Exhibit 10.1
ASSET PURCHASE AGREEMENT
AMONG
C'TREAT OFFSHORE, INC.,
WATERLINK TECHNOLOGIES, INC., WATERLINK, INC.
AND
ITT INDUSTRIES, INC.
TABLE OF CONTENTS
PAGE
ARTICLE I. Definitions...........................................................................1
ARTICLE II. Purchase and Sale.....................................................................8
Section 2.1 Terms of Purchase and Sale...................................................8
Section 2.2 The Closing..................................................................9
Section 2.3 Closing Deliveries...........................................................9
Section 2.4 Adjustment to Purchase Price.................................................9
Section 2.5 Settlement of Purchase Price................................................11
Section 2.6 Assignment and Assumption...................................................12
Section 2.7 Non-Assumption of Liabilities...............................................13
Section 2.8 Instruments of Conveyance...................................................13
ARTICLE III. Representations and Warranties of the Sellers...............................14
Section 3.1 Organization and Qualification of the Seller................................14
Section 3.2 Authority of Seller.........................................................14
Section 3.3 No Violation of Other Instruments...........................................14
Section 3.4 Interests in Property of the Business.......................................15
Section 3.5 Affiliated Businesses.......................................................15
Section 3.6 Subsidiaries................................................................16
Section 3.7 Financial Statements........................................................16
Section 3.8 Events Since the Balance Sheet Date.........................................17
Section 3.9 Absence of Undisclosed Liabilities..........................................18
Section 3.10 Real Property...............................................................18
Section 3.11 Personal Property...........................................................19
Section 3.12 Contracts and Commitments...................................................20
Section 3.13 Important Suppliers and Customers...........................................23
Section 3.14 Insurance...................................................................24
Section 3.15 Labor Agreements and Actions................................................24
Section 3.16 Employee Benefit Plans......................................................26
Section 3.17 Legal Proceedings...........................................................30
Section 3.18 Judgments, Decrees and Orders...............................................30
Section 3.19 Compliance With Law.........................................................31
Section 3.20 Environmental Matters.......................................................32
Section 3.21 Absence of Certain Payments.................................................36
Section 3.22 Consummation of this Transaction............................................37
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Section 3.23 Intellectual Property.......................................................38
Section 3.24 Powers of Attorney..........................................................40
Section 3.25 Taxes.......................................................................40
Section 3.26 Accounts Receivable.........................................................41
Section 3.27 Product Warranty............................................................41
Section 3.28 C'treat Leased Property.....................................................42
ARTICLE IV. Representations and Warranties of the Purchaser.............................42
Section 4.1 Corporate Organization......................................................42
Section 4.2 Corporate Power and Action..................................................42
Section 4.3 Consummation of this Transaction............................................43
Section 4.4 No Broker...................................................................43
ARTICLE V. Covenants...................................................................43
Section 5.1 Estoppel Certificates.......................................................43
Section 5.2 Non-Competition.............................................................44
Section 5.3 Accounts Receivable.........................................................45
Section 5.4 Allocation of Purchase Price................................................46
Section 5.5 Disclosures.................................................................46
Section 5.6 The "Waterlink" Name And Xxxx...............................................46
Section 5.7 Intellectual Property License Agreement.....................................49
Section 5.8 West Palm Environmental Conditions..........................................50
Section 5.9 Environmental Permits.......................................................54
Section 5.10 Payment of Taxes............................................................54
ARTICLE VI. Survival, Indemnification and Escrow........................................55
Section 6.1 Survival of Representations and Warranties..................................55
Section 6.2 Indemnification.............................................................55
Section 6.3 Limitations on Liabilities..................................................57
Section 6.4 Indemnification Procedure as to Third Party Claims..........................58
Section 6.5 Escrow......................................................................59
Section 6.6 Procedures Applicable to Performance of Remedial Activities.................60
Section 6.7 Treatment of Indemnification Payments.......................................62
ARTICLE VII. Employees and Employee Benefits.............................................62
Section 7.1 Employment..................................................................62
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Section 7.2 Compensation and Employee Benefits..........................................63
Section 7.3 Limitation on Service.......................................................64
Section 7.4 Medical, Health and Dental Plans............................................64
Section 7.5 Sellers' 401(k) Plan........................................................66
Section 7.6 Terminations or Layoffs.....................................................66
Section 7.7 Employee Agreements.........................................................67
Section 7.8 Vacation....................................................................68
Section 7.9 COBRA.......................................................................68
Section 7.10 Flexible Spending Accounts..................................................68
Section 7.11 Disability..................................................................69
Section 7.12 Assistance..................................................................70
Section 7.13 No Assumption of Plans......................................................70
Section 7.14 Purchaser's Actions.........................................................70
Section 7.15 No Third Party Rights.......................................................70
ARTICLE VIII. [Intentionally Left Blank]..................................................71
ARTICLE IX. Conditions to Closing.......................................................71
Section 9.1 Conditions Precedent to the Obligations of the Purchaser....................71
Section 9.2 Conditions Precedent to the Obligations of Seller...........................73
Section 9.3 Cooperation of Parties......................................................74
ARTICLE X. Closing Documents...........................................................74
Section 10.1 Sellers' Obligations........................................................74
Section 10.2 Purchaser's Obligations.....................................................75
ARTICLE XI. Miscellaneous...............................................................76
Section 11.1 Notices.....................................................................76
Section 11.2 Transaction Expenses........................................................77
Section 11.3 Bulk Transfer Laws..........................................................77
Section 11.4 Miscellaneous Taxes and Expenses............................................77
Section 11.5 Successors and Assigns......................................................77
Section 11.6 Governing Law...............................................................78
Section 11.7 Disputes....................................................................78
Section 11.8 Entire Agreement; Third Party Rights........................................78
Section 11.9 Amendment; Waiver...........................................................79
Section 11.10 Effect of Captions..........................................................79
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Section 11.11 Counterparts................................................................79
Section 11.12 Further Assurances..........................................................79
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Exhibit A Assumed Liabilities
Exhibit B Excluded Assets
Exhibit C Reference Balance Sheet
Exhibit C -1 Adjustments Reflected on Reference Balance Sheet
Exhibit D Form of Assignment and Assumption Agreement
Exhibit E Form of Xxxx of Sale
Exhibit F List of Leases
Exhibit G Allocation of Purchase Price
Exhibit H Escrow Agreement
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT made as of May 30, 2002 by and among
Waterlink, Inc., a Delaware Corporation (the "Parent"), C'treat OffShore, Inc.,
a Texas Corporation ("C'treat"), Waterlink Technologies, Inc., a Delaware
corporation ("Technologies" and, collectively with C'treat, the "Sellers" and
individually, a "Seller"). and ITT INDUSTRIES, INC., an Indiana corporation (the
"Purchaser").
W I T N E S S E T H:
WHEREAS, the Sellers are affiliated entities, each being wholly-owned by
Parent;
WHEREAS, the Sellers own the Purchased Assets (as hereinafter defined);
WHEREAS, the parties hereto desire that the Sellers sell the Purchased
Assets to the Purchaser, and that the Purchaser purchase the Purchased Assets
from the Sellers;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I. Definitions.
Whenever used in this Agreement: (i) the term "to the best of Seller's or
Sellers' knowledge" means to the best knowledge of a Seller or any Associate of
such Seller after due inquiry of the following: Jorg Xxxxxxxxxxx, Xxxxx Cutting,
Xxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxxxx, Xxxxx
Xxxxxxxx, Xxx Xxxxxx, and Xxxxxxx Xxxxxxxxxx; and (ii) the following terms shall
have the following respective meanings:
"Adjusted Net Worth" means the book value as of the close of business on
the Closing Date of the Purchased Assets less the Assumed Liabilities determined
in accordance with United States generally accepted accounting principles
applied on a
basis consistent with the 2001 Financial Statements, but with adjustments
required by Exhibit C-1;
"Associate" means with respect to any entity any other entity directly or
indirectly controlling, controlled by or under common control with such
specified entity. For purposes of this definition control means ownership of
more than 50% of the shares or ownership interests having power to elect
directors or persons performing a similar function;
"Assumed Liabilities" means the liabilities of the Sellers set forth in
Exhibit A;
"Balance Sheet" has the meaning ascribed thereto in Section 3.7(a);
"Balance Sheet Date" has the meaning ascribed thereto in Section 3.7(a);
"Business" means the business of the Sellers relating to the manufacture,
service and/or sale of the Products;
"Business Employees" has the meaning ascribed thereto in Section 7.1;
"Business's Real Property" means the Real Property and Improvements leased
by any Seller in respect of the Business;
"Business Transitioned Employee" has the meaning ascribed thereto in
Section 7.1;
"Closing" has the meaning ascribed thereto in Section 2.2;
"Closing Balance Sheet" has the meaning ascribed thereto in Section 2.4(a)
"Closing Date" has the meaning ascribed thereto in Section 2.2;
"Closing Payment" has the meaning ascribed thereto in Section 2.1(c);
"Code" has the meaning ascribed thereto in Section 3.16(b);
"Contracts" means contracts, agreements, plans, leases, licenses and
franchises;
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"Disability" has the meaning ascribed thereto in Section 7.1;
"Effective Benefits Time" has the meaning ascribed thereto in Section
7.4(b)(i);
"Employee Agreements" has the meaning ascribed thereto in Section 7.7;
"Environment" has the meaning ascribed thereto in Section 3.20(a);
"Environmental Holdback" has the meaning ascribed thereto in Section 5.8;
"Environmental Law(s)" has the meaning ascribed thereto in Section 3.20(a);
"Environmental Permits" has the meaning ascribed thereto in Section
3.20(a);
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended;
"ERISA Affiliate" has the meaning ascribed thereto in Section 3.16(b);
"Escrow Agreement" has the meaning ascribed thereto in Section 6.5;
"Excluded Assets" means the assets of the Sellers set forth in Exhibit B;
"Hazardous Material(s)" has the meaning ascribed thereto in Section
3.20(a);
"Improvements" means buildings and other improvements;
"Indemnitee" has the meaning ascribed thereto in Section 6.4;
"Indemnitor" has the meaning ascribed thereto in Section 6.4;
"Industrial Property" means patents, copyright registrations, mask work
registrations, domain names, trademark and service xxxx registrations, and
applications for any of the foregoing;
"Intellectual Property" means Industrial Property and inventions, invention
studies (whether patentable or unpatentable), designs, unregistered copyrights,
mask works, unregistered trademarks, unregistered service marks, unregistered
trade dress,
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unregistered trade names, secret formulae, trade secrets, secret processes,
computer programs, confidential information and know-how;
"IRS" has the meaning ascribed thereto in Section 3.16(e);
"Laws" means laws, ordinances, codes, standards, administrative rulings or
regulations of any federal, state, local or foreign governmental authority;
"Liens" has the meaning ascribed thereto in Section 3.2;
"Long Term Disability" has the meaning ascribed thereto in Section 7.11(a);
"Losses" has the meaning ascribed thereto in Section 6.2;
"Mortgage" means a mortgage, deed of trust, deed to secure debt or other
security instrument which is a lien on or title interest in real property or
leased real property, including any notes or bonds secured thereby;
"Multiemployer Plan" means "multiemployer plan" as defined in Section 3(37)
of ERISA;
"Ownership Period" means with respect to any Seller the period of time such
Seller has been owned by Parent and in no event shall be a period of less than
four years;
"Pension Plan" means "employee pension benefit plan" as defined in Section
3(2) of ERISA;
"Permits" means permits, licenses, franchises and other authorizations from
public authorities;
"Permitted Exceptions" means: (a) liens for any current real estate or ad
valorem taxes or assessments not yet delinquent or being contested in good faith
by appropriate proceedings; and (b) inchoate mechanic's, materialmen's,
laborer's, and carrier's liens and other similar inchoate liens arising by
operation of law or statute in the ordinary
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course of the business of the Seller for obligations which are not delinquent
and which will be paid or discharged in the ordinary course of such business;
"Plans" has the meaning ascribed thereto in Section 3.16(a);
"Products" means the following: (a) systems and associated components for
the separation and filtration of industrial water and waste water based on
reverse osmosis membrane technology, as well as microfiltration, ultrafiltration
or nanofiltration; (b) systems and associated components for the desalination of
water based on reverse osmosis membrane technology; (c) equipment and systems
for water purification in industrial, commercial, and residential point of entry
applications based on reverse osmosis membrane technology; and (d) service and
aftermarket parts of systems and equipment indicated in (a)-(c) above;
"Purchase Price" has the meaning ascribed thereto in Section 2.1(b);
"Purchased Assets" means all the assets of the Sellers (or of Parent with
respect to (h) below) used or held for use primarily or exclusively in the
Business, other than Excluded Assets, including but not limited to the
following:
(a) machinery and equipment;
(b) furniture;
(c) inventories of finished goods, raw material and work in process;
(d) accounts receivable;
(e) prepaid expenses;
(f) Contracts;
(g) customer lists and business records; and
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(h) all Intellectual Property owned by either Seller or by Parent
primarily with respect to the Business, including, but not limited to,
all Intellectual Property owned by such Seller or Parent which (i) is
based on inventions, discoveries, designs or writings made by any
person who was an employee of the Business, or any predecessor
thereof, at the time of such making, (ii) is or relates to a trade
name, trademark or service xxxx used exclusively in the Business, or
any predecessor thereof, or (iii) was purchased or developed for the
Business, or any predecessor thereof.
"Purchaser" has the meaning ascribed thereto on page 1 of this Agreement;
"Purchaser Indemnitee" has the meaning ascribed thereto in Section 6.2;
"Real Property" means real property and interests in real property;
"Reference Balance Sheet" means the four column balance sheet attached
hereto as Exhibit C showing for illustrative purposes in the second and
third columns thereof the adjustments which would have been made to
determine Adjusted Net Worth in accordance with the terms of this Agreement
if (i) the Closing had occurred on April 30, 2002 and (ii) on that date
$266,000 representing liabilities for incentive payments to key employees
pursuant to existing contractual obligations and Plan provisions had been
reflected in column 1 of such balance sheet;
"Regulatory Agency" has the meaning ascribed thereto in Section 5.8(b);
"Release" has the meaning ascribed thereto in Section 3.20(a);
"Remedial Activities" has the meaning ascribed thereto in Section 3.20(a);
"Seller" has the meaning ascribed thereto on page 1 of this Agreement;
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"Seller Indemnitee" has the meaning ascribed thereto in Section 6.2;
"Sellers' Accountants" has the meaning ascribed thereto in Section 2. 4
(a);
"Sellers' Welfare Benefits Program" has the meaning ascribed thereto in
Section 7.4(b)(i);
"Settlement Holdback" has the meaning ascribed thereto in Section 2.1;
"Short Term Disability" has the meaning ascribed thereto in Section
7.11(b);
"Tax" means any income, gross receipts, sales, use, real estate, ad
valorem, transfer, franchise, withholding, payroll, employment, excise,
intangibles, severance, occupation, premium or property tax or other like
assessment or charge of any kind whatsoever, together with any interest,
penalty, addition to tax or other additional amount imposed by any taxing
authority;
"Tax Return" means any Tax return, report or form;
"Transaction Document" means any agreement, document, certificate,
instrument or other writing delivered in connection with this Agreement or the
transactions contemplated hereby;
"2001 Financial Statements" has the meaning ascribed thereto in Section
3.7(a);
"WARN" has the meaning ascribed thereto in Section 3.15(f);
"Welfare Plan" means "employee welfare benefit plan" as defined in Section
3(l) of ERISA;
"West Palm Environmental Assessments" has the meaning ascribed thereto in
Section 5.8(a); and
"West Palm Environmental Conditions" has the meaning ascribed thereto in
Section 5.8(a).
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ARTICLE II. Purchase and Sale.
Section 2.1 Terms of Purchase and Sale.
Subject to the terms and conditions of this Agreement:
(a) The Sellers shall sell, assign and transfer the Purchased Assets
and Assumed Liabilities to the Purchaser and the Purchaser shall purchase the
Purchased Assets and assume the Assumed Liabilities from the Sellers.
(b) In consideration for the Purchased Assets, the Purchaser shall
pay to the Sellers an aggregate purchase price (the "Purchase Price") equal to
$15,650,000, subject to adjustment as determined pursuant to Section 2.4, and
assume the Assumed Liabilities.
(c) The Purchaser shall deliver to or for the benefit of the Sellers
$12,860,000 (the "Closing Payment") in immediately available funds. $1,565,000
(the "Escrow Amount") shall be deposited with the escrow agent referred to in
the Escrow Agreement in accordance with Section 6.5 and shall be governed by the
terms of the Escrow Agreement. $150,000 of the Purchase Price shall be retained
by Purchaser (the "Settlement Holdback") pending any adjustment of the Purchase
Price pursuant to Section 2.4, and shall be subject to the terms of Section 2.5.
$1,000,000 of the Purchase Price (the "Environmental Holdback") shall be
retained by Purchaser to secure obligations of Sellers set forth in Section 5.8
and shall be disbursed by Purchaser pursuant to Section 5.8. $75,000 shall be
retained by Purchaser in satisfaction of Sellers' obligation pursuant to Section
9.1(i). The Environmental Holdback and the Settlement Holdback shall bear
interest at a rate per annum equal to 3% (three percent), which interest shall
be paid to Parent for the benefit of the Sellers (i) as to the interest on the
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Environmental Holdback, annually, or if earlier upon disbursement of the
Environmental Holdback pursuant to Section 5.8 and (ii) as to the interest on
the Settlement Holdback, upon disbursement of the payment obligations pursuant
to Section 2.5.
Section 2.2 The Closing. Consummation of the sale and purchase of the
Purchased Assets and assignment and assumption of the Assumed Liabilities (the
"Closing") shall take place concurrently with the execution and delivery of this
Agreement at the offices of Benesch, Friedlander, Xxxxxx & Aronoff LLP, 000
Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000-0000. The date of Closing is herein called
the "Closing Date."
Section 2.3 Closing Deliveries. At the Closing:
(a) The Sellers shall deliver to the Purchaser the documents
referred to in Section 2.8 and shall deliver to the Purchaser possession of the
Purchased Assets (other than the domain name xxxxxxxxxxxxx.xxx);
(b) The Purchaser shall deliver to the Sellers the documents
referred to in Section 2.8 and shall assume the Assumed Liabilities;
(c) The Purchaser shall deliver for the benefit of the Sellers the
Closing Payment by wire transfer in immediately available funds in accordance
with the instructions set forth on Schedule 2.3; and
(d) The Sellers and the Parent, on the one hand, and the Purchaser,
on the other hand, each shall deliver such other documents as may be reasonably
requested by the other.
Section 2.4 Adjustment to Purchase Price.
The Purchase Price shall be adjusted on a dollar for dollar basis to
reflect any
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difference (positive or negative) between $4,700,000 and Adjusted Net Worth.
Adjusted Net Worth shall be determined following the Closing Date as follows:
(a) As soon as practicable but in no event more than 90 days after
the Closing Date the Purchaser shall deliver to the Parent on behalf of the
Sellers an audited adjusted balance sheet (the "Closing Balance Sheet") which
shall be presented in the same four-column format as the Reference Balance Sheet
and shall present:
(i) in column 1 a balance sheet of the assets and liabilities of
the Business as of the Closing Date (including the $266,000 reflected as set
forth in (ii) of the definition of "Reference Balance Sheet";
(ii) in column 2 the assets in column 1 which are not Purchased
Assets and the liabilities in column 1 which are not Assumed Liabilities;
(iii) in column 3 adjustments required by Exhibit C-1
(iv) in column 4 the Adjusted Net Worth.
The Closing Balance Sheet shall be accompanied by the unqualified opinion
of Deloitte & Touche LLP ("Purchaser's Accountants") that column 4 of the
Closing Balance Sheet presents fairly (in all material respects) the Adjusted
Net Worth as of the Closing Date in conformity with United States generally
accepted accounting principles and in accordance with Section 2.4. Parent and
the Sellers shall cooperate fully with the Purchaser and the Purchaser's
Accountants in the preparation and audit of the Closing Balance Sheet.
Additionally, Sellers shall be entitled to have representatives participate in
any physical inventory audit or similar proceeding. Further, during such period
employees of the Parent and its independent certified public accountants (the
"Sellers' Accountants") shall be entitled to access to the Purchaser's
Accountants' work papers
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prepared in connection with the Closing Balance Sheet and shall be entitled to
review and discuss such work papers with the Purchaser's Accountants.
(b) The Sellers may dispute the Adjusted Net Worth as shown on the
Closing Balance Sheet by notifying the Purchaser in writing within 30 days after
receipt of the Closing Balance Sheet. If the Sellers do not so notify the
Purchaser within such period, the Adjusted Net Worth as shown on the Closing
Balance Sheet shall be final, binding and conclusive on the parties. If the
Sellers do so notify the Purchaser, the Purchaser and the Sellers shall attempt
to reconcile their differences, and any resolution by them as to any disputed
amounts shall be final, binding and conclusive on the parties.
(c) If the Purchaser and the Sellers are unable to reach a resolution
with respect to all of the items specified in the notice referred to in Section
2.4(b) within 20 days after the date of receipt by the Purchaser of such notice,
then either party may submit the items remaining in dispute for resolution to an
accounting firm of national recognition mutually acceptable to the Purchaser and
the Sellers (the "Independent Accounting Firm"), which shall, within 20 days
after such submission or such longer period as the Independent Accounting Firm
may require, determine and report to the Sellers and the Purchaser upon such
remaining disputed items, and such determination shall be final, binding and
conclusive on the parties hereto. The fees and disbursements of the Independent
Accounting Firm shall be borne half by the Purchaser and half by the Sellers.
Section 2.5 Settlement of Purchase Price.
If the Adjusted Net Worth as finally determined pursuant to Sections 2.4
(b) or (c) results in a Purchase Price which exceeds the sum of the Closing
Payment, the Escrow
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Amount and the Environmental Holdback, the Purchaser shall, within five business
days after such final determination, pay such excess to the Parent on behalf of
the Sellers. To the extent such excess is less than the amount of the Settlement
Holdback, Purchaser shall be entitled to retain permanently the difference
between the Settlement Holdback and such payment. If the Adjusted Net Worth as
finally determined pursuant to Sections 2.4 (b) or (c) results in a Purchase
Price which is less than the sum of the Closing Payment, the Escrow Amount and
the Environmental Holdback, Parent on behalf of the Sellers shall, within five
business days after such final determination, pay such difference to the
Purchaser. In the event Parent is required to make a payment on behalf of
Sellers pursuant to the immediately preceding sentence, Purchaser shall be
entitled to retain the Settlement Holdback permanently. In the event neither
party is required to make a payment pursuant to this Section 2.5, Purchaser
shall be entitled to retain the Settlement Holdback permanently. The party
making such payment shall pay interest thereon to the other party for the period
from the Closing Date to the date of payment, if any, at the annual rate of 3%
(three percent). Payment of such excess (or difference) and interest thereon
shall be made by wire transfer in immediately available funds in accordance with
the instructions set forth in Schedule 2.5.
Section 2.6 Assignment and Assumption.
(a) The Contracts which are Purchased Assets shall be assigned to the
Purchaser at the Closing. Nothing in this Agreement shall be construed as an
attempt to assign any Contract which by its terms or by law is not assignable
without the consent of the other party or parties thereto, unless such consent
shall have been given. The Sellers agree to use their best efforts to obtain the
consent of any such other party or parties in
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each case where such consent is required and is requested by the Purchaser. If
any required consent is not obtained, the Sellers will cooperate with the
Purchaser in any reasonable arrangement designed to provide for the Purchaser
the benefits and obligations under any such Contract.
(b) Coincident with the Closing, the Purchaser agrees to assume and
pay, perform and discharge when due the Assumed Liabilities. The Purchaser
further agrees to execute and deliver at the Closing an assignment and
assumption agreement substantially in the form set forth in Exhibit D of this
Agreement.
Section 2.7 Non-Assumption of Liabilities. The Purchaser does not assume
any liabilities of the Sellers except the Assumed Liabilities.
Section 2.8 Instruments of Conveyance. In order to effectuate the sale,
conveyance, transfers and assignments contemplated by Sections 2.1 and 2.6
hereof, the Sellers and Parent will execute and deliver at the Closing all such
bills of sale and other documents or instruments of conveyance, transfer or
assignment (including a xxxx of sale substantially in the form set forth in
Exhibit E of this Agreement) as shall be necessary or appropriate to vest in or
to confirm in the Purchaser full and complete title to all of the Purchased
Assets free and clear of any Liens (other than Liens securing Assumed
Liabilities and Permitted Exceptions), all of which documents shall be in form
and substance satisfactory to counsel for the Purchaser. Subsequent to the
Closing, the Sellers will execute and deliver from time to time, at the request
of the Purchaser, all such further instruments of conveyance, transfer,
assignment and further assurance as may be required in order to vest in and
confirm to the Purchaser full and complete title to and the right to use and
enjoy the Purchased Assets.
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ARTICLE III. Representations and Warranties of the Sellers.
Each Seller and the Parent hereby represent and warrant to the Purchaser
that:
Section 3.1 Organization and Qualification of the Seller. Each Seller is
duly organized, validly existing and in good standing under the laws of its
respective State of incorporation and has full power to own the Purchased Assets
owned by it and to carry on the Business as it is now being conducted, and is
qualified to do business as a foreign corporation in the jurisdictions
identified with respect to it in Schedule 3.1, the only jurisdictions in which
its ownership or conduct of the Business requires it to be so qualified.
Section 3.2 Authority of Seller. Each Seller and the Parent has all
requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligation of each Seller and the Parent enforceable
against such Seller and the Parent in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies and
defenses. On consummation of the transactions contemplated by this Agreement in
accordance with the terms thereof each Seller will transfer to the Purchaser
good and valid title to the Purchased Assets owned by such Seller free and clear
of any options, liens, claims, charges or other encumbrances (collectively
"Liens") other than any Liens securing Assumed Liabilities and Permitted
Exceptions.
Section 3.3 No Violation of Other Instruments. Except as set forth in
Schedule 3.3, the execution and delivery of this Agreement and the consummation
of the
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transactions contemplated hereby will not (i) violate any provision of the
Certificate of Incorporation or By-Laws of either Seller or the Parent, (ii)
violate any provision of, or result in the termination of, or the acceleration
of (or entitle any party to exercise a right to terminate or accelerate) any
obligation under, any mortgage, note, lien, contract, lease, franchise, license,
permit, agreement, plan, instrument, order, arbitration award, judgment or
decree to which either Seller or the Parent is a party or by which either Seller
or the Parent is bound, or require the consent of any party thereto or (iii)
violate or conflict with any other material restriction of any kind or character
to which either Seller or the Parent is subject.
Section 3.4 Interests in Property of the Business. Except as disclosed in
Schedule 3.4, neither any Seller Associate nor any officer, director or employee
of Parent, any Seller or any Seller Associate has a direct or indirect interest
in any property, real or personal, tangible or intangible, used in or pertaining
to the Business. Except as set forth in Schedule 3.4, the Purchased Assets
constitute all assets used in, or necessary for, the conduct of the Business as
currently conducted by the Sellers.
Section 3.5 Affiliated Businesses. Set forth in Schedule 3.5 is a complete
and accurate list of all corporations, partnerships, limited liability companies
and sole proprietorships directly or indirectly owned or controlled by any
Seller or any Seller Associate or by any, director or officer of any Seller or
any Seller Associate, which (a) are engaged, or during the past five years (or
the Ownership Period if the Ownership Period is less than five years) were
engaged, in any business similar to the Business or (b) are conducting, or
during the past five years (or the Ownership Period if the Ownership Period is
less than five years) conducted, business with any Seller in respect of the
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Business as a supplier, customer, lessor, lessee or otherwise. Such list
specifies (a) the business engaged in during such period by each such
corporation, limited liability company, partnership or sole proprietorship and
(b) the nature and general volume of the business conducted by such corporation,
limited liability company, partnership or sole proprietorship with the Seller in
respect of the Business and the period during which it has been conducted.
Section 3.6 Subsidiaries. No Seller owns in respect of the Business any
shares of any corporation or any interest in any partnership, joint venture or
other legal entity.
Section 3.7 Financial Statements.
(a) The Sellers have delivered to the Purchaser, as Schedule 3.7(a),
true and correct copies of the unaudited consolidated balance sheet (the
"Balance Sheet") of the Business as of September 30, 2001 (the "Balance Sheet
Date") and the related unaudited consolidated statements of income and cash flow
for the year then ended. Such financial statements (the "2001 Financial
Statements") present fairly in all material respects the financial position of
the Business as of the Balance Sheet Date and the results of the operations of
the Business for the year then ended in conformity with United States generally
accepted accounting principles consistently applied, except that such financial
statements do not include footnotes.
(b) The Sellers have delivered to the Purchaser, as Schedule 3.7(b),
true and correct copies of the unaudited combined balance sheet of the Business
as of April 30, 2002 and the unaudited combined related statement of income for
the seven months then ended. Such financial statements present fairly in all
material respects the financial position of the Business as of such date and the
results of the operations of the
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Business for such period in conformity with United States generally accepted
accounting principles consistently applied, except that such financial
statements do not include footnotes and are subject to normal year-end
adjustments.
(c) The Sellers have delivered to the Purchaser as Schedule 3.7(c),
the unaudited consolidated balance sheets of the Business as of September 30,
2000 and September 30, 1999 and the related unaudited consolidated statements of
income of the Business for the years ended September 30, 2000 and September 30,
1999 which financial statements present fairly in all material respects the
results of operations of the Business for such periods in conformity with United
States generally accepted accounting principles consistently applied, except
that such financial statements do not include footnotes.
Section 3.8 Events Since the Balance Sheet Date. Except as disclosed in
Schedule 3.8, since the Balance Sheet Date, there has not been:
(a) any material adverse change in the results of operations, assets
or financial condition of the Business;
(b) any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the assets or operations of the
Business;
(c) any increase in compensation or employee benefits payable or to
become payable by the Seller in respect of the Business to any of its officers,
employees or agents other than normal increases granted in the ordinary course
of business; or,
(d) any disposition by the Sellers of any personal property of the
Business except such personal property as has been disposed of in the ordinary
course of business, it being understood that a disposition of any single asset
(other than inventories
-17-
of finished products) carried on the Sellers' books at more than $10,000 is
deemed not to be a disposition in the ordinary course of business.
Section 3.9 Absence of Undisclosed Liabilities. There are no liabilities of
the Sellers in respect of the Business, whether or not accrued and whether or
not determined or determinable, other than:
(a) liabilities disclosed or fully provided for in the Balance Sheet
(including the notes thereto) ;
(b) liabilities incurred in the ordinary course of business since the
Balance Sheet Date, none of which has been materially adverse to the assets,
financial condition or results of operations of the Business;
(c) liabilities disclosed in the Schedules to this Agreement; and,
(d) liabilities under Contracts not required to be disclosed in the
Schedules to this Agreement.
Section 3.10 Real Property.
(a) The Sellers own no Real Property.
(b) Schedule 3.10(b) describes all Real Property which is leased
(either as lessee or lessor) by either Seller in respect of the Business as of
the Closing Date (including Real Property leased to either Seller in respect of
the Business pursuant to leases which have been assigned by such Seller but with
respect to which such Seller retains any liability), all leases of such Real
Property and related agreements of subordination or nondisturbance (including
all amendments, modifications, extensions and renewals thereof or thereto) and
all title insurance policies that insure a Seller's interests in and to such
property. Except as disclosed in Schedule 3.10(b): each lease
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described in Schedule 3.10(b) is a valid and binding agreement enforceable in
accordance with its terms and is in full force and effect; no material default
by a Seller or, to the best of any Seller's knowledge, by any other party exists
under any provision thereof; no condition or event exists which after notice or
lapse of time or both would constitute a material default thereunder by a Seller
or, to the best of any Seller's knowledge, by any other party; and the
assignment thereof pursuant to this Agreement will not result in the termination
of, or result in a right of termination under, any such lease, require the
consent of any party thereto or bring into operation any other provision
thereof. Neither Seller has notice or knowledge of any default by a landlord
under any mortgage or other lien that is superior to any lease listed on
Schedule 3.10(b). No Seller has received written notice of any claim of
paramount title by any third party claiming the right to terminate any lease
listed on Schedule 3.10(b).
(c) No Real Property owned or controlled directly or indirectly by
either Seller (other than the Business's Real Property) or any Seller Associate
or by any of the directors or officers of any Seller or any Seller Associate
adjoins, abuts or is adjacent to any of the Business's Real Property.
(d) Except as disclosed in Schedule 3.10(d), no Seller has any oral or
written agreement with any real estate broker, agent or finder with respect to
the Real Property described in Schedule 3.10(b).
(e) The Sellers do not own any Mortgages in respect of the Business.
Section 3.11 Personal Property.
(a) The Sellers own, free and clear of any Liens other than Permitted
Exceptions, all of the personal property included in the Purchased Assets.
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(b) All machinery and equipment owned or leased by Seller and included
in the Purchased Assets which are in regular use are in good working order and
repair.
(c) All inventory included in the Purchased Assets is in good and
merchantable condition and is usable or saleable in the ordinary course of
business.
Section 3.12 Contracts and Commitments.
(a) Except as listed on Schedule 3.12(a), neither Seller is in respect
of the Business a party to, or subject to, any oral or written:
(i) contract for the purchase of products for resale, materials,
parts or supplies and involving any expenditure by the Sellers of more than
$50,000;
(ii) contract for the purchase of machinery or equipment or for
construction, and involving any expenditure by the Sellers of more than $35,000;
(iii) contract to obtain services and involving any expenditure
by the Sellers of more than $35,000;
(iv) lease (as lessee) of machinery, equipment or other personal
property requiring annual rental payments of $25,000 or more;
(v) contract for the sale or lease of its products or the
furnishing of its services and involving consideration of more than $50,000;
(vi) any sales agency, sales representative, broker, distributor
or similar contract relating to the sale or lease of such Seller's products or
the furnishing of its services;
(vii) contract or commitment not listed elsewhere in Schedule
3.12(a), or in any other Schedule delivered pursuant to this Agreement, and
continuing
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for a period of twelve months or more from the date of this Agreement without
the right on the part of such Seller to cancel such contract or commitment
effective within three months without any liability to such Seller;
(viii) contract pursuant to which a party other than such Seller
has a right to renegotiate or require a reduction in price or refund of payments
made to such Seller;
(ix) contract providing for payment by such Seller of liquidated
damages or penalties in the event of breach;
(x) contract containing covenants limiting the freedom of such
Seller to engage in or to compete in any line of business;
(xi) contract or commitment for the borrowing or lending of
money, a line of credit or a guarantee of indebtedness;
(xii) letter of credit, performance or payment bond, or guarantee
of performance, or contract or commitment to provide same;
(xiii) license or franchise agreement not listed in Schedule
3.23(c);
(xiv) contract for the development of any products, processes or
software;
(xv) joint venture contract or arrangement or other agreement
involving sharing of profits;
(xvi) contract with respect to the acquisition or sale of the
business, assets or shares of any corporation, partnership or other business
entity regardless of whether the transaction has been consummated;
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(xvii) contract or commitment with any investment banker,
financial advisor, finder or broker;
(xviii) contract with any government entity;
(xix) contract providing for payment in foreign currency;
(xx) contract or commitment with any present or former Seller
Associate, or any present or former director, officer, employee or agent of
Parent, such Seller or any Seller Associate or any former Shareholder of any
Seller; or,
(xxi) contract not made in the ordinary course of business and
not listed elsewhere in Schedule 3.12(a) or in any other Schedule delivered
pursuant to this Agreement.
(b) Except as disclosed in Schedule 3.3, 3.10(b), 3.12(b) or 3.23(c),
each of the contracts to which such Seller is subject or a party in respect of
the Business is a valid and binding agreement enforceable in accordance with its
terms and is in full force and effect; no material default by such Seller or, to
the best of such Seller's knowledge, by any other party exists under any
provision thereof; no condition or event exists which after notice or lapse of
time or both would constitute a material default thereunder by such Seller or,
to the best of such Seller's knowledge, by any other party; and the assignment
thereof pursuant to this Agreement will not result in termination of, or result
in a right of termination under, any such agreement, require the consent of any
party thereto or bring into operation any other provision thereof.
(c) Attached to Schedule 3.12(c) are copies of each Seller's standard
forms for contracts for the sale of, or warranties relating to, its products or
the furnishing of its services.
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Section 3.13 Important Suppliers and Customers.
(a) Set forth in Schedule 3.13 is a complete and accurate list of:
(i) the names and addresses of the ten largest suppliers (by
dollar volume) of products and services to the Business during its last three
fiscal years, with a description of the existing contractual arrangements, if
any, for continued supply from each such firm;
(ii) the names and addresses of any sole source suppliers of
significant goods or services to the Business with respect to which practical
alternative sources of supply are not available on comparable terms and
conditions, with a description of the contractual arrangements for continued
supply from each such firm;
(iii) the dollar volume of purchases from each supplier referred
to in paragraphs (i) and (ii) above during each of the last three fiscal years;
and
(iv) the names and addresses of each customer of the Sellers
which accounted for 5% or more of the gross revenues of the Business during its
last three fiscal years, together with the annual dollar volume of such revenues
for each such customer.
(b) Except as set forth in Schedule 3.13, no current supplier of
materials or services to the Sellers in connection with the Business in an
amount in excess of $100,000 per year has during the last 12 months decreased
materially or, to the knowledge of either Seller, threatened to decrease or
limit materially its provision of services or supplies to either Seller. Except
as set forth on Schedule 3.13, the Sellers have no knowledge of any termination,
cancellation or limitation of, or any material modification or change in, the
business relationship of either Seller with any such
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supplier or any current customer of either Seller including any such
termination, cancellation, limitation, modification or change which may result
as a consequence of the purchase and sale of the Purchased Assets.
Section 3.14 Insurance. Set forth in Schedule 3.14 is a complete and
accurate list of all current insurance policies of each Seller in respect of the
Business and all other insurance policies of each Seller or any Seller Associate
under which any claim could be made by or on behalf of the Seller in respect of
the Business.
Section 3.15 Labor Agreements and Actions. Except as set forth on Schedule
3.15:
(a) neither Seller is in respect of the Business a party to or bound
by or subject to any contract or agreement with any labor union;
(b) there are in respect of the Business no existing or, to the best
of each Seller's knowledge, threatened (i) labor strikes, work stoppages, slow
downs or interruptions of work affecting either Seller, (ii) arbitrations or
material grievances involving either Seller, or (iii) other labor controversies
which would have a material adverse effect on the financial condition, results
of operations, properties, business or prospects of either Seller and there is
in respect of the Business no pending or, to the best of each Seller's
knowledge, threatened representation question or union organizing activity
respecting the employees of either Seller;
(c) neither Seller is now, nor has such Seller within the last six
months preceding the date of this Agreement, engaged in respect of the Business
in any unfair labor practice within the meaning of the National Labor Relations
Act; prior to such six-month period, neither Seller has engaged in any unfair
labor practice within the meaning
-24-
of the National Labor Relations Act which would have a material adverse effect
on the financial condition, results of operations, properties, business or
prospects of such Seller in respect of the Business;
(d) there are no pending or, to the best of each Seller's knowledge,
threatened unfair labor practice charges or discrimination complaints relating
to race, color, national origin, sex, religion, age, marital status or handicap
against either Seller in respect of the Business before any federal, state or
local board, department, commission or agency nor, to the best of each Seller's
knowledge, does any basis therefor exist;
(e) neither Seller is now, and during the past five years (or the
Ownership Period if the Ownership Period is less than five years) neither Seller
has been, charged with or to the best of either Seller's knowledge threatened
with a charge of violation, or under investigation with respect to a possible
violation, in respect of the Business of any provision of any Laws relating to
unfair labor practices or equal employment opportunity; and there have been no
claims, inquiries, citations, penalties assessed or other proceedings of
federal, state or local governmental agencies in respect of either Seller in
respect of the Business during the past five years (or the Ownership Period if
the Ownership Period is less than five years) which relate to any provision of
any Laws relating to unfair labor practices or equal employment opportunity;
(f) each Seller is in compliance with the Worker Adjustment and
Retraining Notification Act and the regulations promulgated thereunder ("WARN");
(g) Sellers, with respect to the Business, are in compliance with all
requirements of the Code, and all other applicable Laws regarding
classifications as
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employees, independent contractors, leased employees, temporary employees or
otherwise with regard to all persons employed, retained in any capacity or
otherwise performing services with respect to the Business.
(h) Sellers, with respect to the Business, are in compliance with the
Immigration Reform and Control Act and regulations promulgated thereunder or any
other applicable laws relating to immigration. Each Seller has checked the
Social Security number provided to it by each of its employees to confirm that
it matches the records of the Social Security Administration, and has confirmed
that, except for two employees whose situation is being examined, such Social
Security number matches the records of the Social Security Administration.
Section 3.16 Employee Benefit Plans.
(a) Schedule 3.16 attached hereto and made a part hereof sets forth
all plans, contracts, agreements, practices, policies or arrangements, oral or
written, providing for employment or for any bonuses, deferred compensation,
excess benefits, pensions, retirement benefits, profit sharing, stock bonuses,
stock options, stock purchases, stock appreciation, phantom stock, restricted
stock, foreign benefits, life, accident and health insurance, hospitalization,
savings, holiday, vacation, severance pay, change of control payments or
benefits, sick pay, leave, disability, tuition refund, service awards or any
other employee or executive benefits, including, without limitation, any such
plan, contract, agreement, practice, policy or arrangement which is an "employee
benefit plan" as defined in Section 3(3) of ERISA, including any Welfare Plan
and any Pension Plan providing employee benefits or compensation to current or
former employees of Sellers with respect to the Business, maintained or
contributed to by a
-26-
Seller or any ERISA Affiliate, or to which a Seller or any ERISA Affiliate is a
party (each of the preceding hereinafter is referred to individually as a "Plan"
and collectively as "Plans").
(b) None of the Plans is a multi-employer plan within the meaning of
Section 3(37) of ERISA, and, except as disclosed on Schedule 3.16, no Seller nor
any entity which is required to be treated as a single employer with any Seller
pursuant to Section 414 (b), or (c) of the Internal Revenue Code of 1986, as
amended (the "Code") ("ERISA Affiliate") has maintained or sponsored, has been
required to contribute to, has terminated or withdrawn from (either completely
or partially), and no withdrawal liability (as defined in Section 4201, 4063 or
4064 or ERISA) has been incurred by any Seller or an ERISA Affiliate with
respect to, any defined benefit plan or multi-employer plan, and there is no
basis to anticipate that any demand for payment of any withdrawal liability will
be made. Except as disclosed on Schedule 3.16, none of the Plans and no employee
pension benefit plan maintained by any ERISA Affiliate with respect to the
Business is subject to Title IV of ERISA or Section 412 of the Code and neither
any Seller nor any ERISA Affiliate has incurred any liability under Title IV of
ERISA with respect to the Business which has not been satisfied. No Seller nor
any ERISA Affiliate has terminated any defined benefit pension plan with respect
to the Business subject to Title IV of ERISA during the six (6) year period
preceding the Closing Date for which such Seller or ERISA Affiliate has not
received a favorable determination letter from the Internal Revenue Service, and
a copy of any such determination letter has been provided to Purchaser by
Sellers.
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(c) Each Plan (together with its related funding instrument) which is
an employee pension benefit plan, is in material compliance with the
qualification requirements of Section 401 of the Code and the regulations issued
thereunder, and has been in material compliance with such qualification
requirements from the date of its adoption to the date of this Agreement, and
each such Plan and its related funding instrument have been the subject of a
favorable determination letter issued by the Internal Revenue Service holding
that such Plan and funding instrument are so qualified. A copy of the most
recent determination letter, which has been issued by the Internal Revenue
Service has been provided to Purchaser by Seller.
(d) Except as set forth on Schedule 3.16 hereto, none of the Plans
which is an employee welfare benefit plan provides benefits to retirees or other
former employees of any Seller, regardless of whether such benefits are vested,
and no Seller has terminated any employee welfare benefit plan providing
benefits to retirees or other former employees.
(e) Sellers have provided to Purchaser a copy of the Plans and all
amendments thereto. For Sellers' 401(k) Plan, as hereinafter defined, Sellers
have obtained a favorable determination letter or letters from the Internal
Revenue Service (the "IRS"). None of the determination letters has been revoked
by the IRS nor has the IRS given any written notice to either Seller or to the
Parent that it intends to a revoke any such determination letter;
(f) With respect to each of the Plans, the Sellers have provided to
Purchaser a copy of all related trust agreements, all amendments thereto and
written interpretations together with the most recent annual Form 5500 report,
the most recent
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summary plan description and any subsequent summary of material modification,
the most recent summary annual report, any insurance contracts related to such
Plans, and any employee handbooks, manuals and policy statements relating to
such Plans. The Sellers have provided Purchaser with true and complete age,
salary, service and related data for the Business Employees and beneficiaries
thereof;
(g) Sellers shall either contribute or accrue on their books the
amount of any employer matching and floor contributions (in an amount determined
in accordance with each Seller's past practices) to the Sellers' 401 (k) Plan
which is in the ordinary course of business and would be contributed for or
attributable to the period prior to the Closing Date.
(h) Sellers with respect to the Business are in material compliance
with COBRA and all other laws which require the continuation of benefit coverage
upon the happening of certain events, such as the termination of employment or
change in beneficiary or dependent status;
(i) Except as disclosed on Schedule 3.16, the assets of the Plans
maintained by the Sellers or any ERISA Affiliates for the benefit of the
employees of Sellers with respect to the Business do not include any stock or
securities issued by the Sellers or any ERISA Affiliates;
(j) To the knowledge of each Seller, all material reports and
documents with respect to each Pension Plan and Welfare Plan that are required
by ERISA or other laws to be filed or distributed, have been timely filed or
distributed;
(k) Except as set forth on Schedule 3.16, no Plan exists that could
result in the payment to any present or former employee of Sellers with respect
to the
-29-
Business of any money or property or accelerate or provide any other rights or
benefits to any present or former employee of Sellers with respect to the
Business as a result of the transactions contemplated by this Agreement, whether
or not such payments would constitute parachute payment within the meaning of
Section 280G of the Code;
(l) Other than qualified domestic relations orders as defined in
Section 414(p) of the Code and qualified medical child support orders as defined
in Section 609(a)(2)(A) of ERISA, and except for claims for benefits in the
ordinary course, to the knowledge of each Seller, there are no actions, liens,
suits, arbitrations, disputes, legal administrative or other proceedings or
governmental investigations pending against any of the Plans.
Section 3.17 Legal Proceedings. Except as set forth in Schedule 3.17, there
are no claims, actions, suits or proceedings pending or, to the best of Sellers'
knowledge, threatened by or against or affecting either Seller in respect of the
Business or the Purchased Assets.
Section 3.18 Judgments, Decrees and Orders. Schedule 3.18 lists all
judgments, decrees, orders, writs, injunctions, rulings, decisions or awards of
any court or governmental agency to which either Seller is a party or is subject
in respect of the Business or to which any of the Purchased Assets is subject.
Except as set forth in Schedule 3.18, neither Seller is a party to or subject to
any judgment, decree or order enjoining it in respect of any business practice,
the acquisition of any property or the conduct of any business and neither
Seller has operated the Business in violation of any such judgment, decree or
order.
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Section 3.19 Compliance With Law.
(a) Except as set forth in Schedule 3.19(a), neither Seller is in
violation of any Laws and its current facilities and continuation of its current
activities will not in the future violate any Laws currently enacted or adopted
but having only future effect, except for violations which individually, or in
the aggregate, do not and will not have a material adverse effect on the
financial condition, results of operations, business, properties, assets or
liabilities of such Seller in respect of the Business.
(b) Except as set forth in Schedule 3.19(b), neither Seller is now,
and during the past five years (or the Ownership Period if the Ownership Period
is less than five years) neither Seller has been, charged with or to the best of
such Seller's knowledge threatened with a charge or violation, or under
investigation with respect to a possible violation, of any provision of any Laws
relating to any aspect of the Business. Except as set forth in Schedule 3.19(b),
there have been no claims, inquiries, citations, penalties assessed or other
proceedings of federal, state, local or foreign governmental agencies in respect
of either Seller in respect of the Business during the past five years (or the
Ownership Period if the Ownership Period is less than five years) which relate
to any provision of any Laws including but not limited to those relating to
government procurement.
(c) Except as disclosed in Schedule 3.19(c), each Seller has obtained
all Permits which are required in connection with the business and operations of
the Business and is in full compliance therewith. Schedule 3.19(c) lists all
such Permits except for the Permits listed in Schedule 3.20(b) in response to
section 3.20(b). All such Permits are valid and in full force and effect. No
Seller has engaged in any conduct
-31-
which could cause revocation or suspension of any of such Permits and no action
or proceeding which could result in the revocation or suspension of any thereof
is pending or, to the best of Seller's knowledge, threatened.
(d) Except as disclosed in Schedule 3.19(d) and except for transfers,
approvals and authorizations listed in Schedule 3.20(b) in response to Section
3.20(b), no transfers of such Permits and no approvals or authorizations of
public authorities will be required to permit the Purchaser to continue the
Business as presently conducted after sale of the Business to the Purchaser
pursuant to this Agreement.
Section 3.20 Environmental Matters.
(a) For purposes of this Agreement, the capitalized terms defined
below shall have the meanings ascribed to them below.
(i) "Environment" means soil, land surface or subsurface strata;
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands); ground waters; sewer, septic system or waste
treatment, storage or disposal system servicing the Business; drinking water
supply; stream sediments; ambient air (including indoor air); plant and animal
life; and any other environmental medium or natural resource.
(ii) "Environmental Law(s)" means any past or present law
(including common law), statute, ordinance, rule, regulation, code, treaty, or
other requirement adopted or enacted by any federal, state, provincial, local,
foreign or other governmental authority relating to the Environment, Hazardous
Material(s) and/or worker health and safety.
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(iii) "Environmental Permits" means all approvals,
authorizations, consents, permits, licenses, registrations and certificates
required by any applicable Environmental Law.
(iv) "Hazardous Material" means any pollutant, contaminant,
hazardous or toxic substance, waste, and any other material (i) regulated in
connection with its impact or potential impact on human health or the
environment, or (ii) the presence, or discharge of, or exposure to which could
result in liability under any Environmental Law as a result of its impact or
potential impact on human health or the environment; and including asbestos and
asbestos containing material; and petroleum, petroleum products, and waste oil;
any flammable explosives; radioactive materials; or urea formaldehyde foam
insulation.
(v) "Release" means any past or present spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of a Hazardous Material into the Environment
whether intentional or unintentional.
(vi) "Remedial Activities" means all activities required by
applicable Environmental Laws related to the assessment, investigation, removal,
remediation, abatement or mitigation, and including monitoring, of any event or
conditions arising from or relating to the presence of any Hazardous Material(s)
on, at, under or migrating from any Real Property.
(b) Except as disclosed in Schedule 3.20(b) attached hereto and made a
part hereof, each Seller has obtained all Environmental Permits that are
required for the lawful operation of the Business. A list of Environmental
Permits is attached at Schedule
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3.20(b). All such Environmental Permits are in full force and effect. No Seller
has engaged in any conduct which could reasonably be expected to cause
revocation, suspension or adverse modification of any of such Environmental
Permits and no action or proceeding which could result in the revocation,
suspension or adverse modification of any such Environmental Permits is pending
or, to the best of Seller's knowledge, threatened.
(c) Except as disclosed in Schedule 3.20(c) attached hereto and made a
part hereof, each Seller is, at and all times during its ownership of the
Purchased Assets and the Business has been, in material compliance with all
terms and conditions of its Environmental Permits and with all applicable
Environmental Laws.
(d) Except as disclosed in Schedule 3.20(d) attached hereto and made a
part hereof, no Seller has received written notice of, nor has knowledge of, any
allegations of any violation by or claim against the Business or any Seller
under any Environmental Law, and no Seller is aware of any events, conditions,
circumstances, activities, practices, incidents, actions or plans with respect
to the Business which may give rise to any liability under any Environmental
Laws or interfere with or prevent continued compliance with Environmental Laws.
(e) Except as disclosed in Schedule 3.20(e), there have been no
claims, written inquiries, citations, penalties assessed or other proceedings of
federal, state, local or foreign governmental agencies in respect of the Seller
in respect of the Business during the past five years (or the Ownership Period
if the Ownership Period is less than five years) which relate to any provision
of any Environmental Laws.
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(f) Except as disclosed in Schedule 3.20(f) hereof, no Seller has
caused or permitted, and no Seller has any knowledge of, any Release or
threatened Release of any Hazardous Material in violation of applicable
Environmental Laws into, on, under or about any of the Business' Real Property
(or any Real Property formerly owned or operated in connection with the
Business).
(g) Except as disclosed in Schedule 3.20(g) hereof, no Seller has
caused or permitted, and no Seller has any knowledge of, the past or present use
of any of the Business' Real Property (or any Real Property formerly owned or
operated in connection with the Business) for the treatment or disposal of any
Hazardous Material, including without limitation any pits, ponds, lagoons, dry
xxxxx, sumps, trenches or landfills.
(h) Except as disclosed in Schedule 3.20(h) hereof, no Seller has been
identified as a potentially responsible party at any federal or state National
Priority List ("Superfund") site with respect to the Business.
(i) Sellers have made available to Purchaser for its review complete
and correct copies of the documents identified in Schedule 3.20(i) hereto.
(j) Sellers have made available to the Purchaser true and complete
copies of (i) all material reports and documents, final analytic data, and video
or computer tapes relating to the Purchased Assets and compliance with
Environmental Laws with respect to the Business, including, without limitation,
all material correspondence to and from public authorities, all material filings
with public authorities, and all internal or external environmental audits; and
(ii) all documents, reports or analyses, in whatever form, prepared by or on
behalf of any Seller and in Seller's
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possession, or otherwise in its possession, relating to the presence or absence
of any Hazardous Material(s) on, at, under or migrating from or onto any of the
Business' Real Property (or any Real Property formerly owned or operated in
connection with the Business)(hereinafter referred to as "Environmental
Reports"). A listing of all Environmental Reports disclosed hereunder is
included in Schedule 3.20(i).
(k) Except as set forth on Schedule 3.20(k), no underground storage
tanks for Hazardous Material(s) currently exist, nor to the best of Sellers'
knowledge, previously existed, at the Business' Real Property (or any Real
Property formerly owned or operated in connection with the Business).
(l) Except as set forth in Schedule 3.20(l), there are no liens,
encumbrances or restrictions of any nature whatsoever against any Seller or the
Purchased Assets arising under any Environmental Law.
(m) Except as set forth in Schedule 3.20(m), to the knowledge of the
Sellers, no building or structure owned, operated or leased by any Seller
contains any asbestos or asbestos-containing material, urea formaldehyde foam
insulation, or polychlorinated biphenyls (PCBs) in concentrations exceeding 50
ppm.
Section 3.21 Absence of Certain Payments. During the five year period (or
the Ownership Period if the Ownership Period is less than five years) prior to
the date of this Agreement, no Seller has (nor has any Seller, any director,
officer, agent, or employee of any Seller nor any other person, acting on behalf
of any Seller) directly or indirectly in respect of the Business: used any of
the funds of any Seller for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; made any unlawful
payment to foreign or domestic government officials or employees or to foreign
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or domestic political parties or campaigns from the funds of any Seller;
violated any provision of the Foreign Corrupt Practices Act of 1977; established
or maintained any unlawful or unrecorded fund of the monies or other assets of
any Seller; made any false or fictitious entry on the books or records of any
Seller; or made any bribe, rebate, payoff, influence payment, kickback, or other
unlawful payment, to any person or entity, private or public, regardless of
form, whether in money, property, or services, to obtain favorable treatment in
securing business or to obtain special concessions for any Seller, or to pay for
favorable treatment for business secured or for special concessions already
obtained for any Seller.
Section 3.22 Consummation of this Transaction.
(a) Except for filings and approvals listed in Schedule 3.20(b) in
response to Section 3.20(b), and as set forth in Schedule 3.22, no filing by any
Seller with any governmental authority is required with respect to the
transactions contemplated by this Agreement, and the consummation by the Sellers
of the transactions contemplated by this Agreement is not subject to the prior
consent or approval of any governmental authority.
(b) Neither Seller has received from any governmental authority any
request for information with respect to the transactions contemplated by this
Agreement, and no claims, actions, suits, inquiries, investigations or
proceedings are pending or, to the best of either Seller's knowledge, threatened
which seek to restrain or prohibit, or which would hinder, the consummation of
the transactions contemplated by this Agreement.
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Section 3.23 Intellectual Property.
(a) As of the date of this Agreement, Schedule 3.23(a) contains a list
of all the Industrial Property and of all unregistered trademarks, unregistered
service marks and unregistered trade names included in the Purchased Assets.
Except as set forth in Schedule 3.23(a), no Seller has any knowledge that any
such Industrial Property is not valid and enforceable.
(b) Except as set forth in Schedule 3.23(b): all of the Intellectual
Property included in the Purchased Assets is owned by either Seller or Parent
free and clear of any liens, attachments or encumbrances; and there are no
claims or demands nor any proceedings brought by any person, firm or corporation
pertaining to any Intellectual Property included in the Purchased Assets; and
none of the Intellectual Property included in the Purchased Assets is subject to
any order, decree, judgment, stipulation or agreement restricting the use
thereof.
(c) As of the date of this Agreement, Schedule 3.23(c) contains a list
of all contracts (i) involving licenses granted by either Seller to any third
party with respect to any Intellectual Property included in the Purchased Assets
and (ii) involving licenses granted by any third party to either Seller or
Parent or any of their Associates for the use of Intellectual Property in the
operation of the Business other than for the use of software or computer
programs. Except as set forth in Schedule 3.23(c) each contract listed in
Schedule 3.23(c) or 3.23(h): is a valid and binding agreement enforceable in
accordance with its terms and is in full force and effect; no material default
by any Seller or, to the best of Sellers' knowledge, by any other party exists
under any provision thereof; no condition exists which after notice or lapse of
time or both would constitute a
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material default thereunder by any Seller or, to the best of Sellers' knowledge,
by any other party; and the assignment thereof pursuant to this Agreement will
not result in termination of, or result in a right of termination under, any
such agreement, require the consent of any party thereto or bring into operation
any other provision thereof.
(d) Except as set forth in Schedule 3.23(d): (i) none of the products,
apparatus, methods or services which either Seller makes, uses sells or offers
to sell in respect of the Business infringes upon the Intellectual Property of
others; and, (ii) none of the Intellectual Property included in the Purchased
Assets is, to the best of each Seller's knowledge, being infringed by others.
(e) Except as set forth in Schedule 3.23(e), during the last five
years (or the Ownership Period if the Ownership Period is less than five years)
neither any Seller nor any Seller Associate on behalf of any Seller nor, to the
best of Sellers' knowledge, any predecessor of any Seller or any predecessor of
any Seller Associate on behalf of any Seller, has in respect of the Business
been charged with, or charged others with: (i) unfair competition; (ii)
infringement of any patent, trademark, service xxxx, trade dress, trade name,
domain name, copyright or mask work; or (iii) misappropriation of any trade
secrets, confidential information, know how, software or computer programs.
(f) Schedule 3.23(f) lists all opinions of counsel (whether in-house
or outside) which relate to (i) the validity, infringement and/or enforceability
of any Intellectual Property owned or used by either Seller in respect of the
Business or (ii) the use of trade secrets, software, computer programs,
confidential information or know-how owned or used by either Seller in respect
of the Business.
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(g) Each engineering and technical employee of each Seller is required
by the terms of their employment to assign to each Seller all rights to
Intellectual Property made, written or conceived by them during the course of
their employment with such Seller and relating to the business or contemplated
business of such Seller in respect of the Business.
(h) As of the date of this Agreement all software used by Parent,
either Seller, a Parent Associate or a Seller Associate in respect of the
Business is either owned by or licensed to such Parent, Seller or Associate and
Schedule 3.23 (h) sets forth a list of all Contracts granting software licenses
to such Parent, Seller or Associate.
(i) The Intellectual Property included in the Purchased Assets and the
Intellectual Property licensed to the Purchaser pursuant to Section 5.7,
together with the Intellectual Property referred to in Section 5.6, comprise all
of the Intellectual Property owned by the Parent, either Seller or their
Associates necessary for the conduct and operation of the Business in all
material respects as of the date hereof or as contemplated by Sellers during the
next three (3) years. The Purchased Assets shall in no event include any
trademarks or trade names incorporating the term "Waterlink," and any use by the
Purchaser of any such trademark or trade name shall be subject to Section 5.6.
Section 3.24 Powers of Attorney. There are no outstanding powers of
attorney of either Seller in respect of the Business other than those issued in
the ordinary course of business with respect to insurance, Intellectual Property
and tax matters.
Section 3.25 Taxes.
(a) Each Seller has paid or will pay when due or finally settled all
Taxes relating to the Business or to the Purchased Assets which are or become
due and
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payable for all periods up to and including the Closing Date except where the
failure to pay Tax would not have a material adverse effect on the Business.
Each Seller has properly filed on a timely basis, or so will file, when due
(after giving effect to any valid extension of time in which to make such
filings), all Tax Returns relating to the Business or the Purchased Assets for
all periods up to and including the Closing Date except where the failure to
file any Tax Return would not have a material adverse effect on the Business.
(b) None of the Purchased Assets are encumbered by any liens arising
out of unpaid Taxes that are due and payable on or before the Closing Date.
(c) No action or proceeding for the assessment or collection of any
Tax is pending, or to any Seller's knowledge, proposed that would affect the
Business, and no deficiency or other claim for any Tax has been asserted or made
that relates to the Business that has not been fully paid or timely settled.
(d) All Taxes that any Seller is or was required to withhold or
collect with respect to the Business have been paid to the proper governmental
authority.
Section 3.26 Accounts Receivable.
The Accounts Receivable are reflected properly on the books and records of
each Seller, are valid, and arose in the ordinary course of business.
Section 3.27 Product Warranty.
Except as set forth on Schedule 3.27, to the knowledge of Sellers, each
product or service manufactured, sold, leased, or delivered by the Business has
been in conformity with all applicable contractual commitments and all express
and implied warranties in all material respects, and no Seller has any liability
(and, to the best knowledge of Sellers,
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there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any liability) for replacement or repair thereof or other damages in
connection therewith. Except as set forth on Schedule 3.27, no product or
service manufactured, sold, or delivered by the Business is subject to any
guaranty, warranty, or other indemnity.
Section 3.28 C'treat Leased Property. To the knowledge of Sellers, no
portion of the Real Property leased by C'treat is or at any time was a "wetland"
(as such term is defined under any Environmental Law) and C'treat has not
performed, caused or permitted to be performed any activities that would have in
any way filled, destroyed, eliminated, altered, obstructed, disturbed,
interfered with or otherwise affected any "wetlands" in violation of any
Environmental Laws.
ARTICLE IV. Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Seller as follows:
Section 4.1 Corporate Organization. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Indiana.
Section 4.2 Corporate Power and Action. The Purchaser has corporate power
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby, and has taken all action required by law, its Certificate
of Incorporation, its By-Laws or otherwise to authorize such execution and
delivery, and this Agreement is a valid and binding agreement of the Purchaser
in accordance with its terms.
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Section 4.3 Consummation of this Transaction.
(a) The Consummation by Purchaser of the transactions contemplated by
this Agreement is not subject to the prior consent or approval of any
governmental authority.
(b) Purchaser has not received from any governmental authority any
request for information with respect to the transactions contemplated by this
Agreement, and no claims, actions, suits, inquiries, investigations or
proceedings are pending or, to the best of Purchaser's knowledge, threatened
which seek to retrain or prohibit, or which would hinder, the consummation of
the transactions contemplated by this Agreement.
Section 4.4 No Broker. Neither Purchaser nor any person acting on its
behalf is obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement.
ARTICLE V. Covenants.
Section 5.1 Estoppel Certificates. At the Closing, Seller shall deliver in
form reasonably satisfactory to Purchaser:
(a) an estoppel certificate from each landlord or tenant (other than a
Seller) under each lease identified in Exhibit F as requiring an estoppel
certificate to the effect that:
(i) to the best of such landlord's or tenant's knowledge the
applicable Seller is not in default under such lease and no event or condition
has occurred or failed to occur which, with the passage of time or the giving of
notice, or both, could constitute a default by such Seller under the lease;
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(ii) the lease as identified is unmodified except as indicated
and in full force and effect; and
(iii) all rent and other charges required to be paid by such
Seller under the lease have been duly and timely paid and are current.
Section 5.2 Non-Competition.
(a) The Parent and each Seller agrees, in consideration of the
obligations of the Purchaser hereunder, that it will not either directly or
indirectly:
(i) for a period of five years after the Closing Date engage in
or attempt to engage in any of the businesses which constitute or are included
in the Business as engaged in by the Sellers as of the Closing Date in
competition with the Purchaser or any Associate of the Purchaser; or
(ii) for a period of five years after the Closing Date solicit
away from the Purchaser or any Associate of the Purchaser any non-clerical
employees who were employees of any Seller as of the Closing Date.
(b) The Parent and each Seller agree that the provisions of this
Section 5.2 are necessary and reasonable to protect the Purchaser in the conduct
of its business. If any restriction contained in this Section 5.2 shall be
deemed to be invalid, illegal, or unenforceable by reason of the extent,
duration, or geographical scope thereof, or otherwise, then the court making
such determination shall have the right to reduce such extent, duration,
geographical scope, or other provisions hereof, and in its reduced form such
restriction shall then be enforceable in the manner contemplated hereby.
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(c) The Parent and each Seller agrees that any breach by it of this
Section 5.2 will result in the Purchaser suffering a loss which cannot
adequately be compensated for in damages and that the Purchaser shall be
entitled to injunctive relief.
Section 5.3 Accounts Receivable. The Purchaser shall continue after the
Closing to attempt to collect the accounts receivable reflected on the Closing
Balance Sheet in a reasonable manner consistent with the applicable Seller's
efforts prior to the Closing short of referral to a collection agency or
commencement of litigation. Should such efforts not result in the collection in
full of all such accounts receivable by a date which is the later to occur of
(x) 90 days after the Closing Date or (y) 90 days after the due date for any
payment pursuant to the terms of the applicable contract or invoice (the "Due
Date"), then the Purchaser may assign the uncollected portions of such accounts
receivable to such Seller no later than 120 days after the Closing Date or the
Due Date, as the case may be (the "Assigned Receivables"). Promptly upon such
assignment such Seller shall pay to the Purchaser an amount equal to the
Assigned Receivables less all reserves on the Closing Balance Sheet with respect
to such accounts receivable. Thereafter, Purchaser shall promptly deliver all
documents related to the Assigned Receivables to such Seller and Purchaser shall
cooperate in collection matters and shall at no time without such Seller's
consent compromise any amount.
For purposes of determining the collection of accounts receivable any
payments received by the Purchaser and not designated for a specific invoice
shall be applied against the oldest invoice owed by the party making the payment
unless such party shall indicate to the Purchaser that such invoice is in
dispute, in which event the payment shall be applied against the next oldest
invoice owed by such party. The Purchaser shall not
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settle any dispute or compromise any amount regarding any account receivable
covered by this Section without the prior written consent of the applicable
Seller, which shall not be unreasonably withheld.
Section 5.4 Allocation of Purchase Price. The Purchaser and the Sellers
shall allocate the Purchase Price among the Purchased Assets and the
Non-competition covenant set out in Section 5.2 as set forth on Exhibit G and,
in accordance with Section 1060 of the Code. For the purposes of all Taxes and
Tax Returns, the parties agree to report the transactions contemplated in this
Agreement in a manner consistent with Exhibit G and no party will take any
position inconsistent therewith in any Tax Return, in any refund claim, in any
litigation, or otherwise without the consent of the other party except as
required by a final "determination" within the meaning of Section 1313 of the
Code.
Section 5.5 Disclosures. Except as required by law, neither Sellers nor
Purchaser, without the prior written consent of the other, will make any press
release or any similar public announcement concerning the transactions
contemplated by this Agreement. If disclosure is required by law, the disclosing
party shall consult in advance with the other party and attempt in good faith to
reflect such other party's concerns in the required disclosure.
Section 5.6 The "Waterlink" Name And Xxxx.
(a) Subject to the provisions of paragraph (b) below, the Purchaser
will cease all use of the designation "Waterlink" in any fashion or combination,
including but not limited to the names/trademarks "Waterlink Technologies,"
"Waterlink Pure Water Division," "Waterlink Pure Water," "Waterlink C'treat
Offshore," and "Waterlink
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C'treat," as soon as practicable after the Closing Date but not more than one
(1) year after the Closing Date. Nothing in this Section 5.6 or elsewhere herein
shall give the Purchaser the right to use the sole designation "Waterlink" at
any time.
(b) Seller hereby grants to the Purchaser a personal, non-exclusive,
royalty-free license (i) for a period of eighteen (18)months following the
Closing Date to use tools, dies and molds acquired by the Purchaser under the
terms of this Agreement which cause the names or marks "Waterlink Technologies,"
"Waterlink Pure Water Division," "Waterlink Pure Water," "Waterlink C'treat
Offshore," or "Waterlink C'treat," to be cast, struck or molded into Products
currently being produced by or for the Business and (ii) for a period of
eighteen (18) months following the Closing Date to sell Products manufactured
with the use of such tools, dies and molds during such eighteen (18) month
period. The Purchaser shall in any event phase out such use of such names and
marks as soon as is reasonably practicable, and, in particular, shall remove the
cast for such names or marks from each such tool, die or mold on the first
occasion after the Closing Date when such tool, die or mold is refurbished.
Products of the Purchaser in connection with which the cast, struck or molded
names or marks will be so used shall be of a standard quality substantially
equivalent to the standard of quality maintained by the Business for such
Products prior to the Closing Date.
(c) Purchaser agrees that it will not use the "Waterlink" name or xxxx
(or derivations thereof) in any way as to state that Purchaser is the Seller or
Parent, or that Purchaser's Products and/or services are Seller's or Parent's
Products and/or services.
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(d) Purchaser agrees that it will not use the "Waterlink" name or xxxx
(or derivations thereof) on or in connection with any products or services other
than the Products or services of the Business as of the Closing Date.
(e) Purchaser hereby acknowledges that the "Waterlink" name and xxxx
(and derivations thereof) are and will remain the sole property of Seller or
Parent and that Purchaser has and will hereby acquire no ownership rights
whatsoever in the "Waterlink" name or xxxx (or derivations thereof). Purchaser
hereby acknowledges that any and all of the goodwill associated with its use of
the "Waterlink" name or xxxx (or derivations thereof) will inure to Seller and
Parent. Purchaser will not : (i) contest, or assist in any contest of, Seller's
or Parent's ownership of the "Waterlink" name or xxxx (or derivations thereof)
except as required by law; (ii) contest, or assist in any contest of, the
validity or enforceability of the "Waterlink" name or xxxx (or derivations
thereof) except as required by law; or (iii) take any actions with the intent to
injure the "Waterlink" name or xxxx (or derivations thereof) or impair Seller's
or Parent's rights therein.
(f) Purchaser will use such trademark markings in connection with
Purchaser's use of the "Waterlink" name or xxxx (or derivations thereof) as
Seller or Parent shall reasonably require to preserve and protect the trademark
status of the "Waterlink" name or xxxx (or derivations thereof). Purchaser
represents and warrants that the quality of the Products and/or services
provided in connection with the use of the "Waterlink" name or xxxx (or
derivations thereof) will be comparable to the quality of the Products and/or
services which Seller currently provides in connection with the Business. In
order to enable Seller to determine whether such Products or services
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conform to the standard of quality required by this Section 5.6 and to protect
Seller's and Parent's reputation in the marketplace, Purchaser will submit to
Seller, once every six (6) months upon request by Seller, a sample of any
Products, labels, tags and packaging material for the Products, brochures,
promotional materials, representative advertisements, and photographs, drawings
or sketches of signs containing the derivation of the "Waterlink" name or xxxx
(or derivations thereof), as well as copies of materials showing or depicting
how the derivation of the "Waterlink" name or xxxx (or derivations thereof) is
intended to be used in connection with any of Purchaser's Products or services.
Seller or Parent will have the right to object to the manner in which the
derivation of the "Waterlink" name or xxxx is intended to be used by Purchaser
in connection with any Products or services on the grounds that the use of the
derivation of the "Waterlink" name or xxxx exceeds the scope of the license
granted herein by this Section 5.6 or there is a substantial likelihood that
such intended use will cause damage to the goodwill of the "Waterlink" name or
xxxx (or derivations thereof) or Seller's or Parent's reputation in the
marketplace.
Section 5.7 Intellectual Property License Agreement.
(a) Effective as of the Closing Date, Parent and each Seller on behalf
of themselves and their Associates, hereby grants to Purchaser, subject to
Section 5.7(c), a personal, worldwide, perpetual, irrevocable, paid-up,
royalty-free, nonexclusive license, to manufacture, use and sell products and to
provide services which are made, used, sold, offered for sale or under
development by and with respect to the Business as of the Closing Date using any
Intellectual Property (except any Intellectual Property which is conveyed to
Purchaser pursuant to this Agreement) owned by or licensed to (with the
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right to sublicense) Parent, either Seller or their Associates as of the Closing
Date, subject to any rights previously granted to third parties and, to the
extent that any sublicense is available and granted herein, subject to the terms
and conditions of the license agreement granting Parent, either Seller or their
Associates such sublicensing rights. The licenses granted herein for the use of
Intellectual Property other than Industrial Property are effective with respect
to only Intellectual Property other than Industrial Property that is in the
possession of the Business as of the Closing Date.
(b) Effective as of the Closing Date, Purchaser hereby grants to
Parent, either Seller and their Associates, subject to Section 5.7(c), a
personal, worldwide, perpetual, irrevocable, paid-up, royalty-free, nonexclusive
license to manufacture, use and sell products and to provide services which are
made, used, sold, offered for sale or under development by Parent, either Seller
or their Associates (excluding the Business) as of the Closing Date under any
Intellectual Property which is conveyed to Purchaser pursuant to this Agreement,
and which was originally obtained by Parent, either Seller or their Associates
from the Business, and which is in the possession of the Business, Parent,
either Seller or their Associates at the Closing Date, subject to any rights
previously granted to third parties.
(c) It is understood and agreed that the licenses granted above in
this Section 5.7 do not include any right to use registered or unregistered
trademarks, service marks, trade dress or trade names.
Section 5.8 West Palm Environmental Conditions.
(a) The Sellers and Parent agree to fully address the environmental
conditions at the West Palm Facility Site (hereinafter "West Palm Environmental
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Conditions") in accordance with Section 5.8(b) through 5.8(e) below. As used
herein, the term West Palm Environmental Conditions shall mean those impacts to
the Environment arising from the presence on or prior to the Closing Date of
Hazardous Material(s) on, at, under, about or migrating from the West Palm
Facility Site as identified in the West Palm Environmental Assessments (as
hereinafter defined), and including the extent of such impacts as delineated in
future investigation activities. The West Palm Environmental Assessments shall
mean, the following reports of the West Palm facility: Phase I and Phase II
Environmental Site Assessments by ENSR dated May 2002; Phase I and Limited Phase
II Environmental Site Assessment by URS Corporation dated September 20, 2001;
Phase I Environmental Site Assessment by Xxxxxxx Group Services dated September
5, 2000; and Site Investigation Report by IT Corporation dated April 2000; and
2001-2002 results of investigations conducted by or for FDEP included in files
of FDEP to the extent such results address environmental issues at the West Palm
Facility Site on or prior to the Closing Date.
(b) At Sellers' and/or Parent's sole cost and expense, or at the cost
and expense of any other responsible party(ies) but in no event that of
Purchaser, the Sellers and/or Parent shall work diligently with the Florida
Department of Environmental Protection or any successor agency or any other
agency exercising jurisdiction over the West Palm Facility Site (hereinafter
"Regulatory Agency") (i) to voluntarily undertake such Remedial Activities as
the Regulatory Agency requires with respect to the West Palm Environmental
Conditions, and (ii) to obtain either a "no further action" letter with respect
to the West Palm Environmental Conditions, or other written evidence from the
Regulatory Agency which states that the Regulatory Agency will take no action
with
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regard to the West Palm Environmental Conditions. To the extent Sellers and
Parent believe other responsible parties should contribute to or undertake the
work required herein, Sellers and Parent shall use reasonable and best efforts
to cause such parties to cooperate and work with the Regulatory Agency, or
otherwise contribute to the cost of the Remedial Activities. In no event,
however, shall Sellers or Parent take any steps that will prejudice Purchaser or
Purchaser take any steps that will prejudice Sellers or Parent by way of
encouraging action by the Regulatory Agency (which shall not include the pursuit
of a "comfort letter" by Purchaser from the Florida Department of Environmental
Protection) or any third-party as against Purchaser or Sellers or Parent, as the
case may be. The failure of other responsible parties to perform or contribute
shall not limit or change Sellers' and Parent's obligations under this Section
5.8.
(c) All Remedial Activities performed by Sellers and/or Parent
pursuant to this Section 5.8 shall be in accordance with the procedures set
forth at Section 6.6. Sellers and Parent agree that to the extent the Remedial
Activities are undertaken by some other responsible party(ies), Sellers and
Parent shall utilize reasonable and best efforts to ensure that the other
responsible party(ies) agrees to the procedures and provisions of Section 6.6.
(d) Sellers and Parent agree that copies of all invoices for payments
made by Sellers or Parent, or payments made by any other responsible party(ies)
to the extent available to Sellers or Parent, to address the West Palm
Environmental Conditions pursuant to this Section 5.8 shall be provided to
Purchaser on a quarterly basis. Sellers and Parent shall utilize reasonable and
best efforts to obtain copies of all such invoices for payment with regard to
activities performed by any other responsible party(ies).
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(e) Sellers and/or Parent shall demonstrate to Purchaser that they are
proceeding in accordance with the requirements of this Section 5.8 as follows:
(i) within thirty (30) days of the signing of this Agreement initiate
discussions with the Florida Department of Environmental Protection for Sellers
and/or Parent or other responsible party(ies) to enter into some form of
remediation agreement and/or order to address the West Palm Environmental
Conditions and thereafter provide a summary of such discussions to Purchaser;
and (ii) within nine (9) months of the date of this Agreement submit to the
Regulatory Agency or cause other responsible parties to submit to the Regulatory
Agency a work plan for Remedial Activities as necessary to address the West Palm
Environmental Conditions, subject to Purchaser's right of review set forth in
Section 6.6.
(f) The environmental holdback of $1,000,000 ("Environmental
Holdback") shall be disbursed in a single, full disbursement of the entire
amount of the Environmental Holdback to the Parent upon the earliest to occur of
any of the following:
(i) Upon receipt by the Sellers or Parent or other responsible
party (ies) of a "No Action Letter" or other written evidence from the
Regulatory Agency which states that the Regulatory Agency will not require any
Remedial Activities in connection with the West Palm Environmental Conditions.
(ii) Upon receipt by the Sellers or Parent or other responsible
party (ies) of a "No Further Action Letter" or other written evidence from the
Regulatory Agency which states that the Regulatory Agency has accepted the
Remedial Activities performed by the Sellers, Parent or other responsible party
(ies) with regard to the West
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Palm Environmental Conditions and will not require further Remedial Activities
in connection with those conditions.
(g) In the event Purchaser receives a Third-Party Claim, as
hereinafter defined, with respect to the West Palm Environmental Conditions
and, after fifteen (15) days prior written notice to Sellers and Parent
neither Sellers nor Parent have (i) demonstrated that they have fulfilled
their obligations under this Section 5.8, nor (ii) enjoined any legal
action against Purchaser, then Purchaser shall have the right to use the
Environmental Holdback to implement those activities necessary to obtain
the "No Action Letter" or "No Further Action Letter" or similar written
evidence described in subsection (f)(i) and (f)(ii) above. In addition,
such Third-Party Claim that results in Losses to Purchaser shall trigger
Seller's obligations under Article VI and Purchaser shall be indemnified to
the extent the Environmental Holdback is not sufficient to complete
Seller's obligations under Section 5.8. Third-Party Claim shall mean any
written communication received by Purchaser alleging or imposing liability
or responsibility on the part of Purchaser, and includes, but is not
limited to, a lawsuit, administrative action, a "PRP" letter by any
governmental agency, any form of governmental order, or consent decree.
Section 5.9 Environmental Permits. Sellers shall cooperate with Purchaser
and use their best efforts to cause all Environmental Permits to be transferred
to Purchaser promptly after Closing.
Section 5.10 Payment of Taxes. Sellers agree to pay and discharge all Taxes
relating to the Business or the Purchased Assets which relate to or arise out of
the period prior to the Closing.
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ARTICLE VI. Survival, Indemnification and Escrow.
Section 6.1 Survival of Representations and Warranties. The representations
and warranties contained in this Agreement, other than those in Sections 3.2,
3.10, 3.11, 3.16, 3.20, 3.23, 3.25, 3.27, 3.28 and 4.2 shall survive the Closing
for two years after the Closing Date. The representations and warranties in
Sections 3.16, 3.20, 3.23, 3.25, 3.27 and 3.28 shall survive the Closing for so
long as any applicable statute of limitations has not expired, been suspended or
been waived; if there is no applicable statute of limitations such
representations and warranties shall survive the Closing without limitation in
time. The representations in Sections 3.2, 3.10, 3.11 and 4.2 shall survive the
Closing without limitation in time.
Section 6.2 Indemnification.
(a) Notwithstanding any investigation of the Business made by or on
behalf of the Purchaser prior to the Closing, Parent and each Seller agree
jointly and severally to indemnify the Purchaser, and its officers, directors,
employees and agents (individually a "Purchaser Indemnitee and collectively the
"Purchaser Indemnitees") and to hold each Purchaser Indemnitee harmless from and
against all damages, losses and expenses (including reasonable expenses of
investigation and attorneys' fees) after giving effect to any reserves with
respect thereto reflected on the Closing Balance Sheet, any insurance recoveries
received by Purchaser under insurance policies of Parent or Sellers, and in the
case of any matter specifically covered by Section 5.8 and to which the
Environmental Holdback is applicable, the Environmental Holdback ("Losses")
caused by or arising out of any:
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(i) breach of warranty or inaccurate or erroneous representation
of any Seller or Parent contained herein or in any document delivered pursuant
hereto;
(ii) breach of any covenant of a Seller or Parent set forth in
this Agreement or any Transaction Document (including without limitation failure
to make any payment, in excess of the Settlement Holdback, required pursuant to
Section 2.5);
(iii) claim in respect of any liabilities (a) of any Seller or
any predecessor thereof, or (b) resulting from acts or omissions prior to the
Closing of any Seller or any predecessor thereof, other than Assumed
Liabilities;
(iv) liability under, violation of or non-compliance with any
Environmental Law (whether now existing or hereinafter enacted or adopted)
resulting from acts or omissions on or prior to the Closing Date of either
Seller, any predecessor thereof or any predecessor in interest to the Business'
Real Property or any Real Property previously owned or operated in connection
with the Business;
(v) liability resulting from the presence on or prior to the
Closing Date of any Hazardous Material on, at, under or migrating from any of
the Business' Real Property or any Real Property previously owned or operated in
connection with the Business;
(vi) liability resulting from the presence of any Hazardous
Material on, at, under or migrating from any property or facility to which
Hazardous Material manufactured, processed, used, generated or otherwise handled
by any Seller, or any predecessors, has been, or has allegedly been,
transported, transferred, stored, disposed of, deposited, treated, recycled or
received on or prior to the Closing Date; and
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(vii) conditions or events disclosed in any Schedule under
Section 3.20.
(b) Notwithstanding any investigation made by or on behalf of the
Sellers prior to the Closing, the Purchaser agrees to indemnify the Sellers and
their officers, directors, employees and agents (individually a "Seller
Indemnitee and collectively the "Seller Indemnitees") and to hold each Seller
Indemnitee harmless from and against all Losses caused by or arising out of any:
(i) breach of warranty or inaccurate or erroneous representation
of the Purchaser contained herein or any document delivered pursuant hereto;
(ii) breach of any covenant of the Purchaser set forth in this
Agreement or any Transaction Document (including without limitation failure to
make any payment required pursuant to Section 2.5); and
(iii) failure of the Purchaser to discharge any Assumed
Liabilities.
Section 6.3 Limitations on Liabilities.
(a) Claims for Losses caused by or arising out of breach of warranty
or inaccurate or erroneous representation may be made only pursuant to Article
VI hereof and only by written notice within the survival period of such
representation and warranty provided for in Section 6.1.
(b) Sellers' and Parent's obligations to indemnify Purchaser for
Losses caused by or arising out of breach of warranty or inaccurate or erroneous
representation are limited, in the aggregate, to an amount not in excess of the
Purchase Price.
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(c) Neither Sellers and Parent, on the one hand, nor Purchaser, on the
other hand, shall have any obligation to indemnify the other for Losses caused
by or arising out of breach of warranty or inaccurate or erroneous
representation until the total of all such Losses suffered by the other party
exceeds $100,000.
(d) Neither Sellers nor Parent shall have any obligations under
Sections 6.2(a)(iv)-(vii) for costs to remove asbestos material present before
the Closing in any buildings at the Business's Real Property.
Section 6.4 Indemnification Procedure as to Third Party Claims.
(a) Promptly after a Purchaser Indemnitee or a Seller Indemnitee
(individually an "Indemnitee) obtains knowledge of the commencement of any third
party claim, action, suit or proceeding or of the occurrence of any event or the
existence of any state of facts which may become the basis of a third party
claim (any such claim, action, suit or proceeding or event or state of facts
being hereinafter referred to in this Section 6.4 as a "Claim"), in respect of
which an Indemnitee is entitled to indemnification under this Agreement, such
Indemnitee shall notify the indemnitor under this Agreement (the "Indemnitor")
of such Claim in writing, provided, however, that any failure to give such
notice (i) will not waive any rights of the Indemnitee except to the extent that
the rights of the Indemnitor are prejudiced thereby and (ii) will not relieve
the Indemnitor of its obligations as hereinafter provided in this Section 6.4
after such notice is given. With respect to any Claim as to which such notice is
given by the Indemnitee to the Indemnitor, the Indemnitor shall, subject to the
provisions of Section 6.4(b) below, promptly assume the defense and settlement
of such Claim with counsel reasonably satisfactory to the Indemnitee at the
Indemnitor's sole risk and expense, provided,
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however, that the Indemnitee (i) shall be permitted to join in the defense and
settlement of such Claim and to employ counsel at its own expense, (ii) shall
cooperate with the Indemnitor in the defense and settlement of such Claim in any
manner reasonably requested by the Indemnitor and (iii) shall have the right to
pay or settle such Claim at any time in which event the Indemnitee shall be
deemed to have waived any right to indemnification therefor by the Indemnitor.
(b) If (i) the Indemnitor fails to assume the defense of such Claim
or, having assumed the defense and settlement of such Claim, fails reasonably to
contest such Claim in good faith, or (ii) the remedy sought by the claimant with
respect to such Claim is not solely for money damages, the Indemnitee, without
waiving its right to indemnification, may assume the defense and settlement of
such Claim, provided, however, that (i) the Indemnitor shall be permitted to
join in the defense and settlement of such Claim and to employ counsel at its
own expense, (ii) the Indemnitor shall cooperate with the Indemnitee in the
defense and settlement of such Claim in any manner reasonably requested by the
Indemnitee, and (iii) the Indemnitee shall not settle such Claim without
soliciting the views of the Indemnitor and giving them due consideration.
(c) As used in this Section 6.4, the term Indemnitee shall be deemed
to include the plural thereof where the rights or obligations of more than one
Indemnitee may be involved.
Section 6.5 Escrow. As security for (but not in limitation of) the
indemnity provided for in Section 6.2(a), at the Closing the Purchaser will
deposit with The Bank of New York, as escrow agent, $1,565,000, such amount to
constitute an escrow fund to be governed by the terms set forth in an escrow
agreement substantially in the form attached
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hereto as Exhibit H (the "Escrow Agreement"), which shall be executed and
delivered at the Closing by the Purchaser and the Sellers.
Section 6.6 Procedures Applicable to Performance of Remedial Activities.
The following procedures shall apply with regard to the performance of any
Remedial Activities performed pursuant to (i) Section 5.8 or (ii) in the event a
claim for indemnification is made by Purchaser pursuant to Sections
6.2(a)(iv)-(vii) hereof (hereinafter referred to as an "Environmental Claim'):
(a) If Remedial Activities or other action proposed to be taken by
Sellers would materially and adversely affect Purchaser's operation of its
business, including any material impairment in its relationships with customers,
suppliers, the government, or the general public, such action shall not be taken
without Purchaser's prior written consent. In the event such consent is given,
Sellers agree to compensate Purchaser for and indemnify Purchaser against any
Losses (including without limitation interest, penalties, business interruption
and consequential or special damages of any nature, court costs and reasonable
attorneys' fees) resulting from the Remedial Activities' or other action's
effect on Purchaser's operation of the business.
(b) Purchaser agrees to provide access to the affected property for
all purposes related to implementation of any Remedial Activities. Sellers shall
conduct such Remedial Activities in accordance with Environmental Laws or to the
satisfaction of the applicable governmental authority. Sellers shall perform any
Remedial Activities in a prompt and reasonable manner. Sellers shall avoid
material interference with the use of the property. Sellers shall keep Purchaser
apprised of scheduled Remedial Activities and provide Purchaser with no less
than forty-eight (48) hours notice prior to entry onto the
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property. Such notice must be provided each time Sellers, their agents or
contractors will access the property having been absent from the same for over
five (5) business days.
(c) Prior to commencing any Remedial Activities, Sellers shall provide
Purchaser with a draft copy of any work plans describing the work necessary to
implement the Remedial Activities (hereinafter "Remedial Action Plan(s)").
Purchaser will have the right to review and comment on any such Remedial Action
Plan(s). Sellers shall consider Purchaser's comments on any Remedial Action
Plan(s) submitted within fifteen (15) days after Purchaser's receipt of the
Remedial Action Plan(s) unless a shorter time for review is made necessary and
Purchaser has received reasonable notice thereof. Sellers shall give reasonable
consideration to Purchaser's comments but will have the sole discretion to
reject any comments and Sellers are under no obligation to modify any such draft
document. Purchaser covenants and agrees to maintain the confidence of all
drafts provided to it by Sellers under this Section. All correspondence with
governmental authorities or third parties with respect to any Environmental
Claim hereunder shall be copied to Purchaser.
(d) Sellers agree to defend and indemnify and hold Purchaser harmless
from and against any and all Losses arising out of or resulting from, whether
directly or indirectly, the performance of the Remedial Activities by any
Seller, its employees, agents or contractors.
(e) Solely with respect to the matters covered under Section 5.8
hereof, and not in limitation of Parent's or Sellers' indemnification
obligations pursuant to this Article VI, Sellers, Parent and Purchaser agree
that the Environmental Holdback established pursuant to Section 5.8 is
established to provide specific earmarked funds
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available to assure Purchaser of availability of such funds to address the West
Palm Environmental Conditions. The funds included in the Environmental Holdback
shall be treated as described in Section 5.8 and will not be subject to this
Article VI. The Purchaser, Parent and Sellers further agree that notwithstanding
any provision in this Agreement, to the extent the Environmental Holdback is not
sufficient to achieve the purposes intended by Section 5.8 or to the extent any
Claim for Losses is made by Purchaser for which such amount is not available,
the indemnification obligations of Parent and Sellers pursuant to this Article
VI shall be applicable, except that the provisions of Section 6.3(c) shall not
apply.
Section 6.7 Treatment of Indemnification Payments. Any indemnification
payments under this Agreement will be treated as an adjustment to the Purchase
Price for tax purposes.
ARTICLE VII. Employees and Employee Benefits.
Section 7.1 Employment. The Purchaser shall offer employment commencing as
of the Closing Date to all persons (except the two employees referred in Section
3.15(h) for whom the provided social security number failed to match the records
of the Social Security Administration) employed by any Seller with respect to
the Business immediately prior to the Closing Date ("Business Employees") (other
than such persons who are absent from work due to Disability, meaning any
illness or injury, or any other reason except vacation). Such offers of
employment shall include compensation and employee benefits as provided in
Section 7.2. Persons who accept such offers shall be referred to herein as
"Business Transitioned Employees."
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Section 7.2 Compensation and Employee Benefits. The Purchaser shall,
effective as of the Closing Date, provide to the Business Transitioned Employees
(i) base salaries at least equal to their base salaries on the date immediately
preceding the Closing Date and (ii) employee benefits under plans, programs and
arrangements substantially equivalent in the aggregate to either (A) those
provided pursuant to the plans, programs and arrangements (other than any
related to the equity securities of a Seller and other than the Employee
Agreements) of the applicable Seller in effect on the date immediately preceding
the Closing Date or (B) those provided to comparably situated employees of the
Purchaser (other than post retirement health and life insurance coverage and
defined benefit pension benefits); provided, however, that nothing herein shall
prevent, from and after the Closing Date, the amendment or termination of any
specific plan, program or arrangement or interfere with the Purchaser's right or
obligation to make such changes as are necessary to conform with applicable
Laws. Except as provided in Section 7.3, Business Transitioned Employees shall
be given credit for purposes of eligibility and vesting for all service with a
Seller to the same extent as such service was credited for such purpose by such
Seller, under each employee benefit plan, program or arrangement of the
Purchaser in which the Business Transitioned Employees are eligible to
participate; provided, however, that in no event shall the employees be entitled
to any credit to the extent that it would result in a duplication of benefits
with respect to the same period of service. Sellers will provide Form W-2s to
Business Transitioned Employees for the period prior to the Closing Date and
Purchaser will provide Form W-2s to Business Transitioned Employees for the
period on and after the Closing Date. Sellers agree to cause continued coverage
of Business Transitioned Employees and their eligible
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dependents under the Parent's medical, dental, life, disability and health
insurance plans through 12:00 PM midnight May 31, 2002. Purchaser agrees to
reimburse Parent for the amount of all claims, expenses and treatments incurred
by Business Transitioned Employees and their eligible dependents from the
Effective Benefits Time through 12:00 PM midnight on May 31, 2002 under Parent's
medical, dental and health plans. Purchaser shall make such reimbursements
promptly upon submission of Parent's statement therefor.
Section 7.3 Limitation on Service. If at any time Business Transitioned
Employees become eligible to participate in any plans of the Purchaser providing
post retirement health and/or life insurance coverage, only service with the
Purchaser after the Closing Date shall be credited for purposes of satisfying
the eligibility requirements under said plans. If at any time Business
Transitioned Employees become eligible to participate in any plans of Purchaser
providing post retirement health and/or life insurance coverage and/or defined
benefit pension benefits, Business Transitioned Employees shall be eligible only
for such coverage and/or benefits applicable to employees of Purchaser hired on
and after January 1, 2000.
Section 7.4 Medical, Health and Dental Plans.
(a) Effective as of the Closing Date, pursuant to Section 7.2,
Purchaser shall provide each Business Transitioned Employee with medical, dental
and health plan coverage. Purchaser shall cause each medical, dental or health
plan of the Purchaser in which the Business Transitioned Employees participate
to (i) waive any preexisting condition limitations for conditions covered under
the applicable medical, health or dental plans of Sellers, except that Purchaser
may require any Business Transitioned
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Employee or eligible dependent thereof who immediately prior to the Closing Date
is in the process of satisfying any similar limitations under such plans of any
Seller to fully satisfy the balance of the applicable time period for such
limitation under the medical, dental or health plans of the Purchaser, and (ii)
honor any deductible and out-of-pocket expenses due to co-insurance actually
incurred by the Business Transitioned Employees and their beneficiaries under
such plans during the portion of the calendar year prior to such participation
in a plan of the Purchaser; provided, however, that no such expenses shall be
carried over from any preceding calendar year.
(b) (i) Sellers shall be responsible for payment of any premiums for
all of the Sellers' welfare benefit plans, programs and arrangements provided to
the Business Employees as of the date immediately preceding the Closing Date
("Sellers' Welfare Benefit Programs") relating to periods prior to 12:01 AM
Eastern Time of the Closing Date (the "Effective Benefits Time") and for any
liability for all claims, expenses and treatments, including administrative
expenses related thereto, which are in fact covered and payable under the terms
of the Sellers' Welfare Benefit Program and incurred prior to the Effective
Benefits Time, irrespective of whether any such claim is filed or submitted
after the Effective Benefits Time.
(ii) Purchaser shall be responsible for payment of any premiums
relating to periods from and subsequent to the Effective Benefits Time for any
welfare benefit plans, programs and arrangements which Purchaser at its sole
discretion, subject to the requirements of Section 7.2 hereof, may provide to
the Business Transitioned Employees from and after the Effective Benefits Time
("Purchaser's Welfare Benefits Program") and for any liability for all claims,
expenses and treatments,
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including administrative expenses related thereto,
which are in fact covered and payable under the terms of Purchaser's Welfare
Benefits Program and incurred from and subsequent to the Effective Benefits
Time.
Section 7.5 Sellers' 401(k) Plan. As of the Closing Date, Sellers shall
cause each Business Transitioned Employee to be one hundred percent (100%)
vested in his or her accounts in the 401(k) plan maintained by Sellers in effect
on the date immediately preceding the Closing Date ("Sellers 401 (k) Plan").
Sellers and Purchaser agree to cooperate to accomplish, subject to applicable
law, the rollovers of cash, and any notes representing plan loans to
participants, distributed to Business Transitioned Employees participating in
Sellers' 401 (k) Plan and who to elect to make such rollovers, to a defined
contribution plan of Purchaser as soon as practicable following the Closing
Date. Any charges, fees or penalties imposed on or related to any investment
funds or other assets of Sellers' 401 (k) Plan resulting from or in connection
with any such distributions or in any manner related to the transactions
contemplated in this Agreement shall be paid by Sellers or charged to the
accounts of the Business Transitioned Employee in accordance with the terms of
the Sellers' 401(k) Plan and Purchaser shall not be responsible for any such
adjustments, charges, fees or penalties.
Section 7.6 Terminations or Layoffs.
(a) In the event of any termination or layoff by any Seller of any
employee of a Seller in respect to the Business prior to the Closing Date, such
Seller will comply fully with all applicable laws, including without limitation
any laws relating to employee notification (such as with the Worker Adjustment
and Retraining Notification Act of 1988 ("WARN ") and any related state laws of
the United States), and all laws
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relating to discrimination in employment or unfair employment practices, and
such Seller will be solely responsible for all costs related to such termination
or layoff of any such employee, including but not limited to severance expenses
(including without limitation any periodic or lump sum severance payments and
any employee benefits provided in connection with such severance payment), COBRA
continuation benefits, penalties, damages and attorney's fees related thereto.
(b) In the event of any termination or layoff by Purchaser of any
Business Transitioned Employee on or after the Closing Date, Purchaser will
comply fully with all applicable laws, including without limitation any laws
relating to employee notification (such as WARN and any related state laws in
the United States), and all laws relating to discrimination in employment or
unfair employment practices. Purchaser will be solely responsible for all costs
related to such termination or layoff of any Business Transitioned Employee,
including but not limited to severance expenses (including without limitation
any periodic or lump sum severance payments and any employee benefits provided
in connection with such severance payment), COBRA continuation benefits,
penalties, damages and attorneys' fees related thereto.
Section 7.7 Employee Agreements. If Sellers have entered into employment,
termination or retention agreements ("Employee Agreements") with any Business
Employee pursuant to which retention bonuses, or severance, or termination
payments or benefits may be paid in connection with the transactions
contemplated in this Agreement, Sellers will be solely responsible for all
payments and costs related to the Employee Agreements and the Purchaser shall
have no liability or responsibility for any such payments or costs.
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Section 7.8 Vacation. The Purchaser shall provide Business Transitioned
Employees with full credit for all accrued and unused, as of the Closing Date,
vacation benefits to the extent such accrued and unused vacation benefits are
reflected on the Closing Balance Sheet.
Section 7.9 COBRA. With respect to any benefits to which any Business
Transitioned Employees or former employees of Sellers with respect to the
Business or their spouses, former spouses, or other qualifying beneficiaries may
be entitled under COBRA by reason of qualifying events occurring on or prior to
the Closing Date, Sellers shall provide such benefits to any Business
Transitioned Employees and to any such former employees, their spouses, former
spouses and other qualifying beneficiaries from and after the Closing Date
through the remaining period of required coverage.
Section 7.10 Flexible Spending Accounts. Effective as of the Closing Date,
Purchaser shall provide Business Transitioned Employees with a flexible spending
account benefits plan (or plans) in accordance with Section 7.2. Following the
Effective Benefits Time, Sellers shall cause the accounts under its flexible
spending account plan for each Business Transitioned Employee to be transferred
to Purchaser's flexible spending account plan, and Purchaser agrees that such
accounts shall be available to each such Business Transitioned Employee in the
same manner they were available under Sellers' flexible spending account plan.
The transfer of such accounts shall be reflected on the Closing Balance Sheet,
taking into account on a net basis employee payroll deductions and claims paid
through the Effective Benefits Time.
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Section 7.11 Disability.
(a) Any Business Employee who is absent from work due to Long Term
Disability (meaning any Disability of six (6) months or longer duration as of
the date immediately preceding the Closing Date) shall be considered for rehire
by the Purchaser under the same terms as applicable to Business Transitioned
Employees at such time as his or her disability does not affect his or her
ability to perform the position held by such individual with the Business prior
to such Long Term Disability.
(b) Any Business Employee who, as of the Closing Date, is Short Term
Disabled (meaning any Disability of less than six (6) months duration as of the
date immediately preceding the Closing Date) and who after the Closing Date
continues disabled through the remainder of the six (6) month qualifying period
for the Sellers' employee benefit plans and arrangements applicable to Business
Employees who are on Long Term Disability shall, upon completion of such
qualifying periods, be treated and considered for all purposes of this Agreement
as a Business Employee absent from work due to Long Term Disability, effective
from and after the date of completion of such qualifying period.
(c) Any Business Employee, who as of the Closing Date, is Short Term
Disabled and who after the Closing Date ceases to be disabled prior to the
expiration of the six (6) month period which commenced upon the occurrence of
the Business Employees Disability, shall be offered employment by Purchaser upon
the same terms and conditions applicable to all other Business Employees, except
that for all purposes of this Article VII of this Agreement, the date such
Business Employee accepts such offer of employment shall be substituted as
appropriate for the "Closing Date."
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Section 7.12 Assistance. Each Seller agrees to use its best efforts to
assist Purchaser to enter into arrangements, to be effective from and after the
Closing Date, with respect to Purchaser's Welfare Benefit Plans with the current
service providers, administrators and insurers of such Seller's welfare benefit
plans, programs and arrangements. Sellers and Purchaser agree to cooperate fully
with respect to the actions necessary to effect the transactions contemplated in
this Article VII, including the provision of records (including payroll records)
and information as each may reasonably request from the other.
Section 7.13 No Assumption of Plans. With respect to the Business
Transitioned Employees, Purchaser is not assuming, and will not have any
responsibility for the continuation of any Plan, and Purchaser will not be
deemed to be a successor employer to either Seller with respect to any Plan. No
plan adopted or maintained by Purchaser with respect to the Business
Transitioned Employees will be deemed a successor plan of Seller.
Section 7.14 Purchaser's Actions. Nothing in this Article VII shall require
the continued employment of any person or prevent the Purchaser from taking any
action or refrain from taking any action which any Seller or any Seller
Associate, prior to the Closing Date, could have taken or refrained from taking.
Section 7.15 No Third Party Rights. No provision of this Article VII shall
create nor is intended to create nor shall be construed to confer: (i) any third
party beneficiary rights in any employee or former employee, or any beneficiary
or dependent thereof, of the Business, any Seller, any Seller Associate, or the
Purchaser in respect of continued employment or resumed employment or in respect
of any benefits that may be
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provided, directly or indirectly, under the employee benefit plans, program,
policy, practices, or arrangement of the Business, any Seller, any Seller
Associate, or the Purchaser whether prior to, on, or after the Closing Date; or
(ii) any rights, remedies, obligations, or liabilities, legal or equitable, on
any person, firm, corporation, organization, or other entity other than the
Sellers and the Purchaser (or their respective successors and assigns).
ARTICLE VIII. [Intentionally Left Blank]
ARTICLE IX. Conditions to Closing.
Section 9.1 Conditions Precedent to the Obligations of the Purchaser.
The obligations of Purchaser to consummate the purchase of assets
contemplated by this Agreement are subject to the fulfillment by Seller prior to
or at the Closing of each of the following conditions, any one or more of which
may be waived by Purchaser:
(a) No Injunctive Proceedings. No preliminary or permanent injunction
or other order (including a temporary restraining order) of any state or federal
court or other governmental agency which prevents the consummation of the
transactions which are the subject of this Agreement or prohibits Purchaser's
ownership of the Business shall have been issued and remain in effect.
(b) Representations and Warranties. All representations and warranties
of Sellers and Parent contained in this Agreement shall be true and correct in
all material respects as of the Closing Date.
(c) Performance of Agreements, Instruments of Transfer. Sellers shall
have fully performed in all material respects all obligations, agreements,
conditions and commitments required to be fulfilled by Sellers pursuant to the
terms hereof on or prior to
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the Closing Date, and Sellers and Parent shall have tendered to Purchaser the
documents, instruments and certificates required by Section 2.8 and Article X
hereof.
(d) Compliance Certificate. Sellers shall have delivered to Purchaser
its certificate, dated the Closing Date, executed on its behalf by its duly
authorized representative, as to the fulfillment of the conditions set forth in
Paragraphs (b) and (c) above.
(e) Material Changes. There shall not have been any material adverse
change in the business, financial condition or results of operations of any
Seller since December 31, 2001.
(f) Consents, etc. All authorizations, consents or approvals of any
and all governmental regulatory authorities necessary to the transfer and
assignment of the Purchased Assets in connection with the consummation of the
Closing shall have been obtained and be in full force and effect.
(g) Release of Liens. Sellers shall have delivered to Purchaser
evidence satisfactory to Purchaser of release by Bank of America, N.A. and any
other lender(s) of all Liens on the Purchased Assets.
(h) Escrow Agreement. Seller shall have entered into an Escrow
Agreement substantially in the form attached as Exhibit H hereto.
(i) Pollution Liability Insurance. Purchaser shall have obtained
pollution liability insurance acceptable to it with respect to the West Palm
Beach site and shall have received from or on behalf of Sellers $75,000 as a
contribution toward the premium for such insurance.
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Section 9.2 Conditions Precedent to the Obligations of Seller. The
obligations of Sellers to consummate the sale of assets contemplated pursuant to
this Agreement are subject to the fulfillment by Purchaser each of the following
conditions, any one or more of which may be waived by Sellers:
(a) Payment. Purchaser shall have delivered to Seller the payment the
Closing Payment.
(b) Representations and Warranties. All representations and warranties
of Purchaser shall be true and correct in all material respects as of the
Closing Date.
(c) Consents, etc. All authorizations, consents or approvals of any
and all governmental regulatory authorities necessary in connection with the
consummation of the Closing shall have been obtained and be in full force and
effect.
(d) No Injunctive Proceedings. No preliminary or permanent injunction
or other order (including a temporary restraining order) of any state or federal
court or any governmental agency which prevents the consummation of the
transactions which are the subject of this agreement or prohibits Purchaser's
ownership of the Business shall have been issued and remain in effect.
(e) Performance of Agreements, Instruments of Transfer. Purchaser
shall have fully performed in all material respects all obligations, agreements
and conditions required to be fulfilled by Purchaser pursuant to the terms
hereof on or prior to the Closing Date, and Purchaser shall have tendered to
Sellers any documents, instruments or certificates required by Section 2.8 and
Article X hereof.
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(f) Escrow Agreement. Purchaser shall have entered into an escrow
agreement substantially in the form attached as Exhibit H hereto.
Section 9.3 Cooperation of Parties. Each of the parties hereto agrees to
use its reasonable best efforts to bring about the satisfaction of the
conditions required to be performed by it hereunder prior to and at the Closing.
ARTICLE X. Closing Documents.
Section 10.1 Sellers' Obligations.
On the Closing Date, Sellers shall deliver to Purchaser physical possession
of all tangible Purchased Assets and shall execute and/or deliver to Purchaser
all of the following:
(a) Resolutions; Opinion of Counsel. Copies of resolutions of each
Seller certified by its respective Secretary or an Assistant Secretary,
authorizing the execution, delivery and performance of this Agreement and the,
in the case of the Sellers, transactions contemplated hereby, and a legal
opinion by counsel for Sellers and Parent in form reasonably satisfactory to
Purchaser.
(b) Xxxx of Sale. Bills of sale, duly executed by Sellers, in form and
substance reasonably satisfactory to Purchaser, sufficient to convey, transfer
and assign to Purchaser all right, title and interest of Sellers in and to the
Purchased Assets free and clear of liens, claims, encumbrances and security
interests in accordance with this Agreement.
(c) Assignments. Assignments of the Intellectual Property rights,
sales orders, Accounts Receivable, unfilled purchase orders, Contracts, personal
property leases, Real Property leases, Environmental Permits, and Licenses and
Permits, duly
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executed by the appropriate Seller, in form and substance reasonably
satisfactory to Purchaser.
(d) Books and Records. All books and records of Sellers and Parent
relating primarily or exclusively to the Business.
Section 10.2 Purchaser's Obligations.
At the Closing, Purchaser shall deliver to Parent for the benefit of
Sellers the following:
(a) Assumption Agreement. An assignment and assumption agreement, duly
executed by Purchaser, in form and substance reasonably satisfactory to counsel
for Sellers, sufficient to effect the assumption by Purchaser of the Assumed
Liabilities.
(b) Payment. Funds in the amounts and payable as set forth in Section
2.1 hereof.
(c) Resale Certificates. Resale certificates executed by Purchaser,
with respect to sale for resale exemption applicable to the Inventory being
transferred to Purchaser pursuant to the terms of this Agreement. If the
Purchaser does not deliver such certificates to Sellers and Parent at the
Closing, the Purchaser hereby agrees to deliver such certificates to Parent
promptly upon request of Parent.
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ARTICLE XI. Miscellaneous.
Section 11.1 Notices. Any notices or other communications required or
permitted hereunder shall be in writing and shall be given:
if to Purchaser, to:
Sanitaire Division of ITT Industries, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: President
Telecopy: (000) 000-0000
with a copy to:
ITT Fluid Technology
00 Xxxxxxxxxxxx Xxxx
Xxxxx 000
Upper Saddle River, New Jersey 07455
Attention: General Counsel
Telecopy: (000) 000-0000
if to Sellers or Parent to:
Waterlink, Inc.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: President
Telecopy: (000) 000-0000
with a copy to:
Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP
0000 XX Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
or such other address or telecopy number as such parties may hereafter specify
by notice to the other party. Each such notice, request or other communication
shall be effective (i) if given by telecopy, when such telecopy is transmitted
to the telecopy number specified
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in this Section 11.1 and the appropriate acknowledgment of receipt of such
telecopy is received or (ii) if given by any other means, when delivered at the
address specified in this Section 11.1.
Section 11.2 Transaction Expenses. Each party to this Agreement shall bear
and be responsible for all fees, costs and expenses (including, without
limitation, legal and accounting fees and expenses) incurred by such party with
respect to the negotiation of this Agreement and the consummation of the
transactions contemplated hereby.
Section 11.3 Bulk Transfer Laws. The parties hereto hereby waive compliance
with any provisions of the so-called "bulk transfer laws" (Article 6 of the
Uniform Commercial Code) of any relevant jurisdiction which may be applicable to
the transactions contemplated by this Agreement.
Section 11.4 Miscellaneous Taxes and Expenses. Any sales, use or other tax
or recording cost imposed upon the transfer of the assets and business to be
acquired by the Purchaser pursuant to this Agreement shall be paid by the
Seller. All ad valorem property taxes and all rentals, water, electricity, gas,
telephone and other similar and usual expenses in respect of the Business shall
be apportioned as of the Closing Date to the extent not provided for on the
Closing Balance Sheet.
Assessments, if any, for public improvements levied or assessed prior to
the date of this Agreement and for which a lessee is responsible shall be paid
and discharged by the Sellers.
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Section 11.5 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that neither party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other party hereto, except that the
Purchaser may assign, delegate or otherwise transfer its rights under this
Agreement to an Associate of the Purchaser, provided that such assignment,
delegation or transfer shall not relieve the Purchaser of its obligations or
liabilities hereunder.
Section 11.6 Governing Law. This Agreement shall be construed under and in
accordance with the laws of the State of New York, without giving effect to any
rules governing the conflicts of law.
Section 11.7 Disputes. Any controversy or claim arising out of this
Agreement or the Escrow Agreement, or the breach thereof, shall be settled by
arbitration before a single arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AAA"), and judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof; provided, however, the provisions of this Section 11.7
shall not apply with respect to controversies or claims arising out of the
provisions of Sections 2.4 and 6.2 or breaches thereof. Any such arbitration
shall be held in New York, New York. Each party thereto shall pay his own
expenses, and the fee of the arbitrator and the administrative fee of the AAA
shall be paid one half by the Purchaser and one half by the Seller. The
provisions of this Section 11.7 shall not be construed to limit the right or
obligation of an Indemnitor pursuant to Section 6.4 to participate in or assume
the defense of a Claim, nor to entitle an Indemnitor to relitigate in an
arbitration proceeding issues determined in a court proceeding.
Section 11.8 Entire Agreement; Third Party Rights. This Agreement and the
Schedules hereto constitute the entire understanding of the parties, supersede
any prior
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agreements or understandings, written or oral, between the parties with respect
to the subject matter thereof, and are not intended to confer upon any other
person any rights or remedies.
Section 11.9 Amendment; Waiver. This Agreement shall not be amended or
modified except-by written agreement executed by each of the parties hereto. No
provision hereof shall be deemed waived except in writing executed by the
waiving party.
Section 11.10 Effect of Captions. The captions in this Agreement are
included for convenience only and shall not in any way affect the interpretation
or construction of any of the provisions hereof.
Section 11.11 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
Section 11.12 Further Assurances. The parties hereto shall cooperate
reasonably with each other and with their respective representatives in
connection with any steps required to be taken as part of their respective
obligations under this Agreement, and shall (a) furnish upon request to each
other such further information; (b) execute and deliver to each other such other
documents; and (c) 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized representatives as of the day and year
first above written.
C'TREAT OFFSHORE, INC.
By:/s/Xxxxxxx X. Xxxxxxxxxx
Its: Chairman
WATERLINK TECHNOLOGIES, INC.
By:/s/Xxxxxxx X. Xxxxxxxxxx
Its: Chairman
WATERLINK, INC.
By:/s/Xxxxxxx X. Xxxxxxxxxx
Its: President
ITT INDUSTRIES, INC.
By:/s/Xxxxxx X. Xxxxxxxx
Its: Attorney In Fact
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