1
EXECUTION COPY
EXHIBIT 2.1
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POWDER METAL STOCK PURCHASE AGREEMENT
by and between
XXXX HOLDING AG
as Seller
and
SINTER METALS, INC.
as Buyer
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS ....................................................... -1-
ARTICLE II PURCHASE AND SALE OF SHARES ...................................... -7-
2.1 Purchase and Sale ........................................... -7-
2.2 Consideration ............................................... -7-
2.3 Final Statement of Working Capital; Purchase
Price Adjustment ........................................... -8-
2.4 Indemnity Escrow Account .................................... -9-
ARTICLE III REPRESENTATIONS AND WARRANTIES
CONCERNING SELLER ...................................................-10-
3.1 Organization and Good Standing ..............................-10-
3.2 Authority of Seller .........................................-10-
3.3 No Conflict or Breach .......................................-11-
3.4 Consents and Approvals ......................................-11-
3.5 Share Ownership .............................................-11-
3.6 Financial Advisors ..........................................-12-
ARTICLE IV REPRESENTATIONS AND WARRANTIES CONCERNING
THE COMPANY AND SUBSIDIARIES ........................................-12-
4.1 Organization and Good Standing ..............................-12-
4.2 Capitalization ..............................................-12-
4.3 Subsidiaries ................................................-13-
4.4 No Conflict or Breach .......................................-13-
4.5 Consents and Approvals ......................................-14-
4.6 Financial Statements ........................................-14-
4.7 Title to Assets .............................................-14-
4.8 Real Property ...............................................-15-
4.9 Contracts ...................................................-16-
4.10 Intellectual Property .......................................-16-
4.11 Litigation ..................................................-17-
4.12 Taxes .......................................................-17-
4.13 Environmental Protection ....................................-17-
4.14 Labor and Employment Matters ................................-18-
4.15 Employee Benefit Plans ......................................-19-
4.16 Absence of Certain Changes ..................................-20-
4.17 Insurance ...................................................-21-
4.18 Capital Projects ............................................-21-
4.19 Condition of Properties and Equipment .......................-21-
4.20 No Undisclosed Liabilities ..................................-21-
4.21 Entirety of Business ........................................-22-
4.22 Compliance with Laws ........................................-22-
4.23 Completeness of Warranties ..................................-22-
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4.24 Inventory ...................................................-22-
4.25 Receivables .................................................-22-
4.26 Customers and Suppliers .....................................-23-
4.27 Indebtedness ................................................-23-
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER ...........................-23-
5.1 Organization and Good Standing ..............................-23-
5.2 Authority ...................................................-23-
5.3 No Conflict or Breach .......................................-24-
5.4 Consents and Approvals ......................................-24-
5.5 Share Ownership .............................................-24-
5.6 Financial Advisors ..........................................-24-
5.7 Financing ...................................................-25-
5.8 Investment ..................................................-25-
ARTICLE VI COVENANTS OF SELLER ..............................................-25-
6.1 Conduct of Business .........................................-25-
6.2 Access and Information ......................................-27-
6.3 No Solicitation .............................................-28-
6.4 Confidentiality .............................................-28-
6.5 Repayment of Indebtedness ...................................-28-
6.6 Other Actions ...............................................-29-
6.7 Working Capital .............................................-29-
6.8 Director Resignations .......................................-29-
6.9 Intellectual Property .......................................-29-
6.10 Other Assistance ............................................-29-
6.11 Consents ....................................................-29-
6.12 Employment Claims ...........................................-29-
ARTICLE VII COVENANTS OF BUYER ..............................................-29-
7.1 Confidentiality .............................................-29-
7.2 Disclosure to Seller ........................................-30-
ARTICLE VIII MUTUAL COVENANTS ...............................................-30-
8.1 HSR Filings .................................................-30-
8.2 Casualty or Loss ............................................-30-
8.3 Further Actions .............................................-31-
ARTICLE IX CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS ......................-31-
9.1 Representations and Warranties ..............................-32-
9.2 Compliance with Covenants ...................................-32-
9.3 Absence of Litigation .......................................-32-
9.4 HSR Act .....................................................-32-
9.5 Required Consents ...........................................-32-
9.6 No Injunction, etc ..........................................-32-
9.7 Legal Opinion ...............................................-32-
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9.8 Financing ...................................................-32-
9.9 Krebsoge Transactions .......................................-32-
9.10 Indemnity Escrow Agreement ..................................-33-
9.11 Release or Termination of Liens .............................-33-
9.12 Payment of Indebtedness .....................................-33-
9.13 U.S. Real Property Holding Company ..........................-33-
9.14 Contingent Payment Agreement ................................-33-
ARTICLE X CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS ......................-33-
10.1 Representations and Warranties ..............................-34-
10.2 Compliance with Covenants ...................................-34-
10.3 Absence of Litigation .......................................-34-
10.4 HSR Act .....................................................-34-
10.5 No Injunction, etc ..........................................-34-
10.6 Legal Opinion ...............................................-34-
10.7 Irrevocable Letter of Credit Replacement ....................-34-
ARTICLE XI CLOSING ..........................................................-34-
11.1 Closing .....................................................-34-
11.2 Deliveries by Seller ........................................-35-
11.3 Deliveries by Buyer .........................................-35-
ARTICLE XII INDEMNIFICATION .................................................-36-
12.1 Indemnification by Seller ...................................-36-
12.2 Indemnification by Buyer ....................................-37-
12.3 Notice of Claim .............................................-37-
12.4 Defense .....................................................-37-
12.5 Time for Claims .............................................-38-
12.6 Limitation ..................................................-38-
12.7 Characterization ............................................-39-
12.8 Indemnity Amounts ...........................................-39-
ARTICLE XIII TAX MATTERS ....................................................-39-
13.1 Straddle Periods ............................................-39-
13.2 Carrybacks ..................................................-40-
ARTICLE XIV TERMINATION .....................................................-40-
14.1 Termination .................................................-40-
14.2 Effect on Obligations .......................................-41-
ARTICLE XV EMPLOYEES ........................................................-41-
ARTICLE XVI MISCELLANEOUS ...................................................-41-
16.1 Access After the Closing Date ...............................-41-
16.2 Payment of Expenses .........................................-42-
16.3 Publicity ...................................................-42-
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16.4 Commercially Reasonable Efforts .............................-42-
16.5 Notices .....................................................-42-
16.6 Governing Law ...............................................-43-
16.7 Counterparts ................................................-44-
16.8 Assignment ..................................................-44-
16.9 Third Party Beneficiaries ...................................-44-
16.10 Headings; References ........................................-44-
16.11 Amendments; Waiver ..........................................-44-
16.12 Knowledge ...................................................-44-
16.13 Severability ................................................-45-
16.14 Entire Agreement ............................................-45-
16.15 Arbitration; Submission to Jurisdiction .....................-45-
16.16 Overall Adjustment/Indemnification Limitation ...............-46-
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POWDER METAL AGREEMENT
SCHEDULES AND EXHIBITS
Schedule 2.3 - Methodology and Principles; Minimum Working Capital Amount
Schedule 3.4 - Consent and Approvals of Seller
Schedule 3.5 - Share Ownership of Seller
Schedule 4.5 - Required Consents
Schedule 4.7 - Tangible Personal Property
Schedule 4.8(a) - Owned Real Property
Schedule 4.8(b) - Leased Real Property
Schedule 4.9 - Material Contracts
Schedule 4.10 - Intellectual Property
Schedule 4.11 - Litigation
Schedule 4.12 - Taxes
Schedule 4.13 - Environmental Protection
Schedule 4.14 - Labor and Employment Matters
Schedule 4.15 - Employee Benefit Plans
Schedule 4.16 - Changes in Operations
Schedule 4.18 - Capital Projects
Schedule 4.19 - Properties and Equipment
Schedule 4.20 - Undisclosed Liabilities
Schedule 4.22 - Compliance with Laws
Schedule 4.23 - Materials Provided to the Buyer
Schedule 4.26 - Customers & Suppliers
Schedule 4.27 - Indebtedness
Schedule 5.3 - Conflicts and Breaches
Schedule 5.4 - Consents and Approvals of Buyer
Schedule 5.5 - Share Ownership of Buyer
Schedule 5.7 - Financing
Schedule 6.1 - Conduct of Buyer
Schedule 6.9 - Use of Intellectual Property
Schedule 6.12 - Employment Claims
Schedule 9.11 - Release or Termination of Liens
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POWDER METAL STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (together with all Schedules and Exhibits
hereto, this "Agreement"), dated as of October 7, 1996, is entered into by and
between XXXX HOLDING AG, a Swiss corporation (which, together with its
successors and assigns, is herein referred to as the "Seller"), and SINTER
METALS, INC., a Delaware corporation (which, together with its successors and
assigns, is herein referred to as the "Buyer").
RECITALS:
WHEREAS, the Seller is the owner, beneficially and of record, of 5,100
shares of the Class A common stock, par value $.01 per share (the "Seller's
Class A Common Stock"), and 6,434 shares of the Class B common stock, par value
$.01 per share (the "Seller's Class B Common Stock") of Powder Metal Holding,
Inc., a Delaware corporation (the "Company"), which is the parent corporation of
ICM/Krebsoge, Inc., a Delaware corporation ("ICM/K"), which is in turn the
parent corporation of ICM/Krebsoge Canada, Ltd., an Ontario corporation ("ICM/K
Canada");
WHEREAS, the Seller desires to sell, and the Buyer desires to buy, all of
the shares of the Seller's Class A Common Stock and the Seller's Class B Common
Stock (collectively, the "Shares") on the terms and conditions set forth in this
Agreement;
WHEREAS, simultaneously with the purchase of the Shares hereunder, the
Buyer shall purchase shares in Krebsoge Sinterholding GMBH, a German limited
liability company ("Krebsoge"), pursuant to the Krebsoge Agreement (as defined
herein), which shall be executed and which shall close simultaneously with this
Agreement; and
WHEREAS, in connection with or relative to this Agreement, the Seller and
the Buyer have executed, delivered and performed certain Seller Ancillary
Documents and Buyer Ancillary Documents including, without limitation, the Side
Agreement, dated as of September 26,1996.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"AFFILIATE" - Has the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act by the SEC, as in effect on the date hereof.
"ANNUALIZED EBITDA" - (x) the quotient of (i) Net Income, PLUS (ii) all
amounts deducted in calculating Net Income in respect of (a) income and
franchise taxes,
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(b) depreciation and amortization, (c) interest on Indebtedness (including
payments in the nature of interest on capitalized obligations and interest
income as a consequence of the forgiveness of indebtedness by Xxxxxx Financial,
Inc. in 1993), (d) any expenses in determining Net Income for such period in
respect of post-retirement benefits in accordance with FASB 106 and in respect
of any foreign currency translation adjustments in accordance with FASB 52, and
(e) miscellaneous expenses which shall not exceed $100,000 in the aggregate,
EXCLUDING, HOWEVER, any non-recurring income or charges of whatever nature, all
non-recurring expenses or reductions in reserves, for the period beginning on
January 1, 1996 and ending on the last day of the month immediately preceding
the month in which the Closing occurs divided by the number of months in such
period multiplied by (y) 12.
"BALANCE SHEET DATE" - July 31,1996.
"BUSINESS DAY" - Any day other than a Saturday, Sunday or a day on which
banks in New York City are authorized or obligated by law or executive order to
close.
"BUYER ANCILLARY DOCUMENT" - Each other document or agreement executed or
to be executed by the Buyer in connection with or relating to this Agreement.
"BUYER'S COUNSEL" - Xxxxx, Day, Xxxxxx & Xxxxx or such other counsel as is
designated by the Buyer.
"CERCLA" - The Comprehensive Environmental Response, Compensation and
Liability Act, as amended.
"CLOSING" - Defined in Section 11.1.
"CLOSING DATE" - Defined in Section 11.1.
"CLOSING WORKING CAPITAL AMOUNT" - (i) the total Current Assets less (ii)
the total Current Liabilities, each as reflected on the Closing Working Capital
Statement.
"CLOSING WORKING CAPITAL STATEMENT" - The statement of net working capital
of the Company and the Subsidiaries as of the day immediately preceding the
Closing Date.
"CODE" - The Internal Revenue Code of 1986, as amended.
"COMPANY" - Powder Metal Holding, Inc., a Delaware corporation, together
with its successors and assigns.
"CURRENT ASSETS" - The sum of cash, inventory, accounts receivable and
prepaid expenses of the Company and the Subsidiaries.
"CURRENT LIABILITIES" - The sum of accounts payable and accrued liabilities
of the Company and the Subsidiaries, EXCLUDING, HOWEVER, any principal,
interest, fees, penalties
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or other costs associated with any Indebtedness (other than capital lease
obligations) and the current portion of capital lease obligations.
"DOLLAR" OR "$" - U.S. dollars.
"EBITDA SHORTFALL AMOUNT" - (x) the amount, if any, by which Annualized
EBITDA is less than $12 million, multiplied by (y) 5.0.
"EFFECTIVE TIME" - Defined in Section 11.1.
"ENVIRONMENTAL LAWS" - Any and all federal, state, provincial, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment, as now or may at
any time hereafter be in effect.
"ESCROW AGENT" - Defined in Section 2.4.
"EXCHANGE ACT"- The Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations of the SEC promulgated from time to time
thereunder.
"ERISA" - The Employee Retirement Income Security Act of 1974, as amended.
"FINAL STATEMENT OF WORKING CAPITAL" - The statement of net working capital
of the Company and the Subsidiaries as of the close of business on the day
immediately prior to the Closing Date to be delivered pursuant to Section 2.3.
"FINAL WORKING CAPITAL AMOUNT" - (i) the total Current Assets set forth on
the Closing Statement of Working Capital, less (ii) the total Current
Liabilities set forth on the Closing Statement of Working Capital, determined in
accordance with the methodology and accounting principles set forth on Schedule
2.3.
"FINANCIAL STATEMENTS" - Defined in Section 4.6.
"FINANCING" - Defined in Section 5.7.
"GAAP" - Generally accepted accounting principles as in effect in the
United States from time to time.
"GOVERNMENTAL AUTHORITY" - Any nation or government, any state, province or
other political subdivision thereof, and any entity or person exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
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"HAZARDOUS MATERIALS" - Any hazardous or toxic substances, materials,
pollutants or wastes, defined or regulated as such in or under any Environmental
Law or that could reasonably result in liability under any Environmental Law,
including crude oil petroleum and any fraction thereof.
"HSR ACT" - The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder.
"INDEBTEDNESS" - As to any Person, at any time, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (whether from public or private sources) (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (b) any other indebtedness of such Person
which is evidenced by a note, bond, debenture or similar instrument, (c) all
obligations of such Person under capitalized leases, (d) all obligations of such
Person in respect of acceptances issued or created for the account of such
Person, (e) all liabilities secured by any lien or other encumbrance of any kind
(other than any lien or other encumbrance of any kind in respect of operating
leases) on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof and (f) all
guarantees of any Indebtedness or obligations referred to in clauses (a) through
(e) above.
"INDEMNIFIED PARTY" - Defined in Section 12.3.
"INDEMNITY AMOUNTS" - Defined in Section 2.4.
"INDEMNITY ESCROW ACCOUNT" - Defined in Section 2.4.
"INDEMNITY ESCROW AGREEMENT" - Defined in Section 2.4.
"INDEMNITY FUND" - Defined in Section 2.4.
"INDEMNITY FUND DATE" - Defined in Section 2.4.
"INDEMNITY LETTER OF CREDIT" - Defined in Section 2.4.
"INDEMNITY OBLIGOR" - Defined in Section 12.3.
"INTELLECTUAL PROPERTY" - All of the following which is owned by, issued to
or licensed to either the Company or any Subsidiary which is used by them, and
all rights associated therewith (including, without limitation, royalties and
the right to xxx for infringements): inventions (whether or not patentable and
whether or not reduced to practice), trade names and corporate names together
with all goodwill associated therewith, and all translations, adaptations,
derivations and combinations of the foregoing; copyrights and copyrightable
works; trade secrets and confidential information (including, without
limitation, formulae, know-how, manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, plans, proposals,
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technical data, and customer and supplier lists and related information);
computer software (including, without limitation, data and related
documentation); other proprietary rights; and all copies and tangible
embodiments of the foregoing (in whatever form or medium), in each case
including the items claimed by employees of the Company or the Subsidiaries.
"KREBSOGE AGREEMENT" - Defined in Section 9.9.
"LEASED REAL PROPERTY" - The land, buildings and structures leased by the
Company or any Subsidiary, as lessee, and listed in Schedule 4.8(b), including
any additions thereto or substitutions therefor.
"LOAN AGREEMENTS" - Defined in Section 9.12.
"LOSS" - Defined in Section 12.1.
"MATERIAL ADVERSE EFFECT" - A material adverse effect on or material
adverse change in the business, operations, property, results of operations or
financial condition of the Seller or the Company and the Subsidiaries, taken as
a whole, or the Buyer, as the case may be, or on the ability of the Seller, the
Company and the Subsidiaries or the Buyer, as the case may be, to consummate the
transactions contemplated hereby.
"MATERIAL CONTRACTS" - All contracts, commitments, agreements (including
agreements for the borrowing of money or the extension of credit), leases,
licenses, guarantees, understandings and obligations, whether written or oral,
to which the Company or any Subsidiary are party or by which any of them are
bound except for (a) contracts with automotive manufacturers which may be
canceled by the Company or any Subsidiary without penalty on not more than sixty
days' notice, copies of which have been provided to the Buyer; (b) employment
contracts and miscellaneous service contracts terminable on not more than sixty
days' notice without penalty, copies of which have been provided to the Buyer;
(c) purchase orders with suppliers involving payment by the Company or the
Subsidiaries of amounts less than $50,000 in the aggregate; (d) equipment
maintenance agreements involving payment by the Subsidiaries of amounts less
than $50,000 per year in the aggregate; and (e) other contracts not involving
other aggregate liabilities under all such contracts exceeding $50,000 in any
twelve month period.
"MINIMUM WORKING CAPITAL AMOUNT"- $9,215,000, as determined on Schedule
2.3.
"NET INCOME" - The net income (or loss) of the Company and the Subsidiaries
determined in accordance with GAAP, excluding any income (or loss) arising from
extraordinary items, as defined by GAAP.
"OFFICER'S CERTIFICATE" - Defined in Section 12.8.
"OWNED REAL PROPERTY" - The land, building and structures owned by the
Company or any Subsidiary, including any additions thereto or substitutions
therefor.
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"PERSON" - An individual, partnership, corporation, business trust, joint
stock company, limited liability company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"PLANS" - (a) Employee benefit plans as defined in Section 3(3) of ERISA,
whether or not funded and whether or not terminated; (b) employment agreements;
and (c) personnel policies or fringe benefit plans, policies, programs and
arrangements, whether or not subject to ERISA, whether or not funded, and
whether or not terminated, including, without limitation, stock bonus, deferred
compensation, pension, severance, bonus, vacation, travel, incentive and health,
disability and welfare, in each case of or relating to the Company or any
Subsidiary.
"PURCHASE PRICE" - Defined in Section 2.2.
"REAL PROPERTY LEASES" - Defined in subsection 4.8(b).
"REPRESENTATIVES" - Defined in Section 7.1.
"REQUIRED CONSENTS" - Defined in Section 4.5.
"REQUIREMENTS OF LAW" - As to any Person, the Certificate of Incorporation
and By-laws or other organizational or governing documents of such Person, and
any federal, state, local, municipal, foreign, international, multinational or
other administrative order, constitution, law (statutory or otherwise), treaty,
rule, regulation, ordinance or determination of any arbitrator or court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"SEC" - The Securities and Exchange Commission.
"SELLER" - XXXX Holding AG, a Swiss corporation, together with its
successors and assigns.
"SELLER ANCILLARY DOCUMENT" - Each other document or agreement executed or
to be executed by the Seller, the Company or the Subsidiaries, as the case may
be, in connection with or relating to this Agreement.
"SELLER'S COUNSEL" - Cadwalader, Xxxxxxxxxx & Xxxx, or such other counsel
as is designated by Seller.
"SHARES" - Seller's Class A Common Stock and Seller's Class B Common Stock,
which constitute all of the issued and outstanding shares of Class A Common
Stock and Class B Common Stock of the Company other than the Buyer's Class A
Common Stock.
"SUBORDINATED NOTE" - Defined in Section 9.12.
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"SUBSIDIARIES" - Defined in Section 4.1.
"SUBSIDIARY SHARES" - Defined in Section 4.3.
"SURVIVAL DATE" - Defined in Section 12.5.
"TAX OR TAXES" - Any and all taxes, fees, levies, duties, tariffs, imposts,
and other charges of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any government or taxing authority, including, without limitation: taxes or
other charges on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; license, registration and
documentation fees; and customs duties, tariffs, and similar charges.
"TAX RETURN OR TAX RETURNS" - Any report, return declaration or other
information, or any amendment thereof, required to be filed or supplied in
connection with any Tax.
"THIRD PARTY CLAIM" - Defined in Section 12.3.
"WARN" - Defined in Section 4.14(e).
"WORKING CAPITAL ADJUSTMENT AMOUNT" - The amount, if any, by which the
Minimum Working Capital Amount exceeds the Closing Working Capital Amount.
ARTICLE II PURCHASE AND SALE OF SHARES
2.1 PURCHASE AND SALE. The Seller hereby agrees to sell to the Buyer, and
the Buyer hereby agrees to buy from the Seller, at the Closing, all, and not
less than all, of the Shares, free and clear of all claims, liens, security
interests, charges, community property interests, equitable interests, options,
pledges, rights of first refusal or restrictions or encumbrances of any kind,
including any restrictions on use, transfer, voting, receipt of income or other
attribute of ownership, other than those created by the Buyer.
2.2 CONSIDERATION. The purchase price (the "Purchase Price") to be paid for
the Shares shall be (a) $65,000,000 (the "Aggregate Consideration"), minus (i)
the sum of (x) the principal amount of all Indebtedness of the Company and the
Subsidiaries (whether assumed by Buyer or paid by or on behalf of Seller), (y)
subject to Section 16.16, the EBITDA Shortfall Amount, if any, and (z) subject
to Section 16.16, the Working Capital Adjustment Amount, if any, multiplied by
(b) a fraction, the numerator of which shall be equal to the aggregate number of
Shares sold to the Buyer on the Closing Date and the denominator of which shall
be the aggregate number of all shares of Class A Common Stock and Class B Common
Stock on a fully-diluted basis. The Purchase Price shall be paid to Seller by
wire transfer of immediately available funds at the Closing. The Purchase Price
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shall be subject to adjustment after the Closing as set forth in Section 2.3
subject to Section 16.16.
2.3 FINAL STATEMENT OF WORKING CAPITAL; PURCHASE PRICE ADJUSTMENT. (a)
Within ninety days after the Closing Date, the Buyer shall deliver to the Seller
the Final Statement of Working Capital, prepared as described herein, and
reviewed by Xxxxxx Xxxxxxxx & Co. The Final Statement of Working Capital shall,
except as otherwise specifically provided in Schedule 2.3, be prepared in
conformity with the accounting principles utilized in determining the Minimum
Working Capital Amount and the Closing Working Capital Amount. The Seller and
its designated independent accounting firm, Deloitte & Touche, shall have the
right to be present to observe the taking of any physical inventory in
conjunction with the preparation of the Final Statement of Working Capital and
may review and examine the procedures, books, records and work papers used in
the preparation of the Final Statement of Working Capital.
(b) Unless the Seller, within sixty days after receipt of the Final
Statement of Working Capital, notifies the Buyer that it objects to the
computation of the Final Working Capital Amount specifying the basis for such
objection and its alternative computation of the Final Working Capital Amount,
the Final Working Capital Amount shall be binding upon the parties. The
computation of the Final Working Capital Amount shall not be disputed as to
accounting principles so long as the principles and procedures used to compute
Final Working Capital Amount are consistent with those described in Schedule
2.3. If the Buyer and the Seller are unable to agree upon the Final Working
Capital Amount within thirty days after any such notification has been given by
the Seller or within a mutually agreed to extended time period, the controversy
shall be referred to Ernst & Young for a final determination thereof which shall
make such determination based on the presentations of the Buyer and the Seller
and only with respect to the differences so submitted. Such determination shall
be binding upon the parties, absent manifest error, but shall not be for an
amount which is outside of the range of the Buyer's and Seller's disagreement.
The parties shall share equally the fees and expenses of Ernst & Young.
(c) (i) If the Closing Working Capital Amount and the Final Working Capital
Amount each exceed $9,215,000, then no adjustment shall be made to the Purchase
Price pursuant to this Section 2.3(c); (ii) if the Closing Working Capital
Amount and the Final Working Capital Amount are each less than $9,215,000, then
(x) if the Closing Working Capital Amount exceeds the Final Working Capital
Amount, then the Seller shall pay to the Buyer an amount equal to such excess,
or (y) if the Final Working Capital Amount exceeds the Closing Working Capital
Amount, then the Buyer shall pay to the Seller an amount equal to such excess;
(iii) if the Closing Working Capital Amount exceeds $9,215,000 and the Final
Working Capital Amount is less than $9,215,000, then the Seller shall pay to the
Buyer the amount by which $9,215,000 exceeds the Final Working Capital Amount;
and (iv) if $9,215,000 exceeds the Closing Working Capital Amount and the Final
Working Capital Amount exceeds $9,215,000, then the Buyer shall pay to the
Seller the amount by which $9,215,000 exceeds the Closing Working Capital
Amount. The Seller's obligation to pay to the Buyer any amounts pursuant to this
Section 2.3(c) shall not be
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subject to the limitations provided in Section 12.6 but shall be subject to the
limitation provided in Section 16.16.
(d) Any Purchase Price adjustment required under Section 2.3(c) shall be
delivered in accordance with the instructions of the appropriate recipient,
together with interest thereon for each day from and including the Closing Date
to, but excluding, the date of payment, at a rate per annum equal to the prime
rate of interest of Citibank, N.A. in effect on the Closing Date calculated over
a 365-day year, (i) within sixty-five (65) days after delivery of the Final
Statement of Working Capital; or (ii) if the Seller shall have objected to the
Final Statement of Working Capital, within five Business Days following final
determination of the disputed items pursuant to Section 2.3(b).
2.4 INDEMNITY ESCROW ACCOUNT. (a) At the Closing, the Buyer shall deposit
$2,000,000 (which may be in the form of an irrevocable, direct pay letter of
credit or similar bank guarantee (the "Indemnity Letter of Credit"), in either
case in form reasonably acceptable to the Buyer from a financial institution
reasonably acceptable to the Buyer issued to the Escrow Agent on behalf of the
Seller) into an escrow account with an escrow agent mutually acceptable to the
Buyer and the Seller (the "Indemnity Escrow Account"). Such amount or instrument
shall be held in and paid out of the Indemnity Escrow Account in accordance with
the terms hereof and the terms of an Indemnity Escrow Agreement to be entered
into among the Buyer, the Seller and the escrow agent (the "Escrow Agent"), in
form and substance mutually agreeable among such parties (the "Indemnity Escrow
Agreement").
(b) Pursuant to the terms hereof and of the Indemnity Escrow Agreement,
funds held in the Indemnity Escrow Account or drawn under the Indemnity Letter
of Credit shall be applied by the Escrow Agent to make cash payments to the
Buyer equal to the Indemnity Amounts. The "Indemnity Amounts" shall be those
amounts deemed to be due to the Buyer as indemnification pursuant to the
provisions of Section 12.1 hereof and, at the option of the Buyer, amounts in
respect of Employment Claims pursuant to Section 6.12. The Escrow Agent shall
promptly pay the Indemnity Amounts out of the Indemnity Escrow Account to the
Buyer in accordance with Section 12.1 hereof and the Indemnity Escrow Agreement.
The aggregate Indemnity Amounts payable pursuant to Section 12.1 hereof may
exceed the amount of cash deposited by the Buyer on behalf of the Seller in the
Indemnity Escrow Account or the face amount of the Indemnity Letter of Credit
deposited therein, as the case may be.
(c) If the Seller deposited cash in the Indemnity Escrow Account at the
Closing, the Escrow Agent shall pay promptly to the Seller in immediately
available funds (i) on the sixth-month anniversary of the Closing Date, one-half
of the aggregate amount remaining in the Indemnity Escrow Account on such date
and not subject to any claim for Indemnity Amounts, and (ii) on the Survival
Date, the aggregate amount remaining in the Indemnity Escrow Account on such
date and not subject to any claim for Indemnity Amounts. If the Seller deposited
the Indemnity Letter of Credit in the Indemnity Escrow Account at the Closing,
the face amount of the Indemnity Letter of Credit shall be reduced in a
corresponding manner pursuant to the terms of the Indemnity Escrow Agreement.
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(d) In the event claims to Indemnity Amounts shall have been made on or
prior to the Survival Date pursuant to Section 12.1, and such claims shall not
be resolved or paid as of such date, an amount (the "Indemnity Fund") equal to
such unresolved or unpaid claims (or an Indemnity Letter of Credit with a face
value equal to such amount) shall be held by the Escrow Agent in escrow, and
funds therefrom not distributed, until following the date of resolution or
payment to the Buyer of such claims, together with interest thereon (the
"Indemnity Fund Date"). Promptly after the Indemnity Fund Date, the Escrow Agent
shall pay promptly to the Seller in immediately available funds the aggregate
amount remaining in the Indemnity Fund or return the Indemnity Letter of Credit.
(e) The Escrow Agent shall retain in the Indemnity Escrow Account all
income earned, if any, by the Indemnity Escrow Account pursuant to the Indemnity
Escrow Agreement.
(f) The Escrow Agent shall pay out of the Indemnity Escrow Account all fees
and expenses associated with the Indemnity Escrow Account, as provided in the
Indemnity Escrow Agreement, including, without limitation, its own reasonable
fees and expenses.
ARTICLE III REPRESENTATIONS AND WARRANTIES
CONCERNING SELLER
The Seller represents and warrants to the Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. The Seller is a stock corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all requisite power and authority to own,
operate and lease its properties and assets and to conduct its business as
presently conducted. The Seller is duly licensed or qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, or is subject to no
Material Adverse Effect by reason of the failure to be so licensed or qualified
in any such jurisdiction. True, complete and correct copies of the Seller's
constituent documents, as amended to date, have been furnished to the Buyer. No
bankruptcy or conciliation proceedings have been initiated in respect to the
Seller.
3.2 AUTHORITY OF SELLER. The Seller has all requisite power and authority
to execute and deliver this Agreement and any Seller Ancillary Document, and to
perform the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and any Seller Ancillary Document
have been duly and validly authorized by all necessary corporate and shareholder
action on the part of the Seller and no further such action is required on the
part of the Seller or its shareholders. This Agreement has been, and each of the
Seller Ancillary Documents will be, on or prior to the Closing Date, duly
executed and delivered by the Seller and each constitutes or will constitute a
valid and binding obligation of the Seller, enforceable in accordance with its
respective terms, except
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that enforceability hereof or thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
3.3 NO CONFLICT OR BREACH. The execution, delivery and performance of
this Agreement and each of the Seller Ancillary Documents do not and will not:
(a) conflict with or constitute a violation of the Articles of
Association of the Seller;
(b) assuming compliance with the requirements of the HSR Act, conflict
with or constitute a violation of any law, statute, judgment, order, decree
or regulation of any legislative body, court, administrative agency,
Governmental Authority or arbitrator applicable to or relating to the
Seller or its properties or assets; or
(c) conflict with, violate or result in a breach of, or constitute a
default (or an event which, with notice or lapse of time or both would
constitute a default) under, or result in the termination of or accelerate
the performance required by, or result in a right of termination or
acceleration under, any mortgage, note, indenture, deed of trust, lease,
loan agreement or other agreement or instrument applicable to the Seller or
its properties or assets, except for conflicts, violations, breaches or
defaults which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
3.4 CONSENTS AND APPROVALS. Except as set forth on Schedule 3.4, no
(a) consent, approval, authorization, registration or filing with any federal,
state or local judicial or Governmental Authority or administrative agency,
other than as required under the HSR Act or (b) consent, approval, authorization
of or notice to any other third party, is required in connection with the valid
execution, delivery and performance by the Seller of this Agreement or any of
the Seller Ancillary Documents or the consummation by the Seller of the
transactions contemplated herein or therein.
3.5 SHARE OWNERSHIP. The Seller is the owner, beneficially and of
record, of the Shares. At the Closing, the Seller will deliver or cause to be
delivered to the Buyer full right, title and interest in and to the Shares, free
and clear of all claims, liens, security interests, charges, community property
interests, equitable interests, options, pledges, rights of first refusal or
encumbrances of any kind, including any restrictions on use, transfer, voting,
receipt of income or other attribute of ownership. Except as set forth on
Schedule 3.5, the Seller is not a party to any option, warrant, right, contract,
call, put, right to subscribe, conversion right or other agreement, commitment
or right of any kind providing for the issuance, disposition, acquisition or
voting of any of the capital stock of the Company, including the Shares (other
than as set forth in this Agreement) or gives rise to any right in connection
with the issuance, disposition, acquisition or voting of any of the Shares or
other equity or similar interest in the Company.
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3.6 FINANCIAL ADVISORS. Except for Europeans Investors Corporate
Finance, Inc. and Xxxxx & Company Limited, for whose fees the Seller shall be
solely responsible, the Seller has not retained any finder, broker, agent or
other intermediary to act for it or on its behalf in connection with the
negotiation or consummation of this Agreement, and no party has made any claim
for any brokerage commission, finder's fee or similar payment due from the
Seller. None of the Company or any Subsidiary nor any of their respective
officers, directors, employees or agents has employed any broker, finder or
investment banker or incurred any liability for any brokerage fees, commissions,
finders' fees or investment banking fees in connection with the transactions
contemplated hereby.
ARTICLE IV REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY AND SUBSIDIARIES
The Seller represents and warrants to the Buyer as follows:
4.1 ORGANIZATION AND GOOD STANDING. The Company and ICM/Krebsoge are
each corporations duly organized, validly existing and in good standing under
the laws of the State of Delaware and ICM/K Canada is a corporation duly
organized, validly existing and in good standing under the laws of the province
of Ontario. ICM/Krebsoge and ICM/K Canada are sometimes referred to herein
collectively as "Subsidiaries" and individually as a "Subsidiary." The Company
and each Subsidiary is duly qualified to do business as a foreign corporation
and is in good standing in respect of each jurisdiction where the failure to do
so would have a Material Adverse Effect. The Company and each Subsidiary have
all requisite corporate power and authority and governmental authorizations to
own, operate and lease its properties and assets and to carry on its respective
business as presently conducted. The Company and each Subsidiary have all
corporate power and authority to consummate the transactions contemplated by
this Agreement and any Seller Ancillary Document. Complete and correct copies of
the Company and each of the Subsidiaries' constituent documents and governing
instruments, each as amended to date, have been furnished to the Buyer.
4.2 CAPITALIZATION. The authorized capital stock of the Company
consists of: (i) 200,000 shares of Class A Common Stock, par value $.01 per
share, (ii) 100,000 shares of Class B Common Stock, par value $.01 per share,
and (iii) 50,000 shares of 8% Cumulative Preferred Stock, par value $.01 per
share. There are 10,000 shares of Class A Common Stock and 6,434 shares of Class
B Common Stock currently issued and outstanding and all of such shares have been
validly issued and are fully paid and nonassessable. Except as set forth on
Schedule 3.5, there are no outstanding or authorized options, warrants, rights,
contracts, calls, puts, rights to subscribe, conversion rights or other
agreements, commitments or rights of any kind to which the Company or the Seller
is a party or which are binding upon the Company providing for the issuance,
disposition, acquisition or voting of any of its stated capital or other equity
or similar interest of the Company (other than this Agreement), or giving rise
to any rights in connection with the issuance, disposition, acquisition or
voting of any of the Shares. Except as set forth on Schedule 3.5, there are no
voting trusts, proxies or any other agreements or understandings with respect to
the
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voting of any capital stock of the Company or any Subsidiary. Except as set
forth on Schedule 3.5, neither the Company nor any subsidiary is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its stated capital.
4.3 SUBSIDIARIES. (a) The Subsidiaries are the only entities in which
the Company owns, directly or indirectly, any capital stock or other equity
interest. The authorized capital stock of ICM/K consists of 2,000 shares of
common stock, par value $1.00 per share, and all 2,000 of such shares are issued
and outstanding. The authorized capital stock of ICM/K Canada consists of an
unlimited number of common shares without par value and 100 of such shares are
issued and outstanding. (The issued and outstanding shares of ICM/K and ICM/K
Canada are referred to herein, collectively, as the "Subsidiary Shares").
(b) The Company is the owner, beneficially and of record, of all of
the Subsidiary Shares, free and clear of all liens, security interests, charges,
community property interests, equitable interests, options, pledges, rights of
first refusal or restrictions or encumbrances of any kind, including any
restrictions on use, transfer, voting, receipt of income or other attribute of
ownership (other than liens that will be released at Closing and liens related
to Indebtedness assumed by the Buyer). All of the Subsidiary Shares have been
validly issued and are fully paid and nonassessable. There are no outstanding or
authorized options, warrants, rights, contracts, calls, puts, rights to
subscribe, conversion rights or other agreements, commitments or rights of any
kind to which any Subsidiary, the Seller or the Company is a party or which are
binding upon any Subsidiary providing for the issuance, disposition or
acquisition or voting of any of its capital stock, or giving rise to any right
in connection with the issuance, disposition, acquisition or voting of any of
the Subsidiary Shares. There are no voting trusts, proxies or any other
agreements or understandings with respect to the voting of the capital stock of
any Subsidiary. No Subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any of its capital
stock.
4.4 NO CONFLICT OR BREACH. Except as set forth on Schedule 4.4, the
execution, delivery and performance of this Agreement or the Seller Ancillary
Documents by the Seller or the performance of this Agreement or any Seller
Ancillary Document by the Company or any Subsidiary does not and will not:
(a) conflict with or constitute a violation of the Certificate of
Incorporation or By-laws or other constituent document or governing
instrument of the Company or any Subsidiary;
(b) assuming compliance with the requirements of the HSR Act, conflict
with or constitute a violation of any Requirement of Law applicable to or
relating to the Company or any Subsidiary in any manner that would have a
Material Adverse Effect; or
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(c) conflict with, constitute a default under, result in a breach or
acceleration of or, give to others any interest or rights under or require
notice to or the consent of any third party under any contract, agreement,
commitment, mortgage, note, license or other instrument or obligation
applicable to the Company or any Subsidiary or their respective properties
or assets, or any subsidy or incentive provided to the Company or any
Subsidiary by any federal, state, provincial or local judicial or
Governmental Authority or administrative agency.
4.5 CONSENTS AND APPROVALS. Schedule 4.5 describes each of the
following which is required on the part of the Company or the Subsidiaries in
connection with the execution and delivery by the Seller of this Agreement or
any Seller Ancillary Document or the consummation by it or the Company or any
Subsidiary of the transactions contemplated herein or therein: (a) each consent,
approval, authorization, registration, permit, notice or filing with any
federal, state or local judicial or Governmental Authority or administrative
agency, other than as required under the HSR Act and (b) each consent,
approval, authorization of or notice to any other third party, except with
respect to clause (a) or (b) above, such consents, approvals, authorizations and
notices the failure of which to obtain or give would not have a Material Adverse
Effect. The consents described on Schedule 4.5 together with the consents
described on Schedule 3.4 shall be referred to herein, collectively, as the
"Required Consents."
4.6 FINANCIAL STATEMENTS. The Buyer has received copies of (a) the
audited consolidated financial statements of the Company and its Subsidiaries
for the fiscal years ended December 31, 1994 and December 31,1995 and (b)
unaudited interim consolidated financial statements of the Company and its
Subsidiaries for the period ended on the Balance Sheet Date. The financial
statements referred to in the previous sentence are sometimes referred to as the
"Financial Statements." The Financial Statements have been prepared in
accordance with GAAP consistently applied, from books and records which are
maintained in accordance with the controls and procedures of the Company and its
Subsidiaries with the exceptions that such interim statements do not contain the
disclosures required by GAAP in notes accompanying financial statements, and are
subject to normal year-end adjustments (the effect of which will not
individually or in the aggregate, be materially adverse). Except as noted
therein, the Financial Statements fairly present the financial condition and
results of operation of the Company and its Subsidiaries, taken as a whole, as
of the dates and for the periods indicated.
4.7 TITLE TO ASSETS. The Company and each Subsidiary has good and
marketable title to all of its Owned Real Property. Set forth on Schedule 4.8(a)
is a list of all Owned Real Property having a value in excess of $50,000. The
Company has good title to all tangible personal property owned by the Company
and each Subsidiary and used in or necessary to the operation of the business of
the Company and each Subsidiary (collectively, the "Tangible Personal
Property"). Set forth on Schedule 4.7 is a list of all Tangible Personal
Property owned by the Company or a Subsidiary having a value in excess of
$50,000. All such Owned Real Property and Tangible Personal Property are owned
by the Company free and clear of any liens, charges, equitable interests,
options, rights of first
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refusal, encumbrances, claims, security interests, mortgages or pledges of any
nature, other than:
(a) liens arising as a consequence of any Indebtedness which liens are
identified on Schedule 4.7;
(b) easements that could not be reasonably expected to materially
adversely affect the full use and enjoyment of the Owned Real Property or
the purposes for which it is currently used and/or materially detract from
its value;
(c) imperfections of title and encumbrances, if any, which, in the
aggregate, are not material to the Company or any Subsidiary, do not
materially detract from the marketability or value of the properties
subject thereto, and could not be reasonably expected to materially impair
the operations of the owner thereof; and
(d) liens for taxes not yet due and payable.
4.8 REAL PROPERTY.
(a) OWNED. Schedule 4.8(a) contains a description of all Owned Real
Property having a value in excess of $50,000. True, correct and complete
copies of (i) deeds, insurance policies and surveys related to the Owned
Real Property and (ii) all documents evidencing any liens, charges,
equitable interests, options, rights of first refusal, encumbrances,
claims, security interests, mortgages or pledges of any nature upon the
Owned Real Property shall have been delivered to the Buyer prior to the
Closing. None of the liens, charges, equitable interests, options, rights
of first refusal, encumbrances, claims, security interests, mortgages or
pledges of any nature upon the Owned Real Property secure obligations other
than those of the Company or a Subsidiary. There are no liens, charges,
equitable interests, options, rights of first refusal, encumbrances,
claims, security interests, mortgages or pledges of any nature upon the
Owned Real Property which are not registered in the applicable land
register. None of the Seller or the Company or any Subsidiary has received
any notice of any appropriation, condemnation or like proceeding, or of any
violation of any applicable zoning law, regulation or other law, order,
regulation or requirement relating to or affecting any Owned Real Property.
To the best knowledge of the Seller, there are no material physical,
structural or mechanical defects in any improvements on any of the Owned
Real Property.
(b) LEASED. Schedule 4.8(b) contains a description of all Real
Property Leases to which the Company or any Subsidiary is a party (the
"Real Property Leases"). Each of the Real Property Leases is valid, binding
and enforceable in accordance with its terms (except that enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing) and is in full force and effect and there have been no
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breaches or defaults thereunder. None of the Seller or the Company or any
Subsidiary have received any notice of any appropriation, condemnation or
like proceeding, or of any violation of any applicable zoning law,
regulation or other law, order, regulation or requirement relating to or
affecting any Leased Real Property. To the best knowledge of the Seller,
there are no material physical, structural or mechanical defects in any
material improvements on any of Leased Real Property. Except as disclosed
on Schedule 4.8(b), none of the sale of the Shares the execution, delivery
or performance of this Agreement or any Seller Ancillary Document or the
consummation of the transactions contemplated herein or therein will, with
respect to any such Real Property Lease, (i) permit the landlord to
accelerate the rent or cause any material lease terms to be renegotiated,
(ii) constitute a material default thereunder, or (iii) require notice on
the consent of the landlord or any third party, except for the Required
Consents.
4.9 CONTRACTS. Schedule 4.9 lists all Material Contracts. Each of the
Material Contracts is valid, binding and enforceable against the Company or the
Subsidiary party thereto in accordance with its terms (except that
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing) and is in full force and effect and there have been no breaches or
defaults thereunder. Except as disclosed on Schedule 4.9, none of the sale of
the Shares, the execution, delivery or performance of this Agreement or any
Seller Ancillary Document or the consummation of the transactions contemplated
herein or therein will, with respect to any Material Contract, (i) constitute a
default thereunder, (ii) require notice to or the consent of any person or
party, except for the Required Consents, or (iii) affect the continuation,
validity and effectiveness thereof or the terms thereof, except for such
defaults, consents and effects as do not and will not in the aggregate have a
Material Adverse Effect.
4.10 INTELLECTUAL PROPERTY. The Intellectual Property comprises all of
the intellectual property rights necessary for the operation of the business of
the Company and each Subsidiary as currently conducted or as currently proposed
to be conducted. Schedule 4.10 sets forth a complete and correct list of all:
(i) patented or registered Intellectual Property or for which applications or
other applications for such registrations are pending; and (ii) all licenses or
similar agreements or arrangements for the Intellectual Property to which the
Company or any Subsidiary is a party, either as licensee or licensor (including
any intracompany licensing arrangements). Except as set forth in Schedule 4.10:
(i) either the Company or a Subsidiary owns and possesses all right, title and
interest in and to, or has a valid and enforceable license to use, the
Intellectual Property necessary for the operation of its business as currently
conducted or as currently proposed to be conducted free and clear of all liens,
licenses, security interests, encumbrances and other restrictions; (ii) no claim
by any third party contesting the validity, enforceability, use or ownership of
any of the Intellectual Property has been made, is currently outstanding or to
the best knowledge of Seller, is threatened; (iii) neither the Company nor any
Subsidiary has received any notices of any infringement or misappropriation by,
or conflict with, any third party with respect to the Intellectual Property
(including, without limitation, any demand or request
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that the Company or any Subsidiary license any rights from a third party); and
(iv) to the best knowledge of the Seller, neither the Company nor any Subsidiary
has infringed, misappropriated or otherwise conflicted with any intellectual
property rights or other rights of any third parties.
4.11 LITIGATION. Except as set forth in Schedule 4.11, there are no
claims, actions, suits, inquiries, hearings or investigations pending or, to the
best knowledge of Seller, threatened or contemplated against the Company or any
Subsidiary, or which seek to restrain or enjoin the consummation of the
transactions contemplated by this Agreement or any of the Seller Ancillary
Documents.
4.12 TAXES.
(a) The Company and each Subsidiary has paid and discharged, or has
reserved on the Financial Statements or its books and records, all Taxes
required to be paid and currently due as of the Closing Date in respect of
the business and operations of the Company and the Subsidiaries, and the
Company and each Subsidiary has filed all Tax Returns required in
connection therewith to be filed. Neither the Company nor any Subsidiary
has executed or filed with the Internal Revenue Service or any other taxing
authority, domestic or foreign, any extension or agreement extending the
period for the assessment or collection of any Taxes, except for permitted
statutory extensions. Neither the Company nor any Subsidiary is a party to
any pending action or proceeding and neither the Company nor any Subsidiary
has received written notice of any audit or review of any Tax Return or
report of the Company or any Subsidiary which would result in the
imposition of any Tax upon the Company or any Subsidiary. No election under
Section 341(f) of the Code is in effect with respect to any of the assets
of the Company or any Subsidiary. The Seller is a "foreign person" within
the meaning of Section 1445 of the Code.
(b) Schedule 4.12 sets forth the taxable years of Company and each
Subsidiary as to which the respective statutes of limitations with respect
to Taxes have not expired.
4.13 ENVIRONMENTAL PROTECTION.
(a) Except as set forth on Schedule 4.13, neither of the Company nor
any Subsidiary has received any notice of violation, alleged violation,
noncompliance, liability or potential liability regarding environmental
matters or compliance with Environmental Laws. To the Seller's knowledge,
neither the Company nor any Subsidiary is subject to any ongoing
investigation relating to or arising out of any environmental matter.
(b) Except as set forth on Schedule 4.13, to the knowledge of the
Seller, neither the Company nor any Subsidiary has transported or arranged
for the transport of any Hazardous Materials (i) to any site or location
listed or proposed to be listed on the National Priorities List as of
September 1, 1996 or any other
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similar state list; or (ii) to a location which could reasonably be
expected to give rise to liability under Environmental Laws.
(c) Except as set forth on Schedule 4.13, there is no condition
relative to the Company or any Subsidiary or their respective operations or
owned or used properties, including, but not limited to, any contractual
relationships, that could reasonably be expected to result in any material
violation of, or liability under, applicable Environmental Laws or
Environmental Permits (as defined below) or, to the knowledge of the
Seller, could interfere with continued material compliance with applicable
Environmental Laws in the future.
(d) Each of the Company and the Subsidiaries has obtained, or has
filed, all required applications for, all permits, licenses, registrations,
consents and other authorizations required under any Environmental Law
through the date hereof with respect to the operation of the Company and
the Subsidiaries ("Environmental Permits"), except where the failure to
have such permits or to file such applications does not have a Material
Adverse Effect, and all such Environmental Permits are, and have
continuously been, in full force and effect.
(e) Except as set forth on Schedule 4.13, to the knowledge of the
Seller, no above or below ground storage tanks have ever been used for the
storage of Hazardous Materials on or at (i) the Owned Real Property; (ii)
the Leased Real Property; or (iii) any previously owned or leased real
property of the Company or any Subsidiary or former Subsidiary.
(f) Except as set forth on Schedule 4.13, to the knowledge of the
Seller, there has never been a release (as defined in CERCLA) of Hazardous
Materials at, on, under, or from any of the Owned Real Property or Leased
Real Property, or any previously owned or leased real property of the
Company or any Subsidiary.
4.14 LABOR AND EMPLOYMENT MATTERS. With respect to employment matters:
(a) After the execution of this Agreement, the amendment or
termination by the Company or any Subsidiary of any existing employment
agreement with any of their respective officers, directors or employees
will require the express written approval of the Buyer except in the
ordinary course of business consistent with past practice.
(b) Except as disclosed on Schedule 4.14, no employees of the Company
or any Subsidiary are currently represented by a union or other labor
organization or covered by any collective bargaining agreement.
(c) There is no labor strike, dispute, slowdown, stoppage or similar
labor difficulty pending or, to the best of the Seller's knowledge,
threatened against or affecting the Company or any Subsidiary.
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(d) There is no unfair labor practice charge or other complaint
pending or, to the best knowledge of the Seller, threatened against or
otherwise affecting the Company or any Subsidiary.
(e) The Company and Subsidiaries are in compliance with their
obligations pursuant to Worker Adjustment and Retraining Notification Act
of 1988, as amended ("WARN") and all other notification and bargaining
obligations arising under any collective bargaining agreement, statute or
otherwise, respecting their employees.
4.15 EMPLOYEE BENEFIT PLANS. Schedule 4.15 contains a description of
all Plans contributed to, maintained or sponsored by the Company or any
Subsidiary to which any of them are obligated to contribute, or with respect to
which any of them has any liability or potential liability.
(a) Except as disclosed in Schedule 4.15, neither the Company nor any
Subsidiaries contributes to, has any obligation to contribute to or
otherwise has any liability or potential liability with respect to (i) any
Multiemployer Plan (as such term is defined in Section 3(37) of ERISA),
(ii) any Plan of the type described in Sections 4063 and 4064 of ERISA or
in Section 413(c) of the Code, or (and regulations promulgated thereunder),
(iii) any plan which provides health, life insurance, accident or other
"welfare-type" benefits to current or future retirees or current or former
employees, their spouses or dependents, other than in accordance with
Section 4980B of the Code or applicable state continuation coverage law. No
"accumulated funding deficiency" (as such term is used in Section 412 or
4971 of the Code) has occurred with respect to any Plan. No termination has
occurred that remains unsatisfied with respect to any Plan which is not a
Multiemployer Plan but is subject to Title IV of ERISA. With respect to any
Multiemployer Plan to which the Company or any Subsidiary contributes or is
obligated to contribute, neither the Company nor any Subsidiary has had a
complete or partial withdrawal from any such Multiemployer Plan, and
neither the Company nor any Subsidiary would become subject to any
liability under ERISA which would have a Material Adverse Effect if the
Company or any Subsidiary were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the
date hereof.
(b) Each Plan has been maintained, operated, and administered in
compliance with its terms and any related documents or agreements and in
compliance with all applicable laws, including the Code and ERISA. Each
Plan intended to qualify under Section 401(a) of the Code is so qualified
and each trust maintained in connection with each such plan is tax exempt
under Section 501(a) of the Code, and the Internal Revenue Service has
issued favorable determination letters with respect to each such Plan and
related trust and has not taken any action to revoke such letter.
(c) The Seller has previously delivered to the Buyer true, complete
and correct copies of each of the Plans, including all amendments thereto,
and any other
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documents, forms or other instruments relating thereto reasonably requested
by Buyer's counsel.
(d) Except for routine claims for benefits, there is no pending or
threatened assessment, complaint, proceeding, audit or investigation of any
kind in any court or government agency with respect to any Plan, nor is
there any basis for one.
(e) With respect to any insurance policy providing funding for
benefits under any Plan, (i) there is no liability of the Company or any
Subsidiary in the nature of a retroactive or retrospective rate adjustment,
loss sharing arrangement, or other actual or contingent liability, nor
would there be any such liability if such insurance policy were terminated
on the date hereof, and (ii) no insurance company issuing such policy is in
receivership, conservatorship, liquidation, or similar proceeding and, to
the best of the Seller's knowledge, no such proceedings with respect to any
insurer are imminent.
(f) The Company and the Subsidiaries have reserved all rights
necessary to amend or terminate each of the Plans without the consent of
any other Person, except (i) to the extent such rights are limited by any
applicable collective bargaining agreement or law, and (ii) with respect to
claims under any such Plan that are accrued but unpaid as of the date of
such amendment or termination. Neither the Company nor any Subsidiary has
agreed or committed to make any amendments to any of the Plans.
(g) Except as disclosed in Schedule 4.15, neither the Company nor any
Subsidiary maintains any plans or programs or is a party to any agreement
that could result in the payment of severance pay or similar compensation
prior to the Closing, at the time of the Closing or during the one-year
period commencing on the Closing Date. Except as contemplated by Section
6.12, aggregate payments under any such plan, program, or arrangement
during the one-year period commencing on the Closing Date shall not exceed
$100,000 in the aggregate.
4.16 ABSENCE OF CERTAIN CHANGES. Except as described in Schedule 4.16,
since the Balance Sheet Date, the operations of the Company and the Subsidiaries
have been conducted only in the ordinary course and in a manner consistent with
past practice, and the Company and the Subsidiaries have not:
(a) suffered any uninsured damage, destruction, theft or loss to any
asset of the Company or any Subsidiary of a value in excess of $50,000 in
the aggregate;
(b) sold, transferred, distributed or otherwise disposed of any assets
used in the operation of business of the Company or any Subsidiary, or
returned to any customers or otherwise disposed of, any tooling owned by
such customer and in the possession of the Company or any Subsidiary,
except for (i) assets consumed or disposed of in the ordinary course of
business; (ii) assets disposed of in connection
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with the acquisition of replacement property of equivalent kind and value;
or (iii) assets that were returned in the ordinary course of business or
that are no longer used or useful in the business or operations of the
Company or the Subsidiaries;
(c) made, authorized, entered into, or permitted to go into effect any
general wage or salary increase for its employees, other than in the
ordinary course of business consistent with past practice;
(d) amended or terminated, or authorized the amendment or termination
of, any Material Contract or Real Property Lease, other than in the
ordinary course of business consistent with past practice;
(e) incurred any material obligation or liability except normal trade
or business obligations incurred in the ordinary course of business
consistent with past practice and except for expenses relating to
transactions contemplated hereby not to exceed $200,000;
(f) experienced or learned of any change or event which could
reasonably be expected to have a Material Adverse Effect; or
(g) agreed or committed, whether in writing or otherwise, to take any
described in this Section.
4.17 INSURANCE. The insurable properties owned or leased by the
Company or any Subsidiary are, and until the Closing Date will be, adequately
insured by financially sound and reputable insurers at levels of coverage
reasonable and customary in the powder metal industry. All such policies are in
full force and effect and will continue to be in full force and effect upon the
consummation of the transactions contemplated herein and by the Seller Ancillary
Documents. Buyer has been provided with true, correct and complete copies of all
insurance policies relating to or affecting the Owned Real Property, Real
Property Leases or any Material Contract.
4.18 CAPITAL PROJECTS. Schedule 4.18 sets forth each unfinished
capital project with a total cost in excess of $50,000 relating to the business
of each of the Company and the Subsidiaries, the Company's reasonable estimate
of the capital expenditures that will be required subsequent to the Closing Date
to complete such projects and the expected date of completion of such projects.
4.19 CONDITION OF PROPERTIES AND EQUIPMENT. Except for equipment not
currently used in the operation of the business of the Company or Subsidiaries
and except for equipment set forth in Schedule 4.19, the assets and equipment of
each of the Company and the Subsidiaries required for the normal operation of
their respective businesses are in good condition, normal wear and tear
excepted.
4.20 NO UNDISCLOSED LIABILITIES. Each of the Company and the
Subsidiaries has no liabilities or obligations of any nature (absolute, accrued,
contingent or otherwise)
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that are not fully reflected or reserved against in the Financial Statements,
except for liabilities that may have arisen in the ordinary and usual course of
business and consistent with past practice or which are disclosed on Schedule
4.20.
4.21 ENTIRETY OF BUSINESS. The Company and Subsidiaries and the Owned
Real Property, Tangible Personal Property, Leased Real Property and Intellectual
Property constitute all of the companies, businesses, rights, assets and
arrangements necessary to conduct the business of each of the Company and
Subsidiaries as presently conducted, and there are no other companies,
businesses, assets, rights or arrangements necessary to conduct the business of
the Company and the Subsidiaries as presently conducted.
4.22 COMPLIANCE WITH LAWS. Except as set forth in Schedule 4.22, each
of the Company and the Subsidiaries (a) is in material compliance with all laws,
regulations, reporting and licensing requirements and orders applicable to its
business or employees conducting its business, the breach or violation of which
could reasonably be expected to have a Material Adverse Effect; and (b) has
received no notification or communication from any Governmental Authority (i)
asserting that the Company or any Subsidiary is not in compliance with any of
the statutes, treaties, regulations or ordinances that such Governmental
Authority enforces, which noncompliance could reasonably be expected to have a
Material Adverse Effect or (ii) threatening to revoke any license, franchise,
permit or authorization of any Governmental Authority which would have a
Material Adverse Effect.
4.23 COMPLETENESS OF WARRANTIES. To the Seller's best knowledge, the
representations made by the Seller on behalf of itself or the Company or the
Subsidiaries in this Agreement (including the Schedules and Exhibits hereto) and
other materials provided to the Buyer by the Seller or the Company as set forth
on Schedule 4.23 do not contain any untrue statement of a material fact or omit
any material fact necessary to make the statements herein or therein, in light
of the circumstances under which they were made, not misleading.
4.24 INVENTORY. All of the finished goods inventory of the Company and
the Subsidiaries will at the Closing consist of goods useable or saleable in the
ordinary course of the business of the Company and the Subsidiaries except for
such amount of inventory that can be reasonably expected to be written off in
the ordinary course of their business determined by reference to past practice.
The Company and the Subsidiaries currently have and on the Closing Date will
have, inventory and work-in-progress in an amount which is not in excess of the
amount that can reasonably be expected to be sold in the ordinary course of
their business determined by reference to past practice except for such amount
of inventory that can be reasonably expected to be written off in the ordinary
course of their business determined by reference to past practice.
4.25 RECEIVABLES. All receivables of the Company and the Subsidiaries
which are reflected on the balance sheet of the Company on July 31, 1996 and
which are reflected on the books of the Company and the Subsidiaries as of the
Closing Date represent actual, bona fide obligations owing to the Company or the
Subsidiaries in the
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ordinary course of business and are carried at their net realizable value. At
the Closing, such receivables will be free and clear of any liens, charges,
equitable interests, options, rights of first refusal, encumbrances, claims,
security interests, mortgages or pledges of any nature. No reserve allowance in
excess of the recorded reserve is required to be established in accordance with
GAAP with respect to such receivables which are reflected on the balance sheet
of the Company on July 31, 1996 and as of the Closing Date, and no allowance
will be required to be established in accordance with GAAP with respect to such
receivables which will be reflected on the books of the Company and the
Subsidiaries as of the Closing Date. None of such receivables are, or on the
Closing Date will be, past due for a period of more than 90 days.
4.26 CUSTOMERS AND SUPPLIERS. Schedule 4.26 contains a complete and
correct list of (a) the 10 largest customers of and the 10 largest suppliers to
the Company and the Subsidiaries in the aggregate, and any sole-source suppliers
of significant goods or services to the Company and the Subsidiaries with
respect to which alternative sources of supply are not readily available on
comparable terms and conditions, in each case, during the 8-month period ended
August 31, 1996, setting forth the sales by or to the Company and the
Subsidiaries for each such customer or supplier during such period. The Company
has not received written or oral notice that any such customer or supplier will
or may substantially reduce the extent of such relationship, at any time prior
to or after the Closing Date. Neither the Seller nor the Company or any
Subsidiary has received written or oral notice of (a) any other existing or
contemplated material modification or change in the business relationship of the
Company and the Subsidiaries with such customers or suppliers, or (b) any
existing condition or state of facts or circumstances, in either case which has
materially adversely affected, or will materially adversely affect, any such
business relationship with any such customer or supplier.
4.27 INDEBTEDNESS. Schedule 4.27 contains a complete and correct
description of all Indebtedness, including name of creditor, amount outstanding
on the Balance Sheet Date and amortization and repayment schedule.
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Seller as follows:
5.1 ORGANIZATION AND GOOD STANDING. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
5.2 AUTHORITY. The Buyer has all requisite power and authority to
execute and deliver this Agreement and to perform the transactions contemplated
hereby. The execution, delivery and performance of this Agreement have been duly
and validly authorized by all necessary corporate and shareholder action on the
part of the Buyer. This Agreement has been duly executed and delivered by the
Buyer and constitutes a valid and binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms, except that enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent
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conveyance, reorganization, moratorium or other similar laws affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing or other applicable law or other similar laws affecting creditors'
rights generally and by principles of equity regarding the availability of
remedies.
5.3 NO CONFLICT OR BREACH. Except as provided on Schedule 5.3, the
execution, delivery and performance of this Agreement does not and will not:
(a) conflict with or constitute a violation of the Certificate of
Incorporation or Bylaws or other governing instrument of the Buyer;
(b) assuming compliance with the requirements of the HSR Act, conflict
with or constitute a violation of any Requirement of Law applicable to or
relating to Buyer in any manner that would have a Material Adverse Effect;
or
(c) conflict with, constitute a default under, result in a breach or
acceleration of or require notice to or the consent of any third party
under any contract, agreement, commitment, mortgage, note, license or other
instrument or obligation to which Buyer is party or by which it is bound,
in any manner that would have a Material Adverse Effect.
5.4 CONSENTS AND APPROVALS. Except as set forth on Schedule 5.4, no
(a) consent, approval, authorization, permit, notice, registration or filing
with any federal, state or local judicial or Governmental Authority or
administrative agency, other than as required under the HSR Act, or (b) each
consent, approval, authorization of or notice to any other third party, is
required in connection with the valid execution and delivery by Buyer of this
Agreement or any Buyer Ancillary Document or the consummation by Buyer of the
transactions contemplated herein or therein except, in either case, such
consents, approvals, authorizations and notices as the failure to obtain or give
would not have a Material Adverse Effect.
5.5 SHARE OWNERSHIP. The Buyer will have at the Closing good title to
all of the Buyer's Class A Common Stock, free and clear of all liens, security
interests, charges, community property interests, equitable interests, options,
pledges, rights of first refusal or restrictions or encumbrances of any kind,
including any restrictions on use, transfer, voting, receipt of income or other
attribute of ownership. Except as set forth on Schedule 5.5, the Buyer is not a
party to any option, warrant, right, contract, call, put or other agreement or
commitment providing for the disposition or acquisition of any of the capital
stock of the Company, including the Buyer's Class A Common Stock (other than as
set forth in this Agreement).
5.6 FINANCIAL ADVISORS. Except for Salomon Brothers Inc, for whose
fees the Buyer shall be solely responsible, the Buyer has not retained any
finder, broker, agent or other intermediary to act for it or on its behalf, has
acted for or on behalf of Buyer in
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connection with the negotiation or consummation of this Agreement, and no party
has made any claim for any brokerage commission, finder's fee or similar
payment due from Buyer.
5.7 FINANCING. Buyer has secured binding commitments for all financing
(the "Financing") that will be required for it to consummate the purchase of the
Shares, which are set forth on Schedule 5.7 hereto.
5.8 INVESTMENT. Buyer is purchasing the Shares for investment and is
not acquiring the Shares with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act of 1933, as
amended.
ARTICLE VI COVENANTS OF SELLER
Seller covenants and agrees with Buyer as follows:
6.1 CONDUCT OF BUSINESS. From the date hereof to the Closing Date,
except as provided by this Agreement or as Buyer shall otherwise consent in
writing, Seller shall cause the Company and each Subsidiary to:
(a) continue to carry on its business, maintain its facilities and
equipment, maintain its supply of programming, advertising and technical
materials and supplies and keep its books of account, records and files in
substantially the same manner as heretofore carried on and maintained;
(b) maintain in full force and effect through the Closing Date
property damage, liability and other insurance with respect to the assets
of the Company or the Subsidiaries at levels of coverage reasonable and
customary and consistent with past practice.
(c) refrain from selling or otherwise transferring or disposing of
assets having an aggregate value in excess of $50,000, except for (i)
assets consumed or disposed of in the ordinary course of business, (ii)
assets which are no longer used or, in Seller's reasonable judgment, useful
in the business or operations of the Company or the Subsidiaries or (iii)
in connection with the acquisition of replacement property of equivalent
kind or value;
(d) not make any distribution of assets of the Company or any
Subsidiary or declare, pay or set aside for payment any dividend (of any
kind or nature) or distribution with respect to the Shares, except for
allocations or payment of corporate expense and interest expense consistent
with past practice and the Company's obligations to its lenders;
(e) not alter the terms of any existing Material Contract except where
such alteration would not have a Material Adverse Effect, nor enter into
any new
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agreement which, if entered into, would be a Material Contract except for
those set forth on Schedule 6.1(e) and those which will have been provided
to Buyer for its comments at least 5 business days prior to their
execution;
(f) refrain from issuing, selling, delivering, or agreeing to issue,
sell or deliver, any capital stock, warrants, options or similar rights or
other corporate securities of the Company or any Subsidiary and granting or
issuing, or agreeing to grant or issue, any options, warrants, incentive
awards or similar rights calling for the issuance of such securities or
entering into any registration rights agreements;
(g) refrain from repurchasing, redeeming and making a distribution
with respect to, any shares of capital stock of the Company or any
Subsidiary, except as otherwise provided in this Agreement;
(h) refrain from effecting any recapitalization of capital stock of
the Company or any Subsidiary and making any amendment, whether by merger,
consolidation or otherwise, to the Certificate of Incorporation, By-laws or
other governing instrument of the Company or any Subsidiary;
(i) refrain from (i) merging or consolidating with or into any other
corporation or entity, (ii) conveying, selling, leasing or otherwise
disposing of in any transaction or related series of transactions all or
substantially all of the property, business or assets of the Company and
the Subsidiaries (including, without limitation, the capital stock or
assets of the Company and the Subsidiaries), and (iii) acquiring by
purchase the business, assets or stock of any business;
(j) use reasonable efforts to preserve intact the business
organization of the Company and each Subsidiary and to keep available the
services of their present officers and key employees, and use reasonable
efforts to preserve the goodwill of those having business relationships
with the Company and each Subsidiary;
(k) refrain from (i) granting any increase in the compensation of
officers or employees currently receiving total compensation in excess of
$35,000, (including any such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment), except as set forth on
Schedule 6.1(k) and except for reasonable increases in the ordinary course
of business and consistent with past practice, not to exceed, individually
or in the aggregate, 5% of the current base compensation level, (ii) except
with respect to the endorsement of negotiable instruments in the ordinary
course of its business and intercompany debt that is canceled in accordance
with Section 6.5, incurring, assuming or guaranteeing any Indebtedness for
borrowed money or revising or amending the terms of any existing
Indebtedness for borrowed money other than money borrowed under the
Company's revolving credit facility with Xxxxxx Financial, Inc.; (iii)
assuming or incurring any lien charges, equitable interests, mortgages or
pledges of any nature in respect to the property of the Company or any
Subsidiary, other than those made in the ordinary course of business; (iv)
factoring, selling, transferring or otherwise disposing of any account
receivable other than
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factors, sales, transfers or dispositions of account receivables in the
ordinary course of business; or (v) entering into any agreement that is
material to the Company and its Subsidiaries taken as a whole, except in
the ordinary course of business;
(l) refrain from taking any action that would have the effect of
deferring any Tax liability of the Company or any Subsidiary from any
taxable period ending at or before the Closing Date in a manner that is
inconsistent with past practice;
(m) refrain from reviewing, extending or otherwise amending any of the
agreements listed on Schedule 4.15 except as required by law;
(n) refrain from making any capital expenditure other than regularly
scheduled payments made pursuant to those capital projects set forth on
Schedule 4.19; and
(o) refrain from agreeing, whether in writing or otherwise, to do any
of the foregoing;
in each case, except where failure to do any of the foregoing would not have a
Material Adverse Effect and PROVIDED that nothing contained in this Section
shall require Seller, the Company or any Subsidiary to incur any extraordinary
cost or make any extraordinary payment.
6.2 ACCESS AND INFORMATION.
(a) During the period commencing on the date hereof and ending on the
Closing Date, Seller shall permit Buyer and its counsel, accountants,
advisors, providers of financing, and other representatives reasonable
access during normal business hours to all the properties, assets,
employees, books, records, agreements and other documents of the Company
and the Subsidiaries; PROVIDED that, Buyer will obtain the approval of Hans
Xxxxx Xxxxxx or any representative of Xxxxx & Co. or European Investors
Corporate Finance, Inc. prior to each visit to any Company or Subsidiary
premises, whose approval shall not be withheld. Seller shall furnish to
Buyer and its representatives all information concerning the Company and
the Subsidiaries as Buyer may reasonably request; PROVIDED that such
information is prepared by the management of the Company or Subsidiaries,
as the case may be, in the ordinary course of business. Any investigation
by Buyer pursuant to this Section shall be conducted in such manner as not
to interfere unreasonably with the normal operation of the Subsidiaries.
Buyer and its representatives shall be accompanied on any visits to the
premises of the Subsidiaries by representatives of Seller.
(b) The Seller shall, within 15 Business Days after the execution of
this Agreement, provide to Buyer a list of all contracts, commitments,
agreements (including agreements for the borrowing of money or the
extension of credit), leases, licenses, guarantees, understandings and
obligations, whether written or oral, to
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which the Company or either of the Subsidiaries are party and which involve
a payment by or to the Company or a Subsidiary exceeding $50,000 in any
twelve-month period.
6.3 NO SOLICITATION. Neither Seller, the Company, the Subsidiaries nor
any representatives (including, without limitation, attorneys, investment
bankers and accountants) of Seller, the Company or the Subsidiaries will
directly or indirectly, through any partner, officer, director, agent or
otherwise (a) solicit, initiate or encourage the submission of inquiries,
proposals or offers from any Person relating to any acquisition or purchase of
assets or capital stock of the Company or any Subsidiary or any other
transaction that would result in the transfer of control of the Company or any
Subsidiary or an investment by any Person in the Company or any Subsidiary
(each, an "Acquisition Proposal") or (b) participate in any discussions or
negotiations regarding an Acquisition Proposal or any of the foregoing or
furnish to any Person any information concerning the Company or any Subsidiary
or any of the foregoing, except to the extent required by law, or (c) otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person to do or seek any of the foregoing.
6.4 CONFIDENTIALITY. Following the Closing, Seller agrees to retain in
confidence, and to require its directors, officers, employees, consultants,
professional representatives and agents (collectively, "Seller Representatives")
to retain in confidence all information concerning the Company and the
Subsidiaries and further agrees that, following the Closing, it will not use for
its own benefit and will not use or disclose to any third party, or permit the
use or disclosure to any third party of, any such information, except that
Seller may disclose the information to those of the Seller Representatives who
need the information for the proper performance of their assigned duties with
respect to the consummation of the transactions contemplated hereby and the
preparation of appropriate Tax Returns. In making such information available to
its Representatives, Seller shall take any and all precautions necessary to
ensure that the Seller Representatives use the information only as permitted
hereby. Notwithstanding the foregoing, such information may be disclosed (a) if
it is required by court order or decree or applicable law or in connection with
the preparation of Tax Returns, (b) if it is ascertainable or obtained from
public or published information, or (c) if it is received from a third party not
known to the recipient to be under an obligation to keep such information
confidential. If Seller shall be required to make disclosure of any such
information by operation of law (other than in connection with the preparation
of Tax Returns), Seller shall give Buyer prior notice of the making of such
disclosure and shall use all reasonable efforts to afford Buyer an opportunity
to contest the making of such disclosure.
6.5 REPAYMENT OF INDEBTEDNESS. At the Closing, the Buyer shall
determine which Indebtedness of the Company and the Subsidiaries shall be paid
at the Closing (which Indebtedness shall include the Indebtedness referred to in
the first sentence of Section 9.12 and the Company's Indebtedness to Xxxxxx
Financial, Inc.) and the Buyer shall, as directed by and on behalf of the
Seller, cause such Indebtedness (including all accrued but unpaid interest
thereon) to be paid out of the Aggregate Consideration at the Closing.
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6.6 OTHER ACTIONS. The Seller shall not, and shall not permit the
Company or any of its Subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of the representations and
warranties of the Seller or the Company and the Subsidiaries set forth in this
Agreement that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect, or (iii) any of the conditions set forth in Section 9.1 not
being satisfied.
6.7 WORKING CAPITAL. The Company and each of its Subsidiaries will not
(i) delay payment of any accounts payable beyond normal and customary terms,
(ii) fail to maintain adequate inventory or replenish inventory consistent with
past practice, or (iii) accelerate payment of any accounts receivable other than
in the ordinary course.
6.8 DIRECTOR RESIGNATIONS. The Seller shall, after consultation with
the Buyer and with its express approval, cause all members of the Company's or
any Subsidiary's Board of Directors, or any other governing body, if any, to
resign effective as of the Closing.
6.9 INTELLECTUAL PROPERTY. Except for the licenses set forth in
Schedule 6.9, after the Closing the Seller shall refrain from using, and shall
ensure that its Affiliates will not use, directly or indirectly, any
Intellectual Property.
6.10 OTHER ASSISTANCE. To the extent requested by Buyer, Seller shall
reasonably cooperate with and assist Buyer in the preparation of a registration
statement or similar offering document relating to a proposed issuance of
securities of the Buyer. In connection therewith, Seller shall make available to
Buyer and its representatives and agents the officers and employees of the
Company and the Subsidiaries at reasonable times and locations. All reasonable
out-of-pocket expenses incurred by Seller, the Company or the Subsidiaries in
connection with such cooperation and assistance shall be promptly paid by Buyer.
6.11 CONSENTS. Prior to the Closing Date, the Seller shall use its
best efforts to obtain or cause to be obtained all Required Consents, including,
without limitation, paying reasonable consideration necessary to obtain such
consent.
6.12 EMPLOYMENT CLAIMS. Subject to Section 16.16, the Seller shall be
responsible for the first $475,000 to be paid in respect of amounts owed upon
termination, if any, arising under the employment agreements listed on Schedule
6.12 ("Employment Claims"). The Buyer shall be responsible for any amounts in
excess thereof.
ARTICLE VII COVENANTS OF BUYER
Buyer covenants and agree with Seller as follows:
7.1 CONFIDENTIALITY. In consideration of the confidential nature of
certain of the information which will be provided to Buyer by Seller, the
Company and the Subsidiaries prior to the Closing, Buyer agrees to retain in
confidence, prior to the Closing,
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and to require its directors, officers, employees, consultants, professional
representatives and agents (collectively, its "Representatives") to retain in
confidence all information transmitted or disclosed to it by Seller, the Company
and the Subsidiaries, and further agrees that, prior to the Closing, it will not
use for its own benefit and will not use or disclose to any third party, or
permit the use or disclosure to any third party of, any information so obtained
or revealed, except that Buyer may disclose the information (i) to those of its
Representatives who need the information for the proper performance of their
assigned duties with respect to the consummation of the transactions
contemplated hereby, (ii) to the parties from which Buyer seeks financing and
their representatives, and (iii) in a registration statement or similar offering
document relating to the proposed issuance of securities by the Buyer. In making
such information available to its Representatives, Buyer shall take any and all
precautions necessary to ensure that its Representatives use the information
only as permitted hereby. Notwithstanding anything to the contrary in the
foregoing provisions, such information may be disclosed (a) where it is
necessary to any regulatory authorities or governmental agencies, (b) if it is
required by court order or decree or applicable law, (c) if it is ascertainable
or obtained from public or published information, or (d) if it is received from
a third party not known to the recipient to be under an obligation to keep such
information confidential. If Buyer shall be required to make disclosure of any
such information by operation of law, Buyer shall give Seller prior notice of
the making of such disclosure and shall use all reasonable efforts to afford
Seller an opportunity to contest the making of such disclosure. In the event
that the Closing shall not occur, Buyer shall immediately deliver, or cause to
be delivered, to Seller (without retaining any copies thereof) any and all
documents, statements or other written information obtained from Seller, the
Company or any Subsidiary that contain confidential information of Seller.
7.2 DISCLOSURE TO SELLER. The Buyer will notify the Seller if the
Buyer knows or learns of the existence of any facts which cause any of the
representations and warranties contained in Articles III or IV to be or become
untrue, PROVIDED, HOWEVER, that such disclosure shall not affect any of the
Buyer's rights or remedies pursuant to this Agreement.
ARTICLE VIII MUTUAL COVENANTS
8.1 HSR FILINGS. Buyer and Seller shall, as promptly as practicable
following the execution of this Agreement, and in cooperation with each other,
file with the Department of Justice and the Federal Trade Commission the
premerger notification forms and any other documents required under the HSR Act,
and each shall use its reasonable efforts to obtain earliest termination of all
waiting periods under the HSR Act. Buyer shall be responsible for and shall pay
all fees assessed in connection with the filing of such forms and documents.
8.2 CASUALTY OR LOSS. The risk of any loss, damage or impairment,
confiscation or condemnation of any of the assets of the Subsidiaries from any
cause whatsoever shall be borne by Seller at all times prior to the completion
of the Closing. In the event of any loss, damage or impairment, confiscation or
condemnation of any such
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assets prior to the completion of the Closing, Seller shall have the option, but
shall not be required, to expend such funds and take such other actions as are
necessary to repair, replace or restore such assets to their prior condition. If
Seller has commenced but not completed the restoration or replacement of such
assets before the Closing Date, the Closing Date shall be postponed during such
period not to extend beyond the date specified in subsection 14.1(f) to permit
completion of the repair or replacement of the damage or loss. If such assets
have not been restored or replaced by such date, Buyer may then take the action
specified in subsection 14.1(c). Alternatively, Buyer may, at its option,
proceed to Closing as of such date and complete the restoration and replacement
of such damaged assets after the Closing Date, in which event Seller shall
assign to Buyer the right to receive all insurance proceeds payable in
connection with such damage to or destruction of the assets.
8.3 FURTHER ACTIONS.
(a) Seller and Buyer will notify each other immediately of any
litigation, arbitration or administrative proceeding pending or to
its/their knowledge, threatened against either of them, the Company or any
Subsidiary which challenges the transactions contemplated in this
Agreement.
(b) Subject to the terms and conditions of this Agreement, Seller and
Buyer each agree to use commercially reasonable efforts to take, or cause
to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the
transactions contemplated in this Agreement and to satisfy the conditions
hereto.
(c) The Seller and the Buyer agree (i) to furnish upon request to each
other such further information, (ii) to execute and deliver to each other
such other documents, and (iii) to do such other acts and things, all as
the other party may reasonably request for the purpose of carrying out the
intent of this Agreement, the Seller Ancillary Documents, the Buyer
Ancillary Documents and the documents referred to herein and therein.
(d) Prior to the Closing or prior to the termination of this Agreement
pursuant to Section 14(e), the Seller and Buyer will notify each other
immediately orally and in writing if the satisfaction of any condition to
the Closing is or becomes impossible.
ARTICLE IX CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligation of the Buyer to consummate the transactions
contemplated by this Agreement is subject to the satisfaction of the following
conditions on or before the Closing Date, unless specifically waived in writing
by the Buyer on or prior to the Closing Date (such waiver shall not constitute a
waiver of Buyer's rights pursuant to Section 12.1 hereof):
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9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller contained in this Agreement (other than in Section 4.19) (i) shall
have been true and correct in all respects on the date of this Agreement and
(ii) shall be true and correct in all material respects (except that those
representations which expressly contain a materiality qualifier shall each be
true and correct in all respects, giving effect to such qualifier) on the
Closing Date as though made on and as of the Closing Date. Buyer shall have
received a certificate executed by an officer Seller dated as of the Closing
Date, certifying the satisfaction of the conditions in this Section 9.1.
9.2 COMPLIANCE WITH COVENANTS. Seller shall have duly performed and
complied in all material respects with all covenants, agreements and obligations
required by this Agreement to be performed or complied with by it on or prior to
the Closing. Buyer shall have received a certificate executed by an officer of
Seller dated as of the Closing Date, certifying the satisfaction of the
conditions in this Section 9.2.
9.3 ABSENCE OF LITIGATION. No action or proceeding shall be pending by
or before any court or other Governmental Authority of competent jurisdiction
seeking to (a) restrain, prohibit or invalidate the transactions contemplated by
this Agreement in whole or material part or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of the
transactions contemplated by this Agreement or the Seller Ancillary Documents or
the Buyer Ancillary Documents, or (b) impose material limitations on the Buyer's
freedom of action with respect to the Company and its Subsidiaries or any
material portion thereof or all or a material portion of the assets or
businesses of the Buyer.
9.4 HSR ACT. All applicable waiting periods under the HSR Act shall
have expired or been terminated.
9.5 REQUIRED CONSENTS. All Required Consents shall have been obtained
by Seller, the Company or the Subsidiaries, as the case may be, except where
failure to have such consent would not have a Material Adverse Effect.
9.6 NO INJUNCTION. etc. No preliminary or permanent injunction or
other order, decision or decree issued by any court or Governmental Authority of
competent jurisdiction nor any Requirement of Law which restrains, enjoins or
otherwise prohibits the transactions contemplated hereby shall be in effect.
9.7 LEGAL OPINION. Buyer shall have received from Seller's Counsel an
opinion, dated the Closing Date, in form and substance reasonably satisfactory
to Buyer and Buyer's Counsel.
9.8 FINANCING. The Buyer shall have received proceeds of the
Financing.
9.9 KREBSOGE TRANSACTIONS. The transactions contemplated by the
Krebsoge Stock Purchase Agreement, dated the date hereof, between the Buyer and
the Seller relating
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to the sale of Krebsoge and its subsidiaries (the "Krebsoge Agreement") shall
have occurred simultaneously with the Closing.
9.10 INDEMNITY ESCROW AGREEMENT. The Indemnity Escrow Agreement shall
have been executed by the parties and the amounts required thereunder shall have
been funded or instruments deposited as provided in Section 2.4.
9.11 RELEASE OR TERMINATION OF LIENS. Other than any liens created by
the Buyer or liens relating to Indebtedness which the Buyer has agreed to
assume, all liens, security interests, charges, community property interests,
equitable interests, options, pledges, rights of first refusal or restriction or
encumbrance of any kind, including any restrictions on use, transfer, voting,
receipt of income or other attribute of ownership, on any of (i) the Shares, or
(ii) except as set forth on Schedule 9.11, the assets or properties of the
Seller, the Company or the Subsidiaries shall have been terminated, and the
Buyer shall have received written evidence of such releases.
9.12 PAYMENT OF INDEBTEDNESS. The Seller shall pay in full (or shall
direct the Buyer to pay in full on behalf of the Seller from the Aggregate
Consideration) the unpaid principal amount owing by ICM/K to XXXX America
Holding Inc. under the Subordinated Note dated April 30,1996, issued by ICM/K in
the original principal amount of $2,000,000 together with any and all accrued
but unpaid interest thereon computed through the day preceding the Closing Date.
To the extent Buyer has not agreed to assume, the Seller shall pay in full (or
shall direct the Buyer to pay in full on behalf of the Seller from the Aggregate
Consideration) (i) the unpaid principal amount owing to the Company's lenders,
together with any and all accrued but unpaid interest thereon computed through
the day preceding the Closing Date (such loan agreements, the "Loan Agreements")
and (ii) all other Indebtedness of the Company and the Subsidiaries outstanding
as of the Closing Date, together with any accrued but unpaid interest thereon
through the Closing Date.
9.13 U.S. REAL PROPERTY HOLDING COMPANY. The Seller shall certify to
Buyer that neither the Company nor any of the Subsidiaries is a United States
Real Property Holding Company as such term is defined under the Code.
9.14 CONTINGENT PAYMENT AGREEMENT. The Contingent Payment Agreement
dated November 19, 1993 between the Company and Xxxxxx Financial, Inc. shall
have been terminated and neither the Company nor any Subsidiary shall have any
liability arising under or with respect to such agreement.
ARTICLE X CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligation of Seller to consummate the transactions contemplated
by this Agreement is subject to the satisfaction of each of the following
conditions on or before the Closing Date, unless specifically waived in writing
by Seller prior to the Closing (such waiver shall not constitute a waiver of
Seller's rights pursuant to Section 12.2 hereof):
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10.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement (i) shall have been true and
correct on the date of this Agreement and (ii) shall be true and correct in all
material respects (except that those representations which expressly contain a
materially qualifier shall each be true and correct in all respects, giving
effect to such qualifier) on the Closing Date as though made on and as of the
Closing Date. Seller shall have received a certificate executed by an officer of
Buyer dated as of the Closing Date, certifying the satisfaction of the
conditions in this Section 10.1.
10.2 COMPLIANCE WITH COVENANTS. Buyer shall have duly performed and
complied with in all material respects all covenants, agreements and obligations
required by this Agreement to be performed or complied with by it on or before
the Closing Date. Seller shall have received a certificate executed by an
officer of Buyer dated as of the Closing Date, certifying the satisfaction of
the conditions in this Section 10.2.
10.3 ABSENCE OF LITIGATION. No action or proceeding against Buyer
shall be pending by or before any court or other Governmental Authority of
competent jurisdiction seeking to restrain, prohibit or invalidate the
transactions contemplated by this Agreement.
10.4 HSR ACT. All applicable waiting periods under the HSR Act shall
have expired or been terminated.
10.5 NO INJUNCTION, etc. No preliminary or permanent injunction or
other order, decision or decree issued by any court or Governmental Authority of
competent jurisdiction or any Requirement of Law which restrains, enjoins or
otherwise prohibits the transactions contemplated hereby shall be in effect.
10.6 LEGAL OPINION. Seller shall have received from Buyer's Counsel an
opinion, dated the Closing Date, in form and substance reasonably satisfactory
to Seller and Seller's Counsel.
10.7 IRREVOCABLE LETTER OF CREDIT REPLACEMENT. The Buyer shall replace
or cause to be replaced the Irrevocable Letter of Credit issued by Union Bank of
Switzerland in the amount of $2,712,191.77 as security for the Economic
Development Revenue Bonds Series 1985 issued by the City of Salem, Indiana as of
October 16, 1985, maturing October 1, 2000. The Buyer shall provide evidence of
such replacement of the Letter of Credit (the "Substitute Irrevocable Letter of
Credit") to the Seller.
ARTICLE XI CLOSING
11.1 CLOSING. The closing of the sale of the Shares (the "Closing")
shall take place at the offices of Cadwalader, Xxxxxxxxxx & Xxxx in New York,
New York or such other place as agreed to by Seller and Buyer at 6:00 a.m. local
time, on the later to occur of (i) December 10, 1996 or (ii) fifth business day
after the date on which the conditions contained in Sections 9.4 and 10.4 are
met; PROVIDED HOWEVER, as follows: (a) if
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one or more conditions to this Agreement is not satisfied by such date, the
party benefiting from such condition may elect, in its sole discretion, one or
more postponements of the Closing for the purpose of enabling such condition to
be satisfied; and (b) upon agreement of the parties hereto, the Closing may be
postponed to a future date, PROVIDED that, notwithstanding the provisions of the
preceding subparagraphs (a) and (b), in no event may the Closing be postponed
beyond January 31, 1997. The date of the Closing is referred to as the "Closing
Date." The Closing when completed shall be deemed to have occurred at 12:01
a.m., local time, on the Closing Date (the "Effective Time").
11.2 DELIVERIES BY SELLER. At the Closing, Seller shall deliver or
cause to be delivered to Buyer the following:
(a) A certificate of an officer of Seller confirming the satisfaction
of the conditions set forth in Sections 9.1 and 9.2.
(b) A copy of all corporate resolutions authorizing the execution,
delivery and performance of this Agreement and the Seller Ancillary
Documents, and the consummation of the transactions contemplated herein or
therein.
(c) The legal opinion referred to in Section 9.7, the Indemnity Escrow
Agreement and the lien releases and terminations referred to in Section
9.11.
(d) A certificate certifying as to the matters referred to in Section
9.13.
(e) Satisfactory evidence in Buyer's reasonable judgment, that all
Indebtedness (other than the principal amount of Indebtedness Buyer has
agreed to assume) has been repaid or discharged.
(f) Such other documents, certificates and information as Buyer may
reasonably request.
11.3 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver or cause
to be delivered to Seller the following:
(a) A certificate of an officer of Buyer confirming the satisfaction
of the conditions set forth in Sections 10.1 and 10.2.
(b) A copy of all corporate resolutions authorizing the execution,
delivery and performance of this Agreement and the Buyer Ancillary
Documents, and the consummation of the transactions contemplated herein or
therein.
(c) The legal opinion referred to in Section 10.6 and the Indemnity
Agreement.
(d) The Purchase Price, paid by a wire transfer of immediately
available funds in accordance with Section 2.2.
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(e) Replace or cause to be replaced the Irrevocable Letter of Credit
referred to in Section 10.7 and provide evidence of the Substitute Letter
of Credit to the Seller, the original of which shall be delivered to INB
National Bank, as Trustee,
(f) Such other documents, certificates and information as Seller may
reasonably request.
ARTICLE XII INDEMNIFICATION
12.1 INDEMNIFICATION BY SELLER. Subject to the provisions of Sections
2.4, 12.5 and 12.6, the Seller shall indemnify, defend and hold harmless Buyer
and its officers, directors, employees, agents and Affiliates from, against and
with respect to any and all loss, damage, claim, obligation, liability, cost and
expense (including, without limitation, reasonable attorneys' fees and costs and
expenses incurred in investigating, preparing, defending against or prosecuting
any litigation, claim, proceeding or demand), of any kind or character (a
"Loss") arising out of or in connection with any of the following:
(a) any breach of any of the representations or warranties of Seller
contained in this Agreement (other than those contained in Sections 4.18
and 4.24 or the first three sentences of Section 4.25);
(b) any failure by Seller to perform or observe, or to have performed
or observed any covenant or agreement to be performed or observed by it
pursuant to this Agreement;
(c) any failure by Seller to comply with the continuation coverage
requirements applicable to group health plans pursuant to Sections 601 et
seq. of ERISA and Section 4980B of the Code;
(d) all liability for Taxes in excess of $10,000, or payable by or
with respect to, the Company and the Subsidiary for any period ending on or
before the end of the day on the Closing Date and that portion of a
Straddle Period up to and including the Closing Date ("Pre-Closing Tax
Period");
(e) any liability of the Company or Subsidiary for the unpaid Taxes of
any Person (other than such Company or Subsidiary) under Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor, by contract, or otherwise;
(f) any debt or liability of any Company or Subsidiary to the extent
not disclosed on the balance sheet included in the Financial Statements, on
any Schedule hereto, or not otherwise expressly assumed by Buyer hereunder;
or
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(g) any matter set forth on Schedules 4.5, 4.10, 4.11, 4.13, 4.16(e),
4.20 and 4.22 to the extent Losses relating thereto exceed, in the
aggregate together with Losses arising in connection with any matter set
forth on Schedules 4.5, 4.10(b), 4.11, 4.13, 4.16(e), 4.20 and 4.22 of the
Krebsoege Agreement, $1,500,000.
12.2 INDEMNIFICATION BY BUYER. Buyer shall indemnify, defend and hold
harmless each of the Seller, the Company and the Subsidiaries and their
respective officers, directors, employees, agents and Affiliates from, against
and with respect to any Loss arising out of or in connection with any of the
following:
(a) any breach of any of the representations and warranties of Buyer
contained in this Agreement;
(b) any failure by Buyer to perform or observe, or to have performed
or observed any covenant or agreement to be performed or observed by it
pursuant to this Agreement;
(c) Buyer's operation of the Subsidiaries on and after the Effective
Time; or
(d) all liability for Taxes of any Company or Subsidiary for any
taxable period ending after the Closing Date (except to the extent such
taxable period is a Straddle Period in which case Buyer's indemnity will
cover only that portion of such Taxes that are not attributable to the
Pre-Closing Tax Period).
12.3 NOTICE OF CLAIM. If any third party shall notify any party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") which
may give rise to a claim for indemnification against the other party (the
"Indemnity Obligor") under this Article XII, then the Indemnified Party shall,
within 30 days following receipt of such Third Party Claim, promptly notify the
Indemnity Obligor in writing of any claim for recovery, specifying in reasonable
detail the nature of the Loss and the amount of the liability estimated to arise
therefrom. If the Indemnified Party does not so notify the Indemnity Obligor
within 30 days of its discovery of a claim for recovery, such claim shall be
barred only to the extent that the Indemnity Obligor is prejudiced by such
failure to notify. The Indemnified Party shall provide to the Indemnity Obligor
as promptly as practicable thereafter all information and documentation
reasonably requested by the Indemnity Obligor to verify the claim asserted.
12.4 DEFENSE. If the facts relating to a Loss arise out of the claim
of any third party, or if there is any claim against a third party available by
virtue of the circumstances of the Loss, the Indemnity Obligor may, by giving
written notice to the Indemnified Party within 15 days following its receipt of
the notice of such claim, elect to assume the defense or the prosecution
thereof, including the employment of counsel or accountants at its cost and
expense; PROVIDED, HOWEVER, that during the interim the Indemnified Party shall
use its commercially reasonable efforts to take all action (not including
settlement) reasonably necessary to protect against further damage or loss with
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respect to the Loss. The Indemnified Party shall have the right to employ
counsel separate from counsel employed by the Indemnity Obligor in any such
action and to participate therein, but the fees and expenses of such counsel
shall be at the Indemnified Party's own expense, unless (i) the employment
thereof has been specifically authorized by the Indemnity Obligor, (ii) such
Indemnified Party will have been advised by counsel reasonably satisfactory to
the Indemnity Obligor that there may be one or more legal defenses available to
it which are different from or additional to those available to the Indemnity
Obligor and in the reasonable judgment of such counsel it is advisable for such
Indemnified Party to employ separate counsel, or (iii) the Indemnity Obligor has
failed to assume the defense of such action and employ counsel reasonably
satisfactory to the Indemnified Party. Whether or not the Indemnity Obligor
chooses so to defend or prosecute such claim, all the parties hereto shall
cooperate in the defense or prosecution thereof and shall furnish such records,
information and testimony and shall attend such conferences, discovery
proceedings and trials as may be reasonably requested in connection therewith.
The Indemnity Obligor shall not be liable for any settlement of any such claim
effected without its prior written consent. In the event of payment by the
Indemnity Obligor to the Indemnified Party in connection with any Loss arising
out of a third party claim, the Indemnity Obligor shall be subrogated to and
shall stand in the place of the Indemnified Party as to any events or
circumstances in respect of which the Indemnified Party may have any right or
claim against such third party relating to such Indemnified Matter. The
Indemnified Party shall cooperate with the Indemnity Obligor in prosecuting any
subrogated claim. The Indemnity Obligor will take no action in connection with
any claim that would adversely affect the Indemnified Party without the consent
of the Indemnified Party.
12.5 TIME FOR CLAIMS. Any claim asserted with respect to Sections
12.1(a) or (b) (other than with respect of Section 6.4) or 12.2(a) or (b) (other
than with respect of Section 7.1) must be submitted to the Indemnity Obligor in
writing, or invoked in official proceedings, by April 15, 1998 (the "Survival
Date"), other than claims with respect to (i) Sections 4.12 and 4.15, which may
be submitted until sixty (60) days following the expiration of the longest
applicable statute of limitations, (ii) Section 4.13, which may be submitted
until the third anniversary of the Closing Date, and (iii) Sections 3.5 and 4.3
(solely with respect to the ownership of the Subsidiary Shares), which may be
submitted at any time without limitation.
12.6 LIMITATION. Notwithstanding the provisions of Section 12.1 but
subject to the limitation provided in Section 16.16, the Seller shall not have
any indemnification obligation under this Agreement
(a) in excess of $2,000,000 and unless and until the aggregate amount
of the Losses of the Indemnified Party exceeds $250,000 in the aggregate
whereupon such Indemnity Obligor shall be responsible for the aggregate
amount of Losses dollar for dollar from the first claim; or
(b) with respect to an indemnification obligation resulting from a
breach of the representation and warranty contained in the last sentence of
Section 4.25, in excess of the amount of such receivable giving rise to
such breach, net of any
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recorded reserve set forth on the books of the Company and the Subsidiaries
at the time of the Closing with respect to such receivable. Buyer agrees to
assign to Seller any such receivable for which the Buyer has received an
indemnification payment pursuant to this Article XII.
12.7 CHARACTERIZATION. Any payments pursuant to this Article XII shall
be treated by the parties as adjustments to the Purchase Price for tax purposes,
unless otherwise required by law.
12.8 INDEMNITY AMOUNTS. If the Buyer shall incur any Losses (whether
pursuant to a Third Party Claim or otherwise) or determine that it is likely to
incur any Losses and shall consider that it is entitled to be indemnified
against such Losses, the Buyer shall deliver a certificate signed by an officer
thereof (an "Officer's Certificate"), to the Seller which Officer's Certificate
shall (i) state that the Buyer has incurred Losses, or anticipates that it will
incur Losses for which the Buyer is entitled to indemnification pursuant to
Section 12.1 and (ii) specify in reasonable detail each individual Loss included
in the amount so stated, the date such Loss was incurred, the basis for any
anticipated Loss and the nature of the misrepresentation or breach of warranty
or agreement to which each such Loss is related and the computation of the
amount to which the Buyer claims to be entitled hereunder. In the event that the
Seller shall object to the indemnification of the Buyer in respect of any Loss
specified in an Officer's Certificate, the Seller shall, within 30 days of
receiving such Officer's Certificate, deliver to the Buyer a written notice to
such effect and the Seller and the Buyer shall, within the 30-day period
beginning on the date of receipt by the Buyer of such written objection, attempt
in good faith to agree upon the rights of the respective parties with respect to
each of such claims to which the Seller shall have so objected. If the Buyer and
the Seller shall succeed in reaching agreement on their respective rights with
respect to any of such claims, the Buyer and the Seller shall promptly prepare
and sign a memorandum setting forth such agreement. If no agreement is reached,
the Buyer may commence a cause of action in any court having competent
jurisdiction with respect to the Indemnity Escrow Account. The amounts set forth
in (A) claims specified in any Officer's Certificate to which the Seller shall
not object in writing within 30 days after its receipt of such Officer's
Certificate, (B) claims covered by a memorandum of agreement of the nature
described in this Section 12.8 and (C) claims the validity and amount of which
shall have been determined by a final judgment are hereinafter referred to,
collectively, as the "Indemnity Amounts."
ARTICLE XIII TAX MATTERS
13.1 STRADDLE PERIODS. In the case of any taxable period that includes
(but does not end on) the Closing Date (a "Straddle Period"):
(a) real, personal and intangible property Taxes ("Property Taxes") of
the Company and the Subsidiaries for the Pre-Closing Tax period shall
include the amount of such property Taxes for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of days
during the Straddle Period
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that are in the Pre-Closing Tax Period and the denominator of which is the
number of days in the Straddle Period; and
(b) the Taxes of the Company and the Subsidiaries (other than Property
Taxes) attributable to the Pre-Closing Tax Period shall be computed as if
such taxable period ended at the end of the day on the Closing Date and the
amount of Taxes attributable to such period shall be based upon a closing
of the books of the applicable Company and Subsidiary at the end of the day
on the Closing Date.
13.2 CARRYBACKS. Buyer shall not be entitled to carryback any losses,
credits or other Tax benefit items of the Company or the Subsidiaries that
arises in a taxable period (or portion thereof) ending after the Closing Date to
a Pre-Closing Tax Period of Company, Seller, the Company or the Subsidiaries.
ARTICLE XIV TERMINATION
14.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing:
(a) by the mutual written consent of Seller and Buyer;
(b) by Seller (if Seller is not then in breach of any term of this
Agreement), if Buyer shall (i) fail to perform in any material respect its
agreements continued contained herein to be performed on or prior to the
Closing Date, or (ii) materially breach any of its representations or
warranties contained herein, which failure or breach is not cured within
ten days after Seller has notified Buyer of its intent to terminate this
Agreement pursuant to this subparagraph;
(c) by Buyer (if Buyer is not then in breach of any term of this
Agreement), if Seller shall (i) fail to perform in any material respect its
agreements contained herein required to be performed on or prior to the
Closing Date, or (ii) materially breach any of its representations or
warranties contained herein, which failure or breach is not cured within
ten days after Buyer has notified Seller of its intent to terminate this
Agreement pursuant to this subparagraph;
(d) by either Seller or Buyer, if there shall be any nonappealable
final order, writ, injunction or decree of any court or governmental or
regulatory agency binding on Seller or Buyer which prohibits or restrains
Seller or Buyer from consummating the transactions contemplated hereby
(other than temporary injunctions);
(e) by Buyer, if any of the conditions in Article IX has not been
satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply
with its obligations under this Agreement) and Buyer has not waived such
condition on or before the Closing Date;
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or (ii) by Seller, if any of the conditions in Article X has not been
satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Seller to comply
with its obligations under this Agreement) and Seller has not waived such
condition on or before the Closing Date; or
(f) by either the Seller or the Buyer, if the Closing has not occurred
by January 31, 1997, for any reason other than delay or nonperformance of
the party seeking such termination.
14.2 EFFECT ON OBLIGATIONS. Termination of this Agreement pursuant to
this Article shall terminate all obligations of the parties hereunder, except
for the obligations under Sections 16.3 (with respect to expenses), 16.4 (with
respect to publicity) and 7.1 (with respect to confidentiality); PROVIDED,
HOWEVER, that termination pursuant to subparagraphs (b) or (c) of Section 14.1
shall not relieve the defaulting or breaching party from any liability to the
other party hereto.
ARTICLE XV EMPLOYEES
It is the Buyer's present intention to cause the Company and the Subsidiaries to
continue to provide, immediately following the Closing, compensation levels and
employee benefit programs the same as or reasonably comparable to the
compensation levels and employee benefit programs provided by the Company and
the Subsidiaries prior to the Closing, and to continue to credit service under
the employee benefit programs of the Company and the Subsidiaries following the
Closing in a manner consistent with the manner in which service has been
credited under such programs prior to the closing. Notwithstanding the
foregoing, however, the parties recognize that the Company and the Subsidiaries
may, subject to the requirements of any applicable collective bargaining
agreement, change the compensation levels or benefit programs provided by the
Company and the Subsidiaries following the Closing in ways that either the
Company or any Subsidiary determines to be necessary or appropriate for the
operation of its business.
ARTICLE XVI MISCELLANEOUS
16.1 ACCESS AFTER THE CLOSING DATE. After the Closing Date, the Buyer
shall provide the Seller with reasonable access during normal business hours to
copies of all of the books and records of the Company and the Subsidiaries
whenever requested by the Seller, and the Buyer shall retain such books and
records for the later of the end of the normal document retention period of the
Buyer; PROVIDED that the Buyer shall retain all required Tax books and records
until 60 days following the expiration of the applicable statute of limitations.
At the request and expense of the Seller, the Buyer shall deliver copies of any
such books and records to the Seller. At the Seller's out of pocket expense, the
Buyer shall use reasonable efforts to cause any of the employees of the Company
or any Subsidiary or the Buyer who were previously employed by the Company or
any Subsidiary to meet with the Seller and its representatives and agents
(including counsel and
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accountants) at such times and places as the Seller may reasonably request in
order to provide the Seller with information concerning the operation of the
Company and the Subsidiaries and the conduct of their business by the Company or
such Subsidiary prior to the Closing Date.
16.2 PAYMENT OF EXPENSES.
(a) Except as provided in Sections 8.1 and 8.2, all costs of
transferring the Shares to Buyer in accordance with this Agreement,
including recordation, notarial, registration, stamp, transfer and
documentary taxes and fees, and any federal, state or local excise, sales
or use taxes, and any filings or grant fees imposed by any governmental
authority, shall be paid one-half by Seller and one-half by Buyer.
(b) All costs, including recordation, notarial, registration, stamp,
transfer and documentary taxes and fees, and any federal, state or local
excise, sales or use taxes, and any filings or grant fees imposed by any
governmental authority caused by, or arising from, any liquidation, merger,
sale or transfer by or of the Company or any Subsidiary or assets of the
Company or any Subsidiary which occurs after the Closing shall be paid by
Buyer.
(c) Except as otherwise expressly provided in this Agreement, each of
the parties shall bear its own expenses, including the fees of any
attorneys and accountants engaged by such party, in connection with this
Agreement, the Seller Ancillary Documents and the Buyer Ancillary Documents
and the consummation of the transactions contemplated herein or therein.
16.3 PUBLICITY. Seller and Buyer agree that they will not make any
press releases or other announcements prior to the Closing with respect to the
transactions contemplated hereby, except as required by applicable law, without
the prior approval of all other parties. The Seller acknowledges that the Buyer
is required to make certain public disclosures and filings pursuant to the
Exchange Act with respect to the transactions contemplated hereby.
16.4 COMMERCIALLY REASONABLE EFFORTS. Each party hereto agrees to use
commercially reasonable efforts to effect the Closing set forth in this
Agreement and otherwise to consummate the transactions contemplated by this
Agreement. Specifically, but without limiting the generality of the foregoing,
each of Buyer and Seller shall use commercially reasonable efforts to make or
obtain all consents, approvals, authorizations, registrations and filings with
all federal, state, provincial or local judicial or governmental authorities or
administrative agencies as are required in connection with the consummation of
the transactions contemplated by this Agreement.
16.5 NOTICES. All notices, demands and other communications made
hereunder shall be in writing and shall be given either by personal delivery, by
nationally recognized overnight courier (with charges prepaid) or by telecopy
(with telephone confirmation), and shall be deemed to have been given or made
when personally delivered,
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the day following the date deposited with such overnight courier service or when
transmitted to telecopy machine and confirmed by telephone, addressed to the
respective parties at the following addresses (or such other address for a party
as shall be specified by like notice):
If to Seller:
Maag Holding AG
Xxxxxxxxxxx 000
Xxxxxx, Xxxxxxxxxxx CH-8023
Attn: Xxxxxx Xxxxxxxx
Telephone: 000-00-0-000-0000
Telecopy: 011-41-1-271-9204
With a copy (which shall not constitute notice) to:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Buyer:
Sinter Metals, Inc.
Xxxxxxxx Xxxxx, Xxxxx 0000
00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
16.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to conflict
of laws principles.
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16.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16.8 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Neither this Agreement nor any of the rights, interest or obligations
hereunder shall be assigned by either of the parties hereto without the prior
written consent of the other party hereto, and any purported assignment without
such consent shall be void; PROVIDED HOWEVER that (a) the Buyer may, without the
consent of the Seller, (i) grant a security interest in its rights under this
Agreement to a lender as security for Buyer's obligations to such lender and
(ii) assign its rights hereunder to one or more wholly-owned subsidiaries of the
Buyer, but no such grant of security interest or assignment shall release the
Buyer from its obligations hereunder, and (b) the Seller may, without the
consent of the Buyer, assign its rights hereunder to one or more wholly-owned
subsidiaries of the Seller, but no such assignment shall release the Seller from
its obligations hereunder, including, without limitation, its obligations under
Section 12.1, for which it shall be jointly and severally liable with any such
assignee.
16.9 THIRD PARTY BENEFICIARIES. None of the provisions of this
Agreement or any document contemplated hereby is intended to grant any right or
benefit to any person or entity which is not a party to this Agreement.
16.10 HEADINGS; REFERENCES. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of this
Agreement and shall not in any way affect the meaning or interpretation of this
Agreement. When a reference is made in this Agreement to a clause, Section,
Subsection or Article, such reference shall be to such clause, Section,
Subsection or Article of this Agreement unless otherwise indicated.
16.11 AMENDMENTS; WAIVER. Any waiver, amendment, modification or
supplement of or to any term or condition of this Agreement shall be effective
only if in writing and signed by both parties hereto, and the parties hereto
waive the right to amend the provisions of this Section orally. No waiver by any
party of any of the provisions hereof shall be effective unless explicitly set
forth in writing and executed by the party so waiving. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any other or subsequent breach. No failure on the part
of either party hereto to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof. The remedies herein are cumulative
and not exclusive of any remedies provided by law.
16.12 KNOWLEDGE. Whenever used herein with respect to the Seller, the
Company and its Subsidiaries, the term "knowledge" or "best knowledge" shall
mean the actual knowledge of Xxxx X. Xxxxxxxxxx, Xxxxxx Xxxxxxxx, Xxxx Xxxxx,
Xxxxxx Xxxxxxxxxx, Xxxxxxx Xxxxx and Xxxxxx Xxxxxx. Notwithstanding any notice
provided pursuant to Section 7.2, the Seller acknowledges and agrees that the
Buyer's right to rely on the representations
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and warranties of the Seller with respect to itself and the Company and its
Subsidiaries shall not be affected in any way by any investigation conducted by
the Buyer.
16.13 SEVERABILITY. In the event that any provision in this Agreement
shall be determined to be invalid, illegal or unenforceable in any respect, the
remaining provisions of this Agreement shall not be in any way impaired, and the
illegal, invalid or unenforceable provision shall be fully severed from this
Agreement and there shall be automatically added in lieu thereof a provision as
similar in terms and intent to such severed provision as may be legal, valid and
enforceable.
16.14 ENTIRE AGREEMENT. This Agreement and the Schedules and Exhibits
hereto constitute the entire contract between the parties hereto pertaining to
the subject matter hereof, and supersede all prior agreements and understandings
between the parties with respect to such subject matter (except with respect to
that certain Confidentiality Agreement by and between Buyer and Seller which
shall not be superseded hereby in the event of a termination of this Agreement
for any reason before Closing).
16.15 ARBITRATION; SUBMISSION TO JURISDICTION.
(a) Any dispute relating to this Agreement or the Seller Ancillary
Documents or the Buyer Ancillary Documents or the performance by the
parties of their respective obligations hereunder, which is not resolved
after the parties' attempt at amicable negotiations, shall be finally
settled by arbitration. If such a dispute arises, either party may initiate
arbitration proceedings by filing a demand for arbitration with the other
party and the New York, New York office of the American Arbitration
Association (the "AAA"). In making the selection of the arbitrators, each
party will select one arbitrator and the two arbitrators selected will
mutually agree upon the third arbitrator in accordance with the Commercial
Rules of Arbitration of the AAA. If the two selected arbitrators are unable
to agree on the third arbitrator, then the third arbitrator will be
selected in accordance with the Commercial Rules of Arbitration of the AAA.
All arbitration proceedings shall be conducted in accordance with the
Commercial Rules of Arbitration of the AAA before three arbitrators
selected in accordance with the Commercial Rules of Arbitration of the AAA.
All arbitration proceedings shall be held in New York, New York. The
arbitrator's award resulting from such arbitration may be confirmed and
entered as a final judgment in any court of competent jurisdiction and
enforced accordingly.
(b) The enforcement of any arbitration award or any legal action or
proceeding relating in any way to any other matter concerning any
arbitration proceeding pursuant to Section 16.15(a) above may be brought
and enforced in the federal courts of the United States for the Southern
District of New York, and (i) the Seller accepts for itself, the Company
and the Subsidiaries and in respect of its property, and (ii) the Buyer
accepts for itself and in respect of its property, each generally,
irrevocably and unconditionally, the jurisdiction of each such court in
respect of any such action or proceeding; PROVIDED THAT if for whatever
reason the federal courts of the United States for the Southern District of
New York will not
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or cannot hear such action or proceeding, it may be brought and enforced in
the courts of the State of New York in The City of New York, Borough of
Manhattan. The Seller and the Buyer each agree that a judgment, after
exhaustion of all available appeals, in any such action or proceeding shall
be conclusive and binding upon, and may be enforced in any other
jurisdiction, by a suit upon such judgment, a certified copy of which shall
be conclusive evidence of the judgment. The Seller and the Buyer each
irrevocably designate, appoint and empower CT Corporation System, with
offices at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as its designee,
appointee and agent to receive service of any and all legal process,
summons, notices and documents which may be served in any such action or
proceeding and agree that the failure of any such agent to give any advice
of service of process to it shall not impair or affect the validity of such
service or of any such judgment based thereon. If for any reason such
designee, appointee and agent shall cease to be available to act as such,
the Seller and the Buyer each agree to designate a new designee, appointee
and agent in New York City on the terms and for the purposes of this
provision reasonably satisfactory to the other party. The Seller and the
Buyer each further irrevocably consent to the service of process out of any
of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid,
to such party, at its address set forth in Section 16.5, such service to
become effective 30 days after such mailing. Nothing herein shall affect
the right of the Seller or the Buyer to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed
against the Seller or the Buyer in any other jurisdiction.
(c) The Seller and the Buyer each hereby irrevocably waive any
objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in connection the
enforcement of any arbitrator's award or any other matter relating to any
arbitration proceeding pursuant to Section 16.15(a) above brought in the
courts referred to in clause (b) above, and hereby further irrevocably
waive and agree not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient or improper forum.
16.16 OVERALL ADJUSTMENT/INDEMNIFICATION LIMITATION. Notwithstanding
anything in this Agreement to the contrary, in no event shall the aggregate sum
of (i) the EBITDA Shortfall Amount, if any, (ii) the Working Capital Adjustment
Amount, if any, plus or minus the amount of any change thereto pursuant to
Section 2.3(c), (iii) any Employment Claim(s) actually paid by Seller, if any,
and (iv) any Losses actually paid by Seller to Buyer pursuant to Section 12.1,
if any, exceed $3,700,000.
[Remainder of page left blank intentionally]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed by its duly authorized officer as of the date first above
written.
XXXX HOLDING AG
By:
----------------------------------
Name:
Title:
SINTER METALS, INC.
By:
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Name:
Title:
