shall be made giving effect
to the tax consequences of any such Claim, and all proceeds of
insurance recoverable by the exercise of reasonable diligence for
not more than one year by the indemnified persons with respect to
such Claims, provided that in the event that such insurance
recovery takes more than one year, the Indemnified Party shall be
entitled to initiate an indemnification claim and any subsequent
insurance proceeds shall be paid to the Indemnifying Party to the
extent of any payments made or expenses incurred by the
Indemnifying Party.
8.5 Term of Indemnification. The respective Parties'
rights to be indemnified pursuant to Article Eight hereof shall
be limited to Claims presented in writing to the Indemnifying
Party before the expiration of the period hereinafter set forth
applicable to the claim: (a) for all Claims other than those
described in the following clauses (b), (c) and (d) twenty four
(24) months after the Closing Date, (b) for any Claim for breach
of representations and warranties under Section 5.2.18 or
pursuant to Section 8.2(e)(v) five years after the Closing Date,
(c) for any claim for breach of representation and warranties
under Section 5.2.9 ten years after the Closing Date and (d) for
any Claim brought pursuant to Section 8.1(a), 8.1(c), 8.1(d),
8.2(a), 8.2(c), 8.2(d) or 8.2(e) (other than clause (v) thereof),
until the expiration of the statute of limitations applicable to
such Claim .
8.6 Sole Basis For Claims. The Parties agree that the
provisions of this Article Eight set forth the exclusive remedy
of the indemnified persons after the Closing with respect to any
Claims arising under or resulting from any provision of this
Agreement.
ARTICLE NINE: MISCELLANEOUS
9.1 Expenses. Each of Buyer and Sellers shall pay its
own expenses incidental to the negotiation, preparation and
performance of this Agreement and the Ancillary Agreements and
the transactions contemplated hereby and thereby, whether or not
the Closing occurs, as long. as failure to close is not a breach
of this Agreement. Buyer shall be responsible for the payment of
the filing fee under the HSR Act.
9.2 Scope of Liability and Available Remedies.
9.2.1 Joint and Several Liability. Each of
Sellers shall be deemed to have made jointly and severally each
and all of Sellers' representations, warranties, covenants,
undertakings and agreements in this Agreement or any agreement
referenced herein, and Sellers shall be liable jointly and
severally for all Claims arising from any actual or asserted
breach thereof.
9.2.2 Joint and Several Liability. Each Buyer
shall be deemed to have made jointly and severally each and all
of Buyer's representations, warranties, covenants, undertakings
and agreements in this Agreement or any agreement referenced
herein, and each Buyer shall be liable jointly and severally for
all Claims arising from any actual or asserted breach thereof.
9.2.3 Certain Damages Waived. EXCEPT WITH
RESPECT TO RIGHTS OF INDEMNIFICATION IN REGARD TO AWARDS MADE
PURSUANT TO THIRD PARTY ACTIONS, NEITHER SELLERS ON ONE HAND NOR
BUYER ON THE OTHER HAND SHALL BE LIABLE TO THE OTHER FOR ANY
CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS
AGREEMENT OR ANY AGREEMENT REFERENCED IN THIS AGREEMENT, OR A
PARTY'S ACTIONS OR FAILURE TO ACT RELATED THERETO, ANY OTHER
PROVISION TO THE CONTRARY NOTWITHSTANDING.
9.3 Arbitration.
9.3.1 Conference. The Parties shall attempt
in good faith to resolve by agreement any dispute relating to
this Agreement or the agreements referenced herein or any alleged
breach hereof or thereof (except those to which the arbitration
provisions in Section 2.3 apply and any claim or dispute
regarding a covenant not to compete including the enforceability
thereof), including any issue as to whether this Section 9.3
applies (but not the issue whether this Section 9.3 applies to a
claim or dispute regarding any covenant not to compete), which
shall be submitted for resolution to an authorized officer of
Xxxxxx and an authorized representative of the Sellers involved
in the claim or dispute (each such officer and representative
being fully empowered to settle the claim or dispute on behalf of
all of Buyer and Sellers), all of whom shall meet within 15
business days of such submission to seek in good faith an
amicable settlement.
9.3.2 General. Any dispute relating to this
Agreement which is not settled by the Parties within 60 days
after written notice of the claim is first given by either Party
to the other pursuant to Section 9.3.1 shall be settled by
arbitration in accordance within the commercial arbitration rules
of the American Arbitration Association ("AAA") and the
Guidelines for Expediting Larger, Complex Commercial Arbitrations
of the AAA, and judgment upon the award rendered by the
Arbitrator may be entered in any court having jurisdiction over
it. The arbitration proceeding, including the rendering of an
award, shall take place in Chicago, Illinois and shall be
administered by the AAA.
9.3.3 Appointment of Tribunal. Except as
otherwise provided in Sections 2.3, 2.4, and 2.5 hereof, the
arbitral tribunal shall be appointed within thirty (30) days of
the notice of the dispute and shall consist of three (3)
arbitrators, one of whom shall be appointed by Sellers, one by
Buyer and the third by both Sellers and Buyer jointly; provided,
however, if Sellers and Buyer do not select the third arbitrator
within such thirty-day period, such arbitrator shall be chosen by
the AAA as soon as practicable following notice to the AAA by the
Parties of their inability to choose such third arbitrator.
9.3.4 Final and Binding. The award of any
such arbitral tribunal shall be final and binding upon the
Parties to the arbitration. The Parties hereby waive to the
extent permitted by law any rights to appeal or to review of such
award by any court or tribunal. Judgment upon such award may be
entered by the prevailing Party in any court having jurisdiction.
9.3.5 Award. Subject to the provisions of
Sections 8.6 and 9.2 hereof, the award of the arbitral tribunal
may be alternatively or cumulatively for monetary damages, an
order requiring the performance of non-mandatory obligations
(including specific performance) or any other appropriate order
or remedy, including without limitation, injunction and specific
performance. The arbitral tribunal may issue interim awards and
order any provisional measures which should be taken to preserve
the respective rights of either Party which may be enforced in
any court or tribunal of competent jurisdiction.
9.3.6 Cost of Proceedings. The cost of the
arbitration proceeding, including reasonable attorney's and
experts' fees and expenses for both Parties, if there are any,
shall be paid by the non-prevailing Party, unless otherwise
determined by the arbitral tribunal.
9.3.7 Agents. Each Seller appoints SIAL
(including any successor thereof upon written notice to Buyer,
"Sellers' Agent") as its agent to receive on its behalf service
of copies of any notice of dispute, complaint, summons or any
other process that might be served in any action or proceeding or
entering of judgment arising out of or relating to this
Agreement. Buyer may make service on any Seller by sending or
delivering a copy of the process (i) to the Party to be served at
the address and in the manner provided for the giving of notices
in Section 9.4 or (ii) to the Party to be served in care of the
Sellers' Agent at the address and in the manner provided for the
giving of notices in Section 9.4 with a copy to the applicable
Seller or Sellers. Each Buyer appoints Xxxxxx (including any
successor thereof upon written notice to Sellers, "Buyer's
Agent") as its agent to receive on its behalf service of copies
of any notice of dispute, complaint, summons or any other process
that might be served in any action or proceeding or entering of
judgment arising out of or relating to this Agreement. Sellers
may make service on any Buyer by sending or delivering a copy of
the process (i) to the Party to be served at the address and in
the manner provided for the giving of notices in Section 9.4 or
(ii) to the Party to be served in care of the Buyer's Agent at
the address and in the manner provided for the giving of notices
in Section 9.4 with a copy to the applicable Buyer or Buyers.
Nothing in this Section 9.3.7, however, shall affect the right of
any Party to bring any such action or proceeding or entering of
judgment in any other court or to serve legal process in any
other manner permitted by law or at equity. Each Party agrees
that a final judgment in any action or proceeding so brought
shall be conclusive and may be enforced by suit on the judgment
or in any other manner provided by law or at equity.
9.4 Notices. Any notices or other communications
required or permitted hereunder shall be given in writing and
shall be sufficiently given if delivered personally or sent by
confirmed facsimile, or registered mail or certified mail, return
receipt requested, postage prepaid, addressed as follows:
To Buyer or Buyer's Agent: Xxxxxx Industries, Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
To Sellers or Sellers' Agent: Sigma-Xxxxxxx Corporation
0000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
with copies to:
For Sellers: Xxxxx Xxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxx X. Xxxxx
Facsimile: (000) 000-0000
or to such other address as shall hereafter be furnished in
writing by any Party in the aforesaid manner, and any such notice
or communication shall be deemed to have been given as of the
date so delivered or 3 days after the date mailed as provided
above.
9.5 Captions. The captions set forth in this
Agreement are for convenience only and shall not be considered as
part of this Agreement, nor as in any way limiting or amplifying
the terms and provisions hereof.
9.6 Successors and Assigns; Other Parties. This
Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and assigns, provided
that this Agreement may not be assigned by either Party without
the prior written consent of the other Party; provided, however,
that Buyer may (i) assign any or all of its rights and interests
hereunder to one or more of its affiliates and (ii) designate one
or more of its affiliates to perform its obligations hereunder.
No assignment (including without limitation any such assignment
by Buyer) shall relieve a Party of any of its obligations
hereunder without the prior written consent of the other Party.
Nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or entity, other
than the Parties and their respective successors and assigns
(permitted successors and assigns in the case of Sellers), any
rights or remedies under or by reason of this Agreement. Any
assignment requiring consent that is made without such consent
shall be void.
9.7 Entire Agreement. Except for the Confidentiality
Agreement dated December 6, 1999 between the Parties, as amended
or supplemented, which Confidentiality Agreement shall remain in
full force and effect until Closing at which point it shall
expire, this Agreement and the Ancillary Agreements (together
with the Exhibits and Schedules hereto and thereto) supersede any
other agreement, commitment, arrangement or understanding of any
sort whatever, whether written or oral, that may have been made
or entered into by any of the Parties (or by any director,
officer, employee or representative of such Parties or their
affiliates) relating to the sale and purchase of the B-Line
Business. The Confidentiality Agreement, this Agreement, the
Ancillary Agreements and the Exhibits and Schedules hereto and
thereto constitute the entire agreement by and between the
Parties relating to the sale and purchase of the B-Line Business
and there are no agreements, commitments, arrangements or
understandings except as expressly set forth herein.
9.8 Construction. Both Parties have participated in
the drafting of this entire Agreement and expressly acknowledge
such joint participation to avoid application of any rule
construing contractual language against the Party which drafted
the language. The word "including" shall mean including without
limitation. Any Exhibits, Certificates and Schedules identified
in this Agreement are incorporated herein by reference and made a
part hereof.
9.9 Time of Essence. Time shall be of the essence
with respect to each Party's performance of its obligations
pursuant to this Agreement.
9.10 Termination. This Agreement may be terminated as
follows:
(a) Xxxxxx and SIAL, on behalf of all Sellers,
may terminate this Agreement by mutual written consent at any
time prior to the Closing;
(b) Xxxxxx on behalf of Buyer may terminate this
Agreement by giving written notice to Seller's Agent on behalf of
all Sellers at any time prior to the Closing (i) in the event any
of Sellers has breached any representation, warranty, or covenant
contained in this Agreement in any material respect, Buyer has
notified Sellers' Agent in writing of the breach, and the breach
has continued without cure for a period of 30 days after the
notice of breach or (ii) if the Closing shall not have occurred
on or before September 30, 2000, by reason of the failure of any
condition precedent under Section 3.2 hereof (unless the failure
results primarily from Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(c) SIAL on behalf of all Sellers may terminate
this Agreement by giving written notice to Buyer's Agent at any
time prior to the Closing (i) in the event Buyer has breached any
representation, warranty, or covenant contained in this Agreement
in any material respect, any of Sellers has notified Buyer's
Agent in writing of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach
or (ii) if the Closing shall not have occurred on or before
September 30, 2000, by reason of the failure of any condition
precedent under Section 3.1 hereof (unless the failure results
primarily from any of Sellers themselves breaching any
representation, warranty, or covenant contained in this
Agreement).
Termination by any Seller shall be exercised only by Seller's
Agent acting on behalf of all Sellers. Termination by any Buyer
shall be exercised only by Buyer's Agent acting on behalf of all
Buyers. A Party's exercise of its rights of termination
hereunder shall terminate all rights and obligations of the
Parties except the right of any party to recover damages from any
other Party for any breach by such other Party of this Agreement.
9.11 Counterparts. This Agreement may be executed in
two counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same instrument. It
shall not be necessary for every Party hereto to sign each
counterpart but only that each Party shall sign at least one such
counterpart.
9.12 Governing Law. This Agreement shall in all
respects be governed by and construed in accordance with the
local laws of the State of Missouri, without reference to its
principles of choice or conflict of law.
9.13 Modification; Waiver. No modification of or
amendment to this Agreement shall be valid unless in a writing
signed by the Parties referring specifically to this Agreement
and stating the Parties' intention to modify or amend the same.
Any waiver of any term or condition of this Agreement must be in
a writing signed by the Party sought to be charged with such
waiver referring specifically to the term or condition to be
waived, and no such waiver shall be deemed to constitute the
waiver of any other breach of the same or of any other term or
condition of this Agreement.
9.14 Severability. The invalidity or unenforceability
of any particular provision of this Agreement shall not affect
the validity or enforceability of the other provisions hereof.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, Sellers and Buyer, by their duly
authorized officers, have caused this Agreement to be executed as
of the date first above written.
XXXXXX INDUSTRIES, INC. SIGMA-XXXXXXX CORPORATION
By: \c\ Xxxxx X Xxxxxxxxxx By: \c\ Xxxxxxx X. Xxxxx
Name: Xxxxx X. Xxxxxxxxxx Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President, Title: Chief Financial Officer
General Counsel and
Secretary
SIGMA-XXXXXXX CANADA LTD. SIGMA-XXXXXXX CO.
By: \c\ Xxxxxxx X. Xxxxx By: \c\ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
Title: Authorized Signatory Title: Authorized Signatory
SIGMA-XXXXXXX COMPANY LTD. SIGMA-XXXXXXX CHEMIE GMBH
By: \c\ Xxxxxxx X. Xxxxx By: \c\ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
Title: Authorized Signatory Title: Authorized Signatory
CBL ACQUISITION CORP. XXXXXX TECHNOLOGIES COMPANY
By: \c\ Xxxxx X Xxxxxxxxxx By: \c\ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxxxxxxxx Name: Xxxxx X. Xxxx
Title: President Title: General Counsel
GLOSSARY INDEX OF DEFINED TERMS
Term Page Term Page
AAA 67 Laws 24
Accounting Arbitrator 7 Liens 27
ACM 40 Long Term Debt 5
Adjusted Consolidated Manufacturing Stock 2
Valuation 6 multiemployer plan 36
Adjusted Purchase Price 6 Occurrence 50
Agreement 1 Operating Companies 18
Ancillary Agreements 18 Other Taxes 34
Arbitration Deadline 7 Owned Properties 28
Assets 3 Parties 1
Assumed Liabilities 4 Party 1
Xxxxxxxxx 00 XXXX 00
Basket 63 Permits 24
Xxxx of Sale 15 Permitted Liens 28
B-Line 2 Plans 36
B-Line Business 1 Pre-Closing Product Claims 4
B-Line Manufacturing 2 Pre-Closing Tax Period 54
B-Line Stock 2 Preliminary Consolidated
Buyer 1 Valuation 6
Buyer's Letter 7 Preliminary Purchase Price6
Canada B-Line Business Assets2 Release 40
Cap 63 Released 40
Claim 61 Requesting Party 51
Closing 14 SAC 1
Closing Date 14 SAC B-Line Business Assets 2
Code 10 Scheduled Contracts 35
Current B-Line Insurance 42 Scheduled Intangibles 30
Current Employees 57 Section 338(h)(10) Election
Effective Time 14 10
Employee 57 Seller Group 53
employee benefit plan 36 Sellers 1
employee pension plan 36 Sellers' Agent 68, 69
employee welfare plan 36 Sellers' Letter 7
Employees 57 Settlement 9
Environment 38 Shares 10
Environmental Laws 38 SIAL 1
Environmental Liabilities 26 Sigma Canada 1
Environmental Permits 40 Sigma Germany 1
ERISA 36 Sigma UK 1
Excluded Assets 3 Tax 34
Financial Statements 20 Taxes 34
GAAP 20 Third Party Action 64
General Assignment and Transfer Taxes 56
Assumption 14 UK B-Line Business Assets 3
Germany B-Line Business Assets WARN 60
3
Hazardous Substances 39
HSR Act 53
Income Tax Asset 53
Income Taxes 34
Indemnified Party 63
Indemnifying Party 64
Intangibles 30
knowledge 16
LIST OF SCHEDULES
1.1(c) SAC B-Line Business Assets
1.2(f) Long Term Debt Assumed (IRB)
2.2(a) Preliminary and Adjusted Consolidated Valuation
2.2(b) Preliminary Consolidated Valuation
3.2.8 Assigned Leases
4.3 Wiring Instructions
5.1 Knowledge Persons
5.2.2(d) Certain Securities
5.2.3(a) Unaudited Financial Statements
5.2.3(b) Audited Financial Statements
5.2.4 Absence of Changes
5.2.5 Compliance with Law; Licenses and Permits
5.2.6(a) Litigation and Related Matters
5.2.6(b) Product Sale Terms
5.2.7 Title to Property - Owned
5.2.8 Personal Property - Leased
5.2.9 Owned Properties
5.2.10 Real Property - Leased
5.2.11(a) Patents, Trademarks and Other Intellectual Property
(Intangibles)
5.2.11(b) Exceptions to Rights
5.2.12 Taxes
5.2.13 Contracts
5.2.14 Labor Relations
5.2.15(a) Employee Benefit Plans
5.2.17 Inventory
5.2.18 Environmental Matters
5.2.19 Transactions with Affiliated Persons
5.2.21 Shared Facilities, Etc.
5.2.25 Current B-Line Insurance
5.3.5 Buyer's Knowledge
6.1.1 Interim Operation of B-Line Business
6.1.8 Certain Intercompany Agreements
7.1(a) Employees of Operating Companies
7.3(b) Benefits Payable by Buyer
7.4 Terminated Employees of Operating Companies
Schedule 2.2(a)
Determination of Preliminary and Adjusted Consolidated Valuation
1. The Preliminary Consolidation Valuation has been and the
Adjusted Consolidated Valuation shall be prepared in accordance
with the provisions of this Schedule 2.2(a). In the event of a
conflict or inconsistency (i) between this Schedule and the
remainder of the Agreement, this Schedule shall take precedence,
(ii) between Paragraphs 1.1 or 1.2 and 1.3 of this Schedule,
Paragraph 1.3 of this Schedule shall take precedence over
Paragraphs 1.1 and 1.2 of this Schedule, and (iii) between
Paragraphs 1.1 and 1.2 of this Schedule, Paragraph 1.2 of this
Schedule shall take precedence over Paragraph 1.1 of this
Schedule.
1.1. The Preliminary Consolidation Valuation has been and
the Adjusted Consolidated Valuation shall be, except as provided
in Paragraph 1.2 and 1.3, prepared in accordance with principles,
practices and procedures which are the same as those which were
applied in preparing the Audited Financial Statements, and as to
assets or liabilities of a kind or type that were not included in
the Audited Financial Statements, in accordance with normal
principles, practices and procedures of the B-Line Business
regarding similar assets or liabilities.
1.2. Notwithstanding anything to the contrary in Paragraph
1.1, if any of the principles, practices or procedures required
by Paragraph 1.1 produces asset or liability amounts which are
not in compliance with GAAP, the Preliminary Consolidation
Valuation does and the Adjusted Consolidated Valuation shall
reflect an adjustment necessary to produce asset or liability
amounts which are in compliance with GAAP.
1.3. Notwithstanding anything to the contrary in Paragraphs
1.1 or 1.2, the following specific accounting rules controlled
the preparation of the Preliminary Consolidated Valuation and
shall control the preparation of the Adjusted Consolidated
Valuation:
1.3.1. The Preliminary Consolidated Valuation does
not and the Adjusted Consolidated Valuation will not include any
assets or liabilities for deferred Income Taxes.
1.3.2. The quantities of inventory used to determine
the inventory amount to be included in the Adjusted Consolidated
Valuation will be based on the results of a physical inventory to
be taken immediately after the Closing Date. Such physical
inventory shall not include consignment locations (as to which
inventory shall be verified by solicitation of written
confirmation from the consignee). Such physical inventory shall
be taken by Buyer's employees or representatives, at Buyer's
expense. To facilitate this physical inventory count employees
of the B-Line Business shall perform customary pre-counts and
other preparation prior to the Closing Date. Sellers shall have
the right to have their employees or representatives observe such
physical inventory. Inventory will be revalued prior to the
Closing Date as a result of updating standard costs in a manner
consistent with past practices of the B-Line Business; provided,
however, that in no event will such revaluation exceed $1 million
for purposes of the Adjusted Consolidated Valuation. Obsolete
inventory reserves shall be determined using the normal practice
of the B-Line Business (pursuant to which the reserve for "C"
item inventory is valued at 13 1/2% of the standard cost of such
inventory items and the reserve for "D" Item inventory is valued
at 90% of the standard cost of such inventory items); provided
that the obsolete inventory reserve will not be reduced from the
amount of such reserve as reflected on the Audited Financial
Statements as of December 31, 1999. Excess inventory
adjustments, if any, shall be determined in accordance with the
following schedule (for purposes of which "Base Units" of any
item of inventory shall be the quantities of such items used or
sold during the preceding 12 months):
Items for which inventory is equal to
or less than 1.5 times Base Units No adjustment
Items for which inventory
is greater than 1.5 Base Units, but
equal to or less than 2.0 times
Base Units Such inventory items
will be valued at 50%
of standard cost
Items for which inventory is
greater than 2.0 times Base Units Such inventory items
will be valued at 0%
of standard cost
There will be no adjustment for new products introduced
during the preceding 12 months, or for custom inventory
which is being made to satisfy a specific customer
order.
1.3.3. The Preliminary Consolidation Valuation does
not and the Adjusted Consolidated Valuation will not include any
amount payable to or receivable from any Seller or any affiliate
of any Seller.
1.3.4. The Adjusted Consolidated Valuation will
reflect the results of a fixed asset physical existence test of
tangible fixed assets with a net book value greater than $20,000
to be conducted immediately following Closing. Intangibles
capitalized as fixed assets will not be included in such physical
existence test, but to the extent they represent new assets
recorded since December 31, 1999 with a net book value greater
than $20,000 or assets the net book value of which increased by
more than $20,000 since such date, their existence shall be
confirmed by review of the applicable supporting documentation.
The net book value of fixed assets greater than $20,000 which
cannot be physically located or so confirmed will be excluded
from the Adjusted Consolidated Valuation. Such fixed asset
physical existence and confirmation tests shall be conducted by
employees or representatives of the Buyer and at its expense.
Sellers shall have the right to have their employees or
representatives observe such test. In the event any assets so
excluded are subsequently physically located or so confirmed
within 12 months following Closing, the net book value thereof
plus interest calculated as provided in Section 2.4 of the
Agreement shall be paid to Seller.
1.3.5. The Preliminary Consolidated Valuation does
not and the Adjusted Consolidated Valuation will not include any
liabilities or assets with respect to legal, accounting, tax or
investment banking fees incurred by Sellers in connection with
the transaction provided for the Agreement.
1.3.6. The Adjusted Consolidated Valuation will not
include any prepaid expenses, deposits or deferred charges that
are not recoverable in cash or do not provide a direct and
measurable benefit to Buyer.
1.3.7 The Preliminary Consolidated Valuation does
not and the Adjusted Consolidated Valuation will not include
accounts payable which represent checks written on bank accounts
not included in the Assets.
1.3.8 In the Adjusted Consolidated Valuation, the
following accruals will not be decreased from the amounts
included in the Preliminary Consolidated Valuation except to the
extent of amounts paid in cash to third parties between January
1, 2000 and the Effective Time:
Wages and Vacation
Salesmen Bonus
Real Estate Taxes
Sales Incentive Credits
Commissions
Fringes and Other Accruals
Allowance for Bad Debt
Reserve for Credit Memos
1.3.9 The Adjusted Consolidated Valuation shall
include an accrual for the retiree welfare benefits liability,
responsibility for which is being assumed by Buyer as provided in
Section 7.2(b). Such accrual shall equal the aggregate
actuarially determined accrual for such benefits allocable to the
Current Employees who became employees of Buyer following the
Effective Time (other than any such Current Employees whose
benefits Sellers have retained responsibility for as provided in
Section 7.2(b)), as reflected on the books of SIAL as of
December 31, 1999 in accordance with FAS 107.
1.3.10 To the extent not covered by this proceeding
subsections of this Section 1.3, the Preliminary Consolidated
Valuation does not and the Adjusted Consolidation Valuation will
not include any Excluded Assets or Excluded Liabilities.
