EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
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THIS IS AN ASSET PURCHASE AGREEMENT (the "Agreement") dated
September 30, 2003 by and among ProActive Acquisition Corporation, a Michigan
corporation ("Seller"), Xxxxxxxx Controls, Inc., a Delaware corporation
("Xxxxxxxx"), Teleflex Incorporated, a Delaware corporation ("Parent") and
Teleflex Automotive Incorporated, a Delaware corporation and wholly owned
subsidiary of Parent ("Buyer").
Background
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Seller, through its Florida operations, engages in the
business of the design, manufacture, distribution, marketing, research and
development, and sale of electronic throttle control modules, electronic
throttle control sensors and position sensors for the automotive and light truck
markets (defined as, in North America, Class 1 and Class 2 passenger car and
light truck vehicles (as such classes are described on Schedule A to this
Agreement) and, in Europe and Asia, as 0 to 5 ton passenger car and light truck
vehicles) and pedal systems for the Club Car vehicles manufactured by Club Car,
Inc. (collectively, the "Business"). Buyer desires to purchase, and Seller
desires to sell, substantially all of Seller's assets relating to the Business
on the terms and subject to the conditions set forth in this Agreement.
Terms
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In consideration of the mutual covenants contained herein and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE TRANSACTION
Section 1.1. Sale and Purchase of Acquired Assets. Subject to the terms
and conditions of this Agreement, at the Closing referred to in Section 1.8
below, Seller shall sell, assign, transfer, deliver and convey to Buyer and
Buyer shall purchase from Seller the Acquired Assets (as defined below), free
and clear of all liens and encumbrances of every kind, nature and description
except for Permitted Encumbrances (as defined below), for the Purchase Price
specified below in Section 1.2.
"Acquired Assets" means all of Seller's right, title, and
interest in, under and to all of the assets and rights constituting, used or
held for use in the Business, of every kind, nature and description existing on
the date hereof, other than the Excluded Assets, wherever such assets are
located and whether such assets are tangible or intangible, and whether or not
any of such assets have any value for accounting purposes or are carried or
reflected on or specifically referred to in Seller's books or financial
statements, including without limitation all of the assets, properties and
rights of Seller described on Schedule 1.1(a) hereto.
"Permitted Encumbrances" shall mean (i) liens for real and
personal property Taxes (as defined in Section 2.7) which are not yet due and
payable, (ii) mechanic's, carrier's workmen's, repairmen's or other similar
statutory liens arising or incurred in the ordinary course of business, (iii)
minor imperfections of title, conditions, easements and reservations of rights,
including easements and reservations of, or rights of others for, rights of way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, encroachments, covenants and restrictions, and (iv) liens that are
listed or described on Schedule 1.1(b); provided, that with respect to items
described in clauses (ii) or (iii) hereof, such items individually or in the
aggregate, do not materially detract from the value of or impair the use or
occupancy of any asset or property encumbered by such lien.
Section 1.2. Purchase Price; Post-Closing Adjustment; Payment.
(a) Purchase Price. The aggregate purchase price for the
Acquired Assets (the "Purchase Price") shall be Seven Million Dollars
($7,000,000), subject to adjustment pursuant to Sections 1.2(c) and 1.2(d).
(b) Payment of Purchase Price. Subject to the terms and
conditions of this Agreement, Buyer shall pay the Purchase Price to Seller on
the date hereof, by wire transfer of immediately available funds to an account
designated in writing by Seller.
(c) Closing Adjustment.
(i) The Purchase Price delivered at closing (x) shall
be reduced by the amount by which the Closing Net Working Capital (as defined
below) of the Business as reflected on the Estimated Closing Balance Sheet (as
defined below) is less than $2,143,548.00 (the "Target Net Working Capital") and
(y) shall be increased by the amount by which the Closing Net Working Capital of
the Business as reflected on the Estimated Closing Balance Sheet is greater than
the Target Net Working Capital. As used herein, the term "Closing Net Working
Capital" means the current assets of the Business (without the inclusion of the
cash and cash equivalents line items), less current liabilities of the Business
(without the inclusion of the current liabilities which are Retained Liabilities
(as defined in Section 1.5 below)).
(ii) No later than one business day prior to the
Closing Date (as defined in Section 1.8), Seller shall deliver to Purchaser an
unaudited estimated consolidated balance sheet of the Business as of the close
of business on the Closing Date (the "Estimated Closing Balance Sheet"), which
shall reflect Seller's reasonable good faith estimate of the amount of the
Closing Net Working Capital ("Estimated Closing Working Capital") based on
Applicable Accounting Principles (as defined below). "Applicable Accounting
Principles" means U.S. generally accepted accounting principles ("GAAP")
consistently applied on a basis consistent with Seller's past accounting
practices, principles and methodologies. Buyer will have the right to review any
work papers relating to the calculations described in this Section 1.2(c)(ii).
(d) Post-Closing True up.
(i) As promptly as practicable, but no later than 30
calendar days after the Closing Date, Buyer will cause to be prepared and
delivered to Seller an unaudited consolidated balance sheet of the Business as
of the close of business on the Closing Date (the "Closing Balance Sheet") based
on Applicable Accounting Principles, which Closing Balance Sheet will reflect
the actual Closing Net Working Capital. Seller will have the right to review any
work papers relating to the calculations described in the preceding sentence.
(ii) If Seller disagrees with Purchaser's calculation
of Closing Net Working Capital delivered pursuant to subsection (i) above,
Seller may, within 15 business days after delivery of the Closing Balance Sheet,
deliver a notice to Buyer disagreeing with such calculation and setting forth
Seller's calculation of such amount and a description of the nature of and basis
for each of the disagreements. Any such notice of disagreement shall specify
those items or amounts as to which Seller disagrees, and Seller shall be deemed
to have agreed with all other items and amounts contained in the Closing Balance
Sheet and the calculation of Closing Net Working Capital delivered pursuant to
subsection (i) above.
(iii) If a notice of disagreement shall be duly
delivered pursuant to subsection (ii) above, Buyer and Seller shall, during the
15 business days following such delivery, attempt in good faith to reach
agreement on the disputed items or amounts in order to determine the amount of
Closing Net Working Capital, and any such agreement shall be final, binding and
conclusive on the parties. If, after such period, Buyer and Seller are unable to
reach such agreement, they shall promptly cause independent accountants of
nationally recognized standing reasonably satisfactory to Buyer and Seller (who
shall not have any material relationship with Buyer or Seller) to review this
Agreement and the disputed items or amounts for the purpose of calculating
Closing Net Working Capital. In making such calculation, such independent
accountants shall consider only those items or amounts in the Closing Balance
Sheet or Buyer's calculation of Closing Net Working Capital as to which Seller
has disagreed. Such independent accountants shall deliver to Buyer and Seller,
as promptly as practicable, but in any event within 45 calendar days (unless
otherwise agreed to by Buyer and Seller), a report setting forth such
calculation. Such report shall be final and binding upon Buyer and Seller. The
cost of such review and report shall be apportioned to each of Buyer and Seller
based upon the percentage which the portion of the contested amount not awarded
to each party bears to the amount actually contested by such party.
(iv) The Purchase Price shall be decreased, on a
dollar for dollar basis, by the amount by which the Closing Net Working Capital
of the Business as reflected on the Closing Balance Sheet is less than the
Closing Net Working Capital of the Business as reflected on the Estimated
Closing Balance Sheet, and Seller shall pay the difference, if any, in cash in
immediately available funds within five business days after the Closing Balance
Statement has been finalized in accordance with this Section 1.2, together with
the interest thereon for the period commencing on the Closing Date through the
date on which such payment is made (such interest to be calculated at the rate
of 5% per annum, simple
interest). The Purchase Price shall be increased, on a dollar for dollar basis,
by the amount by which the Closing Net Working Capital of the Business as
reflected on the Closing Balance Sheet is greater than the Closing Net Working
Capital of the Business as reflected on the Estimated Closing Balance Sheet, and
Buyer shall pay the difference, if any, in cash in immediately available funds
within five business days after the Closing Balance Statement has been finalized
in accordance with this Section 1.2., together with interest thereon for the
period commencing on the Closing Date through the date on which such payment is
made (such interest to be calculated at the rate of 5% per annum, simple
interest).
Section 1.3. Excluded Assets. Notwithstanding anything to the contrary
in this Agreement, the following assets of Seller shall be retained by Seller
and are not being sold or assigned to Buyer or Parent hereunder (all of the
following are referred to collectively as the "Excluded Assets"):
(a) all monies due or to be received by Xxxxxxxx and Seller
pursuant to or arising from this Agreement;
(b) any and all rights of Xxxxxxxx and Seller under this
Agreement;
(c) books and records that Seller is required to retain
pursuant to any statute, rule, regulation or ordinance, provided that Seller
permits Buyer access to such books and records as provided in Section 4.8;
(d) general books of account and books of original entry that
comprise Seller's permanent accounting or Tax records, provided that Seller
permits Buyer access to such books as provided in Section 4.8, and the stock
record and minute books of Seller;
(e) books and records associated with the Retained
Liabilities;
(f) the assets listed on Schedule 1.3(f);
(g) cash, bank deposits and other cash equivalents existing as
of the close of business on the Closing Date; and
(h) the Benefit Plans (as defined in Section 2.19) and any
similar policies, programs or agreements which relate to the Business Employees
(as defined in Section 4.14).
Section 1.4. Assumed Liabilities. Subject to the terms and conditions
of this Agreement, at Closing, Seller will assign and transfer to Buyer, and
Buyer shall assume, and thereafter pay, perform or discharge in accordance with
their terms, (a) any liability or obligation represented by those certain line
items listed on Schedule 1.4 on the Balance Sheet (as defined in Section
2.5(a)), (b) any liability or obligation incurred by Seller from the Balance
Sheet Date (as defined in Section 2.5(a)) until and including the Closing Date
that would appear under the same line item specified on Schedule 1.4 on a
balance sheet prepared in accordance with Applicable
Accounting Principles and (c) any liability or obligation related to or arising
out of the Business or the Acquired Assets after the Closing Date other than in
each case any Retained Liabilities (collectively, the "Assumed Liabilities").
Section 1.5. Retained Liabilities. Buyer shall not assume any
liabilities or obligations of Seller except for the Assumed Liabilities as
expressly provided for herein, whether such liabilities or obligations relate to
payment, performance or otherwise. All liabilities not expressly transferred to
Buyer hereunder are retained by Seller (the "Retained Liabilities"), and Seller
hereby indemnifies, waives and releases Buyer and Parent from all Retained
Liabilities. Without limiting the foregoing, all of the following shall be
considered Retained Liabilities for the purposes of this Agreement:
(a) any liability or obligation represented by those certain
line items listed on Schedule 1.5(a) on the Balance Sheet and any liability or
obligation incurred by Seller from the Balance Sheet Date until and including
the Closing Date that would appear under the same line items specified on
Schedule 1.5(a) on a balance sheet prepared in accordance with Applicable
Accounting Principles;
(b) subject to Section 4.6(g) any liability or obligation of
Seller existing as a result of any breach of contract, breach of statutory duty,
breach of warranty (other than product liability warranties, which are covered
in Section 1.5(c), below), tort or infringement by Seller that arises after the
Closing Date to the extent that it is attributable to or associated with any
such breach, tort or infringement by Seller on or prior to the Closing Date;
provided, however, that Buyer, not Seller, shall assume and thereafter pay,
perform or discharge any such liability or obligation which Buyer does not
notify Seller of prior to the second anniversary of the Closing Date;
(c) any product liability or warranty claim of any nature in
respect of products manufactured by Seller on or prior to the Closing Date;
(d) any liability, whether primary, secondary, as transferee
or successor, or otherwise, for Taxes (as defined below in Section 2.7(a))
including Taxes arising from the transactions contemplated by this Agreement, of
Seller, and any liability for deferred Taxes; provided, however, that Buyer and
Seller shall prorate on a daily basis all personal property, real property and
other ad valorem Taxes with respect to the Acquired Assets for the taxable
period that includes the Closing Date, such that Seller shall bear the burden of
such Taxes for periods up to and including the Closing Date, and Buyer shall
bear the burden of such Taxes for periods following the Closing Date.
(e) any obligation or liability under any contract, instrument
or agreement which, pursuant to Section 2.11(a), should be set forth on Schedule
2.11(a) but is not set forth on Schedule 2.11(a), that is transferred to Buyer
as part of the Acquired Assets that arises after the Closing Date but that is
attributable to or associated with action or omission or any breach of or
default under any such transferred contract, instrument or agreement on or prior
to the Closing Date;
(f) any Pre-Closing Environmental Liabilities (as defined in
Section 2.12(c));
(g) any liability or obligation with respect to the Benefit
Plans; and
(h) any other liability of Seller arising out of or relating
to any of the Acquired Assets on or prior to the Closing Date except for the
Assumed Liabilities set forth herein.
Section 1.6. Allocation of Consideration. Buyer and Seller agree that
the sale of the Acquired Assets hereunder is a fully taxable sale for income tax
purposes. The Purchase Price shall be allocated among the Acquired Assets and
the covenant not to compete set forth in Section 4.2. Such allocation shall be
made in accordance with Section 1060 of the Internal Revenue Code of 1986, as
amended (the "Code"). No later than 60 days following the Closing Date, Buyer
shall deliver to Seller a proposed allocation of the Purchase Price (and all
other items properly included in "consideration," as described in Treasury
Regulation section 1.1060-1(c)(1)). Within 30 days after receipt of such
proposed allocation, Seller shall give Buyer notice of any objections that
Seller has to such allocation. If Seller gives Buyer notice of any objections to
the proposed allocation, the parties shall meet to endeavor to agree upon an
allocation. If Buyer and Seller cannot agree on such an allocation, then the
allocation shall be referred to an independent accounting firm mutually agreed
to by Buyer and Seller, which shall be directed to resolve the allocation within
thirty (30) days thereafter, and whose decision shall be final, binding and
conclusive on the parties. Buyer, on the one hand, and Seller, on the other
hand, shall each be responsible for one-half of the fees and expenses of such
accounting firm in connection with such determination. If Seller does not object
to Buyer's allocation, if the parties agree on the allocation or if the
independent accounting firm decides an allocation (in any such case, an
"Allocation"), then Buyer and Seller shall use such Allocation in filing all
required forms under Section 1060 of the Code (or any comparable forms under
state or foreign law), and all other Tax Returns (as defined in Section 2.7(a)),
and Buyer and Seller further agree that they shall not take any position
inconsistent with such Allocation upon any examination of any such Tax Return,
in any refund claim or in any tax litigation. The Allocation shall be adjusted
as necessary to reflect any further adjustments to the Purchase Price made after
the Closing Date.
Section 1.7. Consent of Third Parties. Nothing in this Agreement shall
be construed as an attempt to assign any contract, agreement, permit, franchise,
or claim included in the Acquired Assets which is by its terms or by law
nonassignable without the consent of the other party or parties thereto, unless
such consent shall have been given, or as to which all the remedies for the
enforcement thereof enjoyed by Seller would, as a matter of law, pass to Buyer
as an incident of the assignments provided for by this Agreement. In order,
however, to provide Buyer the full realization and value of every contract,
agreement, permit, franchise and claim of the character described in the
immediately preceding sentence, Seller agrees that on and after the Closing, it
will, at the request and under the direction of Buyer, in the name of Seller,
take all reasonable actions and do or cause to be done all such things as shall
in the reasonable opinion of Buyer or its counsel be necessary or proper (a) to
assure that the rights of Seller under such
contracts, agreements, permits, franchises, and claims shall be preserved for
the benefit of Buyer and (b) to facilitate receipt of the consideration to be
received by Seller in and under every such contract, agreement, permit,
franchise, or claim, which consideration shall be held for the benefit of, and
shall be delivered to, Buyer. Except to the extent Buyer has agreed not to
require the consent of certain customers to the assignment contemplated hereby,
nothing in this Section 1.7 shall in any way diminish Seller's obligations
hereunder to obtain all consents and approvals and to take all such other
actions at Closing as are necessary to enable Seller to convey or assign good
and marketable title to all the Acquired Assets to Buyer.
Section 1.8. Closing.
(a) Time and Place. The closing under this Agreement (the
"Closing") will take place at 10:00 a.m., local time, on the date hereof, at the
offices of Dechert LLP, 0000 Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, or
at such other time, date or place as the parties shall mutually agree. The date
on which Closing occurs is sometimes referred to herein as the "Closing Date."
(b) Deliveries by Seller at the Closing. At the Closing Seller
will deliver to Buyer:
(i) a xxxx of sale and instrument of assignment to
the Acquired Assets, duly executed by Seller;
(ii) an assignment and assumption of contracts in the
form of Exhibit A attached hereto (the "Assignment and Assumption of
Contracts"), duly executed by Seller;
(iii) a receipt for the payment of the Purchase Price
duly executed by Seller;
(iv) all such other instruments of assignment,
transfer or conveyance as shall, in the reasonable opinion of Buyer and its
counsel, be necessary to vest in Buyer, good, valid and marketable title to the
Acquired Assets and to put Buyer in actual possession or control of the Acquired
Assets and which shall be in forms reasonably acceptable to Seller;
(v) a certificate stating that Seller is not a
foreign person within the meaning of the Code for purposes of Code Sections 897
and 1441;
(vi) the Toll Manufacturing Agreement for the
production by Buyer of integrated sensors for sale to Xxxxxxxx, using Seller's
integrated sensors tooling, duly executed by Seller and Xxxxxxxx, which shall be
in the form attached as Exhibit B hereto (the "Toll Manufacturing Agreement");
(vii) the Intellectual Property License Agreement,
duly executed by Seller and Xxxxxxxx, which shall be in the form attached as
Exhibit C hereto (the "Intellectual Property Agreement");
(viii) documentation evidencing the transfer of
assets and assignment of contracts that are included in the Acquired Assets, but
prior to such transfer were not owned by Seller (or Seller was not a party to
such contract), in a form reasonably satisfactory to Buyer; and
(ix) such other documents as Buyer may reasonably
request.
(c) Deliveries By Buyer at the Closing. At the Closing, Buyer
will deliver to Seller:
(i) by wire transfer the Purchase Price, as specified
in Section 1.2(a);
(ii) the Assignment and Assumption of Contracts and
an assumption of liabilities in the form of Exhibit D attached hereto, duly
executed by Buyer;
(iii) the Toll Manufacturing Agreement, duly executed
by Buyer and Parent;
(iv) the Intellectual Property Agreement, duly
executed by Buyer and Parent;
(v) a consent to assignment of Xxx Xxxxx'x Employment
Agreement executed by Xxx Xxxxx; and
(vi) such other documents as Seller may reasonably
request.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND XXXXXXXX
Seller and Xxxxxxxx jointly represent and warrant to Parent
and Buyer as follows:
Section 2.1. Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan.
Xxxxxxxx is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Seller has all requisite power and
authority to own or lease the Acquired Assets as now owned or leased and to
carry on the Business as and where now being conducted.
Section 2.2. Power and Authority. Seller and Xxxxxxxx each have the
requisite corporate power and authority to enter into this Agreement and all
other agreements and instruments contemplated hereby to be executed and
delivered by each of Seller and Xxxxxxxx
and to perform their obligations hereunder and thereunder without the need for
the consent of any other person or entity.
Section 2.3. Authorization and Enforceability. This Agreement and all
other agreements and instruments contemplated hereby to be executed and
delivered by each of Seller and Xxxxxxxx have been duly executed and delivered
by each of Seller and Xxxxxxxx, respectively. This Agreement and each of the
other agreements and instruments contemplated hereby to be executed and
delivered by each of Seller and Xxxxxxxx constitute the legal, valid and binding
obligations of Seller and Xxxxxxxx, respectively, enforceable in accordance with
their respective terms, except as enforceability may be limited by bankruptcy,
insolvency or other laws affecting creditors' rights generally and the exercise
of judicial discretion in accordance with general equitable principles. The
execution, delivery and performance of this Agreement and all other agreements
and instruments contemplated hereby to be executed and delivered by each of
Seller and Xxxxxxxx have been duly authorized by all necessary corporate action
on the part of Seller and Xxxxxxxx, respectively (including, if necessary,
stockholder approval).
Section 2.4. No Violation of Laws or Agreements. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the compliance with the terms, conditions and
provisions of this Agreement by Seller and Xxxxxxxx, xxxx not (a) contravene any
provision of Seller's or Xxxxxxxx' certificate of incorporation or bylaws; (b)
violate or result in a breach of or constitute a default (or an event which
might, with the passage of time or the giving of notice or both, constitute a
default) under any of the terms, conditions or provisions of any indenture,
mortgage, loan, credit agreement, sales representative agreement, customer
agreement or supplier agreement or any other agreement or instrument to which
Seller or Xxxxxxxx is a party by which the Business or any of the Acquired
Assets may be bound or affected, or any judgment or order of any court or
governmental department, commission, board, agency or instrumentality, domestic
or foreign, or any applicable law, rule or regulation applicable to Seller or
Xxxxxxxx; (c) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the Acquired Assets or give to
others any interests or rights therein; (d) result in the maturation or
acceleration of any Assumed Liability (or give others the right to cause such a
maturation or acceleration); or (e) result in the termination of or loss of any
right (or give others the right to cause such a termination or loss) under any
agreement or contract included in the Acquired Assets.
Section 2.5. Financial Statements.
(a) The books of account and related records of Seller with
respect to the Business fairly reflect in reasonable detail its assets,
liabilities and transactions. Seller has delivered to Buyer the unaudited
balance sheet of the Business as of June 30, 2003 (the "Balance Sheet") (it
being understood that June 30, 2003 is hereinafter referred to as the "Balance
Sheet Date"), a copy of which is attached hereto as Schedule 2.5.
(b) The Balance Sheet (i) is correct and complete and in
accordance with the books and records of Seller, (ii) fairly presents in all
material respects the financial condition of the Business as of the Balance
Sheet Date, and (iii) has been prepared in accordance with Applicable Accounting
Principles, subject to the absence of footnotes and other presentation items.
Section 2.6. No Changes. Except as disclosed on Schedule 2.6, since the
Balance Sheet Date, Seller has conducted the Business only in the Ordinary
Course of Business. "Ordinary Course of Business" as used herein means in the
ordinary and usual course of the Business, consistent (in terms of character,
kind, magnitude and timing) in all material respects with historical practice
during the nine-month period ended June 30, 2003. Without limiting the
generality of the first sentence of this Section 2.6, except as disclosed on
Schedule 2.6, since the Balance Sheet Date, there has not been:
(a) any material adverse change in the financial condition,
assets, liabilities or net worth, earning power or business of the Business;
(b) any damage, destruction or loss, whether or not covered by
insurance, of assets with an aggregate book value of $50,000 or greater
adversely affecting the Business or any deterioration in the operating condition
of the Acquired Assets, normal wear and tear excepted;
(c) any strike, walkout, labor trouble or any other new or
continued event, development or condition of any character which has or could
materially and adversely affect the business, properties or prospects of the
Business;
(d) any cancellation or waiver of any right material to the
operation of the Business;
(e) any material adverse change or any threat of any material
adverse change in Seller's relations with, or any loss or threat of loss of, any
of the suppliers or customers of the Business;
(f) any disposition of or failure to keep in effect any rights
in, to or for the use of any registered intellectual property rights, or any
disclosure to any person not an employee or independent contractor or other
disposal of any trade secret of confidential or proprietary material, whether or
not covered by any confidentiality agreement;
(g) any sale of the assets of the Business other than in the
Ordinary Course of Business;
(h) any material change or modification in any manner of
Seller's existing credit, collection and payment policies, procedures and
practices with respect to accounts receivable and accounts payable,
respectively, in connection with or relating to the Business, including without
limitation, acceleration of collections of receivables, failure to make
or delay in making collections of receivables (whether or not past due),
acceleration of payment of payables or failure to pay or delay in payment of
payables; or
(i) any amendment or modification of the terms of any contract
between Seller and any customer with respect to the Business or supplier or any
amendment or modification of Seller's customary practices with respect to its
customers or suppliers with respect to the Business which has a material effect
on the Business;
Section 2.7. Taxes.
(a) For the purpose of this Agreement:
"Governmental Body" means any foreign, federal, state, local or
other governmental authority or subdivision thereof or regulatory,
administrative or judicial body thereof.
"Tax" or "Taxes" means any federal, state, local, foreign or other
net income, gross income, gross receipts, windfall profits, severance, property,
production, sales, use, transfer, gains, license, excise, franchise, employment,
payroll, withholding (which includes, without limitation, income, payroll tax,
foreign withholding, backup withholding, and any other withholding obligation
imposed by the Code or a Governmental Body), value added, estimated, alternative
or add on minimum tax, or any other tax, custom, duty, governmental fee or other
like assessment or charge of any kind whatsoever, together with any interest or
any penalty, addition to tax or additional amount imposed by any Governmental
Body with respect thereto.
"Tax Return" means any return, report or similar statement required
to be filed with a Governmental Body or other person with respect to any Taxes
(including any required schedules), including, without limitation, any
information return, claim for refund, amended return and declaration of
estimated Tax.
(b) All Tax Returns that are required to have been filed by
Seller with respect to the Business or the Acquired Assets have been filed
within the time and in the manner required by law, and all such Tax Returns are
true and correct and accurately reflect the Tax liabilities of Seller. All Taxes
of Seller (whether or not shown on any Tax Return), that have become due
pursuant to such Tax Returns, or any assessments or demand for payment received,
have been paid. There are no current, pending or threatened claims, assessments,
notices, proposals to assess, deficiencies, or audits with respect to any Taxes
related to the Business. No Governmental Body with respect to which Seller does
not file Tax Returns with respect to the Business has claimed that Seller is or
may be subject to taxation by that Governmental Body. Seller has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing with respect to the Business to any employee, shareholder,
creditor, independent contractor or other party. There are no Liens with respect
to taxes upon the Acquired Assets other than customary liens for current Taxes
not yet due and payable.
(c) Seller is a United States person with the meaning of
Section 7701(a)(30) of the Code.
Section 2.8. Inventory; Equipment; Literature and Packaging. All of the
inventories of the Business, including that reflected in the Balance Sheet, are
valued in accordance with GAAP at the lower of cost or market. Attached hereto
as Schedule 2.8(a) is a summary of the inventory of raw materials, purchased
components and finished goods of the Business as of August 31, 2003. Except (i)
as disclosed on Schedule 2.8(b) or (ii) as otherwise provided in the Balance
Sheet or the Closing Balance Sheet, all of the inventories of the Business
reflected in the Balance Sheet and all such inventories acquired or produced
since the date of the Balance Sheet consist of items of a quality and quantity
useable and salable in the Ordinary Course of Business as currently conducted
within fifteen months of the Closing, and except for the raw materials and
work-in-process inventory of the Business reserved for potential future product
warranty, replacement and repair obligations, all of such inventory reflected in
the Balance Sheet and all such inventories acquired since the date of the
Balance Sheet can reasonably be expected to be consumed in the Ordinary Course
of Business as currently conducted within fifteen months of the Closing. Any raw
materials and work-in process inventory of the Business reserved for future
product warranty, replacement and repair obligations will be sold within fifteen
months of the Closing. Except (i) as disclosed on Schedule 2.8(b) or (ii) as
otherwise provided in the Balance Sheet or the Closing Balance Sheet, all of the
inventory is in compliance with the appropriate governmental specifications for
such material.
Section 2.9. Accounts Receivable. Except (i) as disclosed on Schedule
2.9(a) or (ii) as otherwise provided on the Balance Sheet or the Closing Balance
Sheet, all of the accounts and notes receivable of the Business included in the
Acquired Assets, including that reflected in the Balance Sheet (a) represent
amounts receivable for merchandise actually delivered or services actually
provided (or, in the case of non-trade accounts or notes represent amounts
receivable in respect of other bona-fide business transactions), (b) have arisen
in the ordinary course of business, and (c) are not subject to any defenses,
counterclaims or offsets except for discounts or allowances allowed in the
Ordinary Course of Business. Schedule 2.9(b) sets forth (i) the total amount of
accounts receivable of the Business outstanding as of August 31, 2003 and (ii)
the agings of such receivables based on the following schedule: 0-30 days, 31-60
days, 61-90 days, and over 90 days, from the original due date thereof and (iii)
the agings of such receivables based on the following schedule: 0-30 days, 31-60
days, 61-90 days and over 90 days, from the date of invoice.
Section 2.10. No Pending Litigation or Proceedings. Except as set forth
on Schedule 2.10, (a) there are no actions, suits, investigations or proceedings
pending or, to Seller's knowledge, threatened against or affecting the Acquired
Assets or the Business, at law or in equity, by or before any court or
governmental department, agency or instrumentality, (b) to Seller's knowledge,
no event has occurred and no claim has been asserted that might result in an
action, suit, investigation or proceeding against the Acquired Assets or the
Business, and (c) to Seller's knowledge, there is no reasonable basis for any
such action, suit, investigation or
proceeding. There are presently no outstanding judgments, decrees or orders of
any court or any governmental or administrative agency against or affecting the
Acquired Assets or the Business.
Section 2.11. Contracts; Compliance.
(a) Schedule 2.11(a) sets forth each outstanding contract,
agreement or commitment of any kind, oral or written, formal or informal,
relating to the Business or the Acquired Assets and which:
(i) involves a commitment or obligation involving
greater than $25,000 with respect to (A) future payments or future receipt of
services or receipt of goods and materials; or (B) future receipt of payments or
future performance of services or delivery of goods and materials;
(ii) is a guarantee, performance bond or indemnity in
respect of indebtedness of any person (including Seller or any affiliate) which
may involve future payment in excess of $25,000 or is a mortgage, security
agreement or other arrangement intended to secure indebtedness of any person
(including Seller or any affiliate);
(iii) imposes a right of first refusal, option or
other restriction with respect to any of the Acquired Assets;
(iv) is an agreement, contract or commitment
regarding confidentiality of information or limiting the freedom of Seller to
engage in any line of business or compete with any person;
(v) is an agreement for the employment of any
individual on a full-time, part-time, consulting or other basis providing annual
compensation, bonus payments, deferred compensation, pension, retirement,
insurance or welfare benefits, accrued vacation pay or severance benefits in
excess of $25,000 in the aggregate;
(vi) is a collective bargaining agreement;
(vii) is an agreement under which the consequences of
a default or termination by either Seller or another party thereto could
reasonably be expected to result in a liability or cost to Seller in excess of
$25,000; or
(viii) is material to the conduct of the Business.
(b) Except as set forth in Schedule 2.11(b):
(i) Each of the contracts set forth in Schedule
2.11(a) (the "Delivered Contracts"), was entered into in a bona fide transaction
in the Ordinary Course of Business and is legal, valid, binding and enforceable
upon Seller and in full force and effect. Seller has heretofore delivered to
Buyer complete and correct copies of the Delivered Contracts.
There is not under any Delivered Contract: (A) any existing default by Seller
or, to Seller's knowledge, by any other party thereto, or (B) any event which,
after notice or lapse of time or both, would constitute a default by Seller or,
to Seller's knowledge, by any other party, or result in a right to accelerate or
terminate or result in a loss of rights of Seller, which default or event could,
individually or in the aggregate, reasonably be expected to result in a
liability or cost to Seller in excess of $25,000;
(ii) There are no purchase contracts or commitments
of Seller that relate to the Business which are not subject to cancellation by
Seller upon payment by Seller of less than $25,000 and continue for a period of
more than 12 months; and
(iii) Seller is not under any liability or obligation
(other than those relating to product warranties) with respect to the return of
inventory or merchandise related to the Business in the possession of customers
or other persons (including without limitation liabilities or obligations with
respect to consignment sales), except liabilities under any contracts or
agreements with an individual customer that do not exceed $25,000.
Section 2.12. Compliance With Laws.
(a) Environmental Compliance.
(i) Seller has not received any request for
information, notice of claim, demand or notification, nor has Seller or anyone
on Seller's behalf filed a notice that Seller or any of its predecessors, with
respect to the Business or the Acquired Assets is or may be potentially
responsible with respect to any investigation, remediation or any response
action of or with respect to any threatened or actual presence of or Release (as
defined below) of any Hazardous Substance (as defined below), whether on-site or
off-site.
(ii) Except as set forth on Schedule 2.12(a), Seller
has not and does not Manage (as defined below) or Release any Hazardous
Substances on any property now or previously owned, operated or leased by Seller
in connection with the Business, nor to Seller's knowledge, has anyone else
Managed or Released any Hazardous Substance on any property now or previously
owned, operated or leased by Seller or its predecessors in connection with the
Business. As used herein, "Release" means release, spill, leak, discharge,
dispose of, pump, pour, emit, empty, inject, xxxxx, dump or allow to escape.
(iii) Except as set forth on Schedule 2.12(a), no
Hazardous Substance Managed by or on behalf of Seller or any predecessor in
interest in connection with the Business has come to be located at any site
which is listed or proposed for listing under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"),
including without limitation the Comprehensive Environmental Response,
Compensation and Liability Information System ("CERCLIS"), the National
Priorities List ("NPL") or on any similar federal, state, regional or local
list, or which is the subject of federal, state, regional or local enforcement
actions or other investigations which may lead to claims against Seller or Buyer
for clean-up costs, remedial work, damages to natural resources or for
personal injury claims, including, but not limited to, claims under CERCLA. No
property now owned or previously owned, operated or leased by Seller in
connection with the Business is listed or proposed for listing on the NPL
promulgated pursuant to CERCLA or CERCLIS or on any similar state list of sites
requiring investigation or clean-up.
(iv) Except as listed on Schedule 2.12(a) and
heretofore provided to Buyer or Parent, there have been no environmental
inspections, investigations, studies, audits, tests, reviews or other analyses
conducted by, for or at the request of Seller or, to Seller's knowledge, by any
other party in relation to any property or business now or previously owned,
operated or leased, by Seller in connection with the Business or the Acquired
Assets.
(v) No PCBs, asbestos-containing materials are or
have been present at any property now or previously owned, operated or leased by
Seller in connection with the Business, nor are there any underground storage
tanks, active or abandoned, at any property now or previously owned, operated or
leased by Seller in connection with the operation of the Business.
(b) Other Laws. Schedule 2.12(b) sets forth a list of all
material permits, certificates, licenses, orders, registrations, franchises,
authorizations and other approvals from all federal, state, local and foreign
governmental and regulatory bodies held by Seller in connection with the
Business. All such permits, certificates, licenses, orders, registrations,
franchises, authorizations and other approvals are in full force and effect and
Seller is in compliance with the terms and conditions thereof. Any such permits
that are not transferable are so designated on Schedule 2.12(b). Seller has
prepared and filed applications for the transfer of all permits which are
required to operate the Business, if any, in adequate time for transfer to occur
prior to Closing hereunder. Except as may otherwise be described in Schedule
2.12(b), Seller holds and is in compliance with all permits, certificates,
licenses, approvals, registrations and authorizations required under all laws,
rules and regulations in connection with the Business, and all of such permits,
certificates, licenses, approvals, registrations and authorizations are in full
force and effect. Seller has made timely application for renewals of all such
Permits for which Environmental Laws (as defined below) require that
applications must be filed on or before the Closing to maintain such Permits in
full force and effect. Seller is currently in compliance with all applicable
statutes, rules, regulations and orders, federal, state and municipal (including
without limitation those relating to the environment, Hazardous Substances,
human health and safety and common law theories of liability related thereto
("Environmental Laws"), occupational safety and health, equal employment
practices and fair trade practices). No notice, citation, summons or order has
been issued, no complaint has been filed, no penalty has been assessed and no
investigation or review is pending or, to Seller's knowledge, threatened by any
governmental or other entity (a) with respect to any alleged violation by Seller
of any law, ordinance, rule, regulation or order of any governmental entity with
respect to the Business; (b) with respect to any alleged failure by Seller to
have any permit, certificate, license, approval, registration or authorization
required in connection with the Business. or (c) with respect to any use,
possession, generation, treatment, storage, recycling, transportation or
disposal (collectively, "Management" or "Manage") of any hazardous or toxic
substance, material or waste, pollutant or
contaminant including polychlorinated biphenyls ("PCBs"), asbestos, petroleum
products and radioactive materials ("Hazardous Substances") by or on behalf of
Seller or any predecessors in interest or in connection with the operation of
the Business or the Acquired Assets.
(c) "Pre-Closing Environmental Liabilities" shall mean,
regardless of whether any of the following are contained in any Disclosure
Schedule to this Agreement or otherwise disclosed to Buyer or Parent prior to
the Closing, any and all Damages as defined in Section 4.4(a), (whether known or
unknown, foreseen or unforeseen, contingent or otherwise, fixed or absolute or
present or arising in the future), asserted against or incurred by Buyer or
Parent, arising out of or relating to any of the following events, first
occurring on or before the Closing: (i) environmental conditions, including
without limitation, the presence, Release or Management of or exposure to
Hazardous Substances (including, but not limited to, any environmental
conditions either on- or off-site) at, on or from any property now or previously
owned, operated or leased in connection with the Business or the Acquired
Assets; or (ii) the off-site transportation, storage, treatment, recycling,
disposal or arrangement for disposal of or distribution of Hazardous Substances
Managed or Released by or on behalf of the Seller or any predecessor in interest
with respect to the Business or the Acquired Assets or at or from any property
now or previously owned, operated or leased by Seller or any predecessor in
interest with respect to the Business or the Acquired Assets; or (iii) any
violation of any Environmental Laws first existing prior to the Closing
(including without limitation, costs and expenses for pollution control or
monitoring equipment required to bringing the Business into compliance with
Environmental Laws and any fines, penalties and defense costs incurred for such
reasonable time after the Closing as it takes the Buyer to come into compliance
with Environmental Laws); (iv) any environmental matters disclosed by Schedule
2.12(a); or (v) any fines, penalties or defense costs incurred by or asserted
against Buyer or the Business with respect to any violation of occupational
safety and health laws or regulations existing within sixty days after Closing
which violation first existed prior to Closing.
Section 2.13. Consents. Except as set forth on Schedule 2.13, no
consent, approval or authorization of, or registration or filing with, any
person, including any governmental authority or other regulatory agency, (a) is
required in connection with the execution and delivery by Seller of this
Agreement, (b) the assignment to Buyer of the Delivered Contracts or (c) the
consummation by Seller of the transactions contemplated hereby or the conduct by
Buyer of the Business after the Closing without interruption, delay or expense
in excess of that which would be incurred by Seller in the Ordinary Course of
Business in the absence of the consummation of the transactions contemplated
hereby.
Section 2.14. Title. Seller has and will convey to Buyer at Closing
good and marketable title to the Acquired Assets, free and clear of any
mortgage, pledge, lien, restriction, encumbrance, tenancy, license,
encroachment, covenant, condition, right of way, easement, claim, security
interest, charge or any other matter affecting title, except for Permitted
Encumbrances. The tangible assets included in the Acquired Assets (including
machinery and equipment) are in good operating condition and repair, ordinary
wear and tear excepted, and are
suitable in the Ordinary Course of Business for the purposes for which they are
currently being used by Seller in the Business, except as set forth on Schedule
2.14.
Section 2.15. Real Property.
(a) Except as set forth in Schedule 2.15(a), Seller has never
owned any real property in connection with the Business.
(b) Schedule 2.15(b) contains a list of all real property
leases pursuant to which Seller leases any real property (the "Leases") in
connection with the Business. Except as set forth in Schedule 2.15(b), Seller
has good and valid title to the leasehold estates conveyed under each Lease,
free and clear of any liens or other encumbrances, except liens described in
Schedule 2.15(b). Each Lease is valid and in full force and effect and is
binding and enforceable upon Seller in accordance with its terms. Except as set
forth in Schedule 2.15(b), to Seller's knowledge, there are no existing defaults
on the part of Seller with respect to the Leases, and no event has occurred
which (with or without notice, lapse of time or both) would constitute a default
on the part of Seller.
Section 2.16. Labor Relations. Except as disclosed on Schedule 2.16, in
connection with the Business, (a) no employee of Seller is represented by any
union or other labor organization; (b) there is no unfair labor practice
complaint against Seller pending or, to Seller's knowledge, threatened before
the National Labor Relations Board; (c) there is no labor strike, dispute, slow
down or stoppage actually pending or, to Seller's knowledge, threatened against
or involving Seller; (d) no grievance which might have a material adverse effect
on Seller or the conduct of the Business is pending; (e) no private agreement
restricts Seller from relocating, closing or terminating any of its operations
or facilities; (f) Seller in the past three (3) years has not experienced any
work stoppage or committed any unfair labor practice; and (g) Seller has not
effectuated a "plant closing" or "mass layoff" under the Worker Adjustment
Retraining Notification Act (the "WARN Act") with respect to the Business, nor
in the past 90 days has Seller effectuated any plant closings or layoffs, which
constitute an "employment loss" within the meaning of the WARN Act or any state
or local law similar to the WARN Act.
Section 2.17. Products Liability and Product Warranty; Club Car. (a)
Except for lawsuits, claims, and expenses fully covered by insurance or fully
indemnified by Seller's suppliers, to Seller's knowledge, there are no (i)
liabilities of Seller, fixed or contingent, asserted or unasserted, with respect
to any product liability or any similar claim that relates to any product
stored, distributed or sold by Seller to others in connection with the Business,
or (ii) liabilities of Seller, fixed or contingent, asserted or unasserted, with
respect to any claim for the breach of any express or implied product warranty
or any other similar claim with respect to any product stored, distributed or
sold by Seller to others in connection with the Business.
(a) (b) To Seller's knowledge, the electronic pedal system
manufactured for the Club Car vehicle by Club Car, Inc. (the "Club Car Pedal
System") has no defects in design, and has been properly designed in accordance
with the specifications previously reviewed, approved and provided by Club Car,
Inc. to Seller. A design of such specifications is
attached as Schedule 2.17(b) hereto (the "Club Car Specifications"). To Seller's
knowledge, when the Club Car Pedal System is manufactured by Buyer in accordance
with the Club Car Specifications and as contemplated as of the date of this
Agreement, it will properly integrate with the Club Car products for which it
was designed.
Section 2.18. Intellectual Property Rights.
(a) To Seller's knowledge, Schedule 2.18 contains a complete
and accurate list of all patents and patent applications, trademarks, service
marks, trade names, and registrations and applications for registration of
industrial designs, copyrights, mask works, trademarks, service marks, trade
names, trade dress and domain names used or necessary for use in the conduct of
the Business specifying as to each such item, as applicable: (i) the owner of
the item, (ii) the jurisdictions in which the item is issued or registered or in
which any application for issuance or registration has been filed, (iii) the
respective issuance, registration, or application number of the item, and (iv)
the date of application and issuance or registration of the item.
(b) Schedule 2.18 also contains a complete and accurate list
of all licenses, sublicenses, consents and other agreements (whether written or
otherwise) (i) pertaining to any patents, industrial design rights, trademarks,
service marks, trade names, trade dress, copyrights, mask works, trade secrets,
computer software programs (other than standard, commercially available
programs), or other intellectual property used in the conduct of the Business,
and (ii) by which Seller licenses or otherwise authorizes a third party to use
such intellectual property. Neither Seller nor, to Seller's knowledge, any other
party, is in breach of or default under any such license or other agreement and
each such license or other agreement is now and immediately following the
Closing shall be valid and in full force and effect.
(c) To Seller's knowledge, except as indicated in Schedule
2.18, Seller owns or is licensed or otherwise has the exclusive right to use,
and has the right to bring actions for the infringement of, and the Acquired
Assets include, all patents, industrial design rights, trademarks, service
marks, trade names, trade dress, copyrights, mask works, inventions, technology,
know-how, designs, formulae, trade secrets, confidential and proprietary
information, computer software programs (other than standard, commercially
available programs), domain names, and other intellectual property necessary for
the operation of the Business as it is currently conducted.
(d) To Seller's knowledge, the operation of the Business does
not infringe on the patents, industrial design rights, trademarks, service
marks, trade names, trade dress, copyrights, mask works, trade secrets or other
intellectual property rights of any third party, and no claim has been made,
notice given, or dispute arisen to that effect. Seller does not have any pending
claims that a third party has violated or infringed any of Seller's patents,
industrial design rights, trademarks, service marks, trade names, trade dress,
copyrights, trade secrets or other proprietary rights. Seller has not given any
indemnification to any third party against infringement of such intellectual
property rights.
(e) Except as indicated in Schedule 2.18 all of the patents,
industrial design registrations, trademark and service xxxx registrations,
copyright registrations, mask work registrations and domain name registrations
indicated in Schedule 2.18 are valid and in full force, are held of record in
the name of Seller free and clear of all liens, encumbrances and other claims,
and are not the subject of any cancellation or reexamination proceeding or any
other proceeding challenging their extent or validity. Except as indicated in
Schedule 2.18, Seller is the applicant of record in all patent applications, and
applications for trademark, service xxxx, trade dress, industrial design, and
copyright registration indicated in Schedule 2.18, and no opposition, extension
of time to oppose, interference, rejection, or refusal to register has been
received in connection with any such application.
(f) Except as set forth in Schedule 2.18, no judicial or
administrative proceeding of any kind is pending or, to the knowledge of Seller,
has been threatened against Seller involving rights to Seller's intellectual
property used in the Business by any third party; and Seller has not received
any written notice of (i) any product infringement or (ii) liability for the use
of intellectual property rights of others with respect to any intellectual
property at any time within the last year. Seller has taken reasonable steps in
accordance with normal industry practice to maintain the confidentiality of all
confidential intellectual property.
Section 2.19. Employee Benefit Plans.
(a) Set forth on Schedule 2.19(a) is a true and complete list
of each (i) "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), (ii) all other
pension, retirement, supplemental retirement, deferred compensation, excess
benefit, profit sharing, bonus, incentive, stock purchase, stock ownership,
stock option, stock appreciation right, employment, severance, salary
continuation, termination, change-of-control, health, life, disability, group
insurance, vacation, holiday and fringe benefit plan, program, contract or
arrangement (whether written or unwritten, and including any that have been
frozen or terminated) maintained, contributed to, or required to be contributed
to, by Seller or any ERISA Affiliate or under which Seller or any ERISA
Affiliate has any liability (the "Benefit Plans") in connection with the
Business. "ERISA Affiliate" means (i) any corporation included with Seller in a
controlled group of corporations within the meaning of Section 414(b) of the
Code; (ii) any trade or business (whether or not incorporated) which is under
common control with Seller within the meaning of Section 414(c) of the Code;
(iii) any member of an affiliated service group of which Seller is a member
within the meaning of Section 414(m) of the Code; or (iv) any other person or
entity treated as an affiliate of Seller under Section 414(o) of the Code.
(b) Except as otherwise disclosed on Schedule 2.19(b):
(i) Each Benefit Plan has been maintained, operated
and administered in compliance with its terms and any related documents or
agreements and the applicable provisions of ERISA, the Code and other applicable
laws, except for any failure that would not result in material liability to the
Seller or any ERISA Affiliate.
(ii) No Acquired Asset is subject to any lien under
Code Section 401(a)(29), ERISA Section 302(f) or Code Section 412(n), ERISA
Section 4068 or arising out of any action filed under ERISA Section 4301(b).
(iii) The Benefit Plans which are "employee pension
benefit plans" within the meaning of Section 3(2) of ERISA and which are
intended to meet the qualification requirements of Section 401(a) of the Code
(each a "Pension Plan") now meet, and at all times since their inception have
met the requirements for such qualification, and the related trusts are now, and
at all times since their inception have been, exempt from taxation under Section
501(a) of the Code.
(iv) Neither Seller nor any ERISA Affiliate, while an
ERISA Affiliate, has incurred any withdrawal liability, within the meaning of
Section 4201 of ERISA, or any contingent withdrawal liability under Section 4204
of ERISA, to any multiemployer pension plan, which liability has not been fully
paid as of the date hereof. All contributions which Seller or any ERISA
Affiliate are required to have made to any such multiemployer plan have been
timely made.
(v) All contributions to, and payments from, any
Benefit Plan which may have been required in accordance with the terms of such
Benefit Plan or any related document have been timely made. All such
contributions to, and payments from, any Benefit Plan, except those to be made
from a trust, qualified under Section 401(a) of the Code, for any period ending
before the Closing Date that are not yet, but will be, required, shall have been
properly accrued and booked on or before the Closing Date.
(vi) No Benefit Plan provides benefits, including,
without limitation, death or medical benefits, beyond termination of service or
retirement other than (A) "COBRA" coverage required under Section 601 or 608 of
ERISA and 4980B of the Code or (B) death or retirement benefits under a Benefit
Plan qualified under Section 401(a) of the Code.
Section 2.20. Brokerage. Except as set forth on Schedule 2.20, Seller
has not made any agreement or taken any other action which might cause any
person to become entitled to a broker's fee, finder's fee or commission as a
result of the transactions contemplated hereunder.
Section 2.21. Nature of Acquired Assets. Except as set forth on
Schedule 2.21, the Acquired Assets include all of the assets and properties of
Seller, other than the real property, that are material to or necessary for the
operation of the Business as presently conducted by Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Buyer and Parent jointly represent and warrant to Seller and
Xxxxxxxx as follows:
Section 3.1. Organization. Buyer and Parent are each corporations duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.
Section 3.2. Power and Authority. Buyer and Parent each have the
requisite corporate power and authority to enter into this Agreement and all
other agreements and instruments contemplated hereby to be executed and
delivered by each of Buyer and Parent and to perform their obligations hereunder
and thereunder without the need for the consent of any other person or entity.
Section 3.3. Authorization and Enforceability. This Agreement and all
other agreements and instruments contemplated hereby to be executed and
delivered by each of Buyer and Parent have been duly executed and delivered by
Buyer and Parent, respectively. This Agreement and each of the other agreements
and instruments contemplated hereby to be executed and delivered by each of
Buyer and Parent constitute the legal, valid and binding obligations of Buyer
and Parent, respectively, enforceable in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency or other laws
affecting creditors' rights generally and the exercise of judicial discretion in
accordance with general equitable principles. The execution, delivery and
performance of this Agreement and all other agreements and instruments
contemplated hereby to be executed and delivered by each of Buyer and Parent
have been duly authorized by all necessary corporate action on the part of Buyer
and Parent, respectively.
Section 3.4. No Violation of Laws or Agreements. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the compliance with the terms, conditions and
provisions of this Agreement by Buyer and Parent, will not (a) contravene any
provision of Buyer's or Parent's certificate of incorporation or bylaws; or (b)
violate or result in a breach of or constitute a default (or an event which
might, with the passage of time or the giving of notice or both, constitute a
default) under any of the terms, conditions or provisions of any judgment or
order of any court or governmental department, commission, board, agency or
instrumentality, domestic or foreign, or any law, rule or regulation applicable
to Buyer or Parent.
Section 3.5. Brokerage. Buyer and Parent have not made any agreement or
taken any other action which might cause anyone to become entitled to a broker's
fee or commission from Seller as a result of the transactions contemplated
hereunder.
Section 3.6. Consents. Except as set forth on Schedule 3.6, no consent,
approval or authorization of, or registration or filing with, any person,
including any governmental authority or other regulatory agency, is required in
connection with the execution and delivery by Buyer or Parent of this Agreement
or the consummation by Buyer or
Parent of the transactions contemplated hereby or the conduct of the Business
after the Closing without interruption or delay.
Section 3.7. Litigation. There is no action or suit pending or, to
Buyer's or Parent's knowledge, threatened which alone or in the aggregate with
other actions and suits could reasonably be expected to restrict Buyer's or
Parent's ability to carry out the transactions contemplated by this Agreement.
ARTICLE IV
CERTAIN ADDITIONAL COVENANTS
Section 4.1. Costs, Expenses and Taxes. Seller will pay all costs and
expenses, including legal fees, in connection with its performance of and
compliance with this Agreement, and all sales, transfer, documentary and similar
taxes in connection with the delivery of the Acquired Assets to be made
hereunder. Buyer will pay all costs and expenses, including legal fees, of
Buyer's and Parent's performance of and compliance with this Agreement.
Section 4.2. Covenant Not to Compete.
(a) For a period of five years (the "Restricted Period") from
and after the Closing, neither Seller nor Xxxxxxxx nor any of their subsidiaries
shall, anywhere in the world, (i) engage directly or indirectly in the Business,
(ii) solicit, interfere with or attempt to entice away from Buyer or any of its
affiliates any individual who is, or was within one year of such solicitation,
interference or enticement, an employee or independent contractor associated
with the Business; provided that Xxxxxxxx shall have the right to (1) offer
employment to Xxxxxx Xxxxxx during the 90 day period following the Closing Date
and (2) solicit or hire Xxx Xxxxxxxx on a consulting basis from time to time
during the Restricted Period, or (iii) directly or indirectly induce any
customers of the Business to cease doing Business or lessen the amount of
Business done with Buyer or its affiliates; provided that (x) passive ownership
of not more than 5% of the outstanding stock of any company which engages in the
Business, or (y) engaging in the AM General Hummer market, shall not, in and of
itself, be a violation of this Section 4.2(a). The parties hereby acknowledge
and agree that this Section 4.2(a) does not restrict any person who controls, is
under common control with, or who after the Closing Date acquires control of
Xxxxxxxx, from operating, owning, controlling or participating in a business
which engages, directly or indirectly, in the Business.
(b) For a period of one year from and after the Closing Date,
neither Buyer nor Parent nor any of their subsidiaries shall employ, directly or
indirectly, Xxxxxx Xxxxx, whether as an employee, consultant, or otherwise, and
whether or not paid for such services, to assist the Buyer or Parent in engaging
directly or indirectly in the business of developing, promoting, manufacturing,
and selling of adjustable pedal systems or electronic throttle controls in North
America for Class 3 and above vehicles, and in Europe and Asia, vehicles above 5
tons, including but not limited to buses, trucks and recreational vehicles (the
"Xxxxxxxx Business").
The parties hereby acknowledge and agree that this Section 4.2(b) does not
restrict any person who controls, is under common control with, or who after the
Closing Date acquires control of Parent, from operating, owning, controlling or
participating in a business which engages, directly or indirectly, in the
Xxxxxxxx Business.
(c) The existence of any claim which any person subject to a
covenant not to compete may allege against any other party to this Agreement,
whether based on this Agreement or otherwise, shall not prevent the enforcement
of this covenant.
(d) The Restricted Period shall be tolled with respect to a
person during any period of violation of this covenant not to compete by such
person and during any other period required for litigation during which the
enforcing party seeks to enforce this covenant against any such person.
(e) In the event that any of the covenants contained in this
Section 4.2 shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too long a period of time or over
too large a geographical area or by reason of its being too extensive in any
other respect, it shall be interpreted to extend only over the longest period of
time for which it may be enforceable, and/or over the largest geographical area
as to which it may be enforceable and/or to the maximum extent in all other
aspects as to which it may be enforceable, all as determined by such court in
such action. The parties hereto acknowledge that both the lengths of time and
the geographic scope are considered by them to be reasonable given the nature of
the Business and the Xxxxxxxx Business and necessary to the protection of such
Business and the Xxxxxxxx Business.
(f) Seller and Xxxxxxxx acknowledge that Buyer is purchasing
the goodwill of Seller and the covenants contained in Section 4.2(a) are
essential to the protection of Buyer's investment in the Acquired Assets and
Buyer would not purchase the Acquired Assets but for these covenants. The
parties hereto agree that a breach of this Section 4.2 shall cause irreparable
harm and that remedies at law for any breach or threat of breach of the
provisions of this Section 4.2 shall be inadequate, and that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this Section
4.2 and to enforce specifically the terms and provisions hereof, in addition to
any other remedy to which the parties may be entitled at law or in equity.
(g) For purposes of this Section 4.2, "subsidiary" shall mean,
with respect to any person or entity, any entity which is owned or controlled
by, directly or indirectly, or under common control with, such person or entity
or one or more subsidiaries of that person or entity, or any combination
thereof.
Section 4.3. Confidential Information.
(a) After the Closing Date, Seller and Xxxxxxxx will treat and
hold as confidential any confidential information concerning the Business and
refrain from using any such confidential information except in connection with
this Agreement, unless (i) compelled to
disclose such confidential information by judicial or administrative process or,
in the opinion of its counsel, by other requirements of law, or (ii) such
confidential information is generally available to the public through no fault
of Seller or Xxxxxxxx.
(b) After the Closing Date, Buyer and Parent will treat and
hold as confidential any confidential information concerning the Xxxxxxxx
Business and refrain from using any such confidential information except in
connection with this Agreement, unless (i) compelled to disclose such
confidential information by judicial or administrative process or, in the
opinion of its counsel, by other requirements of law, or (ii) such confidential
information is generally available to the public through no fault of Buyer or
Parent.
(c) Notwithstanding anything herein to the contrary, any party to this Agreement
(and any employee, representative or other agent of any party to this Agreement)
may disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the transactions contemplated by this Agreement
and all materials of any kind (including opinions or other tax analyses) that
are provided to it relating to such tax treatment and tax structure; provided
however, that such disclosure may not be made to the extent required to be kept
confidential to comply with any applicable federal or state securities laws; and
provided further that (to the extent not inconsistent with the foregoing) such
disclosure shall be made without disclosing the names or other identifying
information of any party.
Section 4.4. Indemnification by Seller and Xxxxxxxx. Subject to
Sections 4.6 and 5.1, Seller and Xxxxxxxx hereby agree to indemnify, defend and
hold harmless Buyer, Parent and their respective affiliates (without
duplication) from and against:
(a) any Damages (defined below) arising out of or resulting
from any inaccuracy or breach of representation or warranty of Seller or
Xxxxxxxx contained in this Agreement or in any agreement or statement or
certificate furnished or to be furnished to Buyer or Parent pursuant hereto or
in connection with the transactions contemplated hereby;
(b) any Damages arising out of or resulting from any breach or
nonfulfillment of any covenant or agreement of Seller or Xxxxxxxx contained in
this Agreement or in any agreement or statement or certificate furnished or to
be furnished to Buyer or Parent pursuant hereto or in connection with the
transactions contemplated hereby;
(c) any Damages arising out of or relating to any Retained
Liabilities described in Section 1.5(b); and
(d) any Damages arising out of or relating to any Retained
Liabilities described in Section 1.5(a), 1.5(c), 1.5(d), 1.5(e), 1.5(f), 1.5(g)
and 1.5(h).
For purposes of this Agreement, "Damages" means the aggregate amount of all
damages, claims, losses, obligations, liabilities (including any governmental
penalty, fines or punitive, consequential or incidental damages), deficiencies,
interest, costs and expenses arising out of or relating to a matter and any
actions, judgments, costs and expenses (including reasonable
attorneys' fees and all other expenses incurred in investigating, preparing,
defending or responding to any litigation or proceeding, commenced or
threatened) incident to such matter or to the enforcement of this Agreement.
Section 4.5. Indemnification by Buyer and Parent. Subject to Sections
4.6 and 5.1, Buyer and Parent hereby agree to indemnify and hold harmless
Xxxxxxxx, Seller, and their respective affiliates (without duplication) from and
against:
(a) any Damages arising out of or resulting from any
inaccuracy or breach of representation or warranty of Buyer and Parent contained
in this Agreement or in any agreement or statement or certificate furnished or
to be furnished to Xxxxxxxx or Seller pursuant hereto or in connection with the
transactions contemplated hereby;
(b) any Damages arising out of or resulting from any breach or
nonfulfillment of any covenant or agreement of Buyer and Parent contained in
this Agreement or in any agreement or statement or certificate furnished or to
be furnished to Xxxxxxxx or Seller pursuant hereto or in connection with the
transactions contemplated hereby; and
(c) any Damages arising out of or relating to any Assumed
Liabilities.
Section 4.6. Indemnification Procedures.
(a) A party seeking indemnification pursuant to Section 4.4 or
Section 4.5 of this Agreement (an "Indemnified Party") shall give prompt written
notice, but in no event less than 30 days notice, to the party from whom such
indemnification is sought (the "Indemnifying Party") of the assertion of any
claim, or the commencement of any action, suit or proceeding by a third party
which is not an affiliate of any party hereto in respect of which indemnity may
be sought hereunder (a "Third Party Claim"), and will give the Indemnifying
Party such information with respect thereto as the Indemnifying Party may
reasonably request, but failure to give such notice shall not relieve the
Indemnifying Party of any liability hereunder except to the extent that the
Indemnifying Party is actually prejudiced thereby.
(b) The Indemnifying Party shall have the right, exercisable
by written notice to the Indemnified Party within 30 days of receipt of notice
from the Indemnified Party of the commencement or assertion of any Third Party
Claim in respect of which indemnity may be sought hereunder, to assume and
conduct the defense of such Third Party Claim with counsel selected by the
Indemnifying Party and reasonably acceptable to the Indemnified Party; provided
that (i) the defense of such Third Party Claim by the Indemnifying Party will
not, in the judgment of the Indemnified Party, have a material adverse effect on
the Indemnified Party; and (ii) the Indemnifying Party has sufficient financial
resources, in the judgment of the Indemnified Party, to satisfy the amount of
any adverse monetary judgment that is reasonably likely to result; and (iii) the
Third Party Claim seeks and continues to seek solely monetary damages; (the
conditions set forth in clauses (i) through (iii) are collectively referred to
as the "Litigation Conditions"). If the Indemnifying Party does not assume the
defense of such Third Party Claim in accordance with this Section 4.6, the
Indemnified Party may continue to defend the Third
Party Claim. If the Indemnifying Party has assumed the defense of a Third Party
Claim as provided in this Section 4.6, the Indemnifying Party will not be liable
for any legal expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof; provided, however, that if (i) the
Litigation Conditions cease to be met, or (ii) the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party Claim, the
Indemnified Party may assume its own defense, and the Indemnifying Party will be
liable for all reasonable costs or expenses paid or incurred in connection
therewith.
(c) The Indemnifying Party or the Indemnified Party, as the
case may be, shall have the right to participate in (but not control), at its
own expense, the defense of any Third Party Claim which the other is defending
as provided in this Agreement.
(d) The Indemnifying Party, if it shall have assumed the
defense of any Third Party Claim as provided in this Agreement, shall not,
without the prior written consent of the Indemnified Party, consent to a
settlement of, or the entry of any judgment arising from, any such Third Party
Claim (i) which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party a complete release from
all liability in respect of such Third Party Claim, or (ii) which grants any
injunctive or equitable relief, or (iii) which may reasonably be expected to
have a material adverse effect on the affected business of the Indemnified
Party. The Indemnified Party shall have the right to settle any Third Party
Claim, the defense of which has not been assumed by the Indemnifying Party, with
the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
(e) Amounts payable in respect of indemnification obligations
of the parties shall be treated as an adjustment to the Purchase Price. Whether
or not the Indemnifying Party chooses to defend or prosecute any Third Party
Claim, all the parties hereto shall cooperate in the defense or prosecution
thereof and shall furnish such records, information and testimony, and attend
such conferences, discovery proceedings, hearings, trials and appeals, as may be
reasonably requested in connection therewith. Any amount payable in respect of
indemnification obligations pursuant to this Agreement shall accrue interest
from the date that damages were paid to a third party or otherwise actually
incurred through the date on which payment is made in full, at the rate of
interest referenced in Section 1.2(d)(iv).
(f) No action or claim for Damages arising out of or resulting
from a breach of representations or warranties shall be brought or made after
the expiration of the period set forth in Section 5.1 (and any such action or
claim is irrevocably waived); provided, however, that the foregoing time
limitations shall not apply to any such claims which have been the subject of a
written notice from Buyer or Parent to Xxxxxxxx or Seller, or from Xxxxxxxx or
Seller to Buyer or Parent, as the case may be, prior to expiration of such
period, which notice specifies in reasonable detail the nature and basis for
such claim.
(g) No Indemnified Party shall be entitled to indemnification
under Section 4.4(a), 4.4(c) or 4.5(a) hereunder, as applicable, for Damages
incurred as a result of any breach of representations and warranties in this
Agreement unless and until the aggregate amount
of Damages which may be asserted under Section 4.4(a), 4.4(c) or 4.5(a)
hereunder, as applicable, exceeds (on a one time basis only) the Threshold
Amount, at which time the Indemnified Party will have the right to
indemnification for all Damages incurred to the extent of such excess.
Notwithstanding anything to the contrary in this Agreement, the indemnification
obligations of Buyer and Parent under Section 4.5(a), on the one hand, and
Xxxxxxxx and Seller under Sections 4.4(a), 4.4(c) and 4.11 on the other hand,
shall not exceed $[2,000,000]. Notwithstanding anything to the contrary in this
Agreement, Buyer, Parent, Xxxxxxxx and Seller shall only have obligations under
Sections 4.4 and 4.5 hereunder, as applicable, in respect of direct and indirect
damages and shall not have any obligations in respect of specific performance or
punitive damages. As used herein, the "Threshold Amount" means an amount equal
to $100,000.
(h) Limitation on Liability. Absent fraud, as between Seller
and Xxxxxxxx, on the one hand, and Buyer and Parent, on the other hand, and
subject to Section 4.2 hereof, the rights and obligations set forth in Sections
4.4, 4.5 and 4.6 will be the sole and exclusive rights, obligations and remedies
with respect to this Agreement, the events giving rise to this Agreement and the
transactions provided for herein or contemplated thereby. Without limiting the
generality or effect of the foregoing, absent fraud, each of the parties to this
Agreement hereby (i) waives any claim or cause of action which it otherwise
might assert, including without limitation under the common law or federal or
state securities, trade regulation, environmental or other laws, by reason of
this Agreement, the events giving rise to this Agreement and the transactions
provided for herein or contemplated hereby or thereby except for claims or
causes of action brought under and subject to the terms and conditions of
Sections 4.4, 4.5 and 4.6 and (ii) agrees that, regardless of the foregoing
provisions, no party will have any liability or obligation in respect of any
claim or cause of action that is or may be brought except in respect of an
indemnifiable loss, and then only to the extent expressly provided in Sections
4.4, 4.5 and 4.6.
Section 4.7. Collection of Receivables. Seller shall, by letter
prepared by Buyer (the "Letter"), irrevocably authorize, instruct and direct
that the account parties of all accounts, notes and receivables constituting
Acquired Assets (such parties, the "Account Parties") shall make and deliver all
payments relating thereto to such location, bank and account (the "Lockbox
Account") as Buyer shall specify. The Letter shall cover all such matters as
Buyer shall reasonably determine. If, notwithstanding such Letter, any of the
Account Parties remit payments directly or indirectly to Seller instead of to
the Lockbox Account, Seller agrees that it shall promptly (and in any event no
later than seven business days following receipt) deliver all such payments
(including but not limited to negotiable instruments which shall be duly
endorsed by Seller to the order of Buyer) to Buyer. Seller hereby irrevocably
designates, makes, constitutes and appoints Buyer (and all persons designated by
Buyer) as its true and lawful attorney-in-fact to do any of the following in the
sole discretion of Buyer: to receive, give receipts for, take, endorse, assign,
deliver, deposit, demand, collect, xxx on, compound, and give acquittance for
any and all information, documents, payments forms (including without limitation
negotiable and non-negotiable instruments) and proceeds received by Buyer via
the Lockbox or from Seller that relate to the accounts, notes and receivables
constituting Acquired
Assets of the Account Parties. For a period of one hundred eighty days after the
Closing, Seller shall use reasonable efforts to assist Buyer in collecting in
full from Account Parties all amounts owed pursuant to all accounts, notes and
receivables constituting Acquired Assets.
Section 4.8. Access and Assistance Post-closing.
(a) Seller, Buyer and Parent shall cooperate fully with each
other after the Closing so that each party has reasonable access to the business
records, contracts and other information existing prior to and at the Closing
Date and relating in any manner to the Acquired Assets (whether in the
possession of Seller or Buyer).
(b) Buyer and Parent shall reasonably assist Xxxxxxxx and
Seller and their respective accountants and other authorized representatives in
the conduct and preparation of the audit for the fiscal year of Xxxxxxxx and
Seller ending September 30, 2003.
(c) Until October 31, 2003, Buyer shall be entitled to
reasonably use Xxxxxxxx' "xxxx.xxx" email accounts to the extent necessary or
desirable to operate the Business.
Section 4.9. Product Recalls, Campaigns and Service Bulletins. Pursuant
to Section 1.5(c), Seller is retaining any product liability of any nature in
respect of products manufactured by Seller on or prior to the Closing Date.
Accordingly, Seller (and not Buyer or Parent) shall deal directly with the
appropriate parties in connection any product recalls, campaigns and service
bulletins in respect of products manufactured by Seller on or prior to the
Closing Date. Buyer and Parent agree that (a) if requested by Seller to replace
any such product and (b) such product or a reasonable substitute thereof is in
the then current catalog of the Business, Buyer (or Parent) shall replace such
product. Seller shall reimburse Buyer (or Parent) in an amount equal to the
price of such product as reflected on the then current price sheet of the
Business, plus Buyer's (or Parent's) actual costs of packing, shipping and other
similar costs associated with replacing such product. Buyer and Parent further
agree that (x) if requested by Seller to rework such product and (y) such
reworking is consistent with the then current services of the Business, Buyer
(or Parent) shall rework such product. Seller shall reimburse Buyer (or Parent)
in an amount equal to the sum of (1) the product of (A) Buyer's actual costs of
reworking such product and (B) 100% plus the gross profit percentage originally
attributable to such product, and (2) Buyer's (or Parent's) actual costs of
packing, shipping and other similar associated costs. Buyer and Parent shall
cooperate fully with Seller so that Seller has reasonable access to business
records, contracts and other information necessary or desirable in dealing with
any product recall, campaign or service bulletin.
Section 4.10. Warranties. Pursuant to Section 1.5(c), Seller is
retaining warranty claims of any nature in respect of products manufactured by
Seller on or prior to the Closing Date. Nevertheless, for the four year period
following the Closing Date (the "Warranty Administration Period"), Buyer (or
Parent) shall deal directly with the appropriate parties in connection with
warranties in respect of products manufactured by Seller on or prior to the
Closing Date and after such Warranty Administration Period the parties agree to
renegotiate the administration of such
warranty claims. Seller agrees that they will reimburse Buyer (or Parent) for
payments made in satisfaction of such warranty claims. To the extent that
warranty claims validly submitted for reimbursement by Buyer (or Parent) during
the Warranty Administration Period do not exceed Three Hundred Thousand Dollars
($300,000.00) then Seller shall transfer to Buyer fifty percent of the
difference between (i) the total warranty claim amounts validly submitted to
Seller for reimbursement during the Warranty Administration Period and (ii)
Three-Hundred Thousand Dollars ($300,000.00). To the extent that warranty claims
during the Warranty Administration Period exceed Three-Hundred Thousand Dollars
($300,000.00) Seller shall continue to be responsible to reimburse Buyer (or
Parent) for payments made in satisfaction of such warranty claims.
Notwithstanding anything to the contrary contained in this Section 4.10, any
warranty claims relating to the Club Car Pedal System shall not be subject to
the provisions of this Section 4.10, but instead shall be governed solely by the
provisions of Section 4.11, below.
Section 4.11. Club Car Contract. If during the period beginning with
the launch of the Club Car Pedal System and terminating sixty days thereafter,
start-up or launch costs are incurred by Buyer, Seller agrees to reimburse Buyer
for fifty percent (50%) of such costs in excess of Fifty Thousand Dollars
($50,000.00). If during the period beginning sixty-one days after the launch of
the Club Car Pedal System and terminating March 31, 2005, there are any actual
warranty claims made to Buyer, to the extent such claims are related to any
defect in design as of the Closing Date of the Club Car Pedal System, Seller
agrees to reimburse Buyer for fifty percent (50%) of the actual costs resulting
from such claims in excess of One-Hundred Thousand Dollars ($100,000.00). Buyer
shall notify Seller in writing with reasonable specificity of the nature and
quantity of such claims.
Section 4.12. Consents and Approvals.
(a) Each of the parties hereto shall use its best efforts to
(i) obtain as promptly as practicable all consents, authorizations, approvals
and waivers required in connection with the consummation of the transactions
contemplated by this Agreement under any federal, state, local or foreign law or
regulation, (ii) lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties hereto to consummate the
transactions contemplated hereby and (iii) effect all necessary registrations
and filings and submissions of information requested by any Governmental Body.
The parties hereto further covenant and agree, with respect to any threatened or
pending preliminary or permanent injunction or other order, decree or ruling or
statute, rule, regulation or executive order that would adversely affect the
ability of the parties hereto to consummate the transactions contemplated
hereby, to respectively use their best efforts to prevent the entry, enactment
or promulgation thereof, as the case may be.
(b) Each party hereto shall promptly inform the other of any
material communication from the Federal Trade Commission, the Antitrust Division
of the United States Department of Justice or any other Governmental Body
regarding any of the transactions contemplated hereby. If any party hereto or
any affiliate thereof receives a request for additional information or
documentary material from any such Governmental Body with respect to the
transactions contemplated hereby, then such party shall endeavor in good faith
to make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance with
such request.
Section 4.13. Filings. Promptly after the execution of this Agreement,
each of the parties hereto shall prepare and make or cause to be made any
required filings, submissions and notifications under the laws of any domestic
or foreign jurisdiction to the extent that such filings are necessary to
consummate the transactions contemplated hereby and will use its best efforts to
take all other actions necessary to consummate the transactions contemplated
hereby in a manner consistent with applicable law. Each of the parties hereto
will furnish to the other parties such necessary information and reasonable
assistance as such other parties may reasonably request in connection with the
foregoing.
Section 4.14. Employment and Employee Benefits. (a) Effective as of
12:01 am on the Closing Date (the "Termination Effective Time"), Seller shall
cause the employment with Seller of all employees of the Business ("Business
Employees"), except Disabled Employees or Workers' Compensation Employees (as
defined below), to be terminated and Buyer shall offer employment, effective
immediately, subject to completion of an application, verification of
eligibility to work in the United States, passing any applicable drug-testing
and any other requirement of law, to all such Business Employees on terms and
conditions as determined by Buyer. As of the Termination Effective Time,
Business Employees shall cease to accrue or enjoy benefits under the Benefit
Plans and shall commence accrual of benefits and participation in those
compensation and employee benefit plans and benefit arrangements maintained by
Buyer in which they are eligible to participate in accordance with the terms of
such plans. Seller shall be solely responsible for any liability, claim or
expense with respect to employment, termination of employment, compensation or
employee benefits of any nature (including, but not limited to the benefits to
be provided under the Benefit Plans) owed to any Business Employees (or the
beneficiary of any Business Employee) that arises out of or relates to the
employment relationship between the Seller and any such employee or former
employee prior to the Termination Effective Time or the termination of such
relationship. Without limiting the foregoing, Seller shall be responsible for
(1) the payment of any severance payment or benefits that become due to any
employee or former employee as a result of the termination of such employee or
former employee by Seller and (2) subject to Buyer's obligations in this Section
4.14, COBRA coverage for employees of the Business and their covered dependents
who had or have a loss of coverage due to a "qualifying event" (within the
meaning of Section 603 of ERISA) due to a termination of employment by Seller
(including termination of employment contemplated by this Agreement). Seller
shall not take any action or cause any action to be taken that would trigger
liability to Buyer with respect to any M&A qualified beneficiary within the
meaning of Section 54.4980B-9 of the Treasury Regulations. Buyer shall not
continue or assume any employee benefit plan or program of the Business
(including, but not limited to the Benefit Plans). From and after the
commencement of their employment with Buyer, Buyer agrees to provide coverage
under Parent's employee health insurance plan to all of the Business Employees
to the same extent provided to similarly situated employees of Buyer.
(b) Business Employees who are on short-term disability leave
as of the date of Closing ("Disabled Employees") or who are on leave under
applicable workers' compensation laws ("Workers' Compensation Employees") shall
not be employed by Buyer as of the Closing Date, and shall remain employees of
Seller and covered under any applicable Benefit Plans in accordance with their
terms. Any Disabled Employee or Workers' Compensation Employee who, after the
Closing Date, becomes eligible for long-term disability benefits under the
applicable long-term disability Benefit Plan shall be covered by such plan in
accordance with its terms. If any Disabled Employee or Workers' Compensation
Employee ceases to be eligible for short-term disability benefits under the
applicable Benefit Plan within the 90-day period that begins on the Closing
Date, Buyer shall, subject only to completion of an application for employment,
verification of legal status to work in the United States, and any required drug
screening, hire such Disabled Employee who, with or without reasonable
accommodations as required by the Americans with Disabilities Act of 1990, can
perform the essential functions of any open position(s) similar to the position
such Disabled Employee or Workers' Compensation Employee held immediately prior
to becoming disabled or eligible for workers' compensation leave, as applicable.
(c) Nothing herein, expressed or implied, shall confer upon
any current or former Business Employees, any rights or remedies (including,
without limitation, any right to employment or continued employment for any
specified period) of any nature or kind whatsoever, under or by reason of this
Agreement.
Section 4.15. WARN Act Notice. In respect of notices and payments
relating to events occurring on or prior to the Closing, Seller shall be
responsible for and assume all liability for any and all notices, payments,
fines or assessments due to any government authority, pursuant to any applicable
federal, state or local law, common law, statute, rule or regulation with
respect to the employment, discharge or layoff of employees by Seller as of or
before the Closing, including but not limited to the Worker Adjustment and
Retraining Notification Act and any rules or regulations as have been issued in
connection with the foregoing (jointly, the "WARN Act"). Likewise, in respect of
notices and payments relating to events occurring after the Closing, Buyer shall
be responsible and assume all liability for any and all notices, payments, fines
or assessments due to any government authority, pursuant to any applicable
federal, state or local law, common law, statute, rule or regulation, including
but not limited to the WARN Act, with respect to the employment, discharge or
layoff of employees employed by Buyer after the Closing.
Section 4.16. Bulk Transfer Laws. Buyer hereby waives compliance by
Seller with the provisions of any applicable bulk sale or bulk transfer laws of
any jurisdiction ("Bulk Sales Law") in connection with the sale to Buyer of the
Acquired Assets, and Seller hereby indemnifies, waives and releases Buyer and
Parent from any liabilities that may result under any Bulk Sales Law.
Section 4.17. Pre-Closing Environmental Liabilities.
(a) Pursuant to Section 1.5(f), Seller is retaining all
Pre-Closing Environmental Liabilities (as defined in Section 2.12). Accordingly,
Seller (and not Buyer or Parent) shall deal directly with the appropriate
parties in connection with the Pre-Closing Environmental Liabilities, including,
without limitation, Governmental Bodies that involve the release or threat of
release of Hazardous Substances, but not otherwise including issues of
non-compliance with Environmental Laws affecting on-site operations of the
Buyer. Seller shall diligently and expeditiously take all appropriate and
necessary actions required under applicable Environmental Laws to fully resolve
the Pre-Closing Environmental Liabilities in accordance with the Appropriate
Remediation Standard and in the time period and deadlines required by applicable
Environmental Laws or any Governmental Body with jurisdiction. Buyer shall have
the right to participate in any meetings and telephone calls held between Seller
and any Governmental Body or a third party claimant relating to the actions
required to address a Pre-Closing Environmental Liability in any instance where
Buyer may incur Damages if Seller fails to appropriately address such
Pre-Closing Environmental Liability or where any action by Seller could
adversely affect Buyer's use or operations of any Site (as defined, below).
Prior to Seller's submission of any documents to such agencies regarding such
liability, Buyer shall have the reasonable opportunity under the circumstances
taking into account applicable regulatory deadlines to consult with and comment
to Seller on such submissions. Seller shall address any and all reasonable
comments of Buyer on any such submissions to a Governmental Body, including,
without limitation, any proposed Remedial Actions (as defined, below); provided
that the result of addressing such comments does not unreasonably increase the
cost or expense of the proposed action by Seller. Seller shall provide Buyer
with copies of all proposed and final submissions, Remedial Action plans and
results of sampling in a reasonable time for Buyer to review any such proposed
submissions prior to submission. Buyer shall review and comment upon any
proposed submissions within a reasonable time under the circumstances taking
into account applicable regulatory deadlines, Buyer shall not contact any
applicable Governmental Bodies for the purpose of intentionally discussing the
matters set forth herein which Seller is performing to resolve a Pre-Closing
Environmental Liability independent of Seller unless Buyer is required by
applicable Environmental Laws or a Governmental Body with jurisdiction to do so.
In the event representatives of Buyer are asked to discuss any such Pre-Closing
Environmental Liability when contacting a Governmental Body for an independent
reason, Buyer's representatives shall make good faith efforts to ask the
Governmental Body to postpone the discussion until the Seller can have
appropriate representation for such discussion. All Remedial Actions shall meet
the Appropriate Remedial Action Standard.
(b) Seller, its engineers, consultants and agents, shall have
the right to enter upon any of the sites leased, owned or occupied by Buyer that
are the subject of the Pre-Closing Environmental Liabilities (the "Sites"),
during reasonable business hours and upon prior reasonable notice to Buyer, to
undertake all such response actions, investigations, monitoring and remediation
("Remedial Actions") as are reasonably necessary to resolve the Pre-Closing
Environmental Liabilities, using such methods as Seller deems appropriate, in
its reasonable discretion to meet the Appropriate Remedial Action Standard and
otherwise in compliance with
applicable Environmental Laws; provided that such access does not unreasonably
interfere with Buyer's use of the Sites. Buyer shall provide Seller with
adequate space on the Sites, in such location or locations as Seller and Buyer
reasonably agree, for Seller's use in the performance of the Seller's
obligations hereunder, including, without limitation, for the temporary storage
of materials used or removed from the ground in the performance of Seller's
obligations and for the placement of remediation systems to be utilized by
Seller in the performance of Seller's obligations, provided that such storage
and use of space is in compliance with applicable Environmental Laws and does
not unreasonably interfere with Buyer's operations or use of the Property. Buyer
shall at all times during the term of this Agreement conduct its business
operations on the Sites in a manner so as not to unreasonably interfere with
Seller's activities performed pursuant to this Section 4.17. In the event that
the Seller, its engineers, consultants or agents are denied access to a Site in
violation of the terms of this Agreement, and such wrongful denial of access
continues for a period of thirty days (30) after written notice thereof by
Seller to Buyer, Seller shall be relieved of the obligation under this Agreement
for which access was denied. Upon completion of Seller's obligations, Seller, at
its sole cost, shall remove its equipment and restore any portions of the Sites
which were disturbed by Seller in connection with Seller performing its
obligations as near as reasonably possible to the in conditions immediately
prior to such disturbance. Seller and Buyer agree to cooperate and work together
in good faith in Seller's fulfillment of its obligations pursuant to this
Section 4.17. Seller and its engineers, consultants and agents shall use their
reasonable best efforts to avoid and minimize any harm to any persons or damage
to real or personal property.
(c) Seller shall further be entitled access to all relevant,
non-privileged records and other documents in possession of Buyer or anyone
under Buyer's control reasonably necessary or appropriate for Seller to address
any Pre-Closing Environmental Liabilities and Seller shall be entitled to make
copies of such reports or other documentation. Buyer and Seller shall each
promptly provide the other with copies of any correspondence or information
regarding claims that could reasonably be expected to result in Damages that
arise out of, result from or relate to Pre-Closing Environmental Liabilities.
(d) "Appropriate Remedial Action Standard" shall mean the most
stringent, publicly available and routinely applied applicable remediation
standards under applicable Environmental Laws imposed by any applicable
Governmental Body with jurisdiction consistent with the current non-residential
use of the property assuming a prohibition on the use of groundwater and
institutional controls that do not unreasonably interfere with Buyer's current
use of the property which (i) shall not materially impair Buyer's use or
operations on the property, (ii) is necessary to resolve a third-party claim (if
applicable), and (iii) conform to the requirements of the lessor for the site in
Sarasota, Florida, as more particularly described in Section 4.17(g). In the
event a Governmental Body does not impose such a standard, then an applicable
remediation standard which otherwise meets the requirements specified in the
preceding sentence and which has been published or promulgated by the
Governmental Body with jurisdiction as of the date of the Remedial Action shall
be presumed to apply.
(e) Provided that Seller is proceeding in addressing a
Pre-Closing Environmental Liability in compliance with applicable Environmental
Laws, applicable deadlines and this Section 4.17, Buyer shall not take any
actions to address such Pre-Closing Environmental Liability that results in
costs or expenses for which it would be entitled to seek indemnification
pursuant to Section 4.4. Nothing contained herein shall prohibit or prevent
Buyer from effecting at Seller's cost any Remedial Action which is required to
be taken or to be made by Seller under this Agreement but which Seller fails to
take (or to make) in a reasonably timely fashion after reasonable notice and
opportunity to cure, under the circumstances, has been given by Buyer to Seller
and which Remedial Action is required by a Governmental Body with jurisdiction,
applicable Environmental Laws or is necessary to prevent a threat to public or
employee health or safety or a threat of injury to property.
(f) Buyer shall not conduct or permit or allow (where within
the control of Buyer) any third party to conduct any surface or subsurface
environmental sampling or investigation of soils or groundwater on any property
now or previously owned, operated or leased by Seller in connection with the
Business or any geotechnical sampling or investigation except where based upon a
good faith plan of Buyer to construct improvements on any such property, until
after the first anniversary of the Closing Date, except where required under
applicable Environmental Laws or any permits, certificates, licenses, approvals,
orders issued or legal demands made pursuant to such Environmental Laws by a
Governmental Body or in response to a claim or a demand by a third party
including any applicable lessor. Buyer shall provide Seller with fifteen (15)
days advanced notice of any proposed environmental sampling or investigation
proposed by Buyer or any third party if known by Buyer, except in the event of
an emergency or some shorter period imposed by the applicable Environmental Law
or permit, certificate, license, approval or order issued or demands made
pursuant thereto or third party claims (including those imposed by a lessor) in
which case such notice shall be provided as early as reasonably practical prior
to the proposed sampling or investigation. Buyer shall not be entitled to
indemnification pursuant to Section 4.4 and Seller shall have no obligation
pursuant to this Section 4.17 or otherwise under this Agreement for the costs of
any surface or subsurface environmental or geotechnical sampling or
investigation performed on any property now or previously owned, operated or
leased by Seller in connection with the Business between the Closing Date and
the first anniversary of the Closing Date in material violation of the
prohibition of this Section 4.17(f), including, without limitation, the notice
requirements for such sampling or investigation as provided in this Section
4.17(f).
(g) Notwithstanding any other provision of this Section 4.17
to the contrary, Seller agrees that in performing its obligations pursuant to
Sections 4.4 and/or 4.17 regarding Pre-Closing Environmental Liabilities at the
Sarasota, Florida site, Seller shall comply with the rights and obligations
imposed by Section 9.3 of the Lease Agreement dated as of March 1, 2000 by and
between CFI Manufacturing, Inc. and Aptek Xxxxxxxx, Inc. with respect to
providing the landlord with the right to participate in legal proceedings or
actions and in obtaining landlord's right to consent to Remedial Action and any
settlement agreement, consent decree or other compromise. Seller agrees that the
landlord's failure to provide its consent to such matters shall not constitute a
violation by Buyer of any provision of this Agreement nor
otherwise excuse Seller's obligations with respect to Pre-Closing Environmental
Liabilities. Buyer agrees to reasonably cooperate with Seller and to assert any
reasonable arguments proposed by Seller, at Seller's sole cost and expense,
against the landlord if the landlord fails or declines to provide a requested
consent.
(h) Buyer shall promptly notify Seller upon learning of a
Pre-Closing Environmental Liability that involves non-compliance with
Environmental Laws affecting on-site operations. Buyer shall diligently and
expeditiously take all appropriate actions under applicable Environmental Laws
to fully resolve such Pre-Closing Environmental Liability. Buyer shall act in
good faith in taking such actions and seeking a commercially reasonable
resolution of the Pre-Closing Environmental Liability. So long as Seller is in
compliance with its indemnification obligations pursuant to Section 4.4 with
respect to such Pre-Closing Environmental Liability, Buyer shall keep Seller
informed of the progress of the matter, provide Seller with relevant
non-privileged documentation regarding the matter and consider reasonable
comments of Seller with regard to the resolution of such Pre-Closing
Environmental Liability.
(i) Seller shall have the right, but not the obligation, for a
period of thirty (30) days after Closing to engage a consultant to perform soil
sampling in the area of the general waste dumpster on the southwestern corner of
the Sarasota, Florida property. Seller shall promptly provide Buyer with copies
of any reports and lab data generated by Seller's consultant performing such
sampling.
ARTICLE V
MISCELLANEOUS
Section 5.1. Nature and Survival of Representations. The
representations, warranties, covenants and agreements of Buyer, Parent and
Seller contained in this Agreement, and all statements contained in this
Agreement or any exhibit or schedule hereto or any certificate, financial
statement or report or other document delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby, shall be deemed to
constitute representations, warranties, covenants and agreements of the
respective party delivering the same. All such representations, warranties,
covenants and agreements shall survive until the first anniversary of the
Closing Date. Seller acknowledges that its representations and warranties in
this Agreement shall not be affected or mitigated by any investigation conducted
by Buyer, Parent or their representatives prior to Closing or any knowledge of
Buyer or Parent.
Section 5.2. Knowledge. As used in this Agreement, "Seller's knowledge"
includes the actual knowledge of Xxxxxx Xxxxxxx, Xxxxxx Xxxxxx, Xxx Xxxxxx, Xxx
Xxxx and Xxxxxx Xxxxx.
Section 5.3. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or, if sent via facsimile, upon receipt of
confirmation of good transmission, or if mailed, when mailed by United States
first-class, certified or registered mail, postage prepaid, to the other
party at the following addresses (or at such other address as shall be given in
writing by any party to the other):
If to Buyer or Parent, to:
Teleflex Incorporated
000 Xxxxx Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Chance, Esq.
Facsimile: 000-000-0000
With required copies to:
Dechert LLP
0000 Xxxx Xxxxxxxx Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq.
Facsimile: 000-000-0000
If to Seller, to:
Xxxxxxxx Controls, Inc.
00000 XX 00xx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Facsimile: 000-000-0000
with a required copy to:
McGuireWoods LLP
0000 Xxxxxx Xxxxxxxxx, Xxxxx 0000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: 000-000-0000
Section 5.4. Successors and Assigns. This Agreement, and all rights and
powers granted hereby, will bind and inure to the benefit of the parties hereto
and their respective successors and assigns.
Section 5.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
giving effect to principles of conflicts of laws.
Section 5.6. Headings. The headings preceding the text of the sections
and subsections hereof are inserted solely for convenience of reference, and
shall not constitute a part of this Agreement, nor shall they affect its
meaning, construction or effect.
Section 5.7. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
Section 5.8. Further Assurances. Each party shall cooperate and take
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
Section 5.9. Amendment and Waiver. The parties may by mutual agreement
amend this Agreement in any respect, and any party, as to such party, may (a)
extend the time for the performance of any of the obligations of any other
party, (b) waive any inaccuracies in representations by any other party, (c)
waive compliance by any other party with any of the agreements contained herein
and performance of any obligations by such other party, and (d) waive the
fulfillment of any condition that is precedent to the performance by such party
of any of its obligations under this Agreement. To be effective, any such
amendment or waiver must be in writing and be signed by the party against whom
enforcement of the same is sought.
Section 5.10. Entire Agreement. This Agreement and the Schedules and
Exhibits hereto, each of which is hereby incorporated herein, set forth all of
the promises, covenants, agreements, conditions and undertakings between the
parties hereto with respect to the subject matter hereof, and supersede all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except for the agreement letter
dated September 4, 2003 among Parent and Seller which shall remain in full force
and effect.
Section 5.11. Interpretations. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against any party
hereto, whether under any rule of construction or otherwise. No party to this
Agreement shall be considered the draftsman. On the contrary, this Agreement has
been reviewed, negotiated and accepted by all parties and their attorneys and
shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
Section 5.12. Public Announcement. Prior to the Closing, except for any
public disclosures required by law, all public announcements (whether oral or
written) or written statements concerning this Agreement or the transactions
contemplated hereby shall be prepared jointly by the parties.
IN WITNESS WHEREOF, the parties hereto have executed this
Asset Purchase Agreement the day and year first above written.
PROACTIVE ACQUISITION CORPORATION
BY: ______________________________
Name:
Title:
XXXXXXXX CONTROLS, INC.
BY: ______________________________
Name:
Title:
TELEFLEX INCORPORATED
BY: ______________________________
Name:
Title:
TELEFLEX AUTOMOTIVE INCORPORATED
BY: ______________________________
Name:
Title:
EXHIBIT C
---------
INTELLECTUAL PROPERTY LICENSE AGREEMENT
---------------------------------------
This is an INTELLECTUAL PROPERTY LICENSE AGREEMENT ("Agreement") dated
September 30, 2003, by and between Xxxxxxxx Controls, Inc., a Delaware
corporation ("Xxxxxxxx"), Aptek Xxxxxxxx, Inc., a Delaware corporation
("Aptek"), Proactive Acquisition Corporation, a Michigan corporation ("Seller"),
Teleflex Incorporated, a Delaware corporation ("Parent") and Teleflex Automotive
Incorporated, a Delaware corporation ("Buyer").
In consideration of the mutual promises contained herein and in the
Asset Purchase Agreement (as defined below), and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, agree as follows.
ARTICLE 1
---------
BACKGROUND
----------
1.1 Xxxxxxxx, Seller, Parent and Buyer have entered into an Asset
Purchase Agreement as of the date hereof (the "Asset Purchase Agreement"), which
provides for the sale by Seller and the purchase by Buyer of certain of the
assets used in the operations of the Business (as defined in Asset Purchase
Agreement).
1.2 In connection with and in furtherance of the transactions
contemplated by the Asset Purchase Agreement, Buyer desires to acquire, or to
acquire the right to use, certain Intellectual Property relating to the Business
as specified herein, and Aptek, Xxxxxxxx and Seller have agreed to transfer or
otherwise make available to Buyer such intellectual property, and Buyer has
agreed to make certain intellectual property available to Xxxxxxxx.
ARTICLE 2
---------
DEFINITIONS
-----------
2.1 Except as otherwise provided expressly in this Agreement, the
definitions and rules of construction as set forth in the Asset Purchase
Agreement are incorporated herein by reference.
2.2 "AUTOMOTIVE AND LIGHT TRUCK MARKETS" means, in North America, Class
1 and Class 2 passenger cars and light truck vehicles (as such classes are
described on Schedule 2.2 of this Agreement) and, in Europe, and Asia, as 0 to 5
ton passenger cars and light truck vehicles.
2.3 "ENTITIES" shall mean all corporations, companies, joint ventures,
or partnerships.
2.4 "HYSTERESIS PATENTS" means the patents relating to manual control
apparatus using a Hysteresis mechanism to replicate the feel of a pedal having a
mechanical linkage identified in Schedule 2.4 of the Agreement (which Schedule
contains an accurate and complete list of all of the Hysteresis Patents, to the
best of Xxxxxxxx', Aptek's and Seller's knowledge), together with all patents
issuing from any now pending or future filed patent application claiming
priority to, or based in whole or part on, any of the patents listed in this
Schedule, including without limitation any and all Letters Patents of the United
States or any other Country issuing therefrom, including (without limitation)
any continuation, continuation-in-part, division, renewal, or substitute
thereof, all patents granted thereon, and all reissues, extensions,
reexaminations and renewals thereof.
2.5 "LICENSED ADJUSTABLE PEDAL PATENTS" means the patents, U.S. and
foreign, now existing and/or issued in the future, owned by Parent or its
subsidiaries covering a pedal (including without limitation electronic pedals)
supported in an operational position for operational movement between rest and
applied positions and an adjustment mechanism for adjusting the operational
position of the pedal, including a license to make, use or sell an accessory or
add-on only in combination with such a licensed adjustable pedal mechanism;
provided, however, that no license is granted incorporating a straight-axis
adjustment mechanism for adjusting the operational position of the pedal along a
straight adjustment axis with or without such accessory or add-on.
2.6 "LTCC PATENTS" means the patents relating to low temperature,
co-fired ceramic sensors used on electronic throttle controls identified in
Schedule 2.6 of this Agreement (which Schedule contains an accurate and complete
list of all of the LTCC Patents, to the best of Xxxxxxxx', Aptek's and Seller's
knowledge), together with all patents issuing from any now pending or future
filed patent application claiming priority to, or based in whole or part on, any
of the patents listed in this Schedule, including without limitation any and all
Letters Patents of the United States or any other Country issuing therefrom,
including (without limitation) any continuation, continuation-in-part, division,
renewal, or substitute thereof, all patents granted thereon, and all reissues,
extensions, reexaminations and renewals thereof.
2.7 "MEDIUM AND HEAVY VEHICLE MARKETS" means, in North America, Class 3
and above vehicles and, in Europe, and Asia, as vehicles above 5 tons, including
but not limited to buses, trucks and recreational vehicles.
2.8 "MULTI-TRACK SENSOR PATENTS" means the patents relating to use of
relatively fixed, multiple tracks for throttle control sensors identified in
Schedule 2.8 of this Agreement, (which Schedule contains an accurate and
complete list of all of the Multi-track Sensor Patents, to the best of Xxxxxxxx'
and Seller's knowledge) together with all patents issuing from any now pending
or future filed patent application claiming priority to, or based in whole or
part on, any of the patents listed in this Schedule, including without
limitation any and all Letters Patents of the United States or any other Country
issuing therefrom, including (without limitation) any continuation,
continuation-in-part, division, renewal, or substitute thereof, all patents
granted thereon, and all reissues, extensions, reexaminations and renewals
thereof.
2.9 "THIRD PARTY" means any corporation, company, person, or other
entity, other than the parties hereto.
2.10 "TELEFLEX LICENSED FIELDS" means the development, production,
manufacture, marketing and sale of electronic throttle control modules,
electronic throttle control sensors and position sensors for the Automotive and
Light Truck Markets, as defined above.
2
2.11 "XXXXXXXX LICENSED FIELD" means the development, promotion,
manufacture, marketing and sale of adjustable pedal systems for the Medium and
Heavy Vehicle Markets as defined above.
ARTICLE 3
---------
LICENSES TO BUYER
-----------------
3.1 Aptek grants to Buyer a paid-up, worldwide, irrevocable, exclusive
right and license under the LTCC Patents to make, use, sell, offer for sale and
import products in the Teleflex Licensed Fields.
3.2 Aptek grants to Buyer a paid-up, worldwide, irrevocable,
non-exclusive right and license under the LTCC Patents to make, use, sell, offer
for sale and import products for on-water applications outside of the Teleflex
Licensed Fields and the Xxxxxxxx Licensed Fields.
3.3 Xxxxxxxx grants Buyer a paid-up, worldwide, irrevocable,
non-exclusive right and license under the Multi-track Sensor Patents to make,
use, sell, offer for sale and import products in the Teleflex Licensed Fields
and in the following markets: (a) off-road vehicles, (b) in North America, Class
3 through Class 6 vehicles, and (c) in Europe and Asia, vehicles from 5 to 15.9
tons, including but not limited to buses, trucks and recreational vehicles.
3.4 Aptek grants to Buyer a paid-up, worldwide, irrevocable
non-exclusive right and license under the Hysteresis Patents to make use, sell,
offer for sale, and import products in the Teleflex Licensed Fields.
3.5 Aptek and Xxxxxxxx agree that they will not grant any license under
the Hysteresis Patents and Multi-track Sensor Patents in the future to any
person or Entity other than Buyer or its affiliates for use in the Teleflex
Licensed Fields without obtaining prior written consent from Buyer. Xxxxxxxx,
Aptek and Seller further agree not to xxx Buyer for infringement of the
Multi-track Sensor Patents anywhere in the world where Buyer has a license
pursuant to this Agreement.
ARTICLE 4
---------
LICENSES TO SELLER
------------------
4.1 Buyer and Parent grant to Xxxxxxxx a paid up, worldwide,
irrevocable, non-exclusive right and license under the Licensed Adjustable Pedal
Patents to make, use, sell, offer for sale and import products in the Xxxxxxxx
Licensed Fields. Such license shall be royalty free except where Buyer is
obligated to pay a royalty or other compensation to Xxxxxxx X. Xxx, Xxxx
Xxxxxxxx and Xxxxxxx X. Xxxxxxx, III and successors other than Parent or Buyer,
in which case such royalty shall be paid by Xxxxxxxx.
4.2 Buyer and Parent agree not to grant any license under the Licensed
Adjustable Pedal Patents, or any patent which would be a Licensed Adjustable
Pedal Patent but for the proviso in the definition thereof, in the future to any
party or Entity other than Xxxxxxxx for use
3
in the Xxxxxxxx Licensed Fields without obtaining prior written consent from
Xxxxxxxx. Buyer further agrees not to xxx Xxxxxxxx for infringement of the
Licensed Adjustable Pedal Patents anywhere in the world where Xxxxxxxx has a
license pursuant to this Agreement.
ARTICLE 5
---------
MUTUAL RELEASE OF PAST CLAIMS OF PATENT INFRINGEMENT
----------------------------------------------------
5.1 The parties, for and on behalf of themselves and their respective
legal representatives, employees, officers, directors, principals, agents,
successors, affiliates, divisions and assigns, each hereby irrevocably release
and forever discharge each other, their predecessors, officers, directors,
employees, shareholders, subsidiaries, divisions, agents, distributors,
suppliers, contractors and all customers of each of the foregoing (whether
direct or indirect) from any and all claims, actions, causes of action, suits,
controversies, damages, demands, duties, rights, obligations, liabilities,
adjustments, responsibilities, infringements, judgments, trespass and demands
whatsoever, in law or in equity, whether known or unknown, suspect or
unsuspected to exist, actually or later acquired, or which were made, could have
been made or could be made in the future, arising out of the Licensed Adjustable
Pedal Patents, or any Patent which would be a Licensed Adjustable Pedal Patent
but for the proviso in the definition thereof, the Hysteresis Patents, the LTCC
Patents and the Multi-track Sensor Patents, including without limitation for
direct, indirect, contributory or inducing infringement, by reason of past
manufacture, use, sale or other disposition of products of the parties, or of
any of its subsidiaries or divisions. This paragraph is intended to be a release
for past acts and events and should not be construed as applicable to any future
act or event.
ARTICLE 6
---------
ADDITIONAL PROVISIONS
---------------------
6.1 If the assignment of any intellectual property, or the grant of any
license or non-assertion under this Agreement or under the Asset Purchase
Agreement, would impose or result in any obligation of Seller, Xxxxxxxx or Aptek
to make any payments as a matter of law or by reason of agreement existing prior
to the Closing Date, excepting only as such payment may be required to be made
to a subsidiary of Seller, Xxxxxxxx or Aptek, but including any such payments as
may be due upon licensing (but not for Seller's, Xxxxxxxx' or Aptek's own use)
to inventors under the laws of any country, then and in such event the
assignment, or non-assertion or license shall be effective as of the Closing
Date, but shall be subsequently rescindable by Seller, Xxxxxxxx or Aptek, as the
case may be, unless and until Buyer undertakes by binding instrument in writing
to make such payment in the place and stead of Seller, Xxxxxxxx or Aptek, as the
case may be. Seller, Xxxxxxxx or Aptek shall notify Buyer in writing at least
sixty (60) days in advance of any such obligation(s) to make payments which are
within its reasonable knowledge.
6.2 Except for express representations and warranties made in this
Agreement and the Asset Purchase Agreement, no other warranties or
representations are provided hereunder expressly or by implication.
4
6.3 Except as otherwise expressly provided herein or in the Asset
Purchase Agreement, no obligation is hereby assumed by Xxxxxxxx, Aptek, Seller
or Buyer to maintain, prosecute, enforce or litigate, file, assert, or defend
any patent application filed on or patent to issue on an invention disclosure
within the scope of this Agreement. If Xxxxxxxx or Aptek elect not to maintain
or defend any LTCC Patent, Multi-track Sensor Patent or Hysteresis Patent in any
jurisdiction, Xxxxxxxx or Aptek shall notify Buyer to such effect. If Buyer
desires that Xxxxxxxx or Aptek maintain or defend such patents, Xxxxxxxx or
Aptek will take all reasonable action to maintain or defend such patent at
Buyer's sole expense.
6.4 In the event that any party receives a request for disclosure under
35 USC ss. 287(b)(4)(B) relating to any process covered by a patent owned by
another party, the party receiving the request agrees to respond to the request
solely by notifying the other parties of the request.
ARTICLE 7
---------
INFRINGEMENT OF INTELLECTUAL PROPERTY
-------------------------------------
7.1 Buyer, Xxxxxxxx and Aptek (and their respective affiliates, where
applicable) shall take the actions, specified below in this Article 8, in the
name of Buyer, Xxxxxxxx or Aptek or both of them (or any of their respective
affiliates) to protect the intellectual property licensed or to be licensed
under this Agreement against any Third Party who infringes such intellectual
property.
7.2 Each party shall give notice to the other of any suspected
infringement of or claims, notices, challenges, actions or proceedings relating
to the validity or enforceability of the intellectual property licensed under
this Agreement, promptly after learning of such infringement or challenge, and
the parties hereto agree to promptly consult with one another upon the receipt
of such notice. To the extent this Agreement permits a licensee of any patent
under this Agreement to bring litigation relating to the licensed patent against
third parties, no such action shall be brought without first giving the owner of
the licensed patent prior notice and the opportunity to discuss meaningfully
such action before it is filed.
7.3 ACTIONS AGAINST INFRINGEMENT OF HYSTERESIS PATENTS, MULTI-TRACK
SENSOR PATENTS OR LICENSED ADJUSTABLE PEDAL PATENTS
7.3.1 As between the parties, the owner of the Hysteresis
Patents, the Multi-track Sensor Patents or the Licensed Adjustable
Pedal Patents, as the case may be, shall have the right to prosecute
all claims against Third Parties for infringement or misappropriation
of such intellectual property, at its own expense, and the licensee of
such intellectual property under this Agreement shall be indemnified
from any such expenses. Notwithstanding the foregoing, the licensee of
such intellectual property shall have the right, but not the
obligation, to join any action pursuant to this Section 7.3.1 at its
own expense.
7.3.2 After receipt of any notice made pursuant to Section 7.2
hereof, if after one hundred eighty (180) days the owner of the
Hysteresis Patents, the Multi-track
5
Sensor Patents or the Licensed Adjustable Pedal Patents, as the case
may be, has failed to initiate a claim against the relevant Third
Parties for infringement or misappropriation of such intellectual
property, the licensee of such intellectual property shall have the
right to prosecute any such claim, at its own expense, and the owner of
such intellectual property shall be named as a plaintiff and fully
cooperate in such proceeding, but shall be indemnified from any such
expenses, including administrative expenses such as those caused by
loss of employee time due to litigation support activities; provided,
however, that such licensee (a) may only prosecute such claim with the
prior written consent of the owner of the intellectual property, which
consent shall not be unreasonably withheld, delayed or conditioned, and
(b) must consult with and obtain prior written consent from the owner
of the intellectual property prior to reaching a settlement of any such
litigation, which consent shall not be unreasonably withheld, delayed
or conditioned.
7.4 ACTIONS AGAINST INFRINGEMENT OF LTCC PATENTS
7.4.1 As between the parties, Aptek shall have the right to
prosecute all claims against Third Parties for infringement or
misappropriation of the LTCC Patents in the Xxxxxxxx Licensed Fields,
at its own expense, and Buyer shall be indemnified from any such
expenses, including administrative expenses. As between the parties,
Buyer shall have the right to prosecute all claims against Third
Parties for infringement or misappropriation of the LTCC Patents in the
Teleflex Licensed Fields, at its own expense, and Aptek shall be named
as a plaintiff, if necessary, and fully cooperate in such proceeding,
but shall also be indemnified from any such expenses, including
administrative expenses; provided, however, that Buyer may only file
such a claim after providing Aptek with thirty (30) days advance notice
of such action. Notwithstanding the foregoing, Aptek or Buyer, as the
case may be, shall have the right, but not the obligation, to join any
action pursuant to this Section 7.4.1 at its own expense.
7.4.2 After receipt of any notice made pursuant to Section 7.2
hereof, if after one hundred eighty (180) days Aptek or Buyer, as the
case may be, has failed to initiate a claim against the relevant Third
Parties for infringement or misappropriation of the LTCC Patents under
Section 7.4.1 hereof, Aptek, in the case of any infringement or
misappropriation in the Teleflex Licensed Fields, or Buyer, in the case
of any infringement or misappropriation in the Xxxxxxxx Licensed
Fields, shall have the right to prosecute any such claim, at its own
expense, and the non-prosecuting party shall be indemnified from any
such expenses, including administrative expenses.
7.5 Any recovery awarded either party or the parties in connection with
an action pursuant to Section 7.3 or under 7.4 shall be distributed as follows:
(a) first, to pay the litigation expenses (including reasonable attorney's fees)
borne by the party or parties that made the claim of infringement in accordance
with this Article 7, and (b) second, eighty percent (80%) to the party or
parties that pursued the action, and twenty percent (20%) to the non-pursuing
party. Administrative expenses incurred by the non-pursuing party under Section
7.3 or 7.4 are not dependent upon the outcome of the litigation to which they
relate, and shall be reimbursed promptly upon receipt of documentation relating
to the same.
6
7.6 Any damages or legal fees that either party is or the parties are
ordered to pay to a Third Party in connection with an action under Section 7.3
or 7.4 hereof shall be the responsibility of the party or parties that pursued
the action.
7.7 Neither party shall settle any action under this Article 7 where
such settlement could have an adverse effect on the rights of the other party,
without the other party's prior written consent, such consent not to be
unreasonably withheld, delayed or conditioned. Only the owner of any
intellectual property licensed under this Agreement shall have the right to
receive any cash payment in settlement, whether as a royalty, lump sum or
otherwise.
ARTICLE 8
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THIRD PARTY INTELLECTUAL PROPERTY
---------------------------------
8.1 If the development, manufacture, use, import, export, offer for
sale or sale of the product making use of the intellectual property licensed
under this Agreement results in a claim for patent infringement or other
violation of intellectual property rights of any Third Party, the party first
having notice of such infringement shall promptly notify the other party, and
the parties agree to consult with one another upon receipt of such notice.
8.2 If the claim involves an allegation of a violation of the
intellectual property of a Third Party, the party responsible for the
manufacture, use, sale, offer for sale and import of the allegedly infringing
products shall have the obligation to defend against such claim at its own
expense.
8.3 Any damages that either party is or the parties are ordered to pay
to a Third Party in connection with an action pursuant to this Article 8 shall
be borne one-hundred percent (100%) by the party responsible for the
manufacture, use, sale, offer for sale and import of the allegedly infringing
products or other violation of intellectual property rights.
ARTICLE 9
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GENERAL PROVISIONS
------------------
9.1 CONFIDENTIALITY. For a period of five (5) years following the
Closing, Seller shall (a) maintain the confidentiality of, and (b) not divulge,
to any person, entity or governmental agency, any confidential or proprietary
information concerning the patent applications and invention disclosures
transferred hereunder and related information except with the prior written
consent of the owner thereof or to the extent that such information is required
to be divulged by legal process; provided, however, that Buyer, and Seller shall
not be subject to the obligation of confidentiality for information that (i)
otherwise becomes lawfully available after the Closing Date on a nonconfidential
basis from a third party or its subsidiaries or (ii) is or becomes generally
available to the public without breach of this Agreement.
9.2 LIMITATION. No licenses are granted herein by implication or
estoppel.
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9.3 SURVIVAL. The representations and warranties of Seller set forth in
this Agreement, including the Schedules referred to herein, shall survive until
the fifth anniversary of the Closing Date.
9.4 ASSIGNMENT. All of the rights, duties and obligations in this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns, and legal representatives. This
Agreement and the rights transferred or granted to each party under this
Agreement, including without limitation the licenses granted herein, may be
assigned, transferred or granted to others without the consent of the other
party, if assigned, transferred or granted together with the substantially all
of the business to which such rights pertain, or pro tanto with a sale of a part
of that business. Any unauthorized assignment of any rights, duties or
obligations under this Agreement shall be null and void.
9.5 ENTIRE AGREEMENT. This Agreement (including all Schedules hereto),
the Asset Purchase Agreement, the Schedules to the Asset Purchase Agreement and
all other agreements entered into between the parties in connection with and as
expressly contemplated by the Asset Purchase Agreement contain the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, with
respect to such matters other than any written agreement of the parties that
expressly provides that it is not superseded by this Agreement.
9.6 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York, its rules of conflict of laws notwithstanding. Each of the
parties hereto hereby submit to the exclusive jurisdiction of the Courts of the
State of New York for purposes of any suit, action or other proceeding arising
out of this Agreement or the transactions contemplated hereby.
9.7 HEADINGS. The heading references herein and the table of contents
hereto (other than the categories set forth on Schedules attached hereto) are
for convenience purposes only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions hereof.
9.8 SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons, Entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
9.9 EXPIRATION. Except as otherwise provided, this Agreement shall
continue in full force and effect until the expiration of the last right
transferred herein.
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IN WITNESS WHEREOF, the parties each have caused this Agreement to be
duly executed by a duly authorized officer and delivered in its name and on its
behalf, all as of the day and year first above written.
XXXXXXXX CONTROLS, INC.
BY: _________________________
Name:
Title:
APTEK XXXXXXXX, INC.
BY: __________________________
Name:
Title:
PROACTIVE ACQUISITION CORPORATION
BY: ___________________________
Name:
Title:
TELEFLEX CORPORATION
BY: ___________________________
Name:
Title:
TELEFLEX AUTOMOTIVE INCORPORATED
BY: ____________________________
Name:
Title:
