EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
SELAS CORPORATION OF AMERICA
AND
SELAS HEAT TECHNOLOGY COMPANY LLC
DATED AS OF MARCH 31, 2005
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made and dated as of March 31, 2005
(the "Agreement"), by and between Selas Corporation of America, a Pennsylvania
corporation ("Seller"), and Selas Heat Technology Company LLC, a Delaware
limited liability company ("Buyer").
BACKGROUND: Seller owns and operates a heat technology business based
in Dresher, Pennsylvania that manufactures and sells original equipment and
replacement gas-fired burners, air/gas mixers, flame arrestors and heat treat
equipment (the "Business"), including all of the outstanding capital stock of
Nippon Selas Co. Ltd., a Japanese company ("Nippon Selas"), and Selas
Waermetechnik GmbH, a German company ("XX Xxxxx"), representing all of the
ownership interests of Nippon Selas and XX Xxxxx (the "Interests").
The parties desire that Seller sell and Buyer buy substantially all of
Seller's assets used in the Business, including Nippon Selas and XX Xxxxx,
subject to the terms and conditions stated in this Agreement;
NOW, THEREFORE, INTENDING TO BE LEGALLY BOUND, and in
consideration of the mutual agreements contained herein, Seller and Buyer agree
as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Sale and Purchase. Subject to the terms and conditions
contained herein, at the Closing provided for in Section 1.6 hereof (the
"Closing"), Seller will sell, transfer, assign and convey to Buyer, and Buyer
will purchase, acquire and accept from Seller free and clear of any encumbrance,
lien or claim, all of Seller's right, title and interest in and to all of
Seller's property and assets, real, personal or mixed, tangible and intangible,
of every kind and description, wherever located used by Seller in the Business
including but not limited to the Specified Assets (as defined in Section 1.2)
(the "Assets"), but not including the Excluded Assets (as defined in Section
1.3), and Buyer shall assume the Assumed Liabilities (as defined in Section
1.4).
1.2 Specified Assets. "Specified Assets" means all of the
following assets of Seller:
1.2.1 Accounts Receivable. All of Seller's rights to
payment for goods sold, leased or licensed or for services rendered, whether
billed or unbilled, and any other receivable or right to payment or claim
related thereto of any nature whatsoever arising in connection with the
Business, including but not limited to those items as set forth on Section
1.2.1. of the Disclosure Schedule ("Accounts Receivable").
1.2.2 Tangible Assets. All of Seller's trade fixtures,
production equipment, information technology equipment, software and office
equipment used in the Business including such items located at the premises
occupied by the Seller at 0000 X. Xxxxxxxx Xxxx, Xxxxx Xxxxxx, Xxxxxxxxxxxx, XXX
(the "Dresher Property") or any premises occupied by Nippon Selas or XX Xxxxx,
including but not limited to those items as set forth on Section 1.2.2. of the
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Disclosure Schedule ("Tangible Assets"). The Tangible Assets being acquired by
Buyer shall also include any claim Seller had, has or may have pursuant to any
warranty, claim for refund or other right related to any Tangible Asset.
1.2.3 Inventory. All of Seller's raw materials, supplies,
work in process, finished goods, office supplies, parts, and other inventory of
any nature whatsoever used in the Business, including but not limited to those
items as set forth on Section 1.2.3. of the Disclosure Schedule ("Inventory").
The Inventory being acquired by Buyer shall also include any claim Seller had,
has or may have pursuant to any warranty, claim for refund or other right
related to any Inventory.
1.2.4 Contracts. All of Seller's rights under the
contracts, agreements, licenses, leases, notes, guarantees and other
instruments, arising in connection with the Business, including but not limited
to those items as set forth on Section 1.2.4. of the Disclosure Schedule, and
including any claims of any nature that Seller had, has or may have against
third-parties related thereto (collectively, "Assigned Contracts").
1.2.5 Intangibles. All of Seller's rights in and to the
tradename Selas Corporation of America and the other names, service marks,
trademarks, tradenames, logos, slogans, patents, copyrights, trade secrets and
similar intangible assets used in the Business (including any registrations or
applications therefor), including but not limited to those items as set forth on
Section 1.2.5. of the Disclosure Schedule, and including any claims of any
nature that Seller had, has or may have against third-parties related thereto.
("Intangibles").
1.2.6 Interests. All of Seller's Interests in Nippon Selas
and XX Xxxxx.
1.2.7 Records and Goodwill. All of Seller's books and
records arising in connection with the Business, all of Seller's rights in
drawings, plans and specifications related to the Business, customer and
prospect lists, information, files and records, correspondence, data, and other
information pertaining to the Business, whether recorded on paper, computer
tapes or disks, or other media of any nature, all of Seller's rights in and to
all advertising, promotional and marketing materials for the Business, all
telephone numbers and telephone listings and websites used by Seller with
respect to the Business (all of which telephone numbers and websites are listed
on Section 1.2.7 of the Disclosure Schedule), all of Seller's rights to solicit,
sell to, and do business with all of Seller's customers and suppliers and all of
Seller's goodwill with respect to the Business.
1.2.8 Prepaid Expenses. All of Seller's prepaid expenses
with respect to the Business and any claim or right appurtenant thereto,
including but not limited to those as set forth on Section 1.2.8 of the
Disclosure Schedule ("Prepaid Expenses"). Section 1.2.8 of the Disclosure
Schedule shall include a list of any Prepaid Expenses that are not transferable
describing the reason therefor. Any such nontransferable prepaid expenses set
forth in Section 1.2.8 to the Disclosure Schedule shall not be included in the
definition of Prepaid Expenses.
1.3 Excluded Assets. Anything in Section 1.2 to the contrary
notwithstanding, the Assets do not include: (a) Seller's cash and cash
equivalents (on hand, in the bank or invested)
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other than cash and cash equivalents of Nippon Selas and XX Xxxxx in an amount
up to $600,000, (b) deposits (however held) (c) any nontransferable prepaid
expenses, premiums or other amounts described as such on Section 1.2.8 of the
Disclosure Schedule, (d) any of Seller's claims, causes of actions, rights to
refunds and other legal rights and remedies, whether or not known at the Closing
Date (as hereinafter defined), related to Seller's ownership of the Assets
and/or operation of the Business, other than as referenced in Section 1.2 as
being included in the Specific Assets, (e) any Accounts Receivable to the extent
that they have been collected, or any finished goods in Inventory that have been
sold, transferred, or otherwise disposed of, as applicable, since the date of
the applicable schedule in the ordinary course of business consistent with
Seller's past practice, (f) any insurance policy, (g) Seller's corporate
charter, qualifications to conduct business as a foreign corporation,
arrangements with registered agents relating to foreign qualifications, taxpayer
and other identification numbers, seals, minute books, stock transfer books,
blank stock certificates, and other documents relating to the organization,
maintenance, and existence of Seller as a corporation, (h) the capital stock or
other equity interest in any subsidiary of the Seller or any other entity other
than Nippon Selas or Selas SW, and (i) any of the rights of Seller under this
Agreement, the Guaranty (as defined in Section 7.2(h)) (or under any side
agreement between Seller on the one hand and Buyer and/or Parent (as defined in
Section 7.2(h)) on the other hand entered into on or after the date of this
Agreement) or any Material Contracts (as defined in Section 3.17) other than the
Assigned Contracts.
1.4 Assumed Liabilities. "Assumed Liabilities" means (a) all
liabilities and obligations of Seller under the Assigned Contracts excluding any
monetary damages arising from Seller's failure to timely perform any Assigned
Contract prior to the Closing Date, (b) all accounts payable with respect to the
Business that arise from bona fide transactions in the ordinary course of
business consistent with Seller's past practice in such amounts as set forth on
the December 31, 2004 Balance Sheet as updated and finalized on the Closing
Balance Sheet as finally determined pursuant to Section 2.2.3 hereof, (c) all
accrued liabilities as described and in such amounts as set forth on the
December 31, 2004 Balance Sheet as updated and finalized on the Closing Balance
Sheet as finally determined pursuant to Section 2.2.3 hereof, (d) all customer
advance payments and guaranteed obligations with respect to the Assigned
Contracts as described and in such amounts as set forth on the December 31, 2004
Balance Sheet as updated and finalized on the Closing Balance Sheet as finally
determined pursuant to Section 2.2.3 hereof, (e) any other liabilities and
obligations in such amounts as set forth on the Closing Balance Sheet as finally
determined pursuant to Section 2.2.3 hereof, (f) except as provided in Section
5.7(e), the obligations and liabilities of the Seller under the Assumed Plans
(as defined in Section 5.7(e)) and (g) accrued but unpaid salary, vacation,
holiday and sick pay as of the Closing Date payable to employees of Seller who
are hired by Buyer and to employees of Nippon Selas and XX Xxxxx in such amounts
as set forth on the Closing Balance Sheet as finally determined pursuant to
Section 2.2.3 hereof.
1.5 No Other Liabilities. Buyer does not assume, and does not
purchase the Assets subject to, any debts, liabilities or obligations of Seller
of any nature, known or unknown, fixed or contingent, except the Assumed
Liabilities. All liabilities of Seller, unless and to the extent expressly
included as an Assumed Liability according to the terms of Section 1.4, shall be
retained, paid, performed and discharged solely by Seller. Further, the parties
agree that, unless
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and to the extent assumed by Buyer as an Assumed Liability according to the
terms of Section 1.4, it is their intention that neither party shall assume any
liability of the other party by virtue of any theory of transferee or successor
liability such as "de facto merger," "continuity of enterprise", the "product
line exception" or other similar principles of law.
1.6 Closing. The Closing of the transactions contemplated by this
Agreement shall take place on March 31, 2005 at the offices of Blank Rome LLP,
One Xxxxx Square, Philadelphia, Pennsylvania, or on such other date and at such
other time or place as the parties may agree. The date of the Closing is
referred to herein as the "Closing Date". The Closing shall be effective as of
5:00 p.m. Eastern Time on March 31, 2005.
ARTICLE II
CONSIDERATION FOR ASSETS
2.1 Purchase Price. The total purchase price payable by Buyer to
Seller at Closing for the Assets is $3,671,000 (the "Cash Purchase Price"),
subject to adjustment as provided in Section 2.2, plus the assumption by Buyer
of the Assumed Liabilities ("Purchase Price"). Subject to the conditions set
forth in this Agreement, the Cash Purchase Price shall be paid by Buyer to
Seller at Closing as follows (i) $2,771,000 shall be paid by wire transfer of
immediately available funds to an account designated in writing by Seller, and
(ii) $900,000 shall be paid by Buyer's subordinated promissory note
substantially as set forth in Exhibit 1.3 (the "Promissory Note").
2.2 Net Total Assets Adjustment. In the event that the Net Total
Assets (as defined in Section 2.2.1) as of the Closing Date (the "Closing Net
Total Assets") is less than $2,430,000 (the "Target Net Total Assets"), the
Purchase Price shall be reduced by the amount by which the Target Net Total
Assets exceeds the Closing Net Total Assets. In the event that the Closing Net
Total Assets is more than the Target Net Total Assets, the Purchase Price shall
be increased by the amount by which the Closing Net Total Assets exceeds the
Target Net Total Assets. The adjustment to the Purchase Price effected by this
Section is referred to as the "Purchase Price Adjustment."
2.2.1 Net Total Assets. For purposes of this Agreement, the
term "Net Total Assets" shall mean the difference between the book value of the
Assets acquired by Buyer less the book value of the Assumed Liabilities assumed
by Buyer, in each case determined in accordance with United States generally
accepted accounting principles consistently applied ("GAAP") and the Seller's
historical accounting practices consistently applied. Set forth in Section 3.6
of the Disclosure Schedule is Seller's unaudited balance sheet for the Business
as of December 31, 2004 (the "December 31, 2004 Balance Sheet"), which shall be
used as an example of the method of calculation and the categories that shall be
used in the determination of the Closing Net Total Assets. For purposes of
determining the book value of Assets and Assumed Liabilities, the following
shall apply:
(a) Unless otherwise provided, book values of
the Business, Nippon Selas and Selas SW shall be determined as of the Closing
Date;
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(b) The book value of the Accounts Receivable
included within the Assets shall include a reasonable reserve for doubtful
accounts;
(c) The book value of the Inventory included
within the Assets shall be based on the value as reported on the December 31,
2004 Balance Sheet, as adjusted by purchases and sales of such Inventory in the
ordinary course of business of Seller since such date as reported in the
Seller's books and net of reserves for obsolete Inventory recorded since such
date on a monthly basis in accordance with past practices;
(d) The book value of the Intangibles included
within the Assets shall be as set forth in the November 30, 2004 Balance Sheet
attached to the Letter of Intent (as defined in Section 10.9);
(e) The book value of the Pre-Paid Expenses
included within the Assets shall be the actual amount paid by Seller in the
ordinary course of business of the Seller as reported in the Seller's books and
records but only to the extent the benefits of those prepaid expenses inure to
Buyer's benefit following Closing;
(f) The book value of the liabilities under the
Defined Benefit Pension Plans (as defined in Section 5.7(e)) shall be deemed to
be $1,529,000 regardless of the actual liabilities thereunder;
(g) [intentionally omitted];
(h) The book value of the Interests shall be
equal to the net worth of Nippon Selas and Selas SW as of the Closing Date;
(i) The book value of the liabilities for the
accounts payable included within the Assumed Liabilities pursuant to Section
1.4(b) shall be as set forth on the December 31, 2004 Balance Sheet as updated
to reflect accounts payable incurred or paid by Seller in the ordinary course of
business since the date thereof;
(j) The book value of the liabilities for
customer advance payments and deposits and guaranteed obligations included
within the Assumed Liabilities pursuant to Section 1.4(d) shall be as set forth
on the December 31, 2004 Balance Sheet as updated to reflect any actual amounts
paid, incurred or guaranteed in the ordinary course of business of Seller since
the date thereof;
(k) The book value of the liabilities for
accrued liabilities included within the Assumed Liabilities pursuant to Section
1.4(c) shall be as set forth on the December 31, 2004 Balance Sheet as updated
to reflect any accrued liabilities incurred or paid by Seller in the ordinary
course of business since the date thereof;
(l) The book value of the liabilities relating
to warranty liabilities and Assigned Contracts that are included in the Assumed
Liabilities pursuant to Section 1.4(a) shall be as set forth on the December 31,
2004 Balance Sheet as updated to reflect any such liabilities
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incurred, paid or remedied by Seller in the ordinary course of business since
the date thereof, except as specifically provided in Section 2.2.1(l) of the
Disclosure Schedule.
2.2.2 Determination. Within forty-five (45) days after the
Closing Date, Seller shall prepare a balance sheet as of the Closing Date or
another date agreed on by Buyer and Seller (the "Closing Balance Sheet"). The
Closing Balance Sheet: (i) shall contain line items substantially consistent
with the line items in December 31, 2004 Balance Sheet, (ii) shall be prepared
in accordance with Section 2.2.1 and otherwise in accordance with GAAP and the
Seller's historical accounting practices, consistently applied as reflected in
the December 31, 2004 Balance Sheet, (iii) shall be accompanied by a certificate
of the chief financial officer of the Seller certifying to the effect of clause
(ii) above and a calculation of the Closing Net Total Assets and the Purchase
Price Adjustment certified by the Seller's chief financial officer (the "Net
Total Assets Certificate"). The Net Total Assets Certificate shall provide in
reasonable detail each of the totals and categories by which the determination
of the Closing Net Total Assets was made.
2.2.3 Right to Object. Seller shall make available to Buyer
all work papers and other materials as Buyer may reasonably require for Buyer's
review of the proposed Closing Balance Sheet. If Buyer has any objections to the
calculation of the Closing Balance Sheet, Closing Net Total Assets or the
Purchase Price Adjustment, Buyer shall deliver to Seller within thirty (30) days
after receiving the Net Total Assets Certificate a detailed written statement
describing such objections. Buyer and Seller will negotiate in good faith in an
effort to resolve such objections between themselves. If the parties are unable
to finally resolve such objections within thirty (30) days after Seller has
received the statement of objections, Buyer and Seller will select a mutually
acceptable, independent accounting firm (the "Accountant") to resolve any
remaining objections and/or, if mutually agreed to by Buyer and Seller, conduct
an audit of the Closing Net Total Assets as of the Closing Date. If Buyer and
Seller cannot agree on the choice of an accounting firm, they will select by lot
a nationally recognized accounting firm, other than any independent accounting
firm regularly engaged or then engaged by Buyer or Seller, or any of their
affiliates, to perform their respective audits or for tax or other services. The
Accountant shall be jointly instructed by Buyer and Seller to finally determine
the amount(s) in dispute. The Accountant shall deliver to each of Buyer and
Seller its determination within thirty (30) days after receiving the joint
instructions of Buyer and Seller, and the determination of the Accountant will
be set forth in writing and will be conclusive and binding upon the parties. The
fees and expenses of the Accountant shall be borne by Seller and Buyer equally.
The date upon which the Closing Balance Sheet, Closing Net Total Assets and
Purchase Price Adjustment becomes final and binding (either by Buyer's failure
to so deliver an objection notice, or agreement of Buyer and Seller, or final
determination of the Accountant) shall be the "Final Settlement Date."
2.2.4 Payment of Purchase Price Adjustment. Any Purchase
Price Adjustment shall be payable to Buyer or Seller, as applicable, within ten
(10) business days after the Final Settlement Date by wire transfer of
immediately available funds to an account designated by the recipient provided,
however, that, in lieu of paying any Purchase Price Adjustment payable by
Seller, Seller shall have the right to set-off any Purchase Price Adjustment up
to $100,000 payable by Seller to Buyer by reducing the principal amount due
under the Promissory Note in an amount equal to the Purchase Price Adjustment
(but not more than $100,000), beginning with the
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first installment of principal due thereunder and continuing with the next
installment in the order of their maturity, and any Purchase Price Adjustment in
excess of $100,000 shall be paid by Seller to Buyer as set forth above.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania. Nippon Selas is a company duly organized, validly existing and in
good standing under the laws of Japan. XX Xxxxx is a company duly organized,
validly existing and in good standing under the laws of Germany. Each of Seller,
Nippon Selas and XX Xxxxx has all requisite corporate and other power and
corporate authority to own, lease and operate its properties and to carry on its
operations as now being conducted. Neither Nippon Selas nor XX Xxxxx has any
direct or indirect subsidiaries or otherwise owns any security in any entity.
Each of Seller, Nippon Selas and XX Xxxxx is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the property owned,
leased or operated by Seller, Nippon Selas or XX Xxxxx, or the nature of the
business conducted by Seller, Nippon Selas or XX Xxxxx makes such qualification
necessary, except in any such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect (as herein defined). Seller has previously made available to Buyer
complete and correct copies of the certificates of incorporation, by-laws or
other organizational documents of Seller, Nippon Selas and XX Xxxxx (in each
case an entity's "Governing Documents"), as currently in effect. A "Material
Adverse Effect" shall mean a material adverse effect on the assets, results of
operations or financial condition of the Business taken as a whole, other than
matters (a) relating to generally applicable economic conditions, or to the
industry of the Business in general, (b) resulting from the announcement of this
Agreement or the announcement of the transactions contemplated by this
Agreement, (c) resulting from the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby or (d) resulting from
Buyer's negotiation of a new collective bargaining agreement with the Local
Union 1191 (UAW) and International Union, United Automobile, Aerospace and
Agricultural Implement Workers of American, UAW ("Union"). Seller has previously
made available to Buyer complete and correct copies of all stock records and
minute books of Nippon Selas and XX Xxxxx, which stock records and minute books,
to Seller's knowledge, contain accurate and complete records in all material
respects of all security holders and all meetings held of, and corporate action
taken by, the shareholders, the board of directors and committees of the board
of directors of such entities at which any material action was taken. At the
Closing, all of those books and records will be in the possession of Nippon
Selas and XX Xxxxx as applicable.
3.2 Authorization. Seller has the capacity to execute and deliver
this Agreement and consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Seller, has been duly
authorized by all necessary corporate action by Seller and constitutes a valid
and binding agreement of Seller, enforceable against Seller in accordance with
its terms. Each of the other agreements, documents and instruments to be
executed and delivered
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by Seller pursuant hereto, when executed and delivered, will have been duly
authorized by all necessary action by Seller's shareholders and/or board of
directors and will constitute, a valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms, except that (a) such
enforcement may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other laws, now or hereafter in effect,
relating to or limiting creditors' rights generally, and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
3.3 Interests. Set forth in Section 3.3 of the Disclosure Schedule
is the type and number of authorized securities of Nippon Selas and XX Xxxxx,
and the total number of such securities of each type that are issued and
outstanding (the "Interests"). All of the Interests are validly issued, fully
paid and non-assessable and free of preemptive rights. There are no outstanding
securities convertible into, exchangeable for, or carrying the right to acquire,
equity securities of either of the Nippon Selas or XX Xxxxx, nor are there any
subscriptions, warrants, options, rights or other arrangements or commitments
(other than this Agreement) which could obligate the either of Nippon Selas or
XX Xxxxx to issue or Seller to sell any of equity securities of either of Nippon
Selas or XX Xxxxx.
3.4 Ownership of the Interests. Seller is the record and
beneficial owner of the Interests, which comprise all of the issued and
outstanding shares of all classes of capital stock of Nippon Selas and XX Xxxxx.
Except as set forth in Section 3.4 of the Disclosure Schedule, Seller has good
title to the Interests, free and clear of all liens, claims, options, security
interests, restrictions, voting agreements, "adverse claim" (within the meaning
of Section 8-102 of the Uniform Commercial Code) or any other encumbrance, both
known and unknown, other than restrictions arising solely under United States
federal and state securities laws. Seller will transfer to the Buyer at Closing,
good title to the Interests, free and clear of all liens, claims, options,
security interests, restrictions, voting agreements or any other encumbrance,
both known and unknown, other than restrictions solely arising under United
States federal and state securities laws or other encumbrances.
3.5 Consents and Approvals: No Violations. Except as set forth in
Section 3.5 of the Disclosure Schedule, the execution, delivery and performance
of this Agreement and the related agreements and the consummation of the
transactions contemplated by them: (a) do not and will not violate provisions of
law applicable to Seller, Nippon Selas, XX Xxxxx; (b) do not and will not
conflict with, result in the breach or termination of any provision of or
constitute a default under (in each case whether with or without the giving of
notice or the lapse of time or both) the certificate of incorporation, by-laws
or other organizations of any of Seller, Nippon Selas or XX Xxxxx, respectively,
or any indenture, mortgage, security, agreement, lease, deed of trust; other
Material Contract (as defined in Section 3.17), any Permit (as defined in
Section 3.24) or any order, judgment, arbitration award, or decree to which
Seller, Nippon Selas or XX Xxxxx is a party or by which any of them or any of
their respective assets and properties are bound; (c) do not and will not result
in the creation of any encumbrance on any of the Assets; (d) do not and will not
require the approval, authority or consent of or filing by Seller, Nippon Selas
or XX Xxxxx with, or notification to, any federal, state or local court,
authority, or governmental or regulatory body or agency, or any other
corporation, partnership, individual, or other entity;
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excluding from the foregoing clauses (b), (c) and (d), such conflicts, breaches,
terminations, defaults, encumbrances or failures to obtain approvals,
authorities, or consents or make filings or give notifications, which
individually or in the aggregate would not have a Material Adverse Effect
(excluding clause (c) as set forth in the definition of Material Adverse Effect
for the purpose of this representation) and would not adversely affect the
ability of Seller to consummate the transactions contemplated by this Agreement;
and (e) do not and will not result in any shareholder of Nippon Selas or XX
Xxxxx having the right to exercise dissenters' appraisal rights.
3.6 Financial Statements. Attached to Section 3.6 of the
Disclosure Schedule is a copy of the December 31, 2004 Balance Sheet. Except as
disclosed in Section 3.6 of the Disclosure Schedule, the December 31, 2004
Balance Sheet has been prepared in accordance with generally accepted accounting
principles consistently applied ("GAAP") and Seller's customary accounting
policies and practices and fairly presents the financial condition of Seller
with respect to the Business (on a consolidated basis with Nippon Selas and XX
Xxxxx), as of December 31, 2004.
3.7 Absence of Undisclosed Liabilities. Except (a) for liabilities
and obligations set forth on the December 31, 2004 Balance Sheet or current
liabilities incurred in the ordinary course of business since December 31, 2004
and recorded in the books and records of the Business, (b) as otherwise
disclosed herein or in Section 3.7(b) of the Disclosure Schedule and (c)
liabilities incurred since December 31, 2004 in the ordinary course of business
and recorded in the books and records of the Business, Seller, with respect to
the Business, Nippon Selas and XX Xxxxx do not have and have not incurred any
liabilities or obligations (whether direct, indirect, accrued or contingent) in
excess of $35,000, individually or in the aggregate, that would be required to
be reflected or reserved against in a balance sheet of the Business prepared in
accordance with GAAP as used in preparing the December 31, 2004 Balance Sheet.
3.8 Absence of Material Adverse and Other Changes. Except as set
forth in Section 3.8 of the Disclosure Schedule or as otherwise contemplated by
this Agreement, since December 31, 2004, there has been no change in the assets,
business prospects, results of operations or financial condition of the
Business, Nippon Selas or XX Xxxxx or the Assets that has had a Material Adverse
Effect and to Seller's knowledge no event has occurred or circumstance exists
that may result in such a Material Adverse Effect.
3.9 Title, Ownership and Related Matters.
(a) As of the date hereof, Seller, Nippon Selas,
and XX Xxxxx do not own or hold any option to acquire any real property relating
to the Business.
(b) Seller, Nippon Selas and XX Xxxxx have, or
will as of the Closing have, good title to, or rights by license, lease or other
agreement to use (each of which is identified in Section 1.2.4. of the
Disclosure Schedule), all the Assets or in the case of Nippon Selas or XX Xxxxx
their assets (or rights thereto) necessary to permit Seller, Nippon Selas, and
XX Xxxxx to conduct the Business as currently conducted, except as set forth in
Section 3.9(b) of the Disclosure Schedule.
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(c) Except as set forth in Section 3.9(c) of the
Disclosure Schedule, all Assets owned by Seller are sold to Buyer free and clear
of all liens or encumbrances and all assets owned by Nippon Selas and XX Xxxxx
are free and clear of all liens or encumbrances.
(d) To knowledge of Seller: (i) except as
disclosed in Section 3.9(d) of the Disclosure Schedule, all material items of
tangible personal property used by Seller in the Business or used by Nippon
Selas or XX Xxxxx is in the possession of such party and (ii) the Assets and the
assets of Nippon Selas and XX Xxxxx constitute all of the assets necessary to
permit Seller, Nippon Selas and XX Xxxxx to conduct the Business as currently
conducted in all material respects.
3.10 Leases.
(a) Section 3.10(a) of the Disclosure Schedule
lists all real property leases and subleases for space occupied by Seller,
Nippon Selas, and XX Xxxxx (the "Leased Property") relating to the Business
(collectively, the "Leases"). True and complete copies of the Leases and all
written amendments and agreements relating thereto have been made available to
Buyer. All of the Leases are valid, binding and enforceable in accordance with
their terms, and none of Seller, Nippon Selas, and XX Xxxxx nor, to the
knowledge of Seller, the other party to any Lease has failed to comply in all
material respects or is in default under such Lease. To the Seller's knowledge,
the use to which all such Leased Property is being put by Seller, Nippon Selas
and XX Xxxxx is in compliance with all applicable laws and regulations in all
material respects.
(b) Section 3.10(b) of the Disclosure Schedule
lists all leases or other agreements or rights under which any of Seller, Nippon
Selas, and XX Xxxxx are the lessee of, or hold or operate, any machinery,
equipment, vehicles or other tangible personal property owned by a third party
except those that are terminable by such company without penalty on 30 or fewer
days notice or that provide for annual rental payments of less than $25,000.
3.11 Intellectual Property.
(a) Except as set forth in Section 3.11(a) of
the Disclosure Schedule (i) to the Seller's knowledge, the conduct of the
Business does not infringe, and has not infringed since January 1, 2000, upon
any intellectual property right of any third party in any material respect, and
(ii) there are no pending, or threatened in writing, proceedings or litigation
or other adverse written claims by any person against the use by Seller, Nippon
Selas or XX Xxxxx of any Intangibles which are owned or licensed by Seller,
Nippon Selas or XX Xxxxx and used in the operation of the Business as currently
conducted.
(b) Except as set forth in Section 3.11(b) of
the Disclosure Schedule, (i) Seller, Nippon Selas and XX Xxxxx own free and
clear of any lien, encumbrance or claim of right or have valid licenses or other
rights (each of which is identified in Section 1.2.5 of the Disclosure Schedule)
to use the Intangibles necessary to permit Seller, Nippon Selas and XX Xxxxx to
conduct the Business operations as currently conducted in all material respects,
(ii) all maintenance fees and other filings necessary for the preservation of
any patents and trademarks
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set forth in Section 1.2.5 of the Disclosure Schedule included in the
Intangibles that are registered with the United States Patent and Trademark
Office and, to the Seller's knowledge, any foreign counterpart set forth on
Schedule 1.2.5, that are material to the Business have been so filed and paid,
or if not paid, are not in default and will be accrued on the Closing Balance
Sheet (it being understood that filing fees and other filings with respect to
patents and trademarks marked as "abandoned" in Section 3.12 of the Disclosure
Schedule have not been made) and (iii) all registrations for the United States
Trademarks set forth on Schedule 1.2.5 of the Seller, and, to Seller's
knowledge, any foreign counterpart set forth in Schedule 1.2.5, are valid and
existing.
(c) Section 1.2.5 of the Disclosure Schedule
completely and accurately lists (including the name of the owner) all of the
following as relates to the Business: (i) all business names, trade names,
registered and unregistered trademarks and applications for registration of the
same (identified by jurisdiction and application or registration number); (ii)
all patents and patent applications (identified by jurisdiction and application
or registration number) and inventions and discoveries that may be patentable;
(iii) all registered copyrights or applications therefor (identified by
jurisdiction and application or registration number), unregistered copyrights in
both published works and unpublished works that are material to the Business;
(iv) all software (other than non-customized software generally available for
off-the-shelf purchase for under $5,000); and (vi) all Internet web sites and
Internet domain names. The Intangibles constitute all of the intellectual
property necessary to permit Seller, Nippon Selas and XX Xxxxx to conduct the
Business operations as currently conducted in all material respects.
(d) Other than as set forth in Section 3.11(d)
of the Disclosure Schedule (i) no action has been initiated or claim been made
by Seller, Nippon Selas or XX Xxxxx relating to any third party infringing or
violating any of Seller's, Nippon Selas' or XX Xxxxx' rights in or to any of the
Intangibles, (ii) to Seller's knowledge, no facts or circumstances exist that
are reasonably likely to give rise to any such action or claim.
3.12 Accounts Receivable. All accounts receivable of the Business
that are reflected on the December 31, 2004 Balance Sheet including all accounts
receivable on Section 3.12 of the Disclosure Schedule with respect to accounts
receivable of Nippon Selas and XX Xxxxx (a) represented valid obligations
arising from sales actually made or services actually performed in the ordinary
course of business and are subject to no valid offsets or counterclaims, and (b)
have been so determined in accordance with GAAP. Except as disclosed on Section
3.12 of the Disclosure Schedule, all accounts receivable of Seller, with respect
to the Business, Nippon Selas or XX Xxxxx that will be reflected on the Closing
Balance Sheet as finally determined in accordance with Section 2.2.3: (a) will
represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business and will be subject to no
valid offsets or counterclaims, (b) will be so determined in accordance with
GAAP, and (c) to the knowledge of Seller, except to the extent that a reserve
against the possible uncollectibility of such accounts receivable is established
and reflected in the Closing Balance Sheet as finally determined in accordance
with Section 2.2.3, all of such accounts receivable will be fully collectible
within 90 days of the date they become due and payable (or the date set forth on
Section 3.12 of the Disclosure Schedule with respect to the particular accounts
receivable of Nippon Selas specified thereon) in accordance with Seller's
ordinary practice and without resort to legal proceedings at the aggregate
recorded amount thereof as shown on the Closing Balance
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Sheet as finally determined in accordance with Section 2.2.3 (or on Section 3.12
of the Disclosure Schedule with respect to particular accounts receivable of
Nippon Selas), except for the reserves, if any, allocable thereto shown on such
Closing Balance Sheet. Except as disclosed on Section 3.12 of the Disclosure
Schedule, no claim has been made in writing, or to Seller's knowledge is
threatened, against Seller, Nippon Selas or XX Xxxxx objecting to the validity,
scope or right of payment of any account receivable.
3.13 Inventory. All inventory of the Business that is reflected on
the December 31, 2004 Balance Sheet has been determined in accordance with GAAP.
The book value of the inventory reflected on the December 31, 2004 Balance Sheet
was based on quantities determined from the Business' perpetual inventory
records, and valued at the lower of cost (determined on a first-in, first-out
basis) or market value and on a basis consistent with that of prior years. All
inventory of the Business that will be shown on the Closing Balance Sheet as
finally determined in accordance with Section 2.2.3, taken as a whole, to the
Seller's knowledge is not excessive, but is reasonable in light of the present
circumstances of the Seller, Nippon Selas and XX Xxxxx and will consist of items
of a quality and quantity useable and saleable in the ordinary course of the
business without markdown or discount, and will be merchantable and fit for
their particular purpose. The Closing Balance Sheet as finally determined in
accordance with Section 2.2.3 will reflect adequate reserves for obsolete and
slow-moving items and items below standard quality (which in any event will not
exceed normal commercial standards in amount), which will reduce the carrying
value of inventory, taken as a whole, to the lower of cost or net realizable
market value. All Inventory is owned by Seller, Nippon Selas or XX Xxxxx, as
applicable, free and clear of any lien, encumbrance or claim of right, other
than sales by Seller, Nippon Selas or XX Xxxxx of finished goods made in the
ordinary course of business
3.14 [Intentionally Omitted]
3.15 Litigation. Except as set forth in Section 3.15 of the
Disclosure Schedule: (a) there is no claim, charge, complaint, action, suit,
proceeding or governmental investigation pending or, to the knowledge of Seller,
threatened against Seller with respect to the Business or the Specified Assets,
Nippon Selas or XX Xxxxx, by or before any court, governmental or regulatory
authority, state, local, federal or foreign, or by any third party, including
but limited to employees of Selas, Nippon Selas or XX Xxxxx, and (b) to the
knowledge of Seller, no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any such claim, charge, complaint, action, suit, proceeding or investigation.
3.16 Compliance with Applicable Law. Except as set forth on Section
3.16 of the Disclosure Schedule, to the knowledge of Seller, each of Seller with
respect to the Business, Nippon Selas and XX Xxxxx are in compliance with all
applicable laws, ordinances, orders, standards, executive orders, rules and
regulations of any federal, state, local or foreign governmental authority
applicable to such company, except for violations, if any, which would not have
a Material Adverse Effect including, but not limited to any and all laws,
ordinances, orders, standards, executive orders, rules and regulations of any
federal, state, local or foreign governmental authority regulating safety in the
work place, prohibiting discrimination, requiring accommodation, requiring
affirmation action, regulating wages, overtime hours of work and child labor,
regulating labor relations, taxes, regulating environmental issues, and
regulating
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securities. Neither Seller nor Nippon Selas nor XX Xxxxx has received, at any
time since January 1, 2003, any notice or other communication (whether oral or
written) from any governmental authority regarding any actual, alleged, possible
or potential violation of, or failure to comply with, any term or requirement of
any such laws, ordinances, rules or regulations.
3.17 Certain Contracts and Arrangements. Except as set forth in
Section 3.17 of the Disclosure Schedule, as of the date hereof, Seller, with
respect to the Business, Nippon Selas and XX Xxxxx are not a party to any
written (a) employment agreement; (b) indenture, mortgage, note, installment
obligation, agreement or other instrument relating to the borrowing of money by
Seller, Nippon Selas or XX Xxxxx (other than intercompany accounts which shall
be governed by Section 2.3 hereof), or the guaranty by Seller, Nippon Selas or
XX Xxxxx of any obligation for the borrowing of money; or (c) other agreement,
including without limitation, purchase orders, or any enforceable oral
agreement, which individually, or in the aggregate with respect to any series of
related agreements, involves the receipt or payment after the date hereof of
more than $10,000 on an annual basis (each such other agreement, a "Material
Contract"). Seller has delivered or made available to Buyer accurate and
complete copies of all Material Contracts to Buyer. Section 3.17 contains a
complete and accurate list of all Material Contracts. All Assigned Contracts are
valid, binding and enforceable on Seller, Nippon Selas or XX Xxxxx, as
applicable, and to Seller's knowledge the other party thereto, in accordance
with their terms, are the result of bona fide arm's-length transactions, and,
none of Seller, Nippon Selas or XX Xxxxx, or to the knowledge of Seller any
other party thereto, is in default (with or without notice or lapse of time or
both) under any of the aforesaid agreements in any material respect. Except as
set forth in Section 3.17 of the Disclosure Schedule, all Assigned Contracts are
assignable by Seller without the consent of any other person or entity.
3.18 Employee Benefit Plans; ERISA; Employees.
(a) Section 3.18(a) of the Disclosure Schedule
lists each employee pension benefit plan (as defined in section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) ("Pension
Plan"), each employee welfare benefit plan (as defined in section 3(1) of ERISA)
("Welfare Plan"), each specified fringe benefit plans (as defined in section
6039D(d) of the Internal Revenue Code of 1986, as amended (the "Code")), and
each executive compensation, retirement, deferred compensation, incentive,
bonus, severance, compensation associated with change in control, perquisite,
health care, death benefit, disability, life insurance, vacation pay, sick pay
or other plan or arrangement to which Seller, Nippon Selas, or XX Xxxxx is or
has during the prior six years been a party, or with respect to which Seller,
Nippon Selas, or XX Xxxxx has or may in the future have an obligation, or that
is or has been during the prior six years maintained, contributed to, or
sponsored by Seller, Nippon Selas, or XX Xxxxx for the benefit of any current or
former employee, officer, or director (such plans and arrangements to be
referred to individually as "Business Plan" and collectively as "Business
Plans").
For purposes of this Section 3.18, "Affiliate Health Plan"
means a group health plan (within the meaning of section 607 of ERISA), and the
term "Affiliate Pension Plan" means a Pension Plan, in either case to which an
ERISA Affiliate (as defined below) is or has during the
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prior six years been a party, or with respect to which an ERISA Affiliate has an
obligation, or that has been or is maintained, contributed to, or sponsored by
an ERISA Affiliate for the benefit of any current or former employee, or in
connection with which Seller, Nippon Selas, or XX Xxxxx may now or in the future
have any obligation by reason of its current or former relationship with an
ERISA Affiliate.
The term "ERISA Affiliate" means each entity that is or has
ever been a member of either (i) a controlled group (within the meaning of
section 414(b) or (c) of the Code) or, for the purposes of the definition of
"Affiliate Health Plan," (ii) an affiliated service group (within the meaning of
section 414(m) or (o) of the Code) that, in either case, includes or included
Seller, Nippon Selas, or XX Xxxxx or an entity of which Seller, Nippon Selas, or
XX Xxxxx is a successor.
Except as set forth in Section 3.18(a) of the Disclosure
Schedule: (a) no Business Plan or Affiliate Pension Plan is a Multiemployer
Plan, as defined in ERISA, or is described in Section 413 of the Internal
Revenue Code of 1986, as amended (the "Code"); (b) no Affiliate Pension Plan is
or has been subject to section 302 or Title IV of ERISA or to section 412 of the
Code; and (c) the Seller has not during the prior six years been a party to,
maintained, contributed to or sponsored any group health plan (within the
meaning of section 607 of ERISA) or Pension Plan subject to section 302 or Title
IV of ERISA or to section 412 of the Code, other than the Business Plans.
(b) Seller has furnished to Buyer a complete and
accurate copy of each Business Plan document (including, in each case, all
amendments), or written descriptions of any unwritten Business Plan, and a
complete and accurate copy of all material documents relating to such plan,
including, if applicable: (A) each trust agreement, insurance or annuity
contract, investment management agreement, custodial agreement, and other
agreement relating to the funding of the plan, and all amendments to them; (B)
the most recent summary plan description and any subsequent summary of material
modifications; (C) the three most recently filed annual return reports (Form
5500 series), including all applicable schedules; (D) the most recent
determination or opinion letter issued by the Internal Revenue Service, if the
plan or its related funding arrangement is intended to be qualified under
section 401(a) or exempt from tax under section 501(a) of the Code, and any
pending application for a determination or opinion letter; (E) the three most
recent financial statements; (F) the three most recent actuarial valuation
reports; (G) all communications received from the IRS, DOL or PBGC; and (H) any
and all correspondence or other written communications relating to withdrawal
liability of any Multiemployer Plan.
(c) Except as set forth in Section 3.18(c) of
the Disclosure Schedule, (i) each of the Business Plans complies in all material
respects, in form and operation, and has been administered and funded in all
material respects in accordance with its terms and the requirements of all
applicable laws, including, without limitation, ERISA, all provisions of the
Code applicable to secure intended tax consequences, and federal securities law,
and all regulations and rulings under such laws, and (ii) each of the Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code, has
been determined by the Internal Revenue
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Service (the "IRS") to be so qualified, is presently so qualified, and Seller
knows of no fact or set of circumstances that would adversely affect such
qualification prior to the Closing. To the knowledge of Seller, there are no
pending or threatened material claims (other than routine claims for benefits)
by, on behalf of or against any of the Plans or any trusts related thereto, and
no fact or event exists that could give rise to such a claim.
Each ERISA Affiliate Health Plan complies with and
has been administered in all material respects in accordance with Part 6 and
Part 7 of Title I of ERISA, as in effect from time to time.
(d) Except as set forth in Section 3.18(d) of
the Disclosure Schedule: (i) all material accrued obligations of Seller, with
respect to the Business, Nippon Selas and XX Xxxxx applicable to their
employees, whether arising by operation of law, by contract, by past custom or
otherwise, for payments by such companies to trusts or other funds or to any
governmental agency, with respect to unemployment compensation benefits, social
security benefits or any other benefits for their employees with respect to the
employment of said employees through the date hereof have been paid or adequate
accruals therefor have been made on each such company's books and records and
(ii) all reasonably anticipated material obligations of Seller, with respect to
the Business, Nippon Selas and XX Xxxxx with respect to such employees, whether
arising by operation of law, by contract, by past custom, or otherwise, for
salaries, vacation and holiday pay, sick pay, bonuses and other forms of
compensation payable to such employees in respect of the services rendered by
any of them prior to November, 2004 have been or will be paid by Seller, Nippon
Selas or XX Xxxxx, respectively, prior to the Closing Date or adequate accruals
therefor have been made on the December 31, 2004 Balance Sheet, and all such
amounts accrued after December 31, 2004 through the Closing Date will have been
paid by Seller, Nippon Selas or XX Xxxxx, respectively, as of the Closing or
will be accrued on the Closing Balance Sheet.
(e) Except as set forth in Section 3.18(e) of
the Disclosure Schedule: with respect to each Business Plan, all material
notices, reports, returns, applications, election forms, and disclosures
required by law or the terms of the plan to be made or provided to the Internal
Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty
Corporation, any participants, spouses of participants, or beneficiaries in the
plan, any trustee, or any insurer with respect to the plan have been timely and
adequately made or provided in accordance with such law or plan.
(f) Except as set forth in Section 3.18(f) of
the Disclosure Schedule, Seller, with respect to the Business, Nippon Selas and
XX Xxxxx do not maintain any health or life insurance plan that provides for
continuing benefits or coverage for any participant or any spouse, dependent or
beneficiary under such plan after termination of employment, other than as may
be required under Section 4980B of the Code and Part 6 of Title I of ERISA and
regulations thereunder ("COBRA"). Seller, with respect to the Business, Nippon
Selas and XX Xxxxx are in compliance in all material respects with the COBRA
notice and continuation coverage requirements with respect to Plans maintained
by such companies.
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(g) No filing has been made with the Internal
Revenue Service, with respect to any Business Plan that is a Pension Plan
intended to be qualified under section 401(a) of the Code, under the Internal
Revenue Service Voluntary Correction Program or any similar program previously
in effect, nor has any self corrective action been taken as to any such plan
under the provisions of any Internal Revenue Service revenue procedure
permitting "self correction" of certain qualification defects.
(h) No Business Plan that is a Pension Plan has
had an accumulated funding deficiency (within the meaning of section 302 of
ERISA or section 412 of the Code), whether or not waived. No asset of the
Business is the subject of a lien arising under section 302(f) of ERISA or
section 412(n) of the Code.
(i) No complete or partial termination has
occurred within the past five years with respect to any Business Plan that is a
Pension Plan. No reportable event (within the meaning of section 4043 of ERISA)
or event described in section 4063(a) of ERISA has occurred or is expected to
occur with respect to any Business Plan subject to Title IV of ERISA. The PBGC
has not instituted proceedings to terminate any Business Plan, no event or
condition has occurred or exists that may constitute grounds under section 4042
of ERISA for the termination of or appointment of a trustee to administer any
such plan, nor has any notice of intent to terminate any such plan been filed
with the PBGC. All premiums due the PBGC with respect to such plans have been
paid on a timely basis.
(j) As to each Business Plan subject to Title IV
of ERISA:
(A) Seller has provided Buyer with the
actuarial valuation for the plan
performed for the fiscal year ended
December 31, 2004, for the purposes
of Statement of Financial
Accounting Standards No. 87 (the
"FAS 87 Report"); all employee
census data furnished to the plan's
actuary in connection with the FAS
87 Report have been accurate and
complete in all material respects;
no amendment or change to any such
Business Plan effective or adopted
after the date of the FAS 87 Report
would increase the benefits under
such Business Plan; and nothing has
occurred since the date of the FAS
87 Report that would have a
materially adverse effect on the
funding condition of any such
Business Plan; and the actuary(ies)
retained with respect to such
Business Plans are qualified in all
respects; and
(B) to the knowledge of Seller (based
on, among other things, the FAS
Report and other communications
with such qualified actuaries), all
costs of such Business Plans have
been provided for on the basis of
consistent methods in accordance
with sound actuarial assumptions
and practices and such FAS 87
Report accurately reflects the
value of the
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plan assets and liabilities as of
the date of such valuation based on
the funding method and actuarial
assumptions specified in the FAS 87
Report.
(k) [Intentionally omitted.]
(l) Except as set forth in Section 3.18(l) of
the Disclosure Schedule, all contributions, insurance premiums, or payments
required to be made with respect to the Business Plans have been made by their
due dates.
(m) Except as set forth in Section 3.18(m) of
the Disclosure Schedule, no Business Plan, and no other commitment or agreement,
provides for the payment of separation, severance, or similar benefits to any
person solely as a result of any transaction contemplated by this Agreement or
as a result of a "change in control", within the meaning of such term under
section 280G of the Code, and the consummation of the transaction contemplated
by this Agreement will not accelerate the time of payment or vesting of, or
increase the amount of, any compensation due to any employee.
3.19 Insurance. Section 3.19 of the Disclosure Schedule sets forth
a complete and accurate list of all currently effective insurance policies
(including any self-insurance arrangements or other contract or arrangement,
other than a policy of insurance, for the transfer or sharing of any risk to
which Seller, Nippon Selas or XX Xxxxx is a party or which involves the
Business) covering the Business (the "Insurance Policies") identifying all of
the following for each such policy: (a) the type of insurance; (b) the insurer;
(c) the policy number; (d) the policy limits, (e) named and additional named
insureds, and (f) the expiration date. Except as disclosed in Section 3.19 of
the Disclosure Schedule, there are no claims, actions, suits or proceedings
arising out of or based on any of these insurance policies and, to the knowledge
of Seller, no basis for any such claim, action, suit or proceeding exists. Each
such insurance policy is valid and binding and is and has been in full force and
effect since the date of its issuance. Neither Seller, Nippon Selas nor XX
Xxxxx, have been notified of any material breach of or default under any such
policy. Seller owns, and after Closing is retaining ownership of, all such
insurance policies. Nothing in this Agreement shall affect Seller's right to
modify or terminate any such insurance policy at any time or to remove Nippon
Selas or XX Xxxxx as a named insured at any time, provided that such
modification or termination does not affect the rights of Nippon Selas or XX
Xxxxx, if any, under such policies for occurrences (as defined in such insurance
policies) existing or arising before and including the Closing Date. Except as
set forth on Section 3.19 of the Disclosure Schedule, since January 1, 2003,
neither Seller, Nippon Selas nor XX Xxxxx has received with respect to any of
the Insurance Policies (y) any refusal of coverage or any notice that a defense
will be afforded with reservation of rights or (x) any notice of cancellation or
any other indication that any policy of insurance is no longer in full force or
effect or that the issuer of any policy of insurance is not willing or able to
perform its obligations thereunder.
3.20 Environmental Matters. Except as set forth in Section 3.20 of
the Disclosure Schedule, to the knowledge of Seller: (a) the operation of the
Business is in compliance in all material respects with all applicable
environmental laws and regulations and (b) there have occurred no and there are
no events, conditions, circumstances, activities, practices, incidents, or
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actions that may give rise to a material liability arising under environmental
laws, or with respect to the Business, Nippon Selas or XX Xxxxx, based upon or
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutants or contaminants.
Seller has delivered to Buyer true and complete copies and results of any
reports, studies, analyses, tests, or monitoring possessed or initiated by
Sellers, Nippon Selas or XX Xxxxx or pertaining to the Business regarding
compliance with environmental laws. Neither Seller nor Nippon Selas nor XX Xxxxx
has not received any notice or other written communication from any governmental
authority regarding any actual, alleged, possible or potential violation of, or
failure to comply with, any term or requirement of any environmental laws,
ordinances, rules or regulations.
3.21 Taxes.
(a) Except as set forth in Section 3.21 of the
Disclosure Schedule, Seller, Nippon Selas and XX Xxxxx have filed all material
Tax Returns that they were required to file, and have paid all Taxes shown to be
due on such Tax Returns. All such Tax Returns are true, correct and complete in
all material respects.
(b) Section 3.21 of the Disclosure Schedule
lists all material Tax Returns filed with respect to Seller, Nippon Selas and XX
Xxxxx for taxable periods ending on or after January 1, 2001, indicates those
Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit.
(c) Seller, Nippon Selas and XX Xxxxx have not
waived any statute of limitations in respect of any Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
(d) No claim has been made since January 1, 2003
or, to the knowledge of Seller, is expected to be made by any governmental
authority in a jurisdiction where Seller, Nippon Selas or XX Xxxxx does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction. There
are no liens or encumbrances on any of the Assets that arose in connection with
any failure (or alleged failure) to pay any Tax, and Seller has no knowledge of
any basis for assertion of any claims attributable to Taxes which, if adversely
determined, would result in any such lien or encumbrance.
(e) The charges, accruals, and reserves with
respect to Taxes on the respective books of Seller, with respect to the
Business, and Nippon Selas and XX Xxxxx are, and as of Closing will be, adequate
and are at least equal to the liability for Taxes with respect to the Business,
Assets, income and operations of Seller, with respect to the Business, and
Nippon Selas and XX Xxxxx. To the extent that any such Taxes of Nippon Selas and
XX Xxxxx are unpaid at the time of Closing, the amounts therefor reflected in
the Closing Balance Sheet shall be adequate for the payment of all Taxes of
those entities attributable to periods prior to Closing including any Taxes
resulting from any transfers of cash or other property by Nippon Selas or XX
Xxxxx to Seller or forgiveness of obligations between Seller and Nippon Selas or
XX Xxxxx in anticipation of the transactions contemplated by this Agreement or
as described in this
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Agreement. None of Seller, Nippon Selas or XX Xxxxx has received any written
proposed tax assessment against any of Seller, Nippon Selas or XX Xxxxx.
(f) As used in this Agreement:
(i) "Taxes" shall mean all taxes,
levies, charges or fees including income, corporation, advance corporation,
gross receipts, transfer, excise, property, sales, use, value-added, license,
payroll, pay-as-you-earn, withholding, social security and franchise or other
governmental taxes or charges, imposed by or under the taxing authority of the
United States or any state, county, local or foreign government, and such term
shall include any interest, penalties or additions to tax attributable to such
taxes.
(ii) "Tax Return" shall mean any report,
return or statement required to be supplied to a taxing authority in connection
with Taxes.
3.22 Related Party Transactions. Except as set forth in Section
3.22 of the Disclosure Schedule, there are no material real estate leases,
personal property leases, loans, guarantees, contracts, transactions or other
arrangements of any nature related to the Business between or among any of
Seller, with respect to the Business, Nippon Selas or XX Xxxxx and any current
or former partner, owner, material stockholder, director, officer or controlling
person of any of Seller, Nippon Selas or XX Xxxxx.
3.23 Certain Fees. Except for the engagement of Xxxxxxxxxx & Xxxx,
Inc. (which is not a party to this Agreement and shall not have any rights under
this Agreement), the fees and expenses of which shall be the sole responsibility
of Seller, neither Seller nor any of its affiliates has employed any broker or
finder or incurred any liability for any brokerage or finders' fees in
connection with this Agreement or the transactions contemplated hereby.
3.24 Permits and Licenses. Except as described in Section 3.24 of
the Disclosure Schedule, Seller, with respect to the Business, Nippon Selas and
XX Xxxxx have all necessary permits, certificates, licenses, approvals,
consents, and other authorizations from any federal, state or local court,
authority, governmental or regulatory body or agency required to carry on and
conduct the Business and to own, lease, use, and operate its assets at the
places and in the manner in which the Business is conducted, except where the
failure to have any such permits, certificates, licenses, approvals, consents,
and other authorizations would not have a Material Adverse Effect ("Permit"). A
complete list of these permits, certificates, licenses, approvals, consents, and
other authorizations is included in Section 3.24 of the Disclosure Schedule.
True and complete copies of all such Permits have been provided to Buyer. To the
knowledge of Seller, Seller, Nippon Selas and XX Xxxxx have at all times
complied in all material respects with all terms and conditions applicable to
each permit. Since January 1, 2003, neither Seller nor Nippon Selas nor XX Xxxxx
has received any notice or other written communication from, and to Seller's
knowledge no such notice or adverse action has been threatened by, any
governmental authority, person or entity regarding (i) any actual, alleged,
possible or potential violation of or failure to comply with any term or
requirement of any Permit or (ii) any actual, proposed, possible or potential
revocation, withdrawal, suspension, cancellation, termination of or modification
to any Permit.
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3.25 Conduct of Business. Except as otherwise disclosed in Section
3.25 of the Disclosure Schedule, since December 31, 2004, Seller, with respect
to the Business, Nippon Selas and XX Xxxxx have not:
(a) Entered into, amended, or terminated any
contract, license, lease, commitment or permit, except in the ordinary course of
business consistent with past practices;
(b) Experienced any labor disturbance;
(c) Discharged or satisfied any encumbrance or
paid or satisfied any obligation or liability (absolute, accrued, contingent, or
otherwise) other than in the ordinary course of business consistent with past
practices and in accordance with the express terms of such obligation or
liability or as required or permitted by this Agreement;
(d) Mortgaged, pledged, or subjected to any
encumbrance any of the Assets or any of the assets of Nippon Selas or XX Xxxxx;
(e) Sold, transferred, agreed to sell or
transfer, mortgaged, pledged, or subjected to any encumbrance any of the Assets
or any of the assets of Nippon Selas or XX Xxxxx; cancelled or agreed to cancel
any debt or claim; or waived any right, except in the ordinary course of
business consistent with past practices or as required by this Agreement;
(f) (A) Granted any increase in employee rates
of pay or any increases in salary payable or to become payable to any officer,
employee, consultant, or agent, other than in connection with their regular
review or (B) by means of any bonus or pension plan, contract, or other
commitment increased the compensation of any officer, director, employee,
consultant, or agent, or (C) hired any new officer, executive employee,
consultant, or agent;
(g) Made or authorized any capital expenditures
for additions to plant or equipment accounts in excess of $20,000 in the
aggregate;
(h) Entered into any transaction (including,
without limitation, any contract or other arrangement providing for employment,
furnishing of services, rental of real or personal property, or otherwise
requiring payments) with any officer, or director of the Seller, Nippon Selas or
XX Xxxxx, respectively; any member of their immediate families; or any of their
affiliates;
(i) Experienced any material damage,
destruction, or loss (whether or not covered by insurance) affecting the Assets
or the Business or the properties, assets or business of Nippon Selas or XX
Xxxxx, respectively;
(j) Failed to maintain and repair the Assets or
the assets of Nippon Selas or XX Xxxxx, respectively, in the ordinary course of
business consistent with past practices, ordinary wear and tear excluded;
(k) Made any change in any method of accounting
or any accounting practice or suffered any deterioration in accounting controls;
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CONFIDENTIAL
(l) To the knowledge of Seller, been threatened
with, or otherwise given written notice of, any material liability; or
(m) Agreed or committed to do any of the
foregoing.
3.26 Employees. Except as set forth in Section 3.26 of the
Disclosure Schedule, there is not now, nor has there been at any time during the
past five years, any strike, lockout, material grievance, other material labor
dispute, or material trouble of any nature pending or threatened against Seller,
with respect to the Business, Nippon Selas or XX Xxxxx or that in any manner
affects the Business. The Seller is and has been in compliance in all material
respects with all laws, rules, interpretive bulletins and regulations regulating
employee wages and hours. Section 3.26 of the Disclosure Schedule sets forth a
true and current list of all of the collective bargaining or union agreements,
including, but not limited to, collective bargaining agreements, letters of
agreement, memoranda of understanding, side agreements and settlements and
arbitration decisions that have a binding effect on the Business (each, a "Labor
Agreement" and collectively, the "Labor Agreements") now in effect and also
includes a true and complete schedule listing the names and total annual
compensation of each person employed by Seller, with respect to the Business,
Nippon Selas or XX Xxxxx as of January 1, 2005. Except as disclosed in Section
3.26 of the Disclosure Schedule, as of the date hereof:
(a) the employment of each employee of Seller,
with respect to the Business, Nippon Selas and XX Xxxxx may be terminated
immediately by each such company, respectively, except as otherwise provided by
statute or government authority or as specifically identified in Section 3.26 of
the Disclosure Schedule with respect to any Labor Agreement or the Collective
Bargaining Agreement;
(b) to the knowledge of Seller, no key executive
employee of Seller, with respect to the Business, Nippon Selas and XX Xxxxx has
plans to terminate his or her employment at or prior to the Closing, whether or
not as a result of the transactions contemplated herein, other than any
executive officer whose resignation has been requested by the Buyer; and
(c) Seller, with respect to the Business, Nippon
Selas and XX Xxxxx have no material labor relations problems.
Except as disclosed in Section 3.26 of the Disclosure Schedule, Seller,
with respect to the Business, Nippon Selas and XX Xxxxx have complied in all
material respects with all Labor Agreements and all applicable laws and orders
relating to the employment of labor, including, but not limited to any and all
laws, ordinances, orders, standards, executive orders, rules and regulations of
any federal, state, local or foreign governmental authority regulating safety in
the work place, prohibiting discrimination, requiring accommodation, requiring
affirmation action, regulating wages, overtime hours of work and child labor,
regulating labor relations, collective bargaining and the payment and
withholding of Taxes and other sums as required by appropriate authorities and
has withheld and paid to the appropriate authorities, or is holding for payment
not yet due to such authorities, all amounts required to be withheld from such
employees of Seller, with respect to the Business, Nippon Selas and XX Xxxxx and
are not liable for any arrears of wages, Taxes, penalties or other sums for
failure to comply with any of the foregoing.
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CONFIDENTIAL
Except as set forth in Section 3.26 of the Disclosure Schedule, the
transaction contemplated by this Agreement will not cause or result in Seller,
Nippon Selas, XX Xxxxx or Buyer being required to give any payment, benefit or
thing of value to any employee of Seller, with respect to the Business, Nippon
Selas or XX Xxxxx pursuant to applicable law or regulation other than accrued
salary, vacation, holiday and sick pay benefits.
3.27 Suppliers and Customers.
(a) A complete and accurate list of all
suppliers or vendors of products or services to the Business (other than legal
or accounting services) aggregating more than $50,000 (at cost) annually during
Seller's last fiscal year, and the contact information of each supplier or
vendor and the amount sold to the Business during that period, is set forth in
Section 3.27(a) of the Disclosure Schedule. The names of any suppliers of goods
or services with respect to which, to the knowledge of Seller, practical
alternative sources of supply are not available on comparable terms and
conditions are separately listed in Section 3.27(a) of the Disclosure Schedule.
(b) A complete and accurate list of each
customer of the Business aggregating more than $50,000 in revenues to the
Business annually during the last fiscal year, the contact information of each
customer, and the amount each customer purchased from the Business during the
last fiscal year is set forth in Section 3.27(b) of the Disclosure Schedule.
(c) Seller has not been given any written
notice, or to Seller's knowledge any non-written information, that might
reasonably indicate that any customer or supplier of the Business intends to
cease purchasing from, selling to, or dealing with Seller, Nippon Selas or XX
Xxxxx, except as set forth in Section 3.27(c) of the Disclosure Schedule. Seller
has not been given any written notice, or to Seller's knowledge any non-written
information, that might reasonably lead Seller to believe that any customer or
supplier intends to alter or condition, in any material respect, the amount of
its purchases or sales or the extent of its dealings with Seller, Nippon Selas
or XX Xxxxx, or would alter or condition in any material respect its purchases
from, sales to, or dealings with Seller, Nippon Selas or XX Xxxxx, in the event
the transactions contemplated by this Agreement are consummated, except as set
forth in Section 3.27(c) of the Disclosure Schedule.
3.28 Bank Accounts. The information in Section 3.28 of the
Disclosure Schedule is a true and complete list of the names and locations of
all banks or other financial institutions that are depositories for funds of
Nippon Selas and XX Xxxxx, the names of all persons authorized to draw or sign
checks or drafts on the accounts, the number of the accounts, and the names and
locations of any institutions in which Nippon Selas and XX Xxxxx has any
safe-deposit boxes and the names of the individuals having access to them.
Except as set forth in Section 3.28 of the Disclosure Schedule, Nippon Selas and
XX Xxxxx do not have any outstanding powers of attorney. Section 3.28 of the
Disclosure Schedule contains a true and complete list of any banks or other
financial institutions that have granted Nippon Selas and XX Xxxxx a loan, line
of credit, credit card, performance or other bond or other financial product or
arrangement of any nature, including the name and location of such bank or
institution and any account number or identifying number.
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CONFIDENTIAL
3.29 Accounts Payable. Section 3.29 of the Disclosure Schedule sets
forth a true and correct aged list of all accounts payable of the Business as of
December 31, 2004 in excess of $10,000 to any one payee. Except as disclosed in
Section 3.29 of the Disclosure Schedule, all of the accounts payable arose from
bona fide purchases of goods or services in the ordinary course of the Business
and are not yet due or were paid when due or in any grace period before any late
fee, interest or other charge will accrued.
3.30 Materiality. No statement in this Agreement, or in any
certificate delivered to Buyer pursuant to this Agreement, contains or will
contain any untrue statement of a material fact, or fails or will fail to
contain any material fact necessary to make the statements not false or
misleading. All documents and other papers delivered to Buyer by or on behalf of
Seller, Nippon Selas or XX Xxxxx in connection with this Agreement and the
transactions contemplated herein are accurate, complete and authentic copies of
original documents.
3.31 Certain Payments/Accounts. To the knowledge of Seller, neither
Seller nor Nippon Selas nor XX Xxxxx nor any director, officer, agent, or
employee of any of them, nor any other person or entity associated with or
acting for or on behalf of any of them, has directly or indirectly (i) made any
unlawful contribution, gift, 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 (a) to obtain favorable
treatment in securing business or to pay for favorable treatment for business
secured, or (b) in violation of any law or regulation; or (ii) established or
maintained any fund or asset that has not been recorded in the books and records
of the Seller, Nippon Selas or XX Xxxxx. To the knowledge of Seller, each
transaction is properly and accurately recorded on the books and records of
Seller, Nippon Selas and XX Xxxxx and each document upon such entries are based
is complete and accurate in all material respects. To the knowledge of Seller,
Seller, Nippon Selas and XX Xxxxx each maintain a system of internal accounting
controls adequate to insure that no off-the-books accounts are maintained and
that assets are used only in accordance with management directives.
3.32 No Other Representations. Except as set forth in this
Agreement, Seller makes no other representations or warranties, express or
implied, including without limitation, warranties of merchantability or fitness
for a particular purpose, representations or warranties contained in or arising
from the Confidential Selling Memorandum prepared by Seller, or representations
or warranties as to any forecasts, projections, budgets or other forward looking
information provided to or obtained by Buyer or its representatives.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization and Authority of Buyer.
(a) Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has previously delivered to Seller complete and correct copies
of its certificate of formation as currently in
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CONFIDENTIAL
effect. Buyer has the power and authority to execute and deliver this Agreement
and consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary action on the part of
Buyer and no other proceedings on the part of Buyer are necessary to authorize
the execution, delivery and performance of this Agreement or the consummation of
the transactions so contemplated.
(b) This Agreement has been duly executed and
delivered by Buyer and constitutes, and, when executed and delivered, each of
the other agreements, documents and instruments to be executed and delivered by
Buyer, pursuant hereto will constitute, a valid and binding agreement of Buyer
(in each case, assuming the valid authorization, execution and delivery of such
agreement by Seller), enforceable against Buyer in accordance with its terms,
except that (i) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now or hereafter
in effect, relating to or limiting creditors' rights generally, and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
4.2 Consents and Approvals; No Violations. Neither the execution
and delivery of this Agreement nor the consummation by Buyer of the transactions
contemplated hereby will (a) conflict with or result in any breach of any
provision of the certificate of formation and operating agreement of Buyer; (b)
require any filing with, or the obtaining of any permit, authorization, consent
or approval of, any governmental or regulatory authority whether within or
outside the United States; (c) violate, conflict with or result in a default (or
any event which, with notice or lapse of time or both, would constitute a
default) under, or give rise to any right of termination, cancellation or
acceleration under, any of the terms, conditions or provisions of any note,
mortgage, other evidence of indebtedness, guarantee, license, agreement, lease
or other instrument or obligation to which Buyer is a party or by which Buyer or
any of its assets may be bound; or violate any order, injunction, decree,
statute, rule or regulation applicable to Buyer, excluding from the foregoing
clauses (b), (c) and (d), (i) such requirements, violations, conflicts,
defaults, rights, security interests, claims, liens, charges, other encumbrances
or violations which would not adversely affect the ability of Buyer to
consummate the transactions contemplated by this Agreement, or (ii) which become
applicable as a result of any acts or omissions by, or the status of or any
facts pertaining to, Seller, Nippon Selas or XX Xxxxx.
4.3 Availability of Funds; Solvency.
(a) Buyer has sufficient immediately available
funds, in cash, to pay the Purchase Price, and in Buyer's reasonable judgment,
to provide the Business, Nippon Selas and XX Xxxxx with sufficient working
capital, to pay and discharge the Assumed Liabilities as they become due and to
pay any other amounts payable pursuant to this Agreement and to effect the
transactions contemplated hereby.
(b) Buyer is solvent as of the date of this
Agreement, and Buyer, Nippon Selas and XX Xxxxx shall not become insolvent as a
result of the consummation of the transactions contemplated by this Agreement,
except that no representation is made with respect
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CONFIDENTIAL
to the effects of Seller's removal of cash from Nippon Selas and XX Xxxxx prior
to Closing. Buyer is, and after giving effect to the transactions contemplated
by this Agreement, Buyer, Nippon Selas and XX Xxxxx shall be, able to pay the
Assumed Liabilities and their other debts as they become due, and Buyer's
property now has, and after giving effect to the transaction contemplated
hereby, Buyer's, Nippon Selas' and XX Xxxxx' property shall have, a fair salable
value greater than the amounts required to pay its debts (including a reasonable
estimate of the amount of all contingent liabilities), except that in each case,
no representation is made with respect to the effects of Seller's removal of
cash from Nippon Selas and XX Xxxxx prior to Closing. Buyer has adequate capital
to carry on its business, and after giving effect to the transactions
contemplated by this Agreement, Buyer, Nippon Selas and XX Xxxxx will have
adequate capital to carry on their businesses except that no representation is
made with respect to the effects of Seller's removal of cash from Nippon Selas
and XX Xxxxx prior to Closing. No transfer of property is being made and no
obligation is being incurred in connection with the transactions contemplated by
this Agreement with the intent to hinder, delay or defraud either present or
future creditors of Buyer.
4.4 Litigation. There is no claim, action, suit, proceeding or
governmental investigation pending or, to the knowledge of Buyer, threatened
against the Buyer, by or before any court, governmental or regulatory authority
or by any third party which challenges the validity of this Agreement.
4.5 Investigation by Buyer. Buyer has conducted its own
independent review and analysis of the Business and the Assets, and acknowledges
that Seller has provided Buyer with access to the personnel, properties,
premises and records of the Business for this purpose. In entering into this
Agreement, Buyer has relied solely upon its own investigation and analysis, and
Buyer (a) acknowledges that none of Seller, Nippon Selas nor XX Xxxxx nor any of
their directors, officers, employees, affiliates, controlling persons, agents or
representatives makes or has made any representation or warranty, either express
or implied, as to the accuracy or completeness of any of the information
provided or made available to Buyer or its directors, officers, employees,
affiliates, controlling persons, agents or representatives, except as and only
to the extent expressly set forth herein with respect to such representations
and warranties and subject to the limitations and restrictions contained in this
Agreement, and (b) agrees, to the fullest extent permitted by law, that none of
Seller, Nippon Selas nor XX Xxxxx, nor any of their directors, officers,
employees, affiliates, controlling persons, agents or representatives shall have
or be subject to any liability or responsibility whatsoever to Buyer or its
directors, officers, employees, affiliates, controlling persons, agents,
consultants, accountants, counsel or other representatives on any basis
(including, without limitation, in contract or tort, under federal or state
securities laws or otherwise) based upon any information provided or made
available, or statements made, to Buyer or its directors, officers, employees,
affiliates, controlling persons, agents or representatives (or any omissions
therefrom), including, without limitation, in respect of the specific
representations and warranties of Seller set forth in this Agreement, except as
and only to the extent expressly set forth herein with respect to such
representations and warranties and subject to the limitations and restrictions
contained in this Agreement. Buyer has no knowledge that the representations and
warranties of Seller in this Agreement or pursuant hereto are incorrect or
incomplete in any material respect.
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CONFIDENTIAL
4.6 Employees. Buyer has no current intention, following the
Closing, to cause Nippon Selas or XX Xxxxx to terminate the employment of any of
the employees of Nippon Selas and XX Xxxxx or to change the terms of employment
of such employees.
4.7 Securities Matters. Buyer is acquiring the Interests for
Buyer's own account as principal, for investment and not with a view to, or for
resale in connection with, any resale or distribution thereof in violation of
the Securities Act of 1933, as amended (the "Securities Act"). Buyer
acknowledges that the Interests are not registered under the Securities Act or
any applicable state securities law, and that such Interests may not be
transferred or sold except pursuant to the registration provisions of the
Securities Act or pursuant to an applicable exemption therefrom and pursuant to
state securities laws and regulations, as applicable.
4.8 Certain Fees. Neither Buyer nor any of its affiliates has
employed any broker or finder or incurred any liability for any brokerage or
finders' fees in connection with this Agreement or the transactions contemplated
hereby.
4.9 No Competition with Large Furnace Business. Buyer does not
and, after giving effect to the transactions contemplated hereby (based upon
Buyer's understanding that the Business as currently conducted by Seller does
not violate the Andritz License Agreement), will not use the name "Selas" and
any variation thereof and the Licensed IP (as defined in the Andritz License
Agreement) in a business that is competitive with the Large Furnace Business (as
defined in Section 5.17 of the Disclosure Schedule).
ARTICLE V
COVENANTS
5.1 Conduct of the Business. Seller agrees that, during the period
from the date of this Agreement to the Closing, except as otherwise contemplated
by this Agreement or consented to by Buyer:
(a) Seller, with respect to the Business, shall
not, and shall cause Nippon Selas and XX Xxxxx not to (i) sell or dispose of any
of its properties or assets, except in the ordinary course of business other
than cash dividends or distributions by Nippon Selas or Selas SW to Seller; (ii)
make any loans, advances (other than advances in the ordinary course of
business) or capital contributions to, or investments in, any other person;
(iii) terminate or materially amend any of its contracts, leases or licenses,
except in the ordinary course of business; (iv) enter into any new agreement
other than customer contracts or renewals of existing agreements or otherwise in
the ordinary course of business; (v) enter into any written employment agreement
with any employee, or increase in any manner the compensation of any of the
officers or other employees of the Business, Nippon Selas or XX Xxxxx, except
for such increases as are granted in the ordinary course of business in
accordance with its customary practices (which shall include normal periodic
performance reviews and related compensation and benefit increases); (vi) adopt,
grant, extend or increase the rate or terms of any bonus, insurance, pension or
other employee benefit plan, payment or arrangement made to, for or with any
such officers or employees of the Business, Nippon Selas or XX Xxxxx, except
increases required by any applicable law, rule or regulation; (vii) make any
change in any of its present
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CONFIDENTIAL
accounting methods and practices, except as required by changes in GAAP, or
(viii) enter into contract agreement or transaction outside of the ordinary
course of business.
(b) Seller, with respect to the Business, shall,
and shall cause Nippon Selas and XX Xxxxx to: (i) conduct its business only in
the ordinary course of business consistent with past practice; (ii) except as
otherwise directed by Buyer in writing, and without making any commitment on
Buyer's behalf, use its commercially reasonable efforts to preserve intact its
current business organization, keep available the services of its officers,
employees and agents and maintain its relations and good will with suppliers,
customers, landlords, creditors, employees, agents and others having business
relationships with it; (iii) confer with Buyer prior to implementing operational
decisions of a material nature; (iv) otherwise report periodically to Buyer
concerning the status of its business, operations and finances; (v) make no
material changes in management personnel without prior consultation with Buyer;
(vi) maintain the Assets and all assets of Nippon Selas and XX Xxxxx in a state
of repair and condition consistent with its current practices; (vii) keep in
full force and effect, without amendment, all material rights relating to
Seller's business; (viii) comply in all material respects with all laws and
regulations and contractual obligations applicable to the operations of the
Business; (ix) continue in full force and effect the insurance coverage under
the policies set forth in Section 3.19 of the Disclosure Schedule; (x) cooperate
with Buyer and assist Buyer in identifying the Permits required by Buyer to
operate the Business from and after the Closing Date and assisting Buyer in
Buyer's effort to either transfer existing Permits to Buyer, where permissible,
or to obtain new Permits; (xi) upon request from time to time, execute and
deliver all documents, and do all other acts that may be reasonably necessary or
desirable in the opinion of Buyer to consummate the transactions contemplated by
this Agreement, all without further consideration; and (xii) maintain all books
and records relating to the Business in the ordinary course of business
consistent with past practice.
5.2 Access to Information.
(a) Between the date of this Agreement and the
Closing, Seller shall (i) give Buyer and its authorized representatives
reasonable access to all books, records, offices and other facilities and
properties of Seller, relating solely to the Business, Nippon Selas and XX
Xxxxx; (ii) permit Buyer to make such inspections thereof as Buyer may
reasonably request, except for any intrusive tests of the real property except
with Seller's consent, which will not be unreasonably withheld, and the consent
of the landlord of such real property; and (iii) cause the officers of Seller to
furnish Buyer with such financial and operating data and other information with
respect to the Business as Buyer may from time to time reasonably request;
provided, however, that any such investigation shall be conducted during normal
business hours under the supervision of Seller or Seller's representative and in
such a manner as to maintain the confidentiality of this Agreement and the
transactions contemplated hereby and not interfere unreasonably with the
business operations of Seller, Nippon Selas or XX Xxxxx.
(b) All information concerning Seller furnished
or provided by Seller or its affiliates to Buyer or its representatives or
obtained by Buyer from Seller, Nippon Selas or XX Xxxxx in connection with this
Agreement (whether furnished, provided or obtained before or
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CONFIDENTIAL
after the date of this Agreement) shall be held subject to a confidentiality
agreement between Seller and Buyer, dated as of November 1, 2004 (the
"Confidentiality Agreement").
5.3 Consents.
(a) Each of Seller and Buyer shall cooperate,
and use its reasonable best efforts, to make all filings and obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and other third parties necessary to
consummate the transactions contemplated by this Agreement. In addition to the
foregoing, Buyer agrees to provide such assurances as to financial capability,
resources and credit worthiness as may be reasonably requested by any third
party whose consent or approval is sought hereunder.
(b) With respect to any agreements for which any
required consent or approval is not obtained prior to the Closing, and Buyer
nevertheless chooses to proceed with Closing, Seller and Buyer shall each use
its reasonable best efforts to obtain any such consent or approval as soon as
commercially practicable after the Closing Date until such consent or approval
has been obtained, and Seller and Buyer shall use their reasonable best efforts
to provide the Buyer and the other parties to such agreements with the same
benefits arising under such agreements, including performance by Buyer, Nippon
Selas or XX Xxxxx as agent or subcontractor for Seller and Buyer, if legally and
commercially feasible, provided, that Buyer and Nippon Selas and XX Xxxxx shall
provide Seller with such access to the premises, books and records and personnel
as is necessary to enable Seller to perform its obligations under such
agreements and Buyer, Nippon Selas or XX Xxxxx shall pay or satisfy the
corresponding liabilities for the enjoyment of such benefits to the extent
Buyer, Nippon Selas or XX Xxxxx would have been responsible therefor if such
consent or approval had been obtained. Once a consent is obtained, Seller shall
promptly assign, transfer, convey and deliver such Assigned Contract to Buyer.
5.4 Best Efforts. Each of Seller and Buyer shall cooperate, and
use its reasonable best efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper, or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement, including Seller assisting Buyer as Buyer may reasonably request
in securing employment arrangements with those employees of the Business
identified by Buyer and assisting Buyer as Buyer may reasonably request with
respect to providing information relevant to the Business as may be requested by
Buyer's lender who may be providing financing for the Purchase Price.
5.5 Public Announcements. Prior to the Closing, except as
otherwise agreed to by the parties, the parties shall not issue any report,
statement or press release or otherwise make any public statements with respect
to this Agreement and the transactions contemplated hereby, except as in the
reasonable judgment of the party may be required by law, in which case the
parties will exercise their reasonable best efforts to reach mutual agreement as
to the language of any such report, statement or press release.
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CONFIDENTIAL
5.6 Consummation. Each party hereto shall use its reasonable best
efforts to consummate the transactions contemplated by this Agreement and shall
not take any action inconsistent with its obligations hereunder or which could
hinder or delay the consummation of the transactions contemplated hereby.
Further, Seller will use its reasonable best efforts to ensure that the
conditions set forth in Article VI hereof are satisfied, insofar as such matters
are within the control of Seller, and Buyer will use its reasonable best efforts
to ensure that the conditions set forth in Article VI hereof are satisfied,
insofar as such matters are within the control of Buyer. Seller and Buyer also
covenant and agree, with respect to a threatened or pending preliminary or
permanent injunction or other order, decree or ruling or statute, rule,
regulation or executive order that would adversely affect the ability of the
parties hereto to consummate the transactions contemplated hereby, to use all
reasonable efforts to prevent or lift the entry, enactment or promulgation
thereof, as the case may be.
5.7 Employees; Employee Benefits.
(a) Immediately following the Closing, Buyer
shall cause Nippon Selas and XX Xxxxx to offer to continue to employ each of
their respective employees on terms substantially equivalent to those in effect
before Closing and Buyer shall offer to employ all current active employees of
the Business (collectively, "Employees"). Those employees who accept such offers
of employment and become employed by Buyer as of the Closing Date shall be
referred to herein as the "Transferred Employees". Buyer shall give full credit
for all service with Seller, Nippon Selas and XX Xxxxx, and any predecessor
thereto to the extent that service with such predecessor entity was recognized
under the applicable plans of Seller, Nippon Selas or XX Xxxxx, to any Employee
employed by Buyer, Nippon Selas or XX Xxxxx for all purposes, including waiting
periods relating to preexisting conditions under medical plans, eligibility to
participate in, vesting and payment of benefits under, and eligibility for early
retirement or any subsidized benefit provided for under, any employee benefit
plan (including, but not limited to, any "employee benefit plan" as defined in
Section 3(3) of ERISA) maintained by Buyer or its subsidiaries (including,
without limitation, any vacation or accrued sick pay plan or policy) on or after
the Closing Date, except to the extent not allowable under the terms of any
insurance policy maintained in connection with such plan. Prior to the Closing,
Seller shall furnish Buyer with a list of the length of service with Seller,
with respect to the Business, Nippon Selas and XX Xxxxx for each of the
Employees.
(b) Upon Closing, at the option of Buyer, and in
cooperation with Seller, either (i) Seller shall assign to Buyer its rights,
authority, and interests under, and Buyer shall assume, the obligations of
Seller with respect to the insurance policies maintained in connection with
those Business Plans that are Welfare Plans set out in Section 5.7(b) of the
Disclosure Schedule, to the extent allowable under such insurance policies (the
"Assumed Policies"), or (ii) Buyer shall establish, effective as of the Closing
Date, employee benefit plans of its own for the benefit of Transferred
Employees.
(c) Effective as of the Closing Date, Seller
shall assign to Buyer its rights, authority, and interests under, and Buyer
shall assume, the obligations of Seller with respect to the Selas Corporation
Union Employees 401(k) Savings Plan and the Selas Corporation Salaried Employees
401(k) Plan (the "Assumed 401(k) Plans").
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(d) Effective as of the Closing Date: (i) Seller
shall assign to Buyer its rights, authority, and interests under, and Buyer
shall assume the obligations of Seller with respect to the Selas Corporation of
America Flexible Benefits Plan ("125 Plan"), and (ii) Seller shall remit to
Buyer an amount equal to the excess, if any, as of Closing, of the aggregate of
positive account balances under the 125 Plan over the aggregate of the negative
account balances under the 125 Plan.
(e) Upon Closing, Seller shall assign to Buyer
its rights, authority, and interests under, and Buyer shall assume the
obligations of Seller with respect to the Selas Corporation of America Pension
Plan for Union Employees and the Selas Corporation of America Salaried
Retirement Plan (the "Defined Benefit Pension Plans"). Notwithstanding Buyer's
assumption of Seller's obligations under the Defined Benefit Pension Plans, the
Assumed Policies, the Assumed 401(k) Plans, and the 125 Plan (collectively, the
"Assumed Plans"), or Buyer's establishment of new benefit plans as described in
Section 5.7(b)(ii), the obligations assumed by Buyer shall not include any
obligation, liability, or expense incurred by reason of error, default, or
negligence of Seller or any person Seller is obliged to indemnify; any duty or
obligation that was required, by law or otherwise, to be performed, completed,
contributed, or paid before the Closing Date; any duty or obligation of Seller
arising out of the failure of Seller or any Assumed Plan to comply with any
legal requirement or terms of the plan or policy for any period before the
Closing Date; or any other liability or obligation of Seller that arose before
the Closing Date.
(f) Seller shall remit all amounts held by
Seller at the Closing Date that Seller had withheld from compensation of
employees in connection with their participation in the Assumed Policies or
Assumed 401(k) Plans to the appropriate insurer or trustee in a timely fashion
in accordance with ERISA and the terms of the plan or policy.
(g) The Seller shall promptly provide Buyer with
all records Buyer reasonably determines to be necessary or pertinent to the
Assumed Plans.
(h) If Buyer does not elect to assume, or the
insurer does not consent to the assumption by Buyer of, the insurance policy
maintained in connection with Seller's long or short term disability plan
covering employees of the Business, then, with respect to any employee of the
Business who was covered by Seller's short or long term disability plan
immediately before the Closing and who is ineligible for coverage under Buyer's
short or long term disability plan after the Closing because of an actively at
work requirement or who does not become a Transferred Employee at the Closing,
Seller shall cause its short or long term disability plan to continue to cover
such employee for as long as coverage would have been available under Seller's
plan as in effect before the Closing.
(i) No third party shall be entitled to enforce
any provision of this Section 5.7.
(j) Effective as of the Closing Date, Buyer
shall assume responsibility for providing continued group health plan coverage
pursuant to COBRA to
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(A) all Transferred Employees and
"qualified beneficiaries" (as
defined under COBRA) associated
with Transferred Employees, to the
extent that entitlement to COBRA
coverage arises out of Seller's
sale of the Assets to Buyer or out
of any event that occurs after the
Closing Date, and
(B) all current and former employees of
the Seller and their qualified
beneficiaries identified in Section
5.7(j) of the Disclosure Schedule
as receiving or being eligible to
elect COBRA coverage as of the
Closing Date.
Seller shall be and remain responsible for COBRA benefits with respect to all
employees of the Seller and the Business other than those described in clauses
(A) and (B).
(k) On and after the Closing Date, Buyer shall
become the sponsor and fiduciary of the Assumed Plans, and shall be solely
responsible for the maintenance and administration of such Assumed Plans. For
all periods prior to the Closing Date, Seller shall be and remain the sponsor
and fiduciary of the Assumed Plans, and shall be solely responsible for the
maintenance and administration of the Assumed Plans. Seller shall take all
actions necessary to effectuate the change of plan sponsorship and transfer of
fiduciary responsibilities including, but not limited to, notifying trustees and
funding agents and obtaining any requisite consents.
(l) Seller covenants and agrees as follows:
(i) Seller shall provide any
Transferred Employee who is a union employee ("Eligible Union Transferred
Employees"), upon retirement (including early retirement) on or before March 31,
2008, with the same retiree medical benefits to which such Eligible Union
Transferred Employee would have been entitled under Seller's Retiree Medical
Plan for Union Employees had he been eligible for and retired with Seller and
applied for benefits immediately prior to the Closing Date except that Seller's
out-of-pocket cost for premiums for such coverage with respect to Eligible Union
Transferred Employees who were not eligible for retirement at the time of
Closing shall be limited to the premium amount(s) in effect in 2004.
(ii) Seller shall provide any
Transferred Employee who is a salaried employee and who, immediately prior to
the Closing Date, was eligible to retire and receive benefits under Seller's
Retiree Medical Plan for Salaried Employees ("Eligible Salaried Transferred
Employees"), upon retirement (including early retirement) or termination of
employment with Buyer, with the same retiree medical benefits such Eligible
Salaried Transferred Employee would have received under such plan had he retired
or terminated employment with Seller and applied for benefits immediately prior
to the Closing Date.
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5.8 Certain Tax Matters.
(a) Seller shall prepare or cause to be prepared
all Tax Returns that will be filed by Buyer with respect to Nippon Selas and XX
Xxxxx for taxable periods ending on or before the Closing Date (the
"Short-Period Returns"). Seller shall pay or accrue on the Closing Balance Sheet
all Taxes shown to be due on the Short-Period Returns.
(b) Buyer shall timely prepare and file or cause
to be timely prepared and filed all Tax Returns for Nippon Selas and XX Xxxxx to
be filed for taxable periods beginning or ending after the Closing Date. Buyer
shall timely pay or cause to be paid the amount of Taxes due shown on such Tax
Returns.
(c) Seller shall have sole control over all Tax
audits of Nippon Selas and XX Xxxxx for any period that ends on or before the
Closing Date and shall be fully responsible for Tax payments, penalties and
assessments resulting therefrom with respect to periods ending on or before the
Closing Date in excess of amounts accrued therefor on the Closing Balance Sheet.
Buyer shall have sole control over all audits and other proceedings that relate
to Taxes of Nippon Selas and XX Xxxxx for any period that begins after the
Closing Date and shall be fully responsible for Tax payments, penalties and
assessments resulting therefrom with respect to periods that begin after the
Closing Date. Seller and Buyer shall cooperate as to any audits or other
proceedings that relate to Taxes of Nippon Selas or XX Xxxxx for any period that
begins before the Closing Date and end after the Closing Date.
(d) Seller and Buyer shall reasonably cooperate,
and shall cause their respective affiliates, officers, employees, agents,
auditors and representatives reasonably to cooperate, in preparing and filing
all Tax Returns (including amended returns and claims for refund), including
maintaining and making available to each other all records necessary in
connection with Taxes and in resolving all disputes and audits with respect to
all taxable periods relating to Taxes. Buyer and Seller recognize that Seller
will need access, from time to time, after the Closing Date, to certain
accounting and tax records and information held by Nippon Selas or XX Xxxxx to
the extent such records and information pertain to events occurring prior to the
Closing Date; therefore, Buyer agrees that from and after the Closing Date Buyer
shall, and shall cause Nippon Selas or XX Xxxxx to, (A) retain and maintain such
records until such time as Seller determines that such retention and maintenance
is no longer necessary and (B) allow Seller and its agents and representatives
(and agents and representatives of its affiliates), to inspect, review and make
copies of such records as Seller may reasonably deem necessary or appropriate
from time to time.
(e) For a period of seven (7) years from the
Closing Date, Buyer shall not, and shall cause Nippon Selas or XX Xxxxx not to,
dispose of or intentionally destroy any of the business records and files of
Nippon Selas or XX Xxxxx relating to Taxes in existence on the Closing Date
without first offering to turn over possession thereof to Seller by written
notice to Seller at least thirty (30) days prior to the proposed date of such
disposition or intentional destruction.
(f) [Intentionally Omitted.]
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(g) Notwithstanding any other provisions of this
Agreement to the contrary, all sales, use, transfer, gains, stamp, duties,
recording and similar Taxes (other than Taxes on the income of Seller) incurred
in connection with the transactions contemplated by this Agreement shall be paid
by Buyer. Buyer shall, at its own expense, accurately file or cause to be filed
all necessary Tax Returns and other documentation with respect to such Taxes and
timely pay, or cause to be paid, all such Taxes. If required by applicable law,
Seller will join in the execution of any such Tax Returns or such other
documentation.
5.9 [Intentionally Omitted.]
5.10 Books and Records. All books, records, drawings and other
records (collectively "Records") delivered by Seller to Buyer will be preserved
by Buyer for a period of at least seven (7) years following the Closing (the
"Retention Period") and Buyer will permit Seller and its authorized
representatives to have reasonable access to, and examine and make copies of,
all such Records as reasonably requested by Seller. In the event that Buyer
elects to dispose of or destroy any such Records at any time during or after the
Retention Period, Buyer shall provide Seller 60 days prior written notice to
review the Records proposed to be disposed of or destroyed and will deliver to
Seller or to a third-party storage facility designated by Seller ("Third Party
Storage Facility") (each at Seller's expense) any Records Seller requests.
5.11 Acknowledgement of Personal Property. The parties hereto agree
and acknowledge that the personal property listed in Section 5.11 of the
Disclosure Schedule is personal property owned by the Seller or Employees and
Seller or such Employees shall be entitled to remove such personal property from
the premises of the Business.
5.12 Release of Guarantees and Liens.
(a) On or before Closing, Seller shall cause,
and shall provide Buyer with reasonably sufficient proof that, all guarantees
made by Nippon Selas or XX Xxxxx for the benefit of Seller, including but not
limited to, guarantees with respect to the credit facilities of Seller, to be
terminated and released.
(b) On or before Closing, Seller shall cause,
and shall provide Buyer with reasonably sufficient proof that, all security
interests, encumbrances and liens on the Assets and assets owned by Nippon Selas
and XX Xxxxx, which liens arise from or in connection with credit facilities of
Seller, to be terminated and released.
(c) On or before Closing, Buyer shall cause, and
shall provide Seller with reasonably sufficient proof that, Seller to be
released from all guarantees made by Seller for the benefit of Nippon Selas or
XX Xxxxx listed on Section 5.12(c) of the Disclosure Schedule. In the event that
Buyer is not able to obtain the release of such guarantees, Buyer shall
indemnify Seller with respect to such guarantees as an Assumed Liability
pursuant to Section 9.3.
5.13 Assignment, Assumption and Release Agreements. Seller has
entered into a Change of Control Agreement with each of Xxxxxx X. Xxxxxx, Xxxxx
X. Xxxxxxxx, and Xxxx X. Xxxxx. At the Closing, Buyer shall assume the
obligations under such agreements and shall
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obtain the release of Seller from its obligations thereunder pursuant to an
Assignment, Assumption and Release Agreement in the form of Exhibit 5.13
attached hereto duly executed by Buyer and each of the parties to such
agreements.
5.14 Supplemental Disclosure. Seller shall promptly from time to
time prior to the Closing supplement or amend in writing its Disclosure Schedule
with respect to any matter hereafter arising or discovered which if existing or
known at the date of this Agreement would have been required to be set forth or
described in such Disclosure Schedule. If (without consideration of the
materiality qualifications contained in individual representations and
warranties) the changes pursuant to such supplements and amendments, in the
aggregate, are breaches of Seller's representations and warranties that are
reasonably likely to involve sums equal to or in excess of $50,000 to remedy
(collectively, "Material and Adverse Change Disclosures"), Buyer shall have the
right to terminate this Agreement in accordance with the procedures set forth in
Section 7.1(a). If Buyer terminates the Agreement due to Material and Adverse
Change Disclosures: Buyer's sole remedy shall be to require Seller to reimburse
Buyer, and Seller will reimburse Buyer for its reasonable expenses, not to
exceed $20,000 in the aggregate If Buyer elects to complete Closing
notwithstanding such Material and Adverse Change Disclosures, the disclosure of
such Material and Adverse Change Disclosures shall be deemed to have been made
as of the date of this Agreement and to have cured any breach of any
representation or warranty made in this Agreement for all purposes of this
Agreement, however, Section 9.4(a) shall no longer apply to Seller and such
section shall be of no further effect and Buyer shall be entitled to seek
indemnification from Seller or to reduce the Purchase Price on a
dollar-for-dollar basis to the extent the changes pursuant to such supplements
and amendments, in the aggregate, are breaches of Seller's representations and
warranties as of the date of this Agreement that involve sums in excess of
$50,000 to remedy.
5.15 Accuracy of Representations and Warranties. Each party will
immediately advise the other party in writing if (a) any of the representations
or warranties of such party is untrue or incorrect in any material respect, or
(b) such party becomes aware of the occurrence of any event or state of facts
that results in any of the representations and warranties of such party being
untrue or incorrect in any material respect. Neither party will take any action,
or omit to take any action, that would result in any of such party's
representations and warranties set forth in this Agreement to be untrue or
incorrect as of the Closing Date in any material respect.
5.16 Non-competition. For a period of seven years after the
Closing, Seller shall not, directly or indirectly, compete against Buyer, Nippon
Selas or XX Xxxxx with respect to the Business. This agreement not to compete
shall apply as to the Business with all customers of the Business, Nippon Selas
and XX Xxxxx as of (or within one year prior to) the Closing or as to which the
Seller, with respect to the Business, Nippon Selas or XX Xxxxx has proposals or
quotations outstanding as of the Closing. If a court of competent jurisdiction
determines that the term or extent of this covenant not to compete is too long
or broad, the term and/or extent shall be reduced to the extent necessary to
make it enforceable. Further as soon as practicable after the Closing, Seller
agrees, on behalf of itself and person or entity controlled by or under common
control with Seller, to cease all use of "Selas" as a trademark, trade name or
in any other manner, including but not limited to making all appropriate
amendments to its Certificate of Incorporation. Seller acknowledges and agrees
that this Section 5.16 is reasonable, necessary to
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protect and preserve Buyer's legitimate business interests and the value of the
Assets and to prevent any unfair advantage conferred on Seller and is a material
portion of the consideration given by Seller to induce Buyer to enter into this
Agreement.
5.17 Large Furnace Business. Buyer understands and agrees that the
name "Selas" and any variation thereof and the Licensed IP (as defined in the
Andritz License Agreement) may not be used in a business that is competitive
with the Large Furnace Business.
5.18 Transition and Consulting Services.
(a) For a period of 90 days after Closing, Buyer
shall and shall cause Nippon Selas and XX Xxxxx to make available to Seller, at
no cost to Seller, the services of Buyer's, Nippon Selas' and XX Xxxxx'
accounting and administrative personnel to assist Seller in closing the books of
Seller with respect to the Business and preparing the Closing Balance Sheet and
any final tax returns.
(b) From time to time after Closing, Buyer shall
provide such reasonable technical assistance and access to Records (as defined
in Section 5.10), including without limitation, reviewing and obtaining
information from any Records of the Business in the possession of the Seller or
held at the Third Party Storage Facility, to permit Seller to defend itself in
litigation and for other proper proposes. Seller shall reimburse Buyer for its
reasonable out of pocket expenses in connection with such assistance and at a
rate of $60.00 per man hour for Buyer's personnel providing assistance in excess
of an aggregate of 300 man hours in a calendar year. Any access by Seller to
Buyer's Records shall be conducted during normal business hours under the
supervision of Buyer and in such a manner as to not interfere unreasonably with
the business operations of Buyer.
(c) Buyer shall administer Seller's Retiree
Medical Plans for four (4) years following Closing. Seller shall continue to pay
its portion of each insurance premium for each retired employee who pays his/her
portion of the medical insurance premium. Buyer shall establish a reporting
system and provide reports to Seller so that Seller can transmit medical
insurance premium payments to Buyer and so that Seller can be assured that it is
paying the correct amount.
5.19 Customer and other Business Relationships. Neither Seller nor
any of its officers, employees or agents shall take any action that would tend
to diminish the value of the Assets after the Closing or that would interfere
with the business of Buyer to be engaged in after the Closing, including
disparaging the name of the or business of Buyer.
5.20 [intentionally omitted]
5.21 Plant Closing Laws. Seller shall bear all responsibility for,
and related costs associated with complying with the terms of the federal Worker
Adjustment and Retraining Notification Act (the "WARN Act") and any similar,
applicable state or local laws with respect to all such employees of the
Business as of the Closing Date. Seller shall terminate the employment of all
employees of the Business prior to the Closing of the transactions
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contemplated by this Agreement, such that no employees of the Business shall be
considered or deemed the employees of the Buyer, except to the extent for
employees employed by Buyer.
5.22 Assurance of Continuity. If Seller ceases to be subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, for a
period of ten years following Closing, Seller shall provide Buyer with quarterly
unaudited financial statements consisting of a balance sheet and income
statement within 45 days of the end of each fiscal quarter. If Seller sells
substantially all of its assets or otherwise reorganizes, Seller agrees that it
shall cause any successor entity to assume Seller's obligations hereunder. Buyer
shall maintain the confidentiality of any financial statements provided by
Seller (other than those publicly filed with the SEC.)
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES
6.1 Conditions to Each Party's Obligation. The respective
obligation of each party to consummate the transactions contemplated herein is
subject to the satisfaction (or mutual waiver) at or prior to the Closing of the
following conditions:
(a) No statute, rule or regulation shall have
been enacted, entered, promulgated or enforced by any court or governmental
authority which prohibits or restricts the consummation of the transactions
contemplated hereby;
(b) There shall not be in effect any judgment,
order, injunction or decree of any court of competent jurisdiction enjoining the
consummation of the transactions contemplated hereby;
(c) Seller and Buyer shall have obtained in
writing all consents set forth in Section 6.1(c) of the Disclosure Schedule that
the parties have determined are necessary to consummate or facilitate
consummation of this Agreement and any related transactions; and
(d) There shall not be any suit, action,
investigation, inquiry or other proceeding instituted, pending or threatened by
any governmental or other regulatory or administrative agency or commission that
seeks to enjoin or otherwise prevent consummation of the transactions
contemplated hereby.
6.2 Conditions to Obligations of Seller. The obligations of Seller
to consummate the transactions contemplated hereby are further subject to the
satisfaction (or waiver) at or prior to the Closing of the following conditions:
(a) Without giving effect to any materiality
qualifiers contained therein, the representations and warranties of Buyer
contained in Article III of this Agreement shall be true and correct in all
material respects in the aggregate as of the Closing Date as if made at and as
of the Closing Date, except for changes permitted or contemplated hereby and
except for representations and warranties which are made as of a specific date,
which shall be true and correct in all material respects in the aggregate at
such date;
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(b) Buyer shall have performed in all material
respects its obligations under this Agreement required to be performed by it at
or prior to the Closing pursuant to the terms hereof; and
(c) Buyer shall have delivered to Seller or its
affiliates those items set forth in Section 7.2 hereof.
6.3 Conditions to Obligations of Buyer. The obligations of Buyer
to consummate the transactions contemplated hereby are further subject to the
satisfaction (or waiver) at or prior to the Closing of the following conditions:
(a) Without giving effect to any materiality
qualifiers contained therein, the representations and warranties of Seller
contained in Article IV of this Agreement shall be true and correct in all
material respects in the aggregate as of the Closing Date as if made at and as
of the Closing Date, except for changes permitted or contemplated hereby and
except for representations and warranties which are as of a specific date, which
shall be true and correct in all material respects in the aggregate at such
date;
(b) Seller shall have performed in all material
respects its obligations under this Agreement required to be performed by it at
or prior to the Closing pursuant to the terms hereof;
(c) Seller or its affiliates or agents shall
have delivered to Buyer those items set forth in Section 7.1 hereof.
ARTICLE VII
DELIVERIES; BOOKS AND RECORDS OF THE COMPANY
7.1 Deliveries by Seller. At the Closing, Seller will deliver or
cause to be delivered to Buyer (unless delivered previously) the following:
(a) A Xxxx of Sale and Assignment Agreement with
respect to the Assets, in form acceptable to the parties ("Xxxx of Sale and
Assignment Agreement"), duly executed by Seller;
(b) An Assumption Agreement with respect to the
Assumed Liabilities, in form acceptable to the parties ("Assumption Agreement"),
duly executed by Seller;
(c) The stock certificate or certificates (or
similar evidence of ownership) representing the Interests, accompanied by stock
powers duly executed in blank or duly executed stock transfer forms or
instruments of transfer, with any required transfer stamps attached, which
validly transfer title of the Interests;
(d) Any Assignment, Assumption and Release
Agreements (as defined in Section 5.13), duly executed by the employees of
Seller that are a party thereto;
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(e) Duly executed comprehensive mutual releases
in the form of Exhibit 7.1(e) attached hereto between Seller and each of Nippon
Selas and XX Xxxxx concerning all claims against the other party, save only for
matters arising out this Agreement;
(f) All the minute books, stock books, ledger
books and corporate seal of Nippon Selas and XX Xxxxx;
(g) All the books and records of Seller, with
respect to the Business, Nippon Selas and XX Xxxxx;
(h) A certificate, dated the Closing Date,
certifying as to the matters described in Sections 6.3(a) and (b) hereof;
(i) A certificate or certificates dated the
Closing Date and signed on behalf of the Seller by its Secretary (i) stating
that (A) the copy of Seller's charter, articles or certificate of incorporation
attached to the certificate is true, correct and complete, (B) no amendment to
such charter, articles or certificate of incorporation has occurred since the
date of the last amendment annexed (such date to be specified), (C) a true and
correct copy of Seller's bylaws as in effect on the date thereof and at all
times since the adoption of the resolutions referred to in clause (D) of this
paragraph is attached to the certificate, (D) the resolutions by Seller's board
of directors authorizing the execution, delivery and performance of this
Agreement (and all other documents and instruments executed in connection
herewith), and authorizing the transactions contemplated thereby, were duly
adopted and continue in force and effect (a copy of such resolutions to be
annexed to such certificate); and (ii) setting forth Seller's incumbent officers
on such certificate or certificates;
(j) An Assignment and Assumption Agreement of
the Collective Bargaining Agreement among the Union, Seller and Buyer, in form
acceptable to Buyer and Seller, duly executed by Seller;
(k) All other documents, instruments and
writings required or reasonably requested to be delivered by Seller at or prior
to the Closing pursuant to this Agreement or otherwise required in connection
herewith.
7.2 Deliveries by Buyer. At the Closing, Buyer will deliver or
cause to be delivered to Seller (unless previously delivered) the following:
(a) The Purchase Price referred to in Section
1.2(a) including the Promissory Note, duly executed by Buyer;
(b) The Xxxx of Sale and Assignment Agreement,
duly executed by Buyer;
(c) The Assumption Agreement, duly executed by
Buyer;
(d) The Assignment, Assumption and Release
Agreements (as defined in Section 5.13), duly executed by Buyer;
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(e) A certificate, executed by an authorized
officer of Buyer, dated the Closing Date, certifying as to the matters described
in Sections 6.2(a) and (b)] hereof;
(f) A certificate or certificates dated of the
Closing Date and signed on behalf of the Buyer by an authorized officer (i)
stating that (A) the copy of Buyer's certificate of formation is true, correct
and complete, (B) no amendment to such certificate of formation has occurred
since the date of the last amendment annexed (such date to be specified), (C) a
true and correct copy of the relevant provisions of Buyer's operating agreement
or similar agreement, if any, with respect to the power and authority of the
Buyer to effect the transactions contemplated hereby and the authority of the
officers or other representatives of the Buyer to execute, deliver and perform
the Agreement and the other documents contemplated hereby, as in effect on the
date thereof and at all times since the adoption of the resolutions referred to
in clause (ii) of this paragraph is annexed to such certificate, (ii) the
resolutions by Buyer's governing body and by Buyer's members, to the extent
applicable, authorizing the execution, delivery and performance of this
Agreement (and all other documents and instruments executed in connection
herewith), and authorizing the transactions contemplated thereby, were duly
adopted and continue in force and effect (a copy of such resolutions to be
annexed to such certificate); and (iii) setting forth Buyer's incumbent officers
on such certificate or certificates;
(g) An Assignment and Assumption Agreement of
the Collective Bargaining Agreement among the Union, Seller and Buyer, in form
acceptable to Buyer and Seller, duly executed by the Union and the Buyer;
(h) A Guaranty in the form attached as Exhibit
7.2(h) ("Guaranty"), duly executed by Lionheart Holdings LLC ("Parent"); and
(i) All other documents, instruments or writings
required or reasonably requested to be delivered by the Buyer at or prior to the
Closing pursuant to this Agreement or otherwise required in connection herewith.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
8.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) by either Buyer or Seller if one or more
breaches of this Agreement that are material in the aggregate have been
committed by the other party and such breach or breaches have not been waived;
provided however that a material breach shall not give rise to a right to
terminate this Agreement under this Section 8.1(a) unless and until (i) the
non-breaching party delivers a written notice to the breaching party, notifying
the breaching party of the breach (including a reasonable description thereof)
and (ii) the breaching party fails to cure such breach within ten (10) days
after delivery of such written notice.
(b) (i) by Buyer if any of the conditions in
Section 6.1 or Section 6.3 has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes
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impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Seller, if any of the conditions in Section
6.1 or Section 6.2 has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Seller to comply with their obligations under this Agreement) and
Seller has not waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Seller; or
(d) by either Buyer or Seller if the Closing has
not occurred (other than through the failure of the party seeking to terminate
this Agreement to comply fully with its obligations under this Agreement) on or
before April 11, 2005, or such later date as the parties may agree upon.
8.2 Procedure and Effect of Termination. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to Section 8.1 hereof, written notice thereof shall
forthwith be given by the parties so terminating to the other party and this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by Seller, on the one hand, or Buyer, on the
other hand. If this Agreement is terminated pursuant to Section 8.1 hereof:
(a) Each party shall redeliver all documents,
work papers and other materials of the other parties relating to the
transactions contemplated hereby, whether obtained before or after the execution
hereof, to the party furnishing the same, and all confidential information
received by any party hereto with respect to the other party shall be treated in
accordance with the Confidentiality Agreement;
(b) All filings, applications and other
submissions made pursuant hereto shall, at the option of Seller, and to the
extent practicable, be withdrawn from the agency or other person to which made;
and
(c) Each party's right of termination under
Section 8.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 8.1, all
further obligations of the parties under this Agreement will terminate, except
that the provisions of Section 5.5, Section 5.15 and Article X will survive;
provided, however, that if this Agreement is terminated by a party because of
the breach of the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies, including any remedies set forth in this Agreement, will survive
such termination unimpaired.
8.3 Amendment, Modification and Waiver. This Agreement may be
amended, modified or supplemented at any time only by a written agreement of
Seller and Buyer. Any failure of Seller or Buyer to comply with any term or
provision of this Agreement may be waived, with respect to Buyer, by Seller and,
with respect to Seller, by Buyer, by an instrument in
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writing signed by or on behalf of the appropriate party, but such waiver or
failure to insist upon strict compliance with such term or provision shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure to comply.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS: INDEMNIFICATION
9.1 Survival of Representations and Warranties and Agreements. All
representations, warranties, covenants, obligations and agreements of Seller and
Buyer, made in this Agreement shall survive the Closing.
9.2 Seller's Agreement to Indemnify. Subject to the terms and
conditions set forth herein, from and after the Closing, Seller shall indemnify
and hold harmless Buyer and its directors, officers, employees, affiliates
(including for this purpose Nippon Selas and XX Xxxxx), controlling persons,
agents and representatives and their successors and permitted assigns ("Buyer
Indemnitees") from and against all liability, demands, claims, actions or causes
of action, assessments, fines, losses, damages, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses), including without
limitation, any third party claims (collectively "Damages") asserted against or
incurred by any Buyer Indemnitee as a result of or arising out of (a) a breach
by Seller of or inaccuracy in any representation or warranty of Seller contained
in Article III of this Agreement as though such representations and warranties
were made at and as of the Closing (except to the extent that any such
representations and warranties are made as of a specified date, then as of such
date), (b) any breach by Seller of, or any failure by Seller to fully carry out
and perform, any agreement, covenant, undertaking or obligation of Seller in
this Agreement including without limitation failure to pay, perform and
discharge any liability or obligation of, or claim against, the Seller other
than the Assumed Liabilities, or (c) Seller's operation of the Business prior to
the Closing Date. The parties agree that the matters subject to indemnification
pursuant to the preceding clauses (b) and (c) shall without limitation include
(i) any asbestos liability or other product liability claim with respect to
products sold prior to Closing, (ii) any adverse environmental condition
existing at the time of Closing with respect to any premises occupied by the
Business for which Seller had liability and (iii) except as specifically assumed
hereunder, any obligation of Seller to any employee or former employee of the
Business.
9.3 Buyer's Agreement to Indemnify. Subject to the terms and
conditions set forth herein, from and after the Closing, Buyer shall indemnify
and hold harmless Seller and its affiliates (it being understood that Nippon
Selas and XX Xxxxx shall not be considered an affiliate of Seller and shall not
be entitled to indemnification by Buyer hereunder), agents and representatives
and their successors and permitted assigns (collectively, the "Seller
Indemnitees") from and against all Damages asserted against or incurred by any
Seller Indemnitee as a result of or arising out of (a) a breach by Buyer of or
inaccuracy in any representation or warranty by Buyer contained in Article IV of
this Agreement as though such representations and warranties were made at and as
of the Closing (except to the extent that any such representations and
warranties are made as of a specified date, then as of such date), (b) any
breach by Buyer of, or any failure by Buyer to fully carry out and perform, any
agreement, covenant, undertaking or obligation of Buyer in this Agreement,
including without limitation failure to pay, perform and
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discharge the Assumed Liabilities or any liability of Nippon Selas or XX Xxxxx,
(c) any breach by Buyer of, or any failure by Buyer to fully carry out and
perform the Promissory Note, (d) all salaries, bonuses, commissions and vacation
entitlements accrued on the Closing Balance Sheet but unpaid as of the Closing
due to any Employee, (e) any claims of, or damages or penalties sought by, any
Employee, or any governmental entity on behalf of or concerning any Employee,
with respect to any act or failure to act by Buyer to the extent arising from
the employment, discharge, layoff or termination of any Employee by Buyer after
the Closing, and (f) Buyer's operation of the Business from and after the
Closing Date.
9.4 Limitations on Indemnification. The indemnification
obligations set forth in this Article IX are subject to the following
limitations:
(a) No indemnification shall be made by the
Seller unless the aggregate amount of Damages exceeds $50,000 and, in the event
that Damages exceed $50,000, indemnification shall be made by the Seller for
such amount and all other future Damages for which Buyer is entitled to
indemnification hereunder; provided, however, that this $50,000 limitation shall
not apply with respect to Seller's indemnification obligations under Section
9.2(b) and (c).
(b) In no event shall Seller's aggregate
obligation to indemnify the Buyer Indemnitees exceed $1,000,000 (the "General
Cap"); provided, however that this General Cap limitation shall not apply with
respect to Seller's obligation to indemnify the Buyer Indemnitees for the
failure by Seller to pay, perform and discharge any liability or obligation of
the Seller other than the Assumed Liabilities.
(c) The obligations of a Seller on the one hand
or Buyer on the other hand, as applicable (the "Indemnitor") to indemnify the
Buyer Indemnitees on the one hand or the Seller Indemnitees on the other hand,
as applicable, (the "Indemnitees") pursuant to this Article IX are subject to
the following provisions:
(i) The amount of any Damages shall be
reduced by any amount actually received by an Indemnitee with respect thereto
under any insurance coverage or from any other party alleged to be responsible
therefor and by the amount of any reduction in Tax liability of the Companies or
such Indemnitee with respect thereto. The Indemnitees shall use reasonable
efforts to collect any amounts available under such insurance coverage and from
such other party alleged to have responsibility. If an Indemnitee receives an
amount under insurance coverage or from such other party or a reduction in Tax
liability with respect to Damages at any time subsequent to any indemnification
provided by an Indemnitor pursuant to this Section 9, then such Indemnitee shall
promptly reimburse the Indemnitor, for any payment made or expense incurred by
Indemnitor in connection with providing such indemnification up to such amount
received by the Indemnitee, or the reduction in tax liability as applicable;
(ii) An Indemnitee shall make
commercially reasonable efforts to mitigate any claim or liability that an
Indemnitee asserts under this Section 9. In the event that an Indemnitee shall
fail to make such commercially reasonable efforts to mitigate any claim or
liability, then notwithstanding anything else to the contrary contained herein,
the Indemnitor shall
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not be required to indemnify an Indemnitee to the extent that any Damages would
have been avoided if an Indemnitee had made such efforts.
(iii) An Indemnitor shall be obligated to
indemnify the Indemnitees only for those claims giving rise to Damages as to
which the Indemnitees have given an Indemnitor written notice thereof. Any
written notice delivered by an Indemnitee with respect to Damages shall set
forth with as much specificity as is reasonably practicable based on the
information then known to the Indemnitee the basis of the claim for Damages and,
to the extent reasonably practicable, a reasonable estimate of the amount
thereof.
(iv) Except for willful, knowing or
intentional fraud, remedies that cannot be waived as a matter of law and
injunctive or provisional relief, if the Closing occurs, this Article IX shall
be the exclusive remedy for breaches of this Agreement (including any covenant,
obligation, representation or warranty contained in this Agreement or in any
certificate delivered pursuant to this Agreement) or otherwise in respect of the
sale of the Assets contemplated hereby.
(d) Any claim by the Buyer, on the one hand, or
Seller, on the other hand, for indemnification under this Article IX must be
made in accordance with Article IX, including Section 9.4(c)(iii), within
eighteen (18) months of the Closing Date, or such claims shall be barred.
Notwithstanding the foregoing: (a) claims by Buyer for breach of Seller's
representations and warranties set forth in Sections 3.2, 3.3, 3.4, 3.9(c), and
3.21, or for matters described in Section 9.2(b) or Section 9.2(c), and (b)
claims by Seller for beaches of Buyer's representations and warranties set forth
in Sections 4.1(b), 4.3, 4.5, 4.7 and 4.9, or for the matters described in
Sections 9.3(b), (c), (d) or (e), in any case may be made at any time, subject
to any statute of limitations applicable to the underlying claim. Time shall be
of the essence with regard to this Section 9.4(d).
9.5 Third Party Indemnification. The obligations of an Indemnitor
to indemnify Indemnitees under Section 9.2 or Section 9.3, as applicable, of
this Article IX hereof with respect to Damages resulting from the assertion of
liability by third parties (a "Claim"), will be subject to the following
additional terms and conditions:
(a) Any Indemnitee against whom any Claim is
asserted will give the Indemnitor advance written notice of any such Claim
promptly after learning of such Claim, and the Indemnitor may, upon written
notice to the Indemnitee, at its sole option elect to undertake and pay for the
defense thereof by representatives of its own choosing but that is reasonably
acceptable to the Indemnitee. The Indemnitor shall not, following and so long as
it diligently conducts such defense, be liable to the Indemnitee for any fees of
other counsel or any other expenses with respect to the defense of such Claim,
however the Indemnitee may retain legal counsel of its own choosing to
participate in the defense of such Claim at its own expense. If the Indemnitor,
within thirty (30) days after written notice of any such Claim, or such shorter
period as is reasonably required, fails to assume the defense of such Claim, the
Indemnitee against whom such Claim has been made will (upon further written
notice to Indemnitor) have the right to undertake the defense or reasonable
compromise or settlement of such Claim on behalf of and for the account and risk
of the Indemnitor, and the costs and expenses of defense (including
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reasonable attorneys' fees) of Claims and Damages (including the cost of any
such reasonable compromise or settlement of any such Claim) for which
indemnification is required under Article IX shall be reimbursed to the
Indemnitee by the Indemnitor. Notice of any third-party Claim to the Indemnitor
by the Indemnitee must specifically include to the extent available to
Indemnitee: (i) the factual basis for such Claim, and (ii) the amount of the
Claim. For the purposes of investigation and/or defense of the Claim, the
Indemnitee agrees to make available to the Indemnitor and/or its authorized
representative(s) the information relied upon by the Indemnitee to substantiate
the Claim and/or defend the Claim. The Indemnitee further agrees to give the
Indemnitor reasonable access to the books, records, and assets of the Indemnitee
that relate to the act or omission or occurrence upon which the third-party
claim is based and the right of the Indemnitor, upon reasonable advance notice,
to interview any relevant personnel of the Indemnitee concerning the Claim
during normal business hours.
(b) Anything in this Section 9.5 to the contrary
notwithstanding: (i) an Indemnitor shall not enter into any settlement or
compromise of any action, suit or proceeding or consent to the entry of any
judgment which does not include as an unconditional term thereof the delivery by
the third-party claimant or plaintiff to the Indemnitee of a written release
from all liability in respect of such action, suit or proceeding and (ii)
neither the Indemnitor nor the Indemnitee shall enter into any compromise or
settlement of any action, suit or proceeding without the prior written consent
of the other, which consent shall not be unreasonably withheld.
ARTICLE X
MISCELLANEOUS
10.1 Fees and Expenses. Whether or not the transactions
contemplated herein are consummated pursuant hereto, except as otherwise
provided herein, each of Seller, on the one hand, and Buyer, on the other hand,
shall pay all fees and expenses incurred by, or on behalf of, such party in
connection with, or in anticipation of, this Agreement and the consummation of
the transactions contemplated hereby. Without limiting the generality of the
foregoing, Buyer shall be responsible for and pay all filing, transfer,
recording and similar fees in connection with the recording of the transfer of
the Intangible Assets to Buyer. Each of Seller, on the one hand, and Buyer, on
the other hand, shall indemnify and hold harmless the other party from and
against any and all claims or liabilities for financial advisory and finders'
fees incurred by reason of any action taken by such party or otherwise arising
out of the transactions contemplated by this Agreement by any person claiming to
have been engaged by such party.
10.2 Further Assurances. From time to time after the Closing Date,
at the request of another party hereto, each of the parties hereto shall execute
and deliver to such requesting party such documents and take such other action
as such requesting party may reasonably request in order to consummate more
effectively the transactions contemplated hereby.
10.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and may be given by any of the following methods: (a) personal
delivery; (b) facsimile transmission; or (c) overnight delivery service. Notices
shall be sent to the appropriate party at its address or facsimile number given
below (or at such other address or facsimile number
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for such party as shall be specified by notice given hereunder):
If to Buyer, to:
c/o Lionheart Holdings LLC
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Chief Executive Officer
Tel No.:(000) 000-0000
Fax No. (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxxxxxx & Mugel, LLP
00 Xxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Fax No. (000) 000-0000
If to Seller, to:
Selas Corporation of America
0000 Xxx Xxx Xxxx
Xxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Chief Financial Officer
Tel. No.: (000) 000-0000
Fax No.: 000-000-0000
with a copy to:
Blank Rome LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esquire
Tel No.: (000) 000-0000
Fax No. (000) 000-0000
All such notices, requests, demands, waivers and, communications shall be deemed
received upon (i) actual receipt thereof by the addressee, (ii) actual delivery
thereof to the appropriate address or (iii) in the case of a facsimile
transmission, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously send
via overnight delivery a copy of
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the notice to the addressee at the address provided for above. However, such
mailing shall in no way alter the time at which the facsimile notice is deemed
received.
10.4 Severability. Should any provision of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any of the other provisions of this Agreement,
which remaining provisions shall remain in full force and effect and the
application of such invalid or unenforceable provision to persons or
circumstances other than those as to which it is held invalid or unenforceable
shall be valid and enforced to the fullest extent permitted by law.
10.5 Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned, directly or indirectly, including, without limitation, by operation
of law, by any party hereto without the prior written consent of the other
parties hereto.
10.6 No Third Party Beneficiaries. This Agreement is solely for the
benefit of Seller, and its successors and permitted assigns, with respect to the
obligations of Buyer under this Agreement, and for the benefit of Buyer, and its
respective successors and permitted assigns, with respect to the obligations of
Seller under this Agreement and this Agreement shall not be deemed to confer
upon or give to any other third party any remedy, claim liability,
reimbursement, cause of action or other right.
10.7 Interpretation.
(a) The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
(b) As used in this Agreement, the term
"person" shall mean and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
(c) As used in this Agreement, the term
"affiliate" shall have the meaning set forth in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended.
(d) As used in this Agreement, the phrases "to
the knowledge of Seller" or "to the knowledge of Seller" or similar phrases in
regard to the Seller's, Nippon Selas' or XX Xxxxx knowledge, shall mean the
actual knowledge, after due investigation, of Xxxx X. Xxxxxx, Xxxxxx X.
Xxxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxx Horano, Xxxxx Xxxxxxxx and
Xxxx X. Xxxxx.
(e) In the event an ambiguity or a question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption
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or burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any provisions of this Agreement.
10.8 Jurisdiction and Consent to Service. Without limiting the
jurisdiction or venue of any other court, each of Seller and Buyer (a) agrees
that any suit, action or proceeding arising out of or relating to this Agreement
may be brought solely in the state courts in Xxxxxxxxxx County Pennsylvania or
Federal courts of the Eastern District of Pennsylvania; (b) consents to the
exclusive jurisdiction of each such court in any suit, action or proceeding
relating to or arising out of this Agreement; (c) waives any objection which it
may have to the laying of venue in any such suit, action or proceeding in any
such court; and (d) agrees that service of any court paper may be made in such
manner as may be provided under applicable laws or court rules governing service
of process.
10.9 Entire Agreement. This Agreement, the Disclosure Schedule, and
the Exhibits and other documents referred to herein or delivered pursuant hereto
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties or any of them with respect to the subject
matter hereof, including, without limitation, the Letter of Intent dated
December 23, 2004 between Seller and Buyer ("Letter of Intent"). The
Confidentiality Agreement shall survive the execution of this Agreement.
10.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
(regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof) as to all matters, including but not limited to
matters of validity, construction, effect, performance and remedies.
10.11 Specific Performance. The parties agree that any breach of the
terms of this Agreement would give rise to irreparable harm for which money
damages would not be an adequate remedy and accordingly the parties agree that,
in addition to any other remedies, each shall be entitled to enforce the terms
of this Agreement by a decree of specific performance without the necessity of
proving the inadequacy of money damages as a remedy.
10.12 Disclosure Schedule. Upon the execution hereof, Seller shall
deliver to Buyer the Disclosure Schedule (the "Disclosure Schedule"), which
discloses certain information called for in Article III and elsewhere in this
Agreement. The Disclosure Schedule shall be subject to the following terms and
conditions:
(a) Unless the context otherwise requires, any
terms used in the Disclosure Schedule but not defined therein shall have the
meanings ascribed thereto in this Agreement;
(b) The section numbers used in the Disclosure
Schedule correspond to the section numbers of this Agreement; provided however,
that, notwithstanding the parties' efforts to properly prepare the Disclosure
Schedule in accordance with the foregoing, the disclosures set forth in an
particular section of the Disclosure Schedule shall, to the extent that
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such disclosures would be appropriate, be deemed to be disclosed on all the
other sections of the Disclosure Schedule therein;
(c) [Intentionally Omitted];
(d) No disclosure of any matter contained
therein shall create an implication that such matter meets any standard of
materiality. Matters reflected in the Disclosure Schedule are not necessarily
limited to matters required by this Agreement to be reflected in the Disclosure
Schedule. Such additional matters are set forth for informational purposes only
and do not necessarily include other matters of a similar nature, nor shall the
inclusion of any item be construed as implying that any such item is "material"
for any purpose;
(e) Any disclosures contained therein which
refer to a document are qualified in their entirety by reference to the text of
such document, a true and complete copy of which was included in the due
diligence information supplied to Buyer; and
(f) Headings and introductory language have been
inserted on the sections of the Disclosure Schedule for convenience of reference
only and shall to no extent have the effect of amending or changing the express
description of the Sections as set forth in this Agreement.
10.13 Counterparts and Facsimile Signatures. This Agreement may be
executed in counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement, and parties may
provide signatures to the other parties by facsimile, provided that an original
copy of such signature be delivered to such other parties as soon as
practicable.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, intending to be legally bound hereby, as of the date first written
above.
SELLER:
SELAS CORPORATION OF AMERICA
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
BUYER:
SELAS HEAT TECHNOLOGY COMPANY LLC
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
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The exhibits and schedules listed below are omitted pursuant to Regulation
S-K, Item 601(b)(2). Intricon Corporation agrees to furnish a copy of such
schedules and/or exhibits to the Securities and Exchange Commission upon
request.
Exhibit 1.3 Promissory Note
Exhibit 5.13 Assignment, Assumption and Release Agreement
Exhibit 7.1(e) Releases
Exhibit 7.2(h) Guaranty
1.2.1 Accounts Receivable.
1.2.2 Tangible Assets.
1.2.3 Inventory.
1.2.4 Contracts.
1.2.5 Intangibles.
1.2.7 Records and Goodwill.
1.2.8 Prepaid Expenses.
2.2.1 Warranty Reserves.
3.3 Interests.
3.4 Ownership of the Interests.
3.5 Consents and Approvals: No Violations.
3.6 Financial Statements.
3.7 Absence of Undisclosed Liabilities.
3.8 Absence of Material Adverse and Other Changes.
3.9 Title, Ownership and Related Matters.
3.10 Leases.
3.11 Intellectual Property.
3.12 Accounts Receivable.
3.15 Litigation.
3.16 Compliance with Applicable Law.
3.17 Certain Contracts and Arrangements.
3.18 Employee Benefit Plans; ERISA; Employees.
3.19 Insurance.
3.19 Insurance (continued).
3.20 Environmental Matters.
3.21 Taxes.
3.22 Related Party Transactions.
3.24 Permits and Licenses.
3.25 Conduct of Business.
3.26 Employees.
3.27 Suppliers and Customers.
3.28 Bank Accounts
3.29 Accounts Payable.
5.7 Employees; Employee Benefits.
5.11 Acknowledgement of Personal Property.
5.12 Release of Guarantees and Liens.
5.17 No Competition with Large Furnace Business
6.1 Required Consents Agreed Upon by Buyer and Seller.
