[Execution Copy]
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ASSET PURCHASE AGREEMENT
by and among
FIGGIE INTERNATIONAL INC.,
FIGGIE INTERNATIONAL REAL ESTATE INC.,
FIGGIE PROPERTIES INC.,
FIGGIE LICENSING CORPORATION,
FIGGIE RISK MANAGEMENT CO.
and
SKL LIFT, INC.
Dated as of July 19, 1997
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TABLE OF CONTENTS
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ARTICLE I
PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES.................. 2
SECTION 1.1 Purchase and Sale...................................... 2
SECTION 1.2 Assumed Liabilities.................................... 7
SECTION 1.3 Retained Liabilities................................... 10
SECTION 1.4 Consideration.......................................... 12
SECTION 1.5 Undertaking............................................ 12
SECTION 1.6 Closing................................................ 12
SECTION 1.7 Deliveries by Seller................................... 13
SECTION 1.8 Deliveries by Buyer.................................... 14
ARTICLE II
RELATED MATTERS ...................................................... 15
SECTION 2.1 Excluded Intellectual Property; Use of Trade-
marks and Logos....................................... 15
SECTION 2.2 Books and Records of the Business..................... 16
SECTION 2.3 Ongoing or Transition Services........................ 19
SECTION 2.4 Intercompany Accounts................................. 19
SECTION 2.5 Exclusive Remedy...................................... 19
SECTION 2.6 Post-Closing Adjustment............................... 20
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER, FIGGIE REAL ESTATE,
FIGGIE PROPERTIES AND FIGGIE LICENSING................................... 23
SECTION 3.1 Organization and Authority of Seller................. 23
SECTION 3.2 Conveyed Subsidiaries................................ 24
SECTION 3.3 Consents and Approvals: No Violations................ 27
SECTION 3.4 Division and Subsidiary Financial Statements......... 29
SECTION 3.5 Absence of Undisclosed Liabilities................... 29
SECTION 3.6 Absence of Material Adverse Changes, etc............. 30
SECTION 3.7 Title; Properties and Assets Necessary for
Conduct of Business.................................. 31
SECTION 3.8 Real Property........................................ 34
SECTION 3.9 Real Property Leases................................. 35
SECTION 3.10 Material Contracts................................... 36
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SECTION 3.11 Intellectual Property................................ 37
SECTION 3.12 Litigation........................................... 38
SECTION 3.13 Compliance with Applicable Law....................... 39
SECTION 3.14 Insurance............................................ 39
SECTION 3.15 Employee Benefit Plans: ERISA....................... 40
SECTION 3.16 Taxes................................................ 44
SECTION 3.17 Environmental Matters................................ 47
SECTION 3.18 Certain Fees......................................... 48
SECTION 3.19 Employees............................................ 48
SECTION 3.20 Powers of Attorney................................... 49
SECTION 3.21 Accounts Receivable and Accounts Payable............. 49
SECTION 3.22 Inventory............................................ 49
SECTION 3.23 Employee Relations; Labor Disagreements.............. 50
SECTION 3.24 Related Party Transactions........................... 51
SECTION 3.25 Absence of Questionable Payments..................... 51
SECTION 3.26 Customers and Vendors................................ 52
SECTION 3.27 Distributors and Representatives..................... 52
SECTION 3.28 Defects in Products or Designs; Product Safety....... 53
SECTION 3.29 Product Warranties................................... 53
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER.................................. 53
SECTION 4.1 Corporate Organization and Authority................. 54
SECTION 4.2 Consents and Approvals: No Violations............... 54
SECTION 4.3 Litigation........................................... 55
SECTION 4.4 Investigation by Buyer............................... 56
SECTION 4.5 Solvency; Financing.................................. 56
SECTION 4.6 Certain Fees......................................... 57
ARTICLE V
COVENANTS ..................................................... 57
SECTION 5.1 Conduct of the Business.............................. 57
SECTION 5.2 Access to Information................................ 61
SECTION 5.3 Regulatory Compliance................................ 62
SECTION 5.4 Consents; Assignments................................ 63
SECTION 5.5 Reasonable Best Efforts, etc......................... 64
SECTION 5.6 Public Announcements................................. 64
SECTION 5.7 Employees; Employee Benefits......................... 65
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Page
SECTION 5.8 Allocation of Purchase Price......................... 68
SECTION 5.9 Proration of Certain Taxes........................... 68
SECTION 5.10 Warranty Claims...................................... 69
SECTION 5.11 Delivery of Reports, Defaults, etc. Pending
Closing.............................................. 69
SECTION 5.12 Real Property Title Review........................... 70
SECTION 5.13 Preliminary Environmental Assessment Reports......... 71
SECTION 5.14 Agreement Not to Compete or Solicit.................. 72
SECTION 5.15 Tax Returns.......................................... 73
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES................................. 73
SECTION 6.1 Conditions to Each Party's Obligations............... 73
SECTION 6.2 Conditions to the Obligations of Buyer............... 74
SECTION 6.3 Conditions to the Obligations of Seller.............. 76
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER; SURVIVAL................................. 77
SECTION 7.1 Termination.......................................... 77
SECTION 7.2 Procedure and Effect of Termination.................. 78
SECTION 7.3 Amendment, Modification and Waiver................... 78
SECTION 7.4 Survival of Representations and Warranties........... 79
SECTION 7.5 Post-Closing Liability; Indemnification.............. 80
SECTION 7.6 New Zealand Property................................. 89
ARTICLE VIII
DEFINITIONS.............................................................. 93
ARTICLE IX
MISCELLANEOUS............................................................ 105
SECTION 9.1 Further Assurances................................... 105
SECTION 9.2 Notices.............................................. 105
SECTION 9.3 Severability......................................... 106
SECTION 9.4 Assignment; Binding Effect........................... 107
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Page
SECTION 9.5 No Third Party Beneficiaries........................ 107
SECTION 9.6 Interpretation...................................... 107
SECTION 9.7 Entire Agreement.................................... 108
SECTION 9.8 Governing Law....................................... 108
SECTION 9.9 Specific Performance................................ 108
SECTION 9.10 Counterparts........................................ 108
EXHIBIT A - Form of Undertaking
EXHIBIT B - Form of Xxxx of Sale
EXHIBIT C - Form of Deed
EXHIBIT D - Form of St. Xxxxxx Xxxxx
EXHIBIT E - Form of Closing Balance Sheet Report and Principles
EXHIBIT F - Form of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP Opinion
EXHIBIT G - Form of Deacons Xxxxxx & Xxxxx Opinion
EXHIBIT H - Form of Xxxxxxx Xxxxx Sheffield Young Opinion
EXHIBIT I - Form of Xxxxxxxxx Xxxxxxx Xxxxx & Xxxxxxxx LLP Opinion
EXHIBIT J - Form of Seller's Release
EXHIBIT K - Form of Designee's Release
EXHIBIT L - Form of Conveyed Subsidiary's Release
EXHIBIT M - Form of New Zealand Lease
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of July 19,
1997, by and among Figgie International Inc., a Delaware corporation ("Seller"),
Figgie International Real Estate Inc., a Delaware corporation ("Figgie Real
Estate"), Figgie Properties Inc., a Delaware corporation ("Figgie Properties"),
Figgie Licensing Corporation, a Delaware corporation ("Figgie Licensing" and,
together with Figgie Real Estate and Figgie Properties, the "Asset Affiliates"),
Figgie Risk Management Co., a Florida corporation, and SKL Lift, Inc. a Delaware
corporation ("Buyer").
W I T N E S S E T H
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WHEREAS, Seller owns and operates the Business (as hereafter defined);
WHEREAS, except as set forth in Section 3.2(c) of the Seller Disclosure
Schedule (as hereafter defined), Seller is the record and beneficial owner of
all of the issued and outstanding shares of common stock of the Conveyed
Subsidiaries (as hereafter defined); and
WHEREAS, pursuant to the terms and conditions set forth in this Agreement,
Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the
Business as a going concern, including (i) all of the assets, properties and
rights, the use of which is primarily in the Business (other than those
specifically excluded as described in this Agreement) and (ii) all of the issued
and outstanding common stock of the Conveyed Subsidiaries owned by Seller (the
"Shares") and the Designee Shares (as hereafter defined), and to assume certain
liabilities relating thereto;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereafter set
forth, and intending to be legally bound hereby, the parties hereto agree as
follows:
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ARTICLE I
PURCHASE AND SALE OF ASSETS
AND ASSUMPTION OF LIABILITIES
SECTION 1.1 Purchase and Sale.
(a) Assets. In reliance on the representations, warranties, covenants
and agreements set forth in this Agreement and subject to paragraphs (c) and (d)
of this Section 1.1 and to the other terms and conditions of this Agreement, at
the Closing (as hereafter defined), Seller shall sell, convey, assign, transfer
and deliver to Buyer, or shall cause to be sold, conveyed, assigned, transferred
and delivered to Buyer, and Buyer shall purchase, acquire and accept from Seller
and Seller's Designee (as hereafter defined), in each case free and clear of all
liens, charges and encumbrances (except for Permitted Liens (as hereafter
defined) and as otherwise expressly permitted by Sections 3.7 and 5.12 hereof),
the Business as a going concern together with all of Seller's (or, in the case
of certain real property, of Figgie Properties' or Figgie Real Estate's and, in
the case of certain Intellectual Property (as hereafter defined), of Figgie
Licensing's) rights, title and interests in and to all of the properties,
contracts, rights and other assets (of every kind, nature, character and
description, whether real, personal or mixed, whether tangible or intangible,
whether accrued, contingent or otherwise and wherever situated), the use of
which is primarily in the Business (the "Assets"), including, without
limitation, the following:
(i) All of the real property owned as of the Closing Date (as
hereafter defined) by Seller, Figgie Properties or Figgie Real Estate, the use
of which is primarily in the Business (other than the Retained Property (as
hereafter defined)) (the "Property") and any rights of Seller, Figgie Properties
or Figgie Real Estate in all facilities, easements, rights of way, licenses,
permits and other appurtenances thereunto belonging (in each case, to the extent
transferable) and all buildings, facilities, structures, fixtures, leasehold and
other improvements located thereon, which Property is listed in Section
1.1(a)(i) of the Seller Disclosure Schedule;
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(ii) All of the rights and incidents of ownership as of the
Closing Date of Seller, or Figgie Properties, in leases or subleases of real
property, the use of which is primarily in the Business (the "Real Property
Leases") and any rights of Seller or Figgie Properties in all easements, rights
of way, licenses, permits and other appurtenances thereunto belonging (in each
case, to the extent transferable) and all buildings, facilities, structures,
fixtures, leasehold and other improvements located thereon, which Real Property
Leases are listed in Section 1.1(a)(ii) of the Seller Disclosure Schedule;
(iii) All of the rights and incidents of ownership as of the
Closing Date of Seller in and to all the leases of personal property, the use of
which is primarily in the Business, to the extent transferable, including all
assets listed in Section 1.1(a)(iii) of the Seller Disclosure Schedule;
(iv) All machinery, equipment, tools, business machines,
vehicles, office furniture and fixtures, office equipment, computer data
processing equipment, office materials, supplies, raw materials, work-in-process
and inventory owned as of the Closing Date by Seller, the use of which is
primarily in the Business, including all assets listed in Section 3.7(a)(i) of
the Seller Disclosure Schedule;
(v) All rights and incidents of ownership of Seller as of the
Closing Date in, to and under all contracts, licenses, leases (other than leases
for real property), commitments, purchase orders, Employment Agreements (as
hereafter defined) and other agreements (in each case, to the extent
transferable), the use of which is primarily in the Business (the "Contracts"),
including the Material Contracts (as hereafter defined) listed in Section
1.1(a)(v) of the Seller Disclosure Schedule;
(vi) All customer and supplier lists of the Business;
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(vii) All accounts receivable and prepaid expenses of the
Business, other than prepaid insurance, as of the Closing Date;
(viii) Subject to Sections 1.1(c)(v) and 2.1 hereof, all domestic
and foreign trademarks, service marks, certification marks, collective marks,
collective membership marks, copyrights, registrations and applications for
registration for any of the foregoing, patents and applications therefor, trade
secrets, tradenames, service names, logos, assumed names, all rights of
enforcement for past infringement thereof, royalty rights, and licenses thereof
and thereto (excluding the Excluded Intellectual Property (as hereafter
defined)), owned by Seller or Figgie Licensing as of the Closing Date, that are
used primarily in the Business, (collectively, the "Intellectual Property"),
including that Intellectual Property listed in Section 1.1(a)(viii) of the
Seller Disclosure Schedule;
(ix) All of Seller's permits, licenses, approvals, consents and
authorizations by any Governmental Entity (as hereafter defined) (collectively,
"Permits"), to the extent transferable, that are exclusively used or held for
use in the Business as of the Closing Date;
(x) All of the Division's (as hereafter defined) books and
records relating solely to the Division and/or the Business;
(xi) All of the Division's other files, indices, market research
studies, surveys, reports, analyses and similar information relating to the
Business;
(xii) All of the Shares and the share of common stock of each of
the Conveyed Subsidiaries owned by Seller's Designee (collectively, the
"Designee Shares");
(xiii) The goodwill of the Business in or arising from the Assets
and the business represented thereby;
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(xiv) All other assets listed in Section 1.1(a)(xiv) of the
Seller Disclosure Schedule;
(xv) All telephone, telex, e-mail, Internet, post office box and
other numbers and addresses primarily related to the Business, to the extent
transferable;
(xvi) All sales data, brochures, catalogs, literature, forms,
mailing lists, art work, photographs and advertising material, in whatever form
or media, that relate primarily to the Business; and
(xvii) Except as provided in Section 1.1(c)(iv) hereof and except
as arising from or relating to the Retained Liabilities (as hereafter defined),
all claims, causes of action, choses in action, rights of recovery and rights of
set-off of any kind in favor of Seller and pertaining to, or arising out of, the
Assets or offsetting any Assumed Liabilities (as hereafter defined), to the
extent transferable.
(b) Instruments of Transfer. The sale, assignment, transfer and
delivery of the Assets, including the Shares, shall be effected by delivery by
Seller to Buyer of (i) the Xxxx of Sale (as hereafter defined), (ii) the Deeds
(as hereafter defined), (iii) the certificates representing the Shares duly
endorsed and in form for transfer to Buyer and (iv) the Other Instruments (as
hereafter defined). Seller shall cause the Designee Shares to be sold, assigned,
transferred and delivered to Buyer or, at Buyer's request, Buyer's designee and
to deliver to Buyer or, at Buyer's request, Buyer's designee the certificate
representing such shares duly endorsed and in form for transfer to Buyer or, at
Buyer's request, Buyer's designee.
(c) Excluded Assets. Notwithstanding anything contained in paragraph
(a) of this Section 1.1 to the contrary, the Assets shall not include any of the
following properties, contracts, rights and other assets (the "Excluded
Assets"):
(i) All rights that accrue or will accrue to Seller under this
Agreement;
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(ii) All cash and cash equivalents, including certificates of
deposit, short-term deposits, time investments and similar items and all
securities (other than xxxxx cash balances at the various locations of the
Business, the Shares and the Designee Shares);
(iii) All tax refunds (including any interest thereon) and all
tax credits and deductions attributable to the Business prior to and including
the Closing Date;
(iv) All insurance policies of Seller and all refunds, rights and
claims thereunder;
(v) Except as specifically provided in Section 2.1(b) hereof, the
Figgie Trademarks and Logos (as hereafter defined) and all intellectual property
that is set forth in Section 1.1(c)(v) of the Seller Disclosure Schedule (such
scheduled intellectual property, together with the Figgie Trademarks and Logos
and the intellectual property that is not used primarily in the Business, the
"Excluded Intellectual Property"); and
(vi) That certain real property listed in Section 1.1(c)(vi) of
the Seller Disclosure Schedule (the "Retained Property").
(d) Nonassignability. Anything contained in this Agreement or any
Related Agreement (as hereafter defined) to the contrary notwithstanding,
neither this Agreement nor any Related Agreement shall constitute an assignment,
transfer, sublicense or sublease of, or an agreement to assign, transfer,
sublicense or sublease any right, title or interest in, to or under any,
contract, license, lease, commitment, sales order, purchase order or other
agreement, or any claim or right to any benefit arising thereunder or resulting
therefrom, if an attempted assignment, transfer, sublicense or sublease thereof,
without the consent or waiver of a third party thereto (including a Governmental
Entity) would constitute a breach thereof or a violation of any Legal
Requirement (as hereafter defined), or in any way adversely affect the rights of
Buyer or Seller thereunder, unless and until such consent or waiver has been
duly obtained or such assignment, transfer, sublicense or sublease has
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otherwise become lawful. In the event and to the extent that Seller is unable,
with the assistance and cooperation of Buyer, to obtain any such required
consent or waiver, Seller shall, as provided in and subject to Section 5.4
hereof, use its reasonable efforts to provide Buyer the benefits of any such
contract, license, lease, commitment, sales order, purchase order or other
agreement (including contracts, licenses, leases, commitments, sales orders,
purchase orders or other agreements pertaining to the use of (x) all software
used primarily in the Business (collectively the "Software Contracts") and (y)
all equipment that is material to the manufacturing operations of the Business
(collectively, the "Manufacturing Equipment Contracts").
SECTION 1.2 Assumed Liabilities. In reliance on the representations,
warranties, covenants and agreements set forth in this Agreement and subject to
the terms and conditions of this Agreement, at the Closing, and concurrently
with the purchase described in Section 1.1 hereof, Buyer shall assume and be
responsible for all of the following obligations and liabilities (collectively,
the "Assumed Liabilities"):
(a) Those Current Liabilities (as such accounting term is generally
used) of Seller to the extent and only to the extent reflected as a liability or
reserve (other than those liabilities or reserves set forth in Section 1.2(a) of
the Seller Disclosure Schedule, which Buyer shall fully assume) on the Final
Closing Balance Sheet (as hereafter defined), as of the close of business on the
Closing Date, remaining unpaid or unperformed as of the Closing Date;
(b) Except as otherwise provided in Section 1.2(e) hereof in respect
of clause 4 of the Xxxxx Service Agreement (as hereafter defined), all
liabilities, obligations and costs of Seller arising after the Closing Date
under any Contract assigned to Buyer pursuant to Section 1.1(a)(v) hereof or as
to which arrangements have been made pursuant to Section 5.4 hereof which is set
forth in the Seller Disclosure Schedule (or which is not required to be set
forth thereon), or which was entered into after the date hereof and prior to the
Closing Date in accordance with the provisions of this Agreement;
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(c) All liabilities, obligations and costs of Seller arising under
express, written or implied warranties in respect to products sold or
manufactured or services performed by Seller and distributed in the ordinary
course of the Business;
(d) Except as provided in Section 5.9 hereof, all liabilities and
obligations for Taxes (as hereafter defined) of Seller or the Conveyed
Subsidiaries that are attributable to or incurred in connection with the
Business after the Closing Date;
(e) Except as provided in Section 1.3(g) hereof, liabilities and
obligations attributable to or incurred in connection with the Business prior
to, on or after the Closing Date with respect to Affected Employees (as
hereafter defined) arising from, or relating to, any incentive, deferred
compensation, insurance, employment, performance, vacation, retiree benefit
plan, program, agreement or arrangement for the benefit of any current or former
employee of the Division, including obligations under clause 4 of the Xxxxx
Service Agreement; provided that in the case of any liability of a type required
by GAAP (as hereafter defined) to be reflected on the Final Closing Balance
Sheet then such liability only to the extent so reflected;
(f) All liabilities, obligations and costs arising under or in
relation to any product liability suit, action, claim or proceeding (whether for
personal injuries or property damages and whether or not related to the
Hunterlift or Economy Engineering product lines) with respect to products sold
or manufactured or services performed by the Division prior to, on or after the
Closing Date if, but only if, such liabilities, obligations or costs arise out
of events (which term for this purpose shall not be deemed to include either the
sale or manufacture of products or the performance of services prior to the
Closing Date) or accidents occurring after the Closing Date;
(g) All liabilities, obligations and costs of Seller from or relating
to any claim for workers' compensation or automobile and similar liabilities for
personal injuries arising in connection with the Business or in
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respect of persons employed in the Business prior to, on or after the Closing
Date if, but only if, such liabilities, obligations or costs arise out of events
or accidents occurring after the Closing Date;
(h) All liabilities, obligations and costs from or relating to any
claim, demand, action, lawsuit or proceeding, which relates to the Business,
Division or Assets by any third party, including any Governmental Entity
(collectively, the "General Litigation Claims"), if, but only if, such General
Litigation Claims (i) are listed in Section 1.2(h) of the Seller Disclosure
Schedule or (ii) arise out of events or accidents occurring after the Closing
Date;
(i) All liabilities, obligations and costs of Seller from or relating
to (i) any Environmental Claim, Release or presence of any Hazardous Materials,
or violation of any Environmental Law (each as hereafter defined) which arises
from or relates to the Business and which arose or occurred prior to the Closing
Date if such Environmental Claim, Release, presence or violation, or a risk
thereof or particular facts related thereto, was disclosed in, or reasonably
ascertainable from a review of the Phase I Environmental Report described in
Section 5.13 hereof (the "Known Pre-Closing Environmental Liabilities"), (ii)
any Release or event that causes the presence of any Hazardous Materials, or
violation of any Environmental Law, which arises from or relates to the Business
and which occurs on or after the Closing (except for a period of ninety days
following the Closing with respect to any violation prior to the Closing and
continuing after the Closing, provided that Buyer shall have made reasonable
efforts to correct such violation), or (iii) any Environmental Claim which
arises from or relates to the Business and which arises from conditions or
events that occur on or after the Closing (except for Environmental Claims
relating to alleged violations of Environmental Law for a period of ninety days
following the Closing with respect to any violation prior to the Closing and
continuing after the Closing, provided that Buyer shall have made reasonable
efforts to correct such violation).
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(j) All liabilities, obligations and costs of Seller, or any of its
Affiliates (as hereafter defined), from or relating to (x) that Amended and
Restated Management Agreement dated as of June 9, 1997 between Seller and
Xxxxxxx X. Xxxxx (other than Section 4.1 thereof) and (y) the letter agreements,
as amended, initially entered into during the period commencing on March 14,
1996 and ending on May 22, 1997, between Seller and the persons set forth in
Section 1.2(j) of the Seller Disclosure Schedule;
(k) All liabilities, obligations and costs set forth in Section 5.7
hereof;
(l) All liabilities, obligations and costs from or relating to the
Hunterlift recall program except those with respect to the Xxxxx Litigation (as
hereafter defined);
(m) All liabilities based, in whole or in part, upon the failure to
comply with laws applicable to bulk sale transfers in respect of any liability
that is otherwise an Assumed Liability; and
(n) All liabilities, obligations and costs incurred after the Closing
Date from or relating to the Xxxxx Equipment, et al. x. Xxxxxx International
Inc. (Superior Court of California, County of Alameda, Southern Division, No.
H-193146 8) potential class action in California (the "Xxxxx Litigation"), if
but only if the class of plaintiffs is not ultimately certified.
SECTION 1.3 Retained Liabilities. Notwithstanding anything in this
Agreement to the contrary, other than Section 2.6(c) hereof, Buyer shall not
assume and shall be deemed not to have assumed and be responsible for, and
Seller shall be solely and exclusively liable and responsible for all debts,
obligations, contracts or liabilities, whether known or unknown, contingent or
otherwise, which arise out of the conduct of the Business prior to the Closing
which are not Assumed Liabilities (the "Retained Liabilities"), including
without limitation the following:
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(a) All liabilities and obligations incurred in connection with the
Excluded Assets;
(b) Except as provided in Section 2.6(c) hereof, all liabilities and
obligations for Taxes of Seller or the Conveyed Subsidiaries that are
attributable to or incurred in connection with the Business prior to or on the
Closing Date;
(c) All liabilities and obligations owed to any current or former
employee of the Division that arises prior to, on or after the Closing Date
under any stock option, stock appreciation, stock purchase, phantom stock or
other equity-based plan of Seller;
(d) All attorneys', accountants', brokers' or finder's fees or other
costs or expenses of Seller incurred in connection with this Agreement or the
transactions contemplated hereby, unless otherwise provided herein;
(e) All liabilities or obligations of any nature whatsoever arising
out of any misrepresentation or breach of any warranty of Seller contained in
this Agreement, or out of the failure of Seller to perform any of the covenants
or agreements contained herein;
(f) All liabilities, obligations and costs relating to the Centaur
insurance dispute;
(g) All liabilities, obligations and costs arising out of Section 4.1
of the Amended and Restated Management Agreement dated June 9, 1997 between
Seller and Xxxxxxx X. Xxxxx;
(h) All liabilities, obligations and costs of Seller from or relating
to any claim for workers' compensation or automobile and similar liabilities for
personal injuries arising in connection with the Business or in respect of
persons employed in the Business prior to or on the Closing Date;
(i) All liabilities, obligations and costs arising under or in
relation to any product liability suit, action, claim or proceeding (whether for
personal
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injuries or property damages and whether or not related to the Hunterlift or
Economy Engineering product lines) with respect to products sold or manufactured
or services performed by the Division prior to, on or after the Closing Date,
if, but only if, such liabilities, obligations or costs arise out of events or
accidents occurring prior to or on the Closing Date;
(j) All liabilities, obligations and costs of Seller from or relating
to any Environmental Claim, Release or presence of any Hazardous Materials, or
violation of any Environmental Law arising prior to the Closing Date other than
the Known Pre-Closing Environmental Liabilities;
(k) All liabilities, obligations and costs relating to the Xxxxx
Litigation in the event that the conditions required in order for such
litigation to become an Assumed Liability are not satisfied; and
(l) All liabilities based, in whole or in part, upon the failure to
comply with laws applicable to bulk sale transfers in respect of any liability
that is otherwise a Retained Liability.
SECTION 1.4 Consideration. The purchase price for the Assets shall be
$150,000,000 in cash, as the same may be adjusted pursuant to Section 2.6 hereof
(the "Purchase Price"). The amount payable at Closing shall be $150,000,000 in
cash, as the same may be adjusted pursuant to Section 2.6(a) hereof (as so
adjusted, the "Closing Cash Payment"), payable in immediately available funds.
SECTION 1.5 Undertaking. At the Closing, and as additional
consideration for the purchase of the Assets, Buyer shall execute and deliver to
Seller an undertaking substantially in the form attached hereto as Exhibit A
(the "Undertaking") pursuant to which Buyer shall agree to pay, perform and
discharge when due, to the extent the same are unpaid, unperformed or
undischarged on the Closing Date, the Assumed Liabilities.
SECTION 1.6 Closing. Subject to the terms and conditions of this
Agreement, the Closing shall take
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place on the later of (i) the date that is forty-five (45) days after the date
of this Agreement and (ii) upon the satisfaction or waiver of the conditions set
forth in Article VI hereof at the offices of Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, 919 Third Avenue, New York, New York, or at such other time and place
as the parties may agree.
SECTION 1.7 Deliveries by Seller. At the Closing, Seller shall deliver
or cause to be delivered to Buyer (unless delivered previously) the following:
(a) the Deeds, provided that as to the Deeds and other conveyancing
documents requiring recordation, delivery to Buyer shall consist of physical
delivery in escrow to Chicago Title Insurance Company, or such other title
insurance company as shall be mutually acceptable to the parties hereto, not
less than 2 business days prior to the Closing, together with Seller's authority
at the Closing to file such documents for recordation;
(b) the Xxxx of Sale;
(c) the certificates representing the Shares and the Designee Shares
duly endorsed and in form for transfer to Buyer or, in the case of the Designee
Shares, Buyer's designee;
(d) the Other Instruments, if any;
(e) general assignments of registered and applied for Intellectual
Property, including patents (excluding Excluded Intellectual Property)
sufficient to transfer title to Buyer in such Intellectual Property under the
laws of the United States, New Zealand and Australia (the "General
Assignments");
(f) the Seller's Closing Certificate (as hereafter defined);
(g) the Seller's Release (as hereafter defined);
(h) the Designee's Release (as hereafter defined);
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(i) resignations of each of the following directors and officers of
the Conveyed Subsidiaries: Xxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxxx X.
Xxxxxxx;
(j) the St. Xxxxxx Xxxxx (as hereafter defined);
(k) the New Zealand Lease (as hereafter defined); and
(l) all other documents, instruments and writings necessary to
consummate the transactions contemplated hereby or expressly required to be
delivered by Seller at or prior to the Closing pursuant to this Agreement.
SECTION 1.8 Deliveries by Buyer. At the Closing, Buyer shall deliver
or cause to be delivered to Seller (unless previously delivered) the following:
(a) the Closing Cash Payment, by wire transfer in immediately
available funds to such bank account or accounts as shall be designated by
Seller prior to the Closing;
(b) a duly executed Undertaking;
(c) the Conveyed Subsidiaries' Release (as hereafter defined);
(d) the St. Xxxxxx Xxxxx;
(e) the New Zealand Lease; and
(f) all other documents, instruments and writings (including, if
necessary, the Other Instruments) necessary to consummate the transactions
contemplated hereby or expressly required to be delivered by Buyer at or prior
to the Closing pursuant to this Agreement.
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ARTICLE II
RELATED MATTERS
SECTION 2.1 Excluded Intellectual Property; Use of Trademarks and
Logos.
(a) Buyer hereby expressly agrees and acknowledges that, subject to
paragraph (b) of this Section 2.1, Seller is not transferring or selling to
Buyer, and Buyer is not purchasing or acquiring from Seller, any right, title or
interest in the Excluded Intellectual Property (including the Figgie Trademarks
and Logos), it being understood that Seller shall retain all right to the
Excluded Intellectual Property and the goodwill represented thereby and
pertaining thereto.
(b) Buyer agrees that each of it and its Affiliates shall cease to
make any use of the Figgie Trademarks and Logos as soon as practicable after the
Closing Date and in any event within nine months thereafter, and from and after
the Closing Date (or, in the case of the matters referred to in the following
sentence, the respective nine-month anniversary or eighteen-month anniversary
thereof) shall not hold itself out as having any continuing affiliation with
Seller or its Affiliates. In addition, as promptly as practicable but in no
event later than nine months following the Closing Date, Buyer shall, and shall
cause its Affiliates to, remove, strike over or otherwise obliterate all of the
Figgie Trademarks and Logos from all materials constituting Assets, including,
without limitation, any vehicles, business cards, schedules, stationery,
displays, signs, promotional materials, manuals, forms, computer software and
other materials and Buyer shall cause all vehicles and, to the extent
practicable, other Assets to be de-marked prior to their disposition to any
third party; provided that until such stock is exhausted (but, in no event later
than eighteen months following the Closing Date), Buyer may continue to use and
dispose of raw materials, work in process and finished goods inventory on which
such name is stamped or imprinted. If the laws of any country require that
Buyer's right, as permitted herein, to use any inventory on which a Figgie
Trademark or Logo is marked be registered in order to fully protect Seller,
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Buyer and Seller shall use reasonable efforts to constitute Buyer as a
registered user (or its equivalent) in each of the countries in which such
registration is necessary. If required by the laws of any country Seller shall,
or if after the eighteen-month anniversary of the Closing Date Buyer desires to
continue to use or dispose of finished goods inventory marked with a Figgie
Trademark and Logo, Seller may, in its sole discretion, enter into such
licensing agreement or agreements consistent with this Section 2.1(b) as Buyer
shall reasonably request or as may be required by law with respect to the uses
thereon of a Figgie Trademark or Logo. Any expenses for constituting Buyer as a
registered user in any country shall be shared equally by Buyer and Seller. Any
registration of Buyer as a permitted user of any marks hereunder shall be
expunged on termination of the period of permitted use under this Agreement and
Seller shall be entitled to, and Buyer shall cooperate with Seller to, take all
necessary steps to that end.
(c) Seller agrees that each of Seller and its Affiliates that are
controlled by Seller shall cease to make any use of the Intellectual Property as
soon as practicable after the Closing Date and in any event within nine months
following the Closing Date and, from and after the Closing Date (or, in the case
of the matters referred to in the following sentence, the nine-month anniversary
thereof), shall not hold itself out as having any affiliation with the Division
or Buyer or its Affiliates. In addition, as promptly as practicable but in no
event later than nine months following the Closing Date, Seller shall, and shall
cause its Affiliates that are controlled by Seller to, remove, strike over or
otherwise obliterate all trademarks and logos included in the Intellectual
Property from all materials not constituting Assets, including, without
limitation, any vehicles, business cards, schedules, stationery, displays,
signs, promotional materials, manuals, forms, computer software and other
materials.
SECTION 2.2 Books and Records of the Business.
(a) Seller agrees to deliver to Buyer or make available to Buyer at
the places of business of the
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Business, at or as soon as practicable after the Closing, as requested by Buyer,
(i) all books and records of Seller to the extent such books and records relate
exclusively to the Division and/or the Business and (ii) a copy of that portion
of all other books and records that relate to the Division and/or the Business
(in the case of each of (i) and (ii) above, including, but not limited to,
correspondence, memoranda, personnel and payroll records and the like).
Notwithstanding the foregoing and except as otherwise provided in Section 2.2(b)
hereof, Seller shall not be obligated to provide (i) any books and records that
relate solely to, or (ii) any distinct portion of any books and records that
relate solely to, Seller as a whole or any divisions or Subsidiaries of Seller
other than the Division and/or the Business.
(b) For a period of five years following the Closing, or for such
longer periods as may be required to satisfy applicable laws, regulations or
agreements, or record retention requirements for Government Contracts (as
hereafter defined), (i) Seller shall retain all books and records relating to
the Division and/or the Business that are integrated or non-separable from the
books and records related to any divisions or Subsidiaries of Seller other than
the Division and/or the Business and (ii) Buyer shall retain all other books and
records of the Division and/or the Business, including, without limitation, all
other such books and records of the Division and/or the Business (A) relating to
Taxes, including, without limitation, accounting and tax records and information
pertaining to events occurring prior to the Closing Date and (B) required to be
retained pursuant to obligations imposed by any Government Contract, statute,
rule or regulation (such books and records of the Division and/or the Business
collectively, the "Records").
(c) For a period of five years following the Closing, or for such
longer periods as may be required to satisfy applicable laws, regulations or
agreements, or record retention requirements for Government Contracts, (i) each
party hereto shall provide to duly authorized representatives of the other party
who wish to review any Records for bona fide business reasons reasonable access,
during regular business hours, to (A) employees of such
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party, if any, who are familiar with such Records and who can assist such
representatives of such other party, at such other party's own expense, in
locating, explaining or otherwise reviewing such Records and (B) use of such
party's copying facilities, clerical services and telephone in a reasonable
manner at such other party's own expense and (ii) neither Seller nor Buyer shall
dispose of or destroy any Records within such period without written permission
of the other.
(d) If original documents are required to respond to legal process in
connection with the conduct by any party of any litigation, arbitration, audit,
settlement proceedings or negotiations with third parties with respect to its
conduct of the Business ("Legal Proceedings"), such party, subject to applicable
laws, regulations or agreements, shall be permitted to remove the Records
temporarily from the other party's premises, provided that such party shall
return such original documents to such other party as promptly as practicable
after such time when such original documents are no longer required in
connection with such Legal Proceedings.
(e) If, in connection with Legal Proceedings, Buyer shall require the
assistance of Seller's employees, Seller shall provide such employees to Buyer
as are reasonably required by Buyer. Buyer shall pay Seller's out-of-pocket
costs incurred in connection with such use of Seller's employees and shall
reimburse Seller for the number of whole business days spent by each such
employee in providing such services at the rate equal to the average daily gross
pay (excluding the value of employee benefits) of such employee during each
calendar month in which such services are performed.
(f) If, in connection with Legal Proceedings, Seller shall require the
assistance of Buyer's employees, Buyer shall provide such employees to Seller as
are reasonably required by Seller. Seller shall pay Buyer's out-of-pocket costs
incurred in connection with such use of Buyer's employees and shall reimburse
Buyer for the number of whole business days spent by each such employee in
providing such services at the rate equal to the average daily gross pay
(excluding the value of employee
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benefits) of such employee during each calendar month in which such services are
performed.
SECTION 2.3 Ongoing or Transition Services. Except (a) as identified
in Section 2.3 of the Seller Disclosure Schedule, (b) for services mutually
agreed upon to be provided by Seller to Buyer upon such terms as they may
mutually agree, and (c) as otherwise agreed to by Seller and Buyer, all data
processing services, real estate and construction services activities, cash
management and property and casualty insurance activities, purchasing and
logistics services, corporate-wide productivity improvement programs regarding
benefits administration and certain financial matters and other products or
services provided (i) to the Division by Seller or any Affiliate of Seller
(other than the Division) or (ii) to Seller or any Affiliate of Seller (other
than the Division) by the Division, including any agreements or understandings
(written or oral) with respect thereto, shall terminate.
SECTION 2.4 Intercompany Accounts. On the Closing Date, all
intercompany account balances then outstanding between the Division, on the one
hand, and Seller and its Affiliates (other than the Division), on the other
hand, shall be cancelled without any payment being made with respect thereto. No
adjustment shall be made to the Purchase Price as a result of any such
cancellation. No intercompany accounts shall be reflected in the Preliminary
Closing Balance Sheet (as hereafter defined) or the Final Closing Balance Sheet.
SECTION 2.5 Exclusive Remedy. Except as otherwise provided in Sections
5.14 and 9.9 hereof, the parties hereto agree that, in the absence of fraud,
their exclusive remedy against each other for claims made in connection with
this Agreement or the Related Agreements shall be those remedies available
pursuant to the indemnification and reimbursement provisions set forth in
Article VII hereof.
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SECTION 2.6 Post-Closing Adjustment.
(a) Seller, at its expense, shall prepare, in accordance with the
accounting principles and procedures set forth in Exhibit E hereto (the "Closing
Balance Sheet Principles"), an estimated balance sheet of the Business as of the
close of business on the Closing Date (the "Preliminary Closing Balance Sheet").
In addition, Seller shall prepare a report as of the Closing Date (the
"Preliminary Closing Report") setting forth its estimate of the net assets of
the Business as of the Closing Date (the "Preliminary Net Assets") as calculated
in accordance with the Closing Balance Sheet Principles. Not later than two (2)
business days prior to the Closing Date, Seller shall deliver to Buyer (i) the
Preliminary Closing Balance Sheet and the Preliminary Closing Report and (ii)
its estimate of the amount of the Closing Cash Payment. The Closing Cash Payment
shall be equal to $150,000,000 (i) plus the amount, if any, by which the
Preliminary Net Assets exceeds $58,000,000 or (ii) minus the amount, if any, by
which $58,000,000 exceeds the Preliminary Net Assets.
(b) As promptly as practicable following the Closing Date, Seller, at
its expense, shall cause to be prepared in accordance with the Closing Balance
Sheet Principles, a balance sheet of the Business as of the close of business on
the Closing Date. This balance sheet (the "Final Closing Balance Sheet") shall
be prepared by Seller and examined in accordance with the Closing Balance Sheet
Principles and U.S. generally accepted auditing standards by Xxxxxx Xxxxxxxx
LLP, independent auditors for Seller ("Xxxxxx Xxxxxxxx"), and delivered to
Buyer, as soon after the Closing Date as possible, but in no event later than
sixty (60) days after the Closing Date, and shall be accompanied by a report
prepared by Xxxxxx Xxxxxxxx (the "Final Closing Report") setting forth the net
assets of the Business as of the Closing Date (the "Final Net Assets"). At
Buyer's expense, Buyer and Price Waterhouse LLP, independent auditors for Buyer
("Price Waterhouse") shall have the opportunity to participate in the physical
inventory taken in connection with the preparation and examination of the Final
Closing Balance Sheet, and to review such of the worksheets and other documents
created or utilized by
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Seller and the related work papers of Xxxxxx Xxxxxxxx in connection with the
preparation and examination of the Final Closing Balance Sheet as Buyer shall
from time to time reasonably request.
(c) Recording fees, transfer taxes, and escrow fees incurred in
connection with the conveyance of the Shares, Property, Real Property Leases,
Subsidiary Real Property Leases (as hereafter defined) or personal property,
including such taxes as are imposed by the Australian and New Zealand taxing
authorities, shall be borne equally by Buyer and Seller and shall not be
reflected as an asset or a liability on the Final Closing Balance Sheet. Costs
associated with obtaining title insurance of the Property shall be the
responsibility of Buyer. Sales and use taxes and all other similar taxes (other
than income and franchise taxes) and all interest and penalties thereon incurred
in connection with conveyance of the Property, Real Property Leases, Subsidiary
Real Property Leases or personal property shall be borne equally by Buyer and
Seller and shall not be reflected as an asset or a liability on the Final
Closing Balance Sheet. Seller shall provide copies of the current or most recent
property tax bills for the Property and, if available, for any leased
properties, to Buyer prior to the Closing Date. After the Closing Date, any
bills or requests for payment received by either Seller or Buyer in connection
with the Business attributable to Taxes which have not been accrued on the Final
Closing Balance Sheet and reflect in whole or part liabilities retained or
assumed, respectively, by Seller on the one hand, or Buyer on the other, shall
be allocated between Buyer and Seller in the manner described in Section 5.9
hereof, or as otherwise appropriate under the terms of this Agreement; provided,
however, that neither party shall pay such xxxx without the prior written
consent of the other party, which consent shall not be unreasonably withheld.
(d) Buyer shall have 30 days following delivery to Buyer of the Final
Closing Balance Sheet during which to notify Seller of any dispute of any item
contained in the Final Closing Balance Sheet, which notice shall set forth in
reasonable detail the basis for such dispute and shall be accompanied by a
certificate of Price Waterhouse that they concur with each of the posi-
-21-
tions taken by Buyer in the notice that the Final Closing Balance Sheet was not
prepared in accordance with the Closing Balance Sheet Principles. If Buyer fails
to notify Seller of any such dispute within such 30-day period, the Final
Closing Balance Sheet shall be deemed to be the agreed upon Final Closing
Balance Sheet. In the event that Buyer shall so notify Seller of any dispute,
Buyer and Seller shall cooperate in good faith to resolve such dispute as
promptly as possible, and upon such resolution, the Final Closing Balance Sheet
shall be prepared in accordance with the agreement of Buyer and Seller.
(e) If Buyer and Seller are unable to resolve any such dispute within
15 days (or such longer period as Buyer and Seller shall mutually agree in
writing) of Buyer's delivery of such notice, such dispute shall be resolved by
the Independent Accounting Firm (as hereafter defined), and such determination
shall be final and binding on the parties. Seller and Buyer shall mutually
select the Independent Accounting Firm, but if Seller and Buyer cannot mutually
agree on the identity of the Independent Accounting Firm, then Seller and Buyer
shall each submit to the other party's independent auditor the name of a
national accounting firm other than the firm whose report accompanied the Final
Closing Balance Sheet or Buyer's objections thereto and other than any firm that
has in the prior two years provided services to Seller, Buyer or any of their
respective Affiliates, and the Independent Accounting Firm shall be selected by
lot from these two firms by the independent auditors of the two parties. (If no
national accounting firm shall be willing to serve as the Independent Accounting
Firm, then an arbitrator shall be selected to serve as such, such selection to
be according to the above procedures.) Any expenses relating to the engagement
of the Independent Accounting Firm shall be shared equally by Buyer and Seller.
The Independent Accounting Firm shall be instructed to use every reasonable
effort to perform its services within 15 days of submission of the Final Closing
Balance Sheet to it and, in any case, as promptly as practicable after such
submission. The Final Closing Balance Sheet shall then be prepared by the Buyer
and Seller based on the determination of the Independent Accounting Firm.
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(f) The Purchase Price shall be equal to the Closing Cash Payment (i)
plus the amount, if any, by which the Final Net Assets exceed the Preliminary
Net Assets or (ii) minus the amount, if any, by which the Preliminary Net Assets
exceed the Final Net Assets. Buyer or Seller, as the case may be, shall, within
10 business days after the final determination of the Final Closing Balance
Sheet pursuant to Sections 2.6(c) and 2.6(d) hereof, make payment by wire
transfer in immediately available funds of the amount of such difference as
determined pursuant to the preceding sentence, together with interest thereon at
a rate equal to the prime rate per annum on the date immediately preceding the
date on which payment is to be made, as quoted by NationsBank, N.A., from the
Closing Date to the date of payment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER, FIGGIE REAL
ESTATE, FIGGIE PROPERTIES AND FIGGIE LICENSING
Seller, Figgie Real Estate, Figgie Properties and Figgie Licensing,
jointly and severally, represent and warrant to Buyer as follows and Buyer, in
agreeing to consummate the transactions contemplated by this Agreement, has
relied upon such representations and warranties:
SECTION 3.1 Organization and Authority of Seller.
(a) Except as set forth in Section 3.1(a) of the Seller Disclosure
Schedule, Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own, lease and operate the Business properties owned,
leased and operated by it and to carry on the operations of the Business as now
being conducted by it. Seller and each of the Asset Affiliates are duly
qualified or licensed to do business and are in good standing in each
jurisdiction in which the property owned, leased or operated by it with respect
to the Business or the nature of the business conducted by the Division makes
such licensing or quali-
-23-
fication necessary, except in any jurisdictions where the failure to be so duly
qualified or licensed or in good standing would not in the aggregate have a
material adverse effect on the assets, liabilities, business, results of
operations or financial condition of the Business, including the Conveyed
Subsidiaries, taken as a whole (a "Material Adverse Effect"). Seller has
heretofore made available to Buyer a complete and correct copy of each of its
Restated Certificate of Incorporation and Bylaws, as currently in effect.
(b) Seller has all requisite corporate power and authority to execute
and deliver this Agreement and the Related Agreements and to perform its
obligations hereunder and thereunder and each Asset Affiliate of Seller has all
requisite power and authority to convey to Buyer title subject to Permitted
Liens and consents of third parties that might be required. The execution and
delivery of this Agreement and the Related Agreements by Seller and the
performance of its obligations hereunder and thereunder have been duly and
validly authorized by the Board of Directors of Seller (the "Board") and no
other corporate or stockholder action on the part of Seller or any of its Asset
Affiliates is necessary to authorize the execution, delivery and performance of
this Agreement and the Related Agreements. This Agreement has been duly executed
and delivered by Seller and constitutes, assuming due authorization, execution
and delivery of this Agreement by Buyer, and each of the Related Agreements to
be executed and delivered by Seller pursuant hereto, when fully executed and
delivered, shall constitute, a valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
SECTION 3.2 Conveyed Subsidiaries.
(a) Section 3.2(a) of the Seller Disclosure Schedule sets forth the
name and jurisdiction of organization or incorporation of each Conveyed
Subsidiary. To the extent that such concepts are recognized by its jurisdiction
of organization or incorporation, each Conveyed Subsidiary (i) is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization or incorporation, (ii) has all requisite corporate
power and authority to own, lease or
-24-
operate the properties and assets owned, leased and operated by such Conveyed
Subsidiary and to carry on its business as currently conducted and (iii) is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, except
in any jurisdictions where the failure to be so qualified or in good standing
would not in the aggregate have a material adverse effect on the assets,
liabilities, business, results of operations or financial condition of the
Conveyed Subsidiaries taken as a whole (a "Subsidiary Material Adverse Effect").
Seller has heretofore made available to Buyer a complete and correct copy of
each of the certificate of incorporation and bylaws (or other organizational
documents of like import), as currently in effect, of each of the Conveyed
Subsidiaries. The copy of the certificate of incorporation and bylaws (or other
organizational documents of like import) of the Conveyed Subsidiaries heretofore
made available to Buyer will be true, complete and correct as of the Closing
Date and will have annexed thereto a copy of every resolution required to be
annexed by the legislation applicable to such Conveyed Subsidiaries.
(b) The minute books and records of each of the Conveyed Subsidiaries,
copies of which have been made available to Buyer prior to the date hereof, (i)
are the original minute books and records of the Conveyed Subsidiaries, (ii) to
the knowledge of Seller, contain all proceedings of the stockholders, the Board
of Directors and any committees thereof with respect to the Conveyed
Subsidiaries, and (iii) to the knowledge of Seller, are true and correct in all
material respects. With respect to each Conveyed Subsidiary, all Tax returns
required to be made and annual financial statements required to be filed with
any federal Australian or New Zealand Governmental Entity have been duly and
correctly made or filed.
(c) Except as set forth in Section 3.2(c) of the Seller Disclosure
Schedule and to the extent that such concepts are recognized by the jurisdiction
of organization or incorporation of each Conveyed Subsidiary, the Shares and the
Designee Shares are validly issued, fully paid and nonassessable, and Seller
owns the
-25-
Shares, and Seller's Designee owns the Designee Shares, free and clear of all
liens, security interests or other encumbrances whatsoever and free and clear of
preemptive rights. Except for this Agreement, there are no outstanding calls,
options, warrants, rights, proxies, participation rights, subscriptions or
commitments relating to the Shares or to any other shares of the capital stock
of the Conveyed Subsidiaries. The Shares shown in Section 3.2(c) of the Seller
Disclosure Schedule as issued and outstanding and the Designee Shares are the
only shares of capital stock of each of the Conveyed Subsidiaries which are
issued or outstanding. Except for this Agreement, there are (i) no
understandings, arrangements, restrictions, commitments or agreements, of any
kind, to which Seller, Seller's Designee or any of Seller's Affiliates is a
party relating to the Shares or the Designee Shares or to any other shares of
the capital stock of the Conveyed Subsidiaries and (ii) no securities
outstanding directly or indirectly convertible into or exchangeable for the
Shares or the Designee Shares. Upon consummation of the transactions at the
Closing, the stock certificates, endorsements and other documents delivered to
Buyer at the Closing will (subject to payment of any stamp duty or similar
charge of the relevant jurisdiction) transfer to and vest in Buyer good, valid
and indefeasible title to the Shares and the Designee Shares, free and clear of
all liens, security interests and other encumbrances whatsoever.
(d) The authorized share capital of Snorkel Elevating Work Platforms
Limited, a company incorporated under the laws of New Zealand ("Snorkel-New
Zealand"), consists solely of 100 issued and fully paid shares of NZ$1.00 par
each, of which 100 shares are issued and outstanding. All of the issued and
outstanding shares of common stock of Snorkel-New Zealand (other than the
Designee Share, which is owned by the Designee) are owned by Seller and are duly
authorized, validly issued, fully paid and nonassessable, and none of such
issued and outstanding shares of common stock were issued in violation of the
preemptive rights of any present or former stockholder of Snorkel-New Zealand.
The authorized capital stock of Snorkel Elevating Work Platforms Pty Limited, a
corporation organized under the laws of New South Wales, Australia
("Snorkel-Australia"), consists of
-26-
100,000 ordinary shares, par value A$1.00 per share, of which 100 shares are
issued and outstanding. All of such ordinary shares are owned by Seller (other
than the Designee Share, which is owned by the Designee) and are duly
authorized, validly issued and fully paid, and none of the issued and
outstanding shares of Snorkel-Australia were issued in violation of the
preemptive rights of any present or former stockholder thereof.
(e) Neither of the Conveyed Subsidiaries owns any capital stock or
other equity securities of any other corporation and has no other type of
interest (whether ownership or other) in any other corporation, partnership,
joint venture or other business organization or entity. Neither of the Conveyed
Subsidiaries is subject to any obligation or requirement to provide funds for,
or to make any investment (in the form of a loan, capital contribution or
otherwise) to or in, any Person (as hereafter defined). Neither Seller nor
either of the Conveyed Subsidiaries has any direct or indirect interest in any
Person that competes with, conducts any business similar to, has any agreement
or arrangement with or is involved in any way with, the Business.
SECTION 3.3 Consents and Approvals: No Violations.
(a) Except as set forth in Section 3.3 of the Seller Disclosure
Schedule, neither the execution by Seller and delivery of this Agreement or the
Related Agreements nor the performance by Seller or any Asset Affiliate of
Seller of its obligations hereunder and thereunder will (i) conflict with or
result in any breach of any provision of the Restated Certificate of
Incorporation or Bylaws of Seller, of the certificate of incorporation or bylaws
of any Asset Affiliate of Seller, or of the organizational or constitutional
documents of either Conveyed Subsidiary; (ii) result in (with or without the
giving of notice or lapse of time or both) a violation or breach of, or
constitute a default or give rise to any right of termination, cancellation or
acceleration under any of the terms, conditions or provisions of any note,
mortgage, letter of credit, other evidence of indebtedness, guarantee, license,
lease or agreement or similar instrument or obligation to which Seller, any
-27-
Asset Affiliate or a Conveyed Subsidiary is a party or by which any of the
Assets may be bound (provided that Seller makes no representation as to any
contract with any federal, state or local government or agency or authority
thereof) or (iii) assuming that the filings, registrations, notifications,
authorizations, consents and approvals referred to in subsection (b) below have
been obtained or made, as the case may be, violate any order, injunction,
decree, statute, rule or regulation of any Governmental Entity to which Seller,
an Asset Affiliate, a Conveyed Subsidiary or the Business is subject, excluding
from the foregoing clauses (ii) and (iii) such requirements, defaults, breaches,
rights or violations that either (A) would not have a material adverse effect on
the ability of Seller to perform its obligations under this Agreement or the
Related Agreements, or (B) become applicable (and would not otherwise be
applicable except) as a result of (1) the business or activities in which Buyer
or any of its Affiliates is or proposes to be engaged or (2) any acts or
omissions by, or facts pertaining to, Buyer or any of its Affiliates.
(b) Except as set forth in Section 3.3 of the Seller Disclosure
Schedule, no filing or registration with, notification to, or authorization,
consent or approval of, any Governmental Entity is required in connection with
the execution and delivery of this Agreement or the Related Agreements by Seller
or the performance by Seller of its obligations hereunder or thereunder, except
(i) compliance with any applicable requirements of the HSR Act (as hereafter
defined) and the Australian and New Zealand equivalents thereof, if any, (ii)
compliance with any applicable requirements of the Foreign Acquisitions and
Takeovers Act of the Commonwealth of Australia (the "Australian Foreign Change
of Control Law"), (iii) compliance with any applicable requirements of the
Overseas Investment Regulations 1995 of New Zealand (the "New Zealand Foreign
Change of Control Law") and (iv) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings that
either (A) may be required to novate, assign or transfer any contract or
agreement with any Governmental Entity, (B) the failure of which to be obtained
or made would not have a material adverse effect on the ability of Seller to
perform its obliga-
-28-
tions under this Agreement or the Related Agreements or (C) become applicable
(and would not otherwise be applicable except) as a result of (1) the business
or activities in which Buyer or any of its Affiliates is or proposes to be
engaged or (2) any acts or omissions by, or facts pertaining to, Buyer or any of
its Affiliates.
SECTION 3.4 Division and Subsidiary Financial Statements. Section 3.4
of the Seller Disclosure Schedule contains true and accurate copies of the
Business's financial statements as of and for the years ended December 31, 1995
and December 31 1996, and as of and for the quarters ended June 30, 1996 and
June 30, 1997 (collectively, the "Division Financial Statements") and the
financial statements of each of the Conveyed Subsidiaries as of and for the
years ended December 31, 1995 and December 31, 1996 (the "Subsidiary Financial
Statements" and, together with the Division Financial Statements, the "Financial
Statements"). Except as set forth in Section 3.4 of the Seller Disclosure
Schedule, the Division Financial Statements (a) have been fairly and accurately
derived from the books and records of the Division and (b) fairly present in
accordance with GAAP consistently applied during and among the periods indicated
the financial position of the Business as of the dates thereof and the results
of operations and cash flows of the Business for the periods then ended. The
Subsidiary Financial Statements comply as to form with applicable accounting
requirements, have been prepared in accordance with generally accepted
accounting principles in effect in New Zealand and Australia, respectively,
consistently applied during and among the periods involved (except as may be
indicated in the notes thereto) and fairly present the financial position of
each of the Conveyed Subsidiaries at the dates thereof and the results of
operations and cash flows for the periods then ended.
SECTION 3.5 Absence of Undisclosed Liabilities. Except (a) for
liabilities and obligations incurred since June 30, 1997 in the ordinary course
of business and consistent with past practice and (b) as otherwise disclosed in
this Agreement or in the Seller Disclosure Schedule, the Division has no
liabilities or obligations (whether direct, indirect, accrued, contin-
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gent, absolute or otherwise) of such nature as would be required to be accrued
on a balance sheet or disclosed in the footnotes of a balance sheet prepared in
accordance with GAAP or, in the case of the Conveyed Subsidiaries, a balance
sheet or disclosed in the footnotes of a balance sheet prepared in accordance
with generally accepted accounting principles as in effect in Australia and New
Zealand, respectively, except for those liabilities and obligations that are, in
the aggregate, immaterial.
SECTION 3.6 Absence of Material Adverse Changes, etc. Except as set
forth in Section 3.6(a) of the Seller Disclosure Schedule, since June 30, 1997,
(a) there has not been any material adverse change in the Assets, liabilities,
business, operations or condition (financial or otherwise) of the Division
(other than changes resulting from changes in general economic or financial
conditions or changes affecting generally the industry in which the Business
operates); (b) Seller and the Conveyed Subsidiaries have conducted the Business
only in the ordinary course and consistent with past practice; (c) none of
Seller or the Conveyed Subsidiaries has increased the compensation of any of the
officers or employees of the Business, except such increases as are granted in
the ordinary course of business in accordance with its customary practices
(which shall include normal periodic performance reviews and related
compensation and benefit increases); (d) none of Seller or the Conveyed
Subsidiaries has sold or disposed of material properties or assets of the
Business, except in the ordinary course of business; (e) Seller and the Conveyed
Subsidiaries have not suffered any loss or damage (whether or not covered by
insurance) to the properties or assets of the Business in excess of $250,000;
(f) none of Seller or the Conveyed Subsidiaries has changed its methods of
accounting or its accounting principles or practices or revalued any of its
assets or determined as collectible any notes or accounts receivable arising out
of the Business that were previously determined to be uncollectible (including,
without limitation, any write-downs of inventory or write-offs of accounts
receivable other than in the ordinary course of business and consistent with
past practice) insofar as they relate to the Business; (g) there has not been
mortgaged, pledged, or subjected to any lien, lease or security interest or
other charge
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or encumbrance any of the Assets other than in the ordinary course of business
and other than Permitted Liens; (h) there has not been any waiver or compromise
by Seller relating to the Assets of a valuable right or of a material debt owed
to it other than in the ordinary course of business; (i) none of Seller or the
Conveyed Subsidiaries has entered into any agreement or made any commitment to
take any of the preceding actions described in this Section 3.6; (j) none of
Seller or the Conveyed Subsidiaries in connection with the Business has, prior
to the date of this Agreement, (i) incurred any indebtedness or other
liabilities (whether absolute, accrued, contingent or otherwise) or guaranteed
any such indebtedness, except in the ordinary course of business, consistent
with past practice; (ii) paid, discharged or satisfied any claims, liabilities
or obligations (absolute, accrued, contingent or otherwise) except in each case
in the ordinary course of business; (iii) permitted any material insurance
policy to be canceled or terminated; (iv) factored or discounted accounts
receivable and other amounts due or sold any inventory at less than fair market
value or made any bulk sale of such inventory except in the ordinary course of
business; (v) sold, assigned, encumbered, licensed, pledged, abandoned or
otherwise transferred any Intellectual Property, Subsidiary Intellectual
Property (as hereafter defined) or other intangible assets; (vi) made any loans
which in the aggregate exceed $5,000 to any employee or made any loans to any
stockholder, officer, director or Affiliate; (vii) made capital expenditures or
commitments in excess of $750,000 in the aggregate; (viii) to the knowledge of
Seller, lost or learned of the prospective loss of any customer, vendor,
representative or agent listed in Section 3.26(a) or 3.27(a) of the Seller
Disclosure Schedule; (ix) made or guaranteed any loans to any customer, vendor
or distributor; or (x) reduced liabilities or reserves in the aggregate in
amounts in excess of $500,000, except by reason of related cash payments.
SECTION 3.7 Title; Properties and Assets Necessary for Conduct of
Business.
(a) Section 3.7(a)(i) of the Seller Disclosure Schedule contains a
complete and accurate list of all fixed assets and each item of tangible
personal property
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(other than inventory and supplies of Seller) used in connection with the
operation of the Business in the United States as of December 31, 1996, other
than the Excluded Assets. Subject to Section 1.1(d) hereof, and except as set
forth in Section 1.1(a) of the Seller Disclosure Schedule, Seller, Figgie
Properties, Figgie Real Estate, Figgie Licensing, or a Conveyed Subsidiary, owns
the Assets and as applicable, has, or will as of the Closing have (and, in the
case of the Assets, Seller shall deliver or cause to be delivered to Buyer)
good, valid and marketable title (subject to Permitted Liens) to, or rights by
license, lease or other agreement to use, all of the Assets and all of the
assets and properties owned by a Conveyed Subsidiary (the "Subsidiary Assets")
(except for, in each case, those disposed of prior to the Closing Date not in
violation of this Agreement), in each case, free and clear of all mortgages,
pledges, security interests, liens, charges, options, easements, rights-of-way
or other encumbrances of any nature whatsoever (collectively, "Liens"), except
for (i) those Liens set forth in Section 3.7(a)(ii) of the Seller Disclosure
Schedule, (ii) mechanics', carriers', workers', repairers', materialmen's,
warehousemen's and other similar Liens arising or incurred in the ordinary
course of business if the obligations secured by such Liens (x) are not
delinquent on either the date of this Agreement or the Closing Date or (y) are
being contested in good faith by appropriate proceedings and for which
appropriate and adequate reserves are established on the Final Closing Balance
Sheet, (iii) Liens exclusively resulting from any action taken by Buyer which is
separate and apart from any action taken, or omitted to be taken, by Seller,
(iv) all matters disclosed in the title commitments delivered by Seller to Buyer
prior to the execution of this Agreement, with respect to the Property (except
to the extent that such matters, in connection with the surveys to be delivered
pursuant to Section 5.12 hereof, reveal material defects that materially
restrict or could materially restrict the continuance after Closing of the
operations of the Business as operated on a recent historical basis), (v) all
matters disclosed in the title commitments, if any, delivered by Seller to Buyer
following the date of this Agreement and within the period specified in Section
5.12 hereof, with respect to the Property, to the extent such matters will not
materi-
-32-
ally restrict the operation of the Business as operated on a recent, historical
basis, (vi) Liens for current Taxes not yet due or that are being contested in
good faith by appropriate proceedings and for which appropriate and adequate
reserves are established on the Final Closing Balance Sheet (collectively,
"Permitted Liens") and except that Seller makes no representation that the
General Assignments or any other documents to be delivered by Seller under
Section 1.7(e) hereof are in form sufficient for recordation in any patent or
trademark office in any jurisdiction outside of the United States; provided that
the representation of Seller in this Section 3.7(a) does not, and shall not be
deemed to, relate or pertain to any asset if the failure of Seller, an Asset
Affiliate or a Conveyed Subsidiary, as applicable, to own such asset would not
render untrue Seller's representation in Section 3.7(b) hereof.
(b) Except as set forth in Section 3.7(b) of the Seller Disclosure
Schedule, and subject to receiving any necessary consents to the transfer or
assignment thereof to Buyer, the Assets and the Subsidiary Assets include all
properties and assets primarily used by Seller in connection with its conduct of
the Business and are and will be sufficient to conduct the Business as of the
date of this Agreement and as of the Closing Date on each of the date of this
Agreement and the Closing Date except, in the case of the foregoing
representation with respect to the date of this Agreement, any Assets disposed
of not in violation of Section 5.1(b)(i) of this Agreement between the date
hereof and the Closing Date.
(c) Section 3.7(c) of the Seller Disclosure Schedule contains a
complete and accurate list of all leases of tangible personal property
(excluding standard office equipment and automobile leases other than any master
automobile lease) leased in connection with the operation of the Business.
(d) All of the fixed assets and other personal property listed (or
required to be listed) in Section 3.7(a)(i) of the Seller Disclosure Schedule
and the assets leased pursuant to the leases listed (or required to be listed)
in Section 3.7(c) of the Seller Disclosure
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Schedule are, taken as a whole, in good operating condition and repair, subject
to ordinary wear and tear.
SECTION 3.8 Real Property. (a) Section 1.1(a)(i) of the Seller
Disclosure Schedule contains a complete and correct list of all Property and all
real property owned by a Conveyed Subsidiary (the "Subsidiary Property") other
than the Retained Property. Seller has supplied to Buyer copies of all surveys
conducted on behalf of and all title insurance policies issued in favor of
Seller or any of its Asset Affiliates which Seller currently has in its
possession with respect to said property.
(b) There are no adverse or other parties in possession of the
Property, the Subsidiary Property, the improvements thereon or any portion or
portions thereof, and on the Closing Date, the Property, the Subsidiary Property
and the improvements thereon will be free and clear of any and all leases,
licensees, occupants or tenants except for Permitted Liens and as set forth in
Section 3.8(a) of the Seller Disclosure Schedule. To the knowledge of Seller,
there are no pending or threatened condemnation, eminent domain or similar
proceedings, or litigation or other proceedings affecting the Property, the
Subsidiary Property, the improvements thereon or any portion or portions
thereof. Except as set forth in Section 3.8(b) of the Seller Disclosure
Schedule, to the knowledge of Seller, there are no pending requests,
applications or proceedings to alter or restrict any zoning or other use
restrictions applicable to the Property, the Subsidiary Property or the
improvements thereon that would interfere with the conduct of the Business or
the use of the Assets consistent with past practice. All necessary easements
exist and are in full force and effect. The Property and the Subsidiary Property
have access, in accordance with past practice, to and from a public right of way
or road and no notice has been received by Seller relating to the termination or
impairment of such access (including applicable parking requirements). Except as
set forth in Section 3.8(b) of the Seller Disclosure Schedule, to the knowledge
of Seller, there is no Maori land claim with respect to the Subsidiary Property.
-34-
(c) Notwithstanding anything herein to the contrary, Seller makes no
representation with respect to the Retained Property.
SECTION 3.9 Real Property Leases. (a) Section 1.1(a)(ii) of the Seller
Disclosure Schedule contains a complete and correct list, of all Real Property
Leases and all leases for real property to which a Conveyed Subsidiary is a
party (the "Subsidiary Real Property Leases"). True and complete copies of the
Real Property Leases and the Subsidiary Real Property Leases, and all written
amendments and agreements relating thereto, have been supplied to Buyer. Each
Real Property Lease and Subsidiary Real Property Lease is valid (except as set
forth in Section 3.9 of the Seller Disclosure Schedule) and neither Seller nor
any Conveyed Subsidiary or, to the knowledge of Seller, any other party thereto
is in default of any material provision thereunder, nor is there any event which
with notice or lapse of time, or both, would constitute a default thereunder and
neither Seller nor any Conveyed Subsidiary has received notice that any party
thereto intends to cancel or terminate same. None of the rights of the tenant
under any such leasehold or other interest in real property will be impaired by
the consummation of the transactions contemplated by this Agreement, except as
specifically listed in Section 3.9 of the Seller Disclosure Schedule.
(b) There are no adverse or other parties in possession of the real
property (including the improvements thereon) subject to the Real Property
Leases or Subsidiary Real Property Leases or any portion or portions thereof,
and on the Closing Date the leasehold interest in the real property (including
the improvements thereon) subject to the Real Property Leases and Subsidiary
Real Property Leases will be free and clear of any and all leases, licensees,
occupants or tenants except for Permitted Liens and as set forth in Section
3.9(a) of the Seller Disclosure Schedule. To the knowledge of Seller, there are
no pending or threatened condemnation, eminent domain or similar proceedings, or
litigation or other proceedings affecting the real property (including the
improvements thereon) subject to the Real Property Leases or Subsidiary Real
Property Leases or any portion or portions thereof. Except as set forth in
Section
-35-
3.9(b) of the Seller Disclosure Schedule, to the knowledge of Seller, there are
no pending requests, applications or proceedings to alter or restrict any zoning
or other use restrictions applicable to the real property subject to the Real
Property Leases or Subsidiary Real Property Leases or any portion or portions
thereof. To the knowledge of Seller, all necessary easements exist and are in
full force and effect. To the knowledge of Seller, all such leased real property
has access, in accordance with past practice, to and from a public right of way
or road and no notice has been received by Seller relating to the termination or
impairment of such access (including applicable parking requirements).
SECTION 3.10 Material Contracts. Section 1.1(a)(v) of the Seller
Disclosure Schedule contains a complete and correct list of all of the following
Contracts (excluding contracts, agreements and commitments otherwise required to
be set forth on the Seller Disclosure Schedule pursuant to this Article III):
(a) employment agreements between Seller or a Conveyed Subsidiary and
an employee of the Business in effect on the date of this Agreement;
(b) Government Contracts;
(c) contracts, agreements and commitments (other than purchase orders
in the ordinary course of business) of Seller or a Conveyed Subsidiary relating
to the Business that involve commitments in excess of $100,000 or have a term of
six (6) months or more;
(d) sales representative agreements to which Seller or a Conveyed
Subsidiary is a party in effect on the date of this Agreement involving the sale
of greater than $2,500,000 of product of the Business annually, except those
agreements that may be cancelled by Seller or such Conveyed Subsidiary without
material penalty upon not more than 180 days' notice;
(e) agreements to which Seller or a Conveyed Subsidiary is a party in
effect on the date of this
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Agreement that limit the ability of the Division to conduct its business in any
geographic market; and
(f) with respect to Snorkel-New Zealand, any agreement, arrangement or
understanding requiring authorization under Part II of the Xxx Xxxxxxx Xxxxxxxx
Xxx 0000 for its legality or validity
(together with the contracts, agreements and commitments otherwise required to
be set forth on the Seller Disclosure Schedule pursuant to this Article III, the
"Material Contracts").
True and complete copies of the Material Contracts and all written
amendments thereto have been made available to Buyer. Except as set forth in
Section 3.10 of the Seller Disclosure Schedule, none of the Material Contracts
has been assigned by Seller or a Conveyed Subsidiary or, to the knowledge of
Seller, is the subject of any security agreement. Except as set forth in Section
3.10 of the Seller Disclosure Schedule, (i) each of the Material Contracts is a
valid and binding obligation of Seller or a Conveyed Subsidiary and, to the
knowledge of Seller, of the other party or parties thereto, enforceable in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization or similar laws or equitable principles relating to
creditors' rights generally; (ii) neither Seller, any Conveyed Subsidiary nor
any other party thereto has terminated, canceled, modified or waived any
material term or condition of any Material Contract; and (iii) neither Seller,
any Conveyed Subsidiary nor, to the knowledge of Seller, any other party to any
Material Contract is in material default under any Material Contract and there
exists no event, condition or occurrence that, after notice or lapse of time, or
both, would constitute such a default either by Seller, any Conveyed Subsidiary
or, to the knowledge of Seller, by any other party to any such Material
Contract.
SECTION 3.11 Intellectual Property. Section 1.1(a)(viii) of the Seller
Disclosure Schedule contains a complete and correct list of the following items
contained within the Intellectual Property and the Subsidiary Intellectual
Property excluding the Excluded Intel-
-37-
lectual Property: all registrations and applications to register domestic and
foreign trademarks, service marks, certification marks, collective marks,
collective membership marks and copyrights; all patents and applications
therefor; all tradenames, service names, and assumed names; and all other
material trademarks and copyrights. Except as set forth in Section 3.11 of the
Seller Disclosure Schedule, all registrations or applications included in the
Intellectual Property and the Subsidiary Intellectual Property are in the name
of Seller, Figgie Licensing or a Conveyed Subsidiary and each such entity has
the right to use its Intellectual Property and Subsidiary Intellectual Property,
as the case may be, with respect to the products and services for which, and in
the geographic areas where, the Intellectual Property and the Subsidiary
Intellectual Property, as the case may be, is currently being used. Except as
set forth in Section 3.12 of the Seller Disclosure Schedule, there are no
pending or, to the knowledge of Seller, threatened claims by any Person (as
hereafter defined) challenging the validity of, or Seller's or a Conveyed
Subsidiary's ownership and use in the Business of, such Intellectual Property or
Subsidiary Intellectual Property, as the case may be.
SECTION 3.12 Litigation. Except as set forth in Section 3.12 of the
Seller Disclosure Schedule, as of the date of this Agreement, there is no claim,
action or proceeding pending or, to the knowledge of Seller, threatened against
Seller or a Conveyed Subsidiary by or before any Governmental Entity with
respect to the Business or its operations in which the relief sought exceeds
$50,000 or the primary relief sought is injunctive or equitable in nature (it
being understood that Section 3.12 of the Seller Disclosure Schedule may include
claims, actions or proceedings, in which the relief sought is less than $50,000
or the primary relief sought is not injunctive or equitable in nature) or that
challenges the validity of this Agreement or the Related Agreements or the
ability of Seller to perform its obligations hereunder or thereunder or any
Asset Affiliate to convey to Buyer good, valid and marketable title subject to
Permitted Liens.
-38-
SECTION 3.13 Compliance with Applicable Law. Except as set forth in
Section 3.13 of the Seller Disclosure Schedule, each of Seller and the Conveyed
Subsidiaries is in compliance in all material respects with all applicable laws,
ordinances, rules and regulations of any federal, state, local or foreign
governmental authority applicable to the Business and its operations (other than
Environmental Laws (as hereafter defined) with respect to which reference is
made to Section 3.17 hereof). All Permits required to conduct the Business have
been obtained, are in full force and effect and are being complied with, except
for immaterial violations and immaterial failures to have the Permits in full
force and effect, if any.
SECTION 3.14 Insurance.
(a) Section 3.14(a) of the Seller Disclosure Schedule contains a
complete and correct list of all material policies (including their respective
expiration dates) of fire, liability, product liability, workers' compensation,
title and other forms of insurance presently in effect with respect to the
current operation of the Business. All such insurance coverage will cease as to
the Business upon the Closing.
(b) Seller has heretofore delivered to Buyer true and complete copies
of certificates evidencing all such policies and inspection reports, if any,
received since January 1, 1993 from insurance underwriters as to the conditions
of the properties and assets owned, leased, occupied or operated by Seller, any
Asset Affiliate or any Conveyed Subsidiary with respect to the Business. None of
Seller, any Asset Affiliate or any Conveyed Subsidiary is in default with
respect to any of the material provisions of such insurance policy, all premiums
due thereon have been paid, and none of Seller, any Asset Affiliate or any
Conveyed Subsidiary has failed to give any notice of or present any claim under
any insurance policy in due and timely fashion. Except as set forth in Section
3.14(b) of the Seller Disclosure Schedule, none of Seller, any Asset Affiliate
or any Conveyed Subsidiary has been refused the issuance of any insurance policy
with respect to the Business, nor has coverage been limited by any insurance
carrier to which it has
-39-
applied for payment under the terms of an insurance policy or with which it has
carried insurance, during the last two years.
SECTION 3.15 Employee Benefit Plans: ERISA.
(a) Section 3.15 of the Seller Disclosure Schedule contains a true and
complete list of all written and oral, formal and, to the knowledge of Seller,
informal annuity, bonus, cafeteria, stock option, stock purchase, profit
sharing, savings, pension, or retirement plans (including all frozen plans and
all terminated plans that have not completed final distribution of its assets),
incentive, group insurance, disability, employee welfare, prepaid legal,
non-qualified deferred compensation including, without limitation, excess
benefit plans, top-hat plans, deferred bonuses, rabbi trusts, secular trusts,
non-qualified annuity contracts, insurance arrangements, non-qualified stock
options, phantom stock plans, or golden parachute payments, or other similar
fringe benefit plans, and all other employee benefit funds or programs (within
the meaning of Section 3(3) of ERISA (as hereafter defined)), covering employees
engaged or formally engaged in the operation of the Business (the "Plans").
Except as set forth in Section 3.15 of the Seller Disclosure Schedule, none of
Seller, any Asset Affiliate or either Conveyed Subsidiary is a party to any
employee agreement, understanding, plan, policy, procedure or arrangement,
whether written or oral, which provides compensation or fringe benefits to its
employees engaged or formerly engaged in the operation of the Business or which
applies to former employees of Seller, any Asset Affiliate or either Conveyed
Subsidiary who were engaged in the Business, and Seller, each Asset Affiliate
and each Conveyed Subsidiary are in compliance with their respective obligations
under all such Plans. Except for changes required by applicable law, there are
no negotiations, demands, commitments or proposals that are pending or that have
been made that concern matters now covered, or that would be covered by the type
of agreements described in Section 3.15 of the Seller Disclosure Schedule or
this Section 3.15(a). None of Seller, any Asset Affiliate or either Conveyed
Subsidiary has any direct or indirect, actual or contingent liability for any
Plan which may become a liability of Buyer, other
-40-
than to make payments for contributions, premiums or benefits when due, all of
which payments have been timely made. None of the Purchased Assets are subject
to any lien or security interest under Section 302(f), 306(a), 307(a) or 4068 of
ERISA or Section 401(a)(29), 412(n) or 6321 of the Code (as hereafter defined).
(b) No "employee pension benefit plan" (as defined in section 3(2) of
ERISA) that Seller or any Asset Affiliate maintains (sometimes referred to
herein as "Pension Plan"), or to which Seller or any Asset Affiliate is
obligated to contribute, has an "accumulated funding deficiency" (as such term
is defined in section 302 of ERISA or section 412 of the Code), whether or not
waived. No Pension Plan to which Seller or any Asset Affiliate is obligated to
contribute with respect to any current or former employee of the Business is a
"multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA) or
a "multiple employer plan" (as described in section 413(c) of the Code).
(c) Each "employee welfare benefit plan" (as defined in section 3(1)
of ERISA) that Seller, any Asset Affiliate or either Conveyed Subsidiary
maintains (sometimes referred to herein as "Welfare Plan") and that is a "group
health plan" (as such term is defined in section 5000(b)(1) of the Code),
complies in all material respects with the applicable requirements of section
4990B(f) of the Code. Any plan, program or arrangement that Seller, any of the
Asset Affiliates or either Conveyed Subsidiary maintains and that provides for
the continuation of health care or life insurance benefits following termination
of employment or the occurrence of a disability provides that it may be amended
or terminated at any time.
(d) Other than claims for benefits arising in the ordinary course of
the administration and operation of the Pension Plans and Welfare Plans, no
claims, investigations or arbitrations are pending by or with respect to any
current or former employee of the Business against any Pension Plan or Welfare
Plan or against Seller, any Asset Affiliate or either Conveyed Subsidiary, any
trust or arrangement created under or as part of any Pension Plan or Welfare
Plan, or any trustee, fiduciary, custodi-
-41-
an, administrator or other person or entity holding or controlling assets of any
Pension Plan or Welfare Plan.
(e) With respect to the Plans listed in Section 3.15 of the Seller
Disclosure Schedule which are subject to ERISA and except as set forth in
Section 3.15 of the Seller Disclosure Schedule:
(i) The Plans are in material compliance with the applicable
provisions of ERISA and each of the Pension Plans, which are intended to be
qualified under Section 401(a) of the Code have been determined by the Internal
Revenue Service (the "IRS") to be so qualified or a request for such
determination has been timely filed with the IRS (and to the knowledge of the
Seller or any Asset Affiliate, nothing has occurred to cause the IRS to revoke
such determination and the IRS has not indicated any disapproval of any request
for such a determination);
(ii) Each Plan has been operated in accordance with its terms and all
required filings that are due prior to the date hereof, including without
limitation, the Forms 5500, for all Plans have been made;
(iii) No prohibited transactions, as defined by Section 406 of ERISA
or Section 4975 of the Code, have occurred with respect to any of the Plans;
(iv) None of Seller, any Asset Affiliate or either Conveyed Subsidiary
has engaged in any transaction with respect to the Plans in connection with
which Seller, any Asset Affiliate or either Conveyed Subsidiary could be
subjected to a criminal or civil penalty under ERISA;
(v) To the knowledge of Seller, none of the Plans, nor any trust which
serves as a funding medium for any of such Plans, nor any issue relating thereto
is currently under examination by or pending before the IRS, the Department of
Labor, the Pension Benefit Guaranty Corporation or any court, other than
applications for determinations pending before the IRS;
(vi) None of the Plans is a "multiemployer plan" as that term is
defined in Section
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3(37) of ERISA and Section 411(f) of the Code, nor a plan maintained by more
than one employer (hereinafter referred to as a "multiple employer plan"), nor a
single employer plan under a multiple controlled group within the meaning of
Section 4063 of ERISA, and none of Seller, any Asset Affiliate or either
Conveyed Subsidiary nor any entity required to be aggregated with Seller, any
Asset Affiliate or either Conveyed Subsidiary under Section 414(b), (c), (m) or
(o) of the Code has incurred any withdrawal liability with respect to any single
plan, multiemployer or multiple employer plan, which liability could constitute
a liability of Buyer;
(vii) No material benefit claims (except those submitted in the
ordinary course of administration of such Plan) are currently pending against
any Plan;
(viii) No Plan provides for retiree medical or retiree life insurance
benefits for former employees of Seller, any Asset Affiliate or either Conveyed
Subsidiary and there is no liability for Taxes with respect to disqualified
benefits under Section 4976 of the Code with respect to any Plan;
(ix) No Pension Plan has been terminated by Seller, any Asset
Affiliate or either Conveyed Subsidiary and there is no liability for Taxes with
respect to a reversion of qualified plan assets under Section 4980 of the Code;
and
(x) Each Pension Plan that has been terminated has completed final
distribution of its assets in accordance with both the terms of the Pension Plan
and such termination.
(f) All Plans that are subject to the laws of Australia and New
Zealand are in material compliance with such applicable laws, including relevant
Tax laws, and the requirements of any trust deed under which they are
established. All contributions payable to such Plans have been made, and all
such Plans are in material compliance with any applicable funding requirements
under the laws of Australia and New Zealand. Each such Plan is funded to an
extent which is sufficient to meet the bene-
-43-
fits prospectively payable and contingently payable to the members of such
Plans.
SECTION 3.16 Taxes.
(a) Except as set forth in Section 3.16(a) of the Seller Disclosure
Schedule, there have been timely filed (taking into account all lawful
extensions of due dates) with the appropriate Taxing Authority (as hereafter
defined) all Tax Returns (as hereafter defined) of Seller relating to the
Business and all Tax Returns of the Conveyed Subsidiaries required to be filed
on or before the Closing Date, and all such Tax Returns were correct and
complete in all material respects.
(b) Seller and the Conveyed Subsidiaries have paid in full all Taxes
if any, shown to be due on such Tax Returns, or otherwise have reserved for or
paid all other Taxes due for all periods up to and including the date hereof,
and at the Closing Date shall have paid or reserved for all Taxes allocable to
periods or portions thereof ending on or before the Closing Date. All Taxes for
the periods covered by the Tax Returns filed or to be filed by Seller and the
Conveyed Subsidiaries, or if not covered by a Tax Return but required to be
paid, have been or will be paid when due whether to a Taxing Authority or to
other Persons (as, for example, under tax allocation agreements).
(c) Except for representations relating to the Conveyed Subsidiaries,
the representations and warranties set forth in subsections (a) and (b) of this
Section 3.16 are not applicable to the extent the Business cannot be made
subject to Liens for Taxes and Buyer and the Conveyed Subsidiaries cannot be
made liable for Taxes relating to the matters constituting breaches of such
representations and warranties.
(d) There are no Liens for Taxes upon the Business or any of the
Assets except Liens for current Taxes not yet due or that are being contested in
good faith by appropriate proceedings and for which appropriate and adequate
reserves are established on the Final Closing Balance Sheet.
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(e) None of the Assets is property which is required to be treated as
being owned by any other Person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code.
(f) None of the Assets is currently financed directly or indirectly by
any tax exempt bonds.
(g) None of the Assets is "tax-exempt use property" within the meaning
of Section 168(h) of the Code.
(h) Except as set forth in Section 3.16(h) of the Seller Disclosure
Schedule, no claim has ever been made by any Taxing Authority in a jurisdiction
where Seller and the Conveyed Subsidiaries do not file Tax Returns that they are
or may be subject to taxation by that jurisdiction with respect to the Assets or
the Business.
(i) Except as set forth in Section 3.16(i) of the Seller Disclosure
Schedule, none of the Conveyed Subsidiaries is a party to any tax allocation or
sharing agreement.
(j) Neither of the Conveyed Subsidiaries has any liability for the
Taxes of any Person (other than the Conveyed Subsidiaries) under Treas. Reg.
Section 1.1502-6 (or any similar provision of the laws of Australia or New
Zealand) as a transferee or successor, by contract, or otherwise.
(k) Neither of the Conveyed Subsidiaries is engaged in a trade or
business in the United States within the meaning of Section 864 of the Code.
(l) Neither of the Conveyed Subsidiaries is a Passive Foreign
Investment Company within the meaning of Section 1296 of the Code.
(m) None of Seller or the Conveyed Subsidiaries has participated in or
cooperated with an international boycott or received a request to participate in
or cooperate with an international boycott within the meaning of Section 999 of
the Code.
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(n) The imputation credit account and dividend withholding payment
account which Snorkel-New Zealand is required to maintain (i) did not on
December 31, 1996, (ii) does not on the date of this Agreement and (iii) will
not on the Closing Date have a debit balance.
(o) Except as set forth in Section 3.16(o) of the Seller Disclosure
Schedule and as otherwise disclosed by Seller to Buyer, no state of facts exist
to the knowledge of Seller that would constitute grounds for the assessment of
any additional Taxes by any Taxing Authority against the Conveyed Subsidiaries
other than sales, use, transfer, recording or similar fees and Taxes that may
arise from the transactions contemplated by this Agreement. No state of facts
exist to the knowledge of Seller that would constitute grounds for the
assessment of any liability for Taxes with respect to the Conveyed Subsidiaries
for the periods that have not been audited by the Internal Revenue Service or
any other Taxing Authority.
(p) Neither of the Conveyed Subsidiaries has granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any Taxes that relate to the Business.
(q) Except as set forth in Section 3.16(q) of the Seller Disclosure
Schedule, there is no material action, suit, proceeding, investigation, audit or
claim now pending against Seller with respect to the Business or any of the
Assets or the Conveyed Subsidiaries in respect of any Tax, and no matter under
discussion with any Taxing Authority relating to any material Tax or assessment
or any claim for additional Tax, asserted by and such Taxing Authority against
Seller or the Conveyed Subsidiaries with respect to the Business or any of the
Assets.
(r) All Taxes with respect to the Assets and the Business that are
required to be withheld or collected have been duly withheld and collected and,
to the extent required have been paid to the proper Taxing Authority, person, or
entity to have been properly deposited as required by applicable law.
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(s) The imputation credit account and dividend withholding payment
account (or similar account) which Snorkel-Australia is required to maintain did
not on December 31, 1996 and does not on the date of this Agreement have a debit
balance.
SECTION 3.17 Environmental Matters.
(a) Except as set forth in Section 3.17(a) of the Seller Disclosure
Schedule, to the knowledge of Seller and its Asset Affiliates, each of Seller
and the Conveyed Subsidiaries is in material compliance with all applicable
Environmental Laws (which material compliance includes, but is not limited to,
the possession by Seller or the appropriate Conveyed Subsidiary, and the timely
making of the application for or for the renewal of, of all permits and other
governmental authorizations required under applicable Environmental Laws and
material compliance with the terms and conditions thereof) with respect to the
Property, the Subsidiary Property and the real property which is the subject of
the Property Leases or the Subsidiary Property Leases. Except as set forth in
Section 3.17(a) of the Seller Disclosure Schedule, since January 1, 1994, none
of Seller and the Conveyed Subsidiaries has received any communication (written
or oral), whether from a Governmental Entity, citizens' group, employee or
otherwise, alleging that Seller or a Conveyed Subsidiary is not in such material
compliance, and there are no past or present actions, activities, circumstances,
conditions, events or incidents that may prevent or interfere with such material
compliance in the future.
(b) Except as set forth in Section 3.17(b) of the Seller Disclosure
Schedule, there is no material Environmental Claim pending or, to the knowledge
of Seller and its Asset Affiliates, threatened with respect to the Property, the
Subsidiary Property or the real property which is the subject of the Property
Leases or the Subsidiary Property Leases against Seller or a Conveyed
Subsidiary, or against any Person whose liability for any material Environmental
Claim Seller or a Conveyed Subsidiary has or may have retained or assumed either
contractually or by operation of law.
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(c) Except as set forth in Section 3.17(c) of the Seller Disclosure
Schedule, to the knowledge of Seller and its Asset Affiliates, there are no past
or present actions, activities, circumstances, conditions, events or incidents
with respect to the Property, the Subsidiary Property, or the real property
which is the subject of the Property Leases or the Real Property Leases,
including, without limitation, the Release, presence, transportation, disposal
or arrangement for disposal of any Hazardous Material that could form the basis
of any material Environmental Claim against Seller or a Conveyed Subsidiary, or
against any Person whose liability for any material Environmental Claim Seller
or a Conveyed Subsidiary has or may have retained or assumed either
contractually or by operation of law.
(d) Seller agrees to cooperate, and to cause the Conveyed Subsidiaries
to cooperate, with Buyer to effect the transfers of any permits or other
governmental authorizations under Environmental Laws that will be required to
permit Buyer to conduct the Business as conducted by Seller and the Conveyed
Subsidiaries immediately prior to the Closing Date.
SECTION 3.18 Certain Fees. Except in connection with the retention of
Xxxxxx Xxxxxxx & Co. Incorporated (whose fees shall be the sole responsibility
of Seller), (i) neither Seller nor any of its Asset Affiliates has employed any
financial advisor or finder and (ii) neither Seller nor the Division has
incurred any liability for any financial advisory or finders' fees, in each case
in connection with this Agreement or the Related Agreements or the transactions
contemplated hereby or thereby.
SECTION 3.19 Employees. Except as set forth in Section 3.19 of the
Seller Disclosure Schedule, since January 1, 1996, no principal executive or key
employee of the Business has left the employ of Seller or any Conveyed
Subsidiary. Except as set forth in Section 3.19 of the Seller Disclosure
Schedule, since January 1, 1996, no salaried employee of the Business who has
been compensated at an annual rate in excess of $75,000 has terminated his or
her employment or had such employment terminated for any reason or for no
reason; no such employee
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has given notice of his or her intent to terminate such employment; and no
notice of termination has been given to any such employee by Seller or any
Conveyed Subsidiary.
SECTION 3.20 Powers of Attorney. There are no outstanding powers of
attorney granted by or binding Seller with respect to the Business or the
Assets, except for revocable powers of attorney routinely granted in the
ordinary course of business that relate to representation before governmental
agencies or were given in connection with the qualification to conduct business
in other jurisdictions.
SECTION 3.21 Accounts Receivable and Accounts Payable. All accounts
receivable of Seller and the Conveyed Subsidiaries related to the Business,
whether reflected on the Financial Statements, or to be reflected on the Final
Closing Balance Sheet, represent sales actually made in the ordinary course of
business or valid claims as to which full performance has been rendered, and the
reserves against the accounts receivable for returns and bad debts are
commercially reasonable and have been calculated in a manner consistent with
past practice. Except to the extent reserved against the accounts receivable in
the appropriate Financial Statement, no counterclaims or offsetting claims with
respect to the accounts receivable have been formally asserted. The accounts
payable of Seller and the Conveyed Subsidiaries reflected on the Financial
Statements and to be reflected on the Final Closing Balance Sheet arose, or will
arise, from bona fide transactions in the ordinary course of business, and all
such accounts payable have been paid or are in the process of being paid, are
not yet due and payable under Seller's or the Conveyed Subsidiaries' payment
policies and procedures, or are being contested by Seller or a Conveyed
Subsidiary in good faith.
SECTION 3.22 Inventory. The inventories of Seller and the Conveyed
Subsidiaries related to the Business consist of raw materials, goods in process
and finished goods salable or usable in the normal course of the Business, and
such inventories are at levels consistent with past practices of the Business.
All such inventories are carried on the books of Seller or the
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Conveyed Subsidiaries pursuant to the normal inventory valuation policies of
Seller or the Conveyed Subsidiaries, as reflected in the Financial Statements.
Either reserves for slow-moving, excess and obsolete inventories have been
established or such inventories have been reduced to their net realizable value
in the Financial Statements in a manner consistent with past practice. Section
3.22(a) of the Seller Disclosure Schedule sets forth the locations of all
inventories of the Division. Except as set forth in Section 3.22(b) of the
Seller Disclosure Schedule, no items included in inventories of Seller or a
Conveyed Subsidiary are or will be pledged as collateral or held by Seller or
the Conveyed Subsidiaries on consignment from others. Neither Seller nor any
Conveyed Subsidiary has outstanding any commitments to purchase inventories in
amounts greater than are reasonably expected to be usable in the ordinary course
of business as presently conducted. All of the foregoing statements are made
only as of the date of the most recent financial statements available and as of
the Closing Balance Sheet subject to the Closing Balance Sheet Principles. With
respect to inventories in the hands of suppliers for which Seller and the
Conveyed Subsidiaries will be committed on the Closing Date, such inventories on
the Closing Date will be reasonably expected to be usable in the ordinary course
of business as presently being conducted.
SECTION 3.23 Employee Relations; Labor Disagreements. Except as set
forth in Section 3.23 of the Seller Disclosure Schedule, no union organizing
efforts have been conducted within the past five (5) years or are now being
conducted in respect of the Business. Except as set forth in Section 3.23 of the
Seller Disclosure Schedule, within the last five (5) years, neither Seller nor
the Conveyed Subsidiaries has had, nor is there now threatened, a strike,
picket, work stoppage, work slowdown, or other labor trouble relating to the
Business or employees engaged therein. Neither Seller nor the Conveyed
Subsidiaries has been a party within the last three (3) years to any collective
bargaining or similar labor agreement relating to the Business or employees
engaged therein. Except as set forth in Section 3.23 of the Seller Disclosure
Schedule, within the last three (3) years, neither Seller nor the Conveyed
Subsidiaries has
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experienced any labor disputes or any work stoppage or slowdowns due to labor
disagreements. Except as set forth in Section 3.23 of the Seller Disclosure
Schedule, (a) no question concerning representation has been raised or, to the
knowledge of Seller, is threatened with respect to the employees of Seller or
the Conveyed Subsidiaries; (b) no grievance that is reasonably likely to have a
Material Adverse Effect, nor any arbitration proceeding arising out of or under
any collective bargaining agreement, is pending and no claims therefor exist;
(c) no collective bargaining agreement that is binding on Seller or any Conveyed
Subsidiary restricts each from relocating, closing or subcontracting any of its
respective operations; and (d) there is no unfair labor practice, charge or
complaint against Seller or any Conveyed Subsidiary with respect to the
Business, or (to the knowledge of Seller) threatened before the National Labor
Relations Board or any foreign authority.
SECTION 3.24 Related Party Transactions. Except as set forth in
Section 3.24 of the Seller Disclosure Schedule, neither Seller, any Conveyed
Subsidiary nor any director or officer of Seller or any Conveyed Subsidiary is
currently a party to any transaction with Seller or any Conveyed Subsidiary
(other than for services as employees, officers and directors), including
without limitation any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from, Seller or any
Conveyed Subsidiary in connection with the operation of the Business, any
employee, officer or director of Seller or any Conveyed Subsidiary, or to or
from any corporation, partnership, trust or other entity in which any such
person, or group of such persons, owns in excess of 5% of the outstanding equity
interest. All transactions described in Section 3.24 of the Seller Disclosure
Schedule, or required to be described therein, were entered into at arms-length
upon terms no less favorable to Seller or any Conveyed Subsidiary than those
generally available from unrelated third parties.
SECTION 3.25 Absence of Questionable Payments. To the knowledge of
Seller, neither Seller nor any Conveyed Subsidiary nor any of their respective
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directors, officers, agents, employees or any other persons acting on their
behalf has, in connection with the operation of the Business, (i) used any
corporate or other funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or established or maintained any unlawful or unrecorded
funds in violation of Section 104 of the Foreign Corrupt Practices Act of 1977,
as amended, or any other applicable foreign, federal or state law; or (ii)
accepted or received any unlawful contributions, payments, expenditures or
gifts.
SECTION 3.26 Customers and Vendors. Section 3.26(a) of the Seller
Disclosure Schedule sets forth correct and complete lists of the twenty (20)
largest (by dollar volume) customers and vendors of the Division during the most
recently completed fiscal year. Except as set forth in Section 3.26(b) of the
Seller Disclosure Schedule, to the knowledge of Seller, there are no outstanding
material disputes with any customer or vendor listed in Section 3.26(a) of the
Seller Disclosure Schedule and no customer or vendor listed thereon has refused
to continue to do business with the Division or has (x) stated its intention not
to continue to do business with the Division or (y) stated its intention to
order at least 10% less of product (measured in revenue dollars) in fiscal 1997
than it ordered in fiscal 1996 or (z) requested a change in its term of payment
to a term of more than 40 days. Except as set forth in Section 3.26(c) of the
Seller Disclosure Schedule, since December 31, 1996, there has not been any
material shortage or unavailability of the raw materials necessary to
manufacture the products sold by the Division, and, to the knowledge of Seller,
there is no current material shortage or unavailability which leads it to
believe that any such shortages will occur.
SECTION 3.27 Distributors and Representatives. Section 3.27(a) of the
Seller Disclosure Schedule sets forth a correct and complete list of the
distributors, representatives and agents for the sale of the products of the
Division during the most recently completed fiscal year. Except as set forth in
Section 3.27(b) of the Seller Disclosure Schedule, since December
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31, 1996, there has been no termination of any independent distributor,
wholesaler, sales representative or agent relationship.
SECTION 3.28 Defects in Products or Designs; Product Safety.
(a) Except as set forth in Section 3.28(a) of the Seller Disclosure
Schedule, the Division has not received actual notice of any alleged
noncompliance with any regulatory, engineering, industrial or other codes
applicable to the design, construction, manufacturing or installation of any
material product made, manufactured, constructed, distributed, sold, leased or
installed by the Division or its employees or agents.
(b) Except as set forth in Section 3.28(b) of the Seller Disclosure
Schedule, Seller has not within the preceding three years filed a notification
or report with the United States Consumer Product Safety Commission concerning
actual or potential hazards with respect to any product manufactured or sold by
the Division.
SECTION 3.29 Product Warranties. True and correct copies of all
express written product warranties and express written product guaranties
applicable to Seller and the Conveyed Subsidiaries and their products and
services in connection with the Business, which were made by Seller or the
Conveyed Subsidiaries after December 31, 1996, have been provided to Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller, Figgie Real Estate, Figgie
Properties and Figgie Licensing as follows:
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SECTION 4.1 Corporate Organization and Authority.
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Buyer has
heretofore delivered to Seller complete and correct copies of its certificate of
incorporation and bylaws (or other organizational documents of like import), as
currently in effect.
(b) Buyer has all requisite corporate power and authority to execute
and deliver this Agreement and the Related Agreements and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Related Agreements by Buyer and the performance by Buyer of
its obligations hereunder and thereunder have been duly and validly authorized
by the Board of Directors of Buyer and no other corporate or stockholder on the
part of Buyer are necessary to authorize the execution, delivery and performance
of this Agreement and the Related Agreements. This Agreement has been duly
executed and delivered by Buyer and constitutes, and when executed and delivered
each of the Related Agreements to be executed and delivered by Buyer will
constitute, assuming due authorization, execution and delivery of this Agreement
and the Related Agreements by Seller, Figgie Real Estate, Figgie Properties and
Figgie Licensing, a valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms.
SECTION 4.2 Consents and Approvals: No Violations.
(a) Neither the execution and delivery of this Agreement or the
Related Agreements by Buyer nor the performance by Buyer of its obligations
hereunder or thereunder will (i) conflict with or result in any breach of any
provision of the certificate of incorporation or bylaws (or other organizational
documents of like import) of Buyer; (ii) result in (with or without the giving
of notice or lapse of time or both) a violation or breach of, or constitute a
default or give rise to any right of termination, cancellation or acceleration
under any of the terms, conditions or provisions of any note, mort-
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gage, letter of credit, other evidence of indebtedness, guarantee, license,
lease or agreement or similar instrument or obligation relating to the business
of Buyer or to which Buyer is a party or by which Buyer or any of the assets
exclusively used or held for use by Buyer may be bound or (iii) assuming that
the filings, registrations, notifications, authorizations, consents and
approvals referred to subsection (b) below have been obtained or made, as the
case may be, violate any order, injunction, decree, statute, rule or regulation
of any Governmental Entity to which Buyer is subject, excluding from the
foregoing clauses (ii) and (iii) such requirements, defaults, breaches, rights
or violations (A) that would not in the aggregate have a material adverse effect
on the ability of Buyer to perform its obligations under this Agreement or the
Related Agreements or (B) that become applicable as a result of any acts or
omissions by Seller.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any Governmental Entity is required in connection with
the execution and delivery of this Agreement or the Related Agreements by Buyer
or the performance by Buyer of its obligations hereunder and thereunder, except
(i) compliance with any applicable requirements of the HSR Act and the
Australian and New Zealand equivalents thereof, if any, (ii) compliance with the
Australia Foreign Change of Control Law and the New Zealand Foreign Change of
Control Law and (iii) such other consents, approvals, orders, authorizations,
notifications, registrations, declarations and filings that either (A) may be
required to novate, assign or transfer any contract or agreement with any
Governmental Entity, (B) the failure of which to be obtained or made would not
have a material adverse effect on the ability of Buyer to perform its
obligations under this Agreement or the Related Agreements or (C) become
applicable as a result of any acts or omissions by Seller.
SECTION 4.3 Litigation. As of the date hereof, there is no claim,
action or proceeding pending or, to the knowledge of Buyer, threatened against
Buyer that challenges the validity of this Agreement or the Related Agreements,
or the ability of Buyer to perform
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its obligations hereunder or thereunder, by or before any Governmental Entity.
SECTION 4.4 Investigation by Buyer. 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 Seller has provided Buyer with access to the
personnel, properties, premises and records of the Business for this purpose. In
entering into this Agreement, Buyer has relied solely upon its own investigation
and analysis and the representations and warranties, information, statements and
covenants contained in this Agreement (including, without limitation, the Seller
Disclosure Schedule) and the Related Agreements, and acknowledges that neither
Seller nor any of its Affiliates, nor any of their respective directors,
officers, employees, controlling persons, agents, representatives or any other
Person makes or has made, other than as specifically made in this Agreement or
any Related Agreement, any representation or warranty, either express or
implied, as to the accuracy or completeness of any of the information provided
or made available to Buyer or its Affiliates, or their respective directors,
officers, employees, controlling persons, agents, representatives or any other
Person. Notwithstanding anything herein to the contrary, the foregoing shall not
be construed to diminish or otherwise adversely affect the rights of Buyer
hereunder, including, without limitation, the rights of Buyer under Section 7.5
hereof.
SECTION 4.5 Solvency; Financing. a) At and immediately after the
Closing, and after giving effect to the transactions contemplated by this
Agreement and the Related Agreements and the financing of such transactions,
Buyer will not (i) be insolvent (either because its financial condition is such
that the sum of its debts is greater than the fair value of its assets or
because the present fair saleable value of its assets will be less than the
amount required to pay its liabilities on its debts and liabilities as they
mature), (ii) have unreasonably small capital with which to engage in its
business or (iii) have incurred or plan to incur debts beyond its ability to pay
as they mature.
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(b) Buyer has, as of the date of this Agreement, delivered to Seller a
complete and correct copy of a commitment letter relating to certain financing
with respect to the purchase of the Division.
SECTION 4.6 Certain Fees. Except in connection with the retention of
Harbour Group Industries, Inc. (whose fees shall be the sole responsibility of
Buyer), none of Buyer or its respective Affiliates has employed any financial
advisor or finder or incurred any liability for any financial advisory or
finders' fees in connection with this Agreement or the Related Agreements or the
transactions contemplated hereby or thereby.
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of the Business. Seller agrees that, during the
period from the date of this Agreement to the Closing, except (i) for transfers
of Excluded Assets from the Division to Seller, (ii) as set forth in Section 5.1
of the Seller Disclosure Schedule or (iii) as consented to by Buyer in writing:
(a) Seller shall (i) cause the business operations of the Division to
be conducted in the ordinary course consistent with past practice, (ii) preserve
intact the Division's organization and use its reasonable best efforts to
preserve relationships with suppliers, customers and others having business
dealings with the Division in order that its goodwill and ongoing business shall
not be impaired in any material respect on the Closing Date, (iii) maintain its
books, accounts and records relating to the Business in the ordinary manner, on
a basis consistent with past practice, (iv) comply in all material respects with
all contractual obligations applicable to the Division or the conduct of the
Business and perform all of its material obligations relating to the Business,
(v) maintain in the ordinary course all of the material licenses and permits
listed on the Seller Disclosure Schedule in full force and effect, (vi) maintain
in the ordinary course all real property, buildings,
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offices, shops and other structures and material properties included in the
Assets in good operating condition and repair, except for ordinary wear and
tear; and (vii) pay its accounts payable relating to the Business in the
ordinary course on a basis consistent with past practice;
(b) Seller shall not (i) sell or dispose of any of the properties or
assets of the Division in excess of $100,000, in the aggregate, except in the
ordinary course of business; (ii) except as may be required by existing
contracts and except for intercompany loans and advances, make any loans,
advances (other than advances in the ordinary course of business and consistent
with past practice of the Business) or capital contributions to, or investments
in, any other Person on behalf of the Business; (iii) increase in any manner the
compensation of any of the officers or other employees of the Business, except
such increases as are granted in the ordinary course of business in accordance
with its practices of the last two years (which shall include normal periodic
performance reviews and related compensation and benefit increases); (iv) adopt,
grant, extend or increase the rate or terms of any bonus, insurance, pension or
other employee benefit plan, payment or arrangement made to, for or with any
such officers or employees of the Business, except for increases occurring in
the ordinary course of business in accordance with its practices of the last two
years or increases required by any applicable law, rule or regulation; (v) make
any change in any of the present accounting methods and practices of the
Business, except as required by changes in GAAP; (vi) mortgage, pledge or
subject to Lien or other encumbrances any of the Assets or the Shares (other
than Permitted Liens and other than pursuant to the Credit Agreement, dated as
of December 19, 1995, as amended between Seller, the lenders party thereto and
General Electric Capital Corporation); (vii) cancel any debt or material claim
in its favor or waive any right of material significance relating to the
Business or the Assets; (viii) with respect to the Division, settle or
compromise any material claims or litigation or, except in the ordinary course
of business, modify, amend or terminate any material contracts; (ix) with
respect to the Division, permit any material insurance policy to be canceled
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or terminated without notice to Buyer; (x) with respect to the Division, fail to
confer on a regular and frequent basis with one or more representatives of Buyer
to report material operational matters and the general status of ongoing
operations; (xi) with respect to the Division, commit a breach of, or default
under, any material contract, agreement, license or instrument to which they are
a party or to which any of their assets may be subject; (xii) with respect to
the Division, (A) factor or discount its accounts receivable or other amounts
due, (B) delay payment on, or otherwise alter the payment terms of, accounts
payable or pay the amounts due thereunder later than the stated date for payment
thereof in accordance with past practice or (C) sell any inventory at less than
fair market value or make any bulk sale of such inventory except in the ordinary
course; (xiii) with respect to the Division, (A) make or authorize capital
expenditures in excess of $500,000; (B) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or other business
organization or division thereof; (C) assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any Person, or
make any loans or advances to any Person; (D) enter into any material contract
or agreement other than in the ordinary course of business; or (E) amend or
terminate in any respect any material contract, agreement, commitment or
arrangement other than in the ordinary course of business; (xiv) with respect to
the Conveyed Subsidiaries, (A) make any new or change any current Tax election
or (B) settle or compromise any material federal, state, local or foreign income
Tax liability; (xv) with respect to the Division, incur or assume any
indebtedness or guarantee any indebtedness or commitments for the same; (xvi)
with respect to the Division, loan or advance any amount to, or sell, transfer
or lease any property or asset to, or enter into any agreement with, any of
their respective stockholders, officers, employees or directors; (xvii) with
respect to the Division, enter into any employment agreement, sales agency
agreement or other contract for the performance of personal services which is
not terminable without liability upon no more than thirty (30) days' notice (or
such greater notice period prescribed by law) or grant any increase in the rate
of compensation or in the benefits payable or to become payable to any agent or
consultant
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over the levels in effect on the date hereof; (xviii) with respect to the
Division, terminate, modify or enter into any leases, governmental licenses or
permits affecting real and/or personal properties, or other authorizations or
agreements affecting real properties or the operation thereof other than as
contemplated by Sections 1.1(d) and 5.4 hereof; (xix) make or guarantee any
loans to any customer, vendor or distributor of the Division or its products;
(xx) with respect to the Division, reduce any liabilities or reserves in the
aggregate in amounts in excess of $500,000, except by reason of related cash
payments; (xxi) amend or propose to amend the articles of association or by-laws
of the Conveyed Subsidiaries; or (xxii) (A) declare or pay any dividends on or
make other distributions in respect of any of the capital stock of the Conveyed
Subsidiaries, (B) split, combine or reclassify any of such capital stock, or
issue or authorize or propose the issuance of any other securities or interests
in respect of, in lieu of or in substitution for shares of such capital stock or
(C) repurchase or otherwise acquire any shares of such capital stock.
(c) Seller shall not take any action regarding the Conveyed
Subsidiaries that would adversely affect Buyer as owner of the Shares after
Closing or adversely affect Seller's ability to transfer the Shares to Buyer.
(d) Seller shall promptly comply, and shall cause the Asset Affiliates
and the Conveyed Subsidiaries to comply, in all material respects with all laws
and regulations (including, without limitation, those relating to the protection
of the environment and employee benefits) applicable to the Division and the
Assets and all laws and regulations with which compliance is required for the
valid consummation of the transactions contemplated hereby and shall promptly
notify Buyer of any legal, administrative or other proceedings, investigations,
inquiries, complaints, notices of violation or other asserted claims, judgments,
injunctions or restrictions, pending, outstanding or, to the knowledge of
Seller, threatened or contemplated, which could affect the Division, the
Business or any of the Assets.
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SECTION 5.2 Access to Information.
(a) Upon reasonable advance notice, between the date hereof and the
Closing, Seller shall (i) give Buyer and its authorized representatives
reasonable access during normal business hours to the offices, facilities,
properties, books and records of the Business; (ii) cause the management of the
Division to furnish Buyer with such financial and operating data and other
information with respect to the business and properties of the Business as Buyer
may from time to time reasonably request, and (iii) instruct the management of
the Division to cooperate with Buyer in its investigation of the Business,
provided, that all requests for information, to visit plants or facilities or to
interview Seller's or the Conveyed Subsidiaries' employees or agents must be
requested of, and coordinated with, an executive officer of Seller or such
person or persons as he shall designate; provided further that any such
investigation shall be conducted under the supervision of Seller's or a Conveyed
Subsidiary's personnel and in such a manner as not to interfere with the
business operations of the Business; provided further that no officer, employee,
or representative of Seller, including those of the Division, shall be required
(x) to participate in road shows or (y) to be otherwise involved in any
financing; provided still further that, subject to clause (x) of the preceding
proviso, officers of Seller, including those of the Division, shall meet, at
reasonable times, with Buyer's financing sources, provided that it shall be made
clear to such financing sources that none of Seller or any such persons shall
have any responsibility or liability with respect to such financing.
Notwithstanding anything to the contrary in this Agreement, none of Seller and
the Conveyed Subsidiaries shall be required to disclose any information to Buyer
or their authorized representatives if doing so would violate any agreement,
law, rule or regulation to which Seller or a Conveyed Subsidiary is a party or
to which Seller or a Conveyed Subsidiary is subject. Notwithstanding anything to
the contrary contained in this Agreement, neither Seller nor any of its
Affiliates shall have any obligation to make available or provide to Buyer or
their authorized representatives a copy of any consolidated, combined or unitary
Tax Return filed by Seller or any of its Affiliates
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or any related materials, except to the extent such Tax Return relates to the
Division.
(b) All information concerning Seller or the Business furnished or
provided by Seller to Buyer or their authorized representatives (whether
furnished before or after the date of this Agreement) shall be held subject to
the Confidentiality Agreement (as hereafter defined). The Confidentiality
Agreement shall remain in full force and effect pursuant to the terms thereof,
notwithstanding the execution and delivery of the Agreement or the termination
hereof.
SECTION 5.3 Regulatory Compliance.
(a) The parties hereto shall make or cause to be made all necessary
filings, as promptly as practicable, including, without limitation, those
required under the HSR Act, the Australian Foreign Change of Control Law, the
New Zealand Foreign Change of Control Law, applicable U.S. or foreign antitrust
laws and applicable state laws, in order to facilitate prompt consummation of
the transactions contemplated hereby and by the Related Agreements. In addition,
Buyer and Seller shall each use their respective reasonable efforts, and shall
cooperate fully with each other to (i) comply as promptly as practicable with
all governmental requirements applicable to the transactions contemplated hereby
and by the Related Agreements and (ii) obtain promptly all approvals, permits,
orders, qualifications or other consents of any applicable Governmental Entities
necessary for the consummation of the transactions contemplated by this
Agreement and the Related Agreements. Each of the parties hereto shall furnish
to the other party such necessary information and reasonable assistance as such
other party may reasonably request in connection with the foregoing.
(b) Subject to the Confidentiality Agreement and applicable law, Buyer
and Seller shall coordinate and cooperate with each other in providing such
assistance as the other may reasonably request in connection with the foregoing
and in seeking early termination of any applicable waiting periods under the HSR
Act, the Australian Foreign Change of Control Law, the New Zealand Foreign
Change of Control Law, or in connection with other regu-
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latory approvals and consents. Each of Buyer and Seller agrees to respond
promptly to and to comply fully with any request for additional information or
documents under the HSR Act, the Australian Foreign Change of Control Law, the
New Zealand Foreign Change of Control Law, and any similar applicable foreign
laws.
SECTION 5.4 Consents; Assignments. Seller shall use its best efforts
to take or cause to be taken all action and to do or cause to be done, and Buyer
shall assist and cooperate with Seller in doing, all things necessary, proper or
advisable under applicable laws and regulations and under applicable contractual
provisions to obtain any consent, approval or amendment required to novate
and/or assign all agreements, leases and licenses relating to the Assets
(including the Software Contracts and Manufacturing Equipment Contracts);
provided that the costs, fees and expenses relating to the assignment of the
agreements, leases and licenses relating to the Assets (including the Software
Contracts and Manufacturing Equipment Contracts) shall be borne by Seller
subject to such costs, fees and expenses not being patently commercially
unreasonable; provided further that Seller shall not request that Buyer make any
payments with respect to such assignments. In the event and to the extent that
Seller is unable to obtain any such required consent, approval or amendment, (i)
Seller shall use its reasonable efforts to (x) provide or cause to be provided
to Buyer the benefits of any permit or approval and of any agreement, lease or
license (including the Software Contracts and Manufacturing Equipment
Contracts), (y) cooperate in any arrangement, reasonable and lawful as to Seller
and Buyer, designed to provide such benefits to Buyer and (z) enforce for the
account of Buyer any rights of Seller arising from such agreements, leases and
licenses, including the right to elect to terminate in accordance with the terms
thereof on the advice of Buyer, (ii) Buyer shall use its reasonable efforts to
perform the obligations of Seller arising under such agreements, leases and
licenses, to the extent that, by reason of the transactions consummated pursuant
to this Agreement, Buyer has control over the resources necessary to perform
such obligations and (iii) Buyer shall indemnify and hold harmless Seller and
its Representatives (as hereafter defined) from and against any Damages (as
hereafter de-
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fined) arising out of or resulting from Buyer's performance or failure to
perform under such agreements, leases and licenses. Seller shall, without
further consideration therefor, pay and remit to Buyer promptly all monies,
rights and other considerations received in respect of such performance. If and
when any such consent shall be obtained or such agreement, lease or license
shall otherwise become assignable or able to be novated, Seller shall promptly
assign and novate all its rights and obligations thereunder to Buyer without the
payment of further consideration and Buyer shall, without the payment of any
further consideration therefor, assume such rights and obligations and Seller
shall be relieved of any and all liability hereunder.
SECTION 5.5 Reasonable Best Efforts, etc. Upon the terms and subject
to the conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take or cause to be taken all action, to do or cause
to be done, and to assist and cooperate with the other party hereto in doing,
all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective, in the most expeditious manner practicable,
the transactions contemplated by this Agreement and the Related Agreements,
including, but not limited to, (i) the satisfaction of the conditions precedent
to the obligations of any of the parties hereto, (ii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the Related Agreements or the performance of the
obligations hereunder or thereunder, (iii) the execution and delivery of such
instruments, and the taking of such other actions as the other party hereto may
reasonably require in order to carry out the intent of this Agreement and the
Related Agreements and (iv) in the case of Buyer, the obtaining of the funds to
pay the Purchase Price and any fees, expenses and other amounts payable pursuant
to this Agreement and the Related Agreements.
SECTION 5.6 Public Announcements. Neither Seller, Buyer nor any of
their respective Affiliates shall issue or cause the publication of any press
release or other public announcement with respect to this Agreement, the Related
Agreements or the other transactions
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contemplated hereby and thereby without the prior consultation and consent of
the other party, except as may be required by law or by any listing agreement
with a national securities exchange.
SECTION 5.7 Employees; Employee Benefits.
(a) Buyer shall offer to continue the employment, after the Closing
Date, of each person who is an active employee of the Business on the Closing
Date (collectively, the "Affected Employees") in a position that is comparable
to that held with the Business as of the Closing Date, at a base salary
comparable to that provided as of such date. No employee of the Business who is
on a leave of absence or who is absent from work on account of a disability on
the Closing Date (the "Absent Employees") shall become an employee of Buyer as
of the Closing Date. Section 5.7 of the Seller Disclosure Schedule sets forth
the name of each Absent Employee, the commencement date of his or her absence
and the reason for such absence. If the terms of the Absent Employee's leave of
absence or disability absence provides for continued employment with the
Business, Buyer shall offer employment to each such Absent Employee listed in
Section 5.7 of the Seller Disclosure Schedule in accordance with such employee's
reemployment terms as of the date after the Closing Date that the employee
returns to work. An Absent Employee shall become an Affected Employee on the
date such employee returns to work having accepted employment with the Buyer
(the "Reemployment Date"). Prior to the Reemployment Date, the Absent Employee
shall continue to be an employee of Seller and shall not be an employee of
Buyer.
(b) As of the Closing Date, Affected Employees shall cease to
participate in the employee welfare benefit plans (as such term in defined in
ERISA) maintained or sponsored by Seller or its Affiliates (the "Prior Welfare
Plans") and shall commence to participate in welfare benefit plans of Buyer or
its Affiliates (the "Replacement Welfare Plans"). Buyer shall use its reasonable
efforts to (i) waive all limitations as to pre-existing condition exclusions and
waiting periods with respect to participation and coverage requirements
applicable to Affected Employees under the Replacement Welfare Plans,
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other than limitations or waiting periods that were in effect with respect to
such employees under the Prior Welfare Plans and that have not been satisfied as
of the Closing Date, and (ii) provide each Affected Employee with credit for any
co-payments and deductibles paid prior to the Closing Date in satisfying any
deductible or out-of-pocket requirements under the Replacement Welfare Plans.
(c) For a period of one year immediately following the Closing Date,
the coverage and benefits provided to Affected Employees pursuant to employee
benefit plans or arrangements maintained by Buyer or its Affiliates shall be, in
the aggregate, not less favorable than those generally provided to the employees
of Buyer or Omniquip International, Inc. and its subsidiaries immediately prior
to the Closing Date. Buyer shall use its reasonable efforts to cause any
Affected Employee who accepts employment with Buyer to be given credit for all
service with the Business and Seller under all employee benefit plans, programs
and policies, and fringe benefits of Buyer in which they become participants for
purposes of eligibility, vesting and benefit accrual. Buyer shall be responsible
and assume all liability for all salary and, except in the case of a pension
plan as defined in ERISA, benefit continuation and/or severance payments
relating to any Affected Employee that may be payable as a result of any
termination by Buyer of the employment of any such Affected Employee within five
years after the Closing Date, and for all notices, payments, fines or
assessments due to any government authority pursuant to any applicable foreign,
federal, state or local law, common law, statute, rule or regulation with
respect to the employment, discharge or layoff of employees by Buyer within five
years after the Closing Date, including, but not limited to, such liability as
arises under the Worker Adjustment and Retraining Notification Act and any rules
or regulations as have been issued in connection with any of the foregoing. The
parties hereto acknowledge that nothing herein is intended to imply that Seller
shall have liability after five years with respect to any of the matters set
forth in preceding sentence.
(d) As of the Closing Date, Buyer shall assume the employment
agreements listed in Section 5.7(d)(i) of
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the Seller Disclosure Schedule (the "Employment Agreements"), which Employment
Agreements shall thereafter be binding obligations of Buyer. As of the Closing
Date, Buyer shall assume the letter agreements, as amended, initially entered
into during the period commencing on March 14, 1996 and ending on May 22, 1997,
between Seller and the persons listed in Section 1.2(k) of the Seller Disclosure
Schedule.
(e) The benefits of the Affected Employees in any of Seller's or its
Asset Affiliates' tax qualified retirement plans shall not be transferred to tax
qualified plans and trusts maintained or to be established by Buyer. Seller and
its Asset Affiliates shall retain all (and Buyer does not assume any) liability
with respect to benefits payable to any Affected Employees from such plans. The
benefits of the Affected Employees in Seller's or its Asset Affiliates' plans
shall be paid to the Affected Employees according to the terms of such plans.
(f) Except as otherwise provided in Section 5.7(d) hereof, Buyer shall
not assume any employee benefit plan entered into or established by Seller or
any Asset Affiliate with or for the benefit of any employee of the Seller or any
Asset Affiliate. Any assets or trust fund established or maintained by Seller or
any Asset Affiliate with respect to any such employee benefit plan shall be
retained by and remain the responsibility of Seller, the applicable Asset
Affiliate or the applicable trustee. The trust fund contemplated by clause 4 of
the Xxxxx Services Agreement and all assets therein shall be retained by and be
the responsibility of Snorkel-Australia.
(g) Seller shall be liable for and be responsible for the
administration of all claims, losses, damages and expenses (including, without
limitation, reasonable attorneys' fees) and other liabilities and obligations
relating to or arising out of all workers' compensation claims of Affected
Employees pending as of the Closing Date, or made after the Closing Date but
relating to events occurring prior to the Closing Date. Buyer shall have
responsibility for and shall indemnify and hold harmless Seller from and against
any and all
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claims, losses, damages and expenses (including, without limitation, reasonable
attorneys' fees) and other liabilities and obligations relating to or arising
out of all workers' compensation claims of Affected Employees made after the
Closing Date and relating to events occurring after the Closing Date.
SECTION 5.8 Allocation of Purchase Price. Section 5.8 of the Seller
Disclosure Schedule sets forth the allocation of the Purchase Price and the
Assumed Liabilities (other than contingent liabilities) among the Assets and the
Shares and the Designee Shares to be purchased hereunder (the "Allocation"),
which Allocation shall be updated as of the Closing Date as soon as practicable
after the final determination of the Final Closing Balance Sheet. The Allocation
shall be made in accordance with section 1060 of the Code and applicable
Treasury Regulations. Each of Seller and Buyer shall (i) be bound by the
Allocation for purposes of determining any Taxes, (ii) prepare and file, and
cause its Affiliates to prepare and file, its Tax Returns on a basis consistent
with the Allocation and (iii) take no position, and cause its Affiliates to take
no position, inconsistent with the Allocation on any applicable Tax Return, in
any proceeding before any Taxing Authority or otherwise. In the event that the
Allocation is disputed by any Taxing Authority, the party receiving notice of
the dispute shall promptly notify the other party hereto concerning resolution
of the dispute; provided, however, that if, in any audit of any Tax Return of
Seller or Buyer by a Taxing Authority, the allocations are finally determined to
be different from the Allocation, Buyer and Seller may (but shall not be
obligated to) take any position or action consistent with the allocations as
finally determined in such audit.
SECTION 5.9 Proration of Certain Taxes. Whenever necessary to
determine the liability for Taxes for a portion of a taxable year or period that
begins before and ends after the Closing Date, the determination of such Taxes
for the portion of the year or period ending on, and the portion of the year or
period beginning after, the Closing Date shall be determined by assuming that
the taxable year ends on the Closing Date, except that exemptions, allowances or
deductions that are
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calculated on an annual basis and annual real and personal property taxes shall
be prorated on the basis of the number of days in the annual period elapsed
through the Closing Date as compared to the number of days in the annual period
elapsing after the Closing Date.
SECTION 5.10 Warranty Claims. Seller and Buyer agree that after the
Closing, all express, implied or oral warranty claims made in connection with
events occurring prior to the Closing Date and in respect of products sold or
services performed by the Division prior to the Closing Date shall be referred
to and processed by Buyer. All such warranty claims shall continue to be Assumed
Liabilities or Retained Liabilities, as the case may be, as provided in Sections
1.2 and 1.3 hereof.
SECTION 5.11 Delivery of Reports, Defaults, etc. Pending Closing.
(a) Seller shall deliver to Buyer reasonably promptly each inspection
report, questionnaire, inquiry, demand or request for information that primarily
or secondarily relates to the Division received from the date of this Agreement
through the Closing Date by Seller, any Asset Affiliate or the Conveyed
Subsidiaries from (and each response thereto), and each statement, report or
other document filed from the date of this Agreement through the Closing Date by
Seller with respect to the Division or any Conveyed Subsidiary with, any
federal, state or local governmental body or administrative agency (including,
but not limited to, the Securities and Exchange Commission, or any stock
exchange, other than any request for information received from the Internal
Revenue Service in connection with its audit of federal income tax returns that
does not relate primarily to the Business).
(b) Seller shall, after becoming aware thereof, promptly notify Buyer
of any event or condition that might cause any Material Adverse Effect or any
Subsidiary Material Adverse Effect or any event or condition that might
reasonably be expected to cause any of its representations, warranties or
covenants set forth herein not to be true and correct as of the Closing Date.
Seller shall also promptly notify Buyer of any development
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involving any matter disclosed on the Seller Disclosure Schedule which shall
occur after the date hereof. The covenants set forth in this Section 5.11 shall
in no event serve as the basis for indemnification under Article VII hereof.
(c) Seller shall comply with all reasonable requests by Buyer to
obtain a good standing certificate with respect to Seller as of the Closing
Date; provided that the failure to obtain such good standing certificate shall
not be deemed a failure of any condition set forth in Article VI hereof.
(d) Seller shall have the right to update the following Sections of
the Seller Disclosure Schedule (solely with respect to actions or occurrences
after the date of this Agreement): 3.6 (only as to clauses (e), (f) and
(j)(viii) of Section 3.6 hereof), 3.7(a)(i) (only with respect to the first
sentence of Section 3.7(a) hereof), 3.8(b) (only with respect to the third and
sixth sentences of Section 3.8(b) hereof), 3.9(b) (only with respect to the
third sentence of Section 3.9(b) hereof), 3.10 (only as to the entering into of
Contracts after the date of this Agreement), 3.12, 3.14(b) (only with respect to
the last sentence of Section 3.14(b) hereof), 3.15 (only with respect to clauses
(e)(v) and (e)(vii) of Section 3.15 hereof), 3.16(h), 3.16(q), 3.17(a) (only
with respect to communications referenced in the last sentence of Section
3.17(a) hereof), 3.17(b), 3.19, 3.23, 3.26(b), 3.26(c), 3.27(b), 3.28(a) and
3.28(b). Such supplements to the Seller Disclosure Schedule shall be taken into
effect only for purposes of Sections 6.2(a) and 7.5 hereof (insofar as the
preceding representations are concerned) but not for any other purpose,
including, without limitation, Section 3.6 hereof, Section 6.2(a) hereof as
applied thereto, and Section 6.2(c) hereof.
SECTION 5.12 Real Property Title Review. To the extent not obtained
prior to the execution of this Agreement, Seller shall request that Chicago
Title Insurance Company or another title company mutually acceptable to Buyer
and Seller furnish commitments, at Buyer's expense, to issue ALTA owner's
policies of title insurance providing that upon due recordation or filing of an
appropriate deed or other instrument of conveyance, such
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title company shall insure that title to the real property to be transferred by
Seller or Figgie Properties or Figgie Real Estate to Buyer pursuant to Section
1.1 hereof, shall be vested in Buyer free and clear of all defects, liens and
encumbrances, other than Permitted Liens. Such commitments described in Section
3.7 hereof shall be delivered not later than ten days prior to the Closing Date.
Seller shall deliver to Buyer a current ALTA "as built" survey (which shows,
among other items, the location of all easements of record set forth in such
title commitments), at Buyer's expense, of each parcel of real property located
in the United States and described in Section 1.1(a)(i) of the Seller Disclosure
Schedule at least ten days prior to the Closing Date. Seller shall deliver to
Buyer a current survey, at Buyer's expense, of each parcel of real property not
located in the United States and described in Section 1.1(a)(i) of the Seller
Disclosure Schedule at least ten days prior to the Closing Date. Buyer shall
review the commitments and surveys prior to Closing. If there exists any
material defect, lien or encumbrance disclosed on said commitments or surveys
that was not disclosed on the title commitments and surveys furnished to Buyer
prior to the date of the execution of this Agreement which materially restricts
or could materially restrict the continuance after Closing of the operations of
the Business as operated on a recent, historical basis, Buyer shall advise
Seller reasonably promptly in writing and Seller shall have the opportunity
before Closing to cure, or make arrangements satisfactory to Buyer to cure, any
such defect, lien or encumbrance, it being agreed that any failure by Seller to
so cure shall constitute a failure to satisfy the conditions to Buyer's
obligation to close set forth in Section 6.2(b) hereof; provided that such
failure shall not otherwise be deemed a breach of any covenant, obligation or
condition herein, including for purposes of Section 7.2 and 7.5 hereof.
SECTION 5.13 Preliminary Environmental Assessment Reports. Buyer may
not prior to Closing conduct a Phase II Environmental Assessment Report for any
parcel of Property. Seller has heretofore delivered to Buyer that Phase I
Environmental Assessment Report of Snorkel-Economy, Elwood, Kansas and St.
Xxxxxx, Missouri, dated August 12, 1996.
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SECTION 5.14 Agreement Not to Compete or Solicit. In order to assure
Buyer the complete benefit of the ownership of the Assets and the Business,
Seller covenants that, for a period of five years after the Closing Date,
neither Seller nor any Affiliate of Seller shall (i) engage in a business
similar to that of the Business and the Division as of the date of this
Agreement (a "Competing Business"), anywhere in the world whether such
engagement shall be as owner, partner, agent, consultant or shareholder (except
as the holder of not more than two percent (2%) of the outstanding shares of a
corporation whose stock is listed on any national or regional securities
exchange or reported by the National Association of Securities Dealers Automated
Quotation System or any successor thereto) or assist any other Person to be so
engaged; (ii) solicit the employment of or hire any person while such person is
in the employ of Buyer or its Affiliates; (iii) solicit any Person who is a
customer of the Division at the Closing Date for purposes of selling to such
customer any product that competes with any product made by the Division as of
the Closing Date; or (iv) induce or attempt to induce any individual, business,
corporation, firm, partnership or other business entity that is a customer or
supplier to Buyer or any distributor or seller of products of Buyer, or that is
otherwise a contracting party with Buyer, to terminate or otherwise adversely
change or cancel any written or oral agreement with Buyer. This Section shall
survive the expiration or termination of this Agreement. Seller acknowledges
that the periods of restriction, the geographical areas of restriction and the
restraints imposed by the provisions of this Section 5.14 are fair and
reasonably required for the protection of Buyer. In the event that any of the
provisions of this Section 5.14 relating to the geographic areas of restriction
or the periods of restriction shall be deemed to exceed the maximum area or
period of time which a court of competent jurisdiction would deem enforceable,
the geographic areas and times shall, for the purposes of this Agreement, be
deemed to be the maximum areas or time periods which a court of competent
jurisdiction would deem valid and enforceable in any state in which such court
of competent jurisdiction shall be convened. Seller acknowledges that any breach
of its obligations under this Section 5.14 may result in irreparable injury to
Buyer, for which Buyer
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may not have an adequate remedy at law. In the event of any such breach, Buyer
may, in its sole discretion and in addition to any other remedies available to
it, bring an action or actions against Seller for injunctive relief, specific
performance or both, and have entered a temporary restraining order, preliminary
or permanent injunction, or order compelling specific performance, and if
successful, obtain reimbursement of its actual costs and attorneys' fees for
bringing such action or actions. In the event of a breach by Seller or any of
its Affiliates of any covenant set forth in this Section 5.14, the term of such
covenant will be extended by the period of the duration of such breach.
Notwithstanding anything herein to the contrary, this Section 5.14 shall not be
deemed violated if Seller makes an acquisition of an interest in any entity that
is engaged in a Competing Business so long as (i) the operations engaged in by
such Competing Business are directly or indirectly disposed of or discontinued
(or Seller disposes of or reduces to below 2% its interest) within twelve months
of Seller having acquired such interest and (ii) neither the sales nor net
income of such acquired Competing Business exceeds 50% of the total sales or
operating income of such entity.
SECTION 5.15 Tax Returns. Buyer shall cause the Conveyed Subsidiaries
to include the results of their respective operations in any separate foreign
income Tax Return required to be filed by the Conveyed Subsidiaries for any
taxable year beginning before and ending after the Closing Date. Buyer shall
pay, or cause to be paid, all Taxes shown as due on any such Tax Return with
respect to the Conveyed Subsidiaries.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES
SECTION 6.1 Conditions to Each Party's Obligations. The respective
obligation of each party to consummate the transactions contemplated hereby is
subject to the satisfaction or, to the extent permitted by applicable law, the
waiver at or prior to the Closing of each of the following conditions:
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(a) Any waiting period applicable to the transactions contemplated by
this Agreement under the HSR Act, the Australian Foreign Change of Control Law
or the New Zealand Foreign Change of Control Law shall have expired or been
terminated and all material governmental authorizations or approvals required in
connection with the transactions contemplated by this Agreement shall have been
obtained or given and shall remain in full force and effect;
(b) No statute, rule or regulation shall have been enacted, entered,
promulgated or enforced by any United States, New Zealand or Australia court or
governmental authority that prohibits the consummation of the transactions
contemplated hereby; and
(c) There shall not be in effect any judgment, order, injunction or
decree of any United States, New Zealand or Australia court of competent
jurisdiction, or any action or proceeding, pending or threatened, by a
Governmental Entity, enjoining the consummation of the transactions contemplated
hereby.
SECTION 6.2 Conditions to the Obligations of Buyer. The obligation of
Buyer to consummate the transactions contemplated hereby is subject to the
satisfaction or waiver at or prior to the Closing, of each of the following
conditions:
(a) On the Closing Date, the representations and warranties of Seller
set forth in Article III of this Agreement shall be true and correct in all
material respects as of the Closing Date as though such representations and
warranties had been made on and as of the Closing Date (except in the case of
any representation and warranty that speaks as of any other date, in such case,
such representation and warranty shall be true and correct in all material
respects as of such date); provided, that the foregoing condition shall be
deemed satisfied with respect to any representation and warranty that is untrue
at any time if the failure of such representation and warranty to be true would
not have a Material Adverse Effect. Buyer shall have received at the Closing a
certificate (the "Seller's Closing Certificate"), dated the Closing Date, signed
by the President
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or a Vice President of Seller to the foregoing effect and to the effect set
forth in subsection (b) below; provided that the qualification with respect to
Material Adverse Effect set forth in the proviso to the preceding sentence shall
be of no force and effect for purposes of the indemnification rights of Buyer
pursuant to Section 7.5 hereof insofar as the Seller's Closing Certificate is
concerned.
(b) Seller shall have performed and complied in all material respects
with all covenants and agreements contained in this Agreement required to be
performed by it on or prior to the Closing Date, and Buyer shall have received
the Seller's Closing Certificate to such effect.
(c) During the period from the date hereof to the Closing Date, there
shall not have occurred a Material Adverse Effect.
(d) All corporate proceedings to be taken by Seller, the Asset
Affiliates and the Conveyed Subsidiaries in connection with the transactions
contemplated by this Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to Buyer.
(e) Seller shall have delivered to Buyer the items referred to in
Section 1.7 hereof.
(f) Seller shall have delivered to Buyer releases of (i) Liens
pursuant to the Credit Agreement, dated as of December 19, 1995, as amended
between Seller, the lenders party thereto and General Electric Capital
Corporation and (ii) Liens of First National Bank of Boston.
(g) (i) (A) There shall have been received all necessary consents from
third parties to the assignment of the contracts, licenses, leases and other
agreements set forth in Section 6.2(g)(i) of the Seller Disclosure Schedule or
(B) Seller shall have provided to Buyer substantially equivalent arrangements
with respect to the contracts, licenses, leases and other agreements set forth
in Section 6.2(g)(i) of the Seller Disclosure
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Schedule; provided that the replacement of any contract, license, lease or other
agreement with such arrangements shall not, in the aggregate, have a material
adverse impact on the operation of the Business and (ii) Seller shall have
obtained either the assignment described in clause (i) of Section 6.2(g)(ii) of
the Seller Disclosure Schedule or the license described in clause (ii) of
Section 6.2(g)(ii) of the Seller Disclosure Schedule.
(h) The condition set forth in the first sentence of clause (A)(xiv)
contained on page 9 of the commitment letter, dated July 18, 1997 (a copy of
which has been previously delivered to Seller), shall have been satisfied or
waived.
(i) Buyer shall have received a written opinion dated as of the
Closing Date from Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to Seller,
in substantially the form attached hereto as Exhibit F.
(j) Buyer shall have received a written opinion dated as of the
Closing Date from Deacons Xxxxxx & Xxxxx, Australian counsel to Seller, in
substantially the form attached hereto as Exhibit G.
(k) Buyer shall have received a written opinion dated as of the
Closing Date from Xxxxxxx Xxxxx Sheffield Young, New Zealand counsel to Seller,
in substantially the form attached hereto as Exhibit H.
SECTION 6.3 Conditions to the Obligations of Seller. The obligation of
Seller to consummate the transactions contemplated hereby is subject to the
satisfaction or waiver at or prior to the Closing, of each of the following
conditions:
(a) On the Closing Date, the representations and warranties of Buyer
set forth in Article IV of this Agreement shall be true and correct in all
material respects as of the Closing Date as though such representations and
warranties had been made on and as of the Closing Date. Seller shall have
received at the Closing a certificate (the "Buyer's Closing Certificate"), dated
the Closing Date, signed by the President or a Vice
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President of Buyer to the foregoing effect and to the effect set forth in
subsection (b) below.
(b) Buyer shall have performed and complied in all material respects
with all covenants and agreements contained in this Agreement required to be
performed by it on or prior to the Closing Date, and Seller shall have received
the Buyer's Closing Certificate to such effect.
(c) All corporate proceedings to be taken by Buyer in connection with
the transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to Seller.
(d) Buyer shall have delivered to Seller the items referred to in
Section 1.8 hereof.
(e) Seller shall have received a written opinion dated as of the
Closing Date from Xxxxxxxxx Xxxxxxx Xxxxx & Xxxxxxxx LLP, counsel to Buyer, in
substantially the form attached hereto as Exhibit I.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER; SURVIVAL
SECTION 7.1 Termination. Notwithstanding anything herein to the
contrary, this Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing:
(a) by the mutual written consent of the Board of Directors of Seller
and the Board of Directors of Buyer;
(b) by either Buyer or Seller, if any United States, New Zealand or
Australian Governmental Entity shall have issued a statute, order, decree or
regulation or taken any other action (which statute, order, decree, regulation
or other action the parties hereto shall use their reasonable best efforts to
lift or render inapplicable to the transactions contemplated hereby), in each
case permanently restraining, enjoining or other other-
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wise prohibiting this Agreement or the Related Agreements or the consummation of
the transactions contemplated hereby or thereby or making this Agreement or the
Related Agreements or the consummation of the transactions contemplated hereby
or thereby illegal and such statute, order, decree, regulation or other action
shall have become final and nonappealable;
(c) by either Seller or Buyer if the Closing shall not have occurred
by October 31, 1997; or
(d) by Seller in the event that the Board determines in the exercise
of its fiduciary duties that such termination is in the best interests of Seller
and its stockholders; provided that Seller agrees that immediately following
such termination it shall pay Buyer a fee of $3 million.
SECTION 7.2 Procedure and Effect of Termination. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to Section 7.1 hereof, written notice thereof shall
forthwith be given by the party so terminating to the other party specifying the
provision hereof pursuant to which such termination is made, and this Agreement
shall become void and of no effect with no liability on the part of any party
hereto and the transactions contemplated hereby shall be abandoned, without
further action; provided that the agreements contained in Sections 3.18, 4.6,
5.2(b), 7.2, 7.4 and 9.5 hereof shall survive the termination hereof; and
provided further that the Confidentiality Agreement shall remain in full force
and effect and that the termination of this Agreement shall not relieve any
party for liability for any willful and knowing breach of this Agreement.
SECTION 7.3 Amendment, Modification and Waiver.
(a) This Agreement may be amended, modified or supplemented only by a
signed written agreement of Seller and Buyer. Any failure of Seller or Buyer to
comply with any term or provision of this Agreement may be waived, with respect
to Buyer, by Seller and, with respect to Seller, by Buyer, by an instrument in
writing signed by
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or on behalf of the appropriate party or parties, but such waiver or failure to
insist upon strict compliance with such term or provision shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure to
comply.
(b) At any time prior to the Closing, a party may (i) extend the time
for the performance of any of the obligations or other acts of the other party
hereto, (ii) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document, certificate or writing
delivered pursuant hereto or (iii) waive compliance with any of the agreements
or conditions of the other party hereto contained herein. Any agreement on the
part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
SECTION 7.4 Survival of Representations and Warranties. The
representations and warranties contained in Sections 3.1, 3.15, 3.17, and 4.1
hereof shall survive the Closing and remain in full force and effect until the
third anniversary of the Closing Date, at which time they shall terminate. The
representations and warranties contained in Sections 3.18, 4.5 and 4.6 hereof
shall survive the Closing and remain in full force and effect until the sixth
anniversary of the Closing Date, at which time they shall terminate. The
representations and warranties contained in Sections 3.7 (as to the fact of
ownership (but not as to the presence of Liens or otherwise as to the quality of
ownership) of the Assets) and 3.16 hereof shall survive the Closing and remain
in full force and effect until the expiration of the applicable statutes of
limitations, at which time they shall terminate. All other representations and
warranties contained in this Agreement shall survive the Closing and remain in
full force and effect until the date eighteen months from the Closing Date, at
which time they shall terminate. All covenants and agreements contained herein
shall survive the Closing for the same period of time as to which Seller is
obligated to indemnify Buyer (or, in the case of covenants and agreements of
Buyer, for the same period of time as to which Buyer is obligated to indemnify
Seller) pursuant to Section 7.5 hereof. The state-
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ments set forth in the Closing Certificates with respect to the representations
and warranties and covenants and agreements contained in this Agreement shall
survive for the same length of time as the corresponding representation and
warranty or covenant and agreement, as the case may be. The sole remedy for any
breach of any representation, warranty, covenant or agreement shall be pursuant
to Section 7.5 hereof, except in the case of fraud or as otherwise provided in
Sections 5.14 and 9.9 hereof.
SECTION 7.5 Post-Closing Liability; Indemnification.
(a) Indemnification. From and after the Closing, but subject to the
provisions of subsections (b) and (c) of this Section 7.5:
(i) Seller shall indemnify and hold harmless Buyer and its
Affiliates, each of Buyer's and its respective Affiliates' directors, officers,
employees, representatives and agents, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the
"Representatives") from and against any liabilities, costs and expenses
(including, without limitation, interest, penalties, reasonable attorneys' fees,
disbursements and expenses, reasonable consultants' fees, disbursements and
expenses, and other costs and expenses incident to proceedings or investigations
or the defense of any claim), judgments, fines, losses, demands, claims, actions
or causes of action, assessments, damages and amounts paid in settlement
(collectively, "Damages") arising out of, resulting from or related to, and to
pay Buyer, its Affiliates and their respective Representatives the full amount
of any sum which Buyer or any of its Affiliates or their respective
Representatives pays on account of (A) any inaccuracy in any representation and
warranty of Seller in this Agreement or in the Seller's Closing Certificate
(without giving effect to the proviso to the first sentence of Section 6.2(a)
hereof to the extent contained therein) or any instrument of transfer or
assumption related hereto, (B) any failure of Seller duly to perform or observe
any covenant or agreement to be performed or observed by Seller pursuant to this
Agreement or the Seller's Closing Certificate or any instrument of transfer or
assumption related hereto
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(other than those set forth in Sections 5.11 and 5.12 hereof), (C) except as
otherwise set forth in Section 2.6(c) hereof, liabilities for Taxes attributable
to the Business for the periods or portions thereof ending on or prior to the
Closing Date, (D) any liabilities related to failures to comply with laws
applicable to bulk sale transfers in respect of Retained Liabilities and (E) the
Retained Liabilities.
(ii) Buyer shall indemnify and hold harmless Seller, its
Affiliates and their respective Representatives from and against any Damages
arising out of, resulting from or related to, and to pay Seller, its Affiliates
and their respective Representatives the full amount of any sum which Seller or
any of its Affiliates or their respective Representatives pays on account of
(A) any inaccuracy in any representation and warranty of Buyer in this Agreement
or in the Buyer's Closing Certificate or any instrument of transfer or
assumption related hereto, (B) any failure of Buyer duly to perform or observe
any covenant or agreement to be performed or observed by Buyer pursuant to this
Agreement or any instrument of transfer or assumption related hereto, (C) the
imposition upon Seller, or assessment against Seller of any debt, liability or
obligation other than the Retained Liabilities arising after the Closing Date of
Buyer or any of its Affiliates relating to any of the Assets or the conduct of
the Business after the Closing Date, (D) liabilities for Taxes attributable to
the Business for the periods or portions thereof ending after the Closing Date
(except to the extent that such period began before the Closing Date, in which
case Buyer's indemnity shall cover only that portion of any such Tax Liability
that is attributable to the portion of the period beginning after the Closing
Date), (E) any liabilities related to failures to comply with laws applicable to
bulk sale transfers in respect of Assumed Liabilities, and (F) the Assumed
Liabilities.
(b) Limitations on Indemnification. i) No action, claim or setoff
for Damages subject to indemnification under this Section 7.5 shall be available
(x) with respect to any claim for Damages resulting from a breach of any
representation or warranty contained in this Agreement, unless such claim is
brought prior to the
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expiration of the survival period of such representation or warranty, (y) with
respect to any claim for Damages resulting from a breach of any covenant the
performance of which is to be made after the Closing Date, unless such claim is
brought within six months of the expiration date for the performance of such
covenant or (z) with respect to any claim for damages resulting from a breach of
any covenant the performance of which is to be made on or prior to the Closing
Date, unless such claim is brought on or before the date eighteen months from
the Closing Date; provided, however, that any claim made by the party seeking
indemnification (the "Indemnified Party") to the party from which
indemnification is sought (the "Indemnifying Party") within the time periods set
forth above shall survive (and be subject to indemnification) until it is
finally and fully resolved. The indemnification obligations of the respective
parties set forth in Sections 7.5(a)(i)(C), (D), and (E) and 7.5(a)(ii)(C), (D),
(E) and (F) hereof shall survive indefinitely.
(ii) Notwithstanding anything herein to the contrary, no
indemnification shall be available under Section 7.5(a)(i)(A) or Section
7.5(a)(ii)(A) hereof (excluding any Damages arising from any breach of the
representations and warranties set forth in Sections 3.1, 3.2(c), 3.18, 4.1, 4.5
and 4.6 hereof and as to the actual ownership of the Property (other than the
Retained Property) (but not the quality of such ownership or the existence of
Liens with respect thereto)) unless and until the aggregate amount of Damages
that would otherwise be subject to indemnification pursuant to Section
7.5(a)(i)(A) or 7.5(a)(ii)(A) hereof ("Basket Losses") exceeds $2 million (the
"Basket Amount"); provided, however, that in the event the Basket Losses exceed
the Basket Amount the Indemnifying Party shall indemnify the Indemnified Party
only for those Damages in excess of $1 million; provided further that any
Damages arising from any breach of the representations and warranties of Seller
in this Agreement or in the Seller's Closing Certificate that are qualified by
references to "Subsidiary Material Adverse Effect" or to "materiality" (but not
to "Material Adverse Effect" or "material adverse effect") and in respect of
which the condition set forth in Section 6.2(a) hereof would not have been
satisfied
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but for the proviso to the first sentence of Section 6.2(a) hereof shall be
excluded from the definition of Basket Losses.
(iii) Notwithstanding anything herein to the contrary, the
maximum aggregate liability of Seller under Section 7.5(a)(i)(A) or of Buyer
under Section 7.5(a)(ii)(A) (excluding any Damages arising from any breach of
the representations and warranties set forth in the first sentence of Section
3.1(a), 3.1(b), clauses (i) and (ii) of the second sentence of 3.2(a), 3.2(c),
3.18, 4.1, 4.5 and 4.6 and as to the actual ownership of the Property (other
than the Retained Property) (but not the quality of such ownership or the
existence of Liens with respect thereto) shall not exceed $20 million.
(iv) Notwithstanding anything herein to the contrary but except
as otherwise provided in Section 7.5(d)(i) hereof, neither Buyer, its
Affiliates, nor their respective Representatives shall be entitled to
indemnification by Seller for any Damages arising from either (A) any matter of
which any of the persons listed in Section 7.5(b)(iv) of the Seller Disclosure
Schedule had actual and specific knowledge prior to the execution of this
Agreement or (B) any breach of any representation and warranty of which Buyer
had actual and specific knowledge prior to the Closing if Buyer was not
required, pursuant to Article VI hereof, to close but nevertheless closed.
(v) Any calculation of Damages for purposes of indemnification
pursuant to this Section 7.5 shall be net of (a) any actual Tax Benefit (as
hereafter defined) to the Indemnified Party arising from such Damages and (b)
any insurance reimbursement in respect of Damages actually received by the
Indemnified Party (except to the extent any such proceeds must be repaid by the
Indemnified Party through adjustments to past, present or future insurance
premiums, which adjustments are directly caused by the payment of such insurance
reimbursement in respect of Damages).
(vi) Notwithstanding anything herein to the contrary, neither
Buyer, its Affiliates, nor their respective representatives shall be entitled to
indemni-
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fication for any matter if and to the extent reflected or included in a reserve
or as a liability on the Final Closing Balance Sheet (other than those matters
reflected or included in the liabilities or reserves set forth in Section 1.2(a)
of the Seller Disclosure Schedule, with respect to which Buyer shall not be
entitled to indemnification).
(c) Indemnification Procedures. All claims for indemnification under
this Agreement shall be asserted and resolved as follows:
(i) An Indemnified Party shall promptly (i) notify in writing the
Indemnifying Party of any third-party claim or claims ("Third Party Claim")
asserted against the Indemnified Party which could give rise to a right of
indemnification under this Agreement and (ii) transmit to the Indemnifying Party
a written notice ("Claim Notice") describing in reasonable detail the nature of
the Third Party Claim, a copy of all papers served with respect to such claim
(if any), an estimate of the amount of damages attributable to the Third Party
Claim, if reasonably possible, and the basis of the Indemnified Party's request
for indemnification under this Agreement.
(ii) Within forty-five days (45) days after receipt of any Claim
Notice (the "Election Period"), the Indemnifying Party shall notify the
Indemnified Party (i) whether the Indemnifying Party disputes its potential
liability to the Indemnified Party under this Section 7.5 with respect to such
Third Party Claim and (ii) whether the Indemnifying Party desires, at the sole
cost and expense of the Indemnifying Party, to defend the Indemnified Party
against such Third Party Claim.
(iii) If the Indemnifying Party notifies the Indemnified Party
within the Election Period that the Indemnifying Party elects to assume the
defense of the Third Party Claim, then the Indemnifying Party shall have the
right to defend, at its sole cost and expense, such Third Party Claim by all
appropriate proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with
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this Section 7.5(c). The Indemnifying Party shall have full control of such
defense and proceedings including any compromise or settlement thereof; provided
that any non-monetary aspect of any settlement shall require the consent of the
Indemnified Party, which consent shall not be unreasonably withheld or delayed.
The Indemnified Party is hereby authorized, at the sole cost and expense of the
Indemnifying Party (but only if such filing is reasonably necessary to protect
its interests and either the Indemnified Party is actually entitled to
indemnification hereunder or the Indemnifying Party assumes the defense with
respect to the Third Party Claim), to file, during the Election Period, any
motion, answer or other pleadings which the Indemnified Party shall deem
necessary or appropriate to protect its interests; provided, that there is not a
reasonable risk that such filings shall materially and adversely affect the
Indemnifying Party's defense; provided further that prior to making any such
filings, the Indemnified Party shall consult with the Indemnifying Party and
shall permit the Indemnifying Party to review such filings. If requested by the
Indemnifying Party, the Indemnified Party shall, at the sole cost and expense of
the Indemnifying Party, cooperate with the Indemnifying Party and its counsel in
contesting any Third Party Claim which the Indemnifying Party elects to contest.
The Indemnified Party may participate in, but not control, any defense or
settlement of any Third Party Claim controlled by the Indemnifying Party
pursuant to this Section 7.5(c) and, except as permitted above, shall bear its
own costs and expenses with respect to such participation.
(iv) If the Indemnifying Party fails to notify the Indemnified
Party within the Election Period that the Indemnifying Party elects to defend
the Indemnified Party pursuant to this Section 7.5(c), or if the Indemnifying
Party elects to defend the Indemnified Party pursuant to this Section 7.5(c) but
fails to prosecute and handle the Third Party Claim with reasonable diligence
and promptness, then the Indemnified Party shall have the right to defend, at
the sole cost and expense of the Indemnifying Party, the Third Party Claim by
all appropriate proceedings. The Indemnified Party shall have full control of
such defense and proceedings; provided, however, that the Indemnified Party may
not enter
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into, without the Indemnifying Party's consent, which shall not be unreasonably
withheld or delayed, any compromise or settlement of such Third Party Claim. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section 7.5(c),
and the Indemnifying Party shall bear its own costs and expenses with respect to
such participation.
(v) In the event an Indemnified Party should have a claim against
an Indemnifying Party hereunder which does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"Indemnity Notice") describing in reasonable detail the nature of the claim, an
estimate of the amount of damages attributable to such claim and the basis of
the Indemnified Party's request for indemnification under this Agreement. If the
Indemnifying Party does not notify the Indemnified Party within sixty (60) days
from its receipt of the Indemnity Notice that the Indemnifying Party disputes
such claim or the calculation of Damages associated therewith, the claim
specified by the Indemnified Party in the Indemnity Notice shall be deemed a
liability of the Indemnifying Party hereunder. If the Indemnifying Party has
timely disputed such claim, as provided above, such dispute shall be resolved by
litigation in an appropriate court of competent jurisdiction.
(vi) Payments of all amounts owing by the Indemnifying Party
pursuant to Sections 7.5(c)(iii) and 7.5(c)(iv) hereof shall be made within
thirty (30) days after the latest of (i) the settlement of the Third Party
Claim, (ii) the expiration of the period for appeal of a final adjudication of
such Third Party Claim or (iii) the expiration of the period for appeal of a
final adjudication of the Indemnifying Party's liability to the Indemnified
Party under this Agreement. Payments of all amounts owing by the Indemnifying
Party pursuant to Section 7.5(c)(v) hereof shall be made within thirty (30) days
after the later of (i) the expiration of the sixty-day Indemnity Notice period
or (ii) the expiration of the period for appeal of a final adjudication of the
Indemnifying Party's liability to the Indemnified Party under this Agreement.
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(vii) The failure to provide notice as provided in this Section
7.5(c) shall not excuse any party from its continuing obligations hereunder;
however, any claim shall be reduced by the damages resulting from such party's
delay or failure to provide notice as provided in this Section 7.5(c).
(viii) The indemnification obligations set forth in this Section
7.5 are made notwithstanding any investigation made by or on behalf of any of
the parties hereto or the results of any such investigation and notwithstanding
the participation of any party in the Closing.
(d) Environmental Matters. (i) Notwithstanding anything to the
contrary in Sections 7.5(b)(ii), (iii), (iv) and (vi) hereof, Seller shall
indemnify and hold harmless Buyer, its Affiliates and their respective
Representatives from and against any Damages arising out of, resulting from or
related to, and shall pay Buyer, its Affiliates and their respective
Representatives the full amount of any sum which Buyer or any of its Affiliates
or their Representatives pays (including, without limitation, for any fines,
penalties, settlements and any curative action relating to such violation) on
account of (A) any violation of Environmental Laws (including, without
limitation, with respect to required notifications and filings under the federal
Emergency Planning and Community Right-to-Know Act) occurring prior to the
Closing or occurring prior to the Closing and continuing after the Closing
(provided, however, that Buyer shall have made reasonable efforts to correct the
violation, and provided further that Seller shall have no obligation hereunder
for any portion of a violation that continues more than ninety (90) days after
the Closing) and (B) any Cleanup (as hereafter defined) required under any
Environmental Law of Hazardous Materials which were Released (or, in the case of
asbestos-containing material, were the cause of a Release) prior to the Closing
(x) on any Property or (y) at any location to the extent the Business is
required to incur Damages with respect to the Cleanup of such Release; provided,
however, that Seller shall have no indemnification or other obligation pursuant
to this Section 7.5(d)(i) with respect to any Known Pre-Closing Environmental
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Liabilities. Seller shall be solely responsible for supervising and performing
any Cleanup relating to Hazardous Materials on any Property to the extent such
Cleanup is subject to the indemnification provisions of this Section 7.5(d)(i);
provided that (x) such Cleanup shall be consistent with the provisions of
Section 7.6(c) hereof as applied to the Property in question and shall not
include any use or deed restrictions on such Property and (y) Seller shall
ensure that all materials relating to the Cleanup that are disposed off-site of
the Property are properly disposed of under the name, and as the property of,
Seller. Except as specifically set forth above, the indemnification obligations
set forth in this Section 7.5(d) shall not include any portion of Damages
attributable to the exacerbation due to any actions of Buyer, its Affiliates or
Representatives of any condition existing as of the Closing involving any
violation of Environmental Laws or any Cleanup of Hazardous Materials.
(ii) Notwithstanding anything to the contrary in Sections
7.5(b)(ii) and (iii) hereof, Buyer shall indemnify and hold harmless Seller, its
Affiliates and their respective Representatives from and against any Damages
arising out of, resulting from or related to, and shall pay Seller, its
Affiliates and their respective Representatives the full amount of any sum which
Seller or any of its Affiliates or their Representatives pays (including,
without limitation, for any fines, penalties, settlements and any curative
action relating to such violation) on account of (A) any violation of
Environmental Laws (including, without limitation, with respect to required
notifications and filings under the federal Emergency Planning and Community
Right-to-Know Act) occurring on or after the Closing other than as specifically
set forth in Section 7.5(d)(i) hereof, (B) any Cleanup of Hazardous Materials
which were Released (or, in the case of asbestos-containing material, were for
the first time the cause of a Release) on or after the Closing (x) on any
Property or (y) at any location to the extent the Business is required to incur
Damages with respect to the Cleanup of such Release and (C) the Known
Pre-Closing Environmental Liabilities. Buyer shall be solely responsible for
supervising and performing any Cleanup relating to Hazardous Materials on any
Property
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to the extent such Cleanup is subject to the indemnification provisions of this
Section 7.5(d)(ii).
(e) All indemnification payments under this Section 7.5 shall be
treated as adjustments to the Purchase Price for income tax purposes.
(f) In the event that the Xxxxx Litigation does not become an
Assumed Liability, following certification of the class of plaintiffs in the
Xxxxx Litigation, Buyer shall pay Seller $500 in cash with respect to each unit
that is covered by the class action such payment to be made in respect of each
unit promptly following the later of (x) certification of the class of
plaintiffs and (y) such unit being covered by either (i) a settlement of the
class action which has been approved by the court and (ii) a final judgment in
the class action which is not the subject of appeal. In the event and to the
extent that it is ultimately determined as described in clauses (i) and (ii) of
the preceding sentence that the members of such class are entitled to receive
product, Buyer shall provide such product at no cost to Seller in lieu of and in
complete substitution for the $500 described in the preceding sentence.
SECTION 7.6 New Zealand Property. (a) In addition to, and not in
limitation of any other provision of this Agreement, and notwithstanding
anything to the contrary in Sections 7.5(b) (ii), (iii), (iv) and (vi) hereof,
from and after the Closing Date Seller shall be responsible for any Cleanup of
Hazardous Materials which were Released prior to the Closing Date on, at, or
under the Levin, New Zealand property (the "Levin Property") or Released or
disposed of in connection with the Business on any property contiguous to the
Xxxxx Property prior to the Closing Date and for which Cleanup is required under
any Environmental Law as interpreted by the independent local council that has
jurisdiction over the Xxxxx Property. Cleanup shall be in accordance with and to
the levels required under any Environmental Laws so interpreted. The parties
agree that they will jointly consult the independent local council in the event
they disagree as to applicable Cleanup requirements or standards; provided,
however, that the parties agree that any Cleanup ordered by a court with
jurisdiction shall be
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deemed to be required by Environmental Law under this Section except to the
extent the independent local council requires an additional or more extensive
Cleanup.
(b) With respect to any discrete part of a Cleanup that is
commenced during the term of the New Zealand Lease and regardless of
whether such discrete part is completed during the term of the Lease,
the Cleanup Costs (as hereafter defined) of such discrete part shall
be divided between Seller and Buyer and paid for as follows: (i)
Seller shall pay 75% of the total Cleanup Costs, and Buyer shall pay
25% of the total Cleanup Costs. "Cleanup Costs" means the costs
payable to an independent contractor for the performance of all or
part of the actions associated with the discrete part of the Cleanup.
Seller shall be responsible for obtaining the services of any
independent contractor necessary for the performance of all or part of
the actions associated with the discrete part of the Cleanup, and
Buyer shall reimburse Seller for 25% of its documented costs paid to
such contractor for any work covered by this Section 7.6. (ii) For
purposes of this Section 7.6, all discrete parts of a Cleanup
contained in a Buyer-approved work plan shall be deemed to have
commenced during the term of the Lease if a contract for performance
of any one discrete part of a Cleanup contained in such work plan is
executed during the term of the Lease, regardless of whether any work
relating to any discrete part of a Cleanup under such work plan has
occurred during the term of the Lease. (iii) Seller shall be 100%
responsible for all Cleanup Costs and other Damages attributable to
(x) the exacerbation due to any actions after the Closing of Seller,
its Affiliates or Representatives (excluding an independent contractor
performing the work) of any condition existing as of the Closing Date
involving the Cleanup of Hazardous Materials and (y) unsuccessfully
contesting the requirement of a Cleanup in negotiations with a
Governmental Entity with jurisdiction over the Xxxxx Property. (iv)
Buyer shall be 100% responsible for all Cleanup Costs and other
Damages attributable to the exacerbation due to any actions of Buyer,
its Affiliates or Representatives (excluding an independent contractor
performing the work) of any condition existing as of the Closing Date
involving the Cleanup of Hazardous Materials.
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(c) (i) Seller shall perform any Cleanup in a manner that, to the
extent reasonably practicable, minimizes any disruption of or
interference with the operations of Buyer.
(ii) Seller shall provide to Buyer promptly upon receipt thereof
copies of all material investigations, plans, proposals and drafts
thereof relating to any proposed Cleanup or discrete part thereof
which Seller is or may be required to perform hereunder, and shall
provide Buyer with an opportunity to comment on such documents. Seller
shall provide Buyer with full and timely access to any independent
contractor retained by Seller, with respect to any Cleanup for which
Buyer is or may be obligated to reimburse Seller under Section 7.6(b)
hereof. Seller shall provide Buyer with timely notice of and an
opportunity to attend (at Buyer's sole expense) any meeting between
Seller and Governmental Entities or other Persons relating to the
Cleanup.
(iii) Any Cleanup performed by Seller hereunder shall be
performed in a workmanlike manner, using appropriate technology, in
accordance with all applicable Environmental Laws and occupational
safety and health requirements. Seller shall require all its
employees, agents, contractors, subcontractors, representatives and
invitees entering upon any of operations of Buyer to be bound by
Buyer's reasonable terms and conditions for such Persons entering such
property. Buyer shall have the right, with the full cooperation of
Seller, upon reasonable advance notice, to inspect and test (at
Buyer's sole expense), all equipment, monitoring devices, samples,
transportation vehicles and facilities taken, used or to be used by
Seller on the Xxxxx Property or any property contiguous thereto.
Seller shall pay, when due, all invoices, bills and claims for labor
or materials furnished for any Cleanup performed by Seller pursuant
hereto, which claims are or may be secured by any mechanic's or
materialman's lien against the Xxxxx Property or any interest therein;
provided, however, that notwithstanding the foregoing, Seller shall
have the right to contest any request for payment and withhold any
payment with the consent of Buyer, which consent shall not be
unreasonably withheld. During any work that Seller performs
(including, without
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limitation, any operation, closure or post-closure monitoring and
care) on the Xxxxx Property or a property contiguous thereto, Seller
shall be solely responsible for compliance with all laws, regulations,
rules and professional standards applicable to its work. Seller shall
use reasonable efforts to require any contractor who performs Cleanup
hereunder to obtain automobile and comprehensive general liability
insurance in amounts customary for work of the nature and scope of the
Cleanup, and shall use reasonable efforts to require Buyer and Seller
be named as a co-insureds of any such insurance.
(d) Seller shall not commence any Cleanup without obtaining
Buyer's approval as follows: (i) Prior to commencing any discrete part
of a Cleanup, Seller shall provide Buyer with a detailed work plan for
such discrete part, including itemized cost estimates. For purposes of
this Section 7.6, a "discrete part of a Cleanup" means all required
remedial actions for specific environmental media (e.g., soil, ground
water), as well as specific stages of a Cleanup (e.g., establishment
of Cleanup requirements, negotiations with Governmental Entities,
preliminary investigation, more detailed investigation). (ii) No later
than 30 days after receiving such detailed work plan, Buyer shall
notify Seller either that it approves the work plan, in which case
Seller may proceed with the discrete part of the Cleanup, or that it
disapproves such work plan. If Buyer disapproves such work plan, Buyer
shall have 30 days to notify Seller that it is terminating the New
Zealand Lease. If Buyer fails to so notify Seller, Buyer shall be
deemed to have approved the work plan, in which case Seller may
proceed with the discrete part of the Cleanup. Notwithstanding Section
7.6(b)(ii) hereof, if Buyer notifies Seller that it is terminating the
New Zealand Lease, any Cleanup that Seller performs under a work plan
that Buyer has not approved shall be deemed to have commenced after
the termination of the Lease. In addition to the foregoing, Seller
may, prior to receiving the approval of Buyer, enter into a contract
with an independent consultant to (w) perform pre-remedial studies,
investigations and governmental negotiations as a basis for developing
a detailed work plan for a discrete part of a Cleanup, (x) develop a
detailed work
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plan for a discrete part of a Cleanup, (y) take emergency Cleanup
action or (z) respond to any government requests for information or
documents in any way relating to cleanup, removal, abatement,
containment, treatment or remediation or potential cleanup, removal,
abatement, containment, treatment or remediation of Hazardous
Materials in the indoor or outdoor environment, but such a contract
shall not be deemed to commence a discrete part of a Cleanup under
Section 7.6(b) hereof unless Buyer ratifies the performance of such
work, which ratification shall not be unreasonably withheld, in which
case the work shall be deemed to be a discrete part of a Cleanup
covered by a Buyer-approved work plan under Section 7.6(b) hereof.
(e) In the event Buyer receives any demand, order or request
relating to a Cleanup covered by this Section 7.6 from a Governmental
Entity or third party, or otherwise becomes aware that a Cleanup
covered by this Section 7.6 may be required, Buyer shall promptly
notify Seller of such facts. Seller hereby consents to, and agrees not
to contest, the personal jurisdiction of the courts of New Zealand
over Seller for purposes of ensuring the parties' compliance with
their covenants, and adjudicating any claims between the parties,
under this Section 7.6, and Seller further agrees that venue proper
for any claims relating to environmental conditions at the Xxxxx
Property is proper for claims relating to this Section 7.6.
ARTICLE VIII
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
following respective meanings:
"Absent Employees" has the meaning set forth in Section 5.7(a) hereof.
"Affected Employees" has the meaning set forth in Section 5.7(a)
hereof.
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"Affiliate" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations promulgated under the Securities Exchange Act of 1934, as
amended.
"Agreement" has the meaning set forth in the preamble hereto.
"Allocation" has the meaning set forth in Section 5.8 hereof.
"Xxxxxx Xxxxxxxx" has the meaning set forth in Section 2.6(b) hereof.
"Asset Affiliate" has the meaning set forth in the preamble hereto.
"Assets" has the meaning set forth in Section l.l(a) hereof.
"Assumed Liabilities" has the meaning set forth in Section 1.2 hereof.
"Australian Foreign Change of Control Law" has the meaning set forth
in Section 3.3(b) hereof.
"Basket Amount" has the meaning set forth in Section 7.5(b)(ii)
hereof.
"Basket Losses" has the meaning set forth in Section 7.5(b)(ii)
hereof.
"Xxxx of Sale" means the duly executed xxxx of sale, substantially in
the form attached hereto as Exhibit B, that Seller shall deliver to Buyer
effecting the sale, assignment, transfer and delivery of the Assets.
"Board" has the meaning set forth in Section 3.1(b) hereof.
"Business" means the business conducted by the Division.
"Buyer" has the meaning set forth in the preamble hereto.
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"Buyer Disclosure Schedule" means the disclosure schedule delivered by
Buyer to Seller substantially concurrently with the execution and delivery by
Seller of this Agreement.
"Buyer's Closing Certificate" has the meaning set forth in Section
6.3(a) hereof.
"Claim Notice" has the meaning set forth in Section 7.5(c)(i) hereof.
"Cleanup" means all actions required to: (1) cleanup, remove, xxxxx,
contain, treat, remediate or prevent exposure to Hazardous Materials in the
indoor or outdoor environment; (2) prevent the Release of Hazardous Materials so
that they do not migrate, endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment; (3) perform pre-remedial studies
and investigations and post-remedial monitoring and care; or (4) respond to any
government requests for information or documents in any way relating to cleanup,
removal, abatement, containment, treatment or remediation or potential cleanup,
removal, abatement, containment, treatment or remediation of Hazardous Materials
in the indoor or outdoor environment.
"Cleanup Costs" has the meaning set forth in Section 7.6(b) hereof.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Balance Sheet Principles" has the meaning set forth in
Section 2.6(a) hereof.
"Closing Cash Payment" has the meaning set forth in Section 1.4
hereof.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Competing Business" has the meaning set forth in Section 5.14 hereof.
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"Confidentiality Agreement" means the confidentiality agreement
entered into between Harbour Group Industries, Inc. and Seller, dated as of
March 11, 1996, as amended.
"Contracts" has the meaning set forth in Section l.l(a)(v) hereof.
"Conveyed Subsidiaries" means Snorkel Elevating Work Platforms
Limited, a company incorporated under the laws of New Zealand and subsidiary of
Seller, and Snorkel Elevating Work Platforms Pty Limited, a corporation
organized under the laws of New South Wales, Australia and subsidiary of Seller.
"Conveyed Subsidiaries' Release" means the release substantially in
the form attached hereto as Exhibit L.
"Damages" has the meaning set forth in Section 7.5(a)(i) hereof.
"Deeds" means quitclaim deeds in recordable form with respect to the
Property substantially in the form set forth in Exhibit C.
"Designee's Release" means the release substantially in the form
attached hereto as Exhibit K.
"Designee Shares" has the meaning set forth in Section 1.1(a)(xii)
hereof.
"Division" means the Snorkel division of Seller, including the
Conveyed Subsidiaries.
"Division Financial Statements" has the meaning set forth in Section
3.4 hereof.
"Election Period" has the meaning set forth in Section 7.5(c)(ii)
hereof.
"Employee" means any Affected Employee, as described in Section 5.7
hereof, or any former employee of the Business.
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"Employment Agreements" has the meaning set forth in Section 5.7(d)
hereof.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any Person alleging potential
liability (including, without limitation, potential liability for investigatory
costs, Cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on or
resulting from (a) the presence or Release of any Hazardous Materials at any
location, whether or not owned or operated by Seller or either of the Conveyed
Subsidiaries, or (b) circumstances forming the basis of any violation of any
Environmental Law.
"Environmental Laws" means all federal, state, local and foreign laws
and regulations relating to pollution or protection of human health or the
environment, including, without limitation, laws relating to Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, transport or
handling of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" has the meaning set forth in Section l.l(c) hereof.
"Excluded Intellectual Property" has the meaning set forth in Section
l.l(c)(v) hereof.
"Xxxxx Litigation" has the meaning set forth in Section 1.2(n) hereof.
"Figgie Licensing" has the meaning set forth in the preamble hereto.
"Figgie Properties" has the meaning set forth in the preamble hereto.
"Figgie Real Estate" has the meaning set forth in the preamble hereto.
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"Figgie Trademarks and Logos" means the name of Seller and any service
marks, trademarks, trade names, identifying symbols, logos, emblems, signs or
insignia related thereto or containing or comprising the name "Figgie",
including any name or xxxx confusingly similar thereto, and the goodwill
relating thereto.
"Final Closing Balance Sheet" has the meaning set forth in Section
2.6(b) hereof.
"Final Closing Report" has the meaning set forth in Section 2.6(b)
hereof.
"Final Net Assets" has the meaning set forth in Section 2.6(b) hereof.
"Financial Statements" has the meaning set forth in Section 3.4
hereof.
"GAAP" means U.S. generally accepted accounting principles.
"General Assignments" has the meaning set forth in Section 1.7(e)
hereof.
"General Litigation Claims" has the meaning set forth in Section
1.2(i) hereof.
"Government Contract" means a mutually binding legal relationship
obligating Seller or a Conveyed Subsidiary to furnish supplies or services and a
government or government agency to pay for them, including all types of
commitments that obligate the government of the United States, New Zealand or
Australia to an expenditure of appropriated funds and that, except as otherwise
authorized, are in writing. In addition to bilateral instruments, "Government
Contract" includes (but is not limited to) awards and notices of awards; job
orders or task letters issued under basic ordering agreements; letter contracts;
orders, such as purchase orders, under which the contract becomes effective by
written acceptance or performance; and bilateral contract modifications.
"Governmental Entity" means any foreign, United States, state or local
governmental entity or municipali-
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ty or subdivision thereof or court, tribunal, commission, board, bureau, agency
or legislative, executive, governmental or regulatory authority or agency.
"Hazardous Materials" means all substances defined as Hazardous
Substances, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R. Section 300.5, or defined as
such by, or regulated as such under, any Environmental Law including, without
limitation, petroleum products.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Xxxxx Services Agreement" means that certain services agreement,
dated September 28, 1990, between Seller and Xxxx Xxxxx.
"Independent Accounting Firm" means the national accounting firm
retained to resolve any disputes between Buyer and Seller over any item
contained in the Final Closing Balance Sheet.
"Indemnified Party" has the meaning set forth in Section 7.5(b)(i)
hereof.
"Indemnifying Party" has the meaning set forth in Section 7.5(b)(i)
hereof.
"Indemnity Notice" has the meaning set forth in Section 7.5(c)(v)
hereof.
"Intellectual Property" has the meaning set forth in Section
l.l(a)(viii) hereof.
"IRS" has the meaning set forth in Section 3.15(e)(i) hereof.
"Known Pre-Closing Environmental Liabilities" has the meaning set
forth in Section 1.2(j) hereof.
"Legal Proceedings" has the meaning set forth in Section 2.2(d)
hereof.
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"Legal Requirement" means all applicable laws, statutes, ordinances,
orders, rules, regulation or requirements.
"Xxxxx Property" has the meaning set forth in Section 7.6(a) hereof.
"Liens" has the meaning set forth in Section 3.7(a) hereof.
"Manufacturing Equipment Contracts" has the meaning set forth in
Section 1.1(d) hereof.
"Material Adverse Effect" has the meaning set forth in Section 3.1(a)
hereof.
"Material Contracts" has the meaning set forth in Section 3.10 hereof.
"New Zealand Foreign Change of Control Law" has the meaning set forth
in Section 3.3(b) hereof.
"New Zealand Lease" means the lease substantially in the form attached
hereto as Exhibit M.
"Other Instruments" means such duly executed, good and sufficient
instruments of conveyance, transfer and assignment, other than the Xxxx of Sale,
the Deeds and the General Assignments, as shall be reasonably required by Buyer
and its counsel and as shall be necessary to convey to Buyer all of Seller's
rights, title and interests in and to the Assets.
"Pension Plan" has the meaning set forth in Section 3.15(b) hereof.
"Permits" has the meaning set forth in Section l.l(a)(ix) hereof.
"Permitted Liens" has the meaning set forth in Section 3.7(a) hereof.
"Person" means and includes any natural person, firm, individual,
partnership, joint venture, company,
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corporation, business trust, trust, association, unincorporated organization or
a Governmental Entity.
"Plans" has the meaning set forth in Section 3.15(a) hereof.
"Preliminary Closing Balance Sheet" has the meaning set forth in
Section 2.6(a) hereof.
"Preliminary Closing Report" has the meaning set forth in Section
2.6(a) hereof.
"Preliminary Net Assets" has the meaning set forth in Section 2.6(a)
hereof.
"Price Waterhouse" has the meaning set forth in Section 2.6(b) hereof.
"Prior Welfare Plans" has the meaning set forth in Section 5.7(b)
hereof.
"Property" has the meaning set forth in Section l.l(a)(i) hereof.
"Purchase Price" has the meaning set forth in Section 1.4 hereof.
"Real Property Leases" has the meaning set forth in Section l.l(a)(ii)
hereof.
"Records" has the meaning set forth in Section 2.2(b) hereof.
"Reemployment Date" has the meaning set forth in Section 5.7(a)
hereof.
"Related Agreements" means those other agreements and instruments
required to be executed pursuant to this Agreement.
"Release" means any release, spill, emission, escape, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration
into the workplace or the environment (including, without limitation, ambient
air, surface water, groundwater and surface
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or subsurface strata) or into or out of any property, including the movement of
Hazardous Materials through or in the air, soil, surface water, groundwater or
property.
"Replacement Welfare Plans" has the meaning set forth in Section
5.7(b) hereof.
"Representatives" has the meaning set forth in Section 7.5(a)(i)
hereof.
"Retained Liabilities" has the meaning set forth in Section 1.3
hereof.
"Retained Property" has the meaning set forth in Section 1.1(c)(vi)
hereof.
"Seller" has the meaning set forth in the preamble hereto.
"Seller Disclosure Schedule" means the disclosure schedule delivered
by Seller to Buyer substantially concurrently with the execution and delivery by
Seller of this Agreement.
"Seller's Closing Certificate" has the meaning set forth in Section
6.2(a) hereof.
"Seller's Designee" means Xxxx Xxxxx.
"Seller's Release" means the release substantially in the form
attached hereto as Exhibit J.
"Shares" has the meaning set forth in the recitals hereto.
"Snorkel-Australia" has the meaning set forth in Section 3.2(d)
hereof.
"Snorkel-New Zealand" has the meaning set forth in Section 3.2(d)
hereof.
"Software Contracts" has the meaning set forth in Section 1.1(d)
hereof.
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"St. Xxxxxx Xxxxx" means the lease substantially in the form attached
hereto as Exhibit D.
"Subsidiary" means with respect to any Person, any corporation or
other legal entity of which such Person owns, directly or indirectly, more than
50% of the outstanding stock or other equity interests, the holders of which are
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
"Subsidiary Assets" has the meaning set forth in Section 3.7(a)
hereof.
"Subsidiary Financial Statements" has the meaning set forth in Section
3.4 hereof.
"Subsidiary Intellectual Property" means (i) all domestic and foreign
registered trademarks, registered copyrights and patents, and applications for
any of the foregoing (excluding the Excluded Intellectual Property) that are
owned as of the Closing Date by the Conveyed Subsidiaries and (ii) all other
material trade names, service marks, logos and assumed names (excluding the
Excluded Intellectual Property) that are owned as of the Closing Date by the
Conveyed Subsidiaries, which Subsidiary Intellectual Property is listed in
Section l.l(a)(viii) of the Seller Disclosure Schedule.
"Subsidiary Material Adverse Effect" has the meaning set forth in
Section 3.2(a) hereof.
"Subsidiary Real Property Leases" has the meaning set forth in Section
3.9(a) hereof.
"Subsidiary Property" has the meaning set forth in Section 3.8(a)
hereof.
"Tax Benefit" shall mean the present value of any net reduction or
increase in Taxes attributable to any loss, deduction (including any positive or
negative changes in any depreciation or amortization deductions arising from any
adjustments to the basis of assets, including any adjustment to purchase price
arising from indemnification payments), credit or similar item for any
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Tax purpose. The amount of any Tax Benefit shall be calculated (i) using the
Indemnified Party's actual effective tax rate for federal, state and local Tax
purposes at the time the indemnification payment is made; (ii) with the
assumption that all Tax Benefits will be utilized by the Indemnified Party at
the first time that such Tax Benefits are allowable under the applicable Tax law
in existence at the time the indemnification payment is made; and (iii) using
the mid-term applicable federal rate (for annual payments) for present value
calculations. Any net negative Tax Benefits shall be treated as additional
Damages subject to indemnification under Section 7.5 hereof.
"Tax Return" means any report, return, statement or other written
information required to be supplied to a taxing authority in connection with
Taxes.
"Taxes" means (i) all income taxes (including any tax on or based upon
net income, or gross income, or income as specially defined, or earnings, or
profits, or selected items of income, earnings or profits) and all gross
receipts, estimated, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, stamp duty,
occupation, premium, property or windfall profits taxes, environment,
alternative or add-on minimum taxes, custom duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any Taxing
Authority and (ii) any liability for the payment of any amount of the Tax
described in the immediately preceding clause (i) as a result of being a
"transferee" (within the meaning of Section 6901 of the Code or any other
applicable law) of another person or successor, by contract, or otherwise, or a
member of an affiliated, consolidated, or combined group.
"Taxing Authority" means any federal, state, local or foreign
governmental entity or other authority (individually or collectively) that is
involved in any way with the determination, assessment or collection of any Tax.
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"Third Party Claim" has the meaning set forth in Section 7.5(c)(i)
hereof.
"Undertaking" has the meaning set forth in Section l.5 hereof.
"Welfare Plan" has the meaning set forth in Section 3.15(c) hereof.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Further Assurances. From time to time after the Closing
Date, at the request of any party hereto and at the expense of such party, the
parties hereto shall execute and deliver to such requesting party such documents
and take such other action as such requesting party may reasonably request in
order to consummate more effectively the transactions contemplated hereby and by
the Related Agreements.
SECTION 9.2 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and may be given by any of the following methods: (a) personal
delivery, (b) facsimile transmission, (c) when mailed in the United States by
registered or certified mail, postage prepaid, return receipt requested or
(d) overnight delivery service. Notices shall be sent to the appropriate party
at its address or facsimile number given below (or at such other address or
facsimile number for such party as shall be specified by notice given
hereunder):
If to Buyer, to:
SKL Lift, Inc.
c/o Omniquip International, Inc.
000 Xxxx Xxxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxxxx 00000
Fax: (000) 000-0000
Attention: X. Xxxxx Stiff
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President and Chief Executive
Officer
with a copy to:
Xxxxxxxxx Xxxxxxx Xxxxx & Xxxxxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Fax: (000) 000-0000
Attention: Xxx X. Xxxxx, Esq.
If to Seller, to:
Figgie International Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxx X. Xxxxx, Esq.
All such notices, requests, demands, waivers and communications shall be deemed
received upon (i) actual receipt thereof by the addressee, (ii) actual delivery
thereof to the appropriate address or (iii) in the case of a facsimile
transmission, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice is deemed received.
SECTION 9.3 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public
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policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated herein is affected in any manner materially
adverse to any party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner.
SECTION 9.4 Assignment; Binding Effect. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned, directly or
indirectly, including, without limitation, by operation of law, by any party
hereto without the prior written consent of the other parties hereto. Subject to
the preceding sentence, this Agreement and all of the provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Notwithstanding anything herein to
the contrary, Seller and Buyer may each assign any and all of its rights under
Article VII hereof to any of its lenders.
SECTION 9.5 No Third Party Beneficiaries. This Agreement is solely for
the benefit of Seller and its successors and permitted assigns, with respect to
the obligations of Buyer under this Agreement, and for the benefit of Buyer, and
its successors and permitted assigns, with respect to the obligations of Seller,
under this Agreement, and this Agreement shall not be deemed to confer upon or
give to any other third party any remedy, claim, liability, reimbursement, cause
of action or other right.
SECTION 9.6 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation." The phrase "made available" when used in this Agreement shall mean
that the information referred
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to has been made available if requested by the party to whom such information is
to be made available. Matters referred to in this Agreement as "to the knowledge
of Seller" and "to Seller's knowledge" shall mean the actual knowledge of Xxxxxx
X. Xxxxxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxx, Xxx Xxxxxxxxxxx, Xxxxxxx
Xxxxxxxx and Xxxx X. Xxxxx.
The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement.
SECTION 9.7 Entire Agreement. This Agreement, together with the
Confidentiality Agreement, the Seller Disclosure Schedule, the Buyer Disclosure
Schedule and the exhibits and other documents referred to herein or delivered
pursuant hereto that form a part hereof, constitute the entire agreement between
the parties hereto with respect to the subject matter hereof and supersede all
other prior agreements and understandings, both written and oral, between the
parties or either of them with respect to the subject matter hereof.
SECTION 9.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.
SECTION 9.9 Specific Performance. The parties acknowledge and agree
that any breach of the terms of this Agreement would give rise to irreparable
harm for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy.
SECTION 9.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of
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which shall be deemed an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received counterparts hereof signed
by all of the other parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
FIGGIE INTERNATIONAL INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
FIGGIE INTERNATIONAL REAL ESTATE INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Secretary
FIGGIE PROPERTIES INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Secretary
FIGGIE LICENSING CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Secretary
FIGGIE RISK MANAGEMENT CO.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Secretary
SKL LIFT, INC.
By: /s/ X. Xxxxx Stiff
--------------------------------
Name: X. Xxxxx Stiff
Title: President
GUARANTY
The undersigned ("Guarantor") hereby agrees to guaranty the
obligations of SKL Lift, Inc., a Delaware corporation (the "Buyer"), under the
Asset Purchase Agreement, dated as of July 19, 1997, by and among Figgie
International Inc., a Delaware corporation, Figgie International Real Estate
Inc., a Delaware corporation, Figgie Properties Inc., a Delaware corporation,
Figgie Licensing Corporation, a Delaware corporation, Figgie Risk Management
Corporation, a Florida corporation, and Buyer.
The obligations of Guarantor under this guaranty are absolute and
unconditional and shall remain in full force and effect without regard to, and
shall not be released, waived, suspended, discharged, terminated or otherwise
affected by, any circumstance or occurrence whatsoever, including, without
limitation, (i) any bankruptcy, insolvency, reorganization, dissolution,
liquidation or the like of Guarantor, (ii) any merger or consolidation of
Guarantor into or with any other entity or (iii) any sale of all or
substantially all of the assets of Guarantor.
This guaranty shall be governed by and construed in all respects under
the laws of the State of New York.
OMNIQUIP INTERNATIONAL, INC.
By: /s/ X. Xxxxx Stiff
--------------------------------
Name: X. Xxxxx Stiff
Title: President and Chief Executive Officer
