Exhibit 10.2
ASSET PURCHASE AGREEMENT
DATED SEPTEMBER 3, 1995
BETWEEN
CLARCOR INC.,
HASTINGS MANUFACTURING COMPANY,
AND
HASTINGS INC.
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
1.1. Definitions ........................................... 2
ARTICLE II
PURCHASE AND SALE
2.1. Purchased Assets ...................................... 18
2.2. Excluded Assets ....................................... 23
2.3. Assumed Liabilities ................................... 25
2.4. Excluded Liabilities .................................. 26
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price ........................................ 29
3.2. Determination of Estimated Purchase Price ............. 29
3.3. Determination of Purchase Price ....................... 30
3.4. Adjustment ............................................ 33
3.5. Allocation of Purchase Price .......................... 34
3.6. Valuation of Inventory and Reserve for Filter Product
Warranty Liability ..................................... 35
ARTICLE IV
CLOSING
4.1. Closing Date .......................................... 37
4.2. Payment on the Closing Date; Escrow ................... 38
4.3. Buyer's Additional Deliveries ......................... 38
4.4. Seller's Additional Deliveries ........................ 40
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
5.1. Organization .......................................... 43
5.2. Subsidiaries and Investments .......................... 44
5.3. Authority ............................................. 44
5.4. Financial Statements .................................. 46
5.5. Operations Since December 31, 1994 .................... 47
5.6. No Undisclosed Liabilities ............................ 49
5.7. Taxes ................................................. 50
5.8. Availability of Assets ................................ 51
5.9. Governmental Permits .................................. 51
5.10. Real Property ........................................ 53
5.11. Real Property Leases ................................. 53
5.12. Condemnation ......................................... 54
5.13. Personal Property .................................... 54
5.14. Personal Property Leases ............................. 55
5.15. Intellectual Property; Software ...................... 55
5.16. Title to Property .................................... 59
5.17. Employees and Related Agreements; ERISA .............. 59
5.18. Employee Relations ................................... 64
5.19. Contracts ............................................ 65
5.20. Status of Contracts .................................. 66
5.21. No Violation, Litigation or Regulatory Action ........ 68
5.22. Environmental Matters ................................ 69
5.23. Insurance ............................................ 72
5.24. Customers and Suppliers .............................. 72
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5.25. Warranties. .......................................... 74
5.26. No Finder ............................................ 74
5.27. Disclosure ........................................... 74
5.28. Financial Projections; Budgets ....................... 75
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1. Organization of Buyer ................................. 76
6.2. Authority of Buyer .................................... 76
6.3. Litigation ............................................ 77
6.4. No Finder ............................................. 77
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Covenant Not to Compete or Solicit Business ........... 78
7.2. Use of Names .......................................... 80
7.3. Taxes ................................................. 81
7.4. Discharge of Liabilities of the Business .............. 84
7.5. Transition Matters .................................... 84
7.6. Warranty and Product Liability Claims in Respect of
Filter Products Produced by Seller Prior to the
Closing Date .......................................... 85
7.7. Collection of Accounts Receivable ......................86
7.8. Soliciting Employees of Seller .........................87
ARTICLE VIII
ADDITIONAL CLOSING DATE DELIVERIES BY SELLER
8.1. Closing Certificate ....................................89
8.2. Audited Financial Statements. ..........................90
8.3. Title Insurance ........................................90
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ARTICLE IX
ADDITIONAL CLOSING DATE DELIVERIES BY BUYER
9.1. Closing Certificate ....................................92
ARTICLE X
INDEMNIFICATION
10.1. Indemnification by Seller .............................92
10.2. Indemnification by Buyer ..............................95
10.3. Notice of Claims ......................................97
10.4. Third Person Claims ...................................99
10.5. Character of Payments ................................101
ARTICLE XI
GENERAL PROVISIONS
11.1. Survival of Obligations ..............................101
11.2. Confidential Nature of Information ...................102
11.3. No Public Announcement ...............................103
11.4. Notices ..............................................104
11.5. Successors and Assigns ...............................105
11.6. Access to Records after Closing ......................106
11.7. Entire Agreement; Amendments .........................107
11.8. Interpretation .......................................107
11.9. Waivers ..............................................107
11.10. Expenses ............................................108
11.11. Partial Invalidity ..................................108
11.12. Execution in Counterparts ...........................109
11.13. Further Assurances ..................................109
11.14. Governing Law .......................................110
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EXHIBITS
Exhibit A: Instrument of Assignment and Xxxx of Sale
Exhibit B: Instrument of Assumption
Exhibit C: Opinion of Counsel to Buyer
Exhibit D: Opinion of Counsel to Seller
Exhibit E: Escrow Agreement
Exhibit F: Transition Agreement
Exhibit G: License Agreement
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated September 3, 1995 (the
"Agreement"), between CLARCOR Inc., a Delaware corporation ("Buyer"),
Hastings Manufacturing Company, a Michigan corporation ("Seller"), and
Hastings Inc., a Canadian corporation ("Hastings Canada").
WHEREAS, Seller and Hastings Canada are, among other things,
engaged in the business (the "Business") of manufacturing, selling and
distributing oil, air, diesel fuel, radiator, water, gas and transmission
fluid filters and crankcase breathers and pollution control valves (the
"Filter Products"); and
WHEREAS, Seller and Hastings Canada desire to sell to Buyer, and
Buyer desires to purchase from Seller and Hastings Canada, on a going
concern basis, the Business and the assets and properties specified herein
used by Seller and Hastings Canada in connection with the Business, all on
the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed between Seller,
Hastings Canada and Buyer as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. In this Agreement, the following terms have
the meanings specified or referred to in this SECTION 1.1 and shall be
equally applicable to both the singular and plural forms. Any agreement
referred to below shall mean such agreement as amended, supplemented and
modified from time to time to the extent permitted by the applicable
provisions thereof and by this Agreement.
"ACCOUNTING FIRM" has the meaning specified in SECTION 3.3(D).
"AFFILIATE" means, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person.
"AFTER-TAX BASIS" shall mean, with respect to any amount which is
to be paid hereunder on an "After-Tax Basis," an amount which, after
subtraction of the amount of all federal, state and foreign Taxes payable
by the recipient thereof as a result of the receipt or accrual of such
payment, and after taking into account (i) the increase in federal, state
and foreign Taxes (including estimated Taxes) payable by such recipient
for all affected taxable years as a result of the event or occurrence
giving rise to such payment (the "INDEMNIFIED EVENT"), and (ii) the
reduction in federal, state and foreign Taxes (including estimated Taxes)
payable by the recipient for all taxable years ending on or before the end
of the taxable year in which such payment is made, shall be sufficient as
of the date of payment to compensate the recipient for such Indemnified
Event.
"AGREED ACCOUNTING PRINCIPLES" means generally accepted
accounting principles consistently applied, PROVIDED that, with respect to
any matter as to which there is more than one generally accepted
accounting principle, Agreed Accounting Principles means the generally
accepted accounting principles applied in the preparation of the Audited
1994 Financial Statements; PROVIDED FURTHER that, notwithstanding the
foregoing, Agreed Accounting Principles shall include the accounting
policies and be subject to the exceptions described in SCHEDULE 1.1; and
PROVIDED FURTHER that, for purposes of the Agreed Accounting Principles,
no known adjustments for items or matters, regardless of the amount
thereof, shall be deemed to be immaterial.
"AGREED ADJUSTMENTS" has the meaning specified in SECTION 3.3(C).
"AGREED RATE" means the prime rate published by The First
National Bank of Chicago, as that rate may vary from time to time, or if
that rate is no longer published, a comparable rate.
"ALLOCATION SCHEDULE" has the meaning specified in SECTION
3.5(B).
"APPRAISAL" has the meaning specified in SECTION 3.5(A).
"APPRAISER" has the meaning specified in SECTION 3.5(A).
"ASSUMED LIABILITIES" has the meaning specified in SECTION 2.3.
"AUDITED 1994 FINANCIAL STATEMENTS" has the meaning specified in
SECTION 8.2.
"BASE INVENTORY" has the meaning specified in SECTION 3.6.
"BOOK VALUE" means the total net book value of the Purchased
Assets as set forth on the books of the Seller and determined in
accordance with Agreed Accounting Principles.
"BULK SALES LAWS" has the meaning specified in SECTION 5.6.
"BUSINESS" has the meaning specified in the first recital to this
Agreement.
"BUYER" has the meaning specified in the first paragraph of this
Agreement.
"BUYER ANCILLARY AGREEMENTS" means all agreements, instruments
and documents being or to be executed and delivered by Buyer (or its
designee) under this Agreement or in connection herewith.
"BUYER GROUP MEMBER" means Buyer and its Affiliates and their
respective successors and assigns.
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"CANADIAN ASSETS" has the meaning specified in SECTION 2.1(B).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601 ET SEQ.,
any amendments thereto, any successor statutes, and any regulations
promulgated thereunder.
"CLAIM NOTICE" has the meaning specified in SECTION 10.3(A).
"CLOSING" means the closing of the transfer of the Purchased
Assets from Seller and Hastings Canada to Buyer.
"CLOSING DATE" has the meaning specified in SECTION 4.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTAMINANT" means any waste, pollutant, hazardous or toxic
substance or waste, petroleum, petroleum-based substance or waste, special
waste, or any constituent of any such substance or waste.
"COPYRIGHTS" means United States and foreign copyrights related
to the Business, whether registered or unregistered, and pending
applications to register the same.
"COURT ORDER" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal and any award in
any arbitration proceeding.
"ENCUMBRANCE" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention
agreement, defect in title, covenant or other restrictions of any kind.
"ENVIRONMENTAL ENCUMBRANCE" means an Encumbrance in favor of any
Governmental Body for (i) any liability under any Environmental Law, or
(ii) damages arising from, or costs incurred by such Governmental Body in
response to, a Release or threatened Release of a Contaminant into the
environment.
"ENVIRONMENTAL LAW" means all Requirements of Laws derived from
or relating to all federal, state and local laws or regulations relating
to or addressing the environment, health or safety, including but not
limited to CERCLA, OSHA and RCRA and any state or Canadian law equivalent
thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESCROW AGENT" means a bank or trust company, mutually acceptable
to Buyer and Seller, acting as escrow agent pursuant to the Escrow
Agreement.
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"ESCROW AGREEMENT" means the Escrow Agreement to be entered into
between Buyer, Seller and the Escrow Agent substantially in the form
attached hereto as EXHIBIT E.
"ESCROW PAYMENT" means $850,000.
"ESTIMATED PURCHASE PRICE" means the Purchase Price, as defined
herein, but determined on an estimated basis by Seller in good faith and
as reflected in the certificate referred to in SECTION 3.2.
"ESTIMATED VALUATION DATE BOOK VALUE" has the meaning specified
in SECTION 3.2.
"EXCLUDED ASSETS" has the meaning specified in SECTION 2.2.
"EXEMPT EMPLOYEE" has the meaning specified in SECTION 7.8(A).
"EXEMPT EMPLOYEE LIST" has the meaning specified in SECTION
7.8(A).
"EXPENSES" means any and all reasonable expenses incurred in
connection with investigating, defending or asserting any claim, action,
suit or proceeding incident to any matter indemnified against hereunder
(including, without limitation, court filing fees, court costs,
arbitration fees or costs, witness fees, and fees and disbursements of
legal counsel, investigators, expert witnesses, consultants, accountants
and other professionals).
"FACILITY TERMINATION LIABILITY" has the meaning specified in
SECTION 7.5(B).
"FILTER PRODUCTS" has the meaning specified in the first recital
to this Agreement.
"GOVERNMENTAL BODY" means any foreign, federal, state, local or
other governmental authority or regulatory body.
"GOVERNMENTAL PERMITS" has the meaning specified in
SECTION 5.9(A).
"GROSS DOLLAR AMOUNT OF INVENTORY" has the meaning specified in
SECTION 3.6.
"HASTINGS CANADA" has the meaning specified in the first
paragraph of this Agreement.
"HASTINGS MICHIGAN PLANT" means the office and manufacturing
facility owned and operated by Seller located in Hastings, Michigan.
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"HASTINGS TRADE NAMES" shall mean: "Hastings Filters," "Hastings
Filtration" "Casite Filters," "Casite Filtration" and "Lifeguard Filters,"
and any combinations of the foregoing.
"HASTINGS TRADEMARK" has the meaning specified in SECTION
5.15(A).
"INDEMNIFIED PARTY" shall have the meaning specified in SECTION
10.3.
"INDEMNITOR" shall have the meaning specified in SECTION 10.3.
"INSTRUMENT OF ASSIGNMENT" means the Instrument of
Assignment and Xxxx of Sale in the form of EXHIBIT A.
"INSTRUMENT OF ASSUMPTION" means the Instrument of Assumption in
the form of EXHIBIT B.
"INTELLECTUAL PROPERTY" means Copyrights, Patent Rights,
Trademarks and Trade Secrets.
"INTERIM 1995 FINANCIAL STATEMENTS" has the meaning specified in
SECTION 8.2.
"INVENTORY CALCULATION BASE" has the meaning specified in SECTION
3.6.
"INVENTORY PRICE" has the meaning specified in SECTION 3.6.
"IRS" means the Internal Revenue Service.
"KNOXVILLE FACILITY" means the packaging and shipping facility
currently owned by Seller located in Knoxville, Tennessee.
"LICENSE" means the Trademark License Agreement in the form of
EXHIBIT G.
"LOSSES" means any and all losses, costs, obligations,
liabilities, settlement payments, awards, judgments, fines, penalties,
damages, expenses, deficiencies or other charges.
"NET DOLLAR AMOUNT OF INVENTORY" has the meaning specified in
SECTION 3.6.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
651 ET SEQ., any amendment thereto, any successor
statute, and any regulations promulgated thereunder.
"OWNED REAL PROPERTY" has the meaning specified in SECTION 5.10.
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"PATENT RIGHTS" means United States and foreign patents, patent
applications, continuations, continuations-in-part, divisions, reissues,
patent disclosures, inventions (whether or not patentable) or improvements
thereto related to the Business.
"PERMITTED ENCUMBRANCES" means (a) liens for taxes and other
governmental charges and assessments which are not yet due and payable,
(b) liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of
business for sums not yet due and payable, (c) other liens or
imperfections on property which are not material in amount or do not
materially detract from the value of or materially impair the existing use
of the property affected by such lien or imperfection, and (d) those
additional specific exceptions to title identified as Permitted
Encumbrances on SCHEDULE 1.2.
"PERSON" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company,
trust, unincorporated organization or Governmental Body.
"PRELIMINARY ACCOUNTING REPORT" has the meaning specified in
SECTION 3.3(A).
"PRELIMINARY PURCHASE PRICE" has the meaning specified in SECTION
3.3(A).
"PRELIMINARY VALUATION DATE STATEMENT OF BOOK VALUE" has the
meaning specified in SECTION 3.3(A).
"PURCHASE PRICE" has the meaning specified in SECTION 3.1.
"PURCHASED ASSETS" has the meaning specified in SECTION 2.1.
"RCRA" means the Resource Conservation and Recovery Act, 42
U.S.C. 6901 ET SEQ., and any successor statute, and any
regulations promulgated thereunder.
"REFERENCE BOOK VALUE" means $12,246,000.
"RELEASE" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration
of a Contaminant into the indoor or outdoor environment or into or out of
any real or personal property used in the Business, including the movement
of Contaminants through or in the air, soil, surface water, groundwater or
real or personal property used in the Business.
"REMEDIAL ACTION" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment, (ii) prevent the Release or threatened Release or minimize
the further Release of Contaminants or (iii) investigate and determine if
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a remedial response is needed and to design such a response and post-
remedial investigation, monitoring, operation and maintenance and care.
"REQUIREMENTS OF LAWS" means any foreign, federal, state and
local laws, statutes, regulations, rules, codes or ordinances enacted,
adopted, issued or promulgated by any Governmental Body (including,
without limitation, those pertaining to electrical, building, zoning,
environmental and occupational safety and health requirements) or common
law.
"SELLER" has the meaning specified in the first paragraph of this
Agreement.
"SELLER AGREEMENTS" has the meaning specified in SECTION 5.20.
"SELLER ANCILLARY AGREEMENTS" means all agreements, instruments
and documents being or to be executed and delivered by Seller and/or
Hastings Canada under this Agreement or in connection herewith.
"SELLER GROUP MEMBER" means Seller and its Affiliates and their
respective successors and assigns.
"SELLER'S 1994 CONSOLIDATED FINANCIAL STATEMENTS" means the
audited consolidated financial statements of Seller and its subsidiaries
as at December 31, 1994 and for the year then ended filed by the Seller
with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended.
"SOFTWARE" means computer software programs and software systems,
including, without limitation, all databases, compilations, tool sets,
compilers, higher level or "proprietary" languages, related documentation
and materials, whether in source code, object code or human readable form.
"STATEMENT OF ASSETS" means the statement of assets of the
Business included in the Interim 1995 Financial Statements.
"STATEMENT OF ASSETS DATE" means the last day of the fiscal
period reflected in the Interim 1995 Financial Statements.
"STRADDLE PERIOD" shall mean any taxable year or period beginning
before and ending after the Closing Date.
"SUBSIDIARIES" has the meaning specified in SECTION 5.2.
"TAX" (and, with correlative meaning, "TAXES" and "TAXABLE")
shall mean:
(i) any federal, state, local or foreign net income, gross
income, gross receipts, windfall profit, severance, property,
production, sales, use, license, excise, franchise, employment,
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payroll, withholding, alternative or add-on minimum, ad valorem,
transfer, stamp, or environmental tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, addition to tax or
additional amount imposed by any governmental authority; and
(ii) any liability for the payment of amounts with respect to
payments of a type described in clause (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group, or
as a result of any obligation under any Tax sharing arrangement or Tax
indemnity agreement.
"TAX RETURN" means any return, report or similar statement
required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim
for refund, amended return and declaration of estimated Tax.
"TOTAL INVENTORY" has the meaning specified in SECTION 3.6.
"TRADEMARKS" means United States, state and foreign trademarks,
service marks, logos, trade dress and trade names, whether registered or
unregistered, and pending applications to register the foregoing, used in
the Business including, without limitation, the Hastings Trade Names and
the Hastings Trademark but excluding the name "Hastings Manufacturing
Company" and "Hastings Inc."
"TRADE SECRETS" means confidential ideas, trade secrets, know-
how, concepts, methods, processes, Filter Product designs, Filter Product
research and development programs and results, formulae, reports, data,
customer lists, mailing lists, business plans, or other proprietary
information in each case to the extent used in or developed in the course
of the operation and conduct of the Business.
"TRANSITION AGREEMENT" means the Transition Agreement to be
entered into between Buyer and Seller substantially in the form attached
hereto as EXHIBIT F.
"VALUATION DATE" means the close of business on the last business
day prior to the Closing Date.
"VALUATION DATE BOOK VALUE" means the aggregate Book Value of the
Purchased Assets as of the Valuation Date.
"VALUATION DATE STATEMENT OF BOOK VALUE" has the meaning
specified in SECTION 3.3.
"YANKTON PLANT" means the office and manufacturing facility
currently owned by Seller, located in Yankton, South Dakota, and used for
the manufacture of Filter Products.
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ARTICLE II
PURCHASE AND SALE
2.1. PURCHASED ASSETS. Upon the terms and subject to the
conditions of this Agreement:
(a) on the Closing Date, Seller shall sell, transfer, assign,
convey and deliver to Buyer (and/or to one or more subsidiaries designated
by Buyer), and Buyer shall purchase from Seller, on a going concern basis,
free and clear of all Encumbrances (except for Permitted Encumbrances),
all right, title and interest of Seller in, to and under all of the assets
and properties of Seller listed or referred to in this SECTION 2.1(A)
(other than the Excluded Assets) of every kind and description, wherever
located, real, personal or mixed, tangible or intangible, and used by
Seller in connection with the Business as the same shall exist on the
Closing Date (herein together with the Canadian Assets collectively called
the "PURCHASED ASSETS") including, without limitation or duplication, the
following:
(i) all of the assets reflected on the Statement of Assets,
except for the Canadian Assets and those disposed of or converted into
cash after the Statement of Assets Date in the ordinary course of
business;
(ii) all raw materials, supplies, work-in-process, finished
goods and other materials used in the production or distribution of,
or which are, Filter Products located at the Yankton Plant, the
Knoxville Facility, the warehouse facilities (including, without
limitation, the Valk Industries facility) leased by the Seller or the
building designated as "Warehouse #3" which is a part of the Hastings
Michigan plant;
(iii) the Governmental Permits listed in SCHEDULE 5.9 which are
then transferable to Buyer;
(iv) the Owned Real Property and options to acquire real
property listed in SCHEDULE 5.10 including, without limitation, the
Yankton Plant and the Knoxville Facility;
(v) the real estate leases and leasehold improvements listed or
described in SCHEDULE 5.11;
(vi) the machinery, equipment, vehicles, furniture and other
personal property listed or referred to in SCHEDULE 5.13 (which
Schedule shall include all machinery, equipment, vehicles, furniture
and similar items located at the Yankton Plant and the Knoxville
Facility (other than Excluded Assets) and such machinery, equipment,
vehicles, furniture and items located at the Hastings Michigan Plant
and used exclusively in the Business);
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(vii) the personal property leases listed in SCHEDULE 5.14;
(viii) the trademark "Lifeguard" and any Copyrights, Patent
Rights and Trademarks (and all goodwill associated therewith), and the
agreements, contracts, licenses, sublicenses, assignments and
indemnities, listed in SCHEDULE 5.15, except that with respect to the
Hastings Trademark, the names "Hastings Manufacturing Company" and
"Hastings Inc.", the Purchased Assets shall only include the permitted
use thereof as set forth in SECTION 7.2 and the rights provided in the
License;
(ix) the customer contracts, agreements or understandings
listed or described in SCHEDULE 5.19 with respect to clause (iii)
of SECTION 5.19 only;
(x) all Trade Secrets and other proprietary or confidential
information used in or relating to Filter Products or the Business;
(xi) all of Seller's rights, claims or causes of action against
third parties relating to the Purchased Assets arising out of
transactions occurring prior to the Closing Date;
(xii) all books and records (including all data and other
information stored on discs, tapes or other media) of Seller relating
to the Purchased Assets and the Business (expressly excluding
corporate financial records, minute books, tax returns, personal
records of persons not engaged in the Business and other books and
records not pertaining exclusively to the Business, PROVIDED that
Seller will provide Buyer with true and complete copies of books and
records which contain information relating to the Purchased Assets
and/or the Business as well as unrelated subjects); and
(xiii) Seller's interest in and to all telephone, telex and
telephone facsimile numbers and other directory listings utilized
primarily in connection with the Business conducted at the Yankton,
South Dakota location and the Knoxville, Tennessee location.
(b) On the Closing Date, Hastings Canada shall sell, transfer,
assign, convey and deliver to Buyer (and/or one or more subsidiaries
designated by Buyer), and Buyer shall purchase from Hastings Canada, on a
going concern basis, free and clear of all Encumbrances (except for
Permitted Encumbrances), all right, title and interest of Hastings Canada
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in, to and under all of the assets and properties of Hastings Canada
listed or referred to in this SECTION 2.1(B) (other than Excluded Assets)
of every kind and description, wherever located, real, personal or mixed,
tangible or intangible, and used by Hastings Canada in connection with the
Business as the same shall exist on the Closing Date (herein collectively
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called the "CANADIAN ASSETS"), including, without limitation and without
duplication, the following:
(i) all of the Canadian Assets reflected on the Statement of
Assets, except those disposed of or converted into cash after the
Statement of Assets Date in the ordinary course of business;
(ii) all raw materials, supplies, work-in-process, finished
goods and other materials used exclusively in the production or
distribution of, or which are, Filter Products;
(iii) the Canadian Government Permits listed in SCHEDULE 5.9
which are then transferable to Buyer;
(iv) the machinery, equipment, vehicles, furniture and other
personal property owned by Hastings Canada and listed or referred to
in SCHEDULE 2.1(B); and
(v) all of Seller's rights, claims or causes of action against
third parties relating to the Canadian Assets arising out of
transactions occurring prior to the Closing Date.
2.2. EXCLUDED ASSETS. Notwithstanding the provisions of
SECTION 2.1, the Purchased Assets shall not include the following (herein
referred to as the "EXCLUDED ASSETS"):
(a) all cash, bank deposits and cash equivalents;
(b) all notes and accounts receivable generated by the
Business prior to the Closing Date that have not been included on
the Valuation Date Statement of Book Value;
(c) the assets and property listed or described on SCHEDULE
2.2(C) and physically located at the Hastings Michigan Plant and
the Knoxville Facility;
(d) all raw materials, work-in-process and finished goods
located at the Hastings Michigan Plant and used in the production
or distribution of, or which are, Filter Products (except as
specifically provided in SECTION 2.1(A)(II) with respect to
finished goods inventory located in Warehouse #3); and all
supplies and other materials used primarily in the production of,
or distribution of, Filter Products and located at the Hastings
Michigan Plant;
(e) notes and accounts receivable arising from the sale by
Seller or Hastings Canada of filters made by a competitor of the
Seller other than under the Hastings name provided that such
notes and accounts receivable have not been included on the
Valuation Date Statement of Book Value;
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(f) the names "Hastings Manufacturing Company," "Hastings
Inc." and the Trademarks, other than the permitted uses thereof
as set forth in SECTION 7.2 and the License;
(g) the real property and related improvements thereon,
including buildings but not machinery, equipment or other
property included in the Purchased Assets, used in the Business
located at (i) Hastings, Michigan and (ii) Xxxxxx, Xxxxxxx,
Xxxxxx;
(h) all contracts of insurance;
(i) all of Seller's or Hastings Canada's employee benefit
agreements, plans or arrangements listed in SCHEDULE 5.17(A);
(j) all contracts listed in SCHEDULE 5.19 except those customer
contracts listed therein with respect to clause (iii) of SECTION 5.19;
(k) all shares of capital stock of the Subsidiaries; and
(l) all refunds of any Tax for which Seller is liable pursuant
to SECTION 7.3.
2.3. ASSUMED LIABILITIES. On the Closing Date, Buyer shall
deliver to Seller the Instrument of Assumption pursuant to which Buyer
shall assume and agree to discharge the following obligations and
liabilities of Seller in accordance with their respective terms and
subject to the respective conditions thereof:
(a) all liabilities and obligations of Seller to be performed
after the Closing Date under the leases, contracts and other
agreements identified in SCHEDULES 5.11, 5.14, 5.15 and 5.19 (but only
with respect to clause (iii) of SECTION 5.19);
(b) all payment obligations with respect to purchase orders for
Inventory for delivery to the Yankton Plant, the Knoxville Facility,
or to warehouse facilities (including, without limitation, the Valk
Industries facility) leased by the Seller which has not been delivered
to Seller at such locations on or before the Closing Date; PROVIDED
that such Inventory has not been included in the Valuation Date
Statement of Book Value;
(c) certain obligations and liabilities of Seller with respect
to (i) product liability or claims for injury to persons or property
and (ii) parts and service for, or repair and replacement of, Filter
Products manufactured, distributed or sold by Seller on or prior to
the Closing Date, as provided in SECTION 7.6 herein; and
(d) all liabilities in respect of Taxes for which Buyer is
liable pursuant to SECTION 7.3.
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All of the foregoing liabilities and obligations to be assumed by Buyer
hereunder (excluding any Excluded Liabilities) are referred to herein as
the "ASSUMED LIABILITIES."
2.4. EXCLUDED LIABILITIES. Buyer shall not assume or be
obligated to pay, perform or otherwise discharge any liability or
obligation of Seller or Hastings Canada, direct or indirect, known or
unknown, absolute or contingent, not expressly assumed by Buyer pursuant
to the Instrument of Assumption (all such liabilities and obligations not
being assumed being herein called the "EXCLUDED LIABILITIES") and,
notwithstanding anything to the contrary in SECTION 2.3, none of the
following shall be Assumed Liabilities for purposes of this Agreement:
(a) any liabilities in respect of Taxes for which Seller is
liable pursuant to SECTION 7.3 or mortgages that presently encumber
the Owned Real Property;
(b) any intercompany payables and other liabilities or
obligations of Seller or any of its Affiliates;
(c) any costs and expenses incurred by Seller or Hastings Canada
incident to its negotiation and preparation of this Agreement and its
performance and compliance with the agreements and conditions
contained herein;
(d) any liabilities or obligations in respect of any Excluded
Assets;
(e) any liabilities in respect of the claims or proceedings
described in SCHEDULE 5.21;
(f) any liabilities and obligations related to, associated with
or arising out of (i) the occupancy, operation, use or control of any
of (A) the Purchased Assets on or prior to the Closing Date or (B) any
property or assets of Seller or Hastings Canada after the Closing Date
or (ii) the operation of the Business on or prior to the Closing Date,
in each case incurred or imposed by any Environmental Law including,
without limitation, all matters included in the report of IT
Corporation dated July 31, 1985 relative to the Knoxville facility and
any other Release of any Contaminant on, at or from (1) the Owned Real
Property, including, without limitation, all facilities, improvements,
structures and equipment thereon, surface water thereon or adjacent
thereto and soil or groundwater thereunder, or any conditions
whatsoever on, under or in the vicinity of such real property or (2)
any real property or facility owned by a third Person to which
Contaminants generated by the Business were sent prior to the Closing
Date;
(g) except as provided in SECTION 2.3 with respect to Filter
Products, any product liability or claims for injury to person or
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property, regardless of when made or asserted, relating to products
manufactured, distributed or sold by Seller or Hastings Canada or
services performed by Seller or Hastings Canada on or prior to the
Closing Date;
(h) any recalls on or after the Closing Date mandated by any
Governmental Body of products manufactured, distributed or sold by
Seller or Hastings Canada on or prior to the Closing Date;
(i) except as provided in SECTION 2.3 with respect to Filter
Products, any obligations to provide parts and service for, or to
repair or replace, any products manufactured, distributed or sold by
Seller or Hastings Canada on or prior to the Closing Date; or
(j) any liability or obligation of Seller or Hastings Canada to
any of Seller's or Hastings Canada's employees, agents or
representatives, or to any collective bargaining organization to which
any of them may belong, in respect of salary, wages, state or federal
taxes, health care or pension benefits (or contributions therefor),
unemployment benefits or any other employee benefit or liability
whether or not such liabilities or obligations arise in connection
with the consummation of the transactions called for by this
Agreement.
ARTICLE III
PURCHASE PRICE
3.1. PURCHASE PRICE. The purchase price for the Purchased
Assets (the "PURCHASE PRICE") shall be determined in accordance with
SECTION 3.3 and shall be equal to $13,000,000, subject to adjustment in
accordance with SECTIONS 3.3 and 3.4.
3.2. DETERMINATION OF ESTIMATED PURCHASE PRICE. Prior to the
date hereof, Seller has delivered to Buyer a certificate executed on
behalf of Seller by either of Seller's co-chief executive officers, dated
the date of its delivery, stating that there has been conducted under the
supervision of such officer a review of all relevant information and data
then available and setting forth in reasonable detail Seller's best
estimate of the Valuation Date Book Value (the "ESTIMATED VALUATION DATE
BOOK VALUE"), which such officer anticipates will be reflected on the
Valuation Date Statement of Book Value prepared in accordance with the
Agreed Accounting Principles and SECTION 3.6 hereof, and the Estimated
Purchase Price. The Estimated Purchase Price shall be equal to
$13,000,000 (a) plus the amount, if any, by which the Estimated Valuation
Date Book Value exceeds the Reference Book Value or (b) minus the amount,
if any, by which the Reference Book Value exceeds the Estimated Valuation
Date Book Value. Such Estimated Purchase Price shall be subject to
approval by Buyer, which approval shall not be unreasonably withheld.
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3.3. DETERMINATION OF PURCHASE PRICE. (a) As promptly as
practicable following the Closing Date (but not later than 90 days after
the Closing Date), Seller shall:
(i) prepare, in accordance with the Agreed Accounting Principles
and SECTION 3.6 hereof, a statement in reasonable detail of the
Valuation Date Book Value (the "PRELIMINARY VALUATION DATE STATEMENT
OF BOOK VALUE"),
(ii) calculate the Purchase Price, which shall be equal to
$13,000,000 (A) plus the amount, if any, by which the Valuation Date
Book Value set forth on the Preliminary Valuation Date Statement of
Book Value exceeds the Reference Book Value or (B) minus the amount,
if any, by which the Reference Book Value exceeds the Valuation Date
Book Value set forth on the Preliminary Valuation Date Statement of
Book Value (such Purchase Price as determined by Seller being referred
to as the "PRELIMINARY PURCHASE PRICE") and
(iii) deliver to Buyer the Preliminary Valuation Date Statement
of Book Value and a certificate setting forth the Preliminary Purchase
Price (the "PRELIMINARY ACCOUNTING REPORT").
(b) Promptly following receipt of the Preliminary Accounting
Report, Buyer may review the same and, within 30 days after the date of
such receipt, may deliver to Seller a certificate (signed by Buyer's chief
executive officer) setting forth its objections to the Preliminary
Valuation Date Statement of Book Value and the Preliminary Purchase Price
as set forth in the Preliminary Accounting Report, together with a summary
of the reasons therefor and calculations which, in its view, are necessary
to eliminate such objections. In the event Buyer does not so object
within such 30-day period, the Preliminary Valuation Date Statement of
Book Value and the Preliminary Purchase Price set forth in the Preliminary
Accounting Report shall be final and binding as the "VALUATION DATE
STATEMENT OF BOOK VALUE" and the Purchase Price, respectively, for
purposes of this Agreement but shall not limit the representations,
warranties, covenants and agreements of the parties set forth elsewhere in
this Agreement.
(c) In the event Buyer so objects within such 30-day period,
Buyer and Seller shall use their reasonable efforts in good faith to
resolve by written agreement (the "AGREED ADJUSTMENTS") any differences as
to the Preliminary Valuation Date Statement of Book Value and the
Preliminary Purchase Price and, in the event Seller and Buyer so resolve
any such differences, the Preliminary Valuation Date Statement of Book
Value and the Preliminary Purchase Price set forth in the Preliminary
Accounting Report as adjusted by the Agreed Adjustments shall be final and
binding as the Valuation Date Statement of Book Value and the Purchase
Price, respectively, for purposes of this Agreement but shall not limit
the representations, warranties, covenants and agreements of the parties
set forth elsewhere in this Agreement.
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(d) In the event any objections raised by Buyer are not resolved
by Agreed Adjustments within the 30-day period next following such 30-day
period, then Buyer and Seller shall submit the objections that are then
unresolved to a national accounting firm acceptable to both Seller and
Buyer and such firm (the "ACCOUNTING FIRM") shall be directed by Buyer and
Seller to resolve the unresolved objections (based solely on the
presentations by Buyer and by Seller as to whether any disputed matter had
been determined in a manner consistent with the Agreed Accounting
Principles and SECTION 3.6 hereof) as promptly as reasonably practicable
and to deliver written notice to each of Buyer and Seller setting forth
its resolution of the disputed matters. The Preliminary Valuation Date
Statement of Book Value and the Preliminary Purchase Price, after giving
effect to any Agreed Adjustments and to the resolution of disputed matters
by the Accounting Firm, shall be final and binding as the Valuation Date
Statement of Book Value and the Purchase Price, respectively, for purposes
of this Agreement but shall not limit the representations, warranties,
covenants and agreements of the parties set forth elsewhere in this
Agreement.
(e) The parties hereto shall make available to Buyer, Seller
and, if applicable, the Accounting Firm, such books, records and other
information (including work papers) as any of the foregoing may reasonably
request to prepare or review the Preliminary Accounting Report or any
matters submitted to the Accounting Firm. The fees and expenses of the
Accounting Firm hereunder shall be paid 50% by Buyer and 50% by Seller.
3.4. ADJUSTMENT. Promptly (but not later than 5 business days)
after the determination of the Purchase Price pursuant to SECTION 3.3 that
is final and binding as set forth herein:
(i) if the Purchase Price exceeds the Estimated Purchase
Price, Buyer shall pay to Seller, by wire transfer of immediately
available funds to such bank account of Seller as Seller shall
designate in writing to Buyer, an amount equal to the excess of
the Purchase Price over the Estimated Purchase Price, plus
interest on such excess from the Closing Date to the date of
payment thereof at the Agreed Rate; or
(ii) if the Estimated Purchase Price exceeds the Purchase
Price, Seller shall pay to Buyer, by wire transfer of immediately
available funds to such bank account of Buyer as Buyer shall
designate in writing to Seller, an amount equal to the excess of
the Estimated Purchase Price over the Purchase Price, plus
interest on such excess from the Closing Date to the date of
payment thereof at the Agreed Rate.
3.5. ALLOCATION OF PURCHASE PRICE.
(a) Buyer shall cause an independent appraiser selected by Buyer
and reasonably acceptable to Seller (the "APPRAISER") to conduct and
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deliver to Buyer and Seller, within 90 days following the Closing Date, an
appraisal (the "APPRAISAL") of the fair market value as of the Closing
Date of the Purchased Assets and the covenants of Seller in SECTION 7.1.
The costs of the Appraisal shall be paid by Buyer.
(b) Within 30 days following receipt of the Appraisal, Buyer
shall deliver to Seller a schedule (the "ALLOCATION SCHEDULE") allocating
the Purchase Price among the Purchased Assets and the covenants of Seller
in SECTION 7.1. The Allocation Schedule shall be prepared in accordance
with Section 1060 of the Code and the regulations thereunder, in
accordance with the Appraisal and shall be subject to the approval of the
Seller, which approval shall not be unreasonably withheld. Seller agrees
that, promptly after receiving the Allocation Schedule, it shall sign the
Allocation Schedule and return an executed copy thereof to Buyer. Buyer
and Seller each agrees to file Internal Revenue Service Form 8594, and all
federal, state, local and foreign Tax Returns, in accordance with the
Allocation Schedule. Buyer and Seller each agrees to provide the other
promptly with any other information required to complete Form 8594.
3.6. VALUATION OF INVENTORY AND RESERVE FOR FILTER PRODUCT
WARRANTY LIABILITY. For the purposes of the preparation of the Estimated
Valuation Date Book Value, the Preliminary Valuation Date Statement of
Book Value and the Valuation Date Statement of Book Value:
(a) the aggregate dollar amount to be included therein with
respect to the inventories included in the Purchased Assets shall be
determined as follows:
(i) the total quantity of inventory on the Closing Date included
in the Purchased Assets in accordance with SECTION 2.1(A)(II) has been
determined by a physical count taken by representatives of Seller and
Buyer in accordance with generally accepted auditing standards as of
the date hereof. The Seller shall report to the Buyer in writing as
of the Closing Date the quantity of each item of inventory determined
from such count. The total quantity of inventory so reported is
hereafter called the "BASE INVENTORY." The Base Inventory for all
items of inventory multiplied by the lower of cost or market (the
"INVENTORY PRICE") for each item is hereinafter called the "TOTAL
INVENTORY."
(ii) as of the Closing Date, Seller shall advise Buyer in
writing of the quantity of each separate item of inventory included in
Base Inventory used or sold by Seller in the 12 month period preceding
the date hereof (the "INVENTORY CALCULATION BASE");
(iii) (A) the Inventory Calculation Base for each item of
finished goods inventory shall be multiplied by three and the
resulting product (which shall not exceed the Base Inventory amount of
such item) shall be multiplied by the Inventory Price of such item of
inventory; and (B) the Inventory Calculation Base for each item of raw
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material and work-in-progress shall be multiplied by the Inventory
Price of such items. The sum of the amounts calculated pursuant to
(A) and (B) above shall be the "GROSS DOLLAR AMOUNT OF INVENTORY".
For purposes of calculating the Gross Dollar Amount of Inventory, any
part number added to Seller's master file within the two years prior
to the date hereof shall be included in the Gross Dollar Amount of
Inventory at its fully recorded amount (i.e., Base Inventory times
Inventory Price);
(iv) The Net Dollar Amount of Inventory shall be the lower of
(A) the Gross Dollar Amount of Inventory or (B) Total Inventory less
$300,000. To the extent, if any, that (A) exceeds (B), such excess,
referred to as the "Obsolescence Reserve Credit," will be ignored in
this calculation, but shall be taken into account in the calculation
made pursuant to Section 2.03(b)(iv) of the Transition Agreement. The
Net Dollar Amount of Inventory shall be included in the Estimated
Valuation Date Book Value, the Preliminary Valuation Date Statement of
Book Value and the Valuation Date Statement of Book Value in respect
of the inventory included in the Purchased Assets; and
(v) Nothing in this SECTION 3.6 shall result in the exclusion of
all or any portion of the Base Inventory from the Purchased Assets;
and
(b) there shall be established and set forth a reserve for
product and warranty liabilities in respect of Filter Products in the
amount of $160,000.
ARTICLE IV
CLOSING
4.1. CLOSING DATE. The Closing shall be consummated at 9:00
A.M., local time, on the date hereof, or on such later date as may be
agreed upon by Buyer and Seller, at the offices of Xxxxxx Xxxxxxxx & Xxxx
LLP, Grand Rapids, Michigan, or at such other place as shall be agreed
upon by Buyer and Seller. The time and date on which the Closing is
actually held are sometimes referred to herein as the "CLOSING DATE."
4.2. PAYMENT ON THE CLOSING DATE; ESCROW. Subject to the
satisfaction by Buyer and Seller of their respective obligations set forth
in this Article IV, at Closing (i) Buyer shall pay to Seller an amount
equal to the Estimated Purchase Price by wire transfer of immediately
available funds to the Seller's account specified in SCHEDULE 4.2 and (ii)
Seller shall deposit with the Escrow Agent an amount equal to the Escrow
Payment by wire transfer of immediately available funds to the Escrow
Agent's account specified in the Escrow Agreement. Pursuant to the terms
of the Escrow Agreement, the Escrow Agent shall hold and disburse the
Escrow Payment, including all interest earned thereon, for a period of
three years from the Closing Date to secure the indemnification
obligations of the Seller set forth in SECTION 10.1 hereof.
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4.3. BUYER'S ADDITIONAL DELIVERIES. At Closing Buyer shall
deliver to Seller all of the following:
(a) Copies of the Certificate of Incorporation of Buyer
certified as of a recent date by the Secretary of State of the State
of Delaware;
(b) Certificate of good standing of Buyer issued as of a recent
date by the Secretary of State of the State of Delaware;
(c) Certificate of the secretary or an assistant secretary of
Buyer, dated the Closing Date, in form and substance reasonably
satisfactory to Seller, as to (i) no amendments to the Certificate of
Incorporation of Buyer since a specified date; (ii) the bylaws of
Buyer; (iii) the resolutions of the Board of Directors of Buyer
authorizing the execution and performance of this Agreement and the
transactions contemplated hereby; and (iv) incumbency and signatures
of the officers of Buyer executing this Agreement and any Buyer
Ancillary Agreement;
(d) Opinion of counsel to Buyer substantially in the form
contained in EXHIBIT C;
(e) The Instrument of Assumption duly executed by Buyer;
(f) The certificate contemplated by SECTION 9.1;
(g) The Escrow Agreement duly executed by Buyer;
(h) The Transition Agreement duly executed by Buyer; and
(i) The License Agreement duly executed by Buyer.
4.4. SELLER'S ADDITIONAL DELIVERIES. At Closing Seller and
Hastings Canada shall deliver to Buyer all of the following:
(a) Copies of the Articles of Incorporation of Seller certified
as of a recent date by the Department of Commerce of the State of
Michigan and the Articles of Incorporation of Hastings Canada
certified as of a recent date by the [NAME OF CANADIAN AGENCY];
(b) Certificate of good standing of Seller issued as of a recent
date by the Department of Commerce of the State of Michigan and
certificate of good standing of Hastings Canada certified as of a
recent date by the [NAME OF CANADIAN AGENCY];
(c) A separate certificate of the secretary or an assistant
secretary of each of Seller and Hastings Canada, dated the Closing
Date, in form and substance reasonably satisfactory to Buyer, as to,
respectively, (i) no amendments to the Articles of Incorporation of
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Seller or the Articles of Incorporation of Hastings Canada since a
specified date; (ii) the bylaws of Seller or Hastings Canada; (iii)
the resolutions of the Board of Directors of Seller and Hastings
Canada authorizing the execution and performance of this Agreement and
the transactions contemplated hereby; and (iv) incumbency and
signatures of the officers of Seller and Hastings Canada executing
this Agreement and any Seller Ancillary Agreement;
(d) Opinion of counsel to Seller and Hastings Canada
substantially in the form contained in EXHIBIT D;
(e) The Instrument of Assignment duly executed by each of Seller
and Hastings Canada;
(f) The certificate contemplated by SECTION 8.1;
(g) The Escrow Agreement duly executed by Seller;
(h) The Transition Agreement duly executed by Seller; and
(i) The License Agreement duly executed by Seller;
(j) A general warranty deed, subject only to the Permitted
Encumbrances, with respect to each of the parcels of Owned Real
Property (including, without limitation, the Yankton Plant and the
Knoxville Facility), duly executed by Seller, in recordable form, and
in form and substance reasonably satisfactory to Buyer;
(k) An assignment, in recordable form, with respect to each of
the leases of real estate described in SCHEDULE 5.11, duly executed by
Seller and in form and substance reasonably satisfactory to Buyer;
(l) The financial statements and title insurance policies
referenced in SECTIONS 8.2 and 8.3;
(m) Certificates of title or origin (or like documents) with
respect to any vehicles or other equipment included in the Purchased
Assets for which a certificate of title or origin is required in order
to transfer title;
(n) All consents, waivers or approvals obtained by Seller and
Hastings Canada with respect to the Purchased Assets or the
consummation of the transactions contemplated by this Agreement
including, without limitation, releases of all Encumbrances (other
than Permitted Encumbrances) relating to the Purchased Assets in form
and substance reasonably satisfactory to Buyer; and
(o) Such other bills of sale, assignments and other instruments
of transfer or conveyance as Buyer may reasonably request or as may be
otherwise necessary to evidence and effect the sale, assignment,
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transfer, conveyance and delivery of the Purchased Assets to Buyer
free and clear of all Encumbrances (other than Permitted
Encumbrances).
In addition to the above deliveries, Seller and Hastings Canada shall take
all steps and actions as Buyer may reasonably request or as may otherwise
be necessary to put Buyer in actual possession or control of the Purchased
Assets.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and
warrants to Buyer and agrees as follows:
5.1. ORGANIZATION. Each of Seller and Hastings Canada is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is incorporated. In addition,
each of Seller and Hastings Canada are duly qualified to transact business
as a foreign corporation and are in good standing in each of the
jurisdictions listed in SCHEDULE 5.1, which jurisdictions are the only
ones in which the ownership or leasing of the Purchased Assets or the
conduct of the Business requires such qualification. No other
jurisdiction has demanded, requested or otherwise indicated that Seller or
Hastings Canada is required so to qualify on account of the ownership or
leasing of the Purchased Assets or the conduct of the Business. Seller
and Hastings Canada each has full power and authority to own or lease and
to operate and use the Purchased Assets owned by it and to carry on the
Business as now conducted by it. True and complete copies of the Articles
of Incorporation and all amendments thereto and of the bylaws, as amended
to date, of Seller and Hastings Canada have been delivered to Buyer.
5.2. SUBSIDIARIES AND INVESTMENTS. Except as set forth in
SCHEDULE 5.2, neither Seller nor Hastings Canada, directly or indirectly,
(i) owns, of record or beneficially, any outstanding voting securities or
other equity interests in any corporation, partnership, joint venture or
other entity which is involved in or relates to the Business or
(ii) controls any corporation, partnership, joint venture or other entity
which is involved in or relates to the Business.
5.3. AUTHORITY. (a) Each of Seller and Hastings Canada has
full power and authority to execute, deliver and perform this Agreement
and all of the Seller Ancillary Agreements to which they are a party. The
execution, delivery and performance of this Agreement and the Seller
Ancillary Agreements by Seller and Hastings Canada have been duly
authorized and approved by their respective boards of directors and do not
require any further authorization or consent of their respective
shareholders. This Agreement has been duly authorized, executed and
delivered by Seller and Hastings Canada and is the legal, valid and
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binding obligation of Seller and Hastings Canada enforceable in accordance
with its terms, and each of the Seller Ancillary Agreements has been duly
authorized by Seller and upon execution and delivery by Seller or Hastings
Canada will be a legal, valid and binding obligation of Seller or Hastings
Canada, as the case may be, enforceable in accordance with its terms,
except, in each case, as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting creditors' rights generally and by general principles of equity.
(b) Except as set forth in SCHEDULE 5.3, neither the execution
and delivery of this Agreement or any of the Seller Ancillary Agreements
or the consummation of any of the transactions contemplated hereby or
thereby nor compliance with or fulfillment of the terms, conditions and
provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or
a loss of rights under, or result in the creation or imposition of any
Encumbrance upon any of the Purchased Assets, under (A) the Articles
of Incorporation or bylaws of Seller or Hastings Canada, (B) any
Seller Agreement, (C) any other material note, instrument, agreement,
mortgage, lease, license, franchise, permit or other authorization,
right, restriction or obligation to which Seller or Hastings Canada is
a party or any of the Purchased Assets is subject or by which Seller
or Hastings Canada is bound, (D) any Court Order to which Seller or
Hastings Canada is a party or any of the Purchased Assets is subject
or by which Seller or Hastings Canada is bound or (E) any Requirements
of Laws affecting Seller, Hastings Canada or the Purchased Assets; or
(ii) require the approval, consent, authorization or act of, or
the making by Seller or Hastings Canada of any declaration, filing or
registration with, any Person.
5.4. FINANCIAL STATEMENTS. The Seller's 1994 Consolidated
Financial Statements have been prepared in conformity with generally
accepted accounting principles consistently applied and present fairly the
financial position and results of operations of Seller and its
subsidiaries as of the date thereof and for the period covered thereby.
Upon preparation and delivery thereof pursuant to SECTION 8.2, the Audited
1994 Financial Statements and the Interim 1995 Financial Statements shall
have been prepared in conformity with generally accepted accounting
principles consistently applied and present fairly the financial position
and results of operations of the Business as of the respective dates
thereof and for the respective periods covered thereby.
5.5. OPERATIONS SINCE DECEMBER 31, 1994. (a) Except as set
forth in SCHEDULE 5.5(A), since December 31, 1994, there has been:
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(i) no material adverse change in the Purchased Assets, the
Business or the operations, liabilities, profits, prospects or
condition (financial or otherwise) of the Business, and no fact or
condition exists or is contemplated or threatened which might
reasonably be expected to cause such a change in the future;
(ii) no damage, destruction, loss or claim, whether or not
covered by insurance, or condemnation or other taking materially and
adversely affecting the Knoxville Facility, the Yankton Plant or the
Hastings Michigan Plant; and
(iii) no material change in the prices of Filter Products or the
terms of payment thereof sold to any customer of the Business the
purchases of which provided 1% or more of the total 1994 revenues of
the Business.
(b) Except as set forth in SCHEDULE 5.5(B), since December 31,
1994, Seller and Hastings Canada have conducted the Business only in the
ordinary course and in conformity with past practice. Without limiting
the generality of the foregoing, since such date, except as set forth in
such Schedule, neither Seller nor Hastings Canada has, in respect of the
Business:
(i) sold, leased (as lessor), transferred or otherwise disposed
of (including any transfers from Seller or Hastings Canada to any of
its Affiliates), or mortgaged or pledged, or imposed or suffered to be
imposed any Encumbrance (other than Permitted Encumbrances) on, any of
the assets used in the Business or any assets acquired for use in the
Business after December 31, 1994, except for inventory and minor
amounts of personal property sold or otherwise disposed of for fair
value in the ordinary course of the Business consistent with past
practice and except for Permitted Encumbrances;
(ii) delayed or accelerated payment of any account payable or
other liability of the Business beyond or in advance of its due date
or the date when such liability would have been paid in the ordinary
course of the Business consistent with past practice;
(iii) allowed the levels of raw materials, supplies, work-in-
process, finished goods or other materials included in the inventory
of the Business to vary in any material respect from the levels
customarily maintained in the Business;
(iv) made, or agreed to make, any distribution of Purchased
Assets to any of its Affiliates;
(v) made any material changes in the programs or policies
relating to the promotion or delivery of Filter Products or in the
warranties made by Seller or Hastings Canada with respect thereto;
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(vi) instituted any increase in the number of employees engaged
in the Business or in any compensation payable to any employee of
Seller or Hastings Canada engaged in the Business or in any profit-
sharing, bonus, incentive, deferred compensation, insurance, pension,
retirement, medical, hospital, disability, welfare or other benefits
made available to employees of Seller or Hastings Canada engaged in
the Business; or
(vii) made any change in the accounting principles and practices
used by Seller from those applied in the preparation of (A) the
Seller's 1994 Consolidated Financial Statements and (B) upon the
preparation and delivery thereof, the Audited 1994 Financial
Statements or the Interim 1995 Financial Statements.
5.6. NO UNDISCLOSED LIABILITIES. Except for the Assumed
Liabilities or such liabilities as may result from the application of the
laws of various states (including, without limitation, Michigan, South
Dakota and Tennessee) applicable to Seller and relating to the bulk sale
of inventory and equipment (the "Bulk Sales Laws"), neither Seller nor
Hastings Canada is subject to any liability (including, without
limitation, unasserted claims, whether known or unknown), whether
absolute, contingent, accrued or otherwise, which will become a liability
of Buyer as the result of the consummation of the transactions provided
for herein.
5.7. TAXES. Except as set forth in SCHEDULE 5.7, (i) Seller has
filed all Tax Returns which are required to be filed and has paid all
Taxes which have become due pursuant to such Tax Returns or pursuant to
any assessment which has become payable; (ii) all such Tax Returns are
complete and accurate and disclose all Taxes required to be paid; (iii)
all such Tax Returns have been examined by the relevant taxing authority
or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired; (iv) there is no action,
suit, investigation, audit, claim or assessment pending or proposed or
threatened with respect to Taxes, and, to the best of Seller's knowledge,
no basis exists therefor; (v) Seller has not waived or been requested to
waive any statute of limitations in respect of Taxes; (vi) all monies
required to be withheld by Seller from employees for income Taxes and
social security and other payroll Taxes have been collected or withheld,
and either paid to the respective taxing authorities, set aside in
accounts for such purpose, or accrued, reserved against and entered upon
the books of the Business; (vii) no transaction contemplated by this
Agreement is subject to withholding under Section 1445 of the Code and no
stock transfer taxes, or other similar taxes will be imposed on the
transfer of the Purchased Assets pursuant to this Agreement; (viii) none
of the Purchased Assets is properly treated as owned by Persons other than
Seller or Hastings Canada for income Tax purposes pursuant to Section
168(f)(8) of the Code (as in effect prior to its amendment by the Tax
Reform Act of 1986) or otherwise; (ix) none of the Purchased Assets is
"tax-exempt use property" within the meaning of the Code or subject to a
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so-called "TRAC lease" under Section 7701(h) of the Code (or any
predecessor provision); and (x) Seller is properly treated as the owner
for all federal, state, local and other income Tax purposes of all
Purchased Assets of which it is the lessor.
5.8. AVAILABILITY OF ASSETS. Except as set forth in SCHEDULE
5.8, the Purchased Assets constitute all the assets used in the Business
and, collectively, are in a condition suitable for the production of
Filter Products in the ordinary course of the Business and in such
quantities and of such quality customarily utilized by the Seller or
Hastings Canada in the operation of the Business.
5.9. GOVERNMENTAL PERMITS. (a) Seller and Hastings Canada own,
hold or possess all licenses, franchises, permits, privileges, immunities,
approvals and other authorizations from a Governmental Body which are
necessary to entitle it to own or lease, operate and use the Purchased
Assets and to carry on and conduct the Business substantially as currently
conducted (herein collectively called "GOVERNMENTAL PERMITS"), except for
such Governmental Permits as to which the failure to so own, hold or
possess would not have a material adverse effect on the Purchased Assets,
the Business or the operations, liabilities, profits, prospects or
condition (financial or otherwise) thereof. SCHEDULE 5.9 sets forth a
list and brief description of each Governmental Permit, except for such
incidental licenses, permits and other authorizations which would be
readily obtainable by any qualified applicant without undue burden in the
event of any lapse, termination, cancellation or forfeiture thereof.
Complete and correct copies of all of the Governmental Permits have
heretofore been delivered to Buyer by Seller.
(b) Except as set forth in SCHEDULE 5.9, (i) Each of Seller and
Hastings Canada have fulfilled and performed its obligations under its
Governmental Permits, and no event has occurred or condition or state of
facts exists which constitutes or, after notice or lapse of time or both,
would constitute a breach or default under any such Governmental Permit or
which permits or, after notice or lapse of time or both, would permit
revocation or termination of any such Governmental Permit, or which might
adversely affect the rights of Seller or Hastings Canada under any such
Governmental Permit; (ii) no notice of cancellation, of default or of any
dispute concerning any Governmental Permit, or of any event, condition or
state of facts described in the preceding clause, has been received by, or
is known to, Seller or Hastings Canada; and (iii) each of the Governmental
Permits is valid, subsisting and in full force and effect and may be
assigned and transferred to Buyer in accordance with this Agreement and
will continue in full force and effect thereafter, in each case without
(x) the occurrence of any breach, default or forfeiture of rights
thereunder, or (y) the consent, approval, or act of, or the making of any
filing with, any Governmental Body.
5.10. REAL PROPERTY. SCHEDULE 5.10 contains a brief description
of (i) each parcel of real property located in or around Yankton, South
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Dakota, (including the Yankton Plant), and Knoxville, Tennessee (including
the Knoxville Facility), owned by Seller and used in or relating to the
Business (the "OWNED REAL PROPERTY") (showing the record title holder,
legal description, permanent index number, location, improvements, the
uses being made thereof and any indebtedness secured by a mortgage or
other Encumbrance thereon) and (ii) each option held by Seller to acquire
any real property located in or around either of such locations for use in
the Business. Complete and correct copies of any title opinions, surveys
and appraisals in Seller's possession or any policies of title insurance
currently in force and in the possession of Seller with respect to each
such parcel have heretofore been delivered by Seller to Buyer.
5.11. REAL PROPERTY LEASES. SCHEDULE 5.11 sets forth a list and
brief description of each lease or similar agreement (showing the parties
thereto, annual rental, expiration date, renewal and purchase options, if
any, the improvements thereon, the uses being made thereof, and the
location and the legal description of the real property covered by such
lease or other agreement) under which (i) Seller is lessee of, or holds or
operates, any real property located in or around Yankton, South Dakota or
Knoxville, Tennessee, owned by any third Person and used in or relating to
the Business or (ii) Seller is lessor of any of the Owned Real Property.
Except as set forth in such Schedule, Seller has the right to quiet
enjoyment of all the real property described in such Schedule for the full
term of each such lease or similar agreement (and any renewal option
related thereto) relating thereto, and the leasehold or other interest of
Seller in such real property under any written leases, if any, is not
subject or subordinate to any Encumbrance except for Permitted
Encumbrances. Complete and correct copies of any title opinions, surveys
and appraisals in Seller's possession or any policies of title insurance
currently in force and in the possession of Seller with respect to each
such parcel of leased property have heretofore been delivered by Seller to
Buyer.
5.12. CONDEMNATION. Neither the whole nor any part of the
Purchased Assets is subject to any pending suit for condemnation or other
taking by any public authority, and, to the best knowledge of Seller, no
such condemnation or other taking is threatened or contemplated.
5.13. PERSONAL PROPERTY. SCHEDULE 5.13 contains a detailed list
of all machinery, equipment, vehicles, furniture and other personal
property owned by Seller or Hastings Canada (other than Excluded Assets)
having an original cost of $5,000 or more and located (a) in the Yankton
Plant, the Knoxville Facility or at Xxxxxx, Xxxxxxx, Xxxxxx or (b) in the
Hastings Michigan Plant and which are included in the Purchased Assets.
5.14. PERSONAL PROPERTY LEASES. SCHEDULE 5.14 contains a brief
description of each lease or other agreement or right, whether written or
oral (including in each case the annual rental, the expiration date
thereof and a brief description of the property covered), under which
Seller or Hastings Canada is lessee of, or holds or operates, any
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machinery, equipment, vehicle or other tangible personal property owned by
a third Person and located (a) in the Yankton Plant or the Knoxville
Facility or at Xxxxxx, Xxxxxxx, Xxxxxx or (b) located in the Hastings
Michigan Plant and which is included in the Purchased Assets, except for
any such lease, agreement or right that is terminable by Seller or
Hastings Canada without penalty or payment on notice of 30 days or less,
or which involves the payment by Seller or Hastings Canada of rentals of
less than $1,000 per year.
5.15. INTELLECTUAL PROPERTY; SOFTWARE. (a) SCHEDULE 5.15
contains a list and description (showing in each case any product, device,
process, service, business or publication covered thereby, the registered
or other owner, expiration date and number, if any) of all Copyrights,
Patent Rights and Trademarks (including all assumed or fictitious names
under which Seller or Hastings Canada is conducting the Business or has
within the previous five years conducted the Business) owned by, licensed
to or used by Seller or Hastings Canada in connection with the conduct of
the Business, including the Hastings Trade Names and the Trademark
"Hastings", which Trademark consists of the spelling of such word pierced
by an arrow running from left to right and is further depicted on SCHEDULE
5.15 (the "HASTINGS TRADEMARK").
(b) SCHEDULE 5.15 contains a list and description (showing in
each case any owner, licensor or licensee) of all Software owned by,
licensed to or used by Seller or Hastings Canada exclusively in the
conduct of the Business, PROVIDED that SCHEDULE 5.15 does not list
Software licensed to Seller or Hastings Canada that is available in
consumer retail stores and subject to "shrink-wrap" license agreements.
(c) SCHEDULE 5.15 contains a list and description (showing in
each case the parties thereto and the material terms thereof) of all
agreements, contracts, licenses, sublicenses, assignments and indemnities
which relate to (i) any Copyrights, Patent Rights or Trademarks listed in
SCHEDULE 5.15, (ii) any Trade Secrets owned by, licensed to or used by
Seller or Hastings Canada in connection with the conduct of the Business
or (iii) any Software listed in SCHEDULE 5.15.
(d) Except as disclosed in SCHEDULE 5.15, either Seller or
Hastings Canada: (i) owns the entire right, title and interest in and to
the Intellectual Property and Software included in the Purchased Assets,
free and clear of any Encumbrance (other than Permitted Encumbrances); or
(ii) has the perpetual, royalty-free right to use the same.
(e) Except as disclosed in SCHEDULE 5.15: (i) all registrations
for Copyrights, Patent Rights and Trademarks identified in SCHEDULE 5.15
as being owned by Seller or Hastings Canada are valid and in force, and
all applications to register any unregistered Copyrights, Patent Rights
and Trademarks so identified are pending and in good standing, all without
challenge of any kind; (ii) the Intellectual Property (other than the
Trademarks) owned by Seller or Hastings Canada is valid and enforceable;
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the Trademarks owned by Seller or Hastings Canada are valid and
enforceable in the United States and Canada; and (iii) Seller or Hastings
Canada has the sole and exclusive right to bring actions for infringement
or unauthorized use of the Intellectual Property and Software owned by
Seller or Hastings Canada and included in the Purchased Assets, and to the
best knowledge of Seller or Hastings Canada, as the case may be, there is
no basis for any such action. Correct and complete copies of: (x)
registrations for all registered Copyrights, Patent Rights and Trademarks
identified in SCHEDULE 5.15 as being owned by Seller; and (y) all pending
applications to register unregistered Copyrights, Patent Rights and
Trademarks identified in SCHEDULE 5.15 as being owned by Seller or
Hastings Canada (together with any subsequent correspondence or filings
relating to the foregoing) shall be promptly delivered by Seller to Buyer.
(f) Except as set forth in SCHEDULE 5.15, no infringement of any
Intellectual Property Right of any other Person has occurred or results in
any way from the operations of the Business, no claim of any infringement
of any Intellectual Property Right of any other Person has been made or
asserted in respect of the operations of the Business and Seller has not
had notice of, or knowledge of any basis for, a claim against Seller or
Hastings Canada that the operations, activities, products, software,
equipment, machinery or processes of the Business infringe any
Intellectual Property Right of any other Person.
(g) Except as disclosed in SCHEDULE 5.15, all employees, agents,
consultants or contractors who have contributed to or participated in the
creation or development of any copyrightable, patentable or trade secret
material on behalf of Seller or Hastings Canada or any predecessor in
interest thereto either: (i) is a party to a "work-for-hire" agreement
under which Seller is deemed to be the original owner/author of all
property rights therein; or (ii) has executed an assignment or an
agreement to assign in favor of Seller (or such predecessor in interest,
as applicable) all right, title and interest in such material.
5.16. TITLE TO PROPERTY. Seller has good and marketable title
in fee simple absolute to all Owned Real Property and to all buildings,
structures and other improvements thereon, in each case free and clear of
all Encumbrances, except for Permitted Encumbrances and except for
mortgages that shall be released at or prior to Closing. Seller and
Hastings Canada have good and marketable title to all of the other
Purchased Assets, free and clear of all Encumbrances, except for Permitted
Encumbrances. Upon delivery to Buyer on the Closing Date of the
instruments of transfer contemplated by SECTION 4.4, Seller and Hastings
Canada will thereby transfer to Buyer good and marketable title to the
Purchased Assets, subject to no Encumbrances, except for Permitted
Encumbrances.
5.17. EMPLOYEES AND RELATED AGREEMENTS; ERISA. (a) Except as
described in SCHEDULE 5.17(A), neither Seller nor Hastings Canada is, with
respect to the Business and the employees of Seller or Hastings Canada, as
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the case may be, engaged in the Business, a party to or bound by any oral
or written:
(i) employee collective bargaining agreement, employment
agreement (other than employment agreements terminable by Seller or
Hastings Canada, as the case may be, without premium or penalty on
notice of 30 days or less under which the only monetary obligation of
Seller or Hastings Canada is to make current wage or salary payments
and provide current fringe benefits), consulting, advisory or service
agreement, deferred compensation agreement, confidentiality agreement
or covenant not to compete;
(ii) contract or agreement with any officer, director or
employee (other than employment agreements disclosed in response to
clause (i) or excluded from the scope of clause (i)), agent, or
attorney-in-fact of Seller or Hastings Canada; or
(iii) stock option, stock purchase, bonus or other incentive
plan or agreement.
(b) Except as described in SCHEDULE 5.17(B), neither Seller nor
Hastings Canada maintains, and is not required to contribute to, any
"employee pension benefit plan" (as such term is defined in Section 3(2)
of ERISA) or "welfare benefit plan" (as such term is defined in Section
3(1) of ERISA), on behalf of any employees engaged in the Business.
Neither Seller nor Hastings Canada is required to contribute to any
"multiemployer plan" (as such term is defined in Section 3(37) of ERISA).
Each of the plans described in such Schedule ("Seller's ERISA Benefit
Plans") which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS, and, to Seller's
knowledge, no event has occurred which would cause any such plan to cease
being so qualified. Except as set forth in SCHEDULE 5.17(B), each of
Seller's ERISA Benefit Plans complies in form in all material respects in
accordance with the requirements of ERISA and, where applicable, the Code.
Seller has complied with the health care continuation requirements of
Section 601, ET. SEQ., of ERISA with respect to employees of the Business
and their spouses, former spouses and dependents.
(c) Seller has delivered to Buyer, with respect to each of
Seller's ERISA Benefit Plans, correct and complete copies of (i) all plan
documents and amendments, trust agreements and insurance contracts,
(ii) the most recent IRS determination letter, (iii) the most recent
Annual Report (Form 5500 Series) and accompanying schedules, as filed,
(iv) the current and, to the extent available, the prior summary plan
description, (v) the most recent financial statements and (vi) the most
recent actuarial report.
(d) Except for Seller's Salaried Retirement Defined Benefit
Plan, which was terminated in 1986, none of Seller's ERISA Benefit Plans
subject to Title IV of ERISA has terminated since September 2, 1974; no
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proceeding has been initiated to terminate any such plan; and there has
been no "reportable event" (within the meaning of Section 4043(b) of
ERISA) since September 2, 1974. None of Seller's ERISA Benefit Plans
which is a defined benefit plan has incurred any "accumulated funding
deficiency" (within the meaning of Section 412 of the Code), whether or
not waived. Assuming that each of Seller's ERISA Benefit Plans which is
subject to Title IV of ERISA were terminated as of the Closing Date,
Seller would have no liability under Title IV of ERISA as a result of such
termination. Except as described in Note 7 to Seller's 1994 Consolidated
Financial Statements, Seller has no obligations under any of Seller's
ERISA Benefit Plans or otherwise to provide health benefits to former
employees of Seller with respect to the Business, except as specifically
required by law. Four management employees, and no other employees, based
at the Yankton, South Dakota and Knoxville, Tennessee facility would be
entitled to health benefits upon retirement from Seller.
(e) Neither Seller nor, to the knowledge of Seller, any other
"disqualified person" (within the meaning of Section 4975 of the Code) or
"party in interest" (within the meaning of Section 3(14) of ERISA) has
engaged in any "prohibited transaction" (within the meaning of Section
4975 of the Code or Section 406 of ERISA) with respect to any of Seller's
ERISA Benefit Plans which could subject any such Plan (or its related
trust) or Seller or any officer, director or employee of Seller to the
penalty or tax under Section 402(i) or Section 402(l) of ERISA or Section
4975 of the Code.
(f) There is no pending or, to the knowledge of Seller,
threatened claim which alleges any violation of ERISA or any other law (i)
by or on behalf of any of Seller's ERISA Benefit Plans or (ii) by any
employee of Seller or any plan participant or beneficiary against any such
plan.
(g) SCHEDULE 5.17(G) contains: (i) a list of all employees or
commission salespersons engaged exclusively in the Business as of March
31, 1995 whose then current annual compensation was in excess of $50,000;
(ii) the then current annual compensation of, and a description of the
fringe benefits (other than those generally available to employees of
Seller) provided by Seller to any such employees or salespersons; (iii) a
list of all present or former employees or commission salespersons engaged
in the Business paid in excess of $50,000 in calendar year 1994 who have
terminated or given notice of their intention to terminate their
relationship with Seller since January 1, 1995; (iv) a list of any
increase, effective after March 31, 1995, in the rate of compensation of
any such employees or commission salespersons if such increase exceeds 10%
of the previous annual salary of such employee or commission salesperson;
and (v) a list of all substantial changes in job assignments of, or
arrangements with, or promotions or appointments of, any such employees or
commission salespersons whose compensation as of January 1, 1995 was in
excess of $50,000 per annum.
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(h) Except as set forth in SCHEDULE 5.17(H), (i) to the best
knowledge of Seller, neither Seller nor Hastings Canada nor any of their
respective employees, officers, directors or Affiliates is involved in any
transaction or other situation with respect to the Business with any
employee, officer, director or Affiliate of Seller or Hastings Canada
which may be generally characterized as a "conflict of interest",
including, but not limited to, direct or indirect interests in the
business of competitors, suppliers or customers of the Business, and
(ii) there are no situations with respect to the Business which involved
or involves (A) the use of any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to political
activity, (B) the making of any direct or indirect unlawful payments to
government officials or others from corporate funds or the establishment
or maintenance of any unlawful or unrecorded funds, (C) the violation of
any of the provisions of The Foreign Corrupt Practices Act of 1977, or any
rules or regulations promulgated thereunder, (D) the receipt of any
illegal discounts or rebates or any other violation of the antitrust laws
or (E) any investigation by the Securities and Exchange Commission or any
other federal, foreign, state or local government agency or authority.
5.18. EMPLOYEE RELATIONS. Except as set forth in SCHEDULE 5.18,
Seller and Hastings Canada have complied, in all material respects, with
all applicable laws, rules and regulations in respect of the Business
which relate to prices, wages, hours, discrimination in employment and
collective bargaining and to the operation of the Business and are not
liable for any arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing. Seller believes that its relations with
the employees of Seller engaged in the Business and Hastings Canada's
relationship with the employees of Hastings Canada engaged in the Business
are satisfactory. Neither Seller nor Hastings Canada is a party to, and
the Business is not affected by or, to the knowledge of Seller, threatened
with, any dispute or controversy with a union or with respect to
unionization or collective bargaining involving the employees of Seller or
Hastings Canada engaged in the Business. Neither Seller nor Hastings
Canada is materially affected by any dispute or controversy with a union
or with respect to unionization or collective bargaining involving any
supplier or customer of the Business. SCHEDULE 5.18 sets forth a
description of any union organizing or election activities involving any
non-union employees of Seller or Hastings Canada engaged in the Business
which have occurred since December 31, 1990 or, to the knowledge of
Seller, are threatened as of the date hereof.
5.19. CONTRACTS. Except as set forth in SCHEDULE 5.19 or any
other Schedule hereto, neither Seller nor Hastings Canada is, with respect
to the Business, a party to or bound by:
(i) any contract for the purchase or sale of any of the Owned
Real Property;
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(ii) any contract for the purchase of raw materials which Seller
reasonably anticipates will involve the payment of more than $30,000
between the date on this Agreement and December 31, 1995 or which
extends beyond December 31, 1995;
(iii) any contract for the sale of goods or services which
Seller reasonably anticipates will involve the payment of more than
$30,000 between the date on this Agreement and December 31, 1995 or
which extends beyond December 31, 1995;
(iv) any consignment, distributor, dealer, manufacturers
representative, sales agency, advertising representative or
advertising or public relations contract relating to the Business;
(v) any contract relating to the Business not made in the
ordinary course; or
(vi) any other contract, agreement, commitment, understanding or
instrument which is material to the Purchased Assets or the Business.
5.20. STATUS OF CONTRACTS. Except as set forth in SCHEDULE 5.20
or in any other Schedule hereto, each of the leases, contracts and other
agreements listed in SCHEDULES 5.11, 5.14, 5.15, 5.17 and 5.19
(collectively, the "SELLER AGREEMENTS") constitutes a valid and binding
obligation of the parties thereto and is in full force and effect and
(except as set forth in SCHEDULE 5.3 and except for those Seller
Agreements which by their terms will expire prior to the Closing Date or
are otherwise terminated prior to the Closing Date in accordance with the
provisions hereof or which are not being assigned to and assumed by Buyer
hereunder) may be transferred to Buyer pursuant to this Agreement and will
continue in full force and effect thereafter, in each case without
breaching the terms thereof or resulting in the forfeiture or impairment
of any rights thereunder and without the consent, approval or act of, or
the making of any filing with, any other party. Seller or Hastings
Canada, as applicable, has fulfilled and performed its obligations under
each of the Seller Agreements, and neither Seller nor Hastings Canada is
in, or alleged to be in, breach or default under, nor is there or is there
alleged to be any basis for termination of, any of the Seller Agreements
and, to the knowledge of Seller, no other party to any of the Seller
Agreements has breached or defaulted thereunder, and no event has occurred
and no condition or state of facts exists which, with the passage of time
or the giving of notice or both, would constitute such a default or breach
by Seller or Hastings Canada or, to the knowledge of Seller, by any such
other party. Neither Seller nor Hastings Canada is currently
renegotiating any of the Seller Agreements or paying liquidated damages in
lieu of performance thereunder. In Seller's opinion none of the Seller
Agreements contains terms unduly burdensome to the Business or is harmful
to the Business or the Purchased Assets. Complete and correct copies of
each of the Seller Agreements have heretofore been delivered to Buyer by
Seller.
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5.21. NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as
set forth in SCHEDULE 5.21:
(i) the Purchased Assets and their uses comply, in all material
respects, with all applicable Requirements of Laws and Court Orders;
(ii) Seller and Hastings Canada have complied, in all material
respects, with all Requirements of Laws and Court Orders which are
applicable to the Purchased Assets or the Business;
(iii) there are no lawsuits, claims, suits, disputes,
proceedings or investigations pending or, to the knowledge of Seller,
threatened against or affecting Seller or Hastings Canada in respect
of the Purchased Assets or the Business nor, to the knowledge of
Seller, is there any basis for any of the same, and there are no
lawsuits, suits or proceedings pending in which Seller or Hastings
Canada is the plaintiff or claimant and which relate to the Purchased
Assets or the Business;
(iv) there is no action, suit or proceeding pending or, to the
knowledge of Seller, threatened which questions the legality or
propriety of the transactions contemplated by this Agreement; and
(v) to the knowledge of Seller, no legislative or regulatory
proposal has been adopted or is pending which could adversely affect
the Business.
5.22. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE
5.22:
(i) the operations of the Business comply, in all material
respects, with all applicable Environmental Laws;
(ii) Seller and Hastings Canada have, in respect of the
Business, obtained all environmental, health and safety Governmental
Permits necessary for the operation of the Business, and all such
Governmental Permits are in good standing and Seller and Hastings Canada
are in compliance, in all material respects, with all terms and conditions
of such permits;
(iii) none of Seller or Hastings Canada, with respect to the
Business, nor any of the Purchased Assets or the present operations
thereof, or the past operations of the Business or the Purchased Assets,
is subject to any on-going investigation by, order from or agreement with
any Person (including without limitation any prior owner or operator of
any of the Purchased Assets) respecting (A) any Environmental Law, (B) any
Remedial Action or (C) any claim of Losses and Expenses arising from the
Release or threatened Release of a Contaminant into the environment;
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(iv) neither Seller nor Hastings Canada is, with respect to the
Business or the Purchased Assets, subject to any judicial or
administrative proceeding, order, judgment, decree or settlement alleging
or addressing a violation of or liability under any Environmental Law;
(v) neither Seller nor Hastings Canada has with respect to the
Business or the Purchased Assets:
(A) reported a Release of a hazardous substance pursuant to
Section 103(a) of CERCLA, or any state or Canadian law
equivalent;
(B) filed a notice pursuant to Section 103(c) of CERCLA or
any Canadian law equivalent;
(C) filed notice pursuant to Section 3010 of RCRA,
indicating the generation of any hazardous waste, as that term is
defined under 40 CFR Part 261 or any state or Canadian law
equivalent; or
(D) filed any notice under any applicable Environmental Law
reporting a substantial violation of any applicable Environmental
Law;
(vi) there is not now, nor to the knowledge of Seller has there
ever been, on or in any of the Purchased Assets:
(A) any treatment, recycling, storage or disposal of any
hazardous waste, as that term is defined under 40 CFR Part 261 or
any state or Canadian law equivalent, that requires or required a
Governmental Permit pursuant to Section 3005 of RCRA or any
Canadian law equivalent; or
(B) any underground storage tank or surface impoundment or
landfill or waste pile;
(vii) there is not now on or in any of the Purchased Assets any
polychlorinated biphenyls (PCB) used in pigments, hydraulic oils,
electrical transformers or other equipment;
(viii) Seller has not received any notice or claim to the effect
that it or Hastings Canada is or may be liable to any Person as a result
of the Release or threatened Release of a Contaminant;
(ix) no Environmental Encumbrance has attached to any of the
Purchased Assets;
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(x) any asbestos-containing material which is on or part of any
of the Purchased Assets is in good repair according to the current
standards and practices governing such material, and its presence or
condition does not violate any currently applicable Environmental Law; and
(xi) none of the Filter Products, now or in the past, contains
asbestos or asbestos-containing material.
5.23. INSURANCE. SCHEDULE 5.23 sets forth a list and brief
description (including nature of coverage, limits, deductibles, premiums
and each claim and loss experienced over the most recent five years with
respect to each type of coverage) of all policies of insurance maintained,
owned or held by Seller and Hastings Canada on the date hereof with
respect to the Purchased Assets or the Business. Seller and Hastings
Canada shall keep or cause such insurance or comparable insurance to be
kept in full force and effect through the Closing Date. Seller and
Hastings Canada have complied with each of such insurance policies and has
not failed to give any notice or present any claim thereunder in a due and
timely manner. Seller has delivered to Buyer correct and complete copies
of the most recent inspection reports, if any, received from insurance
underwriters as to the condition of the Purchased Assets.
5.24. CUSTOMERS AND SUPPLIERS. Set forth in SCHEDULE 5.24
hereto is (a) a list of names and addresses of each customer of the
Business which has purchased $50,000 or more of Filter Products in the 12
months preceding the date of this Agreement and (b) a list of the ten
largest suppliers (measured by dollar volume of purchases by Seller and
Hastings Canada) of Seller and Hastings Canada in respect of the Business
and the percentage of the Business which each such customer or supplier
represents or represented during each of the years ended December 31,
1992, 1993 and 1994 and the six-month period ended June 30, 1995; and
(c) copies of the forms of purchase order for inventory and other supplies
and sales contracts for finished goods used by Seller and Hastings Canada
in respect of the Business. Except as set forth in SCHEDULE 5.24, to the
knowledge of Seller, there exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in
(including, without limitation, any modification or change in pricing,
rebates, discounts or concessions in respect of Filter Products), the
business relationship of Seller or Hastings Canada with any customer or
group of customers listed in SCHEDULE 5.24, or whose purchases
individually or in the aggregate are material to the operations of the
Business, or with any supplier or group of suppliers listed in SCHEDULE
5.24, or whose sales individually or in the aggregate are material to the
operations of the Business. Except as set forth on SCHEDULE 5.24, there
exists no present or future condition or state of facts or circumstances
involving customers, suppliers or sales representatives which Seller now
reasonably anticipates would materially adversely affect the Business or
prevent the conduct of the Business after the consummation of the
transactions contemplated by this Agreement in essentially the same manner
in which it has heretofore been conducted.
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5.25. WARRANTIES. SCHEDULE 5.25 sets forth (i) a specimen copy
of the form of written warranties covering Filter Products which have not
yet expired and (ii) a summary of the warranty expense and reserves
incurred by Seller and Hastings Canada in respect of Filter Products
during each of its last three fiscal years.
5.26. NO FINDER. Neither Seller nor Hastings Canada nor any
Person acting on their behalf has paid or become obligated to pay any fee
or commission to any broker, finder or intermediary for or on account of
the transactions contemplated by this Agreement.
5.27. DISCLOSURE. None of the representations or warranties of
Seller contained herein, none of the information contained in the
Schedules referred to in ARTICLE V, and none of the other information or
documents furnished to Buyer or any of its representatives by Seller or
its representatives pursuant to the terms of this Agreement, is false or
misleading in any material respect or omits to state a fact herein or
therein necessary to make the statements herein or therein not misleading
in any material respect. There is no fact which adversely affects or, to
the knowledge of Seller, in the future is likely to adversely affect the
Purchased Assets or the Business in any material respect which has not
been set forth or referred to in this Agreement or the Schedules hereto.
5.28. FINANCIAL PROJECTIONS; BUDGETS. Seller has made available
to Buyer certain budgets of revenues and costs of sales of the Business
for the period from June 1, 1995 to December 31, 1995, other financial
projections, cost and margin analyses and other statistical and financial
information with respect to the Business and Filter Products, which
projections, analyses and information were prepared for Buyer's use only.
Seller makes no representation or warranty regarding the accuracy of such
materials or as to whether such budgets and projections will be achieved
or otherwise, except that Seller represents and warrants that such
budgets, projections, analyses and information were prepared in good faith
and are based on (i) assumptions believed by it to be reasonable and (ii)
historical information which it reasonably believes is accurate and fairly
stated and is consistent with representations made by Seller to Buyer
regarding the nature and condition of the Business.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer hereby represents
and warrants to Seller and agrees as follows:
6.1. ORGANIZATION OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to own or
lease and to operate and use its properties and assets and to carry on its
business as now conducted.
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6.2. AUTHORITY OF BUYER. (a) Buyer has full power and
authority to execute, deliver and perform this Agreement and all of the
Buyer Ancillary Agreements. The execution, delivery and performance of
this Agreement and the Buyer Ancillary Agreements by Buyer have been duly
authorized and approved by Buyer's board of directors and do not require
any further authorization or consent of Buyer or its stockholders. This
Agreement has been duly authorized, executed and delivered by Buyer and is
the legal, valid and binding agreement of Buyer enforceable in accordance
with its terms, and each of the Buyer Ancillary Agreements has been duly
authorized by Buyer and upon execution and delivery by Buyer will be a
legal, valid and binding obligation of Buyer enforceable in accordance
with its terms, except, in each case, as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting creditors' rights generally and by general
principles of equity.
(b) Neither the execution and delivery of this Agreement or any
of the Buyer Ancillary Agreements or the consummation of any of the
transactions contemplated hereby or thereby nor compliance with or
fulfillment of the terms, conditions and provisions hereof or thereof
will:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or
a loss of rights under (A) the Certificate of Incorporation or bylaws
of Buyer, (B) any material note, instrument, agreement, mortgage,
lease, license, franchise, permit or other authorization, right,
restriction or obligation to which Buyer is a party or any of its
properties is subject or by which Buyer is bound, (C) any Court Order
to which Buyer is a party or by which it is bound or (D) any
Requirements of Laws affecting Buyer; or
(ii) require the approval, consent, authorization or act of, or
the making by Buyer of any declaration, filing or registration with,
any Person, except as provided under the HSR Act.
6.3. LITIGATION. There is no action, suit or proceeding pending
or, to the best knowledge of Buyer, threatened which questions the
legality or propriety of the transactions contemplated by this Agreement.
6.4. NO FINDER. Neither Buyer nor any Person acting on its
behalf has paid or become obligated to pay any fee or commission to any
broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
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ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. COVENANT NOT TO COMPETE OR SOLICIT BUSINESS. In
furtherance of the sale of the Purchased Assets and the Business to Buyer
hereunder by virtue of the transactions contemplated hereby and more
effectively to protect the value and goodwill of the Purchased Assets and
the Business so sold, Seller covenants and agrees that, for a period
ending on the fifth anniversary of the Closing Date, neither Seller nor
Hastings Canada or any of their respective Affiliates will:
(i) directly or indirectly (whether as principal, agent,
independent contractor, partner or otherwise) own, manage,
operate, control, participate in, perform services for, or
otherwise carry on, a business similar to or competitive with the
Business anywhere in the United States of America or Canada (it
being understood by the parties hereto that the Business is not
limited to any particular region of the United States of America
or Canada and that such business may be engaged in effectively
from any location in the United States of America or Canada); or
(ii) induce or attempt to persuade any employee, agent or
customer of the Business to terminate such employment, agency or
business relationship in order to enter into any such
relationship on behalf of any other business organization in
competition with the Business;
PROVIDED, HOWEVER, that nothing set forth in this SECTION 7.1 shall
prohibit Seller or its Affiliates from (x) owning not in excess of 5% in
the aggregate of any class of capital stock of any corporation if such
stock is publicly traded and listed on any national or regional stock
exchange or on the NASDAQ Stock Market or (y) from making occasional sales
of filter products manufactured by unrelated third parties and acquired by
Seller in a "stock-lift" or similar program. In addition, each of Seller
and Hastings Canada covenants and agrees that neither it nor any of its
Affiliates will divulge or make use of any trade secrets or other
confidential information of the Business other than to disclose such
secrets and information to Buyer or its Affiliates. In the event Seller,
Hastings Canada or any Affiliate of Seller or Hastings Canada violates any
of its obligations under this SECTION 7.1, Buyer may proceed against it in
law or in equity for such damages or other relief as a court may deem
appropriate. Seller and Hastings Canada acknowledge that a violation of
this SECTION 7.1 may cause Buyer irreparable harm which may not be
adequately compensated for by money damages. Seller and Hastings Canada
therefore agree that in the event of any actual or threatened violation of
this SECTION 7.1, Buyer shall be entitled, in addition to other remedies
that it may have, to a temporary restraining order and to preliminary and
final injunctive relief against Seller, Hastings Canada or such Affiliate
to prevent any violations of this SECTION 7.1, without the necessity of
posting a bond. The prevailing party in any action commenced under this
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SECTION 7.1 shall also be entitled to receive reasonable attorneys' fees
and court costs. It is the intent and understanding of each party hereto
that if, in any action before any court or agency legally empowered to
enforce this SECTION 7.1, any term, restriction, covenant or promise in
this SECTION 7.1 is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise shall be
deemed modified to the extent necessary to make it enforceable by such
court or agency.
7.2. USE OF NAMES. (a) For a period of 24 months after the
Closing Date, Buyer and its Affiliates shall have the royalty-free right
to refer to the Business as formerly that of "Hastings Manufacturing
Company" or "Hastings Inc." and to use such reference in advertising or in
the description or name of any service or product from time to time
purchased, processed, manufactured or sold by Buyer and its Affiliates in
continuation of the Business. Buyer and its affiliates shall have the
further royalty-free right from and after the Closing Date for an
unlimited period of time to sell or otherwise use or dispose of any
materials included in the inventory of the Business which bear the name
"Hastings Manufacturing Company" or "Hastings Inc." alone or in
combination with other words if such materials (i) were included in the
Purchased Assets, (ii) are returned to Buyer or its Affiliates after the
Closing Date, or (iii) were contracted for by Seller prior to the Closing
Date. Buyer and its affiliates shall also have the royalty-free right
from and after the Closing Date to use, for a period of 12 months
following the Closing Date, any signs, letterhead, invoices or other
supplies which bear the name "Hastings Manufacturing Company" or "Hastings
Inc." alone or in combination with other words if such signs or supplies
(i) were included in the Purchased Assets, or (ii) were contracted for by
Seller prior to the Closing Date.
(b) For a period of five years after the Closing Date, Buyer and
its Affiliates shall have the royalty-free right to use the Hastings
Trademark in advertising or in the description or name of any service or
product from time to time purchased, processed, manufactured or sold by
Buyer and its Affiliates in continuation of the Business. Such right
shall be consistent with the terms set forth in Article III of the
License.
7.3. TAXES. (a) Seller shall be liable for and shall pay all
Taxes (whether assessed or unassessed) applicable to the Business or the
Purchased Assets, in each case attributable to periods (or portions
thereof) ending on or prior to the Closing Date and, with respect to any
Straddle Period, the portion of such Straddle Period ending on and
including the Closing Date. Buyer shall be liable for and shall pay all
Taxes (whether assessed or unassessed) applicable to the Business or the
Purchased Assets, in each case attributable to periods (or portions
thereof) beginning after the Closing Date and, with respect to any
Straddle Period, the portion of such Straddle Period beginning after the
Closing Date. For purposes of this paragraph (a), any period beginning
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before and ending after the Closing Date shall be treated on a "closing of
the books" basis as two partial periods, one ending on the Closing Date
and the other beginning on the day after the Closing Date except that
Taxes (such as property Taxes) imposed on a periodic basis shall be
allocated on a daily basis.
(b) Notwithstanding SECTION 7.3(A), any sales Tax, use Tax, real
property transfer or gains Tax (which shall be calculated on the basis of
values set forth in the Allocation Schedule), documentary stamp Tax or
similar Tax attributable to the sale or transfer of the Purchased Assets
shall be paid 50% by Seller and 50% by Buyer. Buyer and Seller agree to
timely sign and deliver such certificates or forms as may be necessary or
appropriate to establish an exemption from (or otherwise reduce), or make
a report with respect to, such Taxes.
(c) Seller or Buyer, as the case may be, shall provide
reimbursement for any Tax paid by one party all or a portion of which is
the responsibility of the other party in accordance with the terms of this
SECTION 7.3. Within a reasonable time prior to the payment of any said
Tax (other than Taxes previously paid by Seller and allocated on a daily
basis as provided in (a) above), the party paying such Tax shall give
notice to the other party of the Tax payable and the portion which is the
liability of each party, although failure to do so will not relieve the
other party from its liability hereunder.
(d) After the Closing Date, each of Seller and Buyer shall (and
cause their respective Affiliates to):
(i) assist the other party in preparing any Tax Returns which
such other party is responsible for preparing and filing;
(ii) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns of the Business or
the Purchased Assets;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records and documents relating
to Taxes of the Business or the Purchased Assets;
(iv) provide timely notice to the other in writing of any
pending or threatened Tax audits or assessments relating to Taxes or
the Business or the Purchased Assets for taxable periods for which the
other may have a liability under this SECTION 8.3; and
(v) furnish the other with copies of all correspondence received
from any taxing authority in connection with any Tax audit or
information request with respect to any such taxable period.
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(e) Any payments made pursuant to this SECTION 7.3 shall be
treated by Buyer and Seller as an adjustment to the Purchase Price and, to
the extent it cannot be so characterized for Tax purposes, shall be made
on an After-Tax Basis.
7.4. DISCHARGE OF LIABILITIES OF THE BUSINESS. Seller covenants
and agrees that it will pay and discharge, and hold Buyer harmless from,
each and every liability and obligation of Seller or Hastings Canada in
respect of the Business or the Purchased Assets arising from events
occurring on or prior to the Closing Date, excepting only those
liabilities and obligations expressly assumed by Buyer at the Closing
pursuant to instruments of assumption delivered to Seller or Hastings
Canada at the Closing, it being understood and agreed that Buyer is
assuming no liabilities or obligations of Seller or Hastings Canada other
than liabilities and obligations so expressly assumed by Buyer. Seller
shall cause the Owned Real Estate to be released from all Encumbrances
that are not Permitted Encumbrances.
7.5. TRANSITION MATTERS. (a) Certain matters with respect to
the transition on and after the Closing Date of the operation of the
Business from Seller and Hastings Canada to Buyer are addressed in the
Transition Agreement to be entered into between the Buyer and Seller and
delivered on the Closing Date.
(b) As a result of the sale of the Business by Seller and
Hastings Canada to Buyer, Seller acknowledges that, subject to its
obligations under the Transition Agreement, Seller may terminate employees
employed by Seller at the Hastings Michigan Plant and the Knoxville
Facility and Hastings Canada may terminate employees employed by Hastings
Canada at the Xxxxxx, Xxxxxxx, Xxxxxx facility. Seller and Hastings
Canada agree to use their best efforts to avoid any disruption of the
Business after the Closing caused by their respective present or former
employees or any collective bargaining organization to which they may
belong. As set forth in SECTION 10.1, Seller agrees to indemnify and hold
Buyer and its Affiliates harmless from any and all Losses or Expenses
incurred in connection with the termination of such employees of Seller or
Hastings Canada whether resulting from any strike or other concerted union
activity or otherwise (each a "FACILITY TERMINATION LIABILITY").
7.6. WARRANTY AND PRODUCT LIABILITY CLAIMS IN RESPECT OF FILTER
PRODUCTS PRODUCED BY SELLER PRIOR TO THE CLOSING DATE. (a) In the event
that claims or demands are made on Buyer or Seller after the Closing Date
for alleged injury to persons or property caused by an allegedly defective
or faulty Filter Product manufactured, distributed or sold by Seller or
Hastings Canada prior to the Closing Date or for the provision of parts or
service, repair or replacement with respect to any such Filter Product:
(i) Buyer shall be liable for and shall pay all Losses and
Expenses relating to such claims or demands until the aggregate of such
Losses and Expenses equals $320,000;
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(ii) thereafter until there has been incurred additional Losses
and Expenses aggregating $80,000, Losses and Expenses relating to such
claims or demands shall be shared equally by Buyer and Seller, and Seller
shall pay its portion thereof upon written demand therefore made by Buyer,
which demand shall be in reasonable detail; and
(iii) after aggregate Losses and Expenses relating to such
claims or demands have equalled $400,000, Buyer shall have sole
responsibility for such Losses and Expenses.
At all times Buyer shall have sole control and discretion with
respect to the disposition and defense of all such claims and demands and
shall use its best efforts to avoid payment with regard to improper,
erroneous or fraudulent claims. "Best efforts" shall not require Buyer to
engage in litigation or other forms of dispute resolution.
7.7. COLLECTION OF ACCOUNTS RECEIVABLE. After the Closing,
Buyer agrees to provide reasonable assistance to Seller in the performance
of actions necessary to facilitate Seller's collection of accounts
receivable related to the sales of goods by the Business on or before the
Closing Date. The credit and collection departments of Buyer and Seller
will work together in good faith to facilitate the collection of such
accounts receivable. Upon Seller's written request, Buyer agrees that it
shall (a) terminate all sales of Filter Products to any customer of the
Business prior to the Closing Date from which there is unpaid and
outstanding an account receivable due to Seller overdue by more than 120
days or (b) purchase such account receivable from Seller at a price equal
to the amount owed thereon exclusive of interest or late charges. Buyer
shall not be required to terminate any customer who has provided
documentation or other appropriate evidence to the Buyer that such account
receivable is not in fact due and owing. Notwithstanding the foregoing,
Seller acknowledges that it will remain responsible for the collection of
Seller's accounts receivable and Buyer shall not be obligated to undertake
any debt collection efforts or institute or join in any legal action to
collect any of Seller's accounts receivable.
7.8. SOLICITING EMPLOYEES OF SELLER. (a) Commencing on the
date hereof Buyer shall have the right, without the prior written consent
of the Seller, to initiate contact with any salesperson or salaried
employee then employed by Seller or Hastings Canada for the purpose of
soliciting the employment of such person by Buyer; provided that Buyer
shall not, without the prior written consent of Seller, initiate contact
with any Ring Employee or any Exempt Employee then employed by Seller for
the purpose of soliciting the employment of such person by Buyer. An
"EXEMPT EMPLOYEE" shall mean each salesperson, not to exceed 13 in number,
selected by Seller in its sole discretion and set forth on a list
delivered by Seller to Buyer prior to the date hereof (the "EXEMPT
EMPLOYEE LIST"). A "Ring Employee" shall mean each employee of Seller
identified on SCHEDULE 7.8 hereto who is engaged in the operation of
Seller's piston ring business. It shall not be a breach of this SECTION
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7.8(A) by Buyer if any Ring Employee or Exempt Employee initiates contact
or applies for employment by Buyer. In the event that any employee of
Seller becomes an employee of Buyer as the result of a breach by Buyer of
the covenant set forth in this paragraph (a), Buyer shall pay to Seller
liquidated damages in the amount of $40,000 with respect to each such
employee of Seller so hired by Buyer in contravention of this covenant.
Such liquidated damages shall be in addition to any other equitable
remedies available to Seller in connection herewith.
(b) Except as set forth in paragraph (a) hereof, Seller shall
provide access for Buyer to such of Seller's and Hastings Canada's
employees and agents as are engaged in the Business for the purpose of
facilitating Buyer's efforts to hire all or some of such employees.
Notwithstanding the foregoing, Buyer shall be under no obligation to offer
employment to any employee of Seller or Hastings Canada and shall assume
no responsibility for or liability with respect to any employee benefit
agreements, plans or arrangements of Seller or Hastings Canada; provided
that Buyer agrees that it shall be responsible for compliance with the
Worker Adjustment and Retraining Act of 1988 with respect to the Yankton
Plant and its employees.
ARTICLE VIII
ADDITIONAL CLOSING DATE DELIVERIES BY SELLER
On or prior to the Closing Date the Seller shall deliver to Buyer
the following:
8.1. CLOSING CERTIFICATE. There shall have been delivered to
Buyer a certificate, dated the Closing Date, signed on behalf of Seller by
the President or any Vice President of Seller, to the effect that there
has been no material breach by Seller or Hastings Canada in the
performance of any of their covenants and agreements herein; and each of
the representations and warranties of Seller contained or referred to
herein is true and correct on the Closing Date in all material respects,
except for changes therein specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing by Buyer.
8.2. AUDITED FINANCIAL STATEMENTS. On or before the Closing
Date Buyer shall have received the following financial statements
reflecting the assets, income and expense of the Business, in form and
substance reasonably satisfactory to it: (i) a statement of assets of the
Business as at December 31, 1994 and the last day of the last fiscal
quarter ended prior to the Closing Date; and (ii) related statement of
income for the Business for the year and portion of the 1995 fiscal year
then ended along with appropriate notes to such financial statements. All
of such financial statements shall be prepared in accordance with
Regulation S-X promulgated by the Securities and Exchange Commission and
meet the applicable requirements set forth in Form 8-K under the
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Securities Exchange Act of 1934. The financial statements as at December
31, 1994 and for the year then ended shall be accompanied by an
unqualified report of BDO Xxxxxxx, LLP to the effect that such financial
statements have been prepared in conformity with generally accepted
accounting principles and present fairly the financial position and
results of operations of the Business as of the date thereof for the
period covered thereby and are herein referred to as the "AUDITED 1994
FINANCIAL STATEMENTS." The financial statements as at the end of the
calendar quarter immediately prior to the Closing Date and for the period
then ended are herein referred to as the "INTERIM 1995 FINANCIAL
STATEMENTS."
8.3. TITLE INSURANCE. Buyer shall have received, with respect
to each parcel of the Owned Real Property identified in SCHEDULE 5.10, a
current owner's title insurance policy and, with respect to the leased
real property under written lease agreements, if any, identified in
SCHEDULE 5.11, a current leasehold owner's title insurance policy, all of
which policies shall be ALTA-1992 form policies with an endorsement
deleting the "creditor's rights exception or exclusion, with extended
coverage over general exceptions 1 (rights or claims of parties in
possession), 2 (survey matters), 3 (easements), 4 (mechanic's liens) and 5
(taxes or special assessments not shown as existing liens), with ALTA Form
3.1 zoning endorsement, written by a nationally recognized title insurance
company in form and substance satisfactory to Buyer, and in the total
amount shown on the Allocation Schedule for the Owned Real Property and
allocated among the Owned Real Property in accordance with the Allocation
Schedule, insuring that Buyer has good and marketable title thereto, free
and clear of all Encumbrances, except for Permitted Encumbrances. Such
policies may be in the form of marked-up commitments, dated as of the
Closing Date and showing Buyer in title.
ARTICLE IX
ADDITIONAL CLOSING DATE DELIVERIES BY BUYER
On or prior to the Closing Date, the Buyer shall deliver to
Seller the following:
9.1. CLOSING CERTIFICATE. There shall have been delivered to
Seller and Hastings Canada a certificate, dated the Closing Date, signed
by the President or any Vice President of the Buyer to the effect that
there has been no material breach by Buyer in the performance of any of
its covenants and agreements herein; each of the representations and
warranties of Buyer contained or referred to in this Agreement are true
and correct on the Closing Date in all material respects, except for
changes therein specifically permitted by this Agreement or resulting from
any transaction expressly consented to in writing by Seller.
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ARTICLE X
INDEMNIFICATION
10.1. INDEMNIFICATION BY SELLER. (a) Seller agrees to indemnify
and hold harmless each Buyer Group Member from and against any and all
Losses and Expense incurred by such Buyer Group Member in connection with
or arising from:
(i) any breach by Seller or Hastings Canada of any of its
covenants in this Agreement or in any Seller Ancillary Agreement;
(ii) any failure of Seller or Hastings Canada to perform any of
its obligations in this Agreement or in any Seller Ancillary
Agreement;
(iii) any breach of any warranty or the inaccuracy of any
representation of Seller contained in this Agreement or any Schedule
hereto or in any Seller Ancillary Agreement or in any certificate
delivered by or on behalf of Seller pursuant hereto;
(iv) any failure of Seller to obtain prior to the Closing any
consent set forth in SCHEDULE 10.1;
(v) any liabilities incurred by Buyer pursuant to the Bulk Sales
Laws by reason of the transactions provided for in this Agreement,
except that this clause shall not affect the obligation of Buyer to
pay and discharge the Assumed Liabilities;
(vi) the failure of Seller or Hastings Canada to perform or pay,
or take Remedial Actions with respect to, any Excluded Liability; or
(vii) any Facility Termination Liability;
PROVIDED, HOWEVER, that Seller shall be required to indemnify and hold
harmless with respect to Loss and Expense incurred by Buyer Group Members
(other than Loss and Expense incurred as a result of (A) inaccuracies of
the representations and warranties contained in SECTIONS 5.1, 5.3, 5.7,
5.16 and 5.26 hereof, (B) a breach by Seller or Hastings Canada of its
covenants and obligations set forth in SECTIONS 3.5, 7.1, 7.3, 7.4, 7.5(B)
and 11.10(B) hereof, (C) any liability referred to in SECTION 10.1(A)(V)
and 10.1(A)(VI) and (D) inaccuracies of the representations and warranties
contained, or a breach by Seller or Hastings Canada of its covenants and
obligations set forth, in the Seller Ancillary Agreements, as to all of
which this proviso shall have no effect) only if, and to the extent that,
the aggregate amount of such Loss and Expense exceeds $500,000.
(b) The indemnification provided for in this SECTION 10.1 shall
terminate three years after the Closing Date (and no claims shall be made
by any Buyer Group Member under this SECTION 10.1 thereafter), except that
the indemnification by Seller shall continue as to:
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(i) the obligations and representations of each of Seller and
Hastings Canada under the Instrument of Assignment, as to which no
time limitation shall apply;
(ii) the representations and warranties set forth in SECTIONS
5.7 and 5.16 hereof, the covenants of Seller and Hastings Canada set
forth in SECTIONS 3.5, 7.3, 7.4, 7.5(B), 11.2, 11.6, 11.10(B) and
11.13 hereof, any failure by Seller to perform or pay, or take
Remedial Actions with respect to, any Excluded Liability and the
representations, warranties and covenants of Seller and Hastings
Canada set forth in the Seller Ancillary Agreements, as to all of
which no time limitation shall apply;
(iii) the covenant set forth in SECTION 7.1, as to which the
indemnification provided for in this SECTION 10.1 shall terminate one
year after the expiration of the noncompetition period provided for
therein; and
(iv) any Loss or Expense of which any Buyer Group Member has
notified Seller in accordance with the requirements of SECTION 10.3 on
or prior to the date such indemnification would otherwise terminate in
accordance with this SECTION 10.1, as to which the obligation of
Seller shall continue until the liability of Seller shall have been
determined pursuant to this ARTICLE X, and Seller shall have
reimbursed all Buyer Group Members for the full amount of such Loss
and Expense in accordance with this ARTICLE X.
10.2. INDEMNIFICATION BY BUYER. (a) Buyer agrees to indemnify
and hold harmless each Seller Group Member from and against any and all
Loss and Expense incurred by such Seller Group Member in connection with
or arising from:
(i) any breach by Buyer of any of its covenants or agreements in
this Agreement or in any Buyer Ancillary Agreement;
(ii) any failure by Buyer to perform any of its obligations in
this Agreement or in any Buyer Ancillary Agreement;
(iii) any breach of any warranty or the inaccuracy of any
representation of Buyer contained or referred to in this Agreement or
in any Buyer Ancillary Agreement or in any certificate delivered by or
on behalf of Buyer pursuant hereto; or
(iv) the failure of Buyer to perform any of the Assumed
Liabilities;
PROVIDED, HOWEVER, that Buyer shall be required to indemnify and hold
harmless under this SECTION 10.2 with respect to Loss and Expense incurred
by Seller Group Members (other than Loss and Expense incurred as a result
of (A) Buyer's failure to pay, perform or discharge any of the Assumed
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Liabilities, (B) inaccuracies of the representations and warranties
contained in SECTION 6.3 hereof, (C) a breach by Buyer of its covenants
and obligations set forth in SECTIONS 3.5, 7.3 and 7.8(A) hereof and (D)
inaccuracies of the representations and warranties contained, or a breach
by Buyer of its covenants set forth, in the Buyer Ancillary Agreements, as
to all of which this proviso shall have no effect) only if, and to the
extent that, the aggregate amount of such Loss and Expense exceeds
$500,000.
(b) The indemnification provided for in this SECTION 10.2 shall
terminate three years after the Closing Date (and no claims shall be made
by Seller under this SECTION 10.2 thereafter), except that the
indemnification by Buyer shall continue as to:
(i) the covenants of Buyer set forth in SECTIONS 3.5, 7.3, 11.2,
11.6 and 11.13 hereof, the obligation of Buyer to perform the Assumed
Liabilities and the representations, warranties and covenants of Buyer
set forth in the Buyer Ancillary Agreements, as to all of which no
time limitation shall apply; and
(ii) any Loss or Expense of which Seller has notified Buyer in
accordance with the requirements of SECTION 10.3 on or prior to the
date such indemnification would otherwise terminate in accordance with
this SECTION 10.2, as to which the obligation of Buyer shall continue
until the liability of Buyer shall have been determined pursuant to
this ARTICLE X, and Buyer shall have reimbursed all Seller Group
Members for the full amount of such Loss and Expense in accordance
with this ARTICLE X.
10.3. NOTICE OF CLAIMS. (a) Any Buyer Group Member or Seller
Group Member (the "INDEMNIFIED PARTY") seeking indemnification hereunder
shall give to the party obligated to provide indemnification to such
Indemnified Party (the "INDEMNITOR") a notice (a "CLAIM NOTICE")
describing in reasonable detail the facts giving rise to any claim for
indemnification hereunder and shall include in such Claim Notice (if then
known) the amount or the method of computation of the amount of such
claim, and a reference to the provision of this Agreement or any other
agreement, document or instrument executed hereunder or in connection
herewith upon which such claim is based; PROVIDED, that a Claim Notice in
respect of any action at law or suit in equity by or against a third
Person as to which indemnification will be sought shall be given promptly
after the action or suit is commenced; PROVIDED FURTHER that failure to
give such notice shall not relieve the Indemnitor of its obligations
hereunder except to the extent it shall have been prejudiced by such
failure.
(b) In calculating any Loss or Expense there shall be deducted
any insurance recovery in respect thereof and no right of subrogation
shall accrue hereunder to any insurer.
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(c) After the giving of any Claim Notice pursuant hereto, the
amount of indemnification to which an Indemnified Party shall be entitled
under this ARTICLE X shall be determined: (i) by the written agreement
between the Indemnified Party and the Indemnitor; (ii) by a final judgment
or decree of any court of competent jurisdiction; or (iii) by any other
means to which the Indemnified Party and the Indemnitor shall agree. The
judgment or decree of a court shall be deemed final when the time for
appeal, if any, shall have expired and no appeal shall have been taken or
when all appeals taken shall have been finally determined. The
Indemnified Party shall have the burden of proof in establishing the
amount of Loss and Expense suffered by it.
10.4. THIRD PERSON CLAIMS. (a) Subject to SECTION 10.4(B), the
Indemnified Party shall have the right to conduct and control, through
counsel of its choosing, the defense, compromise or settlement of any
third Person claim, action or suit against such Indemnified Party as to
which indemnification will be sought by any Indemnified Party from any
Indemnitor hereunder, and in any such case the Indemnitor shall cooperate
in connection therewith and shall furnish such records, information and
testimony and attend such conferences, discovery proceedings, hearings,
trials and appeals as may be reasonably requested by the Indemnified Party
in connection therewith; PROVIDED, that the Indemnitor may participate,
through counsel chosen by it and at its own expense, in the defense of any
such claim, action or suit as to which the Indemnified Party has so
elected to conduct and control the defense thereof; and PROVIDED, FURTHER,
that the Indemnified Party shall not, without the written consent of the
Indemnitor (which written consent shall not be unreasonably withheld),
pay, compromise or settle any such claim, action or suit, except that no
such consent shall be required if, following a written request from the
Indemnified Party, the Indemnitor shall fail, within 14 days after the
making of such request, to acknowledge and agree in writing that, if such
claim, action or suit shall be adversely determined, such Indemnitor has
an obligation to provide indemnification hereunder to such Indemnified
Party. Notwithstanding the foregoing, the Indemnified Party shall have
the right to pay, settle or compromise any such claim, action or suit
without such consent, PROVIDED that in such event the Indemnified Party
shall waive any right to indemnity therefor hereunder unless such consent
is unreasonably withheld.
(b) If any third Person claim, action or suit against any
Indemnified Party is solely for money damages or, where Seller is the
Indemnitor, will have no continuing effect in any material respect on the
Business or the Purchased Assets, then the Indemnitor shall have the right
to conduct and control, through counsel of its choosing, the defense,
compromise or settlement of any such third Person claim, action or suit
against such Indemnified Party as to which indemnification will be sought
by any Indemnified Party from any Indemnitor hereunder if the Indemnitor
has acknowledged and agreed in writing that, if the same is adversely
determined, the Indemnitor has an obligation to provide indemnification to
the Indemnified Party in respect thereof, and in any such case the
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Indemnified Party shall cooperate in connection therewith and shall
furnish such records, information and testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the Indemnitor in connection therewith; PROVIDED,
that the Indemnified Party may participate, through counsel chosen by it
and at its own expense, in the defense of any such claim, action or suit
as to which the Indemnitor has so elected to conduct and control the
defense thereof. Notwithstanding the foregoing, the Indemnified Party
shall have the right to pay, settle or compromise any such claim, action
or suit, PROVIDED that in such event the Indemnified Party shall waive any
right to indemnity therefor hereunder unless the Indemnified Party shall
have sought the consent of the Indemnitor to such payment, settlement or
compromise and such consent was unreasonably withheld, in which event no
claim for indemnity therefor hereunder shall be waived.
10.5. CHARACTER OF PAYMENTS. Any payment by Buyer or Seller
under this ARTICLE X shall be an adjustment to the Purchase Price and, to
the extent that it cannot be so characterized for Tax purposes, shall be
made on an After-Tax Basis.
ARTICLE XI
GENERAL PROVISIONS
11.1. SURVIVAL OF OBLIGATIONS. All representations, warranties,
covenants and obligations contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement; PROVIDED,
HOWEVER, that, except as otherwise provided in ARTICLE X, the
representations and warranties contained in ARTICLES V and VI shall
terminate on the third anniversary of the Closing Date. Except as
otherwise provided herein, no claim shall be made for the breach of any
representation or warranty contained in ARTICLE V or VI or under any
certificate delivered with respect thereto under this Agreement after the
date on which such representations and warranties terminate as set forth
in this SECTION 11.1.
11.2. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees
that it will treat in confidence all documents, materials and other
information which it shall have obtained regarding the other party during
the course of the negotiations leading to the consummation of the
transactions contemplated hereby (whether obtained before or after the
date of this Agreement), the investigation provided for herein and the
preparation of this Agreement and other related documents, and, in the
event the transactions contemplated hereby shall not be consummated, each
party will return to the other party all copies of nonpublic documents and
materials which have been furnished in connection therewith. Such
documents, materials and information shall not be communicated to any
third Person (other than, in the case of Buyer, to its counsel,
accountants, financial advisors or lenders, and in the case of Seller, to
its counsel, accountants or financial advisors and such parties as may be
reasonably required to obtain the third-party consents anticipated by this
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Agreement). No other party shall use any confidential information in any
manner whatsoever except solely for the purpose of evaluating the proposed
purchase and sale of the Purchased Assets; PROVIDED, HOWEVER, that after
the Closing Buyer may use or disclose any confidential information
included in the Purchased Assets or otherwise reasonably related to the
Business or the Purchased Assets. The obligation of each party to treat
such documents, materials and other information in confidence shall not
apply to any information which (i) is or becomes available to such party
from a source other than such party, (ii) is or becomes available to the
public other than as a result of disclosure by such party or its agents,
(iii) is required to be disclosed under applicable law or judicial
process, but only to the extent it must be disclosed, or (iv) such party
reasonably deems necessary to disclose to obtain any of the consents or
approvals contemplated hereby.
11.3. NO PUBLIC ANNOUNCEMENT. Neither Buyer nor Seller or
Hastings Canada shall, without the approval of the other, make any press
release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that any such
party shall be so obligated by law or the rules of any stock exchange, in
which case the other party shall be advised and the parties shall use
their best efforts to cause a mutually agreeable release or announcement
to be issued; PROVIDED that the foregoing shall not preclude
communications or disclosures necessary to implement the provisions of
this Agreement or to comply with the accounting and Securities and
Exchange Commission disclosure obligations.
11.4. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or
delivered when delivered personally or when sent by registered or
certified mail or by private courier addressed as follows:
If to Buyer, to:
CLARCOR Inc.
0000 Xxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Tel. 815/000-0000
Fax 815/000-0000
with a copy to:
Sidley & Austin
Xxxxx 0000
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
Tel. 312/000-0000
Fax 312/000-0000
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If to Seller or Hastings Canada, to:
Hastings Manufacturing Company
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X.X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Co-Presidents
Tel. 616/000-0000
Fax 616/000-0000
with a copy to:
Xxxxxx Xxxxxxxx & Xxxx LLP
000 Xxx Xxxx Xxxxxxxx
000 Xxxx Xxxxxx, X.X.
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Tel. 616/000-0000
Fax 616/000-0000
or to such other address as such party may indicate by a notice delivered
to the other party hereto.
11.5. SUCCESSORS AND ASSIGNS. (a) The rights of any party
under this Agreement shall not be assignable by such party hereto without
the written consent of the other parties hereto, except that the rights of
the Buyer hereunder may be assigned, without the consent of Seller or
Hastings Canada, to any corporation all of the outstanding capital stock
of which is owned (directly or indirectly) or controlled by Buyer or to
any general or limited partnership in which Buyer or any such corporation
is a general partner, PROVIDED that Buyer shall not be released from any
of its obligations hereunder by reason of such assignment. Following the
Closing, any party may assign any of its rights hereunder, but no such
assignment shall relieve it of its obligations hereunder.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns.
The successors and permitted assigns hereunder shall include without
limitation, in the case of Buyer, any permitted assignee as well as the
successors in interest to such permitted assignee (whether by merger,
liquidation (including successive mergers or liquidations) or otherwise).
Nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any Person other than the parties and successors
and assigns permitted by this SECTION 11.5 any right, remedy or claim
under or by reason of this Agreement.
11.6. ACCESS TO RECORDS AFTER CLOSING. (a) For a period of six
years after the Closing Date, Seller and its representatives shall have
reasonable access to all of the books and records of Seller transferred to
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Buyer hereunder to the extent that such access may reasonably be required
by Seller in connection with matters relating to or affected by the
operations of the Business prior to the Closing Date. Such access shall
be afforded by Buyer upon receipt of reasonable advance notice and during
normal business hours. Seller shall be solely responsible for any costs
or expenses incurred by it pursuant to this SECTION 11.6. If Buyer shall
desire to dispose of any of such books and records prior to the expiration
of such six-year period, Buyer shall, prior to such disposition, give
Seller a reasonable opportunity, at Seller's expense, to segregate and
remove such books and records as Seller may select.
(b) For a period of six years after the Closing Date, Buyer and
its representatives shall have reasonable access to all of the books and
records relating to the Business which Seller or any of its Affiliates may
retain after the Closing Date. Such access shall be afforded by Seller
and its Affiliates upon receipt of reasonable advance notice and during
normal business hours. Buyer shall be solely responsible for any costs
and expenses incurred by it pursuant to this SECTION 11.6. If Seller or
any of its Affiliates shall desire to dispose of any of such books and
records prior to the expiration of such six-year period, Seller shall,
prior to such disposition, give Buyer a reasonable opportunity, at Buyer's
expense, to segregate and remove such books and records as Buyer may
select.
11.7. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Exhibits and Schedules referred to herein and the documents delivered
pursuant hereto contain the entire understanding of the parties hereto
with regard to the subject matter contained herein or therein, and
supersede all prior agreements, understandings or letters of intent
between or among any of the parties hereto. This Agreement shall not be
amended, modified or supplemented except by a written instrument signed by
an authorized representative of each of the parties hereto.
11.8. INTERPRETATION. Article titles and headings to sections
herein are inserted for convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this
Agreement. The Schedules and Exhibits referred to herein shall be
construed with and as an integral part of this Agreement to the same
extent as if they were set forth verbatim herein.
11.9. WAIVERS. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. Any such waiver shall be validly
and sufficiently authorized for the purposes of this Agreement if, as to
any party, it is authorized in writing by an authorized representative of
such party. The failure of any party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any
part hereof or the right of any party thereafter to enforce each and every
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such provision. No waiver of any breach of this Agreement shall be held
to constitute a waiver of any other or subsequent breach.
11.10. EXPENSES. Each party hereto will pay all costs and
expenses incident to its negotiation and preparation of this Agreement and
to its performance and compliance with all agreements and conditions
contained herein on its part to be performed or complied with, including
the fees, expenses and disbursements of its counsel and accountants. The
cost of the commitments for title insurance and surveys described in
SECTION 7.7 and the title insurance policies described in SECTION 8.7
shall each be paid 50% by Seller and 50% by Buyer.
11.11. PARTIAL INVALIDITY. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid
under applicable law, but in case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such provision shall be ineffective to the
extent, but only to the extent, of such invalidity, illegality or
unenforceability without invalidating the remainder of such invalid,
illegal or unenforceable provision or provisions or any other provisions
hereof, unless such a construction would be unreasonable.
11.12. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more counterparts, each of which shall be considered an
original instrument, but all of which shall be considered one and the same
agreement, and shall become binding when one or more counterparts have
been signed by each of the parties hereto and delivered to each of Seller
and Buyer.
11.13. FURTHER ASSURANCES. On the Closing Date Seller and
Hastings Canada shall (i) deliver to Buyer such other bills of sale,
deeds, endorsements, assignments and other good and sufficient instruments
of conveyance and transfer, in form reasonably satisfactory to Buyer and
its counsel, as Buyer may reasonably request or as may be otherwise
reasonably necessary to vest in Buyer all the right, title and interest of
Seller and Hastings Canada in, to or under any or all of the Purchased
Assets, and (ii) take all steps as may be reasonably necessary to put
Buyer in actual possession and control of all the Purchased Assets. From
time to time following the Closing, Seller and Hastings Canada shall
execute and deliver, or cause to be executed and delivered, to Buyer such
other instruments of conveyance and transfer as Buyer may reasonably
request or as may be otherwise necessary to more effectively convey and
transfer to, and vest in, Buyer and put Buyer in possession of, any part
of the Purchased Assets, and, in the case of licenses, certificates,
approvals, authorizations, agreements, contracts, leases, easements and
other commitments included in the Purchased Assets (a) which cannot be
transferred or assigned effectively without the consent of third parties
which consent has not been obtained prior to the Closing, to cooperate
with Buyer at its request in endeavoring to obtain such consent promptly,
and if any such consent is unobtainable, to use its best efforts to secure
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to Buyer the benefits thereof in some other manner, or (b) which are
otherwise not transferable or assignable, to use its best efforts jointly
with Buyer to secure to Buyer the benefits thereof in some other manner
(including the exercise of the rights of Seller and Hastings Canada
thereunder). Not-withstanding anything in this Agreement to the contrary,
this Agreement shall not constitute an agreement to assign any license,
certificate, approval, authorization, agreement, contract, lease, easement
or other commitment included in the Purchased Assets if an attempted
assignment thereof without the consent of a third party thereto would
constitute a breach thereof.
11.14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the
conflicts of law provisions) of the State of Michigan.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed the day and year first above written.
ATTEST: CLARCOR INC.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Secretary Title: President
ATTEST: HASTINGS MANUFACTURING COMPANY
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxx X.X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx Name: Xxxx X.X. Xxxxxxx
Title: Secretary Title: Co-President
ATTEST: HASTINGS INC.
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Secretary Title: Vice President
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