1
Exhibit 2.1
ASSET PURCHASE AGREEMENT
AMONG
GEO SPECIALTY CHEMICALS, INC.,
MALLINCKRODT INC. (a New York corporation),
and
MALLINCKRODT INC. (a Delaware corporation)
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TABLE OF CONTENTS
PAGE
1. SALE AND PURCHASE OF ASSETS..........................................................1
1.1 Transferred Assets..........................................................1
1.2 Excluded Assets.............................................................3
2. ASSUMED AND RETAINED LIABILITIES.....................................................3
2.1 Assumption of Liabilities...................................................4
2.2 Retained Liabilities........................................................5
3. PURCHASE PRICE.......................................................................5
3.1 Purchase Price..............................................................5
3.2 Post-Closing Purchase Price Adjustment......................................5
3.3 Preparation of Postretirement Medical Benefits Closing Statement............6
3.4 Acknowledgment; Confidentiality.............................................7
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY SELLER.................................8
4.1 Organization and Qualification..............................................8
4.2 Corporate Authorization.....................................................8
4.3 Consents and Approvals......................................................8
4.4 Non-contravention...........................................................8
4.5 Binding Effect..............................................................9
4.6 Financial Statements........................................................9
4.7 No Material Adverse Change Since the Balance Sheet Date....................10
4.8 Litigation and Claims......................................................11
4.9 Tax Matters................................................................11
4.10 Employee Benefits..........................................................11
4.11 Compliance with Laws.......................................................13
4.12 Environmental Matters......................................................13
4.13 Intellectual Property......................................................15
4.14 Labor Matters..............................................................16
4.15 Contracts..................................................................17
4.16 Real Property..............................................................18
4.17 Property Used..............................................................19
4.18 Employees; Wage Increases..................................................19
4.19 No Undisclosed Liabilities.................................................19
4.20 Products...................................................................20
4.21 Inventory..................................................................20
4.22 Accounts Receivable........................................................20
4.23 Accounts Payable...........................................................20
4.24 Personal Property..........................................................21
(i)
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4.25 Licenses...................................................................21
4.26 Customers..................................................................21
4.27 Suppliers..................................................................21
4.28 Insurance..................................................................22
4.29 Product Service Obligations, Warranties and Guarantees.....................22
4.30 Prepayments and Deposits...................................................22
4.31 Financial Records..........................................................22
4.32 Finder's Fees..............................................................22
4.33 Computer Software and Databases............................................22
4.34 Transactions in Euros......................................................22
4.35 Material Information.......................................................23
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY BUYER.................................23
5.1 Organization and Qualification.............................................23
5.2 Corporate Authorization....................................................23
5.3 Consents and Approvals.....................................................23
5.4 Binding Effect.............................................................23
5.5 Non-contravention..........................................................23
5.6 Finder's Fees..............................................................24
5.7 Material Information.......................................................24
6. COVENANTS OF BUYER AND SELLER.......................................................24
6.1 Conduct of Business Prior to the Closing Date; Affirmative Covenants.......24
6.2 Conduct of Business Prior to the Closing Date; Negative Covenants..........24
6.3 Conditions; Other Consents.................................................25
6.4 Advise Buyer of Adverse Change.............................................25
6.5 Pre-Closing Access to Information; Confidentiality.........................26
6.6 Post-Closing Access to Information.........................................26
6.7 Updating of General Information and Schedules..............................27
6.8 HSR Act....................................................................27
6.10 Use of Treated Water.......................................................29
6.11 Certain Agreements Concerning Real Property................................30
6.12 Distributor/Sales Agent Contracts..........................................32
7. EMPLOYMENT MATTERS..................................................................32
7.1 Employment by Buyer........................................................32
7.2 Terms of Employment of Transferred Employees...............................32
7.3 Welfare Benefit Plans......................................................33
7.4 Pension Plan for Non-Union Employees.......................................33
7.5 Savings Plan for Non-Union Employees.......................................33
7.6 Union Employees............................................................33
8. ENVIRONMENTAL INDEMNIFICATION.......................................................34
(ii)
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8.1 Environmental Definitions..................................................34
8.2 Indemnification by Seller for Environmental Claims.........................35
8.3 Limited Indemnification by Seller for Shared Environmental Claims..........35
8.4 Control of Remediation.....................................................36
9. CONDITIONS TO OBLIGATIONS OF BUYER..................................................37
9.1 Representations and Warranties True on Closing Date........................37
9.2 Compliance with Agreement..................................................37
9.3 No Litigation..............................................................37
9.4 Third Party Consents and Approvals; Estoppel Certificates..................37
9.5 Material Adverse Change....................................................38
9.6 HSR Act....................................................................38
9.7 Legal Opinion..............................................................38
9.8 Title Insurance............................................................38
9.9 Satisfaction of Buyer with Updated Schedules...............................38
9.10 European Operations........................................................38
9.11 Reliance Letter............................................................38
10. CONDITIONS TO OBLIGATIONS OF SELLER.................................................38
10.1 Representations and Warranties True on Closing Date........................38
10.2 Compliance with Agreement..................................................38
10.3 No Litigation..............................................................39
10.4 License Transfers..........................................................39
10.5 HSR Act....................................................................39
10.6 Legal Opinion..............................................................39
11. CLOSING; PROCEDURES.................................................................39
11.1 Date and Time..............................................................39
11.2 Procedures.................................................................39
12. FURTHER ASSURANCES..................................................................40
13. ALLOCATION..........................................................................40
14. TAXES...............................................................................41
15. NON COMPETITION COVENANT............................................................41
16. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS (INCLUDING
INDEMNIFICATION) ...................................................................42
17. MAXIMUM AGGREGATE LIABILITY OF THE PARTIES..........................................43
(iii)
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18. DEDUCTIBLE..........................................................................43
19. INDEMNIFICATION.....................................................................43
19.1 By Seller..................................................................43
19.2 By Buyer...................................................................43
19.3 Measure of Damages.........................................................44
19.4 Defense of Claims..........................................................44
20. SPECIFIC PERFORMANCE................................................................45
21. TERMINATION.........................................................................45
22. PRORATIONS..........................................................................46
23. USE OF NAME.........................................................................46
24. EXPENSES............................................................................46
25. NOTICES.............................................................................46
26. PUBLIC ANNOUNCEMENTS AND PRESS RELEASES.............................................47
27. GOVERNING LAW.......................................................................47
28. COUNTERPARTS........................................................................47
29. SCHEDULES...........................................................................48
30. ENTIRE AGREEMENT....................................................................48
31. SUCCESSORS AND ASSIGNS..............................................................48
32. SEVERABILITY........................................................................48
33. MISCELLANEOUS DEFINITIONS...........................................................48
(iv)
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EXHIBITS
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Exhibit 7.2 Severance Payment Principles
Exhibit 11.2(a) Assignment and Assumption Agreement
Exhibit 11.2(c) Transitional Services Agreement
Exhibit 11.2(e) Xxxx of Sale
Exhibit 13 Allocation Statement
SCHEDULES
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Schedule 1.1(a) Owned Real Property
Schedule 1.1(b) Leased Real Property
Schedule 1.2(d) Retained Real Estate
Schedule 1.2(f) Excluded Assets List
Schedule 2.1(c) Assumed Employee Accrual List
Schedule 2.1(f) Postretirement Medical Benefits
Schedule 3.2(d) Working Capital Calculation
Schedule 3.3(a) Deviations from GAAP
Schedule 4.3 Consents and Approvals
Schedule 4.4 Contravention
Schedule 4.6(a)(i) Financial Statements
Schedule 4.6(a)(ii) Exceptions to GAAP
Schedule 4.6(a)(iii) Preparation of the Balance Sheet in accordance with Seller's Accounting
Principles
Schedule 4.7 Material Changes
Schedule 4.8 Litigation and Claims
Schedule 4.9 Tax Matters
Schedule 4.10 Employee Benefits
Schedule 4.11 Non-compliance with Laws
Schedule 4.12 Environmental Matters
Schedule 4.13 Intellectual Property Description
Schedule 4.14 Labor Matters
Schedule 4.15 Contracts List
Schedule 4.16(a) Real Property
Schedule 4.16(b) Encumbrances
Schedule 4.16(d) Encroachments; Structures Scheduled for Demolition
Schedule 4.17(a) Assets Used in Business and Not Being Transferred
Schedule 4.17(b) Interests of Other Persons
Schedule 4.18 Employees; Wage Increases
Schedule 4.19 Undisclosed Liabilities
Schedule 4.20(a) Products
Schedule 4.20(b) Product Compliance; Product Failures or Defects
Schedule 4.21 Inventory
(v)
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Schedule 4.22 Accounts Receivable List
Schedule 4.23 Accounts Payable List
Schedule 4.24 Personal Property Description
Schedule 4.25 License List
Schedule 4.26 Customer List
Schedule 4.27 Supplier List
Schedule 4.28 Insurance List
Schedule 4.29 Product Service Agreements; Standard Product and Service Warranties
Schedule 4.30 Prepayments and Deposits
Schedule 4.33 Computer Software and Databases
Schedule 4.34 Transactions in Euros
Schedule 5.3 Consents and Approvals
Schedule 6.9(b) Scrap Yard Site
Schedule 6.9(c) Lagoon Sites
Schedule 6.11(a) Principal Terms of Provisional Lease Agreement
Schedule 6.11(d) Principal Terms of New Lease Agreement
Schedule 7.1 Employees on the Closing Date
Schedule 9.4 Contract Consents
(vi)
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INDEX OF DEFINED TERMS
----------------------
Affiliate...................................................................48
Agreement................................................................... 1
Antitrust Division..........................................................27
Assumed Liabilities..........................................................4
Audited Financial Statements.................................................9
Balance Sheet................................................................9
Balance Sheet Date...........................................................9
Beneficiary.................................................................44
Books and Records............................................................3
Business.....................................................................1
Business Day................................................................48
Buyer........................................................................1
CERCLA......................................................................14
Closing.....................................................................39
Closing Date................................................................39
Closing Date Payment.........................................................5
Competing Business..........................................................42
Computer Software and Databases.............................................22
Confidentiality Agreement...................................................26
Contracts....................................................................2
Conveyance Deadline.........................................................30
Customers...................................................................21
Deductible..................................................................43
Direct Claim................................................................45
DMPA.........................................................................1
Encumbrance..................................................................1
Environmental Claims........................................................35
Environmental Laws..........................................................13
Escrow Sum..................................................................31
Estimated Post-Retirement Medical Benefits...................................5
Excluded Assets..............................................................3
Financial Statements.........................................................9
FTC.........................................................................27
GAAP.........................................................................6
Governmental Authority......................................................35
Governmental Authorizations.................................................13
Governmental Rule...........................................................35
Hazardous Substances........................................................14
HSR Act......................................................................8
Income Statement.............................................................9
Indemnitor..................................................................44
(vii)
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Independent Actuaries........................................................7
Independent Environmental Consultants.......................................36
Independent Public Accountants...............................................6
Insurances..................................................................22
Intellectual Property Description...........................................15
Intellectual Property Rights................................................16
Inventory...................................................................20
IRC.........................................................................12
Laws........................................................................13
Leased Real Property.........................................................1
Licenses....................................................................21
Losses......................................................................35
Major Supplier..............................................................21
Mallinckrodt Chemical........................................................1
Materialmen Liens...........................................................21
New Lease Agreements........................................................31
Notice of Dispute............................................................6
Offer Notice................................................................42
Other Documents.............................................................8
Owned Real Property..........................................................1
Permitted Encumbrances......................................................18
Personal Property............................................................2
Postretirement Medical Benefits Notice of Dispute............................7
Postretirement Medical Benefits..............................................7
Postretirement Medical Benefits Closing Statement............................6
Products.....................................................................1
Prohibited Names............................................................46
Project.....................................................................28
Project Contracts...........................................................28
Proposed Access Easement....................................................32
Provisional Lease Agreement.................................................30
Purchase Price...............................................................5
Qualified Plan..............................................................12
RCRA........................................................................14
Real Property................................................................1
Remedial Action.............................................................36
Retained Businesses..........................................................1
Retained Liabilities.........................................................5
Retained Real Estate.........................................................3
Security Instrument.........................................................30
Seller.......................................................................1
Seller Benefit Plans........................................................12
Seller's Accounting Principles..............................................22
(viii)
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Seller's knowledge..........................................................48
Seller's Non-Union Pension Plan.............................................33
Seller's Non-Union Savings Plan.............................................33
Shared Environmental Claims.................................................35
Subdivision Plan............................................................31
Tax Returns.................................................................11
Taxes.......................................................................11
Third Party Claim...........................................................44
Title Company...............................................................40
TME..........................................................................1
Transferred Assets...........................................................1
Transferred Employees.......................................................32
Transferred Union Employees.................................................33
TRIMET.......................................................................1
TSCA........................................................................14
Voluntary Environmental Investigation.......................................35
Working Capital..............................................................6
Working Capital Statement....................................................5
WTA.........................................................................29
WTA Agreement...............................................................29
(ix)
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made this 29th day
of June, 1998, by and between GEO Specialty Chemicals, Inc., an Ohio corporation
("Buyer"), and Mallinckrodt Inc., a Delaware corporation ("Mallinckrodt
Chemical"), and Mallinckrodt Inc., a New York corporation (together with
Mallinckrodt Chemical, "Seller"). Seller owns certain assets that are used in
connection with its TRIMET Technical Products Division ("TRIMET"), which carries
on the business (the "Business") of manufacturing, marketing and supplying
Dimethylolpropionic Acid ("DMPA"), Trimethylolethane ("TME"), Formaldehyde and
Calcium Formate (collectively, the "Products"). The businesses of the Seller
other than the Business are hereinafter referred to as the "Retained
Businesses." Seller desires to sell, and Buyer desires to purchase,
substantially all of the assets of Seller used in connection with the operation
of the Business, in accordance with the terms and conditions set forth in this
Agreement.
In consideration of the payments and the covenants, and on the terms
and subject to the conditions described in this Agreement, the parties hereby
agree as follows:
1. SALE AND PURCHASE OF ASSETS.
1.1 Transferred Assets. Seller will, on the Closing Date (as defined in
Section 11.1), transfer to Buyer all of Seller's rights, title and interest in
and to the following assets and rights (the "Transferred Assets"), free and
clear of any lien, charge, encumbrance, security interest, option or any other
restriction or third-party right of any kind (an "Encumbrance"), other than
Permitted Encumbrances (as defined in Section 4.16(b):
(a) Owned Real Property. The land (consisting of approximately
96 acres), buildings, improvements, fixtures and other real property
and the easements, rights of way and appurtenances thereon or thereto
owned by Seller and located at Seller's plant in South Whitehall
Township, north of Allentown, Pennsylvania as described in Schedule
1.1(a) (the "Owned Real Property").
(b) Leased Real Property. The warehouse space and sludge
pressing facility and other buildings, improvements and fixtures,
together with certain easements, rights of way and appurtenances
thereto, owned by Seller and located at Seller's plant in South
Whitehall Township, north of Allentown, Pennsylvania as described in
Schedule 1.1(b), which are to be leased to Buyer (the "Leased Real
Property") pursuant to the New Lease Agreement (as defined in Section
6.11(d)). (The Owned Real Property and the Leased Real Property,
together with the land on which the Leased Real Property is situated,
is herein collectively referred to as the "Real Property").
(c) Personal Property. The personal property that is owned by
Seller and used solely or principally in the operation of the Business,
including, without limitation, all of the machinery, equipment and
other items identified on the Personal Property Description
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attached to this Agreement as Schedule 4.24, and all other items of
furniture, fixtures, machinery, equipment, motor vehicles, tools,
parts, supplies and office equipment owned by Seller and used solely or
principally in the operation of the Business (the "Personal Property").
(d) Contracts. All rights and interests of Seller in and to
all contracts and other agreements that are listed on the Contracts
List marked as Schedule 4.15 and all other contracts to which Seller is
a party on the Closing Date that solely or principally relate to or
arise out of the operation of the Business that are not required to be
listed on Schedule 4.15 and which were entered into in the ordinary
course of the Business (collectively, the "Contracts").
(e) Licenses and Permits. All rights and interests of Seller
under all permits and approvals issued to Seller by any Governmental
Authority (as defined in Section 8.1) or other jurisdiction or
instrumentality and relating solely or principally to the Business,
including those marked on the License List attached hereto as Schedule
4.25.
(f) Intellectual Property. All Intellectual Property Rights
(as defined in Section 4.13(h)) that are solely or principally used or
held for use in or relate to the Business and in which Seller and/or
any Affiliate (as defined in Section 33) of Seller have any right,
title or interest, including, without limitation, all of Seller's
current concepts, ideas and technologies relating solely or principally
to the Business and also including, without limitation, those items
identified on the Intellectual Property Description marked as Schedule
4.13.
(g) Cash. All of Seller's xxxxx cash and letters of credit
relating solely to the Business.
(h) Inventory. All inventories, including finished products,
samples, work-in-process, raw materials and packaging materials of the
Business.
(i) Accounts Receivable. All accounts, promissory notes and
other notes receivable, deferred charges, chattel paper and other
rights to receive payments arising from the operation of the Business.
(j) Prepayments. All prepaid expenses and other prepayments
relating to the Business, including prepaid real estate taxes.
(k) Documents. All records, including, without limitation,
locally maintained copies of all books of account, locally maintained
copies of tax records, customer lists, supplier lists, employee
personnel files, local public records, file materials, engineering
data, logs, programming records, consultants' reports, budgets,
financial reports and projections, sales and marketing reports and
plans, operating and business plans, product files and specifications
and correspondence solely or principally used or held for use in the
operation of
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the Business or necessary to show compliance with any law or regulation
applicable to the Business or the operation of the Business or relating
to the ownership, use, manufacture, maintenance or repair of any of the
Transferred Assets ("Books and Records").
(l) Intangibles. All claims, choses in action and other
general intangibles to the extent that they relate solely or
principally to the Business.
(m) Goodwill. All goodwill of the Business, including the
exclusive right for Buyer to represent itself as the successor to the
Business and the right to the use of the name "TRIMET."
(n) Other Assets. All of the other tangible and intangible
property and rights that are owned by Seller and used solely or
principally in connection with the operation of the Business.
1.2 Excluded Assets. Notwithstanding the foregoing, the following
assets of Seller, as well as all assets of Seller solely or principally related
to the Retained Businesses (collectively, the "Excluded Assets"), will be
retained by Seller and will not be included in the Transferred Assets:
(a) Corporate Record Books. The articles of incorporation,
bylaws, minute books, stock transfer records and all other corporate
books and records relating to the corporate affairs of Seller;
(b) Benefit Plans. Except as otherwise provided in Section 7,
any contracts or assets related to any employee benefit plan in which
any employees of Seller or any of its Affiliates participate;
(c) Tax Records. Any records related to income Taxes (as
defined in Section 4.9(a)) paid or payable by Seller or any of its
Affiliates;
(d) Certain Real Property. The owned real property of Seller
located adjacent to the Owned Real Property, as described in Schedule
1.2(d) (the "Retained Real Estate"), except to the extent of Buyer's
interest therein under the New Lease Agreement;
(e) Intercompany Receivables and Liabilities. Liabilities of
Seller to, and receivables of Seller from, any Affiliate of Seller; and
(f) Excluded Assets List. Those specific assets identified on
the Excluded Assets List attached to this Agreement as Schedule 1.2(f).
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2. ASSUMED AND RETAINED LIABILITIES.
2.1 Assumption of Liabilities. Upon the transfer of the Transferred
Assets on the Closing Date in accordance with this Agreement, Buyer shall assume
the following liabilities and obligations of Seller (the "Assumed Liabilities"):
(a) Contracts. All liabilities and obligations of Seller under
the Contracts to the extent, in the case of each particular Contract,
that the rights and benefits under the Contract have been assigned to
Buyer;
(b) Accounts Payable. Accounts payable and other current
liabilities arising in the ordinary course of the operation of the
Business that are reflected in the Working Capital Statement (as
defined in Section 3.2(a));
(c) Employee Accruals. To the extent set forth on the Assumed
Employee Accrual List attached to this Agreement as Schedule 2.1(c),
liabilities to employees of the Business to be employed by Buyer after
the Closing Date in respect of accrued vacation and sick days, whether
or not reflected on the Working Capital Statement;
(d) Post-Closing Environmental Liabilities. All liabilities
relating to the Owned Real Property arising out of: (i) the making,
storage, handling, treatment, disposal of, generation, recycling or
transportation after the Closing Date by Buyer of Hazardous Substances
(as defined in Section 4.12(a)(iv)) in violation of any applicable
Environmental Law (as defined in Section 4.12(a)(i)), (ii) the release
after the Closing Date by any person of Hazardous Substances at, on,
under or from the Owned Real Property, (iii) the failure after the
Closing Date by Buyer to comply with applicable Environmental Laws,
(iv) the use after the Closing Date by any person of any above or below
ground storage tank for the storage of any Hazardous Substances on or
under the Owned Real Property, (v) the failure by Buyer after the
Closing Date to retain in force any required Governmental
Authorizations (as defined in Section 4.12(a)(i)) which Seller shall
have in force on the Closing Date, and (vi) any environmental matters
attributable to events occurring or conditions first existing after the
Closing Date in connection with the operation of the Business by Buyer
except, in any such case, to the extent that such liabilities arise
from or relate to (y) the use or ownership by Seller of, or (z) any
event, occurrence, act or omission relating to the Retained Businesses
or the Retained Real Estate whether prior to, on or after the Closing
Date;
(e) Warranty Obligations. Warranty obligations relative to the
Products and services of the Business that have arisen in the ordinary
and normal course of business and are required to be performed after
the Closing Date;
(f) Certain Postretirement Medical Benefits. The liability to
make payments in respect of those postretirement medical benefits
described on Schedule 2.1(f). The accumulated postretirement benefit
obligation as of the Closing Date will be reflected in the
Postretirement Medical Benefits Closing Statement (as defined in
Section 3.3).
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(g) Pre-Closing Liabilities in the Ordinary and Normal Course
of Business. All other liabilities or obligations of the Business
existing on the Closing Date, to the extent they arise out of the
ordinary and normal course of business and are reflected on the Working
Capital Statement (if and as appropriate), including Buyer's pro rata
portion of calendar 1998 real estate taxes (except for long-term
indebtedness, if any, of the Business and any Encumbrances arising as a
consequence thereof); and
(h) Post-Closing Liabilities. Except as otherwise provided for
herein, all other liabilities, including tax liabilities, to the extent
arising out of or to the extent related to the operation of the
Business by Buyer or its Affiliates or successors after the Closing
Date.
2.2 Retained Liabilities. Except for the liabilities and obligations
expressly referred to in Section 2.1 or except as specifically agreed to herein,
Buyer will not assume or otherwise be responsible for any other liabilities or
obligations of Seller or any of Seller's Affiliates or any other liabilities or
obligations that arise out of the Business or the Transferred Assets, regardless
of their nature (the "Retained Liabilities"). All of the Retained Liabilities
shall be retained by and remain liabilities and obligations of Seller.
3. PURCHASE PRICE.
3.1 Purchase Price. Subject to adjustment in accordance with Sections
3.2, 3.3 and 9.9, the purchase price for the Transferred Assets (the "Purchase
Price") shall be Sixty Million Dollars ($60,000,000) less the sum of (i)
$280,000, being the estimated accumulated postretirement benefit obligation for
certain postretirement medical benefits of certain union employees of the
Business (the "Estimated Postretirement Medical Benefits"), and (ii) $5,000,000,
being the amount to be deposited and held in escrow in accordance with Section
6.11(c) hereof (the "Closing Date Payment"). The Closing Date Payment shall be
payable on the Closing Date by wire transfer of immediately available funds to
Seller's designated bank account.
3.2 Post-Closing Purchase Price Adjustment.
(a) Working Capital Statement. As soon as practicable following the
Closing Date (and in no event later than sixty (60) days following the Closing
Date), Seller will prepare and deliver to Buyer a statement calculated in a
manner consistent with Schedule 3.2(d) showing the book value of the current
assets acquired and the current liabilities assumed of the Business as of the
Closing Date (the "Working Capital Statement"). The Working Capital Statement
will be based upon the books and records of TRIMET and prepared in accordance
with the same accounting principles and practices used in determining the
current assets and the current liabilities shown on the Balance Sheet, except
the Working Capital Statement will not include reserves for uncollectible
accounts receivable or accruals for any employee bonus or incentive arrangement
obligations retained by Seller in accordance with Section 7.3.
(b) Review of Working Capital Statement. Following receipt of the
Working Capital Statement, Buyer will be afforded a period of forty-five (45)
days to review the Working Capital
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Statement. To assist in any such review, Seller will make available to Buyer any
work sheets and other papers prepared in connection with the Working Capital
Statement. At or before the end of the forty-five (45) day review period, Buyer
will either (i) accept the Working Capital Statement in its entirety or (ii)
deliver to Seller a written notice setting forth a detailed explanation of those
items in the Working Capital Statement that Buyer disputes (a "Notice of
Dispute"). If Buyer does not deliver a Notice of Dispute to Seller within the
forty-five (45) day review period, Buyer will be deemed to have accepted the
Working Capital Statement in its entirety. If Buyer delivers a Notice of Dispute
in which it disputes some, but not all, of the items in the Working Capital
Statement, Buyer will be deemed to have accepted all of the items not disputed
other than those not directly disputed but which are affected by the items
disputed.
(c) Resolution of Disputes. Within a period of thirty (30) days after
the delivery of a Notice of Dispute, the parties will attempt to resolve in good
faith any disputed items. If they are unable to do so, the remaining disputed
items will be referred to a nationally recognized firm of independent
accountants whose services have not previously been significantly utilized by
the parties hereto for resolution (the "Independent Public Accountants"). The
parties will share equally the cost of the Independent Public Accountants. The
resolution of the disputed items, as determined by the Independent Public
Accountants, will be binding on the parties.
(d) Adjustment in Amount of the Purchase Price. If the book value of
current assets, less the book value of the current liabilities, shown in the
Working Capital Statement, after the resolution of any dispute pursuant to
Section 3.2(c) (the "Working Capital"), is less than $4,793,000 (which amount
was calculated as set forth in Schedule 3.2(d)), the Purchase Price shall be
reduced by the amount by which $4,793,000 exceeds the Working Capital. If the
Working Capital is more than $4,793,000, the Purchase Price shall be increased
by the amount by which the Working Capital exceeds $4,793,000. Within ten (10)
days after the adjustment to the Purchase Price pursuant to this Section 3.2 has
been finally determined, Buyer shall pay to Seller or Seller shall pay to Buyer,
as applicable, the relevant amount, plus simple interest thereon at the rate of
six percent (6%) per annum from the Closing Date to the date of payment. Any
such payment hereunder shall be made by wire transfer of immediately available
funds to an account designated by the party entitled to payment or in such other
manner as such party shall reasonably request.
3.3 Preparation of Postretirement Medical Benefits Closing Statement.
(a) Postretirement Medical Benefits Closing Statement. As soon as
practicable following the Closing Date (and in no event later than sixty (60)
days following the Closing Date), Seller will prepare and deliver to Buyer a
statement (the "Postretirement Medical Benefits Closing Statement") showing the
accumulated postretirement benefit obligation for postretirement medical
benefits to union Transferred Employees (as defined in Section 7.1) arising from
or relating to any period prior to the Closing Date. The Postretirement Medical
Benefits Closing Statement will be prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis, except as
provided in Schedule 3.3(a) attached hereto.
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(b) Review of Postretirement Medical Benefits Closing Statement.
Following receipt of the Postretirement Medical Benefits Closing Statement,
Buyer will be afforded a period of forty-five (45) days to review the
Postretirement Medical Benefits Closing Statement. To assist in any such review,
Seller will make available to Buyer any plan document, participant data and
actuarial assumptions and methods. At or before the end of the forty-five (45)
day review period, Buyer will either (i) accept the Postretirement Medical
Benefits Closing Statement in its entirety or (ii) deliver to Seller a written
notice setting forth a detailed explanation of those items in the Postretirement
Medical Benefits Closing Statement that Buyer disputes (a "Postretirement
Medical Benefits Notice of Dispute"). If Buyer does not deliver a Postretirement
Medical Benefits Notice of Dispute to Seller within the forty-five (45) day
review period, Buyer will be deemed to have accepted the Postretirement Medical
Benefits Closing Statement in its entirety. If Buyer delivers a Postretirement
Medical Benefits Notice of Dispute in which it disputes some, but not all, of
the items in the Postretirement Medical Benefits Closing Statement, Buyer will
be deemed to have accepted all of the items not disputed other than those not
directly disputed but which are affected by the items disputed.
(c) Resolution of Disputes. Within a period of thirty (30) days after
the delivery of a Postretirement Medical Benefits Notice of Dispute, the parties
will attempt to resolve in good faith any disputed items. If they are unable to
do so, the remaining disputed items will be referred to a nationally recognized
firm of independent actuaries whose services have not previously been
significantly utilized by the parties hereto for resolution (the "Independent
Actuaries"). The parties will share equally the cost of the Independent
Actuaries. The liability for such disputed items, as determined by the
Independent Actuaries, will be binding on the parties.
(d) Adjustment in Amount of the Purchase Price. If the accumulated
postretirement benefit obligation for postretirement medical benefits to the
union Transferred Employees arising from or relating to any period prior to the
Closing Date, as shown in the Postretirement Medical Benefits Closing Statement,
after the resolution of any dispute pursuant to Section 3.3(c) (the
"Postretirement Medical Benefits"), are greater than the Estimated
Postretirement Medical Benefits, the Purchase Price shall be reduced by the
amount by which the Postretirement Medical Benefits exceed the Estimated
Postretirement Medical Benefits. If the Postretirement Medical Benefits are less
than the Estimated Postretirement Medical Benefits, the Purchase Price shall be
increased by the amount by which the Estimated Postretirement Medical Benefits
exceed the Postretirement Medical Benefits. Within ten (10) days after the
adjustment to the Purchase Price pursuant to this Section 3.3 has been finally
determined, Buyer shall pay to Seller or Seller shall pay to Buyer, as
applicable, the relevant amount, plus simple interest thereon at the rate of six
percent (6%) per annum from the Closing Date to the date of payment. Any such
payment hereunder shall be made by wire transfer of immediately available funds
to an account designated by the party entitled to payment or in such other
manner as such party shall reasonably request.
3.4 Acknowledgment; Confidentiality. Subject to the express provisions
of this Agreement, the parties acknowledge that Buyer shall not be precluded
from claiming at any time that any of the representations or warranties of
Seller contained in Section 4 is or was untrue or misleading or has been
breached by reason of the fact that it may have expressly or impliedly agreed
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or approved the Working Capital Statement or the Postretirement Medical Benefits
Closing Statement or any item set out or referred to therein; provided that, it
is not the intent of the parties hereto that Buyer shall be able to recover any
Losses (as defined in Section 8.2) hereunder for breach of any of Seller's
representations and warranties set forth in Section 4 if, and to the extent,
such recovery would amount to a double recovery of any Losses paid or resolved
as a consequence of the procedures set forth in Section 3.2. Seller shall treat
as strictly confidential all financial information contained in the Working
Capital Statement and the Postretirement Medical Benefits Closing Statement or
any of the work sheets and other papers prepared in connection therewith.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY SELLER. Seller
represents and warrants to and agrees with Buyer, as of date hereof and as of
the Closing Date, as follows.
4.1 Organization and Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own and operate the Transferred Assets and to carry on the Business
as currently conducted by it. Seller is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the ownership
or operation of the Transferred Assets or the conduct of the Business by it
requires such qualification and good standing, except where the failure to be so
qualified or in good standing, as the case may be, would not have, individually
or in the aggregate, a material adverse effect on the Business.
4.2 Corporate Authorization. Seller has full power, authority and legal
right to execute and deliver this Agreement and the other deeds and instruments
of transfer and other documents, certificates and agreements for which provision
is made herein (the "Other Documents") and to perform its obligations under this
Agreement and the Other Documents.
4.3 Consents and Approvals. Except as required by the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), or as set forth
on Schedule 4.3, no consent, approval, waiver, authorization, registration or
qualification is required to be obtained by Seller from, and no notice or filing
is required to be given by Seller to or made by Seller with, any Governmental
Authority or other third-party in connection with the execution, delivery and
performance by Seller of this Agreement and the Other Documents, except where
the failure to obtain such consent, approval, waiver or authorization, or to
give or make such notice or filing, would not, individually or in the aggregate,
have a material adverse effect on the Business or materially impair or delay the
ability of Seller to perform its obligations under this Agreement or the Other
Documents or to effect the Closing or consummate the transactions contemplated
by this Agreement and the Other Documents.
4.4 Non-contravention. Except as set forth on Schedule 4.4, the
execution, delivery and performance by Seller of this Agreement and the Other
Documents, and the consummation of the transactions contemplated hereby and
thereby, does not and will not (i) violate any provision of the charter, bylaws
or other organizational documents of Seller, (ii) subject to obtaining the
consents referred to in Section 4.3, conflict with, or result in the breach of,
or constitute a default under, or result in the termination, cancellation or
acceleration of (whether after the filing of notice or the lapse
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of time or both) any right or obligation of Seller under, or in a loss of any
benefit to which Seller is entitled under, any of the Contracts or result in the
creation of any Encumbrance in respect of or upon any of the Transferred Assets,
or (iii) violate or result in a breach of or constitute a default under any law,
rule, regulation, judgment, injunction, order, decree or other restriction of
any Governmental Authority to which Seller is subject, including any license,
permit, certificate and other authorization or approval required under any
applicable law to carry on the Business as currently conducted by Seller; other
than, in the cases of clauses (ii) and (iii), any conflict, breach, termination,
default, cancellation, acceleration, loss, violation or Encumbrance which,
individually or in the aggregate, would not have a material adverse effect on
the Business or materially impair or delay the ability of Seller to perform its
obligations under this Agreement or the Other Documents or to effect the Closing
or consummate the transactions contemplated by this Agreement or the Other
Documents.
4.5 Binding Effect. This Agreement has been duly executed and delivered
by Seller, and this Agreement and the Other Documents, when executed and
delivered, are or will be (as appropriate) the valid and binding obligations of
Seller, enforceable against it in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
4.6 Financial Statements.
(a) The audited balance sheet of the Business as of June 30, 1997, the
audited statement of operations of the Business for the year ended June 30,
1997, the audited statement of cash flows of the Business for the year ended
June 30, 1997, and the statement of divisional equity of the Business as of June
30, 1997 (all of the foregoing collectively, the "Audited Financial
Statements"), the unaudited balance sheet of the Business at March 31, 1998 (the
"Balance Sheet" and "Balance Sheet Date," respectively), the unaudited statement
of operations of the Business for the twelve month period ended March 31, 1998
(the "Income Statement") are attached hereto on Schedule 4.6(a)(i) (the Audited
Financial Statements, the Balance Sheet and the Income Statement together, the
"Financial Statements"). Except as set forth on Schedule 4.6(a)(ii), the Audited
Financial Statements have been prepared in accordance with GAAP applied on a
consistent basis. Except as set forth on Schedule 4.6(a)(iii), the Balance Sheet
and the Income Statement have been prepared in accordance with the Seller's
Accounting Principles (as defined in Section 4.31) consistently maintained and
applied with respect to the Business. The Balance Sheet and the Income
Statement, in all material respects, accurately present the financial position
of the Business as of March 31, 1998 and the results of operations of the
Business for the twelve month period ended March 31, 1998 and, in all material
respects, accurately set forth the information purported to be shown therein.
There has been no material adverse change in the assets, financial condition or
performance of the Business since the Balance Sheet Date which, if it had
occurred, would be required to be reflected on a balance sheet and/or income
statement with respect to the Business, as of any applicable period subsequent
to the Balance Sheet Date, prepared in a manner consistent with the Balance
Sheet and the Income Statement.
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(b) All of the liabilities reflected on the Balance Sheet are related
exclusively to the Business and arose out of or were incurred in the conduct of
the Business.
(c) The information provided to Buyer relating to the corporate and
divisional overhead charges of Seller for the years ended on June 30, 1996,
1997, and 1998 is true and correct in all material respects.
4.7 No Material Adverse Change Since the Balance Sheet Date. Except as
set forth on Schedule 4.7, since the Balance Sheet Date, the Business has been
conducted by Seller in the ordinary course consistent with past practice, and
there has not been:
(a) any material adverse change in the assets, liabilities,
financial condition or operation of the Business;
(b) any damage or destruction, whether or not covered by
insurance, materially affecting the Transferred Assets, operations or
properties, whether owned or leased, of the Business;
(c) any labor dispute or employee matter materially and
adversely affecting the financial position or operations of the
Business;
(d) any sale (other than in the ordinary course of business),
transfer or assignment of, or imposition of any Encumbrance (other than
Permitted Encumbrances) on, any of the Transferred Assets;
(e) any transaction or commitment made, or any Contract or
agreement entered into or amended, relating to the Business or any
Transferred Asset or any relinquishment of any Contract or other right,
other than transactions and commitments made in the ordinary course of
business consistent with past practice;
(f) any change in any method of accounting or accounting
practice with respect to the Business except for any such change after
the date of this Agreement required by reason of a concurrent change in
GAAP;
(g) any employment, deferred compensation, severance,
retirement or other similar agreement entered into with any employee of
the Business, or any amendment to any such existing agreement, or,
change in compensation or other benefits payable to any employee of the
Business pursuant to any severance or retirement plan or policy;
(h) any other event or condition of any character pertaining
to, and materially and adversely affecting, the financial position,
results of operations or prospects of the Business; or
(i) any agreement or commitment to do any of the foregoing.
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4.8 Litigation and Claims. Except as set forth on Schedule 4.8, there
is no civil, criminal or administrative action, suit, demand, claim, hearing,
proceeding, arbitration or investigation pending or, to Seller's knowledge,
threatened involving the Business or any of the Transferred Assets which, if
determined adversely, would, individually or in the aggregate, have a material
adverse effect on the Business or materially impair or delay the ability of
Seller to effect the Closing or which seeks to prevent or enjoin the
transactions contemplated by this Agreement or the Other Documents. Except as
set forth on Schedule 4.8, neither the Business nor the Transferred Assets is
subject to any order, writ, judgment, award, injunction or decree of any
Governmental Authority of competent jurisdiction or any arbitrator.
4.9 Tax Matters.
(a) Except as set forth on Schedule 4.9, with respect to the Business
or the Transferred Assets, (i) all reports, returns, statements, information
statements and the like ("Tax Returns") required to be filed by Seller on or
before the Closing Date with respect to any federal, state, local or foreign
taxes ("Taxes") have been or will be filed when due in accordance with all
applicable laws; (ii) all Taxes shown on such Tax Returns have been or will be
paid in timely fashion; (iii) there is no action, suit, proceeding,
investigation (to Seller's knowledge), audit or claim now pending with respect
to any Taxes of Seller; (iv) there are no outstanding agreements extending the
statutory period of limitation applicable to any claim for, or the period for
the collection or assessment of, Taxes due from Seller; (v) there are no liens
for any Tax on the Transferred Assets, except for Taxes not yet due and payable;
(vi) neither Seller nor Mallinckrodt Chemical GmbH are subject to withholding
under Section 1445 of the Code with respect to the sale of the Transferred
Assets or other assets subject to sale under the Other Documents; (vii) as of
the time of filing, the Tax Returns correctly reflected the facts regarding the
income, business, assets, operations, activities and status of Seller and any
other information required to be shown therein; (viii) the charges, accruals and
reserves for Taxes with respect to Seller for any pre-Closing Tax period
(including any taxable period for which no Tax Return has yet been filed)
reflected on the books of Seller (excluding any provision for deferred Taxes),
as disclosed to Buyer, are adequate to cover such Taxes; (ix) Seller is not
delinquent in the payment of any Taxes; and (x) Seller has not participated in
any arrangement (including by way of a tax sharing agreement) whereby any
income, revenues, receipts, gain, loss or Tax asset of Seller was determined or
taken into account for Tax purposes with reference to or in conjunction with any
income, revenues, receipts, gain, loss, asset, liability or Tax asset of any
other person other than an Affiliate.
(b) None of the Transferred Assets is tax-exempt use property within
the meaning of Section 168(h) of the Code. None of the Transferred Assets is
property that is or will be required to be treated as being owned by another
person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately prior to the enactment of the
Tax Reform Act of 1986. None of the Transferred Assets is subject to a lease,
other than a "true lease" for federal income tax purposes.
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4.10 Employee Benefits.
(a) Schedule 4.10 lists each employee benefit plan, as defined in
Section 3(3) of ERISA, and each bonus or other incentive compensation, stock
option, change-in-control, employment, severance, retirement, post-employment,
health, medical, disability, workers' compensation, reduction in force,
relocation, salary continuation for sickness or other disability, vacation or
educational assistance program, plan, arrangement or agreement (written or
unwritten) to which Seller is a party, contributes or has an obligation to
contribute or which Seller maintains, in each case on behalf of employees
employed in the Business (collectively, the "Seller Benefit Plans"). With
respect to each Seller Benefit Plan, Seller has delivered or made available to
Buyer a true, correct and complete copy of: (i) each writing constituting a part
of such Seller Benefit Plan, including without limitation, all plan documents,
plan amendments, benefit schedules, trust agreements and insurance contracts and
other funding vehicles; (ii) the most recent actuarial report, annual report
(Form 5500 Series) and accompanying schedules, if any; (iii) the current summary
plan description, if any; (iv) the most recent determination letter from the
Internal Revenue Service, if any; and (v) any accounting study of
post-employment life or medical benefits provided under any Seller Benefit Plan.
Each Seller Benefit Plan has been maintained in compliance with its terms and
with the requirements prescribed by any and all statutes, orders, rules and
regulations in all material respects (including, without limitation, ERISA and
the Internal Revenue Code of 1986, as amended (the "IRC")), which are applicable
to such Seller Benefit Plan.
(b) Schedule 4.10 identifies each Seller Benefit Plan that is intended
to be a "qualified plan" within the meaning of Section 401(a) of the IRC (a
"Qualified Plan"). With respect to each Qualified Plan, either (i) the Internal
Revenue Service has issued a favorable determination letter that has not been
revoked or (ii) a timely application for such a determination letter has been
filed and the remedial amendment period with respect to such Qualified Plan
remains open. In the case of either clause (i) or (ii) of the immediately
preceding sentence, there are no existing circumstances or any events that have
occurred that would adversely affect the qualified status of any Qualified Plan
or the related trust.
(c) No Seller Benefit Plan is a "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA or a plan that has two or more contributing
sponsors at least two of whom are not under common control within the meaning of
Section 4063 of ERISA.
(d) Except as a result of any provisions contained or prescribed herein
or as set forth on Schedule 4.10, no employee employed in the Business will
become entitled to any retirement, severance or similar benefit or enhanced or
accelerated benefit solely as a result of the transactions contemplated hereby,
provided Buyer complies with its obligations hereunder. Without limiting the
generality of the foregoing, no amount required to be paid or payable to or with
respect to any such employee in connection with the transactions contemplated
hereby (either solely as a result thereof or as a result of such transactions in
conjunction with any other event) will be an "excess parachute payment" within
the meaning of Section 280G of the IRC.
(e) Seller has timely provided or will timely provide all notices and
any continuation of health benefit coverage required to be provided to any
employees or former employees of Seller
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employed in the Business, spouses and former spouses of any such employees, and
dependents and former dependents of any such employees under COBRA and
applicable state law to the extent and for the periods provided therein.
4.11 Compliance with Laws. Except as set forth on Schedule 4.11 or
4.12, (a) the conduct of the Business complies in all material respects with all
applicable laws, statutes, ordinances, rules, regulations, codes, orders,
judicial decisions, permits, judgments, decrees and injunctions, including any
laws incorporated expressly by reference or by operation of law into, or
otherwise applicable to, any contract made with the United States of America and
including the laws, rules and regulations of any state, province, municipality
or country (collectively, "Laws"), except where the failure to so comply,
individually or in the aggregate, would not have a material adverse effect on
the Business and (b) Seller has all licenses, permits, certificates and other
authorizations and approvals required under all applicable Laws necessary for
the conduct of the Business as currently conducted, other than those the absence
of which would not have a material adverse effect on the Business. Except as set
forth on Schedule 4.11 or 4.12, to Seller's knowledge, Seller is not under
investigation by any Governmental Authority with respect to, and Seller has not
been threatened to be charged with or given notice of, any violation of any Laws
applicable to the Business or the Transferred Assets.
4.12 Environmental Matters.
(a) Except as set forth on Schedule 4.12:
(i) the Business is in compliance with all applicable Laws (to
the extent now in effect or as they may be in effect on the Closing
Date, but not as such laws are hereafter amended or changed) relating
to (x) the protection of the environment (including, without
limitation, air, water, vapor, surface water, groundwater, drinking
water and surface or subsurface land), (y) the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing,
handling, labeling, protection, release or disposal of, pollutants,
contaminants, wastes or chemicals or any toxic, radioactive, or
hazardous substance, waste or material or (z) the effect on the
environment or human health or safety ((x), (y) and (z) collectively,
"Environmental Laws") and all licenses, permits, certificates and other
authorizations and approvals required under all applicable
Environmental Laws to carry on the Business as it is currently
conducted ("Governmental Authorizations"), and to the knowledge of
Seller, there are no facts, conditions, situations or sets of
circumstances, which could reasonably be expected to result in
liability under any Environmental Law with respect to the Business or
the Transferred Assets, except for any such non-compliances or
liabilities which would not have a material adverse effect on the
Business;
(ii) Seller has received no notice, request for information,
citation, complaint, summons or order relating to any violation or
alleged violation of, or any liability under, any Environmental Law in
connection with the Business or the Transferred Assets during the past
three (3) years or, if not resolved, any previous years;
(iii) there are no writs, injunctions, decrees, orders or
judgments outstanding, or any actions, suits, proceedings or
investigations pending or, to Seller's knowledge,
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threatened, relating to compliance with or liability under any
Environmental Law affecting the Business or the Transferred Assets;
(iv) except to the extent it would not have a material adverse
effect on the Business or the Transferred Assets, no "hazardous
substances" (within the meaning of Section 101(14) of the Comprehensive
Environmental Response Compensation and Liability Act, 42 U.S.C.
Section 9601(14) ("CERCLA")), or any pollutant, contaminant, waste,
chemical or other toxic, radioactive, or hazardous substance, waste or
material that, in each case, is regulated under any Environmental Law,
including, without limitation, petroleum, petroleum derivatives,
petroleum by-products or other hydrocarbons, asbestos-containing
materials, polychlorinated biphenyls and urea formaldehyde (each a
"Hazardous Substance" and, collectively, "Hazardous Substances") has
been discharged, disposed of, dumped, injected, pumped, deposited,
spilled, leaked, emitted or released at, on or under any of the
properties now or previously owned, leased or operated by Seller in the
conduct of the Business at any time within the last seven (7) years;
(v) there is and has been no friable asbestos or urea
formaldehyde on the Real Property which has not been encapsulated or
otherwise addressed in compliance with all Environmental Laws;
(vi) the Real Property is not now and has never been operated
by Seller or, to Seller's knowledge, by any former owner or operator of
such property, in each case, as a Treatment, Storage, or Disposal
facility for Hazardous Waste (as such terms are defined under the
Resource Conservation and Recovery Act ("RCRA") or any similar state
statute);
(vii) Seller has not (y) received any written studies or
reports relating to the existence of any chemical substance or mixture
which could present a substantial risk to human health or the
environment reportable under Section 8(e) of the Toxic Substances
Control Act ("TSCA") or (z) received any health and safety studies
reportable under Section 8(d) of TSCA, in each case, in respect of the
Business;
(viii) there are no active or inactive underground or
above-ground storage tanks presently located at any of the Owned Real
Properties or the Leased Real Properties; and
(ix) none of the Owned Real Properties or the Leased Real
Properties or, to Seller's knowledge, any property to which Seller (in
connection with the conduct of the Business) has transported, or
arranged for the disposal of Hazardous Substances is listed or proposed
for listing, on the National Priorities List, CERCLIS or any similar
federal, state, local or foreign list of sites requiring investigation
or clean-up.
(b) Schedule 4.12 sets forth all Governmental Authorizations required
under applicable Environmental Laws in connection with the Business, the
Transferred Assets, the Owned Real Properties and the Leased Real Properties.
Except as set forth on Schedule 4.12, no such Governmental Authorizations
require consent, notification or other action to remain in full force and effect
immediately following the consummation of the transactions contemplated hereby.
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(c) To Seller's knowledge, there has been no significant environmental
investigation, study, audit, test, report or other analysis conducted or
prepared in relation to the Business, any Transferred Asset or any of the Owned
Real Properties or Leased Real Properties, other than those which have been
delivered or made available to Buyer.
4.13 Intellectual Property.
(a) Schedule 4.13 sets forth a list (the "Intellectual Property
Description"), which is accurate and complete in all material respects, of all
(i) patents, patent applications, patent rights, trademarks (registered and
unregistered), trademark applications, trade names (registered and
unregistered), service marks (registered and unregistered), service xxxx
applications, copyrights, copyright applications, publication rights and
computer programs and other computer software (including source codes and object
codes) included in the Transferred Assets, (ii) unexpired licenses of
Intellectual Property Rights (as defined in Section 4.13(h) below) included in
the Transferred Assets that have been granted to or by the Seller and/or any of
its Affiliates, (iii) other agreements relating to Intellectual Property Rights
that relate solely or principally to the Transferred Assets or the Business,
together with a complete listing of all liens, security interests, claims and
rights to use of third-parties with respect to each listed item of Intellectual
Property Rights included in the Transferred Assets.
(b) Seller owns and has the right to use, and to license others to use,
all of the Intellectual Property Rights included in the Transferred Assets. Such
ownership and right to use are free and clear of all liens, security interests,
claims and rights to use of third-parties.
(c) Except to the extent it would not have a material adverse effect on
the Business, Seller has taken steps sufficient to safeguard and maintain the
secrecy and confidentiality of, or its proprietary rights in, all of the
unpatented know how, technology, proprietary processes, formulae and other
information comprised in the Transferred Assets.
(d) Except for licenses listed on Schedule 4.13 as royalty bearing,
there are no royalties, honoraria, fees or other payments payable by Seller to
any person by reason of the ownership, use, license, sale or disposition of any
Intellectual Property Rights included in the Transferred Assets.
(e) Seller is not infringing the right or claimed right of any other
party with respect to any Intellectual Property Rights included in the
Transferred Assets. Except as set forth on Schedule 4.13, Seller has not
received notice of nor has it any knowledge of any alleged or claimed
infringement by any other party with respect to any Intellectual Property Rights
that relates to any product or process manufactured, used, sold or under
development by or for Seller relating solely or principally to the Business.
(f) None of the independent contractors who have performed services for
Seller in connection with the Business has any right, title or interest in the
Intellectual Property Rights included in the Transferred Assets.
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(g) The execution, delivery and performance of this Agreement by
Seller, and the consummation of the transactions contemplated hereby, will not
(x) breach, violate or conflict with any agreement governing the Intellectual
Property Rights included in the Transferred Assets, (y) cause the forfeiture or
termination of, give rise to a right of forfeiture or termination of or impair
the right of Seller to sell, assign and transfer any of such Intellectual
Property Rights to Buyer or (z) impair the right of Buyer after the Closing Date
to use, sell, license, or dispose of, any of such Intellectual Property Rights.
(h) For purposes of this Agreement, the term "Intellectual Property
Rights" means intellectual property rights, including patents, patent
applications, patent rights, trademarks, trademark applications, trade names,
service marks, service xxxx applications, copyrights, copyright applications,
publication rights, computer programs and other computer software (including
source codes and object codes), inventions, know how, trade secrets, technology,
proprietary processes and formulae.
(i) For purposes of this Agreement, the term "use," with respect to
Intellectual Property Rights, includes make, reproduce, display or perform
(publicly or otherwise), prepare derivative works based on, sell, distribute,
disclose and otherwise exploit such Intellectual Property Rights and products
incorporating such Intellectual Property Rights; provided however that all of
the foregoing relate solely to the manner in which such Intellectual Property is
currently being used.
4.14 Labor Matters. Except as disclosed on Schedule 4.14, with respect
to the Business:
(a) except for the existing collective bargaining agreement
covering the hourly employees of the Business (a copy of which is
attached hereto as part of Schedule 4.14), Seller is not a party to any
labor or collective bargaining agreement with respect to employees of
the Business, no employees of the Business are represented by any labor
organization, no union has been certified as a collective bargaining
representative of any employees of the Business, Seller has not
recognized and is not obligated to bargain with any union, and, to
Seller's knowledge, there are no organizing activities (including any
demand for recognition or certification proceedings pending or
threatened to be brought or filed with the National Labor Relations
Board or other labor relations tribunal) involving the employees of the
Business;
(b) there are no strikes, work stoppages, slowdowns, lockouts,
unfair labor practice charges, arbitrations, grievances, or any actions
by the Department of Labor or the National Labor Relations Board
pending or, to Seller's knowledge, threatened against or involving
Seller;
(c) there are no lawsuits, complaints, charges or claims
including, without limitation, employment lawsuits or civil rights,
equal employment opportunity or OSHA complaints or charges, pending or,
to Seller's knowledge, threatened against Seller relating to the
Business, and there are no settlements, consent orders or prior decrees
of any Governmental Authority requiring any continued observance by
Seller;
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(d) Seller is in compliance in all material respects with all
federal, state and local laws and orders relating to the employment of
labor, including, without limitation, all such laws and orders relating
to wages, hours, collective bargaining, discrimination, civil rights,
safety and health, workers' compensation and the collection and payment
of withholding and/or Social Security taxes and similar taxes;
(e) within the three (3) year period immediately preceding the
date of this Agreement, Seller has not received: (i) any written
complaint from any of the Business' current or former employees that
Seller or any of its current or former employees, agents or consultants
have engaged in harassment of any kind towards, or treated unfairly in
any way, the complaining employee; (ii) any written complaint or
objection (from employees or otherwise) regarding discrimination in
employment; or (iii) written notice that any of the Business' employees
have been the subject of a claim of harassment of any kind or unfair
treatment by a current or former employee of Seller; and
(f) during the two (2) year period immediately preceding the
date of the Agreement, there have been no layoffs of the Business'
employees by Seller.
4.15 Contracts.
(a) The Contracts List attached to this Agreement as Schedule 4.15
contains a list of all material contracts, agreements (including, without
limitation, any noncompetition agreements with employees and former employees of
the Business), understandings, commitments, personal property leases, product
warranty agreements, barter and trade arrangements and service agreements
relating solely or principally to the Transferred Assets or the conduct of the
Business. Except for contracts identified on the Contracts List and contracts
not included in the Transferred Assets or unrelated to the conduct of the
Business, Seller is not a party to or bound by any oral or written:
(i) contract for employment or personal services or any
severance agreement or arrangement that is not terminable, without
liability or expense, by Seller upon thirty (30) days' notice or less;
(ii) contract for capital expenditures in excess of $100,000
(other than anticipated capital projects relative to demolition, site
clean-up or remediation);
(iii) contract for the purchase of equipment, inventory,
materials or supplies or the purchase of services involving more than
$100,000;
(iv) contract with any Affiliate of Seller or agreement
otherwise not negotiated at "arm's length";
(v) trade or barter contract, to be performed on or after the
Closing Date, that could impose more than $100,000 of obligations
(monetary or otherwise) on Seller;
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(vi) contract for the production of goods or the provision of
services that, to Seller's knowledge, will cause Buyer to incur a loss
after the Closing Date in the performance thereof; or
(vii) contract not made in the ordinary course of business.
(b) Seller has delivered or made available to Buyer copies of all of
the items listed on the Contracts List, all of which copies are complete and
accurate. Each of the Contracts is a legal, valid and binding obligation of
Seller, enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally, by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law) or by an implied covenant of good faith and
fair dealing and, to Seller's knowledge, is a legal, valid and binding
obligation of the other party or parties thereto. Each of the Contracts is in
full force and effect. There has been no material default by Seller or, to
Seller's knowledge, by any other party or parties thereto, and no event has
occurred or failed to occur which, with the giving of notice, the passage of
time, or both, would constitute a material default by Seller or, to Seller's
knowledge, by the other party or parties under any of the Contracts. To Seller's
knowledge, none of the Contracts is subject to any impending cancellation or
breach that would materially and adversely affect the Business or the
Transferred Assets. Contracts required to be set forth on the Contracts List or
contracts in excess of $100,000 which either (i) require the consent of a third
party to assignment or (ii) are non-assignable are identified separately on the
Contracts List.
4.16 Real Property.
(a) Seller has no interest in any real property used or occupied in
connection with the conduct of the Business other than as described on the Real
Property Description attached to this Agreement as Schedule 4.16(a). Seller is
in possession of the Real Property. Seller has a good and valid fee estate as to
the Real Property.
(b) The Real Property is free and clear of all mortgages, security
interests, title defects, pledges, liens, charges and encumbrances except for
(i) real estate taxes and assessments, both general and special, including,
without limitation, assessments for water and sewer, that are a lien but not yet
due and payable, (ii) other matters affecting title that would not, individually
or in the aggregate, materially detract from the value of the real property used
in connection with the conduct of the Business or materially impair the use or
conduct thereof, and (iii) the matters set forth on Schedule 4.16(b) hereof((i),
(ii) and (iii) together, the "Permitted Encumbrances"); provided, that
notwithstanding the foregoing, Seller acknowledges that Buyer has not had the
opportunity to review and locate by survey the items set forth on Schedule
4.16(b) hereof and Seller represents and warrants to Buyer that such items do
not materially interfere with the conduct of the Business as currently
conducted. Seller has not voluntarily granted, is not a party to any agreement
providing for, and is not aware of, any easements, conditions, reservations,
covenants, restrictions, leases, subleases, rights, options or any other matters
that would materially and adversely affect the use of any of the Real Property
for the same purposes and uses as the Real Property has been used by Seller.
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(c) The primary operations of Seller currently conducted on the Owned
Real Property and the Leased Real Property are not in material violation of
applicable zoning laws or regulations. To Seller's knowledge, with respect to
the Real Property, there are neither any (i) applications, ordinances,
petitions, resolutions or other matters pending before any Governmental
Authority having jurisdiction to act on zoning changes that would prohibit or
make nonconforming the use of any of the Real Property nor (ii) any pending or
threatened condemnation or eminent domain proceedings, or proposed sale in lieu
thereof.
(d) That portion of the Owned Real Property referred to as Lot No. 1 on
the Subdivision Plan dated 6/19/98 prepared by XxXxxx, Xxxxxx & Associates (the
"Subdivision Plan"), is contiguous to and has direct vehicular access to Cedar
Crest Boulevard, providing access for ingress to and egress from all plants,
buildings and structures thereon, and further has access to all appropriate
public utilities, in each case to the extent necessary for the conduct of the
Business as currently conducted. That portion of the Owned Real Property
referred to as Lot No. 2 on the Subdivision Plan has direct vehicular access to
Lot No. 1 over a strip of railroad property by way of an agreement dated June 7,
1934 between Trojan Powder Company and Reading Company, providing access to Lot
No. 1 for ingress to and egress from all plants, buildings and structures
thereon, and further has access to all appropriate public utilities, in each
case to the extent necessary for the conduct of the Business as currently
conducted. The Leased Real Property has, or shall have as of the Closing Date,
(i) vehicular access to the Owned Real Property and to public roads for ingress
to and egress from all plants, buildings and structures thereon as provided in
Schedule 6.11(d) , and (ii) access to all appropriate public utilities to the
extent necessary for the conduct of the Business as currently conducted. Except
as set forth on Schedule 4.16(d), none of the material structures on the Real
Property encroaches upon real property of another person or entity and no
structure of any other person or entity encroaches upon any of the Real
Property. The buildings and other structures and improvements located on the
Real Property are not subject to any material structural defects, except for
such structures and buildings as have been scheduled for demolition or removal,
as described on Schedule 4.16(d).
4.17 Property Used. Except as set forth on Schedule 4.17(a), the
Transferred Assets and the New Lease Agreement constitute all of the assets,
properties and rights used to conduct the Business in the manner in which it is
currently being conducted and as of the Closing Date all of such assets,
properties and rights shall be transferred to Buyer. No person or entity other
than Seller has any interest in any of the property used in the conduct of the
Business, except as set forth on the Interests of Other Persons List attached to
this Agreement as Schedule 4.17(b).
4.18 Employees; Wage Increases. Schedule 4.18 sets forth a true and
complete list of all employees of the Business, showing their names, job titles,
current rates of compensation, rates of compensation before the most recent
change in those rates and the date or dates on which those rates of compensation
most recently changed. No employee of the Business has expressed a formal intent
to resign or retire as a result of the transactions contemplated by this
Agreement or within one year after the Closing Date or, to Seller's knowledge,
is unwilling to become an employee of Buyer.
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4.19 No Undisclosed Liabilities. Seller does not have any obligations
or liabilities whatsoever relating to the Business, whether accrued, contingent,
absolute, determined, determinable or otherwise, that will be included in the
Assumed Liabilities, other than:
(a) current liabilities to be fully reserved against in the
Working Capital Statement or the Postretirement Medical Benefits;
(b) obligations to be performed under the Contracts; and
(c) liabilities disclosed on Schedule 4.19 or any other
schedule to this Agreement.
The foregoing list shall not be construed to expand the definition of Assumed
Liabilities.
4.20 Products.
(a) Schedule 4.20(a) sets forth a list, which is complete and accurate
in all material respects, of the products and product lines of Seller relating
to the Business as well as the revenues derived from each separate product
category for the years ended June 30, 1996 and 1997, and for the period from
July 1, 1997 through March 31, 1998, respectively.
(b) Except as set forth on Schedule 4.20(b), since January 1, 1993,
none of the products produced or sold by Seller in connection with the Business
at any time up to and including the sale thereof has failed to be in compliance
in all material respects with all applicable federal, state, local and foreign
laws and regulations. Except as set forth on Schedule 4.20(b), there is no
design defect with respect to any of such products, and there is no recall of
any such product currently under consideration by Seller.
4.21 Inventory. Schedule 4.21 will set forth a listing of the dollar
value (calculated in accordance with Seller's Accounting Principles consistently
maintained and applied with respect to the Business) of all inventory used or
held for sale in the Business as of June 30, 1998 (the "Inventory"). Except as
disclosed on Schedule 4.21, Seller has good title to all of the Inventory, free
and clear of any Encumbrances, other than Permitted Encumbrances. Since the
Balance Sheet Date, the Inventory has been maintained in the ordinary course of
business consistent with the past practice of Seller. The Inventory is of the
quality and is in such condition, as to be readily saleable or usable in the
normal course of the Business. Such Inventory is in quantities reasonably
sufficient (but not excessive) for the normal operation of the Business as the
Business exists on and as of the date hereof and the Closing Date.
4.22 Accounts Receivable. The Accounts Receivable List attached to this
Agreement as Schedule 4.22 identifies by debtor, amount and age all accounts
receivable of Seller relating to the Business as of April 30, 1998. The Accounts
Receivable List will be updated (to the extent accurate information is
available) as of a date within 5 Business Days prior to the Closing Date. All of
the accounts receivable of Seller relating to the Business on the date of this
Agreement are (a) valid and existing receivables arising from bona fide
transactions, (b) are fully collectible, and will be fully collectible within
120 days after the Closing Date after using commercially reasonable efforts, and
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(c) are not subject to any counterclaim, set off or adjustment. In the event any
account receivable listed on Schedule 4.22 is not fully collectible within such
120 day period, Buyer may elect to (i) forego any claim for indemnification and
retain such account receivable or (ii) obtain or receive indemnification and
transfer to Seller such uncollected account receivable without recourse.
4.23 Accounts Payable. The Accounts Payable List attached to this
Agreement as Schedule 4.23 identifies by creditor, amount and age all accounts
payable of Seller relating to the Business as of April 30, 1998. The Accounts
Payable List will be updated (to the extent accurate information is available)
as of a date within 5 Business Days prior to the Closing Date. Since the Balance
Sheet Date, Seller has paid vendors, taxes, employees, employee reimbursable
expenses and other liabilities on a timely basis and consistently with past
practice. Since the Balance Sheet Date, Seller has not altered or amended its
payment practices, and except as listed on Schedule 4.23, no accounts payable
have aged beyond their due date.
4.24 Personal Property. Each item of tangible Personal Property owned
by Seller which is not fully depreciated is reflected (in as much detail as
reasonably possible) on the Personal Property Description marked as Schedule
4.24. Seller has good and marketable title to the Personal Property, free and
clear of all security interests, title defects, pledges and Encumbrances
whatsoever, including any conditional sale or other title retention agreements,
other than liens imposed by operation of law in favor of persons providing
repairs or other services with respect to the personal property that, in each
case, do not interfere with the use or possession of such property, and as to
which Seller discharges the underlying obligation in the ordinary course of
business ("Materialmen Liens"). The Personal Property has been properly
maintained in a manner consistent with reasonable business practice and, except
as set forth on Schedule 4.24, is in good condition and repair, reasonable wear
and tear excepted.
4.25 Licenses. All material licenses, permits, registrations and
authorizations granted and issued by any Governmental Authority and currently
held by Seller relating solely or principally to the Business (the "Licenses")
and all applications of Seller pending before any Governmental Authority
relating to the Business are listed on the License List attached to this
Agreement as Schedule 4.25. Except as identified on Schedule 4.25, no material
license, permit, registration or authorization is required for the conduct of
the Business as currently conducted or for the ownership of the Transferred
Assets. The Licenses are in full force and effect in all material respects and
are free and clear of any conditions that would have any material adverse effect
on the Business as currently conducted.
4.26 Customers. The Customer List attached to this Agreement as
Schedule 4.26 lists all customers of the Business since July 1, 1995 through the
date of this Agreement (the "Customers"). To Seller's knowledge, no customer
intends to reduce the amount of Products it purchases at any time prior to or
following the consummation of the transaction contemplated by this Agreement,
and Seller is not aware of any substantial deterioration in the creditworthiness
of any of Seller's customers.
4.27 Suppliers. The Supplier List attached to this Agreement as
Schedule 4.27 sets forth a list, which is complete and accurate in all material
respects, of the 25 largest suppliers (by dollar
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volume) of products and services to TRIMET during the nine (9) month period
ended on the Balance Sheet Date and during the period from the Balance Sheet
Date through April 30, 1998, respectively (each such firm a "Major Supplier").
There are no sole-source suppliers of significant materials or services to
TRIMET with respect to which practical alternative sources of supply are not
available on relatively comparable terms and conditions. Since the Balance Sheet
Date, no Major Supplier has declined to continue to act as such or indicated any
present or future intention to cease to do so or to materially change the terms
of such arrangements.
4.28 Insurance. The Insurance List attached to this Agreement as
Schedule 4.28 lists all insurance policies and bonds in force solely or
principally with respect to the Business (the "Insurances"). All of the
Insurances are in full force and effect, are valid and enforceable, and will
remain in full force and effect through the Closing Date.
4.29 Product Service Obligations, Warranties and Guarantees. Schedule
4.29 contains copies of the standard product service agreements and the standard
product and service warranties and guarantees currently used by Seller in the
conduct of the Business. Seller's practices and policies in the conduct of the
Business with respect to the provision of warranties and guarantees and the
handling of warranty and guarantee claims has remained unchanged since the
Balance Sheet Date.
4.30 Prepayments and Deposits. Schedule 4.30 sets forth all customer
prepayments and deposits received by Seller in connection with the Business as
of April 30, 1998. Schedule 4.30 will be updated as of 5 Business Days prior to
the Closing Date.
4.31 Financial Records. All material books of account and other
financial records of Seller relating to the Business and the Transferred Assets
are complete and correct in all material respects and have been made available
to Buyer. All of such books and records have been prepared and maintained in
accordance with Seller's customary business practices and in conformity with
Seller's accounting principles ("Seller's Accounting Principles"), consistently
maintained and applied with respect to the Business.
4.32 Finder's Fees. Except for the agreement between Seller and X.X.
Xxxxxx Securities, Inc. relative to the transaction contemplated herein, there
is no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of Seller or any of Seller's
Affiliates and which might be entitled to any fee or commission from Seller in
connection with the transactions contemplated by this Agreement.
4.33 Computer Software and Databases. Schedule 4.33 sets forth all
computer software and databases owned, licensed, leased, internally developed or
otherwise used in connection with the Business and included in the Transferred
Assets ("Computer Software and Databases"). Seller has all Computer Software and
Databases that are necessary to conduct the Business as currently conducted. The
Computer Software and Databases perform in accordance with the documentation
related thereto or used in connection therewith and are free of material defects
in programming and operation. Except as set forth on Schedule 4.33 the Computer
Software and Databases and the respective computer hardware of Seller relating
to the Business will process dates correctly prior to,
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during and after the calendar year 2000, including, without limitation, century
recognition, calculations that accommodate same century and multi-century
formulas and date values, and interface values that reflect the century and
century changes.
4.34 Transactions in Euros. Schedule 4.34: (a) describes those steps,
if any, taken by Seller to ensure that TRIMET will be able to deal with
transactions undertaken in Euros and (b) contains copies of all warranties,
representations or undertakings given to or received by Seller in connection
with the Business or the Transferred Assets in relation to Seller's or any third
party's ability to transact business in Euros.
4.35 Material Information. No representation or warranty set forth in
this Section 4 or in any schedule referred to herein contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading.
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY BUYER. Buyer
represents and warrants to and agrees with Seller, as of the date hereof and as
of the Closing Date, as follows:
5.1 Organization and Qualification. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Ohio and has all requisite corporate power and authority to carry on its
business as currently conducted.
5.2 Corporate Authorization. The board of directors of Buyer has
approved the execution, delivery and performance of this Agreement and the Other
Documents to which it is or shall be a party. Buyer has full power, authority
and legal right to execute and deliver this Agreement and the Other Documents to
which it is a party and to perform its obligations under this Agreement and the
Other Documents.
5.3 Consents and Approvals. Except as required by the HSR Act, or as
set forth on Schedule 5.3, no consent, approval, waiver, authorization,
registration or qualification is required to be obtained by Buyer from, and no
notice or filing is required to be given by Buyer to or made by Buyer with, any
Governmental Authority or other third-party in connection with the execution,
delivery and performance by Buyer of this Agreement and the Other Documents,
other than where the failure to obtain such consent, approval, waiver or
authorization, or to give or make such notice or filing, would not, individually
or in the aggregate, materially impair or delay the ability of Buyer to perform
its obligations under this Agreement or the Other Documents or to effect the
Closing or consummate the transactions contemplated by this Agreement or the
Other Documents.
5.4 Binding Effect. This Agreement has been duly executed and delivered
by Buyer, and this Agreement and the Other Documents, when executed and
delivered, are or will be (as appropriate) the valid and binding obligations of
Buyer, enforceable against it in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
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5.5 Non-contravention. Neither the execution and delivery of this
Agreement by Buyer, nor the performance by Buyer of its obligations under this
Agreement, will (i) violate any provision of the charter, bylaws or other
organizational documents of Buyer or (ii) violate or result in a breach of or
constitute a default under any law, rule, regulation, judgment, injunction,
order, decree or other restriction of any court or Governmental Authority to
which Buyer is subject, including any license, permit, certificate and other
authorization or approval required under any applicable law; other than, in the
cases of clauses (i) and (ii), any conflict, breach, termination, default,
cancellation, acceleration, loss, violation or encumbrance which, individually
or in the aggregate, would not materially impair or delay the ability of Buyer
to perform its obligations under this Agreement or the Other Documents or to
effect the Closing or consummate the transactions contemplated by this Agreement
or the Other Documents.
5.6 Finder's Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Buyer or any of its Affiliates and which might be entitled to any fee or
commission from Buyer in connection with the transactions contemplated by this
Agreement.
5.7 Material Information. No representation or warranty set forth in
this Section 5, or in any schedule referred to herein, contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading.
6. COVENANTS OF BUYER AND SELLER. Buyer and Seller agree to comply with
their respective covenants set forth in this Section 6:
6.1 Conduct of Business Prior to the Closing Date; Affirmative
Covenants. Between the date of this Agreement and the Closing Date, in
connection with the Business, Seller shall:
(a) operate in the usual and ordinary course of business in
accordance with past practice and conduct the Business in all material
respects in compliance with all applicable laws, rules and regulations
and perform its obligations in relation to the Contracts;
(b) use, repair and, if necessary, replace its assets in a
reasonable manner consistent with past practice and maintain its assets
in substantially their current condition, ordinary wear and tear
excepted;
(c) use all reasonable efforts to preserve intact its present
business organization, keep available the services of its present
officers and employees, preserve its relationships with customers and
others having business relationships with it (which shall include an
obligation to pay suppliers, taxes and other liabilities on a timely
basis and consistent with past practice), and refrain from changing any
of its business policies (including, without limitation, advertising,
marketing, pricing, purchasing, personnel, sales and budget policies);
(d) maintain its present Insurances in full force and effect,
with policy limits and scope of coverage not less than is now provided
by its present insurance; and
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(e) maintain its books of account and records in the usual and
ordinary manner and in accordance with Seller's Accounting Principles
as historically applied.
6.2 Conduct of Business Prior to the Closing Date; Negative Covenants.
Between the date of this Agreement and the Closing Date, in connection with the
Business, Seller shall not:
(a) other than in the ordinary course of business, incur any
debt, obligation or liability (whether accrued, contingent, absolute,
determined, determinable or otherwise) that includes obligations
(monetary or otherwise) to be performed by Buyer after the Closing
Date;
(b) sell, transfer, lease, mortgage, pledge or subject to an
Encumbrance (other than Permitted Encumbrances and Materialmen Liens)
any of the Transferred Assets;
(c) without the prior written consent of Buyer (which consent
shall not be unreasonably withheld or delayed) and other than in the
ordinary course of business modify or extend any Contract or enter into
any contract that would have been a Contract or a property lease had it
been in existence on the date of this Agreement;
(d) make or grant any wage or salary increase to any employee
or pay any bonus or consultancy fee to any officer or employee or any
Affiliate of such person;
(e) make any change in the accounting principles, methods or
practices followed by it or depreciation or amortization policies or
rates;
(f) make any loans or make any non-cash dividends or non-cash
distributions other than in relation to Excluded Assets;
(g) other than in the ordinary course of business, cancel or
compromise any debt or claim, or waive or release any right, of
material value;
(h) buy any items of machinery or equipment with an aggregate
cost in excess of $100,000;
(i) directly or indirectly (through a representative or
otherwise) solicit from or furnish any information to any prospective
buyer, commence or conduct negotiations with any party (other than
Buyer and its representatives), disclose any confidential or
proprietary information, or enter into any agreement with any party
(other than Buyer) concerning the sale, lease or other disposition of
the Business, the Transferred Assets or any part of the Business or
Transferred Assets; and
(j) enter into any agreement to do any of the things referred
to in clauses (a) through (i) above.
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6.3 Conditions; Other Consents. Buyer and Seller shall use commercially
reasonable efforts to satisfy the conditions to the other party's obligations as
described in Sections 9 and 10 and to obtain any other consents, transfers,
authorizations or approvals required for the consummation of the transactions
contemplated by this Agreement and the Other Documents.
6.4 Advise Buyer of Adverse Change. Between the date of this Agreement
and the Closing Date, Seller shall promptly advise Buyer of the occurrence of
any material adverse change in the financial condition or the results of its
operations of the Business or the occurrence of any event or condition that has
or would materially and adversely affect the Business.
6.5 Pre-Closing Access to Information; Confidentiality. From the date
of this Agreement until the Closing Date, upon reasonable notice, Seller shall
provide Buyer and its representatives access at mutually agreeable times to all
properties, equipment, books, accounts, contracts and documents of, or related
to, and information regarding the Transferred Assets and the operation of the
Business and shall permit Buyer and its representatives to perform, at Buyer's
expense, any audits, studies and other examinations as the Buyer shall
reasonably deem appropriate (except that Buyer shall not be permitted to conduct
any environmental studies or audits of the Real Property without the prior
written consent of Seller). Buyer shall be provided access to certain key TRIMET
customers (including Zeneca/Stahl, McWhorter, PPG, Reichhold, and BASF) and
employees. Subject to the immediately preceding sentence, each of Buyer and
Seller shall satisfy their respective obligations under the confidentiality
agreement between them, dated January 19, 1998 (the "Confidentiality
Agreement").
6.6 Post-Closing Access to Information.
(a) Subject to Section 6.6(b), after the Closing, upon request, Seller
and its representatives shall be permitted reasonable access, during normal
business hours, to and to make inspection of the Books and Records transferred
to Buyer hereunder, which records are to be maintained by Buyer in accordance
with the requirements of applicable law and otherwise in accordance with its
customary records retention policy, and to make copies thereof as is reasonably
necessary to allow Seller to obtain information in Buyer's possession (but
excluding attorney work product or other privileged communications). Seller
shall pay Buyer's reasonable out-of-pocket costs incurred in connection with
satisfying such requests. In the event that Buyer determines to destroy or
otherwise dispose of any such Books and Records at any time within seven (7)
years of the Closing Date, it shall provide Seller with at least thirty (30)
days prior written notice before proceeding with any such destruction or other
disposal. Seller shall have the right, upon receipt of such notice, to elect
prior to the date scheduled for such destruction or disposal to obtain all or
any portion of the Books and Records to be destroyed or disposed of unless, in
the reasonable opinion of counsel to Buyer, Seller's possession of such Books
and Records, or portion thereof, would result in the waiver of any privilege to
which Buyer was then entitled, in which case Buyer may, at its option, refuse to
provide the affected portion of such Books and Records to Seller. Promptly
following notification to Buyer of its election to obtain any such Books and
Records, Seller shall arrange for the delivery of such Books and Records to
Seller or its agent, at Seller's sole expense, and Buyer shall cooperate
therewith. After seven (7) years have expired from the Closing Date, Buyer shall
be permitted to dispose of the Books and Records without restriction. This
Section 6.6(a)
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shall survive the Closing and shall continue in full force and effect until such
time as Buyer and Seller mutually agree that the Books and Records are no longer
necessary for any tax audit disclosures. Seller shall keep any information
obtained by it pursuant to this Section 6.6(a) in confidence and shall not,
unless required by law, disclose it to any person.
(b) Seller acknowledges that Buyer intends to install and utilize a new
computer system following the consummation of the transaction contemplated by
this Agreement. As a result, Seller acknowledges that, notwithstanding Section
6.6(a), there can be no assurances that Buyer will be able to maintain for seven
(7) years information not in writing or in hard copy form.
(c) After the Closing and upon request, Buyer and its representatives
shall be permitted reasonable access, during normal business hours, to and to
make inspection of the books and records retained by Seller that relate in any
way to the Business, the Transferred Assets or the Assumed Liabilities
(including, without limitation, books and records relating to the financial
performance of the Business during the three (3) year period prior to the
Closing Date) which records are to be maintained by Seller in accordance with
the requirements of applicable law and otherwise in accordance with its
customary records retention policy, and to make copies of the portions thereof
relating to the Business, the Transferred Assets or the Assumed Liabilities as
is reasonably necessary to allow Buyer to obtain information relating thereto in
Seller's possession (but excluding attorney work product and other privileged
communications). Buyer shall pay Seller's reasonable out-of-pocket costs
incurred in connection with satisfying such requests. For a period of seven (7)
years following the Closing Date, in the event that Seller determines to destroy
or otherwise dispose of any such books and records at any time, it shall provide
Buyer with at least thirty (30) days prior written notice before proceeding with
any such destruction or other disposal so that Buyer may have a reasonable
opportunity to exercise its inspection rights as provided in the first sentence
of this Section 6.6(c). In addition, upon request Seller shall provide
reasonable assistance to Buyer in connection with Buyer's examination of such
books and records.
(d) With respect to Taxes, Seller and Buyer will provide each other
with such cooperation and information as either of them may reasonably request
of the other in the filing of any Tax Return, determining a liability for or a
right to refund of Taxes or in conducting any audit or other proceeding in
respect of Taxes.
6.7 Updating of General Information and Schedules. Between the date of
this Agreement and the Closing Date, Seller will promptly deliver to Buyer, on a
weekly basis, information relating to the operation of the Business, including
weekly sales reports and such other financial information that may be reasonably
requested by Buyer. If following the date hereof Seller becomes aware of matters
which, if in existence or known to Seller on the date hereof, would have been
required to be disclosed in any Schedule hereto or would be required to modify
any representation or warranty contained herein, Seller shall be permitted, by
written notice in accordance with Section 25, to inform Buyer of the relevant
matter and the Schedule or provision of this Agreement to which it relates. Upon
such notice being given to the Buyer the relevant Schedule shall be deemed to be
updated and amended to the extent of the disclosure.
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6.8 HSR Act. Each party has filed with the Federal Trade Commission
(the "FTC") and the Antitrust Division of the United States Department of
Justice (the "Antitrust Division") notification and report forms in accordance
with the HSR Act with respect to the transactions contemplated by this
Agreement. Each party will promptly furnish to the FTC and the Antitrust
Division any additional information requested by either of them pursuant to the
HSR Act. Buyer shall be responsible for the payment of the filing fees in
connection with such notification and report forms.
6.9 Demolition and Clean Up. (a) Buyer and Seller agree that, from and
after the date hereof and for some period of time subsequent to the Closing
Date, work will have to be done on the Owned Real Property to accomplish the
following:
(i) the demolition of certain vacant structures and
buildings located on the Owned Real Property
(described on Schedule 4.16(d)),
(ii) the clean-up of that portion of the Owned Real
Property currently utilized by the Business as an
onsite scrap and unused equipment storage area
(located in the approximate area shown on Schedule
6.9(b)), and
(iii) the closing of certain lagoons located on the Owned
Real Property (as more fully described on Schedule
6.9(c)), but not including ongoing groundwater
monitoring subsequent to closure.
The task described in the immediately preceding sentence shall hereinafter be
referred to as the "Project".
(b) Buyer and Seller agree, from and after the date hereof, jointly to
define the scope of work necessary to accomplish all aspects of the Project in
the most cost-effective manner possible, bearing in mind the need in all cases
to minimize any disruption caused to Buyer or the Business. Notwithstanding the
immediately preceding sentence, with respect to that portion of the Project
described in clause (iii) of subsection (a) above, the closure of lagoons shall
be performed in accordance with the requirements of applicable law and the
Pennsylvania Department of Environmental Protection but, subject to the
immediately foregoing, in accordance with the manner and method of closure
specified by Seller. Buyer and Seller also agree, after the Closing Date,
jointly to select the (i) contractor or contractors who will perform the work
necessary to accomplish the Project and (ii) an engineering firm that will be
responsible for the daily supervision and management of contractor efforts in
completing the Project. Each of the contractors and the engineering firm will be
required to post payment and performance bonds to secure its performance. The
parties agree to make any refinements to the agreed upon scope of work as may be
necessary, in the reasonable view of the selected contractor(s) and/or
engineering firm, to accomplish the Project in a manner consistent with the
first and second sentences of this subsection (b), as applicable, and consistent
with the requirements of all applicable laws.
(c) It is understood that, as the Project progresses and subject to
subsection (b) set forth immediately above, Buyer will have the overall right
and responsibility to direct the Project and the
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efforts of those carrying out tasks necessary to complete the Project. Thus,
upon final agreement by Buyer and Seller as to the precise scope of work with
respect to the Project and selection of the appropriate contractor(s) and
engineering firm, Buyer shall enter into such bonded contracts with said
contractor(s) and engineering firm as are appropriate and customary relative to
their performance of the Project scope of work ("Project Contracts"); provided
that, Seller shall have been allowed to review and approve (which approval shall
not unreasonably be withheld or delayed) the terms of the Project Contracts (and
especially, but not exclusively, the terms thereof relating to the amount and
timing of any compensation) at the time of their preparation and negotiation.
Provided that Buyer has complied with the requirements of this Section 6.9,
Seller shall be responsible to pay to Buyer all amounts due under the Project
Contracts within twenty (20) days of written notification to Seller by Buyer of
any amounts due thereunder, which notification shall be accompanied by a copy of
all invoices and supporting documentation given to Buyer in connection with such
amounts by any one or more of the contractor(s) or the engineering firm. All
change orders to Project Contracts that affect the scope of work of the Project
in any significant manner or that increase the cost thereof must be approved in
advance by Seller (which approval shall not unreasonably be withheld or
delayed).
(d) Although Buyer generally will have the right to direct the Project,
Buyer agrees that it will seek advance advice and consultation from Seller, on a
continuing basis and until the Project has been completed, on all meaningful
aspects of, decisions to be made with respect to, or notices or correspondence
to be given in connection with, the Project. Buyer will deliver or make
available to Seller all correspondence or documents concerning the Project in
Buyer's possession and will grant Seller access to its premises, upon reasonable
advance notice and during normal business hours, to inspect the work being done
in connection with the Project as often as Seller shall deem reasonably
necessary.
(e) The Project Contracts shall obligate the contractor(s) and the
engineering firm to take all steps that are reasonably necessary to ensure (i)
that the work being performed in connection with the Project is performed in a
competent, safe and workmanlike manner and (ii) that all firms or persons
performing any task in connection with the Project take all reasonable
precautions to avoid (A) the unnecessary exposure of any person to Hazardous
Substances, (B) the release or discharge of Hazardous Substances to the
environment or (C) any other act or omission to act that might give rise to an
Environmental Claim.
(f) Seller shall indemnify Buyer (including its officers, directors,
employees, agents or representatives) from and against any Losses incurred by
Buyer by reason of, resulting from or arising out of (i) any exposure by any
person to any Hazardous Substances as a consequence of the performance of any
task in connection with the Project or (ii) any Environmental Claims that occur
solely and only as a consequence of the Project; provided that, Seller will not
be so obligated to indemnify Buyer if and to the extent any Losses are incurred
as a consequence of any failure by Buyer to perform its obligations under this
Section 6.9 or as a consequence of the negligent act, negligent omission to act
or willful misconduct of any employee, agent or representative of Buyer. The
indemnification obligation set forth in this subsection (f) is in addition to
Seller's indemnification obligations under Sections 8 and 19.1 herein and shall
survive the completion of the portion of the Project (as delineated in clauses
(i), (ii) and (iii) of Section 6.9(a)) giving rise to such
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obligation for a period of five (5) years and shall not otherwise be limited
except as set forth in this subsection (f). The provisions of Section 19.4
hereof shall apply with respect to any claims for indemnification made by Buyer
under this subsection (f).
6.10 Use of Treated Water. Mallinckrodt Chemical is a party to an
agreement among Seller, TRIMET and the Whitehall Township Authority ("WTA")
dated March 22, 1995 (the "WTA Agreement") pursuant to which TRIMET is required
to pump ground-water from WTA xxxxx, pipe such ground-water to a holding lagoon
located on the Retained Real Estate, pipe and treat the same in its wastewater
treatment plant located on the Owned Real Estate and discharge it pursuant to
the site's wastewater discharge permit. Buyer agrees, from and after the Closing
Date, to provide Seller with reasonable cooperation (including granting Seller
access to its facilities upon reasonable advance notice to Buyer during normal
business hours) in connection with Mallinckrodt Chemical's continuing
performance and administration of the WTA Agreement, including, without
limitation, accepting and using water as necessary from WTA xxxxx generally in
the manner and to the same extent as currently utilized by the Business, such
acceptance and use by Buyer to continue until remediation of all WTA xxxxx
ceases and to recommence if remediation, once ceased, resumes for any reason.
6.11 Certain Agreements Concerning Real Property.
(a) The parties acknowledge that the land comprising the Owned Real
Property, to be conveyed by Seller to Buyer hereunder, is situated on portions
of two existing tax parcels. Seller has advised Buyer that, as a condition to
the conveyance of fee simple title to the Owned Real Property, Seller must
obtain subdivision approvals from the appropriate governmental authorities, and
that Seller does not expect to obtain such approvals until approximately two to
three months after the Closing Date. Accordingly, the parties agree that, in the
event Seller is unable to convey to Buyer fee simple title to the Owned Real
Property on the Closing Date, Seller and Buyer shall enter into a lease
agreement containing the terms set forth on Schedule 6.11(a) and such other
terms as are customary for similar commercial leases (the "Provisional Lease
Agreement"). The parties shall, at Buyer's request, enter into a Memorandum of
Lease, containing such terms as may be required by law and such other terms
reasonably requested by Buyer, which may, if permitted by law, be recorded by
Buyer in the appropriate land records of the county in which the Owned Real
Property is located; provided, that Buyer agrees not to record such Memorandum
unless Buyer, in its discretion, determines that its rights in the Owned Real
Property may be insecure in any way. Seller shall pay any recording or transfer
fees in connection with the Provisional Lease Agreement. Seller unconditionally
agrees that, within one calendar year following the Closing Date (the
"Conveyance Deadline"), Seller shall obtain the necessary subdivision or other
approvals necessary to convey to Buyer fee simple title to the Owned Real
Property, and convey fee simple title to the Owned Real Property to Buyer, and
Buyer shall accept the same from Seller, in accordance with the terms of this
Agreement, provided that Seller shall make every reasonable effort to procure
such approvals as soon as possible after the Closing Date. The parties further
acknowledge that the portion of the Owned Real Property identified as Lot No. 2
on the Subdivision Plan is landlocked, and Seller agrees to use its best,
commercially reasonably efforts to obtain (i) a perpetual easement, benefitting
and appurtenant to Lot No. 2, over land to the north of Lot No. 4 currently
owned by Jeras Corporation as identified on the Subdivision Plan, for ingress
and egress purposes to Xxxxx Chunk Road, which
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area is partially identified on the Subdivision Plan as the "North Easement" and
(ii) a perpetual easement, benefitting and appurtenant to Lot No. 2, over land
to the west of Lot No. 4 currently owned by Jeras Corporation as identified on
the Subdivision Plan, for ingress and egress purposes to and from Cedar Crest
Blvd, which area is partially identified on the Subdivision Plan as the "West
Easement" (either of such easements is herein referred to as the "Necessary
Access Easement"). Seller shall grant to Buyer an easement or easements for
ingress and egress over that portion of the area described as the "Proposed
Access Easement" located on Lot No. 4 as shown on the Subdivision Plan, for
access to the North Easement, and over the western most 60 feet of Lot No. 4 as
shown on the Subdivision Plan, for access to the West Easement.
(b) In order to secure the performance of Seller's obligations under
Section 6.11(a) above and all damages arising from the breach thereof or from
the failure to obtain the Necessary Access Easement (either pursuant to clause
6.11(a)(i) or (ii)), Seller agrees to grant and deliver to Buyer on the Closing
Date a mortgage or deed of trust (the "Security Instrument") encumbering the
entire tax parcels, and all improvements thereon, on which all or any portion of
the Owned Real Property is situated. Seller shall pay any recording fees or
mortgage tax in connection with the Security Instrument. Buyer shall have the
right to foreclose the Security Instrument in the event of a default by Seller
under the Security Instrument, including the failure to convey title to the
Owned Real Property by the Conveyance Deadline.
(c) In order to further secure the performance of Seller's obligations
under Section 6.11(a) above and to assure the conveyance to Buyer of the
Necessary Access Easement, Seller agrees that, out of the total Purchase Price
to be paid on the Closing Date, the sum of Five Million Dollars ($5,000,000.00)
shall be deposited and held in escrow with the Title Company (defined in Section
11.2(h) below). Such sum shall be placed in an interest bearing account (such
sum, and any interest thereon, is herein referred to as the "Escrow Sum") and
shall be disbursed to Seller upon the conveyance of the Owned Real Property to
Buyer in accordance with the terms hereof on or prior to the Conveyance
Deadline. In the event that Seller fails to convey to Buyer fee title to the
Owned Real Property and also the Necessary Access Easement in accordance with
the terms hereof on or prior to the Conveyance Deadline, the Title Company shall
disburse the Escrow Sum to Buyer, without limiting the right of Buyer to pursue
any other remedies or damages by reason of such breach, including, without
limitation, the right to specific performance and to institute foreclosure
proceedings pursuant to the Security Instrument. The parties agree to enter into
an escrow agreement with the Title Company governing the Escrow Sum consistent
with the terms set forth above prior to the Closing Date.
(d) The parties further agree to enter into and deliver to each other,
on the Closing Date, lease agreements relating to the Leased Real Property
containing the terms set forth on Schedule 6.11(d) and such other terms as may
be customary for similar commercial leases (the "New Lease Agreement"). The
parties acknowledge that the New Lease Agreement shall contain a right of first
offer to purchase the Leased Real Property in accordance with the terms set
forth on Schedule 6.11(d).
(e) Upon obtaining the subdivision approval referred to in Section
6.11(a) above, the parties agree to reexecute or amend, at Buyer's election, the
New Lease Agreement to include the
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adjusted descriptions of the parcels subject to such leases (i.e. Lot Nos. 3 and
4 as identified on the Subdivision Plan) and to record a memorandum of such
lease. Concurrently therewith, Seller will deliver, with respect to the Leased
Real Property, a leasehold owner's insurance policy (ALTA form), if available,
insuring the leasehold title of Buyer in such real estate, including affirmative
insurance covering the option to purchase contained in the New Lease Agreement,
subject only to any applicable Permitted Encumbrances, in an amount of $600,000
or such other amount as may be agreed to in the Allocation Statement referenced
in Section 13 if it has been determined (provided, however, that Buyer may (at
its expense) increase such amount for title insurance coverage purposes, but
Buyer will pay for any resulting increase in the cost of the title insurance or
the amount of transfer or conveyance taxes otherwise payable by Buyer and Seller
in accordance with Section 14 hereof), with standard exceptions deleted, with
affirmative insurance as to any appurtenant easements, and containing a "same
land as survey" endorsement with reference to Lot Nos. 3 and 4 only, which title
policy shall be in form reasonably acceptable to Buyer and issued by
Commonwealth Land Title Insurance Company or another title insurance company
mutually acceptable to the parties.
(f) Seller will deliver, at its expense, a survey of each parcel
comprising the Owned Real Property to be conveyed by Seller to Buyer, which
survey shall be prepared in accordance with ALTA/ACSM Minimum Standard Detail
Requirements, showing all Table A items thereof (except items 5 and 12 and such
other items as may not be reasonably necessary or feasible), and certified in
favor of Seller, Buyer, Buyer's lender and the title company. If such survey
cannot be delivered by the Closing Date, Seller shall deliver such surveys to
Buyer by the Conveyance Deadline.
(g) Buyer agrees that Seller may reserve, in the special warranty
deeds, an easement or easements for ingress and egress over the Owned Real
Property, along the area identified on the Subdivision Plan as the Proposed 33
foot wide access easement (the "Proposed Access Easement") to the extent such
Proposed Access Easement is located within the bounds of the Owned Real
Property, to enable Seller's access to Cedar Crest Blvd from each of lots nos. 3
and 4 as described on the Subdivision Plan. The final location and the terms of
such easements, as well as the easements referred to in Section 6.11(a), shall
be subject to the mutual agreement of Buyer and Seller. Each party shall share
in the cost of maintaining any roads on the Proposed Easement Area in relation
to the relative burden placed on the roads by the users thereof.
6.12 Distributor/Sales Agent Contracts. The parties hereto acknowledge
that, with respect to certain contracts listed on Schedule 4.15 (as reflected in
the notes column), Seller is not assigning to Buyer Seller's right and
obligations under such contracts to the extent that such rights and obligations
do not relate to the Business or the Transferred Assets.
7. EMPLOYMENT MATTERS.
7.1 Employment by Buyer. Each employee listed on Schedule 7.1 who is
employed in connection with the operation of the Business on the Closing Date
(and who is not on disability leave as of that date) shall become an employee of
Buyer from and after the Closing Date, unless any such employee otherwise elects
(the "Transferred Employees"). Buyer shall have no liability for the payment of
wages (or withholdings in respect thereof) or the provision of any benefits
(including,
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without limitation, severance benefits) payable to the employees of Seller other
than the Transferred Employees. Any employee who, on the Closing Date, is on
short-term disability (but not long-term disability) or otherwise on a leave of
absence available to such employee under applicable law or in accordance with
Seller's general policies applicable to all employees, may also elect to become
a Transferred Employee provided such employee returns from short-term disability
leave or any permissible leave of absence within ninety (90) days after the
Closing Date.
7.2 Terms of Employment of Transferred Employees. Buyer shall (a)
employ each Transferred Employee for base compensation at least equal to each
such Transferred Employee's base compensation with Seller immediately prior to
the Closing Date, (b) offer each Transferred Employee benefits in accordance
with Sections 7.3 through 7.6, and (c) otherwise employ each Transferred
Employee on terms and conditions that are comparable in the aggregate to the
terms and conditions of their employment with Seller prior the Closing Date.
During the one-year period following the Closing Date, Buyer will (x) not
terminate any Transferred Employee other than for cause, (y) maintain each
Transferred Employee in the same position that such Transferred Employee held
with Seller prior to the Closing Date or a position comparable in responsibility
and authority to such position (except for any change to which any such
Transferred Employee consents) and (z) continue to offer the Transferred
Employees compensation and benefits in accordance with the first sentence of
this Section 7.2 hereto. In the event Buyer terminates any Transferred Employee
other than for cause during such one-year period, Buyer shall make a severance
payment to such Transferred Employee in accordance with the principles set forth
on Exhibit 7.2.
7.3 Welfare Benefit Plans. Notwithstanding Section 7.3 above, Buyer
will have complete discretion, on and as of the Closing Date, to establish
coverage for and enroll the Transferred Employees in welfare benefit plans of
its choice, subject to any established eligibility requirements, except that (a)
pre-existing medical conditions will not be an eligibility requirement for
enrollment in (and treatment of such conditions will be covered as if the onset
of such conditions occurred after coverage began under) any medical, vision, or
dental plan; (b) any such welfare benefits provided to any Transferred Employee
must be provided to all Transferred Employees; and (c) the benefits provided by
Buyer to the Transferred Employees will not, on average, be worth less to the
Transferred Employees as a whole than the welfare benefits that they were
receiving from Seller immediately prior to the Closing Date. With respect to all
such welfare benefit plans, Buyer will grant all Transferred Employees credited
service for all employment with Seller up to and including the Closing Date for
purposes of eligibility and vesting. No assets will be transferred from Seller
to Buyer, from trustee to trustee, or from funding agent to funding agent with
respect to the funding of any employee welfare benefit plans. Notwithstanding
the foregoing, (i) Buyer's retiree medical benefits will cover only those
Transferred Employees required to be covered for such benefits by existing
collective bargaining agreements, and Seller shall have full liability and
responsibility for the payment of, and shall reimburse Buyer for any amounts
paid by Buyer for, retiree medical benefits with respect to employees who were
employed in the operation of the Business who did not become Transferred
Employees by reason of retirement prior to the Closing Date or otherwise; (ii)
Seller will be liable and responsible for paying, in full, any amount due to any
Transferred Employee under any of Seller's Welfare Benefit Plans covering such
Transferred Employees; and (iii) Seller shall have full liability and
responsibility for the payment of any amounts due under any stay bonus or
incentive arrangement put into place by Seller in anticipation of the
transaction
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contemplated by this Agreement prior to the Closing, no matter when such amounts
may be due or payable, and any employee bonus or incentive arrangements to the
extent related to or payable with respect to periods ending on or before the
Closing Date.
7.4 Pension Plan for Non-Union Employees. No assets will be transferred
from Seller to Buyer or from trustee to trustee on account of any qualified
pension plan covering the non-union employees (the "Seller's Non-Union Pension
Plan"). Seller will amend the Seller's Non-Union Pension Plan to vest, as of the
Closing Date, the interest of each Non-Union Employee, if not otherwise vested.
Buyer will enroll all of such Non-Union Employees in the qualified pension plan
that Buyer has established for similarly situated employees, subject to the
eligibility requirements stated in such plan. Buyer will amend such plan to
recognize service with Seller for purposes of determining vesting and
eligibility to receive benefits. Buyer will have sole and exclusive control and
administration of the Buyer's Non-Union Pension Plan.
7.5 Savings Plan for Non-Union Employees. Effective as of the Closing
Date, participation of Transferred Employees in any qualified savings plan of
Seller covering Non-Union Employees (the "Seller's Non-Union Savings Plan")
shall cease, and contributions to Seller's NonUnion Savings Plan from and with
respect to Transferred Employees shall cease. Buyer will enroll all of such
Non-Union Employees in the qualified savings plan that Buyer has established for
similarly situated employees, subject to the eligibility requirements stated in
such plan. As soon as reasonably practical following the Closing Date, Buyer and
Seller will arrange for a trustee-to-trustee transfer of the accounts of such
Non-Union Employees from Seller's Non-Union Savings Plan to the qualified
savings plan of Buyer.
7.6 Union Employees. (a) Notwithstanding Section 7.3 above, with
respect to union employees of the Business on and as of the Closing Date
("Transferred Union Employees"), Buyer will assume all liability and
responsibility for all welfare plans and benefits provided for in all union
collective bargaining agreements that exist on and after the Closing Date and
will make all payments and perform all acts required thereunder after the
Closing Date, except that Seller shall reimburse Buyer for all payments to be
made thereunder to the extent they relate to periods of employment through the
Closing Date. The liability of Buyer and Seller with respect to the savings and
pension plans covering Transferred Union Employees is fully delineated in the
balance of this Section 7.6 set forth below.
(b) Benefits under Seller's Union Savings Plan. Effective as of the
Closing Date, participation of Transferred Union Employees in the Investment and
Savings Plan for Hourly Employees (the "Seller's Union Savings Plan") shall
cease, and contributions to Seller's Union Savings Plan from and with respect to
Transferred Union Employees shall cease.
(c) Benefits under Buyer's Union Savings Plan. Effective as of the
Closing Date, the Transferred Union Employees shall commence participation in
Buyer's Union Savings Plan which shall provide such benefits as may be required
under the applicable collective bargaining agreement. There shall be no transfer
of assets or liabilities from Seller's Union Savings Plan to Buyer's Union
Savings Plan.
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(d) Benefits under Seller's Union Pension Plan. Effective as of the
Closing Date, the accrual of benefits of Transferred Union Employees under the
TRIMET Hourly Employee Retirement Plan (the "Seller's Union Pension Plan") shall
cease. Benefits accrued up to the Closing Date to each Transferred Union
Employee under Seller's Union Pension Plan shall be fully vested, and Seller
shall provide to Buyer a schedule listing such accrued benefits for each
Transferred Union Employee within ninety (90) days after the Closing Date.
Seller shall pay or cause to be paid to the Transferred Union Employees all
accrued benefits under the Seller's Union Pension Plan on and as of the Closing
Date when such benefits shall be payable pursuant to the terms thereof.
(e) Benefits under Buyer's Union Pension Plan. On or before the Closing
Date, Buyer shall either amend an existing pension plan or plans or establish a
new pension plan or plans as necessary to provide each Transferred Union
Employee the pension benefits required under the applicable collective
bargaining agreement (collectively, the "Buyer's Union Pension Plan"), which
shall be effective as of the Closing Date. The benefits payable under Buyer's
Union Pension Plan shall be reduced by the benefits available to such
Transferred Union Employee under Seller's Union Pension Plan as of the date of
the commencement of benefits to such Transferred Union Employee under Buyer's
Union Pension Plan (whether or not the Transferred Union Employee elects to
receive benefits under Seller's Union Pension Plan as of such date). There shall
be no transfer of assets or liabilities from Seller's Union Pension Plan to
Buyer's Union Pension Plan.
8. ENVIRONMENTAL INDEMNIFICATION.
8.1 Environmental Definitions. In this Agreement, the following defined
terms shall have the following meanings:
"Governmental Authority" shall mean any foreign, federal,
state or local government, or any entity, authority, agency, commission
or other similar body exercising executive, legislative, judicial,
regulatory or administrative authority or functions of or pertaining to
government, including any court or arbitration or similar tribunal.
"Governmental Rule" shall mean any foreign, federal, state or
local law, judgment, order, decree, statute, ordinance, rule or
regulation.
"Environmental Claims" shall mean all claims that are
asserted, obligations that are imposed and actions that are required by
Governmental Authorities or private parties under Environmental Laws
which arise other than as a result of Voluntary Environmental
Investigations undertaken by Buyer after the Closing Date. Such claims
shall also include all claims and actions required by any Environmental
Law involving the investigation, monitoring, containment, restoration
or cleanup of soils, structures, ground water, surface water, vapors or
other features of any sites (whether waste disposal sites, former plant
sites or other sites) on which any Hazardous Substances may be found
which claims, obligations or actions arise other than as a result of
Voluntary Environmental Investigations undertaken by Buyer after the
Closing Date.
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"Shared Environmental Claims" shall mean all claims that are
asserted, obligations that are imposed and actions that are required by
Governmental Authorities or private parties under Environmental Laws
which arise as a result of Voluntary Environmental Investigations
undertaken by Buyer after the Closing Date. Such claims shall also
include all claims and actions required by any Environmental Law
involving the investigation, monitoring, containment, restoration or
cleanup of soils, structures, ground water, surface water, vapors and
other features of any sites (whether waste disposal sites, former plant
sites or other sites) on which any Hazardous Substances may be found,
which claims, obligations or actions arise as a result of Voluntary
Environmental Investigations undertaken by Buyer after the Closing
Date.
"Voluntary Environmental Investigation" shall mean any
investigation or monitoring conducted by or on behalf of Buyer other
than pursuant to a requirement (not itself imposed as a consequence of
any voluntary action by or on behalf of Buyer) of any Environmental
Law, other legal obligation or under any Governmental Rule.
8.2 Indemnification by Seller for Environmental Claims. Seller shall
indemnify Buyer against any loss, cost, liability or expense (including, without
limitation, costs and expenses of litigation and, to the extent not prohibited
by law, reasonable attorneys' fees) (all of which are referred to as "Losses")
incurred by Buyer by reason of, resulting from or arising out of any and all
Environmental Claims that in turn result from or arise out of (a) the operation
of the Business on or prior to the Closing Date or (b) the ownership or use of
the Retained Businesses or the Retained Real Estate prior to, on or after the
Closing Date.
8.3 Limited Indemnification by Seller for Shared Environmental Claims.
Notwithstanding the provisions of Section 8.2 above, Seller shall, to the extent
set forth below, indemnify Buyer against Losses incurred by Buyer by reason of,
resulting from or arising out of any and all Shared Environmental Claims related
to the Transferred Assets or arising from the operation of the Business on or
prior to the Closing Date upon receiving notice of such Shared Environmental
Claims from Buyer during the periods set forth below:
(a) Shared Environmental Claims notified to Seller on or
before the first anniversary of the Closing Date to the extent that
Losses therefrom are in excess of Three Million Dollars ($3,000,000),
and then only for Eighty Percent (80%) of such Losses;
(b) Shared Environmental Claims notified to Seller after the
first anniversary but on or before the second anniversary of the
Closing Date to the extent that Losses therefrom are in excess of Two
Million Four Hundred Thousand Dollars ($2,400,000), and then only for
Sixty Percent (60%) of such Losses;
(c) Shared Environmental Claims notified to Seller after the
second anniversary but on or before the third anniversary of the
Closing Date to the extent that Losses therefrom are in excess of One
Million Eight Hundred Thousand Dollars ($1,800,000), and then only for
Forty Percent (40%) of such Losses;
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(d) Shared Environmental Claims notified to Seller after the
third anniversary but on or before the fourth anniversary of the
Closing Date to the extent that Losses therefrom are in excess of One
Million Two Hundred Thousand Dollars ($1,200,000), and then only for
Twenty Percent (20%) of such Losses; and
(e) Shared Environmental Claims notified to Seller after the
fourth anniversary but on or before the fifth anniversary of the
Closing Date to the extent that Losses therefrom are in excess of Six
Hundred Thousand Dollars ($600,000), and then only for Ten Percent
(10%) of such Losses.
8.4 Control of Remediation. The party which is responsible for the
majority of the cost of any Remedial Action (as defined in Section 8.4(a)) shall
be permitted to control such action, subject to the provisions set forth below.
For purposes of irrevocably determining which party is responsible for the
majority of the cost of the Remedial Action, the parties will attempt to assess
such costs in good faith prior to commencement of any Remedial Action. If they
are unable to agree on the amount of such costs, the matter of estimating such
costs will be referred for resolution to a nationally recognized firm of
environmental consultants whose services have not previously been significantly
utilized by the parties hereto (the "Independent Environmental Consultants").
The parties will share equally the cost of the Independent Environmental
Consultants. The amount of costs determined by the Independent Environmental
Consultants will be binding on the parties only for the purpose of determining
which party shall control any Remedial Action.
(a) Seller Controlled Remediation. With respect to any Losses arising
under this Section 8 for which the liability of Seller is greater than Buyer and
to the extent that such liability involves or may involve the implementation of
any action required by Environmental Law to investigate, clean up, remove, treat
or in any other way address Hazardous Substances ("Remedial Action"), Seller
shall have the right to control, direct and implement (if and as appropriate)
any such Remedial Action, but Buyer shall have the right to review and provide
Seller with written comments in advance of (i) the Seller's selection of
consultants and contractors designated to perform the Remedial Action and (ii)
Seller's final determination of the scope of work for, and type of, the Remedial
Action to be implemented, and in connection with such right of review Buyer
shall have access to Seller's personnel and relevant records and data as
necessary. Seller shall review and reasonably consider Buyer's comments. Seller
shall provide all plans, reports and submissions to any Governmental Authority
regarding any such Remedial Action in draft form to Buyer a reasonable time
prior to transmission of such items to such Governmental Authority and Seller
shall review and reasonably consider any of Buyer's comments on such plans,
reports and submissions.
(b) Buyer Controlled Remediation. With respect to any Losses arising
under this Section 8 for which the liability of Buyer is greater than Seller and
to the extent that such liability involves or may involve the implementation of
any action required by any Environmental Law for Remedial Action, Buyer shall
have the right to control, direct and implement (if and as appropriate) any such
Remedial Action, but Seller shall have the right to review and provide Buyer
with written comments in advance of (i) Buyer's selection of consultants and
contractors designated to perform the Remedial Action and (ii) Buyer's final
determination of the scope of work for, and type of, the Remedial Action to be
implemented, and in connection with such right of review Seller shall have
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access to Buyer's personnel and relevant records and data as necessary. Buyer
shall review and reasonably consider Seller's comments. Buyer shall provide all
plans, reports and submissions to any Governmental Authority regarding any such
Remedial Action in draft form to Seller a reasonable time prior to transmission
of such items to such Governmental Authority and Buyer shall review and
reasonably consider any of Seller's comments on such plans, reports and
submissions.
9. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer under
this Agreement are subject to the satisfaction or waiver by Buyer on or prior to
the Closing Date of the following conditions.
9.1 Representations and Warranties True on Closing Date. The
representations and warranties of Seller made in this Agreement are true in all
respects as set forth herein as of the Closing Date.
9.2 Compliance with Agreement. Seller has performed and complied in all
material respects with all of its obligations under this Agreement that are to
be performed or complied with by it prior to or on the Closing Date.
9.3 No Litigation. No litigation, proceeding, investigation or inquiry
is pending or threatened which, if sustained, would enjoin or prevent the
consummation of the transactions contemplated by this Agreement or would
materially and adversely affect Buyer's right to continue the operation of the
Business as presently conducted.
9.4 Third Party Consents and Approvals; Estoppel Certificates. Seller
shall have obtained all third-party consents and approvals required for the
transfer or continuance, as the case may be, of the Contracts and Licenses
designated on Schedule 9.4 as requiring third party consent or approval, and
such third parties shall have provided consents, approvals, estoppel
certificates, nondisturbance agreements and/or written clarifications of the
rights of Buyer thereunder, in each case, in form and substance reasonably
satisfactory to Buyer.
9.5 Material Adverse Change. There shall not have occurred any material
adverse change in the Transferred Assets or the Business' operations, financial
condition or prospects.
9.6 HSR Act. All required registrations and filings under the HSR Act
shall have been made and any waiting period applicable to the transactions
contemplated hereby pursuant to the HSR Act shall have expired or been
terminated.
9.7 Legal Opinion. Buyer shall have received from counsel for Seller an
opinion that the transactions contemplated hereby have been duly authorized by
all necessary corporate action and that this Agreement and the Other Documents
represent the binding obligation of Seller enforceable in accordance with their
terms, subject only to standard enforceability exceptions.
9.8 Title Insurance. Seller shall have delivered to Buyer the title
insurance policies or other assurance of title as described in Section 11.2(h).
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9.9 Satisfaction of Buyer with Updated Schedules. To the extent that
Seller modifies the Schedules pursuant to Section 6.7 hereof and such
modifications disclose or reflect in the aggregate a material increase in the
liabilities being assumed by Buyer, a material decrease in the value or material
change in the condition of, or a material encumbrance on, the assets, properties
or rights being purchased by Buyer, Buyer shall have the right to terminate this
Agreement. For the purposes of this Section 9.9, the term "material" shall mean
an amount equal to or greater than $300,000.
9.10 European Operations. Arrangements reasonably satisfactory to Buyer
shall have been made concerning (i) TRIMET's European operations carried on by
Seller or its Affiliates' overseas employees and (ii) the ability of Buyer to
continue to provide products and services to established and potential customers
of the Business in Europe.
9.11 Reliance Letter. Buyer shall have received a reliance letter from
Environmental Resources Management reasonably satisfactory to Buyer and its
lenders.
10. CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller
under this Agreement are subject to the satisfaction or waiver by Seller on or
prior to the Closing Date of the following conditions:
10.1 Representations and Warranties True on Closing Date. Buyer's
representations and warranties made in this Agreement are true in all respects
as set forth herein as of the Closing Date.
10.2 Compliance with Agreement. Buyer has performed and complied in all
material respects with all of its obligations under this Agreement that are to
be performed or complied with by it prior to or on the Closing Date.
10.3 No Litigation. No litigation, proceeding, investigation or inquiry
is pending or threatened which, if sustained, would enjoin or prevent the
consummation of the transactions contemplated by this Agreement.
10.4 License Transfers. Seller shall have obtained all material
third-party consents and approvals required for the transfer or continuance, as
the case may be, of the Licenses.
10.5 HSR Act. All required registrations and filings under the HSR Act
shall have been made and any waiting period applicable to the transactions
contemplated hereby pursuant to the HSR Act shall have expired or been
terminated.
10.6 Legal Opinion. Seller shall have received from counsel for Buyer
an opinion that the transactions contemplated hereby have been duly authorized
by all necessary corporate action and that this Agreement and the Other
Documents represent the binding obligation of Buyer enforceable in accordance
with their terms, subject only to standard enforceability exceptions.
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11. CLOSING; PROCEDURES.
11.1 Date and Time. The closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of Xxxxxxxx, Xxxx
& Xxxxx LLP at 0000 Xxx Xxxxxx, 127 Public Square, Cleveland, Ohio, or at the
offices of Seller at 000 XxXxxxxxx Xxxx., Xxxxxxxxx, Xxxxxxxx, at 10:00 a.m. on
July 31, 1998 (or such other date and place as the parties may mutually agree).
The actual date of the Closing is referred to as the "Closing Date."
11.2 Procedures. If all of the conditions specified in Sections 9 and
10 have been fulfilled or are waived in writing by Buyer or Seller, as the case
may be, on or by the Closing Date, then, on the Closing Date:
(a) Seller and Buyer will execute and deliver an assignment
and assumption agreement substantially in the form attached as part of
Exhibit 11.2(a);
(b) Seller and Buyer will execute and deliver the New Lease
Agreement;
(c) Buyer and Seller shall enter into an agreement
substantially in the form of Exhibit 11.2(c) hereto, whereby Seller
will provide to Buyer certain transitional services which are currently
provided to TRIMET by the Retained Businesses for a period of five (5)
months after the Closing Date;
(d) Buyer and Seller shall each cause to be delivered to the
other the opinions referenced in Sections 9.7 and 10.6, as appropriate;
(e) Seller will execute and deliver a xxxx of sale of the
Transferred Assets substantially in the form attached as part of
Exhibit 11.2(e);
(f) Seller will execute and deliver separate assignments, or
other appropriate instruments of transfer with respect to any of the
Transferred Assets not appropriately transferred by an assignment and
assumption agreement and xxxx of sale, in each case, in form reasonably
satisfactory to Buyer, if and as necessary in the reasonable opinion of
Buyer;
(g) Seller will deliver special warranty deeds, in form and
substance reasonably acceptable to Buyer, transferring all Owned Real
Property to Buyer, subject to any and all Permitted Encumbrances, and
shall also execute and deliver to Buyer the Necessary Access
Easement(s) and other easements over the Retained Real Estate provided
in Section 6.11(a); or, if Seller is unable to deliver the special
warranty deeds on the Closing Date, Seller and Buyer will execute and
deliver the Provisional Lease Agreement and Seller will deliver to
Buyer the Security Instrument pursuant to Section 6.11 above, pending a
completion of the transfer as provided in Section 6.11(a) above.
(h) Seller will deliver at Seller's cost, with respect to the
Owned Real Property, an owner's title insurance policy (ALTA form),
insuring the fee simple title of Buyer in such real property, including
insurance covering the Necessary Access Easement(s), subject only
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to any applicable Permitted Encumbrances, in an amount of $2,400,000 or
such other amount as may be agreed to in the Allocation Statement
referenced in Section 13 if it has been determined (provided, however,
that Buyer may (at its expense) increase such amount for title
insurance coverage purposes, but Buyer will pay for any resulting
increase in the cost of the title insurance or the amount of transfer
or conveyance taxes otherwise payable by Buyer and Seller in accordance
with Section 14 hereof), with standard exceptions deleted, with
affirmative insurance as to any appurtenant easements, and containing a
"same land as survey" endorsement, which title policy shall be in form
reasonably acceptable to Buyer and issued by Commonwealth Land Title
Insurance Company or another title insurance company mutually
acceptable to the parties (the "Title Company"); provided, that if
Seller is unable to deliver to Buyer fee simple title to Buyer as
provided herein on the Closing Date, Seller will deliver a leasehold
insurance policy insuring Buyer's leasehold estate under the
Provisional Lease Agreement (in the amount of $2,400,000) and a loan
policy of title insurance (in the amount of $2,400,000) insuring
Buyer's Security Instrument, each in accordance with the applicable
terms set forth above; and
(i) Buyer will deliver the Closing Date Payment to Seller by
wire transfer.
12. FURTHER ASSURANCES. Seller will, from time to time after the
Closing, upon the reasonable request of Buyer, execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, all such further
assignments and assurances as may be reasonably required to transfer to and vest
in Buyer all right, title and interest of Seller in and to the Transferred
Assets and the Business and to protect the right, title and interest of Buyer in
and to the Transferred Assets and the Business.
13. ALLOCATION. Buyer and Seller mutually agree that the Purchase Price
shall be allocated among the Transferred Assets in the manner required by
Section 1060 of the IRC within 120 days after the Closing Date or with respect
to the Owned Real Property, as soon as possible after the subdivision plan
relating thereto is finally approved by the appropriate Governmental
Authorities, but in no event later than December 1, 1998. In making such
allocation, the allocation set forth on the Allocation Statement attached or to
be attached hereto as Exhibit 13 shall apply, which will be agreed upon and
delivered by the parties on the Closing Date or as promptly thereafter as
practicable.
14. TAXES. Unless otherwise expressly set forth herein, Seller and
Buyer will each pay one half of all sales, use and transfer taxes and conveyance
fees, if any, applicable to the transfer of the Transferred Assets and the other
transactions provided for by this Agreement.
15. NON COMPETITION COVENANT.
15.1 Subject to Section 15.5, Seller agrees and warrants that neither
it nor its Affiliates will at any time within five (5) years immediately
following the Closing Date, do any of the following, either directly or
indirectly:
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(a) manufacture, market or distribute any of the Products, or
invest in any company, partnership, organization, proprietorship or
other entity which manufactures, markets or distributes the Products;
(b) sell, solicit or accept business or orders from customers
or prospective customers of the Business with respect to products which
are competitive with the Products, with the term "customer" including
any purchaser of Products from the Business at any time during the 12
months immediately preceding the date of this Agreement;
(c) interfere with, disrupt or attempt to disrupt
relationships, contractual or otherwise, of Buyer with its employees,
contractors, suppliers or customers in the operation of the Business;
(d) operate or perform, in connection with any of the
Products, any advisory or consulting services for any company,
partnership, organization, proprietorship or other entity which
develops, manufactures, prepares, sells or distributes the Products or
Products which are competitive with the Products; or
(e) Permit any person or entity to use any of Seller's names
in furtherance of any activity included in clauses (a) through (d) of
this Section 15.1.
15.2 Any breach of the provisions of Section 15.1 of this Agreement
shall automatically toll and suspend the period of restraint for the amount of
time that the breach continues.
15.3 Notwithstanding the provisions of Section 32 below, if any
provision or provisions of this Section 15 are void or are so declared, the
provision or provisions, as the case may be, shall be considered, and shall be,
severed from this Agreement, and this Agreement shall otherwise remain in full
force and effect. Notwithstanding the immediately preceding sentence, while the
restrictions contained in clauses (a) through (e) of Section 15.1 are considered
by the parties to be reasonable in all the circumstances, it is recognised that
restrictions of the nature in question may fail for technical or other reasons
not reasonably foreseeable and, accordingly, it is hereby agreed and declared
that if any such restrictions shall be adjudged by a court of competent
jurisdiction to be void or unenforceable, but would be valid or enforceable if
part of the wording thereof were deleted or the periods thereof were reduced or
the range of activities dealt with thereby were reduced in scope, the said
restriction shall apply with such modifications as may be necessary to make it
valid and effective, such modifications to be supplied by the parties hereto and
to be as close in intent and effect to the original provisions hereof as
possible.
15.4 Buyer shall have the right to restrain by injunction any breach or
threatened breach of this Section 15 and shall have the right to compel specific
performance of the terms of this Section 15.
15.5 The obligation referred to in Section 15.1 shall not prevent
Seller or any of its Affiliates from (i) acquiring any other company or business
which is engaged in a competitive business so long as the revenues of the
acquired company or business attributable to the competitive
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businesses do not exceed 20% of the total revenue of the acquired company or
business (a "Competing Business") or (ii) acquiring and/or holding the stock,
equity securities or debt of any publicly traded company so long as the
ownership thereof does not exceed 10% of any class of stock, securities or debt
of the acquired company. As soon as possible (and in any event within six (6)
months) after an acquisition of the type described in clause (i) of the first
sentence of this Section 15.5, Seller shall serve a written notice (an "Offer
Notice") to Buyer offering to sell to Buyer the Competing Business (and in such
notice shall provide a description of the Competing Business giving sufficient
details to enable Buyer to fully evaluate such offer) together with the price at
which and the terms upon which Seller would be prepared to sell, which price and
terms shall be fair under all of the circumstances. Within two months after the
service of an Offer Notice, Buyer shall give a counter-notice to Seller
accepting or refusing such offer and, if requested by Buyer, there shall be
consultation between the parties, and Seller shall make available to Buyer (in
confidence and not for use other than for the purpose of evaluating an
appropriate response to an Offer Notice) such information concerning the
Competing Business as Buyer may reasonably require during the time within which
the counter-notice must be given. If the offer contained in the Offer Notice is
accepted, the Competing Business shall be sold to Buyer at the price specified
by Seller or at a price agreed between the parties. The closing of any sale
shall take place as soon as practical after the price has been agreed. In the
event Buyer does not accept such offer, Seller shall thereafter be free to sell
the Competing Business to any third party which Seller shall attempt to do at a
price and on terms no less attractive than those set forth in the Offer Notice
sent to Buyer in connection with the Competing Business. To the extent Seller is
unable to sell the Competing Business upon the terms and conditions set forth in
the Offer Notice sent to Buyer, Seller shall be required to reoffer the
Competing Business to Buyer prior to offering the Competing Business to a third
party at a price or upon terms less attractive than those set forth in the Offer
Notice.
16. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS (INCLUDING
INDEMNIFICATION). The representations and warranties that are contained in this
Agreement will survive until the second anniversary of the Closing Date and will
survive, and any liability of Seller to Buyer for breach of any such
representation or warranty shall not be reduced or otherwise affected by, any
investigation and inquiry made by or on behalf of Buyer or Seller, as the case
may be; except that the representations and warranties regarding authority, any
matter that is fraudulently or deliberately concealed by the party from whom
indemnification is sought, and the representations regarding title to the
Transferred Assets shall survive indefinitely, and the representations regarding
any taxes (as set forth in Sections 4.9 and 4.10) shall survive the Closing Date
through the expiration of the relevant statute of limitations. Except when
another time period is specified herein, all of the covenants in this Agreement
(including for indemnification) will survive until they have been performed in
full. The indemnifications by Seller in Sections 8 and 19.1(e) shall survive for
a period of five (5) years.
17. MAXIMUM AGGREGATE LIABILITY OF THE PARTIES. The maximum aggregate
indemnification liability of each of Seller under Sections 8.2, 8.3, 19.1(a) and
19.1(e) and Buyer under Sections 19.2(a) and 19.2(d) shall not exceed the sum of
Fifteen Million Dollars ($15,000,000). The limitation in this Section 17 does
not apply to indemnification under any sections other than the Sections
referenced in the preceding sentence or any other agreement between the parties.
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18. DEDUCTIBLE. Buyer will not be entitled to indemnification under
Section 19.1(a) or 19.1(e) of this Agreement, and Seller will not be entitled to
indemnification under Section 19.2(a) or 19.2(d), unless the Losses incurred by
Seller or Buyer, as the case may be, exceed Six Hundred Thousand Dollars
($600,000) (the "Deductible"). If the aggregate amount of such Losses exceed the
Deductible, the indemnifying party will be required to pay only the amount by
which such Losses exceed the Deductible. The limitation in this Section 18 does
not apply to indemnification under (i) any sections other than Sections 19.1(a)
and 19.1(e) (with respect to claims for indemnification made by Buyer) and
19.2(a) and (d) (with respect to claims for indemnification by Seller) or (ii)
any other agreement between the parties.
19. INDEMNIFICATION.
19.1 By Seller. In addition to any liability Seller may have to Buyer
under Section 8 hereof, Seller agrees to indemnify Buyer (including its
officers, directors, employees and agents) against any Losses incurred by Buyer
by reason of, resulting from or arising out of (a) the incorrectness of any of
the representations or warranties of Seller contained in this Agreement, (b) the
breach of any of the covenants or agreements of Seller contained in this
Agreement or in any other instrument executed or delivered by Seller or its
Affiliates in connection with this Agreement or given on the Closing Date, (c)
Seller's breach, on or before the Closing Date, of any agreements with third
parties, (d) the assertion against Buyer of any Retained Liability, (e) the
operation of the Business or the ownership of the Transferred Assets by Seller
prior to the Closing Date, or (f) the Retained Businesses and/or the Retained
Real Estate.
19.2 By Buyer. In addition to any payments for which Buyer may be
responsible under Section 8 hereof, after the Closing Date, Buyer agrees to
indemnify Seller (including its officers, directors, employees and agents)
against any Losses incurred by Seller by reason of, resulting from or arising
out of (a) the incorrectness of any of the representations or warranties of
Buyer contained in this Agreement, (b) the breach of any of the covenants or
agreements of Buyer contained in this Agreement or in any other instrument
executed or delivered by Buyer in connection with this Agreement or given on the
Closing Date, (c) Buyer's breach, after the Closing Date, of any agreements with
third parties, (d) the operation of the Business or the ownership of the
Transferred Assets by Buyer after the Closing Date, or (e) the assertion against
Seller of any Assumed Liability.
19.3 Measure of Damages. Except in the case of Losses of the Buyer
indemnifiable pursuant to Sections 19.1(d) and (f), Seller shall not be liable
to indemnify Buyer for damages that are consequential, special, exemplary,
punitive or indirect, except and to the extent such damages are awarded by a
court or other tribunal or administrative authority with respect to a claim that
is otherwise indemnifiable hereunder.
19.4 Defense of Claims.
(a) Promptly after receipt by Buyer or Seller, as the case may be (in
any such case, the "Beneficiary"), of notice of any claim or potential claim or
the commencement of any action by any person that is not a party to this
Agreement (a "Third Party Claim"), which could give rise to a right
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to indemnification pursuant to Sections 19.1 or 19.2, the Beneficiary shall give
the party who may become obligated to provide indemnification hereunder (the
"Indemnitor") written notice describing the Third Party Claim in reasonable
detail.
(b) If the Indemnitor acknowledges in writing that it would be required
to indemnify the Beneficiary against a Third Party Claim which is the subject of
a notice provided pursuant to Section 19.4(a), then the Indemnitor shall have
the right, at its option, to participate in or, by giving written notice to the
Beneficiary, to elect to assume the defense of such Third Party Claim, at the
Indemnitor's own expense and by its own counsel. If the Indemnitor shall
undertake to assume the defense of any Third Party Claim, it shall promptly
notify the Beneficiary of its intention to do so, and the Indemnitor shall not
be liable for any expenses subsequently incurred by the Beneficiary in
connection with the defense thereof; provided, that the Indemnitor has taken
reasonable steps necessary to defend diligently such Third Party Claim. If the
Indemnitor fails promptly to assume the defense of the Third Party Claim or if
it fails to take reasonable steps to defend diligently such Third Party Claim,
the Beneficiary may assume the defense of such Third Party Claim, and the
Indemnitor shall be liable for all reasonable costs or expenses paid or incurred
in connection therewith. The Beneficiary shall cooperate fully with, and provide
appropriate documentation as reasonably requested by, the Indemnitor and its
counsel in the compromise of, or defense against, any such Third Party Claim. In
any event, the Beneficiary shall have the right, at its own expense, to
participate in the defense of any Third Party Claim as to which the Indemnitor
has assumed the defense and compromise.
(c) Without the prior written consent of the Beneficiary, the
Indemnitor shall not enter into any settlement of any Third Party Claim which
would lead to liability or create any financial or other obligation on the part
of the Beneficiary for which the Beneficiary is not entitled to indemnification
hereunder. If a firm offer is made to settle a Third Party Claim without leading
to liability or the creation of a financial or other obligation on the part of
the Beneficiary for which the Beneficiary is not entitled to indemnification
hereunder and the Indemnitor desires to accept such offer, the Indemnitor shall
give written notice to the Beneficiary to that effect. If the Beneficiary fails
to consent to such offer within ten (10) Business Days after its receipt of the
Indemnitor's notice, the Beneficiary may continue to contest or defend such
Third Party Claim and, in such event, the maximum liability of the Indemnitor as
to such Third Party Claim shall not exceed the amount of such settlement offer,
plus costs and expenses paid or incurred by the Beneficiary through the earlier
of (i) the date on which the Beneficiary received notice that the Indemnitor
agreed to assume the defense of the Third Party Claim and (ii) the end of such
ten (10) Business Day period. If the Beneficiary adjusts, settles or compromises
any Third Party Claim without the prior written consent of the Indemnitor, which
consent shall not be unreasonably withheld, the Beneficiary shall thereby waive
any right to indemnity therefor by the Indemnitor. The Indemnitor shall be
liable for any Losses arising due to it unreasonably withholding such consent.
(d) Any claim by a Beneficiary on account of Losses that does not
result from a Third Party Claim (a "Direct Claim") shall be asserted by giving
the Indemnitor reasonably prompt written notice of the nature of such claim and
the nature of any Losses that are or may be indemnifiable hereunder (as and when
known by the Beneficiary), but in any event not later than twenty (20) Business
Days after the Beneficiary becomes aware of such Direct Claim.
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(e) A failure to give timely notice or to include any specified
information in any notice as provided in this Section 19.4 will not affect the
rights or obligations of any party hereunder except and only to the extent that,
as a result of such failure, any party which was entitled to receive such notice
was deprived of its right to recover any payment under its applicable insurance
coverage or was otherwise damaged as a result of such failure.
20. SPECIFIC PERFORMANCE. The parties acknowledge that the Business and
the Transferred Assets are of a unique and extraordinary character and that
money damages would not be a sufficient remedy for any breach by Seller of its
obligations under this Agreement; therefore, in addition to any other rights or
remedies Buyer may have, Buyer shall be entitled to the remedies of specific
performance or injunctive relief in connection with a breach by Seller of its
obligations contained in this Agreement.
21. TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time on or prior to the Closing Date:
(a) by the mutual written consent of Buyer and Seller;
(b) by Buyer (i) if any of the conditions set forth in Section
9 of this Agreement have become incapable of fulfillment on or before
the Closing Date (or other specified date), (ii) Buyer has given Seller
ten (10) Business Days notice of such matter, (iii) Seller has failed
to cause such condition to be fulfilled or capable of fulfillment
within the ten (10) Business Days, and (iv) Buyer is not otherwise in
material default;
(c) by Seller (i) if any of the conditions set forth in
Section 10 of this Agreement have become incapable of fulfillment on or
before the Closing Date (or other specified date), (ii) Seller has
given Buyer ten (10) Business Days notice of such matter, (iii) Buyer
has failed to cause such condition to be fulfilled or capable of
fulfillment within the ten (10) Business Days, and (iv) Seller is not
otherwise in material default; or
(d) by Seller or by Buyer if the Closing has not occurred on
or before September 30, 1998 (and the terminating party is not
otherwise in material default).
If this Agreement is terminated in a manner permitted by subsections (a) through
(d) of this Section 21, this Agreement will become void and of no further force
and effect, and neither of the parties hereto will have any liability to the
other party in respect of such termination of this Agreement; provided, however,
that nothing in this Section 21 shall relieve any party from liability it may
have hereunder for a breach of this Agreement prior to such termination,
including the liability of Seller to Buyer under Section 20 (specific
performance) and, provided, further, that the parties shall remain subject to
the Confidentiality Agreement according to its terms and shall remain subject to
the provisions of Section 24 hereof.
22. PRORATIONS. The parties agree to prorate items in such a way that
Seller or its Affiliates will be responsible for and receive the benefit of such
items to the extent that they relate
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to the period ending on or prior to the Closing Date and Buyer will be
responsible for and receive the benefit of such items to the extent that they
relate to periods after the Closing Date; provided however that there shall be
no proration of items to the extent reflected on the Working Capital Statement.
To the extent that proration is necessary, Seller shall reimburse Buyer or Buyer
shall reimburse Seller, as the case may be, the net amount owed at the Closing.
23. USE OF NAME. After the Closing:
(a) Seller shall cease using any name or names which include
the words "TRIMET Technical Products Division," "TRIMET Technical
Products," "TRIMET" or any colorable imitation thereof (the "Prohibited
Names"); and
(b) Seller shall not establish any division or business entity
with a name including any of the Prohibited Names.
24. EXPENSES. Whether or not the transactions contemplated hereby are
consummated, each of Buyer and Seller will pay, except as otherwise provided
herein, its respective expenses, income and other taxes and costs (including,
without limitation, the fees, disbursements and expenses of its attorneys,
accountants and consultants) incurred by it in negotiating, preparing, closing
and carrying out the transactions contemplated by this Agreement.
25. NOTICES. Any notice, request or instruction to be given hereunder
by any party to the other parties will be deemed to have been given (i) when it
is delivered, (ii) the Business Day after it is sent by overnight courier, or
(iii) when it is sent by facsimile, with confirmation of receipt, addressed as
follows or to such other address(es) as may be designated by written notice to
the other party:
if to Buyer:
GEO Specialty Chemicals, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Xxxxxxxx Xxxx & Xxxxx LLP
0000 Xxx Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
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if to Seller:
Mallinckrodt Inc.
000 XxXxxxxxx Xxxx.
Xxxxxxxxx, Xxxxxxxx 00000
Attn.: Xxxxxxx X. Xxxxxxx, Vice President,
Corporate Development
Fax No.: (000) 000-0000
with a copy to:
Mallinckrodt Inc.
000 XxXxxxxxx Xxxx.
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Vice President and General Counsel
Fax No.: (000) 000-0000
26. PUBLIC ANNOUNCEMENTS AND PRESS RELEASES. Buyer and Seller will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement or the transactions contemplated by it
and will not issue any such press release or make any such public statement
prior to such consultation.
27. GOVERNING LAW. The interpretation and enforcement of this Agreement
will be determined in accordance with the laws of the State of New York,
notwithstanding any conflict of law provision to the contrary.
28. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which shall
together constitute but one and the same instrument.
29. SCHEDULES. The schedules and exhibits attached to this Agreement
and the other documents delivered pursuant hereto are hereby made a part of this
Agreement as if set forth in full herein.
30. ENTIRE AGREEMENT. This Agreement and the other agreements
contemplated to be executed in connection with this Agreement and the
Confidentiality Agreement contain the entire agreement among the parties hereto
with respect to their respective subject matters and supersede all negotiations,
prior discussions, agreements, letters of intent and understandings, written or
oral, relating to those respective subject matters.
31. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided that, neither Buyer nor Seller may assign, delegate or
otherwise transfer any of its rights or obligations under this Agreement without
the prior written consent of the other party; provided further, that Buyer may
grant a security interest of its rights under this Agreement to any one or more
of its institutional lenders.
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32. SEVERABILITY. If any provision of this Agreement is held to be
unenforceable, invalid or void to any extent and for any reason, that provision
shall remain in force and effect to the maximum extent allowable, and the
enforceability and validity of the remaining provisions of this Agreement shall
not be affected thereby.
33. MISCELLANEOUS DEFINITIONS. For the purposes of this Agreement, (a)
any representation or warranty made to "Seller's knowledge" or words of like
import shall mean after due inquiry into the subject matter of the relevant
representation or warranty, the actual knowledge of Messrs. Zacher, Hachey,
Sporka, Weber, Holt, Higgons, Riordan, and Xxxxxxx and Xx. Xxxx with respect to
the matter in question, (b) an "Affiliate" of any party means, in all cases, any
person or entity controlling, controlled by or under common control with such
party, and (c) "Business Day" shall mean any day which is not a Saturday, Sunday
or other day on which banks in New York City are authorized to close.
[Remainder of the page intentionally left blank]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed and delivered by a duly authorized officer as of the date first
above written.
MALLINCKRODT INC. GEO SPECIALTY CHEMICALS, INC.
(a Delaware corporation)
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------ ---------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxx
---------------------------------------- ---------------------------
Title: VP - Corporate Development Title: President
---------------------------------------- --------------------------
Mallinckrodt Inc. - NY
MALLINCKRODT INC.
(a New York corporation)
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------------------
Title: VP - Corporate Development
----------------------------------------
