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EXHIBIT 99.1
ANNEX A
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STOCK PURCHASE AGREEMENT
BETWEEN
XXXXXX INDUSTRIES, INC.
AND
XXXXX-XXXXXX COMPANY
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DATED AS OF JANUARY 10, 1994
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STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
(NOT PART OF THE AGREEMENT)
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PARTIES................................................................................ A-1
PREAMBLES.............................................................................. A-1
ARTICLE I
SALE OF COMPANY COMMON STOCK........................................................... A-1
1.1 Purchase and Sale............................................................... A-1
1.2 Consideration................................................................... A-1
1.3 Closing Balance Sheet........................................................... A-1
1.4 Seller's Review of Preliminary Closing Balance Sheet............................ A-3
1.5 Buyer Response to Seller's Letter............................................... A-3
1.6 Meeting to Resolve Proposed Adjustments......................................... A-4
1.7 Resolution by Accounting Arbitrator............................................. A-4
1.8 Positive or Negative Purchase Price Adjustment.................................. A-4
1.9 Values.......................................................................... A-4
1.10 Place of Payment................................................................ A-5
ARTICLE II
CLOSING................................................................................ A-5
2.1 Time and Place of Closing....................................................... A-5
2.2 Deliveries by the Seller........................................................ A-5
2.3 Deliveries by the Buyer......................................................... A-5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER........................................... A-6
3.1 Organization.................................................................... A-6
3.2 Capitalization.................................................................. A-6
3.3 Authority Relative to This Agreement............................................ A-6
3.4 Consents and Approvals; No Violations........................................... A-7
3.5 Financial Statements............................................................ A-7
3.6 Absence of Certain Changes...................................................... A-8
3.7 No Undisclosed Liabilities...................................................... A-8
3.8 Information in Proxy Statement.................................................. A-8
3.9 Litigation...................................................................... A-8
3.10 Compliance With Applicable Law.................................................. A-8
3.11 Taxes........................................................................... A-9
3.12 ERISA; Employee Benefits........................................................ A-9
3.13 Intellectual Property........................................................... A-10
3.14 Material Contracts; No Defaults................................................. A-11
3.15 Environmental Compliance........................................................ A-11
3.16 Title to Real Property.......................................................... A-12
3.17 Company Assets.................................................................. A-12
3.18 Labor Matters................................................................... A-12
3.19 Purchase for Investment......................................................... A-12
3.20 No Beneficial Ownership of the Buyer's Stock.................................... A-12
3.21 Change in Control............................................................... A-13
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3.22 Business of the Company......................................................... A-13
3.23 Representations Accurate........................................................ A-13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER............................................ A-13
4.1 Organization.................................................................... A-13
4.2 Capitalization.................................................................. A-13
4.3 Authority Relative to this Agreement............................................ A-14
4.4 Consents and Approvals; No Violations........................................... A-14
4.5 Reports......................................................................... A-15
4.6 Absence of Certain Changes...................................................... A-15
4.7 No Undisclosed Liabilities...................................................... A-15
4.8 Information in Proxy Statement.................................................. A-16
4.9 Litigation...................................................................... A-16
4.10 Compliance with Applicable Law.................................................. A-16
4.11 Taxes........................................................................... A-16
4.12 ERISA; Employee Benefits........................................................ A-16
4.13 Intellectual Property........................................................... A-17
4.14 No Defaults..................................................................... A-18
4.15 Environmental Compliance........................................................ A-18
4.16 Representations Accurate........................................................ A-18
4.17 Purchase for Investment......................................................... A-18
ARTICLE V
COVENANTS.............................................................................. A-19
5.1 Business Covenants of the Seller................................................ A-19
5.2 Business Covenants of the Buyer................................................. A-20
5.3 Current Information............................................................. A-21
5.4 Access to Information........................................................... A-21
5.5 Reasonable Best Efforts......................................................... A-22
5.6 Consents: Filings............................................................... A-22
5.7 Shareholder Meeting............................................................. A-23
5.8 Amendment to Articles of Organization and By-Laws............................... A-23
5.9 Rights Agreement................................................................ A-23
5.10 Brokers or Finders.............................................................. A-23
5.11 Fees and Expenses............................................................... A-23
5.12 Employee Benefits............................................................... A-24
5.13 Public Announcements............................................................ A-28
5.14 Use of the Company Name......................................................... A-28
5.15 Company Books and Records....................................................... A-28
5.16 Disclosure Supplements.......................................................... A-29
5.17 Ancillary Agreements............................................................ A-29
5.18 WARN Act........................................................................ A-29
5.19 Taxes........................................................................... A-30
5.20 Existing Insurance Coverage..................................................... A-33
5.21 Certain Obligations............................................................. A-34
5.22 Survival; Indemnification....................................................... A-34
5.23 Repurchase or Receivables....................................................... A-37
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ARTICLE VI
CONDITIONS............................................................................. A-37
6.1 Conditions to Each Party's Obligation to Effect the Transactions Contemplated
by this Agreement............................................................... A-37
6.2 Conditions of Obligations of the Seller to Effect the Transactions Contemplated
by this Agreement............................................................... A-38
6.3 Conditions of Obligations of the Buyer to Effect the Transactions Contemplated
by this Agreement............................................................... A-38
ARTICLE VII
TERMINATION AND ABANDONMENT............................................................ A-38
7.1 Termination..................................................................... A-38
7.2 Procedure and Effect of Termination............................................. A-39
ARTICLE VIII
MISCELLANEOUS.......................................................................... A-39
8.1 Amendment and Modification...................................................... A-39
8.2 Waiver of Compliance; Consents.................................................. A-39
8.3 Investigations; Survival Upon Termination....................................... A-39
8.4 Notices......................................................................... A-40
8.5 Annexes, Schedules and Exhibits................................................. A-40
8.6 Descriptive Headings............................................................ A-40
8.7 Counterparts.................................................................... A-41
8.8 Entire Agreement; Assignment.................................................... A-41
8.9 Governing Law................................................................... A-41
8.10 Specific Performance............................................................ A-41
8.11 Alternative Dispute Resolution.................................................. A-41
8.12 Non-Competition................................................................. A-42
8.13 Further Assurances.............................................................. A-42
8.14 No Third-Party Beneficiaries.................................................... A-42
8.15 Remedies; Waiver................................................................ A-42
8.16 Severability.................................................................... A-42
Exhibit A -- Company Financial Statements
Annex I -- Investment Agreement
Annex II -- Commercial Term Note
Annex III -- Peg Balance Sheet
Annex IV -- Certain Pre-Closing Transactions
Annex V -- Fair Price Charter Amendment
Annex VI -- Control Share Acquisitions Amendment
Annex VII -- Rights Agreement
Annex VIII -- Ancillary Agreement Term Sheets
Seller's Disclosure Schedule
Buyer's Disclosure Schedule
The Registrant will furnish supplementally
a copy of all omitted Schedules to
Exhibit 99.1 upon the request of the
Securities and Exchange Commission.
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of January 10, 1994 (the "Agreement"),
between Xxxxxx Industries, Inc., an Ohio corporation (the "Seller"), and
Xxxxx-Xxxxxx Company, a Massachusetts corporation (the "Buyer").
WHEREAS, the Seller owns all of the issued and outstanding shares of common
stock, par value $.208 1/3 per share (the "Company Common Stock"), of Cameron
Forged Products Company, a Delaware corporation (the "Company"); and
WHEREAS, the Seller desires to sell and the Buyer desires to purchase the
Company Common Stock; and
WHEREAS, simultaneously with the execution and delivery of this Agreement
and as an inducement to enter into this Agreement, the Buyer and the Seller are
entering into the Investment Agreement dated as of the date hereof and in the
form attached hereto as Annex I (the "Investment Agreement"), providing for
certain arrangements with respect to their relationship following consummation
of the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I
SALE OF COMPANY COMMON STOCK
1.1 Purchase and Sale Upon the terms and subject to the conditions of
this Agreement, at the Closing (as hereinafter defined) the Seller will sell,
assign, transfer and deliver to the Buyer, and the Buyer will accept and
purchase from the Seller, all of the Company Common Stock.
1.2 Consideration.
(a) Upon the terms and subject to the conditions of this Agreement, and in
consideration of the sale, assignment, transfer and delivery of the Company
Common Stock the Buyer will pay, issue, and deliver to the Seller the
Consideration. The Consideration consists of (i) the Cash Consideration, (ii)
the Balance Sheet Consideration Amount and (iii) the Equity Consideration.
(b) The "Cash Consideration" $5,000,000 payable as follows: (i) The Buyer
will pay to the Seller the sum of $400,000 at Closing and (ii) the Buyer will
execute and deliver to Seller, at Closing, Buyer's promissory note, dated as of
the Closing, in the form attached hereto as Annex II in the principal amount of
$4,600,000 (the "Note").
(c) The "Equity Consideration" is 16,500,000 shares, par value $1.00 per
share, of the Buyer's Common Stock. At Closing Buyer will issue and deliver to
Seller the Equity Consideration.
(d) The Balance Sheet Consideration Amount will be determined and paid as
set forth herein. Within five days following the date on which the Final Closing
Date Net Asset Value is determined pursuant to the provisions of Section 1.8,
either Seller shall pay to Buyer the Negative Net Asset Amount or Buyer shall
pay to Seller the Positive Net Asset Amount, in either case, together with
interest thereon at the annual rate of 4% per annum from the Closing Date (as
hereinafter defined) until the date paid (the "Balance Sheet Consideration
Amount").
1.3 Closing Balance Sheet. Within 60 days following the Closing Date, the
Buyer shall prepare and deliver to the Seller a consolidated balance sheet of
the Company and the Company Subsidiaries as of the close of business on the
Closing Date (the "Preliminary Closing Balance Sheet"). The Preliminary Closing
Balance Sheet and the final balance sheet determined in accordance with Sections
1.4, 1.5, 1.6 and 1.7 of this Article I (the "Final Closing Balance Sheet")
shall be prepared in
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accordance with principles, practices and procedures that are the same as those
which resulted in the asset and liability values reflected in the Balance Sheet
dated September 26, 1993, which is attached hereto as Annex III (the "Peg
Balance Sheet"). The Preliminary Closing Balance Sheet and the Final Closing
Balance Sheet are sometimes collectively referred to herein as the Preliminary
and Final Closing Balance Sheets. Notwithstanding the foregoing, the following
specific provisions shall take precedence over such principles, practices and
procedures in the preparation of the Preliminary and Final Closing Balance
Sheets:
(a) The asset and liability amounts included in the Preliminary and Final
Closing Balance Sheets will be the same as those included in the Peg Balance
Sheet except as necessary to reflect those changes in the asset and liability
values that result from new transactions and actual changes in facts and
circumstances occurring during the period after (but not including) September
26, 1993 (the "Peg Date") through and including the Closing Date (the "Change
Period"). (To illustrate, if an item of machinery and equipment was included in
the Peg Balance Sheet at a net book value of $1 million, but had not been used
for the past several years, or would no longer function, or would require major
repairs to put it in working condition, this item would be valued at $1 million
in the Preliminary and Final Closing Balance Sheets because no changes in facts
or circumstances occurred during the Change Period which would warrant a
reduction in the book value of that asset as of the Closing Date that would not
have been equally appropriate as of the Peg Date. However, if a change in facts
or circumstances occurred during the Change Period which would have warranted a
change in the book value of such item of machinery and equipment that would not
have been equally appropriate as of the Peg Date, then the book value of such
item would be changed on the Preliminary and Final Closing Balance Sheets. As
further examples, any liability which was underaccrued or over-accrued as of the
Peg Date, absent a change in facts and circumstances during the Change Period,
will be recorded so that it is equally under-accrued or over-accrued as of the
Closing Date, and the aging of accounts receivable may constitute a change in
facts and circumstances warranting a change in the bad debt reserve.)
(b) The quantities of inventory used to determine the inventory amount to
be included in the Preliminary and Final Closing Balance Sheets will be based on
the results of a physical inventory to be taken as of the opening of business on
the Closing Date in accordance with procedures to be mutually agreed to by the
parties. The physical inventory quantities will be priced utilizing the same
standard costs which were used in the determination of the inventory amount
reflected in the Peg Balance Sheet and in the case of items which were not on
hand as of the Peg Date in accordance with the normal procedures of the Company.
The Preliminary and Final Closing Balance Sheets will include a LIFO debit of
$8,226,129 which is the same amount as the LIFO debit included in the Peg
Balance Sheet. The Preliminary and Final Closing Balance Sheets will not include
any reserve or accrual with respect to inventory shrinkage but will include
reserves or accruals for any other inventory valuation matter that are equal in
amount to any such reserves or accruals that were included in the Peg Balance
Sheet, including without limitation, reserves and accruals for excess, obsolete
or slow moving inventory or for loss jobs.
(c) No depreciation or amortization expense shall be recorded for the
Change Period. As a result, the accumulated depreciation and amortization
balances reflected in the Preliminary and Final Closing Balance Sheets shall be
the same as the amounts included in the Peg Balance Sheet adjusted only for
asset sales or other dispositions in the ordinary course of business and in
accordance with the terms of this Agreement.
(d) The Peg Balance Sheet did not and the Preliminary and Final Closing
Balance Sheets will not include any payable or receivable for (i) federal income
tax or (ii) state and local income tax balances. The deferred tax balances on
the Preliminary and Final Closing Balance Sheets will be the same as the
deferred tax balances included in the Peg Balance Sheet adjusted only to reflect
changes in the book or tax basis of the underlying assets and liabilities which
occur during the Change Period.
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(e) The Peg Balance Sheet did not and the Preliminary and Final Closing
Balance Sheets will not include any cash either on-hand or in banks other than
cash equal to the "Receivables Purchase Price" paid by the Seller to the Company
pursuant to the Factoring Agreement (as hereinafter defined) and the Peg Balance
Sheet did not and the Preliminary and Final Closing Balance Sheets will not
include any payable or receivable between the Company and the Seller including
any of Seller's Affiliates.
(f) The Peg Balance Sheet did not and the Preliminary and Final Closing
Balance Sheets will not include any assets or liabilities with respect to the
Company's Domestic Retirement and Savings Plans or Seller U.K. Pension Plans (as
such terms are hereinafter defined).
(g) The Peg Balance Sheet did not and the Preliminary and Final Closing
Balance Sheets will not include any amounts as to land, land improvements or
buildings or environmental accruals with respect to the Katy Road Site (as
hereinafter defined).
(h) For purposes of this Agreement, a change in translation rates between
the U.S. dollar and various foreign currencies, including the U.K. pound, during
the Change Period will be considered to be a change in facts and circumstances.
(i) The deferred tax asset amount included in the Preliminary and Final
Closing Balance Sheets will be net of a deferred tax asset valuation allowance
of $2,776,000 which is the same as the deferred tax asset valuation allowance
included in the Peg Balance Sheet.
(j) The Peg Balance Sheet did not and the Preliminary and Final Closing
Balance Sheets will not include any amounts (assets or liabilities) with respect
to the Gulf Metals Site (as hereinafter defined).
(k) The Peg Balance Sheet did not and the Preliminary and Final Closing
Balance Sheets will not include any adjustments to asset or liability amounts,
including any adjustments for currency translation (increase or decrease) which
may occur in connection with a transfer as contemplated by this Agreement at
other than current book value of U.K. assets or other assets used in the
Business between (i) Seller and the Seller's Subsidiaries and (ii) the Company
and the Company's Subsidiaries.
(l) The Tech Mod accrual to be included in the Preliminary and Final
Closing Balance Sheets will be the same as the Tech Mod accrual included in the
Peg Balance Sheet.
(m) The Preliminary and Final Closing Balance Sheets will include a prepaid
asset equal to 1% of the trade and notes receivable of the Company sold to
Seller pursuant to the Factoring Agreement.
(n) The Peg Balance Sheet did not and the Preliminary and the Final Closing
Balance Sheets will not include any reserve or accrual with respect to any loss
or potential liability which the Company may have in connection with Item 1 in
Section 3.7 of the Seller Disclosure Schedule.
1.4 Seller's Review of Preliminary Closing Balance Sheet. Seller shall
have 30 days following receipt of the Preliminary Closing Balance Sheet to
review (the "Seller's Review") such balance sheet. If Seller determines, in
Seller's reasonable judgment, that it has not been prepared in accordance with
the provisions of Section 1.3 then within the said 30-day period allowed for
Seller's Review, Seller shall prepare and deliver a letter to Buyer (the
"Seller's Letter") setting forth in reasonable detail the adjustments that
Seller determines are appropriate. During the said 30-day period, Buyer shall
grant Seller reasonable access during normal business hours to the books and
records of the Company and its working papers pertaining to the Preliminary
Closing Balance Sheet and shall authorize the Company's auditors to grant
Seller's auditors access to any working papers or other documents prepared by
such auditors with respect to the Preliminary Closing Balance Sheet. If Seller
does not prepare and furnish Seller's Letter to Buyer within the said 30-day
period, then the Preliminary Balance Sheet as prepared by Buyer will become the
Final Closing Balance Sheet.
1.5 Buyer Response to Seller's Letter. Buyer will have 15 days following
receipt of Seller's Letter, if any, to review such letter and prepare a written
response (the "Buyer's Letter") setting forth Buyer's position with respect to
each adjustment proposed by Seller in Seller's Letter. If Buyer does not prepare
and furnish Buyer's Letter to Seller within the 15 days allowed, then all of the
adjustments set
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forth in Seller's Letter shall be deemed to have been accepted by Buyer, and the
Final Closing Balance Sheet shall be prepared by adjusting the Preliminary
Closing Balance Sheet for all of the adjustments set forth in Seller's Letter.
1.6 Meeting to Resolve Proposed Adjustments. As soon as practicable, but
not later than ten days following the receipt by Seller of Buyer's Letter, if
any, the parties shall meet and endeavor to mutually resolve any of Seller's
adjustments not agreed to in Buyer's Letter. If the parties reach agreement on
the remaining adjustments, if any, then the Final Closing Balance Sheet shall be
prepared by adjusting the Preliminary Closing Balance Sheet for the adjustments
agreed to in Buyer's Letter and those resolved by the parties.
1.7 Resolution by Accounting Arbitrator. If the parties do not meet
within the said ten-day period, or they fail to agree to meet at some later
date, or they meet but are unable to resolve all of the adjustments set forth in
Seller's Letter to the mutual satisfaction of both parties, then the parties,
jointly, or if one party is unwilling then the other party singly, shall engage
the New York office of the firm of Deloitte & Touche (the "Accounting
Arbitrator") to resolve any of Seller's adjustments which remain unresolved. The
Accounting Arbitrator shall be furnished with a copy of the Agreement, the Peg
Balance Sheet, the Preliminary Closing Balance Sheet, Seller's Letter, Buyer's
Letter and any other relevant correspondence between the parties. The Accounting
Arbitrator must, within 30 days from the date such documents are furnished,
complete his review and render a written report setting forth his conclusion
with respect to each of Seller's adjustments which were unresolved between the
parties. The Accounting Arbitrator shall be granted access to the books and
records of the Company as well as the working papers or other documents which
either party or its accountants may have which relate to the Preliminary Closing
Balance Sheet and any other documents or information which the Accounting
Arbitrator may deem appropriate. The Accounting Arbitrator's review shall be
limited to the purpose of determining whether, in respect of each disputed
adjustment, the Seller's proposed adjustment or the Buyer's position with
respect to the Seller's proposed adjustment is more nearly in accordance with
the terms of this Agreement. The parties shall have the right to submit written
materials to the Accounting Arbitrator and make oral presentations all in
accordance with procedures to be set forth in the engagement letter between the
parties and the Accounting Arbitrator. In arriving at his determination the
Accounting Arbitrator must select for each adjustment either the Seller's
proposed adjustment or Buyer's position with respect to the Seller's proposed
adjustment. The decision by the Accounting Arbitrator shall be in writing and
delivered to both Buyer and Seller. The Accounting Arbitrator's said decision
shall be conclusive and binding upon the parties and may be entered and enforced
in any court of competent jurisdiction. The parties agree to submit to the
jurisdiction of any such court for the enforcement of such award or decision.
Each party shall pay 50% of the fees and expenses of the Accounting Arbitrator.
If the Accounting Arbitrator is engaged, the Final Closing Balance Sheet will be
prepared by adjusting the Preliminary Closing Balance Sheet for any of Seller's
adjustments accepted by Buyer's Letter, those agreed to by the parties and those
determined by the Accounting Arbitrator.
1.8 Positive or Negative Purchase Price Adjustment. When the Final
Closing Balance Sheet is determined pursuant to the provisions of Sections 1.4,
1.5, 1.6 or 1.7, then the net asset/equity value set forth on such Final Closing
Balance Sheet will be the Final Net Asset Value and the Positive or Negative Net
Asset Amount shall be determined by comparing the Final Net Asset Value to the
net asset/equity amount set forth on the Peg Balance Sheet (the "Peg Value"). If
the Peg Value is more than the Final Net Asset Value, then the excess is the
Negative Net Asset Amount. If the Final Net Asset Value is more than the Peg
Value, then the excess is the Positive Net Asset Amount.
1.9 Values. On or about the date that the number of shares was fixed
between the parties the estimated value of the Equity Consideration was
$47,437,500. This amount added to the Cash Consideration of $5,000,000 is
$52,437,500. These values will be utilized by the Buyer for all relevant
financial accounting purposes.
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1.10 Place of Payment. All payments to Seller under this Agreement shall
be made by wire transfer in immediately available funds to Chase Manhattan Bank,
New York, for credit to Xxxxxx Industries, Inc., account number 000-0-000000.
All payments to Buyer under this Agreement shall be made by wire transfer in
immediately available funds to Shawmut Bank, Boston, for the credit to
Xxxxx-Xxxxxx Company, account number 000-00-00000.
ARTICLE II
CLOSING
2.1 Time and Place of Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") will take place at the offices of
the Seller, at 10:00 A.M. (Houston time) on the fifth business day following the
date on which all of the conditions to each party's obligations hereunder have
been satisfied or waived; or at such other place or time or both as the parties
may agree. The date on which the Closing actually occurs is hereinafter referred
to as the "Closing Date." The Closing and the consummation of the transactions
contemplated hereby shall be deemed effective as of the close of business on the
Closing Date.
2.2 Deliveries by the Seller. At the Closing the Seller will deliver the
following to the Buyer:
(a) Stock certificates representing the Company Common Stock, issued to and
registered in the name or names of the Buyer or its designee or designees,
together with evidence of payment of any applicable stock transfer taxes.
(b) The resignations of those members of the Boards of Directors of the
Company, the U.K. Sub or the Pipeline Sub (as such terms are hereinafter
defined) who will continue after the Closing to be employees of the Seller.
(c) The stock books, stock ledgers, minute books and corporate seals of the
Company, the U.K. Sub and the Pipeline Sub; provided that any of the foregoing
items shall be deemed to have been delivered pursuant to this Section 2.2(c), if
delivered to or otherwise located at the offices of the Company, the U.K. Sub or
the Pipeline Sub.
(d) The officers' certificate and other documents contemplated by Sections
6.1 and 6.3.
(e) All other documents required to be delivered by the Seller on or prior
to the Closing Date pursuant to this Agreement.
2.3 Deliveries by the Buyer. At the Closing the Buyer will deliver the
following to the Seller:
(a) Stock certificates representing the Equity Consideration issued to and
registered in the name or names of the Seller or its designee or designees,
together with evidence of payment of any stock transfer taxes.
(b) $400,000 in cash.
(c) The Note duly executed by the Buyer.
(d) A letter from Wachtell, Lipton, Xxxxx & Xxxx addressed to the Seller
and dated the Closing Date stating that (without opining as to Massachusetts
law) neither the execution nor delivery of the Rights Agreement (as hereinafter
defined) will constitute a breach or violation of any of the provisions of the
Original Rights Agreement (as hereinafter defined).
(e) The officers' certificate and other documents contemplated by Sections
6.1 and 6.2.
(f) All other documents required to be delivered by the Buyer on or prior
to the Closing Date pursuant to this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as follows:
3.1 Organization. Each of the Seller, the Company, CFPD, Ltd.,
incorporated under the laws of England and Scotland and a wholly owned
subsidiary of the Company (the "U.K. Sub"), and Cameron Pipeline, Inc., a Texas
corporation and a wholly owned subsidiary of the Company (the "Pipeline Sub"
and, together with the U.K. Sub, the "Company Subsidiaries"), 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, lease and operate its properties and to carry on its business
as now being conducted. Each of the Seller, the Company and the Company
Subsidiaries is duly qualified or licensed and in good standing to do business
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect. "Material Adverse Effect," as used in this Article III, means a material
adverse effect, on the business operations or financial condition of the Company
and the Company Subsidiaries, taken as a whole, or on the Business (as defined
below). The Seller has heretofore delivered to the Buyer accurate and complete
copies of the Certificate of Incorporation and By-laws (or similar
organizational documents), as currently in effect, of the Company and each
Company Subsidiary. The Company has no subsidiaries other than the Company
Subsidiaries and does not own, directly or indirectly, any capital stock or
other equity securities of any corporation or have any direct or indirect equity
ownership in any business other than the Company Subsidiaries. The Company
Subsidiaries have no subsidiaries and do not own, directly or indirectly, any
capital stock or other equity securities of any corporation or have any direct
or indirect equity ownership in any business.
3.2 Capitalization. (a) The authorized capital stock of the Company
consists of 5,000 shares of Company Common Stock, all of which are issued and
outstanding as of the date hereof. Except as listed in Section 3.2(a) of the
Seller's disclosure schedule (the "Seller Disclosure Schedule"), the authorized
capital stock of the U.K. Sub consists of 1,000,000 shares of common stock (the
"U.K. Stock"), one share of which is issued and outstanding as of the date
hereof. The authorized capital stock of the Pipeline Sub consists of 1,000
shares of common stock par value $1.00 per share (the "Pipeline Stock"), all of
which are issued and outstanding as of the date hereof. All of the shares of
Company Common Stock are owned by the Seller, and all of the shares of U.K.
Stock and Pipeline Stock are owned by the Company, and are in each case validly
issued, fully paid, nonassessable and free of preemptive rights. Except pursuant
to this Agreement, there are no subscriptions, options, warrants, convertible or
exchangeable securities, calls, rights or other agreements or commitments
obligating the Seller, the Company or the Company Subsidiaries to issue,
transfer or sell any securities of the Company or of the Company Subsidiaries.
(b) The Seller has good and marketable title to the shares of Company
Common Stock, and the Company has good and marketable title to the shares of
U.K. Stock and Pipeline Stock, free and clear of all pledges, security
interests, liens, charges, encumbrances, equities, claims and options of
whatever nature. Upon consummation of the transactions contemplated hereby, the
Buyer will acquire good and marketable title to the shares of Company Common
Stock, free and clear of all pledges, security interests, liens, charges,
encumbrances, equities, claims and options of whatever nature.
(c) Section 3.2(c) of the Seller Disclosure Schedule sets forth the name,
jurisdiction of incorporation and capitalization of each Company Subsidiary and
the jurisdictions in which the Company and each Company Subsidiary are qualified
to do business.
3.3 Authority Relative to This Agreement. The Seller has full corporate
power and authority to execute and deliver this Agreement, the Investment
Agreement and the other instruments, agreements and documents contemplated by
this Agreement and the Investment Agreement (the "Other Agree-
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ments") and to perform its obligations hereunder and thereunder. The execution
and delivery of this Agreement, the Investment Agreement and the Other
Agreements and the consummation of the transactions contemplated hereby or
thereby have been duly and validly authorized by the Board of Directors of the
Seller and no other corporate proceedings on the part of the Seller are
necessary to authorize this Agreement, the Investment Agreement and the other
Agreements or to consummate the transactions so contemplated. This Agreement and
the Investment Agreement have been duly and validly executed and delivered by
the Seller and (assuming they are duly and validly executed by the Buyer)
constitute, and the Other Agreements will when executed (assuming due and valid
execution by any other parties thereto) constitute, valid and binding agreements
of the Seller, enforceable against the Seller in accordance with their
respective terms, except as such enforceability may be limited by respective
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general equitable principles
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
3.4 Consents and Approvals; No Violations. Except for applicable
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and German pre-merger notification laws, no filing with, and no permit,
authorization, consent or approval of, any governmental body or authority,
including courts of competent jurisdiction, domestic or foreign ("Governmental
Entity"), is necessary for the consummation by the Seller of the transactions
contemplated by this Agreement and the Investment Agreement and the Other
Agreements. Except as set forth in Section 3.4 of the Seller Disclosure
Schedule, neither the execution and delivery of this Agreement, the Investment
Agreement and the Other Agreements by the Seller nor the consummation by the
Seller of the transactions contemplated hereby or thereby nor compliance by the
Seller with any of the provisions hereof or thereof will (i) conflict with or
breach any provision of the Certificate of Incorporation or By-laws (or similar
organizational documents) of the Seller, any Seller Subsidiary (as defined
below), the Company or any Company Subsidiary, (ii) violate or breach any
provision of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration or result in the creation of any lien) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which the Seller, the
Company or any Company Subsidiary is a party or by which the Seller, the Company
or any Company Subsidiary or any of their properties or assets may be bound, or
(iii) violate any order, judgment, writ, injunction, decree, statute, rule or
regulation applicable to the Seller, the Company or any Company Subsidiary or
any of their properties or assets, except in the case of clauses (ii) and (iii)
for violations, breaches or defaults which would not either have a Material
Adverse Effect or prevent or delay the consummation of the transactions
contemplated hereby. For purposes of this Agreement, the "Seller Subsidiaries"
means the subsidiaries of the Seller other than the Company and the Company
Subsidiaries.
3.5 Financial Statements. Attached hereto as Exhibit A are true and
complete copies of (i) the audited combined balance sheets of the Cameron Forged
Products Division of the Seller, which includes the Company, that portion of
Xxxxxx (Great Britain) Ltd. to the extent that it previously conducted all or
part of the Business (as hereinafter defined) and the Pipeline Sub
(collectively, "Cameron"), as of December 31, 1992 and December 31, 1991 and the
unaudited combined balance sheet of Cameron as of September 30, 1993
(collectively the "Company Balance Sheets"), and (ii) the related audited
combined statements of operations and cash flows for each of the years ended
December 31, 1991 and 1992 and the related unaudited combined statements of
operations and cash flows for the year ended December 31, 1990, and the nine
months ended September 30, 1993 and September 30, 1992 (collectively with the
Company Balance Sheets, the "Company Financial Statements"), together with the
notes thereto and, in the case of the audited balance sheets and statements of
operations and cash flows, an opinion of E&Y relating thereto. The Company
Financial Statements and the Peg Balance Sheet have been prepared from, and are
in accordance with, the books and records of Cameron and the books and records
of Seller that pertain to Cameron. The Company Balance Sheets fairly present the
financial position of Cameron as of their respective dates, and the other
related statements included in the Company Financial Statements fairly present
the results of operations and
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changes in financial position of Cameron for the periods then ended, subject in
the case of the unaudited Company Financial Statements to normal year-end audit
adjustments. The Company Financial Statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a consistent
basis, except as otherwise disclosed in the notes thereto.
3.6 Absence of Certain Changes. Except as disclosed in Section 3.6 of the
Seller Disclosure Schedule or in Annex IV hereto, or as disclosed in the Company
Financial Statements, since September 30, 1993, none of the Company, the Company
Subsidiaries and the Business has (i) taken any of the actions set forth in
Section 5.1(a) through Section 5.1(o) of this Agreement, (ii) suffered a
Material Adverse Effect, or any change in circumstances that is reasonably
likely to have a Material Adverse Effect (other than any change generally
affecting the industry in which the Business is engaged), or (iii) entered into
any transaction, or conducted its business or operations, other than in the
ordinary course of business and consistent with past practice.
3.7 No Undisclosed Liabilities. Any reference in this Agreement to
Seller's Knowledge shall be a reference solely to the actual knowledge of
Xxxxxxx X. Xxxxxxxxxx and his direct reports, and Xxxxxxx X. Xxxxxxxxx, D.
Xxxxxxx XxXxxxxxxx, Xxxx X. Xxxx, Xxxxxx X. Xxxxx, Xxxxxxx X. X'Xxxxx, Xxxxxx X.
Xxxxxx, Xx. and Xxxxx X. Xxxxxxxxxxx. Seller's Knowledge shall not include any
constructive knowledge, imputed knowledge or any knowledge attributed to Seller
solely because Seller or its agents or employees should have known the matter in
question. Except as and to the extent set forth in Section 3.7 of the Seller
Disclosure Schedule, to Seller's Knowledge, neither the Company nor any Company
Subsidiary has any liabilities (absolute, accrued, contingent or otherwise) of a
kind required to be reflected in a balance sheet prepared in accordance with
GAAP, or required to be disclosed in the notes thereto, except (a) liabilities
which were reflected in the December 31, 1992, or the September 30, 1993,
Company Balance Sheets or disclosed in the notes thereto, (b) liabilities which
were incurred since September 30, 1993 in the ordinary course of business,
consistent with past practice and which would be reflected in a balance sheet
prepared in accordance with GAAP, (c) liabilities which have not had a Material
Adverse Effect, and are not reasonably likely to have a Material Adverse Effect,
and (d) liabilities incurred in connection with this Agreement. Except as
disclosed in Section 3.7 of the Seller Disclosure Schedule or the Exhibits or
Annexes hereto, there are no material obligations or liabilities of the Company
or the Company Subsidiaries to the Seller or any of the Seller Subsidiaries that
will exist after the Closing Date.
3.8 Information in Proxy Statement. None of the information supplied in
writing by the Seller, the Seller Subsidiaries, the Company or the Company
Subsidiaries (including without limitation the Company Financial Statements and
any other financial statements of the Company and the Company Subsidiaries) for
inclusion or incorporation by reference in the proxy statement relating to the
meeting of the Buyer's shareholders to be held with respect to the transactions
contemplated by this Agreement (the "Proxy Statement") will, at the time the
Proxy Statement is mailed to the shareholders of the Buyer or at the time of the
meeting of shareholders of the Buyer, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
3.9 Litigation. Except as disclosed in Section 3.9 of the Seller
Disclosure Schedule, (a) there are no existing orders, injunctions, judgments or
decrees of any Governmental Entity which apply to the Company or any Company
Subsidiary or any assets, properties or operations of the foregoing and (b)
there are no actions, suits or proceedings, at law or in equity, pending, or to
Seller's Knowledge, threatened, or to Seller's Knowledge, any investigations
pending or threatened involving the Company or the Company Subsidiaries by or
before any Governmental Entity which in the case of either Clause (a) or (b)
above are reasonably likely to have a Material Adverse Effect.
3.10 Compliance With Applicable Law. Except as set forth in Section 3.10
of the Seller Disclosure Schedule, and except with respect to environmental
matters, which are addressed in Section 3.15 hereof, (a) the Company and the
Company Subsidiaries are, and the Business has been conducted, in compliance
with all laws, ordinances, rules, regulations, decrees and orders of all
Governmental
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Entities ("Laws"), except where the failure to be in compliance is not
reasonably likely to have a Material Adverse Effect and (b) the Seller, the
Company, and the Company Subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary to
conduct the Business as currently conducted (the "Company Permits"), and such
Company Permits are in full force and effect, except for such failure to hold or
be in full force and effect which would not be reasonably likely to have a
Material Adverse Effect. To Seller's Knowledge, no suspension, cancellation or
termination of any of the Company Permits is threatened or imminent that would
be reasonably likely to have a Material Adverse Effect.
3.11 Taxes. The Company has duly filed all returns of income Taxes (as
hereinafter defined) of the Company and the Company Subsidiaries and all
material returns of other Taxes of the Company and the Company Subsidiaries
required to be filed by them or such income or other returns have been included
in a return filed by an affiliated group or by a consolidated, unitary or
combined group of companies of which the Company is or has been a member, and
the Seller or the Company has duly paid, caused to be paid or made adequate
provision for the payment of all such Taxes required to be paid in respect of
the periods covered by such returns and has made adequate provision for payment
of all Taxes anticipated to be payable in respect of all calendar periods since
the periods covered by such returns. Except as disclosed in Section 3.11 of the
Seller Disclosure Schedule, no material deficiency or adjustment in respect of
any Taxes against the Company or any Company Subsidiary remains unpaid and no
material claim or assessment for any such deficiency or adjustment is pending
or, to Seller's Knowledge, threatened. There are no material claims for Taxes
(other than Taxes attributable to Seller or the Seller Subsidiaries) against the
Company or any Company Subsidiaries which might result in a lien, charge or
encumbrance on any of the assets of the Company or any Company Subsidiary.
3.12 ERISA; Employee Benefits. The Seller hereby represents and warrants
to Buyer that as of the date hereof and as of the Closing Date:
(a) Section 3.12(a) of the Seller Disclosure Schedule identifies each
Seller Employee Plan with an annual cost in excess of $100,000. The Seller has
furnished or made available to Buyer true and complete copies of such Seller
Employee Plans (and, if applicable, related trust agreements) and all amendments
thereto and written interpretations thereof together with (i) the most recent
annual report prepared in connection with any such Seller Employee Plan (Form
5500 or 5500-C including, if applicable, Schedules A and B thereto), (ii) the
summary plan description currently in effect for each such Seller Employee Plan
and all modifications thereof, (iii) for each such Seller Employee Plan with
respect to which there is no summary plan description in effect, a written
description of such Seller Employee Plan including all materials distributed or
made available to employees with respect to such Seller Employee Plan and (iv)
the most recent financial statements and actuarial reports (if any) for each
such Seller Employee Plan and its related trust (if any), (collectively, the
"Seller Employee Plan Documents").
(b) Neither the Company nor the Seller nor any subsidiary of either has
incurred, or reasonably expects to incur prior to the Closing Date, any
Controlled Group Liability that could become a material liability of Buyer or
any Buyer Subsidiary (including the Company) after the Closing Date. Except as
set forth on Section 3.12(b) of the Seller Disclosure Schedule, no Seller
Employee Plan with an annual cost in excess of $100,000 is a Title IV Plan. No
Seller Employee Plan is a Multiemployer Plan.
(c) Except as set forth in Section 3.12(c) of the Seller Disclosure
Schedule, each Seller Employee Plan with an annual cost in excess of $100,000
has been maintained in compliance in all material respects with its terms and
with the requirements prescribed by any and all applicable statutes, orders,
rules and regulations including but not limited to ERISA and the Code. Neither
the Seller nor any Related Person has engaged in, nor to Seller's Knowledge has
any other Person engaged in, any "prohibited transaction" (as defined in ERISA
and the Code) with respect to any such Seller Employee Plan.
(d) Section 3.12(d) of the Seller Disclosure Schedule identifies each
Seller Benefit Arrangement with an annual cost in excess of $100,000. The Seller
has furnished or made available to Buyer true and
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complete copies or, if no written document exists, descriptions of each such
Seller Benefit Arrangement. Each such Seller Benefit Arrangement has been
maintained in compliance in all material respects with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules and
regulations.
(e) Section 3.12(e) of the Seller Disclosure Schedule identifies each
Seller International Plan with an annual cost in excess of $100,000. The Seller
has furnished or made available to Buyer true and complete copies or, if no
written document exists, descriptions of each such Seller International Plan.
Each such Seller International Plan has been maintained in all material respects
in compliance with its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations (including any special
provisions relating to qualified plans where such Seller International Plan was
intended to so qualify) and has been maintained in good standing with applicable
regulatory authorities.
(f) Except as set forth on Section 3.12(f) of the Seller Disclosure
Schedule, there are no actions, suits, arbitrations, inquiries, investigations
or other proceedings (other than routine claims for benefits), pending or, to
the Seller's Knowledge, threatened, with respect to any Seller Employee Plan,
Seller Benefit Arrangement or Seller International Plan which would be
reasonably likely to have a Material Adverse Effect.
(g) Except as set forth on Section 3.12(g) of the Seller Disclosure
Schedule, and except for coverage mandated by Section 4980B of the Code, no
Employees or Former Employees and no beneficiaries or dependents of Employees or
Former Employees are or may become entitled under any Seller Employee Plan,
Seller Benefit Arrangement or Seller International Plan to post-employment
welfare benefits of any kind, including without limitation death or medical
benefits, having an annual cost, in the aggregate, in excess of $100,000.
(h) Except as set forth on Section 3.12(h) of the Seller Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not result in any obligation to pay severance, separation pay or other
compensation in the aggregate in excess of $100,000 associated with the
termination of employment to any Employee or Former Employee, result in any
increase in the amount of compensation or benefits or accelerate the vesting or
timing of any payment of any compensation or benefits payable to or with respect
to any Employee or Former Employee, or cause any amounts paid or payable by the
Company, the Buyer or their subsidiaries to or with respect to any Employee or
Former Employee to fail to be deductible for U. S. federal income tax purposes
by reason of Section 280G of the Code.
(i) Except (i) as set forth on Section 3.12(i) of the Seller Disclosure
Schedule, (ii) pursuant to the terms of each Seller Employee Plan, Seller
International Plan and Seller Benefit Arrangement, respectively, (iii) pursuant
to any collective bargaining agreement or (iv) pursuant to applicable law, there
are no arrangements, understandings or agreements, written or unwritten, formal
or informal, which would prevent the termination of each Seller Employee Plan,
Seller International Plan and Seller Benefit Arrangement, respectively, in each
case, without any liability to the Company in excess of $100,000, other than for
accrued benefits thereunder.
3.13 Intellectual Property. Section 3.13 of the Seller Disclosure
Schedule sets forth a list of all of the Company's or any of the Company
Subsidiaries' domestic and foreign patents and patent applications currently
being used in the Business. "Company Intellectual Property" means all of the
Company's or any of the Company Subsidiaries' domestic and foreign letters
patent, patents, patent applications, patent licenses, trademark licenses,
software licenses and knowhow licenses, trade names, trademarks, copyrights,
service marks, trademark registrations and applications, service xxxx
registrations and applications and copyright registrations and applications
currently being used in the Business. Except as set forth in Section 3.13 of the
Seller Disclosure Schedule and except for any claim, infringement, act or
omission that would not be reasonably likely to have a Material Adverse Effect
(a) no claim is pending or, to Seller's Knowledge, threatened which alleges that
any of the Company Intellectual Property is invalid or unenforceable or which is
otherwise adverse to the right, title and
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interest of the Company and the Company Subsidiaries in and to the Company
Intellectual Property, (b) to Seller's Knowledge, no actions or operations of
any other person, association, corporation, individual, partnership, trust or
other entity or organization, including a Governmental Entity (a "Person")
infringe upon or conflict with the right, title or interest of the Company and
the Company Subsidiaries in and to the Company Intellectual Property, and (c) to
Seller's Knowledge, no Company Intellectual Property infringes on the rights
owned or held by any other Person. Except as set forth in Section 3.13 of the
Seller Disclosure Schedule, no existing contract, agreement or understanding
between the Seller, the Company or any Company Subsidiary and any other party
would impede or prevent the continued use by the Company and the Company
Subsidiaries of the entire right, title and interest of the Company and the
Company Subsidiaries in and to the Company Intellectual Property except such
contracts or understandings that would not be reasonably likely to have a
Material Adverse Effect.
3.14 Material Contracts; No Defaults. Except as set forth in Section 3.14
of the Seller Disclosure Schedule or in the notes to the Company Balance Sheets,
neither the Company nor any Company Subsidiary is a party to any written: (a)
material consulting agreement or collective bargaining agreement; (b) indenture,
mortgage, note or other agreement relating to the borrowing of money not in the
ordinary course of business by the Company or any Company Subsidiary or the
guaranty by the Company or any Company Subsidiary of an obligation of a third
party for the borrowing of money; (c) agreement which involves a certain (rather
than contingent) obligation of the Company or any Company Subsidiary of more
than $1,000,000 in any twelvemonth period; or (d) agreement containing covenants
limiting the ability of the Company or any Company Subsidiary to compete in any
line of business with any Person or in any area or territory (collectively, the
"Company Contracts"). Except as set forth in Section 3.14 of the Seller
Disclosure Schedule, (1) there is not, under any of the Company Contracts, any
existing default or event of default or event or condition which, with or
without due notice or lapse of time or both, would constitute a default or event
of default on the part of the Company or any Company Subsidiary, or, to the
Seller's Knowledge, the other parties thereto, except such defaults, events of
default and other events which would not be reasonably likely to have a Material
Adverse Effect, and (2) the Company Contracts are (i) valid and binding
obligations of the Company or the Company Subsidiaries and, to the Seller's
Knowledge, the other parties thereto, (ii) are in full force and effect and
(iii) are enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally and
by general equitable principles (regardless of whether enforceability is
considered in a proceeding in equity or at law).
3.15 Environmental Compliance.
(a) Except as set forth on Section 3.15 of the Seller Disclosure Schedule,
all operations, properties and business activities of the Company, the Company
Subsidiaries and the Business are in compliance with all Environmental Laws and
neither the Company nor any of the Company Subsidiaries has or is subject to any
claim, notice of investigation or liability based upon any Environmental Law or
arising from the disposal of any Regulated Materials except where such failure
to be in compliance or such claim, notice of investigation or liability would
not be reasonably likely to have a Material Adverse Effect.
(b) "Environmental Laws" means all Laws and Company Permits concerning,
relating to or controlling (i) the handling, transportation, sale, offering for
sale, storage, treatment, discharge, disposal, release, use, processing or
manufacture of any material or substance or (ii) the introduction of any
material, substance, radiation or other emission into the environment or
workplace, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Solid Waste Disposal
Act as amended by the Resource Conservation and Recovery Act, the Clean Air Act,
the Clean Water Act, the Toxic Substances Control Act, and the Occupational
Safety and Health Act.
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(c) "Regulated Material" means any material, substance, radiation or
emission which is regulated by or subject to any Environmental Law.
3.16 Title to Real Property. Section 3.16 of the Seller Disclosure
Schedule sets forth a list of all of the Owned Real Property reflected on the
September 30, 1993 Company Balance Sheet or acquired by the Company or any of
the Company Subsidiaries subsequent to the date thereof and conveyed hereby to
Buyer (the "Company Real Property"), together with all Company Leases (as
defined below). The Company or one of the Company Subsidiaries has good and
marketable title to the Company Real Property, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any kind or character, except for
current property taxes not yet payable or such encumbrances that would not be
reasonably likely to have a Material Adverse Effect. To Seller's Knowledge,
there is no appropriation, condemnation or like proceeding relating to the
Company Real Property. Each lease for any leased real property (a "Company
Lease") is a valid and binding lease under which the Company or one of the
Company Subsidiaries is entitled to occupy and use the parcel of real property
for its current use to which such Company Lease relates except for such failure
to be valid and binding as would not be reasonably likely to have a Material
Adverse Effect.
3.17 Company Assets. Except for those assets, properties, contract
rights, or licenses listed on Section 3.17 of the Seller Disclosure Schedule,
the Company and the Company Subsidiaries will own or have at Closing the right
to use all of the assets, properties, contract rights and licenses currently
used to operate the Business, or reflected on the September 30, 1993 Company
Balance Sheet (the "Company Assets"), except for cases in which the failure to
own or to have such right to use would not be reasonably likely to have a
Material Adverse Effect. To the Seller's Knowledge, the consummation of the
transactions contemplated by this Agreement will not, in and of itself,
adversely affect the ownership of or right to use the Company Assets, the
Company Intellectual Property and the Company Permits of the Company or the
Company Subsidiaries, except in cases where the failure to own or to have such
right to use would not be reasonably likely to have a Material Adverse Effect.
3.18 Labor Matters. Except as set forth on Section 3.18 of the Seller
Disclosure Schedule and except as would not constitute a Material Adverse
Effect:
(a) there is no unfair labor practice complaint against the Company or any
of the Company Subsidiaries pending or, to the Seller's Knowledge, threatened
before the National Labor Relations Board or the Ministry of Labor, as the case
may be;
(b) there is no labor strike, dispute, slowdown or stoppage pending or, to
the Seller's Knowledge, threatened against or affecting the Company, any of the
Company Subsidiaries or the Business; and
(c) there is no grievance or arbitration proceeding arising out of or under
collective bargaining agreements pending or, to the Seller's Knowledge,
threatened against or affecting the Company, any of the Company Subsidiaries or
the Business.
3.19 Purchase for Investment. The Seller is acquiring the Equity
Consideration for its own account as principal, with no view to any distribution
of any of the Equity Consideration or any beneficial interest in the Equity
Consideration to any third party, and the Seller has no agreement, understanding
or arrangement to sell, pledge or otherwise dispose of the Equity Consideration
or any beneficial interest in the Equity Consideration to any other Person. The
Seller understands and agrees that the Equity Consideration has not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or applicable state securities laws, and therefore may not be sold or otherwise
transferred, unless the Equity Consideration is registered under the Securities
Act and any applicable state securities laws or unless an exemption from such
registration is available.
3.20 No Beneficial Ownership of the Buyer's Stock. The Seller and its
Affiliates do not hold, have the right to vote or direct the voting of, or
otherwise beneficially own any shares of Common Stock, par value $1.00 per
share, of the Buyer (the "Buyer Common Stock").
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3.21 Change in Control. Except as set forth in Section 3.21 of the Seller
Disclosure Schedule or in cases which would not be reasonably likely to have a
Material Adverse Effect, neither the Company nor any Company Subsidiary is party
to any contract, agreement or understanding relating to employment which
contains a "change in control," "potential change in control" or similar
provision.
3.22 Business of the Company. To the Seller's Knowledge, the Company has
not engaged in any businesses other than the Business, and the Pipeline Sub has
not engaged in any businesses other than the transmission of natural gas.
3.23 Representations Accurate. To Seller's Knowledge, the representations
and warranties of the Seller set forth in this Agreement and qualified by
materiality or by Material Adverse Effects shall be true and correct (subject to
such qualification) as of the Closing Date (except for representations and
warranties that expressly speak only as of some other time), subject to the
disclosures in the Seller Disclosure Schedule as supplemented or amended through
the Closing Date and excluding those failures to be true and correct that do not
have a Material Adverse Effect. To Seller's Knowledge, the representations and
warranties of the Seller set forth in this Agreement and not qualified by
materiality or by Material Adverse Effects shall be true and correct in all
material respects as of the Closing Date (except for representations and
warranties that expressly speak only as of some other time), subject to the
disclosures in the Seller Disclosure Schedule as supplemented or amended through
the Closing Date and excluding those failures to be true and correct that do not
have a Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
4.1 Organization. Except as disclosed in Section 4.1 of the Buyer's
disclosure schedule attached hereto (the "Buyer Disclosure Schedule"), each of
the Buyer and its Subsidiaries (collectively, the "Buyer Subsidiaries") 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, lease and operate its properties and to carry on its
business as now being conducted. Each of the Buyer and the Buyer Subsidiaries is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not have a Material Adverse Effect.
"Material Adverse Effect" as used in this Article IV, means a material adverse
effect in the aggregate, on the business, operations or financial condition of
the Buyer and Buyer Subsidiaries taken as a whole. The Buyer has heretofore
delivered to the Seller accurate and complete copies of the Articles of
Organization and By-laws, as currently in effect, of the Buyer.
4.2 Capitalization.
(a) The authorized capital stock of the Buyer consists of (i) 35,000,000
shares of Buyer Common Stock, of which 17,984,249 shares are issued and
outstanding as of the date hereof, and (ii) 5,000,000 shares of preferred stock,
no par value, none of which are issued or outstanding as of the date hereof. All
of the issued and outstanding shares of Buyer Common Stock are (and the Equity
Consideration will upon issuance be) validly issued, fully paid, nonassessable
and free of preemptive rights. As of the date hereof, approximately 1,690,609
shares of Buyer Common Stock were issuable upon exercise of stock options
("Stock Options") granted under the Buyer's Long-Term Incentive Plan and
Executive Long-Term Incentive Program (collectively, the "Stock Plans") and an
indeterminate number of shares of Buyer Common Stock were reserved for issuance
in accordance with the Rights Agreement, dated as of October 19, 1988 by and
between the Buyer and State Street Bank & Trust Company, as Rights Agent (the
"Original Rights Agreement"). Except pursuant to this Agreement, the Stock
Plans, the Original Rights Agreement and the Buyer's Savings/Investment Plan or
as disclosed in Section 4.2 of the Buyer Disclosure Schedule, there are no
subscriptions, options, warrants, calls, rights or other agreements or
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commitments obligating the Buyer to issue, transfer or sell any of its
securities, including any right of conversion or exchange under any outstanding
security.
(b) Upon consummation of the transactions contemplated hereby, the Seller
will acquire good and marketable title to the Equity Consideration, free and
clear of all pledges, security interests, liens, charges, encumbrances,
equities, claims and options of whatever nature.
(c) Except as disclosed in Section 4.2 of the Buyer Disclosure Schedule,
the only direct or indirect subsidiaries of the Buyer are those named in the
Buyer SEC Reports. Except as disclosed in Section 4.2 of the Buyer Disclosure
Schedule, or in the Buyer SEC Reports, the Buyer does not own, directly or
indirectly, any capital stock or other equity securities of any corporation or
have any direct or indirect equity ownership interest in any business. All of
the outstanding shares of capital stock of each of the Buyer Subsidiaries have
been validly issued and are fully paid, nonassessable and free of preemptive
rights and, except as set forth in Section 4.2 of the Buyer Disclosure Schedule
are owned by either the Buyer or another of the Buyer Subsidiaries free and
clear of all pledges, security interests, liens, charges, encumbrances,
equities, claims and options of whatever nature. Except as disclosed in Section
4.2 of the Buyer Disclosure Schedule there are no outstanding subscriptions,
options, warrants, calls, rights, convertible securities or other agreements or
commitments of any character relating to the issued or unissued capital stock or
other securities of any Buyer Subsidiary, or otherwise obligating the Buyer or
any Buyer Subsidiary to issue, transfer or sell any such securities. Except for
the Investment Agreement, there are not now, and at the Closing Date there will
not be, any voting trusts or other agreements or understandings to which the
Buyer or any Buyer Subsidiary is a party or is bound with respect of the voting
of the capital stock of the Buyer or any Buyer Subsidiary. Except as set forth
above or in Section 4.2 of the Buyer Disclosure Schedule, there are no persons
or entities (other than Buyer Subsidiaries) in which the Buyer or any Buyer
Subsidiary has any voting rights or equity interests.
4.3 Authority Relative to this Agreement. The Buyer has full corporate
power and authority to execute and deliver this Agreement, the Investment
Agreement and the Other Agreements and to perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement, the Investment
Agreement and the Other Agreements and the consummation of the transactions
contemplated hereby or thereby have been duly and validly authorized and
approved by the Board of Directors of the Buyer, including by a two-thirds vote
of the Continuing Directors at a meeting at which a Continuing Director Quorum
(as such terms are defined in the Buyer's Articles of Organization) was present
for purposes of approving the amendment to Article 6(c)2 of the Buyer's Articles
of Organization in the form attached hereto as Annex V (the "Fair Price Charter
Amendment")), and no other corporate proceedings on the part of the Buyer are
necessary to authorize this Agreement, the Investment Agreement and the Other
Agreements (other than the approval of the transactions contemplated hereby by
the requisite affirmative vote of the holders of Buyer Common Stock). This
Agreement and the Investment Agreement have been duly and validly executed and
delivered by the Buyer and (assuming they are duly and validly executed by the
Seller) constitute, and the Other Agreements will when executed constitute,
valid and binding agreements of the Buyer, enforceable against the Buyer in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general equitable principles
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
4.4 Consents and Approvals; No Violations. Except as disclosed in Section
4.4 of the Buyer Disclosure Schedule, and except for applicable requirements of
the Exchange Act and German pre-merger notification laws, no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity, is
necessary for the consummation by the Buyer of the transactions contemplated by
this Agreement and the Investment Agreement. Except as set forth in Section 4.4
of the Buyer Disclosure Schedule, neither the execution and delivery of this
Agreement, the Investment Agreement and the Other Agreements by the Buyer nor
the consummation by the Buyer of the transactions contemplated hereby or thereby
nor compliance by the Buyer with any of the provisions hereof or
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thereof will (i) conflict with or breach any provision of the Articles of
Organization or By-Laws (or similar organizational documents) of the Buyer or
any Buyer Subsidiary, (ii) violate or breach any provision of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration or result in the creation
of any lien) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, agreement or other instrument or
obligation to which the Buyer or any Buyer Subsidiary is a party or by which any
of them or any of their properties or assets may be bound, or (iii) violate any
order, judgment, writ, injunction, decree, statute, rule or regulation
applicable to the Buyer, any Buyer Subsidiary or any of their properties or
assets, except in the case of clauses (ii) and (iii) for violations, breaches or
defaults which would not either have a Material Adverse Effect or prevent or
delay the consummation of the transactions contemplated hereby.
4.5 Reports. Except as disclosed in Section 4.5 of the Buyer Disclosure
Schedule, the Buyer has filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC") since January 1, 1990
(collectively, the "Buyer SEC Reports"), each of which has complied in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act. Except as
disclosed in Section 4.5 of the Buyer Disclosure Schedule, as of their
respective dates, none of the Buyer SEC Reports, including without limitation,
any financial statements or schedules (including the related notes) included
therein, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. Each of the balance sheets (including the
related notes) included in the Buyer SEC Reports fairly presents the
consolidated financial position of the Buyer and the Buyer Subsidiaries as of
the date thereof, and the other related statements (including the related notes)
included therein fairly present the consolidated results of operations and cash
flows of the Buyer and the Buyer Subsidiaries for the respective periods
indicated. Each of the financial statements (including the related notes)
included in the Buyer SEC Reports has been prepared from and is in accordance
with the books and records of the Buyer and has been prepared in accordance with
GAAP consistently applied during the period involved, except as otherwise noted
therein and except for year-end audit adjustments, consisting of normal and
recurring adjustments. The Buyer has delivered to the Seller accurate and
complete copies of all Buyer SEC Reports filed since January 1, 1990.
4.6 Absence of Certain Changes. Except as disclosed in Section 4.6 of the
Buyer Disclosure Schedule or as disclosed in the Buyer SEC Reports, since
December 31, 1992, neither the Buyer nor any of the Buyer Subsidiaries has (i)
taken any actions set forth in Section 5.2(a) through Section 5.2(l) of this
Agreement, (ii) suffered a Material Adverse Effect, or (iii) entered into any
transaction, or conducted its business or operations, other than in the ordinary
course of business and consistent with past practice.
4.7 No Undisclosed Liabilities. Any reference in this Agreement to
Buyer's Knowledge shall be a reference solely to the actual knowledge of Xxxx X.
Xxxxxx, Xxxxx X. Xxxxxx, and their direct reports. Buyer's Knowledge shall not
include any constructive knowledge, imputed knowledge or any knowledge
attributed to Buyer solely because Buyer or its agents or employees should have
known the matter in question. Except as and to the extent set forth in Section
4.7 of the Buyer Disclosure Schedule, to Buyer's Knowledge, neither the Buyer
nor any Buyer Subsidiary has any liabilities (absolute, accrued, contingent or
otherwise) of a kind required to be reflected in a balance sheet prepared in
accordance with GAAP, or required to be disclosed in the notes thereto, except
(a) liabilities which were reflected in the audited consolidated balance sheet
of the Buyer and the Buyer Subsidiaries as of December 31, 1992 incorporated in
the Buyer's Annual Report on Form 10-K for the fiscal year ended December 31,
1992 (the "Buyer Balance Sheet") or disclosed in the notes thereto, (b)
liabilities which were incurred since December 31, 1992 in the ordinary course
of business, consistent with past practice and which would be reflected in a
balance sheet prepared in accordance with GAAP, (c) liabilities which do not
constitute a Material Adverse Effect and would not be reasonably likely to
constitute a Material Adverse Effect and (d) liabilities incurred in connection
with this Agreement.
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4.8 Information in Proxy Statement. None of the information supplied in
writing by the Buyer for inclusion or incorporation by reference in the Proxy
Statement will, at the time the Proxy Statement is mailed to the shareholders of
the Buyer and at the time of the meeting of shareholders of the Buyer, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply in all material respects with the
provisions of the Exchange Act, and the rules and regulations thereunder, except
that no representation is made by the Buyer with respect to statements made
therein based on information supplied by the Seller or the Company in writing
for inclusion or incorporation by reference therein.
4.9 Litigation. Except as disclosed in Section 4.9 of the Buyer
Disclosure Schedule or in the Buyer SEC Reports, (a) there are no existing
orders, injunctions, judgments or decrees of any Governmental Entity which apply
to Buyer or any Buyer Subsidiary or to the assets, properties or operations of
the foregoing and (b) there are no actions, suits, proceedings, at law or in
equity, pending, or to Buyer's Knowledge, threatened or to Buyer's Knowledge any
investigations pending or threatened involving the Buyer or the Buyer
Subsidiaries, or before any Governmental Entity which in the case of either
clause (a) or (b) are reasonably likely to have a Material Adverse Effect.
4.10 Compliance with Applicable Law. Except as set forth in Section 4.10
of the Buyer Disclosure Schedule, or in the Buyer SEC Reports, and except with
respect to environmental matters, which are addressed in Section 4.15 hereof,
(a) the Buyer and the Buyer Subsidiaries are, and the business, operations or
financial condition of the Buyer and the Buyer Subsidiaries has been conducted,
and is, in compliance with all Laws, except where the failure to be in
compliance would not be reasonably likely to have a Material Adverse Effect, and
(b) the Buyer and Buyer Subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary to
conduct their respective businesses as currently conducted (the "Buyer
Permits"), and such Buyer Permits are in full force and effect, except for such
failures to hold or be in full force and effect which would not be reasonably
likely to have a Material Adverse Effect .
4.11 Taxes. The Buyer and each Buyer Subsidiary has duly filed all
returns of income Taxes (as hereinafter defined) and all material returns of
other Taxes required to be filed by it, and the Buyer has duly paid, caused to
be paid or made adequate provision for the payment of all Taxes required to be
paid in respect of the periods covered by such returns and has made adequate
provision for payment of all Taxes anticipated to be payable in respect of all
calendar periods since the periods covered by such returns. Except as set forth
in Section 4.11 of the Buyer Disclosure Schedule, the United States federal and
state income tax returns of the Buyer have been audited by the Internal Revenue
Service or relevant state tax authorities or are closed by the applicable
statute of limitations for all taxable years through 1986. All deficiencies and
assessments asserted as a result of such audits have been paid, fully settled or
adequately provided for in the financial statements contained in the Buyer SEC
Reports, or are being contested in good faith by appropriate proceedings. Except
as set forth in Section 4.11 of the Buyer Disclosure Schedule, there are no
outstanding agreements or waivers extending the statutory period of limitation
relating to the payment of Taxes of the Buyer or its subsidiaries for taxable
periods for which the applicable statute of limitations has not expired.
4.12 ERISA; Employee Benefits. The Buyer hereby represents and warrants
to Seller that as of the date hereof and as of the Closing Date:
(a) Section 4.12(a) of the Buyer's Disclosure Schedule identifies each
Buyer Employee Plan with an annual cost in excess of $100,000. The Buyer has
furnished or made available to Seller true and complete copies of such Buyer
Employee Plans (and, if applicable, related trust agreements) and all amendments
thereto and written interpretations thereof together with (i) the most recent
annual report prepared in connection with any such Buyer Employee Plan (Form
5500 or 5500-C including, if applicable, Schedules A and B thereto), (ii) the
summary plan description currently in effect for each such Buyer Employee Plan
and all modifications thereof, (iii) for each such Buyer Employee Plan with
respect to which there is no summary plan description in effect, a written
description of such Buyer
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Employee Plan including all materials distributed or made available to employees
with respect to such Buyer Employee Plan and (iv) the most recent financial
statements and actuarial reports (if any) for each such Buyer Employee Plan and
its related trust (if any) (collectively, the Buyer Employee Plan Documents").
(b) Except as set forth in Section 4.12(b) of the Buyer Disclosure
Schedule, no Buyer Employee Plan with an annual cost in excess of $100,000 is a
Title IV Plan or a Multiemployer Plan.
(c) Each Buyer Employee Plan with an annual cost in excess of $100,000 that
is intended to be qualified under Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified and no event has occurred
since the date of such determination that would adversely affect such
qualification; each trust created under any such Buyer Employee Plan has been
determined by the Internal Revenue Service to be exempt from tax under Section
501(a) of the Code and no event has occurred since the date of such
determination that would adversely affect such exemption. The Buyer has
furnished to Seller the most recent determination letter of the Internal Revenue
Service relating to each such Buyer Employee Plan. Each such Buyer Employee Plan
has been maintained in compliance in all material respects with its terms and
with the requirements prescribed by any and all applicable statutes, orders,
rules and regulations, including but not limited to ERISA and the Code. Neither
the Buyer nor any Related Person engaged in, nor to Buyer's Knowledge has any
other Person has engaged in, any "prohibited transaction" (as defined in ERISA
and the Code) with respect to any such Buyer Employee Plan.
(d) Section 4.12(d) of the Buyer's Disclosure Schedule identifies each
Buyer Benefit Arrangement with an annual cost in excess of $100,000. The Buyer
has furnished or made available to Seller true and complete copies or, if no
written document exists, descriptions of each such Buyer Benefit Arrangement.
Each such Buyer Benefit Arrangement has been maintained in compliance in all
material respects with its terms and with the requirements prescribed by any and
all applicable statutes, orders, rules and regulations.
(e) Section 4.12(e) of the Buyer Disclosure Schedule identifies each Buyer
International Plan with an annual cost in excess of $100,000. The Buyer has
furnished or made available to Seller true and complete copies or, if no written
document exists, descriptions of each such Buyer International Plan. Each such
Buyer International Plan has been maintained in compliance in all material
respects with its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations (including any special
provisions relating to qualified plans where such Buyer International Plan was
intended to so qualify) and has been maintained in good standing with applicable
regulatory authorities.
(f) Except as set forth on Section 4.12(f) of the Buyer Disclosure
Schedule, there are no actions, suits, arbitrations, inquiries, investigations
or other proceedings (other than routine claims for benefits) pending or, to the
Buyer's Knowledge, threatened, with respect to any Buyer Employee Plan, Buyer
Benefit Arrangement or Buyer International Plan which would be reasonably likely
to have a Material Adverse Effect.
(g) Except as set forth on Section 4.12(g) of the Buyer Disclosure
Schedule, and except for coverage mandated by Section 4980B of the Code, no
Employees or Former Employees and no beneficiaries or dependents of Employees or
Former Employees are or may become entitled under any Buyer Employee Plan, Buyer
Benefit Arrangement or Buyer International Plan to post-employment welfare
benefits of any kind, including without limitation death or medical benefits,
having an annual cost, in the aggregate, in excess of $100,000.
4.13 Intellectual Property. "Buyer Intellectual Property" means all of
the Buyer's or any of the Buyer Subsidiaries' domestic and foreign letters
patent, patents, patent applications, patent licenses, trademark licenses,
software licenses and know-how licenses, trade names, trademarks, copyrights,
service marks, trademark registrations and applications, service xxxx
registrations and applications and copyright registrations and applications
currently being used by the Buyer or any Buyer Subsidiary.
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Except as set forth in Section 4.13 of the Buyer Disclosure Schedule or Buyer's
SEC Reports and except for any claim, infringement, act or omission that would
not be reasonably likely to have a Material Adverse Effect (a) no claim is
pending or, to the knowledge of the Buyer, threatened to the effect that any of
the Buyer Intellectual Property is invalid or unenforceable or which is
otherwise adverse to the right, title and interest of the Buyer and the Buyer
Subsidiaries in and to the Buyer Intellectual Property; (b) to the knowledge of
the Buyer, no actions or operations of any Person infringe upon or conflict with
the right, title or interest of the Buyer and the Buyer Subsidiaries in and to
the Buyer Intellectual Property; and (c) to the knowledge of the Buyer, no Buyer
Intellectual Property infringes on the rights owned or held by any other Person.
Except as set forth in Section 4.13 of the Buyer Disclosure Schedule, no
contract, agreement or understanding between the Buyer or any Buyer Subsidiary
and any other party exists which would impede or prevent the continued use by
the Buyer and the Buyer Subsidiaries of the entire right, title and interest of
the Buyer and the Buyer Subsidiaries in and to the Buyer Intellectual Property.
4.14 No Defaults. Except as set forth in Section 4.14 of the Buyer
Disclosure Schedule or in the Buyer SEC Reports, to Buyer's Knowledge, Buyer and
the Buyer Subsidiaries are not in default under, and no condition exists that
with notice or lapse of time or both would constitute a default under, (i) any
mortgage, loan agreement, indenture, evidence of indebtedness or other
instrument evidencing borrowed money, Buyer and Buyer Subsidiaries'
organizational documents, any other material agreement, contract, lease, license
to which Buyer or Buyer Subsidiaries are a party or by which they or their
properties are bound, or (ii) any judgment, order or injunction of any court,
arbitrator or Governmental Entity, except in the case of clause (i) and (ii)
above those that will not be reasonably likely to have a Material Adverse
Effect.
4.15 Environmental Compliance. Except as set forth in Section 4.15 of the
Buyer Disclosure Schedule, all operations, properties and business activities of
the Buyer and the Buyer Subsidiaries are in compliance with all Environmental
Laws, and neither the Buyer nor any of the Buyer Subsidiaries has or is subject
to any claim, notice of investigation or liability based upon any Environmental
Law or arising from the disposal of any Regulated Material except where such
failure to be in compliance or such claim, notice of investigation or liability
would not be reasonably likely to have a Material Adverse Effect.
4.16 Representations Accurate. To Buyer's Knowledge, the representations
and warranties of the Buyer set forth in this Agreement and qualified by
materiality or by Material Adverse Effects shall be true and correct (subject to
such qualification) as of the Closing Date (except for representations and
warranties that expressly speak only as of some other time), subject to the
disclosures in the Buyer Disclosure Schedule as supplemented or amended through
the Closing Date and excluding those failures to be true and correct that do not
have a Material Adverse Effect. To Buyer's Knowledge, the representations and
warranties of the Buyer set forth in this Agreement and not qualified by
materiality or by Material Adverse Effects shall be true and correct in all
material respects as of the Closing Date (except for representations and
warranties that expressly speak only as of some other time), subject to the
disclosures in the Buyer Disclosure Schedule as supplemented or amended through
the Closing Date and excluding those failures to be true and correct that do not
have a Material Adverse Effect.
4.17 Purchase for Investment. The Buyer is acquiring the Company Common
Stock for its own account as principal, with no view to any distribution of any
of the Company Common Stock or any beneficial interest in the Company Common
Stock to any third party, and the Buyer has no agreement, understanding or
arrangement to sell, pledge or otherwise dispose of the Company Common Stock or
any beneficial interest in the Company Common Stock to any other Person. The
Buyer understands and agrees that the Company Common Stock has not been
registered under the Securities Act, or applicable state securities laws, and
neither the Seller nor the Company has any obligation hereunder to so register
and, therefore, the Company Common Stock may not be sold or otherwise
transferred so as to cause the sale of the shares hereunder by the Seller to be
unlawful or violative of any law or regulation, unless the Company Common Stock
is registered under the Securities Act and any applicable state securities laws
or unless an exemption from such registration is available.
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ARTICLE V
COVENANTS
5.1 Business Covenants of the Seller. Except as expressly contemplated by
this Agreement, the Ancillary Agreements (as hereinafter defined) and except for
the pre-Closing transactions described in Annex IV hereto between the Seller and
its Affiliates, on the one hand, and the Company and the Company Subsidiaries,
on the other hand, during the period from the date of this Agreement and
continuing until the Closing Date, the Seller will cause the Company and the
Company Subsidiaries to carry on their respective businesses in the ordinary
course, consistent with past practice, and to use their respective reasonable
best efforts to preserve intact their present business organizations, to keep
available the services of their present officers and key employees and to
preserve their relationships with customers, suppliers, licensors, licensees,
contractors, distributors and others having business dealings with them. Without
limiting the generality of the foregoing, and except as provided herein, the
Seller will not, without the prior consent of the Buyer, cause or permit the
Company and the Company Subsidiaries to:
(a) (i) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, except that the Company Subsidiaries may declare and
pay a dividend to the Company, (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any subsidiary to repurchase, redeem or otherwise acquire,
any of its securities or any securities of its subsidiaries, or propose to do
any of the foregoing;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities (including indebtedness having the right to
vote) or equity equivalents (including, without limitation, stock appreciation
rights), except pursuant to any Company Benefit Plan, or amend in any material
respect any of the terms of any such agreements, commitments, stock, securities
or equity equivalents outstanding on the date hereof;
(c) amend or propose to amend its charter or by-laws;
(d) acquire, sell, lease, encumber, transfer or dispose of any assets other
than in the ordinary course of business consistent with past practice;
(e) make any capital expenditures which in the aggregate exceed $100,000;
(f) create, incur or assume any long-term debt (including obligations in
respect of capital leases);
(g) except in the ordinary course of business consistent with past
practice, create, incur, assume, maintain or permit to exist any short-term debt
(including obligations in respect of capital leases) or assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person, except that
such debt or obligations which are set forth on the Seller Disclosure Schedule
may be maintained and permitted to exist;
(h) permit any of its current insurance policies to be cancelled or
terminated or any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies providing
coverage equal to or greater than coverage remaining under those cancelled,
terminated or lapsed are in full force and effect;
(i) change any of the accounting principles or practices used by it (except
as required by GAAP);
(j) except as required by law, or pursuant to the terms of any collective
bargaining agreement, (i) enter into, adopt, amend or terminate any Company
Benefit Plan or any agreement, arrangement, plan or policy between itself and
one or more of its directors, executive officers, or other employees, or (ii)
increase in any manner the compensation or fringe benefits of any director,
officer or other
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employee or pay any benefit not required by any plan or arrangement as in effect
as of the date hereof, except such increases as are granted in the ordinary
course of business consistent with past practice (which shall include normal
periodic performance reviews and related compensation and benefit increases but
not any general across-the-board increases);
(k) amend or terminate any material agreements, commitments or contracts,
or enter into other material agreements, commitments or contracts, except in the
ordinary course of business consistent with past practice and not in excess of
current requirements;
(l) lend any money in excess of $100,000 to any Person other than an
Affiliate or trade creditor;
(m) merge or consolidate with or into any other Person; or
(n) enter into any agreement with any Person for the purchase of inventory
for to the Company in excess of $500,000 if such purchase would cause the
Company's inventory to exceed substantially the amount of inventory required to
fill outstanding contracts with customers of the Company; or
(o) agree to take any of the foregoing actions.
Notwithstanding the provisions of this Section 5.1, nothing in this
Agreement shall be construed or interpreted to prevent the Seller, the Company
and the Company Subsidiaries from making, accepting or settling intercompany
advances to, from or with one another, or engaging in any other transaction
incidental to their normal cash management procedures, including without
limitation, short-term investments in time deposits, certificates of deposit and
bankers acceptances made in the ordinary course of business.
5.2 Business Covenants of the Buyer. Except as expressly contemplated by
this Agreement, during the period from the date of this Agreement and continuing
until the Closing Date, the Buyer will, and will cause the Buyer Subsidiaries
to, carry on their respective businesses in the ordinary course, consistent with
past practice, and to use their respective reasonable best efforts to preserve
intact their present business organizations, to keep available the services of
their present officers and key employees and to preserve their relationships
with customers, suppliers, licensors, licensees, contractors, distributors and
others having business dealings with them. Without limiting the generality of
the foregoing, and except as provided herein, the Buyer will not, and will cause
the Buyer Subsidiaries not, without the prior consent of the Seller, to:
(a) (i) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
(iii) amend the terms of, repurchase, redeem or otherwise acquire, or permit any
subsidiary to repurchase, redeem or otherwise acquire, any of its securities or
any securities of its subsidiaries, or propose to do any of the foregoing;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities (including indebtedness having the right to
vote) or equity equivalents (including, without limitation, stock appreciation
rights) except in accordance with Buyer's Stock Plans, or amend in any material
respect any of the terms of any such agreements, commitments, stock, securities
or equity equivalents outstanding on the date hereof;
(c) amend or propose to amend its charter or by-laws in any manner adverse
to the interests of the Seller;
(d) make any capital expenditures which in the aggregate exceed the amounts
contemplated by the Buyer's most recent annual operating budget, unless the
Buyer notifies and consults with the Seller prior to taking any such action;
(e) create, incur or assume any long-term debt (including obligations in
respect of capital leases) in excess of $1,000,000;
X-00
00
(x) except in connection with draws made pursuant to the Financing
Agreement dated March 8, 1993 by and between The CIT Group/Business Credit, Inc.
and the Buyer, among others, or otherwise in the ordinary course of business
consistent with past practice, create, incur, assume, maintain or permit to
exist any short-term debt (including obligations in respect of capital leases)
in excess of $1,000,000 or assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the obligations
of any other Person (except that any such debt or obligations set forth in
Section 5.2(f) of the Buyer Disclosure Schedule may be maintained and permitted
to exist);
(g) lend any money in excess of $100,000, unless the Buyer notifies and
consults with the Seller prior to taking any such action;
(h) except as required by law, (i) enter into, adopt, amend or terminate
any agreement, arrangement, plan or policy between itself and one or more of its
directors or executive officers, or (ii) increase in any manner the compensation
or fringe benefits of any director or executive officer or pay any benefit to
any director or executive officer not required by any plan or arrangement as in
effect as of the date hereof;
(i) enter into any material agreements, commitments or contracts relating
to the acquisition or divestiture of any businesses;
(j) amend or terminate any material agreements, commitments or contracts,
or enter into, other material agreements, commitments or contracts, except in
the ordinary course of business consistent with past practice and not in excess
of current requirements, unless the Buyer notifies and consults with the Seller
prior to taking any such action;
(k) merge or consolidate with or into any other Person; or
(l) agree to take any of the foregoing actions.
5.3 Current Information. During the period from the date of this
Agreement to the Closing Date, the Buyer will notify the Seller and the Seller
will notify the Buyer of any material change (or any event which might
reasonably be expected to cause a material change) in the normal course of
business or operations of the Buyer and the Buyer Subsidiaries or of the Company
and the Company Subsidiaries, as the case may be, and of any complaints,
investigations or hearings by any Governmental Entity (or communications
indicating that the same may be contemplated), or the institution or threat or
settlement of significant litigation, in each case involving the Buyer or the
Buyer Subsidiaries or the Company or the Company Subsidiaries, as the case may
be, and to keep each other fully informed of such events.
5.4 Access to Information.
(a) Between the date of this Agreement and the Closing Date the Buyer will
and will cause the Buyer Subsidiaries to, (i) give the Seller and the Company
and their authorized representatives reasonable access to all books, records,
plants, offices, warehouses and other facilities and properties of the Buyer and
the Buyer Subsidiaries, (ii) permit the Seller and the Company and their
authorized representatives to make such inspections thereof, during regular
business hours, as they may reasonably request, and (iii) cause their officers
to furnish the Seller and the Company and their authorized representatives with
such financial and operating data and other information with respect to the
business, operations and properties of the Buyer and the Buyer Subsidiaries as
the Seller and the Company may from time to time reasonably request; provided,
however, that any such investigation shall be conducted in such a manner as not
to interfere unreasonably with the operation of the business of the Buyer and
the Buyer Subsidiaries.
(b) Between the date of this Agreement and the Closing Date the Seller will
and will cause the Company and the Company Subsidiaries to, (i) give the Buyer
and the Buyer Subsidiaries and their authorized representatives reasonable
access to all books, records, plants, offices, warehouses and other facilities
and properties of the Company, the Company Subsidiaries and the Business, and to
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reasonably permit the Buyer to make copies of such books and records, (ii)
permit the Buyer and the Buyer Subsidiaries and their authorized representatives
to make such inspections thereof, during regular business hours, as they may
reasonably request, and (iii) cause its officers to furnish the Buyer and the
Buyer Subsidiaries and their authorized representatives with the monthly
financial reporting package of the Company that is prepared for the Seller in
its ordinary practice and with such other financial and operating data and other
information with respect to the business, operations and properties of the
Company, the Company Subsidiaries and the Business as the Buyer and the Buyer
Subsidiaries may from time to time reasonably request; provided, however, that
any such investigation shall be conducted in such manner as not to interfere
unreasonably with the operation of the business of the Seller, the Company and
the Company Subsidiaries.
(c) Notwithstanding (a) and (b) above, the Buyer, the Buyer Subsidiaries,
the Seller, the Seller Subsidiaries, the Company and the Company Subsidiaries
shall not be obligated to furnish information if, in the opinion of counsel,
such furnishing of information would be reasonably likely to violate the law.
(d) Between the date of this Agreement and the Closing Date (or, if this
Agreement terminates pursuant to Section 7.1 or otherwise, for three years from
the date hereof), the Buyer will hold and will cause the Buyer Subsidiaries and
their respective officers, directors, employees, representatives, consultants
and advisors to hold and the Seller will hold and will cause the Seller
Subsidiaries, the Company and the Company Subsidiaries and their respective
officers, directors, employees, representatives, consultants and advisors to
hold in strict confidence in accordance with the terms of the Confidentiality
Agreement, dated January 29, 1992, between the Buyer and the Seller (the
"Confidentiality Agreement"), all documents and information furnished to each
other and their representatives, consultants or advisors in connection with the
transactions contemplated by this Agreement; provided, however, that the Buyer
shall not be required hereunder to hold in strict confidence such documents and
information that relate solely to the operation of the Company, the Company
Subsidiaries or the Business. The Confidentiality Agreement will terminate on
the Closing Date.
5.5 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Without limiting the foregoing, the Buyer agrees to use its reasonable best
efforts to, as promptly as practicable, (a) prepare and file with the SEC the
Proxy Statement, respond to the comments (if any) of the staff of the SEC with
respect thereto, and mail to the shareholders of the Buyer the definitive Proxy
Statement, which Proxy Statement shall contain the recommendation of the Board
of Directors of the Buyer to the Buyer's shareholders regarding the transactions
contemplated by this Agreement, and (b) take such actions as may be required to
cause, prior to the Closing Date, the Equity Consideration to be received by the
Seller pursuant to this Agreement to be eligible for quotation on the NASDAQ
National Market System (subject to official notice of issuance). The Seller
shall use its reasonable best efforts (i) to provide to the Buyer all
information about the Seller, the Seller Subsidiaries, the Company or the
Company Subsidiaries (including without limitation the Company Financial
Statements and any other financial statements of the Company and the Company
Subsidiaries) required to be included or incorporated by reference in the Proxy
Statement and (ii) otherwise to cooperate with the Buyer in taking the actions
described in the preceding sentence.
5.6 Consents; Filings.
(a) Each of the parties hereto will use its reasonable best efforts to
obtain consents of all Persons necessary for the consummation of the
transactions contemplated by this Agreement.
(b) Each of the parties hereto will use its reasonable best efforts to file
expeditiously the appropriate German pre-merger filings. The Buyer and the
Seller will make all such other filings, notifications and requests for consent,
approval or permission that may be required by statute, regulation or judicial
decree in connection with the transactions contemplated by this Agreement and
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will cooperate in providing each other or their respective outside counsel any
information, including reasonable access to knowledgeable individuals, necessary
in connection therewith. The Buyer and the Seller shall, upon the request of any
Governmental Entity, supply such agency with any additional requested
information as expeditiously as is reasonably possible, and shall use their
reasonable best efforts to cause the satisfaction or termination of the
applicable waiting period under German pre-merger notification laws. The Buyer
and the Seller shall use their reasonable best efforts to resolve as promptly as
practicable any concern on the part of any Governmental Entity regarding the
legality of the transactions contemplated hereby, but shall not be required to
divest any assets, significantly change the conduct of the business currently
conducted by the Buyer, the Seller or the Company or otherwise materially
restrict the future business activities of the Buyer, the Seller or the Company.
5.7 Shareholder Meeting. The Buyer shall duly call, give notice of,
convene and hold a meeting of its shareholders as promptly as practicable for
the purpose of adopting and approving this Agreement and the transactions
contemplated hereby (including, without limitation, adopting and approving (i)
an amendment to the Buyer's Articles of Organization providing that the number
of authorized shares of Buyer Common Stock be increased to 70,000,000 (the
"Authorized Shares Amendment"), (ii) the issuance of the Equity Consideration,
and (iii) the Fair Price Charter Amendment and for such other purposes as may be
necessary or desirable to effectuate the transactions contemplated by this
Agreement. The Buyer shall use its reasonable best efforts to obtain the
agreement of its Affiliates to vote all shares of Buyer Common Stock
beneficially owned by each such Affiliate in favor of the matters presented to
the Buyer's shareholders in connection with the transactions contemplated by
this Agreement.
5.8 Amendment to Articles of Organization and By-Laws. As promptly as
practicable following adoption of the Authorized Shares Amendment and the Fair
Price Charter Amendment by the requisite affirmative vote of the Buyer's
shareholders but prior to Closing, the Buyer shall file with the Secretary of
the Commonwealth of Massachusetts articles of amendment, duly signed in
accordance with the Massachusetts Business Corporation Law setting forth the
Authorized Shares Amendment, the Fair Price Charter Amendment, and the due
adoption thereof. Prior to Closing, the Board of Directors shall adopt and
approve the amendment to the Buyer's By-laws in the form attached hereto as
Annex VI (the "Control Share Acquisitions Amendment").
5.9 Rights Agreement.. As promptly as practicable following the approval
and adoption of the Amended and Restated Rights Agreement in the form attached
hereto as Annex VII (the "Rights Agreement") by the Buyer's Board of Directors
but prior to the Closing, the Buyer shall execute and deliver the Rights
Agreement.
5.10 Brokers or Finders. Each of the Buyer and the Seller represents, as
to itself, its subsidiaries and its Affiliates, that no agent, broker,
investment banker, financial advisor or other firm or Person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement,
except Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ("DLJ") and Shearson
Xxxxxx Brothers, Inc. ("Shearson"), whose fees and expenses, if any, will be
paid by the Buyer in accordance with the Buyer's agreement with DLJ or Shearson,
and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") and The
First Boston Corporation ("First Boston"), whose fees and expenses, if any, will
be paid by the Seller in accordance with the Seller's agreement with Xxxxxxx
Xxxxx or First Boston; and the Buyer and the Seller each agree to indemnify and
hold the other harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any Person on the basis of any act or statement alleged to have been made by or
on behalf of such party.
5.11 Fees and Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses; provided, however, that in no event shall
such expenses be paid by the Company or the Company Subsidiaries.
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5.12 Employee Benefits.
(a) The following terms, as used in this Agreement, have the following
meanings:
"Buyer Benefit Arrangement" means any employment, severance or similar
contract, arrangement or policy, or any plan or arrangement (whether or not
written) providing for severance benefits, insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation rights, fringe benefits, perquisites or other forms of compensation
or post-retirement insurance, compensation benefits that (i) is not a Buyer
Employee Plan, (ii) is entered into or maintained, as the case may be, by the
Buyer or any of its Affiliates, and (iii) covers any individual employed or
formerly employed, as the case may be, by the Buyer or a subsidiary or Affiliate
of the Buyer.
"Buyer Employee Plan" means any "employee benefit plan", as defined in
Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is
maintained, administered or contributed to by the Buyer or any of its
Affiliates, and (iii) covers any individual employed or formerly employed by the
Buyer or a subsidiary or Affiliate of the Buyer.
"Buyer International Plan" means any employment, severance or similar
contract, arrangement or policy (exclusive of any such contract which is
terminable within thirty days without liability of the Buyer or any of its
Affiliates), or any plan or arrangement providing for severance, insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
pension or retirement benefits or for deferred compensation, profit sharing,
bonuses, stock options, stock appreciation rights, fringe benefits, perquisites
or other forms of compensation or post-retirement insurance, compensation or
benefits that (i) is not a Buyer Employee Plan or a Buyer Benefit Arrangement,
(ii) is maintained or contributed to by the Buyer or any of its Affiliates, and
(iii) covers any individual employed or formerly employed or by the Buyer or a
subsidiary or Affiliate of the Buyer outside the United States.
"COBRA" means Part 6 of Title I of ERISA and Section 4980B of the Code.
"Company Domestic Retirement and Savings Plans" shall mean the Seller
Employee Plans which are included in the definition of "employee pension benefit
plan" as defined in Section 3(2) of ERISA.
"Controlled Group Liability" means any and all liabilities under (i) Title
IV of ERISA, (ii) section 302 of ERISA, (iii) sections 412 and 4971 of the Code,
(iv) the continuation coverage requirements of section 601 et seq. of ERISA and
section 4980B of the Code and (v) corresponding or similar provisions of foreign
laws or regulations.
"Employee" means any individual who, on the Closing Date, is employed in
the Business in any active or inactive status and whose current employment in
the Business has not been terminated and, if applicable, any beneficiary
thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, and the rules and regulations
promulgated thereunder.
"Former Employee" means any individual employed in the Business by the
Seller or any of its Affiliates and whose employment has been terminated prior
to the Closing Date (and, if applicable, any beneficiary thereof), excluding any
individuals subsequently employed by the Seller or any of its Affiliates outside
of the Business.
"Multiemployer Plan" means each Employee Plan that is a multiemployer plan,
as defined in Section 3(37) of ERISA.
"Related Person" of any Person means any other Person which, together with
such Person, would or at any time has been treated as a single employer with
either the Buyer or the Seller (as appropriate), the Company or any Affiliate
under Section 414 of the Code.
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"Seller Benefit Arrangement" means any employment, severance or similar
contract, arrangement or policy, or any plan or arrangement (whether or not
written) providing for severance benefits, insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation rights, fringe benefits, perquisites or other forms of compensation
or post-retirement insurance, compensation benefits that (i) is not a Seller
Employee Plan, (ii) is entered into or maintained, as the case may be, by the
Seller or any of its Affiliates, and (iii) covers any individual employed or
formerly employed, as the case may be, in the Business in the United States.
"Seller Employee Plan" means any "employee benefit plan", as defined in
Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is
maintained, administered or contributed to by the Seller or any of its
Affiliates, and (iii) covers any individual employed or formerly employed in the
Business.
"Seller International Plan" means any employment, severance or similar
contract, arrangement or policy (exclusive of any such contract which is
terminable within thirty days without liability of the Seller or any of its
Affiliates), or any plan or arrangement providing for severance, insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
pension or retirement benefits or for deferred compensation, profit sharing,
bonuses, stock options, stock appreciation rights, fringe benefits, perquisites
or other forms of compensation or post-retirement insurance, compensation or
benefits that (i) is not a Seller Employee Plan or a Seller Benefit Arrangement,
(ii) is maintained or contributed to by the Seller or any of its Affiliates and
(iii) covers any individual employed or formerly employed outside the United
States in the Business.
"Seller U.K. Pension Plan" shall mean the Cameron Iron Works Retirement
Benefits Scheme (1974).
"Title IV Plan" means an Employee Plan, other than any Multiemployer Plan,
subject to Title IV of ERISA.
(b) As of the Closing Date each Employee will continue as an employee of
the Company in the same status and at the same salary or wage and benefit levels
as provided to such Employee on the Closing Date by the Company; provided that,
nothing herein shall prevent the Buyer from altering such salary, wage and
benefit levels or terminating the employment of any Employee after the Closing
Date.
(c) Prior to the Closing Date, the Buyer shall establish a plan or plans
which are substantially similar in all material respects to the Company Domestic
Retirement and Savings Plans. The Buyer reserves the right to amend or terminate
such plans at any time after the Closing Date. Such plan or plans shall provide
credit for the service earned in each of the Company Domestic Retirement and
Savings Plans for purposes of eligibility (including for early retirement
subsidies and disability benefits) and vesting. Such plan or plans shall also
provide credit for benefit accrual purposes from the Closing Date forward.
Benefit accruals shall cease under the Company Domestic Retirement and Savings
Plans as of the Closing Date for all Employees. Service on and after the Closing
Date with the Buyer or any Affiliate, subsidiary or successor of the Buyer shall
be credited under each Company Domestic Retirement and Savings Plan which is not
a Section 401(k) plan solely for the purposes of eligibility (including for
early retirement subsidies and disability benefits) and vesting. Employees shall
not be considered terminated or retired by the Seller under the Domestic
Retirement and Savings Plans until they are no longer being credited with
service for purposes of eligibility (including for early retirement subsidies
and disability benefits) and vesting. The Seller shall take all necessary steps
to remove the Company as sponsoring employer or a participating employer of the
Domestic Retirement and Savings Plans as of the Closing Date. The Seller shall
retain all assets and liabilities associated with each Domestic Retirement and
Savings Plan which is not a Section 401(k) plan. As soon as practicable after
the Closing Date, Seller shall cause the trustee of each of the Domestic
Retirement and Savings Plans which are Section 401 (k) plans (each, a "401 (k)
Plan") to segregate or otherwise
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identify the assets of such 401 (k) plan and related trust agreements and make
any and all filings and submissions to the appropriate governmental agencies
arising in connection with the transfer of assets as described below. The manner
in which the account balances of Employees under each 401 (k) Plan are invested
shall not be affected by such segregation or identification of assets. As soon
as practicable after the Closing Date, Buyer shall establish or designate profit
sharing plans with a salary reduction 401 (k) feature for the benefit of
Employees (such Buyer plans, the "Successor Individual Account Plans"), shall
take all necessary action, if any, to qualify the Successor Individual Account
Plans under the applicable provisions of the Code and shall make any and all
filings and submissions to the appropriate governmental agencies required to be
made by it in connection with the transfer of assets described below. The
successor Individual Account Plans shall include loan and in-service withdrawal
provisions substantially similar to those of such 401 (k) Plans. As soon as
practicable after the Closing Date, but not earlier than (i) thirty (30) days
after the filing of all necessary governmental forms and (ii) the receipt of a
favorable determination letter with respect to the qualification of each of the
Successor Individual Account Plans or the receipt of an opinion of counsel
acceptable to the Buyer and the Seller regarding such qualified status, Seller
shall cause the transfer of the entire account balance (which account balances
will have been credited with any employer contribution for the current Plan year
to which the applicable Employee is entitled under the terms of such 401 (k)
Plan) to the appropriate trustee as designated by Buyer under the trust
agreement forming a part of the Successor Individual Account Plans. The assets
to be transferred shall be in the form of cash, common stock of the Seller or
preferred stock of the Seller, as determined by Seller. The transfer of assets
to the Successor Individual Account Plans described herein shall each satisfy
the requirements of the Code. In consideration for the transfer of assets
described herein, Buyer shall, effective as of the date of transfer described
herein, assume all of the obligations of Seller and any of its Affiliates in
respect of the transferred account balances for the Employees under the 401 (k)
Plans (exclusive of any portion of such account balances which are paid or
otherwise withdrawn prior to the date of transfer described herein). Neither
Buyer nor any of its Affiliates shall assume any other obligations or
liabilities arising under or attributable to the 401 (k) Plans. The Buyer, the
Company and their Affiliates shall indemnify and hold the Seller and its
Affiliates harmless against all obligations and liabilities arising out of or
relating to the maintenance of any plan it establishes pursuant to the
provisions of this Section 5.12(c). Notwithstanding any other provision
contained in this Agreement to the contrary, in the event the Buyer, the
Company, or their Affiliates modify or terminate any plan it establishes
pursuant to the provisions of this Section 5.12(c), the Buyer, the Company and
their Affiliates indemnify and shall hold the Seller and its Affiliates harmless
against any increase in the obligations or liabilities of the Seller and its
Affiliates that arise out of or relating to such modification or termination.
(d) The Buyer shall procure (or shall procure that the U.K. Sub procures)
that:
(i) on or before the Closing Date it establishes a retirement benefit
scheme which is approved or is capable of exempt approval under Chapter I
of Part XIV of the Income and Corporation Taxes Act 1988 ("the New Plan")
for the benefit of the employees of the U.K. Sub and that such employees
are offered membership of the New Plan with effect from the Closing Date;
(ii) the benefits to be provided by the New Plan for the employees of
the U.K. Sub shall be substantially similar in all material respects to
those provided under the Seller U.K. Pension Plan (details of which have
been disclosed) as of the Closing Date (for purposes of this paragraph
5.12(d)(ii), "substantially similar" shall mean that any differences
between the New Plan and the Seller U.K. Pension Plan shall not constitute
a change to any Employee's contract of employment); and
(iii) for the purpose of vesting benefits in the New Plan in respect
of those employees of the U.K. Sub who have not at the Closing Date
qualified for preserved benefits under the Seller U.K. Pension Plan, the
New Plan will recognize the period of pensionable service such employees
have accrued under the Seller U.K. Pension Plan to the intent that they
shall qualify for preserved benefits on the date that they would have done
had their pensionable service under the Seller U.K. Pension Plan not ceased
as a consequence of this Agreement. In the case of those employees of
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the U.K. Sub who already qualify for preserved benefits under the Seller
U.K. Pension Plan the New Plan shall contain provisions which immediately
vest the accrual of their benefits after the Closing Date in the New Plan.
Buyer reserves the right to modify or terminate the New Plan at any time or
from time to time after Closing Date.
(e) The Seller shall procure that in respect of those employees of the U.K.
Sub who have not at the Closing Date qualified for preserved benefits under the
Seller's UK pension Plan such persons will each be offered the opportunity of
electing for a deferred vested benefit in accordance with the provisions of
Rules 12(b) of the Consolidating Trust Deed and rules of the Seller's UK Pension
Plan dated 13 December 1993 (therein described "Discretionary award of Short
Service Benefit in relation to Non Qualifying Members") as an alternative to
receiving a refund of member contributions to which he or she may be entitled
under the terms of the Seller UK Pension Plan as at the Closing Date.
(f) Except for liabilities or obligations arising under the Company
Domestic Retirement and Savings Plans (but not including liabilities or
obligations transferred to plans designated by Buyer in accordance with
paragraph 5.12(c)), the Seller U.K. Pension Plan, the 1993 ESPP and any Seller
Benefit Arrangement providing for the issuance of Seller Stock ("Seller Stock
Plans") as of the Closing Date the Company shall retain, or the Buyer shall
assume, all liabilities or other obligations associated with the Seller Employee
Plans, the Seller Benefit Arrangements and the Seller International Plan for or
attributable to any Employee or Former Employee.
(g) Except for liabilities or obligations arising under the Company
Domestic Retirement and Savings Plans, the Seller U.K. Pension Plan, the 1993
ESPP and the Seller Stock Plans (i) the Buyer, the Company and their Affiliates
shall indemnify and hold the Seller and its Affiliates harmless against
liabilities or obligations arising under the Seller Employee Plans, Seller
Benefit Arrangements and Seller International Plans in respect of any Employee
or Former Employee (including any beneficiary or dependent thereof) and all
obligations and liabilities arising out of or relating to the employment of any
Employee or Former Employee by the Company before or after the Closing other
than obligations and liabilities expressly retained by the Seller pursuant to
this Section 5.12 and (ii) without limiting the generality of the foregoing, the
Company, the Buyer and their Affiliates shall assume, be solely responsible for,
and shall hold the Seller and its Affiliates harmless against, any claims for
workers compensation, medical benefits, life insurance, or other insured or
uninsured welfare benefits of any kind incurred by any Employee or Former
Employee or beneficiary thereof. The Company shall, as of the Closing Date,
assume and retain, and hold the Seller and its Affiliates harmless against, all
obligations and liabilities of the Company and its Affiliates to provide
post-retirement health benefits to any Employee or Former Employee. Seller
hereby indemnifies Buyer and its Affiliates against and agrees to hold each of
them harmless from any and all damage, loss, liability and expense (including,
without limitation, reasonable expenses of investigation and reasonable attorney
fees and expenses) incurred or suffered by Buyer or any of its Affiliates
(including the Company) as a result of, arising out of or relating to (I) the
imposition of any Controlled Group Liability with respect to any employee
benefit plan (as that term is defined in Section 3(3) of ERISA (whether or not
such plan is subject to ERISA)) or arrangement currently or previously
maintained or contributed to by Seller, the Company or any ERISA Affiliate of
Seller or the Company at any time or to which Seller or any Related Person had
or has an obligation to contribute at any time, other than any Seller Employee
Plan, Seller Benefit Arrangement or Seller International Plan to the extent
maintained for the benefit of Employees or Former Employees of the Company and
its Subsidiaries or (II) the Company Domestic Retirement and Savings Plans and
the Seller U.K. Pension Plan.
(h) The Company shall be responsible for continuation coverage requirements
under Section 4980B of the Code for "qualifying events" (within the meaning of
4980B(f)(3) of the Code) with respect to any Employee or Former Employee.
(i) After the Closing, the Buyer shall cause the Company and the Company
Subsidiaries to comply with their collective bargaining obligations.
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(j) Certain Employees as of July 1, 1993 (including certain Former
Employees who became so since July 1, 1993) are participating in the 1993
Offering to the Seller's employees ("ESPP Participants") under the Seller's
Employee Stock Purchase Plan (the "1993 ESPP"), a payroll deduction stock
purchase plan under which options were granted on July 1, 1993, to purchase
shares of Seller common stock on September 8, 1995, and the related payroll
administration is being conducted by the Company in accordance with the Seller's
1993 ESPP standard administration manual. On or before the Closing Date, the
Seller will cause the 1993 ESPP to be continued subsequent to the Closing Date
for all ESPP Participants who become employed by the Buyer on the Closing Date
and the Seller undertakes to cause shares to be issued, and to pay interest on
payroll deposits from and after the Closing Date, all in accordance with the
1993 ESPP, to the ESPP Participants who continue in the 1993 ESPP. The Buyer
agrees to continue, or cause to be continued, the payroll administration related
to such continued participation in the 1993 ESPP, promptly forwarding all cash
withholdings to the Seller with appropriate records. The Seller has the right to
refrain from issuing any of the shares under the 1993 ESPP to any
then-participating ESPP Participant until the Buyer has remitted to the Seller
the amount of any payroll deduction due on behalf of such participant. Except as
provided in this Section , the Buyer shall not have any obligation to continue
the 1993 ESPP after the Closing Date and shall have no obligation to offer any
other stock purchase plan to Employees. Except for any damage, loss, liability
or expense (including, without limitation, reasonable expenses of investigation
and reasonable attorney fees and expenses) which is the result of, arises from
or relates to the gross negligence or willful misconduct of Buyer or the
Company, or their affiliates and subsidiaries, with respect to their compliance
with the provisions of this Section 5.12(j), Seller hereby indemnifies Buyer and
its Affiliates against and agrees to hold each of them harmless from any and all
damage, loss, liability and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorney fees and expenses) incurred or
suffered by Buyer or any of its Affiliates (including the Company) as a result
of, arising out of or relating to the 1993 ESPP and the Seller Stock Plans.
5.13 Public Announcements. Neither the Buyer nor the Seller will issue
any press release or otherwise make any public statement with respect to the
transactions contemplated hereby without the other party's prior consent, except
as required by law or stock exchange or NASDAQ rules or regulations.
5.14 Use of the Company Name.
(a) Except as provided in this Section 5.14, no interest in or right to use
the "Cameron" name is being conveyed pursuant to this Agreement, and following
the Closing Date the Buyer, the Company and the Company Subsidiaries shall not
use the "Cameron" name in any manner in connection with their businesses or
operations, provided, however, the Buyer, the Company and the Company
Subsidiaries shall have the right (i) to use the name "Cameron Forged Products"
in conjunction with the name "Xxxxx-Xxxxxx Company" for three years following
the Closing Date, and (ii) to dispose of or consume existing inventory,
stationery, promotional or advertising literature, labels, office forms and
packaging materials (other than that which relates to oil field equipment
forgings) which may be labeled with the "Cameron" name for up to six months
following the Closing Date.
(b) Immediately following the Closing, the Buyer shall cause the Company to
file with the office of the Secretary of State of the State of Delaware all
documents necessary to change the name of the Company to a name reasonably
satisfactory to the Seller. Pending the effectiveness of the Company's name
change, the Buyer shall file all necessary documentation with the appropriate
Governmental Entities to evidence its doing business as an entity using a name
other than "Cameron Forged Products Company". The Buyer shall take the
equivalent action with respect to such name in any other jurisdiction where it
has been or is used.
5.15 Company Books and Records. For a period of eight years after the
Closing Date, the Buyer shall, or shall cause the Company, the Company
Subsidiaries and their successors and assigns, to (i) retain and, as reasonably
requested, permit the Seller and its employees or agents to inspect and copy all
books and records of the Company or any Company Subsidiary which relate to the
period
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prior to the Closing Date and (ii) cooperate in arranging discussions with (and
the calling as witnesses) officers, directors, employees and agents of the
Company, the Company Subsidiaries and their successors and assigns, on matters
which relate to the Company or the Company Subsidiaries with respect to the
period prior to the Closing Date.
5.16 Disclosure Supplements. Prior to the Closing Date, the Buyer will,
by giving written notice to the Seller, supplement or amend the Buyer Disclosure
Schedule with respect to any matters hereinafter arising which, if existing or
occurring at or prior to the date of this Agreement, would have been required to
be set forth or described in the Buyer Disclosure Schedule or which is necessary
to correct any information in the Buyer Disclosure Schedule or in any
representation and warranty of the Buyer which has been rendered inaccurate
thereby. Prior to the Closing Date, the Seller will, by giving written notice to
the Buyer, supplement or amend the Seller Disclosure Schedule with respect to
any matters hereafter arising which, if existing or occurring at or prior to the
date of this Agreement, would have been required to be set forth or described in
the Seller Disclosure Schedule or which is necessary to correct any information
in the Seller Disclosure Schedule or in any representation and warranty of the
Seller which has been rendered inaccurate thereby. For purposes of determining
the accuracy of the representations and warranties of the Seller contained in
Article III and the accuracy of the representations and warranties of the Buyer
contained in Article IV in order to determine the fulfillment of the conditions
set forth in Sections 6.2 and 6.3 , respectively, the Buyer Disclosure Schedule
and the Seller Disclosure Schedule shall be deemed to include only that
information contained therein on the date of this Agreement and shall be deemed
to exclude any information contained in any subsequent supplement or amendment
thereto.
5.17 Ancillary Agreements.
(a) As promptly as practicable after the date hereof, the Buyer and the
Seller will negotiate in good faith the terms of the following agreements
(collectively the "Ancillary Agreements"):
(i) a lease agreement pursuant to which the Buyer or the U.K. Sub will
lease space and certain oil tool equipment to the Seller or an Affiliate of
the Seller at the Livingston, Scotland facility;
(ii) a lease agreement pursuant to which the Seller or a Seller
Subsidiary will lease space and certain equipment to the Company or an
Affiliate of the Buyer at the Katy Road Site;
(iii) a supply agreement pursuant to which the Buyer will cause the
Company to supply forgings to the Seller or an Affiliate of the Seller;
(iv) a license agreement pursuant to which the Seller will grant to
the Company a non-exclusive license to make and sell certain products
covered by the Seller's hot isostatic pressing patents;
(v) a license agreement pursuant to which the Seller will grant to the
Company a non-exclusive license to make and sell to RMI Titanium Company
certain forgings to be used in a titanium riser covered by the Seller's
patent therefor;
(vi) a computer services agreement pursuant to which the Seller will
permit the Company to continue to use the Seller's Xxxxxx Oil Tool
computer; and
(vii) an agreement providing for the Seller to factor the Company's
receivables (the "Factoring Agreement").
(b) The Ancillary Agreements will include the terms set forth in the term
sheets appearing as Annex VIII hereto, and such other terms to which the parties
may agree in writing.
5.18 WARN Act. The Buyer agrees to indemnify, defend and hold harmless
the Seller, its present or former officers and directors, agents and Affiliates,
against any claims, damages, wages, fines, penalties and expenses, including
attorneys' fees, arising from the failure to comply with the Worker Adjustment
and Retraining Notification Act (the "WARN Act") arising from or relating to a
"plant
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closing" or "mass layoff" (as those terms are defined in the WARN Act) by the
Company occurring on or after the Closing Date.
5.19 Taxes.
(a) With respect to Seller's sale of the Company Common Stock hereunder, if
Seller gives Buyer written notice within 30 days after the Closing Date
("Seller's Notice"), Seller and Buyer shall jointly make each available Section
338(h)(10) Election in accordance with applicable Tax Laws and as set forth
herein, provided that Seller does not own, and is not deemed to own, and as a
result of the transactions contemplated by this Agreement will not own and will
not be deemed to own, fifty percent (50%) or more of Buyer's issued and
outstanding common stock. If the Section 338(h)(10) Election is to be made,
Seller and Buyer will supply in advance to one another copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) to be sent or made by Buyer or Seller or their respective
representatives to or with the Internal Revenue Service relating to such
election. Buyer and Seller agree to report the transfers under this Agreement
consistent with such Section 338(h)(10) Election, and shall take no position or
action contrary thereto (unless required to do so by applicable Tax Laws or an
administrative settlement with Tax Authorities), including but not limited to
any dissolution, merger, consolidation, or liquidation of the Company into the
Buyer for a period of two years following the Closing Date without the prior
written consent of the Seller, which consent may be withheld in its sole
discretion. If the Section 338(h)(10) Election is to be made, Seller agrees to
cause the Company and the Company Subsidiaries to recognize the gain, and to pay
all tax on such gain, with respect to any intangible asset deemed sold pursuant
to such election to the extent necessary to enable Buyer, the Company and the
Company Subsidiaries to amortize such intangible asset pursuant to the
provisions of Section 197 of the Code.
(b) Buyer and Seller shall be jointly responsible for the preparation and
filing of all Section 338 Forms in accordance with applicable Tax Laws and the
terms of this Agreement, and each party shall deliver to the other party such
Forms and related documents at least 30 days prior to the date such Section 338
Forms as are required to be filed under applicable Tax Laws.
(c) The parties hereby agree that, for purposes of the allocation of the
Aggregate Deemed Sale Price ("ADSP") (as defined under applicable Treasury
Regulations), the fair market value of the machinery and equipment, dies, land
and buildings of the U.K. Sub is $24,415,000, and the fair market value of the
remaining assets of the U.K. Sub is at net book value.
(d) Seller shall be liable for, shall pay and shall indemnify and hold
Buyer and the Company and the Company Subsidiaries harmless against all Taxes of
the Company and the Company Subsidiaries for any taxable year or taxable period
ending on or before the Closing Date, including, without limitation, any Taxes
resulting from the making of the Section 338(h)(10) Election and any liability
for Taxes pursuant to Treasury Regulation sec. 1.1502-6. All liabilities and
obligations between the Company and the Company Subsidiaries on the one hand,
and the Seller and any of Seller's Affiliates on the other hand, under any tax
allocation agreement or arrangement in effect on or prior to the Closing Date
(other than this Agreement or as set forth herein) shall cease to exist as of
the date hereof.
(e) Buyer shall be liable for, shall pay and shall indemnify and hold
Seller harmless against, any and all Taxes of the Company and the Company
Subsidiaries for any taxable year or taxable period commencing after the Closing
Date.
(f) Any Taxes for a taxable period beginning before the Closing Date and
ending after the Closing Date (the "Straddle Period") with respect to the
Company or any Company Subsidiary shall be apportioned between Seller and Buyer
based on the actual operations of the Company or the Company Subsidiary, as the
case may be, during the portion of such period ending on the Closing Date (the
"Pre-Closing Straddle Period") and the portion of such period beginning on the
date following the Closing Date, and for purposes of Sections 5.19(d) and
5.19(e), each portion of such period shall be deemed to be a taxable period.
With respect to any Taxes for the Straddle Period, at least thirty days prior to
the due date for the payment of such Taxes, Buyer shall present Seller with a
schedule detailing the
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computation of the Pre-Closing Straddle Period Tax; and within ten days after
Buyer presents Seller with such schedule, Seller shall pay the Company the
amount of the Pre-Closing Straddle Period Tax as computed by Buyer. In the event
Seller disputes Buyer's computation of the Pre-Closing Straddle Period Tax,
Seller shall not be relieved of its obligation to pay, in the first instance,
any such disputed amount. Whether any such disputed amount was in fact due from
Seller shall be resolved in accordance with Section 5.19(m). If upon such
resolution it is determined that any of such disputed amount was not payable to
Buyer and such amount has been paid to Buyer, then Buyer shall refund to Seller
such amount, plus interest at the rate required to be paid under Section 6621 of
the Code.
(g) Seller shall (x) prepare and file all Federal income Tax and unitary
state Tax returns for the Company and the Company Subsidiaries with respect to
all periods, or partial periods, ending on or prior to the Closing Date
(including all tax returns, reports and forms relating thereto which are due
after the Closing Date) and (y) prepare and file or cause the Company and the
Company Subsidiaries to prepare and file all other Tax returns, reports and
forms for the Company which are due prior to the Closing Date, and shall pay all
Taxes with respect to clause (x) and at the time of such filing shall pay or
shall cause the Company or the Company Subsidiaries to pay all Taxes with
respect to clause (y). To the extent requested by Seller, the Company and the
Company Subsidiaries shall participate in the filing of and shall file any
required Tax returns with respect to any period ending on or prior to the
Closing Date. Buyer shall prepare or cause to be prepared the schedules in
respect of the Company and the Company Subsidiaries containing the information
necessary for Seller to prepare any consolidated or combined returns.
(h) Buyer or the Company and the Company Subsidiaries shall prepare and
file all state and local Tax returns, forms and reports, other than returns with
respect to unitary state Taxes, for the Company and the Company Subsidiaries
with respect to any tax period for which such return, form or report is due
after the Closing Date, and shall remit all Taxes with respect thereto and shall
be free to make, or cause to be made, any tax elections in respect of such Taxes
and to claim any deductions or credits, in connection therewith; provided that
all returns filed by Buyer or the Company and the Company Subsidiaries for any
period beginning prior to the Closing Date shall be prepared by Buyer, or the
Company and the Company Subsidiaries, in a manner consistent with the Company's
and the Company's Subsidiaries prior practices, except for changes necessary to
comply with changes in Law.
(i) Seller shall have exclusive control over any dispute relating to any
Tax liability or return of Seller or any Affiliate of Seller (including the
Company and the Company Subsidiaries for periods prior to the Closing Date)
filed by Seller for or with respect to any period, or partial period, ending on
or prior to the Closing Date, provided that Seller shall keep Buyer currently
informed of the progress of any such dispute. In the event that the Section
338(h)(10) Election is not made, Buyer shall be entitled to participate in any
such dispute at its own expense to the extent the same relate to the Company or
any Company Subsidiary; and Seller, with the consent of Buyer, which will not be
unreasonably withheld, may settle any or all such disputes, accept any
determination as final, pay any Tax claim or take such other action to contest
or concede any Tax claimed. If Buyer shall withhold its consent to any action
desired to be taken by Seller in connection with any such dispute, (x) Buyer
shall be responsible for, and shall indemnify and hold Seller and its Affiliates
harmless from and against, any Taxes required to be paid by Seller in connection
therewith in excess of the amount which Seller would otherwise have paid if
Buyer's consent had not been so withheld, (y) Buyer shall thereafter control the
content of all submissions made by Seller to any administrative or judicial
authority to the extent they relate to the Company and (z) (i) if such dispute
involves issues other than those relating solely to the Company or the Company
Subsidiaries, Seller shall control all other aspects of such dispute, or (ii) if
such dispute involves only issues relating solely to the Company or the Company
Subsidiaries, Buyer shall thereafter control such dispute. Buyer shall cooperate
and shall cause its Affiliates to cooperate with Seller and its Affiliates in
connection with any and all such disputes and will execute all lawful, true and
correct powers-of-attorney, affidavits, and other papers necessary in connection
therewith, and will provide Seller reasonable access during normal business
hours to the employees and business,
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financial and Tax records or other similar information of the Company and the
Company Subsidiaries to the extent relating to such dispute.
(j) Buyer and the Company shall have exclusive control over any dispute
relating to any Tax liability or return of Buyer or the Company or any Company
Subsidiary filed for or with respect to any tax period for which a return is due
after the Closing Date (other than Federal income Taxes and unitary state Taxes
relating to periods or partial periods ending on or prior to the Closing Date).
Seller and its Affiliates shall cooperate with Buyer and its Affiliates in
connection with any and all such disputes and will execute all lawful, true and
correct powers-of-attorney, affidavits, and other papers necessary in connection
therewith, and will provide Buyer, the Company and the Company Subsidiaries
reasonable access during normal business hours to the employees and business,
financial and Tax records or other similar information of Seller and its
Affiliates to the extent relating to such dispute.
(k) Buyer shall cause the Company and the Company Subsidiaries to elect,
where permitted by law, to carryforward any net operating loss, net capital
loss, charitable contribution or other item arising after the Closing Date that
could, in the absence of such an election (collectively, "Carrybacks"), be
carried back to a taxable period of the Company or the Company Subsidiaries
ending on or before the Closing Date in which the Company or the Company
Subsidiaries filed a consolidated, combined or unitary tax return with Seller or
any of Seller's Affiliates. Buyer, on its own behalf and on behalf of its tax
Affiliates, hereby waives any right to use or apply any net operating loss, net
capital loss, charitable contribution or other item of the Company for any tax
year ending on any date following the Closing Date to part or all of the period
prior to the Closing Date.
(l) As soon as practicable, but in any event within 15 days after Seller's
or Buyer's request, as the case may be, Buyer shall deliver to Seller, or Seller
shall deliver to Buyer, as the case may be, such information and other data
relating to the Tax returns and Taxes of the Company and shall make available
such knowledgeable employees of Seller, Buyer, the Company or any of their
Affiliates, as the case may be, as Seller or Buyer, as the case may be, may
reasonably request, including providing the information and other data
customarily required by Seller or Buyer, as the case may be, to cause the
completion and filing of all Tax returns for which it has responsibility or
liability under this Agreement or to respond to audits by any Taxing Authority
with respect to any Tax returns or Taxes for which it has any responsibility or
liability under this Agreement or to otherwise enable Seller or Buyer, as the
case may be, to satisfy its accounting or tax requirements.
(m) If Seller and Buyer disagree as to the amount of Taxes for which either
of them is liable to the other under this Section 5.19, Seller and Buyer shall
promptly consult each other in an effort to resolve such dispute. If any such
point of disagreement cannot be resolved within 15 days of the date of
consultation, Seller and Buyer shall within ten days after such 15-day period
jointly select a firm of nationally recognized independent public accountants
who has not represented either Buyer or Seller for three years prior to the date
of the dispute (the "Neutral Auditors") to act as an arbitrator to resolve all
points of disagreement concerning tax accounting matters with respect to this
Agreement. If the parties cannot agree on the selection of the Neutral Auditors
within such ten-day period, then such Neutral Auditors shall be selected by the
American Arbitration Association. All fees and expenses relating to the work
performed by the arbitrator in accordance with this Section 5.19(m) shall be
borne equally by Seller and Buyer.
(n) Seller and Buyer shall (x) each give the other prompt written notice of
the receipt of any claim by any taxing authority that, if successful, may result
in an indemnity payment pursuant to this Section 5.19 and (y) each transmit to
the other a written description reasonably detailing the nature of the claim, a
copy of all papers served with respect to such claim and the basis of its claim
for indemnification under this Section 5.19.
(o) Seller will not allow the Company or any Company Subsidiary to elect to
be excluded from any consolidated federal income tax return of the Seller and
its Affiliates with respect to which it is otherwise includible on account of
any taxable period, whether of 30 days or less or otherwise.
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(p) For purposes of this Agreement, the following terms shall have the
following meanings:
(i) "Code" means the Internal Revenue Code of 1986, as amended.
(ii) "Returns" means any and all returns, declarations, reports,
statements and other documents required to be filed in respect of any Tax.
(iii) "Section 338 Forms" means all returns, documents, statements,
and other forms that are required to be submitted to any Federal, state,
county, or other local Taxing Authority in connection with a Code Section
338(h)(10) Election. Section 338 Forms shall include, without limitation,
any "statement of section 338 election" and United States Internal Revenue
Service Form 8023 (together with any schedules or attachments thereto) that
are required pursuant to relevant Treasury Regulations and any
substantially similar forms under a state or local statute corresponding to
Federal laws.
(iv) "Section 338(h)(10) Election" means an election described in
Section 338(h)(10) of the Code with respect to Seller's sale of the Company
Common Stock to Buyer pursuant to this Agreement. "Section 338(h)(10)
Election" shall also include any substantially similar election under a
state or local statute corresponding to Federal laws.
(v) "Tax" means any of the Taxes.
(vi) "Taxes" means all federal, state, local and foreign income,
profits, franchise, unincorporated business, withholding, capital, general
corporate, customs duties, environmental (including taxes under Section 59A
of the Code), disability, registration, alternative, add-on, minimum,
estimated, sales, goods and services, use, occupation, property, severance,
production, excise, recording, ad valorem, gains, transfer, value-added,
unemployment compensation, social security premium, privilege and any and
all other taxes (including interest, additions to tax and penalties
thereon, and interest on such additions to tax and penalties);
(vii) "Tax Laws" means the Code, Federal, state, county, local, or
foreign laws relating to Taxes and any regulations or official
administrative pronouncements released thereunder.
(viii) "Taxing Authority" means any Governmental Entity having
jurisdiction over the assessment, determination, collection, or other
imposition of Tax.
5.20 Existing Insurance Coverage. As of the Closing Date, the Seller or
its Affiliates will cancel insurance coverage applicable to the Company or the
Company Subsidiaries for occurrences (with respect to any "occurrence" policies)
or claims made (with respect to any "claims-made" policies) after the Closing
Date (other than insurance policies in the name of the Company Subsidiaries);
provided, however, that the remaining insurance coverage shall be available to
the Buyer, the Company and the Company Subsidiaries with respect to insured
occurrences or series of occurrences relating to the Company, the Company
Subsidiaries or the Business on or prior to the Closing Date, if and only to the
extent that the Buyer or the Company has assumed or paid the loss or liability
attributed to such occurrences. If after the Closing, the Seller actually
receives from an insurer cash proceeds (excluding any return of premium or
reimbursed attorneys or investigation or other fees) attributable to such
insurance coverage with respect to any insured occurrences or any series of
occurrences on or prior to the Closing Date or any claims that were asserted on
or prior to the Closing Date, then such cash proceeds shall be paid to the Buyer
net of any deductible, co-payment, retro fees, self-insured premiums, defense
costs or other charges paid or payable to the insurance carrier or obligations
to reimburse the insurance carrier for which the Seller (or any of its
Affiliates) is liable, to the extent that the Buyer or the Company has assumed
or paid the loss or liability attributed to such occurrence or series of
occurrences. The Buyer shall reimburse the Seller for any administrative costs,
retro fees, premiums, self-insured or deductible loss costs or other expenses
that the Seller is charged after the Closing by such insurance carrier relating
to insurance coverage applicable to the Company or the Company Subsidiaries
prior to Closing.
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5.21 Certain Obligations. "Seller's Company Obligations" shall mean any
obligation, commitment, liability or responsibility of the Seller, its
Affiliates or their Predecessors (whether or not also an obligation, commitment,
liability, or responsibility of or claim against, in whole or in part, the
Company, the U.K. Sub or the Pipeline Sub), arising, undertaken or created
before the Closing Date in connection with, on behalf of or for the benefit of
any Cameron Entity, or arising from the conduct of the Business, including
without limitation (i) any consulting, employment or severance agreements,
guarantees, letters of credit, performance bonds, or indemnities, or obligations
or indemnities to officers or directors of any Cameron Entity, (ii) any
agreements with any transferors to the Seller, its Affiliates, or their
Predecessors, of any assets of any Cameron Entity or of the Business, (iii) any
labor or collective bargaining agreements relating to any Cameron Entity, (iv)
any contracts with any Governmental Entity relating to any Cameron Entity, (v)
any sales or purchase agreements relating to any Cameron Entity, (vi) any leases
of real or personal property relating to any Cameron Entity, and (vii) any other
agreements or commitments relating to any Cameron Entity under which the Seller,
its Affiliates or Predecessors will have any liability after the Closing Date;
provided, however, that the Seller's Company Obligations shall exclude the
matters that the Seller is required to indemnify pursuant to Section 5.22(b) or
Section 5.22(f). The Company expressly agrees that it shall assume the Seller's
Company Obligations, effective on the Closing Date, and shall thereafter
discharge the same in accordance with their terms.
5.22 Survival; Indemnification.
(a) Survival of Representations, Warranties and Covenants. Except for the
representation and warranty of the Seller in Section 3.23 hereof and the Buyer
in Section 4.16 hereof which will survive the Closing and remain in full force
and effect thereafter until 18 months after the Closing, the representations and
warranties of the parties contained in this Agreement shall expire with, and be
terminated and extinguished by, the Closing of the transactions contemplated
hereby and shall not survive the Closing Date. Any claim for indemnification
with respect to the representation and warranty of the Seller in Section 3.23
hereof and the Buyer in Section 4.16 hereof that is not asserted by notice given
as herein provided within the 18-month period may not be pursued and hereby is
irrevocably waived and released after such time. Subject to the preceding
18-month limitation on the indemnity with respect to Sections 3.23 and 4.16, the
covenants of the parties in Article V hereof (including without limitation the
indemnities contained therein) will survive the Closing and remain in full force
and effect thereafter without limitation as to time, except in connection with
(i) any applicable statute of limitations or (ii) any such covenant that, by its
terms, is otherwise limited with respect to time.
(b) Cross Indemnity. Subject to the terms and conditions of this Section
5.22, the Seller hereby agrees to indemnify and hold the Buyer, its Affiliates,
and their directors, officers or employees (collectively, "Buyer's Group")
harmless from and against all demands, claims, causes of action, assessments,
losses, damages (including without limitation fines, penalties and punitive
damages), liabilities and costs and expenses, including without limitation
attorneys' fees and any expenses incident to the enforcement of this Section
5.22 (collectively, "Losses"), which the Buyer's Group may suffer, sustain or
become subject to by reason of or resulting from (i) any inaccuracy in the
representation or warranty of the Seller contained in Section 3.23 of this
Agreement, or (ii) any breach of any covenant by the Seller in Article V of this
Agreement. Subject to the terms and conditions of this Section 5.22, the Buyer
hereby agrees to indemnify and hold the Seller, its Affiliates, and their
directors, officers or employees (collectively, "Seller's Group") harmless from
and against all Losses which the Seller's Group may suffer, sustain or become
subject to by reason of or resulting from (i) any inaccuracy in the
representation or warranty of the Buyer contained in Section 4.16 of this
Agreement, (ii) any breach of any covenant by the Buyer in Article V of this
Agreement, or (iii) the Seller's Company Obligations. The party seeking
indemnification pursuant to this Section 5.22 is hereinafter referred to as an
"Indemnified Party" and the party from whom indemnification is sought is
hereinafter referred to as an "Indemnifying Party."
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(c) Limitation of Indemnification. Notwithstanding any contrary provision,
no claim by either party against the other for indemnification arising under
this Article V shall be valid and assertible unless the aggregate amount of
Losses associated with such claim shall exceed $100,000. Further, any claims by
the Indemnified Party against the Indemnifying Party shall be determined net of
any tax benefit actually recognized and utilized to offset or reduce the tax
liability of the Indemnified Party or the other members of its group. All
payments pursuant to this Section 5.22 shall be treated as adjustments to the
purchase price of the Company Common Stock.
(d) Sole Remedy. Other than the rights, obligations, and remedies provided
for in Article I, Article V, Article VII and Article VIII hereof, the Buyer and
the Seller agree that the rights to indemnification provided in this Section
5.22 and elsewhere in this Article V will be the exclusive rights, obligations
and remedies with respect to all provisions of this Agreement. Each party, on
behalf of itself and its Affiliates, irrevocably waives any claim, cause of
action or theory of liability it might otherwise be entitled to assert in
respect of such provisions except for the right to seek indemnification on the
terms and subject to the conditions set forth in this Section 5.22 and elsewhere
in this Article V.
(e) Additional Indemnification by the Buyer. Subject to the terms and
conditions of this Section 5.22 and in addition to the indemnification provided
for in Section 5.22(b), the Buyer agrees, other than the Losses that the Seller
is required to indemnify pursuant to Section 5.22(b) or Section 5.22(f), the
employee benefit matters addressed in Section 5.12 and the tax matters addressed
in Section 5.19, to indemnify and hold the Seller's Group harmless from and
against all Losses which the Seller's Group may suffer, sustain or become
subject to by reason of or resulting from any liabilities or obligations of or
relating to, or claims against, any Cameron Entity or the Business on, before or
after the Closing Date, including without limitation (i) to indemnify and hold
the Seller's Group harmless from and against all Losses which the Seller's Group
may suffer, sustain or become subject to by reason of or resulting from any
Product Liability Claims arising out of or resulting from Products sold or
furnished by the Seller, any of its Affiliates or any Cameron Entity (including
without limitation any product liability assumed in connection with the
acquisition of any business or product line) on, before or after the Closing
Date; (ii) to indemnify and hold the Seller's Group harmless from and against
all Losses which the Seller's Group may suffer, sustain or become subject to by
reason of or resulting from (A) any noncompliance of the operations, properties
or business activities of any Cameron Entity or the Business with any
Environmental Law on, before or after the Closing Date or (B) any liabilities or
obligations of or relating to, or claims against, any Cameron Entity or the
Business based upon any Environmental Law, or arising from the disposal of any
Regulated Materials, on, before, or after the Closing Date; and (iii) to
indemnify and hold the Seller's Group harmless from and against all Losses which
the Seller's Group may suffer, sustain or become subject to by reason of or
resulting from (A) any workers' compensation claim filed against any Cameron
Entity on, before or after the Closing Date, and (B) any employment or severance
agreements entered into by the Seller or the Company relating to employees of
the Company on, before or after the Closing Date, other than severance payments
under the Employment Agreement listed on Section 5.22(e) of the Seller
Disclosure Schedule. It is the intention of the parties that the indemnity
provided herein shall survive the Closing and shall, with respect to
environmental claims under CERCLA, be an agreement expressly not barred by 42
U.S.C.sec.9607(e)(1).
(f) Additional Indemnification by the Seller. Subject to the terms and
provisions of this Section 5.22 and in addition to the indemnification provided
for in Section 5.22(b), the Seller agrees, other than the Losses that the Buyer
is required to indemnify pursuant to Section 5.22(b), the employee benefit
matters addressed in Section 5.12 and the tax matters addressed in Section 5.19,
(i) to indemnify and hold the Buyer's Group harmless from and against all Losses
which the Buyer's Group may suffer, sustain or become subject to by reason of or
resulting from any liabilities or obligations of or relating to, or claims
against, the Seller or the Seller Subsidiaries on, before or after the Closing
Date to the extent that such liabilities, obligations or claims (x) do not
relate to the Business and (y) arise from the activity of (a) any Cameron Entity
(other than the Company or the Pipeline Sub) before the Closing Date, or (b) the
Seller or any of the Seller's subsidiaries (other than the Cameron Entities),
(ii) except
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to the extent the actions of the Buyer, the Company or their Affiliates may
cause or increase any such Losses after the Closing Date, to indemnify and hold
the Buyer's Group harmless from and against all Losses which the Buyer's Group
may suffer, sustain or become subject to by reason of or resulting from any
Regulated Materials disposed of on, or discharged into the environment at, the
Katy Road Site or the Gulf Metals Site on or before the Closing Date; and (iii)
to indemnify and hold the Buyer's Group harmless from and against all Losses
which the Buyer's Group may suffer, sustain or become subject to by reason of or
resulting from severance payments under the Employment Agreement listed on
Section 5.22(e) of the Seller Disclosure Schedule. It is the intention of the
parties that the indemnity provided herein shall survive the Closing and shall,
with respect to environmental claims under CERCLA, be an agreement expressly not
barred by 42 U.S.C.sec.9607(e)(1).
(g) Conditions of Indemnification of Third Party Claims. The obligations
and liabilities of the parties under this Article V with respect to claims of
Losses resulting from the assertion of liability by third parties ("Third-Party
Claim") shall be subject to the following terms and conditions:
(i) The Indemnified Party shall give written notice to the
Indemnifying Party of any such Claim promptly after the Indemnified Party
receives notice thereof, which written notice shall state the nature and
basis of such Claim and, if determinable, the amount thereof, provided that
failure to so notify the Indemnifying Party shall in no case prejudice the
rights of the Indemnified Party under this Agreement unless the
Indemnifying Party shall actually be prejudiced by such failure and then
only to the extent of such actual prejudice. Upon receipt of notice of any
such Claim from the Indemnified Party, the Indemnifying Party will
undertake the defense thereof by representatives of its own choosing.
(ii) In the event that the Indemnifying Party, within a reasonable
time after notice of any such Claim, fails to defend the same, the
Indemnified Party shall (upon further notice to the Indemnifying Party)
have the right to undertake the defense, compromise or settlement of such
Claim on behalf of and for the account and risk of the Indemnifying Party,
subject to the right of the Indemnifying Party to assume the defense of
such Claim at any time prior to settlement, compromise or final
determination thereof.
(iii) Anything in this Section 5.22 to the contrary notwithstanding,
the Indemnifying Party shall have the right, at its own cost and expense,
to defend, compromise or settle such Claim; provided, however, that the
Indemnifying Party shall not, without the Indemnified Party's written
consent, settle or compromise any Claim or consent to entry of any judgment
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to the Indemnified Party a release from all liability
in respect of such Claim. The Indemnified Party shall have the right at its
own expense to participate in the defense of the Claim.
(h) Certain Definitions. As used in this Agreement:
(i) "Product Liability Claim" means any claim or cause of action,
regardless of form and whether absolute, accrued, contingent or otherwise,
arising out of injury to persons or damage to property, relating to the
design or manufacture of or the introduction into commerce by sale,
exchange or assignment of the Products.
(ii) "Business" means research, development, engineering, melting,
refining, remelting, forging, extrusion, machining, manufacturing,
distribution, sales, marketing, service or repair operations associated
with the Products.
(iii) "Products" means closed die forgings (including rotating parts
for aircraft engines or industrial turbines, aircraft landing gear,
structural airframe parts, ordnances and related parts, military and power
plant nuclear forgings, valves, heavy wall pipe and fittings, power
generation forgings and oilfield equipment forgings), extrusions (including
for aircraft engines, pipe, oilfield equipment, bar stock and ordnances),
super alloy powder products, thermal rail products for steel support member
in push slab furnaces and custom-shaped insulators, other forged products,
skid rail reheat systems, and high velocity burners.
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(iv) "Cameron Entities" means (x) the Company, (y) the Pipeline Sub
and (z) that portion of each of the following companies to the extent that
it presently conducts or previously conducted all or part of the Business:
(i) the U.K. Sub, (ii) the forged products division of Cameron Iron Works,
Inc., (iii) the forged products division of Cameron Iron Works USA, Inc.,
(iv) Cameron Forge Company, (v) the forged products division of Cameron
Iron Works Limited, (vi) Xxxxxx Industries, Inc., (vii) Xxxxxx (Great
Britain) Ltd., (viii) Cameron Iron Works, Inc., (ix) Cameron Iron Works
USA, Inc., and (x) Cameron Iron Works Limited, and (xi) any direct or
indirect Predecessor or successor to any of the foregoing that conducted or
conducts all or part of the Business.
(v) "Predecessor" means an entity which has previously held an
interest to which the entity to whom the reference is made has succeeded,
including without limitation an entity which conveyed, transferred or
assigned all or substantially all of its assets to the entity to whom the
reference is made or an entity which was merged or amalgamated into or
consolidated with the entity to whom the reference is made.
(vi) "Katy Road Site" means the former Cameron Iron Works, Katy Road
Facility located at 0000 Xxxxxx Xxxx, Xxxxxxx (Xxxxxx Xxxxxx), Xxxxx.
(vii) "Gulf Metals Site" means the Gulf Metals State Superfund Site in
Houston (Xxxxxx County), Texas, located northeast of the intersection of
Mykawa Road and Xxxxxx-Genoa Road.
(viii) "Affiliate" shall mean any person or entity that directly or
indirectly controls or is controlled by or is under the common control of
the party referred to.
5.23 Repurchase of Receivables. Pursuant to the Factoring Agreement, the
Company has agreed to assign to the Seller prior to Closing its trade and notes
receivables (the "Receivables"). The Buyer agrees to purchase from the Seller
all Receivables that are outstanding 90 days after the Closing Date. Within five
business days following the 90th day after the Closing Date, the Seller will
prepare a statement listing the balance of the outstanding Receivables on such
date, deducting the same reserve amount previously deducted in determining the
Receivables Purchase Price. Within five business days after receipt of such
statement, subject to the terms of the Factoring Agreement, the Company shall
pay to the Seller such amount at its bank account designated in this Agreement.
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Transactions
Contemplated by this Agreement. The respective obligations of each party to
effect the transactions contemplated by this Agreement shall be subject to the
satisfaction at or prior to the Closing Date of the following conditions:
(a) Each of the Seller and the Buyer shall have executed and delivered the
Investment Agreement.
(b) The transactions contemplated by this Agreement shall have been
approved by the requisite affirmative vote of the holders of the Buyer Common
Stock and the requisite consent to the transactions contemplated by this
Agreement shall have been obtained from the holders of the 10 3/4% Senior Notes
due 2003 issued pursuant to the Indenture, dated as of March 16, 1993, by and
among the Company, certain subsidiaries of the Company and State Street Bank and
Trust Company, as Trustee, and by The CIT Group/Business Credit, Inc.
(c) Articles of amendment, signed in accordance with the Massachusetts
Business Corporation Law and setting forth the Authorized Shares Amendment, the
Fair Price Charter Amendment, and the due adoption thereof, shall have been
filed with the Secretary of the Commonwealth of Massachusetts and shall be in
full force and effect.
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(x) The Buyer's Board of Directors shall have adopted and approved the
Control Share Acquisitions Amendment and it shall be in full force and effect.
(e) The Rights Agreement shall have been executed and delivered by the
Buyer and the other party thereto and shall be in full force and effect.
(f) No statute, rule, regulation, executive order, decree or injunction
shall have been enacted, entered, promulgated or enforced, and no action, suit
or proceeding shall be pending or threatened, by any Governmental Entity of
competent jurisdiction which prohibits or challenges the consummation of the
transactions contemplated by this Agreement, or conditions such consummation on
the matters referred to in the last sentence of Section 5.6(b) hereof, and is in
effect.
(g) The Ancillary Agreements shall have been negotiated on terms mutually
satisfactory to the Buyer and the Seller and executed and delivered by each of
the parties thereto.
6.2 Conditions of Obligations of the Seller to Effect the Transactions
Contemplated by this Agreement. The obligations of the Seller to effect the
transactions contemplated by this Agreement are further subject to the
satisfaction at or prior to the Closing Date of the condition that the
representations and warranties of the Buyer set forth in this Agreement and
qualified as to materiality or Material Adverse Effects shall be true and
correct and those not so qualified shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date, as if made
at and as of the Closing Date (except for representations and warranties that
expressly speak only as of some other time), the Buyer shall have delivered the
documents and other items to be delivered pursuant to Section 2.3, and the Buyer
shall have performed and complied, in all material respects, with all
obligations and covenants required to be performed or complied with by it under
this Agreement at or prior to the Closing Date.
6.3 Conditions of Obligations of the Buyer to Effect the Transactions
Contemplated by this Agreement. The obligations of the Buyer to effect the
transactions contemplated by this Agreement are further subject to the
satisfaction at or prior to the Closing Date of the condition that the
representations and warranties of the Seller set forth in this Agreement and
qualified as to materiality or Material Adverse Effects shall be true and
correct and those not so qualified shall be true and correct in all material
respects as of the date of this Agreement (except to the extent that the
transactions set forth on Annex IV have not been consummated as of such date)
and as of the Closing Date, as if made at and as of the Closing Date (except for
representations and warranties that expressly speak only as of some other time),
the Seller shall have delivered the documents and other items to be delivered
pursuant to Section 2.2, and the Seller shall have performed and complied, in
all material respects, with all obligations and covenants required to be
performed or complied with by them under this Agreement at or prior to the
Closing Date.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date, whether before or after approval by the shareholders of the Buyer
of the transactions contemplated by this Agreement:
(a) by mutual consent of the parties hereto;
(b) by the Seller or the Buyer, if the transactions contemplated by this
Agreement shall not have been consummated before June 30, 1994 (unless the
failure to consummate the transactions contemplated by this Agreement by such
date shall be due to the breach of this Agreement by the party seeking to
terminate this Agreement);
(c) by the Seller, if there has been a material violation or breach by the
Buyer of any agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any
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condition to the obligations of the Seller impossible and such violation or
breach has not been waived by the Seller;
(d) by the Buyer, if there has been a material violation or breach by the
Seller of any agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any condition to the obligations of the
Buyer impossible and such violation or breach has not been waived by the Buyer;
or
(e) by either of the parties hereto if this Agreement and the transactions
contemplated hereby are not duly approved by the shareholders of the Buyer at a
meeting of shareholders (or any adjournment thereof) duly called and held for
such purpose.
7.2 Procedure and Effect of Termination. In the event of termination of
this Agreement and abandonment of the transactions contemplated hereby by either
or both of the parties pursuant to Section 7.1, written notice thereof shall
forthwith be given to the other party hereto and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned, without further
action by either of the parties hereto. If this Agreement is terminated as
provided herein:
(a) upon request therefor, each party will redeliver all documents, work
papers and other material of the other party relating to the transactions
contemplated hereby, whether obtained before or after the execution hereof, to
the party furnishing the same or will destroy such documents;
(b) all information received by the Seller and the Company with respect to
the business of the Buyer or by the Buyer with respect to the business of the
Company (other than information which is a matter of public knowledge or which
has heretofore been or is hereafter published in any publication for public
distribution or filed as public information with any Governmental Entity) shall
not at any time be used for the advantage of the Person receiving the
information or to the detriment of the Person furnishing such information; and
each of the Seller and the Buyer will use its reasonable best efforts to prevent
the disclosure thereof to third Persons except as may be required by law;
(c) neither party hereto shall have any liability or further obligation to
the other party hereto pursuant to this Agreement except as stated in this
Section 7.2 and in Sections 5.4(d), 5.10 and 5.11; and
(d) all filings, applications and other submissions made pursuant to
Sections 5.6, 5.7 and 5.8 shall, to the extent practicable, be withdrawn from
the agency or other Person to which made.
ARTICLE VIII
MISCELLANEOUS
8.1 Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written agreement of each of
the parties.
8.2 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
8.2
8.3 Investigations; Survival Upon Termination. Subject to Section
5.22(a), the respective representations and warranties of the parties contained
herein or in any certificates, schedules, exhibits or other documents delivered
prior to or at the Closing shall not be deemed waived or otherwise affected by
any investigation made by any party hereto. Each and every such representation
and warranty shall expire with, and be terminated and extinguished by, the
termination of this Agreement pursuant to
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Section 8.1 or otherwise; and thereafter none of the parties hereto or any of
their respective officers or directors shall be under any liability whatsoever
with respect to any such representations or warranties. This Section 8.3 shall
have no effect upon any other obligation of the parties hereto, whether to be
performed before or after the Closing Date.
8.4 Notices. All notices and other communications hereunder shall be
validly given, made or served, if in writing and delivered personally, sent by
facsimile transmission (receipt of which is confirmed) or mailed by registered
or certified mail (return receipt requested), postage prepaid, to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof):
(a) if to Seller or the Company, to:
Xxxxxx Industries, Inc.
First City Tower, Suite 4000
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile No.: 000-000-0000
(b) if to the Buyer, to:
Xxxxx-Xxxxxx Company
000 Xxxxxxxxx Xxxxxx
Xxx 0000
Xxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Xx., Esq.
Facsimile No.: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Notice given by facsimile shall be deemed delivered on the business day
after it is sent to the recipient. Notice given by mail as set out above shall
be deemed delivered five calendar days after the same is mailed.
8.5 Annexes, Schedules and Exhibits. All annexes, schedules and exhibits
attached hereto or referred to herein are hereby incorporated in and made a part
of this Agreement as if set forth in full herein. All references to "this
Agreement" shall be deemed to include all annexes, schedules and exhibits to
this Agreement. Information set forth in any section to the Seller Disclosure
Schedule or the Buyer Disclosure Schedule is deemed set forth in all other
sections of such Disclosure Schedule. Disclosure of any fact or item in any
annex, schedule or exhibit hereto referenced by a particular paragraph or
section in this Agreement shall, should the existence of the fact or item or its
contents be relevant to any other paragraph or section, be deemed to be
disclosed with respect to that other paragraph or section whether or not a
specific cross reference appears. Disclosure of any fact or item in any annex,
schedule or exhibit hereto shall not necessarily mean that such item or fact
individually is material to (i) the Seller or the Company individually or the
Seller and the Company taken as a whole or (ii) the Buyer or its subsidiaries
individually or the Buyer and its subsidiaries taken as a whole.
8.6 Descriptive Headings. The descriptive headings herein are inserted
for convenience only and are not intended to be part of or to affect the meaning
or interpretation of this Agreement.
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8.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
be considered one and the same agreement.
8.8 Entire Agreement; Assignment. The Confidentiality Agreement, the
Investment Agreement, this Agreement, including the annexes, schedules and
exhibits hereto and thereto, and the other instruments, agreements, documents,
schedules and certificates referred to herein and therein, embody the entire
agreement and understanding of the parties hereto and supersede all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
either of the parties hereto without the prior written consent of the other
party.
8.9 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard to any
applicable principles of conflicts of law.
8.10 Specific Performance. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
8.11 Alternative Dispute Resolution.
(a) The parties shall attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiations between executives
who have authority to settle the controversy. Any party may give the other party
written notice of any dispute not resolved in the normal course of business.
Within 20 days after delivery of said notice, executives of both parties shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to exchange relevant information and to attempt to
resolve the dispute. If the matter has not been resolved within 60 days of the
disputing party's notice, or if the parties fail to meet within 20 days, either
party may initiate mediation of the controversy or claims as provided in Section
8.11(c).
(b) If a negotiator intends to be accompanied at a meeting by an attorney,
the other negotiator shall be given at least three working days' notice of such
intention and may also be accompanied by an attorney. All negotiations pursuant
to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of Evidence and state
rules of evidence.
(c) If negotiation fails within the time limits provided in Section
8.11(a), either party may initiate a mediation proceeding by a request in
writing to the other party. Thereupon, both parties will be obligated to engage
in a mediation. The proceeding will be conducted in accordance with the
presently effective CPR Model Procedure for Mediation of Business Disputes, with
the following exceptions;
(i) The mediator shall be an attorney experienced in mediating large
commercial disputes, who shall be compensated at his normal hourly or per
diem rates for all time spent by him in connection with the proceedings,
and whose fees shall be borne equally by the parties. If the parties have
not agreed within 30 days of the request for mediation on the selection of
a mediator willing to serve, the Center for Public Resources, upon the
request of either party, shall appoint a member of the CPR Panels of
Neutrals who meets the above qualifications as the mediator.
(ii) Efforts to reach a settlement will continue until the conclusion
of the proceeding, which is deemed to occur when: (a) a written settlement
is reached, (b) the mediator concludes and informs the parties in writing
that further efforts would not be useful, or (c) after making a good faith
effort to mediate, either party or both parties assert in writing that an
impasse has been reached. Neither party may withdraw before the conclusion
of the proceeding. Thereafter, if a settlement has not been reached, the
parties shall be free to pursue such rights and remedies, at law or in a
equity, as may be available to them.
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(d) The parties regard the obligations in this Section 8.11 as an essential
provision of this Agreement and one that is legally binding on them. In case of
a violation of such obligation by either party, the other may bring an action to
seek enforcement of such obligation in any court of law having jurisdiction
thereof. This Section 8.11 shall in no way affect the arbitration procedures set
forth in Article I or Article V of this Agreement.
8.12 Non-Competition.
(a) The Seller agrees that, until the later to occur of (i) the Seller's
ceasing to own at least 10% of the outstanding shares of Buyer Common Stock and
(ii) the expiration of a period of three years commencing on the Closing Date,
the Seller will not, and the Seller will not permit any of its subsidiaries
(regardless of whether such Person is a subsidiary of the Seller on the date
hereof) to, engage in the manufacturing or marketing of the Products currently
manufactured or marketed by the Company or the U.K. Sub in competition with the
Buyer or any subsidiary of the Buyer (a "Competing Business"); provided,
however, that (i) the Seller or any Affiliate of the Seller (other than the
Company and the Company Subsidiaries) may continue any existing non-aerospace
forging operations and may make any reasonable maintenance, improvements and
refinements thereto; and (ii) the Seller or any Affiliate of the Seller may
acquire any business which includes ancillary forging operations in support of
its main business; provided further that this covenant shall not prevent the
Seller or its Affiliates from acquiring shares in or the business or assets of
any company, business or entity (the "Target") having a Competing Business (i)
if no more than $10,000,000 of the Target's sales revenue (as recorded in the
then latest available audited accounts) arises from the Competing Business or
(ii) if the sales revenue of the Competing Business is greater than $10,000,000
of the Target's sales revenue, if the Seller uses its reasonable commercial
efforts to dispose of the Competing Business within a two-year period from the
date of acquisition of the Target. If the Seller cannot dispose of the Competing
Business on terms reasonably acceptable to it during such two-year period, then
the Seller shall be free to retain and operate the Competing Business without
any restriction of this Agreement. The Seller acknowledges and agrees that the
foregoing restrictions are reasonably designed to protect the Buyer's
substantial investment and are reasonable with respect to duration, geographical
area and scope.
(b) In the event of breach by the Seller or any subsidiary of the Seller of
any of the provisions of Section 8.12(a), the Buyer may, in addition to any
other rights or remedies existing in its favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce or prevent any violations of the provisions of Section 8.12(a).
8.13 Further Assurances. Each party shall execute and deliver both before
and after the Closing such instruments, agreements and other documents and take
such other actions as the other party may reasonably request to consummate or
implement the transactions contemplated hereby or to evidence such events or
matters.
8.14 No Third-Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to confer upon any other Person, other than the Buyer's
Group and the Seller's Group in connection with Section 5.22, any rights or
remedies of any nature whatsoever under or by reason of this Agreement. Nothing
in this Agreement is intended to relieve or discharge the obligation of any
third Person to (or to confer any right of subrogation or action over against)
any party to this Agreement.
8.15 Remedies; Waiver. All rights and remedies existing under this
Agreement and any related agreements or documents are cumulative to and not
exclusive of, any rights or remedies otherwise available under applicable law.
No failure on the part of any party to exercise or delay in exercising any right
hereunder shall be deemed a waiver thereof, nor shall any single or partial
exercise preclude any further or other exercise of such or any other right.
8.16 Severability. If any provision of this Agreement is determined to be
invalid, illegal or unenforceable by any Governmental Entity, the remaining
provisions of this Agreement to the extent permitted by Law shall remain in full
force and effect, provided that the economic and legal substance of the
transactions contemplated by this Agreement are not affected in any manner
materially adverse to any party. In the event of any such determination, the
parties agree to negotiate in good faith to modify this Agreement to fulfill as
closely as possible the original intents and purposes hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
XXXXXX INDUSTRIES, INC.
H. XXXX XXXXX, JR.
By:__________________________________
H. Xxxx Xxxxx, Jr.
President and Chief
Operating Officer
XXXXX-XXXXXX COMPANY
XXXX X. XXXXXX
By:__________________________________
Xxxx X. Xxxxxx
Chairman and Chief
Executive Officer
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