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ASSET PURCHASE AGREEMENT
BETWEEN
MAGNETEK, INC.
AND
THE XXXXX XXXXX COMPANY
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DATED AS OF MAY 27, 1994
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SALE OF XXXXX XXXXX DIVISION
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . 6
ARTICLE II CLOSING; PURCHASE PRICE ADJUSTMENT . . . . . . . . . . . . . . . . 6
2.1 Sale and Transfer of the Assets . . . . . . . . . . . 6
2.2 Assets Not Transferred. . . . . . . . . . . . . . . . 8
2.3 Assumed and Excluded Liabilities. . . . . . . . . . . 9
2.4 Closing . . . . . . . . . . . . . . . . . . . . . . .11
2.5 Purchase Price Adjustment . . . . . . . . . . . . . .12
2.6 Tax Allocation. . . . . . . . . . . . . . . . . . . .15
2.7 Sales and Use Tax . . . . . . . . . . . . . . . . . .15
ARTICLE III CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . . . . . . . .16
3.1 Buyer's Obligation. . . . . . . . . . . . . . . . . .16
3.2 Seller's Obligation . . . . . . . . . . . . . . . . .16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . .17
4.1 Authority; No Conflicts; Governmental
Consents. . . . . . . . . . . . . . . . . . . . . . .17
4.2 Financial Statements. . . . . . . . . . . . . . . . .18
4.3 Taxes . . . . . . . . . . . . . . . . . . . . . . . .19
4.4 Assets Other than Real Property
Interests . . . . . . . . . . . . . . . . . . . . . .19
4.5 Real Property . . . . . . . . . . . . . . . . . . . .20
4.6 Intellectual Property . . . . . . . . . . . . . . . .20
4.7 Contracts . . . . . . . . . . . . . . . . . . . . . .20
4.8 Litigation; Decrees . . . . . . . . . . . . . . . . .21
4.9 Employee and Related Matters. . . . . . . . . . . . .21
4.10 Environmental Matters . . . . . . . . . . . . . . . .22
4.11 Employee and Labor Relations. . . . . . . . . . . . .22
4.12 Assets of the Division. . . . . . . . . . . . . . . .23
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . . .23
5.1 Authority; No Conflicts; Governmental
Consents. . . . . . . . . . . . . . . . . . . . . . .23
5.2 Actions and Proceedings, etc. . . . . . . . . . . . .24
5.3 Availability of Funds . . . . . . . . . . . . . . . .24
5.4 Buyer's Acknowledgment. . . . . . . . . . . . . . . .24
5.5 Exon-Xxxxxx . . . . . . . . . . . . . . . . . . . . .24
5.6 No Knowledge of Seller's Breach . . . . . . . . . . .25
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5.7 Management Ownership. . . . . . . . . . . . . . . . .25
ARTICLE VI COVENANTS OF SELLER. . . . . . . . . . . . . . . . . . . . . . . .25
6.1 Access. . . . . . . . . . . . . . . . . . . . . . . .25
6.2 Ordinary Conduct. . . . . . . . . . . . . . . . . . .25
6.3 Insurance . . . . . . . . . . . . . . . . . . . . . .26
6.4 Environmental Study and Remediation . . . . . . . . .26
6.5 Title Commitment. . . . . . . . . . . . . . . . . . .27
6.6 Acquisition Proposals . . . . . . . . . . . . . . . .27
6.7 Accounts Receivable . . . . . . . . . . . . . . . . .27
6.8 Non-Competition . . . . . . . . . . . . . . . . . . .28
ARTICLE VII COVENANTS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . .29
7.1 Confidentiality . . . . . . . . . . . . . . . . . . .29
7.2 Accounts Receivable . . . . . . . . . . . . . . . . .29
7.3 Waiver of Bulk Sales Law Compliance . . . . . . . . .30
7.4 Excluded Assets and Inventory . . . . . . . . . . . .30
7.5 Insurance . . . . . . . . . . . . . . . . . . . . . .30
7.6 Covenant Not to Compete . . . . . . . . . . . . . . .30
7.7 Surety Bond . . . . . . . . . . . . . . . . . . . . .31
ARTICLE VIII MUTUAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . .32
8.1 Permits and Consents. . . . . . . . . . . . . . . . .32
8.2 Cooperation . . . . . . . . . . . . . . . . . . . . .33
8.3 Reasonable Efforts. . . . . . . . . . . . . . . . . .33
8.4 Records . . . . . . . . . . . . . . . . . . . . . . .33
8.5 Access to Former Business Records . . . . . . . . . .34
8.6 Use of Trademark and Trade Names. . . . . . . . . . .34
8.7 Required Modifications or
Replacements of Products. . . . . . . . . . . . . . .35
8.8 Conduct of Business . . . . . . . . . . . . . . . . .36
ARTICLE IX EMPLOYEE BENEFIT MATTERS . . . . . . . . . . . . . . . . . . . . .36
9.1 Employee Retention. . . . . . . . . . . . . . . . . .36
9.2 Employee Benefit Plans. . . . . . . . . . . . . . . .36
9.3 Employees Covered by the Collective
Bargaining Agreement. . . . . . . . . . . . . . . . .37
9.4 Bargaining Benefit Plans. . . . . . . . . . . . . . .37
9.5 Vacation and Holiday Pay. . . . . . . . . . . . . . .37
9.6 Access to Information . . . . . . . . . . . . . . . .37
9.7 Third-Party Beneficiaries . . . . . . . . . . . . . .37
ARTICLE X INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . .38
10.1 Indemnification by Seller . . . . . . . . . . . . . .38
10.2 Indemnification by Buyer. . . . . . . . . . . . . . .38
10.3 Indemnification for Environmental
Matters.. . . . . . . . . . . . . . . . . . . . . . .39
10.4 Losses Net of Insurance, Etc. . . . . . . . . . . . .40
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10.5 Termination of Indemnification. . . . . . . . . . . .40
10.6 Procedures Relating to Indemnification
(Other than for Tax Claims) . . . . . . . . . . . . .41
10.7 Procedures Relating to
Indemnification of Tax Claims.. . . . . . . . . . . .42
10.8 Survival of Representations . . . . . . . . . . . . .43
ARTICLE XI GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . .43
11.1 Assignment. . . . . . . . . . . . . . . . . . . . . .43
11.2 No Third-Party Beneficiaries. . . . . . . . . . . . .44
11.3 Termination . . . . . . . . . . . . . . . . . . . . .44
11.4 Expenses. . . . . . . . . . . . . . . . . . . . . . .45
11.5 Attorneys' Fees . . . . . . . . . . . . . . . . . . .45
11.6 Amendments. . . . . . . . . . . . . . . . . . . . . .45
11.7 Notices . . . . . . . . . . . . . . . . . . . . . . .45
11.8 Interpretation; Exhibits and
Schedules . . . . . . . . . . . . . . . . . . . . . .46
11.9 Counterparts. . . . . . . . . . . . . . . . . . . . .46
11.10 Entire Agreement. . . . . . . . . . . . . . . . . . .46
11.11 Fees. . . . . . . . . . . . . . . . . . . . . . . . .47
11.12 Severability. . . . . . . . . . . . . . . . . . . . .47
11.13 Governing Law . . . . . . . . . . . . . . . . . . . .47
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EXHIBITS
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EXHIBIT A Xxxx of Sale, Assignment and Assumption Agreement. . . . . . . . A-1
EXHIBIT B Form of Exclusive Manufacturing Agreement. . . . . . . . . . . . B-1
EXHIBIT C Form of Sublease . . . . . . . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D Opinion of Xxxxxx, Xxxx & Xxxxxxxx . . . . . . . . . . . . . . . D-1
EXHIBIT E Opinion of General Counsel of Seller . . . . . . . . . . . . . . E-1
EXHIBIT F Opinion of Xxxxx & Lardner . . . . . . . . . . . . . . . . . . . F-1
EXHIBIT G Form of License Agreement. . . . . . . . . . . . . . . . . . . . G-1
SCHEDULES
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Schedule 1.1 December Balance Sheet
Schedule 2.1(a) Owned Property
Schedule 2.1(b) Leased Property
Schedule 2.1(e) Intellectual Property
Schedule 2.1(j) Certain Excluded Assets
Schedule 2.2(l) Accounts Receivable and Bank Accounts
Schedule 2.6 Purchase Price Allocation
Schedule 4.1(b) Conflicts (Seller)
Schedule 4.3 Taxes
Schedule 4.4 Liens
Schedule 4.5 Division Properties
Schedule 4.6 Intellectual Property
Schedule 4.7 Certain Contracts
Schedule 4.8 Litigation
Schedule 4.9 Seller Plans
Schedule 4.11 Labor Matters
Schedule 5.1(b) Conflicts (Buyer)
Schedule 6.2 Exceptions to Ordinary Course
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of May 27, 1994, between
MAGNETEK, INC., a Delaware corporation ("Seller"), and THE XXXXX XXXXX COMPANY,
a Wisconsin corporation ("Buyer").
Seller desires to sell to Buyer certain assets (other than
excluded assets) relating to the Xxxxx Xxxxx division (the "Division") of
Seller. Buyer desires to purchase such assets and is willing to assume certain
associated obligations and liabilities.
Accordingly, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Affiliate" has the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act by the SEC, as in effect on the date hereof.
"Assets" has the meaning set forth in Section 2.1.
"Assigned Contracts" has the meaning set forth in Section 2.1(f).
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Xxxx of Sale, Assignment and Assumption Agreement" means a Xxxx of
Sale, Assignment and Assumption Agreement in substantially the form attached
hereto as Exhibit A.
"Brownsville Facility" has the meaning set forth in Section 2.1(b).
"Business Day" means a day other than a Saturday or a Sunday or
other day on which commercial banks in Los Angeles are authorized or required by
law to close.
"Closing Balance Sheet" has the meaning set forth in Section 2.5.
"Closing Date" means the day on which the Closing occurs pursuant
to Section 2.4.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Collective Bargaining Agreement" means the Labor Agreement between
Seller and the International Union of Electronic, Electrical, Salaried, Machine
and Furniture Workers Local No. 1131 ("Union"), dated June 1, 1991 and all
schedules, appendices and letters of understanding (including as the same relate
to any "effects bargaining") related thereto.
"Contract" means any contract, agreement, license, lease, sales or
purchase order or other legally binding commitment, whether written or oral, to
which Seller or the Division is a party and relating primarily to the Division.
"Contractual Obligation" means, as to any Person, any provision of
any note, bond or security issued by such Person or of any mortgage, indenture,
deed of trust, lease, license, franchise, contract, agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property or assets is subject.
"December Balance Sheet" means the unaudited balance sheet of the
Division as of December 31, 1993, attached hereto as Schedule 1.1.
"Division Employee" means any employee of Seller working
exclusively for the Division on the Closing Date, including any employee on
vacation or illness leave on such date.
"Employee Benefit Arrangements" means each and all pension,
supplemental pension, accidental death and dismemberment, life and health
insurance and benefits (including medical, dental, vision and hospitalization),
short and long-term disability, savings, bonus, deferred compensation, incentive
compensation, holiday, vacation, severance pay, salary continuation, sick pay,
sick leave, tuition refund, service award, company car, scholarship, relocation,
patent award, fringe benefit, flexible spending account programs and other
employee benefit arrangements, plans, contracts, policies or practices providing
employee or executive compensation or benefits to Division Employees, other than
the Employee Benefit Plans.
"Employee Benefit Plans" means each and all "employee benefit
plans," as defined in Section 3(3) of ERISA, maintained or contributed to by
Seller or in which Seller participates or participated and which provide
benefits to Division Employees,
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including (i) any such plans that are "employee welfare benefit plans" as
defined in Section 3(1) of ERISA and (ii) any such plans that are "employee
pension benefit plans" as defined in Section 3(2) of ERISA.
"Environmental Law" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Resource Conservation
and Recovery Act of 1976, as amended, and any other applicable statutes,
regulations, rules, ordinances or codes which relate to the protection of human
health or the environment from the effects of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the SEC promulgated
from time to time thereunder.
"Excluded Assets" has the meaning set forth in Section 2.2(b).
"Excluded Inventory" has the meaning set forth in Section 2.2(c).
"Excluded Liabilities" has the meaning set forth in Section 2.3.
"Exclusive Manufacturing Agreement" means the Agreement between
Buyer and Seller, substantially in the form of Exhibit B.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Hazardous Material" means any substance: (i) which is defined as
a hazardous waste, hazardous substance, pollutant or contaminant under any
Environmental Law; (ii) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is
regulated by any Governmental Authority; or (iii) which contains gasoline,
diesel fuel or other petroleum hydrocarbons.
"Knowledge of Buyer" means the actual knowledge of any one or more
of: Xxxxxx X. Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxx
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Xxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxx, Xxxxxxx Xxxxx or Xxxxxx
Xxxxxxxxx.
"Knowledge of Seller" means the actual knowledge of any "officer"
of Seller as such term is defined in 17 C.F.R. Section 240.16a-1(f), to the
extent such officer had, on the date hereof, responsibility for matters that are
the subject of such representation and warranty; PROVIDED, HOWEVER, that unless
such an officer had (a) actual knowledge to the contrary or (b) direct
responsibility at the Division level for the subject matter thereof, such
knowledge is based solely upon the representation and warranty in Section 5.6
hereof.
"Indemnified Person" means, with respect to any Loss, the Person
seeking indemnification hereunder.
"Indemnifying Person" means, with respect to any Loss, the Person
from whom indemnification is being sought hereunder.
"IRS" means the Internal Revenue Service.
"License Agreement" means the License Agreement between Buyer and
Seller in substantially the form of Exhibit G hereto, relating to the use of
certain names.
"Lien" means any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or other security agreement of any kind
or nature whatsoever (including, without limitation, any conditional sale or
other title retention agreement or any financing lease having substantially the
same economic effect as any of the foregoing).
"Loss" means any loss, liability, claim, damage or expense
(including reasonable attorneys' fees and disbursements and the costs of
investigation). Loss recoverable hereunder is subject to the limitations set
forth in Section 10.4.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations, property or condition (financial or other) of the
Division, taken as a whole or (b) the ability of Seller to consummate the
transactions contemplated by this Agreement.
"Milwaukee Facility" has the meaning set forth in Section 2.1(a).
"Owned Property" has the meaning set forth in Section 2.1(a).
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust,
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unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Phase II Report" has the meaning set forth in Section 4.10.
"ReCHILL Products" has the meaning set forth on Schedule 2.2(b).
"Records" has the meaning set forth in Section 2.1(h).
"Required Modification" means, with respect to any product, a
modification, improvement or enhancement which is (a) required by any
Requirement of Law or (b) otherwise necessary or advisable in Seller's
reasonable judgment to permit Seller to meet any duty or obligation owing by
Seller to remedy defects or hazards in such products or to provide any warning
with respect to any such defects or hazards. Required Modifications may also
include, but shall not be limited to, modifications, improvements or
enhancements necessary to meet industry standards, or to implement design
improvements, or modifications of or supplements to the product's design,
quality, components, safety features, labeling, warnings or instructions.
Required Modification shall in no event mean or include any modification,
improvement or enhancement required by any written warranty covering the
relevant product.
"Requirement of Law" means, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"SEC" means the Securities and Exchange Commission.
"Seller Plans" means each and all Employee Benefit Plans and
Employee Benefit Arrangements sponsored or maintained by Seller under which any
Division Employee participates or is entitled to receive benefits.
"Sublease" means the agreement between Buyer and National Electric
Coil, Inc. relating to the Brownsville Facility in substantially the form of
Exhibit C.
"Tax" or "Taxes" means, with respect to any Person, any federal,
state, local or foreign net income, gross income, gross receipts, sales, use,
transfer, registration, ad valorem, value-added, alternative or add-on minimum,
capital, unitary, intangible, franchise, profits, license, withholding, payroll,
social security, Medicare, employment, disability, real
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property, personal, excise, severance, stamp, transfer, occupation, premium,
property, windfall profit tax, environmental, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any jurisdiction or other taxing authority, whether or not disputed,
on such Person.
"Tax Returns" has the meaning set forth in Section 4.3.
"Transaction Documents" means (i) this Agreement, (ii) the Xxxx of
Sale, Assignment and Assumption Agreement, (iii) the warranty deeds of
conveyance of Owned Property, (iv) the Exclusive Manufacturing Agreement,
(v) the Sublease and (vi) the License Agreement.
"Transactions" means the transactions contemplated by the
Transaction Documents.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Terms defined in this Agreement in Sections other
than Section 1.1 shall have the meanings as so defined when used in this
Agreement.
(b) As used herein, accounting terms not defined or to
the extent not defined, shall have the respective meanings given to them under
GAAP.
(c) Unless express reference is made to Business Days,
references to days shall be to calendar days.
ARTICLE II
CLOSING; PURCHASE PRICE ADJUSTMENT
2.1 SALE AND TRANSFER OF THE ASSETS. Subject to the terms and
conditions of this Agreement, on the Closing Date Seller will sell, convey,
transfer, assign and deliver to Buyer all of Seller's right, title and interest
in and to the following assets (except the Excluded Assets) of Seller, to the
extent that they are used primarily in the operations of the Division, as the
same shall exist on the Closing Date (collectively, the "Assets"):
(a) the real property (including all buildings,
improvements and structures located thereon and all rights, privileges,
easements and appurtenances thereto) located at 385 and 000 Xxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx (the "Milwaukee Facility") described on Schedule 2.1(a)
(the "Owned Property");
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(b) an interest, pursuant to the Sublease, in the
leasehold interest relating to the facility used by the Division in Brownsville,
Texas (the "Brownsville Facility") listed on Schedule 2.1(b) (the "Leased
Property");
(c) all tangible personal property, including, without
limitation, the fixtures, furnishings, furniture, office supplies, vehicles,
rolling stock, tools, patterns, machinery, equipment, computer equipment
(including software), located upon or affixed to or normally located in, at or
upon, even if temporarily removed from, any of the Division Property
(collectively, including the fixtures, the "Equipment");
(d) all inventory, including without limitation, raw
materials, work-in-process, finished goods, packaging materials, spare parts and
supplies (the "Inventory");
(e) subject to the limited rights retained in
Section 8.6, the trademarks, trade names, patents, service marks, copyrights
(whether registered or unregistered) and pending applications for the foregoing
listed on Schedule 2.1(e) (the "Intellectual Property");
(f) all Contracts (including but not limited to all
Contracts listed on Schedule 4.7 and all Contracts entered into by the Division
through the Closing Date), provided that any Contract that requires the consent
to assignment of a party thereto which consent has not been obtained prior to
the Closing Date pursuant to Section 8.1 shall be deemed Assigned Contracts only
to the extent therein provided (the "Assigned Contracts");
(g) all transferable business licenses and permits used
primarily in or relating primarily to the Division or the Assets (the
"Permits");
(h) all books and records (other than historical
accounting, financial and Tax records), plans and specifications, surveys and
title policies relating to the Owned Property, sales literature, product
information, employment, records and files and all other information and/or data
related to or used by Seller primarily in connection with the Assets and the
operation of the Division and located at the Milwaukee Facility (the "Records");
(i) all insurance proceeds paid or payable by any
insurance provider for any Asset that is destroyed or damaged after the date
hereof and prior to the Closing Date;
(j) all accounts receivable and notes receivable of
Seller on the Closing Date arising exclusively out of the activities of the
Division, all cash and cash equivalents (except for amounts required to cover
payment of outstanding
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checks) in Division bank accounts on the Closing Date, all prepaid items and
deposits paid by Seller exclusively in connection with the Division (to the
extent reflected on the Closing Balance Sheet) a list of which, as of April 2,
1994, together with the names of the Division's bank accounts (noting which such
accounts may not be transferred to Buyer), is attached hereto as
Schedule 2.1(j); and
(k) all goodwill appurtenant to the foregoing Assets.
2.2 ASSETS NOT TRANSFERRED. Notwithstanding anything herein to
the contrary, the following assets are not included in the Assets and shall be
retained by Seller (the "Excluded Assets"):
(a) all rights, properties, and assets which have been
used or held for use in connection with the Division and which shall have been
transferred (including transfers by way of sale) or otherwise disposed of prior
to the Closing, provided such transfers and disposals shall have been in the
ordinary course of the business of the Division;
(b) all rights of Seller relating to "ReCHILL"
Products, including, without limitation, all rights of Seller under its
agreement with The Trane Company, as more fully described on Schedule 2.2(b),
and all related Records (including records that would constitute Records under
the definition thereof set forth in Section 2.1(h) if such records related to an
Asset), provided that, in the event such Records cannot be segregated in a
commercially reasonable manner from the Records or Assets or from records or
assets of Buyer generated or acquired on or after the Closing Date, Seller shall
have access to such Records pursuant to Section 8.5 hereof;
(c) the inventory of the Division (wherever located) on
the Closing Date of Xxxxx Xxxxx explosion-proof motors and "EVIG" finished good
inventories (the "Excluded Inventory");
(d) rights to or claims for refunds or rebates of Taxes
and other governmental charges and the benefit of net operating loss
carryforwards, carrybacks or other tax benefits or credits of Seller, in each
case whether or not attributable to the Division;
(e) claims or rights against third parties, including,
without limitation, claims or counterclaims arising in respect of the litigation
titled XXXXXX-XXXXXXXX VS. MAGNETEK, ET AL., (including the existing judgment in
Seller's favor) other than claims or rights against third parties arising with
respect to events or breaches occurring after the Closing
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Date under the Assigned Contracts; PROVIDED, HOWEVER, that any rights of
indemnification, contribution or reimbursement that may exist under the Assigned
Contracts solely in respect of Excluded Assets or Excluded Liabilities hereunder
shall be Excluded Assets;
(f) except as set forth in Section 2.1(i), all
insurance policies and rights thereunder, including but not limited to, rights
to any cancellation value as of the Closing Date;
(g) proprietary or confidential business or technical
information, records and policies that relate generally to Seller or any of its
Affiliates and are not used primarily in the Division, including, without
limitation, organization manuals and strategic plans;
(h) subject to the limited rights granted in
Section 8.6, all "MagneTek" marks, including any and all trademarks or service
marks, trade names, slogans or other like property relating to or including the
name "MagneTek," the xxxx MagneTek or any derivative thereof and the MagneTek
logo or any derivative thereof, and Seller's proprietary computer programs or
other software, including but not limited to Seller's proprietary data bases,
accounting and reporting formats, systems and procedures;
(i) all Records relating to pending lawsuits to which
Seller is a party and which involve the Division;
(j) the "back-up" annuity policy of Seller purchased
from Metropolitan Life Insurance Company for the benefit of certain retirees who
previously were employed in the business of the Division;
(k) all other assets of Seller, including but not
limited to assets used by Seller or its Affiliates in other businesses of Seller
or its Affiliates and assets used primarily in connection with Seller's
corporate functions (including but not limited to the corporate charter,
taxpayer and other identification numbers, seals, minute books and stock
transfer books), whether or not used for the benefit of the Division.
2.3 ASSUMED AND EXCLUDED LIABILITIES.
(a) On the Closing Date, Buyer shall execute and
deliver to Seller the Xxxx of Sale, Assignment and Assumption Agreement pursuant
to which Buyer shall assume and agree to pay, perform and discharge when due,
only the following liabilities and obligations of Seller pertaining to the
Assets and the Division (collectively, the "Assumed Liabilities"):
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(i) all of the accounts payable, accrued pay,
other accrued expenses and any other items shown as "current
liabilities" on the Closing Balance Sheet;
(ii) all liabilities and obligations of Seller
which pertain to or are to be performed during the period following
the Closing Date and which arise under any of the Assigned Contracts;
(iii) the liabilities expressly assumed by Buyer
in Section 2.7 and Article IX of this Agreement, and any other
liabilities expressly assumed by Buyer hereunder;
(iv) all liabilities and obligations under open
purchase orders that were entered into by Seller on behalf of the
Division and which provide for the delivery of goods or services (and
in either case for payment) subsequent to the Closing Date;
(v) all obligations and liabilities in respect
of real or personal property Taxes, utilities, gas and other services
pertaining to periods after the Closing Date;
(vi) all liabilities for (a) warranty claims
made after the Closing Date for service, repair, replacement and
similar work with respect to products sold or services provided
before the Closing Date, unless written notice of such claim has been
delivered to Seller within the two-year period following the Closing
Date; (b) workers compensation claims made after the Closing Date,
regardless of the date of injury; (c) product liability claims made
after the Closing Date for injuries, property damage or other Losses
arising with respect to products sold or services provided before the
Closing Date, unless written notice of such claim has been delivered
to Seller within the two-year period following the Closing Date; and
(d) all litigation, arbitration, civil or governmental proceedings,
labor grievances or complaints or similar matters filed after the
Closing Date and not referred to on Schedule 4.8 or Schedule 4.11,
regardless of the date on which the related claim or Loss arose;
(vii) all liabilities and obligations arising
from the operation of the Division from and after the Closing Date.
(b) Notwithstanding Section 2.3(a) above, the Assumed
Liabilities shall in no event include the following liabilities (the "Excluded
Liabilities"):
10
(i) any liability of Seller arising under or
relating to the settlements entered into in 1992 in respect of the
lawsuits filed against Seller by the United States Department of
Labor and by the International Union of Electronic, Electrical,
Salaried, Machine and Furniture Workers;
(ii) any liability in respect of litigation
currently pending against Seller;
(iii) any liability, responsibility or obligation
with respect to (a) any Seller Plan (including, without limitation,
for any retirement benefits due with respect to persons previously
employed by the Division and who retired prior to the Closing Date),
except as provided in Article IX, and excluding any Assigned Contract
and (b) any payments required to be made by virtue of retention bonus
plans or agreements of Seller disclosed on Schedule 4.7 as "Stay and
Pay Agreements";
(iv) any liability for (a) warranty claims made
after the Closing Date for service, repair, replacement and similar
work required under Seller's written warranties with respect to
products sold or services provided prior to the Closing, the expenses
of which, at shop level cost (direct materials plus labor and
variable overhead), in the aggregate exceed the warranty reserve on
the Closing Balance Sheet, (b) claims under health insurance plans of
Seller for covered Division Employees with respect to services
rendered prior to the Closing Date or (c) any product liability
claims for injuries, property damage or other Losses, arising with
respect to products sold or services provided prior to the Closing
Date, but only if written notice of such claims described in
clause (a), (b) or (c) shall have been delivered to Seller within the
two-year period following the Closing Date;
(v) any liability for Taxes attributable to the
ownership or operation of the Division for any period ending on or
prior to the Closing Date, excluding the Taxes covered by
Section 2.7; and
(vi) any liability arising under a Contractual
Obligation of Seller which is required to be, but is not, disclosed
on Schedule 4.7.
2.4 CLOSING. The closing (the "Closing") of the purchase and
sale of the Assets shall be held at the offices of Xxxxx & Xxxxxxx, 000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx, at 9:00 a.m. on May 27, 1994, or if the
conditions to Closing set forth in Article III shall not have been satisfied
11
or waived by such date, subject to Section 11.3, as soon as practicable after
such conditions shall have been satisfied or waived. The date on which the
Closing shall occur is hereinafter referred to as the "Closing Date." At the
Closing, Buyer shall deliver to Seller by wire transfer (to a bank account
designated at least two business days prior to the Closing Date in writing by
Seller) immediately available funds in an amount equal to the sum of $8,300,000
(eight million three hundred thousand dollars, hereinafter, the "Purchase
Price"), plus or minus an estimate, if the parties mutually agree prior to the
Closing Date with respect thereto, of any adjustment to the Purchase Price under
Section 2.5 (the Purchase Price plus or minus such estimate of any adjustment
under Section 2.5 being hereinafter called the "Closing Date Amount"), and such
other documents as are required by this Agreement.
At the Closing, Seller shall deliver or cause to be delivered to
Buyer (a) the Xxxx of Sale, Assignment and Assumption Agreement, (b) warranty
deeds in recordable form for the Owned Property, (c) the documents and
agreements referred to in Section 3.1(d) hereof and (d) such other instruments
of transfer and documents required by this Agreement or as Buyer may reasonably
request, and Buyer shall deliver to Seller (a) the Xxxx of Sale, Assignment and
Assumption Agreement, (b) the documents and agreements referred to in
Sections 2.7 and 3.2 hereof, (c) insurance certificates evidencing compliance
with Section 7.5 hereof and (d) such other instruments of assumption and
documents required by this Agreement or as Seller may reasonably request. In
addition, Seller shall deliver to Buyer at the Closing a certificate in form and
substance satisfactory to Buyer, duly executed and acknowledged, certifying that
Seller is not a foreign person within the meaning of Section 1445(f)(3) of the
Code, and any corresponding affidavit or certificate required for state tax
purposes.
2.5 PURCHASE PRICE ADJUSTMENT.
(a) Within 60 days after the Closing Date, Seller shall
prepare and deliver to Buyer a balance sheet of the Division as of the close of
business on the Closing Date comprising the Assets and the outstanding Assumed
Liabilities (the "Closing Balance Sheet"). For purposes of preparing the
Closing Balance Sheet, Buyer shall make Division Employees available to Seller
(without charge) and such employees shall, for the purpose of assisting Seller
in preparing the Closing Balance Sheet, be instructed by Buyer to act at
Seller's direction.
During the 30 days immediately following Buyer's receipt of
the Closing Balance Sheet, Buyer shall be entitled to review the Closing Balance
Sheet and Seller's working papers relating to the Closing Balance Sheet, and
Seller shall provide
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Buyer access at all reasonable times to its personnel, properties, books and
records to the extent relevant and not comprising Assets. The Closing Balance
Sheet shall become final and binding upon the parties on the thirtieth day
following delivery thereof unless Buyer gives written notice to Seller of its
disagreement with the method of presentation of the Closing Balance Sheet (a
"Notice of Disagreement") prior to such date. Any Notice of Disagreement shall
specify in reasonable detail the nature of any disagreement so asserted. If a
timely Notice of Disagreement is received by Seller with respect to the Closing
Balance Sheet, then the Closing Balance Sheet (as revised in accordance with
clause (x) or (y) below), shall become final and binding upon the parties on the
earlier of (x) the date the parties hereto resolve in writing any differences
they have with respect to any matter specified in a Notice of Disagreement or
(y) the date any matters properly in dispute are finally resolved in writing by
the Accounting Firm (as defined below). During the 30 days immediately
following the delivery of any Notice of Disagreement, Seller and Buyer shall
seek in good faith to resolve in writing any differences which they may have
with respect to any matter specified in such Notice of Disagreement. During
such period, Buyer and Seller shall each have access to the other party's
working papers prepared in connection with the other party's preparation of a
Notice of Disagreement. At the end of such 30-day period, Seller and Buyer
shall submit to an independent accounting firm (the "Accounting Firm") for
review and resolution any and all matters which remain in dispute and which were
properly included in any Notice of Disagreement, and the Accounting Firm shall
reach a final, binding resolution of all matters which remain in dispute. The
Closing Balance Sheet, with such adjustments necessary to reflect the Accounting
Firm's resolution of the matters in dispute, shall become final and binding on
Buyer and Seller on the date the Accounting Firm delivers its final resolution
to the parties. The Accounting Firm shall be Xxxxxx Xxxxxxxx, or if such firm
is unable or unwilling to act, such other nationally recognized independent
public accounting firm as shall be agreed upon by the parties hereto in writing.
The cost of any arbitration (including the fees and expenses of the Accounting
Firm) pursuant to this Section 2.5 shall be borne 50% by Buyer and 50% by
Seller.
(b) The Purchase Price shall be adjusted (after giving
effect to the payment of the Closing Date Amount) such that the Purchase Price
is (i) increased, to the extent that (A) current Assets of the Division increase
(B) Assumed Liabilities of the Division decrease or (C) the aggregate net book
value of plant and equipment increases, in each case from the amount reflected
on the December Balance Sheet, and (ii) decreased, to the extent that
(x) current Assets of the Division decrease, (y) Assumed Liabilities increase or
(z) the aggregate net book value of plant and equipment decreases, in
13
each case from the amount reflected on the December Balance Sheet. The
adjustments referred to in the foregoing clauses (i) and (ii) shall be
cumulative as to each category. The Purchase Price shall be adjusted upward or
downward, dollar for dollar, in respect of any such negative or positive
adjustment; PROVIDED, HOWEVER, that no adjustment to the Purchase Price pursuant
to this Section 2.5 shall be made unless such adjustment would exceed $50,000,
and if the adjustment would exceed $50,000, then the full amount of the
adjustment shall be made; provided, however, that the estimated adjustment, if
any, included in the Closing Date Amount shall be taken into account in
determining whether such threshold is met. Any required adjustment to the
Purchase Price pursuant to this Section 2.5 shall be referred to as the
"Purchase Price Adjustment."
(c) The Closing Balance Sheet shall be prepared in
accordance with GAAP, applied in a manner consistent with that followed in the
preparation of the December Balance Sheet, subject to the following:
(i) inventory shall be reduced by
book value on the Closing Date of the Excluded Inventory,
but only to the extent that such inventory is in
merchantable condition on the Closing Date, and is
maintained in accordance with Section 7.4 hereof;
(ii) the Closing Balance Sheet shall
not reflect any provision for Taxes (whether as an asset or
a liability);
(iii) intercompany accounts receivable
and intercompany liabilities shall not be eliminated;
(iv) all Excluded Assets (and related
depreciation and reserves) shall be eliminated; and
(v) all Excluded Liabilities (and
related reserves) shall be eliminated.
(d) Buyer agrees, with respect to Purchase Price
Adjustments, that following the Closing, Buyer will not take any actions with
respect to the accounting books, records, policies and procedures of the
Division on which the Closing Balance Sheet is to be based that are not
consistent with GAAP applied in the manner consistent with the past practices of
the Division.
(e) Within thirty (30) days after the receipt by Buyer
of the Closing Balance Sheet in accordance with Section 2.5(a) hereof, Buyer
shall remit to Seller or Seller
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shall remit to Buyer, as the case may be, in immediately available funds, any
undisputed amount as to which there is required to be a Purchase Price
Adjustment. With respect to any items that are the subject of a Notice of
Disagreement, payment shall be made in immediately available funds within three
(3) Business Days after the resolution thereof pursuant to Section 2.5(a). Each
payment pursuant to this Section 2.5 shall be made with interest on the amount
of the payment at an annual rate equal to the reference rate quoted by the San
Xxxxxxxxx xxxxxx of Bank of America on the Closing Date for the period from the
Closing Date to the date of payment, computed on the basis of a 360-day year and
actual days elapsed.
(f) Gas, utility, real estate Taxes and similar
obligations that are being assumed by Buyer shall be prorated between the
parties based upon the days elapsed in the applicable payment period and
reflected in Purchase Price Adjustments.
2.6 TAX ALLOCATION. Buyer and Seller shall allocate the
Purchase Price plus the Assumed Liabilities (to the extent identifiable or
reasonably estimable as of the date hereof) to broad categories constituting
components of the Assets in accordance with Schedule 2.6 (as the same may be
updated as of the Closing to reflect changes in the Assets or Assumed
Liabilities occurring after the date thereof and prior to the Closing Date).
Buyer and Seller shall report the purchase and sale of the Assets in accordance
with the agreed-upon allocation among such broad categories for all Tax purposes
(including the filing of the forms prescribed under Section 1060 of the Code and
the Treasury Regulations promulgated thereunder). Within ten days from the
filing thereof, Buyer and Seller shall provide each other with IRS Forms 8594
(and any state or local equivalent form) reflecting such allocation which shall
be filed with the IRS and any applicable Governmental Authority.
2.7 SALES AND USE TAX. Buyer and Seller shall share equally
and shall cooperate in preparing, executing and filing use and sales Tax returns
relating to, and shall share equally and pay when due, any and all sales, real
estate, transfer, use or similar Tax due with regard to, the purchase and sale
of the Assets. The Closing Date Amount shall, to the extent reasonably
feasible, reflect the parties' estimates with regard to such Taxes. Such Tax
Returns shall be prepared in a manner that is consistent with the allocation of
the Purchase Price and Assumed Liabilities contemplated by Section 2.6. Buyer
shall also furnish Seller with a form of resale certificate that complies with
the requirements of Wisconsin, Texas and other applicable state taxation laws.
Buyer and Seller shall cooperate and use reasonable efforts to minimize the Tax
liabilities referred to in this Section 2.7.
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ARTICLE III
CONDITIONS TO CLOSING
3.1 BUYER'S OBLIGATION. The obligations of Buyer to purchase
and pay for the Assets are subject to the satisfaction (or waiver by Buyer in
writing) as of the Closing of the following conditions:
(a) The representations and warranties of Seller made
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as specifically contemplated by this Agreement, on and
as of the Closing, as though made on and as of the Closing Date, and Seller
shall have performed or complied in all material respects with all obligations
and covenants required by this Agreement to be performed or complied with by
Seller by the time of the Closing; and Seller shall have delivered to Buyer a
certificate dated the Closing Date and signed by an authorized officer of Seller
confirming the foregoing.
(b) Buyer shall have received an opinion dated the
Closing Date of Xxxxxx, Xxxx & Xxxxxxxx, counsel to Seller, as to the matters
set forth in Exhibit D, an opinion dated the Closing Date of Xxxxxx X. Miley,
Esq., General Counsel of Seller, as to the matters set forth in Exhibit E, and
an opinion dated the Closing Date of Xxxxxxxx, Xxxxxx & Finger, special Delaware
counsel to Seller, which opinions shall be reasonably satisfactory in form to
Buyer.
(c) No injunction or order shall have been granted by
any court or administrative agency or instrumentality of competent jurisdiction
that would restrain or prohibit any of the Transactions or that would impose
damages as a result thereof, and no action or proceeding shall be pending before
any court or administrative agency or instrumentality of competent jurisdiction
in which any person seeks such a remedy (if in the written opinion of counsel to
Buyer there exists a reasonable risk of a material adverse result in such
pending action or proceeding).
(d) Seller shall have executed and delivered the
Exclusive Manufacturing Agreement, the Sublease and the License Agreement.
3.2 SELLER'S OBLIGATION. The obligations of Seller to sell and
deliver the Assets to Buyer are subject to the satisfaction (or waiver by Seller
in writing) as of the Closing of the following conditions:
(a) The representations and warranties of Buyer made in
this Agreement shall be true and correct in all material
16
respects as of the date hereof and on and as of the Closing, as though made on
and as of the Closing Date, and Buyer shall have performed or complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by Buyer by the time of the Closing; and Buyer
shall have delivered to Seller a certificate dated the Closing Date and signed
by an authorized officer of Buyer confirming the foregoing.
(b) Seller shall have received an opinion dated the
Closing Date of Xxxxx & Lardner, counsel to Buyer, as to the matters set forth
in Exhibit F, which opinion shall be reasonably satisfactory in form to Seller.
(c) No injunction or order shall have been granted by
any court or administrative agency or instrumentality of competent jurisdiction
that would restrain or prohibit the Transactions or that would impose damages as
a result thereof, and no action or proceeding shall be pending before any court
or administrative agency or instrumentality of competent jurisdiction in which
any person seeks such a remedy (if in the written opinion of counsel to Seller
there exists a reasonable risk of a materially adverse result in such pending
action or proceeding).
(d) Buyer shall have executed and delivered the
Exclusive Manufacturing Agreement, the Sublease and the License Agreement.
(e) Continental Bank Letter of Credit No. C7242246 in
the amount of $847,500 issued to Seller in respect of the Division shall have
been returned to Seller and replaced (or the obligation to maintain such letter
of credit extinguished) by Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
4.1 AUTHORITY; NO CONFLICTS; GOVERNMENTAL CONSENTS.
(a) Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Seller
has all requisite corporate power and authority to enter into the Transaction
Documents and to consummate the Transactions. All corporate acts and other
proceedings required to be taken by Seller to authorize the execution, delivery
and performance of the Transaction Documents and the consummation of the
Transactions have been duly and
17
properly taken. This Agreement has been duly executed and delivered by Seller
and constitutes a valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(b) The execution and delivery of this Agreement does
not and of the other Transaction Documents will not, and the consummation of the
Transactions and compliance with the terms of the Transaction Documents will
not, conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Seller under, any provision of (i) the Certificate of Incorporation or By-Laws
of Seller, (ii) subject to the matters disclosed in Schedule 4.1(b), any
Contractual Obligation of Seller or (iii) any judgment, order or decree or,
subject to the matters described in clauses (A)-(C) below, Requirement of Law
applicable to Seller or its property or assets, other than, in the case of
clauses (ii) and (iii) above, any such conflicts, violations, defaults, rights
or Liens that, individually or in the aggregate, would not have a Material
Adverse Effect. No consent, approval, license, permit, order or authorization
of, or registration, declaration or filing with, any Governmental Authority is
required to be obtained or made by or with respect to Seller in connection with
the execution and delivery of the Transaction Documents or the consummation of
the Transactions contemplated hereby, other than (A) compliance with and filings
under Section 13(a) or 15(d), as the case may be, of the Exchange Act,
(B) compliance with and filings and notifications under applicable Environmental
Laws, (C) those that may be required solely by reason of Buyer's participation
in the transactions contemplated hereby, and (D) those that, if not made or
obtained, individually or in the aggregate, would not have a Material Adverse
Effect.
4.2 FINANCIAL STATEMENTS. To the Knowledge of Seller, the
December Balance Sheet was prepared in accordance with GAAP consistently
applied, and fairly presents the financial condition of the Division as of
December 31, 1993 except: (a) as set forth therein, (b) for the absence of
footnotes and (c) for normal recurring adjustments.
18
4.3 TAXES.
(a) Except as disclosed on Schedule 4.3, Seller, and
any affiliated group within the meaning of Section 1504 of the Code, of which
Seller is or has been a member (the "Affiliated Group," but only for the taxable
period during which Seller has been a member thereof), have filed or caused to
be filed in a timely manner (within any applicable extension periods) with the
appropriate Governmental Authority (i) all Tax returns, reports and forms
(collectively, "Tax Returns") required to be filed by the Code or by applicable
laws, (ii) all Taxes shown on such Tax Returns have been timely paid in full by
the due date thereof, (iii) no Tax Liens or assessments have been filed by any
Tax authority against any property or assets of the Division, and (iv) to the
Knowledge of Seller, no claims are being asserted in writing with respect to any
Taxes relating to the Division.
(b) Except as set forth in Schedule 4.3, (i) no
property of the Division is "tax exempt use property" within the meaning of
Section 168(h) of the Code, and (ii) the Assigned Contracts do not include any
lease made pursuant to former Section 168(f)(8) of the Internal Revenue Code of
1954.
(c) Seller is not a "foreign person" within the meaning
of Section 1445(f)(3) of the Code.
4.4 ASSETS OTHER THAN REAL PROPERTY INTERESTS. Seller has good
and valid title to all Assets reflected on the December Balance Sheet or
thereafter acquired, except those sold or otherwise disposed of since the date
of such December Balance Sheet in the ordinary course of business consistent
with past practice, in each case free and clear of all Liens except (a) such as
are disclosed on Schedule 4.4 and (b) mechanics', carriers', workmen's,
repairmen's or other like Liens arising or incurred in the ordinary course of
business, Liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business, Liens for Taxes and other governmental charges which are not
yet due and payable or which may thereafter be paid without penalty, and other
imperfections of title, restrictions or encumbrances, if any, which Liens,
imperfections of title, restrictions or other encumbrances do not, individually
or in the aggregate, materially impair the continued use and operation of the
specific assets to which they relate (the Liens described in the preceding
clause (b) are hereinafter referred to collectively as "Permitted Liens").
This Section 4.4 does not relate to real property or interests in
real property, such items being the subject of Section 4.5.
19
4.5 REAL PROPERTY. Schedule 4.5 sets forth a complete list of
all Owned Properties and a complete list of all Leased Properties and, as to
Leased Property, identifies any leases relating thereto (an Owned Property or
Leased Property being sometimes referred to herein individually as a "Division
Property" and collectively as "Division Properties"). Seller has good,
marketable and insurable fee title to all Owned Property, free and clear of all
Liens, easements, covenants, rights-of-way and other similar restrictions of any
nature whatsoever, except (i) Permitted Liens, (ii) easements, covenants,
rights-of-way and other similar restrictions of record, and (iii) (A) zoning,
building and other similar restrictions, (B) Liens that have been placed by any
developer, landlord or other third party on property over which Seller has
easement rights or on any Leased Property and subordination or similar
agreements relating thereto and (C) unrecorded easements, covenants, rights-of-
way or other similar restrictions, none of which items set forth in clauses (A),
(B) and (C) above, individually or in the aggregate, materially impair the
continued use and operation of the property to which they relate.
4.6 INTELLECTUAL PROPERTY. Schedule 4.6 sets forth a list of
all Intellectual Property (excluding any such Intellectual Property that is
included in Excluded Assets). With respect to registered trademarks,
Schedule 4.6 contains a list of all jurisdictions in which such trademarks are
registered or applied for and all registration and application numbers. Except
as disclosed on Schedule 4.6, Seller owns or has the right to use, without
payment to any other party, the Intellectual Property listed on such
Schedule 4.6. Except as set forth on Schedule 4.8, no claims are pending or, to
the Knowledge of Seller, threatened against Seller by any person with respect to
the ownership, validity, enforceability or use of any Intellectual Property
listed on Schedule 4.6 or otherwise challenging or questioning the validity or
effectiveness of any such Intellectual Property.
4.7 CONTRACTS. Schedule 4.7 sets forth a list of each of the
following types of Contracts:
(a) any employment or severance agreement that has an
aggregate future liability in excess of $100,000 and is not terminable by notice
of not more than 60 days for a cost of less than $50,000 (including any
contracts or agreements with Division Employees that relate to the transactions
contemplated by this Agreement);
(b) any employee collective bargaining agreement or
other contract with any labor union covering Division Employees;
20
(c) to the Knowledge of Seller, any Contract other than
in the ordinary course of business pursuant to which the aggregate of payments
to become due from or to Seller is equal to or exceeds $200,000, and which is
not terminable by no more than 60 days' notice for a cost of less than $100,000;
(d) any lease or similar agreement under which Seller
is a lessor or sublessor of, or makes available for use by any third party
(including another division of Seller), any Division Property or premises
otherwise occupied by the Division.
Except as disclosed on Schedule 4.7, each Contract listed on
Schedule 4.7 is valid, binding and in full force and effect and is enforceable
by Seller in accordance with its terms. Except as disclosed in Schedule 4.7, to
the Knowledge of Seller, Seller has performed all material obligations required
to be performed by it to date under the Contracts and is not (with or without
the lapse of time of the giving of notice, or both) in breach or default in any
material respect thereunder and, to the Knowledge of Seller, no other party to
any of the Contracts is (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect thereunder.
4.8 LITIGATION; DECREES. To the Knowledge of Seller,
Schedule 4.8 sets forth a list, as of the date of this Agreement, of all pending
and threatened lawsuits or claims with respect to which Seller has contacted in
writing the defendant or been contacted in writing by the claimant or by counsel
for the claimant by or against Seller relating to the Division which
(a) involves a claim by or against Seller of more than $100,000, (b) seeks any
injunctive relief or (c) relates to the Transactions. To the Knowledge of
Seller, except as disclosed on Schedule 4.8, Seller is not in default under any
judgment, order or decree of any court, administrative agency or commission or
other Governmental Authority applicable to the Division; except where the
default would not have a Material Adverse Effect.
4.9 EMPLOYEE AND RELATED MATTERS. Schedule 4.9 sets forth each
material Employee Benefit Plan. Seller has made available to Buyer true,
complete and correct copies of (i) each Seller Plan (or, in the case of any
unwritten Seller Plans, descriptions thereof), (ii) the most recent annual
report on Form 5500 filed with the IRS with respect to Seller's Pension Plan and
(iii) the most recent summary plan description for each Seller Plan for which
such a summary plan description is required. Except as disclosed on
Schedule 4.7, as provided in Section 9.2 or as provided in the Collective
Bargaining Agreement, no Division Employee is entitled to any benefit under any
Seller Plan by reason of the Transactions.
21
4.10 ENVIRONMENTAL MATTERS. Except as disclosed in (i) the
Phase I Report regarding the Milwaukee Facility prepared by Dames & Xxxxx (the
"Phase I Report"), (ii) the report based on further investigation (the "Phase II
Report") or (iii) otherwise in writing by Seller addressed to Buyer, to the
Knowledge of Seller, as to the Division and the operation of the Milwaukee
Facility and Brownsville Facility:
(a) Seller is not in material violation of any
applicable Environmental Law nor is Seller under investigation or review by any
Governmental Authority with respect to compliance therewith, or with respect to
the generation, use, treatment, storage or disposal, or the spillage or other
release of any Hazardous Material;
(b) there is no Hazardous Material that is likely to
pose any material risk to safety, health or the environment, and there has
heretofore been no spillage, discharge, release or disposal of any such
Hazardous Material on or under the Division Property in an amount and of a
nature which could reasonably be expected to result in material liability to the
Division; and
(c) there are no pending citations, fines, penalties or
claims have been asserted against Seller under any Environmental Law which could
reasonably be expected to have a Material Adverse Effect and which have not been
reflected in the December Balance Sheet.
4.11 EMPLOYEE AND LABOR RELATIONS. Except as set forth on
Schedule 4.11:
(a) there is no labor strike, dispute, or work stoppage
or lockout pending, or, to the Knowledge of Seller, threatened, involving the
Division;
(b) to the Knowledge of Seller, no union organization
campaign is in progress with respect to the employees of the Division, and no
question concerning representation exists respecting such employees;
(c) there is no unfair labor practice charge or
complaint against Seller pending, or, to the Knowledge of Seller, threatened,
before the National Labor Relations Board involving the Division;
(d) there is no pending, or, to the Knowledge of
Seller, threatened, grievance involving an employee of the Division that, if
adversely decided, would have a Material Adverse Effect; and
22
(e) no charges with respect to or relating to Seller
are pending before the Equal Employment Opportunity commission or any other
Governmental Authority responsible for the prevention of unlawful employment
practices as to which there is a reasonable likelihood of adverse determination
involving the Division, other than those which, if so determined would not have
a Material Adverse Effect.
4.12 ASSETS OF THE DIVISION. Except for any Assets that may not
be transferred to Buyer pursuant to Section 2.2 or Section 8.1, the Assets and
the rights conferred by the Transaction Documents comprise all the properties
and assets used by Seller primarily in the operation of the business of the
Division as conducted on the date hereof. Except as expressly provided herein
or in any of the Transaction Documents, Seller makes no representation or
warranty concerning the Assets or the Division, including as to the quality,
condition, merchantability, salability, obsolescence, working order or fitness
for a particular purpose thereof. Except as expressly provided herein, the
Assets are sold to Buyer "as is and where is."
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 AUTHORITY; NO CONFLICTS; GOVERNMENTAL CONSENTS.
(a) Buyer is a corporation duly organized, validly
existing and in active status under the laws of the State of Wisconsin. Buyer
has all requisite corporate power and authority to enter into the Transaction
Documents and to consummate the Transactions. All corporate acts and other
proceedings required to be taken by Buyer to authorize the execution, delivery
and performance of the Transaction Documents and the consummation of the
Transactions have been duly and properly taken. This Agreement has been duly
executed and delivered by Buyer and constitutes a valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally or by general principles (regardless of whether such enforceability is
considered in a proceeding in equity or law).
(b) Except as disclosed on Schedule 5.1(b), the
execution and delivery of this Agreement does not and of the other Transaction
Documents will not, and the consummation of the Transactions and compliance with
the terms of the
23
Transaction Documents will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon any
of the properties or assets of Buyer under, any provision of (i) the Certificate
of Incorporation or By-Laws of Buyer, (ii) any Contractual Obligation of Buyer
or (iii) any judgment, order or decree or, subject to the matters described in
clauses (A)-(C) below, or Requirement of Law applicable to Buyer or its property
or assets. No material consent, approval, license, permit order or
authorization of, or registration, declaration or filing with, any Governmental
Authority is required to be obtained or made by or with respect to Buyer or its
Affiliates in connection with the execution and delivery of the Transaction
Documents or the consummation by Buyer of the Transactions, other than
(A) compliance with and filings under Section 13(a) and 15(d), as the case may
be, of the Exchange Act, (B) compliance with and filings and notifications under
applicable Environmental Laws and (C) those that may be required solely by
reason of Seller's (as opposed to any other third party's) participation in the
transactions contemplated hereby.
5.2 ACTIONS AND PROCEEDINGS, ETC. There are no (a) outstanding
judgments, orders, writs, injunctions or decrees of any court, governmental
agency or arbitration tribunal against Buyer or (b) actions, suits, claims or
legal, administrative or arbitration proceedings or investigations pending or,
to the Knowledge of Buyer, threatened against Buyer.
5.3 AVAILABILITY OF FUNDS. Buyer has currently effective
commitments, subject to customary exceptions and conditions, as to the
availability to Buyer of all funds required to consummate the Transactions.
5.4 BUYER'S ACKNOWLEDGMENT. Buyer acknowledges and agrees
that, (a) other than the representations and warranties of Seller specifically
contained in this Agreement, there are no representations or warranties of
Seller either expressed or implied with respect to Seller, the Division or the
Transactions, and (b) it shall have a right to indemnification solely as
provided in Article X hereof and shall have no claim or right to indemnification
with respect to any information, documents or materials furnished by Seller or
any of its officers, directors, employees, agents or advisors, or otherwise
available to Buyer.
5.5 EXON-XXXXXX. Buyer is not a "foreign person" for purposes
of the Exon-Xxxxxx Amendment to the Defense Production Act of 1950.
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5.6 NO KNOWLEDGE OF SELLER'S BREACH. To the Knowledge of
Buyer, the representations and warranties of Seller herein (and the Schedules
pertaining thereto) are true and accurate in all material respects and, to the
Knowledge of Buyer, Seller is not in breach of any of its representations or
warranties or of any other condition or circumstance that would excuse Buyer
from its timely performance of its obligations hereunder.
5.7 MANAGEMENT OWNERSHIP. Buyer is a corporation of which at
least 51% of the equity securities are owned (or the voting thereof is
controlled) by individuals who are officers or key employees of the Buyer.
ARTICLE VI
COVENANTS OF SELLER.
Seller covenants and agrees as follows:
6.1 ACCESS. Subject to the provisions of Section 7.1 hereof,
prior to the Closing, Seller will give Buyer and its representatives, employees,
counsel and accountants, together with representatives of Persons providing
financing to Buyer for the Transactions, with reasonable access, during normal
business hours and upon reasonable notice, to the personnel, properties, books
and records of the Division for purposes of investigating its assets,
operations, prospects, obligations and liabilities; provided, however, that such
access does not unreasonably disrupt the normal operations of the Division.
Additionally, subject to the provisions of Section 7.1 hereof and to prior
notification, and the consent (which will not be unreasonably withheld or
delayed), of Seller, Buyer and such representatives may contact the principal
customers and suppliers of the Division for purposes of the foregoing
investigation.
6.2 ORDINARY CONDUCT. Except as contemplated by this Agreement
or as set forth in Schedule 6.2, from the date hereof to the Closing, Seller
will cause the business of the Division to be conducted in the ordinary course
in substantially the same manner as presently conducted and will make all
reasonable efforts consistent with past practices to preserve relationships with
customers, suppliers and others with whom the Division deals. Except as
contemplated by this Agreement, Seller will not do any of the following with
respect to the Division without the prior written consent of Buyer, which
consent will not be unreasonably withheld or delayed:
(a) adopt or amend in any material respect any Seller
Plan or collective bargaining agreement, except as required by law or insofar as
a collective bargaining agreement
25
is then subject to negotiation in advance of its expiration in the ordinary
course;
(b) sell, lease or otherwise dispose of, or agree to
sell, lease or otherwise dispose of, any material portion of its assets (other
than Excluded Assets), except in the ordinary course of business consistent with
past practice;
(c) enter into any lease of real property, except any
renewals of existing leases; or
(d) agree, whether in writing or otherwise, to do any
of the foregoing.
6.3 INSURANCE. Seller shall keep, or cause to be kept, all
insurance policies presently maintained relating to the Division and its
properties, or replacements therefor, in full force and effect through the close
of business on the Closing Date. Buyer will not have any rights under any such
insurance policies from and after the Closing Date.
6.4 ENVIRONMENTAL STUDY AND REMEDIATION.
(a) Seller agrees to retain Dames & Xxxxx, or another
reputable environmental consulting firm selected by Seller, to perform a
Phase II environmental study of the Milwaukee Facility, and to obtain the Phase
II Report from such consulting firm as promptly as possible (without incurring
any additional charge over such firm's customary fees). The Phase II Report
shall indicate that Buyer may rely upon such Phase II Report. Seller further
agrees, at its own expense, to conduct any remediation suggested by the Report
to the extent required, in Seller's reasonable judgment, to cause the Milwaukee
Facility to conform to currently applicable standards applied by Governmental
Authorities. If Seller so determines that remediation is required and the same
is not completed by Seller prior to the Closing, Seller shall complete such
remediation as promptly as is reasonably feasible thereafter, and in a manner
that will minimize, consistent with reasonable commercial practices, the
disruption of the business of the Division. Buyer will cooperate with Seller
and will provide access to the Milwaukee Facility in order to permit Seller to
perform its obligations hereunder.
(b) In the event that as a result of the Phase II
investigation referred to above there is determined to be Hazardous Material
contamination at the Milwaukee Facility, Seller shall perform or cause to be
performed any further remedial investigation, clean-up, removal or other
remedial action necessary, in Seller's reasonable judgment, to cause the
Milwaukee Facility to conform to currently applicable standards applied by
Governmental Authorities ("Remedial Work"); PROVIDED,
26
HOWEVER, that if such contamination is discovered prior to the Closing Date,
Seller shall have the right to terminate this Agreement prior to the Closing
Date in the event Seller reasonably determines that Remedial Work will cost in
excess of $500,000 in addition to amounts expended in connection with its
Phase I and II investigations; PROVIDED, HOWEVER, that in the event Seller so
terminates this Agreement, Seller shall reimburse Buyer (within 60 days of
Buyer's submission of itemized invoices in reasonable detail) for its out-of-
pocket expenses incurred to date in connection with the Transactions, but in no
event to exceed $100,000. In the event Seller does not so elect to terminate
this Agreement, Seller shall proceed to perform the Remedial Work in the manner
described in the penultimate sentence of Section 6.4(a) above, and Buyer shall
comply with the final sentence thereof.
6.5 TITLE COMMITMENT. Seller has furnished to Buyer a standard
form commitment for an owner's policy of title insurance (the "Title
Commitment") issued by Lawyers Title Insurance Corporation dated March 26, 1994
in the amount of $3,000,000. Buyer shall reimburse Seller for one-half of the
expense of the Title Commitment.
6.6 ACQUISITION PROPOSALS. Neither Seller nor any Person
authorized by Seller shall solicit, initiate or encourage any acquisition
proposal or engage in any discussion with respect thereto or provide information
to any other person, concerning a possible sale of the Assets or the business of
the Division.
6.7 ACCOUNTS RECEIVABLE. Seller agrees promptly to forward to
Buyer any and all proceeds from accounts receivable of the Division that are
received by Seller after the Closing Date. If, after the Closing Date, Seller
receives any payment from any Person who at the time of such payment has
outstanding accounts payable to Seller, on the one hand (for the purposes of
this Section, "Seller Accounts Receivable"), and to Buyer, on the other hand
(for the purposes of this Section, "Buyer Accounts Receivable"), and the payment
(a) does not indicate whether it is in respect of Seller Accounts Receivable or
Buyer Accounts Receivable or (b) indicates that it is in payment of both Seller
Accounts Receivable and Buyer Accounts Receivable without specifying the portion
to be allocated to each, then Seller and Buyer shall consult with one another to
determine the proper allocation of such payment; and, if they are unable to
reach agreement on the proper allocation, such payment shall be applied so as to
retire undisputed Seller Accounts Receivable and undisputed Buyer Accounts
Receivable in chronological order based upon the period of time such accounts
receivable have existed on the books of Seller, the Company or the Subsidiaries,
as applicable.
27
6.8 NON-COMPETITION.
(a) Subject to the terms, conditions and exceptions of
this Section 6.8, Seller hereby covenants and agrees that neither it nor any
Affiliate controlled by it (a "Seller Affiliate"), for a period of five (5)
years from and after the Closing Date, will engage, directly or indirectly,
whether as principal, consultant, investor or otherwise, in the design,
development, fabrication, test or delivery of (i) 500-frame and larger motors,
(ii) mine motors, (iii) Navy service motors, (iv) secondary propulsion motors,
(v) synchronous motors and (vi) synchronous condensers in excess of 1,500 KVAR.
Notwithstanding anything to the contrary in this Section 6.8, the acquisition by
Seller of (a) any Person, less than 10% of the gross revenues of which are
derived from a business involving the production of any of the foregoing
products (a "Competitive Business"); PROVIDED that the foregoing business is not
thereafter expanded such that its revenues exceed 20% of the gross revenues of
such Person or (b) no more than 5% of any class of securities of a Person, if
such securities are traded in any public market (within or outside the United
States) or 15% of any class of privately held securities of a Person, in either
case if such Person derives 10% or more of its gross revenues from a Competitive
Business, shall not constitute a breach of this Section 6.8.
(b) Notwithstanding the provisions of Section 6.8(a),
nothing herein shall prohibit Seller or any Seller Affiliate from (i) selling,
marketing or servicing the products described in Section 6.8(a) or
(ii) designing, developing, fabricating, testing, delivering, selling, marketing
or servicing any ReCHILL Products. In addition, nothing herein shall prohibit
Seller or any Seller Affiliate from servicing any product it owns and uses or
from selling spare parts for products that it is permitted to sell hereunder.
(c) The prohibition in Section 6.8(a) shall apply to
all counties in the State of California and all similar political subdivisions
or regions in all states of the United States and all other geographical areas
worldwide. Seller agrees that, in connection with the purchase by Buyer of the
Assets and the Division, the time and geographic restrictions set forth above
are reasonable. Seller agrees that the remedy at law for any breach by it of
this Section 6.8(c) will be inadequate and that Buyer shall be entitled to
injunctive relief. The parties intend that the unenforceability or invalidity
of any term or provision of this Section 6.8(c) shall not render any other term
or provision contained herein unenforceable or invalid. If the activities
described in Section 6.8(a) or the period of time or the geographical area
covered by this Section 6.8 should be deemed too extensive, then the parties
intend that this Section 6.8 be construed to cover
28
the maximum scope of business activities, period of time and geographical area
(not exceeding those specifically set forth herein) as may be permissible under
applicable law.
ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees as follows:
7.1 CONFIDENTIALITY. Buyer acknowledges that the information
being provided to it by Seller is subject to certain provisions regarding
confidentiality set forth in a letter of intent between Buyer and Seller dated
February 7, 1994 (the "Letter of Intent"), which provisions are incorporated
herein by reference. Effective upon, and only upon, the Closing, such
provisions will terminate; PROVIDED, HOWEVER, that Buyer acknowledges that such
provisions will terminate only with respect to information relating solely to
the Division; and PROVIDED, FURTHER, HOWEVER, that Buyer acknowledges that any
and all other information provided to it by Seller or Seller's representatives
concerning Seller shall remain subject to the confidentiality provisions of the
Letter of Intent after the Closing Date.
7.2 ACCOUNTS RECEIVABLE. Buyer agrees to promptly forward or
cause to be forwarded to Seller any and all proceeds from accounts receivable of
Seller that are received by Buyer or the Division after the Closing Date. If,
after the Closing Date, Buyer or the Company receives any payment from any
person who at the time of such payment has outstanding accounts payable to
Seller, on the one hand (for the purposes of this Section, "Seller Accounts
Receivable"), and to Buyer, on the other hand (for the purposes of this Section,
"Buyer Accounts Receivable"), and the payment (a) does not indicate whether it
is in respect of Seller Accounts Receivable or Buyers Accounts Receivable or
(b) indicates that it is in payment of both Seller Accounts Receivable and Buyer
Accounts Receivable without specifying the portion to be allocated to each, then
Seller and Buyer shall consult with one another to determine the proper
allocation of such payment; and, if they are unable to reach agreement on the
proper allocation, such payment shall be applied so as to retire undisputed
Seller Accounts Receivable and undisputed Buyer Accounts Receivable in
chronological order based upon the period of time such accounts receivable have
existed on the books of Seller or Buyer, as applicable.
7.3 WAIVER OF BULK SALES LAW COMPLIANCE. Buyer hereby waives
compliance by Seller with the requirements, if any, of Article 6 of the Uniform
Commercial Code as in force in any state in which Assets are located and all
other similar
29
Requirements of Law applicable to bulk sales and transfers, to the extent
applicable to the Transactions.
7.4 EXCLUDED ASSETS AND INVENTORY. If, after the Closing Date,
Excluded Assets shall remain on the premises utilized or controlled by Buyer,
then (subject to the following sentence) Buyer shall take reasonable steps at
the expense of Seller to deliver such Excluded Assets to Seller, and so long as
such assets remain in Buyer's control, shall exercise reasonable care with
respect thereto, and in no event less care than with respect to its own
properties; PROVIDED, HOWEVER, that Buyer shall not be deemed to have any duty
to obtain insurance for such Excluded Assets (unless so required by the
Exclusive Manufacturing Agreement) to the extent they are not automatically
covered by Buyer's insurance policies. Notwithstanding the foregoing, the
Excluded Inventory shall remain at the Milwaukee Facility in an appropriate
location, at no charge to Buyer, until the earlier of (i) its sale by Seller and
(ii) the first anniversary of the Closing Date, and shall be afforded the degree
of care referred to in the preceding sentence. At the end of such time, either
Seller shall remove such inventory (at Seller's expense) or Buyer may charge a
reasonable warehousing fee to Seller for its continued storage.
7.5 INSURANCE. Buyer shall secure insurance with respect to
the Division from the Closing Date covering general liability and products
liability in amounts customary for the industry in which the Division operates.
7.6 COVENANT NOT TO COMPETE.
(a) Subject to the terms, conditions and exceptions of
this Section 7.6, Buyer hereby covenants and agrees that neither it nor any
Affiliate controlled by it (a "Buyer Affiliate"), for a period of five (5) years
from and after the Closing Date, will engage, directly or indirectly, whether as
principal, consultant, investor or otherwise, in the design, development,
fabrication, testing, delivery, sale, marketing or servicing of ReCHILL
Products.
(b) Notwithstanding the provisions of Section 7.6(a),
nothing herein shall prohibit Buyer from engaging in the activities contemplated
by the Exclusive Manufacturing Agreement. In addition, nothing herein shall
prohibit Buyer or any Buyer Affiliate from servicing any product it owns and
uses.
(c) The prohibition in Section 7.6(a) shall apply to
all counties in the State of California and all similar political subdivisions
or regions in all states of the United States and all other geographical areas
worldwide. Buyer agrees that, in connection with the purchase by Buyer of the
Assets and
30
the Division, the time and geographic restrictions set forth above are
reasonable. Nothing contained in this section shall be construed to prohibit
Buyer or any Buyer Affiliate from investing in debt or equity securities of any
company engaged in any activity described in Section 7.6(a), the capital stock
of which company is listed on a national securities exchange or traded in the
over-the-counter markets, provided that the aggregate stock holdings of Buyer
and such Buyer Affiliates are less than ten percent (10%) of the outstanding
capital stock of such company. Buyer agrees that the remedy at law for any
breach by it of this Section 7.6 will be inadequate and that Buyer shall be
entitled to injunctive relief. The parties intend that the unenforceability or
invalidity of any term or provision of this Section 7.6 shall not render any
other term or provision contained herein unenforceable or invalid. If the
activities described in Section 7.6(a) or the period of time or the geographical
area covered by this Section 7.6 should be deemed too extensive, then the
parties intend that this Section 7.6 be construed to cover the maximum scope of
business activities, period of time and geographical area (not exceeding those
specifically set forth herein) as may be permissible under applicable law.
7.7 SURETY BOND. Buyer agrees that:
(a) On or before the 30th day following the Closing
Date, Buyer shall effect the release or cancellation of the existing Seller
surety bond in the amount of $1,350,000 for the benefit of Divane Brothers
Electric Company, and Seller shall have no further liability under such bond;
and
(b) On or before the 30th day following the Closing
Date, Buyer shall effect the release or cancellation of the existing Seller
surety bond in the amount of $847,500 for the benefit of EBARA Corporation, and
Seller shall have no further liability under such bond. On or before such 30th
day following the Closing Date, Buyer shall reimburse Seller for any theretofore
unreimbursed portion of the $22,310 purchase price thereof.
ARTICLE VIII
MUTUAL COVENANTS
Seller and Buyer each covenant and agree as follows:
8.1 PERMITS AND CONSENTS.
(a) As promptly as practicable after the date hereof,
Buyer and Seller shall make all filings with governmental bodies and other
regulatory authorities, and use all reasonable efforts to obtain all permits,
approvals,
31
authorizations and consents of all third parties, required to consummate the
Transactions. Buyer and Seller shall furnish promptly to each other all
information that is not otherwise available to the other party and that such
party may reasonably request in connection with any such filing. Seller and
Buyer shall use reasonable efforts to obtain such consents to the assignment of
the Assigned Contracts as may be required. Buyer acknowledges that consents to
the Transactions may be required from parties to the Assigned Contracts, that
such consents have not been obtained and that Seller will not assign to Buyer at
the Closing any Assigned Contract that by its terms requires, prior to such
assignment, the consent of any other contracting party thereto unless such
consent has been obtained prior to the Closing Date.
(b) Buyer agrees that Seller shall not have any
liability whatsoever to Buyer arising out of or relating to the failure to
obtain any consents to the assignment of Contracts that may be required in
connection with the Transactions or because of the default, acceleration or
termination of any Assigned Contract as a result thereof. Buyer further agrees
that no representation, warranty or covenant of Seller contained herein shall be
breached or deemed breached, and no condition shall be deemed not satisfied, as
a result of (i) the failure to obtain any such consent or as a result of any
such acceleration or termination or (ii) any lawsuit, action, claim, proceeding
or investigation commenced or threatened by or on behalf of any Person arising
out of or relating to the failure to obtain any such consent or any such
acceleration or termination. Seller shall cooperate with Buyer in any
reasonable manner in connection with Buyer obtaining any such consents;
PROVIDED, HOWEVER, that such cooperation shall not include any requirement that
Seller commence any litigation or offer or grant any accommodation (financial or
otherwise) to any third party. The Purchase Price shall not be subject to
adjustment by reason of any such consents that are not obtained.
(c) With respect to each such Assigned Contract not
assigned on the Closing Date, after the Closing Date Seller shall continue to
deal with the other contracting party(ies) to such Assigned Contract as the
prime contracting party, and Buyer and Seller shall continue to use reasonable
efforts to obtain the consent of all required parties to the assignment of such
Assigned Contract. Such Assigned Contract shall be promptly assigned by Seller
to Buyer after receipt of such consent after the Closing Date. Notwithstanding
the absence of any such consent, Buyer shall be entitled to the benefits of such
Assigned Contract accruing after the Closing Date to the extent that Seller may
provide Buyer with such benefits without violating the terms of such contract;
and to the extent such benefits are so provided, Buyer agrees to perform at its
sole
32
expense all of the obligations of Seller to be performed under such Assigned
Contract after the Closing Date.
8.2 COOPERATION. Buyer and Seller shall cooperate with each
other and shall cause their officers, employees, agents, auditors and
representatives to cooperate with each other after the Closing to ensure the
orderly transition of the Division to Buyer and/or its designated subsidiaries
and to minimize any disruption to the respective businesses of Seller or the
Division that might result from the transactions contemplated hereby. Neither
party shall be required by this Section 8.2 to take any action that would
unreasonably interfere with the conduct of its business.
8.3 REASONABLE EFFORTS. Subject to the terms and conditions of
this Agreement (including the limitations set forth in Section 8.1), each party
will use all reasonable efforts to cause the Closing to occur.
8.4 RECORDS. On the Closing Date, Seller shall deliver or
cause to be delivered to Buyer all Records (including copies of any material
records that would constitute Records under the definition thereof set forth in
Section 2.1(h) if such material records were located at the Milwaukee Facility)
included in the Assets, which are in the possession of Seller to the extent not
then in the possession of the Division, except any records relating to Excluded
Liabilities (including, without limitation, to any Seller Tax liability or to
any litigation or claim not assumed by Buyer hereunder). After the Closing,
upon reasonable written notice and at Buyer's sole expense, Seller agrees to
furnish or cause to be furnished to Buyer and its representatives (including its
auditors), access at reasonable times and during normal business hours to such
information relating to the Division in Seller's possession as is reasonably
necessary for financial reporting and accounting matters, the preparation and
filing of any Tax Returns, reports or forms or the defense of any Tax Claim or
assessment; PROVIDED, HOWEVER, that such access does not unreasonably disrupt
the normal operations of Seller.
8.5 ACCESS TO FORMER BUSINESS RECORDS.
(a) For a period of seven (7) years following the
Closing, Buyer will retain all Records (including any (i) records that relate to
Excluded Assets but would constitute Records if such records related to an Asset
and (ii) Records that cannot be segregated in a commercially reasonable manner
from the Assets or from records or assets of Buyer generated or acquired on or
after the Closing Date). During such period, Buyer will afford authorized
representatives of Seller (including its auditors) access to such Records at
reasonable times and during normal business hours at the principal business
33
office of the Division, or at such other location or locations at which such
Records may be stored or maintained from time to time, and will permit such
representatives to make abstracts from, or copies of, any of such Records, or to
obtain temporary possession of any thereof as may be reasonably required by
Seller at Seller's sole cost and expense. During such period, Buyer will, at
Seller's expense (limited, however, to Buyer's reasonable out-of-pocket
expenditures without regard to any employee cost or other overhead expenses),
reasonably cooperate with Seller in furnishing information, evidence, testimony,
and other reasonable assistance in connection with any action, proceeding, Tax
audit, or investigation to which Seller or any of its Affiliates is subject
relating to the business of the Division prior to the Closing. The term
"Record" as used in this Section 8.5 shall include any data processing files or
other computerized data.
(b) Buyer acknowledges that there is currently pending
on appeal a judgment in favor of Seller in a matter arising from the Division's
activities titled XXXXXX-XXXXXXXX V. MAGNETEK, ET AL. (the "Litigation"). Buyer
acknowledges, without limiting the generality of the foregoing provisions of
this Section 8.5, that its obligations of cooperation with Seller, in the event
the Litigation is remanded for retrial, may include extensive devotion of time
(including travel, at the reasonable expense of Seller) of senior executives of
Buyer. Buyer expressly covenants to make such personnel as may be reasonably
requested by Seller available in the event of such retrial or of other future
proceedings relating to the Litigation.
8.6 USE OF TRADEMARK AND TRADE NAMES.
(a) Notwithstanding anything to the contrary in this
Agreement, Buyer may continue to use the name "MagneTek" and related trademarks,
corporate names, and trade names incorporating "MagneTek," and the stylized
"MagneTek" logos (i) in displays, signage and postings for the period after the
Closing Date necessary to permit the reasonably prompt removal of such names,
and only to the extent such displays, signage or postings exist on the Closing
Date; (ii) for a period of two years, to state the Company's former affiliation
with MagneTek (e.g., "formerly a division of MagneTek, Inc.") and (iii) to the
extent any such trade names, trademarks, service marks or logos appear on
stationery, packaging materials, supplies or inventory on hand as of the Closing
Date or on order at the time of the Closing, until such is exhausted.
(b) Notwithstanding anything to the contrary in this
Agreement, pursuant and subject to the terms of the License Agreement, until the
third anniversary of the Closing Date, Seller may continue to use the name
"Xxxxx Xxxxx" and related
34
trademarks and tradenames incorporating "Xxxxx Xxxxx," and any stylized "Xxxxx
Xxxxx" logos to the extent permitted in the License Agreement.
8.7 REQUIRED MODIFICATIONS OR REPLACEMENTS OF PRODUCTS. The
following provisions of this Section 8.7 shall govern the responsibilities of
Buyer and Seller regarding Required Modifications:
(a) Buyer shall advise Seller promptly after becoming
aware of any Required Modifications to the products shipped by the Division on
or prior to the Closing Date to the extent Seller would be required to indemnify
Buyer for any claims in respect of such products.
(b) Whether or not Buyer gives the foregoing notice,
Buyer shall make any Required Modifications to products shipped by the Division
on or prior to the Closing Date which are necessary or advisable, in the
reasonable discretion of Seller. If the cost to Seller under Section 8.7(c) of
implementing any such Required Modification exceeds the cost to Seller of
replacing such products, Buyer shall replace such products. The obligation of
Buyer hereunder shall include, but not be limited to, such actions as Seller may
reasonably request for (i) the notification of customer and other third parties
in possession of the applicable products, (ii) the shipping of such products, if
necessary, to and from Buyer's facilities for modification, improvement,
enhancement or replacement, (iii) production of replacement products, parts or
supplies necessary for the implementation of the product modification,
enhancement, improvement or placement, (iv) the installation, modification or
replacement of the product by personnel of Buyer, either at the customer's
location or at Buyer's facilities, as appropriate, and (v) recordkeeping and
reports with respect to such product modifications, enhancements, improvements
or replacements to the extent required by law or reasonably requested by Seller.
(c) Seller shall reimburse Buyer for direct
manufacturing, installation, labor and materials costs incurred by Buyer in
installing or implementing any Required Modification under Section 8.7(b) or in
producing any replacement products, parts or supplies under Section 8.7(b),
together with all reasonable out-of-pocket shipping, postage and printing costs
incurred by Buyer in connection therewith.
8.8 CONDUCT OF BUSINESS. Effective on the Closing Date, Seller
shall cease conducting business at the Milwaukee Facility and shall execute any
forms reasonably required to evidence such cessation to the Taxing authorities
of the State of Wisconsin.
35
ARTICLE IX
EMPLOYEE BENEFIT MATTERS
9.1 EMPLOYEE RETENTION. Buyer shall offer employment to
commence as of the Closing Date to all Division Employees, at the same
salaries and wages (including bonus and incentive programs) and on
substantially the same terms and conditions as those in effect immediately
prior to the Closing Date except (i) as to post-retirement health benefits
and (ii) the compensation payable to sales personnel. Buyer has no present
intention (subject to its discretion as to employee performance) to terminate
the employment of any Division Employee within the sixty (60) days following
the Closing Date, and Buyer assumes all obligations and liabilities, if any,
under the Worker Adjustment and Retraining Notification Act (the "WARN Act")
arising out of the Transactions. Buyer also agrees to comply with the terms
of the WARN Act following the Closing Date.
9.2 EMPLOYEE BENEFIT PLANS. Effective as of the Closing Date,
(a) Division Employees shall cease accruing any benefits under any Seller Plan,
and Seller shall take, or cause to be taken, all such action, if any, as may be
necessary to effect such cessation of participation and (b) Buyer shall
establish employee benefit plans for its employees not covered by the Collective
Bargaining Agreement providing benefits which in the aggregate are substantially
the same as the benefits provided to such Division Employees under Seller Plans
for such employees (the "Buyer's Benefit Plans"). All Division Employees will
be fully vested in their accrued benefits under Seller Plans qualified under
Code Section 401(k) and shall be treated as having terminated employment under
such Seller Plans for all applicable purposes; PROVIDED, HOWEVER, that nothing
herein shall be deemed to give rise to a claim for severance under the
Collective Bargaining Agreement. With respect to the Buyer's Benefit Plans,
Buyer shall grant all Division Employees from and after the Closing Date credit
for all service with Seller and its Affiliates and their respective predecessors
prior to the Closing Date for all purposes (other than the accrual of benefits
under a defined benefit or contributory pension plan, however, this proviso
shall not preclude Buyer from granting such credit) for which such service was
recognized by Seller and its Affiliates. With respect to Buyer's Benefit Plans
(and any plan established pursuant to Section 9.4) that provide medical or
dental benefits after the Closing Date, such plans shall waive any exclusions or
limitations with respect to pre-existing conditions and actively-at-work
exclusions. Buyer shall also cause its health plan(s) to be responsible for all
health benefit claims by Division Employees and their covered dependents for
services rendered after the Closing Date. Notwithstanding the foregoing, to the
extent services are rendered after the Closing Date, Buyer shall be responsible
36
therefor, except as to Division Employees who have a condition prior to Closing
and who are covered pursuant to Seller's health maintenance organization
contract, which expires June 1, 1994, to the extent coverage is provided under
such health maintenance organization contract.
9.3 EMPLOYEES COVERED BY THE COLLECTIVE BARGAINING AGREEMENT.
Prior to, but effective as of, the Closing Date Buyer shall have entered into a
new collective bargaining agreement ("New CBA") covering the Division Employees
who are presently covered by the Collective Bargaining Agreement ("Bargaining
Employees") and, except for the matters set forth on Schedule 4.11, shall
expressly assume any and all of Seller's obligations and liabilities under the
Collective Bargaining Agreement arising on or after the Closing Date, except any
claims thereunder (without conceding any merit thereof) with respect to
severance pay or plant closing which are based upon the Transactions.
9.4 BARGAINING BENEFIT PLANS. Effective as of the Closing
Date, Buyer shall establish for the benefit of the Bargaining Employees such
employee benefit plans as are required by the New CBA.
9.5 VACATION AND HOLIDAY PAY. As of the Closing Date, Buyer
shall assume all of Seller's obligations for vacation and holiday pay to all
Division Employees.
9.6 ACCESS TO INFORMATION. Commencing with the date hereof and
continuing to the Closing Date and thereafter, Seller shall make reasonably
available to Buyer such actuarial, financial, personnel and related information
as may be reasonably requested by Buyer with respect to any Seller Plan as it
relates to a Division Employee, including, but not limited to, compensation and
employment histories.
9.7 THIRD-PARTY BENEFICIARIES. No provision of this Article IX
shall create any third-party beneficiary rights in any employee or former
employer of the Division (including any beneficiary or dependent thereof),
including, without limitation, any right to continued employment or employment
in any particular position with Buyer for any specified period of time after the
Closing Date.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION BY SELLER. Subject to the terms and
conditions of this Article X, Seller shall indemnify Buyer and each of its
officers, directors, employees and agents against, and hold them harmless from,
any Loss suffered or
37
incurred by any such Indemnified Person (other than any relating to
environmental matters, for which indemnification provisions are set forth in
Section 10.3) to the extent arising from (a) if the Closing occurs, any breach
of any representation or warranty of Seller contained in this Agreement which
survives the Closing or in any certificate, instrument or other document
delivered pursuant hereto, (b) any breach of any covenant of Seller contained in
this Agreement requiring performance after the Closing Date or (c) if the
Closing occurs, the existence of, or the failure of Seller to pay, perform and
discharge when due, any of the Excluded Liabilities (including, without
limitation, any Losses as a result of the failure of Seller to comply with any
Bulk Sales Laws referred to in Section 7.3); PROVIDED, HOWEVER, that Seller
shall not have any liability under this Section 10.1 unless the aggregate of all
Losses relating thereto for which Seller would, but for this proviso, be liable
exceeds on a cumulative basis with Losses for which Buyer is indemnified under
Section 10.3, an amount equal to $50,000 (and then only to the extent of any
such excess); and PROVIDED FURTHER, HOWEVER, that Seller's aggregate liability
under this Section 10.1 and Section 10.3 shall in no event exceed $5,000,000.
Notwithstanding the foregoing, (i) Seller shall have no obligation to indemnify
Buyer for Losses, whether or not they result from the breach of a representation
or warranty of Seller, if Buyer's representation and warranty in Section 5.6 has
been breached as to the same matter, and the Losses sustained by Buyer in such
matter shall not be cumulatively counted towards the $50,000 threshold, (ii) the
covenant of Seller to perform remediation pursuant to Section 6.4 shall not be
subject to any minimum or maximum liability in the event of indemnification of
Buyer for Seller's breach thereof and (iii) Seller shall have no obligation to
indemnify Buyer with respect to any Loss, including but not limited to, any
breach of the representations set forth in Section 4.5, which is within the
scope of the Title Commitment, and Buyer agrees that its sole recourse with
respect to such matters shall be against the issuer of the Title Commitment.
10.2 INDEMNIFICATION BY BUYER. Subject to the terms and
conditions of this Article X, Buyer shall indemnify Seller and each of its
officers, directors, employees and agents against, and hold them harmless from,
any Loss suffered or incurred by any such Indemnified Person (other than any
relating to environmental matters, for which indemnification provisions are set
forth in Section 10.3) to the extent arising from (a) if the Closing occurs, any
breach of any representation or warranty of Buyer contained in this Agreement
which survives the Closing or in any certificate, instrument or other document
delivered pursuant hereto or in connection herewith, (b) any breach of any
covenant of Buyer contained in this Agreement requiring performance after the
Closing Date, (c) if the Closing occurs, the existence of, or the failure of
Buyer to pay, perform and
38
discharge when due, any of the Assumed Liabilities and (d) if the Closing
occurs, the ongoing operations of Buyer and the Assets after the Closing Date;
PROVIDED, HOWEVER, that Buyer shall not have any liability under this
Section 10.2 unless the aggregate of all Losses relating thereto for which Buyer
would, but for this proviso, be liable exceeds on a cumulative basis with Losses
for which Seller is indemnified under Section 10.3, an amount equal to $50,000
(and then only to the extent of such excess); and PROVIDED FURTHER, HOWEVER,
that Buyer's aggregate liability under clauses (a) and (b) of this Section 10.2
shall in no event exceed $5,000,000.
10.3 INDEMNIFICATION FOR ENVIRONMENTAL MATTERS. Subject to the
terms and conditions of this Article X, Seller shall indemnify and hold Buyer
harmless from and against all Losses resulting from claims or demands by any
Governmental Agency or any third party which is unrelated to Buyer or its
Affiliates arising under any Environmental Law to the extent such Losses (a) are
attributable to Seller's use and/or occupancy of any premises owned or used by
Seller prior to the Closing Date (a "Seller Facility") or to Hazardous Materials
transported offsite from a Seller Facility for treatment, storage or disposal
prior to the Closing, (b) are not attributable to acts or omissions (whether
before or after the Closing) that are within the Knowledge of Buyer and
(c) exceed, on a cumulative basis with Losses for which Buyer is indemnified
under Section 10.1, an amount equal to $50,000; but only to the extent of such
excess and PROVIDED, FURTHER, that Seller's aggregate liability under this
Section 10.3 and Section 10.1 shall in no event exceed $5,000,000. Seller's
indemnification liability hereunder (and its remediation obligation under
Section 6.4) shall in no event be construed to extend to or include any
remediation or other liability arising as a result of the presence of asbestos
in or upon any of the improvements located on the Division Property at any time.
Seller's obligation to indemnify Buyer under this Section 10.3 (but not the
covenant of Seller to perform remediation pursuant to Section 6.4, which is
governed by Section 10.1 hereof) shall expire on the second anniversary of the
Closing Date, and Buyer hereby expressly releases Seller from and after such
second anniversary from any liability in respect of the matters covered by such
indemnification, whether arising by statute or common law, or otherwise. Seller
shall have no obligation to indemnify Buyer with respect to conditions that
existed prior to Seller's use or occupancy of any Seller Facility. Buyer shall
indemnify and hold Seller harmless from and against all Losses resulting from
claims or demands by any Governmental Agency or private party arising under any
Environmental Law to the extent such Losses are attributable to Buyer's use
and/or occupancy of any Seller Facility.
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10.4 LOSSES NET OF INSURANCE, ETC.
(a) The amount of any Loss for which indemnification is
provided under this Article X shall be net of any amounts recovered or
recoverable by the Indemnified Person under insurance policies with respect to
such Loss and of any reserve in respect thereof reflected on the Closing Balance
Sheet.
(b) If the Indemnifying Person makes any payment under
this Article X in respect of any Loss, the Indemnifying Person shall be
subrogated, to the extent of such payment, to the rights of the Indemnified
Person against any insurer or third party with respect to such Losses.
(c) Notwithstanding anything to the contrary elsewhere
in this Agreement, no Indemnifying Person shall, in any event, be liable to the
other party for any consequential damages, including, but not limited to, loss
of revenue or income, cost of capital, or loss of business reputation or
opportunity relating to the breach or alleged breach of this Agreement. Each
party agrees that it will not seek punitive damages as to any matter under,
relating to or arising out of the Transactions.
(d) The parties hereto agree that the indemnification
provisions of this Article X are intended to provide the exclusive remedy as to
all Losses either may incur arising from or relating to the Transactions, and
each party hereby waives, to the extent they may do so, any other rights or
remedies that may arise under any applicable statute, rule or regulation.
10.5 TERMINATION OF INDEMNIFICATION. The obligations to
indemnify and hold harmless a party hereto, (A) pursuant to Sections 10.1(a)
and 10.2(a), shall terminate when the applicable representation or warranty
terminates pursuant to Section 10.8, (B) pursuant to Section 10.3, shall
terminate as set forth therein and (C) pursuant to Sections 10.1(b) and
10.2(b), shall terminate on the second anniversary of the Closing Date;
PROVIDED, HOWEVER, that as to clauses (A), (B) and (C) above, such
obligations to indemnify and hold harmless shall not terminate with respect
to any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice (stating in reasonable detail the basis of such claim) to the
Indemnifying Person. For avoidance of doubt, in the event any of the
remediation required to be performed by Seller pursuant to Section 6.4 is not
completed prior to the second anniversary of the Closing Date, any breach of
such covenant occurring after such second anniversary shall nevertheless give
rise to an indemnification obligation on the part of Seller, and
40
the other provisions of this Article X shall continue to govern any claim of
Buyer for indemnification in respect thereof.
10.6 PROCEDURES RELATING TO INDEMNIFICATION (OTHER THAN FOR TAX
CLAIMS). In order for an Indemnified Person to be entitled to any
indemnification provided for under this Agreement (other than for Tax Claims) in
respect of, arising out of or involving a claim or demand made by any Person
against the Indemnified Person (a "Third-Party Claim"), such Indemnified Person
must notify the Indemnifying Person in writing, and in reasonable detail, of the
Third-Party Claim within 10 Business Days after receipt by such Indemnified
Person of written notice of the Third-Party Claim; PROVIDED, HOWEVER, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Person shall have been actually
prejudiced as a result of such failure (except that the Indemnifying Person
shall not be liable for any Losses incurred during the period in which the
Indemnified Person failed to give such notice). Thereafter, the Indemnified
Person shall deliver to the Indemnifying Person, within five Business Days after
the Indemnified Person's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Person relating to the
Third-Party Claim.
If a Third-Party Claim is made against an Indemnified Person, the
Indemnifying Person will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
Indemnifying Person and reasonably satisfactory to the Indemnified Person.
Should the Indemnifying Person so elect to assume the defense of a Third-Party
Claim, the Indemnifying Person will not be liable to the Indemnified Person for
legal fees and expenses subsequently incurred by the Indemnified Person in
connection with the defense thereof. If the Indemnifying Person assumes such
defense, the Indemnified Person shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Person, it being understood that the
Indemnifying Person shall control such defense. The Indemnifying Person shall
be liable for the fees and expenses of counsel employed by the Indemnified
Person for any period during which the Indemnifying Person has not assumed the
defense thereof (other than during any period in which the Indemnified Person
shall have failed to give notice of the Third-Party Claim as provided above).
If the Indemnifying Person chooses to defend or prosecute any Third-Party Claim,
all the parties hereto shall cooperate in the defense or prosecution thereof.
Such cooperation shall include the retention and (upon the Indemnifying Person's
request) the provision to the Indemnifying Person of records and information
which are reasonably relevant to such Third-Party Claim, and making employees
available on a
41
mutually convenient basis in the manner specified in Section 8.5 hereof to
provide additional information and explanation of any material provided
hereunder. Notwithstanding the foregoing, in the event a Third-Party Claim is
made against Seller as to which Seller is entitled to seek indemnification under
this Article X and Seller concludes, in its reasonable judgment, that Buyer
lacks the financial and personnel resources to vigorously defend Seller from
such Third-Party Claim, Seller may elect to retain the defense of such
Third-Party Claim and shall be entitled to be reimbursed by Buyer for its Losses
incurred in such defense, such expenditures to be reimbursed promptly after
submission of invoices therefor. Whether or not the Indemnifying Person shall
have assumed the defense of a Third-Party Claim, the Indemnified Person shall
not admit any liability with respect to, or settle, compromise or discharge,
such Third-Party Claim without the Indemnifying Person's prior written consent
(which consent shall not be unreasonably withheld or delayed). All Tax Claims
(as defined in Section 10.7) shall be governed by Section 10.7.
10.7 PROCEDURES RELATING TO INDEMNIFICATION OF TAX CLAIMS.
(a) If a claim shall be made by any Tax authority,
which, if successful, might result in an indemnity payment to any Person
hereunder (a "Tax Indemnitee"), the Tax Indemnitee shall promptly notify the
party against whom indemnification is sought (the "Tax Indemnitor") in writing
of such claim (a "Tax Claim"). If notice of a Tax Claim is not given to the Tax
Indemnitor within a sufficient period of time to allow the Tax Indemnitor to
effectively contest such Tax Claim, or in reasonable detail to apprise the Tax
Indemnitor of the nature of the Tax Claim, in each case taking into account the
facts and circumstances with respect to such Tax Claim, the Tax Indemnitor shall
not be liable to the Tax Indemnitee to the extent that the Tax Indemnitor's
ability to effectively contest such Tax Claim is actually prejudiced as a result
thereof.
(b) With respect to any Tax Claim, the Tax Indemnitor
shall control all proceedings taken in connection with such Tax Claim
(including, without limitation, selection of counsel) and, without limiting the
foregoing, may in its sole discretion (and at its sole cost and expense) pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with any taxing authority with respect thereto and may, in its sole
discretion, either pay the Tax claimed and xxx for a refund where applicable law
permits such refund suits or contest the Tax Claim in any permissible manner;
PROVIDED, HOWEVER, that the Tax Indemnitor shall not settle or compromise a Tax
Claim without giving 30 days' prior notice to the Tax Indemnitee, and without
the Tax Indemnitee's consent, which shall not be unreasonably withheld or
delayed, if such settlement or compromise would have a material adverse effect
on
42
the Tax liabilities of the Tax Indemnitee, its Affiliates or any member of its
affiliated group. The Tax Indemnitee, and each of its Affiliates, shall
cooperate with the Tax Indemnitor in contesting any Tax Claim, which cooperation
shall include, without limitation, the retention and (upon the Tax Indemnitor's
request) the provision to the Tax Indemnitor of Records and information which
are reasonably relevant to such Tax Claim, and making employees available on a
mutually convenient basis to provide additional information or explanation of
any material provided hereunder or to testify at proceedings relating to such
Tax Claim.
10.8 SURVIVAL OF REPRESENTATIONS. The representations and
warranties in this Agreement and in any other document delivered in connection
herewith shall survive the Closing solely for purposes of Sections 10.1(a) and
10.2(a) and shall terminate at the close of business on the second anniversary
of the Closing Date except for the representations and warranties in Section 4.3
hereof, which shall survive until the expiration of the applicable statute of
limitations. Representations and warranties relating to environmental matters
in Section 4.10 shall not survive the Closing; however, the covenant in
Section 6.4 shall be governed by Section 10.1 and Seller and Buyer's
indemnification obligations as to environmental matters, which are not covered
by Section 6.4, shall be governed by Section 10.3.
ARTICLE XI
GENERAL PROVISIONS
11.1 ASSIGNMENT. Prior to the Closing, this Agreement and the
rights and obligations hereunder shall not be assignable or transferable by
Buyer (including by operation of law in connection with a merger or sale of
substantially all the assets, of Buyer) without the prior written consent of
Seller; PROVIDED, HOWEVER, that Buyer may assign its right to purchase the
Assets hereunder to an Affiliate of Buyer that can accurately make all of
Buyer's representations and warranties as of the Closing without the prior
written consent of Seller; PROVIDED FURTHER, HOWEVER, that no assignment shall
limit or affect Buyer's obligations hereunder.
11.2 NO THIRD-PARTY BENEFICIARIES. Except as provided in
Article X as to Indemnified Persons, this Agreement is for the sole benefit of
the parties hereto and their permitted assigns and nothing herein expressed or
implied shall give or be construed to give to any person or entity, other than
the parties hereto and such assigns, any legal or equitable rights hereunder.
43
11.3 TERMINATION.
(a) Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated (except as set forth in
Section 11.3(c)) and the Transactions abandoned at any time prior to the Closing
Date:
(i) by mutual written consent of
Seller and Buyer;
(ii) by Seller pursuant to Section 6.4
or if any of the conditions set forth in Section 3.1
shall have become incapable of fulfillment, and shall
not have been waived by Seller;
(iii) by Buyer if any of the conditions
set forth in Section 3.2 shall have become incapable of
fulfillment, and shall not have been waived by Buyer; or
(iv) by either party hereto, if the
Closing does not occur on or prior to May 27, 1994.
(b) In the event of termination by Seller or Buyer
pursuant to this Section 11.3, written notice thereof shall forthwith be given
to the other party and the Transactions shall be terminated, without further
action by either party. If the Transactions are terminated as provided herein:
(i) Buyer shall return all documents
and copies and other material received from Seller
relating to the Transactions, whether so obtained before
or after the execution hereof, to Seller;
(ii) all confidential information
received by Buyer with respect to the Division and
Seller shall be treated in accordance with the
applicable provisions of the Letter of Intent which
shall remain in full force and effect notwithstanding
the termination of this Agreement.
(c) If this Agreement is terminated and the
transactions contemplated hereby are abandoned as described in this
Section 11.3, this Agreement shall become void and of no further force and
effect, except for the provisions of (i) Section 7.1 relating to the obligation
of Buyer to keep confidential certain information and data obtained by it,
(ii) Section 11.4 relating to certain expenses, (iii) Section 12.5 relating to
attorney fees and expenses,
44
(iv) Section 11.11 relating to finder's fees and broker's fees and (v) this
Section 11.3. Nothing in this Section 11.3 shall be deemed to release either
party from any liability for any breach by such party of the terms and
provisions of this Agreement which occurred prior to its termination or to
impair the right of either party to compel specific performance by the other
party of its obligations under this Agreement.
11.4 EXPENSES. Whether or not the Transactions are consummated,
and except as otherwise provided in this Agreement, all fees, costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such fees, costs or expenses.
11.5 ATTORNEYS' FEES. Should any litigation be commenced
concerning this Agreement or the rights and duties of any party with respect to
it, the party prevailing shall be entitled, in addition to such other relief as
may be granted, to a reasonable sum for such party's attorney fees and expenses
determined by the court in such litigation or in a separate action brought for
that purpose.
11.6 AMENDMENTS. No amendment to this Agreement shall be
effective unless it shall be in writing and signed by both parties hereto.
11.7 NOTICES. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent prepaid telex, cable or telecopy, or sent, postage prepaid, by
registered, certified or express mail, or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one business day in the case
of express mail or overnight courier service), as follows:
(i) if to Buyer, to:
The Xxxxx Xxxxx Company
000 Xxxx Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, President
with a copy to:
Xxxxx & Lardner
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxx, Esq.
45
(ii) if to Seller, to:
MagneTek, Inc.
00000 Xxxxx Xxxxxx Xxxxxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Miley, Esq.
General Counsel
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxx, Esq.
11.8 INTERPRETATION; EXHIBITS AND SCHEDULES. The headings
contained in this Agreement, in any Exhibit or Schedule hereto and in the table
of contents to this Agreement, are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Any matter
disclosed in one Schedule hereto shall be deemed incorporated by reference into
each other Schedule hereto and disclosed in each such Schedule. All Exhibits
and Schedules annexed hereto or referred to herein are hereby incorporated in
and made a part of this Agreement as if set forth in full herein. Any
capitalized terms used in any Schedule or Exhibit, but not otherwise defined
therein, shall have the meaning as defined in this Agreement.
11.9 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other party.
11.10 ENTIRE AGREEMENT. This Agreement and the other Transaction
Documents contain the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede all prior oral
and written agreements and understandings (including, without limitation, the
Letter of Intent except as to the confidentiality provisions thereof) relating
to such subject matter.
11.11 FEES. Each party hereto hereby represents and warrants
that no broker or finder has acted for such party in connection with this
Agreement or the transactions contemplated hereby or may be entitled to any
brokerage fee, finder's fee or commission in respect thereof.
11.12 SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any person
46
or circumstance shall be held invalid, illegal or unenforceable in any respect
by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
11.13 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
MAGNETEK, INC.
By:/s/Xxxx X. Xxxxxxx, Xx.
------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Vice President and
Treasurer
THE XXXXX XXXXX COMPANY
By:/s/Xxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
47
