EXHIBIT 10.1
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
Between
THE DERBY CYCLE CORPORATION
and
Cycle Bid Co.
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Dated as of August 20, 2001
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS................................................1
SECTION 2. PURCHASE AND SALE OF THE PURCHASED PROPERTY...............13
SECTION 2.1. Transfer of Assets.........................13
SECTION 2.2. Sale at Closing Date.......................13
SECTION 2.3. Assumption of Liabilities..................13
SECTION 2.4. Ongoing and Transition Services............14
SECTION 3. PURCHASE PRICE............................................14
SECTION 3.1. Purchase Price.............................14
SECTION 3.2. Deposit....................................14
SECTION 3.3. Payment of Closing Purchase Price..........14
SECTION 3.4. Payment of Cash Collateral Amount..........15
SECTION 3.5. Contingent Purchase Price(a)...............15
SECTION 4. CLOSING...................................................16
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE SELLER..............16
SECTION 5.1. Corporate Organization.....................16
SECTION 5.2. Qualification to Do Business...............16
SECTION 5.2. Authorization and Validity of Agreement....17
SECTION 5.4. No Conflict or Violation...................17
SECTION 5.5. Consents and Approvals.....................18
SECTION 5.6. Compliance with Law........................18
SECTION 5.7. Litigation.................................18
SECTION 5.8. Labor Relations............................18
SECTION 5.9. Employee Benefits..........................19
SECTION 5.10. Real Properties............................19
SECTION 5.11. Title, Ownership and Related Matters.......19
SECTION 5.12. Tax Matters................................19
SECTION 5.13. Environmental Matters......................19
SECTION 5.14. Absence of Certain Changes.................20
SECTION 5.15. Absence of Undisclosed Liabilities.........20
SECTION 5.16. Intellectual Property......................21
SECTION 5.17. Material Contracts.........................21
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER...............21
SECTION 6.1. Corporate Organization.....................22
SECTION 6.2. Qualification to Do Business...............22
SECTION 6.3. Authorization and Validity of Agreement....22
(i)
SECTION 6.4. No Conflict or Violation...................22
SECTION 6.5. Consents and Approvals.....................22
SECTION 6.6. Adequate Assurances Regarding Assumed
Executory Contracts........................22
SECTION 6.7. Investigation by the Buyer.................23
SECTION 6.8. Funding....................................23
SECTION 7. COVENANTS OF THE SELLER...................................23
SECTION 7.1. Conduct of Business Before Closing Date....23
SECTION 7.2. Consents and Approvals.....................24
SECTION 7.3. Access to Properties and Records;
Confidentiality............................24
SECTION 7.4. Further Assurances.........................24
SECTION 7.5. Reasonable Efforts.........................24
SECTION 7.6. Assignment of Assumed Executory Contracts
and Warranties.............................25
SECTION 7.7. Cure of Defaults...........................25
SECTION 8. COVENANTS OF THE BUYER....................................25
SECTION 8.1. Actions Before Closing Date................25
SECTION 8.2. Consents and Approvals.....................25
SECTION 8.3. Adequate Assurances Regarding Assumed
Executory Contracts........................25
SECTION 8.4. Performance under Assumed Executory
Contracts..................................26
SECTION 8.5. Books and Records of the Buyer;
Cooperation................................26
SECTION 8.6. Reorganizations............................26
SECTION 9. EMPLOYEES AND EMPLOYEE PLANS..............................26
SECTION 9.1. Offer of Employment........................26
SECTION 9.2. Employee Welfare Benefit Plans.............27
SECTION 9.3. Rights.....................................27
SECTION 10. TAXES.....................................................28
SECTION 10.1. Taxes Related to Purchase of Assets;
Tax Cap....................................28
SECTION 10.2. Cooperation on Tax Matters.................28
SECTION 10.3. Allocation of Purchase Price and Purchase
Price Allocation Forms.....................29
SECTION 10.4. Structure..................................29
SECTION 11. CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER.........29
SECTION 11.1. Representations and Warranties of the
Buyer......................................29
SECTION 11.2. Performance of the Obligations of the
Buyer......................................29
SECTION 11.3. Consents and Approvals; HSR Act............30
SECTION 11.4. No Violation of Orders.....................30
SECTION 11.5. Entry of the Sale Order....................30
SECTION 11.6. Transition Services Agreement..............30
SECTION 11.7. No Additional Material Tax Liability;
Payables and Receivables...................30
(ii)
SECTION 11.8. Resale Certificates. .....................30
SECTION 11.9. Accepted Affiliate Payables. .............30
SECTION 12. CONDITIONS PRECEDENT TO THE PERFORMANCE BY THE BUYER......31
SECTION 12.1. Representations and Warranties of the
Seller.....................................31
SECTION 12.2. Performance of the Obligations of the
Seller.....................................31
SECTION 12.3. Consents and Approvals; HSR Act............31
SECTION 12.4. No Violation of Orders.....................31
SECTION 12.5. Entry of the Bidding Procedures Order......31
SECTION 12.6. Entry of the Sale Order....................32
SECTION 12.7. Cure of Defaults...........................32
SECTION 12.8. Material Adverse Effect....................32
SECTION 12.9. Transition Services Agreement..............32
SECTION 12.10. No Additional Material Tax Liability;
Payables and Receivables...................32
SECTION 12.11. Accepted Affiliate Receivables.............32
SECTION 13. TERMINATION...............................................32
SECTION 13.1. Conditions of Termination..................32
SECTION 13.2. Effect of Termination; Remedies............33
SECTION 14. BIDDING PROCEDURES........................................34
SECTION 14.1. Other Bids; Fees...........................34
SECTION 15. MISCELLANEOUS.............................................34
SECTION 15.1. Successors and Assigns.....................34
SECTION 15.2. Governing Law; Jurisdiction................35
SECTION 15.3. Expenses...................................35
SECTION 15.4. Broker's and Finder's Fees.................35
SECTION 15.5. Notice of Bankruptcy Proceedings...........35
SECTION 15.6. Severability...............................35
SECTION 15.7. Notices....................................36
SECTION 15.8. Amendments; Waivers........................37
SECTION 15.9. Public Announcements.......................37
SECTION 15.10. Entire Agreement...........................37
SECTION 15.11. Parties in Interest........................38
SECTION 15.12. Commercially Reasonable Efforts............38
SECTION 15.13. Section and Paragraph Headings.............38
SECTION 15.14. Counterparts...............................38
SECTION 15.15. Non-survival of Representations,
Warranties and Agreements..................38
SECTION 15.16. Indemnification by the Buyer...............38
(iii)
INDEX TO SCHEDULES
1.0 Assumed Executory Contracts
1.1 Rejected Contracts
1.2 Liens
1.3(a) Form of Bidding Procedures Order of the Bankruptcy Court
1.3(b) Form of Sale Order of the Bankruptcy Court
1.4 Cash Collateral
5.1 Purchased Subsidiaries
5.4 Conflicts or Violations
5.5 Consents and Approvals
5.6 Compliance with Law
5.7 Litigation
5.8 Labor Relations
5.9 Employee Benefits
5.12 Tax Matters
5.13 Environmental Matters
5.14 Absence of Certain Changes
5.16 Intellectual Property
5.17 Material Contracts
7.1 Conduct of Business Before Closing Date
10.3 Allocation of Purchase Price
INDEX TO EXHIBITS
A Form of Deed of Conveyance for Derby Holding (Deutschland) GmbH
(iv)
EXECUTION COPY
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of August
20, 2001, by and between The Derby Cycle Corporation, a Delaware corporation,
(the "SELLER"), and Cycle Bid Co., a Delaware corporation (the "BUYER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Seller is engaged (individually and through its
subsidiaries) primarily in the business of designing, manufacturing and
marketing bicycles;
WHEREAS, the Buyer desires to purchase substantially all of the assets
of the Seller, including the stock of Derby Cycle Corporation Ltd., Raleigh
Industries of Canada Limited, Raleigh B.V. (subject to Section 8.6), Derby
Holding B.V., Derby Trading Co., Inc., Derby Holding (Deutschland) GmbH, and the
U.S. operations of the Seller, including Xxxxxxxx.xxx, Inc. and Derby American
Inc., but excluding the stock of Derby Sweden AB and Lyon Investments B.V.
(collectively, with their direct and indirect subsidiaries, the "BUSINESS"),
from the Seller, and the Seller desires to sell such assets to the Buyer, in
each case upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, promptly after the execution of this Agreement, the Seller
intends to file a voluntary petition for relief (the "BANKRUPTCY CASE") under
chapter 11 of title 11 of the United States Code, 11 U.S.C. xx.xx. 101 ET SEQ.
(the "BANKRUPTCY CODE") in the United States Bankruptcy Court for the District
of Delaware (the "BANKRUPTCY COURT"), and the date of such filing in the
Bankruptcy Court shall be referred to herein as the "PETITION DATE"; and
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements herein contained, the parties hereby agree as follows:
SECTION 1. DEFINITIONS.
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As used in this Agreement, the following terms shall have the following
meanings:
"ACCEPTED AFFILIATE PAYABLES" shall mean any Affiliate Payables which
the Buyer and Seller agree to designate as such prior to the Closing;
"ACCEPTED AFFILIATE RECEIVABLES" shall mean any Affiliate Receivables
which the Buyer and Seller agree to designate as such prior to the Closing;
"ACCOUNTS RECEIVABLE" shall mean all accounts receivable of the Seller
as of the Closing Date;
"AFFILIATE" shall mean, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such other Person, and with respect to any Person that is an
individual, shall also mean such Person's heirs and estate;
"AFFILIATE PAYABLES" shall mean those amounts due from the Seller and
the Excluded Subsidiaries to the Purchased Subsidiaries;
"AFFILIATE RECEIVABLES" shall mean those amounts due to the Seller and
the Excluded Subsidiaries from the Purchased Subsidiaries;
"AGREEMENT" - See Preamble hereto;
"ALLOCATION" -- See Section 10.3;
"ALTERNATIVE TRANSACTION" shall mean a transaction involving a sale of
all or substantially all of the Purchased Property by the Seller to a purchaser
or purchasers other than the Buyer;
"ASSUMED EXECUTORY CONTRACTS" shall mean all Contracts entered into by
the Seller before the Petition Date which are executory and unexpired as of the
Closing Date and which are listed on SCHEDULE 1.0 hereto, as such Schedule may
be adjusted from time to time prior to the Closing Date by agreement of Seller
and Buyer;
"ASSUMED LIABILITIES" -- See Section 2.3;
"AUCTION"--See Section 7 of SCHEDULE 1.3(A);
"BANK GROUP" shall mean Chase Manhattan International Limited, and the
Lenders party to that certain Multicurrency Credit Facility, dated May 12, 1998,
by and among Derby Cycle Corporation and Others, as Borrowers and Guarantors,
Chase Manhattan plc, as Arranger, the Financial Institutions Named Therein, and
Chase Manhattan International Limited, as Facility Asset and Security Agent;
"BANKRUPTCY CASE" -- See the Recitals hereto;
"BANKRUPTCY CODE" -- See the Recitals hereto;
"BANKRUPTCY COURT" -- See the Recitals hereto;
"BIDDERS" -- See Section 14.1(b);
"BIDDING PROCEDURES ORDER" shall mean an order of the Bankruptcy Court:
approving the bidding and auction procedures and overbid protections set forth
on SCHEDULE 1.3(A);
"BIDS" -- See Section 14.1(b);
"BREAKUP FEE" -- See SCHEDULE 1.3(A);
"BUSINESS" - See the Recitals hereto;
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"BUSINESS DAY" shall mean any day other than Saturday, Sunday and any
day which is a legal holiday or a day on which banking institutions in New York
City are authorized by law or other governmental action to close;
"BUSINESS ENTITIES" shall mean Derby Cycle Corporation Ltd., Raleigh
Industries of Canada Limited, Raleigh B.V. (subject to Section 8.6), Derby
Holding B.V., Derby Trading Co., Inc., Derby Holding (Deutschland) GmbH,
Xxxxxxxx.xxx. Inc. and Derby American Inc.;
"BUYER" -- See the Preamble hereto;
"CASH COLLATERAL" shall mean the cash, including without limitation the
cash listed on SCHEDULE 1.4, and any other collateral, securing the
Collateralized Obligations as of the date hereof;
"CASH COLLATERAL AMOUNT" shall mean the amount of Cash Collateral
consisting of cash as of the date hereof and the Fair Market Value of any Cash
Collateral which consists of other collateral as of the date hereof;
"CLAIMS" -- See sub-Section (vi) of the definition of Excluded Assets;
"CLOSING" -- See Section 4;
"CLOSING DATE" -- See Section 4;
"CLOSING PURCHASE PRICE" -- See Section 3.1;
"COLLATERALIZED OBLIGATIONS" shall mean letters of credit, surety
bonds, performance guarantees and similar instruments outstanding as of the date
hereof which are secured by cash or other collateral obtained from the Seller
and its direct and indirect subsidiaries utilizing proceeds of the Gazelle Sale,
including without limitation those listed on SCHEDULE 1.4;
"CODE" shall mean the Internal Revenue Code of 1986, as amended;
"CONTINGENT PURCHASE PRICE" -- See Section 3.5(a);
"CONTRACTS" shall mean, collectively, the outstanding and unexpired
Leases to which the Seller is party, the Purchase Orders, the Sales Obligations
and the Other Contracts;
"DEPOSIT" -- See Section 3.2;
"EMPLOYEE BENEFIT PLAN" shall mean an Employee Pension Benefit Plan or
an Employee Welfare Benefit Plan where no distinction is required by the context
in which the term is used;
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"EMPLOYEE PENSION BENEFIT PLAN" shall mean an "employee pension benefit
plan," as such term is defined in Section 3(2) of ERISA, which covers any
Employee or former employee of the Seller, or any spouse or beneficiary of any
such Employee or former employee;
"EMPLOYEE WELFARE BENEFIT PLAN" shall mean an "employee welfare benefit
plan," as such term is defined in Section 3(1) of ERISA, which covers any
Employee or former employee of the Seller, or any spouse or beneficiary of any
such Employee or former employee;
"EMPLOYEES" -- See Section 9.1(a);
"ENGELBERT" shall mean Xxxxxxxxx Xxxxxx Bike Parts GmbH;
"ENVIRONMENTAL LAWS" shall mean all federal, state, local and foreign
statutes, regulations, ordinances, rules, orders and other provisions having the
force or effect of law, all judicial and administrative orders and
determinations, and all common law concerning pollution or protection of the
environment including, without limitation, all those relating to the
environment, natural resources, public or private health, or the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control or cleanup of any Hazardous Materials;
"ENVIRONMENTAL PERMITS" shall mean permits, licenses, certificates,
authorizations, consents, registrations and approvals required by any applicable
Environmental Laws for the operation of the Business;
"EQUIPMENT AND MACHINERY" shall mean (i) all the equipment, machinery,
furniture, fixtures and improvements, spare parts, supplies, vehicles and other
items of tangible personal property owned or leased by the Seller, except to the
extent the same are attached to real property and considered a portion thereof
under applicable law, and (ii) any rights of the Seller to the warranties (to
the extent assignable) and licenses received from manufacturers and the sellers
of the aforesaid items;
"EQUITY PROCEEDS" shall mean the total Fair Market Value of all
consideration to be paid, issued or distributed to the Initial-Buyer
Stockholders in respect of Initial-Buyer Stock upon consummation of a Sale
Transaction after the repayment of all outstanding indebtedness of the Buyer and
all Sale Transaction-related expenses;
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended;
"EXCLUDED AFFILIATE PAYABLES" shall mean all Affiliate Payables
excluding the Accepted Affiliate Payables;
"EXCLUDED AFFILIATE RECEIVABLES" shall mean all Affiliate Receivables
excluding the Accepted Affiliate Receivables;
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended;
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"EXCLUDED ASSETS" shall mean all the following properties and assets of
the Seller:
(i) the stock of the Excluded Subsidiaries;
(ii) any asset of the Seller that would constitute Purchased
Property (if owned by the Seller on the Closing Date) that is conveyed
or otherwise disposed of during the period from the date hereof until
the Closing Date in the ordinary course of business of the Seller and
not in violation of the terms of this Agreement or as otherwise
permitted by the terms of this Agreement;
(iii) all losses, loss carryforwards and rights to receive refunds,
credits and loss carryforwards with respect to any and all U.S. federal
income Taxes of the Seller incurred or accrued prior to the Closing
Date, including any interest receivable with respect thereto;
(iv) any and all rights, claims, credits, allowances, rebates,
causes of action, known or unknown, pending or threatened (including,
without limitation, all causes of action arising under Sections 510,
544 through 550 and 553 of the Bankruptcy Code or under similar state
laws including, without limitation, fraudulent conveyance claims, and
all other causes of action of a trustee and debtor-in-possession under
the Bankruptcy Code) or rights of set-off (collectively, "CLAIMS"), of
the Seller including, but not limited to, Claims arising out of or
relating in any way to the Bankruptcy Case, or any of the transactions
contemplated thereby or entered into as a consequence thereof; provided
that any Claims that relate to or may be asserted as an offset or
counterclaim to any Assumed Liabilities or Assumed Executory Contract
shall not constitute Excluded Assets;
(v) corporate seals, minute books, charter documents, corporate
stock record books, original tax and financial records and such other
files, books and records as pertain to any of the Excluded Assets or to
the organization, existence or share capitalization of the Seller or
any of the Excluded Subsidiaries;
(vi) all equipment and machinery owned by any customer of the
Seller or any other third party and in the possession of the Seller;
(vii) the rights of the Seller under all Rejected Contracts; and
(viii) the Excluded Affiliate Receivables.
"EXCLUDED LIABILITIES" shall mean the following liabilities and
obligations of the Seller:
(i) any liability or obligation of the Seller under this Agreement
or on account of any of the transactions contemplated hereby to
attorneys, accountants, brokers, investment bankers or other Persons
for services rendered or expenses (except any Transaction Taxes or
Transaction Fees) incurred by or on behalf of the Seller;
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(ii) any liabilities which would arise as a result of a breach of
the Seller's covenants or agreements hereunder;
(iii) any liabilities of the Seller for any U.S. federal income
Taxes payable with respect to the period on or prior to the Closing
Date;
(iv) any indebtedness for borrowed money; including, but not
limited to, any indebtedness owed to the Government of Singapore
Investment Corporation Pte Ltd. or any of its Affiliates;
(v) all Claims arising out of Rejected Contracts;
(vi) any liabilities or obligations relating to any of the Excluded
Assets;
(vii) any liabilities or obligations arising out of or in connection
with the Securities;
(viii) any liabilities or obligations arising out of or in connection
with any common or preferred stock issued by the Seller;
(ix) any liabilities or obligations of the Seller for Professional
Fees;
(x) all Excluded Affiliate Payables; and
(xi) any liabilities or obligations arising out of or in connection
with the Shareholders Agreement;
"EXCLUDED SUBSIDIARIES" shall mean Derby Sweden AB and Lyon Investments
B.V. and all direct and indirect subsidiaries thereof;
"EXPENSE REIMBURSEMENT" -- See SCHEDULE 1.3(A);
"FAIR MARKET VALUE" shall mean (i) with respect to cash or cash
equivalents, the dollar amount thereof; (ii) with respect to securities that
trade on an established market that reports closing sales prices, the average
closing sales price for such securities for the 30 trading days immediately
prior to the date of determination of such Fair Market Value; (iii) with respect
to securities that trade on an established market that does not report closing
sales prices but does report closing bid prices, the average closing bid price
for such securities for the 30 trading days immediately prior to the date of
determination of such Fair Market Value; and (iv) with respect to any other
property, the fair value thereof as determined by an independent investment bank
of national standing reasonably satisfactory to the Buyer and the Seller;
"FILES AND RECORDS" shall mean all business files, records, books,
models, tracings, price sheets, films, slides, art work and printing plates,
tool drawings, plans, designs, blueprints, computer software (object code, and,
to the extent transferable, source code) data and the like in the possession of
or used by the Seller, including, without limitation, customer files,
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correspondence with customers and account histories, sales literature and
promotional or other material pertaining to Products designed, manufactured or
sold by the Seller, material relating to the purchase of materials, supplies and
services, research and commercial data, records relating to the Employees,
consultants and contractors, credit information, catalogs, brochures and
training and other manuals;
"GAZELLE SALE" shall mean the sale of Koninklijke Gazelle B.V. by Derby
Nederland B.V. to Gazelle Holding B.V., pursuant to the Sale and Purchase
Agreement, dated June 15, 2001, among the Seller, Derby Nederland B.V. and
Gazelle Holding B.V.;
"GOVERNMENT" shall mean any agency, division, subdivision, audit group,
court, arbitrator, procuring office or governmental or regulatory authority of
the United States or any foreign government;
"HAZARDOUS MATERIALS" shall mean and include any hazardous or toxic
substance or waste or any contaminant or pollutant including, but not limited
to, "hazardous substances" as defined by the Comprehensive Environmental
Response, Compensation and Liability Act, as amended ("CERCLA"), a "hazardous
waste" as defined by the Resource Conservation and Recovery Act ("RCRA"), as
amended, polychlorinated byphenyls, petroleum products or byproducts, solvents,
chemicals, pesticides, waste oil, grease, or asbestos;
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended;
"INDEMNITEES" - See Section 15.16;
"INITIAL-BUYER REGISTRATION" shall mean the registration of the sale of
any Initial-Buyer Stock by any Initial-Buyer Stockholder under the Securities
Act or under any similar legislation in any other applicable jurisdiction;
"INITIAL-BUYER STOCK" shall mean (i) any of the shares of capital stock
of the Buyer issued at or prior to the Closing and (ii) any other shares of
capital stock of the Buyer issued as a stock dividend or as the result of a
stock split in regard to the shares referenced in clause (i) above;
"INITIAL-BUYER STOCKHOLDER" shall mean any stockholder of the Buyer who
acquires Initial-Buyer Stock contemporaneously with the Closing or any Affiliate
thereof to whom such Initial-Buyer Stock is transferred or assigned;
"INTANGIBLE ASSETS" shall mean all intangible personal property rights
owned by the Seller and all goodwill of the Seller relating thereto;
"INTELLECTUAL PROPERTY" shall mean all United States and foreign
patents, patent applications, licenses, trademarks (whether registered or
unregistered), service marks, trade names, brand names, domain names, logos,
trade dress, copyrights and any applications therefor, and any other proprietary
rights, including, without limitation, know-how, inventions,
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discoveries and improvements, shop rights, processes, methods and formulae,
trade secrets, product drawings, specifications, designs and other technical
information owned by or licensed to the Seller and relating exclusively to the
Business and all of the goodwill associated with the foregoing;
"INVENTORY" shall mean all inventory of products held by the Seller at
the Closing;
"LAZARD" - shall mean Lazard, Freres & Co., LLC;
"LEASED REAL PROPERTY"-- See Section 5.10;
"LEASES" - See Section 5.10;
"LICENSES AND PERMITS" shall mean all of the Seller's franchises,
approvals, orders, certificates, permits, authorizations, licenses and license
applications issued by any Government;
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien (statutory or other) or conditional sale agreement, other than (a) liens on
property underlying any of the Leases; (b) any imperfection of title with
respect to any asset that does not materially interfere with the present
occupancy, use or marketability of such asset and the continuation of the
present occupancy or use of such asset; (c) such covenants, conditions,
restrictions, easements, encroachments or encumbrances that are not created
pursuant to mortgages or other financing or security documents, and any other
state of facts, that do not materially interfere with the present occupancy, use
or marketability of such asset; and (d) liens set forth on SCHEDULE 1.2 hereto;
"LOSS" or "LOSSES" shall mean any and all damages, fines, penalties,
deficiencies, losses and expenses (including without limitation interest, court
cost, reasonable fees of attorneys, accountants and other experts or other
reasonable expenses of litigation or other proceedings or of any claim, default
or assessment, but for purposes of Section 15.16, excluding any of the foregoing
incurred by an Indemnitee in the direction of the defense of a matter it is not
entitled to direct thereunder or as a result of a settlement made by such
Indemnitee in violation of Section 15.16).
"LYON" shall mean Lyon Investments B.V., a wholly-owned subsidiary of
the Seller;
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a)
the business, financial condition or results of operations of the Purchased
Property, taken as a whole, other than any such effect resulting from (i) the
transactions contemplated hereby (including, without limitation, the Bankruptcy
Case), the public announcement of such events, including any reductions in the
workforce, any declines in the amount or rate of sales, which in each case are
attributable to or result from such transaction, or announcement thereof, (ii)
any change in economic conditions affecting the bicycle designing, manufacturing
or marketing industries in the United States, Canada, Germany or the U.K.
generally (including interest rates), (iii) any act
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or omission of the Seller or any of the Purchased Subsidiaries taken with the
consent of the Buyer pursuant to Section 7, (iv) any action taken by, or
omission of, the Seller or any of the Purchased Subsidiaries at the request of
the Buyer; (v) any downgrade, modification, qualification or lowering of, or any
"watch" effected with respect to, any rating assigned to the Seller or the
Purchased Subsidiaries or their securities or financial condition by any rating
organization or agency, or (vi) any effect, event, occurrence, circumstance,
change or development described in any SEC Report filed prior to the date
hereof, or (b) the ability of the Seller to consummate the transactions
contemplated hereby.
"MATERIAL CONTRACT" - See Section 5.17;
"MATERIAL INTELLECTUAL PROPERTY" - See Section 5.16;
"ORDER[S]" shall mean the Bidding Procedures Order and the Sale Order;
"ORGANIZATIONAL DOCUMENTS" - See Section 5.4;
"OTHER CONTRACTS" shall mean all outstanding and unexpired Equipment
and Machinery leases, partnership or joint venture agreements, license
agreements, service contracts, individual employment, severance or bonus
agreements covering any Employee, commission and consulting agreements,
collective bargaining agreements, suretyship contracts, distribution agreements,
contracts or commitments limiting or restraining the Seller with respect to the
Business from engaging or competing in any lines of business or with any Person,
documents granting the power of attorney with respect to the affairs of the
Seller, agreements not made in the ordinary course of business of the Seller,
options to purchase any assets or property rights of the Seller and all other
agreements to which the Seller is a party relating to the Business, but
excluding Leases, Purchase Orders and Sales Obligations;
"PERSON" shall mean any individual, corporation, partnership, joint
venture, association, joint- stock company, trust, unincorporated organization
or Government;
"PETITION DATE" -- See the Recitals hereto;
"PREMISES" shall mean the Purchased Real Property and the Leased Real
Property;
"PRODUCTS" shall mean (i) the products manufactured, or in the process
of design or development for manufacturing, by the Seller (including, but not
limited to, any product necessary and useful for the performance of any
Contract) and (ii) any products manufactured or which were in the process of
design or development for manufacturing by the Seller (or its predecessors in
interest);
"PROFESSIONAL FEE" shall mean any liability or obligation of the Seller
to (a) Xxxxxx, Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, Xxxxxxx Xxxx LLP or
Jefferies & Co., Inc. (but excluding the Transaction Fees), (b) any attorney,
accountant, financial advisor or other professional retained in the Bankruptcy
Case pursuant to Section 327 or 1103 of the Bankruptcy
9
Code, for fees or disbursements incurred on or after the Petition Date, or (c)
any professional retained by the Bank Group;
"PURCHASE ORDERS" shall mean the Seller's outstanding and unexpired
purchase orders, contracts or other commitments to suppliers of goods and
services for materials, supplies or other items used in the Business;
"PURCHASED PROPERTY" shall mean the Seller's cash and cash equivalents
and the rights of the Seller under the Assumed Executory Contracts, Equipment
and Machinery, Files and Records, Intellectual Property, Intangible Assets,
Inventory, Accounts Receivable, Accepted Affiliate Receivables, Licenses and
Permits (to the extent assignable by the Seller), Premises and any prepaid
expenses and other assets relating to the operations of the Business on the
Closing Date, including the capital stock of the Business Entities, PROVIDED,
HOWEVER, that notwithstanding the foregoing, the Purchased Property shall not
include the Excluded Assets;
"PURCHASED REAL PROPERTY" -- See Section 5.10;
"PURCHASED SUBSIDIARIES" shall mean the Business Entities and all
direct and indirect subsidiaries thereof;
"REJECTED CONTRACTS" shall mean the Contracts listed on SCHEDULE 1.1
hereto.
"RELEASE" shall mean any past or present spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing of a Hazardous Substance into the environment;
"SALE" - See Section 2.2;
"SALE ORDER" shall mean an order of the Bankruptcy Court, substantially
in the form of SCHEDULE 1.3(B) hereto, which shall provide, among other things
and without limitation, that: (i) the sale of the Purchased Property to the
Buyer and the assumption by the Seller of the Assumed Executory Contracts and
the assignment of such Assumed Executory Contracts to the Buyer, in accordance
with the terms and conditions of this Agreement and pursuant to, among others,
Sections 363 and 365 of the Bankruptcy Code, is approved; (ii) the Assumed
Executory Contracts will be transferred to, and remain in full force and effect
for the benefit of, the Buyer (or its designated transferee(s)), notwithstanding
any provision in any such contract or lease or in applicable law (including
those described in Sections 365(b)(2) and (f) of the Bankruptcy Code) that
prohibits, restricts or limits in any way such assignment or transfer; (iii) the
consideration provided by the Buyer pursuant to this Agreement constitutes
reasonably equivalent value and fair consideration for the Purchased Property;
(iv) the Buyer is a good faith purchaser of the Purchased Property, as that term
is used in Section 363(m) of the Bankruptcy Code, and is entitled to the
protections provided by such section; and (v) the sale and transfer of the
Purchased Property to the Buyer shall vest the Buyer with all right, title and
interest to the Purchased Property free and clear of Liens, other than Liens
included in the Assumed Liabilities;
10
"SALE TRANSACTION" shall mean any of the following transactions: (i) a
sale of all or substantially all of the assets of the Buyer; (ii) the
acquisition in one or a series of transactions of a direct or indirect interest
in more than 50% of the ownership, voting stock or voting control of the Buyer
by way of purchase, merger, consolidation or otherwise by one or more Persons
that were not in control of the Buyer as of the Closing Date; or (iii) a
complete liquidation or dissolution of the Buyer; provided that any transaction
occurring after the Closing Date which is solely amongst Initial-Buyer
Stockholders will not be considered a Sale Transaction;
"SALES OBLIGATIONS" shall mean all the Seller's outstanding and
unexpired sales orders, contracts or other commitments to purchasers of goods
and services of the Business;
"SCHEDULE" shall mean the applicable schedule to the Seller Disclosure
Letter;
"SEC" shall mean the Securities and Exchange Commission;
"SEC REPORTS" - See Section 5.3(b);
"SECURITIES" shall mean the 10% Senior Notes due 2008 and the 9-3/8%
Senior Notes due 2008 of the Seller and Lyon;
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended;
"SELLER" -- See the Preamble hereto;
"SELLER DISCLOSURE LETTER" shall mean the letter of the Seller dated
the date hereof and addressed to the Buyer relating to this Agreement;
"SELLER'S ACCOUNT" -- See Section 3.2;
"SELLER'S PRORATED PORTION" shall mean, with respect to any real and
personal property taxes and assessments on the Purchased Property for any
taxable period commencing prior to the day immediately preceding the Closing
Date and ending after the Closing Date, the amount of such taxes as determined
by prorating such taxes on a per-diem basis between the Buyer and the Seller as
of the close of business on the Closing Date, with such proration being
allocated so that items relating to time periods ending on or prior to the
Closing Date are considered part of Seller's Prorated Portion and items related
to time periods beginning after the Closing Date are not considered part of
Seller's Prorated Portion;
"SHAREHOLDERS AGREEMENT" shall mean the Second Amended and Restated
Shareholders' Agreement, dated November 22, 2000, by and among the Seller, Derby
Finance S.a.r.l., DC Cycle L.L.C., Xxxxxx Equity Investors III, L.P., Perseus
Cycle L.L.C. and Quantum Industrial Partners LDC, as amended;
"SUPERFUND" - See Section 5.13;
"SUPERIOR BID" -- See SCHEDULE 1.3(A);
11
"TAX CAP" -- See Section 10.1(b);
"TAXES" shall mean all taxes, however denominated, relating to the
Business including any interest, penalties or additions to tax that may become
payable in respect thereof, imposed by any Government, which taxes shall include
all income taxes, payroll and employee withholding, unemployment insurance,
social security (or similar), sales and use, excise, franchise, gross receipts,
occupation, real and personal property, stamp, transfer, workmen's compensation,
customs duties, registration, documentary, value added, alternative or add-on
minimum, estimated, environmental (including taxes under Section 59A of the
Code) and other obligations of the same or a similar nature, whether arising
before, on or after the Closing Date, and any liability for any of the foregoing
resulting from a Person being a transferee of or a member of an affiliated or
combined group; and "TAX" shall mean any one of them;
"TAX RETURNS" shall mean any report, return, information return, filing
or other information, including any schedules, exhibits or attachments thereto,
and any amendments to any of the foregoing required to be filed or maintained in
connection with the calculation, determination, assessment or collection of any
Taxes (including estimated Taxes);
"THIRD PARTY CLAIMS" -- See Section 15.16;
"TO THE BUYER'S KNOWLEDGE" shall mean the actual knowledge, without any
obligation to make inquiry, of the executive officers of the Buyer;
"TO THE SELLER'S KNOWLEDGE" shall mean the actual knowledge, without
any obligation to make inquiry, of the executive officers of the Seller;
"TRANSACTION FEES" shall mean any Sale Fee due to Lazard under its
Engagement Letter dated as of January 1, 2001 and the Success Fee due to
Jefferies & Co., Inc., under its Engagement Letter with the Seller;
"TRANSACTION TAXES" -- See Section 10.1(a);
"TRANSFERRED EMPLOYEES" -- See Section 9.1(b);
"TRANSITION SERVICES AGREEMENT" -- See Section 11.6;
"TRUSTEE ACCOUNT" -- See Section 3.4;
"WARN" -- See Section 9.1(a);
"WELFARE TYPE PLANS" -- See Section 9.2(a).
12
SECTION 2. PURCHASE AND SALE OF THE PURCHASED PROPERTY.
-------------------------------------------
SECTION 2.1. TRANSFER OF ASSETS. Subject to the terms and
conditions herein set forth and pursuant to, among others, Sections 105, 363 and
365 of the Bankruptcy Code, the Seller shall sell, convey, transfer, assign and
deliver to the Buyer, and the Buyer shall purchase and accept from the Seller,
on the Closing Date, all right, title and interest of the Seller in and to the
Purchased Property, wherever located.
The Buyer expressly agrees and understands that the Seller shall not
sell, convey, transfer, assign or deliver to the Buyer and the Buyer shall not
purchase the Excluded Assets.
SECTION 2.2. SALE AT CLOSING DATE. The sale, transfer, assignment
and delivery by the Seller of the Purchased Property to the Buyer, as herein
provided (the "Sale"), shall be effected on the Closing Date by deeds, bills of
sale, endorsements, assignments and other instruments of transfer and conveyance
reasonably satisfactory in form and substance to counsel for the Buyer
including, with respect to the shares of Derby Holding (Deutschland) GmbH and
others, as applicable, a duly notarized deed of conveyance substantially in the
form of Exhibit A hereto.
SECTION 2.3. ASSUMPTION OF LIABILITIES. From and after the
Closing, the Buyer shall assume and the Buyer hereby agrees to pay, perform and
discharge when due, all of the liabilities and obligations of the Seller, other
than the Excluded Liabilities (the "Assumed Liabilities"), including but not
limited to:
(a) all trade payables and accruals;
(b) all administrative expenses incurred during the Bankruptcy
Case;
(c) all liabilities, obligations and duties arising under any and
all Assumed Executory Contracts;
(d) all obligations and liabilities of the Seller with respect to
Transferred Employees and Employees to the extent provided in Section 9 of this
Agreement and all obligations and liabilities of the Seller with respect to
accrued commissions and bonuses;
(e) any wages, salary, severance, bonuses, commissions, vacation
or holiday pay, post retirement medical benefits, fringe benefits, long-term
disability benefits, life insurance benefits, any duties, obligations or
liabilities arising under any employee benefit plan, policy or practice, whether
defined by Section 3(3), ERISA or otherwise, relating to Employees or other
amounts due to any Employees or former employees of the Business (the Seller
shall transfer to the Buyer all benefit plans, policies or practices, along with
all associated funding vehicles, including but not limited to all reserves,
trusts and insurance contracts, and take all actions necessary to effect such
transfers from the Seller to the Buyer);
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(f) all liabilities for damages to Persons or property arising out
of alleged defects in Products manufactured by the Seller, or arising under
warranties issued by the Seller;
(g) all liabilities to repair or replace, or to refund the sales
price (plus commercially reasonable related expenses) of, Products manufactured
by the Seller which any customer claims to be defective;
(h) all obligations and liabilities with respect to equipment and
machinery owned by any customer of the Seller or any other third party and in
the possession of the Seller;
(i) all liabilities relating to or arising under Environmental
Laws;
(j) all Transaction Fees;
(k) all Taxes other than U.S. federal income Taxes; and
(l) all Accepted Affiliate Payables.
SECTION 2.4. ONGOING AND TRANSITION SERVICES. At the Closing, the
provision of all data processing, accounting, banking, personnel, legal,
communications and other products or services currently provided to the Business
by the Seller, including any agreements or understandings (written or oral) with
respect thereto, will terminate, except as provided in the Transition Services
Agreement.
SECTION 3. PURCHASE PRICE.
--------------
SECTION 3.1. PURCHASE PRICE. The purchase price for the sale and
transfer of the Purchased Property is the sum of (I) (a) $20,000,000 in cash
(the "CLOSING PURCHASE PRICE"), which Closing Purchase Price is payable and
deliverable in accordance with Section 3.3 and subject to adjustment, if any, as
provided in Section 10.1(b), PLUS (b) the total value of the Accepted Affiliate
Receivables as calculated in accordance with Section 12.11 less the total value
of the Accepted Affiliate Payables as calculated in accordance with Section
11.9, LESS (c) any Transaction Fees, and (II) any Contingent Purchase Price that
becomes payable as provided in Section 3.5.
SECTION 3.2. DEPOSIT. On the date hereof, the Buyer has deposited
with the Seller $1,000,000 (the "DEPOSIT"), to be held by the Seller in an
interest-bearing segregated account (the "SELLER'S ACCOUNT") pending the earlier
of the termination of this Agreement pursuant to Section 13 and the Closing
Date. The Deposit shall be held and disbursed pursuant to the terms of this
Agreement.
SECTION 3.3. PAYMENT OF CLOSING PURCHASE PRICE. In payment for the
Purchased Property, at the Closing Date:
(a) the Seller shall retain the Deposit, together with any
interest accrued thereon, and shall apply such amount against the Closing
Purchase Price;
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(b) the Buyer shall pay to the Seller the Closing Purchase Price
less the amount retained by the Seller pursuant to clause (a) above, by wire
transfer of immediately available funds to the Seller's Account;
(c) the Buyer shall execute and deliver to the Seller a mutually
satisfactory instrument of assumption of liabilities with respect to the Assumed
Liabilities containing customary terms; and
(d) the Buyer shall pay the Transaction Fees to Lazard and
Jefferies & Co., Inc.
SECTION 3.4. PAYMENT OF CASH COLLATERAL AMOUNT. The Buyer shall
cause any Cash Collateral which is released during the forty-five (45) day
period following the Closing Date by the holder thereof to be paid to an account
or accounts designated in writing by the trustee under the indentures governing
the Securities, for the benefit of the holders of the Securities (the "TRUSTEE
ACCOUNT"). On the forty-fifth (45th) day following the Closing Date, the Buyer
shall wire funds to the Trustee Account in an amount equal to the difference
between the Cash Collateral Amount and the amount of Cash Collateral paid into
the Trustee Account pursuant to this Section 3.4 prior to such date. To the
extent that the Seller and the Excluded Subsidiaries or any of their direct or
indirect subsidiaries are obligors of the Collateralized Obligations, the Buyer
shall use its commercially reasonable efforts to cause such entities to be
released from such obligations.
SECTION 3.5. CONTINGENT PURCHASE PRICE. (a) If a Sale Transaction
is consummated that results in Equity Proceeds of at least $15 million, then,
within five Business Days after consummation of such Sale Transaction, the Buyer
shall pay (or cause to be paid) to the Seller a percentage of such Equity
Proceeds determined in accordance with the following table (the "CONTINGENT
PURCHASE PRICE");
--------------------------------------------------------------------------------
EQUITY PROCEEDS PERCENTAGE
--------------------------------------------------------------------------------
$15,000,000 to $19,999.999 10%
--------------------------------------------------------------------------------
$20,000,000 to $24,999,999 11%
--------------------------------------------------------------------------------
$25,000,000 to $29,999,999 12%
--------------------------------------------------------------------------------
$30,000,000 to $34,999,999 13%
--------------------------------------------------------------------------------
$35,000,000 to $39,999,999 14%
--------------------------------------------------------------------------------
$40,000,000 or greater 15%
--------------------------------------------------------------------------------
To the extent such Equity Proceeds consist of cash (or cash equivalents) and
other property, such Contingent Purchase Price shall, at the option of the
Buyer, be paid (i) in cash (or cash equivalents) or (ii) in a combination of
cash (or cash equivalents) and other property as long as the percentage of such
Contingent Purchase Price that is paid in cash (or cash equivalents) is not less
than the percentage of the Equity Proceeds that consists of cash (or cash
equivalents). The
15
Buyer shall not be required to deliver any property to the Seller in payment of
Contingent Purchase Price if the delivery of such property would violate any
federal, state or foreign securities laws or regulations; provided that the
Buyer shall have used its best efforts to structure the Sale Transaction in such
a way as to avoid such a situation, and that if such a situation nevertheless
exists, the Buyer shall use its best efforts and shall take all appropriate
steps to deliver such property in compliance with such laws or regulations,
including without limitation by effecting the registration under the Securities
Act or other laws or regulations of any securities that constitute part of such
property. If the foregoing efforts prove unsuccessful, the Buyer shall provide
the Seller with cash or other consideration reasonably acceptable to the Seller
that is reasonably equivalent in economic value to the property that cannot be
delivered to the Seller.
(b) The Buyer shall not effect any Initial-Buyer Registration on
behalf of any Initial-Buyer Stockholder unless such Initial-Buyer Stockholder
agrees to pay to the Seller, upon consummation of any sale of Initial-Buyer
Stock pursuant to such Initial-Buyer Registration, a percentage of the net
proceeds received by such Initial-Buyer Stockholder from such sale of
Initial-Buyer Stock equal to the percentage that would have been obtained under
the table set forth in Section 3.5(a) hereof if "Equity Proceeds" as used in
such table was an amount equal to the total Fair Market Value of all shares of
Initial-Buyer Stock computed at the time of such sale.
SECTION 4. CLOSING.
-------
The closing hereunder (the "CLOSING") shall take place at the offices
of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 at 10:00 a.m. on the first Business Day following the
satisfaction or waiver by the appropriate party of all the conditions contained
in Sections 12 and 13 hereof (other than conditions that by their nature may be
satisfied only at the Closing) or on such other date and at such other place and
time as may be mutually agreed to by the parties hereto (the "CLOSING DATE").
Consummation of the transactions at Closing shall be effective as of the close
of business of the date immediately preceding the Closing.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
--------------------------------------------
The Seller hereby represents and warrants to the Buyer as follows:
SECTION 5.1. CORPORATE ORGANIZATION. The Seller and each of the
Purchased Subsidiaries are listed on SCHEDULE 5.1 hereto. The Seller and each of
the Purchased Subsidiaries that is material to the Business is duly organized
and validly existing under the laws of the jurisdiction of its organization.
SECTION 5.2. QUALIFICATION TO DO BUSINESS. The Seller and each of
the Purchased Subsidiaries is duly qualified to do business as a foreign
corporation and is in good standing in every jurisdiction in which the character
of the properties owned or leased by it or the nature of the business conducted
by it makes such qualification necessary, except where the
16
failure to be qualified and in good standing would not be reasonably expected to
have a Material Adverse Effect.
SECTION 5.3. (a) AUTHORIZATION AND VALIDITY OF AGREEMENT. The
Seller has all requisite corporate power and authority to enter into this
Agreement and the Transition Services Agreement, and, subject to the Bankruptcy
Court's entry of the Orders, any filings or waiting periods under the HSR Act or
under any similar legislation in any other applicable jurisdiction, and the
receipt of the consents, waivers and approvals set forth on SCHEDULE 5.5 hereto,
to carry out its obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Transition Services Agreement, and the
performance of the Seller's obligations hereunder and thereunder have been duly
authorized by all necessary corporate action by the board of directors and
stockholders of the Seller, and no other corporate proceedings on the part of
the Seller are necessary to authorize such execution, delivery and performance.
This Agreement has been duly executed by the Seller and, subject to the
Bankruptcy Court's entry of the Orders, constitutes its valid and binding
obligation, enforceable against the Seller in accordance with its terms.
(b) SEC FILINGS. The Seller has filed all forms, reports, exhibits
and other documents required to be filed with the SEC under the Exchange Act
since December 31, 2000 and has made available to the Buyer (i) its Quarterly
Report on Form 10-Q for the period ended March 31, 2001 and its Annual Report on
Form 10-K for the fiscal year ended December 31, 2000, (ii) all other reports or
registration statements filed by the Seller with the SEC under the Exchange Act
since December 31, 2000, and (iii) all amendments, supplements and exhibits to
all such reports and registration statements filed by the Seller with the SEC
(collectively the "SEC REPORTS"). The SEC Reports (i) when filed complied with
the applicable requirements of the Securities Act or the Exchange Act and the
SEC's rules thereunder, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. No subsidiary of the Seller other than Lyon has any class
of securities registered pursuant to the Exchange Act.
(c) FINANCIAL STATEMENTS. Each of the consolidated financial
statements contained in the SEC Reports was prepared in accordance with GAAP
throughout the periods involved (except as may be indicated in the notes
thereto) and each fairly presents, in all material respects, the consolidated
financial position of the Seller and its subsidiaries as at the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to year-end adjustments.
SECTION 5.4. NO CONFLICT OR VIOLATION. Subject to (i) the receipt
of all consents, waivers and approvals set forth on SCHEDULE 5.5 hereto and (ii)
the Bankruptcy Court's entry of the Orders and any filings or waiting periods
under the HSR Act or under any similar legislation in any other applicable
jurisdiction, the execution, delivery and performance by the Seller of this
Agreement and the Transition Services Agreement do not and will not violate or
17
conflict with any provision of the Certificate of Incorporation or By-laws
(collectively, the "ORGANIZATIONAL DOCUMENTS") of the Seller and do not and will
not violate any provision of law, or any order, judgment or decree of any
Government applicable to the Seller, nor will they violate or result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
contract, lease, loan agreement, mortgage, security agreement, trust indenture
or other agreement or instrument attached as an exhibit in the SEC Reports or
set forth on SCHEDULE 5.4 hereto, to which the Seller or any of the Purchased
Subsidiaries is a party or by which it is bound or to which any of its
properties or assets is subject, which violation, conflict, breach or default
would reasonably be expected to have a Material Adverse Effect.
SECTION 5.5. CONSENTS AND APPROVALS. Except as set forth on
SCHEDULE 5.5 hereto, no consent, waiver, authorization or approval of any
Government, and no declaration to or filing or registration with any such
Government, except for the Orders and pursuant to the HSR Act or under any
similar legislation in any other applicable jurisdiction, is required in
connection with the execution and delivery of this Agreement by the Seller or
the performance by the Seller of its obligations hereunder, except for such
consents, waivers, authorizations, approvals, declarations, filings or
registrations the failure to obtain or effect would not reasonably be expected
to have a Material Adverse Effect.
SECTION 5.6. COMPLIANCE WITH LAW. Except as set forth on SCHEDULE
5.6 hereto and in the SEC Reports, neither the Seller nor any of the Purchased
Subsidiaries has received written notice of any violation of any law,
regulation, order or other legal requirement, nor is in default with respect to
any order, writ, judgment, award, injunction or decree of any national, state or
local court or governmental or regulatory authority or arbitrator, domestic or
foreign, applicable to the Business, other than violations the consequences of
which would not reasonably be expected to have a Material Adverse Effect.
SECTION 5.7. LITIGATION. Except as set forth on SCHEDULE 5.7
hereto and in the SEC Reports, there are no claims, actions, suits, proceedings
or investigations pending or, to the knowledge of the Seller, threatened, before
any federal or state court brought by or against the Seller or any of the
Purchased Subsidiaries or any of their respective directors or officers relating
to the Business that would reasonably be expected to have a Material Adverse
Effect. Except as set forth on SCHEDULE 5.7 hereto, there are no orders, writs,
injunctions or decrees currently in force against the Seller or any of the
Purchased Subsidiaries or any of their respective directors or officers relating
to the Business that would reasonably be expected to have a Material Adverse
Effect.
SECTION 5.8. LABOR RELATIONS. Except as set forth on SCHEDULE 5.8
hereto and in the SEC Reports, neither the Seller nor any of the Purchased
Subsidiaries is a party to any collective bargaining agreement and there are no
unfair labor practice proceedings or any labor dispute pending or, to the
knowledge of the Seller, threatened, between the Seller or any Purchased
Subsidiary, on the one hand, and any of their respective current or former
employees or any labor or other collective bargaining unit representing any
current or former employee, on the other hand, that would reasonably be expected
to have a Material Adverse Effect.
18
SECTION 5.9. EMPLOYEE BENEFITS. SCHEDULE 5.9 hereto lists all
material Employee Benefit Plans, any material executive compensation
arrangement, any material excess benefit plan or supplemental pension plan, any
material change in control agreement or severance plan or arrangement, that the
Seller maintains, has entered into, or to which the Seller contributes for the
benefit of any Employee.
SECTION 5.10. REAL PROPERTIES. The ownership of all real property
owned by the Seller or the Purchased Subsidiaries (the "PURCHASED REAL
PROPERTY") or the lease of the property covered by each lease other than the
Rejected Contracts (collectively, the "LEASES") pursuant to which the Seller and
the Purchased Subsidiaries lease real property as lessees (the "LEASED REAL
PROPERTY") or the use thereof, as presently used by the Business, does not
violate any local zoning or similar land use laws or governmental regulations,
which violation would reasonably be expected to have a Material Adverse Effect.
Neither the Seller nor any of the Purchased Subsidiaries is in violation of or
in noncompliance with any covenant, condition, restriction, order or easement
affecting the Purchased Real Property or the Leased Real Property where such
violation or noncompliance would reasonably be expected to have a Material
Averse Effect. There is no condemnation or, to the Seller's knowledge,
threatened condemnation, affecting the Purchased Real Property or the Leased
Real Property, where such condemnation would reasonably be expected to have a
Material Adverse Effect.
SECTION 5.11. TITLE, OWNERSHIP AND RELATED MATTERS. Subject to the
entry of the Sale Order, at the Closing the Seller will have good title to all
Purchased Property that is owned by the Seller and the right by license, lease
or other agreement to use all other Purchased Property, in each case free and
clear of all Liens, other than Liens included in the Assumed Liabilities.
SECTION 5.12. TAX MATTERS. Except as set forth on SCHEDULE 5.12
hereto:
(i) the Seller and the Purchased Subsidiaries have filed when due
all material Tax Returns relating to the Business required by
applicable law to be filed by the Seller or the Purchased Subsidiaries
on or prior to the Closing Date, and has paid all material Taxes due
for the taxable periods to which such Tax Returns relate, except for
such payment obligations that have been stayed by the filing of the
Bankruptcy Case;
(ii) to the Seller's knowledge, there is no action, suit,
proceeding, investigation, audit or claim now pending against, or with
respect to, the Seller or the Purchased Subsidiaries in respect of any
material Tax, nor, to the Seller's knowledge, is there any claim for
additional material Tax asserted by any taxing authority; and
(iii) the Seller is a non-resident of Canada for the purpose of the
Income Tax Act (Canada), as amended.
SECTION 5.13. ENVIRONMENTAL MATTERS. Except as set forth on
SCHEDULE 5.13 hereto, or as would not reasonably be expected to have a Material
Adverse Effect:
19
(a) the Seller and each Purchased Subsidiary (i) has obtained all
Environmental Permits that are required for the lawful operation of the
Business, (ii) is in compliance in all material respects with all terms and
conditions of all Environmental Permits and with any applicable Environmental
Law and (iii) has not received written notice of any material violation by or
material claim against the Business under any Environmental law.
(b) There have been no Releases of any Hazardous Substances into,
on or under any of the properties owned or operated by the Seller or any
Purchased Subsidiary in respect of the Business.
(c) Neither the Seller nor any Purchased Subsidiary has been
identified as a potentially responsible party at any federal or state National
Priority List ("SUPERFUND") site.
SECTION 5.14. ABSENCE OF CERTAIN CHANGES. Since March 31, 2001,
except as set forth on Schedule 5.14 hereto, there has not occurred with respect
to the Business:
(i) any payment, discharge or satisfaction of any liabilities or
obligations (whether accrued, absolute, contingent or otherwise) in
excess of $250,000, other than the payment, discharge or satisfaction,
in the ordinary course of business, of liabilities or obligations
incurred in the ordinary course of business;
(ii) any sale, transfer, distribution or other disposal of any
assets (other than Excluded Assets), except for sales of Inventory or
other assets in the ordinary course of business;
(iii) any increase in the base compensation or other payment to any
director, officer or employee of the Business, whether now or hereafter
payable or granted, or entry into or variation of the terms of any
employment or incentive agreement with any such Person (other than
increases or variations in base compensation in the ordinary course of
business) or entry into or variation of the terms of any employment or
incentive agreements with any such Person;
(iv) any capital expenditure or commitment for additions to
property, plant or equipment, or lease agreement which exceeds
$150,000;
(v) any material change in any method of accounting or keeping its
books of account or accounting practices;
(vi) any damage or destruction of any asset, whether or not covered
by insurance, which exceeds $250,000; or
(vii) any dividend distributions or any similar distributions (other
than any intercompany dividends).
SECTION 5.15. ABSENCE OF UNDISCLOSED LIABILITIES. Neither the
Seller nor any of the Purchased Subsidiaries has any indebtedness or liability,
absolute or contingent,
20
known or unknown, which is not shown or provided for in the SEC Reports other
than indebtedness and liabilities (i) as shall have been incurred in the
ordinary course of business since Xxxxx 00, 0000, (xx) disclosed in this
Agreement or the Schedules hereto, (iii) which would not reasonably be expected
to have a Material Adverse Effect, or (iv) which are not Assumed Liabilities.
SECTION 5.16. INTELLECTUAL PROPERTY. Except as set forth on
SCHEDULE 5.16 hereto, or as would not reasonably be expected to have a Material
Adverse Effect:
(i) the Seller and the Purchased Subsidiaries own or have the
right to use all Intellectual Property material to the Business
("MATERIAL INTELLECTUAL PROPERTY"). To the knowledge of the Seller, no
Person is infringing upon any Material Intellectual Property.
(ii) To the Seller's knowledge, there is no pending or threatened
claim against the Seller or any of the Purchased Subsidiaries, or the
licensors of Material Intellectual Property owned by third parties that
is licensed to the Seller or the Purchased Subsidiaries asserting that
any of such Material Intellectual Property, or the Sellers' or the
Purchased Subsidiaries' use thereof, infringes upon or violates the
rights of any third party.
SECTION 5.17. MATERIAL CONTRACTS. Except as set forth on SCHEDULE
5.17 hereto:
(i) Each contract or agreement (other than a Rejected Contract)
that is material to the Business (a "MATERIAL CONTRACT") is in full
force and effect and will remain in full force and effect immediately
following the Closing, except for any Material Contracts the failure of
which to be in full force and effect as of the date hereof would not
individually or in the aggregate have a Material Adverse Effect;
(ii) neither the Seller nor any of the Purchased Subsidiaries is in
material breach or default, and to the Seller's knowledge no other
party is in material breach or default, and no event has occurred which
with notice or lapse of time would constitute a material breach or
default or permit termination, modification, or acceleration, under
such Material Contract, except insofar as any such possible breaches,
defaults, terminations, modifications or accelerations would not
individually or in the aggregate have a Material Adverse Effect; and
(iii) to the Seller's knowledge, no party has repudiated any
provision of a Material Contract, except insofar as any such possible
repudiation would not individually or in the aggregate have a Material
Adverse Effect.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
-------------------------------------------
The Buyer hereby represents and warrants to the Seller as follows:
21
SECTION 6.1. CORPORATE ORGANIZATION. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of Delaware
and has all requisite corporate power and authority to own its properties and
assets and to conduct its businesses as now conducted.
SECTION 6.2. QUALIFICATION TO DO BUSINESS. The Buyer is duly
qualified to do business as a corporation and is in good standing in every
jurisdiction in which the character of the properties owned or leased by it or
the nature of the business conducted by it makes such qualification necessary,
except where the failure to be qualified and in good standing would not,
individually or in the aggregate, have a material adverse effect on the Buyer's
ability to consummate the transactions contemplated by this Agreement.
SECTION 6.3. AUTHORIZATION AND VALIDITY OF AGREEMENT. The Buyer
has all requisite corporate power and authority to enter into this Agreement and
the Transition Services Agreement, and to carry out its obligations hereunder
and thereunder. The execution and delivery of this Agreement and the Transition
Services Agreement, and the performance of the Buyer's obligations hereunder and
thereunder have been duly authorized by all necessary corporate action by the
board of directors of the Buyer, and no other corporate proceedings on the part
of the Buyer are necessary to authorize such execution, delivery and
performance. This Agreement has been duly executed by the Buyer and constitutes
its valid and binding obligation, enforceable against the Buyer in accordance
with its terms.
SECTION 6.4. NO CONFLICT OR VIOLATION. The execution, delivery and
performance by the Buyer of this Agreement and the Transition Services
Agreement, do not and will not violate or conflict with any provision of the
Certificate or Articles of Incorporation or By-laws (or equivalent documents) of
the Buyer and do not and will not violate any provision of law, or any order,
judgment or decree of any Government applicable to the Buyer, nor will they
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which the Buyer is a party
or by which it is bound or to which any of its properties or assets is subject.
SECTION 6.5. CONSENTS AND APPROVALS. The execution, delivery and
performance of this Agreement and the Transition Services Agreement, on behalf
of the Buyer do not require the consent or approval of, or filing with, any
Government or any other Person except: (i) as required pursuant to the HSR Act
or under any similar legislation in any other applicable jurisdiction; (ii) for
entry of the Orders by the Bankruptcy Court; or (iii) for such consents,
approvals and filings, the failure to obtain or make which would not,
individually or in the aggregate, have a material adverse effect on the ability
of the Buyer to consummate the transactions contemplated hereby.
SECTION 6.6. ADEQUATE ASSURANCES REGARDING ASSUMED EXECUTORY
CONTRACTS. To the Buyer's knowledge, the Buyer is and will be capable of
satisfying the conditions contained in Sections 365(b)(1)(C) and 365(f) of the
Bankruptcy Code with respect to the Assumed Executory Contracts.
22
SECTION 6.7. INVESTIGATION BY THE BUYER. The Buyer has conducted
its own independent review and analysis of the business, operations, technology,
assets, liabilities, results of operations, financial condition and prospects of
the Business and acknowledges that the Seller has provided the Buyer with access
to the personnel, properties, premises and records of the Business for this
purpose. In entering into this Agreement, the Buyer has relied solely upon its
own investigation and analysis, and the Buyer (a) acknowledges that neither the
Seller nor any of its respective directors, officers, stockholders, employees,
Affiliates, controlling persons, agents or representatives makes or has made any
representation or warranty, either express or implied, as to the accuracy or
completeness of any of the information provided or made available to the Buyer
or its directors, officers, employees, Affiliates, controlling persons, agents
or representatives, except as and only to the extent expressly set forth herein
with respect to such representations and warranties and subject to the
limitations and restrictions contained in this Agreement, and (b) agrees, to the
fullest extent permitted by law, that neither the Seller, nor any of its
respective directors, officers, stockholders, employees, Affiliates, controlling
persons, agents or representatives shall have any liability or responsibility
whatsoever to the Buyer or its directors, officers, employees, Affiliates,
controlling persons, agents or representatives on any basis (including, without
limitation, in contract or tort, under federal or state securities laws or
otherwise) based upon any information provided or made available, or statements
made, to the Buyer or its directors, officers, employees, Affiliates,
controlling persons, agents or representatives (or any omissions therefrom),
including, without limitation, in respect of the specific representations and
warranties of the Seller set forth in this Agreement, except, with regard to the
Seller, as and only to the extent expressly set forth herein with respect to
such representations and warranties and subject to the limitations and
restrictions contained in this Agreement.
SECTION 6.8. FUNDING. The Buyer has, and will have on the Closing
Date, sufficient readily available funds to pay the Closing Purchase Price and
fulfill all of its financial obligations under this Agreement.
SECTION 7. COVENANTS OF THE SELLER.
-----------------------
SECTION 7.1. CONDUCT OF BUSINESS BEFORE CLOSING DATE. Except as
set forth on SCHEDULE 7.1 hereto, without the prior written consent of the Buyer
or the authorization of the Bankruptcy Court, after notice and a hearing,
between the date hereof and the Closing Date, the Seller shall not, except as
required or expressly permitted pursuant to the terms hereof:
(i) incur or permit to be incurred any obligation or liability
(exclusive of health and property insurance premiums) in excess of
$100,000, except for Inventory purchases in the ordinary course of
business and Professional Fees;
(ii) voluntarily permit to be incurred any Lien on any of the
Purchased Property;
(iii) increase the rate of compensation for any of the Employees,
except for increases in the ordinary course of business, or enter into
or amend in any material
23
respect any employment, consulting or service agreement respecting the
Business providing for annual payments in excess of $100,000;
(iv) enter into or amend in any material respect any profit
sharing, deferred compensation, bonus, pension, retirement, incentive
or fringe benefit plan for the Employees, other than in the ordinary
course of business;
(v) terminate any of the Employees except in the ordinary course
of business;
(vi) make or commit to any capital expenditure in excess of $50,000
or make or commit to capital expenditures which would, in the
aggregate, exceed $250,000; or
(vii) dispose of any of the Purchased Property with a value in
excess of $100,000, except for transactions pursuant to the Contracts
and except for dispositions of Inventory in the ordinary course of
business.
SECTION 7.2. CONSENTS AND APPROVALS. The Seller shall use
commercially reasonable efforts to obtain all necessary consents, waivers,
authorizations and approvals of all Governments, and of all other Persons,
required to be obtained by the Seller in connection with the execution, delivery
and performance by it of this Agreement.
SECTION 7.3. ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY.
The Seller shall afford to the Buyer, and to the accountants, counsel and
representatives of the Buyer, reasonable access during normal business hours
throughout the period prior to the Closing Date (or the earlier termination of
this Agreement pursuant to Section 13) to all books and records of the Seller
relating to the Business. The Seller shall also afford the Buyer full access,
during normal business hours, to the Business, to all operations of the Business
and to all Purchased Property throughout the period prior to the Closing Date;
provided, however, such access shall not include the right to conduct additional
environmental assessments or investigations. The rights of access contained in
this Section 7.3 are granted subject to, and on, the following terms and
conditions: (i) any such investigation will be conducted in such a manner as not
to interfere unreasonably with the operation of the Business; (ii) all
information provided to the Buyer or its representatives by or on behalf of the
Seller or their representatives (whether pursuant to this Section 7.3 or
otherwise) will be governed and protected by the terms of any confidentiality
agreement entered into between the Seller and the Buyer; and (iii) such rights
of access shall not affect or modify the conditions set forth in Section 12 of
this Agreement in any way.
SECTION 7.4. FURTHER ASSURANCES. Upon the request and at the
expense of the Buyer at any time after the Closing Date, the Seller shall
forthwith execute and deliver such documents as the Buyer or its counsel may
reasonably request to effectuate the purposes of this Agreement.
SECTION 7.5. REASONABLE EFFORTS. Upon the terms and subject to the
conditions of this Agreement, the Seller will use commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary or proper,
24
consistent with applicable law, to consummate and make effective the
transactions contemplated hereby including, without limitation, all reasonable
actions required to be taken by the Seller to (i) assume and assign the Assumed
Executory Contracts, including all actions to be taken pursuant to Sections
365(b) and (f) of the Bankruptcy Code and (ii) obtain the Bankruptcy Court's
entry and approval of the Orders.
SECTION 7.6. ASSIGNMENT OF ASSUMED EXECUTORY CONTRACTS AND
WARRANTIES. Anything contained herein to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign any Assumed Executory
Contract, if, notwithstanding the provisions of Sections 363 and 365 of the
Bankruptcy Code, an attempted assignment thereof, without the consent of the
third party thereto, would be invalid or constitute a breach thereof or in any
way negatively affect the rights of the Seller or the Buyer, as the assignee of
such Assumed Executory Contract, as the case may be, thereunder. If,
notwithstanding the provisions of Sections 363 and 365 of the Bankruptcy Code,
such consent or approval is required but not obtained, the Seller will cooperate
with the Buyer without further consideration, but at the Buyer's expense, in any
reasonable arrangement designed to provide for the Buyer the benefits of or
under any such Assumed Executory Contract, including, without limitation,
enforcement for the benefit of the Buyer of any and all rights of the Seller
against a third party thereto arising out of the breach or cancellation thereof
by such third party. Any assignment to the Buyer of any Assumed Executory
Contract which shall, notwithstanding the provisions of Sections 363 and 365 of
the Bankruptcy Code, require the consent or approval of any third party for such
assignment as aforesaid shall be made subject to such consent or approval being
obtained.
SECTION 7.7. CURE OF DEFAULTS. The Seller shall, on or prior to
the Closing, at the Buyer's expense, cure any and all defaults under the Assumed
Executory Contracts which defaults are required to be cured under the Bankruptcy
Code, so that such Assumed Executory Contracts may be assumed by the Seller and
assigned to the Buyer in accordance with the provisions of Section 365 of the
Bankruptcy Code.
SECTION 8. COVENANTS OF THE BUYER.
----------------------
SECTION 8.1. ACTIONS BEFORE CLOSING DATE. The Buyer shall not take
any action which shall cause it to be in breach of any representations,
warranties, covenants or agreements contained in this Agreement. The Buyer shall
use commercially reasonable efforts to perform and satisfy all conditions to
Closing to be performed or satisfied by the Buyer under this Agreement as soon
as possible, but in no event later than the Closing Date.
SECTION 8.2. CONSENTS AND APPROVALS. The Buyer shall use
commercially reasonable efforts to obtain all necessary consents, waivers,
authorizations and approvals of all Governments, and of all other Persons
required to be obtained by the Buyer to effect the transactions contemplated by
this Agreement.
SECTION 8.3. ADEQUATE ASSURANCES REGARDING ASSUMED EXECUTORY
CONTRACTS. With respect to each Assumed Executory Contract, at the Closing the
Buyer shall provide to the non-Seller party to such Assumed Executory Contract
adequate assurance of the
25
future performance of such Assumed Executory Contract, reasonably acceptable to
the Seller. The Buyer agrees that it will promptly take all actions as are
reasonably requested by the Seller to assist in obtaining the Bankruptcy Court's
entry of the Orders, including, without limitation, furnishing affidavits,
financial information or other documents or information for filing with the
Bankruptcy Court and making the Buyer's employees and representatives available
to testify before the Bankruptcy Court, all of which demonstrate adequate
assurance of future performance by the Buyer under the Assumed Executory
Contracts.
SECTION 8.4. PERFORMANCE UNDER ASSUMED EXECUTORY CONTRACTS. The
Buyer agrees that from and after the Closing Date it shall (i) assume all
obligations and liabilities of the Seller under the Assumed Executory Contracts
and (ii) take all actions necessary to satisfy its obligations and liabilities
under the terms and conditions of each of the Assumed Executory Contracts.
SECTION 8.5. BOOKS AND RECORDS OF THE BUYER; COOPERATION. The
Buyer shall afford to the Seller and to the accountants, counsel and
representatives of the Seller, reasonable access during normal business hours,
to all books, accounts, records, correspondence with accountants, Files and
Records and files of the Buyer relating to the Business conducted on or prior to
the Closing Date until the expiration of the applicable statute of limitations
for the retention of such documents. The Buyer agrees to make former employees
or consultants of the Business who are, at the relevant time, employed or
retained by the Buyer or its Affiliates available to the Seller, upon reasonable
notice and during normal business hours, with respect to any action, suit,
proceeding or investigation to which the Seller is a party or is otherwise
involved with regard to the Business, whether commenced before or after the
Closing Date.
SECTION 8.6. REORGANIZATIONS. If the planned transfer of the stock
of Engelbert held by Lyon to one of the Purchased Subsidiaries has not been
completed prior to the Closing Date, the Seller shall cause Lyon to transfer
such stock directly to the Buyer for no additional consideration and otherwise
on substantially similar terms and subject to substantially similar conditions
to those set forth with respect to the Sale in this Agreement. If the planned
transfer of the stock of Raleigh B.V. held by Derby Nederland B.V. to the Seller
has not been completed prior to the Closing Date, the Seller shall cause Derby
Nederland B.V. to transfer such stock directly to the Buyer for no additional
consideration and otherwise on substantially similar terms and subject to
substantially similar conditions to those set forth with respect to the Sale in
this Agreement.
SECTION 9. EMPLOYEES AND EMPLOYEE PLANS.
----------------------------
SECTION 9.1. OFFER OF EMPLOYMENT.
(a) OFFER TO HIRE. The Buyer shall offer to hire, effective as of
the Closing Date, in a comparable position at the same rate of pay, each active
employee of the Seller, on the day immediately prior to the Closing Date, and
all those inactive employees of the Seller who are on approved leave on such
date because of jury duty, family or medical leave, vacation or military duty
(such employees who are to be given offers of hire being hereinafter referred to
as
26
the "EMPLOYEES"). Unless an Employee declines the Buyer's offer of employment,
each of the Seller's Employees shall be deemed to have accepted the Buyer's
offer of employment and shall become an Employee of the Buyer as of the Closing
Date. The Buyer will have sole responsibility for any obligations or liabilities
to the Employees at all locations under the Worker Adjustment and Retraining
Notification Act ("WARN") to the extent WARN thresholds are exceeded as a result
of actions taken by the Buyer on or after the Closing Date.
(b) TRANSFERRED EMPLOYEES. The Employees who accept employment
with the Buyer shall be referred to herein collectively as the "TRANSFERRED
EMPLOYEES." Except as provided in the next sentence, the Buyer's obligation with
respect to Transferred Employees shall commence as of the Closing Date. If
Employees or former employees of the Seller on layoff on the Closing Date with
recall rights are later rehired, they shall become Transferred Employees, and
the Buyer's obligations with respect to such Employees shall commence as of the
date of rehire.
SECTION 9.2. EMPLOYEE WELFARE BENEFIT PLANS.
------------------------------
(a) The Buyer shall have responsibility for all Transferred
Employees (and their present or former dependents) with respect to claims
incurred or reported under all hospital, medical, life insurance, disability and
other Employee Welfare Benefit Plan expenses and benefits, and for all workers'
compensation, unemployment compensation and other government mandated benefits
(collectively referred to herein as "WELFARE TYPE PLANS") prior to or on or
after the Closing Date. All liability for accrued but unpaid vacation of
Transferred Employees or for vacation not taken as of the Closing Date shall be
the responsibility of the Buyer. The Seller shall transfer to the Buyer all
Welfare Type Plans and all associated funding vehicles (including but not
limited to all trusts and insurance contracts) and take all actions necessary to
effect such transfers from the Seller to the Buyer.
(b) Transferred Employees shall participate under the Buyer's
Employee Welfare Benefit Plans as of the Closing Date, if any, without any
waiting periods, without any evidence of insurability, and without the
application of any preexisting physical or mental condition restrictions except
to the extent applicable under the Seller's Employee Welfare Benefit Plans, but
counting claims incurred prior to the Closing Date for purposes of applying
deductibles, co-payments, out of pocket maximums, benefit maximums and the like.
(c) The Buyer shall have sole responsibility for "continuation
coverage" benefits payable on or after the Closing Date under the Seller's or
the Buyer's group health plans to all Transferred Employees and "qualified
beneficiaries" of Transferred Employees for whom a "qualifying event" has
occurred whether before or after the Closing. The phrases "CONTINUATION
COVERAGE," "QUALIFIED BENEFICIARIES" and "QUALIFYING EVENT" shall have the
meanings ascribed to them in Section 4980B of the Code and Sections 601-608 of
ERISA.
SECTION 9.3. RIGHTS. Nothing herein expressed or implied shall
confer upon any Transferred Employee or other employee or former employee of the
Seller or legal representatives thereof any rights or remedies, including,
without limitation, right to employment
27
or continued employment for any specified period, of any nature or kind
whatsoever or any right to specific terms or conditions of employment (including
rate of pay, fringe benefits or position) under or by reason of this Agreement.
SECTION 10. TAXES.
-----
The parties hereto hereby covenant and agree as follows:
SECTION 10.1. TAXES RELATED TO PURCHASE OF ASSETS; TAX CAP. (a)
Unless otherwise exempt under Section 1146(c) of the Bankruptcy Code or any
other applicable law or treaty, all state and local sales, transfer, gains,
excise, value- added or other similar taxes, including, without limitation, all
state and local taxes in connection with the transfer of the Purchased Property,
and all recording and filing fees (collectively, "TRANSACTION TAXES"), that may
be imposed by reason of the sale, transfer, assignment and delivery of the
Purchased Property, shall be paid by the Buyer, subject to subsection (b) below.
The Seller agrees to take all reasonable actions necessary to qualify for
exemption under Section 1146(c) consistent with a sale pursuant to Section 363
of the Bankruptcy Code. The Buyer and the Seller agree to cooperate to determine
the amount of Transaction Taxes payable in connection with the transactions
contemplated under this Agreement. The Seller agrees to assist the Buyer in the
preparation and filing of any and all required returns for or with respect to
such Transaction Taxes with any and all appropriate taxing authorities. In
addition, the Buyer agrees to assist the Seller by delivering resale
certificates with respect to any inventory of the Seller being transferred in
the Sale for all jurisdictions which impose a sales or use tax on the Sale.
(b) If the sum of (I) any Transaction Taxes and (II) the Seller's
Prorated Portion of any real property and personal property taxes on the
Purchased Property, in each case as reasonably estimated by the parties on or
prior to the Closing Date, in the aggregate exceed $500,000 (the "TAX Cap"), the
Closing Purchase Price shall be reduced dollar for dollar in the amount of such
excess.
SECTION 10.2. COOPERATION ON TAX MATTERS. The Buyer and the Seller
agree to furnish or cause to be furnished to each other, as promptly as
practicable, such information and assistance relating to the Business as is
reasonably necessary for the preparation and filing of any Tax Return, claim for
refund or other required or optional filings relating to Tax matters, for the
preparation for and proof of facts during any Tax audit, for the preparation for
any Tax protest, for the prosecution or defense of any suit or other proceeding
relating to Tax matters and for the answer to any governmental or regulatory
inquiry relating to Tax matters.
The Buyer agrees to retain possession of all accounting, business,
financial and Tax records and information (i) relating to the Business in
existence on the Closing Date transferred to the Buyer hereunder and (ii) coming
into existence after the Closing Date which relate to the Business before the
Closing Date, for a period of at least six years from the Closing Date. In
addition, from and after the Closing Date, the Buyer agrees that it will provide
access to the Seller and its attorneys, accountants and other representatives
(after reasonable notice and during normal business hours and without charge to
the Seller), access to the books, records,
28
documents and other information relating to the Business as the Seller may
reasonably deem necessary to (a) properly prepare for, file, prove, answer,
prosecute and/or defend any such Tax Return, claim, filing, tax audit, tax
protest, suit, proceeding or answer or (b) administer or complete the Bankruptcy
Case. Notwithstanding the forgoing, the Buyer shall not be required to prepare
any documents or determine any information not then in its possession in
response to a request under this Section 10.2.
SECTION 10.3. ALLOCATION OF PURCHASE PRICE AND PURCHASE PRICE
ALLOCATION FORMS. Prior to the Closing Date, the Buyer and the Seller shall
agree to allocate the Purchase Price and the Assumed Liabilities as between the
Buyer and the Seller (or any appropriate assignee of the Buyer) (the
"ALLOCATION"). The Allocation shall be attached to this Agreement prior to the
Closing as SCHEDULE 10.3 hereto and shall be modified after the Closing to
reflect any adjustments to the Purchase Price pursuant to Section 10.1 hereof.
The Buyer and the Seller shall cooperate in filing with the Internal Revenue
Service any required Forms 8594 as provided for in Section 1060 of the Code on a
basis consistent with the Allocation. For all Tax purposes, the Buyer and the
Seller agree to report the transactions contemplated by this Agreement in a
manner consistent with the terms of this Agreement, and that neither of them
will take any position inconsistent with such terms in the preparation, filing
and audit of any Tax Returns.
SECTION 10.4. STRUCTURE. The Buyer and the Seller shall cooperate
with each other and each use its commercially reasonable efforts to structure
the Sale to prevent creation of material tax liabilities resulting from
cancellation of any Excluded Affiliate Payables or Excluded Affiliate
Receivables. Any costs incurred in connection with such structuring, including,
without limitation, professional fees, shall be shared equally by the Buyer and
the Seller.
SECTION 11. CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER.
-------------------------------------------------
The obligations of the Seller to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which (except for
the conditions set forth in Sections 11.3(b) and 11.5 of this Agreement) may be
waived by the Seller in its sole discretion:
SECTION 11.1. REPRESENTATIONS AND WARRANTIES OF THE BUYER. All
representations and warranties made by the Buyer in this Agreement shall be true
and correct in all material respects on and as of the Closing Date as if again
made by the Buyer on and as of such date, except for failures to be true and
correct that do not result in a material adverse effect on the Buyer's ability
to perform its obligations under this Agreement, and the Seller shall have
received a certificate dated the Closing Date and signed by an officer of the
Buyer to that effect.
SECTION 11.2. PERFORMANCE OF THE OBLIGATIONS OF THE BUYER. The
Buyer shall have performed in all material respects all obligations required
under this Agreement to be performed by it on or before the Closing Date (except
with respect to the obligation to pay the Purchase Price in accordance with the
terms of this Agreement, which obligation shall be
29
performed in all respects as required under this Agreement) and the Seller shall
have received a certificate dated the Closing Date and signed by an officer of
the Buyer to that effect.
SECTION 11.3. CONSENTS AND APPROVALS; HSR ACT.
-------------------------------
(a) All material consents, waivers, authorizations and approvals
of any Government required in connection with the execution, delivery and
performance of this Agreement shall have been duly obtained and shall be in full
force and effect on the Closing Date.
(b) The applicable waiting period under the HSR Act or under any
similar legislation in any other applicable jurisdiction shall have expired or
terminated.
SECTION 11.4. NO VIOLATION OF ORDERS. No preliminary or permanent
injunction or other order issued by any Government, nor any statute, rule,
regulation, decree or executive order promulgated or enacted by any Government
that declares this Agreement invalid or unenforceable in any material respect or
which prevents the consummation of the material transactions contemplated hereby
shall be in effect.
SECTION 11.5. ENTRY OF THE SALE ORDER. (i) (A) The Bankruptcy Court
shall have entered the Sale Order in form and substance reasonably satisfactory
to the Seller and (B) no order staying or reversing or modifying or amending in
a manner which is materially adverse to the Seller, the Sale Order shall be in
effect on the Closing Date; and (ii) the Sale Order, as entered by the
Bankruptcy Court, shall not modify the terms and conditions of this Agreement or
the transactions contemplated hereby in such manner as to result in a material
diminution in the benefits of this Agreement to the Seller.
SECTION 11.6. TRANSITION SERVICES AGREEMENT. The Buyer and the
Seller shall have entered into a mutually satisfactory transition services
agreement containing customary terms (the "TRANSITION SERVICES AGREEMENT").
SECTION 11.7. NO ADDITIONAL MATERIAL TAX LIABILITY; PAYABLES AND
RECEIVABLES. The Seller, acting in good faith, shall be satisfied in its sole
discretion that the closing of the transactions contemplated herein will not
create material tax liabilities other than the Transaction Taxes, and that the
Affiliate Payables, Affiliate Receivables, Accepted Affiliate Payables and
Accepted Affiliate Receivables have been calculated and/or paid in an acceptable
amount.
SECTION 11.8. RESALE CERTIFICATES. The Buyer shall have delivered
resale certificates reasonably satisfactory to the Seller with respect to any
inventory of the Seller being transferred in the Sale for all jurisdictions
which impose a sales or use tax on the Sale.
SECTION 11.9. ACCEPTED AFFILIATE PAYABLES. Payment of the Accepted
Affiliate Payables by the Buyer in cash, or other form, either in full or at a
discounted value, in all cases acceptable to the Buyer in its sole discretion.
30
SECTION 12. CONDITIONS PRECEDENT TO THE PERFORMANCE BY THE BUYER.
----------------------------------------------------
The obligations of the Buyer to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which (except for
the conditions set forth in Sections 12.3(b) and 12.6 of this Agreement) may be
waived by the Buyer in its sole discretion:
SECTION 12.1. REPRESENTATIONS AND WARRANTIES OF THE SELLER. All
representations and warranties made by the Seller in this Agreement shall be
true and correct in all material respects on and as of the Closing Date as if
again made by the Seller on and as of such date, except for failures to be true
and correct that do not result in a Material Adverse Effect or a material
adverse effect on the Seller's ability to perform its obligations under this
Agreement, and the Buyer shall have received a certificate dated the Closing
Date and signed by an officer of the Seller to that effect.
SECTION 12.2. PERFORMANCE OF THE OBLIGATIONS OF THE SELLER. The
Seller shall have performed in all material respects all obligations required
under this Agreement to be performed by it on or before the Closing Date, except
for such failure to perform that do not have a Material Adverse Effect, and the
Buyer shall have received a certificate dated the Closing Date and signed by an
officer of the Seller to that effect.
SECTION 12.3. CONSENTS AND APPROVALS; HSR ACT.
(a) All material consents, waivers, authorizations and approvals
of any Government required in connection with the execution, delivery and
performance of this Agreement, shall have been duly obtained and shall be in
full force and effect on the Closing Date.
(b) The applicable waiting period under the HSR Act or under any
similar legislation in any other applicable jurisdiction shall have expired or
terminated.
SECTION 12.4. NO VIOLATION OF ORDERS. No preliminary or permanent
injunction or other order issued by any Government, nor any statute, rule,
regulation, decree or executive order promulgated or enacted by any Government
that declares this Agreement invalid or unenforceable in any material respect or
prevents the consummation of the material transactions contemplated hereby shall
be in effect.
SECTION 12.5. ENTRY OF THE BIDDING PROCEDURES ORDER. (i) (A) The
Bankruptcy Court shall have entered the Bidding Procedures Order in form and
substance reasonably satisfactory to the Buyer, (B) no order staying or
reversing or modifying or amending in a manner which is materially adverse to
the Buyer, the Bidding Procedures Order shall be in effect on the Closing Date
and (C) the Breakup Fee and Expense Reimbursements provisions contained therein,
as set forth herein, shall not have been amended or modified in any manner not
approved in writing by the Buyer; and (ii) the Bidding Procedures Order, as
entered by the
00
Xxxxxxxxxx Xxxxx, shall not modify in any material respect the terms and
conditions of this Agreement or the transactions contemplated hereby in such a
manner as to result in a material diminution in the benefits of this Agreement
to the Buyer.
SECTION 12.6. ENTRY OF THE SALE ORDER. (i) (A) The Bankruptcy Court
shall have entered the Sale Order in form and substance reasonably satisfactory
to the Buyer and (B) no order staying or reversing or modifying or amending in a
manner which is materially adverse to the Buyer, the Sale Order shall be in
effect on the Closing Date; and (ii) the Sale Order, as entered by the
Bankruptcy Court, shall not modify the terms and conditions of this Agreement or
the transactions contemplated hereby in such a manner as to result in a material
diminution in the benefits of this Agreement to the Buyer.
SECTION 12.7. CURE OF DEFAULTS. The Seller shall have cured, at the
Buyer's expense, any and all monetary defaults under the Assumed Executory
Contracts which are required to be cured under the Bankruptcy Code, so that such
Assumed Executory Contracts may be assumed by the Seller and assigned to the
Buyer in accordance with the provisions of Section 365 of the Bankruptcy Code,
other than such failures to cure that do not result in a Material Adverse
Effect.
SECTION 12.8. MATERIAL ADVERSE EFFECT. From the date of this
Agreement to the Closing Date there shall not have been a Material Adverse
Effect.
SECTION 12.9. TRANSITION SERVICES AGREEMENT. The Buyer and the
Seller shall have entered into the Transition Services Agreement.
SECTION 12.10. NO ADDITIONAL MATERIAL TAX LIABILITY; PAYABLES AND
RECEIVABLES. The Buyer, acting in good faith, shall be satisfied in its sole
discretion that the closing of the transactions contemplated herein will not
create material tax liabilities other than the Transaction Taxes, and that the
Affiliate Payables, Affiliate Receivables, Accepted Affiliate Payables and
Accepted Affiliate Receivables have been calculated and/or paid in an acceptable
amount.
SECTION 12.11. ACCEPTED AFFILIATE RECEIVABLES. Payment of the
Accepted Affiliate Receivables by the Seller in cash, or other form, either in
full or at a discounted value, in all cases acceptable to the Seller in its sole
discretion.
SECTION 13. TERMINATION.
-----------
SECTION 13.1. CONDITIONS OF TERMINATION. Notwithstanding anything
to the contrary contained herein, this Agreement may be terminated at any time
before the Closing:
(a) By mutual consent of the Seller and the Buyer;
(b) By the Buyer, on the date that is seventy-five (75) days after
the date hereof, if any condition contained in Section 12 has not been satisfied
or waived; PROVIDED, HOWEVER, that the right to terminate this Agreement under
this paragraph (b) shall not be
32
available to the Buyer if its failure to fulfill any of its obligations under
this Agreement shall have been the reason that the Closing shall not have been
consummated on or before said date;
(c) By the Seller, on the date that is seventy-five (75) days
after the date hereof, if any condition contained in Section 11 has not been
satisfied or waived; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this paragraph (c) shall not be available to the Seller if its
failure to fulfill any of its obligations under this Agreement shall have been
the reason that the Closing shall not have been consummated on or before said
date;
(d) By the Buyer or the Seller, if any Government has issued an
order, decree, injunction, stay or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the material transactions contemplated by
this Agreement, and such order, decree, injunction, stay, ruling or other action
has become final and non-appealable;
(e) Subject to the Buyer's obligation to keep its Bid open through
the earlier of the Closing Date of an Alternative Transaction under SCHEDULE
1.3(A) hereto and October 15, 2001, by either the Buyer or the Seller, upon
approval by the Bankruptcy Court of any Alternative Transaction under SCHEDULE
1.3(A) hereto based upon a Superior Bid;
(f) By the Buyer, on the date that is thirty (30) days after the
date hereof, if the Bidding Procedures Order shall not have been entered by the
Bankruptcy Court on or prior to such date;
(g) By the Buyer, on any date after September 28, 2001, if the
Auction (if any is held) shall not have concluded on or prior to such date with
the Buyer's bid being selected by the Seller as the highest or otherwise best
bid; or
(h) By the Buyer, on any date after October 15, 2001, if the Sale
Order shall not have been entered by the Bankruptcy Court on or prior to such
date.
If the Buyer or the Seller terminate this Agreement pursuant to the
provisions hereof, such termination will be effected by written notice to the
other party specifying the provision hereof pursuant to which such termination
is made.
SECTION 13.2. EFFECT OF TERMINATION; REMEDIES.
-------------------------------
(a) In the event of termination pursuant to Section 13.1, this
Agreement shall become null and void and have no effect (other than Sections 13
and 15 which shall survive termination), with no liability on the part of the
Seller or the Buyer, or their respective directors, officers, employees, agents,
members, managers or stockholders, with respect to this Agreement, except for
(i) the liability of a party for expenses pursuant to Section 15.3 and (ii)
liability as provided below in Section 13.2(b).
33
(b) If this Agreement is terminated:
(i) Pursuant to Section 13.1(a), (b), (c), (d), (f), (g) and (h),
the Deposit, together with the interest accrued thereon, shall be
returned to the Buyer, except that if this Agreement is terminated by
the Seller pursuant to Section 13.1(c) due to the Buyer's failure to
satisfy the conditions contained in Section 11.1 or 11.2, the Buyer and
the Seller acknowledge and agree that a monetary remedy will be
inadequate and impracticable, the Seller will have been caused
irreparable harm and that the Seller shall have the right (A) subject
to the satisfaction or waiver by the Seller of the conditions contained
in Section 11, to require the Buyer to specifically perform under the
terms of this Agreement, or (B) to retain the Deposit, together with
any interest accrued thereon, and in addition, pursue any other
remedies available to the Seller at law.
(ii) By the Buyer pursuant to Section 13.1(b) as a result of the
failure of the Seller to satisfy the conditions in Section 12.1 or
12.2, the Buyer's remedy shall be as set forth on Schedule 1.3(a).
(iii) Pursuant to Section 13.1(e), the parties' rights shall be
determined in accordance with Schedule 1.3(a).
SECTION 14. BIDDING PROCEDURES.
------------------
SECTION 14.1. OTHER BIDS; FEES.
(a) BANKRUPTCY COURT APPROVAL. Upon the execution of this
Agreement, the Seller will seek the approval of the Bankruptcy Court with
respect to (i) the overbid protections set forth on Schedule 1.3(a) hereto; and
(ii) the bid incentives and protections set forth on Schedule 1.3(a) hereto, and
the parties acknowledge that such provisions are subject to approval of the
Bankruptcy Court and that such provisions shall not be binding and shall have no
force or effect unless and until such Bankruptcy Court approval is obtained. The
Buyer acknowledges that the bidding and auction rules to be contained in a
Bidding Procedures Order shall be in the form set forth on Schedule 1.3(a)
hereto, subject to Bankruptcy Court approval.
(b) OTHER BIDS. The Buyer acknowledges that the Seller, through
Lazard, as its agent, will solicit bids ("BIDS") from prospective purchasers
(such prospective purchasers together with the Buyer being referred to
collectively as "BIDDERS") for the sale of the Purchased Property in accordance
with the bidding and auction procedures set forth on Schedule 1.3(a) hereto.
SECTION 15. MISCELLANEOUS.
-------------
SECTION 15.1. SUCCESSORS AND ASSIGNS. Except as otherwise provided
in this Agreement, no party hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other party
hereto and any such attempted assignment without such prior written consent
shall be void and of no force and effect; provided,
34
however, that the Buyer may assign its rights under this Agreement to one or
more Affiliates of the Buyer; provided, further, however, that no such
assignment shall reduce or otherwise vitiate any obligations of the Buyer
hereunder. This Agreement shall inure to the benefit of and shall be binding
upon the successors and permitted assigns of the parties hereto.
SECTION 15.2. GOVERNING LAW; JURISDICTION. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the laws
of the State of New York (without giving effect to the principles of conflicts
of laws thereof), except to the extent that the laws of such State are
superseded by the Bankruptcy Code. For so long as the Seller is subject to the
jurisdiction of the Bankruptcy Court, the parties hereto irrevocably elect as
the sole judicial forum for the adjudication of any matters arising under or in
connection with the Agreement, and consent to the exclusive jurisdiction of, the
Bankruptcy Court.
SECTION 15.3. EXPENSES. Except as otherwise provided herein, each
of the parties hereto shall pay its own expenses in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, any legal and accounting fees, whether or not the transactions
contemplated hereby are consummated. The Buyer shall pay the cost of all
surveys, title insurance policies and title reports ordered by the Buyer.
SECTION 15.4. BROKER'S AND FINDER'S FEES. Each of the parties
represents and warrants that it has dealt with no broker or finder in connection
with any of the transactions contemplated by this Agreement other than Lazard
and Xxxxxxxxx & Company, Inc., whose fees and expenses shall, as between the
parties hereto, be the responsibility of the Seller, and, insofar as such party
knows, no other broker or other Person is entitled to any commission or finder's
fee in connection with any of these transactions.
SECTION 15.5. NOTICE OF BANKRUPTCY PROCEEDINGS. The Seller shall,
from the date hereof, provide the Buyer's counsel with all notices and pleadings
filed by the Seller in the Bankruptcy Case in accordance with Federal Rule of
Bankruptcy Procedure 2002. Notwithstanding the foregoing sentence, the Seller
shall promptly provide the Buyer and its counsel with proposed final drafts of
all documents, motions, orders, filings and pleadings that the Seller proposes
to file with the Bankruptcy Court which relate to the approval or consummation
of the transactions contemplated by this Agreement, or any provision herein, and
will provide the Buyer and its counsel with a reasonable opportunity to review
and comment on such papers.
SECTION 15.6. SEVERABILITY. In the event that any part of this
Agreement is declared by any court or other judicial or administrative body to
be null, void or unenforceable, said provision shall survive to the extent it is
not so declared, and all of the other provisions of this Agreement shall remain
in full force and effect only if, after excluding the portion deemed to be
unenforceable, the remaining terms shall provide for the consummation of the
transactions contemplated hereby in substantially the same manner as originally
set forth at the later of the date this Agreement was executed or last amended.
35
SECTION 15.7. NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given: (i) on the date of service if served personally on the
party to whom notice is to be given; (ii) on the day of transmission if sent via
facsimile transmission to the facsimile number given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission;
(iii) on the second day after delivery to Federal Express or similar overnight
courier or the Express Mail service maintained by the United States Postal
Service; or (iv) on the fifth day after mailing, if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid and properly addressed, to the party as follows:
If to the Seller:
The Derby Cycle Corporation
c/o 00 Xxxxxxx Xxxx
Xxxxxxxxxx XX0 0XX
Xxxxxxx
Attn: Xxxx X. Xxxxxxx
Telecopy: 011-44-115-942-2178
Copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Xxxxxxx X. Xxxxxxxxxx, Esq.
Telecopy: (000) 000-0000
Copy to:
Counsel for Unofficial Bondholders' Committee
Xxxxxxx Xxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxx Xxxxxxxxxxx, Esq.
Xxxxxx Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
If to the Buyer:
Cycle Bid Co.
c/o Perseus, L.L.C.
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
36
Attn: Xxxx Finden-Crofts
Telecopy: (000) 000-0000
Copy to:
Perseus, L.L.C.
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attn: Xxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
Xxxxxx & Xxxxxx
0000 Xxxxxx Xxxx.
Xxxxx 000
XxXxxx, XX 00000-0000
Attn: Xxxxxx X. Xxx, Esq.
Telecopy: (000) 000-0000
Any party may change its address for the purpose of this Section by
giving the other party written notice of its new address in the manner set forth
above.
SECTION 15.8. AMENDMENTS; WAIVERS. This Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance. Any
waiver by any party of any condition, or of the breach of any provision, term,
covenant, representation or warranty contained in this Agreement, in any one or
more instances, shall not be deemed to be nor construed as a furthering or
continuing waiver of any such condition, or of the breach of any other
provision, term, covenant, representation or warranty of this Agreement.
SECTION 15.9. PUBLIC ANNOUNCEMENTS. The parties agree that after
the signing of this Agreement, no party shall make any press release or public
announcement concerning the transactions contemplated by this Agreement without
the prior written approval of the other parties, unless a press release or
public announcement is required by law or order of the Bankruptcy Court. If any
such announcement or other disclosure is required by law or order of the
Bankruptcy Court, the disclosing party agrees to give the nondisclosing party or
parties prior notice of, and an opportunity to comment on, the proposed
disclosure. The parties acknowledge that the Seller shall file this Agreement
with the Bankruptcy Court.
SECTION 15.10. ENTIRE AGREEMENT. This Agreement, the Transition
Services Agreement and any confidentiality agreement between the Buyer and the
Seller contain the entire understanding among the parties hereto with respect to
the transactions contemplated hereby and supersede and replace all prior and
contemporaneous agreements and understandings,
37
oral or written, with regard to such transactions. All schedules hereto and any
documents and instruments delivered pursuant to any provision hereof are
expressly made a part of this Agreement as fully as though completely set forth
herein.
SECTION 15.11. PARTIES IN INTEREST. Nothing in this Agreement is
intended to confer any rights or remedies under or by reason of this Agreement
to any Persons other than the Seller and the Buyer and their respective
successors and permitted assigns. Nothing in this Agreement is intended to
relieve or discharge the obligations or liability of any third Persons to the
Seller or the Buyer. No provision of this Agreement shall give any third Persons
any right of subrogation or action over or against the Seller or the Buyer.
SECTION 15.12. COMMERCIALLY REASONABLE EFFORTS. No reference in this
Agreement to "commercially reasonable efforts" shall require a Person obligated
to use commercially reasonable efforts to pay money or give other consideration,
to incur unreasonable out-of-pocket expenses or to institute or threaten to
institute litigation.
SECTION 15.13. SECTION AND PARAGRAPH HEADINGS. The section and
paragraph headings in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
SECTION 15.14. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
SECTION 15.15. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. All representations, warranties and (except as set forth in the
following sentence) covenants set forth in this Agreement or in any certificate,
document or other instrument delivered in connection herewith, other than those
covenants and agreements set forth in Section 15.16, shall terminate at the
Closing. Only those covenants that contemplate actions to be taken or
obligations in effect after the Closing shall survive in accordance with their
terms and to the extent so contemplated.
SECTION 15.16. INDEMNIFICATION BY THE BUYER. The Buyer covenants and
agrees to indemnify and hold harmless the Seller, its officers, directors,
employees, agents, legal counsel, advisers, representatives, estate and
Affiliates (collectively, the "Indemnitees") from and against, and pay or
reimburse the Indemnitees for, any and all Losses resulting from or arising out
of:
(a) the Assumed Liabilities;
(b) the operation of the Business by the Buyer or the Buyer's
ownership, operation or use of the Purchased Property on or after the Closing
Date; or
(c) any contribution made by Seller to Derby American Inc. prior
to the Closing Date.
38
Within a reasonable time following the determination thereof, an Indemnitee
shall give the Buyer written notice of any matter which such Indemnitee has
determined has given rise to a right of indemnification under this Section 15.16
stating the amount of the Loss, if known, and method of computation thereof, all
with reasonable particularity (subject to the second to last sentence of this
Section 15.16). The obligations and liabilities of any party under this Section
15.16 with respect to Losses arising from claims, assertions, events or
proceedings of any third party which are subject to the indemnification provided
for in this Section 15.16 ("THIRD PARTY CLAIMS") shall be governed by and be
subject to the following additional terms and conditions: if any Indemnitee
shall receive written notice of any Third Party Claim, the Indemnitee shall
promptly give the Buyer written notice of such Third Party Claim (subject to the
second to last sentence of this subsection) and Buyer shall assume and defend
such Third Party Claim with counsel of its own choice and at its expense,
unless, in the reasonable opinion of counsel for the Indemnitee, there is a
conflict or a potential conflict of interest between the Indemnitee and the
Buyer in such matter, in which event the Indemnitee shall be entitled to direct
the defense of such matter with one separate counsel (plus appropriate local
counsel as needed) of its choice reasonably acceptable to the Buyer. The
reasonable fees and expenses of any such separate counsel shall be borne by the
Buyer. The Indemnitee shall cooperate with the Buyer in such defense and make
available to the Buyer, at the Buyer's expense, all witnesses, pertinent
records, materials and information in its possession or under its control
reasonably relating thereto as is required by the Buyer. Similarly, in the event
the Indemnitee is, directly or indirectly, conducting the defense against any
Third Party Claim, the Buyer shall cooperate with the Indemnitee in such defense
and make available to it all witnesses, pertinent records, materials and
information in its possession or under its control reasonably relating thereto
as is reasonably required by the Indemnitee. No such Third Party Claim, except
the settlement thereof which involves (i) the payment of money only either by a
party other than the Indemnitee or for which the Indemnitee is totally
indemnified (without limitation) by the Buyer, and (ii) the unconditional
release from all related liability of the Indemnitee, may be settled by the
Buyer without the written consent of the Indemnitee. No Third Party Claim may be
settled by the Indemnitee without the written consent of Buyer. The foregoing
notwithstanding, the failure of any Indemnitee to give any notice required to be
given hereunder shall not affect such Indemnitee's right to indemnification
hereunder except to the extent the Buyer shall have been actually and materially
prejudiced in its ability to defend the claim or action for which such
indemnification is sought by reason of such failure. Payment by an Indemnitee to
a third party with respect to a Loss shall not affect such Indemnitee's rights
to indemnification pursuant to this Section 15.16.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
THE DERBY CYCLE CORPORATION
By:
---------------------------------------
Name:
Title:
CYCLE BID CO.
By: /s/ Xxxx Finden-Crofts
---------------------------------------
Name: Xxxx Finden-Crofts
Title:
